Exhibit 10.57


 


Macadamia
Nut Purchase Agreement


Mauna Loa Macadamia Nut
Corporation and ML Macadamia Orchards, L.P.


 


This Macadamia Nut Purchase Agreement is entered into on the date set
forth below by and between Mauna Loa Macadamia Nut Corporation (MLMNC-Buyer)
and ML Macadamia Orchards, L.P. (MLP-Seller).


 


14.         Term. This
Agreement shall be deemed to have commenced for all purposes as of January 1,
2006 and shall continue in full force and effect until December 31, 2011
unless terminated earlier as provided herein.


 


15.         Purchase and Sale.
MLP agrees to sell and MLMNC agrees to purchase approximately 6.3 million
pounds of Wet in Shell (WIS) macadamia nuts annually from various MLP orchards.
MLP will deliver all Macadamia Nuts to MLMNC’s Kea’au Plant located at 1
Macadamia Nut Rd. Hilo, Hawaii. The Macadamia Nuts may be delivered to
MLMNC’s Kea’au Plant as Wet in Husk (WIH) or WIS. Macadamia Nuts delivered as
WIH will be husked at MLMNC’s Kea’au Husking Plant. MLMNC will charge its
direct and allocated costs of husking to MLP, but no more than currently being
charged by MLP.


 


16.         Purchase Price. The
Purchase Price for the Macadamia Wet in Shell will be determined on a 20%
moisture and 30% Saleable Kernel recovery to Dry in Shell (SK/DIS) basis. The
price per pound adjusted to 20% moisture and 30% SK/DIS is outlined in Exhibit A.
The Procedures for determining moisture and SK/DIS are outlined in Exhibit B.
Payment calculations are outlined on Exhibit C


 


17.         Payment Terms. Payment
shall be made within 30 days of the date of delivery of WIH or WIS to MLMNC’s
Kea’au Plant.


 


18.         Sampling and Testing
for determining Purchase Price. The procedures to be used in sampling and
testing for moisture and kernel recovery (SK/DIS) are set forth in Exhibit B.
The Purchase Price will be determined based on the QA Data. Any deviations from
the sampling and testing procedures shall be by mutual agreement only.


 


19.         Accounting and Reports.
MLMNC will keep full and accurate records and accounts for all WIS deliveries
made by MLP. All lab results will be provided weekly and corresponding
calculations for payment will be provided to MLP at the time of payment. What
constitutes QA data are outlined in Exhibit B.


 

















 


MLP and MLMNC will be entitled to observe and
audit the others’ sampling and testing process upon reasonable notice and will
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.


 


20.         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, 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 it fails to perform any of its obligations
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 it
repeatedly fails to perform its obligations under this Contract except
after written demand for performance. Termination shall be effective 30 days
from such uncorrected notice and all deliveries prior to termination shall be
paid in accordance with the terms of this agreement.


 


21.         Notice. 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.


 


	
  MLMNC:

  	
  Mauna Loa Macadamia Nut Corp.

  
	
   

  	
   

  	
  1 Macadamia Road

  
	
   

  	
   

  	
  Hilo, Hawaii 96720

  
	
   

  	
   

  	
  Attention: President

  	
  Fax: (808) 966-8410

  
	
   

  	
   

  	
   

  	
   

  
	
  MLP:

  	
  ML Macadamia Orchards, L.P.

  
	
   

  	
   

  	
  26-238 Hawaii Belt Road

  
	
   

  	
   

  	
  Hilo, Hawaii 96720

  
	
   

  	
   

  	
  Attention: President

  	
  Fax: (808) 969-8152

  



 


22.         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 and 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 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.


 


23.         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.


 


24.         Assignment. Neither
party may assign any of its rights or obligation hereunder without the
prior written consent of the other party, which consent shall not be
unreasonably withheld, delayed, denied or conditioned.


 


25.         Entire Agreement. This
Agreement represents the entire agreement and understanding of the parties with
respect to the subject matter hereof.


 


13.        Voluntary Mediation.
In the event both parties agree that voluntary mediation is an appropriate
mechanism to attempt to resolve a dispute under this Agreement, the dispute
shall be submitted to confidential mediation in accordance with mediation
procedures to be agreed upon by the parties at that time. The parties agree to
attempt to resolve any disputes in good faith prior to pursuing any dispute
resolution process.


 


14.   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


 


	
  ML Macadamia Orchards, L.P. (MLP-Seller)

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ Dennis J. Simonis

  	
   

  	
   

  
	
   

  	
  Its President and Chief Executive Officer

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Mauna Loa Macadamia Nut Corp. (MLMNC-Buyer)

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ Charles Young

  	
   

  	
   

  
	
   

  	
  Its Director of Agribusiness

  	
   

  
					



 

















 


Exhibit A


 


Macadamia Nut Purchase
Agreement


Mauna Loa Macadamia Nut
Corporation and ML Macadamia Orchards, L.P.


Purchase Price


 


The Macadamia Nut Wet in Shell
Purchase Price adjusted to 20% moisture and 30% Kernel Recovery SK/DIS
(Saleable Kernel/Dry in Shell) for the term of this Agreement is set forth
below.


 


	
  $0.74/lb

  	
   

  	
  January 1,
  2006 – December 31, 2006

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  $0.75/lb

  	
   

  	
  January 1,
  2007 – December 31, 2008

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  $0.76/lb

  	
   

  	
  January 1,
  2009 – December 31, 2009

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  $0.77/lb

  	
   

  	
  January 1,
  2010 – December 31, 2010

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  $0.78/lb

  	
   

  	
  January 1,
  2011 – December 31, 2011

  	
   

  



 

















 


Exhibit B


 


Macadamia Nut Purchase
Agreement


Mauna Loa Macadamia Nut
Corporation and ML Macadamia Orchards, L.P.


