Document:

Exhibit 10.68

 

TERM LOAN PROMISSORY NOTE

 

	
  $600,000

  	
   

  	
  Santa Rosa, California

  
	
   

  	
   

  	
  June 30, 2009

  

 

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 SIX HUNDRED THOUSAND DOLLARS
($600,000), 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 Third Amended
and Restated Credit Agreement dated as of June 30, 2009, 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, 2013, 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.

 

1

 

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:

  	
  CEO and President

  
	
   

  	
   

  	
   

  
	
   

  	
  ML RESOURCES, INC., a Hawaii corporation

  
	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Dennis J. Simonis

  
	
   

  	
   

  	
  Name:

  	
  Dennis J. Simonis

  
	
   

  	
   

  	
  Title:

  	
  CEO and President

  

 

2Exhibit 10.69

 

THIRD
AMENDED AND RESTATED

CREDIT
AGREEMENT

 

 

Dated as of June 30,
2009

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

  	
  9

  
	
  ARTICLE 3. COLLATERAL

  	
  16

  
	
  ARTICLE 4. CONDITIONS PRECEDENT

  	
  17

  
	
  ARTICLE 5. REPRESENTATIONS AND WARRANTIES

  	
  18

  
	
  ARTICLE 6. FINANCIAL STATEMENTS AND INFORMATION

  	
  23

  
	
  ARTICLE 7. AFFIRMATIVE COVENANTS

  	
  24

  
	
  ARTICLE 8. NEGATIVE COVENANTS

  	
  25

  
	
  ARTICLE 9. INDEMNITY

  	
  27

  
	
  ARTICLE 10. EVENTS OF DEFAULT; RIGHTS AND REMEDIES

  	
  28

  
	
  ARTICLE 11. MISCELLANEOUS

  	
  31

  
	
   

  	
   

  
	
  INDEX
  OF EXHIBITS

  
	
   

  
	
  Exhibit A       -
  Form of Notice of Revolving Advance

  	
   

  
	
   

  	
   

  
	
  Exhibit B       -
  Form of Certification Regarding Compliance with Financial Covenants

  	
   

  

 

i

 

THIS THIRD AMENDED AND RESTATED CREDIT AGREEMENT (“Agreement”), dated
as of June 30, 2009, 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”).

 

B.            The Indebtedness of
the Borrower to the Lender under the terms of the Original Credit Agreement,
the First Restated Credit Agreement and the Second 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, and the
Third Supplemental Security Agreement dated as of June 30, 2009
(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
Second 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):

 

“2000 Term Loan” means the term loan evidenced by the 2000 Term Loan
Promissory Note.

 

1

 

“2000 Term Loan Promissory Note” means the term loan promissory note in
the amount of $4,000,000, dated as of May 1, 2000, made by Borrower in
favor of in favor of Pacific Coast Farm Credit Services, PCA now know as
American AgCredit, PCA, with an outstanding principal balance of $400,000 as of
June 30, 2009.

 

“2000 Term Loan Tranche A” means that certain $1,050,000 original
principal portion of the 2000 Term Loan that was converted on June 1, 2009
to a 3.07% Fixed Rate expiring on July 1, 2009.  The outstanding principal balance of 2000
Term Loan Tranche A is $170,000 as of June 22, 2009.

 

“2000 Term Loan Tranche B” means that certain $1,950,0000 original
principal portion of the 2000 Term Loan that was converted on May 2, 2005
to a 6.87% Fixed Rate expiring on May 1, 2010.  The outstanding principal balance of 2000
Term Loan Tranche B is $230,000 as of June 22, 2009.

 

“2009 Term Loan” means the term loan evidenced by the 2009 Term Loan
Promissory Note.

 

“2009 Term Loan Promissory Note” means the term loan promissory note in
the amount of $600,000, dated as of June 30, 2009, 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 Third 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.

 

2

 

“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, (ii) with respect to the 2000 Term Loan,
the Closing Date was May 1, 2000, and (iii) with respect to the 2009
Term Loan, the date set forth in the preamble to this Amendment or such other
date on which this Amendment 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.

