**Exhibit10.29**

 

FINAL EXECUTION

 

 

 

AMERICAN CRYSTALSUGAR COMPANY

 

 

$20,000,000 4.78%Senior Secured Guaranteed Notes, due February 1, 2010

 

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NOTE PURCHASEAGREEMENT

 

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Dated as ofJanuary 15, 2003

 

 

 

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| SECTION 1.                                  AUTHORIZATION OF  NOTES                       |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| SECTION 2.                                SALE AND PURCHASE OF NOTES                      |
| SECTION 3.                                CLOSING                                         |
| SECTION 4.                                CONDITIONS TO CLOSING                           |
| Section 4.1                                                                                                                                                                                                                                          | Representations  and Warranties |
| Section 4.2                                                                                                                                                                                                                                          | Performance; No  Default |
| Section 4.3                                                                                                                                                                                                                                          | Compliance  Certificates |
| Section 4.4                                                                                                                                                                                                                                          | Opinions of Counsel |
| Section  4.5                                                                                                                                                                                                                                         | Purchase  Permitted By Applicable Law, Etc. |
| Section  4.6                                                                                                                                                                                                                                         | Sale  of Other Notes; Amendment of 1998 Note Purchase Agreement |
| Section  4.7                                                                                                                                                                                                                                         | Payment  of Special Counsel Fees |
| Section 4.8                                                                                                                                                                                                                                          | Private  Placement Number |
| Section  4.9                                                                                                                                                                                                                                         | Changes in  Corporate Structure |
| Section  4.10                                                                                                                                                                                                                                        | Execution  of Security Documents |
| Section  4.11                                                                                                                                                                                                                                        | Filing  and Recording; Collateral Due Diligence |
| Section 4.12                                                                                                                                                                                                                                         | Evidence of  Insurance |
| Section  4.13                                                                                                                                                                                                                                        | Consent  of Holders of Other Securities |
| Section 4.14                                                                                                                                                                                                                                         | Funding Instructions |
| Section  4.15                                                                                                                                                                                                                                        | Payment  of Recording Fees, Charges and Taxes |
| Section 4.16                                                                                                                                                                                                                                         | Proceedings and  Documents |
| SECTION  5.                                REPRESENTATIONS  AND WARRANTIES OF THE COMPANY |
| Section  5.1                                                                                                                                                                                                                                         | Organization;  Power and Authority |
| Section 5.2                                                                                                                                                                                                                                          | Authorization, Etc. |
| Section 5.3                                                                                                                                                                                                                                          | Disclosure. |
| Section  5.4                                                                                                                                                                                                                                         | Organization  and Ownership of Shares of Subsidiaries; Affiliates |
| Section 5.5                                                                                                                                                                                                                                          | Financial Statements |
| Section  5.6                                                                                                                                                                                                                                         | Compliance  with Laws, Other Instruments, Etc. |
| Section  5.7                                                                                                                                                                                                                                         | Governmental  Authorizations, Etc. |
| Section  5.8                                                                                                                                                                                                                                         | Litigation;  Observance of Agreements, Statutes and Orders |
| Section 5.9                                                                                                                                                                                                                                          | Taxes |
| Section 5.10                                                                                                                                                                                                                                         | Title to  Property; Leases |
| Section 5.11                                                                                                                                                                                                                                         | Licenses, Permits,  Etc. |

 

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| Section 5.12                                                                                                                                                                                                                            | Compliance with  ERISA                       |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|----------------------------------------------|
| Section  5.13                                                                                                                                                                                                                           | Private  Offering by the Company             |
| Section  5.14                                                                                                                                                                                                                           | Use of  Proceeds; Margin Regulations         |
| Section 5.15                                                                                                                                                                                                                            | Existing  Debt; Future Liens                 |
| Section  5.16                                                                                                                                                                                                                           | Foreign  Assets Control Regulations, Etc.    |
| Section 5.17                                                                                                                                                                                                                            | Status under  Certain Statutes               |
| Section 5.18                                                                                                                                                                                                                            | Environmental  Matters                       |
| Section 5.19                                                                                                                                                                                                                            | Collateral Matters                           |
| Section 5.20                                                                                                                                                                                                                            | Parity of  Obligations                       |
| SECTION  6.                                REPRESENTATIONS  OF THE PURCHASER |
| Section 6.1                                                                                                                                                                                                                             | Purchase for  Investment                     |
| Section 6.2                                                                                                                                                                                                                             | Source of Funds                              |
| SECTION 7.                                INFORMATION AS TO  COMPANY         |
| Section  7.1                                                                                                                                                                                                                            | Financial  and Business Information          |
| Section 7.2                                                                                                                                                                                                                             | Officer’s  Certificate                  |
| Section 7.3                                                                                                                                                                                                                             | Inspection                                   |
| SECTION 8.                                  PREPAYMENT OF THE  NOTES         |
| Section 8.1                                                                                                                                                                                                                             | Required Prepayments                         |
| Section  8.2                                                                                                                                                                                                                            | Optional  Prepayments with Make-Whole Amount |
| Section 8.3                                                                                                                                                                                                                             | Change in Control                            |
| Section  8.4                                                                                                                                                                                                                            | Allocation  of Partial Prepayments           |
| Section 8.5                                                                                                                                                                                                                             | Maturity;  Surrender, Etc.                   |
| Section 8.6                                                                                                                                                                                                                             | Purchase of Notes                            |
| Section 8.7                                                                                                                                                                                                                             | Make-Whole Amount                            |
| SECTION 9.                                AFFIRMATIVE COVENANTS              |
| Section 9.1                                                                                                                                                                                                                             | Compliance with Law                          |
| Section 9.2                                                                                                                                                                                                                             | Insurance                                    |
| Section 9.3                                                                                                                                                                                                                             | Maintenance of  Properties                   |
| Section 9.4                                                                                                                                                                                                                             | Payment of  Taxes and Claims                 |
| Section 9.5                                                                                                                                                                                                                             | Corporate  Existence, Etc.                   |
| Section 9.6                                                                                                                                                                                                                             | Notes to Rank  Pari Passu                    |
| Section 9.7                                                                                                                                                                                                                             | Further Assurances                           |

 

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| Section 9.8                                                                                                                                                                                                 | Post Closing  Matters                                                                          |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------------------------------------------------------------------------------------------|
| Section  9.9                                                                                                                                                                                                | Incorporation  of Additional Covenants, Events of Default and Additional Information  Requests |
| Section 9.10                                                                                                                                                                                                | Additional  Collateral                                                                         |
| Section 9.11                                                                                                                                                                                                | Minimum Net  Working Capital                                                                   |
| Section  9.12                                                                                                                                                                                               | Consolidated  Funded Debt to Capitalization                                                    |
| Section  9.13                                                                                                                                                                                               | Minimum  Average Net Funds Generated plus Interest Expense                                     |
| SECTION 10.                          NEGATIVE COVENANTS                        |
| Section 10.1                                                                                                                                                                                                | Transactions  with Affiliates                                                                  |
| Section 10.2                                                                                                                                                                                                | Merger,  Consolidation, Etc.                                                                   |
| Section 10.3                                                                                                                                                                                                | Liens                                                                                          |
| Section 10.4                                                                                                                                                                                                | Consolidated Net  Worth                                                                        |
| Section 10.5                                                                                                                                                                                                | Sale of Assets                                                                                 |
| Section 10.6                                                                                                                                                                                                | Limitations on  Funded Debt                                                                    |
| Section 10.7                                                                                                                                                                                                | Line of Business                                                                               |
| Section 10.8                                                                                                                                                                                                | Loans To Growers                                                                               |
| SECTION 11.                            EVENTS OF DEFAULT                       |
| SECTION 12.                            REMEDIES ON  DEFAULT, ETC.              |
| Section 12.1                                                                                                                                                                                                | Acceleration                                                                                   |
| Section 12.2                                                                                                                                                                                                | Other Remedies                                                                                 |
| Section 12.3                                                                                                                                                                                                | Rescission                                                                                     |
| Section  12.4                                                                                                                                                                                               | No  Waivers or Election of Remedies, Expenses, etc.                                            |
| SECTION  13.                         REGISTRATION;  EXCHANGE; SUBSTITUTION OF NOTES |
| Section 13.1                                                                                                                                                                                                | Registration of  Notes                                                                         |
| Section  13.2                                                                                                                                                                                               | Transfer  and Exchange of Notes                                                                |
| Section 13.3                                                                                                                                                                                                | Replacement of Notes                                                                           |
| SECTION 14.                          PAYMENT OF NOTES                          |
| Section 14.1                                                                                                                                                                                                | Place of Payment                                                                               |
| Section 14.2                                                                                                                                                                                                | Home Office Payment                                                                            |
| SECTION 15.                          EXPENSES,  ETC.                           |
| Section 15.1                                                                                                                                                                                                | Transaction Expenses                                                                           |
| Section 15.2                                                                                                                                                                                                | Survival                                                                                       |

 

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| SECTION  16.                          SURVIVAL  OF REPRESENTATIONS AND WARRANTIES; ENTIRE AGREEMENT |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| SECTION 17.                          AMENDMENT AND WAIVER                                           |
| Section 17.1                                                                                                                                                                                                                     | Requirements |
| Section  17.2                                                                                                                                                                                                                    | Solicitation  of Holders of Notes |
| Section 17.3                                                                                                                                                                                                                     | Binding Effect, etc. |
| Section 17.4                                                                                                                                                                                                                     | Notes held by  Company, Etc. |
| SECTION 18.                          NOTICES                                                        |
| SECTION 19.                          REPRODUCTION OF  DOCUMENTS                                     |
| SECTION 20.                          CONFIDENTIAL  INFORMATION                                      |
| SECTION 21.                          SUBSTITUTION OF  PURCHASER                                     |
| SECTION 22.                          MISCELLANEOUS                                                  |
| Section 22.1                                                                                                                                                                                                                     | Successors and  Assigns |
| Section  22.2                                                                                                                                                                                                                    | Payments  Due on Non-Business Days |
| Section 22.3                                                                                                                                                                                                                     | Severability |
| Section 22.4                                                                                                                                                                                                                     | Construction |
| Section 22.5                                                                                                                                                                                                                     | Counterparts |
| Section 22.6                                                                                                                                                                                                                     | Governing Law |
| Section 22.7                                                                                                                                                                                                                     | Additional  Indebtedness |

 

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| **SCHEDULES**    |                                                                        |
|------------------|-----------------------------------------------------------------------------|
|             |                                                                        |
| Schedule A       | Information Relating to  Purchasers                                         |
| Schedule B       | Defined Terms                                                               |
| Schedule 5.4     | Subsidiaries of the Company                                                 |
| Schedule 5.5     | Financial  Statements and Other Reports                                     |
| Schedule 5.12(b) | ERISA Exceptions                                                            |
| Schedule 5.15    | Existing Debt and Existing Liens                                            |
|             |                                                                        |
| **EXHIBITS**     |                                                                        |
|             |                                                                        |
| Exhibit 1        | Form of Note                                                                |
| Exhibit  1(b)    | Form of Guarantee  Agreement                                                |
| Exhibit 4.1      | Representations  and Warranties of Guarantor                                |
| Exhibit 4.4(a)   | Description  of Closing Opinion of Counsel to the Company and the Guarantor |
| Exhibit 4.4(b)   | Description  of Special Counsel’s Closing Opinion                      |
| Exhibit 4.4(c)   | Description  of Closing Opinion of Special Local Counsel to the Purchasers  |
| Exhibit 4.4(d)   | Description  of Closing Opinion of Counsel to the Collateral Agent          |

 

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AMERICAN CRYSTALSUGAR COMPANY

101 NORTH 3RDSTREET

MOORHEAD,MINNESOTA  56560

 

$20,000,000 4.78%Senior Secured Guaranteed Notes, due February 1, 2010

 

Dated as of

January 15, 2003

 

TOEACH OF THE PURCHASERS LISTED IN

THE ATTACHED SCHEDULE A:

 

Ladies and Gentlemen:

 

American Crystal SugarCompany, a Minnesota cooperative corporation (the **“Company”**), agrees with you as follows:

 

SECTION 1.  AUTHORIZATION OF NOTES.

 

(a)                                  TheCompany will authorize the issue and sale of its $20,000,000 4.78% SeniorSecured Guaranteed Notes, due February 1, 2010 (the “**Notes**”), such term to includeany such notes issued in substitution therefor pursuant to Section 13 of thisAgreement or the Other Agreements (as hereinafter defined). The Notes shall besubstantially in the form set out in Exhibit 1 with such changes therefrom, ifany, as may be approved by you and the Company.  Certain capitalized terms used in this Agreement are defined inSchedule B; references to a “Schedule” or an “Exhibit” are, unless otherwisespecified, to a Schedule or an Exhibit attached to this Agreement.

 

(b)                                 Thepayment and performance obligations of the Company under and pursuant to thisAgreement and the Notes are to be fully and unconditionally guaranteed by theGuarantor pursuant to the Guarantee Agreement in substantially the formattached hereto as Exhibit 1(b).

 

(c)                                  Theobligations of the Guarantor under the Guarantee Agreement shall be secured bythe Sidney Mortgage and the Notes shall be secured, equally and ratably withthe other Senior Secured Obligations (as defined in the Intercreditor andCollateral Agency Agreement) by the Collateral (as defined in the Intercreditorand Collateral Agency Agreement).

 

SECTION 2.  SALE AND PURCHASE OF NOTES.

 

Subject to the terms andconditions of this Agreement, the Company will issue and sell to you and youwill purchase from the Company, at the Closing provided for in Section 3, Notesin the principal amount specified opposite your name in Schedule A at thepurchase price of 100% of the principal amount thereof.  Contemporaneously with entering into thisAgreement, the Company is entering into separate Note Purchase Agreements (the **“OtherAgreements”**) identical with this Agreement with each of the otherpurchasers named in Schedule A (the 

 

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**“Other Purchasers”**), providing for the saleat such Closing to each of the Other Purchasers of Notes in the principalamount specified opposite its name in Schedule A.  Your obligation hereunder and theobligations of the Other Purchasers under the Other Agreements are several andnot joint obligations and you shall have no obligation under any Other Agreementand no liability to any Person for the performance or non-performance by anyOther Purchaser thereunder.  You and theOther Purchasers are sometimes referred to hereunder as the “**Purchasers**”.

 

SECTION 3.  CLOSING.

 

The sale and purchase ofthe Notes to be purchased by you and the Other Purchasers shall occur at theoffices of McDermott, Will & Emery, 227 W. Monroe, Suite 4400, Chicago,Illinois 60606 at 10:00 A.M. Chicago, Illinois time, at a closing (the **“Closing”**)on January 31, 2003 or on such other Business Day thereafter on or prior toJanuary 31, 2003 as may be agreed upon by the Company and you and the OtherPurchasers.  At the Closing the Companywill deliver to you the Notes to be purchased by you in the form of a singleNote (or such greater number of Notes in denominations of at least $250,000 asyou may request) dated the date of the Closing and registered in your name (orin the name of your nominee), against delivery by you to the Company or itsorder of immediately available funds in the amount of the purchase pricetherefor by wire transfer of immediately available funds for the account of theCompany at Wells Fargo Bank Northwest, Minneapolis, Routing #091000019, forcredit to the Company’s account no. 0720017777.  If at the Closing the Company shall fail to tender such Notes toyou as provided above in this Section 3, or any of the conditions specified inSection 4 shall not have been fulfilled to your satisfaction, you shall, atyour election, be relieved of all further obligations under this Agreement,without thereby waiving any rights you may have by reason of such failure orsuch non-fulfillment.

 

SECTION 4.  CONDITIONS TO CLOSING.

 

Your obligation topurchase and pay for the Notes to be sold to you at the Closing is subject tothe fulfillment to your satisfaction, prior to or at the Closing, of thefollowing conditions:

 

*Section4.1**                                   Representationsand Warranties*.  Therepresentations and warranties of the Company in this Agreement, of theGuarantor in the Guarantee Agreement and contained in Exhibit 4.1 to this Agreement and the SecurityDocuments shall be correct when made and at the time of the Closing.

 

*Section4.2**                                   Performance;No Default*.  The Company andthe Guarantor shall have performed and complied with all agreements andconditions contained in this Agreement required to be performed or compliedwith by it prior to or at the Closing and after giving effect to the issue andsale of the Notes (and the application of the proceeds thereof as contemplatedby Section 5.14) no Default or Event of Default shall have occurred and becontinuing.

 

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*Section4.3**          **                     ComplianceCertificates*.

 

(a)                                  *Officer’sCertificate of the Company*. The Company shall have delivered to you an Officer’s Certificate, datedthe date of the Closing, certifying that the conditions specified in Sections4.1, 4.2 and 4.9 have been fulfilled.

 

(b)                                 *Secretary’sCertificate of the Company*. The Company shall have delivered to you a certificate certifying as tothe resolutions attached thereto and other corporate proceedings relating tothe authorization, execution and delivery of the Notes, the Agreements and theExisting Mortgages.

 

(c)                                  *Officer’sCertificate of the Guarantor*. The Guarantor shall have delivered to you an Officer’s Certificate,dated the date of the Closing, certifying that the conditions specified inSections 4.1 and 4.2 have been fulfilled.

 

(d)                                 *Secretary’sCertificate of the Guarantor*. The Guarantor shall have delivered to you a certificate certifying as tothe resolutions attached thereto and other corporate proceedings relating tothe authorization, execution and delivery of the Guarantee Agreement and theSidney Mortgage.

 

(e)                                  *Officer’sCertificate*.  The CollateralAgent shall have delivered to you an Officer’s Certificate, dated the date ofthe Closing, certifying that (i) the representations and warranties of theCollateral Agent set forth in Section 2.2 of the Intercreditor and CollateralAgency Agreement shall be correct when made and at the time of the Closing,(ii) the Collateral Agent shall have performed and complied with all agreementsand conditions contained in the Intercreditor and Collateral Agency Agreementrequired to be performed or complied with by it prior to or at the Closing andafter giving effect to the issue and sale of the Notes (and the application ofthe proceeds thereof as contemplated by Section 5.14) no Default or Event ofDefault shall have occurred and be continuing, and (iii) the Collateral Agentshall not have changed its jurisdiction of incorporation or been a party to anymerger or consolidation.

 

(f)                                    *Secretary’sCertificate*.  The CollateralAgent shall have delivered to you a certificate certifying as to theresolutions attached thereto and other corporate proceedings relating to theauthorization, execution and delivery of the Intercreditor and CollateralAgency Agreement.

 

*Section4.4**          **                     Opinionsof Counsel*.  You shall havereceived opinions in form and substance satisfactory to you, dated the date ofthe Closing (a) from Oppenheimer, Wolff & Donnelly, counsel for the Companyand the Guarantor, covering the matters set forth in Exhibit 4.4(a) andcovering such other matters incident to the transactions contemplated hereby asyou or your counsel may reasonably request (and the Company hereby instructsits counsel to deliver such opinion to you), (b) from McDermott, Will& Emery, your special counsel in connection with such transactions,substantially in the form set forth in Exhibit 4.4(b) and covering such othermatters incident to such transactions as you may reasonably request, (c) fromHolland & Hart, as special Montana counsel, and Oppenheimer, Wolff &Donnelly, as special Minnesota and North Dakota counsel, covering the mattersset forth in Exhibit 4.4(c) and covering such 

 

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other matters incident tothe transactions contemplated hereby as you or your special counsel mayreasonably request, and (d) from the Associate General Counsel of theCollateral Agent substantially in the form set forth in Exhibit 4.4(d) andcovering such other matters incident to such transactions as you may reasonablyrequest.

 

*Section4.5**          **                     PurchasePermitted By Applicable Law, Etc*. On the date of the Closing your purchase of Notes shall (a) bepermitted by the laws and regulations of each jurisdiction to which you aresubject, without recourse to provisions (such as Section 1405(a)(8) of the NewYork Insurance Law) permitting limited investments by insurance companieswithout restriction as to the character of the particular investment,(b) not violate any applicable law or regulation (including, withoutlimitation, Regulation T, U or X of the Board of Governors of the FederalReserve System) and (c) not subject you to any tax, penalty or liabilityunder or pursuant to any applicable law or regulation, which law or regulationwas not in effect on the date hereof. If requested by you, you shall have received an Officer’s Certificatecertifying as to such matters of fact as you may reasonably specify to enableyou to determine whether such purchase is so permitted.

 

*Section4.6**          **                     Saleof Other Notes; Amendment of 1998 Note Purchase Agreement*.  Contemporaneously with the Closing theCompany shall sell to the Other Purchasers and the Other Purchasers shallpurchase the Notes to be purchased by them at the Closing as specified inSchedule A, and the original 1998 Note Purchase Agreement shall have beenamended by the Company and the 1998 Purchasers in form and substance reasonablysatisfactory to the Company, the 1998 Purchasers and the Purchasers.

 

*Section4.7**          **                     Paymentof Special Counsel Fees*.  Without limiting the provisions ofSection 15.1, the Company shall have paid on or before the Closing thefees, charges and disbursements of your special counsel and your special localcounsel referred to in Section 4.4 to the extent reflected in a statement ofsuch counsel rendered to the Company at least one Business Day prior to theClosing.

 

*Section4.8**          **                     PrivatePlacement Number*.  A PrivatePlacement Number issued by Standard & Poor’s CUSIP Service Bureau (incooperation with the Securities Valuation Office of the National Association ofInsurance Commissioners) shall have been obtained for the Notes.

 

*Section4.9**          **                     Changesin Corporate Structure*. The Company shall not have changed itsjurisdiction of incorporation or been a party to any merger or consolidationand shall not have succeeded to all or any substantial part of the liabilitiesof any other entity, at any time following the date of the most recentfinancial statements referred to in Schedule 5.5.

 

*Section4.10**                            Executionof Security Documents*.  On orprior to the Closing:

 

(a)                                  theGuarantor shall have executed and delivered the Guarantee Agreement, the 1998Guarantee Agreement and the Bank Guarantee Agreement and each of said agreementsshall be in full force and effect and you shall have received true, correct andcomplete copies thereof;

 

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(b)                                 theCollateral Agent, the Banks and you shall have entered into and delivered theIntercreditor and Collateral Agency Agreement and the Company and the Guarantorshall have acknowledged the execution and delivery of such agreement and theIntercreditor and Collateral Agency Agreement shall be in full force and effectand you shall have received true, correct and complete copies thereof;

 

(c)                                  theGuarantor and the Collateral Agent shall have entered into and delivered theSidney Mortgage in form and substance satisfactory to you and the SidneyMortgage shall be in full force and effect and you shall have received true,correct and complete copies thereof; and

 

(d)                                 theExisting Mortgage shall be modified or amended in form and substance reasonablysatisfactory to the Purchasers to the effect that such Existing Mortgage shallcontinue to secure the Notes following execution of the Modification Agreementas may be required by local law.

 

*Section4.11**                            Filingand Recording; Collateral Due Diligence**. *The Purchasers shall have received the following, in form andsubstance satisfactory to the Purchasers:

 

(a)          evidencethat all filings, registrations and recordings have been made in theappropriate governmental offices, and all other action has been taken, whichshall be necessary to create, in favor of the Collateral Agent on behalf of thePurchasers, a perfected first, priority Lien on the Collateral, includingevidence of recordation of the Mortgages (which may consist of a written ortelephonic confirmation from the title insurance company), and filing ofcompleted UCC-1 financing statements, in each case in the appropriategovernmental offices;

 

(b)         theresults, dated as of a recent date prior to the Closing Date, of searchesconducted in the UCC filing records in each of the governmental offices in eachjurisdiction in which personal property and fixture Collateral is located,which shall have revealed no Liens with respect to any of the Collateral exceptPermitted Liens;

 

(c)          a titleinsurance policy (or a binding commitment therefor) for the Sidney Mortgage (i) issued by a title insurance company of recognizedstanding satisfactory to the Purchasers, (ii) onan ALTA (1970 Form) lender’s extended coverage policy, in an amount and formsatisfactory to the Purchasers, (iii) namingthe Collateral Agent, for the ratable benefit of the Secured Parties, as theinsured thereunder, (iv) insuring that theSidney Mortgage insured thereby creates a valid first priority Lien on theproperty covered by the Sidney Mortgage, subject to no other Liens, other thanPermitted Liens, and to no other exceptions, other than those satisfactory tothe Purchasers, and (v) containing suchendorsements and affirmative coverage as the Purchasers or the Bank (throughthe Purchasers) may reasonably request;

 

(d)         “Date Down”Endorsement to the existing loan title policies for the Existing Mortgageissued by Richland Abstract to the Collateral Agent insuring that the SidneyMortgage insured thereby creates a valid first priority Lien on the property 

 

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covered by theSidney Mortgage, subject to no other Liens, other than Permitted Liens; and

 

(e)          such otherdocuments and instruments in connection with the Sidney Mortgage as shallreasonably be deemed necessary by the Purchasers.

 

*Section4.12**                            Evidenceof Insurance*.  You shall havereceived a certificate dated the Closing executed by the independent insurancebroker of the Company or the Guarantor certifying to the existence of theinsurance required by the Security Documents and the payment of all premiumsthereon.  The original of the policiesor certificates thereof evidencing such insurance issued by the insurers shallbe delivered to the Collateral Agent for safekeeping on your behalf immediatelyupon receipt thereof by the Guarantor.

