**Exhibit10.19**

 

**PROGOLD LIMITED LIABILITY COMPANY**

 

 

**AMENDED AND RESTATED**

**MEMBER CONTROL AGREEMENT**

 

**(CONTAINS RESTRICTIONS ON TRANSFER**

**OF MEMBERSHIP INTERESTS)**

 

 

**September 1, 2009**

 

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**PROGOLD LIMITED LIABILITY COMPANY**

**AMENDED AND RESTATED**

**MEMBER CONTROL AGREEMENT**

**(CONTAINS RESTRICTIONS ON TRANSFER**

**OF MEMBERSHIP INTERESTS)**

 

**Table of Contents**

 
| **Article**                           |   |                                                     | **Page**                                              |
|---------------------------------------|--------|----------------------------------------------------------|-------------------------------------------------------|
|                                  |   |                                                     |                                                  |
| **ARTICLE  I DEFINITIONS**            | **1**  |
| ** **                            |   |
| **ARTICLE  II MEMBERS AND BUSINESS**  | **4**  |
|                                  | 2.1.   | Members                                                  | 4                                                     |
|                                  | 2.2.   | Additional Members                                       | 4                                                     |
|                                  | 2.3.   | Business of the Company                                  | 4                                                     |
|                                  | 2.4.   | Actions Requiring Member and Board Approval              | 4                                                     |
|                                  |   |                                                     |                                                  |
| **ARTICLE  III MEMBERSHIP INTERESTS** | **4**  |
|                                  | 3.1.   | Membership Interests                                     | 4                                                     |
|                                  | 3.2.   | Voting                                                   | 5                                                     |
|                                  |   | (a)                                                      | Voting Power                                          | 5 |
|                                  |   | (b)                                                      | Voting Representatives                                | 5 |
|                                  |   | (c)                                                      | Consents                                              | 5 |
|                                  | 3.3.   | No Cumulative Voting                                     | 5                                                     |
|                                  | 3.4.   | Preemptive Rights                                        | 5                                                     |
|                                  |   | (a)                                                      | When Preemptive Rights Arise                          | 5 |
|                                  |   | (b)                                                      | Exemptions from Preemptive Rights                     | 5 |
|                                  |   | (c)                                                      | Extent of Preemptive Rights                           | 5 |
|                                  |   | (d)                                                      | Waiver of Preemptive Rights                           | 5 |
|                                  |   | (e)                                                      | Notice of Preemptive Rights                           | 6 |
|                                  |   | (f)                                                      | Valuation of Contributions Other Than Money           | 6 |
|                                  | 3.5.   | Waiver of Dissenters’ Rights                        | 6                                                     |
|                                  |   |                                                     |                                                  |
| **ARTICLE  IV CAPITAL CONTRIBUTIONS** | **6**  |
|                                  | 4.1.   | Initial Capital Contributions of Members                 | 6                                                     |
|                                  | 4.2.   | Additional Capital Contributions of Members              | 6                                                     |
|                                  |   | (a)                                                      | Voluntary Additional Capital Contributions of Members | 7 |
|                                  |   | (b)                                                      | Required Additional Capital Contributions of Members  | 7 |
|                                  | 4.3.   | Capital Contributions of New Members                     | 7                                                     |
|                                  | 4.4.   | Capital Accounts                                         | 8                                                     |
|                                  | 4.5.   | Transferee Succeeds to Transferor’s Capital Account | 8                                                     |
|                                  | 4.6.   | No Right to Return of Contributions                      | 8                                                     |
|                                  | 4.7.   | No Interest on Capital                                   | 8                                                     |
|                                  | 4.8.   | Loans to Company                                         | 8                                                     |
|                                  | 4.9.   | Default by Member                                        | 8                                                     |

 

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| **ARTICLE  V ALLOCATIONS**                                     | **9**  |
|----------------------------------------------------------------|--------|
|                                                           | 5.1.   | Allocation of Net Income and Net Losses | 9 |
|                                                           | 5.2.   | Consent to Allocation | 9 |
|                                                           |   |   |   |
| **ARTICLE  VI DISTRIBUTIONS**                                  | **9**  |
|                                                           | 6.1.   | Basis of Distributions | 9 |
|                                                           | 6.2.   | Tax Withholding Obligations Constitute a Distribution | 9 |
|                                                           | 6.3.   | Allocation of Marketing Costs | 9 |
|                                                           | 6.4.   | Periodic Distributions | 10 |
|                                                           |   |   |   |
| **ARTICLE  VII BOARD OF GOVERNORS**                            | **10** |
|                                                           | 7.1.   | Limitation of Governors’ Liability | 10 |
|                                                           | 7.2.   | Written Action By Governors | 11 |
|                                                           |   |   |   |
| **ARTICLE  VIII REQUIRED RECORDS: ACCOUNTING AND TAX MATTERS** | **11** |
|                                                           | 8.1.   | Required Records | 11 |
|                                                           | 8.2.   | Books of Account | 11 |
|                                                           | 8.3.   | Report to Members | 11 |
|                                                           | 8.4.   | Tax Characterization and Returns | 12 |
|                                                           | 8.5.   | Tax Information | 12 |
|                                                           | 8.6.   | Tax Matters Partner | 12 |
|                                                           |   |   |   |
| **ARTICLE  IX ASSIGNMENT MEMBERSHIP INTERESTS**                | **12** |
|                                                           | 9.1.   | Assignment | 12 |
|                                                           |   | (a) | General Restriction on Assignment | 13 |
|                                                           |   | (b) | Conditions Precedent to Assignment of a Membership Interest  to a Non-Member | 13 |
|                                                           |   | (c) | Consent to Proposed Assignment of a Membership Interest to  a Non-Member | 13 |
|                                                           |   | (d) | Effective Date of Assignment | 14 |
|                                                           | 9.2.   | Acquit Company | 14 |
|                                                           | 9.3.   | Restriction on Assignment | 14 |
|                                                           | 9.4.   | First Right of Refusal Upon Proposed Sale of Membership  Interest | 14 |
|                                                           |   | (a) | Notice of Proposed Sale | 14 |
|                                                           |   | (b) | Options to Other Members | 14 |
|                                                           |   | (c) | Exercise and Lapse of Options | 15 |
|                                                           |   | (d) | Proposed Sale to Another Member | 15 |
|                                                           |   | (e) | Restrictions on Assignment Apply | 15 |
|                                                           | 9.5.   | Option to Purchase Membership Interest | 15 |
|                                                           |   | (a) | Purchase Events | 15 |
|                                                           |   | (b) | American Crystal Option | 16 |
|                                                           |   | (c) | Purchase Price and Payment | 16 |
|                                                           |   |   |   |   |
| **ARTICLE X DISSOLUTION: DISSOLUTION AVOIDANCE**               | **16** |
|                                                           | 10.1.  | Dissolution | 16 |
|                                                           |   | (a) | Events of Dissolution | 16 |
|                                                           |   |   | (i) | Expiration of Fixed Period | 16 |
|                                                                |        |  |  |  |  |

 

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|                                           |       |                           | (ii)                                                                | Member and Board Approval             | 16 |
|------------------------------------------------|------------|--------------------------------|---------------------------------------------------------------------|---------------------------------------|----|
|                                           |       |                           | (iii)                                                               | Termination of Membership of a Member | 16 |
|                                           |       | (b)                            | Notice of Dissolution                                               | 17                                    |
|                                           |       | (c)                            | Winding Up of Business                                              | 17                                    |
|                                           | 10.2.      | Dissolution Avoidance          | 17                                                                  |
|                                           |       | (a)                            | Member Consent to Continuation of the Company                       | 17                                    |
|                                           |       | (b)                            | Status of Member Whose Membership Interest is Terminated            | 17                                    |
|                                           |       | (c)                            | No Obligation to Purchase Membership Interest of Terminated  Member | 17                                    |
|                                           |       | (d)                            | Agreement Not to Retire or Resign                                   | 17                                    |
|                                           | 10.3.      | Distributions Upon Liquidation | 18                                                                  |
|                                           |       |                           |                                                                |
| **ARTICLE  XI NEW MEMBERS BOUND BY AGREEMENT** | **18**     |
| ** **                                     | ** ** |
| **ARTICLE  XII REMEDIES**                      | **18**     |
| ** **                                     | ** ** |
| **ARTICLE  XIII MISCELLANEOUS**                | **19**     |
|                                           | 13.1.      | Entire Agreement               | 19                                                                  |
|                                           | 13.2.      | Amendment                      | 19                                                                  |
|                                           | 13.3.      | Severability                   | 19                                                                  |
|                                           | 13.4.      | Consent and Waiver             | 19                                                                  |
|                                           | 13.5.      | No Third Party Beneficiary     | 19                                                                  |
|                                           | 13.6.      | Notices                        | 19                                                                  |
|                                           | 13.7.      | Binding Effect                 | 20                                                                  |
|                                           | 13.8.      | Necessary Instruments and Acts | 20                                                                  |
|                                           | 13.9.      | Number and Gender              | 20                                                                  |
|                                           | 13.10.     | Interpretation                 | 20                                                                  |
|                                           | 13.11.     | Counterparts                   | 20                                                                  |
|                                           | 13.12.     | Governing Law                  | 20                                                                  |

