Exhibit 10.22

 

AMENDED AND RESTATED
UNIFORM MEMBER SUGAR MARKETING AGREEMENT
POOL BASIS

 

THIS AGREEMENT is made effective as of September 20, 2007 by and between UNITED
SUGARS CORPORATION, a cooperative association organized under the laws of the
State of Minnesota (“UNITED”), and AMERICAN CRYSTAL SUGAR COMPANY, a cooperative
association organized under the laws of the State of Minnesota (“ACSC”).

 

WITNESSETH

 

WHEREAS, ACSC is an association of agricultural producers or an agricultural
producer organized and operated so as to adhere to the provisions of
Section 15(a) of the Agricultural Marketing Act (12 U.S.C. § 1141j (a)), as
amended, and the Capper-Volstead Act of 1922 (7 U.S.C. §§ 291, 292), and is
engaged in the operation of one or more sugar processing plants for the purpose
of producing one or more forms of refined sugar; and

 

WHEREAS, UNITED is organized and operated so as to adhere to the provisions of
Section 15(a) of the Agricultural Marketing Act (12 U.S.C. § 1141j (a)), as
amended, and the Capper-Volstead Act of 1922 (7 U.S.C. §§ 291,292), for the
mutual help and benefit of its members (currently United States Sugar
Corporation (“USSC”), Minn-Dak Farmers Cooperative (“MDFC”), and ACSC, and all
future members, each a “MEMBER” or collectively, “MEMBERS”) and for the purposes
of acting as a marketing agency for its MEMBERS and of engaging in the business
of marketing the refined sugar (whether sold in packages or in bulk) produced by
its MEMBERS, including but not limited to, granulated, liquid, blends, and
specialty products; and

 

WHEREAS, ACSC is a MEMBER of UNITED and wishes to participate with other MEMBERS
in developing and maintaining a dependable market for certain products it
produces; and

 

WHEREAS, UNITED and ACSC desire to enter into a membership marketing agreement
on a pool basis;

 

NOW, THEREFORE, in consideration of the above, subject to the respective terms,
conditions, and obligations of ACSC and UNITED herein, UNITED and ACSC agree as
follows:

 

1.             DEFINITIONS. AS USED IN THIS AGREEMENT, THE FOLLOWING TERMS SHALL
HAVE THE FOLLOWING MEANINGS:

 

“Allocation” means the amount of sugar a MEMBER is authorized to market as
established by the United States Department of Agriculture under the Allotment
Statute (defined below).

 

“Allotments” means an overall allotment of sugar processed from domestically
produced sugarcane and sugar beets, as defined and contemplated by the Allotment
Statute.

 

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“Allotment Statute” means the Agricultural Adjustment Act of 1938 (7 U.S.C.
§ 359aa et seq. (2007)), and amendments thereto, or subsequent statutes
providing for sugar marketing allotments.

 

“Assets Costs” shall mean carrying costs of assets associated with Product
shipping, packaging, warehousing (including all costs historically included by
UNITED as warehousing costs), and storage functions, including depreciation and
interest.

 

“Beet Processing Season” means the period of time generally from
September through August during which a Beet Producer processes beets, thick
juice and extract into refined sugar.

 

“Beet Producer” means a MEMBER that processes sugar beets into refined sugar.

 

“Buyer” is a third party purchaser of Finished Product from UNITED.

 

“Commingle” means (i) Finished Product of a MEMBER that is stored by UNITED in a
warehouse or stationary storage facility that is owned or leased by UNITED; or
(ii) Product which has been further processed by UNITED.

 

“Cane Processing Season” means the period of time generally from
mid-October through April during which time a Cane Producer processes sugarcane
into feedstock for a refinery.

 

“Cane Producer” means a MEMBER that processes cane into refined sugar.

 

“Crop Year” means the crop year established by the Beet Producers for their own
business operations.

 

“Excess Product” means that amount of Product exceeding a Beet Producer’s
Allocation.

 

“Fiscal Year” means the fiscal year of UNITED, which begins on September 1 and
ends on August 31.

 

“Force Majeure” means any (i) fire, freeze, accident, explosion, construction
delay, hurricane, flood, act of God, inability to obtain electric power or fuel,
inability to obtain any required permits or licenses, government law, directive
or regulation; or the effect of the application of any governmental law,
directive or regulation, or any like contingency, beyond a party’s reasonable
ability to control or avoid; and (ii) labor dispute or strike, from whatever
cause arising and regardless of whether the demands of the employees involved
are reasonable and within the affected party’s power to concede.

 

“Finished Product” or “Finished Products” means those Products that have been
granulated or otherwise made ready for marketing to third parties.

 

“MEMBER” means a member or shareholder of UNITED who is entitled to vote,
presently ACSC, USSC, and MDFC.

 

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“Net Selling Price” means the gross proceeds realized by UNITED from sales of
Products produced by MEMBERS in the Primary Pool, less expenses directly
attributable to the Primary Pool, including all Operating Costs, charges or
expenses attributable to the marketing and sale of pooled Products, including
without limitation salaries, wages and other benefits of UNITED’s employees,
office expense and appropriate consulting fees, and all costs of transportation
of the pooled Products.

 

“Operating Costs” means operating costs associated with Product shipping,
packaging, warehousing (including all costs historically included by UNITED as
warehousing costs) and storage functions, including without limitation labor
(including direct and indirect costs, such as employee benefits, insurance,
etc.), supplies, and utilities.

 

“Pool Year” means the pool year of the Primary Pool, which coincides with the
Fiscal Year of UNITED, which begins on September 1 and ends on August 31.

 

“Primary Pool” means Product of each MEMBER that is pooled for each Fiscal Year
with Products of other MEMBERS as agreed to in Section 6.1.

 

“Product” or “Products” means refined sugar produced by a MEMBER, or purchased
by a MEMBER or by UNITED on behalf of a MEMBER, during the term of this
Agreement, including, but not limited to, granulated, liquid, blends, specialty
products, standard liquor, thick juice, extract and other forms of ungranulated
sugar.

 

“Pro Rata Share” shall be equal to a fraction, with each MEMBER’S annual
production of Product (on a sugar equivalent basis) included in the Primary Pool
as the numerator and total annual pool production of Product (on a sugar
equivalent basis) for all MEMBERS included in the Primary Pool as the
denominator.

 

“Purchased Sugar” means Product that is purchased by a MEMBER from a third party
or from another MEMBER.

 

“Separate Pool” means Excess Product or other Product of a MEMBER that is not
eligible for the Primary Pool that is separately handled by UNITED for each
Fiscal Year as agreed to in Section 6.1.

 

“Sidney Storage Facility” means the approximately 1,910,000 CWT capacity sugar
storage facilities that are owned or accessible by Sidney Sugars Incorporated, a
wholly owned subsidiary of ACSC (“SSI”), in Sidney, Montana.

 

 “Term” has the meaning set forth in Section 17.

 

“Transgenic” or “Transgenic Variety” means a variety of sugar beet or sugarcane
that contains a gene or genes that has or have been artificially inserted
instead of the plant acquiring the gene or genes through pollination or standard
sugarcane reproduction.

 

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2.             APPOINTMENT OF UNITED AS SALES AGENT.

 

2.1           UNITED APPOINTED SALES AGENT.  ACSC APPOINTS AND DESIGNATES UNITED
TO ACT AS ITS SOLE WORLDWIDE AGENT IN THE SALE AND MARKETING OF ACSC PRODUCTS. 
UNITED ACCEPTS SUCH APPOINTMENT AND AGREES TO ACT AS THE SALES AGENT AND POOL
ADMINISTRATOR IN ACCORDANCE WITH THE TERMS OF THIS AGREEMENT, AND SUBJECT TO
SECTION 19.2 HEREOF.  ACSC AGREES THAT UNITED MAY EMPLOY ALL SUCH PERSONS AND
AGENCIES AS IT DETERMINES TO BE NECESSARY TO CARRY OUT ITS OBLIGATIONS UNDER
THIS AGREEMENT.  IT IS UNDERSTOOD AND AGREED THAT UNITED MAY MARKET PRODUCTS
UNDER THE VARIOUS TRADEMARKS AND TRADE NAMES OF ACSC (IF ANY) PURSUANT TO A
ROYALTY-FREE LICENSE AGREEMENT WITH RESPECT TO SUCH TRADEMARKS AND TRADE NAMES,
THE FORM OF WHICH AGREEMENT SHALL BE MUTUALLY AGREED UPON BY ACSC AND UNITED.

 

2.2           UNITED AUTHORIZED TO PASS TITLE.  UNITED AGREES, AND IS HEREBY
EMPOWERED BY ACSC, TO SELL IN ITS OWN NAME, AND PASS TITLE ON BEHALF OF ACSC,
ALL PRODUCT DURING THE TERM OF THIS AGREEMENT TO SUCH PURCHASERS, AT SUCH TIME
OR TIMES, AT SUCH PLACE OR PLACES, IN SUCH MANNER AND ON SUCH PRICES OR TERMS AS
UNITED DETERMINES TO BE IN THE BEST INTERESTS OF ACSC.

 

2.3           PRODUCTS NOT INCLUDED IN THIS AGREEMENT.  UNITED SHALL HAVE NO
RIGHTS, AND NOTHING HEREIN CONTAINED SHALL BE DEEMED TO CREATE RIGHTS IN UNITED,
IN AND TO ANY OTHER PRODUCTS PRODUCED BY ACSC OTHER THAN PRODUCT OR PRODUCTS AS
HEREIN DEFINED.

 

2.4           PROCUREMENT OF ADDITIONAL PRODUCT.  IT IS UNDERSTOOD AND AGREED
THAT UNITED MAY FROM TIME TO TIME PROCURE CERTAIN PRODUCTS FROM THIRD PARTIES IN
ORDER TO MEET THE REQUIREMENTS OF SALES CONTRACTS OR AS OTHERWISE DETERMINED TO
BE IN THE BEST INTEREST OF THE MEMBERS.  ACSC AND UNITED AGREE THAT UNITED SHALL
ACT AS AN AGENT FOR ACSC IN CONNECTION WITH SUCH PURCHASES OF PRODUCTS AND THAT
THE COSTS OF ACQUIRING SUCH PRODUCTS AND REVENUES RECEIVED FROM THE SALE OF SUCH
PRODUCTS SHALL BE INCLUDED IN THE PRIMARY POOL.

 

3.             PACKAGING.  ACSC INTENDS TO HAVE THE CAPACITY TO SELL PRODUCT IN
BULK AS WELL AS IN PACKAGES.  IT IS UNDERSTOOD THAT PRODUCTION AND PACKAGING
CONSTRAINTS MAY LIMIT THE VOLUME AND MIX OF PACKAGES THAT CAN BE PRODUCED AT ANY
ONE TIME, AND, ACCORDINGLY, UNITED AGREES TO COORDINATE ORDERS FOR PACKAGED
PRODUCT TAKING INTO CONSIDERATION ACSC’S PRODUCTION AND PACKAGING LIMITATIONS.

 

4.             PRODUCTION AND DELIVERY.

 

4.1           TIMING OF PRODUCTION.  IT IS ANTICIPATED THAT ACSC WILL PRODUCE
FINISHED PRODUCTS DURING ITS CAMPAIGN ON AN APPROXIMATELY EVEN MONTHLY
SCHEDULE.  HOWEVER, ACSC ACKNOWLEDGES THAT UNITED’S REQUIREMENTS MAY BE GREATER
IN CERTAIN SPECIFIED MONTHS AND LESS IN OTHERS.  ACCORDINGLY, SUBJECT TO MUTUAL
AGREEMENT OF THE PARTIES, UNITED WILL ENDEAVOR TO COORDINATE DEMANDS WITH ACSC’S
PRODUCTION AND STORAGE CAPACITIES.  AT UNITED’S REQUEST, AND FOR AN AGREED UPON
PAYMENT, ACSC MAY AGREE TO MAXIMIZE ITS PRODUCTION IN ANY MONTH IN ORDER TO
ACCOMMODATE CUSTOMER DEMAND.

