Document:

Exhibit 10.25

 

2005 SUGARBEET DELIVERY AGREEMENT

 

	
  Federal ID No.

  	
   

  	
  Agreement No.

  
	
   

  	
   

  	
  Date:                                                            ,
  2005

  

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

	
  SIDNEY SUGARS
  INCORPORATED

  	
   

  	
  GROWER

  	
   

  
	
   

  	
   

  	
  Print Name

  
	
   

  	
   

  	
   

  
	
  By

  	
   

  	
   

  	
   

  	
  Grower
  E-mail address

  	
   

  
	
   

  	
  Factory
  Agricultural Manager

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Factory Mailing
  Address:

  	
   

  	
  By:

  	
   

  
	
  RR 1 Box 3011

  	
   

  	
   

  	
   

  
	
  Sidney, Montana
  59270

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
									

 

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

 

 

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

 

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

 

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

 

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

 

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

 

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

 

SUGARBEET PAYMENT SCALE

(Payment in dollars per net ton of sugarbeets)

 

	
  Average Net

  Return for Sugar

  	
   

  	
  Adjusted
  Average Sugar Content (%) of Sugarbeets

  	
   

  
	
  per CWT

  	
   

  	
  21.00%

  	
   

  	
  20.00%

  	
   

  	
  19.00%

  	
   

  	
  18.00%

  	
   

  	
  17.00%

  	
   

  	
  16.00%

  	
   

  	
  15.00%

  	
   

  	
  14.00%

  	
   

  
	
  $

  	
  30.00

  	
   

  	
  $

  	
  70.141

  	
   

  	
  $

  	
  65.736

  	
   

  	
  $

  	
  61.331

  	
   

  	
  $

  	
  56.926

  	
   

  	
  $

  	
  52.522

  	
   

  	
  $

  	
  48.118

  	
   

  	
  $

  	
  43.714

  	
   

  	
  $

  	
  39.309

  	
   

  
	
  $

  	
  29.00

  	
   

  	
  $

  	
  67.800

  	
   

  	
  $

  	
  63.534

  	
   

  	
  $

  	
  59.268

  	
   

  	
  $

  	
  55.002

  	
   

  	
  $

  	
  50.735

  	
   

  	
  $

  	
  46.469

  	
   

  	
  $

  	
  42.202

  	
   

  	
  $

  	
  37.936

  	
   

  
	
  $

  	
  28.00

  	
   

  	
  $

  	
  65.461

  	
   

  	
  $

  	
  61.333

  	
   

  	
  $

  	
  57.205

  	
   

  	
  $

  	
  53.077

  	
   

  	
  $

  	
  48.948

  	
   

  	
  $

  	
  44.820

  	
   

  	
  $

  	
  40.691

  	
   

  	
  $

  	
  36.563

  	
   

  
	
  $

  	
  27.00

  	
   

  	
  $

  	
  63.125

  	
   

  	
  $

  	
  59.134

  	
   

  	
  $

  	
  55.143

  	
   

  	
  $

  	
  51.152

  	
   

  	
  $

  	
  47.161

  	
   

  	
  $

  	
  43.171

  	
   

  	
  $

  	
  39.180

  	
   

  	
  $

  	
  35.190

  	
   

  
	
  $

  	
  26.00

  	
   

  	
  $

  	
  60.786

  	
   

  	
  $

  	
  56.933

  	
   

  	
  $

  	
  53.080

  	
   

  	
  $

  	
  49.227

  	
   

  	
  $

  	
  45.375

  	
   

  	
  $

  	
  41.522

  	
   

  	
  $

  	
  37.669

  	
   

  	
  $

  	
  33.816

  	
   

  
	
  $

  	
  25.00

  	
   

  	
  $

  	
  58.445

  	
   

  	
  $

  	
  54.731

  	
   

  	
  $

  	
  51.017

  	
   

  	
  $

  	
  47.303

  	
   

  	
  $

  	
  43.588

  	
   

  	
  $

  	
  39.873

  	
   

  	
  $

  	
  36.158

  	
   

  	
  $

  	
  32.443

  	
   

  
	
  $

  	
  24.00

  	
   

  	
  $

  	
  56.109

  	
   

  	
  $

  	
  52.532

  	
   

  	
  $

  	
  48.955

  	
   

  	
  $

  	
  45.378

  	
   

  	
  $

  	
  41.801

  	
   

  	
  $

  	
  38.224

  	
   

  	
  $

  	
  34.647

  	
   

  	
  $

  	
  31.070

  	
   

  
	
  $

  	
  23.00

  	
   

  	
  $

  	
  53.770

  	
   

  	
  $

  	
  50.331

  	
   

