Document:

Exhibit 4.1

 

EXECUTION COPY

 

 

TYCO ELECTRONICS GROUP S.A.,

as Issuer

 

AND

 

TYCO ELECTRONICS LTD.,

as Guarantor

 

AND

 

DEUTSCHE BANK TRUST

COMPANY AMERICAS,

as Trustee

 

FOURTH SUPPLEMENTAL INDENTURE

Dated as of July 14, 2008

 

$300,000,000 of 5.950% Senior Notes due 2014

 

 

 

THIS FOURTH SUPPLEMENTAL INDENTURE is dated as of July 14, 2008
among TYCO ELECTRONICS GROUP S.A., a Luxembourg company (the “Company”), TYCO ELECTRONICS LTD., a Bermuda
company (“Parent”), and DEUTSCHE
BANK TRUST COMPANY AMERICAS, a New York banking corporation (the “Trustee”).

 

RECITALS

 

A.                                   Parent,
the Company and the Trustee executed and delivered an Indenture, dated as of September 25,
2007, (the “Base Indenture”), to
provide for the issuance by the Company from time to time of unsubordinated
debt securities evidencing its unsecured indebtedness.

 

B.                                     Pursuant
to Board Resolution, the Company has authorized the issuance of the
$300,000,000 principal amount of 5.950% Senior Notes due 2014 (the “Offered Securities”).

 

C.                                     The
entry into this Fourth Supplemental Indenture by the parties hereto is in all
respects authorized by the provisions of the Base Indenture.

 

D.                                    Parent
and the Company desire to enter into this Fourth Supplemental Indenture
pursuant to Section 9.01 of the Base Indenture to establish the terms of
the Offered Securities in accordance with Section 2.01 of the Base
Indenture and to establish the form of the Offered Securities in accordance
with Section 2.02 of the Base Indenture.

 

E.                                      All
things necessary to make this Fourth Supplemental Indenture a valid indenture
and agreement according to its terms have been done.

 

NOW, THEREFORE, for and in consideration of the foregoing premises,
Parent, the Company and the Trustee mutually covenant and agree for the equal
and proportionate benefit of the respective holders from time to time of the
Offered Securities as follows:

 

ARTICLE I

 

Section 1.1.                                   Terms of Offered
Securities.

 

The following terms relate to the Offered Securities:

 

(1)                                  The
Offered Securities constitute a series of securities having the title “5.950%
Senior Notes due 2014”.

 

(2)                                  The
initial aggregate principal amount of the Offered Securities that may be
authenticated and delivered under the Base Indenture (except for Offered
Securities authenticated and delivered upon registration of, transfer of, or in
exchange for, or in lieu of, other Offered Securities pursuant to Section 2.05,
2.06, 2.07, 2.11, or 3.03) is $300,000,000.

 

(3)                                  The
entire Outstanding principal of the Offered Securities shall be payable on January 15,
2014.

 

 

(4)                                  (A)                              The
rate at which the Offered Securities shall bear interest initially shall be
5.950% per year (the “Original Interest Rate”)
payable as set forth in the Offered Securities, and shall be subject to
adjustments as provided in Section 1.1(4)(B).  The date from which interest shall accrue on
the Offered Securities shall be July 14, 2008, or the most recent Interest
Payment Date to which interest has been paid or provided for.  The Interest Payment Dates for the Offered
Securities shall be January 15 and July 15 of each year, beginning January 15,
2009.  Interest shall be payable on each
Interest Payment Date to the holders of record at the close of business on the January 1
and July 1 prior to each Interest Payment Date (a “regular record date”).  The basis upon which interest shall be
calculated shall be that of a 360-day year consisting of twelve 30-day months.

 

(B)                                The
interest rate payable on the Offered Securities shall be subject to adjustments
from time to time if Moody’s, S&P or Fitch downgrades (or subsequently
upgrades) the debt rating assigned to the Offered Securities as set forth in
this Section 1.1(4)(B).  If the
rating from Moody’s, S&P or Fitch of the Offered Securities is decreased to
a rating set forth in the immediately following table, the interest rate on the
Offered Securities shall increase from the Original Interest Rate by adding the
percentage set forth opposite the rating applicable to the lowest two rating
levels assigned to such Offered Securities by any of Moody’s, S&P and
Fitch:

 

	
  Rating Agency

  	
   

  
	
  Moody’s

  	
   

  	
  S&P

  	
   

  	
  Fitch

  	
   

  	
  Percentage

  	
   

  
	
  Ba1

  	
   

  	
  BB+

  	
   

  	
  BB+

  	
   

  	
  0.25

  	
  % 

  
	
  Ba2

  	
   

  	
  BB

  	
   

  	
  BB

  	
   

  	
  0.50

  	
  % 

  
	
  Ba3

  	
   

  	
  BB-

  	
   

  	
  BB-

  	
   

  	
  0.75

  	
  % 

  
	
  B1 or below

  	
   

  	
  B or below

  	
   

  	
  B or below

  	
   

  	
  1.00

  	
  % 

  

 

If at any time the interest rate on the Offered Securities has been
adjusted upward and Moody’s, S&P or Fitch, as the case may be, subsequently
increases its rating of the Offered Securities to any of the threshold ratings
set forth above, the interest rate on the Offered Securities shall be decreased
such that the interest rate for the Offered Securities equals the Original
Interest Rate plus the percentages set forth opposite the ratings from the
tables above in effect immediately following the increase applicable to the two
lowest rating levels assigned to such Offered Securities by any of Moody’s,
S&P or Fitch.  If Moody’s
subsequently increases its rating of the Offered Securities to Baa3 or higher,
S&P increases its rating to BBB- or higher and Fitch increases its rating
to BBB- or higher, the interest rate on the Offered Securities will be
decreased to the Original Interest Rate.

 

Each adjustment required by any decrease or increase in a rating set
forth above, whether occasioned by the action of Moody’s, S&P or Fitch,
shall be made independent of any and all  other adjustments; provided
that in determining any adjustment, the percentage applicable to the lowest two
rating levels assigned to the Offered Securities by any of Moody’s, S&P and
Fitch shall be used.  In no event shall (1) the
interest rate for the Offered Securities be reduced to below the Original
Interest Rate or (2) the total increase in the interest rate on the
Offered Securities exceed 2.00% above the Original Interest Rate.

 

3

 

If any two of Moody’s, S&P or Fitch cease to provide a rating of
the Offered Securities, any subsequent increase or decrease in the interest
rate of the Offered Securities necessitated by a reduction or increase in the
rating by the agency continuing to provide the rating shall be twice the
percentage set forth in the applicable table above.  No adjustments in the interest rate of the
Offered Securities shall be made solely as a result of Moody’s, S&P or
Fitch ceasing to provide a rating.  If
Moody’s, S&P and Fitch all cease to provide a rating of the Offered
Securities, the interest rate on the Offered Securities shall increase to, or
remain at, as the case may be, 2.00% above the Original Interest Rate.  References to Moody’s, S&P and Fitch in this
Section 1.1(4)(B) shall be deemed to include any successors to Moody’s, S&P and
Fitch.

 

Any interest rate increase or decrease described above will take effect
from the first day of the interest period during which a rating change requires
an adjustment in the interest rate.

 

The interest rate on the Offered Security will permanently cease to be
subject to any adjustments described in this Section 1.1(4)(B) (notwithstanding
any subsequent decrease in the ratings by any or all of Moody’s, S&P or
Fitch or any or all of Moody’s, S&P or Fitch ceasing to provide ratings)
and shall be set at the Original Interest Rate if the Offered Securities become
rated A3, A- or A- or higher by any two of Moody’s, S&P and Fitch,
respectively (or one of these ratings if only rated by one of Moody’s, S&P
and Fitch), with a stable or positive outlook by both such rating agencies.

 

(5)                                  The
Offered Securities shall be issuable in whole in the form of one or more
registered Restricted Global Securities, and the Depository for such Restricted
Global Securities shall be The Depository Trust Company, New York, New
York.  The Offered Securities shall be
substantially in the form attached hereto as Exhibit A the terms of which
are herein incorporated by reference. 
The Offered Securities shall be issuable in denominations of $2,000 or
any integral multiple of $1,000 in excess thereof.

 

(6)                                  (A)                              The Offered Securities will be subject to
redemption at the option of the Company on any date (a “Redemption
Date”) prior to the maturity date, in whole or from time to time in
part, in $1,000 increments (provided that any remaining principal amount
thereof shall be at least the minimum authorized denomination thereof), at a
redemption price equal to the greater of (i) 100% of the principal amount
of the Offered Securities to be redeemed and (ii) as determined by the Quotation Agent and delivered to the Trustee, the
sum of the present values of the remaining scheduled payments of principal and
interest thereon due on any date after the Redemption Date (based on the
Original Interest Rate and excluding the portion of interest that will be
accrued and unpaid to and including the Redemption Date) discounted from their
scheduled date of payment to the Redemption Date (assuming a 360-day year
consisting of twelve 30-day months) at the Adjusted Redemption Treasury Rate
plus 45 basis points (such greater amount is referred to herein as the “Redemption Price”), plus accrued and unpaid interest and
Special Interest, if any, thereon to the Redemption Date.

 

(B)                                As
used herein:

 

“Adjusted Redemption Treasury Rate”,
with respect to any Redemption Date, means the 
rate equal to the semiannual equivalent yield to maturity or
interpolated (on a 30/360 day count basis) yield to maturity of the Comparable
Redemption Treasury Issue, assuming a 

 

4

 

price for the Comparable Redemption Treasury Issue (expressed as a
percentage of its principal amount) equal to the Comparable Redemption Treasury
Price for such Redemption Date.

 

“Comparable Redemption Treasury Issue”
means the United States Treasury security selected by the Quotation Agent as
having a maturity comparable to the remaining term of the Offered Securities to
be redeemed that will be utilized at the time of selection and in accordance
with customary financial practice in pricing new issues of corporate debt
securities of comparable maturity to the remaining term of such Offered
Securities.

 

“Comparable Redemption Treasury Price”,
with respect to any Redemption Date, means (i) the average of the Redemption
Reference Treasury Dealer Quotations for such Redemption Date, after excluding
the highest and lowest such Redemption Reference Treasury Dealer Quotations
(unless there is more than one highest or lowest quotation, in which case only
one such highest and/or lowest quotation shall be excluded), or (ii) if
the Quotation Agent obtains fewer than four such Redemption Reference Treasury
Dealer Quotations, the average of all such Redemption Reference Treasury Dealer
Quotations.

 

“Quotation Agent” means a
Redemption Reference Treasury Dealer appointed as such agent by the Company.

 

“Redemption Reference Treasury Dealer”
means four primary U.S.  Government
securities dealers in the United States selected by the Company.

 

“Redemption Reference Treasury Dealer
Quotations”, with respect to each Redemption Reference Treasury
Dealer and any Redemption Date, means the average, as determined by the
Quotation Agent, of the bid and offer prices at 11:00 a.m. New York City
time for the Comparable Redemption Treasury Issue (expressed in each case as a
percentage of its principal amount) for settlement on the Redemption Date
quoted in writing to the Quotation Agent by such Redemption Reference Treasury
Dealer on the third Business Day preceding such Redemption Date.

 

(7)                                  The
Offered Securities will not have the benefit of any sinking fund.

 

(8)                                  Except
as provided herein, the holders of the Offered Securities shall have no special
rights in addition to those provided in the Base Indenture upon the occurrence
of any particular events.

 

(9)                                  The
Offered Securities will be general unsecured and unsubordinated obligations of
the Company and will be ranked equally among themselves.

 

(10)                            The
Offered Securities are not convertible into shares of common stock or other
securities of the Company.

 

(11)                            The
additional Event of Default and restrictive covenants set forth in Sections 1.3
and 1.4 shall be applicable to the Offered Securities.

 

5

 

Section 1.2                                      Additional Defined Terms.

 

As used herein, the following defined terms shall have the following
meanings with respect to the Offered Securities only:

 

“Accounts Receivable” of any Person
means the accounts receivable of such Person generated by the sale of inventory
to third-party customers in the ordinary course of business.

 

“Attributable Debt”, in
connection with a Sale and Lease-Back Transaction, as of any particular time,
means the aggregate of present values (discounted at a rate that, at the
inception of the lease, represents the effective interest rate that the lessee
would have incurred to borrow over a similar term the funds necessary to
purchase the leased assets) of the obligations of the Company or any Restricted
Subsidiary for net rental payments during the remaining term of the applicable
lease, including any period for which such lease has been extended or, at the
option of the lessor, may be extended. 
The term “net rental payments” under any lease of any period shall mean
the sum of the rental and other payments required to be paid in such period by
the lessee thereunder, not including any amounts required to be paid by such
lessee, whether or not designated as rental or additional rental, on account of
maintenance and repairs, reconstruction, insurance, taxes, assessments, water rates
or similar charges required to be paid by such lessee thereunder or any amounts
required to be paid by such lessee thereunder contingent upon the amount of
sales, maintenance and repairs, reconstruction, insurance, taxes, assessments,
water rates or similar charges.

