Document:

Exhibit
10.1

OMTOOL,
LTD.

Personal and Confidential

Via Hand Delivery

Karen Cummings

Omtool, Ltd.

6 Riverside Drive

Andover, MA  01810

Re:  Change of Control Severance Eligibility

Dear
Karen:

In connection with your “at-will”
employment with Omtool, Ltd. (“Omtool” or the “Company”), Omtool agrees to
provide you with eligibility for the severance benefits set forth in this
letter agreement (the “Agreement”) if your employment is terminated under the
circumstances described below:

1.             At-Will
Employment.  This
Agreement is not a contract to employ you for a definite time period, and is
not intended to be and does not constitute a contract or part of a contractual
agreement for continued employment, either express or implied, between the
Company and you, it being acknowledged that your employment is “at will” and
that either you or Omtool may terminate the employment relationship at any
time, for any or no reason, with or without “Cause” (as defined herein) and
with or without prior notice.

2.             Notice of
Termination and other Matters. 
Any termination of your employment, whether by you or Omtool, will be
communicated by written notice (“Notice of Termination”) to the other
party.  All notices provided for in this
Agreement will be in writing and will be effective when personally delivered
(e.g., hand delivery or via electronic mail, where applicable) or mailed by
U.S. mail, postage prepaid, addressed to Omtool, Ltd., 6 Riverside Drive,
Andover, MA 01810, and to you at the address shown above or to such other
address as either Omtool or you may have furnished to the other in writing.

3.             Severance Payments and Benefits Upon a Qualified
Termination.

(a)           Omtool will provide you with the
severance payments listed below only in the event of a Qualified Termination
and provided that you execute a separation agreement and general release in a
form acceptable to the Company, except that the release will not effect your
rights to indemnification, any rights under applicable directors and officers
liability insurance, or vested benefits (if any), and provided that you
continue to adhere to any post-termination obligations including, but not
limited to, any non-competition, non-disclosure and non-solicitation
covenants.  A “Qualified Termination”
means your employment is terminated by the Company without “Cause” or by you
for “Good Reason,” in either case only within the first twelve months after a
Change of Control of the Company.  A
termination of your employment will not constitute

a “Qualified Termination”
if your employment is terminated at any time because (i) you die or become
Disabled, (ii) Omtool terminates you for “Cause,” (iii) you resign or retire
without “Good Reason”, or (iv) the Company files for bankruptcy.  In addition, a termination of your employment
will not constitute a “Qualified Termination” if you resign with “Good
Reason” or you are terminated without “Cause” before a Change of
Control.

(b)           If a Qualified Termination occurs,
you will be eligible to receive the following severance pay and benefits:

(i)            Severance Pay.  Severance will be paid, in equal monthly
installments at your monthly base salary rate in effect immediately prior to
the Qualified Termination, for twelve months from the date of the Qualified
Termination.  The first severance payment
will be made upon the first regularly scheduled Company payday on or following
your execution of the release agreement referenced above, in accordance with
the Company’s normal payroll practices as established or modified from time to
time, and will be subject to all federal, state and/or local payroll and
withholding taxes.

(ii)           Payment of COBRA Premiums.  If you are eligible for and elect to continue
health and dental continuation coverage in accordance with the Consolidated
Omnibus Budget Reconciliation Act of 1985 (“COBRA”), the Company will pay your
COBRA premium (equal to the amount it paid during your employment) until the
earlier of (x) 12 months from the date of the Qualified Termination, or (y) the
date on which you become ineligible to receive COBRA coverage.  During the period in which the Company is
providing this benefit, you will be responsible for paying the portion of the
premiums required for active employees, which will be automatically deducted
from the severance payments referenced in Section 3(b)(i).  Thereafter, you will be responsible for all
COBRA payments.

(c)           You will not be entitled to any of
the severance payments and/or benefits set forth above in Sections 3(b)(i)-(ii)
if your employment termination from Omtool is not a Qualified Termination.  If your employment termination is not a
Qualified Termination, your employment and this Agreement will automatically
terminate and the Company will pay you (or in the case of death, your
designated beneficiary or, if no beneficiary has been designated by you, your
estate) your base salary earned but unpaid and vacation pay accrued but unused
as of the termination date, as well as any bonus and/or commission payment, to
the extent such payment is earned and due in accordance with any such bonus
and/or commission plan.

(d)           If Omtool determines that you have
materially breached the terms of any non-competition or confidentiality
provision contained in any employment, consulting, advisory, non-disclosure,
non-competition or other similar agreement between you and Omtool, then you
agree that Omtool, regardless of the manner of your employment termination, can
refuse to pay and/or cease paying and/or performing all severance-related
obligations under this Section 3 to the extent permitted by applicable law.  The cessation of these severance payments and
benefits shall be in addition to, and not as an alternative to, any other
remedies at law or in equity available to the Company, including the right to
seek an injunction, which you shall not oppose.

4.             Definitions.  For the purposes of this Agreement, the terms
listed below are defined as follows:

(a)           Disabled.  You are “Disabled” for the purposes of this
Agreement if you have been absent from the full-time performance of your duties
with Omtool for 180 days, whether or not consecutively, within a any
consecutive 12-month period, because of incapacity due to physical or mental
impairment that substantially limits a major life activity, and you fail to
resume performance of your essential job duties, with or without reasonable
accommodation (provided that any such accommodation does not cause the Company
an undue hardship).

(b)           Cause.  “Cause,” which shall be determined by the
Company’s Board of Directors (the “Board”), shall mean: (i) your commission of
any act of gross negligence, dishonesty, insubordination or breach of fiduciary
duty which materially adversely affects the Company or its employees, (iv) your
material breach of any term of this Agreement or any other agreement with
Omtool, (v) your conviction of or plea of nolo contendere
to (A) any felony or (B) any misdemeanor involving fraud, deceit, moral
turpitude or embezzlement, or (vi) your disregard of or failure to follow the
Company’s rules or policies in any material respect, or your commission of any
other action that may cause material injuries to the Company, including your
misappropriation of any money or other assets or property (tangible or
intangible) of the Company.

