EXHIBIT 10.58


ACQUISITION AGREEMENT


between


ML MACADAMIA ORCHARDS, L.P.

a Delaware limited partnership,


Buyer


and


MAC FARMS OF HAWAII, LLC,

a Delaware limited liability company,


and


KAPUA ORCHARD ESTATES, LLC,

a Delaware limited liability company


(both collectively, “Seller”)


Effective as of May 24, 2007
















Table of Contents


	
  

  	
   

  	
   

  	
  Page

  
	
  ARTICLE I.

  	
  DEFINITIONS

  	
  1

  
	
   

  	
   

  	
   

  
	
  ARTICLE II.

  	
  THE ACQUISITION

  	
  8

  
	
   

  	
   

  	
   

  
	
   

  	
  2.1

  	
  Basic Transaction

  	
  8

  
	
   

  	
  2.2

  	
  Leased Assets

  	
  9

  
	
   

  	
  2.3

  	
  Terms of Purchase and Sale

  	
  9

  
	
   

  	
  2.4

  	
  Excluded Assets, Accounts Receivable, and Assumed Liabilities

  	
  11

  
	
   

  	
  2.5

  	
  Assumed Liabilities

  	
  12

  
	
   

  	
  2.6

  	
  Closing

  	
  13

  
	
   

  	
  2.7

  	
  Sales and Transfer Taxes; Property Taxes

  	
  13

  
	
   

  	
  2.8

  	
  Assignment and Assumption

  	
  14

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE III.

  	
  REPRESENTATIONS
  AND WARRANTIES RELATING TO SELLER

  	
  14

  
	
   

  	
   

  	
   

  
	
   

  	
  3.1

  	
  Organization and Qualification

  	
  14

  
	
   

  	
  3.2

  	
  Noncontravention

  	
  14

  
	
   

  	
  3.3

  	
  Authorization of Transaction

  	
  15

  
	
   

  	
  3.4

  	
  Subsidiaries

  	
  15

  
	
   

  	
  3.5

  	
  Financial Statements

  	
  15

  
	
   

  	
  3.6

  	
  Reserved

  	
  16

  
	
   

  	
  3.7

  	
  Inventory; Nuts; Product Liability

  	
  16

  
	
   

  	
  3.8

  	
  Absence of Change

  	
  16

  
	
   

  	
  3.9

  	
  Debts, Obligations and Liabilities

  	
  16

  
	
   

  	
  3.10

  	
  Reserved

  	
  16

  
	
   

  	
  3.11

  	
  Tax Matters

  	
  16

  
	
   

  	
  3.12

  	
  Purchased Assets and Leased Assets

  	
  18

  
	
   

  	
  3.13

  	
  Real Property

  	
  18

  
	
   

  	
  3.14

  	
  Contracts

  	
  18

  
	
   

  	
  3.15

  	
  Permits

  	
  18

  
	
   

  	
  3.16

  	
  Intellectual Property

  	
  19

  
	
   

  	
  3.17

  	
  Title to Assets

  	
  19

  
	
   

  	
  3.18

  	
  Customers and Sales

  	
  20

  
	
   

  	
  3.19

  	
  Insurance

  	
  20

  
	
   

  	
  3.20

  	
  Litigation

  	
  20

  
	
   

  	
  3.21

  	
  Environmental Matters

  	
  20

  
	
   

  	
  3.22

  	
  Legal Compliance

  	
  21

  
	
   

  	
  3.23

  	
  Employees

  	
  21

  
	
   

  	
  3.24

  	
  Employee Benefit Plans

  	
  21

  
	
   

  	
  3.25

  	
  Labor Matters

  	
  24

  
	
   

  	
  3.26

  	
  Motor Vehicles

  	
  25

  
	
   

  	
  3.27

  	
  Reserved

  	
  25

  
	
   

  	
  3.28

  	
  Transactions with Affiliates

  	
  25

  
	
   

  	
  3.29

  	
  Fraudulent Conveyance

  	
  25

  



 



 i
 









 


	
  

  	
  3.30

  	
  Brokers’ Fees

  	
  25

  
	
   

  	
  3.31

  	
  Investment Status

  	
  25

  
	
   

  	
  3.32

  	
  Disclosure

  	
  25

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE IV.

  	
  REPRESENTATIONS
  AND WARRANTIES OF BUYER

  	
  26

  
	
   

  	
   

  	
   

  
	
   

  	
  4.1

  	
  Organization and Qualification

  	
  26

  
	
   

  	
  4.2

  	
  Noncontravention

  	
  26

  
	
   

  	
  4.3

  	
  Authorization of Transaction

  	
  27

  
	
   

  	
  4.4

  	
  Brokers’ Fees

  	
  27

  
	
   

  	
  4.5

  	
  Capitalization; Partnership Units

  	
  27

  
	
   

  	
  4.6

  	
  SEC Filings; Financial Statements; No Changes

  	
  27

  
	
   

  	
  4.7

  	
  Vote Required

  	
  28

  
	
   

  	
  4.8

  	
  Disclosure Documents

  	
  28

  
	
   

  	
  4.9

  	
  Disclosure

  	
  29

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE V.

  	
  PRE-CLOSING
  COVENANTS

  	
  29

  
	
   

  	
   

  	
   

  
	
   

  	
  5.1

  	
  Generally

  	
  29

  
	
   

  	
  5.2

  	
  Notices and Consents

  	
  29

  
	
   

  	
  5.3

  	
  Operation of Business Before the Closing

  	
  30

  
	
   

  	
  5.4

  	
  Preservation of Business

  	
  31

  
	
   

  	
  5.5

  	
  Access

  	
  31

  
	
   

  	
  5.6

  	
  Notice of Developments

  	
  32

  
	
   

  	
  5.7

  	
  Exclusivity

  	
  33

  
	
   

  	
  5.8

  	
  Employee Matters

  	
  33

  
	
   

  	
  5.9

  	
  Certain Filings with the SEC

  	
  34

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE VI.

  	
  POST-CLOSING
  COVENANTS

  	
  35

  
	
   

  	
   

  	
   

  
	
   

  	
  6.1

  	
  Post-Closing Cooperation

  	
  35

  
	
   

  	
  6.2

  	
  Post-Closing Confidentiality Obligation of Seller

  	
  35

  
	
   

  	
  6.3

  	
  Post-Closing Litigation Support

  	
  35

  
	
   

  	
  6.4

  	
  Post-Closing Adjustments

  	
  36

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE VII.

  	
  CONDITIONS TO
  OBLIGATIONS TO CLOSE

  	
  36

  
	
   

  	
   

  	
   

  
	
   

  	
  7.1

  	
  Buyer’s Conditions

  	
  36

  
	
   

  	
  7.2

  	
  Seller’s Conditions

  	
  39

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE VIII.

  	
  SURVIVAL AND
  INDEMNIFICATION

  	
  40

  
	
   

  	
   

  	
   

  
	
   

  	
  8.1

  	
  Survival

  	
  40

  
	
   

  	
  8.2

  	
  Mutual Indemnification

  	
  42

  
	
   

  	
  8.3

  	
  Procedure for Indemnification

  	
  43

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE IX.

  	
  TERMINATION

  	
  46

  
	
   

  	
   

  	
   

  
	
   

  	
  9.1

  	
  Termination of Agreement

  	
  46

  
	
   

  	
  9.2

  	
  No Effect on Indemnification Rights

  	
  47

  
	
   

  	
   

  	
   

  	
   

  



 



 ii
 









 


	
  ARTICLE X.

  	
  MISCELLANEOUS
  PROVISIONS

  	
  47

  
	
   

  	
   

  	
   

  
	
   

  	
  10.1

  	
  Press Releases and Announcements

  	
  47

  
	
   

  	
  10.2

  	
  Notices

  	
  48

  
	
   

  	
  10.3

  	
  Specific Performance

  	
  49

  
	
   

  	
  10.4

  	
  Remedies Not Exclusive

  	
  49

  
	
   

  	
  10.5

  	
  Exercise of Remedies

  	
  49

  
	
   

  	
  10.6

  	
  Costs and Expenses

  	
  49

  
	
   

  	
  10.7

  	
  Waiver

  	
  49

  
	
   

  	
  10.8

  	
  Attorneys’ Fees and Disbursements

  	
  50

  
	
   

  	
  10.9

  	
  Further Assurances

  	
  50

  
	
   

  	
  10.10

  	
  Confidentiality

  	
  50

  
	
   

  	
  10.11

  	
  Entire Agreement

  	
  50

  
	
   

  	
  10.12

  	
  Modification

  	
  50

  
	
   

  	
  10.13

  	
  Governing Law

  	
  50

  
	
   

  	
  10.14

  	
  Construction

  	
  51

  
	
   

  	
  10.15

  	
  Partial Invalidity

  	
  51

  
	
   

  	
  10.16

  	
  Binding Effect

  	
  52

  
	
   

  	
  10.17

  	
  Assignment

  	
  52

  
	
   

  	
  10.18

  	
  Time of the Essence

  	
  52

  
	
   

  	
  10.19

  	
  Counterparts/Facsimiles

  	
  52

  
	
   

  	
  10.20

  	
  Waiver of Right to Jury Trial

  	
  52

  
	
   

  	
  10.21

  	
  Dispute Resolution

  	
  53

  
	
   

  	
  10.22

  	
  Effective Date

  	
  53

  
	
   

  	
  10.23

  	
  Reserved

  	
  53

  
	
   

  	
  10.24

  	
  Retention of, and Access to, Books and Records and
  Return of Documents

  	
  53

  
	
   

  	
  10.25

  	
  Limitation of Liability

  	
  54

  



 



 iii















Schedules and Exhibits


Schedule
2.1(a)                     Inventory 
                 Schedule 2.1(b)                     Trees and Fertilizer 
                 Schedule 2.1(c)                     Acquired Contracts
                 Schedule 2.1(d)                     Seller Permits 
                 Schedule 2.1(e)                     Machinery and Equipment
                 Schedule 2.1(f)                      Owned and Leased Vehicles 
                 Schedule 2.1(g)                     Personal Property 
                 Schedule 2.1(h)                     Personal Property Leases
                 Schedule 2.1(i)                      Customer Lists
                 Schedule 2.1(j)                      Intellectual Property
                 Schedule 2.1(m)                    Seller Claims
                 Schedule 2.1(n)                     Deposits and Advances
                 Schedule 2.2(a)                     Leased Assets


Schedule
2.3(b)                     Allocation of
Purchase Consideration 
                 Schedule 2.4                          Excluded Assets


Schedule
3.2                          Consents of
Governmental Authorities
                 Schedule 3.6                          Reserved


Schedule
3.7                          Product
Liability 
                 Schedule 3.9                          Debts, Obligations and
Liabilities
                 Schedule 3.11(e)                   Income Tax Basis for Assets
                 Schedule 3.13                        Real Property
                 Schedule 3.14                        Material Contracts
                 Schedule 3.15                        Permits - Exceptions 
                 Schedule 3.17                        Exceptions to Title
                 Schedule 3.19                        Insurance Policies
                 Schedule 3.20                        Litigation
                 Schedule 3.21                        Environmental Matters


Schedule
3.22                        Legal
Compliance 
                 Schedule 3.23                        Employees


Schedule
3.24(a)                   Employee
Benefit Plans - Material Unfunded Liabilities


Schedule
3.24(b)                   Employee Benefit
Plans - Documentation


Schedule
3.24(c)                   Employee
Benefits Plans - Compliance


Schedule
3.24(d)                   Employee Benefit
Plans - Qualification/Exemption


Schedule
3.24(f)                    Employee
Benefit Plans - Investigation, Audit, or Review 
                 Schedule 3.24(g)                   Employee Benefit Plans -
Certain Type
                 Schedule 3.24(l)                    Employee Benefit Plans -
Continuation of Insurance Coverage
                 Schedule 3.25                        Labor Matters (Part 1
and Part 2)
                 Schedule 3.26                        Motor Vehicles
                 Schedule 3.28                        Transactions with
Affiliates


Schedule
3.30                        Seller’s
Broker’s Fees
                 Schedule 4.5                          Equity Ownership of
Buyer


Schedule
5.3(k)                     Pre-Closing
Transactions


Schedule
5.7                          Exclusivity 
                 Schedule 5.8                          Transferred Employees


Schedule
7.1(g)                     Employment
Relationships 
                 Exhibit A-1                            Orchard Lease
Agreement
                 Exhibit A-2                            Memorandum of Orchard
Lease
                 Exhibit B-1                             Processing Plant
Lease Agreement
                 Exhibit B-2                             Memorandum of
Processing Plant Lease 















                Exhibit C                                Reserved
                 Exhibit D                                Reserved
                 Exhibit E                                 ADR
Provisions
                 Exhibit F                                 Required
Consents


Exhibit
G                                Registration
Rights Agreement


Exhibit
H                                License
Agreement


Exhibit
I                                  Working Capital Calculation



 2















ACQUISITION AGREEMENT


This Acquisition
Agreement (the “Agreement”), effective as of
May 24, 2007, is between Mac Farms of Hawaii, LLC, a Delaware limited liability
company (“Mac Farms”) and Kapua Orchard
Estates, LLC, a Delaware limited liability company (“Kapua”),
(both collectively sometimes called “Seller” in
this Agreement), and ML Macadamia Orchards, L.P. (“MLP”
or “Buyer”), a Delaware limited
partnership, with reference to the following facts:


Seller is engaged in the
farming and harvesting of macadamia nuts on approximately 3,998 acres of land
owned by Seller and located at Kapua on the Island of Hawaii, State of Hawaii.
It owns macadamia orchards on said land and also owns various equipment and
other assets used in the farming of the orchards.


Seller also owns in fee
simple the processing facilities located on approximately 14.955 acres of land
at Kapua on the Island of Hawaii, State of Hawaii (the “Processing
Plant”). It also owns rolling stock and other equipment used in
the processing operations. Furthermore, it owns trademarks, customer lists, and
other intellectual property used in the marketing of products processed from
the nuts grown by Seller and also acquired from independent growers.


Buyer is interested in
acquiring from Seller those personal property assets, and subleasing, leasing,
or otherwise acquiring rights of use from Seller for those real property
assets, used by Seller in its macadamia nut operations, as set forth in this
Agreement.


Seller is willing to sell
to Buyer those personal property assets, and sublease, lease, or otherwise
transfer rights of use to Buyer for those real property assets, used by Seller
in its macadamia nut operations, as set forth in this Agreement.


The Parties therefore
agree as follows:


ARTICLE I.

DEFINITIONS


“Acquired
Contract” has the meaning set forth in Section 2.1(c).


“ADR
Provisions” has the meaning set forth in Exhibit E.


“Agreement”
has the meaning assigned in the preamble to this Agreement.


“Assumed
Liabilities” has the meaning set forth in Section 2.5.


“Basis”
means any past or present fact, situation, circumstance, status, condition,
activity, practice, plan, occurrence, event, incident, action, failure to act,
or transaction that forms the reasonable basis for any specified consequence.


“Books
and Records” has the meaning set forth in Section 2.1(o).


“Book Value” as
used in Exhibit I shall mean the balances as shown on Seller’s general ledger,
after reconciliation and audit or verification by Buyer’s independent certified
public 



 1
 









accountants.


“Business
Day” means any day other than (i) a Saturday or a Sunday or (ii)
a day on which banking and savings and loan institutions are authorized or
required by Law to be closed.


“Buyer”
means MLP and one or more subsidiaries which may be formed by, on behalf of, or
for the ultimate benefit of, MLP to consummate this transaction. Such
subsidiaries may be corporations, limited liability companies, or other types
of entities.


“Buyer
Financial Statements” has the meaning set forth in Section 4.6.


“Buyer
Indemnitees” has the meaning set forth in Section 8.2(a).


“Buyer
SEC Filings” has the meaning set forth in Section 4.6.


“Cash
Payment” has the meaning set forth in Section 2.3(a)(1).


“Claim”
means any civil, criminal or administrative claim, demand, cause of action, suit,
proceeding, arbitration, hearing, or investigation.


“Claim
Notice” has the meaning set forth in Section 8.3(a).


“Closing”
has the meaning set forth in Section 2.6.


“Closing
Date” has the meaning set forth in Section 2.6.


“Code”
means the Internal Revenue Code of 1986, as amended.


“Contract”
means any written contract, mortgage, deed of trust, bond, indenture, lease,
license, note, franchise, certificate, option, warrant, right, or other
instrument, document, obligation or agreement, and any oral obligation, right,
or agreement.


“Disclosure
Schedule” means the collective schedules relating to Seller as
attached hereto.


“Disputes”
has the meaning set forth in Exhibit E.


“Employee
Benefit Plan” means (a) all “employee benefit plans” (as defined
in Section 3(3) of ERISA), whether or not subject to ERISA and (b) all
other employment, bonus, stock option, stock purchase or other equity-based,
benefit, incentive compensation, profit sharing, savings, retirement (including
early retirement and supplemental retirement), disability, insurance, vacation,
incentive, deferred compensation, supplemental retirement (including
termination indemnities and seniority payments), severance, termination,
retention, change of control, indemnification and other similar fringe, welfare
or other employee benefit plans, programs, agreement, contracts, policies or
arrangements (whether or not in writing), (i) sponsored, maintained or
contributed to by Seller or an ERISA Affiliate or to which Seller or an ERISA
Affiliate is a party, (ii) covering or benefiting any current or former
officer, employee, agent, director or independent contractor of Seller or an
ERISA Affiliate (or any dependent or beneficiary of any such individual), or
(iii) with respect to which Seller or an ERISA Affiliate 



 2
 









has (or could have) any
obligation or liability.


“Employees”
means all of the employees of Seller engaged in the Mac Nut Business.


“Environmental
Laws” means all federal, state, and local laws (whether under
statute, ordinance, rule, regulation, or otherwise), orders, decrees, judgments
and other requirements of Governmental Authorities, relating to the protection
of human health, safety, natural resources, or the environment.


“Environmental
Report” has the meaning set forth in Section 3.21.


“ERISA”
means the Employee Retirement Income Security Act of 1974, as amended.


“ERISA
Affiliate” means any Person that, together with Seller, is
treated as a single employer under Section 414(b), (c), (m) or (o) of the Code.


 “Escrow Agent”
means Title Guaranty Escrow Services, Inc., 235 Queen Street, Honolulu, Hawaii
96813.


“Exchange
Act” means the Securities Exchange Act of 1934, as amended.


“Excluded
Assets” has the meaning set forth in Section 2.4.


“Financial
Statements” has the meaning set forth in Section 3.5.


“Fundamental
Representations” has the meaning set forth in Section 8.1(a).


“GAAP”
means the accounting principles generally accepted in the United States of
America, applied on a consistent basis.


“Governmental
Authority” means the United States of America, any state,
commonwealth, territory or possession thereof and any political subdivision or
quasi-governmental authority of any of the same, including any authority with
the power to impose or collect taxes, courts, tribunals, departments,
commissions, boards, bureaus, agencies, counties, municipalities, provinces,
parishes and other instrumentalities.


“Hazardous
Materials” means all chemicals, materials, substances, or wastes
that are regulated, designated, defined or included in any definition under any
Environmental Law as hazardous, radioactive or toxic or as a pollutant or
contaminant, including asbestos or asbestos-containing materials, petroleum or
petroleum products, polychlorinated biphenyls, and urea formaldehyde.


“Indemnified
Party” has the meaning set forth in Section 8.3(a).


“Indemnifying
Party” has the meaning set forth in Section 8.3(a).


“Intellectual
Property” means, as it relates to the Mac Nut Business,
(i) trademarks and service marks, including common law marks, registered,
and/or applied-for marks, trade names, trade dress, label designs, and logos;
(ii) copyright rights and certificates of registrations and 



 3
 









applications for
registration thereof; (iii) computer software (other than off-the-shelf
software), data, and documentation; (iv) trade secrets and confidential
business information (including formulas, compositions, inventions whether
patentable or unpatentable and whether or not reduced to practice, know-how,
manufacturing and production processes and techniques, research and development
information, drawings, specifications, designs, plans, proposals, technical
data, copyrightable works, financial, marketing, and business data, pricing and
cost information, business and marketing plans, and customer and supplier lists
and information); (v) patents, patent applications and patent rights; (vi)
other technology or intellectual property rights of any kind or nature; and
(vii) copies and tangible embodiments thereof (in whatever form or
medium).


“Inventory”
means the inventory described in Section 2.1(a) hereof.  The value of the inventory shall be as
recorded on the books of Seller at the lower of cost or market value, using an
appropriate unit cost methodology.


 “Knowledge”
means the actual knowledge of the managing members, directors, or officers of a
Party.


“Laws”
has the meaning set forth in Section 3.22.


“Leases”
means the Orchard Lease Agreement and the Processing Plant Lease
Agreement.


“Leased
Assets” has the meaning set forth in Section 2.2.


“Liability”
means any liability, debt, obligation, amount or sum due, or other claim of any
description (whether known or unknown, whether absolute or contingent, whether
liquidated or unliquidated, and whether due or to become due) including any
liability for Taxes; provided, however,
that it does not include those items excepted from the definition of Security
Interest.


“Licenses”
has the meaning set forth in Section 3.15.


“Loss”
means any loss, damage, deficiency, cost, levy, fine, out-of-pocket payment, or
other expense (including reasonable legal expenses and costs of defense of
third party claims, including interest and penalties).


“Mac
Nut Business” means all of Seller’s macadamia nut-related
operations and business activities, including Seller’s macadamia nut planting,
watering, growing, pruning, farming, cultivating, and harvesting; and the
processing, storage, transportation, marketing and sales operations.


“Majority
Interest of the Partnership” means those Unitholders who, in the
aggregate, hold a majority of the units of MLP that all Unitholders hold,
excluding the units of MLP held by MLP’s general partner.


“Material
Adverse Effect” means any condition, event, circumstance, change
or effect that, individually or in the aggregate, has had or could reasonably
be expected to have a material adverse effect on the business, assets,
properties, results of operation or financial condition or 



 4
 









prospects of the Mac Nut
Business, the Purchased Assets, or the Leased Assets; provided
that, without limiting the generality of the foregoing, the following
occurrences are to be deemed to result in a Material Adverse Effect, to the
extent the circumstances leading to such occurrences were not disclosed by
Seller to Buyer before the date hereof: (i) destruction of or material damage
to greater than 20% of the macadamia nut trees on the Seller Land; (ii)
destruction of or material damage to any water delivery system that provides
water to the Seller Land; (iii) destruction of or material damage to the
Processing Plant; (iv) the loss of major customers; or (v) issuance by any
Governmental Authority responsible for regulation of the Mac Nut Business or
court having jurisdiction that provides announcement, notice, or order that
could reasonably be expected to result in the prohibition, material delay, or
material curtailment of the operations currently conducted or as contemplated
to be conducted as described in this Agreement.


“Material
Contracts” has the meaning set forth in Section 3.14.


“NewCo1”
has the meaning set forth in Section 2.3(c).


“NewCo2”
has the meaning set forth in Section 2.3(c).


“Orchard
Lease Agreement” has the meaning set forth in Section 7.1(c), and which is attached hereto as

Exhibit A-1.


“Ordinary
Course of Business” means the ordinary course of business
consistent with past custom and practice (including with respect to quantity
and frequency).


“Party”
refers to either Buyer or Seller, as applicable, and “Parties”
refers to both Buyer and Seller.


“PBGC”
means the Pension Benefit Guaranty Corporation.


“Permit”
means any permit, license, approval, certification, endorsement, or
qualification of any Governmental Authority or any other Person.


“Person”
means an individual, a partnership (whether general or limited), a corporation,
a limited liability company, an association, a joint stock company, a trust, a
joint venture, an unincorporated organization or a governmental entity (or any
department, agency or political subdivision thereof).


“Proceeding”
has the meaning set forth in Section 3.20.


“Processing
Plant” means the macadamia nut processing facilities owned and
or controlled by Mac Farms located at Kapua, Island of Hawaii, State of Hawaii.


“Processing
Plant Lease Agreement” has the meaning set forth in Section 7.1(c).


“Pro-Rated
Items” has the meaning set forth in Section 2.7(c).


“Proxy
Statement” has the meaning set forth in Section 4.8.


“Purchase
Consideration” has the meaning set forth in Section 2.3.



 5
 









“Purchased
Assets” has the meaning set forth in Section 2.1.


“Reconciliation
and Review” means a process, whereby an auditor shall (i) verify the
counts from the physical inventory and reconcile it to book quantities, (ii)
identify obsolete, damaged, slow-moving, or otherwise unusable inventory for
write-off by Seller, and (iii) calculate the value of the Inventory at the
lower of cost or market, in accordance with GAAP.


“Registration
Statement” has the meaning set forth in Section 4.8.


“Registration
Rights Agreement”  means the
Registration Rights Agreement, substantially in the form attached as Exhibit G,
under which Buyer shall register, at its expense, the Units under the
Securities Act.


“Related
Agreements” means the agreements to be entered into in
connection with this Agreement between the Parties, including the agreements
listed in Article VII.


“Release”
means releasing, spilling, leaking, pumping, pouring, emitting, emptying,
discharging, injecting, escaping, leaching, migrating, disposing, or dumping.


“Required
Consents” means all franchises, licenses, authorizations,
approvals and consents required under Seller Permits, Acquired Contracts or
otherwise listed in Exhibit F.


“Restricted
Asset” has the meaning set forth in Section 2.8.


“Schedule”
refers to the Disclosure Schedules that are part of and attached to this
Agreement.


“SEC”
means the U.S. Securities and Exchange Commission.


“SEC
Preliminary Approval” means the approval by the SEC of the “Request
for Substitution of Abbreviated Financial Information” to be submitted to the
SEC by the Buyer, a copy of which has been furnished to the Seller.


“Securities
Act” has the meaning set forth in Section 3.31.


“Security
Interest” means any financing statement, mortgage, pledge, trust
deed, encumbrance, charge, or other lien, other than (i) mechanic’s,
materialmen’s, carriers’, workmen’s, repairmen’s and similar liens,
(ii) liens for Taxes, assessments and government charges or levies not yet
due and payable (or for Taxes that the taxpayer is contesting in good faith
through appropriate Proceedings, which Proceedings are set forth on the
Disclosure Schedules), (iii) pledges, deposits or liens arising under
workers’ compensation, unemployment insurance, social security, retirement, and
similar legislation, (iv) liens arising in connection with sales of
foreign receivables, (v) liens on goods in transit incurred under
documentary letters of credit, and (vi) deposits to secure the performance
of bids, trade contracts (other than for borrowed money), leased statutory
obligations, surety and appeal bonds, performance bonds and other obligations
of a like nature incurred in the Ordinary Course of Business.


“Seller”
has the meaning set forth in the preamble to this Agreement.



 6
 









“Seller
Indemnitees” has the meaning set forth in Section 8.2(b).


“Seller
Land” means the lands demised by any of the Orchard Lease
Agreement, Processing Plant Lease Agreement, or which is occupied as of the
date of this Agreement by Seller under any Seller Permit.


“Seller
Permits” has the meaning set forth in Section 2.1(d).


“Subsidiary”
means any corporation or other entity with respect to which another specified
corporation or other entity has the power to vote or direct the voting of
sufficient securities to elect a majority of the directors or other equivalent
management.


“Tax”
means any (a) federal, state, local or foreign income, gross receipts, license,
payroll, employment, excise, severance, stamp, occupation, premium, windfall
profits, environmental, customs duties, capital stock, franchise, profits,
withholding, social security (or similar), unemployment, disability, real
property, personal property, sales, use, transfer, registration, value added,
alternative or add-on minimum, estimated, or other tax of any kind whatsoever,
including any interest, penalty or addition thereto; (b) liability for the
payment of any amounts of the type described in clause (a) arising as a result
of being (or ceasing to be) a member of any affiliated group as defined in
Section 1504 of the Code (or any similar combined, consolidated or unitary
group defined under any Tax Law) (or being included (or required to be
included) in any Tax Return relating thereto); (c) liability under state or
local escheat or unclaimed property Laws (including liabilities relating to
breakage); and (d) liability for the payment of any amounts of the type
described in clause (a), (b) or (c) as a result of any express or implied
obligation to indemnify or otherwise assume or succeed to the liability of any
person.


“Tax
Return” means any federal, foreign, state, or local governmental
tax return, declaration, report, claim for refund, or information return or
statement relating to Taxes, including any schedule or attachment thereto, and
including any amendment thereof.


“Third
Party Claim” has the meaning set forth in Section
8.3(a).


“Title
Company” has the meaning set forth in Section
7.1(f).


“Transferred
Employees” has the meaning set forth in Section 5.8.


“Unitholders”
means all Persons holding units in MLP.


“Units”
has the meaning set forth in Section 2.3(a)(2).


“Webpage”
means Seller’s web page located at the uniform recourse locator address
http://www.macfarms.com, and any e-mail address used by Seller having the
suffix “@macfarms.com.”



 7
 









ARTICLE II.

THE ACQUISITION


2.1          Basic Transaction


On and subject to the
terms and conditions of this Agreement, at the Closing Buyer agrees to purchase
from Seller, and Seller agrees to sell, transfer, convey, assign and deliver to
Buyer, all right, title to and interest in, the assets and properties related
to the Mac Nut Business that are not Excluded Assets or Leased Assets, whether
tangible or intangible, wherever located and whether held by Seller or third
parties, and free and clear from any Liability or Security Interest
(collectively, the “Purchased Assets”), including
the following:


(a)           All
of the inventory as of the Closing Date (the “Inventory”),
including the macadamia nuts, finished goods, packaging materials and supplies
described on Schedule 2.1(a).


(b)           All
of the nursery tree inventory, fertilizer, pesticides, herbicides, and all
similar products, including the items described on Schedule
2.1(b).


(c)           All
rights under all Contracts (other than the Personal Property Leases and the
Seller Permits) described on Schedule 2.1(c)
(the “Acquired Contracts”).


(d)           All
franchises, authorizations, Permits, Licenses, easements, registrations,
leases, variances and similar rights obtained from any Governmental Authority
or any other Person (the “Seller Permits”),
including the Seller Permits described on Schedule 2.1(d).


(e)           All
tools, machinery and equipment, including the items listed on Schedule 2.1(e).


(f)            All
vehicles owned by Seller and all rights in vehicle leases to which Seller is a
party, in either case that are used by Seller in the Mac Nut Business (the “Owned and Leased Vehicles”),
including the Owned and Leased Vehicles listed on Schedule 2.1(f).


(g)           All
other personal property, equipment, tools, (including all miscellaneous
inventory used in the Mac Nut Business, such as replacement belts, motors,
switches, parts, and similar items) office equipment, furnishings, computers,
telephone systems, stationery, supplies, and similar items and other tangible
personal property (the “Personal Property”),
including the Personal Property listed on Schedule 2.1(g).


(h)           All
rights in leases of personal property to which Seller is a party (the “Personal Property Leases”),
including the Personal Property Leases listed on Schedule 2.1(h).


(i)            All
customer lists of Seller that relate to the Mac Nut Business, including the
customer lists provided on Schedule 2.1(i).


(j)            All
Intellectual Property, except the Kapua service mark applications in Classes 37
and 41, as set forth in Schedule 2.4,
and the Kapua trademarks described in, and which will be licensed pursuant to,
the License Agreement between Kapua and Buyer attached hereto as Exhibit H,
including the Intellectual Property described on Schedule 2.1(j).



 8
 









(k)           Reserved.


(l)            Reserved.


(m)          All
claims, choses-in-action, rights in action, rights to tender claims or demands
to Seller’s insurance companies, rights to any insurance proceeds, and other
similar claims, including the claims listed on Schedule 2.1(m),
other than insurance proceeds relating to (i) third-party claims against
Seller, and (ii) Purchased Assets that constitute current assets under GAAP and
were destroyed before the Closing.


(n)           All
performance and other bonds, security and other deposits, advance payments,
prepaid credits and deferred charges, including the items listed on Schedule 2.1(n).


(o)           All
books, files, papers, agreements, correspondence, databases, information
systems, programs, software, documents, and records on whatever medium used by
Seller in the Mac Nut Business (the “Books and Records”).


(p)           All
goodwill generated by or associated with the Mac Nut Business.


(q)           Seller’s
Webpage.


(r)            Any
disaster grant aid from the federal government relating to events that took
place in calendar year 2006, including the earthquake on October 15, 2006,
whether received before or after the Closing Date.


(s)           All
of the other assets necessary for, or used, held for use or intended to be used
in, the conduct of the Mac Nut Business as presently conducted and as presently
proposed to be conducted as of the Closing Date not set forth in Sections 2.1(a) through 2.1(r), except any Excluded
Assets or Leased Assets.


2.2          Leased Assets


(a)           Seller
must (through Mac Farms or Kapua) lease to Buyer, and Buyer must lease from
Seller, those assets and properties used, held for use or intended to be used
in the conduct of the Mac Nut Business set forth on Schedule 2.2(a)
(the “Leased Assets”), upon and
subject to the terms and conditions of the Leases. As used in this Section 2.2(a), “Lease” means and includes “sublease” as to
any Leased Assets.


(b)           Notwithstanding
anything herein to the contrary, the term “Purchased Assets”
does not include the Leased Assets.


2.3          Terms of Purchase
and Sale


(a)           Purchase
Consideration. As full consideration for the sale, transfer, conveyance,
assignment and delivery to Buyer of the Purchased Assets, Buyer must, subject
to the terms of this Agreement, deliver to Seller on the Closing Date the
following (the “Purchase Consideration”):



 9
 









(1)              Cash Payment.  Good and immediately-available funds
(delivered by wire transfer to an account designated by Seller) in the amount
of the net value of Seller’s current assets as of the Closing Date (other than
Seller’s cash, accounts receivable and the associated reserve for doubtful
accounts, which are “Excluded Assets” pursuant to Section 2.4 hereof), less all
current liabilities as of the Closing Date, other than Seller’s revolving
credit line, Seller’s short-term debt, including any loans made to Seller by
its affiliates, such as RBS Sparks Holdings, LP, provisions for income tax
liabilities, interest payable, employee benefits-related liabilities, and any
inter-company balances, all as identified in Exhibit “I” (the “Working Capital” or the “Cash Payment”); provided, however,
notwithstanding the foregoing, the parties hereto agree that five percent (5%)
of the Cash Payment shall be remitted by Buyer to the Escrow Agent to be held
in the Escrow Agent’s trust account (the “Holdback Amount”).  The Escrow Agent shall retain the Holdback
Amount in its trust account (the “Escrow Account”),
pending the outcome of the True-Up (as defined herein).  Upon completion of the True-Up, the Escrow
Agent shall remit the Holdback Amount, as directed in the joint written
instructions of Seller and Buyer.  The
details of the foregoing escrow arrangement shall be memorialized in an escrow
agreement by and among Seller, Buyer, and the Escrow Agent, in form and
substance acceptable to Seller and Buyer. 
Both current assets and current liabilities shall be determined in the
form and manner as set forth in Exhibit “I”. 
The Parties will use the unaudited balance sheets of Seller as of the
last day of the month preceding the Closing Date to determine the estimated
amount of the Cash Payment to be paid by Buyer to Seller on the Closing Date,
using the methodology set forth in Exhibit I.


Thereafter, commencing immediately after the Closing
Date, Buyer will reconcile and review the financial statements of Seller,
NewCo1 and NewCo2 using its regular auditors, Accuity, LLP.  In connection with such Reconciliation and
Review, Buyer shall provide to Seller at least five (5) days’ prior written
notice of any inventory count, and Seller shall have the right to have a
representative present to observe and participate in any such inventory
count.  Within thirty (30) days after the
Closing Date, Buyer will deliver to Seller the results of such Reconciliation
and Review.  The Parties will determine
the actual amount of the Cash Payment, based upon the reconciled and reviewed
balance sheets of Seller, NewCo1 and NewCo2, as of the Closing Date, using the
methodology set forth in Exhibit I and as reconciled and reviewed by Accuity,
LLP (the “True-Up”).  If the True-Up is greater than ninety-five
percent (95%) of the Working Capital, as shown on the unaudited balance sheets
of Seller, as of the last day of the month preceding the Closing Date (the “Base Payment”), then to the extent
the True-Up value exceeds the Base Payment, such amount shall be paid to Seller
from the Hold-Back Amount held in the Escrow Account.  If there are any funds left in the Escrow
Account, after such payment, such funds shall be remitted to Buyer; provided,
however, for the avoidance of doubt,
if the True-Up value exceeds the Hold-Back Amount, then, in any such event,
Buyer shall pay such excess to Seller from Buyer’s funds.  In the event the True-Up value is less than
the Base Payment, then all funds in the Escrow Account shall be paid to
Buyer.  In addition, Seller shall pay to
Buyer, from Seller’s funds, the amount by which the True-Up value is less than
the Base Payment.  The foregoing
payments, based upon the Reconciliation and Review, shall be made within
forty-five (45) days after the Closing Date.


If Seller disagrees with the Reconciliation and Review
prepared by Accuity, LLP, Seller shall have the right to resort to the ADR
procedures set forth in Exhibit E herein.



 10
 









(2)              Units.  Six Hundred Fifty Thousand (650,000) Class A
limited partnership units in MLP (“Units”).  The Units will be issued as a Private
Placement under Regulation D of the Securities Act based upon the
representations of Seller contained in Section 3.31.
Pursuant to and in accordance with the terms and conditions of this Agreement
and the Registration Rights Agreement, and at Buyer’s sole expense, Buyer will
file with the SEC the Registration Statement (as herein defined) to register
the Units with the SEC.


(3)              Reserved.


(4)              Assumption of
Liabilities.  Assumption of the
Liabilities as set forth in Section 2.5.


(b)           Allocation
of the Purchase Consideration.  Buyer and
Seller agree to allocate the Purchase Consideration, as adjusted, in accordance
with the principles set forth in Schedule 2.3(b),
which schedule is based upon the unaudited balance sheets of Seller as of
December 31, 2006.  After the Closing
Date such schedule will be updated to conform to the unaudited balance sheets
of Seller, NewCo1 and NewCo2 as of the Closing Date. Thereafter, the Parties
will make consistent use of the allocation for all tax purposes and in all
filings, declarations, and reports to the IRS in respect thereof, including the
reports required to be filed under Section 1060 of the Code, and to be filed
with the State of Hawaii Department of Taxation, including the Bulk Sales
Report (Form G-8A).  Buyer will prepare
and deliver IRS Form 8594 to Seller within forty-five (45) days after the
Closing Date to be filed with the IRS, which shall be subject to Seller’s
approval, prior to submission thereof by Buyer to the IRS. In any litigation
related to the determination of any tax, Buyer and Seller must not contend that
such allocation is not a correct allocation.


(c)           Determination
of Which Entity Takes Purchased Assets. Buyer will determine, in Buyer’s sole
discretion, which of two entities to be formed for such purpose (“NewCo1” or “NewCo2”),
will take possession of the Purchased Assets upon the Closing; provided, however, that
the fact that either NewCo1 or NewCo2 takes possession of the Purchased Assets
shall in no way reduce or diminish MLP’s obligations or liabilities to Seller
under this Agreement or the Related Agreements. Generally, Buyer intends that
any Purchased Assets whose use would be consistent with MLP’s permissible
operations (i.e., farming macadamia nuts) will be taken by NewCo1, and any
Purchased Assets whose use would be inconsistent with MLP’s permissible
operations (i.e., processing macadamia nuts) will be taken by NewCo2.


(d)           Buyer
will, at its sole expense, form NewCo1 and NewCo2 as subsidiaries of Seller,
immediately prior to Closing.  Buyer will
draft mutually-acceptable transfer documents, so that the proper assets are
transferred to the appropriate subsidiary of Seller.  The foregoing asset transfers and the
transfer of all of the stock and membership interests of such subsidiaries from
Seller to Buyer shall occur and be effective at Closing.


(e)           Seller
will advise Buyer of the entity (i.e., Mac Farms or Kapua) that will receive
the relevant elements of the Purchase Consideration consistent with Section 2.3(b).


2.4          Excluded Assets,
Accounts Receivable, and Assumed Liabilities


The Parties acknowledge,
understand, and agree that Seller owns certain assets that are 



 11
 









not part of the Purchased
Assets or Leased Assets. Notwithstanding anything herein to the contrary,
Seller retains and does not transfer, convey, assign, or deliver to Buyer, and
Buyer does not acquire any right, title, or interest in or to the assets listed
on Schedule 2.4, including Seller’s
(i) cash, and (ii) Accounts Receivable, and associated reserve for doubtful
accounts, which shall be retained by Seller, and which shall be collected by
Buyer for the benefit of Seller and remitted by Buyer to Seller as provided
herein (the “Excluded Assets”); provided,
further, notwithstanding anything to the contrary herein, Seller may sell the
Excluded Assets and the Seller Land to any Person without Buyer’s consent or
approval (the “Third-Party Sales”).


To the extent Buyer
receives any payments from customers for work performed or goods sold by
Seller, prior to the Closing Date, and if Buyer has not performed any work for
such customers or sold any goods to such customers, prior to the receipt of
payment, then Buyer shall immediately remit such funds to Seller.


In the event Buyer should
receive payments from customers after the Closing Date, and such customers owe
accounts payable to both Buyer and Seller, then such payments shall be applied
in accordance with the written instructions or contract number references
accompanying the payment.  If no such
instructions or references accompany the payment, the payment shall be applied
first to accounts receivable accrued and owed to Seller prior to the Closing
Date and thereafter to accounts receivable accrued and owed to Buyer after the
Closing Date.


2.5          Assumed Liabilities


(a)           As
of the Closing Date, Buyer will assume, accept and undertake those liabilities,
duties, obligations, and responsibilities of Seller for the following
liabilities (the “Assumed Liabilities”): (i)
all liability relating to ordinary course trade payables as of the Closing
Date; (ii) all liabilities with respect to capital leases and installment
purchases or any agreement with respect thereto; (iii) all other liabilities
that constitute current liabilities of Seller in accordance with GAAP accrued
as of the Closing Date; (iv) all liabilities related to, or arising from, the
operation of the Mac Nut Business or ownership of the Purchased Assets and the
Leased Assets after the Closing Date, including, without limitation, any and
all roll-back or deferred real property taxes and penalties and interest
thereon assessed with respect to the Leased Assets, even if assessed for tax
years (or parts thereof) before the Closing Date, as provided in the Leases;
(v) all conveyance tax liabilities which arise as a result of the Leases; and
(v) all liabilities relating to the Acquired Contracts from and after Closing. 
Except for the Assumed Liabilities, Buyer does not assume any other
liabilities or obligations of any kind of Seller (whether known or unknown, contingent
or fixed, and whether at law or in equity or however arising), and Seller
remains solely responsible for and must pay and discharge such liabilities and
obligations and hold Buyer harmless with respect thereto as contemplated in Article VIII.


(b)           Without
limiting the generality of the foregoing, Buyer has no liability for the
following, which are not included in the definition of “Assumed
Liabilities”: except as set forth in Section 2.5
(a), (i) principal, interest, fees, expenses and other obligations
in respect of borrowed money or any agreement with respect thereto;
(ii) obligations of Seller for or relating to Taxes (including state and
local sales, use, transfer, excise and other similar Taxes arising in
connection with the consummation of the transactions contemplated by this
Agreement); (iii) obligations and expenses of Seller under this Agreement
or any agreement entered into in 



 12
 









connection with the transactions contemplated by this
Agreement; (iv) liabilities or obligations with respect to any Employee
Benefit Plan; (v) liabilities of Seller with respect to any Proceedings
pending or threatened against Seller; (vi) any liabilities arising out of
any pre-Closing Date breach by Seller of any Contract, whether or not the
obligations under such Contract would be an Assumed Liability; and
(vii) liabilities or obligations of Seller related to or arising from the
operation of the Mac Nut Business or ownership of the Purchased Assets and the
Leased Assets before the Closing Date, including any liability or obligation
relating to or arising from (A) macadamia nut products grown, manufactured,
processed, treated, stored, sold, or distributed by Seller before the Closing
Date or (B) injury to any Person or property before the Closing Date.


2.6          Closing


The closing of the
transactions contemplated by this Agreement (the “Closing”)
will take place at the offices of Carlsmith Ball, ASB Tower, Suite 2200, 1001
Bishop Street, Honolulu, Hawaii, 96813, on, or before, September 30, 2007, or
such other date or place as Buyer and Seller may mutually determine (the “Closing Date”). The Closing Date may
be postponed by either party provided that the Closing Date shall not be later
than October 31, 2007, without the approval, in writing, of both Parties.


2.7          Sales and Transfer
Taxes; Property Taxes


(a)           Seller
must pay all conveyance taxes, Hawaii State general excise taxes, and any other
transfer tax, sales tax, use tax, or similar state, county, or federal tax that
may arise as a result of this transaction, except Buyer shall pay all
conveyance taxes which arise as a result of the Leases.


(b)           Seller
and Buyer shall each pay one-half (1⁄2) of the aggregate premium for a standard
owners’ title policy for Buyer’s lessee interest under the Leases (excluding
any endorsements).  Buyer shall pay all
of the costs of any survey Buyer obtains, the cost of the recording fees for
the Leases, any mortgage recording fees, the additional cost for an ALTA title
policy over the cost of a standard owners’ title policy, and the cost of any
endorsements obtained by Buyer under the title policy.


(c)           Any
and all real property taxes, assessments, utilities, rentals, fuel, and other
charges (“Pro-Rated Items”) applicable
to the Purchased Assets or the Leased Assets which are payable in the year which
includes the Closing Date are to be pro-rated to the Closing Date based on the
percentage of the year before the Closing Date; provided, however, that Buyer
shall be responsible for payment of any and all roll-back or deferred real
property taxes and penalties and interest thereon assessed with respect to the
Leased Assets, even if assessed for tax years (or parts thereof) before the
Closing Date, as provided in the Leases. 
Each of Seller and Buyer is responsible for their respective shares of
those Pro-Rated Items.


(d)           Seller
shall be entitled to any credits or refunds of any Tax paid by Seller or
accruing prior to the Closing Date, including, without limitation, the Hawaii
Goods Excise Tax Credit and the Hawaii Fuel Tax, and not indemnified by Buyer,
and any interest thereon.  Buyer shall be
entitled to any credits or refunds of any Tax paid by Buyer after the Closing
Date and not indemnified by Seller, and any interest thereon.



 13















2.8          Assignment and
Assumption


(a)           Notwithstanding
anything herein to the contrary, if an attempted sale, assignment, transfer, or
delivery of any Purchased Asset would be ineffective without the consent of any
third party, or if such an act would violate the rights of any third party in
the Purchased Assets or otherwise affect adversely the rights of Buyer in the
Purchased Assets, and the applicable Required Consent has not been obtained on
or before the Closing Date, this Agreement does not constitute an actual or
attempted sale, assignment, transfer, or delivery of that Purchased Asset
(each, a “Restricted Asset”). Unless
and until any such Consent is obtained, such Restricted Asset does not
constitute a Purchased Asset, and any associated Liability does not constitute
an Assumed Liability for any purpose hereunder.


(b)           In
any such case, if the Closing has occurred, Seller must use its best efforts to
obtain, as soon as practicable, such Required Consent, as to any Purchased
Asset material to this transaction. Buyer must cooperate reasonably with Seller
in obtaining such Required Consent, provided, that
Buyer is not required to pay any cash consideration therefor or give or allow
to remain in effect any guaranty, letter of credit, performance bond, or other financial
assurance.


(c)           Until
such Required Consent is obtained, as to any Purchased Asset material to this
transaction, Seller must at its expense effect an alternate arrangement, in the
form of a license, sublease, operating agreement or other arrangement, in any
case reasonably satisfactory to Buyer, which results in Buyer receiving all the
benefits and bearing all the ordinary course costs, liabilities and other
obligations with respect to each Restricted Asset.


(d)           If
such Required Consents cannot be obtained by September 30, 2007, as to any
Purchased Asset material to this transaction, then, but only in such event,
Buyer has the option of extending the Closing Date to a date not later than
October 31, 2007, or waiving the requirement and closing the transaction.


ARTICLE III.

REPRESENTATIONS AND WARRANTIES RELATING TO SELLER


Seller represents and
warrants to Buyer that, (i) subject to the specific qualifications and
limitations set forth herein and (ii) except as otherwise set forth in the
Disclosure Schedules, incorporated into and made a part of this Agreement, the
statements contained in this Article III
are correct and complete as of the date of this Agreement.


3.1          Organization and
Qualification


Mac Farms and Kapua are
duly authorized to conduct business and are limited liability companies validly
existing and in good standing under the Laws of the State of Delaware, and are
qualified to do business in Hawaii and in every other jurisdiction in which the
nature of their business requires such qualification.


3.2          Noncontravention


None of the execution and
delivery of this Agreement, the Related Agreements, or the consummation of the
transactions contemplated hereby or thereby, will, with or without lapse of 



 14
 









time, (i) violate
any statute, regulation, rule, judgment, order, decree, stipulation,
injunction, charge, or other restriction of any Governmental Authority to which
Seller is subject or any provision of the certificate of formation or limited
liability company agreement of Seller, or (ii) conflict with, result in a
material breach of, constitute a default under, result in the acceleration of,
create in any party the right to accelerate, terminate, modify, or cancel, or
require any notice under any Contract or other arrangement to which Seller is a
party or by which it is bound or to which any of its assets is subject (or
result in the imposition of any Security Interest upon any of its assets).
Except as set forth on Schedule 3.2,
Seller does not need to give any notice to, make any filing with, or obtain any
authorization, consent, or approval of any Governmental Authority or other
Person in order for the Parties to consummate the transactions contemplated by
this Agreement and the Related Agreements.


3.3          Authorization of
Transaction


Seller has full power and
authority to execute and deliver this Agreement and the Related Agreements and
to perform its obligations hereunder and thereunder. The execution and delivery
of this Agreement and the Related Agreements and the consummation by Seller of
the transaction contemplated hereby have been duly and validly authorized by
all requisite action and no other proceedings on the part of Seller are
necessary to authorize this Agreement and the Related Agreements or to
consummate the transactions contemplated hereby and thereby. This Agreement and
the Related Agreements have been duly executed and delivered by Seller and
constitute the valid and legally binding obligation of Seller, enforceable in
accordance with their respective terms and conditions, subject to applicable
bankruptcy, insolvency, and similar laws affecting the enforcement of creditors’
rights generally and to general principles of equity.


3.4          Subsidiaries


None of the assets
relating to the Mac Nut Business are owned by any Subsidiary of Mac Farms or
Kapua.


3.5          Financial Statements


Seller has delivered to
Buyer copies of:


(a)           unaudited
balance sheets of Mac Farms and Kapua, related statements of operations,
members’ equity and comprehensive income (loss) for and as of the years ended
December 31, 2006, December 31, 2005, December 31, 2004, and for the
six month period ended December 31, 2003;


(b)           the
interim unaudited balance sheets of Mac Farms and Kapua, related statements of
operations, members’ equity and comprehensive income (loss) for and as of the
periods ended December 31, 2005, and December 31, 2006;


(c)           the
interim unaudited end-of-the month statements for the end of each month since
December 31, 2006; and


The unaudited financial statements referred in the previous
sub-paragraphs are collectively referred to as the “Financial
Statements”.



 15
 









On the Closing Date, the estimated Working Capital calculations set
forth in Exhibit I will be, to the best of Seller’s knowledge, accurate in all
material respects.


3.6          Reserved


3.7          Inventory; Nuts;
Product Liability


Except for defects,
spoilage and damage as would customarily be expected in the industry, all of
Seller’s Inventory is of good and merchantable quality, fit for the purpose for
which it is intended, and saleable and useable in the Ordinary Course of
Business, free of defects, spoilage and damage. All of the items in Seller’s
Inventory meet Seller’s current standards and specifications for quality, and
such Inventory is recorded on the books of Seller at the lower of cost or
market value.  Upon Seller’s agreement
with the results of the Reconciliation and Review, Seller will adjust its
financial statements to conform with the results of such Reconciliation and
Review.  Other than described in Schedule 3.7, Seller has not, for the past three years,
recalled any products made, distributed or sold by Seller and it is not now nor
has it ever been under any such obligation to do so, and there is no Basis for
any such recall.  Other than as described
in Schedule 3.7, Seller has not had nor does Seller have any liability
arising out of any injury to individuals or property as a result of the
ownership, possession or use of any of the Inventory manufactured, sold or
delivered by Seller.


3.8          Absence of Change


Since December 31,
2006, (i) Seller has conducted the Mac Nut Business in the Ordinary Course of
Business; and (ii) no event or circumstance has occurred that has had or is
reasonably likely to have a Material Adverse Effect.


3.9          Debts, Obligations,
and Liabilities


Schedule 3.9
contains a complete and accurate list and description of all of the outstanding
Liabilities, Security Interests, debts or other pecuniary obligations of Seller
related to the Mac Nut Business as of the date of this Agreement. Seller does
not have, and on the Closing Date will not have, any debts, Liabilities or
obligations of any nature, whether accrued, absolute, contingent or otherwise,
and whether due or to become due, that are not set forth in Schedule 3.9.


3.10        Reserved


3.11        Tax Matters


(a)           Seller
has timely filed all Tax Returns that it was required to file, and all such Tax
Returns were correct and complete in all respects. All Taxes owed by Seller
(whether or not shown on any Tax Return), other than any Taxes arising since
December 31, 2005, have been paid or accrued on Seller’s Financial Statements.
Seller currently is not a party to any extension of time within which to file
any Tax Return. To Seller’s Knowledge, no material claim has ever been made by
any taxing authority in a jurisdiction where Seller does not file Tax Returns
that it is or may be subject to taxation by that jurisdiction. There are no
Security Interests or liens on 



 16
 









any of the Purchased Assets or Leased Assets for
Taxes, other than for Taxes that are not yet due.


(b)           Seller
has withheld and paid all Taxes required to have been withheld and paid in
connection with amounts paid or owing to any employee, creditor, independent
contractor, or other Person, and Seller has properly reflected the status of
all employees and independent contractors in connection therewith as required
by applicable Tax Law.


(c)           Seller
has not received any notice that any Governmental Authority intends to assess
any additional Taxes for any period for which Tax Returns have been filed, and
no director or officer of Seller with responsibility for Tax matters has
Knowledge of any basis upon which a claim for such additional Taxes could be
made. There is no dispute or claim concerning any Tax Liability of Seller
either (i) to Seller’s Knowledge claimed or raised by any Governmental
Authority in writing or (ii) as to which Seller or the officers of Seller
or employees responsible for Tax matters of Seller has Knowledge based upon
personal contact with any agent of such authority. Seller has not waived any
statute of limitations in respect of Taxes which waiver is currently in effect.
Seller has made available to Buyer correct and complete copies of all Tax
Returns, examination reports, and statements of deficiencies assessed or agreed
to by Seller filed or received since June 1, 2003.


(d)           None
of the Assumed Liabilities is an agreement, contract, obligation, arrangement
or Plan (including any Employee Benefit Plan) that would give rise to
additional tax or interest under Section 409A of the Code. Seller is not a
party to any Tax allocation or sharing agreement. Seller has never been (nor
has any Liability for unpaid Taxes because it once was) a member of an ERISA
Affiliate filing a consolidated federal income Tax Return and has never
incurred any Liability for the Taxes of any Person under Treasury Regulation
Section 1.1502-6 (or any similar provision of any Law). Seller has never
incurred any Liability for the Taxes of any Person as a transferee or
successor, by contract, or otherwise.


(e)           The
book value and the federal income tax basis of each of the Purchased Assets is
as set forth on Schedule 3.11(e) as of December
31, 2006.  Seller will prepare a revised Schedule 3.11(e) ten (10) days prior to the Closing Date, as
of the most recent practicable date, as determined by Seller, ending on the
last day of the month.


(f)            Seller
agrees to notify Buyer of any adjustment to the federal income tax basis of the
Purchased Assets as a result of the transactions contemplated by this Agreement
and the Related Agreements.


(g)           Seller
intends to treat each of the Orchard Lease Agreement and the Processing Plant
Lease Agreement as a lease for federal income tax purposes. Seller intends to
include in gross income all amounts received under the Leases as rental income
for the Leased Assets. Gross amounts will not represent any profit arrangement
between Buyer and Seller or any interest in Buyer.


(h)           Seller
intends to treat the purchase in part as an exchange of the Purchased Assets
for an interest in Buyer qualifying under Section 721 of the Code in which
Buyer will assume the Assumed Liabilities.



 17
 









3.12        Purchased Assets and
Leased Assets


The Purchased Assets and
Leased Assets have been maintained in accordance with Seller’s normal practices
and are in workable operating condition.


3.13        Real Property


Schedule 3.13
sets forth a correct and complete list of all real property used in the Mac Nut
Business, including the Tax Map Key of each parcel or premises (to the extent
applicable), and indicating whether such real property is owned, leased,
licensed, subleased, sublicensed, or otherwise related to Seller.


3.14        Contracts


Schedule 3.14
correctly and completely lists and describes all Material Contracts (as herein
defined) to which Seller is a party or is bound. All Material Contracts to
which Seller is a party or is bound are in full force and binding upon the
parties thereto. No default by Seller has occurred thereunder and, to Seller’s
Knowledge, no default by the other contracting parties has occurred thereunder.
Seller has not waived any of its rights under its Material Contracts. No event,
occurrence or condition exists which, with the lapse of time, the giving of
notice, or both, or the happening of any further event or condition, would
become a default by Seller thereunder. Complete and accurate copies of all
written Material Contracts (including any amendments or supplements thereto)
and true and complete written summaries of all oral Material Contracts have
previously been delivered to Buyer. “Material Contracts”
means any of the following Contracts that relate to the Mac Nut Business:
purchase orders and purchase contracts in excess of $25,000 each; contracts for
capital expenditures in excess of $50,000 each; material agreements or
arrangements regarding confidentiality; agreements or arrangements regarding
non-competition; loan agreements; notes; security agreements; employment and
employment-related agreements; collective bargaining agreements; leases and
subleases of real estate where the annual payments thereunder exceed $10,000
leases and subleases of personal property where the annual payments thereunder
exceed $10,000 or which cannot be canceled by Seller without payment or penalty
upon notice of sixty (60) days or less; material license agreements; joint
venture, partnership or cooperative arrangements; any contract with a
Governmental Authority; and all other Contracts to which Seller is a party or
by which Seller or any of its Purchased Assets is bound and which have a notice
for termination period of more than six (6) months or obligate any party
thereto to make total payments of more than $25,000 during the term of such
agreement or arrangement.


3.15        Permits


Schedule 2.1(d)
contains a complete listing and summary description of all Permits of
Governmental Authorities or other similar rights owned or possessed by Seller
or used in or required for the lawful operation of the Mac Nut Business
(collectively, the “Licenses”). No other License
is required in the conduct of the Mac Nut Business as currently conducted or in
the ownership or use of the Purchased Assets and the Leased Assets. Seller has
in full force and effect all Licenses it is required to have with respect to
its operation of the Mac Nut Business. Except as indicated on Schedule 3.15, Seller owns or possesses all right,
title, and interest in and to all of the Licenses required for the Mac Nut
Business, and has at all times complied in all 



 18
 









material respects with
the terms and conditions of such Licenses. Except as set forth on Schedule 3.15, no loss or expiration of, nor any
noncompliance with, any License is pending or currently expected (including as
a result of the transactions contemplated hereby) other than expiration in
accordance with the terms thereof. Except as set forth on Schedule 3.15,
no consent, permit, approval or authorization of, or declaration to or filing
with, any Governmental Authority is required to be obtained by Seller or Buyer
under the Licenses, applicable Law or otherwise in connection with its
execution, delivery, and performance of this Agreement or the Related Agreements
or the consummation of any other transaction contemplated hereby or thereby.
Except as set forth on Schedule 3.15,
each of the Licenses is freely transferable to Buyer. Seller agrees to
cooperate with Buyer to arrange for new Licenses or Permits where those
Licenses or Permits are not transferable to Buyer.


3.16        Intellectual Property


To the Knowledge of
Seller, the Intellectual Property may be used by Buyer without the need for any
License or consent from any Person. 
Further, to the Knowledge of Seller, the operation of the Mac Nut
Business up to the Closing does not infringe on or misappropriate any
Intellectual Property rights of any Person, violate any right of any Person,
under any applicable Law, and no Person has asserted or threatened to assert
against Seller any claim of infringement or misappropriation of Intellectual
Property rights, or unfair competition or trade practices. Seller owns and has
the right to fully assign, convey, sell or otherwise transfer to Buyer all of
Seller’s Intellectual Property.  Seller
has not granted to any Person any outstanding Licenses or other right to any of
the Purchased Assets or Leased Assets, except as set forth in the License
Agreement between Kapua and Buyer. 
Seller is not liable, nor has it made any contract or arrangement by
which it may become liable, to any other Person for any royalty, fee, or other
compensation for the ownership, use, license, sale, distribution, or
reproduction of any of the Purchased Assets or Leased Assets.


3.17        Title to Assets


(a)           Except
as set forth on Schedule 3.17 and except as
to the Seller Land, Seller has good and marketable title to (or in the case of
assets identified as leased in the Books and Records, a valid leasehold
interest in) all of the Purchased Assets and Leased Assets free and clear of
all Liabilities (other than Liabilities to Seller’s Lessor(s) in accordance
with the terms of any applicable leases between Seller and its Lessor(s) and
Security Interests as to the Leased Assets). Upon Closing, Buyer will be
entitled to the continued possession and use of all Purchased Assets and Leased
Assets subject to, as to the Leased Assets, the terms of the Leases between
Seller and Buyer.


(b)           To
the Knowledge of Seller, there is no pending or anticipated change in any
applicable building, zoning, subdivision, health and safety and other land use
statutes, Laws, rules, regulations or other legal requirements affecting the
real property described on Schedule 3.13
that will have, taken as a whole, a Material Adverse Effect.


(c)           Neither
the whole nor any portion of the Leased Assets is subject to any order to be
sold or is being condemned, expropriated or otherwise taken by any Governmental
Authority 



 19
 









with or without payment of compensation therefor, nor,
to the Knowledge of Seller, has any such condemnation, expropriation or taking
been proposed.


3.18        Customers and Sales


Schedule 2.1(i)
is a correct and current list of all customers with respect to the Mac Nut
Business. In addition, Seller has provided to Buyer (i) summaries of the
sales made to each such customer during the 12 months preceding the
Closing Date, and (ii) copies of all written purchase orders or contracts
with any such customer for delivery of macadamia nuts or related items after
the Closing Date. Seller is not obligated to any such customer under any
macadamia nut by-products rebates, trade allowance or similar reimbursements.
To the Knowledge of Seller, none of these customers intend to cease doing
business with Seller or materially alter the amount of business such customer
is presently doing with Seller.


3.19        Insurance


Schedule 3.19
is a description of all insurance policies held by Seller that provide coverage
to Seller for the operation of its Mac Nut Business. Seller is not in default
with respect to payment of premiums on any such policy, and except as otherwise
disclosed, there are no premiums due or to become due between the date of this
Agreement and the Closing Date. Each policy is in full force and effect and
provides Seller with coverage as stated in the respective policies. Seller has
not received any written notice of any revocation or cancellation of any such
policy. Except as described in Schedule 3.19,
no claim is pending under any such policy.


3.20        Litigation


Schedule 3.20
sets forth each instance in which Seller or an Employee Benefit Plan (i) is
subject to any unsatisfied judgment, order, decree, stipulation, injunction, or
charge or (ii) is a party or, to the Knowledge of Seller, is threatened to be
made a party to any civil, criminal or administrative claim, charge, complaint,
demand, cause of action, suit, proceeding, arbitration, hearing or
investigation (collectively, “Proceeding”),
in any court or quasi-judicial or administrative agency of any federal, state,
local, or foreign jurisdiction or before any arbitrator. Without limiting the
generality of the foregoing, there is no pending or, to the Knowledge of
Seller, threatened Proceeding affecting the Leased Assets or the Purchased
Assets, except as set forth on Schedule 3.20.
To the Knowledge of Seller, no event has occurred, and no condition or
circumstance exists, that might be reasonably expected to directly give rise to
the commencement of any such Proceeding. Except as described on Schedule 3.20, no matter listed thereon could reasonably be
expected, individually or in the aggregate, to result in a Material Adverse
Effect to Seller or any Employee Benefit Plan. Except as described on Schedule 3.20, neither Seller nor, to the Knowledge of
Seller, any Employee Benefit Plan, intends to file or institute any Proceeding
against any other Person.


3.21        Environmental Matters


Buyer acknowledges
receiving a copy of the Phase I Site Assessment, dated June 13, 2003, completed
by URS Corporation (the “Environmental Report”).
To the Knowledge of Seller and except as described in the Environmental Reports
or on Schedule 3.21:



 20
 









(a)           The
Seller Land and all improvements thereon and the operations of the Mac Nut
Business have since June 1, 2003, been and are in material compliance with all
Environmental Laws;


(b)           There
are no pending or, to Seller’s Knowledge, threatened Proceedings involving
Seller or the Seller Land that allege or assert (i) a violation of any
Environmental Law or (ii) that Seller is required to clean up, remove or take
remedial or other responsive action due to a Release of Hazardous Materials;
and


(c)           Seller
has provided Buyer with complete and correct copies of all available studies,
reports, surveys, assessments, audits, correspondence, investigations,
analysis, tests, and other documents (whether in hard copy or electronic form)
in Seller’s possession relating to the presence or alleged presence of
Hazardous Substances at, on, or affecting the Seller Land.


Buyer will arrange for a current Phase I Site Assessment, prepared, at
Buyer’s expense, by a consultant secured by Buyer, and furnish a copy of such
Phase I Site Assessment to Seller.


3.22        Legal Compliance


In conducting the Mac Nut
Business, Seller has complied in all material respects with all federal, state,
and local statutes, ordinances, rules, orders, decrees, judgments, laws or
regulations, including zoning ordinances (collectively, “Laws”).
Except as disclosed in Schedule 3.22,
Seller has not received any written notice asserting any violation of any Law
in the five (5) years immediately preceding the date of this Agreement.


3.23        Employees


Schedule 3.23
is a list of the names and addresses of all full-time Employees, along with the
rates of compensation payable to each. To Seller’s Knowledge, no Employee
(i) has any plans to resign or retire from existing employment before
September 30, 2007, except by way of retirement at or following the age of
retirement set forth in Seller’s employee manual to which Seller is a party,
(ii) has been encouraged or induced by Seller to terminate employment or
(iii) has any reason related to Seller or the Mac Nut Business to
terminate employment or cease performing in their current role. Furthermore,
the consummation of this transaction will not result in the violation of the
Worker Adjustment and Retraining Notification Act (WARN), the Hawaii Dislocated
Workers Act (Haw. Rev. Stat. ch. 394B) or any similar statue, rule or
regulation.


3.24        Employee Benefit Plans


(a)           Schedule 3.24(a)  contains a complete and accurate list of all
Employee Benefit Plans. There has been no amendment, interpretation or
other announcement (written or oral) by Seller, any ERISA Affiliate, or any
representative thereof, relating to a change in participation or coverage under
any Employee Benefit Plan that, either alone or together with other such items
or events, would materially increase the expense of maintaining such Employee
Benefit Plan (or the Employee Benefit Plans taken as a whole) above the level
of expense incurred with respect thereto for the most recent fiscal year
included in the Financial Statements. Neither Seller nor any ERISA Affiliate has
any agreement to create, enter into or contribute to any additional 



 21
 









Employee Benefit Plan, or to modify or amend any existing Employee
Benefit Plan. There has been no amendment, interpretation or other
announcement (written or oral) by Seller, any ERISA Affiliate or any other
Person relating to, or change in participation or coverage under, any Employee
Benefit Plan that, either alone or together with other such items or events,
would materially increase the expense of maintaining such Employee Benefit Plan
(or the Employee Benefit Plans taken as a whole) above the level of expense
incurred with respect thereto for the most recent fiscal year included in the
Financial Statements. Except as set forth on Schedule
3.24(a), there are no material unfunded liabilities in
respect of any Employee Benefit Plan.


(b)           Seller has delivered or made
available to Buyer true, correct and complete copies (or, in the case of
unwritten Employee Benefit Plans, descriptions) of all Employee Benefit Plans
(and all amendments thereto), along with, to the extent applicable to the
particular Employee Benefit Plan, copies of the following: (i) the last three
Annual Reports (Form 5500 series) filed with respect to such Employee
Benefit Plan; (ii) the most recent summary plan description, and all
summaries of material modifications related thereto, distributed with respect
to such Employee Benefit Plan; (iii) all trust agreements, annuity contracts,
insurance contracts and other funding arrangements related to such Employee
Benefit Plan; (iv) the most recent determination letter issued by
the IRS with respect to such Employee Benefit Plan; (v) the most recent
annual actuarial valuation prepared for such Employee Benefit Plan;
(vi) all written communications during the last three years relating to
the amendment, creation or termination of such Employee Benefit Plan, or an
increase or decrease in benefits, acceleration of payments or vesting or other
events that could result in any material liability to the Company or any ERISA
Affiliate; and (vii) all material correspondence to or from any
Governmental Authority relating to such Employee Benefit Plan.


(c)           Except as disclosed on Schedule
3.24(c), to the Knowledge of Seller and its ERISA Affiliates, with
respect to each Employee Benefit Plan: (i) such Employee Benefit Plan was
properly and legally established; (ii) such Employee Benefit Plan is, and
at all times since inception has been, maintained, administered, operated and
funded in all material respects in accordance with its terms and in compliance
with all applicable requirements of all applicable Laws, including ERISA and
the Code; (iii) Seller, each ERISA Affiliate and all other Persons have,
at all times, properly performed all of their duties and obligations (whether
arising by operation of law or by contract) under or with respect to each
Employee Benefit Plan; (iv) all returns, reports (including all
Form 5500 series Annual Reports, together with all schedules and audit reports
required with respect thereto), notices, statements and other disclosures
relating to such Employee Benefit Plan required to be filed with any Governmental
Authority or distributed to
any Employee
Benefit Plan participant have been properly prepared and duly filed or
distributed in a timely manner; (v) none of Seller, any ERISA
Affiliate or any fiduciary of such Employee Benefit Plan has engaged in any
transaction or acted or failed to act in a manner that violates the fiduciary
requirements of ERISA or any other applicable Law; (vi) no transaction or
event has occurred or is threatened or about to occur (including any of the
transactions contemplated in or by this Agreement) that constitutes or could
constitute a prohibited transaction under Section 406 or 407 of ERISA or
under Section 4975 of the Code for which an exemption is not available;
(vii) neither Seller nor any ERISA Affiliate has incurred, and there exists no
condition or set of circumstances in connection with which Seller, any ERISA
Affiliate or Buyer would incur, directly or indirectly, any material liability
or expense (except for routine 



 22
 









contributions and benefit payments) under any applicable Law, or under
any indemnification or similar agreement, with respect to any Employee Benefit
Plan.


(d)           Each Employee Benefit Plan that is intended
to be qualified under Section 401(a) of the Code is maintained under a
volume submitter plan document for which the remedial amendment period is
open.  Except as disclosed in Schedule 3.24(c), to the Knowledge of Seller or any ERISA
Affiliate, nothing has occurred that would adversely affect the qualification
or exemption of any such Employee Benefit Plan or its related trust or group
annuity contract.


(e)           All
contributions, premiums, and other payments due or required to be paid to (or
with respect to) each Employee Benefit Plan have been correctly computed and
have been timely paid, or, if not yet due, have been accrued as a liability on
the Financial Statements. All income taxes and wage taxes required by Law to be
withheld from benefits derived under those Employee Benefit Plans have been
properly withheld and remitted to the proper depository.


(f)            There are no actions, suits
or claims (other than routine claims for benefits) pending or, to the Knowledge
of Seller, threatened with respect to (or against the assets of) any Employee
Benefit Plan, nor, to the Knowledge of Seller, is there a Basis for any such
action, suit or claim. Except as disclosed in Schedule
3.24(f), to the Knowledge of Seller no Employee Benefit Plan is
currently under investigation, audit or review, directly or indirectly, by any
Governmental Authority, and no such action is contemplated or under
consideration by any Governmental Authority.


(g)           Except as disclosed in Schedule 3.24(g),
neither Seller nor any ERISA Affiliate sponsors, maintains or contributes to,
or has ever sponsored, maintained or contributed to (or been obligated to
sponsor, maintain or contribute to), (i) a multiemployer plan as defined
in Section 3(37) or Section 4001(a)(3) of ERISA, (ii) a multiple
employer plan within the meaning of Section 4063 or 4064 of ERISA or
Section 413(c) of the Code, (iii) an employee benefit plan, fund, program,
contract or arrangement that is subject to Section 412 of the Code, Section 302
of ERISA or Title IV of ERISA, or (iv) a multiple employer welfare
arrangement as defined in Section 3(40) of ERISA.


(h)           Neither
Seller nor any ERISA Affiliate has incurred any liability under
Title IV of ERISA.


(i)            The
consummation of the transactions contemplated by this Agreement and the Related
Agreements will not constitute or involve a nonexempt prohibited
transaction within the meaning of Section 406 of ERISA or Section 4975 of the
Code.


(j)            No Employee
Benefit Plan that is subject to Section 409A of the Code has been materially
modified (as defined under Section 409A of the Code) since October 3, 2004 and
all such non-qualified deferred compensation plans or arrangements have been
operated and administered in good faith compliance with Section 409A of the
Code from the period beginning December 31, 2004 through the date hereof.


(k)           None of the execution or delivery of this
Agreement, the Related Agreements or the consummation of the transactions
contemplated In this Agreement will, either alone or in conjunction with any
other event, (i) result in any payment or benefit becoming due or payable, 



 23
 









or required to be provided, to any director, Employee or independent
contractor of Seller, or (ii) result in any amount to fail to be deductible by
reason of Section 280G of the Code.


(l)            Schedule 3.24 contains a
complete and accurate list all individuals who have elected (or who are
eligible to elect) to continue their coverage under Seller’s medical, dental or
other health plan in accordance with Sections 601 et. seq.
of ERISA, Section 4980(f) of the Code or similar state law, together with
the beginning and ending date of the period of continuation coverage for which
each such individual is eligible.


3.25        Labor Matters


Except as set forth on Schedule
3.25, Part 1, there are no disputes, arbitrations,
administrative complaints, civil actions, material employee grievances or material
disciplinary actions pending or, to the Knowledge of Seller, threatened between
Seller and any Employee or relating to labor or employment matters.
Seller has not suffered or sustained any work stoppage and no such work
stoppage,
to the Knowledge of Seller, is threatened. Seller, with respect to the Employees, has
complied in all material respects with all provisions of all Laws relating to
the employment of labor and has no liability for any arrearages of wages or
Taxes or penalties for failure to comply with any such Laws. Seller has no
Knowledge of any organizational efforts presently being made or threatened by
or on behalf of any labor union with respect to any Employee.


Except as set forth on Schedule 3.14 or Schedule 3.25, Part 2,
Seller, with respect to the Employees, is not a party to any:


(a)           management, employment or other contract
providing for the employment or rendition of executive services;


(b)           employment contract that is not terminable
without penalty by Seller on 30-days’ notice;


(c)           bonus, incentive, deferred compensation,
severance pay, pension, profit-sharing, retirement, stock purchase, stock
option, Employee Benefit, or similar Plan, agreement or arrangement;


(d)           collective bargaining agreement or other
agreement with any labor union or other employee organization (and no such
agreement is currently being requested by, or is under discussion by management
of Seller with, any group of Employees or others); or


(e)           other employment contract or other
compensation agreement or arrangement, oral and written, affecting or relating
to current or former Employees of the Mac Nut Business, including loan
agreements, advancements of expenses and similar arrangements.


All such contracts and other agreements and
arrangements set forth on Schedule 3.25. Parts 1 and 2 are valid, and in full force and effect.
Seller has performed all material obligations imposed on it thereunder, and
there are not under any of such contracts, agreements or arrangements, any
defaults or events of default by Seller or, to its Knowledge, any other party
thereto that would have a Material Adverse Effect.



 24















From June 1, 2003, to and including the
Closing Date, Seller has not made any loans to any officer or Employee of
Seller employed in the Mac Nut Business, except as set forth on Schedule 3.25, Parts 1 and 2.


3.26        Motor Vehicles


Schedule 3.26
sets forth an accurate and complete list of all Owned and Leased Vehicles. All
such Owned and Leased Vehicles are (a) properly licensed and registered in
accordance with applicable Law; (b) insured as set forth in the Disclosure
Schedule; (c) in good operating condition and repair (reasonable wear and
tear excepted); and (d) not subject to any Security Interest except as set
forth on Schedule 3.26.


3.27        Reserved


3.28        Transactions with
Affiliates


 Except as disclosed on Schedules 3.25
Part 1, 3.25 Part 2 or 3.28, there are no existing contracts,
transactions, indebtedness or other arrangements, or any related series
thereof, between Seller, on the one hand, and any of the directors, officers,
beneficial owners or other affiliates of Seller, on the other hand.


3.29        Fraudulent Conveyance


Seller is not entering
into this Agreement with the intent to hinder, delay or defraud any Person to
which it is, or may become, indebted. Seller’s assets, at a fair valuation,
exceed its liabilities, and Seller is able, and will continue to be able after
the Closing Date, to meet its debts as they mature and will not become
insolvent as a result of the Closing. After the Closing, Seller will have
sufficient capital and property remaining to conduct the business in which it
will thereafter be engaged.


3.30        Brokers’ Fees


Except as provided in Schedule 3.30, Seller does not have any Liability or
obligation to pay any fees or commissions to any broker, finder, or similar
representative with respect to the transactions contemplated by this Agreement
or the Related Agreements.


3.31        Investment Status


Seller is an “accredited
investor” within the meaning of Rule 501 of Regulation D promulgated
under the Securities Act of 1933, as amended (the “Securities
Act”). In addition, Seller: (a) is acquiring the Units for
its own account for investment and not with a view to the sale or distribution
of all or any part of such Units; and (b) is aware of Buyer’s business
affairs and financial condition and has acquired sufficient information about
Buyer to reach an informed and knowledgeable decision to acquire the Units.


3.32        Disclosure


The representations and
warranties contained in this Article III
do not contain any untrue 



 25
 









statements of a fact or
omit to state any material fact necessary to make the statements in Article III not misleading.


EXCEPT AS OTHERWISE
SPECIFICALLY SET FORTH IN THIS AGREEMENT, SELLER HEREBY EXPRESSLY DISCLAIMS ALL
REPRESENTATIONS AND WARRANTIES, EXPRESS OR IMPLIED, WITH RESPECT TO THE
PURCHASED ASSETS AND THE LEASED ASSETS OR ANY LIABILITIES OR OPERATIONS RELATING THERETO,
INCLUDING ANY WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE,
AND SUCH OTHER REPRESENTATIONS OR WARRANTIES ARE EXPRESSLY DISCLAIMED.  EXCEPT AS OTHERWISE SPECIFICALLY SET FORTH IN
THIS AGREEMENT,  THE PURCHASED ASSETS ARE
BEING SOLD, AND THE LEASED ASSETS ARE BEING CONVEYED, WITHOUT RECOURSE, “AS-IS”
AND “WHERE-IS”.


ARTICLE IV.

REPRESENTATIONS AND WARRANTIES OF BUYER


Buyer represents and
warrants to Seller that the statements contained in this Article IV
are correct and complete as of the date of this Agreement:


4.1          Organization and
Qualification


Buyer is duly authorized
to conduct business and is a limited partnership validly existing and in good
standing under the Laws of the State of Delaware, and is qualified to do
business in Hawaii and in every other jurisdiction in which the nature of its
business requires such qualification. NewCo1, if formed, will either be a
Hawaii corporation or will be a limited liability company formed under the laws
of the State of Hawaii, will be duly authorized to conduct business, will be
validly existing and in good standing under the Laws of the State of Hawaii and
will be qualified to do business in Hawaii and in every other jurisdiction in
which the nature of its business requires such qualification.  NewCo2, if formed, will be a corporation
formed under the laws of the State of Hawaii, will be duly authorized to
conduct business, will be validly existing and in good standing under the Laws
of the State of Hawaii and will be qualified to do business in Hawaii and in
every other jurisdiction in which the nature of its business requires such
qualification.