 

*Section4.13**                            Consentof Holders of Other Securities*. The Company and the 1998 Purchasers shall have executed and deliveredthe First Amendment to the 1998 Note Purchase Agreement dated as of the datehereof in form satisfactory to you. The Company and the Banks shall haveexecuted and delivered the Fifth Amendment to Loan Agreement in formsatisfactory to you.  Any other consentsor approvals required to be obtained from any holder or holders of anyoutstanding Security of the Company and the Guarantor and any amendments ofagreements pursuant to which any Security may have been issued which shall benecessary to permit the consummation of the transactions contemplated hereby orby the Security Documents shall have been obtained and all such consents oramendments shall be satisfactory in form and substance to you and your specialcounsel.

 

*Section4.14**                            FundingInstructions*.  At least 3Business Days prior to the Closing, you shall have received writteninstructions executed by a Responsible Officer of the Company directing themanner of the payment of funds and setting forth (a) the name of the transfereebank, (b) such transferee bank’s ABA number, (c) the account name and numberinto which the purchase price for the Notes is to be deposited, and (d) thename and telephone number of the account representative responsible forverifying receipt of such funds.

 

*Section4.15**                            Paymentof Recording Fees, Charges and Taxes*.  All fees, charges and taxes in connection with the recordation orfiling and re-recordation or re-filing of the Security Documents and any otheragreement or instrument, financing statement or any publication of noticerequired to be filed or recorded to protect the validity of the liens securingthe obligations of the Notes shall have been paid in full.

 

*Section4.16**                            Proceedingsand Documents*.  All corporateand other proceedings in connection with the transactions contemplated by thisAgreement and all documents and instruments incident to such transactions shallbe satisfactory to you and your special counsel, and you and your special counselshall have received all such counterpart originals or certified or other copiesof such documents as you or they may reasonably request.

 

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SECTION 5.  REPRESENTATIONS AND WARRANTIESOF THE COMPANY.

 

The Company representsand warrants to you that:

 

*Section5.1**          **                     Organization;Power and Authority*.  TheCompany is a corporation duly organized, validly existing and in good standingunder the laws of its jurisdiction of incorporation, and is duly qualified as aforeign corporation and is in good standing in each jurisdiction in which suchqualification is required by law, other than those jurisdictions as to whichthe failure to be so qualified or in good standing could not, individually orin the aggregate, reasonably be expected to have a Material AdverseEffect.  The Company has the corporatepower and authority to own or hold under lease the properties it purports toown or hold under lease, to transact the business it transacts and proposes totransact, to execute and deliver this Agreement, the Other Agreements, theMortgage and the Notes and to perform the provisions hereof and thereof.

 

*Section5.2**          **                     Authorization,Etc*.  This Agreement, the Other Agreements, theMortgage and the Notes have been duly authorized by all necessary corporateaction on the part of the Company, and this Agreement constitutes, and uponexecution and delivery thereof each Note will constitute, a legal, valid andbinding obligation of the Company enforceable against the Company in accordancewith its terms, except as such enforceability may be limited by (a) applicablebankruptcy, insolvency, reorganization, moratorium or other similar lawsaffecting the enforcement of creditors’ rights generally and (b) generalprinciples of equity (regardless of whether such enforceability is consideredin a proceeding in equity or at law).

 

*Section5.3**          **                     Disclosure**.*** **This Agreement, the Mortgage, thedocuments, certificates or other writings delivered to you by or on behalf ofthe Company in connection with the transactions contemplated hereby and thefinancial statements listed in Schedule 5.5, taken as a whole, do notcontain any untrue statement of a material fact or omit to state any materialfact necessary to make the statements therein not misleading in light of thecircumstances under which they were made. Since August 31, 2002, other than theacquisition of the Guarantor by the Company, there has been no change in thefinancial condition, operations, business, properties or prospects of theCompany or any Subsidiary except changes that individually or in the aggregatecould not reasonably be expected to have a Material Adverse Effect.  There is no fact known to the Company thatcould reasonably be expected to have a Material Adverse Effect that has notbeen set forth herein or in the other documents, certificates and otherwritings delivered to you by or on behalf of the Company specifically for usein connection with the transactions contemplated hereby.

 

*Section5.4**          **                     Organizationand Ownership of Shares of Subsidiaries; Affiliates*.

 

(a)                                  Schedule5.4 contains (except as noted therein) complete and correct lists (i) of theCompany’s Subsidiaries, showing, as to each Subsidiary, the correct namethereof, the jurisdiction of its organization, and the percentage of shares ofeach class of its capital stock or similar equity interests outstanding ownedby the Company and each other Subsidiary, (ii) of the Company’s Affiliates,other than Subsidiaries, and (iii) of the Company’s directors and seniorofficers.

 

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(b)                                 Allof the outstanding shares of capital stock or similar equity interests of eachSubsidiary shown in Schedule 5.4 as being owned by the Company and itsSubsidiaries have been validly issued, are fully paid and nonassessable and areowned by the Company or another Subsidiary free and clear of any Lien (exceptas otherwise disclosed in Schedule 5.4).

 

(c)                                  EachSubsidiary identified in Schedule 5.4 is a corporation or other legal entityduly organized, validly existing and in good standing under the laws of itsjurisdiction of organization, and is duly qualified as a foreign corporation orother legal entity and is in good standing in each jurisdiction in which suchqualification is required by law, other than those jurisdictions as to whichthe failure to be so qualified or in good standing could not, individually orin the aggregate, reasonably be expected to have a Material AdverseEffect.  Each such Subsidiary has thecorporate or other power and authority to own or hold under lease theproperties it purports to own or hold under lease and to transact the businessit transacts and proposes to transact.

 

(d)                                 NoSubsidiary is a party to, or otherwise subject to any legal restriction or anyagreement (other than this Agreement, the agreements listed on Schedule 5.4 andcustomary limitations imposed by corporate law statutes) restricting theability of such Subsidiary to pay dividends out of profits or make any othersimilar distributions of profits to the Company or any of its Subsidiaries thatowns outstanding shares of capital stock or similar equity interests of suchSubsidiary.

 

*Section5.5**          **                     FinancialStatements*.  The Company hasdelivered to each Purchaser copies of the financial statements of the Companyand its Subsidiaries listed on Schedule 5.5. All of said financial statements (including in each case the relatedschedules and notes) fairly present in all material respects the consolidatedfinancial position of the Company and its Subsidiaries as of the respectivedates specified in such financial statements and the consolidated results oftheir operations and cash flows for the respective periods so specified andhave been prepared in accordance with GAAP consistently applied throughout theperiods involved except as set forth in the notes thereto (subject, in the caseof any interim financial statements, to normal year-end adjustments).

 

*Section5.6**          **                     Compliancewith Laws, Other Instruments, Etc*. The execution, delivery and performance by the Company of thisAgreement, the Existing Mortgage and the Notes will not (a) contravene,result in any breach of, or constitute a default under, or result in thecreation of any Lien in respect of any property of the Company or any Subsidiaryunder, any indenture, mortgage, deed of trust, loan, purchase or creditagreement, lease, corporate charter or by-laws, or any other agreement orinstrument to which the Company or any Subsidiary is bound or by which theCompany or any Subsidiary or any of their respective properties may be bound oraffected, (b) conflict with or result in a breach of any of the terms,conditions or provisions of any order, judgment, decree, or ruling of anycourt, arbitrator or Governmental Authority applicable to the Company or anySubsidiary or (c) violate any provision of any statute or other rule orregulation of any Governmental Authority applicable to the Company or anySubsidiary.

 

*Section5.7**          **                     GovernmentalAuthorizations, Etc*.  Noconsent, approval or authorization of, or registration, filing or declarationwith, any Governmental Authority is required in 

 

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connection with theexecution, delivery or performance by the Company of this Agreement, theMortgage or the Notes.

 

*Section5.8**          **                     Litigation;Observance of Agreements, Statutes and Orders*.

 

(a)                                  Thereare no actions, suits or proceedings pending or, to the knowledge of theCompany, threatened against or affecting the Company or any Subsidiary or anyproperty of the Company or any Subsidiary in any court or before any arbitratorof any kind or before or by any Governmental Authority that, individually or inthe aggregate, could reasonably be expected to have a Material Adverse Effect.

 

(b)                                 Neitherthe Company nor any Subsidiary is in default under any term of any agreement orinstrument to which it is a party or by which it is bound, or any order,judgment, decree or ruling of any court, arbitrator or Governmental Authorityor is in violation of any applicable law, ordinance, rule or regulation(including without limitation Environmental Laws) of any GovernmentalAuthority, which default or violation, individually or in the aggregate, couldreasonably be expected to have a Material Adverse Effect.

 

*Section5.9**          **                     Taxes*.  The Company and its Subsidiaries have filedall tax returns that are required to have been filed in any jurisdiction, andhave paid all taxes shown to be due and payable on such returns and all othertaxes and assessments levied upon them or their properties, assets, income orfranchises, to the extent such taxes and assessments have become due andpayable and before they have become delinquent, except for any taxes andassessments (a) the amount of which is not individually or in theaggregate Material or (b) the amount, applicability or validity of whichis currently being contested in good faith by appropriate proceedings and withrespect to which the Company or a Subsidiary, as the case may be, hasestablished adequate reserves in accordance with GAAP.  The Company knows of no basis for any othertax or assessment that could reasonably be expected to have a Material AdverseEffect.  The charges, accruals andreserves on the books of the Company and its Subsidiaries in respect ofFederal, state or other taxes for all fiscal periods are adequate.  The Federal income tax liabilities of theCompany and its Subsidiaries have been determined by the Internal RevenueService and paid for all fiscal years up to and including the fiscal year endedAugust 31, 1992.

 

*Section5.10**                            Titleto Property; Leases*.  TheCompany and its Subsidiaries have good and sufficient title to their respectiveproperties that individually or in the aggregate are Material, including allsuch properties reflected in the most recent audited balance sheet referred toin Section 5.5 or purported to have been acquired by the Company or anySubsidiary after said date (except as sold or otherwise disposed of in theordinary course of business), in each case free and clear of Liens prohibitedby this Agreement.  All leases thatindividually or in the aggregate are Material are valid and subsisting and arein full force and effect in all material respects.

 

*Section5.11**                            Licenses,Permits, Etc*.

 

(a)                                  TheCompany and its Subsidiaries own or possess all licenses, permits, franchises,authorizations, patents, copyrights, service marks, trademarks and trade names,or rights thereto, 

 

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that individually or inthe aggregate are Material, without known conflict with the rights of others.

 

(b)                                 Tothe best knowledge of the Company, no product of the Company infringes in anymaterial respect any license, permit, franchise, authorization, patent,copyright, service mark, trademark, trade name or other right owned by anyother Person.

 

(c)                                  Tothe best knowledge of the Company, there is no Material violation by any Personof any right of the Company or any of its Subsidiaries with respect to anypatent, copyright, service mark, trademark, trade name or other right owned orused by the Company or any of its Subsidiaries.

 

*Section5.12**                            Compliancewith ERISA*.

 

(a)                                  TheCompany and each ERISA Affiliate have operated and administered each Plan incompliance with all applicable laws except for such instances of noncomplianceas have not resulted in and could not reasonably be expected to result in aMaterial Adverse Effect.  Neither theCompany nor any ERISA Affiliate has incurred any liability pursuant to Title Ior IV of ERISA or the penalty or excise tax provisions of the Code relating toemployee benefit plans (as defined in Section 3 of ERISA), and no event,transaction or condition has occurred or exists that could reasonably beexpected to result in the incurrence of any such liability by the Company orany ERISA Affiliate, or in the imposition of any Lien on any of the rights,properties or assets of the Company or any ERISA Affiliate, in either casepursuant to Title I or IV of ERISA or to such penalty or excise tax provisionsor to Section 401(a)(29) or 412 of the Code, other than such liabilitiesor Liens as would not be individually or in the aggregate Material.

 

(b)                                 Exceptas set forth in Schedule 5.12(b), the present value of the aggregatebenefit liabilities under each of the Plans (other than Multiemployer Plans), determinedas of the end of such Plan’s most recently ended plan year on the basis of theactuarial assumptions specified for funding purposes in such Plan’s most recentactuarial valuation report, did not exceed the aggregate current value of theassets of such Plan allocable to such benefit liabilities.  The term “benefit liabilities” has themeaning specified in section 4001 of ERISA and the terms “current value”and “present value” have the meaning specified in section 3 of ERISA.

 

(c)                                  TheCompany and its ERISA Affiliates have not incurred withdrawal liabilities (andare not subject to contingent withdrawal liabilities) under section 4201or 4204 of ERISA in respect of Multiemployer Plans that individually or in theaggregate are Material.

 

(d)                                 Theexpected postretirement benefit obligation (determined as of the last day ofthe Company’s most recently ended fiscal year in accordance with FinancialAccounting Standards Board Statement No. 106, without regard to liabilitiesattributable to continuation coverage mandated by section 4980B of the Code) ofthe Company and its Subsidiaries is not Material.

 

(e)                                  Theexecution and delivery of this Agreement and the issuance and sale of the Noteshereunder will not involve any transaction that is subject to the prohibitionsof section 406 

 

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of ERISA or in connectionwith which a tax could be imposed pursuant to section 4975(c)(1)(A)-(D) ofthe Code.  The representation by theCompany in the first sentence of this Section 5.12(e) is made in reliance uponand subject to (i) the accuracy of your representation in Section 6.2 as to thesources of the funds used to pay the purchase price of the Notes to bepurchased by you and (ii) the assumption, made solely for the purpose of makingsuch representation, that Department of Labor Interpretive Bulletin 75-2 withrespect to prohibited transactions remains valid in the circumstances of thetransactions contemplated herein.

 

*Section5.13**                            PrivateOffering by the Company*. Neither the Company nor anyone acting on its behalf has offered theNotes or any similar securities for sale to, or solicited any offer to buy anyof the same from, or otherwise approached or negotiated in respect thereofwith, any Person other than you and the Other Purchasers, each of which hasbeen offered the Notes at a private sale for investment.  Neither the Company nor anyone acting on itsbehalf has taken, or will take, any action that would subject the issuance orsale of the Notes to the registration requirements of Section 5 of theSecurities Act.

 

*Section5.14**                            Useof Proceeds; Margin Regulations*. The Company will apply the proceeds of the sale of the Notes to repayshort-term Debt and seasonal Debt and for general corporate purposes.  No part of the proceeds from the sale of theNotes hereunder will be used, directly or indirectly, for the purpose of buyingor carrying any margin stock within the meaning of Regulation U of the Board ofGovernors of the Federal Reserve System (12 CFR 221), or for the purpose ofbuying or carrying or trading in any securities under such circumstances as toinvolve the Company in a violation of Regulation X of said Board (12 CFR 224)or to involve any broker or dealer in a violation of Regulation T of said Board(12 CFR 220).  Margin stock does notconstitute more than 1% of the value of the consolidated assets of the Companyand its Subsidiaries and the Company does not have any present intention thatmargin stock will constitute more than 1% of the value of such assets. As usedin this Section, the terms “margin stock” and “purpose of buying or carrying”shall have the meanings assigned to them in said Regulation U.

 

*Section5.15**                            ExistingDebt; Future Liens*.

 

(a)                                  Schedule5.15 sets forth a complete and correct list of all outstanding Debt of theCompany and its Subsidiaries as of November 30, 2002, since which date therehas been no Material change in the amounts, interest rates, sinking funds,installment payments or maturities of the Debt of the Company or its Subsidiaries.Neither the Company nor any Subsidiary is in default and no waiver of defaultis currently in effect, in the payment of any principal or interest on any Debtof the Company or such Subsidiary and no event or condition exists with respectto any Debt of the Company or any Subsidiary that would permit (or that withnotice or the lapse of time, or both, would permit) one or more Persons tocause such Debt to become due and payable before its stated maturity or beforeits regularly scheduled dates of payment.

 

(b)                                 Neitherthe Company nor any Subsidiary has agreed or consented to cause or permit inthe future (upon the happening of a contingency or otherwise) any of itsproperty, whether now owned or hereafter acquired, to be subject to a Lien notpermitted by Section 10.3.

 

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*Section5.16**                            ForeignAssets Control Regulations, Etc*. Neither the sale of the Notes by the Company hereunder nor its use ofthe proceeds thereof will violate the Trading with the Enemy Act, as amended,or any of the foreign assets control regulations of the United States TreasuryDepartment (31 CFR, Subtitle B, Chapter V, as amended) or any enablinglegislation or executive order relating thereto.

 

*Section5.17**                            Statusunder Certain Statutes*. Neither the Company nor any Subsidiary is (a) subject to regulationunder the Investment Company Act of 1940, as amended, the Public UtilityHolding Company Act of 1935, as amended, the Interstate Commerce Act, asamended, or the Federal Power Act, as amended, or (b) is a person or entitydescribed in Section 1 of Executive Order 13224, of September 24, 2002, and, tothe best knowledge of the Company, neither the Company nor any Subsidiaryengage, and will not engage in, dealings or transactions with, or are or willbe associated with, any such Person or entities.

 

*Section 5.18**                            EnvironmentalMatters*.  Neither the Companynor any Subsidiary, except for the matter set forth inSection 9.8(c) hereof, has knowledge of any claim or has received anynotice of any claim, and no proceeding has been instituted raising any claimagainst the Company or any of its Subsidiaries or any of their respective realproperties now or formerly owned, leased or operated by any of them or otherassets, alleging any damage to the environment or violation of anyEnvironmental Laws, except, in each case, such as could not reasonably beexpected to result in a Material Adverse Effect.  Except as otherwise disclosed to you in writing,

 

(a)                                  neitherthe Company nor any Subsidiary has knowledge of any facts which would give riseto any claim, public or private, of violation of Environmental Laws or damageto the environment emanating from, occurring on or in any way related to realproperties now or formerly owned, leased or operated by any of them or to otherassets or their use, except, in each case, such as could not reasonably beexpected to result in a Material Adverse Effect;

 

(b)                                 neitherthe Company nor any of its Subsidiaries has stored any Hazardous Materials onreal properties now or formerly owned, leased or operated by any of them andhas not disposed of any Hazardous Materials in a manner contrary to anyEnvironmental Laws in each case in any manner that could reasonably be expectedto result in a Material Adverse Effect; and

 

(c)                                  allbuildings on all real properties now owned, leased or operated by the Companyor any of its Subsidiaries are in compliance with applicable EnvironmentalLaws, except where failure to comply could not reasonably be expected to resultin a Material Adverse Effect.

 

*Section5.19**                            CollateralMatters*.

 

(a)                                  Theprovisions of each of the Security Documents are effective to create in favorof the Collateral Agent for the benefit of the Purchasers, a legal, valid and(subject to the qualifications to enforceability in Section 5.2) enforceablesecurity interest (with the priorities 

 

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provided for therein andlimited to the extent the Collateral described therein is within the scope ofthe UCC) in all right, title and interest of the Company, the Guarantor andtheir Subsidiaries in the collateral described therein; and executed financingstatements have been, or on or before the Closing will be, filed in all publicoffices wherein such filing is necessary to perfect the security interests inthe Collateral therein described as against creditors of and purchasers fromthe Company and the Guarantor.

 

(b)                                 Allrepresentations and warranties of the Company, the Guarantor and any of theirSubsidiaries party thereto contained in the Security Documents are true andcorrect.

 

(c)                                  Allfees, charges and taxes in connection with the recordation or filing andre-recordation or re-filing of the Security Documents and any other agreementor instrument, financing statement or any publication of notice required to befiled or recorded to protect the validity of the liens securing the obligationsof the Notes shall have been paid in full.

 

*Section5.20**                            Parityof Obligations*.  Allobligations hereunder and under the Notes are direct and secured obligations ofthe Company ranking pari passu as against the assets of the Company with allother present and future secured Debt (actual or contingent) of the Companywhich is not expressed to be subordinate or junior in rank to any other securedDebt of the Company except for Debt secured by liens permitted by Sections10.3(f), (g) or (h).

 

SECTION 6.  REPRESENTATIONS OF THEPURCHASER.

 

*Section6.1**          **                     Purchasefor Investment*.  Yourepresent that you are purchasing the Notes for your own account or for one ormore separate accounts maintained by you or for the account of one or morepension or trust funds and not with a view to the distribution thereof,provided that the disposition of your or their property shall at all times bewithin your or their control.  Youunderstand that the Notes have not been registered under the Securities Act andmay be resold only if registered pursuant to the provisions of the SecuritiesAct or if an exemption from registration is available, except under circumstanceswhere neither such registration nor such an exemption is required by law, andthat the Company is not required to register the Notes.

 

*Section6.2**          **                     Sourceof Funds*.  You represent thatat least one of the following statements is an accurate representation as toeach source of funds (a “Source”) to be used by you to pay the purchase priceof the Notes to be purchased by you hereunder:

 

(a)                                  theSource is an “insurance company general account” within the meaning ofDepartment of Labor Prohibited Transaction Exemption (“PTE”) 95-60 (issued July12, 1995) and there is no employee benefit plan, treating as a single plan, allplans maintained by the same employer or employee organization, with respect towhich the amount of the general account reserves and liabilities for allcontracts held by or on behalf of such plan, exceed ten percent (10%) of thetotal reserves and liabilities of such general account (exclusive of separateaccount liabilities) plus surplus, as set forth in the NAIC Annual Statement filedwith your state of domicile; or

 

(b)                                 theSource is either (i) an insurance company pooled separate account, within themeaning of PTE 90-1 (issued January 29, 1990), or (ii) a bank collective 

 

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investment fund, within the meaning of the PTE 91-38(issued July 12, 1991) and, except as you have disclosed to the Company inwriting pursuant to this paragraph (b), no employee benefit plan or group ofplans maintained by the same employer or employee organization beneficiallyowns more than 10% of all assets allocated to such pooled separate account orcollective investment fund; or

 

(c)                                  theSource constitutes assets of an “investment fund” (within the meaning of Part Vof the QPAM Exemption) managed by a “qualified professional asset manager” or“QPAM” (within the meaning of Part V of the QPAM Exemption), no employeebenefit plan’s assets that are included in such investment fund, when combinedwith the assets of all other employee benefit plans established or maintainedby the same employer or by an affiliate (within the meaning of Section V(c)(1)of the QPAM Exemption) of such employer or by the same employee organizationand managed by such QPAM, exceed 20% of the total client assets managed by suchQPAM, the conditions of Part I(c) and (g) of the QPAM Exemption are satisfied,neither the QPAM nor a person controlling or controlled by the QPAM (applyingthe definition of “control” in Section V(e) of the QPAM Exemption) owns a 5% ormore interest in the Company and (i) the identity of such QPAM and(ii) the names of all employee benefit plans whose assets are included insuch investment fund have been disclosed to the Company in writing pursuant tothis paragraph (c); or

 

(d)                                 theSource is a governmental plan; or

 

(e)                                  theSource is one or more employee benefit plans, or a separate account or trustfund comprised of one or more employee benefit plans, each of which has beenidentified to the Company in writing pursuant to this paragraph (e); or

 

(f)                                    theSource does not include assets of any employee benefit plan, other than a planexempt from the coverage of ERISA.

 

If you or any subsequenttransferee of the Notes indicates that you or such transferee are relying onany representation contained in paragraph (b), (c) or (e) above, theCompany shall deliver on the date of Closing and on the date of any applicabletransfer a certificate, which shall either state that (i) it is neither aparty in interest nor a “disqualified person” (as defined in Section 4975(e)(2)of the Internal Revenue Code of 1986, as amended), with respect to any planidentified pursuant to paragraphs (b) or (e) above, or (ii) with respectto any plan, identified pursuant to paragraph (c) above, neither it nor any“affiliate” (as defined in Section V(c) of the QPAM Exemption) has at suchtime, and during the immediately preceding one year, exercised the authority toappoint or terminate said QPAM as manager of any plan identified in writingpursuant to paragraph (c) above or to negotiate the terms of said QPAM’smanagement agreement on behalf of any such identified plan. As used in thisSection 6.2, the terms **“employee benefit plan”**, **“governmentalplan”**, **“party in interest”** and **“separateaccount”** shall have the respective meanings assigned to such termsin Section 3 of ERISA.

 

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SECTION 7.  INFORMATION AS TO COMPANY.

