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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K/A (AMENDMENT NO 1)
/X/ Annual Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
For the fiscal year ended
AUGUST 31, 1995
or
/ / Transition Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
-------------------------
Commission File
No. 33-83868
-------------------------
AMERICAN CRYSTAL SUGAR COMPANY
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
Minnesota 84-0004720
(STATE OF INCORPORATION) (I.R.S. EMPLOYER IDENTIFICATION NUMBER)
101 North Third Street
Moorhead, MN 56560 (218) 236-4400
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (REGISTRANT'S TELEPHONE NUMBER)
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
NONE
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
NONE
-------------------------
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. YES X NO
----- -----
---------------------------------------
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K contained herein, and will not be contained, to the best
of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in part III of this Form 10-K or any amendment to this
Form 10-K. [ ]
-------------------------
As of November 10, 1995, 2,343 shares of the Registrant's Common Stock and
415,255 shares of the Registrant's Preferred Stock were outstanding. As there
is only a limited, private market for shares of the Registrant's stock and the
Registrant does not obtain information regarding the transfer price in
transactions between its members, the Registrant is not able to estimate the
aggregate market value of the Registrant's shares held by non-affiliates.
DOCUMENTS INCORPORATED BY REFERENCE
Certain exhibits to this Report are incorporated by reference from the
Company's Registration Statement on Form S-1 (File number 33-83868), declared
effective on November 23, 1994.
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PART I.
ITEM 1. BUSINESS
The following text should be inserted on page 4 of the original filing,
before the heading "Government Program and Regulation":
ENERGY AND TRANSPORTATION
American Crystal uses large quantities of energy in its operations,
principally for heating the cossettes (sliced beets), evaporating water from
juices containing sugar, drying wet beet pulp, and generating electrical
power. Each of the Company's five factories currently burns low sulphur coal
as their primary source of energy. However, the Company is in the process of
converting certain of its dryer facilities to operate with natural gas as the
energy source. The Company presently obtains all of its coal from Montana
under a supply contract with Kennecott Energy Company (for and on behalf
of Spring Creek Coal Company) expiring on July 31, 2005. This coal is
transported from Montana to the Company's factories under a coal
transportation agreement with Northern Coal Transportation Company
expiring on July 31, 2005.
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PART IV.
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
FINANCIAL STATEMENT SCHEDULES
None
REPORTS ON FORM 8-K
The Company was not required to and did not file any reports on Form 8-K
during the three months ended August 31, 1995.
EXHIBITS
*3(i) Restated Articles of Incorporation of American Crystal Sugar
Company.
*3(ii) Restated Bylaws of American Crystal Sugar Company
*10(f) Growers' Contract (5-year Agreement)
*10(g) Growers' Contract (Annual Contract)
*10(h) Coal Supply Agreement between Registrant and Spring Creek Coal
Company, dated August 1, 1986
*10(i) Coal Transportation Agreement between Registrant and Northern
Coal Transportation Company, dated August 1, 1986
*10(j) Beet Loading and Hauling Agreement between Registrant and
Transystems, Inc., dated May 18, 1993
*10(k) Form of Uniform Member Marketing Agreement between Registrant and
United Sugars Corporation, dated January 1, 1994.
*10(l) Trademark License Agreement between Registrant and United Sugars
Corporation, dated November 1, 1993.
*10(m) Uniform Member Marketing Agreement, Pool Basis between Registrant
and Midwest Agri-Commodities Company, dated April 14, 1992
*10(n) Stipulation Agreement between Registrant and State of Minnesota
Pollution Control Agency
*10(o) Master Agreement between Registrant, United Sugars Corporation,
American Federation of Grain Millers, AFL-CIO, CLC, et al.
*10(p) Loan Agreement between Registrant and St. Paul Bank for
Cooperatives, dated December 20, 1993
*10(q) Amended and Restated Loan Agreement between Registrant and First
Bank National Association, dated November 22, 1993
*10(r) Pension Contract and Amendments
*10(s) Compensation, Severance and Loan Agreement with Mr. J. Famalette,
dated March 2, 1992
*10(t) Compensation and Loan Agreement with Mr. J. Famalette, dated
October 1, 1993
*10(u) Form of Operating Agreement between Registrant and ProGold
Limited Liability Company
*10(v) Form of Member Control Agreement between Registrant and ProGold
Limited Liability Company
*10(w) Administrative Services Agreement between Registrant and ProGold
Limited Liability Company
*10(x) Uniform Member Marketing Agreement
10(y) Coal Supply Agreement between Registrant and Spring Creek Coal
Company, dated August 25, 1995 (Confidential Treatment Requested
as to certain provisions.)
10(z) Coal Transportation Agreement between Registrant and Northern
Coal Transportation Company, dated August 25, 1995 (Confidential
Treatment Requested as to certain provisions.)
23 Consent of Independent Public Accountant.
#99 Consents of Directors-Elect
3
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- ---------------------------
* Incorporated by reference from the Company's Registration Statement on
Form S-1 (File No. 33-83868), declared effective November 23, 1994.
# Previously filed.
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
AMERICAN CRYSTAL SUGAR COMPANY
BY /S/ DANIEL J. MCCARTY
-----------------------------------------------
Daniel J. McCarty, Chief Executive Officer
Dated: October 30, 1996
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS REPORT HAS
BEEN SIGNED BY THE FOLLOWING PERSONS IN THE CAPACITIES AND ON THE DATES
INDICATED.
Signature Title Date
- --------- ----- ----
/s/ Daniel J. McCarty Chief Executive October 30, 1996
- --------------------- Officer
Daniel J. McCarty
/s/ Samuel S.M. Wai Treasurer October 30, 1996
- ---------------------
Samuel S.M. Wai
/s/ Paul Borgen Director October 30, 1996
- ---------------------
Paul Borgen
/s/ Thomas Bryl Director October 30, 1996
- ---------------------
Thomas Bryl
/s/ Aime J. Dufault Director October 30, 1996
- ---------------------
Aime J. Dufault
/s/ Steven M. Goodwin Director October 30, 1996
- ---------------------
Steven M. Goodwin
/s/ Court G. Hanson Director October 30, 1996
- ---------------------
Court G. Hanson
/s/ Lonn M. Kiel Director October 30, 1996
- ---------------------
Lonn M. Kiel
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Signature Title Date
- --------- ----- ----
/s/ David Kragnes Director October 30, 1996
- ---------------------
David Kragnes
/s/ Wayne Langen Director October 30, 1996
- ---------------------
Wayne Langen
/s/ Duane Lien Director October 30, 1996
- ---------------------
Duane Lien
/s/ Patrick D. Mahar Director October 30, 1996
- ---------------------
Patrick D. Mahar
/s/ Barry W. Malme Director October 30, 1996
- ---------------------
Barry W. Malme
/s/ Robert Nyquist Chairman October 30, 1996
- ---------------------
Robert Nyquist
/s/ G. Terry Stadstad Director October 30, 1996
- ---------------------
G. Terry Stadstad
/s/ Robert Vivatson Director October 30, 1996
- ---------------------
Robert Vivatson
/s/ Michael Warner Director October 30, 1996
- ---------------------
Michael Warner
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COAL SUPPLY AGREEMENT
THIS AGREEMENT is made and entered into this 25th day of August, 1995, by
and between Kennecott Energy Company, a Delaware corporation, with offices in
Gillette, Wyoming, for and on behalf of Spring Creek Coal Company, a Montana
corporation (hereinafter together called "Seller"), and American Crystal
Sugar Company, a Minnesota cooperative with offices at 101 North Third
Street, Moorhead, Minnesota 56560 ("Buyer").
RECITALS
1. Spring Creek Coal Company and Buyer entered into a Coal Supply
Agreement dated August 1, 1986 ("the 1986 Coal Supply Agreement") relating to
the supply of coal to July 31, 1995.
2. Buyer desires to secure a continued coal supply for use in the
operation of its sugar factories in East Grand Forks, Moorhead and Crookston,
Minnesota, and in Drayton and Hillsboro North Dakota, and, at its option, at
the ProGold Limited Liability Company ("Progold LLC") (a 46% owned affiliate of
Buyer) Wahpeton, North Dakota corn processing factory referred to collectively
as the "Sugar Factories" or individually as a "Sugar Factory," from 1995 for a
period of ten (10) years.
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3. Seller desires to continue to sell to Buyer coal to be mined from its
Spring Creek Mine (the "Mine") near Decker, Montana.
NOW, THEREFORE, in consideration of the mutual covenants and agreements of
the parties set forth below, Seller agrees to sell and deliver, and Buyer agrees
to purchase and accept, coal of the quantity and quality specified below, at the
price and on the terms and conditions stated in this Agreement.
SECTION 1. TERM; CAMPAIGN SEASONS.
1.01 TERM. The term of this Agreement shall commence on August 1, 1994
("the Effective Date") and shall continue up to July 31, 2005.
1.02 CAMPAIGN SEASONS. Shipments to all sugar factories except ProGold LLC
under this Agreement are to be divided into periods of approximately ten months
commencing on or about. August 15 and continuing until about May 31 of the
following calendar year, with the last such period running from about August 15,
2004, to about May 31, 2005. These ten-month periods of coal deliveries shall
be referred to as "Campaign Seasons." Shipments to ProGold LLC may occur
year-round.
SECTION 2. COAL SOURCE.
