NOTE PURCHASE AGREEMENT

Note Purchase Agreement

You are currently viewing:

This Note Purchase Agreement involves

Diamond Foods Inc | TEACHERS INSURANCE AND ANNUITY | PRU & CO.

. RealDealDocs™ contains millions of easily searchable legal documents and clauses from top law firms. Search for free - click here.

Title: NOTE PURCHASE AGREEMENT
Governing Law: California Date: 3/25/2005

NOTE PURCHASE AGREEMENT, Parties: diamond foods inc , teachers insurance and annuity , pru & co.

<PAGE>

EXHIBIT 10.17

================================================================================

DIAMOND WALNUT GROWERS, INC.

$20,000,000

7.35% Senior Notes, Series A, due December 1, 2013

-------------

NOTE PURCHASE AGREEMENT

-------------

Dated July 17, 2001

================================================================================

<PAGE>

TABLE OF CONTENTS

(Not a part of the Agreement)

<TABLE>

SECTION HEADING PAGE

<S> <C>

SECTION 1. AUTHORIZATION OF NOTES.......................................................... 1

SECTION 2. SALE AND PURCHASE OF NOTES...................................................... 1

SECTION 3. CLOSING......................................................................... 2

SECTION 4. CONDITIONS TO CLOSING........................................................... 2

Section 4.1. Representations and Warranties.................................................. 2

Section 4.2. Performance; No Default......................................................... 2

Section 4.3. Compliance Certificates......................................................... 2

Section 4.4. Opinions of Counsel............................................................. 3

Section 4.5. Purchase Permitted by Applicable Law, etc....................................... 3

Section 4.6. Sale of Other Notes............................................................. 3

Section 4.7. Payment of Special Counsel Fees................................................. 3

Section 4.8. Private Placement Number........................................................ 3

Section 4.9. Changes in Corporate Structure.................................................. 3

Section 4.10. Proceedings and Documents....................................................... 3

SECTION 5. REPRESENTATIONS AND WARRANTIES OF THE COMPANY................................... 4

Section 5.1. Organization; Power and Authority............................................... 4

Section 5.2. Authorization, etc.............................................................. 4

Section 5.3. Disclosure...................................................................... 4

Section 5.4. Organization and Ownership of Shares of Subsidiaries;

Affiliates.................................................................. 4

Section 5.5. Financial Statements............................................................ 5

Section 5.6. Compliance with Laws, Other Instruments, etc.................................... 5

Section 5.7. Governmental Authorizations, etc................................................ 6

Section 5.8. Litigation; Observance of Agreements, Statutes and Orders....................... 6

Section 5.9. Taxes........................................................................... 6

Section 5.10. Title to Property; Leases....................................................... 6

Section 5.11. Licenses, Permits, etc.......................................................... 6

Section 5.12. Compliance with ERISA........................................................... 7

Section 5.13. Private Offering by the Company................................................. 8

Section 5.14. Use of Proceeds; Margin Regulations............................................. 8

Section 5.15. Existing Debt; Future Liens..................................................... 8

Section 5.16. Foreign Assets Control Regulations, etc......................................... 8

Section 5.17. Status under Certain Statutes................................................... 9

Section 5.18. Environmental Matters........................................................... 9

</TABLE>

<PAGE>

<TABLE>

<S> <C>

SECTION 6. REPRESENTATIONS OF THE PURCHASER................................................ 9

Section 6.1. Purchase for Investment......................................................... 9

Section 6.2. Source of Funds................................................................. 9

SECTION 7. INFORMATION AS TO THE COMPANY................................................... 11

Section 7.1. Financial and Business Information.............................................. 11

Section 7.2. Officer's Certificate........................................................... 13

Section 7.3. Inspection...................................................................... 14

SECTION 8. PREPAYMENT OF THE NOTES......................................................... 14

Section 8.1. Required Prepayments............................................................ 14

Section 8.2. Optional Prepayments with Make-Whole Amount..................................... 14

Section 8.3. Allocation of Partial Prepayments............................................... 15

Section 8.4. Maturity; Surrender, etc........................................................ 15

Section 8.5. Purchase of Notes............................................................... 15

Section 8.6. Make-Whole Amount............................................................... 15

SECTION 9. AFFIRMATIVE COVENANTS........................................................... 17

Section 9.1. Compliance with Law............................................................. 17

Section 9.2. Insurance....................................................................... 17

Section 9.3. Maintenance of Properties....................................................... 17

Section 9.4. Payment of Taxes and Claims..................................................... 17

Section 9.5. Corporate Existence, etc........................................................ 18

SECTION 10. NEGATIVE COVENANTS.............................................................. 18

Section 10.1. Transactions with Affiliates.................................................... 18

Section 10.2. Merger, Consolidation, etc...................................................... 18

Section 10.3. Liens........................................................................... 19

Section 10.4. Limitations on Debt............................................................. 20

Section 10.5. Consolidated Adjusted Net Worth................................................. 21

Section 10.6. Sale of Assets, Etc............................................................. 21

Section 10.7. Subordination of Payments to Members............................................ 21

Section 10.8. Line of Business................................................................ 22

SECTION 11. EVENTS OF DEFAULT............................................................... 22

SECTION 12. REMEDIES ON DEFAULT, ETC........................................................ 24

Section 12.1. Acceleration.................................................................... 24

Section 12.2. Other Remedies.................................................................. 24

Section 12.3. Rescission...................................................................... 24

Section 12.4. No Waivers or Election of Remedies, Expenses, etc............................... 25

SECTION 13. REGISTRATION; EXCHANGE, SUBSTITUTION OF NOTES................................... 25

Section 13.1. Registration of Notes........................................................... 25

Section 13.2. Transfer and Exchange of Notes.................................................. 25

</TABLE>

-ii-

<PAGE>

<TABLE>

<S> <C>

Section 13.3. Replacement of Notes............................................................ 26

SECTION 14. PAYMENTS ON NOTES............................................................... 26

Section 14.1. Placement of Notes.............................................................. 26

Section 14.2. Home Office Payment............................................................. 26

SECTION 15. EXPENSES, ETC................................................................... 27

Section 15.1. Transaction Expenses............................................................ 27

Section 15.2. Survival........................................................................ 27

SECTION 16. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ENTIRE

AGREEMENT................................................................... 27

SECTION 17. AMENDMENT AND WAIVER............................................................ 27

Section 17.1. Requirements.................................................................... 27

Section 17.2. Solicitation of Holders of Notes................................................ 27

Section 17.3. Binding Effect, etc............................................................. 28

Section 17.4. Notes Held by Company, etc...................................................... 28

