Exhibit 10.66


 


SECOND
AMENDED AND RESTATED


CREDIT
AGREEMENT


 


 


Dated as of July 8,
2008


 


among


 


ML MACADAMIA
ORCHARDS, L.P.


ML RESOURCES, INC.


 


as Borrower


 


and


 


AMERICAN AGCREDIT,
PCA


 


 


as Lender


 


Loan No. 5327946


 

















 


INDEX OF
EXHIBITS


 


	
  Exhibit A

  	
   

  	
  - Form of Notice
  of Revolving Advance

  
	
   

  	
   

  	
   

  
	
  Exhibit B

  	
   

  	
  - Form of
  Certification Regarding Compliance with Financial Covenants

  
	
   

  	
   

  	
   

  
	
  Exhibit C

  	
   

  	
  - List of Real Property
  Collateral

  



 


i

















 


THIS SECOND AMENDED AND
RESTATED CREDIT AGREEMENT (“Agreement”), dated as of July 8, 2008, 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 “Amended and Restated Credit Agreement”). The Amended and 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 (collectively the “Amendments to the Amended and Restated Credit
Agreement”).  Collectively the Amended
and Restated Credit Agreement and the Amendments thereto are referred to herein
as the “Restated Credit Agreement”.


 


B.           The Indebtedness of the Borrower to
the Lender under the terms of the Original Credit Agreement and the 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 (collectively the “Security Agreements”).


 


C.           Borrower has requested that Lender
extend and amend the terms of the credit evidenced by the Restated Credit
Agreement and Lender is willing to do so on the terms and conditions set forth
herein.


 


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


 


ARTICLE  I.


 


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):


 


“Addendum to Nut Purchase
Agreement” shall have the meaning assigned to it in Section 4.1(e).


 


1

















 


“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 Second 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 three
quarters of one percent (75 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.


 


“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, and (ii) with respect to the Term Loan, the Closing Date was May 1,
2000.


 


“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.


 


2

















 


“Consolidated Net Income”
shall mean, for any period, on a consolidated basis, the net income, if any, 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. §§ 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 2.8, including the Loan Fee, and Application
Fee, any prepayment surcharge, and any other fees due to Lender pursuant to the
Loan Documents.


 


3

















 


“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 2.4(b) to convert to a fixed rate of interest,
the applicable LIBO Rate as of the date of such election plus a margin equal on
the Closing Date to two and seventy-five one hundredths percent (2.75%); (b) 
with respect to any portion of Term Loan Tranche A that Borrower elects at any
time pursuant to Section 2.5(b) to convert to a fixed rate of
interest, the applicable LIBO Rate as of the date of such election plus a
margin equal on the Closing Date to two and seventy-five one hundredths percent
(2.75%).


 


“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 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 2.4,
Section 2.5 or Section 2.6, on which a portion of the Revolving
Advances or a portion of the Term Loan shall begin to bear interest at a Fixed
Rate.


 


4

















 


“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 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).


 


“Loan Documents” shall
mean this Agreement, the Revolving Loan Promissory Note of even date herewith,
the Term Note dated May 1, 2000, 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.


 


“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 30, 2009 (“Revolving
Loan Maturity Date”), and with respect to the Term Loan Promissory Note, May 1,
2010 (“Term Loan Maturity Date”).


 


5

















 


“Maximum Lawful Rate”
shall have the meaning assigned to it in Section 2.7(e).


 


“Maximum Revolving Loan”
shall mean Six Million Dollars ($6,000,000).


 


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


 


6

















 


“Mortgage” shall mean the
mortgage to be delivered to the Lender by the Borrower pursuant to the
provisions of Section 3.3 hereof, covering the real property described in Exhibit C
attached hereto.


 


“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 any of the Loan Documents. 
This term includes the Revolving Loan, the 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 existing as of the Closing Date as 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).


 


7

















 


“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 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.


 


“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.


 


“Term Loan Promissory
Note” means the Borrower’s Term Loan Promissory Note dated as of May 1,
2000 with an outstanding principal balance of $800,000 as of June 16,
2008.


 


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.


 


8

















 


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.


 


ARTICLE  II.


 


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
shall be evidenced by the Revolving Loan Promissory Note to be executed and
delivered by Borrower to Lender on the Closing Date.


 


(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 Loan.


 


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


 


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(b)           Principal Payments — Term Loan.  With respect to the Term Loan, Borrower shall
pay to Lender, annual principal installments of Four Hundred Thousand Dollars
($400,000) commencing on May 1, 2009 and continuing on the first day of May in
each year thereafter through and including May 1, 2010; provided,
that all unpaid principal, accrued interest and other amounts evidenced by the
Term Loan Promissory Note shall be due and payable in full on the Term Loan
Maturity Date.