 

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

 

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

 

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

 

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

 

3

 

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 275 basis points for elections made prior to June 20, 2009 and
325 basis points for elections made on or after June 30, 2009; (b) with respect
to any portion of 2000 Term Loan Tranche A that Borrower elects at any time
pursuant to Section 2.6(b) to convert to a fixed rate of interest, the
applicable LIBO Rate as of the date of such election plus a margin equal to 275
basis points; (c) with respect to 2000 Term Loan Tranche B, a fixed rate of
interest equal to 6.8700% per annum; and (d) with respect to the 2009 Term
Loan, a fixed rate of interest equal to 7.50% per annum

 

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

 

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

 

“Hazardous Material” shall mean any substance, material or waste, the
generation, handling, storage, treatment or disposal of which is regulated by
any local or state government authority in any jurisdiction in which Borrower
has owned, leased or operated real property or disposed of hazardous materials,
or by the United States Government, including any material or 

 

4

 

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 or a portion of the 2000 Term Loan shall begin to bear interest at a
Fixed Rate.

 

“Interest Period” shall mean (a) with respect to any portion of
interest on Revolving Advances that Borrower elects to have bear interest at a
Fixed Rate, a period beginning on the Interest Determination Date and ending,
at Borrower’s election, either one (1) month, two (2) months, three (3) months,
or six (6) months thereafter, and (b) with respect to any portion of
interest on 2000 Term Loan Tranche A that Borrower elects to have bear interest
at a Fixed Rate, a period beginning on the Interest Determination Date and
ending, at Borrower’s election, either one (1) month, two (2) month,
three (3) months, six (6) months, or twelve (12) months thereafter.

 

“Lender” shall mean American AgCredit, PCA.

 

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

 

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

 

5

 

“Loan Documents” shall mean this Agreement, the First Amendment To
Revolving Loan Promissory Note of even date herewith, the Revolving Loan
Promissory Note, the 2000 Term Loan Promissory Note, the 2009 Term Loan
Promissory Note, 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, the 2000 Term Loan and the 2009
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, June 29, 2010 (“Revolving Loan Maturity Date”), with respect to the 2000
Term Loan Promissory Note, May 1, 2010 (“2000 Term Loan Maturity Date”), and
with respect to the 2009 Term Loan Promissory Note, July 1, 2013 (the “2009
Term Loan Maturity Date”).

 

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

 

“Maximum Revolving Loan” shall mean Five Million Dollars ($5,000,000).

 

“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.

 

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

 

“Obligations” shall mean all loans, advances, debts, liabilities, and
obligations for the performance of covenants, tasks or duties or for payment of
monetary amounts (whether or not such performance is then required or
contingent, or amounts are liquidated or determinable and whether or not
allowed as a claim in any proceeding referred to in Section 10.1(i) or
10.1(j)) owing by Borrower to Lender, and all covenants and duties regarding
such amounts, of any kind or nature, present or future, whether or not
evidenced by any note, agreement or other instrument, arising under 

 

6

 

any of the Loan
Documents.  This term includes the
Revolving Loan, the 2000 Term Loan, the 2009 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 

 

7

 

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

 

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

 

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

 

“Revolving Loan Promissory Note” means the revolving loan promissory
note in the amount of $6,000,000, dated as of July 8, 2008, made by
Borrower in favor of in Lender, with an outstanding principal balance of
$700,000 as of June 22, 2009.

 

“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.

 

8

 

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) 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 Loans.

 

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

 

(b)                                 2009 Term Loan.  
On the Closing Date, Lender will advance the 2009 Term Loan to
Borrower.  The 2009 Term Loan shall be
evidenced by the 2009 Term Loan Promissory Note.

 

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 

 

9

 

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)                                 2000 Term Loan

 

(i)                                     Principal Payments. 
On the 2000 Term Loan Maturity Date (i.e., May 1, 2010), Borrower
shall pay to Lender the remaining principal installment of Four Hundred
Thousand Dollars ($400,000) due under the 2000 Term Loan Note, together with
all unpaid principal, accrued interest and other amounts then due under the
2000 Term Loan Promissory Note.

 

(ii)                                  Interest Payments. 
Interest on the 2000 Term 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 2000 Term Loan but not otherwise due and payable
on the 2000 Term Loan Maturity Date shall become due and payable on the 2000
Term Loan Maturity Date.