(c)           Change of Control.  A “Change of Control” shall mean the
occurrence of one of the following events during the period in which you are
eligible to receive the severance payments and other benefits listed in Section
3: (i) any transaction in which the Company is to be consolidated with or
acquired by another entity in a merger, tender offer or other reorganization in
which the holders of the outstanding voting stock of the Company immediately
preceding the consummation of such event, shall, immediately following such
event, hold, as a group, less than a majority of the voting securities of the
surviving or successor entity, or (ii)  the sale of all or substantially
all of the Company’s assets. 
Notwithstanding the foregoing, the Board of Directors of the Company
may, prior to the closing of any transaction in which the Company is to be
consolidated with or acquired by another entity in a merger or other
reorganization, determine that such transaction constitutes a “Change of
Control” for the purposes of this Agreement.

(d)           Good Reason.  A termination by you for “Good Reason” will
occur whenever any of the following circumstances have taken place: (i) your
position, duties and/or responsibilities are significantly and materially
diminished; (ii) your base salary is reduced, other than such reduction that is
part of a general reduction or other concessionary arrangement affecting all
executive corporate officers of Omtool and its successors; or (iii) Omtool or
any person in control of Omtool requires you to perform your duties principally
in a new location outside a radius of 30 miles from your business location at
the time of the Change of Control.

5.             Assignment.  Omtool may assign this Agreement, which will
inure to the benefit of and be enforceable by Omtool’s successors and
assigns.  You may not assign this
Agreement.  Notwithstanding the forgoing,
this Agreement will inure to and be binding upon the Company’s successors.  The Company will require any successor who
effects an Acquisition to agree in writing to assume this Agreement.

6.             Confidentiality.  The terms and conditions of this Agreement
are strictly confidential.  You shall not
discuss or reveal any information concerning this letter agreement to any past
or present Omtool employee or any third person or entity other than your
counsel and members of your immediate family.

7.             Miscellaneous.

(a)           In the event of any dispute, this
Agreement will be construed as a whole, will be interpreted in accordance with
its fair meaning, and will not be construed strictly for or against either you
or the Company.  If one or more of the
provisions contained in this Agreement shall for any reason be held to be
unenforceable at law, such provision or provisions shall be construed by the
appropriate judicial body by limiting or reducing it or them, so as to be
enforceable to the maximum extent compatible with (i) the applicable law as it
shall then appear and (ii) the parties’ intent.

(b)           This Agreement shall be deemed to be
made and entered into in The Commonwealth of Massachusetts.  This Agreement and any claims arising out of
this Agreement (or any other claims arising out of the relationship between the
parties) shall be governed by and construed in accordance with the laws of The
Commonwealth of Massachusetts and shall in all respects be interpreted,
enforced and governed under the internal and domestic laws of such Commonwealth,
without giving effect to the principles of conflicts of laws of such Commonwealth.

(c)           No waiver by either party of any
breach by you of any provision hereof shall be deemed to be a waiver of any
later or other breach thereof or as a waiver of any other provision of this
Agreement.  This Agreement may not be
waived, amended, discharged or terminated orally or by any course of dealing
between the parties, but only by an instrument in writing signed by you and
either the Company’s Chief Executive Officer or a designated member of the
Company’s Board of Directors.

(d)           You must execute a legally
enforceable separation agreement and general release in a form acceptable to
Omtool prior to the receipt of any payments or other benefits set forth above.

(e)           This Agreement is the exclusive
agreement with respect to the severance payments and benefits payable to you in
the event of a termination of your employment. 
All prior negotiations and agreements regarding severance benefits, whether
oral or written, express or implied, are hereby superseded and cancelled.

(f)            As
a condition to this Agreement you agree to enter into and execute a
non-competition and non-solicitation agreement with the Company in the form
attached as Exhibit A.

[Remainder of Page Intentionally Left Blank.  Signature Page follows.]

If this letter sets forth our agreement, kindly sign and return to
Omtool the enclosed copy of this letter.

	
  

  	
  Sincerely,

  
	
   

  	
   

  
	
   

  	
  OMTOOL, LTD.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/ Robert L. Voelk

  
	
   

  	
   

  	
  Robert L. Voelk

  
	
   

  	
  Title:

  	
  Chief Executive Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Accepted and agreed to this 11th day of April, 2007

  
	
   

  
	
   

  
	
  By:

  	
         /s/ Karen
  Cummings

  	
   

  
	
   

  	
  Karen Cummings

  
						

 

Exhibit A

 

NONCOMPETITION, NONSOLICITATION and
DEVELOPMENTS AGREEMENT

In consideration
and as a condition of my employment and/or continued employment by Omtool, Ltd.
and/or any of its subsidiaries, subdivisions or affiliates (the “Company”), I
hereby agree with the Company as follows:

1.  Best Efforts.  During the period of my employment by the
Company, I shall devote my full time and best efforts to the business of the
Company and I shall neither pursue any business opportunity outside the Company
nor take any position with any organization other than the Company without the
approval of the Company’s President and/or the Board of Directors; provided,
however, that I may participate in professional, civic, social and/or
charitable activities that do not adversely affect my ability to carry out my
responsibilities to the Company.

2.  Noncompetition.  During the period of my employment by the
Company and for one year thereafter(the “Term”),
regardless of the reasons for my termination, I shall not, directly or
indirectly, alone or as a consultant, partner, officer, director, employee,
joint venturer, lender or stockholder of any entity, accept employment in a “Competitive
Position” within the Restricted Territory with any business that competes
(whether directly or indirectly) with the products or services being created,
developed, manufactured, marketed, distributed or sold by the Company.

For purposes of
this Agreement “Competitive Position” shall mean any position with a direct or
indirect competitor of the Company that directly or indirectly involves (i) the
performance of services similar to the services that I provided to the Company
at any time during my tenure with the Company, (ii) job duties similar to the
job duties of any position that I held with the Company, or (iii) me in the
development, manufacture, marketing, distribution and/or sale of products or
services then being created, developed, manufactured, marketed, distributed or
sold by the Company.

