**Exhibit10.27**

 

MLA No. Z269

 

# **MASTER LOAN AGREEMENT**

 

**THIS MASTER LOAN AGREEMENT** is entered into as of March 31, 2000,between **CoBANK, ACB**  (“CoBank”, successor by merger to the St.Paul Bank for Cooperatives) and **AMERICAN CRYSTAL SUGAR COMPANY**, Moorhead,Minnesota  (the “Company”).

 

# **BACKGROUND**

 

On March 5, 1999,the St. Paul Bank for Cooperatives (“SPB”) entered into a Seasonal LoanAgreement (the “Seasonal Loan Agreement”) and a Term Loan Agreement (the “TermLoan Agreement”) (collectively, the “Existing Loan Agreements”) with theCompany.  Under the Seasonal LoanAgreement, SPB made various seasonal loans to the Company, each of which wasevidenced by a promissory note.  Under theTerm Loan Agreement, SPB made various term loans, each of which was also evidencedby a promissory note.  Subsequently, SPBmerged with and into CoBank.  CoBank andthe Company now desire to amend and restate the Existing Loan Agreements andconsolidate the Existing Loan Agreements into this Master Loan Agreement.  CoBank and the Company also desire to amendand restate the promissory notes evidencing the seasonal loans and term loansmade pursuant to the Existing Loan Agreements by entering into variousSupplements in place of the promissory notes. Each Supplement will set forth the amount of the loan, the purpose ofthe loan, the interest rate or rate options applicable to that loan, therepayment terms of the loan, and any other terms and conditions applicable tothat particular loan.  Each loan will begoverned by the terms and conditions contained in this Master Loan Agreementand in the Supplement relating to the loan. Collateral securing loans made pursuant to the Existing Loan Agreementsshall continue to secure those same loans, all as now evidenced by variousSupplements, to the same extent as provided for in the Existing Loan Agreementsand any security agreements (including, without limitation, mortgages and deedsof trust) entered into in connection therewith.

 

**SECTION 1.   Supplements. **In addition to those Supplements enteredinto to amend and restate the promissory notes executed in connection with theExisting Loan Agreements, the parties may enter into other Supplements in orderto evidence new loans that CoBank may make to the Company.  Each Supplement will set forth the amount ofthe loan, the purpose of the loan, the interest rate or rate options applicableto that loan, the repayment terms of the loan, and any other terms andconditions applicable to that particular loan. Each loan will be governed by the terms and conditions contained in thisMaster Loan Agreement and in the Supplement relating to the loan.

 

**SECTION 2.   Availability. **Loans will be made available on any dayon which CoBank and the Federal Reserve Banks are open for business upon thetelephonic or written request of the Company. Requests for loans must be received no later than 12:00 noon Company’slocal time on the date the loan is desired. Loans will be made available by wire transfer of immediately availablefunds to such account or accounts as may be authorized by the Company. TheCompany shall furnish to CoBank a duly completed and executed copy of a CoBankDelegation and Wire and Electronic Transfer Authorization Form, and CoBankshall be entitled to rely on (and shall incur no liability to the Company inacting on) any request or direction furnished in accordance with the termsthereof.

 

**SECTION 3.   Repayment. **TheCompany’s obligation to repay each loan shall be evidenced by the promissorynote set forth in the Supplement relating to that loan or by such replacementnote as CoBank shall require.  CoBankshall maintain a record of all loans, the interest accrued thereon, and allpayments made with respect thereto, and such record shall, absent proof ofmanifest error, be conclusive evidence of the outstanding principal andinterest on the loans.  All paymentsshall be made by wire transfer of

 

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immediately available funds or by check.  Wire transfers shall be made to ABA No. 307088754 for adviceto and credit of CoBANK (or to such other account as CoBank may direct bynotice).  The Company shall give CoBanktelephonic notice no later than 12:00 noon Company’s local time of its intentto pay by wire and funds received after 3:00 p.m. Company’s local time shall becredited on the next business day. Checks shall be mailed to CoBank, Department 167, Denver, Colorado,80291–0167 (or to such other place as CoBank may direct by notice).  Credit for payment by check will not begiven until the latter of: (a) the day on which CoBank receives immediatelyavailable funds; or (b) the next business day after receipt of the check.

 

**SECTION 4.   Capitalization. **TheCompany agrees to purchase such equity in CoBank as CoBank may from time totime require in accordance with its Bylaws. However, the maximum amount of equity which the Company shall beobligated to purchase in connection with any loan may not exceed the maximumamount permitted by the Bylaws at the time the Supplement relating to that loanis entered into or such loan is renewed or refinanced by CoBank.

 

**SECTION 5.   Security.**The Company’s obligations under thisagreement, all Supplements (whenever executed), and all instruments anddocuments contemplated hereby or thereby, shall be secured by a statutory firstlien on all equity which the Company may now own or hereafter acquire inCoBank.  This security shall be inaddition to any other security that may otherwise be required or provided.

 

**SECTION 6.   Conditions Precedent.**

 

**(A)    Conditionsto Initial Supplement. **CoBank’sobligation to extend credit under the initial Supplement hereto is subject tothe conditions precedent that CoBank receive, in form and substancesatisfactory to CoBank, each of the following:

 

**(i)      ThisAgreement, Etc. **Aduly executed copy of this agreement and all instruments and documentscontemplated hereby.

 

**(ii)     Opinionof Counsel. **Afavorable opinion from the Company’s counsel addressed to CoBank covering eachmatter as CoBank may reasonably require.

 

**(iii)    Evidenceof Authority. **Suchcertified board resolutions, evidence of incumbency, and other evidence thatCoBank may require that the Supplement, all instruments and documents executedin connection therewith, and, in the case of initial Supplement hereto, thisagreement and all instruments and documents executed in connection herewith,have been duly authorized and executed.

 

**(B)    Conditionsto Each Supplement. **CoBank’sobligation to extend credit under each Supplement, including the initialSupplement, is subject to the conditions precedent that CoBank receive, in formand content satisfactory to CoBank, each of the following:

 

**(i)      Supplement. **A duly executed copy ofthe Supplement and all instruments and documents contemplated thereby.

 

**(ii)     Feesand Other Charges.** All fees and other charges specifically permitted by this MasterLoan Agreement or the Supplements, as well as reasonable expenses for outsidecounsel.

 

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**(iii)    Evidenceof Perfection, Etc. **Suchevidence as CoBank may require that CoBank has a duly perfected first prioritylien on all security for the Company’s obligations, and that the Company is incompliance with Section 8(D) hereof.

 

**(C)    Conditionsto Each Loan. **CoBank’sobligation under each Supplement to make any loan to the Company thereunder issubject to the condition that no “Event of Default” (as defined in Section 11hereof) or event which with the giving of notice and/or the passage of timewould become an Event of Default hereunder (a “Potential Default”), shall haveoccurred and be continuing.

 

**SECTION 7.   Representations and Warranties.**

 

**(A)    ThisAgreement. **TheCompany represents and warrants to CoBank that as of the date of thisAgreement:

 

(**i)      Compliance. **The Company is in compliance with all of the terms ofthis agreement, and no Event of Default or Potential Default exists hereunder.

 

**(B)    EachSupplement. **Theexecution by the Company of each Supplement hereto shall constitute arepresentation and warranty to CoBank that:

 

(**i)      Applications. **Each representation and warranty and all informationset forth in any application or other documents submitted in connection with,or to induce CoBank to enter into, such Supplement, is correct in all materialrespects as of the date of the Supplement.

 

**(ii)     ConflictingAgreements, Etc. **Thisagreement, the Supplements, and all security and other instruments anddocuments relating hereto and thereto (collectively, at any time, the “LoanDocuments”),  do not conflict with, orrequire the consent of any party to, any other agreement to which the Companyis a party or by which it or its property may be bound or affected, and do notconflict with any provision of the Company’s bylaws, articles of incorporation,or other organizational documents.

 

(**iii)    Compliance. **The Company is in compliance with all of the terms of theLoan Documents (including, without limitation, Section 8(A) of this agreementon eligibility to borrow from CoBank).

 

**(iv)     BindingAgreement. **The LoanDocuments create legal, valid, and binding obligations of the Company which areenforceable in accordance with their terms, except to the extent thatenforcement may be limited by applicable bankruptcy, insolvency, or similarlaws affecting creditors’ rights generally.

 

**SECTION 8.   Affirmative Covenants. **Unlessotherwise agreed to in writing by CoBank, while this agreement is in effect,the Company agrees to:

 

**(A)      Eligibility. **Maintain its status as anentity eligible to borrow from CoBank.

 

**(B)      CorporateExistence, Licenses. Etc. **(i)Preserve and keep in full force and effect its existence and good standing inthe jurisdiction of its incorporation or formation; (ii) qualify and remainqualified to transact business in all jurisdictions where such qualification isrequired; and (iii) obtain and maintain all licenses, certificates, permits,authorizations, approvals, and the like which are material to the conduct ofits business or required by law, rule, regulation, ordinance, code, order, andthe like (collectively, “Laws”).

 

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**(C)    Compliancewith Laws.** Comply inall material respects with all applicable Laws, including, without limitation,all Laws relating to environmental protection and any patron or memberinvestment program that it may have.  Inaddition, the Company agrees to cause all persons occupying or present on anyof its properties to comply in all material respects with all environmentalprotection Laws.

 

**(D)    Insurance. **Maintain insurance withinsurance companies or associations acceptable to CoBank in such amounts andcovering such risks as are usually carried by companies engaged in the same orsimilar business and similarly situated, and make such increases in the type oramount of coverage as CoBank may request. All such policies insuring any collateral for the Company’s obligationsto CoBank shall have mortgagee or lender loss payable clauses or endorsementsin form and content acceptable to CoBank. At CoBank’s request, all policies (or such other proof of compliancewith this Subsection as may be satisfactory to CoBank) shall be delivered toCoBank.

 

**(E)     PropertyMaintenance. **Maintainall of its property that is necessary to or useful in the proper conduct of itsbusiness in good working condition, ordinary wear and tear excepted.

 

**(F)     Booksand Records. **Keepadequate records and books of account in which complete entries will be made inaccordance with generally accepted accounting principles (“GAAP”) consistentlyapplied.

 

**(G)    Inspection. **Permit CoBank or itsagents, upon reasonable notice and during normal business hours or at suchother times as the parties may agree, to examine its properties, books, andrecords, and to discuss its affairs, finances, and accounts, with itsrespective officers, directors, employees, and independent certified publicaccountants.

 

**(H)    Reportsand Notices. **Furnishto CoBank:

 

**(i)      AnnualFinancial Statements. **Assoon as available, but in no event more than 120 days after the end of eachfiscal year of the Company occurring during the term hereof, annual financialstatements of the Company prepared in accordance with GAAP consistentlyapplied.  Such financial statementsshall:  (a) be audited by independentcertified public accountants selected by the Company and acceptable to CoBank;(b) be accompanied by a report of such accountants containing an opinionthereon acceptable to CoBank; (c) be prepared in reasonable detail and incomparative form; and (d) include a balance sheet, a statement of income,a statement of retained earnings, a statement of cash flows, and all notes andschedules relating thereto.

 

**(ii)     InterimFinancial Statements.**As soon as available, but in no eventmore than 5 days after the filing with the Securities Exchange Commission,after the end of each quarter, a balance sheet of the Company as of the end ofsuch fiscal quarter, a statement of income for the Company for such period andfor the period year to date, and such other interim statements as CoBank mayspecifically request, all prepared in reasonable detail and in comparative formin accordance with GAAP consistently applied.

 

**(iii)    AnnualBudgets.**As soon as available, but in no event more than  60 days after the end of any fiscal year ofthe Company occurring during the term hereof, copies of the Company’s annualbudgets and forecasts of operations.

 

**(iv)     CapitalExpenditures Budget:**TheCompany will furnish an annual capital expenditure budget, within 60 days afterthe end of each fiscal year.  TheCompany will also furnish a revised budget if increases over the originalcapital expenditure budget are approved by the board of directors.

 

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**(v)      Noticeof Default. **Promptlyafter becoming aware thereof, notice of the occurrence of an Event of Defaultor a Potential Default.

 

**(vi)     Noticeof Non-Environmental Litigation. **Promptlyafter the commencement thereof, notice of the commencement of all actions,suits, or proceedings before any court, arbitrator, or governmental department,commission, board, bureau, agency, or instrumentality affecting the Companywhich, if determined adversely to the Company, could have a material adverseeffect on the financial condition, properties, profits, or operations of theCompany.