 

(c)                                  2009 Term Loan. 
Interest on the 2009 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 $12,500 each, commencing on August 1, 2009 and continuing on the
first day of each month thereafter through and including July 1, 2013, and
all unpaid principal, accrued interest and other amounts evidenced by the 2009
Term Loan Promissory Note shall be due and payable in full on the 2009 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
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 2000 Term Loan, or any portion of the Revolving Loan subject to
a Fixed Rate, or any portion of the 2009 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).  Unless otherwise approved by Lender, any
prepayment of the 2000 Term Loan shall be applied pro rata, based on the
respective aggregate principal amounts then outstanding, to 2000 Term Loan
Tranche A and 2000 Term Loan Tranche B, and shall not reduce the amount of any
installment payments to Lender.

 

(c)                                  Prepayment Surcharge. 
At the time Borrower makes any Prepayment, Borrower shall simultaneously
pay to Lender a prepayment surcharge for each Fixed Rate portion of the 2000
Term Loan, 2009 Term Loan or Revolving Loan so prepaid, calculated as follows:

 

For the 2009 Term Loan
and for each portion of the Revolving Loan or the 2000 Term Loan bearing
interest at a Fixed Rate, the prepayment surcharge shall be equal to any 

 

10

 

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.

 

2.5.                             Interest Rate on Revolving Advances.

 

(a)                                  Base Rate.  Revolving
Advances hereunder shall bear interest at a floating rate equal 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.                             Interest Rate on 2000 Term Loan Tranche A.

 

(a)                                  Base Rate.  2000 Term
Loan Tranche A is currently bearing interest at a fixed rate equal to 3.07% per
annum with an Interest Period expiring on July 1, 2009.  Upon expiration of the current interest
period 2000 Term Loan Tranche A shall bear interest at the Base Rate, unless
Borrower elects to convert the interest rate to a Fixed Rate for the period
selected by Borrower in accordance with the provisions of Section 2.6(b).

 

(b)                                 Designation of Fixed Rates. 
Upon expiration of the current Fixed Rate, Borrower may, from time to
time, elect to convert all or a portion of 2000 Term Loan Tranche A to a Fixed
Rate; provided, that (i) at least two (2) Business Days prior
to the proposed Interest Determination Date, Borrower has provided Lender with
written notice of such election, the requested Interest Determination Date, the
amount of 2000 Term Loan Tranche A to be converted, and the requested Interest
Period for the amount to be converted, (ii) at the time of delivery of such
written notice and upon the date of conversion, no Default or Event of Default
exists under this Agreement, (iii) at no time shall there be more than
four (4) outstanding tranches of 2000 Term Loan Tranche A bearing interest
at a Fixed Rate, (iv) the last day of the Interest Period chosen by
Borrower shall not extend beyond the 2000 Term Loan Maturity Date, and (v) the
amount converted to a Fixed Rate at any one time shall be not less than Fifty
Thousand Dollars ($50,000) and any 

 

11

 

amounts in excess
thereof shall be in integral multiples of Ten Thousand Dollars ($10,000).  Any election by Borrower pursuant to this Section 2.6(b) shall
be irrevocable during the Interest Period selected by Borrower, and that
portion of 2000 Term Loan Tranche A so converted shall bear interest at the
applicable Fixed Rate until the expiration of the applicable Interest Period at
which time, unless another Fixed Rate has been duly elected by Borrower
pursuant to this Section 2.6(b), the interest rate for such portion of
2000 Term Loan Tranche A will automatically convert to the Base Rate.

 

(c)                                  Margin Applicable to Fixed Rate Elections
for 2000 Term Loan Tranche A.  The margin
applicable to 2000 Term Loan Tranche A is 275 basis points.

 

2.7.                             Interest Rate on 2000 Term Loan Tranche B.

 

(a)                                  Fixed Rate.    The
interest rate on Tranche B is currently fixed at 6.8700% per annum with the
current Interest Period set to expire on the 2000 Term Loan Maturity Date.

 

2.8.                             Interest Rate on 2009 Term Loan. 
The interest rate payable on the 2009 Term Loan is a fixed rate of 7.50%
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 2000 Term Loan or (iii) the
2009 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.  2000 Term
Note Tranches A and B are currently accruing interest on the basis of a three
hundred sixty-five (365) day year and actual days elapsed until the end of
their respective Interest Determination Periods.  The 2009 Term Loan Promissory Note shall
accrue interest on the basis of a three hundred sixty-five (365) day year and
actual days elapsed until the 2009 Term Loan Maturity Date.

