Exhibit 10.52

 

Macadamia Nut Purchase Agreement

Hamakua Macadamia Nut Company, Inc. & ML Macadamia Orchards, L. P.

Calendar Years 2007 through 2012

 

This Macadamia Nut Purchase Agreement is entered into on the date set forth
below by and between Hamakua Macadamia Nut Company, Inc., a Hawaii Corporation
(“HMNC”) and ML Macadamia Orchards, L.P. (“MLP”).

 

Whereas, HMNC is experienced and capable in all aspects of the business of
processing and marketing macadamia nuts;

 

Whereas, MLP is the legal and beneficial owner of macadamia nut crop produced in
certain macadamia nut orchards in Hawaii;

 

Whereas, HMNC desires to purchase wet-in-shell (“WIS”) macadamia nuts from MLP
as provided herein;

 

Now, therefore, in consideration of the promises and mutual covenants and
agreements set forth herein, the parties agree as follows:

 

1.  Term.  This Agreement shall be deemed to have commenced for all purposes as
of January 1, 2007 and shall continue in full force and effect until December
31, 2012, unless terminated earlier as provided herein.

 

2.  Delivery.  MLP shall harvest macadamia nuts and fill containers suitable for
transport as mutually agreed upon, and arrange for pickup or delivery of
wet-in-husk (“WIH”) nuts from MLP’s orchards or WIS nuts from a designated
husking station. MLP may, at its option, husk and/or deliver nuts prior to
delivery to HMNC. If MLP husks or delivers nuts, MLP will be entitled to husking
and/or delivery bonus outlined in section 7. Ownership of the nut crop will
transfer from Seller to HMNC upon pickup by HMNC or delivery by MLP to HMNC.

 

3. Purchase and Sale.  MLP agrees to sell and HMNC agrees to purchase
approximately 6 million pounds (between 5.8 and 6.2 million) of WIS macadamia
nuts annually from various MLP orchards. The 6 million pounds shall be divided
into three equal segments of approximately 2 million pounds each. The nut
purchase price for Segment I (2 million pounds) under this contract shall be
renegotiated on or before December 31, 2008 for the remaining four years of the
contract. The nut purchase price for Segment II (2 million pounds) shall be
renegotiated on or before December 31, 2010 for the remaining two years of the
contract. If the Parties are unable to negotiate a mutually agreeable price
relative to Segment I or II, the production from that segment may be withdrawn
from the contract and sold by MLP to other parties.

 

4.  Blended Index Crop Price.  A Blended Index Crop Price (“BICP”) per pound
shall be calculated each year for all pounds delivered (adjusted to 20% moisture
and 30% SK/DIS recovery). The BICP shall be based 60% on Hamakua’s weighted
average bulk nut price for the preceding crop year (July-June) and 40% on a
fixed component of 85 cents per pound as outlined in Exhibit A. The initial BICP
shall be determined based on HMNC’s average bulk nut price for the 2006-2007
crop year (July 1, 2006 – June 30, 2007) and shall apply to all deliveries in
2007. The BICP shall apply to all deliveries from all segments until their
respective renegotiation dates.

 

5. Minimum and Maximum BICP Guidelines The Parties agree that the BICP for any
year shall not be less than 75 cents per pound and shall be no more than 95
cents per pound (adjusted to 20% moisture and

 

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30% SK/DIS recovery). The Parties further agree that any change in the BICP
shall be limited to +/- 7 cents annually.

 

6. Spot Price Adjustment Not withstanding the foregoing, if HMNC pays a weighted
average spot price higher than the MLP contract price during any calendar year,
MLP will receive an additional nut price adjustment equal to 50% of the
difference between the weighted average spot price and the prevailing contract
price. This provision does not affect the index calculations. Any additional
payment shall be calculated and paid by HMNC no later than January 31st of the
succeeding year.

 

Any spot prices negotiated between MLP and HMNC for deliveries above contract
volumes will not be included in the calculation of the Spot Price Adjustment
above.

 

7. Husking and Delivery Bonuses - There shall be no charges for hauling or
husking by HMNC. HMNC will pay a Hauling Bonus of $.02 per pound WIS (adjusted
to 20% moisture and 30% SK/DIS recovery) for WIS nuts husked by MLP and a
hauling bonus of $.02 per pound WIS (adjusted to 20% moisture and 30% SK/DIS
recovery) for nuts delivered to HMNC by MLP.

 

8. Payment Terms.  Payments shall be made within 30 days of the date of
delivery.

 

9.  PACA Lien – HMNC acknowledges that WIS macadamias are a perishable
agricultural commodity. HMNC further concedes that all receivables related to
deliveries of WIS or WIH nuts are subject to and secured by the provisions of
the Perishable Agricultural Commodities Act of 1930.

