Exhibit 10.69

 

THIRD AMENDED AND RESTATED

CREDIT AGREEMENT

 

 

Dated as of June 30, 2009

among

ML MACADAMIA ORCHARDS, L.P.

ML RESOURCES, INC.

as Borrower

and

AMERICAN AGCREDIT, PCA

as Lender

 

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TABLE OF CONTENTS

 

ARTICLE 1. GENERAL TERMS

1

ARTICLE 2. AMOUNT AND TERMS OF CREDIT

9

ARTICLE 3. COLLATERAL

16

ARTICLE 4. CONDITIONS PRECEDENT

17

ARTICLE 5. REPRESENTATIONS AND WARRANTIES

18

ARTICLE 6. FINANCIAL STATEMENTS AND INFORMATION

23

ARTICLE 7. AFFIRMATIVE COVENANTS

24

ARTICLE 8. NEGATIVE COVENANTS

25

ARTICLE 9. INDEMNITY

27

ARTICLE 10. EVENTS OF DEFAULT; RIGHTS AND REMEDIES

28

ARTICLE 11. MISCELLANEOUS

31

 

 

INDEX OF EXHIBITS

 

Exhibit A       - Form of Notice of Revolving Advance

 

 

 

Exhibit B       - Form of Certification Regarding Compliance with Financial
Covenants

 

 

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THIS THIRD AMENDED AND RESTATED CREDIT AGREEMENT (“Agreement”), dated as of
June 30, 2009, is by and among ML MACADAMIA ORCHARDS, L.P., a Delaware limited
partnership, and ML RESOURCES, INC., a Hawaii corporation (collectively,
“Borrower”), and AMERICAN AGCREDIT, PCA as successor in interest to PACIFIC
COAST FARM CREDIT SERVICES, PCA, (“Lender”) with respect to the following facts:

 

RECITALS

 

A.            Borrower and Lender entered into a Credit Agreement dated as of
May 1, 2000 providing Borrower with certain financial accommodations (the
“Original Credit Agreement”).  Said Original Credit Agreement was amended by
letter agreement on March 26, 2001 and July 25, 2001 (the “Letter Amendments”)
and by an Amendment to Credit Agreement dated September 16, 2002 (the
“Amendment”).  The Original Credit Agreement, Letter Amendments, and the
Amendment are collectively referred to herein as the “Original Amended Credit
Agreement”.  The Original Amended Credit Agreement was replaced by an Amended
and Restated Credit Agreement dated as of May 1, 2004 (the “First Restated
Credit Agreement”). The First Restated Credit Agreement was amended by an
Amendment dated August 17, 2004, a Waiver and Amendment dated as of March 15,
2005, and by four additional amendments dated December 27, 2005, July 5, 2007,
March 14, 2008, and April 25, 2008 respectively.  The First Restated Credit
Agreement, including all amendments thereto, was replaced by a Second Amended
and Restated Credit Agreement dated as of July 8, 2008 (the “Second Restated
Credit Agreement”).

 

B.            The Indebtedness of the Borrower to the Lender under the terms of
the Original Credit Agreement, the First Restated Credit Agreement and the
Second Restated Credit Agreement is secured by certain collateral described in
the Security Agreement dated as of May 1, 2000, the Supplemental Security
Agreement dated as of May 1, 2004, and the Second Supplemental Security
Agreement dated as of July 8, 2008, and the Third Supplemental Security
Agreement dated as of June 30, 2009 (collectively the “Security Agreements”) and
by the Mortgage, as defined herein.

 

C.            Borrower has requested that Lender extend and amend the terms of
the credit evidenced by the Second Restated Credit Agreement and Lender is
willing to do so subject to and in accordance with the terms, covenants,
conditions and provisions set forth herein.

 

NOW, THEREFORE, in consideration of the premises and the mutual covenants
hereinafter contained, the parties hereto agree as follows:

 

ARTICLE 1

 

GENERAL TERMS

 

1.1.          Certain Defined Terms.  As used in this Agreement, all terms
defined in the preamble to this Agreement shall have the meanings set forth
therein, and the following terms shall have the following meanings (such
meanings to be equally applicable to both the singular and plural forms of the
terms defined):

 

“2000 Term Loan” means the term loan evidenced by the 2000 Term Loan Promissory
Note.

 

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“2000 Term Loan Promissory Note” means the term loan promissory note in the
amount of $4,000,000, dated as of May 1, 2000, made by Borrower in favor of in
favor of Pacific Coast Farm Credit Services, PCA now know as American AgCredit,
PCA, with an outstanding principal balance of $400,000 as of June 30, 2009.

 

“2000 Term Loan Tranche A” means that certain $1,050,000 original principal
portion of the 2000 Term Loan that was converted on June 1, 2009 to a 3.07%
Fixed Rate expiring on July 1, 2009.  The outstanding principal balance of 2000
Term Loan Tranche A is $170,000 as of June 22, 2009.

 

“2000 Term Loan Tranche B” means that certain $1,950,0000 original principal
portion of the 2000 Term Loan that was converted on May 2, 2005 to a 6.87% Fixed
Rate expiring on May 1, 2010.  The outstanding principal balance of 2000 Term
Loan Tranche B is $230,000 as of June 22, 2009.

 

“2009 Term Loan” means the term loan evidenced by the 2009 Term Loan Promissory
Note.

 

“2009 Term Loan Promissory Note” means the term loan promissory note in the
amount of $600,000, dated as of June 30, 2009, made by Borrower in favor of
Lender.

 

“Affiliate” shall mean any person or entity directly or indirectly controlling,
controlled by, or under common control with the Borrower.  For the purposes of
this definition, “control” (including with correlative meanings, the terms
“controlled by” and “under common control with”) as used with respect to the
Borrower, any person, or entity shall mean the possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of the Borrower, any person, or entity, whether through the ownership
of voting shares, by contract or otherwise.

 

“Agreement” shall mean this Third Amended and Restated Credit Agreement,
including all amendments, modifications, and supplements hereto and any
appendices, exhibits, or schedules to any of the foregoing.

 

“Bankruptcy Code” shall mean 11 U.S.C. §§ 101, et   seq., as in effect from time
to time.

 

“Base Rate” shall mean a floating rate of interest equal to the Prime Rate plus
a margin of one percentage point (100 basis points).

 

“Borrower” shall mean ML Macadamia Orchards, L.P., a Delaware limited
partnership, and ML Resources, Inc., a Hawaii corporation.

 

“Business Day” shall mean any day that is not a Saturday, a Sunday, or a day on
which banks are required or permitted to be closed in the State of California.

 

“Capital Lease” shall mean, with respect to any Person, any lease of any
property (whether real, personal or mixed) by such Person as lessee that, in
accordance with GAAP, either would be required to be classified and accounted
for as a capital lease on a balance sheet of such Person or otherwise be
disclosed as such in a note to such balance sheet, other than, in the case of
Borrower, any such lease under which Borrower is the lessor.

 

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“Charges” shall mean all federal, state, county, city, municipal, local,
foreign, or other governmental taxes (including, without limitation, taxes owed
to the Pension Benefit Guaranty Corporation or any successor) at the time due
and payable, levies, assessments, charges, liens, claims or encumbrances upon or
relating to (i) the Collateral, (ii) the Obligations, (iii) the employees,
payroll, income, or gross receipts of Borrower, (iv) Borrower’s ownership or use
of any of its assets, or (v) any other aspect of Borrower’s business.

 

“Closing Date” shall mean, (i) with respect to the Revolving Loan, the date set
forth in the preamble to this Agreement, or such other date on which this
Agreement is closed, (ii) with respect to the 2000 Term Loan, the Closing Date
was May 1, 2000, and (iii) with respect to the 2009 Term Loan, the date set
forth in the preamble to this Amendment or such other date on which this
Amendment is closed.

 

“Collateral” shall mean any and all property of Borrower in which Lender now or
hereafter has a Lien to secure all or any part of the Obligations to Lender.

 

“Collection Account” shall mean a bank account in the name of Lender at a bank
chosen by Borrower and reasonably acceptable to Lender.

 

“Consolidated EBITDA” shall mean, for any period, for MLO and its Subsidiaries
on a consolidated basis, the sum (without duplication) of: (a) Consolidated Net
Income; plus (b) the sum of (i) Federal, state, local, and foreign income taxes,
(ii) interest expense (including the interest portion of any capitalized lease
obligations), (iii) depletion, depreciation and amortization, and
(iv) extraordinary losses; minus (c) the sum of (I) gains on asset sales, and
(II) extraordinary gains.

 

“Consolidated Net Income” shall mean, for any period, on a consolidated basis,
the net income or net loss, of MLO, determined in accordance with GAAP.

 

“Default” shall mean any event or circumstance which, with the passage of time
or the giving of notice or both, would unless remedied or waived, become an
Event of Default.

 

“Default Rate” shall mean a rate of interest that is three percent (3.00%) per
annum higher than the rate otherwise applicable.

 

“Disclosure Schedule” shall mean the Disclosure Schedule delivered by Borrower
to Lender in conjunction with this Agreement.

 

“Environmental Laws” shall mean all federal, state and local laws, statutes,
ordinances and regulations, now or hereafter in effect, and in each case as
amended or supplemented from time to time, and any judicial or administrative
interpretation thereof, including, without limitation, any applicable judicial
or administrative order, consent decree or judgment, relative to the applicable
real estate, relating to the regulation and protection of human health, safety,
the environment and natural resources (including ambient air, surface water,
groundwater, wetlands, land surface or subsurface strata, wildlife, aquatic
species and vegetation).  Environmental Laws include the Comprehensive
Environmental Response, Compensation, and Liability Act of 1980, as amended (42
U.S.C. §§ 9601 et   seq.) (“CERCLA”); the Hazardous Material Transportation Act,
as amended (49 U.S.C. §§ 1801 et   seq.); the Federal Insecticide, Fungicide,
and Rodenticide Act, as amended (7 U.S.C. §§ 136 et   seq.); the Resource
Conservation and Recovery Act, as amended (42 U.S.C. §§ 6901 et  seq.) (“RCRA”);
the Toxic Substance Control Act, as amended (15 U.S.C. §§

 

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2601 et  seq.); the Clean Air Act, as amended (42 U.S.C. §§ 7401 et   seq.); the
Federal Water Pollution Control Act, as amended (33 U.S.C. §§ 1251 et   seq.);
the Occupational Safety and Health Act, as amended (29 U.S.C. §§ 651 et   seq.);
and the Safe Drinking Water Act, as amended (42 U.S.C. §§ 300(f) et  seq.), and
any and all regulations promulgated thereunder, and all analogous state and
local counterparts or equivalents and any transfer of ownership notification or
approval statutes.

 

“ERISA” shall mean the Employee Retirement Income Security Act of 1974 (or any
successor legislation thereto), as amended from time to time, and any
regulations promulgated thereunder.

 

“ERISA Affiliate” shall mean, with respect to Borrower, any trade or business
(whether or not incorporated) under common control with Borrower and which,
together with Borrower, are treated as a single employer within the meaning of
Section 4001(a) of ERISA.

 

“Eurodollar Business Day” shall mean a business day on which banks generally in
the city of London are open for interbank or foreign exchange transactions.

 

“Event of Default” shall have the meaning assigned to it in Section 10.1.

 

“Fees” shall mean any fees referred to in Section 2.10, any prepayment
surcharge, and any other fees due to Lender pursuant to the Loan Documents.

 

“Fiscal Quarter” shall mean any of the quarterly accounting periods of Borrower.

 

“Fiscal Year” shall mean the 12-month period of Borrower ending December 31 of
each year.  Subsequent changes of the fiscal year of Borrower shall not change
the term “Fiscal Year,” unless Lender shall consent in writing to such change.

 

“Fixed Rate” shall mean: (a) with respect to any portion of the Revolving Loan
that Borrower elects at any time pursuant to Section 2.5(b) to convert to a
fixed rate of interest, the greater of (i) four percent (4%) per annum or (ii)
applicable LIBO Rate as of the date of such election plus a margin equal to 275
basis points for elections made prior to June 20, 2009 and 325 basis points for
elections made on or after June 30, 2009; (b) with respect to any portion of
2000 Term Loan Tranche A that Borrower elects at any time pursuant to Section
2.6(b) to convert to a fixed rate of interest, the applicable LIBO Rate as of
the date of such election plus a margin equal to 275 basis points; (c) with
respect to 2000 Term Loan Tranche B, a fixed rate of interest equal to 6.8700%
per annum; and (d) with respect to the 2009 Term Loan, a fixed rate of interest
equal to 7.50% per annum

 

“GAAP” shall mean generally accepted accounting principles in the United States
of America as in effect from time to time.

 

“Governmental Authority” shall mean any nation or government, any state or other
political subdivision thereof, and any agency, department or other entity
exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government.

 

“Hazardous Material” shall mean any substance, material or waste, the
generation, handling, storage, treatment or disposal of which is regulated by
any local or state government authority in any jurisdiction in which Borrower
has owned, leased or operated real property or disposed of hazardous materials,
or by the United States Government, including any material or

 

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substance which is (i) defined as a “hazardous waste,” “hazardous material,”
“hazardous substance,” “extremely hazardous waste” or “restricted hazardous
waste” or other similar term of phrase under any such law, (ii) petroleum,
(iii) designated as a “hazardous substance” pursuant to Section 311 of the Clean
Water Act, 33 U.S.C. § 1251 et  seq. (33 U.S.C. § 1321) or listed pursuant to
Section 307 of the Clean Water Act (33 U.S.C. § 1317), (iv) defined as a
“hazardous waste” pursuant to Section 1004 of the Resource Conservation and
Recovery Act, 42 U.S.C. § 6901, et   seq. (42 U.S.C. § 6903), or (v) defined as
a “hazardous substance” pursuant to Section 101 of the Comprehensive
Environmental Response, Compensation, and Liability Act, 42 U.S.C. § 9601, et
  seq. (42 U.S.C. § 9601).