 

(c)                                  Default Rate. 
Any overdue principal or interest with respect to any Revolving Advance,
or the 2000 Term Loan or the 2009 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 

 

12

 

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 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 

 

13

 

other amount payable under any Loan Document (except for changes in the
rate of tax on the overall net income of a Lender); or

 

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

 

(iii)                               shall impose on Lender any other
condition; and the result of any of the foregoing is to increase the cost to
Lender of making, renewing, or maintaining any portion of the Revolving Loan or
2000 Term Loan with interest rates tied to the LIBO Rate and/or to reduce any
amount receivable by Lender in connection therewith; then in any such case,
Borrower shall pay to Lender, immediately upon demand, such amount or amounts
as may be necessary to compensate Lender for any additional costs incurred by
Lender and/or reductions in amounts received by Lender which are attributable
to LIBO Rates made available to Borrower hereunder.  In determining which costs incurred by a
Lender and/or reductions in amounts received by a Lender are attributable to
such LIBO Rates, any reasonable allocation made by Lender among its operations
shall be conclusive and binding upon Borrower; provided, that Lender’s
determination under this Section 2.9(e) as
to Borrower is in accordance with its treatment of other borrowers under
commercial loans generally.

 

2.10.                       Fees.  In addition to
any other fees listed in this Agreement, Borrower shall, upon the Closing Date,
pay to Lender a 2009 Term Loan origination fee in the amount of $9,000 and a
Revolving Loan modification fee in the amount of $25,000.

 

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.

 

14

 

2.14.                       Accounting.  Lender will
provide to Borrower monthly accountings of transactions under the Revolving
Loan and 2009 Term Loan and quarterly accountings of transactions under the
2000 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 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.

 

15

 

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 2000 Term Loan or 2009 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 2000 Term Loan or the 2009 Term Loan and
or its commitment to make Revolving Advances or the 2000 Term Loan or the 2009
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 

 

16

 

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 2009 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;

 

(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 2009 Term Loan Promissory Note 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
and the extension of the Mortgage to secure the 2009 Term Loan Promissory Note.

 

(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.

 

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

 

(a)                                  All of Borrower’s representations and
warranties contained herein or in any of the Loan Documents shall be true and
correct in all material respects on and as of the Closing Date 

 

17

 

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 2009 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 Third Amended and Restated Credit Agreement and to make the 2009 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 Borrower’s
certificate of incorporation or by-laws or

 

18

 

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.

 

19

 

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

 

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

 

5.9.                              Investment Company Act. 
Borrower is not an “investment company” or an “affiliated person” of, or
“promoter” or “principal underwriter” for, an “investment company,” as such
terms are defined in the Investment Company Act of 1940, as amended.  The making of the 2009 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 2009 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.                        ERISA.  Each “Plan”
(as defined below) is in compliance in all material respects with the applicable
provisions of ERISA and the Internal Revenue Code (“IRC”) and with respect to
each Plan, other than a Qualified Plan, all required contributions and benefits
have been paid in accordance with the provisions of each such Plan to the
extent that the failure to pay any such contribution or benefit would have a
Material Adverse Effect.  There are no
pending or, to Borrower’s knowledge, threatened claims, actions or lawsuits
(other than claims for benefits in the normal course), asserted or instituted against
Borrower or any Plan or its assets. 
Neither Borrower

 

20

 

nor any ERISA Affiliate of either has incurred or
reasonably expects to incur any Withdrawal Liability under Section 4201 of
ERISA as a result of a complete or partial withdrawal from a Multiemployer
Plan.  Borrower has not engaged in a
prohibited transaction, as defined in Section 4975 of the IRC or Section 406
of ERISA, in connection with any Plan, which would subject Borrower (after
giving effect to any exemption) to a material tax on prohibited transactions
imposed by Section 4975 of the IRC or any other material liability.  As used above, the term “Plan” means, with
respect to Borrower or any ERISA Affiliate of either, at any time, an employee
benefit plan, as defined in Section 3(3) of ERISA, which Borrower
maintains, contributes to or has an obligation to contribute to on behalf of
participants who are or were employed by any of them.  The terms “Qualified Plan” and “Multiemployer
Plan” shall have the meaning given them in ERISA.

