Document:

Exhibit 10.76

 

FOURTH
AMENDMENT TO REVOLVING LOAN PROMISSORY NOTE

 

This
Fourth Amendment to Revolving Loan Promissory Note (this “Amendment”) is
entered into as of July 15, 2010, by and between AMERICAN AGCREDIT, PCA, an agricultural
credit association chartered pursuant to the Farm Credit Act of 1971 (“Lender”),
and ML MACADAMIA ORCHARDS, L.P., a
Delaware limited partnership, and ML
RESOURCES, INC., a Hawaii corporation (together, “Borrower”).

 

R  E  C
I  T  A  L  S:

 

A.            Borrower and Lender entered in to a
Fourth Amended and Restated Credit Loan Agreement dated July 15, 2010 (the
“Credit Agreement”) whereby Lender agreed, among other things, to modify the
terms of repayment and extend the maturity date of that certain Revolving Loan
Promissory Note dated July 8, 2008 in the amount of Six Million Dollars
($6,000,000.00) made by Borrower in favor of Lender (the “Revolving Note”).

 

B.            The parties are entering into this
Amendment to evidence the reduction in the amount of the Revolving Note from
$6,000,000.00 to $5,000,000.00 and the extension of the maturity of the
Revolving Note.

 

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

 

A  G  R
E  E  M  E  N  T

 

1.             Amendment to Loan Amount.  The loan amount
of the Revolving Note, as stated in the first paragraph thereof, is hereby
reduced from Six Million Dollars ($6,000,000.00) to Five Million Dollars
($5,000,000.00).

 

2.             Amendment to Maturity Date.  The maturity
date of the Revolving Note, as stated in the third paragraph thereof, is hereby
extended from August 13, 2010 to July 13, 2012.

 

 

3.             No Other Amendments. 
Except as modified expressly or by necessary implication herein or in
the Credit Agreement, all of the terms and conditions of the Revolving Note
shall remain unchanged and in full force and effect.

 

IN WITNESS WHEREOF, this Fourth Amendment to
Revolving Loan Promissory Note has been duly executed as of the date first
written above.

 

	
   

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

  
	
   

  	
   

  
	
   

  	
  By:

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

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/
  Dennis J. Simonis

  
	
   

  	
   

  	
  Name:

  	
  Dennis
  J. Simonis

  
	
   

  	
   

  	
  Title:

  	
  President

  
	
   

  	
   

  	
   

  
	
   

  	
  ML RESOURCES, INC., a Hawaii corporation

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Dennis J. Simonis

  
	
   

  	
  Name:

  	
  Dennis
  J. Simonis

  
	
   

  	
  Title:

  	
  President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  AMERICAN AGCREDIT, PCA

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Vern Zander

  
	
   

  	
  Name:

  	
  Vern
  Zander

  
	
   

  	
  Title:

  	
  Vice
  PresidentExhibit 10.77

 

TERM LOAN PROMISSORY NOTE

 

	
  $10,500,000.00

  	
   

  	
  Santa Rosa, California

  
	
   

  	
   

  	
  July 15, 2010

  

 

FOR
VALUE RECEIVED, the undersigned, ML MACADAMIA ORCHARDS, L.P., a Delaware
limited partnership, and ML RESOURCES, INC., a Hawaii corporation
(collectively “Borrower”), hereby jointly and severally promise to pay to the
order of AMERICAN AGCREDIT, PCA (“Lender”), at the times, place and in the
manner designated in the “Credit Agreement” (as defined below), in lawful money
of the United States of America and in immediately available funds, the
principal amount of TEN MILLION FIVE HUNDRED THOUSAND DOLLARS ($10,500,000),
together with interest on the unpaid principal amount of this Term Loan
Promissory Note (the “Note”) outstanding from time to time from the date of
this Note at the rate provided in the Credit Agreement.  All capitalized terms, unless otherwise
defined herein, shall have the meanings ascribed to them in the Fourth Amended
and Restated Credit Agreement dated as of July 15, 2010, between Borrower
and Lender (as amended or modified from time to time, the “Credit Agreement”)
between Borrower and Lender.

 

This
Note is issued by Borrower to Lender pursuant to the Credit Agreement, to which
reference is hereby made for a statement of all of the terms and conditions
under which the loan evidenced hereby is made. 
This Note is subject to amendment only if and to the extent of an
amendment of the Credit Agreement.

 

The
principal amount of the indebtedness evidenced hereby shall be payable from
Borrower to Lender in the amounts specified in the Credit Agreement, and, if
not sooner paid in full, shall be due and payable on July 1, 2020, as
specified in the Credit Agreement. 
Borrower shall pay interest on the outstanding principal amount from
time to time until such principal amount is paid in full at such interest rates
and at such times as are specified in the Credit Agreement.  If any payment on this Note becomes due and
payable on a day other than a Business Day, the maturity thereof shall be
extended to the next succeeding Business Day and, with respect to payments of
principal, interest thereon shall be payable at the then applicable rate during
such extension.

 

Upon
and after the occurrence of an Event of Default, this Note may, as provided in
the Credit Agreement, and without demand, notice or legal process of any kind,
be declared, and upon such declaration immediately shall become, or upon
certain circumstances set forth in the Credit Agreement may become without
declaration, due and payable.  Demand, presentment,
protest, and notice of nonpayment and protest are hereby waived by Borrower.