 

4.2           PRODUCT PRODUCTION SCHEDULES.  ACSC SHALL PROVIDE TO UNITED BY
JUNE 1 OF EACH FISCAL YEAR DURING THE TERM A PRELIMINARY ESTIMATED PRODUCTION
SCHEDULE (SPECIFYING VOLUME AND DATES) OF PRODUCT FOR THE NEXT FOLLOWING FISCAL
YEAR AND WILL PROVIDE A REVISED ESTIMATED PRODUCTION SCHEDULE OF PRODUCT BY
JULY 1 AND EACH MONTH THEREAFTER OF EACH SUCH YEAR, REFLECTING ANY CHANGES FROM
THE JUNE PRELIMINARY ESTIMATE.  UNITED AND ACSC SHALL JOINTLY

 

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DEVELOP A PRODUCTION AND DELIVERY SCHEDULE PLAN FOR ACSC FOR EACH FISCAL YEAR
THAT WILL ATTEMPT TO ACCOMMODATE, AS MUCH AS REASONABLY POSSIBLE, THE DUAL GOALS
OF MAXIMIZING THE PRICE TO BE PAID TO ACSC AND MAXIMIZING PRODUCTION
EFFICIENCIES, WITH THE OBJECTIVE OF SELLING ALL OF ACSC’S PRODUCTION OF PRODUCT
EACH YEAR.

 

4.3           WEEKLY DELIVERY AMOUNTS.  ESTIMATED WEEKLY DELIVERY SCHEDULES OF
FINISHED PRODUCT, INCLUDING QUANTITIES, AND BULK AND PACKAGING REQUIREMENTS FOR
EACH WEEK OF EACH MONTH, SHALL BE AGREED UPON BY UNITED AND ACSC AT LEAST SEVEN
(7) DAYS IN ADVANCE OF THE MONTH TO WHICH THEY APPLY.  THE PARTIES SHALL USE
REASONABLE EFFORTS, RECOGNIZING CUSTOMER DEMAND, TO ACCOMMODATE EACH OTHER IN
SETTING SUCH SCHEDULES.

 

5.             BILLING AND COLLECTION.  ALL SALES MADE BY UNITED SHALL BE BILLED
ON INVOICES OF UNITED AND ALL RECEIPTS SHALL BE COLLECTED BY UNITED.

 

6.             POOLING OF PRODUCT.

 

6.1           AGREEMENT TO POOL PRODUCT.  UNITED AND ACSC AGREE THAT THE
PRODUCTS TO BE SOLD BY UNITED HEREUNDER SHALL BE POOLED FOR EACH FISCAL YEAR
WITH PRODUCTS OF THE OTHER MEMBERS OF UNITED IN THE PRIMARY POOL.  UNITED BY
ACTION OF ITS EXECUTIVE COMMITTEE SHALL HAVE THE DISCRETION TO CREATE ADDITIONAL
POOLS AS DEEMED REASONABLY NECESSARY FOR THE EQUITABLE TREATMENT OF ALL MEMBERS
AND TO CREATE ACCOUNTING STANDARDS FOR SUCH ADDITIONAL POOLS.

 

6.2           ADJUSTMENTS FOR BEET PRODUCERS.  THE AMOUNT OF PRODUCT TO BE
INCLUDED IN THE PRIMARY POOL FOR A BEET PRODUCER SHALL BE THE AMOUNT OF PRODUCT
PRODUCED BY THE BEET PRODUCER DURING THE APPLICABLE CROP YEAR, NOT TO EXCEED THE
BEET PRODUCER’S ALLOCATION.  ANY EXCESS PRODUCT OF A BEET PRODUCER SHALL BE
MARKETED AS PROVIDED IN SECTION 19.2, BELOW.

 

6.3           ADJUSTMENTS FOR CANE PRODUCERS.  IN ORDER TO COORDINATE THE CANE
PROCESSING SEASON WITH THE BEET PROCESSING SEASON, THE AMOUNT OF CANE PRODUCT
FOR A CANE PRODUCER TO BE INCLUDED IN THE PRIMARY POOL FOR EACH FISCAL YEAR
SHALL BE THE AMOUNT OF CANE PRODUCT (ON A SUGAR EQUIVALENT BASIS) PRODUCED BY
THE CANE PRODUCER DURING THE APPLICABLE FISCAL YEAR, LESS THE CANE PRODUCT (ON A
SUGAR EQUIVALENT BASIS) PRODUCED BY THE CANE PRODUCER THAT WAS ALLOCATED TO THE
PRIOR FISCAL YEAR, WITH THE DIFFERENCE MULTIPLIED BY 1.141.

 

7.             PRICE FOR PRODUCT.

 

7.1           PRICE.  UNITED SHALL PAY TO ACSC ITS PRO RATA SHARE OF THE NET
SELLING PRICE FOR ALL PRODUCTS SOLD BY UNITED HEREUNDER.

 

7.2           TIMING OF PAYMENT TO MEMBERS.  AS SALES OF FINISHED PRODUCT ARE
MADE BY UNITED FROM THE PRIMARY POOL, THE GROSS CASH RECEIPTS RECEIVED BY UNITED
FROM THE SALE OF SUCH FINISHED PRODUCTS SHALL BE PAID DAILY TO ACSC AND EACH
OTHER PRIMARY POOL PARTICIPANT ON THE BASIS OF THE ESTIMATED PRO RATA SHARE OF
THE FINISHED PRODUCT, REDUCED BY IN-PROCESS INVENTORIES ON HAND AT THE BEGINNING
OF THE YEAR (WHICH ARE INCLUDED IN THE PRIOR YEAR’S PRIMARY POOL), TO BE
PRODUCED BY ACSC AND EACH OF THE OTHER PARTICIPANTS IN THE PRIMARY POOL DURING
THAT FISCAL YEAR.  THE FORMULA SET FORTH IN SECTION 6.3 (ADJUSTMENTS FOR CANE
PRODUCERS) SHALL BE UTILIZED TO ADJUST CANE PRODUCER’S PRODUCTION DURING THE
FISCAL YEAR FOR THE PURPOSE OF

 

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DETERMINING CANE PRODUCER’S ESTIMATED PRO RATA SHARE, AND THE PAYMENT OF GROSS
CASH RECEIPTS TO CANE PRODUCER SHALL BE ADJUSTED ACCORDINGLY.  BECAUSE GROSS
CASH RECEIPTS ARE DISTRIBUTED DAILY, UNITED SHALL BORROW FROM ITS LINE OF CREDIT
IN ORDER TO COVER ITS MONTHLY OPERATING COSTS.  SUCH MONTHLY OPERATING COSTS
SHALL BE PROMPTLY REIMBURSED TO UNITED BY EACH MEMBER ON THE SAME BASIS
DESCRIBED ABOVE REGARDING DAILY CASH DISTRIBUTIONS SO THAT EACH MEMBER PAYS ITS
PRO RATA SHARE OF THE EXPENSES THAT ARE INCURRED BY UNITED DURING THE MONTH.

 

7.3           ADJUSTMENTS FOR CHANGES TO PRODUCTION ESTIMATES.  THE
DETERMINATION OF ACSC’S PRO RATA SHARE OF GROSS CASH RECEIPTS SHALL BE BASED ON
UNITED’S BEST ESTIMATE OF THE AMOUNT OF FINISHED PRODUCTS ANTICIPATED TO BE
PRODUCED IN SUCH FISCAL YEAR BY ACSC AND EACH OTHER PARTICIPANT IN THE PRIMARY
POOL, AND SHALL BE ADJUSTED BY UNITED PERIODICALLY AS PRODUCTION FIGURES ARE
MORE PRECISELY DETERMINED.  SUCH ADJUSTMENTS SHALL REFLECT AN INTEREST CHARGE TO
BE PAID BY ANY PRIMARY POOL PARTICIPANT WHO HAS RECEIVED EXCESS DISTRIBUTIONS
BASED ON THE PRELIMINARY PRODUCTION ESTIMATES AND SUCH INTEREST SHALL BE PAID TO
THE PRIMARY POOL PARTICIPANT(S) WHO RECEIVED LESS THAN FULL DISTRIBUTIONS.  FOR
PURPOSES OF THIS PARAGRAPH, INTEREST CHARGES SHALL BE THE PRIME RATE AS
PUBLISHED IN THE WALL STREET JOURNAL ON THE FIRST BUSINESS DAY OF EACH MONTH. 
AS SOON AS EXACT INFORMATION AND PRODUCTION FIGURES ARE AVAILABLE, UNITED SHALL
DETERMINE ACSC’S FINAL PRO RATA SHARE OF THE GROSS CASH RECEIPTS FOR THE PRIMARY
POOL DURING THE FISCAL YEAR, AND APPROPRIATE ADJUSTMENTS, TOGETHER WITH INTEREST
CHARGES/CREDITS AS PROVIDED ABOVE, SHALL BE MADE.  THE FINAL ACCOUNTING FOR THE
PRIMARY POOL SHALL BE MADE NO LATER THAN THE NINETIETH DAY FOLLOWING THE LAST
DAY OF EACH FISCAL YEAR.

 

8.             UNITED’S BOOKS AND RECORDS.  UNITED SHALL KEEP ACCURATE RECORDS
OF COSTS, SALES, AND DISTRIBUTIONS OF PRIMARY POOL PROCEEDS IN ACCORDANCE WITH
SOUND AND GENERALLY ACCEPTED ACCOUNTING PRACTICES.  SAID RECORDS SHALL BE AT ALL
REASONABLE TIMES FULLY AVAILABLE FOR INSPECTION AND COPYING BY ACSC OR ITS
CERTIFIED PUBLIC ACCOUNTANTS.  ALL RECORDS OF THE PRIMARY POOL AND ANY SEPARATE
POOL THAT IS CREATED SHALL BE AUDITED ANNUALLY BY UNITED’S REGULAR INDEPENDENT
CERTIFIED PUBLIC AUDITORS AND THE AUDIT REPORT MADE AVAILABLE TO ACSC.

 

9.             BUDGET OF MARKETING COSTS.  UNITED SHALL PREPARE AN ANNUAL BUDGET
OR ESTIMATE OF ALL DIRECT AND INDIRECT MARKETING COSTS FOR THE PRIMARY POOL.  IT
IS THE INTENTION OF UNITED TO SECURE INDEPENDENT FINANCING FOR COSTS ASSOCIATED
WITH THE MARKETING OF PRODUCTS AS REFLECTED IN THE BUDGET.

 

10.           PRODUCT SPECIFICATIONS, QUALITY STANDARDS AND HANDLING OF PRODUCTS
OF SUBSTANDARD QUALITY.

 

10.1         SPECIFICATIONS.  ACSC AGREES TO COMPLY WITH UNITED’S SPECIFICATIONS
FOR PRODUCTS, WHICH SPECIFICATIONS PRESCRIBE STANDARDS AND PROCEDURES FOR
QUALITY CONTROL, STORAGE, AND SHIPMENT OF PRODUCTS, AND WHICH ARE ATTACHED
HERETO AS SCHEDULE A.  IN ADDITION, ACSC AGREES TO COMPLY WITH UNITED’S QUALITY
ASSURANCE POLICY THAT IS ATTACHED HERETO AS SCHEDULE B.  ANY CHANGES TO THE
SPECIFICATIONS OR QUALITY ASSURANCE POLICY SHALL BE MUTUALLY AGREED UPON BY
UNITED AND THE MEMBERS.

