DELIVERY AGREEMENT
This Agreement
is between Farmer Direct Foods, Inc. (Farmer Direct), formerly American
White Wheat Producers Association, Atchison, Kansas, and
____________________________ of
____________________________________________________(“Grower”).
(Print Grower Name)
(Print Address)
Whereas,
Farmer Direct is an agricultural marketing cooperative organized under the
laws of the State of Kansas; and
Whereas,
Farmer Direct has the exclusive right to sell certain varieties of certified
white wheat seed and the exclusive right to market identity preserved grain
produced from said seed; and
Whereas,
Grower is a member of Farmer Direct and owns ______ shares of Class D
Preferred Stock of Farmer Direct; and
Whereas,
Farmer Direct and Grower desire to set forth the terms of their relationship
relative to the planting and harvesting of white wheat and the purchase,
storage and marketing of grain produced therefrom;
Now, therefore,
for and in consideration of the foregoing and the mutual agreements set
forth herein, Farmer Direct and the Grower agree as follows:
1.
Legal
Relationship. The legal relationship between Grower, as producer and seller
of certain varieties of white wheat, and Farmer Direct, as purchaser and
marketer of said white wheat, is defined by the express terms of this
Agreement. The relationship is
further defined and controlled by the Amended and Restated Articles of
Incorporation of Farmer Direct (“Articles”), the Amended and Restated
Bylaws of Farmer Direct (“Bylaws”), and such other policies and
procedures as may from time to time be adopted by Farmer Direct with respect
to the production, harvest, delivery, purchase, storage and marketing of
white wheat. Grower’s rights and obligations under this Agreement are
intrinsically related to membership in Farmer Direct and ownership of Class
D Preferred Stock issued by Farmer Direct
2.
Right
and Obligation of Grower to Produce and Deliver. Grower
has the right and the obligation each year to deliver and sell to Farmer
Direct all of the grain produced from certified white wheat seed planted,
grown and harvested pursuant to this Agreement on ninety acres of dry land
or sixty acres of irrigated land for each share of Class D Preferred Stock
owned by the Grower, subject to overplant or underplant tolerances
determined annually by the Board of Directors of Farmer Direct
(the “Grain”). During
the term of this Agreement, Grower shall not plant, harvest, market, or sell
to any other person or entity any white wheat of the same varieties being
produced pursuant to this Agreement unless such production is under the
terms of another contract consented to in writing by Farmer Direct
3.
Right
and Obligation of
Farmer Direct to Accept and
Purchase. Farmer Direct has
the right and obligation to accept, purchase, and market all Grain delivered
by Grower hereunder that meets minimum acceptable standards as further
defined in Sections 5 and 8 of this Agreement.
4.
Products
Covered. Grower agrees to purchase from Farmer Direct, or a Farmer
Direct approved dealer, certified white wheat seed of such varieties as
determined by Farmer Direct, in such quantities and for such acres as set
forth on a Field Data Sheet, a copy of which is attached hereto as Exhibit
A. New Field Data Sheet(s)
shall be prepared for each field for each year during the term of this
Agreement.
5.
Identity
Preserved Crop. The
parties hereto agree and acknowledge that the Grain is a specialty crop with
a defined market. To maintain
quality, to assure purity and to preserve the identity of the Grain, Grower
agrees to follow those procedures relating to the production, storage, and
delivery of the Grain that may be established by Farmer Direct and
communicated to Grower from time to time during the term of this Agreement.
Grower shall further comply with all applicable federal, state, and
local laws and regulations. Farmer
Direct shall have the right to inspect each field for variety verification
and by December 1st of each year, Grower will prepare and provide
Farmer Direct with a Field Data Sheet and a copy of FSA Form 578 covering
each field planted.
6.