 

**(vii)   Noticeof Environmental Litigation, Etc. **Promptlyafter receipt thereof, notice of the receipt of all pleadings, orders,complaints, indictments, or any other communication alleging a condition thatmay require the Company to undertake or to contribute to a cleanup or otherresponse under environmental Laws, or which seek penalties, damages, injunctiverelief, or criminal sanctions related to alleged violations of such Laws, orwhich claim personal injury or property damage to any person as a result ofenvironmental factors or conditions.

 

**(viii)  Bylaws and Articles.**  Promptly after any change in the Company’s bylaws or articles ofincorporation (or like documents), copies of all such changes, certified by theCompany’s Secretary.

 

**(ix)    OtherInformation. **Suchother information regarding the condition or operations, financial orotherwise, of the Company as CoBank may from time to time reasonably request,including but not limited to copies of all pleadings, notices, andcommunications referred to in Subsections 8(H)(vi) and (vii) above.

 

**(x)      Officer Certificate.**  Aquarterly officers certificate within 45 days of each fiscal quarter end, in aform acceptable to CoBank, certified by an officer of the Company, thatmeasures compliance with Minimum Net Working Capital; Long Term Debt Coverageand Long Term Debt to Capitalization. (Section 10 (A) & (B) & (C)).

 

**(I)      GrowerAgreements.** The Company shallabide by the terms and conditions of its member grower agreements; make nomaterial amendments or changes to the agreements without the written consent ofthe Bank; and extend the agreements for an additional five years when thecurrent contracts expire.

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**(J)     Crystech,L.L.C. (“Crystech”). **Cause to be furnished to CoBank:

 

**(i)     **AnnualFinancial Statements. ** **Assoon as available, but in no event more than 120 days after the end of eachfiscal year of Crystech occurring during the term hereof, annual financialstatements of Crystech prepared in accordance with GAAP consistentlyapplied.  Such financial statementsshall:  (a) be audited by independentcertified public accountants selected by Crystech and acceptable to CoBank; (b)be accompanied by a report of such accountants containing an opinion thereonacceptable to CoBank; (c) be prepared in reasonable detail and in comparativeform; and (d) include a balance sheet, a statement of income, a statementof retained earnings, a statement of cash flows, and all notes and schedulesrelating thereto.

 

**(ii)    **InterimFinancial Statements.** **Assoon as available, but in no event more than 60 days after the end of eachquarter, a balance sheet of Crystech as of the end of such fiscal quarter, astatement of income for Crystech for such period and for the period year todate, and such other interim statements

 

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as CoBank may specifically request, all prepared in reasonable detailand in comparative form in accordance with GAAP consistently applied.

 

**(iii)   **Examinations.** **Such examination of Crystech’sbooks and records as CoBank may reasonably request.

 

**(K)    AnnualPaydown. **The Companywill paydown all short term loans to $80,000,000 or less for a period of 30consecutive days during the calendar year. Total short term loans includes the seasonal loans, Commodity CreditCorporation loans, commercial paper, overdraft loans with original maturitydates of one year or less.  Total shortterm loans excludes current maturities of long term debt.

 

**SECTION 9.   Negative Covenants. **Unlessotherwise agreed to in writing by CoBank, while this agreement is in effect theCompany will not:

 

**(A)    Borrowings.** Create, incur,assume, or allow to exist, directly or indirectly, any indebtedness orliability for borrowed money (including trade or bankers’ acceptances), lettersof credit, or the deferred purchase price of property or services (includingcapitalized leases), except for:  (i) debtto CoBank; (ii) accounts payable to trade creditors incurred in theordinary course of business; (iii) current operating liabilities (other thanfor borrowed money) incurred in the ordinary course of business; and (iv)permitted borrowings identified on Attachment A.

 

**(B)    Liens. **Create, incur, assume, orallow to exist any mortgage, deed of trust, pledge, lien (including the lien ofan attachment, judgment, or execution), security interest, or other encumbranceof any kind upon any of its property, real or personal (collectively,“Liens”).  The foregoing restrictionsshall not apply to:  (i) Liens in favorof CoBank; (ii) Liens for taxes, assessments, or governmental charges that arenot past due; (iii) Liens and deposits under workers’ compensation, unemploymentinsurance, and social security Laws; (iv) Liens and deposits to secure theperformance of bids, tenders, contracts (other than contracts for the paymentof money), and like obligations arising in the ordinary course of business asconducted on the date hereof; (v) Liens imposed by Law in favor of mechanics,materialmen, warehousemen, and like persons that secure obligations that arenot past due or that are being contested in good faith by the Company; and(vi) easements, rights-of-way, restrictions, and other similarencumbrances which, in the aggregate, do not materially interfere with theoccupation, use, and enjoyment of the property or assets encumbered thereby inthe normal course of its business or materially impair the value of the propertysubject thereto except for the permitted liens identified on Attachment B,without the prior written consent of the Bank. In addition, the Company agrees that it will not agree to a negativepledge with any other lender or third party.

 

**(C)    Mergers,Acquisitions, Etc. **Mergeor consolidate with any other entity or acquire all or a material part of theassets of any person or entity, or form or create any new subsidiary oraffiliate, or commence operations under any other name, organization, orentity, including any joint venture.

 

**(D)    Transferof Assets. **Sell,transfer, lease, or otherwise dispose of any of its assets, except in theordinary course of business.

 

**(E)     Loans. **Lend or advance money,credit, or property to any person or entity, except for trade credit extendedin the ordinary course of business and certain inter-company loans madepursuant to Intercompany Loan/Security Agreement dated August 31, 1997 andsuccessor agreements.

 

**(F)     ContingentLiabilities. **Assume,guarantee, become liable as a surety, endorse, contingently agree to purchase,or otherwise be or become liable, directly or indirectly (including, but not

 

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limited to, by means of a maintenance agreement, an asset or stockpurchase agreement, or any other agreement designed to ensure any creditoragainst loss), for or on account of the obligation of any person or entity,except by the endorsement of negotiable instruments for deposit or collectionor similar transactions in the ordinary course of the Company’s business andexcept for any liability on account of a guaranty of indebtedness of MidwestAgri Commodities.

 

**(G)    Changein Business. **Engagein any business activities or operations substantially different from orunrelated to the Company’s present business activities or operations.

 

**SECTION 10.  Financial Covenants. **Unlessotherwise agreed to in writing, while this agreement is in effect:

 

**(A)    Minimum Net Working Capital**. The Company shall maintain minimum at all timesand measured as of the end of each Fiscal Quarter a ratio of Current Assetsless Current Liabilities of not less than $35,000,000.

 

**(B)    LongTerm Debt to Capitalization. ** The Company shall maintain at all times andmeasured as of the end of each Fiscal Quarter a ratio of Long Term Debt dividedby the sum of Long Term Debt plus Equity of no greater than fifty-five percent(55%).

 

**(C)    Long Term Debt Coverage.** The Company shall maintain at all times andmeasured as of the end of each Fiscal Quarter a ratio of Long Term Debt toAverage Net Funds Generated during the most recent three Fiscal Years of notgreater than six (6) times.

 

**(D)    Definitions. **For purposes of thisSection 10 and this Master Loan Agreement, the following terms shall be definedas follows:

 

**(i)      AverageNet Funds Generated.**Average Net Funds Generated is the sumof the following for the most recent three fiscal years divided by three (3).

 

**Add:**Unit Retains;Depreciation and amortization; Net income from non-member business and memberbusiness tax timing differences; Decrease in investments in other cooperatives(excluding subsidiaries); and Net revenue from sale of stock.

 

**Minus:**Increase ininvestments in other cooperatives (excluding subsidiaries); Net loss fromnon-member business and member business tax timing differences; Provision forincome tax; and Members’ investment retirements.

 

**(ii)     BorrowingBase.**A maximum dollar amount available to the Borrower underthe terms of the Commitment (as set forth in a Supplement) as determined on thebasis of the most recent Borrowing Base Certificate.

 

**(iii)    BorrowingBase Certificate.**A certification of the value of specifiedassets of the Borrower used in computing the Borrowing Base.

 

**(iv)     Capitalization.**The sum of long term debt plus equity as determined inaccordance with GAAP.

 

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**(v)      CurrentAssets.**The current assets of the Borrower as measured inaccordance with GAAP.

 

**(vi)     CurrentLiability.**The current liabilities of the Borrower asmeasured in accordance with GAAP.

 

**(vii)   Depreciation.**Total depreciation of the Borrower as measured in accordancewith GAAP.

 

**(viii)  Debt.**Debt means as to any Person: (a)indebtedness or liability of such Person for borrowed money, or for thedeferred purchase price of property or services; (b) obligations of such Personas lessee under capital leases; (c) obligations of such Person arising underbankers’ or trade acceptance facilities; (d) all guarantees, endorsements(other than for collection or deposit in the ordinary course of business), andother contingent obligations of such Person to purchase any of the itemsincluded in this definition, to provide funds for payment, to supply funds toinvest in any other Person, or otherwise to assure a creditor of another Personagainst loss; (e) all obligations secured by a lien on property owned by suchPerson, whether or not the obligations have been assumed; and (f) allobligations of such Person under any agreement providing for an interest rateswap, cap, cap and floor, contingent participation or other hedging mechanismswith respect to interest payable on any of the items described in thisdefinition.

 

**(ix)    Equity.**Total equity of the Borrower as measured in accordance withGAAP.

 

**(x)      FiscalQuarter.**Each three (3) month period beginning on the firstday of each of the following months: September, December, March and June.

 

**(xi)    FiscalYear.**A year commencing on September 1 and ending on August31.

 

**(xii)   GAAP.**Generally accepted accounting principles in effect from timeto time.

 

**(xiii)  Interest Expense.**Current cost of borrowing fundsthat is shown as a financial expense in the income statement and as measured inaccordance with GAAP.

 

**(xiv)   LongTerm Debt.**The long term debt (excluding current maturities)as determined in accordance with GAAP.

 

**(xv)    NetRealizable Value.**The expected selling price of an inventoryitem less expected costs to complete and dispose, as determined in accordancewith GAAP.

 

**(xvi)   NetWorking Capital.**Shall mean the Total Current Assets minus theTotal Current Liabilities of the Borrower as determined in accordance with GAAPaccounting principles, consistently applied.

 

**(xvii) Person.**Person shall mean any individual, soleproprietorship, partnership, joint venture, trust, unincorporated organization,association, corporation, limited liability company, cooperative association,institution, entity, party or government (whether national, federal, state,provincial, country, city, municipal or otherwise, including withoutlimitation, and instrumentality, division, agency, body or department thereof).

 

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**(xviii) Subsidiary.**Subsidiary shall meanwith respect to any Person: (a) any corporation in which such Person, directlyor indirectly, (i) owns more than fifty percent (50%) of the outstanding stockthereof, or (ii) has the power under ordinary circumstances to elect at least amajority of the directors thereof, or (b) any partnership, association, jointventure, limited liability company, or other unincorporated organization orentity with respect to which such Person, directly or indirectly, owns anequity interest in an amount sufficient to control the management thereof.

 

**SECTION 11.  Events of Default. **Eachof the following shall constitute an “Event of Default” under this agreement:

 

**(A)    PaymentDefault. **The Companyshould fail to make any payment to, or to purchase any equity in, CoBank whendue.  Any payment received by CoBankafter its due date shall not be subject to an increase in the interest rate, asprovided for in Section 12 below, if the Company is not responsible for thepayment delay.

 

**(B)    Representationsand Warranties. **Anyrepresentation or warranty made or deemed made by the Company herein or in anySupplement, application, agreement, certificate, or other document related toor furnished in connection with this agreement or any Supplement, shall proveto have been false or misleading in any material respect on or as of the datemade or deemed made.

 

**(C)    CertainAffirmative Covenants. **TheCompany should fail to perform or comply with Sections 8(A) through 8(H)(ii),8(H)(viii), or any reporting covenant set forth in any Supplement hereto, andsuch failure continues for 15 days after written notice thereof shall have beendelivered by CoBank to the Company.

 

**(D)    OtherCovenants and Agreements. **TheCompany should fail to perform or comply with any other covenant or agreementcontained herein or in any other Loan Document or shall use the proceeds of anyloan for an unauthorized purpose.

 

**(E)     Cross-Default. **The Company should, afterany applicable grace period, breach or be in default under the terms of anyother agreement between the Company and CoBank.

