Exhibit 10.24

 

FIVE YEAR AGREEMENT

BETWEEN

 

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(Shareholder)

Growing Unit:        

 

and

 

Shareholder:   

AMERICAN CRYSTAL SUGAR COMPANY

(Company)

 

1.         PLANTING AND DELIVERY OBLIGATIONS.  Shareholder agrees during the
Initial Term and any Renewal Term hereof to prepare land, plant, replant,
harvest and deliver, the number of acres of sugarbeets based upon the number of
Preferred Shares of Company then owned by Shareholder, subject to the provisions
of Sections 2 and 3 of this Agreement.  Shareholder agrees to replant any
sugarbeets that are lost due to flooding, weather conditions or any other cause,
provided that such replanting can be reasonably accomplished on or before
June 10 of the then current crop year.  Land to be used for sugarbeet
production, cultural and harvest practice requirements, and other matters shall
be specified by annual contract to be entered into between Company and
Shareholder as a supplement to this Agreement (the “Annual Contract”).  Company
shall not be obligated to purchase sugarbeets, and Shareholder agrees to destroy
prior to August 15, or such other date specified by the Company and communicated
to Shareholder, sugarbeets from all acres planted in excess of that contracted
pursuant to this Agreement.  Company hereby reserves the right to disapprove of
any field proposed to be used by a shareholder to grow sugarbeets if in the
judgment of Company the field is not appropriate for sugarbeets due to disease,
soil type, drainage conditions, or other factors.  Shareholder agrees to abide
by any policies that may be established from time to time by Company related to
rotation, destruction of damaged or diseased sugarbeets, and/or other agronomic
and operational matters.

 

2.         TOLERANCES.  The total number of acres of sugarbeets to be planted by
Shareholder shall be subject to overplant and underplant tolerances as
established from time to time by Company pursuant to this Agreement. 
Shareholder hereby acknowledges and agrees that said tolerances may be
established and/or modified from time to time by Company as determined to be
appropriate to respond to planting, crop conditions, and/or government imposed
marketing allocations.  The initial tolerance and any modification thereof shall
be effective upon communication of the same to Shareholder by Company, and the
Annual Contract shall be deemed amended to the extent of the modified tolerance.

 

3.         PRORATION.  Company hereby reserves the right to prorate delivery
rights with regard to any crop to be delivered hereunder.  Any such proration
shall be made by Company after a determination by the Board of Directors that
Company may not be able to economically process the entire crop for any reason,
including, but not limited, to government imposed marketing allocations or a
larger than anticipated crop yield.  A proration may be accomplished on the
basis of a percentage of Preferred Shares, planted acres or any other means
determined by the Board of Directors to be fair and equitable.  Any proration
shall be communicated to, and applied against, all shareholders of Company on a
uniform and equitable basis as determined by the Board of Directors.  The Annual
Contract shall be deemed modified to the extent of any such proration.

 

4.         PREVENTED PLANTING.  Shareholder shall be unconditionally obligated
to plant the sugarbeet crop unless such planting is prevented as a result of
acts of God or other causes beyond the reasonable control of Shareholder, as
provided in Section 15 of this Agreement.  If, after making all reasonable
efforts, Shareholder has been prevented from planting the sugarbeet crop on or
before June 10 of the applicable crop year, or such later date as may be
established from time to time under federal crop insurance policies to enable a
sugarbeet grower to receive prevented planting coverage at an unreduced level,
(the “Prevented Planting Date”), Shareholder shall be relieved of its obligation
to plant such sugarbeet crop.  Shareholder may elect to plant the sugarbeet crop
at any time after the Prevented Planting Date.  A determination as to whether
Shareholder is prevented from planting shall be mutually determined by
Shareholder and a representative of Company based on Shareholder’s planting
conditions for the period leading up to and including the Prevented Planting
Date.