Harvest
and Storage. Grower will notify Farmer Direct no later than July 31st
each year of the amount and varieties of Grain harvested and its location
(“Committed Grain”). If
Grower suffers a crop failure Grower shall notify Farmer Direct no later
than July 31st of such failure and, thereby shall not be in
breach of this Agreement for failure to deliver all or a portion of the
Grain. After harvest, Grower shall store and preserve the identity
of all Grain harvested until delivered to Farmer Direct Grower agrees to
provide Farmer Direct with samples of harvested Grain drawn according to
approved sampling procedures established by Farmer Direct immediately after
harvest from each separately identified storage bin.
7.
Title
and Risk of Loss. Title and all risk of loss to grain shall be and remain with
Grower until Grain is delivered to and accepted by Farmer Direct, at which
time absolute title and risk of loss shall pass to Farmer Direct
After title and risk of loss pass, Farmer Direct may obtain insurance
for Farm Stored Grain.
8.
Delivery
and Acceptance. Farmer Direct shall take delivery of the Grower’s Committed
Grain as of October 1st of each Crop Year (with the term “Crop
Year” to refer to a complete planting and harvesting season with the year
designating the year of harvest), in accordance with the methods set forth
hereunder:
a.
Farmer Direct Facility.
Grower shall deliver Grain to Farmer Direct at a Farmer Direct
specified central Kansas location or to a third party identified by Farmer
Direct; or
b.
Farm
Stored Grain. Provided Grower has acceptable, separate storage facilities
and elects to store the Grain for Farmer Direct, Grower shall separately
store Grain at Grower’s facility (“Farm Stored Grain”). Farm Stored Grain shall be considered delivered to Farmer
Direct on October 1st provided a measurement acceptable to the
USDA/CCC has been obtained by Grower at his expense and provided to Farmer
Direct Farmer Direct shall pay
Grower a storage fee at a rate determined by Farmer Direct starting July 1st
of each crop year, payable after Grain is loaded out. Grower shall clearly
identify Farm Stored Grain as the property of Farmer Direct by placing a
sticker so stating on the storage structure.
Farmer Direct shall
arrange and pay for inspection and fumigation of Farm Stored Grain. Grower shall provide Farmer Direct and/or its representative
access to such Farm Stored Grain. At
Farmer Direct's discretion, with ten (10) calendar days' notice, Grower
shall load out all or part of the Farm Stored Grain for transport to a
location determined by Farmer Direct
All Grain delivered by Grower to Farmer Direct,
either under Section 8(a) or 8(b) above, shall meet such specifications, and
be subject to such allowances, deductions and premiums, as may from time to
time be determined by Farmer Direct (“Grain Specifications”).
Grain of substandard quality, as determined by Farmer Direct shall be
either (i) rejected and/or returned to Grower with all costs relating to the
rejection and return charged to Grower; or (ii) accepted with discounts and
allowances made and charged against Grower because of the substandard
quality or condition at the time of delivery.
Farmer Direct shall use accepted standards to assess the quality of
Grain delivered by Grower.
9.
Grain
Marketing. Farmer Direct shall market all Grain delivered and
accepted from all Growers for each Crop Year over the course of the next one
(1) year period for the benefit of its members. Farmer Direct shall
market the Grain, at a rate that it determines, such that all of the Grain
delivered for the Crop Year is marketed by September 30th of the
next Crop Year. Farmer Direct
shall, in good faith, strive to obtain the best price available for all
Grain marketed. Farmer Direct
does not, however, warrant the final selling price.
10.
Allocation
and Payment. On or about October 1st of each Crop Year, Farmer
Direct shall set an estimated price per bushel for Grain to be used for that
Crop Year (“Estimated Grain Price”).
Farmer Direct shall pay Grower on or about November 30th,
January 31st, April 30th, July 31st, and
October 31st payments equal to 80% of the Estimated Grain Price
per bushel based on a quantity no less than the actual quantity of Grain
used by Farmer Direct for the preceding quarter.
On or before December 31st, provided an
audit of the financial records for the preceding fiscal year has been
completed, Farmer Direct Directors may elect to make a final payment or
allocation to Grower if net proceeds after expenses exceed amounts paid out
to Growers in the preceding quarters for that crop year.
