Document:

Exhibit 10.79

 

FOURTH
SUPPLEMENTAL SECURITY AGREEMENT

 

THIS FOURTH SUPPLEMENTAL SECURITY AGREEMENT (this
“Security Agreement”), dated as of July 15, 2010, is made by ML MACADAMIA
ORCHARDS, L.P., a Delaware limited partnership, and ML RESOURCES, INC., a
Hawaii corporation (“Grantor”), in favor of AMERICAN AGCREDIT, PCA as successor
in interest to PACIFIC COAST FARM CREDIT SERVICES, PCA (“Lender”).

 

RECITALS

 

A.                                   Pursuant to that certain Fourth Amended
and Restated Credit Agreement dated as of July 15, 2010 (the “Fourth
Amended Credit Agreement”) by and among Grantor, as borrower, and Lender,
Lender is agreeing to extend financial accommodations to Borrower on the terms
set forth therein (the “Loans”).  Lender
is willing to do so, but only upon the condition, among others, that Grantor
shall execute this Security Agreement.

 

B.                                     Pursuant to that certain Credit Agreement
dated as of May 1, 2000 (the “Original Credit Agreement”), by and among
Grantor, as borrower, and Pacific Coast Farm Credit Services, PCA, Lender
extended certain financial accommodations to Borrower conditioned upon, among
other things, the execution of a Security Agreement dated as of May 1,
2000 (the “Original Security Agreement”).  
In addition, pursuant to that certain Amended and Restated Credit
Agreement dated as of May 1, 2004 (the “First Amended Credit Agreement”),
by and among Borrower and Lender, Lender extended certain further financial
accommodations to Borrower conditioned upon, among other things, the execution
of a Supplemental Security Agreement dated as of May 1, 2004 (the
“Supplemental Security Agreement”).  In
addition, pursuant to that certain Second Amended and Restated Credit Agreement
dated as of July 8, 2008 (the “Second Amended Credit Agreement”) by and
among Borrower and Lender, Lender extended certain further financial
accommodations to Borrower conditioned upon, among other things, the execution
of a Second Supplemental Security Agreement dated as of July 8, 2008 (the
“Second Supplemental Security Agreement”). 
In addition, pursuant to that certain Third Amended and Restated Credit
Agreement dated as of June 30, 2009 (the “Third Amended Credit Agreement”)
by and among Borrower and Lender, Lender extended certain further financial
accommodations to Borrower conditioned upon, among other things, the execution
of a Third Supplemental Security Agreement dated as of June 30, 2009 (the
“Third Supplemental Security Agreement”) It is the intent of the parties hereto
that this Security Agreement supplement both the Original Security Agreement,
the Supplemental Security Agreement, the Second Supplemental Security
Agreement, and the Third Supplemental Security Agreement, all  of which are to remain in full force and
effect.

 

NOW THEREFORE, for good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, and in order to
induce Lender to enter into the Fourth Amended Credit Agreement, Grantor
agrees, for the benefit of Lender, as follows:

 

 

AGREEMENT

 

1.                                       Defined Terms. 
Unless otherwise defined herein, (i) terms defined in the Fourth
Amended Credit Agreement are used herein as therein defined except that the
defined terms that refer to the “Borrower” shall refer herein to Grantor, and
(ii) the following terms shall have the following meanings (such meanings
being equally applicable to both the singular and plural forms of the terms
defined):

 

“Account Debtor”
means any “account debtor,” as such term is defined in the UCC.

 

“Accounts” has the
meaning assigned to it in Exhibit A hereto.

 

“Chattel Paper”
has the meaning assigned to it in Exhibit A hereto.

 

“Collateral” has
the meaning assigned to it in Section 2 of this Security Agreement.

 

“Contracts” has
the meaning assigned to it in Exhibit A hereto.

 

“Documents” has
the meaning assigned to it in Exhibit A hereto.

 

“Equipment” has
the meaning assigned to it in Exhibit A hereto.

 

“Farm Products”
has the meaning assigned to it in Exhibit A hereto.

 

“Fixtures” has the
meaning assigned to it in Exhibit A hereto.

 

“Fourth Amended Credit Agreement” has the
meaning assigned to it in Recital A.

 

“General Intangibles”
has the meaning assigned to it in Exhibit A hereto.

 

“Grantor” means ML
Macadamia Orchards, L.P., a Delaware limited partnership, and ML
Resources, Inc., a Hawaii corporation.

 

“hereby,” “herein,”
“hereof,” and “hereunder” and words of similar import refer to this
Security Agreement as a whole (including any amendments, attachments, and
schedules hereto) and not merely to the specific section, paragraph or clause
in which the respective word appears.

 

“Instruments” has
the meaning assigned to it in Exhibit A hereto.

 

“Inventory” has
the meaning assigned to it in Exhibit A hereto.

 

“Investment Property”
has the meaning assigned to it in Exhibit A hereto.

 

“Lender” has the
meaning assigned to them in the preamble hereto.

 

 

“License” means
any Patent License, Trademark License or other license of rights or interests
now held or hereafter acquired by Grantor.

 

“Loans” has the
meaning assigned to it in Recital A, including, but not limited to the
Revolving Loan and the 2010 Term Loan.

 

“Original Credit
Agreement” has the meaning assigned to it in Recital B.

 

“Patent License”
means rights under any written agreement now owned or hereafter acquired by
Grantor granting any right with respect to any invention on which a Patent is
in existence.

 

“Patents” means
all of the following in which Grantor now holds or hereafter acquires any
interest: (i) all letters patent of the United States or any other
country, all registrations and recordings thereof, and all applications for
letters patent of the United States or any other country, including
registrations, recordings and applications in the United States Patent and
Trademark Office or in any similar office or agency of the United States, any
State or Territory thereof, or any other country, and (ii) all reissues,
continuations, continuations-in-part or extensions thereof.

 

“Proceeds” has the
meaning assigned to it in Exhibit A hereto.

 

“Second Amended Credit
Agreement” has the meaning assigned to it in Recital B.

 

“Secured Obligations”
shall mean any and all loans, advances, obligations, covenants, and duties
owing to Lender by Grantor of any kind or nature, absolute or contingent, due
or to become due, whether now existing or hereafter arising, whether or not
evidenced by any note, guaranty, non-recourse guaranty or other instrument,
agreement or writing, including, without limitation, the Original Credit
Agreement, the First Amended Credit Agreement, the Second Amended Credit
Agreement, the First Amendment to Second Amended Credit Agreement, the Third
Amended Credit Agreement, and the Fourth Amended Credit Agreement, all
interest, charges, fees, attorneys’ fees, expenses, and any other sum
chargeable by Lender to Grantor under this or any other agreement.

 

“Security Agreement”
means this Security Agreement, as the same may from time to time be amended,
modified or supplemented.