 

10.2         STATE AND FEDERAL REGULATIONS.  ALL PRODUCTS DELIVERED TO OR AT THE
ORDER OF UNITED SHALL CONFORM TO QUALITY AND OTHER STANDARDS PRESCRIBED BY
APPLICABLE STATE AND FEDERAL RULES AND REGULATIONS.

 

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10.3         SUBSTANDARD PRODUCT.  PRODUCT THAT FAILS TO MEET THE SPECIFICATIONS
OR THE QUALITY ASSURANCE POLICY AND WHICH CANNOT BE SOLD WITHOUT DISCOUNTING
SHALL BE CONSIDERED SUBSTANDARD FOR PURPOSES OF THIS AGREEMENT.  PRODUCT OF
SUBSTANDARD QUALITY SHALL BE WITHHELD FROM THE PRIMARY POOL AND MARKETED BY
UNITED IN A SEPARATE POOL, WITH PROCEEDS OF THE SALE OF SUCH PRODUCT, LESS ALL
DIRECT AND INDIRECT SELLING EXPENSES, DISTRIBUTED TO THE MEMBER THAT PRODUCED
SUCH PRODUCT; IN THE ALTERNATIVE, THIS MEMBER AND UNITED MAY MUTUALLY AGREE THAT
THE PRODUCT OF SUBSTANDARD QUALITY MAY REMAIN IN THE PRIMARY POOL AND THE MEMBER
WILL BE CHARGED WITH THE ADDITIONAL COSTS RELATING TO THE SUBSTANDARD QUALITY OF
THE PRODUCT, INCLUDING ANY NECESSARY DISCOUNTS.

 

11.           STORAGE OF PRODUCT.  ACSC SHALL STORE ITS PRODUCT AS THE PARTIES
SHALL MUTUALLY AGREE; PROVIDED, HOWEVER, THAT WITH RESPECT TO STORAGE BY MEMBERS
OR UNITED, THE PARTIES SHALL UTILIZE REASONABLY AVAILABLE STORAGE METHODS THAT
RESULT IN THE LOWEST TOTAL COST TO THE PRIMARY POOL.  AT THE EARLIEST REASONABLE
TIME AFTER PROCESSING COMMENCES IN EACH FISCAL YEAR AND AS SOON AS PRODUCT HAS
BEGUN TO BE PLACED IN STORAGE, ACSC SHALL DELIVER DAILY PRODUCT INVENTORY
REPORTS TO UNITED.  ALL PRODUCT INCLUDED IN THE DAILY INVENTORY SHALL BE
INCLUDED IN THE PRIMARY POOL FOR THE APPROPRIATE FISCAL YEAR EVEN THOUGH THE
PRODUCT REMAINS ON THE PREMISES OF ACSC.

 

11.1         PORTION OF SIDNEY STORAGE FACILITY CONTROLLED BY UNITED.  UNITED
WILL HAVE THE EXCLUSIVE RIGHT TO STORE 910,000 CWT OF SUGAR IN THE SIDNEY
STORAGE FACILITY (THE “UNITED CONTROLLED STORAGE”).  UNITED SHALL BE RESPONSIBLE
FOR REIMBURSING ACSC FOR THE ASSET COSTS AND OPERATING COSTS OF THE UNITED
CONTROLLED STORAGE PURSUANT TO SECTION 16 HEREOF.  THE PARTIES ACKNOWLEDGE THAT
A PORTION OF SUCH REIMBURSABLE ASSET COSTS AND OPERATING COSTS MAY INCLUDE COSTS
CHARGED TO ACSC BY A THIRD PARTY.

 

11.2         PORTION OF SIDNEY STORAGE FACILITY CONTROLLED BY ACSC.

 

11.2.1               ACSC RETAINS THE EXCLUSIVE RIGHTS WITH RESPECT TO THAT
PORTION OF THE SIDNEY STORAGE FACILITY NOT CONSTITUTING UNITED CONTROLLED
STORAGE (THE “ACSC CONTROLLED STORAGE”).  IN THE EVENT UNITED DESIRES TO UTILIZE
THE ACSC CONTROLLED STORAGE THAT IS NOT OTHERWISE BEING UTILIZED BY ACSC, IT
SHALL NOTIFY ACSC IN WRITING AT LEAST THIRTY (30) DAYS IN ADVANCE OF THE DATE
UNITED ANTICIPATES UTILIZING SUCH STORAGE.  THE NOTICE SHALL STATE THE VOLUME OF
STORAGE UNITED DESIRES AND THE ANTICIPATED DURATION OF THE STORAGE.  ACSC SHALL
PROVIDE A WRITTEN RESPONSE TO UNITED WITHIN FIFTEEN (15) DAYS AFTER RECEIPT OF
THE NOTICE TO CONFIRM WHETHER OR NOT UNITED MAY UTILIZE THE REQUESTED PORTION OF
THE ACSC CONTROLLED STORAGE.  UNITED’S USE OF THE ACSC CONTROLLED STORAGE SHALL
AT ALL TIMES BE SUBJECT TO THE CONTINUING RIGHTS OF ACSC AS PROVIDED IN
PARAGRAPH 11.2.2.

 

11.2.2               IN THE EVENT UNITED IS UTILIZING THE ACSC CONTROLLED
STORAGE AND ACSC DESIRES TO EXERCISE ITS RIGHTS TO UTILIZE SUCH STORAGE DUE TO
GOVERNMENT IMPOSED MARKETING RESTRICTIONS OR DUE TO HIGHER THAN ANTICIPATED
PRODUCTION OUTPUT OF SSI OR ACSC, ACSC SHALL PROVIDE UNITED WITH THIRTY (30)
DAYS ADVANCE WRITTEN NOTICE TO VACATE THE PORTION OF THE ACSC CONTROLLED STORAGE
THAT ACSC DESIRES TO UTILIZE AND UNITED SHALL USE ITS

 

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BEST EFFORTS TO VACATE THE PORTION OF THE ACSC CONTROLLED STORAGE NEEDED BY
ACSC.  IN THE EVENT THAT UNITED IS UNABLE TO VACATE ALL OR A PORTION OF THE ACSC
CONTROLLED STORAGE DURING SUCH THIRTY-DAY PERIOD DUE TO LOAD-OUT LIMITATIONS AT
THE FACILITY, THEN, IF SUCH ACTION WOULD RELIEVE ACSC’S SHORTAGE OF STORAGE,
UNITED AND ACSC WILL EXECUTE APPROPRIATE ACCOUNTING TRANSFERS BETWEEN UNITED AND
ACSC TO PROVIDE THAT UP TO 1,000,0000 CWT OF THE SUGAR STORED AT THE SIDNEY
STORAGE FACILITY IS BEING STORED FOR THE ACCOUNT OF ACSC RATHER THAN FOR THE
ACCOUNT OF UNITED.  IF UNITED IS UNABLE TO VACATE SUFFICIENT STORAGE AS REQUIRED
BY ACSC AND IF THE ABOVE REFERENCED ACCOUNTING TRANSFER WOULD NOT RELIEVE ACSC’S
SHORTAGE OF STORAGE, THEN AT THE CONCLUSION OF THE THIRTY-DAY PERIOD, UNITED
SHALL (I) CONTINUE TO BE RESPONSIBLE FOR THE REIMBURSEMENT OF COSTS PROVIDED IN
PARAGRAPH 11.2.3 OF THIS AGREEMENT; AND (II) SHALL BE OBLIGATED TO REIMBURSE
ACSC FOR ALL STORAGE COSTS ACSC MAY INCUR AS A RESULT OF NOT HAVING THE ACSC
CONTROLLED STORAGE AVAILABLE WHICH IS OVER AND ABOVE THE AMOUNT ACSC WOULD HAVE
INCURRED IF THE STORAGE HAD BEEN MADE AVAILABLE TO ACSC, INCLUDING, BUT NOT
LIMITED TO, PACKAGING, SHIPPING, HANDLING, IN AND OUT CHARGES, STORAGE FEES,
REPROCESSING, AND OTHER COSTS ASSOCIATED WITH ACSC’S USE OF AN OUTSIDE STORAGE
FACILITY.

 

11.2.3               SUBJECT TO THE PROVISIONS SET FORTH IN THIS PARAGRAPH
11.2.3 REGARDING THE CALCULATION OF UTILIZATION, UNITED SHALL REIMBURSE ACSC FOR
THE OPERATING COSTS OF THE ACSC CONTROLLED STORAGE.  THE PARTIES ACKNOWLEDGE
THAT ACSC’S OPERATING COSTS SHALL INCLUDE ACTUAL OPERATING COSTS BILLED TO ACSC
BY SSI.  THE PARTIES AGREE THAT UNITED SHALL REIMBURSE ACSC FOR THE ASSET COSTS
OF THE ACSC CONTROLLED STORAGE, BUT THAT THE ASSET COSTS SHALL BE BASED UPON THE
FIXED AMOUNT OF $0.042 PER CWT PER MONTH.  WITH RESPECT TO REIMBURSEMENT FOR
OPERATING COSTS AND ASSETS COSTS, THE REIMBURSEMENT FOR THE ACSC CONTROLLED
STORAGE SHALL BE BASED ON UNITED’S AVERAGE MONTHLY UTILIZATION (IN CWTS) OF THE
ACSC CONTROLLED STORAGE.  THE AVERAGE MONTHLY UTILIZATION SHALL BE THE SUM OF
THE NUMBER OF CWTS IN STORAGE ON THE FIRST DAY AND THE LAST DAY OF THE MONTH
DIVIDED BY TWO.

 

12.           RISK OF LOSS AND INSURANCE.

 

12.1         RISK OF LOSS.  ACSC COVENANTS AND AGREES THAT IT SHALL BEAR THE
RISK OF LOSS OF ANY PRODUCT PRODUCED BY ACSC UNTIL THE RISK OF LOSS FOR SUCH
PRODUCT PASSES TO THE BUYER; PROVIDED, HOWEVER, THAT RISK OF LOSS SHALL PASS TO
UNITED BEFORE DELIVERY TO THE BUYER IF THE PRODUCT IS COMMINGLED.  REGARDLESS OF
WHICH PARTY BEARS THE RISK OF LOSS, ACSC SHALL CONTINUE TO BE THE OWNER OF ITS
PRODUCT UNTIL THE PRODUCT IS SOLD TO THE BUYER.  WHENEVER UNITED SHALL HAVE
POSSESSION OR CONTROL OVER SUCH PRODUCT PRIOR TO SALE TO THE BUYER, UNITED SHALL
ACT STRICTLY AS CUSTODIAN THEREOF IN ACCORDANCE WITH THE PROVISIONS OF THIS
AGREEMENT.

 

12.2         ACSC TO MAINTAIN INSURANCE.  ACSC COVENANTS AND AGREES, AT ITS SOLE
COST AND AT ALL TIMES DURING THE TERM OF THIS AGREEMENT, TO MAINTAIN IN FORCE
DURING THE PERIOD FOR WHICH IT BEARS THE RISK OF LOSS, (I) AN ALL RISK PROPERTY
INSURANCE POLICY OR POLICIES COVERING LOSS, THEFT OR

 

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DAMAGE TO THE PRODUCTS PRODUCED BY ACSC IN AN AMOUNT NOT LESS THAN THE FULL
REPLACEMENT COST THEREOF; AND (II)  PRODUCT LIABILITY INSURANCE IN AN AMOUNT
REQUIRED BY UNITED FROM TIME TO TIME NAMING UNITED AS AN ADDITIONAL INSURED.