 

“Indebtedness” of any Person shall mean all obligations for borrowed money
(including the present value of capitalized lease obligations) which, in
accordance with GAAP, would be included in determining total liabilities as
shown on the liability side of a balance sheet as of the date at which
Indebtedness is to be determined, and guarantees, letters of credit (other than
letters of credit to support trade payables) and endorsements (other than of
notes, bills and checks presented to banks for collection or deposit in the
ordinary course of business), in each case to support indebtedness for borrowed
money of others, but excluding existing guarantees outstanding on the Closing
Date (and extensions or renewals thereof).

 

“Interest Determination Date” shall mean the date, as designated by Borrower
pursuant to Section 2.5, Section 2.6 or Section 2.7, on which a portion of the
Revolving Advances or a portion of the 2000 Term Loan shall begin to bear
interest at a Fixed Rate.

 

“Interest Period” shall mean (a) with respect to any portion of interest on
Revolving Advances that Borrower elects to have bear interest at a Fixed Rate, a
period beginning on the Interest Determination Date and ending, at Borrower’s
election, either one (1) month, two (2) months, three (3) months, or six
(6) months thereafter, and (b) with respect to any portion of interest on 2000
Term Loan Tranche A that Borrower elects to have bear interest at a Fixed Rate,
a period beginning on the Interest Determination Date and ending, at Borrower’s
election, either one (1) month, two (2) month, three (3) months, six (6) months,
or twelve (12) months thereafter.

 

“Lender” shall mean American AgCredit, PCA.

 

“LIBO Rate” shall mean, for any Interest Determination Date, the rate offered
from time to time for U.S. Dollar deposits for the Interest Period selected, as
quoted by Telerate News Service on page 3750 recorded as of 11:00 A.M. London
setting time (or, if the page 3750 of the Telerate News Service is unavailable,
the comparable reference on the Reuters Screen LIBOR Page or such other
quotation service as may be chosen by Lender) on the second full Eurodollar
Business Day preceding the beginning of the Interest Period; provided, that if
two or more of such offered rates appear on Telerate (or on the Reuters Screen
LIBOR Page or alternative service, as the case may be), the “LIBO Rate” shall be
highest of the two rates quoted.

 

“Lien” shall mean any mortgage or deed of trust, pledge, hypothecation,
assignment, deposit arrangement, lien, charge, claim, security interest or
encumbrance, or preference, priority or other security agreement or preferential
arrangement of any kind or nature whatsoever (including any lease or title
retention agreement, any financing lease having substantially the same economic
effect as any of the foregoing, and the filing of, or agreement to give, any
financing statement perfecting a security interest under the Uniform Commercial
Code or comparable law of any jurisdiction).

 

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“Loan Documents” shall mean this Agreement, the First Amendment To Revolving
Loan Promissory Note of even date herewith, the Revolving Loan Promissory Note,
the 2000 Term Loan Promissory Note, the 2009 Term Loan Promissory Note, the
Security Documents, and all other agreements, instruments, documents, and
certificates identified in any Schedule of Documents listing documents to be
delivered by Borrower to Lender and including all other pledges, powers of
attorney, consents, mortgages, assignments, contracts and agreements whether
heretofore, now, or hereafter executed by or on behalf of Borrower or any of its
Affiliates, or any employee of Borrower or any of its Affiliates, and delivered
to Lender in connection with this Agreement, or any previous versions of this
Agreement or the transactions contemplated thereby or hereby.

 

“Loans” shall mean the Revolving Loan, the 2000 Term Loan and the 2009 Term
Loan, collectively.

 

“Maintenance Capital Expenditures” shall mean capital expenditures for
maintenance and enhancement of MLO’s business operations.

 

“Material Adverse Effect” shall mean a material adverse effect on (i) the
business, assets, operations, or financial or other condition of Borrower,
(ii) Borrower’s ability to pay the Obligations in accordance with the terms
thereof, or (iii) the Collateral or Lender’s Liens on the Collateral or the
priority of any such Lien, or (iv) Lender’s rights and remedies under this
Agreement and the other Loan Documents.

 

“Maturity Date” means with respect to the Revolving Loan Promissory Note, June
29, 2010 (“Revolving Loan Maturity Date”), with respect to the 2000 Term Loan
Promissory Note, May 1, 2010 (“2000 Term Loan Maturity Date”), and with respect
to the 2009 Term Loan Promissory Note, July 1, 2013 (the “2009 Term Loan
Maturity Date”).

 

“Maximum Lawful Rate” shall have the meaning assigned to it in Section 2.9(e).

 

“Maximum Revolving Loan” shall mean Five Million Dollars ($5,000,000).

 

“MLO” shall mean ML Macadamia Orchards, L.P., a Delaware limited partnership.

 

“Mortgage” shall mean the mortgage given by Borrower to Lender, dated January 8,
2009, and recorded in the State of Hawaii Bureau of Conveyances on January 14,
2009 as Document No. 2009-004913 and filed in the Office of the Assistant
Registrar of the Land Court of the State of Hawaii as Document No. 3818975 and
noted on Transfer Certificate of Title No. 283,473, covering the real property
described therein.

 

“Notice of Revolving Advance” shall have the meaning assigned to it in
Section 2.1(b).

 

“Obligations” shall mean all loans, advances, debts, liabilities, and
obligations for the performance of covenants, tasks or duties or for payment of
monetary amounts (whether or not such performance is then required or
contingent, or amounts are liquidated or determinable and whether or not allowed
as a claim in any proceeding referred to in Section 10.1(i) or 10.1(j)) owing by
Borrower to Lender, and all covenants and duties regarding such amounts, of any
kind or nature, present or future, whether or not evidenced by any note,
agreement or other instrument, arising under

 

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any of the Loan Documents.  This term includes the Revolving Loan, the 2000 Term
Loan, the 2009 Term Loan, all principal, interest, Fees, charges, expenses,
attorneys’ fees and any other sum chargeable to Borrower under this Agreement or
any of the Loan Documents.

 

“PACA” shall mean the Perishable Agricultural Commodities Act, 7 U.S.C. §
499e(c) (or any successor legislation thereto), as amended from time to time,
and any regulations promulgated thereunder.

 

“Permitted Encumbrances” shall mean the following encumbrances: (i) Liens for
taxes or assessments or other governmental Charges or levies, either not yet due
and payable or which are currently being contested in good faith by appropriate
proceedings and which at all times are junior and subordinate to the Lien of
Lender; (ii) pledges or deposits securing obligations under workmen’s
compensation, unemployment insurance, social security or public liability laws
or similar legislation; (iii) pledges or deposits securing bids, tenders,
contracts (other than contracts for the payment of money) or leases to which
Borrower is a party as lessee made in the ordinary course of business;
(iv) deposits securing public or statutory obligations of Borrower; (v) inchoate
and unperfected workers’, mechanics’, suppliers’ or similar Liens arising in the
ordinary course of business; (vi) carriers’, warehousemen’s, or other similar
possessory Liens arising in the ordinary course of business and securing
indebtedness either not yet due and payable or which are currently being
contested in good faith by appropriate proceedings; (viii) deposits securing, or
in lieu of, surety, appeal or customs bonds in proceedings to which Borrower is
a party; (ix) an attachment or judgment Lien, but only for a period of thirty
(30) days following attachment of such Lien and such attachment or judgment lien
shall cease to be a Permitted Lien if the obligation that it secures has not
been satisfied or bonded during such thirty (30) day period; (x) zoning
restrictions, easements, licenses, or other restrictions on the use of real
property or other minor irregularities in title (including leasehold title)
thereto, so long as the same do not materially impair the use, value, or
marketability of such real property, leases or leasehold estates; (xi) Liens
identified in Part (E) of the Disclosure Schedule, but only securing the debt
and covering the property referred to therein, (xii) Liens to secure
Indebtedness arising from development of investment properties, provided that
the Liens do not encumber any asset other than the asset benefiting from the
improvement, and (xiii) security interests securing purchase money indebtedness
and liens covering property other than Collateral, in each case to the extent
permitted by Section 8.4.

 

“Person” shall mean any individual, sole proprietorship, partnership, joint
venture, trust, unincorporated organization, association, corporation,
institution, public benefit corporation, entity or government (whether federal,
state, county, city, municipal or otherwise, including, without limitation, any
instrumentality, division, agency, body or department thereof).

 

“Prime Rate” shall mean the “Prime” rate as published from time to time in The
Wall Street Journal, regardless of whether such rate is actually charged by any
bank, or, in the event that The Wall Street Journal ceases publication of such
rate, in such other nationally recognized financial publication of general
circulation as Lender may, from time to time, designate in writing based on
Lender’s reasonable determination that the rate so published is comparable to
the “Prime” rate published in  The Wall Street Journal.

 

“Restricted Payment” shall mean (a) any payment or other distribution, direct or
indirect, in respect of any partnership interest or stock in Borrower, except a
distribution payable

 

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solely in additional partnership interest or stock, and (b) any payment, direct
or indirect, on account of the redemption, retirement, purchase or other
acquisition of any partnership interest or stock or (c) any payment, loan,
contribution, or other transfer of funds or other property to any partner or
stockholder of Borrower except for reasonably equivalent value.

 

“Revolving Advance” shall have the meaning ascribed to such term in
Section 2.1(a).

 

“Revolving Loan” shall mean the aggregate amount of Revolving Advances
outstanding at any time.

 

“Revolving Loan Promissory Note” means the revolving loan promissory note in the
amount of $6,000,000, dated as of July 8, 2008, made by Borrower in favor of in
Lender, with an outstanding principal balance of $700,000 as of June 22, 2009.

 

“Security Documents” shall mean all Security Agreements, mortgages, assignments,
and other similar documents delivered by Borrower to Lender pursuant to which
Borrower grants to Lender a security interest in, assignment of, or Lien upon
any real or personal property of Borrower, including all amendments,
modifications and supplements thereto.

 

“Subsidiary” shall mean any corporation, association or business entity of which
Borrower owns, directly or indirectly, more than fifty percent of the voting
securities or which Borrower otherwise controls.

 

“Tangible Net Worth” shall mean the gross book value of the assets of MLO
(exclusive of goodwill, patents, trademarks, trade names, organization expense
unamortized debt discount and expense, deferred charges and other like
intangibles) less (i) reserves applicable thereto and (ii) all liabilities
(including subordinated liabilities), in each case determined in accordance with
GAAP (provided an adjustment shall be made to eliminate the effect of FAS 109),
and as reasonably determined by Lender in accordance with GAAP.

 

1.2.          Accounting Terms.  Any accounting term used in this Agreement
shall have, unless otherwise specifically provided herein, the meaning
customarily given such term in accordance with GAAP, and all financial
computations hereunder shall be computed, unless otherwise specifically provided
herein, in accordance with GAAP consistently applied.  That certain terms or
computations are explicitly modified by the phrase “in accordance with GAAP”
shall in no way be construed to limit the foregoing.

 

1.3.          Certain Matters of Construction.  The words “herein,” “hereof,”
“hereto,” “hereunder,” and other words of similar import refer to this Agreement
as a whole, including the Exhibits and Schedules hereto, as the same may from
time to time be amended, modified or supplemented, and not to any particular
section, subsection or clause contained in this Agreement.  Any reference to a
“Section,” “Exhibit,” or “Schedule” shall refer to the relevant Section or,
Exhibit, or Schedule to this Agreement, unless specifically indicated to the
contrary.  Wherever from the context it appears appropriate, each term stated in
either the singular or plural shall include the singular and plural, and
pronouns stated in the masculine, feminine or neuter gender shall include the
masculine, feminine or neuter.  The term “including” shall not be limiting or
exclusive, unless specifically indicated to the contrary.

 

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ARTICLE 2

 

AMOUNT AND TERMS OF CREDIT

 

2.1.                             Revolving Advances.

 

(a)                                  Revolving Advances To Be Made Available. 
Upon and subject to the terms and conditions hereof, Lender agrees to make
available, from time to time, until the Revolving Loan Maturity Date, for
Borrower’s use and upon the request of Borrower therefore, advances (each, a
“Revolving Advance”) that shall not exceed the Maximum Revolving Loan.  The
amount of any Revolving Advance shall be not less than Fifty Thousand Dollars
($50,000) and shall be in integral multiples of One Thousand Dollars ($1,000).  
The Revolving Loan is evidenced by the Revolving Loan Promissory Note.

 

(b)                                 Requests for Advances.  If Borrower desires
to receive a Revolving Advance, Borrower shall deliver a notice (a “Notice of
Revolving Advance”) to Lender substantially in the form of Exhibit A no later
than 2:00 p.m. (California time) on the Business Day prior to the date of the
proposed Revolving Advance.  Lender shall be entitled to rely upon and shall be
fully protected under this Agreement in relying upon any Notice of Revolving
Advance reasonably believed by Lender to be genuine.  Upon the close of business
on the date of the proposed Revolving Advance, Lender shall make the Revolving
Advance available to Borrower unless Lender determines that Borrower is not
entitled to such Revolving Advance under the terms of this Agreement.  All
notices delivered pursuant to this Section 2.1(b) shall be delivered by
facsimile to the facsimile number set forth in Section 11.9 or to such other
facsimile number as a party hereto shall designate in writing pursuant to the
provisions of Section 11.9; provided that such notices may also be delivered by
electronic mail if approved by Lender.

 

(c)                                  Revolving Nature of Loan; Repayment of
Loan.  The Revolving Loan is a revolving line of credit and Borrower may borrow,
repay principal, and reborrow in accordance with the terms of this Agreement;
provided that Borrower shall provide Lender with one (1) day’s advance notice of
any repayment.  Repayments of principal shall be not less than Fifty Thousand
Dollars ($50,000) and shall be in integral multiples of One Thousand Dollars
($1,000).  The Revolving Loan shall mature and shall become due and payable in
full on the Revolving Loan Maturity Date.