  	
  $

  	
  46.892

  	
   

  	
  $

  	
  43.453

  	
   

  	
  $

  	
  40.014

  	
   

  	
  $

  	
  36.575

  	
   

  	
  $

  	
  33.136

  	
   

  	
  $

  	
  29.697

  	
   

  
	
  $

  	
  22.00

  	
   

  	
  $

  	
  51.431

  	
   

  	
  $

  	
  48.130

  	
   

  	
  $

  	
  44.829

  	
   

  	
  $

  	
  41.528

  	
   

  	
  $

  	
  38.227

  	
   

  	
  $

  	
  34.926

  	
   

  	
  $

  	
  31.625

  	
   

  	
  $

  	
  28.323

  	
   

  
	
  $

  	
  21.00

  	
   

  	
  $

  	
  49.095

  	
   

  	
  $

  	
  45.931

  	
   

  	
  $

  	
  42.767

  	
   

  	
  $

  	
  39.603

  	
   

  	
  $

  	
  36.440

  	
   

  	
  $

  	
  33.277

  	
   

  	
  $

  	
  30.114

  	
   

  	
  $

  	
  26.950

  	
   

  
	
  $

  	
  20.00

  	
   

  	
  $

  	
  46.754

  	
   

  	
  $

  	
  43.729

  	
   

  	
  $

  	
  40.704

  	
   

  	
  $

  	
  37.679

  	
   

  	
  $

  	
  34.653

  	
   

  	
  $

  	
  31.628

  	
   

  	
  $

  	
  28.602

  	
   

  	
  $

  	
  25.577

  	
   

  
	
  $

  	
  19.00

  	
   

  	
  $

  	
  44.413

  	
   

  	
  $

  	
  41.527

  	
   

  	
  $

  	
  38.641

  	
   

  	
  $

  	
  35.755

  	
   

  	
  $

  	
  32.866

  	
   

  	
  $

  	
  29.979

  	
   

  	
  $

  	
  27.090

  	
   

  	
  $

  	
  24.204

  	
   

  
	
  $

  	
  18.00

  	
   

  	
  $

  	
  42.072

  	
   

  	
  $

  	
  39.325

  	
   

  	
  $

  	
  36.578

  	
   

  	
  $

  	
  33.831

  	
   

  	
  $

  	
  31.079

  	
   

  	
  $

  	
  28.330

  	
   

  	
  $

  	
  25.578

  	
   

  	
  $

  	
  22.831

  	
   

  

 

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

 

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

 

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

 

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

 

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

 

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

 

	
  Receiving station

  	
  X

  	
  100% + Grower’s % tare

  	
  X

  	
  Weighted average of Grower’s District sugar content

  	
  =

  	
  Adjusted Freight Rate

  
	
  Freight Rate

  	
   

  	
  100

  	
   

  	
  Weighted average of Grower’s sugar content

  	
   

  	
   

  

 

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

 

	
   

  	
  Actual Factory

  	
  =

  	
  Total Factory
  Freight Charges

  	
   

  
	
   

  	
  Freight Cost

  	
   

  	
  Total Screened
  Tons Delivered to Factory Yard

  

 

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

 

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

 

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

 

2

 

	
  Pleasant View

  	
   

  	
  Area I
  (Glendive)

  Area II (Cracker Box exit to Yellowstone River

  Area III (Fallon to Yellowstone River)

  Area IV (Fallon Flats)

  	
   

  	
  $

  $

  $

  $

  	
  .00

  .30

  .60

  .90

  	
   per ton
 per ton
 per ton
 per ton

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Powder River

  	
   

  	
  Area I (Kinsey
  and Tongue River)

  	
   

  	
  $

  	
  .90

  	
   per ton

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Marley District

  	
   

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

  

  Area I (East of border)

  Area II (West of border)

  	
   

  	
  $

  $

  	
  1.10 

  .93

  	
   per ton
 per ton

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Culbertson

  	
   

  	
  Area I (East of
  Brockton, Montana)

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

  	
   

  	
  

  $

  $

  	
  .00

  1.00

  	
  
 per ton

  

 

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

 

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

 

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

 

	
  Initial Payment

  	
   

  	
  2nd Payment

  	
   

  	
   

  	
   

  
	
  % of SSI’s

  	
   

  	
   

  	
   

  	
  % of SSI’s

  	
   

  	
   

  	
   

  	
  Final Payment

  	
   

  
	
  estimated

  	
   

  	
   

  	
   

  	
  estimated

  	
   

  	
   

  	
   

  	
  % of
  actual

  	
   

  	
   

  	
   

  
	
  net payment

  	
   

  	
  Date

  	
   

  	
  new
  payment

  	
   

  	
  Date

  	
   

  	
  Net
  payment

  	
   

  	
  Date

  	
   

  
	
  65

  	
  %

  	
  As provided above

  	
   

  	
  90

  	
  %*

  	
  First Friday in April

  	
   

  	
  100

  	
  %*

  	
  October 31, 2006

  	
   

  

 

*Taking
credit for prior payments

 

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

 

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

 

11.           Dues Deductions.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

3

 

2006 SUGARBEET DELIVERY AGREEMENT

 

	
  Federal ID No.

