Document:

Exhibit
10.31

 

[Portions
of this Exhibit have been omitted pursuant to a request for confidentiality
under Rule 24b-2 of the Securities Exchange Act of 1934, as amended.  A copy of this Exhibit with all sections
intact has been filed separately with the Securities and Exchange Commission.]

 

BEET LOADING AND HAULING AGREEMENT

 

THIS AGREEMENT is
made as of April 28, 2003, by and between AMERICAN CRYSTAL SUGAR COMPANY, a
Minnesota agricultural cooperative corporation, whose address is 101 North
Third Street, Moorhead, Minnesota (hereinafter “ACSC”) and TRANSYSTEMS LLC, a
Wyoming limited liability company, whose address is 511 Central Avenue West,
Suite 2, Great Falls, Montana (hereinafter “Contractor”).

 

1.                   Purposes:  This Agreement shall cover:

 

(a)                             The
loading of sugarbeets from storage piles into trucks by Contractor at ACSC’s
outside sugarbeet receiving stations at the locations designated on Exhibit
A hereto (the “Outside Receiving Stations”) for hauling by truck to ACSC’s
sugarbeet factories at: Moorhead, Crookston, East Grand Forks, Minnesota;
Hillsboro and Drayton, North Dakota; (collectively, the “Factories”);

 

(b)                            The
hauling of sugarbeets by truck by Contractor from the Outside Receiving
Stations to the wet hoppers at the Factories and the unloading thereof into the
wet hoppers;

 

(c)                             The
loading of sugarbeets from storage piles into trucks by Contractor at the
receiving stations at the Factories (the “Factory Receiving Stations”), the
hauling of such sugarbeets by truck to the wet hoppers at the Factories and the
unloading thereof into the wet hoppers. 
Outside Receiving Stations and Factory Receiving Stations may
hereinafter be collectively referred to as “Receiving Stations;” and

 

(d)                            Teardown
services, clean up, snow removal and other services as provided herein.

 

With all of such services
as set forth above and more fully described in Sections 3, 4, 5 and 15 below
collectively referred to as the “Transportation Services.”

 

2.                   Term:  This Agreement shall be effective as of the
date hereof and shall be in effect for and during the sugarbeet processing
campaigns with respect to the 2003 through 2007 sugarbeet crops (the “Term”),
unless cancelled or terminated earlier as hereinafter provided.  Each sugarbeet processing campaign shall be
referred to as the “Campaign Period” and each 12-month period commencing on
September 1 and ending on August 31, shall be referred to as a “Contract Year.”

 

3.                   Loading:  During each Campaign Period, Contractor
agrees to load into trucks of Contractor as directed by ACSC all sugarbeets in
storage piles as designated by ACSC at the specified Outside Receiving Stations
and shall load or replace in storage piles, all sugarbeets which may fall to
the ground during loading.  As requested
by ACSC, Contractor shall deliver designated mixes of loads of sugarbeets from
Factory Receiving Stations and from Outside Receiving Stations to assist in
maintaining consistent deliveries to the Factories.  Contractor will have at least twelve (12) loaders available at
all times during the Term hereof to fulfill the loading requirements
hereunder.  Such loaders shall be
provided at the costs specified on Exhibit A.

 

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In the event ACSC
requests that Contractor operate additional loaders for sugarbeet blending
purposes, ACSC will reimburse Contractor for the additional loaders at the rate
set forth on Exhibit A.

 

4.                   Hauling:

 

(a)                             Responsibility
of Contractor.  During each Campaign
Period, Contractor agrees to haul by truck all sugarbeets loaded as described
in Section 3 to the Factories designated by ACSC and to unload all of said
sugarbeets, including those which may fall to the ground during transport and
unloading, into the wet hopper on the grounds at the designated Factories.  Contractor shall assure a reliable supply of
sugarbeets to each Factory such that there is no gap in deliveries to any
Factory wet hopper of more that five minutes.

 

(b)                            Limitation
of Contractor Responsibility. 
Notwithstanding the provisions of paragraph (a) above, Contractor’s
responsibility to haul sugarbeets from the Outside Receiving Stations shall be
based on the capacity of the Equipment, with such limitation to be an average
of 1,152,000 ton miles per day from such Outside Receiving Stations during each
Campaign Period (the “Maximum Haul”). 
In addition to the normal hauling rates set forth on Exhibits A and D,
ACSC will be responsible for all incremental costs incurred to haul sugarbeets
in excess of the Maximum Haul. 
Contractor agrees to provide ACSC with such documentation as may be
requested by ACSC to verify the incremental costs.  Subject to the preceding sentence, the rates set forth on Exhibits
A and D shall apply to hauls in excess of the Maximum Haul.  The parties will cooperate during the
Campaign Period to project the projected ton miles per day for the Campaign
Period.  In the event the parties
project that the Maximum Haul will be exceeded during any Campaign Period, the
parties will mutually agree as to methods and costs for transporting the
sugarbeets in excess of the Maximum Haul. 
Should the parties be unable to reach such agreement, ACSC may make
alternate arrangements and/or retain the services of a third party to transport
sugarbeets in excess of the Maximum Haul, and Contractor shall not be entitled
to any compensation with respect to the transportation of such sugarbeets.

 

5.                   Factory
Yard Loading and Hauling: 
During each Campaign Period, Contractor agrees to load into trucks all
sugarbeets in storage piles as designated by ACSC at the specified Factory
Receiving Stations and to transport such sugarbeets to, and unload the same
into, the wet hoppers or Contractor’s Unloading Equipment at each Factory.  Contractor shall load or replace in storage
piles, all sugarbeets that may fall to the ground during loading.

 

6.                   Tear
Down Services:  At ACSC’s
request and upon expiration of existing contracts between ACSC and certain
third parties, Contractor agrees to assume the responsibility for performing
the “tear down” of frozen sugarbeets at designated locations prior to
loading.  Tear down services shall
include the tear down of the sugarbeet piles with a backhoe, and the removal
and stacking of ventilation tubes. 
Frozen sugarbeets are located at the deep freeze piling sites set forth
on Exhibit B, attached hereto (the “Deep Freeze Beets”).  Notwithstanding commencement of
the Term of this Agreement, tear down services shall commence on the following
schedule to the extent requested in writing by ACSC:

 

2

 

	
  Location of Deep Freeze Storage
  Piles

  	
   

  	
  Crop Year

  	
   

  
	
  Crookston
  District Piles

  	
   

  	
  2003

  	
   

  
	
  Drayton
  District Piles

  	
   

  	
  2003

  	
   

  
	
  East
  Grand Forks District Piles

  	
   

  	
  2004

  	
   

  
	
  Hillsboro
  District Piles

  	
   

  	
  2004

  	
   

  
	
  Moorhead
  District Piles

  	
   

  	
  2005

  	
   

  

 

Contractor shall provide all necessary equipment to
perform tear down services on a schedule to be established by ACSC.  ACSC will provide necessary ripper claw
buckets for the backhoes.  In the event
Contractor performs services pursuant to this Section 6, such services shall be
considered “Transportation Services” and Contractor shall be paid for such
services in accordance with the terms of this Agreement, at a rate of XXXXX per
hauled ton for tear down and XXXXX per tube for tube removal and stacking. [Portions of
this section have been omitted pursuant to a request for confidentiality under
Rule 24b-2 of the Securities Exchange Act of 1934, as amended.  A copy of this Agreement with this section
intact has been filed separately with the Securities and Exchange Commission.]

