EXHIBIT 10(A)
(REVISED Nov. 2002)
GROWERS AGREEMENT
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(Applicable to all Xxxxxx-Grower-Stockholders
of Minn-Dak Farmers Cooperative)
This agreement is entered into between _______________________________,
a xxxxxx-grower-stockholder of Minn-Dak Farmers Cooperative, Wahpeton, North
Dakota, whose mailing address is ______________________________________________,
hereinafter referred to as the "Grower"; and MINN-DAK FARMERS COOPERATIVE of
7525 Red River Road, Wahpeton, North Dakota, hereinafter referred to as the
"Cooperative".
This Growers Agreement provides as follows:
1. The Grower agrees to prepare the land, plant, care for, harvest and
deliver the product of ________ Units of stock times 1.35 acres of sugarbeets
each year for the farming years commencing on ______________ and continuing for
a period of one (1) year. (Each Unit consists of one share of the Company's
Class A Preferred Stock, par value $105 per share, one share of the Company's
Class B Preferred Stock, par value $75 per share and one share of the Company's
Class C Preferred Stock, par value $76 per share). At the end of each "farming
year" the term of this agreement shall automatically be renewed for an
additional period of one (1) year so that at the commencement of each year of
farming, there shall be a term of one (1) year remaining, unless notice of
termination shall have been given by the Cooperative to the grower prior to the
beginning of any farming year with the termination effective as of the end of
that year. For purposes of this agreement, a "farming year" shall commence on
January 1 and run through December 31 of each year.
(a) The Grower agrees that in the planting of said sugarbeets the
Grower will follow a crop rotation plan which will be established by the
Cooperative from time to time. (See Addendum A for current crop rotation policy)
(b) The Grower agrees that annually the Grower will furnish and enter
into an annual requirement agreement with the Cooperative setting forth the
description of the land on which said sugarbeets will be grown and including
such other information as may be required by the Cooperative. Each current
annual requirement shall become a part of this agreement and be binding upon the
parties hereto.
(c) The Grower agrees that the designations of acreage location shall
be subject to approval of the Cooperative based on location, soil type and
drainage considerations.
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(d) The Grower agrees to notify and receive written approval from two
members of the Agricultural Staff and the vice president of agriculture before
acreage is destroyed.
(e) The Grower shall not plant sugarbeets on any land on which canola
has been planted during any of the previous six years.
2. The Grower agrees to furnish the Cooperative with such information
as it may request from time to time regarding the crop or crops covered by this
agreement. Representatives of the Cooperative shall also have the right to enter
the Grower's beet fields from time to time during the growing and harvesting
seasons to inspect the crops thereon and to take samples for testing in
ascertaining the quality of the beets.
3. The Grower will harvest and deliver to the Cooperative all beets
grown under this contract, said delivery to be made at such times and in such
quantities and to such place or places as may be designated by the Cooperative.
All beets delivered hereunder shall be properly topped as designated by the
Cooperative's Agricultural Department. All beets shall be subject to a proper
deduction for tare. There shall be deducted from the gross weight of beets
delivered hereunder, before net tons are determined, the Grower's tare weight,
as determined by the Cooperative's method of sampling loads for tare and through
the use of the Cooperative's laboratory which measures each Grower's beet sample
for dirt, stones, trash and other foreign substances. Each Grower's daily
average tare percentage, as determined by all load samples of the Grower for
that delivery day or delivery day by field, if field method is used by Grower,
is used to determine the tare weight of all beets delivered by the Grower for
that delivery day. The Cooperative has the option of rejecting any diseased,
frozen or damaged beets; beets which, in the Cooperative's opinion, are not
suitable for the manufacture of sugar; beets as to which in the Cooperative's
opinion, the terms and conditions of this contract have not been properly
complied with or for any other bona fide reason.
4. Any grower deciding not to plant 1.25 acres per unit of Cooperative
stock owned by the Grower in any one year, shall be subject to a maximum penalty
of $1000 per acre found to be in violation following a hearing by the Board of
Directors. Provided, however, if weather conditions or an act of God prevented
said grower from planting all the Grower's acreage and after a review has been
conducted by the Board of Directors and Agricultural Department Staff person
from the grower's district, and a finding to that effect is made by the Board of
Directors, such failure may be excused.
5. Any Cooperative member grower refusing to replant acreage where
necessary through June 20, will be required to pay the Cooperative a sum equal
to 100% of the Cooperative's direct overhead costs per acre. (See Addendum A for
calculation of direct overhead costs per acre)
Such penalty will be assessed on all of the acres, up to 1.25 acres per unit of
stock owned, which such grower fails to replant through June 20.
