**Exhibit 10.25**

 

**2005 SUGARBEET DELIVERY AGREEMENT**

 

| Federal ID No. |   | Agreement No.                                                                                                                                                                                                                                                                                                                                                                        |
|----------------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|           |   | Date:                                                            ,  2005 |

 

**SIDNEYSUGARS 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 sellto SSI during the 2005-crop season, and SSI shall purchase from Grower, thesugarbeets as described on the attached Addendum(s) in accordance with theterms of this Agreement (this Agreement and such Addendum(s) together with theExhibits attached hereto being collectively referred to herein as the Agreement).  SSI shall not be obligated to purchase, andGrower agrees to destroy prior to August 15, 2005, sugarbeets from allacres planted in excess of that set forth on the Addendum(s) attachedhereto.  SSI hereby reserves the right toprorate deliveries to be made under this Agreement.  Any such proration shall be established bySSI after a determination by SSI that it may not be able to economicallyprocess the entire crop for any reason, including but not limited to,government imposed marketing allocations and for a larger than anticipated cropyield.  A proration shall be communicatedto, and applied against, all growers of SSI on a uniform and equitablebasis.  Title and risk of loss forsugarbeets purchased hereunder shall pass from Grower to SSI at the time thesugarbeets are placed on the piler belt. It is understood and agreed that the terms of this Agreement apply tothe 2005 sugarbeet crop and do not constitute a commitment by SSI to purchasesugarbeets in subsequent years.

 

2.             **Agricultural Practices.**  The sugarbeets shall be planted not laterthan June 1, 2005 unless a later date is approved in advance in writing bySSI.  Grower shall not plant sugarbeetsin the same field in consecutive years unless approved in advance in writing bySSI.  Grower shall not apply nitrogenfertilizer to the sugarbeets after July 1, 2005 unless approved in advancein writing by SSI.  Grower shall notirrigate the sugarbeets within the 20-day period immediately prior to the datethat harvest and delivery of the sugarbeets are scheduled to commence unlessapproved in advance in writing by SSI. EXCEPT UNDER UNAVOIDABLE EMERGENCY CONDITIONS, GROWER SHALL REMOVE THESUGARBEET FOLIAGE FROM THE CROP ONLY ON THE DAY ON WHICH SUGARBEETS AREHARVESTED AND SHALL PROTECT THE SUGARBEETS FROM SUN AND FREEZINGTEMPERATURES AFTER REMOVAL FROM THE GROUND. Except as expressly set forth in this Agreement, Grower is not obligatedto adopt or conform to agricultural practices recommended by SSI or itsemployees.  In no event shall SSI be liablefor any failure or partial failure of Grower’s sugarbeet crop or damage to thesugarbeets.

 

3.             **Restricted Chemicals.**  Grower shall not apply to the sugarbeets, orto the land upon which the sugarbeets are grown, any “pesticide chemical” asdefined in the Federal Food, Drug, and Cosmetic Act, as amended, unless aregulation shall then be in effect under Section 408 of such Act exemptingsuch chemical from the requirement of a tolerance or prescribing a tolerancefor such chemical, in which event such chemical may be applied to thesugarbeets, or land upon which the sugarbeets are grown, only at such time andin such manner and quantities as shall be within the tolerance prescribed forsugarbeets, and any quantity of such chemical in or on sugarbeets deliveredhereunder shall be within the tolerance prescribed in such regulation.  Grower acknowledges and agrees that SSI shallhave the right to reject and refuse delivery of any sugarbeets to which havebeen applied, or which have been grown on land to which has been applied, anyunauthorized, non-registered, non-approved or prohibited pesticide, herbicide,chemical or other substance.  Growerfurther acknowledges and agrees that SSI’s right to reject or refuse deliveryof any of said sugarbeets may be invoked by SSI at its sole option, regardlessof whether or not use of, or application of, an unauthorized, non-registered,non-approved, or prohibited pesticide, herbicide, chemical or other substanceresults in, or may result in, a residue in or on the sugarbeets grown, or sugaror by-products produced from such sugarbeets. Grower warrants that the sugarbeets shall be produced and delivered incompliance with all applicable State and Federal laws and the rules andregulations thereunder, including, but not limited to, Section 12 of theFair Labor Standards Act relating to the employment of minors.

 

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

 

5.             **Condition of Sugarbeets. **Grower shall deliver the sugarbeets toSSI 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 thecompletion of harvest to avoid an insufficient or uneconomic utilization of areceiving station) properly topped and free from excessive amounts of dirt,stones, leaves, trash or other foreign substances which may interfere with thehandling or processing of the sugarbeets. GROWER SHALL NOT DELIVER AND SSI SHALL NOT BE OBLIGATED TO RECEIVE OR TOPAY FOR AND MAY REJECT (i) sugarbeets not grown, harvested ordelivered in compliance with the terms of this Agreement; (ii) sugarbeetsof less than 12% sugar content; (iii) sugarbeets of less than 80% purity; (iv) diseased,frozen, freeze damaged, wilted or improperly topped sugarbeets; (v) sugarbeetswhich are commingled with excessive amounts of dirt, stones, leaves, trash orother foreign substances; or (vi) sugarbeets which for any other reasonare not suitable for storage and/or the manufacture of sugar.  SSI’s failure to reject any sugarbeets shallnot constitute a waiver by SSI of, or in any manner impair, SSI’s right toreject any other sugarbeets under this Agreement.

 

6.             **Timing of Deliveries.**  Sugarbeets shall be harvested and deliveredas and when scheduled by SSI until the beginning of regular harvest (thebeginning of regular harvest is hereinafter referred to as the “initial pilingdate”).  No sugarbeets may be deliveredbefore the initial piling date unless covered by an Early Harvest Amendmentbetween Grower and SSI.  The initialpiling 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 deliverall unharvested sugarbeets as soon as possible without further notificationand, unless prevented by weather conditions, shall complete delivery of allsugarbeets by December 1, 2005.  Ifweather conditions prevent the harvest of all sugarbeets prior to December 1,2005 and if the Factory is still operating, Grower may deliver during suchoperating period at such times and places as may be designated by SSI.  SSI may (i) change the initial pilingdate, (ii) control and restrict deliveries after the initial piling date,or (iii) control and restrict deliveries during any period when warmweather may subject sugarbeets in storage piles to abnormal deterioration.  SSI shall use its best efforts to receiveapproximately 5% per day (during a normal working day) of all Grower’sestimated total tonnage; provided, that, issues related to the management andoperation of the receiving stations (outside or factory yard) shall be withinthe exclusive control of SSI.  Anyrequests by Grower for correction and/or changes in delivery tickets must bereceived by SSI within ten (10) days of the date of delivery of thesugarbeets 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 tocomplete delivery of all sugarbeets within the twenty (20) harvest dayscommencing on the initial piling date (the “Regular Harvest Period”) as furtherprovided in this Section 7.