 

“Below Investment Grade Rating Event”
means the Offered Securities are rated below an Investment Grade Rating by at
least two of the Rating Agencies on any date from the date of the public notice
of an arrangement that could result in a Change of Control until the end of the
60-day period following public notice of the occurrence of the Change of
Control (which 60-day period shall be extended so long as the rating of the
Offered Securities is under publicly announced consideration for possible
downgrade by any of the Rating Agencies); provided that a Below Investment
Grade Rating Event otherwise arising by virtue of a particular reduction in
rating shall be deemed not to have occurred in respect of a particular Change
of Control (and thus shall be deemed not to be a Below Investment Grade Rating
Event for purposes of the definition of Change of Control Triggering Event) if
the rating agencies making the reduction in rating to which this definition
would otherwise apply do not publicly announce or publicly confirm or inform
the Trustee in writing at its request that the reduction was the result, in
whole or in part, of any event or circumstance comprised of or arising as a
result of, or in respect of, the applicable Change of Control (whether or not
the applicable Change of Control shall have occurred at the time of the Below
Investment Grade Rating Event).

 

“Change of Control Triggering Event”
means the occurrence of both a Change of Control and a Below Investment Grade
Rating Event.

 

“Change of Control” means the
occurrence of any of (1) the direct or indirect sale, transfer, conveyance
or other disposition (other than by way of merger or consolidation), in one or
a series of related transactions, of all or substantially all of the assets of
Parent and its subsidiaries taken as a whole to any person or group of persons
for purposes of Section 13(d) of the Exchange Act other than Parent
or one of its subsidiaries or a person controlled by Parent or 

 

6

 

one
of its subsidiaries; (2) consummation of any transaction (including any
merger or consolidation) the result of which is that  any “person” (as that term is used in Section 13(d)(3) of
the Exchange Act) other than Parent’s or its subsidiaries’ employee benefit
plans, becomes the beneficial owner (as defined in Rules 13(d)(3) and
13(d)(5) under the Exchange Act), directly or indirectly, of more than 50%
of the outstanding voting stock of Parent, measured by voting power rather than
number of shares; or (3) the replacement of a majority of the board of
directors of Parent over a two-year period from the directors who constituted
the board of directors of Parent at the beginning of such period, and such
replacement shall not have been approved by at least a majority of the board of
directors of Parent then still in office (either by a specific vote or by
approval of a proxy statement in which such member was named as a nominee for
election as a director, without objection to such nomination) who either were
members of such board of directors at the beginning of such period or whose
election as a member of such board of directors was previously so approved;
provided, that, a transaction effected to create a holding company for Parent
will not be deemed to involve a Change of Control if: (1) pursuant to such
transaction Parent becomes a direct or indirect wholly-owned subsidiary of such
holding company and (2) the direct or indirect holders of the voting stock
of such holding company immediately following that transaction are
substantially the same as the holders of Parent’s voting stock immediately
prior to that transaction.  Following any
such transaction, references in this definition to Parent shall be deemed to
refer to such holding company.  For
purposes of this definition, “voting stock” of any specified “person”
(as that term is used in Section 13(d)(3) of the Exchange Act) as of
any date means the capital stock of such person that is at the time entitled to
vote generally in the election of the board of directors of such person.

 

“Consolidated Net Worth”
at any date means total assets less total liabilities, in each case appearing
on the most recently prepared consolidated balance sheet of Parent and its
subsidiaries as of the end of a fiscal quarter of Parent, prepared in
accordance with United States generally accepted accounting principles as in
effect on the date of the consolidated balance sheet.

 

“Consolidated Tangible Assets”
at any date means total assets less all intangible assets appearing on the most
recently prepared consolidated balance sheet of Parent and its subsidiaries as
of the end of a fiscal quarter of Parent, prepared in accordance with United
States generally accepted accounting principles as in effect on the date of the
consolidated balance sheet.  “Intangible
assets” means the amount (if any) stated under the heading “Intangible assets,
net” or under any other heading of intangible assets separately listed, in each
case on the face of such consolidated balance sheet.

 

“Fitch” means Fitch Ratings Ltd.

 

“Funded Indebtedness”
means any Indebtedness maturing by its terms more than one year from the date
of the determination thereof, including any Indebtedness renewable or
extendible at the option of the obligor to a date later than one year from the
date of the determination thereof.

 

“Indebtedness” means,
without duplication, the principal amount (such amount being the face amount
or, with respect to original issue discount bonds or zero coupon notes, bonds
or debentures or similar securities, determined based on the accreted amount as
of the date of the 

 

7

 

most recently prepared consolidated balance sheet of Parent and its
Subsidiaries as of the end of a fiscal quarter of Parent prepared in accordance
with United States generally accepted accounting principles as in effect on the
date of such consolidated balance sheet) of (i) all obligations for
borrowed money, (ii) all obligations evidenced by debentures, notes or
other similar instruments, (iii) all obligations in respect of letters of
credit or bankers acceptances or similar instruments or reimbursement
obligations with respect thereto (such instruments to constitute Indebtedness
only to the extent that the outstanding reimbursement obligations in respect
thereof are collateralized by cash or cash equivalents reflected as assets on a
balance sheet prepared in accordance with United States generally accepted
accounting principles), (iv) all obligations to pay the deferred purchase
price of property or services, except (A) trade and similar accounts
payable and accrued expenses, (B) employee compensation, deferred
compensation and pension obligations, and other obligations arising from
employee benefit programs and agreements or other similar employment
arrangements, (C) obligations in respect of customer advances received and
(D) obligations in connection with earnout and holdback agreements, in
each case in the ordinary course of business, (v) all obligations as
lessee to the extent capitalized in accordance with United States generally
accepted accounting principles and (vi) all Indebtedness of others
consolidated in such balance sheet that is guaranteed by the Company or any of
its Subsidiaries or for which the Company or any of its Subsidiaries is legally
responsible or liable (whether by agreement to purchase indebtedness of, or to
supply funds or to invest in, others).

 

“Investment Grade Rating” means a
rating equal to or higher than BBB- (or the equivalent) by Fitch, Baa3
(or the equivalent) by Moody’s and BBB- (or the equivalent) by S&P.

 

“Moody’s” means Moody’s Investor Services Inc.

 

“Non-Recourse Indebtedness”
means Indebtedness upon the enforcement of which recourse may be had by the
holder(s) thereof only to identified assets of Parent or the Company or
any Subsidiary of Parent or the Company and not to Parent or the Company or any
Subsidiary of Parent or the Company personally (subject to, for the avoidance
of doubt, customary exceptions contained in non-recourse financings to the
non-recourse nature of the obligations thereunder).

 

“Principal Property” means
any U.S. manufacturing, processing or assembly plant or any U.S. warehouse or
distribution facility of the Parent or any of its Subsidiaries that is used by
any U.S. Subsidiary of the Company and (A) is owned by the Parent or any
Subsidiary of the Parent on the date hereof, (B) the initial construction
of which has been completed after the date hereof, or (C) is acquired
after the date hereof, in each case, other than any such plants, facilities,
warehouses or portions thereof, that in the opinion of the Board of Directors
of the Company, are not collectively of material importance to the total
business conducted by the Parent and its subsidiaries as an entirety, or that
has a net book value (excluding any capitalized interest expense), on the date
hereof in the case of clause (A) of this definition, on the date of
completion of the initial construction in the case of clause (B) of this
definition or on the date of acquisition in the case of clause (C) of this
definition, of less than the greater of $50,000,000 and 0.5% of Consolidated
Tangible Assets on the consolidated balance sheet of Parent and its
subsidiaries as of the applicable date.

 

8

 

“Qualifying Subsidiary” means a U.S. Subsidiary, the total
Accounts Receivable of which exceeds the greater of $2.5 million and 0.20% of
the amount stated under the heading “Accounts receivable, net of
allowance for doubtful accounts,” or its equivalent, appearing on
the most recently prepared consolidated balance sheet of Parent and its
subsidiaries as of the end of a fiscal quarter of Parent, prepared in
accordance with United States generally accepted accounting principles.

 

“Rating Agencies” means (1) each
of Fitch, Moody’s and S&P; and (2) if any of Fitch, Moody’s or S&P
ceases to rate the Offered Securities or fails to make a rating of the Offered
Securities publicly available for reasons outside of the Company’s control, a “nationally
recognized statistical rating organization” within the meaning of Rule 15c3-1(c)(2)(vi)(F) under
the Exchange Act, selected by the Company (as certified by a resolution of the
Company’s Board of Directors) as a replacement agency for Fitch, Moody’s or
S&P, or all of them, as the case may be.

 

“Restricted Subsidiary”
means any Subsidiary of the Company that owns or leases a Principal Property.

 

“Sale and Lease-Back Transaction”
means an arrangement with any Person providing for the leasing by the Company
or a Restricted Subsidiary of any Principal Property whereby such Principal Property
has been or is to be sold or transferred by the Company or a Restricted
Subsidiary to such Person other than Parent, the Company or any of their
respective Subsidiaries; provided, however, that the foregoing shall not apply
to any such arrangement involving a lease for a term, including renewal rights,
for not more than three years.

 

“S&P” means Standard & Poor’s
Rating Services, a division of The McGraw-Hill Companies, Inc.

 

“U.S. Subsidiary” means any Subsidiary
organized under the laws of a jurisdiction of the United States or any
political subdivision thereof.

 

Section 1.3.                                   Additional Covenants.

 

The following additional covenants shall apply with respect to the
Offered Securities so long as any of the Offered Securities remain Outstanding
(but subject to defeasance, as provided in the Indenture):

 

(1)                                  Limitation
on Liens.

 

The Company will not, and will not permit any Restricted Subsidiary to,
issue, assume or guarantee any Indebtedness that is secured by a mortgage,
pledge, security interest, lien or encumbrance (each a “lien”) upon any property that at the time
of such issuance, assumption or guarantee constitutes a Principal Property, and
the Company will not, and will not permit any U.S. Subsidiary that at the time
of such issuance, assumption or guarantee is a Qualifying Subsidiary to, issue,
assume or guarantee any Indebtedness that is secured by a lien upon such
Qualifying Subsidiary’s Accounts Receivables, or any shares of stock of or
Indebtedness issued by any such Restricted Subsidiary or such Qualifying
Subsidiary, whether now owned or 

 

9

 

hereafter acquired, in each case without effectively providing that,
for so long as such lien shall continue in existence with respect to such
secured Indebtedness, the Offered Securities (together with, if the Company
shall so determine, any other Indebtedness of the Company ranking equally with
the Offered Securities, it being understood that for purposes hereof,
Indebtedness which is secured by a lien and Indebtedness which is not so
secured shall not, solely by reason of such lien, be deemed to be of different
ranking) shall be equally and ratably secured by a lien ranking ratably with or
equal to (or at the Company’s option prior to) such secured Indebtedness;
provided, however, that the foregoing covenant shall not apply to:

 

(a)                                  liens
existing on the date the Offered Securities are first issued;

 

(b)                                 liens
on the stock, assets or Indebtedness of a Person existing at the time such
Person becomes a Restricted Subsidiary, unless created in contemplation of such
Person becoming a Restricted Subsidiary;

 

(c)                                  liens
on any assets or Indebtedness of a Person existing at the time such Person is
merged with or into or consolidated with or acquired by the Company or a
Restricted Subsidiary or at the time of a purchase, lease or other acquisition
of the assets of a corporation or firm as an entirety or substantially as an
entirety by the Company or any Restricted Subsidiary;

 

(d)                                 liens
on any Principal Property existing at the time of acquisition thereof by the
Company or any Restricted Subsidiary, or liens to secure the payment of the
purchase price of such Principal Property by the Company or any Restricted
Subsidiary, or to secure any Indebtedness incurred, assumed or guaranteed by
the Company or a Restricted Subsidiary for the purpose of financing all or any
part of the purchase price of such Principal Property or improvements or
construction thereon, which Indebtedness is incurred, assumed or guaranteed
prior to, at the time of or within one year after such acquisition (or in the
case of real property, completion of such improvement or construction or
commencement of full operation of such property, whichever is later); provided,
however, that in the case of any such acquisition, construction or improvement,
the lien shall not apply to any Principal Property theretofore owned by the
Company or a Restricted Subsidiary, other than the Principal Property so
acquired, constructed or improved (and accessions thereto and improvements and
replacements thereof and the proceeds of the foregoing);