  	
   

  	
  Agreement No.

  
	
   

  	
   

  	
  Date:                                                            ,
  2006

  

 

SIDNEY
SUGARS INCORPORATED (“SSI”) and                                                                                                                

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

                                                                                        ,
State of                                                    ,
hereby agree as follows:

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

	
  SIDNEY SUGARS
  INCORPORATED

  	
   

  	
  GROWER

  	
   

  
	
   

  	
   

  	
  Print Name

  
	
   

  	
   

  	
   

  
	
  By

  	
   

  	
   

  	
   

  	
  Grower
  E-mail address

  	
   

  
	
   

  	
  Factory
  Agricultural Manager

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Factory Mailing
  Address:

  	
   

  	
  By:

  	
   

  
	
  RR 1 Box 3011

  	
   

  	
   

  	
   

  
	
  Sidney, Montana
  59270

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
										

 

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

 

4

 

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

 

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

 

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

 

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

 

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

 

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

 

SUGARBEET PAYMENT SCALE

(Payment in dollars per net ton of sugarbeets)

 

	
  Average Net

  Return for

  	
   

  	
  Adjusted
  Average Sugar Content (%) of Sugarbeets

  	
   

  
	
  Sugar per
  CWT

  	
   

  	
  21.00%

  	
   

  	
  20.00%

  	
   

  	
  19.00%

  	
   

  	
  18.00%

  	
   

  	
  17.00%

  	
   

  	
  16.00%

  	
   

  	
  15.00%

  	
   

  	
  14.00%

  	
   

  
	
  $

  	
  30.00

  	
   

  	
  $

  	
  69.891

  	
   

  	
  $

  	
  65.486

  	
   

  	
  $

  	
  61.081

  	
   

  	
  $

  	
  56.676

  	
   

  	
  $

  	
  52.272

  	
   

  	
  $

  	
  47.868

  	
   

  	
  $

  	
  43.464

  	
   

  	
  $

  	
  39.059

  	
   

  
	
  $

  	
  29.00

  	
   

  	
  $

  	
  67.550

  	
   

  	
  $

  	
  63.284

  	
   

  	
  $

  	
  59.018

  	
   

  	
  $

  	
  54.752

  	
   

  	
  $

  	
  50.485

  	
   

  	
  $

  	
  46.219

  	
   

  	
  $

  	
  41.952

  	
   

  	
  $

  	
  37.686

  	
   

  
	
  $

  	
  28.00

  	
   

  	
  $

  	
  65.211

  	
   

  	
  $

  	
  61.083

  	
   

  	
  $

  	
  56.955

  	
   

  	
  $

  	
  52.827

  	
   

  	
  $

  	
  48.698

  	
   

  	
  $

  	
  44.570

  	
   

  	
  $

  	
  40.441

  	
   

  	
  $

  	
  36.313

  	
   

  
	
  $

  	
  27.00

  	
   

  	
  $

  	
  62.875

  	
   

  	
  $

  	
  58.884

  	
   

  	
  $

  	
  54.893

  	
   

  	
  $

  	
  50.902

  	
   

  	
  $

  	
  46.911

  	
   

  	
  $

  	
  42.921

  	
   

  	
  $

  	
  38.930

  	
   

  	
  $

  	
  34.940

  	
   

  
	
  $

  	
  26.00

  	
   

  	
  $

  	
  60.536

  	
   

  	
  $

  	
  56.683

  	
   

  	
  $

  	
  52.830

  	
   

  	
  $

  	
  48.977

  	
   

  	
  $

  	
  45.125

  	
   

  	
  $

  	
  41.272

  	
   

  	
  $

  	
  37.419

  	
   

  	
  $

  	
  33.566

  	
   

  
	
  $

  	
  25.00

  	
   

  	
  $

  	
  58.195

  	
   

  	
  $

  	
  54.481

  	
   

  	
  $

  	
  50.767

  	
   

  	
  $

  	
  47.053

  	
   

  	
  $

  	
  43.338

  	
   

  	
  $

  	
  39.623

  	
   

  	
  $

  	
  35.908

  	
   

  	
  $

  	
  32.193

  	
   