SECTION 18. NOTICES......................................................................... 29

SECTION 19. REPRODUCTION DOCUMENTS.......................................................... 29

SECTION 20. CONFIDENTIAL INFORMATION........................................................ 29

SECTION 21. SUBSTITUTION OF PURCHASER....................................................... 30

SECTION 22. MISCELLANEOUS................................................................... 31

Section 22.1. Successors and Assigns.......................................................... 31

Section 22.2. Payments Due on Non-Business Days............................................... 31

Section 22.3. Severability.................................................................... 31

Section 22.4. Construction.................................................................... 31

Section 22.5. Counterparts.................................................................... 31

Section 22.6. Governing Law................................................................... 31

Section 22.7. Additional Debt................................................................. 31

Signature........................................................................................ 32

</TABLE>

-iii-

<PAGE>

SCHEDULE A -- Information Relating to Purchaser

SCHEDULE B -- Defined Terms

SCHEDULE 5.4 -- Subsidiaries of the Company and Ownership of Subsidiary

Stock

SCHEDULE 5.5 -- Financial Statements

SCHEDULE 5.15 -- Existing Debt

EXHIBIT 1 -- Form of 7.35% Senior Note, Series A, due December 1, 2013

EXHIBIT 4.4(a)(1) -- Form of Opinion of California Counsel for the Company

EXHIBIT 4.4(a)(2) -- Form of Opinion of Special Counsel for the Company

EXHIBIT 4.4(b) -- Form of Opinion of Special Counsel for the Purchasers

EXHIBIT 10.7 -- Form of Section 7.05 of the By-laws of the Company

-iv-

<PAGE>

DIAMOND WALNUT GROWERS, INC.

1050 SOUTH DIAMOND STREET

STOCKTON, CALIFORNIA 95201

7.35% Senior Notes, Series A, due December 1, 2013

Dated as of

July 17, 2001

TO EACH OF THE PURCHASERS LISTED IN

THE ATTACHED SCHEDULE A:

Ladies and Gentlemen:

DIAMOND WALNUT GROWERS, INC., a California corporation (the "Company"),

agrees with you as follows:

SECTION 1. AUTHORIZATION OF NOTES.

The Company will authorize the issue and sale of $20,000,000 aggregate

principal amount of its 7.35% Senior Notes, Series A, due December 1, 2013 (the

"Notes", such term to include any such notes issued in substitution therefor

pursuant to Section 13 of this Agreement or the Other Agreements (as hereinafter

defined)). The Notes shall be substantially in the form set out in Exhibit 1,

with such changes therefrom, if any, as may be approved by you and the Company.

Certain capitalized terms used in this Agreement are defined in Schedule B;

references to a "Schedule" or an "Exhibit" are, unless otherwise specified, to a

Schedule or an Exhibit attached to this Agreement.

SECTION 2. SALE AND PURCHASE OF NOTES.

Subject to the terms and conditions of this Agreement, the Company will

issue and sell to you and you will purchase from the Company, at the Closing

provided for in Section 3, Notes in the principal amount specified opposite your

name in Schedule A at the purchase price of 100% of the principal amount

thereof. Contemporaneously with entering into this Agreement, the Company is

entering into separate Note Purchase Agreements (the "Other Agreements")

identical with this Agreement with each of the other purchasers named in

Schedule A (the "Other Purchasers"), providing for the sale at such Closing to

each of the Other Purchasers of Notes in the principal amount specified opposite

its name in Schedule A. Your obligation hereunder, and the obligations of the

Other Purchasers under the Other Agreements, are several and not joint

obligations, and you shall have no obligation under any Other Agreement and no

liability to any Person for the performance or nonperformance by any Other

Purchaser thereunder.

<PAGE>

Diamond Walnut Growers, Inc. Note Purchase Agreement

SECTION 3. CLOSING.

The sale and purchase of the Notes to be purchased by you and the Other

Purchasers shall occur at the offices of Chapman and Cutler, 111 West Monroe

Street, Chicago, Illinois 60603, at 10:00 A.M. Chicago time, at a closing (the

"Closing") on December 4, 2001 or on such other Business Day, on or prior to

December 7, 2001, as may be agreed upon by the Company and you and the Other

Purchasers. At the Closing the Company will deliver to you the Notes to be

purchased by you in the form of a single Note (or such greater number of Notes

in denominations of at least $250,000 as you may request) dated the date of the

Closing and registered in your name (or in the name of your nominee), against

delivery by you to the Company or its order of immediately available funds in

the amount of the purchase price therefor by wire transfer of immediately

available funds for the account of the Company to account number at Bank of

America, NA., 555 California Street, San Francisco, California 94104. If at the

Closing the Company shall fail to tender such Notes to you as provided above in

this Section 3, or any of the conditions specified in Section 4 shall not have

been fulfilled to your satisfaction, you shall, at your election, be relieved of

all further obligations under this Agreement, without thereby waiving any rights

you may have by reason of such failure or such nonfulfillment.

SECTION 4. CONDITIONS TO CLOSING.

Your obligation to purchase and pay for the Notes to be sold to you at the

Closing is subject to the fulfillment to your satisfaction, prior to or at the

Closing, of the following conditions:

Section 4.1. Representations and Warranties. The representations and

warranties of the Company in this Agreement shall be correct when made and at

the time of the Closing.

Section 4.2. Performance; No Default. The Company shall have performed and

complied with all agreements and conditions contained in this Agreement required

to be performed or complied with by it prior to or at the Closing, and after

giving effect to the issue and sale of the Notes (and the application of the

proceeds thereof as contemplated by Section 5.14), no Default or Event of

Default shall have occurred and be continuing. Neither the Company nor any

Subsidiary shall have entered into any transaction since the date of the

Memorandum that would have been prohibited by Sections 10.1, 10.2 or 10.7 hereof

had such Sections applied since such date.

Section 4.3. Compliance Certificates.

(a) Officer's Certificate. The Company shall have delivered to you an

Officer's Certificate, dated the date of the Closing, certifying that the

conditions specified in Sections 4.1, 4.2 and 4.9 have been fulfilled.

(b) Secretary's Certificate. The Company shall have delivered to you a

certificate certifying as to the resolutions attached thereto and other

corporate proceedings relating to the authorization, execution and delivery of

the Notes and the Agreements.

-2-

<PAGE>

Diamond Walnut Growers, Inc. Note Purchase Agreement

Section 4.4. Opinions of Counsel. You shall have received opinions in form

and substance satisfactory to you, dated the date of the Closing (a) from

Downey, Brand, Seymour & Rohwer, California counsel for the Company and from

Chapman and Cutler, special counsel for the Company, covering the matters set

forth in Exhibits 4.4(a)(I) and 4.4(a)(2) and covering such other matters

incident to the transactions contemplated hereby as you or your counsel may

reasonably request (and the Company hereby instructs its counsel to deliver such

opinion to you) and (b) from Orrick, Herrington & Sutcliffe LLP, your special

counsel in connection with such transactions, substantially in the form set

forth in Exhibit 4.4(b) and covering such other matters incident to such

transactions as you may reasonably request.

