EXHIBIT 10.96

 

THIRD AMENDMENT TO

FOURTH AMENDED AND RESTATED

CREDIT AGREEMENT

 

THIS THIRD AMENDMENT TO FOURTH AMENDED AND RESTATED CREDIT AGREEMENT
(“Amendment”), dated as of August 27, 2013, is by and among ROYAL HAWAIIAN
ORCHARDS, L.P., a Delaware limited partnership formerly known as ML MACADAMIA
ORCHARDS, L.P., and ROYAL HAWAIIAN RESOURCES, INC., a Hawaii corporation
formerly known as ML RESOURCES, INC. (collectively, “Borrower”), and AMERICAN
AGCREDIT, PCA (“Lender”) with respect to the following facts:

 

RECITALS

 

A.            Borrower and Lender entered into a Fourth Amended and Restated
Credit Agreement dated as of July 15, 2010 providing Borrower with certain
financial accommodations (the “Original Agreement”).  The Original Agreement was
amended by that First Amendment to Fourth Amended and Restated Credit Agreement
dated March 7, 2011 (the “First Amendment”) and that Second Amendment to Fourth
Amended and Restated Credit Agreement dated July 12, 2012 (the “Second
Amendment”).  The Original Agreement, the First Amendment and the Second
Amendment shall hereinafter be collectively referred to as the “Credit
Agreement.”

 

B.            Borrower has requested that Lender amend the Credit Agreement to:
(i) increase the amount of the Revolving Loan by $2,000,000.00 (the “Increased
Revolver Amount”) from $5,000,000.00 to $7,000,000.00 until December 31, 2013,
at which time the Revolving Note shall be reduced to $5,000,000.00;  (ii) add a
50 basis point increase in the interest rate on the Increased Revolver Amount;
(iii) change the Consolidated EBITDA definition to include proceeds from a
subscription rights offering to be conducted by the Borrower prior to
December 31, 2013; (iv) amend the Minimum Consolidated EBITDA financial covenant
for September 30, 2013, to $0; and (v) amend the unused commitment fee to be not
applicable to the Increased Amount.

 

C.            Lender is willing to grant forgoing request upon the terms and
conditions set forth herein below.

 

NOW, THEREFORE, taking the forgoing Recitals into account, and for other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties agree as follows:

 

1.   Definitions; References; Interpretation.

 

(a)                                 Unless otherwise specifically defined
herein, each term used herein (including the Recitals hereof) which is defined
in the Credit Agreement shall have the meaning assigned to such term in the
Credit Agreement.

 

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(b)                                 Each reference to “this Amendment”,
“hereof”, “hereunder”, “herein” and “hereby” and each other similar reference
contained in the Credit Agreement and each reference to “the Agreement” or “the
Credit Agreement” and each other similar reference in the other Loan Documents,
shall from and after August 27, 2013 refer to the Credit Agreement as amended
hereby.

 

2.   Loan Fee.  Borrower shall pay to Lender a fee for this Amendment in the
amount of $1,500.00.

 

3.   Increase to Revolving Loan.  The Revolving Loan is hereby increased by
$2,000,000.00 to $7,000,000.00 until December 31, 2013.  On January 1, 2014, the
Revolving Loan shall be reduced to $5,000,000.00.  On the Maturity Date Borrower
shall pay the entire unpaid principal sum together with all interest accrued
thereon.  On or before January 1, 2014, herein called “Partial Payment Date”,
Borrower shall make a partial payment of principal in such amount as shall be
sufficient to reduce the outstanding principal of the Revolving Loan to
$5,000,000.00.  Further, all interest and advances (if any) shall be paid in
full such that, on the Partial Payment Date, the total of all amounts
(principal, interest, advances, or otherwise) owing as and for the Revolving
Loan shall be no more than $5,000,000.00 on the Partial Payment Date.  Failure
to make such payment on the Partial Payment Date shall be a default on the
Revolving Loan.

 

4.   Amendments to Definitions.  The following definitions included in the
Credit Agreement are hereby deleted in their entirety and replaced with the
following:

 

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

 

“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, (iv) extraordinary
losses, and (v) net proceeds from MLO’s subscription rights offering to be
conducted prior to December 31, 2013; minus (c) the sum of (I) gains on asset
sales, and (II) extraordinary gains.

 

“Maximum Revolving Loan” shall mean Seven Million Dollars ($7,000,000.00) until
December 31, 2013, and thereafter until the Maturity Date shall mean Five
Million Dollars ($5,000,000.00).

 

“MLO” shall mean Royal Hawaiian Orchards, L.P., a Delaware limited partnership,
formerly known as ML Macadamia Orchards, L.P.

