Exhibit 10.55


 


This Macadamia Nut Purchase Agreement is entered into on the date set
forth below by and between Purdyco International, Ltd., a Hawaii Corporation,
d.b.a. Island Princess, (“IP”) and ML Macadamia Orchards, L.P. (“MLP”).


 


Whereas, IP 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, IP 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, 2011, unless terminated earlier as provided herein.


 


2. 
Purchase and Sale.  MLP agrees to sell and IP agrees to purchase
at least 1.9 million pounds and no more than 2.1 million pounds of WIS
macadamia nuts annually from various MLP orchards. Should the parties mutually
agree in writing, up to 3 million additional pounds may be sold annually on the
same terms and conditions. For purposes of this provision, WIS pounds shall be
defined as field pounds, adjusted to 20% moisture and 30% SK/DIS kernel
recovery.


 


3. 
Delivery. 
MLP shall harvest macadamia nuts and fill containers suitable for
transport as mutually agreed upon, and deliver husked WIS nuts to IP’s processing
plant. The Parties acknowledge that the crop must be harvested and delivered in
a timely manner or the nut quality will be adversely affected. Accordingly, IP
agrees to accept delivery of the crop as harvested, up to a maximum of 150,000
WIS pounds per week and shall have the capacity to unload up to 40,000 pounds
per hour. The Island Princess processing facility will be open to receive
macadamia nut deliveries Monday through Friday from 7:00 AM to 3:00 PM.  Saturday deliveries during peak harvest
periods will be accepted with a minimum 24 hour notice to the Kea’au GM (Office
Phone; 966-7451, ext 203).  Should IP be
unable to accept deliveries up to this level, MLP shall provide samples of the
husked WIS nuts intended for delivery. When the delayed nuts are actually
delivered, payment shall be based on these samples. MLP recognizes a duty to
mitigate any damage by providing forecasts of intended deliveries and by
selling delayed deliveries to other processors with excess capacity if at all
possible.


 





















 


4. 
Annual Contract Price.  The Parties shall mutually agree upon a
contract price for each six-month period (January-June and July-December)
under the contract. The pricing for January-June shall be agreed to no
later than November 15th of the preceding year. The pricing for
July-December shall be agreed to no later than the preceding
May 15th.


 


Should the Parties fail to agree upon a price by the established dates,
the Parties shall mutually engage an independent third party broker or
specialist to (1) survey the macadamia market for the preceding crop year,
(2) determine the average price per pound for bulk premium (Hawaiian and
Australian) Style II macadamia nuts and (3) issue a certified report to
the parties. The procedures for such review are outlined in Exhibit A.
Either party may review or challenge the content of the report within 15 days
of issuance, in which case the parties shall attempt to resolve the matter
through good faith negotiation. Should the parties fail to reach a final agreement,
the objecting party may, at its own cost, engage a second qualified Specialist
to perform another price survey. The results of the two surveys shall be
averaged to determine the Global Macadamia Kernel Price. The Global Macadamia
Price as determined by the Specialist(s) shall be converted to a WIS contract
price using a conversion factor of 15.2% of the Global Macadamia Kernel Price.


 


In the event that a contract price has not been established by the
beginning of any six-month contract period, any nuts delivered will be paid at
an estimated price equal to the price in the preceding period. Once the new
pricing is determined, an adjustment shall be calculated and reflected in the
subsequent monthly payment.


 


5. 
(A) Options to Terminate. In the event
that the contract price for any six-month contract period is less than 75 cents
per pound, MLP shall be entitled to terminate this agreement at its sole option
by providing 60 days written notice.  In
the event that the contract price for any six-month contract period is more
than $1.20 per pound, IP shall be entitled to terminate this agreement at its
sole option by providing 60 days written notice.


 


5. 
(B) Suspension of WIS Macadamia Nut Delivery.- In the event that rocks
contained in a delivery, as determined by the WIS macadamia nuts sampling
process exceeds 0.5% of the gross weight of the delivery sample, or when
“Extraneous” matter ( as defined in Exhibit B) exceeds 5% of the gross
weight of delivery sample, IP has the right to refuse further deliveries of WIS
macadamia nuts until satisfied that MLP has taken the necessary measures to
correct the problem at their husking plant. 
IP will inform MLP immediately when extraneous materials exceed the
established criteria and allow reasonable time for MLP to mitigate the problem.


 


6. 
Payment Terms. 
Payments shall be made within 30 days of the date of delivery.


 


7. 
PACA Lien – IP acknowledges that WIS macadamias
are a perishable agricultural commodity. IP further concedes that all
receivables related to deliveries of WIS nuts are subject to and secured by the
provisions of the Perishable Agricultural Commodities Act of 1930.


