**Exhibit10.31**

 

MLA No. Z269F

 

**AMENDEDAND RESTATEDMASTER LOAN AGREEMENT**

 

**THIS AMENDED ANDRESTATED MASTER LOAN AGREEMENT**(“Agreement”) isentered into as of July 21, 2003, between **CoBANK, ACB** (“CoBank”) and **AMERICANCRYSTAL SUGAR COMPANY, Moorhead, Minnesota**(the “Company”), andamends and restates that Master Loan Agreement dated as of March 31, 2000.

 

**BACKGROUND**

 

CoBank and the Company are parties to a Master Loan Agreement datedMarch 31, 2000 and numbered Z269 (as previously amended, the “Existing Agreement”).  Pursuant to the terms of the ExistingAgreement, the parties entered into one or more Supplements thereto to evidencespecific loans from CoBank to the Company. CoBank and the Company now desire toamend and restate the Existing Agreement and to apply such new agreement to theexisting Supplements, as well as any new Supplements that may be issuedhereunder to evidence any new loans that CoBank may make to the Company.  For that reason and for valuable consideration(the receipt and sufficiency of which are hereby acknowledged), CoBank and theCompany hereby agree that the Existing Agreement shall be amended and restatedto read as follows:

 

**SECTION 1.**                            **Supplements.**  In the event the Company desires to borrowfrom CoBank and CoBank is willing to lend to the Company, or in the eventCoBank and the Company desire to consolidate any existing loans hereunder, theparties will enter into a Supplement to this Agreement (a “Supplement”).  Each Supplement will set forth the amount ofthe loan, the purpose of the loan, the interest rate or rate options applicableto that loan, the repayment terms of the loan, and any other terms andconditions applicable to that particular loan. Each loan will be governed by the terms and conditions contained in thisAgreement and in the Supplement relating to the loan.

 

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

 

**SECTION 3.**                            **Repayment.**  The Company’s obligation to repay each loanshall be evidenced by the promissory note set forth in the Supplement relatingto that loan or by such replacement note as CoBank shall require. CoBank shallmaintain a record of all loans, the interest accrued thereon, and all paymentsmade with respect thereto, and such record shall, absent proof of manifesterror, be conclusive evidence of the outstanding principal and interest on theloans. All payments shall be made by wire transfer of immediately availablefunds or by check. Wire transfers shall be made to ABA No. 307088754 for adviceto and credit of CoBANK (or to such other account as CoBank may direct bynotice). The Company shall give CoBank telephonic notice no later than 12:00noon Company’s local time of its intent to pay by wire and funds received after3:00 p.m. Company’s local time shall be credited on the next business day.Checks shall be mailed to CoBank, Department 167, Denver, Colorado, 80291-0167

 

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(or to such other place as CoBank may direct by notice). Credit forpayment by check will not be given until the latter of: (a) the day on whichCoBank receives immediately available funds; or (b) the next business day afterreceipt of the check.

 

**SECTION 4.**                            **Capitalization.**The Company agrees to purchase such equity in CoBank as CoBank may from time totime require in accordance with its Bylaws. However, the maximum amount ofequity which the Company shall be obligated to purchase in connection with anyloan may not exceed the maximum amount permitted by the Bylaws at the time theSupplement relating to that loan is entered into or such loan is renewed orrefinanced by CoBank.

 

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

 

**SECTION 6.**                            **ConditionsPrecedent.**

 

**(A)**                               **Conditionsto Initial Supplement.** CoBank’s obligation to extend credit under the initial Supplement heretois subject to the conditions precedent that CoBank receive, in form andsubstance satisfactory to CoBank, each of the following:

 

**(i)**                                    **This Agreement, Etc.**  A duly executed copy of this Agreement andall instruments and documents contemplated hereby.

 

**(ii)**                                **Opinion of Counsel.**  A favorable opinion from the Company’scounsel addressed to CoBank covering each matter as CoBank may reasonablyrequire.

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**(iii)**                            **Evidence of Authority.**  Such certified board resolutions, evidenceof incumbency, and other evidence that CoBank may require that the Supplement,all instruments and documents executed in connection therewith, and, in thecase of initial Supplement hereto, this Agreement and all instruments anddocuments executed in connection herewith, have been duly authorized andexecuted.

 

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

 

**(i)**                                    **Supplement.**  A duly executed copy of the Supplement and all instruments anddocuments contemplated thereby.

 

**(ii)**                                **Fees andOther Charges.**  All fees andother charges specifically permitted by this Agreement or the Supplements, aswell as reasonable expenses for outside counsel.

 

**(iii)**                            **Evidence ofPerfection, Etc.** Such evidence as CoBank may require that CoBank hasa duly perfected first priority lien on all security for the Company’sobligations, and that the Company is in compliance with Section 8(D) hereof.

 

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

 

**SECTION 7.**                            **Representationsand Warranties.**

 

**(A)**                               **ComplianceWith Agreement.** The Company represents and warrants to CoBank thatas of the date of this Agreement the Company and, to the extent contemplatedhereunder, each Subsidiary (as defined in Section 10(D)(xix) below), is incompliance with all of the terms of this Agreement, and no Event of Default orPotential Default exists hereunder.

 

**(B)**                               **EachSupplement.**  The execution bythe Company of each Supplement hereto shall constitute a representation andwarranty to CoBank that:

 

**(i)**                                    **Applications.**  Each representation and warranty and allinformation set forth in any application or other documents submitted inconnection with, or to induce CoBank to enter into, such Supplement, is correctin all material respects as of the date of the Supplement.

 

**(ii)**                                **ConflictingAgreements, Etc.**  ThisAgreement, the Supplements, and all security and other instruments anddocuments relating hereto and thereto (collectively, at any time, the “LoanDocuments”), do not conflict with, or require the consent of any party to, anyother Agreement to which the Company is a party or by which it or its propertymay be bound or affected, and do not conflict with any provision of theCompany’s bylaws, articles of incorporation, or other organizational documents.

 

**(iii)**                            **Compliance.**  The Company and, to the extent contemplatedhereunder, each Subsidiary, is in compliance with all of the terms of the LoanDocuments (including, without limitation, Section 8(A) of this Agreement oneligibility to borrow from CoBank).

 

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

 

**SECTION 8.**                            **AffirmativeCovenants.**  Unless otherwiseagreed to in writing by CoBank, while this Agreement is in effect, the Companyagrees to, and with respect to Subsections 8(B) through 8(G) and 8(H)(v)-(ix)hereof, agrees to cause each Subsidiary to:

 

**(A)**                               **Eligibility.**  Maintain its status as an entity eligible toborrow from CoBank.

 

**(B)**                               **CorporateExistence, Licenses. Etc.** (i) Preserve and keep in full force and effect its existence and goodstanding in the jurisdiction of its incorporation or formation; (ii) qualifyand remain qualified to transact business in all jurisdictions where suchqualification is required; and (iii) obtain and maintain all licenses,certificates, permits, authorizations, approvals, and the like which arematerial to the conduct of its business or required by law, rule, regulation,ordinance, code, order, and the like (collectively, “Laws”).

 

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**(C)**                               **Compliancewith Laws.**  Comply in allmaterial respects with all applicable Laws, including, without limitation, allLaws relating to environmental protection and any patron or member investmentprogram that it may have. In addition, the Company agrees to cause all Personsoccupying or present on any of its properties, and to cause each Subsidiary tocause all Persons occupying or present on any of its properties, to comply inall material respects with all environmental protection Laws.

 

**(D)**                               **Insurance.**  Maintain insurance with insurance companiesor associations acceptable to CoBank in such amounts and covering such risks asare usually carried by companies engaged in the same or similar business andsimilarly situated, and make such increases in the type or amount of coverageas CoBank may request. All such policies insuring any collateral for theCompany’s obligations to CoBank shall have mortgagee or lender loss payableclauses or endorsements in form and content acceptable to CoBank. At CoBank’srequest, all policies (or such other proof of compliance with this Subsectionas may be satisfactory to CoBank) shall be delivered to CoBank.

 

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

 

**(F)**                                 **Books andRecords.**  Keep adequaterecords and books of account in which complete entries will be made inaccordance with generally accepted accounting principles (“GAAP”) consistentlyapplied.

 

**(G)**                               **Inspection.**  Permit CoBank or its agents, upon reasonablenotice and during normal business hours or at such other times as the partiesmay agree, to examine its properties, books, and records, and to discuss itsaffairs, finances, and accounts, with its respective officers, directors,employees, and independent certified public accountants.

 

**(H)**                               **Reports andNotices.**  Furnish to CoBank:

 

**(i)**                                    **AnnualFinancial Statements.**  Assoon as available, but in no event more than 120 days after the end of eachfiscal year of the Company occurring during the term hereof, annual financialstatements of the Company and its consolidated Subsidiaries, if any, preparedin accordance with GAAP consistently applied. Such financial statements shall:(a) be audited by independent certified public accountants selected by theCompany and acceptable to CoBank; (b) be accompanied by a report of suchaccountants containing an opinion thereon acceptable to CoBank; (c) be preparedin reasonable detail and in comparative form; and (d) include a balance sheet,a statement of income, a statement of retained earnings, a statement of cashflows, and all notes and schedules relating thereto.

 

**(ii)**                                **InterimFinancial Statements.**  Assoon as available after the end of each quarter, but in no event more than 5days after the Company’s quarterly filing with the Securities ExchangeCommission, a balance sheet of the Company and its consolidated Subsidiaries,if any, as of the end of such fiscal quarter, a statement of income for theCompany and its consolidated Subsidiaries, if any, for such period and for theperiod year to date, and such other interim statements as CoBank mayspecifically request, all prepared in reasonable detail and in comparative formin accordance with GAAP consistently applied.

 

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

 

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

 

**(v)**                                   **Notice of Default.**  Promptly after becomingaware thereof, notice of the occurrence of an Event of Default or a PotentialDefault.

 

**(vi)**                               **Notice ofNon-Environmental Litigation.** Promptly after the commencement thereof, notice of the commencement ofall actions, suits, or proceedings before any court, arbitrator, orgovernmental department, commission, board, bureau, agency, or instrumentalityaffecting the Company or any Subsidiary which, if determined adversely to theCompany or any such Subsidiary, could have a material adverse effect on thefinancial condition, properties, profits, or operations of the Company or anysuch Subsidiary.

 

**(vii)**                           **Notice ofEnvironmental Litigation, Etc.** Promptly after receipt thereof, notice of the receipt of all pleadings,orders, complaints, indictments, or any other communication alleging acondition that may require the Company or any Subsidiary to undertake or tocontribute to a cleanup or other response under environmental Laws, or whichseek penalties, damages, injunctive relief, or criminal sanctions related toalleged violations of such Laws, or which claim personal injury or propertydamage to any person as a result of environmental factors or conditions.Notwithstanding the preceding sentence, notice shall be required only if costs,damages and/or penalties associated with an alleged condition or violation ofLaw exceed or are expected to exceed $7,500,000.00 or if any criminal activityis alleged.

 

**(viii)**                       **Bylaws andArticles.**  Promptly after anychange in the Company’s bylaws or articles of incorporation (or likedocuments), copies of all such changes, certified by the Company’s Secretary.

 

**(ix)**                              **OtherInformation.**  Such otherinformation regarding the condition or operations, financial or otherwise, ofthe Company or any Subsidiary as CoBank may from time to time reasonablyrequest, including but not limited to copies of all pleadings, notices, andcommunications referred to in Subsections 8(H)(vi) and (vii) above.

