Preferred Network by ProducePay Membership Agreement (Distributor)

1.         Member Agreement. By electronically accepting this Agreement, the Distributor identified as a member in the Preferred Network by ProducePay Membership Application (the “Member”) agrees that this Agreement shall be legally binding on the Member.

2.       Initial Membership Period: The initial membership period for the Preferred Network Membership shall be one year from Member’s electronic acceptance of this Agreement. This Agreement will not renew automatically at the end of the initial membership period. Member may choose to renew membership at the end of the initial membership period, subject to maintaining in good standing with Produce Pay Inc. (the “Company”) and paying the applicable membership renewal fees.  

3.       Membership Benefits: The Preferred Network Membership encompasses the following:

4.       Diligence.  Member’s participation in the Preferred Network is subject to it passing the Company’s diligence requirements, in the sole discretion of the Company. If Member does not pass the diligence requirements, Member’s membership in the Preferred Network and this Agreement shall automatically terminate.

5.       Information furnished by Member. Member is required to furnish the Company information or material about its entity, business or products/services as part of the registration process for the Preferred Network and to establish a member account.  Member represents, warrants and agrees that (a) such information and material whether submitted during the registration process or thereafter throughout the continuation of its use of the ProducePay platform is true, accurate, current and complete, and (b) it will maintain and promptly amend all information and material to keep it true, accurate, current and complete.

6.       Fulfillment Fee: In consideration for membership in the ProducePay Preferred Network, Member hereby agrees to pay the Company a fulfillment fee of 0.25% of the final gross sales value of each shipment, net of documented adjustments made in accordance with Section 8, sourced from any Preferred Network Grower. A “Preferred Network Grower” is a grower matched with Member by the Company.

7.       Transaction Term Sheets: Member agrees that for each sale of produce sourced from that Preferred Network Grower, it shall complete and submit to the Company upon agreeing to the transaction with the Preferred Network Grower a transaction term sheet in the form currently provided by the Company that includes, among other things, the type of produce, estimated volume, estimated start terms, nature of transaction, pricing, commission and other material terms.  Member shall immediately notify the Company in writing if there are any changes in any transaction from the terms previously provided the Company in the transaction term sheet.

8.       Produce Acceptance:  Member hereby agrees that, within one business day of receiving a shipment of produce from a Preferred Network Grower, it shall indicate its acceptance and the quantity and quality of the produce on the ProducePay platform.

Member agrees that it shall only make quality deductions from a shipment from a Preferred Network Grower in accordance with the following rules:

a.         The Member must provide a timely USDA inspection (within 8 hours of receipt for truck shipments and 24 hours of receipt for rail shipments) to justify all rejections, dumps, repacks, or sales below relevant or applicable market prices unless previously agreed upon with the seller.

b.         Quality deductions are only permitted if justified by a 3rd party audit where the auditor is trained to grade to USDA standards.

c.         If the Member accepts anything less than shipped volume or adjusts prices below market rates, it must provide written reasoning as to why on the ProducePay platform.

9.       Liquidations: Member agrees that, for each sale of produce sourced from a Preferred Network Grower, upon such sale Member shall pay to the Company an amount equal to: (a) all payments due by Member to the Preferred Network Grower for that shipment (the “Liquidation Payment”), plus (b) the fulfillment fee calculated in accordance with Section 6 (Fulfillment Fee). The Company will pay the Preferred Network Grower the Fulfillment Payment less all amounts owed by the Preferred Network Grower to the Company. Payment and accounting remittance (liquidation files) will be due to the Company as per PACA’s regulations within 30 days of receipt from the date the goods are received and accepted by the ultimate buyer.

For each shipment, Member shall provide the Company with an itemized liquidation report showing itemized sales prices and all commission fees and other deductions, which shall be provided via the Company’s liquidation email address, uploaded into the ProducePay platform via CSV or PDF files, or sent via ERP integration. This report shall be provided at the same time as the Member remits the Liquidation Payment on the ProducePay platform.

10.     Restrictions on Advances.  Member agrees that it will not offer or provide a Preferred Network Grower for that Preferred Network Grower with any loans or advances (including preseason and/or pick & pack advances) without the prior written approval of the Company. The Company shall have the ability to provide Pick and Pack financing for each Preferred Network Grower shipment to the Member or Preferred Network Grower for a separate financing fee, and provide a Preferred Network Grower pre-season financing for a separate financing fee.

11.     Data. Member hereby grants the Company a non-exclusive, worldwide, perpetual, transferable, royalty-free license to use, copy, transmit, sub-license, index, store, aggregate, and display Transaction Data in connection with the operation and maintenance of the Preferred Network, for technical support of the ProducePay platform, to perform the payment liquidations, to otherwise perform obligations to the Member or any Preferred Network Grower, to monitor Member’s suitability for continued inclusion in the Preferred Network, to perform account management services, and to publish, display, and distribute de-identified, aggregated information derived from Transaction Data and other information from Member’s use of the ProducePay platform and participation in the Preferred Network, for marketing, research or compliance purposes, for purposes of improving the Company’s products and services or the ProducePay platform, and for developing, displaying, and distributing benchmarks and similar reports, provided that any such data is not publicly identified or identifiable as originating with or associated with Member. The foregoing shall not limit the ability of the Company: (a) to publish or otherwise share or distribute information regarding the Member that is obtained from publicly available or nonconfidential sources, such as Blue Book, or (b) to share data with a Preferred Network Grower regarding transactions with that Preferred Network Grower. “Transaction Data” means any data of any type regarding transactions between Member and a Preferred Network Grower, including without limitation produce type, pricing and quality, sale price, fees and deductions, quality, grading and time periods for sale or liquidation of produce.