 

(a)           The lateharvest payment shall be assessed against Grower if Grower delivers sugarbeetsto a receiving station (outside or factory yard) after the Trigger Time (as definedbelow) for that receiving station.  Thelate harvest payment to be assessed to Grower shall be $100 for each hour ofoperation of that receiving station for the benefit of Grower.  The amount of the late harvest payment shallbe deducted from the first payment (and subsequent payments if necessary) to bemade by SSI to Grower hereunder.

 

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

 

(c)           Thefollowing terms and conditions shall apply with regard to the determination ofthe late harvest payment:

 

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

 

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

 

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

 

THIS IS A LEGALLY BINDINGCONTRACT.  GROWER HAS HAD THE OPPORTUNITYTO CONSULT WITH AN ATTORNEY CONCERNING THE RIGHTS AND OBLIGATIONS SET FORTHHEREIN.

 
| **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:     |   |
|                                 |                               |            |        |  |  |  |  |  |

 

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

 

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(iii)          Growermay avoid the late harvest payment by completing deliveries to anotherreceiving station closer to the factory for which the Trigger Time has not yetbeen met.

 

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

 

8.             **Beet Payment.**  Sugarbeets grown, harvested and delivered inaccordance with the terms of this Agreement shall be paid for under thefollowing terms:

 

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

 

(b)           SSI shalldetermine the sugar content of the sugarbeets and the factory cossettes, whichdetermination shall be final.  Grower mayhave representatives (weighman, tareman and chemist) in SSI’s scale house, tareroom and laboratory to check weights, tares and sugar analyses, but such representativesmust be qualified in the line of work to be performed.

 

(c)           The priceper net ton of sugarbeets shall be based on (i) the Average Net Return forSugar (as defined in paragraph 8(d)) and (ii) the Adjusted Average SugarContent of Grower’s sugarbeets (as defined and determined under paragraph8(e)), as set forth in the following scale, subject to increase or decrease forfreight charges, early harvest payments, and/or hauling allowance as providedin 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 AdjustedAverage Sugar Content shall be in the same relative proportion and shall beinterpolated from the scale.  If theAverage Net Return for Sugar or the Adjusted Average Sugar Content is higher orlower than shown in the foregoing scale, the price to be paid for sugarbeetsshall be increased or decreased in proportion to the immediately precedingprice interval.

 

(d)           The termAverage Net Return for Sugar as used in this Agreement means the net sellingprice for sugar received by American Crystal Sugar Company from United SugarsCorporation for the 2005 crop year, less all charges and expenditures of thekind regularly and customarily deducted from the net selling price for sugarunder SSI’s system of accounting established for determining Average Net Returnfor Sugar. Without limiting the generality of the foregoing, there shall beincluded among the charges and expenditures deductible from the net sellingprice for sugar in determining Average Net Return for Sugar (i) allexcise, sales or other taxes and all other direct or indirect charges of anykind paid or accrued by SSI on, or with respect to, or arising out of themanufacture, processing, production, ownership, possession, holding for sale,sale, marketing or shipment of such sugar or any part thereof, or on all or anypart of the return from such sale; (ii) the profit or loss, if any,resulting from hedging operations conducted by SSI in response to sugarcustomers requests for sugar pricing based on sugar futures contracts listed onthe New York Coffee, Sugar & Cocoa Exchange; (iii) the profit orloss, if any, resulting from SSI’s purchase and sale of other domestic orforeign refined sugar which SSI deems necessary or advisable to fill shortfallsin SSI’s production or to preserve SSI’s market share; (iv) all costs incurredin preparing sugar for marketing, including the cost of packaging, liquefying,and powdering; (v) all costs, charges, reductions in revenue, storagefees, and interest expense resulting from SSI’s production of sugar in excessof that permitted to be marketed under government imposed marketing allocationsbased on the Sidney factory’s percentage of the overall allotment quantity, asadjusted from time to time; and (vi) other costs, fees and expensescomparable or similar to those subtracted from the net selling price incalculating the beet payment to the shareholders of American Crystal SugarCompany.

 

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

 

(f)            The finaldetermination of Average Net Return for Sugar shall be verified by a firm ofindependent certified public accountants selected by SSI, which verificationshall be conclusive.  Grower (actingthrough the Association) shall have the right to select at its own expense afirm of certified public accountants to check the determination of Average NetReturn for Sugar.

 

(g)           Thepayment for sugarbeets determined in accordance with paragraph 8(c) shallbe increased or decreased as follows:

 

(i)            In theevent Grower delivers sugarbeets to an outside receiving station, Grower shallbe charged a freight participation charge (per screened ton) applicable to thetransportation of Grower’s sugarbeets from the receiving station to thefactory.  The Grower freightparticipation charge (per net ton) is an amount equal to 40% of the AdjustedFreight 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 “AdjustedFreight 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 theevent Grower delivers sugarbeets to the Sidney factory yard, Grower will becharged a factory freight participation charge (per screened ton) applicable tothe transportation of the Grower’s sugarbeets from the pile to the wethopper.  The Grower freight charge is anamount 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)          Inthe event Grower is contracted to deliver sugarbeets to an outside receivingstation and instead elects to deliver sugarbeets to the Sidney factory yard,Grower will be paid a hauling allowance equal to 50% of the Adjusted FreightRate for the receiving station to which Grower was contracted.

 

(iv)          In theevent Grower is contracted to deliver sugarbeets to an outside receivingstation and elects to deliver the sugarbeets to an outside receiving stationthat is closer to the Sidney Factory, Grower shall be paid a hauling allowanceequal to 50% of the freight savings based on the Adjusted Freight Rates for theaffected receiving stations.

 

(v)           In theevent Grower delivers sugarbeets to outside receiving stations from certaingeographic areas, Grower shall be paid a delivery incentive to compensateGrower for increased hauling expenses. The delivery incentive shall becalculated as follows:

 

2

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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-fivepercent (75%) of the payment adjustments provided in paragraphs 8(g)(i) and8(g)(ii) shall be applied to the first payment for sugarbeets to be madeto Grower under this Agreement and twenty-five percent (25%) shall be appliedto the second payment for sugarbeets to be made to Grower under thisAgreement.  The payment adjustmentsprovided in paragraphs 8(g)(iii), 8(g)(iv), and 8(g)(v) shall be appliedto the first payment for sugarbeets to be made to Grower under thisAgreement.  The determination ofcontracted receiving station and associated districts shall be based on thatspecified in the Addendum(s) to this Agreement.