 

**(x)**                                  **OfficerCertificate.**  A quarterlyofficers certificate within 45 days of each fiscal quarter end, in a formacceptable to CoBank, certified by an officer of the Company, that measurescompliance with Minimum Net Working Capital; Interest Coverage Ratio and LongTerm Debt to Capitalization. (Section 10 (A) & (B) & (C)).

 

**(I)**                                    **GrowerAgreements.**  The Companyshall abide by the terms and conditions of its member grower agreements; makeno material amendments or changes to the agreements without the written consentof the Bank; and extend the agreements for an additional five years when thecurrent contracts expire.

 

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

 

**(i)**                                    AnnualFinancial Statements. As soon as available, but in no event more than 120 daysafter the end of each fiscal year of Crystech occurring during the term hereof,annual financial statements of Crystech prepared in accordance with GAAPconsistently applied. Such financial statements shall: (a) be audited byindependent certified public accountants selected by Crystech and acceptable toCoBank; (b) be accompanied by a report of such accountants containing anopinion thereon acceptable to CoBank; (c) be prepared in reasonable detail andin comparative form; and (d) include a balance sheet, a statement of income, astatement of retained earnings, a statement of cash flows, and all notes andschedules relating thereto.

 

**(ii)**                                InterimFinancial Statements. As soon as available, but in no event more than 60 daysafter the end of each quarter, a balance sheet of Crystech as of the end ofsuch fiscal quarter, a statement of income for Crystech for such period and forthe period year to date, and such other interim statements as CoBank mayspecifically request, all prepared in reasonable detail and in comparative formin accordance with GAAP consistently applied.

 

**(iii)**                            Examinations.Such examination of Crystech’s books and records as CoBank may reasonablyrequest.

 

**SECTION 9.**                            **NegativeCovenants.**

 

**(A)**                               Unlessotherwise agreed to in writing by CoBank, while this Agreement is in effect,the Company shall not, and shall not permit its Subsidiaries to:

 

**(i)**                                    **Borrowings.**  Create, incur, assume, or allow to exist,directly or indirectly, any indebtedness or liability for borrowed money(including trade or bankers’ acceptances), letters of credit, or the deferredpurchase price of property or services (including capitalized leases), exceptfor: (a) debt to CoBank; (b) accounts payable to trade creditors incurred inthe ordinary course of business; (c) current operating liabilities (other thanfor borrowed money) incurred in the ordinary course of business; (d)indebtedness incurred in connection with the $20,000,000 Senior SecuredGuaranteed Notes issued pursuant to the 2002 Note Purchase Agreement between theCompany and the note purchasers named therein; (e) indebtedness incurred inconnection with the $50,000,000 Senior Secured Guaranteed Notes issued pursuantto the 1998 Note Purchase Agreement between the Company and the note purchasersnamed therein (with the 2002 Note Purchase Agreement and the 1998 Note PurchaseAgreement referred to collectively as the “Note Purchase Agreements”); (f)intercompany debt between the Company and its wholly owned Subsidiary, SidneySugars Incorporated (“Sidney”), in amounts not to exceed an aggregate of$60,000,000.00 at any one time for the purpose of meeting Sidney’s workingcapital needs; and (g) permitted borrowings identified on Attachment A.

 

**(ii)**                                **Liens.**  Create, incur, assume, or allow to exist anymortgage, deed of trust, pledge, lien (including the lien of an attachment,judgment, or execution), security interest, or other encumbrance of any kindupon any of its property, real or personal (collectively, “Liens”). Theforegoing restrictions shall not apply to: (a) Liens in favor of CoBank; (b)Liens for taxes, assessments, or governmental charges that are not past due;(c) Liens and deposits underworkers’ compensation, unemployment insurance, and social security Laws; (d)Liens and deposits to secure the performance of bids, tenders, contracts(other than contracts for the payment of money), and like obligations arisingin the

 

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ordinary course of business as conducted on the date hereof; (e) Liensimposed by Law in favor of mechanics, materialmen, warehousemen, and likepersons that secure obligations that are not past due or that are beingcontested in good faith by the Company or Subsidiary, as applicable; (f) Lienscreated in connection with the Note Purchase Agreements described in subsection9(A)(i) above (provided that said Liens shall be shared with CoBank in a manneracceptable to CoBank); and (g) easements, rights-of-way, restrictions, andother similar encumbrances which, in the aggregate, do not materially interferewith the occupation, use, and enjoyment of the property or assets encumberedthereby in the normal course of its business or materially impair the value ofthe property subject thereto except for the permitted Liens identified onAttachment B, without the prior written consent of the Bank.  In addition, the Company agrees that it willnot agree to a negative pledge with any other lender or third party.

 

**(iii)**                            **Mergers,Acquisitions, Etc.**  Merge orconsolidate with any other entity or acquire all or a material part of theassets of any person or entity, or, except upon advance written notice toCoBank, form or create any new subsidiary or affiliate, or commence operationsunder any other name, organization, or entity, including any joint venture; provided,however, the Company and any of its Subsidiaries can merge or consolidate withor into each other as long as the Company is the surviving entity.

 

**(iv)**                               **Transfer ofAssets.**  Sell, transfer,lease, or otherwise dispose of any of its assets, except in the ordinary courseof business; provided however, the following shall not be prohibited: (a) thelease of sugar processing plants in Torrington, Wyoming and Hereford, Texas, toWestern Sugar Cooperative and Imperial Sugar Company or a wholly-owned subsidiaryof the Company, respectively; (b) the sale of the Hereford, Texas facility; and(c) the sale of excess real property associated with the Sidney, Montanafacility.

 

**(v)**                                   **Loans.**  Lend or advance money, credit, or propertyto any person or entity, except for (a) trade credit extended in the ordinarycourse of business; (b) certain inter-company loans made pursuant toIntercompany Loan/Security Agreement dated August 31, 1997 and successoragreements; and (c) intercompany line of credit loans from the Company toSidney, in amounts not to exceed an aggregate of $60,000,000.00 at any one timefor the purpose of meeting Sidney’s working capital needs.

 

**(vi)**                               **ContingentLiabilities.**  Assume,guarantee, become liable as a surety, endorse, contingently agree to purchase,or otherwise be or become liable, directly or indirectly (including, but notlimited to, by means of a maintenance agreement, an asset or stock purchaseagreement, or any other agreement designed to ensure any creditor againstloss), for or on account of the obligation of any person or entity, except bythe endorsement of negotiable instruments for deposit or collection or similartransactions in the ordinary course of the Company’s or Subsidiaries’ businessand except for (1) any liability on account of a Company guaranty of theindebtedness of Midwest Agri Commodities; and (2) any guarantees created inconnection with the Note Purchase Agreements described in subsection 9(A)(i)above.

 

**(vii)**                           **Change inBusiness.**  Engage in anybusiness activities or operations substantially different from or unrelated tothe Company’s present business activities or operations.

 

**(B)**                               Notwithstandinganything in this Section 9 to the contrary, the prohibitions set forth in thissection shall apply only to any act or transaction by the Company, includingany Subsidiary, deemed “material”. An act or transaction shall be deemedmaterial only if the amount or value of the act or transaction exceeds$7,500,000.00. This materiality standard shall not apply to subsection (A)(ii),which

 

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subsection shall apply without reference to the materiality of the Lien(but subject to exceptions noted therein), and subsection (A)(vii), whichsubsection shall apply without reference to the materiality of any businessactivities or operations substantially different from or unrelated to theCompany’s or any Subsidiary’s present business activities or operations.

 

**SECTION 10.**                     **FinancialCovenants.**  Unless otherwiseagreed to in writing, while this Agreement is in effect:

 

**(A)**                               **Minimum NetWorking Capital.**  The Companyand its Subsidiaries, on a consolidated basis, shall have (1) at the end ofeach fiscal quarter, other than fiscal year end, an excess of current assetsover current liabilities (both as determined in accordance with GAAPconsistently applied) of not less than $15,000,000.00; and (2) at the end ofeach fiscal year, an excess of current assets over current liabilities (both asdetermined in accordance with GAAP consistently applied) of not less than$35,000,000.00.

 

**(B)**                               **Long TermDebt to Capitalization.**  TheCompany and its Subsidiaries, on a consolidated basis, shall maintain at alltimes and measured as of the end of each Fiscal Quarter a ratio of Long TermDebt divided by the sum of Long Term Debt plus Equity of no greater thanfifty-five percent (55%).

 

**(C)**                               **InterestCoverage Ratio.**  The Companyand its Subsidiaries, on a consolidated basis, shall maintain at all times, andmeasured as of the end of each Fiscal Quarter, a minimum ratio of Average NetFunds Generated plus Average Interest Expense to Average Interest Expense of2.5:1

 

**(D)**                               **Definitions.**  For purposes of this Section 10 and thisAgreement, the following terms shall be defined as follows:

 

**(i)**                                    **AverageInterest Expense** shall mean the total interest expense of theCompany and its Subsidiaries (including, without limitation, interest expenseon capital leases and, to the extent not included therein, fees and othercharges payable with respect to all Debt), all determined on a consolidatedbasis in accordance with GAAP, for the most recent twelve (12) Fiscal Quartersdivided by four (4).

 

**(ii)**                                **Average NetFunds Generated** shall mean the sum of the following for the mostrecent twelve (12) Fiscal Quarters divided by four (4):

 

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

 

**Minus:**  Increase in investments in othercooperatives (excluding subsidiaries); Net loss from non-member business andmember business tax timing differences; Provision for income tax; and Members’investment retirements.

 

**(iii)**                            **BorrowingBase** shall mean a maximum dollar amount available to the Companyunder the terms of the Commitment (as set forth in a Supplement) as determinedon the basis of the most recent Borrowing Base Certificate.

 

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**(iv)**                               **BorrowingBase Certificate** shall mean a certification of the value ofspecified assets of the Company used in computing the Borrowing Base preparedin a form acceptable to CoBank.

 

**(v)**                                   **Capitalization**shall mean the sum of Long Term Debt plus Equity as determined in accordancewith GAAP.

 

**(vi)**                               **CurrentAssets.** The current assets of the Company and its Subsidiaries asmeasured in accordance with GAAP.

 

**(vii)**                           **CurrentLiability** shall mean the current liabilities of the Company and itsSubsidiaries as measured in accordance with GAAP.

 

**(viii)**                       **Depreciation**shall mean total depreciation of the Company and its Subsidiaries as measuredin accordance with GAAP.

 

**(ix)**                              **Debt**shallmean as to any Person: (a) indebtedness or liability of such Person forborrowed money, or for the deferred purchase price of property or services; (b)obligations of such Person as lessee under capital leases; (c) obligations ofsuch Person arising under bankers’ or trade acceptance facilities; (d) allguarantees, endorsements (other than for collection or deposit in the ordinarycourse of business), and other contingent obligations of such Person topurchase any of the items included in this definition, to provide funds forpayment, to supply funds to invest in any other Person, or otherwise to assurea creditor of another Person against loss; (e) all obligations secured by alien on property owned by such Person, whether or not the obligations have beenassumed; and (f) all obligations of such Person under any agreement providingfor an interest rate swap, cap, cap and floor, contingent participation orother hedging mechanisms with respect to interest payable on any of the itemsdescribed in this definition.

 

**(x)**                                  **Equity**shall mean total equity of the Company and its Subsidiaries as measured inaccordance with GAAP.

 

**(xi)**                              **Fiscal Quarter** shall mean each three (3)month period beginning on the first day of each of the following months:September, December, March and June.

 

**(xii)**                          **Fiscal Year** shall mean a year commencing onSeptember 1 and ending on August 31.

 

**(xiii)**                      **GAAP** shall mean generally acceptedaccounting principles in effect from time to time.

 

**(xiv)**                         **Interest Expense** shall mean current cost ofborrowing funds that is shown as a financial expense in the income statementand as measured in accordance with GAAP.

