Exhibit 10.30

 

 

No. Z269D

FOUTH AMENDMENT
TO MASTER LOAN AGREEMENT

 

 

THIS AMENDMENT is entered into as of November 6, 2002, between CoBANK, ACB
(“CoBank”) and AMERICAN CRYSTAL SUGAR COMPANY, Moorhead, Minnesota (the
“Company”).

 

BACKGROUND

 

CoBank and the Company are parties to a Master Loan Agreement dated March 31,
2000, (such agreement, as previously amended, is hereinafter referred to as the
“MLA”).  By Amendment and Waiver dated as of October 7, 2002, CoBank permitted
the Company to establish and capitalize Sidney Sugars Incorporated (“Sidney
Sugars”) as a wholly owned subsidiary of the Company.  CoBank and the Company
now desire to amend the MLA so that for purposes of measuring compliance with
financial covenants set forth in the MLA and preparation of financial statements
as required by the MLA, the financial results of the Company and Sidney Sugars
be consolidated.  CoBank and the Company also desire to amend the MLA to require
the Company to cause Sidney Sugars to adhere to certain affirmative and negative
covenants applicable to the Company.  Lastly, CoBank and the Company desire to
amend the MLA to substitute one financial covenant for another.  For these
reasons, and for valuable consideration (the receipt and sufficiency of which
are hereby acknowledged), CoBank and the Company agree as follows:

 

1.                                       While the MLA is in effect, the Company
agrees to cause Sidney Sugars (with respect to itself in place of and in
addition to the Company) to comply with the following affirmative covenants set
forth in Section 8 of the MLA:  Section 8(B), (C), (D), (E), (F), (G) and
(H)(v)-(ix), and to comply with it’s Grower Agreements.

 

2.                                       While the MLA is in effect, the Company
agrees that all reports required by Section 8(H) shall be prepared on a
consolidated basis with the Company’s Subsidiaries, including Sidney Sugars.

 

3.                                       While the MLA is in effect, the Company
agrees that it will cause Sidney Sugars (with respect to itself in place of and
in addition to the Company) to comply with the negative covenants set forth in
Section 9, except that (1) guarantees and liens created in connection with a
1998 note purchase agreement between the Company and the note purchasers
relating to the $50,000,000 Senior Secured Guaranteed Notes and a 2002 note
purchase agreement between the Company and the note purchasers relating to the
$20,000,000 Senior Secured Guaranteed Notes shall be permitted provided that
said liens shall be shared with CoBank in a manner acceptable to CoBank, (2)
loans from the Company to Sydney Sugars as described in Section 3 of that
Amendment and Waiver dated as of October 7, 2002, between the Company and CoBank
shall be permitted, and, to the extent that the following would otherwise be
prohibited, (3) the lease of sugar processing plants in Torrington, Wyoming, and
Hereford, Texas, to Western Sugar Cooperative and Imperial Sugar Company,
respectively.  In addition, CoBank aggress that

 

--------------------------------------------------------------------------------

 

permitted borrowings under Section 9(A) shall include indebtedness of the
Company incurred in connection with the $20,000,000 Senior Secured Guaranteet
Notes issued pursuant to the 2002 note purchase agreement between the Company
and the note purchasrers.

 

4.                                       While the MLA is in effect, the Company
agrees that all financial covenants set forth in Section 10 shall be measured on
a consolidated basis with the Company’s Subsidiaries, including Sidney Sugars. 
References in any covenant to the Company shall mean the Company and its
Subsidiaries, including Sidney Sugars.

 

5.                                       Section 10(C) of the MLA is hereby
amended and restated in its entirety to read as follows:

 

(C)  Minimum Average Net Funds Plus Interest Expense. The Company shall maintain
at all times and measured as of the end of each Fiscal Quarter a minimum ratio
of Average Net Funds plus Interest Expense to Interest Expense (both as
determined in accordance with GAAP consistently applied) of 2.5:1.  Average Net
Funds to Interest Expense shall be calculated on a rolling twelve (12) quarter
basis.  For purposes of this Section 10(C), Interest Expense shall mean:  the
total interest expense of the Borrower and its Subsidiaries (including, without
limitation, interest expense on capital leases) and, to the extent not included
therein, fees and other charges payable with respect to all Debt), all
determined on a consolidated basis in accordance with GAAP.

 

6.                                       Except as set forth in this amendment,
the MLA shall continue in full force and effect as written.

 

IN WITNESS WHEREOF, the parties have caused this amendment to be executed by
their duly authorized officers as of the date shown above.

 

CoBANK, ACB

 

AMERICAN CRYSTAL SUGAR COMPANY

 

 

 

 

 

By:

 /s/ Michael Tousignant

 

By:

 /s/ Sam Wai

 

 

 

 

 

Title:

 Vice President

 

Title:

 Treasurer

 

2

--------------------------------------------------------------------------------

 

REVOLVING TERM LOAN SUPPLEMENT

 

THIS SUPPLEMENT to the Master Loan Agreement dated March 31, 2000 (the “MLA”),
is entered into as of November 6, 2002, between CoBANK, ACB (“CoBank”) and
AMERICAN CRYSTAL SUGAR COMPANY, Moorhead, Minnesota (the “Company”), and amends
and restates the Supplement dated March 27, 2002 and numbered Z269T01B.

 

SECTION 1.   The Revolving Term Loan Commitment.  On the terms and conditions
set forth in the MLA and this Supplement, CoBank agrees to make loans to the
Company during the period set forth below in an aggregate principal amount not
to exceed $58,276,702.22 at any one time outstanding (the “Commitment”).  Within
the limits of the Commitment, the Company may borrow, repay and reborrow.

 

SECTION 2.   Purpose and Transfer.  The purpose of the Commitment is to finance
the operating needs of the Company.

 

SECTION 3.   Term.  The term of the Commitment shall be from the date hereof, up
to but not including March 30, 2003, or such later date as CoBank may, in its
sole discretion, authorize in writing, provided, however, that if the payment
due on or before December 31, 2002 (as described in Section 5 below) is paid as
agreed, and the Company is not otherwise in default, then the term of the
Commitment shall be extended up to, but not including, July, 31, 2003.

 

SECTION 4.   Interest.  The Company agrees to pay interest on the unpaid balance
of the loans in accordance with one or more of the following interest rate
options, as selected by the Company:

 

(A)                               Variable Rate Option.  At a rate per annum
equal at all times to the rate of interest established by CoBank from time to
time as its National Variable Rate, which Rate is intended by CoBank to be a
reference rate and not its lowest rate. The National Variable Rate will change
on the date established by CoBank as the effective date of any change therein
and CoBank agrees to notify the Company promptly after any such change.

 

(B)                               Quoted Rate Option.  At a fixed rate per annum
to be quoted by CoBank in its sole discretion in each instance.  Under this
option, rates may be fixed on such balances and for such periods as may be
agreeable to CoBank in its sole discretion in each instance.

 

(C)                               LIBOR Option.  At a fixed rate equal to
“LIBOR” (as hereinafter defined) plus the Applicable LIBOR Margin per annum (as
described in terms of basis points (“bps”) in the chart immediately set forth
below).  Under this option:  (a) rates may be fixed for “Interest Periods” (as
hereinafter defined) of 1, 2, 3, or 6 months, or 1 year, as selected by the
Company; (b) the minimum amount that may be fixed at any one time shall be
$2,000,000.00; and (c) rates may only be fixed on a “Banking Day” (as
hereinafter defined) or, at the option of the Company, on 2 Banking Days’ prior
notice.  For purposes hereof: (i) ”LIBOR” shall mean the rate indicated by
Telerate (rounded upward to the nearest thousandth) as having been quoted by the
British Bankers Association at 11:00 a.m. London time on the date the Company
elects to fix a rate under this option for the offering of U.S. dollar deposits
in the London interbank market for the Interest Period designated by the
Company; (ii) “Banking Day” shall mean a day on which CoBank is open for
business, dealings in U.S. dollar deposits are being carried out in the London
interbank market, and banks are open for business in New York City and London,
England; and (iii) “Interest Period” shall mean a period commencing on the day
the Company elects to fix a rate under this option (or, at the option of the
Company, two Banking Days later) and ending on the numerically corresponding day
in the next calendar month or the month that is 2, 3 or 6 months or 1 year
thereafter, as the case may be; provided, however, that:  (x) in the event such
ending day is not a Banking

 

3

--------------------------------------------------------------------------------

 

Day, such period shall be extended to the next Banking Day unless such next
Banking Day falls in the next calendar month, in which case it shall end on the
preceding Banking Day; and (y) if there is no numerically corresponding day in
the month, then such period shall end on the last Banking Day in the relevant
month.