 

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

 

9.             **Payment Schedule.**  SSI shall make an initial payment (i) onNovember 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 deliveryfor sugarbeets delivered by Grower on or after November 5, 2005.  The payments for sugarbeets will be adjustedas provided in paragraphs 8(g) and 8(h) and any other deductionsprovided hereunder or otherwise authorized by Grower.  The initial and subsequent payments will bemade based on the Adjusted Sugar Content of Grower’s sugarbeets, and SSI’sestimate of anticipated Average Net Return for Sugar as set forth in thefollowing 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 |   |

 

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*Takingcredit for prior payments

 

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

 

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

 

11.           **Dues Deductions.**

 

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

 

(b)           SSI may atits option deduct from any payment due under this Agreement an amountequivalent to Grower’s proportionate share (determined on a per ton basis) of50% of the amount paid by or on behalf of SSI to The Sugar Association and/orThe American Sugar Alliance.

 

12.           **Research.**  SSI is hereby authorized by Grower to deductfrom any payment due to Grower the amount of $.01 per net ton of beetspurchased and to pay such amount to the SSI/Grower Joint Research CommitteeTrust - Sidney (the “Sidney Trust”) for the purpose of promoting sugarbeetagronomic research.  SSI shall contributeto the Sidney Trust an equal amount in cash. Expenditures from the Sidney Trust will be determined by the ResearchCommittee.  The composition of theResearch Committee will include equal representation from both SSI and theAssociation.

 

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

 

14.           **Force Majeure.**  Fire, labor trouble, accident, act of God orof the public enemy, weather or other cause beyond the reasonable control ofthe parties which prevents Grower from the performance of this Agreement orwhich prevents SSI from economically utilizing the sugarbeets contracted for inthe 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 allUSDA-FSA forms required to ensure maximum eligibility of SSI to qualify sugarfor CCC loans in accordance with the Farm Security and Rural Investment Act of2002 and regulations promulgated thereunder, or other applicable legislation orregulations.

 

16.           **Non-Interference.**  This Agreement shall not be construed toaffect, modify or in any way interfere with any marketing agreement betweenGrower and the Association.

 

17.           **Entire Agreement; Assignment.**  This Agreement constitutes the entireagreement of the parties with respect to the subject matter hereof, andsupercedes and replaces any and all prior written and oral agreements betweenGrower and SSI (and its predecessors). The printed terms hereof may be modified or waived only by writtenagreement signed by an officer of SSI. Grower’s individual performance is contemplated hereby, and Grower shallnot assign this Agreement without SSI’s prior written consent.  Grower is an independent contractor and isnot an agent or employee of SSI.

 

18.           **Breach Remedies.**  Grower agrees to comply with all applicablefederal, state and local laws, ordinances, regulations and rulings, as well asSSI’s operational and agricultural regulations and policies (collectivelyreferred to herein as “Applicable Law and Policy”).  Grower acknowledges and agrees that Grower isrequired, pursuant to this Agreement to grow and deliver the sugarbeet crop toSSI at the times specified by SSI.  Anyone or more of the following shall constitute a breach of this Agreement byGrower: (i) the failure of Grower to plant, grow and deliver said crop toSSI; (ii) the failure of Grower to comply with Applicable Law and Policy, (iii) thefailure of Grower to comply with any provision of this Agreement, or (iv) thebreach by Grower of any other agreement with SSI.  Upon a breach of this Agreement, Grower maybe subject to one or more of the following remedies as determined by SSI :

 

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

 

(b)           Paymentof liquidated damages to SSI for failure to deliver the sugarbeets contemplatedunder this Agreement, which liquidated damages are hereby declared and statedto be an amount equal to Grower’s share of SSI’s fixed costs (to be determinedon a per ton basis) for processing of the crop; and

 

(c)           Anyother legal or equitable remedy that may be available to SSI under applicablelaw.

 

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

 

20.           **Soil Sampling****.**  Growermay request SSI to perform soil sampling of Grower’s fields.  Such soil sampling will be performed by SSIto the extent feasible, and the cost of such soil sampling will be deductedfrom the first payment for sugarbeets to be made to Grower under thisAgreement.  Grower hereby authorizes SSIto make such deduction.

 

3

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**2006 SUGARBEET DELIVERY AGREEMENT**

 

| Federal ID No. |   | Agreement No.                                                                                                                                                                                                                                                                                                                                                                        |
|----------------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|           |   | Date:                                                            ,  2006 |

 

**SIDNEYSUGARS 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 sellto SSI during the 2006-crop season, and SSI shall purchase from Grower, thesugarbeets as described on the attached Addendum(s) in accordance with theterms of this Agreement (this Agreement and such Addendum(s) together with theExhibits attached hereto being collectively referred to herein as theAgreement).  SSI shall not be obligatedto purchase, and Grower agrees to destroy prior to August 15, 2006,sugarbeets from all acres planted in excess of that set forth on theAddendum(s) attached hereto.  SSI herebyreserves the right to prorate deliveries to be made under this Agreement.  Any such proration shall be established bySSI after a determination by SSI that it may not be able to economicallyprocess the entire crop for any reason, including but not limited to,government imposed marketing allocations and for a larger than anticipated cropyield.  A proration shall be communicatedto, and applied against, all growers of SSI on a uniform and equitablebasis.  Title and risk of loss forsugarbeets purchased hereunder shall pass from Grower to SSI at the time thesugarbeets are placed on the piler belt. It is understood and agreed that the terms of this Agreement apply tothe 2006 sugarbeet crop and do not constitute a commitment by SSI to purchasesugarbeets in subsequent years.

 

2.             **Agricultural Practices.**  The sugarbeets shall be planted not laterthan June 1, 2006 unless a later date is approved in advance in writing bySSI.  Grower shall not plant sugarbeetsin the same field in consecutive years unless approved in advance in writing bySSI.  Grower shall not apply nitrogenfertilizer to the sugarbeets after July 1, 2006 unless approved in advancein writing by SSI.  Grower shall notirrigate the sugarbeets within the 20-day period immediately prior to the datethat harvest and delivery of the sugarbeets are scheduled to commence unlessapproved in advance in writing by SSI. EXCEPT UNDER UNAVOIDABLE EMERGENCY CONDITIONS, GROWER SHALL REMOVE THESUGARBEET FOLIAGE FROM THE CROP ONLY ON THE DAY ON WHICH SUGARBEETS AREHARVESTED AND SHALL PROTECT THE SUGARBEETS FROM SUN AND FREEZINGTEMPERATURES AFTER REMOVAL FROM THE GROUND. Except as expressly set forth in this Agreement, Grower is not obligatedto adopt or conform to agricultural practices recommended by SSI or itsemployees.  In no event shall SSI beliable for any failure or partial failure of Grower’s sugarbeet crop or damageto the sugarbeets.