 

**(xv)**                             **Long Term Debt** shall mean long term debt(excluding current maturities) as determined in accordance with GAAP.

 

**(xvi)**                         **Net Realizable Value** shall mean theexpected selling price of an inventory item less expected costs to complete anddispose, as determined in accordance with GAAP.

 

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**(xvii)**                     **Net WorkingCapital** shall mean the Total Current Assets minus the Total CurrentLiabilities of the Company and its Subsidiaries as determined in accordancewith GAAP accounting principles, consistently applied.

 

**(xviii)**                 **Person**shallmean any individual, sole proprietorship, partnership, joint venture, trust,unincorporated organization, association, corporation, limited liabilitycompany, cooperative association, institution, entity, party or government(whether national, federal, state, provincial, country, city, municipal orotherwise, including without limitation, and instrumentality, division, agency,body or department thereof).

 

**(xix)**                        **Subsidiary**shall mean with respect to any Person: (a) any corporation in which suchPerson, directly or indirectly, (i) owns more than fifty percent (50%) of theoutstanding stock thereof, or (ii) has the power under ordinary circumstancesto elect at least a majority of the directors thereof, or (b) any partnership,association, joint venture, limited liability company, or other unincorporatedorganization or entity with respect to which such Person, directly orindirectly, owns an equity interest in an amount sufficient to control themanagement thereof.  For purposes ofthis Section 10 only, “Subsidiary” shall not include ProGold Limited LiabilityCompany (“ProGold”) (but only for so long as ProGold’s current lease withCargill remains in effect and in good standing) or Crystech.

 

**SECTION 11.**                     **Events ofDefault.**  Each of thefollowing shall constitute an “Event of Default” under this Agreement:

 

**(A)**                               **PaymentDefault.**  The Company shouldfail to make any payment to, or to purchase any equity in, CoBank when due. Anypayment received by CoBank after its due date shall not be subject to anincrease in the interest rate, as provided for in Section 12 below, if theCompany is not responsible for the payment delay.

 

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

 

**(C)**                               **CertainAffirmative Covenants.**  TheCompany or, to the extent required hereunder, any Subsidiary should fail toperform or comply with Sections 8(A) through 8(H)(ii), 8(H)(viii), or anyreporting covenant set forth in any Supplement hereto, and such failurecontinues for 15 days after written notice thereof shall have been delivered byCoBank to the Company.

 

**(D)**                               **OtherCovenants and Agreements.** The Company or, to the extent required hereunder, any Subsidiary shouldfail to perform or comply with any other covenant or agreement contained hereinor in any other Loan Document or shall use the proceeds of any loan for anunauthorized purpose.

 

**(E)**                                 **Cross-Default.**  The Company should, after any applicablegrace period, breach or be in default under the terms of any other agreementbetween the Company and CoBank.

 

**(F)**                                 **OtherIndebtedness.**  The Companyor, to the extent required hereunder, any Subsidiary should fail to pay whendue any indebtedness to any other person or entity for borrowed money or anylong-term obligation for the deferred purchase price of property (including anycapitalized lease), or any other event occurs which, under any agreement orinstrument relating to such indebtedness or obligation,

 

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has the effect of accelerating or permitting the acceleration of suchindebtedness or obligation, whether or not such indebtedness or obligation isactually accelerated or the right to accelerate is conditioned on the giving ofnotice, the passage of time, or otherwise.

 

**(G)**                               **Judgments.**  A judgment, decree, or order for the paymentof money shall be rendered against the Company or any Subsidiary in an amountwhich, if enforced, would have a material adverse effect on the financial condition,profits or operations of the Company, or a Lien prohibited under Section 9(B)hereof shall have been obtained and shall continue in effect for a period of 20consecutive days without being discharged, satisfied, or stayed pending appeal.

 

**(H)**                               **Insolvency,Etc.**  The Company or anySubsidiary shall: (i) become insolvent or shall generally not, or shall beunable to, or shall admit in writing its inability to, pay its debts as theycome due; or (ii) suspend its business operations or a material part thereof ormake an assignment for the benefit of creditors; or (iii) apply for, consentto, or acquiesce in the appointment of a trustee, receiver, or other custodianfor it or any of its property or, in the absence of such application, consent,or acquiescence, a trustee, receiver, or other custodian is so appointed; or(iv) commence or have commenced against it any proceeding under any bankruptcy,reorganization, arrangement, readjustment of debt, dissolution, or liquidationLaw of any jurisdiction.

 

**(I)**                                    **MaterialAdverse Change.**  Any materialadverse change occurs, as reasonably determined by CoBank, in the Company’sfinancial condition, results of operation, or ability to perform itsobligations hereunder or under any instrument or document contemplated hereby.

 

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

 

**SECTION 12.**                     **Remedies.**

 

**(A)**                               **Rights.**  Upon the occurrence and during thecontinuance of an Event of Default or any Potential Default, CoBank shall haveno obligation to continue to extend credit to the Company and may discontinuedoing so at any time without prior notice. CoBank shall promptly notify the Company subsequent to any action todiscontinue extending credit to the Company. In addition, upon the occurrenceand during the continuance of any Event of Default, CoBank may, upon notice tothe Company, terminate any commitment and declare the entire unpaid principalbalance of the loans, all accrued interest thereon, and all other amountspayable under this Agreement, all Supplements, and the other Loan Documents tobe immediately due and payable. Upon such a declaration, the unpaid principalbalance of the loans and all such other amounts shall become immediately dueand payable, without protest, presentment, demand, or further notice of anykind, all of which are hereby expressly waived by the Company. In addition,upon such an acceleration:

 

**(i)**                                    **Enforcement.**  CoBank may proceed to protect, exercise, andenforce such rights and remedies as may be provided by this Agreement, anyother Loan Document or under Law.  Eachand every one of such rights and remedies shall be cumulative and may beexercised from time to time, and no failure on the part of CoBank to exercise,and no delay in exercising, any right or remedy shall operate as a waiverthereof, and no single or partial exercise of any right or remedy shallpreclude any other or future exercise thereof, or the exercise of any otherright. Without limiting the foregoing, CoBank may hold

 

11

----

 

and/or set off and apply against the Company’s obligations to CoBank theproceeds of any equity in CoBank, any cash collateral held by CoBank, or anybalances held by CoBank for the Company’s account (whether or not such balancesare then due).

 

**(ii)**                                **Applicationof Funds.**  CoBank may applyall payments received by it to the Company’s obligations to CoBank in suchorder and manner as CoBank may elect in its sole discretion.

 

**(B)**                               **DefaultInterest Rate.**  In additionto the rights and remedies set forth above: (i) if the Company fails topurchase any equity in CoBank when required or fails to make any payment toCoBank when due, then at CoBank’s option in each instance, such payment shallbear interest from the date due to the date paid at 4% per annum in excess ofthe rate(s) of interest that would otherwise be in effect on that loan; and(ii) after the maturity of any loan(whether as a result of acceleration or otherwise), the unpaid principalbalance of such loan (including without limitation, principal, interest,fees and expenses) shall automatically bear interest at 4% per annum in excessof the rate(s) of interest that would otherwise be in effect on that loan. Allinterest provided for herein shall be payable on demand and shall be calculatedon the basis of a year consisting of 360 days.

 

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

 

**SECTION 14.**                     **CompleteAgreement, Amendments.**  ThisAgreement, all Supplements, and all other instruments and documentscontemplated hereby and thereby, are intended by the parties to be a completeand final expression of their agreement. No amendment, modification, or waiverof any provision hereof or thereof, and no consent to any departure by theCompany herefrom or therefrom, shall be effective unless approved by CoBank andcontained in a writing signed by or on behalf of CoBank, and then such waiveror consent shall be effective only in the specific instance and for thespecific purpose for which given. In the event this Agreement is amended orrestated, each such amendment or restatement shall be applicable to allSupplements hereto.

 

**SECTION 15.**                     **Other Typesof Credit.**  From time totime, CoBank may issue letters of credit or extend other types of credit to orfor the account of the Company.  In theevent the parties desire to do so under the terms of this Agreement, suchextensions of credit may be set forth in any Supplement hereto and thisAgreement shall be applicable thereto.

 

12

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**SECTION 16.**                     **ApplicableLaw.**  Except to the extentgoverned by applicable federal law, this Agreement and each Supplement shall begoverned by and construed in accordance with the laws of the State of Colorado,without reference to choice of law doctrine.

 

**SECTION 17.**                     **Notices.**  All notices hereunder shall be in writingand shall be deemed to be duly given upon delivery if personally delivered orsent by telegram or facsimile transmission, or 3 days after mailing if sent byexpress, certified or registered mail, to the parties at the followingaddresses (or such other address for a party as shall be specified by likenotice):

 
| If to CoBank as follows:                           | If to the Company, as follows:                  |
|----------------------------------------------------|-------------------------------------------------|
| CoBank, ACB                                        | American Crystal Sugar Company                  |
| Corporate Finance                                  | ATTN: Treasurer                                 |
| P.O. Box 5110                                      | 101 North 3rd Street, Moorhead, Minnesota 56560 |
| Denver, Colorado 80217 – Fax # (303) 694-5830 | FAX#:  (218) 236-4702                      |

 

**SECTION 18.**                     **Taxes andExpenses.**  To the extentallowed by law, the Company agrees to pay all reasonable out-of-pocket costsand expenses (including the fees and expenses of counsel retained by CoBank)incurred by CoBank in connection with the origination, administration,collection, and enforcement of this Agreement and the other Loan Documents,including, without limitation, all costs and expenses incurred in perfecting,maintaining, determining the priority of, and releasing any security for theCompany’s obligations to CoBank, and any stamp, intangible, transfer, or liketax payable in connection with this Agreement or any other Loan Document.

 

**SECTION 19.**                     **Effectivenessand Severability.**  ThisAgreement shall continue in effect until: (i) all indebtedness and obligationsof the Company under this Agreement, all Supplements, and all other LoanDocuments shall have been paid or satisfied; (ii) CoBank has no commitment toextend credit to or for the account of the Company under any Supplement; and(iii) either party sends written notice to the other terminating thisAgreement. Any provision of this Agreement or any other Loan Document which isprohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,be ineffective to the extent of such prohibition or unenforceability withoutinvalidating the remaining provisions hereof or thereof.

 

**SECTION 20.**                     **Successorsand Assigns.**  This Agreement,each Supplement, and the other Loan Documents shall be binding upon and inureto the benefit of the Company and CoBank and their respective successors andassigns, except that the Company may not assign or transfer its rights orobligations under this Agreement, any Supplement or any other Loan Documentwithout the prior written consent of CoBank.

 

**SECTION 21.**                     **Participations.**  From time to time, CoBank may sell to one ormore banks, financial institutions or other lenders a participation in one ormore of the loans or other extensions of credit made pursuant to thisagreement.  However, no suchparticipation shall relieve CoBank of any commitment made to the Company underany Supplement hereto.  In connectionwith the foregoing, CoBank may disclose information concerning the Company andits Subsidiaries to any participant or prospective participant, provided thatsuch participant or prospective participant agrees to keep such informationconfidential.  CoBank agrees that allLoans that are made by CoBank and that are retained for its own

 

13

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account and are not included in a sale of participation interest shallbe entitled to patronage distributions in accordance with the bylaws of CoBankand its practices and procedures related to patronage distribution.Accordingly, all Loans that are included in a sale of participation interestshall not be entitled to patronage distributions.  A sale of participation interest may include certain votingrights of the participants regarding the loans hereunder (including withoutlimitation the administration, servicing and enforcement thereof). CoBankagrees to give written notification to the Company of any sale of participationinterests.

