**Exhibit 10.24**

 

LoanNo. Z269T01F

 

**REVOLVING TERM LOANSUPPLEMENT**

 

**THIS SUPPLEMENT** to the Amended and Restated Master LoanAgreement dated July 21, 2003 (the “MLA”), is entered into as of July 11,2005, between **CoBANK,****ACB** (“CoBank”) and **AMERICANCRYSTAL SUGAR COMPANY, Moorhead, Minnesota** (the “Company”), andamends and restates the Supplement dated August 13, 2004 and numberedZ269T01E.

 

**SECTION 1.         TheRevolving Term Loan Commitment.**  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 $58,276,702.22 at any one timeoutstanding (the “Commitment”). Within the limits of the Commitment, theCompany may borrow, repay and reborrow.

 

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

 

**SECTION 3.**         **Term.** The term of the Commitment shall be from the date hereof, up to and includingAugust 1, 2006, or such later date as CoBank may, in its sole discretion,authorise in writing.

 

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

 

**(A)          CoBank Base Rate.** At a rate per annum equal at all times to the rate of interest establishedby CoBank from time to time as its CoBank Base Rate, which Rate is intended byCoBank to be a reference rate and not its lowest rate. The CoBank Base Ratewill change on the date established by CoBank: as the effective date of anychange therein and CoBank agrees to notify the Company of any such change.

 

**(B)          Quoted Rate.** At a fixed rate per annum to be quoted by CoBank in its sole discretionin each instance. Under this option, rates may be fixed on such balances andfor**such periods, as may beagreeable to CoBank in its sole discretion in each instance, providedthat;  (1) the maximum fixed periodshall be 1 day; and (2) the minimum amount that may be fixed each timeshall be $2,000,000.00.

 

**(C)          LIBOR Option.**  At a fixed rate equal to “LIBOR.” (ashereinafter defined) plus 90 basis points per annum (the “LIBOR” Spread).  Under this option: (a) rates may befixed for “Interest Periods” (as hereinafter defined) of 1, 2, 3, or 6 months,or 1 year, as selected by the Company; (b) the minimum amount that may befixed at any one time shall be $2,000,000.00; and (c) rates may only be fixedon a “Banking Day” (as hereinafter defined) or, at the option of the Company,on 3 Banking Days’ prior notice.  Forpurposes hereof: (i) “LIBOR” shall mean the rate (rounded upward to thenearest sixteenth, and adjusted for reserves required on “EurocurrencyLiabilities” (as hereinafter defined) for banks subject to “FRB Regulation D”(as hereinafter defined) or required by any other federal law or regulation)quoted by the British Bankers Association (the “BBA”) at 11:00 a.m. Londontime two Banking Days before the commencement of the Interest Period for theoffering of U.S. dollar deposits in the London interbank market for theinterest 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 interbank market, and banks are open forbusiness in New York City and London, England;

 

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and (iii) “Interest Period” shall mean a period commencing on theday the Company elects to fix a rate under this option and ending on thenumerically corresponding day in the next calendar month or the month that is2, 3, or 6 months or 1 year thereafter, as the case may be; provided, however,that: (x) in the event such ending day is not a Banking Day, such period shallbe extended to the next Banking Day unless such next Banking Day falls in thenext calendar month, in which case it shall end on the preceding Banking Day;and (y) if there is no numerically corresponding day in the month, then suchperiod shall end on the last Banking Day in the relevant month; and (v) “FRBRegulation D” shall mean Regulation D as promulgated by the Board of Governorsof the Federal Reserve System, 12 CFR Part 204, as amended.

 

**(D)          Treasury Option.**  At a fixed rate equal to Applicable TreasuryMargin per annum (as described in terms of basis points (“bps”) in the chart immediatelyset forth below) above the “U.S. Treasury Rate” (as hereinafter defined). Underthis option, balances of $2,000,000.00 or more may be fixed on or before forperiods ranging from two years to the final maturity date of the loan, asselected 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 the lastday of its fixed rate period in order to pay any installment of principal. Forpurposes hereof, the “U.S. Treasury Rate” shall mean the yield to maturity onU.S. Treasury instruments having the same maturity date as the last day of thefixed rate period selected by the Company, as calculated from the bid priceindicated by Telerate (page 5) at the time the rate is fixed. If, however,no instrument is indicated for the maturity selected, then the rate shall be interpolatedbased on the bid prices quoted for the next longest and shortest maturities soindicated. In the event Telerate ceases to provide such quotations ormaterially changes the form or substance of page 5 (as determined byCoBank), then CoBank will notify the Company and the parties hereto will agreeupon a substitute basis for obtaining such quotations

 

**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                                                          |       | 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                                                             |       |

 

The spread over all of the above indices, includingthe Floor (Minimum) Rate, may increase or decrease for future fixed amountsbased on the Company’s previous fiscal quarter’s leverage ratio, asfollows;

 

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| **LEVERAGE RATIO  (as defined below)**                          | ** ** | **INCREASE / DECREASE  TO SPREAD** | ** ** | **CHANGE TO  APPLICABLE 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.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,as it may be amended), divided by total members’ investments plus the estimatedunit retains.

 

Changes to the Applicable LIBOR or TreasuryMargin shall be made quarterly on the latter of either: (a) five businessdays after the Bank’s receipt of the Company’s certification of compliance withthe leverage ratio, or (b) 30 days after the end of each calendar quarter.If the Company fails to timely furnish to CoBank the compliance certificate asrequired to be delivered pursuant to the MLA, then the change to the ApplicableLIBOR and Treasury Margin shall be an increase of the highest permitted underthe above chart.