 

2.2.                             Term Loans.

 

(a)                                  2000 Term Loan.   On May 1, 2000 Lender
advanced the 2000 Term Loan to Borrower.  The 2000 Term Loan is evidenced by the
2000 Term Loan Promissory Note executed and delivered by Borrower to Lender on
May 1, 2000.

 

(b)                                 2009 Term Loan.   On the Closing Date,
Lender will advance the 2009 Term Loan to Borrower.  The 2009 Term Loan shall be
evidenced by the 2009 Term Loan Promissory Note.

 

2.3.                             Repayment Provisions.

 

(a)                                  Revolving Loan

 

(i)                                     Interest Payments.  Interest on the
Revolving Loan shall be due and payable on the first day of each calendar
quarter; provided, that if any Interest Period shall mature

 

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prior to the first day of a calendar quarter, then interest accrued at a Fixed
Rate during the particular Interest Period shall be due and payable upon
expiration of the Interest Period.  Interest accrued on the Revolving Loan but
not otherwise due and payable on the Revolving Loan Maturity Date shall become
due and payable on the Revolving Loan Maturity Date.

 

(b)                                 2000 Term Loan

 

(i)                                     Principal Payments.  On the 2000 Term
Loan Maturity Date (i.e., May 1, 2010), Borrower shall pay to Lender the
remaining principal installment of Four Hundred Thousand Dollars ($400,000) due
under the 2000 Term Loan Note, together with all unpaid principal, accrued
interest and other amounts then due under the 2000 Term Loan Promissory Note.

 

(ii)                                  Interest Payments.  Interest on the 2000
Term Loan shall be due and payable on the first day of each calendar quarter;
provided, that if any Interest Period shall mature prior to the first day of a
calendar quarter, then interest accrued at a Fixed Rate during the particular
Interest Period shall be due and payable upon expiration of the Interest
Period.  Interest accrued on the 2000 Term Loan but not otherwise due and
payable on the 2000 Term Loan Maturity Date shall become due and payable on the
2000 Term Loan Maturity Date.

 

(c)                                  2009 Term Loan.  Interest on the 2009 Term
Loan shall be due and payable on the first day of each calendar month together
with equal monthly principal payments in the amount of $12,500 each, commencing
on August 1, 2009 and continuing on the first day of each month thereafter
through and including July 1, 2013, and all unpaid principal, accrued interest
and other amounts evidenced by the 2009 Term Loan Promissory Note shall be due
and payable in full on the 2009 Term Loan Maturity Date.

 

2.4.                             Prepayments.

 

(a)                                  Prepayment in Full.  Borrower shall have
the right at any time to voluntarily prepay the Loans in full and to terminate
this Agreement upon at least three (3) Business Days notice to Lender, without
premium or penalty except Borrower shall pay to Lender a prepayment surcharge
calculated in accordance with Section 2.4(c).  Prepayment in full shall be
accompanied by the payment of all accrued and unpaid interest and all Fees and
other remaining Obligations.

 

(b)                                 Partial Prepayment.  Borrower shall have the
right at any time to voluntarily prepay any portion of the 2000 Term Loan, or
any portion of the Revolving Loan subject to a Fixed Rate, or any portion of the
2009 Term Loan, upon at least three (3) Business Days notice to Lender, without
premium or penalty except Borrower shall pay to Lender, a prepayment surcharge
calculated in accordance with Section 2.4(c).  Unless otherwise approved by
Lender, any prepayment of the 2000 Term Loan shall be applied pro rata, based on
the respective aggregate principal amounts then outstanding, to 2000 Term Loan
Tranche A and 2000 Term Loan Tranche B, and shall not reduce the amount of any
installment payments to Lender.

 

(c)                                  Prepayment Surcharge.  At the time Borrower
makes any Prepayment, Borrower shall simultaneously pay to Lender a prepayment
surcharge for each Fixed Rate portion of the 2000 Term Loan, 2009 Term Loan or
Revolving Loan so prepaid, calculated as follows:

 

For the 2009 Term Loan and for each portion of the Revolving Loan or the 2000
Term Loan bearing interest at a Fixed Rate, the prepayment surcharge shall be
equal to any

 

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funding losses incurred by Lender as a result of such prepayment, including any
loss or unreimbursed expense arising from the redeployment of funds, calculated
according to any reasonable methodology established by Lender.

 

2.5.                             Interest Rate on Revolving Advances.

 

(a)                                  Base Rate.  Revolving Advances hereunder
shall bear interest at a floating rate equal the Base Rate or four percent (4%)
per annum, whichever is greater, unless Borrower elects to convert the interest
rate to a Fixed Rate for the period selected by Borrower in accordance with the
provisions of Section 2.5(b).

 

(b)                                 Fixed Rate for Revolving Loan.  Borrower
may, from time to time, elect to convert all or a portion of the outstanding
Revolving Advances to a Fixed Rate; provided, that (i) at least two (2) Business
Days prior to the proposed Interest Determination Date, Borrower has provided
Lender with written notice of such election, the requested Interest
Determination Date, the amount of the Revolving Advances to be converted, and
the requested Interest Period for the amount to be converted, (ii) at the time
of delivery of such written notice and upon the date of conversion, no Default
or Event of Default exists under this Agreement, (iii) at no time shall there be
more than five (5) outstanding tranches of the Revolving Loan bearing interest
at a Fixed Rate, (iv) the last day of the Interest Period chosen by Borrower
shall not extend beyond the Revolving Loan Maturity Date, and (v) the amount
converted to a Fixed Rate at any one time shall be not less than Fifty Thousand
Dollars ($50,000) and any amounts in excess thereof shall be in integral
multiples of Fifty Thousand Dollars ($50,000).  Any election by Borrower
pursuant to this Section 2.5(b) shall be irrevocable during the Interest Period
selected by Borrower, and that portion of the Revolving Loan so converted shall
bear interest at the applicable Fixed Rate until the expiration of the
applicable Interest Period at which time, unless another Fixed Rate has been
duly elected by Borrower pursuant to this Section 2.5(b), the interest rate for
such portion of the Revolving Loan will automatically convert to a floating rate
equal to the Base Rate or four percent (4%) per annum, whichever is greater.

 

2.6.                             Interest Rate on 2000 Term Loan Tranche A.

 

(a)                                  Base Rate.  2000 Term Loan Tranche A is
currently bearing interest at a fixed rate equal to 3.07% per annum with an
Interest Period expiring on July 1, 2009.  Upon expiration of the current
interest period 2000 Term Loan Tranche A shall bear interest at the Base Rate,
unless Borrower elects to convert the interest rate to a Fixed Rate for the
period selected by Borrower in accordance with the provisions of Section 2.6(b).

 

(b)                                 Designation of Fixed Rates.  Upon expiration
of the current Fixed Rate, Borrower may, from time to time, elect to convert all
or a portion of 2000 Term Loan Tranche A to a Fixed Rate; provided, that (i) at
least two (2) Business Days prior to the proposed Interest Determination Date,
Borrower has provided Lender with written notice of such election, the requested
Interest Determination Date, the amount of 2000 Term Loan Tranche A to be
converted, and the requested Interest Period for the amount to be converted,
(ii) at the time of delivery of such written notice and upon the date of
conversion, no Default or Event of Default exists under this Agreement, (iii) at
no time shall there be more than four (4) outstanding tranches of 2000 Term Loan
Tranche A bearing interest at a Fixed Rate, (iv) the last day of the Interest
Period chosen by Borrower shall not extend beyond the 2000 Term Loan Maturity
Date, and (v) the amount converted to a Fixed Rate at any one time shall be not
less than Fifty Thousand Dollars ($50,000) and any

 

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amounts in excess thereof shall be in integral multiples of Ten Thousand Dollars
($10,000).  Any election by Borrower pursuant to this Section 2.6(b) shall be
irrevocable during the Interest Period selected by Borrower, and that portion of
2000 Term Loan Tranche A so converted shall bear interest at the applicable
Fixed Rate until the expiration of the applicable Interest Period at which time,
unless another Fixed Rate has been duly elected by Borrower pursuant to this
Section 2.6(b), the interest rate for such portion of 2000 Term Loan Tranche A
will automatically convert to the Base Rate.

 

(c)                                  Margin Applicable to Fixed Rate Elections
for 2000 Term Loan Tranche A.  The margin applicable to 2000 Term Loan Tranche A
is 275 basis points.

 

2.7.                             Interest Rate on 2000 Term Loan Tranche B.

 

(a)                                  Fixed Rate.    The interest rate on Tranche
B is currently fixed at 6.8700% per annum with the current Interest Period set
to expire on the 2000 Term Loan Maturity Date.

 

2.8.                             Interest Rate on 2009 Term Loan.  The interest
rate payable on the 2009 Term Loan is a fixed rate of 7.50% per annum.

 

2.9.                             Other Interest Provisions.

 

(a)                                  Payments Due on Business Days.  If any
installment of interest or any other amount payable under any Loan Document
becomes due and payable on a day other than a Business Day, the payment date for
such payment shall be extended to the next succeeding Business Day and, with
respect to payments of principal or other payments that bear interest (other
than interest first due on such date), interest thereon shall be payable at the
then applicable rate during such extension; provided, however, if any
installment of interest relating to (i) Revolving Advances that have been
converted to a Fixed Rate or (ii) the 2000 Term Loan or (iii) the 2009 Term
Loan, shall become due and payable on a Saturday, the payment date for such
payment shall be the preceding Business Day.

 

(b)                                 Computation of Interest.  All computations
of interest calculated with respect to the LIBO Rate shall be made by Lender on
the basis of a three hundred sixty (360) day year, in each case for the actual
number of days occurring in the period for which such interest is payable.  All
computations of interest calculated with respect to the Base Rate shall be made
by Lender on the basis of a three hundred sixty five (365) day year, in each
case for the actual number of days occurring in the period for which such
interest is payable.   Any change in the applicable rate shall become effective
on the day such change occurs.  Each determination by Lender of an interest rate
hereunder shall be conclusive and binding for all purposes, absent manifest
error or bad faith.  2000 Term Note Tranches A and B are currently accruing
interest on the basis of a three hundred sixty-five (365) day year and actual
days elapsed until the end of their respective Interest Determination Periods. 
The 2009 Term Loan Promissory Note shall accrue interest on the basis of a three
hundred sixty-five (365) day year and actual days elapsed until the 2009 Term
Loan Maturity Date.

 

(c)                                  Default Rate.  Any overdue principal or
interest with respect to any Revolving Advance, or the 2000 Term Loan or the
2009 Term Loan, and the amount of any fees, costs, or expenses that Borrower is
obligated to pay to Lender under this Agreement or any Loan Document not paid
when due, shall bear interest, payable on demand, for each day until paid at a
rate per annum equal to the Default Rate.  In addition, upon and after the
occurrence of an Event of Default and continuing until such Event of Default has
been cured or waived in writing by Lender in

 

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accordance with the terms of this Agreement, interest shall accrue on the
Obligations at the Default Rate.  The interest rate increase to the Default Rate
shall take effect immediately upon the occurrence of an Event of Default,
without prior notice to Borrower.

 

(d)                                 Interest Not to Exceed Maximum Lawful Rate. 
Notwithstanding anything to the contrary set forth in this Agreement, if at any
time until payment in full of all of the Obligations, the rate of interest
payable hereunder exceeds the highest rate of interest permissible under any law
which a court of competent jurisdiction shall, in a final determination, deem
applicable hereto (the “Maximum Lawful Rate”), then in such event and so long as
the Maximum Lawful Rate would be so exceeded, the rate of interest payable
hereunder shall be equal to the Maximum Lawful Rate; provided, that if at any
time thereafter the rate of interest payable hereunder is less than the Maximum
Lawful Rate, Borrower shall continue to pay interest hereunder at the Maximum
Lawful Rate until such time as the total interest received by Lender hereunder,
is equal to the total interest which Lender would have received had the interest
rate payable hereunder been (but for the operation of this Section 2.9(d)) the
interest rate payable since the Closing Date.  Thereafter, the interest rate
payable hereunder shall be the rate of interest set forth herein, unless and
until the rate of interest again exceeds the Maximum Lawful Rate, in which event
this paragraph shall again apply.  In no event shall the total interest received
by Lender pursuant to the terms hereof exceed the amount which Lender could
lawfully have received had the interest due hereunder been calculated for the
full term hereof at the Maximum Lawful Rate.  In the event the Maximum Lawful
Rate is calculated pursuant to this Section 2.9(d), such interest shall be
calculated at a daily rate equal to the Maximum Lawful Rate divided by the
number of days in the year in which such calculation is made.  In the event that
a court of competent jurisdiction, notwithstanding the provisions of this
Section 2.9(d), shall make a final determination that Lender has received
interest hereunder or under any of the Loan Documents in excess of the Maximum
Lawful Rate, Lender shall to the extent permitted by applicable law, promptly
apply such excess first to any interest due and not yet paid under the Revolving
Loan and the 2000 Term Loan and the 2009 Term Loan, then to the outstanding
principal of the Revolving Loan, the 2000 Term Loan and the 2009 Term Loan
(without premium or penalty), and then to Fees and any other unpaid Obligations
and thereafter shall refund any excess to Borrower or as a court of competent
jurisdiction may otherwise order.