 

10.  Sampling.  HMNC and MLP shall agree on such methods and procedures as may
be appropriate to enable HMNC to determine the gross wet-in-shell weight, the
moisture content and the kernel recovery of the macadamia nuts delivered to it
by MLP with as much accuracy as is reasonably practicable.  The procedures to be
used in sampling for moisture, kernel recovery and percentage of husked WIS nuts
included in WIH nut loads and in calculating the payment to MLP are set forth in
Exhibit B. Any deviations from the sampling procedure shall be by mutual
agreement only.

 

11.  Accounting and Reports.  HMNC shall keep full and accurate records and
accounts showing, among other things, dates of delivery and weights of nuts from
the orchards, all wet-in-husk weights measured, and all other information that
may be necessary or desirable in order to calculate and verify payments to MLP
under this Agreement.

Along with each payment for deliveries, HMNC will provide a written report to
MLP describing the shipment delivery weight (WIH or WIS), the quality analysis
results, and the calculations that determine payment.

 

HMNC agrees to provide a report, prepared and certified by an independent
accountant, by August 15 of each calendar year, detailing the BICP to be used
for payment of deliveries in that calendar year. HMNC also agrees to provide a
report, prepared and certified by an independent accountant, within 45 days from
the end of each calendar year, detailing the weighted average WIS price paid by
HMNC to independent growers for the preceding year. MLP shall have 90 days from
receipt of each report to object or investigate.

 

MLP shall be entitled to observe the sampling process upon reasonable notice and
shall be entitled to any information necessary or desirable to verify the
accuracy of the nut price or payment. To the extent that information is shared
between the parties hereunder and is not otherwise in the public domain, both
parties agree to keep such information confidential except as may be required by
law or in connection with any litigation between the parties.

 

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12.  Termination.  The parties may terminate this Agreement at any time by
mutual agreement in writing.  In the event that any party shall be in default
(as defined below), the non-defaulting party may terminate this Agreement at any
time by delivering written notice of such termination to the defaulting party.

 

A party shall be in “default” under this Agreement in the event that (i) it
files any voluntary proceeding for dissolution or under any federal or state
bankruptcy, insolvency, receivership or similar law; (ii) any such proceeding is
commenced against it involuntarily and is not dismissed within 60 days; (iii) it
makes any composition with or assignment for the benefit of its creditors; (iv)
it enters into any corporate reorganization or acquisition without making
adequate provision for the performance of its obligations under this Agreement;
(v) it fails to perform any of its obligations when due under this Agreement and
it fails to correct such non-performance within 30 days after written demand for
performance is made by the other party; or (vi) it repeatedly fails to perform
its obligations under this Contract except after written demand for performance.

 

13.  Notice.  For convenience of operation hereunder, each of HMNC and MLP shall
designate one representative to serve as the channel of communication for
delivering information to and securing necessary action by its principals.  Any
party may change its representative from time-to-time by delivering written
notice of such change to the other party.  Until further notice is given, each
party’s representative shall be the person listed in the notice address below.

 

Any and all notices, demands, or other communications (collectively, “notice”)
requiring or desired to be given hereunder by either party shall be in writing
and shall be validly given or made to the other party or his authorized
representative at the address set forth below, if served either personally or if
deposited in the United States mails, certified or registered, postage prepaid,
or if sent by fax.

 

HMNC:

 

Hamakua Macadamia Nut Company, Inc.

 

 

61-3251 Maluokalani Street

 

 

P.O. Box 44715

 

 

Kawaihae, Hawaii 96743

 

 

Attention: President

Fax: (808) 882-8335

 

 

 

MLP:

 

ML Macadamia Orchards, L.P.

 

 

26-238 Hawaii Belt Road

 

 

Hilo, Hawaii 96720

 

 

Attention: President

Fax: (808) 969-8152

 

If such notice is delivered personally, service shall conclusively be deemed to
have been made at the time of such delivery.  If such notice is given by mail,
service shall conclusively be deemed to have been made 72 hours after deposit
thereof in the mail as provided for above.  If such notice is given by fax,
service shall conclusively be deemed to have been made 24 hours after the
transmission thereof and receipt of the proper response code.  Any party may
change its address for the purpose of receiving notices as herein provided by a
written notice given to the other party.