 

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**PROGOLD LIMITED LIABILITY COMPANY**

**AMENDED AND RESTATED**

**MEMBER CONTROL AGREEMENT**

**(CONTAINS RESTRICTIONS ON TRANSFER**

**OF MEMBERSHIP INTERESTS)**

 

THISAMENDED AND RESTATED MEMBER CONTROL AGREEMENT is made effective as of the 1stday of September, 2009, by and between Golden Growers Cooperative, a Minnesotacooperative association, and American Crystal Sugar Company, a Minnesotacooperative association.

 

**RECITALS**

 

WHEREAS,the parties hereto constitute all of the current Members of ProGold LimitedLiability Company, a Minnesota limited liability company; and

 

WHEREAS,Section 322B.37 of the Minnesota Limited Liability Company Act authorizesa “member control agreement” as defined therein; and

 

WHEREAS,the parties previously entered into a Member Control Agreement dated October 1,1994 (the “Member Control Agreement”); and

 

WHEREAS,the parties entered into an Amendment to the Member Control Agreement on October 31,1997, and Amendment No. 2 to the Member Control Agreement on May 27,2009 (the “Amendments”); and

 

WHEREAS,the parties hereto desire to further amend and restate such agreement.

 

NOW,THEREFORE, in consideration of the foregoing, the mutual agreements of theparties contained herein, and the mutual benefits to be gained by theperformance hereof, the parties hereto agree as follows:

 

# **ARTICLE I**

# **DEFINITIONS**

 

Theterms defined in this Article I shall, for all purposes of this Agreement(except as may be otherwise expressly provided in this Agreement or unless thecontext otherwise requires), have the following respective meanings:

 

1.1           “Act” means the Minnesota LimitedLiability Company Act contained in Minnesota Statutes, Chapter 322B, asamended, and any successor thereto.

 

1.2           “Agreement” means this Member ControlAgreement as amended, modified or supplemented from time to time, including anyschedules to the Agreement.

 

1.3           “American Crystal” means AmericanCrystal Sugar Company, a Minnesota cooperative association.

 

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1.4           “Articles of Organization” means thearticles of organization filed on behalf of the Company with the MinnesotaSecretary of State, as amended from tine to time.

 

1.5           “Assign”, “Assigned” or “Assignment”means any voluntary transfer or transfer by operation of law by which aMembership Interest will be transferred, in whole or in part, by a Member,including a sale, exchange, merger, consolidation or any other form ofconveyance.

 

1.6           “Board” or “Board of Governors” meansthe board of governors of the Company.

 

1.7           “Capital Account” means the accountof a Member which is maintained in accordance with the provisions of Section 4.4.

 

1.8           “Code” means the Internal RevenueCode of 1986, as amended, and any successor thereto.  Any reference herein to specific sections ofthe Code and the Treasury Regulations thereunder shall be deemed to include areference to any corresponding provisions of future law.

 

1.9           “Company” means ProGold LimitedLiability Company, a Minnesota limited liability company.

 

1.10         “Contribution Agreement” means awritten agreement between the Company and a Person desiring to make a contributionwhich sets forth the terms of such Person’s agreement to make a contribution(and admission as a Member if not already a Member), including withoutlimitation the agreed value of the contribution that shall be made by suchPerson to the capital of the Company and the Percentage Interest and VotingInterest to which such Person shall be entitled.

 

1.11         “Contribution Allowance Agreement”means a written agreement between the Company and a Person which sets forth theterms upon which such Person has the right, but not the obligation, to make acontribution (and be admitted as a Member if not already a Member), includingwithout limitation the agreed value of the contribution that may be made bysuch Person to the capital of the Company and the Percentage Interest andVoting Interest to which such Person shall be entitled.

 

1.12         “Distributions” means the distributionsto the Members of cash or other assets of the Company made from time to timepursuant to the provisions of this Agreement.

 

1.13         “Financial Rights” means a Member’srights to share in Net Income and Net Losses and Distributions with respect toa Membership Interest in accordance with the terms of this Agreement.

 

1.14         “Golden Growers” means Golden GrowersCooperative, a Minnesota cooperative association.

 

1.15         “Governance Rights” means all of aMember’s rights as a Member in the Company other than Financial Rights and theright to assign Financial Rights.

 

1.16         “Governor” means a natural personserving on the Board of Governors.

 

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1.17         “Manager” means a natural personelected, appointed, or otherwise designated as a manager by the Board ofGovernors, and any other natural person considered elected as a managerpursuant to the Act.

 

1.18         “Member” means a Person reflected inthe Required Records of the Company as the owner of some Governance Rights of aMembership Interest of the Company.

 

1.19         “Membership Interest” means a Member’sinterest in the Company consisting of the Member’s Financial Rights, right toassign Financial Rights, Governance Rights, and right to assign GovernanceRights.

 

1.20         [Intentionally Omitted]

 

1.21         “Net Income” and “Net Losses” mean theprofits and losses of the Company, as the case may be, as determined underCommonly Accepted Accounting Principles as of the close of each of the fiscalyears of the Company.

 

1.22         “Operating Agreement” means theoperating agreement of the Company adopted pursuant to the Act containingrules, resolutions, or other provisions that relate to the management of thebusiness or the regulation of the affairs of the Company.

 

1.23         “Person” means any individual,partnership, limited liability company, corporation, cooperative association,trust or other entity.

 

1.24         “Percentage Interest” as to any Membermeans the “Percentage Interest” reflected on Schedule A for such Member, asdeemed amended in accordance with Sections 4.1(b), 4.2(a), 4.3, and 4.9.  “Percentage Interests” means all of suchPercentage Interests in the Company.

 

1.25         “Preemptive Right” is the right of aMember to make contributions (or enter into a Contribution Agreement to makecontributions) of a certain amount or to enter into a Contribution AllowanceAgreement specifying future contributions of a certain amount before the Companymay accept new contributions from (or enter into Contribution Agreements with)other Persons or enter into Contribution Allowance Agreements with otherPersons as provided for in Section 3.4.

 

1.26         “Required Records” means those recordsrequired to be maintained under Section 322B.373 of the Act.

 

1.27         “Tax Withholding Obligation” means anamount equal to the portion of any amount allocated, credited, or otherwisedistributable to a Member which the Company is required to withhold for incometax purposes pursuant to any applicable federal, state, local, or othergovernmental agency law or regulation.

 

1.28         “Voting Interest” as to any Membermeans the “Voting Interest” reflected on Schedule A for such Member, as deemedamended in accordance with Sections 4.1(b), 4.2(a), 4.3, 4.9 and 10.2(b).  “Voting Interests” means all of such VotingInterests in the Company.

 

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# **ARTICLE II**MEMBERS AND BUSINESS

# ** **

2.1.         Members.  The names and addresses of the Members areset forth on Schedule A. Each Member shall give the Board of Governors at leastten (10) days prior written notice of any change in such Member’s addressas shown on Schedule A.  The Membersacknowledge and agree that in addition to this Agreement, the relationshipamong the Members and the Company is established and governed by theAdministrative Services Agreement dated as of September 1, 1996 betweenthe Company and American Crystal.