The coal sold under this Agreement shall be from Seller's
Spring Creek Mine located near Decker, Montana. If an event of
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force majeure, as defined in Section 8, prevents delivery of coal at the Spring
Creek Mine, Seller may, but shall not be required to, supply coal from sources
other than the Spring Creek Mine ("Substitute Coal"), provided that the price
for Substitute Coal shall be adjusted as necessary so that the total delivered
cost per million Btu for Substitute Coal delivered to the Sugar Factories,
taking into account Buyer's actual transportation costs, equals the delivered
cost per million Btu for coal from the Mine, subject to any price adjustments
pursuant to Sections 4.02 and 6.01. Seller's right to furnish Substitute Coal
shall not affect its right to claim a force majeure or to claim excuse from
performance pursuant to Section 8 below. Buyer may, but shall not be required
to, accept Substitute Coal with field averages different than Spring Creek Mine
field averages specified in Section 4.01 (a) of this Agreement.
SECTION 3. COAL QUANTITY; SHIPMENT SCHEDULE.
3.01 QUANTITY. Seller agrees to sell and Buyer agrees to
purchase all of the coal (other than up to 6,500 tons of Buyer's total coal
requirement in each Campaign Season, which amount Buyer may utilize for test
coal burns) that Buyer requires to operate its Sugar Factories during the
term of this Agreement, which Buyer in good faith estimates to be 500,000
tons per
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Campaign Season. The term "ton" shall mean 2,000 pounds of coal, weighed as
provided in Section 5.04(b) below.
3.02 ESTIMATES.
(a) CAMPAIGN SEASON ESTIMATES. Upon execution of
this Agreement and by August 1 of each subsequent year, Buyer shall furnish
Seller with a written estimate of the quantity of coal to be delivered FOB
Seller's Mine during the Campaign Season beginning in that year.
(b) CHANGES TO ESTIMATES. If Buyer desires to alter the quantity of
coal to be delivered FOB Seller's Mine during a Campaign Season, Buyer may
notify Seller by mail or by telephone, telegraph or other electronic means.
Any electronic notice shall be confirmed in writing within ten (10) days.
For purposes of this Section 3.02, the total amount of coal requested by
Buyer for a Sugar Factory during any period shall be calculated by the
following formula:
[(Lp divided by Lcs) x Ecs] + A = Coal Requested
where
Lp = Length of the actual delivery period within the Campaign Season,
in days
Lcs = Length of the Campaign Season, in days
Ecs = Estimate of coal requirements for that Sugar Factory for the
Campaign Season
A = Adjustments. The term "Adjustments" shall mean the sum of all
increases or decreases in coal
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deliveries during the given period requested by Buyer.
(c) EXTENSION OF CAMPAIGN SEASON. For all sugar factories except
ProGold LLC, Buyer may extend any Campaign Season by three months before August
15 or after May 31 of such Campaign Season upon six weeks' written notice to
Seller. Campaign season for ProGold LLC is contemplated to be year-round.
3.03 SHIPMENTS. Buyer shall use reasonable efforts to schedule arrivals of
trains at Seller's Mine such that Seller can deliver coal in approximately equal
monthly amounts during any Campaign Season; provided that deliveries in the
first months of a Campaign Season will be larger to allow Buyer to build
stockpiles at each Sugar Factory. Weekly deliveries will be in substantially
equal quantities consistent with the monthly delivery quantity. Seller shall
use reasonable efforts to deliver as much coal as Buyer desires to take in any
week. Buyer agrees to pay for and accept delivery of up to 12 percent more than
Buyer's estimated or amended coal requirements in any month, provided that Buyer
shall not be required to pay for more coal than it has requested during any
Campaign Season.
SECTION 4. QUALITY OF COAL.
4.01 QUALITY AND SIZE OF COAL.
(a) FIELD AVERAGES. Field averages for Spring Creek Coal are
as follows:
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Btu: 9,400 per pound
Sulfur: 0.33 percent
Sodium oxide: 8.39 percent
Ash: 4.00 percent
Moisture: 24.50 percent
Size: run-of-mine, sized to pass through two-inch round
screen (crushed 2" x 0)
Buyer acknowledges that actual quality of particular coal shipments will vary as
different portions of the field are mined. Buyer's exclusive remedies for
variations from field averages are those set forth in Section 4.02 below.
(b) SAMPLING. Representative samples of coal f rom each trainload
shall be taken at the loading facilities at Seller's Spring Creek Mine by agents
of an independent commercial testing organization, using methods and procedures
approved by the American Society for Testing and Materials (ASTM). The
resulting analysis shall be accepted as the quality of coal on which invoices
are to be rendered and payments made in accordance with Section 6. Any change in
the quality of coal during subsequent transportation or storage shall have no
effect on the quality of coal as shown on the invoice.
4.02 REMEDIES FOR QUALITY VARIATIONS. Buyer may not reject any
trainload of coal once the coal has commenced loading onto railcars at the Point
of Delivery as defined in Section 5.01. The following remedies shall be Buyer's
exclusive
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remedies for variations in the quality of coal delivered under this Agreement.
(a) BTU/LB. If any five consecutive trainloads of coal contain a
cumulative weighted average Btu/lb less than 9200 Btu/lb, then the Purchase
Price of the fifth and each consecutive trainload that, when averaged with the
previous four trains, maintains a weighted average Btu/lb less than 9200 Btu/lb
("low Btu coal") shall be adjusted according to the following formula:
Weighted Average Btu content per pound-9200
(for five consecutive trainloads) x Purchase
------------------------------------------ Price
9200
If any five consecutive trainloads of coal contain a cumulative weighted
average Btu/lb greater than 9600 Btu/lb, then the Purchase Price of the fifth
and each consecutive trainload that, when averaged with the previous four
trains, maintains a weighted average Btu/lb greater than 9600 Btu/lb ("high Btu
coal") shall be adjusted according to the following formula:
Weighted Average Btu content per pound - 9600
(for five consecutive trainloads) x Purchase
------------------------------------------- Price
9600
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(b)(i) SULFUR DIOXIDE. If delivered coal cannot
be burned at the Sugar Factory to which it is shipped because the cumulative
weighted average sulfur dioxide content of any five consecutive trainloads of
coal exceeds 1.2 pounds per million Btu of sulfur dioxide, Buyer shall have the
following remedies:
(aa) Buyer may, at its option, reconsign all segments of the
fifth and each consecutive trainload that maintains a cumulative weighted
average in excess of 1.2 pounds per million Btu of sulfur dioxide at Seller's
expense to a Sugar Factory that can burn such coal, or
(bb) If Seller cannot cure the problem within seven (7) days
by providing Substitute Coal or otherwise, Buyer may discontinue coal purchases
(as to any unit train that has not commenced loading) with respect to the
affected Sugar Factory. Reduction in tonnage to the affected Sugar Factory
shall be Buyer's sole remedy per this Section (b) (i) (bb), and Seller shall
not be liable for any incidental or consequential damages, including lost
profits, caused thereby.
(ii) In the case of shipments of coal to the East Grand
Forks Sugar Factory, Seller shall use its reasonable efforts to deliver a
cumulative weighted average sulfur dioxide content of any five consecutive
trainloads of coal not exceeding 0.65 pounds sulfur dioxide per million Btu.
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(iii) In the case of shipments of coal to the Crookston Sugar
Factory, Seller shall use its reasonable efforts to deliver a cumulative
weighted average sulfur dioxide content of any five consecutive trainloads of
coal not exceeding 0.93 pounds of sulfur dioxide per million Btu.
(c) SODIUM OXIDE, MOISTURE AND ASH. With respect to sodium oxide,
moisture and ash content, Buyer assumes the risk of all variations
from field averages.
SECTION 5. UNIT TRAINS, LOADING AND WEIGHING.
5.01 POINT OF DELIVERY. The coal for the Sugar Factories
shall be delivered FOB loaded in railcars provided by Buyer on the railroad
loading siding at the Mine or, if Substitute Coal is delivered to any Sugar
Factory, at the railroad loading siding located at the Substitute Coal Source
(the "Point of Delivery"), with freight paid by Buyer.
5.02 TITLE. Upon the completion of loading of a railcar, the
title and risk of loss for all coal in that car shall be Buyer's.
5.03 TRAINS. Buyer shall provide trains of no fewer than 55
open-top hopper or gondola railcars each. Such railcars shall be delivered to
the Point of Delivery by Buyer, ready for loading, with hopper doors closed and
cleaned of all previous commodities.
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5.04 LOADING PROCEDURE.
(a) OPERATIONS. Buyer shall be responsible for arranging all
transportation contracts and for coordinating the arrival of railroad trains for
loading at the Point of Delivery with Seller. Buyer or its designee shall use
best efforts to give Seller at least 24 hours' notice of the arrival of railcars
at the Point of Delivery for loading. Seller shall operate its railcar loading
facilities twenty-four (24) hours per day, three hundred sixty-five (365) days
per year, subject to Seller's labor agreements. Seller shall, at its expense,
load each railcar to its full visible capacity and will complete the loading of
each train, including authorization of the train's departure. Seller will hold
Buyer harmless from any damages caused by the overloading of railcars.