 

This
Term Loan Promissory Note and the indebtedness and obligations evidenced hereby
are secured by the Mortgage and the Security Agreements described in the Credit
Agreement.

 

 

This
Note has been executed, delivered and accepted at Santa Rosa, California, and
shall be governed by, and interpreted and construed in accordance with, the
laws of the State of California.

 

	
   

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

  
	
   

  	
   

  
	
   

  	
  By:

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

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/
  Dennis J. Simonis

  
	
   

  	
   

  	
  Name:

  	
  Dennis
  J. Simonis

  
	
   

  	
   

  	
  Title:

  	
  President

  
	
   

  	
   

  	
   

  
	
   

  	
  ML
  RESOURCES, INC., a Hawaii corporation

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Dennis J. Simonis

  
	
   

  	
  Name:

  	
  Dennis
  J. Simonis

  
	
   

  	
  Title:

  	
  PresidentExhibit 10.78

 

FOURTH AMENDED AND RESTATED

CREDIT AGREEMENT

 

Dated as of July 15, 2010

among

ML MACADAMIA ORCHARDS, L.P.

ML RESOURCES, INC.

as Borrower

and

AMERICAN AGCREDIT, PCA

as Lender

 

 

TABLE OF CONTENTS

 

	
  ARTICLE  1.
  GENERAL TERMS

  	
  1

  
	
   

  	
   

  
	
  ARTICLE  2. AMOUNT
  AND TERMS OF CREDIT

  	
  7

  
	
   

  	
   

  
	
  ARTICLE  3.
  COLLATERAL

  	
  14

  
	
   

  	
   

  
	
  ARTICLE  4.
  CONDITIONS PRECEDENT

  	
  14

  
	
   

  	
   

  
	
  ARTICLE  5.
  REPRESENTATIONS AND WARRANTIES

  	
  16

  
	
   

  	
   

  
	
  ARTICLE  6.
  FINANCIAL STATEMENTS AND INFORMATION

  	
  21

  
	
   

  	
   

  
	
  ARTICLE  7.
  AFFIRMATIVE COVENANTS

  	
  22

  
	
   

  	
   

  
	
  ARTICLE  8.
  NEGATIVE COVENANTS

  	
  23

  
	
   

  	
   

  
	
  ARTICLE  9.
  INDEMNITY

  	
  25

  
	
   

  	
   

  
	
  ARTICLE  10.
  EVENTS OF DEFAULT; RIGHTS AND REMEDIES

  	
  26

  
	
   

  	
   

  
	
  ARTICLE  11.
  MISCELLANEOUS

  	
  28

  

 

INDEX OF EXHIBITS

 

Exhibit A               - Form of Notice of
Revolving Advance

 

Exhibit B               - Form of Certification Regarding
Compliance with Financial Covenants

 

i

 

THIS
FOURTH AMENDED AND RESTATED CREDIT AGREEMENT (“Agreement”), dated as of July 15,
2010, 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 “First Restated Credit Agreement”). The First 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.  The First Restated
Credit Agreement, including all amendments thereto, was replaced by a Second
Amended and Restated Credit Agreement dated as of July 8, 2008 (the “Second
Restated Credit Agreement”).  The Second
Restated Credit Agreement, including all amendments thereto, was replaced by a
Third Amended and Restated Credit Agreement dated as of June 30, 2009 (the
“Third Restated Credit Agreement”).

 

B.            The Indebtedness of the Borrower to
the Lender under the terms of the Original Credit Agreement, the First Restated
Credit Agreement, the Second Restated Credit Agreement and the Third 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, the Third Supplemental Security Agreement dated as of June 30, 2009,
and the Fourth Supplemental Security Agreement dated as of July 15, 2010
(collectively the “Security Agreements”) and by the Mortgage, as defined
herein.

 

C.            Borrower has requested that Lender
extend and amend the terms of the credit evidenced by the Third Restated Credit
Agreement and Lender is willing to do so subject to and in accordance with the
terms, covenants, conditions and provisions set forth herein.

 

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

 

ARTICLE 1

 

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):

 

“2010
Term Loan” means the term loan evidenced by the 2010 Term Loan Promissory Note.

 

1

 

“2010
Term Loan Promissory Note” means the term loan promissory note in the amount of
$10,500,000, dated as of July 15, 2010, made by Borrower in favor of
Lender.

 

“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 Fourth 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 one percentage point (100 basis points).

 

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

 

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

 

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

 

“Charges”
shall mean all federal, state, county, city, municipal, local, foreign, or
other governmental taxes (including, without limitation, taxes owed to the
Pension Benefit Guaranty Corporation or any successor) at the time due and
payable, levies, assessments, charges, liens, claims or encumbrances upon or
relating to (i) the Collateral, (ii) the Obligations, (iii) the
employees, payroll, income, or gross receipts of Borrower, (iv) Borrower’s
ownership or use of any of its assets, or (v) any other aspect of Borrower’s
business.

 

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

 

“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
or net loss, of MLO, determined in accordance with GAAP.

 

2

 

“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 two percent (2.00%) per annum
higher than the rate otherwise applicable.