 

7.                   Equipment:

 

(a)                             Provision
of Equipment. Contractor shall supply the necessary trucks, equipment,
fuel, material, labor, parts inventory and other items necessary to perform its
obligations under this Agreement.  All
equipment shall be of appropriate size, weight and capacity to properly
accomplish the work without injury or damage to the personnel or property of
ACSC.  Except as otherwise agreed upon
by ACSC, Contractor shall furnish at least that equipment referenced in its bid
proposal dated March 7, 2003 and reflected on Exhibit C, attached hereto
(the “Equipment”).  Contractor shall
develop and furnish ACSC with a plan to provide additional equipment to meet
unexpected needs.  Contractor shall
maintain all trucks and semi trailers free of dirt, debris and snow buildup in
the truck or trailer box.  ACSC shall
maintain or cause to be maintained adequate electrical service and lighting at
each Outside Receiving Station and Factory Receiving Station.

 

(b)                            Unloading
Equipment.  Contractor may install
at its cost additional unloading equipment (the “Contractor’s Unloading
Equipment”) at one or more of the Factories to enable Contractor to unload semi
tractors equipped with combination trailers (pups).  Contractor shall be responsible for all costs related to the
purchase, installation, maintenance, and operation of the Contractor’s
Unloading Equipment.  The Contractor’s
Unloading Equipment shall be installed pursuant to plans and at locations to be
mutually agreed upon by the parties. 
Contractor will be responsible for obtaining all permits and approvals
from government authorities that are necessary for installation and operation
of the Contractor’s Unloading Equipment. 
Contractor will be responsible for staffing the Contractor’s Unloading
Equipment.  Contractor will equip each
Factory’s wet hopper operating station with controls that will enable ACSC
personnel to transfer sugarbeets from Contractor’s surge tanks to the wet
hopper.  ACSC will provide electricity
to operate the Contractor’s Unloading Equipment at no additional charge to
Contractor.  The Contractor’s Unloading
Equipment shall be installed and operated so as not to interfere with the
efficient operation of the Factory.  If
in ACSC’s judgment the use of the Contractor’s Unloading Equipment is adversely
affecting the operation of the Factory, upon notice by ACSC to Contractor,
Contractor shall immediately modify the operation of such equipment to rectify
the adverse effect on Factory operation, or discontinue the use of such
equipment.  Contractor shall be responsible
for the costs of any such modifications. 
Except as otherwise specifically provided in Section 11 for the
Drayton Factory, the installation, use, modification and or discontinued use of
the Contractor’s Unloading Equipment shall not

 

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affect the rates charged
for Transportation Services.  ACSC shall
continue to make its existing unloading equipment available to Contractor at
each Factory throughout the Term hereof. 
Contractor shall retain ownership of, and insure the Contractor’s
Unloading Equipment during the Term hereof, and shall remove such equipment
from each Factory within sixty (60) days following termination of this
Agreement.

 

8.                   Work
Schedules:  Contractor shall
coordinate its work with ACSC’s Management at the Factories and shall operate
with sufficient equipment and labor, twenty-four hours per day, seven days per
week, so as to keep the Factories supplied with sugarbeets at all times to
permit optimum full-scale Factory operations. 
Contractor shall deliver sufficient quantities of sugarbeets to permit
each Factory to operate at its optimum daily slicing capacity, it being
understood that, through the term of this Agreement, ACSC may, at any time,
increase or decrease the slicing capacity at any of the Factories.  ACSC shall have complete discretion in
determining which Receiving Stations or portions thereof shall be hauled at any
given time and the times and rates at which sugarbeets covered by this
Agreement shall be received at the wet hoppers at the Factories.  Notwithstanding the foregoing, at no time
shall Contractor be required to haul 100% of the total slice from the Outside
Receiving Stations to all Factories at the same time.  Each party shall keep the other constantly advised of estimated
delivery schedules and Factory operations and shall, particularly, notify the
other promptly of any matter arising which might result in any delay or change
in the anticipated time or rate of receipt of sugarbeets covered by this
Agreement.  Contractor shall furnish
equipment as necessary to transport outside piles to the Factories before
removing any sugarbeets from either ACSC’s above ground ventilation piles or
ACSC’s deep freeze storage buildings.

 

9.                   Due Care:  Contractor shall use due care in its
operations to ensure that there is minimal damage, injury, or loss of
sugarbeets to be transported and unloaded under this Agreement and to ensure
that no dirt, trash or debris is unloaded at the wet hopper at the Factories
other than that already adhering to the sugarbeets when loaded into its
trucks.  All frozen chunks of sugarbeets
must be broken up prior to loading into trucks.

 

10.            Default:  In the event Contractor fails to comply with
any of the provisions of this Agreement or does not perform to ACSC’s good
faith satisfaction, ACSC may: (a) immediately employ such equipment and labor
or immediately contract with others as is necessary, in ACSC’s sole discretion,
to complete or facilitate the work of Contractor; and/or (b) terminate this Agreement
as to Contractor by 10 days notice in writing and employ such equipment and
labor or contract with others as is necessary, in ACSC’s sole discretion, to
complete the Transportation Services to be provided hereunder.  In either the event of (a) or (b) above,
Contractor shall pay ACSC, upon demand, that portion of ACSC’s costs incurred
for facilitating or completing the Transportation Services that are in excess
of the payments that would have been made to Contractor for such work under
this Agreement

 

11.            Payments:  For the work hereunder, ACSC agrees to pay,
and Contractor agrees to accept, the amounts set forth on Exhibit A
hereto, subject to the annual wage adjustments provided in Section 17 of this
Agreement.  In the event Contractor
installs Contractor’s Unloading Equipment at the Drayton Factory, the rates set
forth on Exhibit D hereto shall replace the rates on Exhibit A,
with respect to the Drayton Factory only. 
The installation of Contractor’s Unloading Equipment at the other
Factories shall not affect the rates set forth on Exhibit A.  The rates on Exhibits A and D noted
as “Fall Rates” shall apply during that portion of the Campaign Period that
seasonal road weight restrictions are in effect.  The rates on Exhibits A and D noted as “Winter Rates”
shall apply during that portion of the Campaign Period that seasonal weight

 

