UDA Terms and Conditions of Supply

1.   Scope. These terms and conditions (these “Terms”) are the only terms that govern the sale of the Products by United Dairymen of Arizona (“Seller”) to the Buyer. Buyer expressly agrees to each and every term contained in these Terms, which shall control over any inconsistent or contrary provision in Buyer’s purchase order or sales contract or related documents (“Buyer Documents”) or any other related purchasing documents or communications. Seller expressly rejects any terms and conditions contained in Buyer Documents. Fulfillment of Buyer’s order does not constitute acceptance of any of Buyer’s terms and conditions and does not serve to modify or amend these Terms. Buyer’s provision of a purchase order or sales contract to Seller shall constitute implicit acceptance of these Terms. Acceptance of a purchase order or sales contract by Seller does not constitute an agreement to accept future purchase orders or sales contracts from Buyer. Seller has the right to reject and not accept any purchase order or sales contract from Buyer for any reason prior to delivery. No amendment to or modification of these Terms is effective unless it is in writing, identified as an amendment to and signed by an authorized representative of each party. Notwithstanding anything herein to the contrary, if a written contract signed by both parties is in existence covering the sale of the Products covered hereby, the terms and conditions of said contract shall prevail to the extent they are inconsistent with these Terms.

2.   Definitions. In addition to the terms defined elsewhere in these Terms, the following terms shall have the meanings set forth below:

(a) “Buyer” means the purchaser of the Products from Seller including its agents, contractors, representatives, and affiliates.

(b) “Delivery Point” means the location at which delivery of the Products from Seller to Buyer shall occur as set forth in the purchase order or sales contract.

(c) “Products” means the products set forth in a purchase order or sales contract or quotation, which may include, without limitation, milk and related milk by-products.

(d) “Nonconforming Products” means only the following: (i) product shipped is different than identified in Buyer’s purchase order or sales contract; or (ii) Product’s label or packaging incorrectly identifies its contents.

3.   Delivery. The Products will be delivered within a reasonable time after the receipt of Buyer’s purchase order or sales contract in accordance with the delivery schedule set forth therein, or as mutually agreed between the parties, and subject to availability of the Products. A delivery date in any invoice, order acknowledgment or purchase order or sales contract, if any, is not fixed or guaranteed. Subject to the Incoterms, as set forth in the applicable purchase order or sales contract, Seller shall not be liable for any delays, loss or damage in transit.

(a) Partial Delivery. Seller may, in its sole discretion, without liability or penalty, make partial shipments of the Products to Buyer. Each shipment will constitute a separate sale, and Buyer shall pay for the units shipped whether such shipment is in whole or partial fulfillment of Buyer’s purchase order or sales contract.

(b) Failure to Deliver. If for any reason Buyer fails to accept delivery of any of the Products or if Seller is unable to deliver the Products at the Delivery Point on such date because Buyer has not provided appropriate instructions, documents, licenses or authorizations: (i) risk of loss to the Products shall pass to Buyer; (ii) the Products shall be deemed to have been delivered; and (iii) Seller, at its option, may store the Products until Buyer picks them up, whereupon Buyer shall be liable for all related costs and expenses (including, without limitation, storage and insurance). In the event Buyer fails to take delivery of such Products for greater than thirty (30) days, or sooner if the expiration dates of such Products so dictates, Seller may elect to resell or reallocate such Products as it deems necessary without liability to the Seller, and Buyer shall be liable for any resulting losses or damages incurred by Seller including consequential damages and lost profits. Any liability of Seller for non-delivery of the Products shall be limited to replacing the Products within a reasonable time or adjusting the invoice respecting such Products to reflect the actual quantity delivered.

4.   Quantity. If Seller delivers to Buyer a quantity of the Products non-materially more or less than the quantity set forth in a purchase order or sales contract, Buyer shall not be entitled to object to or reject the Products or any portion of them by reason of any nonmaterial surplus or shortfall and shall pay for such Products at the price set forth in the invoice.