 

**(F)     OtherIndebtedness. **TheCompany should fail to pay when due any indebtedness to any other person orentity for borrowed money or any long-term obligation for the deferred purchaseprice of property (including any capitalized lease), or any other event occurswhich, under any agreement or instrument relating to such indebtedness or obligation,has the effect of accelerating or permitting the acceleration of suchindebtedness or obligation, whether or not such indebtedness or obligation isactually accelerated or the right to accelerate is conditioned on the giving ofnotice, the passage of time, or otherwise.

 

**(G)    Judgments.** A judgment, decree,or order for the payment of money shall be rendered against the Company in anamount which, if enforced, would have a material adverse effect on thefinancial condition, profits or operations of the Compay, or a Lien prohibitedunder Section 9(B) hereof shall have been obtained and shall continue in effectfor a period of 20 consecutive days without being discharged, satisfied, orstayed pending appeal.

 

**(H)    Insolvency,Etc. **The Companyshall:  (i) become insolvent or shallgenerally not, or shall be unable to, or shall admit in writing its inabilityto, pay its debts as they come due; or (ii) suspend its businessoperations or a material part thereof or make an assignment for the benefit ofcreditors; or (iii) apply for, consent to, or acquiesce in the appointmentof a trustee, receiver, or other custodian for it

 

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or any of its property or, in the absence of such application, consent,or acquiescence, a trustee, receiver, or other custodian is so appointed; or(iv) commence or have commenced against it any proceeding under any bankruptcy,reorganization, arrangement, readjustment of debt, dissolution, or liquidationLaw of any jurisdiction.

 

**(I)      MaterialAdverse Change. **Anymaterial adverse change occurs, as reasonably determined by CoBank, in theCompany’s financial condition, results of operation, or ability to perform itsobligations hereunder or under any instrument or document contemplated hereby.

 

**(J)     Guaranties.** The Company’s agreement to guaranty, assume, orprovide surety of other entities’ financial obligations shall not exceed anaggregate amount greater than 10% of the Company’s net worth, without theBank’s prior written consent.

 

**SECTION 12.  Remedies. **Uponthe occurrence and during the continuance of an Event of Default or anyPotential Default, CoBank shall have no obligation to continue to extend creditto the Company and may discontinue doing so at any time without prior notice.  CoBank shall promptly notify the Companysubsequent to any action to discontinue extending credit to the Company.  In addition, upon the occurrence and duringthe continuance of any Event of Default, CoBank may, upon notice to theCompany, terminate any commitment and declare the entire unpaid principalbalance of the loans, all accrued interest thereon, and all other amountspayable under this agreement, all Supplements, and the other Loan Documents tobe immediately due and payable.  Uponsuch a declaration, the unpaid principal balance of the loans and all suchother amounts shall become immediately due and payable, without protest,presentment, demand, or further notice of any kind, all of which are herebyexpressly waived by the Company.  Inaddition, upon such an acceleration:

 

**(A)    Enforcement. **CoBank may proceed toprotect, exercise, and enforce such rights and remedies as may be provided bythis agreement, any other Loan Document or under Law.  Each and every one of such rights and remedies shall becumulative and may be exercised from time to time, and no failure on the partof CoBank to exercise, and no delay in exercising, any right or remedy shalloperate as a waiver thereof, and no single or partial exercise of any right orremedy shall preclude any other or future exercise thereof, or the exercise ofany other right.  Without limiting theforegoing, CoBank may hold and/or set off and apply against the Company’sobligations to CoBank the proceeds of any equity in CoBank, any cash collateralheld by CoBank, or any balances held by CoBank for the Company’s account(whether or not such balances are then due).

 

**(B)    Applicationof Funds.** CoBank mayapply all payments received by it to the Company’s obligations to CoBank insuch order and manner as CoBank may elect in its sole discretion.

 

In addition to therights and remedies set forth above: (i) if the Company fails to purchase any equity in CoBank whenrequired or fails to make any payment to CoBank when due, then at CoBank’soption in each instance, such payment shall bear interest from the date due tothe date paid at 4% per annum in excess of the rate(s) of interest that wouldotherwise be in effect on that loan; and (ii) after the maturity of anyloan (whether as a result of acceleration or otherwise), the unpaid principalbalance of such loan (including without limitation, principal, interest, feesand expenses) shall automatically bear interest at 4% per annum in excess ofthe rate(s) of interest that would otherwise be in effect on that loan.  All interest provided for herein shall bepayable on demand and shall be calculated on the basis of a year consisting of360 days.

 

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**SECTION 13.  Broken Funding Surcharge. **Notwithstanding any provision contained in anySupplement giving the Company the right to repay any loan prior to the date itwould otherwise be due and payable, the Company agrees that in the event itrepays any fixed rate balance prior to its scheduled due date or prior to thelast day of the fixed rate period applicable thereto (whether such payment ismade voluntarily, as a result of an acceleration, or otherwise), the Companywill pay to CoBank a surcharge in an amount which would result in CoBank beingmade whole (on a present value basis) for the actual or imputed funding lossesincurred by CoBank as a result thereof. Notwithstanding the foregoing, in the event any fixed rate balance isrepaid as a result of the Company refinancing the loan with another lender orby other means, then in lieu of the foregoing, the Company shall pay to CoBanka surcharge in an amount sufficient (on a present value basis) to enable CoBankto maintain the yield it would have earned during the fixed rate period on theamount repaid.  Such surcharges will becalculated in accordance with methodology established by CoBank (a copy ofwhich will be made available to the Company upon request).

 

**SECTION 14.  Complete Agreement, Amendments. **This agreement, all Supplements, and all otherinstruments and documents contemplated hereby and thereby, are intended by theparties to be a complete and final expression of their agreement.  No amendment, modification, or waiver of anyprovision hereof or thereof, and no consent to any departure by the Companyherefrom or therefrom, shall be effective unless approved by CoBank andcontained in a writing signed by or on behalf of CoBank, and then such waiveror consent shall be effective only in the specific instance and for thespecific purpose for which given.  Inthe event this agreement is amended or restated, each such amendment orrestatement shall be applicable to all Supplements hereto.

 

**SECTION 15.  Other Types of Credit.** From time to time, CoBank may issue lettersof credit or extend other types of credit to or for the account of theCompany.  In the event the partiesdesire to do so under the terms of this agreement, such extensions of creditmay be set forth in any Supplement hereto and this agreement shall beapplicable thereto.

 

**SECTION 16.  Applicable Law. **Exceptto the extent governed by applicable federal law, this agreement and eachSupplement shall be governed by and construed in accordance with the laws ofthe State of Colorado, without reference to choice of law doctrine.

 

**SECTION 17.  Notices. **Allnotices hereunder shall be in writing and shall be deemed to be duly given upondelivery if personally delivered or sent by telegram or facsimile transmission,or 3 days after mailing if sent by express, certified or registered mail, tothe parties at the following addresses (or such other address for a party asshall be specified by like notice):

 
| If to CoBank, as follows:

CoBank, ACB

Corporate Finance

P.O. Box 5110

Denver, Colorado 80217 — Fax # (303) 694-5830 |   | If to the Company, as follows:

American Crystal Sugar Company

ATTN: Treasurer

101 North 3rd Street, Moorhead, Minnesota  56560

FAX#:  (218)  236-4702 |
|------------------------------------------------------------------------------------------------------------------------------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------|

 

**SECTION 18.  Taxes and Expenses. **Tothe extent allowed by law, the Company agrees to pay all reasonableout-of-pocket costs and expenses (including the fees and expenses of counselretained by CoBank) incurred by CoBank in connection with the origination,administration, collection, and enforcement of this agreement and the otherLoan Documents, including, without limitation, all costs and expenses incurredin perfecting, maintaining, determining the priority of, and releasing anysecurity for the Company’s obligations to CoBank, and any stamp, intangible,transfer, or like tax payable in connection with this agreement or any otherLoan Document.

 

11

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**SECTION 19.  Effectiveness and Severability. **This agreement shall continue in effect until:  (i) all indebtedness and obligations ofthe Company under this agreement, all Supplements, and all other Loan Documentsshall have been paid or satisfied; (ii) CoBank has no commitment to extendcredit to or for the account of the Company under any Supplement; and (iii)either party sends written notice to the other terminating this agreement.  Any provision of this agreement or any otherLoan Document which is prohibited or unenforceable in any jurisdiction shall,as to such jurisdiction, be ineffective to the extent of such prohibition orunenforceability without invalidating the remaining provisions hereof or thereof.

 

**SECTION 20.  Successors and Assigns. **Thisagreement, each Supplement, and the other Loan Documents shall be binding uponand inure to the benefit of the Company and CoBank and their respectivesuccessors and assigns, except that the Company may not assign or transfer itsrights or obligations under this agreement, any Supplement or any other LoanDocument without the prior written consent of CoBank.

 

**SECTION 21.**  **Participations.**  From time to time, CoBank may sell to one or more banks or otherfinancial institutions a participation in one or more of the loans or otherextensions of credit made pursuant to this agreement.  However, no such participation shall relieve CoBank of anycommitment made to the Company under any Supplement hereto.  In connection with the foregoing, CoBank maydisclose information concerning the Company to any participant or prospective participant, provided that suchparticipant or prospective participant agrees to keep such information confidential.

 

 

**IN WITNESS WHEREOF**,the parties have caused this agreement to be executed by their duly authorizedofficers as of the date shown above.

 

 
| **CoBANK,  ACB** | **AMERICAN  CRYSTAL SUGAR COMPANY** |
|------------------|-------------------------------------|
|             |                                |
| By               | /s/ Casey Garten                    |   | By: | /s/ Sam Wai |   |
|             |                                |   |   |
| Title            | Vice President                      |   | Title: | Treasurer |   |

 

12

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**No.**Z269A

 

**AMENDMENT**

 

**THIS AMENDMENT** is entered into as of March28, 2001*,*between **CoBANK,ACB** (“CoBank”) and **AMERICAN CRYSTAL SUGAR COMPANY**, Moorhead,Minnesota (the “Company”).

 

**BACKGROUND**

 

CoBank and the Company are parties to a Master LoanAgreement dated March 31, 2000*,* (such agreement, as previously amended,is hereinafter referred to as the “MLA”). CoBank and the Company now desire to amend the MLA.  For that reason, and for valuable consideration(the receipt and sufficiency of which are hereby acknowledged), CoBank and theCompany agree as follows:

 

1.             Section 10(A) ofthe MLA is hereby amended and restated to read as follows:

 

**(A)** **MinimumNet Working Capital**. (1) have at the end of each fiscal quarter, other thanfiscal year end, an excess of current assets over current liabilities (both asdetermined in accordance with GAAP consistently applied) of not less than$15,000,000.00 and (2) have at then end of each fiscal year, an excess ofcurrent assets over current liabilities (both as determined in accordance withGAAP consistently applied) of not less than $35,000,000.00.

 

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

 

**IN WITNESS WHEREOF**, the parties have causedthis amendment to be executed by their duly authorized officers as of the dateshown above.

 
| **CoBANK,  ACB** | **AMERICAN  CRYSTAL SUGAR COMPANY** |
|------------------|-------------------------------------|
|             |
| By:              | /s/ Casey Garten                    |   | By: | /s/ Sam Wai |   |
|             |                                |   |   |   |
| Title:           | Vice President                      |   | Title: | Treasurer |   |

 

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Loan No. Z269T01B

 

**REVOLVINGTERM LOAN SUPPLEMENT**

** **

**THIS SUPPLEMENT**to theMaster Loan Agreement dated March 31, 2000 (the “MLA”), is entered into as ofMarch 27, 2002, between **CoBANK, ACB**(“CoBank”)and **AMERICAN CRYSTAL****SUGAR COMPANY,**Moorhead, Minnesota (the“Company”), and amends and restates the Supplement dated March 28, 2001 and numbered Z269T01 A.

** **

**SECTION1. The Revolving Term Loan Commitment.**On the termsand conditions set forth in the MLA and this Supplement,CoBank agrees to make loans to the Company during the period set forth below in an aggregate principal amount not to exceed$66,024,319.00 at any one time outstanding (the “Commitment”).Within the limits of the Commitment, the Company may borrow, repay and reborrow.

** **

**SECTION2. Purpose and Transfer.**The purposeof the Commitment is to finance the operatingneeds of the Company.

** **

**SECTION 3. Term.**The term of theCommitment shall be from the date hereof, up to but not including March 30,2003, or such later date as CoBank may, in its sole discretion, authorize inwriting.