(b) WEIGHING. The weight of coal sold under this Agreement
shall be determined on appropriate commercial scales chosen by Seller and
installed at Seller's loading facilities at the Spring Creek Mine. Seller's
scales shall be inspected and certified by Hoke and Associates at six-month
intervals during the term of this Agreement. The weights determined at Seller's
Spring Creek Mine shall be accepted by Buyer as the quantity of coal for which
invoices are to be rendered and payments made in accordance with Section 6
below. Any change in the weight of
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coal during subsequent transportation or storage shall have no effect on the
weight of coal shown on the invoice. In the event Seller's scales are
inoperative for a period, Seller shall inform Buyer and use its best efforts to
restore operation of the scales as soon as possible. The weight of coal per
railcar delivered during such period that scales are inoperative shall be
deemed equal to the average weight per railcar for coal delivered during the
preceding month. If Seller's scales are inoperative during the first month of
this Agreement, the weight of coal delivered shall be determined by mutually
acceptable independent means.
SECTION 6. PRICE; PRICE ADJUSTMENTS.
6.01 PURCHASE PRICE. The Purchase Price per ton of coal (2,000
pounds) to be paid by Buyer, or by Buyer on behalf of ProGold LLC, to Seller
for each delivery of coal FOB Point of Delivery in railcars under this
Agreement shall be the sum of (a) the Base Price, as defined and as adjusted
as provided below, plus (b) the Pass-Through Costs, as defined in Section
6.04, plus (c) the New Costs, as defined in Section 6.05, applicable to such
delivery. The Purchase Price, as thus determined, shall be subject to
adjustment for changes in the depletion allowance as provided in Section
6.06, and for Btu Variations as provided in Section 4.02.
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*CONFIDENTIAL TREATMENT REQUESTED*
As of the Effective Date, the initial Base Price per ton of coal FOB
Point of Delivery is equal to ** (the "Initial Base Price"), the Pass-Through
Costs are equal to ** and the Purchase Price is therefore equal to ** per
ton. The Purchase Price per ton of coal delivered by Seller to Buyer or to
ProGold LLC during the Campaign Season from August 1994 to May 1995 ("the
Campaign Season 1994-95"), shall be adjusted from the Purchase Price to be
paid by Buyer for such coal delivery pursuant to the 1986 Coal Supply
Agreement to the Purchase Price referred to in this Section 6.01. Such
adjustments in Purchase Price for deliveries of coal already made during the
Campaign Season 1994-95 to the date of this Agreement shall be paid or
credited to Buyer in accordance with Section 6.08 hereof.
6.02 INDEX ADJUSTMENT OF BASE PRICE. The Initial Base Price as
of the Effective Date shall be divided, for purposes of escalation, into
three Initial Base Price Components, weighted in percentage terms as follows:
(1) Gross Domestic Product-Implicit Price Deflator (GDP-IPD Component: 40%);
(2) SIC Code 122 (Labor Component: 30%); and (3) PPI 112 (Machinery
Component: 30%). The Initial Base Price values are set forth as follows:
GDP - IPD = First published, first quarter 1994 value
(125.7) [Source: Department of Commerce, Bureau of
Economic Analysis] as published in the April 1994
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monthly report, "Survey of Current Business", Table 7.13.
SIC 122 = First published, May 1994 value (17.85) [Source: U.S.
Department of labor, Bureau of Labor Statistics] as published in the
July 1994 monthly report, "Employment & Earnings" currently in Table B-15.
PPI - 112 = First published, June 1994 value (133.6) [Source: U.S.
Department of Labor, Bureau of Labor Statistics] as published in the
June 1994 monthly report, "Producer Price Indexes", currently in Table 6.
The Initial Base Price will apply to all shipments of coal made during the
Campaign Season 1994-1995 and all shipments thereafter through September 30,
1995.
The Initial Base Price will be adjusted on the first day of each
calendar quarter during the term of this Agreement, beginning October 1,
1995. The Initial Base Price, as adjusted, will be referred to as the "Base
Price". These adjustments will be calculated as follows using the most
current first published index information available at the beginning of each
quarter:
ABP = |.4 x (AG) +.3 x (AL) + .3 x (AM) |x IBP
| ------- ------ ------- |
| (125.7) (17.85) (133.6) |
where,
ABP = Adjusted Base Price for the current calendar quarter.
AG = GDP/IPD first published index value for the second preceding
quarter.
AL = SIC 122 AHE first published index value for the third preceding
month.
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AM = PPI - 112 first published index value for the second preceding
month.
IBP = The Initial Base Price as referred to in Section 6.01.
6.03 CHANGES IN INDICES. Should any of the indices referred
to in Section 6.02 above be discontinued, the parties shall select a
substitute index or indices by mutual agreement.
6.04 PASS-THROUGH COSTS. Seller's costs per ton of coal
produced and delivered, falling into the categories below, shall be treated
as "Pass-Through Costs" fully reimbursable by Buyer to Seller over and above
the Base Price determined under Sections 6.01 and 6.02. The amounts set forth
in attached Exhibit A are the amounts that will be included in the Purchase
Price as of August 1, 1994, for each Pass-Through Cost Item. Pass-Through
Costs, other than pass through costs assessed on values relating to the sales
price, shall be prorated over the total volume of Seller's production from
the Mine, and Buyer shall be assigned, as its actual Pass-Through Costs, only
that prorated share based on Buyer's share of the total of Seller's
production from the Mine. Buyer shall receive a refund or credit against
future purchases (if applicable) in the event Seller receives a reduction in
or refund of any Pass-Through Costs charged to Buyer. The categories of
Pass-Through Costs are more specifically defined as follows:
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(a) TAXES AND BLACK LUNG COSTS. All taxes and black lung
costs (other than taxes directly borne by Buyer or taxes imposed on or
measured by net income and franchise taxes) levied or assessed by any
governmental authority on the coal, on its severance from the soil, or on
Seller's mining facilities or operations or other activities incident to the
performance of its obligations under this Agreement, including all taxes and
governmental charges levied or assessed against Seller with respect to the
coal for reclamation by any governmental authority; taxes imposed pursuant to
26 USC Section 4121 or other successor provision of law, or other taxes that
may be imposed to provide health or safety benefits to Seller's employees;
and all costs, other than taxies, incurred by Seller in connection with
production of coal at the Mine for black lung, including (without limitation)
premiums for black lung insurance, or payments made or accrued to a private
or public trust (including a trust fund established pursuant to Section
501(c) (21) of the Internal Revenue Code) or reserve for future black lung
claims. In the event Seller chooses to cover its potential black lung
liability by a means other than black lung insurance, the amount included as
black lung costs under this provision shall not exceed the cost of such
insurance. Buyer is to bear and pay directly (or reimburse Seller for any
such taxes Seller pays) all sales, use,
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or similar taxes levied or assessed on the coal purchased hereunder. The
parties agree that if taxes are assessed on values related to the sales
price, taxes paid by Buyer under this Agreement shall be computed using the
Purchase Price under this Agreement.
(b) ROYALTIES. All royalties in effect on the coal sold to
Buyer and for which Seller is liable under the leases then prevailing,
notwithstanding suspension of payment pending any appeal of the royalty or
adjustment thereof. In the event any royalty or adjustment is appealed by
Seller and decreased as a result, Seller will refund to Buyer any
overpayments. The amount of royalties to be paid by Buyer as to any month's
deliveries of coal mined under leases held by Seller ("Leased Coal") shall
equal the applicable royalty per ton multiplied by the number of tons of
Leased Coal delivered to Buyer from the Mine during that month. If royalties
are assessed on values related to the sales price, royalties paid by Buyer
under this Agreement shall be computed using the Purchase Price under this
Agreement.
6.05 NEW COSTS. The Base Price provided in Section 6.01
includes Seller's best estimate of the cost, per ton of coal, of complying
with all federal, state, and local laws, rules, and regulations in force as
of July 1, 1994, except for
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those items specifically designated as Pass-Through Costs, as they were
implemented, interpreted, and enforced on the Effective Date, which estimate
shall, for purposes of this provision, be binding upon Seller (such costs
shall be referred to as "Compliance Costs") . To the extent that new laws,
rules, regulations, or governmental orders coming into effect after July 1,
1994, or changes in the implementation, interpretation or enforcement of
laws, rules and regulations in effect on July 1, 1994, cause any increase or
decrease in the Compliance Costs, the Purchase Price shall be increased or
decreased, as the case may be, by the amount that accurately reflects the
change in Compliance Costs incurred. Such changes in Compliance Costs shall
be referred to as "New Costs."
New Costs shall be prorated over the total volume of Seller's production
from the Mine if the new cost is based on tonnage sold from the Mine, and
Buyer shall be assigned, as its actual New Costs, only that prorated share
based on its share of the total of Seller's production from the Mine. If the
New Cost is based on a percentage of Sales Price, Buyer shall pay its portion
of the new cost based on its Sales Price.
6.06 ADJUSTMENT OF PURCHASE PRICE FOR CHANGES IN DEPLETION
ALLOWANCE. If at any time after the Effective Date changes are made in the
law regarding the allowance for depletion
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*CONFIDENTIAL TREATMENT REQUESTED*
on coal that affect the state and federal income tax deductions for depletion
available to Seller, the Purchase Price shall be increased or decreased by
the amount needed to provide Seller with the same cash flow from the sale of
each ton of coal under this Agreement after state and federal income taxes.
In calculating Seller's after-tax cash flow from the sale of a ton of coal
for this purpose, Seller shall compute its taxes as if it filed separate
(nonconsolidated) state and federal income tax returns and paid state and
federal income taxes at the maximum rate for corporations.