 

(e)                                  liens
securing Indebtedness owing by any subsidiary to the Company, Parent or a
subsidiary thereof or by the Company to Parent;

 

(f)                                    liens
in favor of the United States or any State thereof, or any department, agency
or instrumentality or political subdivision of the United States of America or
any State thereof, or in favor of any other country or any political
subdivision thereof, to secure partial, progress, advance or other payments
pursuant to any contract, statute, rule or regulation or to secure any
Indebtedness incurred or guaranteed for the purpose of financing all or any
part of the purchase price (or, in the case of real property, the cost of
construction or improvement) of the Principal Property or assets subject to
such liens 

 

10

 

(including liens incurred in connection with
pollution control, industrial revenue or similar financings);

 

(g)                                 pledges,
liens or deposits under workers’ compensation or similar legislation, and liens
thereunder that are not currently dischargeable, or in connection with bids,
tenders, contracts (other than for the payment of money) or leases to which the
Company or any subsidiary is a party, or to secure the public or statutory
obligations of the Company or any subsidiary, or in connection with obtaining
or maintaining self-insurance, or to obtain the benefits of any law, regulation
or arrangement pertaining to unemployment insurance, old age pensions, social
security or similar matters, or to secure surety, performance, appeal or
customs bonds to which the Company or any subsidiary is a party, or in
litigation or other proceedings in connection with the matters heretofore
referred to in this clause, such as interpleader proceedings, and other similar
pledges, liens or deposits made or incurred in the ordinary course of business;

 

(h)                                 liens
created by or resulting from any litigation or other proceeding that is being
contested in good faith by appropriate proceedings, including liens arising out
of judgments or awards against the Company or any subsidiary with respect to
which the Company or such subsidiary in good faith is prosecuting an appeal or
proceedings for review or for which the time to make an appeal has not yet
expired; or final unappealable judgment liens which are satisfied within 15
days of the date of judgment; or liens incurred by the Company or any
subsidiary for the purpose of obtaining a stay or discharge in the course of
any litigation or other proceeding to which the Company or such subsidiary is a
party;

 

(i)                                     liens
for taxes or assessments or governmental charges or levies not yet due or
delinquent; or that can thereafter be paid without penalty, or that are being
contested in good faith by appropriate proceedings; landlord’s liens on
property held under lease; and any other liens or charges incidental to the
conduct of the business of the Company or any subsidiary, or the ownership of
their respective assets, that were not incurred in connection with the
borrowing of money or the obtaining of advances or credit and that, in the
opinion of the Board of Directors of the Company, do not materially impair the
use of such assets in the operation of the business of the Company or such
subsidiary or the value of such Principal Property or assets for the purposes
of such business;

 

(j)                                     liens
to secure the Company’s or any subsidiary’s obligations under agreements with
respect to interest rate swap, spot, forward, future and option transactions,
entered into in the ordinary course of business;

 

(k)                                  liens
on (including securitization programs with respect to) accounts receivable
(including any accounts receivable constituting or evidenced by chattel paper,
instruments or intangibles (as defined in the Uniform Commercial Code of the
State of New York) (i) existing at the time of acquisition thereof by the
Company or any U.S. Subsidiary or (ii) of a Person existing at the time
such Person is merged with or into or consolidated with or acquired by the
Company or any U.S. Subsidiary; provided that such liens were in existence, or
granted or required to be granted or otherwise attach pursuant 

 

11

 

to any agreement in existence, prior to, and
were not granted or such agreement was not entered into (as applicable) in
contemplation of, such acquisition, merger or consolidation and such liens do
not extend to any assets other than accounts receivable (including any accounts
receivable constituting or evidenced by chattel paper, instruments or
intangibles (as so defined) and rights (contractual and other) and collateral
related thereto and proceeds of the foregoing and any related deposit accounts
containing such proceeds;

 

(l)                                     liens
not permitted by the foregoing clauses (a) to (k), inclusive, if at
the time of, and after giving effect to, the creation or assumption of any such
lien, the aggregate amount (without duplication) of all outstanding
Indebtedness of the Company and its Restricted Subsidiaries secured by all such
liens on such Principal Properties and all outstanding Indebtedness of the
Company and its Qualifying Subsidiaries secured by all such liens on Accounts
Receivable not so permitted by the foregoing clauses (a) through (k),
inclusive, together with the Attributable Debt in respect of Sale and
Lease-Back Transactions permitted by paragraph (a) under subsection (2) below
do not exceed the greater of $1,500,000,000 and 10% of Consolidated Net Worth;
and

 

(m)                               any
extension, renewal or replacement (or successive extensions, renewals or
replacements) in whole or in part, of any lien referred to in the foregoing
clauses (a) to (l), inclusive; provided, however, that the principal
amount of Indebtedness secured thereby unless otherwise excepted under
clauses (a) through (l) shall not exceed the principal amount of
Indebtedness  (plus the amount of any
unused revolving credit or similar commitments) so secured at the time of such
extension, renewal or replacement, and that such extension, renewal or
replacement shall be limited to all or a part of the assets (or any
replacements therefor) that secured the lien so extended, renewed or replaced
(plus improvements and construction on real property).

 

(2)                                  Limitation
on Sale/Leaseback Transactions.

 

The Company will not, and will not permit any Restricted Subsidiary to,
enter into any Sale and Lease-Back Transaction unless:

 

(a)                                  the
Company or such Restricted Subsidiary, at the time of entering into a Sale and
Lease-Back Transaction, would be entitled to incur Indebtedness secured by a
lien on the Principal Property to be leased in an amount at least equal to the
Attributable Debt in respect of such Sale and Lease-Back Transaction, without
equally and ratably securing the Securities pursuant to subsection (1) above;
or

 

(b)                                 the
direct or indirect proceeds of the sale of the Principal Property to be leased
are at least equal to the fair value of such Principal Property (as determined
by the Company’s Board of Directors) and an amount equal to the net proceeds
from the sale of the property or assets so leased is applied, within 180 days
of the effective date of any such Sale and Lease-Back Transaction, to the
purchase or acquisition (or, in the case of real property, commencement of the
construction) of property or assets or to the retirement (other than at
maturity or pursuant to a mandatory sinking fund or mandatory redemption
provision) of Securities, or of Funded Indebtedness of the Company or a
consolidated Subsidiary ranking on a parity with or senior to the Securities;
provided that 

 

12

 

there shall be credited to the amount of net
worth proceeds required to be applied pursuant to this clause (b) an
amount equal to the sum of (i) the principal amount of Securities
delivered within 180 days of the effective date of such Sale and Lease-Back
Transaction to the Trustee for retirement and cancellation and (ii) the
principal amount of other Funded Indebtedness voluntarily retired by the
Company within such 180-day period, excluding retirements of Securities and
other Funded Indebtedness as a result of conversions or pursuant to mandatory
sinking fund or mandatory prepayment provisions.

 

(3)                                  Change
of Control Triggering Event.

 

(a)                                  Upon the
occurrence of a Change of Control Triggering Event, unless the Company has
exercised its right to redeem the Offered Securities pursuant to Section 1.1(6) hereof
or Section 14.01 of the Base Indenture, each Holder will have the right to
require that the Company purchase all or a portion, in $1,000 increments
(provided that any remaining principal amount thereof shall be at least
the minimum authorized denomination thereof), of such Holder’s Offered Securities pursuant
to Section 1.3(3)(b) hereof (the “Change of
Control Offer”), at a purchase price equal to 101% of the principal
amount thereof plus accrued and unpaid interest, if any, to the date of
purchase.

 

(b)                                 Within 30
days following the date upon which the Change of Control Triggering Event
occurred, or at the Company’s option, prior to any Change of Control, but after
the public announcement of the Change of Control, the Company shall send, by
first class mail, a notice to each Holder, with a copy to the Trustee, which
notice shall govern the terms of the Change of Control Offer.  Such notice shall describe the
transaction or transactions that constitute the Change of Control and shall
state:

 

(A)                              that
the Change of Control Offer is being made pursuant to this Section 1.3(3) of
this Fourth Supplemental Indenture;

 

(B)                                that
the Company is required to offer to purchase all of the outstanding principal
amount of Offered Securities, the purchase price and, that on the date
specified in such notice, which date shall be no earlier than 30 days and
no later than 60 days from the date such notice is mailed, other than as
may be required by law (the “Change of Control Payment
Date”), the Company shall repurchase the Offered Securities validly
tendered and not withdrawn pursuant to this Section 1.3(3);

 

(C)                                if mailed
prior to the date of consummation of the Change of Control, shall state that
the Change of Control Offer is conditioned on the Change of Control Triggering
Event occurring on or prior to the Change of Control Payment Date;

 

(D)                               that
any Offered Security not tendered or accepted for payment shall continue to
accrue interest;

 

13

 

(E)                                 that,
unless the Company defaults in making such payment, Offered Securities accepted
for payment pursuant to the Change of Control Offer shall cease to accrue
interest after the Change of Control Payment Date;

 

(F)                                 that
Holders electing to have an Offered Security purchased pursuant to a Change of
Control Offer may elect to have all or any portion of such Offered Security
purchased;

 

(G)                                that
Holders of Offered Securities electing to have Offered Securities purchased
pursuant to a Change of Control Offer shall be required to surrender their
Offered Securities, with the form entitled “Option of Holder to Elect Purchase”
on the reverse of the Offered Security, or such other customary documents of
surrender and transfer as the Company may reasonably request, duly completed,
or transfer the Offered Security by book-entry transfer, to the paying agent at
the address specified in the notice prior to the Change of Control Payment
Date;

 

(H)                               that
Holders shall be entitled to withdraw their election if the Company, the
Depositary or the paying agent, as the case may be, receives, not later than
the expiration of the Change of Control Offer, a telegram, facsimile transmission
or letter setting forth the name of the Holder, the principal amount of the
Offered Security the Holder delivered for purchase and a statement that such
Holder is withdrawing its election to have such Offered Security purchased;

 

(I)                                    that
Holders whose Offered Securities are purchased only in part shall be issued new
Securities equal in principal amount to the unpurchased portion of the
Securities surrendered (or transferred by book-entry transfer); and

 

(J)                                   the
CUSIP number, if any, printed on the Offered Securities being repurchased and
that no representation is made as to the correctness or accuracy of the CUSIP
number, if any, listed in such notice or printed on the Offered Securities.

 

(c)                                  The Company
will not be required to make a Change of Control Offer if a third party makes
such an offer in the manner, at the times and otherwise in compliance with the
requirements for such an offer made by the Company and such third party
purchases all Offered Securities properly tendered and not withdrawn under its
offer.

 

(d)                                 The Company
will comply with the requirements of Rule 14e-1 under the Exchange Act and
any other securities laws and regulations thereunder to the extent such laws
and regulations are applicable in connection with the repurchase of Offered
Securities pursuant to a Change of Control Offer.  To the extent that any securities laws or regulations
conflict with the provisions of this Section 1.3(3), the Company shall
comply with the applicable securities laws and regulations and shall be deemed
not to have breached its obligations under this Section 1.3(3) by
virtue thereof.

 

14

 

Section 1.4        Additional Event of Default.

 

The following additional event shall be established and shall
constitute an “Event of Default” under Section 6.01(a) of the Base
Indenture with respect to the Offered Securities so long as any of the Offered
Securities remain Outstanding:

 

(9)       an event of default shall happen and be continuing with
respect to the Company’s or Parent’s Indebtedness for borrowed money (other
than Non-Recourse Indebtedness) under any indenture or other instrument
evidencing or under which the Company or Parent shall have a principal amount
outstanding (such amount with respect to original issue discount bonds or zero
coupon notes, bonds or debentures or similar securities based on the accreted
amount determined in accordance with United States generally accepted
accounting principles and as of the date of the most recently prepared
consolidated balance sheet of the Company or Parent, as the case may be) in
excess of $100,000,000, and such event of default shall involve the failure to pay
the principal of such Indebtedness on the final maturity date thereof after the
expiration of any applicable grace period with respect thereto, or such
Indebtedness shall have been accelerated so that the same shall have become due
and payable prior to the date on which the same would otherwise have become due
and payable, and such acceleration shall not be rescinded or annulled within
ten Business Days after notice thereof shall have been given to the Company and
Parent by the Trustee, or to the Company, Parent and the Trustee by the Holders
of at least 25% in aggregate principal amount of the Outstanding Securities;
provided that, if such event of default under such indenture or instrument
shall be remedied or cured by the Company or Parent or waived by the requisite
holders of such Indebtedness, then the Event of Default hereunder by reason
thereof shall be deemed likewise to have been thereupon remedied, cured or
waived without further action upon the part of either the Trustee or any of the
Securityholders, and provided further, however, that subject to the provisions
of Sections 7.01 and 7.02, the Trustee shall not be charged with knowledge
of any such event of default unless written notice thereof shall have been
given to the Trustee by the Company or Parent, as the case may be, by the
holder or an agent of the holder of any such Indebtedness, by the trustee then
acting under any indenture or other instrument under which such default shall
have occurred, or by the Holders of not less than 25% in the aggregate
principal amount of Outstanding Securities.