 

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

 

“Environmental
Laws” shall mean all federal, state and local laws, statutes, ordinances and
regulations, now or hereafter in effect, and in each case as amended or
supplemented from time to time, and any judicial or administrative
interpretation thereof, including, without limitation, any applicable judicial
or administrative order, consent decree or judgment, relative to the applicable
real estate, relating to the regulation and protection of human health, safety,
the environment and natural resources (including ambient air, surface water,
groundwater, wetlands, land surface or subsurface strata, wildlife, aquatic
species and vegetation).  Environmental
Laws include the Comprehensive Environmental Response, Compensation, and
Liability Act of 1980, as amended (42 U.S.C. §§ 9601 et   seq.)
(“CERCLA”); the Hazardous Material Transportation Act, as amended (49 U.S.C. §§
1801 et   seq.); the Federal Insecticide, Fungicide,
and Rodenticide Act, as amended (7 U.S.C. §§ 136 et   seq.);
the Resource Conservation and Recovery Act, as amended (42 U.S.C. §§ 6901 et  seq.) (“RCRA”); the Toxic Substance
Control Act, as amended (15 U.S.C. §§ 2601 et  seq.); the Clean Air Act, as amended (42
U.S.C. §§ 7401 et   seq.); the Federal Water Pollution Control
Act, as amended (33 U.S.C. §§ 1251 et   seq.);
the Occupational Safety and Health Act, as amended (29 U.S.C. §§ 651 et   seq.);
and the Safe Drinking Water Act, as amended (42 U.S.C. §§ 300(f) et  seq.), and any and all regulations
promulgated thereunder, and all analogous state and local counterparts or
equivalents and any transfer of ownership notification or approval statutes.

 

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

 

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

 

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

 

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

 

“Fees”
shall mean any fees referred to in Section 2.10, 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 2.5(b) to
convert to a fixed rate of interest, the greater of (i) four percent (4%)
per annum or (ii) applicable LIBO Rate as of the date of such election
plus a margin equal to 325 basis points; and (b) with respect to the 2010
Term Loan, a fixed rate of interest equal to 6.50% per annum

 

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

 

3

 

“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 2.5,
Section 2.6 or Section 2.7, on which a portion of the Revolving
Advances 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 the interest on
the 2010 Term Loan, the interest from origination of the 2010 Term Loan to the
2010 Term Loan Maturity Date.

 

“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 

 

4

 

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 Fourth Amendment To Revolving Loan
Promissory Note of even date herewith, the Third Amendment To Revolving Loan
Promissory Note dated July 23, 2010, the Second Amendment To Revolving
Loan Promissory Note dated June 28, 2010, the First Amendment To Revolving
Loan Promissory Note dated June 30, 2009, the Revolving Loan Promissory
Note, the 2010 Term Loan Promissory Note of even date herewith, 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.

 

“Loans”
shall mean the Revolving Loan and the 2010 Term Loan, collectively.

 

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

 

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

 

“Maturity
Date” means with respect to the Revolving Loan Promissory Note, July 13,
2012 (“Revolving Loan Maturity Date”), and with respect to the 2010 Term Loan
Promissory Note, July 1, 2020 (“2010 Term Loan Maturity Date”).

 

“Maximum
Lawful Rate” shall have the meaning assigned to it in Section 2.9(e).

 

“Maximum
Revolving Loan” shall mean from the Closing Date until July 15, 2011 Five
Million Dollars ($5,000,000), and thereafter until the Maturity Date Four
Million Dollars ($4,000,000).

 

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

 

“Mortgage”
shall mean the mortgage given by Borrower to Lender, dated January 8,
2009, and recorded in the State of Hawaii Bureau of Conveyances on January 14,
2009 as Document No. 2009-004913 and filed in the Office of the Assistant
Registrar of the Land Court of the State of Hawaii as Document No. 3818975
and noted on Transfer Certificate of Title No. 283,473, covering the real
property described therein, as amended and supplemented from time to time.

 

“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 

 

5

 

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
2010 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 identified in Part (E) of the
Disclosure Schedule, but only securing the debt and covering the property
referred to therein, (xii) Liens to secure Indebtedness arising from development
of investment properties, provided that the Liens do not encumber any asset
other than the asset benefiting from the improvement, and (xiii) security
interests securing purchase money indebtedness and liens covering property
other than Collateral, in each case to the extent permitted by Section 8.4.

 

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

 

“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 

 

6

 

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.

 

“Revolving
Loan Promissory Note” means the revolving loan promissory note in the amount of
$5,000,000, dated as of July 15, 2010, made by Borrower in favor of in
Lender.

 

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

 

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

 

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

 

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 2

 

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) 

 

7

 

and
shall be in integral multiples of One Thousand Dollars ($1,000).   The Revolving Loan is evidenced by the
Revolving Loan Promissory Note.

 

(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)           2010 Term Loan.   The 2010 Term Loan shall be evidenced by the
2010 Term Loan Promissory Note executed and delivered by Borrower to Lender.

 

2.3.         Repayment Provisions.

 

(a)           Revolving Loan

 

(i)            Interest
Payments.  Interest on the Revolving Loan shall be due
and payable on the first day of each calendar quarter; provided, that if
any Interest Period shall mature prior to the first day of a calendar quarter,
then interest accrued at a Fixed Rate during the particular Interest Period
shall be due and payable upon expiration of the Interest Period.  Interest accrued on the Revolving Loan but
not otherwise due and payable on the Revolving Loan Maturity Date shall become
due and payable on the Revolving Loan Maturity Date.