 

(e)                                  Additional Fixed Rate Provisions.  If at
any time Lender reasonably determines that for any reason adequate and
reasonable means do not exist for ascertaining the LIBO Rate or the LIBO Rate
generally becomes unavailable to Lender, Lender shall promptly give notice
thereof to Borrower, and upon the giving of such notice, no new Fixed Rate may
be selected by Borrower, until Lender is reasonably able to ascertain the LIBO
Rate and Lender shall promptly notify Borrower at such time; provided, that
Lender’s determination under this Section 2.9(e) as to Borrower shall be in
accordance with its treatment of other borrowers under commercial loans
generally.  In the event that any law, treaty, rule, regulation, or
determination of a court or governmental authority or any change therein or in
the interpretation or application thereof or compliance by Lender with any
request or directive (whether or not having the force of law) from any central
bank or governmental authority:

 

(i)                                     shall subject Lender to any tax of any
kind whatsoever with respect to any LIBO Rate, or change the basis of taxation
of payments to Lender of principal, interest or any

 

13

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other amount payable under any Loan Document (except for changes in the rate of
tax on the overall net income of a Lender); or

 

(ii)                                  shall impose, modify or hold applicable
any reserve, special deposit, compulsory loan, or similar requirement against
assets held by, or deposits or other liabilities in or for the account of,
advances or loans by, or other credit extended by, or any other acquisition of
funds by, any office of Lender; or

 

(iii)                               shall impose on Lender any other condition;
and the result of any of the foregoing is to increase the cost to Lender of
making, renewing, or maintaining any portion of the Revolving Loan or 2000 Term
Loan with interest rates tied to the LIBO Rate and/or to reduce any amount
receivable by Lender in connection therewith; then in any such case, Borrower
shall pay to Lender, immediately upon demand, such amount or amounts as may be
necessary to compensate Lender for any additional costs incurred by Lender
and/or reductions in amounts received by Lender which are attributable to LIBO
Rates made available to Borrower hereunder.  In determining which costs incurred
by a Lender and/or reductions in amounts received by a Lender are attributable
to such LIBO Rates, any reasonable allocation made by Lender among its
operations shall be conclusive and binding upon Borrower; provided, that
Lender’s determination under this Section 2.9(e) as to Borrower is in accordance
with its treatment of other borrowers under commercial loans generally.

 

2.10.                       Fees.  In addition to any other fees listed in this
Agreement, Borrower shall, upon the Closing Date, pay to Lender a 2009 Term Loan
origination fee in the amount of $9,000 and a Revolving Loan modification fee in
the amount of $25,000.

 

2.11.                       Fees Cumulative and Non-Refundable.  All Fees
payable under any Loan Document shall be cumulative and all Fees shall be
considered fully earned on the date of payment and shall not be refundable under
any circumstances.

 

2.12.                       Farm Credit Stock.  So long as any Indebtedness
remains outstanding under the terms of this Agreement, Borrower shall maintain
its ownership of One Thousand Dollars ($1,000) of stock in American AgCredit or
such other amount thereof as may be required by Lender.

 

2.13.                       Receipt of Payments.  Borrower shall make each
payment under this Agreement not later than 12:00 P.M. (California time) on the
day when due in lawful money of the United States of America by wire transfer of
immediately available funds to the Collection Account.  Borrower shall have
advised Lender in writing of each payment being made by Borrower no later than
2:00 p.m. (California time) on the Business Day prior to the date of making of
such payment.  For purposes of computing interest and fees and determining the
amount of funds available for borrowing by Borrower pursuant to Article II,
payments of immediately available funds by wire transfer deposited in the
Collection Account not later than 10:30 a.m. (California time) (and for which
Lender has received notice prior to the making of such payment) shall be deemed
received by Lender upon that Business Day.  If payment shall be deposited later
than 10:30 a.m. (California time) on any particular Business Day (or if Lender
was not given prior notice of the payment by 2:00 p.m. (California time) on the
Business Day preceding the date of payment), such payment shall be deemed
received on the following Business Day.  If Lender, in its sole discretion,
determines to accept from Borrower payment by checks, drafts, or similar
non-cash items, payment shall be deemed received by Lender two (2) Business Days
after notice to Lender and deposit of such payment in the Collection Account.

 

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2.14.                       Accounting.  Lender will provide to Borrower monthly
accountings of transactions under the Revolving Loan and 2009 Term Loan and
quarterly accountings of transactions under the 2000 Term Loan.  Each and every
such accounting shall (absent manifest error) be deemed final, binding, and
conclusive in all respects as to all matters reflected therein, unless Borrower
or Lender, within one hundred twenty (120) days after the date any such
accounting is rendered, shall notify Lender in writing of any objection which
Borrower or Lender may have to any such accounting, describing the basis for
such objection with specificity.  In that event, only those items expressly
objected to in such notice shall be deemed to be disputed by Borrower or
Lender.  Lender’s determination, based upon the facts available, of any item
objected to by Borrower or Lender in such notice shall (absent manifest error)
be final, binding, and conclusive, unless Borrower shall commence a judicial
proceeding to resolve such objection within sixty (60) days following Lender’s
notifying Borrower of such determination.

 

2.15.                       Taxes.

 

(a)                                  Any and all payments by Borrower hereunder
or under the Loan Documents shall be made, in accordance with this Section 2.15,
free and clear of and without deduction for any and all present or future taxes,
levies, imposts, deductions, Charges, or withholdings, and all liabilities with
respect thereto, excluding taxes imposed on or measured by the net income of
Lender by the jurisdiction under the laws of which Lender is organized or any
political subdivision thereof (all such non-excluded taxes, levies, imposts,
deductions, Charges, withholdings and liabilities being hereinafter referred to
as “Taxes”).  If Borrower shall be required by law to deduct any Taxes from or
in respect of any sum payable hereunder or under any of the Loans to Lender,
(i) the sum payable shall be increased as may be necessary so that after making
all required deductions (including deductions applicable to additional sums
payable under this Section 2.15) Lender receives an amount equal to the sum it
would have received had no such deductions been made, (ii) Borrower shall make
such deductions, and (iii) Borrower shall pay the full amount deducted to the
relevant taxing or other authority in accordance with applicable law.

 

(b)                                 In addition, Borrower agrees to pay any
present or future stamp or documentary taxes or any other sales, transfer,
excise, mortgage recording, or property taxes, Charges or similar levies that
arise from any payment made hereunder or under the Loans, or from the execution,
sale, transfer, delivery or registration of, or otherwise with respect to, this
Agreement or the Loan Documents and any other agreements and instruments
contemplated thereby (hereinafter referred to as “Other Taxes”).

 

(c)                                  Borrower shall indemnify Lender for the
full amount of Taxes or Other Taxes (including any Taxes or Other Taxes imposed
by any jurisdiction on amounts payable under this Section 2.15) paid by Lender
and any liability (including penalties, interest and expenses) arising there
from or with respect thereto, whether or not such Taxes or Other Taxes were
correctly or legally asserted.  This indemnification shall be made within thirty
(30) days from the date Lender makes written demand therefor.

 

(d)                                 Without prejudice to the survival of any
other agreement of Borrower hereunder, the agreements and obligations of
Borrower contained in this Section 2.15 shall survive the payment in full of all
Obligations.

 

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2.16.                       Capital Adequacy.

 

(a)                                  Borrower shall pay to Lender from time to
time on written request such amounts as Lender may reasonably determine to be
necessary to compensate Lender for any increased costs to Lender that it
reasonably determines are attributable to any law or regulation, or any
interpretation, directive, or request (whether or not having the force of law
and whether or not failure to comply therewith would be unlawful) of any court
or governmental or monetary authority (i) following any Regulatory Change or
(ii) implementing after the Closing Date any risk-based capital guideline or
other capital requirement (whether or not having the force of law and whether or
not the failure to comply therewith would be unlawful) heretofore or hereafter
issued by any Governmental Authority in respect of Lender’s Percentage of the
Revolving Loan or 2000 Term Loan or 2009 Term Loan (such compensation to include
an amount equal to any reduction of the rate of return on assets or equity of
Lender to a level below that which Lender could have achieved but for such law,
regulation, interpretation, directive or request); provided that with respect to
this Section 2.16, Lender shall treat Borrower as Lender generally treats its
other similarly situated borrowers.

 

(b)                                 Lender will furnish to Borrower a
certificate setting forth the basis and amount of each request by Lender for
compensation under this Section 2.16.  Determinations and allocations by Lender
for purposes of this Section 2.16 of the effect of any Regulatory Change
pursuant to or of capital maintained pursuant to this Section 2.16, on its costs
or rate of return of maintaining Revolving Advances or the 2000 Term Loan or the
2009 Term Loan and or its commitment to make Revolving Advances or the 2000 Term
Loan or the 2009 Term Loan, and of the amounts required to compensate Lender
under this Section 2.16, shall be conclusive absent manifest error or bad faith.

 

(c)                                  As used in this Section 2.16, “Regulatory
Change” shall mean any change after the Closing Date in federal, state, or
foreign law or regulations (including Regulation D) or the adoption or making
after such date of any interpretation, directive or request applying to a class
of lenders including Lender of or under any Federal, state, or foreign law or
regulations (whether or not having the force of law and whether or not failure
to comply therewith would be unlawful) by any court or governmental or monetary
authority charged with the interpretation or administration thereof.

 

ARTICLE 3

 

COLLATERAL

 

3.1.                             Borrower’s Obligations.  The Obligations of
Borrower to pay all sums due to Lender and to perform all other covenants and
agreements under this Agreement and the other Loan Documents to which Borrower
is a party, shall be secured by all Collateral to the extent provided in the
Security Documents.

 

3.2.                             Assurances.  Borrower shall, at its sole cost
and expense, execute and deliver to Lender all such further documents,
instruments, and agreements and to perform all such other acts which may be
reasonably required in the opinion of Lender to enable Lender to perfect,
protect, exercise, or enforce their respective rights as the secured parties or
beneficiaries under the Security Documents.  To the extent permitted by
applicable law, Borrower hereby authorizes Lender to file financing statements
and continuation statements with respect to the security interests granted under
the Security Documents in favor of Lender and to execute such financing
statements and

 

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continuation statements on behalf of Borrower and hereby grants Lender with a
limited power-of-attorney to do so.  Such power-of-attorney is coupled with an
interest and is irrevocable.

 

3.3.                             Real and Personal Property Collateral.   In
addition to the personal property Collateral pledged to secure the Obligations
pursuant to the Security Agreements, Borrower has delivered to Lender the
Mortgage encumbering certain real property located in the State of Hawaii.  The
Security Agreements and the Mortgage shall secure all of the Loans, including
the 2009 Term Loan.

 

ARTICLE 4

 

CONDITIONS PRECEDENT

 

4.1.                             Conditions Precedent to Closing Date. 
Notwithstanding any other provision of this Agreement and without affecting in
any manner the rights of Lender hereunder, the Closing Date shall not occur
until and unless each and every one of the following conditions has been
satisfied or waived, in Lender’s sole discretion:

 

(a)                                  Borrower shall have delivered to Lender all
documents required by Lender to be delivered on or before the Closing Date;

 

(b)                                 Lender shall have received from Borrower
current interim and, or fiscal year end financial statements, all updated
pro-forma financial information, copies of all public filings and disclosures,
evidence of receipt of all necessary governmental approvals, required
certifications, including, but not limited to, compliance with all laws, payment
of all taxes and satisfaction of all insurance requirements, and such legal
opinions as may reasonably be required by Lender;

 

(c)                                  No Material Adverse Effect shall have
occurred or shall exist;

 

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

 

(e)                                  Borrower shall have delivered to Lender the
2009 Term Loan Promissory Note in form and substance satisfactory to Lender.

 

(f)                                    Borrower shall have delivered to Lender a
mortgage modification in form and substance satisfactory to Lender and Lender’s
local counsel, to be recorded in the State of Hawaii Bureau of Conveyances for
the purpose of giving constructive notice of the existence of this Agreement and
the extension of the Mortgage to secure the 2009 Term Loan Promissory Note.

 

(g)                                 Borrower shall have obtained for Lender, at
Borrower’s expense, such endorsements as Lender may require, in Lender’s sole
discretion, to the existing lender’s policy of title insurance that insures the
Mortgage.

 

(h)                                 Borrower shall have reimbursed Lender for
its reasonable out-of-pocket expenses in connection with this Agreement,
including title insurance premiums, recording fees and the reasonable fees,
charges and disbursements of local counsel for Lender.

 

4.2.                             Conditions Precedent to Each Revolving
Advance.  It shall be a condition to the funding of each subsequent Revolving
Advance that the following statements shall be true on the date of each such
funding or advance:

 

(a)                                  All of Borrower’s representations and
warranties contained herein or in any of the Loan Documents shall be true and
correct in all material respects on and as of the Closing Date

 

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and the date of each such Revolving Advance is incurred as though made on and as
of such date, except to the extent that any such representation or warranty
expressly relates to an earlier date and for changes therein permitted or
contemplated by this Agreement.

 

(b)                                 No event shall have occurred and be
continuing, or would result from the funding of any Revolving Advance or the
2009 Term Loan, which (i) constitutes or would constitute a Default or an Event
of Default, or (ii) which has a Material Adverse Effect.

 

(c)                                  After giving effect to each Revolving
Advance, the aggregate principal amount of the Revolving Loan shall not exceed
the Maximum Revolving Loan.

 

The acceptance by Borrower of the proceeds of any Revolving Advance shall be
deemed to constitute, as of the date of such acceptance, a representation and
warranty by Borrower that the conditions in this Section 4.2 have been
satisfied.

 

ARTICLE 5

 

REPRESENTATIONS AND WARRANTIES

 

To induce Lender to enter into this Third Amended and Restated Credit Agreement
and to make the 2009 Term Loan and future Revolving Advances, as herein provided
for, Borrower makes the following representations and warranties to Lender, each
and all of which shall be true and correct as of the date of execution and
delivery of this Agreement, and shall survive the execution and delivery of this
Agreement:

 

5.1.                             Corporate Existence; Compliance with Law.  MLO
is a limited partnership duly organized, validly existing, and in good standing
under the laws of the State of Delaware.  ML Resources, Inc.  is the managing
general partner of MLO.   ML Resources, Inc. is a corporation duly organized,
validly existing and in good standing under the laws of the State of Hawaii. 
Neither Borrower has any Subsidiaries.  Each Borrower (i) is duly qualified as a
foreign corporation or limited partnership and is in good standing under the
laws of each jurisdiction where its ownership or lease of property or the
conduct of its business requires such qualification (except for jurisdictions in
which such failure to so qualify or to be in good standing would not have a
Material Adverse Effect); (ii) has the requisite corporate power and authority
and the legal right to own, pledge, mortgage or otherwise encumber and operate
all real property that it owns, to lease the real property it operates under
lease, and to conduct its business as now, heretofore, and proposed to be
conducted; (iii) has all material licenses, permits, consents, or approvals from
or by, and has made all material filings with, and has given all material
notices to, all Governmental Authorities having jurisdiction, to the extent
required for such ownership, operation, and conduct; (iv) is in compliance with
its certificate of incorporation and by-laws, or its agreement of limited
partnership, as applicable; and (v) is in compliance with all applicable
provisions of law where the failure to comply would have a Material Adverse
Effect.