 

5.         TERM.  The initial term of this Agreement shall be for the crops to
be planted in 2013, 2014, 2015, 2016 and 2017 (the “Initial Term”).  This
Agreement shall automatically renew for successive five (5) crop year terms
(“Renewal Terms”) unless one party provides written notice to the other party on
or before August 31 of the final crop year of the then current Initial or
Renewal Term, of such party’s intent to terminate this Agreement.  The
provisions of this Agreement that are applicable to the final crop year of the
then current Initial or Renewal Term shall remain in effect following notice of
termination until performance has been completed by both parties with respect to
such final crop year.

 

6.         PAYMENT FOR SUGARBEETS.  Payment for sugarbeets delivered each crop
year shall be made as set forth in this Section 6 (using the definitions set
forth in Section 18).

(a)     The Gross Beet Payment for sugarbeets delivered shall be the “per
hundredweight value of recovered sugar” multiplied by the number of
hundredweight of “recovered sugar” contained in the sugarbeets delivered by
Shareholder.  Shareholder’s share of “agri-products revenue” will be added while
Shareholder’s share of “operating costs” will be subtracted, both allocated on a
per “net ton of sugarbeets delivered” basis.  Company reserves the right to
establish a marketing allocation adjustment program to provide for equitable
treatment among shareholders from year to year as a result of limitations on
production due to government imposed marketing allocations.  The costs and/or
adjustments associated with this program will be used to determine the Gross
Beet Payment in a manner consistent with the program, as approved by the Board
of Directors.

(b)     The following allowances, costs and deductions, if applicable, will be
used in adjusting Shareholder’s Gross Beet Payment to Shareholder’s Net Beet
Payment:

(i)            Hauling Allowance Program:  Company reserves the right to
establish a hauling allowance program and in connection therewith to allocate
the cost of the hauling allowance program among shareholders of Company in a
manner consistent with the program as approved from time to time by the Board of
Directors.

(ii)           Pre-Pile Quality Premium Program:  Company reserves the right to
establish a pre-pile quality premium program as partial compensation to
shareholders for the delivery of sugarbeets prior to the commencement of the
piling campaign.  The cost of this program will be shared equally each crop year
on a per “net ton of sugarbeets delivered” basis by all shareholders who have
delivered sugarbeets to Company.

(iii)          Minimum Payment Allowance Program:  Company reserves the right to
establish a minimum payment allowance program.  The cost of this program will be
shared equally each crop year on a per “net ton of sugarbeets delivered” basis
by all shareholders who have delivered sugarbeets to Company.

(iv)          Tare Incentive Program:  Company reserves the right to establish a
tare incentive program to encourage growers to reduce tare.  The cost of this
program will be allocated among shareholders of Company in a manner consistent
with the program, as approved by the Board of Directors.

(v)           Unit Retain:  A unit retain  may be declared by the Board of
Directors and the amount of such unit retain shall be deducted from the final
payment to be made for sugarbeets, and Company may deduct the estimated unit
retain from the periodic payments to be made pursuant to Section 7 of this
Agreement.  Company reserves the right to determine the tax treatment of any
unit retain at a date subsequent to the date that the amount of the unit retain
is declared by the Board of Directors.

(c)     Company reserves the right to establish various programs resulting in
adjustments to one or more payments to be made to the shareholders under this
Agreement.  Such programs may include, but are not limited to, a program to
encourage timely harvest by shareholders, a freight charge program to recover
certain charges associated with the transportation of sugarbeets, a program to
encourage shareholders to comply with pre-pile delivery policies, and a program
by which shareholders are charged for excessive delivery ticket corrections. 
Any such programs shall be approved, and may be modified from time to time, by
the Board of Directors.

 

7.         PAYMENT SCHEDULE.  Payment for sugarbeets delivered shall be made as
follows:

(a)     An initial payment shall be made on or about November 15.  Such payment
shall be sixty-five percent (65%) of Company’s then current estimate of
Shareholder’s Net Beet Payment for that crop year.

(b)     A second payment will be made on or about March 31.  Such payment shall
be an amount which will bring that payment plus the November payment to ninety
percent (90%) of Company’s then current estimate of Shareholder’s Net Beet
Payment for that crop year.