 

LIBOR MARGINS

 

FIXED RATE
PRODUCT

 

INDEX

 

SPREAD OVER INDEX IN BASIS
POINTS (Applicable LIBOR Margin)

 

One Month

 

LIBOR

 

90bps

 

Two Months

 

LIBOR

 

90bps

 

Three Months

 

LIBOR

 

90bps

 

Six Months

 

LIBOR

 

90bps

 

One Year

 

LIBOR

 

90bps

 

 

(D) Treasury Option.  At a fixed rate equal to Applicable Treasury Margin per
annum (as described in terms of basis points (“bps”) in the chart immediately
set forth below) above the “U.S. Treasury Rate” (as hereinafter defined). Under
this option, balances of $2,000,000.00 or more may be fixed on or before for
periods ranging from two  years to the final maturity date of the loan, as
selected by the Company. However, rates may not be fixed in such a manner as to
require the Company to have to repay any fixed rate balance prior to the last
day of its fixed rate period in order to pay any installment of principal. For
purposes hereof, the “U.S. Treasury Rate” shall mean the yield to maturity on
U.S. Treasury instruments having the same maturity date as the last day of the
fixed rate period selected by the Company, as calculated from the bid price
indicated by Telerate (page 5) at the time the rate is fixed.  If, however, no
instrument is indicated for the maturity selected, then the rate shall be
interpolated based on the bid prices quoted for the next longest and shortest
maturities so indicated. In the event Telerate ceases to provide such quotations
or materially changes the form or substance of page 5 (as determined by CoBank),
then CoBank will notify the Company and the parties hereto will agree upon a
substitute basis for obtaining such quotations

 

TREASURY MARGINS

 

FIXED RATE
PRODUCT

 

INDEX

 

SPREAD OVER INDEX IN BASIS
POINTS (Applicable Treasury Margin)

 

Two Years

 

U.S.$ Constant Maturity
Treasury Rate (“US$CMT”)

 

125 bps

 

Three Years

 

US$CMT

 

125 bps

 

Four Years

 

US$CMT

 

125 bps

 

Five Years

 

US$CMT

 

125 bps

 

Seven Years

 

US$CMT

 

140 bps

 

Ten Years

 

US$CMT

 

140 bps

 

Floor (Minimum) Rate (For Two to Ten Year Fixed Rate Products Only)

 

CoBank’s cost of funds (as reasonably determined by CoBank in its sole
discretion)

 

105bps

 

 

4

--------------------------------------------------------------------------------

 

The spread over all of the above indices, including the Floor (Minimum) Rate,
may increase or decrease for future fixed amounts based on the Company’s
previous fiscal quarter’s leverage ratio, as follows:

 

LEVERAGE RATIO (as
defined below)

 

INCREASE / DECREASE
TO SPREAD

 

CHANGE TO LIBOR and
TREASURY MARGINS
(IN BASIS POINTS)

 

A.  Equal to or greater than 1.35:1.00

 

Increase

 

20

 

B.  Equal to or greater than 1.20:1.00, but less than 1.35:1.00

 

None

 

0

 

C.  Less than 1.20:1.00, but greater than or equal to 1.00:1.00

 

Decrease

 

10

 

D.  Less than 1.00:1.00

 

Decrease

 

20

 

 

Leverage Ratio: The Company will maintain a leverage ratio of not more than
1.50:1.0, and attain a leverage ratio of not more than 1.40:1.0 on November 30,
2002.  Leverage ratio is long term debt (excluding current maturities)
calculated in accordance with GAAP plus or minus the difference between actual
working capital and minimum net working capital (as defined in the MLA No. Z269,
Section 10), divided by total members investments plus the estimated unit
retains.

 

The spread shall be adjusted quarterly on the latter of either: (a) five
business days after the Bank’s receipt of the Company’s certification of
compliance with the leverage ratio, or (b) 30 days after the end of each
calendar quarter.

 

The Company shall select the applicable rate option at the time it requests a
loan hereunder and may, subject to the limitations set forth above, elect to
convert balances bearing interest at the variable rate option to one of the
fixed rate options. Upon the expiration of any fixed rate period, interest shall
automatically accrue at the variable rate option unless the amount fixed is
repaid or fixed for an additional period in accordance with the terms hereof.
Notwithstanding the foregoing, unless CoBank otherwise consents in its sole
discretion in each instance, rates may not be fixed for periods expiring after
the maturity date of the loans. In the event CoBank so consents and the
Commitment is not renewed, then each balance so fixed shall be due and payable
on the last day of its fixed rate period, and the promissory note set forth
below shall be deemed amended accordingly. All elections provided for herein
shall be made telephonically or in writing and must be received by 12:00 noon
Company’s local time. Interest shall be calculated on the actual number of days
each loan is outstanding on the basis of a year consisting of 360 days and shall
be payable quarterly in arrears by the 20th day of the following month.

 

SECTION 5.   Promissory Note.  The Company promises to repay the loans that are
outstanding in annual principal payments of $9,396,579.17 each due on or before
December 31st of each year through December 31, 2008, and a final principal
payment due on or before December 31, 2009.  All

 

5

--------------------------------------------------------------------------------

 

outstanding balances shall be repaid by December 31, 2009. If any installment
due date is not a day on which CoBank is open for business, then such payment
shall be made on the next day on which CoBank is open for business.  In addition
to the above, the Company promises to pay interest on the unpaid principal
balance hereof at the times and in accordance with the provisions set forth in
Section 4 hereof. This note replaces and supersedes, but does not constitute
payment of the indebtedness evidenced by, the promissory note set forth in the
Supplement being amended and restated hereby.

 

The Company shall be permitted to make special payments, in a minimum amount of
$388,500.00, on the variable rate portion of this loan, when all short term
financing, including the Company’s seasonal loans, Commodity Credit Corporation
loans and other short term loans have been zeroed out.  These special payments
may be readvanced through the expiration date of the Commitment. Reinstatement
may be denied and canceled at any time at the option of CoBank. The reinstatable
commitments arising from such special payments shall be subject to the
Commitment Fee as described in Section 8 below.

 

SECTION 6.   Prepayment.  The loans may be prepaid in whole or in part on one
CoBank business day’s prior written notice.  During the term of the Commitment,
prepayments shall be applied to such balances, fixed or variable, as the Company
shall specify.  After the expiration of the term of the Commitment, prepayments
shall, unless CoBank otherwise agrees, be applied to principal installments in
the inverse order of their maturity and to such balances, fixed or variable, as
CoBank shall specify.

 

SECTION 7.   Commitment Fee.  In consideration of the Commitment, the Company
agrees to pay to CoBank a commitment fee on the average daily unused portion of
the Commitment at the rate of 20 basis points per annum (calculated on a 360 day
basis), payable quarterly in arrears by the 20th day following each calendar
quarter. Such fee shall be payable for each calendar quarter (or portion
thereof) occurring during the original or any extended term of the Commitment.

 

SECTION 8.   Commitments Arising From Special Payments.  Commitments arising as
a result of special payments described in Section 5 above shall be subject to a
commitment fee of 25 basis points (0.25%) on an annualized basis, on the average
daily commitment.  Any such fees incurred shall be payable on the last day of
the calendar quarter, in arrears, computed on the basis of a year of 360 days
for the actual number of days elapsed in which such reinstatable commitments
were outstanding.

 

SECTION 9.   Security.  In addition to any other security that may otherwise be
required or provided, the Company’s obligations under this Supplement are
secured by that Restated Mortgage and Security Agreement dated September 15,
1998, from American Crystal Sugar Company to St. Paul Bank for Cooperatives (now
known as CoBank as a result of merger), as Collateral Agent.

 

IN WITNESS WHEREOF, the parties have caused this Supplement to be executed by
their duly authorized officers as of the date shown above.

 

CoBANK, ACB

 

AMERICAN CRYSTAL SUGAR COMPANY

 

 

 

 

 

 

 

 

By:

 /s/ Michael Tousignant

 

By:

 /s/ Sam Wai

 

 

 

 

 

Title:

 Vice President

 

Title:

 Treasurer

 

6

--------------------------------------------------------------------------------

 

REVOLVING TERM LOAN SUPPLEMENT

 

THIS SUPPLEMENT to the Master Loan Agreement dated March 31, 2000 (the “MLA”),
is entered into as of November 6, 2002, between CoBANK, ACB (“CoBank”) and
AMERICAN CRYSTAL SUGAR COMPANY, Moorhead, Minnesota (the “Company”), and amends
and restates the Supplement dated March 27, 2002 and numbered Z269T01BNP.