4

 

restrictions are removed.  All
rates are based on maximum legal weight limits on all haul roads involved.  Contractor agrees to furnish thirty (30)
full (pup) trailers for operation of combination units having a gross vehicle
weight of 105,500 pounds.  If such
thirty units is not sufficient to fully service the Outside Receiving Stations
designated by ACSC, Contractor shall use its other Equipment to meet the ACSC
requirements and the rates for such Equipment set forth on Supplement #1 to
Exhibit A shall apply.  If
Contractor is required to reduce or is allowed to increase the normal truckload
weights by reason of any governmental action, the rates expressed on Exhibits
A and D will be adjusted accordingly.  
For purposes of the preceding sentence, the gross vehicle weights set
forth on Exhibit A shall be the “normal” truckload weights and shall
serve as the basis for determining an increase or decrease in permitted
truckload weights.  Payments shall be
made by ACSC to Contractor on the basis of statements of weights on or before
the 23rd day of each month for all sugarbeets hauled from the 1st
to the 15th of each month and on or before the 8th day of
each month for all sugarbeets hauled between the 16th and the last
day of the preceding month.  Settlement
for each Outside Receiving Station shall be made upon the satisfactory
completion of all hauling from that Outside Receiving Station

 

12.            Fuel
Provisions.  The rates
established by Exhibits A and D are based on an estimated fuel cost of
$1.05 per gallon delivered.  The price
per gallon for fuel for each crop year will be set at a specified rate per
gallon delivered by agreement between the parties on or before August 1st
of each of the crop years covered by this Agreement.  The rates set forth on Exhibits A and D will be adjusted
based on the agreed upon fuel price for that Campaign Period.  Should the fuel price vary from that agreed
upon, the difference will be paid by, or credited to ACSC at the end of the
Campaign Period.  Contractor will
furnish ACSC with copies of all fuel invoices for the purpose of the annual
calculation.  ACSC reserves the right to
purchase and supply fuel to Contractor at Contractor’s expense if ACSC can
obtain fuel at a lower cost per gallon delivered than can Contractor.  For the purpose of the annual rate
adjustment provided for herein, the cost of fuel to Contractor is agreed to be
15% of Contractor’s total costs of operation. 
In the event of fuel allocations, Contractor shall furnish proof of the
allocation and guarantee of sufficient fuel to accomplish its work hereunder
during any such period of allocation. 
Failure to provide such proof shall be a default hereunder.

 

13.            Payment Disputes:  In the event of any disputes with respect to
the determination of any amounts due hereunder, ACSC and Contractor, together
with their representatives, shall promptly meet, confer and negotiate in good
faith with a view to resolving any and all such disputes.  If such negotiations fail to resolve any
disputes within fifteen (15) calendar days, the parties agree to submit the
settlement of such dispute to binding arbitration pursuant to the commercial
arbitration rules of the American Arbitration Association.  The arbitration shall be conducted in
Minneapolis, Minnesota, U.S.A.   Any award rendered shall be final and conclusive upon the parties.
The parties shall request and the American Arbitration Association shall (i) appoint
a single arbitrator who is familiar with the industry; (ii) direct the
arbitrator to follow substantive rules of law and the federal rules of
evidence, where and if applicable; (iii) allow the parties to conduct
discovery pursuant to the rules then in effect under the federal rules of civil
procedure (excluding confidential records that are not relevant to the issues
being arbitrated) for a period not to exceed thirty (30) days;
(iv) require any testimony to be transcribed; and (v) require any award
or decision to be accompanied by findings of fact and a statement of reasons
for the decision.  Each party shall bear
its own costs and expenses, including reasonable attorney’s fees and expert’s
fees, incurred in any dispute that is determined and/or settled by arbitration
pursuant to this Section.  Except where
clearly prevented by the area in dispute, both parties agree to continue
performing their respective obligations under this Agreement (ex. the
performance of the

 

5

 

Transportation Services by Contractor and the payment of undisputed
amounts by ACSC) while the dispute is being resolved.

 

14.            Weight
Determination: To calculate the weight to be used for purposes of the
rates set forth on Exhibits A and D for the Outside Receiving Stations,
97% of the raw weight (2000 pounds per ton) of sugarbeets delivered by growers
at that station, less the agreed upon raw weight of sugarbeets discarded by
ACSC, shall be used.  To calculate the
weight for purposes of the rates set forth on Exhibits A and D for the
Factory Receiving Stations, 91.6% of the raw weight (2,000 pounds per ton) of
sugarbeets delivered by growers to such piles, less the agreed upon raw weight
of sugarbeets discarded by ACSC shall be used. 
Raw weight shall mean the weight of purchased sugarbeets before the
deduction for tare.  The record of
weights of sugarbeets hauled under this Agreement will be kept by ACSC and
statements of weights shall be furnished by ACSC to Contractor.

 

15.            Other Responsibilities
of Contractor:

 

(a)                             Clean
Up.  Upon the completion of
Contractor’s operations at any Receiving Station, Contractor shall level the
piling site by backdragging with its loader and shall clean up the site and
scale house, hauling away all trash and garbage.

 

(b)                            Snow
Removal.  At the request of ACSC,
Contractor shall haul snow and beet debris to separate staging areas as
designated by ACSC.  Such services will
be provided to ACSC by Contractor at a rate of $40.00 per hour for a truck and
driver, and $48.00 per hour for a loader and operator, in each case to be
billed to ACSC as provided in Section 11.

 

(c)                             Sugarbeet
Disposal.  At the request of ACSC,
Contractor shall remove and dispose of any sugarbeets that it does not deliver
to a Factory for processing to areas designated by ACSC.  Such removal and disposal shall be
accomplished in accordance with the applicable state and federal laws and
environmental regulations.  Contractor’s
obligations are limited to the loading and hauling (in Contractor’s Equipment)
of such sugarbeets to sites designated by ACSC.  Contractor will unload such sugarbeets at a single site for each
load and will not be responsible for spreading sugarbeets at disposal sites.  Such removal and disposal services will be
provided to ACSC by Contractor at a rate of $40.00 per hour for a truck and
driver, and $48.00 per hour for a loader and operator, in each case to be
billed to ACSC as provided in Section 11. 
This paragraph does not apply with respect to sugarbeets left at a location
at the request of ACSC due to spoilage, excess snow, or other factors.

 

(d)                            Portable
Toilets.  Contractor shall furnish a
portable toilet at all Outside Receiving Stations while sugarbeets are being
hauled from that Station.

 

16.            Compliance With
Laws:  Contractor shall obtain
any necessary permits, licenses or certifications and shall comply with all
applicable laws, ordinances, rules and regulations, and specifically, without
limiting the generality of the foregoing, with applicable Worker’s Compensation
laws and Unemployment Compensation laws, the Federal Insurance Contributions
Act and Federal Unemployment Tax Act, federal and state withholding tax and
federal and state labor laws and other laws affecting employers and employees
with respect to all employees of Contractor and subcontractors and such
subcontractors’ employees and shall furnish evidence of such compliance to ACSC
upon request.  Contractor shall post
appropriate highway warning

 

6

 

signs at piling sites when operating and shall keep local, state,
county and township officials advised should its activities create hazardous
road conditions.  Contractor shall
comply with all Federal and State environmental laws and requirements for
proper disposal of all waste material including but not limited to tires, waste
oil (including grease rags, oil filters), tires and batteries.