4.2          Noncontravention


The execution and
delivery of this Agreement and the Related Agreements, and the consummation of the transactions
contemplated hereby and thereby, will not (i) violate any statute,
regulation, rule, judgment, order, decree, stipulation, injunction, charge, or
other restriction of any government, governmental agency, or court to which
Buyer is subject or any provision of the certificate of limited partnership or
partnership agreement of Buyer, or (ii) conflict with, result in a
material breach of, constitute a default under, result in the acceleration of,
create in any party the right to accelerate, terminate, modify, or cancel, or
require any notice under any contract, lease, sublease, license, sublicense,
franchise, permit, indenture, agreement or mortgage for borrowed money,
instrument of indebtedness, security interest, or other arrangement to which Buyer
is a party or by which it is bound or to which any of its assets is subject (or
result in the imposition of any security interest upon any of its assets).
Buyer does 



 26
 









not need to give any
notice to, make any filing with, or obtain any authorization, consent, or
approval of any government or governmental agency in order for the Parties to
consummate the transactions contemplated by this Agreement or the Related
Agreements.


4.3          Authorization of
Transaction


Buyer has full power and
authority (including full limited partnership power and authority) to execute
and deliver this Agreement and the Related Agreements and to perform its
obligations hereunder and thereunder (including, without limitation, the
issuance of the Units and the registration of the Units pursuant to the
Registration Statement).  The execution
and delivery of this Agreement and the Related Agreements will have been, prior
to the Closing Date, duly and validly authorized by all requisite action. This
Agreement and the Related Agreements have been duly executed and delivered by
Buyer and constitute the valid and legally binding obligations of Buyer,
enforceable in accordance with their terms and conditions, subject to
applicable bankruptcy, insolvency, and similar laws affecting the enforcement
of creditors’ rights generally and to general principles of equity.


4.4          Brokers’ Fees


Buyer has no Liability or
obligation to pay any fees or commissions to any broker, finder, or agent with
respect to the transactions contemplated by this Agreement and the Related
Agreements for which Seller could become liable or obligated.


4.5          Capitalization;
Partnership Units


The authorized capital
stock of Buyer consists of 7,575,757 Class A limited partnership units. As of
the date of this Agreement, 7,575,757 Class A limited partnership units were
issued and outstanding.  Of this amount,
75,757 Units are owned by the Buyer, and 7,500,000 Units are owned by limited
partners.  As of the date of this
Agreement, there are, and as of the Closing Date there will be, no options,
warrants or other rights to purchase Class A limited partnership units of
Buyer, or securities convertible into or exchangeable for Class A limited
partnership units or obligating Buyer to issue or sell any Class A limited
partnership units, or securities convertible into or exchangeable for such
Class A limited partnership units, except as provided herein. The Units to
be issued under the terms of this Agreement will at Closing have been
adequately reserved and will, when issued, be validly issued, fully paid and
non-assessable and will not be issued in violation of any preemptive rights. As
of the effective date of this Agreement, the equity ownership of those partners
of Buyer who had more than a 5% partnership interest in Buyer was as set forth
on Schedule 4.5.


4.6          SEC Filings;
Financial Statements; No Changes


Buyer has timely filed or
furnished all registration statements, prospectuses, forms, reports and
documents required to be filed or furnished by it under the Securities Act or
the Exchange Act, as the case may be, since December 31, 2003 (collectively,
the “Buyer SEC Filings”). Each Buyer SEC
Filing (i) as of its date complied in all material respects with the
requirements of the Securities Act or the Exchange Act, as the case may be, and
(ii) except to the extent superseded by a later filed Buyer SEC Filing, does
not contain any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the 



 27
 









statements made therein,
in the light of the circumstances under which they were made, not misleading.
Each of the consolidated financial statements (including, in each case, any
notes thereto) contained in the Buyer SEC Filings (the “Buyer
Financial Statements”) was prepared in accordance with GAAP
applied (except as may be indicated in the notes thereto and, in the case of
unaudited quarterly financial statements, as permitted by Form 10-Q under the
Exchange Act) on a consistent basis throughout the periods indicated (except as
may be indicated in the notes thereto), and each presented fairly the
consolidated financial position, results of operations and cash flows of Buyer
as of the respective dates thereof and for the respective periods indicated
therein. The Books and Records of Buyer have been, and are being, maintained in
accordance with applicable legal and accounting requirements, and the Buyer
Financial Statements are consistent with the Books and Records. Since December
31, 2005, except as contemplated by, or as disclosed in, this Agreement or in
the Buyer SEC Filings, Buyer has conducted its businesses in the ordinary
course consistent with past practice and, since such date, there has not been
(a) any condition, event, circumstance, change or effect that,
individually or in the aggregate, has had or could reasonably be expected to
have a material adverse effect on the business, assets, properties, results of
operation or financial condition or prospects of Buyer or any event or
development that would, individually or in the aggregate, reasonably be
expected to have such a condition, event, circumstance, change or effect, or
(b) any event or development that would, individually or in the aggregate,
reasonably be expected to prevent or materially delay the performance of this
Agreement or the Related Agreements by Buyer.


4.7          Vote Required


Other than the
affirmative vote of a Majority Interest of the Partnership, which is necessary
to approve this Agreement, the Related Agreements, and the transactions
contemplated hereby, there is no other vote of the holders of any class or
series of partnership interests which is necessary to approve this Agreement
and the Related Agreements and the transactions contemplated hereby and
thereby.


4.8          Disclosure Documents


The registration
statement on Form S-3, any amendments or supplements thereto filed by Buyer
pursuant to which the Units will be registered with the SEC (including any
filings under the Securities Act or Exchange Act incorporated by reference
therein, collectively, the “Registration Statement”)
filed by Buyer pursuant to and in accordance with the terms and conditions of
this Agreement and the Registration Rights Agreement, at the time the
Registration Statement is declared effective, will comply as to form in all
material respects with the applicable requirements of the Securities Act and
other applicable Law, and the Registration Statement does not, and will not, at
the time the Registration Statement is declared effective, contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements made therein, in light of
the circumstances under which they were made, not misleading. The proxy
statement, any amendments or supplements thereto (collectively, the “Proxy Statement”) submitted by Buyer
in connection with seeking approval by a Majority Interest of the Partnership
of this Agreement, the Related Agreements, and the transactions contemplated
hereby and thereby, at the time the Proxy Statement is first mailed to the
Unitholders, will comply as to form in all material respects with the
applicable requirements of the Exchange Act and other applicable Law, and the
Proxy 



 28
 









Statement does not, and
at the time the Proxy Statement is first mailed to the Unitholders will not,
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements made
therein, in light of the circumstances under which they were made, not
misleading.


4.9          Disclosure


The representations and
warranties contained in this Article IV
do not contain any untrue statement of a fact or omit to state any material
fact necessary to make the statements in Article IV
not misleading.


ARTICLE V.

PRE-CLOSING COVENANTS


The Parties agree as
follows with respect to the period between the execution of this Agreement and
the Closing Date or the earlier termination of this Agreement:


5.1          Generally


Each Party must use its
reasonable efforts to take all action and to do all things necessary, proper,
or advisable to consummate and make effective the transactions contemplated by
this Agreement (including satisfying the closing conditions set forth in Article VII).


5.2          Notices and Consents


Seller must give any
notices to third parties and must use reasonable commercial efforts to obtain
such consents as the other Party may reasonably request in connection with the
consummation of the transactions contemplated by this Agreement and the Related
Agreements, including the Required Consents. 
At the request of Seller, Buyer must provide Seller with such assistance
and information as is reasonably requested by Seller to obtain the Required
Consents. Any costs incurred in obtaining the such Required Consents must be
borne by Seller. Seller must provide written notice to Seller’s employees and
the director of the Department of Labor and Industrial Relations of the State
of Hawaii 60 days before the Closing Date, as required under the Hawaii
Dislocated Workers Act.  Seller agrees
that it will be responsible for all liability, back pay, or penalties for any
violations of Hawaii’s Dislocated Workers Act arising out of termination of
Seller’s employees by Seller on, or prior to, the Closing Date.  Notwithstanding anything in this Agreement to
the contrary, this Agreement shall not constitute an agreement to assign any
Purchased Asset or any claim or right or any benefit arising under or resulting
from such Purchased Asset if an attempted assignment thereof, without the
consent of a third party, would constitute a breach, default, violation or
other contravention of the rights of such third party, would be ineffective
with respect to any party to an agreement concerning such Purchased Asset,
claim or right, or would in any way adversely affect the rights of Seller or,
upon transfer, Buyer under such Purchased Asset, claim or right. If any
transfer or assignment by Seller to Buyer, or any assumption by Buyer of, any
interest in, or liability, obligation or commitment under, any Purchased Asset,
claim or right requires the consent of a third party, then such transfer or
assignment or assumption shall be made subject to such consent being obtained.
If any such consent is not obtained before the Closing, and the Closing shall
nonetheless take place on the terms set forth herein, thereafter, Seller shall
use its best efforts to secure such consent as 



 29
 









promptly as practicable
after the Closing. Seller shall cooperate with Buyer in any lawful and
commercially reasonable arrangement reasonably proposed by Buyer under which (i)
Buyer shall obtain (without infringing upon the legal rights of such third
party or violating any applicable Law) the economic claims, rights and benefits
under the Purchased Asset, claim or right with respect to which the consent has
not been obtained in accordance with this Agreement, and (ii) Buyer shall
assume any related economic burden with respect to the Purchased Asset, claim
or right with respect to which the consent has not been obtained in accordance
with this Agreement. For the avoidance of doubt, subject only to Section 7.1(b), the terms of this Section 5.2
do not constitute conditions precedent to Closing, but rather represent the
means for facilitating the assignment to Buyer of certain of the Purchased
Assets and the assumption by Buyer of any obligations relating thereto, that
Buyer has agreed to assume, under the terms of this Agreement.


5.3          Operation of
Business Before the Closing


Seller must not, during
the period from the date hereof to the Closing Date, engage in any practice,
take any action, embark on any course of action, or enter into any transaction
with respect to the Mac Nut Business that is outside the Ordinary Course of
Business. Seller must (a) promptly notify Buyer of any event or occurrence
not in the Ordinary Course of Business, (b) confer with Buyer before
implementing any operational decisions of a material nature, (c) report
periodically to Buyer concerning the status of the Mac Nut Business, operations
and finances, and (d) cooperate with Buyer and assist Buyer in identifying the
Licenses required by Buyer to operate the Mac Nut Business from and after
Closing and either transferring existing Licenses of Seller to Buyer or
assisting Buyer in obtaining new Licenses for Buyer. Without limiting the
generality of the foregoing, with respect to the Mac Nut Business, other than
in the Ordinary Course of Business, Seller shall not (without the prior consent
of Buyer):


(a)           sell,
lease, dispose of, or otherwise transfer any interest in any Purchased Assets
or Leased Assets, except any sale or disposition of the Seller Land in
accordance with the terms hereof;


(b)           alter
in any material respect its historical practices and policies relating to the
payment of accounts payable, including any delay in paying accounts payable;


(c)           fail
to pay or otherwise satisfy its monetary obligations as they become due, except
such as are being contested in good faith;


(d)           create,
assume or suffer to be incurred any Liability or Security Interest on the
Purchased Assets;


(e)           incur
any indebtedness for borrowed money or guarantee any such indebtedness or issue
or sell any debt securities or guarantee any debt securities of others;


(f)            terminate
(other than allowing a contract or license to terminate by its terms), amend,
supplement or modify any Material Contract or License related to the Mac Nut
Business;


(g)           declare
or pay any dividends on or make other distributions in respect of any of its
equity interests, or set aside funds therefor, except for distributions of
profits;



 30
 









(h)           make
any loans to, or distribute any cash to, any Employee, equity holder or other
individual;


(i)            terminate
any Employee or grant severance or termination pay to any director, officer,
Employee or consultant;


(j)            adopt,
amend, or terminate (other than allowing a plans, program, policy or other
arrangement to terminate by its terms) any Employee Benefit Plans, programs,
policies or other arrangements, or enter into any employment contract, pay any
special bonus or special remuneration to any director, Employee or consultant,
or increase the salaries or wage rates of its Employees;


(k)           engage
in any transaction other than (i) one contemplated by this Agreement or any
Related Agreement, or (ii) that certain co-pack agreement with Hawaiian Host,
including the loan of certain co-packing equipment to Hawaiian Host, as more
particularly described on Schedule 5.3(k)
hereof, or (iii) any Third-Party Sales valued or with a potential value in
excess of $75,000, even if in the Ordinary Course of Business, without first
advising Buyer;


(l)            enter
into any transaction (other than one contemplated by this Agreement or any
Related Agreement) with its managers, officers, or members or their affiliates;


(m)          cancel,
materially amend, or renew any insurance policy; or


(n)           enter
into any contract or agree, in writing or otherwise, to take any of the actions
described above in clauses (a) through (m) of this Section 5.3.


5.4          Preservation of
Business


Seller must use
reasonable commercial efforts, consistent with past practices, to keep its
business and properties substantially intact, including Seller’s respective
present operations, physical facilities, working conditions, and relationships
with lessors, licensers, suppliers, customers and Employees.


5.5          Access


(a)           Seller
shall permit Buyer or Buyer’s representatives full access at reasonable times,
and in manner so as not to unreasonably interfere with the normal business
operations of Seller, to the headquarters and properties of Seller and to such
Books and Records, contracts, Tax records, and documents of or pertaining to
the Mac Nut Business as are reasonably necessary for Buyer’s performance of due
diligence under this Agreement. In conducting its due diligence, Buyer will
(i) obtain prior written permission from Seller before contacting any
customer, suppliers or Employees of Seller (other than the following Employees,
manager, or consultant: Mark Crawford, John Sullivan, David Rietow, and Hilary
Brown, whom Buyer may contact directly), (ii) use reasonable efforts to
limit the number and duration of such contacts with customers, suppliers or
Employees so as not to disturb or alarm Seller’s customers, suppliers or
Employees, and (iii) use reasonable efforts not to disrupt Seller’s
business operations in conducting its due diligence.



 31
 









(b)           Buyer
shall proceed to arrange with Seller a mutually agreeable time and place at
which Buyer may conduct interviews with such Employees or customers of Seller
(other than the individuals listed in Section 5.5(a))
as are mutually agreed to by Buyer and Seller’s representatives.


(c)           Seller
shall, upon reasonable notice, furnish to Buyer such additional financial and
operating data and other information regarding Seller and the Mac Nut Business
(including current information regarding Seller’s prospects, assets, contracts,
rights, Liabilities and obligations) that Buyer may from time to time
reasonably request.


(d)           Seller
shall grant Buyer and its agents and employees the right to enter the Seller
Land at reasonable times and with reasonable notice before the Closing for the purpose
of inspecting the Seller Land and the Purchased Assets, making such surveys or
performing such tests, studies or other activities as are reasonably
appropriate in connection with the consummation of transactions contemplated by
this Agreement and the Related Agreements; provided, however,
that (i) all such activities are at Buyer’s sole cost, expense, and
risk  without right of reimbursement from
Seller, and (ii) Buyer must use reasonable efforts to not unreasonably
interfere with Seller’s existing activities on the Seller Land or the Mac Nut
Business.


(e)           Seller
shall use reasonable efforts to assist and cooperate with Buyer in the
development of transition plans for implementation by Buyer following the
Closing.


5.6          Notice of
Developments


Seller shall give prompt
written notice to Buyer of (i) any development affecting the ability of
Seller to consummate the transactions contemplated by this Agreement and the
Related Agreements, (ii) any material loss of any equipment, supplier,
customer, contract or right relating to the Mac Nut Business, or (iii) any
breach of or other variance (or circumstance or occurrence that could
reasonably be expected to result in breach or variance or failure of a closing
condition) from the representations and warranties of Seller contained in Article III, or any breach of or noncompliance (or
circumstance or occurrence that could reasonably be expected to result in a
breach or noncompliance of failure of a closing condition) with any covenant
hereunder by Seller. If any fact or circumstance requires any change to the
Disclosure Schedules, then Seller promptly shall deliver to Buyer a supplement
to the Disclosure Schedules specifying such change. No disclosure under this Section 5.6 is to be deemed to amend or supplement the
Disclosure Schedules or to prevent or cure any misrepresentation, breach of
warranty, or breach of covenant.


Buyer shall give prompt
written notice to Seller of (i) any development affecting the ability of
Buyer to consummate the transactions contemplated by this Agreement and the
Related Agreements, or (ii) any breach of or other variance (or
circumstance or occurrence that could reasonably be expected to result in
breach or variance or failure of a closing condition) from the representations
and warranties of Buyer contained in Article IV,
or any breach of or noncompliance (or circumstance or occurrence that could
reasonably be expected to result in a breach or noncompliance of failure of a
closing condition) with any covenant hereunder by Buyer.



 32
 









5.7          Exclusivity


Seller shall not solicit,
entertain or encourage (including by way of furnishing to any third party
information regarding the Mac Nut Business or the Leased Assets or Purchased
Assets or Assumed Liabilities for such purpose) the submission of, or any
proposal or offer from any Person other than Buyer relating to any acquisition
of Seller’s membership interests, or its assets or business operations related
to the Mac Nut Business, whether through direct purchase, merger, consolidation
or other business combination, other than the sale of inventory in the Ordinary
Course of Business.


Notwithstanding the
foregoing paragraph, but without limiting the generality thereof, Seller may
engage in discussions with third parties for the purpose of consummating (and may consummate) any
Third-Party Sales; provided, however, that the buyer, in connection with any such
Third-Party Sales, except as otherwise set forth on Schedule 5.7
attached hereto, agrees to purchase the Seller Land and/or the Excluded Assets
subject to the terms of this Agreement.


5.8          Employee Matters


(a)           Attached
as Schedule 5.8, is a list of employees
that Buyer wishes to hire (collectively the “Transferred
Employees”). Subject to applicable Law and the receipt of any
employee consents requested by Seller, Buyer will have full access to the Books
and Records (including performance appraisals and disciplinary actions) of
Seller for the purpose of preparing for and conducting employment interviews
with all Transferred Employees. Seller agrees to terminate the employment of
all the hired Transferred Employees effective immediately before the Closing.
Before the Closing, Seller and Buyer shall jointly prepare and approve a notice
to be sent to the Transferred Employees on or before the Closing Date, advising
such Transferred Employees of the sale of the Mac Nut Business, their
termination as Seller’s Employees and Buyer’s offer of employment. Buyer will
hire the Transferred Employees who accept Buyer’s offer of employment on
mutually agreeable terms and conditions as between Buyer, and such Employees
and Seller will not have any obligation or responsibilities in connection with
Buyer’s post-Closing employment of the Transferred Employees; provided, however, Seller must retain and comply with
obligations and responsibilities as may be imposed on Seller under the Hawaii
Dislocated Workers Act or the federal Worker Adjustment Retraining Notification
Act. In the event any Transferred Employee fails to accept Buyer’s offer of
employment, such Employee must remain an Employee of Seller, subject to Seller’s
usual and customary practices, policies and procedures regarding employment,
and Seller must be solely responsible for any and all obligations or liability
with respect to the employment, or termination of employment, of any such
Employee. Buyer’s expressed intention to extend offers of employment as set
forth in this Section 5.8 does not constitute
any commitment (express or implied) of any obligation on the part of Buyer to a
post-Closing employment relationship of any fixed term or duration or upon an
terms or conditions other than those that Buyer may establish under individual
offers of employment. Nothing in this Agreement restricts any right of Buyer to
terminate any Transferred Employee or to amend or terminate Employee benefits
after the Closing Date to the extent permitted under applicable Law.


(b)           Buyer
will set its own initial terms and conditions of employment for the Transferred
Employees and others it may hire, including work rules, benefits and salary and




 33
 









wage structure, all as permitted by Law. Seller is
solely liable for any severance payment required to be made to its Employees
due to the transaction contemplated by this Agreement. Seller has advised Buyer
that there are no collective bargaining agreements in force.


(c)           Buyer
must grant or cause to be granted full credit to the Transferred Employees that
accept employment with Buyer for carry-over to employment with Buyer of unused
vacation and other paid time-off balances under the Employee Benefit Plan and
Employee policies of Seller before the Closing Date.


5.9          Certain Filings with
the SEC


(a)           As
promptly as practicable after the execution of this Agreement, Buyer shall seek
from the SEC preliminary approval (“SEC Preliminary Approval”)
to file the Proxy Statement using the abbreviated financial information as set
forth in Buyer’s “Request for Substitution of Abbreviated Financial Information”
to the SEC.  Buyer will use all
reasonable best efforts to obtain the SEC Preliminary Approval within fourteen
(14) Business Days after the date of this Agreement.


(b)           Either
party in its sole discretion may determine whether it is satisfied with the
approvals and/or conditions granted or required by the SEC in the SEC
Preliminary Approval.  At such time as
such party makes such determination, it may give written notice to the other
party that it is satisfied with the SEC Preliminary Approval and waives its
right to terminate the Agreement as provided for in Section
9.1(f).


(c)           Either
party may terminate this Agreement as provided for in Section
9.1(f) at any time after the expiration of fourteen (14) Business
Days from the effective date of this Agreement, and no later than five (5)
Business Days after the date on which the other party has given such terminating
party the written notice provided for in Section 5.9(b).


(d)           As
promptly as practicable after the giving of the written notice provided for in Section 5.9 (b), Buyer shall prepare and file with the
SEC a proposed Proxy Statement.  Each of
Buyer and Seller shall prepare and file with the SEC any other filings as and
when required or requested by the SEC. 
Each of Buyer and Seller will use all reasonable best efforts
(i) to respond to any comments made by the SEC with respect to the Proxy
Statement and (ii) to have the Proxy Statement cleared by the SEC.  Seller shall cooperate with the Buyer and the
SEC and furnish reasonable information requested by the Buyer and the SEC; provided, however, that Seller shall not be required to
provide to the SEC (or permit Buyer to provide to the SEC) any additional
information that may be requested by the SEC in order to prepare audited
financial statements of Seller or to include other financial data of Seller in
Buyer’s “Request for Substitution of Abbreviated Financial Information” to the
SEC or in the Proxy Statement even if such additional information, audited
financial statements or other financial data is required by the SEC to grant
the SEC Preliminary Approval and/or to clear the Proxy Statement.  As promptly as practicable after clearing all
SEC comments to the Proxy Statement, Buyer shall mail the Proxy Statement to
its holders of partnership interests. The Proxy Statement shall include the
recommendation of the Board of Directors of Seller that adoption of this
Agreement and the transactions contemplated hereby by Buyer’s Unitholders are
advisable and in the best interests of Buyer. No amendment or 



 34
 









supplement to the Proxy Statement will be made by
Buyer without the approval of Seller (which approval shall not be unreasonably
withheld, conditioned, or delayed).


(e)           The
information supplied by Seller for inclusion in the Proxy Statement shall not
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements
contained therein not misleading. The information supplied by Buyer for
inclusion in the Proxy Statement shall not contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary to make the statements contained therein not misleading. All
documents that Buyer is responsible for filing with the SEC in connection with
the transactions contemplated herein will comply as to form and substance in
all material respects with the applicable requirements of the Securities Act
and the rules and regulations thereunder, the Exchange Act and the rules and
regulations thereunder, and other applicable Law.


ARTICLE VI.

POST-CLOSING COVENANTS


6.1          Post-Closing
Cooperation


If at any time after the
Closing any further action is reasonably necessary or desirable to carry out
the purposes of this Agreement and the Related Agreements, each Party must take
such further action (including the execution and delivery of such further
instruments and documents) as any other Party reasonably may request, all at
the sole cost and expense of the requesting Party, except in connection with
the Registration Rights Agreement as to requests made by Seller, without right
of reimbursement from any other Party (unless the requesting Party is entitled
to indemnification therefor under Article VIII).
The covenants contained in this Article VI
shall survive the Closing.


6.2          Post-Closing
Confidentiality Obligation of Seller


Seller must treat all
information that was in its possession before the Closing Date with respect to
the Mac Nut Business (whether or not reduced to writing and whether or not
patentable or protected by copyright) as confidential for a period of five
(5) years from the Closing Date; provided that
the foregoing information does not include information that (i) was or
becomes generally available to the public other than as a result of an
unauthorized disclosure by Seller, (ii) was or becomes available to Seller
on a non-confidential basis without breach of this Agreement, provided that such source is not known to Seller, after
reasonably inquiry, to be bound by a confidentiality agreement or otherwise
prohibited from transmitting the information to Seller by a contractual, legal
or fiduciary obligation known to Seller, after reasonably inquiry,  (iii) which is required to be and
actually is disclosed, under applicable Law, provided
that Seller will use reasonable efforts under the circumstances to
notify Buyer of such requirement and cooperate with Buyer so as to provide
Buyer the opportunity to obtain such protective orders or other relief, at
Buyer’s expense, as the compelling court or other entity may grant, or (iv)
such disclosures as are necessary in order for Seller to enforce the terms of this
Agreement.


6.3          Post-Closing
Litigation Support


In the event and for so
long as any Party actively is contesting or defending against any 



 35
 









Proceeding in connection
with (i) any transaction contemplated under this Agreement or any Related
Agreement or (ii) any fact situation, circumstance, status, condition,
activity, practice, plan, occurrence, event, incident, action, failure to act
or transaction on or before the Closing Date involving a Party, the other Party
must provide reasonable cooperation to the contesting or defending Party and
its counsel in the contest or defense, make its personnel reasonably available,
and provide such testimony and access to its books and records as is reasonably
necessary in connection with the contest or defense, all at the sole cost and
expense of the contesting or defending Party (unless the contesting or
defending Party is entitled to indemnification therefore under Article VIII).


6.4          Post-Closing
Adjustments


Both Parties will
exercise due diligence in cooperating and making all post-closing adjustments,
such as preparing a balance sheet as of the Closing Date, adjusting prorations,
and preparing a schedule of book values and tax basis values as of the Closing
Date, all of which shall be accomplished no later than thirty (30) days after
the Closing Date.


ARTICLE VII.

CONDITIONS TO OBLIGATIONS TO CLOSE


7.1          Buyer’s Conditions


The obligation of Buyer
to consummate the transactions to be performed by it in connection with the
Closing is subject to satisfaction or waiver of the following conditions,
provided that Buyer may waive any condition specified in this Section 7.1 only if Buyer executes a writing so stating
at or before the Closing:


(a)           Covenants,
Representations and Warranties


The respective
representations and warranties of Seller set forth in Article III
must be true and correct in all material respects (except for those
representations and warranties that contain an express materiality
qualification, which must be true and correct in all respects) on the date made
and at and as of the Closing Date, and Seller must have performed and complied
with all of its covenants hereunder in all material respects through the
Closing Date, and Buyer must have received a certificate in form and substance
satisfactory to Buyer dated as of the Closing Date on behalf of Seller by the
president of Seller or an equivalent officer to such effect.


(b)           Consents


Seller must have procured
all Required Consents and must have provided evidence of such Required Consents
and notices in form and substance reasonably satisfactory to Buyer.  Buyer must have received all Governmental
Authorizations as are necessary to allow Buyer to operate the Mac Nut Business
and the Leased Assets and Purchased Assets from and after the Closing Date.


(c)           Documents
to Be Delivered By Seller


The following documents,
in form and substance satisfactory to Buyer, must be delivered 



 36
 









to Buyer at Closing by
Seller:


(1)           bill of sale, duly executed by
Seller;


(2)           assignment and assumption
agreements, duly executed by Seller, in a form mutually agreeable to both
parties;


(3)           assignment of Seller’s
Intellectual Property described in Schedule 2.1(j),
in due form for recordation with the appropriate Governmental Authority and the
License Agreement, each duly executed by Seller;


(4)           vehicle titles and assignments
sufficient to transfer title to the Owned and Leased Vehicles to Buyer;


(5)           orchard lease agreement in the
form of Exhibit A-1 hereto (the “Orchard Lease Agreement”), duly
executed by Seller;


(6)           memorandum of the Orchard
Lease Agreement in the form of Exhibit A-2
hereto (the “Memorandum of Lease”), duly
executed by Seller;


(7)           processing plant lease
agreement in the form of Exhibit B-1
hereto (the “Processing Plant Lease Agreement”),
duly executed by Seller;


(8)           memorandum of the Processing
Plant Lease Agreement in the form of Exhibit B-2
hereto (the “Memorandum of Plant Lease”),
duly executed by Seller;


(9)           the Registration Rights
Agreement duly executed by Seller;


(10)         reserved;


(11)         originals (to the extent
available) or copies of the Acquired Contracts and Seller Permits;


(12)         if applicable, executed
non-foreign certificates in accordance with Section 1445 of the Code and
the regulations issued thereunder;


(13)         State of Hawaii Department of
Taxation Form G-8A, Report of Bulk Sale or Transfer, duly executed by Seller,
together with the attached certificate of the Director of Taxation of the State
of Hawaii, bearing an issuance date no earlier than ten (10) days before
Closing;


(14)         Tax Clearance Certificate (Form
A-6) issued by the Hawaii State Department of Taxation no earlier than fifteen
(15) days before Closing;


(15)         Hawaii State Tax Form N-289,
duly executed by Seller;


(16)         Conveyance Tax Certificates
relating to the Orchard Lease Agreement and Processing Plant Lease Agreement,
duly executed by Seller;



 37
 









(17)         the Required Consents (as listed
in Exhibit F);


(18)         payoff and release letters
relating to liens on the Purchased Assets;


(19)         the Books and Records;


(20)         certificate of Secretary of
Seller duly executed by Seller;


(21)         originals of lien releases,
including Uniform Commercial Code Termination Statements, executed by Rabobank
in connection with any Security Interests on the Purchased Assets in favor of
Rabobank;


(22)         stock powers and
assignment of membership interests, as applicable, relating to NewCo1 and
NewCo2, duly-executed by Seller; and 


(23)         such other
certificates, instruments of sale, transfer, conveyance, and assignment or
other documents reasonably requested by Buyer and as otherwise necessary or
appropriate to transfer the Purchased Assets and Assumed Liabilities, or as
Buyer may reasonably request to consummate the transactions contemplated by
this Agreement and the Related Agreements and to vest in Buyer full and
complete title to the Purchased Assets, free and clear of all encumbrances.


(d)           Financial
Condition


Each of the following
must be true and complete as of the Closing Date:


(1)           All respective Security
Interests securing debts of Seller relating to the Purchased Assets shall be
paid in full before, or at, the Closing; and


(2)           No unsatisfied liens for the
failure to pay Taxes (except for liens for any current real and personal
property taxes and all non-delinquent installments of assessments or bonds) of
any nature whatsoever exist concerning the Mac Nut Business.


(e)           No
Material Adverse Change


No Material Adverse
Effect shall have occurred at any time since December 31, 2005.


(f)            Title
to Seller Land


Title Guaranty of Hawaii,
Incorporated or such other title company as is acceptable to Buyer (“Title Company”) must have issued to
Buyer and Buyer’s lenders an irrevocable commitment to issue to Buyer an ALTA
leasehold title insurance policy, in the amount of $5,000,000, insuring that
immediately upon Closing Buyer will be the owner of the leasehold interest in
the Seller Land, subject only to matters reasonably acceptable to Buyer. Buyer,
at Buyer’s discretion, may secure issuance of two different policies, one for
the Orchard Lease and one for the Processing Plant Lease.


(g)           Employment
Relationships



 38
 









Buyer must have received
from those persons enumerated in Schedule 7.1(g)
assurances satisfactory to Buyer with respect to each of the foregoing person’s
intentions to enter the employ of Buyer immediately after the Closing, which
assurances may include executed offer letters or employments agreements.


(h)           Legal
Proceedings


There must be no legal
requirement in effect, and no judgment or order must have been entered and not
vacated by any Governmental Authority of competent jurisdiction in any
Proceeding or arising therefrom, which unduly delays, enjoins, restrains, makes
illegal, or prohibits consummation of the transactions contemplated by this
Agreement or by the Related Agreements, and there must be no Proceeding pending
or threatened seeking, or which if successful would have the effect of, any of
the foregoing.


(i)            Partnership
Approval


Buyer must have received
approval of a Majority Interest of the Partnership to close this transaction.


7.2          Seller’s Conditions


The obligation of Seller
to consummate the transactions to be performed by it in connection with the
Closing is subject to satisfaction or waiver of the following conditions,
provided that Seller may waive any condition specified in this Section 7.2 if it executes a writing so stating at or
before the Closing Date:


(a)           Covenants,
Representations and Warranties


The respective
representations and warranties of Buyer set forth in Article IV
must be true and correct in all material respects (except for those
representations and warranties that contain an express materiality
qualification, which must be true and correct in all respects) on the date made
and at and as of the Closing Date, and Buyer must have performed and complied
with all of its covenants hereunder in all material respects through the Closing,
and Seller must have received a certificate dated the Closing Date on behalf of
Buyer by the president of Buyer or equivalent officer to such effect.


(b)           Documents
to Be Delivered by Buyer


The following documents,
in form and substance satisfactory to Seller, must be delivered to Seller at
Closing by Buyer:


(1)           unit certificate representing
the Units;


(2)           assignment and assumption
agreement in a form mutually agreeable to both parties;


(3)           the Orchard Lease Agreement,
duly executed by Buyer;



 39
 









(4)           the Memorandum of Lease, duly
executed by Buyer;


(5)           the Processing Plant Lease
Agreement, duly executed by Buyer;


(6)           the Memorandum of Plant Lease,
duly executed Buyer;


(7)           the Registration Rights
Agreement duly executed by Buyer;


(8)           reserved;


(9)           the License Agreement
duly-executed by Buyer;


(10)         certificate of
Secretary of Buyer duly executed by Buyer;


(11)         reserved;


(12)         County of Hawaii
Affidavit for Continuation of Agricultural Dedication (RP Form 19-60(g))
duly-executed by Buyer and notarized; and


(13)         such other
certificates, instruments of sale, transfer, conveyance, and assignment or
other documents reasonably requested by Seller and as otherwise necessary or
appropriate to the transfer of the Purchased Assets and Assumed Liabilities, or
as Seller may reasonably request to consummate the transactions contemplated by
this Agreement and the Related Agreements.


(c)           Legal
Proceedings


There must be no legal
requirement in effect, and no judgment or order must have been entered and not
vacated by any Governmental Authority of competent jurisdiction in any
Proceeding or arising therefrom, which unduly delays, enjoins, restrains, makes
illegal, or prohibits consummation of the transactions contemplated hereby or
by the Related Agreements, and there must be no Proceeding pending or
threatened seeking, or which if successful would have the effect of, any of the
foregoing.


(d)           Approvals
by All Members of Seller


Seller
shall have received the approvals of all members of Mac Farms and Kapua.


ARTICLE VIII.

SURVIVAL AND INDEMNIFICATION


8.1          Survival


Regardless of any
investigation made by the Parties in connection with this Agreement or by the
Related Agreements, any notice to Buyer under Section 5.6,
or any waiver of any closing condition set forth in Article VII:



 40















(a)           all
representations and warranties set forth in this Agreement or in the Related
Agreements (including any certificate delivered at Closing or otherwise in
connection with this Agreement and the Related Agreements) shall survive the
Closing Date and the consummation of the transactions contemplated hereby for a
period of 12 months and will not be affected in any way by any examination
made for or on behalf of either Party, the knowledge of any of its respective
officers, directors, members, employees or agents, or the acceptance of any
certificate or other closing document; provided, however,
that the Parties’ respective representations and warranties set forth in Section 3.1 (Organization and Qualification), Section 3.3 (Authorization of Transaction), Section 3.11 (Tax Matters), Section 3.17
(Title to Assets), Section 3.24
(Employee Benefit Plans), Section 4.1
(Organization and Qualification) and Section 4.3
(Authorization of Transaction) will survive the Closing Date for a period
ending thirty (30) days after the expiration of the applicable statute of
limitations for all Claims that could be asserted by any third party, including
Governmental Authorities, with respect to matters addressed in such Sections
(all representations and warranties by Buyer and Seller that survive for longer
than 12 months are referred to herein as the “Fundamental
Representations”);


(b)           all
obligations of the Parties under the covenants and agreements contained in this
Agreement shall survive the Closing, until all such obligations have been fully
performed in accordance with their terms; and


(c)           any
written claim for indemnification provided under Section 8.3
based upon a breach of a representation or warranty asserted before the
applicable survival period set forth in subsection (a) above, shall survive
until final resolution of such Claim.


All certificates
delivered by Seller in connection with this Agreement, any Related Agreement or
the Closing are deemed to be representations and warranties of Seller for this Article VIII, subject to the same survival period as is set
forth in Section 8.1; provided,
however, that to the extent such
certificates relate to Fundamental Representations, the longer survival period
applicable thereto as provided in Section 8.1
applies on a comparable Basis to that certificate. For this Article VIII, no such certificate will be deemed to
modify any representation or warranty made under this Agreement or the Related
Agreements without Buyer’s prior written consent.  No notice to Buyer, after the date hereof but
before Closing, of any breach of any representation, warranty, or covenant
shall affect or impair any rights to be indemnified as provided herein.


All certificates
delivered by Buyer in connection with this Agreement, any Related Agreement or
the Closing are deemed to be representations and warranties of Buyer for this Article VIII, subject to the same survival period as is set
forth in Section 8.1; provided,
however, that to the extent such
certificates relate to Fundamental Representations, the longer survival period
applicable thereto as provided in Section 8.1
applies on a comparable Basis to that certificate. For this Article VIII, no such certificate shall be deemed to
modify any representation or warranty made under this Agreement or the Related
Agreements without Seller’s prior written consent. No notice to Seller, after
the date hereof but before Closing, of any breach of any representation,
warranty, or covenant shall affect or impair any rights to be indemnified as
provided herein.



 41
 









8.2          Mutual Indemnification


(a)           The
Seller shall indemnify, hold harmless, and defend Buyer and each of Buyer’s
partners, subsidiaries, affiliates, officers, employees, and agents and their
respective successors and assigns (collectively, the “Buyer
Indemnitees”), from and against any and all Losses which any
Buyer Indemnitee may suffer, sustain or become subject to, as a result of or
relating to (including by virtue of any third party’s allegation of):


(1)              the breach (or third party
allegation that, if true, would constitute a breach) by Seller of any
representation or warranty made by Seller in this Agreement or any Related
Agreement or any certificate delivered by Seller in connection with this
Agreement or any Related Agreement or the Closing;


(2)              the breach (or third party
allegation that, if true, would constitute a breach) by Seller of any covenant
or agreement made by Seller in this Agreement or any Related Agreement or any
certificate delivered by Seller in connection with this Agreement or any
Related Agreement or the Closing;


(3)              any obligation or liability
of any kind associated in any way with or attributable to Seller that is not an
Assumed Liability, including any and all obligations or Liabilities related to
or arising from the operation of the Mac Nut Business or the ownership of the
Purchased Assets and the Leases Assets before the Closing (including
Liabilities or obligations relating to environmental and worker health and
safety compliance matters occurring before the Closing Date);


(4)              any obligation or Liability
of any kind arising from or related to noncompliance with applicable fraudulent
transfer legal requirements in connection with the transactions contemplated by
this Agreement and the Related Agreements, or the Closing; and


(5)              any obligation or Liability
of any kind arising under the Worker Adjustment and Retraining Notification Act
(WARN), the Hawaii Dislocated Workers Act (Haw. Rev. Stat. Chapter 394B) or any
similar statue, rule or regulation as a result of Seller’s termination of its
Employees;


provided, however,
that Seller shall not be obligated to indemnify, hold harmless, and defend
Buyer or any Buyer Indemnitees, unless the aggregate of all Losses of all Buyer
Indemnitees subject to indemnification hereunder exceeds One Hundred Thousand
Dollars ($100,000), in which case Buyer Indemnitees shall be entitled to
recover all Losses in excess of such amount, subject to the terms of the last
paragraph of Section 8.3 hereof. The
foregoing limitation does not apply to any Seller indemnification obligation
arising out of, relating to or resulting from fraud or intentional
misrepresentation by Buyer.


(b)           Buyer
shall indemnify, hold harmless, and defend Seller and each of Seller’s members,
subsidiaries, affiliates, officers, directors, employees, and agents and their
respective successors and assigns (collectively, the “Seller
Indemnitees”), from and against any and all Losses which any
Seller Indemnitee may suffer, sustain or become subject to, as a result of or
relating to (including by virtue of any third party’s allegation of):



 42
 









(1)              the breach (or third party
allegation that, if true, would constitute a breach) by Buyer of any
representation or warranty made by Buyer in this Agreement or any Related
Agreement or any certificate delivered by Buyer in connection with this
Agreement or any Related Agreement or the Closing;


(2)              the breach (or third party
allegation that, if true, would constitute a breach) by Buyer of any covenant
or agreement made by Buyer in this Agreement or any Related Agreement or any
certificate delivered by Buyer in connection with this Agreement or any Related
Agreement or the Closing;


(3)              any obligation or liability
of any kind associated in any way with or attributable to Buyer that is an
Assumed Liability, including any and all obligations or Liabilities related to
or arising from the operation of the Mac Nut Business or the ownership of the
Purchased Assets and the Leased Assets from and after the Closing (including
Liabilities or obligations relating to environmental and worker health and
safety compliance matters occurring on or after the Closing Date);


provided, however,
that Buyer is not be obligated to indemnify Seller or any Seller Indemnitees
unless the aggregate of all Losses of all Seller Indemnitees under such clauses
exceed One Hundred Thousand Dollars ($100,000), in which case Seller
Indemnitees are entitled to recover all Losses in excess of such amount,
subject to the terms of the last paragraph of Section 8.3
hereof. The foregoing limitation does not apply to any Buyer indemnification
obligation arising out of, relating to or resulting from fraud or intentional
misrepresentation by Seller.


(c)           Seller
shall be liable to a Buyer Indemnitee concerning Claims referred to in Section 8.2(a) only if such Buyer Indemnitee gives
written notice thereof under Sections 8.3(a)
and 10.2 to Seller before the
expiration of the survival period, as set forth in Section 8.1,
applicable to such Claim.


(d)           The
Buyer shall only liable to a Seller Indemnitee concerning Claims referred to in
Section 8.2(b) only if such Seller
Indemnitee gives written notice thereof under Sections 8.3(a)
and 10.2 to Buyer before the expiration
of the survival period, as set forth in Section 8.1,
applicable to such Claim.


8.3          Procedure for
Indemnification


(a)           If
any Seller Indemnitee or Buyer Indemnitee seeks indemnification under Section 8.2, such party (the “Indemnified
Party”) must give written notice to Buyer or Seller, as
applicable (the “Indemnifying Party”), of the
facts and circumstances giving rise to the Claim (a “Claim
Notice”), as promptly as
practicable, but in any event (1) before the expiration of the survival
period for such Claim as provided in Section 8.1
and (2) if such Claim relates to the assertion against an Indemnified
Party of any Claim or dispute by a third party (a “Third
Party Claim”), within 30 days after receipt by the
Indemnified Party of written notice of a legal process relating to such Third
Party Claim; provided, however, that, with
respect to the time limits set forth in the foregoing clause (2), no delay
on the part of the Indemnified Party in notifying the Indemnifying Party shall relieve the Indemnifying Party of
any obligation under this Article VIII
except to the extent that the Indemnifying
Party is materially and adversely 



 43
 









affected thereby. Any such Claim Notice must describe
the nature of the Claim in reasonable detail to the extent known to the
Indemnified Party, the amount thereof if then ascertainable, and the provision
or provisions of this Agreement or any Related Agreements on which the Claim is
based.


(b)           Unless
the Claim described in the Claim Notice is contested by the Indemnifying Party by
written notice to the Indemnified Party, given within 20 days of the
receipt of the Claim Notice, the Indemnified Party is conclusively deemed to be
entitled to indemnity for such Claim under this Article VIII.
If, within that 20-day period, the Indemnifying
Party contests the Claim in writing to the Indemnified Party, then the
Indemnified Party and Indemnifying Party, acting in good faith, must attempt to
reach agreement with respect to such Claim. If that agreement cannot be
reached, then that Claim must be resolved by a court of competent jurisdiction
unless earlier settled by the Parties. If the Parties reach agreement on such
Claim, a memorandum setting forth such agreement must be prepared and signed by
the Parties, and the amount of such settlement must be paid as provided
therein.


(c)           (i)            Subject to Section
8.3(d), an Indemnifying
Party has the right, upon written notice given to the Indemnified Party
within 15 days after receipt of a Claim Notice relating to a Third Party
Claim, to assume the defense or handling of such Third Party Claim, at the Indemnifying Party’s sole
expense, in which case the provisions of Section 8.3(c)(ii)
govern.


(ii)           The Indemnifying Party
must select counsel to conduct the defense or handling of such Third Party
Claim reasonably satisfactory to the Indemnified Party. The Indemnifying Party
must defend or handle such Third Party Claim in consultation with the
Indemnified Party and in such manner as is reasonable under the circumstances
and must keep the Indemnified Party timely apprised of the status of such Third
Party Claim. The Indemnifying
Party must not, without the prior written consent of the Indemnified
Party, agree to a settlement of any Third Party Claim, unless (A) the
settlement (I) is for monetary damages only, (II) is contained in a written
agreement, and (III) provides an unconditional release and discharge of the
Indemnified Party and the Indemnified
Party has no reasonable, good faith objection to the form or substance of such
discharge and release, and (B) the Indemnified Party must not have
reasonably objected to any such settlement on the ground that the circumstances
surrounding the settlement could adversely impact the business, operations,
assets, liabilities (absolute, accrued, contingent or otherwise), condition
(financial or otherwise) or prospects of the Indemnified Party (which, with
respect to Buyer, shall include the prospects of the Mac Nut Business or the
Leased Assets or Purchased Assets) or could establish or contribute to a
precedential custom or practice which could have a material adverse effect on
the continuing business interests of the Indemnified Party (which, with respect
to Buyer, shall include the prospects of the Mac Nut Business or the Purchased
Assets); provided, however, that if the
Indemnified Party objects
under the foregoing clause (B) to a proposed settlement that is bona fide and
contained in writing and that would, but for such objection, have been final,
valid and binding on the party or parties asserting such Third Party Claim,
then the maximum liability of the Indemnifying
Party for indemnification in respect of such Third Party Claim (notwithstanding
the amount of any later settlement or resolution thereof) is limited to the
dollar amount of such proposed settlement. Notwithstanding any other provision
of this Agreement, under no circumstances does the Indemnifying Party have any
authority to settle any Third Party Claim if such settlement would require any
payment by or other obligation of the Indemnified Party. If the Indemnifying
Party 



 44
 









defends or handles such
Third Party Claim, the Indemnified Party must cooperate with the Indemnifying Party. The
Indemnified Party is entitled to participate in the defense or handling of such
Third Party Claim with its own counsel and at its own expense. The Indemnified
Party must not, without the prior written consent of the Indemnifying Party
(which consent must not be unreasonably withheld or delayed), agree to a
settlement of any Third Party Claim that is being defended and handled by the Indemnifying Party under
this Section 8.3(c)(ii).


(d)           (i)            If (A) the Indemnifying Party does
not give written notice to the Indemnified Party, within 15 days after
receipt of the notice from the Indemnified Party of a Third Party Claim,
stating that (1) the Indemnifying
Party has elected to assume the defense or handling of such Third Party
Claim and (2) the Indemnifying
Party acknowledges that any Losses or other obligations incurred by the
Indemnified Party that may arise from such Third Party Claim constitute Losses
for which the Indemnifying
Party is obligated to indemnify the Indemnified Party hereunder (subject
to the limitations in Section 8.2);
(B) at any time the Indemnifying
Party fails to carry out such defense or handling diligently and in such
manner as is reasonable under the circumstances; (C) the Third Party Claim
involves other than only money damages; (D) the circumstances surrounding
the matter could, in the good faith judgment of the Indemnified Party, result
in a material adverse impact on the business, operations, assets, liabilities
(absolute, accrued, contingent or otherwise), condition (financial or
otherwise) or prospects of any of the Indemnified Party (which, with respect to
Buyer, shall include the prospects of the Mac Nut Business or the Leased Assets
or Purchased Assets); (E) the matter involves or affects any Taxes or Tax
Return of the Indemnified Party or an affiliated group of which the Indemnified
Party is a member; or (F) the Indemnified Party has reasonably determined,
upon advice of counsel, that having common counsel with the Indemnifying Party
would present such counsel with a conflict of interest or that, upon advice of
counsel, there may be legal defenses available to such Indemnified Party which
are different from or in addition to those available to the Indemnifying Party,
then the provisions of Section 8.3(d)(ii)
govern.


(ii)           The Indemnified Party may, at the Indemnifying Party’s expense,
select counsel reasonably satisfactory to the Indemnifying Party to defend or handle such Third
Party Claim in a manner that is reasonable under the circumstances; provided, however, that the Indemnified Party must keep the Indemnifying Party timely
apprised of the status of such Third Party Claim. The Indemnified Party must
not settle such Third Party Claim without the prior written consent of the Indemnifying Party (which
consent must not be unreasonably withheld or delayed). If the Indemnified Party
defends or handles such Third Party Claim, the Indemnifying Party must cooperate with the
Indemnified Party, at the Indemnifying Party’s expense. The Indemnified Party
is entitled to participate in the defense or handling of such Third Party Claim
with its own counsel and at the Indemnifying
Party’s expense. In addition, in the event that the Indemnifying Party is
not permitted to assume the defense of a Third Party Claim solely by virtue of
clause (C) or (D) of paragraph (d)(i) above, then the Indemnifying Party is permitted to pursue, at its
own expense, settlement discussions directly with any other parties involved in
such Third Party Claim. Notwithstanding the preceding sentence, the Indemnifying Party
must not, without the prior written consent of the Indemnified Party, agree to
a settlement of any Third Party Claim, unless (A) the settlement is for
monetary damages only, and with respect to Claims by any Indemnified Party
provides an unconditional release and discharge of the Indemnified Party and
the Indemnified Party has no reasonable good faith objection to the form or
substance of such discharge and release and (B) the Indemnified Party must
not have reasonably objected 



 45
 









to any such settlement on
the ground that the circumstances surrounding the settlement could adversely
impact the business, operations, assets, liabilities (absolute, accrued,
contingent or otherwise), condition (financial or otherwise) or prospects of
the Indemnified Party (which, with respect to Buyer, shall include the
prospects of the Mac Nut Business or the Leased Assets or Purchased Assets) or
could establish or contribute to a precedential custom or practice which could
have a Material Adverse Effect on the continuing business interests of the
Indemnified Party (which, with respect to Buyer, shall include the interests of
the Mac Nut Business or the Purchased Assets); provided,
however, that if the Indemnified Party objects under the foregoing
clause (B) to a proposed settlement that is bona fide and contained in writing
and that would, but for such objection, have been final, valid and binding on
the party or parties asserting such Third Party Claim, then the maximum
liability of the Indemnifying
Party for indemnification in respect of such Third Party Claim
(notwithstanding the amount of any later settlement or resolution thereof) is
limited to the dollar amount of such proposed settlement. Notwithstanding any
other provision of this Agreement, if such Losses are subject to the terms of
the last paragraph of Section 8.2(a) or (b),
as applicable, under no circumstances does the Indemnifying Party have any
authority to settle any Third Party Claim without the prior written consent of
the Indemnified Party if such settlement would require any payment by or other
obligation of the Indemnified Party or any other party.


(iii)          The aggregate maximum of all Losses of
Buyer Indemnitees and Seller Indemnitees, respectively, shall not exceed Two
Million Dollars ($2,000,000), unless such Losses arise out of, relate to or
result from (i) fraud or intentional misrepresentation by Seller or Buyer,
respectively, (ii) Assumed Liabilities, (iii) Excluded Assets, (iv) the
calculation, payment or issuance of any consideration payable to Seller under
this Agreement or any Related Agreement (including cash or the Units), or (v)
the failure by Seller to deliver to Buyer possession or ownership, as
applicable, of any or all of the Purchased Assets.


ARTICLE IX.

TERMINATION


9.1          Termination of
Agreement


This Agreement may or
must, as applicable, terminate as follows:


(a)           Buyer
and Seller may terminate this Agreement by mutual written consent at any time
before the Closing;


(b)           Buyer
may terminate this Agreement by giving written notice to Seller at any time
before the Closing in the event Seller is in breach of any representation,
warranty, or covenant contained in this Agreement or any Related Agreement in
any material respect and such breach has not been cured within fifteen
(15) calendar days after receipt of written notice thereof;


(c)           Seller
may terminate this Agreement by giving written notice to Buyer at any time
before the Closing in the event Buyer is in breach of any representation,
warranty, or covenant contained in this Agreement in any material respect and
such breach has not been cured within fifteen (15) days calendar days
after receipt of written notice thereof;



 46
 









(d)           by
either Buyer or Seller if satisfaction of a closing condition of the
terminating Party is impossible; provided, however,
that a Party does not have the right to terminate this Agreement under this Section 9.1(d) if such Party’s breach of any obligation
under this Agreement or any Related Agreement has been the primary cause of the
failure of the Closing to occur on or before the Closing Date; and


(e)           Buyer
or Seller may terminate this Agreement if the Closing does not occur by October
31, 2007; provided, however, that a Party does not
have the right to terminate this Agreement under this Section
9.1(e) if such Party’s breach of any obligation under this Agreement
has been the primary cause of the failure of the Closing to occur on or before
the aforementioned date.


(f)            Either
party may terminate this Agreement in its sole discretion at any time after the
date which is fourteen (14) Business Days after the date of this Agreement, and
which is no later than five (5) Business Days after the date on which the other
party has given the written notice provided for in Section 5.9(b)
that its has waived its rights to terminate the Agreement, without
any liability or obligation hereunder or otherwise, whatsoever.


(g)           Either
party may terminate this Agreement without any liability or obligation
hereunder or otherwise, in its sole discretion, at any time, if (i) Seller
elects not to provide to the SEC (or permit Buyer to provide to the SEC) any
additional information that may be requested by the SEC in order to prepare
audited financial statements of Seller or to include other financial data of
Seller in Buyer’s “Request for Substitution of Abbreviated Financial
Information” to the SEC or in the Proxy Statement pursuant to the proviso
contained in the fourth sentence of Section 5.9(d)
and (ii) such additional information, audited financial statements or
other financial data is required by the SEC to grant the SEC Preliminary
Approval and/or to clear the Proxy Statement.


9.2          No Effect on
Indemnification Rights


No termination of this Agreement or any Related Agreement alters,
affects, modifies, or restricts any Party’s rights to rely on or seek indemnification
for a breach of any of the representations and warranties or conditions or
covenants of any of the Parties contained in this Agreement or any Related
Agreement before such termination.


ARTICLE X.

MISCELLANEOUS PROVISIONS


10.1        Press Releases and
Announcements


Buyer may be required by
law to disclose the existence and material terms of this Agreement by filing a
Form 8-K or other filing with the SEC. 
Seller acknowledges and agrees that Buyer may file a copy of this Agreement
in such Form 8-K or other filing with the SEC. Thereafter, unless required by
the SEC, neither Party shall issue any other press release or public
announcement or disclosure of the existence or terms of this Agreement or the
Related Agreements, amendments, or the transactions contemplated hereby or
thereby, without the prior written approval of the other Party, which written
approval must not be unreasonably withheld, conditioned, or delayed.



 47
 









10.2        Notices


All notices, demands, and
requests required or permitted to be given under the provisions of this
Agreement shall be in writing and shall be deemed given (i) when personally
delivered to the party to be given such notice or other communication; (ii) on
the business day that such notice or other communication is sent by facsimile,
email or similar electronic means, fully prepaid, which facsimile or similar
electronic communication shall promptly be confirmed by written notice; (iii)
on the third business day following the date of deposit in the United States
mail if such notice or other communication is sent by certified or registered
mail with return receipt requested and postage thereon fully prepaid; or (iv)
on the business day following the day such notice or other communication is
sent prepaid by reputable overnight courier, to the following:


	
  Buyer:

  	
   

  	
  ML Macadamia Orchards, L.P.

  26-238 Hawaii Belt Road,

  Hilo, Hawaii 96720

  
	
   

  	
   

  	
  Phone:

  	
  (808)-969-8052

  
	
   

  	
   

  	
  Fax:

  	
  (808)-969-5152

  
	
   

  	
   

  	
  Attention:

  	
  Dennis J. Simonis

  
	
   

  	
   

  	
   

  	
   

  
	
  w/copy to:

  	
   

  	
  Carlsmith Ball LLP

  1001 Bishop Street, Suite 2200

  Honolulu, Hawaii 96813

  
	
   

  	
   

  	
  Phone:

  	
  (808) 523-2501

  
	
   

  	
   

  	
  Fax:

  	
  (808) 523-0842

  
	
   

  	
   

  	
  Attention:

  	
  James H. Case, Esq.

  
	
   

  	
   

  	
   

  	
   

  
	
  Seller:

  	
   

  	
  Mac Farms of Hawaii, LLC/

  Kapua Orchard Estates, LLC

  c/o Sparks Corp.

  775 Ridge Lake Boulevard, Suite 450

  Memphis, Tennessee 38120

  
	
   

  	
   

  	
  Phone:

  	
  (901) 766-4412

  
	
   

  	
   

  	
  Fax:

  	
  (901) 328-2777

  
	
   

  	
   

  	
  Attention:

  	
  Robert D. Sparks

  
	
   

  	
   

  	
   

  	
   

  



 



 48
 









 


	
  w/copy to:

  	
   

  	
  Baker, Donelson, Bearman, Caldwell & Berkowitz,
  PC

  165 Madison Avenue, Suite 2000

  Memphis, Tennessee 38103

  
	
   

  	
   

  	
  Phone:

  	
  (901) 577-2306 or

  
	
   

  	
   

  	
   

  	
  (901) 577-2274

  
	
   

  	
   

  	
  Fax:

  	
  (901) 577-0853 or

  
	
   

  	
   

  	
   

  	
  (901) 577-4203

  
	
   

  	
   

  	
  Attention:

  	
  John E. Kruger, Esq.

  
	
   

  	
   

  	
   

  	
  Mark A. B. Carlson, Esq.

  
	
   

  	
   

  	
   

  	
   

  



Any Party may change its
address for this Section 10.2 by giving written
notice to the other Party, under the terms hereof.


10.3        Specific Performance


Each Party acknowledges
and agrees that the other Party would be damaged irreparably in the event any
of the provisions of this Agreement or any Related Agreement are not performed
in accordance with their specific terms or otherwise are breached. Accordingly,
each Party agrees that the other Party is entitled to an injunction or
injunctions to prevent breaches of the provisions of this Agreement and to
enforce specifically this Agreement and the terms and provisions hereof in any
action instituted in any court of the United States or any state thereof having
jurisdiction over the Parties and the matter, in addition to any other remedy
to which they may be entitled, at law or in equity.


10.4        Remedies Not Exclusive


Except as otherwise
provided in Article VIII, any Party’s use of
any remedy specified herein for the enforcement of this Agreement or any
Related Agreement is not exclusive and does not deprive such Party of, or limit
the application of, any other remedy provided by law, at equity or otherwise.


10.5        Exercise of Remedies


The exercise of any right
or remedy by either Party under this Agreement or any Related Agreement does
not in any way constitute a cure or waiver of any default hereunder, invalidate
any act done under any notice of default, or prejudice either Party in the
exercise of any of their respective rights under this Agreement or any Related
Agreement.


10.6        Costs and Expenses


Except as otherwise
provided herein, each Party must bear its own costs and expenses (including
legal fees and disbursements) incurred in connection with this Agreement or any
Related Agreement and the transactions contemplated hereby.


10.7        Waiver


No waiver of any of the
provisions of this Agreement or any Related Agreement is to be deemed to
constitute a waiver of any other provision, whether or not similar, nor does
any waiver 



 49
 









constitute a continuing
waiver. No waiver is binding unless executed in writing by the Party making the
waiver.


10.8        Attorneys’ Fees and
Disbursements


Each Party must bear its
own attorneys’ fees and disbursements arising out of or in any way related to
this Agreement or any Related Agreement incurred on or before the effective
date of this Agreement, except as otherwise provided herein.  Further, if, however, after the effective
date of this Agreement, a Party or Parties bring(s) an action to enforce or
interpret it, whether in tort, contract or otherwise, the prevailing Party or
Parties in that action is entitled to recover from the unsuccessful Party or
Parties reasonable attorneys’ fees and disbursements incurred in the
prosecution or defense of said litigation as determined by a court of competent
jurisdiction.


10.9        Further Assurances


Each Party must execute
and deliver any and all additional assurances, documents, and other papers, and
must do any and all acts and things reasonably necessary in connection with the
performance of its duties, obligations and responsibilities under this
Agreement or any Related Agreement and to carry out the intent of the Parties.


10.10      Confidentiality


Except as otherwise
provided in Section 10.1 of this Agreement or
any Related Agreement, the conditions, covenants, provisions and terms of this
Agreement must be kept in strict confidence by Parties and neither Party is to
disclose to a Person the circumstances, details and facts of this Agreement or
any Related Agreement unless required by any federal or state Law, including, but not limited to, in
connection with any state or federal inquiry or investigation, or in the event
of litigation between the Parties, or with third parties, but only to the
extent necessary to comply with such Law or to conduct such litigation, and
subject to all reasonable, available restrictions upon further disclosure.


10.11      Entire Agreement


This Agreement, including
the Disclosure Schedules and the exhibits and annexes to this Agreement
constitute the entire agreement, contract and understanding of the Parties with
respect of the subject matter hereof and any and all prior negotiations, agreements,
contracts, covenants, promises, representations, understandings or warranties,
whether oral or written, express or implied, are hereby terminated and canceled
in their entirety and are of no further force or effect.


10.12      Modification


No amendment or modification
of this Agreement or any Related Agreement is valid unless in writing and
signed by the Parties.


10.13      Governing Law


All questions concerning
the construction, validity and interpretation of this Agreement will be
governed by and construed in accordance with the Laws of the State of Hawaii
without 



 50
 









giving effect to any
choice of law or conflict of law provision or rule that would cause the
application of the Laws of any jurisdiction other than the State of Hawaii.


10.14      Construction


(a)           The
Parties have negotiated this Agreement as Persons of equal sophistication and
equal bargaining power; the rule of interpreting ambiguities against the
drafter therefore is inapplicable. This Agreement is to be fairly and equitably
construed as the joint product of the Parties.


(b)           In
this Agreement, the masculine, feminine, or neuter gender and the singular or
plural number is deemed to include the other whenever the context so requires,
and “shall”, “must”
and “agrees” are mandatory, and “may” is permissive.


(c)           The
captions appearing at the commencement of the provisions of this Agreement are
descriptive only and for convenience in reference. If there is any conflict
between any such caption and the provision at the head of which it appears,
then the provision, and not the caption, controls and governs in the
construction of this Agreement.


(d)           The
Parties acknowledge, understand, and agree that their respective agents and
representatives executing this Agreement on behalf of each of Parties are
learned and conversant in the English language, and that the English language
controls the construction, enforcement, governance, interpretation, and
performance of this Agreement.


(e)           Unless
otherwise indicated herein, with respect to any reference made in this Agreement
to a Section (or Article, Subsection, Paragraph, Subparagraph, or Clause),
Annex, Exhibit, or Schedule, such reference is a section (or article,
subsection, paragraph, subparagraph, or clause) of, or an annex, exhibit, or
schedule to, this Agreement.


(f)            Whenever
the words “include,”  “includes”
or “including” are used in this Agreement,
they are deemed, as the context indicates, to be followed by the words “but
(is/are) not limited to.” Whenever the conjunction “or”
is used in this Agreement, it is deemed, as the context indicates, to be
inclusive (i.e., “A or B” means A, B, or A and B)
and not exclusive (i.e., “A or B”
means A or B, but not A and B), thereby avoiding the use of “and/or” to show
the intended inclusiveness.


(g)           Where
specific language is used to clarify or illustrate by example a general
statement contained herein, such specific language is not deemed to modify,
limit, or restrict the construction of the general statement that is being
clarified or illustrated.


(h)           All
Schedules and Exhibits, if any, described in this Agreement and attached hereto
are by this reference incorporated fully herein; the words “this
Agreement” must be considered to include all such Schedules and
Exhibits, if any.


10.15      Partial Invalidity


If any provision of this Agreement
is held by a court of competent jurisdiction to be invalid, void or
unenforceable, the remaining provisions nevertheless continue in full force 



 51
 









without being impaired or
invalidated in any way.


10.16      Binding Effect


This Agreement inures to,
and for the benefit of, and is binding upon, each Party’s respective parent,
subsidiary, agents, assignees, directors, employees, joint venturers, members,
officers, partners, predecessors, representatives, servants, shareholders,
successors, and all others acting for, under, or in concert with it, past,
present, and future.


10.17      Assignment


Neither Buyer nor Seller
may assign any of its rights or obligations hereunder without the prior written
consent of the other Party. 
Notwithstanding the foregoing, Buyer may pledge its rights and
obligations under this Agreement to its lenders in connection with financing
arrangements pertaining to this transaction, subject to Seller’s prior written
approval, which approval shall not be unreasonably
withheld, delayed, denied, or conditioned.  Further, notwithstanding the foregoing,
Seller may assign its rights and obligations under this Agreement with respect
to the Leased Assets to any third party to whom it sells all or part of the
Seller Land; provided, however,
that the buyer of the Seller Land, in whole or in part, agrees to purchase such
Seller Land subject to the terms of this Agreement.


10.18      Time of the Essence


Time is of the essence to
this Agreement with respect to the performance by each Party of its duties,
obligations and responsibilities under this Agreement, and also each and every
condition, covenant, provision and term of this Agreement.


10.19      Counterparts/Facsimiles


This Agreement may be
executed in counterparts, each of which is deemed an original, and such
counterparts constitute one and the same instrument, which may be sufficiently
evidenced by a counterpart. A facsimile, telecopy, PDF, or other reproduction
of this Agreement may be executed by one or more Parties, and an executed copy
of this Agreement may be delivered by one or more Parties by facsimile, PDF
e-mail, or similar instantaneous electronic transmission device under which the
signature of or on behalf of such Party can be seen, and such execution and
delivery is to be considered valid, binding and effective for all purposes. At
the request of any Party, the Parties agree to execute an original of this
Agreement as well as any facsimile, telecopy or other reproduction hereof.


10.20      Waiver of Right to Jury
Trial


EACH OF THE PARTIES
HERETO IRREVOCABLY WAIVES AS AGAINST THE OTHER PARTY HERETO ANY RIGHTS IT MAY
HAVE TO A JURY TRIAL IN THE UNITED STATES OF AMERICA IN RESPECT OF ANY CIVIL
ACTION ARISING UNDER THIS AGREEMENT. 
EACH PARTY MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION
WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE OTHER PARTY TO THE
WAIVER OF ITS RIGHT TO TRIAL BY JURY.



 52
 









10.21      Dispute Resolution


(a)           Pre-Closing Disputes. If there is any Dispute asserted by
either Party before the Closing Date, then, to the extent permitted by Law, the
Parties agree that all actions or Proceedings arising in connection with that
Dispute must be tried and litigated only in the state and federal courts
located in the State of Hawaii. That choice of venue is mandatory and not
permissive in nature, thereby precluding the possibility of jurisdiction or
venue other than specified in this Section 10.21(b).
To the extent permitted by law, (a) the Parties hereby waive any right each may
have to assert the doctrine of forum non conveniens
or to object to venue for any Proceeding brought in accordance with this Section 10.21(b); and (b) the Parties stipulate that the
state and federal courts located in the State of Hawaii will have in personam jurisdiction and venue over the Parties for the
litigation of any Dispute arising out of or related to this Agreement asserted
by either Party before the Closing Date. Service of process sufficient for
personal jurisdiction in any action against any Party hereto may be made by
registered or certified mail, to its address indicated herein. Each Party
agrees that any final judgment rendered against it in any action or proceeding
will be conclusive as to the subject of such final judgment, and it may be
enforced in other jurisdictions in any manner provided by law.


(b)           Post-Closing Disputes. If there is any Dispute (as defined
in Section B of Exhibit E) asserted by either
Party after the Closing Date, that Dispute must be resolved in accordance with
the ADR Provisions set forth in Exhibit E. Each
Party agrees that the ADR Provisions set forth in Exhibit E
constitute the sole method of seeking redress against the other Party after the
Closing Date.


10.22      Effective Date


This Agreement becomes
effective upon the date first written above immediately after its execution by
all Parties.


10.23      Reserved


10.24      Retention of, and Access
to, Books and Records and Return of Documents


After the Closing Date,
Buyer shall retain, for a period of five (5) years, those Books and Records of
Seller delivered to Buyer.  Buyer shall
also provide Seller and its representatives reasonable access thereto for a
period of five (5) years after Closing, during normal business hours and on at
least two (2) days’ prior written notice, to enable Seller to prepare financial
statements or tax returns or deal with tax audits or other business matters
relating to the pre-closing business of Seller, including, but not limited to, compliance with Seller’s
indemnity obligations hereunder.


In the event that the
transactions contemplated by this Agreement do not close, then, in any such
event, Buyer hereby agrees to promptly return to Seller all documents furnished
by Seller to Buyer, for review by Buyer, including,
but not limited to, the draft schedules 2.1(a) - 7.1(g) and the reports
referenced therein.



 53
 









10.25      Limitation of Liability


NOTWITHSTANDING ANYTHING
TO THE CONTRARY HEREIN, EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES ANY CLAIM
AGAINST THE OTHER PARTY FOR PUNITIVE, SPECIAL, INCIDENTAL, EXEMPLARY, AND
CONSEQUENTIAL DAMAGES.


The
signature page directly follows; the remainder of this page is intentional left
blank.



 54
 









The Parties are signing
this Acquisition Agreement on the dates written below, but effective as of the
date indicated in the introductory paragraph.


	
  

  	
  BUYER:

  
	
   

  	
   

  
	
   

  	
  ML MACADAMIA ORCHARDS, L.P.,

  
	
   

  	
  a Delaware limited partnership

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
  Dated:         
    , 2007

  	
   

  	
  Name: Dennis J. Simonis

  
	
   

  	
   

  	
  Title: President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  SELLER:

  
	
   

  	
   

  
	
   

  	
  MAC FARMS OF HAWAII, LLC,

  
	
   

  	
  a Delaware limited liability company

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
  Dated:         
    , 2007

  	
   

  	
  Name: Robert D. Sparks

  
	
   

  	
   

  	
  Title: Chairman of the Board

  
	
   

  	
   

  	
   

  
	
   

  	
  KAPUA ORCHARD ESTATES, LLC,

  
	
   

  	
  a Delaware limited liability company

  
	
   

  	
   

  	
  By: MFH Investors, LLC, its manager

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name: Jeff Gilbrech

  
	
   

  	
   

  	
  Title: Vice-President

  



 



 55















EXHIBIT
A-1 TO ACQUISITION AGREEMENT


AGRICULTURAL LEASE


BY AND BETWEEN


KAPUA ORCHARD ESTATES, LLC,

a Delaware limited liability company (“Lessor”),


NEWCO1, LLC, 

a Hawaii limited liability company (“Lessee”),


and


ML MACADAMIA ORCHARDS, L.P.,

a Delaware limited partnership (“Guarantor”)


DATED AS OF         
  , 2007



 56















AGRICULTURAL LEASE


This AGRICULTURAL LEASE
(the “Lease”) is made as of this    day of        ,
2007, by and between KAPUA ORCHARD ESTATES, LLC, a Delaware limited liability
company, whose principal place of business is c/o Sparks Corp., 775 Ridge Lake
Boulevard, Suite 450, Memphis, Tennessee 38120 (“Lessor”), NEWCO1, LLC.,
a Hawaii limited liability company, whose principal place of business is 26-238
Hawaii Belt Road, Hilo, Hawaii 96720, and ML MACADAMIA ORCHARDS, L.P., a
Delaware limited partnership, whose principal place of business is 26-238
Hawaii Belt Road, Hilo, Hawaii, 96720 (“Guarantor”).


W  I  T  N  E  S  S  E  T  H:


WHEREAS, Lessor is the
owner in fee or lessee of certain Premises (as defined hereinafter);


WHEREAS, the negotiation
and execution of this Lease is a contemplated and permitted event under the
Acquisition Agreement, dated as of         ,
2007, by and among Guarantor, Lessor and Mac Farms of Hawaii, LLC (“Mac Farms”);


WHEREAS, Lessor desires
to lease the Premises to Lessee, and Lessee desires to lease the same from
Lessor for the term, at the rental price and upon the covenants, conditions and
provisions set forth herein;


WHEREAS, Lessor’s
objective is to develop and sell portions of the Premises for residential,
recreational, commercial and other purposes, which objective will require some
use of the lands being demised herein and withdrawing land from the Lease from
time to time; and


WHEREAS, Lessee’s
objective is to use the Premises for the farming of macadamia orchards in
accordance with prudent, efficient, and profitable farming practices.


NOW, THEREFORE, in
consideration of the mutual covenants and agreements set forth herein, and for
other good and valuable consideration, the receipt and adequacy of which are
hereby acknowledged, the parties hereto agree on the matters set forth in the
remainder of this Lease. In the event of any future dispute, the parties, any
mediators or any courts shall attempt to balance the reasonable desires and
needs of the Lessor as compared to the reasonable desires and needs of the
Lessee:


ARTICLE
I.



LEASE


1.1          Premises. The Lessor, in consideration of the covenants herein
contained and on the part of the Lessee to be observed and performed, and upon
and subject to the terms and conditions hereinafter set forth, hereby leases to
the Lessee the real property described in Exhibit “A” attached hereto,
and the improvements thereon, herein collectively called the “Premises,”
together with all macadamia nut trees and other plants thereon for the uses set
forth in Section 4.01 below;













TOGETHER WITH the use, in
common with others entitled thereto, of such roads and roadways on the Premises
for ingress and egress as may be necessary in the conduct of the business of
the Lessee; and


TOGETHER WITH any and all
irrigation or water delivery systems, and other utility systems, facilities and
equipment relating or appurtenant to the Premises and any and all roads,
roadways, easements, access rights, licenses or other use rights on, relating
or appurtenant to the Premises.


TO HAVE AND TO HOLD the
same, together with all tenements, hereditaments, rights, easements, privileges
and appurtenances thereunto belonging or appertaining or held and enjoyed
therewith unto the Lessee, for the uses and purposes set forth in this Lease
and during the full term of this Lease;


SUBJECT, HOWEVER, to the
reserved rights of Lessor set forth herein.


1.2          Reservation of Rights. Lessor hereby expressly reserves, and the rights of
Lessee are subject to, the following rights of Lessor (the “Reserved Rights”):


(a)           All
the development rights set forth in detail in Section 4.12.


(b)           The
right to designate portions of the Premises (the “Easement Areas”) for
use as roadways, rights of way, crossings, and access (for vehicular,
pedestrian and equipment purposes), and for other easements, as Lessor, in its
reasonable discretion and from time to time, may determine necessary or
appropriate for its development activities under this Lease, including, without
limitation, easements over, under, upon, across, along and through any portion
of the Premises, for lines, transmission facilities and appurtenances for above
grade or underground utilities of every kind, including, without limitation,
electricity, gas, telephone, pipes, water, sewers, drainage, flowage, surface
run-off water, and appurtenances thereto and equipment and facilities
therefore, for conveyors of rock and rock products and any other purposes, for
services and substances whatsoever, including, without limitation, access,
over, across, under, along and through the Premises, including the right to
enter upon the Premises to construct, reconstruct, operate and maintain such
easements, appurtenances, equipment, and facilities.


(c)           The
right to access and use all existing or future roads and utilities or other
easements, and all future designated Easement Areas over, under, upon, across,
along and through the Premises for any purpose; and the right to authorize the
persons defined below to make reasonable use of all existing or future roads,
utilities, and all future designated Easement Areas; provided, however,
that Lessor shall reimburse Lessee for any reasonable additional costs of
maintenance or repair attributable to Lessor’s use of such roads (ordinary wear
and tear excepted), utilities and/or easements. Authorized persons shall
include (1) persons with a direct connection with the Lessor such as employees,
consultants, contractors, and other specific invitees or licensees of the
Lessor , and (2) those persons who purchase a portion of the Premises from the
Lessors, and their employees, families, guests, consultants, invitees,
licensees, or consultants.  This right
shall not extend to the general public.



 2
 









(d)           The
right to install and maintain gates or other access control devices on the
borders of any Excluded Area. The Lessee shall have the right to install gates
or other access controls at the various entrances to the Premises so that it
may make certain that persons entering the Premises have a right to do so.
Lessor and Lessee shall make all reasonable efforts to prepare reasonable
control systems.


(e)           The
right to dedicate any roadway or other Easement Area or portion thereof and the
improvements thereon to the County of Hawaii, State of Hawaii, or other
appropriate governmental or quasi-governmental authority; provided,
however, that such dedication does not adversely affect Lessee’s use
of such roadways or Easement Area.


(f)            The
right to apply for, process, pursue and obtain any and all necessary or
appropriate permits, approvals and authorizations from any governmental
authority for purposes of subdividing (and or consolidating and subdividing)
the various lots and parcels included within the Premises in such manner as
Lessor may determine from time to time.


(g)           The
right to create by declaration of restrictive covenants, or otherwise, any and
all restrictions and rules regarding restrictions, limitations or affirmative
obligations respecting the use of all or any portion of the Premises by any
person (the “Restrictive Covenants”) and the right to create any Planned
Unit Development, Condominium Property Regime, or other common ownership
arrangements as may be permitted under applicable law from time to time of any
kind or nature whatsoever (the “Planned Regimes”), and to create common
areas in connection therewith (the “Common Areas”) and community,
homeowner and other similar associations (the “Associations”).  The rights of the Lessor contained in this
paragraph shall apply only to Excluded Areas.


(h)           The
right to enter the Premises to conduct and undertake studies, to perform tests,
to prepare plans for and to execute or implement any development or enhancement
activities as determined by Lessor from time to time including, without
limitation, the right to construct, install, modify, remove, replace, maintain,
and operate any improvements and facilities over, under, upon, across, along
and through any portion of the Premises desired to be developed by Lessor as
Lessor may determine from time to time; provided,
however, that Lessee
agrees that it shall not unreasonably interfere with such construction and
installation and shall reasonably cooperate with Lessor in connection
therewith. The right of development shall be confined to Excluded Areas except
for the construction and installation of infrastructure necessary for the
development of the Excluded Areas. 
Infrastructure shall include roads, wells, water pipelines, pumps,
electric and telephone utility lines and substations, and any other
infrastructure required to be installed on the Premises in order to permit any
usage of Excluded Areas.


(i)            Subject
to Lessee’s rights under Section 4.07, all water rights of Lessor
pertaining to the Premises as delineated in Section 4.07 along with a
reasonable right to enter the Premises for purposes of using such rights and of
locating the existence of any additional water resources and the right to
create Easement Areas in connection therewith, and to construct, reconstruct,
install, lay, maintain, operate, repair, replace and use water wells,
reservoirs, ditches, and any other related or other equipment and facilities
for the development, transmission and utilization of any water resources on the
Premises in the manner as set forth in Section 4.07 



 3
 









hereof.  These
water rights do not include the right to use the present water system except as
set forth in Section 4.07.  The right to
develop additional water sources shall be controlled in accordance with the
provisions of Section 4.07.


(j)            The
right to designate any existing easement as an Easement Area.  Such Easement Areas shall be designated only
upon portions of the Premises which are required for infrastructure, such as
roads, water lines, utility lines, etc. 
Such Easement Areas shall not be Excluded Areas and shall be available
for use by both Lessor and Lessee.


(k)           The
right to assign to any person, persons, or entity, including, without
limitation, any Association or limited partnership, in whole or in part, who
purchases any portion of the Excluded Areas, the rights to use the Easement
Areas. Such Easement Areas shall be appurtenant to and run with the land.


(l)            The
Lessor shall have the right to sell the Premises to any person, persons, or
entity, including, without limitation, any Association or limited partnership,
in whole or in part, subject to the Lease. In such event both the Lessor and
Lessee shall retain the rights and be subject to the obligations contained in
this Lease; provided, however,
that no such partial transfer of the Premises shall be permitted if, regardless
of the number of such transfers by Lessor or its permitted transferees, the
total number of persons or entities possessing ownership rights in the Premises
is greater than five (5); provided, further, that there shall never be more than one (1) person
or entity with the right to exercise the rights of Lessor under this Lease.