 

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

 
| **CoBANK, ACB** | **AMERICAN CRYSTAL  SUGAR COMPANY** |
|-----------------|-------------------------------------|
|            |
| By              | /s/ Michael Tousignant              |   | By: | /s/ Sam Wai |   |
|            |                                |   |   |   |   |
| Title           | Vice President                      |   | Title: | TREASURER |   |
|            |                                |   |   |   |
|            |                                |   |   |   | 7/30/03 |
|            |                                |   |   |   | [ILLEGIBLE] |
|                 |                                     |  |  |  |  |  |

 

14

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Attachment “A”

 

 

AMERICAN CRYSTAL SUGAR COMPANY (ACSC)

AND SUBSIDIARIES

Permitted Borrowings

 
| **Lender**                                                     |   | **Amount**                                  |   |
|----------------------------------------------------------------|--------|---------------------------------------------|--------|
|                                                           |   |                                        |   |
| Commercial Paper                                               |   | Variable  Maximum Outstanding: $225 million |   |
|                                                           |   |                                        |   |
| Minn-Dak Farmers Cooperative                                   |   | Variable                                    |   |
| Southern Minnesota Beet Sugar Cooperative                      |   |                                        |   |
| United States Sugar Corporation                                |   |                                        |   |
|                                                           |   |                                        |   |
| Private Placement of Debt                                      |   |                                        |   |
| John Hancock Mutual Life Insurance Co.                         |   | $26 million                                 |   |
| John Hancock Variable Life Insurance Co.                       |   | $1.5 million                                |   |
| Paul Revere Life Insurance Company                             |   | $22.5 million                               |   |
| John Hancock Ins. Co.                                          |   | $20 million                                 |   |
|                                                           |   |                                        |   |
| Wells Fargo                                                    |   | $1 million                                  |   |
|                                                           |   |                                        |   |
| Commodity Credit Corporation                                   |   | Variable                                    |   |
|                                                           |   |                                        |   |
| East Grand Forks Pollution Control  Refunding Series A         |   | $4,090,000                                  |   |
|                                                           |   |                                        |   |
| East Grand Forks Industrial Development  Series B              |   | $915,000                                    |   |
|                                                           |   |                                        |   |
| 1996 Traill County Series A, B & C  Bonds                  |   | $18 million                                 |   |
|                                                           |   |                                        |   |
| 1997 City of Moorhead Bonds                                    |   | $5.5 million                                |   |
|                                                           |   |                                        |   |
| 1998 Traill County Bonds                                       |   | $5.75 million                               |   |
|                                                           |   |                                        |   |
| 1999 Traill County Bonds                                       |   | $3.58million                                |   |
|                                                           |   |                                        |   |
| 2000 City of East Grand Forks Bonds                            |   | $5.75 million                               |   |
|                                                           |   |                                        |   |
| Intercompany Loan(s) from ACSC to Sidney  Sugars  Incorporated |   | $60 million                                 |   |

 

----

 

Attachment “B”

 

 

AMERICAN CRYSTAL SUGAR COMPANY (ACSC)

AND SUBSIDIARIES

Permitted Liens

 
| **Asset**                                                                   |   | **Lien  Holder**                                                                          |   |
|-----------------------------------------------------------------------------|--------|-------------------------------------------------------------------------------------------|--------|
|                                                                        |   |                                                                                      |   |
| Sugar                                                                       |   | Commodity Credit Corporation                                                              |   |
|                                                                        |   |                                                                                      |   |
| Real Estate, Equipment, Intangibles                                         |   | CoBank as Collateral Agent                                                                |   |
|                                                                        |   |                                                                                      |   |
| ACSC’s Equity in Crystech, LLC                                         |   | First Union Trust Company, National  Association, as Collateral Agent                     |   |
|                                                                        |   |                                                                                      |   |
| Pollution  control Equipment located at ACSC’s  Moorehead, MN Facility |   | Security Agreement  American National Bank and Trust Company  (now known as Firstar Bank) |   |
|                                                                        |   |                                                                                      |   |
| Industrial Development Revenue Bond                                         |   | Security Agreement                                                                        |   |
| Equipment Located at ACSC’s Moorhead, MN  Facility                     |   | Wells Fargo (successor to Firstar Bank)                                                   |   |
|                                                                        |   |                                                                                      |   |
| Marketing Assets                                                            |   | Minn-Dak Farmers Cooperative                                                              |   |
|                                                                        |   | Southern Minnesota Beet Sugar Cooperative                                                 |   |
|                                                                        |   | United States Sugar Corporation                                                           |   |
|                                                                        |   |                                                                                      |   |
| Fixed Assets – Collateral Pool                                         |   | Private Placement of Debt                                                                 |   |
|                                                                        |   | John Hancock Mutual Life Insurance Co.                                                    |   |
|                                                                        |   | John Hancock Variable Life Insurance Co.                                                  |   |
|                                                                        |   | Paul Revere Life Insurance Co.                                                            |   |

 

----

 

**CoBANK,ACB**

** **

**COMPLIANCECERTIFICATE – CERTIFIED INTERIM FINANCIALS**

 

This certificate is being furnished to CoBANK, ACB (“CoBank”) toinduce CoBank to make and/or continue to make advances to the Company and tocomply with and demonstrate compliance with the terms, covenants, andconditions of the Company’s Master Loan Agreement and all Promissory Note andSupplements thereto. The undersigned hereby certifies that: (i) thiscertificate was prepared from the books and records of the Company, is inagreement with them, and is correct to the best of the undersigned’s knowledgeand belief; (ii) no “Event of Default” (as defined in the Master LoanAgreement) or event which, with the giving of notice and/or the passage of timeand/or the occurrence of any other condition, would ripen into an Event ofDefault (a “Potential Default”) shall have occurred and be continuing,except as disclosed below; and (iii) based upon the undersigned’s review of theattached interim financial statement(s) dated as of                            ,to the best of the undersigned’s knowledge, the attached financial statement(s)are accurate and complete for the period reflected.

 

Thiscertificate is attached to and made a part of the Company’s interim financialstatements for the reporting period ending                           .

 
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   | **Required**                                                                                                                                                                                              |   | **Actual** |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------|
| **Net Working Capital**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   |                                                                                                                                                                                                      |   |       |
| 1.                                       Current Assets  as measured in accordance with GAAP

2.                                       Current  Liabilities as measured in accordance with GAAP

3.                                       Net Working  Capital (1. minus 2.)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |   | Minimum Net Working Capital required  for fiscal quarters other than fiscal year  end = $15,000,000  Minimum Net Working Capital required for fiscal year end = $35,000,000                               |   | 1.  2.  3. |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |                                                                                                                                                                                                      |   |       |
| **Interest Coverage Ratio**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   |                                                                                                                                                                                                      |   |       |
| 1.                                       Average Net  Funds Generated which is the sum of the following for the most recent 12  Fiscal Quarters divided by 4.

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

•                                          Minus:  Increase in investments in other cooperatives (excluding subsidiaries); Net  loss from non-member business and member business tax timing differences;  Provision for income tax; and Members’ investment retirements.

2.                                       Average  Interest Expense defined as the total interest expense of the Company and its  Subsidiaries (including, without limitation, interest expense on capital  leases) and fees and other charges payable with respect to all Debt, all  determined on a consolidated basis in accordance with GAAP for the most  recent 12-Fiscal Quarters divided by 4.

3.                                       Interest  Coverage Ratio (Sum of 1. and 2., divided by 2.) |   | Maintain at all times, and measured as of the end of each Fiscal  Quarter, a minimum ratio of Average Net Funds Generated plus Average Interest  Expense to Average Interest Expense of at least 2.5:1.0. |   | 1.  2.  3. |

 

----

 
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   | **Required**                                                                                                                                                                                        |   | **Actual**                                                                                                                                                                         |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| **Long Term Debt to  Capitalization**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   |                                                                                                                                                                                                |   |                                                                                                                                                                               |
| 1.                                       Long Term Debt  (excluding current maturities) calculated in accordance with GAAP

2.                                       The sum of  Long Term Debt plus Equity as determined in accordance with GAAP

3.                                       Long Term Debt  to Capitalization (1. divided by 2.)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   | Maintain at all times and measured as of the end of each Fiscal  Quarter the ratio of Long Term Debt divided by the sum of Long Term Debt plus  Equity of no greater than fifty-five percent (55%). |   | 1.  2.  3.                                                                                                                                                                         |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   |                                                                                                                                                                                                |   |                                                                                                                                                                               |
| ***Note: For purposes of this calculation the  long term debt and equity associated with the consolidation of Pro Gold LLC  are to be excluded.***                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |                                                                                                                                                                                                |   |                                                                                                                                                                               |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   |                                                                                                                                                                                                |   |                                                                                                                                                                               |
| **Leverage Ratio (and Term Performance  Pricing)**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |                                                                                                                                                                                                |   |                                                                                                                                                                               |
| 1.                                       Long Term Debt  (excluding current maturities) calculated in accordance with GAAP

2.                                       Plus or minus  the difference between actual working capital and $35,000,000

3.                                       Total members  investments

4.                                       Estimated unit  retains

5.                                       Leverage Ratio  (The sum of 1. plus or minus 2. divided by the sum of 3. plus 4.)

  |   | Maintain a leverage ratio of not more than 1.50:1.0                                                                                                                                                 |   | 1.  2.  3.  4.  5.

 

**Based upon the  previous fiscal quarter’s Leverage Ratio, the Company is entitled to the  following change in the LIBOR and TREASURY Margins:** |

 

The above calculations and ratios are to be determined on aconsolidated basis in accordance with Section 10 of the Master Loan Agreement(which excludes the financial results of ProGold and Crystech from suchcalculations and ratios).

 
|   | **AMERICAN CRYSTAL  SUGAR COMPANY** |
|--------|-------------------------------------|
|   | (“Company”)               |
|   |                                |
|   |                                |
|   | Authorized Signature                |
|   |                                |
|   |                                |
|   | Title                               |
|   |                                |
|   |                                |
|   | Date                                |

 

----

 

Loan No. Z269T01D

 

**REVOLVINGTERM LOAN SUPPLEMENT**

 

**THIS SUPPLEMENT**tothe Amended and Restated Master Loan Agreement dated July 21, 2003 the (“MLA”),is entered into as of July 21, 2003, between **CoBANK, ACB** (“CoBank”) and **AMERICANCRYSTAL SUGAR COMPANY, Moorhead, Minnesota** (the “Company”), andamends and restates the Supplement dated November 6, 2002 and numberedZ269T01C.

 

**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$58,276,702.22 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 theCommitment is to finance the operating needs of the Company.

 

**SECTION 3.**                            **Term.**  The term of theCommitment shall be from the date hereof, up to and including August 1, 2004,or such later date as CoBank may, in its sole discretion, authorize in writing.

 

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

 

**(A)**                               **CoBank Base Rate.**  At a rate per annum equalat all times to the rate of interest established by CoBank from time to time asits CoBank Base Rate, which Rate is intended by CoBank to be a reference rateand not its lowest rate. The CoBank Base Rate will change on the dateestablished by CoBank as the effective date of any change therein and CoBankagrees to notify the Company of any such change.

 

**(B)**                               **Quoted Rate.**  At a fixed rate per annumto be quoted by CoBank in its sole discretion in each instance. Under thisoption, rates may be fixed on such balances and for such periods, as may beagreeable to CoBank in its sole discretion in each instance, provided that: (1)the maximum fixed period shall be 1 day; and (2) the minimum amount that may befixed each time shall be $2,000,000.00.