 

“Third Amended Credit
Agreement” has the meaning assigned to it in Recital B.

 

“Trademark License”
means rights under any written agreement now owned or hereafter acquired by
Grantor granting any right to use any Trademark or Trademark registration.

 

 

“Trademarks” means
all of the following now owned or hereafter acquired by Grantor:  (i) all trademarks, trade names,
corporate names, business names, trade styles, service marks, logos, other
source or business identifiers, prints and labels on which any of the foregoing
have appeared or appear, designs and general intangibles of like nature, now
existing or hereafter adopted or acquired, all registrations and recordings
thereof, and all applications in connection therewith, including registrations,
recordings and applications in the United States Patent and Trademark Office or
in any similar office or agency of the United States, any State or Territory
thereof, or any other country or any political subdivision thereof, and
(ii) all reissues, extensions or renewals thereof.

 

“UCC” means the
Uniform Commercial Code as the same may, from time to time, be in effect in the
State of California; provided, however, in the event that, by
reason of mandatory provisions of law, any or all of the attachment, perfection
or priority of Lender’s security interest in any Collateral is governed by the
Uniform Commercial Code as in effect in a jurisdiction other than the State of
California, the term “UCC” shall mean the Uniform Commercial Code as in effect
in such other jurisdiction for purposes of the provisions hereof relating to
such attachment, perfection or priority and for purposes of definitions related
to such provisions.

 

2.                                       Grant of Security Interest.

 

a.                                       To secure the prompt and complete payment
and performance when due (whether at stated maturity, by acceleration or
otherwise) of all the Secured Obligations, and to induce Lender to enter into
the Fourth Amended Credit Agreement and to make the Loans in accordance with
the terms thereof, Grantor hereby grants to Lender, a lien on and security
interest in all of the property described on Exhibit A hereto, whether now
owned by or owing to, or hereafter acquired by or arising in favor of Grantor
(including under any trade names, styles or divisions thereof), and whether
owned or consigned by, or leased to Grantor, and regardless of where located,
together with any and all replacements, remedies, or accessions thereto and all
proceeds and products thereof (all of which being hereinafter collectively
referred to as the “Collateral”); provided, however, that
notwithstanding any provision to the contrary contained in this Security
Agreement, Grantor does not grant, and Lender has not taken, a lien against or
security interest in (i) any Hazardous Materials in which Grantor may now
or hereafter acquire any interest, or which Grantor may now or hereafter
possess, manage or control, any (ii) any of Grantor’s governmental licenses
and permits that if included in the Collateral would violate any mandatory
requirements of such licenses and permits or applicable law prohibiting the
creation of security interests therein.

 

b.                                      In addition, to secure the prompt and
complete payment when due of the Secured Obligations and in order to induce
Lender to enter into the Fourth Amended Credit Agreement and to make the Loans
in accordance with the terms thereof, Grantor hereby grants to Lender a
security interest in all other personal property of Grantor, including all
property of every description now or hereafter in the possession or custody of,
or in transit to, Lender for any purpose, including safekeeping, collection or
pledge, for the account of Grantor, or as to which Grantor may have any right
or power.

 

 

3.                                       Lender’s Rights; Limitations on Lender’s
Obligations.

 

a.                                       Grantor Remains Liable Under Contracts
and Licenses.  Grantor agrees that, anything herein to the
contrary notwithstanding, Grantor shall remain liable under each of its
Contracts and each of its Licenses to observe and perform all the conditions
and obligations to be observed and performed by it thereunder and Grantor shall
perform all of its duties and obligations thereunder, all in accordance with
and pursuant to the terms and provisions of each such Contract or License.  Lender shall not have any obligation or
liability under any Contract or License by reason of or arising out of this
Security Agreement or the granting herein of a security interest therein or the
receipt by Lender of any payment relating to any Contract or License pursuant
hereto, nor shall Lender be required or obligated in any manner to perform or
fulfill any of the obligations of Grantor under or pursuant to any Contract or
License, or to make any payment, or to make any inquiry as to the nature or the
sufficiency of any payment received by it or the sufficiency of any performance
by any party under any Contract or License, or to present or file any claim, or
to take any action to collect or enforce any performance or the payment of any
amounts which may have been assigned to it or to which it may be entitled at
any time or times.

 

b.                                      Notice of Assignment of Collateral to
Lender.  Lender may at any time after the occurrence
and during the continuance of an Event of Default notify Account Debtors of
Grantor, parties to the Contracts of Grantor, and obligors in respect of
Instruments and Investment Property of Grantor that the Accounts and the right,
title and interest of Grantor in and under such Contracts, Instruments,
and Investment Property have been assigned to Lender and that payments shall be
made directly to Lender.  Upon the
request of Lender, Grantor shall so notify such Account Debtors, parties to such
Contracts, and obligors in respect of such Instruments and Investment
Property.  Lender may at any time after
the occurrence and during the continuance of an Event of Default notify
obligors in respect of Chattel Paper of Grantor that the right, title and interest
of Grantor in and under such Chattel Paper has been assigned to Lender and that
payments shall be made directly to Lender.

 

c.                                       Verification of Collateral. 
Upon reasonable prior notice to Grantor (unless an Event of Default has
occurred and is continuing, in which case no notice is necessary), Lender shall
have the right to make test verifications of the Accounts and physical
verifications and appraisals of the Inventory and other Collateral in any
manner and through any medium that it considers advisable, and Grantor agrees
to furnish all such assistance and information as Lender may require in
connection therewith.

 

4.                                       Representations and Warranties. 
Grantor hereby represents and warrants that:

 

a.                                       Authority; Execution. 
Grantor has the right and power and is duly authorized and empowered to
enter into, execute, deliver and perform this Security Agreement, and any other
agreements, documents or instruments executed in connection herewith or
therewith.  Grantor’s execution and
performance of this Security Agreement will not constitute, cause or result in
any breach or violation of any provision of the partnership agreement, articles
of incorporation or by-laws of Grantor, any law or any contractual obligation
of Grantor and does not conflict with, constitute a default or require 

 

 

any consent under (other than consents that if not
obtained would not have a material adverse effect) or result in the creation of
any Lien upon any property or assets of Grantor pursuant to any contractual
obligation of Grantor.  Upon execution,
this Security Agreement will constitute a valid, binding obligation of Grantor
to Lender that is enforceable according to its terms, except as the
enforceability of this Security Agreement may be subject to or limited by
bankruptcy, insolvency, reorganization, arrangement, moratorium or other
similar laws relating to or affecting the rights of creditors generally and
except as the availability of equitable remedies are subject to the application
of equitable principles.  No further consent,
ratification or approval is required for this Security Agreement to be
effective.