 

14.  Force Majeure.  Neither of the parties hereto shall be liable or
accountable to the other party for any delay in complying or any failure to
comply with any of the terms, provisions or conditions of this Agreement in the
event that such failure shall have been caused by an act of God, strike,
lockout, public enemy, war, civil commotion, riot, condemnation, judicial or
governmental order or other requirements of law which directly prohibit the
performing by either party of the obligations hereunder (such as, but not
limited to, governmental regulations concerning the hazards of marketing or
consumption of macadamia nuts) or the refusal or failure of any governmental
office or officer to grant any permit or order necessary

 

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for compliance herewith by either party hereto, nor shall either of the parties
hereto be liable or accountable to the other party for any damages arising from
any such delay or failure.

 

15. Waiver.  The failure of either party to enforce its rights upon any default
on the part of the other party shall not be construed as a waiver thereof, nor
shall any custom or practice which may grow up between the parties in the course
of administering this Agreement be construed to waive or to lessen the right of
either party to demand performance by the other party or exercise its rights in
the event of default.  No provision of, or default under this Agreement, may be
waived except by a notice in writing signed by the party making the waiver.  A
waiver by either party of a particular default shall not be deemed to be a
waiver of any other subsequent default.

 

16. Assignment.  Neither of the parties hereto may assign any of its rights or
obligations under this Agreement without the prior written consent of the other
party.  No consent or approval required under this Agreement shall be
unreasonably withheld and no charge for the giving of such consent or approval
shall be made.

 

17. Entire Agreement.  This Agreement represents the entire agreement and
understanding of the parties with respect to the subject matter hereof.  The
parties specifically acknowledge and agree that no joint venture or lease is
created hereby and that neither party is hereby appointed as the agent of the
other party.

 

18. Governing Law.  This Agreement will primarily be performed in and shall be
governed by and construed in accordance with the laws of the State of Hawaii.
Each of the parties consents to the jurisdiction of the courts of the State of
Hawaii or any federal court sitting in Hawaii and agrees that Hawaii is an
appropriate venue for any action that may be brought under this Agreement.

 

 

IN WITNESS WHEREOF, HMNC and MLP have caused this Macadamia Nut Purchasing
Agreement to be executed and delivered by their duly authorized representatives
on this 16th day of December, 2004.

 

HMNC:

 

HAMAKUA MACADAMIA NUT COMPANY, INC.

 

 

 

 

 

 

 

 

By

/s/ Richard Schnitzler

 

 

 

 

Richard Schnitzler

 

 

 

Its President

 

 

 

 

 

 

MLP:

 

ML MACADAMIA ORCHARDS, L.P.

 

 

 

 

 

By

/s/ Dennis J. Simonis

 

 

 

 

Dennis J. Simonis

 

 

 

Its President

 

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Exhibit A

 

Macadamia Nut Purchase Agreement

Hamakua Macadamia Nut Company, Inc. & ML Macadamia Orchards, L.P.

Blended Index Crop Price (BICP) Based on Bulk Kernel Price

 

Ave Bulk Kernel Price

 

60% Component

Crop Price

 

40% Fixed Component

Crop Price

 

Blended Index

Crop Price

At least

 

& less than

 

 

 

6.65

 

& above

 

1.01

 

0.85

 

0.95

6.60

 

6.65

 

1.00

 

0.85

 

0.94

6.55

 

6.60

 

0.99

 

0.85

 

0.93

6.50

 

6.55

 

0.98

 

0.85

 

0.93

6.45

 

6.50

 

0.98

 

0.85

 

0.93

6.40

 

6.45

 

0.97

 

0.85

 

0.92

6.35

 

6.40

 

0.96

 

0.85

 

0.92

6.30

 

6.35

 

0.95

 

0.85

 

0.91

6.25

 

6.30

 

0.94

 

0.85

 

0.90

6.20

 

6.25

 

0.93

 

0.85

 

0.90

6.15

 

6.20

 

0.92

 

0.85

 

0.89

6.10

 

6.15

 

0.91

 

0.85

 

0.89

6.05

 

6.10

 

0.90

 

0.85

 

0.88

6.00

 

6.05

 

0.89

 

0.85

 

0.87

5.95

 

6.00

 

0.88

 

0.85

 

0.87

5.90

 

5.95

 

0.87

 

0.85

 

0.86

5.85

 

5.90

 

0.86

 

0.85

 

0.86

5.80

 

5.85

 

0.85

 

0.85

 

0.85

5.75

 

5.80

 

0.84

 

0.85

 

0.84

5.70

 

5.75

 

0.83

 

0.85

 

0.84

5.65

 

5.70

 

0.82

 

0.85

 

0.83

5.60

 

5.65

 

0.81

 

0.85

 

0.83

5.55

 

5.60

 

0.80

 

0.85

 

0.82

5.50

 

5.55

 

0.79

 

0.85

 

0.81

5.45

 

5.50

 

0.78

 