 

**(C)**                               **LIBOR Option.**  At a fixed rate equal to“LIBOR” (as hereinafter defined) plus 90 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 (rounded upward tothe 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 timetwo Banking Days before the commencement of the Interest Period for theoffering of U.S. dollar deposits in the London interbank market for the InterestPeriod designated by the Company; (ii) “Banking Day” shall mean a day on whichCoBank is open for business, dealings in U.S. dollar deposits are being carriedout in the London interbank market, and banks are open for business in New YorkCity and London, England; and (iii) “Interest Period” shall mean a periodcommencing on the day the Company elects to fix a rate under this option andending on the numerically corresponding day in the next calendar month or themonth that is 2, 3, or 6 months or 1 year thereafter, as the case may be;provided, however, that: (x) in the event such

 

----

 

ending day is not a Banking Day, such period shall be extended to thenext Banking Day unless such next Banking Day falls in the next calendar month,in which case it shall end on the preceding Banking Day; and (y) if there is nonumerically corresponding day in the month, then such period shall end on thelast Banking Day in the relevant month; and (v) “FRB Regulation D” shall meanRegulation D as promulgated by the Board of Governors of the Federal ReserveSystem, 12 CFR Part 204, as amended.

 

**(D)**                               **Treasury Option.**At a fixed rate equal toApplicable Treasury Margin per annum (as described in terms of basis points(“bps”) in the chart immediately set forth below) above the “U.S. TreasuryRate” (as hereinafter defined). Under this option, balances of $2,000,000.00 ormore may be fixed on or before for periods ranging from two years to the finalmaturity date of the loan, as selected by the Company. However, rates may not befixed in such a manner as to require the Company to have to repay any fixedrate balance 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 the time therate is fixed. If, however, no instrument is indicated for the maturityselected, then the rate shall be interpolated based on the bid prices quotedfor the next longest and shortest maturities so indicated. In the eventTelerate ceases to provide such quotationsor materially changes the form or substance of page 5 (as determined byCoBank), then CoBank will notify the Company and the parties hereto willagree upon a substitute basis for obtaining such quotations

 

**TREASURY MARGINS**

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

 

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

 

2

----

 
| **LEVERAGE  RATIO****(as defined below)**                      |   | **INCREASE/DECREASE****TO SPREAD** |   | **CHANGE TO****APPLICABLE LIBORand TREASURYMARGINS(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 (excluding current maturities) calculated in accordance withGAAP plus or minus the difference between actual working capital and MinimumNet Working Capital (as defined in the MLA No. Z269, Section 10, as it may beamended), divided by total members investments plus the estimated unit retains.

 

Changes to the Applicable LIBOR or Treasury Margin shall be madequarterly on the latter of either: (a) five business days after the Bank’sreceipt of the Company’s certification of compliance with the leverage ratio,or (b) 30 days after the end of each calendar quarter. If the Company fails totimely furnish to CoBank the compliance certificate as required to be deliveredpursuant to the MLA, then the change to the Applicable LIBOR and TreasuryMargin shall be an increase of the highest permitted 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 the foregoing, unless CoBank otherwise consentsin its sole discretion in each instance, rates may not be fixed for periodsexpiring after the maturity date of the loans. In the event CoBank so consentsand the Commitment is not renewed, then each balance so fixed shall be due andpayable on the last day of its fixed rate period, and the promissory note set forthbelow shall be deemed amended accordingly. All elections provided for hereinshall be made telephonically or in writing and must be received by 12:00 noonCompany’s local time. Interest shall be calculated on the actual number of dayseach loan is outstanding on the basis of a year consisting of 360 days andshall be payable quarterly in arrears by the 20th day of the following month.

 

**SECTION 5.**                            **Promissory Note.**  The Company promises torepay the loans that are outstanding in 6 equal, consecutive annual principalpayments of $9,396,579.17 with the first such payment due on or before December31, 2004, and a final principal payment due in an amount equal to the remainingunpaid principal balance on or before December 31, 2010. If any installment duedate is not a day on which CoBank is open for business, then such payment shallbe made on the next day on

 

3

----

 

which CoBank is open for business. In addition to the above, the Company promises to pay interest on theunpaid principal balance hereof at the times and in accordance with theprovisions set forth in Section 4 hereof. This note replaces and supersedes, but does not constitute payment ofthe indebtedness evidenced by, the promissory note set forth in the Supplementbeing amended and restated hereby.

 

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

 

**SECTION 6.**                            **Prepayment. **Subjectto Section 13 of the MLA, the loans may be prepaid in whole or in part on oneCoBank business day’s prior written notice. During the term of the Commitment, prepayments shall be applied to suchbalances, fixed or variable, as the Company shall specify.  After the 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.**                            **Commitment Fee.** In consideration of the Commitment, the Company agrees to pay toCoBank a commitment fee on the average daily unused portion of the Commitmentat the rate of 20 basis points per annum (calculated on a 360 day basis),payable quarterly in arrears by the 20th day following each calendar quarter.Such fee shall be payable for each quarter (or portion thereof) occurringduring the original or any extended term of the Commitment.

 

**SECTION 8.**                            **Commitments Arising From Special Payments.** Commitments arising as a result of specialpayments described in Section 5 above shall be subject to a commitment fee of25 basis points (0.25%) on an annualized basis, on the average daily unusedcommitment.  Any such fees incurredshall be payable on the last day of the calendar quarter, in arrears, computedon the basis of a year of 360 days for the actual number of days elapsed inwhich such reinstatable commitments were outstanding.

 

**SECTION 9.**                            **Security.** In addition to any other security that may otherwise be requiredor provided, the Company’s obligations to CoBank under this Supplement aresecured by that Restated Mortgage and Security Agreement dated September 15,1998, from American Crystal Sugar Company to St. Paul Bank for Cooperatives(now known as CoBank as a result of merger), as Collateral Agent, as amended onJanuary 31, 2003 by that certain Modification Agreement to the Amended andRestated Mortgage and Security Agreement.

 

**SECTION 10.**                     **Amendment Fee.**  In consideration of the amendment, the Company agrees to pay toCoBank on the execution hereof a fee in the amount of $9,396.58.

 

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

 
| **CoBANK, ACB** | **AMERICAN CRYSTAL  SUGAR COMPANY** |
|-----------------|-------------------------------------|
|            |
|            |
| By:             | /s/ Michael Tousignant              |   | By: | /s/ Sam Wai |   |
|            |                                |   |   |   |   |
| Title:          | Vice President                      |   | Title: | TREASURER |   |
|            |                                |   |   |   |
|            |                                |   |   |   | 7-30-03 |
|            |                                |   |   |   | [ILLEGIBLE] |
|                 |                                     |  |  |  |  |  |

 

4

----

 

Loan No. Z269T01DNP 

 

**REVOLVINGTERM LOAN SUPPLEMENT**

 

**THIS SUPPLEMENT**to the Amended and Restated Master LoanAgreement dated July 21, 2003 (the “MLA”), is entered into as of July 21, 2003,between **CoBANK, ACB**(“CoBank”) and**AMERICAN CRYSTAL SUGAR COMPANY, Moorhead,Minnesota**(the “Company”), and amends and restates the Supplementdated November 6, 2002 and numbered Z269T01CNP.

** **

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

 

**SECTION 2.**                           **Purpose.**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, 2004, or such later date as CoBankmay, in its sole discretion, authorize 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.**  Ata rate per annum equal at all times to the rate of interest established byCoBank from time to time as its CoBank Base Rate, which Rate is intended by CoBankto be a reference rate and not its lowest rate. The CoBank Base Rate willchange on the date established by CoBank as the effective date of any changetherein 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 and for such periods, as may be agreeableto CoBank in its sole discretion in each instance, provided that:  (1) the maximum fixed period shall be 1 day;and (2) the minimum amount that may be 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 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 be fixedat any one time shall be $2,000,000.00; and (c) rates may only be fixed on a“Banking Day” (as hereinafter defined) or, at the option of the Company, on 3Banking Days’ prior notice.   Forpurposes hereof: (i) “LIBOR” shall mean the rate (rounded upward to the nearestsixteenth and adjusted for reserves required on “Eurocurrency Liabilities” (asherein after defined) for banks subject to “FRB Regulation D” (as herein afterdefined) or required by any other federal law or regulation) quoted by theBritish Bankers Association (the “BBA”) at 11:00 a.m. London time 2 BankingDays before the commencement of the Interest for Period for the offering ofU.S. dollar deposits in the London interbank market for the Interest Perioddesignated by the Company, as published by Bloomberg or another majorinformation vendor listed on the BBA’s official website; (ii) “Banking Day”shall mean a day on which CoBank is open for business, dealings in U.S. dollardeposits are being carried out in the London interbank market, and banks areopen for business in New York City and London, England; (iii) “Interest Period”shall mean a period commencing on the day the Company elects to fix a rateunder this option and ending onthe numerically corresponding day in the next calendar month or the month thatis 2, 3 or 6

 

----

 

months or 1 year thereafter, as the case may be: provided, however,that: (x) in the event such ending day is not a Banking 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; (iv)“Eurocurrency Liabilities” shall have meaning as set forth in FRB Regulation D;and (v) “FRB Regulation D” shall mean Regulation D as promulgated by the Boardof Governors of the Federal Reserve System, 12 CFR Part 204, as amended.

 

**(D)****Treasury Option.**At a fixed rateequal to Applicable Treasury Margin per annum (as described in terms of basispoints (“bps”) in the chart immediately set forth below) above the “U.S.Treasury Rate” (as hereinafter defined). Under this option, balances of$2,000,000.00 or more may be fixed on or before for periods ranging from twoyears to the final maturity date of the loan, as selected by the Company.However, rates may not be fixed in such a manner as to require the Company tohave to repay any fixed rate balance prior to the last day of its fixed rateperiod in order to pay any installment of principal. For purposes hereof, the“U.S. Treasury Rate” shall mean the yield to maturity on U.S. Treasuryinstruments having the same maturity date as the last day of the fixed rateperiod selected by the Company, as calculated from the bid price indicated byTelerate (page 5) at the time the rate is fixed. If, however, no instrument isindicated for the maturity selected, then the rate shall be interpolated basedon 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 by CoBank),then CoBank will notify the Company and the parties hereto will agree upon asubstitute basis for obtaining such quotations.

 

**TREASURY MARGINS**

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

 

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:

 

2

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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 ofnot more than 1.50:1.0. Leverage ratio is long term debt (excluding currentmaturities) calculated in accordance with GAAP plus or minus the differencebetween actual working capital and Minimum Net Working Capital (as defined inthe MLA No. Z269,**Section 10, asit may be amended), divided by total members investments plus the estimatedunit retains.

 

Changes to the Applicable LIBOR or Treasury Margin shall be madequarterly on the latter of either: (a) five business days after the Bank’sreceipt of the Company’s certification of compliance with the leverage ratio,or (b) 30 days after the end of each calendar quarter. If the Company fails totimely furnish to CoBank the compliance certificate as required to be deliveredpursuant to the MLA, then the change to the Applicable LIBOR and TreasuryMargin shall be an increase of the highest permitted under the 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 loans that are outstanding in 6equal, consecutive annual principal payments of $7,603,420.83, with the firstsuch payment due on or before December 31, 2003, and a final principal paymentdue in an amount equal to the remaining unpaid principal balance on or beforeDecember 31, 2009.  If any installment due date is not a day onwhich 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 pay intereston the unpaid principal balance hereof at the times and in accordance with theprovisions set forth in Section 4 hereof. This note replaces and supersedes,but does not constitute payment of the indebtedness evidenced by, thepromissory note set forth in the Supplement being amended and restated hereby.