 

b.                                      Title to Collateral. 
Except for the security interest granted to Lender under this Security
Agreement, Grantor is the sole owner of each item of the Collateral in which it
purports to grant a security interest hereunder, having good and marketable
title thereto free and clear of any and all liens, security interests or other
encumbrances.

 

c.                                       No Other Liens. 
No effective security agreement, financing statement, equivalent
security or lien instrument or continuation statement covering all or any part
of the Collateral is on file or of record in any public office, except such as
may have been filed by Grantor in favor of Lender pursuant to this Security
Agreement or such as relate to protective filings with respect to equipment
leases.

 

d.                                      Perfection and Priority of Security
Interest in the Collateral.  The security
interest granted to Lender in the Collateral under this Security Agreement is a
duly perfected security interest in favor of Lender to secure the Secured
Obligations, and is senior in priority to all other Liens against and security
interests in all or any part of the Collateral.

 

e.                                       Accounts.  Subject to
reasonable reserves therefore on the books of Grantor, each Account of Grantor
is, or when it comes into existence will be, a statement of an indebtedness
incurred by the obligor thereunder to Grantor in the amount shown thereon.  All Accounts are, or will be when they come
into existence, bona fide transactions completed in accordance with the terms
and provisions contained in any documents related thereto.

 

f.                                         Change of Name. 
Grantor did not and has not done within the last five years business
under any trade name or style other than as disclosed on Exhibit C hereto.

 

g.                                      Locations of Offices and Collateral;
Federal Taxpayer Identification.  Grantor’s
chief executive office, principal place of business, corporate offices, all
warehouses and premises within which Collateral is stored or located, and the
locations of all of its records concerning the Collateral are set forth on
Exhibit C hereto, and Grantor shall not change such chief executive
office, principal place of business, corporate offices, or warehouses or
Collateral premises, or remove such records unless it has taken such action as
is necessary to cause the Lien of Lender in the Collateral to continue to be
perfected.  Grantor shall not change its
chief executive office, principal place of business, 

 

 

corporate offices, or warehouses or Collateral
premises, or the location of its records concerning the Collateral, or its
federal taxpayer identification number, without giving thirty (30) days’ prior
written notice thereof to Lender. 
Grantor’s federal taxpayer identification number is  as set forth on Exhibit C hereto.

 

h.                                      Registered Patents, Trademarks, and
Copyrights.  Grantor does not own or have any interest in
any Patents, Trademarks, or Copyrights that have been registered or otherwise
recorded with any governmental office, except as set forth on Exhibit C
hereto.

 

i.                                          Farming Operations. 
Grantor does not own or have any interest in any real property other
than the real property described in Exhibit B hereto.

 

5.                                       Covenants.  Grantor
covenants and agrees with Lender that from and after the date of this Security
Agreement and until the Secured Obligations are fully satisfied:

 

a.                                       Further Assurances; Pledge of Instruments. 
At any time and from time to time, upon the written request of Lender,
and at the sole expense of Grantor, Grantor shall promptly and duly execute and
deliver any and all such further instruments and documents and take such
further action as Lender may reasonably deem desirable to obtain the full
benefits of this Security Agreement and of the rights and powers herein
granted, including (i) filing any financing or continuation statements
under the UCC with respect to the liens and security interests granted
hereunder or under any other Loan Document and (ii) transferring
Collateral to Lender’s possession (if such Collateral consists of Chattel Paper
or if a security interest in such Collateral can be perfected only by
possession, or, if requested by Lender). 
Grantor also hereby authorizes Lender to file any such financing or
continuation statement without the signature of Grantor to the extent permitted
by applicable law.  If any amount payable
under or in connection with any of the Collateral is or shall become evidenced
by any Instrument, such Instrument, other than checks and notes received in the
ordinary course of business, shall be duly endorsed in a manner satisfactory to
Lender and delivered to Lender immediately upon Grantor’s receipt thereof.

 

b.                                      Maintenance of Records. 
Grantor shall keep and maintain, at its own cost and expense,
satisfactory and complete records of the Collateral, including a record of any
and all payments received and any and all credits granted with respect to the
Collateral and all other dealings with the Collateral.  Upon the request of Lender, Grantor shall
mark its books and records pertaining to the Collateral to evidence this
Security Agreement and the security interests granted hereby.  All Chattel Paper shall be marked with the
following legend:  “This writing and the
obligations evidenced or secured hereby are subject to the security interest of
American AgCredit, PCA.”  For Lender’s further
security, Grantor agrees that Lender shall have a special property interest in
all of Grantor’s books and records pertaining to the Collateral and, upon the
occurrence and during the continuation of any Event of Default, Grantor shall
deliver and turn over any such books and records to Lender or to its
representatives at any time on demand of Lender.  Prior to the occurrence of an Event of
Default and upon reasonable notice from Lender, Grantor shall permit any
representative of Lender to inspect such books and records and shall provide
photocopies thereof to Lender as more specifically set forth in
Section 5(i) below.

 

 

c.                                       Delivery of Notes, Documents and Chattel
Paper.  Grantor shall deliver to Lender or its
designee all now existing or hereafter created or arising (i) original
promissory notes payable to Grantor, assigned to Grantor, pledged to Grantor or
otherwise held by Grantor, together with all corresponding documents including
deeds of trust, security agreements and title insurance policies, with such
endorsements thereto as Lender may reasonably require, (ii) Instruments
(except for checks which are deposited in the ordinary course of Grantor’s
business), (iii) negotiable warehouse receipts, and (iv) Chattel
Paper, promptly upon the execution of this Security Agreement or Grantor’s
receipt of any such item, as the case may be.

 

d.                                      Further Identification of Collateral. 
Grantor shall, if so requested by Lender, furnish to Lender, as often as
Lender reasonably requests, statements and schedules further identifying and
describing the Collateral and such other reports in connection with the
Collateral as Lender may reasonably request, all in reasonable detail.

 

e.                                       Limitation on Liens on Collateral. 
Grantor shall not create, permit or suffer to exist, and shall defend
the Collateral against and take such other action as is necessary to remove,
any Lien on the Collateral.  Grantor
shall further defend the right, title and interest of Lender in and to any of Grantor’s
rights under the Collateral, including, the Accounts, Chattel Paper, Contracts,
Documents, Equipment, Farm Products, Fixtures, General
Intangibles, Instruments, Investment Property, and Inventory and in
and to the Proceeds thereof against the claims and demands of all Persons
whomsoever.

 

f.                                         Notices.  Grantor shall
advise Lender, in reasonable detail, promptly, within five (5) Business
Days after it becomes aware of: (i) any material Lien, attaching to or
asserted against any of the Collateral, (ii) any material change in the
composition of the Collateral (iii) any destruction of or substantial
damage to any of the Collateral in excess of $100,000 and (iv) the
occurrence of any other event which would have a Material Adverse Effect upon
the Collateral and/or Lender’s Lien.