 

3.             **Restricted Chemicals.**  Grower shall not apply to the sugarbeets, orto the land upon which the sugarbeets are grown, any “pesticide chemical” asdefined in the Federal Food, Drug, and Cosmetic Act, as amended, unless aregulation shall then be in effect under Section 408 of such Act exemptingsuch chemical from the requirement of a tolerance or prescribing a tolerancefor such chemical, in which event such chemical may be applied to thesugarbeets, or land upon which the sugarbeets are grown, only at such time andin such manner and quantities as shall be within the tolerance prescribed forsugarbeets, and any quantity of such chemical in or on sugarbeets deliveredhereunder shall be within the tolerance prescribed in such regulation.  Grower acknowledges and agrees that SSI shallhave the right to reject and refuse delivery of any sugarbeets to which havebeen applied, or which have been grown on land to which has been applied, anyunauthorized, non-registered, non-approved or prohibited pesticide, herbicide,chemical or other substance.  Grower furtheracknowledges and agrees that SSI’s right to reject or refuse delivery of any ofsaid sugarbeets may be invoked by SSI at its sole option, regardless of whetheror not use of, or application of, an unauthorized, non-registered,non-approved, or prohibited pesticide, herbicide, chemical or other substanceresults in, or may result in, a residue in or on the sugarbeets grown, or sugaror by-products produced from such sugarbeets. Grower warrants that the sugarbeets shall be produced and delivered incompliance with all applicable State and Federal laws and the rules andregulations thereunder, including, but not limited to, Section 12 of theFair Labor Standards Act relating to the employment of minors.

 

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

 

5.             **Condition of Sugarbeets. **Grower shall deliver the sugarbeets toSSI 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 thecompletion of harvest to avoid an insufficient or uneconomic utilization of areceiving station) properly topped and free from excessive amounts of dirt,stones, leaves, trash or other foreign substances which may interfere with thehandling or processing of the sugarbeets. GROWER SHALL NOT DELIVER AND SSI SHALL NOT BE OBLIGATED TO RECEIVE OR TOPAY FOR AND MAY REJECT (i) sugarbeets not grown, harvested ordelivered in compliance with the terms of this Agreement; (ii) sugarbeetsof less than 12% sugar content; (iii) sugarbeets of less than 80% purity; (iv) diseased,frozen, freeze damaged, wilted or improperly topped sugarbeets; (v) sugarbeetswhich are commingled with excessive amounts of dirt, stones, leaves, trash orother foreign substances; or (vi) sugarbeets which for any other reasonare not suitable for storage and/or the manufacture of sugar.  SSI’s failure to reject any sugarbeets shallnot constitute a waiver by SSI of, or in any manner impair, SSI’s right toreject any other sugarbeets under this Agreement.

 

6.             **Timing of Deliveries.**  Sugarbeets shall be harvested and deliveredas and when scheduled by SSI until the beginning of regular harvest (thebeginning of regular harvest is hereinafter referred to as the “initial pilingdate”).  No sugarbeets may be deliveredbefore the initial piling date unless covered by an Early Harvest Amendmentbetween Grower and SSI.  The initialpiling 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 deliverall unharvested sugarbeets as soon as possible without further notificationand, unless prevented by weather conditions, shall complete delivery of allsugarbeets by December 1, 2006.  Ifweather conditions prevent the harvest of all sugarbeets prior to December 1,2006 and if the Factory is still operating, Grower may deliver during suchoperating period at such times and places as may be designated by SSI.  SSI may (i) change the initial pilingdate, (ii) control and restrict deliveries after the initial piling date,or (iii) control and restrict deliveries during any period when warmweather may subject sugarbeets in storage piles to abnormal deterioration.  SSI shall use its best efforts to receiveapproximately 5% per day (during a normal working day) of all Grower’s estimatedtotal tonnage; provided, that, issues related to the management and operationof the receiving stations (outside or factory yard) shall be within theexclusive control of SSI.  Any requestsby Grower for correction and/or changes in delivery tickets must be received bySSI within ten (10) days of the date of delivery of the sugarbeets inorder 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 tocomplete delivery of all sugarbeets within the twenty (20) harvest dayscommencing on the initial piling date (the “Regular Harvest Period”) as furtherprovided in this Section 7.

 

(a)           The lateharvest payment shall be assessed against Grower if Grower delivers sugarbeetsto a receiving station (outside or factory yard) after the Trigger Time (asdefined below) for that receiving station. The late harvest payment to be assessed to Grower shall be $100 for eachhour of operation of that receiving station for the benefit of Grower.  The amount of the late harvest payment shallbe deducted from the first payment (and subsequent payments if necessary) to bemade by SSI to Grower hereunder.

 

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

 

(c)           Thefollowing terms and conditions shall apply with regard to the determination ofthe late harvest payment:

 

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

 

(ii)           The lateharvest payment shall apply for each hour that the receiving station is openfor the benefit of the Grower, regardless of the actual hours the Grower isactively harvesting sugarbeets.  Growerwill 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 itwill not be harvesting sugarbeets.  Theminimum interval for operation of a receiving station will be 8 hours.

 

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

 

THIS IS A LEGALLY BINDINGCONTRACT.  GROWER HAS HAD THE OPPORTUNITYTO CONSULT WITH AN ATTORNEY CONCERNING THE RIGHTS AND OBLIGATIONS SET FORTHHEREIN.

 
| **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:     |   |
|                                 |                               |            |        |  |  |  |  |  |  |

 

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

 

4

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(iii)          Growermay avoid the late harvest payment by completing deliveries to anotherreceiving station closer to the factory for which the Trigger Time has not yetbeen met.

 

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

 

8.             **Beet Payment.**  Sugarbeets grown, harvested and delivered inaccordance with the terms of this Agreement shall be paid for under thefollowing terms:

 

(a)           A properdeduction for tare will be made by SSI in determining the net tons ofsugarbeets delivered by Grower.  Thedetermination of top tare shall be based on the removal of all beet crownmaterial leaving a distinct trace of leaf scar after the top tare istaken.  For beets smaller than or equalto 3” in diameter, removal will be straight across.  For beets larger than 3” in diameter, removalwill be down to 22o from the horizontal. All soil, beet tops, weeds, rocks and other debris found in all sampleswill be part of the total tare.

 

(d)           SSI shalldetermine the sugar content of the sugarbeets and the factory cossettes, whichdetermination shall be final.  Grower mayhave representatives (weighman, tareman and chemist) in SSI’s scale house, tareroom and laboratory to check weights, tares and sugar analyses, but suchrepresentatives must be qualified in the line of work to be performed.

