**Exhibit 10.52**

 

Macadamia Nut Purchase Agreement

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

Calendar Years 2007 through 2012

 

ThisMacadamia Nut Purchase Agreement is entered into on the date set forth below byand 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 processingand marketing macadamia nuts;

 

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

 

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

 

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

 

1.  Term. This Agreement shall be deemed to have commenced for all purposes as ofJanuary 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 fillcontainers suitable for transport as mutually agreed upon, and arrange forpickup or delivery of wet-in-husk (“WIH”) nuts from MLP’s orchards or WIS nutsfrom a designated husking station. MLP may, at its option, husk and/or delivernuts prior to delivery to HMNC. If MLP husks or delivers nuts, MLP will beentitled to husking and/or delivery bonus outlined in section 7. Ownership ofthe nut crop will transfer from Seller to HMNC upon pickup by HMNC or deliveryby MLP to HMNC.

 

3.Purchase and Sale.  MLP agrees tosell and HMNC agrees to purchase approximately 6 million pounds (between 5.8and 6.2 million) of WIS macadamia nuts annually from various MLP orchards. The6 million pounds shall be divided into three equal segments of approximately 2million pounds each. The nut purchase price for Segment I (2 million pounds)under this contract shall be renegotiated on or before December 31, 2008 forthe 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 theremaining two years of the contract. If the Parties are unable to negotiate amutually agreeable price relative to Segment I or II, the production from thatsegment may be withdrawn from the contract and sold by MLP to other parties.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 poundshall be calculated each year for all pounds delivered (adjusted to 20% moistureand 30% SK/DIS recovery). The BICP shall be based 60% on Hamakua’s weightedaverage bulk nut price for the preceding crop year (July-June) and 40% on afixed component of 85 cents per pound as outlined in Exhibit A. The initialBICP shall be determined based on HMNC’s average bulk nut price for the2006-2007 crop year (July 1, 2006 – June 30, 2007) and shall apply to alldeliveries in 2007. The BICP shall apply to all deliveries from all segmentsuntil their respective renegotiation dates.

 

5.Minimum and Maximum BICP Guidelines The Parties agree that the BICP forany year shall not be less than 75 cents per pound and shall be no more than 95cents 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 shallbe limited to +/- 7 cents annually.

 

6. Spot Price AdjustmentNot withstanding the foregoing, if HMNC pays a weighted average spot pricehigher than the MLP contract price during any calendar year, MLP will receivean additional nut price adjustment equal to 50% of the difference between theweighted average spot price and the prevailing contract price. This provisiondoes not affect the index calculations. Any additional payment shall be calculatedand paid by HMNC no later than January 31st of the succeeding year.

 

Anyspot prices negotiated between MLP and HMNC for deliveries above contractvolumes will not be included in the calculation of the Spot Price Adjustmentabove.

 

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

 

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

 

9.  PACA Lien – HMNC acknowledges that WISmacadamias are a perishable agricultural commodity. HMNC further concedes thatall receivables related to deliveries of WIS or WIH nuts are subject to andsecured by the provisions of the Perishable Agricultural Commodities Act of1930.

 

10.  Sampling.  HMNC and MLP shall agree on such methods andprocedures as may be appropriate to enable HMNC to determine the grosswet-in-shell weight, the moisture content and the kernel recovery of themacadamia nuts delivered to it by MLP with as much accuracy as is reasonablypracticable.  The procedures to be usedin sampling for moisture, kernel recovery and percentage of husked WIS nutsincluded in WIH nut loads and in calculating the payment to MLP are set forthin Exhibit B. Any deviations from the sampling procedure shall be by mutualagreement only.

 

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

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

 

HMNCagrees to provide a report, prepared and certified by an independentaccountant, by August 15 of each calendar year, detailing the BICP to be usedfor 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 theend of each calendar year, detailing the weighted average WIS price paid byHMNC to independent growers for the preceding year. MLP shall have 90 days fromreceipt of each report to object or investigate.

 

MLPshall be entitled to observe the sampling process upon reasonable notice andshall be entitled to any information necessary or desirable to verify theaccuracy of the nut price or payment. To the extent that information is sharedbetween the parties hereunder and is not otherwise in the public domain, bothparties agree to keep such information confidential except as may be requiredby law or in connection with any litigation between the parties.

 

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

 

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

 

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

 

Any and allnotices, demands, or other communications (collectively, “notice”) requiring ordesired to be given hereunder by either party shall be in writing and shall bevalidly given or made to the other party or his authorized representative atthe address set forth below, if served either personally or if deposited in theUnited States mails, certified or registered, postage prepaid, or if sent byfax.

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

 

14.  Force Majeure.  Neither of the parties hereto shall be liableor accountable to the other party for any delay in complying or any failure tocomply with any of the terms, provisions or conditions of this Agreement in theevent that such failure shall have been caused by an act of God, strike,lockout, public enemy, war, civil commotion, riot, condemnation, judicial orgovernmental order or other requirements of law which directly prohibit theperforming by either party of the obligations hereunder (such as, but notlimited to, governmental regulations concerning the hazards of marketing or consumptionof macadamia nuts) or the refusal or failure of any governmental office orofficer to grant any permit or order necessary

 

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

 

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

 

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

 

17. EntireAgreement.  This Agreement representsthe entire agreement and understanding of the parties with respect to thesubject matter hereof.  The partiesspecifically acknowledge and agree that no joint venture or lease is createdhereby and that neither party is hereby appointed as the agent of the otherparty.

 

18. GoverningLaw.  This Agreement will primarilybe performed in and shall be governed by and construed in accordance with thelaws of the State of Hawaii. Each of the parties consents to the jurisdictionof the courts of the State of Hawaii or any federal court sitting in Hawaii andagrees that Hawaii is an appropriate venue for any action that may be broughtunder this Agreement.

 

 

IN WITNESSWHEREOF, HMNC and MLP have caused this Macadamia Nut PurchasingAgreement to beexecuted and delivered by their duly authorized representatives on this 16thday 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. & MLMacadamia 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. & MLMacadamia 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 thewet-in-husk (“WIH”) or wet-in-shell (“WIS”) nuts delivered.  A shipment (“shipment”) shall mean one loaddelivered on a single day.

 

2.  Obtain a sample, drawnrandomly from throughout the delivered shipment of mutually agreed uponquantity of nuts.

 

3.  Weigh the sample and recordthe weight.  For loads received WIH, huskthe sample and record the weight of the resulting sample of WIS nuts.  The ratio of WIS weight to the WIH weight ofthe sample shall be applied to the Gross Weight determined in item 1 above todetermine 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 WIHloads or the weight determined in item 1 above for WIS loads is designatedherein as “W”.

 

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

 

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

 

6.  Weigh the quality sample andrecord the weight.  Dry the sample atapproximately 110 degrees Fahrenheit for 7 days.  Record the dry-in-shell (“DIS”) weight.  The weight, in grams, of the DIS sample isdesignated herein as “X”.

 

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

 

8.  Inspect the raw kernels andseparate 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 isdesignated herein as “Y”.

 

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

 

KR = Y/X

 

11. Determine spoilage percentages for each category of unusable asfollows:

 

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

 

12. Determine Payable Pounds for the load.

 

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

 

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

 

b)  Determine Payable Pounds forthe 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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