 


8. 
Sampling. 
IP and MLP shall use such methods and procedures as may be appropriate
to enable IP 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 in calculating the payment to MLP are set
forth in Exhibit B. Any deviations from the sampling procedure shall be by
mutual agreement only.


 


9. 
Accounting and Reports.  IP 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, IP will provide a written report to MLP describing the shipment
delivery weight (WIS), the quality analysis results, and the calculations that
determine payment.


 


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.


 


10.  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.


 


11.  Notice.  For convenience of
operation hereunder, each of IP 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.


 





















 


	
  IP:

  	
  Island Princess Macadamia Nut Company

  
	
   

  	
  2846 Ualena Street

  	
   

  
	
   

  	
  Honolulu, Hawaii 96819

  	
   

  
	
   

  	
  Attention: President

  	
  Fax: (808) 836-2019

  
	
   

  	
   

  	
   

  
	
  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.


 


12.  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 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. In
the event that any such event shall have a material adverse economic impact on
the price or marketability of macadamia nuts, either party may terminate this
agreement with 90 days written notice.


 


13.  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.


 


14.  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.


 


15. 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.


 





















 


16. Mediation. Any and all matters in
dispute arising from or relating to this contract/agreement, or the breach
thereof, which remain unresolved after direct negotiation between the parties,
shall first be submitted to confidential mediation in accordance with the
Rules, Procedures and Protocols for Mediation of Dispute Prevention &
Resolution, Inc., then in effect. The parties agree that a good faith
attempt to resolve all issues in mediation is a pre-condition to further
adversarial proceedings of any kind.


 


17. 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, IP and MLP have caused this Macadamia Nut Purchase
Agreement to be executed and
delivered by their duly authorized representatives on this 5th day of January,
2006.


 


	
  IP:

  	
  PURDYCO INTERNATIONAL, LTD.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By

  	
  /s/ Michael Purdy

  	
   

  
	
   

  	
   

  	
  Michael Purdy

  
	
   

  	
   

  	
  Its President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  MLP:

  	
  ML MACADAMIA ORCHARDS, L.P.

  
	
   

  	
   

  	
   

  
	
   

  	
  By

  	
  /s/ Dennis J. Simonis

  	
   

  
	
   

  	
   

  	
  Dennis J. Simonis

  
	
   

  	
   

  	
  Its President

  



 





















 


EXHIBIT A


 


PROCEDURES FOR DETERMINATION OF
GLOBAL MACADAMIA PRICES


 


1.                                       If the parties fail or are unable to agree
upon a contract price by November 15th for any January-June period
or by May 15th for any July-December period during the
term hereof, the following procedures shall be used to determine the Global
Macadamia Kernel Price, as defined herein. 
This Global Macadamia Kernel Price shall then be converted to a WIS
contract price equal to 15.2% of the Global Macadamia Kernel Price.


 


2.                                       The parties shall mutually-select an
independent third-party broker or specialist (the “Specialist”) from the list
below with current experience and transactions in the macadamia nut
market.  The Specialist shall be
independent and shall have no material business relationship with either party.


 


	
  a.

  	
  J.F. Braun & Associates

  
	
  b.

  	
  Trademark Commodities Inc.

  
	
  c.

  	
  Jennings & Associates

  
	
  d.

  	
  Debbie Roy Brokerage

  
	
  e.

  	
  York Sutch & Associates

  



 


If the parties shall be unable to mutually agree
upon a Specialist, then the parties shall alternately delete one name each from
the list, until only one Specialist is left.


 


3.                                       The Specialist shall determine the average,
current spot price per-pound for bulk premium (Hawaiian and Australian) Style
II raw macadamia nuts (FOB West Coast) (the “Global Macadamia Kernel
Price”).  Any distressed or discounted
sales for old or inferior macadamia nuts shall be excluded from the determination.  The Specialist shall thereupon issue a
certified report of the foregoing to the parties, which report shall state the
average price per pound for the applicable period, together with the
methodology, procedure and actual sample of transactions utilized in the
calculation.


 


4.                                       If neither party objects to the reported
Global Macadamia Kernel Price, as determined above, the WIS contract price will
be 15.2% of the Global Macadamia Kernel Price.


 


5.                                       If either party challenges the conclusions of
the report within fifteen (15) days of the issuance thereof, the parties shall
attempt to resolve the pricing issues through good faith negotiations.  In the event that the parties fail or are
unable to reach a final agreement as to the contract price within fifteen (15)
days, the objecting party may, at its own cost, engage a second, qualified,
independent, third-party broker or specialist to prepare a second certified
price report using the procedures set forth in item no. 3 above.  The results of the two reports shall be
averaged to determine the Global Macadamia Kernel Price.  The Global Macadamia Kernel Price, as
determined by the independent third-party broker(s) or specialist(s), as the
case may be, shall be converted to a WIS macadamia nut contract price using a
conversion factor of 15.2% of the Global Macadamia Kernel Price.