 

12.3         UNITED TO MAINTAIN INSURANCE.  UNITED COVENANTS AND AGREES, AT ITS
SOLE COST AND AT ALL TIMES DURING THE TERM OF THIS AGREEMENT, TO MAINTAIN IN
FORCE DURING THE PERIOD FOR WHICH IT BEARS THE RISK OF LOSS, (I) AN ALL RISK
PROPERTY INSURANCE POLICY OR POLICIES COVERING LOSS, THEFT OR DAMAGE TO THE
PRODUCTS IN AN AMOUNT NOT LESS THAN THE FULL REPLACEMENT COST THEREOF; AND (II) 
PRODUCT LIABILITY INSURANCE IN AN AMOUNT APPROVED BY UNITED FROM TIME TO TIME,
NAMING ACSC AS AN ADDITIONAL INSURED ON A PRIMARY AND NONCONTRIBUTORY BASIS.

 

12.4         CERTIFICATES OF INSURANCE.  INSURANCE POLICIES SHALL BE TAKEN OUT
WITH RESPONSIBLE INSURANCE COMPANIES WITH A BEST RATING OF NO LESS THAN A-, AND
SUCH POLICIES SHALL NOT BE CANCELED OR MATERIALLY ALTERED WITHOUT TEN DAYS’
WRITTEN NOTICE TO UNITED AND ACSC.  EACH PARTY SHALL FURNISH THE OTHER PARTY
WITH CERTIFICATES OF INSURANCE FOR POLICIES REQUIRED HEREUNDER, TOGETHER WITH A
SUMMARY OF THE TERMS AND CONDITIONS OF THE POLICY OR POLICIES, AND THE DATE ON
WHICH THE SAME EXPIRE.

 

12.5         WAIVER OF SUBROGATION.  UNITED AND ACSC HEREBY WAIVE SUBROGATION
RIGHTS AS TO THE OTHER PARTY WITH RESPECT TO ALL INSURANCE COVERAGES.

 

13.           ORDERS.  REGARDLESS OF FACTORY OR WAREHOUSE DESIGNATION, THE
PROCEEDS FROM SALES ORDERS SHALL BE CREDITED TO THE PRIMARY POOL FOR THE
APPROPRIATE FISCAL YEAR.  UNITED SHALL CONSIDER CAR LOADINGS, POINTS OF
DESTINATION, CAPACITY OF TANKS OR WAREHOUSES, SIZE OF INVENTORIES STORED
THEREIN, COSTS AND OTHER PERTINENT FACTORS IN SELECTING THE FACTORY, WAREHOUSE
OR WAREHOUSES FROM WHICH DELIVERY SHALL BE MADE.

 

14.           LOGISTICS FUNCTION.  UNITED SHALL BE RESPONSIBLE FOR PERFORMING
ALL NORMAL LOGISTICS FUNCTIONS RELATING TO THE SHIPMENT OF ALL PRODUCTS PRODUCED
AT ACSC’S PLANT.  DIRECT OR INDIRECT COSTS OF UNITED ASSOCIATED WITH THE
PERFORMANCE OF THE LOGISTICS FUNCTIONS RELATED TO PRODUCTS SHALL BE A MARKETING
EXPENSE OF THE PRIMARY POOL.

 

15.           INFORMATION FROM ACSC.  ACSC SHALL, WHENEVER REQUESTED BY UNITED,
FURNISH TO UNITED PRODUCTION AND RELATED STATISTICAL DATA FOR PRODUCTS PREPARED
ON A DAILY BASIS, AND SHALL MAKE ITS BOOKS AND RECORDS RELATED THERETO AVAILABLE
AT ALL REASONABLE TIMES FOR INSPECTION BY UNITED.  ACSC SHALL NOT BE REQUIRED TO
RELEASE INFORMATION CONCERNING ACSC’S PROPRIETARY PROCESSES OR COSTS (OTHER THAN
REIMBURSABLE ASSET COSTS AND OPERATING COSTS) WHICH COSTS SHALL BE PROVIDED IN
SUFFICIENT DETAIL TO SATISFY UNITED’S REASONABLE REQUIREMENTS IN CONNECTION WITH
THE REIMBURSEMENTS PROVIDED FOR IN SECTION 16 HEREOF, OR OTHER CONFIDENTIAL
FINANCIAL INFORMATION.  ACSC FURTHER AGREES, UPON REQUEST OF UNITED, TO FURNISH
UNITED WITH SAMPLES OF PRODUCTS FOR GRADING OR SELLING PURPOSES.

 

16.           POOL EXPENSES INCURRED BY ACSC.

 

16.1         ACSC SHALL BE REIMBURSED OUT OF THE PRIMARY POOL FOR ITS ASSETS
COSTS AND OPERATING COSTS; PROVIDED, HOWEVER, THAT STORAGE COSTS OF THICK JUICE
OR STANDARD LIQUOR FROM BEETS OR RAW CANE SUGAR REFINERY FEEDSTOCK SHALL ONLY BE
REIMBURSABLE PURSUANT TO THE STORAGE REIMBURSEMENT GUIDELINES SET FORTH IN
SCHEDULE C.

 

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16.2         UNITED SHALL CREDIT ACSC FOR ITS ASSET COSTS AND OPERATING COSTS
WITHIN THIRTY (30) DAYS OF SUBMISSION OF ACSC’S WRITTEN COST BREAKDOWN.  IN THE
EVENT THERE IS A DISPUTE REGARDING THE AMOUNT OF SUCH REIMBURSEMENT, UNITED
SHALL CREDIT THE UNDISPUTED AMOUNT AND IF THE PARTIES ARE UNABLE TO RESOLVE THE
DISPUTED AMOUNTS WITHIN THIRTY (30) DAYS FROM THE DATE PAYMENT IS DUE, THE
CONTROVERSY SHALL BE RESOLVED IN THE MANNER PROVIDED IN SECTION 21 HEREOF.

 

16.3         ACSC SHALL, PRIOR TO THE CONSTRUCTION OR INSTALLATION OF ANY NEW
ASSETS TO BE CHARGED TO THE PRIMARY POOL, OBTAIN APPROVAL FROM UNITED FOR SUCH
CONSTRUCTION OR INSTALLATION.

 

17.           TERM OF AGREEMENT; TERMINATION.

 

17.1         TERM.  THE TERM OF THIS AGREEMENT SHALL COMMENCE ON THE DATE HEREOF
AND SHALL CONTINUE THROUGH AUGUST 31, 2008 (THE “INITIAL TERM”) AND FROM FISCAL
YEAR TO FISCAL YEAR THEREAFTER (THE “RENEWAL TERMS”) UNTIL TERMINATED AS
PROVIDED HEREIN. “TERM” MEANS THE INITIAL TERM AND ANY RENEWAL TERMS.

 

17.2         TERMINATION BY UNITED OR ACSC.  AFTER THE END OF THE INITIAL TERM,
EITHER UNITED OR ACSC HAS THE RIGHT TO TERMINATE THIS AGREEMENT BY GIVING
WRITTEN NOTICE BY REGISTERED MAIL TO THE OTHER PARTY OF SUCH TERMINATION. 
NOTICE OF TERMINATION TO BE EFFECTIVE AT THE CONCLUSION OF A RENEWAL TERM SHALL
BE GIVEN PRIOR TO MAY 1 OF A GIVEN YEAR TO BE EFFECTIVE ON AUGUST 31 OF THE
SUBSEQUENT YEAR (E.G., NOTICE GIVEN ON APRIL 30, 2008 IS EFFECTIVE AUGUST 31,
2009).

 

17.3         TERMINATION PURSUANT TO THE BYLAWS OF UNITED.  IN THE EVENT
MEMBERSHIP IN UNITED IS TERMINATED PURSUANT TO THE PROVISIONS OF THE BYLAWS OF
UNITED, ACSC’S PARTICIPATION IN THIS AGREEMENT SHALL TERMINATE EFFECTIVE THE
DATE OF TERMINATION OF MEMBERSHIP; PROVIDED, HOWEVER, THAT UNITED SHALL HAVE THE
OBLIGATION TO PURCHASE FROM ACSC AND ACSC SHALL HAVE THE OBLIGATION TO SELL
PRODUCTS IN THE QUANTITIES AND UNDER THE PAYMENT TERMS PROVIDED IN THIS
AGREEMENT FOR THE NEXT SUCCEEDING TWELVE (12) MONTH PERIOD FOLLOWING
TERMINATION; FURTHER PROVIDED, THAT IN NO EVENT SHALL UNITED OR ACSC BE REQUIRED
TO TAKE ANY ACTIONS THAT COULD JEOPARDIZE UNITED’S STATUS AS A COMMON MARKETING
AGENT UNDER THE CAPPER-VOLSTEAD ACT.

 

17.4        PERFORMANCE FOLLOWING TERMINATION.

 

17.4.1      FOLLOWING TERMINATION OF ACSC’S PARTICIPATION IN THIS AGREEMENT, AS
PROVIDED IN SECTIONS 17.2 OR 17.3 ABOVE, ACSC SHALL HAVE THE OBLIGATION TO SELL
ITS PRO RATA SHARE OF ANY PRODUCT FOR WHICH UNITED HAS, AS OF THE DATE OF NOTICE
OF TERMINATION, MADE COMMITMENT TO DELIVER TO A THIRD PARTY BUYER, UNDER THE
PAYMENT TERMS PROVIDED FOR IN THIS AGREEMENT.

 

17.4.2      THE RIGHTS AND OBLIGATIONS WITH RESPECT TO THE MARKETING OF ACSC’S
PRODUCTS SHALL CONTINUE IN EFFECT UNTIL ALL OF SUCH POOLED PRODUCTS HAVE BEEN
SOLD BY UNITED AND ACSC’S PRO RATA SHARE OF THE NET SELLING PRICE FROM SALES OF
PRIMARY POOL PRODUCTS PRODUCED BY UNITED’S MEMBERS DURING SUCH YEARS AND
REIMBURSABLE COSTS AND EXPENSES HAVE BEEN DISTRIBUTED.

 

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18.           REPRESENTATIONS, WARRANTIES, AND INDEMNIFICATIONS.

 

18.1         REPRESENTATIONS BY ACSC.  ACSC REPRESENTS AND WARRANTS THAT IT IS
NOT UNDER CONTRACT OR OBLIGATION TO SELL, MARKET, CONSIGN OR DELIVER ANY OF THE
PRODUCTS COMMITTED TO THE POOLS UNDER THIS AGREEMENT TO ANY OTHER PERSON, FIRM,
ASSOCIATION, CORPORATION OR OTHER ENTITY.  FURTHER, ACSC SHALL DEFEND AND HOLD
HARMLESS UNITED FROM ANY COSTS, CLAIMS, LIABILITIES, SUITS OR OTHER PROCEEDINGS
OR ACTIONS OF ANY NATURE OR KIND WHATSOEVER ARISING FROM OR CONNECTED WITH ANY
SUCH PRIOR AGREEMENT, CONTRACT OR ARRANGEMENT OR THE TERMINATION OR CANCELLATION
OF ANY PRIOR AGREEMENTS, CONTRACTS OR ARRANGEMENTS.