5.   Shipping Terms. Delivery shall be made pursuant to the Incoterms set forth in the purchase order or sales contract.

6.   Title and Risk of Loss. Title and risk of loss shall be governed by the Incoterms as set forth in the purchase order or sales contract. As collateral security for the payment of the purchase price of the Products, Buyer hereby grants to Seller a lien on and security interest in and to all of the right, title and interest of Buyer in, to and under the Products, wherever located, and whether now existing or hereafter arising or acquired from time to time, and in all accessions thereto and replacements or modifications thereof, as well as all proceeds (including insurance proceeds) of the foregoing. The security interest granted under this provision constitutes a purchase money security interest under the Arizona Uniform Commercial Code. Buyer shall execute any other document, including a financing statement or other document similar to the UCC-1, necessary to perfect Seller’s security interest in the Products. Buyer authorizes Seller to file at Buyer’s expense any financing statement related to the Products without Buyer’s signature, except where prohibited by law. Nothing in these Terms gives Buyer any right, title or interest in any of Seller’s assets or rights other than the Products as set forth in the relevant purchase order or sales contract and order confirmation to the exclusion of any intellectual property rights in or related to such Products unless otherwise mutually agreed between the parties.

7.   Nonconforming Products

(a)   Inspection and Notice. Buyer shall inspect the Products upon delivery. Buyer will be deemed to have accepted the Products unless it notifies Seller in writing of any Nonconforming Products no more than fourteen (14) days from the date of delivery (the “Initial Inspection Period”) and furnishes such written evidence or other documentation as reasonably required by Seller.

(b)   Latent Defects. Notwithstanding Section 7(a), for defects in any Products not reasonably apparent in the Initial Inspection Period, Buyer must notify Seller in writing as soon as practical upon becoming aware of such latent defect; provided, however, no such latent defect notice will be permitted after thirty (30) days from the date of delivery.

(c)   Defect Investigation Procedure. In the event Buyer provides written notice of defect to Seller, Buyer shall, in addition to providing the written evidence and other documentation reasonably required by Seller, keep the Nonconforming Products stored separately in a state or condition in which the Products were originally supplied and at a commercially appropriate temperature until Seller has had the opportunity to inspect such Nonconforming Products, and provide access and assistance that Seller reasonably requests in order for Seller to inspect and assess the Nonconforming Products. Seller shall not be liable for any defect or damage to the Products if: (i) Buyer fails to timely provide written notice of any nonconformity; (ii) Buyer fails to comply with the investigation procedures set forth in this Section; (iii) Buyer contributed to or caused the nonconformity including, without limitation, Buyer’s failure to properly store the Products or use such Products in an unintended manner; (iv) the Products are incorporated into or mixed with other products; or (v) notice is received after the expiration date of the relevant Products.

(d)   Remedy. If Buyer timely notifies Seller of any Nonconforming Products, and Seller, after completing its investigation, acknowledges and agrees it is responsible for the Nonconforming Products, shall, in its sole discretion, (i) replace such Nonconforming Products with conforming Products, or (ii) credit or refund the Price for such Nonconforming Products, together with any reasonable shipping and handling expenses incurred by Buyer in connection therewith. Buyer shall ship, at its expense and risk of loss, the Nonconforming Products to the Delivery Point. If Seller exercises its option to replace Nonconforming Products, Seller shall, after receiving Buyer’s shipment of Nonconforming Products, ship to Buyer, at Buyer’s expense and risk of loss, the replaced Products to the Delivery Point. Buyer acknowledges and agrees that the remedies set forth in this Section are Buyer’s exclusive remedies for the delivery of Nonconforming Products. Except as provided herein, all sales of Products to Buyer are made on a one-way basis and Buyer has no right to return Products purchased under this Agreement to Seller.

8.   Price. Buyer shall purchase the Products from Seller at the prices (the “Prices“) set forth in the applicable invoice subject to Seller’s further adjustment based on the actual quantity of Products delivered. All Prices are exclusive of all sales, use and excise taxes, and any other similar taxes, duties and charges of any kind imposed by any governmental authority on any amounts payable by Buyer. Buyer shall be responsible for all such charges, costs and taxes; provided, that, Buyer shall not be responsible for any taxes imposed on, or with respect to, Seller’s income, revenues, gross receipts, personnel or real or personal property or other assets. Buyer is solely responsible for any regulatory costs related to the Products including, without limitation, consumer product safety requirements.