 

*Section7.1**          **                     Financialand Business Information*. The Company shall deliver to each holder of the Notes that is anInstitutional Investor:

 

(a)                                  QuarterlyStatements — within 60 days after the end of each quarterly fiscal period ineach fiscal year of the Company (other than the last quarterly fiscal period ofeach such fiscal year), duplicate copies of,

 

(i)                                     aconsolidated balance sheet of the Company and its Subsidiaries as at the end ofsuch quarter, and

 

(ii)                                  consolidatedstatements of income, changes in shareholders’ equity and cash flows of theCompany and its Subsidiaries, for such quarter and (in the case of the secondand third quarters) for the portion of the fiscal year ending with suchquarter,

 

(iii)                               settingforth in each case in comparative form the figures for the correspondingperiods in the previous fiscal year, all in reasonable detail, prepared inaccordance with GAAP applicable to quarterly financial statements generally,and certified by a Senior Financial Officer as fairly presenting, in allmaterial respects, the financial position of the companies being reported onand their results of operations and cash flows, subject to changes resultingfrom year-end adjustments;

 

(b)                                 AnnualStatements — within 120 days after the end of each fiscal year of the Company,duplicate copies of,

 

(i)                                     aconsolidated balance sheet of the Company and its Subsidiaries, as at the endof such year, and

 

(ii)                                  consolidatedstatements of income, changes in shareholders’ equity and cash flows of theCompany and its Subsidiaries, for such year,

 

setting forth in eachcase in comparative form the figures for the previous fiscal year, all inreasonable detail, prepared in accordance with GAAP, and accompanied by

 

(1)                                  anopinion thereon of Eide Bailly LLP or any other independent certified publicaccountants of recognized national standing, which opinion shall state thatsuch financial statements present fairly, in all material respects, thefinancial position of the companies being reported upon and their results ofoperations and cash flows and have been prepared in conformity with GAAP, andthat the examination of such accountants in connection with such financialstatements has been made in accordance with generally accepted auditingstandards, and that such audit provides a reasonable basis for such opinion inthe circumstances, and

 

(2)                                  acertificate of such accountants stating that they have reviewed this Agreementand stating further whether, in making their 

 

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audit, they have becomeaware of any condition or event that then constitutes a Default or an Event ofDefault, and, if they are aware that any such condition or event then exists,specifying the nature and period of the existence thereof (it being understoodthat such accountants shall not be liable, directly or indirectly, for anyfailure to obtain knowledge of any Default or Event of Default unless suchaccountants should have obtained knowledge thereof in making an audit inaccordance with generally accepted auditing standards or did not make such anaudit);

 

(c)                                  SECand Other Reports — promptly upon their becoming available, one copy of (i)each financial statement, report, notice or proxy statement sent by the Companyor any Subsidiary to public securities holders generally, and (ii) eachregular or periodic report, each registration statement (without exhibitsexcept as expressly requested by such holder), and each prospectus and allamendments thereto filed by the Company or any Subsidiary with the Securitiesand Exchange Commission and of all press releases and other statements madeavailable generally by the Company or any Subsidiary to the public concerningdevelopments that are Material;

 

(d)                                 Noticeof Default or Event of Default — promptly, and in any event within five daysafter a Responsible Officer becoming aware of the existence of any Default orEvent of Default or that any Person has given any notice or taken any actionwith respect to a claimed default hereunder or that any Person has given anynotice or taken any action with respect to a claimed default of the typereferred to in Section 11(f), a written notice specifying the nature and periodof existence thereof and what action the Company is taking or proposes to takewith respect thereto;

 

(e)                                  ERISAMatters — promptly, and in any event within five days after a ResponsibleOfficer becoming aware of any of the following, a written notice setting forththe nature thereof and the action, if any, that the Company or an ERISAAffiliate proposes to take with respect thereto:

 

(i)                                     withrespect to any Plan, any reportable event, as defined in section 4043(b)of ERISA and the regulations thereunder, for which notice thereof has not beenwaived pursuant to such regulations as in effect on the date hereof; or

 

(ii)                                  thetaking by the PBGC of steps to institute, or the threatening by the PBGC of theinstitution of, proceedings under section 4042 of ERISA for thetermination of, or the appointment of a trustee to administer, any Plan, or thereceipt by the Company or any ERISA Affiliate of a notice from a MultiemployerPlan that such action has been taken by the PBGC with respect to suchMultiemployer Plan; or

 

(iii)                               anyevent, transaction or condition that could result in the incurrence of anyliability by the Company or any ERISA Affiliate pursuant to Title I or IV ofERISA or the penalty or excise tax provisions of the Code relating 

 

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to employee benefitplans, or in the imposition of any Lien on any of the rights, properties orassets of the Company or any ERISA Affiliate pursuant to Title I or IV of ERISAor such penalty or excise tax provisions, if such liability or Lien, takentogether with any other such liabilities or Liens then existing, couldreasonably be expected to have a Material Adverse Effect;

 

(f)                                    Noticesfrom Governmental Authority — promptly, and in any event within 30 days ofreceipt thereof, copies of any notice to the Company or any Subsidiary from anyFederal or state Governmental Authority relating to any order, ruling, statuteor other law or regulation that could reasonably be expected to have a MaterialAdverse Effect; and

 

(g)                                 RequestedInformation — with reasonable promptness, such other data and informationrelating to the business, operations, affairs, financial condition, assets orproperties of the Company or any of its Subsidiaries or relating to the abilityof the Company to perform its obligations hereunder and under the Notes as fromtime to time may be reasonably requested by any such holder of Notes.

 

*Section7.2**          **                     Officer’sCertificate*.  Each set offinancial statements delivered to a holder of Notes pursuant to Section (a) orSection (b) of Section 7.1 shall be accompanied by a certificate of a SeniorFinancial Officer setting forth:

 

(a)                                  CovenantCompliance — the information (including detailed calculations) required inorder to establish whether the Company was in compliance with the requirementsof Sections 9.11, 9.12, 9.13, 10.2, 10.3, 10.4, 10.5, 10.6 and 10.8 hereof,during the quarterly or annual period covered by the statements then beingfurnished (including with respect to each such Section, where applicable, thecalculations of the maximum or minimum amount, ratio or percentage, as the casemay be, permissible under the terms of such Sections, and the calculation ofthe amount, ratio or percentage then in existence); and

 

(b)                                 Eventof Default — a statement that such officer has reviewed the relevant termshereof and has made, or caused to be made, under his or her supervision, areview of the transactions and conditions of the Company and its Subsidiariesfrom the beginning of the quarterly or annual period covered by the statementsthen being furnished to the date of the certificate and that such review shallnot have disclosed the existence during such period of any condition or eventthat constitutes a Default or an Event of Default or, if any such condition orevent existed or exists (including, without limitation, any such event orcondition resulting from the failure of the Company or any Subsidiary to complywith any Environmental Law), specifying the nature and period of existence thereofand what action the Company shall have taken or proposes to take with respectthereto.

 

*Section7.3**          **                     Inspection*.  The Company shall permit the representativesof each holder of Notes that is an Institutional Investor:

 

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(a)                                  NoDefault — if no Default or Event of Default then exists, at the expense of suchholder and upon reasonable prior notice to the Company, to visit the principalexecutive office of the Company, to discuss the affairs, finances and accountsof the Company and its Subsidiaries with the Company’s officers, and (with theconsent of the Company, which consent will not be unreasonably withheld) itsindependent public accountants, and (with the consent of the Company, whichconsent will not be unreasonably withheld) to visit the other offices andproperties of the Company and each Subsidiary, all at such reasonable times andas often as may be reasonably requested in writing; and

 

(b)                                 Default— if a Default or Event of Default then exists, at the expense of the Company,to visit and inspect any of the offices or properties of the Company or anySubsidiary, to examine all their respective books of account, records, reportsand other papers, to make copies and extracts therefrom, and to discuss theirrespective affairs, finances and accounts with their respective officers andindependent public accountants (and by this provision the Company authorizessaid accountants to discuss the affairs, finances and accounts of the Companyand its Subsidiaries), all at such times and as often as may be requested.

 

SECTION 8.  PREPAYMENT OF THE NOTES.

 

*Section8.1**          **                     RequiredPrepayments*.  On March 1,2003 and on the first day of each calendar month thereafter to and includingFebruary 1, 2010, the Company will prepay $238,095.24 principal amount (or suchlesser principal amount as shall then be outstanding) of the Notes at par andwithout payment of the Make-Whole Amount or any premium, *provided* that upon anypartial prepayment of the Notes pursuant to Section 8.2 or purchase of theNotes permitted by Section 8.6 the principal amount of each required prepaymentof the Notes becoming due under this Section 8.1(a) on and after the date ofsuch prepayment or purchase shall be reduced in the same proportion as the aggregateunpaid principal amount of the Notes is reduced as a result of such prepaymentor purchase.

 

*Section8.2**          **                     OptionalPrepayments with Make-Whole Amount*. The Company may, at its option, upon notice as provided below, prepay atany time all, or from time to time any part of,  the Notes, in an amount not less than 5% of the aggregateprincipal amount of all series of the Notes then outstanding in the case of apartial prepayment, at 100% of the principal amount so prepaid, together withinterest accrued thereon to the date of such prepayment, plus the Make-WholeAmount determined for the prepayment date with respect to such principalamount.  The Company will give eachholder of Notes written notice of each optional prepayment under this Section8.2 not less than 30 days and not more than 60 days prior to the date fixed forsuch prepayment.  Each such notice shallspecify such date, the aggregate principal amount of the Notes to be prepaid onsuch date, the principal amount of each Note held by such holder to be prepaid(determined in accordance with Section 8.4), and the interest to be paid on theprepayment date with respect to such principal amount being prepaid, and shallbe accompanied by a certificate of a Senior Financial Officer as to the estimatedMake-Whole Amount due in connection with such prepayment (calculated as if thedate of such notice were the date of the prepayment), setting forth the detailsof such computation.  Two Business Daysprior to such 

 

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prepayment, the Companyshall deliver to each holder of Notes a certificate of a Senior FinancialOfficer specifying the calculation of such Make-Whole Amount as of thespecified prepayment date.

 

*Section8.3**          **                     Changein Control*.

 

(a)                                  *Notice ofChange in Control or Control Event*. The Company will, within two Business Days after any Responsible Officerhas knowledge of the occurrence of any Change in Control or Control Event, givewritten notice of such Change in Control or Control Event to each holder ofNotes unless notice in respect of such Change in Control (or the Change inControl contemplated by such Control Event) shall have been given pursuant tosubparagraph (b) of this Section 8.3. If a Change in Control has occurred, such notice shall contain andconstitute an offer to purchase Notes as described in subparagraph (c) of thisSection 8.3 and shall be accompanied by the certificate described insubparagraph (g) of this Section 8.3.

 

(b)                                 *Condition toCompany Action*.  The Companywill not take any action that consummates or finalizes a Change in Controlunless (i) at least 60 days prior to such action it shall have given to eachholder of Notes written notice containing and constituting and offer topurchase Notes as described in subparagraph (c) of this Section 8.3,accompanied by the certificate described in subparagraph (g) of this Section8.3, and (ii) contemporaneously with such action, it purchases all Notesrequired to be purchased in accordance with this Section 8.3.

 

(c)                                  *Offer toPurchase Notes*.  The offer topurchase Notes contemplated by subparagraphs (a) and (b) of this Section 8.3shall be an offer to purchase, in accordance with and subject to this Section8.3, all, but not less than all, of the Notes held by each holder (in this caseonly, “holder” in respect of any Note registered in the name of a nominee for adisclosed beneficial owner shall mean such beneficial owner) on a datespecified in such offer (the “Proposed Purchase Date”). If such ProposedPurchase Date is in connection with an offer contemplated by subparagraph (a)of this Section 8.3, such date shall be not less than 60 days and not more than90 days after the date of such offer (if the Proposed Purchase Date shall notbe specified in such offer, the Proposed Purchase Date shall be the 75th dayafter the date of such offer).

 

(d)                                 *Acceptance*.  A holder of Notes may accept or reject theoffer to purchase made pursuant to this Section 8.3 by causing a notice of suchacceptance or rejection to be delivered to the company at least 15 days priorto the Proposed Purchase Date.  Afailure by a holder of Notes to respond to an offer to purchase made pursuantto this Section 8.3 shall be deemed to constitute an acceptance of such offerby such holder.

 

(e)                                  *Purchase*.  Purchase of the Notes to be purchasedpursuant to this Section 8.3 shall be at 100% of the principal amount of suchNotes, together with interest on such Notes accrued to the date of purchase.The purchase shall be made on the Proposed Purchase Date except as provided insubparagraph (f) of this Section 8.3.

 

(f)                                    *DeferralPending Change in Control*. The obligation of the Company to purchase Notes pursuant to the offersrequired by subparagraph (b) and accepted in accordance 

 

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with subparagraph (d) ofthis Section 8.3 is subject to the occurrence of the Change in Control inrespect of which such offers and acceptances shall have been made.  In the event that such Change in Controldoes not occur on or prior to the Proposed Purchase Date in respect thereof,the purchase shall be deferred until and shall be made on the date on whichsuch Change in Control occurs.  The  Company shall keep each holder of Notesreasonably and timely informed of (i) any such deferral of the date ofpurchase, (ii) the date on which such Change in Control and the purchase areexpected to occur, and (iii) any determination by the Company that efforts toeffect such Change in Control have ceased or been abandoned (in which case theoffers and acceptances made pursuant to this Section 8.3 in respect of suchChange in Control shall be deemed rescinded).

 

(g)                                 *Officer’sCertificate*.  Each offer topurchase the Notes pursuant to this Section 8.3 shall be accompanied by acertificate, executed by a Senior Financial Officer of the Company and datedthe date of such offer, specifying: (i) the Proposed Purchase Date; (ii) thatsuch offer is made pursuant to this Section 8.3; (iii) the principal amount ofeach Note offered to be purchased; (iv) the interest that would be due on eachNote offered to be purchased, accrued to the Proposed Purchase Date; (v) thatthe conditions of this Section 8.3 have been fulfilled; and (vi) in reasonabledetail, the nature and date or proposed date of the Change in Control.

 

(h)                                 *Definitions*.

 

“*Change in Control*” shall be deemed to haveoccurred if any person (as such term is used in section 13(d) and section14(d)(2) of the Exchange Act as in effect on the date of the Closing) orrelated persons constituting a Group (other than one or more PermittedInvestors) become the “beneficial owners” (as such term is used in Rule 13d-3under the Exchange Act as in effect on the date of the Closing), directly orindirectly, of more than 50% of the total voting power of all classes thenoutstanding of the Company’s voting stock.

 

“*Group*” shall mean any group of relatedpersons constituting a “Group” for the purposes of Section 13(d) of theExchange Act, or any successor provision.

 

“*ControlEvent*” means:

 

(i)                                     theexecution by the Company or any of its Subsidiaries or Affiliates of anyagreement or letter of intent with respect to any proposed transaction or eventor series of transactions or events which, individually or in the aggregate,may reasonably be expected to result in a Change of Control,

 

(ii)                                  theexecution of any written agreement which, when fully performed by the partiesthereto, would result in a Change in Control, or

 

(iii)                               themaking of any written offer by any person (as such term is used in section13(d) and section 14(d)(2) of the Exchange Act as in effect on the date of theClosing) or related persons constituting a Group to the holders of the commonstock of the Company, which offer, if accepted by the requisite number ofholders, would result in a Change in Control.

 

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*Section8.4**          **                     Allocationof Partial Prepayments*.  Inthe case of each partial prepayment of the Notes pursuant to Section 8.2, theprincipal amount of the Notes to be prepaid shall be allocated among all of theNotes at the time outstanding in proportion, as nearly as practicable, to therespective unpaid principal amounts thereof not theretofore called forprepayment.

 

*Section8.5**          **                     Maturity;Surrender, Etc**.* In the case of each prepayment or purchase of Notes pursuant to thisSection 8, the principal amount of each Note to be prepaid or purchased shallmature and become due and payable on the date fixed for such prepayment orpurchase, together with interest on such principal amount accrued to such dateand the applicable Make-Whole Amount, if any. From and after such date, unless the Company shall fail to pay suchprincipal amount when so due and payable, together with the interest andMake-Whole Amount, if any, as aforesaid, interest on such principal amountshall cease to accrue.  Any Note paid,purchased or prepaid in full shall be surrendered to the Company and cancelledand shall not be reissued, and no Note shall be issued in lieu of any prepaidor purchased principal amount of any Note.

 

*Section8.6**          **                     Purchaseof Notes*.  The Company willnot and will not permit any Affiliate to purchase, redeem, prepay or otherwiseacquire, directly or indirectly, any of the outstanding Notes except upon thepurchase, payment or prepayment of the Notes in accordance with the terms ofthis Agreement and the Notes.  TheCompany will promptly cancel all Notes acquired by it or any Affiliate pursuantto any payment, prepayment or purchase of Notes pursuant to any provision of thisAgreement and no Notes may be issued in substitution or exchange for any suchNotes.

 

*Section8.7**          **                     Make-WholeAmount*.  The term “Make-WholeAmount” means, with respect to any Note, an amount equal to the excess, if any,of the Discounted Value of the Remaining Scheduled Payments with respect to theCalled Principal of such Note over the amount of such Called Principal,provided that the Make-Whole Amount may in no event be less than zero.  For the purposes of determining theMake-Whole Amount, the following terms have the following meanings:

 

“*Called Principal*” means,with respect to any Note, the principal of such Note that is to be prepaid orpurchased pursuant to Section 8.2 or Section 8.3 or has become or isdeclared to be immediately due and payable pursuant to Section 12.1, asthe context requires.

 

“*Discounted Value*” means,with respect to the Called Principal of any Note, the amount obtained bydiscounting all Remaining Scheduled Payments with respect to such CalledPrincipal from their respective scheduled due dates to the Settlement Date withrespect to such Called Principal, in accordance with accepted financialpractice and at a discount factor (applied on the same periodic basis as thaton which interest on the Notes of the series is payable) equal to theReinvestment Yield with respect to such Called Principal.

 

“*Reinvestment Yield*” means,with respect to the Called Principal of any Note, .50% over the yield tomaturity****impliedby (i) the yields reported, as of 10:00 A.M. (New York City time) onthe second Business Day preceding the Settlement Date with respect to suchCalled Principal, on the display designated as “Page 678” on the TelerateAccess Service (or such other display as 

 

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may replace Page 678 onTelerate Access Service) for actively traded U.S. Treasury securities having amaturity equal to the maturity of the Notes as of such Settlement Date, or(ii) if such yields are not reported as of such time or the yieldsreported as of such time are not ascertainable, the Treasury Constant MaturitySeries Yields reported, for the latest day for which such yields have been soreported as of the second Business Day preceding the Settlement Date withrespect to such Called Principal, in Federal Reserve Statistical Release H.15(519) (or any comparable successor publication) for actively traded U.S.Treasury securities having a constant maturity equal to the maturity of theNotes as of such Settlement Date.  Suchimplied yield will be determined, if necessary, by (a) converting U.S. Treasurybill quotations to bond-equivalent yields in accordance with accepted financialpractice and (b) interpolating linearly between (1) the actively tradedU.S. Treasury security with the maturity closest to and greater than thematurity of the Notes and (2) the actively traded U.S. Treasury security withthe maturity closest to and less than the maturity of the Notes.

 

“*Remaining Scheduled Payments*”means, with respect to the Called Principal of any Note, all payments of suchCalled Principal and interest thereon that would be due after the SettlementDate with respect to such Called Principal if no payment or purchase of suchCalled Principal were made prior to its scheduled due date, providedthat if such Settlement Date is not a date on which interest payments are dueto be made under the terms of the Notes, then the amount of the next succeedingscheduled interest payment will be reduced by the amount of interest accrued tosuch Settlement Date and required to be paid on such Settlement Date pursuantto Section 8.2, 8.3 or 12.1.

 

“*Settlement Date*” means, withrespect to the Called Principal of any Note, the date on which such CalledPrincipal is to be prepaid or purchased pursuant to Section 8.2 or Section8.3 or has become or is declared to be immediately due and payable pursuant toSection 12.1, as the context requires.

 

SECTION 9.  AFFIRMATIVE COVENANTS.

 

The Company covenantsthat so long as any of the Notes are outstanding:

 

*Section9.1**          **                     Compliancewith Law*.  The Company will,and will cause each of its Subsidiaries, to comply with all laws, ordinances orgovernmental rules or regulations to which each of them is subject, including,without limitation, Environmental Laws, and will obtain and maintain in effectall licenses, certificates, permits, franchises and other governmentalauthorizations necessary to the ownership of their respective properties or tothe conduct of their respective businesses, in each case to the extentnecessary to ensure that non-compliance with such laws, ordinances or governmentalrules or regulations or failures to obtain or maintain in effect such licenses,certificates, permits, franchises and other governmental authorizations couldnot, individually or in the aggregate, reasonably be expected to have aMaterial Adverse Effect.

 

*Section9.2**          **                     Insurance*.  The Company will, and will cause each of itsSubsidiaries, to maintain, with financially sound and reputable insurers,insurance with respect to their respective properties and businesses againstsuch casualties and contingencies, of such types, on such terms and in suchamounts (including deductibles, co-insurance and self-insurance, if adequatereserves 

 

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are maintained withrespect thereto) as is customary in the case of entities of establishedreputations engaged in the same or a similar business and similarly situated.

 

*Section9.3**          **                     Maintenanceof Properties*.  The Companywill, and will cause each of its Subsidiaries to, maintain and keep, or causeto be maintained and kept, their respective properties in good repair, workingorder and condition (other than ordinary wear and tear), so that the businesscarried on in connection therewith may be properly conducted at all times,provided that this Section shall not prevent the Company or any Subsidiary fromdiscontinuing the operation and the maintenance of any of its properties ifsuch discontinuance is desirable in the conduct of its business and the Companyhas concluded that such discontinuance could not, individually or in theaggregate, reasonably be expected to have a Material Adverse Effect.

 

*Section9.4**          **                     Paymentof Taxes and Claims*.  TheCompany will, and will cause each of its Subsidiaries to, file all tax returnsrequired to be filed in any jurisdiction and to pay and discharge all taxesshown to be due and payable on such returns and all other taxes, assessments,governmental charges, or levies imposed on them or any of their properties,assets, income or franchises, to the extent such taxes and assessments havebecome due and payable and before they have become delinquent and all claimsfor which sums have become due and payable that have or might become a Lien onproperties or assets of the Company or any Subsidiary, provided that neitherthe Company nor any Subsidiary need pay any such tax or assessment or claims if(a) the amount, applicability or validity thereof is contested by theCompany or such Subsidiary on a timely basis in good faith and in appropriateproceedings, and the Company or a Subsidiary has established adequate reservestherefor in accordance with GAAP on the books of the Company or such Subsidiaryor (b) the nonpayment of all such taxes and assessments in the aggregatecould not reasonably be expected to have a Material Adverse Effect.

 

*Section9.5**          **                     CorporateExistence, Etc**.* The Company will at all times preserve and keep in full force and effectits corporate existence as a cooperative corporation organized and existingunder the laws of the United States or any State thereof (including theDistrict of Columbia); *provided* that the Company may convert itsform of organization to a limited liability company so long as it shallmaintain Investment Grade Status. Subject to Section 10.2, the Company will at all times preserve and keepin full force and effect the corporate existence of each of its Subsidiariesand all rights and franchises of the Company and its Subsidiaries unless, inthe good faith judgment of the Company, the termination of or failure topreserve and keep in full force and effect such corporate existence, right orfranchise could not, individually or in the aggregate, have a Material AdverseEffect.

 

*Section9.6**          **                     Notesto Rank Pari Passu*.  TheNotes and all other obligations of the Company under this Agreement are and atall times shall remain direct and secured obligations of the Company rankingpari passu as against the assets of the Company with all other Notes from timeto time issued and outstanding hereunder without any preference amongthemselves and pari passu with all other present and future secured Debt(actual or contingent, of the Company which is not expressed to be subordinateor junior in rank to any other secured Debt of the Company, except for Debtsecured by Liens permitted by Sections 10.3(f), (g) or (h).

 

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*Section9.7**          **                     FurtherAssurances*.  Promptly uponrequest by the Collateral Agent, the Company shall (and shall cause itsSubsidiaries including all entities which become Subsidiaries after the datehereof to) execute, acknowledge, deliver, record, re-record, file, re-file,register and re-register, any and all such further conveyances, securityagreements, charges, debentures, guaranties, mortgages, assignments, estoppelcertificates, financing statements and continuations thereof, terminationstatements, notices of assignment, transfers, certificates, assurances andother instruments the Collateral Agent may reasonably require from time to timein order (i) to carry out more effectively the purposes of this Agreementor any Security Document, (ii) to subject to the Liens created by any ofthe Security Documents any of the properties, rights or interests covered byany of the Security Documents, (iii) to perfect and maintain the validity,effectiveness and priority of any of the Security Documents and the Liensintended to be created thereby, and (iv) to better assure, convey, grant,assign, transfer, preserve, protect and confirm to the Collateral Agent therights granted or now or hereafter intended to be granted to the Purchasersunder any Security Document or under any other document executed in connectiontherewith (including the granting of a mortgage on any now or hereafteracquired owned real property).  In connectionwith the execution of the foregoing, the Company shall cause to be delivered tothe Collateral Agent such opinions of counsel and other supporting documents asthe Collateral Agent shall reasonably require.

 

*Section9.8**          **                     PostClosing Matters*.

 

(a)                                  *Survey.*An ALTA survey for the property that is secured by the Sidney Mortgage datedwithin three (3) months of the date of this Agreement and prepared inaccordance with the “Minimum Standard Detail Requirements for ALTA/ACSM LandTitle Surveys” jointly established by and adopted by ALTA, ACSM and NSPS in1999, and including items 1, 2, 3, 4, 6, 7(a), 7(b), 8, 9, 10 and 13 of Table Athereof (the “**Survey**”) The Survey shall be prepared by a surveyor ofrecognized standing satisfactory to the Purchasers and shall be certified tothe Purchasers and the Collateral Agent.

 

(b)                                 *Easement.*  The Company shall obtain, or shall cause theGuarantor to obtain, on or prior to December 31, 2003 (i) a perpetual easement,or similar right, in clear title, that allows the Guarantor to dischargethrough an existing pipeline into the discharge pool and from there to theirrigated land at the property secured by the Sidney Mortgage, and sucheasement shall be reasonably satisfactory in scope and form to the Noteholdersand their special counsel; and (ii) a “Date Down” endorsement to the titlepolicy for the property secured by the Sidney Mortgage delivered pursuant toSection 4.11(c) of this Agreement that provides affirmative coverage for theeasement.

 

(c)                                  *Pond*.  The Company shall obtain, or shall cause theGuarantor to obtain, on or prior to June 30, 2004 (i) fee simpleabsolute title, or similar title by agreement or through legal proceedings in,to, and under the property commonly known as the “pond” or “discharge pool”parcel, and such title shall be reasonably satisfactory in scope and form tothe Noteholders and their special counsel; (ii) an amendment to the SidneyMortgage and such other documents reasonably required by Noteholders and theirspecial counsel; and (iii) a “Date Down” endorsement to the title policyfor the property secured by the Sidney Mortgage delivered 

 

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pursuant toSection 4.11(c) of this Agreement that provides affirmative coverage forthe pond or discharge pool parcel.