6.07 BILLING AND PAYMENT. Seller shall invoice Buyer
semimonthly for coal delivered. Payment shall be made by check or wire
transfer, due within twenty (20) days after the date of each invoice;
provided that Buyer may withhold payment of the portion of any invoice which
is the subject of a bona fide dispute under the provisions of this Agreement.
Checks and wire transfers shall be made to Seller's account as follows:
Wire Transfer:
Bank: FIRST SECURITY BANK OF UTAH
ABA No.: 124000012
Account No.: **
Account Name: Spring Creek Coal Company
18
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*CONFIDENTIAL TREATMENT REQUESTED*
Check:
Account Name: Spring Creek Coal Company
Account No: **
Address: P.0. Box 26094
Salt Lake City, Utah 84126-0094
The details of this account shall, from time to time, be notified in
writing to Buyer. All amounts due for which payment is not timely made shall
bear interest from the date on which payment became due at the then
prevailing prime interest rate quoted by Morgan Guaranty Trust Company plus 2
percent per annum. All invoiced amounts shall be subject, however, to
subsequent adjustment wherever this Agreement specifically so provides, and
no interest shall be payable to either party with respect to the amounts of
such adjustments. If payment is not made when due, Seller may give Buyer
written notice of such past due payment. Three (3) days after such notice is
effective, pursuant to Section 10.07, Seller may suspend deliveries until the
invoice, including any interest, has been paid. If the invoice is not paid
within fifteen (15) days after Seller's notice becomes effective, Buyer's
failure to make payment when due shall constitute a material breach of this
Agreement by Buyer, and Seller may, at its sole option, cancel this
Agreement.
6.08 ADJUSTMENTS. The parties recognize that at the time each
invoice for coal is prepared, it may not be possible to calculate
definitively the costs and other price
19
<PAGE>
adjustment factors applicable to the calendar half-month for which such
invoice is rendered; each invoice will, therefore, be based upon the most
current data reasonably available at the time of invoicing. Upon receipt of
information permitting determination of price adjustments, Seller shall
prepare and furnish to Buyer a supplemental invoice reflecting that
information. Seller or Buyer shall, within fifteen (15) days after mailing
of such supplemental invoice, pay the sum required by such invoice as above
provided.
6.09 FINALITY OF INVOICES. Except as otherwise expressly
provided in this Agreement, any invoice that is not contested within
twenty-four (24) months after the date thereof shall be deemed correct and
final unless any of the Pass-Through Costs have retrospective effect on the
Purchase Price of coal more than 24 months after the date of invoice, and
provided that Seller shall advise Buyer of any such effect or potential
effect within a reasonable time following Seller becoming so aware.
6.10 RECORDS AND AUDITS. Seller shall keep accurate records
and books of accounts showing all data relating to price, quantity and
quality determinations and adjustments required for purposes of this
agreement. At the election of Buyer, once each fiscal year of Seller, Seller
shall make such records and books of account covering the preceding fiscal
year
20
<PAGE>
available for audit at Seller's offices during Seller's normal office hours.
Such audits shall be prepared and certified to by a nationally recognized
firm of certified public accountants to be mutually agreed by Buyer and
Seller and Buyer shall bear the expenses of the audit. The findings of the
audit will be binding on the parties absent a finding by either party of a
material error in the audit which error is identified within 60 days after
completion of the audit and submission of the findings to the Seller. If the
audit discloses that an overpayment or an under payment has been made, the
amount thereof shall promptly be paid to the party to whom it is owed by the
other party. Buyer shall have the option of having the audit prepared by
Seller's independent auditors as part of the regular annual audit of Seller's
books and records. In such event, only those expenses in excess of Seller's
normal audit expenses will be borne by Buyer. The accounting firm conducting
the audit shall be bound not to disclose and shall treat as confidential any
and all proprietary information of Seller furnished to or examined by such
firm in connection with the audit.
*CONFIDENTIAL TREATMENT REQUESTED*
SECTION 7. DISCLAIMER OF WARRANTIES, LIMITATION ON LIABILITY.
7.01 EXPRESS WARRANTIES. BUYER AGREES THAT SELLER MAKES NO
EXPRESS WARRANTIES OTHER THAN THOSE IDENTIFIED AS SUCH IN THIS AGREEMENT.
21
<PAGE>
7.02 IMPLIED WARRANTIES. ALL WARRANTIES OF MERCHANTABILITY
OR OF FITNESS FOR A PARTICULAR PURPOSE OR ARISING FROM A COURSE OF DEALING OR
USAGE OF TRADE ARE SPECIFICALLY EXCLUDED.
7.03 LIMITATION ON LIABILITY. In no event shall either party have
liability to the other party for incidental or consequential damages except as
expressly stated in this Agreement.
SECTION 8. FORCE MAJEURE.
If either party is unable to meet any of its obligation under this
Agreement as a result of flood, earthquake, storm, or other act of God, fire,
derailment, accident, strike, lockout, boycotts, picketing, shortages of or
inability to obtain electric power, raw materials, railcars or machinery,
mechanical breakdown in facilities, war, insurrection, riot, catastrophic
sugar beet or corn crop failure (as applicable), railroad line abandonment,
act of government or governmental agency, or due to any cause beyond the
reasonable control of either party, including the inability of a Sugar
Factory, the Mine and/or the rail carrier to meet its obligations for reasons
whether similar or dissimilar to the foregoing and whether foreseeable or
unforeseeable, such event will be deemed an event of force majeure. In
addition, it shall be deemed an event of force majeure in the event Buyer is
22
<PAGE>
unable to burn Seller's coal due to ash-fouling, sulfer dioxide emissions, or
other legally enforceable environmental restrictions, or either party
permanently closes or experiences partial failure or nonoperation of any of
its facilities lasting a minimum of seven (7) days as a result of reasons
beyond the control of such party. In the event of force majeure, the
obligations of the parties, other than payment for coal previously delivered,
shall be suspended for the duration of the event of force majeure, provided
that reasonable notice is given. Whenever in Seller's judgment any event of
force majeure requires restriction of deliveries, Seller reserves the right
in its discretion to allocate its available supply of coal in a fair and
equitable manner without obligation to furnish products from other sources.
No suspension or reduction for reason of force majeure shall invalidate the
remainder of this Agreement; but on removal of the cause, shipments shall
resume at the specified rate; deficiencies in shipments so caused shall not
be made up except by mutual consent. If any event of force majeure prevents
the performance of either party for a period of one year or more despite that
party's efforts to eliminate the force majeure event and to mitigate its
impact, then the party not claiming an event of force majeure may terminate
this Agreement by providing at least thirty (30) days written notice of
termination to the other
23
<PAGE>
party. The provisions of this Section shall not excuse either party from
performing unless that party gives a reasonable notice to the other party of the
occurrence of an event of force majeure.
SECTION 9. DISPUTES.
In the event any dispute arises between the parties concerning any issue of
law or fact arising out of this Agreement, it shall be settled by arbitration
pursuant to the Commercial Arbitration Rules of the American Arbitration
Association, and judgment upon the award may be entered in any court having
jurisdiction over the matter.
The parties to the arbitration shall be entitled to such discovery as would
be available to them under the Federal Rules of Civil Procedure, and the
arbitrators will have all the authority of a court under such Rules incidental
to such discovery, including but not limited to orders to produce documents or
other materials and orders to appear and submit to deposition and to impose
appropriate sanctions, including but not limited to awarding sanctions against a
party for failure to comply with any order.
The arbitration panel shall consist of three arbitrators with experience in
the coal industry, one appointed by Seller, one by Buyer and the third by the
arbitrators appointed by Seller
24
<PAGE>
and Buyer. If the party appointed arbitrators cannot agree within fifteen (15)
days after their appointment on appointment of the third arbitrator, then the
third arbitrator shall be appointed by the American Arbitration Association.
SECTION 10. GENERAL PROVISIONS.
10.01 WAIVER. Failure of either party at any time to require
performance of any provision of this Agreement shall not limit that party's
right to enforce the provisions, nor shall any waiver of any breach of any
provision be a waiver of any succeeding breach of the provision itself or of any
other provision.
10.02 HEADINGS. The headings in this Agreement are included only
for convenience and shall not control or affect the meaning or construction of
this Agreement.
10.03 ENTIRE AGREEMENT. This Agreement is the entire agreement
between the parties. There are no other provisions, representations, warranties
or understandings, express or implied. No modification, variation or amendment
of this Agreement shall be of any force or effect unless it is in writing and
signed by all the parties.
10.04 BINDING EFFECT. This Agreement shall be binding upon and
inure to the benefit of the parties, their respective successors and assigns.
25
<PAGE>
10.05 GOVERNING LAW. This Agreement shall be construed and
enforced in accordance with the laws of the State of Minnesota.
10.06 COUNTERPARTS. This Agreement may be executed in any number
of counterparts, each of which shall be deemed an original.
10.07 NOTICES. Notices under this Agreement shall be in writing
and shall be effective when actually delivered. If mailed, a notice shall be
deemed effective five (5) days after mailing as registered or certified mail,
postage prepaid, directed to the other party as set out below. If via
commercial courier or express service, a notice shall be deemed to be effective
upon its receipt, if directed to the other party as set forth below. If via
telefacsimile, a notice shall be deemed effective upon receipt of the successful
telefax transmission report, directed to the other party as set out below:
SELLER: KENNECOTT ENERGY COMPANY
Attn: Contract Administration
505 South Gillette Avenue
Gillette, Wyoming 82716
or
Caller Box 3009
Gillette, Wyoming 82717-3009
Fax No. (307) 687-6009
BUYER: AMERICAN CRYSTAL SUGAR COMPANY
Attn: Vice President, Operations
101 North Third Street
Moorhead, MN 56560
Fax No. (218) 236-4494
26
<PAGE>
The addresses and fax numbers of any party may be changed by giving notice in
writing at any time to the other party.