For the avoidance
of doubt, no exercise by Lessor of its Reserved Rights shall result in the
withdrawal from the Lease of areas in excess of the limitations set forth in
Section 4.12(B) and shall be exercised by Lessor only to the extent necessary,
appropriate or incidental to the exercise of its development rights under
Section 4.12. Lessee hereby agrees, if so required by law, to join in and
execute and deliver any instruments or documents as may be reasonably requested
by Lessor from time to time in order to create, confirm, implement or
facilitate the Reserved Rights of Lessor hereinabove or otherwise set forth
this Lease, including, without limitation, documents or instruments respecting
the creation of any Easement Areas and/or Excluded Areas.


The Lessor shall
make all plans, whether plans for easements, development plans, subdivision
plans, or any other plan which might affect the Lessee, available to Lessee for
review prior to the implementation of such plans.  Lessor agrees to explain such plans to the
Lessee and the reasons for such plans. Lessee shall have the opportunity to
discuss such plans with the Lessor for the purpose of giving the Lessor its
views on whether or not such plans will interfere with agricultural operations
of the Lessee. The Lessor may implement any plans on Excluded Areas without
consent of the Lessee.  If such plans
involve the Premises, such plans shall not be pursued without the consent of
the Lessee, which shall not be unreasonably withheld, conditioned, or delayed.


1.3          Designation of Excluded Areas. In addition to the reserved rights of Lessor under
Section 1.02 above and under any other provision of this Lease, Lessor shall
have the right, from time to time, to withdraw certain portions of the Premises
from the Lease, all as set forth in Section 4.12(B).  Such withdrawn  areas shall be referred
to as “Excluded Areas”.  Upon 



 4
 









such withdrawal and designation,
Lessee shall not, unless specifically provided in this Lease, have any further
rights or obligations with respect to such Excluded Areas, and Lessee agrees
that it shall not be entitled to enter or use such Excluded Areas without the
written permission of Lessor or any successor owner of a portion of the
Premises including the Excluded Areas; provided, however,
that such designation shall not in any way reduce any of Lessee’s rights and
obligations hereunder with respect to the remaining portions of the Premises
not so withdrawn, and shall not entitle Lessee to the refund of any rent or
other money previously paid by the Lessee or owed by the Lessee for rent up to
the effective date of the withdrawal.


ARTICLE
II.



TERM OF LEASE


2.1          Term of Lease. The term (the “Term”) of this Lease shall be Four
(4) years, Eleven Months, and Twenty-Nine Days commencing on _______________,
2007 (the “Commencement Date”) and continuing to _______________, 2012.


ARTICLE
III.



LEASE RENTAL


3.1          Time, Manner and Place of Payment.  During the
first year, of the Term hereof, there shall be no lease rent due and
payable.  Thereafter, for the balance of
the Term hereof, the Lessee shall pay to the Lessor lease rent in the amount of
U.S. Dollars Seventy-Eight & 121⁄2 100ths ($78.125) per acre under this Lease
for each twelve (12) month period for the remaining term of the Lease.  For purposes of the payment of rental under
this Lease only, and notwithstanding any survey, document, appraisal, opinion
or other document to the contrary, the acreage of the Premises shall be deemed
to be Three Thousand Nine Hundred Ninety-Eight (3,998) acres upon the
Commencement Date hereof. The rental due hereunder shall be reduced to the
extent and at the time acreage is removed from or reduced under this Lease
pursuant to Section 4.12(B) herein.  The
Lessee shall pay the lease rent in legal money of the United States at the
office of the Lessor in equal monthly installments in advance on the first day
of each month during the Term, except for the first twelve (12) months.  Lease rent for a full month shall be due for
the last month of the Lease, even though the Lease for the last month of the
Lease is for a term, which is one (1) day short of a full month.  Accordingly, the lease rent for each month of
the Lease, commencing on the first (1st) day of the thirteenth (13th) month of the Lease shall be U.S. Dollars
Twenty-Six Thousand Twenty-Eight & 65/100ths ($26,028.65) per month.


3.2          General Excise Tax. Lessee will also pay to Lessor at the time and
together with each payment of rent which is subject to GET, an amount which,
when added to rent (whether actually or constructively received by Lessor),
shall yield to Lessor, after deduction of the GET, an amount equal to that
which Lessor would have realized had no such GET been imposed. “GET” means the
State of Hawaii general excise tax on gross income, any sales or value added
taxes under any successor, similar or new federal, state or county law which
may be hereafter enacted, on account of the receipt, actual or constructive, by
Lessor of the rental payments, reimbursement of gross income taxes, and any
other taxable gross income attributable to the 



 5
 









Premises or this Lease. For purpose
of illustration only, the amount of such tax is presently four percent (4%),
resulting in an additional amount to paid by Lessee to Lessor of 4.166%.


3.3          Property and Conveyance Taxes. Lessee shall pay directly to the taxing authority
before they become delinquent all property taxes and assessments of every
description to which the Premises or improvements on the Premises (excluding
all such taxes on an Excluded Area and any areas designated for development or
being developed by Lessor pursuant to Section 4.12 below) are now or during the
Term of this Lease may be assessed or may become liable, whether assessed to or
payable by Lessor or Lessee, which property taxes and assessments shall be
prorated as of the Commencement Date of this Lease. Lessee shall also pay when
due all conveyance taxes imposed by the State of Hawaii in respect of this
Lease, although the parties currently believe that no such conveyance taxes
will be due. Lessee shall be responsible for the payment for all interest, fees
and penalties payable due to the late payment or nonpayment of any of the taxes
described in this Section 3.03. This Lease is a “triple net lease” or a “net,
net, net lease” as such terms are normally used in the real property leasing
industry, and unless an expense relating to the Premises is specifically
provided herein to be borne by Lessor, it shall be borne by Lessee.


If all or a portion of the Premises
is now or shall hereafter be dedicated for agricultural use or classified for
non dedicated agricultural use assessment under the provisions of the Hawaii
County Code, and if at any time after such dedication or classification either
Lessor or Lessee shall fail to observe the restrictions on the use of such
portion of the Premises or shall cancel or cause such dedication or
classification to be cancelled for any reason whatsoever (including, without
limitation, Lessee’s failure to farm any portion of the Premises or Lessor’s
development of the Premises), or shall otherwise cause a deferred or roll back
tax to be imposed, the party whose act or omission caused such dedication or
classification to be cancelled shall promptly pay or cause to be paid to the
other party all taxes, roll back taxes, penalties and other charges imposed by
the County of Hawaii and paid or to be paid by such party. This obligation
shall survive termination of the Lease.


3.4          Financial Covenants. For the term of the Lease, Guarantor on a
consolidated basis (or its successors and permitted assigns) shall at all times
maintain a net worth equal to or greater than FIVE MILLION DOLLARS
($5,000,000.00), determined in accordance with GAAP.  Upon the execution of this Lease and on a
yearly basis during the Term, Guarantor (or its successors and permitted
assigns) shall provide to Lessor a copy of its unaudited consolidated financial
statements certified for accuracy by an executive officer or other senior
manager of such person or entity.


ARTICLE
IV.



CONDUCT OF BUSINESS BY LESSEE AND LESSOR


4.1          Use. Lessee shall use the Premises for the purpose of
farming, cultivating, irrigating, fertilizing, maintaining, harvesting, or
otherwise dealing with the existing macadamia nut trees on the Premises
(collectively, the “Orchards”) and any additional macadamia nut trees, nursery
stock, supplies, crops or nuts; and conducting any lawful and incidental
activities related to the foregoing uses, including, without limitation,
housing of employees, migrant workers or 



 6
 









other individuals that have a
non-recreational business relationship with Lessee; provided, however,
that Lessee shall not be permitted in any circumstances to use the Premises for
any retail sales of products or other use of the Premises which would otherwise
materially increase the number of persons entering the Premises, except, that nothing herein shall
preclude Lessee from increasing the number of employees, workers, or
contractors entering the Premises in connection with Lessee’s operations.  Lessee shall use the irrigation and water
systems solely for the irrigation and servicing of the Orchards and other
portions of the Premises. Lessee’s use of the Premises shall also be in
accordance with the remaining sections of this Article IV. Lessee shall
not use or permit the Premises or any part thereof to be used for any other
purpose or use other than those for which the Premises have been leased and in
the manner provided in this Lease, unless otherwise from time to time mutually
agreed to in writing by the parties hereto. Subject to Lessor’s obligations
under this Lease, Lessee agrees to repair and maintain the irrigation system in
good working condition suitable for irrigation of the Orchards, subject only to
Force Majeure Events (as defined in Article XIII).


4.2          Observance of Laws. Lessee will at all times comply with all Laws (as
defined below) now or hereafter applicable to or affecting the Premises. Lessee
will at Lessee’s expense during the Term alter, maintain or restore the
Premises in compliance with all Laws relating to the condition, use or
occupancy of the Premises and as permitted under the Lease. Lessee will at all
times during the Term of this Lease keep the Premises in a condition in
conformity with normal farming operations subject to the additional provisions
of Section 4.04.


4.3          Waste or Nuisance. Lessee shall not use the Premises in any manner that
will constitute unlawful or unreasonable waste, unlawful nuisance or other
improper or unlawful use of the Premises.


4.4          Good Husbandry and Care of Orchards.
Lessee believes that
substantial portions of the Premises may not be worth cultivating at any given
time in accordance with normal good husbandry standards in that the cost of
cultivation, irrigation, and harvesting may exceed the value of the harvested
nuts wet-in-shell at the time.  Such
acres may be designated by Lessee from time to time in its sole discretion and
will be termed the “Uneconomical Acres”. 
Lessee shall not be held to normal standards of good husbandry on the
Uneconomical Acres.  Lessee in its sole
discretion will determine which portion of the Premises it will cultivate.
Nevertheless, Lessee shall in its reasonable discretion:  (a) use reasonable diligence in attempting to
prevent trees from dying on the Uneconomical Acres; (b) irrigate all trees on
the Uneconomical Acres to the extent that water of reasonable salinity is
available after the remainder of the operating orchards have been irrigated and
to the extent that irrigation is necessary to preserve the life of the trees;
and (c) exercise sufficient good husbandry so that the Lessee or Lessor will be
able to return the trees to normal productivity status if the acres become
economical again.  Lessee, at its sole
expense and at its sole discretion, shall replace any and all dead, dying, damaged
or destroyed macadamia nut trees with new macadamia nursery stock.


4.5          Condition of the Premises. EXCEPT AS OTHERWISE
SPECIFICALLY PROVIDED IN THIS LEASE, LESSEE ACKNOWLEDGES THAT LESSEE HAS MADE
ALL OF THE INSPECTIONS AND INVESTIGATIONS THAT LESSEE DEEMS NECESSARY OR
DESIRABLE AND HAS DECIDED TO LEASE THE PREMISES ON THE BASIS SET FORTH HEREIN.
LESSEE HAS INSPECTED THE PREMISES AND THE 



 7
 









CURRENT
PHYSICAL CONDITION THEREOF, AND SHALL RELY ON ITS OWN INSPECTION AND SHALL
ACCEPT THE PREMISES “AS-IS” AND
IN THEIR CONDITION AS OF THE DATE HEREOF. EXCEPT AS OTHERWISE SPECIFICALLY
PROVIDED IN THIS LEASE, LESSEE FURTHER ACKNOWLEDGES THAT LESSOR HAS MADE NO
REPRESENTATION OR WARRANTY, WHETHER EXPRESS OR IMPLIED, WITH RESPECT TO THE
PHYSICAL CONDITION OR STATE OF REPAIR OF THE PREMISES, THE MACADAMIA NUT TREES,
OR ANY IMPROVEMENTS THEREON (INCLUDING ANY WARRANTIES WHICH MAY BE DEEMED MADE
AT LAW, THE BENEFIT OF WHICH, IF ANY, LESSEE HEREBY WAIVES) OR AS TO THE USE,
MERCHANTABILITY, DESIGN, QUALITY, DESCRIPTION, DURABILITY, OPERATION OR FITNESS
FOR USE OF THE PREMISES OR AS TO THE QUALITY OF THE PREMISES, THE MACADAMIA NUT
TREES OR ANY IMPROVEMENTS THEREON.


4.6          Utilities and Permits. Except as otherwise specifically provided in this
Lease, Lessee shall be solely responsible for obtaining at Lessee’s expense (A)
all utility services and connections and any other services or facilities,
including but not limited to water, sewer, electricity and telephone service,
required for or in connection with Lessee’s use of the Premises, and (B) any
governmental classification, zoning, permits, approval, or consent required by
law for or in connection with the use of the Premises. All utility charges to
the Premises in any manner shall be the sole costs and expense of the Lessee during
the entire Term.


4.7          Water. The existing irrigation system is a portion of the
Premises leased by the Lessor to the Lessee as part of this Lease. The system
includes Well No. 1 (Hawaii State Well No. 0751-01) and the Okoe Well (Hawaii
State Well No. 0953-01). The operation of the system includes pumping of water
from the wells and the delivery of such water to the portions of the Orchards
which are makai of the government road. 
Under ordinary circumstances the salinity of the water is such that it
is not potable for human consumption and has salinity which often approaches
levels which have too much salinity for irrigation purposes.  If there is too much pumping, salinity may
rise to levels where the water cannot be used for irrigation.  Lessee shall have the right to use the
irrigation system located on the Premises and shall have the reasonable use of
any and all water sources on the Premises including, without limitation, water
for purposes of irrigating the Orchards and conducting Lessee’s operations.  Lessee shall be responsible for the
operation, maintenance, and repair of the irrigation system and all facilities
and equipment utilized in connection therewith at its sole cost, risk, and
expense at the same or better standards at which such system, wells, facilities
and equipment are being operated, maintained and repaired as of the date
hereof, reasonable wear and tear excluded.


By execution of
this Lease and subject to Lessor’s rights to use water herein as set forth
below, all water supply agreements (if any) held by Lessor, with all rights and
obligations attendant thereto, are hereby leased by Lessor to Lessee.


This Lease is
subject to the rights of Lessor to draw water from any source on the Premises,
including, without limitation, Well No. 1 and the Okoe Well, in accordance with
the terms of this Lease. Lessor shall be allowed reasonable use of any and all
water sources located on the Premises along with reasonable use of the existing
irrigation system located on the Premises; provided, that: (a) unless otherwise
agreed to by Lessor and Lessee, Lessor’s reasonable use of the water from Well
No. 1 and the Okoe Well shall not exceed more than FIVE 



 8
 









PERCENT
(5%) of the total available water from such wells, from time to time; and (b)
Lessor’s reasonable use includes the use of such water from Well No. 1 and the
Okoe Well for its development activities on any Excluded Areas.  For purposes of this Section 4.07, “available
water” or “water available”, as to the two wells referenced herein, means that amount
of water actually available from Well No. 1 and the Okoe Well (whether or not
actually drawn) as determined based on good hydrological practices and
applicable governmental rules and regulations. Lessor agrees that in
consideration of the costs incurred by Lessee in maintaining and operating Well
No. 1 and the Okoe Well and the related facilities, it shall pay to Lessee a
mutually agreeable sum per gallon of water actually drawn by Lessor from the
Premises.


Lessor assumes no
responsibility to Lessee for any shortage or unavailability of water from the
source or sources of water on the Premises, from Well No. 1 or the Okoe Well,
or from any source whatsoever; nor does Lessor warrant the quality or quantity
of water obtained from any source or sources. Lessee shall pay all acquisition,
operation, and maintenance, repair, diversion and dispersion costs and charges
and/or water charges incurred with the use of water used on the Premises for
whatever purpose or purposes, including, without limitation, the irrigation
system, Well No. 1 and the Okoe Well. With respect to water drawn by Lessor,
Lessee does not represent or warrant to Lessor the quality or quantity of such
water.


During the term of
this Lease, if Lessee or Lessor determines, in its respective reasonable
discretion, that Well No. 1 and the Okoe Well do not produce water in
sufficient quantity or of sufficient quality to fully-irrigate the Premises, or
if water is unavailable from such sources for any reason whatsoever, for the
purposes set forth herein, Lessee and Lessor shall have the right, but not the
obligation, to reasonably explore the Premises (with such right being held
exclusively by Lessor as to any Excluded Area) for additional water sources
and, subject to the provisions of Article VI, to develop an additional
well or wells from which to draw water for Lessor’s or Lessee’s purposes. Such
right shall include the right to conduct such testing of the Premises (with
such right being held exclusively by Lessor as to any Excluded Area) to locate
additional water sources, drill test wells, obtain any necessary permits and
approvals, and to construct necessary improvements related thereto; provided, however, that no such new water
facility shall be permitted to be located closer than one thousand five hundred
(1,500) feet to any existing residential dwelling, a proposed residential
dwelling or the border of any Excluded Area, and no well shall be drilled if a
drilling study commissioned by Lessor and performed by a engineer or
hydrologist licensed in the state of Hawaii deems, in his reasonable
professional opinion, that the new well will increase the salinity level of
water pumped from Well No. 1 and the Okoe Well to levels unacceptable for
farming, cultivating and irrigating macadamia nut trees. Lessee shall have a
non-exclusive right to any new water source established after the date hereof
and located on any Excluded Area (even if such new water source was established
prior to the designation of such Excluded Area), provided that Lessor has excess
capacity (in its sole discretion) and is willing to enter into an agreement
regarding such non-exclusive right with Lessee. Any and all costs and expenses
of developing any such irrigation facilities, well equipment or other such
improvements, including costs of exploring for water, testing, design, permits
and approvals and construction shall be borne by the party seeking such source
or as otherwise agreed by the Lessor and Lessee. Each party shall provide the
other party with copies of any and all water-related studies and surveys that
are prepared by or for the first party in connection with these exploration and
development rights within thirty (30) days of their preparation.



 9
 









For and during the
term of this Lease, Lessor agrees, subject to the foregoing provisions and
disclaimers, and without representation or warranty of any kind or nature
whatsoever, to use commercially reasonable efforts to maintain and renew as
necessary all permits, licenses, contracts, easements, and agreements relating
to Lessor’s rights to access, use, deliver and maintain water, Well No. 1, and
the Okoe Well in full force and effect and to notify Lessee within five (5)
business days of the occurrence of any event which results in or threatens the
termination, suspension or avoidance of any such permit, license, contract,
easement or agreement. For and during the term of this Lease, Lessee agrees to
reimburse Lessor for fifty percent (50%) of Lessor’s reasonable costs and
expenses (including, without limitation, reasonable attorney’s fees) associated
with such actions.


Notwithstanding
the foregoing provisions of this Section or any other Section of this Lease,
Lessee hereby acknowledges, confirms, and agrees that Lessor has not made any,
and makes no, representation or warranty of any kind or nature whatsoever as to
any right or authority of Lessor to make water available to Lessee hereunder; provided, however, that Lessor agrees to cooperate with
Lessee, and to use commercially reasonable efforts, to secure all rights which
may be necessary or appropriate in connection with creating and/or confirming
the right of Lessee to have access to Well No. 1 and Okoe Well for purposes of
maintaining, operating and repairing such wells and all related facilities and
equipment as contemplated hereunder, or to create and/or confirm the right of
Lessee to use water from Well No. 1 and Okoe Well that is otherwise provided or
made available to Lessee by Lessor for the purposes contemplated hereunder;
provided further that Lessee agrees to pay FIFTY PERCENT (50%) of any and all
reasonable costs and expenses (including, without limitation, reasonable
attorneys’ fees) incurred by Lessor in connection with the creation and/or
confirmation of any such rights.


In the event that a Force Majeure
Event destroys the well, or a substantial portion of the irrigation system, the
Lessee shall not be required to replace or repair the system; provided, however, any insurance proceeds due Lessor will be
paid per Article IX.


4.8          Roads Within the Leased Parcel.
The existing roads within
the Premises have been leased to the Lessee. Lessor shall be entitled to use
any and all existing roadways, pathways and the like within the Premises; provided, however, Lessor acknowledges and agrees that the
roads will be maintained by Lessee as agricultural roads suitable for use by
four wheel drive vehicles and farming vehicles and machinery and any use by
Lessor, or Lessor’s contractors, employees, agents and guests, shall be solely
at their own risk.  In the event that any new roads are
designated by Lessor as an Excluded Area, Lessee shall no longer be entitled to
use such roads, subject to Lessee’s rights to continued reasonable access to
the entire Premises under Section 4.12(B). 
Lessee shall maintain all such roadways within the Premises at its sole
cost and expense unless designated as an Excluded Area.  Lessee may also build and repair at Lessee’s
sole cost and expense such additional roads, pathways and the like within the
Premises, as it believes necessary for the operation contemplated by this
Lease, but only after the road locations have been previously approved in
writing by Lessor.  Lessee shall maintain
all roads on the Premises in a safe condition and in compliance with law in accordance
with standards for agricultural roads within a macadamia nut orchard. Lessor
shall be entitled to improve such roads at its expense, and Lessee shall be
entitled to use such improved roads.



 10
 









4.9          Access. Lessee shall have the right to exercise its
reasonable discretion to prohibit any persons from entering or remaining on the
Premises except persons expressly or impliedly authorized by Lessor to have
access thereto in connection with their usage rights set forth in
Section 1.02 or elsewhere in this Lease.


4.10        Lessee’s Investments and Expenses.
Lessee agrees to pay for all
the machinery, equipment, labor and all other costs and expenses reasonably
necessary to properly utilize and maintain the Premises and the Orchards as
herein provided.


4.11        Noxious Weeds; Pests. As provided for in Section 4.04, Lessee may
designate Uneconomical Acres.  Lessee
will diligently endeavor to control the growth and spread of noxious weeds and
grasses and rodents and other pests on the Premises in accordance with normal
practices observed by farmers of macadamia nut orchards on all portions
excluding the Uneconomical Acres. Lessee has the right, to provide the
Uneconomical Acres with minimal maintenance except for irrigation as provided
for in Section 4.04.  Lessee will
endeavor to keep all such noxious weeds and grass on areas that Lessee is
farming from going to seed and to prevent as far as reasonably possible the
introduction of such noxious weeds and grasses not already present. Lessee will
endeavor to control all such noxious weeds and grasses now existing or
hereafter growing by constant use according to the practices of good husbandry
of the most practical means of control. Any pesticides shall be used in a
manner and in a quantity as is mandated by instructions on the manufacturer’s
label and by any federal, state or other governmental body asserting
jurisdiction over such matters. Any operation for the control of noxious weeds
and grasses and rodents and other pests utilizing poison that is identified
from time to time as a “Restricted Use Products” or “Restricted Use Pesticides”
by the United States Environmental Protection Agency or the Hawaii Department
of Agriculture (or other similar agency) shall be done in accordance with
instructions on the manufacturer’s label and health and safety standards as may
be established from time to time by any federal, state or other governmental
body asserting jurisdiction over such matters.


4.12        Development of the Premises by Lessor.


(a)           Development
and Cooperation. Lessor intends (and reserves the right), from time to time
throughout the Term of this Lease, to develop portions of the Premises for
residential, recreational, commercial or other purposes. Lessee shall
reasonably cooperate with Lessor, and shall use reasonable efforts to cause
their respective affiliates, officers, employees, agents and representatives
reasonably to cooperate with Lessor, in connection with Lessor’s efforts to
investigate, study, plan and implement any of the development activities
intended by Lessor so long as such cooperation does not cause Lessee to incur
any liability or cost or expense associated therewith.  As plans for any such development activities
progress, Lessor shall provide periodic status updates to Lessee, shall provide
status updates to Lessee when reasonably requested by Lessee, and when
appropriate (in Lessor’s sole judgment) will solicit input from Lessee on the
specific details of any particular development plan.  Lessee shall join in, if required to do so by
government authorities, applications, documents, and instruments that may be
reasonably requested by Lessor or required in connection with Lessor’s efforts
to develop the Premises and secure any permits, approvals, or entitlements of
any kind or nature whatsoever related to such development; provided, however, that: (a) Lessee shall not be required to incur 



 11
 









any liability or cost or expense associated therewith,
and (b) Lessee shall remain neutral and not oppose any such applications.


(b)           Reduction
of Acreage under Lease and Trees in the Orchards.  In connection with any contemplated
development activities undertaken pursuant to Section 4.12, Lessor
anticipates that it will be required during the Term of this Lease to reduce
the number of acres subject to this Lease by removing such acreage from this
Lease (such removed acreage is referred to herein as an “Excluded Area”).  Lessor and Lessee agree that no acreage will
be withdrawn from the lease prior to March 1, 2008.  On or before October 1, 2007, Lessor will
advise Lessee of any acreage which it wishes to withdraw from the lease on
March 1, 2008.  The Lessor shall provide
the Lessee with the development plan, together with a survey and all required
governmental permits.  Lessee shall have
the opportunity to discuss such proposed withdrawal with the Lessor for the
purpose of advising the Lessor of adverse consequences to the Lessee, if
any.  The acres as finally determined
shall be withdrawn from the Lease effective March 1, 2008.  Similar notices and withdrawal dates shall be
applicable to the following years.  Lessor shall have the right by such
withdrawal to reduce the number of acres leased to Lessee under this Lease up
to the maximum yearly amount of Four Hundred (400) acres and to remove such
proposed Excluded Area from the Lease effective as of March 1 of each year,
except for the year 2007.  The location,
delineation and selection of any such Excluded Area shall be made at the sole
and absolute discretion of the Lessor, and Lessor shall, upon the effective
date of the removal of such Excluded Area from the Lease, have the right to
commence development activities thereon, including, without limitation, the
removal of any and all trees (including macadamia nut trees), shrubs or other
growth from the Excluded Area.  Lessor
may elect to remove up to 400 acres per year from this Lease (except for the
year 2007 and upon compliance with the terms hereof) without regard to
contiguity or proximity and in varying parcels with the exception that (i) each
and every tract of land removed from this Lease shall contain a minimum of One
Hundred (100) acres and (ii) the removal of any tract of land shall not
materially diminish or hinder Lessee’s ability to farm the remaining land
subject to this Lease.  In addition, in
the event Lessor elects to remove less than the annual limit of 400 acres per
year during any year of this Lease, any acreage less than the 400 acre maximum
shall be cumulative and Lessor shall be allowed to remove the differential in
acreage during any following year or any other year of the Term of this Lease.  It is the intent and understanding of both
Lessee and Lessor that any acreage allowed to be removed hereunder by Lessor,
which is not so removed by Lessor in the applicable year, shall rollover and
shall be cumulative in nature and shall be available to Lessor during any
subsequent year of the Term of this Lease so long as the cumulative removals of
Lessor under this Lease do not exceed 400 acres per year (maximum of 1,600
acres during the Term hereof).  Lessor
shall not designate any portion of the Premises as an Excluded Area without
providing Lessee the right to continued reasonable access to the entire
Premises. Upon the effective date of the removal of any Excluded Area from this
Lease, Lessee’s rental payments hereunder shall be proportionately reduced by
the number of acres removed from this Lease divided by 3,998.  Lessee shall at no time have any claim
against Lessor for any loss of profits or similar claim related to Lessor’s
removal of acreage from this Lease.


(c)           Infrastructure
Facilities. As otherwise provided herein, Lessor shall have the right, at
its expense and at any time during the Term of this Lease, to enhance or
develop, or cause to be enhanced or developed, the Premises’ infrastructure
facilities (including but not limited to roads, bridges, sewers, water wells,
fences and utility services).  Lessee
shall have the 



 12
 









right to use such enhanced facilities unless they are
within an Excluded Area.  Lessee shall
reasonably cooperate with Lessor’s reasonable requests to trim limbs or
branches of any trees in an agriculturally sound manner, to the extent deemed
necessary or appropriate by Lessor to assure effective and safe use of any such
enhancements or developments; provided, however,
that Lessee shall not be required to undertake any such action except at Lessor’s
expense; and provided, further,
that Lessee shall only be required to cooperate with such requests from Lessor
during the months of January and February.


(d)           Requirements
of Development Activities and Reserved Rights. In exercising Lessor’s
rights to develop the Premises under this Section 4.12 and other
provisions of this Lease and in exercising its Reserved Rights, Lessor agrees
that (i) it shall make reasonable efforts to make development plans
available to Lessee for review prior to implementation and to discuss such
plans with Lessee for the purpose of understanding Lessee’s views on whether or
not such plans might interfere with the agricultural operations of Lessee
(provided that Lessee shall not be granted any consent or approval rights
pursuant to this Section 4.12(D)), (ii) it shall not adversely and
materially interfere with Lessee’s rights under this Lease, operations or use
of the Premises, (iii) the exercise of such rights shall not result in any
material costs and expenses to Lessee for which Lessor does not agree to
reimburse Lessee, (iv) it shall comply in all material respects with all laws
relating to its activities and obtain any governmental classification, zoning,
permits, approval, or consent required by law or otherwise necessary for or in
connection with its activities.


4.13        Quiet Enjoyment. Lessor hereby covenants with Lessee, that so long as
Lessee fully and timely performs its obligations under the Lease, including,
but not limited to, the timely payment of lease rent and all other monetary
obligations thereunder, Lessee shall have quiet enjoyment of the Premises
against all persons and entities holding title by, through, or under Lessor,
including Lessor’s lenders, and Lessor hereby covenants that it will secure
from its lenders in favor of Lessee, such lenders’ non-disturbance and
attornment agreement.


ARTICLE
V.



HAZARDOUS MATERIALS


5.1          No Use of Hazardous Materials. In addition to Lessor consent requirements for the
use of “Restricted Use Products” or “Restricted Use Pesticides” set forth in
Section 4.11, Lessee will not use, generate, manufacture, treat, handle,
refine, produce, process, store, discharge, release, dispose of or allow to
exist on, within, under or about the Premises, any Hazardous Material, unless (A)
such material is used in the ordinary course of Lessee’s operations on the
Premises, and (B) such use is in full and strict compliance with all
instructions on the manufacturer’s label and all applicable Hazardous Materials
Laws.


5.2          Notice of Releases and Claims. If Lessee at any time becomes aware of any Hazardous
Release or of any Hazardous Materials Claim in respect of the Premises, Lessee
will immediately so notify Lessor and provide to Lessor detailed reports of any
such event as may be requested by Lessor. Lessor shall have the right to join
and participate, as a party if it so elects, at Lessee’s reasonable expense, in
any actions initiated in respect of any Hazardous Materials Claims.



 13















5.3          Remedial Obligations. Lessee will take all reasonable steps and corrective
actions to remedy any Hazardous Release caused by Lessee or its agents and
shall bear all related Hazardous Materials Cleanup Liabilities. Lessor will
take all reasonable steps and corrective actions to remedy any Hazardous
Release by Lessor or its agents and shall bear all related Hazardous Materials
Cleanup Liabilities. Lessor agrees that Lessee shall not be liable for any
Hazardous Materials Cleanup Liabilities arising prior to the date of this
Lease.


5.4          Certain Definitions.


(a)           “Hazardous
Material” means any and all flammable explosives, radioactive materials,
asbestos, hydrocarbons, organic compounds known as polychlorinated biphenyls,
chemicals known to cause cancer or reproductive toxicity, pollutants,
contaminants, hazardous wastes, toxic substances or related materials, and any
and all other substances or materials defined as or included in the definition
of “hazardous substances”, hazardous wastes”, or “hazardous materials”, and/or “toxic
substances” under or for the purposes of the Hazardous Materials Laws. For the
avoidance of doubt, the definition of “Hazardous Material” includes any
pesticide, poison or other agent (including, for the avoidance of doubt, any “Restricted
Use Products” or “Restricted Use Pesticides” identified from time to time by
the United States Environmental Protection Agency, the Hawaii Department of
Agriculture or other similar agency) used to control any noxious weeds and
grasses and rodents and other pests.


(b)           “Hazardous
Material Cleanup Liabilities” means any cost or expense of any nature
whatsoever required to be undertaken under or pursuant to any Environmental Law
to contain, remove, remedy, respond to, clean up or abate the release of any Hazardous
Materials or other contamination of surface water, groundwater, land surface or
subsurface strata, whether on-site or off-site, arising from activities at the
Premises, including, without limitation, the manufacture, generation,
formulation, processing, labeling, distribution, introduction into commerce or
on-site or off-site use, treatment, handling, storage, disposal, or
transportation of any Hazardous Materials.


(c)           “Hazardous
Materials Claim” means (i) any action instituted, or to the best of Lessee’s
knowledge contemplated or threatened, in respect of the Premises pursuant to
any Hazardous Materials Law, and (ii) any and all claims made or to the best of
Lessee’s knowledge contemplated or threatened, by any third party against
Lessee or any other person seeking damages, contribution, cost recovery,
compensation, injunctive relief or similar relief resulting from an Hazardous
Release or from the existence of any Hazardous Material on, within or under the
Premises.


(d)           “Hazardous
Materials Law” means any Law, now or hereafter in effect, relating to
Hazardous Materials, including, without limitation, the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended, 42
U.S.C. Section 9601, et seq., the Resource Conservation and Recovery Act, 42
U.S.C. Section 6901, et seq., the Hazardous Materials Transportation Act, 49
U.S.C. Section 1801, et seq., the Clean Water Act, 33 U.S.C. Section 1251, et
seq., the Clean Air Act, 42 U.S.C. Section 7401, et seq., the Toxic Substances Control
Act, 15 U.S.C. Sections 2601 through 2629, the Safe Drinking Water Act, 42
U.S.C. Sections 300f through 300j, Section 311 of the Federal Water Pollution
Control Act, 33 U.S.C. Section 1317, Federal Resource Conservation and Recovery
Act, 42



 14
 









U.S.C. Section 6901, Hawaii Revised Statutes Chapters
340A through 340F, 341, and 342B through 342P, and any similar federal, state
and local laws and ordinances and the regulations published and/or promulgated
pursuant thereto, as amended to date.


(e)           “Hazardous
Release” means any event involving the use, deposit, disposal, spill,
release or discharge of any hazardous material on, within or under the Premises
during the Term of the Lease.


(f)            “Law” means
any judicial decision, statute, constitution, ordinance, resolution,
regulation, rule, administrative order, or other requirement of any municipal,
county, state, federal, or other government agency or authority having
jurisdiction over the parties or the Premises, or both, in effect either at the
time of execution of the Lease or at any time during the Term, including,
without limitation, any regulation or order of a quasi-official entity or body.
For the avoidance of doubt, the definition of “Law” includes any such
requirement promulgated by the United States Food and Drug Administration or
the United States Department of Agriculture.


ARTICLE VI.



ALTERATIONS AND IMPROVEMENTS


6.1          Alterations and Improvements by
Lessee. Except as
otherwise set forth herein, Lessee shall not make any alterations to the
Premises or any improvements thereon without Lessor’s prior written consent,
which shall not be unreasonably withheld, conditioned or delayed.
Notwithstanding the foregoing, Lessee shall have the right, without the consent
of Lessor but with fifteen (15) days prior written notice to Lessor, to make
the following alterations or improvements:


(a)           Any alteration or
improvement that Lessee is required to perform in order to discharge its repair
and maintenance obligations under this Lease; or


(b)           Any minor alteration
or improvement the cost of which does not exceed FIFTEEN THOUSAND DOLLARS
($15,000.00) and that is directly related to Lessee’s permitted uses of the
Orchards;


If the alteration exceeds FIFTEEN THOUSAND DOLLARS ($15,000), Lessee
may proceed with the alteration or improvement so long as (i) Lessee secures
the prior written consent of Lessor as provided for in the opening paragraph of
this Section 6.01, (ii) Lessee obtains a Builder’s Risk Policy if
required under Section 6.02(B) and (iii) any such alterations or improvements
do not materially adversely impact the levels of noise, dust, smoke,
earthshock, soot, ash, odor, noxious vapors or other adverse environmental
conditions (excluding, however, reasonable temporary impacts during
construction that otherwise comply with applicable Laws) or materially
adversely impact the transmission of surface water runoff in the immediate area
where such alterations or improvements are installed or used or materially
adversely affect, in Lessor’s reasonable discretion, Lessor’s development
activities as contemplated in Section 4.12 herein.


Lessor agrees to
join in and execute, if required to do so by government authorities, any
application for permits or other approvals or authorizations relating to any



 15
 









permitted alterations or improvements as may be
required by applicable law or otherwise reasonably requested by Lessee; provided, however, that Lessor shall not
be required to incur any liability or any material cost or expense associated
therewith for which Lessee does not agree to reimburse Lessor.


6.2          Protection Against Liens and
Encumbrances.


(a)           Liens and
Encumbrances. Lessee shall keep the Premises free from any mechanics’ or
materialmen’s liens for labor and/or materials furnished in the improvement of
the Premises, or from any attachment, execution or judgment liens, and any
charge or encumbrance arising out of a claim against Lessee whatsoever.


(b)           Builder’s Risk
Policies and Surety Bonds. In the event that Lessee makes any alterations
or improvements to the Premises with a contract sum (the “Contract Sum”)
of greater than or equal to FIVE HUNDRED THOUSAND DOLLARS ($500,000.00), Lessee
shall, at its sole expense, maintain, or cause its contractor to maintain, an
All Risk Builder’s Risk Policy (the “Builder’s Risk Policy”), in an
amount equal to one hundred percent (100%) of the Contract Sum for such
alteration or improvement, including all engineering and project development
costs. The Builder’s Risk Policy shall provide coverage on an “All Risks” basis
with excluded coverage including earthquake, flood, collapse and off-site
coverage. The coverage provided by the Builder’s Risk Policy shall be
maintained until final acceptance of the alterations or improvements by Lessee.
In addition, in such circumstances, upon Lessor’s request, Lessee shall, at it
sole expense, furnish, or cause to be furnished, a surety bond in form and
substance satisfactory to Lessor, containing a performance and payment clause,
in the amount of the Contract Sum. Such bond shall be issued by a surety or bonding
company licensed to do business in the State of Hawaii and approved by Lessor,
and shall be furnished to Lessor prior to commencement of the work on such
alteration or improvement.


6.3          Ownership of Improvements and
Alterations. All
permanent improvements or permitted alterations thereto (including, without
limitation, fencing, the irrigation system, all other existing improvements on
the date hereof and any other improvements made by Lessor or Lessee after the
date hereof) on the Premises shall become the property of Lessor upon Lessee’s
surrender of the Premises to Lessor on expiration or termination of this Lease.
All non-permanent improvements, fixtures, equipment, permitted alterations
thereto, and personal property are and shall remain the property of Lessee upon
termination of this Lease.


6.4          Lessor’s Right to Make
Modifications to Improvements. Lessor shall have the right, at its sole cost and expense, to make any
reasonable modifications to any improvements on the Premises (including,
without limitation, those made after the date hereof and those owned by Lessee
or its affiliates) in order to reduce the amount of noise, dust, smoke,
earthshock, soot, ash, odor, noxious vapors or other adverse environmental
conditions generated by such improvements. Lessee shall reasonably cooperate
with Lessor, and shall cause its affiliates, officers, employees, agents and
representatives reasonably to cooperate with Lessor, in connection with Lessor’s
efforts to investigate, study, plan and implement any such modifications.
Lessee shall join in and execute, if required to do so by government
authorities, any applications, documents, and instruments that may be
reasonably requested by Lessor or required in connection with Lessor’s efforts
to make such modifications and secure any permits,



 16
 









approvals, or entitlements of any kind or nature
whatsoever. Notwithstanding the foregoing, Lessor agrees that Lessee shall not
as a result of Lessor’s rights under this Section 6.04 incur any liability or
out-of-pocket cost or expense or experience any loss of revenues or profits
associated with a material interruption of its business for which Lessor does
not agree to reimburse Lessee.


ARTICLE VII.



MAINTENANCE AND REPAIRS


7.1          Maintenance and Repairs by Lessee.
Lessee at its cost shall
keep the Premises in good order, condition and repair to standards customary in
the farming of macadamia nut orchards. Lessee shall pay for all damage to the
Premises and the improvements thereon (including, without limitation, the
irrigation system) resulting from the acts or omissions of Lessee or its
employees, agents or invitees (Force Majeure Events excepted).


7.2          No Obligation of Lessor for
Maintenance and Repairs. Except
as otherwise provided in this Lease, Lessor shall not be obligated to make any
repairs to the Premises (or the improvements thereon) or maintain the same in
good condition. All repairs and maintenance of the Premises shall be Lessee’s
sole responsibility and made at Lessee’s expense.


7.3          Access of Lessor to the Premises.
Upon at least twenty-four
(24) hours prior notice, Lessee shall permit Lessor and its agents to enter
into and upon the Premises at all reasonable times to inspect and examine the
same and determine the state of repair and condition thereof, to maintain the Premises
and the improvements thereon, and to make repairs, alterations and additions
to, and to inspect and examine any portion of the Premises and the improvements
thereon, with the right to erect temporary structures as may be required, and
all without any rebate of lease rent or liability to Lessee for any loss of
occupation or quiet enjoyment of the Premises thereby occasioned; provided, however, that all such work shall
be done promptly and in such manner and during such hours as to cause no
unreasonable and substantial interference to Lessee’s business.


7.4          Utilities. Lessee shall make all arrangements for the
installation of, if necessary, and pay for all utilities and services furnished
to the Premises or used by Lessee, including, without limitation, electricity,
water (other than the water to be made available by Lessor under
Section 4.07), telephone service, trash collection and all connection and
meter charges. Lessor shall not be liable for interruption or failure to
furnish such services.


ARTICLE VIII.



WAIVERS OF LIABILITY AND INDEMNITY


8.1          Waiver of Liability. Lessor shall not be liable to Lessee or any persons
claiming under Lessee for any damage to Lessee or to the property of Lessee
from any cause, except to the extent (a) that any such damage results from the
intentional misconduct or the gross negligence of Lessor, Lessor’s agents or
contractors or from Lessor’s (or Lessor’s agents’ or contractors’) exercise of
its rights to develop the Premises under this Lease or its Reserved Rights, or
(b) arising under Sections 8.02 or 8.03 below. Lessee waives all claims against
Lessor for damage to



 17
 









person or personal property (including death resulting
therefrom) arising for any reason, except as to matters described in
subsections (a) and (b) above.


8.2          General Indemnity. Lessor and Lessee (the “Indemnifying Party”)
each agrees, from and after the date hereof, to indemnify, hold harmless and
defend the other and each of its respective affiliates, officers, directors,
employees, attorneys, agents, contractors, guests and invitees and each of the
heirs, executors, successors and assigns of any of the foregoing (collectively,
the “Indemnified Parties”), from and against any and all liabilities,
losses, damages (including foreseeable or unforeseeable consequential damages),
claims, costs and expenses, interest, awards, judgments and penalties
(including reasonable attorneys’ and consultants’ fees and expenses)
(collectively, a “Loss”) suffered or incurred by such Indemnified
Parties, arising out of or resulting from (i) any breach of any representation
or warranty of the Indemnifying Party contained in this Lease, (ii) any breach
of any covenant or agreement of the Indemnifying Party contained in this Lease,
(iii) any accident, fire, nuisance or failure to maintain of the Indemnifying
Party, or (iv) any act or omission of Indemnifying Party resulting from
livestock or other animals straying from the Premises, except in all cases to
the extent that such Loss was caused by intentional misconduct of the Indemnified
Parties. The provisions of this Section 8.02 shall survive the expiration,
termination, assignment or cancellation of this Lease.


8.3          Indemnity for Hazardous Materials
Claims. Subject to the
last sentence of Section 5.03, the Indemnifying Party agrees, from and after
the date hereof, to indemnify, hold harmless and defend the Indemnified Parties
from and against any Loss suffered or incurred by any such Indemnified Parties,
arising out of or resulting from (i) the use, generation, manufacture, treatment,
handling, refining, production, processing, storage, release, discharge,
disposal or presence of any Hazardous Materials on, within, under or about the
Premises by the Indemnifying Party, and (ii) the Indemnified Party’s
investigation and handling (including the defense) of any Hazardous Materials
Claims, whether or not any lawsuit or other formal legal proceeding shall have
been commenced in respect of such claims. The provisions of this Section 8.03
shall survive the expiration, termination, assignment or cancellation of this
Lease.


8.4          Losses. Except as arising under Article V or Sections
8.02 or 8.03, Lessor shall not be responsible for any losses or damage to any
improvements, personal property or Orchards on the Premises for any reason
whatsoever (other than the gross negligence or intentional misconduct of
Lessor) including, without limitation, damage or loss caused by fire, theft,
vandalism, lighting, rain, floods, or interference by any third party.


8.5          Surrounding Use Effects and
Operations. Except as
otherwise provided in this Lease, Lessee and Lessor hereby waive any claims
arising from the effect (of which Lessee and Lessor are hereby given notice)
upon the Premises, and any improvements constructed thereon, of various hazards
and noise, dust, smoke, earthshock, soot, ash, odor, noxious vapors,
transmission of surface water runoff, or other adverse environmental
conditions, including but not limited to those attributable to wind drift and
other weather factors (collectively, the “Surrounding Use Effects”)
created by or attributable to historical, existing, and prospective
construction, development, agricultural, pastoral, residential, commercial and
other non-residential uses and activities by Lessee and Lessor, and Lessee and
Lessor hereby consent to all of those uses and activities by Lessee on the
Premises and Lessor on the land surrounding or in the general area of the
Premises (including, without limitation any Easement Areas and Excluded



 18
 









Areas) which include, but are not limited to, burning,
harvesting, tending as well as fertilization and pest and weed control;
diversified agricultural operations and activities; livestock grazing;
quarrying; real estate development and other changes in use (due to zoning
changes or other governmental authorization or otherwise), construction,
grading, improvement and maintenance of the Premises or adjacent surrounding
properties (including, without limitation, any Easement Areas and Excluded
Areas); the operation, construction, and maintenance respecting any use of the
Premises by Lessee or Lessor; electrical transmission lines and facilities
within or in the vicinity of the Premises; irrigation of any and all
surrounding lands with reclaimed water, treated effluent, or other non-potable
water sources (collectively, the “Surrounding Operations”). Except as
otherwise provided in this Lease, Lessee and Lessor and their respective
successors and permitted assigns shall be deemed to have assumed any and all
risks associated with such Surrounding Operations and the annoyances,
inconveniences and nuisances created thereby as they relate to the Premises and
the use thereof by Lessee or Lessor, and to have waived all rights and claims
against each other (and their successors and assigns) and Related Parties (as
defined below), arising out of or in connection with such activities,
annoyances, inconveniences and nuisances as they relate to the Premises and the
use thereof by Lessee or Lessor, including but not limited to (a) any
right to seek damages attributable thereto, or (b) the abatement or
elimination thereof. As used herein, the term “Related Parties” shall
mean Lessor, Lessee and their respective successors and assigns, and their
respective partners, members, owners, subsidiaries and affiliates, and any
officer, director, member, representative, employee or agent thereof.


8.6          General Conditions.  Subject to Lessor’s Reserved Rights, all representations and warranties
in Sections 16.02(D) through 16.02(G), Section 16.02(I), and Sections 16.02(K)
through 16.02(P) shall survive and continue in full force and effect for a
period of thirty (30) months after the date hereof and the obligations to
indemnify and hold harmless a party hereto pursuant to Section 8.02(i) shall
terminate thirty (30) months after the date hereof; provided, however, that
such obligations to indemnify shall not terminate with respect to any item as
to which the Indemnified Party shall have before the expiration of such
24-month period, previously made a claim by delivering notice of such claim
(stating in reasonable detail the basis of such claim) to the Indemnifying
Party.  All representations and
warranties in Section 16.02(H) shall survive and continue in full force and
effect for the Term of the Lease.


8.7          All representations and warranties in Sections
16.01(A) through 16.02(C) and Section 16.02(J) shall survive and continue in
full force and effect for a period ending thirty (30) days after expiration of
the applicable statute of limitations (including extensions thereto) and the
obligations to indemnify and hold harmless a party hereto pursuant to Section
8.02(iii) shall terminate thirty (30) days after expiration of the applicable
statute of limitations (including extensions thereto); provided, however, that
such obligations to indemnify shall not terminate with respect to any item as
to which the Indemnified Party shall have, before the expiration of such 30-day
period after expiration of the applicable statute of limitations (including
extensions thereto), previously made a claim by delivering notice of such claim
(stating in reasonable detail the basis of such claim) to the Indemnifying
Party.



 19
 









ARTICLE IX.



INSURANCE


9.1          Public Liability and Property
Damage Insurance.


(a)           Lessee shall
maintain, throughout the Term of the Lease and at its cost, insurance for the
mutual benefit of Lessor, Lessee and the Indemnified Parties against (i) all
claims for personal injury, death and property damage arising out of and in
connection with Lessee’s use or occupancy of the Premises, naming Lessor as an
additional insured and sole loss payee, as applicable, and having bodily injury
policy limits of not less than FIVE MILLION DOLLARS ($5,000,000.00) per person
and FIVE MILLION DOLLARS ($5,000,000.00) per occurrence in the aggregate and
property damages limits of not less than TWO MILLION DOLLARS ($2,000,000.00)
per occurrence in the aggregate; (ii) all claims of employees working in or at
the Premises under appropriate worker’s compensation and employer’s liability
insurance to the extent and in form and amount required by law;
(iii) general liability insurance in amounts reasonably acceptable to
Lessor; (iv) macadamia nut tree insurance, naming Lessor as an additional
insured party and having property damages limits of not less than the current
macadamia nut tree insurance in effect as of the date hereof; (v) all
contractual liabilities assumed by Lessee under Sections 8.02 and 8.03
(including no less than three (3) year tail coverage); and (vi) insurance
against damage to the irrigation system, naming Lessor as an additional insured
party and having property damages limits of not less than the current insurance
in effect as of the date hereof.


(b)           All policies of
insurance required to be provided by Lessee under this Section 9.01 shall:


(1)           Include
an endorsement providing that inclusion of more than one entity as insured
under any such policy shall in no way prejudice the right of any other insured
entity as respects any claim, demand, suit or judgment made or brought by or in
favor of any other insured entity, so that the policy shall protect each entity
in the same manner as though a separate policy had been issued to each entity;


(2)           Include
an endorsement providing that Lessor, although named as an insured, shall be
entitled to recover under the policies for any loss to Lessor, or Lessor’s
employees, agents, or contractors (and other Indemnified Parties),
notwithstanding the negligence of Lessee.


(3)           Cover
the whole of the Premises, and the business operated by Lessee and/or any
further sublessee within the Premises and any act or omission of any employee
of Lessee and any event involving any employee of Lessee which occurs at any
other portion of the Premises and which occurs in the course of such employee’s
employment with Lessee.


(4)           Acknowledge
the indemnity obligations of Lessee under Article VIII.



 20
 









9.2          Payment of Premiums and Delivery of
Policies. Lessee shall
pay all premiums and all fees and expenses for the insurance required by this
Lease when due and will deliver true and correct copies of all policies of
insurance, as well as certificates of insurance evidencing the coverages
required herein, to Lessor together with evidence of payment of the premiums
satisfactory to Lessor within twenty (20) days prior to the Commencement Date
of this Lease. If Lessee has not provided the required insurance certificates
within thirty (30) days of Lessor’s notice to Lessee to provide such
certificates, Lessor may exclude Lessee from occupancy of the Premises until
the required insurance certificates have been provided to Lessor. Lessee (i)
shall deliver certificates of insurance evidencing the coverages required
herein not less than twenty (20) days prior to the expiration dates of expiring
policies and (ii) shall use commercially reasonable efforts to deliver
copies of replacement policies or renewals not less than sixty (60) days after
the effectiveness of such replacement policies or renewals. Binders binding the
issuance of policies of insurance for the coverage specified in this
Article IX shall be accepted by Lessor if such policies are not obtainable
by Lessee at the time in question due to any building or improvement being in
the course of construction or other cause of temporary duration.


9.3          Review of Coverage. Lessee acknowledges that inflation may reduce the
effective value of coverage, that terms of insurance contracts or endorsements
may be revised, that the types of insurance contemplated by this Lease may
become unavailable or that other circumstances may arise which affect or
threaten to affect the protection to be afforded by the insurance required by
this Lease. Accordingly, the adequacy of the coverage afforded by the insurance
shall be subject to review by Lessor from time to time, and if Lessor
reasonably determines at any time or times that a prudent businessman in Hawaii
utilizing the Premises in a manner similar to the use of the Premises by Lessee
would increase the limits of liability or would insure the property against
additional perils when such insurance is available in Hawaii, Lessee shall forthwith
procure and maintain such other or additional forms and amounts of insurance as
Lessor finds sufficient.


9.4          Policies. All the insurance required under this Lease:


(a)           Shall be effected by
policies issued by insurance companies authorized to do business in the State
of Hawaii with a general policy holders rating of “A-” or better, and with a
financial size category of Class VI or better, as rated in the most recent
edition of Best’s Insurance Reports.


(b)           Be issued as a
primary policy and not contributing with, and not in excess of coverage which
Lessor may carry.


(c)           Contain an
endorsement requiring thirty (30) days’ prior written notice from the insurance
company to both Lessor and Lessee before cancellation or change in the
coverage, scope, or amount of any policy.


(d)           In the case of
liability insurance, a maximum TWENTY-FIVE THOUSAND DOLLARS ($25,000.00)
deductible.


(e)           Be in a form
reasonably satisfactory to Lessor.



 21
 









(f)            (F)           Shall name Lessee as the insured
party and Lessor as an additional insured, but subject nevertheless to the
loss-payee provisions and provisions relative to the disposition of insurance
proceeds stated in this Article IX.


(g)           Be in amounts
sufficient to prevent the insured from being a co-insurer within the terms of
applicable policies.


9.5          Failure to Provide Insurance.


(a)           If Lessee defaults
in insuring the Premises or in delivering the policies (and certificates),
Lessor may, at Lessor’s option but without being so obligated, effect such
insurance from year to year and pay the premiums, and Lessee will reimburse
Lessor on demand for any premiums so paid with interest from the time of
payment at the rate from of one percent (1%) per month. The procurement by
Lessor of any insurance required to be carried by Lessee shall not release
Lessee from its obligation to obtain the insurance required by this Lease nor
prejudice Lessor’s exercise of its remedies under this Lease for Lessee’s
failure to obtain insurance.


(b)           Lessor shall not
have any liability to Lessee for the coverage or quality of any insurance
required to be carried by Lessee or for the collection of any insurance
proceeds or for the insolvency of any insurer or insurance underwriter, and
Lessee’s failure to maintain the insurance coverage require hereunder nor the
inability to collect all or a part of such insurance shall not release Lessee
from any of its obligations hereunder.


9.6          Subrogation. Lessor and Lessee release each other from any claims
for damage to any person or to the Premises by, or that result from, risks insured
against under any insurance policies carried by Lessor or Lessee and in force
at the time of any such damage consistent with the requirements of this Lease
and each agrees to look solely to and seek recovery from such insurance
policies so long as such waiver of subrogation does not affect the right of the
insured to recover thereunder. Lessor and Lessee shall cause each insurance
policy obtained by them to provide that the insurance company waives all right
of recovery by way of subrogation against the other in connection with any
damage covered by any policy.


9.7          Net Insurance Proceeds. Any proceeds from any casualty insurance maintained
by Lessee for the macadamia nut trees in the Orchards and other improvements on
the Premises used by Lessee in connection with this Lease arising out of or
relating to any claim for damage to or destruction of such macadamia nut trees
or such other improvements shall paid solely to Lessee and shall be used by
Lessee solely for the timely repair and replacement of the insured property.


9.8          Lessor’s Public Liability and
Property Damage Insurance.


(a)           Throughout the Term
of the Lease, Lessor shall maintain, at its cost, insurance for the mutual
benefit of Lessor, Lessee and the Indemnified Parties against (i) all claims for
personal injury, death and property damage arising out of and in connection
with Lessor’s use, occupancy or operations with respect to the Premises and
Excluded Areas, naming Lessee as an additional insured, and having bodily
injury policy limits of not less than ONE MILLION DOLLARS ($1,000,000.00) per
person and ONE MILLION DOLLARS



 22
 









($1,000,000.00) per occurrence in the aggregate and
property damages limits of not less than ONE MILLION DOLLARS ($1,000,000.00)
per occurrence in the aggregate; and (ii) general liability insurance.


(b)           All policies of
insurance required to be provided by Lessor under this Section 9.08 shall:


(1)           Include
an endorsement providing that inclusion of more than one entity as insured
under any such policy shall in no way prejudice the right of any other insured
entity as respects any claim, demand, suit or judgment made or brought by or in
favor of any other insured entity, so that the policy shall protect each entity
in the same manner as though a separate policy had been issued to each entity;


(2)           Include
an endorsement providing that Lessee, although named as an insured, shall be
entitled to recover under the policies for any loss to Lessee, or Lessee’s
employees, agents, or contractors (and other Indemnified Parties), notwithstanding
the negligence of Lessor.


(3)           Acknowledge
the indemnity obligations of Lessor under Article VIII.


ARTICLE X.



CONDEMNATION


10.1        Definitions.


(a)           “Condemnation”
means (i) the exercise of any governmental power, whether by legal proceedings
or otherwise, by a condemnor and (ii) a voluntary sale or transfer by Lessor to
any condemnor, either under threat of condemnation or while legal proceedings
for condemnation are pending.


(b)           “Date of taking”
means the date the condemnor has the right to possession of the property being
condemned.


(c)           “Condemnation
Award” means all compensation, damages, sums, or anything of value awarded,
paid, or received on a total or partial condemnation.


(d)           “Condemnor”
means any public or quasi-public authority or private corporation or individual
having power of condemnation.


10.2        Parties’ Rights and Obligations To Be
Governed by Lease. If,
during the Term or during the period of time between the execution of this
Lease and the Commencement Date, there is any taking of all or any part of the
Premises or any interest in this Lease by condemnation, the rights and
obligations of the parties shall be determined pursuant to this Article X.



 23
 









10.3        Termination of Lease as to Portion of
Premises Taken. If the
Premises or any portion thereof or interest therein is taken by condemnation,
this Lease shall terminate only as to the part so taken on the date of taking.


10.4        Option to Terminate. If the whole of the Premises or greater than fifty
percent (50%) of the acreage of the Premises or interest therein is taken by
condemnation, then in any such event, either Lessor or Lessee shall have the
right to terminate this Lease by giving the other written notice of termination
within sixty (60) days after such taking. Any such termination shall be effective
as of the last day of the calendar month next following the month in which such
notice is given. Upon such a termination, Lessor shall have no obligation to
refund to Lessee any rent or other monies paid by Lessee. Termination of this
Lease by Lessor pursuant to this Section 10.04 shall not affect the
respective rights of Lessor and Lessee to any Condemnation Award.


10.5        Distribution of Condemnation Award.
Any Condemnation Award shall
belong to and shall be paid to Lessor, and Lessee agrees that Lessor shall be
solely entitled to pursue, negotiate, settle, or otherwise resolve any and all
issues relating to the amount or nature of such Condemnation Award, and Lessee
waives any rights in respect thereto or claims arising out of any decision or
resolution of the matter approved or otherwise reached by Lessor; provided, however, that in the event the
amount of any such Condemnation Award relates to any portion of the Premises
that remains subject to the Lease at such time, then Lessor agrees to pay to Lessee
a portion of such Condemnation Award equal to the sum of:


(a)           The amount equal to
the portion of the Condemnation Award expressly attributable to permanent,
permitted improvements on the property made by Lessee at its sole cost and
expense since the date hereof;


(b)           The amount equal to
the portion of the Condemnation Award expressly attributable to Lessee’s
personal property, crops on macadamia nut trees (but not to the macadamia nut
trees) and nursery stock on the Premises.


Notwithstanding
the foregoing, under no circumstances whatsoever shall Lessee be paid any
portion of any Condemnation Award expressly attributable to (i) the
leased-fee simple interest in the Premises, (ii) any improvements on the
Premises existing as of the date hereof and (iii) the value of any
macadamia nut trees or other crops on the Premises.


10.6        Temporary Taking. The temporary taking of the Premises or any part of
the Premises shall constitute a taking of the Premises by condemnation only
when the use and occupancy by the taking authority is continued for longer than
one-hundred (180) consecutive days. During this one-hundred eighty (180) day
period, all of the provisions of this Lease shall remain in full force and
effect. Lessor shall be entitled to whatever Condemnation Award may be paid for
the use and occupation of the Premises for the period involved.



 24
 









ARTICLE XI.



ASSIGNMENT, ENCUMBRANCE AND SUBORDINATION


11.1        Assignment. Lessee may not assign this Lease nor sublet any or
all of the Premises without the prior consent of Lessor, which consent shall
not be unreasonably withheld, conditioned or delayed. Any assignment of this
Lease permitted by Lessor shall not be valid or of any force or effect until
the assignee shall have executed, acknowledged and delivered to Lessor a written
agreement assuming all the obligations on Lessee’s part to be performed under
this Lease; provided, however,
the assignee shall not be required to assume any Hazardous Materials Cleanup
Liabilities arising prior to the date of this Lease. In the event of any such
assignment or sublease, Lessee shall remain liable for its obligations under
this Lease, unless otherwise agreed in writing by Lessor. In addition, Lessee
may not pledge, mortgage or otherwise encumber in any manner the Premises or
the uses and benefits contemplated by this Lease without the prior written
consent of Lessor, which consent shall not be unreasonably withheld,
conditioned or delayed; provided, however, that this Section 11.01 shall not apply to
liens or assignments arising out of the sale of the macadamia nuts or other
crops derived from the Premises in the ordinary course of Lessee’s business;
and provided, further,
that Lessee shall be permitted to pledge, mortgage or otherwise encumber the
uses and benefits contemplated by this Lease in connection with the closing of
the Acquisition Agreement and the execution of this Lease. Notwithstanding any
other provision in this Lease, Guarantor may not assign its obligations under
this Lease without the prior consent of Lessor, which consent may be withheld,
conditioned or delayed by Lessor in its sole discretion.


11.2        Subordination to All Present
Encumbrances. This Lease
and the rights of Lessee hereunder shall be subordinate to all present
encumbrances.


11.3        Mortgage of Premises by Lessor. Subject to Section 4.13, this Lease is and
shall be subject and subordinate, at all times, to the lien of any mortgage or
mortgages or other encumbrances which may now or hereafter affect the Premises
(or any portion thereof) and to all advances made or hereafter to be made upon
the security thereof and to the interests thereon, and to any agreements of any
kind at any time made, modifying, supplementing, extending or replacing any
such mortgages.. Lessor agrees to promptly provide notice to Lessee of any such
mortgage or other encumbrance and a complete copy thereof. Lessee further
agrees that it shall attorn to the right to any lender, secured party or other
purchaser who acquires title to the Premises (or any portion thereof) through
foreclosure, exercise of a power of sale or a deed in lieu of foreclosure, and
Lessee shall remain bound by the terms of this Lease and shall not have the
right or option to terminate this Lease in the event title to the Premises (or
any portion thereof) is acquired by any other party. At the request of Lessor,
Lessee shall execute and deliver such further documents and instruments as may
be reasonably requested by Lessor to confirm and implement the provisions of
this Section 11.03.


11.4        Sale of Subdivided Lots. Lessee agrees that in addition to Lessor’s right to
sell the entire Premises, Lessor has the right to sell any subdivided lot or
lots (each a “Subdivided Lot”) within the Premises (including existing
lots and lots resulting from any future subdivision or consolidation and
resubdivision). Upon the sale of a Subdivided Lot, the portion of the Premises
represented by such Subdivided Lot shall continue to be subject to this Lease;



 25
 









provided, however,
that Lessee agrees that any Subdivided Lot that has been withdrawn from this
Lease as an Excluded Area shall no longer be subject to the terms of this
Lease; and provided, further,
that no such transfer of a Subdivided Lot shall be permitted if, regardless of
the number of such transfers by Lessor or its permitted transferees, the total
number of persons or entities possessing ownership rights in the Premises is
greater than five (5); provided, further, that there shall never be more than one (1) person
or entity with the right to exercise the rights of Lessor under this Lease.


11.5        Right to Estoppel Certificates. Either Lessor or Lessee, within fifteen (15) days
after written request from one other, shall execute and deliver to such
requesting party, in recordable form, a statement certifying in substance that
(A) this Lease represents the entire agreement of Lessor and Lessee and is
unmodified and in full force and effect, or in full force and effect as
modified, and stating the modifications, (B) the amount of the lease rent, the
dates to which the lease rent has been paid in advance, and the amount of any
security deposit or prepaid lease rent, (C) there has been no transfer of this
Lease nor Lessor’s or Lessee’s (as applicable) interest therein, and (D) there
are not, to Lessor’s or Lessee’s (as applicable) knowledge, any uncured
defaults on the part of Lessee or Lessor (as applicable) and that Lessor or
Lessee (as applicable) has no right of offset, counterclaim or deduction
against lease rent, or specifying such defaults, if any are claimed together
with the amount of any alleged offset, counterclaim or deduction. Any such
statement may be relied upon by any prospective purchaser or lender. Failure to
deliver the certificate within the fifteen (15) days shall be conclusive upon
the party upon whom such request was made failing to deliver the certificate of
the foregoing certifications.


ARTICLE XII.



DEFAULT


12.1        Events of Default. The following events shall constitute events of
default, in addition to any other events of default:


(a)           If Lessee shall fail
to pay any rent payments within ten (10) days after written notice by Lessor to
Lessee that the same is due and payable, or Lessee shall fail to pay any tax
payments, reimbursements, deposits or any other charges or payments due
hereunder within ten (10) days after written notice to Lessee that the same
shall become due and payable; or


(b)           Without limitation
to other provisions of this Section 12.01, if Lessee shall fail to perform
or comply with any covenant, term or provision contained in this Lease
(including, without limitation, the use, cooperation and maintenance provisions
of Article IV, Article VII and elsewhere in this Lease), which
failure shall not, within thirty (30) days after written notice thereof shall
have been given to Lessee by Lessor, have been remedied to the reasonable
satisfaction of Lessor or up to ninety (90) days if Lessee is diligently
pursuing such cure if more than thirty (30) days is reasonably required to
cure; provided, however,
that with respect to a failure to perform or comply with any non-material
covenant, term or provision contained in this Lease, if Lessee is diligently
pursuing such cure after sixty (60) days and Lessee commenced diligent cure
activities within thirty (30) days after notice thereof, Lessee



 26
 









may make a written request not more than thirty (30)
or less than fifteen (15) days prior to the end of such ninety (90) day period
for a reasonable extension of such ninety (90) day period and Lessor shall
approve such request in writing prior to the expiration of such ninety (90) day
period unless such extension would have a materially adverse effect on Lessor
or its ability to exercise any of its material rights under this Lease
(including, without limitation, the Reserved Rights or Lessor’s rights to
develop the Premises) and, in the event that Lessor shall fail to respond to
such written request within fifteen (15) days, such request shall be deemed
approved by Lessor; or


(c)           If any material
representation or warranty contained herein or any written representation or
certificate to Lessor concerning the financial condition or credit standing of
Lessee (or its successors and permitted assigns) proves to be materially false
or misleading; or


(d)           If any person
obtains an order or decree in any court of competent jurisdiction enjoining or
prohibiting Lessee from performing any of its material obligations under this
Lease and such proceedings are not discontinued and such decree is not vacated
or stayed and timely appealed within ninety (90) days after the granting
thereof; or


(e)           If there shall be a
pledge or mortgage of the uses and benefits contemplated by this Lease by
Lessee without the prior written consent of Lessor, except in accordance with
the provisions of Section 11.01; or


(f)            If Lessee shall
become insolvent, or shall make an assignment for the benefit of creditors, or
shall admit in writing any inability to pay its debts as they become due, or
shall be the subject of a voluntary or involuntary petition in bankruptcy, or
shall be adjudicated a bankrupt or insolvent, or shall file any petition or
answer seeking for itself any arrangement, composition, adjustment,
liquidation, dissolution or similar relief to which it may be entitled under
any present or future Law, or shall file any answer admitting the material
allegations of any petition filed against it in any such proceedings, or shall
seek or consent to or acquiesce in the appointment of any trustee, receiver or
liquidator of all or a substantial part of its properties or assets, or, if the
State of Hawaii or any other governmental authority having jurisdiction over
Lessee shall dissolve Lessee or cancel, revoke, withdraw or approve the
withdrawal of any charter, certificate, registration or authority to maintain
Lessee’s existence or right to do business as a corporation in the State of
Hawaii unless, in any such case, such event shall have been rescinded within
thirty (30) days, or, within sixty (60) days after commencement of any
proceedings against Lessee seeking any arrangement, composition, adjustment, or
similar relief under any present or future Law, such proceeding shall not have
been dismissed, or, within sixty (60) days after the appointment, without the
consent or acquiescence of Lessee, of any trustee, receiver or liquidator of
any or of all or a substantial part of its properties or assets, any such
appointment shall not have been vacated, or, if any action shall be taken by an
officer or director of Lessee, looking to the dissolution or liquidation of
Lessee; or


(g)           If this Lease or any
estate or interest hereunder shall be seized, attached, executed, confiscated,
levied upon under any legal process or under claim of legal right, or subject
to forfeiture proceedings under state or federal laws as a result of any act or
omission of Lessee, and Lessee shall fail to secure release or discharge of
this Lease from such seizure within thirty (30) days of such seizure.



 27
 









For the avoidance
of doubt, and notwithstanding anything to the contrary herein, in the event
that (i) Lessor has complied with its obligations hereunder, and (ii) either
(x) Lessee refuses, fails, or is unable to continue to perform its
obligations hereunder or (y) this Lease is terminated early for any
reason, then, in any such event, Lessee shall not be entitled to a refund of
any rent or other money otherwise paid or payable by Lessee hereunder.


12.2        Right to Re-enter. Upon the occurrence of an uncured event of default
under Section 12.01(A) (after expiration of the applicable cure period),
Lessor, besides any other rights or remedies it may have, shall have the immediate
right, with or without termination of this Lease, of re-entry and may remove
all persons and property from the Premises and such property may be removed and
stored in a public warehouse or elsewhere at the cost of, and for the account
of Lessee, all without service or notice or resort to legal process and without
being deemed guilty of trespass, or becoming liable for any loss or damage
which may be occasioned thereby.


12.3        Right to Terminate. Should Lessor elect to re-enter for Lessee’s
default, as provided in Section 12.02, or should it take possession pursuant to
legal proceedings or pursuant to any notice provided for by law, it may, at its
sole discretion, either terminate this Lease or it may from time to time
without terminating this Lease, make such alterations and repairs as may be
necessary in order to re-lease the Premises, and re-lease the Premises or any
part thereof for such term or terms (which may be for a term extending beyond
the Term of this Lease) and at such lease rent and upon such other terms and
conditions as Lessor in its sole discretion may deem advisable. Upon each such
leasing, all lease rent received by Lessor from such leasing shall belong to
Lessor and shall be applied to offset any remaining rent owed by Lessee to Lessor.
Termination may, but need not necessarily, be made effective by the giving of
written notice to Lessee of intention to end the Term of this Lease, specifying
a day not earlier than five (5) days thereafter, and upon the giving of such
notice, the Term of this Lease and all right, title and interest of Lessee
hereunder shall expire as fully and completely on the day so specified as if
that day were the date herein specifically fixed for the expiration of the
Term. No re-entry or taking possession of the Premises by Lessor shall be
construed as an election on its part to terminate this Lease unless a written
notice of such intention is given to Lessee or unless the termination thereof
is decreed by a court of competent jurisdiction. Notwithstanding any such
leasing without termination, Lessor may at any time thereafter elect to
terminate this Lease for such previous default. On termination of this Lease,
Lessor may recover from Lessee all of the following: (a) the worth at the time
of the award of any unpaid rent that had been earned at the time of the
termination, to be computed by allowing interest at the rate of one percent
(1%) per month; (b) the worth at the time of the award of the amount by which
the unpaid rent that would have been earned between the time of the termination
and the time of the award exceeds the amount of unpaid rent that Lessee proves
could reasonably have been avoided, to be computed by allowing interest at the
foregoing rate; (c) the worth at the time of the award of the amount by which
the unpaid rent for the balance of the Lease Term after the time of the award
exceeds the amount of unpaid rent that Lessee proves could reasonably have been
avoided, to be computed by discounting that amount at the discount rate of the
Federal Reserve Bank of San Francisco at the time of the award plus one percent
(1%); (d) any other amount necessary to compensate Lessor for all the detriment
proximately caused by Lessee’s failure to perform obligations under this Lease;
and (e) any other amounts, in addition to or in lieu of the foregoing that may
be permitted by applicable law.



 28















12.4        Right to Cure. Should an event of default occur, Lessor may, at
Lessor’s option and without prejudice to any other right or remedy of Lessor
provided herein, cure the same and Lessee shall reimburse Lessor for the cost
thereof on demand, together with interest at the rate from of one percent (1%)
per month until paid.


12.5        Non-waiver. The failure of Lessor or Lessee to insist upon the
performance of any term, covenant or condition herein contained shall not be
deemed to be a waiver of such term, covenant or condition or any subsequent
breach of the same or any other term, covenant or condition herein contained,
nor shall any custom or practice which may develop between the parties in the
course of administering this Lease be construed as a waiver of Lessor’s or
Lessee’s right to insist upon the performance of any term, covenant or
condition. The subsequent acceptance of any payment hereunder by Lessor shall
not be deemed to be a waiver of any preceding breach by Lessee of any term,
covenant or condition of this Lease, other than the failure of Lessee to pay
the particular payment so accepted, regardless of Lessor’s knowledge of such
preceding breach at the time of acceptance of such payment.


12.6        No Accord and Satisfaction. No payment by Lessee or receipt by Lessor of a
lesser amount than the payment herein stipulated shall be deemed to be other
than on account of the earliest payment, nor shall any endorsement or statement
on any check or any letter accompanying any check or payment be deemed an
accord and satisfaction, and Lessor may accept such check or payment without
prejudice to Lessor’s right to recover the balance of such payment or pursue
any other remedy provided in this Lease.


12.7        Waiver of Rights of Redemption. Lessee hereby expressly waives any and all rights of
redemption granted by or under any present or future Laws in the event of
Lessee being evicted or dispossessed for any cause or in the event of Lessor’s
obtaining possession of the Premises by reason of the default by Lessee under
any of the covenants, conditions, or provisions of this Lease or otherwise.


12.8        Cumulative Rights and Remedies. The remedies provided for in this Lease are in
addition to any and all other rights available to Lessor and/or Lessee at law
or in equity, by statute or otherwise, and shall include without limitation the
right to recover all actual, consequential, special and punitive damages as
well as the right to specific performance or other injunctive relief. Lessee
acknowledges and agrees that in addition thereto, Lessor shall be entitled to
delay damages resulting from any failure of Lessee to promptly and reasonably
comply with its obligations hereunder relating to contemplated cooperation by
Lessee with Lessor’s efforts to develop the Premises or to otherwise exercise
its Reserved Rights in any respect, or in the event that Lessee shall
affirmatively act to obstruct, delay or make more difficult the exercise by
Lessor of its Reserved Rights, including, without limitation, Lessor’s rights
to develop the Premises. Lessor acknowledges and agrees that in addition
thereto, Lessee shall be entitled to delay damages resulting from any failure
of Lessor to promptly and reasonably comply with its obligations hereunder
relating to refraining by Lessor from interfering with Lessee’s efforts to farm
and process crops on the Premises or to otherwise exercise its rights in any
respect.



 29
 









ARTICLE XIII.



FORCE MAJEURE; DESTRUCTION OF LAND


13.1        Force Majeure. If either Lessor or Lessee is prevented from
complying, either totally or in part, with any of the terms or provisions of
this Lease by reason of fire, shortages, flood, storm, earthquake, volcanic
eruption, hurricanes, major and unforeseeable insect infestations, major and
unforeseeable plant disease outbreaks, strike, lockout or other material labor
trouble, riot, war, rebellion, or other acts of God (each a “Force Majeure
Event”), then upon written notice to the non-disabled party, the affected
provisions and/or other requirements of this Lease shall be suspended during
the period of such disability. The disabled party shall make commercially
reasonable efforts to remove such disability within sixty (60) days of giving
notice of such disability. During said period, the non-disabled party may seek
to have its needs, which would otherwise be met hereunder, met by others
without liability to the disabled party hereunder. In no event shall a Force
Majeure Event constitute a basis for Lessee to delay to perform any payment
obligations hereunder or any covenants hereunder that are not directly impacted
by such Force Majeure Event.


13.2        Destruction of Land by Force Majeure
Event. If the whole of
the Premises or greater than fifty percent (50%) of the acreage of the Premises
is destroyed as a result of a Force Majeure Event or if a Processing Plant
Lease Event occurs, either Lessor or Lessee shall have the right to terminate
this Lease by giving the other written notice of termination within sixty (60)
days after such Force Majeure Event. Any such termination shall be effective as
of the last day of the calendar month next following the month in which such
notice is given. Upon such a termination, Lessor shall have no obligation to
refund to Lessee any rent or other monies paid by Lessee. A “Processing Plant
Lease Event” shall have occurred if the Nut Storage Facility and the Husking
Plant leased pursuant to the Processing Plant Lease, dated as of the date
hereof (the “Processing Plant Lease”), by and between Lessee and Mac Farms, is
rendered unusable for the purposes specified in the Processing Plant Lease as a
result of a Force Majeure Event (as defined in the Processing Plant Lease).


ARTICLE XIV.



SURRENDER


14.1        Surrender. At the end of the Term of the Lease or sooner
termination, Lessee shall return the Premises to Lessor together with
(i) all macadamia nut trees, plants and shrubs existing thereon at that
time, (ii) any buildings and permanent structures existing thereon at that
time and (iii) all irrigation equipment existing thereon at that time.


14.2        Failure to Surrender the Orchards.
If Lessee remains in
possession of the Premises or any portion thereof after the termination or
expiration of this Lease, or, whenever occurring or howsoever caused, Lessee
fails to immediately surrender and deliver possession of the Premises to Lessor,
Lessee shall pay Lessor, as liquidated rental, an amount equal to Two Hundred
Percent (200%) of the then current rental for the Premises divided by 365 for
each day it holds possession of any such portion; provided, however, no such liquidated
rental shall be payable for the first thirty (30) days after the termination or
expiration of this Lease if (i) as of



 30
 









such date, Lessee has ceased all nut harvesting, nut
processing and other operations on the Premises and (ii) the sole reason
for such unauthorized failure to surrender the Premises is due to the pendency
of an event that would qualify as a Force Majeure Event. Lessor, by accepting
such liquidated rental, shall not be deemed to waive any other right or
privilege under this Lease, but rather such right shall be considered as in
addition to and not in exclusion of such rights and privileges.


ARTICLE XV.



INTENTIONALLY DELETED


ARTICLE XVI.



MISCELLANEOUS PROVISIONS


16.1        Approvals. The response to any request for approval or consent
as provided in this Lease will not be unreasonably or arbitrarily withheld,
conditioned, or delayed, unless the approval is stated to be at the discretion
of the party whose approval is sought. Whenever approval may not be
unreasonably withheld, Lessor will not require the payment of any money for the
giving of such approval other than a reasonable charge for the review and
processing of the application for and preparation of, the approval or consent
and reimbursement of actual expenses for consultants, including architects, engineers
or attorneys, engaged in connection with Lessor’s review and approval.


16.2        Representations and Warranties of
Lessor. Lessor hereby
makes the following representations and warranties, to Lessee, all of which are
true as of the date hereof. All the representations and warranties in
Sections 16.02(B) through 16.02(P) are made in their entirety to the
Knowledge of Lessor. “Knowledge of Lessor” means the actual knowledge of
the managing members or officers of Lessor.


(a)           Power and
Authority of Lessor. Lessor hereby represents and warrants that Lessor is a
limited liability company that is duly-organized, validly-existing, and in good
standing in the State of Delaware. Lessor is duly-qualified to transact
business, and is in good standing in the State of Hawaii. Lessor has the
requisite right, power, and authority to execute and deliver this Lease and to
perform all of its other duties and obligations under this Lease. Lessor has
taken all actions necessary to authorize the execution, delivery and performance
of this Lease. This Lease shall constitute the valid and binding obligations of
Lessor, enforceable against Lessor in accordance with its terms. No consent,
notice, approval or authorization of, or designation, declaration or filing
with, any governmental authority or any other person or entity is required to
be obtained by Lessor in connection with the execution, delivery and
performance of this Lease, and the performance of Lessor’s obligations
hereunder.


