ATTRIBUTABLE TO THE SALE OF THE CO-PRODUCT IN THE
OPERATION OF THE PRODUCT POOLS; AND
(f)
All losses incurred by MIDWEST as a result of uncollectible
accounts receivable shall be allocated to the appropriate product pool and shall
be regarded as a marketing expense in determining the net proceeds of that
product pool.
6.
BUDGET AND ADVANCE OF MARKETING COSTS.
MIDWEST SHALL PREPARE A
MONTHLY BUDGET OR ESTIMATE OF ALL DIRECT AND INDIRECT MARKETING COSTS FOR EACH
PRODUCT POOL.
EACH MEMBER OR PATRON INVOLVED IN THE POOL SHALL PAY IN ADVANCE
ITS ESTIMATED PRO-RATA SHARE OF SUCH MARKETING COSTS FOR THE MONTH.
IN THE
ALTERNATIVE, THE PROCESSOR AUTHORIZES MIDWEST TO BORROW FUNDS PURSUANT TO ITS
BANK LINE OF CREDIT TO PAY DIRECT AND INDIRECT MARKETING COSTS, PROVIDED THAT
THE MEMBERS AND PATRONS SHALL REIMBURSE MIDWEST FOR THE MARKETING EXPENSES
INCURRED DURING THE PREVIOUS MONTH NO LATER THAN THE 8TH BUSINESS DAY OF THE
FOLLOWING MONTH.
7.
PRODUCT WARRANTIES AND QUALITY STANDARDS; HANDLING OF PRODUCT OF
SUBSTANDARD QUALITY.
MIDWEST SHALL FURNISH TO PROCESSOR FROM TIME TO TIME WITH
PURCHASER SPECIFICATIONS FOR CO-PRODUCTS PRESCRIBING STANDARDS AND PROCEDURES
FOR QUALITY CONTROL, STORING AND SHIPPING OF SUCH PRODUCT.
INITIALLY SUCH
STANDARDS SHALL BE THOSE SET FORTH ON SCHEDULE "A" ATTACHED HERETO.
PROCESSOR
SHALL OBSERVE AND COMPLY WITH ANY SUCH SPECIFICATIONS FURNISHED BY MIDWEST.
IN
ADDITION, ALL CO-PRODUCTS DELIVERED TO OR AT THE ORDER OF MIDWEST SHALL CONFORM
TO QUALITY AND OTHER STANDARDS THAT ARE PRESCRIBED BY APPLICABLE STATE AND
FEDERAL RULES AND REGULATIONS.
Co-Product of substandard quality, as determined by MIDWEST, shall, on the joint
agreement of PROCESSOR and MIDWEST, or if no agreement has been reached, at the
option of Midwest:
(a) be withheld from the pool and marketed by Midwest with
input from PROCESSOR on an individual agency basis with proceeds from the sale
of such Co-Product, less all direct and indirect selling expenses, distributed
to PROCESSOR, or (b) remain in the pool and be charged with the additional costs
relating to the substandard quality of the Co-Product.
8.
STORAGE OF PRODUCT.
PROCESSOR SHALL STORE ITS CO-PRODUCTS IN
TANKS, BINS, AND WAREHOUSES THAT ARE APPROVED IN ADVANCE BY MIDWEST.
AT THE
EARLIEST REASONABLE TIME AFTER PROCESSING COMMENCES EACH YEAR AND AS SOON AS
CO-PRODUCTS ARE PLACED IN STORAGE, PROCESSOR SHALL DELIVER REGULAR INVENTORY
REPORTS TO MIDWEST.
ALL PRODUCTION INCLUDED IN THE REGULAR INVENTORY REPORT
SHALL BE INCLUDED IN THE POOL FOR THE APPROPRIATE CROP YEAR EVEN THOUGH THE
CO-PRODUCTS REMAIN ON THE PROPERTY OF THE PROCESSOR.
ALL ON-SITE STORAGE
EXPENSES AND ON-SITE LABOR, MATERIALS, AND OTHER EXPENSES INCURRED AT THE
PROCESSOR FACILITIES FOR THE PREPARATION, LOADING AND SHIPMENT OF CO-PRODUCTS
PRODUCED BY PROCESSOR SHALL BE PAID DIRECTLY BY PROCESSOR AND SHALL NOT BE A
POOL EXPENSE.
9.
RISK OF LOSS, INSURANCE, AND
INDEMNIFICATION.
PROCESSOR
COVENANTS AND AGREES THAT IT SHALL BEAR THE RISK OF LOSS OF THE CO-PRODUCTS
UNTIL THE CO-PRODUCTS ARE TRANSFERRED FROM THE VARIOUS PROCESSOR FACILITIES TO A
COMMON CARRIER FOR DELIVERY TO MIDWEST OR TO THE PURCHASER.
UNTIL SUCH