10.08 CONFIDENTIALITY. Any nonpublic information, oral or
written, including the contents of this Agreement and any related agreement,
disclosed by either party to the other shall be considered confidential
information, and such information shall not be disclosed to any third party
other than to Seller's parent corporation, Progold LLC, or the employees,
accountants, attorneys, and lenders of such parties, and will be kept secret and
confidential during the term of this Agreement.
10.09 EFFECT ON PRIOR AGREEMENT. This Agreement supersedes the
agreement between the parties dated August 1, 1986, as of the Effective Date of
this Agreement. The parties do not intend to waive any right to payment or
cause of action under the Agreements dated August 1, 1986, arising from facts,
acts or omissions before the Effective Date of this Agreement.
10.10 THIRD PARTY BENEFICIARY. Progold LLC shall be deemed to
be a third party beneficiary under the terms of this Agreement to the extent
that Progold LLC receives coal under this Agreement. Buyer agrees that it
shall pay for all coal delivered to Progold LLC under the terms hereof.
27
<PAGE>
IN WITNESS WHEREOF, the parties have duly executed this
Agreement as of the Effective Date.
SELLER KENNECOTT ENERGY COMPANY FOR AND ON
BEHALF OF SPRING CREEK COAL COMPANY
By /s/ ILLEGIBLE
-----------------------------
Title: V.P. Marketing & Sales
-----------------------------
BUYER AMERICAN CRYSTAL SUGAR COMPANY
By /s/ Marcus F. Richardson
-----------------------------
Title: C.O.O.
-----------------------------
28
<PAGE>
EXHIBIT A
Estimated Pass-Through Costs
Included in Base Price
as of August 1, 1994
Price Per
Ton
---------
SECTION 6.04(A) - TAXES
Severance Tax *
Gross Proceeds Tax C
Resource Indemnity Trust Tax O
Federal Reclamation Fee N
Black Lung Excise Tax F
Black Lung Insurance I
Property Taxes D
Depletion Allowance E
N
Total Taxes T
I
SECTION 6.04(B) - ROYALTIES A
L
BLM Royalty
Rosebud Royalty T
R
Total Royalty E
A
T
TOTAL ESTIMATED PASS-THROUGH COSTS M
E
N
T
R
E
Q
U
E
S
T
E
D
29
<PAGE>
COAL TRANSPORTATION AGREEMENT
THIS AGREEMENT is made and entered into this 25th day of August, 1995, by
and between Northern Coal Transportation Company, an Oregon corporation with
an office in Gillette, Wyoming ("Northern"), and American Crystal Sugar
Company, a Minnesota cooperative with offices at 101 North Third Street,
Moorhead, Minnesota 56560 ("Shipper").
RECITALS
1. Concurrent with this Coal Transportation Agreement ("Agreement"),
Kennecott Energy Company, for and on behalf of Spring Creek Coal Company, has
executed a Coal Supply Agreement with Shipper (the "Coal Supply Agreement")
for the sale and purchase of coal from the Spring Creek Mine (the "Mine") to
Shipper. The coal is to be used in Shipper's sugar factories in East Grand
Forks, Moorhead and Crookston, Minnesota, in Drayton and Hillsboro, North
Dakota, and possibly in Progold LLC's Wahpeton, North Dakota, sugar factory.
In this Agreement, these sugar factories shall be referred to collectively as
the "Sugar Factories" or individually as a "Sugar Factory." Capitalized terms
not otherwise defined in this Agreement will have the meaning set forth in
the Coal Supply Agreement.
<PAGE>
2. The Coal Supply Agreement contemplates the establishment of a
transportation system that can take delivery at the Point of Delivery (as that
term is defined in Section 5.01 of the Coal Supply Agreement) of estimated
requirements of coal in approximately equal weekly and monthly amounts and
transport those amounts to the Sugar Factories.
3. Shipper has appointed United Sugars Corporation, a Minnesota company
with offices at 1700 Eleventh Street, Moorhead, Minnesota ("USC") to act as its
agent in procuring and facilitating the transportation of coal to the Sugar
Factories. USC has the authority and is acting on behalf of Shipper in
relation to the transportation of coal under the Coal Supply Agreement. USC
will be acting on behalf of Shipper under this Agreement.
4. Northern desires to enter into a contract with Shipper to arrange for
the transportation of coal called for by the Coal Supply Agreement and to
perform all of the obligations of Shipper with respect to the transportation of
coal required by the Coal Supply Agreement.
NOW, THEREFORE, in consideration of the mutual covenants and agreements of
the parties set forth below, the parties to this Agreement agree as follows:
2
<PAGE>
SECTION 1. TERM; CAMPAIGN SEASONS.
1.01 TERM. The term of this Agreement shall commence on July
1,1995 ("the Effective Date"), and shall continue to July 31, 2005.
1.02 CAMPAIGN SEASONS. Shipments under the Coal Supply
Agreement have been divided into periods of approximately ten months
commencing on or about August 15 and continuing until about May 31 of the
following calendar year, with the last such period running from about August
15, 2004, to about May 31, 2005. These ten-month periods of coal deliveries
shall be referred to in this Agreement as "Campaign Seasons." The Campaign
Season for ProGold LLC is contemplated to be year-round.
SECTION 2. SHIPMENTS.
2.01 DESCRIPTION OF TRANSPORTATION SYSTEM. Northern agrees to
transport from the Spring Creek Mine to the Sugar Factories the estimated annual
requirements under the Coal Supply Agreement in approximately equal weekly and
monthly amounts. The coal is to be delivered to Shipper FOB Point of Delivery.
The Coal Supply Agreement anticipates that deliveries in the first months of a
Campaign Season will be larger to allow Shipper sufficient time to build
stockpiles at each Sugar Factory. Northern will design the system to allow
Shipper Substantial flexibility to increase or decrease the amount of coal
delivered
3
<PAGE>
to a Sugar Factory by each unit train (when broken into segments), subject to
the tonnage minimum stated in Section 2.09 of this Agreement. However, Shipper
may not stop a unit train from cycling except in the event of a force majeure as
provided in Section 5 of this Agreement, since such interruptions greatly
increase the difficulty of transportation management. Northern reserves the
right to tender trains of not more than 80 cars in total or 115,000 tons of
coal in total per calendar month consisting of the total cars to Shipper
and/or Minn-Dak Farmers Cooperative (""Minn-Dak") for the destination Sugar
Factories and Minn-Dak's Sugar Factory so that following telephonic notice to
Shipper of such limitation aforesaid Northern shall not be required to tender
trains totaling 80 cars or 115,000 tons per calendar month under this
Agreement to both Minn-Dak and Shipper, until such time as Northern gives
telephonic notice to Shipper that the limitation no longer applies. There
will be a stop at Fargo, North Dakota, for removal of cars to be delivered to
Moorhead and Wahpeton, North Dakota. Shipper may not require Northern to
continue more than 75 cars to Grand Forks, North Dakota. At origin, Northern
may place all cars for delivery via Fargo, North Dakota, at the head of the
train. A detailed description of the transportation system, as set forth
4
<PAGE>
Northern's agreement with the Burlington Northern Railroad (the "Carrier"), is
set forth in Exhibit A.
2.02 RESPONSIBILITIES CONCERNING DELIVERY - Northern shall
deliver coal to the Sugar Factories. Northern will deliver coal in railcars
directly to sidings on Shipper's property at the Sugar Factories. Northern will,
on Shipper's behalf, fully pursue all claims against third parties for loss of
the coal in any given railcar from the time that the railcar is completely
loaded at the Spring Creek Mine until the railcar is on property at a Sugar
Factory.
2.03 COORDINATION. Northern shall be responsible for arranging
all transportation and for coordinating with Spring Creek Coal Company the
arrival of railroad trains for loading at the Point of Delivery (as defined in
Section 5.01 of the Coal Supply Agreement). Northern shall use reasonable
efforts to schedule arrivals of trains at the Point of Delivery such that coal
can be delivered in approximately equal monthly amounts during any Campaign
Season; provided that deliveries in the first months of a Campaign Season will
be larger to allow Shipper to build stockpiles at each of the Sugar Factories.
Weekly shipments will be in substantially equal quantities consistent with the
monthly delivery quantity.
5
<PAGE>
2.04 NOTICE OF CHANGES IN TRAIN SEGMENTS. If Shipper desires to
alter the size of train segments to be transported to any Sugar Factory during a
Campaign Season, Shipper may notify Northern by mail or by telephone, telegraph
or other electronic means. Any electronic notice shall be confirmed in writing
within ten (10) days. Requested changes in the size of train segments to be
transported to any Sugar Factory will be implemented for the first train loaded
more than 24 hours after notice is received; provided that Northern shall not be
obligated to provide unit trains of more than 80 cars or fewer than 55 cars,
which trains are comprised -of Shipper and Minn-Dak cars. Subject to system
limitations, a train segment that has left the Mine may be reconsigned to a
different Sugar Factory. Shipper shall monitor and control its coal stockpiles
so that requested increases or decreases in the size of train segments delivered
to the Sugar Factories will not result in a unit train with more than 80 cars or
fewer than 55 cars which may be combined with Minn-Dak shipments. USC will act
on Shipper's behalf in coordinating unit train composition with Minn-Dak and
Northern.