 

The Company shall select the applicable rate optionat the time it requests a loan hereunder and may, subject to the limitationsset forth above, elect to convert balances bearing interest at the variablerate option to one of the fixed rate options. Upon the expiration of any fixedrate period, interest shall automatically accrue at the variable rate optionunless the amount fixed is repaid or fixed for an additional period inaccordance with the terms hereof. Notwithstanding the foregoing, unless CoBankotherwise consents in its sole discretion in each instance, rates may not befixed for periods expiring after the maturity date of the loans. In the eventCoBank so consents and the Commitment is not renewed, then each balance sofixed shall be due and payable on the last day of its fixed rate period, andthe promissory note set forth below shall be deemed amended accordingly. Allelections provided for herein shall be made telephonically or in writing andmust be received 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 bans thatare outstanding in 4 equal, consecutive annual principal payments of$9,396,579.17, with the first such payment due on or before December 31,2006, and a final principal payment due in an amount equal to the remainingunpaid principal balance on or before December 31, 2010. If anyinstallment due date is not a day on which CoBank is open for business, thensuch payment shall be made on the next day on

 

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which CoBank is open for business. In addition to the above, theCompany promises to pay interest on the unpaid principal balance hereof at thetimes and in accordance with the provisions set forth in Section 4 hereof.This note replaces and supersedes, but does not constitute payment of theindebtedness evidenced by, the promissory note set forth in the Supplementbeing amended and restated hereby.

 

The Company shall be permitted to make specialpayments, in a minimum amount of $388,500,00, on the variable rate portion ofthis loan, when all short term financing, including the Company’s seasonalloans, Commodity Credit Corporation loans and other short term loans have beenzeroed out. These special payments may be readvanced through the expirationdate of the Commitment. Reinstatement may be denied and canceled at any time atthe option of CoBank. The reinstatable commitments arising from such specialpayments shall be subject to the Commitment Fee as described in Section 8below.

 

**SECTION 6.         Prepayment.**  Subject to Section 13 of the MLA, the loans may be prepaid in whole orin part on one CoBank business day’s prior written notice. During the term ofthe Commitment, prepayments shall be applied to such balances, fixed orvariable, as the Company shall specify. After the expiration of the term of theCommitment, prepayments shall, unless CoBank otherwise agrees, be applied toprincipal installments in the inverse order of their maturity and to suchbalances, fixed or variable, 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 unusedportion of the Commitment at the rate of 20 basis points per annum (calculated ona 360 day basis), payable quarterly in arrears by the 20th day following eachcalendar quarter. Such fee shall be payable for each quarter (or portionthereof) occurring during the original or any extended term of the Commitment.

 

**SECTION 8.         CommitmentsArising From Special Payments.**   Commitmentsarising as a result of special payments described in Section 5 above shallbe subject to a commitment fee of 25 basis points (0.25%) on an annualizedbasis, on the average daily unused commitment. Any such fees incurred shall bepayable on the last day of the calendar quarter, in arrears, computed on thebasis of a year of 360 days for the actual number of days elapsed in which suchreinstatable commitments were outstanding,

 

**SECTION 9.          Security.**   In addition to any other security that mayotherwise be required or provided, the Company’s obligations to CoBank underthis Supplement are secured by that Restated Mortgage and Security Agreementdated September 15, 1998, from American Crystal Sugar Company to St. PaulBank for Cooperatives (now known as CoBank as a result of merger), asCollateral Agent, as amended on January 31, 2003 by that certainModification Agreement to the Amended and Restated Mortgage and SecurityAgreement.

 

**SECTION 10.       Amendment Fee.**   In consideration of the amendment, theCompany agrees to pay to CoBank on the execution hereof a fee in the amount of$9,396,58.

 

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

 
| **CoBANK, ACB** |                           | **AMERICAN CRYSTAL SUGAR COMPANY** |
|-----------------|--------------------------------|------------------------------------|
|            |                           |                               |
| By:             | /s/  Pat  Schulz     |                               |   | By: |    /s/  Sam  Wai |   |
|            |                           |                               |
| Title:          | Assistant  Corporate Secretary |                               |   | Title: |    Treasurer |   |

 

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Loan No.Z269T01FNP

 

**REVOLVINGTERM LOAN SUPPLEMENT**

 

**THIS SUPPLEMENT** to the Amended and RestatedMaster Loan Agreement dated July 21, 2003 (the “MLA”), is entered, into asof July 8, 2005, between **CoBANK, ACB**(“CoBank”) and **AMERICAN CRYSTAL SUGAR COMPANY, Moorhead,Minnesota** (the “Company”), and amends and restates the Supplementdated August 13, 2004 and numbered Z269T01ENP.

 

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

 

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

 

**SECTION 3****.**         **Term.**   The term of the Commitment shall be from thedate hereof, up to and including August 1, 2006, or such later date asCoBank 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)          CoBank Base Rate.**  At a rate per annum equal at alltimes to the rate of interest established by CoBank from time to time as itsCoBank Base Rate, which Rate is intended by CoBank to be a reference rate andnot its lowest rate. The CoBank Base Rate will change on the date establishedby CoBank as the effective date of any change therein and CoBank agrees tonotify the Company of any such change.

 

**(B)          Quoted Rate.**  At a fixed rate per annum to be quoted by CoBank in its sole discretionin each instance. Under this option, rates may be fixed on such balances and forsuch periods, as may be agreeable to CoBank in its sole discretion in eachinstance, provided that:  (1) themaximum fixed period shall be 1 day; and (2) the minimum amount that maybe fixed each time shall be $2,000,000.00.