 

ARTICLE
II

 

MISCELLANEOUS

 

Section 2.1.       Definitions.

 

Capitalized terms used but not defined in this Fourth Supplemental
Indenture shall have the meanings ascribed thereto in the Base Indenture.

 

15

 

Section 2.2.       Confirmation of Indenture.

 

The Base Indenture, as supplemented and amended by this Fourth
Supplemental Indenture, is in all respects ratified and confirmed, and the Base
Indenture, this Fourth Supplemental Indenture and all indentures supplemental
thereto shall be read, taken and construed as one and the same instrument.

 

Section 2.3.       Concerning the Trustee.

 

In carrying out the Trustee’s responsibilities hereunder, the Trustee
shall have all of the rights, protections and immunities which it possesses
under the Indenture.  The recitals
contained herein and in the Offered Securities, except the Trustee’s
certificate of authentication, shall be taken as the statements of the Company,
and the Trustee assumes no responsibility for their correctness.  The Trustee makes no representations as to
the validity or sufficiency of this Fourth Supplemental Indenture or of the
Offered Securities.  The Trustee shall
not be accountable for the use or application by the Company of the Offered
Securities or the proceeds thereof.

 

Section 2.4.       Governing Law.

 

This Fourth Supplemental Indenture and the Offered Securities shall be
deemed to be a contract made under the internal laws of the State of New York,
and for all purposes shall be construed in accordance with the laws of said
State without regard to conflicts of laws principles that would require the
application of any other law.

 

Section 2.5.       Separability.

 

In case any provision in this Fourth Supplemental Indenture shall for
any reason be held to be invalid, illegal or unenforceable, the validity,
legality and enforceability of the remaining provisions shall not in any way be
affected or impaired thereby.

 

Section 2.6.       Counterparts.

 

This Fourth Supplemental Indenture may be executed in any number of
counterparts each of which shall be an original, but such counterparts shall
together constitute but one and the same instrument.

 

Section 2.7        No Benefit.

 

Nothing in this Fourth Supplemental Indenture, express or implied,
shall give to any Person other than the parties hereto and their successors or
assigns, and the holders of the Offered Securities, any benefit or legal or
equitable rights, remedy or claim under this Fourth Supplemental Indenture or
the Base Indenture.

 

16

 

IN WITNESS WHEREOF, the parties hereto have caused this Fourth
Supplemental Indenture to be duly executed all as of the day and year first
above written.

 

 

	
   

  	
  TYCO ELECTRONICS GROUP S.A.

  
	
   

  	
   

  
	
   

  	
  By:

  	
   /s/ Mario Calastri

  
	
   

  	
   

  	
  Name:

  	
  Mario Calastri

  
	
   

  	
   

  	
  Title:

  	
  Director

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  TYCO ELECTRONICS LTD.

  
	
   

  	
   

  
	
   

  	
  By:

  	
   /s/ Mario Calastri

  
	
   

  	
   

  	
  Name:

  	
  Mario Calastri

  
	
   

  	
   

  	
  Title:

  	
  Senior Vice President and Treasurer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  DEUTSCHE BANK TRUST COMPANY

  AMERICAS

  
	
   

  	
  as Trustee

  
	
   

  	
   

  
	
   

  	
  By:

  	
   /s/ Carol Ng

  
	
   

  	
   

  	
  Name: Carol Ng

  
	
   

  	
   

  	
  Title: Vice President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   /s/ Wanda Camacho

  
	
   

  	
   

  	
  Name: Wanda Camacho

  
	
   

  	
   

  	
  Title: Vice President

  

 

 

EXHIBIT
A

FORM OF 5.950% SENIOR NOTES

 

[Insert the Private Placement Legend and/or
the Global Security legend, as applicable]

 

5.950% SENIOR NOTES DUE 2014

 

No. [      ]                                                                                                                                                                $[               ]

CUSIP No. [                 ]

 

TYCO ELECTRONICS GROUP S.A.

 

promises to pay to Cede & Co. or registered assigns, the
principal sum of
[              ]
Dollars on [        ].

 

Interest Payment Dates: January 15 and July 15

 

Record Dates:  January 1 and
July 1

 

Each holder of this Security (as defined below), by accepting the same,
agrees to and shall be bound by the provisions hereof and of the Indenture
described herein, and authorizes and directs the Trustee described herein on
such holder’s behalf to be bound by such provisions.  Each holder of this Security hereby waives
all notice of the acceptance of the provisions contained herein and in the
Indenture and waives reliance by such holder upon said provisions.

 

This Security shall not be entitled to any benefit under the Indenture,
or be valid or become obligatory for any purpose, until the Certificate of
Authentication hereon shall have been signed by or on behalf of the Trustee.  The provisions of this Security are continued
on the reverse side hereof, and such continued provisions shall for all
purposes have the same effect as though fully set forth at this place.

 

IN WITNESS WHEREOF, the Company has caused this instrument to be signed
in accordance with Section 2.04 of the Indenture.

 

Date: 
[        ]

 

	
   

  	
  TYCO ELECTRONICS GROUP S.A.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
  [If second signature is applicable:]

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  

 

A-1

 

CERTIFICATE OF AUTHENTICATION

 

This is one of the Securities of the series designated therein referred
to in the within-mentioned Indenture.

 

	
   

  	
  DEUTSCHE BANK TRUST COMPANY

  AMERICAS, as Trustee

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Authorized Signatory

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Authorized Signatory

  
	
   

  	
   

  
	
   

  	
  Dated:  [        ]

  

 

A-2

 

GUARANTEE

 

For value received, TYCO ELECTRONICS LTD. hereby absolutely,
unconditionally and irrevocably guarantees to the holder of this Security the
payment of principal of, premium, if any, and interest on, the Security upon
which this Guarantee is set forth in the amounts and at the time when due and
payable whether by declaration thereof or otherwise, and interest on the
overdue principal and interest, if any, of such Security, if lawful, to the
holder of such Security and the Trustee on behalf of the holders, all in
accordance with and subject to the terms and limitations of such Security and Article XV
of the Indenture.  This Guarantee will
not become effective until the Trustee or Authenticating Agent duly executes
the certificate of authentication on this Security.  This Guarantee shall be governed by and
construed in accordance with the laws of the State of New York, without regard
to conflict of law principles thereof.

 

Dated:
[        ]

 

	
   

  	
  TYCO ELECTRONICS LTD.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
    Name:

  
	
   

  	
   

  	
    Title:

  

 

A-3

 

Tyco Electronics Group S.A.

 

5.950% Senior Notes due 2014

 

This security is one of a duly authorized series of debt securities of
Tyco Electronics Group S.A., a Luxembourg company (the “Company”), issued or to
be issued in one or more series under and pursuant to an Indenture for the
Company’s unsubordinated debt securities, dated as of September 25, 2007
(the “Base Indenture”), duly executed and delivered by and among the Company,
Tyco Electronics Ltd. (“Parent”) and Deutsche Bank Trust Company Americas (the “Trustee”),
as supplemented by the Fourth Supplemental Indenture, dated as of July 14,
2008 (the “Fourth Supplemental Indenture”), by and among the Company, Parent
and the Trustee.  The Base Indenture as
supplemented and amended by the Fourth Supplemental Indenture is referred to
herein as the “Indenture.”  By the terms
of the Base Indenture, the debt securities issuable thereunder are issuable in
series that may vary as to amount, date of maturity, rate of interest and in
other respects as provided in the Base Indenture.  This security is one of the series designated
on the face hereof (individually, a “Security,” and collectively, the “Securities”),
and reference is hereby made to the Indenture for a description of the rights,
limitations of rights, obligations, duties and immunities of the Trustee, the
Company, Parent and the holders of the Securities (the “Securityholders”).  Capitalized terms used herein and not
otherwise defined shall have the meanings given them in the Base Indenture or
the Fourth Supplemental Indenture, as applicable.

 

1.  Interest.  The
Company promises to pay interest on the principal amount of this Security at an
annual rate of 5.950%, subject to adjustment as provided below.  The Company will pay interest semi-annually
on January 15 and July 15 of each year (each such day, an “Interest
Payment Date”).  If any Interest Payment
Date, redemption date or maturity date of this Security is not a Business Day,
then payment of interest or principal (and premium, if any) shall be made on
the next succeeding Business Day with the same force and effect as if made on
the date such payment was due, and no interest shall accrue for the period
after such date to the next succeeding Business Day.  Interest on the Securities will accrue from
the most recent date to which interest has been paid or duly provided for or,
if no interest has been paid, from the date of issuance; provided that, if
there is no existing Default in the payment of interest, and if this Security
is authenticated between a regular record date referred to on the face hereof
and the next succeeding Interest Payment Date, interest shall accrue from such
next succeeding Interest Payment Date; and provided, further, that the first
Interest Payment Date shall be January 15, 2009.  Interest will be computed on the basis of a
360-day year of twelve 30-day months.  In
certain circumstances, liquidated damages may be payable as provided in Section 6.01
of the Indenture.  Any such liquidated
damages shall be payable in the same manner and on the same dates as the stated
interest payable on this Security.

 

The interest rate payable on this Security shall be subject to
adjustments from time to time if Moody’s, S&P or Fitch downgrades (or
subsequently upgrades) the debt rating assigned to this Security as set forth
in Section 1.1(4)(B) of the Fourth Supplemental Indenture.

 

2.  Method of Payment.  The Company will pay
interest on the Securities (except defaulted interest), if any, to the persons
in whose name such Securities are registered at the 

 

A-4

 

close of business on the regular record date
referred to on the facing page of this Security for such interest
installment.  In the event that the
Securities or a portion thereof are called for redemption and the Redemption
Date is subsequent to a regular record date with respect to any Interest
Payment Date and prior to such Interest Payment Date, interest on such
Securities will be paid upon presentation and surrender of such Securities as
provided in the Indenture.  The principal
of and the interest on the Securities shall be payable in the coin or currency
of the United States of America that at the time is legal tender for public and
private debt, at the office or agency of the Company maintained for that
purpose in accordance with the Indenture.

 

3.  Paying Agent and Registrar.  Initially,
Deutsche Bank Trust Company Americas, the Trustee, will act as paying agent and
Security Registrar.  The Company may
change or appoint any paying agent or Security Registrar without notice to any
Securityholder.  Parent, the Company or
any of their Subsidiaries may act in any such capacity.

 

4.  Indenture.  The terms of the Securities
include those stated in the Indenture and those made part of the Indenture by
reference to the Trust Indenture Act of 1939 (“TIA”) as in effect on the date
the Indenture is qualified.  The
Securities are subject to all such terms, and Securityholders are referred to
the Indenture and TIA for a statement of such terms.  The Securities are unsecured general
obligations of the Company and constitute the series designated on the face
hereof as the “5.950% Senior Notes due 2014”, initially limited to $300,000,000
in aggregate principal amount.  The
Company will furnish to any Securityholder upon written request and without
charge a copy of the Base Indenture and the Fourth Supplemental Indenture.  Requests may be made to: Tyco Electronics
Group S.A., 17, boulevard Grande-Duchesse Charlotte, L-1331 Luxembourg,
Attention: The Managing Directors.

 

5.  Optional Redemption.  The Securities
will be subject to redemption at the option of the Company on any date prior to
the maturity date, in whole or from time to time in part, in $1,000 increments
(provided that any remaining principal amount thereof shall be at least
the minimum authorized denomination thereof), on written notice given to the
Securityholders thereof not less than 30 days nor more than 90 days prior to
the date fixed for redemption in such notice (the “Redemption Date”), at a
redemption price equal to the greater of (i) 100% of the principal amount
of such Securities to be redeemed and (ii) as determined by the Quotation Agent and delivered to the Trustee, the
sum of the present values of the remaining scheduled payments of principal and
interest thereon due on any date after the Redemption Date (based on the
Original Interest Rate and excluding the portion of  interest that will be accrued and unpaid to
and including the Redemption Date) discounted from their scheduled date of
payment to the Redemption Date (assuming a 360-day year consisting of twelve
30-day months) at the Adjusted Redemption Treasury Rate plus 45 basis points (such greater amount is
referred to herein as the “Redemption Price”), plus, in either the case of
clause (i) or clause (ii), accrued and unpaid interest and Special
Interest, if any, thereon to the Redemption Date.  This Security is also subject to redemption
to the extent provided in Article XIV of the Indenture.