2.05 RIGHT TO TRANSPORT EXCESS COAL. To maintain the efficient
operation of its transportation system, Northern may transport from the Spring
Creek Mine to the Sugar Factories
6
<PAGE>
up to 12 percent more than Shipper's estimated or amended coal requirements in
any month, as contemplated by Section 3.03 of the Coal Supply Agreement.
Shipper agrees to accept and pay for the transportation of such coal, provided
that Shipper shall not be required to pay transportation for more coal than it
has requested during any Campaign Season, subject to the minimum tonnage stated
in Section 2.09 of this Agreement.
2.06 EXTENDED CAMPAIGN SEASON. Under Section 3.02 (b) of the
Coal Supply Agreement, Shipper may extend any Campaign Season by three months
before August 15 or after May 31 of such Campaign Season upon six weeks written
notice to Spring Creek Coal Company. If Shipper chooses to extend any Campaign
Season, it shall also be required to give Northern six weeks written notice and
Shipper shall pay Northern for any increased transportation costs as specified
in Section 2.08 of this Agreement.
2.07 UNLOADING. Shipper agrees to provide facilities at the
Sugar Factories to permit delivery by Northern of segments of a train. Said
facilities shall be designed and constructed for carload unloading. Northern
will place the loaded cars on a siding on Shipper's property. The Shipper will
complete unloading operation at its own expense. The Shipper shall exercise
reasonable care and caution when unloading.-Cl
7
<PAGE>
railcars at their facilities and will insure that railcar doors are closed with
latches in the locked position, with cargo hoppers free and clear of any foreign
debris. The Shipper shall pay for the actual costs incurred by Northern in
respect of any failure of Shipper to exercise such reasonable care and caution,
including any origin demurrage incurred by Northern as a result thereof.
Plant-personnel are responsible to notify USC, who will in turn notify
Northern, of any problems or deficiencies found concerning the railcars.
When a train reaches a Sugar Factory, the coal shall be unloaded from each
railcar within five (5) full days of the date of the arrival of such railcar
to ensure that at least 55 empty railcars- are available at all times to make
up unit trains. In the event that railcars are not unloaded within the time
specified above, Northern reserves the right to charge a mutually acceptable
demurrage rate on each such railcar.
2.08 CHANGES IN TRANSPORTATION SYSTEM. Shipper acknowledges that
changes in the transportation system including, but not limited to, (i)
reconsignment, of train segments from one Sugar Factory to another; (ii) any
break in the unit train cycle due to failure to unload railcars or other reasons
caused by Shipper; (iii) any extension of the Campaign Season as provided in
Section 2.06 of this Agreement, and (iv) Carriers Line Abandonment as set forth
in Section 7.01 may result in changes
8
<PAGE>
*CONFIDENTIAL TREATMENT REQUESTED*
in Northern's railcar and other costs as set forth in Exhibit A. Unless excused
by Section 5, Shipper agrees to pay all such changes in transportation costs
caused by or attributable to Shipper or USC. Northern WILL be responsible for
changes in transportation costs caused by or attributable to Northern. Northern
will be responsible for changes in transportation costs caused by or
attributable to Northern.
2.09 FREIGHT COSTS DUE TO QUANTITY VARIATIONS.
(a) Shipper acknowledges that if it takes delivery of less
than a total of ** tons of coal in any Campaign Season, Northern may incur
additional freight costs. If in any Campaign Season (1) Shipper and Minn-Dak
take combined deliveries of less than a cumulative total of ** tons of coal,
and (2) Shipper takes delivery of less than a cumulative total of ** tons of
coal, Shipper agrees to pay Northern an amount representing liquidated
damages (and not a penalty) as defined and specified in Exhibit B. Such
cumulative minimum volumes of coal will be reduced as excused or permitted by
Sections 2.09(b) or 5 of the Shipper's and Minn-Dak Coal Transportation
Agreements.
(b) Notwithstanding the provisions of Section 5 of this
Agreement, the cumulative minimum volume of coal to be transported during
each Campaign Season during the term hereof shall be reduced if, after the
exhaustion of all other commer-
9
<PAGE>
*CONFIDENTIAL TREATMENT REQUESTED*
cially reasonable efforts by Shipper which are coordinated with Northern,
Shipper installs gas-fired pulp dryers at any one or more of its processing
facilities in order to comply with air particulate emission regulatory
requirements. Shipper shall notify Northern of its intention to convert any
of its coal-fired pulp dryers to gas-fired pulp dryers and the effective date
of such conversion(s) under this Section. Upon the effective date of such
conversion(s), the annual minimum volume requirements of coal to be shipped
hereunder by Shipper shall be reduced as follows.
Conversion of Pulp Results on Reduction in Annual
Dryers at .... Minimum Volume of......
Crookston ** Tons/Year
Drayton ** Tons/Year
East Grand Forks ** Tons/Year
Hillsboro ** Tons/Year
Moorhead ** Tons/Year
This reduction in annual minimum volume shall be proportionately reduced in
the first year of the conversion to reflect the portion of the year with
respect to which the reduction is to be effective.
2.10 FROZEN COAL. Shipper assumes the risk that coal may
freeze in transit between the Spring Creek Mine or any source of Substitute
Coal and the Sugar Factories. No price
10
<PAGE>
adjustment or delay in unloading shall be allowed for frozen coal.
2.10 SOLE REPRESENTATIVE. For the purpose of proper and
efficient communications, it is expressly understood between Northern and the
Shipper that Northern is the sole representative of Shipper, USC and the Sugar
Companies for all services stated or contemplated in this Agreement and that all
communication, verbal or written, relating in any way to the rates, terms,
conditions, and performance of this Agreement be accomplished solely between
Northern, Northern Mine's Representative and Carrier. The only exception to the
above will involve day-to-day communications between USC or the Sugar Companies
it represents and the Carrier pertaining to or relating to railcar switching
from and to the Sugar Factories or such switching of destination related
operations.
SECTION 3. TRANSPORTATION COSTS; ADJUSTMENTS; BILLING AND PAYMENT
3.01 TRANSPORTATION COSTS. Shipper will pay Northern the sum
of (a) the transportation costs as set out in Exhibit C and as adjusted
pursuant to Section 3.03, below, plus (b) any increased costs caused by
changes in the transportation system under Section 2.08 which are caused by
Shipper, plus
11
<PAGE>
(c) any increased costs caused by Quantity Variations under Section 2.09
(together called "Transportation Costs").
3.02 WEIGHING. Loaded cars will not be weighed by Northern.
Weights to be used for the assessment of transportation charges shall be
those ascertained by Spring Creek Coal Company at the Spring Creek Mine
pursuant to Section 5.04(b) of the Coal Supply Agreement.
3.03 ADJUSTMENT FOR CHANGES IN TRANSPORTATION COSTS. The
Transportation Costs shall be adjusted quarterly by adding to them the
product of (a) the applicable Transportation Costs shown on Exhibit C,
multiplied by (b) the percentage change of seventy percent (70%) GDP FW most
recent quarterly growth rate (described in Exhibit D) effective October 1,
1995, provided always that the Transporation Costs shall not reduce below
those set forth in Exhibit C hereto. In the event the GDP FW is
discontinued, the successor tariff or index applicable to Northern's
transporation agreements with the Carrier (as outlined in Exhibit D) shall
apply for purposes of this provision.
3.04 BILLING AND PAYMENT. Northern shall invoice Shipper
semimonthly for Transportation Costs. Payment shall be due on each invoice
within twenty (20) days after the date of the invoice by check or wire
transfer to Northern's account, as follows:
12
<PAGE>
*CONFIDENTIAL TREATMENT REQUESTED*
Wire Transfer:
BANK: First Security Bank of Utah
ABA No: 124000012
Account No: **
Account Name: Northern Coal Transportation
Check:
Account Name: Northern Coal Transportation
Account No.: **
Address: P.O. Box 26094
Salt Lake City, Utah 84126-0094
All amounts due for which payment is not timely made shall bear interest from
the date on which payment became due at the then prevailing prime interest
rate quoted by Morgan Guaranty Trust Company plus two percent per annum. All
invoiced amounts shall be subject, however, to subsequent adjustment wherever
this Agreement specifically so provides, and no interest shall be payable to
either party with respect to the amounts of such adjustments. If payment is
not made when due, Northern may give Shipper written notice of such past due
payment. Three days after such notice is effective, pursuant to Section
7.08, Northern may suspend transportation until the invoice, including any
interest and any increased transportation costs caused by the suspension of
deliveries, has been paid. If the invoice is not paid within 15 days after
Northern's notice becomes effective, Shipper's failure to make payment when
due shall constitute a
13
<PAGE>
material breach of this Agreement by Shipper, and Northern may, at its sole
option, cancel this Agreement.
3.05 ADJUSTMENTS. The parties recognize that at the time each
invoice for Transportation Costs is prepared, it may not be possible to
calculate definitively the costs and other adjustment factors applicable to
the calendar half-month for which such invoice is rendered; each invoice
will, therefore, be based upon the most current data reasonably available at
the time of invoicing. Upon receipt of information permitting determination
of price adjustments, Northern shall prepare and furnish to Shipper a
supplemental invoice reflecting that information. Northern or Shipper shall,
within fifteen (15) days after mailing of such supplemental invoice, pay the
sum required by such invoice as above provided.