 

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

 

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

 

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 

 

21

 

business, except where
the failure to so obtain or comply with such environmental permits would not
result in Environmental Liabilities that could reasonably be expected to exceed
$100,000, and all such Environmental Permits are valid, uncontested and in good
standing.  Borrower is not involved in
operations and does not know of any facts, circumstances or conditions,
including any releases of Hazardous Materials, that are likely to result in any
Environmental Liabilities of Borrower that could reasonably be expected to
exceed $100,000.  There is no litigation arising
under or related to any Environmental Laws, environmental permits or Hazardous
Material that seeks damages, penalties, fines, costs or expenses in excess of
$50,000 or injunctive relief against, or that alleges criminal misconduct by,
Borrower.  No notice has been received by
Borrower identifying it as a “potentially responsible party” or requesting
information under CERCLA or analogous state statutes, and to the knowledge of
Borrower, there are no facts, circumstances or conditions that may result in
Borrower being identified as a “potentially responsible party” under CERCLA or
analogous state statutes.

 

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

 

22

 

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

 

ARTICLE 6

 

FINANCIAL STATEMENTS AND INFORMATION

 

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

 

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

 

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

 

23

 

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

 

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

 

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

 

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

 

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

 

ARTICLE 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.

 

24

 

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

 

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

 

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.

 

25

 

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

 

8.3.                              Investments; Loans and Advances. 
Borrower shall not make any investment in, or make or accrue loans or
advances of money to any Person, through the direct or indirect holding of
securities or otherwise; provided, that Borrower may: (a) make and
maintain investments in cash equivalents, (b) make and maintain loans or
advances to, any of its wholly-owned Subsidiaries (provided that the creation
of such wholly-owned Subsidiary has been approved by Lender and has guaranteed
all Obligations and secured such guarantee by a first priority security
interest in all of such Subsidiary’s assets), (c) loans to employees to
the extent disclosed to and approved by Lender, (d) investments existing
on the Closing Date to the extent approved by Lender.

 

8.4.                              Indebtedness. 
Except as otherwise expressly permitted by this Agreement, Borrower
shall not create, incur, assume, or permit to exist any Indebtedness, except (a) Indebtedness
secured by Permitted Encumbrances, (b) the Revolving Loan, (c) the
2000 Term Loan, (d) the 2009 Term Loan, (e) 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, (f) 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, (g) Indebtedness secured by property of Borrower other than
the Collateral in an aggregate amount not to exceed Five Hundred Thousand
Dollars ($500,000), (h) unsecured Indebtedness in an aggregate amount not
to exceed One Hundred Thousand Dollars ($100,000), and (i) purchase money
indebtedness with respect to the acquisition of new capital assets so long as
such Indebtedness is secured only by the particular asset being acquired.

 

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

 

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

 

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

 

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

 

26

 

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.

 

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 Sixty-Eight
Thousand Dollars ($41,068,000.00) 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 2009 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 September 30,
2009, followed by the four quarters ended October 31, 2009, 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.

 

27

 

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 therefor) shall constitute an “Event of Default” hereunder:

 

(a)                                  Failure to Pay Principal. 
Borrower shall fail to make any payment of principal owing with respect
to the Revolving Loan or any regularly scheduled payment of principal owing
with respect to the 2000 Term Loan or the 2009 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 2000 Term Loan, the 2009 Term Loan, or any
other amount (other than expenses payable under any Loan Document) owing with
respect to the Revolving Loan, the 2000 Term Loan, the 2009 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

 

28

 

incorrect, as of the date
when made or deemed made (including those made or deemed made pursuant to Section 4.2)
and the same is by its nature incapable of being cured or shall remain
unremedied for a period ending on the first to occur of twenty (20) days after
Borrower shall receive written notice of any such failure from Lender or thirty
(30) days after Borrower shall become aware thereof.

 

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

 

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

 

(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,

 

29

 

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

 

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

 

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

 

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

 

30

 

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,
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 2000 Term Loan, the 2009 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

 

31

 

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, 2000 Term Loan or 2009 Term Loan, (ii) evaluate, observe,
assess Borrower or its affairs, and (iii) verify, protect, evaluate,
assess, appraise, collect, sell, liquidate or otherwise dispose of the
Collateral, including  and field
inspections; then, in any such event, the reasonable attorneys’ and other
professional and service providers’ fees (including internally-allocated costs
of in-house counsel) arising from such services, including those of any
appellate proceedings, and all expenses, costs, charges, and other fees
incurred by such counsel  and others in
any way or respect arising in connection with or relating to any of the events
or actions described in this Section 11.3, shall be payable, on demand, by
Borrower to Lender and shall be additional Obligations secured under this
Agreement and the other Loan Documents by all of the Collateral.

 

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

 

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

 

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

 

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.