 

**(C)          LIBOR Option.** At a fixed rate equal to “LIBOR” (as hereinafter defined) plus 90 basispoints per annum (the “LIBOR” Spread). Under this option:  (a) rates may be fixed for “Interest Periods”(as hereinafter defined) of 1, 2, 3 or 6 months, or 1 year, as selected by theCompany; (b) the minimum amount that may he 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 3 Banking Days’ priornotice.  For purposes hereof: (i) “LIBOR”shall mean the rate (rounded upward to the nearest sixteenth and adjusted forreserves required on “Eurocurrency Liabilities” (as hereinafter defined) for bankssubject to “PRB Regulation D” (as hereinafter defined) or required by any otherfederal law or regulation) quoted by the British Bankers Association (the “BBA”)at 11:00 a.m. London time 2 Banking Days before the commencement of theInterest for Period for the offering of U.S. dollar deposits in the Londoninterbank market for the Interest Period designated by the Company, aspublished by Bloomberg or another major information vendor listed on the BBA’sofficial website; (ii) “Banking Day” shall mean a day on which CoBank isopen for business, dealings in U.S. dollar deposits are being carried out inthe London interbank market, and banks are open for business in New York Cityand London, England; (iii) “Interest Period” shall mean a period commencing onthe day the Company elects to fix a rate under this

 

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option and ending on the numerically corresponding day in the nextcalendar month or the month that is 2, 3 or 6 months or 1 year thereafter, asthe case may be; provided, however, that: (x) in the event such ending day isnot a Banking Day, such period shall be extended to the next Banking Day unlesssuch next Banking Day falls in the 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; (iv) “Eurocurrency Liabilities” shall havemeaning as set forth in FRB Regulation D; and (v) “FRB Regulation D” shallmean Regulation D as promulgated by the Board of Governors of the FederalReserve System, 12 CFR Part 204, as amended.

 

**(D)          Treasury Option.**  At a fixed rate equal to theApplicable Treasury Margin per annum (as described in terms of basis points (“bps”)in the chart immediately set forth below) above the “U.S. Treasury Rate” (ashereinafter defined). Under this option, balances of $2,000,000.00 or more maybe fixed on or before for periods ranging from two years to the final maturitydate of the loan, as selected by the Company. However, rates may not be fixedin such 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 purposes hereof, the “U.S. Treasury Rate” shallmean 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 thetime the rate is fixed. If, however, no instrument is indicated for thematurity selected, then the rate shall be interpolated based on the bid pricesquoted for the next longest and shortest maturities so indicated. In the eventTelerate ceases to provide such quotations or materially changes the form orsubstance of page 5 (as determined by CoBank), then CoBank will notify theCompany and the parties hereto will agree upon a substitute basis for obtainingsuch quotations,

 

**TREASURYMARGINS**

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

 

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

 

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| **LEVERAGE RATIO  (as defined below)**                         | ** ** | **INCREASE / DECREASE  TO SPREAD** | ** ** | **CHANGE TO  APPLICABLE 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:**   TheCompany will maintain a leverage ratio of not more than 1.50:1.0. Leverageratio is long term debt (excluding current maturities) calculated in accordancewith GAAP plus or minus the difference between actual working capital andMinimum Net Working Capital (as defined in the MLA No. Z269,**Section 10, as it may be amended),divided by total members investments plus the estimated unit retains.

 

Changes to the Applicable LIBOR or TreasuryMargin shall be made quarterly on the latter of either: (a) five businessdays after the Bank’s receipt of the Company’s certification of compliance withthe leverage ratio, or (b) 30 days after the end of each calendar quarter.If the Company fails to timely furnish to CoBank the compliance certificate asrequired to be delivered pursuant to the MLA, then the change to the ApplicableLIBOR and Treasury Margin shall be an increase of the highest permitted underthe above chart.

 

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 thevariable rate option to one of the fixed rate options. Upon the expiration ofany fixed rate period, interest shall automatically accrue at the variable rateoption unless the amount fixed is repaid or fixed for an additional period inaccordance with the terms hereof. Notwithstanding the foregoing, unless CoBankotherwise consents in its sole discretion in each instance, rates may not befixed for periods expiring after the maturity date of the loans. In the eventCoBank so consents and the Commitment is not renewed, then each balance sofixed shall be due and payable on the last day of its fixed rate period, andthe promissory note set forth below shall be deemed amended accordingly. Allelections provided for herein shall be made telephonically or in writing andmust be received 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.**   TheCompany promises to repay the loans that are outstanding in 3 equal,consecutive annual principal payments of $7,603,420.83, with the first suchpayment due on or before December 31, 2006, and a final principal paymentdue in an amount equal to the remaining unpaid principal balance on or before December 31,2009. If any installment due date is not a day on which CoBank is open forbusiness, then such payment shall be made on the next day on which CoBank isopen for business. In addition to the above, the Company promises to payinterest on the unpaid principal balance hereof at the times and in accordancewith the provisions set forth in Section

 

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4 hereof.  This note replaces andsupersedes, but does not constitute payment of the indebtedness evidenced by,the promissory note set forth in the Supplement being amended and restatedhereby.

 

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

 

**SECTION 6.         Prepayment.**   Subject to Section 13 of the MLA, theloans may be prepaid in whole or in part on one CoBank business day’s priorwritten notice. During the term of the Commitment, prepayments shall be appliedto such balances, fixed or variable, as the Company shall specify. After theexpiration of the term of the Commitment, prepayments shall, unless CoBankotherwise agrees, be applied to principal installments in the inverse order oftheir maturity and to such balances, fixed or variable, as CoBank shallspecify.

 

**SECTION 7.         CommitmentFee.**   In consideration of the Commitment, theCompany agrees to pay to CoBank a commitment fee on the average daily unusedportion of the Commitment at the 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 quarter (or portionthereof) occurring during the original or any extended term of the Commitment.

 

**SECTION 8.         CommitmentsArising From Special Payments.**   Commitmentsarising as a result of special payments described in Section 5 above shallbe subject to a commitment fee of 25 basis points (0.25%) on an annualizedbasis, on the average daily unused commitment. Any such fees incurred shall bepayable on the last day of the calendar quarter, in arrears, computed on. thebasis of a year of 360 days for the actual number of days elapsed in which suchreinstatable commitments were outstanding.