** **

**SECTION4. Interest.**The Company agrees to pay interest onthe unpaid balance of the loans in accordance with one or more ofthe following interest rate options, as selected by the Company:

** **

**(A)         ****Variable Rate Option.  **At a rate per annum equal at all timesto the rate of interest established by CoBank from time totime as its National Variable Rate, which Rate is intended by CoBank to be areference rate and not its lowest rate. The National Variable Rate will changeon the date established by CoBank as theeffective date of any change therein and CoBank agrees to notify the Companypromptly after any such change.

** **

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

** **

**(C)         ****LIBOR Option.  **At a fixed rate equal to “LIBOR” (as hereinafter defined) plus the Applicable LIBOR Margin per annum (as described in terms of basis points(“bps”) in the chart immediately set forth below).   Under this option:    (a) rates may be fixed for “InterestPeriods” (as hereinafter defined) of 1, 2, 3, or 6 months, or 1 year, asselected by the Company; (b) the minimum amount thatmay be fixed at any one time shall be $2,000,000.00; and (c) rates may only befixed on a “Banking Day” (as hereinafter defined)or, at the option of the Company, on 2 Banking Days’ prior notice.  For purposes hereof: (i)“LIBOR” shall mean the rate indicated by Telerate (rounded upward to thenearest thousandth) as having been quoted by the British Bankers Association at11:00 a.m. London time on the date the Company elects tofix a rate under this option for the offering of U.S. dollar deposits in the London interbank market for the Interest Period designated by theCompany; (ii) “Banking Day” shall mean a day on which CoBankis open for business, dealings in U.S. dollar deposits are being carried out in the London interbank market, and banks areopen for business in New York City and London, England; and (iii)“Interest Period” shall mean a period commencing on the day the Company electsto fix a rate under this option (or, at the optionof the Company, two Banking Days later) and ending on the numerically corresponding day in the next calendarmonth or the month that is 2, 3 or 6 months or 1 year thereafter, as thecase may be; provided, however, that: (x) in the event such ending day is not a Banking Day, such period shall be extended to the nextBanking Day unless such next Banking Day falls in the

 

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next calendar month, in which case itshall end on the preceding Banking Day; and (y) if there is no numericallycorresponding day in the month, then such period shall end on the last BankingDay in the relevant month.

 

**LIBORMARGINS**

 
| **FIXED RATE PRODUCT** |   | **INDEX** |   | **SPREAD OVER INDEX IN BASIS   POINTS (Applicable LIBOR Margin)** |   |
|------------------------|--------|-----------|--------|-------------------------------------------------------------------|--------|
| One Month              |   | LIBOR     |   | 90bps                                                             |   |
| Two Months             |   | LIBOR     |   | 90bps                                                             |   |
| Three Months           |   | LIBOR     |   | 90bps                                                             |   |
| Six Months             |   | LIBOR     |   | 90bps                                                             |   |
| One Year               |   | LIBOR     |   | 90bps                                                             |   |

** **

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

 

**TREASURYMARGINS**
| **FIXED RATE PRODUCT**                                                |   | **INDEX**                                                                              |   | **SPREAD OVER INDEX IN BASIS   POINTS (Applicable Treasury Margin)** |   |
|-----------------------------------------------------------------------|--------|----------------------------------------------------------------------------------------|--------|----------------------------------------------------------------------|--------|
| Two Years                                                             |   | U.S.$ Constant Maturity Treasury Rate (“US$CMT”)                        |   | 125 bps                                                              |   |
| Three Years                                                           |   | US$CMT                                                                                 |   | 125 bps                                                              |   |
| Four Years                                                            |   | US$CMT                                                                                 |   | 125 bps                                                              |   |
| Five Years                                                            |   | US$CMT                                                                                 |   | 125 bps                                                              |   |
| Seven Years                                                           |   | USSCMT                                                                                 |   | 140 bps                                                              |   |
| Ten Years                                                             |   | US$CMT                                                                                 |   | 140 bps                                                              |   |
| Floor  (Minimum) Rate (For Two to Ten Year Fixed  Rate Products Only) |   | CoBank’s cost of funds (as reasonablydeterminedby CoBank in its sole  discretion) |   | 105 bps                                                              |   |

 

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

 

 

| **LEVERAGE RATIO (as****defined below)**                       |   | **INCREASE / DECREASE****TO SPREAD** |   | **CHANGE TO LIBOR and TREASURY MARGINS****(IN BASIS POINTS)** |   |
|----------------------------------------------------------------|--------|--------------------------------------|--------|--------------------------------------------------------------------|--------|
| A. Equal to or  greater than 1.35:1.00                         |   | Increase                             |   | 20                                                                 |   |
| B. Equal to or greater than 1.20:1.00, but less than 1.35:1.00 |   | None                                 |   | 0                                                                  |   |
| C. Less than 1.20:1.00, but greater than or equal to 1.00:1.00 |   | Decrease                             |   | 10                                                                 |   |
| D. Less than  1.00:1.00                                        |   | Decrease                             |   | 20                                                                 |   |

** **

**Leverage Ratio:**The Company will maintain a leverage ratio of not more than 1.50:1.0, andattain a leverage ratio of not more than 1.40:1.0 onNovember 30, 2002. Leverage ratio is long term debt (excludingcurrent maturities) calculated in accordance with GAAP plus or minus thedifference between actual working capital and minimum net working capital (asdefined in the MLA No. Z269, Section 10), divided by total members investmentsplus the estimated unit retains.

 

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

 

The Company shall select the applicablerate option at the time it requests a loan hereunder and may, subject to thelimitations set forth above, elect to convert balances bearing interest at thevariable rate option to one of the fixed rate options. Upon the expiration ofany fixed rate period, interest shall automaticallyaccrue at the variable rate option unless the amount fixed is repaid or fixedfor an additional period in accordance with the termshereof. Notwithstanding the foregoing, unless CoBank otherwise consents in its sole discretion in each instance, rates may not be fixedfor periods expiring after the maturity dateof the loans. In the event CoBank so consents and the Commitment is notrenewed, then each balance so fixed shall be due and payable on the lastday of its fixed rate period, and the promissory note set forth below shall be deemed amended accordingly. All electionsprovided for herein shall be made telephonically or in writing and must bereceived by 12:00 noon Company’s local time. Interest shall becalculated on the actual number of days each loan is outstanding on the basisof a year consisting of 360 days and shall be payable quarterly in arrears bythe 20th day of the following month.

 

**SECTION 5. Promissory Note.**The Company promises to repay the outstandingin annual principal payments of $9,396,579.17 each due on or before December 3 year throughDecember 31, 2008, and a final principal payment due on or before December 31,2009. All outstanding balances shall berepaid by December 31, 2009. If any installment due date is not a day on which CoBank is open for business, then suchpayment shall be made on the next day on which CoBank is open for business. In addition to the above, theCompany promises to pay interest on the unpaid principal balance hereof at the times and in accordance with theprovisions set forth in Section 4 hereof.

 

16

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This note replaces and supersedes, butdoes not constitute payment of the indebtedness evidenced by, the promissorynote set forth in the Supplement being amended and restated hereby.

 

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

 

**SECTION6. Prepayment.**The loans may be prepaid in whole orin part on one CoBank business day’s prior written notice.During the term of the Commitment, prepayments shall be applied to suchbalances, fixed or variable, as the Company shall specify. After the expirationof the term of the Commitment, prepayments shall, unlessCoBank otherwise agrees, be applied to principal installments in the inverseorder of their maturity and to such balances, fixed or variable, as CoBankshall specify.

 

**SECTION7. Commitment Fee.**In consideration of the Commitment,the Company agrees to pay to CoBank a commitment fee on theaverage daily unused portion of the Commitment at the rate of 20 basis points per annum (calculated on a 360 day basis), payablequarterly in arrears by the 20th day following each calendar quarter. Such feeshall be payable for each calendar quarter (or portion thereof) occurring during the original or any extended term of the Commitment.

** **

**SECTION8. Commitments Arising From Special Payments.**Commitments arising as a result ofspecial payments described in Section *5*aboveshall be subject to a commitment fee of 25 basis points (0.25%) on an annualized basis, on the average daily commitment.Any such fees incurred shall be payable on the last day of the calendarquarter, in arrears, computed on the basis of a year of 360 days for the actual number of days elapsed in which such reinstatable commitmentswere outstanding.

** **

**SECTION9. Security.**In addition to any other security thatmay otherwise be required or provided, theCompany’s obligations under this Supplement are secured by that RestatedMortgage and Security Agreement dated September 15,1998, from American Crystal Sugar Company to St. Paul Bank for Cooperatives(now known as CoBank as a result of merger), as Collateral Agent.

** **

**SECTION10**. **ExtensionFee.**In consideration of extending the Commitment, the Companyagrees to pay to CoBank on the execution hereof, an extension fee in the amountof $9,397.00, (10bp based on 12/31/01 principal payment of$9,396,579.00).

** **

**INWITNESS WHEREOF,**the parties have caused this Supplementto be executed by their duly authorizedofficers as of the date shown above.

 

| **CoBANK, ACB** |   | **AMERICAN CRYSTAL SUGAR COMPANY** |
|-----------------|--------|------------------------------------|
|            |   |                               |
| By:             |   |                               | By: | /s/ Sam Wai |
|            |   |                               |   |   |
| Title:          |   |                               | Title: | Treasurer |

 

 

17

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Loan No. Z269T01BNP

 

**REVOLVING TERM LOANSUPPLEMENT**

 

**THIS SUPPLEMENT**to the Master Loan Agreement dated March 31, 2000 (the “MLA”), isentered into as of March 27, 2002, between **CoBANK,ACB**(“CoBank”) and **AMERICANCRYSTAL****SUGAR C1OMPANY,**Moorhead,Minnesota (the “Company”), and amends and restates the Supplement dated March28, 2001 and number0ed Z269T01ANP.

 

**SECTION 1. TheRevolving Term Loan Commitment.**On the termsand conditions set forth in the MLA and this Supplement,CoBank agrees to make loans to the Company during the period set forth below in an aggregate principal amount not to exceed$52,275,680.83 at any one time outstanding(the “Commitment”). Within the limits of the Commitment, the Company mayborrow, repay and reborrow.

 

**SECTION 2. Purpose andTransfer.**The purpose of the Commitment is to finance the operating needs of the Company.

 

**SECTION 3. Term.**The term of the Commitment shall be from the date hereof, up to but not including March30, 2003, or such later date as CoBank may, in its sole discretion, authorize in writing.

 

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

 

**(A)          ****Variable Rate Option.  **At a rate per annum equal at all timesto the rate of interest established by CoBank from time totime as its National Variable Rate, which Rate is intended by CoBank to be areference rate and not its lowest rate. The National Variable Rate will changeon the date established by CoBank as theeffective date of any change therein and CoBank agrees to notify the Companypromptly after any such change.

 

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

 

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

 

18

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next calendar month, in which case it shallend on the preceding Banking Day; and (y) if there is no numericallycorresponding day in the month, then such period shall end on the last BankingDay in the relevant month.

 

**LIBOR MARGINS**

 
| **FIXED RATE****PRODUCT** |   | **INDEX** |   | **SPREAD OVER INDEX IN  BASIS****POINTS (Applicable LIBOR Margin)** |
|---------------------------|--------|-----------|--------|---------------------------------------------------------------------|
| One Month                 |   | LIBOR     |   | 90bps                                                               |
| Two Months                |   | LIBOR     |   | 90bps                                                               |
| Three Months              |   | LIBOR     |   | 90bps                                                               |
| Six Months                |   | LIBOR     |   | 90bps                                                               |
| One Year                  |   | LIBOR     |   | 90bps                                                               |

 

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

 

**TREASURYMARGINS**

 
| **FIXED RATE****PRODUCT**                                           |   | **INDEX**                                                                                 |   | **SPREAD OVER INDEX  IN BASIS****POINTS  (Applicable Treasury Margin)** |
|---------------------------------------------------------------------|--------|-------------------------------------------------------------------------------------------|--------|-------------------------------------------------------------------------|
| Two Years                                                           |   | U.S. $ Constant MaturityTreasury (“US$CMT”)                                     |   | 125 bps                                                                 |
| Three Years                                                         |   | USSCMT                                                                                    |   | 125 bps                                                                 |
| Four Years                                                          |   | US$CMT                                                                                    |   | 125 bps                                                                 |
| Five Years                                                          |   | USSCMT                                                                                    |   | 125 bps                                                                 |
| Seven Years                                                         |   | US$CMT                                                                                    |   | 140 bps                                                                 |
| Ten Years                                                           |   | US$CMT                                                                                    |   | 140 bps                                                                 |
| Floor (Minimum) Rate (For Two to Ten Year Fixed Rate Products Only) |   | CoBank‘s cost of  funds (as reasonably determined by  CoBank in its sole discretion) |   | 105 bps                                                                 |

 

19

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

 
| **LEVERAGE RATIO (as****defined  below)**                                          |   | **INCREASE / DECREASE****TO  SPREAD** |   | **CHANGE TO LIBOR and  TREASURY MARGINS****(IN  BASIS POINTS)** |
|------------------------------------------------------------------------------------|--------|---------------------------------------|--------|-----------------------------------------------------------------|
| A.  Equal to or greater than 1.35:1.00                                        |   | Increase                              |   | 20                                                              |
| B.  Equal to or  greater  than 1 .20: 1 .00, but less than 1 .35 : 1 .00 |   | None                                  |   | 0                                                               |
| C.  Less than  1.20:1.00, but greater than or equal to 1  .00: 1 .00          |   | Decrease                              |   | 10                                                              |
| D.  Less than 1.00:1.00                                                       |   | Decrease                              |   | 20                                                              |

 

**Leverage Ratio:**The Company will maintain a leverage ratio of not more than 1.50:1.0, andattain a leverage ratio of not more than 1.40:1.0 onNovember 30, 2002. Leverage ratio is long term debt (excluding currentmaturities) calculated in accordance with GAAP plus or minus the differencebetween actual working capital and minimum net working capital (as defined inthe MLA No. Z269, Section 10), divided by total members investments plus theestimated unit retains.