For purposes of
this Agreement “Restricted Territory” shall include any geographic area (i) in
which I have contacted, serviced or conducted business, whether directly or
indirectly, with any Company customer or client on the Company’s behalf, or
(ii) in which the Company does business or is anticipating or planning to do
business.

3.  Nonsolicitation of Customers.  During the Term, and regardless of the
reasons for my termination, I shall not, directly or indirectly, alone or as a
consultant, partner, officer, director, employee, joint venturer, lender or
stockholder of any entity, solicit any customer of the Company or any potential
customer of the Company (i) with whom I have had contact, or (ii) about whom I
obtained or became familiar with through Confidential Information (as defined
in Paragraph 5) during the course of my employment with the Company.

4.  Nonsolicitation of Employees.  During the Term, and regardless of the
reasons for my termination, I shall not, directly or indirectly, alone or as a
consultant, partner, officer, director, employee, joint venturer, lender or
stockholder of any entity, employ, attempt to employ or knowingly permit any
company or business organization by which I am employed or which is directly or
indirectly controlled by me to employ, any Company employee, agent, representative
or consultant, or any such person whose employment or consultancy with the
Company has

terminated within
six months (either before or after) of my departure from the Company, or in any
manner seek to solicit or induce any employee, agent, representative or
consultant to leave his or her employment with the Company, or assist in the
recruitment or hiring of any such person.

5.  Nondisclosure.  I shall not at any time, whether during or
after the termination of my employment, reveal to any person or entity any
Confidential Information except to employees of the Company who need to know
such Confidential Information for the purposes of their employment, or as
otherwise authorized by the Company in writing. 
The term “Confidential Information” shall include, without limitation,
any information concerning the organization, business or finances of the
Company or of any third party, which the Company is under an obligation to keep
confidential or that is maintained by the Company as confidential.  Such Confidential Information shall include,
but is not limited to, trade secrets or confidential information respecting
inventions, products, designs, methods, know-how, techniques, systems,
processes, engineering data, software programs, software code, works of authorship,
customer lists, customer information, marketing or sales information, personnel
information, financial information, pricing information, business plans,
projects, plans and proposals.  I shall
keep confidential all matters entrusted to me and shall not use or attempt to
use any Confidential Information except as may be required in the ordinary
course of performing my duties as an employee of the Company, nor shall I use
any Confidential Information in any manner except as required in connection with
the performance of my duties for the Company.

6.  Company Property.  I agree that during my employment I shall not
make, use or permit to be used any Company Property otherwise than for the
benefit of the Company.  The term “Company
Property” shall include all notes, memoranda, reports, lists, records, files,
drawings, sketches, specifications, designs, software programs, software code,
data, computers, cellular telephones, pagers, credit and/or calling cards,
keys, access cards, documentation or other materials of any nature and in any
form, whether written, printed, electronic or in digital format or otherwise,
relating to any matter within the scope of the business of the Company or
concerning any of its dealings or affairs and any other Company property in my
possession, custody or control.  I
understand that de minimis use of a Company
cellular telephone, pager, credit and/or calling card will not violate this
Section, provided that I timely reimburse the Company for any personal use in
accordance with Company policy.  I
further agree that I shall not, after the termination of my employment, use or
permit others to use any such Company Property. 
I acknowledge and agree that all Company Property shall be and remain
the sole and exclusive property of the Company. 
Immediately upon the termination of my employment I shall deliver all
Company Property in my possession, and all copies thereof, to the Company.

7.  Assignment of Developments.

(a) If at any time or
times during my employment, I shall (either alone or with others) make,
conceive, create, discover, invent or reduce to practice any Development that
(i) relates to the business of the Company or any customer of or supplier
to the Company or any of the products or services being developed, manufactured
or sold by the Company or which may be used in relation therewith; or
(ii) results from tasks assigned to me by the Company; or
(iii) results from the use of premises or personal property (whether
tangible or intangible) owned, leased or contracted for by the Company, then
all such Developments and the benefits thereof are

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and shall
immediately become the sole and absolute property of the Company and its
assigns, as works made for hire or otherwise. 
The term “Development” shall mean any invention, modification,
discovery, design, development, improvement, process, software program, work of
authorship, documentation, formula, data, technique, know-how, trade secret or
intellectual property right whatsoever or any interest therein (whether or not
patentable or registrable under copyright, trademark or similar statutes
(including, but not limited to, the Semiconductor Chip Protection Act) or
subject to analogous protection).  I
shall promptly disclose to the Company (or any persons designated by it) each such
Development.  I hereby assign all rights
(including, but not limited to, rights to inventions, patentable subject
matter, copyrights and trademarks) I may have or may acquire in the
Developments and all benefits and/or rights resulting therefrom to the Company
and its assigns without further compensation and shall communicate, without
cost or delay, and without disclosing to others the same, all available
information relating thereto (with all necessary plans and models) to the
Company.

(b) Excluded Developments. 
I represent that the Developments identified in the Appendix, if any,
attached hereto comprise all the Developments that I have made or conceived
prior to my employment by the Company, which Developments are excluded from
this Agreement.  I understand that it is
only necessary to list the title of such Developments and the purpose thereof
but not details of the Development itself. 
IF THERE ARE ANY SUCH DEVELOPMENTS TO BE EXCLUDED, THE UNDERSIGNED
SHOULD INITIAL HERE; OTHERWISE IT WILL BE DEEMED THAT THERE ARE NO SUCH
EXCLUSIONS.

8.  Further Assurances.  I shall, during my employment and at any time
thereafter, at the request and cost of the Company, promptly sign, execute,
make and do all such deeds, documents, acts and things as the Company and its
duly authorized officers may reasonably require:

(a) to apply for, obtain, register and vest in the
name of the Company alone (unless the Company otherwise directs) patents,
copyrights, trademarks or other analogous protection in any country throughout
the world relating to a Development of the Company and when so obtained or
vested to renew and restore the same; and

(b) to assist in the defense of any judicial,
opposition or other proceedings in respect of such applications and any judicial,
opposition or other proceeding, petition or application for revocation of any
such patent, copyright, trademark or other analogous protection.

