Purchasing Terms

PURCHASING TERMS AND CONDITIONS AGREEMENT

This Purchasing Terms and Conditions Agreement, together with any Invoice Statements (hereinafter defined as the “Agreement”), is between Rural Energy Enterprises, Inc. (“REE”), located at 6637 Arctic Spur Rd., Anchorage, Alaska, 99518-1549, and the undersigned dealer (“Dealer”).

1. Financing Terms and Invoice Statements. REE will send Dealer an Invoice Statement at the time the product is shipped. Dealer shall pay the current amount due on the Invoice Statement within 30 days of the date of the Invoice Statement. If Dealer fails to pay REE within 30 days of the date of the Invoice Statement, the amounts for all current Invoice Statements to Dealer become immediately due and the total amount that Dealer owes to REE shall be considered Past Due.
2. Return of Products to REE. All products returned for credit or refund to REE shall be handled as follows:
   • Dealer shall contact REE for a return authorization number within 30 days of the date of the Invoice Statement.
   • Dealer shall prepay all freight for shipment back to REE.
   • REE must receive all products in the original or comparable cartons and in good condition, and Dealer bears the risk of loss during shipment. REE will not accept broken or partial cartons for return.
   • REE will impose a 10% restocking charge on all returns, except as provided in this paragraph. The return of electrical components is subject to a 25% restocking fee, if REE determines that the box has been opened. If opened, the electrical component will be tested at REE’s convenience, and if the item fails inspections, then in REE’s sole discretion, credit will be denied.
   • REE reserves the right to refuse the return of products at its sole and absolute discretion.
3. Past Due Accounts. REE will charge Dealer a service charge of 1.5% per month on any Past Due account. REE may ship all future orders to Past Due accounts cash on delivery (“C.O.D.”), and the total amount due at the time of delivery will include C.O.D. fees, shipping charges, and the total balance due on Dealer’s account. Furthermore, REE reserves the right to withhold future shipments to any overdue accounts.
4. Dealer’s Obligation. Dealer promises to pay to REE all sums that Dealer owes REE at the time of executing this Agreement, plus all charges on future Invoice Statements that REE sends to Dealer, and any other charges, costs, or fees assessed pursuant to the terms of this Agreement, including any renewals, extensions, or modifications of this Agreement (“Obligation”).
5. Security Interests. Dealer grants to REE a Security Interest in all products that REE ships to Dealer, and the proceeds of the same, whether now owned or after acquired (“Collateral”), for the purpose of securing Dealer’s Obligation to REE. REE’s Security Interests in the proceeds of any sale from Dealer to a consumer includes any instruments, chattel paper, or any item of value, or the proceeds from the same that Dealer receives pursuant to the sale to the consumer.
6. Dealer’s Rights of Possession and Use. REE acknowledges that Dealer, in the ordinary course of business, sells the products supplied by REE to consumers who shall take free and clear of REE’s Security Interests in the products. Until Default, Dealer shall have the right to possess and use the products REE supplies to Dealer in the ordinary course of business, subject to the terms of this Agreement.
7. Financing Statements. Dealer warrants and conveys that no financing statement covering any of the Collateral or any proceeds of the same is on file with any public office. At the request of REE and in a form acceptable to REE, Dealer shall join in executing one or more financing statements, or notifying holders of existing security interests of record in the same Collateral of this purchase money security interests.
8. Default. The occurrence of one or more of the following events shall constitute a Default by Dealer:
   • Dealer fails to pay any Obligation when due, or a remittance for any Obligation is dishonored when first presented for payment;
   • Dealer (including any partner, member, shareholder, officer, director, or affiliate of Dealer who guaranties Dealer’s Obligations) dies, becomes insolvent, generally fails to pay debts when due, ceases to do business, makes an assignment for the benefit of creditors, or commences a proceeding under the laws of bankruptcy, reorganization, arrangement, insolvency, receivership, dissolution or liquidation, or other similar law of any jurisdiction;
   • Dealer abandons the Collateral; or
   • Dealer or any Guarantor takes any action purposing to revoke, limit, or terminate a guaranty or other assurances of payment of the Obligation.
9. Dealer’s Covenants. In furtherance of the intent of this Agreement, Dealer makes the following warranties and covenants:
   • Dealer promises to keep the Collateral free from any adverse liens, security interests, or encumbrances, and will keep the Collateral in good condition and will not waste or destroy any of the same.
   • Dealer shall take all commercially practicable steps to ensure that it receives payment from consumers for any sale of the inventory.
   • Dealer shall not use the inventory in violation of any statute or ordinance.
   • Dealer shall keep the Collateral at the address for the place of business listed below Dealer’s signature and promptly notify REE in writing of any change or discontinuance of the use of this place of business listed in this Agreement.
   • Dealer shall maintain a means of identifying the proceeds from any sale of the inventory to consumers.
   • Dealer shall promptly pay all taxes, assessments, liens, or encumbrances, governmental or private, levied on or against the Collateral.
   • Dealer shall have and maintain insurance protecting against the loss of the Collateral, and shall, upon demand from REE, take all steps necessary to ensure that REE is a named insured and that the policies and protections are satisfactory to REE.
10. REE’s Remedies. Upon Default, or at any time while Dealer remains in Default, REE may declare all amounts that Dealer owes to REE due and payable, and REE shall have all the rights and remedies of the secured party under AS 45.29.601--45.29.628. REE may require Dealer to assemble the Collateral and make it available to REE, or to ship Collateral to REE. REE may exercise its rights to peaceably enter Dealer’s place of business for purposes of exercising its rights as a secured party. Any expense REE incurs to enforce its rights under this Agreement, including the costs of retaking the Collateral, preparing the Collateral for sale, attorney fees, and any other costs incurred by REE shall become a part of the Obligation and may be recovered by REE under the terms of this Agreement.
11. Waiver. REE may, in its sole discretion, choose not to enforce any portion of this Agreement, and any such choice shall not constitute evidence that REE has waived any protection guaranteed by this Agreement.
12. Choice of Law and Forum. REE and Dealer agree that this Agreement shall be construed and enforced pursuant to the laws of the State of Alaska, and any dispute that arises shall be filed and decided by the Superior Court for the State of Alaska, Third Judicial District in Anchorage, or an inferior court of the same district and venue, if the jurisdiction limits of the court permit.
13. Binding Effect. All rights of REE under this Agreement shall inure to the benefit of its successors or assigned, and all obligations of Dealer shall be binding on its heirs, executors, administrators, successors or assigns. If a Guarantor executes this agreement, the Dealer and Guarantor’s obligations to pay REE shall be joint and several.
14. Entire Contract. This Agreement shall be effective when executed by Dealer, and together with the Invoice Statements, shall constitute the entire Agreement between the parties.