(b)           Non-Contravention.
Neither the execution and delivery of this Lease, nor the consummation of the
transactions contemplated hereby will (i) violate any constitution, statute,
regulation, rule, injunction, judgment, order, decree, ruling, charge, or other
restriction of any government, governmental agency, or court to which Lessor or
the Premises is subject or any provision of the organizational documents of
Lessor, or (ii) conflict with, result in a breach



 31
 









of, constitute a default under, result in the
acceleration of, create in any party the right to accelerate, terminate,
modify, or cancel, or require any notice under any agreement, contract, lease,
license, instrument, or other arrangement to which Lessor is a party or by
which Lessor is bound or to which the Premises is subject (or result in the imposition
of any lien upon any of the Premises). Notwithstanding anything to the contrary
herein, Lessor is not representing or warranting that the transactions
contemplated by this Lease do not contravene or violate any anti-trust,
non-competition or similar laws.


(c)           Title to the
Premises. Except as disclosed on Schedule A, Lessor is the sole and
exclusive legal and beneficial owner of the Premises, free and clear of all
liens, security interests, encumbrances and/or other restrictions on transfer.


(d)           Leases.
Except as disclosed on Schedule F, there are no space or occupancy
leases, licenses, concessions or tenancies relating to all or any part of the
Premises.


(e)           Contracts.
Except as disclosed on Schedule G, there are no contracts to which
Lessor is a party relating to the Premises.


(f)            Services.
All improvements located on the Premises have been constructed to have ingress,
egress, water supply, storm and sanitary sewer facilities, and telephone and
electrical and other utility services that are adequate for the existing uses
of such improvements. All public utilities and ingress and egress to and from
the improvements are by way of public streets and highways. There are no
disputes pending or threatened, with any utility provider or any person who holds
an interest in the property burdened by an easement for utilities or for
ingress and egress to and from the Premises, nor has Lessor received actual
notice of any proposed utility rate increase. Except as disclosed in Schedule
H, there is no existing, proposed or contemplated plan to modify or realign
any street or highway adjacent to or providing ingress to and egress from the
Premises.


(g)           Condemnation
Proceedings. There are no pending or proposed or threatened condemnation
proceedings affecting the Premises or any part thereof, and Lessor has not
received any written or oral notice of the same from any governmental
authority.


(h)           Environmental
Matters. Lessee acknowledges receiving a copy of the Phase I Site
Assessment, dated June 13, 2003, completed by URS Corporation (along with any
Phase I Site Assessment, prepared by or for Lessee, the “Environmental
Reports”). To the Knowledge of Lessor and except as described in the
Environmental Reports: (a) the Premises and all improvements thereon have since
June 1, 2003, been and are in material compliance with all Hazardous Materials
Laws; (b) there are no pending or, to the Knowledge of Lessor, threatened
proceedings involving the Premises that allege or assert (i) a violation of any
Hazardous Materials Law or (ii) that Lessor is required to clean up, remove or
take remedial or other responsive action due to a release of Hazardous
Materials; and (c) Lessor has provided Lessee with complete and correct copies
of all available studies, reports, surveys, assessments, audits,
correspondence, investigations, analysis, tests, and other documents (whether
in hard copy or electronic form) in Lessor’s possession relating to the
presence or alleged presence of Hazardous Materials at, on, or affecting the
Premises.



 32
 









(i)            Permits and
Approvals. Schedule I contains a list of all licenses, permits,
approvals and certificates held by Lessor from governmental authorities in
connection with Lessor’s ownership and use of the Premises and, except as
disclosed in Schedule I, all such licenses, permits, approvals and
certificates have been obtained and are presently in full force and effect, and
all requirements and conditions necessary to maintain such licenses, permits,
approvals and certificates are in full force and effect and have been complied
with in connection with Lessor’s ownership and use of the Premises. Except as
set forth in Schedule I, Lessor has received no notice of a current
or uncured violation of any such license, permit, approval or certificate from
any governmental authority. Notwithstanding the foregoing, Lessee will apply
for and supply its own governmental permits, approvals, and certificates as it
may require.


(j)            Tax Matters.
There are no tax liens upon the Premises, except for liens for non-delinquent
real property taxes and assessments. Lessor is not presently a party to, and
has received no notice with respect to, any proposed or pending litigation,
proceeding or claim by any governmental authority for the collection of any
real property taxes or assessments that relate to the Premises.


(k)           Litigation.
Except as set forth in Schedule J, there are no pending or
threatened court, administrative or arbitration actions or proceedings, at law
or in equity, affecting all or any portion of the Premises, or to which Lessor
is a party that, if adversely decided, could impact Lessor’s ownership of or
right to use the Premises.


(l)            Compliance With
Laws. Except as set forth in Schedule K, there are no uncured
or uncorrected violations of any laws, ordinances or governmental regulations
relating to the Premises that have been served upon, received by or issued to
or entered against Lessor.


(m)          Consents. No
consent, notice, approval or authorization of, or designation, declaration or
filing with, any governmental authority or any other person or entity is
required to be obtained by Lessor in connection with the execution, delivery
and performance of this Lease, the performance of Lessor’s obligations
hereunder and thereunder, and the consummation of this Lease.


(n)           Water Rights.
Subject to any determination by any court of applicable jurisdiction affecting
the rights of private parties regarding the ownership, use or other rights
respecting water under the laws of Hawaii, and subject also to any applicable
governmental regulations pertaining to water, Lessor owns or has the right to
use the water rights impacted by this Lease. There is no litigation pending or
threatened that relates to or challenges the ownership, validity,
enforceability or use of such water rights.


(o)           Construction
Disputes and Mechanics’ Liens. There are no disputes pending between Lessor
and any mechanics or materialmen with respect to any work or materials
furnished to the Premises, and no work has been performed for Lessor or
materials have been supplied to Lessor with respect to the Premises that are
likely to give rise to such a dispute. Lessor has paid, or has made
arrangements reasonably satisfactory to Lessee to pay, all bills that relate to
work or materials furnished to the Premises which, if not paid, could result in
the filing of a mechanic’s or materialmen’s lien.



 33
 









(p)           No Material
Misstatements or Omissions. No representations or warranties of Lessor in
this Lease, or in any statement, certificate or schedule furnished to Lessee by
Lessor pursuant to this Lease, or in connection with the transactions
contemplated hereby, contain any untrue statement of a material fact, or omit
to state a material fact necessary to make the statements contained therein not
misleading.


16.3        Representations and Warranties of
Lessee. Lessee hereby
makes the following representations and warranties to Lessor, all of which are
true as of the date hereof.


(a)           Power and
Authority of Lessee. Lessee is a Hawaii limited liability company that is
duly-organized, validly-existing, and in good standing in the State of Hawaii.
Guarantor is a Delaware limited partnership that is duly organized, validly
existing, and in good standing in the State of Hawaii. Both Lessee and
Guarantor have the requisite right, power, and authority to execute and deliver
this Lease and to perform all of its duties and obligations under this Lease.
Lessee and Guarantor have taken all actions necessary to authorize the
execution, delivery and performance of this Lease. This Lease shall constitute
the valid and binding obligation of Lessee and Guarantor, enforceable against
Lessee and Guarantor in accordance with its terms. No consent, notice, approval
or authorization of, or designation, declaration or filing with, any
governmental authority or other person or entity is required to be obtained by
Lessee or Guarantor in connection with the execution, delivery and performance
of this Lease, and the performance of Lessee’s and Guarantor’s obligations
hereunder.


(b)           Non-Contravention.
Neither the execution and delivery of this Lease, nor the consummation of the
transactions contemplated hereby will (i) violate any constitution, statute,
regulation, rule, injunction, judgment, order, decree, ruling, charge, or other
restriction of any government, governmental agency, or court to which Lessee is
subject or any provision of the organizational documents of Lessee, or (ii)
conflict with, result in a breach of, constitute a default under, result in the
acceleration of, create in any party the right to accelerate, terminate,
modify, or cancel, or require any notice under any agreement, contract, lease,
license, instrument, or other arrangement to which Lessee is a party or by
which Lessee is bound.


(c)           No Material
Misstatements or Omissions. No representations or warranties of Lessee in
this Lease, or in any statement, certificate or schedule furnished to Lessor by
Lessee pursuant to this Lease, or in connection with the transactions
contemplated hereby, contain any untrue statement of a material fact, or omit
to state a material fact necessary to make the statements contained therein not
misleading.


16.4        Counterparts and Facsimile Signatures.
This Lease may be executed
in two or more counterparts, each of which shall be deemed to be an original,
but all of which shall constitute one and the same agreement. The submission of
a signature page by facsimile transmission shall be considered as an “original”
signature page for purposes of this Lease so long as the original signature
page is thereafter transmitted by mail or by other delivery service and the
original signature page is substituted for the facsimile signature page in the
original and duplicate originals of this Lease.


16.5        Discretion. Whenever the approval of Lessor is stated to be
within the discretion of Lessor, the granting or denial of the approval may be
withheld or granted for any reason or for



 34
 









no reason, and Lessor will not for any reason or to
any extent be required to grant the approval or exercise the discretion of
Lessor or impose conditions to the approval in any particular manner,
regardless of the reasonableness of either the request for approval or the
conditions imposed.


16.6        Entire Agreement. This Lease constitutes the entire agreement between
the parties and supersedes all other prior or contemporaneous discussions,
representations or agreements relating to the Premises.


16.7        Incorporation of Schedules and
Exhibits into Lease. Any
schedules and exhibits that are attached to this Lease are incorporated herein
by this reference.


16.8        Expenses of Lessor and Lessee. Lessee will pay to Lessor on demand all costs and
expenses, including reasonable attorneys’ fees, incurred by Lessor in enforcing
any covenants or conditions contained in this Lease, and in connection with any
litigation commenced by Lessee or against Lessee by others, to which Lessor
shall without fault on its part be made a party. Lessor will pay to Lessee on
demand all costs and expenses, including reasonable attorneys’ fees, incurred
by Lessee in enforcing any covenants or conditions contained in this Lease, and
in connection with any litigation commenced by Lessor or against Lessor by
others, to which Lessee shall without fault on its part be made a party. All
reimbursements hereunder shall be paid with interest from the date such costs
and expenses are incurred at the rate of one percent (1%) per month until paid.


16.9        Governing Law and Dispute Resolution.
The rights and obligations
of the parties to this Lease shall be governed by, interpreted, performed, and
enforced in accordance with the substantive laws of the State of Hawaii,
without reference to principles of conflict of laws.


Any Dispute (as defined
in Exhibit “B” hereto) between the parties hereto shall be resolved in
accordance with the ADR Provisions (as defined in Exhibit “B” hereto). Each
party agrees that the ADR Provisions constitute the sole method of seeking
redress against the other party for any Dispute.


A party may, without
inconsistency with the foregoing agreement relating to dispute resolution, seek
from any court of competent jurisdiction any interim or provisional relief or
remedy (including injunctive relief) which may be necessary to protect its
property or rights pending the determination of the merits of the controversy.
In addition, without inconsistency with the foregoing agreement, a party hereto
may bring a third-party action or cross-claim against another party, in order
to enforce the indemnification rights referenced in this Lease.


16.10      Waiver of Jury Trial. THE PARTIES HERETO WAIVE ALL RIGHT TO TRIAL BY JURY
IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS UNDER THIS LEASE.


16.11      Modifications. No amendments, modifications or additions to this
Lease shall be made or be binding on any party unless made in writing and
signed by all parties.


16.12      Notices. All notices or other communications shall be in
writing and shall be deemed duly given on (a) the date of personal or courier
delivery; (b) the date of transmission by



 35
 









telecopy or other electronic transmission service,
provided a confirmation copy is also sent no later than the next business day
by certified mail, postage pre-paid, return receipt requested; or (c) three (3)
business days after the date of deposit in the United States Mail, by certified
mail, postage pre-paid, return receipt requested, addressed as follows:


	
  If to Lessor:

  	
   

  	
  Kapua Orchard Estates, LLC

  	
   

  	
   

  
	
   

  	
   

  	
  c/o Sparks Corp.

  	
   

  	
   

  
	
   

  	
   

  	
  775 Ridge Lake
  Blvd, Suite 450

  	
   

  	
   

  
	
   

  	
   

  	
  Memphis, TN
  38120

  	
   

  	
   

  
	
   

  	
   

  	
  Telephone:

  	
  (901) 766-4412

  	
   

  	
   

  
	
   

  	
   

  	
  Telecopier:

  	
  (901) 766-8140

  	
   

  	
   

  
	
   

  	
   

  	
  Attention:

  	
  Mr. Robert D. Sparks

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  and

  	
   

  	
  Kapua Orchard Estates, LLC

  	
   

  	
   

  
	
   

  	
   

  	
  c/o Greater Pacific Food Holdings, LLC

  	
   

  	
   

  
	
   

  	
   

  	
  1170 Signal Hill
  Road

  	
   

  	
   

  
	
   

  	
   

  	
  P.O. Box 1378

  	
   

  	
   

  
	
   

  	
   

  	
  Pebble Beach,
  California 93953

  	
   

  	
   

  
	
   

  	
   

  	
  Telephone:

  	
  (831) 624-1583

  	
   

  	
   

  
	
   

  	
   

  	
  Telecopier:

  	
  (831) 625-6263

  	
   

  	
   

  
	
   

  	
   

  	
  Attention:

  	
  Mr. Thomas R. Modisette

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  with a
  copy to:

  	
   

  	
  Baker, Donelson, Bearman, Caldwell & Berkowitz,
  PC

  
	
   

  	
   

  	
  165 Madison
  Avenue, Suite 2000

  	
   

  	
   

  
	
   

  	
   

  	
  Memphis,
  Tennessee 38103

  	
   

  	
   

  
	
   

  	
   

  	
  Telephone:

  	
  (901) 577-2306 or

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  (901) 577-2274

  	
   

  	
   

  
	
   

  	
   

  	
  Telecopier:

  	
  (901) 577-0853 or

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  (901) 577-4203

  	
   

  	
   

  
	
   

  	
   

  	
  Attention:

  	
  John E. Kruger, Esq.

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Mark A. B. Carlson, Esq.

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  If to Lessee or

  	
   

  	
   

  	
   

  	
   

  
	
  Guarantor:

  	
   

  	
  Newco1, LLC

  	
   

  	
   

  
	
   

  	
   

  	
  ML Macadamia Orchards, L.P.

  	
   

  	
   

  
	
   

  	
   

  	
  26-238 Hawaii Belt Road

  	
   

  	
   

  
	
   

  	
   

  	
  Hilo, Hawaii 96720

  	
   

  	
   

  
	
   

  	
   

  	
  Telephone:

  	
  (808) 969-8052

  	
   

  	
   

  
	
   

  	
   

  	
  Telecopier:

  	
  (808) 969-8057

  	
   

  	
   

  
	
   

  	
   

  	
  Attention:

  	
  Mr. Dennis J. Simonis

  	
   

  	
   

  
								



 



 36
 









 


	
  with a copy to:

  	
   

  	
  Carlsmith Ball

  	
   

  	
   

  
	
   

  	
   

  	
  1001 Bishop Street

  	
   

  	
   

  
	
   

  	
   

  	
  ASB Tower, Suite 2200

  	
   

  	
   

  
	
   

  	
   

  	
  Telephone:

  	
  (808) 523-2501

  	
   

  	
   

  
	
   

  	
   

  	
  Telecopier:

  	
  (808) 523-0842

  	
   

  	
   

  
	
   

  	
   

  	
  Attention:

  	
  James H. Case, Esq.

  	
   

  	
   

  



 


Any party may
change its mailing address by giving written notice to the other parties in
accordance with this Section 16.12.


16.13      All Payments Payable in U. S. Currency.
All sums payable under this
Lease must be paid in lawful money of the United States of America.


16.14      Severability. If any part of this Lease is held to be invalid or
unenforceable for any reason, the remainder of this Lease shall continue in
full force and effect.


16.15      Persons Bound. This Lease shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and permitted
assigns.


16.16      Time of Essence. Time is of the essence as to every provision of this
Lease. No party shall be obligated to agree to any extensions of deadlines or
other delays except as specifically provided in this Lease. In calculating such
deadlines, all references to “days” herein shall be deemed to mean calendar
days and not business days except as specifically provided otherwise in this Lease.


16.17      No Partnership Intended. It is expressly understood that Lessor does not in
any way or for any purpose become a partner of Lessee in the conduct of its
business or otherwise or a joint venturer or a member of a joint enterprise
with Lessee.


16.18      No Third-Party Beneficiaries. Nothing in this Lease is intended or shall be
construed to create or confer any rights or remedies upon any person or entity
other than the parties to this Lease and, subject to the restrictions on
assignment that are contained herein, their respective successors and permitted
assigns.


16.19      Broker’s Commission. Except as otherwise set forth herein, each party
represents and warrants to the other party, that it has not had any contracts,
communications, or dealings regarding the subject matter of the transactions
contemplated herein with any finder, agent, or broker, whether or not licensed
as such. In the event that any finder, agent, or broker brings a claim for a
commission or finder’s fee based upon any contracts, dealings, or
communications relating to this transaction, the party whose acts or omissions
gave rise to such claim and all costs, expenses, and other liabilities relating
thereto, including reasonable attorneys’ fees (collectively, the “Costs”),
shall indemnify, hold harmless, and defend the other parties against the Costs.


16.20      Provisions Are Covenants and Conditions.
All provisions, whether
covenants or conditions, on the part of Lessee shall be deemed to be both
covenants and conditions.



 37
 









16.21      Singular and Plural; Pronouns. When required by the context of this Lease, the
singular shall include the plural. A pronoun of one gender shall include
reference to all genders as the context may require.


16.22      Captions. The title and captions in this Lease shall have no
effect on their interpretation.


16.23      Recordation. Lessor and Lessee agree to join in execution of a
memorandum “short form” of this Lease which shall be recorded in the Bureau of
Conveyances of the State of Hawaii. Such memorandum short form of this Lease
shall describe the parties, the Premises, the term of this Lease and shall
incorporate this Lease by reference only.


16.24      Interpretation. Each party acknowledges that it has been represented
and advised by legal counsel in the negotiation and legal effects of this Lease
and acknowledges that it has caused this Lease to be reviewed and approved by
legal counsel of its own choice. No negotiations concerning or modifications
made to prior drafts of this Lease shall be construed in any manner to limit,
reduce or impair the rights, remedies, duties and obligations of the parties
under this Lease, or to restrict or expand the meaning of any of the provisions
of this Lease, or to construe any of the provisions of this Lease in any party’s
favor. No party shall be deemed to be the drafter of this Lease and no term or
provision of this Lease may be construed against any party on that basis.


16.25      Transfer of Lessor’s Interest in the
Premises. Lessee
acknowledges that Lessor has the right to transfer all or any portion of its
interest in the Premises, this Lease and/or the Reserved Rights (whether by
assignment, sale, conveyance or otherwise) to any party or parties, at any
time, and without the consent or approval of Lessee in any manner, and, in the
event of an assignment of Lessor’s interest in this Lease to a third party,
Lessee agrees that Lessor shall automatically be released from all liability
under this Lease and Lessee agrees to look solely to such transferee for the
performance of Lessor’s obligations hereunder after the date of transfer and
such transferee shall be deemed to have fully assumed and be liable for all
obligations of this Lease to be performed by Lessee, and Lessee shall attorn to
such transferee provided, however, that no such partial transfer of
the Premises shall be permitted if, regardless of the number of such transfers
by Lessor or its permitted transferees, the total number of persons or entities
possessing ownership rights in the Premises is greater than five (5); provided, further,
that there shall never be more than one (1) person or entity with the right to
exercise the rights of Lessor under this Lease; provided, further,
that Lessor shall only be permitted to transfer its interests in the Reserved
Rights to a person or entity that is a transferee of Lessor’s interests in both
the Premises and the Lease. Lessee further acknowledges that Lessor may assign
its interest in this Lease to a mortgage lender as additional security and
agrees that such an assignment shall not release Lessor from its obligations
hereunder and that Lessee shall continue to look to Lessor for the performance
of its obligations hereunder. Lessee further acknowledges that Lessor may grant
to transferees of Excluded Areas the right to use Easement Areas, to have access
to Lessor’s rights to water under Section 4.07 and to use Lessor’s rights to
utilities on the Premises, all in a manner otherwise consistent with the terms
and conditions of this Lease and subject to any limitations placed by this
Lease on Lessor’s ability to use such Easement Areas, water rights and
utilities.  



 38
 









16.26      Guaranty: Guarantor hereby unconditionally and irrevocably
guarantees to Lessor that:


(a)           Lessee will duly and
punctually pay all lease rents, taxes, assessments, collection costs, attorneys’
fees and all other sums to be paid by Lessee under the Lease; and


(b)           Lessee will duly and
punctually observe and perform every other agreement, covenant and condition to
be observed or performed by Lessee under the Lease (collectively, the “Obligations”).


The
obligations of Guarantor under this Lease shall not be affected, modified or
impaired upon the occurrence from time to time of any of the following, whether
or not with notice to or the consent of Guarantor (a) the failure to give
notice to any Guarantor of the occurrence of any Event of Default under the
terms and provisions of this Lease; (b) the waiver of the payment, performance
or observance of any of the Obligations; (c) the taking or omitting to take any
actions referred to in this Lease; or (d) the voluntary or involuntary
liquidation, dissolution, sale or other disposition of all or substantially all
of the assets, marshalling of assets, receivership, insolvency, bankruptcy,
assignment for the benefit of creditors or readjustment of, or other similar
proceedings which affect Guarantor, or any allegation of invalidity or contest
of the validity of this Lease or this Section 16.26 in any such proceeding.
Guarantor hereby waives (a) any and all rights to require Lessor to prosecute
or seek to enforce any remedies against Lessee or any other party liable to
Lessor on account of the Obligations; (b) any right to assert against Lessor
any defense (legal or equitable), set-off, counterclaim, or claim which
Guarantor may now or at any time hereafter have against Lessee or any other
party liable to Lessor in any way or manner; (c) all defenses, counterclaims
and off-sets of any kind or nature, arising directly or indirectly from the
present or future lack of validity or enforceability of this Lease; (d) any
defense arising by reason of any claim or defense based upon an election of
remedies by Lessor; and (e) all presentments, demands for performance, notices
of non-performance, protests, notices of protest, notices of dishonor, notices
of default, notice of acceptance, and all other notices or formalities to which
Guarantor may be entitled.


[the
remainder of this page intentionally left blank]



 39
 









IN WITNESS WHEREOF, the
undersigned have executed, or have caused to be
executed, this Agricultural Lease on the date first written above.


	
  

  	
  KAPUA ORCHARD ESTATES, LLC

  
	
   

  	
   

  
	
   

  	
  By: MFH INVESTORS, LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name: Jeff Gilbrech

  
	
   

  	
   

  	
  Title: Vice President

  
	
   

  	
   

  	
  “Lessor”

  
	
   

  	
   

  	
   

  
	
   

  	
  NEWCO1, LLC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name Dennis J.
  Simonis

  
	
   

  	
   

  	
  Title: President

  
	
   

  	
   

  	
  “Lessee”

  
	
   

  	
   

  	
   

  
	
   

  	
  ML
  MACADAMIA ORCHARDS, L.P.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name: Dennis J. Simonis

  
	
   

  	
   

  	
  Title: President

  
	
   

  	
   

  	
  “Guarantor”

  



 


 



 40















EXHIBIT “A”


DESCRIPTION
OF REAL PROPERTY


The real property located
on the following tax map keys:


a)                          8-9-2-16


b)                         8-9-2-18


c)                          8-9-11-5


d)                         8-9-11-6


e)                          8-9-11-8


f)                            8-9-11-11


g)                         8-9-11-12


h)                         8-9-11-13


i)                             8-9-11-14


j)                             8-9-11-19


k)                          8-9-11-21


l)                             8-9-11-22


m)                       8-9-11-23


n)                         8-9-11-24


o)                         8-9-11-25


p)                         8-9-11-26


q)                         8-9-12-1


r)                            8-9-12-2


s)                          8-9-12-3


t)                            8-9-12-4


u)                         8-9-12-5


v)                         8-9-12-6


w)                       8-9-12-7


x)                           8-9-12-8


y)                         8-9-12-9


z)                           8-9-12-10


aa)                    8-9-12-11


bb)                  8-9-12-12


cc)                    8-9-12-13


dd)                  8-9-12-14


ee)                    8-9-12-15


ff)                        8-9-12-18


gg)                  8-9-12-19


hh)                  8-9-11-15


ii)                          8-9-11-16


jj)                          8-9-11-17


kk)                    8-9-11-18


ll)                          8-9-12-16













mm)  8-9-12-17


nn)      8-9-12-22


Formal legal descriptions
to be provided at Closing.


END OF
EXHIBIT “A”



 2















 


	
  LAND COURT SYSTEM

  	
  REGULAR SYSTEM

  
	
  Return by Mail  (   )  Pickup  (   )  To:

  	
   

  
	
   

  	
   

  
	
  Tax Map Key No.:
  See Exhibit A

  	
  Total Pages

  



EXHIBIT “B”


ALTERNATIVE
DISPUTE RESOLUTION PROVISIONS


A.            Purpose and Exclusivity.
The purpose of these alternative dispute resolution provisions (“ADR Provisions”)
is to provide Lessor and Lessee with a mechanism to resolve Disputes, as
defined herein, that may develop in the future concerning the subject matter of
the Lease. The Parties agree that these ADR Provisions are the exclusive method
to resolve all Disputes and that the goal of both Parties in agreeing to these
ADR Provisions is to ensure that all Disputes are resolved in the most
expeditious and inexpensive manner possible. All provisions of these ADR Provisions
are to be interpreted with that purpose in mind.


B.            Definition.
“Disputes” means and includes any and all claims, controversies, and
disagreements of any nature whatsoever between Lessor and Lessee, at law or in
equity, that relate to or arise out of, directly or indirectly, the Lease
(including all exhibits thereto), except (i) Disputes involving a failure
by Lessee or Guarantor to pay punctually all lease rents, taxes, assessments,
collection costs, attorneys’ fees and all other sums to be paid by Lessee or
Guarantor under the Lease, and (ii) claims for indemnity, contribution,
subrogation, or the like which must be asserted, if at all, only by
cross-claim, third party complaint, or the like in litigation brought by or
against a third party in which the principal claim(s) giving rise to the right
of indemnity, contribution, subrogation, or the like is asserted. The existence
of a Dispute may, but need not be, predicated upon a breach of the Lease by
one, or both of the Parties.













C.            Knowing Release.
Lessor and Lessee each acknowledge that these ADR Provisions have served as a
material inducement for them to enter into the Lease. To accomplish the purpose
of these ADR Provisions, Lessor and Lessee, with respect to any Dispute, waive
their respective rights to a jury trial on any claim or cause of action based
upon or arising out of such Dispute. In addition, with respect to any Dispute,
Lessor and Lessee waive any and all right that either of them may have to
recover any type of consequential, incidental, special, punitive or exemplary
damages, or treble or other multiple damages provided for by any statute or
rule. Nothing contained in this Section C (Knowing Release) precludes
the recovery of compensatory damages, attorneys’ fees and costs as provided in
the Lease.


D.            [Reserved.]


E.             Negotiation
and Mediation. Lessor and Lessee acknowledge that, if a Dispute
arises between them, they shall attempt to resolve the Dispute by negotiation,
or failing that by mediation conducted in the State of Hawaii. For a period of
ten (10) calendar days following the written notice of a Dispute given by one
to the other, the Parties agree to hold meetings, attended by individuals with
decision making authority, to attempt to resolve the Dispute through good faith
negotiations. If at the end of this ten (10) day period they have not been able
to resolve the Dispute (and have not agreed to extend the negotiating period),
then either Party may give the other written notice of a request for mediation,
in which event they shall jointly select a neutral person with at least ten
years experience as a commercial mediator and who has experience involving
complex commercial transactions and real estate disputes, to act as mediator.
The fees of the mediator shall be shared equally by both Parties. If within
thirty (30) days after written request for mediation, the Parties are unable to
agree upon a mediator, or to thereafter resolve the Dispute by mediation, then
either Party shall be entitled to seek redress in the state or federal courts
of the State of Hawaii.


END OF
EXHIBIT “B”



 4
 









EXHIBIT
A-2


MEMORANDUM
OF LEASE


THIS MEMORANDUM
OF LEASE
is executed as of           ,
2007, by and between KAPUA ORCHARD ESTATES, LLC,
a Delaware limited liability company having an address at 89-406 Mamalahoa
Highway, Captain Cook, Hawaii, 96704 (“Lessor”), and                ,
a Hawaii limited liability company having an address at 26-238 Hawaii
Belt Road, Hilo, Hawaii, 96720 (“Lessee”).


W I T N E S S E T H:


That upon the
terms and conditions set forth in that certain unrecorded Agricultural Lease,
dated as of           ,
2007, by and between Lessor and Lessee, all of which terms and conditions are
hereby made a part hereof as fully and completely as if herein specifically set
out in full, Lessor has demised and leased and does hereby demise and lease
unto Lessee, and Lessee has leased and hired and does hereby lease and hire
from Lessor, all of the property described in Exhibit A attached hereto and
incorporated herein by this reference.


TO HAVE AND TO
HOLD the
same for a term of four (4) years, eleven (11) months, and twenty nine (29)
days commencing on           ,
2007, and ending on           ,
2012, unless sooner terminated as therein provided.


IN WITNESS
WHEREOF,
the parties hereto have executed this Memorandum of Lease as of the day and
year first above written.


	
  

  	
  LESSOR:

  
	
   

  	
   

  
	
   

  	
  KAPUA ORCHARD ESTATES, LLC,

  
	
   

  	
  a Delaware limited liability company

  
	
   

  	
   

  	
  By: MFH Investors, LLC, its manager

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  JEFF GILBRECH, Vice-President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  LESSEE:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  ,

  
	
   

  	
   

  	
  a Hawaii limited liability company

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
						



 



 5
 









 


	
  STATE OF

  	
  )

  	
   

  
	
   

  	
  ) SS.

  	
   

  
	
  COUNTY OF

  	
  )

  	
   

  



 


On this     
day of         , 2007, before
me appeared ROBERT D. SPARKS, to me personally
known, who, being by me duly-sworn or affirmed, did say that such person
executed the foregoing instrument as the free act and deed of such person, and
if applicable in the capacity shown, having been duly-authorized to execute
such instrument in such capacity.


	
  

  	
   

  
	
  

  	
  Print Name:

  	
   

  
	
   

  	
  Notary Public, State of

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  My Commission Expires:

  	
   

  



 


	
  STATE OF HAWAII

  	
  )

  	
   

  
	
   

  	
  ) SS.

  	
   

  
	
  COUNTY OF HONOLULU

  	
  )

  	
   

  



 


On
this      day of         ,
2007, before me appeared                ,
to me personally known, who, being by me duly-sworn or affirmed, did say that
such person executed the foregoing instrument as the free act and deed of such
person, and if applicable in the capacity shown, having been duly-authorized to
execute such instrument in such capacity.


	
  

  	
   

  
	
  

  	
  Print Name:

  	
   

  
	
   

  	
  Notary Public, State of

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  My Commission Expires:

  	
   

  



 



 6
 









 


	
  LAND COURT SYSTEM

  	
  REGULAR SYSTEM

  
	
  Return by Mail  (   )  Pickup  (   )  To:

  	
   

  
	
   

  	
   

  
	
  Tax Map Key No.:
  See Exhibit A

  	
  Total Pages

  



EXHIBIT A


PARCEL ONE:


Tax Key:  8-9-002-016 (3):


All of that certain parcel of land (portions of the
lands described in and covered by Land Patent Grant Number 3712, Lot A to J. M.
Monsarrat and Land Patent Grant Number 3712, Lot B to J. M. Monsarrat) situate,
lying and being on the westerly side of the Old Mamalahoa Highway to Okoe,
District of South Kona, Island and County of Hawaii, State of Hawaii, being LOT
4-A, and thus bounded and described as per survey of said Chrystal Thomas
Yamasaki, to-wit:


Beginning at the northeasterly corner of this parcel
of land, being also the southeasterly corner of Lot 5 and a point on the
westerly side of Mamalahoa Highway, the coordinates of said point of beginning
referred to Government Survey Triangulation Station “KAPUKAWAA” being 7,492.35
feet south and 14,731.11 feet east and running by azimuths measured clockwise
from true South:


1.   348°  
26’                          570.25     feet along the westerly side of the Old Mamalahoa
Highway to a pipe;


2.   340°  
30’                          146.20     feet along the westerly side of the Old
Mamalahoa Highway to a pipe;



 7
 









Thence, for the next
three (3) courses following along Lot 4-B and along the remainder of Grant 3712
to Lot B to J. M. Monsarrat:


3.    53°  
30’                           787.73     feet to a pipe;


4.    63°  
00’                           204.75     feet to a pipe;


5.   340°  
30’                          27.92       feet to a pipe;


6.    53°  
30’                           48.00       feet along Government Land to a “+”
(found);


7.    45°  
41’           40”          194.76     feet
along Lot 2 and along Royal Patent 6853, Land Commission Award 9971, Apana 30
to W. P. Leleiohoku to a pipe;


Thence, for the next
seven (7) courses following along stonewall and along the remainder of Grant
3712 to Lot B to J. M. Monsarrat


8.   154°  
32’                          50.52       feet to a pipe;


9.   154°  
32’                          142.47     feet to a pipe;


10.  168°  
46’         30”          82.40       feet
to a pipe;


11.  157°  
31’                         144.19     feet to a pipe;


12.  159°  
53’                         121.22     feet to a pipe;


13.  165°  
43’                         55.85       feet to a pipe;


14.  146°  
03’                         69.03       feet to a pipe;


15.  186°  
00’                         291.61     feet along Grant 1461, Apana 2 to Kekapa
and Grant 1577, Apana 2 to Humeku to a pipe;


16.  260°  
41’                         296.45     feet along Lot 2 and along Grant 3712, Lot
A to J. M. Monsarrat to a pipe;


17.  252°  
12’                         309.46     feet along Lot 2 and along Grant 3712, Lot
A to J. M. Monsarrat to a pipe;


18.  208°  
30’                         410.40     feet along Lot 2 and along the remainder of
Grant 3712, Lot A to J. M. Monsarrat to a pipe;



 8
 









19.  168°  
26’                         287.09     feet along Lot 2 and along the remainder of
Grant 3712, Lot A to J. M. Monsarrat to a pipe;


20.  258°  
26’                         217.68     feet along Lot 5 and along the remainder of
Grant 3712, Lot A to J. M. Monsarrat to the point of beginning and containing
an area of 15.271 acres, more or less.


BEING a portion of the land acquired by Kapua Orchard
Estates, LLC, a Delaware limited liability company, by Warranty Deed dated June
27, 2003, recorded in said Bureau as Document No. 2003-131937, from Mac Farms
of Hawaii, Inc., a Hawaii corporation.


SUBJECT, HOWEVER, to the following:


(a)           Reservation in favor of the State of
Hawaii of all mineral and metallic mines.


(b)           An easement 50.00 feet wide for road
and utility purposes in favor of Grant 3712, Lot B to J. M. Monsarrat, as per
survey of Haruo Shigeoka, Registered Professional Surveyor, dated February 9,
1971, more particularly described therein.


The boundaries of said easement have been established
as set forth by Affidavit dated June 8, 1978, recorded in Liber 12962 at Page
786.


(c)           Grant in favor of Hawaii Electric
Light Company, Inc., and Hawaiian Telephone Company, now known as Hawaiian
Telcom, Inc., dated October 24, 1978, recorded in Liber 13464 at Page 513;
granting an easement for utility purposes over and across a portion of said
parcel.


(d)           Right-of-Entry to Farms of Kapua,
Ltd., a California limited partnership, dated May 24, 1989, recorded in said
Bureau in Liber 23307, Page 108, granting the right to explore for water on its
land, to construct, install and operate water delivery systems thereon, and to
use and remove such water in accordance with the terms contained therein, for a
period of 2 years from the date hereof.


(e)           Terms and provisions contained in
Declaration of Reciprocal Restrictive Covenants dated May 24, 1989,
recorded in said Bureau in Liber 23307, Page 410.


(f)            Terms and provisions contained in
Declaration, Confirmation and Cancellation of Easement Rights and Grant of
Easements dated June 27, 2003, recorded in said Bureau as Document
No. 2003-131936.


(g)           Claims arising out of customary and
traditional rights and practices, including without limitation those exercised
for subsistence, cultural, religious, access or gathering purposes, as provided
for in the Hawaii Constitution or the Hawaii Revised Statutes.



 9
 









PARCEL TWO:


Tax Key:  8-9-002-018 (3):


All of that certain parcel of land (portion of the
land described in and covered by Land Patent Grant Number 3712, Lot A to J. M.
Monsarrat) situate, lying and being on the westerly side of the Old Mamalahoa
Highway at Okoe, District of South Kona, Island and County of Hawaii, State of
Hawaii, being LOT 5, and thus bounded and described as per survey of said
Chrystal Thomas Yamasaki, to-wit:


Beginning at a pipe at the southeasterly corner of
this parcel of land, being also the northeasterly corner of Lot 4-A, and a
point on the westerly side of the Old Mamalahoa Highway, the coordinates of
said point of beginning referred to Government Survey Triangulation Station “KAPUKAWAA”
being 7,492.35 feet south and 14,731.11 feet east and running by azimuths
measured clockwise from true South:


Thence, for the next for
(4) courses following along the remainder of Grant 3712, Lot A to J. M.
Monsarrat;


1.    78°  
26’                           436.20     feet along Lot 4-A and along Lot 2 to a
pipe;


2.   168°  
26’                          327.43     feet along Lot 2 to a pipe;


3.   264°  
35’                          170.85     feet along Lot 2 to a pipe;


4.   265°  
45’                          284.56     feet along Lot 2 to a pipe;


Thence, following along
the westerly side of the Old Mamalahoa Highway on a curve to the left with a
radius of 175.00 feet, the chord azimuth and distance being:


5.     0°  
44’            23.5”       74.60       feet
to a pipe;


6.   348°  
26’                          200.00     feet along the westerly side of the Old
Mamalahoa Highway to the point of beginning and containing an area of 3.036
acres, more or less.


BEING a portion of the land acquired by Kapua Orchard
Estates, LLC, a Delaware limited liability company, by Warranty Deed dated June
27, 2003, recorded in said Bureau as Document No. 2003-131937, from Mac Farms
of Hawaii, Inc., a Hawaii corporation.


SUBJECT, HOWEVER, to the following:


(a)           Reservation in favor of the State of
Hawaii of all mineral and metallic mines.


(b)           Right-of-Entry to Farms of Kapua,
Ltd., a California limited partnership, dated May 24, 1989, recorded in said
Bureau in Liber 23307, Page 108, granting the right to 



 10
 









explore for water
on its land, to construct, install and operate water delivery systems thereon,
and to use and remove such water in accordance with the terms contained
therein, for a period of 2 years from the date hereof.


(c)           Terms and provisions contained in
Declaration of Reciprocal Restrictive Covenants dated May 24, 1989,
recorded in said Bureau in Liber 23307, Page 410.


(d)           Terms and provisions contained in
Declaration, Confirmation and Cancellation of Easement Rights and Grant of
Easements dated June 27, 2003, recorded in said Bureau as Document
No. 2003-131936.


(e)           Claims arising out of customary and
traditional rights and practices, including without limitation those exercised
for subsistence, cultural, religious, access or gathering purposes, as provided
for in the Hawaii Constitution or the Hawaii Revised Statutes.


PARCEL THREE:


Tax Key:  8-9-011-005 (3):


All of that certain parcel of land being all of Lots
14 and 18 and a portion of Lot 10, (being also a portion of the land(s)
described in and covered by Royal Patent Number 6853, Land Commission Award
Number 9971, Apana 30 to W. P. Leleiohoku) situate, lying and being at Kapua,
South Kona, Island of Hawaii, State of Hawaii, being LOT L and thus bounded and
described as per survey dated April 17, 2002, to-wit:


Beginning at the south corner of this parcel of land, being
also the east corner of Lot K, on the west side of Hawaii Belt Road (F.A.P. No.
BF-011-1(3)), the coordinates of said point of beginning referred to Government
Survey Triangulation Station “KAPUKAWAA” being 18,458.97 feet south and
21,648.42 feet east, thence running by azimuths measured clockwise from true
South:


1.   131°  
00’          10”          445.70     feet
along Lot K along the remainder of R. P. 6853, L. C. Aw. 9971, Apana 30 to W.
P. Leleiohoku;


2.   150°  
29’          15”          325.43     feet
along Lot K along the remainder of R. P. 6853, L. C. Aw. 9971, Apana 30 to W.
P. Leleiohoku;


3.   155°  
32’          50”          360.72     feet
along Lot K along the remainder of R. P. 6853, L. C. Aw. 9971, Apana 30 to W.
P. Leleiohoku;


4.   157°  
01’          15”          306.48     feet
along Lot K along the remainder of R. P. 6853, L. C. Aw. 9971, Apana 30 to W.
P. Leleiohoku


5.   136°  
03’          30”          353.24     feet
along Lot K along the remainder of R. P. 6853, L. C. Aw. 9971, Apana 30 to W.
P. Leleiohoku;



 11
 









6.   144°  
47’          45”          1,120.57  feet along Lot K along the remainder of R. P. 6853, L. C. Aw. 9971,
Apana 30 to W. P. Leleiohoku;


7.   151°  
00’                          785.55     feet along Lot K along the remainder of R.
P. 6853, L. C. Aw. 9971, Apana 30 to W. P. Leleiohoku;


8.             Thence along Lot K along the remainder of R. P. 6853, L.
C. Aw. 9971, Apana 30 to W. P. Leleiohoku, on a curve to the left with a radius
of 90.00 feet, the azimuth and distance of the chord being:


132°   23’                                57.46       feet;


9.   113°  
46’                          40.00       feet along Lot K along the remainder of
R. P. 6853, L. C. Aw. 9971, Apana 30 to W. P. Leleiohoku;


10.           Thence along Lot K along the
remainder of R. P. 6853, L. C. Aw. 9971, Apana 30 to W. P. Leleiohoku on a
curve to the right with a radius of 30.00 feet, the azimuth and distance of the
chord being:


150°   10’                                35.61       feet;


11.  186°  
34’                         30.00       feet along Lot K along the remainder of
R. P. 6853, L. C. Aw. 9971, Apana 30 to W. P. Leleiohoku;


12.           Thence along Lot K along the
remainder of R. P. 6853, L. C. Aw. 9971, Apana 30 to W. P. Leleiohoku, on a
curve to the right with a radius of 50.00 feet, the azimuth and distance of the
chord being:


207°   51’                38”          36.32       feet;


13.           Thence along the west side of Hawaii
Belt Road (F.A.P. No. BF-011-1(3)), on a curve to the right with a radius of
11,960.00 feet, the azimuth and distance of the chord being:


324°   18’                44.32”     2,751.10  feet;


14.  330°  
55’                         966.45     feet along the west side of Hawaii Belt
Road (F.A.P. No. BF-011-1(3));


15.   60°  
55’                          20.00       feet along the west side of Hawaii Belt
Road (F.A.P. No. BF-011-1(3));


16.  240°  
55’                         116.76     feet along Hawaii Belt Road (F.A.P. No.
BF-011-1(3)) to the point of beginning and containing an area of 12.886 acres.



 12
 









Together with that certain Easement Agreement dated
May 28, 1982, recorded in said Bureau in Liber 16369, Page 175, by and between
Mac Farms of Hawaii, Inc., a Hawaii corporation, and Land of Kapua, a Hawaii
general partnership, “Grantors”, and Farms of Kapua, Ltd., a California limited
partnership, “Grantee”.


Together with a nonexclusive, perpetual easement for
the purpose of constructing, maintaining and operating a water delivery system
over and across Easement “1” and Easement “2” for roadway, powerline, equipment
and waterline purposes, as set forth by instrument dated — (acknowledged
December 12, 2002), recorded in said Bureau as Document No. 2003-004964, more
particularly described therein, and subject to the terms and provisions,
including the failure to comply with any covenants, conditions and
reservations, contained therein.


Together with a nonexclusive, perpetual easement for
the purpose of constructing, maintaining and operating a water delivery system,
over and across Easement “A” for access, utility, water pipeline and well site
purposes, as set forth in instrument dated — (acknowledged December 12, 2002),
recorded in said Bureau as Document No. 2003-004965, more particularly
described therein, and subject to the terms and provisions, including the
failure to comply with any covenants, conditions and reservations, contained
therein.


(f)            Assignment and Assumption of
Easements, dated — (acknowledged June 25, 2003), recorded in said Bureau as
Document No. 2003-131938, by Mac Farms of Hawaii, Inc., a Hawaii corporation, “Assignor”,
to Kapua Orchard Estates, LLC, a Delaware limited liability company, “Assignee”.


BEING a portion of the land conveyed to Kapua Orchard
Estates, LLC, a Delaware limited liability company, by Warranty Deed dated
June 27, 2003, recorded in said Bureau as Document No. 2003-131937, from
Mac Farms of Hawaii, Inc., a Hawaii corporation.


SUBJECT, HOWEVER, to the following:


(a)           Reservation in favor of the State of
Hawaii of all mineral and metallic mines.


(b)           Designation of Easement “R-3-A” for
:roadway and utility purposes, as shown on Subdivision Map prepared by Gary S.
Takamoto, Registered Professional Land Surveyor with ControlPoint Surveying,
Inc., dated September 21, 2001, revised November 25, 2002.


(c)           Designation of Easement “L-3” for
landscape and signage purposes, as shown on Subdivision Map prepared by Gary S.
Takamoto, Registered Professional Land Surveyor with ControlPoint Surveying,
Inc., dated September 21, 2001, revised November 25, 2002.


(d)           Designation of Easement “L-4” for
landscape and signage purposes, as shown on Subdivision Map prepared by Gary S.
Takamoto, Registered Professional Land 



 13
 









Surveyor with
ControlPoint Surveying, Inc., dated September 21, 2001, revised November 25,
2002.


(e)           Restricted abutter’s rights of
vehicle access into and from Hawaii Belt Road, Federal Aid Project No.
BF-011-1(3), as conveyed to the State of Hawaii, by Deed dated December 31,
1959, recorded in said Bureau in Liber 3827, Page 428.


(f)            Grant to Hawaii Electric Light
Company, Inc. a Hawaii corporation, and Hawaiian Telephone Company
Incorporated, now known as Hawaiian Telcom, Inc., dated November 7, 1980,
recorded in said Bureau in Liber 15599, Page 306, granting a perpetual right
and easement for utility purposes.


(g)           Easement Agreement dated May 28,
1982, recorded in said Bureau in Liber 16369, Page 175, by and between Mac Farms
of Hawaii, Inc., a Hawaii corporation, and Lands of Kapua, a Hawaii general
partnership, “Grantors”, and Farms of Kapua, Ltd., a California limited
partnership, “Grantee”.


(h)           Right-of-Entry dated February 10,
1966 to Hawaii Electric Light Company, Inc. for the purpose of installing,
removing, maintaining and repairing pole and wire lines until such time as an
appropriate easement is granted to said Company.


(i)            Right-of-Entry dated May 24, 1989,
recorded in said Bureau in Liber 23307, Page 108, in favor of Farms of Kapua,
Ltd., a California limited partnership, granting the right to explore for water
on its land, to construct, install and operate water delivery systems thereon,
and to use and remove such water in accordance with the terms contained therein,
for a period of 2 years from the date hereof.


(j)            Terms and provisions contained in
Declaration of Reciprocal Restrictive Covenants dated May 24, 1989, recorded in
said Bureau in Liber 23307, Page 410.


(k)           Grant of Easements (Roadway,
Right-of-Way Access, Landscaping, Etc.) to One Keahole Partners, a Hawaii
general partnership, dated — (acknowledged December 12, 2002), recorded in said
Bureau as Document No. 2003-004966, granting two (2) nonexclusive, perpetual
80-foot-wide easements (Easements R-1-A and Easement R-3-A) and one (1)
non-exclusive, perpetual 50-foot wide easement (Easement R-4), for purposes of
roadway, right-of-way access, service, and utilities including electricity and
telephones and pipelines for sewer and water, over portions of the Mac Farms
Lands, more particularly described therein.


(l)            Terms and provisions contained in
Declaration, Confirmation and Cancellation of Easement Rights and Grant of
Easements dated June 27, 2003, recorded in said Bureau as Document No.
2003-131936.


(m)          Claims arising out of customary and
traditional rights and practices, including without limitation those exercised
for subsistence, cultural, religious, access or gathering purposes, as provided
for in the Hawaii Constitution or the Hawaii Revised Statutes.



 14















PARCEL FOUR:


Tax Key:  8-9-011-006 (3):


All of that certain parcel of land being portions of
Lots 2, 3, 5, 6, 9, 10, 12, 13-A-1, 13-A-2, 14 and 40-foot Road Reserve, (being
also portions of the land(s) described in and covered by Land Commission Award
Number 10,528 to Nahulu and Royal Patent Number 6853, Land Commission Award
Number 9971, Apana 30 to W. P. Leleiohoku and all of Royal Patent Number 4349,
Land Commission Award Number 7934 to Kapa, Land Commission Award Number 7940 to
Kaaua and Royal Patent Number 7992, Land Commission Award Number 10,530 to
Naolulu) situate, lying and being at Kapua, South Kona, Island of Hawaii, State
of Hawaii, being LOT J and thus bounded and described as per survey dated April
17, 2002, to-wit:


Beginning at the north corner of this parcel of land,
on the west side of Road Parcel “F” (Mamalahoa Highway), the coordinates of
said point of beginning referred to Government Survey Triangulation Station “KAPUKAWAA”
being 8,759.25 feet south and 15,095.87 feet east, thence running by azimuths
measured clockwise from true South:


1.   348°  
40’                          558.58     feet along the west side of Road Parcel “F”
(Mamalahoa Highway);


2.   338°  
50’                          398.85     feet along the west side of Road Parcel “F”
(Mamalahoa Highway);


3.   317°  
45’                          293.70     feet along the west side of Road Parcel “F”
(Mamalahoa Highway);


4.             Thence along the west side of Road Parcel “F” (Mamalahoa
Highway), on a curve to the right with a radius of 155.00 feet, the azimuth and
distance of the chord being:


337°   52’                30”          106.66     feet;


5.   358°  
00’                          60.50       feet along the west side of Road Parcel “F”
(Mamalahoa Highway);


6.             Thence along the west side of Road Parcel “F” (Mamalahoa
Highway), on a curve to the left with a radius of 120.00 feet, the azimuth and
distance of the chord being:


327°   30’                                121.81     feet;


7.   297°  
00’                          85.50       feet along the west side of Road Parcel “F”
(Mamalahoa Highway);



 15
 









8.   319°  
30’                          396.88     feet along the west side of Road Parcel “F”
(Mamalahoa Highway), along the remainder of L. C. Aw. 10,528 to Nahulu;


9.    67°  
34’                           418.14     feet along L. C. Aw. 7940-C to Keliiamaole;


10.  320°  
59’         40”          244.20     feet
along L. C. Aw. 7940-C to Keliiamaole;


11.  240°  
59’         40”          122.10     feet
along L. C. Aw. 7940-C to Keliiamaole;


12.  253°  
37’         40”          271.53     feet
along L. C. Aw. 7940-C to Keliiamaole;


13.           Thence along the west side of Hawaii
Belt Road (F.A.P. No. BF-011-1(3)) on a curve to the left, with a radius of
12,040.00 feet, the azimuth and distance of the chord being:


335°   46’                43.6”       63.07       feet;


14.   49°  
09’          40”          509.29     feet
along L. C. Aw. 10,380 to Naluhielua;


15.  337°  
29’         40”          20.00       feet
along L. C. Aw. 10,380 to Naluhielua;


16.  335°  
11’                         111.60     feet along L. C. Aw. 10,380 to Naluhielua;


17.   67°  
30’                          488.80     feet along L. C. Aw. 10,527, Apana 2 to
Namaielua;


18.   80°  
13’                          179.10     feet along L. C. Aw. 10,527, Apana 2 to
Namaielua;


19.   69°  
35’                          260.46     feet along L. C. Aw. 10,527, Apana 2 to
Namaielua;


20.   59°  
37’                          275.26     feet along R. P. 3677, L. C. Aw. 7927 to
Kama;


21.   67°  
29’          40”          283.80     feet
along R. P. 3677, L. C. Aw. 7927 to Kama;


22.   73°  
59’          40”          322.10     feet
along R. P. 3677, L. C. Aw. 7927 to Kama;


23.  348°  
59’         40”          151.80     feet
along R. P. 3677, L. C. Aw. 7927 to Kama;


24.  247°  
44’         40”          336.60     feet
along R. P. 3677, L. C. Aw. 7927 to Kama;


25.  256°  
59’         40”          583.40     feet
along R. P. 3677, L. C. Aw. 7927 to Kama;


26.  256°  
30’         30”          420.80     feet
along L. C. Aw. 10,527, Apana 2 to Namaielua;


27.  240°  
25’         40”          531.50     feet
along L. C. Aw. 10,527, Apana 2 to Namaielua;



 16
 









28.  161°  
44’         40”          200.00     feet
along L. C. Aw. 10,527, Apana 2 to Namaielua;


29.   67°  
19’                          39.34       feet along L. C. Aw. 10,527, Apana 2 to
Namaielua;


30.  226°  
14’         40”          303.46     feet
along L. C. Aw. 10,380 to Naluhielua;


31.  235°  
44’         40”          205.79     feet
along L. C. Aw. 10,380 to Naluhielua;


32.           Thence along the west side of Hawaii
Belt Road (F.A.P. No. BF-011-1(3)), on a curve to the left with a radius of
12,040.00 feet, the azimuth and distance of the chord being:


333°   47’                45.4”       490.40     feet;


33.   62°  
37’          44.36”     10.00       feet
along the west side of Hawaii Belt Road (F.A.P. No. BF-011-1(3));


34.           Thence along the west side of Hawaii
Belt Road (F.A.P. No. BF-011-1(3)), on a curve to the left with a radius of
12,050.00 feet, the azimuth and distance of the chord being:


332°   23’                28.4”       100.00     feet;


35.  242°  
09’         12.6”       10.00       feet
along the west side of Hawaii Belt Road (F.A.P. No. BF-011-1(3));


36.           Thence along the west side of Hawaii
Belt Road (F.A.P. No. BF-011-1(3)), on a curve to the left with a radius of
12,040.00 feet, the azimuth and distance of the chord being:


331°   57’                42.7”       80.54       feet;


37.           Thence along the west side of Road
Parcel “E” (Mamalahoa Highway), on a curve to the left with a radius of 50.00
feet, the azimuth and distance of the chord being:


28°   20’                  15”          54.96       feet;


38.  355°  
00’                         76.62       feet along the west side of Road Parcel “E”
(Mamalahoa Highway);


39.           Thence along the west side of Road
Parcel “E” (Mamalahoa Highway), on a curve to the left with a radius of 270.00
feet, the azimuth and distance of the chord being:


347°   20’                                72.04       feet;


40.  339°  
40’                         143.25     feet along the west side of Road Parcel “E”
(Mamalahoa Highway);



 17
 









41.  334°  
30’                         124.15     feet along the west side of Road Parcel “E”
(Mamalahoa Highway);


42.           Thence along the west side of Road
Parcel “E” (Mamalahoa Highway), on a curve to the right with a radius of 320.00
feet, the azimuth and distance of the chord being:


325°   05’                                104.71     feet;


43.  315°  
40’                         102.21     feet along the west side of Road Parcel “E”
(Mamalahoa Highway);


44.           Thence along the west side of Road
Parcel “E” (Mamalahoa Highway), on a curve to the right with a radius of 90.00
feet, the azimuth and distance of the chord being:


336°   35’                                64.26       feet;


45.  357°  
30’                         95.30       feet along the west side of Road Parcel “E”
(Mamalahoa Highway);


46.           Thence along the west side of Road
Parcel “E” (Mamalahoa Highway), on a curve to the left with a radius of 170.00
feet, the azimuth and distance of the chord being:


342°   20’                                88.95       feet;


 47. 
327°   10’                        375.30     feet
along the west side of Road Parcel “E” (Mamalahoa Highway);


48.  321°  
40’                         362.80     feet along the west side of Road Parcel “E”
(Mamalahoa Highway);


49.  328°  
20’                         227.84     feet along the west side of Road Parcel “E”
(Mamalahoa Highway);


50.           Thence along the west side of Road
Parcel “E” (Mamalahoa Highway), on a curve to the left with a radius of 300.00
feet, the azimuth and distance of the chord being:


317°   25’                                113.63     feet;


 51. 
306°   30’                        163.21     feet
along the west side of Road Parcel “E” (Mamalahoa Highway);


52.           Thence along the west side of Road
Parcel “E” (Mamalahoa Highway), on a curve to the right with a radius of 180.00
feet, the azimuth and distance of the chord being:



 18
 









313°   00’                                40.75       feet;


53.  319°  
30’                         242.85     feet along the west side of Road Parcel “E”
(Mamalahoa Highway);


54.  321°  
35’                         700.35     feet along the west side of Road Parcel “E”
(Mamalahoa Highway);


55.  317°  
30’                         177.02     feet along the west side of Road Parcel “E”
(Mamalahoa Highway);


56.           Thence along the west side of Road
Parcel “E” (Mamalahoa Highway), on a curve to the left with a radius of 220.00
feet, the azimuth and distance of the chord being:


306°   00’                                87.72       feet;


57.  294°  
30’                         144.39     feet along the west side of Road Parcel “E”
(Mamalahoa Highway);


58.           Thence along the west side of Road
Parcel “E” (Mamalahoa Highway), on the curve to the left with a radius of 79.12
feet, the azimuth and distance of the chord being:


259°   51’                                89.96       feet;


59.  315°  
07’                         182.02     feet along the west side of Hawaii Belt
Road (F.A.P. No. BF-011-1(3));


60.   45°   07’                          35.00       feet along the west side of Hawaii Belt
Road (F.A.P. No. BF-011-1(3));


61.  315°  
07’                         250.00     feet along the west side of Hawaii Belt
Road (F.A.P. No. BF-011-1(3));


62.  225°  
07’                         35.00       feet along the west side of Hawaii Belt
Road (F.A.P. No. BF-011-1(3));


63.  315°  
07’                         375.00     feet along the west side of Hawaii Belt
Road (F.A.P. No. BF-011-1(3));


64.   45°  
07’                          30.00       feet along the west side of Hawaii Belt
Road (F.A.P. No. BF-011-1(3));



 19
 









65.  315°  
07’                         9.41         feet along the west side of Hawaii Belt
Road (F.A.P. No. BF-011-1(3));


66.           Thence along the west side of Hawaii
Belt Road (F.A.P. No. BF-011-1(3)), on a curve to the right with a radius of
11,930.00 feet, the azimuth and distance of the chord being:


315°   50’                03.4”       298.83     feet;


67.  226°  
33’         06.8”       30.00       feet
along the west side of Hawaii Belt Road (F.A.P. No. BF-011-1(3));


68.           Thence along the west side of Hawaii
Belt Road (F.A.P. No. BF-011-1(3)), on a curve to the right with a radius of
11,960.00 feet, the azimuth and distance of the chord being:


317°   00’                36.5”       191.31     feet;


69.           Thence along the west side of Lot “K”,
on a curve to the left with a radius of 100.00 feet, the azimuth and distance
of the chord being:


27°   28’                                  71.35       feet;


70.    6°  
34’                           30.00       feet along the west side of Lot “K”;


71.           Thence along the west side of Lot “K”,
on a curve to the left with a radius of 80.00 feet, the azimuth and distance of
the chord being:


330°   10’                                94.95       feet;


72.  293°  
46’                         40.00       feet along the west side of Lot “K”;


73.           Thence along the west side of Lot “K”,
on a curve to the right with a radius of 40.00 feet, the azimuth and distance
of the chord being:


312°   23’                                25.54       feet;


74.  331°  
00’                         788.29     feet along the west side of Lot “K”;


75.  324°  
47’         45”          1,127.07  feet along the west side of Lot “K”;


76.  316°  
03’         30”          347.81     feet
along the west side of Lot “K”;


77.  337°  
01’         15”          297.87     feet
along the west side of Lot “K”;


78.  335°  
32’         50”          363.57     feet
along the west side of Lot “K”;



 20
 









79.  330°  
29’         15”          336.22     feet
along the west side of Lot “K”;


80.  311°  
00’         10”          466.96     feet
along the west side of Lot “K”;


81.  331°  
03’         20”          410.73     feet
along the west side of Lot “K”;


82.  319°  
15’                         314.92     feet along the west side of Lot “K”;


83.  330°  
55’                         1,093.21  feet along the west side of Hawaii Belt Road
(F.A.P. No. BF-011-1(3));


84.   53°  
19’                          5,427.64  feet along the Government Land of
Kaulanamauna;


85.  152°  
27’                         4,528.93  feet along Lot 13-B along the remainder of R.
P. 6853, L. C. Aw. 9971, Apana 30 to W. P. Leleiohoku;


86.   62°  
27’                          1,524.61  feet along Lot 13-B along the remainder of R.
P. 6853, L. C. Aw. 9971, Apana 30 to W. P. Leleiohoku;


87.  152°  
27’                         1,590.79  feet along Lot D-1 along the remainder of R.
P. 6853, L. C. Aw. 9971, Apana 30 to W. P. Leleiohoku;


88.  242°  
27’                         1,043.15  feet along Lot 7 along the remainder of R. P.
6853, L. C. Aw. 9971, Apana 30 to W. P. Leleiohoku;


89.  152°  
27’                         796.48     feet along Lot 7 along the remainder of R.
P. 6853, L. C. Aw. 9971, Apana 30 to W. P. Leleiohoku;


90.  242°   46’                         1,555.25  feet along Lot H along the remainder of R. P.
6853, L. C. Aw. 9971, Apana 30 to W. P. Leleiohoku;


91.  148°  
37’                         464.20     feet along Lot H along the remainder of R.
P. 6853, L. C. Aw. 9971, Apana 30 to W. P. Leleiohoku;


92.  243°  
30’                         31.00       feet along Lot G along the remainder of
R. P. 6853, L. C. Aw. 9971, Apana 30 to W. P. Leleiohoku;


93.  151°  
13’         30”          1,503.97  feet along Lots G and F along remainder of R. P. 6853, L. C. Aw.
9971, Apana 30 to W. P. Leleiohoku;


94.  243°  
34’                         60.75       feet along Lot E along the remainder of
R. P. 6853, L. C. Aw. 9971, Apana 30 to W. P. Leleiohoku;



 21
 









95.  151°  
20’                         734.10     feet along Lot E along the remainder of R.
P. 6853, L. C. Aw. 9971, Apana 30 to W. P. Leleiohoku;


96.  152°  
15’                         718.52     feet along Lot D along the remainder of R.
P. 6853, L. C. Aw. 9971, Apana 30 to W. P. Leleiohoku;


97.   62°  
52’                          86.76       feet along Lot D along the remainder of
R. P. 6853, L. C. Aw. 9971, Apana 30 to W. P. Leleiohoku;


98.  149°  
09’                         757.69     feet along Lot C along the remainder of R.
P. 6853, L. C. Aw. 9971, Apana 30 to W. P. Leleiohoku;


99.   73°  
24’                          357.50     feet along Lot C along the remainder of R.
P. 6853, L. C. Aw. 9971, Apana 30 to W. P. Leleiohoku;


100.   3°  
33’                          47.00       feet along Lot C along the remainder of
R. P. 6853, L. C. Aw. 9971, Apana 30 to W. P. Leleiohoku;


101.  60°  
45’                         127.00     feet along Lot C along the remainder of R.
P. 6853, L. C. Aw. 9971, Apana 30 to W. P. Leleiohoku;


102. 149°   20’                        665.95     feet along Lots C and B along the remainder
of R. P. 6853, L. C. Aw. 9971, Apana 30 to W. P. Leleiohoku;


103. 242°   36’                        308.00     feet along Lot B along the remainder of R.
P. 6853, L. C. Aw. 9971, Apana 30 to W. P. Leleiohoku;


104. 154°   52’                        803.50     feet along Lot B along the remainder of R.
P. 6853, L. C. Aw. 9971, Apana 30 to W. P. Leleiohoku;


105.  63°  
50’                         409.50     feet along Lot B along the remainder of R.
P. 6853, L. C. Aw. 9971, Apana 30 to W. P. Leleiohoku;


106. 151°   56’                        157.00     feet along Lot B along the remainder of R.
P. 6853, L. C. Aw. 9971, Apana 30 to W. P. Leleiohoku;


107. 247°   18’                        218.50     feet along Lot A along the remainder of R.
P. 6853, L. C. Aw. 9971, Apana 30 to W. P. Leleiohoku;


108. 155°   22’                        1,290.31  feet along Lot A along the remainder of R. P.
6853, L. C. Aw. 9971, Apana 30 to W. P. Leleiohoku;


109. 238°   00’                        247.29     feet along Lot 7 along the remainder of R.
P. 6853, L. C. Aw. 9971, Apana 30 to W. P. Leleiohoku;



 22
 









110. 146°   25’        30”          155.00     feet
along Lot 7 along the remainder of R. P. 6853, L. C. Aw. 9971, Apana 30 to W.
P. Leleiohoku;


111. 246°   20’        50”          906.73     feet
along Grant 3712, Lot B to J. M. Monsarrat;


112. 225°   41’        40”          1,247.14  feet along Grant 3712, Lot B to J. M. Monsarrat;


113. 250°   52’        40”          1,017.10  feet along Government Land of Honomalino to the point of beginning
and containing an area of 1346.546 acres.


Together with that certain Easement Agreement dated
May 28, 1982, recorded in said Bureau in Liber 16369, Page 175, by and between
Mac Farms of Hawaii, Inc., a Hawaii corporation, and Land of Kapua, a Hawaii general
partnership, “Grantors”, and Farms of Kapua, Ltd., a California limited
partnership, “Grantee”.


(n)           Together with a nonexclusive,
perpetual easement for the purpose of constructing, maintaining and operating a
water delivery system over and across Easement “1” and Easement “2” for
roadway, powerline, equipment and waterline purposes, as set forth by
instrument dated — (acknowledged December 12, 2002), recorded in said Bureau as
Document No. 2003-004964, more particularly described therein, and subject to
the terms and provisions, including the failure to comply with any covenants,
conditions and reservations, contained therein.


Together with a nonexclusive, perpetual easement for
the purpose of constructing, maintaining and operating a water delivery system,
over and across Easement “A” for access, utility, water pipeline and well site
purposes, as set forth in instrument dated — (acknowledged December 12, 2002),
recorded as Document No. 2003-004965, more particularly described therein, and
subject to the terms and provisions, including the failure to comply with any
covenants, conditions and reservations, contained therein.


(o)           Assignment and Assumption of
Easements dated — (acknowledged June 25, 2003), recorded in said Bureau as
Document No. 2003-131938, by Mac Farms of Hawaii, Inc., a Hawaii corporation,
“Assignor, to Kapua Orchard Estates, LLC, a Delaware limited liability company,
“Assignee”.


BEING a portion of the land conveyed to Kapua Orchard
Estates, LLC, a Delaware limited liability company, by Warranty Deed dated
June 27, 2003, recorded in said Bureau as Document No. 2003-131937, from
Mac Farms of Hawaii, Inc., a Hawaii corporation.


SUBJECT, HOWEVER, to the following:


(a)           Reservation in favor of the State of
Hawaii of all mineral and metallic mines.



 23
 









(b)           Designation of Easement “R-2” for
roadway and utility purposes, as shown on Subdivision Map prepared by Gary S.
Takamoto, Registered Professional Land Surveyor with ControlPoint Surveying,
Inc., dated September 21, 2001, revised November 25, 2002.


(c)           Designation of Easement “R-4” for
roadway and utility purposes, as shown on Subdivision Map prepared by Gary S.
Takamoto, Registered Professional Land Surveyor with ControlPoint Surveying,
Inc., dated September 21, 2001, revised November 25, 2002.


(d)           Designation of Easement “R-1-A” for
roadway and utility purposes, as shown on Subdivision Map prepared by Gary S.
Takamoto, Registered Professional Land Surveyor with ControlPoint Surveying,
Inc., dated September 21, 2001, revised November 25, 2002.


(e)           Designation of Easement “R-3-A” for
roadway and utility purposes, as shown on Subdivision Map prepared by Gary S.
Takamoto, Registered Professional Land Surveyor with ControlPoint Surveying,
Inc., dated September 21, 2001, revised November 25, 2002.


(f)            Easement in favor of Lot 13-B and
Parcel D for roadway and utility purposes.


(g)           Restricted abutter’s rights of
vehicle access into and from Hawaii Belt Road, Federal Aid Project No.
BF-011-1(3), as conveyed to the State of Hawaii, by Deed dated December 31,
1959, recorded in said Bureau in Liber 3827, Page 428.


(h)           Grant to Hawaii Electric Light
Company, Inc. a Hawaii corporation, and Hawaiian Telephone Company
Incorporated, now known as Hawaiian Telcom, Inc., dated November 7, 1980,
recorded in said Bureau in Liber 15599, Page 306, granting a perpetual right
and easement for utility purposes.


(i)            Utility Easement Agreement dated May
28, 1982, but effective as provided therein, recorded in said Bureau in Liber
16368, Page 776, by and among Lands of Kapua, a Hawaii general partnership, Mac
Farms of Hawaii, Inc., a Hawaii corporation, and Farms of Kapua, Ltd., a
California limited partnership.


(j)            Easement Agreement dated May 28,
1982, recorded in said Bureau in Liber 16369, Page 175, by and between Mac
Farms of Hawaii, Inc., a Hawaii corporation, and Lands of Kapua, a Hawaii
general partnership, “Grantors”, and Farms of Kapua, Ltd., a California limited
partnership, “Grantee”.


(k)           Terms and provisions contained in
Agreement dated August 31, 1983, recorded in said Bureau in Liber 17321, Page
160, by Department of Water Supply, County of Hawaii, and Honomalino
Agricultural Company, Inc., a General Partner of Honomalino Macadamia Orchard
Ten, re:  Public water.



 24
 









(l)            Grant to Hawaii Electric Light
Company, Inc., a Hawaii corporation, and GTE Hawaiian Telephone Company
Incorporated, a Hawaii corporation, now known as Hawaiian Telcom, Inc., dated —
(acknowledged October 18, 1988), recorded in said Bureau in Liber 22557, Page
11, granting a perpetual right and easement for utility purposes.


(m)          Grant to Hawaii Electric Light
Company, Inc., a Hawaii corporation, dated September 16, 1993, recorded in said
Bureau as Document No. 93-167247, granting a perpetual right and easement for
utility purposes.


(n)           Matters arising out of, including any
access and utility rights in favor of Royal Patent Number 6507, Land Commission
Award Number 10,572, Apana 2 to Ohuaaiai, and Royal Patent Number 3677, Land
Commission Award Number 7927 to Kama, Tax Map Key designation (3) 8-9-011-016 and
(3) 8-9-011-017, located within the subject land described hereinabove.


(o)           Right-of-Entry dated February 10,
1966 to Hawaii Electric Light Company, Inc. for the purpose of installing,
removing, maintaining and repairing pole and wire lines until such time as an
appropriate easement is granted to said Company.


(p)           Right-of-Entry dated May 24, 1989,
recorded in said Bureau in Liber 23307, Page 108, in favor of Farms of Kapua,
Ltd., a California limited partnership, granting the right to explore for water
on its land, to construct, install and operate water delivery systems thereon,
and to use and remove such water in accordance with the terms contained
therein, for a period of 2 years from the date hereof.


(q)           Terms and provisions contained in
Declaration of Reciprocal Restrictive Covenants dated May 24, 1989, recorded in
said Bureau in Liber 23307, Page 410.


(r)            Grant of Easements (Roadway,
Right-of-Way Access, Landscaping, Etc.) to One Keahole Partners, a Hawaii general
partnership, dated — (acknowledged December 12, 2002), recorded in said Bureau
as Document No. 2003-004966, granting two (2) nonexclusive, perpetual
80-foot-wide easements (Easements R-1-A and Easement R-3-A) and one (1)
non-exclusive, perpetual 50-foot wide easement (Easement R-4), for purposes of
roadway, right-of-way access, service, and utilities including electricity and
telephones and pipelines for sewer and water, over portions of the Mac Farms
Lands, more particularly described therein


(s)           Terms and provisions contained in
Declaration, Confirmation and Cancellation of Easement Rights and Grant of
Easements dated June 27, 2003, recorded in said Bureau as Document No.
2003-131936.


(t)            Claims arising out of customary and
traditional rights and practices, including without limitation those exercised
for subsistence, cultural, religious, access or gathering purposes, as provided
for in the Hawaii Constitution or the Hawaii Revised Statutes.



 25
 









PARCEL FIVE:


Tax Key:  8-9-011-008 (3):


All of that certain parcel of land being all of Road
Parcels “B”, “C”, and “D” (Mamalahoa Highway), and Lot 19 (being also a portion
of the land(s) described in and covered by Royal Patent Number 6853, Land
Commission Award Number 9971, Apana 30 to W. P. Leleiohoku) situate, lying and
being at Kapua, South Kona, Island of Hawaii, State of Hawaii, being LOT K for
roadway purposes and thus bounded and described as per survey dated April 17,
2002, to-wit:


Beginning at the east corner of this parcel of land,
being also the south corner of Lot L and on the west side of Hawaii Belt Road
(F.A.P. No. BF-011-1(3)), the coordinates of said point of beginning referred
to Government Survey Triangulation Station “KAPUKAWAA” being 18,458.97 feet
south and 21,648.42 feet east, thence running by azimuths measured clockwise
from true South:


1.   330°  
55’                          83.24       feet along the west side of Hawaii Belt
Road (F.A.P. No. BF-011-1(3));


2.   240°  
55’                          20.00       feet along the west side of Hawaii Belt
Road (F.A.P. No. BF-011-1(3));


3.   330°  
55’                          664.87     feet along the west side of Hawaii Belt
Road (F.A.P. No. BF-011-1(3))


4.   139°  
15’                          314.92     feet along Lot J along the remainder of R.
P. 6853, L. C. Aw. 9971, Apana 30 to W. P. Leleiohoku;


5.   151°  
03’          20”          410.73     feet
along Lot J along the remainder of R. P. 6853, L. C. Aw. 9971, Apana 30 to W.
P. Leleiohoku;


6.   131°  
00’          10”          466.96     feet
along Lot J along the remainder of R. P. 6853, L. C. Aw. 9971, Apana 30 to W.
P. Leleiohoku;


7.   150°  
29’          15”          336.22     feet
along Lot J along the remainder of R. P. 6853, L. C. Aw. 9971, Apana 30 to W.
P. Leleiohoku;


8.   155°  
32’          50”          363.57     feet
along Lot J along the remainder of R. P. 6853, L. C. Aw. 9971, Apana 30 to W.
P. Leleiohoku;


9.   157°  
01’          15”          297.87     feet
along Lot J along the remainder of R. P. 6853, L. C. Aw. 9971, Apana 30 to W.
P. Leleiohoku;


10.  136°  
03’         30”          347.81     feet
along Lot J along the remainder of R. P. 6853, L. C. Aw. 9971, Apana 30 to W.
P. Leleiohoku;



 26
 









11.  144°  
47’         45”          1,127.07  feet along Lot J along the remainder of R. P. 6853, L. C. Aw. 9971,
Apana 30 to W. P. Leleiohoku;


12.  151°  
00’                         788.29     feet along Lot J along the remainder of R.
P. 6853, L. C. Aw. 9971, Apana 30 to W. P. Leleiohoku;


13.           Thence along Lot J along the
remainder of R. P. 6853, L. C. Aw. 9971, Apana 30 to W. P. Leleiohoku, on a
curve to the left with a radius of 40.00 feet, the azimuth and distance of the
chord being:


132°   23’                                25.54       feet:


14.  113°  
46’                         40.00       feet along Lot J along the remainder of
R. P. 6853, L. C. Aw. 9971, Apana 30 to W. P. Leleiohoku;


15.           Thence along Lot J along the remainder
of R. P. 6853, L. C. Aw. 9971, Apana 30 to W. P. Leleiohoku, on a curve to the
right with a radius of 80.00 feet, the azimuth and distance of the chord being:


150°   10’                                94.95       feet;


16.  186°  
34’                         30.00       feet along Lot J along the remainder of R.
P. 6853, L. C. Aw. 9971, Apana 30 to W. P. Leleiohoku;


17.           Thence along Lot J along the
remainder of R. P. 6853, L. C. Aw. 9971, Apana 30 to W. P. Leleiohoku, on a
curve to the right with a radius of 100.00 feet, the azimuth and distance of
the chord being:


207°   28’                                71.35       feet;


18.           Thence along the west side of Hawaii
Belt Road (F.A.P. No. BF-011-1(3)), on a curve to the right with a radius of
100.00 feet, the azimuth and distance of the chord being:


317°   35’                17.4”       50.01       feet;


19.           Thence along Lot L along the
remainder of R. P. 6853, L. C. Aw. 9971, Apana 30 to W. P. Leleiohoku, on a
curve to the left with a radius of 50.00 feet, the azimuth and distance of the
chord being:


27°   51’                  38”          36.32       feet;


20.    6°  
34’                           30.00       feet along Lot L along the remainder of
R. P. 6853, L. C. Aw. 9971, Apana 30 to W. P. Leleiohoku;



 27
 









21.           Thence along Lot L along the
remainder of R. P. 6853, L. C. Aw. 9971, Apana 30 to W. P. Leleiohoku, on a
curve to the left with a radius of 30.00 feet, the azimuth and distance of the
chord being:


330°   10’                                35.61       feet;


22.  293°  
46’                         40.00       feet along Lot L along the remainder of
R. P. 6853, L. C. Aw. 9971, Apana 30 to W. P. Leleiohoku;


23.           Thence along Lot L along the
remainder of R. P. 6853, L. C. Aw. 9971, Apana 30 to W. P. Leleiohoku on a
curve to the right with a radius of 90.00 feet, the azimuth and distance of the
chord being:


312°   23’                                57.46       feet;


24.  331°  
00’                         785.55     feet along Lot L along the remainder of R.
P. 6853, L. C. Aw. 9971, Apana 30 to W. P. Leleiohoku;


25.  324°  
47’         45”          1,120.57  feet along Lot L along the remainder of R. P. 6853, L. C. Aw. 9971,
Apana 30 to W. P. Leleiohoku;


26.  316°  
03’         30”          353.24     feet
along Lot L along the remainder of R. P. 6853, L. C. Aw. 9971, Apana 30 to W.
P. Leleiohoku;


27.  337°  
01’         15”          306.48     feet
along Lot L along the remainder of R. P. 6853, L. C. Aw. 9971, Apana 30 to W.
P. Leleiohoku;


28.  335°  
32’         50”          360.72     feet
along Lot L along the remainder of R. P. 6853, L. C. Aw. 9971, Apana 30 to W.
P. Leleiohoku;


29.  330°  
29’         15”          325.43     feet
along Lot L along the remainder of R. P. 6853, L. C. Aw. 9971, Apana 30 to W.
P. Leleiohoku;


30.  311°  
00’         10”          445.70     feet
along Lot L along the remainder of R. P. 6853, L. C. Aw. 9971, Apana 30 to W.
P. Leleiohoku to the point of beginning and containing an area of 5.344 acres.


Together with that certain Easement Agreement dated
May 28, 1982, recorded in said Bureau in Liber 16369, Page 175, by and between
Mac Farms of Hawaii, Inc., a Hawaii corporation, and Land of Kapua, a Hawaii
general partnership, “Grantors”, and Farms of Kapua, Ltd., a California limited
partnership, “Grantee”.



 28















Together with a nonexclusive, perpetual easement for
the purpose of constructing, maintaining and operating a water delivery system
over and across Easement “1” and Easement “2” for roadway, powerline, equipment
and waterline purposes, as set forth by instrument dated — (acknowledged
December 12, 2002), recorded in said Bureau as Document No. 2003-004964, more
particularly described therein, and subject to the terms and provisions,
including the failure to comply with any covenants, conditions and reservations,
contained therein.