If the Company is unable, after reasonable effort, to
secure my signature as required by this paragraph on any application for
patent, copyright, trademark or other analogous registration or other documents
regarding any legal protection relating to a Development, whether because of my
physical or mental incapacity or for any other reason whatsoever, I hereby irrevocably
designate and appoint the Company and its duly authorized officers and agents
as my agent and attorney-in-fact, to act for and in my behalf and stead to
execute and file any such application or applications or other documents and to
do all other lawfully permitted acts to further the prosecution and issuance
of  patent, copyright or trademark
registrations or any other legal protection thereon with the same legal force
and effect as if executed by me.

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9.  Employment
At Will.  I understand that neither
this Agreement nor any other document I have signed regarding my employment
with the Company constitutes an express or implied employment contract and that
my employment with the Company is on an “at-will” basis.  Accordingly, I understand that either the
Company or I may terminate my employment at any time, for any or no reason,
with or without prior notice.

10.  Representations.

(a) I represent that my
employment with the Company and my performance of all of the terms of this
Agreement do not and will not breach any agreement to keep in confidence
proprietary information acquired by me in confidence or in trust prior to my
employment by the Company, nor will it violate any nonsolicitation and/or
noncompetition agreements entered into prior to my employment with the
Company.  I have not entered into, and I
shall not enter into, any agreement either written or oral in conflict
herewith.

(b) I further agree that
any breach of this Agreement by me will cause irreparable damage to the Company
and that in the event of such breach the Company shall have, in addition to any
and all remedies of law, the right to an injunction, specific performance or
other equitable relief to prevent the violation of my obligations hereunder.

11.  Waiver; Amendments.  Any waiver by the Company of a breach of any
provision of this Agreement shall not operate or be construed as a waiver of
any subsequent breach of such provision or any other provision hereof.  In addition, any amendment to or modification
of this Agreement or any waiver of any provision hereof must be in writing and
signed by the Company’s President or, if applicable, a member of the Board of
Directors.

12.  Severability.  I agree that each provision and the subparts
of each provision herein shall be treated as separate and independent clauses,
and the unenforceability of any one clause shall in no way impair the enforce­ability
of any of the other clauses of the Agreement. 
Moreover, if one or more of the provisions contained in this Agreement
shall for any reason be held to be excessively broad as to scope, activity,
subject or otherwise so as to be unenforceable at law, such provision or
provisions shall be construed by the appropriate judicial body by limiting or
reducing it or them, so as to be enforceable to the maximum extent compatible
with the applicable law as it shall then appear.  I hereby further agree that the language of
all parts of this Agreement shall in all cases be construed as a whole
according to its fair meaning and not strictly for or against either of the
parties.

13.  Survival.  This Agreement shall be effective as of the
date entered below.  My obligations under
this Agreement shall survive the termination of my employment regardless of the
manner of such termination and shall be binding upon my heirs, executors,
administrators and legal representatives.

14.  Assignment.  The Company shall have the right to assign
this Agreement to its successors and assigns, and all covenants and agreements
hereunder shall inure to the benefit of and be enforceable by said successors
or assigns.  I will not assign this
Agreement.

15.  Governing Law; Forum
Selection Clause.  This Agreement
shall be governed by and construed in accordance with the laws of the Commonwealth
of Massachusetts and shall in all

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respects be
interpreted, enforced and governed under the internal and domestic laws of the Commonwealth
of Massachusetts, without giving effect to their principles of conflicts of
laws of such State.  Any claims or legal
actions by one party against the other arising out of this Agreement shall be
governed by the laws of the Commonwealth of Massachusetts and shall be
commenced and maintained in any state or federal court located in Massachusetts,
and I hereby submit to the jurisdiction and venue of any such court.

16.           Entire Agreement.  This Agreement sets forth the complete, sole
and entire agreement between the parties with respect to my noncompetition and
nonsolicitation obligations and supersedes any and all other agreements,
negotiations, discussions, proposals, or understandings, whether oral or
written, previously entered into, discussed or considered by the parties.  This Agreement does not supercede the
Severance Agreement between the Company and me, if any, of even date herewith.

IN WITNESS HEREOF,
the undersigned has executed this Agreement as a sealed instrument as of the
date first written below.

	
  

  	
  Signature:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Date:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Address:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
					

 

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APPENDIX – TITLE/PURPOSE OF DEVELOPMENTS

The following is a complete list
of all Developments and the purpose of those Developments:

	
  

  	
   

  	
   No Developments

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   See Below

  

 

	
  Developments and purpose:

  
	
   

  
	
   

  	
   

  
	
   

  
	
   

  	
   

  
	
   

  
	
   

  	
   

  
	
   

  
	
   

  	
   

  
	
   

  
	
   

  	
   

  
	
   

  
	
   

  	
   

  

 

 6Exhibit
10.26

EMPLOYMENT
AGREEMENT

THIS EMPLOYMENT AGREEMENT (“Agreement”)
is entered into effective as of the 21st day of March 2007 by and between
American Crystal Sugar Company (“Company”) and David  A. Berg (“Executive”).

WHEREAS, Company desires to employ
Executive, and Executive desires to be employed by the Company, pursuant to the
terms of this Agreement.

NOW THEREFORE, in consideration of the
foregoing and the mutual terms and conditions set forth herein, the parties
agree as follows:

1.                                      NATURE OF EMPLOYMENT.  Company and Executive expressly agree that
they have an “at will” employment relationship, which means that either party
has the right to terminate the employment relationship at any time and for any
reason, with or without cause.  The
reason for the termination, as set forth in Paragraph 6 of this Agreement, will
determine the amount of post-termination payments upon termination, as set
forth in Paragraph 7 of this Agreement. 
It is understood and agreed that Executive will continue to be subject
to the same policies, terms and conditions as those described in Company’s
employee handbook, other policies and employee benefit plans, except as
otherwise specifically provided in this Agreement.