 

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

 

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

 

**SECTION 5. PromissoryNote.**The Company promises to repay the loans thatare outstanding in annual principal payments of$7,603,420.83 each due on or before December 31” of each year throughDecember 31, 2007, and a final principal payment due on or before December 31,2008. All outstanding balances shall berepaid by December 31, 2008. If any installment due date is not a day on which CoBank is open for business, then such paymentshall be made on the next day on which CoBank is open for business. In addition to the above, the Company promises topay interest on the unpaid principalbalance hereof at the times and in accordance with the provisions set forth inSection 4 hereof. This note replaces and supersedes, but does notconstitute payment of the indebtedness evidenced by, the promissory note setforth in the Supplement being amended and restated hereby.

 

20

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The Company shall be permitted to makespecial payments, in a minimum amount of $111,500.00, on the variable rateportion of this loan, when all short term financing, including the Company’sseasonal loans, Commodity Credit Corporationloans and other short term loans have been zeroed out. These special payments may be readvanced through the expirationdate of the Commitment. Reinstatement may be denied and canceled at any time at the option of CoBank. Thereinstatable commitments arising from such special payments shall besubject to the Commitment Fee as described in Section 8 below.

 

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

 

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

 

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

 

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

 

**SECTION 10. ExtensionFee.**In consideration of extending the Commitment,the Company agrees to pay to CoBank on theexecution hereof, an extension fee in the amount of $7,603.00, (10bp based on the12/31/01 principal payment of $7,603,421.00).

 

**IN WITNESS WHEREOF,**the partieshave caused this Supplement to be executed by their duly authorized officers asof the date shown above.

 
| **CoBANK, ACB** | **AMERICAN CRYSTAL SUGAR COMPANY** |
|-----------------|------------------------------------|
|            |                               |   |   |   |
|            |                               |   |   |   |
| By:             |                               |   | By: |   /s/ Sam Wai |
|            |                               |   |   |   |
| Title:          |                               |   | Title: |   Treasurer |

 

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Loan No. Z269T02BNP

 

**REVOLVING TERM LOAN SUPPLEMENT**

 

**THISSUPPLEMENT** to the Master Loan Agreement dated March 31, 2000(the “MLA”), is entered into as of March 27, 2002, between **CoBANK, ACB** (“CoBank”) and **AMERICAN CRYSTAL SUGAR COMPANY**, Moorhead,Minnesota (the “Company”), and amends and restates the Supplement dated March28, 2001 and numbered Z269T02ANP.

 

**SECTION 1**. **The Revolving Term Loan Commitment.** On theterms and conditions set forth in the MLA and this Supplement, CoBank agrees tomake loans to the Company during the period set forth below in an aggregate principal amountnot to exceed$14,068,836.00 at any one time outstanding(the “Commitment”). Within the limits of the Commitment, the Company mayborrow, repay and reborrow, provided, however, no advances shall be made onthis Term Loan, until Term Loan No. Z269T01 (as it may be amended), has beenfully advanced.

 

**SECTION 2**. **Purpose and Transfer**.  The purpose of the Commitment is to financethe operating needs of theCompany.

 

**SECTION 3**. **Term.** The term of the Commitment shall be from the date hereof, up to but not including March 30, 2003, or such later dateas CoBank may, in its sole discretion, authorize in writing.

 

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

 

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

** **

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

** **

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

 

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

 

**LIBOR MARGINS**

 
| **FIXED RATE****PRODUCT** |   | **INDEX** |   | **SPREAD OVER INDEX IN BASIS  POINTS (Applicable LIBOR Margin)** |   |
|---------------------------|--------|-----------|--------|------------------------------------------------------------------|--------|
| One Month                 |   | LIBOR     |   | 90bps                                                            |   |
| Two Months                |   | LIBOR     |   | 90bps                                                            |   |
| Three Months              |   | LIBOR     |   | 90bps                                                            |   |
| Six Months                |   | LIBOR     |   | 90bps                                                            |   |
| One Year                  |   | LIBOR     |   | 90bps                                                            |   |

 

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

 

**TREASURY MARGINS**

** **
| **FIXED RATE****PRODUCT**                                           |   | **INDEX**                                                                                |   | **SPREAD OVER INDEX IN BASIS****POINTS (Applicable Treasury Margin)** |   |
|---------------------------------------------------------------------|--------|------------------------------------------------------------------------------------------|--------|-----------------------------------------------------------------------|--------|
| Two Years                                                           |   | U.S.$ Constant Maturity  Treasury (“US$CMT”)                                   |   | 125 bps                                                               |   |
| Three Years                                                         |   | US$CMT                                                                                   |   | 125 bps                                                               |   |
| Four Years                                                          |   | USSCMT                                                                                   |   | 125 bps                                                               |   |
| Five Years                                                          |   | USSCMT                                                                                   |   | 125 bps                                                               |   |
| Seven Years                                                         |   | US$CMT                                                                                   |   | 140 bps                                                               |   |
| Ten Years                                                           |   | USSCMT                                                                                   |   | 140 bps                                                               |   |
| Floor (Minimum) Rate (For Two to Ten Year Fixed Rate Products Only) |   | CoBank’s cost of funds (as reasonably  determined by CoBank in its sole discretion) |   | 105 bps                                                               |   |

 

 

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Thespread over all of the above indices, including the Floor (Minimum) Rate, mayincrease or decrease for future fixed amounts based on the Borrower’sprevious fiscal quarter’s leverage ratio, as follows:

 
| **LEVERAGE RATIO (as defined****below)**                        |   | **INCREASE/DECREASE****TO SPREAD** |   | **CHANGE TO LIBOR and****TREASURY MARGINS****(IN BASIS  POINTS)** |   |
|-----------------------------------------------------------------|--------|------------------------------------|--------|-------------------------------------------------------------------|--------|
| A. Equal to or greater than 1.35:1.00                           |   | Increase                           |   | 20                                                                |   |
| B. Equal to or greater than 1.20:1.00, but less  than 1.35:1.00 |   | None                               |   | 0                                                                 |   |
| C. Less than 1.20:1.00, but greater than or equal  to 1.00:1.00 |   | Decrease                           |   | 10                                                                |   |
| D. Less than 1.00:1.00                                          |   | Decrease                           |   | 20                                                                |   |

** **

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

 

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

 

TheCompany shall select the applicable rate option at the time it requests a loanhereunder and may, subject to the limitations set forth above, elect to convertbalances bearing interest at the variable rate option to one of thefixed rate options. Upon the expiration of any fixed rate period, interestshall automaticallyaccrue at the variable rate option unless the amount fixed is repaid or fixedfor an additional period in accordance with the terms hereof. Notwithstanding theforegoing, unless CoBank otherwise consents in its sole discretion in each instance, ratesmay not be fixed for periods expiring after the maturity date of the loans. In the event CoBank soconsents and the Commitment is not renewed, then each balance so fixed shall be due and payable on the last day of itsfixed rate period, and the promissory noteset forth below shall be deemed amended accordingly. All elections provided forherein shall be made telephonically or in writing and must be received by 12:00noon Company’s local time. Interest shall be calculated on the actualnumber of days each loan is outstanding on the basis of a year consisting of360 days and shall be payable quarterly in arrears by the 20th day of thefollowing month.

 

**SECTION 5. Promissory Note**. The Company promises torepay the loans that are outstanding in annual principal payments of $2,000,000.00 eachdue on or before December 31st of each year commencing in 2002. Alloutstanding balances shall be repaid by December 31, 2009. If any installment

 

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duedate is not a day on which CoBank is open for business, then such payment shallbe made on the next day on which CoBank is open for business. In addition tothe above, the Company promises to pay interest on the unpaid principal balance hereof at the times and inaccordance with the provisions set forth inSection 4 hereof. This note replaces and supersedes, but does not constitutepayment of the indebtedness evidenced by, the promissory note set forthin the Supplement being amended and restated hereby.

** **

**SECTION 6.  Prepayment.** The loans may be prepaid in whole or in part onone CoBank businessday’s prior written notice. During the term of the Commitment, prepaymentsshall be applied to such balances, fixed or variable, as the Company shallspecify. After the expiration of the term of the Commitment, prepayments shall, unless CoBank otherwiseagrees, be applied to principal installments in the inverse order of theirmaturity and to such balances, fixed or variable, as CoBank shall specify.

** **

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

** **

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

** **

**SECTION 9.  Security.** In addition to any other security that may otherwise berequired or provided, the Company’s obligations under this Supplement are secured by that RestatedMortgage and Security Agreementdated September 15, 1998, from American Crystal Sugar Company to St. Paul Bankfor Cooperatives (now known as CoBank as a result of merger), as CollateralAgent.

**SECTION 10.**  Extension Fee. In consideration of extendingthe Commitment, the Company agrees to pay to CoBank on the execution hereof, anextension fee in the amount of $14,069.00 (10bp based on the current balance of $14,068,836.00).

** **

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

 
| **CoBANK, ACB** |   | **AMERICAN CRYSTAL SUGAR COMPANY** |
|-----------------|--------|------------------------------------|
|            |   |                               |
|            |   |                               |   |   |
| By:             |   |                               | By: | /s/ Sam Wai |
|            |   |                               |   |   |
| Title:          |   |                               | Title: | Treasurer |

 

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**Exhibit A**

** **

**LETTER OF CREDIT REIMBURSEMENTAGREEMENT**

 

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

 

1.         The Company will pay toCoBank in United States currency and in immediately available funds the amountof each draft drawn or instrumentpaid under a Credit.   In addition, theCompany agrees to pay to CoBank such fee for issuing each Credit as CoBank shall prescribe, as well as all customarycharges associated with the issuance of a Credit.   If a Credit is payable in a foreign currency, the Company will pay to CoBank an amount in UnitedStates currency equivalent to CoBank’s selling rate of exchange for that currency.   In addition to the amounts set forth above,the Company shall pay to CoBank such amounts as CoBank shall determineare necessary to compensate CoBank for any cost attributable to CoBank issuingor having outstanding any Credit resultingfrom the application of any law or regulation concerning any reserve,assessment, capital adequacy or similar requirement relating to letters ofcredit, reimbursement agreements with respect thereto, or to similarliabilities or assets of banks, whetherexisting at the time of the issuance of a Credit or adopted thereafter.   Each payment hereunder shall be payable on demandat the place and manner set forth in the Master Loan Agreement between theparties (the “MLA”) and with interest fromthe date of demand to the date paid at CoBank’s National Variable Rate.  The Company hereby authorizes CoBank tocreate a loan under the Supplement bearing interest at the variable rateset forth therein for any sums owing hereunder.

 

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

 

3.         In the event the Creditis a commercial Credit, then, in addition to the other provisions hereof, theCompany:   (i) agrees to obtain or cause to be inexistence insurance on any merchandise described in the Credit against fire andother usual risks and against any additional risks which CoBank may request;and (ii) authorizes and empowers CoBank to collect the amount due under anysuch insurance and apply the same against any of the Company’s obligations toCoBank arising under the Credit or otherwise.   Inaddition, whether the Credit is a commercial or a standby Credit, the Companyrepresents and warrants that any requiredimport, export or foreign exchange licenses or other governmental approvalsrelevant to the Credit and the merchandise describedtherein have been obtained and that the transactions contemplated thereby arenot prohibited under any law, rule, regulation, order or the like,including the Foreign Assets Control Regulations of the U.S. Department ofTreasury.