 

**SECTION 9.         Security.**  In addition to any other securitythat may otherwise be required or provided, the Company’s obligations to CoBankunder this Supplement are secured by that Restated Mortgage and SecurityAgreement dated September 15, 1998, from American Crystal Sugar Company toSt. Paul Bank for Cooperatives (now known as CoBank as a result of merger), asCollateral Agent, as amended on January 31, 2003 by that certain ModificationAgreement to the Amended and Restated Mortgage and Security Agreement.

 

**SECTION 10.       Amendment Fee.**   Inconsideration of the amendment, the Company agrees to pay to CoBank on theexecution hereof a fee in the amount of $7,603.42.

 

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

 

 
| **CoBANK, ACB** |                           | **AMERICAN CRYSTAL SUGAR COMPANY** |
|-----------------|--------------------------------|------------------------------------|
|            |                           |                               |
|            |                           |                               |
| By:             | /s/  Pat  Schulz     |                               |   | By: |    /s/  Sam  Wai |   |
|            |                           |                               |
| Title:          | Assistant  Corporate Secretary |                               |   | Title: |    Treasurer |   |

 

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Loan No. Z269T06C

 

**REVOLVING TERM LOANSUPPLEMENT**

 

**THIS SUPPLEMENT** to the Amended and Restated Master LoanAgreement dated July 21, 2003 (the “MLA”), is entered into as of July 11,2005, between **CoBANK, ACB** (“CoBank”)and **AMERICAN****CRYSTAL SUGAR COMPANY,****Moorhead,****Minnesota**(the “Company”), and amends and restates the Supplement dated September 8,2004, and numbered Z269T06B.

 

**SECTION 1.**         **The Revolving Term Loan Commitment.**  On the terms and conditions set forth in theMLA and this Supplement, CoBank agrees to make loans to the Company from thedate hereof, up to and including August 1, 2006, in an aggregate principalamount not to exceed, at any one time outstanding, $35,000,000.00 less theamounts scheduled to be repaid during the period set forth below in Section 5(the “Commitment”). Within the limits of the Commitment, the Company mayborrow, repay and reborrow.

 

**SECTION 2.         Purpose.** The purpose of the Commitment is to finance the operating needs andgeneral corporate purposes of the Company and provide for short-term commercialand standby letters of credit.

 

**SECTION 3.**         **Term.** Intentionally Omitted.

 

**SECTION 4.         Interest.** The Company agrees to pay interest on the unpaid balance of the loans inaccordance with one or more of the following interest rate options, as selectedby the Company.

 

**(A)          CoBankBase Rate.**   At a rate per annum equal at all times tothe rate of interest established by CoBank from time to time as its CoBank BaseRate, which Rate is intended by CoBank to be a reference rate and not itslowest rate. The CoBank Base Rate will change on the date established by CoBankas the effective date of any change therein and CoBank agrees to notify theCompany of any such change.

 

**(B)          QuotedRate.**  At a fixed rate per annum to be quoted byCoBank in its sole discretion in each instance. Under this option, rates may befixed on such balances and for such periods, as may be agreeable to CoBank inits sole discretion in each instance, provided that: (1) the maximum fixedperiod shall be 1 day; (2) the minimum amount that may be fixed each timeshall be $2,000,000.00.

 

**(C)          LIBOROption.**  At a fixed rate equal to “LIBOR” (ashereinafter defined) plus 100 basis points per annum (the “LIBOR Spread”).Under this option: (a) rates may be fixed for “Interest Periods” (ashereinafter defined) of 1, 2, 3 or 6 months, or 1 year, as selected by theCompany; (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 3 Banking Days’ priornotice. For purposes hereof: (i) “LIBOR” shall mean the rate (roundedupward to the nearest sixteenth and adjusted for reserves required on “EurocurrencyLiabilities” (as hereinafter defined) for banks subject to “FRB Regulation D”(as hereinafter defined) or required by any other federal law or regulation)quoted by the British Bankers Association (the “BBA”) at 11:00 a.m. London time2 Banking Days before the commencement of the Interest for Period for theoffering of U.S. dollar deposits in the London interbank market for theInterest Period designated by the Company, as published by Bloomberg or anothermajor information vendor listed on the BBA’s official website; (ii) “BankingDay” 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 banksare open for business in New York City and London, England; (iii) “Interest

 

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Period” shall mean a period commencing on the day the Company elects tofix a rate under this option and ending on the 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 Day, such period shall be extended to the nextBanking Day unless such next Banking Day falls in the next calendar month, inwhich case it shall end on the preceding Banking Day; and (y) if there is nonumerically corresponding day in the month, then such period shall end on thelast Banking Day in the relevant month; (iv) “Eurocurrency Liabilities”shall have meaning as set forth in FRB Regulation D; and (v) “FRBRegulation D” shall mean Regulation D as promulgated by the Board of Governorsof the Federal Reserve System, 12 CFR Part 204, as amended.

 

The L1BOR Spread may increase or decrease for future fixed amountsbased on the Company’s previous fiscal quarter’s leverage ratio, as follows:

 
| **LEVERAGE RATIO  (as defined below)**                         | ** ** | **INCREASE/DECREASE  TO LIBOR SPREAD** | ** ** | **CHANGE TO THE  LIBOR SPREAD (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 aleverage ratio of not more than 1.50:1.0. Leverage ratio is long term debt(excluding current maturities) calculated in accordance with GAAP plus or minusthe difference between actual working capital and Minimum Net Working Capital(as defined in the MLA No. Z269, Section 10, as it may be amended),divided by total members’ investments plus the estimated unit retains.

 

Changes to the LIBOR Spread shall be made quarterly on the latter ofeither: (a) five business days after the Bank’s receipt of the Company’scertification of compliance with the leverage ratio, or (b) 30 days afterthe end of each calendar quarter. If the Company fails to timely furnish toCoBank the compliance certificate as required to be delivered pursuant to theMLA, then the change to the LIBOR Spread shall be an increase of the highestpermitted under the above chart.