 

2.2.         Additional Members.  No additional Members shall be admitted tothe Company except as provided in Section 4.3.

 

2.3.         Business of the Company.  Without limiting the general businesspurposes or powers of the Company pursuant to the Act, the Members agree thatthe business of the Company shall be to own and operate one or more corn wetmilling processing plants that may be located in any of the States of SouthDakota, Minnesota or North Dakota, and to undertake and carry on all activitiesnecessary or advisable in connection with the ownership and operation of suchplants.  The Company shall not engage inany other business incompatible with the business of owning and operating suchplants without the prior written consent of Members owning at least a majorityof the Voting Interests.  Notwithstandingthe foregoing, the Members authorize the Company’s lease of its Wahpeton, NorthDakota wet corn milling facility (“Facility”) to Cargill, Incorporated (“Cargill”)and agree that this lease is compatible with the business of the Company.

 

2.4.         Actions Requiring Member andBoard Approval . Notwithstanding anything to the contrary in this Agreement and withoutlimiting the authority of either the Members or the Board of Governors, thefollowing Company actions must be approved by both the affirmative vote ofMembers owning a majority of the Voting Interests at a duly held meeting of theMembers and the affirmative vote of a majority of the Governors present at aduly held meeting of the Board of Governors: (a) mergers or consolidations involving the Company, (b) saleor liquidation of substantially all of the assets of the Company, (c) amendmentof the Articles of Organization or Operating Agreement of the Company, (d) dissolutionof the Company as provided in Section 10.1(a), (e) approval of thestrategic plan of the Company and any amendments thereto, which plan shallinclude, but need not be limited to, product mix, primary customers, marketingplans, pricing/margin expectations, and capitalization plans, (f) theapproval of new Members as provided in Section 4.3, and (g) theapproval of loans to the Company by Members as provided in Section 4.8.  A vote on any of the foregoing actions maytake place at a meeting of the Board or Members only if the notice of suchmeeting includes specific notice of the action to be considered.

 

# **ARTICLE III**MEMBERSHIP INTERESTS

# ** **

3.1.         Membership Interests.  The Membership Interests reflected inSchedule A are ordinary Membership Interests of one class, without series, andshall have the rights provided by 

 

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law,subject to any statement in this Agreement of the specific rights or terms ofsuch Membership Interests.

 

3.2.         Voting.

 

(a)           Voting Power.  Members shall be entitled to vote on allmatters in proportion to their Voting Interests as set forth on Schedule A.

 

(b)           Voting Representatives.  Each Member who is not an individual shalldesignate in writing an authorized voting representative to cast such Member’svote and may also designate one or more alternate authorized votingrepresentatives.  Any of such alternateauthorized voting representatives may cast such Member’s vote in the absence ofthe authorized voting representative.  AMember may designate a new authorized voting representative or new alternateauthorized voting representatives by written notice to the other Members.

 

(c)           Consents.  Whenever this Agreement or the Act allows foror requires the Members to consent to an action, the authorized votingrepresentative or alternate authorized voting representatives of each Memberprovided for in Section 3.2(b) shall grant or withhold such consentson behalf of such Member.

 

3.3.         No Cumulative Voting.  Members shall not be entitled to cumulatetheir voting power for the election of Governors.

 

3.4.         Preemptive Rights.

 

(a)           When Preemptive Rights Arise.  A Member has a Preemptive Right whenever theCompany proposes to accept contributions from (or enter into ContributionAgreements with) other Persons or enter into Contribution Allowance Agreementswith other Persons, except as provided in Section 3.4(b).  Members shall have such Preemptive Rightsregardless of whether the contribution is to be made in the form of money or aform other than money.

 

(b)           Exemptions from PreemptiveRights.  No Preemptive Rights arise asto contributions to be accepted from (or Contribution Agreements to be enteredinto with) other Persons or as to Contribution Allowance Agreements to beentered into with other Persons when the contribution is (i) to be made orreflected pursuant to a plan of merger or exchange, or (ii) to be made orreflected pursuant to a plan of reorganization approved by a court of competentjurisdiction pursuant to a state or federal statute.

 

(c)           Extent of Preemptive Rights.  The extent to which each Member may make anew contribution, or obtain the right to make a new contribution under aContribution Allowance Agreement, by exercise of a Preemptive Right is theratio that such Member’s Percentage Interest before the new contribution bearsto the total of all Members’ Percentage Interests before the new contribution.

 

(d)           Waiver of Preemptive Rights.  A Member may waive a Preemptive Right inwriting.  Unless otherwise provided inthe waiver, a waiver of Preemptive Rights is effective 

 

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onlyfor the proposed contribution or Contribution Allowance Agreement described inthe waiver.

 

(e)           Notice of Preemptive Rights.  When the Company proposes to accept new contributions(or enter into Contribution Agreements) or enter into Contribution AllowanceAgreements with respect to which Members have Preemptive Rights under this Section 3.4,the Board of Governors shall cause notice to be given to each Member entitledto Preemptive Rights.  The notice must begiven at least sixty (60) days before the date by which the Member mustexercise a Preemptive Right and must contain (i) the extent of the Member’sPreemptive right, being:  (1) in thecase of a Preemptive Right to make a contribution (or enter into a ContributionAgreement), the amount of the contribution to be made, and (2) in the caseof a Preemptive Right to enter into a Contribution Allowance Agreement, theamount of the contribution to be allowed under that Contribution AllowanceAgreement, (ii) the method used to determine the extent of the Member’sPreemptive Rights, (iii) the terms and conditions upon which the Membermay make a contribution (or enter into a Contribution Agreement) or enter intoa Contribution Allowance Agreement, and (iv) the time within which and themethod by which the Member must exercise the Preemptive Right.

 

(f)            Valuation of ContributionsOther Than Money.  In theevent the Company proposes to accept contributions from (or enter into ContributionAgreements with) Persons or enter into Contribution Allowance Agreements withPersons when the contribution is to be made in a form other than money, thenthe value of such contribution shall be determined by appraisals as provided inthis Section 3.4(f).  The value ofthe contribution shall first be determined by the opinion of two independentappraisers, one of which shall be selected by the Person who is to make thecontribution and one of which shall be selected by Members owning a majority ofthe Voting Interests.  If the results ofthe two appraisers do not differ by more than ten percent (10%) of the higherappraisal, then the average of the two appraisals shall be considered the valueof the contribution.  If the results ofthe two appraisers differ by more than ten percent (10%) of the higherappraisal, a third appraiser shall be selected by mutual agreement of the firsttwo appraisers.  The average of the twoclosest appraisals among the three appraisals shall then be considered thevalue of the contribution.  All suchappraisals shall be completed prior to notice of Preemptive Rights being givento Members pursuant to Section 3.4(e). The cost of all appraisals shall be paid by the Company.

 

3.5.         Waiver of Dissenters’ Rights.  Each Member hereby waives and agrees not toassert dissenters’ rights under the Act, subject to Section 322B.873,Subd. 3 of the Act.

 

# **ARTICLE IV**CAPITAL CONTRIBUTIONS

# ** **

4.1.         Initial CapitalContributions of Members.  Thenames of the Members and the respective initial contributions are reflected onSchedule A. Each Member shall be credited with their respective PercentageInterest set forth on Schedule A.

 

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4.2.         Additional CapitalContributions of Members.

 

(a)           Voluntary Additional CapitalContributions of Members. Additional voluntary contributions from Members shall be accepted andadditional Contribution Agreements or Contribution Allowance Agreements shallbe entered into with Members by the Board of Governors only upon (i) theprior written directive of Members owning at least a majority of the VotingInterests, regardless of whether the Board approves of such contribution ofadditional capital, and (ii) in cases where Preemptive Rights provided forin Section 3.4 apply, only to the extent that the Members have (1) waivedin writing such Preemptive Rights, or (2) failed to exercise suchPreemptive Rights by the date fixed by the Board for the exercise of thosePreemptive Rights in the Notice of Preemptive rights required by Section 3.4(e),provided that within one year of such date the Board may accept contributionsor enter into Contribution Agreements or Contribution Allowance Agreements asdirected by the Members only on terms no less favorable to the Company than thoseoffered to the Members.  Upon suchwritten directive and contribution of additional capital, Schedule A shall bedeemed to be appropriately amended. There shall be no limit on the Voting Interest or Percentage Interestwhich any Member may own.