 

g.                                      Limitations on Modifications of Accounts. 
Subject to the terms of the Fourth Amended Credit Agreement, upon the
occurrence and during the continuation of any Event of Default, Grantor shall
not, without Lender’s prior written consent, (i) grant any extension of
the time of payment of any of the Accounts, Chattel Paper, Instruments or
amounts due under any Contract; (ii) compromise or settle the same for
less than the full amount thereof; (iii) release, in whole or in part, any
Person liable for the payment thereof; or (iv) allow any credit or
discount whatsoever thereon other than trade discounts granted in the ordinary
course of business of Grantor.

 

h.                                      Continuous Perfection. 
Grantor shall not change its name, identity or corporate structure in
any manner which might make any financing or continuation statement filed in
connection herewith seriously misleading within the meaning of section
9-402(7) of the UCC or any other then applicable provision of the UCC
unless Grantor shall have given Lender at least thirty (30) days’ prior written
notice thereof and shall have taken all action (or made arrangements to take
such action substantially 

 

 

simultaneously with such change if it is impossible to
take such action in advance) necessary or reasonably requested by Lender to
amend such financing statement or continuation statement so that it is not
seriously misleading.

 

i.                                          Right of Inspection. 
Upon reasonable notice to Grantor (unless an Event of Default has
occurred and is continuing, in which case no notice is necessary), Lender shall
at all times have full and free access during normal business hours to all the
books and records and correspondence of Grantor, and Lender or its
representatives may examine the same, take extracts therefrom and make
photocopies thereof, and Grantor agrees to render to Lender, at Grantor’s cost
and expense, such clerical and other assistance as may be reasonably requested
with regard thereto.  Upon reasonable
notice to Grantor (unless an Event of Default has occurred and is continuing,
in which case no notice is necessary), Lender and its representatives shall
also have the right to enter into and upon any premises where any of the
Inventory is located for the purpose of inspecting the same, observing its use
or otherwise protecting Lender’s interests in the Collateral.

 

j.                                          Indemnification. 
In any suit, proceeding or action brought by Lender relating to any
Account, Chattel Paper, Contract, General Intangible, Instrument or
Document for any sum owing thereunder, or to enforce any provision of any
Account, Chattel Paper, Contract, General Intangible, Instrument, or
Document, Grantor shall save, indemnify and keep Lender harmless from and
against all expense, loss or damage suffered by reason of any defense, setoff,
counterclaim, recoupment or reduction of liability whatsoever of the obligor
thereunder arising out of a breach by Grantor of any obligation thereunder or
arising out of any other agreement, indebtedness or liability at any time owing
to, or in favor of, such obligor or its successors from Grantor, and all such
obligations of Grantor shall be and remain enforceable against, and only
against, Grantor and shall not be enforceable against Lender.

 

k.                                       Compliance with Terms of
Accounts, etc.  In all material respects, Grantor shall
perform and comply with all obligations in respect of (i) Accounts,
(ii) material Chattel Paper, Contracts, Licenses, Instruments and
Documents, and (iii) all other material agreements to which it is a party
or by which it is bound.

 

l.                                          Notification Prior to Registration of
Patents, Trademarks, and Copyrights.  Grantor shall
not register any interest in any Patents, Trademarks, or Copyrights nor shall
Grantor permit any in any Patents, Trademarks, or Copyrights in which Grantor
has an interest to become registered with any governmental office, unless
Grantor has provided Lender with fifteen (15) days prior notice of Grantor’s
intent to do so and Grantor shall provide Lender prior to effecting or
permitting any such registration with such additional security documents as
Lender shall request.

 

m.                                    Farming Operations. 
Grantor shall not undertake any farming operations on any real property
other than the property listed on Exhibit B hereto unless Grantor shall
have provided Lender with thirty (30) days prior notice of Grantor’s intent to
do so, which notice shall be accompanied by a detailed description of the real
property on which the crops are grown, and Grantor shall have provided Lender
with a supplement to this Security Agreement and such financing statement amendments
and other documents as Lender shall request.

 

 

6.                                       Lender’s Appointment as Attorney-in-Fact.

 

a.                                       Grantor hereby irrevocably constitutes
and appoints Lender and any officer or agent thereof, with full power of
substitution, as its true and lawful attorney-in-fact with full irrevocable
power and authority in the place and stead of Grantor and in the name of
Grantor or in its own name, and hereby grants to Lender, in Lender’s
discretion, the power and right, on behalf of Grantor, without notice to or assent
by Grantor, and at any time prior to or after the occurrence of an Event of
Default, to do the following:

 

(i)  to take any and all appropriate action and
to execute and deliver any and all documents and instruments which may be
necessary or desirable to continue any insurance existing pursuant to the terms
of the Fourth Amended Credit Agreement, and pay all or any part of the premiums
therefore and the costs thereof; and

 

(ii)  to file any
financing or continuation statements under the UCC with respect to the Liens
and security interests granted hereunder or under any other Loan Document.

 

b.                                      Grantor hereby irrevocably constitutes
and appoints Lender and any officer or agent thereof, with full power of
substitution, as its true and lawful attorney-in-fact with full irrevocable
power and authority in the place and stead of Grantor and in the name of
Grantor or in its own name, from time to time in Lender’s discretion, for the
purpose of carrying out the terms of this Security Agreement, to take any and all
appropriate action and to execute and deliver any and all documents and
instruments which may be necessary or desirable to accomplish the purposes of
this Security Agreement and, without limiting the generality of the foregoing,
hereby grants to Lender the power and right, on behalf of Grantor, without
notice to or assent by Grantor, upon the occurrence and during the continuation
of an Event of Default, to do the following:

 

(i)  ask, demand,
collect, receive and give acquittances and receipts for any and all money due
or to become due under any Collateral, and take ownership and control of any
and all lock boxes and other depository accounts by written notice to any bank
or other institution maintaining such lock boxes or other depository accounts;

 

(ii)  in the name of
Grantor, in its own name or otherwise, endorse and receive payment of any
checks, drafts, notes, acceptances, or other Instruments for the payment of
monies due under any Collateral;

 

(iii)  receive
payment of any and all monies, claims, and other amounts due or to become due
at any time arising out of or in respect of any Collateral;

 

 

(iv) 
pay or discharge taxes, liens, security interest, or other encumbrances levied
or placed on or threatened against the Collateral;

 

(v) 
effect any repairs or obtain any insurance called for by the terms of this
Security Agreement and pay all or any part of the premiums therefore and costs
thereof;

 

(vi) 
direct any party liable for any payment under or in respect of any of the
Collateral to make payment of any and all monies due or to become due
thereunder, directly to Lender or as Lender shall direct;