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6. The Cooperative may assess a penalty against any Grower who it
determines, after a review by the Board of Directors and the Agricultural Staff,
has not properly cared for the crop. The penalty shall be a sum equal to 100% of
the Cooperative's direct overhead costs per acre. (See Addendum A for
calculation of direct overhead costs per acre)
7. Any grower having acres unreported to the Cooperative over and above
the Grower's contracted acres plus the overplant permitted in that year after
the August 1st deadline for destroying acres, will be penalized for such excess
of unreported acres in the following manner. First, there shall be a hearing
before the Board of Directors and a finding as the number of acres in violation.
Second, the following overplant penalties shall be assessed.
First Violation.
1. If the unreported acres are discovered prior to harvest, the
sugarbeets shall be destroyed and the grower shall be assessed a
penalty of $200 per acre found in violation.
2. If the unreported acres are discovered after harvest, the grower
shall forfeit the crop raised on the acres determined to have been
unreported. The forfeiture of the crop shall be implemented by reducing
the grower's total pounds of sugar by the pounds of sugar produced on
the number of acres determined by the Board to be unreported, using the
total farm average/acre. This will adjust downward all future payments
for this crop made to the grower including the trucking payment. Any
amount already paid for these pounds of sugar to the grower shall be
deducted from the next beet payment to be made.
3. In addition to number one or two above, the grower shall be required
to sign a release authorizing the FSA Office to provide to Minn-Dak all
certification of acres records for a three-year period following the
year of the violation. These records will be used by the field man for
comparison with Minn-Dak records. If any discrepancy is found it will
be brought to the attention of the Board.
Second Violation.
In addition to the penalties stated under First Violation, the Grower
shall be subject to a maximum penalty of $1000 per acre found to be in
violation following a hearing by the Board of Directors.
8. It is understood and agreed that if any Governmental authority shall
establish any restrictions, allotment or quota upon the growing, production or
processing of beets, or the output, transportation or sale of beet sugar, then
the Cooperative may
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reduce to the extent which it deems necessary the acreage of beets herein
contracted for, and shall be obligated to purchase beets only from such reduced
acreage.
9. Grower also agrees not to intentionally apply to the crop or land on
which the crop is grown any pesticide chemical, or other substance, as defined
in all applicable Federal and State laws, unless a regulation shall then be in
effect, exempting such chemical from the necessity of a tolerance or
establishing a tolerance for such chemical, in which event such chemical shall
be applied to the crop or land only at such time and in such manner and
quantities as shall be specified in the labeling of such chemical and so that
any residue of such chemical on beets delivered hereunder shall be within the
tolerance specified in such regulation. The Cooperative reserves the right to
reject the delivery of any beets not complying with this provision and assess
back to the grower direct costs incurred by the Cooperative in each incident.
(See Addendum A for calculation of direct costs.)
In addition to the penalties stated above, in the event of a second
violation, the Grower shall be subject to a maximum penalty of $1000 per acre
found to be in violation following a hearing by the Board of Directors.
10. The Grower agrees that, in connection with the growing and delivery
of beets under this contract, he will comply with all applicable laws, including
but not limited to child and migrant labor laws, and all regulations or rulings
relating thereto issued by any duly authorized governmental authority.
11. Seed varieties to be planted by Growers must be approved by the
Cooperative's Seed Committee. All sugar beet seed to be planted by the Grower
must be purchased by the Grower from the Cooperative with the exception of seed
used in field test plots for which all seed must be approved by the
Cooperative's Ag Staff. Any sugarbeets raised from GMO seed shall not be
delivered to the Cooperative. The Cooperative agrees to use its best efforts to
obtain its seed inventory at the best possible prices and terms and to resell
such seed to the Grower at no profit to the Cooperative. The Cooperative makes
no warranty of merchantability, fitness for a particular purpose, productiveness
or any other warranty as to any seed furnished by the Cooperative, except that
seed furnished by the Cooperative is warranted, to the extent of the purchase
price only, to be as described on the seed container within recognized
tolerances. It is also expressly agreed that the Cooperative does not guarantee
a crop. The Cooperative reserves the right to reject the delivery of any beets
not complying with this provision and assess back to the grower direct costs
incurred by the Cooperative in each incident. (See Addendum A for calculation of
direct costs.)
In addition to the penalties stated above, in the event of a second
violation, the Grower shall be subject to a maximum penalty of $1000 per acre
found to be in violation following a hearing by the Board of Directors.