 

If the giving of the notice of redemption is completed as provided in
the Indenture, interest on such Securities or portions of Securities shall
cease to accrue on and after the Redemption Date, unless the Company shall
default in the payment of such Redemption Price and accrued interest with
respect to any such Security or portion thereof.

 

A-5

 

The Company shall not be required to make mandatory redemption or
sinking fund payments with respect to the Securities.

 

6.  Change of Control Triggering Event.  Upon the occurrence of a Change of Control
Triggering Event, unless the Company has exercised its right to redeem this Security,
the holder of this Security will have the right to require that the Company
purchase all or a portion, in $1,000 increments (provided that
any remaining principal amount thereof shall be at least the minimum authorized
denomination thereof), of this Security at a purchase price equal to 101% of the principal
amount hereof plus accrued and unpaid interest, if any, to the date of
purchase.  Within 30 days following the
date upon which the Change of Control Triggering Event occurred, or at the
Company’s option, prior to any Change of Control, but after the public
announcement of the Change of Control, the Company shall send, by first class
mail, a notice to each Holder, with a copy to the Trustee, which notice shall
govern the terms of the Change of Control Offer.

 

7.  Denominations, Transfer, Exchange.  The
Securities are in registered form without coupons in the denominations of
$2,000 or any integral multiple of $1,000 in excess thereof.  The transfer of Securities may be registered
and Securities may be exchanged as provided in the Indenture.  The Securities may be presented for exchange
or for registration of transfer (duly endorsed or with the form of transfer
endorsed thereon duly executed if so required by the Company or the Security
Registrar) at the office of the Security Registrar or at the office of any
transfer agent designated by the Company for such purpose.  No service charge will be made for any
registration of transfer or exchange, but a Securityholder may be required to
pay any applicable taxes or other governmental charges.  If the Securities are to be redeemed, the
Company will not be required to:  (i) issue,
register the transfer of, or exchange any Security during a period beginning at
the opening of business 15 days before the day of mailing of a notice of
redemption of less than all of the Outstanding Securities of the same series
and ending at the close of business on the day of such mailing; (ii) register
the transfer of or exchange any Security of any series or portions thereof selected
for redemption, in whole or in part, except the unredeemed portion of any such
Security being redeemed in part; nor (iii) register the transfer of or
exchange a Security of any series between the applicable record date and the
next succeeding Interest Payment Date.

 

8.  Persons Deemed Owners.  The registered
Securityholder may be treated as its owner for all purposes.

 

9.  Repayment to Parent or the
Company.  Any funds or Governmental
Obligations deposited with any paying agent or the Trustee, or then held by
Parent or the Company, in trust for payment of principal of, premium, if any,
or interest on the Securities of a particular series that are not applied but
remain unclaimed by the holders of such Securities for at least one year after
the date upon which the principal of, premium, if any, or interest on such
Securities shall have respectively become due and payable, shall be repaid to
Parent or the Company, as applicable, or (if then held by Parent or the
Company) shall be discharged from such trust. 
After return to the Company or Parent, Holders entitled to the money or
securities must look to the Company or Parent, as applicable, for payment as
unsecured general creditors.

 

10.  Amendments, Supplements and Waivers.  The
Base Indenture contains provisions permitting the Company, Parent and the
Trustee, with the consent of the holders of not less than 

 

A-6

 

a majority in aggregate principal amount of
the Outstanding Securities to enter into supplemental indentures for the
purpose of adding, changing or eliminating any provisions to the Base Indenture
or supplemental indenture or indentures or of modifying in any manner not
covered elsewhere in the Base Indenture the rights of the holders of the Securities
of such series; provided, however, that no such supplemental
indenture, without the consent of the holders of each Security then Outstanding
and affected thereby, shall:  (i) extend
a fixed maturity of or any installment of principal of any Securities of any
series or reduce the principal amount thereof, or reduce the amount of
principal of any original issue discount security that would be due and payable
upon declaration of acceleration of the maturity thereof; (ii) reduce the
rate of or extend the time for payment of interest of any Security of any
series; (iii) reduce the premium payable upon the redemption of any
Security; (iv) make any Security payable in Currency other than that
stated in the Security; (v) impair the right to institute suit for the
enforcement of any payment on or after the fixed maturity thereof (or in the
case or redemption, on or after the redemption date); or (vi) reduce the
percentage of Securities, the holders of which are required to consent to any
such supplemental indenture or indentures. 
The Base Indenture also contains provisions permitting the holders of
not less than a majority in aggregate principal amount of the Outstanding
Securities of each series affected thereby, on behalf of all of the holders of
the securities of such series, to waive any past Default under the Base
Indenture, and its consequences, except a Default in the payment of the
principal of, premium, if any, or interest on any security of such series or a
Default in respect of a covenant or provision of the Base Indenture that cannot
be modified or amended without the consent of the holder of each Outstanding
Security of such affected series.  Any
such consent or waiver by the registered Securityholder shall be conclusive and
binding upon such holder and upon all future holders and owners of this
Security and of any Security issued in exchange for this Security or in place
hereof (whether by registration of transfer or otherwise), irrespective of
whether or not any notation of such consent or waiver is made upon this
Security.

 

11.  Defaults and Remedies.  If an Event of
Default with respect to the securities of a series issued pursuant to the Base
Indenture occurs and is continuing, the Trustee or the holders of at least 25%
in aggregate principal amount of the Securities of such series then
Outstanding, by notice in writing to the Company and Parent (and to the Trustee
if notice is given by such holders), may declare the unpaid principal of,
premium, if any, and accrued interest, if any, due and payable immediately.  Subject to the terms of the Indenture, if an
Event of Default under the Indenture shall occur and be continuing, the Trustee
will be under no obligation to exercise any of its rights or powers under the Indenture
at the request or direction of any of the holders, unless such holders have
offered the Trustee indemnity satisfactory to it.  Upon satisfaction of certain conditions set
forth in the Indenture, the holders of a majority in principal amount of the
Outstanding Securities of a series issued pursuant to the Base Indenture will
have the right to direct the time, method and place of conducting any
proceeding for any remedy available to the Trustee, or exercising any trust or
power conferred on the Trustee, with respect to the securities of such series.

 

12.  Trustee, Paying Agent and Security Registrar May Hold
Securities.  The Trustee, subject to
certain limitations imposed by the TIA, or any paying agent or Security
Registrar, in its individual or any other capacity, may become the owner or
pledgee of Securities with the same rights it would have if it were not
Trustee, paying agent or Security Registrar.

 

A-7

 

13.  No Recourse Against Others.  No
recourse under or upon any obligation, covenant or agreement of the Indenture,
or of any Security, or for any claim based thereon or otherwise in respect
hereof or thereof, shall be had against any incorporator, stockholder, officer
or director, past, present or future as such, of Parent or the Company or of
any predecessor or successor corporation, either directly or through Parent or
the Company or any such predecessor or successor corporation, whether by virtue
of any constitution, statute or rule of law, or by the enforcement of any
assessment or penalty or otherwise; it being expressly understood that the
Indenture and the obligations issued hereunder and thereunder are solely
corporate obligations, and that no such personal liability whatever shall
attach to, or is or shall be incurred by, the incorporators, shareholders,
officers or directors as such, of Parent or the Company or of any predecessor
or successor corporation, or any of them, because of the creation of the
indebtedness authorized by the Indenture, or under or by reason of the obligations,
covenants or agreements contained in the Indenture or in the Securities or
implied therefrom; and that any and all such personal liability of every name
and nature, either at common law or in equity or by constitution or statute,
of, and any and all such rights and claims against, every such incorporator,
shareholder, officer or director as such, because of the creation of the
indebtedness authorized by the Indenture, or under or by reason of the
obligations, covenants or agreements contained in the Indenture or in the
Securities or implied therefrom, are hereby expressly waived and released as a
condition of, and as a consideration for, the acceptance of the Securities.

 

14.  Discharge of Indenture.  The Indenture
contains certain provisions pertaining to defeasance, which provisions shall
for all purposes have the same effect as if set forth herein.

 

15.  Authentication.  This Security shall
not be valid until the Trustee signs the certificate of authentication attached
to the other side of this Security.

 

16.  Guarantees. 
All payments by the Company under the Indenture and this Security are
fully and unconditionally guaranteed to the holder of this Security by Parent,
as provided in the related Guarantee and the Indenture.

 

17.  Additional Amounts.  The Company and Parent are obligated to pay
Additional Amounts on this Security to the extent provided in Article XIV
of the Indenture.

 

18.  Abbreviations.  Customary abbreviations
may be used in the name of a Securityholder or an assignee, such as: TEN COM (=
tenants in common), TEN ENT (= tenants by the entireties), JT TEN (= joint
tenants with right of survivorship and not as tenants in common), CUST (=
Custodian), and U/G/M/A (= Uniform Gifts to Minors Act).

 

19.  Governing Law.  The Base Indenture, the
Fourth Supplemental Indenture and this Security (and the Guarantee hereon)
shall be deemed to be a contract made under the internal laws of the State of
New York, and for all purposes shall be construed in accordance with the laws
of said State.

 

A-8

 

ASSIGNMENT FORM

 

To assign this Security, fill in the form below: (I) or (we)
assign and transfer this Security to

 

 

(Insert assignee’s soc. sec. or tax I.D. no.)

 

 

 

 

(Print or type assignee’s name, address and zip code)

and irrevocably appoint

agent to transfer this Security on the books of
the Company.  The agent may substitute
another to act for him.

 

 

	
  Date:

  	
   

  	
   

  	
   

  
	
   

  
	
   

  
	
   

  	
  Your Signature:

  	
   

  
	
   

  	
  (Sign exactly as your name appears on the face of this

  Security)

  
	
   

  	
   

  
	
   

  	
   

  
	
  Signature Guarantee:

  	
   

  	
   

  
								

 

A-9

 

OPTION OF HOLDER TO ELECT PURCHASE

 

If you want to elect to have this Security purchased by the Company
pursuant to Section 1.3(3) of the Fourth Supplemental Indenture,
check the box:

 

o  1.3(3) Change of Control Triggering
Event

 

If you want to elect to have only part of this Security purchased by
the Company pursuant to Section 1.3(3) of the Fourth Supplemental
Indenture, state the amount: 
$                    .

 

	
  Date:

  	
   

  	
   

  	
  Your Signature:

  
	
   

  	
  (Sign exactly as your name appears

  
	
   

  	
  on the other side of the Security)

  

 

 

Tax I.D. number

 

 

	
  Signature Guarantee:

  	
   

  	
   

  
	
   

  	
    (Signature must be guaranteed by a

  
	
   

  	
    participant in a recognized signature

  
	
   

  	
    guarantee medallion program)Exhibit 10.62

 

SECOND AMENDED AND RESTATED

CREDIT AGREEMENT

 

Dated as of July 8, 2008

 

among

 

ML MACADAMIA ORCHARDS, L.P.

ML RESOURCES, INC.

 

as Borrower

 

and

 

AMERICAN AGCREDIT, PCA

 

as Lender

 

Loan No. 5327946

 

 

INDEX OF EXHIBITS

 

	
  Exhibit A

  	
   

  	
  - Form of Notice of Revolving Advance

  
	
   

  	
   

  	
   

  
	
  Exhibit B 

  	
   

  	
  - Form of Certification Regarding Compliance with Financial
  Covenants 

  
	
   

  	
   

  	
   

  
	
  Exhibit C

  	
   

  	
  - List of Real Property Collateral

  

 

i

 

THIS SECOND AMENDED AND RESTATED CREDIT AGREEMENT (“Agreement”), dated
as of July 8, 2008, is by and among ML MACADAMIA ORCHARDS, L.P., a
Delaware limited partnership, and ML RESOURCES, INC., a Hawaii corporation
(collectively, “Borrower”), and AMERICAN AGCREDIT, PCA as successor in interest
to PACIFIC COAST FARM CREDIT SERVICES, PCA, (“Lender”) with respect to the
following facts:

 

RECITALS

 

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

 

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

 

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

 

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

 

1

 

ARTICLE 
I.

 

GENERAL TERMS

 

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

 

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

 

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

 

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

 

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

 

“Base Rate” shall mean a floating rate of interest equal to the Prime
Rate plus a margin of three quarters of one percent (75 basis points).