 

17.            Wage Requirement:

 

(a)                             It
is understood and agreed that ACSC is subject to a collective bargaining
agreement with the Bakery, Confectionery, Tobacco Workers and Grain Millers
AFL-CIO (the “Collective Bargaining Agreement”) which provides that ACSC will
obligate third parties to pay certain minimum wages to employees moving
sugarbeets within the Factory yard. 
Contractor shall compensate its affected employees in accord with this
requirement, including wage adjustments as provided in the Collective
Bargaining Agreement.  The applicable
minimum as of the date of this Agreement is XXXXXX per hour.  The rate for Factory yard loading and
hauling expressed on Exhibit A will be adjusted based on wage increases
applied only to Contractor’s employees specifically affected by the Collective
Bargaining Agreement, but only on a straight time basis.  Contractor will provide ACSC with the information
relative to the employees affected sufficient to enable ACSC to verify the rate
adjustment.  [Portions of this section have been
omitted pursuant to a request for confidentiality under Rule 24b-2 of the
Securities Exchange Act of 1934, as amended. 
A copy of this Agreement with this section intact has been filed
separately with the Securities and Exchange Commission.]

 

(b)                            The
rates set forth on Exhibits A and D shall be subject to annual
adjustment to reflect wage increases for each of the Campaign Periods during
the Term.  For purposes of this
adjustment, wages shall be deemed to be XXXX% of the Contractor’s total rate
provided in Exhibits A and D. 
Accordingly XXXXX% of each rate bid shall be adjusted annually by the
percentage of ACSC’s average annual wage rate adjustment effective as of August
1 of the preceding year under the Collective Bargaining Agreement.  (For example, if a rate is bid at $XXXXXXper
ton and ACSC’s applicable average wage rate adjustment effective August 1,
2003, is a XXX% increase, the rate for 2004 crop year operations will be
XXXXXX.) [Portions
of this section have been omitted pursuant to a request for confidentiality
under Rule 24b-2 of the Securities Exchange Act of 1934, as amended.  A copy of this Agreement with this section
intact has been filed separately with the Securities and Exchange Commission.]

 

18.            Independent
Contractor Status:  It is
expressly understood and agreed that Contractor, in making and entering into
this Agreement and in carrying out the same, is acting and operating as an
independent contractor and is not in any sense an employee, servant, agent,
partner or joint venturer of ACSC and is responsible for directing, hiring,
paying and discharging its employees.

 

7

 

19.            Insurance and
Indemnification:

 

(a)                             Contract
must provide and maintain the following insurance coverage:

 

(1)                                  Workers
Compensation Insurance as required by statute and Employers Liability Insurance
for claims arising for bodily injury not covered by statute, in the minimum
limit required by applicable state law or $500,000 per employee (whichever is
less).

 

(2)                                  Comprehensive
General Liability Insurance with limits of not less than $1,000,000 combined
single limit and $2,000,000 general aggregate for personal injury (including
death) and property damage.  Insurance
shall not contain any endorsement or provisions which limit or restrict
coverage for contractual liability.

 

(3)                                  Automobile
Liability insurance with limits of not less than $1,000,000 combined single
limit or $1,000,000 bodily injury and $1,000,000 property damage, all per
accident and irrespective of whether vehicles are owned, hired or non-owned.

 

(4)                                  Umbrella/Excess
Liability with limits of not less than $10,000,000 per occurrence and annual
aggregate limit, but excluding Workers Compensation Insurance as provided for
above.

 

(5)                                  All
risk property coverage with respect to the Contractor’s Unloading Equipment in
an amount deemed reasonable by Contractor.

 

Contractor’s deductibles shall not exceed $250,000 per
occurrence on any of the policies of insurance.  Contractor shall provide ACSC with insurance certificates
providing evidence of proper coverage before the start of work.  Contractor must provide waivers of
subrogation from each insurer.

 

(b)                            Contractor
will indemnify, defend and hold harmless ACSC and its subsidiaries, officers,
employees, agents, successors, assigns, from and against any loss, property
loss, liability, claim, demand, suit, action, fine, penalty, cost and expense
of any nature whatsoever including but not limited to reasonable attorneys’
fees, expenses and court costs, incurred by ACSC or its subsidiaries, officers,
employees, agents, successors, assigns as a result of the negligent or
intentional acts of Contractor in connection with its performance under this
Agreement.

 

(c)                             ACSC
will indemnify, defend and hold harmless Contractor and its subsidiaries,
officers, employees, agents, successors, assigns, from and against any loss,
property loss, liability, claim, demand, suit, action, fine, penalty, cost and
expense of any nature whatsoever including but not limited to reasonable
attorneys’ fees, expenses and court costs, incurred by Contractor or its
subsidiaries, officers, employees, agents, successors, assigns as a result of
the negligent or intentional acts of ACSC in connection with its performance
under this Agreement.

 

8

 

20.            No Guarantee by
ACSC:  ACSC will exercise
diligence to see that there is an ample supply of sugarbeets to permit
efficient operation hereunder.  However,
it is expressly understood and agreed that ACSC shall not be liable for a
reduction in volume of its operations or those of Contractor caused by strikes,
lock outs, shortage of materials, a reduction in the supply of sugarbeets
resulting from decisions by growers to deliver from farm fields to Factory
sites or from adverse weather conditions, or due to the physical condition of
sugarbeets making it impossible to store them, or caused by a reduction in the
Factory slice or caused by any other matter, any of which may prevent, in whole
or in part, any operations hereunder or maximum or optimum operations.

 

21.            Sale of Sugarbeets
to Third Parties:  ACSC may at
any time sell its sugarbeets to third parties. 
In the event of such a sale Contractor shall be compensated for its loss
of revenue resulting from the sale of sugarbeets.  Compensation shall be determined by multiplying the number of
tons of sugarbeets that would have been hauled but for the sale, by
Contractor’s rate which would have applied for transporting those sugarbeets to
the nearest of ACSC’s Factories.  The
product of that calculation shall be multiplied by .30 to determine the amount
of the payment to be made by ACSC to the Contractor.  In the event ACSC discards sugarbeets, Contractor shall not be
entitled to compensation for loss of revenue from discarded sugarbeets.

 

22.            Liquidated Damages:

 

(a)                             Premature
Use of Deep Freeze Sugarbeets.  ACSC
and Contractor intend that sugarbeets stored in ventilated outside piles and in
buildings (“Deep Freeze Sugarbeets”) not be processed until non-deep freeze
sugarbeets have been processed.  In the
event deep freeze sugarbeets are processed because Contractor fails to deliver
sufficient quantities of non-deep freeze sugarbeets liquidated damages may
apply.  The amount of the liquidated
damages is $3.00 per ton of Deep Freeze Sugarbeets, applied to all tons of Deep
Freeze Sugarbeets transported prior to completion of transporting non- Deep Freeze
Sugarbeets.  In the event of severe
weather conditions, ACSC may, in its discretion, excuse the obligation to pay
damages under this paragraph.  Deep
Freeze Sugarbeets transported by Contractor at the request of ACSC for reasons
unrelated to Contractor’s failure to deliver sufficient quantities of non-Deep
Freeze Sugarbeets are not subject to the liquidated damage provisions of this
paragraph.

