Exhibit 10.25

 

2005 SUGARBEET DELIVERY AGREEMENT

 

Federal ID No.

 

Agreement No.

 

 

Date:                                                            , 2005

 

SIDNEY SUGARS INCORPORATED (“SSI”) and
                                                                                                         
                                                                     “Grower”),
[a. corporation, a partnership, an individual]*, whose address is
                        
                                                                                        ,
State of                                                    , hereby agree as
follows:

 

1.             Purchase and Sale.  Grower shall grow and shall deliver and sell
to SSI during the 2005-crop season, and SSI shall purchase from Grower, the
sugarbeets as described on the attached Addendum(s) in accordance with the terms
of this Agreement (this Agreement and such Addendum(s) together with the
Exhibits attached hereto being collectively referred to herein as the
Agreement).  SSI shall not be obligated to purchase, and Grower agrees to
destroy prior to August 15, 2005, sugarbeets from all acres planted in excess of
that set forth on the Addendum(s) attached hereto.  SSI hereby reserves the
right to prorate deliveries to be made under this Agreement.  Any such proration
shall be established by SSI after a determination by SSI that it may not be able
to economically process the entire crop for any reason, including but not
limited to, government imposed marketing allocations and for a larger than
anticipated crop yield.  A proration shall be communicated to, and applied
against, all growers of SSI on a uniform and equitable basis.  Title and risk of
loss for sugarbeets purchased hereunder shall pass from Grower to SSI at the
time the sugarbeets are placed on the piler belt.  It is understood and agreed
that the terms of this Agreement apply to the 2005 sugarbeet crop and do not
constitute a commitment by SSI to purchase sugarbeets in subsequent years.

 

2.             Agricultural Practices.  The sugarbeets shall be planted not
later than June 1, 2005 unless a later date is approved in advance in writing by
SSI.  Grower shall not plant sugarbeets in the same field in consecutive years
unless approved in advance in writing by SSI.  Grower shall not apply nitrogen
fertilizer to the sugarbeets after July 1, 2005 unless approved in advance in
writing by SSI.  Grower shall not irrigate the sugarbeets within the 20-day
period immediately prior to the date that harvest and delivery of the sugarbeets
are scheduled to commence unless approved in advance in writing by SSI.  EXCEPT
UNDER UNAVOIDABLE EMERGENCY CONDITIONS, GROWER SHALL REMOVE THE SUGARBEET
FOLIAGE FROM THE CROP ONLY ON THE DAY ON WHICH SUGARBEETS ARE HARVESTED AND
SHALL PROTECT THE SUGARBEETS FROM SUN AND FREEZING TEMPERATURES AFTER REMOVAL
FROM THE GROUND.  Except as expressly set forth in this Agreement, Grower is not
obligated to adopt or conform to agricultural practices recommended by SSI or
its employees.  In no event shall SSI be liable for any failure or partial
failure of Grower’s sugarbeet crop or damage to the sugarbeets.

 

3.             Restricted Chemicals.  Grower shall not apply to the sugarbeets,
or to the land upon which the sugarbeets are grown, any “pesticide chemical” as
defined in the Federal Food, Drug, and Cosmetic Act, as amended, unless a
regulation shall then be in effect under Section 408 of such Act exempting such
chemical from the requirement of a tolerance or prescribing a tolerance for such
chemical, in which event such chemical may be applied to the sugarbeets, or land
upon which the sugarbeets are grown, only at such time and in such manner and
quantities as shall be within the tolerance prescribed for sugarbeets, and any
quantity of such chemical in or on sugarbeets delivered hereunder shall be
within the tolerance prescribed in such regulation.  Grower acknowledges and
agrees that SSI shall have the right to reject and refuse delivery of any
sugarbeets to which have been applied, or which have been grown on land to which
has been applied, any unauthorized, non-registered, non-approved or prohibited
pesticide, herbicide, chemical or other substance.  Grower further acknowledges
and agrees that SSI’s right to reject or refuse delivery of any of said
sugarbeets may be invoked by SSI at its sole option, regardless of whether or
not use of, or application of, an unauthorized, non-registered, non-approved, or
prohibited pesticide, herbicide, 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.  Grower warrants that the sugarbeets shall be
produced and delivered in compliance with all applicable State and Federal laws
and the rules and regulations thereunder, including, but not limited to,
Section 12 of the Fair Labor Standards Act relating to the employment of minors.

 

4.             Sugarbeet Seed.  Grower shall use only such sugarbeet seed as may
be jointly approved, in advance, by SSI and the Montana-Dakota Beet Growers
Association (the “Association”).  SSI makes no warranties with respect to
approved sugarbeet seed varieties.

 

5.             Condition of Sugarbeets.  Grower shall deliver the sugarbeets to
SSI in good condition at the receiving station designated on the Addendum(s)
hereto (which designation may be changed by SSI by notice to Grower near the
completion of harvest to avoid an insufficient or uneconomic utilization of a
receiving station) properly topped and free from excessive amounts of dirt,
stones, leaves, trash or other foreign substances which may interfere with the
handling or processing of the sugarbeets.  GROWER SHALL NOT DELIVER AND SSI
SHALL NOT BE OBLIGATED TO RECEIVE OR TO PAY FOR AND MAY REJECT (i) sugarbeets
not grown, harvested or delivered in compliance with the terms of this
Agreement; (ii) sugarbeets of less than 12% sugar content; (iii) sugarbeets of
less than 80% purity; (iv) diseased, frozen, freeze damaged, wilted or
improperly topped sugarbeets; (v) sugarbeets which are commingled with excessive
amounts of dirt, stones, leaves, trash or other foreign substances; or
(vi) sugarbeets which for any other reason are not suitable for storage and/or
the manufacture of sugar.  SSI’s failure to reject any sugarbeets shall not
constitute a waiver by SSI of, or in any manner impair, SSI’s right to reject
any other sugarbeets under this Agreement.

 

6.             Timing of Deliveries.  Sugarbeets shall be harvested and
delivered as and when scheduled by SSI until the beginning of regular harvest
(the beginning of regular harvest is hereinafter referred to as the “initial
piling date”).  No sugarbeets may be delivered before the initial piling date
unless covered by an Early Harvest Amendment between Grower and SSI.  The
initial piling date will begin on a date determined by SSI no earlier than
September 26, 2005 and no later than October 1, 2005.  On and after the initial
piling date, Grower shall harvest and deliver all unharvested sugarbeets as soon
as possible without further notification and, unless prevented by weather
conditions, shall complete delivery of all sugarbeets by December 1, 2005.  If
weather conditions prevent the harvest of all sugarbeets prior to December 1,
2005 and if the Factory is still operating, Grower may deliver during such
operating period at such times and places as may be designated by SSI.  SSI may
(i) change the initial piling date, (ii) control and restrict deliveries after
the initial piling date, or (iii) control and restrict deliveries during any
period when warm weather may subject sugarbeets in storage piles to abnormal
deterioration.  SSI shall use its best efforts to receive approximately 5% per
day (during a normal working day) of all Grower’s estimated total tonnage;
provided, that, issues related to the management and operation of the receiving
stations (outside or factory yard) shall be within the exclusive control of
SSI.  Any requests by Grower for correction and/or changes in delivery tickets
must be received by SSI within ten (10) days of the date of delivery of the
sugarbeets in order to be considered by SSI.

 

7.             Late Harvest Payment.  Notwithstanding the provisions of
Section 6, Grower may be subject to a late harvest payment in the event Grower
fails to complete delivery of all sugarbeets within the twenty (20) harvest days
commencing on the initial piling date (the “Regular Harvest Period”) as further
provided in this Section 7.

 

(a)           The late harvest payment shall be assessed against Grower if
Grower delivers sugarbeets to a receiving station (outside or factory yard)
after the Trigger Time (as defined below) for that receiving station.  The late
harvest payment to be assessed to Grower shall be $100 for each hour of
operation of that receiving station for the benefit of Grower.  The amount of
the late harvest payment shall be deducted from the first payment (and
subsequent payments if necessary) to be made by SSI to Grower hereunder.

 

(b)           The “Trigger Time” shall be the point in time following completion
of the Regular Harvest Period that a receiving station has operated for three
(3) harvest days following delivery of 95% of the sugarbeets contracted for
delivery to that receiving station.  A “harvest day” shall be defined as the
normal hours of operation during the Regular Harvest Period for that receiving
station.  The actual Trigger Time for purposes of calculating the late harvest
payment shall be determined following completion of harvest based on actual
deliveries.

 

(c)           The following terms and conditions shall apply with regard to the
determination of the late harvest payment:

 

(i)            The late harvest payment shall be applied against the Grower’s
agreement(s) with respect to which the late deliveries are made.

 

(ii)           The late harvest payment shall apply for each hour that the
receiving station is open for the benefit of the Grower, regardless of the
actual hours the Grower is actively harvesting sugarbeets.  Grower will not be
charged a late harvest payment for any period that it is not harvesting,
provided that Grower has given SSI reasonable advance notice that it will not be
harvesting sugarbeets.  The minimum interval for operation of a receiving
station will be 8 hours.

 

THE PROVISIONS OF PARAGRAPH NO. 8 TO PARAGRAPH 20, BOTH INCLUSIVE, AS SHOWN ON
THE ATTACHED PAGE HERETO, ARE PART OF THIS AGREEMENT.  THE UNDERSIGNED
REPRESENTS THAT HE/SHE IS AN AUTHORIZED REPRESENTATIVE OF GROWER AND THAT HE/SHE
HAS THE AUTHORITY TO BIND GROWER TO THE TERMS OF THIS AGREEMENT.

 

THIS IS A LEGALLY BINDING CONTRACT.  GROWER HAS HAD THE OPPORTUNITY TO CONSULT
WITH AN ATTORNEY CONCERNING THE RIGHTS AND OBLIGATIONS SET FORTH HEREIN.

 

SIDNEY SUGARS INCORPORATED

 

GROWER

 

 

 

Print Name

 

 

 

By

 

 

 

Grower E-mail address

 

 

Factory Agricultural Manager

 

 

 

 

 

 

Factory Mailing Address:

 

By:

 

RR 1 Box 3011

 

 

 

Sidney, Montana 59270

 

Title:

 

 

 

 

 

 

By:

 

 

 

 

 

 

 

Title:

 

 

--------------------------------------------------------------------------------

* Strike out all but the appropriate designation.  If a partnership, the name of
the partnership, if any, and the names of all partners should appear.

 

--------------------------------------------------------------------------------

 

(iii)          Grower may avoid the late harvest payment by completing
deliveries to another receiving station closer to the factory for which the
Trigger Time has not yet been met.

 

(iv)          If SSI determines that a receiving station is, or is anticipated
to be, over its capacity to receive and store sugarbeets, Grower may not be
permitted to deliver to that station, at the sole discretion of SSI.