Section 4.5. Purchase Permitted by Applicable Law, etc. On the date of the

Closing your purchase of Notes shall (i) be permitted by the laws and

regulations of each jurisdiction to which you are subject, without recourse to

provisions (such as Section 1405(a)(8) of the New York Insurance Law) permitting

limited investments by insurance companies without restriction as to the

character of the particular investment, (ii) not violate any applicable law or

regulation (including, without limitation, Regulation T, U or X of the Board of

Governors of the Federal Reserve System) and (iii) not subject you to any tax,

penalty or liability under or pursuant to any applicable law or regulation,

which law or regulation was not in effect on the date hereof. If requested by

you, you shall have received an Officer's Certificate certifying as to such

matters of fact as you may reasonably specify to enable you to determine whether

such purchase is so permitted.

Section 4.6. Sale of Other Notes. Contemporaneously with the Closing, the

Company shall sell to the Other Purchasers, and the Other Purchasers shall

purchase, the Notes to be purchased by them at the Closing as specified in

Schedule A.

Section 4.7. Payment of Special Counsel Fees. Without limiting the

provisions of Section 15.I, the Company shall have paid on or before the date

hereof and at Closing, the fees, charges and disbursements of your special

counsel referred to in Section 4.4 to the extent reflected in a statement of

such counsel rendered to the Company at least one Business Day prior to the date

hereof and at Closing.

Section 4.8. Private Placement Number. A Private Placement Number issued

by Standard & Poor's CUSIP Service Bureau (in cooperation with the Securities

Valuation Office of the National Association of Insurance Commissioners) shall

have been obtained for the Notes.

Section 4.9. Changes in Corporate Structure. The Company shall not have

changed its jurisdiction of incorporation or been a party to any merger or

consolidation and shall not have succeeded to all or any substantial part of the

liabilities of any other entity, at any time following the date of the most

recent financial statements referred to in Schedule 5.5.

Section 4.10. Proceedings and Documents. All corporate and other

proceedings in connection with the transactions contemplated by this Agreement

and all documents and instruments incident to such transactions shall be

satisfactory to you and your special counsel, and you and your special counsel

shall have received all such counterpart originals or certified or other copies

of such documents as you or they may reasonably request.

-3-

<PAGE>

Diamond Walnut Growers, Inc. Note Purchase Agreement

SECTION 5. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.

The Company represents and warrants to you that:

Section 5.1. Organization; Power and Authority. The Company is an

incorporated non-stock cooperative marketing association duly organized, validly

existing and in good standing under the Food and Agricultural Code of the State

of California and is not required to be qualified as a foreign corporation in

any jurisdiction. The Company has the corporate power and authority to own or

hold under lease the properties it purports to own or hold under lease, to

transact the business it transacts and proposes to transact, to execute and

deliver this Agreement and the Other Agreements and the Notes and to perform the

provisions hereof and thereof. The Company is an "association" within the

meaning of Section 54002 of the California Food and Agricultural Code, and is

not subject in any manner to the terms of the California Corporate Securities

law, Division 1 (commencing with Section 25000), Title 4 of the Corporation's

Code of California.

Section 5.2. Authorization, etc. This Agreement, the Other Agreements and

the Notes have been duly authorized by all necessary corporate action on the

part of the Company, and this Agreement constitutes, and upon execution and

delivery thereof each Note will constitute, a legal, valid and binding

obligation of the Company enforceable against the Company in accordance with its

terms, except as such enforceability may be limited by (i) applicable

bankruptcy, insolvency, reorganization, moratorium or other similar laws

affecting the enforcement of creditors' rights generally and (ii) general

principles of equity (regardless of whether such enforceability is considered in

a proceeding in equity or at law). The Notes constitute Senior Debt of the

Company and rank pari passu with all other unsecured Senior Debt of the Company.

The Notes including the principal amount thereof, interest thereon and

Make-Whole Amount with respect thereto, if any, are hereby specifically

designated as "Specified Senior Indebtedness" for the purposes of the

Subordinated Loan Agreement.

Section 5.3. Disclosure. The Company, through its agent, SPP Capital

Partners, LLC, has delivered to you and each Other Purchaser a copy of a Private

Placement Memorandum, dated March 2001 (the "Memorandum"), relating to the

transactions contemplated hereby. The Memorandum fairly describes, in all

material respects, the general nature of the business and principal properties

of the Company and its Subsidiaries. This Agreement, the Memorandum and the

financial statements listed in Schedule 5.5, taken as a whole, do not contain

any untrue statement of a material fact or omit to state any material fact

necessary to make the statements therein not misleading in light of the

circumstances under which they were made. Since July 31, 2000, there has been no

change in the financial condition, operations, business, properties or prospects

of the Company or any Subsidiary except changes that individually or in the

aggregate could not reasonably be expected to have a Material Adverse Effect.

There is no fact known to the Company that could reasonably be expected to have

a Material Adverse Effect that has not been set forth herein or in the

Memorandum.

Section 5.4. Organization and Ownership of Shares of Subsidiaries;

Affiliates. (a) Schedule 5.4 contains (except as noted therein) complete and

correct lists (i) of the Company's Subsidiaries, showing, as to each Subsidiary,

the correct name thereof, the jurisdiction of its organization, and the

percentage of shares of each class of its capital stock or

-4-

<PAGE>

Diamond Walnut Growers, Inc. Note Purchase Agreement

similar equity interests outstanding owned by the Company and each other

Subsidiary, (ii) of the Company's Affiliates, other than Subsidiaries, and (iii)

of the Company's directors and senior officers.

(b) All of the outstanding shares of capital stock or similar equity

interests of each Subsidiary shown in Schedule 5.4 as being owned by the Company

and its Subsidiaries have been validly issued, are fully paid and nonassessable

and are owned by the Company or another Subsidiary free and clear of any Lien

(except as otherwise disclosed in Schedule 5.4).

legal entity duly organized, validly existing and in good standing under the

laws of its jurisdiction of organization, and is duly qualified as a foreign

corporation or other legal entity and is in good standing in each jurisdiction

in which such qualification is required by law, other than those jurisdictions

as to which the failure to be so qualified or in good standing could not,

individually or in the aggregate, reasonably be expected to have a Material

Adverse Effect. Each such Subsidiary has the corporate or other power and

authority to own or hold under lease the properties it purports to own or hold

under lease and to transact the business it transacts and proposes to transact.

(d) No Subsidiary is a party to, or otherwise subject to, any legal

restriction or any agreement (other than this Agreement, the agreements listed

on Schedule 5.4 and customary limitations imposed by corporate law statutes)

restricting the ability of such Subsidiary to pay dividends out of profits or

make any other similar distributions of profits to the Company or any of its

Subsidiaries that owns outstanding shares of capital stock or similar equity

interests of such Subsidiary.