Together with a nonexclusive, perpetual easement for
the purpose of constructing, maintaining and operating a water delivery system,
over and across Easement “A” for access, utility, water pipeline and well site
purposes, as set forth in instrument dated  — (acknowledged December 12, 2002), recorded
in said Bureau as Document No. 2003-004965, more particularly described
therein, and subject to the terms and provisions, including the failure to
comply with any covenants, conditions and reservations, contained therein.


Assignment and Assumption of Easements, dated  — (acknowledged June 25, 2003), recorded in
said Bureau as Document No. 2003-131938, by Mac Farms of Hawaii, Inc., a Hawaii
corporation, “Assignor, to Kapua Orchard Estates, LLC, a Delaware limited
liability company, “Assignee”.


BEING a portion of the land conveyed to Kapua Orchard
Estates, LLC, a Delaware limited liability company, by Warranty Deed dated
June 27, 2003, recorded in said Bureau as Document No. 2003-131937, from
Mac Farms of Hawaii, Inc., a Hawaii corporation.


SUBJECT, HOWEVER, to the following:


(a)           Reservation in favor of the State of
Hawaii of all mineral and metallic mines.


(b)           Designation of Easement “R-3-A” for
roadway and utility purposes, as shown on Subdivision Map prepared by Gary S.
Takamoto, Registered Professional Land Surveyor with ControlPoint Surveying,
Inc., dated September 21, 2001, revised November 25, 2002.


(c)           Easement in favor of Lot 13-B and
Parcel D for roadway and utility purposes.


(d)           Easement Agreement dated May 28,
1982, recorded in said Bureau in Liber 16369, Page 175, by and between Mac
Farms of Hawaii, Inc., a Hawaii corporation, and Lands of Kapua, a Hawaii
general partnership, “Grantors”, and Farms of Kapua, Ltd., a California limited
partnership, “Grantee”.


(e)           Rights of others who may have
easement or access rights in the land described hereinabove.



 29
 









(f)            Right-of-Entry dated February 10,
1966 to Hawaii Electric Light Company, Inc. for the purpose of installing,
removing, maintaining and repairing pole and wire lines until such time as an
appropriate easement is granted to said Company.


(g)           Right-of-Entry dated May 24, 1989,
recorded in said Bureau in Liber 23307, Page 108, in favor of Farms of Kapua,
Ltd., a California limited partnership, granting the right to explore for water
on its land, to construct, install and operate water delivery systems thereon,
and to use and remove such water in accordance with the terms contained
therein, for a period of 2 years from the date hereof.


(h)           Terms and provisions contained in
Declaration of Reciprocal Restrictive Covenants dated May 24, 1989, recorded in
said Bureau in Liber 23307, Page 410.


(i)            Grant of Easements (Roadway,
Right-of-Way Access, Landscaping, Etc.) to One Keahole Partners, a Hawaii
general partnership, dated — (acknowledged December 12, 2002), recorded in said
Bureau as Document No. 2003-004966, granting two (2) nonexclusive, perpetual
80-foot-wide easements (Easements R-1-A and Easement R-3-A) and one (1)
non-exclusive, perpetual 50-foot wide easement (Easement R-4), for purposes of
roadway, right-of-way access, service, and utilities including electricity and
telephones and pipelines for sewer and water, over portions of the Mac Farms
Lands, more particularly described therein


(j)            Terms and provisions contained in
Declaration, Confirmation and Cancellation of Easement Rights and Grant of
Easements dated June 27, 2003, recorded in said Bureau as Document No.
2003-131936.


(k)           Claims arising out of customary and
traditional rights and practices, including without limitation those exercised
for subsistence, cultural, religious, access or gathering purposes, as provided
for in the Hawaii Constitution or the Hawaii Revised Statutes.


PARCEL SIX:


Tax Key:  8-9-011-011 (3):


All of that certain parcel of land being portions of
Lots 5 and 6, (being also a portion of the land(s) described in and covered by
Royal Patent Number 6853, Land Commission Award Number 9971, Apana 30 to W. P.
Leleiohoku) situate, lying and being at Kapua, South Kona, Island of Hawaii,
State of Hawaii, being LOT A and thus bounded and described as per survey dated
April 17, 2002, to-wit:


Beginning at the south corner of this parcel of land,
being also the west corner of Lot B the coordinates of said point of beginning
referred to Government Survey Triangulation Station “KAPUKAWAA” being 12,165.90
feet south and 11,856.35 feet east, thence running by azimuths measured
clockwise from true South:



 30
 









1.   152°  
27’                          1,183.65  feet along Lot 7 along remainder of R. P.
6853, L. C. Aw. 9971, Apana 30 to W. P. Leleiohoku;


2.   258°  
30’                          200.51     feet along Lot 7 along remainder of R. P.
6853, L. C. Aw. 9971, Apana 30 to W. P. Leleiohoku;


3.   238°  
00’                          922.71     feet along Lot 7 along remainder of R. P.
6853, L. C. Aw. 9971, Apana 30 to W. P. Leleiohoku;


4.   335°  
22’                          1,290.31  feet along Lot J along remainder of (Lots 5
and 6) R. P. 6853, L. C. Aw. 9971, Apana 30 to W. P. Leleiohoku;


5.    67°  
18’                           1,050.73  feet along Lots J and B along remainder of
(Lot 6) R. P. 6853, L. C. Aw. 9971, Apana 30 to W. P. Leleiohoku to the point
of beginning and containing an area of 29.926 acres.


Together with that certain Easement Agreement dated
May 28, 1982, recorded in said Bureau in Liber 16369, Page 175, by and between
Mac Farms of Hawaii, Inc., a Hawaii corporation, and Land of Kapua, a Hawaii
general partnership, “Grantors”, and Farms of Kapua, Ltd., a California limited
partnership, “Grantee”.


Together with a nonexclusive, perpetual easement for
the purpose of constructing, maintaining and operating a water delivery system
over and across Easement “1” and Easement “2” for roadway, powerline, equipment
and waterline purposes, as set forth by instrument dated — (acknowledged
December 12, 2002), recorded in said Bureau as Document No. 2003-004964, more
particularly described therein, and subject to the terms and provisions,
including the failure to comply with any covenants, conditions and
reservations, contained therein.


Together with a nonexclusive, perpetual easement for
the purpose of constructing, maintaining and operating a water delivery system,
over and across Easement “A” for access, utility, water pipeline and well site
purposes, as set forth in instrument dated — (acknowledged December 12, 2002),
recorded in said Bureau as Document No. 2003-004965, more particularly
described therein, and subject to the terms and provisions, including the
failure to comply with any covenants, conditions and reservations, contained
therein.


(l)            Assignment and Assumption of
Easements, dated — (acknowledged June 25, 2003), recorded in said Bureau as
Document No. 2003-131938, by Mac Farms of Hawaii, Inc., a Hawaii corporation, “Assignor”,
to Kapua Orchard Estates, LLC, a Delaware limited liability company, “Assignee”.


BEING a portion of the land conveyed to Kapua Orchard
Estates, LLC, a Delaware limited liability company, by Warranty Deed dated
June 27, 2003, recorded in said Bureau as Document No. 2003-131937, from
Mac Farms of Hawaii, Inc., a Hawaii corporation.


SUBJECT, HOWEVER, to the following:



 31
 









(a)           Reservation in favor of the State of
Hawaii of all mineral and metallic mines.


(b)           Right-of-Entry dated February 10,
1966 to Hawaii Electric Light Company, Inc. for the purpose of installing,
removing, maintaining and repairing pole and wire lines until such time as an
appropriate easement is granted to said Company.


(c)           Designation of Easement “R-1-A” for
roadway and utility purposes, as shown on Subdivision Map prepared by Gary S.
Takamoto, Registered Professional Land Surveyor with ControlPoint Surveying,
Inc., dated September 21, 2001, revised November 25, 2002.


(d)           Designation of Easement “R-2” for
roadway and utility purposes, as shown on Subdivision Map prepared by Gary S.
Takamoto, Registered Professional Land Surveyor with ControlPoint Surveying,
Inc., dated September 21, 2001, revised November 25, 2002.


(e)           Easement Agreement dated May 28,
1982, recorded in said Bureau in Liber 16369, Page 175, by and between Mac
Farms of Hawaii, Inc., a Hawaii corporation, and Lands of Kapua, a Hawaii
general partnership, “Grantors”, and Farms of Kapua, Ltd., a California limited
partnership, “Grantee”.


(f)            Right-of-Entry dated May 24, 1989,
recorded in said Bureau in Liber 23307, Page 108, in favor of Farms of Kapua,
Ltd., a California limited partnership, granting the right to explore for water
on its land, to construct, install and operate water delivery systems thereon,
and to use and remove such water in accordance with the terms contained
therein, for a period of 2 years from the date hereof.


(g)           Terms and provisions contained in
Declaration of Reciprocal Restrictive Covenants dated May 24, 1989, recorded in
said Bureau in Liber 23307, Page 410.


(h)           Grant of Easements (Roadway,
Right-of-Way Access, Landscaping, Etc.) to One Keahole Partners, a Hawaii
general partnership, dated — (acknowledged December 12, 2002), recorded in said
Bureau as Document No. 2003-004966, granting two (2) nonexclusive, perpetual
80-foot-wide easements (Easements R-1-A and Easement R-3-A) and one (1)
non-exclusive, perpetual 50-foot wide easement (Easement R-4), for purposes of
roadway, right-of-way access, service, and utilities including electricity and
telephones and pipelines for sewer and water, over portions of the Mac Farms
Lands, more particularly described therein


(i)            Terms and provisions contained in
Declaration, Confirmation and Cancellation of Easement Rights and Grant of
Easements dated June 27, 2003, recorded in said Bureau as Document No.
2003-131936.


(j)            Claims arising out of customary and
traditional rights and practices, including without limitation those exercised
for subsistence, cultural, religious, access or gathering purposes, as provided
for in the Hawaii Constitution or the Hawaii Revised Statutes.



 32
 









PARCEL SEVEN:


Tax Key:  8-9-011-012 (3):


All of that certain parcel of land being portions of
Lots 3 and 6, (being also a portion of the land(s) described in and covered by
Royal Patent Number 6853, Land Commission Award Number 9971, Apana 30 to W. P.
Leleiohoku) situate, lying and being at Kapua, South Kona, Island of Hawaii, State
of Hawaii, being LOT B and thus bounded and described as per survey dated April
17, 2002, to-wit:


Beginning at the west corner of this parcel of land,
being also the south corner of Lot A the coordinates of said point of beginning
referred to Government Survey Triangulation Station “KAPUKAWAA” being 12,165.90
feet south and 11,856.35 feet east, thence running by azimuths measured
clockwise from true South:


1.   247°  
18’                          832.23     feet along Lot A along remainder of (Lot 6)
R. P. 6853, L. C. Aw. 9971, Apana 30 to W. P. Leleiohoku;


2.   331°  
56’                          157.00     feet along Lot J along remainder of (Lot 6)
R. P. 6853, L. C. Aw. 9971, Apana 30 to W. P. Leleiohoku;


3.   243°  
50’                          409.50     feet along Lot J along remainder of (Lot 6)
R. P. 6853, L. C. Aw. 9971, Apana 30 to W. P. Leleiohoku;


4.   334°  
52’                          803.50     feet along Lot J along remainder of (Lots 6
and 3) R. P. 6853, L. C. Aw. 9971, Apana 30 to W. P. Leleiohoku;


5.    62°  
36’                           308.00     feet along Lot J remainder of (Lots 6 and
3) R. P. 6853, L. C. Aw. 9971, Apana 30 to W. P. Leleiohoku;


6.   329°  
20’                          419.49     feet along Lot J along remainder of (Lot 6)
R. P. 6853, L. C. Aw. 9971, Apana 30 to W. P. Leleiohoku;


7.    59°  
06’                           922.55     feet along Lot C along remainder of (Lot 6)
R. P. 6853, L. C. Aw. 9971, Apana 30 to W. P. Leleiohoku;


8.   152°  
27’                          1,512.00  feet along Lot 7 along remainder of R. P.
6853, L. C. Aw. 9971, Apana 30 to W. P. Leleiohoku to the point of beginning
and containing an area of 35.734 acres.


Together with that certain Easement Agreement dated
May 28, 1982, recorded in said Bureau in Liber 16369, Page 175, by and between
Mac Farms of Hawaii, Inc., a Hawaii corporation, and Land of Kapua, a Hawaii
general partnership, “Grantors”, and Farms of Kapua, Ltd., a California limited
partnership, “Grantee”.



 33
 









Together with a nonexclusive, perpetual easement for
the purpose of constructing, maintaining and operating a water delivery system
over and across Easement “1” and Easement “2” for roadway, powerline, equipment
and waterline purposes, as set forth by instrument dated — (acknowledged
December 12, 2002), recorded in said Bureau as Document No. 2003-004964, more
particularly described therein, and subject to the terms and provisions,
including the failure to comply with any covenants, conditions and
reservations, contained therein.


Together with a nonexclusive, perpetual easement for
the purpose of constructing, maintaining and operating a water delivery system,
over and across Easement “A” for access, utility, water pipeline and well site
purposes, as set forth in instrument dated  — (acknowledged December 12, 2002), recorded
in said Bureau as Document No. 2003-004965, more particularly described
therein, and subject to the terms and provisions, including the failure to
comply with any covenants, conditions and reservations, contained therein.


(k)           Assignment and Assumption of
Easements, dated  — (acknowledged June
25, 2003), recorded in said Bureau as Document No. 2003-131938, by Mac Farms of
Hawaii, Inc., a Hawaii corporation, “Assignor”, to Kapua Orchard Estates, LLC,
a Delaware limited liability company, “Assignee”.


BEING a portion of the land conveyed to Kapua Orchard
Estates, LLC, a Delaware limited liability company, by Warranty Deed dated
June 27, 2003, recorded in said Bureau as Document No. 2003-131937, from
Mac Farms of Hawaii, Inc., a Hawaii corporation.


SUBJECT, HOWEVER, to the following:


(a)           Reservation in favor of the State of
Hawaii of all mineral and metallic mines.


(b)           Right-of-Entry dated February 10,
1966 to Hawaii Electric Light Company, Inc. for the purpose of installing,
removing, maintaining and repairing pole and wire lines until such time as an
appropriate easement is granted to said Company.


(c)           Designation of Easement “R-2” for
roadway and utility purposes, as shown on Subdivision Map prepared by Gary S.
Takamoto, Registered Professional Land Surveyor with ControlPoint Surveying,
Inc., dated September 21, 2001, revised November 25, 2002.


(d)           Easement Agreement dated May 28,
1982, recorded in said Bureau in Liber 16369, Page 175, by and between Mac
Farms of Hawaii, Inc., a Hawaii corporation, and Lands of Kapua, a Hawaii
general partnership, “Grantors”, and Farms of Kapua, Ltd., a California limited
partnership, “Grantee”.


(e)           Right-of-Entry dated May 24, 1989,
recorded in said Bureau in Liber 23307, Page 108, in favor of Farms of Kapua,
Ltd., a California limited partnership, granting the right to explore for water
on its land, to construct, install and operate water delivery systems 



 34
 









thereon, and to
use and remove such water in accordance with the terms contained therein, for a
period of 2 years from the date hereof.


(f)            Terms and provisions contained in
Declaration of Reciprocal Restrictive Covenants dated May 24, 1989, recorded in
said Bureau in Liber 23307, Page 410.


(g)           Grant of Easements (Roadway,
Right-of-Way Access, Landscaping, Etc.) to One Keahole Partners, a Hawaii
general partnership, dated — (acknowledged December 12, 2002), recorded in said
Bureau as Document No. 2003-004966, granting two (2) nonexclusive, perpetual
80-foot-wide easements (Easements R-1-A and Easement R-3-A) and one (1)
non-exclusive, perpetual 50-foot wide easement (Easement R-4), for purposes of
roadway, right-of-way access, service, and utilities including electricity and
telephones and pipelines for sewer and water, over portions of the Mac Farms
Lands, more particularly described therein.


(h)           Terms and provisions contained in
Declaration, Confirmation and Cancellation of Easement Rights and Grant of
Easements dated June 27, 2003, recorded in said Bureau as Document No.
2003-131936.


(i)            Claims arising out of customary and
traditional rights and practices, including without limitation those exercised
for subsistence, cultural, religious, access or gathering purposes, as provided
for in the Hawaii Constitution or the Hawaii Revised Statutes.


PARCEL EIGHT:


Tax Key:  8-9-011-013 (3):


All of that certain parcel of land (portion of the
land described in and covered by Royal Patent Number 6853, Land Commission
Award Number 9971, Apana 30 to W. P. Leleiohoku) situate, lying and being at
Kapua, District of South Kona, Island and County of Hawaii, State of Hawaii,
being ROAD PARCEL “E”, and thus bounded and described:


Beginning at the most easterly corner of this parcel
of land and on the southwest side of Hawaii Belt Road, the coordinates of said
point of beginning referred to Government Survey Triangulation Station “KAPUKAWAA”
being 14,297.92 feet south and 18,585.40 feet east, and running thence by
azimuths measured clockwise from true South:


Along Lot 6 on a curve to
the right with a radius of 79.12 feet, the chord azimuth and distance being:


1.    79°  
51’           00”          89.96       feet;


2.   114°  
30’          00”          144.39     feet
along Lot 6;


Thence on a curve to the
right with a radius of 220.00 feet along same, the chord azimuth and distance
being:



 35
 









3.   126°  
00’          00”          87.72       feet;


4.   137°  
30’          00”          177.02     feet
along Lot 6;


5.   141°  
35’           00”         700.35     feet
along same;


6.   139°  
30’          00”          242.85     feet
along same;


Thence on a curve to the
left with a radius of 180.00 feet along same, the chord azimuth and distance
being:


7.   133°  
00’          00”          40.75       feet;


8.   126°  
30’          00”          163.21     feet
along Lot 6;


Thence on a curve to the
right with a radius of 300.00 feet along same, the chord azimuth and distance
being:


9.   137°  
25’          00”          113.63     feet;


10.  148°  
20’         00”          277.84     feet
along Lot 6;


11.  141°  
40’         00”          362.80     feet
along same;


12.  147°  
10’         00”          375.30     feet
along same;


Thence on a curve to the
right with a radius of 170.00 feet along same, the chord azimuth and distance
being:


13.  162°   20’         00”          88.95       feet;


14.  177°  
30’         00”          95.30       feet
along Lot 6;


Thence on a curve to the
left with a radius of 90.00 feet along same, the chord azimuth and distance
being:


15.  156°  
35’         00”          64.26       feet;


16.  135°  
40’         00”          102.21     feet
along Lot 6;


Thence on a curve to the
right with a radius of 320.00 feet along same, the chord azimuth and distance
being:



 36
 









17.  145°  
05’         00”          104.71     feet;


18.  154°  
30’         00”          124.15     feet
along Lot 6;


19.  159°  
40’         00”          143.25     feet
along same;


Thence on a curve to the
right with a radius of 270.00 feet along Lots 6 and 3 for the next two (2)
courses, the chord azimuths and distances being:


20.  164°  
00’         00”          40.80       feet;


21.  171°  
40’         00”          31.40       feet;


22.  175°  
00’         00”          76.62       feet
along Lot 3;


Thence on a curve to the
right with a radius of 50.00 feet along same, the chord azimuth and distance
being:


23.  208°  
20’         15.1”       54.96       feet;


Thence on a curve to the
left with a radius of 12,040.00 feet along the southwest side of Hawaii Belt
Road, the chord azimuth and distance being:


24.  331°  
40’         30.2”       40.00       feet;


Thence on a curve to the
left with a radius of 10.00 feet along Lot 21, the chord azimuth and distance
being:


25.   28°  
20’          15.1”       10.99       feet;


26.  355°  
00’         00”          76.62       feet
along Lot 21;


Thence on a curve to the
left with a radius of 230.00 feet along same, the chord azimuth and distance
being:


27.  347°  
20’         00”          61.37       feet;


28.  339°  
40’         00”          141.45     feet
along Lot 21;


29.  334°  
30’         00”          122.35     feet
along same;


Thence on a curve to the
left with a radius of 280.00 feet along same, the chord azimuth and distance
being:



 37
 









30.  325°  
05’         00”          91.62       feet;


31.  315°  
40’         00”          102.21     feet
along Lot 21;


Thence on a curve to the
right with a radius of 130.00 feet along same, the chord azimuth and distance
being:


32.  336°   35’         00”          92.82       feet;


33.  357°  
30’         00”          95.30       feel
along Lot 21;


Thence on a curve to the
left with a radius of 130.00 feet along same, the chord azimuth and distance
being:


34.  342°  
20’         00”          68.02       feet;


35.  327°  
10’         00”          373.38     feet
along Lot 21;


36.  321°  
40’         00”          363.20     feet
along same;


37.  328°  
20’         00”          230.16     feet
along same;


Thence on a curve to the
left with a radius of 260.00 feet along same, the chord azimuth and distance
being:


38.  317°  
25’         00”          98.48       feet;


39.  306°  
30’         00”          163.21     feet
along Lot 21;


Thence on a curve to the
right with a radius of 220.00 feet along same, the chord azimuth and distance
being:


40.  313°  
00’         00”          49.81       feet;


41.  319°  
30’         00”          243.57     feet
along Lot 21;


42.  321°  
35’         00”          699.65     feet
along same;


43.  317°  
30’         00”          175.60     feet
along same;


Thence on a curve to the
left with a radius of 180.00 feet along same, the chord azimuth and distance
being:


44.  306°  
00’         00”          71.77       feet;



 38
 









45.  294°  
30’         00”          144.39     feet
along Lot 21;


Thence on a curve to the
left with a radius of 39.12 feet along Lot 21, the chord azimuth and distance
being:


46.  259°  
51’         00”          44.48       feet;


Thence on a curve to the
left with a radius of 12,040.00 feet along the southwest side of Hawaii Belt
Road, the chord azimuth and distance to the point of beginning being:


47.  315°  
12’         42.6”       40.00       feet
and containing an area of 3.227 acres.


Together with that certain Easement Agreement dated
May 28, 1982, recorded in said Bureau in Liber 16369 at Page 175, by and
between Mac Farms of Hawaii, Inc., a Hawaii corporation, and Land of Kapua, a
Hawaii general partnership, “Grantors”, and Farms of Kapua, Ltd., a California
limited partnership, “Grantee”.


BEING a portion of the land conveyed to Kapua Orchard
Estates, LLC, a Delaware limited liability company, by Warranty Deed dated
June 27, 2003, recorded in said Bureau as Document No. 2003-131937, from
Mac Farms of Hawaii, Inc., a Hawaii corporation.


SUBJECT, HOWEVER, to the following:


(a)           Reservation in favor of the State of
Hawaii of all mineral and metallic mines.


(b)           Right-of-Entry dated February 10,
1966 to Hawaii Electric Light Company, Inc. for the purpose of installing,
removing, maintaining and repairing pole and wire lines until such time as an
appropriate easement is granted to said Company.


(c)           Easement Agreement dated May 28,
1982, recorded in said Bureau in Liber 16369, Page 175, by and between Mac
Farms of Hawaii, Inc., a Hawaii corporation, and Lands of Kapua, a Hawaii
general partnership, “Grantors”, and Farms of Kapua, Ltd., a California limited
partnership, “Grantee”.


(d)           Right-of-Entry dated May 24, 1989,
recorded in said Bureau in Liber 23307, Page 108, in favor of Farms of Kapua,
Ltd., a California limited partnership, granting the right to explore for water
on its land, to construct, install and operate water delivery systems thereon,
and to use and remove such water in accordance with the terms contained
therein, for a period of 2 years from the date hereof.


(e)           Terms and provisions contained in
Declaration of Reciprocal Restrictive Covenants dated May 24, 1989, recorded in
said Bureau in Liber 23307, Page 410.



 39
 









(f)            Claims arising out of customary and
traditional rights and practices, including without limitation those exercised
for subsistence, cultural, religious, access or gathering purposes, as provided
for in the Hawaii Constitution or the Hawaii Revised Statutes.


(g)           The easement in favor of the public
over and across that portions of the Old Mamahahoa Highway, being said Road
Parcel “E”, area 3.227 acres, more or less.


PARCEL NINE:


Tax Key:  8-9-011-014 (3):


All of that certain parcel of land (portion of the
land described in and covered by Royal Patent Number 6853, Land Commission
Award Number 9971, Apana 30 to W. P. Leleiohoku) situate, lying and being on
the west side of Hawaii Belt Road at Kapua, District of South Kona, Island and
County of Hawaii, State of Hawaii, being LOT 21, and thus bounded and
described:


Beginning at a point at the north east corner of this
parcel of land on the west side of the Hawaii Belt Road the coordinates of said
point of beginning referred to Government Survey Triangulation Station “KAPUKAWAA”
being 11,531.93 feet south and 16,527.31 feet east and running by azimuths,
measured clockwise from true South:


Thence following along
west side of Hawaii Belt Road on a curve to the left with a radius of 12,040.00
feet, the chord azimuth and distance being:


1.   330°  
47’          31”          331.16     feet
along west side of Hawaii Belt Road;


2.    60°  
00’           14”          10.00       feet
along west side of Hawaii Belt Road;


Thence following along
west side of Hawaii Belt Road on a curve to the left with a radius of 12,050.00
feet, the chord azimuth and distance being:


3.   329°  
20’          51”          276.14     feet
along west side of Hawaii Belt Road;


4.   238°  
41’          27”          10.00       feet
along west side of Hawaii Belt Road;


Thence following along
west side of Hawaii Belt Road on a curve to the left with a radius of 12,040.00
feet the chord azimuth and distance being:


5.   321°  
59’          56”          2,806.07  feet;


Thence following along
the Old Mamalahoa Highway on a curve to the right with a radius of 39.12 feet
the chord azimuth and distance being:


6.    79°  
51’                           44.48       feet;



 40
 









7.   114°  
30’                          144.39     feet along east side of Old Mamalahoa
Highway;


Thence following along
the Old Mamalahoa Highway on a curve to the right with a radius of 180.00 feet
the chord azimuth and distance being:


8.   126°  
00’                          71.77       feet;


9.   137°  
30’                          175.60     feet along east side of Old Mamalahoa
Highway;


10.  141°  
35’                         699.65     feet along east side of Old Mamalahoa
Highway;


11.  139°  
30’                         243.57     feet along east side of Old Mamalahoa
Highway;


Thence following along
the Old Mamalahoa Highway on a curve to the left with a radius of 220.00 feet
the chord azimuth and distance being:


12.  133°  
00’                         49.81       feet;


13.  126°  
30                          163.21     feet along east side of Mamalahoa Highway;


Thence following along
Old Mamalahoa Highway on a curve to the right with a radius of 260.00 feet the
chord azimuth and distance being:


14.  137°  
25’                         98.48       feet;


15.  148°  
20’                         230.16     feet along east side of Mamalahoa Highway;


16.  141°  
40’                         363.20     feet along east side of Mamalahoa Highway;


17.  147°  
10’                         373.38     feet along east side of Mamalahoa Highway;


Thence following along
Old Mamalahoa Highway on a curve to the right with a radius of 130.00 feet the
chord azimuth and distance being:


18.  162°  
20’                         68.02       feet;


19.  177°  
30’                         95.30       feet along east side of Mamalahoa
Highway;


Thence following along
east side of Old Mamalahoa Highway on a curve to the left with a radius of
130.00 feet the chord azimuth and distance being:


20.  156°  
35’                         92.82       feet;



 41
 









21.  135°  
40’                         102.21     feet along east side of Old Mamalahoa
Highway;


Thence following along
east side of Old Mamalahoa Highway on a curve to the right with a radius of
280.00 feet the chord azimuth and distance being:


22.  145°  
05’                         91.62       feet;


23.  154°  
30’                         122.35     feet along east side of Old Mamalahoa
Highway;


24.  159°  
40’                         141.45     feet along east side of Old Mamalahoa
Highway;


Thence following along
Old Mamalahoa Highway on a curve to the right with a radius of 230.00 feet the
chord azimuth and distance being:


25.  167°  
20’                         61.37       feet;


26.  175°  
00’                         76.62       feet along east side of Mamalahoa
Highway;


Thence following along
east side of Mamalahoa Highway on a curve to the right with a radius of 10.00
feet the chord azimuth and distance being:


27.  208°  
20’         15”          10.99       feet
to the point of beginning and containing and area of 7.375 acres.


Together with that certain Easement Agreement dated
May 28, 1982, recorded in said Bureau in Liber 16369, Page 175, by and between
Mac Farms of Hawaii, Inc., a Hawaii corporation, and Land of Kapua, a Hawaii
general partnership, “Grantors”, and Farms of Kapua, Ltd., a California limited
partnership, “Grantee”.


BEING a portion of the land conveyed to Kapua Orchard
Estates, LLC, a Delaware limited liability company, by Warranty Deed dated
June 27, 2003, recorded in said Bureau as Document No. 2003-131937, from
Mac Farms of Hawaii, Inc., a Hawaii corporation.


SUBJECT, HOWEVER, to the following:


(a)           Reservation in favor of the State of
Hawaii of all mineral and metallic mines.


(b)           Right-of-Entry dated February 10,
1966 to Hawaii Electric Light Company, Inc. for the purpose of installing,
removing, maintaining and repairing pole and wire lines until such time as an
appropriate easement is granted to said Company.


(c)           Restricted abutter’s rights of
vehicle access into and from Hawaii Belt Road, Federal Aid Project No.
BF-011-1(3), as conveyed to the State of Hawaii, by Deed dated December 31,
1959, recorded in said Bureau in Liber 3827, Page 428.



 42
 









(d)           Easement Agreement dated May 28,
1982, recorded in said Bureau in Liber 16369, Page 175, by and between Mac
Farms of Hawaii, Inc., a Hawaii corporation, and Lands of Kapua, a Hawaii
general partnership, “Grantors”, and Farms of Kapua, Ltd., a California limited
partnership, “Grantee”.


(e)           Right-of-Entry dated May 24, 1989,
recorded in said Bureau in Liber 23307, Page 108, in favor of Farms of Kapua,
Ltd., a California limited partnership, granting the right to explore for water
on its land, to construct, install and operate water delivery systems thereon,
and to use and remove such water in accordance with the terms contained
therein, for a period of 2 years from the date hereof.


(f)            Terms and provisions contained in
Declaration of Reciprocal Restrictive Covenants dated May 24, 1989, recorded in
said Bureau in Liber 23307, Page 410.


(g)           Claims arising out of customary and
traditional rights and practices, including without limitation those exercised
for subsistence, cultural, religious, access or gathering purposes, as provided
for in the Hawaii Constitution or the Hawaii Revised Statutes.


PARCEL TEN:


Tax Key:  8-9-011-019 (3):


All of that certain parcel of land (being portions of
the land described in and covered by Land Commission Award Number 10528 to
Nahulu, and Royal Patent Number 6853, Land Commission Award 9971, Apana 30 to
W. P. Leleiohoku) situate, lying and being on the southwest side of Hawaii Belt
Road at Kapua, District of South Kona, Island and County of Hawaii, State of
Hawaii, being LOT 1, and thus bounded and described:


3Beginning at the northeast corner of this parcel of
land on the southwest side of Hawaii Belt Road, the coordinates of which
referred to Government Survey Triangulation Station “KAPUKAWAA” being 8,220.68
feet south and 15,417.51 feet east, and running by azimuths measured clockwise
from true South:


Along the southwest side
of Hawaii Belt Road, on a curve to the left with a radius of 12,040.00 feet,
the chord azimuth and distance being:


1.   345°  
37’          33.4”       294.72     feet;


2.    74°  
55’           28.8”       15.00       feet
along a jog on the southwest side of Hawaii Belt Road;


Thence along the
southwest side of Hawaii Belt Road, on a curve to the left with a radius of
12,055.00 feet, the chord azimuth and distance being:


3.   343°  
43’          51.6”       502.26     feet;



 43
 









4.   252°  
32’          14.4”       15.00       feet
along a jog on the southwest side of Hawaii Belt Road;


Thence along the
southwest side of Hawaii Belt Road, on a curve to the left with a radius of
12,040.00 feet, the chord azimuth and distance being:


5.   339°  
53’          57.05”     1,108.36  feet;


6.    67°  
15’           40”          6.19         feet
along the northeast side of Mamalahoa Highway;


7.   139°  
30’                          385.11     feet along the northeast side of Mamalahoa
Highway;


8.   117°  
00’                          93.46       feet along the northeast side of
Mamalahoa Highway;


Thence along the
northeast side of Mamalahoa Highway on a curve to the right with a radius of
80.00 feet, the chord azimuth and distance being:


9.   147°  
30’                          81.21       feet;


10.  178°  
00’                         60.50       feet along the northeast side of
Mamalahoa Highway;


Thence along the
northeast side of Mamalahoa Highway, on a curve to the left with a radius of
195.00 feet, the chord azimuth and distance being:


11.  157°  
52’         30”          134.18     feet;


12.  137°  
45’                         286.26     feet along the northeast side of Mamalahoa
Highway;


13.  158°  
50’                         387.97     feet along the northeast side of Mamalahoa
Highway;


14.  168°  
40’                         560.70     feet along the northeast side of Mamalahoa
Highway;


15.  250°  
52’         40”          300.07     feet
along Government Land of Honomalino to the point of beginning and containing an
area of 10.250 acres, more or less.


Together with that certain Easement Agreement dated
May 28, 1982, recorded in said Bureau in Liber 16369, Page 175, by and between
Mac Farms of Hawaii, Inc., a Hawaii corporation, and Land of Kapua, a Hawaii
general partnership, “Grantors”, and Farms of Kapua, Ltd., a California limited
partnership, “Grantee”.


BEING a portion of the land conveyed to Kapua Orchard
Estates, LLC, a Delaware limited liability company, by Warranty Deed dated
June 27, 2003, recorded in said Bureau as Document No. 2003-131937, from
Mac Farms of Hawaii, Inc., a Hawaii corporation.


SUBJECT, HOWEVER, to the following:



 44















 


(a)           Reservation in favor of the State of
Hawaii of all mineral and metallic mines.


(b)           Right-of-Entry dated February 10,
1966 to Hawaii Electric Light Company, Inc. for the purpose of installing,
removing, maintaining and repairing pole and wire lines until such time as an
appropriate easement is granted to said Company.


(c)           Restricted abutter’s rights of
vehicle access into and from Hawaii Belt Road, Federal Aid Project No.
BF-011-1(3), as conveyed to the State of Hawaii, by Deed dated December 31,
1959, recorded in said Bureau in Liber 3827, Page 428.


(d)           Utility Easement Agreement dated May
28, 1982, but effective as provided therein, recorded in said Bureau in Liber
16368, Page 776, by and among Lands of Kapua, a Hawaii general partnership, Mac
Farms of Hawaii, Inc., a Hawaii corporation, and Farms of Kapua, Ltd., a
California limited partnership.


(e)           Easement Agreement dated May 28,
1982, recorded in said Bureau in Liber 16369, Page 175, by and between Mac
Farms of Hawaii, Inc., a Hawaii corporation, and Lands of Kapua, a Hawaii
general partnership, “Grantors”, and Farms of Kapua, Ltd., a California limited
partnership, “Grantee”.


(f)            Grant to Hawaii Electric Light
Company, Inc., a Hawaii corporation, and GTE Hawaiian Telephone Company
Incorporated, a Hawaii corporation, now known as Hawaiian Telcom, Inc., dated —
(acknowledged October 31, 1988), recorded in said Bureau in Liber 22557, Page
11, granting a perpetual right and easement for utility purposes.


(g)           Right-of-Entry dated May 24, 1989,
recorded in said Bureau in Liber 23307, Page 108, in favor of Farms of Kapua,
Ltd., a California limited partnership, granting the right to explore for water
on its land, to construct, install and operate water delivery systems thereon,
and to use and remove such water in accordance with the terms contained
therein, for a period of 2 years from the date hereof.


(h)           Terms and provisions contained in
Declaration of Reciprocal Restrictive Covenants dated May 24, 1989, recorded in
said Bureau in Liber 23307, Page 410.


(i)            Claims arising out of customary and
traditional rights and practices, including without limitation those exercised
for subsistence, cultural, religious, access or gathering purposes, as provided
for in the Hawaii Constitution or the Hawaii Revised Statutes.


PARCEL ELEVEN:


Tax Key:   8-9-011-021 (3):


All of that certain parcel of land being a portion of
Lot 6, (being also a portion of the land(s) described in and covered by Royal
Patent Number 6853, Land Commission Award Number 9971, Apana 30 to W. P. Leleiohoku)
situate, lying and being at Kapua, South Kona, 



 45
 









Island of Hawaii, State
of Hawaii, being LOT C and thus bounded and described as per survey dated April
17, 2002, to-wit:


Beginning at the south corner of this parcel of land,
being also the west corner of Lot D, the coordinates of said point of beginning
referred to Government Survey Triangulation Station “KAPUKAWAA” being 14,359.15
feet south and 13,000.52 feet east, thence running by azimuths measured
clockwise from true South:


1.   152°  
27’               961.75 feet along Lot 7 along
remainder of R. P. 6853, L. C. Aw. 9971, Apana 30 to W. P. Leleiohoku;


2.   239°  
06’               922.55 feet
along Lot B along remainder of (Lot 6) R. P. 6853, L. C. Aw. 9971, Apana 30 to
W. P. Leleiohoku;


3.   329°  
20’               246.46 feet
along Lot J along remainder of (Lot 6) R. P. 6853, L. C. Aw. 9971, Apana 30 to
W. P. Leleiohoku;


4.   240°  
45’               127.00 feet
along Lot J along remainder of (Lot 6) R. P. 6853, L. C. Aw. 9971, Apana 30 to
W. P. Leleiohoku;


5.   183°  
33’                 47.00 feet
along Lot J along remainder of (Lot 6) R. P. 6853, L. C. Aw. 9971, Apana 30 to
W. P. Leleiohoku;


6.   253°  
24’               357.50 feet
along Lot J along remainder of (Lot 6) R. P. 6853, L. C. Aw. 9971, Apana 30 to
W. P. Leleiohoku;


7.   329°  
09’               757.69 feet
along Lot J along remainder of (Lot 6) R. P. 6853, L. C. Aw. 9971, Apana 30 to
W. P. Leleiohoku;


8.    62°  
52’             1,480.24 feet
along Lot D along remainder of (Lot 6) R. P. 6853, L. C. Aw. 9971, Apana 30 to
W. P. Leleiohoku to the point of beginning and containing an area of 30.702
acres.


Together with that certain Easement Agreement dated
May 28, 1982, recorded in said Bureau in Liber 16369, Page 175, by and between Mac
Farms of Hawaii, Inc., a Hawaii corporation, and Land of Kapua, a Hawaii
general partnership, “Grantors”, and Farms of Kapua, Ltd., a California limited
partnership, “Grantee”.


Together with a nonexclusive, perpetual easement for
the purpose of constructing, maintaining and operating a water delivery system
over and across Easement “1” and Easement “2” for roadway, powerline, equipment
and waterline purposes, as set forth by instrument dated — (acknowledged
December 12, 2002), recorded in said Bureau as Document No. 2003-004964, more
particularly described therein, and subject to the terms and provisions,
including the failure to comply with any covenants, conditions and
reservations, contained therein.



 46
 









Together with a nonexclusive, perpetual easement for
the purpose of constructing, maintaining and operating a water delivery system,
over and across Easement “A” for access, utility, water pipeline and well site
purposes, as set forth in instrument dated — (acknowledged December 12, 2002),
recorded in said Bureau as Document No. 2003-004965, more particularly
described therein, and subject to the terms and provisions, including the
failure to comply with any covenants, conditions and reservations, contained
therein.


Assignment and Assumption of Easements, dated —
(acknowledged June 25, 2003), recorded in said Bureau as Document No.
2003-131938, by Mac Farms of Hawaii, Inc., a Hawaii corporation, “Assignor”, to
Kapua Orchard Estates, LLC, a Delaware limited liability company, “Assignee”.


BEING a portion of the land conveyed to Kapua Orchard
Estates, LLC, a Delaware limited liability company, by Warranty Deed dated
June 27, 2003, recorded in said Bureau as Document No. 2003-131937, from
Mac Farms of Hawaii, Inc., a Hawaii corporation.


SUBJECT, HOWEVER, to the following:


(a)           Reservation in favor of the State of
Hawaii of all mineral and metallic mines.


(b)           Right-of-Entry dated February 10,
1966 to Hawaii Electric Light Company, Inc. for the purpose of installing,
removing, maintaining and repairing pole and wire lines until such time as an
appropriate easement is granted to said Company.


(c)           Designation of Easement “R-2” for
roadway and utility purposes, as shown on Subdivision Map prepared by Gary S.
Takamoto, Registered Professional Land Surveyor with ControlPoint Surveying,
Inc., dated September 21, 2001, revised November 25, 2002.


(d)           Easement Agreement dated May 28,
1982, recorded in said Bureau in Liber 16369, Page 175, by and between Mac
Farms of Hawaii, Inc., a Hawaii corporation, and Lands of Kapua, a Hawaii
general partnership, “Grantors”, and Farms of Kapua, Ltd., a California limited
partnership, “Grantee”.


(e)           Right-of-Entry dated May 24, 1989,
recorded in said Bureau in Liber 23307, Page 108, in favor of Farms of Kapua,
Ltd., a California limited partnership, granting the right to explore for water
on its land, to construct, install and operate water delivery systems thereon,
and to use and remove such water in accordance with the terms contained
therein, for a period of 2 years from the date hereof.


(f)            Terms and provisions contained in
Declaration of Reciprocal Restrictive Covenants dated May 24, 1989, recorded in
said Bureau in Liber 23307, Page 410.


(g)           Grant of Easements (Roadway,
Right-of-Way Access, Landscaping, Etc.) to One Keahole Partners, a Hawaii
general partnership, dated — (acknowledged December 12, 



 47
 









2002), recorded in
said Bureau as Document No. 2003-004966, granting two (2) nonexclusive,
perpetual 80-foot-wide easements (Easements R-1-A and Easement R-3-A) and one
(1) non-exclusive, perpetual 50-foot wide easement (Easement R-4), for purposes
of roadway, right-of-way access, service, and utilities including electricity
and telephones and pipelines for sewer and water, over portions of the Mac
Farms Lands, more particularly described therein


(h)           Terms and provisions contained in
Declaration, Confirmation and Cancellation of Easement Rights and Grant of
Easements dated June 27, 2003, recorded in said Bureau as Document No.
2003-131936.


(i)            Claims arising out of customary and
traditional rights and practices, including without limitation those exercised
for subsistence, cultural, religious, access or gathering purposes, as provided
for in the Hawaii Constitution or the Hawaii Revised Statutes.


PARCEL TWELVE:


Tax Key:   8-9-011-022 (3):


All of that certain parcel of land being a portion of
Lot 6, (being also a portion of the land(s) described in and covered by Royal
Patent Number 6853, Land Commission Award Number 9971, Apana 30 to W. P.
Leleiohoku) situate, lying and being at Kapua, South Kona, Island of Hawaii,
State of Hawaii, being LOT D and thus bounded and described as per survey dated
April 17, 2002, to-wit:


Beginning at the west corner of this parcel of land,
being also the south corner of Lot C, the coordinates of said point of
beginning referred to Government Survey Triangulation Station “KAPUKAWAA” being
14,359.15 feet south and 13,000.52 feet east, thence running by azimuths
measured clockwise from true South:


1.   242°  
52’             1,567.00 feet
along Lots C and J along remainder of (Lot 6) R. P. 6853, L. C. Aw. 9971, Apana
30 to W. P. Leleiohoku;


2.   332°  
15’               718.52 feet
along Lot J along remainder of (Lot 6) R. P. 6853, L. C. Aw. 9971, Apana 30 to
W. P. Leleiohoku;


3.    62°  
52’             1,569.51 feet
along Lot E along remainder of (Lot 6) R. P. 6853, L. C. Aw. 9971, Apana 30 to
W. P. Leleiohoku;


4.   152°  
27’               718.50 feet
along Lot 7 along remainder of R. P. 6853, L. C. Aw. 9971, Apana 30 to W. P.
Leleiohoku to the point of beginning and containing an area of 25.867 acres.


Together with that certain Easement Agreement dated
May 28, 1982, recorded in said Bureau in Liber 16369, Page 175, by and between
Mac Farms of Hawaii, Inc., a Hawaii corporation, and Land of Kapua, a Hawaii
general partnership, “Grantors”, and Farms of Kapua, Ltd., a California limited
partnership, “Grantee”.



 48
 









Together with a nonexclusive, perpetual easement for
the purpose of constructing, maintaining and operating a water delivery system
over and across Easement “1” and Easement “2” for roadway, powerline, equipment
and waterline purposes, as set forth by instrument dated — (acknowledged
December 12, 2002), recorded in said Bureau as Document No. 2003-004964, more
particularly described therein, and subject to the terms and provisions,
including the failure to comply with any covenants, conditions and
reservations, contained therein.


Together with a nonexclusive, perpetual easement for
the purpose of constructing, maintaining and operating a water delivery system,
over and across Easement “A” for access, utility, water pipeline and well site
purposes, as set forth in instrument dated — (acknowledged December 12, 2002),
recorded in said Bureau as Document No. 2003-004965, more particularly
described therein, and subject to the terms and provisions, including the
failure to comply with any covenants, conditions and reservations, contained
therein.


Assignment and Assumption of Easements, dated —
(acknowledged June 25, 2003), recorded in said Bureau as Document No.
2003-131938, by Mac Farms of Hawaii, Inc., a Hawaii corporation, “Assignor”, to
Kapua Orchard Estates, LLC, a Delaware limited liability company, “Assignee”.


BEING a portion of the land conveyed to Kapua Orchard
Estates, LLC, a Delaware limited liability company, by Warranty Deed dated
June 27, 2003, recorded in said Bureau as Document No. 2003-131937, from
Mac Farms of Hawaii, Inc., a Hawaii corporation.


SUBJECT, HOWEVER, to the following:


(a)           Reservation in favor of the State of
Hawaii of all mineral and metallic mines.


(b)           Right-of-Entry dated February 10,
1966 to Hawaii Electric Light Company, Inc. for the purpose of installing,
removing, maintaining and repairing pole and wire lines until such time as an
appropriate easement is granted to said Company.


(c)           Designation of Easement “R-2” for
roadway and utility purposes, as shown on Subdivision Map prepared by Gary S.
Takamoto, Registered Professional Land Surveyor with ControlPoint Surveying,
Inc., dated September 21, 2001, revised November 25, 2002.


(d)           Easement Agreement dated May 28,
1982, recorded in said Bureau in Liber 16369, Page 175, by and between Mac
Farms of Hawaii, Inc., a Hawaii corporation, and Lands of Kapua, a Hawaii
general partnership, “Grantors”, and Farms of Kapua, Ltd., a California limited
partnership, “Grantee”.


(e)           Right-of-Entry dated May 24, 1989,
recorded in said Bureau in Liber 23307, Page 108, in favor of Farms of Kapua,
Ltd., a California limited partnership, granting the right to explore for water
on its land, to construct, install and operate water delivery systems 



 49
 









thereon, and to
use and remove such water in accordance with the terms contained therein, for a
period of 2 years from the date hereof.


(f)            Terms and provisions contained in
Declaration of Reciprocal Restrictive Covenants dated May 24, 1989, recorded in
said Bureau in Liber 23307, Page 410.


(g)           Grant of Easements (Roadway,
Right-of-Way Access, Landscaping, Etc.) to One Keahole Partners, a Hawaii
general partnership, dated — (acknowledged December 12, 2002), recorded in said
Bureau as Document No. 2003-004966, granting two (2) nonexclusive, perpetual
80-foot-wide easements (Easements R-1-A and Easement R-3-A) and one (1)
non-exclusive, perpetual 50-foot wide easement (Easement R-4), for purposes of
roadway, right-of-way access, service, and utilities including electricity and
telephones and pipelines for sewer and water, over portions of the Mac Farms
Lands, more particularly described therein.


(h)           Terms and provisions contained in
Declaration, Confirmation and Cancellation of Easement Rights and Grant of
Easements dated June 27, 2003, recorded in said Bureau as Document No.
2003-131936.


(i)            Claims arising out of customary and
traditional rights and practices, including without limitation those exercised
for subsistence, cultural, religious, access or gathering purposes, as provided
for in the Hawaii Constitution or the Hawaii Revised Statutes.


PARCEL THIRTEEN:


Tax Key:   8-9-011-023 (3):


All of that certain parcel of land being a portion of
Lot 6, (being also a portion of the land(s) described in and covered by Royal
Patent Number 6853, Land Commission Award Number 9971, Apana 30 to W. P.
Leleiohoku) situate, lying and being at Kapua, South Kona, Island of Hawaii,
State of Hawaii, being LOT E and thus bounded and described as per survey dated
April 17, 2002, to-wit:


Beginning at the south corner of this parcel of land,
being also the west corner of Lot F, the coordinates of said point of beginning
referred to Government Survey Triangulation Station “KAPUKAWAA” being 15,629.65
feet south and 13,663.31 feet east, thence running by azimuths measured
clockwise from true South:


1.   152°  
27’               714.50 feet
along Lot 7 along remainder of R. P. 6853, L. C. Aw. 9971, Apana 30 to W. P.
Leleiohoku;


2.   242°  
52’             1,569.51 feet
along Lot D along remainder of (Lot 6) R. P. 6853, L. C. Aw. 9971, Apana 30 to
W. P. Leleiohoku;


3.   331°  
20’               734.10 feet
along Lot J along remainder of (Lot 6) R. P. 6853, L. C. Aw. 9971, Apana 30 to
W. P. Leleiohoku;



 50
 









4.    63°  
34’             1,584.07 feet
along Lots J and F along remainder of (Lot 6) R. P. 6853, L. C. Aw. 9971, Apana
30 to W. P. Leleiohoku to the point of beginning and containing an area of
26.209 acres.


Together with that certain Easement Agreement dated
May 28, 1982, recorded in said Bureau in Liber 16369, Page 175, by and between
Mac Farms of Hawaii, Inc., a Hawaii corporation, and Land of Kapua, a Hawaii
general partnership, “Grantors”, and Farms of Kapua, Ltd., a California limited
partnership, “Grantee”.


Together with a nonexclusive, perpetual easement for
the purpose of constructing, maintaining and operating a water delivery system
over and across Easement “1” and Easement “2” for roadway, powerline, equipment
and waterline purposes, as set forth by instrument dated — (acknowledged
December 12, 2002), recorded in said Bureau as Document No. 2003-004964, more
particularly described therein, and subject to the terms and provisions,
including the failure to comply with any covenants, conditions and reservations,
contained therein.


Together with a nonexclusive, perpetual easement for
the purpose of constructing, maintaining and operating a water delivery system,
over and across Easement “A” for access, utility, water pipeline and well site
purposes, as set forth in instrument dated -- (acknowledged
December 12, 2002), recorded in said Bureau as Document No. 2003-004965, more
particularly described therein, and subject to the terms and provisions,
including the failure to comply with any covenants, conditions and
reservations, contained therein.


Assignment and Assumption of Easements, dated —
(acknowledged June 25, 2003), recorded in said Bureau as Document No.
2003-131938, by Mac Farms of Hawaii, Inc., a Hawaii corporation, “Assignor”, to
Kapua Orchard Estates, LLC, a Delaware limited liability company, “Assignee”.


BEING a portion of the land conveyed to Kapua Orchard
Estates, LLC, a Delaware limited liability company, by Warranty Deed dated
June 27, 2003, recorded in said Bureau as Document No. 2003-131937, from Mac
Farms of Hawaii, Inc., a Hawaii corporation.


SUBJECT, HOWEVER, to the following:


(a)           Reservation in favor of the State of
Hawaii of all mineral and metallic mines.


(b)           Right-of-Entry dated February 10,
1966 to Hawaii Electric Light Company, Inc. for the purpose of installing,
removing, maintaining and repairing pole and wire lines until such time as an
appropriate easement is granted to said Company.


(c)           Designation of Easement “R-2” for
roadway and utility purposes, as shown on Subdivision Map prepared by Gary S.
Takamoto, Registered Professional Land 



 51
 









Surveyor with
ControlPoint Surveying, Inc., dated September 21, 2001, revised November 25,
2002.


(d)           Easement Agreement dated May 28,
1982, recorded in said Bureau in Liber 16369, Page 175, by and between Mac
Farms of Hawaii, Inc., a Hawaii corporation, and Lands of Kapua, a Hawaii
general partnership, “Grantors”, and Farms of Kapua, Ltd., a California limited
partnership, “Grantee”.


(e)           Right-of-Entry dated May 24, 1989,
recorded in said Bureau in Liber 23307, Page 108, in favor of Farms of Kapua,
Ltd., a California limited partnership, granting the right to explore for water
on its land, to construct, install and operate water delivery systems thereon,
and to use and remove such water in accordance with the terms contained
therein, for a period of 2 years from the date hereof.


(f)            Terms and provisions contained in
Declaration of Reciprocal Restrictive Covenants dated May 24, 1989, recorded in
said Bureau in Liber 23307, Page 410.


(g)           Grant of Easements (Roadway,
Right-of-Way Access, Landscaping, Etc.) to One Keahole Partners, a Hawaii
general partnership, dated — 
(acknowledged December 12, 2002), recorded in said Bureau as Document
No. 2003-004966, granting two (2) nonexclusive, perpetual 80-foot-wide easements
(Easements R-1-A and Easement R-3-A) and one (1) non-exclusive, perpetual
50-foot wide easement (Easement R-4), for purposes of roadway, right-of-way
access, service, and utilities including electricity and telephones and
pipelines for sewer and water, over portions of the Mac Farms Lands, more
particularly described therein.


(h)           Terms and provisions contained in
Declaration, Confirmation and Cancellation of Easement Rights and Grant of
Easements dated June 27, 2003, recorded in said Bureau as Document No.
2003-131936.


(i)            Claims arising out of customary and
traditional rights and practices, including without limitation those exercised
for subsistence, cultural, religious, access or gathering purposes, as provided
for in the Hawaii Constitution or the Hawaii Revised Statutes.


PARCEL FOURTEEN:


Tax Key:   8-9-011-024 (3):


All of that certain parcel of land being a portion of
Lot 6, (being also a portion of the land(s) described in and covered by Royal
Patent Number 6853, Land Commission Award Number 9971, Apana 30 to W. P.
Leleiohoku) situate, lying and being at Kapua, South Kona, Island of Hawaii,
State of Hawaii, being LOT F and thus bounded and described as per survey dated
April 17, 2002, to-wit:


Beginning at the west corner of this parcel of land,
being also the south corner of Lot E, the coordinates of said point of
beginning referred to Government Survey Triangulation 



 52
 









Station “KAPUKAWAA” being
15,629.65 feet south and 13,663.31 feet east, thence running by azimuths
measured clockwise from true South:


1.   243°  
34’             1,523.32 feet
along Lot E along remainder of (Lot 6) R. P. 6853, L. C. Aw. 9971, Apana 30 to
W. P. Leleiohoku;


2.   331°  
13’     30”       747.06 feet along Lot J along remainder
of (Lot 6) R. P. 6853, L. C. Aw. 9971, Apana 30 to W. P. Leleiohoku;


3.    63°  
45’             1,539.40 feet
along Lot G along remainder of (Lot 6) R. P. 6853, L. C. Aw. 9971, Apana 30 to
W. P. Leleiohoku;


4.   152°  
27’               741.65 feet
along Lot 7 along remainder of R. P. 6853, L. C. Aw. 9971, Apana 30 to W. P.
Leleiohoku to the point of beginning and containing an area of 26.153 acres.


Together with that certain Easement Agreement dated
May 28, 1982, recorded in said Bureau in Liber 16369, Page 175, by and between
Mac Farms of Hawaii, Inc., a Hawaii corporation, and Land of Kapua, a Hawaii
general partnership, “Grantors”, and Farms of Kapua, Ltd., a California limited
partnership, “Grantee”.


Together with a nonexclusive, perpetual easement for
the purpose of constructing, maintaining and operating a water delivery system
over and across Easement “1” and Easement “2” for roadway, powerline, equipment
and waterline purposes, as set forth by instrument dated — (acknowledged
December 12, 2002), recorded in said Bureau as Document No. 2003-004964, more
particularly described therein, and subject to the terms and provisions,
including the failure to comply with any covenants, conditions and
reservations, contained therein.


Together with a nonexclusive, perpetual easement for
the purpose of constructing, maintaining and operating a water delivery system,
over and across Easement “A” for access, utility, water pipeline and well site
purposes, as set forth in instrument dated — (acknowledged December 12, 2002),
recorded in said Bureau as Document No. 2003-004965, more particularly
described therein, and subject to the terms and provisions, including the
failure to comply with any covenants, conditions and reservations, contained
therein.


Assignment and Assumption of Easements, dated —
(acknowledged June 25, 2003), recorded in said Bureau as Document No.
2003-131938, by Mac Farms of Hawaii, Inc., a Hawaii corporation, “Assignor”, to
Kapua Orchard Estates, LLC, a Delaware limited liability company, “Assignee”.


BEING a portion of the land conveyed to Kapua Orchard
Estates, LLC, a Delaware limited liability company, by Warranty Deed dated
June 27, 2003, recorded in said Bureau as Document No. 2003-131937, from
Mac Farms of Hawaii, Inc., a Hawaii corporation.


SUBJECT, HOWEVER, to the following:



 53
 









(a)           Reservation in favor of the State of
Hawaii of all mineral and metallic mines.


(b)           Right-of-Entry dated February 10,
1966 to Hawaii Electric Light Company, Inc. for the purpose of installing,
removing, maintaining and repairing pole and wire lines until such time as an
appropriate easement is granted to said Company.


(c)           Designation of Easement “R-2” for
roadway and utility purposes, as shown on Subdivision Map prepared by Gary S.
Takamoto, Registered Professional Land Surveyor with ControlPoint Surveying,
Inc., dated September 21, 2001, revised November 25, 2002.


(d)           Easement Agreement dated May 28,
1982, recorded in said Bureau in Liber 16369, Page 175, by and between Mac
Farms of Hawaii, Inc., a Hawaii corporation, and Lands of Kapua, a Hawaii
general partnership, “Grantors”, and Farms of Kapua, Ltd., a California limited
partnership, “Grantee”.


(e)           Right-of-Entry dated May 24, 1989,
recorded in said Bureau in Liber 23307, Page 108, in favor of Farms of Kapua,
Ltd., a California limited partnership, granting the right to explore for water
on its land, to construct, install and operate water delivery systems thereon,
and to use and remove such water in accordance with the terms contained
therein, for a period of 2 years from the date hereof.


(f)            Terms and provisions contained in
Declaration of Reciprocal Restrictive Covenants dated May 24, 1989, recorded in
said Bureau in Liber 23307, Page 410.


(g)           Grant of Easements (Roadway,
Right-of-Way Access, Landscaping, Etc.) to One Keahole Partners, a Hawaii
general partnership, dated — (acknowledged December 12, 2002), recorded in said
Bureau as Document No. 2003-004966, granting two (2) nonexclusive, perpetual
80-foot-wide easements (Easements R-1-A and Easement R-3-A) and one (1)
non-exclusive, perpetual 50-foot wide easement (Easement R-4), for purposes of
roadway, right-of-way access, service, and utilities including electricity and
telephones and pipelines for sewer and water, over portions of the Mac Farms
Lands, more particularly described therein.


(h)           Terms and provisions contained in
Declaration, Confirmation and Cancellation of Easement Rights and Grant of
Easements dated June 27, 2003, recorded in said Bureau as Document No.
2003-131936.


(i)            Claims arising out of customary and
traditional rights and practices, including without limitation those exercised
for subsistence, cultural, religious, access or gathering purposes, as provided
for in the Hawaii Constitution or the Hawaii Revised Statutes.


PARCEL FIFTEEN:


Tax Key:   8-9-011-025 (3):



 54
 









All of that certain parcel of land being a portion of
Lot 6, (being also a portion of the land(s) described in and covered by Royal
Patent Number 6853, Land Commission Award Number 9971, Apana 30 to W. P.
Leleiohoku) situate, lying and being at Kapua, South Kona, Island of Hawaii, State
of Hawaii, being LOT G and thus bounded and described as per survey dated April
17, 2002, to-wit:


Beginning at the south corner of this parcel of land,
being also the west corner of Lot H, the coordinates of said point of beginning
referred to Government Survey Triangulation Station “KAPUKAWAA” being 16,963.82
feet south and 14,359.32 feet east, thence running by azimuths measured
clockwise from true South:


1.   152°  
27’               763.15 feet
along Lot 7 along remainder of R. P. 6853, L. C. Aw. 9971, Apana 30 to W. P.
Leleiohoku;


2.   243°  
45’             1,539.40 feet
along Lot F along remainder of (Lot 6) R. P. 6853, L. C. Aw. 9971, Apana 30 to
W. P. Leleiohoku;


3.   331°  
13’     30”       756.91 feet along Lot J along remainder
of (Lot 6) R. P. 6853, L. C. Aw. 9971, Apana 30 to W. P. Leleiohoku;


4.    63°  
30’             1,555.45 feet
along Lots J and H along remainder of (Lot 6) R. P. 6853, L. C. Aw. 9971, Apana
30 to W. P. Leleiohoku to the point of beginning and containing an area of 26.984
acres.


Together with that certain Easement Agreement dated
May 28, 1982, recorded in said Bureau in Liber 16369, Page 175, by and between
Mac Farms of Hawaii, Inc., a Hawaii corporation, and Land of Kapua, a Hawaii
general partnership, “Grantors”, and Farms of Kapua, Ltd., a California limited
partnership, “Grantee”.


Together with a nonexclusive, perpetual easement for
the purpose of constructing, maintaining and operating a water delivery system
over and across Easement “1” and Easement “2” for roadway, powerline, equipment
and waterline purposes, as set forth by instrument dated —  (acknowledged December 12, 2002), recorded in
said Bureau as Document No. 2003-004964, more particularly described therein,
and subject to the terms and provisions, including the failure to comply with
any covenants, conditions and reservations, contained therein.


Together with a nonexclusive, perpetual easement for
the purpose of constructing, maintaining and operating a water delivery system,
over and across Easement “A” for access, utility, water pipeline and well site
purposes, as set forth in instrument dated — (acknowledged December 12, 2002),
recorded in said Bureau as Document No. 2003-004965, more particularly
described therein, and subject to the terms and provisions, including the
failure to comply with any covenants, conditions and reservations, contained
therein.


Assignment and Assumption of Easements, dated —
(acknowledged June 25, 2003), recorded in said Bureau as Document No.
2003-131938, by Mac Farms of Hawaii, Inc., a 



 55
 









Hawaii corporation, “Assignor”,
to Kapua Orchard Estates, LLC, a Delaware limited liability company, “Assignee”.


BEING a portion of the land conveyed to Kapua Orchard
Estates, LLC, a Delaware limited liability company, by Warranty Deed dated June 27,
2003, recorded in said Bureau as Document No. 2003-131937, from Mac Farms of
Hawaii, Inc., a Hawaii corporation.


SUBJECT, HOWEVER, to the following:


(a)           Reservation in favor of the State of
Hawaii of all mineral and metallic mines.


(b)           Right-of-Entry dated February 10,
1966 to Hawaii Electric Light Company, Inc. for the purpose of installing,
removing, maintaining and repairing pole and wire lines until such time as an
appropriate easement is granted to said Company.


(c)           Designation of Easement “R-2” for
roadway and utility purposes, as shown on Subdivision Map prepared by Gary S.
Takamoto, Registered Professional Land Surveyor with ControlPoint Surveying,
Inc., dated September 21, 2001, revised November 25, 2002.


(d)           Easement Agreement dated May 28,
1982, recorded in said Bureau in Liber 16369, Page 175, by and between Mac
Farms of Hawaii, Inc., a Hawaii corporation, and Lands of Kapua, a Hawaii
general partnership, “Grantors”, and Farms of Kapua, Ltd., a California limited
partnership, “Grantee”.


(e)           Right-of-Entry dated May 24, 1989,
recorded in said Bureau in Liber 23307, Page 108, in favor of Farms of Kapua,
Ltd., a California limited partnership, granting the right to explore for water
on its land, to construct, install and operate water delivery systems thereon,
and to use and remove such water in accordance with the terms contained
therein, for a period of 2 years from the date hereof.


(f)            Terms and provisions contained in
Declaration of Reciprocal Restrictive Covenants dated May 24, 1989, recorded in
said Bureau in Liber 23307, Page 410.


(g)           Grant of Easements (Roadway,
Right-of-Way Access, Landscaping, Etc.) to One Keahole Partners, a Hawaii
general partnership, dated — (acknowledged December 12, 2002), recorded in said
Bureau as Document No. 2003-004966, granting two (2) nonexclusive, perpetual
80-foot-wide easements (Easements R-1-A and Easement R-3-A) and one (1)
non-exclusive, perpetual 50-foot wide easement (Easement R-4), for purposes of
roadway, right-of-way access, service, and utilities including electricity and
telephones and pipelines for sewer and water, over portions of the Mac Farms
Lands, more particularly described therein.


(h)           Terms and provisions contained in
Declaration, Confirmation and Cancellation of Easement Rights and Grant of
Easements dated June 27, 2003, recorded in said Bureau as Document No.
2003-131936.



 56
 









(i)            Claims arising out of customary and
traditional rights and practices, including without limitation those exercised
for subsistence, cultural, religious, access or gathering purposes, as provided
for in the Hawaii Constitution or the Hawaii Revised Statutes.


PARCEL SIXTEEN:


Tax Key:   8-9-011-026 (3):


All of that certain parcel of land being a portion of
Lot 6, (being also a portion of the land(s) described in and covered by Royal
Patent Number 6853, Land Commission Award Number 9971, Apana 30 to W. P.
Leleiohoku) situate, lying and being at Kapua, South Kona, Island of Hawaii,
State of Hawaii, being LOT H and thus bounded and described as per survey dated
April 17, 2002, to-wit:


Beginning at the west corner of this parcel of land,
being also the south corner of Lot G, the coordinates of said point of
beginning referred to Government Survey Triangulation Station “KAPUKAWAA” being
16,963.82 feet south and 14,359.32 feet east, thence running by azimuths
measured clockwise from true South:


1.   243°  
30’             1,524.45 feet
along Lot G along remainder of (Lot 6) R. P. 6853, L. C. Aw. 9971, Apana 30 to
W. P. Leleiohoku;


2.   328°  
37’               464.20 feet along
Lot J along remainder of (Lot 6) R. P. 6853, L. C. Aw. 9971, Apana 30 to W. P.
Leleiohoku;


3.    62°  
46’             1,555.25 feet
along Lot J along remainder of (Lot 6) R. P. 6853, L. C. Aw. 9971, Apana 30 to
W. P. Leleiohoku;


4.   152°  
27’               482.50 feet along Lot 7 along remainder
of R. P. 6853, L. C. Aw. 9971, Apana 30 to W. P. Leleiohoku to the point of
beginning and containing an area of 16.707 acres.


Together with that certain Easement Agreement dated
May 28, 1982, recorded in said Bureau in Liber 16369, Page 175, by and between
Mac Farms of Hawaii, Inc., a Hawaii corporation, and Land of Kapua, a Hawaii
general partnership, “Grantors”, and Farms of Kapua, Ltd., a California limited
partnership, “Grantee”.


Together with a nonexclusive, perpetual easement for
the purpose of constructing, maintaining and operating a water delivery system
over and across Easement “1” and Easement “2” for roadway, powerline, equipment
and waterline purposes, as set forth by instrument dated — (acknowledged
December 12, 2002), recorded in said Bureau as Document No. 2003-004964, more
particularly described therein, and subject to the terms and provisions,
including the failure to comply with any covenants, conditions and
reservations, contained therein.


Together with a nonexclusive, perpetual easement for
the purpose of constructing, maintaining and operating a water delivery system,
over and across Easement “A” for access, 



 57
 









utility, water pipeline
and well site purposes, as set forth in instrument dated — (acknowledged
December 12, 2002), recorded in said Bureau as Document No. 2003-004965, more
particularly described therein, and subject to the terms and provisions,
including the failure to comply with any covenants, conditions and
reservations, contained therein.


Assignment and Assumption of Easements, dated —
(acknowledged June 25, 2003), recorded in said Bureau as Document No.
2003-131938, by Mac Farms of Hawaii, Inc., a Hawaii corporation, “Assignor”, to
Kapua Orchard Estates, LLC, a Delaware limited liability company, “Assignee”.


BEING a portion of the land conveyed to Kapua Orchard
Estates, LLC, a Delaware limited liability company, by Warranty Deed dated
June 27, 2003, recorded in said Bureau as Document No. 2003-131937, from
Mac Farms of Hawaii, Inc., a Hawaii corporation.


SUBJECT, HOWEVER, to the following:


(a)           Reservation in favor of the State of
Hawaii of all mineral and metallic mines.


(b)           Right-of-Entry dated February 10,
1966 to Hawaii Electric Light Company, Inc. for the purpose of installing, removing,
maintaining and repairing pole and wire lines until such time as an appropriate
easement is granted to said Company.


(c)           Designation of Easement “R-2” for
roadway and utility purposes, as shown on Subdivision Map prepared by Gary S.
Takamoto, Registered Professional Land Surveyor with ControlPoint Surveying,
Inc., dated September 21, 2001, revised November 25, 2002.


(d)           Designation of Easement “R-3-A” for
roadway and utility purposes, as shown on Subdivision Map prepared by Gary S.
Takamoto, Registered Professional Land Surveyor with ControlPoint Surveying,
Inc., dated September 21, 2001, revised November 25, 2002.


(e)           Easement Agreement dated May 28,
1982, recorded in said Bureau in Liber 16369, Page 175, by and between Mac
Farms of Hawaii, Inc., a Hawaii corporation, and Lands of Kapua, a Hawaii
general partnership, “Grantors”, and Farms of Kapua, Ltd., a California limited
partnership, “Grantee”.


(f)            Right-of-Entry dated May 24, 1989,
recorded in said Bureau in Liber 23307, Page 108, in favor of Farms of Kapua,
Ltd., a California limited partnership, granting the right to explore for water
on its land, to construct, install and operate water delivery systems thereon,
and to use and remove such water in accordance with the terms contained
therein, for a period of 2 years from the date hereof.


(g)           Terms and provisions contained in
Declaration of Reciprocal Restrictive Covenants dated May 24, 1989, recorded in
said Bureau in Liber 23307, Page 410.



 58















 


(h)           Grant of Easements (Roadway,
Right-of-Way Access, Landscaping, Etc.), to One Keahole Partners, a Hawaii
general partnership, dated — (acknowledged December 12, 2002), recorded in said
Bureau as Document No. 2003-004966, granting two (2) nonexclusive, perpetual
80-foot-wide easements (Easements R-1-A and Easement R-3-A) and one (1)
non-exclusive, perpetual 50-foot wide easement (Easement R-4), for purposes of
roadway, right-of-way access, service, and utilities including electricity and
telephones and pipelines for sewer and water, over portions of the Mac Farms
Lands, more particularly described therein.


(i)            Terms and provisions contained in
Declaration, Confirmation and Cancellation of Easement Rights and Grant of
Easements dated June 27, 2003, recorded in said Bureau as Document No.
2003-131936.


(j)            Claims arising out of customary and
traditional rights and practices, including without limitation those exercised
for subsistence, cultural, religious, access or gathering purposes, as provided
for in the Hawaii Constitution or the Hawaii Revised Statutes.


PARCEL SEVENTEEN:


Tax Key:    8-9-012-001 (3):


All of that certain parcel of land (portion of the
land described in and covered by Royal Patent Number 6853, Land Commission
Award Number 9971, Apana 30 to W. P. Leleiohoku) situate, lying and being on
the easterly side of Hawaii Belt Road at Kapua, District of South Kona, Island
and County of Hawaii, State of Hawaii, and thus bounded and described as per
metes and bounds description dated June 25, 1981, from a map dated October 10,
1979, to-wit:


Beginning at “OONO MONUMENT” situated on the south
boundary of this parcel of land, being also the north boundary of the
Government land of Kaulanamauna, the coordinates of which point referred to
Government Survey Triangulation Station “KAPUKAWAA” being 19,956.85 feet south
and 22,697.26 feet east, and running by azimuths measured clockwise from true
South:


1.    53°  
19’                  89.33                feet
along the north boundary of the Government land of Kaulanamauna, to the
easterly side of Hawaii Belt Road;


2.   150°  
55’               703.07                feet along the easterly side of
Hawaii Belt Road;


3.   320°  
00’               378.69                feet along the west side of the
old Mamalahoa Highway;


4.   327°  
22’               319.60                feet along the west side of the
old Mamalahoa Highway;


5.    52°  
53’     40”         2.99                feet
along the north boundary of the Government land of Kaulanamauna, to the point
of beginning and containing an area of 0.916 acre.



 59
 









 


Together with that certain Easement Agreement dated
May 28, 1982, recorded in said Bureau in Liber 16369, Page 175, by and between
Mac Farms of Hawaii, Inc., a Hawaii corporation, and Land of Kapua, a Hawaii
general partnership, “Grantors”, and Farms of Kapua, Ltd., a California limited
partnership, “Grantee”.


BEING a portion of the land conveyed to Kapua Orchard
Estates, LLC, a Delaware limited liability company, by Warranty Deed dated
June 27, 2003, recorded in said Bureau as Document No. 2003-131937,
from Mac Farms of Hawaii, Inc., a Hawaii corporation.


SUBJECT, HOWEVER, to the following:


(a)           Reservation in favor of the State of
Hawaii of all mineral and metallic mines.


(b)           Right-of-entry dated February 10,
1966 to Hawaii Electric Light Company, Inc. for the purpose of installing, removing,
maintaining and repairing pole and wire lines until such time as an appropriate
easement is granted to said Company.


(c)           Restricted abutter’s rights of
vehicle access into and from Hawaii Belt Road, Federal Aid Project No.
BF-011-1(3), as conveyed to the State of Hawaii, by Deed dated December 31,
1959, recorded in said Bureau in Liber 3827, Page 428.


(d)           Utility Easement Agreement dated May
28, 1982, but effective as provided therein, recorded in said Bureau in Liber
16368, Page 776, by and among Lands of Kapua, a Hawaii general partnership, Mac
Farms of Hawaii, Inc., a Hawaii corporation, and Farms of Kapua, Ltd., a
California limited partnership.


(e)           Easement Agreement dated May 28,
1982, recorded in said Bureau in Liber 16369, Page 175, by and between Mac
Farms of Hawaii, Inc., a Hawaii corporation, and Lands of Kapua, a Hawaii
general partnership, “Grantors”, and Farms of Kapua, Ltd., a California limited
partnership, “Grantee”.


(f)            Grant to Hawaii Electric Light
Company, Inc., a Hawaii corporation, dated September 16, 1993, recorded in said
Bureau as Document No. 93-167247, granting a perpetual right and easement to
construct, reconstruct, repair, maintain and operate pole and wire lines and/or
underground lines and to use such appliances and equipment as may by necessary
for the transmission and distribution of electricity.


(g)           Terms and provisions contained in
Declaration, Confirmation and Cancellation of Easement Rights and Grant of
Easements dated June 27, 2003 recorded in said Bureau as Document
No. 2003-131936.


(h)           Terms and provisions, contained in
Declaration of Reciprocal Restrictive Covenants dated May 24, 1989,
recorded in said Bureau in Liber 23307, Page 410.



 60
 









 


(i)            Claims arising out of customary and
traditional rights and practices, including without limitation those exercised
for subsistence, cultural, religious, access or gathering purposes, as provided
for in the Hawaii Constitution or the Hawaii Revised Statutes.


PARCEL EIGHTEEN:


Tax Key:    8-9-012-002 (3)


All of that certain parcel of land (portion of the
land described in and covered by Royal Patent Number 6853, Land Commission
Award Number 9971, Apana 30 to W. P. Leleiohoku) situate, lying and being at
Kapua, District of South Kona, Island and County of Hawaii, State of Hawaii, being
ROAD PARCEL “A”, and thus bounded and described:


Beginning at the most southerly corner of this parcel
of land and on the Kapua-Kaulanamauna boundary, the coordinates of said point
of beginning referred to Government Survey Triangulation Station “KAPUKAWAA”
being 19,955.05 feet south and 22,699.64 feet east, and running thence by
azimuths measured clockwise from true South:


1.   147°  
22’     00”       319.60             feet
along the remainder of R. P. 6853, L. C. Aw. 9971, Apana 30 to W. P.
Leleiohoku;


2.   140°  
00’     00”       378.69             feet
along same;


3.   150°  
55’     00”       211.22             feet
along the northeast side of Hawaii Belt Road;


4.   320°  
00’     00”       588.67             feet
along Lot 27-D;


5.   327°  
22’     00”       319.06             feet
along same;


6.    52°  
53’     40”        40.12               feet
along the land of Kaulanamauna to the point of beginning and containing an area
of 0.737 acre.


Together with that certain Easement Agreement dated
May 28, 1982, recorded in said Bureau in Liber 16369, Page 175, by and between
Mac Farms of Hawaii, Inc., a Hawaii corporation, and Land of Kapua, a Hawaii
general partnership, “Grantors”, and Farms of Kapua, Ltd., a California limited
partnership, “Grantee”.


BEING a portion of the land conveyed to Kapua Orchard
Estates, LLC, a Delaware limited liability company, by Warranty Deed dated
June 27, 2003, recorded in said Bureau as Document No. 2003-131937,
from Mac Farms of Hawaii, Inc., a Hawaii corporation.


SUBJECT, HOWEVER, to the following:


(a)           Reservation in favor of the State of Hawaii
of all mineral and metallic mines.



 61
 









 


(b)           Right-of-entry dated February 10,
1966 to Hawaii Electric Light Company, Inc. for the purpose of installing,
removing, maintaining and repairing pole and wire lines until such time as an
appropriate easement is granted to said Company.


(c)           Easement in favor of the public over
and across those portions of the old Mamalahoa Highway covered hereinabove,
more specifically referred to as Road Parcels “A”, area 0.737 acre, “B”, area
3.510 acres, “C”, area 0.670 acre, “D”, area 1.047 acres, “E”, area 3.227
acres, and “F”, area 1.864 acres.


(d)           Utility Easement Agreement dated May
28, 1982, but effective as provided therein, recorded in said Bureau in Liber
16368, Page 776, by and among Lands of Kapua, a Hawaii general partnership, Mac
Farms of Hawaii, Inc., a Hawaii corporation, and Farms of Kapua, Ltd., a
California limited partnership.


(e)           Easement Agreement dated May 28,
1982, recorded in said Bureau in Liber 16369, Page 175, by and between Mac
Farms of Hawaii, Inc., a Hawaii corporation, and Lands of Kapua, a Hawaii
general partnership, “Grantors”, and Farms of Kapua, Ltd., a California limited
partnership, “Grantee”.


(f)            Rights of others who may have
easement or access rights in the land described hereinabove.


(g)           Terms and provisions contained in
Declaration, Confirmation and Cancellation of Easement Rights and Grant of
Easements dated June 27, 2003 recorded in said Bureau as Document
No. 2003-131936.


(h)           Terms and provisions, contained in
Declaration of Reciprocal Restrictive Covenants dated May 24, 1989,
recorded in said Bureau in Liber 23307, Page 410.


(i)            Claims arising out of customary and
traditional rights and practices, including without limitation those exercised
for subsistence, cultural, religious, access or gathering purposes, as provided
for in the Hawaii Constitution or the Hawaii Revised Statutes.