Further, any Grower who knowingly jeopardizes the processibility or
marketability of the crop or a portion of the crop through actions, including
but not
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limited to, use of nonlabeled chemicals or planting of unapproved beet seed
varieties, may be held liable for damages incurred by the Cooperative including
consequential damages.
12. The amount charged for all beet seed furnished by the Cooperative
to the Grower hereunder, and all charges, penalties, costs and/or advances made
to the Grower by the Cooperative shall constitute a debt from the Grower to the
Cooperative which the Cooperative shall have the right to collect as in the case
of any other contractual obligation. The Cooperative shall have the right, at
its option, to treat any such amounts, advances or indebtedness as part payment
for beets grown and delivered under this contract. Any such amounts, advances,
or indebtedness which are due and payable or which hereafter may become due and
payable from the Grower to the Cooperative shall be, become, and remain a first
and prior lien on the crop of sugar beets to be grown hereunder and shall be
deducted by the Cooperative from the initial payment or any subsequent payment
from the Cooperative to the Grower which shall become due hereunder, or under
any subsequent beet contract between the Cooperative and the Grower.
13. The Cooperative will furnish all loading equipment at the loading
stations, pay all freight charges from outside piling stations, and pay mileage
on beets assigned to and delivered to all receiving stations in accordance with
policies determined by the Cooperative. (See Addendum A for current Receiving
Station Regulation) Upon delivery to and acceptance by the Cooperative of the
sugarbeets as provided for herein, title thereto shall be deemed to vest, and
shall be vested, in the Cooperative.
14. The Grower specifically acknowledges and agrees that the Grower may
be required by the Cooperative to take back sugarbeets, dirt or other
substances, if determined by the Board of Directors that hauling out is
necessary and legally feasible.
15. Each year of this agreement, the Cooperative will pay to the Grower
for beets delivered and accepted at the time and in the manner hereinafter
provided, a price per pound of extractable sugar, determined to be as follows:
(a) Extractable pounds of sugar will be determined by the Cooperative
in its laboratory from beet samples statistically taken from each Grower at its
receiving stations. The beet samples will be tested for sugar content and
purity, and said results used in a formula to determine extractable pounds of
sugar delivered. (See Addendum A for calculation of extractable pounds of
sugar.)
(b) In addition, each Grower will be reviewed for eligibility for early
harvest bonus extractable pounds of sugar. The bonus extractable pounds of sugar
will be determined by a formula that takes into account the delivery date in
early harvest, as well as the extractable pounds of sugar delivered on that same
date. (See Addendum A for the current Bonus Sugar Formula and Early Harvest
Delivery Policy.)
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(c) Payment to the Grower will be an amount equal to the individual
Grower's total delivered extractable pounds of sugar (as determined in 15a.)
plus the calculated pounds of early harvest bonus sugar (as determined in 15b.),
multiplied by the price to be paid per pound of extractable sugar to all
Growers.
(d) The price per pound of extractable sugar to all Growers will be
determined by dividing the total Grower proceeds by the total pounds of
extractable and bonus sugar delivered from all Growers. Growers proceeds are
defined as the amount after deducting from gross sales, all costs, charges,
expenses, and margins (including reserves but excluding payments to growers) as
are regularly and customarily deducted from gross sales in accordance with the
Cooperative's system of accounting heretofore established.
(e) If in the opinion of the Board of Directors of the Cooperative, the
working capital position of the Cooperative is at any time insufficient, the
Cooperative may and shall retain from the price to be paid for beets such
amount(s) as are deemed necessary by the Board of Directors, the deduction(s) to
be made at such time(s) as the Board of Directors shall require; and such
amounts(s) as may be retained shall be evidenced in the records of the
Cooperative by equity credits in favor of the Shareholders.
16. Settlements shall be made as follows:
For all beets delivered from the beginning of harvest up to and
including October 31st, initial payments shall be made on or about November 15th
of the year in which beets are delivered to the Cooperative; for all beets
delivered after October 31st, initial payment shall be made no later than the
15th day of each month for beets delivered during the previous calendar month.
Further, each Grower agrees to the following:
(a) The first payment shall not exceed 65 percent of the estimated
price to be paid per pound of extractable sugar to all Growers;
(b) The second payment shall be paid on the first Friday in February,
and shall bring the total of the first and second payments to an amount not to
exceed 70 percent of the estimated price to be paid per pound of extractable
sugar to all Growers;
(c) The third payment shall be paid on the first Friday in April, and
shall bring the total of the first, second and third payments to an amount not
to exceed 80 percent of the estimated price to be paid per pound of extractable
sugar to all Growers;
(d) The fourth payment shall be paid on the first Friday in July, and
shall bring the total of the first, second, third and fourth payments to an
amount not to exceed 95 percent of the estimated price to be paid per pound of
extractable sugar to all Growers;
(e) The final payment shall be determined as of the end of the
Cooperative's fiscal year, after the Board of Directors has reviewed the final
audited financial statements of the Cooperative; and shall bring the total of
the payments to an amount equal to the price to be paid per pound of extractable
sugar to all Growers.