 

3

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The Companyshall be permitted to make special payments, in a minimum amount of$111,500.00, on the variable rate portion of this loan, when all short termfinancing, including the Company’s seasonal loans, Commodity Credit Corporationloans and other short term loans have been zeroed out.  These special payments may be readvancedthrough the expiration date of the Commitment. Reinstatement may be denied and canceled at any time at the option ofCoBank.  The reinstatable commitmentsarising from such special payments shall be subject to the Commitment Fee asdescribed in Section 8 below.

 

**SECTION 6.**                            **Prepayment.**  Subjectto Section 13 of the MLA, the loans may be prepaid in whole or in part on oneCoBank business day’s prior written notice. During the term of the Commitment,prepayments shall be applied to such balances, fixed or variable, as theCompany 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 7.**                            **Commitment Fee.**  Inconsideration of the Commitment, the Company agrees to pay to CoBank acommitment 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 calendar quarter (or portion thereof) occurringduring the original or any extended term of the Commitment.

** **

**SECTION 8.**                            **Commitments Arising FromSpecial Payments.**  Commitments arising as a resultof special payments described in Section 5 above shall be subject to acommitment fee of 25 basis points (0.25%) on an annualized basis, on theaverage daily unused commitment.  Anysuch fees incurred shall be payable on the last day of the calendar quarter, inarrears, computed on the basis of a year of 360 days for the actual number ofdays elapsed in which such reinstatable commitments were outstanding.

 

**SECTION 9.**                            **Security.**  Inaddition to any other security that may otherwise be required or provided, theCompany’s obligations to CoBank under this Supplement are secured by thatRestated Mortgage and Security Agreement dated September 15, 1998, fromAmerican Crystal Sugar Company to St. Paul Bank for Cooperatives (now known asCoBank as a result of merger), as Collateral Agent, as amended on January 31,2003 by that certain Modification Agreement to the Amended and RestatedMortgage and Security Agreement.

** **

**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$7,603.43.

** **

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

 
| **CoBANK, ACB** | **AMERICAN CRYSTAL  SUGAR COMPANY** |
|-----------------|-------------------------------------|
|            |
|            |
| By:             | /s/ Michael Tousignant              |   | By: | /s/ Sam Wai |   |
|            |                                |   |   |   |   |
| Title:          | Vice President                      |   | Title: | TREASURER |   |
|            |                                |   |   |   |
|            |                                |   |   |   | 7-30-03 |
|            |                                |   |   |   | [ILLEGIBLE] |
|                 |                                     |  |  |  |  |  |  |

 

4

----

 

Loan No. Z269T02DNP

 

**REVOLVINGTERM LOAN SUPPLEMENT**

** **

**THISSUPPLEMENT**to theAmended and Restated Master Loan Agreement dated July 21, 2003 (the“MLA”), is entered into as of July 21, 2003, between **CoBANK, ACB**(“CoBank”) and **AMERICAN CRYSTAL SUGAR COMPANY, Moorhead, Minnesota**(the“Company”), and amends and restates the Supplement dated November 6, 2002and numbered Z269T02C NP.

 

**SECTION 1.  The Revolving Term Loan Commitment. **On the terms and conditions set forth in the MLA and this Supplement,CoBank agrees to make loans to the Company during the period set forth below inan aggregate principal amount not to exceed $5,012,277.55 at any one timeoutstanding (the “Commitment”).  Withinthe limits of the Commitment, the Company may borrow, repay and reborrow,provided, however, no advances shall be made on this Term Loan, until Term LoanNo. Z269T01D, (as it may be amended), has been fully advanced.

 

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

 

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

 

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

 

**(A)****                             ****CoBank Base Rate. **At a rate per annum equal at all times to the rate of interestestablished by CoBank from time to time as its CoBank Base Rate, which Rate isintended by CoBank to be a reference rate and not its lowest rate.  The CoBank Base Rate will change on the dateestablished by CoBank as the effective date of any change therein and CoBankagrees 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 and for such periods, as may be agreeableto CoBank in its sole discretion in each instance, provided that:  (1) the maximum fixed period shall be 1 day;and (2) the minimum amount that may be 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” (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” (as hereinafterdefined) 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 andadjusted for reserves required on “Eurocurrency Liabilities” (as herein afterdefined) for banks subject to “FRB Regulation D” (as herein after defined) orrequired by any other federal law or regulation) quoted by the British BankersAssociation (the “BBA”) at 11:00 a.m. London time 2 Banking Days before thecommencement of the Interest for Period for the offering of U.S. dollardeposits in the London interbank market for the Interest Period designated bythe Company, as published by Bloomberg or another major information vendorlisted on 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 a periodcommencing on the day 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; (iv)“Eurocurrency Liabilities” shall have meaning as set forth in FRB Regulation D;and (v) “FRB Regulation D” shall mean Regulation D as promulgated by the Boardof Governors of the Federal Reserve System, 12 CFR Part 204, as amended.

 

**(D)****TreasuryOption. **At a fixed rateequal to Applicable “Treasury” Margin per annum (as described in terms of basispoints (“bps”) in the chart immediately set forth below) above the “U.S.Treasury Rate” (as hereinafter defined). Under this option, balances of $2,000,000.00 or more may be fixed on orbefore for periods ranging from two years to the final maturity date of theloan, as selected by the Company. However, rates may not be fixed in such a manner as to require theCompany to have to repay any fixed rate balance prior to the last day of itsfixed rate period in order to pay any installment of principal.  For purposes hereof, the “U.S. TreasuryRate” shall mean the yield to maturity on U.S. Treasury instruments having thesame maturity date as the last day of the fixed rate period selected by theCompany, as calculated from the bid price indicated by Telerate (page 5) at thetime the rate is fixed.  If, however, noinstrument is indicated for the maturity selected, then the rate shall beinterpolated based on the bid prices quoted for the next longest and shortestmaturities so indicated.  In the 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$CMT”)                                   |   | 125bps                                                               |
| Three Years                                                         |   | US$CMT                                                                                   |   | 125bps                                                               |
| Four Years                                                          |   | US$CMT                                                                                   |   | 125bps                                                               |
| Five Years                                                          |   | US$CMT                                                                                   |   | 125bps                                                               |
| Seven Years                                                         |   | US$CMT                                                                                   |   | 140bps                                                               |
| Ten Years                                                           |   | US$CMT                                                                                   |   | 140bps                                                               |
| Floor (Minimum) Rate (For Two to Ten Year Fixed Rate Products Only) |   | CoBank’s cost of funds (as reasonably determined by CoBank in its  sole discretion) |   | 105bps                                                               |

 

The spread over all of theabove indices, including the Floor (Minimum) Rate, may increase or decrease forfuture fixed amounts based on the Borrower’s previous fiscal quarter’s leverageratio, as follows:

 

2

----

 
| **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                                                                        |

 

**LeverageRatio:**The Companywill maintain a leverage ratio of not more than 1.50:1.0.  Leverage ratio is long term debt (excludingcurrent maturities) calculated in accordance with GAAP plus or minus thedifference between actual working capital and Minimum Net Working Capital (asdefined in the MLA No. Z269,**Section 10,as it may be amended), divided by total members investments plus the estimatedunit retains.

 

Changes to the ApplicableLIBOR or Treasury Margin shall be made quarterly on the latter of either: (a)five business days after the Bank’s receipt of the Company’s certification ofcompliance with the leverage ratio, or (b) 30 days after the end of eachcalendar quarter.  If the Company failsto timely furnish to CoBank the compliance certificate as required to bedelivered pursuant to the MLA, then the change to the Applicable LIBOR andTreasury Margin shall be an increase of the highest permitted under the abovechart.

 

The Company shall select theapplicable rate option at the time it requests a loan hereunder and may,subject to the limitations set forth above, elect to convert balances bearinginterest at the variable rate option to one of the fixed rate options.  Upon the expiration of any fixed rate period,interest shall automatically accrue at the variable rate option unless 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 soconsents and the Commitment is not renewed, then each balance so fixed shall bedue and payable on the last day of its fixed rate period, and the promissorynote set forth below shall be deemed amended accordingly.  All elections provided for herein shall bemade telephonically or in writing and must be received by 12:00 noon Company’slocal 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 2 equal,consecutive annual principal payments of $2,000,000.00, with the first suchpayment due on or before December 31, 2003, and the second such paymentdue on or before December 31, 2004, and a final principal payment due inan amount equal to the remaining unpaid principal balance on or before December 31, 2005.  If any installment due date is not a day onwhich

 

3

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CoBank is open for business,then such payment shall be made on the next day on which CoBank is open forbusiness.  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 4hereof.  This note replaces and supersedes,but does not constitute payment of the indebtedness evidenced by, thepromissory note set forth in the Supplement being amended and restated hereby. 

 

**SECTION 6.  Prepayment. **Subject toSection 13 of the MLA, the loans may be prepaid in whole or in part on oneCoBank business day’s prior written notice. During the term of the Commitment, prepayments shall be applied to suchbalances, fixed or variable, as the Company shall specify.  After the 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.  Commitment Fee. **Inconsideration of the Commitment, the Company agrees to pay to CoBank acommitment 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 fee shall be payable for each calendarquarter (or portion thereof) occurring during the original or any extended termof the Commitment.

 

**SECTION 8.  Letters of Credit. **Ifagreeable to CoBank in its sole discretion in each instance, in addition to loans,the Company may utilize the Commitment to open irrevocable letters of creditfor its account.  Each letter of creditwill be issued within a reasonable period of time after receipt of a dulycompleted and executed copy of CoBank’s then current form of application (or,if applicable, in accordance with the terms of any CoTrade-Agreement betweenthe parties), and shall reduce the amount available under the Commitment by themaximum amount capable of being drawn thereunder.  Any draw under any letter of credit issued hereunder shall bedeemed an advance under the Commitment. Each letter of credit must be in form and content acceptable to CoBankin its sole discretion, must expire no later than the maturity date of theloans.  There shall be a fee for issuingeach letter of Credit that shall be determined by CoBank at the time ofapplication and paid by the Company at or before issuance or as otherwiseagreed.

 

**SECTION 9.  Security. **In addition toany other security that may otherwise be required or provided, the Company’sobligations to CoBank under this Supplement are secured by that RestatedMortgage and Security Agreement dated September 15, 1998, from AmericanCrystal Sugar Company to St. Paul Bank for Cooperatives (now known as CoBank asa result of merger), as Collateral Agent, as amended on January 31, 2003by that certain Modification Agreement to the Amended and Restated Mortgage andSecurity Agreement.

 

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

 
| **CoBANK, ACB** |                               | **AMERICAN CRYSTAL SUGAR COMPANY** |
|-----------------|------------------------------------|------------------------------------|
|            |                               |                               |
|            |                               |                               |
| By:             |   /s/ Michael Tousignant |                               | By: | /s/ Sam Wai |
|            |                               |                               |   |   |
| Title:          |   Vice President         |                               | Title: | TREASURER |

 

4

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Loan No. Z269T03BNP

 

**SINGLEADVANCE TERM LOAN SUPPLEMENT**

 

**THISSUPPLEMENT**to theAmended and Restated Master Loan Agreement dated as of July 21, 2003 (the“MLA”), is entered into as of July 21, 2003, between **CoBANK, ACB**(“CoBank”) and **AMERICAN CRYSTAL SUGAR COMPANY, Moorhead, Minnesota**(the“Company”), and amends and restates the Supplement dated April 21, 2000and numbered Z269T03A NP (the “Existing Supplement”).