2.                                      DUTIES.  Effective April 2, 2007, Executive shall be
employed in the capacity of, and shall hold the title of, President.  Executive shall also assume the title of
Chief Executive Officer upon the retirement of James J. Horvath.  Executive shall assume primary responsibility
for his job titles, reporting responsibilities and duties that are assigned,
which titles and responsibilities may be changed from time to time, by Company’s
Board of Directors.  Executive shall be
responsible for providing Company with such expertise as is within the areas of
Executive’s knowledge and professional experience.  The services of Executive shall be exclusive
to Company.  Executive will devote
substantially all of Executive’s business hours to, and make the best use of
Executive’s energy, knowledge, and training in performing Executive’s duties at
the Company.

3.                                      RELATIONSHIP
BETWEEN PARTIES.  The
relationship between Company and Executive shall be that of employer and
employee.  Nothing contained herein shall
be construed to give Executive any interest in the assets of Company.  All of the records of any and all business
ventures in which Company from time to time may become involved, and all of the
records and files pertaining to Company’s suppliers, licensors, licensees and
customers are herein specifically acknowledged to be the property of Company
and not that of Executive.

4.                                      COMPENSATION
AND BENEFITS.  As compensation
for all of Executive’s services under this Agreement, subject to the provisions
of Paragraph 7, Company agrees to provide Executive the following compensation,
reimbursements and benefits:

a.                                       Base
Salary.  Company will pay
Executive a gross base salary (the “Base Salary”), payable in accordance with
Company’s standard payroll practices and withholdings.  Executive’s initial annual gross Base Salary
shall be $324,000.  The Base Salary shall
increase to $415,200 at such time as Executive assumes the position of Chief
Executive Officer as provided in Paragraph 2. 
Thereafter the Base Salary shall be subject to annual performance review
and adjustment by Company’s Board of Directors.

b.                                       Incentive
Awards.  As additional
compensation, Executive may be eligible to receive discretionary annual bonuses
and/or long term incentive compensation (“Incentive Awards”) pursuant to the
terms and conditions of Company’s short term (annual) bonus program and/or
Company’s long term incentive plan (jointly referred to as “Incentive Plans”).  With reference to the Incentive Plans, the
parties understand as follows:

(i)                                     Executive’s
eligibility to receive Incentive Awards will be determined by Company’s Board
of Directors, in its sole discretion;

(ii)                                  The
Incentive Plans are as complete and accurate as Company can reasonably make
them.  However, they are not necessarily
all-inclusive because circumstances which Company has not anticipated may
arise.  Company may interpret or vary
from the Incentive Plans if, in its opinion, the circumstances warrant it;

(iii)                               Company
reserves the right to make any changes at any time to the Incentive Plans by
adding to, deleting from or otherwise amending any portion of them, with or
without notice to Executive.

(iv)                              Any
questions regarding the computation of Incentive Awards under the Incentive
Plans will be conclusively determined by Company’s Board of Directors, pursuant
to the terms and conditions of the Incentive Plans.

c.                                       Automobile.  Company will provide Executive with a monthly
automobile allowance of $604.  In
addition, the Company will reimburse Executive at IRS approved rates for
mileage driven on Company business.

d.                                       Business
Expenses.  Company shall
reimburse Executive for any and all ordinary, necessary and reasonable business
expenses that Executive incurs in connection with the performance of Executive’s
duties under this Agreement, including entertainment, telephone, travel and
miscellaneous expenses, provided that Executive obtains proper approval for
such expenses pursuant to Company’s practices and procedures and that Executive
provides Company with documentation for such expenses in a form sufficient to
sustain Company’s deduction for such expenses under the Internal Revenue Code.

e.                                       Standard
Benefits.  Except as otherwise
provided in this Agreement, Company shall continue to provide Executive with
the same time off pay (e.g., vacation), health, disability and life insurance
coverage provided generally to other employees of Company, and to continued
participation in Company’s other employee benefit plans which are presently
existing or which may be established in the future by Company for its
employees.  Executive shall receive
physicals, tax planning assistance, and other benefits to the extent available
to other officers of the Company.  It is
understood that no references in this Agreement to particular employee benefit
plans established or maintained by Company are intended to change the terms

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and conditions of
these plans or to preclude Company from amending or terminating any such
benefit plans.

f.                                         Country
Club Membership.  Company shall
provide Executive with use of a membership to the Fargo Country Club for the
promotion of Company’s business.  Company
shall be responsible for reimbursing Executive for all costs related to such
membership (i.e., dues, monthly minimums, etc.).

g.                                      Changes.  No reference in this Agreement to any policy
or any employee benefit plan established or maintained by Company shall
preclude Company from changing any such policies or amending or terminating any
such benefit plans; provided, that, such change, amendment or termination shall
not cause an amendment of this Agreement without the written approval of the
parties as provided in Paragraph 12.

h.                                      Withholding
Taxes.  Company may withhold from
any compensation, reimbursements and benefits payable to Executive all federal,
state, city and other taxes as shall be required pursuant to any law or
governmental regulation or ruling.

i.                                         Termination.  Except as otherwise stated in this Agreement,
Company’s obligations under Paragraph 4 will cease upon the date of Executive’s
termination of employment.

5.                                      BUSINESS
PROTECTIONS TO COMPANY.

a.                                       Non-Disclosure
of Trade Secrets and Confidential Information.  Executive shall not during the term of his
employment or at any time thereafter divulge, furnish or make accessible to
anyone or use in any way other than for the benefit of Company in the ordinary
course of business of Company any trade secrets or confidential information of
Company which Executive has acquired or has become acquainted with or will
acquire or become acquainted with during the term of his employment, whether
developed by him or by others. 
Confidential information includes any information or compilation of
information that derives independent economic value from not being generally
known or readily ascertainable by proper means by other persons and which
relates to any aspect of Company’s business, including, but not limited to,
trade secret information relating to Company’s scientific technology, processes
and products; research and development; Company’s philosophies and strategies;
vendor and customer lists; and any confidential information of a vendor,
licensor, licensee or customer which has been divulged to Company by such
individuals or entities.  All information
disclosed to Executive, or to which he obtains access, whether originated by
him or by others, during the period of his employment, which he has reasonable
basis to believe to be confidential information, or which is treated by Company
as being confidential information, shall be presumed to be confidential
information.

b.                                       Non-Competition/Non-Solicitation
of Customers or Employees. 
Executive expressly agrees that during the term of his employment by
Company he will not, without the prior written consent of Company, be
interested or involved, directly or indirectly, in any form, fashion or manner,
as a partner, officer, director, stockholder, adviser, employee, agent or in
any other form or capacity, in any other business competitive with Company’s
business, or which, had Executive presented the opportunity to Company, is so
closely related to Company’s business that such opportunity could have been
pursued by Company.  Executive also
agrees that

 3
 

he will bring any
business opportunity that Company may be interested in to Company’s attention.