 

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

 

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

 

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

 

7.         In the event:   (i) the Company fails to make any paymentowing hereunder when the same shall become due and payable; (ii) any covenant orrepresentation or warranty set forth herein is breached; (iii)the “Commitment” (as defined in the Supplement) expires prior to the expiration date ofany Credit; or (iv) an “Event of Default” (as defined in the MLA) occurs 

 

26

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underthe MLA, then, in any such event, the amount of each Credit, together with anyamounts payable by us in connection therewith, shall, at CoBank’s option, become immediately due andpayable. To the extent that any amount paid by the Company pursuant to this Section 7 shall not then be dueunder the terms of a Credit, such payment shall serve as security for the Company’s obligation to indemnify CoBank for anyamounts subsequently disbursed by CoBank pursuant to a Credit. Furthermore,upon the institution of any legal proceeding described in Section 6(ii) hereof,the Company will, on demand, assign anddeliver to CoBank, as security for the Company’s obligation to indemnifyCoBank, cash collateral in an amount satisfactory to CoBank.

 

8.          CoBank shall be fullyprotected in, and shall incur no liability to the Company for acting upon, anyoral, telephonic, facsimile, cable or other electronic instructions which CoBank in goodfaith believes to have been given by any authorized person.  CoBank may, at its option, use any means ofverifying any instructions received by it and may also, at its option, refuse to act on any oral, telephonic,facsimile, cable or other electronic instructions or any part thereof, withoutincurring any responsibility forany loss, liability or expenses arising out of such refusal.

 

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

 

27

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Loan No. Z269T03A NP

 

**SINGLE ADVANCE TERM LOAN SUPPLEMENT**

 

**THIS SUPPLEMENT** to the Master LoanAgreement dated as of March 31, 2000 (the “MLA”), is entered into as of April21, 2000, between **CoBANK, ACB**(“CoBank”) and **AMERICANCRYSTAL SUGAR COMPANY**, Moorhead, Minnesota (the “Company”), andamends and restates the Supplement dated March 31, 2000 and numbered Z269T03NP.

 

**SECTION 1.         TheTerm Loan. **ThisSupplement is to evidence a term loan to the Company in the original principalcommitment amount of $12,000,000.00 (the “Loan”).  The Loan is currently evidenced by Note No. 30800NP (the “Note”)and is subject to the terms of that certain Note Agreement dated December 5,1994 by and among the Company, CoBank’s predecessor (the St. Paul Bank forCooperatives), and Bank of North Dakota (the “Note Agreement”).  The outstanding principal balance of theLoan as of the date hereof is $7,200,000.00.

 

**SECTION 2.         Purposeand Transfer. **Thepurpose of this Supplement is to replace the Note and transfer the indebtednessevidenced thereby to this Supplement. As of the date of this Supplement, the Note shall be deemed replaced andsuperseded, but the indebtedness evidenced by such Note shall not be deemed tohave been paid off, by this Supplement and the MLA.  The Note Agreement shall remain in full force and effect exceptthat any reference to the “Loan” shall be deemed to mean the indebtednessevidenced by this Supplement, and any reference to “Loan Agreement” shall bedeemed a reference to the MLA.  To theextent that the Note Agreement may be inconsistent with the terms of thisSupplement or the MLA, the terms of the Note Agreement shall control.  All security given to secure the Note shallsecure this Supplement.

 

**SECTION 3.         Availability. **The date****forpermitting advances under the Note has expired. ** **Thereis no further availability.

 

**SECTION 4.         Interest.**The Company agrees to pay interest on the unpaid balance of the Loan at suchrate or rates as determined in accordance with the terms of the NoteAgreement.  As of the date hereof theinterest rate is fixed at 6.34% per annum and shall remain fixed at such ratefor the period as provided for in the Note Agreement.  All other matters regarding the calculation and payment ofinterest shall be in accordance with the terms of the Note Agreement(including, without limitation, the terms applicable to prepayment of fixedrate loans prior to pricing maturity dates).

 

**SECTION 5.         PromissoryNote. **The Companypromises to repay the Loan in accordance with the repayment terms of the NoteAgreement.  If any installment due dateis not a day on which CoBank is open for business, then such payment shall bemade on the next day on which CoBank is open for business.  In addition to the above, the Companypromises to pay interest on the unpaid principal balance hereof at the timesand in accordance with the terms of the Note Agreement.  This note replaces and supersedes, but doesnot constitute payment of the indebtedness evidenced by, the promissory noteset forth in the Supplement being amended and restated hereby.

 

**SECTION 6.         Prepayment. **Subject to the terms ofthe Note Agreement,****the Loan may be prepaid in whole or inpart on one CoBank business day’s prior written notice.

 

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**SECTION 7.         Security. **In addition to any othersecurity that may otherwise be required or provided, the Company’s obligationsunder this Supplement are secured by that Restated Mortgage and SecurityAgreement dated September 15, 1998, from American Crystal Sugar Company to St.Paul Bank for Cooperatives (now known as CoBank as a result of merger), asCollateral Agent.

 

**IN WITNESS WHEREOF,** the parties have causedthis Supplement to be executed by their duly authorized officers as of the dateshown above.

 
| **CoBANK,  ACB** | **AMERICAN  CRYSTAL SUGAR COMPANY** |
|------------------|-------------------------------------|
|             |
| By:              | /s/ Casey Garten                    |   | By: | /s/ Sam Wai |   |
|             |                                |   |   |   |
| Title:           | Vice President                      |   | Title: | Treasurer |   |

 

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Loan No.  Z269S01C

 

**STATUSED****REVOLVING CREDIT SUPPLEMENT**

 

 

**THIS SUPPLEMENT** to the Master LoanAgreement dated March 31, 2000 (the “MLA”), is entered into as of March 27,2002, between **CoBANK, ACB**(“CoBank”) and **AMERICAN CRYSTAL SUGAR COMPANY**,Moorhead, Minnesota (the “Company”), and amends and restates the Supplementdated March 28, 2001 and numbered Z269S01B.

 

**SECTION 1.         TheRevolving Credit Facility. **Onthe terms and conditions set forth in the MLA and this Supplement, CoBankagrees to make loans to the Company during the period set forth below in anaggregate principal amount not to exceed, at any one time outstanding, thelesser of the “Borrowing Base” (as calculated pursuant to the Borrowing BaseCertificate, the form of which is attached hereto as Exhibit A) or$180,000,000.00 (the “Commitment”). Within the limits of the Commitment, butsubject to the Borrowing Base, the Company may borrow, repay and reborrow.

 

**SECTION 2.         Purposeand Transfer.** Thepurpose of the Commitment is to finance the Company’s general corporatepurposes, fund working capital requirements, back the Company’s commercialpaper program, and issue short-term commercial and standby letters of credit.

 

**SECTION 3.         Term. **The term of the Commitmentshall be from the date hereof, up to but not including March 30, 2003, or suchlater date as CoBank may, in its sole discretion, authorize in writing.

 

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

 

**(A)          Base RateOption.**  At a rate perannum at all times equal to the Base Rate. For the purposes hereof, Base Rate means that rate in effect from day today defined as the “prime rate” as published from time to time in the EasternEdition of The Wall Street Journal as the average prime lending rate forseventy-five percent (75%) of the United States; thirty (30) largest commercialbanks, or if The Wall Street Journal shall cease publication or cease publishingthe “prime rate” on a regular basis, such other regularly published averageprime rate applicable to such commercial banks as is acceptable to the Lenderin its reasonable discretion.  Loans forwhich the Base Rate option is selected are referred to herein as “Base RateLoans”.

 

Base Rate Loans shall be:  (a)in minimum amounts of $5,000,000 and incremental multiples of $1,000,000; and(b) made available on any Banking Day. Interest on Base Rate Loans shall be calculated on the actual number ofdays each loan is outstanding on the basis of a year consisting of 360 days andshall be payable monthly in arrears on the twentieth Banking Day of thefollowing month.

 

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

 

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

 

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Interest on Quoted RateLoans shall be calculated on the actual number of days each loan is outstandingon the basis of a year consisting of 360 days and shall be payable monthly inarrears on the twentieth Banking Day of the following month.

 

**(C)          LIBOR Option.** At a fixed rate equal to LIBOR plus the Applicable Margin (as definedbelow).  For the purposes hereof, LIBORmeans the rate for deposits in U.S. Dollars, with maturities comparable to theselected LIBOR Interest Period, that appears on the display designed as page“3750” of the Telerate Service (or such other page as may replace the 3750 pageof that service of if the Telerate Service shall cease displaying such rates,such other service or services as may be nominated by the British Bankers’Association for the purpose of displaying London Interbank Offered Rates forU.S. Dollar deposits), determined as of 11:00 a.m. London time two Banking Daysprior to the commencement of such LIBOR Interest Period.  “LIBOR Interest Period” means a period ofone, two, three or six months.  LIBORpricing will be adjusted for Regulation D reserve requirements.  The Applicable Margin is 70 basis points.  Loans for which the LIBOR option is selectedare referred to herein as “LIBOR Loans”.

 

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

 

**(1)           Notwithstanding anything herein to the contrary, if, on orprior to the determination of the LIBOR rate for any LIBOR Interest Period,CoBank determines (which determination shall be conclusive) that quotations ofinterest rates in accordance with the definition of LIBOR rate are not beingprovided in the relevant amounts or for the relevant maturities for purposes ofdetermining rates of interest for LIBOR rate advances as provided in thisSupplement, then CoBank shall give the Company prompt notice thereof, and solong as such condition remains in effect, CoBank shall be under no obligationto make LIBOR rate loans, convert Base Rate loans into LIBOR rate loans, orcontinue LIBOR rate loans, and the Company shall, on the last day(s) of thethen current applicable LIBOR Interest Period(s) for the outstanding LIBOR rateloans, either prepay such LIBOR rate loans or such LIBOR rate loans shallautomatically be converted into a Base Rate loan in accordance with thisSection 4.**

 

**(2)           If any law, treaty, rule, regulation or determination of acourt or governmental authority or any change therein or in the interpretationor application thereof subsequent to the date hereof (each, a “Change in Law”)shall make it unlawful for CoBank to (a) advance any LIBOR rate loan or (b)maintain all or any portion of a LIBOR rate loan, then CoBank shall promptlynotify the Company thereof.  In theformer event, any obligation of CoBank to make available any future LIBOR rateloan shall immediately be canceled (and, in lieu thereof shall be made as aBase Rate loan or Quoted Rate loan at the option of the Company), and in thelatter event, any such unlawful LIBOR rate loan or portions thereof thenoutstanding shall be converted, at the option of the Company, to either a BaseRate loan or a Quoted Rate loan; provided, however, that if any such Change inLaw shall permit the LIBOR rate to remain in effect until the expiration of theLIBOR rate period applicable to any such unlawful LIBOR rate loan, then suchLIBOR rate loan shall continue in effect until the expiration of such LIBORrate period.  Upon the occurrence of anyof the foregoing events on account of any Change in Law, the Company shall payto CoBank immediately upon demand such amounts as may be necessary tocompensate CoBank for any fees, charges, or other costs incurred or payable byCoBank as a result thereof and which are attributable to any LIBOR rate loansmade available to the Company hereunder.**

 

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

 

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

 

**SECTION 5.         PromissoryNote.**The Company promises to repay the unpaid principalbalance of the loans on the first CoBank business day following the last day ofthe term of the Commitment.  In additionto the above, the Company promises to pay interest on the unpaid principalbalance of the loans at the times and in accordance with the provisions setforth in Section 4 hereof.  This notereplaces and supersedes, but does not constitute payment of the indebtednessevidenced by, the promissory note set forth in the Supplement being amended andrestated hereby.

 

**SECTION 6.         BorrowingBase Certificate, Etc. **TheCompany agrees to furnish a Borrowing Base Certificate to CoBank at such timesor intervals as CoBank may from time to time request.  Until receipt of such a request, the Company agrees to furnish aBorrowing Base Certificate to CoBank within 30 days after each month endcalculating the Borrowing Base as of the last day of the month for which theCertificate is being furnished. However, if no balance is outstanding hereunder on the last day of suchperiod, no Report need be furnished. Regardless of the frequency of the reporting, if at any time the amountoutstanding under the Commitment exceeds the Borrowing Base, the Company shallimmediately

 

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notify CoBank and repay so much of the loans as is necessary to reducethe amount outstanding under the Commitment to the limits of the BorrowingBase.

