PREFERRED NETWORK IN-SEASON PRODUCE PURCHASE AGREEMENT CONTRACT TERMS
As used herein, the following terms shall have the respective meanings indicated below:
“Aggregate Transaction Volume” means the aggregate amount of Produce measured by the Estimated Prevailing Market Price that has been purchased by the Company in a particular Contract Year under this Agreement and for which the Company has received an amount equal to the Company Proceeds within 45 days of the Company paying the Initial In-season Payment for such Produce.
“Company Expenses” means, with respect to each Produce Shipment, bank fees (including wire fees and charges for insufficient funds), credit check costs, diligence costs, supplies and costs of collection and enforcement of the Company’s rights, including legal fees.
“Company Proceeds” means, with respect to a particular Produce Shipment, the sum of the In-season Payments, the Distribution Fee and the Company Expenses.
“Contract Year” means a 12-month period commencing on the Effective Date and on each anniversary thereof during the term of this Agreement; provided, however, that if the Effective Date is not the first date of a calendar month, then the first Contract Year hereunder shall be the remaining portion of the calendar month beginning on the Effective Date plus the next 12 calendar months thereafter.
“Distribution Agreement” means a distribution agreement entered into from time to time by and between Company and a Distributor.
“Distribution Fee” means a fee payable to Company from the Net Sale Proceeds of each Produce Shipment in an amount equal to the Gross Sales Proceeds multiplied by the Distribution Fee Rate applicable to such Produce Shipment.
“Distribution Fee Rate” means the Preliminary Distribution Fee Rate set forth in the Transaction Terms, as adjusted pursuant to Section 3.3 of these Contract Terms.
“Distributor” means a third party that sells and distributes a Produce Shipment for the Company.
“Distributor’s Commission” means the commission payable to a Distributor under a Producer Agreement with respect to the sale and distribution of a Produce Shipment.
“Distributor Deductions” means any and all deductions that a Distributor makes from the Gross Proceeds in accordance with the applicable Producer Agreement or other governing agreement, in addition to the Distributor’s Commission, including taxes, fees, commissions and other amounts paid by the Distributor on account of the sale and distribution of a Produce Shipment.
“Estimated Prevailing Market Price” means for particular Produce either: (a) a price determined by the Company based on historical sales values published by the United States Department of Agriculture’s Market News website (https://www.marketnews.usda.gov/mnp/fv-home), or any successor or substitute of the foregoing website providing five-year historical index sale values comparable to those currently provided by such website at the time that the Producer agrees to sell such Produce through the Platform, or (b) such other price estimated by the Company to be the prevailing market price in its sole discretion.
“Final Payment” means the final payment that the Producer is entitled to receive with respect to a Produce Shipment equal to (a) the Net Sale Proceeds for that Produce Shipment, minus (b) the Company Proceeds for that Produce Shipment.
“Gross Sale Proceeds” means the proceeds received by the Distributor for the sale of a Produce Shipment, without deduction of Distributor’s Commissions or Distributor Deductions.
“Initial In-season Payment” means the Initial In-season Payment Ratio multiplied by the underlying Produce’s Estimated Prevailing Market Price.
“Initial In-season Payment Ratio” means the Initial In-season Payment Ratio (i.e., ratio of Initial In-season Payment to Estimated Prevailing Market Price) set forth in the Transaction Terms.
“In-season Payments” means, with respect to any Produce Shipment, the Initial In-season Payment plus the Second In-season Payment, if any.
“Net Sale Proceeds” means the proceeds received by Distributor for a Produce Shipment less (a) the Distributor’s Commission for that Produce Shipment, and (b) the Distributor Deductions for that Produce Shipment.
“Platform” means, the software platform and software as a service solution provided by Company to the Producer, Distributor and other parties with respect to Produce Shipments, that enables (a) Produce Shipments to be purchased by Company via the Platform, and (b) all funds owed to the Producer by the Company to be remitted electronically via the Platform.
“Produce” means all products, items and goods, including, but not limited to, fruits, vegetables, grains, root, crops of the forest, in their natural or unprocessed states and in all of their respective varieties, that constitute “perishable agricultural commodities” as defined in the Perishable Agricultural Commodities Act, 1930 (“PACA”) (7 U.S.C. 499a(4)).