 

(vii) 
sign and endorse any invoices, freight or express bills, bills of lading,
storage or warehouse receipts, drafts against debtors, assignments,
verifications, and notices in connection with accounts and other documents
constituting or related to the Collateral;

 

(viii) 
settle, compromise or adjust any suit, action, or proceeding described above
and, in connection therewith, give such discharges or releases as Lender may
deem appropriate;

 

(ix) 
file any claim or take or commence any other action or proceeding in any court
of law or equity or otherwise deemed appropriate by Lender for the purpose of
collecting any and all such monies due under any Collateral whenever payable;

 

(x) 
commence and prosecute any suits, actions or proceedings of law or equity in
any court of competent jurisdiction to collect the Collateral or any part
thereof and to enforce any other right in respect of any Collateral;

 

(xi) 
defend any suit, action or proceeding brought against Grantor with respect to
any Collateral if Grantor does not defend such suit, action or proceeding or if
Lender believes that Grantor is not pursuing such defense in a manner that will
maximize the recovery with respect to such Collateral;

 

(xii) 
license or, to the extent permitted by an applicable license, sublicense
whether general, specific or otherwise, and whether on an exclusive or
non-exclusive basis, any Patent or Trademark throughout the world for such term
or terms on such conditions and in such manner as Lender shall, in its sole
discretion, determine;

 

(xiii) 
sell, transfer, pledge, make any agreement with respect to, or otherwise deal
with any of the Collateral as fully and completely as though Lender were the
absolute owner thereof for all purposes, and to do, at Lender’s option and Grantor’s
expense, at any time, or from time to time, all acts and things which Lender
reasonably deems necessary to perfect, preserve, or realize upon the Collateral
and Lender’s Lien therein in order to effect the intent of this Security
Agreement, all as fully and effectively as Grantor might do; and

 

 

(xiv) contact,
make any agreement with, or otherwise deal with any governmental or regulatory
agency in connection with the operation of Grantor’s business or the possession
or liquidation of any or all of the Collateral.

 

c.                                       Grantor hereby
ratifies, to the extent permitted by law, all that said attorneys shall
lawfully do or cause to be done by virtue hereof.  The power of attorney granted pursuant to
this Section 6 is a power coupled with an interest and shall be
irrevocable until the Secured Obligations are paid or otherwise satisfied in
full.

 

d.                                      The powers
conferred on Lender hereunder are solely to protect Lender’s interests in the
Collateral and shall not impose any duty upon Lender to exercise any such
powers.  Lender shall be accountable only
for amounts that it actually receives as a result of the exercise of such
powers and neither it nor any of its officers, directors, employees, agents or
representatives shall be responsible to Grantor for any act or failure to act,
except for their own gross negligence or willful misconduct.

 

e.                                       Grantor also
authorizes Lender to execute, in connection with the sale provided for in
Section 8 hereof, any endorsements, assignments or other instruments of
conveyance or transfer with respect to the Collateral.

 

7.                                      Performance by
Lender of Grantor’s Obligation.  If Grantor fails to perform or comply with
any of its agreements contained herein or in any other Loan Document, and
Lender, as provided for by the terms of this Security Agreement, or in any
other Loan Document, shall itself perform or comply, or otherwise cause
performance of or compliance with such agreement, the reasonable expenses,
including attorneys’ fees, of Lender incurred in connection with such performance
or compliance, together with interest thereon at the Base Rate then in effect
in respect of the Revolving Loan, shall be payable by Grantor to Lender on
demand and shall constitute Secured Obligations secured hereby.

 

8.                                      Remedies,
Rights Upon Default.

 

a.                                      If any Event of
Default shall occur and be continuing, Lender may exercise in addition to all
other rights and remedies granted to it under this Security Agreement, the
Original Credit Agreement, the First Amended Credit Agreement, the Second
Amended Credit Agreement, the Third Amended Credit Agreement, the Fourth
Amended Credit Agreement or any of the other Documents evidencing any loan
obligations from Grantor to Lender, or agreement securing, evidencing or
relating to the Secured Obligations, all rights and remedies of a secured party
under the UCC.  Without limiting the
generality of the foregoing, Grantor expressly agrees that in any such event
Lender, without demand of performance or other demand, advertisement or notice
of any kind (except the notice specified below of time and place of public or
private sale) to or upon Grantor or any other Person (all and each of which
demands, advertisements and notices are hereby expressly waived to the maximum
extent permitted by the UCC and other applicable law), may forthwith enter upon
the premises of Grantor where any Collateral is located through self-help,
without judicial process, without first obtaining a final judgment or giving
Grantor notice and opportunity for a hearing on Lender’s claim or action, and
without paying rent to Grantor, and collect, receive, assemble, process,
appropriate and realize upon the Collateral, or any part thereof, and may
forthwith sell, lease, assign, give an option or

 

 

options to purchase, or sell
or otherwise dispose of and deliver said Collateral (or contract to do so), or
any part thereof, in one or more parcels at public or private sale or sales, at
any exchange or broker’s board or at any of Lender’s offices or elsewhere at
such prices as it may deem best, for cash or on credit or for future delivery
without assumption of any credit risk. 
Lender shall have the right upon any such public sale or sales, and, to
the extent permitted by law, upon any such private sale or sales, to purchase
for the benefit of Lender the whole or any part of said Collateral so sold,
free of any right or equity of redemption, which equity of redemption Grantor
hereby releases.  Such sales may be
adjourned and continued from time to time with or without notice.  Lender shall have the right to conduct such
sales on Grantor’s premises or elsewhere and shall have the right to use
Grantor’s premises without charge for such sales for such time or times as
Lender deems necessary or advisable.

 

b.                                      Grantor further
agrees, at Lender’s request, to assemble the Collateral and make it available
to Lender at places which Lender shall reasonably select, whether at Grantor’s
premises or elsewhere.  Until Lender is
able to effect a sale, lease, or other disposition of Collateral, Lender shall
have the right to use or operate Collateral on behalf of Lender, or any part
thereof, to the extent that it deems appropriate for the purpose of preserving
Collateral or its value or for any other purpose deemed appropriate by
Lender.  Lender shall have no obligation
to Grantor to maintain or preserve the rights of Grantor as against third
parties with respect to Collateral while Collateral is in the possession of
Lender.  Lender may, if it so elects,
seek the appointment of a receiver or keeper to take possession of Collateral
and to enforce any of Lender’s remedies with respect to such appointment
without prior notice or hearing.  Lender
shall apply the net proceeds of any such collection, recovery, receipt,
appropriation, realization or sale, as provided in Section 8(e) hereof,
such Grantor remaining liable for any deficiency remaining unpaid after such
application, and only after so paying over such net proceeds and after the
payment by Lender of any other amount required by any provision of law,
including section 9-504(1)(c) of the UCC (but only after Lender has
received what Lender considers reasonable proof of a subordinate party’s
security interest), need Lender account for the surplus, if any, to
Grantor.  To the maximum extent permitted
by applicable law, Grantor waives all claims, damages, and demands against
Lender arising out of the repossession, retention or sale of the Collateral
except such as arise out of the gross negligence or willful misconduct of such
party.  Grantor agrees that five (5) days’
prior notice by Lender of the time and place of any public sale or of the time
after which a private sale may take place is reasonable notification of such
matters.  Grantor shall remain liable for
any deficiency if the proceeds of any sale or disposition of the Collateral are
insufficient to pay all amounts to which Lender is entitled, Grantor also being
liable for any attorneys’ fees incurred by Lender to collect such deficiency.