  
	
  $

  	
  24.00

  	
   

  	
  $

  	
  55.859

  	
   

  	
  $

  	
  52.282

  	
   

  	
  $

  	
  48.705

  	
   

  	
  $

  	
  45.128

  	
   

  	
  $

  	
  41.551

  	
   

  	
  $

  	
  37.974

  	
   

  	
  $

  	
  34.397

  	
   

  	
  $

  	
  30.820

  	
   

  
	
  $

  	
  23.00

  	
   

  	
  $

  	
  53.520

  	
   

  	
  $

  	
  50.081

  	
   

  	
  $

  	
  46.642

  	
   

  	
  $

  	
  43.203

  	
   

  	
  $

  	
  39.764

  	
   

  	
  $

  	
  36.325

  	
   

  	
  $

  	
  32.886

  	
   

  	
  $

  	
  29.447

  	
   

  
	
  $

  	
  22.00

  	
   

  	
  $

  	
  51.181

  	
   

  	
  $

  	
  47.880

  	
   

  	
  $

  	
  44.579

  	
   

  	
  $

  	
  41.278

  	
   

  	
  $

  	
  37.977

  	
   

  	
  $

  	
  34.676

  	
   

  	
  $

  	
  31.375

  	
   

  	
  $

  	
  28.073

  	
   

  
	
  $

  	
  21.00

  	
   

  	
  $

  	
  48.845

  	
   

  	
  $

  	
  45.681

  	
   

  	
  $

  	
  42.517

  	
   

  	
  $

  	
  39.353

  	
   

  	
  $

  	
  36.190

  	
   

  	
  $

  	
  33.027

  	
   

  	
  $

  	
  29.864

  	
   

  	
  $

  	
  26.700

  	
   

  
	
  $

  	
  20.00

  	
   

  	
  $

  	
  46.504

  	
   

  	
  $

  	
  43.479

  	
   

  	
  $

  	
  40.454

  	
   

  	
  $

  	
  37.429

  	
   

  	
  $

  	
  34.403

  	
   

  	
  $

  	
  31.378

  	
   

  	
  $

  	
  28.352

  	
   

  	
  $

  	
  25.327

  	
   

  
	
  $

  	
  19.00

  	
   

  	
  $

  	
  44.163

  	
   

  	
  $

  	
  41.277

  	
   

  	
  $

  	
  38.391

  	
   

  	
  $

  	
  35.505

  	
   

  	
  $

  	
  32.616

  	
   

  	
  $

  	
  29.729

  	
   

  	
  $

  	
  26.840

  	
   

  	
  $

  	
  23.954

  	
   

  
	
  $

  	
  18.00

  	
   

  	
  $

  	
  41.822

  	
   

  	
  $

  	
  39.075

  	
   

  	
  $

  	
  36.328

  	
   

  	
  $

  	
  33.581

  	
   

  	
  $

  	
  30.829

  	
   

  	
  $

  	
  28.080

  	
   

  	
  $

  	
  25.328

  	
   

  	
  $

  	
  22.581

  	
   

  

 

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

 

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

 

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

 

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

 

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

 

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

 

	
  Receiving station

  	
  X

  	
  100% + Grower’s % tare

  	
  X

  	
  Weighted average of Grower’s District sugar content

  	
  =

  	
  Adjusted Freight Rate

  
	
  Freight Rate

  	
   

  	
  100

  	
   

  	
  Weighted average of Grower’s sugar content

  	
   

  	
   

  

 

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

 

	
   

  	
  Actual Factory

  	
  =

  	
  Total Factory
  Freight Charges

  	
   

  
	
   

  	
  Freight Cost

  	
   

  	
  Total Screened
  Tons Delivered to Factory Yard

  

 

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

 

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

 

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

 

5

 

	
  Pleasant View

  	
   

  	
  Area I (Glendive)

  Area II (Cracker Box exit to Yellowstone River

  Area III (Fallon to Yellowstone River)

  Area IV (Fallon Flats)

  	
   

  	
  $

  $

  $

  $

  	
  .00

  .30

  .60

  .90

  	
   per ton
 per ton
 per ton
 per ton

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Powder River

  	
   

  	
  Area I (Kinsey
  and Tongue River)

  	
   

  	
  $

  	
  .90

  	
   per ton

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Marley District

  	
   

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

  

  Area I (East of border)

  Area II (West of border)

  	
   

  	
  $

  $

  	
  1.10 

  .93

  	
   per ton
 per ton

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Culbertson

  	
   

  	
  Area I (East of
  Brockton, Montana)

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

  	
   

  	
  

  $

  $

  	
  .00

  1.00

  	
  
 per ton

  