“Produce Shipment” means a shipment of Produce (e.g., truckload) purchased by the Company pursuant to this Agreement via the Platform.
“Producer Agreement” means an agreement between the Producer and a Distributor relating to the sale of a Produce Shipment by Company to Distributor on a fixed or consignment basis for Produce that is shipped directly by Producer to Distributor.
“Repayment Period” means, with respect to each Produce Shipment, the period commencing upon payment by Company of the Initial In-season Payment and ending on a date that the Company receives the Net Sale Proceeds from the Distributor.
“Second In-season Payment” means, with respect to any Produce Shipment, an amount equal to (a) the product of the Second In-season Payment Ratio set forth in the Transaction Terms multiplied by the expected Net Sales Proceeds for that Produce Shipment calculated on the basis of the verified Gross Sales Proceeds, Distributor’s Commission and the Distributor Deductions entered into the Platform by the Distributor after its sale of that Produce Shipment, less (b) the Initial In-season Payment.
2. PURCHASE AND SALE OF PRODUCE
2.1 The Platform. During the Term, Company shall operate the Platform and provide a user account to the Producer for it to engage in the sale and purchase of Produce Shipments on the terms set forth herein. Company grants the Producer the non-exclusive right and license to use the Platform during the Term on the terms set forth herein.
2.2 Conditions for Company to Consider Purchase Produce. In order for Company to consider the purchase of Produce Shipments, the following conditions must be satisfied:
(a) All documentation, including but not limited to bill of lading, export documents, shipping documents has been supplied to the Company via the Platform and determined by the Company to meet its pre-determined standards;
(b) The Produce has received an inspection report, has appropriate insurance and deductible to sufficiently cover all of Company’s In-season Payments, and other costs associated with recovery and wait-time of reimbursement, and the offered transaction otherwise satisfies the Company’s due diligence and diligence guidelines;
(c) The Producer has shipped the Produce Shipment to an approved and registered Distributor on the Platform under which the Distributor can accept or reject a Produce Shipment, and supplied the Company with the Producer Agreement for that Distributor via the Platform; and
(d) The Distributor has notified the Company and the Producer via the Platform of its acceptance of the Produce Shipment as satisfactory for sale by the Distributor under the terms of the Distribution Agreement. Rejected Produce shall not be purchased by the Company and shall be removed from the Platform.
2.3 Offers of Sale from Producer. During the Term, Producer shall from time to time offer to the Company Produce Shipments for sale on the terms hereof. In order to offer a Produce Shipment to the Company, the Producer shall log into the Platform to notify Company that the Producer has shipped a Produce Shipment to an approved Distributor that is registered on the Platform.
2.4 Company Acceptance; Conveyance of Title. After a Produce Shipment is offered to the Company, the Company, at its sole discretion, can then elect via the Platform to accept or reject purchase of such Produce Shipment. If the Company accepts such Produce Shipment, upon such acceptance all right, title and interest to such Produce Shipment shall be conveyed by the Producer to Company free and clear of all liens and encumbrances via an electronic receipt and confirmation through the Platform and the Company shall remit payment of the Initial In-season Payment to the Producer. The Producer agrees that upon such conveyance, Company shall then have all rights and title to such Produce Shipment, including, without limitation, all rights to receive the Gross Sale Proceeds and the Net Sale Proceeds of the Produce Shipment and all rights to recover the Company Proceeds, subject to the terms hereof. Upon the request of Company, the Producer shall execute all instruments and documents and take all actions as may be reasonably required to effectuate such conveyance and assignment.
2.5 Second In-season Payment. Upon request from Producer, the Company in its sole discretion may make a Second In-season Payment to Producer through the Platform after Distributor has sold the Produce and entered into the Platform the verified Gross Sales Proceeds, Distributor’s Commission and the Distributor Deductions. The Second In-season Payment can be made at the same time as the Initial In-season Payment if the conditions in the preceding sentence is satisfied at that time.
2.6 Bona Fide Purchaser. The Producer acknowledges and agrees that Company is a bona fide purchaser acting in good faith with respect to all of its interactions with the Producer, including, without limitation, all transactions contemplated herein; the Producer further acknowledges and agrees that all amounts due and owing to Company in connection with this Agreement, including, without limitation, the Distribution Fees, Company Expenses, and any other fees and amounts received by Company in connection with a Produce Shipment are duly earned and obtained for fair and reasonable value provided by the Company.