 

SECTION 1.   The Revolving Term Loan Commitment.  On the terms and conditions
set forth in the MLA and this Supplement, CoBank agrees to make loans to the
Company during the period set forth below in an aggregate principal amount not
to exceed $49,079,855.68 at any one time outstanding (the “Commitment”).  Within
the limits of the Commitment, the Company may borrow, repay and reborrow.

 

SECTION 2.   Purpose and Transfer.  The purpose of the Commitment is to finance
the operating needs of the Company.

 

SECTION 3.   Term.  The term of the Commitment shall be from the date hereof, up
to but not including March 30, 2003, or such later date as CoBank may, in its
sole discretion, authorize in writing, provided, however, that if the payment
due on or before December 31, 2002 (as described in Section 5 below) is paid as
agreed, and the Company is not otherwise in default, then the term of the
Commitment shall be extended up to, but not including, July, 31, 2003.

 

SECTION 4.   Interest. The Company agrees to pay interest on the unpaid balance
of the loans in accordance with one or more of the following interest rate
options, as selected by the Company:

 

(A)                               Variable Rate Option.  At a rate per annum
equal at all times to the rate of interest established by CoBank from time to
time as its National Variable Rate, which Rate is intended by CoBank to be a
reference rate and not its lowest rate. The National Variable Rate will change
on the date established by CoBank as the effective date of any change therein
and CoBank agrees to notify the Company promptly after any such change.

 

(B)                               Quoted Rate Option.   At a fixed rate per
annum to be quoted by CoBank in its sole discretion in each instance.  Under
this option, rates may be fixed on such balances and for such periods as may be
agreeable to CoBank in its sole discretion in each instance.

 

(C)                               LIBOR Option.  At a fixed rate equal to
“LIBOR” (as hereinafter defined) plus the Applicable LIBOR Margin per annum (as
described in terms of basis points (“bps”) in the chart immediately set forth
below).  Under this option:  (a) rates may be fixed for “Interest Periods” (as
hereinafter defined) of 1, 2, 3 or 6 months, or 1 year, as selected by the
Company; (b) the minimum amount that may be fixed at any one time shall be
$2,000,000.00; and (c) rates may only be fixed on a “Banking Day” (as
hereinafter defined) or, at the option of the Company, on 2 Banking Days’ prior
notice.  For purposes hereof: (i) ”LIBOR” shall mean the rate indicated by
Telerate (rounded upward to the nearest thousandth) as having been quoted by the
British Bankers Association at 11:00 a.m. London time on the date the Company
elects to fix a rate under this option for the offering of U.S. dollar deposits
in the London interbank market for the Interest Period designated by the
Company; (ii) “Banking Day” shall mean a day on which CoBank is open for
business, dealings in U.S. dollar deposits are being carried out in the London
interbank market, and banks are open for business in New York City and London,
England; and (iii) “Interest Period” shall mean a period commencing on the day
the Company elects to fix a rate under this option (or, at the option of the
Company, two Banking Days later) and ending on the numerically corresponding day
in the next calendar month or the month that is 2, 3 or 6 months or 1 year
thereafter, as the case may be; provided, however, that:  (x) in the event such
ending day is not a Banking

 

7

--------------------------------------------------------------------------------

 

Day, such period shall be extended to the next Banking Day unless such next
Banking Day falls in the next calendar month, in which case it shall end on the
preceding Banking Day; and (y) if there is no numerically corresponding day in
the month, then such period shall end on the last Banking Day in the relevant
month.

 

LIBOR MARGINS

 

FIXED RATE
PRODUCT

 

INDEX

 

SPREAD OVER INDEX IN BASIS
POINTS (Applicable LIBOR Margin)

 

One Month

 

LIBOR

 

90bps

 

Two Months

 

LIBOR

 

90bps

 

Three Months

 

LIBOR

 

90bps

 

Six Months

 

LIBOR

 

90bps

 

One Year

 

LIBOR

 

90bps

 

 

(D) Treasury Option.  At a fixed rate equal to the Applicable Treasury Margin
per annum (as described in terms of basis points (“bps”) in the chart
immediately set forth below) above the “U.S. Treasury Rate” (as hereinafter
defined). Under this option, balances of $2,000,000.00 or more may be fixed on
or before for periods ranging from two years to the final maturity date of the
loan, as selected by the Company. However, rates may not be fixed in such a
manner as to require the Company to have to repay any fixed rate balance prior
to the last day of its fixed rate period in order to pay any installment of
principal.  For purposes hereof, the “U.S. Treasury Rate” shall mean the yield
to maturity on U.S. Treasury instruments having the same maturity date as the
last day of the fixed rate period selected by the Company, as calculated from
the bid price indicated by Telerate (page 5) at the time the rate is fixed.  If,
however, no instrument is indicated for the maturity selected, then the rate
shall be interpolated based on the bid prices quoted for the next longest and
shortest maturities so indicated. In the event Telerate ceases to provide such
quotations or materially changes the form or substance of page 5 (as determined
by CoBank), then CoBank will notify the Company and the parties hereto will
agree upon a substitute basis for obtaining such quotations.

 

TREASURY MARGINS

 

FIXED RATE
PRODUCT

 

INDEX

 

SPREAD OVER INDEX IN BASIS
POINTS (Applicable Treasury Margin)

 

Two Years

 

U.S. $ Constant Maturity Treasury (“US$CMT”)

 

125 bps

 

Three Years

 

US$CMT

 

125 bps

 

Four Years

 

US$CMT

 

125 bps

 

Five Years

 

US$CMT

 

125 bps

 

Seven Years

 

US$CMT

 

140 bps

 

Ten Years

 

US$CMT

 

140 bps

 

Floor (Minimum) Rate (For Two to Ten Year Fixed Rate Products Only)

 

CoBank’s cost of funds (as reasonably determined by CoBank in its sole
discretion)

 

105bps

 

 

8

--------------------------------------------------------------------------------

 

The spread over all of the above indices, including the Floor (Minimum) Rate,
may increase or decrease for future fixed amounts based on the Company’s
previous fiscal quarter’s leverage ratio, as follows:

 

LEVERAGE RATIO (as
defined below)

 

INCREASE / DECREASE
TO SPREAD

 

CHANGE TO LIBOR and
TREASURY MARGINS
(IN BASIS POINTS)

 

A.  Equal to or greater than 1.35:1.00

 

Increase

 

20

 

B.  Equal to or greater than 1.20:1.00, but less than 1.35:1.00

 

None

 

0

 

C.  Less than 1.20:1.00, but greater than or equal to 1.00:1.00

 

Decrease

 

10

 

D.  Less than 1.00:1.00

 

Decrease

 

20

 

 

Leverage Ratio: The Company will maintain a leverage ratio of not more than
1.50:1.0, and attain a leverage ratio of not more than 1.40:1.0 on November 30,
2002.  Leverage ratio is long term debt (excluding current maturities)
calculated in accordance with GAAP plus or minus the difference between actual
working capital and minimum net working capital (as defined in the MLA No. Z269,
Section 10), divided by total members investments plus the estimated unit
retains.

 

The spread shall be adjusted quarterly on the latter of either: (a) five
business days after the Bank’s receipt of the Company’s certification of
compliance with the leverage ratio, or (b) 30 days after the end of each
calendar quarter.

 

The Company shall select the applicable rate option at the time it requests a
loan hereunder and may, subject to the limitations set forth above, elect to
convert balances bearing interest at the variable rate option to one of the
fixed rate options. Upon the expiration of any fixed rate period, interest shall
automatically accrue at the variable rate option unless the amount fixed is
repaid or fixed for an additional period in accordance with the terms hereof.
Notwithstanding the foregoing, unless CoBank otherwise consents in its sole
discretion in each instance, rates may not be fixed for periods expiring after
the maturity date of the loans. In the event CoBank so consents and the
Commitment is not renewed, then each balance so fixed shall be due and payable
on the last day of its fixed rate period, and the promissory note set forth
below shall be deemed amended accordingly. All elections provided for herein
shall be made telephonically or in writing and must be received by 12:00 noon
Company’s local time. Interest shall be calculated on the actual number of days
each loan is outstanding on the basis of a year consisting of 360 days and shall
be payable quarterly in arrears by the 20th day of the following month.

 

SECTION 5.   Promissory Note.  The Company promises to repay the loans that are
outstanding in annual principal payments of $7,603,420.83 each due on or before
December 31st of each year through December 31, 2007, and a final principal
payment due on or before December 31, 2008.  All outstanding balances shall be
repaid by December 31, 2008. If any installment due date is not a day on which
CoBank

 

9

--------------------------------------------------------------------------------

 

 is open for business, then such payment shall be made on the next day on which
CoBank is open for business.  In addition to the above, the Company promises to
pay interest on the unpaid principal balance hereof at the times and in
accordance with the provisions set forth in Section 4 hereof.  This note
replaces and supersedes, but does not constitute payment of the indebtedness
evidenced by, the promissory note set forth in the Supplement being amended and
restated hereby.