 

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

 

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

 

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

 

	
  Initial Payment

  	
   

  	
  2nd Payment

  	
   

  	
   

  	
   

  
	
  % of SSI’s

  	
   

  	
   

  	
   

  	
  % of
  SSI’s

  	
   

  	
   

  	
   

  	
  Final Payment

  	
   

  
	
  estimated

  	
   

  	
   

  	
   

  	
  estimated

  	
   

  	
   

  	
   

  	
  % of
  actual

  	
   

  	
   

  	
   

  
	
  net payment

  	
   

  	
  Date

  	
   

  	
  new
  payment

  	
   

  	
  Date

  	
   

  	
  Net
  payment

  	
   

  	
  Date

  	
   

  
	
  65

  	
  %

  	
  As provided above

  	
   

  	
  90

  	
  %*

  	
  First Friday in April

  	
   

  	
  100

  	
  %*

  	
  October 31, 2007

  	
   

  

 

*Taking
credit for prior payments

 

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

 

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

 

11.           Dues Deductions.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

6

 

2007 SUGARBEET DELIVERY AGREEMENT

 

	
  Federal ID No.

  	
   

  	
  Agreement No.

  
	
   

  	
   

  	
  Date:                                                            ,
  2007

  

 

SIDNEY
SUGARS INCORPORATED (“SSI”) and                                                                                                                  

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

                                                                                        ,
State of                                                    ,
hereby agree as follows:

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

	
  SIDNEY SUGARS
  INCORPORATED

  	
   

  	
  GROWER

  	
   

  
	
   

  	
   

  	
  Print Name

  
	
   

  	
   

  	
   

  
	
  By

  	
   

  	
   

  	
   

  	
  Grower
  E-mail address

  	
   

  
	
   

  	
  Factory
  Agricultural Manager

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Factory Mailing
  Address:

  	
   

  	
  By:

  	
   

  
	
  RR 1 Box 3011

  	
   

  	
   

  	
   

  
	
  Sidney, Montana
  59270

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
									

 

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

 

7

 

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

 

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

 

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

 

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

 

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

 

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

 

SUGARBEET PAYMENT SCALE

(Payment in dollars per net ton of sugarbeets)

 

	
  Average Net

  Return for Sugar

  	
   

  	
  Adjusted
  Average Sugar Content (%) of Sugarbeets

  	
   

  
	
  per CWT

  	
   

  	
  21.00%

  	
   

  	
  20.00%

  	
   

  	
  19.00%

  	
   

  	
  18.00%

  	
   

  	
  17.00%

  	
   

  	
  16.00%

  	
   

  	
  15.00%

  	
   

  	
  14.00%

  	
   

  
	
  $

  	
  30.00

  	
   

  	
  $

  	
  69.291

  	
   

  	
  $

  	
  64.886

  	
   

  	
  $

  	
  60.481

  	
   

  	
  $

  	
  56.076

  	
   

  	
  $

  	
  51.672

  	
   

  	
  $

  	
  47.268

  	
   

  	
  $

  	
  42.864

  	
   

  	
  $

  	
  38.459

  	
   

  
	
  $

  	
  29.00

  	
   

  	
  $

  	
  66.950

  	
   

  	
  $

  	
  62.684

  	
   

  	
  $

  	
  58.418

  	
   

  	
  $

  	
  54.152

  	
   

  	
  $

  	
  49.885

  	
   

  	
  $

  	
  45.619

  	
   

  	
  $

  	
  41.352

  	
   

  	
  $

  	
  37.086

  	
   

  
	
  $

  	
  28.00

  	
   

  	
  $

  	
  64.611

  	
   

  	
  $

  	
  60.483

  	
   

  	
  $

  	
  56.355

  	
   

  	
  $

  	
  52.227

  	
   

  	
  $

  	
  48.098

  	
   

  	
  $

  	
  43.970

  	
   

  	
  $

  	
  39.841

  	
   

  	
  $

  	
  35.713

  	
   

  
	
  $

  	
  27.00

  	
   

  	
  $

  	
  62.275

  	
   

  	
  $

  	
  58.284

  	
   

  	
  $

  	
  54.293

  	
   

  	
  $

  	
  50.302

  	
   

  	
  $

  	
  46.311

  	
   

  	
  $

  	
  42.321

  	
   

  	
  $

  	
  38.330

  	
   

  	
  $

  	
  34.340

  	
   

  
	
  $

  	
  26.00

  	
   

  	
  $

  	
  59.936

  	
   

  	
  $

  	
  56.083

  	
   

  	
  $

  	
  52.230

  	
   

  	
  $

  	
  48.377

  	
   