 

18.2         REPRESENTATIONS BY UNITED.  UNITED REPRESENTS AND WARRANTS THAT IT
HAS THE POWER AND AUTHORITY TO ENTER INTO THIS AGREEMENT, SELL THE PRODUCTS
COMMITTED TO THE POOLS AND OTHERWISE TO FULFILL ITS OBLIGATIONS UNDER THIS
AGREEMENT.  FURTHER, UNITED SHALL DEFEND AND HOLD HARMLESS ACSC AND ITS
EMPLOYEES, AGENTS AND SHAREHOLDERS, FROM ANY COSTS, CLAIMS, LIABILITIES, SUITS
OR OTHER PROCEEDINGS OR ACTIONS OF ANY NATURE OR KIND WHATSOEVER ARISING FROM OR
CONNECTED WITH ANY SALES BY UNITED OF PRODUCTS HEREUNDER.

 

18.3         INDEMNIFICATION BY ACSC.  ACSC HEREBY AGREES TO INDEMNIFY AND HOLD
HARMLESS, UNITED, ITS MEMBERS, AND THEIR RESPECTIVE EMPLOYEES, FROM AND AGAINST
ANY CLAIMS, LOSSES OR LIABILITIES ARISING OUT OF, OR RESULTING FROM, THE
PRODUCTION, ON-SITE STORAGE OR LOADING OF ANY OF ACSC’S PRODUCTS WHICH ARE
MARKETED BY UNITED PURSUANT TO THIS AGREEMENT.

 

18.4         TRANSGENIC VARIETY.  AT SUCH TIME AS ACSC DECIDES TO GROW OR PERMIT
ITS MEMBERS TO GROW TRANSGENIC VARIETIES, WRITTEN NOTICE OF SAME SHALL BE
DELIVERED TO UNITED AND EACH OF THE MEMBERS.  ACSC ACKNOWLEDGES THAT IF IT GROWS
OR ITS MEMBERS GROW TRANSGENIC VARIETIES IN A GIVEN POOL YEAR, THEN ALL OF THE
PRODUCT PRODUCED BY ACSC DURING THAT POOL YEAR WILL BE CONSIDERED TO BE
TRANSGENIC PRODUCT.  (THE PRECEDING SENTENCE NOTWITHSTANDING, SUGAR PRODUCED AT
SIDNEY SUGARS MAY, AT THE OPTION OF ACSC, BE EXCLUDED FROM THE REQUIREMENT THAT
ALL SUGAR PRODUCED BY ACSC WILL BE CONSIDERED TRANSGENIC PRODUCT IF ACSC OR ITS
MEMBERS GROW TRANSGENIC VARIETIES IN A GIVEN POOL YEAR.)  ACSC FURTHER
ACKNOWLEDGES THAT UNITED MAY SELL AND MARKET BOTH PRODUCT PRODUCED FROM
TRANSGENIC PLANTS (“TRANSGENIC PRODUCT”) AND PRODUCT PRODUCED FROM
NON-TRANSGENIC PLANTS (“NON-TRANSGENIC PRODUCT”).  ACSC AND UNITED AGREE THAT
SHOULD NON-TRANSGENIC PRODUCT THAT IS SOLD BY UNITED CAUSE THE NET SELLING PRICE
OF A MEMBER OR MEMBERS  PRODUCING NON-TRANSGENIC PRODUCT IN ANY POOL YEAR TO BE
MORE THAN 5% HIGHER THAN SUCH NET SELLING PRICE WOULD HAVE BEEN HAD
NON-TRANSGENIC PRODUCT NOT BEEN SOLD BY UNITED, THEN ANY MEMBER PRODUCING
NON-TRANSGENIC PRODUCT SHALL BE COMPENSATED FOR SUCH DIFFERENCE BY RECEIVING ITS
PRO RATA SHARE OF THE ESTIMATED PREMIUM REALIZED ON THE SALES OF NON-TRANSGENIC
PRODUCT (THE “NON-TRANSGENIC PREMIUM”), ALL AS CALCULATED BY UNITED AND APPROVED
BY ACTION OF ITS EXECUTIVE COMMITTEE.  AN ILLUSTRATION OF THIS CALCULATION IS
ATTACHED HERETO AS SCHEDULE D.  UNITED AND ACSC AGREE THAT THE OTHER MEMBERS OF
UNITED ARE THIRD PARTY BENEFICIARIES TO THE REPRESENTATIONS AND WARRANTIES
CONTAINED IN THIS SECTION 18.4.

 

18.5         INDEMNIFICATION BY UNITED.  UNITED HEREBY AGREES TO INDEMNIFY AND
HOLD HARMLESS, ACSC AND ITS EMPLOYEES, AGENTS AND SHAREHOLDERS, FROM AND AGAINST
ANY CLAIMS, LOSSES OR LIABILITIES ARISING OUT OF, OR RESULTING FROM, THE ACTIONS
OR OMISSIONS OF UNITED, ITS EMPLOYEES OR AGENTS WITH RESPECT TO THE PRODUCT,
FROM AND AFTER THE TIME RISK OF LOSS OF ACSC’S PRODUCT TRANSFERS.

 

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18.6         CONFORMANCE WITH ARTICLES AND BYLAWS.  ACSC ACCEPTS AND AGREES TO
CONFORM TO AND ABIDE BY THE PROVISIONS OF THE ARTICLES OF INCORPORATION AND
BYLAWS OF UNITED AND ALL AMENDMENTS THERETO DURING THE TERM OF THIS AGREEMENT.

 

18.7         NON-WAIVER OF RIGHTS.  ACSC AGREES THAT UNITED SHALL HAVE ALL
RIGHTS AND REMEDIES PROVIDED BY LAW AND IN THE BYLAWS OF UNITED IN THE EVENT OF
A BREACH OR THREATENED BREACH BY ACSC OF THIS AGREEMENT.

 

19.           MARKETING ALLOTMENTS AND ALLOCATIONS.

 

19.1         ALLOCATION IS PROPERTY OF ACSC.  IN THE EVENT ALLOTMENTS AND
ALLOCATIONS ARE IMPLEMENTED PURSUANT TO THE ALLOTMENT STATUTE, ANY ALLOCATION
ATTRIBUTABLE TO ACSC SHALL BE THE PROPERTY OF ACSC.

 

19.2          EXCESS PRODUCT.

 

19.2.1      EXCESS PRODUCT OF ACSC SHALL NOT BE INCLUDED IN THE PRIMARY POOL,
BUT WILL BE MARKETED AS FOLLOWS:

 

19.2.1.1        BY UNITED IN THE SUCCEEDING YEAR’S PRIMARY POOL, SUBJECT TO THE
LIMIT OF ACSC’S ALLOCATION FOR THAT SUCCEEDING YEAR. ANY SUCH EXCESS PRODUCT
SHALL BE STORED AND OTHERWISE HANDLED AT THE EXPENSE OF ACSC, ALTHOUGH UNITED
MAY PROVIDE STORAGE AND HANDLING SERVICES. IN THE EVENT ACSC HAS EXCESS PRODUCT
THAT IS BEING STORED BY UNITED, ANY DIRECT COSTS INCURRED AS A RESULT OF SUCH
STORAGE SHALL BE CHARGED TO ACSC AND SHALL NOT BE SHARED BY OTHER PARTICIPANTS
IN THE PRIMARY POOL.

 

19.2.1.2        BY ACSC, TO A NON-MEMBER PROCESSOR OR TO ANOTHER MEMBER, BUT NOT
TO A DOMESTIC USER OR CONSUMER OF SUGAR FOR HUMAN CONSUMPTION; PROVIDED,
HOWEVER, THAT UNITED SHALL BE REIMBURSED FOR ALL DIRECT COSTS RELATING TO THE
STORAGE OR HANDLING OF ANY SUCH PRODUCT BY UNITED;

 

19.2.1.3        IN THE ALTERNATIVE, ACSC AND UNITED MAY MUTUALLY AGREE THAT
EXCESS PRODUCT SHALL BE MARKETED BY UNITED AS PART OF A SEPARATE POOL THAT IS
CREATED FOR ACSC. IF UNITED MARKETS THE EXCESS PRODUCT, ACSC MAY ELECT TO HAVE
THE EXCESS PRODUCT MARKETED BY UNITED IN THE CURRENT YEAR (IN THE EXPORT MARKET
OR OTHER MARKETS THAT DO NOT VIOLATE THE ALLOTMENT STATUTE) OR CARRIED OVER BY
UNITED TO THE NEXT FISCAL YEAR.

 

19.2.2      IN THE EVENT ACSC HAS PRODUCT IN EXCESS OF ITS ALLOCATION THAT IS
BEING STORED BY UNITED, ANY ADDITIONAL INCREMENTAL COSTS INCURRED AS A RESULT OF
SUCH STORAGE SHALL BE CHARGED TO ACSC AS PART OF THE OPERATION OF THE

 

12

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SEPARATE POOL AND SHALL NOT BE SHARED BY OTHER PARTICIPANTS IN THE PRIMARY POOL.

 

19.3         NET SELLING PRICE WHEN ALLOCATIONS IMPLEMENTED.  IN THE EVENT OF
ALLOTMENTS AND ALLOCATIONS, NET SELLING PRICE OF THE PRIMARY POOL AND NET
SELLING PRICE OF THE SEPARATE POOL SHALL BE DETERMINED IN A MANNER CONSISTENT
WITH THE PROVISIONS OF SECTION 7 OF THIS AGREEMENT; PROVIDED THAT (I) IN THE
CASE OF THE PRIMARY POOL, NET SELLING PRICE SHALL BE BASED UPON THE VOLUME OF
ACSC’S ACTUAL PRODUCTION THAT IS NOT IN EXCESS OF ACSC’S ALLOCATION, AND (II) IN
THE CASE OF A SEPARATE POOL, NET SELLING PRICE SHALL BE BASED UPON THE VOLUME OF
ACSC’S PRODUCT THAT IS IN THE SEPARATE POOL.  PURCHASED SUGAR SHALL BE INCLUDED
IN THE PRO RATA SHARE (SUBJECT TO ADJUSTMENT PURSUANT TO SECTION 7.3) AND
INCLUDED IN THE PRIMARY POOL, BUT THE SUM OF ACSC’S ACTUAL PRODUCTION AND THE
QUANTITY OF PURCHASED SUGAR SHALL NOT EXCEED THE ALLOCATION OF ACSC.

 

20.           FORCE MAJEURE.

 

20.1         NOTIFICATION AND EFFORTS TO MINIMIZE.  NEITHER UNITED NOR ACSC
SHALL BE LIABLE TO THE OTHER FOR FAILURE TO PERFORM ANY PART OF THIS AGREEMENT
IF SUCH FAILURE RESULTS FROM THE OCCURRENCE OF AN EVENT OF FORCE MAJEURE,
PROVIDED THAT THE PARTY AFFECTED BY THE EVENT (I) NOTIFIES THE OTHER PARTY OF
SUCH EVENT PROMPTLY UPON LEARNING OF THE OCCURRENCE OF THE EVENT, SUCH NOTICE
(AS HEREINAFTER DEFINED) TO INCLUDE THE ANTICIPATED EFFECT OF SUCH EVENT ON THE
PERFORMANCE OF SUCH PARTY UNDER THIS AGREEMENT AND (II) USES ITS BEST EFFORTS TO
MINIMIZE DELAYS AND/OR NON-PERFORMANCE CAUSED BY SUCH EVENT.

 

20.2         RELEASE FROM LIABILITY.  EACH PARTY SHALL BE COMPLETELY RELEASED
FROM ALL LIABILITY TO THE OTHER ARISING AS A CONSEQUENCE OF ANY EXCUSED
PERFORMANCE CAUSED BY AN EVENT OF FORCE MAJEURE, INCLUDING, BUT NOT LIMITED TO,
ALL CLAIMS FOR INCIDENTAL, SPECIAL OR CONSEQUENTIAL DAMAGES.