 

(d)                                 *EnvironmentalRelease*. The Montana Department of Environmental Quality (“MDEQ”)shall have issued, and the Guarantor shall have received, on or prior toDecember 31, 2003, a letter or other documentation that states that theproperty secured by the Sidney Mortgage has passed the mandated pulp dryeremissions tests conducted by the MDEQ.

 

The Company shalldeliver, or shall cause the Guarantor to deliver, all documents referenced inthis Section 9 to the Noteholders, through their special counsel, as soon asthey become available to the Company or the Guarantor.  Notwithstanding the foregoing Post ClosingMatters set forth in this Section 9.8, if the Company has not satisfied aPost Closing Matter on or before the date(s) established herein, the Companyshall be allowed an extension of the applicable deadline to satisfy a PostClosing Matter for a period of time up to an additional six (6) months, *provided,*that (i) the Company is using its good faith efforts to satisfy theapplicable Post Closing Matter(s) herein; (ii) the property secured by theSidney Mortgage continues to be operated as a sugar beet processing facility;and (iii) the failure to satisfy the required Post Closing Matter does nothave a Material Adverse Effect.

 

*Section9.9**                                   Incorporationof Additional Covenants, Events of Default and Additional Information Requests**.*  In the event that the Company shall agree inany agreement under which Funded Debt is issued which Funded Debt is secured bythe Mortgage to include in such agreement either (a) financial covenants orrestrictions which are not included in this Agreement or to an increase in therestrictiveness of a financial covenant or restriction which is contained inthis Agreement, (b) any events of default which are not contained in thisAgreement or (c) any informational requests which are not included in thisAgreement (collectively, the “**Additional Provision**”), such AdditionalProvision shall be incorporated in this Agreement as if fully set forthherein.  In the event such AdditionalProvision is deleted from such other agreement or waived by the holders of therelated Funded Debt, such Additional Provision shall be deemed to be deletedfrom or waived under this Agreement without further action.

 

*Section9.10**                            AdditionalCollateral**.* In the event that an Event of Defaulthas occurred, the Purchasers may require the Company and/or the Guarantor tosecure the Notes and the Guarantee Agreement pursuant to additional SecurityDocuments with respect to the Hereford, Texas Property and the Torrington,Wyoming Property in form and substance satisfactory to the Purchasers grantingto the Collateral Agent for the benefit of the Secured Parties, a firstpriority mortgage on and security interest in said Properties. The Company andthe Guarantor shall in connection with the grant of such security interestprovide the same type of environmental reports, mortgage title insurance,insurance policies, ALTA surveys and other due diligence as was delivered onthe date hereof, or required to be delivered pursuant to Section 9.8(a) and(b),  with respect to the property whichis subject to the Sidney Mortgage within 60 days of the request of thePurchasers to so provide.

 

*Section9.11**                            MinimumNet Working Capital**.* Consolidated Current Assets will at the end of each fiscal quarter(other than the last fiscal quarter of each fiscal year) exceed ConsolidatedCurrent Liabilities by at least $15,000,000. Consolidated Current Assets willat the 

 

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end of the last fiscalquarter of each fiscal year exceed Consolidated Current Liabilities by at least$35,000,000.

 

*Section9.12**                            ConsolidatedFunded Debt to Capitalization**.* The Company will at all times keep andmaintain a ratio of Consolidated Funded Debt to Consolidated TotalCapitalization of no greater than 0.55:1.00, determined at the end of eachfiscal quarter.

 

*Section9.13**                            MinimumAverage Net Funds Generated plus Interest Expense**.*  The Company will at all times keep andmaintain a ratio of Average Net Funds Generated plus Interest Expense toInterest Expense of at least 2.50:1.00, determined at the end of each fiscalquarter.

 

*Section9.14**                            GrowerAgreements**.*The Company will (a) at all times abideby the terms and conditions of all Grower Agreements; (b) not amend GrowerAgreements in a manner that would make the Grower Agreements less restrictiveor have a Material Adverse Effect on the Company’s ability to make payments onthe Notes or otherwise comply with this Agreement; and (c) extend the currentGrower Agreements with its Growers for an additional five years when suchGrower Agreements expire.

 

SECTION 10. NEGATIVE COVENANTS.

 

The Company covenants that so long as any of the Notesare outstanding:

 

*Section10.1**                            Transactionswith Affiliates*.  The Companywill not and will not permit any Subsidiary to enter into directly orindirectly any transaction or Material group of related transactions(including, without limitation, the purchase, lease, sale or exchange ofproperties of any kind or the rendering of any service with any Affiliate(other than the Company or another Subsidiary or Guarantor; provided Guarantorremains as a Wholly-Owned Subsidiary of the Company), except in the ordinarycourse and pursuant to the reasonable requirements of the Company’s or suchSubsidiary’s business and upon fair and reasonable terms no less favorable tothe Company or such Subsidiary than would be obtainable in a comparablearm’s-length transaction with a Person not an Affiliate other than PermittedSpecified Affiliate Transactions.

 

*Section10.2**                            Merger,Consolidation, Etc**.* The Company will not, and will notpermit any Subsidiary to, consolidate with or be a party to a merger with anyother Person, or sell, lease or otherwise dispose of all or substantially allof its assets; *provided* that:

 

(a)                                  anySubsidiary may merge or consolidate with or into the Company or any otherSubsidiary so long as in any merger or consolidation involving the Company, theCompany shall be the surviving or continuing corporation; and

 

(b)                                 theCompany may consolidate or merge with or into or transfer all or substantiallyall of its assets to any other corporation or limited liability company if (i)the successor formed by such consolidation or the survivor of such merger orthe Person that acquires by conveyance, transfer or lease substantially all ofthe assets of the Company as an entirety, as the case may be, shall beorganized and existing under the 

 

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laws of the United States or any State thereof(including the District of Columbia), and, if in the event the Company is notsuch successor, survivor or transferee, (ii) the due and punctual payment ofthe principal of and premium, if any, and interest on all of the Notes,according to their tenor, and the due and punctual performance and observationof all of the covenants in the Notes and this Agreement to be performed orobserved by the Company are expressly assumed in writing by the survivingcorporation (if other than the Company) and the surviving corporation shall furnishto the Holders an opinion of counsel satisfactory to such Holders to the effectthat the instrument of assumption has been duly authorized, executed anddelivered and constitutes the legal, valid and binding contract and agreementof the surviving corporation enforceable in accordance with its terms, exceptas enforcement of such terms may be limited by bankruptcy, insolvency,reorganization, moratorium and similar laws affecting the enforcement ofcreditors’ rights generally and by general equitable principles; (iii)immediately prior to and after giving effect to such transaction, (A) noDefault or Event of Default shall have occurred and be continuing and (B) thesurviving corporation would be permitted by the provisions of Section 10.6(c)to incur at least $1.00 of additional Funded Debt; and (iv) shall maintainInvestment Grade Status.

 

No such conveyance,transfer or lease of substantially all of the assets of the Company shall havethe effect of releasing the Company or any successor corporation that shalltheretofore have become such in the manner prescribed in this Section 10.2from its liability under this Agreement or the Notes.

 

*Section10.3**                            Liens*.The Company will not, and will not permit any Subsidiary to, create, assume,incur, or suffer to be created, assumed, or incurred or to exist, any Lien onits or their property or assets, whether now owned or hereafter acquired, orupon any income or profits therefrom, or transfer any property for the purposeof subjecting the same to the payment of obligations in priority to the paymentof its or their general creditors, or acquire or agree to acquire, or permitany Subsidiary to acquire, any property or assets upon conditional salesagreements or other title retention devices, except:

 

(a)                                  Liensfor property taxes and assessments or governmental charges or levies and Lienssecuring claims or demands of mechanics and materialmen, *provided* that paymentthereof is not at the time required by Section 9.4;

 

(b)                                 Liensof or resulting from any judgment or award, the time for the appeal or petitionfor rehearing of which shall not have expired, or in respect of which theCompany or a Subsidiary shall at any time in good faith be prosecuting anappeal or proceeding for a review and in respect of which a stay of executionpending such appeal or proceeding for review shall have been secured within 60days after the expiration of any such stay;

 

(c)                                  Liensincidental to the conduct of business or the ownership of properties and assets(including, without limitation, Liens in connection with worker’s compensation,unemployment insurance and other like laws, warehousemen’s and attorneys’ liensand statutory landlords’ liens) and Liens to secure the performance of 

 

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bids, tenders or trade contracts, or to securestatutory obligations, surety or appeal bonds or other Liens of like generalnature, in any such case incurred in the ordinary course of business and not inconnection with the borrowing of money and which do not in any event materiallyimpair the use of such property in the operation of the business of the Companyand its Subsidiaries taken as a whole, or the value of such property for thepurposes of such business, *provided* in each case, the obligationsecured is not overdue or, if overdue, is being contested in good faith byappropriate actions or proceedings;

 

(d)                                 minorsurvey exceptions or minor encumbrances, easements or reservations, or rightsof others for rights-of-way, utilities and other similar purposes, or zoning orother restrictions as to the use of real properties, which are necessary forthe conduct of the activities of the Company and its Subsidiaries or whichcustomarily exist on properties of corporations engaged in similar activitiesand similarly situated and which do not in any event materially impair theiruse in the operation of the business of the Company and its Subsidiaries takenas a whole, or the value of the property for the purposes of such business;

 

(e)                                  Lienssecuring Debt of a Subsidiary to the Company or to a Wholly-Owned Subsidiary;

 

(f)                                    (i)Liens existing as of the Closing and described on Schedule 5.15 heretoincluding, without limitation, Liens securing Funded Debt (including FundedDebt incurred after the Closing under and pursuant to 10.6(c)) which areevidenced by the Mortgages and the CoBank Stock Lien and (ii) Permitted CurrentAsset Liens;

 

(g)                                 Liensincurred after the Closing given to secure the payment of the purchase priceincurred in connection with the acquisition, construction or improvement offixed assets of the Company or any Subsidiary, which Liens are incurredcontemporaneously with or within 180 days after the payment of suchpurchase price or completion of such construction, and Liens existing on suchfixed assets at the time of acquisition thereof or at the time of acquisitionby the Company or any Subsidiary of any business entity then owning such fixedassets, whether or not such existing Liens were given to secure the payment ofthe purchase price of the fixed assets to which they attach, *provided*that(i) the Lien shall attach solely to the fixed assets acquired, constructedor improved, (ii) at the time of acquisition, construction or improvementof such fixed assets, the aggregate amount remaining unpaid on all Indebtednesssecured by Liens on such fixed assets whether or not assumed by the Company orany Subsidiary shall not exceed an amount equal to 100% of the fair marketvalue at the time of acquisition, construction or improvement of such fixedassets (as determined in good faith by the Board of Directors of the Company),and (iii) all Debt secured by such Liens shall have been incurred withinthe applicable limitations of this Agreement including, without limitation,Section 10.6; and

 

(h)                                 inaddition to the liens permitted under Section 10.3(a) through (g), Liens, other than Current AssetLiens, securing Debt of the Company or any Subsidiary incurred 

 

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within the limitations of Section 10.6(d); *provided*that no lien shall be permitted on or with respect to the Hereford, TexasProperty or the Torrington, Wyoming Property.

 

*Section10.4**                            ConsolidatedNet Worth*.  The Company willat all times keep and maintain Consolidated Net Worth at an amount not less thanthe sum of $190,000,000.

 

*Section10.5**                            Saleof Assets*.  The Company shallnot, and shall not permit any Subsidiary thereof to, sell, lease, transfer orotherwise dispose of assets (except assets sold in the ordinary course ofbusiness for fair market value and except as provided in Section 10.2(b)); *provided*that the foregoing restrictions do not apply to:

 

(a)                                  thesale, lease, transfer or other disposition of assets of a Subsidiary to theCompany or a Wholly-Owned Subsidiary; or

 

(b)                                 thesale of assets for cash or other property to a person or persons if all thefollowing conditions are met:

 

(i)                                     suchassets (valued at net book value) do not, together with all other assets of theCompany and its Subsidiaries previously disposed of during the period from thedate of this Agreement to and including the date of the sale of such assets(other than in the ordinary course of business), exceed 25% of ConsolidatedTotal Assets, determined at the end of the immediately preceding fiscalquarter;

 

(ii)                                  inthe opinion of the Company’s board of directors, the sale is for fair value andis in the best interests of the Company and its Subsidiaries, taken as a whole;and

 

(iii)                               immediatelyprior to and after the consummation of the transaction and prior to and aftergiving effect thereto (A) no Default or Event of Default would exist and (B)the Company would be permitted by the provisions of Section 10.6(c) to incur atleast $1.00 of additional Funded Debt;

 

*provided,however,* that for the purposes of the foregoing calculation,there shall not be included any assets to the extent that the net proceeds ofthe sale of such assets were or are applied within 270 days of the date of saleof such assets to either (A) the acquisition of fixed assets useful andintended to be used in the operation of the business of the Company and itsSubsidiaries as described in Section 10.7 and having a fair market value (asdetermined in good faith by the board of directors of the Company) at leastequal to that of the net proceeds applied from the sale of the assets sodisposed of or (B) the prepayment of senior Funded Debt on a pro ratabasis.  It is understood and agreed bythe Company that any such proceeds paid and applied to the prepayment of the Notesas hereinabove provided shall be prepaid as and to the extent provided inSection 8.2.

 

*Section10.6**                            Limitationson Funded Debt*.  The Companywill not, and the Company will not permit any Subsidiary to, create, assume,guarantee or otherwise incur or in any manner become liable in respect of anyFunded Debt except:

 

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(a)                                  FundedDebt evidenced by the Notes;

 

(b)                                 FundedDebt of the Company and its Subsidiaries outstanding as of the date of thisAgreement and described on Schedule 5.15 hereto or any extension, renewal orrefunding of any Funded Debt without increase in the principal amount thereofat the time of such extension, renewal or refunding;

 

(c)                                  additionalFunded Debt of the Company and of its Subsidiaries incurred after the Closing, *provided,however,* that Consolidated Funded Debt shall not exceed 55% ofConsolidated Total Capitalization, determined at the end of the immediatelypreceding fiscal quarter; and

 

(d)                                 additionalPriority Debt, *provided, however,*that the Company will not at any timepermit the aggregate amount of outstanding Priority Debt (other than (i) theIndebtedness incurred under the Permitted Guarantee Agreements and (ii) thePermitted Intercompany Debt) to exceed an amount equal to 15% of ConsolidatedNet Worth, determined at the end of the immediately preceding fiscal quarter.

 

Any Person which becomes a Subsidiary after the datehereof shall for all purposes of this Section 10.6 be deemed to have created,assumed or incurred at the time it becomes a Subsidiary all Debt of such Personexisting immediately after it becomes a Subsidiary.

 

*Section10.7**                            Lineof Business*.  The Companywill not, and will not permit any of its Subsidiaries to, engage in anybusiness if, as a result, the general nature of the business in which theCompany, or the Company and its Subsidiaries, taken as a whole, would then beengaged would be substantially changed from the general nature of the businessin which the Company and it Subsidiaries, taken as a whole, are engaged on thedate of this Agreement.

 

*Section10.8**                            LoansTo Growers*.  The Companyshall not, and will not permit any of its Subsidiaries to, make any loans toGrowers that in the aggregate exceed $10,000,000.00 (other than loans toGrowers in connection with the purchase of common shares and/or preferredshares issued by the Company).

 

SECTION 11. EVENTS OF DEFAULT.

 

An “*Event of Default*” shall exist if any ofthe following conditions or events shall occur and be continuing:

 

(a)                                  theCompany defaults in the payment of any principal or Make-Whole Amount, if any,on any Note when the same becomes due and payable, whether at maturity or at adate fixed for prepayment or by declaration or otherwise; or

 

(b)                                 theCompany defaults in the payment of any interest on any Note after the same becomesdue and payable; or

 

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(c)                                  theCompany defaults in the performance of or compliance with any term contained inSections 9.11, 9.12, 9.13, 10.4, 10.5, 10.6, 10.7 or 10.8; or

 

(d)                                 theCompany or the Guarantor defaults in the performance of or compliancewith any term contained herein (other than those referred to inparagraphs (a), (b) and (c) of this Section 11) or in the SecurityDocuments and such default is not remedied within 30 days after the earlier of(i) a Responsible Officer obtaining actual knowledge of such default and(ii) the Company or the Guarantor, as the case may be,  receiving written notice of such defaultfrom any holder of a Note (any such written notice to be identified as a“notice of default” and to refer specifically to this paragraph (d) ofSection 11); or

 

(e)                                  anyrepresentation or warranty made in writing by or on behalf of the Company orthe Guarantor or by any officer of the Company or the Guarantor in thisAgreement, the Guarantee Agreement or the Security Documents or in any writingfurnished in connection with the transactions contemplated hereby proves tohave been false or incorrect in any material respect on the date as of whichmade; or

 

(f)                                    (i)the Company or any Subsidiary is in default (as principal or as guarantor orother surety) in the payment of any principal of or premium or make-wholeamount or interest on any Debt that is outstanding in an aggregate principalamount of at least $2,500,000 beyond any period of grace provided with respectthereto, or (ii) the Company or any Subsidiary is in default in the performanceof or compliance with any term of any evidence of any Debt in an aggregateoutstanding principal amount of at least $2,500,000 or of any mortgage, indentureor other agreement relating thereto or any other condition exists, and suchfailure continues unremedied for 30 days after the applicable grace or noticeperiod, if any, specified in the relevant document on the date of such failure,or (iii) the Company or any Subsidiary is in default in the performance of orcompliance with any term of any evidence of any Debt in an aggregateoutstanding principal amount of at least $2,500,000 or of any mortgage,indenture or other agreement relating thereto or any other condition exists,and as a consequence of such default or condition such Debt has become, or hasbeen declared, due and payable before its stated maturity or before itsregularly scheduled dates of payment, or (iv) as a consequence of the occurrenceor continuation of any event or condition (other than the passage of time orthe right of the holder of Debt to convert such Debt into equity interests),the Company or any Subsidiary has become obligated to purchase or repay Debtbefore its regular maturity or before its regularly scheduled dates of paymentin an aggregate outstanding principal amount of at least $2,500,000; or

 

(g)                                 theCompany, the Guarantor or any Subsidiary (i) is generally not paying, oradmits in writing its inability to pay, its debts as they become due,(ii) files, or consents by answer or otherwise to the filing against itof, a petition for relief or reorganization or arrangement or any otherpetition in bankruptcy, for liquidation or to take advantage of any bankruptcy,insolvency, reorganization, moratorium or other similar law of anyjurisdiction, (iii) makes an assignment for the benefit of its creditors,(iv) consents to the appointment of a custodian, receiver, trustee orother officer with 

 

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similar powers with respect to it or with respect toany substantial part of its property, (v) is adjudicated as insolvent orto be liquidated, or (vi) takes corporate action for the purpose of any ofthe foregoing; or

 

(h)                                 acourt or governmental authority of competent jurisdiction enters an orderappointing, without consent by the Company, the Guarantor or any of itsSubsidiaries, a custodian, receiver, trustee or other officer with similarpowers with respect to it or with respect to any substantial part of itsproperty, or constituting an order for relief or approving a petition forrelief or reorganization or any other petition in bankruptcy or for liquidationor to take advantage of any bankruptcy or insolvency law of any jurisdiction,or ordering the dissolution, winding-up or liquidation of the Company, theGuarantor or any of their Subsidiaries, or any such petition shall be filedagainst the Company, the Guarantor or any of their Subsidiaries and suchpetition shall not be dismissed within 60 days; or

 

(i)                                     afinal judgment or judgments for the payment of money aggregating in excess of$5,000,000 are rendered against one or more of the Company, the Guarantor andtheir Subsidiaries and which judgments are not, within 60 days after entrythereof, bonded, discharged or stayed pending appeal, or are not dischargedwithin 60 days after the expiration of such stay; or

 

(j)                                     (i)any Security Document shall for any reason (other than pursuant to the termsthereof) cease to create a valid security interest in the Collateral purportedto be covered thereby or such security interest shall for any reason cease tobe a perfected security interest (having the priority provided for therein)subject only to Liens permitted pursuant to Section 10.3, or (ii) any materialprovision of any Security Document shall for any reason cease to be valid andbinding on or enforceable against the Company, the Guarantor or any Subsidiaryparty thereto or the Company, the Guarantor or any Subsidiary shall so state inwriting or bring an action to limit its obligations or liabilities thereunder;or

 

(k)                                  (i) anyPlan shall fail to satisfy the minimum funding standards of ERISA or the Codefor any plan year or part thereof or a waiver of such standards or extension ofany amortization period is sought or granted under section 412 of theCode, (ii) a notice of intent to terminate any Plan shall have been or isreasonably expected to be filed with the PBGC or the PBGC shall have institutedproceedings under ERISA section 4042 to terminate or appoint a trustee toadminister any Plan or the PBGC shall have notified the Company or any ERISAAffiliate that a Plan may become a subject of any such proceedings,(iii) the aggregate “amount of unfunded benefit liabilities” (within themeaning of section 4001(a)(18) of ERISA) under all Plans, determined inaccordance with Title IV of ERISA, shall exceed an amount equal to 5% ofConsolidated Net Worth, (iv) the Company or any ERISA Affiliate shall haveincurred or is reasonably expected to incur any liability pursuant to Title Ior IV of ERISA or the penalty or excise tax provisions of the Code relating toemployee benefit plans, (v) the Company or any ERISA Affiliate withdraws fromany Multiemployer Plan, or (vi) the Company or any Subsidiary establishes oramends any employee welfare benefit plan that provides post-employment

 

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welfare benefits in a manner that would increase theliability of the Company or any Subsidiary thereunder; and any such event orevents described in clauses (i) through (vi) above, either individually ortogether with any other such event or events, could reasonably be expected tohave a Material Adverse Effect.

 

As used in Section 11(j),the terms **“employeebenefit plan”** and **“employee welfare benefit plan”** shall havethe respective meanings assigned to such terms in Section 3 of ERISA.

 

SECTION 12. REMEDIES ON DEFAULT, ETC.

 

*Section12.1**                            Acceleration*.

 

(a)                                  Ifan Event of Default with respect to the Company described in paragraph (g)or (h) of Section 11 (other than an Event of Default described in clause (i) ofparagraph (g) or described in clause (vi) of paragraph (g) by virtueof the fact that such clause encompasses clause (i) of paragraph (g)) hasoccurred, all the Notes then outstanding shall automatically become immediatelydue and payable.

 

(b)                                 Ifany other Event of Default has occurred and is continuing, any holder orholders of more than 25% in principal amount of the Notes at the timeoutstanding may at any time at its or their option, by notice or notices to theCompany, declare all the Notes then outstanding to be immediately due andpayable.

 

(c)                                  Ifany Event of Default described in paragraph (a) or (b) of Section 11 hasoccurred and is continuing, any holder or holders of Notes at the timeoutstanding affected by such Event of Default may at any time, at its or theiroption, by notice or notices to the Company, declare all the Notes held by itor them to be immediately due and payable.

 

Upon any Notes becoming due and payable under thisSection 12.1, whether automatically or by declaration, such Notes willforthwith mature and the entire unpaid principal amount of such Notes, plus (x)all accrued and unpaid interest thereon and (y) the Make-Whole Amountdetermined in respect of such principal amount (to the full extent permitted byapplicable law), shall all be immediately due and payable, in each and everycase without presentment, demand, protest or further notice, all of which arehereby waived.  The Companyacknowledges, and the parties hereto agree, that each holder of a Note has theright to maintain its investment in the Notes free from repayment by theCompany (except as herein specifically provided for) and that the provision forpayment of a Make-Whole Amount by the Company in the event that the Notes areprepaid or are accelerated as a result of an Event of Default, is intended toprovide compensation for the deprivation of such right under suchcircumstances.

 

*Section12.2**                            OtherRemedies*.  If any Default orEvent of Default has occurred and is continuing, and irrespective of whetherany Notes have become or have been declared immediately due and payable underSection 12.1, the holder of any Note at the time outstanding may proceed toprotect and enforce the rights of such holder by an action at law, suit inequity or other appropriate proceeding, whether for the specific performance ofany agreement contained 

 

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herein or in any Note, orfor an injunction against a violation of any of the terms hereof or thereof, orin aid of the exercise of any power granted hereby or thereby or by law orotherwise.

 

*Section12.3**                            Rescission*.  At any time after any Notes have beendeclared due and payable pursuant to clause (b) or (c) of Section 12.1, theholders of not less than 66 2/3% in principal amount of the Notes thenoutstanding, by written notice to the Company, may rescind and annul any suchdeclaration and its consequences if (a) the Company has paid all overdueinterest on the Notes, all principal of and Make-Whole Amount, if any, on anyNotes that are due and payable and are unpaid other than by reason of suchdeclaration, and all interest on such overdue principal and Make-Whole Amount,if any, and (to the extent permitted by applicable law) any overdue interest inrespect of the Notes, at the Default Rate, (b) all Events of Default andDefaults, other than non-payment of amounts that have become due solely byreason of such declaration, have been cured or have been waived pursuant toSection 17, and (c) no judgment or decree has been entered for thepayment of any monies due pursuant hereto or to the Notes.  No rescission and annulment under this Section12.3 will extend to or affect any subsequent Event of Default or Default orimpair any right consequent thereon.