 

5.2.                             Corporate Power; Authorization; Enforceable
Obligations.  The execution, delivery, and performance by Borrower of the Loan
Documents to which it is a party, and all instruments and documents required to
be delivered by Borrower under any of the Loan Documents, and the creation of
all Liens provided for in any Loan Documents: (i) are within Borrower’s
corporate or partnership power; (ii) have been duly authorized by all necessary
or proper corporate or partnership action; (iii) are not in contravention of any
provision of Borrower’s certificate of incorporation or by-laws or

 

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agreement of limited partnership, as applicable; (iv) will not violate any law
or regulation, or any order or decree of any court or governmental
instrumentality; (v) will not conflict with or result in the breach or
termination of, constitute a default under or accelerate any performance
required by, any material indenture, mortgage, deed of trust, lease, agreement
or other instrument to which Borrower is a party or by which Borrower or any of
its property is bound; (vi) will not result in the creation or imposition of any
Lien upon any of the property of Borrower other than those in favor of Lender,
all pursuant to the Loan Documents; and (vii) do not require the consent or
approval of any Governmental Authority or any other Person, except for consents
or approvals which have been duly obtained or specifically waived in writing by
Lender.  At or prior to the Closing Date, each of the Loan Documents required
hereunder to be delivered at or prior to the Closing Date shall have been duly
executed and delivered on behalf of Borrower and each shall then constitute a
legal, valid, and binding obligation of Borrower, to the extent it is a party
thereto, enforceable against it in accordance with its terms except for general
principles of equity and the effect of bankruptcy, insolvency, and other laws
affecting the rights of creditors generally.

 

5.3.                              Solvency; Projections.  Borrower is solvent
and will be solvent after completion of such acquisition and after giving effect
to the initial advance hereunder.  All budget forecasts and projections of
Borrower delivered to Lender are based upon reasonable estimates and
assumptions, all of which are fair in light of current conditions, have been
prepared on the basis of the assumptions stated therein, and reflect the
reasonable estimate of Borrower of the results of operations and other
information projected therein.

 

5.4.                              Ownership of Property; Liens.   None of the
properties and assets of Borrower are subject to any Liens, except Permitted
Encumbrances and the Lien in favor of Lender pursuant to the Security
Documents.  All real property owned or leased by Borrower on the Closing Date is
set forth on Parts (A) and (B) of the Disclosure Schedule.  Neither Borrower nor
any other party to any such lease is in default of its obligations thereunder,
except for any default which would not have a Material Adverse Effect.  All
permits required to have been issued to enable the real property owned or leased
by Borrower to be lawfully occupied and used for all of the purposes for which
they are currently occupied and used, have been lawfully issued and are, as of
the date hereof, in full force and effect, except for any permit for which the
failure of such permit to be issued and in full force and effect would not have
a Material Adverse Effect.  Borrower has not received any notice, and to
Borrower’s knowledge does not have, any pending, threatened, or contemplated
condemnation proceeding affecting any real property owned or leased by Borrower
or any part thereof, or of any sale or other disposition of any real property
owned or leased by Borrower or any part thereof in lieu of condemnation.

 

5.5.                              No Default.  Borrower is not in default, and
to Borrower’s knowledge no third party is in default, under or with respect to
any contract, agreement, lease or other instrument to which it is a party, which
default in each case or in the aggregate would have a Material Adverse Effect. 
No Default or Event of Default has occurred and is continuing.

 

5.6.                              Burdensome Restrictions.  No contract, lease,
agreement, or other instrument to which Borrower is a party or is bound and no
provision of applicable law or governmental regulation has a Material Adverse
Effect, or insofar as Borrower can reasonably foresee, may have a Material
Adverse Effect.

 

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5.7.                              Labor Matters.  There are no strikes or other
labor disputes against Borrower that are pending or, to Borrower’s knowledge,
threatened which would have a Material Adverse Effect.  Hours worked by and
payment made to employees of Borrower have not been in violation of the Fair
Labor Standards Act or any other applicable law dealing with such matters which
would have a Material Adverse Effect.  All payments due from Borrower on account
of employee health and welfare insurance which would have a Material Adverse
Effect if not paid have been paid or accrued as a liability on the books of
Borrower.

 

5.8.                              Other Ventures.  Except as set forth in
Part (C) of the Disclosure Schedule, Borrower is not engaged in any joint
venture or partnership with any other Person.

 

5.9.                              Investment Company Act.  Borrower is not an
“investment company” or an “affiliated person” of, or “promoter” or “principal
underwriter” for, an “investment company,” as such terms are defined in the
Investment Company Act of 1940, as amended.  The making of the 2009 Term Loan
and future Revolving Advances by Lender, the application of the proceeds and
repayment thereof by Borrower and the consummation of the transactions
contemplated by this Agreement and the other Loan Documents will not violate any
provision of such Act or any rule, regulation, or order issued by the Securities
and Exchange Commission thereunder.

 

5.10.                        Margin Regulations.  Borrower does not own any
“margin security”, as that term is defined in Regulations U of the Board of
Governors of the Federal Reserve System (the “Federal Reserve Board”).  The
Revolving Advances and 2009 Term Loan will not be used, directly or indirectly,
for the purpose of purchasing or carrying any margin security, for the purpose
of reducing or retiring any indebtedness which was originally incurred to
purchase or carry any margin security or for any other purpose which might cause
any of the loans under this Agreement to be considered a “purpose credit” within
the meaning of Regulation T, U, or X of the Federal Reserve Board.

 

5.11.                        Taxes.  All federal, state, local, and foreign tax
returns, reports, and statements, including information returns required to be
filed by Borrower, have been filed with the appropriate Governmental Authority
and all Charges and other impositions shown thereon to be due and payable have
been paid prior to the date on which any fine, penalty, interest, or late charge
may be added thereto for nonpayment thereof, or any such fine, penalty,
interest, late charge, or loss has been paid.  Borrower has paid when due and
payable all Charges required to be paid by it.  Proper and accurate amounts have
been withheld by Borrower from their respective employees for all periods in
full and complete compliance with the tax, social security, and unemployment
withholding provisions of applicable federal, state, local and foreign law and
such withholdings have been timely paid to the respective governmental
agencies.  None of Borrower’s tax returns, with respect to Borrower’s corporate
income, are currently being audited by the Internal Revenue Service or any other
applicable Governmental Authority.

 

5.12.                        ERISA.  Each “Plan” (as defined below) is in
compliance in all material respects with the applicable provisions of ERISA and
the Internal Revenue Code (“IRC”) and with respect to each Plan, other than a
Qualified Plan, all required contributions and benefits have been paid in
accordance with the provisions of each such Plan to the extent that the failure
to pay any such contribution or benefit would have a Material Adverse Effect. 
There are no pending or, to Borrower’s knowledge, threatened claims, actions or
lawsuits (other than claims for benefits in the normal course), asserted or
instituted against Borrower or any Plan or its assets.  Neither Borrower

 

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nor any ERISA Affiliate of either has incurred or reasonably expects to incur
any Withdrawal Liability under Section 4201 of ERISA as a result of a complete
or partial withdrawal from a Multiemployer Plan.  Borrower has not engaged in a
prohibited transaction, as defined in Section 4975 of the IRC or Section 406 of
ERISA, in connection with any Plan, which would subject Borrower (after giving
effect to any exemption) to a material tax on prohibited transactions imposed by
Section 4975 of the IRC or any other material liability.  As used above, the
term “Plan” means, with respect to Borrower or any ERISA Affiliate of either, at
any time, an employee benefit plan, as defined in Section 3(3) of ERISA, which
Borrower maintains, contributes to or has an obligation to contribute to on
behalf of participants who are or were employed by any of them.  The terms
“Qualified Plan” and “Multiemployer Plan” shall have the meaning given them in
ERISA.

 

5.13.                        No Litigation.  Except as set forth in Part (D) of
the Disclosure Schedule, no action, claim or proceeding is now pending or, to
Borrower’s knowledge, threatened against Borrower, at law, in equity or
otherwise, before any court, board, commission, agency, or instrumentality of
any federal, state, or local government or of any agency or subdivision thereof,
or before any arbitrator or panel of arbitrators, which, if determined
adversely, could have a Material Adverse Effect, nor to Borrower’s knowledge
does a state of facts exist which is reasonably likely to give rise to such
proceedings.  None of the matters set forth in Part (D) of the Disclosure
Schedule questions the validity of any of the Loan Documents or any action taken
or to be taken pursuant thereto, or would have either individually or in the
aggregate a Material Adverse Effect.

 

5.14.                        Brokers.  No broker or finder acting on behalf of
Borrower brought about the obtaining, making, or closing of the loans made
pursuant to this Agreement or the transactions contemplated by the Loan
Documents and has no obligation to any Person in respect of any finder’s or
brokerage fees in connection therewith.

 

5.15.                        Patents, Trademarks, Copyrights, and Licenses.
Borrower owns or possess all licenses, permits, franchises, authorizations,
patents, copyrights, service marks, trademarks and trade names, or rights
thereto, that individually or in the aggregate are necessary to the conduct of
Borrower’s business, without known conflict with the rights of others.  To the
best knowledge of Borrower, no product of Borrower infringes in any material
respect any license, permit, franchise, authorization, patent, copyright,
service mark, trademark and trade name or other right owned by any other
Person.  To the best knowledge of Borrower, there is no material violation by
any Person of any right of Borrower with respect to any patent, copyright,
service mark, trademark and trade name or other right owned by Borrower.

 

5.16.                        Full Disclosure.  To Borrower’s knowledge, no
information contained in this Agreement, the other Loan Documents, any budget
forecasts or projections, the financial statements delivered to Lender, or any
written statement furnished by or on behalf of Borrower pursuant to the terms of
this Agreement, which has previously been delivered to Lender, contains any
untrue statement of a material fact or omits to state a material fact necessary
to make the statements contained herein or therein not misleading in light of
the circumstances under which made.

 

5.17.                        Environmental Matters.  Borrower is and has been in
compliance with all Environmental Laws, except for such noncompliance which
would not result in Environmental Liabilities which could reasonably be expected
to exceed $100,000. Borrower has obtained, and is in compliance with, all
environmental permits required by Environmental Laws for the operations of its

 

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business, except where the failure to so obtain or comply with such
environmental permits would not result in Environmental Liabilities that could
reasonably be expected to exceed $100,000, and all such Environmental Permits
are valid, uncontested and in good standing.  Borrower is not involved in
operations and does not know of any facts, circumstances or conditions,
including any releases of Hazardous Materials, that are likely to result in any
Environmental Liabilities of Borrower that could reasonably be expected to
exceed $100,000.  There is no litigation arising under or related to any
Environmental Laws, environmental permits or Hazardous Material that seeks
damages, penalties, fines, costs or expenses in excess of $50,000 or injunctive
relief against, or that alleges criminal misconduct by, Borrower.  No notice has
been received by Borrower identifying it as a “potentially responsible party” or
requesting information under CERCLA or analogous state statutes, and to the
knowledge of Borrower, there are no facts, circumstances or conditions that may
result in Borrower being identified as a “potentially responsible party” under
CERCLA or analogous state statutes.

 

5.18.                        Insurance Policies.  Borrower has disclosed to
Lender in writing all insurance of any nature maintained for current occurrences
by Borrower, as well as a summary of the terms of such insurance.  Borrower
shall maintain “All Risk” physical damage insurance on all of Borrower’s
tangible real and personal property, wherever located, and covers, without
limitation, fire and extended coverage, boiler and machinery coverage, liquids,
theft, burglary, explosion, collapse, and all other hazards and risks ordinarily
insured against by owners or users of such properties in similar businesses. 
All policies of insurance on such real and personal property contain a lender’s
loss payable endorsement, in form and substance acceptable to Lender, showing
loss payable to Lender (Form 438 BFU or its equivalent) and extra expense and
business interruption endorsements.  Such endorsement, or an independent
instrument furnished to Lender, provides that the insurance companies will give
Lender at least thirty (30) days prior written notice before any such policy or
policies of insurance shall be altered or canceled and that no act or default of
Borrower or any other Person shall affect the right of Lender to recover under
such policy or policies of insurance in case of loss or damage.  In addition,
Borrower shall maintain the following types of insurance coverage, in such
amounts as may be approved by Lender: (a) comprehensive general liability
insurance on an “occurrence basis” against claims for personal injury, bodily
injury and property damage, including premises/operations, broad form
contractual liability, underground, explosion and collapse hazard, independent
contractors, broad form property coverage, products and completed operations
liability; (b) statutory limits of worker’s compensation insurance,
(c) automobile liability insurance for all owned, non-owned or hired automobiles
against claims for personal injury, bodily injury, and property damage; and
(d) umbrella insurance.  All of such policies are in full force and effect and
in form and with insurers recognized as adequate by Lender, and provide coverage
of such risks and for such amounts as are customarily maintained for businesses
of the scope and size of Borrower’s and as otherwise acceptable to Lender.  Each
insurance policy contains a clause which provides that Lender’s interest under
such policy shall not be invalidated by any act or omission to act of, or any
breach of warranty by, the insured, or by any change in the title, ownership or
possession of the insured property, or by the use of the property for purposes
more hazardous than is permitted in such policy.  Borrower has delivered to
Lender a policy of insurance that evidences the existence of each policy of
insurance, payment of all premiums therefor and compliance with all provisions
of this Agreement.