 

8.             Beet Payment.  Sugarbeets grown, harvested and delivered in
accordance with the terms of this Agreement shall be paid for under the
following terms:

 

(a)           A proper deduction for tare will be made by SSI in determining the
net tons of sugarbeets delivered by Grower.  The determination of top tare shall
be based on the removal of all beet crown material leaving a distinct trace of
leaf scar after the top tare is taken.  For beets smaller than or equal to 3” in
diameter, removal will be straight across.  For beets larger than 3” in
diameter, removal will be down to 22º from the horizontal.  All soil, beet tops,
weeds, rocks and other debris found in all samples will be part of the total
tare.

 

(b)           SSI shall determine the sugar content of the sugarbeets and the
factory cossettes, which determination shall be final.  Grower may have
representatives (weighman, tareman and chemist) in SSI’s scale house, tare room
and laboratory to check weights, tares and sugar analyses, but such
representatives must be qualified in the line of work to be performed.

 

(c)           The price per net ton of sugarbeets shall be based on (i) the
Average Net Return for Sugar (as defined in paragraph 8(d)) and (ii) the
Adjusted Average Sugar Content of Grower’s sugarbeets (as defined and determined
under paragraph 8(e)), as set forth in the following scale, subject to increase
or decrease for freight charges, early harvest payments, and/or hauling
allowance as provided in paragraph 8(g).

 

SUGARBEET PAYMENT SCALE

(Payment in dollars per net ton of sugarbeets)

 

Average Net
Return for Sugar

 

Adjusted Average Sugar Content (%) of Sugarbeets

 

per CWT

 

21.00%

 

20.00%

 

19.00%

 

18.00%

 

17.00%

 

16.00%

 

15.00%

 

14.00%

 

$

30.00

 

$

70.141

 

$

65.736

 

$

61.331

 

$

56.926

 

$

52.522

 

$

48.118

 

$

43.714

 

$

39.309

 

$

29.00

 

$

67.800

 

$

63.534

 

$

59.268

 

$

55.002

 

$

50.735

 

$

46.469

 

$

42.202

 

$

37.936

 

$

28.00

 

$

65.461

 

$

61.333

 

$

57.205

 

$

53.077

 

$

48.948

 

$

44.820

 

$

40.691

 

$

36.563

 

$

27.00

 

$

63.125

 

$

59.134

 

$

55.143

 

$

51.152

 

$

47.161

 

$

43.171

 

$

39.180

 

$

35.190

 

$

26.00

 

$

60.786

 

$

56.933

 

$

53.080

 

$

49.227

 

$

45.375

 

$

41.522

 

$

37.669

 

$

33.816

 

$

25.00

 

$

58.445

 

$

54.731

 

$

51.017

 

$

47.303

 

$

43.588

 

$

39.873

 

$

36.158

 

$

32.443

 

$

24.00

 

$

56.109

 

$

52.532

 

$

48.955

 

$

45.378

 

$

41.801

 

$

38.224

 

$

34.647

 

$

31.070

 

$

23.00

 

$

53.770

 

$

50.331

 

$

46.892

 

$

43.453

 

$

40.014

 

$

36.575

 

$

33.136

 

$

29.697

 

$

22.00

 

$

51.431

 

$

48.130

 

$

44.829

 

$

41.528

 

$

38.227

 

$

34.926

 

$

31.625

 

$

28.323

 

$

21.00

 

$

49.095

 

$

45.931

 

$

42.767

 

$

39.603

 

$

36.440

 

$

33.277

 

$

30.114

 

$

26.950

 

$

20.00

 

$

46.754

 

$

43.729

 

$

40.704

 

$

37.679

 

$

34.653

 

$

31.628

 

$

28.602

 

$

25.577

 

$

19.00

 

$

44.413

 

$

41.527

 

$

38.641

 

$

35.755

 

$

32.866

 

$

29.979

 

$

27.090

 

$

24.204

 

$

18.00

 

$

42.072

 

$

39.325

 

$

36.578

 

$

33.831

 

$

31.079

 

$

28.330

 

$

25.578

 

$

22.831

 

 

Fractions of Average Net Return for Sugar and Adjusted Average Sugar Content
shall be in the same relative proportion and shall be interpolated from the
scale.  If the Average Net Return for Sugar or the Adjusted Average Sugar
Content is higher or lower than shown in the foregoing scale, the price to be
paid for sugarbeets shall be increased or decreased in proportion to the
immediately preceding price interval.

 

(d)           The term Average Net Return for Sugar as used in this Agreement
means the net selling price for sugar received by American Crystal Sugar Company
from United Sugars Corporation for the 2005 crop year, less all charges and
expenditures of the kind regularly and customarily deducted from the net selling
price for sugar under SSI’s system of accounting established for determining
Average Net Return for Sugar. Without limiting the generality of the foregoing,
there shall be included among the charges and expenditures deductible from the
net selling price for sugar in determining Average Net Return for Sugar (i) all
excise, sales or other taxes and all other direct or indirect charges of any
kind paid or accrued by SSI on, or with respect to, or arising out of the
manufacture, processing, production, ownership, possession, holding for sale,
sale, marketing or shipment of such sugar or any part thereof, or on all or any
part of the return from such sale; (ii) the profit or loss, if any, resulting
from hedging operations conducted by SSI in response to sugar customers requests
for sugar pricing based on sugar futures contracts listed on the New York
Coffee, Sugar & Cocoa Exchange; (iii) the profit or loss, if any, resulting from
SSI’s purchase and sale of other domestic or foreign refined sugar which SSI
deems necessary or advisable to fill shortfalls in SSI’s production or to
preserve SSI’s market share; (iv) all costs incurred in preparing sugar for
marketing, including the cost of packaging, liquefying, and powdering; (v) all
costs, charges, reductions in revenue, storage fees, and interest expense
resulting from SSI’s production of sugar in excess of that permitted to be
marketed under government imposed marketing allocations based on the Sidney
factory’s percentage of the overall allotment quantity, as adjusted from time to
time; and (vi) other costs, fees and expenses comparable or similar to those
subtracted from the net selling price in calculating the beet payment to the
shareholders of American Crystal Sugar Company.

 

(e)           The Adjusted Average Sugar Content of Grower’s sugarbeets is the
average sugar content of Grower’s sugarbeets (as determined by SSI’s individual
tests) reduced by a “Pol Adjustment” in an amount equal to 50% of the difference
between (1) the average sugar content of all growers’ regular harvest sugarbeets
received by SSI for the Sidney Factory (as determined by SSI’s aggregate
individual tests) during the current crop year less (2) the average sugar
content of all growers’ regular harvest sugarbeets sliced by SSI at the Sidney
Factory (as determined by SSI’s cossette tests) during the current crop year. 
Steam to the beet slicers will be shut off whenever a sample of cossettes is
taken for purposes of Pol Adjustment.

 

(f)            The final determination of Average Net Return for Sugar shall be
verified by a firm of independent certified public accountants selected by SSI,
which verification shall be conclusive.  Grower (acting through the Association)
shall have the right to select at its own expense a firm of certified public
accountants to check the determination of Average Net Return for Sugar.

 

(g)           The payment for sugarbeets determined in accordance with paragraph
8(c) shall be increased or decreased as follows:

 

(i)            In the event Grower delivers sugarbeets to an outside receiving
station, Grower shall be charged a freight participation charge (per screened
ton) applicable to the transportation of Grower’s sugarbeets from the receiving
station to the factory.  The Grower freight participation charge (per net ton)
is an amount equal to 40% of the Adjusted Freight Rate for the Powder River and
Pleasant View receiving stations, and 50% of the Adjusted Freight Rate for all
other receiving stations.  The Adjusted Freight Rate (hereinafter the “Adjusted
Freight Rate”) is calculated by the following formula:

 

Receiving station

X

100% + Grower’s % tare

X

Weighted average of Grower’s District sugar content

=

Adjusted Freight Rate

Freight Rate

 

100

 

Weighted average of Grower’s sugar content

 

 

 

(ii)           In the event Grower delivers sugarbeets to the Sidney factory
yard, Grower will be charged a factory freight participation charge (per
screened ton) applicable to the transportation of the Grower’s sugarbeets from
the pile to the wet hopper.  The Grower freight charge is an amount equal to 50%
of the Actual Factory Freight Cost calculated as follows:

 

 

Actual Factory

=

Total Factory Freight Charges

 

 

Freight Cost

 

Total Screened Tons Delivered to Factory Yard

 

(iii)          In the event Grower is contracted to deliver sugarbeets to an
outside receiving station and instead elects to deliver sugarbeets to the Sidney
factory yard, Grower will be paid a hauling allowance equal to 50% of the
Adjusted Freight Rate for the receiving station to which Grower was contracted.

 

(iv)          In the event Grower is contracted to deliver sugarbeets to an
outside receiving station and elects to deliver the sugarbeets to an outside
receiving station that is closer to the Sidney Factory, Grower shall be paid a
hauling allowance equal to 50% of the freight savings based on the Adjusted
Freight Rates for the affected receiving stations.

 

(v)           In the event Grower delivers sugarbeets to outside receiving
stations from certain geographic areas, Grower shall be paid a delivery
incentive to compensate Grower for increased hauling expenses. The delivery
incentive shall be calculated as follows:

 

2

--------------------------------------------------------------------------------

 

Pleasant View

 

Area I (Glendive)
Area II (Cracker Box exit to Yellowstone River
Area III (Fallon to Yellowstone River)
Area IV (Fallon Flats)

 

$
$
$
$

.00
.30
.60
.90

 per ton
 per ton
 per ton
 per ton

 

 

 

 

 

 

Powder River

 

Area I (Kinsey and Tongue River)

 

$

.90

 per ton

 

 

 

 

 

 

Marley District

 

These beets will delivered to the Sugar Valley station or optionally to the
Factory with hauling allowance. (Border—the road that runs south of the old
Marley station past the church for 2.4 miles. It then angles west for .6 mile
and turns south for 1.4 miles.)

Area I (East of border)
Area II (West of border)

 

$
$

1.10
.93

 per ton
 per ton

 

 

 

 

 

 

Culbertson

 

Area I (East of Brockton, Montana)
Area II (All sugarbeet acres grown west of the town of Brockton, Montana)

 

$
$

.00
1.00

 per ton

 

Seventy-five percent (75%) of the payment adjustments provided in paragraphs
8(g)(i) and 8(g)(ii) shall be applied to the first payment for sugarbeets to be
made to Grower under this Agreement and twenty-five percent (25%) shall be
applied to the second payment for sugarbeets to be made to Grower under this
Agreement.  The payment adjustments provided in paragraphs 8(g)(iii), 8(g)(iv),
and 8(g)(v) shall be applied to the first payment for sugarbeets to be made to
Grower under this Agreement.  The determination of contracted receiving station
and associated districts shall be based on that specified in the Addendum(s) to
this Agreement.

 

(h)           The payment for sugarbeets determined in accordance with paragraph
8(c) shall be decreased in an amount equal to fifty percent (50%) of the weight
shrink of the sugarbeets between the time of delivery and the time of
processing.  The weight shrink shall be equal to (i) the actual tons of
sugarbeets sliced by SSI for the 2005 crop and measured at the cossette scale,
divided by (ii) the total net tons of sugarbeets delivered to SSI by all growers
for the 2005 crop.  The net tons of sugarbeets delivered by Grower shall be
reduced in an amount equal to 50% of the weight shrink and the resulting
decrease in the payment for sugarbeets (if any) shall be reflected as an
adjustment on the second payment for sugarbeets to be made under this
Agreement.  No adjustment to the payment for the sugarbeets shall be made in the
event the actual tons of sugarbeets sliced is greater than or equal to the net
tons of sugarbeets delivered.