PARCEL NINETEEN:


Tax Key:    8-9-012-003 (3):


All of that certain parcel of land (being a portion of
the land described in and covered by Royal Patent Number 6853, Land Commission
Award 9971, Apana 30 to W. P. Leleiohoku) situate, lying and being on the
northeast side of Hawaii Belt Road at Kapua, District of South Kona, Island and
County of Hawaii, State of Hawaii, being LOT 27-D, and thus bounded and described:


Beginning at the northwest corner of this parcel of
land on the northeast side of Hawaii Belt Road, the coordinates of which
referred to Government Survey Triangulation



 62
 









 


Station “KAPUKAWAA” being
18,851.61 feet south and 21,981.20 feet east, and running by azimuths measured
clockwise from true South:


1.   232°  
50’              6,692.98              feet
along 40-foot road reserve;


2.   330°  
55’              1,333.62              feet
along remainder of L. C. Aw. 9971, Apana 30 to W. P. Leleiohoku to the
Government Land of Kaulanamauna (Lot 27-C);


3.    52°  
53’     40”    6,559.43              feet
along the Government Land of Kaulanamauna;


4.   147°  
22’                319.06               feet
along the easterly side of old Mamalahoa Highway;


5.   140°  
00’                588.67               feet
along the easterly side of old Mamalahoa Highway;


6.   150°  
55’                  33.12               feet along the easterly side of
Hawaii Belt Road;


7.   240°  
55’                    5.00               feet
along the easterly side of Hawaii Belt Road;


8.   150°  
55’                100.00               feet
along the easterly side of Hawaii Belt Road;


9.    60°  
55’                     5.00               feet
along the easterly side of Hawaii Belt Road;


10.  150°  
55’               278.33               feet along the easterly side of
Hawaii Belt Road to the point of beginning and containing an area of 200.661
acres, more or less.


Together with that certain Easement Agreement dated
May 28, 1982, recorded in said Bureau in Liber 16369, Page 175, by and between
Mac Farms of Hawaii, Inc., a Hawaii corporation, and Land of Kapua, a Hawaii
general partnership, “Grantors”, and Farms of Kapua, Ltd., a California limited
partnership, “Grantee”.


BEING a portion of the land conveyed to Kapua Orchard
Estates, LLC, a Delaware limited liability company, by Warranty Deed dated
June 27, 2003, recorded in said Bureau as Document No. 2003-131937,
from Mac Farms of Hawaii, Inc., a Hawaii corporation.


SUBJECT, HOWEVER, to the following:


(a)           Reservation in favor of the State of
Hawaii of all mineral and metallic mines.


(b)           Right-of-entry dated February 10,
1966 to Hawaii Electric Light Company, Inc. for the purpose of installing,
removing, maintaining and repairing pole and wire lines until such time as an
appropriate easement is granted to said Company.



 63
 









 


(c)           Restricted abutter’s rights of
vehicle access into and from Hawaii Belt Road, Federal Aid Project No.
BF-011-1(3), as conveyed to the State of Hawaii, by Deed dated December 31,
1959, recorded in said Bureau in Liber 3827, Page 428.


(d)           Utility Easement Agreement dated May
28, 1982, but effective as provided therein, recorded in said Bureau in Liber
16368, Page 776, by and among Lands of Kapua, a Hawaii general partnership, Mac
Farms of Hawaii, Inc., a Hawaii corporation, and Farms of Kapua, Ltd., a
California limited partnership.


(e)           Easement Agreement dated May 28,
1982, recorded in said Bureau in Liber 16369 at Page 175, by and between Mac
Farms of Hawaii, Inc., a Hawaii corporation, and Lands of Kapua, a Hawaii
general partnership, “Grantors”, and Farms of Kapua, Ltd., a California limited
partnership, “Grantee”.


(f)            Grant to Hawaii Electric Light
Company, Inc., a Hawaii corporation, dated September 16, 1993, recorded in said
Bureau as Document No. 93-167247, granting a perpetual right and easement to
construct, reconstruct, repair, maintain and operate pole and wire lines and/or
underground lines and to use such appliances and equipment as may by necessary
for the transmission and distribution of electricity.


(g)           Terms and provisions contained in
Declaration, Confirmation and Cancellation of Easement Rights and Grant of
Easements dated June 27, 2003 recorded in said Bureau as Document
No. 2003-131936.


(h)           Terms and provisions, contained in
Declaration of Reciprocal Restrictive Covenants dated May 24, 1989,
recorded in said Bureau in Liber 23307, Page 410.


(i)            Claims arising out of customary and
traditional rights and practices, including without limitation those exercised
for subsistence, cultural, religious, access or gathering purposes, as provided
for in the Hawaii Constitution or the Hawaii Revised Statutes.


PARCEL TWENTY:


Tax Key:    8-9-012-004 (3):


All of that certain parcel of land situate on the east
side of Hawaii Belt Road at Kapua, District of South Kona, Island and County of
Hawaii, State of Hawaii, being EASEMENT “A”, and thus bounded and described:


Beginning at the northwest corner of this parcel of
land at the southwest corner of Lot 27-E and on the east side of Hawaii Belt
Road, the coordinates of which referred to Government Survey Triangulation
Station “KAPUKAWAA” being 18,816.33 feet south and 21,961.56 feet east and
running by azimuths measured clockwise from true South:


1.   232°  
50’             6,692.98               feet along Lots 27-E, 15, 25 and
27;



 64
 









 


2.   330°  
55’                 40.40                feet along Easement “B”;


3.    52°  
50’             6,692.98                feet
along Lot 27-D, along remainder of L. C. Aw. 9971, Apana 30 to W. P.
Leleiohoku;


4.   150°  
55’                 40.40                feet along the east side of
Hawaii Belt Road to the point of beginning and containing an area of 6.146
acres.


Together with that certain Easement Agreement dated
May 28, 1982, recorded in said Bureau in Liber 16369 at Page 175, by and
between Mac Farms of Hawaii, Inc., a Hawaii corporation, and Land of Kapua, a
Hawaii general partnership, “Grantors”, and Farms of Kapua, Ltd., a California
limited partnership, “Grantee”.


BEING a portion of the land conveyed to Kapua Orchard
Estates, LLC, a Delaware limited liability company, by Warranty Deed dated
June 27, 2003, recorded in said Bureau as Document No. 2003-131937,
from Mac Farms of Hawaii, Inc., a Hawaii corporation.


SUBJECT, HOWEVER, to the following:


(a)           Reservation in favor of the State of
Hawaii of all mineral and metallic mines.


(b)           Right-of-entry dated February 10,
1966 to Hawaii Electric Light Company, Inc. for the purpose of installing,
removing, maintaining and repairing pole and wire lines until such time as an
appropriate easement is granted to said Company.


(c)           Easement in favor of Lots 27-B-1 and
15 and Parcel A for roadway purposes.


(d)           Easement “A” in favor of Parcel A for
roadway and utility purposes.


(e)           Easement Agreement dated May 28,
1982, recorded in said Bureau in Liber 16369, Page 175, by and between Mac
Farms of Hawaii, Inc., a Hawaii corporation, and Lands of Kapua, a Hawaii
general partnership, “Grantors”, and Farms of Kapua, Ltd., a California limited
partnership, “Grantee”.


(f)            Rights of others who may have
easement or access rights in the land described hereinabove.


(g)           Terms and provisions contained in
Declaration, Confirmation and Cancellation of Easement Rights and Grant of
Easements dated June 27, 2003 recorded in said Bureau as Document
No. 2003-131936.


(h)           Terms and provisions, contained in
Declaration of Reciprocal Restrictive Covenants dated May 24, 1989,
recorded in said Bureau in Liber 23307, Page 410.



 65
 









 


(i)            Claims arising out of customary and
traditional rights and practices, including without limitation those exercised
for subsistence, cultural, religious, access or gathering purposes, as provided
for in the Hawaii Constitution or the Hawaii Revised Statutes.


PARCEL TWENTY-ONE:


Tax Key:    8-9-012-005 (3):


All of that certain parcel of land (portion of the
land described in and covered by Royal Patent Number 6853, Land Commission
Award Number 9971, Apana 30 to W. P. Leleiohoku) situate, lying and being on
the northeasterly side of Hawaii Belt Road at Kapua, District of South Kona,
Island and County of Hawaii, State of Hawaii, being LOT 27-E, and thus bounded
and described:


Beginning at the northwest corner of this parcel of
land on the northeast side of Hawaii Belt Road, the coordinates of which
referred to Government Survey Triangulation Station “KAPUKAWAA” being 17,793.85
feet south and 21,392.84 feet east, and running by azimuths measured clockwise
from true South:


1.   232°  
50’             1,757.66               feet
along remainder of L. C. Aw. 9971, Apana 30 to W. P. Leleiohoku (Lot 27-A);


2.   330°  
55’             1,170.00               feet along remainder of L. C. Aw.
9971, Apana 30 to W. P. Leleiohoku (Lot 15);


3.    52°  
50’             1,757.66                feet along 40-foot road reserve;


4.   150°  
55’             1,170.00               feet along the easterly side of
Hawaii Belt Road to the point of beginning and containing an area of 46.741
acres, more or less.


Together with that certain Easement Agreement dated
May 28, 1982, recorded in said Bureau in Liber 16369, Page 175, by and between
Mac Farms of Hawaii, Inc., a Hawaii corporation, and Land of Kapua, a Hawaii
general partnership, “Grantors”, and Farms of Kapua, Ltd., a California limited
partnership, “Grantee”.


BEING a portion of the land conveyed to Kapua Orchard
Estates, LLC, a Delaware limited liability company, by Warranty Deed dated
June 27, 2003, recorded in said Bureau as Document No. 2003-131937,
from Mac Farms of Hawaii, Inc., a Hawaii corporation.


SUBJECT, HOWEVER, to the following:


(a)           Reservation in favor of the State of
Hawaii of all mineral and metallic mines.



 66
 









 


(b)           Right-of-entry dated February 10,
1966 to Hawaii Electric Light Company, Inc. for the purpose of installing,
removing, maintaining and repairing pole and wire lines until such time as an
appropriate easement is granted to said Company.


(c)           Restricted abutter’s rights of
vehicle access into and from Hawaii Belt Road, Federal Aid Project No.
BF-011-1(3), as conveyed to the State of Hawaii, by Deed dated December 31,
1959, recorded in said Bureau in Liber 3827, Page 428.


(d)           Easement Agreement dated May 28,
1982, recorded in said Bureau in Liber 16369, Page 175, by and between Mac
Farms of Hawaii, Inc., a Hawaii corporation, and Lands of Kapua, a Hawaii general
partnership, “Grantors”, and Farms of Kapua, Ltd., a California limited
partnership, “Grantee”.


(e)           Grant to Hawaii Electric Light
Company, Inc., a Hawaii corporation, dated September 16, 1993, recorded in said
Bureau as Document No. 93-167247, granting a perpetual right and easement to
construct, reconstruct, repair, maintain and operate pole and wire lines and/or
underground lines and to use such appliances and equipment as may by necessary
for the transmission and distribution of electricity.


(f)            Terms and provisions contained in
Declaration, Confirmation and Cancellation of Easement Rights and Grant of
Easements dated June 27, 2003 recorded in said Bureau as Document
No. 2003-131936.


(g)           Terms and provisions, contained in
Declaration of Reciprocal Restrictive Covenants dated May 24, 1989,
recorded in said Bureau in Liber 23307, Page 410.


(h)           Claims arising out of customary and
traditional rights and practices, including without limitation those exercised
for subsistence, cultural, religious, access or gathering purposes, as provided
for in the Hawaii Constitution or the Hawaii Revised Statutes.


PARCEL TWENTY-TWO:


Tax Key:    8-9-012-006 (3):


All of that certain parcel of land (portion of the
land described in and covered by Royal Patent Number 6853, Land Commission
Award Number 9971, Apana 30 to W. P. Leleiohoku) situate, lying and being at
Kapua, District of South Kona, Island and County of Hawaii, State of Hawaii,
being LOT 15, and thus bounded and described:


Beginning at the southwest corner of this parcel of
land on the north side of a 40-foot road, the coordinates of which referred to
Government Survey Triangulation Station “KAPUKAWAA” being 17,754.45 feet south
and 23,362.21 feet east, and running by azimuths measured clockwise from true
South:


1.   150°  
55’             1,170.00               feet along Lot 27-E, along
remainder of L. C. Aw. 9971, Apana 30 to W. P. Leleiohoku;



 67
 









 


2.   232°  
50’             4,267.16               feet along Lot 27, along
remainder of L. C. Aw. 9971, Apana 30 to W. P. Leleiohoku;


3.   335°   43’    
30”       853.16             feet along Lot 27, along remainder
of L. C. Aw. 9971, Apana 30 to W. P. Leleiohoku;


4.   330°  
55’               330.00                feet along Lot 27, along
remainder of L. C. Aw. 9971, Apana 30 to W. P. Leleiohoku;


5.    52°  
50’             4,194.92                feet
along 40-foot road, along remainder of L. C. Aw. 9971, Apana 30 to W. P.
Leleiohoku to the point of beginning and containing an area of 112.244 acres,
more or less.


Together with that certain Easement Agreement dated
May 28, 1982, recorded in Liber 16369 at Page 175, by and between Mac Farms of
Hawaii, Inc., a Hawaii corporation, and Land of Kapua, a Hawaii general
partnership, “Grantors”, and Farms of Kapua, Ltd., a California limited
partnership, “Grantee”.


BEING a portion of the land conveyed to Kapua Orchard
Estates, LLC, a Delaware limited liability company, by Warranty Deed dated
June 27, 2003, recorded in said Bureau as Document No. 2003-131937,
from Mac Farms of Hawaii, Inc., a Hawaii corporation.


SUBJECT, HOWEVER, to the following:


(a)           Reservation in favor of the State of
Hawaii of all mineral and metallic mines.


(b)           Right-of-entry dated February 10,
1966 to Hawaii Electric Light Company, Inc. for the purpose of installing,
removing, maintaining and repairing pole and wire lines until such time as an
appropriate easement is granted to said Company.


(c)           Easement Agreement dated May 28,
1982, recorded in said Bureau in Liber 16369, Page 175, by and between Mac
Farms of Hawaii, Inc., a Hawaii corporation, and Lands of Kapua, a Hawaii general
partnership, “Grantors”, and Farms of Kapua, Ltd., a California limited
partnership, “Grantee”.


(d)           Terms and provisions contained in
Declaration, Confirmation and Cancellation of Easement Rights and Grant of
Easements dated June 27, 2003 recorded in said Bureau as Document
No. 2003-131936.


(e)           Terms and provisions, contained in
Declaration of Reciprocal Restrictive Covenants dated May 24, 1989,
recorded in said Bureau in Liber 23307, Page 410.



 68
 









 


(f)            Claims arising out of customary and
traditional rights and practices, including without limitation those exercised
for subsistence, cultural, religious, access or gathering purposes, as provided
for in the Hawaii Constitution or the Hawaii Revised Statutes.


PARCEL TWENTY-THREE:


Tax Key:    8-9-012-007 (3):


All of that certain parcel of land (being portion(s)
of the land(s) described in and covered by Royal Patent Number 6853, Land
Commission Award Number 9971, Apana 30 to W. P. Leleiohoku), situate, lying and
being on the northeasterly side of Hawaii Belt Road (F.A.P. No. BF-011-(3)) and
approximately 2,500 feet northwest of Government Land of Kaulanamauna, at
Kapua, District of South Kona, Island and County of Hawaii, State of Hawaii,
being LOT 27-A, and thus bounded and described:


Beginning at a 3/4” pipe in concrete at the southwest
corner of this parcel of land, being also the northwest corner of Lot 27-E,
said lot being a portion of Ahupuaa of Kapua and being also a portion of Royal
Patent Number 6853, Land Commission Award Number 9971, Apana 30 to W. P. Leleiohoku,
and on the northeast side of Hawaii Belt Road (F.A.P. No. BF-011-(3)), the
coordinates of said point of beginning referred to Government Survey
Triangulation Station “PUU NAHAHA 2” being 6,148.69 feet south and 14,871.88
feet east, and running by azimuths measured clockwise from true South:


1.   150°  
55’     22.3”   377.72              feet
along the northeast side of Hawaii Belt Road (F.A.P. No. BF-011-(3)) to a 1/2”
pipe in concrete;


2.   Thence along the northeast side of Hawaii
Belt Road (F.A.P. No. BF-011-(3)) on a curve to the left with a radius of
12,040.00 feet, the chord azimuth and distance being:


149°   56’    
07.5”         414.98              feet;


3.   Thence along the northeast side of Hawaii
Belt Road (F.A.P. No. BF-011-(3)) on a curve to the left with a radius of
12,040.00 feet, the chord azimuth and distance being:


148°   51’    
10.10”        40.00               feet;


4.   Thence along the northeast side of Hawaii
Belt Road (F.A.P. No. BF-011-(3)) on a curve to the left with a radius of
12,040.00 feet, the chord azimuth and distance being:


148°   08’    
43.25”      257.33               feet
to a 1/2” pipe;


5.   Thence along the northeast side of Hawaii
Belt Road (F.A.P. No. BF-011-(3)) on a curve to the left with a radius of
12,040.00 feet, the chord azimuth and distance being:


145°   50’    
39.43”      709.65               feet
to a 1/2” pipe in concrete;



 69
 









 


6.   232°  
50’     22”    6,663.81             feet
along Lot 17 being a portion of Ahupuaa of Kapua, same being also a portion of
R.P. 6853, L.C. Aw. 9971, Ap. 30 to W. P. Leleiohoku to a 1/2” pipe in concrete
and passing over the following: nail in rock at 559.68 feet; 1/2” pipe at
1,593.81 feet; 1/2” pipe at 2,513.81 feet; 1/2” pipe at 3,413.81 feet; 1/2”
pipe at 4,353.81 feet; 3/8” rebar at 5,013.81 feet and a 1/2” pipe at 5,843.81
feet;


7.   280°  
30’     22”      348.26              feet
along Lot 17 being a portion of Ahupuaa of Kapua, same being also a portion of
R.P. 6853, L.C. Aw. 9971, Ap. 30 to W. P. Leleiohoku to a 1/2” pipe in
concrete;


8.   344°  
10’     22”   2,744.87              feet
along Lot 27-B-1, being a portion of Ahupuaa of Kapua, same being also a
portion of R.P. 6853, L.C. Aw. 9971, Ap. 30 to W. P. Leleiohoku to a 1/2” pipe
in concrete and passing over the following: spike at 1,000.00 feet and a spike
at 2,000.00 feet;


9.    52°  
50’     22”       740.40              feet along Easement “A”, being a
40 ft. road reserve being a portion of Ahupuaa of Kapua, same being also a
portion of R.P. 6853, L.C. Aw. 9971, Ap. 30 to W. P. Leleiohoku to a 1/2” pipe
in concrete;


10.  150°  
55’     22”     330.00              feet
along Lot 15, being a portion of Ahupuaa of Kapua, same being also a portion of
R.P. 6853, L.C. Aw. 9971, Ap. 30 to W. P. Leleiohoku to a 1/2” pipe in
concrete;


11.  155°  
43’     52”     853.16              feet
along Lot 15, being a portion of Ahupuaa of Kapua, same being also a portion of
R.P. 6853, L.C. Aw. 9971, Ap. 30 to W. P. Leleiohoku to a 1/2” pipe in
concrete;


12.   52°  
50’     22”   6,024.82              feet
along Lot 15 and 27-E, being a portion of Ahupuaa of Kapua, same being also a
portion of R.P. 6853, L.C. Aw. 9971, Ap. 30 to W. P. Leleiohoku to the point of
beginning and passing over the following: 1/2” pipe at 610.00 feet; 1/2” pipe
at 1,530.00 feet; 1/2” pipe at 2,400.00 feet; 1/2” pipe at 2,970.00 feet; 1/2”
pipe at 3,970.00 feet; 3/8” rebar at 4,590.00 feet and a 1/2” pipe at 5,575.00
feet and containing an area of 300.002 acres, more or less.


Together with that certain Easement Agreement dated
May 28, 1982, recorded in said Bureau in Liber 16369, Page 175, by and between
Mac Farms of Hawaii, Inc., a Hawaii corporation, and Land of Kapua, a Hawaii
general partnership, “Grantors”, and Farms of Kapua, Ltd., a California limited
partnership, “Grantee”.


BEING a portion of the land conveyed to Kapua Orchard
Estates, LLC, a Delaware limited liability company, by Warranty Deed dated
June 27, 2003, recorded in said Bureau as Document No. 2003-131937,
from Mac Farms of Hawaii, Inc., a Hawaii corporation.


SUBJECT, HOWEVER, to the following:



 70
 









 


(a)           Reservation in favor of the State of
Hawaii of all mineral and metallic mines.


(b)           Restricted abutter’s rights of
vehicle access into and from Hawaii Belt Road, Federal Aid Project No.
BF-011-1(3), as conveyed to the State of Hawaii, by Deed dated December 31,
1959, recorded in said Bureau in Liber 3827, Page 428.


(c)           Restriction of vehicular access
rights along courses 1, 2, 4 and 5 of said parcel.


(d)           Terms and provisions contained in
Declaration, Confirmation and Cancellation of Easement Rights and Grant of
Easements dated June 27, 2003 recorded in said Bureau as Document
No. 2003-131936.


(e)           Terms and provisions, contained in
Declaration of Reciprocal Restrictive Covenants dated May 24, 1989,
recorded in said Bureau in Liber 23307, Page 410.


(f)            Claims arising out of customary and
traditional rights and practices, including without limitation those exercised
for subsistence, cultural, religious, access or gathering purposes, as provided
for in the Hawaii Constitution or the Hawaii Revised Statutes.


PARCEL TWENTY-FOUR:


Tax Key:    8-9-012-009 (3):


All of that certain parcel of land (portion of the
land described in and covered by Royal Patent Number 6853, Land Commission
Award 9971, Apana 30 to W. P. Leleiohoku) situate, lying and being on the
northeasterly side of Hawaii Belt Road (F.A.P. No. BF-011-1(3)) at Kapua,
District of South Kona, Island and County of Hawaii, State of Hawaii, being LOT
16-A, and thus bounded and described as per survey dated December 4,
1984, to-wit:


Beginning at the westernmost corner of this parcel of
land, being also the southwesterly corner of Lot 20-B and a point on the
northeasterly side of the Hawaii Belt Road (F.A.P. No. BF-011-1(3)), the
coordinates of said point of beginning referred to Government Survey
Triangulation Station “KAPUKAWAA” being 14,712.47 feet south and 19,111.16 feet
east, and running by azimuths measured clockwise from true South:


Thence, for the next
thirteen (13) courses following along the remainder of Royal Patent 6853, Land
Commission Award 9971, Apana 30 to W. P. Leleiohoku:


1.   232°  
50’             3,970.86               feet along Lot 20-B and along the
southerly end of an existing 40-foot wide Road Reserve to a point;


2.   155°  
30’             2,504.79               feet along an existing 40-foot
wide Road Reserve to a point;



 71
 









 


Thence, for the next
eleven (11) courses following along Lot 17-A of this subdivision:


3.   245°  
30’                 809.40              feet
to a point;


4.   328°  
00’              3,274.09              feet
to a point;


5.    52°  
50’                  575.72              feet to a point;


6.   322°  
50’                   50.00              feet
to a point;


7.    52°  
50’               2,916.45              feet to a point;


Thence, following on a
curve to the left with a radius of 275.00 feet, the chord azimuth and distance
being:


8.    28°  
25’                  227.35              feet
to a point;


9.     4°  
00’                   245.77              feet
to a point;


Thence, following on a
curve to the right with a radius of 325.00 feet, the chord azimuth and distance
being:


10.   30°  
55’     30”      294.34              feet
to a point;


11.   57°  
51’                 299.67              feet
to a point;


12.   57°  
05’                 427.36              feet
to a point;


Thence, following on a
curve to the left with a radius of 30.00 feet, the chord azimuth and distance
being:


13.    9°  
05’     59”         44.58              feet
to a point;


Thence, following along
the northeasterly side of Hawaii Belt Road (F.A.P. No. BF-011-1(3)) on a curve
to the left with a radius of 12,040.00 feet, the chord azimuth and distance
being:


14.  140°  
51’     12.5”  110.38              feet
to a point;


Thence, for the next ten
(10) courses following along Lot 16-B of this subdivision and along the
remainder of Royal Patent 6853, Land Commission Award 9971, Apana 30 to W. P.
Leleiohoku:


Thence, following on a
curve to the left with a radius of 30.00 feet, the chord azimuth and distance
being:



 72
 









 


15.  278°  
50’     13.5”   39.96               feet
to a point;


16.  237°  
05’               439.71               feet to a point;


17.  237°  
51’               300.00               feet to a point;


Thence, following on a
curve to the left with a radius of 275.00 feet, the chord azimuth and distance
being:


18.  210°  
55’     30”    249.05               feet
to a point;


19.  133°  
00’               430.00               feet to a point;


20.   43°  
00’                192.00               feet
to a point;


21.  128°  
00’               455.00               feet to a point;


22.   38°  
00’                380.00               feet
to a point;


23.  308°  
00’               180.02               feet
to a point;


24.   46°  
00’                330.26               feet
to a point;


Thence, following along
the northeasterly side of Hawaii Belt Road (F.A.P. No. BF-011-1(3)) on a curve
to the left with a radius of 12,040.00 feet, the chord azimuth and distance
being:


25.  136°  
36’     03.5”     623.75           feet
to a point;


26.  135°  
07’               151.70               feet along the northeasterly side
of Hawaii Belt Road (F.A.P. No. BF-011-1(3)) to the point of beginning and
containing an area of 166.322 acres, more or less.


Together with that certain Easement Agreement dated
May 28, 1982, recorded in said Bureau in Liber 16369, Page 175, by and between
Mac Farms of Hawaii, Inc., a Hawaii corporation, and Land of Kapua, a Hawaii
general partnership, “Grantors”, and Farms of Kapua, Ltd., a California limited
partnership, “Grantee”.


BEING a portion of the land conveyed to Kapua Orchard
Estates, LLC, a Delaware limited liability company, by Warranty Deed dated
June 27, 2003, recorded in said Bureau as Document No. 2003-131937,
from Mac Farms of Hawaii, Inc., a Hawaii corporation.


SUBJECT, HOWEVER, to the following:



 73
 









 


(a)           Reservation in favor of the State of
Hawaii of all mineral and metallic mines.


(b)           Right-of-entry dated February 10,
1966 to Hawaii Electric Light Company, Inc. for the purpose of installing,
removing, maintaining and repairing pole and wire lines until such time as an
appropriate easement is granted to said Company.


(c)           Restricted abutter’s rights of
vehicle access into and from Hawaii Belt Road, Federal Said Project No.
BF-011-1(3), as conveyed to the State of Hawaii, by Deed dated December 31,
1959, recorded in said Bureau in Liber 3827, Page 428.


(d)           Easement in favor of Lots 16B, 17A
and Parcel A.


(e)           Easements “D-1” and “1” in favor of
Parcel A.


(f)            Easement “1” (50 feet wide) for
access purposes and Easement “D-1” (50 feet wide).


(g)           Access and Utility Easement “1” (80
feet wide) as shown on Tax Maps.


(h)           Declaration, Confirmation and
Cancellation of Easement Rights and Grant of Easements dated June 27, 2003,
recorded in said Bureau as Document No. 2003-131936.


(i)            Easement Agreement dated May 28,
1982, recorded in said Bureau in Liber 16369, Page 175, by and between Mac
Farms of Hawaii, Inc., a Hawaii corporation, and Lands of Kapua, a Hawaii
general partnership, “Grantors”, and Farms of Kapua, Ltd., a California limited
partnership, “Grantee”.


(j)            Terms and provisions contained in
Declaration, Confirmation and Cancellation of Easement Rights and Grant of
Easements dated June 27, 2003 recorded in said Bureau as Document
No. 2003-131936.


(k)           Terms and provisions, contained in
Declaration of Reciprocal Restrictive Covenants dated May 24, 1989,
recorded in said Bureau in Liber 23307, Page 410.


(l)            Claims arising out of customary and
traditional rights and practices, including without limitation those exercised
for subsistence, cultural, religious, access or gathering purposes, as provided
for in the Hawaii Constitution or the Hawaii Revised Statutes.


PARCEL TWENTY-FIVE:


Tax Key:    8-9-012-010 (3):


All of that certain parcel of land (portion of the
land described in and covered by Royal Patent Number 6853, Land Commission
Award Number 9971, Apana 30 to W. P. Leleiohoku) situate, lying and being on
the northwesterly side of Hawaii Belt Road at Kapua,



 74
 









 


District of South Kona,
Island and County of Hawaii, State of Hawaii, being LOT 20-B, and thus bounded
and described:


Beginning at the northwesterly corner of this parcel
of land on the westerly side of Hawaii Belt Road, the coordinates of which
referred to Government Survey Triangulation Station “KAPUKAWAA” being 13,589.95
feet south and 18,039.63 feet east, and running by azimuths measured clockwise
from true South:


1.   245°  
30’             4,343.74               feet along remainder of L. C. Aw.
9971, Apana 30 to W. P. Leleiohoku;


2.   335°  
30’                604.80               feet
along remainder of L. C. Aw. 9971, Apana 30 to W. P. Leleiohoku, along 40-foot
road reserve;


3.    52°  
50’              3,929.86               feet
along remainder of L. C. Aw. 9971, Apana 30 to W. P. Leleiohoku, along Lot 16
to the westerly side of Hawaii Belt Road;


4.   135°  
07’                332.71               feet along the westerly side of
Hawaii Belt Road;


5.   225°  
07’                    5.00               feet along the westerly side of
Hawaii Belt Road;


6.   135°  
07’                150.00               feet
along the westerly side of Hawaii Belt Road;


7.    45°  
07’                     5.00               feet along the westerly side of
Hawaii Belt Road;


8.   135°  
07’                182.02               feet
along the westerly side of Hawaii Belt Road;


thence following along
the westerly side of Hawaii Belt Road, on a curve to the right with a radius of
11,960.00 feet, the chord azimuth and distance being:


9.   137°  
14’     33.7”  887.38               feet
to the point of beginning and containing an area of 100.017 acres, more or less.


Together with that certain Easement Agreement dated
May 28, 1982, recorded in said Bureau in Liber 16369, Page 175, by and between
Mac Farms of Hawaii, Inc., a Hawaii corporation, and Land of Kapua, a Hawaii
general partnership, “Grantors”, and Farms of Kapua, Ltd., a California limited
partnership, “Grantee”.


BEING a portion of the land conveyed to Kapua Orchard
Estates, LLC, a Delaware limited liability company, by Warranty Deed dated
June 27, 2003, recorded in said Bureau as Document No. 2003-131937,
from Mac Farms of Hawaii, Inc., a Hawaii corporation.


SUBJECT, HOWEVER, to the following:



 75















(a)           Reservation in favor of the State of
Hawaii of all mineral and metallic mines.


(b)           Right-of-entry dated February 10,
1966 to Hawaii Electric Light Company, Inc. for the purpose of installing,
removing, maintaining and repairing pole and wire lines until such time as an
appropriate easement is granted to said Company.


(c)           Restricted abutter’s rights of
vehicle access into and from Hawaii Belt Road, Federal Aid Project No.
BF-011-1(3), as conveyed to the State of Hawaii, by Deed dated December 31,
1959, recorded in said Bureau in Liber 3827, Page 428.


(d)           Easement Agreement dated May 28,
1982, recorded in said Bureau in Liber 16369, Page 175, by and between Mac
Farms of Hawaii, Inc., a Hawaii corporation, and Lands of Kapua, a Hawaii
general partnership, “Grantors”, and Farms of Kapua, Ltd., a California limited
partnership, “Grantee”.


(e)           Terms and provisions contained in
Declaration, Confirmation and Cancellation of Easement Rights and Grant of
Easements dated June 27, 2003 recorded in said Bureau as Document
No. 2003-131936.


(f)            Terms and provisions, contained in
Declaration of Reciprocal Restrictive Covenants dated May 24, 1989,
recorded in said Bureau in Liber 23307, Page 410.


(g)           Claims arising out of customary and
traditional rights and practices, including without limitation those exercised
for subsistence, cultural, religious, access or gathering purposes, as provided
for in the Hawaii Constitution or the Hawaii Revised Statutes.


PARCEL TWENTY-SIX:


Tax Key:    8-9-012-011 (3):


All of that certain parcel of land (portion of the
land described in and covered by Royal Patent Number 6853, Land Commission
Award Number 9971, Apana 30 to W. P. Leleiohoku) situate, lying and being on
the northwesterly side of Hawaii Belt Road at Kapua, District of South Kona,
Island and County of Hawaii, State of Hawaii, being LOT 20-A, and thus bounded
and described:


Beginning at the southeast corner of this parcel of
land on the westerly side of Hawaii Belt Road, the coordinates of which
referred to Government Survey Triangulation Station “KAPUKAWAA” being 13,589.95
feet south and 18,039.63 feet east, and running by azimuths measured clockwise
from true South:


Following along the west
side of Hawaii Belt Road, on a curve to the right with a radius of 11,960.00
feet, the chord azimuth and distance being:


1.   141°  
36’     50.1”     937.09            feet;



 76
 









2.   245°  
30’             4,271.63               feet along remainder of L. C. Aw.
9971, Apana 30 to W. P. Leleiohoku, along Lot 23;


3.   155°  
30’             1,000.00               feet along remainder of L. C. Aw.
9971, Apana 30 to W. P. Leleiohoku, along Lot 23;


4.   245°  
30’               297.00                feet along 40-foot road reserve;


5.   335°  
30’             1,909.70               feet along remainder of L. C. Aw.
9971, Apana 30 to W. P. Leleiohoku, along 40-foot road reserve;


6.    65°  
30’             4,343.74                feet along remainder of L. C.
Aw. 9971, Apana 30 to W. P. Leleiohoku to the point of beginning and containing
an area of 100.012 acres, more or less.


Together with that certain Easement Agreement dated
May 28, 1982, recorded in said Bureau in Liber 16369, Page 175, by and between
Mac Farms of Hawaii, Inc., a Hawaii corporation, and Land of Kapua, a Hawaii
general partnership, “Grantors”, and Farms of Kapua, Ltd., a California limited
partnership, “Grantee”.


BEING a portion of the land conveyed to Kapua Orchard
Estates, LLC, a Delaware limited liability company, by Warranty Deed dated
June 27, 2003, recorded in said Bureau as Document No. 2003-131937,
from Mac Farms of Hawaii, Inc., a Hawaii corporation.


SUBJECT, HOWEVER, to the following:


(a)           Reservation in favor of the State of
Hawaii of all mineral and metallic mines.


(b)           Right-of-entry dated February 10,
1966 to Hawaii Electric Light Company, Inc. for the purpose of installing,
removing, maintaining and repairing pole and wire lines until such time as an
appropriate easement is granted to said Company.


(c)           Restricted abutter’s rights of
vehicle access into and from Hawaii Belt Road, Federal Aid Project No.
BF-011-1(3), as conveyed to the State of Hawaii, by Deed dated December 31,
1959, recorded in said Bureau in Liber 3827, Page 428.


(d)           Easement Agreement dated May 28,
1982, recorded in said Bureau in Liber 16369, Page 175, by and between Mac
Farms of Hawaii, Inc., a Hawaii corporation, and Lands of Kapua, a Hawaii
general partnership, “Grantors”, and Farms of Kapua, Ltd., a California limited
partnership, “Grantee”.


(e)           Terms and provisions contained in
Declaration, Confirmation and Cancellation of Easement Rights and Grant of
Easements dated June 27, 2003 recorded in said Bureau as Document
No. 2003-131936.



 77
 









(f)            Terms and provisions, contained in
Declaration of Reciprocal Restrictive Covenants dated May 24, 1989,
recorded in said Bureau in Liber 23307, Page 410.


(g)           Claims arising out of customary and
traditional rights and practices, including without limitation those exercised
for subsistence, cultural, religious, access or gathering purposes, as provided
for in the Hawaii Constitution or the Hawaii Revised Statutes.


PARCEL TWENTY-SEVEN:


Tax Key:    8-9-012-012 (3):


All of that certain parcel of land (being portion of
the land(s) described in and covered by Royal Patent Number 6853, Land
Commission Award Number 9971, Apana 30 to W. P. Leleiohoku) situate, lying and
being on the east side of Hawaii Belt Road at Kapua, District of South Kona,
Island and County of Hawaii, State of Hawaii, being LOT 23 and thus bounded and
described:


Beginning at a point at the southwest corner of this
parcel of land, on the east side of Hawaii Belt Road, the coordinates of which
referred to Government Survey Triangulation Station “KAPUKAWAA” being 12,041.60
feet south and 16,913.10 feet east, and running by azimuths measured clockwise
from true South:


Along the south side of
proposed 40-foot road, on a curve to the right with a radius of 30.00 feet, the
chord azimuth and distance being:


1.   197°  
01’     32.8”      44.92             feet;


2.   245°  
30’             4,400.00               feet along the south side of
proposed 40-foot road, along remainder of L. C. Aw. 9971, Apana 30 to W. P.
Leleiohoku;


3.   335°  
30’             1,000.00               feet along remainder of L. C. Aw.
9971, Apana 30 to W. P. Leleiohoku;


4.    65°  
30’             4,271.63                feet along remainder of L. C.
Aw. 9971, Apana 30 to W. P. Leleiohoku to the east side of Hawaii Belt Road;


Thence along the east
side of Hawaii Belt Road, on a curve to the right with a radius of 11,960.00
feet, the chord azimuth and distance being:


5.   145°  
26’     22”       659.68             feet;


6.   237°  
01’     11.2”      10.00             feet
along the east side of Hawaii Belt Road;


Thence along the east
side of Hawaii Belt Road, on a curve to the right with a radius of 11,950.00
feet, the chord azimuth and distance being:



 78
 









7.   147°  
40’     34.7”     273.85            feet;


8.    58°  
19’     58.1”      10.00              feet
along the east side of Hawaii Belt road;


Thence along the east
side of Hawaii Belt Road, on a curve to the right with a radius of 11,960.00
feet, the chord azimuth and distance being:


9.   148°  
26’     31.8”      45.66             feet
to the point of beginning and containing an area of 100.023 acres, more or
less.


BEING the land conveyed to Kapua Orchard Estates, LLC,
a Delaware limited liability company, by Warranty Deed dated November 1, 2005,
recorded in said Bureau as Document No. 2005-222508, from Dahlas J. Antoku
and Mieko Antoku.


SUBJECT, HOWEVER, to the following:


(a)           Reservation in favor of the State of
Hawaii of all mineral and metallic mines.


(b)           Restricted abutter’s rights of
vehicle access into and from Hawaii Belt Road, Federal Aid Project No.
BF-011-1(3), as conveyed to the State of Hawaii, by Deed dated December 31,
1959, recorded in said Bureau in Liber 3827, Page 428.


(c)           Right-of-entry dated February 10,
1966 to Hawaii Electric Light Company, Inc. for the purpose of installing,
removing, maintaining and repairing pole and wire lines until such time as an
appropriate easement is granted to said Company.


(d)           All existing easements and rights of
way, as set forth in Deed dated June 29, 1973, recorded in said Bureau in Liber
9282, Page 1.


(e)           Mortgage and Fixture Filing dated April
4, 2007, filed as Document No. 2007-060798.


PARCEL TWENTY-EIGHT:


Tax Key:    8-9-012-013 (3):


All of that certain parcel of land situate on the east
side of Hawaii Belt Road at Kapua, District of South Kona, Island and County of
Hawaii, State of Hawaii, being EASEMENT “G”, and thus bounded and described:


Beginning at the north corner of this parcel of land
on the east side of Hawaii Belt Road, the coordinates of which referred to
Government Survey Triangulation Station 



 79
 









“KAPUKAWAA” being 11,955.31 feet south and 16,860.78
feet east and running by azimuths measured clockwise from true South:


On a curve to the left
with a radius of 30.00 feet, the chord azimuth and distance being:


1.   287°  
16’     03.2”      39.97             feet;


2.   245°  
30’             4,748.76               feet along Lots 26 and 17, along
remainder of L. C. Aw. 9971, Apana 30 to W. P. Leleiohoku;


3.   335°  
30’             2,544.79               feet along Easement “H”, along
Lot 16, along remainder of L. C. Aw. 9971, Apana 30 to W. P. Leleiohoku;


4.    52°  
50’                41.00                  feet
along Lot 16, along remainder of L. C. Aw. 9971, Apana 30 to W. P. Leleiohoku;


5.   155°  
30’             2,513.78               feet along Lots 20-B and 20-A,
along remainder of L. C. Aw. 9971, Apana 30 to W. P. Leleiohoku;


6.    65°  
30’             4,697.00                feet along Lots 20-A and 23,
along remainder of L. C. Aw. 9971, Apana 30 to W. P. Leleiohoku;


thence following along
Lot 23, along remainder of L. C. Aw. 9971, Apana 30 to W. P. Leleiohoku on a
curve to the left with a radius of 30.00 feet, the chord azimuth and distance
being:


7.    17°  
01’     32.8”      44.92              feet;


thence following along
the east side of Hawaii Belt Road on a curve to the right with a radius of
11,960.00 feet, the chord azimuth and distance being:


8.   148°  
47’     35.9”     100.94            feet
to the point of beginning and containing an area of 6.721 acres.


Together with that certain Easement Agreement dated
May 28, 1982, recorded in said Bureau in Liber 16369, Page 175, by and between
Mac Farms of Hawaii, Inc., a Hawaii corporation, and Land of Kapua, a Hawaii
general partnership, “Grantors”, and Farms of Kapua, Ltd., a California limited
partnership, “Grantee”.


BEING a portion of the land conveyed to Kapua Orchard
Estates, LLC, a Delaware limited liability company, by Warranty Deed dated
June 27, 2003, recorded in said Bureau as Document No. 2003-131937,
from Mac Farms of Hawaii, Inc., a Hawaii corporation.


SUBJECT, HOWEVER, to the following:



 80
 









(a)           Reservation in favor of the State of
Hawaii of all mineral and metallic mines.


(b)           Right-of-entry dated February 10,
1966 to Hawaii Electric Light Company, Inc. for the purpose of installing,
removing, maintaining and repairing pole and wire lines until such time as an
appropriate easement is granted to said Company.


(c)           Easement in favor of Lots 20A, 20B,
17-A, 16-A, 27-B-1 and Parcel A for roadway and utility purposes.


(d)           Easement Agreement dated May 28,
1982, recorded in Liber 16369 at Page 175, by and between Mac Farms of Hawaii,
Inc., a Hawaii corporation, and Lands of Kapua, a Hawaii general partnership, “Grantors”,
and Farms of Kapua, Ltd., a California limited partnership, “Grantee”.


(e)           Rights of others who may have
easement or access rights in the land described hereinabove.


(f)            Terms and provisions contained in
Declaration, Confirmation and Cancellation of Easement Rights and Grant of
Easements dated June 27, 2003 recorded in said Bureau as Document
No. 2003-131936.


(g)           Terms and provisions, contained in
Declaration of Reciprocal Restrictive Covenants dated May 24, 1989,
recorded in said Bureau in Liber 23307, Page 410.


(h)           Claims arising out of customary and
traditional rights and practices, including without limitation those exercised
for subsistence, cultural, religious, access or gathering purposes, as provided
for in the Hawaii Constitution or the Hawaii Revised Statutes.


PARCEL TWENTY-NINE:


Tax Key:    8-9-012-014 (3):


All of that certain parcel of land (being a portion of
the land described in and covered by Royal Patent Number 6853, Land Commission
Award 9971, Apana 30 to W. P. Leleiohoku) situate, lying and being at Kapua,
District of South Kona, Island and County of Hawaii, State of Hawaii, being LOT
26, and thus bounded and described:


Beginning at a point at the northwest corner of this
parcel of land, on the south side of Government Land of Honomalino, the
coordinates of which referred to Government Survey Triangulation Station “KAPUKAWAA”
being 8,621.36 feet south and 15,493.42 feet east, and running by azimuths
measured clockwise from true South:


1.   250°   52’    
40”     3,160.74            feet along the Government Land of
Honomalino;



 81
 









2.   335°  
30’             3,331.16               feet along remainder of L. C. Aw.
9971, Apana 30 to W. P. Leleiohoku;


3.    65°  
30’             3,255.32                feet along 40-foot road along
remainder of L. C. Aw. 9971, Apana 30 to W. P. Leleiohoku;


Thence following along
40-foot road on a curve to the right with a radius of 30.00 feet, the chord
azimuth and distance being:


4.   107°  
16’     03.2”      39.97             feet;


Thence following along
the east side of the Hawaii Belt Road on a curve to the right with a radius of
11,960.00 feet, the chord azimuth and distance being:


5.   150°  
44’     38.6”     713.35            feet;


6.   172°  
20’               390.01                feet along remainder of L. C.
Aw. 9971, Apana 30 to W. P. Leleiohoku;


7.   245°  
30’             1,551.32               feet along remainder of L. C. Aw.
9971, Apana 30 to W. P. Leleiohoku;


8.   155°  
30’               544.50                feet along remainder of L. C.
Aw. 9971, Apana 30 to W. P. Leleiohoku;


9.    65°  
30’               800.00    
            feet along remainder of
L. C. Aw. 9971, Apana 30 to W. P. Leleiohoku;


10.  155°  
30’               544.50               feet along remainder of L. C. Aw.
9971, Apana 30 to W. P. Leleiohoku;


11.   65°  
30’               852.58                feet along remainder of L. C.
Aw. 9971, Apana 30 to W. P. Leleiohoku;


Thence following along
the east side of the Hawaii Belt Road on a curve to the right with a radius of
11,960.00 feet, the chord azimuth and distance being:


12.  161°  
25’     04.5”     816.01           feet;


13.  253°  
22’     22.4”       5.00             feet
along the east side of Hawaii Belt Road;


Thence following along
the east side of the Hawaii Belt Road on a curve to the right with a radius of
11,955.00 feet, the chord azimuth and distance being:



 82
 









14.  163°  
51’     01.3”     199.25           feet;


15.   74°  
19’     40.2”       5.00              feet
along the east side of Hawaii Belt Road;


Thence following along
the east side of the Hawaii Belt Road on a curve to the right with a radius of
11,960.00 feet, the chord azimuth and distance being:


16.  165°  
20’    44.95”     424.97          feet
to the point of beginning and containing an area of 232.262 acres, more or
less.


Excepting and reserving all of the certain parcel of
land (portion of land(s) described in Royal Patent 6853. L.C. Aw. 9911, Apana
30 to W. P. Leleiohoku) situate at Kapua, South Kona, Island of Hawaii, State
of Hawaii, being LOT 26-B, bounded and described as follows:


Beginning at a point at the west corner of this parcel
of land the coordinates of said point of beginning referred to Government
Survey Triangulation Station “KAPUKAWAA” being 9,457.28 feet south and
15,809.55 feet east and running by azimuths measured clockwise from true South:


1.   252°  
05’                          150.00     feet along Lot 26-A;


2.   342°  
05’                          150.00     feet along Lot 26-A;


3.    72°  
05’                           150.00     feet along Lot 26-A;


4.   162°  
05’                          150.00     feet along Lot 26-A to the point of
beginning and containing an area of 0.517 acre.


Together with that certain Easement Agreement dated
May 28, 1982, recorded in said Bureau in Liber 16369, Page 175, by and between
Mac Farms of Hawaii, Inc., a Hawaii corporation, and Lands of Kapua, a Hawaii
general partnership, “Grantors”, and Farms of Kapua, Ltd., a California limited
partnership, “Grantee”.


BEING a portion of the land conveyed to Kapua Orchard
Estates, LLC, a Delaware limited liability company, by Warranty Deed dated
June 27, 2003, recorded in said Bureau as Document No. 2003-131937,
from Mac Farms of Hawaii, Inc., a Hawaii corporation.


SUBJECT, HOWEVER, to the following:


(a)           Reservation in favor of the State of
Hawaii of all mineral and metallic mines.



 83
 









(b)           Right-of-entry dated February 10,
1966 to Hawaii Electric Light Company, Inc. for the purpose of installing,
removing, maintaining and repairing pole and wire lines until such time as an
appropriate easement is granted to said Company.


(c)           Restricted abutter’s rights of
vehicle access into and from Hawaii Belt Road, Federal Aid Project No.
BF-011-1(3), as conveyed to the State of Hawaii, by Deed dated December 31,
1959, recorded in said Bureau in Liber 3827, Page 428.


(d)           Utility Easement Agreement dated May
28, 1982, but effective as provided therein, recorded in said Bureau in Liber
16368, Page 776, by and among Lands of Kapua, a Hawaii general partnership, Mac
Farms of Hawaii, Inc., a Hawaii corporation, and Farms of Kapua, Ltd., a
California limited partnership.


(e)           Easement Agreement dated May 28,
1982, recorded in said Bureau in Liber 16369, Page 175, by and between Mac
Farms of Hawaii, Inc., a Hawaii corporation, and Lands of Kapua, a Hawaii
general partnership, “Grantors”, and Farms of Kapua, Ltd., a California limited
partnership, “Grantee”.


(f)            Grant to Hawaii Electric Light
Company, Inc., a Hawaii corporation, and GTE Hawaiian Telephone Company
Incorporated, a Hawaii corporation, now known as Hawaiian Telcom, Inc., dated —
(acknowledged October 4, 1988, October 18, 1988 and October 31, 1988), recorded
in said Bureau in Liber 22557, Page 11, granting a perpetual right and easement
to construct, reconstruct, repair maintain and operate pole and wire lines
and/or underground lines and to use such appliances and equipment as may be
necessary for the transmission and distribution of electricity.


(g)           Nonexclusive appurtenant easement (40
feet wide) for road and utility purposes over and across Lot 26-A (portion of
Royal Patent 6853, L.C. Aw. 9911, Apana 30 to W. P. Leleiohoku) situate at
Kapua, South Kona, Island of Hawaii, State of Hawaii, which easement is more
particularly described as follows:


Beginning at a point at the northwest corner of this
parcel of land and on the easterly side of Hawaii Belt Road Project No. BE
011-1(3) the coordinates of said point of beginning referred to Government
Survey Triangulation Station “KAPUKAWAA” being 9,442.88 feet south and
15,724.04 feet east and running by azimuths measured clockwise from true South:


1.   252° 
05’                           226.93     feet;


2.   342° 
05’                           40.00       feet;


3.    72° 
05’                            227.00     feet partly along Lot 26-B to a point at
the easterly side of Hawaii Belt Road Project No. BF 011-1(3); thence along the
easterly side of Hawaii Belt Road Project No. BE 011-1(3) along a curve to the
right having a radius of 11,960.00 feet, the chord azimuth and distance being:



 84
 









4.   162° 
10’           45.2”       40.00       feet
to the point of beginning and containing an area of 0.208 acre.


(h)           Terms and provisions contained in
Declaration, Confirmation and Cancellation of Easement Rights and Grant of
Easements dated June 27, 2003 recorded in said Bureau as Document
No. 2003-131936.


(i)            Terms and provisions, contained in
Declaration of Reciprocal Restrictive Covenants dated May 24, 1989,
recorded in said Bureau in Liber 23307, Page 410.


(j)            Claims arising out of customary and
traditional rights and practices, including without limitation those exercised
for subsistence, cultural, religious, access or gathering purposes, as provided
for in the Hawaii Constitution or the Hawaii Revised Statutes.


PARCEL THIRTY:


Tax Key:  8-9-012-015 (3):


All of that certain parcel of land (portions of the
lands described in and covered by Royal Patent Number 6853, Land Commission
Award Number 9971, Apana 30 to W. P. Leleiohoku and Land Patent Number —, Land
Commission Award Number 10528 to Nahulu, including a portion of the old
Mamalahoa Highway) situate, lying and being at Kapua, District of South Kona,
Island and County of Hawaii, State of Hawaii, being LOT 26-A, and thus bounded
and described as per survey dated October 21, 1966, to-wit:


Beginning at a pipe in concrete at the northwest
corner of this parcel of land and on the easterly side of Hawaii Belt Road
(F.A.P. No. BF-011-1(3)), the coordinates of which referred to Government
Survey Triangulation Station “KAPUKAWAA” being 9,997.44 feet south and
15,916.39 feet east, and running by azimuths measured clockwise from true
South:


1.   245°  
30’               852.58                feet along Lot 26, along
remainder of L. C. Aw. 9971, Apana 30 to W. P. Leleiohoku;


2.   335°  
30’               544.50                feet along Lot 26, along
remainder of L. C. Aw. 9971, Apana 30 to W. P. Leleiohoku;


3.   245°  
30’               800.00                feet along Lot 26, along
remainder of L. C. Aw. 9971, Apana 30 to W. P. Leleiohoku;


4.   335°  
30’               544.50                feet along Lot 26, along
remainder of L. C. Aw. 9971, Apana 30 to W. P. Leleiohoku;


5.    65°  
30’             1,551.32                feet along Lot 26, along remainder
of L. C. Aw. 9971, Apana 30 to W. P. Leleiohoku;



 85
 









6.   352°  
20’               390.01                feet along the easterly side of
the old Mamalahoa Highway;


Thence following along
the easterly side of Hawaii Belt Road (F.A.P. No. BF-011-1(3)), on a curve to
the right with a radius of 11,960.00 feet, the chord azimuth and distance
being:


7.   153°  
44’     20.6”     536.86            feet;


8.   235°  
44’     40”        63.08              feet
along L. C. Aw. 10,380 to Naluhielua;


9.   132°  
59’     40”       151.80             feet
along L. C. Aw. 10,380 to Naluhielua;


10.   49°  
09’     40”         4.55               feet
along L. C. Aw. 10,380 to Naluhielua;


Thence following along
the easterly side of Hawaii Belt Road (F.A.P. No. BF-011-1(3)), on a curve to
the right with a radius of 11,960.00 feet, the chord azimuth and distance
being:


11.  155°  
48’     34.35”     28.18           feet;


12.  253°  
37’     40”        14.24             feet
along L. C. Aw. 7940-C to Keliiamaole;


13.  168°  
59’     40”       264.00            feet
along L. C. Aw. 7940-C to Keliiamaole;


14.   67°  
34’     00”        71.28              feet
along L. C. Aw. 7940-C to Keliiamaole;


Thence following along
the easterly side of Hawaii Belt Road (F.A.P. No. BF-011-1(3)), on a curve to
the right with a radius of 11,960.00 feet, the chord azimuth and distance
being:


15.  158°  
17’     10.7”     491.18           feet
to the point of beginning and containing an area of 32.024 acres, more or less.


Excepting and reserving the old Mamalahoa Highway.


Also excepting and reserving Land Patent Number —,
Land Commission Award Number 10528 to Nahulu.


Together with that certain Easement Agreement dated
May 28, 1982, recorded in said Bureau in Liber 16369, Page 175, by and between
Mac Farms of Hawaii, Inc., a Hawaii corporation, and Land of Kapua, a Hawaii
general partnership, “Grantors”, and Farms of Kapua, Ltd., a California limited
partnership, “Grantee”.


BEING a portion of the land conveyed to Kapua Orchard
Estates, LLC, a Delaware limited liability company, by Warranty Deed dated
June 27, 2003, recorded in said Bureau as Document No. 2003-131937,
from Mac Farms of Hawaii, Inc., a Hawaii corporation.


SUBJECT, HOWEVER, to the following:



 86
 









(a)           Reservation in favor of the State of
Hawaii of all mineral and metallic mines.


(b)           Right-of-entry dated February 10,
1966 to Hawaii Electric Light Company, Inc. for the purpose of installing,
removing, maintaining and repairing pole and wire lines until such time as an
appropriate easement is granted to said Company.


(c)           Restricted abutter’s rights of
vehicle access into and from Hawaii Belt Road, Federal Aid Project No.
BF-011-1(3), as conveyed to the State of Hawaii, by Deed dated December 31,
1959, recorded in said Bureau in Liber 3827, Page 428.


(d)           Easement Agreement dated May 28,
1982, recorded in said Bureau in Liber 16369, Page 175, by and between Mac
Farms of Hawaii, Inc., a Hawaii corporation, and Lands of Kapua, a Hawaii
general partnership, “Grantors”, and Farms of Kapua, Ltd., a California limited
partnership, “Grantee”.


(e)           Terms and provisions contained in
Declaration, Confirmation and Cancellation of Easement Rights and Grant of
Easements dated June 27, 2003 recorded in said Bureau as Document
No. 2003-131936.


(f)            Terms and provisions, contained in
Declaration of Reciprocal Restrictive Covenants dated May 24, 1989,
recorded in said Bureau in Liber 23307, Page 410.


(g)           Claims arising out of customary and
traditional rights and practices, including without limitation those exercised
for subsistence, cultural, religious, access or gathering purposes, as provided
for in the Hawaii Constitution or the Hawaii Revised Statutes.


PARCEL THIRTY-ONE:


Tax Key:    8-9-012-018 (3):


All of that certain parcel of land (portion of the
land described in and covered by Royal Patent Number 6853, Land Commission
Award Number 9971, Apana 30 to W. P. Leleiohoku) situate, lying and being on
the southeasterly side of Hawaii Belt Road (F.A.P. No. BF-011-1(3)) at Kapua,
District of South Kona, Island and County of Hawaii, State of Hawaii, being LOT
17-A, and thus bounded and described as per survey dated December 4, 1984,
to-wit:


Beginning at the southernmost corner of this parcel of
land, being also the northwesterly corner of Lot 27-A and a point on the
northeasterly side of the Hawaii Belt Road (F.A.P. No. BF-011-1(3)), the
coordinates of said point of beginning referred to Government Survey
Triangulation Station “KAPUKAWAA” being 16,264.65 feet south and 20,446.29 feet
east and running by azimuths measured clockwise from true South:


Thence, for the next five
(5) courses following along the northeasterly side of the Hawaii Belt Road
(F.A.P. No. BF-011-1(3));



 87
 









Thence, following on a
curve to the left with a radius of 12,040.00 feet, the chord azimuth and
distance being:


1.   143°  
52’     18.88”    116.59           feet
to a point;


2.   233°  
35’     40.2”      10.00             feet
to a point;


Thence, following on a
curve to the left with a radius of 12,050.00 feet, the chord azimuth and
distance being:


3.   142°  
45’     32.2”     351.44            feet
to a point;


4.    51°  
55’     24.2”      10.00              feet
to a point;


Thence, following on a
curve to the left with a radius of 12,040.00 feet, the chord azimuth and
distance being:


5.   141°  
31’     11.1”     169.64            feet
to a point;


Thence, for the next
eleven (11) courses following along Lot 16-A of this subdivision and along the
remainder of Royal Patent 6853, Land Commission Award 9971, Apana 30 to W. P.
Leleiohoku:


Thence, following on a
curve to the right with a radius of 30.00 feet, the chord azimuth and distance
being:


6.   189°  
05’     59”        44.58              feet
to a point;


7.   237°  
05’               427.36                feet to a point;


8.   237°  
51’               299.67                feet to a point;


Thence, following on a
curve to the left with a radius of 325.00 feet, the chord azimuth and distance
being:


9.   210°  
55’     30”       294.34             feet
to a point;


10.  184°  
00’               245.77               feet
to a point;


Thence, following on a
curve to the right with a radius of 275.00 feet, the chord azimuth and distance
being:


11.  208°  
25’               227.35               feet to a point;



 88
 









12.  232°  
50’             2,916.45              feet to a point;


13.  142°  
50’                50.00                feet to a point;


14.  232°  
50’               575.72               feet to a point;


15.  148°  
00’             3,274.09              feet to a point;


16.   65°  
30’               809.40                feet to a point;


Thence, for the next
three (3) courses following along the remainder of Royal Patent 6853, Land
Commission Award 9971, Apana 30 to W. P. Leleiohoku:


17.  155°  
30’                40.00                feet along an existing 40-foot
wide Road Reserve to a point;


18.   65°  
30’             1,493.44               feet along an existing 40-foot
wide Road Reserve to a point;


19.  155°  
30’             3,331.16              feet along Lot 26 to a point;


20.  250°  
52’     40”     4,835.77           feet
along Government Land (State of Hawaii) to a point;


Thence, for the next
three (3) courses following along the remainder of Royal Patent 6853, Land
Commission Award 9971, Apana 30 to W. P. Leleiohoku:


21.  334°  
10’             6,999.97              feet along Lot 27-B-1 to a point;


22.  100°  
30’               348.26               feet along Lot 27-A to a point;


23.   52°  
50’             6,663.81               feet to the point of beginning and containing an area
of 671.256 acres, more or less.


Together with that certain Easement Agreement dated
May 28, 1982, recorded in said Bureau in Liber 16369, Page 175, by and between
Mac Farms of Hawaii, Inc., a Hawaii corporation, and Land of Kapua, a Hawaii
general partnership, “Grantors”, and Farms of Kapua, Ltd., a California limited
partnership, “Grantee”.


BEING a portion of the land conveyed to Kapua Orchard
Estates, LLC, a Delaware limited liability company, by Warranty Deed dated
June 27, 2003, recorded in said Bureau as Document No. 2003-131937,
from Mac Farms of Hawaii, Inc., a Hawaii corporation.


SUBJECT, HOWEVER, to the following:


(a)           Reservation in favor of the State of
Hawaii of all mineral and metallic mines.



 89
 









(b)           Right-of-entry dated February 10,
1966 to Hawaii Electric Light Company, Inc. for the purpose of installing,
removing, maintaining and repairing pole and wire lines until such time as an
appropriate easement is granted to said Company.


(c)           Easements “E” and “H”, being parcels
of land 40.00 feet wide for road and utility purposes as set forth in
instrument dated May 28, 1982, recorded in said Bureau in Liber 16369, Page
296, more particularly described therein.


(d)           Restricted abutter’s rights of
vehicle access into and from Hawaii Belt Road, Federal Aid Project No.
BF-011-1(3), as conveyed to the State of Hawaii, by Deed dated December 31,
1959, recorded in said Bureau in Liber 3827, Page 428.


(e)           Utility Easement Agreement dated May
28, 1982, but effective as provided therein, recorded in said Bureau in Liber
16368, Page 776, by and among Lands of Kapua, a Hawaii general partnership, Mac
Farms of Hawaii, Inc., a Hawaii corporation, and Farms of Kapua, Ltd., a
California limited partnership.


(f)            Easement Agreement dated May 28,
1982, recorded in said Bureau in Liber 16369, Page 175, by and between Mac
Farms of Hawaii, Inc., a Hawaii corporation, and Lands of Kapua, a Hawaii
general partnership, “Grantors”, and Farms of Kapua, Ltd., a California limited
partnership, “Grantee”.


(g)           Easement in favor of Lots 16A, 16B
and Parcel A.


(h)           Access and Utility Easement “1” (80
feet wide) as shown on Tax Maps.


(i)            Terms and provisions contained in
Declaration, Confirmation and Cancellation of Easement Rights and Grant of
Easements dated June 27, 2003 recorded in said Bureau as Document
No. 2003-131936.


(j)            Terms and provisions, contained in
Declaration of Reciprocal Restrictive Covenants dated May 24, 1989,
recorded in said Bureau in Liber 23307, Page 410.


(k)           Claims arising out of customary and
traditional rights and practices, including without limitation those exercised
for subsistence, cultural, religious, access or gathering purposes, as provided
for in the Hawaii Constitution or the Hawaii Revised Statutes.


PARCEL THIRTY-TWO:


Tax Key:    8-9-012-019 (3):


All of that certain parcel of land (portion of the
land described in and covered by Royal Patent Number 6853, Land Commission
Award Number 9971, Apana 30 to W. P. Leleiohoku) situate, lying and being about
8,200 feet east of Hawaii Belt Road on the south side of the Government Land of
Honomalino at Kapua, District of South Kona, Island and County of Hawaii, State
of Hawaii, being LOT 27 B-1 (Mac 11), and thus bounded and described:



 90
 









Beginning at the northwest corner of this parcel of
land at the northeast corner of Lot 17 and on the south boundary of the
Government Land of Honomalino, the coordinates of which referred to Government
Survey Triangulation Station “KAPUKAWAA” being 6,001.85 feet south and
23,048.71 feet east, and running by azimuths measured clockwise from true
South:


1.   250°  
52’     40”     1,207.00            feet
along the Government Land of Honomalino;


2.   334°  
10’            10,752.19              feet along Lot A, being a portion
of R. P. 6853, L. C. Aw. 9971, Apana 30 to W. P. Leleiohoku;


3.    52°  
53’     40”     1,142.88             feet
along Government Land of Kaulanamauna;


4.   150°  
55’             1,374.02               feet along Lot 27-D and a 40-feet
Road Reserve, being portions of R. P. 6853, L. C. Aw. 9971, Apana 30 to W. P.
Leleiohoku;


5.   154°  
10’             9,744.84               feet along Lot 27-A and 17, being
portions of R. P. 6853, L. C. Aw. 9971, Apana 30 to W. P. Leleiohoku to the
point of beginning and containing an area of 299.879 acres, more or less.


Together with that certain Easement Agreement dated
May 28, 1982, recorded in said Bureau in Liber 16369, Page 175, by and between
Mac Farms of Hawaii, Inc., a Hawaii corporation, and Land of Kapua, a Hawaii
general partnership, “Grantors”, and Farms of Kapua, Ltd., a California limited
partnership, “Grantee”.


BEING a portion of the land conveyed to Kapua Orchard
Estates, LLC, a Delaware limited liability company, by Warranty Deed dated
June 27, 2003, recorded in said Bureau as Document No. 2003-131937,
from Mac Farms of Hawaii, Inc., a Hawaii corporation.


SUBJECT, HOWEVER, to the following:


(a)           Reservation in favor of the State of
Hawaii of all mineral and metallic mines.


(b)           Right-of-entry dated February 10,
1966 to Hawaii Electric Light Company, Inc. for the purpose of installing,
removing, maintaining and repairing pole and wire lines until such time as an
appropriate easement is granted to said Company.


(c)           Easement Agreement dated May 28,
1982, recorded in said Bureau in Liber 16369, Page 175, by and between Mac
Farms of Hawaii, Inc., a Hawaii corporation, and Lands of Kapua, a Hawaii
general partnership, “Grantors”, and Farms of Kapua, Ltd., a California limited
partnership, “Grantee”.



 91
 









(d)           Terms and provisions contained in
Declaration, Confirmation and Cancellation of Easement Rights and Grant of
Easements dated June 27, 2003 recorded in said Bureau as Document
No. 2003-131936.


(e)           Terms and provisions, contained in
Declaration of Reciprocal Restrictive Covenants dated May 24, 1989,
recorded in said Bureau in Liber 23307, Page 410.


(f)            Claims arising out of customary and
traditional rights and practices, including without limitation those exercised
for subsistence, cultural, religious, access or gathering purposes, as provided
for in the Hawaii Constitution or the Hawaii Revised Statutes.


(g)           Utility Easement Agreement dated May
28, 1982, but effective as provided therein, recorded in said Bureau in Liber
16368, Page 776, by and among Lands of Kapua, a Hawaii general partnership, Mac
Farms of Hawaii, Inc., a Hawaii corporation, and Farms of Kapua, Ltd., a
California limited partnership.


GENERAL


The above parcels,
to the extent applicable, are subject to the following encumberances:


(a)           Grant of Easement, undated but
acknowledged December 12, 2002, recorded as Document No. 2003-004964.


(b)           Grant of Easement, undated but
acknowledged December 12, 2002, recorded as Document No. 2003-004965.


(c)           Mortgage with Assignment of
Rents, Security Agreement and Fixture Filings, dated June 27, 2003, filed as
Document No. 2003-131939.



 92
 









EXHIBIT
B-1 TO ACQUISITION AGREEMENT


PROCESSING PLANT LEASE




BY AND BETWEEN






MAC FARMS OF HAWAII, LLC,

a Delaware limited liability company (“Lessor”),


NEWCO2, INC.,

a Hawaii corporation (“Lessee”),


and






ML MACADAMIA ORCHARDS, L.P.,

a Delaware limited partnership (“Guarantor”)




DATED AS OF                     ,
2007



 93















 


	
  LAND COURT SYSTEM

  	
  REGULAR SYSTEM

  
	
  Return by Mail  (   )  Pickup  (   )  To:

  	
   

  
	
   

  	
   

  
	
  Tax Map Key No.: See Exhibit A

  	
  Total Pages

  



PROCESSING PLANT LEASE


This PROCESSING PLANT
LEASE (this “Lease”) is made as of this      day
of            ,
2007, by and between MAC FARMS OF HAWAII, LLC, a Delaware limited liability
company, whose principal place of business is c/o Sparks Corp., 775 Ridge Lake
Blvd., Suite 450, Memphis, Tennessee 38120 (“Lessor”), NEWCO2, INC., a
Hawaii corporation, whose principal place of business is 26-238 Hawaii Belt
Road, Hilo, Hawaii, 96720 (“Lessee”), and ML MACADAMIA ORCHARDS, L.P., a
Delaware limited partnership, whose principal place of business is 26-238
Hawaii Belt Road, Hilo, Hawaii 96720 (“Guarantor”).


W  I  T  N  E  S  S  E  T  H:


WHEREAS, Lessor is the
owner in fee of certain Premises (as defined hereinafter); and


WHEREAS, the negotiation
and execution of this Lease is a contemplated and permitted event under the
Acquisition Agreement, dated as of         
  , 2007, by and among Guarantor, Lessor and Kapua Orchard Estates,
LLC (“KOE”);


WHEREAS, Lessor desires
to lease the Premises to Lessee, and Lessee desires to lease the same from
Lessor for the term, at the rental price and upon the covenants, conditions and
provisions set forth herein.


NOW, THEREFORE, in
consideration of the mutual covenants and agreements set forth herein, and for
other good and valuable consideration, the receipt and adequacy of which are 













hereby acknowledged, the
parties hereto agree as follows:


ARTICLE I



LEASE


Section 1.01           Premises.
Lessor, in consideration of the covenants herein contained and on the part of
Lessee to be observed and performed, and upon and subject to the terms and
conditions hereinafter set forth, hereby leases to Lessee the real property
described in Exhibit ”A” hereto, and the buildings, improvements and
facilities thereon, including, without limitation, the Nut Storage Facility and
the Husking Plant, herein collectively called the “Premises”;


TO HAVE AND TO HOLD the
same, together with all tenements, hereditaments, rights, easements, privileges
and appurtenances thereunto belonging or appertaining or held and enjoyed
therewith unto Lessee, for the uses and purposes set forth in this Lease and
during the full term of this Lease.


ARTICLE II



TERM OF LEASE


Section 2.01           Term
of Lease. The term (the “Term”) of this Lease shall be twenty (20) years
commencing on
          
  , 2007 (the “Commencement Date”) and continuing to         
  , 2027.


ARTICLE III



LEASE RENTAL


Section 3.01           Time,
Manner and Place of Payment.  There
shall be no lease rent for the first year of the Lease.  Lessee shall pay to Lessor the lease rent in
the amount of U.S. Dollars One Hundred Thousand One Hundred Eleven &
11/100ths ($111,111.11) per annum during each of the second (2nd) through tenth (10th) years of the Term; and U.S.
Dollars Two Hundred Thousand ($200,000.00) per annum during each of the
eleventh (11th ) through
twentieth (20th) years of
the Term.  Lessee shall pay the lease
rent in legal money of the United States at the office of Lessor in equal
monthly installments, in advance, on the first (1st) day of each month, during the Term,
except for the first twelve (12) months. 
Accordingly, the lease rent for each month of the Lease, commencing on
the first (1st) day of the
thirteenth (13th)
month of the Lease and ending at the end of the tenth (10th) year of the Lease, shall be U.S. Dollars
Nine Thousand Two Hundred Fifty-Nine & 26/100ths ($9,259.26) per
month.  Further, the lease rent,
commencing on the first (1st) day
of the one hundred twenty-first (121st)
month of the Lease and ending at the end of the twentieth (20th) year of the Lease, shall be U.S.
Dollars Sixteen Thousand Six Hundred Sixty-Six & 67/100ths ($16,666.67) per
month.



 2
 









Section 3.02           General
Excise Tax. Lessee will also pay to Lessor at the time and together with
each payment of rent which is subject to GET, an amount which, when added to
rent (whether actually or constructively received by Lessor), shall yield to
Lessor, after deduction of the GET, an amount equal to that which Lessor would
have realized had no such GET been imposed. “GET” means the State of Hawaii general
excise tax on gross income, any sales or value added taxes under any successor,
similar or new federal, state or county law which may be hereafter enacted, on
account of the receipt, actual or constructive, by Lessor of the rental
payments, reimbursement of gross income taxes, and any other taxable gross
income attributable to the Premises or this Lease. For purpose of illustration
only, the amount of such tax is presently four percent (4%), resulting in an
additional amount to paid by Lessee to Lessor of 4.166%.


Section 3.03           Property
and Conveyance Taxes. Lessee shall pay directly to the taxing authority
before they become delinquent all property taxes and assessments of every
description to which the Premises or improvements on the Premises are now or
during the Term of this Lease may be assessed or may become liable, whether
assessed to or payable by Lessor or Lessee, which property taxes and
assessments shall be prorated as of the Commencement Date of this Lease. Lessee
shall also pay when due all conveyance taxes imposed by the State of Hawaii in
respect of this Lease. Lessee shall be responsible for the payment for all
interest, fees and penalties payable due to the late payment or nonpayment of
any of the taxes described in this Section 3.03. This Lease is a “triple
net lease” or a “net, net, net lease” as such terms are normally used in the
real property leasing industry, and unless an expenses relating to the Premises
is specifically provided herein to be borne by Lessor, it shall be borne by
Lessee.


Section 3.04           Financial
Covenants. For the term of the Lease, Guarantor on a consolidated basis (or
its successors and permitted assigns) shall at all times maintain a net worth
equal to or greater than FIVE MILLION DOLLARS ($5,000,000.00), determined in
accordance with GAAP. Upon the execution of this Lease and on a yearly basis
during the Term, Guarantor (or its successors and permitted assigns) shall
provide to Lessor a copy of its unaudited consolidated financial statements
certified for accuracy by an executive officer or other senior manager of such
person or entity.


ARTICLE IV



CONDUCT OF BUSINESS BY LESSEE


Section 4.01           Use.
Lessee shall use the Premises for the purpose of processing, packing,
marketing, selling or otherwise dealing with macadamia nut products; farming, cultivating, irrigating, fertilizing,
maintaining, harvesting, or otherwise dealing with the existing macadamia nut
trees; and conducting any lawful and incidental activities related to
the foregoing uses, including, without limitation, housing of employees,
migrant workers or other individuals that have a non-recreational business
relationship with Lessee. Lessee’s use of the Premises shall also be in
accordance with the remaining sections of this Article IV. Lessee shall
not use or permit the Premises or any part thereof to be used for any other
purpose or use other than those for which 



 3
 









the Premises have
been leased and in the manner provided in this Lease, unless otherwise from
time to time mutually agreed to in writing by the parties hereto.


Section 4.02           Observance
of Laws. Lessee will at all times comply with all Laws (as defined below)
now or hereafter applicable to or affecting the Premises. Lessee will at Lessee’s
expense during the Term alter, maintain or restore the Premises in compliance
with all Laws relating to the condition, use or occupancy of the Premises and
as permitted under the Lease. Lessee will at all times during the Term of this
Lease keep the Premises in a clean, orderly and sanitary condition in the
manner customary in a macadamia nut processing plant.


Section 4.03           Waste
or Nuisance. Lessee shall not use the Premises in any manner that will
constitute unlawful or unreasonable waste, unlawful nuisance or other improper
or unlawful use of the Premises.


Section 4.04           Intentionally
Deleted.


Section 4.05           Condition
of the Premises. EXCEPT
AS OTHERWISE SPECIFICALLY PROVIDED IN THIS LEASE, LESSEE ACKNOWLEDGES THAT
LESSEE HAS MADE ALL OF THE INSPECTIONS AND INVESTIGATIONS THAT LESSEE DEEMS
NECESSARY OR DESIRABLE AND HAS DECIDED TO LEASE THE PREMISES ON THE BASIS SET
FORTH HEREIN. LESSEE HAS INSPECTED THE PREMISES AND THE CURRENT PHYSICAL
CONDITION THEREOF, AND SHALL RELY ON ITS OWN INSPECTION AND SHALL ACCEPT THE
PREMISES “AS-IS” AND IN THEIR
CONDITION AS OF THE DATE HEREOF. EXCEPT AS OTHERWISE SPECIFICALLY PROVIDED IN
THIS LEASE, LESSEE FURTHER ACKNOWLEDGES THAT LESSOR HAS MADE NO REPRESENTATION
OR WARRANTY, WHETHER EXPRESS OR IMPLIED, WITH RESPECT TO THE PHYSICAL CONDITION
OR STATE OF REPAIR OF THE PREMISES, OR ANY IMPROVEMENTS THEREON (INCLUDING ANY
WARRANTIES WHICH MAY BE DEEMED MADE AT LAW, THE BENEFIT OF WHICH, IF ANY,
LESSEE HEREBY WAIVES) OR AS TO THE USE, MERCHANTABILITY, DESIGN, QUALITY,
DESCRIPTION, DURABILITY, OPERATION OR FITNESS FOR USE OF THE PREMISES OR AS TO
THE QUALITY OF THE PREMISES, OR ANY IMPROVEMENTS THEREON.


Section 4.06           Utilities
and Permits. Except as otherwise specifically provided in this Lease,
Lessee shall be solely responsible for obtaining at Lessee’s expense (A) all
utility services and connections and any other services or facilities,
including but not limited to water, sewer, electricity and telephone service,
required for or in connection with Lessee’s use of the Premises, and (B) any
governmental classification, zoning, permits, approval, or consent required by
law for or in connection with the use of the Premises. All utility charges to
the Premises in any manner shall be the sole costs and expense of Lessee during
the entire Term.


Section 4.07           Water.
Subject to the availability of water and consistent with good hydrological
practices and applicable governmental rules and regulations, Lessee shall have
the right to the reasonable use of any and all water sources on the Premises
for purposes of 



 4
 









conducting
(a) Lessee’s operations in a manner consistent with past practice in
connection with the processing of macadamia nuts at the Nut Storage Facility
and the Husking Plant and (b) any permitted expansion of such operations;
and Lessee shall be responsible for the operation, maintenance and repair of
any water sources and all facilities and equipment utilized in connection
therewith at its sole cost, risk and expense at the same or better standards at
which such system, wells, facilities and equipment are being operated,
maintained and repaired as of the date hereof, reasonable wear and tear
excluded. By execution of this Lease, all water supply agreements (if any) held
by Lessor, together with all rights and obligations attendant thereto, are
hereby leased by Lessor to Lessee. Lessor assumes no responsibility to Lessee
for any shortage or unavailability of water from the source or sources of water
on the Premises, from any source whatsoever; nor does Lessor warrant the
quality or quantity of water obtained from any source or sources. Lessee shall pay
all acquisition, operation, and maintenance, repair, diversion and dispersion
costs and charges and/or water charges incurred with the use of water used on
the Premises for whatever purpose or purposes.


Section 4.08           Roads
Within the Leased Parcel. The roads within the Premises have been leased to
Lessee. Lessee at Lessee’s sole cost and expense shall maintain all roads on
the Premises in a safe condition and in compliance with law in accordance with
customary standards for agricultural roads or processing plant roads within a
macadamia nut orchard or a processing plant area, as applicable. Lessee may
also build and repair at Lessee’s sole cost and expense such additional roads,
pathways and the like within the Premises, as it believes necessary for the operation
contemplated by this Lease, but only after the road locations have been
previously approved in writing by Lessor, which approval shall not be
unreasonably withheld, conditioned, or delayed.


Section 4.09           Intentionally
Deleted.


Section 4.10           Lessee’s
Investments and Expenses. Lessee agrees to pay for all the machinery,
equipment, labor and all other costs and expenses reasonably necessary to
properly utilize and maintain the Premises as herein provided.


Section 4.11           Intentionally
Deleted.


Section 4.12           Quiet
Enjoyment. Lessor hereby covenants with Lessee, that so long as Lessee
fully and timely performs its obligations under the Lease, including, but not
limited to, the timely payment of lease rent and all other monetary obligations
thereunder, Lessee shall have quiet enjoyment of the Premises against all
persons and entities holding title by, through, or under Lessor, including
Lessor’s lenders, and Lessor hereby covenants that it will secure from its
lenders in favor of Lessee, such lenders’ non-disturbance and attornment
agreement.


Section 4.13           Husking
Facility. Lessor, in its sole and absolute discretion, may give written
notice to Lessee, at any time during the Term after the end of the fourth (4th)
year of the Term, which requires Lessee to relocate or shut-down (the “Relocation
Notice”) the husking facility on a date specified by Lessor (the “Relocation
Date”).  The Relocation Date shall not be
earlier than two (2) years after the date of the Relocation Notice, and the
Relocation Date shall 



 5
 









be during the
second quarter of the year in which the expiration of the two (2) year notice
period occurs; provided, however, if the expiration of the two (2) year notice
period occurs after the second quarter of the year in question, then, in any
such event, the Relocation Date shall be in the second quarter of the year
following the expiration of the two (2) year notice period.  Lessee agrees that the husking facility will
be shut-down or moved on, or before, the Relocation Date.