 

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5.19.                        PACA.  Borrower is not a “dealer,” “commission
merchant,” or “broker” under PACA, and Borrower’s assets are not subject to the
trust provisions provided for under PACA.

 

ARTICLE 6

 

FINANCIAL STATEMENTS AND INFORMATION

 

6.1.                            Reports and Notices.  Borrower covenants and
agrees that it shall deliver to Lender:

 

(a)                                  Within fifteen (15) days after the end of
each calendar month ending January 31, February 28/29, April 30, May 31,
July 31, August 31, October 31 and November 30, and forty five (45) days after
the end of each calendar quarter ending March 31, June 30, September 30 and
December 31  (i) financial and other information requested by Lender, including
an internally-prepared (or publicly-filed, if available) statement of income and
cash flow, balance sheet (and management letter, if the month end is also a
Fiscal Quarter end), each of which shall provide comparisons to the prior year’s
equivalent period and to the budgets provided to Lender, (ii) the certification
of the chief financial officer of Borrower that all such financial statements
and schedules are complete and correct and present fairly in accordance with
GAAP (subject to normal year-end adjustments), the financial position, the
results of operations and the statements of cash flows of Borrower as at the end
of such month (and for the Fiscal Quarter just ended, if applicable), and that
there was no Default or Event of Default in existence as of such time; and
(iii) if the month end is also a Fiscal Quarter end, a certificate in the form
attached hereto as Exhibit B, containing the certification of Borrower’s chief
financial officer that Borrower has complied with all of the covenants set forth
in Section 8.12 as of the end of such Fiscal Quarter;

 

(b)                                 Within ninety (90) days after the end of
each Fiscal Year, audited financial statements, consisting of balance sheets and
statements of income and retained earnings and cash flows, setting forth in
comparative form in each case the figures for the previous Fiscal Year, which
financial statements shall be prepared in accordance with GAAP, certified
without qualification by a firm of independent certified public accountants of
recognized national standing selected by Borrower and acceptable to Lender, and
accompanied by (i) a report from such accountants to the effect that in
connection with their audit examination, nothing has come to their attention to
cause them to believe that a Default or Event of Default had occurred and that,
to the best of their knowledge, Borrower was in compliance with all the
covenants set forth in Section 8.12 as of the end of such Fiscal Year, (ii) the
annual letter from Borrower’s chief financial officer to such accountants in
connection with their audit examination detailing Borrower’s contingent
liabilities and material litigation matters involving Borrower, (iii) a
certification of the chief financial officer of Borrower that all such financial
statements are complete and correct and present fairly in accordance with GAAP
the financial position, the results of operations and the statements of cash
flow of Borrower as at the end of such year and for the period then ended and
that there was no Default or Event of Default in existence as of such time, and 
(iv) a certificate in the form attached hereto as Exhibit B, containing the
certification of Borrower’s chief financial officer that Borrower has complied
with all of the covenants set forth in Section 8.12 as of the end of such Fiscal
Year;

 

(c)                                  Within ninety (90) days after the start of
any Fiscal Year, an annual budget and forecast for such Fiscal Year,
substantially in the form provided to Lender prior to the Closing Date, and
containing such information as Lender shall request;

 

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(d)                                 Within ninety (90) days after completion of
crop harvesting, an annual crop production report containing such information as
Lender shall request;

 

(e)                                  As soon as practicable, but in any event
within one (1) Business Day after Borrower becomes aware of the existence of any
Default or Event of Default, or any development or other information which would
have a Material Adverse Effect, telephonic notice specifying the nature of such
Default or Event of Default or development or information, including the
anticipated effect thereof, which notice shall be promptly confirmed in writing
within three (3) Business Days;

 

(f)                                    Copies of all federal, state, local and
foreign tax returns, information returns and reports in respect of income,
franchise or other taxes on or measured by income (excluding sales, use or like
taxes) filed by Borrower; and

 

(g)                                 Such other information respecting Borrower’s
business, financial condition or prospects as Lender may, from time to time,
reasonably request.

 

6.2.                            Communication with Accountants.   Lender is
authorized to communicate directly with Borrower’s independent certified public
accountants and tax advisors, and such accountants and tax advisors are hereby
authorized to disclose directly to Lender any and all financial information
requested by Lender.

 

ARTICLE 7

 

AFFIRMATIVE COVENANTS

 

Borrower covenants and agrees that, unless Lender shall have otherwise
consented, Borrower shall comply with and observe each of the following
covenants.

 

7.1.                              Maintenance of Existence; Conduct of
Business.  Borrower shall: (a) do or cause to be done all things necessary to
preserve and keep in full force and effect its corporate or partnership
existence and its rights and franchises; (b) continue to conduct its business
substantially as now conducted or as otherwise permitted hereunder; and
(c) maintain all of its property that is necessary or useful in the proper
conduct of its business in good working condition (taking into consideration
ordinary wear and tear).

 

7.2.                              Payment of Obligations.  Borrower shall pay
and discharge or cause to be paid and discharged promptly all Charges imposed
upon it, its income, and profits, or any of its property, and lawful claims for
labor, materials, supplies, and services or otherwise before any thereof shall
become in default, except for those that are being contested in good faith by
proper legal actions or proceedings.

 

7.3.                              Books and Records.  Borrower shall keep
adequate records and books of account with respect to its business activities,
in which proper entries, reflecting all of its financial transactions, are made
in accordance with GAAP and on a basis consistent with the financial statements
delivered to Lender.

 

7.4.                              Litigation.  Borrower shall notify Lender in
writing, promptly upon learning thereof, of any litigation commenced or
threatened against Borrower, and of the institution against it of any suit or
administrative proceeding that (a) may involve an amount in excess of One
Hundred Thousand Dollars ($100,000) or (b) may have a Material Adverse Effect if
adversely determined.

 

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7.5.                              Insurance.  Borrower shall, at its sole cost
and expense, maintain the policies of insurance described in Section 5.18 in
form and with insurers recognized as adequate by Lender, and all such policies
shall be in such amounts as may be reasonably satisfactory to Lender.  In
addition, Borrower shall notify Lender promptly of any occurrence causing a
material loss or decline in value of any real or personal property and the
estimated (or actual, if available) amount of such loss or decline.  Borrower
hereby directs all present and future insurers under its “All Risk” policies of
insurance to pay all proceeds payable thereunder directly to Lender.  Borrower
irrevocably makes, constitutes and appoints Lender (and all officers, employees,
or agents designated by Lender) as Borrower’s true and lawful agent and
attorney-in-fact for the purpose of making, settling, and adjusting claims under
the “All Risk” policies of insurance, endorsing the name of Borrower on any
check, draft, instrument or other item of payment for the proceeds of such “All
Risk” policies of insurance, and for making all determinations and decisions
with respect to such “All Risk” policies of insurance; provided Lender agrees
that it shall not exercise its right to settle or adjust any claim unless an
Event of Default has occurred and is continuing.  In the event Borrower at any
time or times hereafter shall fail to obtain or maintain any of the policies of
insurance required above or to pay any premium in whole or in part relating
thereto, Lender, without waiving or releasing any Obligations or Default or
Event of Default hereunder, may at any time or times thereafter (but shall not
be obligated to) obtain and maintain such policies of insurance and pay such
premium and take any other action with respect thereto which Lender deems
advisable.  All sums so disbursed by Lender, including reasonable attorneys’
fees, court costs, expenses and other charges relating thereto, shall be
payable, on demand, by Borrower to Lender and shall be additional Obligations
hereunder secured by the Collateral.  Lender reserves the right at any time,
upon review of Borrower’s risk profile, to require additional forms and limits
of insurance to, in Lender’s reasonable judgment, after consultation with
Borrower, adequately protect Lender’s interests.

 

7.6.                              Compliance with Laws and Agreements.  Borrower
shall comply in all material respects with all federal, state and local laws and
regulations applicable to it.  Borrower shall perform, within all required time
periods, all of its obligations and enforce all of its rights under each
material agreement to which it is a party.

 

7.7.                              Environmental Matters.  Borrower shall
(i) comply in all material respects with the Environmental Laws applicable to
it, (ii) notify Lender promptly after knowledge in the event of any spill or
release which is reportable to any Governmental Authority upon any premises
owned or occupied by it, and (iii) promptly forward to Lender a copy of any
order, notice, permit, application, or any other communication or report
received by Borrower in connection with any matter relating to the Environmental
Laws that may materially affect such premises.

 

ARTICLE 8

 

NEGATIVE COVENANTS

 

Borrower covenants and agrees that, unless Lender shall have otherwise
consented, Borrower shall comply with and observe each of the following
covenants.

 

8.1.                              Mergers, Etc.; Change of Business.  Borrower
shall not, directly or indirectly, by operation of law or otherwise, merge with,
consolidate with, acquire all or substantially all of the assets or capital
stock of, or otherwise combine with, any Person or form any Subsidiary. 
Borrower shall not engage in any business other than those businesses in which
Borrower is engaged on the Closing Date.

 

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8.2.                              Capital Structure.  Borrower shall not make
any material changes in its capital structure or amend its certificate of
incorporation, by-laws, limited partnership agreement without the prior written
consent of Lender, which consent will not be unreasonably withheld.

 

8.3.                              Investments; Loans and Advances.  Borrower
shall not make any investment in, or make or accrue loans or advances of money
to any Person, through the direct or indirect holding of securities or
otherwise; provided, that Borrower may: (a) make and maintain investments in
cash equivalents, (b) make and maintain loans or advances to, any of its
wholly-owned Subsidiaries (provided that the creation of such wholly-owned
Subsidiary has been approved by Lender and has guaranteed all Obligations and
secured such guarantee by a first priority security interest in all of such
Subsidiary’s assets), (c) loans to employees to the extent disclosed to and
approved by Lender, (d) investments existing on the Closing Date to the extent
approved by Lender.

 

8.4.                              Indebtedness.  Except as otherwise expressly
permitted by this Agreement, Borrower shall not create, incur, assume, or permit
to exist any Indebtedness, except (a) Indebtedness secured by Permitted
Encumbrances, (b) the Revolving Loan, (c) the 2000 Term Loan, (d) the 2009 Term
Loan, (e) all unfunded pension fund and other employee benefit plan obligations
and liabilities but only to the extent they are permitted to remain unfunded
under applicable law, (f) Indebtedness under Capital Leases to the extent
permitted under this Agreement, but not to exceed One Million Two Hundred
Thousand Dollars ($1,200,000) at any time outstanding, (g) Indebtedness secured
by property of Borrower other than the Collateral in an aggregate amount not to
exceed Five Hundred Thousand Dollars ($500,000), (h) unsecured Indebtedness in
an aggregate amount not to exceed One Hundred Thousand Dollars ($100,000), and
(i) purchase money indebtedness with respect to the acquisition of new capital
assets so long as such Indebtedness is secured only by the particular asset
being acquired.

 

8.5.                              Transactions with Affiliates.  Borrower shall
not enter into or be a party to any transaction with (including the purchase
from, sale to, or exchange of property with, or the rendering of any service by
or for) any Affiliate of Borrower, except in the ordinary course of and pursuant
to the reasonable requirements of Borrower’s business and upon fair and
reasonable terms that are fully disclosed to Lender and are no less favorable to
Borrower than would be obtained in a comparable arm’s-length transaction with a
Person not an Affiliate of Borrower; provided, that MLO  may reimburse ML
Resources, Inc. for reasonable management expenses.

 

8.6.                              Liens.  Borrower shall not create or permit
any Lien on any of its properties or assets except the Lien of Lender under the
Loan Documents and Permitted Encumbrances.

 

8.7.                              Sales of Assets.  Borrower shall not sell,
transfer (including any consensual transfer such as the execution of a deed in
lieu of foreclosure), convey, assign, or otherwise dispose of any of its assets
or properties involved in Borrower’s macadamia operations; provided, that the
foregoing shall not prohibit (i) the sale of inventory in the ordinary course of
business, (ii) disposal of worn out or obsolete assets, (iii) the sale or other
disposal of used equipment which is being replaced by equipment having a similar
value or serving a similar function, and (iv) sale of other assets in an
aggregate amount not to exceed One Million Dollars ($1,000,000) from and after
the Closing Date.

 

8.8.                              Cancellation of Claims.  Borrower shall not
cancel any claim or debt owing to it, except for reasonable consideration or in
the ordinary course of business.

 

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8.9.                              Restricted Payments.  Borrower shall not make
any Restricted Payments without Lender’s prior written consent, which consent
may be withheld in Lender’s sole and absolute discretion.

 

8.10.                        Environmental Compliance.  Borrower shall not and
shall not knowingly permit any other Person within the control of Borrower to
cause or permit the presence, use, generation, manufacture, installation,
release, discharge, storage or disposal of any Hazardous Materials on, under, in
or about any of its real estate or the transportation of any Hazardous Materials
to or from any real estate where such presence, use, generation, manufacture,
installation, release, discharge, storage or disposal would violate any
Environmental Laws, the violation of which would have a Material Adverse Effect.

 

8.11.                        PACA License.  Borrower shall not obtain or attempt
to obtain a dealer license under PACA.

 

8.12.                        Financial Covenants.

 

(a)                                  Minimum Tangible Net Worth.  MLO shall not
permit its Tangible Net Worth, as of the last day of any fiscal year beginning
with fiscal year 2009, to be less than the applicable “Minimum Tangible Net
Worth Amount.”  The Minimum Tangible Net Worth Amount shall initially be
Forty-One Million Sixty-Eight Thousand Dollars ($41,068,000.00) and shall be
increased dollar for dollar by the amount of positive Consolidated Net Income
achieved by MLO, beginning the first day of fiscal year 2009 and thereafter.