 

(b)                            Supply
of Sugarbeets.  Should Contractor
fail to furnish a steady supply of sugarbeets at all times to permit optimum
full-scale Factory operations as required hereunder, Contractor will pay to
ACSC, as liquidated damages and not a penalty, the sum of Five Thousand Dollars
($5,000.00) per hour of Factory down time, pro-rated on 15 minute increments,
for each Factory so affected.  The
parties agree that in the event Contractor fails to supply a steady supply of
sugarbeets, actual damages to ACSC would be difficult or impossible to measure,
and further that such hourly sum represents a reasonable estimate of ACSC’s
likely actual damages in such event.  In
the event of severe weather conditions, ACSC may, in its discretion, excuse the
first fifteen minutes of down time.

 

23.            Change of Receiving
Stations or Closing of Factories: 
ACSC reserves the right, in its sole discretion, to close and abandon
operations or reduce operations at any Factory and/or Outside Receiving Station
and to move and/or establish new, Outside Receiving Stations.  ACSC shall not be liable to Contractor for a
reduction in Contractor’s revenue by the exercise of any of the rights so
reserved to ACSC.  In the event the
Company closes an Outside Receiving Station, Contractor shall not be entitled
to compensation or damages for the closing of the Stations.  In the event the Company opens a new Outside
Receiving Station, Contractor and

 

9

 

Company, will negotiate the freight rate or rates from that Station to
the appropriate Factory or Factories and Exhibit A will be revised
accordingly.

 

24.            Termination:  This Agreement shall terminate at the
end of the Term or may be terminated earlier by written notice as follows:

 

(a)                             By
the nonbreaching party if the other party fails to perform any obligation
imposed on it by this Agreement and fails to cure such breach within ten (10)
days following receipt of written notice of the existence of such a breach; or

 

(b)                            Immediately
by either party in the event the other party is declared insolvent or bankrupt
or makes an assignment or other arrangement for benefit of creditors.

 

Upon the completion of
any notice and cure period required under this Section, this Agreement shall be
terminated (except for any on-going obligation arising hereunder) and such date
shall be deemed the “Termination Date.”

 

25.            Factory Shops:  ACSC shall provide Contractor with use
of shops at each Factory for purposes of Equipment service and related
activities at a cost of $50,000 per year to be paid by Contractor.  The shops shall be provided pursuant to the
terms of a lease agreement to be mutually agreed upon by the parties.

 

26.            Miscellaneous
Provisions:

 

(a)                             All
notices, requests and demands given to or made upon the parties hereto shall be
in writing and be delivered or mailed by United States Certified Mail Postage
Prepaid, return receipt requested, to the following addresses:

 

	
  If to ACSC:

  	
   

  	
  American Crystal Sugar
  Company

  
	
   

  	
   

  	
  101 North Third Street

  
	
   

  	
   

  	
  Moorhead, Minnesota
  56560

  
	
   

  	
   

  	
  Attention: Ag
  Operations Manager

  
	
   

  	
   

  	
   

  
	
  With a Copy to:

  	
   

  	
  Oppenheimer, Wolff
  & Donnelly, LLP

  
	
   

  	
   

  	
  Plaza VII

  
	
   

  	
   

  	
  45 South Seventh
  Street, Suite 3300

  
	
   

  	
   

  	
  Minneapolis, Minnesota
  55402

  
	
   

  	
   

  	
  Attention:  Daniel C. Mott

  
	
   

  	
   

  	
   

  
	
  If to Contractor:

  	
   

  	
  Transystems LLC

  
	
   

  	
   

  	
  511 Central Avenue
  West, Suite 2

  
	
   

  	
   

  	
  Great Falls, Montana
  59404-2848

  
	
   

  	
   

  	
  Attention: President

  

 

Either party may, by notice hereunder to the other
party, designate a change of address.

 

(b)                            This
Agreement shall be binding upon and insure to the benefit of the parties hereto
and their respective successors and assigns, provided that this Agreement shall
not be assigned by Contractor without the prior written consent of ACSC.

 

10

 

(c)                             This
Agreement shall have been deemed to be made under the laws of the State of
Minnesota and for all purposes shall be construed in accordance with and
governed by the laws of the State of Minnesota.  Any litigation arising under this Agreement shall be venued in
the Courts of the State of Minnesota.

 

(d)                            No
failure on the part of either party to exercise, and no delay in exercising,
any right or remedy hereunder shall operate as a waiver thereof nor shall any
single or partial exercise of any right or remedy hereunder preclude any other
or further exercise thereof or the exercise of any other right or remedy
granted hereby or by any related document or by law.

 

(e)                             This
Agreement constitutes the sole agreement between the parties with respect to
the subject hereof, and there are no agreements or understandings with respect
to such matters other than as set forth herein and therein.

 

(f)                               Each
party warrants that it has full power and authority to enter into this
Agreement and the entering into this Agreement will not constitute a default
with respect to any other agreement by which it is bound or to which it is
subject.

 

(g)                            Time
is of the essence with regard to the performance of this Agreement.

 

(h)                            This
Agreement may not be assigned by either party (either directly or by operation
of law through merger, consolidation, etc.) without the prior written consent
of the other party.  This Agreement
shall be binding on the successor and permitted assigns of the parties.

 

(i)                                ACSC
and Contractor agree to enter into an agreement on substantially the same term
as this Agreement with respect to the transport of sugarbeets at the Sidney,
Montana sugarbeet factory that is owned by Sidney Sugars Incorporated, a
subsidiary of ACSC.

 

(j)                                Each
party shall designate an individual representative to act of behalf of such
party during the Term of this Agreement (the “Designated Representative”).  The Designated Representative shall have the
authority to represent the party in all matters related to the administration
of this Agreement.  The initial
Designated Representatives shall be as follows:

 

Contractor:                          Dan Rice

ACSC:                                                  Neil
Juhnke

 

Either party may change their Designated
Representative by providing written notice of the change to the other party.

 

11

 

 

IN WITNESS WHEREOF, the parties have
executed this Agreement in their corporate names by proper corporate officers
and affix their corporate seals as to the day and year above stated.

 

	
   

  	
  AMERICAN CRYSTAL SUGAR COMPANY

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ David Berg

  	
   

  
	
   

  	
  Its: 

  	
  Vice President
  Agriculture

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  TRANSYSTEMS LLC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Scott Lind

  	
   

  
	
   

  	
  Its: 

  	
  President

  	
   

  

 

12

 

	
  FALL RATES

  	
  EXHIBIT A

  

 

RFQ FORM

FREIGHT FROM
RECEIVING STATION TO FACTORY

 

American Crystal
Sugar Company

As a Rate Per Ton
for Delivery To (fill in white area only):

 

	
  Station

  	
   

  	
  Moorhead

  	
   

  	
  Hillsboro

  	
   

  	
  Crookston

  	
   

  	
  E.G.F.

  	
   

  	
  Drayton

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

[Portions
of this section have been omitted pursuant to a request for confidentiality
under Rule 24b-2 of the Securities Exchange Act of 1934, as amended.  A copy of this Agreement with this section
intact has been filed separately with the Securities and Exchange Commission.]