Nut in Shell Sampling and
Testing Procedures /QA Data


 


Sampling


 


Nuts delivered as Wet in Husk (WIH) will be husked for individual
growers by batch method at MLMNC’s Kea’au husking plant. Following husking,
each batch of Wet in Shell (WIS) will be weighed by means of a certified “Batch
Scale”. The total weight of the batch will be recorded and this will constitute
the “Gross Pounds Received” (“GPR”).


 


Wet in Shell (WIS) samples from nuts husked at MLMNC’s husking plant
will be drawn randomly by means of a continuous sampler located on the
discharge chute of the “Batch Scale”.


 


Nuts delivered as Wet in Shell (WIS) will be accepted but they must be
accompanied by a certified weight ticket for each WIS load delivered. This will
constitute the “Gross Pounds Received” (“GPR”).


 


For nuts delivered as WIS, samples will be drawn randomly by means of a
continuous sampler located on the discharge chute of the WIS receiving station.


 


WIS samples as described above may vary in size but at no time
will the sample weigh less than 20 pounds.


 


Testing


 


The WIS samples will be used for determining the amount of extraneous
material (as defined below), moisture content, kernel quality and kernel
recovery for their representative deliveries.


 


Weigh the entire sample and record the weight as the Gross Sample
Weight (“GSW”). Remove all extraneous material from the sample, weigh and
record the weight of all extraneous material. The remainder of the sample will
be thoroughly mixed and divided into two equal sub-samples A and B.


 


Extraneous Material is defined as


 


•                  Foreign
material


•                  Trash


•                  Husk
(loose pieces)


•                  Husks
from unhusked Nuts

















 


•                  Empty
Nuts


•                  Rat
Damaged


•                  Sticks


•                  Rocks


•                  Mechanically
fractured shell where the kernel is exposed (applicable only when WIS nuts
husked by MLP)


•                  Germinated
Nuts


•                  Peewee
Nuts < 5/8 inch in diameter (test peewee nuts <5/8” for quality and
recovery)


 


The ratio of weight for the Extraneous material to the Gross Sample
Weight (“GSW”) will be applied to the “GPR” to determine the Gross Weight WIS (“GW”)
delivered (after Extraneous material).


 


Moisture content will be determined by drawing a one pound sample from
each of the sub-samples A and B (“moisture sample”). The moisture sample will
be weighed and the weight recorded. The moisture sample will be dried in a
convection oven at 105 degrees Celsius (220 degrees Fahrenheit) for 48 hours. After
drying the dried sample will be weighed and the weight recorded. The percentage
moisture “M” will be determined by dividing the difference in weight prior to
and after drying by the weight prior to drying.


 


Sub Samples A and B will be weighed separately and dried at a
temperature of approximately 35 degrees Celsius (120 degrees Fahrenheit) for 7
days(Note: subject to revision following evaluation of moisture sensor and oven
drying procedures. The revision must be mutually agreed upon by both parties). After
drying, sub sample A will be weighed and the weight recorded as the Dry in
Shell (“DIS”) weight “X”. Sub sample B will be held for 30 days and may be
used for confirmation of the results for sub sample A.


 


Crack sub sample A and separate the shells from the kernels. Determine
the weight of the recovered raw kernel. Inspect the raw kernel and separate
unsaleable kernels and record the weights of the following categories


 


a)              Stink Bug damage       (>
2 spots)


b)             Other Insect damage


i.                  Koa Seed Worm


ii.               Tropical Nut Borer


c)              Mold


d)             Germinated


e)              Immature/Shrivel


f)                Bacterial damage


g)             Total a) through f)
and record as raw unsaleable


 

















 


Roast remaining kernel from sub sample A using Commercial Criteria. Using
the Hawaii Department of Agriculture “Standards for Roasted Macadamia Nuts” separate
out and weigh the unsaleable kernel and record weight as


 


h) Roasted Unsaleable


 


Each category for unsaleable kernel will be reported by weight and by %
of total weight of recovered raw kernel.


 


Weigh remaining Saleable kernel from sub sample A and record as
Saleable Kernel (“SK”).


 


Determine Kernel Recovery (“KR”) where


 


KR = SK/X


 


QA Data


 


The QA data will be provided by MLMNC for each delivery. The QA Data
will include Gross Pounds Received, Moisture content (from moisture sample), %
Extraneous Material (from sample), % total Unsaleable kernel (from sample), %
Unsaleable kernel by category (from sample) and Kernel Recovery “KR” (SK/DIS).


 

















 


Exhibit C


 


Macadamia Nut Purchase
Agreement


Mauna Loa Macadamia Nut
Corporation and ML Macadamia Orchards, L.P.


Payment Calculations


 


Payment
Calculations


 


The payable pounds for each delivery will be calculated by


 


Converting “GW” of each delivery to 20%
moisture (“WM”) where


 


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


 


Converting “WM” to payable pounds (“P”) @ 30%
KR where


 


P = WM*(KR/.3)


 


Sample Calculation:


 


Gross Pounds Received “GPR” = 100,000 lbs


% Extraneous Material (from sample) = 2%


Moisture “M” (from sample) = 23%


Kernel Recovery “KR” (from sample) = 28%


Price (from Exhibit A) = $0.75/lb


 


	
  Gross Weight WIS 

  	
  = Gross Pounds Received minus Extraneous
  Material

  
	
   

  	
  = 100,000 lbs minus (100,000 lbs * .02%)

  
	
   

  	
  = 98,000 lbs

  



 


WM = 98,000 lbs * (1-.23)/(1-.2) = 94,325 lbs


 


P = 94,325 lbs * (.28/.3) = 
88,036 lbs


 


Payment =  88,036* $0.75/lb = $
66,027.