 

9.             Payment Schedule.  SSI shall make an initial payment (i) on
November 20, 2005 for sugarbeets delivered by Grower prior to November 5, 2005
and (ii) on the 15th day of the month following the month of delivery for
sugarbeets delivered by Grower on or after November 5, 2005.  The payments for
sugarbeets will be adjusted as provided in paragraphs 8(g) and 8(h) and any
other deductions provided hereunder or otherwise authorized by Grower.  The
initial and subsequent payments will be made based on the Adjusted Sugar Content
of Grower’s sugarbeets, and SSI’s estimate of anticipated Average Net Return for
Sugar as set forth in the following schedule:

 

Initial Payment

 

2nd Payment

 

 

 

% of SSI’s

 

 

 

% of SSI’s

 

 

 

Final Payment

 

estimated

 

 

 

estimated

 

 

 

% of actual

 

 

 

net payment

 

Date

 

new payment

 

Date

 

Net payment

 

Date

 

65

%

As provided above

 

90

%*

First Friday in April

 

100

%*

October 31, 2006

 

 

--------------------------------------------------------------------------------

*Taking credit for prior payments

 

If Grower is a tenant on the land on which the sugarbeets are grown and Grower
and the landlord have a crop sharing agreement, any check issued in payment for
sugarbeets delivered by Grower may be made payable jointly, at Grower’s
election, to Grower and Grower’s landlord pursuant to forms and procedures
prescribed by SSI.  Grower may from time to time request that SSI deduct certain
amounts from the payments to be made hereunder to satisfy payment obligations to
third parties.  SSI reserves the right to approve the form of such requests.  To
the extent SSI elects to honor such request(s), Grower shall defend and
indemnify SSI from all losses, costs, and damages (including attorneys’ fees and
costs) incurred by SSI as a result of payments to a third party.

 

10.           Advances to Grower.  Advances by SSI to Grower, either in seed,
money, or otherwise, shall constitute payment for sugarbeets purchased hereunder
to the extent of such advances and may be deducted from the initial or
subsequent payments to Grower; provided, however, in the event Grower abandons
his sugarbeet acreage, such advances shall become due and payable immediately.

 

11.           Dues Deductions.

 

(a)           SSI at its option may deduct from any payment due under this
Agreement (unless notified in writing by Grower before September 1, 2005 not to
make such deduction) the Grower’s dues and assessments to the Association and
pay this amount to the Association.  No such deduction shall be made unless the
Association notifies SSI in writing of the amount of such dues and assessments
prior to August 15, 2005.  Grower hereby acknowledges that said deduction may
occur.

 

(b)           SSI may at its option deduct from any payment due under this
Agreement an amount equivalent to Grower’s proportionate share (determined on a
per ton basis) of 50% of the amount paid by or on behalf of SSI to The Sugar
Association and/or The American Sugar Alliance.

 

12.           Research.  SSI is hereby authorized by Grower to deduct from any
payment due to Grower the amount of $.01 per net ton of beets purchased and to
pay such amount to the SSI/Grower Joint Research Committee Trust - Sidney (the
“Sidney Trust”) for the purpose of promoting sugarbeet agronomic research.  SSI
shall contribute to the Sidney Trust an equal amount in cash.  Expenditures from
the Sidney Trust will be determined by the Research Committee.  The composition
of the Research Committee will include equal representation from both SSI and
the Association.

 

13.           Right of Access.  SSI shall have the right to enter Grower’s
sugarbeet fields and to take sugarbeet samples from time to time for the purpose
of determining the quality and quantity of the sugarbeets.

 

14.           Force Majeure.  Fire, labor trouble, accident, act of God or of
the public enemy, weather or other cause beyond the reasonable control of the
parties which prevents Grower from the performance of this Agreement or which
prevents SSI from economically utilizing the sugarbeets contracted for in the
manufacture of sugar therefrom at the factory shall excuse Grower or SSI, as the
case may be, from the performance of this Agreement.

 

15.           Government Filings.  Grower agrees to make timely filings of all
USDA-FSA forms required to ensure maximum eligibility of SSI to qualify sugar
for CCC loans in accordance with the Farm Security and Rural Investment Act of
2002 and regulations promulgated thereunder, or other applicable legislation or
regulations.

 

16.           Non-Interference.  This Agreement shall not be construed to
affect, modify or in any way interfere with any marketing agreement between
Grower and the Association.

 

17.           Entire Agreement; Assignment.  This Agreement constitutes the
entire agreement of the parties with respect to the subject matter hereof, and
supercedes and replaces any and all prior written and oral agreements between
Grower and SSI (and its predecessors).  The printed terms hereof may be modified
or waived only by written agreement signed by an officer of SSI.  Grower’s
individual performance is contemplated hereby, and Grower shall not assign this
Agreement without SSI’s prior written consent.  Grower is an independent
contractor and is not an agent or employee of SSI.

 

18.           Breach Remedies.  Grower agrees to comply with all applicable
federal, state and local laws, ordinances, regulations and rulings, as well as
SSI’s operational and agricultural regulations and policies (collectively
referred to herein as “Applicable Law and Policy”).  Grower acknowledges and
agrees that Grower is required, pursuant to this Agreement to grow and deliver
the sugarbeet crop to SSI at the times specified by SSI.  Any one or more of the
following shall constitute a breach of this Agreement by Grower: (i) the failure
of Grower to plant, grow and deliver said crop to SSI; (ii) the failure of
Grower to comply with Applicable Law and Policy, (iii) the failure of Grower to
comply with any provision of this Agreement, or (iv) the breach by Grower of any
other agreement with SSI.  Upon a breach of this Agreement, Grower may be
subject to one or more of the following remedies as determined by SSI :

 

(a)           Termination of this Agreement and the right to deliver sugarbeets
to SSI for processing;

 

(b)           Payment of liquidated damages to SSI for failure to deliver the
sugarbeets contemplated under this Agreement, which liquidated damages are
hereby declared and stated to be an amount equal to Grower’s share of SSI’s
fixed costs (to be determined on a per ton basis) for processing of the crop;
and

 

(c)           Any other legal or equitable remedy that may be available to SSI
under applicable law.

 

19.           Indemnification.  Grower agrees to hold harmless and indemnify SSI
and its officers, directors, owners, shareholders, and affiliates from any and
all losses, costs, or damages (including attorneys fees and costs) SSI or its
officers, directors, owners, employees, shareholders, or affiliates may incur as
a result of Grower (1) delivering sugarbeets to SSI grown from non-approved seed
varieties, or to which have been applied, or which have been grown on land upon
or to which any unauthorized, non-registered, non-approved or prohibited
pesticide, herbicide, chemical or other substance has been applied; or
(ii) breaching any provision of this Agreement.  This indemnification obligation
shall be in addition to any other remedies that may be available to SSI under
Section 18 of this Agreement.

 

20.           Soil Sampling.  Grower may request SSI to perform soil sampling of
Grower’s fields.  Such soil sampling will be performed by SSI to the extent
feasible, and the cost of such soil sampling will be deducted from the first
payment for sugarbeets to be made to Grower under this Agreement.  Grower hereby
authorizes SSI to make such deduction.

 

3

--------------------------------------------------------------------------------

 

2006 SUGARBEET DELIVERY AGREEMENT

 

Federal ID No.

 

Agreement No.

 

 

Date:                                                            , 2006

 

SIDNEY SUGARS INCORPORATED (“SSI”) and
                                                                                                               

                                                                    “Grower”),
[a. corporation, a partnership, an individual]*, whose address
is                    

                                                                                        ,
State of                                                    , hereby agree as
follows:

 

1.             Purchase and Sale.  Grower shall grow and shall deliver and sell
to SSI during the 2006-crop season, and SSI shall purchase from Grower, the
sugarbeets as described on the attached Addendum(s) in accordance with the terms
of this Agreement (this Agreement and such Addendum(s) together with the
Exhibits attached hereto being collectively referred to herein as the
Agreement).  SSI shall not be obligated to purchase, and Grower agrees to
destroy prior to August 15, 2006, sugarbeets from all acres planted in excess of
that set forth on the Addendum(s) attached hereto.  SSI hereby reserves the
right to prorate deliveries to be made under this Agreement.  Any such proration
shall be established by SSI after a determination by SSI that it may not be able
to economically process the entire crop for any reason, including but not
limited to, government imposed marketing allocations and for a larger than
anticipated crop yield.  A proration shall be communicated to, and applied
against, all growers of SSI on a uniform and equitable basis.  Title and risk of
loss for sugarbeets purchased hereunder shall pass from Grower to SSI at the
time the sugarbeets are placed on the piler belt.  It is understood and agreed
that the terms of this Agreement apply to the 2006 sugarbeet crop and do not
constitute a commitment by SSI to purchase sugarbeets in subsequent years.

 

2.             Agricultural Practices.  The sugarbeets shall be planted not
later than June 1, 2006 unless a later date is approved in advance in writing by
SSI.  Grower shall not plant sugarbeets in the same field in consecutive years
unless approved in advance in writing by SSI.  Grower shall not apply nitrogen
fertilizer to the sugarbeets after July 1, 2006 unless approved in advance in
writing by SSI.  Grower shall not irrigate the sugarbeets within the 20-day
period immediately prior to the date that harvest and delivery of the sugarbeets
are scheduled to commence unless approved in advance in writing by SSI.  EXCEPT
UNDER UNAVOIDABLE EMERGENCY CONDITIONS, GROWER SHALL REMOVE THE SUGARBEET
FOLIAGE FROM THE CROP ONLY ON THE DAY ON WHICH SUGARBEETS ARE HARVESTED AND
SHALL PROTECT THE SUGARBEETS FROM SUN AND FREEZING TEMPERATURES AFTER REMOVAL
FROM THE GROUND.  Except as expressly set forth in this Agreement, Grower is not
obligated to adopt or conform to agricultural practices recommended by SSI or
its employees.  In no event shall SSI be liable for any failure or partial
failure of Grower’s sugarbeet crop or damage to the sugarbeets.

 

3.             Restricted Chemicals.  Grower shall not apply to the sugarbeets,
or to the land upon which the sugarbeets are grown, any “pesticide chemical” as
defined in the Federal Food, Drug, and Cosmetic Act, as amended, unless a
regulation shall then be in effect under Section 408 of such Act exempting such
chemical from the requirement of a tolerance or prescribing a tolerance for such
chemical, in which event such chemical may be applied to the sugarbeets, or land
upon which the sugarbeets are grown, only at such time and in such manner and
quantities as shall be within the tolerance prescribed for sugarbeets, and any
quantity of such chemical in or on sugarbeets delivered hereunder shall be
within the tolerance prescribed in such regulation.  Grower acknowledges and
agrees that SSI shall have the right to reject and refuse delivery of any
sugarbeets to which have been applied, or which have been grown on land to which
has been applied, any unauthorized, non-registered, non-approved or prohibited
pesticide, herbicide, chemical or other substance.  Grower further acknowledges
and agrees that SSI’s right to reject or refuse delivery of any of said
sugarbeets may be invoked by SSI at its sole option, regardless of whether or
not use of, or application of, an unauthorized, non-registered, non-approved, or
prohibited pesticide, herbicide, 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.  Grower warrants that the sugarbeets shall be
produced and delivered in compliance with all applicable State and Federal laws
and the rules and regulations thereunder, including, but not limited to,
Section 12 of the Fair Labor Standards Act relating to the employment of minors.