 

(b)           Required Additional CapitalContributions of Members. Except as provided in Section 4.1(b), on September 1, 1997 andeach September 1 thereafter, the Members shall, if approved by the Boardof Governors, contribute a pro rata share, based upon the Percentage Interestsof the Members, of up to an aggregate annual maximum of Five Million Dollars($5,000,000), to the capital of the Company. The amount of such contributions shall be determined by the Board ofGovernors of the Company.  No otheradditional contributions to the capital of the Company from Members shall berequired without the prior written consent of all the Members.  If such consent is obtained, such requiredadditional contributions shall be assessed against the Members based upon thePercentage Interests of the Members. Notwithstanding the foregoing, the Board of Governors may, in itsdiscretion, by resolution require that any Member to whom a Tax WithholdingObligation is attributable make an additional contribution to the capital ofthe Company in an amount equal to such Tax Withholding Obligation.

 

4.3.         Capital Contributions of NewMembers.  New contributions from Personsseeking to become Members shall be accepted and new Contribution Agreements orContribution Allowance Agreements shall be entered into with Persons seeking tobecome Members (and new Membership Interests shall be thereby granted) by theBoard of Governors only upon (a) both the affirmative vote of a majorityof the Governors present at a duly held meeting of the Board and the priorwritten approval of Members owning at least a majority of the Voting Interests,and (b) in cases where Preemptive Rights provided for in Section 3.4apply, only to the extent that the Members have (i) waived in writing suchPreemptive Rights, or (ii) failed to exercise such Preemptive Rights bythe date fixed by the Board for the exercise of those Preemptive Rights in theNotice of Preemptive rights required by Section 3.4(e), provided thatwithin one year of such date the Board may accept contributions or enter intoContribution Agreements or Contribution Allowance Agreements only on terms noless favorable to the Company than those offered to the Members.  Upon such approval and issuance of additionalMembership Interests, Schedule A shall be deemed to be appropriatelyamended.  Nothing in this Section 4.3shall be construed to limit the effect of Section 9.1 with respect to theAssignment of Membership Interests by Members.

 

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4.4.         Capital Accounts.  A separate Capital Account shall bemaintained for each Member.  The initialbalances in the Capital Accounts shall be, for each Member, the initial capitalcontribution as set forth on Schedule A. The Capital Account of each Membershall be increased by (a) the amount of any additional contribution suchMember makes to the capital of the Company pursuant to Section 4.2; (b) theagreed value of property contributed by such Member to the Company, net ofliabilities which the Company assumes or to which the property is subject; and (c) theshare of Company income and gains (including income and gains exempt from tax)allocated to such Member under the provisions of Article V; and shall bedecreased by (i) any Distribution made by the Company’ to such Member pursuantto the provisions of Article VI; (ii) the agreed value of anyproperty distributed to such Member by the Company, net of liabilities attachedto such property which the Member assumes or to which the property is subject;and (iii) the share of Company losses and deductions (including anyexpenditures of the Company described in Section 705(a)(2)(B) of theCode or treated as such expenditures pursuant to Treasury Regulations Section 1.704-1(b)(2)(iv)(i))allocated to such Member under the provisions of Article V.

 

4.5.         Transferee Succeeds toTransferor’s Capital Account.  Any transfers permitted by Article IX ofthis Agreement by a Member to a transferee of all or a part of such Member’sFinancial Rights in the Company shall vest in such permitted transferee (andsuch permitted transferee shall become a successor in interest to) theproportionate interest of the transferor Member’s Capital Account to the extentof the Membership Interest transferred.

 

4.6.         No Right to Return ofContributions.  The Membersshall have no right to the withdrawal or the return of their respectivecontributions to the capital of the Company except to the extent set forth in Section 10.4upon liquidation of the Company.

 

4.7.         No Interest on Capital.  No interest shall be paid by the Company onthe initial or any subsequent contribution to the capital of the Company.

 

4.8.         Loans to Company.  A Member may lend money to the Company fromtime to time, if authorized by the Board of Governors and Members owning atleast a majority of the Voting Interests. Any such loan shall not be treated as a contribution to the Capital ofthe Company for any purpose or entitle the Member to any increase in suchMember’s share of the income, gain, losses, deductions, credits orDistributions of the Company and the Company shall be obligated to such Memberfor the amount of any such loan.  Theinterest rate and other material terms of any loan shall be as agreed to by theMember making the loan and approved by the Board of Governors and Members owningat least a majority of the Voting Interests.

 

4.9.         Default by Member.  In the event that a Member fails to make anypayment, or any installment thereof, when due, of any contribution or otherobligation hereunder or under a Contribution Agreement, the Board of Governorsmay enforce such obligation in such manner as may be permitted by law.  Without limiting the generality of theforegoing, the Board of Governors may, in its sole discretion, (i) bringan action at law or in equity to enforce such obligation, (ii) assessinterest on the unpaid amount at the highest rate of interest then beingcharged to the Company by any lender, (iii) allow the remaining Members toloan funds to the Company in the amount of the deficiency, (iv) retainamounts of Distributions otherwise distributable to the defaulting Member as anoffset to the deficiency, and/or (v) allow the 

 

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remainingMembers to contribute the amount of the deficiency, thereby increasing theirMembership Interests in relation to the defaulting Member.  If the Board allows the remaining Members tocontribute the amount of the deficiency pursuant to clause (v) above, eachremaining Member shall have the right to contribute an amount in the proportionwhich each such remaining Member’s Percentage Interest bears to the aggregatePercentage Interests of all remaining Members who desire to participate in suchcontribution.  Upon such contribution bythe remaining Members, Schedule A shall be deemed to be appropriatelyamended.  If the Board elects to pursueremedies other than as provided in clause (v) above, the Voting Interestand Percentage Interest of the defaulting Member shall remain unaffected by thedefault.  Each Member agrees that in theevent such Member fails to make any payment, or any installment thereof, whendue, of any contribution or other obligation hereunder or under a ContributionAgreement, such Member and the voting representatives of such Member andGovernors appointed by such Member shall not be permitted in person or by proxyto vote either as a Member or a Governor on the question of what action theCompany shall take with respect to such default.

 

# **ARTICLE V**ALLOCATIONS

# ** **

5.1.         Allocation of Net Income andNet Losses .  Net Incomeand Net Losses shall be allocated annually among the Members based on theirPercentage Interests as reflected on Schedule A, subject to adjustmentreflecting the allocation of marketing costs as provided in Section 6.3,and the Capital Accounts shall be adjusted in accordance with Section 4.4.

 

5.2.         Consent to Allocation.  Each Member, by execution of this Agreement,expressly consents to the method provided herein for the allocation of Companyprofits and losses.

 

# **ARTICLE VI**DISTRIBUTIONS

# ** **

6.1.         Basis of Distributions.  Any Distributions authorized by the Board ofGovernors, other than Distributions upon liquidation pursuant to Section 10.3and Tax Withholding Obligations which constitute Distributions pursuant to Section 6.2,shall be distributed among the Members based on their Percentage Interests asreflected on Schedule A, subject to adjustment to reflect the allocation ofmarketing costs as provided in Section 6.3, provided that the Board may,in its discretion, reduce the amount otherwise distributable to any Member bythe amount of a Tax Withholding Obligation attributable to such Member whichhas not previously reduced a Distribution to such Member.

 

6.2.         Tax Withholding ObligationsConstitute a Distribution.  AnyTax Withholding Obligation which is withheld by the Company shall constitute aDistribution of such amount by the Company to the Member to whom such TaxWithholding Obligation is attributable.