 

The Company shall be permitted to make special payments, in a minimum amount of
$111,500.00, on the variable rate portion of this loan, when all short term
financing, including the Company’s seasonal loans, Commodity Credit Corporation
loans and other short term loans have been zeroed out.  These special payments
may be readvanced through the expiration date of the Commitment.  Reinstatement
may be denied and canceled at any time at the option of CoBank. The reinstatable
commitments arising from such special payments shall be subject to the
Commitment Fee as described in Section 8 below.

 

SECTION 6.   Prepayment.  The loans may be prepaid in whole or in part on one
CoBank business day’s prior written notice.  During the term of the Commitment,
prepayments shall be applied to such balances, fixed or variable, as the Company
shall specify.  After the expiration of the term of the Commitment, prepayments
shall, unless CoBank otherwise agrees, be applied to principal installments in
the inverse order of their maturity and to such balances, fixed or variable, as
CoBank shall specify.

 

SECTION 7.   Commitment Fee.  In consideration of the Commitment, the Company
agrees to pay to CoBank a commitment fee on the average daily unused portion of
the Commitment at the rate of 20 basis points per annum (calculated on a 360 day
basis), payable quarterly in arrears by the 20th day following each calendar
quarter. Such fee shall be payable for each calendar quarter (or portion
thereof) occurring during the original or any extended term of the Commitment.

 

SECTION 8.   Commitments Arising From Special Payments.  Commitments arising as
a result of special payments described in Section 5 above shall be subject to a
commitment fee of 25 basis points (0.25%) on an annualized basis, on the average
daily commitment.  Any such fees incurred shall be payable on the last day of
the calendar quarter, in arrears, computed on the basis of a year of 360 days
for the actual number of days elapsed in which such reinstatable commitments
were outstanding.

 

SECTION 9.   Security.  In addition to any other security that may otherwise be
required or provided, the Company’s obligations under this Supplement are
secured by that Restated Mortgage and Security Agreement dated September 15,
1998, from American Crystal Sugar Company to St. Paul Bank for Cooperatives (now
known as CoBank as a result of merger), as Collateral Agent.

 

IN WITNESS WHEREOF, the parties have caused this Supplement to be executed by
their duly authorized officers as of the date shown above.

 

CoBANK, ACB

 

AMERICAN CRYSTAL SUGAR COMPANY

 

 

 

 

 

 

 

 

 

 

By:

 /s/ Michael Tousignant

 

By:

 /s/ Sam Wai

 

 

 

 

 

Title:

 Vice President

 

Title:

 Treasurer

 

10

--------------------------------------------------------------------------------

 

REVOLVING TERM LOAN SUPPLEMENT

 

THIS SUPPLEMENT to the Master Loan Agreement dated March 31, 2000 (the “MLA”),
is entered into as of November 6, 2002, between CoBANK, ACB (“CoBank”) and
AMERICAN CRYSTAL SUGAR COMPANY, Moorhead, Minnesota (the “Company”), and amends
and restates the Supplement dated March 27, 2002 and numbered Z269T02BNP.

 

SECTION 1.   The Revolving Term Loan Commitment.  On the terms and conditions
set forth in the MLA and this Supplement, CoBank agrees to make loans to the
Company during the period set forth below in an aggregate principal amount not
to exceed $5,012,277.55 at any one time outstanding (the “Commitment”).  Within
the limits of the Commitment, the Company may borrow, repay and reborrow,
provided, however, no advances shall be made on this Term Loan, until Term Loan
No. Z269T01 (as it may be amended), has been fully advanced.

 

SECTION 2.   Purpose and Transfer.  The purpose of the Commitment is to finance
the operating needs of the Company.

 

SECTION 3.   Term.  The term of the Commitment shall be from the date hereof, up
to but not including March 30, 2003, or such later date as CoBank may, in its
sole discretion, authorize in writing, provided, however, that if the payment
due on or before December 31, 2002 (as described in Section 5 below) is paid as
agreed, and the Company is not otherwise in default, then the term of the
Commitment shall be extended up to, but not including, July, 31, 2003.

 

SECTION 4.   Interest. The Company agrees to pay interest on the unpaid balance
of the loans in accordance with one or more of the following interest rate
options, as selected by the Company:

 

(A)                               Variable Rate Option.  At a rate per annum
equal at all times to the rate of interest established by CoBank from time to
time as its National Variable Rate, which Rate is intended by CoBank to be a
reference rate and not its lowest rate. The National Variable Rate will change
on the date established by CoBank as the effective date of any change therein
and CoBank agrees to notify the Company promptly after any such change.

 

(B)                               Quoted Rate Option.   At a fixed rate per
annum to be quoted by CoBank in its sole discretion in each instance.  Under
this option, rates may be fixed on such balances and for such periods as may be
agreeable to CoBank in its sole discretion in each instance.

 

(C)                               LIBOR Option.  At a fixed rate equal to
“LIBOR” (as hereinafter defined) plus the Applicable LIBOR Margin per annum (as
described in terms of basis points (“bps”) in the chart immediately set forth
below).  Under this option:  (a) rates may be fixed for “Interest Periods” (as
hereinafter defined) of 1, 2, 3, or 6 months, or 1 year, as selected by the
Company; (b) the minimum amount that may be fixed at any one time shall be
$2,000,000.00; and (c) rates may only be fixed on a “Banking Day” (as
hereinafter defined) or, at the option of the Company, on 2 Banking Days’ prior
notice.  For purposes hereof: (i) ”LIBOR” shall mean the rate indicated by
Telerate (rounded upward to the nearest thousandth) as having been quoted by the
British Bankers Association at 11:00 a.m. London time on the date the Company
elects to fix a rate under this option for the offering of U.S. dollar deposits
in the London interbank market for the Interest Period designated by the
Company; (ii) “Banking Day” shall mean a day on which CoBank is open for
business, dealings in U.S. dollar deposits are being carried out in the London
interbank market, and banks are open for business in New York City and London,
England; and (iii) “Interest Period” shall mean a period commencing on the day
the Company elects to fix a rate under this option (or, at the option of the
Company, two Banking Days later) and ending on the numerically corresponding day
in the next calendar month or the month that is 2, 3 or 6 months or 1 year

 

11

--------------------------------------------------------------------------------

 

thereafter, as the case may be; provided, however, that:  (x) in the event such
ending day is not a Banking Day, such period shall be extended to the next
Banking Day unless such next Banking Day falls in the next calendar month, in
which case it shall end on the preceding Banking Day; and (y) if there is no
numerically corresponding day in the month, then such period shall end on the
last Banking Day in the relevant month.

 

LIBOR MARGINS

 

FIXED RATE
PRODUCT

 

INDEX

 

SPREAD OVER INDEX IN BASIS
POINTS (Applicable LIBOR Margin)

 

One Month

 

LIBOR

 

90bps

 

Two Months

 

LIBOR

 

90bps

 

Three Months

 

LIBOR

 

90bps

 

Six Months

 

LIBOR

 

90bps

 

One Year

 

LIBOR

 

90bps

 

 

(D) Treasury Option.  At a fixed rate equal to Applicable “Treasury” Margin per
annum (as described in terms of basis points (“bps”) in the chart immediately
set forth below) above the “U.S. Treasury Rate” (as hereinafter defined). Under
this option, balances of $2,000,000.00 or more may be fixed on or before for
periods ranging from two years to the final maturity date of the loan, as
selected by the Company. However, rates may not be fixed in such a manner as to
require the Company to have to repay any fixed rate balance prior to the last
day of its fixed rate period in order to pay any installment of principal. For
purposes hereof, the “U.S. Treasury Rate” shall mean the yield to maturity on
U.S. Treasury instruments having the same maturity date as the last day of the
fixed rate period selected by the Company, as calculated from the bid price
indicated by Telerate (page 5) at the time the rate is fixed.  If, however, no
instrument is indicated for the maturity selected, then the rate shall be
interpolated based on the bid prices quoted for the next longest and shortest
maturities so indicated. In the event Telerate ceases to provide such quotations
or materially changes the form or substance of page 5 (as determined by CoBank),
then CoBank will notify the Company and the parties hereto will agree upon a
substitute basis for obtaining such quotations.