 

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 variable rate option unless theamount fixed is repaid or fixed for an additional period in accordance with theterms hereof.  Notwithstanding theforegoing, unless CoBank otherwise consents in its sole discretion in eachinstance, rates may not be fixed for periods expiring after the maturity dateof the loans. In the event CoBank consents to one or more balances being fixedfor a period or periods extending beyond the maturity date of the loans and theCommitment is not renewed, then each such balance shall be due and payable onthe last day of its fixed rate period and the promissory note set

 

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forth below shall be deemed amended accordingly. All elections providedfor herein shall be made telephonically or in writing and must be received by12:00 Noon 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 monthly in arrears by the 20th day of thefollowing month; provided, however, in the event the Company elects to fix allor a portion of the indebtedness outstanding under the LIBOR interest rateoption above, interest shall be payable at the maturity of the interest periodand if the LIBOR interest rate fix is for a period longer than 3 months,interest on that portion of the indebtedness outstanding shall be payablequarterly in arrears by the 20th day of the following month and at maturity.

 

**SECTION 5.          Promissory Note.** The Company promises to repay on the dates set forth below, the outstandingprincipal, if any, that is in excess of the listed amounts:

 
| **Payment Date**       | ** ** | **Reducing Commitment Amount** | ** **    |
|------------------------|------------|--------------------------------|---------------|
|                   |       |                           |          |
| December 31, 2006 |       | $                              | 29,166,666.67 |   |
| December 31, 2007 |       | $                              | 23,333,333.34 |   |
| December 31, 2008 |       | $                              | 17,500,000.01 |   |
| December 31, 2009 |       | $                              | 11,666,666.68 |   |
| December 31, 2010 |       | $                              | 5,833,333.35  |   |

 

followed by a final installment in an amount equal to the remainingunpaid principal balance of the loans on December 31, 2011. 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.          Prepayment.**  Subject to Section 13 of the MLA, theloans may be prepaid in whole or in part on one Business Day’s prior writtennotice. 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 theirmaturity and to such balances, fixed or variable, as CoBank shall specify.

 

**SECTION 7.          Security.**  In addition to any other security that mayotherwise be required or provided, the Company’s obligations to CoBank underthis Supplement are secured by that Restated Mortgage and Security Agreementdated September 15, 1998, from American Crystal Sugar Company to St. PaulBank for Cooperatives (now known as CoBank as a result of merger), asCollateral Agent, as amended on January 31, 2003 by that certainModification Agreement to the Amended and Restated Mortgage and SecurityAgreement.

 

**SECTION 8.          Commitment Fee.** In consideration of the Commitment, the Company agrees to pay to CoBanka commitment fee on the average daily unused portion of the Commitment at therate 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 quarter (or portion thereof) occurring during theoriginal or any extended term of the Commitment.

 

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**SECTION 9.         Amendment Fee.**  In consideration of the amendment, the Companyagrees****to pay****to CoBank on the execution hereof a fee inthe amount of $15,000.00.

 

**SECTION 10.       Loan Origination Fee.**  In consideration of the Commitment, the Company agrees to pay to CoBankon the execution hereof a loan origination fee in the amount of $20,000.00.

 

**IN WITNESS****WHEREOF,**the parties have caused thisSupplement to be executed by their duly authorized officers as of the date shownabove.

 
| **CoBANK, ACB** |                           | **AMERICAN CRYSTAL SUGAR COMPANY** |
|-----------------|--------------------------------|------------------------------------|
|            |                           |                               |
| By:             | /s/  Pat  Schulz     |                               |   | By: |    /s/  Sam  Wai |   |
|            |                           |                               |
| Title:          | Assistant  Corporate Secretary |                               |   | Title: |    Treasurer |   |

 

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Loan No. Z269T07

 

**STATUSEDREVOLVING TERM LOAN SUPPLEMENT**

 

**THIS SUPPLEMENT** to the Master Loan Agreement dated July 21,2003 (the “MLA”), is entered into as of July 11, 2005, between **CoBANK, ACB** (“CoBank”) and **AMERICAN CRYSTAL SUGAR COMPANY,****Moorhead,****Minnesota**(the “Company”).

 

**SECTION 1.**         **The Revolving Credit Facility.**  On the terms and conditions set forth in theMLA and this Supplement, CoBank agrees to make loans to the Company during theperiod set forth below in an aggregate principal amount not to exceed, at anyone time outstanding, the lesser of the “Borrowing Base” (as calculatedpursuant to the Borrowing Base Certificate, the form of this is attached heretoas Exhibit A) or the sum of $280,000,000.00. Within the limits of theCommitment, and the limit of the Borrowing Base, the Company may borrow, repayand reborrow.

 

**SECTION 2*.        *Purpose.**  The purpose of the Commitment is to financethe Company’s general corporate purposes, fund working capital requirements,support the Company’s commercial paper program, provide for short-term commercialand standby letters of credit and to renew, extend, and refinance the Company’sobligations to CoBank under the Statused Revolving Credit Supplement dated July 20,2004 and numbered Z269S01G, as amended, and the Revolving Term Loan Supplementdated July 20, 2004 and numbered Z269T05A (the “Existing Agreements”). TheCompany agrees that on the date when all conditions precedent to CoBank’sobligation to extend credit hereunder have been satisfied: (a) theprincipal balance outstanding under the Existing Agreements shall betransferred to and charged against the Commitment; (b) all obligationsrelating to letters of credit issued and outstanding under the ExistingAgreements shall be transferred to and continued as if letters of credit hadbeen issued under this Supplement; (c) all accrued obligations of theCompany under the Existing Agreements for the payment of interest or othercharges shall survive such cancellation and be transferred to and become partof the Company’s obligations under this Supplement as if fully set forthherein; and (d) the Existing Agreements and the promissory note set forthin or executed in connection therewith shall be deemed replaced and superseded,but the indebtedness evidenced by such notes shall not be deemed to have beenpaid off, by this Supplement and the MLA. In addition, in the event any balances bearing interest at a fixed rateare outstanding on the date such loans are being transferred hereto, then suchbalances shall continue to be subject to such rates for the remaining agreedupon fixed rate periods but shall otherwise be subject to the terms hereof.