Executive
further agrees that for a period of two years after termination of his
employment with Company for whatever reason, whether voluntary or involuntary,
Executive will not, directly or indirectly, either for himself or for any other
person, firm, company or corporation, engage in or otherwise affiliate with any
business operation engaged in competition with Company, or call upon, solicit,
divert, or attempt to solicit or divert business from any person, firm or
corporation which was a customer of Company during Executive’s employment with
Company.  Executive agrees and
acknowledges that Company’s natural trade area is international in its
geographic scope, and therefore that it is reasonable that the restrictions set
forth in this paragraph pertain to all states in the United States of America
and all other countries in which Company does business.

Further,
for a two year period after Executive’s termination of employment for any
reason, whether voluntary or involuntary, Executive agrees not to solicit or
induce any of Company’s employees to terminate their employment relationship
with Company, for any reason.

The
term “customer” of Company as used herein shall be defined and construed to
mean any and all persons, partnerships, trusts, corporations or other entities
which were customers of Company, or any of Company’s related companies or
affiliates, at any time during Executive’s employment.

c.                                       Non-Disparagement.  During the period of Executive’s employment
and for an unlimited period thereafter, Executive agrees not to make any
disparaging remarks of any sort or otherwise communicate any disparaging remarks
about Company or any of its shareholders, directors, officers or employees,
directly or indirectly, to any of Company’s employees, shareholders, directors,
customers, vendors, competitors, or other people or entities with whom Company
has a business or employment relationship.

d.                                       Return of
Confidential Information Upon Termination of Employment.  Upon the termination of his employment,
Executive agrees to deliver promptly to Company all originals and copies of
records, manuals, books, blank forms, documents, letters, memoranda, notes,
notebooks, reports, data, tables, accounts, calculations and copies thereof,
which are the property of Company or which relate in any way to the business,
products, customers, practices or techniques of Company, and all other
property, trade secrets and confidential information of Company, including, but
not limited to, all documents which in whole or in part contain any trade
secrets or confidential information of Company, which in any of these cases are
in his possession or under his control. 
Executive shall also return any Company computer in his possession and
any electronic media used for storage of the Company’s confidential
information.

e.                                       Cooperation
in Claims.  During the period of
Executive’s employment and for an unlimited time thereafter, at the request of
Company, Executive will cooperate with Company with respect to any claims or
lawsuits by or against Company where Executive has knowledge of the facts
involved in such claims or lawsuits. 
Such cooperation shall include, but

 4
 

shall not be
limited to, Executive providing reasonable deposition, hearing and trial
testimony and making himself available at reasonable times to prepare for such
testimony with Company’s attorneys; responding to questions that may be posed
from time to time by Company’s attorneys regarding such claims or lawsuits;
declining to voluntarily aid, assist or cooperate with any party who has claims
or lawsuits by or against Company, or with their attorneys or agents; and
notifying Company and Company’s attorneys when and if the Executive is
contacted by other parties or their attorneys or agents involved in actions by
or against Company.  Nothing in this
Subparagraph 5.e. shall prevent Executive from honestly testifying at an
administrative hearing, arbitration, deposition or in court, in response to a
lawful and properly served subpoena in a proceeding involving Company.  Company agrees to pay, or reimburse
Executive, for any out of pocket expenses which he incurs relating to his
cooperation.  If Executive forfeits
compensation from other employment as a result of meeting his requirements
under this subparagraph, Company agrees to compensate Executive in an amount
equal to the amount of compensation forfeited.

f.                                         Remedies.  The parties recognize and agree that, because
the breach by Executive of the provisions of Paragraph 5 would result in
damages difficult to ascertain, Company shall be entitled to injunctive and
other equitable relief to prevent a breach or threatened breach of the
provisions of Paragraph 5.  Accordingly,
Executive specifically agrees that Company shall be entitled to temporary and
permanent injunctive relief to enforce the provisions of Paragraph 5 and that
such relief may be granted without the necessity of proving actual damages.  Such injunctive or equitable relief shall be
in addition to and not in lieu of any right to recover money damages for any
such breach.  Further, if Executive
violates any portion of Paragraph 5, in connection with any suit at law or in
equity, Company shall be entitled to an accounting, and to the repayment of all
profits, compensation, commissions, fees, royalties or other enumeration which
Executive or any other entity or person may have either directly or indirectly
realized and/or may realize, as a result of, growing out of, or in connection
with Executive’s violations; and if Company prevails against Executive in a
legal action for violation of any portion of Paragraph 5, Company shall be
entitled to collect from Executive any attorney’s fees and costs incurred in
bringing any action to enforce the terms of Paragraph 5, as well as any
attorney’s fees and costs for the collection of any judgments in Company’s
favor arising out of Executive’s violations.

g.                                      Enforceability.  Executive agrees that considering Executive’s
relationship with Company, and given the terms of this Agreement, the
restrictions and remedies set forth in Paragraph 5 are reasonable.  Notwithstanding the foregoing, if any of the
covenants set forth above shall be held to be invalid or unenforceable, the
remaining parts thereof shall nevertheless continue to be valid and enforceable
as though the invalid or unenforceable parts have not been included
therein.  In the event the provisions
relating to time periods and/or areas of restriction shall be declared by a
court of competent jurisdiction to exceed the maximum time periods or areas of
restriction permitted by law, then such time periods and areas of restriction
shall be amended to become and shall thereafter be the maximum periods and/or
areas of restriction which said court deems reasonable and enforceable.  Executive also agrees that Company’s action
in not enforcing a particular breach of any part of Paragraph 5 will not
prevent Company from enforcing its rights as to any other breach that Company
discovers, and shall not operate as a waiver by Company against any future
enforcement of a breach.