 

21.           DISPUTE RESOLUTION.

 

21.1         AGREEMENT TO ARBITRATE.  ANY DISPUTE, CONTROVERSY OR CLAIM ARISING
OUT OF OR RELATING TO THIS AGREEMENT THAT CANNOT BE RESOLVED AMICABLY BETWEEN
THE PARTIES SHALL BE FINALLY RESOLVED BY ARBITRATION IN CHICAGO, ILLINOIS, OR
SUCH OTHER LOCATION AS MAY BE MUTUALLY AGREED UPON, IN ACCORDANCE WITH THE
COMMERCIAL ARBITRATION RULES OF THE AMERICAN ARBITRATION ASSOCIATION (THE
“AAA”); PROVIDED, HOWEVER, THAT THE PLAINTIFF IN ANY CLAIM FOR DAMAGES EXCEEDING
$10,000,000 MAY SEEK JUDICIAL RESOLUTION IN ANY COURT OF COMPETENT JURISDICTION
AND SHALL NOT BE SUBJECT TO THIS SECTION.  ANY ARBITRATION SHALL BE HELD BEFORE
A PANEL OF THREE (3) ARBITRATORS MUTUALLY AGREED TO BETWEEN THE PARTIES, ONE OF
WHOM SHALL BE FAMILIAR WITH THE SUGAR INDUSTRY.  IF THE PARTIES ARE UNABLE TO
AGREE UPON THE SELECTION AND APPOINTMENT OF ARBITRATORS WITHIN THIRTY (30) DAYS
OF A WRITTEN DEMAND FOR ARBITRATION, THEN ARBITRATORS SHALL BE APPOINTED BY THE
AAA PURSUANT TO ITS COMMERCIAL ARBITRATION RULES.

 

21.2         DISCOVERY.  IN CONNECTION WITH ANY SUCH ARBITRATION, THE PARTIES
FURTHER AGREE TO PARTICIPATE IN THE EXCHANGE OF INFORMATION AND DOCUMENTATION
THROUGH DISCOVERY PURSUANT TO THE RULES ESTABLISHED BY THE ARBITRATORS.

 

21.3         AUTHORITY OF ARBITRATORS.  THE ARBITRATORS SHALL HAVE FULL
AUTHORITY TO RENDER ANY FORM OF LEGAL OR EQUITABLE RELIEF TO ADDRESS THE
PARTIES’ DISPUTE, INCLUDING AN AWARD OF MONETARY

 

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DAMAGES AND/OR INJUNCTIVE RELIEF; PROVIDED, HOWEVER, THAT IN NO EVENT SHALL THE
ARBITRATORS HAVE THE POWER TO INCLUDE ANY ELEMENT OF PUNITIVE OR EXEMPLARY
DAMAGES IN THE ARBITRATION AWARD.  JUDGMENT UPON ANY AWARD FOR ANY LEGAL OR
EQUITABLE RELIEF SO RENDERED BY THE ARBITRATORS SHALL BE CONSIDERED FINAL AND
BINDING AND MAY BE ENTERED IN ANY STATE OR FEDERAL COURT OF COMPETENT
JURISDICTION.

 

22.           COMPLETE AGREEMENT.  THE PARTIES AGREE THAT THIS AGREEMENT
CONSTITUTES THE COMPLETE AGREEMENT OF THE PARTIES WITH RESPECT TO THE SUBJECT
MATTER HERETO AND THERE ARE NO ORAL OR OTHER CONDITIONS, PROMISES,
REPRESENTATIONS OR INDUCEMENTS IN ADDITION TO ORAL VARIANCE WITH ANY OF THE
TERMS HEREOF, AND THAT THIS CONTRACT REPRESENTS THE VOLUNTARY AND CLEAR
UNDERSTANDING OF BOTH PARTIES FULLY AND COMPLETELY.  ANY PRIOR MARKETING
AGREEMENTS AND ANY AMENDMENTS THERETO BETWEEN UNITED AND ACSC ARE SUPERSEDED BY
THIS AGREEMENT.

 

23.           ASSIGNMENT.  NEITHER ACSC NOR UNITED MAY ASSIGN THIS AGREEMENT
WITHOUT PRIOR WRITTEN CONSENT OF THE OTHER PARTY TO THIS AGREEMENT.

 

24.           WAIVER OF BREACH.  NO WAIVER OF A BREACH OF ANY OF THE AGREEMENTS
OR PROVISIONS CONTAINED IN THIS AGREEMENT SHALL BE CONSTRUED TO BE A WAIVER OF
ANY SUBSEQUENT BREACH OF THE SAME OR OF ANY OTHER PROVISION OF THIS AGREEMENT.

 

25.           NOTICES.  WHENEVER NOTICE IS REQUIRED BY THE TERMS HEREOF, IT
SHALL BE GIVEN IN WRITING BY DELIVERY OR BY CERTIFIED OR REGISTERED MAIL
ADDRESSED TO THE OTHER PARTY AT THE FOLLOWING ADDRESS OR SUCH OTHER ADDRESS AS A
PARTY SHALL DESIGNATE BY APPROPRIATE NOTICE:

 

If to UNITED:

 

UNITED SUGARS CORPORATION

7401 Metro Boulevard, Suite 350

Edina, MN  55439

Attn:  President

 

With a copy to:

 

Timothy J. Pabst, Esq.

Leonard, Street and Deinard, Professional Association

150 South Fifth Street, Suite 2300

Minneapolis, MN  55402

 

If to ACSC:

 

AMERICAN CRYSTAL SUGAR COMPANY

101 North Third Street

Moorhead, MN  56560

Attn:  CEO

 

If notice is given by mail, it will be effective two (2) days after mailing.

 

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26.           CONSTRUCTION OF TERMS OF AGREEMENT; MODIFICATION.  THE LANGUAGE IN
ALL PARTS OF THIS AGREEMENT SHALL BE CONSTRUCTED AS A WHOLE ACCORDING TO ITS
FAIR MEANING AND NOT STRICTLY FOR OR AGAINST ANY PARTY HERETO.  HEADINGS IN THIS
AGREEMENT ARE FOR CONVENIENCE ONLY AND ARE NOT CONSTRUED AS A PART OF THIS
AGREEMENT OR IN ANY DEFINING, LIMITING OR AMPLIFYING THE PROVISIONS HEREOF. 
THIS AGREEMENT CONTAINS THE ENTIRE AGREEMENT BETWEEN THE PARTIES WITH RESPECT TO
THE SUBJECT MATTER HEREOF AND SHALL NOT BE MODIFIED IN ANY MANNER EXCEPT BY AN
INSTRUMENT IN WRITING EXECUTED BY THE PARTIES HERETO.  IN THE EVENT ANY TERM,
COVENANT, OR CONDITION HEREIN CONTAINED IS HELD TO BE INVALID OR VOID BY ANY
COURT OF COMPETENT JURISDICTION, THE INVALIDITY OF ANY SUCH TERM, COVENANT OR
CONDITION SHALL IN NO WAY AFFECT ANY OTHER TERM, COVENANT OR CONDITION HEREIN
CONTAINED.

 

27.           SUCCESSORS AND ASSIGNS.  SUBJECT TO THE OTHER PROVISIONS OF THIS
AGREEMENT, ALL OF THE TERMS, COVENANTS AND CONDITIONS OF THIS AGREEMENT SHALL
INURE TO THE BENEFIT OF AND SHALL BIND THE PARTIES HERETO AND THEIR SUCCESSORS
AND ASSIGNS.

 

[Signatures follow on the next page]

 

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IN WITNESS WHEREOF, UNITED and ACSC have executed this Agreement effective the
day and year first above written.

 

UNITED SUGARS CORPORATION

AMERICAN CRYSTAL SUGAR COMPANY

 

 

By:

/s/ John R. Doxie

 

By:

/s/ David Berg

Its:

President

 

Its:

President

 

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Schedule A
{Section 10.1}

 

Specifications for Products
(Attached)

 

17

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Schedule B

{Section 10.1}

 

Quality Assurance Policy

 

PURPOSE:

 

The purpose of the Quality Assurance function at UNITED is to provide guidance
and direction to operational groups in the development, implementation and
maintenance of Quality Systems.  Quality Systems are those systems designed to
assure products and services of the Member companies meet the expectations of
the targeted customer segments.

 

The Quality Assurance group will accomplish this through development,
implementation and audit of systems and standards that will be developed and
implemented that define customer expectations as well as documenting the
performance of the Member companies against those standards.

 

STRATEGY:

 

The vehicle through which the above will be accomplished will be a system of
documented policies and procedures defining the activities that will occur
within each of the operational groups providing product for sale.

 

The basis for those policies and procedures will be a combination of FDA
requirements as well as standards communicated by UNITED’s primary customer
segments.

 

Policies and procedures that will be defined, include but are not limited to:

 

Product Safety/Regulatory (FDA):

 

·                  Good Manufacturing Practices (21 CFR Part 110 of the Food
Drug and Cosmetic Act).

 

·                  HACCP (Hazards Analysis and Critical Control Points)

 

(The two systems noted above are made up of a number of audit and process
management activities designed to assure the safety of the product that is
produced, stored and distributed by internal facilities as well as outside
agents of the company [i.e. copack facilities, facilities that produce and ship
product under agreement with UNITED and Outside Distribution Facilities/Public
Warehouses]).

 

Product Quality/Functionality

 

·                  Product Standards for each product sold and distributed
through UNITED will be defined.  Standards (for product as shipped) will
typically be defined by any or all of the following:

 

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·                  Flavor/Odor

·                  Color

·                  Moisture

·                  Ash

·                  Sediment

·                  Visible Specks

·                  Floc

·                  Invert

·                  Specific Rotation

·                  Granulation

·                  Density

·                  Flowability

·                  Pesticides/heavy metals

·                  Specific trace element analysis

As defined by the customer segment (i.e.bottling and National Formulary)

·                  Microbiology standards

 

·                                          Process Control Systems/Documentation

 

Process Control Systems are those control systems by which each producing
facility manages their process to produce product which meet the approved
product standards as shipped.

 

Each Member facility will document, through a Standard Operating Procedures
format, the methods utilized to assure processes are operated in a consistent
controllable manner.

 

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Schedule C
{Section 16.1}

 

Storage Reimbursement Guidelines -

Parameters for Including Sugar Juice Tank Assets and Raw Cane Sugar Storage
Assets as an Expense of the Primary Pool

 

A MEMBER shall be reimbursed out of the Primary Pool for its storage costs of
thick juice or standard liquor (collectively referred to as “sugar juice”) from
beets or raw cane sugar refinery feedstock only if, in the judgment of UNITED,
there is a benefit to the Primary Pool.  The assets costs associated with the
storage of sugar juice in tanks and the storage of raw cane sugar refinery
feedstock will be an expense of the Primary Pool when the use/increased use of
these assets at UNITED’s request will lower the overall costs to the Primary
Pool.  Generally, this would happen anytime UNITED forces increased use of these
sugar juice tanks or raw cane sugar refinery feedstock storage over and above
what is already incorporated into the MEMBER’S annual plant production schedule
for that campaign.