0.85

 

0.81

5.40

 

5.45

 

0.77

 

0.85

 

0.80

5.35

 

5.40

 

0.76

 

0.85

 

0.80

5.30

 

5.35

 

0.75

 

0.85

 

0.79

5.25

 

5.30

 

0.74

 

0.85

 

0.78

5.20

 

5.25

 

0.73

 

0.85

 

0.78

5.15

 

5.20

 

0.72

 

0.85

 

0.77

5.10

 

5.15

 

0.71

 

0.85

 

0.77

5.05

 

5.10

 

0.70

 

0.85

 

0.76

Below

 

5.05

 

0.69

 

0.85

 

0.75

 

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Exhibit B

 

Macadamia Nut Purchase Agreement

Hamakua Macadamia Nut Company, Inc. & ML Macadamia Orchards, L.P.

Procedure for Sampling & Evaluating NIS Deliveries / Payment Calculations

 

1.  Upon receipt of a shipment, weigh or verify certified weight ticket to
determine the Gross Weight of the wet-in-husk (“WIH”) or wet-in-shell (“WIS”)
nuts delivered.  A shipment (“shipment”) shall mean one load delivered on a
single day.

 

2.  Obtain a sample, drawn randomly from throughout the delivered shipment of
mutually agreed upon quantity of nuts.

 

3.  Weigh the sample and record the weight.  For loads received WIH, husk the
sample and record the weight of the resulting sample of WIS nuts.  The ratio of
WIS weight to the WIH weight of the sample shall be applied to the Gross Weight
determined in item 1 above to determine the gross weight of the WIS nuts
delivered for loads received WIH. The gross weight of WIS nuts delivered as
determined by the foregoing for WIH loads or the weight determined in item 1
above for WIS loads is designated herein as “W”.

 

4.  Split the sample into two lots, one to determine moisture (“moisture
sample”) and the other to determine spoilage and kernel recovery (“quality
sample”).

 

5.  Weigh the moisture sample and record the weight.  Dry the sample at
approximately 175 degrees Fahrenheit for a period of 3 days.  Weigh the dried
sample and record the weight after drying.  Divide the difference in weight
prior to and after drying by the weight prior to drying.  The result is the
percentage of moisture of the WIS nuts designated herein as “M”.

 

6.  Weigh the quality sample and record the weight.  Dry the sample at
approximately 110 degrees Fahrenheit for 7 days.  Record the dry-in-shell
(“DIS”) weight.  The weight, in grams, of the DIS sample is designated herein as
“X”.

 

7.  Crack the DIS sample and separate the shells from the kernels.  Determine
the weight of the recovered raw kernels.

 

8.  Inspect the raw kernels and separate unsaleable kernels and record the
weights of the following categories.

a)  Stinkbug damage (>3 spots)

b)  Other insect damage

c)  Mold

d)  Germination

e)  Bacterial damage

f)  Immature/Shrivels

g) Total a) through f)

 

Record the data and summarize for field management purposes.

 

9.  Using commercial criteria, separate out the salable kernel and record the
weight.  The weight, in grams, of salable kernel is designated herein as “Y”.

 

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10. Determine the Salable Kernel Recovery (SK/DIS) factor designated herein as
“KR”.

 

KR = Y/X

 

11. Determine spoilage percentages for each category of unusable as follows:

 

For each category of unusable, divide the recorded category
weight by the total of unusable and usable kernel (8(g) plus Y).

 

12. Determine Payable Pounds for the load.

 

a)  Convert total load to WIS weight at 20% moisture designated herein
as             “WM”

 

WM = W*(1-M)/(1-.2)

 

b)  Determine Payable Pounds for the load designated herein as “P”

 

P = WM*(KR/.3)

 

13. Sample Calculation.

 

WIS Delivered

 

45,000

 lbs

Moisture (from sample)21.0%

 

 

 

Salable Kernel Recovery (from sample)

 

30.5

%

Price (e.g. 1st year volume price)

 

$

.85

 

Delivery Bonus (if delivered)

 

$

.02

 

Husking Bonus (if husked)

 

$

.02

 

 

WM = 45,000 * (1-.21)/(1-.2) = 44,437 lbs WIS adjusted to 20% moisture

 

 

P = 44,437 * 0.305/0.3 = 45,178 lbs WIS adjusted to 20% moisture &

 

30%

recovery (Contract Pounds)

 

 

 

Payment = 45,178 lbs * $.85

=

 

$

38,401.30

 

Delivery Bonus (if delivered)

= 45,178 * $.02=

 

$

903.56

 

Husking Bonus (if husked)

= 45,178 * $.02=

 

$

903.56

 

 

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