 

(e)           The priceper net ton of sugarbeets shall be based on (i) the Average Net Return forSugar (as defined in paragraph 8(d)) and (ii) the Adjusted Average SugarContent of Grower’s sugarbeets (as defined and determined under paragraph8(e)), as set forth in the following scale, subject to increase or decrease forfreight charges, early harvest payments, and/or hauling allowance as providedin 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 |   |

 

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

 

(d)           The termAverage Net Return for Sugar as used in this Agreement means the net sellingprice for sugar received by American Crystal Sugar Company from United SugarsCorporation for the 2006 crop year, less all charges and expenditures of thekind regularly and customarily deducted from the net selling price for sugarunder SSI’s system of accounting established for determining Average Net Returnfor Sugar. Without limiting the generality of the foregoing, there shall beincluded among the charges and expenditures deductible from the net sellingprice for sugar in determining Average Net Return for Sugar (i) allexcise, sales or other taxes and all other direct or indirect charges of anykind paid or accrued by SSI on, or with respect to, or arising out of themanufacture, processing, production, ownership, possession, holding for sale,sale, marketing or shipment of such sugar or any part thereof, or on all or anypart of the return from such sale; (ii) the profit or loss, if any,resulting from hedging operations conducted by SSI in response to sugarcustomers requests for sugar pricing based on sugar futures contracts listed onthe New York Coffee, Sugar & Cocoa Exchange; (iii) the profit orloss, if any, resulting from SSI’s purchase and sale of other domestic orforeign refined sugar which SSI deems necessary or advisable to fill shortfallsin SSI’s production or to preserve SSI’s market share; (iv) all costsincurred 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 inexcess of that permitted to be marketed under government imposed marketingallocations based on the Sidney factory’s percentage of the overall allotmentquantity, as adjusted from time to time; and (vi) other costs, fees andexpenses comparable or similar to those subtracted from the net selling pricein calculating the beet payment to the shareholders of American Crystal SugarCompany.

 

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

 

(f)            The finaldetermination of Average Net Return for Sugar shall be verified by a firm ofindependent certified public accountants selected by SSI, which verificationshall be conclusive.  Grower (actingthrough the Association) shall have the right to select at its own expense afirm of certified public accountants to check the determination of Average NetReturn for Sugar.

 

(g)           Thepayment for sugarbeets determined in accordance with paragraph 8(c) shallbe increased or decreased as follows:

 

(i)            In theevent Grower delivers sugarbeets to an outside receiving station, Grower shallbe charged a freight participation charge (per screened ton) applicable to thetransportation of Grower’s sugarbeets from the receiving station to thefactory.  The Grower freightparticipation charge (per net ton) is an amount equal to 40% of the AdjustedFreight 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 “AdjustedFreight 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 eventGrower delivers sugarbeets to the Sidney factory yard, Grower will be charged afactory freight participation charge (per screened ton) applicable to thetransportation of the Grower’s sugarbeets from the pile to the wet hopper.  The Grower freight charge is an amount equalto 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)          Inthe event Grower is contracted to deliver sugarbeets to an outside receivingstation and instead elects to deliver sugarbeets to the Sidney factory yard,Grower will be paid a hauling allowance equal to 50% of the Adjusted FreightRate for the receiving station to which Grower was contracted.

 

(iv)          In theevent Grower is contracted to deliver sugarbeets to an outside receivingstation and elects to deliver the sugarbeets to an outside receiving stationthat is closer to the Sidney Factory, Grower shall be paid a hauling allowanceequal to 50% of the freight savings based on the Adjusted Freight Rates for theaffected receiving stations.

 

(v)           In theevent Grower delivers sugarbeets to outside receiving stations from certaingeographic areas, Grower shall be paid a delivery incentive to compensateGrower for increased hauling expenses. The delivery incentive shall becalculated as follows:

 

5

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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-fivepercent (75%) of the payment adjustments provided in paragraphs 8(g)(i) and8(g)(ii) shall be applied to the first payment for sugarbeets to be madeto Grower under this Agreement and twenty-five percent (25%) shall be appliedto the second payment for sugarbeets to be made to Grower under thisAgreement.  The payment adjustmentsprovided in paragraphs 8(g)(iii), 8(g)(iv), and 8(g)(v) shall be appliedto the first payment for sugarbeets to be made to Grower under thisAgreement.  The determination ofcontracted receiving station and associated districts shall be based on that specifiedin the Addendum(s) to this Agreement.

 

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

 

9.             **Payment Schedule.**  SSI shall make an initial payment (i) onNovember 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 deliveryfor sugarbeets delivered by Grower on or after November 5, 2006.  The payments for sugarbeets will be adjustedas provided in paragraphs 8(g) and 8(h) and any other deductionsprovided hereunder or otherwise authorized by Grower.  The initial and subsequent payments will bemade based on the Adjusted Sugar Content of Grower’s sugarbeets, and SSI’sestimate of anticipated Average Net Return for Sugar as set forth in thefollowing 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 |   |

 

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*Takingcredit for prior payments

 

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

 

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

 

11.           **Dues Deductions.**

 

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

 

(b)           SSI may atits option deduct from any payment due under this Agreement an amountequivalent to Grower’s proportionate share (determined on a per ton basis) of50% of the amount paid by or on behalf of SSI to The Sugar Association and/orThe American Sugar Alliance.

 

12.           **Research.**  SSI is hereby authorized by Grower to deductfrom any payment due to Grower the amount of $.01 per net ton of beetspurchased and to pay such amount to the SSI/Grower Joint Research CommitteeTrust - Sidney (the “Sidney Trust”) for the purpose of promoting sugarbeetagronomic research.  SSI shall contributeto the Sidney Trust an equal amount in cash. Expenditures from the Sidney Trust will be determined by the ResearchCommittee.  The composition of theResearch Committee will include equal representation from both SSI and theAssociation.

 

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

 

14.           **Force Majeure.**  Fire, labor trouble, accident, act of God orof the public enemy, weather or other cause beyond the reasonable control ofthe parties which prevents Grower from the performance of this Agreement orwhich prevents SSI from economically utilizing the sugarbeets contracted for inthe 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 allUSDA-FSA forms required to ensure maximum eligibility of SSI to qualify sugarfor CCC loans in accordance with the Farm Security and Rural Investment Act of2002 and regulations promulgated thereunder, or other applicable legislation orregulations.

 

16.           **Non-Interference.**  This Agreement shall not be construed toaffect, modify or in any way interfere with any marketing agreement betweenGrower and the Association.