 

In the event UNITED requests the use/increased use of assets for the storage of
sugar juice in tanks or the storage of raw cane sugar refinery feedstock, the
Primary Pool shall pay the MEMBER’S asset costs as follows:

 

The storage rate charged by the MEMBER for the use of sugar juice tanks or raw
cane refinery feedstock storage shall be calculated based upon the percentage of
storage utilized by UNITED multiplied by the MEMBER’S average cost of all sugar
juice tanks or raw cane sugar refinery feedstock storage that are routinely
utilized by the MEMBER for storage of sugar juice or raw cane sugar refinery
feedstock.  The storage costs charged by the MEMBER shall begin the day UNITED
requests the MEMBER to start utilizing sugar juice or raw cane sugar refinery
feedstock storage.  The MEMBER shall be reimbursed for incremental refining
costs that directly result from the reimbursable storage covered by Schedule C.

 

Average costs shall be determined by summing the total of depreciation, asset
costs, property insurance and taxes related to all tanks/buildings routinely
utilized by the MEMBER for storage of sugar juice or raw cane sugar refinery
feedstock.  (All depreciation and net book values used for calculating asset use
fees are based on the applicable UNITED depreciation guidelines.)  These total
costs are then averaged over the total tank/building capacity for those
applicable tanks/buildings.  The percent utilization is determined by
calculating what percent of the total tank/building capacity is being utilized
each day.  That average percent utilization calculated for the month is then
multiplied times the total per month cost of the tanks/buildings.

 

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Schedule D
{Section 18.4}

 

Should UNITED market both Transgenic Product and Non-Transgenic Product, then
for each sale of Non-Transgenic Product UNITED will record:

 

·                  the volume of Non-Transgenic Product sold,

·                  an estimate of the Net Selling Price for each sale of
Non-Transgenic Product,

·                  an estimate of the amount by which the Net Selling Price on
the Non-Transgenic Product sale exceeds the expected Net Selling Price on a
similar sale of Transgenic Product (Non-Transgenic Premium), and

·                  an estimate of the total amount of  Non-Transgenic Premium
Revenue (volume of Non-Transgenic Product sales multiplied by the Estimated
Non-Transgenic Premium).

 

UNITED will summarize these sales in a format similar to the following:

 

 

 

Non-
Transgenic
Sales Volume
(cwt)

 

Estimated
NSP
($/cwt)

 

Estimated Non-
Transgenic
Premium ($/cwt)

 

Non-
Transgenic
Premium
Revenue($)

 

Sept

 

200,000

 

$

26.00

 

$

1.50

 

$

300,000

 

Oct

 

400,000

 

$

26.50

 

$

1.00

 

$

400,000

 

Nov

 

600,000

 

$

28.00

 

$

2.00

 

$

1,200,000

 

Dec

 

400,000

 

$

31.00

 

$

3.00

 

$

1,200,000

 

Jan

 

500,000

 

$

25.00

 

$

1.00

 

$

500,000

 

Feb

 

300,000

 

$

28.00

 

$

4.00

 

$

1,200,000

 

Mar

 

700,000

 

$

23.00

 

$

2.00

 

$

1,400,000

 

April

 

500,000

 

$

22.00

 

$

1.00

 

$

500,000

 

May

 

400,000

 

$

27.00

 

$

4.00

 

$

1,600,000

 

June

 

1,200,000

 

$

23.00

 

$

1.00

 

$

1,200,000

 

July

 

700,000

 

$

24.00

 

$

3.00

 

$

2,100,000

 

August

 

200,000

 

$

22.00

 

$

0.25

 

$

50,000

 

Annual Total

 

6,100,000

 

$

25.02

 

$

1.91

 

$

11,651,000

 

 

During each Fiscal Year, United will summarize all costs associated with
segregating Non-Transgenic Product and Transgenic Product to avoid cross
contamination of the two products (Segregation Costs).  Segregation Costs may
include, but are not limited to,  the cost to clean railcars to assure no cross
contamination, the cost to isolate products in storage to avoid cross
contamination, etc.

 

21

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

 

Since Segregation Costs will have been accounted for in the calculation of the
Net Selling Price each year, the Non-Transgenic producer’s(s’) pro rata share of
Segregation Costs will be added to the Non-Transgenic Premium Revenue in order
to determine what percentage the resulting Non-Transgenic Premium Revenue is of
the Non-Transgenic producer’s(s’) Net Selling Price.

 

At the end of each Fiscal Year, UNITED will divide 1) the total amount of
Non-Transgenic Premium Revenue by 2) the Non-Transgenic producer’s(s’) Net
Selling Price less the total amount of the Non-Transgenic Premium Revenue.  If
the total value of the Non-Transgenic Premium Revenue is more than 5% of the
Non-Transgenic producer’s(s’) Net Selling Price, then the Non-Transgenic Premium
Revenue will be distributed on a pro rata basis to those MEMBERS who produced
the Non-Transgenic Sugar.  If the total value of the Non-Transgenic Premium
Revenue is less than 5% of the Non-Transgenic producer’s(s’) Net Selling Price,
then the Non-Transgenic Premium Revenue will not be redistributed.

 

Example 1

 

Annual sales of Non-Transgenic Product are as follows:

 

Month

 

Non-Transgenic
Sales Volume
(cwt)

 

Estimated
NSP
($/cwt)

 

Estimated Non-
Transgenic
Premium
($/cwt)

 

Non-
Transgenic
Premium
Revenue ($)

 

Sept

 

200,000

 

$

26.00

 

$

1.50

 

$

300,000

 

Oct

 

400,000

 

$

26.50

 

$

1.00

 

$

400,000

 

Nov

 

600,000

 

$

28.00

 

$

2.00

 

$

1,200,000

 

Dec

 

400,000

 

$

31.00

 

$

3.00

 

$

1,200,000

 

Jan

 

500,000

 

$

25.00

 

$

1.00

 

$

500,000

 

Feb

 

300,000

 

$

28.00

 

$

4.00

 

$

1,200,000

 

Mar

 

700,000

 

$

23.00

 

$

2.00

 

$

1,400,000

 

April

 

500,000

 

$

22.00

 

$

1.00

 

$

500,000

 

May

 

400,000

 

$

27.00

 

$

4.00

 

$

1,600,000

 

June

 

1,200,000

 

$

23.00

 

$

1.00

 

$

1,200,000

 

July

 

700,000

 

$

24.00

 

$

3.00

 

$

2,100,000

 

August

 

200,000

 

$

22.00

 

$

0.25

 

$

51,000

 

Totals

 

6,100,000

 

$

25.02

 

$

1.91

 

$

11,651,000

 

 

22

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

 

Member Sales Volumes by Product Type

 

 

 

Transgenic Volume

 

Total Annual Volume (cwts)
Non-Transgenic Volume

 

Total Volume

 

Member’s Share of
Total Volume

 

Member’s Share of Non-
Transgenic Volume

 

Member A

 

31,000,000

 

0

 

31,000,000

 

62.00

%

0.0000

%

Member B

 

0

 

13,000,000

 

13,000,000

 

26.00

%

100.0000

%

Member C

 

6,000,000

 

0

 

6,000,000

 

12.00

%

0.0000

 

Total

 

37,000,000

 

13,000,000

 

50,000,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Annual Sales of Customer-Required Non-Transgenic Sugar

 

 

 

 

 

 

 

 

 

 

 

Annual Volume (cwts)

 

6,100,000

 

 

 

 

 

 

 

 

 

Estimate Non-Transgenic Premium $(/cwt)

 

$

1.91

 

 

 

 

 

 

 

 

 

Non-Transgenic Premium Revenue

 

$

11,651,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average annual NSP for all volume ($/cwt)

 

$

23.23

 

Premium Included in NSP

 

 

 

 

 

 

 

Annual Net Selling Price (all volume times avg price)

 

$

1,161,500,000

 

$

11,651,000

 

 

 

 

 

 

 

Member A’s Net Selling Price

 

$

720,130,000

 

$

7,223,620

 

 

 

 

 

 

 

Member B’s Net Selling Price

 

$

301,990,000

 

$

3,029,260

 

 

 

 

 

 

 

Member C’s Net Selling Price

 

$

139,380,000

 

$

1,398,120

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Annual Segregation Costs

 

$

900,000

 

 

 

 

 

 

 

 

 

Pro Rata Share of Segregation Costs

 

 

 

 

 

 

 

 

 

 

 

Member A

 

$

558,000

 

 

 

 

 

 

 

 

 

Member B

 

$

234,000

 

 

 

 

 

 

 

 

 

Member C

 

$

108,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Results

 

 

 

 

 

 

 

 

 

 

 

Non-Transgenic Premium Revenue % of Non-Transgenic Producer’s(s’) Net Selling
Price

 

3.9786

%

 

 

 

 

 

Result:  Since the Non-Transgenic Premium Revenue is less than 5% (Example 1
result is 3.9786%) of Non-Transgenic producer’s(s’) Net Selling Price, no
separate distribution of Non-Transgenic Premium Revenue is made to Members
supplying Non-Transgenic Product to UNITED.

 

23

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

 

Example 2

 

Annual sales of Non-Transgenic Product are as follows:

 

Month

 

Non- Transgenic
Sales Volume
(cwt)

 

Estimated
NSP
($/cwt)

 

Estimated Non-
Transgenic
Premium
($/cwt)

 

Non-
Transgenic
Premium
Revenue
($)

 

Sept

 

200,000

 

$

26.00

 

$

1.00

 

$

200,000

 

Oct

 

400,000

 

$

26.50

 

$

3.00

 

$

1,200,000

 

Nov

 

600,000

 

$

28.00

 

$

4.00

 

$

2,400,000

 

Dec

 

400,000

 

$

31.00

 

$

2.00

 

$

800,000

 

Jan

 

500,000

 

$

25.00

 

$

2.00

 

$

1,000,000

 

Feb

 

300,000

 

$

28.00

 

$

1.00

 

$

300,000

 

Mar

 

700,000

 

$

23.00

 

$

3.00

 

$

2,100,000

 

April

 

500,000

 

$

22.00

 

$

2.00

 

$

1,000,000

 

May

 

400,000

 

$

27.00

 

$

2.00

 

$

800,000

 

June

 

1,200,000

 

$

23.00

 

$

4.00

 

$

4,800,000

 

July

 

700,000

 

$

24.00

 

$

3.00

 

$

2,100,000

 

August

 

200,000

 

$

22.00

 

$

2.81

 

$

563,000

 

Totals

 

6,100,000

 

$

25.02

 

$

2.83

 

$

17,263,000

 

 

24

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

 

Member Sales Volumes by Product Type

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Transgenic Volume

 

Total Annual Volume (cwts)
Non-Transgenic Volume

 

Total Volume

 

Member’s Share of
Total Volume

 

Member’s Share of Non-
Transgenic Volume

 

Member A

 

31,000,000

 

0

 

31,000,000

 

62.00

%

0.0000

%

Member B

 

0

 

13,000,000

 

13,000,000

 

26.00

%

100.0000

%

Member C

 

6,000,000

 

0

 

6,000,000

 

12.00

%

0.0000

%

Total

 

37,000,000

 

13,000,000

 

50,000,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Annual Sales of Customer-Required Non-Transgenic Sugar

 

 

 

 

 

 

 

 

 

 

 

Annual Volume (cwts)

 

6,100,000

 

 

 

 

 

 

 

 

 

Estimate Non-Transgenic Premium ($/cwt)

 

$

2.83

 

 

 

 

 

 

 

 

 

Non-Transgenic Premium Revenue

 

$

17,263,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average annual NSP for all volume ($/cwt)

 

$

23.23

 

Premium Included in NSP

 

 

 

 

 

 

 

Annual Net Selling Price (all volume times avg price)

 

$

1,161,500,000

 

$

17,263,000

 

 

 

 

 

 

 

Member A’s Net Selling Price

 

$

720,130,000

 

$

10,703,060

 

 

 

 

 