(c)     The final payment, including any portion thereof designated as a
patronage dividend, which together with the prior payments shall equal one
hundred percent (100%) of the Net Beet Payment, shall be made no later than 15
days after the approval of the Company’s audited financial statements for the
fiscal year during which the crop was processed.

 

Shareholder may from time to time request that Company deduct certain amounts
from the payments to be made hereunder to satisfy payment obligations to third
parties.  Company, at its sole discretion, reserves the right to approve the
form and content of such requests.  To the extent Company elects to honor such
request(s), Shareholder shall indemnify and hold the Company harmless from all
losses, costs, and damages (including attorneys’ fees and costs) incurred by
Company as a result of payments to a third party.

 

Shareholder hereby acknowledges and agrees that Company may issue patronage
distributions and/or unit retains pursuant to the provisions of the Company’s
Bylaws, which patronage distributions and unit retains may be qualified or
nonqualified pursuant to 26 U.S.C. 1388 (Internal Revenue Code) for regular
and/or alternative minimum tax purposes.  Shareholder hereby agrees that the
amount of any qualified patronage distribution and/or unit retain will be taken
into account by Shareholder at its stated dollar amount in the manner provided
in 26 U.S.C. 1385 for regular and alternative minimum tax purposes, and will be
reported on Shareholder’s income tax return for the taxable year in which the
qualified written notice of such distribution or unit retain is received, all as
more particularly described in the Company’s Bylaws.

 

THE UNDERSIGNED REPRESENTS THAT HE/SHE IS AN AUTHORIZED REPRESENTATIVE OF
SHAREHOLDER AND THAT HE/SHE HAS THE AUTHORITY TO BIND SHAREHOLDER TO THE TERMS
OF THIS AGREEMENT.

 

Dated this            day of
                                              ,      

 

AMERICAN CRYSTAL SUGAR COMPANY

 

By:

 

 

By:

 

 

 

 

 

Its:

 

By:

 

 

 

 

 

 

 

By:

 

 

 

 

 

 

Its:

 

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8.         BREACH AND REMEDIES.  Shareholder agrees to abide by the Articles of
Incorporation and the Bylaws of Company, to comply with all applicable federal,
state and local laws, ordinances, regulations and rulings, as well as Company’s
operational and agricultural regulations and policies (collectively referred to
herein as “Applicable Law and Policy”).  Shareholder acknowledges and agrees
that Shareholder is required, pursuant to this Agreement, the Annual Contract,
and the Bylaws of Company, to prepare land, plant, replant, harvest and deliver
the sugarbeet crop to Company in each year at the times specified by Company. 
Any one or more of the following shall constitute a breach of this Agreement by
Shareholder: (i) the failure of Shareholder to prepare land, plant, replant,
harvest and deliver said crop to Company; (ii) the failure of Shareholder to
comply with Applicable Law and Policy, (iii) the failure of Shareholder to
comply with any provision of this Agreement, or (iv) the breach by Shareholder
of any other agreement with Company.  Upon a breach of this Agreement, the
Shareholder may be subject to one or more of the following remedies as
determined by Company:

(a)   Expulsion as a member of Company;

(b)   Forfeiture of Shareholder’s Common Stock in Company and qualification to
be a preferred shareholder of Company;

(c)   Termination of this Agreement and the right to deliver sugarbeets to
Company for processing;

(d)   Payment of liquidated damages to Company, which liquidated damages are
hereby declared and stated to be an amount equal to Shareholder’s share of
Company fixed costs for processing of the crop; and

(e)   Any other legal or equitable remedy that may be available to Company under
applicable law or as otherwise mutually agreed upon by Shareholder and Company.

 

9.         SOIL TESTS.  Shareholder agrees to undertake and conduct soil testing
on an annual basis on all land Shareholder utilizes for growing of sugarbeets
pursuant to this Agreement.  Shareholder further agrees to report and make
available the results of said soil tests to the agricultural department of
Company, together with information as to the amounts and kinds of fertilizer
applied to the soil tested.