 

(b)                                 Minimum Consolidated EBITDA.               
MLO shall have Consolidated EBITDA of not less than $1,500,000 for each rolling
four-quarter period, beginning with the four quarters ended September 30, 2009,
followed by the four quarters ended October 31, 2009, and so on for each rolling
four-quarter period thereafter.

 

ARTICLE 9

 

INDEMNITY

 

9.1.                              Indemnification.  Borrower shall indemnify and
hold Lender and Lender’s affiliates, subsidiaries, officers, directors,
employees, attorneys, and agents (each, an “Indemnified Person”), harmless from
and against any and all suits, actions, proceedings, claims, damages, losses,
liabilities and expenses (including reasonable attorneys’ fees and disbursements
(including allocated costs of internal counsel) and other costs of
investigations or defense, including those incurred upon any appeal) which may
be instituted or asserted against or incurred by such Indemnified Person as a
result of credit having been extended under this Agreement and the other Loan
Documents or in connection with Lender’s interest in any Collateral; provided,
that Borrower shall not be liable for any indemnification to such Indemnified
Person to the extent that any such suit, action, proceeding, claim, damage,
loss, liability or expense was the result of any action by such Indemnified
Person or results from such Indemnified Person’s gross negligence or willful
misconduct.  NEITHER LENDER NOR ANY OTHER INDEMNIFIED PERSON SHALL BE
RESPONSIBLE OR LIABLE TO BORROWER, ANY OTHER PERSON, ANY SUCCESSOR, ASSIGNEE, OR
THIRD PARTY BENEFICIARY OF SUCH PERSON OR ANY OTHER PERSON ASSERTING CLAIMS
DERIVATIVELY THROUGH SUCH PARTY, FOR INDIRECT, PUNITIVE, EXEMPLARY, OR
CONSEQUENTIAL DAMAGES WHICH MAY BE ALLEGED AS A RESULT OF CREDIT HAVING BEEN
EXTENDED UNDER THE LOAN DOCUMENTS.

 

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ARTICLE 10

 

EVENTS OF DEFAULT; RIGHTS AND REMEDIES

 

10.1.                        Events of Default.  The occurrence of any one or
more of the following events (regardless of the reason therefor) shall
constitute an “Event of Default” hereunder:

 

(a)                                  Failure to Pay Principal.  Borrower shall
fail to make any payment of principal owing with respect to the Revolving Loan
or any regularly scheduled payment of principal owing with respect to the 2000
Term Loan or the 2009 Term Loan when due and payable and such failure shall
remain uncured for a period of two (2) Business Days; provided that the failure
to make such payment may only be cured by paying the amount due together with
interest on such amount at the Default Rate.

 

(b)                                 Failure to Pay Interest or Other Amounts
Other than Expenses.  Borrower shall fail to make any payment of interest on the
Revolving Loan, the 2000 Term Loan, the 2009 Term Loan, or any other amount
(other than expenses payable under any Loan Document) owing with respect to the
Revolving Loan, the 2000 Term Loan, the 2009 Term Loan or any of the other
Obligations when due and payable or declared due and payable and such failure
shall remain uncured for a period of two (2) Business Days; provided that the
failure to make such payment may only be cured by paying the amount due together
with interest on such amount at the Default Rate.

 

(c)                                  Failure to Pay Expenses.  Borrower shall
fail to make any payment of any expenses payable under any Loan Document, and
such failure shall have remained uncured for a period of ten (10) days after
Borrower has received notice of such failure from Lender; provided that the
failure to make such payment may only be cured by paying the amount due together
with interest on such amount at the Default Rate.

 

(d)                                 Breach of Covenants or Other Provisions of
This Agreement.  Borrower shall fail or neglect to perform, keep, or observe any
other provision of this Agreement or of any of the other Loan Documents, and the
same is by its nature incapable of being cured or shall remain unremedied for a
period ending on the first to occur of twenty (20) days after Borrower shall
receive written notice of any such failure from Lender or thirty (30) days after
Borrower shall become aware thereof.  A breach by Borrower of the financial
covenants set forth in Section 8.12 are incapable of being cured.

 

(e)                                  Default Under Other Indebtedness.  A
default shall occur under any other agreement, document, or instrument to which
Borrower is a party or by which Borrower or Borrower’s property is bound and
such default involves the failure to make any payment (whether of principal,
interest, or otherwise) due (whether by scheduled maturity, required prepayment,
acceleration, demand, or otherwise, but only after expiration of any cure
periods provided by the underlying agreement, document, or instrument) in
respect of any Indebtedness of Borrower in excess of One Hundred Thousand
Dollars ($100,000).

 

(f)                                    Breach of Representation or Warranty. 
Any material representation or warranty herein or in any Loan Document or in any
written statement pursuant thereto or hereto, report, financial statement, or
certificate made or delivered to Lender by Borrower shall be untrue or

 

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incorrect, as of the date when made or deemed made (including those made or
deemed made pursuant to Section 4.2) and the same is by its nature incapable of
being cured or shall remain unremedied for a period ending on the first to occur
of twenty (20) days after Borrower shall receive written notice of any such
failure from Lender or thirty (30) days after Borrower shall become aware
thereof.

 

(g)                                 Loss of Assets.  (i) Any of the assets of
Borrower shall be attached, seized, levied upon, or subjected to a writ or
distress warrant, or come within the possession of any receiver, trustee,
custodian, or assignee for the benefit of creditors of Borrower and shall remain
unstayed or undismissed for thirty (30) consecutive days, (ii) any Person other
than Borrower shall apply for the appointment of a receiver, trustee or
custodian for any of Borrower’s assets and such application shall remain
unstayed or undismissed for thirty (30) consecutive days, or (iii) Borrower
shall have concealed, removed, or permitted to be concealed or removed, any part
of its property, with intent to hinder, delay, or defraud its creditors or any
of them or made or suffered a transfer of any of its property or the incurring
of an obligation which may be fraudulent under any bankruptcy, fraudulent
conveyance or other similar law.

 

(h)                                 Involuntary Insolvency Actions.  A case or
proceeding shall have been commenced against Borrower in a court having
competent jurisdiction seeking a decree or order (i) under the Bankruptcy Code,
or any other applicable federal, state, or foreign bankruptcy or other similar
law, (ii) appointing a custodian, receiver, liquidator, assignee, trustee or
sequestrator (or similar official) of Borrower or of any substantial part of its
properties, or (iii) ordering the winding-up or liquidation of the affairs of
Borrower and such case or proceeding shall remain undismissed or unstayed for
thirty (30) consecutive days or such court shall enter a decree or order
granting the relief sought in such case or proceeding.

 

(i)                                     Voluntary Insolvency Actions.  Borrower
shall (i) file a petition seeking relief under the Bankruptcy Code, or any other
applicable federal, state or foreign bankruptcy or other similar law,
(ii) consent to the institution of proceedings thereunder or to the filing of
any such petition or to the appointment of or taking possession by a custodian,
receiver, liquidator, assignee, trustee, or sequestrator (or similar official)
of Borrower or of any substantial part of its properties, (iii) fail generally
to pay its debts as such debts become due, or (iv) take any corporate action in
furtherance of any such action.

 

(j)                                     Judgments.  Final judgment or judgments
for the payment of money in excess of Fifty Thousand Dollars ($50,000) in the
aggregate shall be rendered against Borrower and the same shall not be (i) fully
covered by insurance, or (ii) vacated, stayed, bonded, paid, or discharged for a
period of thirty (30) days.

 

(k)                                  Material Adverse Effect.  There shall occur
any event or circumstance that constitutes a Material Adverse Effect.

 

10.2.                        Acceleration; Remedies.

 

(a)                                  Automatic Acceleration; Exercise of
Remedies.  If an Event of Default shall occur and be continuing: (i) all
Obligations and any indebtedness of Borrower under any of the Loan Documents,
any term thereof to the contrary notwithstanding, shall at Lender’s option and
without notice be accelerated and become immediately due and payable without
presentment, demand,

 

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protest, or notice of dishonor, all of which are hereby expressly waived by
Borrower; and (ii) the obligation, if any, of Lender to make further Revolving
Advances shall immediately cease and terminate.  Lender shall have all rights,
powers, and remedies available under each of the Loan Documents, including the
right to resort to any or all Collateral for any Obligations and to exercise any
or all of the rights of a beneficiary or secured party with respect to the
Collateral pursuant to applicable law.  All rights, powers and remedies of
Lender in connection with each of the Loan Documents (x) may be exercised at any
time and from time to time after the occurrence and during the continuation of
an Event of Default, (y) are cumulative and not exclusive, and (z) shall be in
addition to any other rights, powers or remedies provided by law or equity.   
Without limiting the foregoing, Lender may, as provided in the Farm Credit Act
of 1971, as amended, retire and cancel all or any portion of Borrower’s stock or
other equities in Lender and apply the proceeds thereof to the Obligations.  In
addition, Lender may hold, set off, sell, and/or apply against Borrower’s
indebtedness any and all cash, accounts, securities, instruments, documents, or
other property in Lender’s possession or under its control.

 

(b)                                 Payments to Third Parties.  At its sole
discretion and without any obligation to do so, Lender may pay any amount to any
Person as Lender deems reasonably necessary to preserve the value of, avoid loss
of or damage to, or prevent foreclosure, sale, or forfeiture of any of the
Collateral, including bidding at or redeeming from any sale of Collateral. Any
amounts paid or expended by Lender in connection herewith shall constitute
Obligations which shall be payable on demand and which shall bear interest at
the Default Rate from the date paid by Lender.

 

(c)                                  Appointment of Receiver.  After the
occurrence of an Event of Default, Lender may (but shall not be obligated to)
seek to obtain the appointment of a receiver who shall be vested with any and
all such powers and rights as Lender may request of the court, including the
right (i) to sell the Collateral at one or more private or public sales, (ii) to
undertake cultivation, harvest, purchasing, processing, sales, collections, or
other work in connection with any Collateral (or any portion thereof) in
accordance with this Agreement and the other Loan Documents (or any other plan
of cultivation, harvest, processing, preservation or maintenance approved by
Lender and the receiver or the court), and (iii) to exercise any or all such
rights, powers or privileges as Borrower or Lender might exercise on its own
behalf.

 

10.3.                        Distribution and Application of Amounts Received
After an Event of Default.  Any amounts received by Lender on account of the
Obligations after an Event of Default, whether from voluntary payment by
Borrower, from a foreclosure sale, or from some other source shall be
distributed against such portions of the Obligations and in such order as
Lender, in its sole discretion, shall determine.  Borrower irrevocably waives
the right to direct the application of any and all payments at any time or times
hereafter received by Lender from or on behalf of Borrower, and Borrower
irrevocably agrees that Lender shall have the continuing exclusive right to
apply any and all such payments against the then due and payable Obligations of
Borrower as Lender may deem advisable.

 

10.4.                        Waivers by Borrower.  Except as otherwise provided
for in this Agreement, Borrower waives (i) presentment, demand and protest and
notice of presentment, dishonor, notice of intent to accelerate, notice of
acceleration, protest, default, nonpayment, maturity, release, compromise,
settlement, extension, or renewal of any or all commercial paper, accounts,
contract rights, documents, instruments, chattel paper and guaranties at any
time held by Lender on which Borrower

 

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may in any way be liable and hereby ratifies and confirms whatever Lender may do
in this regard, (ii) all rights to notice and a hearing prior to Lender’s taking
possession or control of, or to Lender’s replevy, attachment or levy upon, the
Collateral or any bond or security which might be required by any court prior to
allowing  Lender to exercise any of its remedies, and (iii) the benefit of all
valuation, appraisal and exemption laws.

 

ARTICLE 11

 

MISCELLANEOUS

 

11.1.                        Successors and Assigns.  This Agreement and the
other Loan Documents shall be binding on and shall inure to the benefit of
Borrower and Lender and their respective successors and assigns, except as
otherwise provided herein or therein.  Borrower may not assign, transfer,
hypothecate, or otherwise convey its rights, benefits, obligations, or duties
hereunder or thereunder without the prior express written consent of Lender. 
Any purported assignment, transfer, hypothecation, or other conveyance by
Borrower without the prior express written consent of all of Lender shall be
void.  Lender may sell, assign, transfer, grant a participation in, or otherwise
dispose of all or any portion of its interest in this Agreement at any time
without consent of Borrower.  In connection therewith, Lender shall be entitled
to provide to any assignee or participant or prospective assignee or participant
such information pertaining to Borrower as Lender may deem appropriate or such
assignee or participant or prospective assignee or participant may request;
provided, that such assignee or participant or prospective assignee or
participant shall agree (a) to treat in confidence such information, and (b) not
to make use of such information for purposes of transactions other than
contemplated by such assignment or participation.

 

11.2.                        Complete Agreement; Modification of Agreement;
Consents and Waivers.  The Loan Documents constitute the complete agreement
between the parties with respect to the subject matter hereof and may not be
modified, altered, or amended except by an agreement in writing executed by
Borrower and Lender.  No amendment or waiver of any provision of this Agreement
or any Loan Document, nor consent to any departure by Borrower therefrom, shall
in any event be effective unless the same shall be in writing and executed by
Lender.