  	
  $

  	
  44.525

  	
   

  	
  $

  	
  40.672

  	
   

  	
  $

  	
  36.819

  	
   

  	
  $

  	
  32.966

  	
   

  
	
  $

  	
  25.00

  	
   

  	
  $

  	
  57.595

  	
   

  	
  $

  	
  53.881

  	
   

  	
  $

  	
  50.167

  	
   

  	
  $

  	
  46.453

  	
   

  	
  $

  	
  42.738

  	
   

  	
  $

  	
  39.023

  	
   

  	
  $

  	
  35.308

  	
   

  	
  $

  	
  31.593

  	
   

  
	
  $

  	
  24.00

  	
   

  	
  $

  	
  55.259

  	
   

  	
  $

  	
  51.682

  	
   

  	
  $

  	
  48.105

  	
   

  	
  $

  	
  44.528

  	
   

  	
  $

  	
  40.951

  	
   

  	
  $

  	
  37.374

  	
   

  	
  $

  	
  33.797

  	
   

  	
  $

  	
  30.220

  	
   

  
	
  $

  	
  23.00

  	
   

  	
  $

  	
  52.920

  	
   

  	
  $

  	
  49.481

  	
   

  	
  $

  	
  46.042

  	
   

  	
  $

  	
  42.603

  	
   

  	
  $

  	
  39.164

  	
   

  	
  $

  	
  35.725

  	
   

  	
  $

  	
  32.286

  	
   

  	
  $

  	
  28.847

  	
   

  
	
  $

  	
  22.00

  	
   

  	
  $

  	
  50.581

  	
   

  	
  $

  	
  47.280

  	
   

  	
  $

  	
  43.979

  	
   

  	
  $

  	
  40.678

  	
   

  	
  $

  	
  37.377

  	
   

  	
  $

  	
  34.076

  	
   

  	
  $

  	
  30.775

  	
   

  	
  $

  	
  27.473

  	
   

  
	
  $

  	
  21.00

  	
   

  	
  $

  	
  48.245

  	
   

  	
  $

  	
  45.081

  	
   

  	
  $

  	
  41.917

  	
   

  	
  $

  	
  38.753

  	
   

  	
  $

  	
  35.590

  	
   

  	
  $

  	
  32.427

  	
   

  	
  $

  	
  29.264

  	
   

  	
  $

  	
  26.100

  	
   

  
	
  $

  	
  20.00

  	
   

  	
  $

  	
  45.904

  	
   

  	
  $

  	
  42.879

  	
   

  	
  $

  	
  39.854

  	
   

  	
  $

  	
  36.829

  	
   

  	
  $

  	
  33.803

  	
   

  	
  $

  	
  30.778

  	
   

  	
  $

  	
  27.752

  	
   

  	
  $

  	
  24.727

  	
   

  
	
  $

  	
  19.00

  	
   

  	
  $

  	
  43.563

  	
   

  	
  $

  	
  40.677

  	
   

  	
  $

  	
  37.791

  	
   

  	
  $

  	
  34.905

  	
   

  	
  $

  	
  32.016

  	
   

  	
  $

  	
  29.129

  	
   

  	
  $

  	
  26.240

  	
   

  	
  $

  	
  23.354

  	
   

  
	
  $

  	
  18.00

  	
   

  	
  $

  	
  41.222

  	
   

  	
  $

  	
  38.475

  	
   

  	
  $

  	
  35.728

  	
   

  	
  $

  	
  32.981

  	
   

  	
  $

  	
  30.229

  	
   

  	
  $

  	
  27.480

  	
   

  	
  $

  	
  24.728

  	
   

  	
  $

  	
  21.981

  	
   

  

 

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

 

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

 

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

 

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

 

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

 

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

 

	
  Receiving station

  	
  X

  	
  100% + Grower’s % tare

  	
  X

  	
  Weighted average of Grower’s District sugar content

  	
  =

  	
  Adjusted Freight Rate

  
	
  Freight Rate

  	
   

  	
  100

  	
   

  	
  Weighted average of Grower’s sugar content

  	
   

  	
   

  

 

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

 

	
   

  	
  Actual Factory

  	
  =

  	
  Total Factory
  Freight Charges

  	
   

  
	
   

  	
  Freight Cost

  	
   

  	
  Total Screened
  Tons Delivered to Factory Yard

  

 

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

 

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

 

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

 

8

 

	
  Pleasant View

  	
   

  	
  Area I (Glendive)

  Area II (Cracker Box exit to Yellowstone River

  Area III (Fallon to Yellowstone River)

  Area IV (Fallon Flats)

  	
   