Section 4.14           Frontage
Improvements. During the sixth (6th) and seventh (7th) years of the Term,
Lessee shall spend Two Hundred Fifty Thousand Dollars ($250,000.00) each year
(for a total of $500,000.00) for beautification of the commercially-zoned land
and/or highway frontage, as will be recommended by Lessor, and which shall be
in a manner reasonably satisfactory to both parties hereto.


ARTICLE V


HAZARDOUS MATERIALS


Section 5.01           No
Use of Hazardous Materials. Lessee will not use, generate, manufacture,
treat, handle, refine, produce, process, store, discharge, release, dispose of
or allow to exist on, within, under or about the Premises, any Hazardous
Material, unless (A) such material is used in the ordinary course of Lessee’s
operations on the Premises, and (B) such use is in full and strict compliance
with all instructions on the manufacturer’s label and all applicable Hazardous
Materials Laws.


Section 5.02           Notice
of Releases and Claims. If Lessee at any time becomes aware of any
Hazardous Release or of any Hazardous Materials Claim in respect of the
Premises, Lessee will immediately so notify Lessor and provide to Lessor
detailed reports of any such event as may be requested by Lessor. Lessor shall
have the right to join and participate, as a party if it so elects, at Lessee’s
reasonable expense, in any actions initiated in respect of any Hazardous
Materials Claims.


Section 5.03           Remedial
Obligations. Lessee will take all reasonable steps and corrective actions
to remedy any Hazardous Release caused by Lessee or its agents and shall bear
all related Hazardous Materials Cleanup Liabilities. Lessor will take all
reasonable steps and corrective actions to remedy any Hazardous Release by
Lessor or its agents and shall bear all related Hazardous Materials Cleanup
Liabilities. Lessor agrees that Lessee shall not be liable for any Hazardous
Materials Cleanup Liabilities arising prior to the date of this Lease.


Section 5.04           Certain
Definitions.


(c)           “Hazardous
Material” means any and all flammable explosives, radioactive materials,
asbestos, hydrocarbons, organic compounds known as polychlorinated biphenyls,
chemicals known to cause cancer or reproductive toxicity, pollutants,
contaminants, hazardous wastes, toxic substances or related materials, and any
and all other substances or materials defined as or included in the definition
of “hazardous substances”, hazardous wastes”, or “hazardous materials”, and/or “toxic
substances” under or for the purposes of the Hazardous 



 6
 









Materials Laws. For the avoidance of doubt, the
definition of “Hazardous Material” includes any pesticide, poison or
other agent (including, for the avoidance of doubt, any “Restricted Use
Products” or “Restricted Use Pesticides” identified from time to time by the
United States Environmental Protection Agency, the Hawaii Department of
Agriculture or other similar agency) used to control any noxious weeds and
grasses and rodents and other pests.


(d)           “Hazardous
Material Cleanup Liabilities” means any cost or expense of any nature
whatsoever required to be undertaken under or pursuant to any Environmental Law
to contain, remove, remedy, respond to, clean up or abate the release of any
Hazardous Materials or other contamination of surface water, groundwater, land
surface or subsurface strata, whether on-site or off-site, arising from activities
at the Premises, including, without limitation, the manufacture, generation,
formulation, processing, labeling, distribution, introduction into commerce or
on-site or off-site use, treatment, handling, storage, disposal, or
transportation of any Hazardous Materials.


(e)           “Hazardous
Materials Claim” means (i) any action instituted, or to the best of Lessee’s
knowledge contemplated or threatened, in respect of the Premises pursuant to
any Hazardous Materials Law, and (ii) any and all claims made or to the best of
Lessee’s knowledge contemplated or threatened, by any third party against
Lessee or any other person seeking damages, contribution, cost recovery,
compensation, injunctive relief or similar relief resulting from an Hazardous
Release or from the existence of any Hazardous Material on, within or under the
Premises.


(f)            “Hazardous
Materials Law” means any Law, now or hereafter in effect, relating to
Hazardous Materials, including, without limitation, the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended, 42
U.S.C. Section 9601, et seq., the Resource Conservation and Recovery Act, 42
U.S.C. Section 6901, et seq., the Hazardous Materials Transportation Act, 49
U.S.C. Section 1801, et seq., the Clean Water Act, 33 U.S.C. Section 1251, et
seq., the Clean Air Act, 42 U.S.C. Section 7401, et seq., the Toxic Substances
Control Act, 15 U.S.C. Sections 2601 through 2629, the Safe Drinking Water Act,
42 U.S.C. Sections 300f through 300j, Section 311 of the Federal Water Pollution
Control Act, 33 U.S.C. Section 1317, Federal Resource Conservation and Recovery
Act, 42 U.S.C. Section 6901, Hawaii Revised Statutes Chapters 340A through
340F, 341, and 342B through 342P, and any similar federal, state and local laws
and ordinances and the regulations published and/or promulgated pursuant
thereto, as amended to date.


(g)           “Hazardous
Release” means any event involving the use, deposit, disposal, spill,
release or discharge of any hazardous material on, within or under the Premises
during the Term of the Lease.


(h)           “Law”
means any judicial decision, statute, constitution, ordinance, resolution,
regulation, rule, administrative order, or other requirement of any municipal,
county, state, federal, or other government agency or authority having
jurisdiction over the parties or the Premises, or both, in effect either at the
time of execution of the Lease or at any time during the Term, including,
without limitation, any regulation or order of a quasi-official entity or body.
For 



 7
 









the avoidance of doubt, the definition of “Law”
includes any such requirement promulgated by the United States Food and Drug
Administration or the United States Department of Agriculture.


ARTICLE VI



ALTERATIONS AND IMPROVEMENTS


Section 6.01           Alterations
and Improvements by Lessee. Except as otherwise set forth herein, Lessee
shall not make any alterations to the Premises or any improvements thereon
without Lessor’s prior written consent, which shall not be unreasonably
withheld, conditioned, or delayed. Notwithstanding the foregoing, Lessee shall
have the right, without the consent of Lessor but with fifteen (15) days prior
written notice to Lessor, to make the following alterations or improvements:


(A)          Any
alteration or improvement that Lessee is required to perform in order to
discharge its repair and maintenance obligations under this Lease; or 3


(B)           Any
minor alteration or improvement the cost of which does not exceed FIFTY
THOUSAND DOLLARS ($50,000.00) and that is directly related to Lessee’s
permitted uses of the Orchards.


If the alteration
exceeds FIFTY THOUSAND DOLLARS ($50,000.00), Lessee may proceed with the
alteration or improvement so long as (i) Lessee secures the prior written
consent of Lessor as provided for in the opening paragraph of this
Section 6.01, (ii) Lessee obtains a Builder’s Risk Policy if required
under Section 6.02(B), and (iii) any such alterations or improvements
do not materially adversely impact the levels of noise, dust, smoke,
earthshock, soot, ash, odor, noxious vapors or other adverse environmental
conditions in any area greater than twenty-five (25) yards within any
properties neighboring on the Premises (excluding, however, reasonable
temporary impacts during construction that otherwise comply with applicable
Laws) or materially adversely impact the transmission of surface water runoff
in any area greater than twenty-five (25) yards within any properties
neighboring on the Premises.


Lessor agrees to
join in and execute, if required to do so by government authorities, any
application for permits or other approvals or authorizations relating to any
permitted alterations or improvements as may be required by applicable law or
otherwise reasonably requested by Lessee; provided, however,
that Lessor shall not be required to incur any liability or any material
cost or expense associated therewith for which Lessee does not agree to
reimburse Lessor.


Section 6.02           Protection
Against Liens and Encumbrances.


(A)          Liens
and Encumbrances. Lessee shall keep the Premises free from any mechanics’
or materialmen’s liens for labor and/or materials furnished in the improvement
of the Premises, or from any attachment, execution or judgment liens, and any
charge or encumbrance arising out of a claim against Lessee whatsoever.



 8
 









(B)           Builder’s
Risk Policies and Surety Bonds. In the event that Lessee makes any
alterations or improvements to the Premises with a contract sum (the “Contract
Sum”) of greater than or equal to FIVE HUNDRED Thousand Dollars
($500,000.00), Lessee shall, at its sole expense, maintain, or cause its
contractor to maintain, an All Risk Builder’s Risk Policy (the “Builder’s
Risk Policy”), in an amount equal to one hundred percent (100%) of the
Contract Sum for such alteration or improvement, including all engineering and
project development costs. The Builder’s Risk Policy shall provide coverage on
an “All Risks” basis with excluded coverage including earthquake, flood,
collapse and off-site coverage. The coverage provided by the Builder’s Risk
Policy shall be maintained until final acceptance of the alterations or
improvements by Lessee. In addition, in such circumstances, upon Lessor’s
request, Lessee shall, at it sole expense, furnish, or cause to be furnished, a
surety bond in form and substance satisfactory to Lessor, containing a
performance and payment clause, in the amount of the Contract Sum. Such bond
shall be issued by a surety or bonding company licensed to do business in the
State of Hawaii and approved by Lessor, and shall be furnished to Lessor prior
to commencement of the work on such alteration or improvement.


Section 6.03           Ownership
of Improvements and Alterations. All permanent improvements or permitted
alterations thereto (including, without limitation, fencing, the irrigation
system, all other existing improvements on the date hereof and any other
improvements made by Lessor or Lessee after the date hereof) on the Premises
shall become the property of Lessor upon Lessee’s surrender of the Premises to
Lessor on expiration or termination of this Lease. All non-permanent improvements,
fixtures, equipment, permitted alterations thereto, and personal property are
and shall remain the property of Lessee upon termination of this Lease.


ARTICLE VII



MAINTENANCE AND REPAIRS


Section 7.01           Maintenance
and Repairs by Lessee. Lessee at its cost shall keep the Premises in good
order, condition and repair to standards customary in the operation of
macadamia nut processing facilities. Lessee shall pay for all damage to the
Premises and the improvements thereon resulting from the acts or omissions of
Lessee or its employees, agents or invitees (Force Majeure Events excepted).


Section 7.02           No
Obligation of Lessor for Maintenance and Repairs. Except as otherwise
provided in this Lease, Lessor shall not be obligated to make any repairs to
the Premises (or the improvements thereon) or maintain the same in good
condition. All repairs and maintenance of the Premises shall be Lessee’s sole
responsibility and made at Lessee’s expense.


Section 7.03           Access
of Lessor to the Premises. Upon at least twenty-four (24) hours prior
notice, Lessee shall permit Lessor and its agents to enter into and upon the
Premises at all reasonable times to inspect and examine the same and determine
the state of repair and condition thereof, to maintain the Premises and the
improvements thereon, and to make repairs, alterations and additions to, and to
inspect and examine any portion of the Premises and the improvements 



 9
 









thereon, with the
right to erect temporary structures as may be required, and all without any
rebate of lease rent or liability to Lessee for any loss of occupation or quiet
enjoyment of the Premises thereby occasioned; provided, however,
that all such work shall be done promptly and in such manner and during such
hours as to cause no unreasonable and substantial interference to Lessee’s
business.


Section 7.04           Utilities.
Lessee shall make all arrangements for the installation of, if necessary, and
pay for all utilities and services furnished to the Premises or used by Lessee,
including, without limitation, electricity, water, telephone service, trash
collection and all connection and meter charges. Lessor shall not be liable for
interruption or failure to furnish such services.


ARTICLE VIII



WAIVERS OF LIABILITY AND INDEMNITY


Section 8.01           Waiver
of Liability. Lessor shall not be liable to Lessee or any persons claiming
under Lessee for any damage to Lessee or to the property of Lessee from any
cause, except to the extent (a) that any such damage results from the
intentional misconduct or the gross negligence of Lessor, Lessor’s agents or
contractors or from Lessor’s (or Lessor’s agents’ or contractors’) exercise of
its rights under this Lease, or (b) arising under Sections 8.02 or 8.03 below.
Lessee waives all claims against Lessor for damage to person or personal property
(including death resulting therefrom) arising for any reason, except as to
matters described in subsections (a) and (b) above.


Section 8.02           General
Indemnity. Lessor and Lessee (the “Indemnifying Party”) each agrees,
from and after the date hereof, to indemnify, hold harmless and defend the
other and each of its respective affiliates, officers, directors, employees,
attorneys, agents, contractors, guests and invitees and each of the heirs,
executors, successors and assigns of any of the foregoing (collectively, the “Indemnified
Parties”), from and against any and all liabilities, losses, damages
(including foreseeable or unforeseeable consequential damages), claims, costs
and expenses, interest, awards, judgments and penalties (including reasonable
attorneys’ and consultants’ fees and expenses) (collectively, a “Loss”)
suffered or incurred by such Indemnified Parties, arising out of or resulting
from (i) any breach of any representation or warranty of the Indemnifying Party
contained in this Lease, (ii) any breach of any covenant or agreement of the
Indemnifying Party contained in this Lease, (iii) any accident, fire, nuisance
or failure to maintain of the Indemnifying Party, or (iv) any act or
omission of Indemnifying Party resulting from livestock or other animals
straying from the Premises, except in all cases to the extent that such Loss
was caused by intentional misconduct of the Indemnified Parties. The provisions
of this Section 8.02 shall survive the expiration, termination, assignment
or cancellation of this Lease.


Section 8.03           Indemnity
for Hazardous Materials Claims. Subject to the last sentence of Section
5.03, the Indemnifying Party agrees, from and
after the date hereof, to indemnify, hold harmless and defend the Indemnified
Parties from and against any Loss suffered or incurred by any such Indemnified
Parties, arising out of or resulting from (i) the use, generation, 



 10
 









manufacture, treatment, handling, refining, production, processing,
storage, release, discharge, disposal or presence of any Hazardous Materials
on, within, under or about the Premises by the Indemnifying Party, and (ii) the
Indemnified Party’s investigation and handling (including the defense) of any
Hazardous Materials Claims, whether or not any lawsuit or other formal legal
proceeding shall have been commenced in respect of such claims. The provisions
of this Section 8.03 shall survive the expiration, termination, assignment or
cancellation of this Lease.


Section 8.04           Losses.
Except as arising under Article V or Sections 8.02 or 8.03, Lessor shall not be
responsible for any losses or damage to any improvements or personal property
on the Premises for any reason whatsoever (other than the gross negligence or
intentional misconduct of Lessor) including, without limitation, damage or loss
caused by fire, theft, vandalism, lighting, rain, floods, or interference by
any third party.


Section 8.05           Surrounding
Use Effects and Operations. Except as otherwise provided in this Lease,
Lessee and Lessor hereby waive any claims arising from the effect (of which
Lessee and Lessor are hereby given notice) upon the Premises, and any
improvements constructed thereon, of various hazards and noise, dust, smoke,
earth shock, soot, ash, odor, noxious vapors, transmission of surface water
runoff, or other adverse environmental conditions, including but not limited to
those attributable to wind drift and other weather factors (collectively, the “Surrounding
Use Effects”) created by or attributable to historical, existing, and
prospective construction, development, agricultural, pastoral, residential,
commercial and other non-residential uses and activities by Lessee and Lessor,
and Lessee and Lessor hereby consent to all of those uses and activities by
Lessee on the Premises and Lessor on the land surrounding or in the general
area of the Premises which include, but are not limited to, burning,
harvesting, tending as well as fertilization and pest and weed control;
diversified agricultural operations and activities; livestock grazing;
quarrying; real estate development and other changes in use (due to zoning
changes or other governmental authorization or otherwise), construction,
grading, improvement and maintenance of the Premises or adjacent surrounding
properties; the operation, construction, and maintenance respecting any use of
the Premises by Lessee or Lessor; electrical transmission lines and facilities
within or in the vicinity of the Premises; irrigation of any and all
surrounding lands with reclaimed water, treated effluent, or other non-potable
water sources (collectively, the “Surrounding Operations”). Except as
otherwise provided in this Lease, Lessee and Lessor and their respective
successors and permitted assigns shall be deemed to have assumed any and all
risks associated with such Surrounding Operations and the annoyances,
inconveniences and nuisances created thereby as they relate to the Premises and
the use thereof by Lessee or Lessor, and to have waived all rights and claims
against each other (and their successors and assigns) and Related Parties (as
defined below), arising out of or in connection with such activities,
annoyances, inconveniences and nuisances as they relate to the Premises and the
use thereof by Lessee or Lessor, including but not limited to (a) any
right to seek damages attributable thereto, or (b) the abatement or
elimination thereof. As used herein, the term “Related Parties” shall
mean Lessor, Lessee and their respective successors and assigns, and their
respective partners, members, owners, subsidiaries and affiliates, and any
officer, director, member, representative, employee or agent thereof.



 11
 









Section 8.06           General
Conditions.             All
representations and warranties in Sections 16.02(D) through 16.02(G), Section
16.02(I), and Sections 16.02(K) through 16.02(P) shall survive and continue in
full force and effect for a period of thirty (30) months after the date hereof
and the obligations to indemnify and hold harmless a party hereto pursuant to
Section 8.02(i) shall terminate thirty (30) months after the date hereof;
provided, however, that such obligations to indemnify shall not terminate with
respect to any item as to which the Indemnified Party shall have before the
expiration of such 24-month period, previously made a claim by delivering
notice of such claim (stating in reasonable detail the basis of such claim) to
the Indemnifying Party.


All representations and warranties
in Section 16.02(H) shall survive and continue in full force and effect for the
Term of the Lease.


All representations and warranties
in Sections 16.01(A) through 16.02(C) and Section 16.02(J) shall survive and
continue in full force and effect for a period ending thirty (30) days after
expiration of the applicable statute of limitations (including extensions
thereto) and the obligations to indemnify and hold harmless a party hereto
pursuant to Section 8.02(iii) shall terminate thirty (30) days after expiration
of the applicable statute of limitations (including extensions thereto); provided, however, that
such obligations to indemnify shall not terminate with respect to any item as
to which the Indemnified Party shall have, before the expiration of such 30-day
period after expiration of the applicable statute of limitations (including
extensions thereto), previously made a claim by delivering notice of such claim
(stating in reasonable detail the basis of such claim) to the Indemnifying
Party.


ARTICLE IX



INSURANCE


Section 9.01           Public
Liability and Property Damage Insurance.


(A)          Lessee
shall maintain, throughout the Term of the Lease and at its cost, insurance for
the mutual benefit of Lessor, Lessee and the Indemnified Parties against (i)
all claims for personal injury, death and property damage arising out of and in
connection with Lessee’s use or occupancy of the Premises, naming Lessor as an
additional insured and sole loss payee, as applicable, and having bodily injury
policy limits of not less than FIVE MILLION DOLLARS ($5,000,000.00) per person
and FIVE MILLION DOLLARS ($5,000,000.00) per occurrence in the aggregate and
property damages limits of not less than TWO MILLION DOLLARS ($2,000,000.00)
per occurrence in the aggregate; (ii) all claims of employees working in or at
the Premises under appropriate worker’s compensation and employer’s liability
insurance to the extent and in form and amount required by law;
(iii) general liability insurance in amounts reasonably acceptable to
Lessor; and (iv) all contractual liabilities assumed by Lessee under
Sections 8.02 and 8.03 (including no less than three (3) year tail coverage).


(B)           All
policies of insurance required to be provided by Lessee under this Section 9.01
shall:



 12
 









(i)            Include
an endorsement providing that inclusion of more than one entity as insured
under any such policy shall in no way prejudice the right of any other insured
entity as respects any claim, demand, suit or judgment made or brought by or in
favor of any other insured entity, so that the policy shall protect each entity
in the same manner as though a separate policy had been issued to each entity;


(ii)           Include
an endorsement providing that Lessor, although named as an insured, shall be
entitled to recover under the policies for any loss to Lessor, or Lessor’s
employees, agents, or contractors (and other Indemnified Parties),
notwithstanding the negligence of Lessee.


(iii)          Cover
the whole of the Premises, and the business operated by Lessee and/or any
further sub lessee within the Premises and any act or omission of any employee
of Lessee and any event involving any employee of Lessee which occurs at any
other portion of the Premises and which occurs in the course of such employee’s
employment with Lessee.


(iv)          Acknowledge
the indemnity obligations of Lessee under Article VIII.


Section 9.02           Payment
of Premiums and Delivery of Policies. Lessee shall pay all premiums and all
fees and expenses for the insurance required by this Lease when due and will
deliver true and correct copies of all policies of insurance, as well as
certificates of insurance evidencing the coverages required herein, to Lessor
together with evidence of payment of the premiums satisfactory to Lessor within
twenty (20) days prior to the Commencement Date of this Lease. If Lessee has
not provided the required insurance certificates within thirty (30) days of
Lessor’s notice to Lessee to provide such certificates, Lessor may exclude
Lessee from occupancy of the Premises until the required insurance certificates
have been provided to Lessor. Lessee (i) shall deliver certificates of
insurance evidencing the coverages required herein not less than twenty (20)
days prior to the expiration dates of expiring policies and (ii) shall use
commercially reasonable efforts to deliver copies of replacement policies or
renewals not less than sixty (60) days after the effectiveness of such
replacement policies or renewals. Binders binding the issuance of policies of
insurance for the coverage specified in this Article IX shall be accepted
by Lessor if such policies are not obtainable by Lessee at the time in question
due to any building or improvement being in the course of construction or other
cause of temporary duration.


Section 9.03           Review
of Coverage. Lessee acknowledges that inflation may reduce the effective
value of coverage, that terms of insurance contracts or endorsements may be
revised, that the types of insurance contemplated by this Lease may become
unavailable or that other circumstances may arise which affect or threaten to
affect the protection to be afforded by the insurance required by this Lease.
Accordingly, the adequacy of the coverage afforded by the insurance shall be
subject to review by Lessor from time to time, and if Lessor reasonably
determines at any time or times that a prudent businessman in Hawaii utilizing
the Premises in a manner similar to the use of the Premises by Lessee would
increase the limits of liability or 



 13
 









would insure the
property against additional perils when such insurance is available in Hawaii,
Lessee shall forthwith procure and maintain such other or additional forms and
amounts of insurance as Lessor finds sufficient.


Section 9.04           Policies.
All the insurance required under this Lease:


(A)          Shall
be effected by policies issued by insurance companies authorized to do business
in the State of Hawaii with a general policy holders rating of “A-” or better,
and with a financial size category of Class VI or better, as rated in the most
recent edition of Best’s Insurance Reports.


(B)           Be
issued as a primary policy and not contributing with, and not in excess of
coverage which Lessor may carry.


(C)           Contain
an endorsement requiring thirty (30) days’ prior written notice from the
insurance company to both Lessor and Lessee before cancellation or change in
the coverage, scope, or amount of any policy.


(D)          In
the case of liability insurance, a maximum TWENTY-FIVE THOUSAND DOLLARS
($25,000.00) deductible.


(E)           Be
in a form reasonably satisfactory to Lessor.


(F)           Shall
name Lessee as the insured party and Lessor as an additional insured, but
subject nevertheless to the loss-payee provisions and provisions relative to
the disposition of insurance proceeds stated in this Article IX.


(G)           Be
in amounts sufficient to prevent the insured from being a co-insurer within the
terms of applicable policies.


Section 9.05           Failure
to Provide Insurance.


(A)          If
Lessee defaults in insuring the Premises or in delivering the policies (and
certificates), Lessor may, at Lessor’s option but without being so obligated,
effect such insurance from year to year and pay the premiums, and Lessee will
reimburse Lessor on demand for any premiums so paid with interest from the time
of payment at the rate from of one percent (1%) per month. The procurement by
Lessor of any insurance required to be carried by Lessee shall not release
Lessee from its obligation to obtain the insurance required by this Lease nor
prejudice Lessor’s exercise of its remedies under this Lease for Lessee’s
failure to obtain insurance.


(B)           Lessor
shall not have any liability to Lessee for the coverage or quality of any
insurance required to be carried by Lessee or for the collection of any
insurance proceeds or for the insolvency of any insurer or insurance
underwriter, and Lessee’s failure to maintain the insurance coverage require
hereunder nor the inability to collect all or a part of such insurance shall
not release Lessee from any of its obligations hereunder.



 14
 









Section 9.06           Subrogation.
Lessor and Lessee release each other from any claims for damage to any person
or to the Premises by, or that result from, risks insured against under any
insurance policies carried by Lessor or Lessee and in force at the time of any
such damage consistent with the requirements of this Lease and each agrees to
look solely to and seek recovery from such insurance policies so long as such
waiver of subrogation does not affect the right of the insured to recover
thereunder. Lessor and Lessee shall cause each insurance policy obtained by
them to provide that the insurance company waives all right of recovery by way
of subrogation against the other in connection with any damage covered by any
policy.


Section 9.07           Net
Insurance Proceeds. Any proceeds from any casualty insurance maintained by
Lessee for the improvements on the Premises used by Lessee in connection with
this Lease arising out of or relating to any claim for damage to or destruction
of such improvements shall be used and applied as follows:


(i)            First, at Lessee’s option, such
proceeds shall be used to replace the improvements so damaged or destroyed;


(ii)           Second, any remaining proceeds shall
belong to and shall be paid to Lessor.


ARTICLE X



CONDEMNATION


Section 10.01         Definitions.


(A)          “Condemnation”
means (i) the exercise of any governmental power, whether by legal proceedings
or otherwise, by a condemnor and (ii) a voluntary sale or transfer by Lessor to
any condemnor, either under threat of condemnation or while legal proceedings
for condemnation are pending.


(B)           “Date
of taking” means the date the condemnor has the right to possession of the
property being condemned.


(C)           “Condemnation
Award” means all compensation, damages, sums, or anything of value awarded,
paid, or received on a total or partial condemnation.


(D)          “Condemnor”
means any public or quasi-public authority or private corporation or individual
having power of condemnation.


Section 10.02         Parties’
Rights and Obligations To Be Governed by Lease. If, during the Term or
during the period of time between the execution of this Lease and the
Commencement Date, there is any taking of all or any part of the Premises or
any interest in this Lease by condemnation, the rights and obligations of the
parties shall be determined pursuant to this Article X.



 15















Section 10.03         Termination of Lease as to Portion
of Premises Taken. If the Premises or any portion thereof or interest
therein is taken by condemnation, this Lease shall terminate only as to the
part so taken on the date of taking.


Section 10.04         Option to Terminate. If the
whole of the Premises or greater than fifty percent (50%) of the acreage of the
Premises or interest therein is taken by condemnation, then in any such event,
either Lessor or Lessee shall have the right to terminate this Lease by giving the
other written notice of termination within sixty (60) days after such taking.
Any such termination shall be effective as of the last day of the calendar
month next following the month in which such notice is given. Upon such a
termination, Lessor shall have no obligation to refund to Lessee any rent or
other monies paid by Lessee. Termination of this Lease by Lessor pursuant to
this Section 10.04 shall not affect the respective rights of Lessor and
Lessee to any Condemnation Award.


Section 10.05         Distribution of Condemnation Award.
Any Condemnation Award shall belong to and shall be paid to Lessor, and Lessee
agrees that Lessor shall be solely entitled to pursue, negotiate, settle, or
otherwise resolve any and all issues relating to the amount or nature of such
Condemnation Award, and Lessee waives any rights in respect thereto or claims
arising out of any decision or resolution of the matter approved or otherwise
reached by Lessor; provided, however,
that in the event the amount of any such Condemnation Award relates to any
portion of the Premises that remains subject to the Lease at such time, then
Lessor agrees to pay to Lessee a portion of such Condemnation Award equal to
the sum of:


(A)          The amount equal to the portion of the
Condemnation Award expressly attributable to permanent, permitted improvements
on the property made by Lessee at its sole cost and expense since the date
hereof;


(B)           The amount equal to the portion of
the Condemnation Award expressly attributable to Lessee’s personal property on
the Premises.


Notwithstanding
the foregoing, under no circumstances whatsoever shall Lessee be paid any
portion of any Condemnation Award expressly attributable to (i) the
leased-fee simple interest in the Premises, and (ii) any improvements on
the Premises existing as of the date hereof.


Section 10.06         Temporary Taking. The temporary
taking of the Premises or any part of the Premises shall constitute a taking of
the Premises by condemnation only when the use and occupancy by the taking
authority is continued for longer than one-hundred (180) consecutive days.
During this one-hundred eighty (180) day period, all of the provisions of this
Lease shall remain in full force and effect. Lessor shall be entitled to
whatever Condemnation Award may be paid for the use and occupation of the
Premises for the period involved.



 16
 









ARTICLE XI


ASSIGNMENT,
ENCUMBRANCE AND SUBORDINATION


Section 11.01         Assignment. Lessee may not
assign this Lease nor sublet any or all of the Premises without the prior
consent of Lessor, which consent shall not be unreasonably withheld,
conditioned or delayed. Any assignment of this Lease permitted by Lessor shall
not be valid or of any force or effect until the assignee shall have executed,
acknowledged and delivered to Lessor a written agreement assuming all the
obligations on Lessee’s part to be performed under this Lease; provided, however, the
assignee shall not be required to assume any Hazardous Materials Cleanup
Liabilities arising prior to the date of this Lease. In the event of any such
assignment or sublease, Lessee shall remain liable for its obligations under
this Lease, unless otherwise agreed in writing by Lessor. In addition, Lessee
may not pledge, mortgage or otherwise encumber in any manner the Premises or
the uses and benefits contemplated by this Lease without the prior written
consent of Lessor, which consent shall not be unreasonably withheld,
conditioned or delayed; provided, however, that Lessee shall be permitted to pledge, mortgage
or otherwise encumber the uses and benefits contemplated by this Lease in
connection with the closing of the Acquisition Agreement and the execution of
this Lease. Notwithstanding any other provision in this Lease, Guarantor may
not assign its obligations under this Lease without the prior consent of Lessor,
which consent may be withheld, conditioned or delayed by Lessor in its sole
discretion.


Section 11.02         Intentionally Deleted.


Section 11.03         Mortgage of Premises By Lessor.
Subject to Section 4.12, this Lease is and shall be subject and
subordinate, at all times, to the lien of any mortgage or mortgages or other
encumbrances which may now or hereafter affect the Premises (or any portion
thereof) and to all advances made or hereafter to be made upon the security
thereof and to the interests thereon, and to any agreements of any kind at any
time made, modifying, supplementing, extending or replacing any such mortgages.
Lessor agrees to promptly provide notice to Lessee of any such mortgage or
other encumbrance and a complete copy thereof. Lessee further agrees that it
shall attorn to the right to any lender, secured party or other purchaser who
acquires title to the Premises (or any portion thereof) through foreclosure,
exercise of a power of sale or a deed in lieu of foreclosure, and Lessee shall
remain bound by the terms of this Lease and shall not have the right or option
to terminate this Lease in the event title to the Premises (or any portion
thereof) is acquired by any other party. At the request of Lessor, Lessee shall
execute and deliver such further documents and instruments as may be reasonably
requested by Lessor to confirm and implement the provisions of this Section
11.03.


Section 11.04         Intentionally Deleted.


Section 11.05         Right to Estoppel Certificates.
Either Lessor or Lessee, within fifteen (15) days after written request from
one other, shall execute and deliver to such requesting party, in recordable
form, a statement certifying in substance that (A) this Lease represents the
entire agreement of Lessor and Lessee and is unmodified and in full force and
effect, or in full force 



 17
 









and effect as modified,
and stating the modifications, (B) the amount of the lease rent, the dates to
which the lease rent has been paid in advance, and the amount of any security
deposit or prepaid lease rent, (C) there has been no transfer of this Lease nor
Lessor’s or Lessee’s (as applicable) interest therein, and (D) there are not,
to Lessor’s or Lessee’s (as applicable) knowledge, any uncured defaults on the
part of Lessee or Lessor (as applicable) and that Lessor or Lessee (as
applicable) has no right of offset, counterclaim or deduction against lease
rent, or specifying such defaults, if any are claimed together with the amount
of any alleged offset, counterclaim or deduction. Any such statement may be
relied upon by any prospective purchaser or lender. Failure to deliver the
certificate within the fifteen (15) days shall be conclusive upon the party
upon whom such request was made failing to deliver the certificate of the
foregoing certifications.


ARTICLE XII


DEFAULT


Section 12.01         Events of Default. The following
events shall constitute events of default, in addition to any other events of
default:


(A)          If Lessee shall fail to pay any rent
payments within ten (10) days after written notice by Lessor to Lessee that the
same is due and payable, or Lessee shall fail to pay any tax payments,
reimbursements, deposits or any other charges or payments due hereunder within
ten (10) days after written notice to Lessee that the same shall become due and
payable; or


(B)           Without limitation to other
provisions of this Section 12.01, if Lessee shall fail to perform or
comply with any covenant, term or provision contained in this Lease (including,
without limitation, the use, cooperation and maintenance provisions of Article IV,
Article VII and elsewhere in this Lease), which failure shall not, within
thirty (30) days after written notice thereof shall have been given to Lessee
by Lessor, have been remedied to the reasonable satisfaction of Lessor or up to
ninety (90) days if Lessee is diligently pursuing such cure if more than thirty
(30) days is reasonably required to cure; provided, however,
that with respect to a failure to perform or comply with any non-material
covenant, term or provision contained in this Lease, if Lessee is diligently
pursuing such cure after sixty (60) days and Lessee commenced diligent cure
activities within thirty (30) days after notice thereof, Lessee may make a
written request not more than thirty (30) or less than fifteen (15) days prior
to the end of such ninety (90) day period for a reasonable extension of such
ninety (90) day period and Lessor shall approve such request in writing prior
to the expiration of such ninety (90) day period unless such extension would
have a materially adverse effect on Lessor or its ability to exercise any of
its material rights under this Lease and, in the event that Lessor shall fail
to respond to such written request within fifteen (15) days, such request shall
be deemed approved by Lessor; or



 18
 









(C)           If any material representation or
warranty contained herein or any written representation or certificate to
Lessor concerning the financial condition or credit standing of Lessee (or its
successors and permitted assigns) proves to be materially false or misleading;
or


(D)          If any person obtains an order or
decree in any court of competent jurisdiction enjoining or prohibiting Lessee
from performing any of its material obligations under this Lease and such
proceedings are not discontinued and such decree is not vacated or stayed and
timely appealed within ninety (90) days after the granting thereof; or


(E)           If there shall be a pledge or
mortgage of the uses and benefits contemplated by this Lease by Lessee without
the prior written consent of Lessor, except in accordance with the provisions
of Section 11.01; or


(F)           If Lessee shall become insolvent, or
shall make an assignment for the benefit of creditors, or shall admit in
writing any inability to pay its debts as they become due, or shall be the
subject of a voluntary or involuntary petition in bankruptcy, or shall be
adjudicated a bankrupt or insolvent, or shall file any petition or answer
seeking for itself any arrangement, composition, adjustment, liquidation,
dissolution or similar relief to which it may be entitled under any present or
future Law, or shall file any answer admitting the material allegations of any
petition filed against it in any such proceedings, or shall seek or consent to
or acquiesce in the appointment of any trustee, receiver or liquidator of all
or a substantial part of its properties or assets, or, if the State of Hawaii
or any other governmental authority having jurisdiction over Lessee shall
dissolve Lessee or cancel, revoke, withdraw or approve the withdrawal of any
charter, certificate, registration or authority to maintain Lessee’s existence
or right to do business as a corporation in the State of Hawaii unless, in any
such case, such event shall have been rescinded within thirty (30) days, or,
within sixty (60) days after commencement of any proceedings against Lessee
seeking any arrangement, composition, adjustment, or similar relief under any
present or future Law, such proceeding shall not have been dismissed, or,
within sixty (60) days after the appointment, without the consent or
acquiescence of Lessee, of any trustee, receiver or liquidator of any or of all
or a substantial part of its properties or assets, any such appointment shall
not have been vacated, or, if any action shall be taken by an officer or
director of Lessee, looking to the dissolution or liquidation of Lessee; or


(G)           If this Lease or any estate or
interest hereunder shall be seized, attached, executed, confiscated, levied
upon under any legal process or under claim of legal right, or subject to
forfeiture proceedings under state or federal laws as a result of any act or
omission of Lessee, and Lessee shall fail to secure release or discharge of
this Lease from such seizure within thirty (30) days of such seizure.


For the avoidance of
doubt, and notwithstanding anything to the contrary herein, in the event that
(i) Lessor has complied with its obligations hereunder, and (ii) either
(x) Lessee refuses, fails, or is unable to continue to perform its
obligations hereunder or (y) this Lease is terminated early for any reason,
then, in any such event, Lessee shall not be entitled to a refund of any rent
or other money otherwise paid or payable by Lessee hereunder.



 19
 









Section 12.02         Right to Re-enter. Upon the
occurrence of an uncured event of default under Section 12.01(A) (after
expiration of the applicable cure period), Lessor, besides any other rights or
remedies it may have, shall have the immediate right, with or without
termination of this Lease, of re-entry and may remove all persons and property
from the Premises and such property may be removed and stored in a public
warehouse or elsewhere at the cost of, and for the account of Lessee, all
without service or notice or resort to legal process and without being deemed
guilty of trespass, or becoming liable for any loss or damage which may be
occasioned thereby.


Section 12.03         Right to Terminate. Should
Lessor elect to re-enter for Lessee’s default, as provided in Section 12.02, or
should it take possession pursuant to legal proceedings or pursuant to any
notice provided for by law, it may, at its sole discretion, either terminate
this Lease or it may from time to time without terminating this Lease, make
such alterations and repairs as may be necessary in order to re-lease the
Premises, and re-lease the Premises or any part thereof for such term or terms
(which may be for a term extending beyond the Term of this Lease) and at such
lease rent and upon such other terms and conditions as Lessor in its sole
discretion may deem advisable. Upon each such leasing, all lease rent received
by Lessor from such leasing shall belong to Lessor and shall be applied to
offset any remaining rent owed by Lessee to Lessor. Termination may, but need
not necessarily, be made effective by the giving of written notice to Lessee of
intention to end the Term of this Lease, specifying a day not earlier than five
(5) days thereafter, and upon the giving of such notice, the Term of this Lease
and all right, title and interest of Lessee hereunder shall expire as fully and
completely on the day so specified as if that day were the date herein
specifically fixed for the expiration of the Term. No re-entry or taking
possession of the Premises by Lessor shall be construed as an election on its
part to terminate this Lease unless a written notice of such intention is given
to Lessee or unless the termination thereof is decreed by a court of competent
jurisdiction. Notwithstanding any such leasing without termination, Lessor may
at any time thereafter elect to terminate this Lease for such previous default.
On termination of this Lease, Lessor may recover from Lessee all of the
following: (a) the worth at the time of the award of any unpaid rent that had
been earned at the time of the termination, to be computed by allowing interest
at the rate of one percent (1%) per month; (b) the worth at the time of the
award of the amount by which the unpaid rent that would have been earned
between the time of the termination and the time of the award exceeds the
amount of unpaid rent that Lessee proves could reasonably have been avoided, to
be computed by allowing interest at the foregoing rate; (c) the worth at the
time of the award of the amount by which the unpaid rent for the balance of the
Lease Term after the time of the award exceeds the amount of unpaid rent that
Lessee proves could reasonably have been avoided, to be computed by discounting
that amount at the discount rate of the Federal Reserve Bank of San Francisco
at the time of the award plus one percent (1%); (d) any other amount necessary
to compensate Lessor for all the detriment proximately caused by Lessee’s
failure to perform obligations under this Lease; and (e) any other amounts, in
addition to or in lieu of the foregoing that may be permitted by applicable
law.


Section 12.04         Right to Cure. Should an event
of default occur, Lessor may, at Lessor’s option and without prejudice to any
other right or remedy of Lessor provided herein, cure the 



 20
 









same and Lessee shall
reimburse Lessor for the cost thereof on demand, together with interest at the
rate from of one percent (1%) per month until paid.


Section 12.05         Non-waiver. The failure of
Lessor or Lessee to insist upon the performance of any term, covenant or
condition herein contained shall not be deemed to be a waiver of such term,
covenant or condition or any subsequent breach of the same or any other term,
covenant or condition herein contained, nor shall any custom or practice which
may develop between the parties in the course of administering this Lease be
construed as a waiver of Lessor’s or Lessee’s right to insist upon the performance
of any term, covenant or condition. The subsequent acceptance of any payment
hereunder by Lessor shall not be deemed to be a waiver of any preceding breach
by Lessee of any term, covenant or condition of this Lease, other than the
failure of Lessee to pay the particular payment so accepted, regardless of
Lessor’s knowledge of such preceding breach at the time of acceptance of such
payment.


Section 12.06         No Accord and Satisfaction. No
payment by Lessee or receipt by Lessor of a lesser amount than the payment
herein stipulated shall be deemed to be other than on account of the earliest
payment, nor shall any endorsement or statement on any check or any letter
accompanying any check or payment be deemed an accord and satisfaction, and
Lessor may accept such check or payment without prejudice to Lessor’s right to
recover the balance of such payment or pursue any other remedy provided in this
Lease.


Section 12.07         Waiver of Rights of Redemption.
Lessee hereby expressly waives any and all rights of redemption granted by or
under any present or future Laws in the event of Lessee being evicted or
dispossessed for any cause or in the event of Lessor’s obtaining possession of
the Premises by reason of the default by Lessee under any of the covenants,
conditions, or provisions of this Lease or otherwise.


Section 12.08         Cumulative Rights and Remedies.
The remedies provided for in this Lease are in addition to any and all other
rights available to Lessor and/or Lessee at law or in equity, by statute or
otherwise, and shall include without limitation the right to recover all
actual, consequential, special and punitive damages as well as the right to
specific performance or other injunctive relief. Lessee acknowledges and agrees
that in addition thereto, Lessor shall be entitled to delay damages resulting
from any failure of Lessee to promptly and reasonably comply with its
obligations hereunder relating to contemplated cooperation by Lessee with
Lessor. Lessor acknowledges and agrees that in addition thereto, Lessee shall
be entitled to delay damages resulting from any failure of Lessor to promptly
and reasonably comply with its obligations hereunder relating to refraining by
Lessor from interfering with Lessee’s efforts to farm and process crops on the
Premises or to otherwise exercise its rights in any respect.


ARTICLE XIII


FORCE MAJEURE


Section 13.01         Force Majeure. If either Lessor
or Lessee is prevented from complying, either totally or in part, with any of
the terms or provisions of this Lease by reason of fire, 



 21
 









shortages, flood, storm,
earthquake, volcanic eruption, hurricanes, strike, lockout or other material
labor trouble, riot, war, rebellion, or other acts of God (each a “Force
Majeure Event”), then upon written notice to the non-disabled party, the
affected provisions and/or other requirements of this Lease shall be suspended
during the period of such disability. The disabled party shall make
commercially reasonable efforts to remove such disability within sixty (60)
days of giving notice of such disability. During said period, the non-disabled
party may seek to have its needs, which would otherwise be met hereunder, met
by others without liability to the disabled party hereunder. In no event shall
a Force Majeure Event constitute a basis for Lessee to delay to perform any
payment obligations hereunder or any covenants hereunder that are not directly
impacted by such Force Majeure Event.


Section 13.02         Destruction of Land by Force Majeure
Event. If the Nut Storage Facility and the Husking Plant is rendered unusable
for the purposes specified in this Lease as a result of a Force Majeure Event
or if an Agricultural Lease Event occurs, either Lessor or Lessee shall have
the right to terminate this Lease by giving the other written notice of
termination within sixty (60) days after such Force Majeure Event. Any such
termination shall be effective as of the last day of the calendar month next
following the month in which such notice is given. Upon such a termination,
Lessor shall have no obligation to refund to Lessee any rent or other monies
paid by Lessee. An “ Agricultural Lease Event” shall have occurred if the whole
of the Premises (leased pursuant to the Agricultural Lease, dated as of the
date hereof (the “Agricultural Lease”), by and between Lessee and KOE) or greater
than fifty percent (50%) of the acreage of such Premises is destroyed as a
result of a Force Majeure Event (as defined in the Agricultural Lease).


ARTICLE XIV


SURRENDER


Section 14.01         Surrender. At the end of the
Term of the Lease or sooner termination, Lessee shall return the Premises to
Lessor together with (i) all plants and shrubs existing thereon at that
time, (ii) any buildings and permanent structures existing thereon at that
time, and (iii) any permanent improvements thereto constructed after the date
hereof.


Section 14.02         Failure to Surrender. If Lessee
remains in possession of the Premises or any portion thereof after the
termination or expiration of this Lease, or, whenever occurring or howsoever
caused, Lessee fails to immediately surrender and deliver possession of the
Premises to Lessor, Lessee shall pay Lessor, as liquidated rental, an amount
equal to Two Hundred Percent (200%) of the then current rental for the Premises
divided by 365 for each day it holds possession of any such portion; provided, however, no such liquidated
rental shall be payable for the first thirty (30) days after the termination or
expiration of this Lease if (i) as of such date, Lessee has ceased all nut
harvesting, nut processing and other operations on the Premises and
(ii) the sole reason for such unauthorized failure to surrender the
Premises is due to the pendency of an event that would qualify as a Force
Majeure Event. Lessor, by accepting such liquidated rental, shall not be deemed
to waive any other right or privilege under this Lease, but rather such right
shall be considered as in addition to and not in exclusion of such rights and
privileges.



 22
 









ARTICLE XV


LESSEE OPTION TO RENEW


Section 15.01         Option to Renew. Prior to the
end of year fifteen (15) of the Term, Lessor shall provide Lessee a notice of
termination after year twenty (20) of the Term or notice of the grant of Lessee
an option for an additional term for a period of five (5) years (the “Option Term”), which option
shall be exercisable only by written notice (“Exercise Notice”) delivered by Lessee to Lessor as
provided in Section 15.03 below, provided that, as of the date of delivery of
such notice and, at Lessor’s option, as of the last day of the Term, Lessee is
not in monetary default under this Lease after expiration of applicable cure
periods and Lessee has not previously been in monetary default under this Lease
after expiration of applicable cure periods more than once. The right contained
in this Section 15.01 shall be personal to Lessee and may only be exercised by
Lessee (and not any assignee, sublessee or transferee of Lessee’s interest in
this Lease). If Lessor delivers Lessee neither a notice of termination nor a
notice of the grant an option for an additional term, then Lessor shall be
deemed to have delivered Lessee a notice of termination.


Section 15.02         Option Rent. The annual rent
payable by Lessee during the Option Term (the “Option Rent”)  shall
be an amount mutually agreed upon by Lessor and Tenant.


Section 15.03         Exercise of Option. The option
contained in this Article 15 shall be exercised by Lessee, if at all, only in
the following manner: (i) Lessee shall endeavor to deliver written notice (“Interest Notice”) to Lessor on
or before the date which is fifteen (15) months prior to the expiration of the initial Term, stating that Lessee
is interested in exercising its option; (ii) Lessor, after receipt of Lessee’s
notice, shall deliver notice (the “Option
Rent Notice”) to Lessee not less than thirteen (13) months prior to
the expiration of the initial Term, setting forth the Option Rent; and (iii) if
Lessee wishes to exercise such option, whether or not Lessee has given the
fifteen (15) months prior
written notice, Lessee shall, on or before the date occurring twelve (12)
months prior to the expiration of the initial Term, exercise the option by
delivering written notice (the “Option Exercise Notice”) thereof to
Lessor, and upon, and concurrent with, such exercise, Lessee may, at its
option, accept or reject the Option Rent. If Lessee rejects the Option Rent
contained in the Option Rent Notice, or if Lessee delivers the Option Exercise
Notice without previously having timely delivered the Interest Notice, the
parties shall follow the procedure, and the Option Rent shall be determined, as
set forth in Section 15.04 below. If Lessee timely and properly exercises its
option to extend, the Term shall be extended for the Option Term upon all of
the terms and conditions set forth in this Lease, except that the rent under
this Lease shall be as indicated in the Option Rent Notice.


Section 15.04         Determination of Option Rent. In
the event Lessee timely and appropriately objects to the Option Rent, Lessor
and Lessee shall attempt to agree upon the Option Rent, using their best
good-faith efforts. Notwithstanding Section 16.09, if Lessor and Lessee
fail to reach agreement within ten (10) business days following Lessee’s
objection to the Option Rent (the “Outside Agreement Date”), then each party
shall make a separate determination of the Option Rent within five (5) business days after the
applicable Outside 



 23
 









Agreement Date, and such
determinations shall be submitted to arbitration as follows: Lessor and Lessee
shall each appoint one arbitrator who shall be a real estate broker or real
estate attorney who shall have been active over the five (5) year period ending
on the date of such appointment in the leasing of farm land in the State of
Hawaii. The determination of the arbitrators shall be limited solely to the
issue of whether Lessor’s or Lessee’s submitted Option Rent is the closest to
the actual Option Rent, as determined by the arbitrators in their reasonable
judgment. Each such arbitrator shall be appointed within fifteen (15) days
after the applicable Outside Agreement Date. The two (2) arbitrators so appointed
shall within ten (10) days of the date of the appointment of the last appointed
arbitrator agree upon and appoint a third arbitrator who shall be qualified
under the same criteria set forth hereinabove for qualification of the initial
two (2) arbitrators. The three (3) arbitrators shall within thirty (30) days of
the appointment of the third arbitrator reach a decision as to whether the
parties shall use Lessor’s or Lessee’s submitted Option Rent and shall notify
Lessor and Lessee thereof. The decision of the majority of the three (3)
arbitrators shall be binding upon Lessor and Lessee. If either Lessor or Lessee
fails to appoint an arbitrator within fifteen (15) days after the applicable
Outside Agreement Date, then the arbitrator appointed by one of them shall
reach a decision, notify Lessor and Lessee thereof, and such arbitrator’s
decision shall be binding upon Lessor and Lessee. If the two (2) arbitrators
fail to agree upon and appoint a third arbitrator, or if both parties fail to
appoint an arbitrator, then the appointment of the third arbitrator or any
arbitrator shall be dismissed and the matter to be decided shall be forthwith
submitted to arbitration under the provisions of the American Arbitration
Association. The cost of the arbitration shall be paid by Lessor and Lessee
equally.


ARTICLE XVI


MISCELLANEOUS PROVISIONS


Section 16.01         Approvals. The response to any
request for approval or consent as provided in this Lease will not be
unreasonably or arbitrarily withheld, conditioned or delayed, unless the
approval is stated to be at the discretion of the party whose approval is
sought. Whenever approval may not be unreasonably withheld, Lessor will not
require the payment of any money for the giving of such approval other than a
reasonable charge for the review and processing of the application for and
preparation of, the approval or consent and reimbursement of actual expenses
for consultants, including architects, engineers or attorneys, engaged in
connection with Lessor’s review and approval.


Section 16.02         Representations and Warranties of
Lessor. Lessor hereby makes the following representations and warranties,
to Lessee, all of which are true as of the date hereof. All the representations
and warranties in Sections 16.02(B) through 16.02(P) are made in their
entirety to the Knowledge of Lessor. “Knowledge of Lessor” means the
actual knowledge of the directors or officers of Lessor.


(A)          Power and Authority of Lessor.
Lessor hereby represents and warrants that Lessor is a limited liability company
that is duly-organized, validly-existing, and in good standing in the State of
Delaware. Lessor is duly-qualified to transact business, and is in good
standing in the State of Hawaii. Lessor has the requisite right, power, and
authority to execute 



 24
 









and deliver this Lease
and to perform all of its other duties and obligations under this Lease. Lessor
has taken all actions necessary to authorize the execution, delivery and
performance of this Lease. This Lease shall constitute the valid and binding
obligations of Lessor, enforceable against Lessor in accordance with its terms.
No consent, notice, approval or authorization of, or designation, declaration
or filing with, any governmental authority or any other person or entity is
required to be obtained by Lessor in connection with the execution, delivery
and performance of this Lease, and the performance of Lessor’s obligations
hereunder.


(B)           Non-Contravention. Neither the
execution and delivery of this Lease, nor the consummation of the transactions
contemplated hereby will (i) violate any constitution, statute, regulation,
rule, injunction, judgment, order, decree, ruling, charge, or other restriction
of any government, governmental agency, or court to which Lessor or the
Premises is subject or any provision of the organizational documents of Lessor,
or (ii) conflict with, result in a breach of, constitute a default under,
result in the acceleration of, create in any party the right to accelerate,
terminate, modify, or cancel, or require any notice under any agreement,
contract, lease, license, instrument, or other arrangement to which Lessor is a
party or by which Lessor is bound or to which the Premises is subject (or
result in the imposition of any lien upon any of the Premises). Notwithstanding
anything to the contrary herein, Lessor is not representing or warranting that
the transactions contemplated by this Lease do not contravene or violate any
anti-trust, non-competition or similar laws.


(C)           Title to the Premises. Except
as disclosed on Schedule A, Lessor is the sole and exclusive legal and
beneficial owner of the Premises, free and clear of all liens, security
interests, encumbrances and/or other restrictions on transfer.


(D)          Leases. Except as disclosed on Schedule
F, there are no space or occupancy leases, licenses, concessions or
tenancies relating to all or any part of the Premises.


(E)           Contracts. Except as disclosed
on Schedule G, there are no contracts to which Lessor is a party
relating to the Premises.


(F)           Services. All improvements
located on the Premises have been constructed to have ingress, egress, water
supply, storm and sanitary sewer facilities, and telephone and electrical and
other utility services that are adequate for the existing uses of such
improvements. All public utilities and ingress and egress to and from the
improvements are by way of public streets and highways. There are no disputes
pending or threatened, with any utility provider or any person who holds an
interest in the property burdened by an easement for utilities or for ingress
and egress to and from the Premises, nor has Lessor received actual notice of
any proposed utility rate increase. Except as disclosed in Schedule H,
there is no existing, proposed or contemplated plan to modify or realign any
street or highway adjacent to or providing ingress to and egress from the
Premises.


(G)           Condemnation Proceedings.
There are no pending or proposed or threatened condemnation proceedings
affecting the Premises or any part thereof, and Lessor has not received any
written or oral notice of the same from any governmental authority.



 25
 









(H)          Environmental Matters. Lessee
acknowledges receiving a copy of the Phase I Site Assessment, dated June 13,
2003, completed by URS Corporation (along with any Phase I Site Assessment,
prepared by or for Lessee, the “Environmental Reports”). To the
Knowledge of Lessor and except as described in the Environmental Reports: (a)
the Premises and all improvements thereon have since June 1, 2003, been and are
in material compliance with all Hazardous Materials Laws; (b) there are no
pending or, to the Knowledge of Lessor, threatened proceedings involving the
Premises that allege or assert (i) a violation of any Hazardous Materials Law
or (ii) that Lessor is required to clean up, remove or take remedial or other
responsive action due to a release of Hazardous Materials; and (c) Lessor has
provided Lessee with complete and correct copies of all available studies,
reports, surveys, assessments, audits, correspondence, investigations,
analysis, tests, and other documents (whether in hard copy or electronic form)
in Lessor’s possession relating to the presence or alleged presence of
Hazardous Materials at, on, or affecting the Premises.


(I)            Permits and Approvals. Schedule
I contains a list of all licenses, permits, approvals and certificates held
by Lessor from governmental authorities in connection with Lessor’s ownership
and use of the Premises and, except as disclosed in Schedule I, all such
licenses, permits, approvals and certificates have been obtained and are presently
in full force and effect, and all requirements and conditions necessary to
maintain such licenses, permits, approvals and certificates are in full force
and effect and have been complied with in connection with Lessor’s ownership
and use of the Premises. Except as set forth in Schedule I, Lessor
has received no notice of a current or uncured violation of any such license,
permit, approval or certificate from any governmental authority.
Notwithstanding the foregoing, Lessee will apply for and supply its own
governmental permits, approvals, and certificates as it may require.


(J)            Tax Matters. There are no tax
liens upon the Premises, except for liens for non-delinquent real property
taxes and assessments. Lessor is not presently a party to, and has received no
notice with respect to, any proposed or pending litigation, proceeding or claim
by any governmental authority for the collection of any real property taxes or
assessments that relate to the Premises.


(K)          Litigation. Except as set forth
in Schedule J, there are no pending or threatened court,
administrative or arbitration actions or proceedings, at law or in equity,
affecting all or any portion of the Premises, or to which Lessor is a party
that, if adversely decided, could impact Lessor’s ownership of or right to use
the Premises.


(L)           Compliance With Laws. Except
as set forth in Schedule K, there are no uncured or uncorrected
violations of any laws, ordinances or governmental regulations relating to the
Premises that have been served upon, received by or issued to or entered
against Lessor.


(M)         Consents. No consent, notice,
approval or authorization of, or designation, declaration or filing with, any
governmental authority or any other person or entity is required to be obtained
by Lessor in connection with the execution, delivery and performance of this
Lease, the performance of Lessor’s obligations hereunder and thereunder, and
the consummation of this Lease.



 26
 









(N)          Water Rights. Subject to any
determination by any court of applicable jurisdiction affecting the rights of
private parties regarding the ownership, use or other rights respecting water
under the laws of Hawaii, and subject also to any applicable governmental
regulations pertaining to water, Lessor owns or has the right to use the water
rights impacted by this Lease. There is no litigation pending or threatened
that relates to or challenges the ownership, validity, enforceability or use of
such water rights.


(O)          Construction Disputes and Mechanics’
Liens. There are no disputes pending between Lessor and any mechanics or
materialmen with respect to any work or materials furnished to the Premises,
and no work has been performed for Lessor or materials have been supplied to
Lessor with respect to the Premises that are likely to give rise to such a
dispute. Lessor has paid, or has made arrangements reasonably satisfactory to
Lessee to pay, all bills that relate to work or materials furnished to the
Premises which, if not paid, could result in the filing of a mechanic’s or
materialmen’s lien.


(P)           No Material Misstatements or
Omissions. No representations or warranties of Lessor in this Lease, or in
any statement, certificate or schedule furnished to Lessee by Lessor pursuant
to this Lease, or in connection with the transactions contemplated hereby, contain
any untrue statement of a material fact, or omit to state a material fact
necessary to make the statements contained therein not misleading.


Section 16.03         Representations and Warranties of
Lessee. Lessee hereby makes the following representations and warranties to
Lessor, all of which are true as of the date hereof.


(A)          Power and Authority of Lessee.
Lessee is a Hawaii corporation that is duly-organized, validly-existing, and in
good standing in the State of Hawaii. Guarantor is a Delaware limited partnership.
Lessee and Guarantor have the requisite right, power, and authority to execute
and deliver this Lease and to perform all of their duties and obligations under
this Lease. Lessee and Guarantor have taken all actions necessary to authorize
the execution, delivery and performance of this Lease. This Lease shall
constitute the valid and binding obligation of Lessee and Guarantor,
enforceable against Lessee and Guarantor in accordance with its terms. No
consent, notice, approval or authorization of, or designation, declaration or
filing with, any governmental authority or any other person or entity is
required to be obtained by Lessee or Guarantor in connection with the
execution, delivery and performance of this Lease, and the performance of
Lessee’s and Guarantor’s obligations hereunder.


(B)           Non-Contravention. Neither the
execution and delivery of this Lease, nor the consummation of the transactions
contemplated hereby will (i) violate any constitution, statute, regulation,
rule, injunction, judgment, order, decree, ruling, charge, or other restriction
of any government, governmental agency, or court to which Lessee is subject or
any provision of the organizational documents of Lessee, or (ii) conflict with,
result in a breach of, constitute a default under, result in the acceleration
of, create in any party the right to accelerate, terminate, modify, or cancel,
or require any notice under any agreement, contract, lease, license,
instrument, or other arrangement to which Lessee is a party or by which Lessee
is bound.



 27
 









(C)           No Material Misstatements or
Omissions. No representations or warranties of Lessee in this Lease, or in
any statement, certificate or schedule furnished to Lessor by Lessee pursuant
to this Lease, or in connection with the transactions contemplated hereby,
contain any untrue statement of a material fact, or omit to state a material
fact necessary to make the statements contained therein not misleading.


Section 16.04         Counterparts and Facsimile
Signatures. This Lease may be executed in two or more counterparts, each of
which shall be deemed to be an original, but all of which shall constitute one
and the same agreement. The submission of a signature page by facsimile
transmission shall be considered as an “original” signature page for purposes
of this Lease so long as the original signature page is thereafter transmitted
by mail or by other delivery service and the original signature page is
substituted for the facsimile signature page in the original and duplicate
originals of this Lease.


Section 16.05         Discretion. Whenever the
approval of Lessor is stated to be within the discretion of Lessor, the
granting or denial of the approval may be withheld or granted for any reason or
for no reason, and Lessor will not for any reason or to any extent be required
to grant the approval or exercise the discretion of Lessor or impose conditions
to the approval in any particular manner, regardless of the reasonableness of
either the request for approval or the conditions imposed.


Section 16.06         Entire Agreement. This Lease
constitutes the entire agreement between the parties and supersedes all other
prior or contemporaneous discussions, representations or agreements relating to
the Premises..


Section 16.07         Incorporation of Schedules and
Exhibits into Lease. Any schedules and exhibits that are attached to this
Lease are incorporated herein by this reference.


Section 16.08         Expenses of Lessor and Lessee.
Lessee will pay to Lessor on demand all costs and expenses, including
reasonable attorneys’ fees, incurred by Lessor in enforcing any covenants or
conditions contained in this Lease, and in connection with any litigation
commenced by Lessee or against Lessee by others, to which Lessor shall without
fault on its part be made a party. Lessor will pay to Lessee on demand all
costs and expenses, including reasonable attorneys’ fees, incurred by Lessee in
enforcing any covenants or conditions contained in this Lease, and in
connection with any litigation commenced by Lessor or against Lessor by others,
to which Lessee shall without fault on its part be made a party. All
reimbursements hereunder shall be paid with interest from the date such costs
and expenses are incurred at the rate of one percent (1%) per month until paid.


Section 16.09         Governing Law. The rights and obligations
of the parties to this Lease shall be governed by, interpreted, performed, and
enforced in accordance with the substantive laws of the State of Hawaii,
without reference to principles of conflict of laws.


Subject to the
arbitration procedures relating solely to the issue of whether Lessor’s or
Lessee’s submitted Option Rent is the closest to the actual Option Rent
pursuant to 



 28
 









Section 15.04, any
Dispute (as defined in Exhibit ”B” hereto) between the parties hereto
shall be resolved in accordance with the ADR Provisions (as defined in
Exhibit ”B” hereto). Each party agrees that the ADR Provisions constitute
the sole method of seeking redress against the other party for any Dispute.


A party may, without
inconsistency with the foregoing agreement relating to dispute resolution, seek
from any court of competent jurisdiction any interim or provisional relief or
remedy (including injunctive relief) which may be necessary to protect its
property or rights pending the determination of the merits of the controversy.
In addition, without inconsistency with the foregoing agreement, a party hereto
may bring a third-party action or cross-claim against another party, in order
to enforce the indemnification rights referenced in this Lease.


Section 16.10         Waiver of Jury Trial. THE
PARTIES HERETO WAIVE ALL RIGHT TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO
ENFORCE OR DEFEND ANY RIGHTS UNDER THIS LEASE.


Section 16.11         Modifications. No amendments,
modifications or additions to this Lease shall be made or be binding on any
party unless made in writing and signed by all parties.


Section 16.12         Notices. All notices or other
communications shall be in writing and shall be deemed duly given on (a) the
date of personal or courier delivery; (b) the date of transmission by telecopy
or other electronic transmission service, provided a confirmation copy is also
sent no later than the next business day by certified mail, postage pre-paid,
return receipt requested; or (c) three (3) business days after the date of
deposit in the United States Mail, by certified mail, postage pre-paid, return
receipt requested, addressed as follows:


If
to Lessor:                                                                                Mac
Farms of Hawaii, LLC

c/o Sparks Corp

775 Ridge Lake Blvd, Suite 450

Memphis, TN 38120

Telephone:            (901) 766-4412

Telecopier:            (901) 766-8140

Attention:              Mr. Robert D.
Sparks


and                                                                                                                           Kapua
Orchard Estates, LLC

c/o Greater Pacific Food Holdings, LLC

1170 Signal Hill Road

P.O. Box 1378

Pebble Beach, California 93953

Telephone:            (831) 624-1583

Telecopier:            (831) 625-6263

Attention:              Mr. Thomas R.
Modisette



 29
 









with a
copy to:                                                                Baker,
Donelson, Bearman, Caldwell & Berkowitz, PC

165 Madison Avenue, Suite 2000

Memphis, Tennessee 38103

Telephone:            (901) 577-2306 or
                                 (901)
577-2274

Telecopier:            (901) 577-0853 or
                                 (901)
577-4203

Attention:              John E. Kruger, Esq.
                                 Mark A. B.
Carlson, Esq.


If to Lessee or


Guarantor:                                                                                        Newco2
and ML Macadmia Orchards, L.P.

26-238 Hawaii Belt Road

Hilo, Hawaii 96720

Telephone:            (808) 969-8052

Telecopier:            (808) 969-8057

Attention:              Mr. Dennis J.
Simonis


with a copy to:                                                                Carlsmith
Ball

1001 Bishop St, ASB Tower, Suite 2200

Honolulu, Hawaii 96813

Telephone:            (808) 523-2501

Telecopier:            (808) 523-0842

Attention:              James H. Case,
Esq.


Any party may change its
mailing address by giving written notice to the other parties in accordance
with this Section 16.12.


Section 16.13         All Payments Payable in U. S.
Currency. All sums payable under this Lease must be paid in lawful money of
the United States of America.


Section 16.14         Severability. If any part of
this Lease is held to be invalid or unenforceable for any reason, the remainder
of this Lease shall continue in full force and effect.


Section 16.15         Persons Bound. This Lease shall
be binding upon and inure to the benefit of the parties hereto and their
respective successors and permitted assigns.


Section 16.16         Time of Essence. Time is of the
essence as to every provision of this Lease. No party shall be obligated to
agree to any extensions of deadlines or other delays except as specifically
provided in this Lease. In calculating such deadlines, all references to “days”
herein shall be deemed to mean calendar days and not business days except as
specifically provided otherwise in this Lease.



 30
 









Section 16.17         No Partnership Intended. It is
expressly understood that Lessor does not in any way or for any purpose become
a partner of Lessee in the conduct of its business or otherwise or a joint
venturer or a member of a joint enterprise with Lessee.


Section 16.18         No Third-Party Beneficiaries.
Nothing in this Lease is intended or shall be construed to create or confer any
rights or remedies upon any person or entity other than the parties to this
Lease and, subject to the restrictions on assignment that are contained herein,
their respective successors and permitted assigns.


Section 16.19         Broker’s Commission. Except as
otherwise set forth herein, each party represents and warrants to the other
party, that it has not had any contracts, communications, or dealings regarding
the subject matter of the transactions contemplated herein with any finder,
agent, or broker, whether or not licensed as such. In the event that any
finder, agent, or broker brings a claim for a commission or finder’s fee based
upon any contracts, dealings, or communications relating to this transaction,
the party whose acts or omissions gave rise to such claim and all costs,
expenses, and other liabilities relating thereto, including reasonable
attorneys’ fees (collectively, the “Costs”), shall indemnify, hold
harmless, and defend the other parties against the Costs.


Section 16.20         Provisions Are Covenants and
Conditions. All provisions, whether covenants or conditions, on the part of
Lessee shall be deemed to be both covenants and conditions.


Section 16.21         Singular and Plural; Pronouns.
When required by the context of this Lease, the singular shall include the
plural. A pronoun of one gender shall include reference to all genders as the
context may require.


Section 16.22         Captions. The title and captions
in this Lease shall have no effect on their interpretation.


Section 16.23         Recordation. Lessor and Lessee
agree to join in execution of a memorandum “short form” of this Lease which
shall be recorded in the Bureau of Conveyances of the State of Hawaii. Such
memorandum short form of this Lease shall describe the parties, the Premises,
the term of this Lease and shall incorporate this Lease by reference only.


Section 16.24         Interpretation. Each party
acknowledges that it has been represented and advised by legal counsel in the
negotiation and legal effects of this Lease and acknowledges that it has caused
this Lease to be reviewed and approved by legal counsel of its own choice. No
negotiations concerning or modifications made to prior drafts of this Lease
shall be construed in any manner to limit, reduce or impair the rights,
remedies, duties and obligations of the parties under this Lease, or to
restrict or expand the meaning of any of the provisions of this Lease, or to
construe any of the provisions of this Lease in any party’s favor. No party
shall be deemed to be the drafter of this Lease and no term or provision of
this Lease may be construed against any party on that basis.



 31
 









Section 16.25         Transfer of Lessor’s Interest in the
Premises and Lease. Lessee acknowledges that Lessor has the right to
transfer all of its interest in the Premises, this Lease (whether by
assignment, sale, conveyance or otherwise) to any party or parties, at any
time, and without the consent or approval of Lessee in any manner, and, in the
event of an assignment of Lessor’s interest in this Lease to a third party,
Lessee agrees that Lessor shall automatically be released from all liability
under this Lease and Lessee agrees to look solely to such transferee for the
performance of Lessor’s obligations hereunder after the date of transfer and
such transferee shall be deemed to have fully assumed and be liable for all
obligations of this Lease to be performed by Lessee, and Lessee shall attorn to
such transferee. Lessee further acknowledges that Lessor may assign its
interest in this Lease to a mortgage lender as additional security and agrees
that such an assignment shall not release Lessor from its obligations hereunder
and that Lessee shall continue to look to Lessor for the performance of its
obligations hereunder.


Section 16.26         Guaranty. Guarantor hereby
unconditionally and irrevocably guarantees to Lessor that:


(A)          Lessee will duly and punctually pay
all lease rents, taxes, assessments, collection costs, attorneys’ fees and all
other sums to be paid by Lessee under the Lease; and


(B)           Lessee will duly and punctually
observe and perform every other agreement, covenant and condition to be
observed or performed by Lessee under the Lease (collectively, the “Obligations”).


The
obligations of Guarantor under this Lease shall not be affected, modified or
impaired upon the occurrence from time to time of any of the following, whether
or not with notice to or the consent of Guarantor (a) the failure to give
notice to any Guarantor of the occurrence of any Event of Default under the
terms and provisions of this Lease; (b) the waiver of the payment, performance
or observance of any of the Obligations; (c) the taking or omitting to take any
actions referred to in this Lease; or (d) the voluntary or involuntary
liquidation, dissolution, sale or other disposition of all or substantially all
of the assets, marshalling of assets, receivership, insolvency, bankruptcy,
assignment for the benefit of creditors or readjustment of, or other similar
proceedings which affect Guarantor, or any allegation of invalidity or contest
of the validity of this Lease or this Section 16.26 in any such proceeding.
Guarantor hereby waives (a) any and all rights to require Lessor to prosecute
or seek to enforce any remedies against Lessee or any other party liable to
Lessor on account of the Obligations; (b) any right to assert against Lessor
any defense (legal or equitable), set-off, counterclaim, or claim which
Guarantor may now or at any time hereafter have against Lessee or any other
party liable to Lessor in any way or manner; (c) all defenses, counterclaims
and off-sets of any kind or nature, arising directly or indirectly from the
present or future lack of validity or enforceability of this Lease; (d) any
defense arising by reason of any claim or defense based upon an election of
remedies by Lessor; and (e) all presentments, demands for performance, notices
of non-performance, protests, notices of protest, notices of dishonor, notices
of default, notice of acceptance, and all other notices or formalities to which
Guarantor may be entitled.


[the remainder of this page intentionally left blank]



 32














 


	
  LAND COURT SYSTEM

  	
  REGULAR SYSTEM

  
	
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  Tax Map Key no.:
  See Exhibit A

  	
  Total Pages

  



IN WITNESS WHEREOF, the
undersigned have executed, or have caused to be executed, this Processing Plant
Lease on the date first written above.


	
  

  	
  MAC FARMS OF HAWAII, LLC

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name: Robert D. Sparks

  
	
   

  	
   

  	
  Title: Managing Member        “Lessor”

  
	
   

  	
   

  	
   

  
	
   

  	
  NEWCO2, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
  By

  	
   

  
	
   

  	
   

  	
  Name Dennis J. Simonis

  
	
   

  	
   

  	
  Title: President        “Lessee”

  
	
   

  	
   

  	
   

  
	
   

  	
  ML MACADAMIA ORCHARDS, L.P.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name: Dennis J. Simonis

  
	
   

  	
   

  	
  Title: President        “Guarantor”

  












 


	
  LAND COURT SYSTEM

  	
  REGULAR SYSTEM

  
	
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  Tax Map Key no.:
  See Exhibit A

  	
  Total Pages

  



EXHIBIT “A”


DESCRIPTION
OF REAL PROPERTY


The real property located
on the tax map key 8-9-12-8.


Formal legal description
to be provided at Closing.


END OF
EXHIBIT “A”











 


	
  LAND COURT SYSTEM

  	
  REGULAR SYSTEM

  
	
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  Tax Map Key no.:
  8-9-12:8

  	
  Total Pages

  



EXHIBIT “B”


ALTERNATIVE
DISPUTE RESOLUTION PROVISIONS


A.            Purpose and Exclusivity.
The purpose of these alternative dispute resolution provisions (“ADR Provisions”)
is to provide Lessor and Lessee with a mechanism to resolve Disputes, as
defined herein, that may develop in the future concerning the subject matter of
the Lease. The Parties agree that these ADR Provisions are the exclusive method
to resolve all Disputes and that the goal of both Parties in agreeing to these
ADR Provisions is to ensure that all Disputes are resolved in the most
expeditious and inexpensive manner possible. All provisions of these ADR
Provisions are to be interpreted with that purpose in mind.


B.            Definition. “Disputes” means and
includes any and all claims, controversies, and disagreements of any nature
whatsoever between Lessor and Lessee, at law or in equity, that relate to or
arise out of, directly or indirectly, the Lease (including all exhibits
thereto), except (i) Disputes involving a failure by Lessee or Guarantor
to pay punctually all lease rents, taxes, assessments, collection costs,
attorneys’ fees and all other sums to be paid by Lessee or Guarantor under the
Lease, and (ii) claims for indemnity, contribution, subrogation, or the
like which must be asserted, if at all, only by cross-claim, third party
complaint, or the like in litigation brought by or against a third party in
which the principal claim(s) giving rise to the right of indemnity,
contribution, subrogation, or the like is asserted. The existence of a Dispute
may, but need not be, predicated upon a breach of the Lease by one, or both of
the Parties.
















C.            Knowing Release.
Lessor and Lessee each acknowledge that these ADR Provisions have served as a
material inducement for them to enter into the Lease. To accomplish the purpose
of these ADR Provisions, Lessor and Lessee, with respect to any Dispute, waive
their respective rights to a jury trial on any claim or cause of action based
upon or arising out of such Dispute. In addition, with respect to any Dispute,
Lessor and Lessee waive any and all right that either of them may have to
recover any type of consequential, incidental, special, punitive or exemplary
damages, or treble or other multiple damages provided for by any statute or
rule. Nothing contained in this Section C (Knowing Release) precludes
the recovery of compensatory damages, attorneys’ fees and costs as provided in
the Lease.


D.            [Reserved.]


E.             Negotiation
and Mediation. Lessor and Lessee acknowledge that, if a Dispute
arises between them, they shall attempt to resolve the Dispute by negotiation,
or failing that by mediation conducted in the State of Hawaii. For a period of
ten (10) calendar days following the written notice of a Dispute given by one
to the other, the Parties agree to hold meetings, attended by individuals with
decision making authority, to attempt to resolve the Dispute through good faith
negotiations. If at the end of this ten (10) day period they have not been able
to resolve the Dispute (and have not agreed to extend the negotiating period),
then either Party may give the other written notice of a request for mediation,
in which event they shall jointly select a neutral person with at least ten
years experience as a commercial mediator and who has experience involving
complex commercial transactions and real estate disputes, to act as mediator.
The fees of the mediator shall be shared equally by both Parties. If within
thirty (30) days after written request for mediation, the Parties are unable to
agree upon a mediator, or to thereafter resolve the Dispute by mediation, then
either Party shall be entitled to seek redress in the state or federal courts
of the State of Hawaii.


END OF
EXHIBIT “B”



 3
 









EXHIBIT
B-2


MEMORANDUM
OF LEASE


THIS MEMORANDUM
OF LEASE
is executed as of           ,
2007, by and between MAC FARMS OF HAWAII, LLC,
a Delaware limited liability company having an address at 89-406
Mamalahoa Highway, Captain Cook, Hawaii, 96704 (“Lessor”), and                ,
a Hawaii limited liability company having an address at 26-238 Hawaii
Belt Road, Hilo, Hawaii, 96720 (“Lessee”).


W I T N E S S E T H:


That upon the
terms and conditions set forth in that certain unrecorded Processing Plant
Lease, dated as of           ,
2007, by and between Lessor and Lessee, all of which terms and conditions are
hereby made a part hereof as fully and completely as if herein specifically set
out in full, Lessor has demised and leased and does hereby demise and lease
unto Lessee, and Lessee has leased and hired and does hereby lease and hire
from Lessor, all of the property described in Exhibit A
attached hereto and incorporated herein by this reference.


TO HAVE AND TO
HOLD the
same for a term of twenty years (20) years commencing on        
  , 2007, and ending on               ,
2027, unless sooner terminated as therein provided.


IN WITNESS
WHEREOF,
the parties hereto have executed this Memorandum of Lease as of the day and
year first above written.


	
  

  	
   

  	
  LESSOR:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  MAC FARMS OF HAWAII, LLC,

  
	
   

  	
   

  	
  a Delaware limited liability company

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  ROBERT D. SPARKS

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  LESSEE:

  
	
   

  	
   

  	
                       ,

  
	
   

  	
   

  	
  a Hawaii limited liability company

  
	
   

  	
   

  	
   

  
	
  

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  	
   

  



 



 4
 









STATE OF                                                            )


                                                                                )  SS.


COUNTY OF                                                        )


On this     
day of             ,
2007, before me appeared ROBERT D. SPARKS,
to me personally known, who, being by me duly-sworn or affirmed, did say that
such person executed the foregoing instrument as the free act and deed of such
person, and if applicable in the capacity shown, having been duly-authorized to
execute such instrument in such capacity.


	
  

  	
   

  
	
  

  	
  Print Name:

  	
   

  
	
   

  	
  Notary Public, State of

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  My Commission Expires:

  	
   

  



STATE OF
HAWAII                                           )


                                                                                )  SS.


CITY AND
COUNTY OF HONOLULU           )


On
this      day of        
  , 2007, before me appeared                ,
to me personally known, who, being by me duly-sworn or affirmed, did say that
such person executed the foregoing instrument as the free act and deed of such
person, and if applicable in the capacity shown, having been duly-authorized to
execute such instrument in such capacity.


	
  

  	
   

  
	
  

  	
  Print Name:

  	
   

  
	
   

  	
  Notary Public, State of

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  My Commission Expires:

  	
   

  



 



 5














 


	
  LAND COURT SYSTEM

  	
  REGULAR SYSTEM

  
	
  Return by Mail  (   )  Pickup  (   )  To:

  	
   

  
	
   

  	
   

  
	
  Tax Map Key No.: 8-9-12:8

  	
  Total Pages

  



EXHIBIT A


All of that certain
parcel of land (portion of the land described in and covered by Royal Patent
Number 6853, Land Commission Award Number 9971, Apana 30 to W. P. Leleiohoku)
situate, lying and being on the Northeasterly side of the Hawaii Belt Road
(F.A.P. No. BF-011-1(3)) at Kapua, District of South Kona, Island and County of
Hawaii, State of Hawaii, Being LOT 16-B, and thus bounded and described as per
survey of Chrystal Thomas Yamasaki, Registered Professional Land Surveyor,
dated December 4, 1984, to-wit:


Beginning at the
southernmost corner of this parcel of land, being also the Northwesterly corner
of the “pole” of Lot 16-A and a point on the Northeasterly side of the Hawaii
Belt Road (F.A.P. No. BF-011-1(3)), the coordinates of said point of beginning
referred to Government Survey Triangulation Station “KAPUKAWAA” being 15,672.53
feet South and 19,989.82 feet East and running by azimuths measured clockwise
from true South:


Thence, following
along the Northeasterly side of the Hawaii Belt Road (F.A.P. No. BF-011-1(3))
on a curve to the left with a radius of 12,040.00 feet, the chord azimuth and
distance being:


1.   139°  
20’          17”          526.47     feet
to a point;


Thence, for the
next ten (10) courses following along Lot 16-A of the subdivision and along the
remainder of Royal Patent 6853, Land Commission Award 9971, Apana 30 to W. P.
Leleiohoku:


2.   226°  
00’                          330.26     feet to a point;











3.   128°  
00’                          180.02     feet to a point;


4.   218°  
00’                          380.00     feet to a point;


5.   308°  
00’                          455.00     feet to a point;


6.   223°  
00’                          192.00     feet to a point;


7.   313°  
00’                          430.00     feet to a point;


Thence, following
on a curve to the right with a radius of 275.0 feet, the chord azimuth and
distance being:


8.    30°  
55’           30”          249.05     feet
to a point;


9.    57°  
51’                           300.00     feet to a point;


10.   57°  
05’                          439.71     feet to a point;


Thence, following
on a curve to the right with a radius of 30.00 feet, the chord azimuth and
distance being:


11.   98°  
50’          13.5”       39.96       feet
to the point of beginning and containing an area of 14.955 acres, more or less.