Section 5.5. Financial Statements. The Company has delivered to each

Purchaser copies of the financial statements of the Company and its Subsidiaries

listed on Schedule 5.5. All of said financial statements (including in each case

the related schedules and notes) fairly present in all material respects the

consolidated financial position of the Company and its Subsidiaries as of the

respective dates specified in such Schedule and the consolidated results of

their operations and cash flows for the respective periods so specified and have

been prepared in accordance with GAAP consistently applied throughout the

periods involved except as set forth in the notes thereto (subject, in the case

of any interim financial statements, to normal year-end adjustments).

Section 5.6. Compliance with Laws, Other Instruments, etc. The execution,

delivery and performance by the Company of this Agreement and the Notes will not

(i) contravene, result in any breach of, or constitute a default under, or

result in the creation of any Lien in respect of any property of the Company or

any Subsidiary under, any indenture, mortgage, deed of trust, loan, purchase or

credit agreement, lease, corporate charter or by-laws, or any other agreement or

instrument to which the Company or any Subsidiary is bound or by which the

Company or any Subsidiary or any of their respective properties may be bound or

affected, (ii) conflict with or result in a breach of any of the terms,

conditions or provisions of any order, judgment, decree, or ruling of any court,

arbitrator or Governmental Authority applicable to the Company or any Subsidiary

or (iii) violate any provision of any statute or other rule or regulation of any

Governmental Authority applicable to the Company or any Subsidiary.

-5-

<PAGE>

Diamond Walnut Growers, Inc. Note Purchase Agreement

Section 5.7. Governmental Authorizations, etc. No consent, approval or

authorization of, or registration, filing or declaration with, any Governmental

Authority is required in connection with the execution, delivery or performance

by the Company of this Agreement or the Notes.

Section 5.8. Litigation; Observance of Agreements, Statutes and Orders.

(a) There are no actions, suits or proceedings pending or, to the knowledge of

the Company, threatened against or affecting the Company or any Subsidiary or

any property of the Company or any Subsidiary in any court or before any

arbitrator of any kind or before or by any Governmental Authority that,

individually or in the aggregate, could reasonably be expected to have a

Material Adverse Effect.

(b) Neither the Company nor any Subsidiary is in default under any term of

any agreement or instrument to which it is a party or by which it is bound, or

any order, judgment, decree or ruling of any court, arbitrator or Governmental

Authority or is in violation of any applicable law, ordinance, rule or

regulation (including without limitation Environmental Laws) of any Governmental

Authority, which default or violation, individually or in the aggregate, could

reasonably be expected to have a Material Adverse Effect.

Section 5.9. Taxes. The Company is taxed as a cooperative under Subtitle

A, Chapter 1, Subchapter T, Section 1381 et seq. of the Code and the Company and

its Subsidiaries have filed all tax returns that are required to have been filed

in any jurisdiction, and have paid all taxes shown to be due and payable on such

returns and all other taxes and assessments levied upon them or their

properties, assets, income or franchises, to the extent such taxes and

assessments have become due and payable and before they have become delinquent,

except for any taxes and assessments (i) the amount of which is not individually

or in the aggregate Material or (ii) the amount, applicability or validity of

which is currently being contested in good faith by appropriate proceedings and

with respect to which the Company or a Subsidiary, as the case may be, has

established adequate reserves in accordance with GAAP. The Company knows of no

basis for any other tax or assessment that could reasonably be expected to have

a Material Adverse Effect. The charges, accruals and reserves on the books of

the Company and its Subsidiaries in respect of Federal, state or other taxes for

all fiscal periods are adequate. The Company and its Subsidiaries have not been

previously audited by the Internal Revenue Service, but are in the process of

being audited for the fiscal year ended July 31, 1998 by the Internal Revenue

Service as of the date hereof.

Section 5.10. Title to Property; Leases. The Company and its Subsidiaries

have good and sufficient title to their respective properties that individually

or in the aggregate are Material, including all such properties reflected in the

most recent audited balance sheet referred to in Section 5.5 or purported to

have been acquired by the Company or any Subsidiary after said date (except as

sold or otherwise disposed of in the ordinary course of business), in each case

free and clear of Liens prohibited by this Agreement. All leases that

individually or in the aggregate are Material are valid and subsisting and are

in full force and effect in all material respects.

Section 5.11. Licenses, Permits, etc. (a) The Company and its Subsidiaries

own 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 Material, without known conflict with the

rights of others;

-6-

<PAGE>

Diamond Walnut Growers, Inc. Note Purchase Agreement

(b) To the best knowledge of the Company, no product of the Company

infringes in any Material respect any license, permit, franchise, authorization,

patent, copyright, service mark, trademark, trade name or other right owned by

any other Person; and

by any Person of any right of the Company or any of its Subsidiaries with

respect to any patent, copyright, service mark, trademark, trade name or other

right owned or used by the Company or any of its Subsidiaries.

Section 5.12. Compliance with ERISA. (a) The Company and each ERISA

Affiliate have operated and administered each Plan in compliance with all

applicable laws except for such instances of noncompliance as have not resulted

in and could not reasonably be expected to result in a Material Adverse Effect.

Neither the Company nor any ERISA Affiliate has incurred any liability pursuant

to Title I or IV of ERISA or the penalty or excise tax provisions of the Code

relating to employee benefit plans (as defined in section 3 of ERISA), and no

event, transaction or condition has occurred or exists that could reasonably be

expected to result in the incurrence of any such liability by the Company or any

ERISA Affiliate, or in the imposition of any Lien on any of the rights,

properties or assets of the Company or any ERISA Affiliate, in either case

pursuant to Title I or IV of ERISA or to such penalty or excise tax provisions

or to section 401(a)(29) or 412 of the Code, other than such liabilities or

Liens as would not be individually or in the aggregate Material.

(b) The present value of the aggregate benefit liabilities under each of

the Plans (other than Multiemployer Plans), determined as of the end of such

Plan's most recently ended plan year on the basis of the actuarial assumptions

specified for funding purposes in such Plan's most recent actuarial valuation

report, did not exceed the aggregate current value of the assets of such Plan

allocable to such benefit liabilities by an amount more than $300,000 in the

case of any single Plan or in the aggregate for all Plans. The term "benefit

liabilities" has the meaning specified in section 4001 of ERISA and the terms

"current value" and "present value" have the meanings specified in section 3 of

ERISA.

liabilities (and are not subject to contingent withdrawal liabilities) under

section 4201 or 4204 of ERISA in respect of Multiemployer Plans that

individually or in the aggregate are Material.