 

**SECTION 1.  The Term Loan. **ThisSupplement is to evidence a term loan to the Company in the original principalcommitment amount of $12,000,000.00 (the “Loan”).  The Loan was originally evidenced by Note No. 30800NP (the“Note”) and was subject to the terms of that certain Note Agreement datedDecember 5, 1994 by and among the Company, CoBank’s predecessor (the St.Paul Bank for Cooperatives), and Bank of North Dakota (the “NoteAgreement”).  The Note was replaced bythe Existing Supplement.  Theoutstanding principal balance of the Loan as of the date hereof is$4,800,000.00.

 

**SECTION 2.  Purpose and Transfer. **The purpose of this Supplement is to replace the Existing Supplementand transfer the indebtedness evidenced thereby to this Supplement.  As of the date of this Supplement, theExisting Supplement shall be deemed replaced and superseded, but the indebtednessevidenced by the Existing Supplement shall not be deemed to have been paid offby this Supplement.  The Note Agreementshall continue to remain in full force and effect except that any reference tothe “Loan” shall be deemed to mean the indebtedness evidenced by thisSupplement, and any reference to “Loan Agreement” shall be deemed a referenceto the MLA.  To the extent that the NoteAgreement may be inconsistent with the terms of this Supplement or the MLA, theterms of the Note Agreement shall control. All security given-to secure the Note shall secure this Supplement.

 

**SECTION 3.  Availability. **Thedate for permitting advances under the Note has expired.  There is no further availability.

 

**SECTION 4.  Interest. **The Companyagrees to pay interest on the unpaid balance of the Loan at such rate or ratesas determined in accordance with the terms of the Note Agreement.  As of the date hereof the interest rate isfixed at 6.34% per annum and shall remain fixed at such rate for the period asprovided for in the Note Agreement.  Allother matters regarding the calculation and payment of interest shall be inaccordance with the terms of the Note Agreement (including, without limitation,the terms applicable to prepayment of fixed rate loans prior to pricingmaturity dates).

 

**SECTION 5.  Promissory Note. **TheCompany promises to repay the Loan in accordance with the repayment terms ofthe Note Agreement.  If any installmentdue date is not a day on which CoBank is open for business, then such paymentshall be made on the next day on which CoBank is open for business.  In addition to the above, the Companypromises to pay interest on the unpaid principal balance hereof at the timesand in accordance with the terms of the Note Agreement.  This note replaces and supersedes, but doesnot constitute payment of the indebtedness evidenced by, the promissory noteset forth in the Supplement being amended and restated hereby.

 

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**SECTION 6.  Prepayment. **Subject to theterms of the Note Agreement, the Loan may be prepaid in whole or in part on oneCoBank business day’s prior written notice.

 

**SECTION 7.  Security. **In addition toany other security that may otherwise be required or provided, the Company’sobligations to CoBank under this Supplement are secured by that RestatedMortgage and Security Agreement dated September 15, 1998, from AmericanCrystal Sugar Company to St. Paul Bank for Cooperatives (now known as CoBank asa result of merger), as Collateral Agent, as amended on January 31, 2003by that certain Modification Agreement to the Amended and Restated Mortgage andSecurity Agreement.

 

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

 
| **CoBANK, ACB** |                         | **AMERICAN CRYSTAL SUGAR COMPANY** |
|-----------------|------------------------------|------------------------------------|
|            |                         |                               |
|            |                         |                               |
| By:             |  /s/ Michael Tousignant |                               | By: | /s/ Sam Wai |
|            |                         |                               |   |   |
| Title:          | Vice President               |                               | Title: | TREASURER |

 

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Loan No. Z269T04A

 

**NON-REVOLVINGCREDIT SUPPLEMENT**

**(Letter ofCredit)**

 

**THISSUPPLEMENT**to theAmended and Restated Master Loan Agreement dated July 21, 2003 (the“MLA”), is entered into as of July 21, 2003, between **CoBANK, ACB**(“CoBank”) and **AMERICAN CRYSTAL SUGAR COMPANY, Moorhead, Minnesota**(the“Company”) and amends and restates the Supplement dated March 31, 2000 andnumbered Z269T04 (the “Existing Supplement”).

 

**SECTION 1.  The Non-Revolving Credit Facility. **On the terms and conditions set forth in the MLA and this Supplement,CoBank agrees to make loans to the Company during the period set forth below inan aggregate principal amount not to exceed $31,000,000.00 at any one timeoutstanding (the “Commitment”).  Amountsborrowed and later repaid may not be reborrowed.

 

**SECTION 2.  Purpose. **The purpose ofthe Commitment is to reimburse CoBank in the event of draws on letters ofcredit issued by CoBank (or its predecessor) for the benefit of the Company,and to renew, extend and refinance the Company’s obligations to CoBank underthe Existing Supplement.

 

**SECTION 3.  Term. **The term ofthe Commitment shall be from the date hereof, up to and includingApril 30, 2013 (the “Maturity Date”), or such later date as CoBank may, inits sole discretion, authorize in writing.

 

**SECTION 4.  Interest. **The Companyagrees to pay interest on the unpaid principal balance of the loan(s), inaccordance with the following interest rate:

 

**CoBank BaseRate. **The unpaid principal balance shall bearinterest at a rate per annum equal at all times to the rate of interestestablished by CoBank from time to time as its CoBank Base Rate, which Rate isintended by CoBank to be a reference and not its lowest rate.  The CoBank Base Rate will change on the dateestablished by CoBank as the effective date of any change therein and CoBank agreesto notify the Company of any such change.

 

Interest shall be calculatedon the actual number of days each loan is outstanding on the basis of a yearconsisting of 360 days and shall be payable monthly in arrears by the 20thday of the following month or such other date that CoBank shall require in awritten notice to the Company.

 

**SECTION 5.  Promissory Note. **TheCompany promises to repay the unpaid principal balance of the loans on demand,or if no demand is made, then any time on or before the Commitment expirationdate.  In addition to the above, theCompany promises to pay interest on the unpaid principal balance of the loansat the times and in accordance with the provisions set forth in Section 4hereof.

 

**SECTION 6.  Letters of Credit. **Ifagreeable to CoBank in its sole discretion in each instance, in addition toloans, the Company may utilize the Commitment to open irrevocable letters ofcredit for its account.  Each letter ofcredit 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

 

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letter of credit must be inform and content acceptable to CoBank in its sole discretion, must expire nolater than the Maturity Date. There shall be a fee for issuing each letter ofCredit that shall be determined by CoBank at the time of application and paidby the Company at or before issuance or as otherwise agreed.

 

**SECTION 7.  Security. **In addition toany other security that may otherwise be required or provided, the Company’sobligations to CoBank under this Supplement are secured by that RestatedMortgage and Security Agreement dated September 15, 1998, from AmericanCrystal Sugar Company to St. Paul Bank for Cooperatives (now known as CoBank asa result of merger), as Collateral Agent, as amended on January 31, 2003by that certain Modification Agreement to the Amended and Restated Mortgage andSecurity Agreement.

 

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

 
| **CoBANK, ACB** |                   | **AMERICAN CRYSTAL SUGAR COMPANY** |
|-----------------|------------------------|------------------------------------|
|            |                   |                               |
| By:             | /s/ Michael Tousignant |                               | By: | /s/ Sam Wai |
|            |                   |                               |   |   |
| Title:          | Vice President         |                               | Title: | TREASURER |

 

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Loan No. Z269T05

 

**REVOLVING TERM LOAN SUPPLEMENT**

 

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

 

**SECTION 1.  The Revolving Term Loan Commitment. **On the terms and conditions set forth in the MLA and this Supplement,CoBank agrees to make loans to the Company during the period set forth below inan aggregate principal amount not to exceed $15,000,000.00 at any one timeoutstanding (the “Commitment”).  Withinthe limits of the Commitment, the Company may borrow, repay and reborrow.

 

**SECTION 2.  Purpose. **The purpose ofthe Commitment is to provide for short-term commercial and standby letters ofcredit, and, if the Commitment under the Statused Revolving Credit SupplementNo. Z269S01E (as it may be amended from time to time) is fully advanced, thento provide for the operating needs of the Company.

 

**SECTION 3.  Term. **The term ofthe Commitment shall be from the date hereof, up to and includingAugust 1, 2005, or such later date as CoBank may, in its sole discretion,authorize in writing.

 

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

 

**(A)****                              ****Base Rate Option. **At a-rate per annum at all times equal to the Base Rate.  For the purposes hereof, Base Rate meansthat rate in effect from day to day defined as the “prime rate” as publishedfrom time to time in the Eastern Edition of The Wall Street Journal as theaverage prime lending rate for seventy-five percent (75%) of the United States;thirty (30) largest commercial banks, or if The Wall Street Journal shall ceasepublication or cease publishing the “prime rate” on a regular basis, such otherregularly published average prime rate applicable to such commercial banks asis acceptable to the Lender in its reasonable discretion.  Loans for which the Base Rate option isselected are referred to herein as “Base Rate Loans”.  Base Rate Loans shall be made available on any Banking Day.

 

**(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 for such periods, as may be agreeableto CoBank in its sole discretion in each instance, provided that:  (1) the maximum fixed period shall be 1 day;and (2) the minimum amount that may be fixed each time shall be $2,000,000.00.

 

**(C)****                              ****LIBOR Option. **At a fixed rate equal to “LIBOR” (as hereinafter defined) plus 100basis points per annum.  Under thisoption:  (a) rates may be fixed for“Interest Periods” (as hereinafter defined) of 1, 2, 3 or 6 months, or 1 year,as selected by the Company; (b) the minimum amount that may be fixed at any onetime shall be $2,000,000.00; and (c) rates may only be fixed on a “Banking Day”(as hereinafter defined) or, at the option of the Company, on 3 Banking Days’prior notice.  For purposes hereof: (i)“LIBOR” shall mean the rate (rounded upward to the nearest sixteenth andadjusted for reserves required on “Eurocurrency Liabilities” (as hereinafter defined) for banks subjectto  “FRB Regulation D” (as hereinafterdefined) or required by any other federal law or regulation) quoted by theBritish Bankers Association (the “BBA”) at 11:00 a.m. London time 2 BankingDays before the commencement of the Interest for Period for the offering ofU.S. dollar deposits in the London interbank market for the Interest Perioddesignated by the Company, as published by Bloomberg or another major

 

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information vendor listed on the BBA’s officialwebsite; (ii) “Banking Day” shall mean a day on which CoBank is open forbusiness, dealings in U.S. dollar deposits are being carried out in the Londoninterbank market, and banks are open for business in New York City and London,England; (iii) “Interest Period” shall mean a period commencing on the day theCompany elects to fix a rate under this option and ending on the numericallycorresponding day in the next calendar month or the month that is 2, 3 or 6months 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 shall beextended to the next Banking Day unless such next Banking Day falls in the nextcalendar month, in which case it shall end on the preceding Banking Day; and(y) if there is no numerically corresponding day in the month, then such periodshall end 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)**                                 Notwithstanding anything herein to thecontrary, if, on or prior to the determination of the LIBOR rate for any LIBORInterest Period, CoBank determines (which determination shall be conclusive)that quotations of interest rates in accordance with the definition of LIBORrate are not being provided in the relevant amounts or for the relevantmaturities for purposes of determining rates of interest for LIBOR rateadvances as provided in this Supplement, then CoBank shall give the Companyprompt notice thereof, and so long as such condition remains in effect, CoBankshall be under no obligation to make LIBOR rate loans, convert Base Rate loansinto LIBOR rate loans, or continue LIBOR rate loans, and the Company shall, onthe last day(s) of the then current applicable LIBOR Interest Period(s) for theoutstanding LIBOR rate loans, either prepay such LIBOR rate loans or such LIBORrate loans shall automatically be converted into a Base Rate loan in accordancewith this Section 4.