 

(b)           2010 Term Loan.  Interest on the 2010 Term Loan shall be due
and payable on the first day of each calendar month together with equal monthly
principal payments in the amount of $87,500 each, commencing on August 1,
2010 and continuing on the first day of each month thereafter through and
including July 1, 2020, and all unpaid principal, accrued interest and
other amounts evidenced by the 2010 Term Loan Promissory Note shall be due and
payable in full on the 2010 Term Loan Maturity Date.

 

2.4.         Prepayments.

 

(a)           Prepayment in Full.  Borrower shall have the right at any time to
voluntarily prepay the Loans in full and to terminate this Agreement upon at
least three (3) Business Days notice to Lender, without premium or penalty
except Borrower shall pay to 

 

8

 

Lender
a prepayment surcharge calculated in accordance with Section 2.4(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 Revolving Loan subject to a Fixed Rate,
or any portion of the 2010 Term Loan, 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 2.4(c)..

 

(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 2010 Term Loan or Revolving Loan so prepaid,
calculated as follows:

 

For
the 2010 Term Loan and for each portion of the Revolving 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.  Notwithstanding the above, Borrower may also
prepay up to $1,050,000.00 on the 2010 Term Loan annually without a prepayment
surcharge.

 

2.5.         Interest Rate on Revolving Advances.

 

(a)           Base Rate.  Revolving Advances hereunder shall bear
interest at a floating rate equal to the Base Rate or four percent (4%) per
annum, whichever is greater, 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)           Fixed Rate for Revolving Loan.  Borrower may, from time to time, elect to
convert all or a portion of the outstanding Revolving Advances to a Fixed Rate;
provided, that (i) at least two (2) Business Days prior to the
proposed Interest Determination Date, Borrower has provided Lender with written
notice of such election, the requested Interest Determination Date, the amount
of the Revolving Advances to be converted, and the requested Interest Period
for the amount to be converted, (ii) at the time of delivery of such
written notice and upon the date of conversion, no Default or Event of Default
exists under this Agreement, (iii) at no time shall there be more than
five (5) outstanding tranches of the Revolving Loan bearing interest at a
Fixed Rate, (iv) the last day of the Interest Period chosen by Borrower
shall not extend beyond the Revolving Loan Maturity Date, and (v) the
amount converted to a Fixed Rate at any one time shall be not less than Fifty
Thousand Dollars ($50,000) and any amounts in excess thereof shall be in
integral multiples of Fifty Thousand Dollars ($50,000).  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 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 2.5(b), the interest rate for such portion of the
Revolving Loan will automatically convert to a floating rate equal to the Base
Rate or four percent (4%) per annum, whichever is greater.

 

2.6.         Intentionally Omitted.

 

2.7.         Intentionally Omitted.

 

2.8.         Interest Rate on 2010 Term Loan.  The interest rate payable on the 2010 Term

 

9

 

Loan is a fixed rate of 6.50% per annum.

 

2.9.          Other
Interest Provisions.

 

(a)           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 2010 Term Loan, shall
become due and payable on a Saturday, the payment date for such payment shall
be the preceding Business Day.

 

(b)           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.  The 2010 Term Loan Promissory
Note shall accrue interest on the basis of a three hundred sixty (360) day year
and a 30-day month until the 2010 Term Loan Maturity Date.

 

(c)           Default
Rate.  Any overdue principal or
interest with respect to any Revolving Advance, or the 2010 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.

 

(d)           Interest
Not to Exceed Maximum Lawful Rate. 
Notwithstanding anything to the contrary set forth in this Agreement, if
at any time until payment in full of all of the Obligations, the rate of
interest payable hereunder exceeds the highest rate of interest permissible
under any law which a court of competent jurisdiction shall, in a final
determination, deem applicable hereto (the “Maximum Lawful Rate”), then in such
event and so long as the Maximum Lawful Rate would be so exceeded, the rate of interest
payable hereunder shall be equal to the Maximum Lawful Rate; provided,
that if at any time thereafter the rate of interest payable hereunder is less
than the Maximum Lawful Rate, Borrower shall continue to pay interest hereunder
at the Maximum Lawful Rate until such time as the total interest received by
Lender hereunder, is equal to the total interest which Lender would have
received had the interest rate payable hereunder been (but for the operation of
this Section 2.9(d)) 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 

 

10

 

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 2.9(d), 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 2.9(d), 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 2000 Term Loan
and the 2009 Term Loan, then to the outstanding principal of the Revolving
Loan, the 2000 Term Loan and the 2009 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.

 

(e)           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 2.9(e) as to Borrower shall
be in accordance with its treatment of other borrowers under commercial loans
generally.  In the event that any law,
treaty, rule, regulation, or determination of a court or governmental authority
or any change therein or in the interpretation or application thereof or
compliance by Lender with any request or directive (whether or not having the
force of law) from any central bank or governmental authority:

 

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

 

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

 

(iii)          shall
impose on Lender any other condition; and the result of any of the foregoing is
to increase the cost to Lender of making, renewing, or maintaining any portion
of the Revolving Loan 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 2.9(e) as to Borrower is in accordance
with its treatment of other borrowers under commercial loans generally.