 

“Revolving Loan Promissory Note” means Revolving Loan Promissory Note dated
July 8, 2008, as amended by that First Amendment to Revolving Loan Promissory
Note dated June 30, 2009, as further amended by that Second Amendment to
Revolving Loan Promissory Note effective June 29, 2010, as further amended by
that Third Amendment to Revolving Loan Promissory Note effective July 15, 2010,
as further amended by that Fourth Amendment to Revolving Loan Promissory Note
dated July 15, 2010, as further amended by that Fifth Amendment to Revolving
Loan Promissory Note dated July 12, 2012, as further amended by that Sixth
Amendment to Revolving Loan Promissory Note dated concurrently with this
Amendment.

 

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5.   Interest Rate on Increased Revolver Amount.  Revolving Advances for
advances made from the Increased Revolver Amount shall bear interest at the Base
Rate plus one-half percent per annum.

 

6.   Amend EBITDA Financial Covenant.  The Minimum Consolidated EBITDA financial
covenant is hereby deleted in its entirety and replaced with the following:

 

Minimum Consolidated EBITDA.  MLO shall have Consolidated EBITDA of not less
than $0 for the rolling four-quarter period ending September 30, 2013, and not
less than $1,500,000 for each rolling four-quarter period thereafter, beginning
with the four quarters ended December 31, 2013, followed by the four quarters
ended March 30, 2014, and so on for each rolling four-quarter period thereafter.

 

7.   Revolving Loan Unused Commitment Fee.  Borrower agrees to continue to pay
Lender three eights of one percent (37.5 basis points) per annum on the daily
unused portion of the Revolving Loan, payable in arrears (the “Unused Commitment
Fee”), however, the Unused Commitment Fee will not apply to any unused
commitment in the Increased Revolver Amount.

 

8.  Conditions of Effectiveness.   The effectiveness of this Amendment shall be
subject to the satisfaction of each of the following conditions precedent:

 

(a)                                 Lender shall have received from Borrower a
duly executed original of this Amendment and a duly executed original of the
Sixth Amendment to Revolving Loan Promissory Note, along with all other
documents required by Lender associated with the amendment contemplated herein,
in form and content satisfactory to Lender.

 

(b)                                 Borrower shall have executed and delivered
to Lender a notarized Additional Charge to And Amendment of Mortgage, Security
Agreement, Financing Statement and Assignment of Rents, in form and content
satisfactory to Lender and it shall have been duly recorded in the Bureau of
Conveyances of the State of Hawaii (with filing of the same with the Land Court
of the State of Hawaii to follow as set forth therein).

 

(c)                                  Borrower shall pay to Lender the Loan Fee
in Section 2 above.

 

(d)                                 There shall be no liens, encumbrances or
interests on the real property securing the Revolving Loan and the Term Loan
other than those liens, encumbrances and interests listed in the attached
Exhibit “A”.

 

(e)                                  There shall have been no material adverse
change in the business, condition (financial or otherwise), operations,
performance, or properties of the Borrower.

 

(f)                                   No event shall have occurred that may be
or with the passage of time may be considered an Event of Default as defined in
the Credit Agreement or any other document or documents signed by Borrower
(whether as a borrower, as mortgagor, or debtor).

 

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

 

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9.   Continuing Validity.  Except as expressly modified herein, the terms of the
original Agreement and all other related loan documents remain unchanged and in
full force and effect.  Consent by the Lender to the changes described herein
does not waive Lenders’ right to strict performance of the terms and conditions
contained in the Credit Agreement as amended.  Nothing in this Amendment will
constitute a satisfaction of the Indebtedness.  It is the Lender’s intention to
retain as liable parties all makers, guarantors, endorsers of the original
Indebtedness, unless Lender expressly releases such party in writing.   The Term
Loan (which includes the 2010 Term Loan) (or any other instrument not expressly
noted as affected hereby) is not affected by these presents.