 

17.           **Entire Agreement; Assignment.**  This Agreement constitutes the entireagreement of the parties with respect to the subject matter hereof, andsupercedes and replaces any and all prior written and oral agreements betweenGrower and SSI (and its predecessors). The printed terms hereof may be modified or waived only by writtenagreement signed by an officer of SSI. Grower’s individual performance is contemplated hereby, and Grower shallnot assign this Agreement without SSI’s prior written consent.  Grower is an independent contractor and isnot an agent or employee of SSI.

 

18.           **Breach Remedies.**  Grower agrees to comply with all applicablefederal, state and local laws, ordinances, regulations and rulings, as well asSSI’s operational and agricultural regulations and policies (collectivelyreferred to herein as “Applicable Law and Policy”).  Grower acknowledges and agrees that Grower isrequired, pursuant to this Agreement to grow and deliver the sugarbeet crop toSSI at the times specified by SSI.  Anyone or more of the following shall constitute a breach of this Agreement byGrower: (i) the failure of Grower to plant, grow and deliver said crop toSSI; (ii) the failure of Grower to comply with Applicable Law and Policy, (iii) thefailure of Grower to comply with any provision of this Agreement, or (iv) thebreach by Grower of any other agreement with SSI.  Upon a breach of this Agreement, Grower maybe subject to one or more of the following remedies as determined by SSI :

 

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

 

(b)           Paymentof liquidated damages to SSI for failure to deliver the sugarbeets contemplatedunder this Agreement, which liquidated damages are hereby declared and statedto be an amount equal to Grower’s share of SSI’s fixed costs (to be determinedon a per ton basis) for processing of the crop; and

 

(c)           Anyother legal or equitable remedy that may be available to SSI under applicablelaw.

 

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

 

20.           **Soil Sampling****.**  Growermay request SSI to perform soil sampling of Grower’s fields.  Such soil sampling will be performed by SSIto the extent feasible, and the cost of such soil sampling will be deductedfrom the first payment for sugarbeets to be made to Grower under thisAgreement.  Grower hereby authorizes SSIto make such deduction.

 

6

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**2007 SUGARBEET DELIVERY AGREEMENT**

 

| Federal ID No. |   | Agreement No.                                                                                                                                                                                                                                                                                                                                                                        |
|----------------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|           |   | Date:                                                            ,  2007 |

 

**SIDNEYSUGARS 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 sellto SSI during the 2007-crop season, and SSI shall purchase from Grower, thesugarbeets as described on the attached Addendum(s) in accordance with theterms of this Agreement (this Agreement and such Addendum(s) together with theExhibits attached hereto being collectively referred to herein as theAgreement).  SSI shall not be obligatedto purchase, and Grower agrees to destroy prior to August 15, 2007,sugarbeets from all acres planted in excess of that set forth on theAddendum(s) attached hereto.  SSI herebyreserves the right to prorate deliveries to be made under this Agreement.  Any such proration shall be established bySSI after a determination by SSI that it may not be able to economicallyprocess the entire crop for any reason, including but not limited to,government imposed marketing allocations and for a larger than anticipated cropyield.  A proration shall be communicatedto, and applied against, all growers of SSI on a uniform and equitablebasis.  Title and risk of loss forsugarbeets purchased hereunder shall pass from Grower to SSI at the time thesugarbeets are placed on the piler belt. It is understood and agreed that the terms of this Agreement apply tothe 2007 sugarbeet crop and do not constitute a commitment by SSI to purchasesugarbeets in subsequent years.

 

2.             **Agricultural Practices.**  The sugarbeets shall be planted not laterthan June 1, 2007 unless a later date is approved in advance in writing bySSI.  Grower shall not plant sugarbeetsin the same field in consecutive years unless approved in advance in writing bySSI.  Grower shall not apply nitrogenfertilizer to the sugarbeets after July 1, 2007 unless approved in advancein writing by SSI.  Grower shall notirrigate the sugarbeets within the 20-day period immediately prior to the datethat harvest and delivery of the sugarbeets are scheduled to commence unlessapproved in advance in writing by SSI. EXCEPT UNDER UNAVOIDABLE EMERGENCY CONDITIONS, GROWER SHALL REMOVE THESUGARBEET FOLIAGE FROM THE CROP ONLY ON THE DAY ON WHICH SUGARBEETS AREHARVESTED AND SHALL PROTECT THE SUGARBEETS FROM SUN AND FREEZINGTEMPERATURES AFTER REMOVAL FROM THE GROUND. Except as expressly set forth in this Agreement, Grower is not obligatedto adopt or conform to agricultural practices recommended by SSI or itsemployees.  In no event shall SSI beliable for any failure or partial failure of Grower’s sugarbeet crop or damageto the sugarbeets.

 

3.             **Restricted Chemicals.**  Grower shall not apply to the sugarbeets, orto the land upon which the sugarbeets are grown, any “pesticide chemical” asdefined in the Federal Food, Drug, and Cosmetic Act, as amended, unless aregulation shall then be in effect under Section 408 of such Act exemptingsuch chemical from the requirement of a tolerance or prescribing a tolerancefor such chemical, in which event such chemical may be applied to thesugarbeets, or land upon which the sugarbeets are grown, only at such time andin such manner and quantities as shall be within the tolerance prescribed forsugarbeets, and any quantity of such chemical in or on sugarbeets deliveredhereunder shall be within the tolerance prescribed in such regulation.  Grower acknowledges and agrees that SSI shallhave the right to reject and refuse delivery of any sugarbeets to which havebeen applied, or which have been grown on land to which has been applied, anyunauthorized, non-registered, non-approved or prohibited pesticide, herbicide,chemical or other substance.  Growerfurther acknowledges and agrees that SSI’s right to reject or refuse deliveryof any of said sugarbeets may be invoked by SSI at its sole option, regardlessof whether or not use of, or application of, an unauthorized, non-registered,non-approved, or prohibited pesticide, herbicide, chemical or other substanceresults in, or may result in, a residue in or on the sugarbeets grown, or sugaror by-products produced from such sugarbeets. Grower warrants that the sugarbeets shall be produced and delivered incompliance with all applicable State and Federal laws and the rules andregulations thereunder, including, but not limited to, Section 12 of theFair Labor Standards Act relating to the employment of minors.