 

c.                                       Grantor agrees
to pay any and all costs of Lender, including, reasonable attorneys’ fees,
incurred in connection with the enforcement of any of its rights and remedies
hereunder.

 

d.                                      Except as
otherwise specifically provided herein, Grantor hereby waives presentment,
demand, protest or any notice (to the maximum extent permitted by applicable
law) of any kind in connection with this Security Agreement or any Collateral.

 

 

e.                                       The proceeds of
any sale, disposition or other realization upon all or any part of the
Collateral shall be distributed by Lender, upon receipt, in accordance with the
provisions of the Fourth Amended Credit Agreement.

 

f.                                        From and after
the occurrence and during the continuation of an Event of Default, Lender may,
at its sole discretion, contact any and all Federal, state, or other
governmental or regulatory agencies with any jurisdiction over Grantor, with
respect to the possibility that Lender may take over the operation of any
Grantor’s business, or the possibility that Lender may take possession of or
liquidate any or all of the Collateral.

 

g.                                       Grantor
acknowledges that Lender shall be entitled to independently, but without
duplication, exercise the rights and remedies of Lender exercisable for their
benefit under this Security Agreement.

 

9.                                      Indemnity and
Expenses.

 

a.                                      Grantor agrees
to indemnify Lender from and against any and all claims, losses and liabilities
growing out of or resulting from this Security Agreement (including,
enforcement of this Security Agreement), except claims, losses or liabilities
resulting from such indemnified party’s gross negligence or willful misconduct.

 

b.                                      Grantor will
upon demand pay to Lender the amount of any and all reasonable out-of-pocket
expenses, including the reasonable fees and disbursements of counsel and of any
experts and agents, which Lender may incur in connection with (i) the
administration of this Security Agreement, (ii) the custody, preservation,
use or operation of, or the sale of, collection from, or other realization
upon, any of the Collateral, (iii) the exercise or enforcement of any of
the rights of Lender hereunder, or (iv) the failure by Grantor to perform
or observe any of the provisions hereof.

 

10.                               Grant of
License to Use Patent and Trademark Collateral.  For the purpose of enabling Lender to
exercise rights and remedies under Section 8 hereof (including, without
limiting the terms of Section 8 hereof, in order to take possession of,
hold, preserve, process, assemble, prepare for sale, market for sale, sell or
otherwise dispose of Collateral) at such time as Lender shall be lawfully
entitled to exercise such rights and remedies, Grantor hereby grants to Lender
an irrevocable, non-exclusive license (exercisable without payment of royalty
or other compensation to Grantor) to use, transfer, license or sublicense any
Patent, Trademark, trade secret, or copyright now owned or hereafter acquired
by Grantor, and wherever the same may be located, and including in such license
reasonable access to all media in which any of the licensed items may be
recorded or stored and to all computer and automatic machinery software and
programs used for the compilation or printout thereof.

 

11.                               Limitation on
Lender’s Duty in Respect of Collateral.  Lender shall use reasonable care with respect
to the Collateral in its possession or under its control.  Lender shall have no other duty as to any
Collateral in its possession or control or in the possession or control of any
agent or nominee of such party, or any income thereon or as to the preservation
of rights against prior parties or any other rights pertaining thereto.

 

 

12.                               Reinstatement.  This Security Agreement shall remain in full
force and effect and continue to be effective should any petition be filed by
or against Grantor for liquidation or reorganization, should Grantor become
insolvent or make an assignment for the benefit of creditors or should a
receiver or trustee be appointed for all or any significant part of Grantor’s
assets, and shall continue to be effective or be reinstated, as the case may
be, if at any time payment and performance of the Secured Obligations, or any
part thereof, is, pursuant to applicable law, rescinded or reduced in amount,
or must otherwise be restored or returned by any obligee of the Secured
Obligations, whether as a “voidable preference,” “fraudulent conveyance,” or
otherwise, all as though such payment or performance had not been made.  In the event that any payment, or any part
thereof, is rescinded, reduced, restored or returned, the Secured Obligations
shall be reinstated and deemed reduced only by such amount paid and not so
rescinded, reduced, restored or returned.

 

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

 

(a)  If to American
AgCredit, at:

 

American AgCredit, PCA

5560 South Broadway

Eureka, California  95503

Attention:  Account Officer — ML Macadamia Orchards

Facsimile:  (707) 442-1268

 

American AgCredit, PCA

200 Concourse Blvd.

P.O. Box 1120

Santa Rosa, CA 95402-1120

Attn: Account Officer —ML
Macadamia Orchards

Facsimile: (707) 521-3575

Email to:  moneydesk@agloan.com

 

 

(b)  If to Grantor, at:

 

ML Macadamia Orchards, L.P.

ML Resources, Inc.

26-238 Hawaii Belt Road

Hilo, Hawaii  96720

Attention: Mr.  Dennis
J. Simonis

Facsimile: (808) 969-8152

 

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

 

14.                               Severability.  Any provision of this Security Agreement
which is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate
or render unenforceable such provision in any other jurisdiction.

 

15.                               No Waiver;
Cumulative Remedies.  Lender
shall not by any act, delay, omission or otherwise be deemed to have waived any
of its rights or remedies hereunder, and no waiver shall be valid unless in
writing, signed by Lender, and then only to the extent therein set forth.  A waiver by Lender of any right or remedy
hereunder on any one occasion shall not be construed as a bar to any right or
remedy that Lender would otherwise have had on any future occasion.  No failure to exercise nor any delay in
exercising on the part of Lender, any right, power or privilege hereunder,
shall operate as a waiver thereof, nor shall any single or partial exercise of
any right, power or privilege hereunder preclude any other or future exercise
thereof or the exercise of any other right, power or privilege.  The rights and remedies hereunder provided
are cumulative and may be exercised singly or concurrently, and are not
exclusive of any rights and remedies provided by law.  None of the terms or provisions of this
Security Agreement may be waived, altered, modified or amended except by an
instrument in writing, duly executed by Lender and Grantor affected by such
waiver.