 5
 

h.                                      Other
Obligations.  It is intended that
the obligations of Executive to perform pursuant to the terms of Paragraph 5
are unconditional and do not depend on the performance or nonperformance of any
agreements, duties or obligations between Company and Executive not
specifically contained in this Agreement. 
Paragraph 5 shall survive the termination of Executive’s employment,
regardless of the reason for termination.

6.                                      TERMINATION.  Executive’s employment will or may be
terminated at any time as follows:

a.                                       Death.  Executive’s employment shall terminate upon
Executive’s death.

b.                                       Disability.  Executive’s employment shall terminate if
Executive sustains a disability which is serious enough that Executive is not
able to perform the essential functions of Executive’s job, with or without
reasonable accommodations, as defined and if required by applicable state and
federal disability laws.  Executive shall
be presumed to have such a disability for purpose of this Agreement if
Executive qualifies, because of illness or incapacity, to begin receiving
disability income insurance payments under the long term disability income
insurance policy that Company makes available for the benefit of its employees
generally.  If there is no such policy in
effect at the date of Executive’s potential disability, or if Executive does
not qualify for such payments, Executive shall nevertheless be presumed to have
such a disability if Executive is substantially incapable of performing
Executive’s duties for a period of more than twelve (12) weeks.

c.                                       For Cause.  Company may terminate Executive’s at will
employment at any time for Cause.  “Cause”
shall be defined as:

(i)                                     Executive’s
material breach of any of Executive’s obligations under this Agreement, or
Executive’s repeated failure or refusal to perform or observe Executive’s
duties, responsibilities and obligations as an employee of Company for reasons
other than disability or incapacity;

(ii)                                  Any
dishonesty or other breach of the duty of loyalty of Executive affecting
Company or any customer, vendor or employee of Company;

(iii)                               Use
of alcohol or other drugs in a manner which affects the performance of
Executive’s duties, responsibilities and obligations as an employee of Company;

(iv)                              Conviction
of Executive of a felony or of any crime involving misrepresentation or fraud;

(v)                                 Commission
by Executive of any other willful or intentional act which could reasonably be
expected to injure the reputation, business or business relationships of
Company and/or Executive;

(vi)                              The
existence of any court order or settlement agreement prohibiting Executive’s
continued employment with Company; or

 6
 

(vii)                           Any
other reason or act of misconduct which would permit discharge of an employee
of Company under disciplinary guidelines applicable to Executive as an employee
of Company.

d.                                       Voluntary
Resignation/Retirement. 
Executive may, upon sixty (60) days written notice, voluntarily resign
and/or retire from Executive’s at will employment at any time and for any
reason.  During the sixty (60) days after
notice is given, Executive agrees that he shall continue to render his normal
services to Company, and Company agrees that it shall continue to pay him his
regular rate of compensation.

e.                                       Without Cause
“At Will”.  Company may, upon
written notice, terminate Executive’s at will employment without cause.  In other words, Company can terminate
Executive’s at will employment at any time and for any reason, by giving
Executive written notice.

7.                                      PAYMENTS UPON
TERMINATION.

a.                                       Death.  If Executive’s employment is terminated due
to the death of Executive, Executive’s estate or heirs, as appropriate, shall
be paid (i) Executive’s monthly Base Salary (or other applicable benefits)
through the date of death; (ii) any benefits payable under any life insurance
policy maintained by Company for the benefit of Executive at the time Executive’s
death occurred; (iii) Executive’s accrued but unpaid time off pay (including,
but not limited to, vacation) (iv) any unpaid expense reimbursement; (v) any
vested Incentive Awards owing to Executive pursuant to the terms and conditions
of the Incentive Plans; and (vi) Executive’s other accrued benefits, if any,
under any of Company’s other employee benefit plans (e.g., pension plan, 401(k)
plan, the SERP), subject to the terms and conditions of those plans.  In the event of a termination of employment
as a result of Executive’s death, Executive understands that no Incentive
Awards will be granted to Executive for the fiscal year in which the
termination of employment takes place.

b.                                       Disability.  If Executive’s employment is terminated due
to Executive’s Disability, Executive shall be paid (i) the applicable employee
benefit (e.g. paid leave, sick leave, unpaid leave, disability benefits, etc.)
through the date of termination; (ii) any benefits payable under any disability
policy made available to Executive by Company for the benefit of Executive at
the time of Executive’s disability (iii) Executive’s accrued but unpaid time
off pay (including, but not limited to, vacation); (iv) any unpaid expense
reimbursement; (v) any vested Incentive Awards owing to Executive pursuant to
the terms and conditions of the Incentive Plans; and (vi) Executive’s other
accrued benefits, if any, under any of Company’s other employee benefits plans
(e.g., pension plan, 401(k) plan, the SERP), subject to the terms and
conditions of those plans.  In the event
of a termination of employment as a result of Executive’s disability, Executive
understands that no Incentive Awards will be granted to Executive for the
fiscal year in which the termination of employment takes place.

c.                                       For
Cause/Voluntary Resignation/Retirement. 
If Company terminates Executive’s employment for Cause, or if Executive
voluntarily resigns and/or retires from his employment, Executive shall be paid
(i) Executive’s monthly Base Salary through the date of termination; (ii)
Executive’s accrued but unpaid time off pay (including, but not limited to,

 7
 

vacation); (iii)
any unpaid expense reimbursement; and (iv) any vested Incentive Awards owing to
Executive pursuant to the terms and conditions of the Incentive Plans; and (v)
Executive’s other accrued benefits, if any, under any of Company’s other
employee benefit plans (e.g., pension plan, 401(k) plan, the SERP), subject to
the terms and conditions of those plans. 
In the event of a termination for Cause by Company, or a voluntary
termination by Executive, Executive understands that no Incentive Awards will
be granted to Executive for the fiscal year in which the termination of
employment takes place.