 


2.3          Prepayments.


 


(a)           Prepayment in
Full.  Borrower shall have the right
at any time to voluntarily prepay the entire amount of the outstanding
Revolving Loan and the entire amount of the outstanding Term Loan 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 2.3(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 Term Loan, or any portion of the
Revolving Loan subject to a Fixed Rate, 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 2.3(c).  Unless otherwise approved by Lender, any
prepayment of the Term Loan shall be applied pro rata, based on the respective
aggregate principal amounts then outstanding, to Term Loan Tranche A and 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 Term Loan and the Revolving Loan so prepaid,
calculated as follows:


 


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


 


2.4          Interest Rate on Revolving Advances.


 


(a)           Base Rate.  Revolving Advances hereunder 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 2.4(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


 


10

















 


excess thereof shall be
in integral multiples of Fifty Thousand Dollars ($50,000).  Any election by Borrower pursuant to this Section 2.4(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 2.4(b), the interest rate for such portion of the
Revolving Loan will automatically convert to the Base Rate.


 


11

















 


2.5          Interest Rate on Term Loan Tranche
A.


 


(a)           Base Rate.  Term Loan Tranche A is currently bearing
interest at a fixed rate equal to 5.1435% per annum with an Interest Period
expiring on May 1, 2009.  Upon
expiration of the current interest period 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 2.5(b).


 


(b)           Designation of Fixed Rates.  Upon expiration of the current Fixed Rate the
Borrower may, from time to time, elect to convert all or a portion of 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 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 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 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 amounts in excess thereof shall be in
integral multiples of Ten Thousand Dollars ($10,000).  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 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 2.5(b), the interest rate for such portion of
Term Loan Tranche A will automatically convert to the Base Rate.


 


(c)           Margin Applicable to Fixed Rate
Elections for Term Loan Tranche A. 
The margin applicable to Term Loan Tranche A is two and three quarters
percent (2.75%).


 


2.6          Interest Rate on 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 Term Loan Maturity Date.


 


2.7          Other Interest Provisions.


 


(a)           Interest Payment Dates.  Interest shall be due and payable on the
first day of each calendar quarter with respect to all interest accrued on the
Revolving Loan and the Term Loan during the preceding 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
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.  Interest accrued on the Term Loan but not
otherwise due and payable on the Term Loan Maturity Date shall become due and
payable on the Term Loan Maturity Date.


 


(b)           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


 


12

















 


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 Term Loan,
shall become due and payable on a Saturday, the payment date for such payment
shall be the preceding Business Day.


 


(c)           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.  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.


 


(d)           Default Rate.  Any overdue principal or interest with
respect to any Revolving Advance, or the 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 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.


 


(e)           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 2.7(e))
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 2.7(e),
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 2.7(e),
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
Term Loan, then to the outstanding principal of the Revolving Loan, and the
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.


 


13

















 


(f)            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 2.7(f) 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 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
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 2.7(f) as
to Borrower is in accordance with its treatment of other borrowers under
commercial loans generally.


 


2.8          Fees.  In addition to the other Fees listed in this
Agreement, Borrower shall, upon the Closing Date, pay to Lender a loan fee in
the amount of Twenty-one Thousand Dollars ($21,000.00).


 


2.9          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.


 


2.10        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.


 


14

















 


2.11        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.


 


15

















 


2.12        Accounting.  Lender will provide a monthly accounting of
transactions under the Revolving Loan, and a quarterly accounting of
transactions under the Term Loan to Borrower. 
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.


 


2.13        Taxes.


 


(a)           Any and all payments by Borrower
hereunder or under the Loan Documents shall be made, in accordance with this Section 2.13,
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 Revolving Note or Term Note 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 2.13) 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 Revolving Notes, Term Notes,
or from the execution, sale, transfer, delivery or registration of, or otherwise
with respect to, this Agreement or the Revolving Notes, Term Notes, 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 2.13)
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)           Within thirty (30) days after the
date of any payment of Taxes, Borrower shall furnish to Lender the original or
a certified copy of a receipt evidencing payment thereof.


 


(e)           Without prejudice to the survival of
any other agreement of Borrower hereunder, the agreements and obligations of
Borrower contained in this Section 2.13 shall survive the payment in full
of all Obligations.


 


16

















 


2.14        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 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 2.14, 
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 2.14. 
Determinations and allocations by Lender for purposes of this Section 2.14
of the effect of any Regulatory Change pursuant to or of capital maintained
pursuant to this Section 2.14, on its costs or rate of return of
maintaining Revolving Advances or the Term Loan and or its commitment to make
Revolving Advances or the Term Loan, and of the amounts required to compensate
Lender under this Section 2.14, shall be conclusive absent manifest error
or bad faith.