 

4.             Sugarbeet Seed.  Grower shall use only such sugarbeet seed as may
be jointly approved, in advance, by SSI and the Montana-Dakota Beet Growers
Association (the “Association”).  SSI makes no warranties with respect to
approved sugarbeet seed varieties.

 

5.             Condition of Sugarbeets.  Grower shall deliver the sugarbeets to
SSI in good condition at the receiving station designated on the Addendum(s)
hereto (which designation may be changed by SSI by notice to Grower near the
completion of harvest to avoid an insufficient or uneconomic utilization of a
receiving station) properly topped and free from excessive amounts of dirt,
stones, leaves, trash or other foreign substances which may interfere with the
handling or processing of the sugarbeets.  GROWER SHALL NOT DELIVER AND SSI
SHALL NOT BE OBLIGATED TO RECEIVE OR TO PAY FOR AND MAY REJECT (i) sugarbeets
not grown, harvested or delivered in compliance with the terms of this
Agreement; (ii) sugarbeets of less than 12% sugar content; (iii) sugarbeets of
less than 80% purity; (iv) diseased, frozen, freeze damaged, wilted or
improperly topped sugarbeets; (v) sugarbeets which are commingled with excessive
amounts of dirt, stones, leaves, trash or other foreign substances; or
(vi) sugarbeets which for any other reason are not suitable for storage and/or
the manufacture of sugar.  SSI’s failure to reject any sugarbeets shall not
constitute a waiver by SSI of, or in any manner impair, SSI’s right to reject
any other sugarbeets under this Agreement.

 

6.             Timing of Deliveries.  Sugarbeets shall be harvested and
delivered as and when scheduled by SSI until the beginning of regular harvest
(the beginning of regular harvest is hereinafter referred to as the “initial
piling date”).  No sugarbeets may be delivered before the initial piling date
unless covered by an Early Harvest Amendment between Grower and SSI.  The
initial piling date will begin on a date determined by SSI no earlier than
September 26, 2006 and no later than October 1, 2006.  On and after the initial
piling date, Grower shall harvest and deliver all unharvested sugarbeets as soon
as possible without further notification and, unless prevented by weather
conditions, shall complete delivery of all sugarbeets by December 1, 2006.  If
weather conditions prevent the harvest of all sugarbeets prior to December 1,
2006 and if the Factory is still operating, Grower may deliver during such
operating period at such times and places as may be designated by SSI.  SSI may
(i) change the initial piling date, (ii) control and restrict deliveries after
the initial piling date, or (iii) control and restrict deliveries during any
period when warm weather may subject sugarbeets in storage piles to abnormal
deterioration.  SSI shall use its best efforts to receive approximately 5% per
day (during a normal working day) of all Grower’s estimated total tonnage;
provided, that, issues related to the management and operation of the receiving
stations (outside or factory yard) shall be within the exclusive control of
SSI.  Any requests by Grower for correction and/or changes in delivery tickets
must be received by SSI within ten (10) days of the date of delivery of the
sugarbeets in order to be considered by SSI.

 

7.             Late Harvest Payment.  Notwithstanding the provisions of
Section 6, Grower may be subject to a late harvest payment in the event Grower
fails to complete delivery of all sugarbeets within the twenty (20) harvest days
commencing on the initial piling date (the “Regular Harvest Period”) as further
provided in this Section 7.

 

(a)           The late harvest payment shall be assessed against Grower if
Grower delivers sugarbeets to a receiving station (outside or factory yard)
after the Trigger Time (as defined below) for that receiving station.  The late
harvest payment to be assessed to Grower shall be $100 for each hour of
operation of that receiving station for the benefit of Grower.  The amount of
the late harvest payment shall be deducted from the first payment (and
subsequent payments if necessary) to be made by SSI to Grower hereunder.

 

(b)           The “Trigger Time” shall be the point in time following completion
of the Regular Harvest Period that a receiving station has operated for three
(3) harvest days following delivery of 95% of the sugarbeets contracted for
delivery to that receiving station.  A “harvest day” shall be defined as the
normal hours of operation during the Regular Harvest Period for that receiving
station.  The actual Trigger Time for purposes of calculating the late harvest
payment shall be determined following completion of harvest based on actual
deliveries.

 

(c)           The following terms and conditions shall apply with regard to the
determination of the late harvest payment:

 

(i)            The late harvest payment shall be applied against the Grower’s
agreement(s) with respect to which the late deliveries are made.

 

(ii)           The late harvest payment shall apply for each hour that the
receiving station is open for the benefit of the Grower, regardless of the
actual hours the Grower is actively harvesting sugarbeets.  Grower will not be
charged a late harvest payment for any period that it is not harvesting,
provided that Grower has given SSI reasonable advance notice that it will not be
harvesting sugarbeets.  The minimum interval for operation of a receiving
station will be 8 hours.

 

THE PROVISIONS OF PARAGRAPH NO. 8 TO PARAGRAPH 20, BOTH INCLUSIVE, AS SHOWN ON
THE ATTACHED PAGE HERETO, ARE PART OF THIS AGREEMENT.  THE UNDERSIGNED
REPRESENTS THAT HE/SHE IS AN AUTHORIZED REPRESENTATIVE OF GROWER AND THAT HE/SHE
HAS THE AUTHORITY TO BIND GROWER TO THE TERMS OF THIS AGREEMENT.

 

THIS IS A LEGALLY BINDING CONTRACT.  GROWER HAS HAD THE OPPORTUNITY TO CONSULT
WITH AN ATTORNEY CONCERNING THE RIGHTS AND OBLIGATIONS SET FORTH HEREIN.

 

SIDNEY SUGARS INCORPORATED

 

GROWER

 

 

 

Print Name

 

 

 

By

 

 

 

Grower E-mail address

 

 

Factory Agricultural Manager

 

 

 

 

 

 

Factory Mailing Address:

 

By:

 

RR 1 Box 3011

 

 

 

Sidney, Montana 59270

 

Title:

 

 

 

 

 

 

By:

 

 

 

 

 

 

 

Title:

 

 

--------------------------------------------------------------------------------

* Strike out all but the appropriate designation.  If a partnership, the name of
the partnership, if any, and the names of all partners should appear.

 

4

--------------------------------------------------------------------------------

 

(iii)          Grower may avoid the late harvest payment by completing
deliveries to another receiving station closer to the factory for which the
Trigger Time has not yet been met.

 

(iv)          If SSI determines that a receiving station is, or is anticipated
to be, over its capacity to receive and store sugarbeets, Grower may not be
permitted to deliver to that station, at the sole discretion of SSI.

 

8.             Beet Payment.  Sugarbeets grown, harvested and delivered in
accordance with the terms of this Agreement shall be paid for under the
following terms:

 

(a)           A proper deduction for tare will be made by SSI in determining the
net tons of sugarbeets delivered by Grower.  The determination of top tare shall
be based on the removal of all beet crown material leaving a distinct trace of
leaf scar after the top tare is taken.  For beets smaller than or equal to 3” in
diameter, removal will be straight across.  For beets larger than 3” in
diameter, removal will be down to 22º from the horizontal.  All soil, beet tops,
weeds, rocks and other debris found in all samples will be part of the total
tare.

 

(d)           SSI shall determine the sugar content of the sugarbeets and the
factory cossettes, which determination shall be final.  Grower may have
representatives (weighman, tareman and chemist) in SSI’s scale house, tare room
and laboratory to check weights, tares and sugar analyses, but such
representatives must be qualified in the line of work to be performed.

 

(e)           The price per net ton of sugarbeets shall be based on (i) the
Average Net Return for Sugar (as defined in paragraph 8(d)) and (ii) the
Adjusted Average Sugar Content of Grower’s sugarbeets (as defined and determined
under paragraph 8(e)), as set forth in the following scale, subject to increase
or decrease for freight charges, early harvest payments, and/or hauling
allowance as provided in paragraph 8(g).

 

SUGARBEET PAYMENT SCALE

(Payment in dollars per net ton of sugarbeets)

 

Average Net
Return for

 

Adjusted Average Sugar Content (%) of Sugarbeets

 

Sugar per CWT

 

21.00%

 

20.00%

 

19.00%

 

18.00%

 

17.00%

 

16.00%

 

15.00%

 

14.00%

 

$

30.00

 

$

69.891

 

$

65.486

 

$

61.081

 

$

56.676

 

$

52.272

 

$

47.868

 

$

43.464

 

$

39.059

 

$

29.00

 

$

67.550

 

$

63.284

 

$

59.018

 

$

54.752

 

$

50.485

 

$

46.219

 

$

41.952

 

$

37.686

 

$

28.00

 

$

65.211

 

$

61.083

 

$

56.955

 

$

52.827

 

$

48.698

 

$

44.570

 

$

40.441

 

$

36.313

 

$

27.00

 

$

62.875

 

$

58.884

 

$

54.893

 

$

50.902

 

$

46.911

 

$

42.921

 

$

38.930

 

$

34.940

 

$

26.00

 

$

60.536

 

$

56.683

 

$

52.830

 

$

48.977

 

$

45.125

 

$

41.272

 

$

37.419

 

$

33.566

 

$

25.00

 

$

58.195

 

$

54.481

 

$

50.767

 

$

47.053

 

$

43.338

 

$

39.623

 

$

35.908

 

$

32.193

 

$

24.00

 

$

55.859

 

$

52.282

 

$

48.705

 

$

45.128

 

$

41.551

 

$

37.974

 

$

34.397

 

$

30.820

 

$

23.00

 

$

53.520

 

$

50.081

 

$

46.642

 

$

43.203

 

$

39.764

 

$

36.325

 

$

32.886

 

$

29.447

 

$

22.00

 

$

51.181

 

$

47.880

 

$

44.579

 

$

41.278

 

$

37.977

 

$

34.676

 

$

31.375

 

$

28.073

 

$

21.00

 

$

48.845

 

$

45.681

 

$

42.517

 

$

39.353

 

$

36.190

 

$

33.027

 

$

29.864

 

$

26.700

 

$

20.00

 

$

46.504

 

$

43.479

 

$

40.454

 

$

37.429

 

$

34.403

 

$

31.378

 

$

28.352

 

$

25.327

 

$

19.00

 

$

44.163

 

$

41.277

 

$

38.391

 

$

35.505

 

$

32.616

 

$

29.729

 

$

26.840

 

$

23.954

 

$

18.00

 

$

41.822

 

$

39.075

 

$

36.328

 

$

33.581

 

$

30.829

 

$

28.080

 

$

25.328

 

$

22.581

 

 

Fractions of Average Net Return for Sugar and Adjusted Average Sugar Content
shall be in the same relative proportion and shall be interpolated from the
scale.  If the Average Net Return for Sugar or the Adjusted Average Sugar
Content is higher or lower than shown in the foregoing scale, the price to be
paid for sugarbeets shall be increased or decreased in proportion to the
immediately preceding price interval.