 

6.3.         Allocation of MarketingCosts.  It is anticipated that theCompany will enter into Marketing Agreements with United Sugars Corporation (“United”)and Midwest Agri Commodities Company (“Midwest”) under which United and Midwestwill market certain products produced by the Company.  The Marketing Agreements will require thatthe Company 

 

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reimburseUnited and Midwest for their marketing costs through the payment of a “StructuralCharge,” “Transactional Charges” and “Direct Costs” (as such terms are definedtherein).  It is the intention of theMembers that Golden Growers be effectively responsible for payment of onehundred percent (100%) of the Structural Charge and Transactional Charges paidby the Company to United and Midwest during the first five (5) years thatsuch charges are payable pursuant to the Marketing Agreements.  Thereafter, the Structural Charges andTransactional Charges shall be the responsibility of all Members in proportionto their respective Percentage Interests. In furtherance of the foregoing intentions, the Members hereby agreethat the Company shall make appropriate adjustments to the respectiveallocations of Net Income and Net Losses and Distributions to Members in orderto reduce the allocations of Net Income and the Distributions (and increase theallocations of Net Losses) to Golden Growers, and increase the allocations ofNet Income and the Distributions (and reduce the allocations of Net Losses) toAmerican Crystal and Minn-Dak (on the basis of their respective PercentageInterests) during such five year period, to provide that Golden Growers willeffectively pay such Structural Charge and Transactional Charges.

 

6.4.         Periodic Distributions.  The Board of Governors shall authorizeperiodic Distributions of cash to the Members based on their PercentageInterests as reflected on Schedule A, subject to the adjustments provided inthis Article VI, in a total amount equal to the estimated Net Income, ifany, for the then current fiscal year to the extent such a Distribution islegally permitted.  A final Distributionshall be paid to the Members, subject to the adjustments provided in this Article VI,within ninety (90) days following the end of the fiscal year of the Companybased on the actual Net Income for the preceding fiscal year to the extent sucha Distribution is legally permitted.  TheBoard may, in its discretion, reduce the amount otherwise distributable to anyMember by the amount of a Tax Withholding Obligation attributable to suchMember which has not previously reduced a Distribution to such Member.

 

# **ARTICLE VII**BOARD OF GOVERNORS

# ** **

7.1.         Limitation of Governors’Liability.  No Governorof the Company shall be personally liable to the Company or its Members formonetary damages for breach of fiduciary duty by such Governor; provided,however, that this Section 7.1 shall not eliminate or limit the liabilityof a Governor to the extent provided by applicable law (a) for any breachof the Governor’s duty of loyalty to the Company or its Members, (b) foracts or omissions not in good faith or which involve intentional misconduct ora knowing violation of law, (c) under Section 322B.56 or 80A.23 ofthe Minnesota Statutes, (d) for any transaction from which the Governorderived an improper personal benefit, or (e) for any act or omissionoccurring prior to the effective date of this Agreement.  It is the intention of the Members of theCompany to eliminate or limit the personal liability of the Governors of theCompany to the greatest extent permitted under Minnesota Law.  If amendments to Minnesota Statutes arepassed after this Agreement becomes effective which authorize limited liabilitycompanies to act to further eliminate or limit the personal liability ofGovernors, then the liability of the Governors of the Company shall beeliminated or limited to the greatest extent permitted by the MinnesotaStatutes as so amended.  No amendment toor repeal of the provisions of this Section 7.1 shall apply to or have anyeffect on the liability or alleged liability of any Governor of the Company foror with respect to any acts or omissions of such Governor occurring prior tosuch amendment or repeal.

 

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7.2.         Written Action By Governors.  Any action required or permitted to be takenat a meeting of the Board of Governors not needing approval by the Members, maybe taken by written action signed by the number of Governors that would berequired to take such action at a meeting of the Board of Governors at whichall Governors are present; provided, however, that at least one Governorappointed by each Member must sign such written action.  The written action is effective when signedby the required number of Governors, unless a different effective time isprovided in the written action.  Whenwritten action is taken by less than all Governors, notice of the text andeffective date of such written action must be immediately given to allGovernors.

 

# **ARTICLE VIII**REQUIRED RECORDS:  ACCOUNTING AND TAXMATTERS

# ** **

8.1.         Required Records.  The Board of Governors shall maintain theRequired Records of the Company in a complete and accurate manner.  The Board of Governors shall maintain theRequired Records on a current basis, including without limitation the recordingof any transfer of all or part of a Member’s Membership Interest pursuant to Article IXin the Required Records as soon as the Board receives notice of suchtransfer.  The Board of Governors shallconspicuously note in the Required Records of the Company that the Members’interests are governed by this Agreement and that this Agreement contains a restrictionon the assignment of Financial Rights. The Required Records of the Company shall at all times be kept at theprincipal executive office of the Company or such other place or places withinthe United States as the Board of Governors may determine.  Each of the Members shall have access to andmay inspect and copy the Required Records as provided in Section 322B.373of the Act.

 

8.2.         Books of Account.  The Board of Governors shall keep completeand accurate accounts of all transactions of the Company in proper books ofaccount and shall enter or cause to be entered therein a full and accurateaccount of each and every Company transaction in accordance with accountingprinciples and methods as determined by the Board of Governors with the adviceof the Company’s accountants.  The booksof account of the Company shall be closed and balanced as of the end of eachfiscal year.  The books of account andother records of the Company shall at all times be kept at the principalexecutive office of the Company or such other place or places within the UnitedStates as the Board of Governors may determine.

 

Eachof the Members shall have access to and may inspect and copy any of such booksand records at all reasonable times and in accordance with the Act.

 

8.3.         Report to Members.  Not later than ninety (90) days after the endof each fiscal year of the Company, each Member shall be furnished with areport of the business and operations of the Company during such fiscal year,which report shall constitute the accounting of the Board of Governors for suchfiscal year.  The report shall containfinancial statements, including statements of assets and liabilities, of incomeand expenses, of Members’ equity and changes in financial position, of cashflow, and of the amount and nature of any compensation paid to the Board ofGovernors and Managers during the period, including a description of theservices performed in relation thereto, and shall otherwise be in such form andhave such content as the Board of Governors deems proper.

 

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8.4.         Tax Characterization andReturns.  The Members acknowledge thatthe Company will be characterized as a partnership for income taxpurposes.  The Chief Manager of theCompany shall prepare or cause to be prepared and shall file on or before thedue date (or any extension thereof) any federal, state or local tax returnsrequired to be filed by the Company. Members owning at least a majority of the Voting Interests shall havecomplete discretion and authority concerning any tax election required or permittedto be made by the Company.

 

8.5.         Tax Information.  The Chief Manager of the Company shalldeliver or cause to be delivered to each Member within ninety (90) days afterthe end of each fiscal year (or within a reasonable time thereafter if theCompany’s due date for a tax return is extended) such information concerningthe Company as is necessary or appropriate to permit each Member to properlycomplete any federal, state or local income tax return in which Members mustinclude items attributable to the Company. The Chief Manager shall endeavor to provide sufficient information fromtime to time during the year as may be appropriate to permit the Members to payfederal, state and local estimated taxes.

 

8.6.         Tax Matters Partner.  The Tax Matters Partner shall be the Memberso designated in accordance with Sections 6221-33 of the Code and relatedTreasury Regulations and such Member shall assume the responsibilities assignedto tax matters partners therein.  AmericanCrystal shall be the Tax Matters Partner until such time as Members owning atleast a majority of the Voting Interests may designate a successor Tax MattersPartner.  If on advice of counsel the TaxMatters Partner determines that it is in the best interest of the Members thatthe final results of any administrative proceeding be appealed by theinstitution of legal proceedings, the Tax Matters Partner is hereby authorizedto commence such legal proceedings in such forum as the Tax Matters Partner, onadvice of counsel, determines to be appropriate.  In the event the Tax Matters Partner selectsa forum for appeal in which the Members are required to deposit a proportionateshare of any disputed tax before making such appeal, the Tax Matters Partnermust obtain the approval of Members owning at least a majority of the VotingInterests.  If such approval is obtained,each of the Members will be required to deposit and pay such Member’sproportionate share of such disputed tax before participating in suchappeal.  The Members acknowledge thatsuch deposit under current law does not earn interest and that the failure toso deposit may preclude a Member from pursuing any other sort of appeal bycourt action.  The Tax Matters Partnershall not be liable to any other Member for any action taken with respect toany such administrative proceedings or appeal so long as the Tax MattersPartner is not grossly negligent or guilty of willful misconduct.  Any costs paid or incurred by the Tax MattersPartner in connection with its activities in such capacity shall be reimbursedby the Company.  Each Member acknowledgesthat any cost a Member may incur in connection with an audit of such Member’sincome tax return, including an audit of such Member’s investment in thisCompany, is such Member’s sole responsibility and obligation; and neither theCompany, the Board of Governors, the Managers nor the Tax Matters Partner shallbe liable to any Member for reimbursement or sharing of any such costs.