 

11.3.                        Fees and Expenses.  Borrower shall reimburse Lender
for all reasonable fees, costs, and expenses incurred in connection with:
(a) the preparation and negotiation of the Loan Documents (including the
reasonable fees and expenses of internal counsel, and appraisers and
consultants, retained in connection with the Loan Documents and the transactions
contemplated thereby and advice in connection therewith); (b) any amendment,
modification, or waiver of, or consent with respect to, any of the Loan
Documents; (c) any advice in connection with the administration of the Revolving
Loan, the 2000 Term Loan, the 2009 Term Loan, this Agreement, any Loan Document,
or the Collateral; (d) any litigation, contest, dispute, suit, proceeding, or
action (whether instituted by Lender, Borrower or any other Person) in any way
relating to the Collateral, any of the Loan Documents or any other agreements to
be executed or delivered in connection therewith or herewith, including any
litigation, contest, dispute, suit, case, proceeding or action, and any appeal
or review thereof, in connection with a case commenced by or against Borrower or
any other Person that may be obligated to Lender by virtue of this Agreement, or
the other Loan Documents, under the Bankruptcy Code, or any other applicable
federal, state or foreign bankruptcy or other similar law (including the seeking
of relief from the automatic stay or proposal of opposition

 

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to a plan of reorganization); (e) any attempt to enforce any rights of Lender
against Borrower or any other Person that may be obligated to Lender by virtue
of any of the Loan Documents; or (f) any attempt to (i) monitor the Revolving
Loan, 2000 Term Loan or 2009 Term Loan, (ii) evaluate, observe, assess Borrower
or its affairs, and (iii) verify, protect, evaluate, assess, appraise, collect,
sell, liquidate or otherwise dispose of the Collateral, including  and field
inspections; then, in any such event, the reasonable attorneys’ and other
professional and service providers’ fees (including internally-allocated costs
of in-house counsel) arising from such services, including those of any
appellate proceedings, and all expenses, costs, charges, and other fees incurred
by such counsel  and others in any way or respect arising in connection with or
relating to any of the events or actions described in this Section 11.3, shall
be payable, on demand, by Borrower to Lender and shall be additional Obligations
secured under this Agreement and the other Loan Documents by all of the
Collateral.

 

11.4.                        Access.  Borrower shall provide access to Lender,
exercisable as frequently as Lender reasonably determines to be appropriate,
upon reasonable advance notice (unless an Event of Default shall have occurred
and be continuing, in which event no notice shall be required and Lender shall
have access at any and all times), during normal business hours (or at such
other times as may reasonably be requested by Lender), to inspect the properties
and facilities of Borrower and to inspect, audit, and make extracts from all of
Borrower’s records, files, and books of account and Borrower shall make such
items available to Lender.

 

11.5.                        No Waiver by Lender.  Lender’s failure, at any time
or times, to require strict performance by Borrower of any provision of this
Agreement and any of the other Loan Documents shall not waive, affect, or
diminish any right of Lender thereafter to demand strict compliance and
performance therewith.  Any suspension or waiver by Lender of an Event of
Default by Borrower under the Loan Documents shall not suspend, waive, or affect
any other Event of Default by Borrower under this Agreement and any of the other
Loan Documents whether the same is prior or subsequent thereto and whether of
the same or of a different type.  None of the undertakings, agreements,
warranties, covenants, and representations of Borrower contained in this
Agreement or any of the other Loan Documents and no Default or Event of Default
by Borrower under this Agreement and no defaults by Borrower under any of the
other Loan Documents shall be deemed to have been suspended or waived by Lender,
unless such suspension or waiver is by an instrument in writing signed by an
officer of Lender, and directed to Borrower specifying such suspension or
waiver.

 

11.6.                        Severability.  Wherever possible, each provision of
this Agreement shall be interpreted in such manner as to be effective and valid
under applicable law, but if any provision of this Agreement shall be prohibited
by or invalid under applicable law, such provision shall be ineffective to the
extent of such prohibition or invalidity, without invalidating the remainder of
such provision or the remaining provisions of this Agreement.

 

11.7.                        Parties.  This Agreement and the other Loan
Documents shall be binding upon, and inure to the benefit of, the successors of
Borrower, Lender and the assigns, transferees and endorsees of Lender.

 

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11.8.                        GOVERNING LAW.   EXCEPT AS OTHERWISE EXPRESSLY
PROVIDED IN ANY OF THE LOAN DOCUMENTS, IN ALL RESPECTS, INCLUDING ALL MATTERS OF
CONSTRUCTION, VALIDITY AND PERFORMANCE, THIS AGREEMENT AND THE OBLIGATIONS
ARISING HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE
WITH, THE LAWS OF THE STATE OF CALIFORNIA APPLICABLE TO CONTRACTS MADE AND
PERFORMED IN SUCH STATE, WITHOUT REGARD TO THE PRINCIPLES THEREOF REGARDING
CONFLICT OF LAWS, AND ANY APPLICABLE LAWS OF THE UNITED STATES OF AMERICA. 
BORROWER HEREBY CONSENTS AND AGREES THAT THE SUPERIOR COURTS OF SAN FRANCISCO
COUNTY, CALIFORNIA, OR, AT LENDER’S OPTION, THE UNITED STATES DISTRICT COURT FOR
THE NORTHERN DISTRICT OF CALIFORNIA, SHALL HAVE NON-EXCLUSIVE JURISDICTION TO
HEAR AND DETERMINE ANY CLAIMS OR DISPUTES BETWEEN BORROWER AND LENDER PERTAINING
TO THIS AGREEMENT OR TO ANY MATTER ARISING OUT OF OR RELATED TO THIS AGREEMENT. 
BORROWER EXPRESSLY SUBMITS AND CONSENTS IN ADVANCE TO SUCH JURISDICTION IN ANY
ACTION OR SUIT COMMENCED IN ANY SUCH COURT, AND BORROWER HEREBY WAIVES ANY
OBJECTION WHICH BORROWER MAY HAVE BASED UPON LACK OF PERSONAL JURISDICTION,
IMPROPER VENUE OR FORUM NON CONVENIENS AND HEREBY CONSENTS TO THE GRANTING FOR
SUCH LEGAL OR EQUITABLE RELIEF AS IS DEEMED APPROPRIATE BY SUCH COURT.  BORROWER
HEREBY WAIVES PERSONAL SERVICE OF THE SUMMONS, COMPLAINT, AND OTHER PROCESS
ISSUED IN ANY SUCH ACTION OR SUIT AND AGREES THAT SERVICE OF SUCH SUMMONS,
COMPLAINT AND OTHER PROCESS MAY BE MADE BY REGISTERED OR CERTIFIED MAIL
ADDRESSED TO BORROWER AT THE ADDRESS SET FORTH IN SECTION 11.9 OF THIS AGREEMENT
AND THAT SERVICE SO MADE SHALL BE DEEMED COMPLETED UPON THE EARLIER OF
BORROWER’S ACTUAL RECEIPT THEREOF OR THREE (3) DAYS AFTER DEPOSIT IN THE U.S.
MAILS, PROPER POSTAGE PREPAID.  NOTHING IN THIS AGREEMENT SHALL BE DEEMED OR
OPERATE TO PRECLUDE LENDER FROM BRINGING SUIT OR TAKING OTHER LEGAL ACTION IN
ANY OTHER JURISDICTION.

 

11.9.                        Notices.  Except as otherwise provided herein,
whenever it is provided herein that any notice, demand, request, consent,
approval, declaration, or other communication shall or may be given or delivered
to or served upon any of the parties by another, or whenever any of the parties
desires to give or deliver or serve upon another any communication with respect
to this Agreement, each such notice, demand, request, consent, approval,
declaration, or other communication shall be in writing, shall be addressed to
the addresses set forth below, or such other or additional address as the
parties may notify each other of in writing, and shall be deemed to have been
sent, delivered, or given and received upon the earlier of:  (a) if by facsimile
or other electronic means, upon transmission if transmission occurs between
8:00 a.m. and 5:00 p.m. on any Business Day; (b) if by Federal Express or other
overnight or one-day mail or delivery service, on the next Business Day
following deposit with such delivery service; (c) if by personal delivery, upon
completion of delivery; or (d) if by mail, three (3) Business Days after deposit
in the U.S. Mail, first class, postage prepaid :

 

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(a)                                 If to Lender, at:

 

American AgCredit, PCA

5560 South Broadway

Eureka, California 95503

Attention: Account Officer – ML Macadamia Orchards

Facsimile:  (707) 442-1268

 

American AgCredit, ACA

200 Concourse Boulevard

Santa Rosa, California 95403

Attention: Account Officer – ML Macadamia Orchards

Facsimile:  (707) 545-9400

Email: vzander@agloan.com

 

(b)                                If to Borrower, at:

 

ML Macadamia Orchards, L.P.

ML Resources, Inc.

26-238 Hawaii Belt Road

Hilo, Hawaii 96720

Attention: Mr. Dennis J. Simonis

Facsimile: (808) 969-8152

Email: Dsimonis@MLNut.com

 

or at such other address as may be substituted by notice given as herein
provided.  The giving of any notice required hereunder may be waived in writing
by the party entitled to receive such notice.  Failure or delay in delivering
copies of any notice, demand, request, consent, approval, declaration, or other
communication to the persons designated above to receive copies shall in no way
adversely affect the effectiveness of such notice, demand, request, consent,
approval, declaration, or other communication.

 

11.10.                  Survival.  The representations and warranties of
Borrower in this Agreement shall survive the execution, delivery and acceptance
hereof by the parties hereto and the closing of the transactions described
herein or related hereto.

 

11.11.                  Section Titles.  The Section titles and Table of
Contents contained in this Agreement are and shall be without substantive
meaning or content of any kind whatsoever and are not a part of the agreement
between the parties hereto.

 

11.12.                  Counterparts.  This Agreement may be executed in any
number of separate counterparts, each of which shall be deemed an original, but
all such counterparts together shall constitute one and the same instrument.

 

11.13.                  Performance Always Due on Business Day.  To the extent
that any date under this Agreement is not a Business Day, then the payment or
performance due on such day shall be due on the next Business Day.

 

11.14.                  MUTUAL WAIVER OF JURY TRIAL.  BECAUSE DISPUTES ARISING
IN CONNECTION WITH COMPLEX FINANCIAL TRANSACTIONS ARE MOST QUICKLY AND
ECONOMICALLY RESOLVED BY AN EXPERIENCED AND EXPERT PERSON AND THE

 

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PARTIES WISH APPLICABLE STATE AND FEDERAL LAWS TO APPLY (RATHER THAN ARBITRATION
RULES), THE PARTIES DESIRE THAT THEIR DISPUTES BE RESOLVED BY A JUDGE APPLYING
SUCH APPLICABLE LAWS.  THEREFORE, TO ACHIEVE THE BEST COMBINATION OF THE
BENEFITS OF THE JUDICIAL SYSTEM AND OF ARBITRATION, THE PARTIES HERETO WAIVE ALL
RIGHT TO TRIAL BY JURY IN ANY ACTION, SUIT, OR PROCEEDING BROUGHT TO ENFORCE OR
DEFEND ANY RIGHTS OR REMEDIES UNDER THIS AGREEMENT OR ANY OF THE OTHER LOAN
DOCUMENTS.

 

11.15.                  Time of the Essence.  Time is of the essence in every
provision of this Agreement.

 

11.16.                  No Third Party Beneficiaries.  This Agreement is made
and entered into for the sole protection and benefit of the parties hereto and
their respective permitted successors and assigns, and no other Person shall be
a third party beneficiary of, or have any direct or indirect cause of action or
claim in connection with, this Agreement or any other Loan Document.

 

IN WITNESS WHEREOF, this Agreement has been duly executed as of the date first
written above.

 

 

ML MACADAMIA ORCHARDS, L.P., a Delaware limited partnership

 

 

 

 

 

By:

ML RESOURCES, INC., a Hawaii corporation, its managing general partner

 

 

 

 

 

By:

/s/ Dennis J. Simonis

 

 

Name:

Dennis J. Simonis

 

 

Title:

CEO and President

 

 

 

 

ML RESOURCES, INC., a Hawaii corporation, as Borrower

 

 

 

 

By:

/s/ Dennis J. Simonis

 

Name:

Dennis J. Simonis

 

Title:

CEO and President

 

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AMERICAN AGCREDIT, PCA

 

 

 

 

 

 

By:

/s/ Vern Zander

 

Name:

Vern Zander

 

Title:

Vice President

 

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EXHIBIT A

FORM OF NOTICE OF REVOLVING ADVANCE

[DATE]

 

American AgCredit, ACA

200 Concourse Blvd.

Santa Rosa, CA  95403

 

Attention:  Account Executive (ML Macadamia Orchards)

 

Re:                             Revolving Advance under Third Amended and
Restated Credit Agreement dated as of June 30, 2009

 

Ladies and Gentlemen:

 

The undersigned, ML Macadamia Orchards, L.P., a Delaware limited partnership,
and ML Resources, Inc., a Hawaii corporation, refer to the Third Amended and
Restated Credit Agreement, dated as of June 30, 2009 (the “Credit Agreement”),
among the undersigned, and American AgCredit, PCA, (“Lender”), and hereby
notifies Lender, pursuant to Section 2.1 of the Credit Agreement, that the
undersigned hereby requests a “Revolving Advance,” under and as defined in the
Credit Agreement and in connection therewith, sets forth the information below,
relating to such Revolving Advance:

 

(i)                                     The date of the requested Revolving
Advance shall be                         ;

 

(ii)                                  The aggregate amount of the requested
Revolving Advance is                                        (Dollars)
($                      ); and

 

(iii)                               The requested Revolving Advance should be
directed to [Bank, address, account and wiring instructions].

 

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The undersigned hereby certifies that the conditions contained in Section 4.2 of
the Credit Agreement are satisfied on the date hereof, and will be satisfied on
the date of the requested Revolving Advance, before and after giving effect
thereto and to the application of the proceeds therefrom, unless waived in
writing by Lender.

 

 

 

Very truly yours,

 

 

 

 

ML MACADAMIA ORCHARDS, L.P., a Delaware limited partnership

 

 

 

 

By:

ML RESOURCES, INC., a Hawaii corporation,

 

 

its managing general partner

 

 

 

 

 

 

By:

 

 

 

Name:

 

 

 

Title:

 

 

 

 

 

 

ML RESOURCES, INC., a Hawaii corporation

 

 

 

 

 

By:

 

 

Name:

 

 

Title:

 

 

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EXHIBIT B

 

FORM OF NOTICE OF CERTIFICATION OF FINANCIAL COVENANTS

 

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