 

32

 

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

 

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

 

33

 

(a)                                 If to Lender, at:

 

American AgCredit, PCA

5560 South Broadway

Eureka, California 95503

Attention: Account Officer – ML Macadamia Orchards

Facsimile:  (707) 442-1268

 

American AgCredit,
ACA

200 Concourse
Boulevard

Santa Rosa,
California 95403

Attention: Account
Officer – ML Macadamia Orchards

Facsimile:  (707) 545-9400

Email: vzander@agloan.com

 

(b)                                If to Borrower, at:

 

ML Macadamia Orchards,
L.P.

ML Resources, Inc.

26-238 Hawaii Belt Road

Hilo, Hawaii 96720

Attention: Mr. Dennis
J. Simonis

Facsimile: (808) 969-8152

Email: Dsimonis@MLNut.com

 

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

 

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

 

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

 

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

 

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

 

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

 

34

 

PARTIES WISH APPLICABLE STATE AND FEDERAL LAWS TO
APPLY (RATHER THAN ARBITRATION RULES), THE PARTIES DESIRE THAT THEIR DISPUTES
BE RESOLVED BY A JUDGE APPLYING SUCH APPLICABLE LAWS.  THEREFORE, TO ACHIEVE THE BEST COMBINATION OF
THE BENEFITS OF THE JUDICIAL SYSTEM AND OF ARBITRATION, THE PARTIES HERETO
WAIVE ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, SUIT, OR PROCEEDING BROUGHT TO
ENFORCE OR DEFEND ANY RIGHTS OR REMEDIES UNDER THIS AGREEMENT OR ANY OF THE
OTHER LOAN DOCUMENTS.

 

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

 

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

 

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

 

	
   

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

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

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

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Dennis J. Simonis

  
	
   

  	
   

  	
  Name:

  	
  Dennis J. Simonis

  
	
   

  	
   

  	
  Title:

  	
  CEO and President

  
	
   

  	
   

  	
   

  
	
   

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

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Dennis J. Simonis

  
	
   

  	
  Name:

  	
  Dennis J. Simonis

  
	
   

  	
  Title:

  	
  CEO and President

  
						

 

35

 

	
   

  	
  AMERICAN AGCREDIT, PCA

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Vern Zander

  
	
   

  	
  Name:

  	
  Vern Zander

  
	
   

  	
  Title:

  	
  Vice President

  

 

36

 

EXHIBIT A

FORM OF NOTICE OF
REVOLVING ADVANCE

[DATE]

 

American AgCredit, ACA

200 Concourse Blvd.

Santa Rosa, CA 
95403

 

Attention: 
Account Executive (ML Macadamia Orchards)

 

Re:                             Revolving Advance under Third Amended and
Restated Credit Agreement dated as of June 30, 2009

 

Ladies and Gentlemen:

 

The undersigned, ML
Macadamia Orchards, L.P., a Delaware limited partnership, and ML Resources, Inc.,
a Hawaii corporation, refer to the Third Amended and Restated Credit Agreement,
dated as of June 30, 2009 (the “Credit Agreement”), among the undersigned,
and American AgCredit, PCA, (“Lender”), and hereby notifies Lender, pursuant to
Section 2.1 of the Credit Agreement, that the undersigned hereby requests
a “Revolving Advance,” under and as defined in the Credit Agreement and in
connection therewith, sets forth the information below, relating to such
Revolving Advance:

 

(i)                                     The date of the requested Revolving
Advance shall be
                        ;

 

(ii)                                  The aggregate amount of the requested
Revolving Advance is
                                      
(Dollars)
($                      );
and

 

(iii)                               The requested Revolving Advance should be
directed to [Bank, address, account and wiring instructions].

 

1

 

The undersigned hereby
certifies that the conditions contained in Section 4.2 of the Credit
Agreement are satisfied on the date hereof, and will be satisfied on the date
of the requested Revolving Advance, before and after giving effect thereto and
to the application of the proceeds therefrom, unless waived in writing by
Lender.

 

 

	
   

  	
  Very truly yours,

  
	
   

  	
   

  	
   

  
	
   

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

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  ML RESOURCES, INC., a Hawaii corporation,

  
	
   

  	
   

  	
  its managing general partner

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  ML RESOURCES, INC., a Hawaii corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
					

 

2

 

EXHIBIT B

 

FORM OF NOTICE OF
CERTIFICATION OF FINANCIAL COVENANTS

 

1

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