 

*Section12.4**                            NoWaivers or Election of Remedies, Expenses, etc**.*  No course of dealing and no delay on the part of any holder ofany Note in exercising any right, power or remedy shall operate as a waiverthereof or otherwise prejudice such holder’s rights, powers or remedies.  No right, power or remedy conferred by thisAgreement or by any Note upon any holder thereof shall be exclusive of anyother right, power or remedy referred to herein or therein or now or hereafteravailable at law, in equity, by statute or otherwise.  Without limiting the obligations of the Company under Section 15,the Company will pay to the holder of each Note on demand such further amountas shall be sufficient to cover all costs and expenses of such holder incurredin any enforcement or collection under this Section 12, including, withoutlimitation, reasonable attorneys’ fees, expenses and disbursements.

 

SECTION 13. REGISTRATION; EXCHANGE; SUBSTITUTIONOF NOTES.

 

*Section13.1**                            Registrationof Notes*.  The Company shallkeep at its principal executive office a register for the registration andregistration of transfers of Notes.  Thename and address of each holder of one or more Notes, each transfer thereof andthe name and address of each transferee of one or more Notes shall beregistered in such register.  Prior todue presentment for registration of transfer, the Person in whose name any Noteshall be registered shall be deemed and treated as the owner and holder thereoffor all purposes hereof, and the Company shall not be affected by any notice orknowledge to the contrary.  The Companyshall give to any holder of a Note that is an Institutional Investor promptlyupon request therefor, a complete and correct copy of the names and addressesof all registered holders of Notes.

 

*Section13.2**                            Transferand Exchange of Notes*.  Uponsurrender of any Note at the principal executive office of the Company forregistration of transfer or exchange (and in the case of a surrender forregistration of transfer, duly endorsed or accompanied by a written instrumentof transfer duly executed by the registered holder of such Note or his attorneyduly authorized in writing and accompanied by the address for notices of eachtransferee of such Note 

 

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or part thereof), theCompany shall execute and deliver, at the Company’s expense (except as providedbelow), one or more new Notes (as requested by the holder thereof) in exchangetherefor, in an aggregate principal amount equal to the unpaid principal amountof the surrendered Note.  Each such newNote of such shall be payable to such Person as such holder may request andshall be substantially in the form of Exhibit 1.  Each such new Note shall be dated and bear interest from the dateto which interest shall have been paid on the surrendered Note or dated thedate of the surrendered Note if no interest shall have been paid thereon.  The Company may require payment of a sumsufficient to cover any stamp tax or governmental charge imposed in respect ofany such transfer of Notes.  Notes shallnot be transferred in denominations of less than $1,000,000, provided that ifnecessary to enable the registration of transfer by a holder of its entireholding of Notes, one Note may be in a denomination of less than$1,000,000.  Any transferee, by itsacceptance of a Note registered in its name (or the name of its nominee), shallbe deemed to have made the representation set forth in Section 6.2.

 

*Section13.3**                            Replacementof Note**s*.  Upon receipt bythe Company of evidence reasonably satisfactory to it of the ownership of andthe loss, theft, destruction or mutilation of any Note (which evidence shallbe, in the case of an Institutional Investor, notice from such InstitutionalInvestor of such ownership and such loss, theft, destruction or mutilation),and

 

(a)                                  inthe case of loss, theft or destruction, of indemnity reasonably satisfactory toit (provided that if the holder of such Note is, or is a nominee for, anoriginal Purchaser or another holder of a Note with a minimum net worth of atleast $25,000,000, such Person’s own unsecured agreement of indemnity shall bedeemed to be satisfactory), or

 

(b)                                 inthe case of mutilation, upon surrender and cancellation thereof, the Company atits own expense shall execute and deliver, in lieu thereof, a new Note, datedand bearing interest from the date to which interest shall have been paid onsuch lost, stolen, destroyed or mutilated Note or dated the date of such lost,stolen, destroyed or mutilated Note if no interest shall have been paidthereon.

 

SECTION 14. PAYMENT OF NOTES.

 

*Section14.1**                            Placeof Payment*.  Subject toSection 14.2, payments of principal, Make-Whole Amount, if any, and interestbecoming due and payable on the Notes shall be made in New York, New York atthe principal office of Citibank, N.A. in such jurisdiction.  The Company may at any time, by notice toeach holder of a Note, change the place of payment of the Notes so long as suchplace of payment shall be either the principal office of the Company in suchjurisdiction or the principal office of a bank or trust company in suchjurisdiction.

 

*Section14.2**                            HomeOffice Payment*.  So long asyou or your nominee shall be the holder of any Note, and notwithstandinganything contained in Section 14.1 or in such Note to the contrary, the Companywill pay all sums becoming due on such Note for principal, Make-Whole Amount,if any, and interest by the method and at the address specified for such purposebelow your name in Schedule A, or by such other method or at such other addressas you shall have 

 

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from time to timespecified to the Company in writing for such purpose, without the presentationor surrender of such Note or the making of any notation thereon, except thatupon written request of the Company made concurrently with or reasonablypromptly after payment or prepayment in full of any Note, you shall surrendersuch Note for cancellation, reasonably promptly after any such request, to theCompany at its principal executive office or at the place of payment mostrecently designated by the Company pursuant to Section 14.1.  Prior to any sale or other disposition ofany Note held by you or your nominee you will, at your election, either endorsethereon the amount of principal paid thereon and the last date to whichinterest has been paid thereon or surrender such Note to the Company inexchange for a new Note or Notes pursuant to Section 13.2.  The Company will afford the benefits of thisSection 14.2 to any Institutional Investor that is the direct or indirecttransferee of any Note purchased by you under this Agreement and that has madethe same agreement relating to such Note as you have made in this Section 14.2.

 

SECTION 15. EXPENSES, ETC.

 

*Section15.1**                            TransactionExpenses*.  Whether or not thetransactions contemplated hereby are consummated, the Company will pay allcosts and expenses (including reasonable attorneys’ fees of a special counsel and,if reasonably required, local or other counsel) incurred by you and each OtherPurchaser or holder of a Note in connection with such transactions and inconnection with any amendments, waivers or consents under or in respect of thisAgreement or the Notes (whether or not such amendment, waiver or consentbecomes effective), including, without limitation: (a) the costs and expensesincurred in enforcing or defending (or determining whether or how to enforce ordefend) any rights under this Agreement, the Security Documents or the Notes orin responding to any subpoena or other legal process or informal investigativedemand issued in connection with this Agreement, the Security Documents or theNotes, or by reason of being a holder of any Note, and (b) the costs andexpenses, including financial advisors’ fees, incurred in connection with theinsolvency or bankruptcy of the Company or any Subsidiary or in connection withany work-out or restructuring of the transactions contemplated hereby and bythe Notes.  The Company will pay, andwill save you and each other holder of a Note harmless from, all claims inrespect of any fees, costs or expenses if any, of brokers and finders (otherthan those retained by you).

 

*Section15.2**                            Survival*.  The obligations of the Company under thisSection 15 will survive the payment or transfer of any Note, theenforcement, amendment or waiver of any provision of this Agreement or theNotes, and the termination of this Agreement.

 

SECTION 16. SURVIVAL OF REPRESENTATIONS AND WARRANTIES;ENTIRE AGREEMENT.

 

All representations and warranties contained hereinshall survive the execution and delivery of this Agreement and the Notes, thepurchase or transfer by you of any Note or portion thereof or interest thereinand the payment of any Note, and may be relied upon by any subsequent holder ofa Note, regardless of any investigation made at any time by or on behalf of 

 

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you or any other holderof a Note.  All statements contained inany certificate or other instrument delivered by or on behalf of the Companypursuant to this Agreement  shall bedeemed representations and warranties of the Company under this Agreement.  Subject to the preceding sentence, thisAgreement and the Notes embody the entire agreement and understanding betweenyou and the Company and supersede all prior agreements and understandingsrelating to the subject matter hereof.

 

SECTION 17. AMENDMENT AND WAIVER.

 

*Section17.1**                            Requirements*.  This Agreement and the Notes may be amended,and the observance of any term hereof or of the Notes may be waived (eitherretroactively or prospectively), with (and only with) the written consent ofthe Company and the Required Holders, except that (a) no amendment or waiver ofany of the provisions of Section 1, 2, 3, 4, 5, 6 or 21 hereof, or anydefined term (as it is used therein), will be effective as to you unlessconsented to by you in writing, and (b) no such amendment or waiver may,without the written consent of the holder of each Note at the time outstandingaffected thereby, (i) subject to the provisions of Section 12relating to acceleration or rescission, change the amount or time of anyprepayment or payment of principal of, or reduce the rate or change the time ofpayment or method of computation of interest or of the Make-Whole Amount on,the Notes, (ii) change the percentage of the principal amount of the Notesthe holders of which are required to consent to any such amendment or waiver,or (iii) amend any of Sections 8, 11(a), 11(b), 12, 17 or 20.

 

*Section17.2**                            Solicitationof Holders of Notes*.

 

(a)                                  *Solicitation*.  The Company will provide each holder of theNotes (irrespective of the amount of Notes then owned by it) with sufficientinformation, sufficiently far in advance of the date a decision is required, toenable such holder to make an informed and considered decision with respect toany proposed amendment, waiver or consent in respect of any of the provisionshereof or of the Notes.  The Companywill deliver executed or true and correct copies of each amendment, waiver orconsent effected pursuant to the provisions of this Section 17 to eachholder of outstanding Notes promptly following the date on which it is executedand delivered by, or receives the consent or approval of, the requisite holdersof Notes.

 

(b)                                 *Payment*.  The Company will not directly or indirectlypay or cause to be paid any remuneration, whether by way of supplemental oradditional interest, fee or otherwise, or grant any security, to any holder of Notesas consideration for or as an inducement to the entering into by any holder ofNotes or any waiver or amendment of any of the terms and provisions hereofunless such remuneration is concurrently paid, or security is concurrentlygranted, on the same terms, ratably to each holder of Notes then outstandingeven if such holder did not consent to such waiver or amendment.

 

*Section17.3**                            BindingEffect, etc*.  Any amendmentor waiver consented to as provided in this Section 17 applies equally toall holders of Notes and is binding upon them and upon each future holder ofany Note and upon the Company without regard to whether such Note has beenmarked to indicate such amendment or waiver. No such amendment or waiver will extend to or affect any obligation, covenant,agreement, Default or Event of Default not expressly amended or waived orimpair any right consequent thereon.  Nocourse of dealing between the Company 

 

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and the holder of anyNote nor any delay in exercising any rights hereunder or under any Note shalloperate as a waiver of any rights of any holder of such Note.  As used herein, the term “this Agreement”and references thereto shall mean this Agreement as it may from time to time beamended or supplemented.

 

*Section17.4**    Notesheld by Company, Etc**.* Solely for the purpose of determining whether the holders of therequisite percentage of the aggregate principal amount of Notes thenoutstanding approved or consented to any amendment, waiver or consent to begiven under this Agreement or the Notes, or have directed the taking of anyaction provided herein or in the Notes to be taken upon the direction of theholders of a specified percentage of the aggregate principal amount of Notesthen outstanding, Notes directly or indirectly owned by the Company or any ofits Affiliates shall be deemed not to be outstanding.

 

SECTION 18. NOTICES.

 

All notices and communications provided for hereundershall be in writing and sent (a) by telecopy if the sender on the same daysends a confirming copy of such notice by a recognized overnight deliveryservice (charges prepaid), or (b) by registered or certified mail with returnreceipt requested (postage prepaid), or (c) by a recognized overnight deliveryservice (with charges prepaid).  Anysuch notice must be sent:

 

(i)                                     ifto you or your nominee, to you or it at the address specified for suchcommunications in Schedule A, or at such other address as you or it shall havespecified to the Company in writing,

 

(ii)                                  ifto any other holder of any Note, to such holder at such address as such otherholder shall have specified to the Company in writing, or

 

(iii)                               ifto the Company, to the Company at its address set forth at the beginning hereofto the attention of Vice President-Finance, or at such other address as theCompany shall have specified to the holder of each Note in writing.

 

Notices under thisSection 18 will be deemed given only when actually received.

 

SECTION 19. REPRODUCTION OF DOCUMENTS.

 

This Agreement and all documents relating thereto,including, without limitation, (a) consents, waivers and modifications that mayhereafter be executed, (b) documents received by you at the Closing (except theNotes themselves), and (c) financial statements, certificates and otherinformation previously or hereafter furnished to you, may be reproduced by youby any photographic, photostatic, microfilm, microcard, miniature photographicor other similar process and you may destroy any original document soreproduced.  The Company agrees andstipulates that, to the extent permitted by applicable law, any suchreproduction shall be admissible in evidence as the original itself in anyjudicial or administrative proceeding (whether or not the original is inexistence and whether or not such reproduction was made by you in the regularcourse of business) and any enlargement, facsimile or further reproduction ofsuch reproduction shall likewise be admissible in evidence.  This Section 19 shall not prohibit theCompany or any 

 

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other holder of Notesfrom contesting any such reproduction to the same extent that it could contestthe original, or from introducing evidence to demonstrate the inaccuracy of anysuch reproduction.

 

SECTION 20. CONFIDENTIAL INFORMATION.

 

For the purposes of this Section 20, **“ConfidentialInformation”** means information delivered to you by or on behalf ofthe Company or any Subsidiary in connection with the transactions contemplatedby or otherwise pursuant to this Agreement that is proprietary in nature andthat was clearly marked or labeled or otherwise adequately identified whenreceived by you as being confidential information of the Company or suchSubsidiary, provided that such term does not include information that(a) was publicly known or otherwise known to you prior to the time of suchdisclosure, (b) subsequently becomes publicly known through no act or omissionby you or any Person acting on your behalf, (c) otherwise becomes known to youother than through disclosure by the Company or any Subsidiary or (d)constitutes financial statements delivered to you under Section 7.1 that areotherwise publicly available.  You willmaintain the confidentiality of such Confidential Information in accordancewith procedures adopted by you in good faith to protect confidentialinformation of third parties delivered to you, provided that you maydeliver or disclose Confidential Information to (i) your directors, officers,trustees, employees, agents, attorneys and affiliates (to the extent suchdisclosure reasonably relates to the administration of the investmentrepresented by your Notes), (ii) your financial advisors and other professionaladvisors who agree to hold confidential the Confidential Information substantiallyin accordance with the terms of this Section 20, (iii) any other holder of anyNote, (iv) any Institutional Investor which is not a Competitor to which yousell or offer to sell such Note or any part thereof or any participationtherein (if such Person has agreed in writing prior to its receipt of suchConfidential Information to be bound by the provisions of this Section 20); *provided*that if an Event of Default described in **Section 11**has occurred and is continuingor if the Notes have been accelerated pursuant to **Section 12.1**, any suchInstitutional Investor may be a Competitor, (v) any Person from which you offerto purchase any security of the Company (if such Person has agreed in writingprior to its receipt of such Confidential Information to be bound by theprovisions of this Section 20), (vi) any federal or state regulatoryauthority having jurisdiction over you, (vii) the National Association ofInsurance Commissioners or any similar organization, or any nationallyrecognized rating agency that requires access to information about yourinvestment portfolio or (viii) any other Person to which such delivery ordisclosure may be necessary or appropriate (w) to effect compliance with anylaw, rule, regulation or order applicable to you, (x) in response to anysubpoena or other legal process, (y) in connection with any litigation to whichyou are a party or (z) if an Event of Default has occurred and is continuing,to the extent you may reasonably determine such delivery and disclosure to benecessary or appropriate in the enforcement or for the protection of the rightsand remedies under your Notes and this Agreement.  Each holder of a Note, by its acceptance of a Note, will bedeemed to have agreed to be bound by and to be entitled to the benefits of thisSection 20 as though it were a party to this Agreement.  On reasonable request by the Company inconnection with the delivery to any holder of a Note of information required tobe delivered to such holder under this Agreement or requested by such holder(other than a holder that is a party to this 

 

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Agreement or itsnominee), such holder will enter into an agreement with the Company embodyingthe provisions of this Section 20.

 

SECTION 21. SUBSTITUTION OF PURCHASER.

 

You shall have the right to substitute any one of yourAffiliates as the purchaser of the Notes that you have agreed to purchasehereunder, by written notice to the Company, which notice shall be signed byboth you and such Affiliate, shall contain such Affiliate’s agreement to bebound by this Agreement and shall contain a confirmation by such Affiliate ofthe accuracy with respect to it of the representations set forth in Section6.  Upon receipt of such notice,wherever the word “you” is used in this Agreement (other than in this Section21), such word shall be deemed to refer to such Affiliate in lieu of you.  In the event that such Affiliate is sosubstituted as a purchaser hereunder and such Affiliate thereafter transfers toyou all of the Notes then held by such Affiliate, upon receipt by the Companyof notice of such transfer, wherever the word “you” is used in this Agreement(other than in this Section 21), such word shall no longer be deemed torefer to such Affiliate, but shall refer to you, and you shall have all therights of an original holder of the Notes under this Agreement.

 

SECTION 22. MISCELLANEOUS.

 

*Section 22.1**                            Successorsand Assigns*.  All covenantsand other agreements contained in this Agreement by or on behalf of any of theparties hereto bind and inure to the benefit of their respective successors andassigns (including, without limitation, any subsequent holder of a Note)whether so expressed or not.

 

*Section 22.2**                            PaymentsDue on Non-Business Days*. Anything in this Agreement or the Notes to the contrary notwithstanding,any payment of principal of or Make-whole Amount or interest on any Note thatis due on a date other than a Business Day shall be made on the next succeedingBusiness Day without including the additional days elapsed in the computationof the interest payable on such next succeeding Business Day.

 

*Section 22.3**                            Severability*.  Any provision of this Agreement that isprohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,be ineffective to the extent of such prohibition or unenforceability withoutinvalidating the remaining provisions hereof, and any such prohibition orunenforceability in any jurisdiction shall (to the full extent permitted bylaw) not invalidate or render unenforceable such provision in any otherjurisdiction.

 

*Section 22.4**                            Construction*.  Each covenant contained herein shall beconstrued (absent express provision to the contrary) as being independent ofeach other covenant contained herein, so that compliance with any one covenantshall not (absent such an express contrary provision) be deemed to excusecompliance with any other covenant. Where any provision herein refers to action to be taken by any Person,or which such Person is prohibited from taking, such provision shall beapplicable whether such action is taken directly or indirectly by such Person.

 

*Section 22.5**                            Counterparts*.  This Agreement may be executed in any numberof counterparts, each of which shall be an original but all of which togethershall constitute one 

 

40

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instrument.  Each counterpart may consist of a number ofcopies hereof, each signed by less than all, but together signed by all, of theparties hereto.

 

*Section 22.6**                            GoverningLaw*.  This Agreement shall beconstrued and enforced in accordance with, and the rights of the parties shallbe governed by, the law of the State of New York excluding choice-of-lawprinciples of the law of such State that would require the application of thelaws of a jurisdiction other than such State.

 

*Section 22.7**                            AdditionalIndebtedness**.* Subject to the terms and provisions hereof, the Company may, from timeto time, issue and sell additional senior promissory notes and may, inconnection with the documentation thereof, incorporate by reference variousprovisions of this Agreement.  Suchincorporation by reference shall not modify, dilute or otherwise affect theterms and provisions hereof including, without limitation, the priority of theNotes and the percentage of the Notes required to approve an amendment oreffectuate a waiver under the provisions of Section 17 or the percentages ofthe Notes required to accelerate the Notes or rescind such an accelerationunder provisions of Section 12.

 

*    *   *    *    *

 

41

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If you are in agreement with the foregoing, pleasesign the form of agreement on the accompanying counterpart of this Agreementand return it to the Company, whereupon the foregoing shall become a bindingagreement between you and the Company.

 

 
|   | Very truly yours,               |
|--------|---------------------------------|
|   |                            |
|   | AMERICAN CRYSTAL SUGAR  COMPANY |
|   |                            |
|   |                            |
|   | By:                             | /s/ Sam Wai |   |
|   |                            | Its: | TREASURER |   |
|        |                                 |  |  |  |  |

 

42

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| The foregoing is hereby  agreed to as of the date thereof. |                                  |
|------------------------------------------------------------|---------------------------------------|
|                                                       |                                  |
|                                                       |                                  |
|                                                       | JOHN  HANCOCK LIFE INSURANCE  COMPANY |
|                                                       |                                  |
|                                                       |                                  |
|                                                       | By:                                   | /s/ Greg Hennenfent |   |
|                                                       |                                  |   |   |
|                                                       |                                  | Its: | DIRECTOR |   |
|                                                            |                                       |  |  |  |  |

 

43

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|   | JOHN  HANCOCK VARIABLE LIFE  INSURANCE COMPANY |
|--------|------------------------------------------------|
|   |                                           |
|   |                                           |
|   | By:                                            | /s/ Greg Hennenfent |   |
|   |                                           |   |   |
|   |                                           | Its: | DIRECTOR |   |
|        |                                                |  |  |  |

 

44

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|   | JOHN  HANCOCK LIFE INSURANCE  COMPANY OF VERMONT |
|--------|--------------------------------------------------|
|   |                                             |
|   |                                             |
|   | By:                                              | /s/ Greg Hennenfent |   |
|   |                                             |   |   |
|   |                                             | Its: | DIRECTOR |   |
|        |                                                  |  |  |  |

 

45

----

     
| **Name and Address of Purchaser**        |   | **Principal  Amount of   Notes to be Purchased** |       |
|------------------------------------------|--------|--------------------------------------------------|------------|
|                                     |   |                                             |       |
| **John  Hancock Life Insurance Company** |   | $                                                | 3,000,000  |   |
| 200  Clarendon Street                    |   | $                                                | 15,250,000 |   |
| Boston,  Massachusetts 02117             |   |                                             |       |
| Facsimile  Number: 617-572-1605          |   |                                             |       |
| Confirmation  Number: 617-572-5323       |   |                                             |       |

 

**Payments**

 

All payments on or inrespect of the Notes or other obligations in accordance with the provisions ofthis Agreement are to be by bank wire transfer of Federal or other immediatelyavailable funds for credit by 12 Noon, Chicago time (identifying each paymentas “American Crystal Sugar Company, 4.78% Senior Secured Guaranteed Notes, dueFebruary 1, 2010, PPN 02530# AD 3 principal, premium or interest”) to:

 

Bank One, Illinois

ABA No. 071100269

Champaign Service Center– Mortgage/Bond

Account Number 617423603

On order of:  American Crystal Sugar Company & [PPNNumber]

Wire Deadline:  12 Noon, Chicago Time.