 

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

 

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

 

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

 

“Charges” shall mean all federal, state, county, city, municipal,
local, foreign, or other governmental taxes (including, without limitation,
taxes owed to the Pension Benefit 

 

2

 

Guaranty Corporation or any successor) at the time due and payable,
levies, assessments, charges, liens, claims or encumbrances upon or relating to
(i) the Collateral, (ii) the Obligations, (iii) the employees,
payroll, income, or gross receipts of Borrower, (iv) Borrower’s ownership
or use of any of its assets, or (v) any other aspect of Borrower’s
business.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

“Environmental Laws” shall mean all federal, state and local laws,
statutes, ordinances and regulations, now or hereafter in effect, and in each
case as amended or supplemented from time to time, and any judicial or
administrative interpretation thereof, including, without limitation, any
applicable judicial or administrative order, consent decree or judgment,
relative to the applicable real estate, relating to the regulation and protection
of human health, safety, the environment and natural resources (including
ambient air, surface water, groundwater, wetlands, land surface or subsurface
strata, wildlife, aquatic species and vegetation).  Environmental Laws include the Comprehensive
Environmental Response, 

 

3

 

Compensation, and Liability Act of 1980, as amended (42 U.S.C. §§ 9601 et
  seq.) (“CERCLA”); the Hazardous Material
Transportation Act, as amended (49 U.S.C. §§ 1801 et   seq.);
the Federal Insecticide, Fungicide, and Rodenticide Act, as amended (7 U.S.C.
§§ 136 et   seq.); the Resource Conservation and
Recovery Act, as amended (42 U.S.C. §§ 6901 et  seq.) (“RCRA”); the Toxic Substance
Control Act, as amended (15 U.S.C. §§ 2601 et  seq.); the Clean Air Act, as amended (42
U.S.C. §§ 7401 et   seq.); the Federal Water Pollution Control
Act, as amended (33 U.S.C. §§ 1251 et   seq.);
the Occupational Safety and Health Act, as amended (29 U.S.C. §§ 651 et   seq.);
and the Safe Drinking Water Act, as amended (42 U.S.C. §§ 300(f) et  seq.), and any and all regulations
promulgated thereunder, and all analogous state and local counterparts or
equivalents and any transfer of ownership notification or approval statutes.

 

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

 

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

 

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

 

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

 

“Fees” shall mean any fees referred to in Section 2.8, including
the Loan Fee, and Application Fee, any prepayment surcharge, and any other fees
due to Lender pursuant to the Loan Documents.

 

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

 

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

 

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

 

4

 

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

 

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

 

“Hazardous Material” shall mean any substance, material or waste, the
generation, handling, storage, treatment or disposal of which is regulated by
any local or state government authority in any jurisdiction in which Borrower
has owned, leased or operated real property or disposed of hazardous materials,
or by the United States Government, including any material or substance which
is (i) defined as a “hazardous waste,” “hazardous material,” “hazardous
substance,” “extremely hazardous waste” or “restricted hazardous waste” or
other similar term of phrase under any such law, (ii) petroleum, (iii) designated
as a “hazardous substance” pursuant to Section 311 of the Clean Water Act,
33 U.S.C. § 1251 et  seq. (33
U.S.C. § 1321) or listed pursuant to Section 307 of the Clean Water Act
(33 U.S.C. § 1317), (iv) defined as a “hazardous waste” pursuant to Section 1004
of the Resource Conservation and Recovery Act, 42 U.S.C. § 6901, et   seq.
(42 U.S.C. § 6903), or (v) defined as a “hazardous substance” pursuant to Section 101
of the Comprehensive Environmental Response, Compensation, and Liability Act,
42 U.S.C. § 9601, et   seq. (42 U.S.C. § 9601).

 

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

 

“Interest Determination Date” shall mean the date, as designated by
Borrower pursuant to Section 2.4, Section 2.5 or Section 2.6, on
which a portion of the Revolving Advances or a portion of the Term Loan shall
begin to bear interest at a Fixed Rate.

 

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

 

5

 

either one (1) month, two (2) month, three (3) months,
six (6) months, or twelve (12) months thereafter.

 

“Lender” shall mean American AgCredit, PCA.

 

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

 

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

 

“Loan Documents” shall mean this Agreement, the Revolving Loan
Promissory Note of even date herewith, the Term Note dated May 1, 2000,
the Security Documents, and all other agreements, instruments, documents, and
certificates identified in any Schedule of Documents listing documents to be
delivered by Borrower to Lender and including all other pledges, powers of
attorney, consents, mortgages, assignments, contracts and agreements whether
heretofore, now, or hereafter executed by or on behalf of Borrower or any of
its Affiliates, or any employee of Borrower or any of its Affiliates, and
delivered to Lender in connection with this Agreement, or any previous versions
of this Agreement or the transactions contemplated thereby or hereby.

 

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

 

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

 

6

 

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

 

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

 

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

 

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

 

7

 

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

 

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

 

“Obligations” shall mean all loans, advances, debts, liabilities, and
obligations for the performance of covenants, tasks or duties or for payment of
monetary amounts (whether or not such performance is then required or contingent,
or amounts are liquidated or determinable and whether or not allowed as a claim
in any proceeding referred to in Section 10.1(i) or 10.1(j)) owing by
Borrower to Lender, and all covenants and duties regarding such amounts, of any
kind or nature, present or future, whether or not evidenced by any note,
agreement or other instrument, arising under any of the Loan Documents.  This term includes the Revolving Loan, the
Term Loan, all principal, interest, Fees, charges, expenses, attorneys’ fees
and any other sum chargeable to Borrower under this Agreement or any of the
Loan Documents.

 

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

 

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

 

8

 

Disclosure Schedule, but only securing the debt and covering the
property referred to therein, (xii) Liens to secure Indebtedness arising
from development of investment properties, provided that the Liens do not
encumber any asset other than the asset benefiting from the improvement, and
(xiii) security interests securing purchase money indebtedness and liens
covering property other than Collateral, in each case to the extent permitted
by Section 8.4.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

9

 

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

 

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

 

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

 

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

 

ARTICLE 
II.

 

AMOUNT AND TERMS OF CREDIT

 

2.1           Revolving
Advances.

 

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

 

10

 

and shall be in integral multiples of One Thousand Dollars
($1,000).    The Revolving Loan shall be
evidenced by the Revolving Loan Promissory Note to be executed and delivered by
Borrower to Lender on the Closing Date.

 

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

 

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

 

2.2           Term Loan.

 

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

 

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

 

11

 

2.3           Prepayments.

 

(a)           Prepayment in Full. 
Borrower shall have the right at any time to voluntarily prepay the
entire amount of the outstanding Revolving Loan and the entire amount of the
outstanding Term Loan and to terminate this Agreement upon at least three (3) Business
Days notice to Lender, without premium or penalty except Borrower shall pay to
Lender a prepayment surcharge calculated in accordance with Section 2.3(c).  Prepayment in full shall be accompanied by
the payment of all accrued and unpaid interest and all Fees and other remaining
Obligations.

 

(b)           Partial
Prepayment.  Borrower shall have the
right at any time to voluntarily prepay any portion of the Term Loan, or any
portion of the Revolving Loan subject to a Fixed Rate, upon at least three (3) Business
Days notice to Lender, without premium or penalty except Borrower shall pay to
Lender, a prepayment surcharge calculated in accordance with Section 2.3(c).  Unless otherwise approved by Lender, any
prepayment of the Term Loan shall be applied pro rata, based on the respective
aggregate principal amounts then outstanding, to Term Loan Tranche A and Term
Loan Tranche B, and shall not reduce the amount of any installment payments to
Lender.

 

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

 

For each portion of the Revolving Loan or the Term Loan bearing
interest at a Fixed Rate, the prepayment surcharge shall be equal to any
funding losses incurred by Lender as a result of such prepayment, including any
loss or unreimbursed expense arising from the redeployment of funds, calculated
according to any reasonable methodology established by Lender; and

 

2.4           Interest Rate on
Revolving Advances.

 

(a)           Base Rate.  Revolving Advances hereunder shall bear
interest at the Base Rate, unless Borrower elects to convert the interest rate
to a Fixed Rate for the period selected by Borrower in accordance with the
provisions of Section 2.4(b).

 

(b)           Fixed Rate for
Revolving Loan.  Borrower may, from
time to time, elect to convert all or a portion of the outstanding Revolving
Advances to a Fixed Rate; provided, that (i) at least two (2) Business
Days prior to the proposed Interest Determination Date, Borrower has provided
Lender with written notice of such election, the requested Interest
Determination Date, the amount of the Revolving Advances to be converted, and
the requested Interest Period for the amount to be converted, (ii) at the
time of delivery of such written notice and upon the 

 

12

 

date of conversion, no Default or Event of Default exists under this
Agreement, (iii) at no time shall there be more than five (5) outstanding
tranches of the Revolving Loan bearing interest at a Fixed Rate, (iv) the
last day of the Interest Period chosen by Borrower shall not extend beyond the
Revolving Loan Maturity Date, and (v) the amount converted to a Fixed Rate
at any one time shall be not less than Fifty Thousand Dollars ($50,000) and any
amounts in excess thereof shall be in integral multiples of Fifty Thousand
Dollars ($50,000).  Any election by
Borrower pursuant to this Section 2.4(b) shall be irrevocable during
the Interest Period selected by Borrower, and that portion of the Revolving
Loan so converted shall bear interest at the applicable Fixed Rate until the
expiration of the applicable Interest Period at which time, unless another
Fixed Rate has been duly elected by Borrower pursuant to this Section 2.4(b),
the interest rate for such portion of the Revolving Loan will automatically
convert to the Base Rate.

 

13

 

2.5           Interest Rate on
Term Loan Tranche A.

 

(a)           Base Rate.  Term Loan Tranche A is currently bearing
interest at a fixed rate equal to 5.1435% per annum with an Interest Period
expiring on May 1, 2009.  Upon
expiration of the current interest period Term Loan Tranche A shall bear
interest at the Base Rate, unless Borrower elects to convert the interest rate
to a Fixed Rate for the period selected by Borrower in accordance with the
provisions of Section 2.5(b).

 

(b)           Designation of
Fixed Rates.  Upon expiration of the
current Fixed Rate the Borrower may, from time to time, elect to convert all or
a portion of Term Loan Tranche A to a Fixed Rate; provided, that (i) at
least two (2) Business Days prior to the proposed Interest Determination
Date, Borrower has provided Lender with written notice of such election, the
requested Interest Determination Date, the amount of Term Loan Tranche A to be
converted, and the requested Interest Period for the amount to be converted, (ii) at
the time of delivery of such written notice and upon the date of conversion, no
Default or Event of Default exists under this Agreement, (iii) at no time
shall there be more than four (4) outstanding tranches of Term Loan
Tranche A bearing interest at a Fixed Rate, (iv) the last day of the
Interest Period chosen by Borrower shall not extend beyond the Term Loan
Maturity Date, and (v) the amount converted to a Fixed Rate at any one
time shall be not less than Fifty Thousand Dollars ($50,000) and any amounts in
excess thereof shall be in integral multiples of Ten Thousand Dollars
($10,000).  Any election by Borrower
pursuant to this Section 2.5(b) shall be irrevocable during the
Interest Period selected by Borrower, and that portion of Term Loan Tranche A
so converted shall bear interest at the applicable Fixed Rate until the
expiration of the applicable Interest Period at which time, unless another
Fixed Rate has been duly elected by Borrower pursuant to this Section 2.5(b),
the interest rate for such portion of Term Loan Tranche A will automatically
convert to the Base Rate.

 

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

 

2.6           Interest Rate on
Term Loan Tranche B.

 

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

 

2.7           Other Interest
Provisions.

 

(a)           Interest Payment
Dates.  Interest shall be due and
payable on the first day of each calendar quarter with respect to all interest
accrued on the Revolving Loan and the Term Loan during the preceding calendar
quarter; provided, that if any Interest Period shall mature prior to the
first day of a calendar quarter, then interest accrued at a Fixed Rate during
the 

 

14

 

particular Interest Period shall be due and payable upon expiration of
the Interest Period.  Interest accrued on
the Revolving Loan but not otherwise due and payable on the Revolving Loan
Maturity Date shall become due and payable on the Revolving Loan Maturity
Date.  Interest accrued on the Term Loan
but not otherwise due and payable on the Term Loan Maturity Date shall become
due and payable on the Term Loan Maturity Date.

 

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

 

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

 

(d)           Default Rate.  Any overdue principal or interest with
respect to any Revolving Advance, or the Term Loan, and the amount of any fees,
costs, or expenses that Borrower is obligated to pay to Lender under this
Agreement or any Loan Document not paid when due, shall bear interest, payable
on demand, for each day until paid at a rate per annum equal to the Default
Rate.  In addition, upon and after the
occurrence of an Event of Default and continuing until such Event of Default
has been cured or waived in writing by Lender in accordance with the terms of
this Agreement, interest shall accrue on the Obligations at the Default
Rate.  The interest rate increase to the
Default Rate shall take effect immediately upon the occurrence of an Event of
Default, without prior notice to Borrower.