 


(c)           As used in this Section 2.14, “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.


 


17

















 


ARTICLE  III.


 


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 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          Mortgage of Real Property.  In addition to the Collateral currently
pledged to secure the Indebtedness of the Borrower to the Lender hereunder,
Borrower shall, within ninety (90) days of the Closing Date, deliver to Lender
a Mortgage in form and substance satisfactory to Lender covering the real
property located in the State of Hawaii and described in Exhibit C
attached hereto. Said Mortgage shall secure both the existing Revolving Loan
and the Term Loan made hereunder.


 


ARTICLE  IV.


 


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


 


18
















 


(e)                                  Lender has received an executed copy of
the Addendum to Macadamia Nut Purchase Agreement dated July 8, 2008
between Mauna Loa Macadamia Nut Corporation and Borrower (the “Addendum to Nut
Purchase Agreement”) with terms and conditions to be approved by Lender.  The Addendum to Nut Purchase Agreement shall
terminate no sooner than June 30, 2009, unless terminated earlier as
provided in the Macadamia Nut Purchase Agreement.  In addition, the Addendum to Nut Purchase
Agreement shall include a requirement for Mauna Loa to purchase a minimum of 9
million wet in shell pounds of macadamia nuts from Borrower up to a maximum of
12 million wet in shell pounds.  The
minimum price shall be $0.60 per pound, adjusted to 20% moisture and 30%
saleable kernel recovery to dry shell.


 


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 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
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.


 


4.3                                 Conditions Subsequent. 
Within ninety (90) days of the Closing Date, Borrower shall deliver to
Lender the following:


 


(a)                                  An Hawaiian Mortgage, in form and
substance satisfactory to Lender covering the real property listed in Exhibit C
hereto.


 


(b)                                 An ALTA 2006 lender’s policy of title
insurance, including the appropriate endorsements, provided, however, that
certain survey requirements may be waived and the survey exception shall be
permitted.  The policy or policies shall
be subject to such exceptions and conditions of title as Lender may, at its
sole discretion, approve.  The amount and
coverage under the policy or policies shall be determined by Lender upon
completion of Lender’s due diligence.


 


19

















 


ARTICLE  V.


 


REPRESENTATIONS AND WARRANTIES


 


To
induce Lender to enter into this Second Amended and Restated Credit Agreement
and to make the Revolving Loan, 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 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.


 


20

















 


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.


 


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 Revolving Loan and Term
Loan 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 Term Loan will not be used, directly or indirectly, for the purpose 


 


21

















 


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 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.


 


22

















 


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 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 and assets, 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 an 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 


 


23

















 


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
certificate of insurance that evidences the existence of each policy of
insurance, payment of all premiums therefor and compliance with all provisions
of this Agreement.


 


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  VI.


 


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 


 


24

















 


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;


 


(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  VII.


 


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).


 


25

















 


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.


 


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.


 


26

















 


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  VIII.


 


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.


 


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
Term Loan, (d) 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, (e) 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, (f) Indebtedness
secured by property of Borrower other than the Collateral in an aggregate
amount not to exceed Five Hundred Thousand Dollars ($500,000), (g) unsecured
Indebtedness in an aggregate amount not to exceed One Hundred Thousand Dollars
($100,000), and (h) 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 


 


27

















 


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.


 


8.9                                 Restricted Payments. 
Borrower shall not make any Restricted Payments.


 


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 quarter beginning with the fiscal quarter ending September 30,
2008, to be less than the applicable “Minimum Tangible Net Worth Amount.”  The Minimum Tangible Net Worth Amount shall
initially be Forty-One Million Dollars ($41,000,000.00) and shall be increased
dollar for dollar by the amount of positive Consolidated Net Income achieved by
MLO, beginning October 1, 2008 and thereafter.


 


(b)                                 Minimum Consolidated EBITDA.                Commencing on September 30, 2008, MLO shall have Consolidated
EBITDA of not less than $600,000 for the three quarters ended September 30,
2008; Consolidated EBITDA of not less than $1,150,000 for the four quarters
ended December 31, 2008; and Consolidated EBITDA of not less than
$1,200,000 for the four quarters ended March 31, 2009 and thereafter.


 


28

















 


8.13                                                                          Addendum to Nut Purchase Agreement. 
Borrower shall not terminate that Addendum to Nut Purchase Agreement
prior to June 30, 2009 without prior written consent of Lender.


 


ARTICLE  IX.


 


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.


 


ARTICLE  X.


 


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 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 Term Loan, or any other amount (other than
expenses payable under any Loan Document) owing with respect to the Revolving
Loan, the 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.


 


29
















 


(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 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.


 


30

















 


(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, 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.