 

13

 

RFQ FORM

FREIGHT FROM
RECEIVING STATION TO FACTORY

 

American Crystal
Sugar Company

 

Rate per ton mile for
hauls other than those specified will be negotiated.

 

	
  Load and haul factory
  yard per ton.

  	
   

  	
  XXXXXX

  
	
  Load outside stations
  per ton

  	
   

  	
  XXXXXX

  
	
  If an excess of twelve
  (12) loaders used simultaneously at request of ACS, the additional rate per
  ton is

  	
   

  	
  XXXXXX

  
	
  Loader moves

  	
   

  	
  XXXXXX

  
	
  Hourly loader rate

  	
   

  	
  XXXXXX

  
	
  Percent of Fuel to
  Total Cost

  	
   

  	
  XXXXXX

  
	
  Percent of Labor to
  Total Cost

  	
   

  	
  XXXXXX

  
	
  Alternate
  pricing for al ACSC sites:

  	
   

  	
   

  
	
  Teardown deep freeze
  and remove vent tubes

  	
   

  	
  XXXXXX

  
	
  Haul and stack deep
  freeze vent tubes

  	
   

  	
  XXXXXX

  

 

[Portions
of this section have been omitted pursuant to a request for confidentiality
under Rule 24b-2 of the Securities Exchange Act of 1934, as amended.  A copy of this Agreement with this section
intact has been filed separately with the Securities and Exchange Commission.]

 

14

 

	
  FALL GVW’S

  	
   

  

 

RFQ FORM

FREIGHT FROM
RECEIVING STATION TO FACTORY

 

American Crystal
Sugar Company

 

	
  Station

  	
   

  	
  Moorhead

  	
   

  	
  Hillsboro

  	
   

  	
  Crookston

  	
   

  	
  E.G.F.

  	
   

  	
  Drayton

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

Note:  The first figure in the cells indicates the
number of axles and the second series of numbers is the maximum GVW for that
number of axles.  This information is
for the exclusive use of ACS and Transystems.

 

[Portions
of this section have been omitted pursuant to a request for confidentiality
under Rule 24b-2 of the Securities Exchange Act of 1934, as amended.  A copy of this Agreement with this section
intact has been filed separately with the Securities and Exchange Commission.]

 

15

 

	
  WINTER RATES

  	
  EXHIBIT A

  

 

RFQ FORM

FREIGHT FROM
RECEIVING STATION TO FACTORY

 

American Crystal
Sugar Company

As a Rate Per Ton
for Delivery To (fill in white area only):

 

	
  Station

  	
   

  	
  Moorhead

  	
   

  	
  Hillsboro

  	
   

  	
  Crookston

  	
   

  	
  E.G.F.

  	
   

  	
  Drayton

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

[Portions
of this section have been omitted pursuant to a request for confidentiality
under Rule 24b-2 of the Securities Exchange Act of 1934, as amended.  A copy of this Agreement with this section
intact has been filed separately with the Securities and Exchange Commission.]

 

16

 

	
  WINTER GVW’S

  	
   

  

 

RFQ FORM

FREIGHT FROM
RECEIVING STATION TO FACTORY

 

American Crystal
Sugar Company

 

	
  Station

  	
   

  	
  Moorhead

  	
   

  	
  Hillsboro

  	
   

  	
  Crookston

  	
   

  	
  E.G.F.

  	
   

  	
  Drayton

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

Note:  The first figure in the cells indicates the
number of axles and the second series of numbers is the maximum GVW for that
number of axles.  This information is
for the exclusive use of ACS and Transystems.

 

[Portions
of this section have been omitted pursuant to a request for confidentiality
under Rule 24b-2 of the Securities Exchange Act of 1934, as amended.  A copy of this Agreement with this section
intact has been filed separately with the Securities and Exchange Commission.]

 

17

 

	
  FALL RATES

  	
  SUPPLEMENT #1

  

 

RATES FOR FIVE
AXLE – DRAYTON & HILLSBORO

 

American Crystal
Sugar Company

As a Supplemental
Rate Per Ton for Delivery To:

 

	
  Station

  	
   

  	
  Moorhead

  	
   

  	
  Hillsboro

  	
   

  	
  Crookston

  	
   

  	
  E.G.F.

  	
   

  	
  Drayton

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

[Portions
of this section have been omitted pursuant to a request for confidentiality
under Rule 24b-2 of the Securities Exchange Act of 1934, as amended.  A copy of this Agreement with this section
intact has been filed separately with the Securities and Exchange Commission.]

 

18

 

	
  FALL GVW’S

  	
   

  

 

RATES FOR FIVE
AXLE – DRAYTON & HILLSBORO

 

American Crystal
Sugar Company

As a Supplemental Rate Per Ton for Delivery To:

 

	
  Station

  	
   

  	
  Moorhead

  	
   

  	
  Hillsboro

  	
   

  	
  Crookston

  	
   

  	
  E.G.F.

  	
   

  	
  Drayton

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

Note:  The first figure in the cells indicates the
number of axles and the second series of numbers is the maximum GVW for that
number of axles.  This information is
for the exclusive use of ACS and Transystems.

 

[Portions
of this section have been omitted pursuant to a request for confidentiality
under Rule 24b-2 of the Securities Exchange Act of 1934, as amended.  A copy of this Agreement with this section
intact has been filed separately with the Securities and Exchange Commission.]

 

19

 

	
  WINTER RATES

  	
  SUPPLEMENT #1

  

 

RATES FOR FIVE
AXLE – DRAYTON & HILLSBORO

 

American Crystal
Sugar Company

As a Supplemental
Rate Per Ton for Delivery To:

 

	
  Station

  	
   

  	
  Moorhead

  	
   

  	
  Hillsboro

  	
   

  	
  Crookston

  	
   

  	
  E.G.F.

  	
   

  	
  Drayton

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

[Portions
of this section have been omitted pursuant to a request for confidentiality under
Rule 24b-2 of the Securities Exchange Act of 1934, as amended.  A copy of this Agreement with this section
intact has been filed separately with the Securities and Exchange Commission.]

 

20

 

	
  WINTER GVW’S

  	
   

  

 

RATES FOR FIVE
AXLE – DRAYTON & HILLSBORO

 

American Crystal
Sugar Company

As a Supplemental Rate Per Ton for Delivery To:

 

	
  Station

  	
   

  	
  Moorhead

  	
   

  	
  Hillsboro

  	
   

  	
  Crookston

  	
   

  	
  E.G.F.

  	
   

  	
  Drayton

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

Note:  The first figure in the cells indicates the
number of axles and the second series of numbers is the maximum GVW for that
number of axles.  This information is
for the exclusive use of ACS and Transystems.

 

[Portions
of this section have been omitted pursuant to a request for confidentiality
under Rule 24b-2 of the Securities Exchange Act of 1934, as amended.  A copy of this Agreement with this section
intact has been filed separately with the Securities and Exchange Commission.]