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17. The Grower is an independent contractor. Agricultural or other
advice may be offered the Grower by the Cooperative's representatives, but the
Grower's status as an independent contractor shall not be thereby affected. In
no event shall the Cooperative be responsible for any failures or partial
failures of the crop or damage to the beets or actions of the Grower.
18. In case of the bankruptcy of the Cooperative, the destruction of an
integral part of the factory and the Cooperative's failure or inability to
rebuild or repair the same, or in the event of fire, strikes, accidents, acts of
God and the public enemy, or other causes beyond the control of the parties
which prevent the Grower from the performance of this contract or the
Cooperative from utilizing the beets contracted for in the manufacture of sugar
therefrom, shall excuse the respective parties hereto from the performance of
this contract. Furthermore the Cooperative shall not be subject to any damage
for failing to receive the sugarbeets of the Grower, the Grower hereby waiving
and abandoning any rights or claims which the Grower may have for such damages,
if any. However, in the event the Bank shall through foreclosure or otherwise
acquire in whole or in part the assets of the Cooperative, the Growers shall
remain obligated hereunder as though the contract were originally entered into
between the Growers and the Bank.
19. The Grower acknowledges and agrees that the Grower may be liable to
the Cooperative for damages in the event the Grower's actions result in a loss
to the Cooperative. Any Grower who knowingly jeopardizes the processibility or
marketability of the crop or a portion of the crop through actions, including
but not limited to, use of nonlabeled chemicals or planting of unapproved beet
seed varieties, may be held liable for damages incurred by the Cooperative
including consequential damages.
20. It is mutually agreed that there are no other or different
documents, representations, promises or agreements affecting this agreement, and
that this agreement, the annual requirement, the Articles of Incorporation and
By-Laws of the Cooperative, constitute the full, free and complete understanding
of the parties.
21. No agent of the Cooperative has any authority to change, waive, or
modify any of the terms or provisions of this contract.
22. This Agreement may be amended effective at the beginning of any
calendar year by the Cooperative giving notice to the Grower of the amendment by
November 1 of the prior year and providing a new Agreement to the
Grower/Shareholder for signature prior to the planting of the crop.
23. This agreement shall be binding upon the Grower, the Grower's
heirs, legal representative, successors, and assigns, and upon the Cooperative,
its successors and assigns, and shall not be transferable by the Grower without
the written consent of the Cooperative, its successors and assigns; and shall
apply equally to owned, rented or leased acres.
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24. By signing this Growers Agreement, the parties specifically agree
that all prior Growers Agreements between the Grower and the Cooperative are
hereby cancelled effective on the first day of the year following the date this
agreement is signed by both parties.
IN WITNESS WHERE OF, the Grower has hereunto executed this Growers
Agreement on this _____ day of _______________, 20 _____.
------------------------------- ---------------------------
Xxxxxx-Grower-Stockholder Xxxxxx-Grower-Stockholder
ACCEPTANCE BY COOPERATIVE
-------------------------
This Growers Agreement is hereby accepted by the Board of Directors of Minn-Dak
Farmers Cooperative on this _____ day of ________________________, 20 _____.
MINN-DAK FARMERS COOPERATIVE
By
------------------------------------
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ADDENDUM A
2002
A. (G.A.-1a,) CROP ROTATION POLICY: The board of directors adopted a
policy for a three-year rotation for all sugarbeets, including
irrigated acres, unless authorized by the board in an emergency
situation only.
B. (G.A.-5,6) DIRECT OVERHEAD COST CALCULATION: Direct Overhead Cost
Calculation is defined as a penalty equal to 100% of the cooperative's
prior fiscal year's actual fixed costs per acre for the number acres
involved. Overhead costs vary from year to year depending on the crop
size. Total actual fixed costs for the prior fiscal year divided by the
total number of harvested acres would equal the fixed cost per acre.