 

Contemporaneous with theabove wire transfer, advice setting forth:

 

(1)                    the full name,interest rate and maturity date of the Notes or other obligations;

(2)                    allocation ofpayment between principal and interest and any special payment; and

(3)                    name andaddress of Bank or Trustee from which wire transfer was sent, shall bedelivered or faxed AND mailed to:

 

John Hancock LifeInsurance Company

200 Clarendon Street

Boston, Massachusetts02117

Attn: InvestmentAccounting Division, B-3

Facsimile Number:  617-572-0628

 

**Notices**

 

Notices with respect toscheduled and unscheduled payments, written confirmation of each such paymentto:

 

 

Schedule A

(to Note PurchaseAgreement)

 

----

 
| John Hancock  Life Insurance Company

201 Knollwood  Drive, Suite A

Champaign,  Illinois  61820-7594

Attn:  Accounting

Facsimile  Number:  217-356-1031

  | **AND:**

John Hancock  Life Insurance Company

200 Clarendon  Street

Boston,  Massachusetts 02117

Attention:     Bond and Corporate Finance Group, T-57

Facsimile  Number:  617-572-1165 |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

 

Notices with respect tochange in Issuer’s name, address, principal place of business, change inlocation of collateral, copies of legal opinions to:

 

John Hancock Life InsuranceCompany

200 Clarendon Street

Boston, Massachusetts02117

Attention: Investment LawDivision, T-30

Facsimile Number:   617-572-9269

 

All other communicationswhich shall include, but not be limited to, financial statements andcertificates of compliance with financial covenants, shall be delivered orfaxed AND mailed to:

 

John Hancock LifeInsurance Company

200 Clarendon Street

Boston, Massachusetts02117

Attention: Bond andCorporate Finance Group, T-57

Facsimile Number:   617-572-1605

 

With a Copy to:

 

1622 Colonial Parkway

Suite 1A

Inverness, Illinois  60067

Attention:  Greg Hennenfent

Facsimile Number:  847-776-5835

 

Name of Nominee in whichNotes are to be issued:  None

 

Taxpayer I.D.Number:  04-1414660

 

A-2

----

 
| **Name and Address of Purchaser**                 |   | **Principal  Amount of   Notes to be Purchased** |      |
|---------------------------------------------------|--------|--------------------------------------------------|-----------|
|                                              |   |                                             |      |
| **John  Hancock Variable Life Insurance Company** |   | $                                                | 1,500,000 |   |
| 200  Clarendon Street                             |   |                                             |      |
| Boston,  Massachusetts 02117                      |   |                                             |      |
| Attn:  Bond and Corporate Finance Group T-57      |   |                                             |      |
| Facsimile  Number:  617-572-1605             |   |                                             |      |
| Confirmation  Number:  617-572-5323          |   |                                             |      |
|                                                   |        |                                                  |           |  |

 

**Payments**

 

All payments on or inrespect of the Notes or other obligations in accordance with the provisions ofthis Agreement are to be by bank wire transfer of Federal or other immediatelyavailable funds for credit by 12 Noon, Chicago time (identifying eachpayment as “American Crystal Sugar Company, 4.78% Senior Secured GuaranteedNotes, due February 1, 2010, PPN 02530# AD 3, principal, premium orinterest”) to:

 

Bank One, Illinois

ABA No. 071100269

Champaign Service Center– Mortgage/Bond

Account Number 617423603

On order of:  American Crystal Sugar Company & [PPNNumber]

Wire Deadline:  12 Noon, Chicago Time

 

Contemporaneous with theabove wire transfer, advice setting forth:

 

(1)                    the full name,interest rate and maturity date of the Notes or other obligations;

(2)                    allocation ofpayment between principal and interest and any special payment; and

(3)                    name andaddress of Bank or Trustee from which wire transfer was sent, shall bedelivered or faxed AND mailed to:

 

John Hancock LifeInsurance Company

200 Clarendon Street

Boston, Massachusetts02117

Attn: InvestmentAccounting Division, B-3

Facsimile Number:  617-572-0628

 

**Notices**

 

Notices with respect toscheduled and unscheduled payments, written confirmation of each such paymentto:

 

A-3

----

 
| John  Hancock Variable Life Insurance Company

201 Knollwood  Drive, Suite A

Champaign,  Illinois  61820-7594

Attn:  Accounting

Facsimile Number:  217-356-1031 | **AND:**

John  Hancock Life Insurance Company

200  Clarendon Street

Boston,  Massachusetts  02117

Attention:  Bond and Corporate Finance Group, T-57

Facsimile  Number:  617-572-1165 |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

 

Notices with respect tochange in Issuer’s name, address, principal place of business, change inlocation of collateral, copies of legal opinions to:

 

John Hancock LifeInsurance Company

200 Clarendon Street

Boston, Massachusetts02117

Attention: Investment LawDivision, T-30

FacsimileNumber:   617-572-9269                  

 

All Notices regardingFinancial Statements and Certificates of Compliance with financial covenantsshall be mailed and faxed to the following:

 

John Hancock LifeInsurance Company

200 Clarendon Street

Boston, Massachusetts02117

Attn: Bond and CorporateFinance Group, T-57

Facsimile Number:   617-572-1605

 

All other communicationswhich shall include, but not be limited to, financial statements andcertificates of compliance with financial covenants, shall be delivered orfaxed AND mailed to:

 

John Hancock Life InsuranceCompany

200 Clarendon Street

Boston, Massachusetts02117

Attention: Investment LawDivision, T-30

Facsimile Number:   617-572-9269

 

With a Copy to:

 

1622 Colonial Parkway

Suite 1A

Inverness, Illinois  60067

Attention:  Greg Hennenfent

Facsimile Number:  847-776-5835

 

A-4

----

 

Name of nominee in whichNotes are to be issued:  None

 

Taxpayer I.D.Number:  04-2664016

 

A-5

----

 
| **Name and Address of Purchaser**              |   | **Principal  Amount of  Notes to be Purchased** |        |
|------------------------------------------------|--------|-------------------------------------------------|-------------|
|                                           |   |                                            |        |
| **John  Hancock Insurance Company of Vermont** |   | **$**                                           | **250,000** | ** ** |
| 200  Clarendon Street                          |   |                                            |        |
| Boston,  Massachusetts 02117                   |   |                                            |        |
| Facsimile  Number: 617-572-1605                |   |                                            |        |
| Confirmation  Number: 617-572-5323             |   |                                            |        |
|                                                |        |                                                 |             |  |

 

**Payments**

 

All payments on or inrespect of the Notes or other obligations in accordance with the provisions ofthis Agreement are to be by bank wire transfer of Federal or other immediatelyavailable funds for credit by 12 Noon, Chicago time (identifying eachpayment as “American Crystal Sugar Company, 4.78% Senior Secured GuaranteedNotes, due February 1, 2010, PPN 02530# AD 3 principal, premium orinterest”) to:

 

Bank One, Illinois

ABA No. 071100269

Champaign Service Center– Mortgage/Bond

Account Number 617423603

On order of:  American Crystal Sugar Company & [PPNNumber]

Wire Deadline:  12 Noon, Chicago Time

 

Contemporaneous with theabove wire transfer, advice setting forth:

 

(1)                    the full name,interest rate and maturity date of the Notes or other obligations;

(2)                    allocation ofpayment between principal and interest and any special payment; and

(3)                    name andaddress of Bank or Trustee from which wire transfer was sent, shall bedelivered or faxed AND mailed to:

 

John Hancock LifeInsurance Company

200 Clarendon Street

Boston, Massachusetts02117

Attn: InvestmentAccounting Division, B-3

Facsimile Number:  617-572-0628

 

**Notices**

 

Notices with respect toscheduled and unscheduled payments, written confirmation of each such paymentto:

 

A-6

----

 
| John Hancock Life Insurance Company of Vermont

c/o John Hancock  Life Insurance Company

201 Knollwood  Drive, Suite A

Champaign,  Illinois  61820-7594

Attn:  Accounting

Facsimile  Number:  217-356-1031 | **AND:**

John  Hancock Life Insurance Company

200  Clarendon Street

Boston,  Massachusetts  02117

Attention:  Bond and Corporate Finance Group, T-57

Facsimile  Number:  617-572-1165 |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

 

Notices with respect tochange in Issuer’s name, address, principal place of business, change inlocation of collateral, copies of legal opinions to:

 

John Hancock LifeInsurance Company

200 Clarendon Street

Boston, Massachusetts02117

Attention: Investment LawDivision, T-30

Facsimile Number:   617-572-9269

 

All other communicationswhich shall include, but not be limited to, financial statements andcertificates of compliance with financial covenants, shall be delivered orfaxed AND mailed to:

 

John Hancock LifeInsurance Company

200 Clarendon Street

Boston, Massachusetts02117

Attention: Bond andCorporate Finance Group, T-57

Facsimile Number:   617-572-1605

 

With a Copy to:

 

1622 Colonial Parkway

Suite 1A

Inverness, Illinois  60067

Attention:  Greg Hennenfent

Facsimile Number:  847-776-5835

 

Name of Nominee in whichNotes are to be issued:  None

 

Taxpayer I.D.Number:  03-0367897

 

A-7

----

     

**DEFINEDTERMS**

 

As used herein, thefollowing terms have the respective meanings set forth below or set forth inthe Section hereof following such term:

 

*“1998 Guarantee Agreement”*means that certain Guarantee Agreement dated the date hereof from the Guarantorto the 1998 Purchasers as amended from time to time.

 

*“1998 Notes”* meansthose certain Senior Secured Guaranteed Notes of the Company issued andoutstanding under the 1998 Note Purchase Agreements as amended and restated asof the date hereof.

 

*“1998 Note Purchase Agreements”*means those separate and several Note Purchase Agreements dated as of September15, 1998 between the Company and the 1998 Purchasers as amended by the FirstAmendment thereto and as further amended from time to time.

 

*“1998 Purchasers”*means the from time to time holders of the 1998 Notes of the Company.

 

*“Additional Provision”*  shall have the meaning set forth therein inSection 9.9.

 

*“Affiliate”* means,at any time, and with respect to any Person, (a) any other Person that at suchtime directly or indirectly through one or more intermediaries Controls, or isControlled by, or is under common Control with, such first Person, (b) anyPerson beneficially owning or holding, directly or indirectly, 10% or more ofany class of voting or equity interests of the Company or any Subsidiary or anycorporation of which the Company and its Subsidiaries beneficially own or hold,in the aggregate, directly or indirectly, 10% or more of any class of voting orequity interests, and (c) United Sugars Corporation, Midwest Agri-CommoditiesCompany, ProGold Limited Liability Company and Crystech LLC; provided, that forthe purposes of this definition, all Growers shall be also considered in the aggregateas an Affiliate of the Company.  As usedin this definition, *“Control”* means the possession, directlyor indirectly, of the power to direct or cause the direction of the managementand policies of a Person, whether through the ownership of voting securities,by contract or otherwise. Unless the context otherwise clearly requires, anyreference to an “Affiliate” is a reference to an Affiliate of the Company.

 

*“Average Net Funds Generated”*means the sum of the following for the most recent twelve (12) fiscal quartersdivided by twelve (12):  (i) unitretains; depreciation and amortization; net income from non-member business andmember business tax timing differences; decrease in investments in othercooperatives (excluding Subsidiaries); and net revenue from sale of stock;minus (ii) increase in investments in other cooperatives (excludingSubsidiaries); net loss from non-member business and member business tax timingdifferences; provision for income tax; and members’ investment retirements.

 

 

Schedule B

(to Note PurchaseAgreement)

 

----

 

*“Bank Guarantee Agreement”*means that certain Guarantee Agreement dated as of the date hereof from theGuarantor to the Banks as amended from time to time.

 

*“Banks*” meansCoBank, ACB, as successor by merger with St. Paul Bank for Cooperatives, aslender under the Loan Agreement and its successors and assigns.

 

*“Business Day”*means (a) for the purposes of Section 8.6 only, any day other than aSaturday, a Sunday or a day on which commercial banks in New York City are requiredor authorized to be closed, and (b) for the purposes of any otherprovision of this Agreement, any day other than a Saturday, a Sunday or a dayon which commercial banks in Minneapolis, Minnesota, or New York, New York orFargo, North Dakota are required or authorized to be closed.

 

*“Called Principal”*is defined in Section 8.7.

 

*“Capital Lease”*means, at any time, a lease with respect to which the lessee is requiredconcurrently to recognize the acquisition of an asset and the incurrence of aliability in accordance with GAAP.

 

*“Change in Control”*is defined in Section 8.3(h).

 

*“Closing”* isdefined in Section 3.

 

*“CoBank Stock Lien”*means the statutory first lien on all stock and other equity of CoBank, ACB assuccessor by merger to St. Paul Bank for Cooperatives held by the Companypursuant to 12 USC 2131.

 

*“Code”* means theInternal Revenue Code of 1986, as amended from time to time, and the rules andregulations promulgated thereunder from time to time.

 

“*Collateral”* means allproperty and interests in property and proceeds thereof now owned or hereafteracquired by the Company or any of its respective Subsidiaries in or upon whicha Lien now or hereafter exists in favor of the Purchasers, whether under thisAgreement, the Security Documents or under any other documents executedpursuant to this Agreement, by any such Person and delivered to the Purchasers.

 

*“Collateral Agent”*means CoBank, ACB as successor by merger with St. Paul Bank for Cooperatives,in its capacity as collateral agent for the Purchasers under and pursuant toIntercreditor and Collateral Agency Agreement, and any permitted successorcollateral agent.

 

*“Company”* meansAmerican Crystal Sugar Company, a Minnesota cooperative corporation and itssuccessors and assigns.

 

*“Competitor”*shall mean any Person which is substantially engaged in the sugar processingand sales industry, *provided* that:

 

B-2

----

 

(a)                                  theprovision of investment advisory services by a Person to a Plan which is ownedor controlled by a Person which would otherwise be a Competitor shall not ofitself cause the Person providing such services to be deemed to be aCompetitor;

 

(b)                                 inno event shall an Institutional Investor be deemed a Competitor unless suchInstitutional Investor controls, or is controlled by, or is under commoncontrol with, a Person that is substantially engaged in the sugar processingand sales industry; and

 

(c)                                  anInstitutional Investor that would otherwise be deemed a Competitor pursuant tothe foregoing provisions of this definition by virtue of its ownership orcontrol as a portfolio investment of the equity securities of any Personengaged in the business of the sugar processing and sales industry shall not bedeemed a Competitor if such Institutional Investor has established procedureswhich will prevent confidential information supplied to such InstitutionalInvestor by the Company from being transmitted or otherwise made available tosuch Person.

 

*“Confidential Information”*is defined in Section 20.

 

*“Consolidated Current Assets”*means the current assets of the Company and its Subsidiaries, including,without limitation, cash, cash equivalents, inventory, receivables as otherassets generally described as “current assets” in accordance with GAAP, determinedon a consolidated basis in accordance with GAAP.

 

*“Consolidated Current Liabilities”*means the current liabilities of the Company and its Subsidiaries, determinedon a consolidated basis in accordance with GAAP.

 

*“Consolidated Funded Debt*”means, without duplication, all Funded Debt of the Company and itsSubsidiaries, determined on a consolidated basis in accordance with GAAP.

 

“*Consolidated Net Worth*”means total members’ investments in accordance with GAAP, including anygoodwill and other intangible assets.

 

“*Consolidated Total Assets*”means the total assets of the Company and its Subsidiaries, determined on aconsolidated basis in accordance with GAAP.

 

“*Consolidated Total Capitalization*”means the sum of Consolidated Funded Debt and Consolidated Net Worth.

 

*“Control Event”*isdefined in Section 8.3(h).

 

*“Current Asset Liens”*shall mean Liens on the current assets of the Company and its Subsidiariesincluding, without limitation, Liens on cash, cash equivalents, inventory,receivables and other assets generally described as “current assets” inaccordance with GAAP.

 

*“Debt”* withrespect to any Person means, at any time, without duplication,

 

B-3

----

 

(a)                                  itsliabilities for borrowed money and its redemption obligations in respect ofmandatorily redeemable Preferred Stock;

 

(b)                                 itsliabilities for the deferred purchase price of property acquired by such Person(excluding accounts payable arising in the ordinary course of business butincluding all liabilities created or arising under any conditional sale orother title retention agreement with respect to any such property);

 

(c)                                  allliabilities appearing on its balance sheet in accordance with GAAP in respectof Capital Leases;

 

(d)                                 allliabilities for borrowed money secured by any Lien with respect to any propertyowned by such Person (whether or not it has assumed or otherwise become liablefor such liabilities);

 

(e)                                  allits liabilities in respect of letters of credit or instruments serving asimilar function issued or accepted for its account by banks and otherfinancial institutions (whether or not representing obligations for borrowedmoney);

 

(f)                                    Swapsof such Person; and

 

(g)                                 anyGuaranty of such Person with respect to liabilities of a type described in anyof clauses (a) through (f) hereof.

 

Debt of any Person shallinclude all obligations of such Person of the character described in clauses(a) through (g) to the extent such Person remains legally liable in respectthereof notwithstanding that any such obligation is deemed to be extinguishedunder GAAP.

 

*“Default”* means anevent or condition the occurrence or existence of which would, with the lapseof time or the giving of notice or both, become an Event of Default.

 

*“Default Rate”*means with respect to any series of Notes that rate of interest that is thegreater of (i) 2% per annum above the rate of interest stated in clause(a) of the first paragraph of such series of Notes or (ii) 2% over therate of interest publicly announced by Citibank, N.A. in New York City as its“base” or “prime” rate.

 

*“Discounted Value”*is defined in Section 8.7.

 

*“Environmental Laws”*means any and all Federal, state, local, and foreign statutes, laws,regulations, ordinances, rules, judgments, orders, decrees, permits, concessions,grants, franchises, licenses, agreements or governmental restrictions relatingto pollution and the protection of the environment or the release of anymaterials into the environment, including but not limited to those related tohazardous substances or wastes, air emissions and discharges to waste or publicsystems.

 

B-4

----

 

*“ERISA*” means theEmployee Retirement Income  Security Actof 1974, as amended from time to time, and the rules and regulationspromulgated thereunder from time to time in effect.

 

*“ERISA Affiliate”*means any trade or business  (whether ornot incorporated) that is treated as a single employer together with theCompany under section 414 of the Code.

 

*“Event of Default”*is defined in Section 11.

 

*“Exchange Act”*means the Securities Exchange Act of 1934, as amended.

 

“*Excepted Affiliates*” meansMidwest Agri-Commodities Company, a North Dakota cooperative corporation,ProGold Limited Liability Company, a limited liability company organized underthe laws of the State of Minnesota, United Sugars Corporation, a cooperativecorporation organized under the laws of the State of Minnesota and CrystechLLC, a limited liability company organized under the laws of the State ofDelaware.

 

*“Existing Mortgage”*meansthat certain Restated Mortgage and Security Agreement dated as of September 15,1998 from the Company to the Collateral Agent covering certain real propertylocated in the States of Minnesota and North Dakota, as modified or amended asdescribed in Section 4.10(d), and as may be further amended.

 

*“Fifth Amendment to Loan Agreement”*means that certain Fifth Amendment to, and forming a part of, the LoanAgreement, dated as of January 15, 2003, between the Company and CoBank.

 

*“Funded Debt”*means all Debt of any Person which would, in accordance with GAAP, constitutelong term Debt including, but not limited to: (a) any Debt with a maturity ofmore than one year after the creation of such Debt, (b) any Debt outstandingunder a revolving credit or similar agreement providing for borrowings (andrenewals and extensions thereof) which pursuant to its terms would constitutelong term Debt in accordance with GAAP, (c) any Capital Lease obligation and(d) any guarantee with respect to Funded Debt of another person; provided,however, excluding any Debt (including current maturities thereof) whichwould, in accordance with GAAP, constitute short term Debt, including anyrevolving credit or similar agreements which have maturities of 365 days orless.

 

*“GAAP”* meansgenerally accepted accounting principles as in effect from time to time in theUnited States of America.

 

*“Governmental Authority”*means

 

(a)                                  thegovernment of

 

(i)                                     theUnited States of America or any State or other political subdivision thereof,or

 

B-5

----

 

(ii)                                  anyjurisdiction in which the Company or any Subsidiary conducts all or any part ofits business, or which asserts jurisdiction over any properties of the Companyor any Subsidiary, or

 

(b)                                 anyentity exercising executive, legislative, judicial, regulatory oradministrative functions of, or pertaining to, any such government.

 

*“Group”*is definedin Section 8.3(h).

 

*“Grower”* means theindividual member shareholders of the Company who deliver sugarbeets to theCompany.

 

*“Grower Agreement”*means the agreement between Company and an individual Grower for a Grower tosupply the number of acres of sugarbeets equal to the number of preferredshares of the Company then owned by such Grower.

 

*“Guarantee Agreement”*means that certain Guarantee Agreement dated as of the date hereof from theGuarantor to the Purchasers as amended from time to time.

 

*“Guarantor”* meansSidney Sugars Incorporated, a Minnesota corporation and its successors andassigns.

 

*“Guaranty”* means,with respect to any Person, any obligation (except the endorsement in theordinary course of business of negotiable instruments for deposit orcollection) of such Person guaranteeing or in effect guaranteeing anyindebtedness, dividend or other obligation of any other Person in any manner,whether directly or indirectly, including (without limitation) obligationsincurred through an agreement, contingent or otherwise, by such Person:

 

(a)                                  topurchase such indebtedness or obligation or any property constituting securitytherefor;

 

(b)                                 toadvance or supply funds (i) for the purchase or payment of such indebtedness orobligation, or (ii) to maintain any working capital or other balance sheetcondition or any income statement condition of any other Person or otherwise toadvance or make available funds for the purchase or payment of suchindebtedness or obligation;

 

(c)                                  tolease properties or to purchase properties or services primarily for thepurpose of assuring the owner of such indebtedness or obligation of the abilityof any other Person to make payment of the indebtedness or obligation; or

 

(d)                                 otherwiseto assure the owner of such indebtedness or obligation against loss in respectthereof;

 

*provided, however*, the obligation of theCompany under the Tolling Services Agreement dated as of June 3, 1998 withCrystech, LLC, shall not be deemed to be a Guaranty of the Debt of 

 

B-6

----

 

Crystech, LLC, so long asCrystech, LLC’s assets and liabilities are not consolidated with the Company’sassets and liabilities in accordance with GAAP.

 

In any computation of theindebtedness or other liabilities of the obligor under any Guaranty, theindebtedness or other obligations that are the subject of such Guaranty shallbe assumed to be direct obligations of such obligor.

 

*“Hazardous Material”*means any and all pollutants, toxic or hazardous wastes or any other substancesthat might pose a hazard to health or safety, the removal of which may berequired or the generation, manufacture, refining, production, processing,treatment, storage, handling, transportation, transfer, use, disposal, release,discharge, spillage, seepage, or filtration of which is or shall be restricted,prohibited or penalized by any applicable law (including, without limitation,asbestos, urea formaldehyde foam insulation and polycholorinated biphenyls).

 

*“Hereford, Texas Property”*means the real and personal property of the Company or of the Guarantor, as thecase may be, and located in Deaf Smith County, Texas.

 

*“holder”* means,with respect to any Note, the Person in whose name such Note is registered inthe register maintained by the Company pursuant to Section 13.1.

 

*“Institutional Investor”*means (a) any original purchaser of a Note, (b) any holder of a Noteholding more than 5% of the aggregate principal amount of the Notes thenoutstanding, and (c) any bank, trust company, savings and loan association orother financial institution, any pension plan, any investment company, anyinsurance company, any broker or dealer, or any other similar financialinstitution or entity, regardless of legal form.

 

*“Intercreditor and Collateral AgencyAgreement”* means that certain Amended and RestatedIntercreditor and Collateral Agency Agreement among the Purchasers, the 1998Purchasers and the Banks dated as of the date hereof and as amended from timeto time.

 

“*Interest Expense*” means thetotal interest expense of the Company and its Subsidiaries (including, withoutlimitation, interest expense on capital leases) and, to the extent not includedtherein, fees and other charges payable with respect to all Debt), determinedon a consolidated basis in accordance with GAAP.

 

*“Investment Grade Status”*means, with respect to any Person, to be rated “Baa3” or above  or “BBB-” or above, respectively, by Moody’sInvestors Service, Inc. or Standard & Poor’s Ratings Group, a division ofMcGraw-Hill and any successor thereto.

 

*“Lien”* means, withrespect to any Person, any mortgage, lien, pledge, charge, security interest orother encumbrance, or any interest or title of any vendor, lessor, lender orother secured party to or of such Person under any conditional sale or othertitle retention agreement or Capital Lease, upon or with respect to anyproperty or asset of such Person (including in the case of stock, stockholderagreements, voting trust agreements and all similar arrangements).

 

B-7

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“*Loan Agreement*” means thatcertain Master Loan Agreement, dated March 31, 2000, as amended by the FirstAmendment, dated as of March 28, 2001, the Second Amendment, dated as of March27, 2002, the Amendment and Waiver, dated as of October 7, 2002, the FourthAmendment, dated as of  November 6, 2002,and the Fifth Amendment dated as of January 15, 2003, and as amended andsupplemented prior to the date hereof and as may be amended or supplementedfrom time to time, between the Company and the Bank.

 

*“Make-Whole Amount”*is defined in Section 8.7.

 

*“Material”* meansmaterial in relation to the business, operations, affairs, financial condition,assets, properties, or prospects of the Company and its Subsidiaries taken as awhole.

 

*“Material Adverse Effect”*means a material adverse effect on (a) the business, operations, affairs,financial condition, assets or properties of the Company and its Subsidiariestaken as a whole, or (b) the ability of the Company to perform its obligationsunder this Agreement, the Security Documents and the Notes, or (c) the validityor enforceability of this Agreement or the Notes, or (d) the validity orperfection of the security interests granted under and pursuant to the SecurityDocuments.

 

*“MDEQ”* is definedin Section 9.8(c).

 

*“Modification Agreement”*means that certain Modification Agreement dated as of January 15, 2003 betweenthe Company and the Collateral Agent that modifies the Existing Mortgageamended in connection with this Agreement.

 

*“Mortgages”* means,collectively, the Existing Mortgage and the Sidney Mortgage.

 

*“Multiemployer Plan”*means any Plan that is a “multiemployer plan” (as such term is defined insection 4001(a)(3) of ERISA).

 

*“Notes”* is definedin Section 1.

 

*“Officer’s Certificate”*means a certificate of a Senior Financial Officer or of any other officer ofthe Company whose responsibilities extend to the subject matter of suchcertificate.

 

*“Other Agreements”*is defined in Section 2.

 

“*Other Purchasers*” is definedin Section 2.

 

“*PBGC*” means the PensionBenefit Guaranty Corporation referred to and defined in ERISA or any successorthereto.

 

*“Permitted Current Asset Liens”*means Current Asset Liens against current assets securing short term Debt ofthe Company incurred after the Closing that: (a) are Commodity Credit Corporation (“CCC”) loans or other, similarloans made by a successor to the CCC or similar government sponsored loans orloans associated with a governmental program; or (b) 

 

B-8

----

 

satisfy the followingconditions precedent:  (i) such Lienssecure the short term Debt of the Company and all Debt of the Company which issubject to the Intercreditor and Collateral Agency Agreement at the time ofincurrence of such short term Debt on a *pari passu* basis, (ii) the Companyexecutes and delivers a security agreement evidencing such Liens which isreasonably satisfactory to the obligees of the subject short term Debt, theSecured Parties and the Company and which security agreement becomes subject tothe Intercreditor and Collateral Agency Agreement and (iii) the Intercreditorand Collateral Agency Agreement is amended by the Collateral Agent, the SecuredParties and the Company to incorporate mutually acceptable terms and provisionsrelating to the administration and enforcement of the Liens so granted.

 

*“Permitted Guarantee Agreements”*means the Guarantee Agreement, the 1998 Guarantee Agreement and the BankGuarantee Agreement.