 

**SECTION 7.         CommitmentFee.**  In considerationof the Commitment, the Company agrees to pay to CoBank a commitment fee on theaverage daily unused portion of the Commitment at the rate of 20 basis pointsper annum (calculated on a 360 day basis), payable quarterly in arrears by the20th day following each calendar quarter. The unused amount of the364-Day facility will be the difference between the 364-Day Commitment and thesum of the outstanding 364-Day Facility Loans and the undrawn face amount ofall outstanding Letters of Credit.

 

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

 

**SECTION 9.         Lettersof Credit**.  Inaddition to loans, and if agreeable to CoBank in its sole discretion in eachinstance, the Company may utilize the Commitment to open irrevocable letters ofcredit for its account.  Each letter ofcredit shall reduce the amount available under the Commitment by the maximumamount capable of being drawn thereunder. The rights and obligations of the parties with respect to each letter ofcredit will be governed by the Reimbursement Agreement attached hereto asExhibit B (which rights and obligations shall be in addition to the rights andobligations of the parties hereunder and under the MLA).  This Commitment shall expire on March 30,2003. The fee for issuing each letter of credit shall be 70 basis points of theface amount of each letter of credit, along with an issuance fee to CoBank, forits own account, equal to the greater of (a) 1/8% of the face amount of theletter of credit, or (b) $2,000. The Company promises to repay the outstandingbalance on the Commitment in full on demand, or if no demand is made, then anytime on or before the commitment expiration date of March 30, 2003**.**

 

**IN WITNESS WHEREOF,** the parties have causedthis Supplement to be executed by their duly authorized officers as of the dateshown above.

 
| **CoBANK,  ACB** | **AMERICAN  CRYSTAL SUGAR COMPANY** |
|------------------|-------------------------------------|
|             |                                |
| By:              |                                |   | By: |   |   |
|             |                                |   |   |   |
| Title:           |                                |   | Title: |   |   |

** **

**33**

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** **

**EXHIBIT “A”**

** **

**[Form of Borrowing Base]**

**American Crystal SugarCompany**

Monthly Borrowing Base

For the month ended_______________

 
| **Trade Accounts Receivables** | **$** | ** ** | **@ 80%** | **$** |   | ** ** |
|--------------------------------|-------|------------|-----------|-------|--------|------------|

(a)

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

 
| **Inventory** | **$** | ** ** | **(b)** |   | ** ** |
|---------------|-------|------------|---------|--------|------------|

 

Inventory as determinedon the basis of Net Realizable Value, defined as the expected selling price ofan inventory item less expected costs to complete and dispose, as determined inaccordance with GAAP.

 
| **Crop Payments due Non-members  and members** | **$**  | ** ** | **(c)**   |   | ** ** |
|------------------------------------------------|--------|------------|-----------|--------|------------|
|                                           |   |       |      |   |       |
| **Net Inventory Value (b-c)  (d)**             | **$**  | ** ** | **@ 75%** | **$**  |       |   |
|                                           |   |       |      |   |       |
| **Borrowing Base (a+d)**                       |   |       |      | **$**  |       |   |
|                                           |   |       |      |   |       |
| **Commercial Paper  (e)**                      |   |       |      | **$**  |       |   |
|                                           |   |       |      |   |       |
| **Seasonal Loan  (f)**                         |   |       |      |   |       |   |
|                                           |   |       |      |   |       |
| **CCC  (g)**                                   |   |       |      |   |       |   |
|                                           |   |       |      |   |       |
| **Total Short-term Loans (e+f+g)**             | **$**  |       |      |   |       |
|                                                |        |            |           |        |            |  |  |

 

 

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**Exhibit B**

 

**LETTER OF CREDIT REIMBURSEMENTAGREEMENT**

 

In consideration of CoBank issuing one or more lettersof credit (each a “Credit”) for the Company’s account under the Supplement towhich this agreement is attached (the “Supplement”), the Company agrees asfollows:

 

1.     The Company will pay to CoBank in UnitedStates currency and in immediately available funds the amount of each draftdrawn or instrument paid under a Credit. In addition, the Company agrees to pay to CoBank such fee for issuingeach Credit as prescribed in Section 9 of Supplement number Z269S01C, as wellas all customary charges associated with the issuance of a Credit.  If a Credit is payable in a foreigncurrency, the Company will pay to CoBank an amount in United States currencyequivalent to CoBank’s selling rate of exchange for that currency.  In addition to the amounts set forth above,the Company shall pay to CoBank such amounts as CoBank shall determine arenecessary to compensate CoBank for any cost attributable to CoBank issuing orhaving outstanding any Credit resulting from the application of any law orregulation concerning any reserve, assessment, capital adequacy or similarrequirement relating to letters of credit, reimbursement agreements withrespect thereto, or to similar liabilities or assets of banks, whether existingat the time of the issuance of a Credit or adopted thereafter.  Each payment hereunder shall be payable ondemand at the place and manner set forth in the Master Loan Agreement betweenthe parties (the “MLA”) and with interest from the date of demand to the datepaid at CoBank’s National Variable Rate. The Company hereby authorizes CoBank to create a loan under theSupplement bearing interest at the variable rate set forth therein for any sumsowing hereunder.

 

2.     NeitherCoBank nor any of its correspondents shall in any way be responsible for theperformance by any beneficiary of its obligations to the Company nor for theform, sufficiency, correctness, genuineness, authority of the person signing,falsification or legal effect of any documents called for under a Credit ifsuch documents on their face appear to be in order.  In addition, CoBank and its correspondents may receive and acceptor pay as complying with the terms of a Credit any drafts, documents, orcertificates, otherwise in order, signed by any person purporting to be anadministrator, executor, trustee in bankruptcy, debtor in possession, assigneefor the benefit of creditors, liquidator, receiver, or other legalrepresentative of the party authorized under a Credit to draw or issue suchinstruments or other documents.

 

3.     In theevent the Credit is a commercial Credit, then, in addition to the otherprovisions hereof, the Company:  (i)agrees to obtain or cause to be in existence insurance on any merchandisedescribed in the Credit against fire and other usual risks and against anyadditional risks which CoBank may request; and (ii) authorizes and empowersCoBank to collect the amount due under any such insurance and apply the sameagainst any of the Company’s obligations to CoBank arising under the Credit or otherwise.  In addition, whether the Credit is acommercial or a standby Credit, the Company represents and warrants that anyrequired import, export or foreign exchange licenses or other governmentalapprovals relevant to the Credit and the merchandise described therein havebeen obtained and that the transactions contemplated thereby are not prohibitedunder any  law, rule, regulation, orderor the like, including the Foreign Assets Control Regulations of theU.S. Department of Treasury.

 

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

 

5.     CoBankshall not be responsible for any act, error, neglect, default, omission,insolvency or failure in business of any of its correspondents, and any actiontaken or omitted by CoBank or its correspondents under or in connection with aCredit shall, if taken or omitted with honesty in fact, be binding on theCompany and shall not put CoBank or its correspondents under any resultingliability to the Company.  In no eventshall  CoBank be liable for special,consequential or punitive damages.

 

6.     TheCompany will indemnify CoBank against and hold it harmless from all loss,damage, cost, and expense (including attorneys’ fees and expenses) arising outof (i) its issuance of or any other action taken by CoBank in connection with aCredit, other than loss or damage resulting from its gross negligence orwillful misconduct, and (ii) claims or legal proceedings incident to thecollection of amounts owed by the Company hereunder, or the enforcement ofCoBank’s rights or the rights of others under a Credit, including, withoutlimitation, legal proceedings relating to any court order, injunction or otherprocess or decree restraining or seeking to restrain CoBank from paying anyamount under a Credit.

 

7.     In theevent:  (i) the Company fails to makeany payment owing hereunder when the same shall become due and payable; (ii)any covenant or representation or warranty set forth herein is breached; (iii)the “Commitment” (as defined in the Supplement) expires prior to the expirationdate of any Credit; or (iv) an “Event of Default” (as defined in the MLA)occurs

 

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under the MLA, then, in any such event, the amount ofeach Credit, together with any amounts payable by us in connection therewith,shall, at CoBank’s option, become immediately due and payable. To the extentthat any amount paid by the Company pursuant to this Section 7 shall not thenbe due under the terms of a Credit, such payment shall serve as security forthe Company’s obligation to indemnify CoBank for any amounts subsequentlydisbursed by CoBank pursuant to a Credit. Furthermore, upon the institution of any legal proceeding described inSection 6(ii) hereof, the Company will, on demand, assign and deliver toCoBank, as security for the Company’s obligation to indemnify CoBank, cashcollateral in an amount satisfactory to CoBank.

 

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

 

9.     TheUniform Customs and Practice as most recently published by the InternationalChamber of Commerce (hereafter called the “UCP”) shall in all respects bedeemed a part hereof as fully as if incorporated herein, and shall apply to theCredits.  To the extent the UCP isinconsistent with the governing law set forth in the MLA, the UCP shall control.

 

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[Form of Borrowing Base]

** **

**American Crystal SugarCompany**

Monthly Borrowing Base

For the month ended__________________

 
| **Trade Accounts Receivables** | **$** | ** ** | **@ 80%** | **$** |   | **(a)** | ** ** |
|--------------------------------|-------|------------|-----------|-------|--------|---------|------------|

 

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

 
| **Inventory** | **$** | ** ** | **(b)** |   | ** ** |
|---------------|-------|------------|---------|--------|------------|

 

Inventory as determinedon the basis of Net Realizable Value, defined as the expected selling price ofan inventory item less expected costs to complete and dispose, as determined inaccordance with GAAP.

 
| **Crop Payments due Non-members  and members** | **$**  | ** ** | **(c)**   |   | ** ** |
|------------------------------------------------|--------|------------|-----------|--------|------------|
|                                           |   |       |      |   |       |
| **Net Inventory Value (b-c)**                  | **$**  | ** ** | **@ 75%** | **$**  |       | **(d)** |   |
|                                           |   |       |      |   |       |
| **Borrowing Base (a+d)**                       |   |       |      | **$**  |       |   |   |
|                                           |   |       |      |   |       |
| **Commercial Paper**                           |   |       |      | **$**  |       | **(e)** |   |
|                                           |   |       |      |   |       |
| **Seasonal Loan**                              |   |       |      |   |       | **(f)** |   |
|                                           |   |       |      |   |       |
| **CCC**                                        |   |       |      |   |       | **(g)** |   |
|                                           |   |       |      |   |       |
| **Total Short-term Loans (e+f+g)**             |   |       |      | **$**  |       |   |   |
|                                                |        |            |           |        |            |  |  |  |  |

 

 

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Loan No. Z269T04

 

**LETTER OF CREDIT COMMITMENT SUPPLEMENT.**

 

**THIS SUPPLEMENT** to the Master LoanAgreement dated March 31, 2000 ** **(the“MLA”), is entered into as of March 31, 2000**,**between **CoBANK, ACB**(“CoBank”) and**AMERICANCRYSTAL SUGAR COMPANY**, Moorhead, Minnesota   (the “Company”).

 

**SECTION 1.         TheLetter of Credit. **Onthe terms and conditions set forth in the MLA, CoBank agrees to establish aloan commitment to the Company in an amount not to exceed $31,000,000.00 (the“Commitment”).  The Commitment shallexpire at 12:00 noon (Company’s local time) on April 30, 2013 or on such laterdate as CoBank may, in its sole discretion, authorize in writing.

 

**SECTION 2.         Purpose. **The purpose of theCommitment is to reimburse CoBank in the event of draws on letters of creditissued by CoBank (or its predecessor)****for the benefit of the Company,****andto renew, extend and refinance the Company’s obligations to CoBank under theCompany’s existing Letter of Credit Commitment (“Existing Letter of CreditCommitment”) as currently evidenced by Note No. 30343  (the “Note”) and the Loan Agreement dated March 5, 1999**.**(the“Existing Agreement”).  The Companyagrees that on the date when all conditions precedent to CoBank’s obligation toextend credit hereunder have been satisfied: (a) the principal balance outstanding (or any obligationsoutstanding as a result of any letters of credit currently in effect) under theExisting Letter of Credit Commitment shall be transferred to and chargedagainst this Commitment; (b) all accrued obligations of the Company under theExisting Letter of Credit Commitment for the payment of interest or othercharges shall be transferred to and become part of the Company’s obligationsunder this Supplement as if fully set forth herein; and, (c) the Note and theExisting Agreement (to the extent applicable to the Note) shall be deemedreplaced and superseded, but the indebtedness evidenced by such Note shall notbe deemed to have been paid off, by this Supplement and the MLA.