 

**SECTION 3.         Term.** The term of the Commitment shall be from the date hereof, up to andincluding August 1, 2007, or such later date as CoBank may, in its solediscretion, authorize in writing.

 

**SECTION 4.         Interest.** The Company agrees to pay interest on the unpaid balance of the loans inaccordance with one or more of the following interest rate options, as selectedby the Company:

 

**(A)          Base Rate Option.** At a rate per annum at all times equal to the Base Rate. For thepurposes hereof, Base Rate means that rate in effect from day to day defined asthe “prime rate” as published from time to time in the Eastern Edition of TheWall Street Journal as the average prime lending rate for seventy-five percent(75%) of the United States’ thirty (30) largest commercial banks, or

 

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if The Wall Street Journal shall cease publication or cease publishingthe “prime rate” on a regular basis, such other regularly published average primerate applicable to such commercial banks as is acceptable to the Lender in itsreasonable discretion. Loans for which the Base Rate option is selected arereferred to herein as “Base Rate Loans”. Base Rate Loans shall be: (a) inminimum amounts of $5,000,000.00 and incremental multiples of $1,000,000.00;and (b) made available on any Banking Day.

 

**(B)          Quoted Rate.** At a fixed rate per annum to be quoted by CoBank in its sole discretion ineach instance. Under this option, rates may be fixed on such balances and forsuch periods, as may be agreeable to CoBank in its sole discretion in eachinstance, provided that: (1) the maximum fixed period shall be 1 day; and (2) theminimum amount that may be fixed each time shall be $5,000,000.00.

 

**(C)          LIBOR Option.** At a fixed rate equal to “LIBOR” (as hereinafter defined) plus 75 basispoints per annum. 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 anyone time shall be $5,000,000.00; and (c) rates may only be fixed on a “BankingDay” (as hereinafter defined) or, at the option of the Company, on 3 BankingDays’ prior notice.  For purposes hereof:(i) “LIBOR” shall mean the rate (rounded upward to the nearest sixteenthand adjusted for reserves required on “Eurocurrency Liabilities” (ashereinafter defined) for banks subject to “FRB Regulation D” (as hereinafterdefined) or required by any other federal law or regulation) quoted by the BritishBankers Association (the “BBA”) at 11:00 a.m. London time 2 Banking Daysbefore the commencement of the Interest Period for the offering of U.S. dollardeposits in the London interbank market for the Interest Period designated by theCompany, as published by Bloomberg or another major information vendor listedon the BBA’s official website; (ii) “Banking Day” shall mean a day onwhich CoBank is open for business, dealings in U.S. dollar deposits are beingcarried out in the London interbank market, and banks are open for business inNew York City and London, England; (iii) “Interest Period” shall mean aperiod commencing on the day the Company elects to fix a rate under this optionand ending on the numerically corresponding day in the next calendar month orthe month that is 2, 3 or 6 months or 1 year thereafter, as the case may be;provided, however, that:  (x) in theevent such ending day is not a Banking Day, such period shall be extended tothe next Banking Day unless such next Banking Day falls in the next calendarmonth, in which case it shall end on the preceding Banking Day; and (y) ifthere is no numerically corresponding day in the month, then such period shallend on the last Banking Day in the relevant month; (iv) “EurocurrencyLiabilities” shall have meaning as set forth in FRB Regulation D; and (v) “FRBRegulation D” shall mean Regulation D as promulgated by the Board of Governorsof the Federal Reserve System, 12 CFR Part 204, as amended.

 

**(1)**           Notwithstandinganything herein to the contrary, if, on or prior to the determination of theLIBOR rate for any LIBOR Interest Period, CoBank determines (whichdetermination shall be conclusive) that quotations of interest rates inaccordance with the definition of LIBOR rate are not being provided in therelevant amounts or for the relevant maturities for purposes of determiningrates of interest for LIBOR rate advances as provided in this Supplement, thenCoBank shall give the Company prompt notice thereof, and so long as such conditionremains in effect, CoBank shall be under no obligation to make LIBOR rateloans, convert Base Rate loans into LIBOR rate loans, or continue LIBOR rateloans, and the Company shall, on the last day(s) of the then current applicableLIBOR Interest Period(s) for the outstanding LIBOR rate loans, either prepaysuch LIBOR rate loans or such LIBOR rate loans shall automatically be convertedinto a Base Rate loan in accordance with this Section 4.

 

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**(2)**           Ifany law, treaty, rule, regulation or determination of a court or governmental authorityor any change therein or in the interpretation or application thereofsubsequent to the date hereof (each, a “Change in Law”) shall make it unlawfulfor CoBank to (a) advance any LIBOR rate loan or (b) maintain all or anyportion of a LIBOR rate loan, then CoBank shall promptly notify the Company thereof.  In the former event, any obligation of CoBankto make available any future LIBOR rate loan shall immediately be canceled(and, in lieu thereof shall be made as a Base Rate loan or Quoted Rate loan atthe option of the Company), and in the latter event, any such unlawful LIBORrate loan or portions thereof then outstanding shall be converted, at theoption of the Company, to either a Base Rate loan or a Quoted Rate loan;provided, however, that if any such Change in Law shall permit the LIBOR rateto remain in effect until the expiration of the LIBOR rate period applicable toany such unlawful LIBOR rate loan, then such LIBOR rate loan shall continue ineffect until the expiration of such LIBOR rate period. Upon the occurrence ofany of 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.