The cost per acre times the number of acres involved equals the amount
of the penalty. An example for 25 affected acres would be:
$18,417,358 FY2003 fixed costs / 112,346 2002 crop harvested
acres = $163.93 fixed cost per acre
$163.93 fixed cost per acre X 25 acres = $4,098.25 penalty
C. (G.A.-9,11) DIRECT COSTS DEFINITION: Direct costs are defined as all
direct and indirect costs incurred by the cooperative to mitigate said
violation of the Growers Agreement. These would include but not be
limited to the following: director(s) fees, analysis and testing costs,
travel expenses and attorney(s) fees.
D. (G.A.-13) RECEIVING STATION REGULATIONS
(year)
1. Grower shall pick up cards, stickers, letters and truck
numbers at preharvest meetings.
2. Designated sticker certification will be required on all
trucks to be unloaded at factory.
3. Growers with 24-hour trucks shall haul the full 24 hours.
4. In case of breakdowns, the Agriculturist must be contacted
prior to any substitute truck being authorized.
5. In the absence of the Agriculturist, the piler operator has
the authority to enforce Minn-Dak Policy regarding harvest
deliveries.
6. The grower is ultimately responsible for a driver's conduct at
the receiving station. Drivers suspected of operating trucks
under the influence of drugs/alcohol will not be allowed to
unload their trucks and will be reported to law enforcement
officials. Growers will be notified if any of their drivers
are driving unsafely at the receiving station. Any driver
considered unfit to drive or
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who refuses to conform to receiving station rules will be
dismissed by the Agriculturist. Any criminal conduct will be
reported to law enforcement officials.
7. Growers whose drivers block the scale intentionally, or act in
any manner which causes delay in delivery of sugarbeets at the
receiving station in any way, will not be allowed to deliver
any beets for a minimum of 24 hours as determined by the
Agriculturist.
8. Drivers shall not drive over beets at the toe of the pile,
miss their tare dirt or drive over an unprotected portion of
the power cord.
E. (G.A.-15a) EXTRACTABLE SUGAR FORMULA: The formula for arriving at total
pounds of extractable sugar delivered per grower is as follows:
o Each day's delivery of beets by each grower is sampled for
RDS (which is converted to purity), sugar content and net
weight of beets.
o The samples are averaged for purity and sugar content, and
those averages are plugged into a formula to determine pounds
of extractable sugar per ton of beets delivered.
The formula is:
[40.4(S)] - [2040(S)] - 12 = Pounds of Sugar Per Ton
Q
Where: S = % sugar content
Q = Purity
o After determining the pounds of extractable sugar per ton
for the grower for that day's delivery of beets, that
resultant number is multiplied by the total net tons of beets
delivered for that day, resulting in the total pounds of
extractable sugar delivered for that day for each grower. Each
day's deliveries are calculated and accumulated until the
total pounds of extractable sugar delivered for the entire
harvest, by grower, has been determined.
F. (G.A.-15b) EARLY HARVEST DELIVERY POLICY (including Bonus Sugar Formula):
1. The plan is based upon a premium payment for beet
deliveries during early harvest starting in September and
continuing to the first day of stockpiling in October.
2. Premium payment is on a daily declining percentage rate of
two percent (2%). The initial premium will be determined by
the interval from the first day of early harvest, up to, but
not including the first day of main harvest.
Example: Early-harvest starts September 10
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Main harvest starts October 5
--
25 day interval
All deliveries on September 10 will receive a fifty percent
(50%) adjustment, on September 11, a 48% adjustment, and
continue the adjustment decline at 2% per day until deliveries
on October 4 would receive only a 2% adjustment.
3. The actual pounds of extractable sugar delivered on any
delivery day will be multiplied by the premium adjustment for
that day. This "Bonus Sugar" will be added to the grower final
total extractable sugar delivery and paid for at the final
average rate per pound for the crop.
4. Growers will receive and be expected to deliver the
assigned pre-harvest tonnage quotas on the specific scheduled
receiving station operating days. The agriculture department
must approve and be informed of any quota adjustments between
growers. All quotas are gross tons (before tare deduction).
5. Unless specifically requested by the agriculture
department, no premium payment will be paid on deliveries in
excess of assigned quotas.
6. Premium payment example:
September 10 = 50% premium adjustment
Grower delivers 100 tons with 20,000 pounds of
extractable sugar
20,000 X 50% - 10,000 pounds of Bonus Sugar
September 20 = 30% premium adjustment
Grower delivers 100 tons with 20,000 pounds of
extractable sugar
20,000 X 30% - 6,000 pounds Bonus Sugar
September 30 = 10% premium adjustment
Grower delivers 100 tons with 20,000 pounds of
extractable sugar
20,000 X 10% - 2,000 pounds Bonus Sugar
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