 





















 


EXHIBIT B


 


Procedure for Sampling NIS for Payment Purposes


 


1.  MLP agrees to provide
certified scale weights for each delivery, either from the batch scales located
at the Pahala and Kea’au husking stations or from a public scale located no
more than 10 miles from the Island Princess processing facility.  Upon delivery, weigh or verify certified
weight ticket to determine the Gross Weight of each wet-in-shell (“WIS”) shipment.
A shipment (“shipment”) shall mean one load delivered on a single day.  Additional loads delivered on the same day
will be treated as individual shipments, i.e. separate weights and
samples.  IP will provide, upon delivery,
a receipt that states the weight of each shipment delivered by MLP. (The
delivery and accompanying sample will be identified by lot.  The lot designation will be by date and time
of receipt.  A delivery, for example, on
March 3, 2007 at 2:00PM shall be designated “MLP3/3/07-1400”.


 


2.  MLP will provide samples from
its continuous sampler until IP has the ability to draw a continuous sample
from throughout the delivered shipment of mutually agreed upon quantity of
nuts.  When IP installs a continuous
sampler IP will adhere to the procedures as stated below.  A 60 lbs. (minimum weight) sample will be
collected and will accompany the shipment at the time of delivery.  This sample will be used by IP to determine
the moisture content, the amount of extraneous material, kernel quality and recovery.  From this sample - using accepted grab
procedures -  two sub samples, designated
“A” and “B”, of 20lbs. each shall be collected. 
Sub-sample “A” shall be used for analysis as specified in the following
text.  Sub-sample “B” shall be used to
verify the analysis results if requested by MLP.  Sub-sample “B” shall be held available for 14
days following issuance of payment by IP or until that payment is accepted by
MLP (which ever comes first).


 


3.  To determine Gross Weight WIS
Delivered (herein designated as “GW”):


a.  Weigh sub-sample “A” and
record the weight.


b.  Sort the sample and remove
any extraneous material (to include: rat damaged and empty nuts, rocks, sticks,
husk, mechanically fractured shell exposing kernel, and any trash).  Record the weight of this portion.


c.  Screen the resulting WIS
sample for peewee nuts (defined as nuts less than 5/8 inch in diameter).  Record the weight of this portion.  Retain the WIS portion for subsequent
analysis.


d.  Calculate the ratio:


((wt. sub-sample “A”) - (wt. extraneous material) - (wt. peewee nuts))
/ wt. sub-sample “A” = EM


e.  Calculate “GW” as follows:


EM x Gross Weight of shipment = GW


 


4. 
Split the cleaned WIS sub-sample “A” into two portions, one of
approximately two (2) lbs. for moisture content determination (moisture
sample) and the other of approximately ten (10) lbs. for quality analysis
(quality sample).  The procedures for
moisture content analysis are specified in paragraph 5 below.  The procedures for determining kernel
recovery and spoilage are specified in paragraphs 6 to 11.


 





















 


5.  Weigh the moisture sample and
record the weight.  Dry the sample at
approximately 250 degrees Fahrenheit for a period of 1 day.  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 122 degrees Fahrenheit for 3
days then raise the temperature to 140 degrees Fahrenheit for 2 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.  Roast all recovered kernel at 260 degrees
Fahrenheit for 35 minutes in a convection oven.


 


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


 


	
  a)

  	
  Stinkbug damage (>2 spots)

  
	
  b)

  	
  Koa Seed Worm damage

  
	
  c)

  	
  Tropical Nut Borer damage

  
	
  d)

  	
  Mold

  
	
  e)

  	
  Germination

  
	
  f)

  	
  Immature/Shrivels

  
	
  g)

  	
  Total a) through f)

  



 


Record the data and summarize for field
management purposes.


 


9.  Using Hawaii, Department of
Agriculture “Standards for Hawaii-Grown Shelled Macadamia Nuts” criteria,
separate out the salable kernel and record the weight.  The weight, in grams, of salable kernel is
designated herein as “Y”.


 


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 = GW*(1-M)/(1-.2)


 


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


 


P = WM*(KR/.3)


 


13. Sample Calculation.


 


Gross Weight WIS Delivered (after
Ex-       45,000 lbs traneous material)


	
  Moisture
  (from sample)

  	
   

  	
  21.0

  	
  %

  
	
  Salable Kernel Recovery (from sample)

  	
   

  	
  30.5

  	
  %

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

  	
   

  	
  $

  	
  .85

  	
   

  
					



 


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 * $0.85  =                            $38,401.30