(d) The expected post-retirement benefit obligation (determined as of the

last day of the Company's most recently ended fiscal year in accordance with

Financial Accounting Standards Board Statement No. 106, without regard to

liabilities attributable to continuation coverage mandated by section 4980B of

the Code) of the Company and its Subsidiaries is disclosed in the audited

financial statements for the fiscal year ended July 31, 2000.

(e) The execution and delivery of this Agreement and the issuance and sale

of the Notes hereunder will not involve any transaction that is subject to the

prohibitions of section 406 of ERISA or in connection with which a tax could be

imposed pursuant to section 4975(c)(1)(A)-(D) of the Code. The representation by

the Company in the first sentence of this Section 5.12(e) is made in reliance

upon and subject to the accuracy of your representation in

-7-

<PAGE>

Diamond Walnut Growers, Inc. Note Purchase Agreement

Section 6.2 as to the sources of the funds used to pay the purchase price of the

Notes to be purchased by you.

Section 5.13. Private Offering by the Company. Neither the Company nor

anyone acting on its behalf has offered the Notes or any similar securities for

sale to, or solicited any offer to buy any of the same from, or otherwise

approached or negotiated in respect thereof with, any Person other than you, the

Other Purchasers and not more than 34 other Institutional Investors, each of

which has been offered the Notes at a private sale for investment. Neither the

Company nor anyone acting on its behalf has taken, or will take, any action that

would subject the issuance or sale of the Notes to the registration requirements

of Section 5 of the Securities Act.

Section 5.14. Use of Proceeds; Margin Regulations. The Company will apply

the proceeds of the sale of the Notes to reduce short term borrowings and for

general corporate purposes. No part of the proceeds from the sale of the Notes

hereunder will be used, directly or indirectly, for the purpose of buying or

carrying any margin stock within the meaning of Regulation U of the Board of

Governors of the Federal Reserve System (12 CFR 207), or for the purpose of

buying or carrying or trading in any securities under such circumstances as to

involve the Company in a violation of Regulation X of said Board (12 CPR 224) or

to involve any broker or dealer in a violation of Regulation T of said Board (12

CFR 220). Margin stock does not constitute more than 1.00% of the value of the

consolidated assets of the Company and its Subsidiaries and the Company does not

have any present intention that margin stock will constitute more than 1.00% of

the value of such assets. As used in this Section, the terms "margin stock" and

"purpose of buying or carrying" shall have the meanings assigned to them in said

Regulation U.

Section 5.15. Existing Debt; Future Liens. (a) Schedule 5.15 sets forth a

complete and correct list of all outstanding Debt of the Company and its

Subsidiaries as of May 1, 2001, since which date there has been no Material

change in the amounts, interest rates, sinking funds, installment payments or

maturities of the Debt of the Company or its Subsidiaries. Neither the Company

nor any Subsidiary is in default and no waiver of default is currently in

effect, in the payment of any principal or interest on any Debt of the Company

or such Subsidiary and no event or condition exists with respect to any Debt of

the Company or any Subsidiary that would permit (or that with notice or the

lapse of time, or both, would permit) one or more Persons to cause such Debt to

become due and payable before its stated maturity or before its regularly

scheduled dates of payment.

(b) Except as disclosed in Schedule 5.15, neither the Company nor any

Subsidiary has agreed or consented to cause or permit in the future (upon the

happening of a contingency or otherwise) any of its property, whether now owned

or hereafter acquired, to be subject to a Lien not permitted by Section 10.3.

Section 5.16. Foreign Assets Control Regulations, etc. Neither the sale of

the Notes by the Company hereunder nor its use of the proceeds thereof will

violate the Trading with the Enemy Act, as amended, or any of the foreign assets

control regulations of the United States Treasury Department (31 CFR, Subtitle

B, Chapter V, as amended) or any enabling legislation or executive order

relating thereto.

-8-

<PAGE>

Diamond Walnut Growers, Inc. Note Purchase Agreement

Section 5.17. Status under Certain Statutes. Neither the Company nor any

Subsidiary is an "investment company" registered or required to be registered

under the Investment Company Act of 1940, as amended, or is subject to

regulation under the Public Utility Holding Company Act of 1935, as amended, the

ICC Termination Act of 1995, as amended, or the Federal Power Act, as amended.

Section 5.18. Environmental Matters. Neither the Company nor any

Subsidiary has knowledge of any claim or has received any notice of any claim,

and no proceeding has been instituted raising any claim against the Company or

any of its Subsidiaries or any of their respective real properties now or

formerly owned, leased or operated by any of them or other assets, alleging any

damage to the environment or violation of any Environmental Laws, except, in

each case, such as could not reasonably be expected to result in a Material

Adverse Effect. Except as otherwise disclosed to you in writing:

(a) neither the Company nor any Subsidiary has knowledge of any

facts which would give rise to any claim, public or private, of violation

of Environmental Laws or damage to the environment emanating from,

occurring on or in any way related to real properties now or formerly

owned, leased or operated by any of them or to other assets or their use,

except, in each case, such as could not reasonably be expected to result

in a Material Adverse Effect;

(b) neither the Company nor any of its Subsidiaries has stored any

Hazardous Materials on real properties now or formerly owned, leased or

operated by any of them or has disposed of any Hazardous Materials in a

manner contrary to any Environmental Laws in each case in any manner that

could reasonably be expected to result in a Material Adverse Effect; and

operated by the Company or any of its Subsidiaries are in compliance with

applicable Environmental Laws, except where failure to comply could not

reasonably be expected to result in a Material Adverse Effect.

SECTION 6. REPRESENTATION OF THE PURCHASER.

Section 61. Purchase for Investment. You represent that you are purchasing

the Notes for your own account or for one or more separate accounts maintained

by you or for the account of one or more pension or trust funds and not with a

view to the distribution thereof, provided that the disposition of your or their

property shall at all times be within your or their control. You understand that

the Notes have not been registered under the Securities Act and may be resold

only if registered pursuant to the provisions of the Securities Act or if an

exemption from registration is available, except under circumstances where

neither such registration nor such an exemption is required by law, and that the

Company is not required to register the Notes.