 

**(3)**           IfCoBank shall determine that, after the date hereof, the adoption of any applicableLaw, rule or regulation regarding capital adequacy, or any change therein,or any change in the interpretation or administration thereof by anygovernmental authority, central bank or comparable agency charged with theinterpretation or administration thereof, or any request or directive regardingcapital adequacy (whether or not having the force of law) of any suchgovernmental authority, central bank or comparable agency, has or would havethe effect of reducing the rate of return on capital of CoBank as a consequenceof CoBank’s obligations hereunder to a level below that which CoBank could haveachieved but for such adoption, change, request or directive (taking intoconsideration its policies with respect to capital adequacy existing on thedate of this Supplement) by an amount deemed by CoBank to be material, thenfrom time to time, within fifteen (15) days after demand by CoBank, the Companyshall pay to CoBank such additional amount or amounts as will compensate CoBankfor such reduction.  CoBank agrees totake reasonable steps to reduce the amount of such increase, provided, however,that CoBank shall not be required to take any such step, if in CoBank’s soleopinion, CoBank would suffer an economic loss or any negative legal orregulatory consequences as a result thereof. If CoBank is to require the Company to make payments under this Section thenCoBank must make a demand on the Company to make such payment within ninety(90) days of the later of (1) the date on which such capital costs areactually incurred by CoBank, or (2) the date on which CoBank knows, or shouldhave known, that such capital costs have been incurred by CoBank.

 

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 variable rate unless the amountfixed is repaid or fixed for an additional period. Notwithstanding theforegoing, rates may not be fixed for periods expiring after the maturity dateof the loans. All elections provided for herein shall be made telephonically orin writing and must be received by 12:00 Noon Company’s local time; in the caseof LIBOR rate loans, all such elections must be made in writing. Interest shallbe calculated on the actual number of days each loan is outstanding on thebasis of a year consisting of 360 days and shall be payable monthly in arrearsby the 20th day of the following month or such other day that CoBank shallrequire in a written notice to the Company, and at

 

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maturity; provided, however, in the event the Company elects to fix allor a**portion of the indebtednessoutstanding under the LIBOR interest rate option above, interest shall bepayable at the maturity of the interest period and if the LIBOR interest ratefix is for a period longer than 3 months, interest on that portion of theindebtedness outstanding shall be payable quarterly in arrears on eachanniversary of the date the LIBOR interest rate fix was made and at maturity.

 

**SECTION 5.         PromissoryNote.**  Notwithstanding anything to the contraryherein, any loan taken by the Company pursuant to this Commitment shall berepaid on or before the earlier of (i) 360 days following the date thatfunds are advanced to the Company hereunder, or (ii) the expiration ofthis Commitment on August 1, 2007. If any installment due date is not aday on which CoBank is open for business, then such payment shall be made onthe next day on which CoBank is open for business. In addition to the above,the Company promises to pay interest on the unpaid principal balance hereof atthe times and in accordance with the provisions set forth in Section 4hereof.

 

**SECTION 6.         Borrowing Base Certificate, Etc.** The Company agrees to furnish a Borrowing Base Certificate to CoBank atsuch times or intervals as CoBank may from time to time request. Until receiptof such a request, the Company agrees to furnish a Borrowing Base Certificateto CoBank as soon as available after the end of each quarter, but in no eventmore than 5 days after the Company’s quarterly filing with the SecuritiesExchange Commission, calculating the Borrowing Base as of the last day of thequarter for which the Certificate is being furnished. However, if no balance isoutstanding hereunder on the last day of such period, no Report need befurnished. Regardless of the frequency of the reporting, if at any time theamount outstanding under the Commitment exceeds the lesser of the BorrowingBase or $280,000,000.00, the Company shall immediately notify CoBank and repayso much of the loans as is necessary to reduce the amount outstanding under theCommitment to the limits of the lesser of the Borrowing Base or$280,000,000.00.

 

**SECTION 7.         Prepayment.**  Subject to the broken funding surchargeprovision of the MLA, the Company may on one Business Day’s prior writtennotice prepay all or any portion of the loan(s). During the term of theCommitment, prepayments shall be applied to such balances, fixed or variable,as the Company shall specify. After the expiration of the term of the Commitment,prepayments shall, unless CoBank otherwise agrees, be applied to principalinstallments in the inverse order of their maturity and to such balances, fixedor variable, as CoBank shall specify.

 

**SECTION 8.         Lettersof Credit.**  If agreeable to CoBank in its solediscretion in each instance, in addition to loans, the Company may utilize theCommitment to open irrevocable letters of credit for its account. Each letterof credit will be issued within a reasonable period of time after receipt of aduly completed and executed copy of CoBank’s then current form of application(or, if applicable, in accordance with the terms of any CoTrade Agreementbetween the parties), and shall reduce the amount available under theCommitment by the maximum amount capable of being drawn thereunder.  Any draw under any letter of credit issuedhereunder shall be deemed an advance under the Commitment. Each letter ofcredit must be in form and content acceptable to CoBank in its sole discretion,must expire no later than the time the Commitment expires. The fee for issuingeach letter of credit shall be 75 basis points of the face amount of eachletter of credit, along with an issuance fee to CoBank, for its own account,equal to the greater of (a) 1/8% of the face amount of the letter ofcredit, or (b) $2,000.00, payable by the Company at or before issuance oras otherwise agreed. The Company promises to repay

 

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the outstanding balance on the Commitment in full on demand, or if no demandis made, then any time on or before the Commitment expiration date of August 1,2007.