 

11

 

2.10.        Fees.  In addition to any other fees listed in this
Agreement, Borrower shall, upon the Closing Date, pay to Lender a 2010 Term
Loan origination fee in the amount of $105,000 and a Revolving Loan
modification fee in the amount of $32,500.

 

2.11.        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.

 

2.12.        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.

 

2.13.        Receipt
of Payments.  Borrower shall make
each payment under this Agreement not later than 12:00 P.M. (California
time) on the day when due in lawful money of the United States of America by
wire transfer of immediately available funds to the Collection Account.  Borrower shall have advised Lender in writing
of each payment being made by Borrower no later than 2:00 p.m. (California
time) on the Business Day prior to the date of making of such payment.  For purposes of computing interest and fees
and determining the amount of funds available for borrowing by Borrower
pursuant to Article II, payments of immediately available funds by wire
transfer deposited in the Collection Account not later than 10:30 a.m.
(California time) (and for which Lender has received notice prior to the making
of such payment) shall be deemed received by Lender upon that Business Day.  If payment shall be deposited later than
10:30 a.m. (California time) on any particular Business Day (or if Lender
was not given prior notice of the payment by 2:00 p.m. (California time)
on the Business Day preceding the date of payment), such payment shall be
deemed received on the following Business Day. 
If Lender, in its sole discretion, determines to accept from Borrower
payment by checks, drafts, or similar non-cash items, payment shall be deemed
received by Lender two (2) Business Days after notice to Lender and
deposit of such payment in the Collection Account.

 

2.14.        Accounting.  Lender will provide to Borrower monthly
accountings of transactions under the Revolving Loan and 2010 Term Loan.  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.

 

2.15.        Taxes.

 

(a)           Any
and all payments by Borrower hereunder or under the Loan Documents shall be
made, in accordance with this Section 2.15, 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 

 

12

 

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 of the Loans 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 2.15) 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 Loans, or from the execution, sale, transfer, delivery or
registration of, or otherwise with respect to, this Agreement or 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 2.15) paid by Lender and any liability (including penalties,
interest and expenses) arising there from or with respect thereto, whether or
not such Taxes or Other Taxes were correctly or legally asserted.  This indemnification shall be made within
thirty (30) days from the date Lender makes written demand therefor.

 

(d)           Without
prejudice to the survival of any other agreement of Borrower hereunder, the
agreements and obligations of Borrower contained in this Section 2.15
shall survive the payment in full of all Obligations.

 

2.16.        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 2010 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 2.16, 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 2.16.  Determinations and allocations by Lender for
purposes of this Section 2.16 of the effect of any Regulatory Change
pursuant to or of capital maintained pursuant to this Section 2.16, on its
costs or rate of return of maintaining Revolving Advances or the 2010 Term Loan
and or its commitment to make 

 

13

 

Revolving Advances or the 2010 Term Loan, and of the
amounts required to compensate Lender under this Section 2.16, shall be
conclusive absent manifest error or bad faith.

 

(c)           As
used in this Section 2.16, “Regulatory Change” shall mean any change after
the Closing Date in federal, state, or foreign law or regulations (including
Regulation D) or the adoption or making after such date of any interpretation,
directive or request applying to a class of lenders including Lender of or
under any Federal, state, or foreign law or regulations (whether or not having
the force of law and whether or not failure to comply therewith would be
unlawful) by any court or governmental or monetary authority charged with the
interpretation or administration thereof.

 

ARTICLE 3

 

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.          Real
and Personal Property Collateral.  
In addition to the personal property Collateral pledged to secure the
Obligations pursuant to the Security Agreements, Borrower has delivered to
Lender the Mortgage encumbering certain real property located in the State of
Hawaii.  The Security Agreements and the
Mortgage shall secure all of the Loans, including the 2010 Term Loan.

 

ARTICLE 4

 

CONDITIONS PRECEDENT

 

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

 

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

 

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

 

14

 

(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)           Borrower shall have delivered to
Lender the 2010 Term Loan Promissory Note and the Fourth Amendment to Revolving
Loan Promissory Note, both in form and substance satisfactory to Lender.

 

(f)            Borrower shall have delivered to
Lender a mortgage modification in form and substance satisfactory to Lender and
Lender’s local counsel, to be recorded in the State of Hawaii Bureau of
Conveyances for the purpose of giving constructive notice of the existence of
this Agreement, the extension of the Mortgage to secure the 2010 Term Loan
Promissory Note, and the additional real property security for the Revolving
Loan and the 2010 Term Loan as described in the mortgage modification.

 

(g)           Borrower shall have obtained for
Lender, at Borrower’s expense, such endorsements as Lender may require, in
Lender’s sole discretion, to the existing lender’s policy of title insurance
that insures the Mortgage.

 

(h)           Borrower shall have reimbursed Lender
for its reasonable out-of-pocket expenses in connection with this Agreement,
including title insurance premiums, recording fees and the reasonable fees,
charges and disbursements of local counsel for Lender.