 

*“Permitted Intercompany Debt”*means (a) those certain unsecured term loans from Company to Guarantor totaling$30,500,000 and evidenced by (i) the Promissory Note dated October 7, 2002 fromGuarantor to Company in the amount of $7,500,000 and due on August 31, 2007 and(ii) the Promissory Note dated October 7, 2002 from Guarantor to Company in theamount of $23,000,000 and due on August 31, 2003; and (b) that certainunsecured line of credit currently in the aggregate amount of $50,000,000 andevidenced by the Draw Note dated October 7, 2002 from Guarantor to Company anddue on August 31, 2003 (or as may be amended to increase the aggregate amountof the unsecured line of credit by an additional $10,000,000 to an aggregateamount of $60,000,000) as each such instrument is in effect on the ClosingDate, or as may be amended as allowed in (b) herein; and (c) those certainunsecured term loans (from time to time herein) from Company to MidwestAgri-Commodities Company in an amount not to exceed $3,000,000; provided thatif at any time after the Closing Date the Company requires the Guarantor toexecute and deliver a mortgage in substantially the same form as the Sidney Mortgagewith respect to the Mortgaged Property described therein (the “SubordinateSidney Mortgage”) to secure all or any portion of the indebtedness described inclause (a) or (b) above (the “Subordinate Indebtedness”), such indebtednessshall continue to constitute “Permitted Intercompany Debt” so long as (A) theCompany shall first obtain the written approval of the Noteholders to thedelivery of such Subordinate Sidney Mortgage, which approval shall not beunreasonably withheld, (B) the Company and the Noteholders shall have executeda subordination agreement in form and substance satisfactory to the Noteholderspursuant to which the Company shall agree that the Subordinate Sidney Mortgageand the Subordinate Indebtedness shall in all respects be subject andsubordinate to the Notes and the Sidney Mortgage and shall contain such otherprovisions including deep subordination and remedies blockage provisions asrequested by the Noteholders, (C) the Company and the Noteholders shall haveexecuted a pledge agreement(s) in form and substance satisfactory to theNoteholders pursuant to which the Company shall pledge its interest in the“Subordinate Indebtedness” and the Subordinate Sidney Mortgage and the capitalstock of the Guarantor to the Collateral Agent for the benefit of the SecuredParties to secure the payment of the Senior Secured Obligations (as defined inthe Intercreditor Agreement), (D) the Company, the Secured Parties and theCollateral Agent shall execute and deliver any required amendments or modificationsto the Intercreditor Agreement to reflect the delivery of the SubordinateSidney Mortgage and the subordination agreement, and (E) the Company and theGuarantor shall have executed and delivered all requisite UCC’s, titleinsurance policies, legal opinions, and such 

 

B-9

----

 

other and further mattersand showings as Noteholders, the Collateral Agent or the other Secured Partiesmay require in connection with the execution and delivery of the SubordinateSidney Mortgage.

 

*“Permitted Investors”*means any of the shareholders of the Company as of the date of Closing or anyheirs or beneficiaries thereof and any of the members of the current managementteam.  For purposes of this definition,the “current management team” shall consist of all of the officers of theCompany set forth on Schedule 5.4.

 

*“Permitted Specified AffiliateTransactions”*  means anytransaction by and between the Company and (i) United Sugars Corporation(‘United Sugar’) and pertaining to the procurement, purchase, soliciting ofsales and sale of sugar by United Sugar on behalf of, and as agent for, theCompany, and the financing of such activities of United Sugar by the Company;(ii) Midwest Agri-Commodities Company (‘Midwest’) and pertaining to theprocurement, purchase, soliciting of sales and sale of sugar beet pulp by  Midwest on behalf of, and as agent for, theCompany, and the financing of such activities of Midwest by the Company; (iii)ProGold Limited Liability Company and pertaining to the financing, maintenance,operation and other activities associated with, or related to, that certaincorn processing facility located just North of Wahpeton, North Dakota; and (iv)Crystech, LLC and pertaining to the obligations of the Company to processmolasses under the terms of that certain Tolling Services Agreement dated as ofJune 3, 1998.

 

*“Person”* means anindividual, partnership, corporation, limited liability company, association,trust, unincorporated organization, or a government or agency or politicalsubdivision thereof.

 

*“Plan”* means an“employee benefit plan” (as defined in section 3(3) of ERISA) that is or,within the preceding five years, has been established or maintained, or towhich contributions are or, within the preceding five years, have been made orrequired to be made, by the Company or any ERISA Affiliate or with respect towhich the Company or any ERISA Affiliate may have any liability.

 

*“Preferred Stock”*means any class of capital stock of a corporation that is preferred over anyother class of capital stock of such corporation as to the payment of dividendsor the payment of any amount upon liquidation or dissolution of suchcorporation.

 

“*Priority Debt*” means(a) Funded Debt of any Subsidiary *plus* (without duplication) (b) Funded Debtof the Company or any Subsidiary secured by a Lien which is incurred after theClosing under and pursuant to Section 10.3(h).

 

*“property”* or *“properties”*means, unless otherwise specifically limited, real or personal property of anykind, tangible or intangible, choate or inchoate.

 

*“ Purchasers”* isdefined in Section 2.

 

*“QPAM Exemption”*means Prohibited Transaction Class Exemption 84-14 issued by the United StatesDepartment of Labor.

 

B-10

----

 

*“Other Purchasers”*is defined in Section 1.

 

*“Reinvestment Yield”*is defined in Section 8.7.

 

*“Remaining Scheduled Payments”*is defined in Section 8.7.

 

*“Required Holders”*means, at any time, the holders of at least 66-2/3% in principal amount of theNotes at the time outstanding (exclusive of Notes then owned by the Company orany of its Affiliates).

 

*“Responsible Officer”*means any Senior Financial Officer and any other officer of the Company withresponsibility for the administration of the relevant portion of thisagreement.

 

*“Secured Parties”*shall have the meaning assigned thereto in the Intercreditor and CollateralAgency Agreement.

 

*“Securities Act”*means the Securities Act of 1933, as amended from time to time.

 

*“Security”* meansany security as defined in Section 2(1) of the Securities Act of 1933, asamended.

 

*“Security Documents”*means, collectively, (a) the Guarantee Agreement, (b) the Sidney Mortgage, theExisting Mortgage, and all other security agreements, mortgages, deeds oftrust, lease assignments, guarantees and other similar agreements between theCompany or any Subsidiary and the Collateral Agent for the benefit of thePurchasers pursuant to or in connection with the transactions contemplatedhereby, and all financing statements (or comparable documents now or hereafterfiled in accordance with the UCC or comparable law) against the Company or anySubsidiary as debtor in favor of Collateral Agent, for the benefit of thePurchasers, as secured party, and (c) any amendments, supplements, modifications,renewals, replacements, consolidations, substitutions and extensions of any ofthe foregoing.

 

*“Senior Financial Officer”*means the chief financial officer, vice president-finance, principal accountingofficer, treasurer or comptroller of the Company.

 

*“Settlement Date”*is defined in Section 8.7.

 

*“Sidney Mortgage”*means that certain Mortgage and Security Agreement dated as of the date hereoffrom the Guarantor to the Collateral Agent covering certain real and personalproperty located in the State of Montana, as amended.

 

*“Special Prepayment Date”*is defined in Section 8.1(b).

 

*“Subsidiary”*means, as to any Person, any corporation, association or other business entityin which such Person or one or more of its Subsidiaries or such Person and oneor more of its Subsidiaries owns sufficient equity or voting interests toenable it or them (as a group) 

 

B-11

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ordinarily, in theabsence of contingencies, to elect a majority of the directors (or Personsperforming similar functions) of such entity, and any partnership or jointventure if more than a 50% interest in the profits or capital thereof is ownedby such Person or one or more of its Subsidiaries or such Person and one ormore of its Subsidiaries (unless such partnership can and does ordinarily takemajor business actions without the prior approval of such Person or one or moreof its Subsidiaries) other than the Excepted Affiliates so long as each suchentity is not consolidated with the Company in accordance with GAAP.  Unless the context otherwise clearlyrequires, any reference to a “Subsidiary” is a reference to a Subsidiary of theCompany.

 

*“Swaps”* means,with respect to any Person, payment obligations with respect to interest rateswaps, currency swaps and similar obligations obligating such Person to makepayments, whether periodically or upon the happening of a contingency.  For the purposes of this Agreement, theamount of the obligation under any Swap shall be the amount determined in respectthereof as of the end of the then most recently ended fiscal quarter of suchPerson, based on the assumption that such Swap had terminated at the end ofsuch fiscal quarter, and in making such determination, if any agreementrelating to such Swap provides for the netting of amounts payable by and tosuch Person thereunder or if any such agreement provides for the simultaneouspayment of amounts by and to such Person, then in each such case, the amount ofsuch obligation shall be the net amount so determined.

 

*“Torrington, Wyoming Property”*means the real and personal property of the Company or the Guarantor, as thecase may be, and located in Goshen County, Wyoming.

 

*“UCC”* means theUniform Commercial Code as the same may, from time to time, be in effect in theState of New York; provided, however, in the event that, byreason of mandatory provisions of law, any or all of the attachment, perfectionor priority of the security interest in any Collateral is governed by theUniform Commercial Code as in effect in a jurisdiction other than the State ofNew York, the term “UCC” shall mean the Uniform Commercial Code as in effect insuch other jurisdiction for purposes of the provisions hereof relating to suchattachment, perfection or priority and for purposes of definitions related tosuch provisions.

 

*“Wholly-Owned Subsidiary”*means, at any time, any Subsidiary one hundred percent (100%) of all of theequity interests (except directors’ qualifying shares) and voting interests ofwhich are owned by any one or more of the Company and the Company’s otherWholly-Owned Subsidiaries at such time.

 

B-12

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**Subsidiaries**

 

Sidney SugarsIncorporated                                                                                           100%capital stock owned by the Company

 

**Affiliates**

 

None other than theExcepted Affiliates

 

**Officers**

 
| James J. Horvath  |   | President and CEO                                                  |
|-------------------|--------|--------------------------------------------------------------------|
| David A. Berg     |   | Vice President –  Agriculture                                 |
| Thomas S. Astrup  |   | Vice President –  Administration                              |
| Joseph J. Talley  |   | Vice President –  Finance                                     |
| David A. Walden   |   | Vice President –  Operations                                  |
| Daniel C. Mott    |   | General Counsel and  Corporate Secretary                           |
| Samuel  S. M. Wai |   | Treasurer and Assistant  Secretary                                 |
| Brian Ingulsrud   |   | Corporate Controller,  Assistant Secretary and Assistant Treasurer |
| Ronald Peterson   |   | Assistant Treasurer and  Assistant Secretary                       |
| Mark L. Lembke    |   | Assistant Secretary and  Assistant Treasurer                       |

 

**AMERICAN CRYSTAL SUGAR COMPANY**

**BOARD OF DIRECTORS – November 1, 2002**

 

Michael A. Astrup

Jerry D. Bitker

Richard Borgen

Paul J. Driscoll

Curtis Haugen

Lonn M. Kiel

David J. Kragnes

Francis L. Kritzberger

Patrick D. Mahar

Jeff McInnes

Ronald Reitmeier

Jim A. Ross

G. Terry Stadstad

Robert Vivatson

Neil Widner

 

 

Schedule 5.4

(to Note PurchaseAgreement)

 

----

     

**Financial Statements**

 

Audited financialstatements of the Company for the fiscal years ended on August 31, 2002, August31, 2001 and August 31, 2000.

 

 

Schedule 5.5

(to Note PurchaseAgreement)

 

----

 

**SCHEDULE 5.12(b)**

 

The actuarial “presentvalue” of the Company’s Plan A is 97.3% funded based on an accumulatedplan benefits on the funding basis (e.g., 8.25% interest rate as ofMarch 1, 2002) and the market value of the assets (including contributionsreceivable) as shown on the IRS Form 5500 plan report.

 

 

Schedule 5.12(b)

(to Note PurchaseAgreement)

 

----

 

     

 

**EXISTINGLIENS**

 

as of November 30,2002

 
| 1.     | Instrument: |   | Intercreditor Agreement                                                                                                                         |
|--------|-------------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------|
|   | Lienholder: |   | St. Paul Bank for  Cooperatives (now known as CoBank, A.C.B.) as collateral agent                                                               |
|   | Collateral: |   | Real and Personal  Property                                                                                                                     |
|   |        |   |                                                                                                                                            |
| 2.     | Instrument: |   | Pledge Agreement                                                                                                                                |
|   | Lienholder: |   | First Union Trust  Company, National Association, as Collateral Agent                                                                           |
|   | Collateral: |   | The Company’s equity in  Crystech, LLC                                                                                                     |
|   |        |   |                                                                                                                                            |
| 3.     | Instrument: |   | Lease Agreement                                                                                                                                 |
|   | Lessor:     |   | Crystech, LLC                                                                                                                                   |
|   | Property:   |   | Equipment                                                                                                                                       |
|   |        |   |                                                                                                                                            |
| 4.     | Instrument: |   | Various Lease  Agreements                                                                                                                       |
|   | Lessor:     |   | American Technologies  Credit, Inc.                                                                                                             |
|   | Property:   |   | Equipment                                                                                                                                       |
|   |        |   |                                                                                                                                            |
| 5.     | Instrument: |   | Security Agreement                                                                                                                              |
|   | Lienholder: |   | American National Bank  and Trust Company (now known as Firstar Bank)                                                                           |
|   | Collateral: |   | Pollution Control  Equipment located at the Company’s Moorhead, MN facility                                                                |
|   |        |   |                                                                                                                                            |
| 6.     | Instrument: |   | Security Agreement                                                                                                                              |
|   | Lienholder: |   | American National Bank  and Trust Company                                                                                                       |
|   | Collateral: |   | Certain equipment  purchased with $1,000,000 Industrial Development Revenue Bond Issue and  located at the Company’s Moorhead, MN facility |
|   |        |   |                                                                                                                                            |
| 7.     | Instrument: |   | Lease Agreement                                                                                                                                 |
|   | Lessor:     |   | Newcourt Communications  Finance Corporation                                                                                                    |
|   | Property:   |   | Equipment                                                                                                                                       |
|   |        |   |                                                                                                                                            |
| 8.     | Instrument: |   | Various Lease  Agreements                                                                                                                       |
|   | Lessor:     |   | IBM Credit Corporation                                                                                                                          |
|   | Property:   |   | IBM Equipment                                                                                                                                   |

 

Schedule 5.15

(to Note PurchaseAgreement)

 

----

 
| 9.     | Instrument: |   | Lease Agreement                                 |
|--------|-------------|--------|-------------------------------------------------|
|   | Lessor:     |   | AT&T Credit  Corporation                    |
|   | Property:   |   | Equipment                                       |
|   |        |   |                                            |
| 10.    | Instrument: |   | Lease Agreement                                 |
|   | Lessor:     |   | AgCountry Farm Credit  Services, PCA            |
|   | Property:   |   | Equipment                                       |
|   |        |   |                                            |
| 11.    | Instrument: |   | Various Lease  Agreements                       |
|   | Lessor:     |   | Butler Machinery  Corporation                   |
|   | Property:   |   | Equipment                                       |
|   |        |   |                                            |
| 12.    | Instrument: |   | Various Lease  Agreements                       |
|   | Lessor:     |   | Nott Company                                    |
|   | Property:   |   | Equipment                                       |
|   |        |   |                                            |
| 13.    | Instrument: |   | Pledge Agreement                                |
|   | Leinholder: |   | Commodity Credit  Corporation                   |
|   | Collateral: |   | 2001 and 2002 sugar and  the proceeds therefrom |

 

**EXISTING DEBT**

 

**American Crystal Sugar Company**

**Long Term Debt**

**(In Thousands)**

**November 30, 2002**

 
| Total  Term Loan, CoBank,ACB               |   | $      | 101,300 |   |
|--------------------------------------------|--------|--------|---------|--------|
| Term  Loan, Insurance Companies            |   | $      | 50,000  |   |
| Term  Loan, Bank of North Dakota           |   | $      | 5,600   |   |
| Tax  Exempt Bonds:                         |   |   |    |
| East  Grand Forks 2000 Bonds               |   | $      | 5,750   |   |
| East  Grand Forks 2001 Bonds               |   | $      | 4,990   |   |
| Trail  County Series A, B & C          |   | $      | 18,000  |   |
| Trail  County 1998 Bonds                   |   | $      | 5,750   |   |
| Trail  County 1999 Bonds                   |   | $      | 3,526   |   |
| City  of Moorhead 1997 Bonds               |   | $      | 5,500   |   |
| Other                                      |   | $      | —  |   |
| Sub-total                                  |   | $      | 200,416 |   |
| Less  Current Maturities of Long Term Debt |   | $      | (18,045 | )      |
| Total  Long Term Debt                      |   | $      | 182,371 |   |

 

----

 

**American Crystal Sugar Company**

**Current Maturities of Long Term Debt**

**(In Thousands)**

**November 30, 2002**

 
| Term Loan at CoBank                            |   |   |   |
|------------------------------------------------|--------|--------|--------|
| Due  December 31, 2003                         |   | $      | 17,000 |   |
|                                           |   |   |   |
| Tax  Exempt Bonds:  East Grand Forks 2001 |   |   |   |
| Series  A Due April 1, 2003                    |   | $      | 165    |   |
| Series  B Due April 1, 2003                    |   | $      | 80     |   |
|                                           |   |   |   |
| Bank  of North Dakota                          |   |   |   |
| Due  February 20, 2003                         |   | $      | 800    |   |
|                                           |   |   |   |
| Total                                          |   | $      | 18,045 |   |

 

**American Crystal Sugar Company**

**Short Term Debt**

**(In Thousands)**

**November 30, 2002**

 
| Total  Seasonal Loan, CoBank |   | $      | 46,000  |   |
|------------------------------|--------|--------|---------|--------|
|                         |   |   |    |
| Total  Commercial Paper      |   | $      | 149,040 |   |
|                         |   |   |    |
| Total  Seasonal Debt         |   | $      | 195,040 |   |

 

----

     

**[FORM OF NOTE]**

 

AMERICAN CRYSTALSUGAR COMPANY

 

4.78% SENIORSECURED GUARANTEED NOTES, DUE FEBRUARY 1, 2010

 
| No.  [         ]                     |   | [Date]                                                                                                    |
|-----------------------------------------------------------------------------------|--------|-----------------------------------------------------------------------------------------------------------|
| $[             ] |   | PPN                  |

 

FOR VALUE RECEIVED, theundersigned, AMERICAN CRYSTAL SUGAR COMPANY (herein called the “Company”), acooperative corporation organized and existing under the laws of the State ofMinnesota, hereby promises to pay to[                       ],or registered assigns, the principal sum of[                  ]DOLLARS on [             ,           ], withinterest (computed on the basis of a 360-day year of twelve 30-day months) (a)on the unpaid balance thereof at the rate of 4.78% per annum from the datehereof, payable monthly, on the first day of each calendar month in each year,commencing with March 1, 2003, until the principal hereof shall have become dueand payable, and (b) to the extent permitted by law on any overdue payment(including any overdue prepayment) of principal, any overdue payment ofinterest and any overdue payment of any Make-Whole Amount (as defined in theNote Purchase Agreements referred to below), payable monthly as aforesaid (or,at the option of the registered holder hereof, on demand), at a rate per annumfrom time to time equal to the greater of (i) 6.78%****or (ii) 2% over the rate ofinterest publicly announced by Citibank N.A. from time to time in New York Cityas its “base” or “prime” rate.

 

Payments of principal of,interest on and any Make-Whole Amount with respect to this Note are to be madein lawful money of the United States of America at the principal office ofCitibank, N.A. in New York, New York or at such other place as the Companyshall have designated by written notice to the holder of this Note as providedin the Note Purchase Agreements referred to below.

 

This Note is one of aseries of Senior Secured Guaranteed Notes (herein called the “Notes”) issuedpursuant to separate Note Purchase Agreements, dated as of January 15, 2003 (asfrom time to time amended, the “Note Purchase Agreements”), between the Companyand the respective Purchasers named therein and is entitled to the benefitsthereof.  Each holder of this Note willbe deemed, by its acceptance hereof, (i) to have agreed to the confidentialityprovisions set forth in Section 20 of the Note Purchase Agreements and (ii) tohave made the representation set forth in Section 6.2 of the Note PurchaseAgreements.

 

This Note is a registeredNote and, as provided in the Note Purchase Agreements, upon surrender of thisNote for registration of transfer, duly endorsed, or accompanied by a writteninstrument of transfer duly executed, by the registered holder hereof or suchholder’s attorney duly authorized in writing, a new Note for a like principalamount will be issued to, and registered in the name of, the transferee.  Prior to due presentment for registration oftransfer, the Company may treat the person in whose name this Note isregistered as the owner hereof for the 

 

Exhibit 1

(to Note PurchaseAgreement)

 

----

 

purpose of receivingpayment and for all other purposes, and the Company will not be affected by anynotice to the contrary.

 

The Company will makerequired prepayments of principal on the dates and in the amounts specified inthe Note Purchase Agreements. This Note is also subject to optional prepayment,in whole or from time to time in part, at the times and on the terms specifiedin the Note Purchase Agreements, but not otherwise.

 

If an Event of Default,as defined in the Note Purchase Agreements, occurs and is continuing, theprincipal of this Note may be declared or otherwise become due and payable inthe manner, at the price (including any applicable Make-Whole Amount) and withthe effect provided in the Note Purchase Agreements.

 

This Note is equally andratably secured by the Collateral (as defined in the Intercreditor andCollateral Agency Agreement).  Referenceis hereby made to the Intercreditor and Collateral Agency Agreement for adescription of the collateral thereby mortgaged, warranted, bargained, sold,released, conveyed, assigned, transferred, pledged and hypothecated, the natureand extent of the security for the Notes, the rights of the holders of theNotes, the Collateral Agent (as defined in the Note Purchase Agreements) inrespect of such security and otherwise.

 

Pursuant to the GuaranteeAgreement, Sidney Sugars Incorporated, a Minnesota corporation has irrevocably,absolutely and unconditionally guaranteed payment in full of the principal of,Make-Whole Amount, if any, and interest on this Note and performance by theCompany of all of its obligations contained in the Note Purchase Agreements.

 

This Note shall beconstrued and enforced in accordance with, and the rights of the parties shallbe governed by, the law of the State of New York excluding choice-of-lawprinciples of the law of such State that would require the application of thelaws of a jurisdiction other than such State.

 

**PURSUANT TO NORTH DAKOTA CENTURY CODESECTION 32-19-06.1, THE COMPANY IS HEREBY PUT ON NOTICE THAT THE SECUREDPARTIES (AS DEFINED IN THE NOTE PURCHASE AGREEMENTS) MAY HAVE THE RIGHT TOPROCEED TO OBTAIN AND COLLECT A DEFICIENCY JUDGMENT, TOGETHER WITH FORECLOSUREOF THE REAL PROPERTY MORTGAGED UNDER APPLICABLE LAWS.**

 

 
|   | AMERICAN CRYSTAL SUGAR  COMPANY |
|--------|---------------------------------|
|   |                            |
|   |                            |
|   | By:                             |   |   |
|   | Name:                           |   |   |
|   | Title:                          |   |   |
|        |                                 |  |  |  |  |  |  |

 

----

 

REPRESENTATIONAND WARRANTIES OF GUARANTOR

 

The Guarantor representsand warrants to each Purchaser as follows:

 

1.                                       *Subsidiaries. *TheGuarantor has, directly and indirectly, good and marketable title to all of theshares it purports to own of the stock of each of its subsidiaries, free andclear in each case of any Lien.  Allsuch shares have been duly issued and are fully paid and non-assessable.

 

2.                                       *Organizationand Authority. *TheGuarantor, and each of its subsidiaries,

 

(a)                                  isa corporation or general partnership, duly incorporated, or duly organized, asthe case may be, amalgamated or continued, validly existing and in goodstanding and has duly made all registrations and filings required given thenature of its business under the laws of its jurisdiction of incorporation ororganization and has paid all taxes as are necessary to maintain its corporateor partnership existence, as the case may be;

 

(b)                                 hasall requisite power and authority and all necessary licenses and permits to ownand operate its properties and to carry on its business as now conducted, wherefailure to do so would materially affect adversely the business, properties,profits or financial condition of the Guarantor or any of its subsidiaries; and

 

(c)                                  isduly licensed or qualified and is in good standing as a foreign corporation ineach jurisdiction wherein the nature of the business transacted by it or thenature of the property owned or leased by it makes such licensing orqualification necessary, where failure to do so would materially affectadversely the business, properties, profits or financial condition of theGuarantor or any of its subsidiaries.

 

3.                                       *FullDisclosure. *Neitherthe Guarantee Agreement, the Security Documents to which the Guarantor is asignatory nor any other written statement furnished by the Guarantor to suchPurchaser in connection with the negotiation of the Guarantee Agreement and theSecurity Documents to which the Guarantor is a signatory, contains any untruestatement of a material fact or omits a material fact necessary to make thestatements contained therein or herein not misleading.  To the knowledge of the Guarantor after dueinquiry, there is no fact peculiar to the Guarantor or its subsidiaries whichthe Guarantor has not disclosed to such Purchaser in writing which materiallyaffects adversely nor, so far as the Guarantor can now foresee, will materiallyaffect adversely the properties, business, profits or financial condition ofthe Guarantor and its subsidiaries, taken as a whole.

 

4.                                       *PendingLitigation.  *Thereare no proceedings pending or, to the knowledge of the Guarantor, threatenedagainst or affecting the Guarantor or any of its subsidiaries in any court orbefore any governmental authority or arbitration board or tribunal arereasonably likely to materially affect adversely the properties, business,profits or financial condition of the Guarantor and its subsidiaries.

 

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5.                                       *Titleto Properties.* The Guarantor and each of its subsidiarieshas good and marketable title in fee simple (or its equivalent under applicablelaw) to all material parcels of real property and has good title to all theother material items of property it purports to own, except as sold orotherwise disposed of in the ordinary course of business and except for Lienspermitted by this Agreement.

 

6.                                       *Patentsand Trademarks. *TheGuarantor and each of its subsidiaries owns, possesses or has the right to useall the patents, trademarks, trade names, service marks, copyright, licensesand rights with respect to the foregoing necessary for the present and plannedfuture conduct of its business, without any known conflict with the rights ofothers.