Together with that
certain Easement Agreement dated May 28, 1982, recorded in the Bureau of
Conveyances of the State of Hawaii in Liber 16369 at Page 175, by and between
Mac Farms of Hawaii, Inc., a Hawaii corporation, and Land of Kapua, a Hawaii
general partnership, “Grantors”, and Farms of Kapua, Ltd., a California limited
partnership, “Grantee”.


Together with a perpetual
non-exclusive easement for access, roadway and utility purposes over and across
Easement “1” and Easement “D-1”, each being a portion of Lot 16-A, as set forth
by instrument dated June 27, 2003, recorded in said Bureau as Document No.
2003-131936, more particularly described therein; and subject to the terms and
provisions, including the failure to comply with any covenants, conditions and
reservations, contained therein.


BEING the premises
acquired by Mac Farms of Hawaii, LLC, a Delaware limited liability company, by
Warranty Deed dated June 27, 2003, recorded in said Bureau as Document No.
2003-131941, from Mac Farms of Hawaii, Inc., a Hawaii corporation.


SUBJECT, HOWEVER, to
restricted abutter’s rights of vehicle access into and from Hawaii Belt Road,
Federal Aid Project No. BF-011-1(3), as conveyed to the State of Hawaii, by
Deed dated December 31, 1959, recorded said Bureau in Liber 3827 at Page 428.


Tax Key:  8-9-012-008 (3)











EXHIBIT C


RESERVED











EXHIBIT D


RESERVED











EXHIBIT E


ALTERNATIVE DISPUTE RESOLUTION PROVISIONS


A.            Purpose and Exclusivity.  The purpose of these alternative dispute
resolution provisions (“ADR Provisions”) is to provide Seller and Buyer with a
mechanism to resolve Disputes, as defined herein, that may develop in the
future concerning the subject matter of the Agreement.  The Parties agree that these ADR Provisions
are the exclusive method to resolve all Disputes and that the goal of both
Parties in agreeing to these ADR Provisions is to ensure that all Disputes are
resolved in the most expeditious and inexpensive manner possible.  All provisions of these ADR Provisions are to
be interpreted with that purpose in mind.


B.            Definition.  “Disputes” means and includes any and all
claims, controversies, and disagreements of any nature whatsoever between
Seller and Buyer, at law or in equity, that relate to or arise out of, directly
or indirectly, the Agreement (including all exhibits thereto other than the
Leases), except:  claims for indemnity,
contribution, subrogation, or the like which must be asserted, if at all, only
by cross-claim, third party complaint, or the like in litigation brought by or
against a third party in which the principal claim(s) giving rise to the right
of indemnity, contribution, subrogation, or the like is asserted.  The existence of a Dispute may, but need not
be, predicated upon a breach of the Agreement by one, or both of the Parties.


C.            Knowing Release.  Seller and Buyer each acknowledge that these
ADR Provisions have served as a material inducement for them to enter into the
Agreement.  To accomplish the purpose of
these ADR Provisions, Seller and Buyer, with respect to any Dispute, waive
their respective rights to a jury trial on any claim or cause of action based
upon or arising out of such Dispute.  In
addition, with respect to any Dispute, Seller and Buyer waive any and all right
that either of them may have to recover any type of consequential, incidental,
special, punitive or exemplary damages, or treble or other multiple damages
provided for by any statute or rule. 
Nothing contained in this Section C (Knowing Release) precludes
the recovery of compensatory damages, attorneys’ fees and costs as provided in
the Agreement.


D.            [Reserved.]


E.             Negotiation
and Mediation.  Seller and
Buyer acknowledge that, if a Dispute arises between them, they shall attempt to
resolve the Dispute by negotiation, or failing that by mediation conducted in
the State of Hawaii.  For a period of ten
(10) calendar days following the written notice of a Dispute given by one to
the other, the Parties agree to hold meetings, attended by individuals with
decision making authority, to attempt to resolve the Dispute through good faith
negotiations.  If at the end of this ten
(10) day period they have not been able to resolve the Dispute (and have not
agreed to extend the negotiating period), then either Party may give the other
written notice of a request for mediation, in which event they shall jointly
select a neutral person with at least ten years experience as a commercial
mediator and who has experience involving complex commercial transactions and
real estate disputes, to act as mediator. 
The fees of the mediator shall be shared equally by both Parties.  If within thirty (30) days after written
request for mediation, the Parties are unable to agree upon a mediator, or to
thereafter resolve the 











Dispute by mediation, then either Party shall be entitled to
seek redress in the state or federal courts of the State of Hawaii.


END OF EXHIBIT E











EXHIBIT F


REQUIRED CONSENTS


Contracts


1.               Three-Party
Volunteer Driver Agreements between Seller, VPSI, Inc. and various authorized
drivers dated (various dates) for participation in VPSI’s vanpool program,
terminable on 30-days’ written notice by any party to the other parties (also
terminable by VPSI, Inc. on 24-hours’ written notice for cause). (Not
assignable with written consent.)


2.               LPG Purchase
Agreement between Seller and Citizens Communications Company dba The Gas
Company dated June 20, 2003 for the purchase of Seller’s liquefied petroleum
gas requirements for a 3-year term ending June 19, 2006 and automatically
renews for an additional 12 months if 60 days prior written notice of
termination is not given (not assignable without the consent of Citizens
Communications Company).


3.               Macadamia Nut Husk
Purchase Agreement, dated as of an unspecified date in 1999, by and between
Seller (as licensor) and Big Island Hauling, Inc. (as licensee), to facilitate
the composting of macadamia nut husks procured by Big Island Hauling, Inc. from
Seller.  No assignment without prior
written consent.


4.               Agreement re: HMAA
Medical/Drug/Vision/Life/AD&D; Group Policy #3334


5.               Agreement re:
Kaiser Permanente Medical/Drug/Vision; Group Plan #12220/002/11


6.               Agreement re:
Hawaii Dental Service (HDS) Dental; Group Number 2364


7.               Agreement dated as
of August 1, 2006, by and between Employee Assistance of the Pacific and Mac
Farms of Hawaii, LLC.


8.               Lease: Electronic
Sorting Machine, Bank of Hawaii Equipment Leasing Division, Equipment Lease Agreement
No. 22100 dated November 12, 1998. No assignment without prior written
consent.  Lease expired on July 30, 2006,
but was automatically renewed for an additional 16 month term.


9.               Financing
Agreement with Ford Credit for 2004 Ford F-150 VIN # 3508, Landers Ford, Inc.
2082 W. Poplar Ave, Collierville, TN 38017.


10.         Financing
Agreement with Ford Credit for 2004 Ford F-150 VIN # 8518, Landers Ford, Inc.
2082 W. Poplar Ave, Collierville, TN 38017.


11.         Macadamia Nut Farming and
Purchasing Agreement dated          ,
2004 by and between Mac Farms of Hawaii, LLC and Showe Family Hawaii, LLC.  No assignment without prior written consent.











Permits


Freely
Transferable Permits:


1.               Commercial
Measuring Device Licenses issued by the State of Hawaii, Department of Agriculture
for measuring device serial numbers 73350, G920473TX, H511092EG, H511093EG,
H511094EG and H533447 (requires post transfer notice)


2.               Permits to Operate
issued by State of Hawaii, Department of Labor and Industrial Relations, Hawaii
Occupational Health & Safety Division for the following equipment:


Horizontal
Air Tank/Buckeye Boiler Company (HPV 619-89)

Horizontal Air Tank/Brunner Eng. & Mfg. Co. (HPV 38-80)

Horizontal Air Tank/Brunner Eng. & Mfg. Co. (HPV 206-80)

Horizontal Air Tank/Brunner Eng. & Mfg. Co. ((HPV 205-80)

Horizontal Air Tank/Brunner Eng. & Mfg. Co. (HPV 1017-80)

Horizontal Air Tank/Trinity Industries (HPV 76-04A)

Horizontal Air Tank/Trinity Industries (HPV 77-04)

Wt Steam Power Boiler/The International Boiler Works (HAW 3496-80)


(requires
post transfer notice)


Permits
requiring consent from the appropriate governmental body:


1.               Noncovered Source
Permit No. 0388-01-N issued by the State of Hawaii, Department of Health, for 9
MMBTU/hr. Macadamia Nut Shell-Fried Steam Boiler


Non -
Transferable permits that Buyer must obtain:


1.               Dealers In Farm Produce License No. 0420-X000-09 issued by State
of Hawaii, Department of Agriculture, Quality Assurance Division, Commodities
Branch (not assignable)


2.               General Excise Tax
License, State of Hawaii, Department of Taxation


3.               Official Vehicle
Safety Inspection Station Permit


4.               Permit for
Flammable or Combustible Liquid Storage which permits maintenance of a
combustible fuel tank for dispensing of Class I and Class II liquids


5.               Food Establishment
Permit (FK4057), State of Hawaii, Department of Health


6.               Revocable Permit
(No. 7360 and S-6576) from the Board of Land and Natural Resources, State of
Hawaii, Department of Land and Natural Resources (This permit relates to access
to land to secure water to irrigate land underlying the Leases.  As such, neither the land nor the permit is
being transferred.)











EXHIBIT G


REGISTRATION RIGHTS AGREEMENT


REGISTRATION
RIGHTS AGREEMENT (this “Agreement”),
effective as of           ,
2007, by and between ML  MACADAMIA ORCHARDS, L.P., a Delaware limited partnership
(the “Company”), and MAC FARMS OF HAWAII, LLC, a Delaware limited liability
company (the “Initial Holder”).


WHEREAS,
this Agreement is made pursuant to the Acquisition Agreement, dated as of May   ,
2007 (the “Acquisition Agreement”), by
and among the Company, the Initial Holder and Kapua Orchard Estates, LLC, a
Delaware limited liability company, which provides for the sale to the Company
the macadamia nut farming, harvesting and processing business of the Initial
Holder;


WHEREAS,
pursuant to the Acquisition Agreement, the Company has issued to the Initial
Holder Six Hundred Fifty Thousand (650,000) Class A limited partnership units
in the Company (the “Securities”);
and


WHEREAS,
to induce the Initial Holder to enter into the Acquisition Agreement, the
Company has agreed to provide to the Initial Holder and its direct and indirect
transferees the registration rights set forth in this Agreement. The execution
of this Agreement is a condition to the closing under the Acquisition
Agreement.


NOW,
THEREFORE, in consideration of the mutual covenants herein
contained and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, and intending to be legally
bound, the parties hereby agree as follows:


1.          Definitions.


As used in this
Agreement, the following capitalized defined terms shall have the following
meanings:


“1933 Act”
shall mean the Securities Act of 1933, as amended from time to time.


“1934 Act” shall mean the Securities
Exchange Act of l934, as amended from time to time.


“Acquisition
Agreement” shall have the meaning set forth in the preamble.


“Affiliate”
shall mean, with respect to any specified Person, any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified person. For the purposes of this definition, “control”
when used 











with respect to
any person means the power to direct the management and policies of such
Person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise; and the terms “controlling” and “controlled”
have meanings correlative to the foregoing.


“Closing Date”
shall have the meaning ascribed to such term in the Acquisition Agreement.


“Company”
shall have the meaning set forth in the preamble and shall also include the
Company’s successors.


“Effectiveness
Period” shall mean a registration effected pursuant to
Section 2.1.


“Holder”
shall mean an Initial Holder, for so long as it owns any Registrable
Securities, and each of its successors, assigns and direct and indirect
transferees who become holders of Registrable Securities.


“Initial Holder”
shall have the meaning set forth in the preamble.


“Majority Holders”
shall mean the Holders of a majority of the outstanding Registrable Securities;
provided, however,
that whenever the consent or approval of Holders of a specified percentage of
Registrable Securities is required hereunder, Registrable Securities, if any,
held by the Company or any Affiliate of the Company shall be disregarded in
determining whether such consent or approval was given by the Holders of such
required percentage amount.


“Partnership
Units” shall mean any Class A limited partnership units of the
Company.


“Person”
shall mean an individual, partnership (general or limited), corporation,
limited liability company, trust or unincorporated organization, or a
government or agency or political subdivision thereof.


“Prospectus”
shall mean the prospectus included in a Shelf Registration Statement, including
any preliminary prospectus, and any such prospectus as amended or supplemented
by any prospectus supplement, including any such prospectus supplement with
respect to the terms of the offering of any portion of the Registrable
Securities covered by a Shelf Registration Statement, and by all other
amendments and supplements to a prospectus, including post-effective
amendments, and in each case including all material incorporated by reference
therein.


“Questionnaire”
shall mean a registration effected pursuant to Section 2.1.


“Registrable Securities”
shall mean all or any of the Securities; provided, however,
that any such Securities shall cease to be Registrable Securities when (i) a Shelf
Registration Statement with respect to such Securities shall have been declared
effective under the 1933 Act and such Securities shall have been disposed of
pursuant to such Shelf 











Registration
Statement, (ii) such Securities have been or may be sold to the public pursuant
to Rule l44 (or any similar provision then in force, but not Rule 144A) under
the 1933 Act, (iii) such Securities shall have ceased to be outstanding or (iv)
such Securities may be sold or transferred, other than by the Company’s Affiliates,
pursuant to Rule 144(k) (or any similar provision then in force) under the
1933 Act.


“Registration Expenses”
shall mean any and all expenses incident to performance of or compliance by the
Company with this Agreement, including without limitation: (i) all SEC,
stock exchange or National Association of Securities Dealers, Inc. (the “NASD”)
registration and filing fees, including, if applicable, the fees and expenses
of any “qualified independent underwriter” (and its counsel) that is required
to be retained by any holder of Registrable Securities in accordance with the
rules and regulations of the NASD, (ii) all fees and expenses incurred in
connection with compliance with state securities or blue sky laws and
compliance with the rules of the NASD (including reasonable fees and
disbursements of counsel for any underwriters or Holders in connection with
blue sky qualification of any of the Registrable Securities and any filings
with the NASD), (iii) all expenses of the Company in preparing or assisting
in preparing, word processing, printing and distributing any Shelf Registration
Statement, any Prospectus, any amendments or supplements thereto, any
securities sales agreements and other documents relating to the performance of
and compliance with this Agreement, (iv) all fees and expenses incurred in
connection with the listing, if any, of any of the Registrable Securities on
any securities exchange or exchanges, (v) all rating agency fees, (vi) the
fees and disbursements of counsel for the Company and of the independent public
accountants of the Company, including the expenses of any special audits or “comfort”
letters required by or incident to such performance and compliance, (vii) the
reasonable fees and expenses of a single counsel to the Holders in connection
with the Shelf Registration, which counsel shall be selected by the Majority
Holders of the Registrable Securities to be registered by such Shelf
Registration, and (viii) any fees and expenses of any special experts
retained by the Company in connection with any Shelf Registration Statement,
but excluding any underwriting discounts and commissions and transfer taxes, if
any, relating to the sale or disposition of Registrable Securities by a Holder.


“SEC”
shall mean the Securities and Exchange Commission or any successor agency or
government body performing the functions currently performed by the United
States Securities and Exchange Commission.


“Shelf Registration”
shall mean a registration effected pursuant to Section 2.1.


“Shelf Registration Statement”
shall mean a “shelf” registration statement of the Company pursuant to the
provisions of Section 2.1 of this Agreement which covers all of the Registrable
Securities on an appropriate form under Rule 415 under the 1933 Act, or any
similar rule that may be adopted by the SEC, and all amendments and supplements
to such registration statement, including post-effective amendments, in each
case including the Prospectus contained therein, all exhibits thereto and all
material incorporated by reference therein.


“Suspension
Period” shall mean a registration effected pursuant to
Section 2.4.











“Underwriter”
shall mean a registration effected pursuant to Section 4.


2.          Registration Under the 1933 Act.


2.1        Shelf Registration.


(a)        The
Company shall, at its cost, no later than 90 calendar days after the Closing
Date, file with the SEC, and thereafter shall use reasonable best efforts to
cause to be declared effective as promptly as practicable but no later than
180 calendar days after the Closing Date, a Shelf Registration Statement
relating to the offer and sale of the Registrable Securities by the Initial
Holder or, as applicable, any additional Holders that have provided the
information pursuant to Section 2.1(d).


(b)        The
Company shall, at its cost, use reasonable best efforts, subject to Section
2.4, to keep the Shelf Registration Statement continuously effective to permit
the Prospectus forming part thereof to be usable by Holders for a period of two
years from the date the Shelf Registration Statement is declared effective by
the SEC, or for such shorter period that will terminate when all Registrable
Securities covered by the Shelf Registration Statement have been sold pursuant
to the Shelf Registration Statement or cease to be outstanding or otherwise to
be Registrable Securities (the “Effectiveness Period”).


(c)        Notwithstanding
any other provisions in this Agreement, the Company shall use reasonable best
efforts to ensure that (i) any Shelf Registration Statement and any amendment
thereto and any Prospectus forming part thereof and any supplement thereto
complies in all material respects with the 1933 Act and the rules and
regulations thereunder, (ii) any Shelf Registration Statement and any amendment
thereto does not, when it becomes effective, contain an untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading and (iii) any
Prospectus forming part of any Shelf Registration Statement, and any supplement
to such Prospectus (as amended or supplemented from time to time), does not
include an untrue statement of a material fact or omit to state a material fact
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading.


(d)        Notwithstanding any other provisions in
this Agreement, no Holder of Registrable Securities may include any of its
Registrable Securities in the Shelf Registration Statement pursuant to this
Agreement unless the Holder furnishes to the Company a fully completed,
customary selling securityholder questionnaire (the “Questionnaire”)
and such other information in writing as the Company may reasonably request in
writing for use in connection with the Shelf Registration Statement or
Prospectus included therein and in any application to be filed with or under
state securities laws. To be named as a selling securityholder in the
Prospectus at the time of effectiveness of the Shelf Registration Statement,
each 











Holder must,
before the effectiveness of the Shelf Registration Statement and no later than
the 20th calendar day after the issuance of the press release by the Company
announcing the initial filing of the Registration Statement, furnish the
completed Questionnaire and such other information that the Company may
reasonably request in writing, if any, to the Company in writing and the
Company will include the information from the completed Questionnaire and such
other information, if any, in the Shelf Registration Statement and the
Prospectus in a manner so that upon effectiveness of the Shelf Registration
Statement the Holder will be permitted to deliver the Prospectus to purchasers
of the Holder’s Registrable Securities. From and after the date that the
Registration Statement is first declared effective by the SEC, upon receipt of
a completed Questionnaire and such other information that the Company may
reasonably request in writing, if any, the Company will use reasonable best
efforts to file within 20 business days any amendments or supplements to the
Shelf Registration Statement necessary for such Holder to be named as a selling
securityholder in the Prospectus contained therein to permit such Holder to
deliver the Prospectus to purchasers of the Holder’s Securities (subject to the
Company’s right to suspend the Shelf Registration Statement as described in
Section 2.4 below); provided, however, that the Company shall not be required to file more
than one such amendment to the Shelf Registration Statement in any calendar
quarter for all such Holders. Holders that do not deliver a completed written
Questionnaire and such other information, as provided for in this
Section 2.1(d), will not be named as selling securityholders in the
Prospectus. Each Holder named as a selling securityholder in the Prospectus
agrees to promptly furnish to the Company all information required to be
disclosed to make information previously furnished to the Company by the Holder
not materially misleading and any other information regarding such Holder and
the distribution of such Holder’s Registrable Securities as the Company may
from time to time reasonably request in writing.


(e)        Each
Holder agrees not to sell any Registrable Securities pursuant to the Shelf
Registration Statement without delivering, or causing to be delivered, a
Prospectus to the purchaser thereof and, following termination of the
Effectiveness Period, to notify the Company, within 10 calendar days of a
written request by the Company, of the amount of Registrable Securities sold
pursuant to the Shelf Registration Statement and, in the absence of a response,
the Company may assume that all of such Holder’s Registrable Securities have
been so sold; provided, however,
that the Company shall use reasonable best efforts to confirm that all of such
Holder’s Registrable Securities have been so sold prior to making such
assumption.


The Company shall not permit any securities other than
Registrable Securities to be included in the Shelf Registration Statement. The
Company further agrees, if necessary, to supplement or amend the Shelf
Registration Statement, as required by Section 2.3(b) below, and to furnish to
the Holders of Registrable Securities copies of any such supplement or
amendment promptly after its being used or filed with the SEC.















2.2        Expenses. The Company shall pay
all Registration Expenses in connection with the registration pursuant to
Section 2.1. Each Holder shall pay all underwriting discounts and commissions
and transfer taxes, if any, relating to the sale or disposition of such Holder’s
Registrable Securities pursuant to the Shelf Registration Statement.


2.3.       Effectiveness. (a) The Company
will be deemed not have used its reasonable best efforts to cause the Shelf
Registration Statement to become, or to remain, effective during the requisite
period if the Company voluntarily takes any action that would, or, or fails to
take any action which failure would result in any such Shelf Registration
Statement not being declared effective or the Holders of Registrable Securities
covered thereby not being able to offer and sell such Registrable Securities
during that period as and to the extent contemplated hereby, unless such action
is required by applicable law.


(b)         A Shelf Registration Statement pursuant
to Section 2.1 will not be deemed to have become effective unless it has been
declared effective by the SEC; provided, however, that if, after it has been declared effective, the
offering of Registrable Securities pursuant to a Shelf Registration Statement
is interfered with by any stop order, injunction or other order or requirement
of the SEC or any other governmental agency or court, such Shelf Registration
Statement will be deemed not to have been effective during the period of such
interference, until the offering of Registrable Securities pursuant to such
Shelf Registration Statement may legally resume.


2.4.         Suspension.
The Company may suspend the use of any Prospectus for a period not to exceed 45
calendar days in any rolling 90-calendar day period, or an aggregate of
120 calendar days in any rolling 12-month period, (each, a “Suspension Period”) if the Board of
Directors of the Company shall have determined in good faith that because of
valid business reasons (not including avoidance of the Company’s obligations
hereunder), including without limitation proposed or pending corporate
developments and similar events or because of filings with the SEC, it is in
the best interests of the Company to suspend such use, and prior to suspending
such use the Company provides the Holders with written notice of such
suspension, which notice need not specify the nature of the event giving rise
to such suspension. Each Holder shall keep confidential any communications
received by it from the Company regarding the suspension of the use of the Prospectus,
except as required by applicable law.


3.          Registration Procedures.


In connection with
the obligations of the Company with respect to the Shelf Registration, the
Company shall:


(a)        prepare and file with the SEC a Shelf
Registration Statement, within the relevant time period specified in Section 2,
on the appropriate form under the 1933 Act, which form (i) shall be selected by
the Company, (ii) shall be available for the sale of the Registrable Securities
by the selling Holders thereof, (iii) shall comply as to form in all material
respects with the requirements of the applicable form and include or
incorporate by reference all financial statements required by the SEC to be
filed therewith or incorporated by reference therein, and (iv) shall comply in all
material respects with the applicable requirements of Regulation S-T 











under the 1933 Act, if
any, and use reasonable best efforts to cause such Shelf Registration Statement
to become effective and remain effective in accordance with Section 2;


(b)        (i) prepare and file with the SEC
such amendments and post-effective amendments to the Shelf Registration
Statement as may be necessary under applicable law to keep the Shelf
Registration Statement effective for the Effectiveness Period, subject to Section 2.4;
and (ii) cause each Prospectus to be supplemented by any required
prospectus supplement, and as so supplemented to be filed pursuant to Rule 424
(or any similar provision then in force) under the 1933 Act and comply during
the Effectiveness Period with the provisions of the 1933 Act, the 1934 Act and
the rules and regulations thereunder required to enable the disposition of all
Registrable Securities covered by the Shelf Registration Statement in
accordance with the intended method or methods of distribution by the selling
Holders thereof;


(c)        (i) notify each Holder of Registrable
Securities of the filing, by issuing a press release, of a Shelf Registration
Statement with respect to the Registrable Securities; (ii) furnish to each
Holder of Registrable Securities that has provided the information required by
Section 2.1(d) and to each underwriter of an underwritten offering of
Registrable Securities, if any, without charge, as many copies of each
Prospectus, including each preliminary Prospectus, and any amendment or
supplement thereto and such other documents as such Holder or underwriter may
reasonably request, including financial statements and schedules and, if the
Holder so requests, all exhibits to facilitate the unrestricted sale or other
disposition of the Registrable Securities; and (iii) subject to Section 2.4 and
to any notice by the Company in accordance with Section 3(e) of the existence
of any fact of the kind described in Sections 3(e)(ii), (iii), (iv), (v)
and (vi), consent to the use of the Prospectus or any amendment or supplement
thereto by each of the selling Holders of Registrable Securities that has
provided the information required by Section 2.1(d) in connection with the
offering and sale of the Registrable Securities;


(d)        use reasonable best efforts to register
or qualify the Registrable Securities under all applicable state securities or “blue
sky” laws of such jurisdictions as any Holder of Registrable Securities covered
by a Shelf Registration Statement and each underwriter of an underwritten
offering of Registrable Securities shall reasonably request, and do any and all
other acts and things which may be reasonably necessary or advisable to enable
each such Holder and underwriter to consummate the disposition in each such
jurisdiction of such Registrable Securities owned by such Holder; provided, however, that
the Company shall not be required to (i) qualify as a foreign corporation or as
a dealer in securities in any jurisdiction where it would not otherwise be
required to qualify but for this Section 3(d), or (ii) take any action which
would subject it to general service of process or taxation in any such
jurisdiction where it is not then so subject;


(e)        notify promptly each Holder of
Registrable Securities under a Shelf Registration that has provided the
information required by Section 2.1(d) and, if requested by such Holder,
confirm such advice in writing promptly: (i) when a Shelf Registration
Statement has become effective and when any post-effective amendments thereto
become effective; (ii) of any request by the SEC or any state securities
authority for post-effective amendments and supplements to a Shelf Registration
Statement and Prospectus or for additional information after the Shelf
Registration Statement has become effective; (iii) of the issuance by the SEC
or any 











state securities
authority of any stop order suspending the effectiveness of a Shelf
Registration Statement or the initiation of any proceedings for that purpose;
(iv) of the happening of any event or the discovery of any facts during the
period a Shelf Registration Statement is effective which makes any statement of
a material fact made in such Shelf Registration Statement or the related
Prospectus untrue or which requires the making of any changes in such Shelf
Registration Statement or Prospectus to make the statements therein not
misleading; (v) of the receipt by the Company of any notification with respect
to the suspension of the qualification of the Registrable Securities for sale
in any jurisdiction or the initiation or threatening of any proceeding for such
purpose; and (vi) of any determination by the Company that a post-effective
amendment to such Shelf Registration Statement would be appropriate;


(f)        furnish special counsel for the Holders
of Registrable Securities copies of any comment letters received from the SEC
or any other request by the SEC or any state securities authority for
amendments or supplements to a Shelf Registration Statement and Prospectus or
for additional information;


(g)        use reasonable best efforts to obtain
the withdrawal of any order suspending the effectiveness of a Shelf
Registration Statement at the earliest possible moment;


(h)        furnish to each Holder of Registrable
Securities that has provided the information required by Section 2.1(d), and
each underwriter, if any, without charge, at least one conformed copy of each
Shelf Registration Statement and any post-effective amendment thereto,
including financial statements and schedules (without documents incorporated
therein by reference and all exhibits thereto, unless requested);


(i)         (i) cooperate with the selling
Holders of Registrable Securities to facilitate the timely preparation and
delivery of certificates representing Registrable Securities to be sold and not
bearing any restrictive legends (other than as required by the certificate of
limited partnership or partnership agreement of the Company or applicable law);
and (ii) enable such Registrable Securities to be in such denominations
and registered in such names as the selling Holders or the underwriters, if
any, may reasonably request at least three business days prior to the closing
of any sale of Registrable Securities;


(j)         upon the occurrence of any event or the
discovery of any facts, each as contemplated by Sections 3(e)(ii), (iii),
(iv), (v) and (vi), as promptly as practicable after the occurrence of such an
event, use reasonable best efforts to prepare a supplement or post-effective
amendment to the Shelf Registration Statement or the related Prospectus or any
document incorporated therein by reference or file any other required document
so that, as thereafter delivered to the purchasers of the Registrable
Securities, such Prospectus will not contain at the time of such delivery any
untrue statement of a material fact or omit to state a material fact necessary
to make the statements therein, in light of the circumstances under which they
were made, not misleading or will remain so qualified. At such time as such
public disclosure is otherwise made or the Company determines that such
disclosure is not necessary, in each case to correct any misstatement of a
material fact or to include any omitted material fact, the Company agrees
promptly to notify each Holder that has provided the information required by
Section 2.1(d) of such determination and to furnish each Holder such
number of copies of the Prospectus as amended or supplemented, as such Holder
may reasonably request;











(k)        no less than three business days prior
to the filing of any Shelf Registration Statement, any Prospectus, any
amendment to a Shelf Registration Statement or amendment or supplement to a
Prospectus (other than amendments and supplements that do nothing more than
name Holders and provide information with respect thereto), provide copies of
such document to the Initial Holder on behalf of such Holders;


(l)         enter into such customary agreements
and take all other customary and appropriate actions to expedite or facilitate
the disposition of such Registrable Securities including but not limited to:


(i) obtain opinions of counsel to the Company and
updates thereof addressed to each selling Holder and the underwriters, if any,
covering the matters set forth in the opinion of such counsel delivered on the
Closing Date;


(ii) obtain “comfort” letters and updates thereof from
the Company’s independent certified public accountants (and, if necessary, any
other independent certified public accountants of any subsidiary of the Company
or of any business acquired by the Company for which financial statements are,
or are required to be, included in the Shelf Registration Statement) addressed
to the underwriters, if any, and use reasonable efforts to have such letter
addressed to the selling Holders of Registrable Securities, such letters
substantially in the form and covering the matters covered in the comfort
letter delivered on the Closing Date; and


(iii) if an underwriting agreement is entered into,
cause the same to set forth indemnification provisions and procedures
substantially equivalent to the indemnification provisions and procedures set
forth in Section 4 with respect to the underwriters and all other parties to be
indemnified pursuant to said Section or, at the request of any underwriters, in
the form customarily provided to such underwriters in similar types of
transactions.


The actions under
Section 3(l)(i), (ii) and (iii) shall be done solely in connection with
the underwritten offering of Registrable Securities off of such Shelf
Registration Statement pursuant to an underwriting or similar agreement as and
to the extent required thereunder, and reasonably requested by any of the
parties thereto;


(m)      if reasonably requested in connection with
a disposition of Registrable Securities, make available for inspection during
business hours by representatives of the Holders of the Registrable Securities,
any underwriters participating in any disposition pursuant to a Shelf
Registration Statement, and any counsel or accountant retained by any of the
foregoing, all financial and other records, pertinent corporate documents and
properties of the Company reasonably requested by any such persons, and cause
the respective officers, directors, employees, and any other agents of the
Company to supply all information reasonably requested by any such
representative, underwriter, special counsel or accountant in connection with a
Shelf Registration Statement, and make such representatives of the Company
available for discussion of such documents as shall be reasonably requested by
the Initial Holder, in each case as is customary for “due diligence”
investigations; provided, however,
that, to the extent the 











Company, in its
reasonable discretion, agrees to disclose non-public information, such persons
shall first agree in writing with the Company that any such non-public
information shall be kept confidential by such persons and shall be used solely
for the purposes of exercising rights under this Agreement and such person
shall not engage in trading any securities of the Company until such material
non-public information becomes properly publicly available, unless (i)
disclosure of such information is required by court or administrative order or
is necessary to respond to inquiries of regulatory authorities,
(ii) disclosure of such information is required by law (including any
disclosure requirements pursuant to federal securities laws in connection with
the filing of any Registration Statement or the use of any Prospectus referred
to in this Agreement upon a customary opinion of counsel for such persons
delivered and reasonably satisfactory to the Company), (iii) such information
becomes generally available to the public other than as a result of a
disclosure or failure to safeguard by any such person, or (iv) such information
becomes available to any such person from a source other than the Company and
such source is not bound by a confidentiality agreement; and, provided, further, that
the foregoing inspection and information gathering shall, to the greatest
extent possible, be coordinated on behalf of all the Holders and the other parties
entitled thereto by special counsel to the Holders;


(n)       a reasonable time prior to filing the
Shelf Registration Statement, any Prospectus forming a part thereof, any
amendment to the Shelf Registration Statement or amendment or supplement to
such Prospectus (other than amendments and supplements that do nothing more
than name Holders and provide information with respect thereto), provide copies
of such document to the Holders of Registrable Securities that have provided
the information required by Section 2.1(d), to the Initial Holder, to special
counsel for the Holders and to the underwriter or underwriters of an
underwritten offering of Registrable Securities, if any, make such changes in
any such document prior to the filing thereof as the Initial Holder, the
counsel to the Holders or the underwriter or underwriters reasonably request
within three business days of delivery of such copies and not file any such
document in a form to which the Majority Holders, the Initial Holder on behalf
of the Holders of Registrable Securities, special counsel for the Holders of
Registrable Securities or any underwriter shall not have previously been
advised and furnished a copy of or to which the Majority Holders, the Initial
Holder of behalf of the Holders of Registrable Securities, counsel to the
Holders of Registrable Securities or any underwriter shall reasonably object
within three business days of delivery of such copies, and make the
representatives of the Company available for discussion of such document as shall
be reasonably requested by the Holders of Registrable Securities, the Initial
Holder on behalf of such Holders, counsel for the Holders of Registrable
Securities or any underwriter;


(o)       use reasonable best efforts to cause all
Registrable Securities to be listed on any securities exchange or inter-dealer
quotation system on which similar securities issued by the Company are then
listed if requested by the Majority Holders, or if requested by the underwriter
or underwriters of an underwritten offering of Registrable Securities, if any;


(p)        if the Securities are rated, use
reasonable best efforts to cause the Registrable Securities to be rated by the
appropriate rating agencies;


(q)        otherwise comply with all applicable
rules and regulations of the SEC and make available to its security holders, as
soon as reasonably practicable, an earnings statement 











covering at least 12
months which shall satisfy the provisions of Section 11(a) of the 1933 Act and
Rule 158 thereunder; and


(r)         cooperate and assist in any filings
required to be made with the NASD and in the performance of any due diligence
investigation by any underwriter and its counsel (including any “qualified
independent underwriter” that is required to be retained in accordance with the
rules and regulations of the NASD).


Without limiting
Section 2.1(d), the Company may (as a condition to such Holder’s participation
in the Shelf Registration) require each Holder of Registrable Securities to
furnish to the Company such information regarding the Holder and the proposed
distribution by such Holder of such Registrable Securities as the Company may
from time to time reasonably request in writing.


Each Holder agrees
that, upon receipt of any notice from the Company of the happening of any event
or the discovery of any facts, each of the kind described in
Sections 3(e)(ii), (iii), (iv), (v) and (vi), such Holder will forthwith
discontinue disposition of Registrable Securities pursuant to the Prospectus
included in the Shelf Registration Statement until such Holder’s receipt of the
copies of the supplemented or amended Prospectus contemplated by Section 3(j)
or written notice from the Company that the Shelf Registration Statement is
again effective and no amendment or supplement is needed, and, if so directed
by the Company, such Holder will deliver to the Company (at its expense) all
copies in such Holder’s possession, other than permanent file copies then in
such Holder’s possession, of the Prospectus covering such Registrable
Securities current at the time of receipt of such notice.


In the event that
the Company is in breach of its obligations under this Agreement, the Company
shall not file any Registration Statement with respect to any securities
(within the meaning of Section 2(1) of the 1933 Act) of the Company other than
Registrable Securities.


If any of the
Registrable Securities covered by any Shelf Registration Statement are to be
sold in an underwritten offering, the underwriter or underwriters and manager
or managers that will manage such offering will be selected by the Majority
Holders of the Registrable Securities to be registered by such Shelf
Registration and shall be reasonably acceptable to the Company. No Holder of
Registrable Securities may participate in any underwritten registration hereunder
unless such Holder (a) agrees to sell such Holder’s Registrable Securities on
the basis provided in any underwriting arrangements approved by the persons
entitled hereunder to approve such arrangements and (b) completes and
executes all questionnaires, powers of attorney, indemnities, underwriting
agreements and other documents required under the terms of such underwriting
arrangements.


4.          Indemnification; Contribution.


(a)  The Company agrees to indemnify and hold
harmless the Initial Holder, each Holder who has provided information to the
Company in accordance with Section 2.1(d), each Person who participates as an
underwriter (any such Person being an “Underwriter”)
and each Person, if any, who controls any Holder or Underwriter within the
meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act as follows:















(i) against any
and all loss, liability, claim, damage and expense whatsoever, as incurred,
arising out of any untrue statement or alleged untrue statement of a material
fact contained in any Shelf Registration Statement (or any amendment or
supplement thereto) pursuant to which Registrable Securities were registered
under the 1933 Act, including all documents incorporated therein by reference,
or the omission or alleged omission therefrom of a material fact required to be
stated therein or necessary to make the statements therein not misleading, or
arising out of any untrue statement or alleged untrue statement of a material
fact contained in any Prospectus (or any amendment or supplement thereto) or
the omission or alleged omission therefrom of a material fact necessary to make
the statements therein, in the light of the circumstances under which they were
made, not misleading;


(ii) against any
and all loss, liability, claim, damage and expense whatsoever, as incurred, to
the extent of the aggregate amount paid in settlement of any litigation, or any
investigation or proceeding by any governmental agency or body, commenced or
threatened, or of any claim whatsoever based upon any such untrue statement or
omission, or any such alleged untrue statement or omission; provided, however, that
(subject to Section 4(d) below) any such settlement is effected with the
written consent of the Company; and


(iii) against any
and all out-of-pocket expense whatsoever, as incurred (including the reasonable
fees and disbursements of counsel chosen by any indemnified party), reasonably
incurred in investigating, preparing or defending against any litigation, or
any investigation or proceeding by any governmental agency or body, commenced
or threatened, or any claim whatsoever based upon any such untrue statement or
omission, or any such alleged untrue statement or omission, to the extent that
any such expense is not paid under subparagraph (i) or (ii) above;


provided, however,
that this indemnity agreement shall not apply to any loss, liability, claim,
damage or expense to the extent arising out of any untrue statement or omission
or alleged untrue statement or omission made in reliance upon and in conformity
with written information furnished to the Company by or on behalf of any Holder
or Underwriter expressly for use in a Shelf Registration Statement (or any
amendment thereto) or any Prospectus (or any amendment or supplement thereto);
and, provided, further,
that this indemnity provision shall not apply to any loss, liability, claim,
damage or expense if the Holder fails to deliver at or prior to the written
confirmation of sale the most recent Prospectus furnished to such Holder by the
Company and such Prospectus, as amended or supplemented as of the time of such
confirmation of sale, including any amendment or supplement filed with the SEC
that is incorporated by reference in the Prospectus), would have corrected such
untrue statement or omission or alleged untrue statement or omission of a
material fact and delivery thereof was required by law.


(b)        Each Holder who has provided information
to the Company in accordance with Section 2.1(d), severally, but not jointly,
agrees to indemnify and hold harmless the Company, the Initial Holder, each
Underwriter and the other selling Holders who have provided information to the
Company in accordance with Section 2.1(d), and each of their respective
directors and officers, and each Person, if any, who controls the Company, the
Initial Holder, any 











Underwriter or any other selling Holder within the
meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act, against
any and all loss, liability, claim, damage and expense described in the
indemnity contained in Section 4(a), as incurred, but only with respect to
untrue statements or omissions, or alleged untrue statements or omissions, made
in the Shelf Registration Statement (or any amendment thereto) or any
Prospectus included therein (or any amendment or supplement thereto) in
reliance upon and in conformity with written information with respect to such
Holder furnished to the Company by or on behalf of such Holder expressly for
use in the Shelf Registration Statement (or any amendment thereto) or such
Prospectus (or any amendment or supplement thereto); provided,
however, that no such Holder shall be
liable for any claims hereunder in excess of the amount of net proceeds
received by such Holder from the sale of Registrable Securities pursuant to
such Shelf Registration Statement.


(c)        Each indemnified party shall give notice
as promptly as reasonably practicable to each indemnifying party of any action
or proceeding commenced against it in respect of which indemnity may be sought
hereunder, but failure so to notify an indemnifying party shall not relieve
such indemnifying party from any liability hereunder to the extent it is not
materially prejudiced as a result thereof and in any event shall not relieve it
from any liability which it may have otherwise than on account of this
indemnity agreement. An indemnifying party may participate at its own expense
in the defense of such action; provided, however, that counsel to the indemnifying party shall not
(except with the consent of the indemnified party) also be counsel to the
indemnified party. In no event shall the indemnifying party or parties be
liable for the fees and expenses of more than one counsel (in addition to any
local counsel) separate from their own counsel for all indemnified parties in
connection with any one action or separate but similar or related actions in
the same jurisdiction arising out of the same general allegations or
circumstances. No indemnifying party shall, without the prior written consent
of the indemnified parties, settle or compromise or consent to the entry of any
judgment with respect to any litigation, or any investigation or proceeding by
any governmental agency or body, commenced or threatened, or any claim
whatsoever in respect of which indemnification or contribution could be sought
under this Section 4 (whether or not the indemnified parties are actual or
potential parties thereto), unless such settlement, compromise or consent (i)
includes an unconditional release of each indemnified party from all liability
arising out of such litigation, investigation, proceeding or claim and (ii)
does not include a statement as to or an admission of fault, culpability or a
failure to act by or on behalf of any indemnified party.


(d)        If at any time an indemnified party
shall have requested an indemnifying party to reimburse the indemnified party
for fees and expenses of counsel, such indemnifying party agrees that it shall
be liable for any settlement of the nature contemplated by
Section 4(a)(ii) effected without its written consent if (i) such
settlement is entered into more than 45 calendar days after receipt by such
indemnifying party of the aforesaid request, (ii) such indemnifying party shall
have received notice of the terms of such settlement at least 30 calendar days
prior to such settlement being entered into and (iii) such indemnifying party
shall not have reimbursed such indemnified party in accordance with such
request prior to the date of such settlement.


(e)       If
the indemnification provided for in this Section 4 is for any reason
unavailable to or insufficient to hold harmless an indemnified party in respect
of any losses, liabilities, claims, damages or expenses referred to therein,
then each indemnifying party shall 











contribute to the aggregate amount of
such losses, liabilities, claims, damages and expenses incurred by such
indemnified party, as incurred, in such proportion as is appropriate to reflect
the relative fault of the indemnifying party or parties on one hand and the
indemnified party or party on the other hand in connection with the statements
or omissions which resulted in such losses, liabilities, claims, damages or
expenses, as well as any other relevant equitable considerations.


The
relative fault of Company, on the one hand,
and the Holders and the Initial Holder, on the other hand,
shall be determined by reference to, among other things, whether any such
untrue or alleged untrue statement of a material fact or omission or alleged
omission to state a material fact relates to information supplied by the
Company or by the Holder or the Initial Holder and the parties’ relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission.


The
Company, the Holders and the Initial Holder agree that it would not be just and
equitable if contribution pursuant to this Section 4 were determined by pro
rata allocation (even if the Initial Holder were treated as one entity for such
purpose) or by any other method of allocation which does not take account of
the equitable considerations referred to above in this Section 4. The aggregate
amount of losses, liabilities, claims, damages and expenses incurred by an
indemnified party and referred to above in this Section 4 shall be deemed to
include any out-of-pocket legal or other expenses reasonably incurred by such
indemnified party in investigating, preparing or defending against any
litigation, or any investigation or proceeding by any governmental agency or
body, commenced or threatened, or any claim whatsoever based upon any such
untrue or alleged untrue statement or omission or alleged omission.


Notwithstanding
the provisions of this Section 4, no Initial Holder shall be required to
contribute any amount in excess of the amount by which the total price at which
the Securities sold by it were offered exceeds the amount of any damages which
such Initial Holder has otherwise been required to pay by reason of such untrue
or alleged untrue statement or omission or alleged omission.


No
Person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the 1933 Act) shall be entitled to contribution from any
Person who was not guilty of such fraudulent misrepresentation.


For purposes of this
Section 4, each Person, if any, who controls an Initial Holder or Holder within
the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act shall
have the same rights to contribution as such Initial Holder or Holder, and each
director of the Company, and each Person, if any, who controls the Company
within the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act
shall have the same rights to contribution as the Company.


5.          Miscellaneous.


5.1        Rule 144 and Rule 144A.
For so long as the Company is subject to the reporting requirements of Section
13 or 15(d) of the 1934 Act, the Company covenants that it will file the
reports required to be filed by it under Section 13(a) or 15(d) of the 1934 Act
and the rules and regulations adopted by the SEC thereunder. If the Company
ceases to be so required to file such reports, the Company covenants that it
will upon the request of any Holder of 











Registrable Securities (a) make publicly available
such information as is necessary to permit sales pursuant to Rule 144 under the
1933 Act, (b) deliver such information to a prospective purchaser as is
necessary to permit sales pursuant to Rule 144A under the 1933 Act and take
such further action as any Holder of Registrable Securities may reasonably
request for such purpose, and (c) take such further action that is reasonable
in the circumstances, in each case, to the extent required from time to time to
enable such Holder to sell its Registrable Securities without registration
under the 1933 Act within the limitation of the exemptions provided by
(i) Rule 144 under the 1933 Act, as such Rule may be amended from time to
time, (ii) Rule 144A under the 1933 Act, as such Rule may be amended from time
to time, or (iii) any similar rules or regulations hereafter adopted by the
SEC. Upon the request of any Holder of Registrable Securities, the Company will
deliver to such Holder a written statement as to whether it has complied with
such requirements. Notwithstanding the foregoing, nothing in this Section 5.1
shall be deemed to require the Company to register any of its securities (other
than the Partnership Units) under the 1934 Act.


5.2        No Inconsistent Agreements.
The Company has not entered into and the Company will not after the date of
this Agreement enter into any agreement which is inconsistent with the rights
granted to the Holders of Registrable Securities in this Agreement or otherwise
conflicts with the provisions of this Agreement. The rights granted to the
Holders hereunder do not and will not for the term of this Agreement in any way
conflict with the rights granted to the holders of any of the Company’s other
issued and outstanding securities under any such agreements.


5.3        Amendments and Waivers.
The provisions of this Agreement, including the provisions of this sentence,
may not be amended, modified or supplemented, and waivers or consents to
departures from the provisions of this Agreement may not be given unless the
Company has obtained the written consent of the Majority Holders of such
Registrable Securities Holders of at least a majority of the outstanding
Registrable Securities affected by such amendment, modification, supplement,
waiver or departure. Notwithstanding the foregoing, this Agreement may be
amended by a written agreement between the Company and the Initial Holder,
without the consent of the Holders of the Registrable Securities, to cure any
ambiguity or to correct or supplement any provision contained herein. Each
Holder of Registrable Securities outstanding at the time of any amendment,
modification, waiver or consent pursuant to this Section 5.3, shall be bound by
such amendment, modification, waiver or consent, whether or not any notice or writing
indicating such amendment, modification, waiver or consent is delivered to such
Holder.


5.4        Notices. All notices and other
communications provided for or permitted hereunder shall be made in writing by
hand delivery, registered first-class mail, facsimile, or any courier
guaranteeing overnight delivery (a) if to a Holder, at the most current address
given by such Holder to the Company in a Questionnaire or by means of a notice
given in accordance with the provisions of this Section 5.4, which address
initially is the address set forth in the Acquisition Agreement with respect to
the Initial Holder (including all duplicate copies required to be delivered
pursuant to the Acquisition Agreement); and (b) if to the Company,
initially at the Company’s address set forth in the Acquisition Agreement
(including all duplicate copies required to be delivered pursuant to the
Acquisition Agreement), and thereafter at such other address of which notice is
given in accordance with the provisions of this Section 5.4. All such 











notices and other communications shall be deemed given
(i) when personally delivered to the party to be given such notice or other
communication; (ii) on the business day that such notice or other communication
is sent by facsimile, email or similar electronic means, fully prepaid, which
facsimile or similar electronic communication shall promptly be confirmed by
written notice; (iii) on the third business day following the date of deposit
in the United States mail if such notice or other communication is sent by
certified or registered mail with return receipt requested and postage thereon
fully prepaid; or (iv) on the business day following the day such notice or
other communication is sent prepaid by reputable overnight courier.


5.5        Successor and Assigns.
This Agreement shall inure to the benefit of and be binding upon the
successors, assigns and transferees of each of the parties, including, without
limitation and without the need for an express assignment, subsequent Holders; provided, however, that
nothing herein shall be deemed to permit any assignment, transfer or other
disposition of Registrable Securities in violation of the terms of the
Acquisition Agreement. If any transferee of any Holder shall acquire
Registrable Securities, in any manner, whether by operation of law or
otherwise, such Registrable Securities shall be held subject to all of the
terms of this Agreement, and by taking and holding such Registrable Securities
such person shall be conclusively deemed to have agreed to be bound by and to
perform all of the terms and provisions of this Agreement, including the
restrictions on resale set forth in this Agreement and, if applicable, the
Acquisition Agreement, and such person shall be entitled to receive the
benefits hereof.


5.6        Third Party Beneficiaries.
The Initial Holder (even if the Initial Holder is not a Holder of Registrable
Securities) shall be a third party beneficiary to the agreements made hereunder
between the Company, on the one hand,
and the Holders, on the other hand, and shall have
the right to enforce such agreements directly to the extent it deems such
enforcement necessary or advisable to protect its rights or the rights of
Holders hereunder. Each Holder of Registrable Securities shall be a third party
beneficiary to the agreements made hereunder between the Company and the
Initial Holder and shall have the right to enforce such agreements directly to
the extent it deems such enforcement necessary or advisable to protect its
rights hereunder.


5.7        Specific Enforcement. Without
limiting the remedies available to the Initial Holder and the Holders, the
Company acknowledges that any failure by the Company to comply with its
obligations under Section 2.1 may result in material irreparable injury to the
Initial Holder or the Holders for which there is no adequate remedy at law,
that it may not be possible to measure damages for such injuries precisely and
that, in the event of any such failure, the Initial Holder or any Holder may
seek such relief as may be required to specifically enforce the Company’s
obligations under Section 2.1.


5.8        Restriction on Resales. Until the
expiration of two years after the original issuance of the Securities, the
Company will not, and will cause its Affiliates not to, resell any Securities
which are “restricted securities” (as such term is defined under
Rule 144(a)(3) under the 1933 Act) that have been reacquired by any of
them and shall cancel such Securities immediately upon any purchase of any such
by the Company.











5.9        Counterparts; Facsimiles. This
Agreement may be executed in counterparts, each of which is deemed an original,
and such counterparts constitute one and the same instrument, which may be
sufficiently evidenced by a counterpart. A facsimile, telecopy, PDF, or other
reproduction of this Agreement may be executed by one or more parties, and an
executed copy of this Agreement may be delivered by one or more parties by
facsimile, PDF e-mail, or similar instantaneous electronic transmission device
under which the signature of or on behalf of such party can be seen, and such
execution and delivery is to be considered valid, binding and effective for all
purposes. At the request of either party, the parties agree to execute an
original of this Agreement as well as any facsimile, telecopy or other
reproduction hereof.


5.10      Headings. The headings in this
Agreement are for convenience of reference only and shall not limit or
otherwise affect the meaning hereof.


5.11      Waiver of Right to Jury
Trial. EACH OF THE PARTIES HERETO IRREVOCABLY WAIVES AS AGAINST
THE OTHER PARTY HERETO ANY RIGHTS IT MAY HAVE TO A JURY TRIAL IN THE UNITED
STATES OF AMERICA IN RESPECT OF ANY CIVIL ACTION ARISING UNDER THIS
AGREEMENT.  EACH PARTY MAY FILE AN
ORIGINAL COUNTERPART OR A COPY OF THIS SECTION WITH ANY COURT AS WRITTEN
EVIDENCE OF THE CONSENT OF THE OTHER PARTY TO THE WAIVER OF ITS RIGHT TO TRIAL
BY JURY.


5.12      Governing Law. THIS
AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAW OF THE
STATE OF DELAWARE WITHOUT REGARD TO THE PRINCIPLES OF CONFLICT OF LAWS THEREOF.


5.13      Severability. In the event that any
one or more of the provisions contained herein, or the application thereof in
any circumstance, is held invalid, illegal or unenforceable, the validity,
legality and enforceability of any such provision in every other respect and of
the remaining provisions contained herein shall not be affected or impaired
thereby.


5.14      Entire
Agreement. This Agreement is intended by the parties as a final expression
of their agreement and intended to be a complete and exclusive statement of the
agreement and understanding of the parties hereto in respect of the subject
matter contained herein. There are no restrictions, promises, warranties or
undertakings, other than those set forth or referred to herein with respect to
the registration rights granted by the Issuer with respect to the Registrable
Securities. This Agreement supersedes all prior agreements and understandings
between the parties with respect to such subject matter.











IN
WITNESS WHEREOF, the parties have caused this Registration
Rights Agreement to be duly executed and delivered by their duly authorized
representatives as of the date first written above.


	
  

  	
  ML MACADAMIA ORCHARDS, L.P.,

  
	
   

  	
  a Delaware limited partnership

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Dennis J. Simonis

  
	
   

  	
   

  	
  Title:

  	
  President

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  MAC FARMS OF HAWAII, LLC,

  
	
   

  	
  a Delaware limited liability company

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Robert D. Sparks

  
	
   

  	
   

  	
  Title:

  	
  Chairman of the Board

  



 











EXHIBIT H


TRADEMARK
LICENSE AGREEMENT


TRADEMARK LICENSE AGREEMENT
(this “Agreement”), effective as of        
  , 2007, by and between KAPUA ORCHARD ESTATES, LLC,
a Delaware limited liability company (“Licensor”),
and                ,


a                 
(“Licensee”).


WHEREAS,
this Agreement is made pursuant to the Acquisition Agreement, dated as of        ,
2007, by and between Licensee, on the one hand,
and Licensor and Mac Farms of Hawaii, LLC, a Delaware limited liability company
(“Mac Farms”), on the other
hand, (the “Purchase Agreement”),
which provides for the sale to Licensee of the macadamia nut farming,
harvesting and processing business of Licensor and Mac Farms;


WHEREAS, Licensor is the owner of
certain trademarks and the goodwill associated therewith, which trademarks are
listed on Schedule A (the “Licensed Marks”);


WHEREAS,
Licensee desires to use the Licensed Marks solely in connection with its
macadamia nut farming, harvesting and processing business (the “Macadamia Nut Business”); and


WHEREAS,
Licensor, as the owner of the Licensed Marks, agrees to license Licensee to use
the Licensed Marks solely in connection with the Macadamia Nut Business on the
terms and conditions set forth herein.


NOW,
THEREFORE, in consideration of the mutual covenants herein
contained and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, and intending to be legally
bound, the parties hereby agree as follows:


1.         Grant of License; Payment.  Licensor hereby grants Licensee, subject to
the terms hereof, a personal, exclusive, royalty-free, fully paid-up, license
to use the Licensed Marks solely in connection with the Macadamia Nut Business
during the Term (as defined below). Except in connection with Licensee’s use or
utilization of the Licensed Marks for or in relation to advertising, promotion
and marketing of Licensee in connection with the Macadamia Nut Business,
Licensee shall have no right to sublicense the use of the Licensed Marks.  In exchange for the exclusive license granted
herein, Licensee hereby pays to Licensor a one-time license fee in the amount
of ONE DOLLAR ($1.00) by corporate check or such other funds as may be agreed
upon by the parties. No other royalty shall be paid to Licensor for Licensee’s
use of Licensed Marks under this Agreement. Licensor shall have no right or
interest in or to any revenues, profits or other benefits derived by Licensee
from its permitted use of the Licensed Marks under this Agreement











2.             Other
Conditions.  Licensee
shall make no use of the Licensed Marks except solely in connection with the
Macadamia Nut Business, and shall not use the Licensed Marks in any manner
whatsoever which infringes upon the rights of other persons or parties. In
conjunction with any permitted use of the Licensed Marks, Licensee shall
publish a legend (the “Legend”)
stating the following: “The Kapua or the Kapua Ranch, as the case may be,
trademark is the property of Kapua Orchard Estates, LLC, and is used here by
permission.” The Legend shall appear, if and as appropriate, on all contracts
and other legal documents, on all product packaging and in all publications
(including print and online advertisements). Licensee agrees to provide to
Licensor annually, or upon Licensor’s reasonable request, samples of its
product packaging materials, advertising materials and any other publications
(including electronic) using the Licensed Marks for review by Licensor for
compliance with the terms hereof. Licensee agrees to make any changes
reasonably requested by Licensor which are necessary to bring Licensee into
compliance with the terms of this Agreement. Licensor may, from time to time,
publish or distribute standards of usage for the Licensed Marks. Licensee
agrees to abide by such standards of usage.


3.         Ownership Acknowledgement.  Licensee hereby acknowledges Licensor’s
ownership of and right, title and interest in and to the Licensed Marks and
that all use of the Licensed Marks by Licensee, heretofore or hereafter, shall
inure to the sole benefit of Licensor. Licensee will not make any representation
or do any act which may be taken to indicate that it has any right, title or
interest in or to the ownership or use of the Licensed Marks except as licensed
under the terms of this Agreement, and acknowledges that nothing contained in
this Agreement shall give Licensee any continuing right, title or interest in
or to the Licensed Marks, except other than those rights contained herein.
Licensee hereby acknowledges the validity of the Licensed Marks. Licensee shall
not do any act which it knows (or should know), or of which it is notified by
Licensor that in Licensor’s reasonable belief may affect the validity of the
Licensed Marks. Licensee agrees not to contest the validity of Licensor’s
rights in the Licensed Marks, or perform any act or omission adverse to the
Licensed Marks or to said exclusive rights of Licensor. Notwithstanding
Section 8 hereof, Licensor may terminate this Agreement immediately upon
giving written notice to Licensee if Licensee shall challenge the validity of
or Licensor’s ownership or interest in the Licensed Marks. Licensee shall
cooperate to the fullest extent possible with Licensor or its nominee to take
such actions as Licensor may reasonably consider necessary to protect the
Licensed Marks, prosecute any application for registration therefor or maintain
any registrations therefor; provided, however, that it shall be Licensor’s sole
responsibility to maintain said registration, at Licensor’s sole expense.


4.         Quality Control;
Inspection.  Licensee
acknowledges the importance to Licensor of its reputation and goodwill, and to
the public of maintaining high, uniform standards of quality for the macadamia
nuts or other goods sold under the Licensed Marks in connection with the
Macadamia Nut Business (collectively, the “Products”).
Licensee represents, warrants and agrees that all Products shall:


(a)           be of good and merchantable quality
and comply with all applicable laws and regulations;











(b)           be as good or better than the current
quality of similar products now or hereafter advertised, distributed,
manufactured, processed, or sold by Licensee; and


(c)           meet such quality standards and
specifications as may be prescribed by Licensor to Licensee, from time-to-time,
during the Term.


Licensee shall permit
Licensor to inspect, at Licensee’s premises, at any reasonable time, the
Products, and Licensee shall, upon request of Licensor, submit to Licensor
samples of the Products which are sold or intended to be sold under the
Licensed Marks for the purpose of ascertaining and determining compliance with
the terms of this Agreement.


5.         Enforcement.  Licensee shall fully cooperate with Licensor
in maintaining and defending the ownership and validity of the Licensed Marks.
Licensee will promptly notify Licensor of (i) any infringement or unauthorized
use of any Licensed Marks by any third party of which it becomes aware, or (ii)
any assertion by any third party that Licensee’s use of the Licensed Marks
infringes such third party’s rights. Licensor shall not be obligated to
initiate or defend any legal action with respect to the Licensed Marks, and
Licensee shall not initiate or defend any such action itself without Licensor’s
prior written consent. After receipt of any notice from Licensee about any
potential infringement, Licensor shall, in its sole discretion determine what
action, if any, should be taken. Any such action shall be directed and
controlled by Licensor, and at Licensor’s sole expense; provided, however,
notwithstanding anything to the contrary herein, the cost of prosecuting or defending
any infringement action, including legal fees, shall be for the account of
Licensee, if the necessity of prosecuting or defending any such infringement
action was caused by the acts or omissions or misconduct of Licensee.


6.         Use of Licensed Marks in
Trade Name.  Licensee
agrees that it shall not use the Licensed Marks as part of its name or trade
name.  Licensee acknowledges and agrees,
that upon any termination hereof, it will immediately change any domain name
used by it, as necessary, to a domain name or names not including the Licensed
Marks or any similar variation thereof. 
During and after the Term, Licensee agrees that it will not produce or
use, or cause or enable another to reproduce or use, any trademarks, service
marks or other related rights derived from or confusingly similar to, or likely
to cause confusion with, the Licensed Marks.


7.         Term.  This Agreement and all licenses and rights
granted hereunder shall continue for a period commencing on the date first
written above and ending on           ,
2012 (the “Term”), except as earlier
terminated as provided herein. [NOTE: The term of the
license will be set to coincide with the term of the orchard lease.]


8.         Termination.  In addition to Licensor’s immediate
termination rights under Section 3, Licensor shall have the right to
immediately terminate this Agreement by giving written notice thereof to
Licensee in the event of any failure of Licensee to correct or cure any
material breach by Licensee of any covenant or obligation under this Agreement,
including, but not limited to,
those set forth in Section 4 hereof, within (i) 15 calendar days after
receipt of notice thereof from Licensor as to any covenant or obligation other
than those set forth in Section 4, and (ii) 60 days after receipt of notice
thereof from Licensor as to any covenant or obligation set forth in Section
4.  In the event that Licensee makes any
assignment for the benefit of creditors, files a petition in bankruptcy
(voluntarily), has a petition filed against it by a third party 











(involuntarily), becomes
insolvent, or is similarly prevented from or unable to fulfill its duties,
hereunder, this Agreement shall automatically terminate. Upon the termination
of this Agreement for any reason, Licensee shall immediately cease all use of
the Licensed Marks and deliver to Licensor or destroy all materials bearing the
Licensed Marks, at Licensor’s option, and shall forthwith change its domain
name, as necessary, in accordance with Section 6.  Notwithstanding any termination in accordance
with this Agreement, Licensor shall have, and hereby reserves all the rights
and remedies which it has or which are granted to it at law or in equity, including, but not limited to,
injunctive relief for damage or breach of this Agreement on the part of
Licensee.


9.         Relationship of the
Parties.  Licensor and
Licensee are independent contractors. This Agreement does not create the
relationship of principal and agent, joint venturers or partners between
Licensee and Licensor, and in no circumstances shall Licensee be considered an
agent of Licensor.


10.       Indemnity.  Licensee agrees to indemnify, hold harmless,
and defend Licensor, together with the respective directors, officers,
managers, members, employees, agents, successors, and assigns of Licensor against
and from any and all actions, causes of action, claims, liabilities, losses, or
damages they may incur, including attorneys’, experts’, and accountants’ fees
(and court costs), arising out of, or in connection with, any breach by
Licensee of the terms of this Agreement.


11.       Notice.  All notices, demands, and requests required
or permitted to be given under the provisions of this Agreement shall be in
writing and shall be deemed given (i) when personally delivered to the party to
be given such notice or other communication; (ii) on the business day that such
notice or other communication is sent by facsimile, email or similar electronic
means, fully prepaid, which facsimile or similar electronic communication shall
promptly be confirmed by written notice; (iii) on the third business day
following the date of deposit in the United States mail if such notice or other
communication is sent by certified or registered mail with return receipt
requested and postage thereon fully prepaid; or (iv) on the business day
following the day such notice or other communication is sent prepaid by
reputable overnight courier, to the following:


	
  If to Licensee:

  	
  ML Macadamia Orchards, L.P.

  
	
   

  	
  26-238 Hawaii Belt Road,

  
	
   

  	
  Hilo, Hawaii 96720

  
	
   

  	
  Phone:

  	
  (808)-969-8052

  
	
   

  	
  Fax:

  	
  (808)-969-5152

  
	
   

  	
  Attention:

  	
  Dennis J. Simonis

  
	
   

  	
   

  	
   

  
	
  with a copy to:

  	
  Carlsmith Ball LLP

  
	
   

  	
  1001 Bishop Street, Suite 2200

  
	
   

  	
  Honolulu, Hawaii 96813

  
	
   

  	
  Phone:

  	
  (808) 523-2501

  
	
   

  	
  Fax:

  	
  (808) 523-0842

  
	
   

  	
  Attention:

  	
  James H. Case, Esq.

  
	
   

  	
   

  	
   

  



 











 


	
  If to Licensor:

  	
  Kapua Orchard Estates, LLC

  
	
   

  	
  c/o Sparks Corp.

  
	
   

  	
  775 Ridge Lake Boulevard, Suite 450

  
	
   

  	
  Memphis, Tennessee 38120

  
	
   

  	
  Phone:

  	
  (901) 766-4412

  
	
   

  	
  Fax:

  	
  (901) 328-2777

  
	
   

  	
  Attention:

  	
  Robert D. Sparks

  
	
   

  	
   

  	
   

  
	
  with a copy to:

  	
  Baker, Donelson, Bearman, Caldwell & Berkowitz,
  PC

  
	
   

  	
  165 Madison Avenue, Suite 2000

  
	
   

  	
  Memphis, Tennessee 38103

  
	
   

  	
  Phone:

  	
  (901) 577-2306 or

  
	
   

  	
   

  	
  (901) 577-2274

  
	
   

  	
  Fax:

  	
  (901) 577-0853 or

  
	
   

  	
   

  	
  (901) 577-4203

  
	
   

  	
  Attention:

  	
  John E. Kruger, Esq. or

  
	
   

  	
   

  	
  Mark A. B. Carlson, Esq.

  



Either party may change
its address for this Section 11 by giving written notice to the other
party in accordance with the terms of this Section 11.


12.       Entire Agreement.  This Agreement (including Schedule A
hereto, which is incorporated by reference herein) is intended by the parties
as a final expression of their agreement and intended to be a complete and
exclusive statement of the agreement and understanding of the parties hereto in
respect of the subject matter contained herein. This Agreement supersedes all
prior agreements and understandings between the parties with respect to such
subject matter. This Agreement may only be amended or modified in a writing
signed by each of the parties hereto.


13.       Governing Law; Venue.  This Agreement shall be construed in
accordance with the laws of the State of Hawaii without reference to its choice
of law provisions, in accordance with any applicable federal law (including the
Lanham Act), and in accordance with such interpretations thereof by the Federal
Circuit, the Trademark Trial and Appeal Board and other relevant tribunals. Any
claims, disputes or causes of action of any sort arising under or related to
this Agreement, including those regarding the construction or interpretation
thereof, shall be subject to the exclusive jurisdiction of a court of competent
jurisdiction located in Hawaii, and Licensee hereby waives any objection it may
have to the jurisdiction or venue of such court. In any such action, Licensor
shall be entitled to recover the expenses, including attorneys’ fees, which it
incurred in bringing and/or defending such action, including any action for
injunctive relief.


14.       Warranty Disclaimer;
Liability Limitation.  LICENSOR MAKES NO REPRESENTATIONS OR
WARRANTIES OF ANY KIND, EXPRESS OR IMPLIED, WITH RESPECT TO THE LICENSED MARKS,
INCLUDING, BUT NOT LIMITED TO, ANY IMPLIED WARRANTIES OF QUALITY, PERFORMANCE,
MERCHANTABILITY, FITNESS FOR ANY PARTICULAR PURPOSE, OR NON-INFRINGEMENT. IN NO
EVENT WILL LICENSOR BE LIABLE FOR ANY INDIRECT, PUNITIVE, SPECIAL, INCIDENTAL 











OR CONSEQUENTIAL DAMAGES
IN CONNECTION WITH OR ARISING OUT OF THIS AGREEMENT HOWEVER CAUSED AND
REGARDLESS OF THE THEORY OF LIABILITY, EVEN IF LICENSOR HAS BEEN ADVISED OF THE
POSSIBILITY OF SUCH DAMAGES, AND EVEN IF ANY OTHER REMEDY PROVIDED FOR HEREIN
FAILS OF ITS ESSENTIAL PURPOSE.


15.       Waiver.  Any failure of Licensor or Licensee to
enforce, at any time or for any period of time, any of the provisions under
this Agreement shall not be construed as a waiver of the right to enforce such
provisions unless said waiver is in writing, and signed by an authorized
executive officer of the party to be bound by such waiver.


16.       Survival.  Licensee recognizes and agrees that its
obligations under Sections 3 through 6 and 9 through 21 (inclusive) of
this Agreement shall survive any termination of this Agreement and Licensee
shall be bound by such obligations and terms after any termination hereof.


17.       Severability.  In the event that any one or more of the
provisions contained herein, or the application thereof in any circumstance, is
held invalid, illegal or unenforceable, the validity, legality and
enforceability of any such provision in every other respect and of the
remaining provisions contained herein shall not be affected or impaired
thereby.


18.       Remedies.  In the event Licensee breaches or threatens
to breach any of the covenants expressed herein, the damages to Licensor will
be great and irreparable and difficult to ascertain, which Licensee hereby
acknowledges.  Therefore, Licensor may
apply to a court of competent jurisdiction, as set forth herein, for injunctive
or other equitable relief to restrain any such breach or threat of breach, and
such other and further relief as any such court may deem proper.


19.       Headings.  The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof.


20.       Counterparts; Facsimiles.  This Agreement may be executed in
counterparts, each of which is deemed an original, and such counterparts
constitute one and the same instrument, which may be sufficiently evidenced by
a counterpart. A facsimile, telecopy, PDF, or other reproduction of this
Agreement may be executed by one or more parties, and an executed copy of this
Agreement may be delivered by one or more parties by facsimile, PDF e-mail, or
similar instantaneous electronic transmission device under which the signature
of or on behalf of such party can be seen, and such execution and delivery is
to be considered valid, binding and effective for all purposes. At the request
of either party, the parties agree to execute an original of this Agreement as
well as any facsimile, telecopy or other reproduction hereof.


21.       Assignment; Binding Effect.  Licensee shall not assign or transfer any
interest in this Agreement by assignment, sublicense, merger, consolidation,
operation of law or otherwise without the prior written authorization of
Licensor. This Agreement shall be binding upon and inure to the benefit of the
parties and their respective affiliates, permitted assigns, successors and
legal representatives, including, without limitation, notwithstanding anything
to the contrary 











herein, any party
to which Licensor may sell, assign, transfer, devise or otherwise convey any of
its rights under this Agreement, or any of its rights in and to the Licensed
Marks.


IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed
and delivered by their duly authorized representatives as of the date first
written above.


	
  

  	
  LICENSOR:

  	
   

  	
  LICENSEE:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  KAPUA
  ORCHARD ESTATES, LLC,

  a Delaware limited liability company

  	
   

  	
   

  	
               ,
  

  a                

  	
   

  
	
   

  	
  By: MFH Investors, LLC, its manager

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
  Name:

  	
  Jeff Gilbrech

  	
   

  	
  Name:

  	
  Dennis J. Simonis

  	
   

  
	
  Title:

  	
  Vice-President

  	
   

  	
  Title:

  	
  President

  	
   

  



 















Schedule
A to Trademark License Agreement


LICENSED
MARKS


	
  Mark

  	
   

  	
  Country

  	
   

  	
  Status

  	
   

  	
  App. No.

  /

  Reg. No.

  	
   

  	
  App. Date

  /

  Reg. Date

  	
   

  	
  Classes

  	
   

  	
  Goods

  
	
  KAPUA*

  	
   

  	
  United

  States

  	
   

  	
  Pending

  	
   

  	
  76/576289

  	
   

  	
  2/19/2004

  	
   

  	
  29

  	
   

  	
  PROCESSED MACADAMIA NUTS,

  PROCESSED FRUIT SNACKS,

  PROCESSED DRIED FRUIT AND NUT MIXES

  
	
  KAPUA

  RANCH

  	
   

  	
  United

  States

  	
   

  	
  Pending

  	
   

  	
  77/004428

  	
   

  	
  9/21/06

  	
   

  	
  29

  	
   

  	
  PROCESSED MACADAMIA NUTS

  
	
  KAPUA

  RANCH

  	
   

  	
  United

  States

  	
   

  	
  Pending

  	
   

  	
  77/004442

  	
   

  	
  9/21/06

  	
   

  	
  30

  	
   

  	
  CHOCOLATE COVERED NUTS AND COFFEE BEANS

  







*              The definition of “Licensed Marks” in the Agreement
excludes all “Kapua” service marks.











EXHIBIT
I


“WORKING
CAPITAL” CALCULATION


	
  Certain
  Current Assets*

  	
   

  	
  Amount as of the Closing Date

  
	
  (a)***

  	
   

  	
  Deposits

  	
   

  	
  xxx

  
	
  (b)

  	
   

  	
  Inventory W.I.P.

  	
   

  	
  xxx

  
	
  (c)

  	
   

  	
  Inventory/Finished Goods

  	
   

  	
  xxx

  
	
  (d)

  	
   

  	
  Inventory Other (Packaging Materials)

  	
   

  	
  xxx

  
	
  (e)

  	
   

  	
  Inventory Valuation Reserve

  	
   

  	
  xxx

  
	
  (f)

  	
   

  	
  Less: Provisions

  	
   

  	
  xxx

  
	
  (g)

  	
   

  	
  Other

  	
   

  	
  xxx

  
	
   

  	
   

  	
  Total of Certain
  Current Assets

  	
   

  	
  x,xxx,xxx

  



 


	
  Certain
  Current Liabilities***

  	
   

  	
   

  
	
  (h)

  	
   

  	
  Accounts Payable - Trade

  	
   

  	
  xxx

  
	
  (i)

  	
   

  	
  Unvouched Accounts Payable

  	
   

  	
  xxx

  
	
  (j)

  	
   

  	
  Accounts Payable - Other (Accrued Liabilities)

  	
   

  	
  xxx

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Total of Certain
  Current Liabilities

  	
   

  	
  x,xxx,xxx

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  “Working
  Capital”

  	
   

  	
  x,xxx,xxx

  







*                                         The calculation of the “Total
of Certain Current Assets” of Seller shall exclude any inter-company balances.


**                                  The calculation
of the “Total of Certain Current Liabilities” of Seller shall exclude any
amounts for Seller’s revolving credit line, Seller’s short-term debt, including
any loans made to Seller by its affiliates, such as RBS Sparks Holdings, LP,
provisions for income tax liabilities, interest payable, employee
benefits-related liabilities, and any inter-company balances.


***                           Valuation Method

(a)            Book Balance as
defined in Acquisition Agreement

(b)            Refer to attached Exhibit
I.1

(c)            Refer to attached Exhibit
I.1

(d)            Book Balance (as defined)

(e)            Refer to attached Exhibit
I.1

(d)            Book Balance (as defined)

(f)             Book Balance (as defined)

(g)            Book Balance (as defined)

(h)            Book Balance (as defined)

(i)             Book Balance (as defined)

(j)             Book Balance (as defined)


(as defined)











 


	
  LAND COURT SYSTEM

  	
  REGULAR SYSTEM

  
	
  Return by Mail  (   )  Pickup  (   )  To:

  	
   

  
	
   

  	
   

  
	
  Tax Map Key No.:
  (3) 8-9-12:8

  	
  Total Pages

  



EXHIBIT
I.1


Mac Farms of Hawaii, LLC

Inventory Valuation Procedure


FINISHED GOODS INVENTORY:


1.             A physical count of the finished goods inventory will be
taken on the measurement date. Product in transit will be added.


2.             The quantities derived from the physical count will be
reconciled to the inventory detail in the company’s books and records as listed
on the company’s inventory report (IL28). Product in transit is reflected in
the general ledger but not included in the IL28 inventory report. Product in
transit must therefore be added to the IL28 quantities to arrive at total finished
goods inventory. Actual differences between book inventory and the reconciled
inventory will be adjusted in the company’s books and records.


3.             The IL28 values finished goods inventory at standard
cost from the bills of material.  A
detailed cost analysis will be performed to determine the actual cost of
finished goods inventory. The variance as determined by the difference between
IL28 and the detailed cost analysis will be allocated to the individual items
comprising the inventory, resulting in an actual cost basis on a per item
basis.


4.             To the extent that this manufacturing variance is
include in the inventory valuation 











reserve (See also
discussion below), the inventory valuation reserve will be adjusted to
eliminate this variance and transfer these costs to either the finished goods
inventory as discussed under 3 above, or cost of goods sold.


5.             A lower of cost or market
comparison will be done on an item by item basis.  Finished goods inventory will be adjusted to
the lower of cost or market valuation in accordance with Generally Accepted
Accounting Practices.


INVENTORY VALUATION RESERVE:


1.             At December 31, 2006, the inventory valuation reserve
was adjusted to the variance between actual costs of finished goods inventory
versus the standard costs reflected in the book inventory report. All timing
differences were eliminated.


2.             At interim months within the company’s business cycle,
the inventory valuation reserve contains both manufacturing variances, if any,
and timing differences between spending (primarily farming costs) and the
conversion of products to finished goods.


3.             After eliminating any manufacturing variances, as
discussed under FINISHED GOODS INVENTORY item 4, the remaining inventory
valuation reserve will be included in the total inventory valuation at book
value.


WORK IN PROCESS
INVENTORY:


1.             Work in process inventory will be valued using the
procedure outlined in the attached example reflecting the valuation as of
December 31, 2006. See EXHIBIT I.1.1 and EXHIBIT I.1.2.











EXHIBIT
I.1.1


MacFarms of Hawaii, LLC

Analysis of Non-System (WIP) Inventory

UNAUDITED


	
   

  	
   

  	
  December 31, 2006

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Pounds

  	
   

  	
  Conversion

  Rate

  	
   

  	
  Equivalent

  Kernels

  	
   

  	
  Valuation

  	
   

  
	
  WIS at the
  Husker

  	
   

  	
  10,000 

  	
  (a)

  	
  17.6

  	
  %(b)

  	
  1,756 

  	
  (c)

  	
  $

  	
  2.90

  	
  (d)

  	
  $

  	
  5,088

  	
   

  
	
  WIS in tanks and
  Silo

  	
   

  	
  3,287,000 

  	
  (a)

  	
  19.4

  	
  %(b)

  	
  638,500 

  	
  (c)

  	
  $

  	
  3.33

  	
  (d)

  	
  $

  	
  2,123,699

  	
   

  
	
  Raw finished
  kernels in storage tanks

  	
   

  	
  23,000 

  	
  (a)

  	
  100

  	
  %(b)

  	
  23,000 

  	
  (c)

  	
  $

  	
  4.00

  	
  (d)

  	
  $

  	
  92,093

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Total WIP
  Kernels

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  663,255

  	
   

  	
  $

  	
  3.35

  	
   

  	
  $

  	
  2,220,880

  	
   

  







WIP
Inventory Valuation Methodology:


Work in process will be
valued for book value purposes in a manner consistent with the valuation
performed at December 31, 2006 as described herein:


(a)         First, pounds are
estimated by management in each of the WIP inventory categories noted above.


(b)        Then, raw pounds for each
category are converted using the fixed conversion rates noted (See formula in
Unit Cost Calculation attached at EXHIBIT I.1.2).


(c)         Raw pounds are multiplied
by the conversion rate to arrive at equivalent finished kernels.


(d)        See
Unit Cost Calculation attached at EXHIBIT I.1.2.