 

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

 

5.             **Condition of Sugarbeets. **Grower shall deliver the sugarbeets toSSI 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 thecompletion of harvest to avoid an insufficient or uneconomic utilization of areceiving station) properly topped and free from excessive amounts of dirt,stones, leaves, trash or other foreign substances which may interfere with thehandling or processing of the sugarbeets. GROWER SHALL NOT DELIVER AND SSI SHALL NOT BE OBLIGATED TO RECEIVE OR TOPAY FOR AND MAY REJECT (i) sugarbeets not grown, harvested ordelivered in compliance with the terms of this Agreement; (ii) sugarbeetsof less than 12% sugar content; (iii) sugarbeets of less than 80% purity; (iv) diseased,frozen, freeze damaged, wilted or improperly topped sugarbeets; (v) sugarbeetswhich are commingled with excessive amounts of dirt, stones, leaves, trash orother foreign substances; or (vi) sugarbeets which for any other reasonare not suitable for storage and/or the manufacture of sugar.  SSI’s failure to reject any sugarbeets shallnot constitute a waiver by SSI of, or in any manner impair, SSI’s right toreject any other sugarbeets under this Agreement.

 

6.             **Timing of Deliveries.**  Sugarbeets shall be harvested and deliveredas and when scheduled by SSI until the beginning of regular harvest (thebeginning of regular harvest is hereinafter referred to as the “initial pilingdate”).  No sugarbeets may be deliveredbefore the initial piling date unless covered by an Early Harvest Amendmentbetween Grower and SSI.  The initialpiling 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 deliverall unharvested sugarbeets as soon as possible without further notificationand, unless prevented by weather conditions, shall complete delivery of allsugarbeets by December 1, 2007.  Ifweather conditions prevent the harvest of all sugarbeets prior to December 1,2007 and if the Factory is still operating, Grower may deliver during suchoperating period at such times and places as may be designated by SSI.  SSI may (i) change the initial pilingdate, (ii) control and restrict deliveries after the initial piling date,or (iii) control and restrict deliveries during any period when warmweather may subject sugarbeets in storage piles to abnormal deterioration.  SSI shall use its best efforts to receiveapproximately 5% per day (during a normal working day) of all Grower’sestimated total tonnage; provided, that, issues related to the management andoperation of the receiving stations (outside or factory yard) shall be withinthe exclusive control of SSI.  Anyrequests by Grower for correction and/or changes in delivery tickets must bereceived by SSI within ten (10) days of the date of delivery of thesugarbeets 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 tocomplete delivery of all sugarbeets within the twenty (20) harvest days commencingon the initial piling date (the “Regular Harvest Period”) as further providedin this Section 7.

 

(a)           The lateharvest payment shall be assessed against Grower if Grower delivers sugarbeetsto a receiving station (outside or factory yard) after the Trigger Time (asdefined below) for that receiving station. The late harvest payment to be assessed to Grower shall be $100 for eachhour of operation of that receiving station for the benefit of Grower.  The amount of the late harvest payment shallbe deducted from the first payment (and subsequent payments if necessary) to bemade by SSI to Grower hereunder.

 

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

 

(c)           Thefollowing terms and conditions shall apply with regard to the determination ofthe late harvest payment:

 

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

 

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

 

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

 

THIS IS A LEGALLY BINDINGCONTRACT.  GROWER HAS HAD THE OPPORTUNITYTO CONSULT WITH AN ATTORNEY CONCERNING THE RIGHTS AND OBLIGATIONS SET FORTHHEREIN.

 
| **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:     |   |
|                                 |                               |            |        |  |  |  |  |  |

 

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

 

7

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(iii)          Growermay avoid the late harvest payment by completing deliveries to anotherreceiving station closer to the factory for which the Trigger Time has not yetbeen met.

 

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

 

8.             **Beet Payment.**  Sugarbeets grown, harvested and delivered inaccordance with the terms of this Agreement shall be paid for under thefollowing terms:

 

(a)           A properdeduction for tare will be made by SSI in determining the net tons ofsugarbeets delivered by Grower.  Thedetermination of top tare shall be based on the removal of all beet crownmaterial leaving a distinct trace of leaf scar after the top tare istaken.  For beets smaller than or equalto 3” in diameter, removal will be straight across.  For beets larger than 3” in diameter, removalwill be down to 22o from the horizontal. All soil, beet tops, weeds, rocks and other debris found in all samples willbe part of the total tare.

 

(f)            SSI shalldetermine the sugar content of the sugarbeets and the factory cossettes, whichdetermination shall be final.  Grower mayhave representatives (weighman, tareman and chemist) in SSI’s scale house, tareroom and laboratory to check weights, tares and sugar analyses, but suchrepresentatives must be qualified in the line of work to be performed.

 

(g)           The priceper net ton of sugarbeets shall be based on (i) the Average Net Return forSugar (as defined in paragraph 8(d)) and (ii) the Adjusted Average SugarContent of Grower’s sugarbeets (as defined and determined under paragraph8(e)), as set forth in the following scale, subject to increase or decrease forfreight charges, early harvest payments, and/or hauling allowance as providedin 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 |   |

 

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

 

(d)           The termAverage Net Return for Sugar as used in this Agreement means the net selling pricefor sugar received by American Crystal Sugar Company from United SugarsCorporation for the 2007 crop year, less all charges and expenditures of thekind regularly and customarily deducted from the net selling price for sugarunder SSI’s system of accounting established for determining Average Net Returnfor Sugar. Without limiting the generality of the foregoing, there shall beincluded among the charges and expenditures deductible from the net sellingprice for sugar in determining Average Net Return for Sugar (i) allexcise, sales or other taxes and all other direct or indirect charges of anykind paid or accrued by SSI on, or with respect to, or arising out of themanufacture, processing, production, ownership, possession, holding for sale,sale, marketing or shipment of such sugar or any part thereof, or on all or anypart of the return from such sale; (ii) the profit or loss, if any,resulting from hedging operations conducted by SSI in response to sugarcustomers requests for sugar pricing based on sugar futures contracts listed onthe New York Coffee, Sugar & Cocoa Exchange; (iii) the profit orloss, if any, resulting from SSI’s purchase and sale of other domestic orforeign refined sugar which SSI deems necessary or advisable to fill shortfallsin SSI’s production or to preserve SSI’s market share; (iv) all costsincurred 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 inexcess of that permitted to be marketed under government imposed marketingallocations based on the Sidney factory’s percentage of the overall allotmentquantity, as adjusted from time to time; and (vi) other costs, fees andexpenses comparable or similar to those subtracted from the net selling pricein calculating the beet payment to the shareholders of American Crystal SugarCompany.

 

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

 

(f)            The finaldetermination of Average Net Return for Sugar shall be verified by a firm ofindependent certified public accountants selected by SSI, which verificationshall be conclusive.  Grower (actingthrough the Association) shall have the right to select at its own expense afirm of certified public accountants to check the determination of Average NetReturn for Sugar.