 

**SECTION3.         Promissory Note.** The Company promises to repay all outstanding balances for advances madein support of outstanding letters of credit, upon demand

 

**SECTION 4.         Interest.**The Company agrees to pay interest on the unpaid principalbalance of each loan, from the date of draw to actual repayment on a dailybasis for the actual number of days any portion of the principal isoutstanding.  The unpaid principalbalance shall bear interest at a rate per annum equal at all times to the rateof interest established by CoBank from time to time as its National VariableRate, which Rate is intended by CoBank to be a reference rate and not itslowest rate.  The National Variable Ratewill change on the date established by CoBank as the effective date of anychange therein and CoBank agrees to notify the Company promptly after any suchchange. Interest shall be calculated on the actual number of days each loan isoutstanding on the basis of a year consisting of 360 days and shall bepayable monthly in arrears by the 20th day of the following month.

 

**SECTION 5.         Issuanceof Letters of Credit**. Each letter of credit issued shall reduce the amount available under theCommitment by the maximum amount capable of being drawn thereunder.  The rights and obligations of the partieswith respect to each letter of credit will be governed by the ReimbursementAgreement attached hereto as Exhibit A (which rights and obligations shall bein addition to the rights and obligations of the parties hereunder and underthe MLA).  The fee for issuing each  letter of credit shall be determined CoBankat the time of issuance.  The Companypromises to repay the outstanding balance on the Commitment in full on demand,or if no demand is made, then any time on or before the Commitment expirationdate.

 

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**SECTION 6.          Security. **In addition to any othersecurity that may otherwise be required or provided, the Company’s obligationsunder this Supplement are secured by that Restated Mortgage and SecurityAgreement dated September 15, 1998, from American Crystal Sugar Company to St.Paul Bank for Cooperatives (now known as CoBank as a result of merger), asCollateral Agent.

 

**IN WITNESS WHEREOF,** the parties have causedthis Supplement to be executed by their duly authorized officers as of the dateshown above.

 
| **CoBANK,  ACB** | **AMERICAN  CRYSTAL SUGAR COMPANY** |
|------------------|-------------------------------------|
|             |                                |
| By:              | /s/ Casey Garten                    |   | By: | /s/ Sam Wai |   |
|             |                                |   |   |   |
| Title:           | Vice President                      |   | Title: | Treasurer |   |

 

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**Exhibit A**

 

**LETTER OF CREDIT REIMBURSEMENTAGREEMENT**

 

In consideration of CoBank issuing one or more lettersof credit (each a “Credit”) for the Company’s account under the Supplement towhich this agreement is attached (the “Supplement”), the Company agrees asfollows:

 

1.     TheCompany will pay to CoBank in United States currency and in immediatelyavailable funds the amount of each draft drawn or instrument paid under aCredit.  In addition, the Company agreesto pay to CoBank such fee for issuing each Credit as CoBank shall prescribe, aswell as all customary charges associated with the issuance of a Credit.  If a Credit is payable in a foreigncurrency, the Company will pay to CoBank an amount in United States currencyequivalent to CoBank’s selling rate of exchange for that currency.  In addition to the amounts set forth above,the Company shall pay to CoBank such amounts as CoBank shall determine arenecessary to compensate CoBank for any cost attributable to CoBank issuing orhaving outstanding any Credit resulting from the application of any law orregulation concerning any reserve, assessment, capital adequacy or similarrequirement relating to letters of credit, reimbursement agreements withrespect thereto, or to similar liabilities or assets of banks, whether existingat the time of the issuance of a Credit or adopted thereafter.  Each payment hereunder shall be payable ondemand at the place and manner set forth in the Master Loan Agreement betweenthe parties (the “MLA”) and with interest from the date of demand to the datepaid at CoBank’s National Variable Rate. The Company hereby authorizes CoBank to create a loan under theSupplement bearing interest at the variable rate set forth therein for any sumsowing hereunder.

 

2.     NeitherCoBank nor any of its correspondents shall in any way be responsible for theperformance by any beneficiary of its obligations to the Company nor for theform, sufficiency, correctness, genuineness, authority of the person signing,falsification or legal effect of any documents called for under a Credit ifsuch documents on their face appear to be in order.  In addition, CoBank and its correspondents may receive and acceptor pay as complying with the terms of a Credit any drafts, documents, orcertificates, otherwise in order, signed by any person purporting to be anadministrator, executor, trustee in bankruptcy, debtor in possession, assigneefor the benefit of creditors, liquidator, receiver, or other legalrepresentative of the party authorized under a Credit to draw or issue suchinstruments or other documents.

 

3.     In theevent the Credit is a commercial Credit, then, in addition to the otherprovisions hereof, the Company:  (i)agrees to obtain or cause to be in existence insurance on any merchandisedescribed in the Credit against fire and other usual risks and against anyadditional risks which CoBank may request; and (ii) authorizes and empowersCoBank to collect the amount due under any such insurance and apply the sameagainst any of the Company’s obligations to CoBank arising under the Credit or otherwise.  In addition, whether the Credit is acommercial or a standby Credit, the Company represents and warrants that anyrequired import, export or foreign exchange licenses or other governmentalapprovals relevant to the Credit and the merchandise described therein havebeen obtained and that the transactions contemplated thereby are not prohibitedunder any  law, rule, regulation, orderor the like, including the Foreign Assets Control Regulations of theU.S. Department of Treasury.

 

4.     Alldirections and correspondence relating to a Credit are to be sent at theCompany’s risk and CoBank does not assume any responsibility for anyinaccuracy, interruption, error, or delay in transmission or delivery by post,telegraph, cable or other electronic means, or for any inaccuracy oftranslation.

 

5.     CoBankshall not be responsible for any act, error, neglect, default, omission,insolvency or failure in business of any of its correspondents, and any actiontaken or omitted by CoBank or its correspondents under or in connection with aCredit shall, if taken or omitted with honesty in fact, be binding on theCompany and shall not put CoBank or its correspondents under any resultingliability to the Company.  In no eventshall  CoBank be liable for special,consequential or punitive damages.

 

6.     TheCompany will indemnify CoBank against and hold it harmless from all loss,damage, cost, and expense (including attorneys’ fees and expenses) arising outof (i) its issuance of or any other action taken by CoBank in connection with aCredit, other than loss or damage resulting from its gross negligence orwillful misconduct, and (ii) claims or legal proceedings incident to thecollection of amounts owed by the Company hereunder, or the enforcement ofCoBank’s rights or the rights of others under a Credit, including, withoutlimitation, legal proceedings relating to any court order, injunction or otherprocess or decree restraining or seeking to restrain CoBank from paying anyamount under a Credit.

 

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

 

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

 

9.     TheUniform Customs and Practice as most recently published by the InternationalChamber of Commerce (hereafter called the “UCP”) shall in all respects bedeemed a part hereof as fully as if incorporated herein, and shall apply to theCredits.  To the extent the UCP isinconsistent with the governing law set forth in the MLA, the UCP shallcontrol.

 

40

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**(to be placed on Companyletterhead)**

** **

**AMERICAN CRYSTAL SUGARCOMPANY**

** **

**COMPLIANCE CERTIFICATE**

 

To induce CoBank to makeand continue making advances to the Company and to comply with and demonstratecompliance with the terms, covenants, and conditions of the Loan Agreement andall Supplements thereto, this financial statement is furnished to theBank.  The undersigned certifies that,(i) this statement was prepared from the books and records of the Association,is in agreement with them, and is correct to the best of the undersigned’sknowledge and belief, and (ii) no event has occurred which, with notice orlapse of time, or both, might become an Event of Default under the LoanAgreement.

 

 

AMERICAN CRYSTAL SUGAR

 
|   |   |         |
|--------|--------|--------------|
| Date   |   | (Name/Title) |

 

 

41

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[Form of ComplianceCertificate]

 

# **American Crystal Sugar Company**

## QuarterlyCompliance Certificate

Term and Seasonal Loans

 
| Net Working  Capital:                                       |   |   |   |
|-------------------------------------------------------------|--------|--------|--------|
|                                                        |   |   |   |
| a) Current  Assets as measured in accordance with GAAP      |   | $      |   |
| b) Current  Liabilities as measured in accordance with GAAP |   | $      |   |
|                                                        |   |   |   |
| Net Working  Capital (a-b)                                  |   | $      |   |

*** ***

***Minimum Net Working Capital Required for fiscal quartersother than fiscal year end = $15,000000.***

***Minimum Net Working Capital Required for fiscal year end =$35,000,000.***

 

Long-Term Debt Coverage:

 

     NetFunds

 
|   |                                                                            |   | **Year 1**        |   | **Year 2** |   | **Year 3** |   |
|--------|---------------------------------------------------------------------------------|--------|-------------------|--------|------------|--------|------------|--------|
| a)     | Unit retains                                                                    |   | +                 |   |       |   |       |   |
|   |                                                                            |   |              |   |       |   |       |   |
| b)     | Depreciation and amortization                                                   |   | +                 |   |       |   |       |   |
|   |                                                                            |   |              |   |       |   |       |   |
| c)     | Net income from non-member business and member  business tax timing differences |   | +                 |   |       |   |       |   |
|   |                                                                            |   |              |   |       |   |       |   |
|   |                                                                            |   |              |   |       |   |       |   |
| d)     | Decrease in investments in other cooperatives  (excluding subsidiaries)         |   | +                 |   |       |   |       |   |
|   |                                                                            |   |              |   |       |   |       |   |
|   |                                                                            |   |              |   |       |   |       |   |
| e)     | Net revenue from the sale of stock                                              |   | +                 |   |       |   |       |   |
|   |                                                                            |   |              |   |       |   |       |   |
| f)     | Increase in investments in other cooperatives  (excluding subsidiaries)         |   | (                 | )      | (          | )      | (          | )      |
|   |                                                                            |   |              |   |       |   |       |   |
| g)     | Net loss from non-member business and member  business tax timing differences   |   | (                 | )      | (          | )      | (          | )      |
|   |                                                                            |   |              |   |       |   |       |   |
| h)     | Provision for income tax                                                        |   | (                 | )      | (          | )      | (          | )      |
|   |                                                                            |   |              |   |       |   |       |   |
| i)     | Members’ investment retirements                                            |   | (                 | )      | (          | )      | (          | )      |
|   |                                                                            |   |              |   |       |   |       |   |
|   | Sum (a through i)                                                               |   |              |   |
|   |                                                                            |   |              |   |       |   |       |   |
|   |                                                                            |   | Average Net Funds | $      |       | j      |
|   |                                                                            |   |              |   |       |   |       |   |
|   |                                                                            |   | Long-term Debt    | $      |       | k      |
|   |                                                                            |   |              |   |       |   |       |   |
|   |                                                                            |   | Ratio (k / j)     |   |       | :l     |
|   |                                                                            |   |              |   |       |   |       |   |

 

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Long-Term Debt to Capitalization:

 
|                                                                                                       |   |   |
|------------------------------------------------------------------------------------------------------------|--------|--------|
|                                                                                                       |   |   |
| a)    Long-term debt (excluding current  maturities)  as determined in accordance with GAAP | $      |   |
|                                                                                                       |   |   |
| b)   Total equity as measured in accordance with  GAAP                                           | $      |   |
|                                                                                                       |   |   |
| c)    Capitalization (a + b)                                                                | $      |   |
|                                                                                                       |   |   |
| Long-Term Debt  to Capitalization (a / c)                                                                  |   | :1.0   |
|                                                                                                            |        |        |  |  |

 

Leverage Ratio (Term Pricing Only)
|                                                      |   |   |
|-----------------------------------------------------------|--------|--------|
|                                                      |   |   |
| a)    Long-term Debt                       | $      |   |   |
|                                                      |   |   |
| b)   Actual Less Minimum Net Working Capital    | $      |   |   |
|                                                      |   |   |
| c)    Adjusted Long-term Debt (a — b) | $      |   |   |
|                                                      |   |   |
| d)   Total Member Investment                    | $      |   |   |
|                                                      |   |   |
| e)    Estimated Unit Retains               | $      |   |   |
|                                                      |   |   |
| f)    Adjusted Members Investment (d + e)  | $      |   |   |
|                                                      |   |   |
| g)   Adjusted Leverage Ratio (c / f)            |   | :1.0   |

 

Pricing Grid (Term Only)

 

A.    >     1.35:1___________B.     1.20:1___________ C.     < 1.20:1___________ D.     < 1.0:1___________

 

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