 

(i)            Borrower
shall cause the following leases and license between International Air Service
Company, LTD as lessor and Mauna Loa Macadamia Nut Corporation as lessee and
licensee to be subordinated to the Mortgage as amended:

 

i)        Unrecorded Agricultural Lease dated September 21, 1981,
as amended on November 28, 1983, by and between International Air Service
Company, LTD, organized under the laws of the State of California, “Lessor”,
and Mauna Loa Macadamia Nut Corporation, a Hawaii corporation, “Lessee”, a
memorandum thereof being recorded in Liber 15833 at Page 51, and Liber
17510 at Page 120, State of Hawaii, Bureau of Conveyances;

 

ii)       Unrecorded Agricultural Lease dated
September 12, 1979, by and between International Air Service Company, LTD,
“Lessor”, and Mauna Loa Macadamia Nut Corporation, “Licensee”, a memorandum
thereof being recorded in Liber 13991 at Page 687, State of Hawaii, Bureau
of Conveyances;

 

iii)      Unrecorded Agricultural Lease dated
September 12, 1979, by and between International Air Services Company,
LTD, “Lessor”, and Mauna Loa Macadamia Nut Corporation, “Lessee”; a memorandum
thereof being recorded in Liber 13991 at Page 680, State of Hawaii, Bureau
of Conveyances; and

 

iv)     Unrecorded Agricultural Lease dated
June 24, 1983 by and between IASCO Farms, LTD, a California corporation,
“Lessor”, and Mauna Loa Macadamia Nut Corporation, a Hawaii corporation,
“Lessee”, a memorandum thereof being recorded in Liber 17134 at Page 701,
State of Hawaii, Bureau of Conveyances.

 

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:

 

15

 

(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 2010 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.

 

ARTICLE 5

 

REPRESENTATIONS AND
WARRANTIES

 

To induce Lender to enter into this Fourth Amended and
Restated Credit Agreement and to make the 2010 Term Loan and future Revolving
Advances, as herein provided for, Borrower makes the following representations
and warranties to Lender, each and all of which shall be true and correct as of
the date of execution and delivery of this Agreement, and shall survive the
execution and delivery of this Agreement:

 

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

 

5.2           Corporate
Power; Authorization; Enforceable Obligations.  The execution, delivery, and performance by
Borrower of the Loan Documents to which it is a party, and all instruments and
documents required to be delivered by Borrower under any of the Loan Documents,
and the creation of all Liens provided for in any Loan Documents: (i) are
within Borrower’s corporate or partnership power; (ii) have been duly
authorized by all necessary or proper corporate or partnership action;
(iii) are not in contravention of any provision of 

 

16

 

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 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 

 

17

 

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 2010 Term Loan and future Revolving Advances 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 2010 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
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         RISA.  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, 

 

18

 

the term “Plan” means, with respect to Borrower or any
ERISA Affiliate of either, at any time, an employee benefit plan, as defined in
Section 3(3) of ERISA, which Borrower maintains, contributes to or
has an obligation to contribute to on behalf of participants who are or were
employed by any of them.  The terms
“Qualified Plan” and “Multiemployer Plan” shall have the meaning given them in
ERISA.

 

5.13         No Litigation.  Except as set forth in Part (D) of
the Disclosure Schedule, no action, claim or proceeding is now pending or, to
Borrower’s knowledge, threatened against Borrower, at law, in equity or
otherwise, before any court, board, commission, agency, or instrumentality of
any federal, state, or local government or of any agency or subdivision
thereof, or before any arbitrator or panel of arbitrators, which, if determined
adversely, could have a Material Adverse Effect, nor to Borrower’s knowledge
does a state of facts exist which is reasonably likely to give rise to such
proceedings.  None of the matters set
forth in Part (D) of the Disclosure Schedule questions the validity
of any of the Loan Documents or any action taken or to be taken pursuant thereto,
or would have either individually or in the aggregate a Material Adverse
Effect.

 

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

 

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 

 

19

 

$100,000.  There
is no litigation arising under or related to any Environmental Laws,
environmental permits or Hazardous Material that seeks damages, penalties,
fines, costs or expenses in excess of $50,000 or injunctive relief against, or
that alleges criminal misconduct by, Borrower. 
No notice has been received by Borrower identifying it as a “potentially
responsible party” or requesting information under CERCLA or analogous state
statutes, and to the knowledge of Borrower, there are no facts, circumstances
or conditions that may result in Borrower being identified as a “potentially
responsible party” under CERCLA or analogous state statutes.

 

5.18         Insurance Policies.  Borrower has disclosed to Lender in writing
all insurance of any nature maintained for current occurrences by Borrower, as
well as a summary of the terms of such insurance.  Borrower shall maintain “All Risk” physical damage
insurance on all of Borrower’s tangible real and personal property, 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 a lender’s
loss payable 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 policy 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.

 

20

 

ARTICLE 6

FINANCIAL STATEMENTS AND
INFORMATION

 

6.1           Financial Statements and
Information.  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 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

 

21

 

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 7

AFFIRMATIVE COVENANTS

 

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

 

7.1                               Maintenance of
Existence; Conduct of Business.  Borrower shall: (a) do or cause to be
done all things necessary to preserve and keep in full force and effect its
corporate or partnership existence and its rights and franchises; (b) continue
to conduct its business substantially as now conducted or as otherwise
permitted hereunder; and (c) maintain all of its property that is
necessary or useful in the proper conduct of its business in good working
condition (taking into consideration ordinary wear and tear).