Section 6.2. Source of Funds. You represent that at least one of the

following statements is an accurate representation as to each source of funds (a

"Source") to be used by you to pay the purchase price of the Notes to be

purchased by you hereunder:

-9-

<PAGE>

Diamond Walnut Growers, Inc. Note Purchase Agreement

(a) the Source is an "insurance company general account" within the

meaning of Department of Labor Prohibited Transaction Exemption ("PTE")

95-60 (issued July 12, 1995) and there is no employee benefit plan,

treating as a single plan, all plans maintained by the same employer or

employee organization, with respect to which the amount of the general

account reserves and liabilities for all contracts held by or on behalf of

such plan, exceed ten percent (10%) of the total reserves and liabilities

of such general account (exclusive of separate account liabilities) plus

surplus, as set forth in the NAIC Annual Statement filed with your state

of domicile; or

(b) the Source is either (i) an insurance company pooled separate

account, within the meaning of PTE 90-1 (issued January 29, 1990), or (ii)

a bank collective investment fund, within the meaning of the PTE 91-38

(issued July 12, 1991) and, except as you have disclosed to the Company in

writing pursuant to this paragraph (b), no employee benefit plan or group

of plans maintained by the same employer or employee organization

beneficially owns more than 10% of all assets allocated to such pooled

separate account or collective investment fund; or

the meaning of Part V of the QPAM Exemption) managed by a "qualified

professional asset manager" or "QPAM" (within the meaning of Part V of the

QPAM Exemption), no employee benefit plan's assets that are included in

such investment fund, when combined with the assets of all other employee

benefit plans established or maintained by the same employer or by an

affiliate (within the meaning of Section V(c)(1) of the QPAM Exemption) of

such employer or by the same employee organization and managed by such

QPAM, exceed 20% of the total client assets managed by such QPAM, the

conditions of Part I(c) and (g) of the QPAM Exemption are satisfied,

neither the QPAM nor a person controlling or controlled by the QPAM

(applying the definition of "control" in Section V(e) of the QPAM

Exemption) owns a 5% or more interest in the Company and (i) the identity

of such QPAM and (ii) the names of all employee benefit plans whose assets

are included in such investment fund have been disclosed to the Company in

writing pursuant to this paragraph (c); or

(d) the Source is a governmental plan; or

(e) the Source is one or more employee benefit plans, or a separate

account or trust fund comprised of one or more employee benefit plans,

each of which has been identified to the Company in writing pursuant to

this paragraph (e); or

(f) the Source does not include assets of any employee benefit plan,

other than a plan exempt from the coverage of ERISA.

If you or any subsequent transferee of the Notes indicates that you or

such transferee are relying on any representation contained in paragraph (b),

date of any applicable transfer a certificate, which shall either state that (i)

it is neither a party in interest nor a "disqualified person" (as defined in

section 4975(e)(2) of the Internal Revenue Code of 1986, as amended), with

respect to any plan identified pursuant to paragraphs (b) or (e) above, or (ii)

with respect to any plan, identified

-10-

<PAGE>

Diamond Walnut Growers, Inc. Note Purchase Agreement

pursuant to paragraph (c) above, neither it nor any "affiliate" (as defined in

Section V(c) of the QPAM Exemption) has at such time, and during the immediately

preceding one year, exercised the authority to appoint or terminate said QPAM as

manager of any plan identified in writing pursuant to paragraph (c) above or to

negotiate the terms of said QPAM's management agreement on behalf of any such

identified plan. As used in this Section 6.2, the terms "employee benefit plan",

"governmental plan", "party in interest" and "separate account" shall have the

respective meanings assigned to such terms in section 3 of ERISA.

SECTION 7. INFORMATION AS TO COMPANY.

Section 7.1. Financial and Business Information. The Company shall deliver

to each holder of Notes that is an Institutional Investor:

(a) Quarterly Statements -- within 60 days after the end of each

quarterly fiscal period in each fiscal year of the Company (other than the

last quarterly fiscal period of each such fiscal year), duplicate copies

of:

(i) a consolidated balance sheet of the Company and its

Subsidiaries as at the end of such quarter, and

(ii) consolidated statement of income of the Company and its

Subsidiaries for such quarter and (in the case of the second and

third quarters) for the portion of the fiscal year ending with such

quarter,

setting forth in each case in comparative form the figures for the

corresponding periods in the previous fiscal year, all in reasonable

detail, prepared in accordance with GAAP applicable to quarterly financial

statements generally, and certified by a Senior Financial Officer as

fairly presenting, in all material respects, the financial position of the

companies being reported on and their results of operations, subject to

changes resulting from year-end adjustments;

(b) Annual Statements -- within 120 days after the end of each

fiscal year of the Company, duplicate copies of:

(i) a consolidated balance sheet of the Company and its

Subsidiaries, as at the end of such year, and

(ii) consolidated statements of income, changes in members'

equity, net proceeds and current member account and cash flows of

the Company and its Subsidiaries, for such year,

setting forth in each case in comparative form the figures for the

previous fiscal year, all in reasonable detail, prepared in accordance

with GAAP, and accompanied by

(A) an opinion thereon of independent certified public

accountants of recognized national standing, which opinion shall

state that such financial statements present fairly, in all material

respects, the consolidated financial position of the companies being

reported upon and their results of operations and

-11-

<PAGE>

Diamond Walnut Growers, Inc. Note Purchase Agreement

cash flows and have been prepared in conformity with GAAP, and that

the examination of such accountants in connection with such

financial statements has been made in accordance with generally

accepted auditing standards, and that such audit provides a

reasonable basis for such opinion in the circumstances, and

(B) a certificate of such accountants (or, so long as the

Required Holders have not reasonably requested the aforementioned

certificate, a footnote in the related annual audited financial

statements) stating that they have reviewed this Agreement and

stating further whether, in making their audit, they have become

aware of any condition or event that then constitutes a Default or

an Event of Default, and, if they are aware that any such condition

or event then exists, specifying the nature and period of the

existence thereof (it being understood that such accountants shall

not be liable, directly or indirectly, for any failure to obtain

knowledge of any Default or Event of Default unless such accountants

should have obtained knowledge thereof in making an audit in

accordance with generally accepted auditing standards or did not

make such an audit);

one copy of (i) each financial statement, report, notice or proxy

statement sent by the Company or any Subsidiary to public securities

holders generally, and (ii) each regular or periodic report, each

registration statement (without exhibits except as expressly requested by

such holder), and each prospectus and all amendments thereto filed by the

Company or any Subsidiary with the Securities and Exchange Commission and

of all press releases and other statements made available generally by the

Company or any Subsidiary to the public concerning developments that are

Material;

(d) Notice of Default or Event of Default -- promptly, and in any

event within five Business Days after a Responsible Officer becoming aware

of the existence of any Default or Event of Default or that any Person has

given any notice or taken any action with respect to a claimed default

hereunder or that any Person has given any notice or taken any action with

respect to a claimed default of the type referred to in Section 1l(f), a

written notice specifying the nature and period of existence thereof and

what action the Company is taking or proposes to take with respect

thereto;

(e) ERISA Matters -- promptly, and in any event within five days

after a Responsible Officer becoming aware of any of the following, a

written notice setting forth the nature thereof and the action, if any,

that the Company or an ERISA Affiliate proposes to take with respect

thereto:

(i) with respect to any Plan, any reportable event, as defined

in section 4043(b) of ERISA and the regulations thereunder, for

which notice thereof has not been waived pursuant to such

regulations as in effect on the date hereof; or

(ii) the taking by the PBGC of steps to institute, or the

threatening by the PBGC of the institution of, proceedings under

section 4042 of ERISA for the termination of, or the appointment of

a trustee to administer, any Plan, or the

-12-

<PAGE>

Diamond Walnut Growers, Inc. Note Purchase Agreement

receipt by the Company or any ERISA Affiliate of a notice from a

Multiemployer Plan that such action has been taken by the PBGC with

respect to such Multiemployer Plan; or

(iii) any event, transaction or condition that could result in

the incurrence of any liability by the Company or any ERISA

Affiliate pursuant to Title I or IV of ERISA or the penalty or

excise tax provisions of the Code relating to employee benefit

plans, or in the imposition of any Lien on any of the rights,

properties or assets of the Company or any ERISA Affiliate pursuant

to Title I or IV of ERISA or such penalty or excise tax provisions,

if such liability or Lien, taken together with any other such

liabilities or Liens then existing, could reasonably be expected to

have a Material Adverse Effect;

(f) Notices from Governmental Authority -- promptly, and in any

event within 30 days of receipt thereof, copies of any notice to the

Company or any Subsidiary from any Federal or state Governmental Authority

relating to any order, ruling, statute or other law or regulation that

could reasonably be expected to have a Material Adverse Effect; and

(g) Requested Information -- with reasonable promptness, such other

data and information relating to the business, operations, affairs,

financial condition, assets or properties of the Company or any of its

Subsidiaries or relating to the ability of the Company to perform its

obligations hereunder and under the Notes as from time to time may be

reasonably requested by any such holder of Notes.

Section 7.2. Officer's Certificate. Each set of financial statements

delivered to a holder of Notes pursuant to Section 7.1(a) or Section 7.1(b)

hereof shall be accompanied by a certificate of a Senior Financial Officer

setting forth:

(a) Covenant Compliance -- the information (including detailed

calculations) required in order to establish whether the Company was in

compliance with the requirements of Section 10.3 through Section 10.7

hereof, inclusive, during the quarterly or annual period covered by the

statements then being furnished (including with respect to each such

Section, where applicable, the calculations of the maximum or minimum

amount, ratio or percentage, as the case may be, permissible under the

terms of such Sections, and the calculation of the amount, ratio or

percentage then in existence); and

(b) Event of Default -- a statement that such officer has reviewed

the relevant terms hereof and has made, or caused to be made, under his or

her supervision, a review of the transactions and conditions of the

Company and its Subsidiaries from the beginning of the quarterly or annual

period covered by the statements then being furnished to the date of the

certificate and that such review shall not have disclosed the existence

during such period of any condition or event that constitutes a Default or

an Event of Default or, if any such condition or event existed or exists

(including, without limitation, any such event or condition resulting from

the failure of the Company or any Subsidiary to comply with any

Environmental Law), specifying the nature and period of

-13-

<PAGE>

Diamond Walnut Growers, Inc. Note Purchase Agreement

existence thereof and what action the Company shall have taken or proposes

to take with respect thereto.

Section 7.3. Inspection. The Company shall permit the representatives of

each holder of Notes that is an Institutional Investor:

(a) No Default -- if no Default or Event of Default then exists, at

the expense of such holder and upon reasonable prior notice to the

Company, to visit the principal executive office of the Company, to

discuss the affairs, finances and accounts of the Company and its

Subsidiaries with the Company's officers, and (with the consent of the

Company, which consent will not be unreasonably withheld) its independent

public accountants, and (with the consent of the Company, which consent

will not be unreasonably withheld) to visit the other offices and

properties of the Company and each Subsidiary, all at such reasonable

times and as often as may be reasonably requested in writing; and

(b) Default -- if a Default or Event of Default then exists, at the

expense of the Company, to visit and inspect any of the offices or

properties of the Company or any Subsidiary, to examine all their

respective books of account, records, reports and other papers, to make

copies and extracts therefrom, and to discuss their respective affairs,

finances and accounts with their respective officers and independent

public accountants (and by this provision the Company authorizes said

accountants to discuss the affairs, finances and accounts of the Company

and its Subsidiaries), all at such times and as often as may be requested.

SECTION 8. PREPAYMENT OF THE NOTES.

Section 8.1. Required Prepayments. On December 1, 2009 and on each

December 1 thereafter to and including December 1, 2012 the Company will prepay

$4,000,000 principal amount (or such lesser principal amount as shall then be

outstanding) of the Notes at par and without payment of the Make-Whole Amount or

any premium, provided that upon any partial prepayment of the Notes pursuant to

Section 8.2 or purchase of the Notes permitted by Section 8.5 the principal

amount of each required prepayment of the Notes becoming due under this Section

8.1 on and after the date of such prepayment or purchase shall be reduced in the

same proportion as the aggregate unpaid principal amount of the Notes is reduced

as a result of such prepayment or purchase.

Section 8.2. Optional Prepayments with Make-Whole Amount. The Company may,

at its option, upon notice as provided below, prepay at any time all, or from

time to time any part of, the Notes, in an amount not less than 10% of the

aggregate principal amount of the Notes then outstanding in the case of a

partial prepayment, at 100% of the principal amount so prepaid, together with

interest accrued thereon to the date of such prepayment, plus the Make-Whole

Amount determined for the prepayment date with respect to such principal amount.

The Company will give each holder of Notes written notice of each optional

prepayment under this Section 8.2 not less than 30 days and not more than 60

days prior to the date fixed for such prepayment. Each such notice shall specify

such date, the aggregate principal amount of the Notes to be prepaid on such

date, the principal amount of each Note held by such holder to be

-14-

<PAGE>

Diamond Walnut Growers, Inc. Note Purchase Agreement

prepaid (determined in accordance with Section 8.3), and the interest to be paid

on the prepayment date with respect to such principal amount being prepaid, and

shall be accompanied by a certificate of a Senior Financial Officer as to the

estimated Make-Whole Amount due in connection with such prepayment (calculated

as if the date of such notice were the date of the prepayment), setting forth

the details of such computation. Two Business Days prior to such prepayment, the

Company shall deliver to each holder of Notes a certificate of a Senior

Financial Officer specifying the calculation of such Make-Whole Amount as of the

specified prepayment date.

Section 8.3. Allocation of Partial Prepayments. In the case of each

partial prepayment of the Notes, the principal amount of the Notes to be prepaid

shall be allocated among all of the Notes at the time outstanding in proportion,

as nearly as practicable, to the respective unpaid principal amounts thereof.

Section 8.4. Maturity; Surrender, etc. In the case of each prepayment of

Notes pursuant to this Section 8, the principal amount of each Note to be

prepaid shall mature and become due and payable on the date fixed for such

prepayment, together with interest on such principal amount accrued to such date

and the applicable Make-Whole Amount, if any. From and after such date, unless

the Company shall fail to pay such principal amount when so due and payable,

together with the interest and Make-Whole Amount, if any, as aforesaid, interest

on such principal amount shall cease to accrue. Any Note paid or prepaid in full

shall be surrendered to the Company and cancelled and shall not be reissued, and

no Note shall be issued in lieu of any prepaid principal amount of any Note.