 

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# **ARTICLE IX**ASSIGNMENT MEMBERSHIP INTERESTS

# ** **

9.1.         Assignment.

 

(a)           General Restriction onAssignment.  No Membermay Assign all or part of such Member’s Membership Interest except as permittedunder this Section 9.1.  A Member’sMembership Interest may be Assigned in whole or in part, without the consent ofany other Member, to another Person already a Member at the time of theAssignment.  Notwithstanding anything tothe contrary in this Agreement, no Member may assign all or a part of suchMember’s Membership Interest to any person who is not already a Member at thetime of the assignment without Cargill’s prior written consent during the termof Cargill’s lease of the Facility or any extension thereof.  Any other Assignment of a MembershipInterest, in whole or in part, is effective only if (1) Members owning amajority of the Voting Interests and a majority of the Percentage Interestscollectively owned by Members (excluding the Member seeking to make theAssignment and such Member’s Voting Interest and Percentage Interest), approvethe Assignment by written consent, which consent may be granted or withheld asthe remaining Members may determine in their sole discretion, and (2) theMember seeking to make the Assignment and the assignee comply with theprovisions of Section 9.1(b).

 

(b)           Conditions Precedent toAssignment of a Membership Interest to a Non-Member.  Any Member desiring to Assign such Member’sMembership Interest, in whole or in part, to a non-Member shall notify theBoard of Governors of such desire.  Suchnotice to the Board of Governors shall include (i) an opinion of counsel(whose fees and expenses shall be borne by such assigning Member), satisfactoryin form and substance to the Board, to the effect that either (1) theAssignment constitutes an exempt transaction, and does not require registrationunder applicable state and federal securities laws, or (2) the MembershipInterest, or portion thereof, to be Assigned is duly and properly registeredunder all applicable state and federal securities laws; (ii) evidencesatisfactory to the Board that the assignee of the Membership Interest iseligible to become a Member pursuant to this Article IX and of suchassignee’s agreement to comply with and be bound by the terms of this MemberControl Agreement and to execute any and all documents that the Board may deemnecessary in connection with such assignee becoming a Member as provided for inArticle XI; (iii) evidence satisfactory to the Board that thetransfer will not impair the ability of the Company to be taxed as apartnership for federal income tax purposes or to take advantage of accelerateddepreciation under the Code; (iv) representations in form and substancesatisfactory to the Board that the assignee is acquiring the MembershipInterest for such assignee’s own account for investment and not with a view tothe distribution thereof; and (v) a written agreement signed by theassignee that the Membership Interest being acquired will in no event be resoldunless properly registered under all applicable state and securities laws orexempt therefrom.

 

(c)           Consent to ProposedAssignment of a Membership Interest to a Non-Member.  In the event that a Member seeks to Assignsuch Member’s Membership Interest, in whole or in part, to a non-Member, theBoard of Governors shall (i) so notify the Members and, by special meetingcalled on thirty (30) days written notice (or by solicitation of signatures onfifteen (15) days written notice), (ii) request in writing the decision ofeach Member to grant or withhold consent pursuant to this Section 9.1.  Failure of a Member to respond eitheraffirmatively or negatively to such request within sixty (60) days of suchwritten notice shall be construed as withholding such consent.  Consent to a proposed Assignment of aMembership Interest (which includes all of a Member’s Governance Rights)pursuant to this Section 9.1 also constitutes the consent necessary toavoid the dissolution of the Company which would otherwise occur under the Acton account of the assignor ceasing to be a Member if the quantum 

 

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ofconsent required to avoid such dissolution is not greater than the consentpursuant to this Section 9.1.

 

(d)           Effective Date of Assignment.  All Assignments of all or part of a Member’sMembership Interest in the Company shall be deemed effective on the first dayof the month next following the month in which the Assignment occurs and theassignee’s name and address and the nature and extent of the Assignment arereflected in the Required Records of the Company.  The appropriate Company records shall beconspicuously noted to prevent the sale or Assignment of Membership Interestsotherwise than in accordance with this Article IX.

 

9.2.         Acquit Company.  In the absence of written notice to theCompany of any Assignment of a Membership Interest, any payment by the Companyto the assigning Member (or the assigning Member’s successor in interest) shallacquit the Company of liability to the extent of such payment to any otherPerson who may have any interest in such payment by reason of an Assignment bythe Member, whether by actual Assignment or by operation of law.

 

9.3.         Restriction on Assignment.  Notwithstanding the foregoing provisions ofthis Article IX, no Assignment of a Membership Interest may be made if theMembership Interest sought to be Assigned, when added to the total of all otherMembership Interests Assigned within the period of twelve (12) consecutivemonths prior thereto, would result in the termination of the Company under Section 708of the Code; provided, however, that Members owning at least a majority of theVoting Interests may waive such restriction on transfer.

 

9.4.         First Right of Refusal UponProposed Sale of Membership Interest.

 

(a)           Notice of Proposed Sale.  In the event that a Member desires to Assignits Membership Interest, in whole or in part, by a sale for consideration toanother Person who is not a Member pursuant to a bona fide offer, such Membershall give written notice of such fact to the Company and the otherMembers.  Such notice shall include (i) theportion of such Member’s Membership Interest to be sold, (ii) the identityof the Person making the bona fide offer, and (iii) a copy of the bonafide offer, which shall include the purchase price, payment terms, and allother terms and conditions of the offer.

 

(b)           Options to Other Members.  For a period of forty-five (45) days from thedate of receipt of the notice of a proposed sale, each other Member shall havean initial option to purchase a portion of the Membership Interest offered forsale based on the proportion which such Member’s Voting Interest bears to thetotal Voting Interests of all the other Members.  In the event all of the other Members do notexercise such initial option, the Company shall give notice, within five daysof the end of such forty-five (45) day initial option period, to all of theMembers who exercised their initial option advising them of the portion of theMembership Interest offered for sale remaining. For a period of fifteen (15) days after the- Company gives such notice,the Members who exercised their initial option shall then have a secondaryoption to purchase a portion of such remaining portion of the MembershipInterest offered for sale based on the proportion which such Member’s VotingInterest bears to the total Voting Interests of all the Members who exercisedtheir initial option.  Similar optionsshall continue to arise in favor of those Members who continue to exercisetheir options hereunder in the same manner as the secondary option provided forin the preceding sentence until all of the Membership Interest 

 

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offeredfor sale has been purchased or no Member desires to purchase the remainingportion of such Membership Interest. Notwithstanding the foregoing, the other Members may agree amongthemselves as to the portion of the Membership Interest offered for sale orremaining portion thereof, as the case may be, to be purchased by each,provided all of the Membership Interest offered for sale is purchased.  The purchase price of any MembershipInterest, or portion thereof, purchased by exercise of an option grantedhereunder shall be the purchase price pursuant to the bona fide offer, whichshall be payable in such amounts and at such times and pursuant to such otherterms and conditions as provided in the bona fide offer.

 

(c)           Exercise and Lapse ofOptions.  The options provided in Section 9.4(b) maybe exercised by giving timely written notice to the Member whose MembershipInterest is the subject of such option and to the Company.  In the event that the other Members fail toexercise their respective options to collectively purchase the entireMembership Interest offered for sale, then all of the options exercised asprovided in Sections 9.4(b) and 9.4(c) shall be deemed to berescinded from the outset as though they never had been exercised.  The Member whose Membership Interest, orportion thereof, is offered for sale may at any time within sixty (60) daysafter lapse or rescission of the options provided in Section 9.4(b) sellsuch Membership Interest to the Person specified in the notice of proposedsale; provided, that (i) such sale shall be at the purchase price pursuantto the bona fide offer and according to the other terms and conditions asprovided in the bona fide offer, (ii) all consents required under the Actand this Agreement are obtained, (iii) such Member and the proposedpurchaser comply with all applicable provisions of the Act and this Agreement,and (iv) the proposed purchaser agrees in writing to become subject tothis Agreement.  In the event that theMember shall fail to make such sale within such sixty (60) day period, theMember shall again comply with the terms of this Section 9.4 as acondition precedent to any subsequent sale of the Membership Interest.