 

16.                               Limitation by
Law.  All rights, remedies and
powers provided in this Security Agreement may be exercised only to the extent
that the exercise thereof does not violate any applicable provision of law, and
all the provisions of this Security Agreement are intended to be subject to all
applicable mandatory provisions of law that may be controlling and to be
limited to the extent necessary so that they shall not render this Security
Agreement invalid, unenforceable, in whole or in part, or not entitled to be
recorded, registered, or filed under the provisions of any applicable law.

 

 

17.                               Termination of
this Security Agreement. 
Subject to Section 12 hereof, this Security Agreement shall
terminate upon full and final payment and performance of all of the Secured
Obligations.

 

18.                               Successor and
Assigns.  This Security Agreement and
all obligations of Grantor hereunder shall be binding upon the successors and
assigns of Grantor, and shall, together with the rights and remedies of Lender
hereunder, inure to the benefit of Lender and its successors and assigns, as
permitted pursuant to the terms of the Original Credit Agreement, the First
Amended Credit Agreement, the Second Amended Credit Agreement, the Third
Amended Credit Agreement and the Fourth Amended Credit Agreement.  No sales of participations, other sales,
assignments, transfers or other dispositions of any agreement governing or
instrument evidencing the Secured Obligations or any portion thereof or
interest therein, as permitted pursuant to the terms of the Fourth Amended
Credit Agreement, shall in any manner affect the security interest granted to
Lender hereunder.  Grantor may not
assign, sell or otherwise transfer an interest in this Security Agreement
except as provided by the Original Credit Agreement, the First Amended Credit
Agreement, the Second Amended Credit Agreement, the Third Amended Credit
Agreement or the Fourth Amended Credit Agreement.

 

19.                               Further
Indemnification.  Grantor
agrees to pay, and to hold Lender harmless from, any and all liabilities with
respect to, or resulting from any delay in paying, any and all excise, sales,
or other similar taxes which may be payable or determined to be payable with
respect to any of the Collateral or in connection with any of the transactions
contemplated by this Security Agreement.

 

20.                               Entire
Agreement.  The
execution of this Security Agreement supersedes all the negotiations or
stipulations concerning matters thereof that preceded or accompanied the
execution and delivery of this Security Agreement.  This Security Agreement is intended by the
parties hereto to be a complete and exclusive statement of the terms and
conditions hereof.

 

21.  GOVERNING LAW.  EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN ANY
OF THE LOAN DOCUMENTS, IN ALL RESPECTS, INCLUDING ALL MATTERS OF
CONSTRUCTION, VALIDITY AND PERFORMANCE, THIS SECURITY AGREEMENT AND THE
OBLIGATIONS ARISING HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED AND ENFORCED
IN ACCORDANCE WITH, THE LAWS OF THE STATE OF CALIFORNIA APPLICABLE TO CONTRACTS
MADE AND PERFORMED IN SUCH STATE, WITHOUT REGARD TO THE PRINCIPLES THEREOF
REGARDING CONFLICT OF LAWS, AND ANY APPLICABLE LAWS OF THE UNITED STATES OF
AMERICA.  GRANTOR HEREBY CONSENTS AND
AGREES THAT THE SUPERIOR COURTS OF SAN FRANCISCO COUNTY, CALIFORNIA, OR, AT
LENDERS OPTION, THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF
CALIFORNIA, SHALL HAVE NON-EXCLUSIVE JURISDICTION TO HEAR AND DETERMINE ANY
CLAIMS OR DISPUTES BETWEEN GRANTOR AND LENDER PERTAINING TO THIS SECURITY AGREEMENT
OR TO ANY MATTER ARISING OUT OF OR RELATED TO THIS SECURITY AGREEMENT.  GRANTOR EXPRESSLY

 

 

SUBMITS AND
CONSENTS IN ADVANCE TO SUCH JURISDICTION IN ANY ACTION OR SUIT COMMENCED IN ANY
SUCH COURT, AND GRANTOR HEREBY WAIVES ANY OBJECTION WHICH GRANTOR MAY HAVE
BASED UPON LACK OF PERSONAL JURISDICTION, IMPROPER VENUE OR FORUM  NON
CONVENIENS AND HEREBY CONSENTS TO THE GRANTING FOR SUCH LEGAL OR
EQUITABLE RELIEF AS IS DEEMED APPROPRIATE BY SUCH COURT.  GRANTOR HEREBY WAIVES PERSONAL SERVICE OF THE
SUMMONS, COMPLAINT, AND OTHER PROCESS ISSUED IN ANY SUCH ACTION OR SUIT AND
AGREES THAT SERVICE OF SUCH SUMMONS, COMPLAINT AND OTHER PROCESS MAY BE
MADE BY REGISTERED OR CERTIFIED MAIL ADDRESSED TO GRANTOR AT THE ADDRESS SET
FORTH IN SECTION 13 OF THIS SECURITY AGREEMENT AND THAT SERVICE SO MADE
SHALL BE DEEMED COMPLETED UPON THE EARLIER OF GRANTOR’S ACTUAL RECEIPT THEREOF
OR THREE (3) DAYS AFTER DEPOSIT IN THE U.S. MAILS, PROPER POSTAGE
PREPAID.  NOTHING IN THIS SECURITY
AGREEMENT SHALL BE DEEMED OR OPERATE TO PRECLUDE LENDER OR GRANTOR FROM
BRINGING SUIT OR TAKING OTHER LEGAL ACTION IN ANY OTHER JURISDICTION.

 

22.  MUTUAL WAIVER OF JURY TRIAL.  BECAUSE DISPUTES ARISING IN CONNECTION WITH
COMPLEX FINANCIAL TRANSACTIONS ARE MOST QUICKLY AND ECONOMICALLY RESOLVED BY AN
EXPERIENCED AND EXPERT PERSON AND THE PARTIES WISH APPLICABLE STATE AND FEDERAL
LAWS TO APPLY (RATHER THAN ARBITRATION RULES), THE PARTIES DESIRE THAT THEIR
DISPUTES BE RESOLVED BY A JUDGE APPLYING SUCH APPLICABLE LAWS.  THEREFORE, TO ACHIEVE THE BEST COMBINATION OF
THE BENEFITS OF THE JUDICIAL SYSTEM AND OF ARBITRATION, THE PARTIES HERETO
WAIVE ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, SUIT, OR PROCEEDING BROUGHT TO
ENFORCE OR DEFEND ANY RIGHTS OR REMEDIES UNDER THIS SECURITY AGREEMENT OR ANY
OF THE OTHER LOAN DOCUMENTS.