 

(d)           The term Average Net Return for Sugar as used in this Agreement
means the net selling price for sugar received by American Crystal Sugar Company
from United Sugars Corporation for the 2006 crop year, less all charges and
expenditures of the kind regularly and customarily deducted from the net selling
price for sugar under SSI’s system of accounting established for determining
Average Net Return for Sugar. Without limiting the generality of the foregoing,
there shall be included among the charges and expenditures deductible from the
net selling price for sugar in determining Average Net Return for Sugar (i) all
excise, sales or other taxes and all other direct or indirect charges of any
kind paid or accrued by SSI on, or with respect to, or arising out of the
manufacture, processing, production, ownership, possession, holding for sale,
sale, marketing or shipment of such sugar or any part thereof, or on all or any
part of the return from such sale; (ii) the profit or loss, if any, resulting
from hedging operations conducted by SSI in response to sugar customers requests
for sugar pricing based on sugar futures contracts listed on the New York
Coffee, Sugar & Cocoa Exchange; (iii) the profit or loss, if any, resulting from
SSI’s purchase and sale of other domestic or foreign refined sugar which SSI
deems necessary or advisable to fill shortfalls in SSI’s production or to
preserve SSI’s market share; (iv) all costs incurred in preparing sugar for
marketing, including the cost of packaging, liquefying, and powdering; (v) all
costs, charges, reductions in revenue, storage fees, and interest expense
resulting from SSI’s production of sugar in excess of that permitted to be
marketed under government imposed marketing allocations based on the Sidney
factory’s percentage of the overall allotment quantity, as adjusted from time to
time; and (vi) other costs, fees and expenses comparable or similar to those
subtracted from the net selling price in calculating the beet payment to the
shareholders of American Crystal Sugar Company.

 

(e)           The Adjusted Average Sugar Content of Grower’s sugarbeets is the
average sugar content of Grower’s sugarbeets (as determined by SSI’s individual
tests) reduced by a “Pol Adjustment” in an amount equal to 50% of the difference
between (1) the average sugar content of all growers’ regular harvest sugarbeets
received by SSI for the Sidney Factory (as determined by SSI’s aggregate
individual tests) during the current crop year less (2) the average sugar
content of all growers’ regular harvest sugarbeets sliced by SSI at the Sidney
Factory (as determined by SSI’s cossette tests) during the current crop year. 
Steam to the beet slicers will be shut off whenever a sample of cossettes is
taken for purposes of Pol Adjustment.

 

(f)            The final determination of Average Net Return for Sugar shall be
verified by a firm of independent certified public accountants selected by SSI,
which verification shall be conclusive.  Grower (acting through the Association)
shall have the right to select at its own expense a firm of certified public
accountants to check the determination of Average Net Return for Sugar.

 

(g)           The payment for sugarbeets determined in accordance with paragraph
8(c) shall be increased or decreased as follows:

 

(i)            In the event Grower delivers sugarbeets to an outside receiving
station, Grower shall be charged a freight participation charge (per screened
ton) applicable to the transportation of Grower’s sugarbeets from the receiving
station to the factory.  The Grower freight participation charge (per net ton)
is an amount equal to 40% of the Adjusted Freight Rate for the Powder River and
Pleasant View receiving stations, and 50% of the Adjusted Freight Rate for all
other receiving stations.  The Adjusted Freight Rate (hereinafter the “Adjusted
Freight Rate”) is calculated by the following formula:

 

Receiving station

X

100% + Grower’s % tare

X

Weighted average of Grower’s District sugar content

=

Adjusted Freight Rate

Freight Rate

 

100

 

Weighted average of Grower’s sugar content

 

 

 

(ii)           In the event Grower delivers sugarbeets to the Sidney factory
yard, Grower will be charged a factory freight participation charge (per
screened ton) applicable to the transportation of the Grower’s sugarbeets from
the pile to the wet hopper.  The Grower freight charge is an amount equal to 50%
of the Actual Factory Freight Cost calculated as follows:

 

 

Actual Factory

=

Total Factory Freight Charges

 

 

Freight Cost

 

Total Screened Tons Delivered to Factory Yard

 

(iii)          In the event Grower is contracted to deliver sugarbeets to an
outside receiving station and instead elects to deliver sugarbeets to the Sidney
factory yard, Grower will be paid a hauling allowance equal to 50% of the
Adjusted Freight Rate for the receiving station to which Grower was contracted.

 

(iv)          In the event Grower is contracted to deliver sugarbeets to an
outside receiving station and elects to deliver the sugarbeets to an outside
receiving station that is closer to the Sidney Factory, Grower shall be paid a
hauling allowance equal to 50% of the freight savings based on the Adjusted
Freight Rates for the affected receiving stations.

 

(v)           In the event Grower delivers sugarbeets to outside receiving
stations from certain geographic areas, Grower shall be paid a delivery
incentive to compensate Grower for increased hauling expenses. The delivery
incentive shall be calculated as follows:

 

5

--------------------------------------------------------------------------------

 

Pleasant View

 

Area I (Glendive)
Area II (Cracker Box exit to Yellowstone River
Area III (Fallon to Yellowstone River)
Area IV (Fallon Flats)

 

$
$
$
$

.00
.30
.60
.90

 per ton
 per ton
 per ton
 per ton

 

 

 

 

 

 

Powder River

 

Area I (Kinsey and Tongue River)

 

$

.90

 per ton

 

 

 

 

 

 

Marley District

 

These beets will delivered to the Sugar Valley station or optionally to the
Factory with hauling allowance. (Border—the road that runs south of the old
Marley station past the church for 2.4 miles. It then angles west for .6 mile
and turns south for 1.4 miles.)

Area I (East of border)
Area II (West of border)

 

$
$

1.10
.93

 per ton
 per ton

 

 

 

 

 

 

Culbertson

 

Area I (East of Brockton, Montana)
Area II (All sugarbeet acres grown west of the town of Brockton, Montana)

 

$
$

.00
1.00

 per ton

 

Seventy-five percent (75%) of the payment adjustments provided in paragraphs
8(g)(i) and 8(g)(ii) shall be applied to the first payment for sugarbeets to be
made to Grower under this Agreement and twenty-five percent (25%) shall be
applied to the second payment for sugarbeets to be made to Grower under this
Agreement.  The payment adjustments provided in paragraphs 8(g)(iii), 8(g)(iv),
and 8(g)(v) shall be applied to the first payment for sugarbeets to be made to
Grower under this Agreement.  The determination of contracted receiving station
and associated districts shall be based on that specified in the Addendum(s) to
this Agreement.

 

(h)           The payment for sugarbeets determined in accordance with paragraph
8(c) shall be decreased in an amount equal to fifty percent (50%) of the weight
shrink of the sugarbeets between the time of delivery and the time of
processing.  The weight shrink shall be equal to (i) the actual tons of
sugarbeets sliced by SSI for the 2006 crop and measured at the cossette scale,
divided by (ii) the total net tons of sugarbeets delivered to SSI by all growers
for the 2006 crop.  The net tons of sugarbeets delivered by Grower shall be
reduced in an amount equal to 50% of the weight shrink and the resulting
decrease in the payment for sugarbeets (if any) shall be reflected as an
adjustment on the second payment for sugarbeets to be made under this
Agreement.  No adjustment to the payment for the sugarbeets shall be made in the
event the actual tons of sugarbeets sliced is greater than or equal to the net
tons of sugarbeets delivered.

 

9.             Payment Schedule.  SSI shall make an initial payment (i) on
November 20, 2006 for sugarbeets delivered by Grower prior to November 5, 2006
and (ii) on the 15th day of the month following the month of delivery for
sugarbeets delivered by Grower on or after November 5, 2006.  The payments for
sugarbeets will be adjusted as provided in paragraphs 8(g) and 8(h) and any
other deductions provided hereunder or otherwise authorized by Grower.  The
initial and subsequent payments will be made based on the Adjusted Sugar Content
of Grower’s sugarbeets, and SSI’s estimate of anticipated Average Net Return for
Sugar as set forth in the following schedule:

 

Initial Payment

 

2nd Payment

 

 

 

% of SSI’s

 

 

 

% of SSI’s

 

 

 

Final Payment

 

estimated

 

 

 

estimated

 

 

 

% of actual

 

 

 

net payment

 

Date

 

new payment

 

Date

 

Net payment

 

Date

 

65

%

As provided above

 

90

%*

First Friday in April

 

100

%*

October 31, 2007

 

 

--------------------------------------------------------------------------------

*Taking credit for prior payments

 

If Grower is a tenant on the land on which the sugarbeets are grown and Grower
and the landlord have a crop sharing agreement, any check issued in payment for
sugarbeets delivered by Grower may be made payable jointly, at Grower’s
election, to Grower and Grower’s landlord pursuant to forms and procedures
prescribed by SSI.  Grower may from time to time request that SSI deduct certain
amounts from the payments to be made hereunder to satisfy payment obligations to
third parties.  SSI reserves the right to approve the form of such requests.  To
the extent SSI elects to honor such request(s), Grower shall defend and
indemnify SSI from all losses, costs, and damages (including attorneys’ fees and
costs) incurred by SSI as a result of payments to a third party.

 

10.           Advances to Grower.  Advances by SSI to Grower, either in seed,
money, or otherwise, shall constitute payment for sugarbeets purchased hereunder
to the extent of such advances and may be deducted from the initial or
subsequent payments to Grower; provided, however, in the event Grower abandons
his sugarbeet acreage, such advances shall become due and payable immediately.

 

11.           Dues Deductions.

 

(a)           SSI at its option may deduct from any payment due under this
Agreement (unless notified in writing by Grower before September 1, 2006 not to
make such deduction) the Grower’s dues and assessments to the Association and
pay this amount to the Association.  No such deduction shall be made unless the
Association notifies SSI in writing of the amount of such dues and assessments
prior to August 15, 2006.  Grower hereby acknowledges that said deduction may
occur.

 

(b)           SSI may at its option deduct from any payment due under this
Agreement an amount equivalent to Grower’s proportionate share (determined on a
per ton basis) of 50% of the amount paid by or on behalf of SSI to The Sugar
Association and/or The American Sugar Alliance.

 

12.           Research.  SSI is hereby authorized by Grower to deduct from any
payment due to Grower the amount of $.01 per net ton of beets purchased and to
pay such amount to the SSI/Grower Joint Research Committee Trust - Sidney (the
“Sidney Trust”) for the purpose of promoting sugarbeet agronomic research.  SSI
shall contribute to the Sidney Trust an equal amount in cash.  Expenditures from
the Sidney Trust will be determined by the Research Committee.  The composition
of the Research Committee will include equal representation from both SSI and
the Association.