9.   Payment Terms. Buyer shall pay all invoiced amounts due to Seller within thirty (30) days of receipt of Seller’s invoice unless otherwise communicated and outlined in accordance in the purchase order or sales contract confirmation. All payments to UDA exceeding $50,000 USD must be made via Automated Clearing House (ACH) or Wire transfer. Checks received that exceed $50,000 USD will be returned and subject to a $500.00 fee per check returned. Buyer shall make all payments in accordance with the payment terms as set forth in the purchase order or sales contract.

(a)   Late Payments. Late payments are subject to an annual weighted average cost of capital (WACC) rate of 20.00% late fee based on the Days Past Due table attached as Appendix A. Buyer shall reimburse Seller for all costs incurred in collecting any late payments, including, without limitation, attorneys’ fees. In addition to all other remedies available under these Terms or at law (which Seller does not waive by the exercise of any rights hereunder), Seller shall be entitled to suspend the delivery of any Products if Buyer fails to pay any amounts when due.

(b)   Set-Off. Buyer shall not withhold payment of any amounts due and payable by reason of any set-off of any claim or dispute with Seller, whether relating to Seller’s breach, bankruptcy or otherwise. If Buyer is in default of any amount owed to Seller, Seller reserves the right to set off any amount that Buyer owes to Seller against amounts, if any, owed by Seller to Buyer.

(c)   Invoice Disputes. In the event Buyer reasonably believes an invoice is incorrect, Buyer may provide written notice within five (5) business days of receiving such invoice, which shall include a detailed statement of the claimed error. Buyer’s failure to provide such notice shall be deemed a waiver of any dispute and Buyer acknowledges and agrees it shall treat such invoice as correct. Buyer shall make full payment of the amount due on any invoice even if under dispute.

(d)   Account Suspension and Collections. At 31 days past the payment due date, the customer’s account will be placed on hold (“Delinquent Account”) and all services provided by UDA will be temporarily suspended until the outstanding payment is received (“Delinquent Account Hold”). A notification will be sent to the customer informing them of the Delinquent Account Hold and the actions required to reinstate services. If payment remains outstanding beyond 35 days past the payment due date, the matter will be referred to our legal collections team for further action.

(e)   Check Returned for Insufficient Funds. Any check (or e-check) returned by the bank due to insufficient funds is subject to a $1,000.00 fee.

10.   Event of Default. Buyer shall be deemed in default of these Terms if: (a) Buyer fails to make timely payment in accordance with Section 9 and payment remains due and outstanding for more than thirty (30) days from the date originally due; (b) Buyer discontinues the conduct of its business or applies for or consents to the imposition of any insolvency relief or proceeding; (c) Buyer has undergone a change of control or sold or transferred a material portion of its assets resulting in a constructive assignment of these Terms to a different party; or (d) Buyer is in breach of these Terms or any other agreement to which the parties are bound. Upon the occurrence of any event of default, as set forth above, all amounts payable shall immediately become due and Seller may, in its sole discretion, (i) cancel any purchase order or sales contract not yet shipped, (ii) retain any deposit Buyer may have initially paid; and (iii) reclaim or resell Products in Buyer’s possession.

11.   Disclaimer of Warranties. SELLER WARRANTS ONLY THAT THE PRODUCTS, AT TIME OF DELIVERY, MEET THE SPECIFICATIONS SET FORTH IN A PURCHASE ORDER OR SALES CONTRACT. SELLER MAKES NO WARRANTY WHATSOEVER WITH RESPECT TO THE PRODUCTS, INCLUDING ANY (a) WARRANTY OF MERCHANTABILITY; OR (b) WARRANTY OF FITNESS FOR A PARTICULAR PURPOSE; OR (c) WARRANTY OF TITLE; WHETHER EXPRESS OR IMPLIED BY LAW, COURSE OF DEALING, COURSE OF PERFORMANCE, USAGE OF TRADE OR OTHERWISE.

