SUPPLEMENTAL SECURITY AGREEMENT

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

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

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

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

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

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

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

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

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

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

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

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

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

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

“ Loan ” has the meaning assigned to it in Recital A.

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

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

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

“ Secured Obligations ” means all obligations of Grantor to Lender under the Amended and Restated  Credit Agreement or any other Loan Document.

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

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

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

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

2.              Grant of Security Interest .

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

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

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

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

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

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

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

a.             Authority; Execution .  Grantor has the right and power and is duly authorized and empowered to enter into, execute, deliver and perform this Security Agreement, and any other agreements, documents or instruments executed in connection herewith or therewith.  Grantor’s execution and performance of this Security Agreement will not constitute, cause or result in any breach or violation of any provision of the partnership agreement, articles of incorporation or by-laws of Grantor, any law or any contractual obligation of Grantor and does not conflict with, constitute a default or require any consent under (other than consents that if not obtained would not have a Material Adverse Effect) or result in the creation of any Lien that would not be a Permitted Encumbrance upon any property or assets of Grantor pursuant to any contractual obligation of Grantor.  Upon execution, this Security Agreement will constitute a valid, binding obligation of Grantor to Lender that is enforceable according to its terms, except as the enforceability of this Security Agreement may be subject to or limited by bankruptcy, insolvency, reorganization, arrangement, moratorium or other similar laws relating to or affecting the rights of creditors generally and except as the availability of equitable remedies are subject to the application of equitable principles.  No further consent, ratification or approval is required for this Security Agreement to be effective.

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

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

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

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

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

g.             Locations of Offices and Collateral; Federal Taxpayer Identification .  Grantor’s chief executive office, principal place of business, corporate offices, all warehouses and premises within which Collateral is stored or located, and the locations of all of its records concerning the Collateral are set forth on Exhibit C hereto, and Grantor shall not change such chief executive office, principal place of business, corporate offices, or warehouses or Collateral premises, or remove such records unless it has taken such action as is necessary to cause the Lien of Lender in the Collateral to continue to be perfected.  Grantor shall not change its chief executive office, principal place of business, corporate offices, or warehouses or Collateral premises, or the location of its records concerning the Collateral, or its federal taxpayer identification number, without giving thirty (30) days’ prior written notice thereof to Lender.  Grantor’s federal taxpayer identification number is as set forth on Exhibit C hereto.

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

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

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

a.             Further Assurances; Pledge of Instruments .  At any time and from time to time, upon the written request of Lender, and at the sole expense of Grantor, Grantor shall promptly and duly execute and deliver any and all such further instruments and documents and take such further action as Lender may reasonably deem desirable to obtain the full benefits of this Security Agreement and of the rights and powers herein granted, including (i) filing any financing or continuation statements under the UCC with respect to the liens and security interests granted hereunder or under any other Loan Document and (ii) transferring Collateral to Lender’s possession (if such Collateral consists of Chattel

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Paper or if a security interest in such Collateral can be perfected only by possession, or, if requested by Lender).  Grantor also hereby authorizes Lender to file any such financing or continuation statement without the signature of Grantor to the extent permitted by applicable law.  If any amount payable under or in connection with any of the Collateral is or shall become evidenced by any Instrument, such Instrument, other than checks and notes received in the ordinary course of business, shall be duly endorsed in a manner satisfactory to Lender and delivered to Lender immediately upon Grantor’s receipt thereof.

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

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

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

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

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

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

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

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

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

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

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