 

23.                               Amendments; etc.  No amendment to or waiver of any provision of
this Security Agreement nor consent to any departure by Grantor from any
provision of the Security Agreement, shall in any event be effective unless the
same shall be in writing and signed by Lender, and then such waiver or consent
shall be effective only in the specific instance and for the specific purpose
for which given.

 

24.                               Interpretation.  No provision of this Security Agreement shall
be construed against or interpreted to the disadvantage of any party hereto by
any court or other governmental or judicial authority by reason of such party’s
having or being deemed to have structured, drafted or dictated such provision.

 

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

 

 

26.                               Counterparts.  This Security Agreement may be executed in
any number of identical counterparts, each of which shall be an original, but
all of which shall constitute one and the same agreement.  This Security Agreement shall become
effective when Lender shall have received all original executed counterparts.

 

27.                               Further Assurances.  Grantor agrees, upon the written request of
Lender, to execute and deliver to Lender, from time to time, any additional
instruments or documents reasonably considered necessary by Lender to cause
this Security Agreement and the Secured Obligations to be, become, or remain
valid and effective, and to cause Lender’s security interest in the pledged
Collateral to be, become, or remain duly perfected.

 

IN
WITNESS WHEREOF, each of the parties hereto has caused this Security Agreement
to be executed and delivered by its duly authorized officer on the date first
set forth above.

 

	
   

  	
   

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

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

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

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
  /s/ Dennis J. Simonis

  
	
   

  	
   

  	
   

  	
  Name:

  	
  Dennis J. Simonis

  
	
   

  	
   

  	
   

  	
  Title:

  	
  President

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  ML RESOURCES, INC., a
  Hawaii corporation

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Dennis J. Simonis

  
	
   

  	
   

  	
  Name:

  	
  Dennis J. Simonis

  
	
   

  	
   

  	
  Title:

  	
  President

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  ACCEPTED:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  AMERICAN AGCREDIT, PCA

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Vern Zander

  	
   

  	
   

  	
   

  
	
  Name:

  	
  Vern Zander

  	
   

  	
   

  	
   

  
	
  Title:

  	
  Vice PresidentExhibit 10.4

 

AMENDMENT TO OPTION AGREEMENTS

 

This
AMENDMENT TO OPTION AGREEMENTS (this “Amendment”)
is made and entered into effective as of the 11th day of August, 2010 by UHS
Holdco, Inc., a Delaware corporation (the “Company”) with respect
to each Option Agreement (each, an “Option Agreement” and collectively,
the “Option Agreements”) heretofore executed by the Company which
provides for the grant of an Option pursuant to the UHS Holdco, Inc. Stock
Option Plan (the “Plan”). 
Capitalized terms used but not otherwise defined herein shall have the
meanings given them in the Option Agreements or the Plan, as appropriate.

 

WHEREAS, the Option Agreements were entered into between
the Company and certain individuals eligible to receive grants pursuant to the
Plan (each, an “Grantee” and collectively, the “Grantees”), and
the Options granted pursuant to each Option Agreement are either  Performance Vesting Options or Time Vesting
Options;

 

WHEREAS, the Company desires to amend the Option
Agreements entered into between the Company and each Grantee who remains
actively employed by the Company or any of its subsidiaries as of the date of
this Amendment as set forth herein or who serves on the Board of Directors of
the Company or any of its subsidiaries as of the date of this Amendment, and
has determined that the amendments provided for herein do not impair the rights
of such Grantees.

 

NOW, THEREFORE, in consideration of the foregoing promises
and agreements and for other good and valuable consideration, the receipt and
sufficiency of which is acknowledged, the Company agrees as follows:

 

1.             Amendment of
Annex I.  Annex I of each Option
Agreement is hereby amended by (a) replacing, for 2010 and all subsequent
fiscal years, the text in each row under the columns titled “Base Target EBITDA”
and “Capital Expenditures Target” with “(1)”; and (b) adding a footnote (1) to
the bottom of each such Annex I which reads as follows:

 

“(1)         “No Base Target
EBITDA or Capital Expenditures Target shall apply with respect to this fiscal
year.”

 

2.             Amendment of Section 5(d).  Section 5(d) of each Option
Agreement is hereby amended to strike the words “to the extent BSMB realizes an
IRR equal to or greater than 20%” appearing therein.

 

3.             Amendment
Relating to 2010 Aggregate Test.  With respect only to each Option Agreement
dated prior to December 31, 2009, Section 5(b) of each such
Option Agreement is hereby amended to provide that, with respect to the portion
of any Performance Vesting Options granted under such Option Agreement which did
not vest at the end of the fiscal 2009 Performance Vesting Period (the “2009
Portion”), the Aggregate Test to be performed at the end of the 2010 fiscal
year shall be deemed to have been met as of the date of this Amendment, and the
2009 Portion shall be deemed fully vested as of the date of this Amendment, in
each case provided that the Grantee remains continuously employed with the
Company and/or any of its Subsidiaries through the date of this Amendment.

 

 

4.             Amendment of Section 6(c).  The first sentence of Section 6(c) of
each Option Agreement is hereby amended to read as follows:

 

Upon (a) a Change in Control (as defined below) or (b) a Sale
of the Company pursuant to clause (ii) of the definition thereof set forth
in the Plan, 100% of any portion of the Time Vesting Options that is not vested
as of the date of such Change in Control or such Sale of the Company, as
applicable, shall become vested and immediately exercisable and, subject to
Sections 5.10 and 6.4 of the Plan, shall remain exercisable for a period of 90
days following such Change in Control or such Sale of the Company, as
applicable.

 

5.             Application of
Amendments.  The
amendments provided for under paragraphs 1-4 above shall apply only with
respect to Option Agreements entered into between the Company and each Grantee
who remains actively employed by the Company or any of its subsidiaries as of
the date of this Amendment.

 

6.             Governing Law.  This Amendment shall be governed by, and
construed in accordance with, the law of the State of Delaware, without regard
to conflict of law principles.

 

7.             Successors and
Assigns.  The terms and provisions of
this Amendment shall inure to the benefit of, and be binding upon, the Company
and its successors and assigns and upon Grantee and Grantee’s successors and
assigns, whether or not any such person shall have become a party to this
Amendment and have agreed in writing to join herein and be bound by the terms
hereof.

 

8.             Remainder of
Agreement Unchanged.  Except as
amended by this Amendment, each Option Agreement shall otherwise remain in full
force and effect.

 

9.             Severability.  If one or more provisions of this Amendment
are held to be unenforceable under applicable law, such provision shall be
excluded from this Amendment and the balance of the Amendment shall be
interpreted as if such provision were so excluded and shall be enforceable in
accordance with its terms.

 

IN WITNESS WHEREOF, this Amendment has been
executed to be effective as of the date and year first above written.

 

 

	
   

  	
  UHS HOLDCO, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

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