3.06 FINALITY OF INVOICES. Except as otherwise expressly
provided in this Agreement, any invoice that is not contested within
twenty-four (24) months after the date thereof shall be deemed correct and
final.
3.07 RECORDS AND AUDITS. Northern shall keep accurate records
and books of accounts showing all data relating to Transportation Costs for
purposes of this Agreement. At the election of Shipper, once each fiscal
year of Northern, Northern shall make such records and books of account
covering the
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<PAGE>
*CONFIDENTIAL TREATMENT REQUESTED*
preceding fiscal year available for audit at Northern's Offices during
Northern's normal office hours. Such audits shall be prepared and certified
to by a nationally recognized firm of certified public accountants to be
selected by Shipper and Shipper shall bear the expenses of the audit. The
findings of the audit will be binding on the parties absent a finding of
material error in the audit which is brought to the attention of Northern
within 90 days after submission of the audit results to Northern by Shipper.
If the audit discloses that an overpayment or an underpayment has been made,
the amount thereof shall promptly be paid to the party to whom it is owed by
the other party. Shipper shall have the option of having the audit prepared
by Northern's independent auditors as part of the regular annual audit of
Northern's books and records. In such event, only those expenses in excess
of Northern's normal audit expenses will be borne by Shipper. The accounting
firm conducting the audit shall be bound not to disclose and shall treat as
confidential any and all proprietary information of Northern furnished to or
examined by such firm in connection with the audit.
3.08 TERMINATION. Shipper may terminate this Agreement at
any time upon giving at least ** notice in writing to Northern. In the event
of such termination, Shipper shall pay, as liquidated damages and not as a
penalty, **
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*CONFIDENTIAL TREATMENT REQUESTED*
(**) of the lowest effective Transportation Costs for a Sugar Factory, as set
forth in Exhibit C and as adjusted pursuant to Section 3.03 in effect on the
last day of the Campaign Season, times the tonnage requirement of ** tons per
Campaign Season, as adjusted pursuant to Sections 2.09(b) and 5, for the
remaining term of this Agreement less all tons shipped during the Campaign
Season in which the notice of termination is given.
SECTION 4. LIABILITY AND INDEMNIFICATION.
4.01 LIABILITY FOR PROPERTY DAMAGE AND PERSONAL INJURY. Each
party shall assume and be responsible for any liability for loss and damage
to property and for personal injury, including death, to any person caused by
the negligence of that party and arising out of or connected with performance
of this Agreement.
4.02 JOINT LIABILITY. If liability is due to the joint and
concurring negligence of the parties, it shall be shared by them
proportionately on the basis of the negligence of each party involved.
4.03 LIMITATION ON LIABILITY. IN NO EVENT SHALL EITHER PARTY
HAVE LIABILITY TO THE OTHER PARTY FOR INCIDENTAL OR CONSEQUENTIAL DAMAGES
EXCEPT AS EXPRESSLY STATED IN THIS AGREEMENT.
16
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*CONFIDENTIAL TREATMENT REQUESTED*
SECTION 5. FORCE MAJEURE.
(a) If either party is unable to meet any of its obligations under
this Agreement as a result of flood, earthquake, storm, or other act of God,
fire, derailment, accident, strike, lockout, boycotts, picketing, shortages of
or inability to obtain electric power, raw materials, railcars or machinery,
mechanical breakdown in facilities, war, insurrection, riot, catastrophic sugar
beet or corn crop failure (as applicable), railroad line abandonment, act of
government or governmental agency, or due to any cause beyond the reasonable
control of either party, including the inability of a Sugar Factory, the Mine
and/or the Carrier to meet its obligations for reasons whether similar or
dissimilar to the foregoing and whether foreseeable or unforeseeable" such event
will be deemed an event of force majeure. In addition, it shall be deemed an
event of force majeure in the event Shipper is unable to burn Northern's coal
due to ash-fouling, sulfur dioxide emissions, or other legally enforceable
environmental restrictions, or either party permanently closes or experiences
partial failure or nonoperation of any of its facilities lasting a minimum of
seven (7) days as a result of reasons beyond the control of such party. In the
event of force majeure, the obligations of the parties, other than payment for
Transportation Costs incurred, shall be
17
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suspended for the duration of the event of force majeure, provided that
reasonable notice is given. No suspension or reduction for reason of force
majeure shall invalidate the remainder of this Agreement; but on removal of the
cause, shipments shall resume at the specified rate; deficiencies in shipments
so caused shall not be made up except by mutual consent. If an event of force
majeure prevents the performance of either party for a period of one year or
more despite that party's efforts to eliminate the force majeure event and to
mitigate its impact, then the party not claiming an event of force majeure may
terminate this Agreement by providing at least thirty (30) days written notice
of termination to the other party. The provisions of this Section shall not
excuse either party from performing unless that party gives a reasonable notice
to the other party of the occurrence of an, event of force
majeure.
(b) For the purposes of any partial or total event of Force Majeure under
this Agreement, it will be presumed that, except for the event, total loading of
coal onto trains at the mine and total deliveries to Shipper by Northern at the
Sugar Factories would have been 3650 Tons per Campaign Season day, under the
500,000 Ton Minimum Volume Requirement, for each continuous hour period. Lie
Minimum Tonnaqe Requirement of 416,66-1 tons
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(subject to reduction as provided herein) will be proportionately reduced per
Campaign Season day for each Force Majeure day claimed as follows:
Minimum Tonnage Requirement
DESTINED WHEN TO: 500,000 TONS
----------------- ------------
Redco, ND 575 Tons
Wilds, MN 560 Tons
Drayton, 4TD 575 Tons
Bingham, MN 540 Tons
East Grand Forks, MN 750 Tons
Wahpeton, ND 650 Tons
(c) For the purposes of this Section 5, the Shipper destination Sugar
Factories are those located at the destination named in Exhibit C.
SECTION 6. DISPUTES.
In the event any dispute arises between the parties concerning any issue of
law or fact arising out of this Agreement, it shall be settled by arbitration
pursuant to the Commercial Arbitration Rules of the American Arbitration
Association, and judgment upon the award may be entered in any court having
jurisdiction over the matter.
The parties to the arbitration shall be entitled to such discovery as would
be available to them under the Federal Rules of Civil Procedure, and the
arbitrators will have all the authority of a court under such Rules incidental
to such discovery, Including but not limited to orders to produce documents or
19
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other materials and orders to appear and submit to deposition and to impose
appropriate sanctions, including but not limited to awarding sanctions against a
party for failure to comply with any order.
The arbitration panel shall consist of three arbitrators, one appointed by
Northern, one by Shipper and the third by the arbitrators appointed by Northern
and Shipper. If the partyappointed arbitrators cannot agree within 15 days
after their appointment on appointment of a third person, then the third person
shall be appointed by the American Arbitration Associa- tion.
SECTION 7. GENERAL PROVISIONS.
7.01 LINE ABANDONMENT. The terms of this Agreement in no WAY
obligate carrier or Northern to continue ownership, maintenance (including
Weight standards), or operation of any rail lines. Northern will not be
liable for any consequential damages or increased transportation costs that
may be incurred by Shipper as the result of carrier's discontinuation of
ownership, maintenance (including Weight standards), or operation of any rail
lines. If Shipper fails to meet its Minimum Tonnage Requirements due to
lawful cessation of service or abandonment of any ral lines during the term
of this Agreement, as the sole remedy of: Shipper, the rates on all coal
whhich moved in accor-
20
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dance with this Agreement during the then current Campaign Season shall be
determined as if the Minimum Tonnage Requirement had been met.
7.02 WAIVER. Failure of either party at any time to require
performance of any provision of this Agreement shall not limit that party's
right to enforce the provisions, nor shall any waiver of any breach of any
provision be a waiver of any succeeding breach of the provision itself or of
any other provision.
7.03 HEADINGS. The headings in this Agreement are included only
for convenience and shall not control or affect the meaning or construction of
this Agreement.
7.04 ENTIRE AGREEMENT. This Agreement is the entire agreement
between the parties. There are no other provisions, representations,
warranties or understandings, express or implied. No modification, variation
or amendment of this Agreement shall be of any force or effect unless it is
in writing and signed by all the parties.
7.05 BINDING AFFECT. This Agreement shall be binding upon and
inure to the benefit of the parties, their respective successors and assigns.
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7.06 GOVERNING LAW. This Agreement shall be construed and
enforced in accordance with the laws of the State of Minnesota.
7.07 COUNTERPARTS. This Agreement may be executed in any number
of counterparts, each of which shall be deemed an original.
7.08 NOTICES. Notices under this Agreement shall be in writing
and shall be effective when actually delivered. If mailed, a notice shall be
deemed effective five (5) days after mailing as registered or certified mail,
postage prepaid, directed to the other party as set out below. If via
telefacsimile, a notice shall be deemed effective upon receipt of the successful
telefax transmission report, directed to the other party as set out below.
NORTHERN NORTHERN COAL TRANSPORTATION COMPANY
Attn: Contract Administration
505 South Gillette Avenue
Gillette, Wyoming 82716
or
Caller Box 3009
Gillette, Wyoming 82717-3009
Fax No. (307)687-6009
SHIPPER AMERICAN CRYSTAL SUGAR COMPANY
Attn: Vice President, Operations
101 North Third Street
Moorhead, Minnesota 56560
Fax No. (218)236-4494
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The addresses and fax numbers of any party may be changed by giving notice in
writing at any time to the other party.