 

TREASURY MARGINS

 

FIXED RATE
PRODUCT

 

INDEX

 

SPREAD OVER INDEX IN BASIS
POINTS (Applicable Treasury Margin)

 

Two Years

 

U.S.$ Constant Maturity
Treasury (“US$CMT”)

 

125bps

 

Three Years

 

US$CMT

 

125bps

 

Four Years

 

US$CMT

 

125bps

 

Five Years

 

US$CMT

 

125bps

 

Seven Years

 

US$CMT

 

140bps

 

Ten Years

 

US$CMT

 

140bps

 

Floor (Minimum) Rate (For Two to Ten Year Fixed Rate Products Only)

 

CoBank’s cost of funds (as reasonably determined by CoBank in its sole
discretion)

 

105bps

 

 

12

--------------------------------------------------------------------------------

 

The spread over all of the above indices, including the Floor (Minimum) Rate,
may increase or decrease for future fixed amounts based on the Borrower’s
previous fiscal quarter’s leverage ratio, as follows:

 

LEVERAGE RATIO (as defined
below)

 

INCREASE / DECREASE
TO SPREAD

 

CHANGE TO LIBOR and
TREASURY MARGINS
(IN BASIS POINTS)

 

A.  Equal to or greater than 1.35:1.00

 

Increase

 

20

 

B.  Equal to or greater than 1.20:1.00, but less than 1.35:1.00

 

None

 

 0

 

C.  Less than 1.20:1.00, but greater than or equal to 1.00:1.00

 

Decrease

 

10

 

D.  Less than 1.00:1.00

 

Decrease

 

20

 

 

Leverage Ratio: The Borrower will maintain a leverage ratio of not more than
1.50:1.0, and attain a leverage ratio of not more than 1.40:1.0 on November 30,
2002.  Leverage ratio is long term debt (excluding current maturities)
calculated in accordance with GAAP plus or minus the difference between actual
working capital and minimum net working capital (as defined in the MLA No. Z269,
Section 10), divided by total members investments plus the estimated unit
retains.

 

The spread shall be adjusted quarterly on the latter of either: (a) five
business days after the Bank’s receipt of the Borrower’s certification of
compliance with the leverage ratio, or (b) 30 days after the end of each
calendar quarter.

 

The Company shall select the applicable rate option at the time it requests a
loan hereunder and may, subject to the limitations set forth above, elect to
convert balances bearing interest at the variable rate option to one of the
fixed rate options. Upon the expiration of any fixed rate period, interest shall
automatically accrue at the variable rate option unless the amount fixed is
repaid or fixed for an additional period in accordance with the terms hereof.
Notwithstanding the foregoing, unless CoBank otherwise consents in its sole
discretion in each instance, rates may not be fixed for periods expiring after
the maturity date of the loans. In the event CoBank so consents and the
Commitment is not renewed, then each balance so fixed shall be due and payable
on the last day of its fixed rate period, and the promissory note set forth
below shall be deemed amended accordingly. All elections provided for herein
shall be made telephonically or in writing and must be received by 12:00 noon
Company’s local time. Interest shall be calculated on the actual number of days
each loan is outstanding on the basis of a year consisting of 360 days and shall
be payable quarterly in arrears by the 20th day of the following month.

 

13

--------------------------------------------------------------------------------

 

SECTION 5.   Promissory Note. The Company promises to repay the loans that are
outstanding in annual principal payments of $2,000,000.00 each due on or before
December 31st of each year commencing in 2002.  All outstanding balances shall
be repaid by December 31, 2009. If any installment due date is not a day on
which CoBank is open for business, then such payment shall be made on the next
day on which CoBank is open for business.  In addition to the above, the Company
promises to pay interest on the unpaid principal balance hereof at the times and
in accordance with the provisions set forth in Section 4 hereof. This note
replaces and supersedes, but does not constitute payment of the indebtedness
evidenced by, the promissory note set forth in the Supplement being amended and
restated hereby.

 

SECTION 6.   Prepayment.  The loans may be prepaid in whole or in part on one
CoBank business day’s prior written notice.  During the term of the Commitment,
prepayments shall be applied to such balances, fixed or variable, as the Company
shall specify.  After the expiration of the term of the Commitment, prepayments
shall, unless CoBank otherwise agrees, be applied to principal installments in
the inverse order of their maturity and to such balances, fixed or variable, as
CoBank shall specify.

 

SECTION 7.   Commitment Fee.  In consideration of the Commitment, the Company
agrees to pay to CoBank a commitment fee on the average daily unused portion of
the Commitment at the rate of 20 basis points per annum (calculated on a 360 day
basis), payable quarterly in arrears by the 20th day following each calendar
quarter. Such fee shall be payable for each calendar quarter (or portion
thereof) occurring during the original or any extended term of the Commitment.

 

SECTION 8.   Letters of Credit.  In addition to loans, and if agreeable to
CoBank in its sole discretion in each instance, the Company may utilize the
Commitment to open irrevocable letters of credit for its account.  Each letter
of credit shall reduce the amount available under the Commitment by the maximum
amount capable of being drawn thereunder.  The rights and obligations of the
parties with respect to each letter of credit will be governed by the
Reimbursement Agreement attached hereto as Exhibit A (which rights and
obligations shall be in addition to the rights and obligations of the parties
hereunder and under the MLA). The fee for issuing each letter of credit shall be
determined at the time of application.

 

SECTION 9.   Security.  In addition to any other security that may otherwise be
required or provided, the Company’s obligations under this Supplement are
secured by that Restated Mortgage and Security Agreement dated September 15,
1998, from American Crystal Sugar Company to St. Paul Bank for Cooperatives (now
known as CoBank as a result of merger), as Collateral Agent.

 

IN WITNESS WHEREOF, the parties have caused this Supplement to be executed by
their duly authorized officers as of the date shown above.

 

CoBANK, ACB

 

AMERICAN CRYSTAL SUGAR COMPANY

 

 

 

 

 

 

 

 

By:

 /s/ Michael Tousignant

 

By:

 /s/ Sam Wai

 

 

 

 

 

Title:

 Vice President

 

Title:

 Treasurer

 

14

--------------------------------------------------------------------------------

 

Exhibit A

 

LETTER OF CREDIT REIMBURSEMENT AGREEMENT

 

In consideration of CoBank issuing one or more letters of credit (each a
“Credit”) for the Company’s account under the Supplement to which this agreement
is attached (the “Supplement”), the Company agrees as follows:

 

1.                                       The Company will pay to CoBank in
United States currency and in immediately available funds the amount of each
draft drawn or instrument paid under a Credit.  In addition, the Company agrees
to pay to CoBank such fee for issuing each Credit as CoBank shall prescribe, as
well as all customary charges associated with the issuance of a Credit.  If a
Credit is payable in a foreign currency, the Company will pay to CoBank an
amount in United States currency equivalent to CoBank’s selling rate of exchange
for that currency.  In addition to the amounts set forth above, the Company
shall pay to CoBank such amounts as CoBank shall determine are necessary to
compensate CoBank for any cost attributable to CoBank issuing or having
outstanding any Credit resulting from the application of any law or regulation
concerning any reserve, assessment, capital adequacy or similar requirement
relating to letters of credit, reimbursement agreements with respect thereto, or
to similar liabilities or assets of banks, whether existing at the time of the
issuance of a Credit or adopted thereafter.  Each payment hereunder shall be
payable on demand at the place and manner set forth in the Master Loan Agreement
between the parties (the “MLA”) and with interest from the date of demand to the
date paid at CoBank’s National Variable Rate.  The Company hereby authorizes
CoBank to create a loan under the Supplement bearing interest at the variable
rate set forth therein for any sums owing hereunder.

 

2.                                       Neither CoBank nor any of its
correspondents shall in any way be responsible for the performance by any
beneficiary of its obligations to the Company nor for the form, sufficiency,
correctness, genuineness, authority of the person signing, falsification or
legal effect of any documents called for under a Credit if such documents on
their face appear to be in order.  In addition, CoBank and its correspondents
may receive and accept or pay as complying with the terms of a Credit any
drafts, documents, or certificates, otherwise in order, signed by any person
purporting to be an administrator, executor, trustee in bankruptcy, debtor in
possession, assignee for the benefit of creditors, liquidator, receiver, or
other legal representative of the party authorized under a Credit to draw or
issue such instruments or other documents.

 

3.                                       In the event the Credit is a commercial
Credit, then, in addition to the other provisions hereof, the Company:  (i)
agrees to obtain or cause to be in existence insurance on any merchandise
described in the Credit against fire and other usual risks and against any
additional risks which CoBank may request; and (ii) authorizes and empowers
CoBank to collect the amount due under any such insurance and apply the same
against any of the Company’s  obligations to CoBank arising under the Credit or
otherwise.  In addition, whether the Credit is a commercial or a standby Credit,
the Company represents and warrants that any required import, export or foreign
exchange licenses or other governmental approvals relevant to the Credit and the
merchandise described therein have been obtained and that the transactions
contemplated thereby are not prohibited under any  law, rule, regulation, order
or the like, including the Foreign Assets Control Regulations of the
U.S. Department of Treasury.