 

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 

 

22

 

“All
Risk” policies of insurance to pay all proceeds payable thereunder directly to
Lender.  Borrower irrevocably makes,
constitutes and appoints Lender (and all officers, employees, or agents
designated by Lender) as Borrower’s true and lawful agent and attorney-in-fact
for the purpose of making, settling, and adjusting claims under the “All Risk”
policies of insurance, endorsing the name of Borrower on any check, draft,
instrument or other item of payment for the proceeds of such “All Risk”
policies of insurance, and for making all determinations and decisions with
respect to such “All Risk” policies of insurance; provided Lender agrees that
it shall not exercise its right to settle or adjust any claim unless an Event
of Default has occurred and is continuing. 
In the event Borrower at any time or times hereafter shall fail to
obtain or maintain any of the policies of insurance required above or to pay
any premium in whole or in part relating thereto, Lender, without waiving or
releasing any Obligations or Default or Event of Default hereunder, may at any
time or times thereafter (but shall not be obligated to) obtain and maintain
such policies of insurance and pay such premium and take any other action with
respect thereto which Lender deems advisable. 
All sums so disbursed by Lender, including reasonable attorneys’ fees,
court costs, expenses and other charges relating thereto, shall be payable, on
demand, by Borrower to Lender and shall be additional Obligations hereunder
secured by the Collateral.  Lender
reserves the right at any time, upon review of Borrower’s risk profile, to
require additional forms and limits of insurance to, in Lender’s reasonable
judgment, after consultation with Borrower, adequately protect Lender’s
interests.

 

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

 

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 8

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 

 

23

 

holding
of securities or otherwise; provided, that Borrower may: (a) make and
maintain investments in cash equivalents, (b) make and maintain loans or
advances to, any of its wholly-owned Subsidiaries (provided that the creation
of such wholly-owned Subsidiary has been approved by Lender and has guaranteed
all Obligations and secured such guarantee by a first priority security
interest in all of such Subsidiary’s assets), (c) loans to employees to
the extent disclosed to and approved by Lender, (d) investments existing
on the Closing Date to the extent approved by Lender.

 

8.4                               Indebtedness.  Except as otherwise expressly permitted by
this Agreement, Borrower shall not create, incur, assume, or permit to exist
any Indebtedness, except (a) Indebtedness secured by Permitted Encumbrances,
(b) the Revolving Loan, (c) the 2010 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, (iv) the sale of
real property to ISACO as described in that certain Option Agreement between
IASCO and ML Macadamia Orchards LP dated as of July 15, 2010, provided
that the net proceeds of the sale be applied to the principal balance of the
2010 Term Loan,  and (v) 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 without Lender’s prior written consent,
which consent may be withheld in Lender’s sole and absolute discretion.

 

24

 

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 year
beginning with fiscal year 2009, 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 the first day of
fiscal year 2010 and thereafter.

 

(b)                     Minimum
Consolidated EBITDA.                     MLO shall have
Consolidated EBITDA of not less than $1,500,000 for each rolling four-quarter
period, beginning with the four quarters ended June 30, 2010, followed by
the four quarters ended September 30, 2010, and so on for each rolling
four-quarter period thereafter.

 

ARTICLE 9

INDEMNITY

 

9.1                               Indemnification.  Borrower shall indemnify and hold Lender and
Lender’s affiliates, subsidiaries, officers, directors, employees, attorneys,
and agents (each, an “Indemnified Person”), harmless from and against any and
all suits, actions, proceedings, claims, damages, losses, liabilities and
expenses (including reasonable attorneys’ fees and disbursements (including
allocated costs of internal counsel) and other costs of investigations or
defense, including those incurred upon any appeal) which may be instituted or
asserted against or incurred by such Indemnified Person as a result of credit
having been extended under this Agreement and the other Loan Documents or in
connection with Lender’s interest in any Collateral; provided, that Borrower
shall not be liable for any indemnification to such Indemnified Person to the
extent that any such suit, action, proceeding, claim, damage, loss, liability
or expense was the result of any action by such Indemnified Person or results
from such Indemnified Person’s gross negligence or willful misconduct.  NEITHER LENDER NOR ANY OTHER INDEMNIFIED
PERSON SHALL BE RESPONSIBLE OR LIABLE TO BORROWER, ANY OTHER PERSON, ANY
SUCCESSOR, ASSIGNEE, OR THIRD PARTY BENEFICIARY OF SUCH PERSON OR ANY OTHER
PERSON ASSERTING CLAIMS DERIVATIVELY THROUGH SUCH PARTY, FOR INDIRECT,
PUNITIVE, EXEMPLARY, OR CONSEQUENTIAL DAMAGES WHICH MAY BE ALLEGED AS A
RESULT OF CREDIT HAVING BEEN EXTENDED UNDER THE LOAN DOCUMENTS.

 

25

 

ARTICLE 10

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 therefore) 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
2010 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 2010 Term Loan, or any other amount (other
than expenses payable under any Loan Document) owing with respect to the
Revolving Loan, the 2010 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.