 

13.           Right of Access.  SSI shall have the right to enter Grower’s
sugarbeet fields and to take sugarbeet samples from time to time for the purpose
of determining the quality and quantity of the sugarbeets.

 

14.           Force Majeure.  Fire, labor trouble, accident, act of God or of
the public enemy, weather or other cause beyond the reasonable control of the
parties which prevents Grower from the performance of this Agreement or which
prevents SSI from economically utilizing the sugarbeets contracted for in the
manufacture of sugar therefrom at the factory shall excuse Grower or SSI, as the
case may be, from the performance of this Agreement.

 

15.           Government Filings.  Grower agrees to make timely filings of all
USDA-FSA forms required to ensure maximum eligibility of SSI to qualify sugar
for CCC loans in accordance with the Farm Security and Rural Investment Act of
2002 and regulations promulgated thereunder, or other applicable legislation or
regulations.

 

16.           Non-Interference.  This Agreement shall not be construed to
affect, modify or in any way interfere with any marketing agreement between
Grower and the Association.

 

17.           Entire Agreement; Assignment.  This Agreement constitutes the
entire agreement of the parties with respect to the subject matter hereof, and
supercedes and replaces any and all prior written and oral agreements between
Grower and SSI (and its predecessors).  The printed terms hereof may be modified
or waived only by written agreement signed by an officer of SSI.  Grower’s
individual performance is contemplated hereby, and Grower shall not assign this
Agreement without SSI’s prior written consent.  Grower is an independent
contractor and is not an agent or employee of SSI.

 

18.           Breach Remedies.  Grower agrees to comply with all applicable
federal, state and local laws, ordinances, regulations and rulings, as well as
SSI’s operational and agricultural regulations and policies (collectively
referred to herein as “Applicable Law and Policy”).  Grower acknowledges and
agrees that Grower is required, pursuant to this Agreement to grow and deliver
the sugarbeet crop to SSI at the times specified by SSI.  Any one or more of the
following shall constitute a breach of this Agreement by Grower: (i) the failure
of Grower to plant, grow and deliver said crop to SSI; (ii) the failure of
Grower to comply with Applicable Law and Policy, (iii) the failure of Grower to
comply with any provision of this Agreement, or (iv) the breach by Grower of any
other agreement with SSI.  Upon a breach of this Agreement, Grower may be
subject to one or more of the following remedies as determined by SSI :

 

(a)           Termination of this Agreement and the right to deliver sugarbeets
to SSI for processing;

 

(b)           Payment of liquidated damages to SSI for failure to deliver the
sugarbeets contemplated under this Agreement, which liquidated damages are
hereby declared and stated to be an amount equal to Grower’s share of SSI’s
fixed costs (to be determined on a per ton basis) for processing of the crop;
and

 

(c)           Any other legal or equitable remedy that may be available to SSI
under applicable law.

 

19.           Indemnification.  Grower agrees to hold harmless and indemnify SSI
and its officers, directors, owners, shareholders, and affiliates from any and
all losses, costs, or damages (including attorneys fees and costs) SSI or its
officers, directors, owners, employees, shareholders, or affiliates may incur as
a result of Grower (1) delivering sugarbeets to SSI grown from non-approved seed
varieties, or to which have been applied, or which have been grown on land upon
or to which any unauthorized, non-registered, non-approved or prohibited
pesticide, herbicide, chemical or other substance has been applied; or
(ii) breaching any provision of this Agreement.  This indemnification obligation
shall be in addition to any other remedies that may be available to SSI under
Section 18 of this Agreement.

 

20.           Soil Sampling.  Grower may request SSI to perform soil sampling of
Grower’s fields.  Such soil sampling will be performed by SSI to the extent
feasible, and the cost of such soil sampling will be deducted from the first
payment for sugarbeets to be made to Grower under this Agreement.  Grower hereby
authorizes SSI to make such deduction.

 

6

--------------------------------------------------------------------------------

 

2007 SUGARBEET DELIVERY AGREEMENT

 

Federal ID No.

 

Agreement No.

 

 

Date:                                                            , 2007

 

SIDNEY SUGARS INCORPORATED (“SSI”) and
                                                                                                                 

                                                                    ”Grower”),
[a. corporation, a partnership, an individual]*, whose address
is                         

                                                                                        ,
State of                                                    , hereby agree as
follows:

 

1.             Purchase and Sale.  Grower shall grow and shall deliver and sell
to SSI during the 2007-crop season, and SSI shall purchase from Grower, the
sugarbeets as described on the attached Addendum(s) in accordance with the terms
of this Agreement (this Agreement and such Addendum(s) together with the
Exhibits attached hereto being collectively referred to herein as the
Agreement).  SSI shall not be obligated to purchase, and Grower agrees to
destroy prior to August 15, 2007, sugarbeets from all acres planted in excess of
that set forth on the Addendum(s) attached hereto.  SSI hereby reserves the
right to prorate deliveries to be made under this Agreement.  Any such proration
shall be established by SSI after a determination by SSI that it may not be able
to economically process the entire crop for any reason, including but not
limited to, government imposed marketing allocations and for a larger than
anticipated crop yield.  A proration shall be communicated to, and applied
against, all growers of SSI on a uniform and equitable basis.  Title and risk of
loss for sugarbeets purchased hereunder shall pass from Grower to SSI at the
time the sugarbeets are placed on the piler belt.  It is understood and agreed
that the terms of this Agreement apply to the 2007 sugarbeet crop and do not
constitute a commitment by SSI to purchase sugarbeets in subsequent years.

 

2.             Agricultural Practices.  The sugarbeets shall be planted not
later than June 1, 2007 unless a later date is approved in advance in writing by
SSI.  Grower shall not plant sugarbeets in the same field in consecutive years
unless approved in advance in writing by SSI.  Grower shall not apply nitrogen
fertilizer to the sugarbeets after July 1, 2007 unless approved in advance in
writing by SSI.  Grower shall not irrigate the sugarbeets within the 20-day
period immediately prior to the date that harvest and delivery of the sugarbeets
are scheduled to commence unless approved in advance in writing by SSI.  EXCEPT
UNDER UNAVOIDABLE EMERGENCY CONDITIONS, GROWER SHALL REMOVE THE SUGARBEET
FOLIAGE FROM THE CROP ONLY ON THE DAY ON WHICH SUGARBEETS ARE HARVESTED AND
SHALL PROTECT THE SUGARBEETS FROM SUN AND FREEZING TEMPERATURES AFTER REMOVAL
FROM THE GROUND.  Except as expressly set forth in this Agreement, Grower is not
obligated to adopt or conform to agricultural practices recommended by SSI or
its employees.  In no event shall SSI be liable for any failure or partial
failure of Grower’s sugarbeet crop or damage to the sugarbeets.

 

3.             Restricted Chemicals.  Grower shall not apply to the sugarbeets,
or to the land upon which the sugarbeets are grown, any “pesticide chemical” as
defined in the Federal Food, Drug, and Cosmetic Act, as amended, unless a
regulation shall then be in effect under Section 408 of such Act exempting such
chemical from the requirement of a tolerance or prescribing a tolerance for such
chemical, in which event such chemical may be applied to the sugarbeets, or land
upon which the sugarbeets are grown, only at such time and in such manner and
quantities as shall be within the tolerance prescribed for sugarbeets, and any
quantity of such chemical in or on sugarbeets delivered hereunder shall be
within the tolerance prescribed in such regulation.  Grower acknowledges and
agrees that SSI shall have the right to reject and refuse delivery of any
sugarbeets to which have been applied, or which have been grown on land to which
has been applied, any unauthorized, non-registered, non-approved or prohibited
pesticide, herbicide, chemical or other substance.  Grower further acknowledges
and agrees that SSI’s right to reject or refuse delivery of any of said
sugarbeets may be invoked by SSI at its sole option, regardless of whether or
not use of, or application of, an unauthorized, non-registered, non-approved, or
prohibited pesticide, herbicide, 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.  Grower warrants that the sugarbeets shall be
produced and delivered in compliance with all applicable State and Federal laws
and the rules and regulations thereunder, including, but not limited to,
Section 12 of the Fair Labor Standards Act relating to the employment of minors.

 

4.             Sugarbeet Seed.  Grower shall use only such sugarbeet seed as may
be jointly approved, in advance, by SSI and the Montana-Dakota Beet Growers
Association (the “Association”).  SSI makes no warranties with respect to
approved sugarbeet seed varieties.

 

5.             Condition of Sugarbeets.  Grower shall deliver the sugarbeets to
SSI in good condition at the receiving station designated on the Addendum(s)
hereto (which designation may be changed by SSI by notice to Grower near the
completion of harvest to avoid an insufficient or uneconomic utilization of a
receiving station) properly topped and free from excessive amounts of dirt,
stones, leaves, trash or other foreign substances which may interfere with the
handling or processing of the sugarbeets.  GROWER SHALL NOT DELIVER AND SSI
SHALL NOT BE OBLIGATED TO RECEIVE OR TO PAY FOR AND MAY REJECT (i) sugarbeets
not grown, harvested or delivered in compliance with the terms of this
Agreement; (ii) sugarbeets of less than 12% sugar content; (iii) sugarbeets of
less than 80% purity; (iv) diseased, frozen, freeze damaged, wilted or
improperly topped sugarbeets; (v) sugarbeets which are commingled with excessive
amounts of dirt, stones, leaves, trash or other foreign substances; or
(vi) sugarbeets which for any other reason are not suitable for storage and/or
the manufacture of sugar.  SSI’s failure to reject any sugarbeets shall not
constitute a waiver by SSI of, or in any manner impair, SSI’s right to reject
any other sugarbeets under this Agreement.

 

6.             Timing of Deliveries.  Sugarbeets shall be harvested and
delivered as and when scheduled by SSI until the beginning of regular harvest
(the beginning of regular harvest is hereinafter referred to as the “initial
piling date”).  No sugarbeets may be delivered before the initial piling date
unless covered by an Early Harvest Amendment between Grower and SSI.  The
initial piling date will begin on a date determined by SSI no earlier than
September 26, 2007 and no later than October 1, 2007.  On and after the initial
piling date, Grower shall harvest and deliver all unharvested sugarbeets as soon
as possible without further notification and, unless prevented by weather
conditions, shall complete delivery of all sugarbeets by December 1, 2007.  If
weather conditions prevent the harvest of all sugarbeets prior to December 1,
2007 and if the Factory is still operating, Grower may deliver during such
operating period at such times and places as may be designated by SSI.  SSI may
(i) change the initial piling date, (ii) control and restrict deliveries after
the initial piling date, or (iii) control and restrict deliveries during any
period when warm weather may subject sugarbeets in storage piles to abnormal
deterioration.  SSI shall use its best efforts to receive approximately 5% per
day (during a normal working day) of all Grower’s estimated total tonnage;
provided, that, issues related to the management and operation of the receiving
stations (outside or factory yard) shall be within the exclusive control of
SSI.  Any requests by Grower for correction and/or changes in delivery tickets
must be received by SSI within ten (10) days of the date of delivery of the
sugarbeets in order to be considered by SSI.