 

 

Member B’s Net Selling Price

 

$

301,990,000

 

$

4,488,380

 

 

 

 

 

 

 

Member C’s Net Selling Price

 

$

139,380,000

 

$

2,071,560

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Annual Segregation Costs

 

$

900,000

 

 

 

 

 

 

 

 

 

Pro Rata Share of Segregation Costs

 

 

 

 

 

 

 

 

 

 

 

Member A

 

$

558,000

 

 

 

 

 

 

 

 

 

Member B

 

$

234,000

 

 

 

 

 

 

 

 

 

Member C

 

$

108,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Results

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-Transgenic Premium Revenue % of Non-Transgenic Producer(s)’ Net Selling
Price

 

5.8859

%

 

 

 

 

 

Example 2 Result: Since Non-Transgenic Premium Revenue is more than 5% (Example
2 result is 5.8859%) of Non-Transgenic producer’s(s’) Net Selling Price, the
Non-Transgenic Premium Revenue ($17.263 million in this example) is distributed
pro rata to MEMBERS supplying Non-Transgenic Product to UNITED as follows:

 

If, and only if, Non-Transgenic Premium is > 5% of Non Transgenic Producer(s)’
NSP, then total Net Selling Price is redistributed as follows:

 

 

 

New Redistributed
Share of NT Prem

 

Share of NT
Premium
Revenue
already in NSP

 

NT Prem returned
to NT Producer(s)

 

NT Prem to be
added to NSP

 

Return of share of
Segregation Costs

 

Added share
of Segregation
Costs

 

NSP Before
Adjustment

 

New adjusted
NSP

 

New NSP
per cwt

 

 

 

Member A

 

$

0

 

10,703,060

 

$

-10,703,060

 

$

0

 

$

0

 

$

-196,054

 

$

720,130,000

 

709,230,886

 

$

22.88

 

Member A

 

Member B

 

$

17,263,000

 

4,488,380

 

$

0

 

$

12,774,620

 

$

234,000

 

$

0

 

$

301,990,000

 

314,998,620

 

$

24.23

 

Member B

 

Member C

 

$

0

 

2,071,560

 

$

-2,071,560

 

$

0

 

$

0

 

$

-37,946

 

$

139,380,000

 

137,270,494

 

$

22.88

 

Member C

 

Total

 

$

17,263,000

 

17,263,000

 

$

-12,774,620

 

$

12,774,620

 

$

234,000

 

$

-234,000

 

$

1,161,500,000

 

1,161,500,000

 

$

23.23

 

 

 

 

25

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

 

Example 2 Values

 

Assumptions

 

 

 

 

 

Transgenic Volume

 

Total Annual Volume (cwts)
Non-Transgenic Volume

 

Total Annual
Volume (cwts)

 

Member’s Share of Total
Volume

 

Member’s Share of
Non-Transgenic Volume

 

A

 

Member Sales Volumes by Product Type

 

 

 

 

 

 

 

 

 

 

 

 

 

Member A

 

31,000,000

 

0

 

31,000,000

 

62.00

%

0.0000

%

 

 

Member B

 

0

 

13,000,000

 

13,000,000

 

26.00

%

100.0000

%

 

 

Member C

 

6,000,000

 

0

 

6,000,000

 

12.00

%

0.0000

%

 

 

Total

 

37,000,000

 

13,000,000

 

50,000,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

B

 

Annual Sales of Customer-Required Non-Transgenic Sugar

 

 

 

 

 

 

 

 

 

 

 

 

 

Annual Volume (cwts)

 

6,100,000

 

 

 

 

 

 

 

 

 

 

 

Estimate Non-Transgenic Premium ($/cwt)

 

$

2.83

 

 

 

 

 

 

 

 

 

 

 

Non-Transgenic Premium Revenue

 

$

17,263,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

C

 

Average annual NSP for all volume ($/cwt)

 

$

23.23

 

Premium Included in NSP

 

 

 

 

 

 

 

 

 

Annual Net Selling Price (all volume times avg price)

 

$

1,161,500,000

 

$

17,263,000

 

 

 

 

 

 

 

 

 

Member A’s Net Selling Price

 

$

720,130,000

 

$

10,703,060

 

 

 

 

 

 

 

 

 

Member B’s Net Selling Price

 

$

301,990,000

 

$

4,488,380

 

 

 

 

 

 

 

 

 

Member C’s Net Selling Price

 

$

139,380,000

 

$

2,071,560

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

D

 

Annual Segregation Costs

 

$

900,000

 

 

 

 

 

 

 

 

 

 

 

Pro Rata Share of Segregation Costs

 

 

 

 

 

 

 

 

 

 

 

 

 

Member A

 

$

558,000

 

 

 

 

 

 

 

 

 

 

 

Member B

 

$

234,000

 

 

 

 

 

 

 

 

 

 

 

Member C

 

$

108,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Results

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-Transgenic Premium Revenue % of Non-Transgenic Producer(s)’ Net Selling
Price

 

5.8859

%

 

 

 

 

 

If, and only if, Non-Transgenic Premium is > 5% of Non Transgenic Producer(s)’
NSP, then total Net Selling Price is redistributed as follows:

 

 

 

New Redistributed
Share of NT Prem

 

Share of NT Premium
Revenue already in NSP

 

NT Prem returned
to NT Producer(s)

 

NT Prem to be
added to NSP

 

Return of share of
Segregation Costs

 

Added share
of Segregation
Costs

 

NSP Before
Adjustment

 

New adjusted
NSP

 

New NSP
per cwt

 

 

 

Member A

 

$

0

 

10,703,060

 

$

-10,703,060

 

$

0

 

$

0

 

$

-196,054

 

$

720,130,000

 

709,230,886

 

$

22.88

 

Member A

 

Member B

 

$

17,263,000

 

4,488,380

 

$

0

 

$

12,774,620

 

$

234,000

 

$

0

 

$301,990,000

 

314,998,620

 

$

24.23

 

Member B

 

Member C

 

$

0

 

2,071,560

 

$

-2,071,560

 

$

0

 

$

0

 

$

-37,946

 

$139,380,000

 

137,270,494

 

$

22.88

 

Member C

 

Total

 

$

17,263,000

 

17,263,000

 

$

-12,774,620

 

$

12,774,620

 

$

234,000

 

$

-234,000

 

$1,161,500,000

 

1,161,500,000

 

$

23.23

 

 

 

 

26

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

Schedule D of the Member Marketing Agreement

Variables are in blue

 

Examples 1 and 2 - Formulas

 

Assumptions

 

Member Sales Volumes by Product Type

 

Transgenic Volume

 

Totoal Annual Volume (cwts)
Non-Transgenic Volume

 

Total Volume

 

Member’s Share of Total
Volume

 

Member’s Share of
Non-Transgenic

 

A

 

Member Sales Volumes by Product Type

 

 

 

 

 

 

 

 

 

 

 

 

 

Member A

 

31000000

 

0

 

=SUM(D10:E10)

 

=SUM(F10/F13)

 

=SUM(E10/E13)

 

 

 

Member B

 

0

 

13000000

 

=SUM(D11:E11)

 

=SUM(F11/F13)

 

=SUM(E11/E13)

 

 

 

Member C

 

6000000

 

0

 

=SUM(D12:E12)

 

=SUM(F12/F13)

 

=SUM(E12/E13)

 

 

 

Total

 

=SUM(D10:D12)

 

=SUM(E10:E12)

 

=SUM(F10:F12)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

B

 

Annual Sales of Customer-Required Non-Transgenic Sugar

 

 

 

 

 

 

 

 

 

=IF(H10>0,100%,0)

 

 

 

Annual Volume (cwts)

 

6100000

 

 

 

 

 

 

 

=IF(H11>0,100%,0)

 

 

 

Estimate Non-Transgenic Premium ($/cwt)

 

2.83

 

 

 

 

 

 

 

=IF(H12>0,100%,0)

 

 

 

Non-Transgenic Premium Revenue

 

=SUM(D16*D17)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

C

 

Average annual NSP for all volume ($/cwt)

 

$

23.23

 

Premium Included in NSP

 

 

 

 

 

 

 

 

 

Annual Net Selling Price (all volume times avg price)

 

=SUM(F13*D20)

 

=D18

 

 

 

 

 

 

 

 

 

Member A’s Net Selling Price

 

=SUM(F10*D20)

 

=SUM(G10*D18)

 

 

 

 

 

 

 

 

 

Member B’s Net Selling Price

 

=SUM(F11*D20)

 

=SUM(G11*D18)

 

 

 

 

 

 

 

 

 

Member C’s Net Selling Price

 

=SUM(F12*D20)

 

=SUM(G12*D18)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

D

 

Annual Segregation Costs

 

900000

 

 

 

 

 

 

 

 

 

 

 

Pro Rata Share of Segregation Costs

 

 

 

 

 

 

 

 

 

 

 

 

 

Member A

 

=SUM((F10/F13)*D26)

 

 

 

 

 

 

 

 

 

 

 

Member B

 

=SUM((F11/F13)*D26)

 

 

 

 

 

 

 

 

 

 

 

Member C

 

=SUM((F12/F13)*D26)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Results

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-Transgenic Premium Revenue% of Non-Transgenic Producer(s)’ Net Selling Price

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

=SUM(D18+((H15*D28)+(H16*D29)+(H17*D30)))/(((H15*D22)+(H16*D23)+(H17*D24))-((H15*E22)+(H16*E23)+(H17*E24))-((H15*D28)+(H16*D29)+(H17*D30)))

 

 

 

 

If, and only if, Non-Transgenic Premium is > 5% of Non Transgenic Producer(s)’
NSP, then total Net Selling Price is redistributed as follows:

 

 

 

New Redistributed
Share of NT Prem

 

Share of NT Premium
Revenue already in NSP

 

NT Prem returned
to NT Producer(s)

 

NT Prem to be added to
NSP

 

Return of share of
Segregation Costs

 

Added share of Segregation Costs

 

NSP Before
Adjustment

 

New adjusted
NSP

 

New NSP
per cwt

 

 

 

Member A

 

=SUM(H10*D18)

 

=SUM(G10*D18)

 

=IF(D40=0,-E40,0)

 

=IF(E40+F40=0,0,D40-E40)

 

=IF(H10=0,0,D28)

 

=IF(H40=0,-SUM((H41+H42)*(D10/D13)),0

 

=D22

 

=SUM(F40:J40)

 

=SUM(K40/F10)

 

Member A

 

Member B

 

=SUM(H11*D18)

 

=SUM(G11*D18)

 

=IF(D41=0,-E41,0)

 

=IF(E41+F41=0,0,D41-E41)

 

=IF(H11=0,0,D29)

 

=IF(H41=0,-SUM((H40+H42)*(D11/D13)),0

 

=D23

 

=SUM(F41:J41)

 

=SUM(K41/F11)

 

Member B

 

Member C

 

=SUM(H12*D18)

 

=SUM(G12*D18)

 

=IF(D42=0,-E42,0)

 

=IF(E42+F42=0,0,D42-E42)

 

=IF(H12=0,0,D30)

 

=IF(H42=0,-SUM((H40+H41)*(D12/D13)),0

 

=D24

 

=SUM(F42:J42)

 

=SUM(K42/F12)

 

Member C

 

Total

 

=SUM(D40:D42)

 

=SUM(E40:E42)

 

=SUM(F40:F42)

 

=SUM(G40:G42)

 

=SUM(H40:H42)

 

=SUM(I40:I42)

 

=SUM(J40:J42)

 

=SUM(K40:K42)

 

=SUM(K43/F13)

 

 

 

 

27

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