 

(d)           Proposed Sale to AnotherMember.  Notwithstanding anything tothe contrary herein, the provisions of this Section 9.4 shall not applyand need not be complied with if the proposed purchaser is currently a Memberof the Company.

 

(e)           Restrictions on AssignmentApply.  Nothing in this Section 9.4shall be construed to limit the effect of the provisions of the Act or thisAgreement with respect to restrictions on the Assignment or other transfer ofGovernance Rights, Financial Rights, and/or Membership Interests by Members.

 

9.5.         Option to PurchaseMembership Interest.

 

(a)           Purchase Events.  The following shall constitute a “PurchaseEvent”:

 

(i)            Any Person acquires more than ten percent (10%) ofthe outstanding Units of Golden Growers; or

 

(ii)           The articles of incorporation and/or bylaws ofGolden Growers are amended to alter member voting from one member/one vote to asystem that permits a member to have more than one vote.

 

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(b)           American Crystal Option.  Upon the occurrence of a Purchase Event,American Crystal shall have the option to purchase all of the MembershipInterest of Golden Growers.  GoldenGrowers shall provide written notice to American Crystal within sixty (60) daysfollowing the occurrence of a Purchase Event. American Crystal shall have sixty (60) days following receipt of thenotice in which to exercise its option to purchase Golden Growers’ MembershipInterest.  American Crystal may exerciseits option by providing written notice to Golden Growers of its desire toexercise the option, which notice must be sent to Golden Growers within suchsixty (60) day period.  American Crystal’sfailure to exercise the option within such sixty (60) day period shall resultin a waiver of the option.

 

(c)           Purchase Price and Payment.  The Purchase Price for Golden Growers’Membership Interest shall be equal to the appraised value using the followingprocedure.  The value of the GoldenGrowers’ Membership Interest shall first be determined by the opinion of twoindependent appraisers, one of which shall be selected by Golden Growers andone of which shall be selected by American Crystal.  If the results of the two appraisers do notdiffer by more than ten percent (10%) of the higher appraisal, then the averageof the two appraisals shall be considered the value of the MembershipInterest.  If the results of the twoappraisers differ by more than ten percent (10%) of the higher appraisal, athird appraiser shall be selected by mutual agreement of the first twoappraisers.  The average of the twoclosest appraisals among the three appraisals shall then be considered thevalue of the Membership Interest.  Allsuch appraisals shall be completed within 60 days following the exercise of theoption to purchase by American Crystal. The cost of all appraisals shall be paid by the Company.  The closing on sale of the MembershipInterest shall occur within sixty (60) days following completion of the finalappraisal; provided that, ACSC may elect not to proceed with the closing in theevent Purchase Price established pursuant to the foregoing procedure is, in thesole judgment of American Crystal, not satisfactory.  The Purchase Price shall be paid in cash atclosing.

 

# **ARTICLE X**DISSOLUTION:  DISSOLUTION AVOIDANCE

# ** **

10.1.       Dissolution.

 

(a)           Events of Dissolution.  The Company shall be dissolved upon theoccurrence of any of the following events:

 

(i)            Expiration of Fixed Period.  When the period fixed in the Articles ofOrganization for the duration of the Company expires;

 

(ii)           Member and Board Approval.  Upon the approval of both the affirmativevote of Members owning a majority of the Voting Interests and the affirmativevote of a majority of the Governors present at a duly held meeting of the Boardof Governors; or

 

(iii)          Termination of Membership of a Member.  Upon the death/ dissolution (as applicable),retirement, resignation, expulsion, bankruptcy of a Member or occurrence of anyother event that terminates the continued membership of a Member in 

 

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theCompany, unless the remaining Members consent to avoid dissolution pursuant to Section 10.2.

 

(b)           Notice of Dissolution.  As soon as possible following the occurrenceof any of the events specified in Section 10.1(a) effecting thedissolution of the Company, the appropriate representative of the Company shallexecute a notice of dissolution in such form as shall be prescribed by theMinnesota Secretary of State, setting forth the information required under theAct, and shall file same with the Minnesota Secretary of State’s office.

 

(c)           Winding Up of Business.  Upon filing a notice of dissolution with theMinnesota Secretary of State, the Company shall cease to carry on its business,except insofar as may be necessary for the winding up of its business, but itsseparate existence shall continue until a certificate of termination has beenissued by the Secretary of State or until a decree dissolving the Company hasbeen entered by a court of competent jurisdiction.

 

10.2.       Dissolution Avoidance.

 

(a)           Member Consent toContinuation of the Company.  The Company shall not be dissolved and is notrequired to be wound up by reason of the occurrence of an event that terminatesthe continued membership of a Member in the Company (including the eventsenumerated in Section 322B.80, Subd. 1, clause (5) of the Act) if (i) eitherthere are at least two remaining Members or a new Member is admitted asprovided in Section 3228.11 of the Act, and (ii) the existence andbusiness of the Company is continued by the consent of all the remainingMembers, no later than ninety (90) days after the termination of the continuedmembership.  Pursuant to Section 9.1(c),the consent to a proposed Assignment of Governance Rights may also constitutethe consent necessary to avoid the dissolution of the Company.  Notwithstanding anything to the contrary, anew Member may not be appointed during the term of Cargill’s lease of theFacility or any extension thereof without Cargill’s prior written consent.

 

(b)           Status of Member WhoseMembership Interest is Terminated.  If dissolution is avoided by the consent ofMembers pursuant to subsection (a) of this Section 10.2, then theMember whose Membership Interest has terminated shall lose all GovernanceRights and will be considered merely an assignee of the Financial Rights ownedbefore the termination of such Member’s Membership Interest.  In such event, Schedule A shall be deemed tobe appropriately amended to allocate the Voting Interest of the Member whoseMembership Interest is terminated among the remaining Members in proportion tothe remaining Members’ existing Voting Interests.

 

(c)           No Obligation to PurchaseMembership Interest of Terminated Member.  If dissolution is avoided by the consent ofMembers pursuant to subsection (a) of this Section 10.2, neither theCompany nor the remaining Members shall be obligated to purchase the MembershipInterest of the Member whose Membership Interest was terminated.

 

(d)           Agreement Not to Retire orResign.  Each Member agrees not toretire or resign from the Company without the prior written consent of all theother Members.  If any Member retires orresigns from the Company in contravention of this Section 10.2(d), such 

 

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Membershall be liable to the Company and the remaining Members for any damages causedby such retirement or resignation.

 

10.3.       Distributions UponLiquidation.  Uponliquidation, the business of the Company shall be wound up, the Board ofGovernors shall take full account of the Company assets and liabilities, andall assets shall be liquidated as promptly as is consistent with obtaining thefair value thereof.  If any assets arenot sold, gain or loss shall be allocated to the Members in accordance with Article Vas if such assets had been sold at their fair market value at the time of theliquidation.  If any assets aredistributed to a Member, rather than sold, the Distribution shall be treated asa Distribution equal to the fair market value of the assets at the time of theliquidation.  The assets of the Companyshall be applied and distributed in the following order of priority:

 

(a)           First, to the payment of alldebts and liabilities of the Company, including all fees due the Governors andManagers, and including any loans or advances that may have been made by theMembers to the Company, in the order of priority as provided by law;

 

(b)           Second, to the establishmentof any reserves deemed necessary by the Managers or the person winding up theaffairs of the Company for any contingent liabilities or obligations of theCompany;

 

(c)           Third, to the Members,ratably in proportion to the credit balances in their respective CapitalAccounts, in an amount equal to the aggregate credit balances in the CapitalAccounts after and including all allocations to the Members under Article V,including the allocation of any income, gain or loss from the sale, exchange orother disposition (including a deemed sale pursuant to this Section 10.3)of the Company’s assets.