12.     Privacy Policy and Terms of Use: Member hereby consents to the Company’s privacy policy, located at https://producepay.com/privacy/ which describes Company’s privacy practices, and the Company’s terms of use located at https://producepay.com/terms-of-use/, both of which are incorporated by reference into this Agreement. By Member’s continuing use of the ProducePay platform, Member consents to any updates to the Company’s privacy policy or terms of use that may be published on the Company’s website or the ProducePay platform from time to time.

13.     Right to Terminate Membership: Member may terminate its membership in the Preferred Network at any time upon written notice to the Company. The Company may terminate Member’s participation in the Preferred Network upon written notice to Member if (a) the Company, in its sole discretion, determines that Member no longer satisfies the Company’s diligence standards or that it is not in the best interests of the Company or the Preferred Network for Member’s participation to continue, or (b) the Company discontinues or modifies the participation requirements for the Preferred Network.

14.      Survival: The fulfillment fee under Section 6 and the requirements regarding transaction term sheets, product acceptance and liquidations under Sections 7, 8 and 9  apply to all shipments sourced from a Preferred Network Grower even after Member’s membership in the Preferred Network expires or terminates, regardless of the reason (including for non-renewal or termination under Section 12). In addition to Sections 6-9 surviving, the restriction on advances under Section 10, the provisions of Sections 5, 11, 12 and 15-23 and this Section 14 shall survive the expiration or termination of this Agreement and the Member’s participation in the Preferred Network, regardless of the reason.

15.     Assignment:  This Agreement shall not be assigned or delegated by the Member in whole or in part without the prior written consent of Company, which may be withheld by Company in its sole discretion.

16.     Waiver; Severability: Failure by the Company to enforce a provision of this Agreement shall not constitute a waiver of that or any other provision of the Agreement.  If one or more provisions of this Agreement are held to be unenforceable under applicable statute, regulation or other law, Company and the Member shall renegotiate such provision in good faith, in order to maintain the economic position enjoyed by each party as close as possible to that under the provision rendered unenforceable.  If Company and the Member cannot reach a mutually agreeable and enforceable replacement for such provision, then (a) such provision shall be excluded from this Agreement, (b) the balance of this Agreement shall be interpreted as if such provision were so excluded, and (c) the balance of the Agreement shall be enforceable in accordance with its terms.

17.     Governing Law; Consent to Jurisdiction: This Agreement and all documents, agreements, contracts and instruments executed in connection herewith shall be governed by and construed and enforced in accordance with the laws of the State of Delaware, without regard to its conflict of laws provisions that would require the application of the laws of another jurisdiction. Member hereby irrevocably submits to the non-exclusive jurisdiction of any United States federal court or Delaware state court located in Delaware in any action or proceeding arising out of or relating to this Agreement or any documents executed in connection herewith and Member hereby irrevocably agrees that all claims in respect of such action or proceeding may be heard and determined in any such United States Federal Court or Delaware state court.  Member irrevocably consents to the service of any and all process in any such action or proceeding brought in any court in or of the State of Delaware by the delivery of copies of such process to it at its address set forth in this Agreement by certified mail directed to such address or such other address as may be designated by it in a notice to the Company.  

18.     Entire Agreement:  This Agreement, together with the other agreements referenced herein or in the Preferred Network by ProducePay Membership Application, sets forth the sole understanding and agreement of the Member and the Company with respect to the Member’s participation in the Preferred Network and supersedes all other prior and contemporaneous discussions, negotiations agreements and understandings, whether written or oral, between them. 

19.     Amendments:  No modification of this Agreement or of any covenant, condition or limitation contained herein shall be valid or effective unless it is (a) in writing and duly executed by the parties hereto, or (b) electronically accepted by Member on the ProducePay platform. Member’s continued use of the ProducePay platform after notification of modifications of this Agreement by Company via the ProducePay platform will be deemed electronic acceptance by Member hereunder. 

20.     Attorneys’ Fees: In any action arising out of or relating to this Agreement, the non-prevailing party will pay the substantially prevailing party’s reasonable attorneys’ fees, costs, and necessary disbursements, whether or not the action is prosecuted to award or judgment.

21.     Relocation or Name Change:  The Member shall provide Company with written notice at least thirty (30) calendar days prior to the Member’s change of name or location.

22.     Electronic Credit and Debit Authorization: Member irrevocably authorizes the Company to initiate electronic credit or debit entries to Member’s account on file with the Company at any time and without regard to the source of any monies in such account for any amount owed to the Company under this Agreement if such amount is not paid within fifteen (15) calendar days of the date such payment was due. As a condition to the Company entering into this Agreement, Member shall provide the bank at which its account is held with any and all approvals, consents or other permissions which may be necessary in order for such bank to pay direct debits to the Company. This authority will remain in full force and effect until (a) the Company notifies the bank that all monies due to the Company under this Agreement have been paid in full; or (b) the parties have otherwise agreed in writing to terminate this authorization. the Company may levy an administrative charge if a direct debit for any charge is returned unpaid.

23.      Company Disclaimer: The Member acknowledges and agrees that the Company is providing no representations, warranties, guaranties or assurances of any type to the Member regarding any Preferred Network Grower, the performance by a Preferred Network Grower of its obligations to the Member, or the produce provided by any Preferred Network Grower.

End of Agreement