  	
  $

  $

  $

  $

  	
  .00

  .30

  .60

  .90

  	
   per ton
 per ton
 per ton
 per ton

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Powder River

  	
   

  	
  Area I (Kinsey
  and Tongue River)

  	
   

  	
  $

  	
  .90

  	
   per ton

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Marley District

  	
   

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

  

  Area I (East of border)

  Area II (West of border)

  	
   

  	
  $

  $

  	
  1.10 

  .93

  	
   per ton
 per ton

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Culbertson

  	
   

  	
  Area I (East of
  Brockton, Montana)

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

  	
   

  	
  

  $

  $

  	
  .00

  1.00

  	
  
 per ton

  

 

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

 

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

 

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

 

	
  Initial Payment

  	
   

  	
  2nd Payment

  	
   

  	
   

  	
   

  
	
  % of SSI’s

  	
   

  	
   

  	
   

  	
  % of
  SSI’s

  	
   

  	
   

  	
   

  	
  Final Payment

  	
   

  
	
  estimated

  	
   

  	
   

  	
   

  	
  estimated

  	
   

  	
   

  	
   

  	
  % of
  actual

  	
   

  	
   

  	
   

  
	
  net payment

  	
   

  	
  Date

  	
   

  	
  new
  payment

  	
   

  	
  Date

  	
   

  	
  Net
  payment

  	
   

  	
  Date

  	
   

  
	
  65

  	
  %

  	
  As provided above

  	
   

  	
  90

  	
  %*

  	
  First Friday in April

  	
   

  	
  100

  	
  %*

  	
  October 31, 2008

  	
   

  

 

*Taking credit for prior payments

 

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

 

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

 

11.           Dues Deductions.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

9Exhibit 10.1

 

 

DEPOMED, INC. BONUS PLAN

 

Depomed’s Bonus Plan is designed to provide employees with a
performance-based plan that rewards the achievement of individual goals and corporate
performance.

 

Background

 

In the past, Depomed has used a discretionary bonus program to reward certain
high performing employees for their efforts and accomplishments.  As the Company matures and grows, we want to
formalize the structure of employees’ activities to be consistent with Depomed’s
Corporate Goals and define a specific process so that employees know how
bonuses are granted and what they need to accomplish in order to benefit from
the Bonus Plan.

 

In early 2005, all levels of Depomed’s management were directed to
establish individual goals and objectives consistent with Depomed’s Corporate
Goals.  By following their defined goals
and objectives, the activities of these employees will focus on and directly
support the Corporate Goals.  These goals
are to be reviewed together by employees and their supervisors on an ongoing
basis throughout the calendar year.  The
period for accomplishing the 2005 goals and objectives ends on December 31,
2005.

 

Eligibility

 

For calendar year 2005, all levels of Depomed’s management staff will
participate in the formal Bonus Plan; other employees will be eligible for the
discretionary bonus plan.  For 2006 and
beyond, all regular employees who work at least 25 hours per week will be eligible
to participate in the Plan.  For 2005 and
beyond, employees who join the company by August 1 will be eligible to
participate in the plan on a pro-rated basis.

 

Bonus Target

 

A “Bonus Target” has been identified for different levels of personnel
and is based on a percentage of base pay. 
In some instances, if an individual achieves all their goals, they could
be eligible to receive the entire bonus target percentage at the end of the
year.  This is explained in more detail
below.

 

Corporate Multiplier

 

The proposed bonus pool (or Bonus Targets) will be subject to a “Corporate
Multiplier,” which will reflect the Company’s overall success and fiscal
concerns.  In a year, where the corporate
goals are met and the Company’s finances are on target, the Corporate Multiplier
could be 100%.  Conversely, in a year
where only a portion of the corporate goals are met and finances are not on
target, a corporate multiplier of 75%, 50% or zero, for example, might be
applied to the bonus pool.  At the end of
the subject year, the Company’s performance will be evaluated by the CEO, CFO
and the Board of Directors and the Corporate Multiplier will be set.

 

 

The Bonus Targets have been set as follows:

 

	
   

  	
   

  	
  Bonus Target

  	
   

  
	
  CEO

  	
   

  	
  50

  	
  %

  
	
  Vice Presidents

  	
   

  	
  35

  	
  %

  
	
  Sr./Directors/Assoc. Directors

  	
   

  	
  25

  	
  %

  
	
  Sr./Managers

  	
   

  	
  15

  	
  %

  
	
  Supervisors

  	
   

  	
  10

  	
  %

  
	
  Independent Contributors

  	
   

  	
  5

  	
  %

  

 

Weighting of Goals

 