12.   Indemnity; Limitation of Liability. 

(a)   Buyer shall indemnify, defend and hold harmless Seller and its officers, directors, employees, agents, affiliates, successors and permitted assigns (collectively, the “Indemnified Party”) against any and all losses, damages, liabilities, deficiencies, claims, actions, judgments, settlements, interest, awards, penalties, fines, costs, or expenses of whatever kind, including reasonable attorneys’ fees, fees and the costs of enforcing any right to indemnification under these Terms and the cost of pursuing any insurance providers, incurred by the Indemnified Party relating to any claim of a third party or Seller arising out of or occurring in connection with (a) the Products purchased from Seller; and (b) Buyer’s negligence, willful misconduct or breach of these Terms. Buyer shall not enter into any settlement without Seller’s prior written consent.

(b)   IN NO EVENT SHALL SELLER BE LIABLE TO BUYER OR ANY THIRD PARTY FOR ANY LOSS OF USE, REVENUE OR PROFIT OR FOR ANY CONSEQUENTIAL, INDIRECT, INCIDENTAL, SPECIAL, EXEMPLARY, OR PUNITIVE DAMAGES WHETHER ARISING OUT OF BREACH OF CONTRACT, TORT (INCLUDING NEGLIGENCE) OR OTHERWISE, REGARDLESS OF WHETHER SUCH DAMAGES WERE FORESEEABLE AND WHETHER OR NOT SELLER HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES, AND NOTWITHSTANDING THE FAILURE OF ANY AGREED OR OTHER REMEDY OF ITS ESSENTIAL PURPOSE.

(c)   IN NO EVENT SHALL SELLER’S AGGREGATE LIABILITY ARISING OUT OF OR RELATED TO THIS AGREEMENT, WHETHER ARISING OUT OF OR RELATED TO BREACH OF CONTRACT, TORT (INCLUDING NEGLIGENCE) OR OTHERWISE, EXCEED THE AMOUNT BUYER HAS ACTUALLY PAID FOR THE PRODUCTS IN THE SHIPMENT GIVING RISE TO A CLAIM.

(d)   The limitation of liability set forth in Section 12(b) above shall not apply to liability resulting from Seller’s gross negligence or willful misconduct.

13.   Insurance. From the date Buyer submits an initial purchase order or sales contract to Seller, and for one (1) year from the date of the last delivery, Buyer shall, at its own expense, maintain and carry insurance in full force and effect which includes, but is not limited to, commercial general liability (including product liability) with an aggregate policy limit of no less than five million US Dollars ($5,000,000) per occurrence with financially sound and reputable insurers. Upon Seller’s request, Buyer shall provide Seller with a certificate of insurance from Buyer’s insurer evidencing the insurance coverage specified in these Terms. The certificate of insurance shall name Seller as an additional insured. Buyer shall provide Seller with thirty (30) days’ advance written notice in the event of a cancellation or material change in Buyer’s insurance policy. Except where prohibited by law, Buyer shall require its insurer to waive all rights of subrogation against Seller’s insurers and Seller.

14.   Compliance with Law. Buyer shall comply with all applicable laws, regulations and ordinances. Buyer shall maintain in effect all the licenses, permissions, authorizations, consents and permits that it needs to carry out its obligations under this Agreement. Buyer shall comply with all export and import laws of all countries involved in the sale of the Products under these Terms or any resale of the Products by Buyer. Buyer assumes all responsibility for shipments of Products requiring any government import clearance.

15.   Waiver. No waiver by Seller of any of the provisions of these Terms is effective unless explicitly set forth in writing and signed by Seller. No failure to exercise, or delay in exercising, any right, remedy, power or privilege arising from this Agreement operates, or may be construed, as a waiver thereof. No single or partial exercise of any right, remedy, power or privilege hereunder precludes any other or further exercise thereof or the exercise of any other right, remedy, power or privilege.