If
Executive voluntarily resigns and/or retires from his employment, Company may,
at its sole option, waive some portion or all of the 60-day notice period; and
continue to pay Executive his full Base Salary as well as all benefits for the
remainder of the 60-day notice period, with the understanding that Executive
will have no rights or obligations to provide employment services.  In other words, the effective date of the
resignation or retirement will not be changed; and Company’s compensation
obligations, as set forth in Paragraph 4, will continue through the designated
date of resignation or retirement, although Executive will not be performing
services during that period of time.  The
parties expressly agree that, should Company choose to waive some portion or
all of the 60-day notice period under this provision, it will nevertheless be
treated as a voluntary resignation and/or retirement; it will not be treated as
a termination without cause.

d.                                       Without Cause
At Will.  If Company terminates
Executive’s at will employment without Cause, Executive shall be paid (i)
Executive’s monthly Base Salary through the date of termination; (ii) Executive’s
accrued but unpaid time off pay (including, but not limited to, vacation);
(iii) any unpaid expense reimbursement; (iv) any vested Incentive Awards owing
to Executive pursuant to the terms and conditions of the Incentive Plans; and
(v) Executive’s other accrued benefits, if any, under any of Company’s other
employee benefit plans (e.g., pension plan, 401(k) plan, the SERP), subject to
the terms and conditions of those plans. 
In the event of a termination without Cause, Executive understands that
no Incentive Awards will be granted to Executive for the fiscal year during
which the termination takes place.

An
additional payment of “post-termination severance pay” may be available if
Company terminates Executive’s at will employment without Cause.  If Executive (after having Executive’s
employment terminated without Cause) signs (and does not rescind, as allowed by
law) a Release of Claims in a form satisfactory to Company which assures, among
other things, that Executive will not commence any type of litigation or other
claims as a result of the termination, and if Executive honors all of Executive’s
other obligations as required by this Agreement, Company shall pay Executive
post-termination severance pay, as follows:

(i)                                     Except
as provided in Paragraph (7)(d)(ii) below, if Company terminates Executive’s at
will employment without Cause, Company agrees to pay Executive a
post-termination severance payment equal to two (2) years of Executive’s Base
Salary in effect as of the effective date of the termination of
employment.  This payment will be made
over a two year period of time in a manner consistent with the Company’s normal
payroll practices, unless otherwise agreed to by the parties, less applicable
payroll withholdings, after the above-referenced Release is signed and becomes
effective.

 8
 

(ii)                                  If
Company terminates Executive’s at will employment without Cause as a result of
a change of control, (e.g., a merger, consolidation, sale of a controlling
interest in Company, or a sale or lease of substantially all of its assets),
and if Executive accepts a position of employment in a comparable position with
the new controlling entity (either before or after termination of employment
with the Company), Company will not be obligated to pay Executive the remainder
of the post-termination severance payments provided in Paragraph (7)(d)(i)
above, for the period following acceptance of the position with the new
controlling entity.

(iii)                               It
is understood that, except as specifically set forth above or required by law,
no post-termination payments or benefits will be provided to Executive
following the termination of Executive’s employment.  It is specifically understood that no
pension, retirement, 401(k) or SERP contributions will be paid by Company based
on the post-termination severance payments. 
Further, the parties expressly agree and understand that Executive shall
not be entitled to an Incentive Award under Company’s Incentive Plans or any
other bonus for any fiscal year, or part thereof, during which the post-termination
pay is paid.

(iv)                              In
no event shall the Company pay any post-termination severance pay to Executive
unless Executive’s termination of employment by the Company without cause
constitutes a ‘separation from service’ as defined in Section 409A of the Internal
Revenue Code of 1986, as amended, and the regulations, notices and guidance of
general applicability issued thereunder.

8.                                      ASSIGNMENT.  The rights and obligations of Company
hereunder may be transferred to its successors and assigns.  Executive may not, however, transfer or
assign his rights or obligations contained in this Agreement.

9.                                      SEVERABILITY.  To the extent any provision of this Agreement
shall be invalid or unenforceable, it shall be considered deleted from this
Agreement and the remainder of such provision and of this Agreement shall be
unaffected and shall continue in full force and effect.  Notwithstanding the foregoing, in the event
that any provision of this Agreement is unenforceable because it is over broad,
then such provision shall be limited to the extent necessary to make it
enforceable under applicable law and enforced as so limited.  Executive acknowledges the uncertainty of the
law in this respect and expressly stipulates that this Agreement be given the
construction which renders its provisions valid and enforceable to the maximum
extent (not exceeding its express terms) possible under applicable law.

10.                               GOVERNING LAW.  This Agreement shall be construed and
enforced in accordance with the laws of the State of Minnesota, to the extent
not pre-empted by federal law.  Any legal
proceeding related to this Agreement shall be brought in an appropriate state
or federal court in the State of Minnesota, and each of the parties hereby
consents to the exclusive jurisdiction of the state and/or federal courts in
the State of Minnesota for this purpose.

 9
 

11.                               WAIVER.  The waiver by any party hereto of a breach of
any provision of this Agreement shall not operate or be construed as a waiver
of any subsequent breach by either party.

12.                               ENTIRE AGREEMENT;
AMENDMENT.  This Agreement
supersedes any prior employment or other agreements between the parties and
contains the entire Agreement of the parties. 
There are no terms other than those contained herein.  No amendment or modification of this Agreement
shall be deemed effective unless or until executed in writing by the parties
hereto with the same formality attending execution of this Agreement.

IN WITNESS WHEREOF, Company has caused this
Agreement to be executed by its duly authorized officer and Executive has
signed this Agreement as of the day and year first above written.

	
  

  	
   

  	
  AMERICAN CRYSTAL SUGAR COMPANY

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By

  	
  \s\ David
  Kragnes

  	
   

  
	
   

  	
   

  	
   

  	
  Its

  	
  Chairman

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
     \s\
  David A. Berg

  	
   

  
	
   

  	
   

  	
    
  David A. Berg

  
							

 

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