Section 8.5. Purchase of Notes. The Company will not and will not permit

any Affiliate to purchase, redeem, prepay or otherwise acquire, directly or

indirectly, any of the outstanding Notes except (a) upon the payment or

prepayment of the Notes in accordance with the terms of this Agreement and the

Notes or (b) pursuant to an offer to purchase made by the Company or an

Affiliate pro rata to the holders of all Notes at the time outstanding upon the

same terms and conditions. Any such offer shall provide each holder with

sufficient information to enable it to make an informed decision with respect to

such offer, and shall remain open for at least 15 Business Days. If the holders

of more than 25% of the principal amount of the Notes then outstanding accept

such offer, the Company shall promptly notify the remaining holders of such fact

and the expiration date for the acceptance by holders of Notes of such offer

shall be extended by the number of days necessary to give each such remaining

holder at least 10 Business Days from its receipt of such notice to accept such

offer. The Company will promptly cancel all Notes acquired by it or any

Affiliate pursuant to any payment, prepayment or purchase of Notes pursuant to

any provision of this Agreement and no Notes may be issued in substitution or

exchange for any such Notes.

Section 8.6. Make-Whole Amount. The term "Make-Whole Amount" means, with

respect to any Note, an amount equal to the excess, if any, of the Discounted

Value of the Remaining Scheduled Payments with respect to the Called Principal

of such Note over the amount of such Called Principal, provided that the

Make-Whole Amount may in no event be less than zero. For the purposes of

determining the Make-Whole Amount, the following terms have the following

meanings:

-15-

<PAGE>

Diamond Walnut Growers, Inc. Note Purchase Agreement

"Called Principal" means, with respect to any Note, the principal of

such Note that is to be prepaid pursuant to Section 8.2 or has become or

is declared to be immediately due and payable pursuant to Section 12.1, as

the context requires.

"Discounted Value" means, with respect to the Called Principal of

any Note, the amount obtained by discounting all Remaining Scheduled

Payments with respect to such Called Principal from their respective

scheduled due dates to the Settlement Date with respect to such Called

Principal, in accordance with accepted financial practice and at a

discount factor (applied on the same periodic basis as that on which

interest on the Notes is payable) equal to the Reinvestment Yield with

respect to such Called Principal.

"Reinvestment Yield" means, with respect to the Called Principal of

any Note, 0.50% over the yield to maturity implied by (i) the yields

reported, as of 10:00 A.M. (New York City time) on the second Business Day

preceding the Settlement Date with respect to such Called Principal, on

the display designated as "PX1" on the Bloomberg Financial Markets

Services Screen (or such other display as may replace page "PX1" on the

Bloomberg Financial Markets Services Screen) for actively traded U.S.

Treasury securities having a maturity equal to the Remaining Average Life

of such Called Principal as of such Settlement Date, or (ii) if such

yields are not reported as of such time or the yields reported as of such

time are not ascertainable, the Treasury Constant Maturity Series Yields

reported, for the latest day for which such yields have been so reported

as of the second Business Day preceding the Settlement Date with respect

to such Called Principal, in Federal Reserve Statistical Release H.15

(519) (or any comparable successor publication) for actively traded U.S.

Treasury securities having a constant maturity equal to the Remaining

Average Life of such Called Principal as of such Settlement Date. Such

implied yield will be determined, if necessary, by (a) converting U.S.

Treasury bill quotations to bond-equivalent yields in accordance with

accepted financial practice and (b) interpolating linearly between (1) the

actively traded U.S. Treasury security with a maturity closest to and

greater than the Remaining Average Life and (2) the actively traded U.S.

Treasury security with a maturity closest to and less than the Remaining

Average Life.

"Remaining Average Life" means, with respect to any Called

Principal, the number of years (calculated to the nearest one-twelfth

year) obtained by dividing (i) such Called Principal into (ii) the sum of

the products obtained by multiplying (a) the principal component of each

Remaining Scheduled Payment with respect to such Called Principal by (b)

the number of years (calculated to the nearest one-twelfth year) that will

elapse between the Settlement Date with respect to such Called Principal

and the scheduled due date of such Remaining Scheduled Payment.

"Remaining Scheduled Payments" means, with respect to the Called

Principal of any Note, all payments of such Called Principal and interest

thereon that would be due after the Settlement Date with respect to such

Called Principal if no payment of such Called Principal were made prior to

its scheduled due date, provided that if such Settlement Date is not a

date on which interest payments are due to be made under the terms of the

Notes, then the amount of the next succeeding scheduled interest payment

-16-

<PAGE>

Diamond Walnut Growers, Inc. Note Purchase Agreement

will be reduced by the amount of interest accrued to such Settlement Date

and required to be paid on such Settlement Date pursuant to Section 8.2 or

12.1.

"Settlement Date" means, with respect to the Called Principal of any

Note, the date on which such Called Principal is to be prepaid pursuant to

Section 8.2 or has become or is declared to be immediately due and payable

pursuant to Section 12.1, as the context requires.

SECTION 9. AFFIRMATIVE COVENANTS.

The Company covenants that so long as any of the Notes are outstanding:

Section 9.1. Compliance with Law. The Company will, and will cause each of

its Subsidiaries to, comply with all laws, ordinances or governmental rules or

regulations to which each of them is subject, including, without limitation,

Environmental Laws, and will obtain and maintain in effect all licenses,

certificates, permits, franchises and other governmental authorizations

necessary to the ownership of their respective properties or to the conduct of

their respective businesses, in each case to the extent necessary to ensure that

non-compliance with such laws, ordinances or governmental rules or regulations

or failures to obtain or maintain in effect such licenses, certificates,

permits, franchises and other governmental authorizations could not,

individually or in the aggregate, reasonably be expected to have a Material

Adverse Effect.

Section 9.2. Insurance. The Company will, and will cause each of its

Subsidiaries to, maintain, with financially sound and reputable insurers,

insurance with respect to their respective properties and businesses against

such casualties and contingencies, of such types, on such terms and in such

amounts (including deductibles, co-insurance and self-insurance, if adequate

reserves are maintained with respect thereto) as is customary in the case of

entities of established reputations engaged in the same or a similar business

and similarly situated.

Section 9.3. Maintenance of Properties. The Company will, and will cause

each of its Subsidiaries to, maintain and keep, or cause to be maintained and

kept, their respective properties in good repair, worki

SITE SEARCH

AGREEMENTS / CONTRACTS

CLAUSES

Search Contract Clauses >>

Browse Contract Clause Library>>

Get Email Updates