 

10.  Security Remains In Effect.  All instruments of security (“Security
Instruments”), remain in full force and effect and secure all obligations of
Borrower, as affected by these presents, including without limitation that
Mortgage, Security Agreement, Financing Statement And Assignment Of Rents dated
January 8, 2009, recorded in the Bureau of Conveyances of the State of Hawaii 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. 283473, 337743,
337744, 510502, 589117, and 473851, as additionally charged and amended by that
Additional Charge To And Amendment Of Mortgage, Security Agreement, Financing
Statement And Assignment Of Rents effective June 30, 2009, recorded as aforesaid
as Document No. 2009-103496 through 2009-103497 and filed as aforesaid as
Document No. 3875709 through 3876710 and noted on the aforesaid Transfer
Certificates of Title, and as additionally charged and amended by that
Additional Charge to and Amendment of Mortgage, Security Agreement, Financing
Statement and Assignment of Rents made effective on July 15, 2010, recorded in
the Bureau of Conveyances of the State of Hawaii on August 6, 2010, as Document
No. 2010-0113108, and filed in the Office of the Assistant Registrar of the Land
Court of the State of Hawaii as Document No. 3986961 and noted on the aforesaid
Transfer Certificates of Title, and a security agreement dated May 1, 2000, an
supplement thereto dated May 1, 2004, a second supplement thereto dated July 8,
2008, a third supplement thereto dated June 30, 2009, and a forth supplement
thereto dated July 15, 2010, and the financing statement(s) recorded as
aforesaid as Document No(s). 2000-059003 and 2010-113110.  These presents do not
and shall not affect the priority of any of the Security Instruments.  These
presents are made as a part of the same transaction(s) as the
transaction(s) evidenced by the instruments heretofore recited in these
presents.  Borrower jointly and severally re-affirm(s) all of Borrower’s
obligations to Lender whether as set forth in this writing or in any other
writing or otherwise (and whether as a borrower, mortgagor, debtor, or
otherwise).”

 

11.  Miscellaneous.

 

(a)                                 The Borrower acknowledges and agrees that
the execution and delivery by Lender of this Amendment shall not be deemed to
create a course of dealing or an obligation to execute similar amendments or
waivers in the future.

 

(b)                                 This Amendment shall be binding upon and
inure to the benefit of the Borrower and the Lender and their respective
successors and assigns.

 

(c)                                  This Amendment shall be governed by and
construed in accordance with the laws of the State of California, provided that
the Lender shall retain all rights arising under federal law.

 

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(d)                                 This Amendment may be executed in
counterparts, each of which shall be deemed an original, but all such
counterparts together shall constitute but one and the same instrument.  Each of
the parties hereto understands and agrees that this document may be delivered by
any party thereto either in the form of an executed original or an executed
original sent by facsimile transmission to be followed promptly by mailing of a
hard copy original, and that receipt by the Lender of a facsimile transmitted
document purportedly bearing the signature of the Borrower shall bind the
Borrower with the same force and effect as the delivery of a hard copy
original.  Any failure of the Lender to receive the hard copy executed original
of such document shall not diminish the binding effect of receipt of the
facsimile transmitted executed original of such document of the party whose hard
copy page was not received by the Lender.

 

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

 

(f)                                   If any term or provision of this Amendment
shall be deemed prohibited or invalid under any applicable law, such provision
shall be invalidated without affecting the remaining provisions of this
Amendment or the Loan Documents and, to the extent possible, the invalid portion
shall be reformed and this Amendment and the Loan Documents, as the case may be,
shall be enforced as so reformed or without the invalid portion, as appropriate,
to accomplish the purposes thereof.  Except as amended by these presents, and as
so amended, all documents signed by Borrower (whether as a borrower, mortgagor,
debtor, or otherwise) remain in full force and effect (including, without
limitation, all promissory notes and amendments thereto, mortgages and
additional charges thereto and amendments thereof, security agreements and
financing statements and additional charges thereto and amendments thereof, and
loan agreements (whether denominated as a credit agreement or otherwise) and all
additional charges thereto and amendments thereof) and Lender has, reserves, and
shall have all rights thereunder.

 

IN WITNESS WHEREOF the parties have signed this Amendment as of the date first
above written.

 

BORROWER:

 

 

 

ROYAL HAWAIIAN ORCHARDS, L.P., a Delaware limited partnership formerly known as
ML MACADAMIA ORCHARDS, L.P.

 

 

 

By: Royal Hawaiian Resources, Inc., a Hawaii corporation formerly known as ML
Resources, Inc., its managing general partner

 

 

 

By:

/s/ Jon Y. Miyata

 

 

 

Name:

Jon Y. Miyata

 

 

 

Title:

Vice President

 

 

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ROYAL HAWAIIAN RESOURCES, INC., a Hawaii corporation formerly known as ML
RESOURCES, INC.

 

 

 

By:

/s/ Jon Y. Miyata

 

 

 

Name:

Jon Y. Miyata

 

 

 

Title:

Vice President

 

 

 

 

 

LENDER:

 

 

 

AMERICAN AGCREDIT, PCA,

 

a federal production credit association

 

 

 

By:

/s/ Dennis P. Regli

 

 

Dennis P. Regli

 

 

 

Title:

Vice President

 

 

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