2.7 Term. The term of this Agreement (“Term”) shall be the period commencing on the Effective Date and ending on the date that is one year from the Effective Date, and shall be automatically extended for consecutive one (1) year periods on each anniversary of the Effective Date, unless either party shall have provided written notice of termination to the other party not less than thirty (30) days prior to the expiration of the current term Effective Date or the Agreement is otherwise terminated in accordance with the Terms and Conditions. All payment obligations will survive termination of this Agreement.
3. DISPOSITION OF NET SALE PROCEEDS
3.1 Payment from Distributor. The Distributor shall remit via wire to Company the Net Sale Proceeds in accordance with the Distribution Agreement. Producer acknowledges that Company is not responsible for the determination or verification of Distributor Deductions, and shall not be liable to the Producer for any payment defaults or delinquencies by the Distributor.
3.2 Final Payment. Upon the Company’s receipt of the Net Sale Proceeds, the Company shall pay the Producer the Final Payment. With respect to each Produce Shipment, upon receipt of the Net Sale Proceeds from the Distributor, Company through the Platform shall calculate and notify the Producer of the following and remit the Final Payment to the Producer:
(a) the Gross Sale Proceeds, the Net Sale Proceeds, and the Distributor’s Commission amounts and other Distributor Deductions, and the Repayment Period for such Produce Shipment;
(b) the Distribution Fee to be retained by Company as compensation for the services provided hereunder calculated based on the Gross Sale Proceeds (not the Net Sale Proceeds), subject to adjustment in accordance with Section 3.3 of these Contract Terms based on (A) the actual ratio of the In-season Payments to the Gross Sales Proceeds and (B) the actual Repayment Period; and
(c) the Final Payment, if any, to be paid to the Producer.
3.3 Distribution Fee Rate Adjustments. The Preliminary Distribution Fee Rate is subject to adjustment as follows:
(a) If the ratio of the In-season Payments to the Gross Sales Proceeds for a Produce Shipment does not equal the applicable Initial In-season Payment Ratio for any reason (including without limitation because a Second In-season Payment has been made), then the Preliminary Distribution Fee Rate will be adjusted by a number of basis points equal to the product of: (A) the Distribution Fee Adjustment Factor set forth in the Transaction Term’s, times (B) the difference of (1) the actual ratio of the In-season Payments to the Gross Sales Proceeds minus (2) the applicable Initial In-season Payment Ratio.
(b) In addition, if the Repayment Period of a particular Produce Shipment is in excess of the Maximum Repayment Period set forth in the Transaction Terms, the Preliminary Distribution Fee Rate, as adjusted per clause (a) above, will increase by a fraction equal to the quotient of one (1) divided by the Maximum Repayment Period for each day that the actual Repayment Period exceeds the Maximum Repayment Period.
3.4 Return of Title to Produce Shipment. If the Company after a period of time equal to double the length of the Maximum Repayment Period set forth in the Transaction Terms (the “Return Period”) has not received the Net Sale Proceeds for a particular Producer Shipment, the Producer shall pay the Company an amount equal to the Company Proceeds (the “Deemed Purchase Price”) and the Company shall return title to such Produce Shipment to the Producer. In connection with the foregoing, the Producer shall pay and hold all responsibility for any and all costs incurred by Company during the Return Period with respect to such Produce Shipment. The Company, in its sole discretion, may recover the Deemed Purchase Price for a particular Produce Shipment by withholding such amount from the In-season Payments owed by Company to Producer for another Produce Shipment or withholding it out of the Net Sale Proceeds from another Produce Shipment.
3.5 Recovery of Delinquencies. If the Producer is in arrears on any payments due hereunder with respect to any particular Produce Shipment, the Company, in its sole discretion, may recover some or all of the delinquent amount by withholding such amount from the In-season Payments or Final Payment of another Produce Shipment. In that case, the amount withheld will be treated as if the Company had paid the Producer that amount on account of the applicable In-season Payments or Final Payment.
End of Contract Terms