 

4.                                       All directions and correspondence
relating to a Credit are to be sent at the Company’s risk and CoBank does not
assume any responsibility for any inaccuracy, interruption, error, or delay in
transmission or delivery by post, telegraph, cable or other electronic means, or
for any inaccuracy of translation.

 

5.                                       CoBank shall not be responsible for any
act, error, neglect, default, omission, insolvency or failure in business of any
of its correspondents, and any action taken or omitted by CoBank or its
correspondents under or in connection with a Credit shall, if taken or omitted
with honesty in fact, be binding on the Company and shall not put CoBank or its
correspondents under any resulting liability to the Company.  In no event shall 
CoBank be liable for special, consequential or punitive damages.

 

6.                                       The Company will indemnify CoBank
against and hold it harmless from all loss, damage, cost, and expense (including
attorneys’ fees and expenses) arising out of (i) its issuance of or any other
action taken by CoBank in connection with a Credit, other than loss or damage
resulting from its gross negligence or willful misconduct, and (ii) claims or
legal proceedings incident to the collection of amounts owed by the Company
hereunder, or the enforcement of CoBank’s rights or the rights of others under a
Credit, including, without limitation, legal proceedings relating to any court
order, injunction or other process or decree restraining or seeking to restrain
CoBank from paying any amount under a Credit.

 

15

--------------------------------------------------------------------------------

 

7.                                       In the event:  (i) the Company fails to
make any payment owing hereunder when the same shall become due and payable;
(ii) any covenant or representation or warranty set forth herein is breached;
(iii) the “Commitment” (as defined in the Supplement) expires prior to the
expiration date of any Credit; or (iv) an “Event of Default” (as defined in the
MLA) occurs under the MLA, then, in any such event, the amount of each Credit,
together with any amounts payable by us in connection therewith, shall, at
CoBank’s option, become immediately due and payable. To the extent that any
amount paid by the Company pursuant to this Section 7 shall not then be due
under the terms of a Credit, such payment shall serve as security for the
Company’s obligation to indemnify CoBank for any amounts subsequently disbursed
by CoBank pursuant to a Credit.  Furthermore, upon the institution of any legal
proceeding described in Section 6(ii) hereof, the Company will, on demand,
assign and deliver to CoBank, as security for the Company’s obligation to
indemnify CoBank, cash collateral in an amount satisfactory to CoBank.

 

8.                                       CoBank shall be fully protected in, and
shall incur no liability to the Company for acting upon, any oral, telephonic,
facsimile, cable or other electronic instructions which CoBank in good faith
believes to have been given by any authorized person.  CoBank may, at its
option, use any means of verifying any instructions received by it and may also,
at its option, refuse to act on any oral, telephonic, facsimile, cable or other
electronic instructions or any part thereof, without incurring any
responsibility for any loss, liability or expenses arising out of such refusal.

 

9.                                       The Uniform Customs and Practice as
most recently published by the International Chamber of Commerce (hereafter
called the “UCP”) shall in all respects be deemed a part hereof as fully as if
incorporated herein, and shall apply to the Credits.  To the extent the UCP is
inconsistent with the governing law set forth in the MLA, the UCP shall control.

 

16

--------------------------------------------------------------------------------

 

AMENDED AND RESTATED
STATUSED REVOLVING CREDIT SUPPLEMENT

 

THIS SUPPLEMENT to the Master Loan Agreement dated March 31, 2000 (the “MLA”),
is entered into as of November 6, 2002, between CoBANK, ACB (“CoBank”) and
AMERICAN CRYSTAL SUGAR COMPANY, Moorhead, Minnesota (the “Company”), and amends
and restates the Supplement dated March 27, 2002 and numbered Z269S01C.

 

SECTION 1.   The Revolving Credit Facility.  On the terms and conditions set
forth in the MLA and this Supplement, CoBank agrees to make loans to the Company
during the period set forth below in an aggregate principal amount not to
exceed, at any one time outstanding, the lesser of the “Borrowing Base” (as
calculated pursuant to the Borrowing Base Certificate, the form of which is
attached hereto as Exhibit A) or $265,000,000.00 (the “Commitment”). Within the
limits of the Commitment, but subject to the Borrowing Base, the Company may
borrow, repay and reborrow.

 

SECTION 2.   Purpose.  The purpose of the Commitment is to finance the Company’s
general corporate purposes, fund working capital requirements, support the
Company’s commercial paper program, and issue short-term commercial and standby
letters of credit.  In addition, and to the extent allowed under the Amendment
and Waiver to the Master Loan Agreement number Z269C dated October 7, 2002, the
purpose of the Commitment is to (a) finance the asset purchases under the Asset
Purchase Agreement dated October 7, 2002, by and among Imperial Sugar Company,
Holly Sugar Company, and Sidney Sugars Incorporated; (b) fund an equity
investment in Sidney Sugars Incorporated in an amount not to exceed
$7,500,000.00; (c) fund a term loan to Sidney Sugars Incorporated in an amount
not to exceed $7,500,000.00; (d) provide an intercompany line of credit loan to
Sidney Sugars Incorporated in an amount not to exceed $50,000,000.00; (e) fund a
secured loan to Western Sugar Cooperative in an amount not to exceed
$1,500,000.00; and (f) provide on behalf of Western Sugar Cooperative a
unsecured letter of credit in an amount not to exceed $6,800,000.00.

 

SECTION 3.   Term.  The term of the Commitment shall be from the date hereof, up
to and including July 31, 2003, or such later date as CoBank may, in its sole
discretion, authorize in writing.

 

SECTION 4.   Interest.  The Company agrees to pay interest on the unpaid balance
of the loans in accordance with one or more of the following interest rate
options, as selected by the Company:

 

(A)                               Base Rate Option.  At a rate per annum at all
times equal to the Base Rate.  For the purposes hereof, Base Rate means that
rate in effect from day to day defined as the “prime rate” as published from
time to time in the Eastern Edition of The Wall Street Journal as the average
prime lending rate for seventy-five percent (75%) of the United States; thirty
(30) largest commercial banks, or if The Wall Street Journal shall cease
publication or cease publishing the “prime rate” on a regular basis, such other
regularly published average prime rate applicable to such commercial banks as is
acceptable to the Lender in its reasonable discretion.  Loans for which the Base
Rate option is selected are referred to herein as “Base Rate Loans”.

 

Base Rate Loans shall be:  (a) in minimum amounts of $5,000,000 and incremental
multiples of $1,000,000; and (b) made available on any Banking Day.  Interest on
Base Rate Loans shall be calculated

 

17

--------------------------------------------------------------------------------

 

on the actual number of days each loan is outstanding on the basis of a year
consisting of 360 days and shall be payable monthly in arrears on the twentieth
Banking Day of the following month.

 

(B)                               Quoted Rate Option.  At a fixed rate per annum
at all times equal to the Quoted Rate.  For the purposes hereof, Quoted Rate
means a fixed rate of interest to apply to a loan (referred to herein as a
“Quoted Rate Loan”) for a specified period of time not to exceed thirty (30)
days quoted by CoBank in its sole discretion.

 

Quoted Rate Loans shall be (i) in minimum amounts of $1,000,000 and incremental
multiples of $1,000,000; and (ii) made available on any Banking Day.  The Quoted
Rate may not necessarily be the lowest rate at which CoBank funds at that time.

 

Interest on Quoted Rate Loans shall be calculated on the actual number of days
each loan is outstanding on the basis of a year consisting of 360 days and shall
be payable monthly in arrears on the twentieth Banking Day of the following
month.

 

(C)                               LIBOR Option.  At a fixed rate equal to LIBOR
plus the Applicable Margin (as defined below).  For the purposes hereof, LIBOR
means the rate for deposits in U.S. Dollars, with maturities comparable to the
selected LIBOR Interest Period, that appears on the display designed as page
“3750” of the Telerate Service (or such other page as may replace the 3750 page
of that service of if the Telerate Service shall cease displaying such rates,
such other service or services as may be nominated by the British Bankers’
Association for the purpose of displaying London Interbank Offered Rates for
U.S. Dollar deposits), determined as of 11:00 a.m. London time two Banking Days
prior to the commencement of such LIBOR Interest Period.  “LIBOR Interest
Period” means a period of one, two, three or six months.  LIBOR pricing will be
adjusted for Regulation D reserve requirements.  The Applicable Margin is 100
basis points.  Loans for which the LIBOR option is selected are referred to
herein as “LIBOR Loans”.