 

(e)           Interest Not to
Exceed Maximum Lawful Rate. 
Notwithstanding anything to the contrary set forth in this Agreement, if
at any time until payment in full of all of the Obligations, the rate of
interest payable hereunder exceeds the highest rate of interest permissible 

 

15

 

under any law which a court of competent jurisdiction shall, in a final
determination, deem applicable hereto (the “Maximum Lawful Rate”), then in such
event and so long as the Maximum Lawful Rate would be so exceeded, the rate of
interest payable hereunder shall be equal to the Maximum Lawful Rate; provided,
that if at any time thereafter the rate of interest payable hereunder is less
than the Maximum Lawful Rate, Borrower shall continue to pay interest hereunder
at the Maximum Lawful Rate until such time as the total interest received by
Lender hereunder, is equal to the total interest which Lender would have
received had the interest rate payable hereunder been (but for the operation of
this Section 2.7(e)) the interest rate payable since the Closing
Date.  Thereafter, the interest rate
payable hereunder shall be the rate of interest set forth herein, unless and
until the rate of interest again exceeds the Maximum Lawful Rate, in which
event this paragraph shall again apply.  In
no event shall the total interest received by Lender pursuant to the terms
hereof exceed the amount which Lender could lawfully have received had the
interest due hereunder been calculated for the full term hereof at the Maximum
Lawful Rate.  In the event the Maximum
Lawful Rate is calculated pursuant to this Section 2.7(e), such interest shall be calculated at a daily
rate equal to the Maximum Lawful Rate divided by the number of days in the year
in which such calculation is made.  In
the event that a court of competent jurisdiction, notwithstanding the
provisions of this Section 2.7(e), shall make a final determination that
Lender has received interest hereunder or under any of the Loan Documents in
excess of the Maximum Lawful Rate, Lender shall to the extent permitted by
applicable law, promptly apply such excess first to any interest due and not
yet paid under the Revolving Loan and the Term Loan, then to the outstanding
principal of the Revolving Loan, and the Term Loan (without premium or
penalty), and then to Fees and any other unpaid Obligations and thereafter
shall refund any excess to Borrower or as a court of competent jurisdiction may
otherwise order.

 

(f)            Additional Fixed
Rate Provisions.  If at any time
Lender reasonably determines that for any reason adequate and reasonable means do
not exist for ascertaining the LIBO Rate or the LIBO Rate generally becomes
unavailable to Lender, Lender shall promptly give notice thereof to Borrower,
and upon the giving of such notice, no new Fixed Rate may be selected by
Borrower, until Lender is reasonably able to ascertain the LIBO Rate and Lender
shall promptly notify Borrower at such time; provided, that Lender’s
determination under this Section 2.7(f) as
to Borrower shall be in accordance with its treatment of other borrowers under
commercial loans generally.  In the event
that any law, treaty, rule, regulation, or determination of a court or
governmental authority or any change therein or in the interpretation or
application thereof or compliance by Lender with any request or directive
(whether or not having the force of law) from any central bank or governmental
authority:

 

(i)            shall subject
Lender to any tax of any kind whatsoever with respect to any LIBO Rate, or
change the basis of taxation of payments to Lender of principal, interest or any
other amount payable under any Loan Document (except for changes in the rate of
tax on the overall net income of a Lender); or

 

16

 

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

 

(iii)          shall impose on
Lender any other condition; and the result of any of the foregoing is to
increase the cost to Lender of making, renewing, or maintaining any portion of
the Revolving Loan or Term Loan with interest rates tied to the LIBO Rate
and/or to reduce any amount receivable by Lender in connection therewith; then
in any such case, Borrower shall pay to Lender, immediately upon demand, such
amount or amounts as may be necessary to compensate Lender for any additional
costs incurred by Lender and/or reductions in amounts received by Lender which
are attributable to LIBO Rates made available to Borrower hereunder.  In determining which costs incurred by a
Lender and/or reductions in amounts received by a Lender are attributable to
such LIBO Rates, any reasonable allocation made by Lender among its operations
shall be conclusive and binding upon Borrower; provided, that Lender’s
determination under this Section 2.7(f) as
to Borrower is in accordance with its treatment of other borrowers under
commercial loans generally.

 

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

 

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

 

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

 

2.11         Receipt of
Payments.  Borrower shall make each
payment under this Agreement not later than 12:00 P.M. (California time) on the day when due in lawful
money of the United States of America by wire transfer of immediately available
funds to the Collection Account. 
Borrower shall have advised Lender in writing of each payment being made
by Borrower no later than 2:00 p.m. (California time) on the Business Day
prior to the date of making of such payment. 
For purposes of computing interest and fees and determining the amount
of funds available for borrowing by Borrower pursuant to Article II, payments of
immediately available funds by wire transfer deposited in the Collection
Account not later than 10:30 a.m. (California time) (and for which Lender
has received notice prior to the making of such payment) shall be 

 

17

 

deemed received by Lender upon that Business Day.  If payment shall be deposited later than
10:30 a.m. (California time) on any particular Business Day (or if Lender
was not given prior notice of the payment by 2:00 p.m. (California time)
on the Business Day preceding the date of payment), such payment shall be
deemed received on the following Business Day. 
If Lender, in its sole discretion, determines to accept from Borrower
payment by checks, drafts, or similar non-cash items, payment shall be deemed
received by Lender two (2) Business Days after notice to Lender and
deposit of such payment in the Collection Account.

 

18

 

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

 

2.13         Taxes.

 

(a)           Any and all payments by
Borrower hereunder or under the Loan Documents shall be made, in accordance
with this Section 2.13, free and clear of and without deduction for any
and all present or future taxes, levies, imposts, deductions, Charges, or
withholdings, and all liabilities with respect thereto, excluding taxes imposed
on or measured by the net income of Lender by the jurisdiction under the laws
of which Lender is organized or any political subdivision thereof (all such
non-excluded taxes, levies, imposts, deductions, Charges, withholdings and
liabilities being hereinafter referred to as “Taxes”).  If Borrower shall be required by law to
deduct any Taxes from or in respect of any sum payable hereunder or under any
Revolving Note or Term Note to Lender, (i) the sum payable shall be
increased as may be necessary so that after making all required deductions
(including deductions applicable to additional sums payable under this Section 2.13)
Lender receives an amount equal to the sum it would have received had no such
deductions been made, (ii) Borrower shall make such deductions, and (iii) Borrower
shall pay the full amount deducted to the relevant taxing or other authority in
accordance with applicable law.

 

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

 

(c)           Borrower shall indemnify
Lender for the full amount of Taxes or Other Taxes (including any Taxes or
Other Taxes imposed by any jurisdiction on amounts payable under this Section 2.13)
paid by Lender and any liability (including penalties, interest and

 

19

 

expenses)
arising there from or with respect thereto, whether or not such Taxes or Other
Taxes were correctly or legally asserted. 
This indemnification shall be made within thirty (30) days from the date
Lender makes written demand therefor.

 

(d)           Within thirty (30) days
after the date of any payment of Taxes, Borrower shall furnish to Lender the
original or a certified copy of a receipt evidencing payment thereof.

 

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

 

2.14         Capital Adequacy.

 

(a)           Borrower shall pay to Lender
from time to time on written request such amounts as Lender may reasonably
determine to be necessary to compensate Lender for any increased costs to
Lender that it reasonably determines are attributable to any law or regulation,
or any interpretation, directive, or request (whether or not having the force
of law and whether or not failure to comply therewith would be unlawful) of any
court or governmental or monetary authority (i) following any Regulatory
Change or (ii) implementing after the Closing Date any risk-based capital
guideline or other capital requirement (whether or not having the force of law
and whether or not the failure to comply therewith would be unlawful)
heretofore or hereafter issued by any Governmental Authority in respect of
Lender’s Percentage of the Revolving Loan or Term Loan (such compensation to
include an amount equal to any reduction of the rate of return on assets or
equity of Lender to a level below that which Lender could have achieved but for
such law, regulation, interpretation, directive or request); provided
that with respect to this Section 2.14, 
Lender shall treat Borrower as Lender generally treats its other
similarly situated borrowers.

 

(b)           Lender will furnish to
Borrower a certificate setting forth the basis and amount of each request by
Lender for compensation under this Section 2.14.  Determinations and allocations by Lender for
purposes of this Section 2.14 of the effect of any Regulatory Change
pursuant to or of capital maintained pursuant to this Section 2.14, on its
costs or rate of return of maintaining Revolving Advances or the Term Loan and
or its commitment to make Revolving Advances or the Term Loan, and of the
amounts required to compensate Lender under this Section 2.14, shall be
conclusive absent manifest error or bad faith.

 

(c)           As used in this Section 2.14,
“Regulatory Change” shall mean any change after the Closing Date in federal,
state, or foreign law or regulations (including Regulation D) or the adoption or
making after such date of any interpretation, directive or request applying to
a class of lenders including Lender of or under any Federal, state, or foreign
law or regulations (whether or not having the force of law and whether or not
failure to comply therewith would be

 

20

 

unlawful)
by any court or governmental or monetary authority charged with the
interpretation or administration thereof.

 

21

 

ARTICLE  III.

 

COLLATERAL

 

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

 

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

 

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

 

ARTICLE  IV.

 

CONDITIONS PRECEDENT

 

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

 

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

 

22

 

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

 

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

 

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

 

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

 

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

 

(a)           All of Borrower’s representations
and warranties contained herein or in any of the Loan Documents shall be true
and correct in all material respects on and as of the Closing Date and the date
of each such Revolving Advance is incurred as though made on and as of such
date, except to the extent that any such representation or warranty expressly
relates to an earlier date and for changes therein permitted or contemplated by
this Agreement.

 

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

 

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

 

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

 

23

 

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

 

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

 

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

 

ARTICLE  V.

 

REPRESENTATIONS AND WARRANTIES

 

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

 

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

 

24

 

its
agreement of limited partnership, as applicable; and (v) is in compliance
with all applicable provisions of law where the failure to comply would have a
Material Adverse Effect.

 

5.2           Corporate Power;
Authorization; Enforceable Obligations.  The execution, delivery, and performance by
Borrower of the Loan Documents to which it is a party, and all instruments and
documents required to be delivered by Borrower under any of the Loan Documents,
and the creation of all Liens provided for in any Loan Documents: (i) are
within Borrower’s corporate or partnership power; (ii) have been duly
authorized by all necessary or proper corporate or partnership action; (iii) are
not in contravention of any provision of Borrower’s certificate of
incorporation or by-laws or agreement of limited partnership, as applicable; (iv) will
not violate any law or regulation, or any order or decree of any court or
governmental instrumentality; (v) will not conflict with or result in the
breach or termination of, constitute a default under or accelerate any
performance required by, any material indenture, mortgage, deed of trust,
lease, agreement or other instrument to which Borrower is a party or by which
Borrower or any of its property is bound; (vi) will not result in the
creation or imposition of any Lien upon any of the property of Borrower other
than those in favor of Lender, all pursuant to the Loan Documents; and (vii) do
not require the consent or approval of any Governmental Authority or any other
Person, except for consents or approvals which have been duly obtained or
specifically waived in writing by Lender. 
At or prior to the Closing Date, each of the Loan Documents required
hereunder to be delivered at or prior to the Closing Date shall have been duly
executed and delivered on behalf of Borrower and each shall then constitute a
legal, valid, and binding obligation of Borrower, to the extent it is a party
thereto, enforceable against it in accordance with its terms except for general
principles of equity and the effect of bankruptcy, insolvency, and other laws
affecting the rights of creditors generally.

 

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

 

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

 

25

 

issued
and in full force and effect would not have a Material Adverse Effect.  Borrower has not received any notice, and to
Borrower’s knowledge does not have, any pending, threatened, or contemplated
condemnation proceeding affecting any real property owned or leased by Borrower
or any part thereof, or of any sale or other disposition of any real property
owned or leased by Borrower or any part thereof in lieu of condemnation.

 

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

 

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

 

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

 

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

 

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

 

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

 

26

 

Agreement
to be considered a “purpose credit” within the meaning of Regulation T, U, or X
of the Federal Reserve Board.