“Net Proceeds” shall be the actual gross proceeds received by
Farmer Direct less those usual and customary charges and expenses incurred
by Farmer Direct in the marketing of Grain and the operation of its
business. Total payments to
Grower for Grain shall be equal to the percentage of Grower’s Committed
Grain compared to all Grain committed by all growers.
Payment splits will be made in accordance with names
and percentage shares indicated on the Form 578, unless instructions to the
contrary are received by Farmer Direct by August 31st of each
year.
11.
Additions
and Deductions. All additions credited to Growers, including but not limited
to applicable premiums for Grain delivered, shall be added ratably to each
quarterly payment made to Grower and to the final payment as may be
necessary until fully paid. All
applicable discounts charged to Grower for Grain delivered and all expenses
and charges incurred by Farmer Direct for the account of Grower, including
but not limited to transportation charges based on the transportation cost
schedule determined by Farmer Direct from time to time and provided to the
Grower shall be deducted ratably from each quarterly payment to Grower, and
from the Final Payment as may be necessary until fully paid. An
accounting of receipts and expenses shall be provided Grower by Farmer
Direct with each Grower’s payment.
12.
Warranties. Grower warrants to Farmer Direct that Grower is entitled to
possession and control of land, to grow the Grain, that Grower is the owner
of the resulting Grain crop and will maintain control and identity of this
Grain crop and not commingle said Grain crop with wheat of other varieties
or other grains. Grower
warrants that there are no contracts (other than this Agreement or another
production contract acceptable to Farmer Direct) in effect for its sale,
marketing, consignment, or delivery of the Grain.
13.
Liens,
Loans and Collateral. If the Grower grants a security interest in any of the
Grower’s Grain during the term of this Agreement or if a lien of any
nature is filed against the Grain crop, Farmer Direct shall name the
lienholder on any payments made to Grower unless Grower provides Farmer
Direct with a written waiver signed by the lienholder.
The Grower agrees to inform Farmer Direct in writing of any security
interests granted in or liens filed against the Grower’s Grain.
Further, Grower hereby acknowledges that Farmer Direct shall have the
authority to receive CCC loans or LDP payments for the Grain.
Grower hereby agrees not to obtain CCC loans or LDP payments with
respect to the Grain and grants Farmer Direct the authority to place a CMA
lien on the Grain, including Farm Stored Grain.
Grower agrees to assist Farmer Direct with any actions necessary to
facilitate the CCC loans, including, but not limited to, completing forms,
placing signage and obtaining required measurements.
Farmer Direct will pay the proceeds from any CCC loans to Growers
within fifteen (15) days of receipt of funds from the CCC.
Farmer Direct reserves the right to exclude any Grower from the
Farmer Direct marketing pool in the event such Grower cannot or does not
participate in the CCC program with Farmer Direct
14.
Term. This Agreement shall cover a period of five (5) Crop Years
beginning with the 2002 Crop Year and terminating after the 2006 Crop Year.
Thereafter, this Agreement shall automatically renew for successive
terms of five (5) Crop Years unless either party delivers to the other party
a written notice of its intent not to renew the Agreement so that the notice
is received no later than March 31st of the final Crop Year in
the then current term. This Agreement shall also terminate immediately upon
termination of Grower’s membership in Farmer Direct as provided in the
Articles and Bylaws. Farmer
Direct shall retain rights in any product not accounted for or delivered by
Grower during this term and shall have an ongoing right to require delivery
of same even after expiration hereof.
15.
Disputes
and Breach.
a.
Arbitration. Any and all disputes as to amounts owed under this Agreement
shall be submitted to and resolved through binding arbitration conducted
pursuant to the rules of the American Arbitration Association before a
single arbitrator who is familiar with the grain marketing industry and who
is mutually agreed to between the parties.