 

# **ARTICLE XI**NEW MEMBERS BOUND BY AGREEMENT

# ** **

AnyPerson who is admitted to the Company as a Member shall be subject to and boundby all the provisions of this Agreement as if originally a party to thisAgreement.  Such Person shall execute andacknowledge all documents and instruments, in form and substance satisfactoryto the Board of Governors, as the Board of Governors shall deem necessary oradvisable to effect such admission and to confirm the agreement of the Personbeing admitted to be bound by all the terms and provisions of thisAgreement.  Such Person shall pay allreasonable expenses in connection with such admission as a Member, includingwithout limitation legal fees and costs of preparation of any amendment to orrestatement of this Agreement, if necessary or desirable in connectiontherewith.

 

# **ARTICLE XII**REMEDIES

# ** **

TheMembers and the Company agree that in the event of a breach of this Agreement,the non-breaching party or parties shall be entitled to the remedies ofspecific performance and injunctive relief, except where prohibited by the Act,and that such remedies shall be in addition to any other remedies available atlaw or in equity with the pursuit of any one or more remedies 

 

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notbeing a bar to the pursuit of other remedies which may be available.  The Members and the Company further agreethat the breaching party or parties shall pay all reasonable costs, expenses,and attorneys’ fees incurred by the non-breaching party or parties in pursuingtheir remedies for a breach of this Agreement.

 

# **ARTICLE XIII**MISCELLANEOUS

# ** **

13.1.       Entire Agreement.  This Agreement and the agreements identifiedin Section 2.1 constitute the entire agreement among the parties andsupersede any prior agreement or understanding among them with respect to thesubject matter hereof and thereof, including the original Member ControlAgreement dated October 1, 1994 and the Amendments thereto.

 

13.2.       Amendment .  This Agreement may not be modified, amended,or supplemented, except by a writing signed by all of the parties to thisAgreement who are then Members of the Company.

 

13.3.       Severability.  If any provision of this Agreement is held tobe illegal, invalid, or unenforceable under the present or future lawseffective during the term of this Agreement, such provision will be fullyseverable; this Agreement will be construed and enforced as if such illegal,invalid, or unenforceable provision had never comprised a part of thisAgreement; and the remaining provisions of this Agreement will remain in fullforce and effect and will not be affected by the illegal, invalid, orunenforceable provision or by its severance from this Agreement.  Furthermore, in lieu of such illegal,invalid, or unenforceable provision, there will be added automatically as apart of this Agreement a provision as similar in terms to such illegal,invalid, or unenforceable provision as may be possible and be legal, valid, andenforceable.

 

13.4.       Consent and Waiver.  No consent under and no waiver of anyprovision of this Agreement on any one occasion shall constitute a consentunder or waiver of any other provision on said occasion or on any otheroccasion, nor shall it constitute a consent under or waiver of the consented toor waived provision on any other occasion. No consent or waiver shall be enforceable unless it is in writing andsigned by the Member against whom such consent or waiver is sought to beenforced.

 

13.5.       No Third Party Beneficiary.  This Agreement is made solely andspecifically among and for the benefit of the parties hereto, and theirrespective successors and assigns, and no other Person will have any rights,interest, or claims hereunder or be entitled to any benefits under or onaccount of this Agreement as a third party beneficiary or otherwise, exceptthat the Company shall have standing to bring an action to recover damagesprovided for by the Act or to seek remedies otherwise provided by law in theevent of a breach or threatened breach of this Agreement.

 

13.6.       Notices.  All notices, offers, demands, or othercommunications required or permitted under this Agreement shall be in writing,signed by the Person giving the same. Notice shall be treated as given when personally received or (except inthe event of a mail strike) three business days after being sent by certifiedor registered mail, postage prepaid, return receipt requested, to a Member atthe address as shown from time to time on the records of the 

 

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Company.  Any Member may specify a different address bywritten notice to the Board of Governors.

 

13.7.       Binding Effect.  Except as herein otherwise specificallyprovided, this Agreement shall be binding upon and inure to the benefit of theparties and their legal representatives, heirs, administrators, executors,successors and assigns.

 

13.8.       Necessary Instruments andActs.  The Members covenant and agreethat they shall execute any further instruments and shall perform any actswhich are or may become necessary to effectuate and to carry out the terms andconditions of this Agreement.

 

13.9.       Number and Gender.  Wherever from the context it appearsappropriate, each term stated in either the singular or the plural shallinclude the singular and the plural and pronouns stated in either themasculine, the feminine or the neuter gender shall include the masculine,feminine and neuter.

 

13.10.     Interpretation.  All references herein to Articles, Sectionsand subsections refer to Articles, Sections and subsections of thisAgreement.  All Article, Section andsubsection headings are for reference purposes only and shall not affect theinterpretation of this Agreement.

 

13.11.     Counterparts.  This Agreement may be executed in any numberof counterparts, all of which taken together shall constitute one agreementbinding on all Members.  Each Membershall become bound by this Agreement immediately upon signing any counterpart, independentlyof the signature of any other Member.

 

13.12.     Governing Law.  This Agreement and the rights of the partieshereunder shall be governed by and interpreted in accordance with the laws ofthe State of Minnesota.

 

INWITNESS WHEREOF, the undersigned have executed this Amended and Restated MemberControl Agreement as of the day and year first above written.

 
|   | GOLDEN  GROWERS COOPERATIVE     |
|--------|---------------------------------|
|   |                            |
|   |                            |
|   | By:                             | /s/  Harvey A. Pyle |
|   |                            |   |
|   |                            | Its:  Chairperson |
|   |                            |
|   |                            |
|   | AMERICAN  CRYSTAL SUGAR COMPANY |
|   |                            |
|   |                            |
|   | By:                             | /s/  Thomas S. Astrup |
|   |                            |
|   | Its:  Chief Financial Officer   |

 

20

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**SCHEDULE A**

 

The undersigned Members of ProGold LimitedLiability Company, hereby agree and acknowledge that the following informationapplies for all purposes to the ProGold Limited Liability Company Amended andRestated Member Control Agreement dated effective September 1, 2009; thisSchedule A to be effective as of the date hereof.

 
| **Member  and  Address**                                                                                               | ** ** | **Form of  Contribution** | ** ** | **Agreed  Value of  Contribution** | ** **  | **Percentage  Interest  (Financial  Rights)** | ** ** | **Voting  Interest (Governance  Rights)** | ** ** |
|------------------------------------------------------------------------------------------------------------------------|------------|--------------------------------|------------|------------------------------------|-------------|-----------------------------------------------|------------|-------------------------------------------|------------|
| Golden  Growers Cooperative   101 North Tenth Street   Suite 110   P.O. Box 2484   Fargo, North Dakota 58102 |       | Cash                           |       | $                                  | 51,156,000  |                                          | 49         | %                                         | 49         | % |
|                                                                                                                   |       |                           |       |                               |        |                                          |       |                                      |       |   |
| American  Crystal Sugar   Company   101 Third Street North   Moorhead, Minnesota 56560                                 |       | Cash                           |       | $                                  | 53,244,000  | *                                             | 51         | %                                         | 51         | % |
|                                                                                                                   |       |                           |       |                               |        |                                          |       |                                      |       |   |
| TOTAL                                                                                                                  |       |                           |       | $                                  | 104,400,000 |                                          | 100        | %                                         | 100        | % |

 

 
| Dated:  September 1, 2009. | GOLDEN  GROWERS COOPERATIVE     |
|---------------------------------|---------------------------------|
|                            |                            |
|                            |                            |
|                            | By:                             | /s/  Harvey A. Pyle |
|                            | Its:  Chairperson               |
|                            |                            |
|                            |                            |
|                            | AMERICAN  CRYSTAL SUGAR COMPANY |
|                            |                            |
|                            |                            |
|                            | By:                             | /s/  Thomas S. Astrup |
|                            |                            | Its:  Chief Financial Officer |

 

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*Includesan initial contribution of $48,024,000 plus the value of the initialcontribution of $5,220,000 made by Minn-Dak Farmers Cooperative in exchange fora 5% interest in ProGold that was acquired by American Crystal on April 23,2003.

 

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