 

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

 

5.12         ERISA.  Each “Plan” (as defined below) is in
compliance in all material respects with the applicable provisions of ERISA and
the Internal Revenue Code (“IRC”) and with respect to each Plan, other than a
Qualified Plan, all required contributions and benefits have been paid in
accordance with the provisions of each such Plan to the extent that the failure
to pay any such contribution or benefit would have a Material Adverse Effect.  There are no pending or, to Borrower’s
knowledge, threatened claims, actions or lawsuits (other than claims for
benefits in the normal course), asserted or instituted against Borrower or any
Plan or its assets.  Neither Borrower nor
any ERISA Affiliate of either has incurred or reasonably expects to incur any
Withdrawal Liability under Section 4201 of ERISA as a result of a complete
or partial withdrawal from a Multiemployer Plan.  Borrower has not engaged in a prohibited
transaction, as defined in Section 4975 of the IRC or Section 406 of
ERISA, in connection with any Plan, which would subject Borrower (after giving
effect to any exemption) to a material tax on prohibited transactions imposed
by Section 4975 of the IRC or any other material liability.  As used above, the term “Plan” means, with
respect to Borrower or any ERISA Affiliate of either, at any time, an employee
benefit plan, as defined in Section 3(3) of ERISA, which Borrower
maintains, contributes to or has an obligation to contribute to on behalf of
participants who are or were employed by any of them.  The terms “Qualified Plan” and “Multiemployer
Plan” shall have the meaning given them in ERISA.

 

5.13         No Litigation.  Except as set forth in Part (D) of
the Disclosure Schedule, no action, claim or proceeding is now pending or, to
Borrower’s knowledge, threatened against Borrower, at law, in equity or
otherwise, before any court, board, commission, agency, or instrumentality of
any federal, state, or local government or of any agency or subdivision thereof,
or before any arbitrator or panel of arbitrators, which, if determined
adversely, could have a Material Adverse Effect, nor to Borrower’s knowledge
does a state of facts exist which is

 

27

 

reasonably
likely to give rise to such proceedings. 
None of the matters set forth in Part (D) of the Disclosure
Schedule questions the validity of any of the Loan Documents or any action
taken or to be taken pursuant thereto, or would have either individually or in
the aggregate a Material Adverse Effect.

 

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

 

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

 

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

 

5.17         Environmental Matters.  Borrower is and has been in compliance with
all Environmental Laws, except for such noncompliance which would not result in
Environmental Liabilities which could reasonably be expected to exceed
$100,000. Borrower has obtained, and is in compliance with, all environmental
permits required by Environmental Laws for the operations of its business,
except where the failure to so obtain or comply with such environmental permits
would not result in Environmental Liabilities that could reasonably be expected
to exceed $100,000, and all such Environmental Permits are valid, uncontested
and in good standing.  Borrower is not
involved in operations and does not know of any facts, circumstances or
conditions, including any releases of Hazardous Materials, that are likely to
result in any Environmental Liabilities of Borrower that could reasonably be
expected to exceed $100,000.  There is no
litigation arising under or related to any Environmental Laws, environmental
permits or Hazardous Material that seeks damages, penalties, fines, costs or
expenses in excess of $50,000 or injunctive relief against, or that alleges
criminal misconduct by,

 

28

 

Borrower.  No notice has been received by Borrower
identifying it as a “potentially responsible party” or requesting information
under CERCLA or analogous state statutes, and to the knowledge of Borrower,
there are no facts, circumstances or conditions that may result in Borrower
being identified as a “potentially responsible party” under CERCLA or analogous
state statutes.

 

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

 

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

 

29

 

ARTICLE 
VI.

 

FINANCIAL STATEMENTS AND INFORMATION

 

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

 

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

 

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

 

30

 

such time, and  (iv) a
certificate in the form attached hereto as Exhibit B, containing the
certification of Borrower’s chief financial officer that Borrower has complied
with all of the covenants set forth in Section 8.12 as of the end of such
Fiscal Year;

 

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

 

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

 

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

 

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

 

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

 

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

 

ARTICLE 
VII.

 

AFFIRMATIVE COVENANTS

 

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

 

7.1           Maintenance
of Existence; Conduct of Business. 
Borrower shall: (a) do or cause to be done all things necessary to
preserve and keep in full force and effect its corporate or partnership
existence and its rights and franchises; (b) continue to conduct its
business substantially as now conducted or as otherwise permitted hereunder;
and (c) maintain all of its

 

31

 

property that is necessary or useful in the proper conduct of its
business in good working condition (taking into consideration ordinary wear and
tear).

 

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

 

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

 

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

 

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

 

32

 

demand, by Borrower to Lender and shall be additional Obligations
hereunder secured by the Collateral. 
Lender reserves the right at any time, upon review of Borrower’s risk
profile, to require additional forms and limits of insurance to, in Lender’s
reasonable judgment, after consultation with Borrower, adequately protect
Lender’s interests.

 

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

 

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

 

ARTICLE 
VIII.

 

NEGATIVE COVENANTS

 

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

 

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

 

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

 

8.3           Investments;
Loans and Advances.  Borrower shall
not make any investment in, or make or accrue loans or advances of money to any
Person, through the direct or indirect holding of securities or otherwise;
provided, that Borrower may: (a) make and maintain investments in cash
equivalents, (b) make and maintain loans or advances to, any of its
wholly-owned Subsidiaries (provided that the creation of such wholly-owned
Subsidiary has

 

33

 

been approved by Lender and has guaranteed all Obligations and secured
such guarantee by a first priority security interest in all of such Subsidiary’s
assets), (c) loans to employees to the extent disclosed to and approved by
Lender, (d) investments existing on the Closing Date to the extent
approved by Lender.

 

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

 

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

 

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

 

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

 

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

 

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

 

34

 

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

 

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

 

8.12         Financial
Covenants.

 

(a)           Minimum
Tangible Net Worth.  MLO shall not
permit its Tangible Net Worth, as of the last day of any fiscal quarter
beginning with the fiscal quarter ending September 30, 2008, to be less
than the applicable “Minimum Tangible Net Worth Amount.”  The Minimum Tangible Net Worth Amount shall
initially be Forty-One Million Dollars ($41,000,000.00) and shall be increased
dollar for dollar by the amount of positive Consolidated Net Income achieved by
MLO, beginning October 1, 2008 and thereafter.

 

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

 

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

 

ARTICLE 
IX.

 

INDEMNITY

 

9.1           Indemnification.  Borrower shall indemnify and hold Lender and
Lender’s affiliates, subsidiaries, officers, directors, employees, attorneys,
and agents (each, an “Indemnified Person”), harmless from and against any and
all suits, actions, proceedings, claims, damages, losses, liabilities and
expenses (including reasonable attorneys’ fees and disbursements (including
allocated costs of internal counsel) and other costs of investigations or
defense, including those incurred upon any appeal) which may be instituted or
asserted against or incurred by such Indemnified Person as a result of credit
having been extended under this Agreement and

 

35

 

the other Loan Documents or in connection with Lender’s interest in any
Collateral; provided, that Borrower shall not be liable for any indemnification
to such Indemnified Person to the extent that any such suit, action,
proceeding, claim, damage, loss, liability or expense was the result of any
action by such Indemnified Person or results from such Indemnified Person’s
gross negligence or willful misconduct. 
NEITHER LENDER NOR ANY OTHER INDEMNIFIED PERSON SHALL BE RESPONSIBLE OR
LIABLE TO BORROWER, ANY OTHER PERSON, ANY SUCCESSOR, ASSIGNEE, OR THIRD PARTY
BENEFICIARY OF SUCH PERSON OR ANY OTHER PERSON ASSERTING CLAIMS DERIVATIVELY
THROUGH SUCH PARTY, FOR INDIRECT, PUNITIVE, EXEMPLARY, OR CONSEQUENTIAL DAMAGES
WHICH MAY BE ALLEGED AS A RESULT OF CREDIT HAVING BEEN EXTENDED UNDER THE
LOAN DOCUMENTS.

 

ARTICLE 
X.

 

EVENTS OF DEFAULT; RIGHTS AND REMEDIES

 

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

 

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

 

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

 

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

 

36

 

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

 

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

 

(f)            Breach
of Representation or Warranty.  Any
material representation or warranty herein or in any Loan Document or in any
written statement pursuant thereto or hereto, report, financial statement, or
certificate made or delivered to Lender by Borrower shall be untrue or
incorrect, as of the date when made or deemed made (including those made or
deemed made pursuant to Section 4.2) and the same is by its nature incapable
of being cured or shall remain unremedied for a period ending on the first to
occur of twenty (20) days after Borrower shall receive written notice of any
such failure from Lender or thirty (30) days after Borrower shall become aware
thereof.

 

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

 

(h)           Involuntary
Insolvency Actions.  A case or
proceeding shall have been commenced against Borrower in a court having
competent jurisdiction seeking a decree or order (i) under the Bankruptcy
Code, or any other applicable federal, state, or foreign bankruptcy or other
similar law, (ii) appointing a custodian, receiver, liquidator, assignee,
trustee or sequestrator (or similar official) of Borrower or of any substantial
part of its properties, or

 

37

 

(iii) ordering the winding-up or liquidation of the affairs of
Borrower and such case or proceeding shall remain undismissed or unstayed for
thirty (30) consecutive days or such court shall enter a decree or order
granting the relief sought in such case or proceeding.

 

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

 

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

 

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

 

10.2         Acceleration;
Remedies.

 

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

 

38

 

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

 

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

 

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

 

10.4         Waivers by
Borrower.  Except as otherwise
provided for in this Agreement, Borrower waives (i) presentment, demand
and protest and notice of presentment, dishonor, notice of intent to
accelerate, notice of acceleration, protest, default, nonpayment, maturity,
release, compromise, settlement, extension, or renewal of any or all commercial
paper, accounts, contract rights, documents, instruments, chattel paper and
guaranties at any time held by Lender on which Borrower may in any way be
liable and hereby ratifies and confirms whatever Lender may do in this regard, (ii) all
rights to notice and a hearing prior to Lender’s taking possession or control
of, or to Lender’s replevy, attachment or levy upon, the Collateral or any bond
or security which might be required by any court prior to allowing  Lender to exercise any of its remedies, and (iii) the
benefit of all valuation, appraisal and exemption laws.

 

39

 

ARTICLE 
XI.

 

MISCELLANEOUS

 

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

 

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

 

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

 

40

 

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

 

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

 

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

 

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

 

41

 

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

 

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

 

11.9         Notices.  Except as otherwise provided herein, whenever
it is provided herein that any notice, demand, request, consent, approval,
declaration, or other communication shall or may be given or delivered to or
served upon any of the parties by another, or whenever any of the parties
desires to give or deliver or serve upon another any communication with respect
to this Agreement, each such notice, demand, request, consent, approval,
declaration, or other communication shall be in writing, shall be addressed to
the addresses set forth below, or such other or additional address as the
parties may notify each other of in writing, and shall be deemed

 

42

 

to have been sent, delivered, or given and received upon the earlier
of:  (a) if by facsimile or other
electronic means, upon transmission if transmission occurs between 8:00 a.m.
and 5:00 p.m. on any Business Day; (b) if by Federal Express or other
overnight or one-day mail or delivery service, on the next Business Day
following deposit with such delivery service; (c) if by personal delivery,
upon completion of delivery; or (d) if by mail, three (3) Business
Days after deposit in the U.S. Mail, first class, postage prepaid :

 

(a)           If to Lender, at:

 

American AgCredit, PCA

5560 South Broadway

Eureka, California 95503

Attention: Account Officer – ML Macadamia
Orchards

Facsimile:  (707) 442-1268

 

American AgCredit, ACA

200 Concourse Boulevard

Santa Rosa, California 95403

Attention: Account Officer – ML Macadamia Orchards

Facsimile:  (707) 545-9400

Email: vzander@agloan.com

 

(b)           If to Borrower, at:

 

ML Macadamia Orchards, L.P.

ML Resources, Inc.

26-238 Hawaii Belt Road

Hilo, Hawaii 96720

Attention: Mr. Dennis J. Simonis

Facsimile: (808) 969-8152

Email: Dsimonis@MLNut.com

 

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

 

43

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

44

 

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

 

	
   

  	
  ML MACADAMIA
  ORCHARDS, L.P., a Delaware

  limited partnership

  
	
   

  	
   

  
	
   

  	
  By:  ML RESOURCES, INC.

  
	
   

  	
  its managing general partner

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
    /s/  Dennis J.
  Simonis

  
	
   

  	
  Name: 

  	
  Dennis J.
  Simonis

  
	
   

  	
  Title:

  	
  President

  
	
   

  	
   

  
	
   

  	
  ML
  RESOURCES, INC., a Hawaii corporation, as

  Borrower

  
	
   

  	
   

  
	
   

  	
  By:

  	
    /s/  Dennis J.
  Simonis

  
	
   

  	
  Name: 

  	
  Dennis J.
  Simonis

  
	
   

  	
  Title:

  	
  President

  
	
   

  	
   

  	
   

  
	
   

  	
  AMERICAN
  AGCREDIT, PCA

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
    /s/  Vern Zander

  
	
   

  	
  Name:

  	
  Vern Zander

  
	
   

  	
  Title:

  	
  Vice
  President

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00144-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00144-of-00352.parquet"}]]