If the parties are unable to agree upon the selection and appointment
of an arbitrator within thirty (30) days of a written demand for
arbitration, then an arbitrator shall be appointed by the American
Arbitration Association. The
costs and expenses of the arbitrator shall be borne equally by Grower and
Farmer Direct The Grower and Farmer Direct shall each bear their own
expenses incurred in connection with the arbitration proceedings.
b.
Legal
and Equitable Remedies. The
parties acknowledge that: (i) Farmer Direct cannot go into the open market
to replace any Grain that Grower may fail to deliver; (ii)
Farmer Direct will suffer economic loss which will be difficult to
measure in the event Grower breaches Grower’s obligations hereunder; and
(iii) that equitable remedies including injunctive relief, specific
performance and liquidated damages are appropriate in the event of a
material breach hereof by Grower. A
material breach shall include, but not be limited to, the following:
(i) Grower fails to produce, for reasons other than due to an act of
God, deliver or account for Grain produced or to be produced under this
Agreement. (ii) Grower
commingles Grain produced under this Agreement with other varieties not
covered by this Agreement. (iii)
Grower violates the Federal Plant Variety Protection Act, or (iv) Grower
sells Grain in violation of this Agreement.
In
the event of a material breach, Farmer Direct shall have the right to
immediately terminate this Agreement and/or to collect liquidated damages
from the Grower. In the event
Farmer Direct determines to recover liquidated damages, with such
determination to be made by the board of Farmer Direct, the amount
recoverable as liquidated damages shall be equal to forty percent (40%) of
the expected gross sale price to have been received by Farmer Direct for any
Committed Grain Grower fails to deliver to Farmer Direct
The parties expressly agree that liquidated damages are not punitive
in nature.
Farmer Direct shall
further have the right to pursue any and all other remedies available at law
or in equity,
including but not limited to injunctive relief and specific performance.
Farmer Direct shall be further entitled to collect from Grower all
court costs, fees (including attorneys fees), and any and all expenses
incurred by Farmer Direct to pursue its remedies as a result of, arising out
of, or caused by Grower’s breach of this Agreement.
c.
Expulsion.
In the event Grower breaches this Agreement, Grower
may be subject to expulsion as a member of Farmer Direct as set forth in the
Articles and Bylaws.
16.
Non-Waiver.
If at anytime either of the parties waive any right
arising from a breach by the other party of any of the provisions of this
Agreement, such waiver shall not be construed as a continuing waiver of
other breaches. None of the
terms of this Agreement shall be held to have been waived or altered unless
such waiver or alteration is in writing and signed by the parties.
17.
Interpretation
and Choice of Law. The provisions of this Agreement shall be
interpreted together with the Articles and Bylaws of Farmer Direct Grower
agrees to be bound by the Articles of Incorporation and Bylaws of Farmer
Direct, and all rules, regulations, policies and resolutions adopted or
established by or under authority of Farmer Direct Board of Directors which
provides for the operation, management, or marketing of Growers’ grain.
Terms and provisions of this contract shall be governed by and
construed in accordance with the laws of State of Kansas.
18.
Amendment.
No agent of Farmer Direct has any authority to
change, waive, or modify any of the terms or provisions of this Agreement.
Farmer Direct reserves the right to alter any provisions of this
Agreement provided any such alteration is approved at any regular or special
meeting of the members of Farmer Direct at which a quorum is registered as
being present or represented by mail vote, by a majority of the members
voting, where the notice of such meeting contains a statement of the
proposed alteration.
19.
Successors. This
Agreement shall be binding on the heirs and successors of the parties.
This Agreement and the rights and obligations created by it shall not
be assigned or transferred by Grower without written consent of Farmer
Direct
******************************************
This Agreement shall be final when signed and
accepted by Farmer Direct in Atchison, KS.
Grower ________________________ TIN:________________________
(signature)
(taxpayer identification number)
By:
_______________________
Dated: ______________________
Farmer
Direct______________________________, its:_________________
Dated: _________________
(signature)
(title)