 

21

 

EXHIBIT B

 

DEEP FREEZE STORAGE CAPACITIES - NET TONS

 

	
  Factory and Out-station

  	
   

  	
  Sheds

  	
   

  	
  Open Storage

  	
   

  	
  Total

  	
   

  
	
  Moorhead Yard

  	
   

  	
  100,000

  	
   

  	
  160,000

  	
   

  	
  260,000

  	
   

  
	
  Felton

  	
   

  	
   

  	
   

  	
  220,000

  	
   

  	
  220,000

  	
   

  
	
  Amenia

  	
   

  	
   

  	
   

  	
  75,000

  	
   

  	
  75,000

  	
   

  
	
  Hillsboro Yard

  	
   

  	
  125,000

  	
   

  	
  130,000

  	
   

  	
  255,000

  	
   

  
	
  Reynolds

  	
   

  	
   

  	
   

  	
  330,000

  	
   

  	
  330,000

  	
   

  
	
  Crookston Yard

  	
   

  	
  100,000

  	
   

  	
  285,000

  	
   

  	
  385,000

  	
   

  
	
  Warren

  	
   

  	
   

  	
   

  	
  100,000

  	
   

  	
  100,000

  	
   

  
	
  EGF Yard

  	
   

  	
  175,000

  	
   

  	
  261,000

  	
   

  	
  436,000

  	
   

  
	
  Ardoch

  	
   

  	
   

  	
   

  	
  167,000

  	
   

  	
  167,000

  	
   

  
	
  Alvarado

  	
   

  	
   

  	
   

  	
  142,000

  	
   

  	
  142,000

  	
   

  
	
  Drayton Yard

  	
   

  	
  175,000

  	
   

  	
  140,000

  	
   

  	
  315,000

  	
   

  
	
  McArthur

  	
   

  	
   

  	
   

  	
  91,000

  	
   

  	
  91,000

  	
   

  
	
  Grafton

  	
   

  	
   

  	
   

  	
  91,000

  	
   

  	
  91,000

  	
   

  
	
  RRV Total

  	
   

  	
  675,000

  	
   

  	
  2,192,000

  	
   

  	
  2,867,000

  	
   

  

 

22

 

EXHIBIT C

 

EQUIPMENT PROPOSED

 

	
  Transportation Equipment

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  A.

  	
   

  	
  Tractors

  	
   

  	
  96

  	
   

  	
  2004 Freightliner
  “Columbia” model.  Equipped with
  Mercedes Benz 12 liter 350 hp engines.

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  B

  	
   

  	
  Trailers

  	
   

  	
  96

  	
   

  	
  Semi trailers.
  Combination of current and new East all-aluminum-flat decks.  The cages are Transystems’ proprietary
  design.

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  C.

  	
   

  	
  Full (pup) Trailers

  	
   

  	
  30

  	
   

  	
  New East
  all-aluminum-flat decks.  The cages
  are Transystems’ proprietary design.

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Loading, Tear Down and Supplemental Unloading Equipment

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  A.

  	
   

  	
  Wheel Loaders

  	
   

  	
  17

  	
   

  	
  Combination of current
  and new Komatsu WA-450 and WA-500 wheel loaders with beet buckets.  (17 units total)

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  B.

  	
   

  	
  Backhoes

  	
   

  	
   

  	
   

  	
  Combination of Komatsu
  PC300LC (primary tool) and PC220LC as standby tools.  Each factory shall have a primary tool and
  a standby tool.

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  C.

  	
   

  	
  Contractor’s Unloading Equipment

  	
   

  	
   

  	
   

  	
  Three 85’ Transystems
  proprietary design tippers.  Three 260
  cubic yard and two 400 cubic yard surge hoppers.  These will provide supplemental unloading capacity and will
  feed existing ACSC wet hoppers.  ACSC
  would provide access to its two existing portable skips.

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Transystems’ proposal
  includes additional unloading equipment at each factory.

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  The Hillsboro, Drayton,
  and East Grand Forks factories each would receive an additional portable
  tipper and unloading conveyors.  The
  Hillsboro and Drayton tippers would be designed to accommodate semi-pup side
  dump units.

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  The existing ACSC
  portable skips would be used at Crookston and Moorhead.

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  All locations would
  receive additional hoppers that would allow the temporary storage of 250 to
  500 tons of beets.

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Loader Fuel Trailers

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  A.

  	
   

  	
  Loader Fuel Trailers

  	
   

  	
  15

  	
   

  	
  (250 gallons US) with
  portable toilets

  

 

23

 

	
  FALL RATES

  	
  EXHIBIT D

  

 

FIVE & SEVEN AXLE
DRAYTON RATES

 

American Crystal
Sugar Company

As a Rate Per Ton
for Delivery To (fill in white area only):

 

	
  Station

  	
   

  	
  Moorhead

  	
   

  	
  Hillsboro

  	
   

  	
  Crookston

  	
   

  	
  E.G.F.

  	
   

  	
  Drayton

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

Note:  The first figure in the cells indicates the
number of axles and the second series of numbers is the maximum GVW for that
number of axles.  This information is
for the exclusive use of ACS and Transystems

 

[Portions of this section have been omitted pursuant to a
request for confidentiality under Rule 24b-2 of the Securities Exchange Act of
1934, as amended.  A copy of this
Agreement with this section intact has been filed separately with the
Securities and Exchange Commission.]

 

24

 

	
  WINTER  RATES

  	
   

  

 

FIVE & SEVEN
AXLE DRAYTON RATES

 

American Crystal
Sugar Company

As a Rate Per Ton for Delivery To (fill in white area only):

 

	
  Station

  	
   

  	
  Moorhead

  	
   

  	
  Hillsboro

  	
   

  	
  Crookston

  	
   

  	
  E.G.F.

  	
   

  	
  Drayton

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

[Portions of this section have been omitted pursuant to a
request for confidentiality under Rule 24b-2 of the Securities Exchange Act of
1934, as amended.  A copy of this
Agreement with this section intact has been filed separately with the
Securities and Exchange Commission.]

 

25

 

	
  WINTER GVW’S

  	
   

  

 

FIVE & SEVEN
AXLE DRAYTON RATES

 

American Crystal
Sugar Company

As a Rate Per Ton
for Delivery To (fill in white area only):

 

	
  Station

  	
   

  	
  Moorhead

  	
   

  	
  Hillsboro

  	
   

  	
  Crookston

  	
   

  	
  E.G.F.

  	
   

  	
  Drayton

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

Note:  The first figure in the cells indicates the
number of axles and the second series of numbers is the maximum GVW for that
number of axles.  This information is
for the exclusive use of ACS and Transystems

 

[Portions of this section have been omitted pursuant to a
request for confidentiality under Rule 24b-2 of the Securities Exchange Act of
1934, as amended.  A copy of this
Agreement with this section intact has been filed separately with the Securities
and Exchange Commission.]

 

26Exhibit 10.32

 

[Portions of this Exhibit have been omitted pursuant to a
request for confidentiality under Rule 24b-2 of the Securities Exchange Act of
1934, as amended.  A copy of this
Exhibit with all sections intact has been filed separately with the Securities
and Exchange Commission.]

 

 

FORM OF 2003 SUGARBEET DELIVERY
AGREEMENT

 

	
  Federal ID No.