 

7.*                                      **Complianceis Legal and Authorized. *Complianceby the Guarantor with all of the provisions of the Guarantee Agreement and theSecurity Documents to which the Guarantor is a signatory—

 

(a)                                  iswithin the corporate or partnership powers, as the case may be, of theGuarantor;

 

(b)                                 willnot violate any provisions of any law or any order of any court or governmentalauthority or agency and will not conflict with or result in any breach of anyof the terms, conditions or provisions of, or constitute a default under thecharter or other organizational documents of the Guarantor or any indenture orother agreement or instrument to which the Guarantor is a party or by which itmay be bound or result in the imposition of any Liens or encumbrances on anyproperty of the Guarantor; and

 

(c)                                  hasbeen duly authorized by proper corporate or partnership action, as the case maybe, on the part of the Guarantor (no action by the stockholders or partners ofthe Guarantor being required by law, by the charter or other organizationaldocuments of the Guarantor or otherwise), and such Guarantee Agreement and SecurityDocuments have been duly executed and delivered by the Guarantor and constitutethe legal, valid and binding obligations, contracts and agreements of theGuarantor enforceable in accordance with its terms.

 

8.*                                      **NoDefaults.*  Neither the Guarantor nor any of itssubsidiaries is in default in the payment of principal or interest on any Debtor is in default under any instrument or instruments or agreements under andsubject to which any Debt has been issued, and no event has occurred and iscontinuing under the provisions of any such instrument or agreement which withthe lapse of time or the giving of notice, or both, would constitute an eventof default thereunder.

 

9.*                                      **GovernmentalConsent. *Noapproval, consent or withholding of objection on the part of, or filing,registration or qualification with, any governmental department, regulatoryauthority or court under the laws of the United States or any agency orauthority thereof, state, Federal or local, is necessary in connection with thelawful execution and delivery by the Guarantor of its Guaranty or compliance bythe Guarantor with any of the provisions of such Guarantee Agreement and theSecurity Documents including, without limitation, payments to be made undersuch Guarantee Agreement.

 

10.*                                 Taxes.*The Guarantor and its subsidiaries have filed all tax returns that arerequired to have been filed in any jurisdiction, and have paid all taxes shownto be due and 

 

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payable on such returnsand all other taxes and assessments levied upon them or their properties,assets, income or franchises, to the extent such taxes and assessments havebecome due and payable and before they have become delinquent, except for anytaxes and assessments (i) the amount of which is not individually or inthe aggregate material, or (ii) the amount, applicability or validity ofwhich is currently being contested in good faith by appropriate proceedings andwith respect to which the Guarantor or a subsidiary has established adequatereserves in accordance with GAAP.  TheGuarantor knows of no basis for any other tax or assessment that couldreasonably be expected to have a material adverse effect.  The charges, accruals and reserves on thebooks of the Guarantor and its subsidiaries in respect of Federal, state orother taxes for all fiscal periods are adequate.  As applicable, the Federal income tax liabilities of theGuarantor and its subsidiaries have been paid for all fiscal years up to andincluding the fiscal year ended August 31. Guarantor was formed in October, 2002 and no income tax liabilities areyet due for this fiscal year.

 

11.                                 *Employee-RelatedMatters.*  (a) Each pension plan maintained by theGuarantor or any of its subsidiaries complies in all material respects with allapplicable statutes and governmental rules and regulations.  The Guarantor and each of its subsidiarieshas satisfied their respective funding obligations as required by applicablelaw for all pension plans maintained by them. All tax returns and reports required to be filed by or with respect tothe Guarantor’s and each of its subsidiaries’ pension plans in all applicablejurisdictions have been filed.  Suchplans are (to the extent required under applicable law, rule or regulation)registered under, and are in compliance with, applicable federal legislationand all reports, returns and filings required to be made thereunder have beenmade.  Such plans have been at all timesadministered in accordance with their terms and the provisions of applicable law.  Neither the Guarantor nor any of itssubsidiaries has incurred a liability in connection with the winding-up of apension plan or the withdrawal from a multiemployer plan which would have aMaterial adverse effect on the properties, business, profits or condition(financial or otherwise) of the Guarantor and each of its subsidiaries taken asa whole or impair the ability of the Guarantor or any of its subsidiaries toperform its respective obligations contained in the Guarantee Agreement and theSecurity Documents to which the Guarantor is a signatory.  There are no controversies pending or, tothe knowledge of the Guarantor, threatened or anticipated between the Guarantorand any of its employees which would have a material adverse effect on theproperties, business, profits or condition (financial or otherwise) of theGuarantor or any of its subsidiaries or would materially impair the ability ofthe Guarantor or any of its subsidiaries to perform its obligations containedin the Guarantee Agreement and the Security Documents to which the Guarantor isa signatory and there are no material labor disputes, grievances, arbitrationproceedings or any strikes, work stoppages or slow downs pending or, to theGuarantor’s knowledge, threatened by the Guarantor’s employees andrepresentatives.

 

(b)                                 Theconsummation of the transactions provided for in the Guarantee Agreement andthe Security Documents to which the Guarantor is a signatory and compliance bythe Guarantor with the provisions thereof will not involve any prohibitedtransaction within the meaning of ERISA or Section 4975 of the InternalRevenue Code of 1986, as amended.  NoReportable Event has occurred and is continuing with respect to any Plan.  Neither the Guarantor nor any ERISAAffiliate has withdrawn from any Plan or Multiemployer Plan or instituted steps

 

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todo so and no steps have been instituted to terminate any Plan.  No condition exists or event or transactionhas occurred in connection with any Plan which could result in the incurrenceby the Guarantor or any ERISA Affiliate of any material liability, fine orpenalty.  No Plan maintained by theGuarantor or any ERISA Affiliate, nor any trust created thereunder, hasincurred any “accumulated funding deficiency” as defined in Section 302 ofERISA nor does the present value of all benefits vested under all Plans exceed,as of the last annual valuation date, the value of the assets of the Plansallocable to such vested benefits. Neither the Guarantor nor any ERISA Affiliate has any contingentliability with respect to any post-retirement “welfare benefit plan” (as suchterm is defined in ERISA) except as has been disclosed to the Purchasers.

 

12.*                                **Compliancewith Law. *Neitherthe Guarantor nor any of its subsidiaries (a) is in violation of any law,ordinance, franchise, governmental rule or regulation to which it is subject;or (b) has failed to obtain any license, permit, franchise or othergovernmental authorization necessary to the ownership of its property or to theconduct of its business, which violation or failure to obtain would materiallyadversely affect the business, prospects, profits, properties or condition(financial or otherwise) of the Guarantor and its subsidiaries, taken as a whole,or impair the ability of the Guarantor to perform its obligations contained inthe Guarantee Agreement and the Security Documents to which the Guarantor is asignatory.  Neither the Guarantor norany of its subsidiaries is in default with respect to any order of any court orgovernmental authority or arbitration board or tribunal.

 

13.*                                **Compliancewith Environmental Laws. *Exceptas indicated in Section 9.8(c), neither the Guarantor nor any of itssubsidiaries is in violation of any applicable United States Federal,state, or local laws, statutes, rules, regulations or ordinances relating topublic health, safety or the environment, including, without limitation,relating to releases, discharges, emissions or disposals to air, water, land orground water, to the withdrawal or use of ground water, to the use, handling ordisposal of polychlorinated biphenyls (PCBs), asbestos or urea formaldehyde, tothe treatment, storage, disposal or management of hazardous substances(including, without limitation, petroleum, crude oil or any fraction thereof,or other hydrocarbons), pollutants or contaminants, to exposure to toxic,hazardous or other controlled, prohibited or regulated substances whichviolation could materially affect adversely the business, profits, propertiesor financial condition of the Guarantor and its subsidiaries, taken as awhole.  The Guarantor does not know ofany liability or class of liability of the Guarantor or any of its subsidiariesunder the Comprehensive Environmental Response, Compensation and Liability Actof 1980, as amended (42 U.S.C. Section 9601 *et seq*.), or the ResourceConservation and Recovery Act of 1976, as amended (42 U.S.C. Section 6901 *et seq*.).

 

14.                                 *Absenceof Foreign or Enemy Status.*  (a) Neither the Guarantor nor any of itssubsidiaries on the date hereof, is (i) an *“enemy”* or an *“ally ofenemy”* within the meaning of Section 2 of the Trading with theEnemy Act, (ii) a “national” of a foreign country designated in Executive Order8389, as amended or of any “designated enemy country” as defined in ExecutiveOrder No. 9095, as amended, of the President of the United States of America,in each case within the meaning of said Executive Orders, as amended, or of anyregulation issued thereunder, or (iii) a “national of any designatedforeign country” within the meaning of the Foreign Assets Control Regulationsor of the Cuban Assets Control Regulations of the United States of America.

 

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(b)                                 Theexecution and delivery of the Guarantee Agreement and the Security Documents bythe Guarantor as contemplated hereby will not violate the Foreign AssetsControl Regulations, the Foreign Funds Control Regulations, the TransactionControl Regulations, the Cuban Assets Control Regulations, the Iranian AssetsControl Regulations, the Libyan Sanctions Regulations, the South AfricanTransactions Regulations, or the Iraqi Sanctions Regulations of the UnitedStates Treasury Department (each as set forth in 31 C.F.R., Subtitle B,Chapter V, as amended).

 

(c)Neither the Guarantor nor any of its subsidiaries on the date hereof is aperson or entity described in Section 1 of Executive Order 13224, of September24, 2002, and, to the best knowledge of the Guarantor, neither the Guarantornor any of its subsidiaries engage, and will not engage in, dealings ortransactions with, or are or will be associated with, any such Person orentities.

 

15.                                 *Consolidatedand Integrated Business.* The Company and the Guarantor prepareconsolidated financial statements and do their financial reporting on anintegrated basis.  Both the Company andthe Guarantor process sugar beets into refined sugar and sugarby-products.  The proceeds received bythe Company from the sale of the Notes will be used by the Company to repay indebtednessincurred by the Company to finance the acquisition of the Guarantor’s operatingassets.  The reduction in the Company’sindebtedness will permit the Company to have additional liquidity and capacityto continue to lend money to Guarantor.

 

16.                                 *Solvencyand Consideration.*  (a) The Guarantor is solvent, hascapital not unreasonably small in relation to its business or any contemplatedor undertaken transaction and has assets having a value both at fair valuationand at present fair salable value greater than the amount required to pay itsdebts as they become due and greater than the amount that will be required topay its probable liability on its existing debts as they become absolute andmatured.  The Guarantor does not intendto incur, or believes or should have believed that it will incur, debts beyondits ability to pay such debts as they become due.  The Guarantor will not be rendered insolvent by the execution anddelivery of, and performance of its obligations under, the Guarantee Agreementand the Security Documents to which the Guarantor is a signatory.  the Guarantor does not intend to hinder,delay or defraud its creditors by or through the execution and delivery of, orperformance of its obligations under, the Guarantee Agreement and the SecurityDocuments to which the Guarantor is a signatory.

 

(b)                                 TheGuarantor has determined that the execution and delivery of the GuaranteeAgreement and the Security Documents to which the Guarantor is a signatory isin furtherance of its corporate purposes and is in its best interest and thatit will derive substantial benefit, whether directly or indirectly, from themaking of such Guarantee Agreement and the Security Documents (i) by,among other things, (1) enabling its direct or indirect parent company toobtain financing deemed necessary and beneficial by such parent company forgeneral, consolidated corporate purposes and (2) enabling it to increaseits capitalization on a consolidated basis and (ii) in accordance with itsparticipation in the consolidated and integrated business described inparagraph 15 hereof.

 

17.                                 *GuaranteeAgreement to Rank Pari Passu*.  The Guarantee Agreement to which theGuarantor is a party and all other obligations thereunder are direct andunsecured obligations 

 

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ofthe Guarantor ranking *pari passu* as against all other presentand future Debt (actual or contingent) of the Guarantor which is not secured orthe subject of any statutory trust or preference or which is not expressed tobe subordinate or junior in rank to any other Debt of the Guarantor.

 

18.*                                **InvestmentCompany Act. *TheGuarantor is not, and is not directly or indirectly controlled by or acting onbehalf of any Person which is, required to register as an *“investment company”* underthe Investment Company Act of 1940, as amended.

 

19.                                 *PublicUtility Holding Company Act.*  The Guarantor is not, nor will it become,solely by reason of entering into or performing its obligations under theGuarantee Agreement to which it is a party or the carrying out of any of thetransactions contemplated thereby, a “public utility company” or a “holdingcompany” under the Public Utility Holding Company Act of 1935, as amended.

 

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DESCRIPTION OF CLOSINGOPINION OF COUNSEL TO THE COMPANY AND THE GUARANTOR

 

The closing opinion ofOppenheimer, Wolff & Donnelley, special counsel to the Company and theGuarantor, which is called for by **Section 4.4(a)** of the Note PurchaseAgreement, shall be dated the date of Closing and addressed to the Purchasers,shall be satisfactory in scope and form to the Purchasers and shall be to theeffect that:

 

1.                                       TheCompany is a cooperative, duly organized, validly existing and in good standingunder the laws of the State of Minnesota, has the corporate power and thecorporate authority to execute and perform the Note Purchase Agreements, theFirst Amendment 1998 Note Purchase Agreement and the Existing Mortgage and toissue the Notes and has the full corporate power and the corporate authority toconduct the activities in which it is now engaged and is duly licensed orqualified and is in good standing as a foreign corporation in the State ofNorth Dakota.

 

2.                                       TheGuarantor is a corporation, duly organized, validly existing and in goodstanding under the laws of the State of Minnesota, has the corporate power andthe corporate authority to execute and perform the Guarantees and the SidneyMortgage and has the full corporate power and the corporate authority toconduct the activities in which it is now engaged and is duly licensed orqualified and is in good standing as a foreign corporation in Montana, Texasand Wyoming and all of the issued and outstanding shares of capital stock ofthe Guarantor have been duly issued, are fully paid and non-assessable and areowned by the Company.

 

3.                                       TheTransaction Documents have been duly authorized by all necessary corporateaction on the part of the Company or the Guarantor, as applicable, have beenduly executed and delivered by the Company or the Guarantor, as applicable, andconstitute the legal, valid and binding contracts of the Company and theGuarantor, as applicable, enforceable in accordance with its terms.

 

4.                                       TheNotes have been duly authorized by all necessary corporate action on the partof the Company, have been duly executed and delivered by the Company andconstitute the legal, valid and binding obligations of the Company enforceablein accordance with their terms.

 

 

EXHIBIT 4.4(a)

(to Note Purchase Agreement)

 

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5.                                       Noapproval, consent or withholding of objection on the part of, or filing,registration or qualification with, any governmental body, Federal, state orlocal, is necessary in connection with the execution, delivery and performanceof the Transaction Documents.

 

6.                                       Theissuance and sale of the Notes, and the execution, delivery and performance bythe Company or the Guarantor, as applicable, of the Note Purchase Agreements,the Existing Mortgage, the Sidney Mortgage, the First Amendment 1998 NotePurchase Agreement and the Guarantees do not conflict with or result in anybreach of any of the provisions of or constitute a default under or result inthe creation or imposition of any Lien upon any of the property of the Companyor the Guarantor, as applicable, pursuant to the provisions of the Articles ofIncorporation or By-laws of the Company and the Guarantor, as applicable, or toour actual knowledge, except for the consents from existing lenders requiredunder the Note Purchase Agreement, any agreement or other instrument to whichthe Company or the Guarantor, as applicable, is a party or by which the Companyor the Guarantor, as applicable, may be bound.

 

7.                                       Theissuance, sale and delivery of the Notes under the circumstances contemplatedby the Note Purchase Agreements does not, under existing law, require theregistration of the Notes under the Securities Act of 1933, as amended, or thequalification of an indenture under the Trust Indenture Act of 1939, asamended.

 

8.                                       Theissuance of the Notes and the use of the proceeds of the sale of the Notes inaccordance with the provisions of and contemplated by the Note PurchaseAgreements do not violate or conflict with Regulation  T, U or X of the Board of Governors of the Federal ReserveSystem.

 

9.                                       Thereis no litigation pending or, to the best knowledge of such counsel, threatenedwhich in such counsel’s opinion could reasonably be expected to have amaterially adverse effect on the Company’s or the Guarantor’s business orassets or which would impair the ability of the Company to issue and deliverthe Notes or the ability of the Company or the Guarantor to comply with theprovisions of the Note Purchase Agreements, the Guarantees, the ExistingMortgage or the Sidney Mortgage, as applicable.

 

10.                                 TheExisting Mortgage constitutes a legal, valid and binding contract and agreementof the Company enforceable in accordance with its respective terms.

 

11.                                 TheExisting Mortgage as of the Closing is in proper form under Minnesota and NorthDakota law, as applicable, such that when it shall be recorded or filed forrecord in all public offices wherein such filing or recordation is necessary,the lien thereof shall be perfected against creditors of and purchasers fromthe Company or the Guarantor, as applicable; all UCC financing statementsexecuted and delivered by the Company or the Guarantor, as applicable, relatingto the transaction contemplated by the Transaction Documents on or prior to theClosing are in proper form under applicable law, as applicable, have been filedfor record in the appropriate public offices and, as a result of such filingsand upon such filings being properly indexed the security interests which canbe perfected by filing and which are 

 

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created under the Existing Mortgage and the SidneyMortgage will have been perfected as against creditors of the Company or theGuarantor, as applicable, or purchasers from the Company or the Guarantor, asapplicable, of the property subject to such security interests.

 

The opinion ofOppenheimer, Wolff & Donnelley shall cover such other matters relating tothe sale of the Notes as the Purchasers may reasonably request.  With respect to matters of fact on whichsuch opinion is based, such counsel shall be entitled to rely on appropriatecertificates of public officials and officers of the Company and of theGuarantor.

 

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DESCRIPTION OF SPECIALCOUNSEL’S CLOSING OPINION

 

The closing opinion ofMcDermott, Will & Emery, special counsel to the Purchasers, called for by **Section 4.4(b)**of the Note Purchase Agreements shall be dated the date of Closing andaddressed to the Purchasers, shall be satisfactory in form and substance to thePurchasers and shall be to the effect that:

 

1.                                       TheNote Purchase Agreements have been duly authorized by all necessary corporateaction on the part of the Company, have been duly executed and delivered by theCompany and constitute the legal, valid and binding contracts of the Companyenforceable in accordance with its terms, subject to bankruptcy, insolvency,fraudulent conveyance or similar laws affecting creditors’ rights generally,and general principles of equity (regardless of whether the application ofprinciples is considered in a proceeding in equity or at law).

 

2.                                       TheNotes have been duly authorized by all necessary corporate action on the partof the Company, have been duly executed and delivered by the Company andconstitute the legal, valid and binding obligations of the Company enforceablein accordance with their terms, subject to bankruptcy, insolvency, fraudulentconveyance or similar laws affecting creditors’ rights generally, and generalprinciples of equity (regardless of whether the application of such principlesis considered in a proceeding in equity or at law).

 

3.                                       Theissuance, sale and delivery of the Notes under the circumstances contemplatedby the Note Purchase Agreement does not, under existing law, require theregistration of the Notes under the Securities Act of 1933, as amended, or thequalification of an indenture under the Trust Indenture Act of 1939, asamended.

 

The opinion of McDermott,Will & Emery shall also state that the opinion of Oppenheimer, Wolff &Donnelley is satisfactory in scope and form to McDermott, Will & Emery andthat, in their opinion, the Purchasers are justified in relying thereon.

 

In rendering the opinionset forth in paragraphs 1 and 2 above with respect to the authorization of theNote Purchase Agreements and the Notes, McDermott, Will & Emery may relysolely upon an examination of the secretarial and incumbency certificate andthe corporate resolutions of the Company and the opinion of Oppenheimer, Wolff& Donnelley.  The opinion ofMcDermott, Will & Emery is limited to the laws of the State of New York andthe Federal laws of the United States.

 

With respect to mattersof fact upon which such opinion is based, McDermott, Will & Emery may relyon appropriate certificates of public officials and officers of the Company.

 

 

EXHIBIT 4.4(b)

(to Note PurchaseAgreement)

 

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DESCRIPTION OF CLOSINGOPINION OF SPECIAL LOCAL COUNSEL TO THE PURCHASERS

 

The closing opinion ofHolland & Hart, special Montana counsel and Oppenheimer, Wolff &Donnelly, special Minnesota and North Dakota counsel to the Purchasers, whichis called for by **Section 4.4(c)** of the Note Purchase Agreement, shall bedated the date of Closing and addressed to the Purchasers, shall besatisfactory in scope and form to the Purchasers and shall be to the effectthat:

 

1.                                       Assumingthe Existing Mortgage to which the Company is a party, and the Sidney Mortgageto which the Guarantor is a party, have been duly authorized by propercorporate action on the part of the Company or the Guarantor, as applicable,have been duly executed and delivered by authorized officers of the Company orthe Guarantor, as applicable, the Existing Mortgage to which the Company is aparty, and the Sidney Mortgage to which the Guarantor is a party, constitutelegal, valid and binding contracts and agreements of the Company or theGuarantor, as applicable, enforceable in accordance with their respectiveterms, except as enforcement of such terms may be limited by (i) bankruptcy,insolvency or similar laws effecting the enforcement of creditors’ rightsgenerally, (ii) equitable principles of general applicability (regardless ofwhether such enforceability is considered in a preceding in equity or at law),and (iii) except that certain remedies provided for in the Existing Mortgage orthe Sidney Mortgage, as applicable, may be limited by applicable law, but noneof such limitations as to remedies will, however, in their opinion, materiallyinterfere with the practical realization of the security provided by theExisting Mortgage or the Sidney Mortgage, as applicable.

 

2.                                       Noapproval, consent or withholding of objection on the part of, or filing,registration or qualification with, any Minnesota, North Dakota or Montanagovernmental body, state or local, is necessary in connection with the execution,delivery and performance by the Company or the Guarantor, as applicable, of theNote Purchase Agreements, the Notes, the Guaranty, the Existing Mortgage or theSidney Mortgage.

 

3.                                       TheExisting Mortgage or the Sidney Mortgage, as applicable, and financingstatements or similar notices thereof have been recorded and filed for recordin all public offices wherein such filing or recordation is necessary toperfect the lien thereof against creditors of and purchasers from the Companyor the Guarantor, as applicable.

 

4.                                       Whenthe Existing Mortgage or the Sidney Mortgage, as applicable, has been recordedin the real estate records in the County in which the property is located andwhen UCC-1 financing statements in a form provided by the applicable state lawhave been filed with the office of the Secretary of State of Minnesota and theSecretary of State of North Dakota, or the Secretary of State of Montana, asapplicable, and in the real estate records in the county in which the propertyis located, the Existing Mortgage or Sidney Mortgage, as applicable, (orfinancing statements with respect thereto) shall have been recorded or filed inall public offices wherein such filing or recordation is necessary to perfectthe lien or security interest thereof as against creditors of and purchasersfrom the Company or the Guarantor, as applicable.  Except for the necessity of filing continuation statements withrespect to such financing statements prior to five years from the date offiling thereof and prior to each fifth year thereafter, no further filings or 

 

EXHIBIT 4.4(c)

 

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recordings are necessaryto create or perfect the liens and security interests granted under suchdocuments.

 

The opinion of Holland& Hart is limited to the laws of the State of Montana and the Federal lawsof the United States. The opinion of and Oppenheimer, Wolff & Donnelly islimited to the laws of the State of Minnesota, the State of North Dakota and the Federal laws of the United States.

 

With respect to mattersof fact upon which such opinion is based, Holland & Hart and Oppenheimer,Wolff & Donnelly may rely on appropriate certificates of public officialsand officers of the Company or the Guarantor, as applicable.

 

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DESCRIPTION OF CLOSINGOPINION FOR COUNSEL FOR THE COLLATERAL AGENT

 

The closing opinion ofthe Associate General Counsel of the Collateral Agent called for by **Section4.4(d)** of the Note Purchase Agreement, shall be dated the date ofClosing and addressed to the Purchasers, shall be satisfactory in form and substanceto the Purchasers and shall be to the effect that:

 

1.                             TheCollateral Agent is a cooperation banking association validly existing underthe laws of the United States and is duly qualified to act as Collateral Agentunder the Intercreditor and Collateral Agency Agreement.

 

2.                             TheCollateral Agent has the requisite power and authority to execute, deliver andperform its respective obligations under the Intercreditor and CollateralAgency Agreement and has taken all necessary action to authorize the execution,delivery and performance by it of each of the said agreements or instruments.

 

3.                             TheIntercreditor and Collateral Agency Agreement has been duly authorized,executed and delivered by the Collateral Agent and constitutes the legal, validand binding contract of the Collateral Agent enforceable against the CollateralAgent in accordance with its terms, subject to bankruptcy, insolvency,fraudulent conveyance and similar laws affecting creditors’ rights generally,and general principles of equity (regardless of whether the application of suchprinciples is considered in a proceeding in equity or at law).

 

4.                             Noauthorization, consent, approval, license, exemption of or filing orregistration with any court or governmental department, commission, board, bureau,agency or instrumentality by the Collateral Agent or any affiliate thereof isnecessary to the valid execution, delivery or performance of the Intercreditorand Collateral Agency Agreement.

 

The opinion of theAssociate General Counsel of the Collateral Agent shall cover such othermatters relating to the transactions contemplated by the Note PurchaseAgreements as the Purchasers may reasonably request.  With respect to matters of fact on which such opinion is based,such counsel shall be entitled to rely on appropriate certificates of publicofficials and other officers of the parties involved in the transaction.

 

 

EXHIBIT 4.4(d)

(to Note PurchaseAgreement)

 

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