16.   Confidential Information. All non-public, confidential or proprietary information of Seller, including but not limited to specifications, samples, plans, documents, data, business operations, customer lists, pricing, discounts or rebates, disclosed by Seller to Buyer, whether disclosed orally or disclosed or accessed in written, electronic or other form or media, and whether or not marked, designated or otherwise identified as “confidential” in connection with these Terms is confidential, solely for the use of performing these Terms and may not be disclosed or copied unless authorized in advance by Seller in writing. Upon Seller’s request, Buyer shall promptly return all documents and other materials received from Seller. Seller shall be entitled to injunctive relief for any violation of this Section. This Section does not apply to information that is: (a) in the public domain; (b) known to Buyer at the time of disclosure; or (c) rightfully obtained by Buyer on a non-confidential basis from a third party. This Section shall survive for three (3) years from the date of the last Product delivery.

17.   Force Majeure. No party shall be liable or responsible to the other party, nor be deemed to have defaulted under or breached this Agreement, for any failure or delay in fulfilling or performing any term of these Terms (except for any obligations of Buyer to make payments to Seller hereunder), when and to the extent such failure or delay is caused by or results from acts beyond the impacted party’s (“Impacted Party”) reasonable control, including, without limitation, the following force majeure events (“Force Majeure Event(s)”): (a) acts of God; (b) flood, fire, earthquake, (c) explosion; (d) war, invasion, hostilities (whether war is declared or not), terrorist threats or acts, riot or other civil unrest; (e) government order, law, or actions; (f) pandemics and epidemics; (g) national or regional emergency; (h) strikes, labor stoppages or slowdowns, or other industrial disturbances; (i) shortage of adequate power or transportation facilities; and (j) other similar events beyond the reasonable control of the Impacted Party. The Impacted Party shall give notice within five (5) business days of the Force Majeure Event to the other party, stating the period of time the occurrence is expected to continue. The Impacted Party shall use diligent efforts to end the failure or delay and ensure the effects of such Force Majeure Event are minimized. The Impacted Party shall resume the performance of its obligations as soon as reasonably practical after the removal of the cause.

18.   Assignment. Buyer shall not assign any of its rights or delegate any of its obligations under these Terms without the prior written consent of Seller. Any purported assignment or delegation in violation of this Section is null and void. No assignment or delegation relieves Buyer of any of its obligations under these Terms.

19.   Relationship of the Parties. The relationship between the parties is that of independent contractors. Nothing contained in this Agreement shall be construed as creating any agency, partnership, joint venture or other form of joint enterprise, employment or fiduciary relationship between the parties, and neither party shall have authority to contract for or bind the other party in any manner whatsoever.

20.   No Third-Party Beneficiaries. These Terms are for the sole benefit of the parties hereto and their respective successors and permitted assigns and nothing herein, express or implied, is intended to or shall confer upon any other person or entity any legal or equitable right, benefit or remedy of any nature whatsoever under or by reason of these Terms.

21.   Governing Law; Jurisdiction. These Terms shall be governed by and construed in accordance with the internal laws of the State of Arizona without giving effect to its conflicts of law principles. Any legal suit, action, or proceeding relating to these Terms must be instituted in the federal or state courts located in Maricopa County, Arizona. Each party irrevocably submits to the exclusive jurisdiction of such courts in any such suit, action, or proceeding.

22.   Documentation. All documentation required for export and shipment will be provided in accordance with recommendations of USDEC at www.usdec.org.

23.   Notices. All notices, requests, consents, claims, demands, waivers and other communications under these Terms must be in writing and addressed to the other party at its known address (or to such other address that the receiving party may designate from time to time). Unless otherwise agreed herein, all notices must be delivered by personal delivery, nationally recognized overnight courier or certified or registered mail (in each case, return receipt requested, postage prepaid). Except as otherwise provided in these Terms, a notice is effective only (a) on receipt by the receiving party, and (b) if the party giving the Notice has complied with the requirements of this Section.

24.   Severability. If any term or provision of this Agreement is invalid, illegal or unenforceable in any jurisdiction, such invalidity, illegality or unenforceability shall not affect any other term or provision of these Terms or invalidate or render unenforceable such term or provision in any other jurisdiction.