 

10.   AGRICULTURE PRACTICES.  Shareholder agrees to plant only those seed
varieties that have been approved by Company and are on the “approved variety”
list for the then current crop year.  Shareholder agrees that it shall use no
pesticide, chemical or other substances in a manner inconsistent with product
labels; or that could result in any residue in or on sugarbeets grown for
Company under this Agreement, or in any sugar or by-products produced from such
sugarbeets, beyond the limits permitted by law or governmental regulations. 
Shareholder acknowledges and agrees that Company shall have the right to reject
and refuse delivery of any sugarbeets (a) that are produced from seed varieties
that are not on the “approved variety” list for the then current crop year; or
(b) to which have been applied, or which have been grown on ground to which has
been applied, any unauthorized, non-registered, non-approved or prohibited
pesticide, chemical or other substance.  Shareholder further acknowledges and
agrees that Company’s right to reject or refuse delivery of any of said
sugarbeets may be invoked by Company at its sole option, regardless of whether
or not use of, or application of, an unauthorized, non-registered, non-approved,
or prohibited pesticide, chemical or other substance results in, or may result
in, a residue in or on the sugarbeets grown, or sugar or by-products produced
from such sugarbeets.  Shareholder hereby grants Company (and its employees and
agents) the right to enter the land upon which sugarbeets are being grown for
the purpose of inspecting and taking samples of such sugarbeets to verify
compliance with the terms of this Agreement.

 

11.   INDEMNIFICATION.  Shareholder agrees to hold harmless and indemnify
Company and all shareholders of Company from any and all losses, costs, or
damages (including attorneys’ fees and costs) Company or its shareholders may
incur as a result of Shareholder (i) delivering sugarbeets to Company grown from
non-approved seed varieties, or to which have been applied, or which have been
grown on ground upon or to which any unauthorized, non-registered, non-approved
or prohibited pesticide, chemical or other substance has been applied; or
(ii) breaching any provision of this Agreement.

 

12.   DELIVERY OF SUGARBEETS.  Delivery of sugarbeets shall be made by
Shareholder at such times, in such quantities, and to such receiving stations as
may be designated by Company.

(a)   Title and all risk of loss to said sugarbeets shall be and remain with
Shareholder until such time as Shareholder completes delivery to Company at the
designated receiving station, at which time title and risk of loss shall pass to
Company.  The sugarbeets shall be protected from sun and frost between the time
of harvest and the time of delivery, including sugarbeets that are loaded on
truck.  Company has the option of rejecting any diseased, frozen or damaged
sugarbeets; sugarbeets having less than 12% sugar or less than 80% purity;
sugarbeets that, in Company’s opinion, are not suitable for storage or for the
manufacture of sugar; sugarbeets as to which, in Company’s opinion, the terms
and conditions of this Agreement have not been properly complied with; or for
any other bona fide reason.

(b)   All sugarbeets delivered shall be properly defoliated and free from excess
dirt, stones, trash and other foreign substances of any kind which might
interfere with handling and processing at Company’s factories.  All sugarbeets
shall be subject to a deduction for tare.  Tare determination, sugar percentage,
sugar loss to molasses, and other quality measures shall be determined at
quality laboratories operated by Company.

(c)   Notwithstanding anything to the contrary herein, the representations and
warranties made by Shareholder relative to the sugarbeets shall continue
following the delivery of the sugarbeets and the resulting transfer of the risk
of loss to Company.

 

13.   SHAREHOLDER INDEBTEDNESS TO COMPANY.  It is agreed that liquidated damages
arising under Section 8 of this Agreement, the amount charged for all sugarbeet
seed purchased from Company by Shareholder together with any related technology
fees, and any and all other indebtedness to Company by Shareholder, whether due
or not, shall constitute a debt which Company shall have the right to collect as
it would any other contractual obligation.  Any such amount or indebtedness that
is due and payable or that hereafter may become due and payable to Company from
Shareholder shall become and remain a first priority lien on the crop of
sugarbeets to be grown and may, if not previously paid by Shareholder, be
deducted by Company from any payments from Company to Shareholder that shall
become due under this Agreement or any subsequent agreement between Company and
Shareholder.  Shareholder agrees to repay Company, at the time of Shareholder’s
initial beet payment for each crop year, all such amounts or indebtedness,
together with interest at a rate to Shareholder as may be set by Company, but
not to exceed the highest rate allowed by law.  Shareholder hereby grants
Company a security interest in any beet payments to be made to, or unit retains
held in the name of Shareholder, for purposes of securing payment of such
indebtedness.  Notwithstanding any other remedy which may be available, Company
shall have the right, exercisable at its sole option, to offset any indebtedness
to Company against the beet payments to be made to Shareholder hereunder and/or
unit retains held in the name of Shareholder.  Company may terminate this
Agreement upon ten (10) days written notice in the event Shareholder is, as of
April 1 of any crop year during the term hereof, in default on any payment
obligation owed to Company