 

**SECTION 9.         Bid Borrowing.**

 

**(A)  General.** CoBank agrees that the Company may from time to time request CoBank to submitan offer to make a loan to the Company, provided, however, that CoBank may, butshall have no obligation to, submit such offer, and the Company may, but shallhave no obligation to, accept any such offer. A request that CoBank submit anoffer to make a loan hereunder shall be referred to herein as a “**bid request**”, and an offer to make a loan that specifies theloan amount, interest rate and maturity shall be referred to herein as the “**bid**”. Bid requests may be made orally or in writing (in aform approved by CoBank) but if made orally shall be confirmed promptly bytelecopy (facsimile) of a written completed bid request in a form approved byCoBank. Each bid request shall specify (a) the amount of the requested loan,which amount must be a minimum amount of $1,000,000.00 or integral multiplesthereof (or the entire available balance of the Commitment), (b) the dateof the loan, and (c) the maturity date or Interest Period of the loan,CoBank may, in response to a bid request, in its discretion, irrevocably submitto the Company a bid containing an offer to make the loan.  Each bid, if submitted, must be submitted tothe Company, whether orally or in writing, by 10:00 a.m. (Denver,Colorado, time) on the day following the bid request. Each bid shall specify(x) the amount of the loan for which such bid is being made, (y) the rate ofinterest per annum offered for the loan (which may be expressed in the form ofan index plus any margin), and (z) the maturity date or Interest Period of theloan, which date shall not be beyond the term of the Commitment. Not later than11:00 a.m. (Denver, Colorado, time) on the day the Company receives CoBank’sbid (or at such later time as CoBank may agree), the Company shall eitherreject the bid or accept the bid by giving notice to CoBank by telephone in eithercase, confirmed by facsimile. Failure to properly notify CoBank of anacceptance of the bid may be treated by CoBank as a rejection. Any loan made asresult of the Company’s acceptance of CoBank’s bid (such loan to be referred toherein as a “bid loan”) shall be subject to the terms of the MLA, thisSupplement and all other Loan Documents entered into by the Company inconnection with the MLA.

 

**(B)  Limitations.** If CoBank has sold participation interests in the Commitment, then bid loansby CoBank shall be deemed to reduce only CoBank’s pro rata share of the totalCommitment. The sum of all bid loans outstanding may not at any time exceed theleaser of (a) $50,000,000.00 or (b) the dollar amount of CoBank’s prorata share of the Commitment (as said amount may be reduced as a result ofother loans made pursuant to the Commitment).

 

**SECTION 10.       Consent of Participants.** CoBank has sold Participation interests in the Loan Documents to thefollowing Participants: Ag Country PCS; AgFirst, FCB; First Farm CreditServices; Wells Fargo Bank, N.A. (formerly Norwest Bank of North Dakota); U.S.AgBank, FCB; and The Bank of Tokyo-Mitsubishi, Ltd.

 

**SECTION 11.       Security.**  Except for CoBank’s lieu on the Company’sequity in CoBank, the Company’s obligations hereunder and, to the extentrelated hereto, the MLA, shall be unsecured.

 

**SECTION 12.       CommitmentFee.**  In consideration of the Commitment, theCompany agrees to pay to CoBank a commitment fee on the average daily unusedportion of the Commitment at the rate of 15 basis points per annum (calculatedon a 360 day basis), payable quarterly in arrears by the 20th day

 

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following each calendar quarter. Such fee shall be payable for eachquarter (or portion thereof) occurring during the original or any extended termof the Commitment.

 

**SECTION 13.**       **Loan Origination Fee.**   Inconsideration of the Commitment, the Company agrees to pay to CoBank on theexecution hereof a loan origination fee in the amount of $210,000.00.

 

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

 
| **CoBANK, ACB** |                           | **AMERICAN CRYSTAL SUGAR COMPANY** |
|-----------------|--------------------------------|------------------------------------|
|            |                           |                               |
| By:             | /s/  Pat  Schulz     |                               |   | By: |    /s/  Sam  Wai |   |
|            |                           |                               |
| Title:          | Assistant  Corporate Secretary |                               |   | Title: |    Treasurer |   |

 

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**EXHIBIT “A”**

 

[Form of BorrowingBase]

**AmericanCrystal Sugar Company**

Monthly Borrowing BaseFor the month ended                   

 

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

 

Trade Accounts Receivables are defined as those of the Company and allSubsidiaries which: (1) arise from the sale and delivery of inventory onordinary trade terms; (2) are evidenced by an invoice; (3) are net ofany 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) arenot subject to any offset or deduction; (6) are not owing by an affiliateof Company; (7) are not owing by an obligor located outside of the U.S.unless the receivable is supported by a letter of credit issued by a bankacceptable to the CoBank; and (8) are not government receivables. Theabove provisions notwithstanding, Trade Receivables shall also exclude (i) anyaccounts that are past due more than 90 days, and (ii) any contra accountregardless of the date;

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

 

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

 
| Crop Payments due Non-members and members                                                                                                                                                                                         |   | $      | (c)    |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|--------|
|                                                                                                                                                                                                                              |   |   |   |
| Net Inventory Value (b-c)                                                                                                                                                                                                         |   | $      | @ 75%  |
| $                               (d)                                    |   |   |   |
|                                                                                                                                                                                                                              |   |   |   |
| Borrowing Base (a+d)                                                                                                                                                                                                              |   |   |   |
| $                                                                      |   |   |   |
|                                                                                                                                                                                                                              |   |   |   |
| Commercial Paper                                                                                                                                                                                                                  |   |   |   |
| $                               (c)                                    |   |   |   |
|                                                                                                                                                                                                                              |   |   |   |
| Statused Revolving Term – RI0013T07                                                                                                                                                                                          |   |   |   |
| $                               (f)                                    |   |   |   |
|                                                                                                                                                                                                                              |   |   |   |
| Commodity Credit Corp. loans                                                                                                                                                                                                      |   |   |   |
|                                      (g) |   |   |   |
|                                                                                                                                                                                                                              |   |   |   |
| Total Short-term Loans (e+f+g)                                                                                                                                                                                                    |   | $      |   |

 

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