 

7.             Late Harvest Payment.  Notwithstanding the provisions of
Section 6, Grower may be subject to a late harvest payment in the event Grower
fails to complete delivery of all sugarbeets within the twenty (20) harvest days
commencing on the initial piling date (the “Regular Harvest Period”) as further
provided in this Section 7.

 

(a)           The late harvest payment shall be assessed against Grower if
Grower delivers sugarbeets to a receiving station (outside or factory yard)
after the Trigger Time (as defined below) for that receiving station.  The late
harvest payment to be assessed to Grower shall be $100 for each hour of
operation of that receiving station for the benefit of Grower.  The amount of
the late harvest payment shall be deducted from the first payment (and
subsequent payments if necessary) to be made by SSI to Grower hereunder.

 

(b)           The “Trigger Time” shall be the point in time following completion
of the Regular Harvest Period that a receiving station has operated for three
(3) harvest days following delivery of 95% of the sugarbeets contracted for
delivery to that receiving station.  A “harvest day” shall be defined as the
normal hours of operation during the Regular Harvest Period for that receiving
station.  The actual Trigger Time for purposes of calculating the late harvest
payment shall be determined following completion of harvest based on actual
deliveries.

 

(c)           The following terms and conditions shall apply with regard to the
determination of the late harvest payment:

 

(i)            The late harvest payment shall be applied against the Grower’s
agreement(s) with respect to which the late deliveries are made.

 

(ii)           The late harvest payment shall apply for each hour that the
receiving station is open for the benefit of the Grower, regardless of the
actual hours the Grower is actively harvesting sugarbeets.  Grower will not be
charged a late harvest payment for any period that it is not harvesting,
provided that Grower has given SSI reasonable advance notice that it will not be
harvesting sugarbeets.  The minimum interval for operation of a receiving
station will be 8 hours.

 

THE PROVISIONS OF PARAGRAPH NO. 8 TO PARAGRAPH 20, BOTH INCLUSIVE, AS SHOWN ON
THE ATTACHED PAGE HERETO, ARE PART OF THIS AGREEMENT.  THE UNDERSIGNED
REPRESENTS THAT HE/SHE IS AN AUTHORIZED REPRESENTATIVE OF GROWER AND THAT HE/SHE
HAS THE AUTHORITY TO BIND GROWER TO THE TERMS OF THIS AGREEMENT.

 

THIS IS A LEGALLY BINDING CONTRACT.  GROWER HAS HAD THE OPPORTUNITY TO CONSULT
WITH AN ATTORNEY CONCERNING THE RIGHTS AND OBLIGATIONS SET FORTH HEREIN.

 

SIDNEY SUGARS INCORPORATED

 

GROWER

 

 

 

Print Name

 

 

 

By

 

 

 

Grower E-mail address

 

 

Factory Agricultural Manager

 

 

 

 

 

 

Factory Mailing Address:

 

By:

 

RR 1 Box 3011

 

 

 

Sidney, Montana 59270

 

Title:

 

 

 

 

 

 

By:

 

 

 

 

 

 

 

Title:

 

 

--------------------------------------------------------------------------------

* Strike out all but the appropriate designation.  If a partnership, the name of
the partnership, if any, and the names of all partners should appear.

 

7

--------------------------------------------------------------------------------

 

(iii)          Grower may avoid the late harvest payment by completing
deliveries to another receiving station closer to the factory for which the
Trigger Time has not yet been met.

 

(iv)          If SSI determines that a receiving station is, or is anticipated
to be, over its capacity to receive and store sugarbeets, Grower may not be
permitted to deliver to that station, at the sole discretion of SSI.

 

8.             Beet Payment.  Sugarbeets grown, harvested and delivered in
accordance with the terms of this Agreement shall be paid for under the
following terms:

 

(a)           A proper deduction for tare will be made by SSI in determining the
net tons of sugarbeets delivered by Grower.  The determination of top tare shall
be based on the removal of all beet crown material leaving a distinct trace of
leaf scar after the top tare is taken.  For beets smaller than or equal to 3” in
diameter, removal will be straight across.  For beets larger than 3” in
diameter, removal will be down to 22º from the horizontal.  All soil, beet tops,
weeds, rocks and other debris found in all samples will be part of the total
tare.

 

(f)            SSI shall determine the sugar content of the sugarbeets and the
factory cossettes, which determination shall be final.  Grower may have
representatives (weighman, tareman and chemist) in SSI’s scale house, tare room
and laboratory to check weights, tares and sugar analyses, but such
representatives must be qualified in the line of work to be performed.

 

(g)           The price per net ton of sugarbeets shall be based on (i) the
Average Net Return for Sugar (as defined in paragraph 8(d)) and (ii) the
Adjusted Average Sugar Content of Grower’s sugarbeets (as defined and determined
under paragraph 8(e)), as set forth in the following scale, subject to increase
or decrease for freight charges, early harvest payments, and/or hauling
allowance as provided in paragraph 8(g).

 

SUGARBEET PAYMENT SCALE

(Payment in dollars per net ton of sugarbeets)

 

Average Net
Return for Sugar

 

Adjusted Average Sugar Content (%) of Sugarbeets

 

per CWT

 

21.00%

 

20.00%

 

19.00%

 

18.00%

 

17.00%

 

16.00%

 

15.00%

 

14.00%

 

$

30.00

 

$

69.291

 

$

64.886

 

$

60.481

 

$

56.076

 

$

51.672

 

$

47.268

 

$

42.864

 

$

38.459

 

$

29.00

 

$

66.950

 

$

62.684

 

$

58.418

 

$

54.152

 

$

49.885

 

$

45.619

 

$

41.352

 

$

37.086

 

$

28.00

 

$

64.611

 

$

60.483

 

$

56.355

 

$

52.227

 

$

48.098

 

$

43.970

 

$

39.841

 

$

35.713

 

$

27.00

 

$

62.275

 

$

58.284

 

$

54.293

 

$

50.302

 

$

46.311

 

$

42.321

 

$

38.330

 

$

34.340

 

$

26.00

 

$

59.936

 

$

56.083

 

$

52.230

 

$

48.377

 

$

44.525

 

$

40.672

 

$

36.819

 

$

32.966

 

$

25.00

 

$

57.595

 

$

53.881

 

$

50.167

 

$

46.453

 

$

42.738

 

$

39.023

 

$

35.308

 

$

31.593

 

$

24.00

 

$

55.259

 

$

51.682

 

$

48.105

 

$

44.528

 

$

40.951

 

$

37.374

 

$

33.797

 

$

30.220

 

$

23.00

 

$

52.920

 

$

49.481

 

$

46.042

 

$

42.603

 

$

39.164

 

$

35.725

 

$

32.286

 

$

28.847

 

$

22.00

 

$

50.581

 

$

47.280

 

$

43.979

 

$

40.678

 

$

37.377

 

$

34.076

 

$

30.775

 

$

27.473

 

$

21.00

 

$

48.245

 

$

45.081

 

$

41.917

 

$

38.753

 

$

35.590

 

$

32.427

 

$

29.264

 

$

26.100

 

$

20.00

 

$

45.904

 

$

42.879

 

$

39.854

 

$

36.829

 

$

33.803

 

$

30.778

 

$

27.752

 

$

24.727

 

$

19.00

 

$

43.563

 

$

40.677

 

$

37.791

 

$

34.905

 

$

32.016

 

$

29.129

 

$

26.240

 

$

23.354

 

$

18.00

 

$

41.222

 

$

38.475

 

$

35.728

 

$

32.981

 

$

30.229

 

$

27.480

 

$

24.728

 

$

21.981

 

 

Fractions of Average Net Return for Sugar and Adjusted Average Sugar Content
shall be in the same relative proportion and shall be interpolated from the
scale.  If the Average Net Return for Sugar or the Adjusted Average Sugar
Content is higher or lower than shown in the foregoing scale, the price to be
paid for sugarbeets shall be increased or decreased in proportion to the
immediately preceding price interval.

 

(d)           The term Average Net Return for Sugar as used in this Agreement
means the net selling price for sugar received by American Crystal Sugar Company
from United Sugars Corporation for the 2007 crop year, less all charges and
expenditures of the kind regularly and customarily deducted from the net selling
price for sugar under SSI’s system of accounting established for determining
Average Net Return for Sugar. Without limiting the generality of the foregoing,
there shall be included among the charges and expenditures deductible from the
net selling price for sugar in determining Average Net Return for Sugar (i) all
excise, sales or other taxes and all other direct or indirect charges of any
kind paid or accrued by SSI on, or with respect to, or arising out of the
manufacture, processing, production, ownership, possession, holding for sale,
sale, marketing or shipment of such sugar or any part thereof, or on all or any
part of the return from such sale; (ii) the profit or loss, if any, resulting
from hedging operations conducted by SSI in response to sugar customers requests
for sugar pricing based on sugar futures contracts listed on the New York
Coffee, Sugar & Cocoa Exchange; (iii) the profit or loss, if any, resulting from
SSI’s purchase and sale of other domestic or foreign refined sugar which SSI
deems necessary or advisable to fill shortfalls in SSI’s production or to
preserve SSI’s market share; (iv) all costs incurred in preparing sugar for
marketing, including the cost of packaging, liquefying, and powdering; (v) all
costs, charges, reductions in revenue, storage fees, and interest expense
resulting from SSI’s production of sugar in excess of that permitted to be
marketed under government imposed marketing allocations based on the Sidney
factory’s percentage of the overall allotment quantity, as adjusted from time to
time; and (vi) other costs, fees and expenses comparable or similar to those
subtracted from the net selling price in calculating the beet payment to the
shareholders of American Crystal Sugar Company.

 

(e)           The Adjusted Average Sugar Content of Grower’s sugarbeets is the
average sugar content of Grower’s sugarbeets (as determined by SSI’s individual
tests) reduced by a “Pol Adjustment” in an amount equal to 50% of the difference
between (1) the average sugar content of all growers’ regular harvest sugarbeets
received by SSI for the Sidney Factory (as determined by SSI’s aggregate
individual tests) during the current crop year less (2) the average sugar
content of all growers’ regular harvest sugarbeets sliced by SSI at the Sidney
Factory (as determined by SSI’s cossette tests) during the current crop year. 
Steam to the beet slicers will be shut off whenever a sample of cossettes is
taken for purposes of Pol Adjustment.

 

(f)            The final determination of Average Net Return for Sugar shall be
verified by a firm of independent certified public accountants selected by SSI,
which verification shall be conclusive.  Grower (acting through the Association)
shall have the right to select at its own expense a firm of certified public
accountants to check the determination of Average Net Return for Sugar.