 

LIBOR Loans shall be:  (a) in a minimum amount of $5,000,000 and incremental
multiples of $1,000,000;  (b) made available on three Banking Days prior notice;
and (c) be for periods of one, two, three, or six months.  Interest on LIBOR
Loans shall be calculated on the actual number of days each loan is outstanding
on the basis of a year consisting of 360 days and shall be payable in arrears
upon maturity of the applicable LIBOR Interest Period, but no less frequently
than quarterly.  The LIBOR option shall be subject to the following limitations:

 

(1)                                  Notwithstanding anything herein to the
contrary, if, on or prior to the determination of the LIBOR rate for any LIBOR
Interest Period, CoBank determines (which determination shall be conclusive)
that quotations of interest rates in accordance with the definition of LIBOR
rate are not being provided in the relevant amounts or for the relevant
maturities for purposes of determining rates of interest for LIBOR rate advances
as provided in this Supplement, then CoBank shall give the Company prompt notice
thereof, and so long as such condition remains in effect, CoBank shall be under
no obligation to make LIBOR rate loans, convert Base Rate loans into LIBOR rate
loans, or continue LIBOR rate loans, and the Company shall, on the last day(s)
of the then current applicable LIBOR Interest Period(s) for the outstanding
LIBOR rate loans, either prepay such LIBOR rate loans or such LIBOR rate loans
shall automatically be converted into a Base Rate loan in accordance with this
Section 4.

 

18

--------------------------------------------------------------------------------

 

(2)                                  If any law, treaty, rule, regulation or
determination of a court or governmental authority or any change therein or in
the interpretation or application thereof subsequent to the date hereof (each, a
“Change in Law”) shall make it unlawful for CoBank to (a) advance any LIBOR rate
loan or (b) maintain all or any portion of a LIBOR rate loan, then CoBank shall
promptly notify the Company thereof.  In the former event, any obligation of
CoBank to make available any future LIBOR rate loan shall immediately be
canceled (and, in lieu thereof shall be made as a Base Rate loan or Quoted Rate
loan at the option of the Company), and in the latter event, any such unlawful
LIBOR rate loan or portions thereof then outstanding shall be converted, at the
option of the Company, to either a Base Rate loan or a Quoted Rate loan;
provided, however, that if any such Change in Law shall permit the LIBOR rate to
remain in effect until the expiration of the LIBOR rate period applicable to any
such unlawful LIBOR rate loan, then such LIBOR rate loan shall continue in
effect until the expiration of such LIBOR rate period.  Upon the occurrence of
any of the foregoing events on account of any Change in Law, the Company shall
pay to CoBank immediately upon demand such amounts as may be necessary to
compensate CoBank for any fees, charges, or other costs incurred or payable by
CoBank as a result thereof and which are attributable to any LIBOR rate loans
made available to the Company hereunder.

 

(3)                                  If CoBank shall determine that, after the
date hereof, the adoption of any applicable Law, rule or regulation regarding
capital adequacy, or any change therein, or any change in the interpretation or
administration thereof by any governmental authority, central bank or comparable
agency charged with the interpretation or administration thereof, or any request
or directive regarding capital adequacy (whether or not having the force of law)
of any such governmental authority, central bank or comparable agency, has or
would have the effect of reducing the rate of return on capital of CoBank as a
consequence of CoBank’s obligations hereunder to a level below that which CoBank
could have achieved but for such adoption, change, request or directive (taking
into consideration its policies with respect to capital adequacy existing on the
date of this Supplement) by an amount deemed by CoBank to be material, then from
time to time, within fifteen (15) days after demand by CoBank, the Company shall
pay to CoBank such additional amount or amounts as will compensate CoBank for
such reduction.  CoBank agrees to take reasonable steps to reduce the amount of
such increase, provided, however, that CoBank shall not be required to take any
such step, if in CoBank’s sole opinion, CoBank would suffer an economic loss or
any negative legal or regulatory consequences as a result thereof.  If CoBank is
to require the Company to make payments under this Section then CoBank must make
a demand on the Company to make such payment within ninety (90) days of the
later of (1) the date on which such capital costs are actually incurred by
CoBank, or (2) the date on which CoBank knows, or should have known, that such
capital costs have been incurred by CoBank.

 

The Company shall select the applicable rate option at the time it requests a
loan hereunder and may, subject to the limitations set forth above, elect to
convert balances bearing interest at the variable rate option to one of the
fixed rate options. Upon the expiration of any fixed rate period, interest shall
automatically accrue at the Base Rate unless the amount fixed is repaid or fixed
for an additional period in accordance with the terms hereof. Notwithstanding
the foregoing, unless CoBank otherwise consents in its sole discretion in each
instance, rates may not be fixed for periods expiring after the maturity date of
the loan. In the event CoBank so consents and the Commitment is not renewed,
then each balance so fixed shall be due and payable on the last day of its fixed
rate period, and the promissory note set forth below shall be deemed amended
accordingly. All elections provided for herein shall be made telephonically or
in writing and must be received by 12:00 noon Company’s local time.  As used in
this Section 4, “Banking Day” means a day on which CoBank is open for business,
dealings in U.S. dollar deposits are being carried out in the London interbank
market, and banks are open for business in New York City and London, England.

 

SECTION 5.   Promissory Note. The Company promises to repay the unpaid principal
balance of the loans on the first CoBank business day following the last day of
the term of the Commitment.  In addition to the above, the Company promises to
pay interest on the unpaid principal balance of the loans at the times and in
accordance with the provisions set forth in Section 4 hereof.  This note
replaces and

 

19

--------------------------------------------------------------------------------

 

supersedes, but does not constitute payment of the indebtedness evidenced by,
the promissory note set forth in the Supplement being amended and restated
hereby.

 

SECTION 6.   Borrowing Base Certificate, Etc.  The Company agrees to furnish a
Borrowing Base Certificate to CoBank at such times or intervals as CoBank may
from time to time request.  Until receipt of such a request, the Company agrees
to furnish a Borrowing Base Certificate to CoBank within 30 days after each
month end calculating the Borrowing Base as of the last day of the month for
which the Certificate is being furnished.  However, if no balance is outstanding
hereunder on the last day of such period, no Report need be furnished. 
Regardless of the frequency of the reporting, if at any time the amount
outstanding under the Commitment exceeds the Borrowing Base, the Company shall
immediately notify CoBank and repay so much of the loans as is necessary to
reduce the amount outstanding under the Commitment to the limits of the
Borrowing Base.

 

SECTION 7.   Commitment Fee.  In consideration of the Commitment, the Company
agrees to pay to CoBank a commitment fee on the average daily unused portion of
the Commitment at the rate of 20 basis points per annum (calculated on a 360 day
basis), payable quarterly in arrears by the 20th day following each calendar
quarter. The unused amount of the Commitment will be the difference between the
Commitment and the sum of the outstanding principal amount of loans under the
Commitment and the undrawn face amount of all outstanding Letters of Credit.

 

SECTION 8.   Utilization Fee.  For any day on which the outstanding principal
amount of loans shall be greater than 25% of the Commitment (but no greater than
50% of the Commitment), the Company shall pay to CoBank a utilization fee equal
to 0.125% per annum (calculated on a 360 day basis) on the aggregate amount
outstanding on such day.  For any day on which the outstanding principal amount
of loans shall be greater than 50% of the Commitment, the Company shall pay to
CoBank a utilization fee equal to 0.25% per annum (calculated on a 360 day
basis) on the aggregate amount outstanding on such day.  Accrued and unpaid
utilization fees, if any, shall be payable quarterly in arrears by the 20th day
following each calendar quarter.

 

SECTION 9.   Letters of Credit.  In addition to loans, and if agreeable to
CoBank in its sole discretion in each instance, the Company may utilize the
Commitment to open irrevocable letters of credit for its account.  Each letter
of credit shall reduce the amount available under the Commitment by the maximum
amount capable of being drawn thereunder.  The rights and obligations of the
parties with respect to each letter of credit will be governed by the
Reimbursement Agreement attached hereto as Exhibit B (which rights and
obligations shall be in addition to the rights and obligations of the parties
hereunder and under the MLA).  This Commitment shall expire on July 31, 2003.
The fee for issuing each letter of credit shall be 100 basis points of the face
amount of each letter of credit, along with an issuance fee to CoBank, for its
own account, equal to the greater of (a) 1/8% of the face amount of the letter
of credit, or (b) $2,000. The Company promises to repay the outstanding balance
on the Commitment in full on demand, or if no demand is made, then any time on
or before the Commitment expiration date of July 31, 2003.