 

(g)           Thepayment for sugarbeets determined in accordance with paragraph 8(c) shallbe increased or decreased as follows:

 

(i)            In theevent Grower delivers sugarbeets to an outside receiving station, Grower shallbe charged a freight participation charge (per screened ton) applicable to thetransportation of Grower’s sugarbeets from the receiving station to thefactory.  The Grower freightparticipation charge (per net ton) is an amount equal to 40% of the AdjustedFreight 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 “AdjustedFreight 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 theevent Grower delivers sugarbeets to the Sidney factory yard, Grower will becharged a factory freight participation charge (per screened ton) applicable tothe transportation of the Grower’s sugarbeets from the pile to the wethopper.  The Grower freight charge is anamount 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)          Inthe event Grower is contracted to deliver sugarbeets to an outside receivingstation and instead elects to deliver sugarbeets to the Sidney factory yard,Grower will be paid a hauling allowance equal to 50% of the Adjusted FreightRate for the receiving station to which Grower was contracted.

 

(iv)          In theevent Grower is contracted to deliver sugarbeets to an outside receivingstation and elects to deliver the sugarbeets to an outside receiving stationthat is closer to the Sidney Factory, Grower shall be paid a hauling allowanceequal to 50% of the freight savings based on the Adjusted Freight Rates for theaffected receiving stations.

 

(v)           In theevent Grower delivers sugarbeets to outside receiving stations from certaingeographic areas, Grower shall be paid a delivery incentive to compensateGrower for increased hauling expenses. The delivery incentive shall becalculated 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-fivepercent (75%) of the payment adjustments provided in paragraphs 8(g)(i) and8(g)(ii) shall be applied to the first payment for sugarbeets to be madeto Grower under this Agreement and twenty-five percent (25%) shall be appliedto the second payment for sugarbeets to be made to Grower under thisAgreement.  The payment adjustmentsprovided in paragraphs 8(g)(iii), 8(g)(iv), and 8(g)(v) shall be appliedto the first payment for sugarbeets to be made to Grower under thisAgreement.  The determination ofcontracted receiving station and associated districts shall be based on thatspecified in the Addendum(s) to this Agreement.

 

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

 

9.             **Payment Schedule.**  SSI shall make an initial payment (i) onNovember 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 deliveryfor sugarbeets delivered by Grower on or after November 5, 2007.  The payments for sugarbeets will be adjustedas provided in paragraphs 8(g) and 8(h) and any other deductionsprovided hereunder or otherwise authorized by Grower.  The initial and subsequent payments will bemade based on the Adjusted Sugar Content of Grower’s sugarbeets, and SSI’sestimate of anticipated Average Net Return for Sugar as set forth in thefollowing 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 onthe land on which the sugarbeets are grown and Grower and the landlord have acrop sharing agreement, any check issued in payment for sugarbeets delivered byGrower may be made payable jointly, at Grower’s election, to Grower and Grower’slandlord pursuant to forms and procedures prescribed by SSI.  Grower may from time to time request that SSIdeduct certain amounts from the payments to be made hereunder to satisfypayment obligations to third parties. SSI reserves the right to approve the form of such requests.  To the extent SSI elects to honor suchrequest(s), Grower shall defend and indemnify SSI from all losses, costs, anddamages (including attorneys’ fees and costs) incurred by SSI as a result ofpayments to a third party.

 

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

 

11.           **Dues Deductions.**

 

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

 

(b)           SSI may atits option deduct from any payment due under this Agreement an amountequivalent to Grower’s proportionate share (determined on a per ton basis) of50% of the amount paid by or on behalf of SSI to The Sugar Association and/orThe American Sugar Alliance.

 

12.           **Research.**  SSI is hereby authorized by Grower to deductfrom any payment due to Grower the amount of $.01 per net ton of beetspurchased and to pay such amount to the SSI/Grower Joint Research CommitteeTrust - Sidney (the “Sidney Trust”) for the purpose of promoting sugarbeetagronomic research.  SSI shall contributeto the Sidney Trust an equal amount in cash. Expenditures from the Sidney Trust will be determined by the ResearchCommittee.  The composition of theResearch Committee will include equal representation from both SSI and theAssociation.

 

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

 

14.           **Force Majeure.**  Fire, labor trouble, accident, act of God orof the public enemy, weather or other cause beyond the reasonable control ofthe parties which prevents Grower from the performance of this Agreement orwhich prevents SSI from economically utilizing the sugarbeets contracted for inthe 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 allUSDA-FSA forms required to ensure maximum eligibility of SSI to qualify sugarfor CCC loans in accordance with the Farm Security and Rural Investment Act of2002 and regulations promulgated thereunder, or other applicable legislation orregulations.

 

16.           **Non-Interference.**  This Agreement shall not be construed toaffect, modify or in any way interfere with any marketing agreement betweenGrower and the Association.

 

17.           **Entire Agreement; Assignment.**  This Agreement constitutes the entireagreement of the parties with respect to the subject matter hereof, andsupercedes and replaces any and all prior written and oral agreements betweenGrower and SSI (and its predecessors). The printed terms hereof may be modified or waived only by writtenagreement signed by an officer of SSI. Grower’s individual performance is contemplated hereby, and Grower shallnot assign this Agreement without SSI’s prior written consent.  Grower is an independent contractor and isnot an agent or employee of SSI.

 

18.           **Breach Remedies.**  Grower agrees to comply with all applicablefederal, state and local laws, ordinances, regulations and rulings, as well asSSI’s operational and agricultural regulations and policies (collectivelyreferred to herein as “Applicable Law and Policy”).  Grower acknowledges and agrees that Grower isrequired, pursuant to this Agreement to grow and deliver the sugarbeet crop toSSI at the times specified by SSI.  Anyone or more of the following shall constitute a breach of this Agreement byGrower: (i) the failure of Grower to plant, grow and deliver said crop toSSI; (ii) the failure of Grower to comply with Applicable Law and Policy, (iii) thefailure of Grower to comply with any provision of this Agreement, or (iv) thebreach by Grower of any other agreement with SSI.  Upon a breach of this Agreement, Grower maybe subject to one or more of the following remedies as determined by SSI :

 

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

 

(b)           Paymentof liquidated damages to SSI for failure to deliver the sugarbeets contemplatedunder this Agreement, which liquidated damages are hereby declared and statedto be an amount equal to Grower’s share of SSI’s fixed costs (to be determinedon a per ton basis) for processing of the crop; and

 

(c)           Anyother legal or equitable remedy that may be available to SSI under applicablelaw.

 

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

 

20.           **Soil Sampling****.**  Growermay request SSI to perform soil sampling of Grower’s fields.  Such soil sampling will be performed by SSIto the extent feasible, and the cost of such soil sampling will be deductedfrom the first payment for sugarbeets to be made to Grower under thisAgreement.  Grower hereby authorizes SSIto make such deduction.

 

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