 

(g)           The payment for sugarbeets determined in accordance with paragraph
8(c) shall be increased or decreased as follows:

 

(i)            In the event Grower delivers sugarbeets to an outside receiving
station, Grower shall be charged a freight participation charge (per screened
ton) applicable to the transportation of Grower’s sugarbeets from the receiving
station to the factory.  The Grower freight participation charge (per net ton)
is an amount equal to 40% of the Adjusted Freight Rate for the Powder River and
Pleasant View receiving stations, and 50% of the Adjusted Freight Rate for all
other receiving stations.  The Adjusted Freight Rate (hereinafter the “Adjusted
Freight Rate”) is calculated by the following formula:

 

Receiving station

X

100% + Grower’s % tare

X

Weighted average of Grower’s District sugar content

=

Adjusted Freight Rate

Freight Rate

 

100

 

Weighted average of Grower’s sugar content

 

 

 

(ii)           In the event Grower delivers sugarbeets to the Sidney factory
yard, Grower will be charged a factory freight participation charge (per
screened ton) applicable to the transportation of the Grower’s sugarbeets from
the pile to the wet hopper.  The Grower freight charge is an amount equal to 50%
of the Actual Factory Freight Cost calculated as follows:

 

 

Actual Factory

=

Total Factory Freight Charges

 

 

Freight Cost

 

Total Screened Tons Delivered to Factory Yard

 

(iii)          In the event Grower is contracted to deliver sugarbeets to an
outside receiving station and instead elects to deliver sugarbeets to the Sidney
factory yard, Grower will be paid a hauling allowance equal to 50% of the
Adjusted Freight Rate for the receiving station to which Grower was contracted.

 

(iv)          In the event Grower is contracted to deliver sugarbeets to an
outside receiving station and elects to deliver the sugarbeets to an outside
receiving station that is closer to the Sidney Factory, Grower shall be paid a
hauling allowance equal to 50% of the freight savings based on the Adjusted
Freight Rates for the affected receiving stations.

 

(v)           In the event Grower delivers sugarbeets to outside receiving
stations from certain geographic areas, Grower shall be paid a delivery
incentive to compensate Grower for increased hauling expenses. The delivery
incentive shall be calculated as follows:

 

8

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Pleasant View

 

Area I (Glendive)
Area II (Cracker Box exit to Yellowstone River
Area III (Fallon to Yellowstone River)
Area IV (Fallon Flats)

 

$
$
$
$

.00
.30
.60
.90

 per ton
 per ton
 per ton
 per ton

 

 

 

 

 

 

Powder River

 

Area I (Kinsey and Tongue River)

 

$

.90

 per ton

 

 

 

 

 

 

Marley District

 

These beets will delivered to the Sugar Valley station or optionally to the
Factory with hauling allowance. (Border—the road that runs south of the old
Marley station past the church for 2.4 miles. It then angles west for .6 mile
and turns south for 1.4 miles.)

Area I (East of border)
Area II (West of border)

 

$
$

1.10
.93

 per ton
 per ton

 

 

 

 

 

 

Culbertson

 

Area I (East of Brockton, Montana)
Area II (All sugarbeet acres grown west of the town of Brockton, Montana)

 

$
$

.00
1.00

 per ton

 

Seventy-five percent (75%) of the payment adjustments provided in paragraphs
8(g)(i) and 8(g)(ii) shall be applied to the first payment for sugarbeets to be
made to Grower under this Agreement and twenty-five percent (25%) shall be
applied to the second payment for sugarbeets to be made to Grower under this
Agreement.  The payment adjustments provided in paragraphs 8(g)(iii), 8(g)(iv),
and 8(g)(v) shall be applied to the first payment for sugarbeets to be made to
Grower under this Agreement.  The determination of contracted receiving station
and associated districts shall be based on that specified in the Addendum(s) to
this Agreement.

 

(h)           The payment for sugarbeets determined in accordance with paragraph
8(c) shall be decreased in an amount equal to fifty percent (50%) of the weight
shrink of the sugarbeets between the time of delivery and the time of
processing.  The weight shrink shall be equal to (i) the actual tons of
sugarbeets sliced by SSI for the 2007 crop and measured at the cossette scale,
divided by (ii) the total net tons of sugarbeets delivered to SSI by all growers
for the 2007 crop.  The net tons of sugarbeets delivered by Grower shall be
reduced in an amount equal to 50% of the weight shrink and the resulting
decrease in the payment for sugarbeets (if any) shall be reflected as an
adjustment on the second payment for sugarbeets to be made under this
Agreement.  No adjustment to the payment for the sugarbeets shall be made in the
event the actual tons of sugarbeets sliced is greater than or equal to the net
tons of sugarbeets delivered.

 

9.             Payment Schedule.  SSI shall make an initial payment (i) on
November 20, 2007 for sugarbeets delivered by Grower prior to November 5, 2007
and (ii) on the 15th day of the month following the month of delivery for
sugarbeets delivered by Grower on or after November 5, 2007.  The payments for
sugarbeets will be adjusted as provided in paragraphs 8(g) and 8(h) and any
other deductions provided hereunder or otherwise authorized by Grower.  The
initial and subsequent payments will be made based on the Adjusted Sugar Content
of Grower’s sugarbeets, and SSI’s estimate of anticipated Average Net Return for
Sugar as set forth in the following schedule:

 

Initial Payment

 

2nd Payment

 

 

 

% of SSI’s

 

 

 

% of SSI’s

 

 

 

Final Payment

 

estimated

 

 

 

estimated

 

 

 

% of actual

 

 

 

net payment

 

Date

 

new payment

 

Date

 

Net payment

 

Date

 

65

%

As provided above

 

90

%*

First Friday in April

 

100

%*

October 31, 2008

 

 

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*Taking credit for prior payments

 

If Grower is a tenant on the land on which the sugarbeets are grown and Grower
and the landlord have a crop sharing agreement, any check issued in payment for
sugarbeets delivered by Grower may be made payable jointly, at Grower’s
election, to Grower and Grower’s landlord pursuant to forms and procedures
prescribed by SSI.  Grower may from time to time request that SSI deduct certain
amounts from the payments to be made hereunder to satisfy payment obligations to
third parties.  SSI reserves the right to approve the form of such requests.  To
the extent SSI elects to honor such request(s), Grower shall defend and
indemnify SSI from all losses, costs, and damages (including attorneys’ fees and
costs) incurred by SSI as a result of payments to a third party.

 

10.           Advances to Grower.  Advances by SSI to Grower, either in seed,
money, or otherwise, shall constitute payment for sugarbeets purchased hereunder
to the extent of such advances and may be deducted from the initial or
subsequent payments to Grower; provided, however, in the event Grower abandons
his sugarbeet acreage, such advances shall become due and payable immediately.

 

11.           Dues Deductions.

 

(a)           SSI at its option may deduct from any payment due under this
Agreement (unless notified in writing by Grower before September 1, 2007 not to
make such deduction) the Grower’s dues and assessments to the Association and
pay this amount to the Association.  No such deduction shall be made unless the
Association notifies SSI in writing of the amount of such dues and assessments
prior to August 15, 2007.  Grower hereby acknowledges that said deduction may
occur.

 

(b)           SSI may at its option deduct from any payment due under this
Agreement an amount equivalent to Grower’s proportionate share (determined on a
per ton basis) of 50% of the amount paid by or on behalf of SSI to The Sugar
Association and/or The American Sugar Alliance.

 

12.           Research.  SSI is hereby authorized by Grower to deduct from any
payment due to Grower the amount of $.01 per net ton of beets purchased and to
pay such amount to the SSI/Grower Joint Research Committee Trust - Sidney (the
“Sidney Trust”) for the purpose of promoting sugarbeet agronomic research.  SSI
shall contribute to the Sidney Trust an equal amount in cash.  Expenditures from
the Sidney Trust will be determined by the Research Committee.  The composition
of the Research Committee will include equal representation from both SSI and
the Association.

 

13.           Right of Access.  SSI shall have the right to enter Grower’s
sugarbeet fields and to take sugarbeet samples from time to time for the purpose
of determining the quality and quantity of the sugarbeets.

 

14.           Force Majeure.  Fire, labor trouble, accident, act of God or of
the public enemy, weather or other cause beyond the reasonable control of the
parties which prevents Grower from the performance of this Agreement or which
prevents SSI from economically utilizing the sugarbeets contracted for in the
manufacture of sugar therefrom at the factory shall excuse Grower or SSI, as the
case may be, from the performance of this Agreement.

 

15.           Government Filings.  Grower agrees to make timely filings of all
USDA-FSA forms required to ensure maximum eligibility of SSI to qualify sugar
for CCC loans in accordance with the Farm Security and Rural Investment Act of
2002 and regulations promulgated thereunder, or other applicable legislation or
regulations.

 

16.           Non-Interference.  This Agreement shall not be construed to
affect, modify or in any way interfere with any marketing agreement between
Grower and the Association.

 

17.           Entire Agreement; Assignment.  This Agreement constitutes the
entire agreement of the parties with respect to the subject matter hereof, and
supercedes and replaces any and all prior written and oral agreements between
Grower and SSI (and its predecessors).  The printed terms hereof may be modified
or waived only by written agreement signed by an officer of SSI.  Grower’s
individual performance is contemplated hereby, and Grower shall not assign this
Agreement without SSI’s prior written consent.  Grower is an independent
contractor and is not an agent or employee of SSI.

 

18.           Breach Remedies.  Grower agrees to comply with all applicable
federal, state and local laws, ordinances, regulations and rulings, as well as
SSI’s operational and agricultural regulations and policies (collectively
referred to herein as “Applicable Law and Policy”).  Grower acknowledges and
agrees that Grower is required, pursuant to this Agreement to grow and deliver
the sugarbeet crop to SSI at the times specified by SSI.  Any one or more of the
following shall constitute a breach of this Agreement by Grower: (i) the failure
of Grower to plant, grow and deliver said crop to SSI; (ii) the failure of
Grower to comply with Applicable Law and Policy, (iii) the failure of Grower to
comply with any provision of this Agreement, or (iv) the breach by Grower of any
other agreement with SSI.  Upon a breach of this Agreement, Grower may be
subject to one or more of the following remedies as determined by SSI :

 

(a)           Termination of this Agreement and the right to deliver sugarbeets
to SSI for processing;

 

(b)           Payment of liquidated damages to SSI for failure to deliver the
sugarbeets contemplated under this Agreement, which liquidated damages are
hereby declared and stated to be an amount equal to Grower’s share of SSI’s
fixed costs (to be determined on a per ton basis) for processing of the crop;
and

 

(c)           Any other legal or equitable remedy that may be available to SSI
under applicable law.

 

19.           Indemnification.  Grower agrees to hold harmless and indemnify SSI
and its officers, directors, owners, shareholders, and affiliates from any and
all losses, costs, or damages (including attorneys fees and costs) SSI or its
officers, directors, owners, employees, shareholders, or affiliates may incur as
a result of Grower (1) delivering sugarbeets to SSI grown from non-approved seed
varieties, or to which have been applied, or which have been grown on land upon
or to which any unauthorized, non-registered, non-approved or prohibited
pesticide, herbicide, chemical or other substance has been applied; or
(ii) breaching any provision of this Agreement.  This indemnification obligation
shall be in addition to any other remedies that may be available to SSI under
Section 18 of this Agreement.

 

20.           Soil Sampling.  Grower may request SSI to perform soil sampling of
Grower’s fields.  Such soil sampling will be performed by SSI to the extent
feasible, and the cost of such soil sampling will be deducted from the first
payment for sugarbeets to be made to Grower under this Agreement.  Grower hereby
authorizes SSI to make such deduction.

 

9

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