 

SECTION 10.   Amendment Fee.  In consideration of the amendment, the Company
agrees to pay to CoBank on the execution hereof, a fee in the amount of
$135,000.00. (.075% of commitment prior to increase, $180,000,000.00)

 

SECTION 11.   Loan Origination Fee.  In consideration of the Commitment, the
Company agrees to pay to CoBank on the execution hereof, a loan origination fee
in the amount of $65,000.00. (0.10% of the Commitment increase amount
$65,000,000.00).

 

20

--------------------------------------------------------------------------------

 

IN WITNESS WHEREOF, the parties have caused this Supplement to be executed by
their duly authorized officers as of the date shown above.

 

CoBANK, ACB

 

AMERICAN CRYSTAL SUGAR COMPANY

 

 

 

 

 

By:

 /s/ Michael Tousignant

 

By:

 /s/ Sam Wai

 

 

 

 

 

Title:

 Vice President

 

Title:

 Treasurer

 

 

EXHIBIT “A”

 

[Form of Borrowing Base]

American Crystal Sugar Company

Monthly Borrowing Base

For the month ended           

 

Trade Accounts Receivables

 

$

@ 80%

$

(a)

 

Trade Accounts Receivables are defined as those of the Borrower and all
Guarantors which:  (1) arise from the sale and delivery of inventory on ordinary
trade terms; (2) are evidenced by an invoice; (3) are net of any credit, trade
or other allowance given to the account debtor; (4) are not owing by an account
debtor who has become insolvent or is the subject of any bankruptcy,
reorganization, liquidation or like proceeding; (5) are not subject to any
offset or deduction; (6) are not owing by an affiliate of Borrower; (7) are not
owing by an obligor located outside of the U.S. unless the receivable is
supported by a letter of credit issued by a bank acceptable to the Lender; and
(8) are not government receivables.  The above provisions notwithstanding, Trade
Receivables shall also exclude (i) any accounts that are past due more than 90
days, and (ii) any contra account regardless of the date;

 

Inventory

 

$

(b)

 

 

 

Inventory as determined on the basis of Net Realizable Value, defined as the
expected selling price of an inventory item less expected costs to complete and
dispose, as determined in accordance with GAAP.

 

Crop Payments due Non-members and members

 

$

(c)

 

 

 

Net Inventory Value (b-c)

 

$

@ 75%

 

(d)

 

Borrowing Base (a+d)

 

$

 

$

 

 

Commercial Paper

 

$

 

$

(e)

 

 

21

--------------------------------------------------------------------------------

 

Seasonal Loan

 

 

 

 

(f)

 

Commodity Credit Corp. loans

 

 

 

 

(g)

 

Total Short-term Loans (e+f+g)

$

 

 

 

 

 

 

Exhibit B

 

LETTER OF CREDIT REIMBURSEMENT AGREEMENT

 

 

In consideration of CoBank issuing one or more letters of credit (each a
“Credit”) for the Company’s account under the Supplement to which this agreement
is attached (the “Supplement”), the Company agrees as follows:

 

1.               The Company will pay to CoBank in United States currency and in
immediately available funds the amount of each draft drawn or instrument paid
under a Credit.  In addition, the Company agrees to pay to CoBank such fee for
issuing each Credit as prescribed in Section 9 of Supplement number Z269S01C, as
well as all customary charges associated with the issuance of a Credit.  If a
Credit is payable in a foreign currency, the Company will pay to CoBank an
amount in United States currency equivalent to CoBank’s selling rate of exchange
for that currency.  In addition to the amounts set forth above, the Company
shall pay to CoBank such amounts as CoBank shall determine are necessary to
compensate CoBank for any cost attributable to CoBank issuing or having
outstanding any Credit resulting from the application of any law or regulation
concerning any reserve, assessment, capital adequacy or similar requirement
relating to letters of credit, reimbursement agreements with respect thereto, or
to similar liabilities or assets of banks, whether existing at the time of the
issuance of a Credit or adopted thereafter.  Each payment hereunder shall be
payable on demand at the place and manner set forth in the Master Loan Agreement
between the parties (the “MLA”) and with interest from the date of demand to the
date paid at CoBank’s National Variable Rate.  The Company hereby authorizes
CoBank to create a loan under the Supplement bearing interest at the variable
rate set forth therein for any sums owing hereunder.

 

2.               Neither CoBank nor any of its correspondents shall in any way
be responsible for the performance by any beneficiary of its obligations to the
Company nor for the form, sufficiency, correctness, genuineness, authority of
the person signing, falsification or legal effect of any documents called for
under a Credit if such documents on their face appear to be in order.  In
addition, CoBank and its correspondents may receive and accept or pay as
complying with the terms of a Credit any drafts, documents, or certificates,
otherwise in order, signed by any person purporting to be an administrator,
executor, trustee in bankruptcy, debtor in possession, assignee for the benefit
of creditors, liquidator, receiver, or other legal representative of the party
authorized under a Credit to draw or issue such instruments or other documents.

 

3.               In the event the Credit is a commercial Credit, then, in
addition to the other provisions hereof, the Company:  (i) agrees to obtain or
cause to be in existence insurance on any merchandise described in the Credit
against fire and other usual risks and against any additional risks which CoBank
may request; and (ii) authorizes and empowers CoBank to collect the amount due
under any such insurance and apply the same against any of the Company’s
obligations to CoBank arising under the Credit or otherwise.  In addition,
whether the Credit is a commercial or a standby Credit, the Company represents
and warrants that any required import, export or foreign exchange licenses or
other governmental approvals relevant to the Credit and the merchandise
described therein have been obtained and that the transactions contemplated
thereby are not prohibited under any  law, rule, regulation, order or the like,
including the Foreign Assets Control Regulations of the U.S. Department of
Treasury.

 

4.               All directions and correspondence relating to a Credit are to
be sent at the Company’s risk and CoBank does not assume any responsibility for
any inaccuracy, interruption, error, or delay in transmission or delivery by
post, telegraph, cable or other electronic means, or for any inaccuracy of
translation.

 

5.               CoBank shall not be responsible for any act, error, neglect,
default, omission, insolvency or failure in business of any of its
correspondents, and any action taken or omitted by CoBank or its correspondents
under or in connection with a Credit shall, if taken or omitted with honesty in
fact, be binding on the Company and shall not put CoBank or its correspondents
under any resulting liability to the Company.  In no event shall  CoBank be
liable for special, consequential or punitive damages.

 

22

--------------------------------------------------------------------------------

 

6.               The Company will indemnify CoBank against and hold it harmless
from all loss, damage, cost, and expense (including attorneys’ fees and
expenses) arising out of (i) its issuance of or any other action taken by CoBank
in connection with a Credit, other than loss or damage resulting from its gross
negligence or willful misconduct, and (ii) claims or legal proceedings incident
to the collection of amounts owed by the Company hereunder, or the enforcement
of CoBank’s rights or the rights of others under a Credit, including, without
limitation, legal proceedings relating to any court order, injunction or other
process or decree restraining or seeking to restrain CoBank from paying any
amount under a Credit.

 

7.               In the event:  (i) the Company fails to make any payment owing
hereunder when the same shall become due and payable; (ii) any covenant or
representation or warranty set forth herein is breached; (iii) the “Commitment”
(as defined in the Supplement) expires prior to the expiration date of any
Credit; or (iv) an “Event of Default” (as defined in the MLA) occurs under the
MLA, then, in any such event, the amount of each Credit, together with any
amounts payable by us in connection therewith, shall, at CoBank’s option, become
immediately due and payable. To the extent that any amount paid by the Company
pursuant to this Section 7 shall not then be due under the terms of a Credit,
such payment shall serve as security for the Company’s obligation to indemnify
CoBank for any amounts subsequently disbursed by CoBank pursuant to a Credit. 
Furthermore, upon the institution of any legal proceeding described in Section
6(ii) hereof, the Company will, on demand, assign and deliver to CoBank, as
security for the Company’s obligation to indemnify CoBank, cash collateral in an
amount satisfactory to CoBank.

 

8.               CoBank shall be fully protected in, and shall incur no
liability to the Company for acting upon, any oral, telephonic, facsimile, cable
or other electronic instructions which CoBank in good faith believes to have
been given by any authorized person.  CoBank may, at its option, use any means
of verifying any instructions received by it and may also, at its option, refuse
to act on any oral, telephonic, facsimile, cable or other electronic
instructions or any part thereof, without incurring any responsibility for any
loss, liability or expenses arising out of such refusal.

 

9.               The Uniform Customs and Practice as most recently published by
the International Chamber of Commerce (hereafter called the “UCP”) shall in all
respects be deemed a part hereof as fully as if incorporated herein, and shall
apply to the Credits.  To the extent the UCP is inconsistent with the governing
law set forth in the MLA, the UCP shall control.

 

23

--------------------------------------------------------------------------------