For each goal identified, a weight will be assigned reflecting the
significance of the goal and the level of effort required to achieve it; the combined
weight of the different goals should total 100%. When establishing the weight
for a given goal, attention should be paid to the significance of the goal and
the effort required.  For example, an
ongoing goal that consumes 50% of someone’s time for the year would receive a
weight of 50%; a fixed-term goal or standard that consumes 100% of an employee’s
effort for three months would receive a weight of 25% (reflecting 25% of the
year).  Other goals or standards will be
weighted based on their significance or potential impact to the company.  For instance, a new multi-million dollar deal
with a new partner, might be weighted at 70%, regardless of the time involved
to finalize the terms.  Or, a goal to
streamline a new procedure in the lab and resulting in significant time savings,
might result in a weight of 75% (given that the impact on the company is
significant and long-lasting).

 

Bonus Calculation

 

Throughout the year and at year-end, employee’s goals and achievements
will be assessed.  An employee who
achieved an individual goal will receive a “1” for full credit of the goal; a
goal that is well under way, but has not been fully achieved could receive a “.5” for partial credit; a goal not achieved
will receive a “0” for no credit.  An
employee who not only achieved his or her goal, but well exceeded expectations,
resulting in tangible evidence of significant improvement of the well being of
the company, could receive a “1.5” rating.

 

In the example below, Goal #1 – with a 25% weight — was achieved and
the employee receives a “1” or full credit for this goal in the result.  For Goal #2, our sample employee not only
achieved this goal, but far exceeded expectations, which is reflected in a
multiplier of 1.5; Goal #3 was not accomplished and no credit is given; Goal #4
is well underway but was not fully achieved in the defined time frame.  Accordingly, only partial credit is given.

 

Once the “Result” has been calculated, the Corporate Multiplier is
applied, producing the final bonus.

 

	
  Goal

  	
   

  	
  Weight

  	
   

  	
   

  	
   

  	
  Achieved

  	
   

  	
   

  	
   

  	
  Result

  	
   

  	
  Corporate

  Multiplier

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  #1

  	
   

  	
  25

  	
  %

  	
  X

  	
   

  	
  1

  	
   

  	
  =

  	
   

  	
  25

  	
  %

  	
   

  	
   

  
	
  #2

  	
   

  	
  30

  	
  %

  	
  X

  	
   

  	
  1.5

  	
   

  	
  =

  	
   

  	
  45

  	
  %

  	
   

  	
   

  
	
  #3

  	
   

  	
  35

  	
  %

  	
  X

  	
   

  	
  0

  	
   

  	
  =

  	
   

  	
  0

  	
   

  	
   

  	
   

  
	
  #4

  	
   

  	
  10

  	
  %

  	
  X

  	
   

  	
  .50

  	
   

  	
  =

  	
   

  	
  5

  	
  %

  	
   

  	
   

  
	
   

  	
   

  	
  100

  	
  %

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  75

  	
  %

  	
  80

  	
  %

  

 

2

 

In the above example, our sample Manager, making $60,000 per year, would
have earned a bonus of $5,400, as follows:

 

	
  Salary

  	
   

  	
  $

  	
  60,000

  	
   

  
	
  Bonus Target @ 15%

  	
   

  	
  9,000

  	
   

  
	
  Result @ 75%

  	
   

  	
  6,750

  	
   

  
	
  Corporate Multiplier @ 80%

  	
   

  	
  5,400

  	
   

  

 

Using this same sample Manager, had he accomplished all his goals and
received an “Achieved Rating” of “1” for each goal, and the Corporate
Multiplier was 100%, he would have received the following bonus:

 

	
  Salary

  	
   

  	
  $

  	
  60,000

  	
   

  
	
  Bonus Target @ 15%

  	
   

  	
  9,000

  	
   

  
	
  Result @ 100%

  	
   

  	
  9,000

  	
   

  
	
  Corporate Multiplier @ 100%

  	
   

  	
  9,000

  	
   

  

 

Performance Assessment and Payment of Bonuses

 

In January, following the plan year, individual goals will be assessed
and performance reviews will be prepared and delivered to employees.  Bonuses will be calculated and payment of
bonuses will be paid to employees no later than March 31.

 

Employees must be employed by Depomed on the day payment is made to be
eligible for a bonus payment.  No
employee, who has been under formal disciplinary action, will be eligible to
receive a bonus.

 

Depomed retains the right to alter or eliminate the Plan and its terms
and conditions at any time and for any reason, before, during or after the plan
year.

 

No participant shall have any vested right to receive any payment until
actual delivery of such compensation. 
This plan does not constitute a contract or other agreement concerning
employment with Depomed.  Employment at
Depomed is “at will” and may be terminated at any time by Depomed or by the
employee, either with or without cause.

 

3

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