7.08 CONFIDENTIALLITY. Any nonpublic information, oral or
written, including the contents of this Agreement and any related agreement,
disclosed by a party to the other shall be considered confidential information,
and such information shall not be disclosed to any third party, other than to
Northern's parent corporation, USC, ProGold, or the employees, accountants,
attorneys, and lenders of such parties, and will be kept secret and confidential
during the term of this Agreement.
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the
Effective Date set forth above.
NORTHERN COAL TRANSPORTATION COMPANY
By /s/ ILLEGIBLE
--------------------------------------
Title V.P. Marketing & Sales
-----------------------------------
AMERICAN CRYSTAL SUGAR COMPANY
By /s/ Marcus F. Richardson
--------------------------------------
Title CO.O.
-----------------------------------
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*CONFIDENTIAL TREATMENT REQUESTED*
EXHIBIT A
DESCRIPTION OF TRANSPORTATION
(AS EXCERPTED FROM THE AGREEMENT BETWEEN THE BURLINGTON
NORTHERN RAILROAD AND NORTHERN COAL TRANSPORTATION COMPNAY)
Trains of not less than ** or more than ** Northern cars will be tendered
at Origin destined to Grand Forks, North Dakota, with a stop at Fargo, North
Dakota, for removal of cars to be delivered to destinations via Fargo, North
Dakota. All cars for delivery via Fargo, North Dakota, will be loaded at the
head end of the train by Northern.
Before tendering each shipment to Carrier at Origin, Northern will
specify on the Bill of Lading the car number, the number of cars and the
loaded weight to be delivered to each Destination. Loaded trains will be
divided into segments as previously designated by Northern on the Bill of
Lading and the segments will be delivered by the Carrier to the specified
Destinations. Carrier will deliver each segment to a siding on Receiver's
property at each destination to which delivery is to be made. Empty cars
shall be stored on Receiver's property at each Destination until picked up by
Carrier. Carrier shall be responsible for making up trains of empty cars for
movement to Origin. Northern agrees to pay for line-haul transportation at
the Effective Rates and for Accessorial Services at the Effective Charges.
At request of Northern, Carrier will permit a change in the Destination
shown on the Bill of Lading to another Destination after departure from
Origin if instructions are received by Carrier, as set forth below before
arrival of train at Fargo, North Dakota, or Grand Forks, North Dakota. A
diversion charge of ** per car will apply when cars are so diverted. When
instructions to divert cars are received after arrival of train at Fargo,
North Dakota, a diversion charge of ** per each diverted car will apply.
Services provided by Carrier which are included in the Base Freight
Component include line-haul transportation of Coal from Origin to
Destination, operating trains through loading facilities at Origin, placing
the loaded cars on a siding on Receiver's property at Destination, returning
empty Northern-furnished cars to the Origin loading facilities, storing and
handling Northern-owned spare cars as replacement for bad order cars and
providing all motive power, necessary cabooses (if required) and related
24
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*CONFIDENTIAL TREATMENT REQUESTED*
transportation facilities and equipment. Carrier assumes full responsibility
and risk for the efficient scheduling of such operations.
If it is determined by the Carrier that ** empty cars are not available
at Grand Forks, North Dakota, and origin for return movement to the Origin
for loading, Carrier will notify Northern. Northern will instruct Carrier
whether to release the motive power at a charge of ** or to let train return
to Origin with the empty cars available at Grand Forks, North Dakota, plus
whatever empty cars Northern may instruct the Carrier to pick up en route to
Origin. An additional charge of ** will apply to restart the cycle.
Carrier agrees to perform, and Northern agrees to pay for, certain
Accessorial Services as directed by Northern.
Northern may discontinue any train cycle by giving Carrier at least 24
hours advance notice. The following charges shall apply for each such
interruption to the train cycle:
(a) ** , which shall include release of motive power and crew; and **
for restarting of train cycle. An, additional ** per 24-hour period
or fraction thereof will apply for the storage of Seller cars on
Carrier track, or
(b) ** , which shall include release of motive power and crew; and **
for restarting a train cycle provided that Northern cars are stored
on private track directly accessible to Carrier.
25
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*CONFIDENTIAL TREATMENT REQUESTED*
EXHIBIT B
LIQUIDATED DAMAGES
If, for reasons other than termination of the Agreement as provided in
Section 3.08, (1) Shipper and Minn-Dak fail to tender to Northern at least **
tons combined in the Campaign Season as adjusted in Sections 2.09(b) and 5 of
the Shipper's and MinnDak's Coal Transportation Agreements and (2) Shipper
fails to tender to Northern at least ** tons as adjusted in Sections 2.09(b)
and 5 during the Campaign Season, liquidated damages to Northern shall be
paid to Northern as follows: ** of the lowest Effective Transportation Costs
for any Shipper Sugar Factory, as set forth in Exhibit C and as adjusted
pursuant to Section 3.03, in effect on the last day of the Campaign Season,
times the difference between the tons actually delivered to ACS during that
Campaign Season and ** tons, as adjusted by Sections 2.09(b) and 5.
26
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*CONFIDENTIAL TREATMENT REQUESTED*
EXHIBIT C
TRANSPORTATION COSTS, INCLUDING FREIGHT COST
AND RAILCAR COST (Effective July 1, 1995, per Ton)
Base
Plant Site Transportation Costs
---------- --------------------
East Grand Forks ** Per Net Ton
Crookston ** Per Net Ton
Drayton ** Per Net Ton
Moorhead ** Per Net Ton
Hillsboro ** Per Net Ton
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EXHIBIT D
ADJUSTMENT OF RATES AND CHARGES
Except as otherwise provided in this Agreement, the rates and charges set
forth in Section 2.08 and Exhibit A of this Agreement, including the Base
Rate(s) set forth in Exhibit C, shall be adjusted quarterly, upward or
downward, by an amount equal to seventy percent (70%) of the GDP FW most
recent quarterly growth rate, to produce the Effective Transportation Costs
as described in Exhibits A and C.
Adjustments shall become effective quarterly on January 1, April 1, July
1, and October 1 of each calendar year, with the first adjustment to become
effective on October 1, 1995. Northern shall notify USC in writing of all
adjustments and furnish supporting calculations prior to the effective date
of the adjustment, or, as soon thereafter as the information necessary to
calculate the adjustment is made by the Carrier. The new Transportation Costs
so determined shall be applicable retroactive to the adjustment date in
question.
The percentage change shall be equal to the "Previous Quarter's GDP FW
Index" minus the "Next Previous Quarter's GDP EW Index," divided by the
"Next Previous Quarter's GDP FW Index" for each current adjustment time
period. An example of the quarterly percentage change calculation is
described below:
((Q3 1994 - Q2 1994))/Q2 1994
((130.3 - 129.4)/129.4 = .0069552 rounded to .00696)
The quarterly GDP FW index percentage change (in decimal) will be
multiplied by seventy percent (70%) to produce the Adjustment Percentage
Change (in decimal). The previous quarterly Transportation Costs are
multiplied by the Adjustment Percentage Change to produce the "Change
Amount." The previous Transportation Costs plus the Change Amount equals the
new quarter's Transportation Costs.
Example:
Adjustment Percentage Change (decimal):
.0000696 TIMES .70 = .00487 rounded = .0049
Change Amount:
$10.00 (Previous Effective Rate) X .0049 = $0.45 rounded = $0.05
28
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New Transportation Cost:
$10.00 (Previous Transportation Cost) + $0.05 (Change
Amount) = $10.05
Source: U.S. Department of Commerce
Survey of Current Business
Table 7.1 for GDP Fixed Weight
Survey of Current
Adjustment Period Business Issue
----------------- -----------------
First Quarter October
Second Quarter January
Third Quarter April
Fourth Quarter July
All calculated numbers shall be rounded to the nearest fifth digit after
the decimal point (i.e., .00001499 = .00001). All final adjustment
computations shall be rounded to the nearest whole one cent by going to the
lower one cent when computations result in a balance of less than one-half
cent and to the next higher whole one cent when computations result in a
balance of one-half cent or more.
It is the intent of the parties that the adjustment index (the GDP FW)
reflects changes in railroad input costs. If the U.S. Department of Commerce
or any successor organizations cease to publish the GDP FW index required for
the calculations outlined in this Section, the parties shall mutually
determine and agree upon the most appropriate substitute index or indices
which most closely matches the economic structure (that is, to measure
changes in railroad input costs) of the discontinued index or indices to be
used for adjustments for the remainder of the Agreement term immediately
following such action. If the parties do not come to an agreement as to the
substitute index or indices by an adjustment date, the Transportation Costs
shall not be adjusted until such time as the index or indices are agreed to,
at which time a retroactive adjustment shall be made retroactive to said
adjustment date. If the parties do not come to an agreement as to the
substitute index or indices by 60 days following an adjustment date, the
provision of Section 6 shall apply.
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[LETTERHEAD]
CONSENT OF INDEPENDENT AUDITORS
- --------------------------------------------------------------------------------
We consent to the use of our report dated October 13, 1995, with respect to the
financial statements of American Crystal Sugar Company for the year ended
August 31, 1995, in this Form 10-K (file number 33-85868).
/s/ Eide Helmeke PLLP
October 30, 1996
Fargo, North Dakota