  	
   

  	
  Agreement No.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Date:                                                          ,
  2003

  

 

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 2003-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, 2003, 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.

 

2.             Agricultural
Practices.  The
sugarbeets shall be planted not later than June 1, 2003 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, 2003 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.

 

*
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.

 

 

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
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 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, 2003 and no later than October
1, 2003.  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, 2003.  If weather conditions prevent the harvest of
all sugarbeets prior to December 1, 2003 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.  After consultation
with the Association, 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.  Any requests

 

2

 

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.

 

(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.

 

3

 

(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 per CWT

  	
   

  	
  Adjusted
  Average Sugar Content (%) of Sugarbeets

  	
   

  
	
   

  	
  19.0%

  	
   

  	
  18.0%

  	
   

  	
  17.0%

  	
   

  	
  16.0%

  	
   

  	
  15.0%

  	
   

  	
  14.0%

  	
   

  
	
  XXXX

  	
   

  	
  XXXX

  	
   

  	
  XXXX

  	
   

  	
  XXXX

  	
   

  	
  XXXX

  	
   

  	
  XXXX

  	
   

  	
  XXXX

  	
   

  
	
  XXXX

  	
   

  	
  XXXX

  	
   

  	
  XXXX

  	
   

  	
  XXXX

  	
   

  	
  XXXX

  	
   

  	
  XXXX

  	
   

  	
  XXXX

  	
   

  
	
  XXXX

  	
   

  	
  XXXX

  	
   

  	
  XXXX

  	
   

  	
  XXXX

  	
   

  	
  XXXX

  	
   

  	
  XXXX

  	
   

  	
  XXXX

  	
   

  
	
  XXXX

  	
   

  	
  XXXX

  	
   

  	
  XXXX

  	
   

  	
  XXXX

  	
   

  	
  XXXX

  	
   

  	
  XXXX

  	
   

  	
  XXXX

  	
   

  
	
  XXXX

  	
   

  	
  XXXX

  	
   

  	
  XXXX

  	
   

  	
  XXXX

  	
   

  	
  XXXX

  	
   

  	
  XXXX

  	
   

  	
  XXXX

  	
   

  
	
  XXXX

  	
   

  	
  XXXX

  	
   

  	
  XXXX

  	
   

  	
  XXXX

  	
   

  	
  XXXX

  	
   

  	
  XXXX

  	
   

  	
  XXXX

  	
   

  
	
  XXXX

  	
   

  	
  XXXX

  	
   

  	
  XXXX

  	
   

  	
  XXXX

  	
   

  	
  XXXX

  	
   

  	
  XXXX

  	
   

  	
  XXXX

  	
   

  
	
  XXXX

  	
   

  	
  XXXX

  	
   

  	
  XXXX

  	
   

  	
  XXXX

  	
   

  	
  XXXX

  	
   

  	
  XXXX

  	
   

  	
  XXXX

  	
   

  
	
  XXXX

  	
   

  	
  XXXX

  	
   

  	
  XXXX

  	
   

  	
  XXXX

  	
   

  	
  XXXX

  	
   

  	
  XXXX

  	
   

  	
  XXXX

  	
   

  
	
  XXXX

  	
   

  	
  XXXX

  	
   

  	
  XXXX

  	
   

  	
  XXXX

  	
   

  	
  XXXX

  	
   

  	
  XXXX

  	
   

  	
  XXXX

  	
   

  
	
  XXXX

  	
   

  	
  XXXX

  	
   

  	
  XXXX

  	
   

  	
  XXXX

  	
   

  	
  XXXX

  	
   

  	
  XXXX

  	
   

  	
  XXXX

  	
   

  

 

[Portions
of this section have been omitted pursuant to a request for confidentiality
under Rule 24b-2 of the Securities Exchange Act of 1934, as amended.  A copy of this Agreement with this section
intact has been filed separately with the Securities and Exchange Commission.]

 

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 2003 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

 

4

 

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; 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 the 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 50% of the Adjusted Freight
Rate.  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 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

  	
  =

  	
  Factory Freight Rate
  per Screened Ton

  
	
  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 (determined as set forth above) for the receiving station to which Grower
was contracted.

 

5

 

(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:

 

	
  Pleasant View

  	
   

  	
  Area I (Glendive)

  Area II (Cracker Box exit to Yellowstone River

  Area III (Fallon to Yellowstone River)

  Area IV (Fallon Flats)

  	
   

  	
  $ XXX per ton

  $ XXX per ton

  $ XXX per ton

  $ XXX per ton

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Powder River

  	
   

  	
  Area I (Kinsey and
  Tongue River)

  	
   

  	
  $ XXX 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)

  	
   

  	
  $ XXX  per ton

  $ XXX per ton

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Culbertson

  	
   

  	
  Area I (East of
  Brockton, Montana)

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

  	
   

  	
  $ XXX

  $ XXX per ton

  

 

[Portions of this section have been omitted pursuant to a
request for confidentiality under Rule 24b-2 of the Securities Exchange Act of
1934, as amended.  A copy of this
Agreement with this section intact has been filed separately with the
Securities and Exchange Commission.]

 

(vi)          In the event SSI enters into Early
Harvest Amendments with any of its growers that result in SSI making early
harvest payments to such growers, the total cumulative amount of such early
harvest payments shall be proportionately deducted (on per ton basis) from the
payment to be made to all growers, including Grower.

 

The payment adjustments
provided in this paragraph 8(g) shall be applied to the first payment of
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.

 

6

 

9.             Payment
Schedule.  SSI shall make
an initial payment (i) on November 20, 2003 for sugarbeets delivered by Grower
prior to November 5, 2003 and (ii) on the 15th day of the month following the
month of delivery for sugarbeets delivered by Grower on or after November 5,
2003.  The initial payment will be
reduced by the Grower freight participation provided in paragraph 8(c) 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

  	
   

  	
  Final
  Payment

  	
   

  
	
  % of SSI’s 

  estimated 

  net return

  	
   

  	
  Date

  	
   

  	
  % of SSI’s 

  estimated 

  new return

  	
   

  	
  Date

  	
   

  	
  % of actual 

  net return

  	
   

  	
  Date

  	
   

  
	
  XXX%

  	
   

  	
  As provided above

  	
   

  	
  XXX%*

  	
   

  	
  April 2, 2004

  	
   

  	
  XXX%*

  	
   

  	
  October 31, 2004

  	
   

  

 

*Taking credit for prior payments

 

[Portions of this section have been omitted pursuant to a
request for confidentiality under Rule 24b-2 of the Securities Exchange Act of
1934, as amended.  A copy of this
Agreement with this section intact has been filed separately with the
Securities and Exchange Commission.]

 

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, 2003 not to make such deduction) the Grower’s dues and assessments
to the Montana-Dakota Beet Growers Association (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, 2003.  Grower hereby acknowledges that said
deduction may occur.

 

7

 

(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

 

8

 

(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.

 

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:

  	
   

  
	
  P.O. Box 1168

  	
   

  	
   

  
	
  Sidney, Montana  59270

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
								

 

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