 

14.   NO LIABILITY.  In no event shall Company be liable to Shareholder for
partial or complete failure of crop or for any injury or damage to sugarbeets
prior to the time of delivery to Company.

 

15.   FORCE MAJEURE.  Fire, labor disruptions, accidents, acts of God and the
public enemy, or other causes beyond the reasonable control of the parties which
prevent Shareholder from the performance of this Agreement, or Company from
utilizing the sugarbeets contracted for in the manufacture of sugar, shall
excuse the respective parties from the performance of this Agreement.

 

16.   BINDING EFFECT.  Subject to the limitations set forth in the Articles of
Incorporation and Bylaws of Company, this Agreement shall be binding upon
Shareholder, its heirs, legal representatives, successors and permitted assigns;
and upon Company, its successors and assigns.  This Agreement shall not be
transferred or assigned by Shareholder without written consent of Company.  No
agent of Company has any authority to change, waive, or modify any of the terms
or provisions of this Agreement.

 

17.   AMENDMENT.  Company reserves the right to amend any provisions of this
Agreement as follows:

(a)   This Agreement may be amended by a resolution approved by the Board of
Directors to the extent that such amendment does not have material adverse
effect on the shareholders of Company, taken as a whole.  Such amendment shall
be effective upon written notice to Shareholder.

(b)   This Agreement may be amended by a resolution approved at any regular or
special meeting of shareholders of Company at which a quorum is registered as
being present or represented by mail vote, by a majority of shareholders so
present or represented by mail vote, where the notice of such meeting contains a
statement of the proposed amendment.

 

18.   DEFINITIONS.  The following definitions shall apply with respect to terms
used herein:

(a)   The “per hundredweight value of recovered sugar” shall be the “net selling
price per hundredweight of sugar”, as hereinafter defined, recovered from that
year’s crop, adjusted for the difference between the opening inventory book
value and its actual net selling price, and adjusted by valuing the closing
inventory at its estimated net realizable value.

(b)   “Recovered sugar” contained in the sugarbeets delivered by Shareholder
shall be determined by Company deducting  from gross sugar (i) sugar loss to
molasses on a fresh beet basis and/or sugar loss resulting from such other
quality measures as may be established from time to time by Company, and
(ii) Shareholder’s share of other sugar losses incurred in the storage and
processing of the sugarbeets, allocated on a per “net ton of sugarbeets
delivered” basis; and increased by Shareholder’s share of additional sugar
recovered through the molasses desugarization process on a per “net ton of
sugarbeets delivered” basis.

(c)   The “net selling price per hundredweight of sugar” sold shall be
determined by deducting from the gross sales price all such charges and
expenditures as are regularly and customarily deducted from such gross sales
price of sugar in accordance with Company’s system of accounting used to
determine the “net selling price of sugar” sold.

(d)   “Agri-products revenue” shall be determined by using the net selling price
of pulp, molasses, and any other agri-product produced by Company, of that crop
year, as determined in accordance with Company’s system of accounting.

(e)   Operating costs shall be determined in accordance with Company’s system of
accounting, and shall include all costs and expenses not otherwise accounted for
with respect to business done with members, and shall be net of results from
beet seed and other miscellaneous member business.

(f)    “Net ton of sugarbeets delivered” shall mean a gross ton of sugarbeets
delivered, less the tare weight of dirt, rocks, weeds, and other foreign
materials, as determined by Company.

 

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