 


31

















 


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 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  XI.


 


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.


 


32

















 


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 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 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 or 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.


 


33

















 


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.


 


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 


 


34

















 


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 :


 


(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.


 


35

















 


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 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:

  	
  President

  
	
   

  	
   

  
	
   

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

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Dennis J.
  Simonis

  
	
   

  	
  Name:

  	
  Dennis J.
  Simonis

  
	
   

  	
  Title:

  	
  President

  
	
   

  	
   

  	
   

  
	
   

  	
  AMERICAN
  AGCREDIT, PCA

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Sean O’day

  
	
   

  	
  Name:

  	
  Sean O’day

  
	
   

  	
  Title:

  	
  Senior Vice
  President

  
				



 


36

















 


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 Second Amended
and Restated Credit Agreement dated as of July 8, 2008


 


Ladies and Gentlemen:


 


The
undersigned, ML Macadamia Orchards, L.P., a Delaware limited partnership, and
ML Resources, Inc., a Hawaii corporation, refer to the Second Amended and
Restated Credit Agreement, dated as of July 8, 2008 (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].


 


37

















 


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:

  	
   

  
					



 


38

















 


EXHIBIT B


 


FORM OF NOTICE OF CERTIFICATION OF FINANCIAL COVENANTS


 

















 


EXHIBIT C


 


REAL PROPERTY TO BE MORTGAGED


 




	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  LESSOR/

  	
   

  
	
  TMK

  	
   

  	
  LOCATION

  	
   

  	
  ACRES

  	
   

  	
  OR FEE

  	
   

  
	
  3-1-6-001-017

  	
   

  	
  KEAAU II

  	
   

  	
  161.229

  	
   

  	
  FEE

  	
   

  
	
  3-1-6-001-020

  	
   

  	
  KEAAU I

  	
   

  	
  313.042

  	
   

  	
  FEE

  	
   

  
	
  3-1-6-001-022

  	
   

  	
  KEAAU I

  	
   

  	
  95.502

  	
   

  	
  FEE

  	
   

  
	
  3-1-6-001-023

  	
   

  	
  KEAAU I

  	
   

  	
  338.369

  	
   

  	
  FEE

  	
   

  
	
  3-1-6-001-027

  	
   

  	
  KEAAU I

  	
   

  	
  143.012

  	
   

  	
  FEE

  	
   

  
	
  3-1-6-001-029

  	
   

  	
  KEAAU X

  	
   

  	
  89.811

  	
   

  	
  FEE

  	
   

  
	
  3-1-6-001-030

  	
   

  	
  KEAAU II

  	
   

  	
  90.501

  	
   

  	
  FEE

  	
   

  
	
  3-1-6-001-035

  	
   

  	
  KEAAU I

  	
   

  	
  287.036

  	
   

  	
  FEE

  	
   

  
	
  3-1-6-003-079

  	
   

  	
  KEAAU I

  	
   

  	
  285.239

  	
   

  	
  FEE

  	
   

  
	
  3-1-6-003-082

  	
   

  	
  KEAAU I

  	
   

  	
  228.212

  	
   

  	
  FEE

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  2,031.953

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  3-9-6-003-006

  	
   

  	
  KA’U I

  	
   

  	
  14.500

  	
   

  	
  FEE

  	
   

  
	
  3-9-6-003-015

  	
   

  	
  KA’U I

  	
   

  	
  382.128

  	
   

  	
  FEE

  	
   

  
	
  3-9-6-003-021

  	
   

  	
  KA’U I

  	
   

  	
  116.820

  	
   

  	
  FEE

  	
   

  
	
  3-9-6-004-002

  	
   

  	
  KA’U I

  	
   

  	
  8.551

  	
   

  	
  FEE

  	
   

  
	
  3-9-6-004-003

  	
   

  	
  KA’U I

  	
   

  	
  3.938

  	
   

  	
  FEE

  	
   

  
	
  3-9-6-004-005

  	
   

  	
  KA’U I

  	
   

  	
  18.780

  	
   

  	
  FEE

  	
   

  
	
  3-9-6-004-017

  	
   

  	
  KA’U I

  	
   

  	
  8.557

  	
   

  	
  FEE

  	
   

  
	
  3-9-6-004-018

  	
   

  	
  KA’U I

  	
   

  	
  16.536

  	
   

  	
  FEE

  	
   

  
	
  3-9-6-004-019

  	
   

  	
  KA’U I

  	
   

  	
  9.126

  	
   

  	
  FEE

  	
   

  
	
  3-9-6-012-017

  	
   

  	
  KA’U I

  	
   

  	
  25.572

  	
   

  	
  FEE

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  604.508

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Total

  	
   

  	
  2,636.461