 

(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 

 

26

 

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

 

(h)                     Involuntary Insolvency Actions. 
A case or proceeding shall have been commenced against Borrower in a
court having competent jurisdiction seeking a decree or order (i) under
the Bankruptcy Code, or any other applicable federal, state, or foreign
bankruptcy or other similar law, (ii) appointing a custodian, receiver,
liquidator, assignee, trustee or sequestrator (or similar official) of Borrower
or of any substantial part of its properties, or (iii) ordering the
winding-up or liquidation of the affairs of Borrower and such case or
proceeding shall remain undismissed or unstayed for thirty (30) consecutive
days or such court shall enter a decree or order granting the relief sought in
such case or proceeding.

 

(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 

 

27

 

Act of 1971, as amended, retire and cancel all or any
portion of Borrower’s stock or other equities in Lender and apply the proceeds
thereof to the Obligations.  In addition,
Lender may hold, set off, sell, and/or apply against Borrower’s indebtedness
any and all cash, accounts, securities, instruments, documents, or other
property in Lender’s possession or under its control.

 

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

 

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

 

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

 

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

 

ARTICLE 11

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, 

 

28

 

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 2010 Term Loan, this Agreement, any
Loan Document, or the Collateral; (d) any litigation, contest, dispute,
suit, proceeding, or action (whether instituted by Lender, Borrower or any
other Person) in any way relating to the Collateral, any of the Loan Documents
or any other agreements to be executed or delivered in connection therewith or
herewith, including any litigation, contest, dispute, suit, case, proceeding or
action, and any appeal or review thereof, in connection with a case commenced
by or against Borrower or any other Person that may be obligated to Lender by
virtue of this Agreement, or the other Loan Documents, under the Bankruptcy
Code, or any other applicable federal, state or foreign bankruptcy or other
similar law (including the seeking of relief from the automatic stay or
proposal of opposition to a plan of reorganization); (e) any attempt to
enforce any rights of Lender against Borrower or any other Person that may be
obligated to Lender by virtue of any of the Loan Documents; or (f) any
attempt to (i) monitor the Revolving Loan, 2010 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.

 

29

 

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.

 

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 

 

30

 

HAVE BASED UPON LACK OF PERSONAL
JURISDICTION, IMPROPER VENUE OR FORUM NON CONVENIENS AND HEREBY CONSENTS
TO THE GRANTING FOR SUCH LEGAL OR EQUITABLE RELIEF AS IS DEEMED APPROPRIATE BY
SUCH COURT.  BORROWER HEREBY WAIVES
PERSONAL SERVICE OF THE SUMMONS, COMPLAINT, AND OTHER PROCESS ISSUED IN ANY
SUCH ACTION OR SUIT AND AGREES THAT SERVICE OF SUCH SUMMONS, COMPLAINT AND
OTHER PROCESS MAY BE MADE BY REGISTERED OR CERTIFIED MAIL ADDRESSED TO
BORROWER AT THE ADDRESS SET FORTH IN SECTION 11.9 OF THIS AGREEMENT AND
THAT SERVICE SO MADE SHALL BE DEEMED COMPLETED UPON THE EARLIER OF BORROWER’S
ACTUAL RECEIPT THEREOF OR THREE (3) DAYS AFTER DEPOSIT IN THE U.S. MAILS,
PROPER POSTAGE PREPAID.  NOTHING IN THIS
AGREEMENT SHALL BE DEEMED OR OPERATE TO PRECLUDE LENDER FROM BRINGING SUIT OR
TAKING OTHER LEGAL ACTION IN ANY OTHER JURISDICTION.

 

11.9                        Notices.  Except as
otherwise provided herein, whenever it is provided herein that any notice,
demand, request, consent, approval, declaration, or other communication shall
or may be given or delivered to or served upon any of the parties by another,
or whenever any of the parties desires to give or deliver or serve upon another
any communication with respect to this Agreement, each such notice, demand,
request, consent, approval, declaration, or other communication shall be in
writing, shall be addressed to the addresses set forth below, or such other or
additional address as the parties may notify each other of in writing, and
shall be deemed to have been sent, delivered, or given and received upon the
earlier of:  (a) if by facsimile or
other electronic means, upon transmission if transmission occurs between
8:00 a.m. and 5:00 p.m. on any Business Day; (b) if by Federal
Express or other overnight or one-day mail or delivery service, on the next
Business Day following deposit with such delivery service; (c) if by
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) 521-3575

Email: moneydesk@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

 

31

 

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

 

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

 

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

 

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

 

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

 

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.

 

32

 

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

 

	
   

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

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

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

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Dennis J. Simonis

  
	
   

  	
   

  	
  Name:

  	
  Dennis J. Simonis

  
	
   

  	
   

  	
  Title:

  	
  President

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  ML RESOURCES, INC., a Hawaii corporation,

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Dennis J. Simonis

  
	
   

  	
  Name:

  	
  Dennis J. Simonis

  
	
   

  	
  Title:

  	
  President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  AMERICAN AGCREDIT, PCA

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Vern Zander

  
	
   

  	
  Name:

  	
  Vern Zander

  
	
   

  	
  Title:

  	
  Vice President

  

 

33

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00177-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00177-of-00352.parquet"}], [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00177-of-00352.parquet"}]]