 

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

 

**(3)**                                 If CoBank shall determine that, after thedate hereof, the adoption of any applicable Law, rule or regulation regardingcapital adequacy, or any change therein, or any change in the interpretation oradministration thereof by any governmental authority, central bank orcomparable agency charged with the interpretation or administration thereof, orany request or directive regarding capital adequacy (whether or not having theforce of law) of any such governmental authority, central bank or comparableagency, has or would have the effect of reducing the rate of return on capitalof CoBank as a consequence of CoBank’s obligations hereunder to a level belowthat which CoBank could

 

2

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have achieved but for such adoption, change, requestor directive (taking into consideration its policies with respect to capitaladequacy existing on the date of this Supplement) by an amount deemed by CoBankto be material, then from time to time, within fifteen (15) days after demandby CoBank, the Company shall pay to CoBank such additional amount or amounts aswill compensate CoBank for such reduction. CoBank agrees to take reasonable steps to reduce the amount of suchincrease, provided, however, that CoBank shall not be required to take any suchstep, if in CoBank’s sole opinion, CoBank would suffer an economic loss or anynegative legal or regulatory consequences as a result thereof.  If CoBank is to require the Company to makepayments under this Section then CoBank must make a demand on the Companyto make such payment within ninety (90) days of the later of (1) the date onwhich such capital costs are actually incurred by CoBank, or (2) the date onwhich CoBank knows, or should have known, that such capital costs have beenincurred by CoBank.

 

The Company shall select theapplicable rate option at the time it requests a loan hereunder and may,subject to the limitations set forth above, elect to convert balances bearinginterest at the variable rate option to one of the fixed rate options.  Upon the expiration of any fixed rateperiod, interest shall automatically accrue at the variable rate unless theamount fixed is repaid or fixed for an additional period.  Notwithstanding the foregoing, rates may notbe fixed for periods expiring after the maturity date of the loans.  All elections provided for herein shall bemade telephonically or in writing and must be received by 12:00 Noon Company’slocal time; in the case of LIBOR rate loans, all such elections must be made inwriting.  Interest shall be calculatedon the actual number of days each loan is outstanding on the basis of a yearconsisting of 360 days and shall be payable monthly in arrears by the 20th dayof the following month or such other day that CoBank shall require in a writtennotice to the Company, and at maturity; provided, however, in the event theCompany elects to fix all or a portion of the indebtedness outstanding underthe LIBOR interest rate option above, interest shall be payable at the maturityof the interest period and if the LIBOR interest rate fix is for a periodlonger than 3 months, interest on that portion of the indebtedness outstandingshall be payable quarterly in arrears on each anniversary of the date the LIBORinterest rate fix was made and at maturity.

 

**SECTION 5.  Promissory Note. **TheCompany promises to repay the loans that are outstanding at the time theCommitment expires.  If any installmentdue date is not a day on which CoBank is open for business, then such paymentshall be made on the next day on which CoBank is open for business.  In addition to the above, the Companypromises to pay interest on the unpaid principal balance hereof at the timesand in accordance with the provisions set forth in Section 4 thereof.

 

**SECTION 6.  Letters of Credit. **Ifagreeable to CoBank in its sole discretion in each instance, in addition toloans, the Company may utilize the Commitment to open irrevocable letters ofcredit for its account.  Each letter ofcredit 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 of credit must be in form andcontent acceptable to CoBank in its sole discretion, must expire no later thanthe time the Commitment expires.  Thefee for issuing each letter of credit shall be 100 basis points of the faceamount of each letter of credit, along with an issuance fee to CoBank, for itsown account, equal to the greater of (a) 1/8% of the face amount of the letterof credit, or (b) $2,000, payable by the Company at or before issuance or asotherwise agreed.  The Company promisesto repay the outstanding balance on the Commitment in full on demand, or if nodemand is made, then any time on or before the Commitment expiration date ofAugust 1, 2005.

 

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**SECTION 7.  Commitment Fee. **Inconsideration of the Commitment, the Company agrees to pay to CoBank acommitment 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 fee shall be payable for each calendarquarter (or portion thereof) occurring during the original or any extended termof the Commitment.

 

**SECTION 8.  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 $11,250.00.

 

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

 
| **CoBANK, ACB** |                   | **AMERICAN CRYSTAL SUGAR COMPANY** |
|-----------------|------------------------|------------------------------------|
|            |                   |                               |
| By:             | /s/ Michael Tousignant |                               | By: | /s/ Sam Wai |
|            |                   |                               |   |   |
| Title:          | Vice President         |                               | Title: | TREASURER |

 

4

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Loan No. Z269T06

 

**REVOLVINGTERM LOAN SUPPLEMENT**

 

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

 

**SECTION 1.  The Revolving Term Loan Commitment. **On the terms and conditions set forth in the MLA and this Supplement,CoBank agrees to make loans to the Company from the date hereof, up to andincluding August 1, 2004, in an aggregate principal amount not to exceed,at any one time outstanding, $15,000,000.00 less the amounts scheduled to berepaid during the period set forth below in Section 5 (the “Commitment”).  Within the limits of the Commitment, theCompany may borrow, repay and reborrow.

 

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

 

**SECTION 3.  Term. **IntentionallyOmitted.

 

**SECTION 4.  Interest. **The Companyagrees to pay interest on the unpaid balance of the loans in accordance withone or more of the following interest rate options, as selected by the Company.

 

**(A)****                              ****CoBank Base Rate. **At a rate per annum equal at all times to the rate of interestestablished by CoBank from time to time as its CoBank Base Rate, which Rate isintended by CoBank to be a reference rate and not its lowest rate.  The CoBank Base Rate will change on the dateestablished by CoBank as the effective date of any change therein and CoBankagrees 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 and for such periods, as may be agreeableto CoBank in its sole discretion in each instance, provided that: (1) themaximum fixed period shall be 1 day; (2) the minimum amount that may be fixedeach time shall be $2,000,000.00.

 

**(C)****                              ****LIBOR Option. **At a fixed rate equal to “LIBOR” (as hereinafter defined) plus 100basis 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 (rounded upward to the nearest sixteenth andadjusted for reserves required on “Eurocurrency Liabilities” (as hereinafterdefined) for banks subject to “FRB Regulation D” (as hereinafter defined) orrequired by any other federal law or regulation) quoted by the British BankersAssociation (the “BBA”) at 11:00 a.m. London time 2 Banking Days before thecommencement of the Interest for Period for the offering of U.S. dollardeposits in the London interbank market for the Interest Period designated bythe Company, as published by Bloomberg or another major information vendorlisted on 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 a periodcommencing on the day the Company elects to fix a rate under this option

 

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and ending on the numerically corresponding day in thenext calendar month or the month that is 2, 3 or 6 months or 1 year thereafter,as the case may be; provided, however, that: (x) in the event such ending dayis not a Banking Day, such period shall be extended to the next Banking Dayunless such next Banking Day falls in the next calendar month, in which case itshall end on the preceding Banking Day; and (y) if there is no numericallycorresponding day in the month, then such period shall end on the last BankingDay in the relevant month; (iv) “Eurocurrency Liabilities” shall have meaningas set forth in FRB Regulation D; and (v) “FRB Regulation D” shall meanRegulation D as promulgated by the Board of Governors of the Federal ReserveSystem, 12 CFR Part 204, as amended.

 

The LIBOR Spread may increase or decrease for futurefixed amounts based 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 a leverage ratio ofnot more than 1.50:1.0. Leverage ratio is long term debt (excluding currentmaturities) calculated in accordance with GAAP plus or minus the differencebetween actual working capital and Minimum Net Working Capital (as defined in theMLA No. Z269, Section 10, as it may be amended), divided by total membersinvestments plus the estimated unit retains.

 

Changes to the LIBOR Spreadshall be made quarterly on the latter of either: (a) five business days afterthe Bank’s receipt of the Company’s certification of compliance with theleverage ratio, or (b) 30 days after the 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 theapplicable rate option at the time it requests a loan hereunder and may,subject to the limitations set forth above, elect to convert balances bearinginterest at the variable rate option to one of the fixed rate options.  Upon the expiration of any fixed rateperiod, interest shall automatically accrue at the variable rate option unlessthe amount fixed is repaid or fixed for an additional period in accordance withthe terms 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 CoBankconsents to one or more balances being fixed for a period or periods extendingbeyond the maturity date of the loans and the Commitment is not renewed, theneach such balance shall be due and payable on the last day of its fixed rateperiod and the promissory note set

 

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forth below shall be deemedamended accordingly.  All electionsprovided for herein shall be made telephonically or in writing and must bereceived by 12:00 Noon Company’s local time. Interest shall be calculated on the actual number of days each loan isoutstanding on the basis of a year consisting of 360 days and shall be payablemonthly in arrears by the 20th day of the following month; provided, however,in the event the Company elects to fix all or 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 by the 20th dayof the following month and at maturity.

 

**SECTION 5.  Promissory Note. **TheCompany 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, 2004 |   | $                               | 12,857,142.86 |   |
| December 31, 2005 |   | $                               | 10,714,285.72 |   |
| December 31, 2006 |   | $                               | 8,571,428.58  |   |
| December 31, 2007 |   | $                               | 6,428,571.44  |   |
| December 31, 2008 |   | $                               | 4,285,714.30  |   |
| December 31, 2009 |   | $                               | 2,142,857.16  |   |

 

followed by a finalinstallment in an amount equal to the remaining unpaid principal balance of theloans on December 31, 2010.

 

**SECTION 6.  Prepayment. **Subject toSection 13 of the MLA, the loans may be prepaid in whole or in part on oneCoBank business day’s prior written notice. During the term of the Commitment, prepayments shall be applied to suchbalances, fixed or variable, as the Company shall specify.  After the 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.  Security. **In addition toany other security that may otherwise be required or provided, the Company’sobligations to CoBank under this Supplement are secured by that RestatedMortgage and Security Agreement dated September 15, 1998, from AmericanCrystal Sugar Company to St. Paul Bank for Cooperatives (now known as CoBank asa result of merger), as Collateral Agent, as amended on January 31, 2003by that certain Modification Agreement to the Amended and Restated Mortgage andSecurity Agreement.

 

**SECTION 8.  Commitment Fee. **In considerationof the Commitment, the Company agrees to pay to CoBank a commitment fee on theaverage daily unused portion of the Commitment at the rate of 20 basis pointsper annum (calculated on a 360 day basis), payable quarterly in arrears by the20th day following each calendar quarter. Such fee shall be payable for each calendar quarter (or portion thereof)occurring during the original or any extended term of the Commitment.

 

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**SECTION 9.  Origination Fee. **Inconsideration of the Commitment, the Company agrees to pay to CoBank on theexecution hereof a loan origination fee in the amount of $15,000.00.

 

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

 
| **CoBANK, ACB** |                   | **AMERICAN CRYSTAL SUGAR COMPANY** |
|-----------------|------------------------|------------------------------------|
|            |                   |                               |
| By:             | /s/ Michael Tousignant |                               | By: | /s/ Sam Wai |
|            |                   |                               |   |   |
| Title:          | Vice President         |                               | Title: | TREASURER |

 

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Loan No. Z269S01E 

 

**STATUSEDREVOLVING CREDIT SUPPLEMENT**

 

**THISSUPPLEMENT**to theAmended and Restated Master Loan Agreement dated July 21, 2003 (the“MLA”), is entered into as of July 21, 2003, between **CoBANK, ACB**(“CoBank”) and **AMERICAN CRYSTAL SUGAR COMPANY, Moorhead, Minnesota**(the“Company”), and amends and restates the Supplement dated November 6, 2002and numbered Z269S01D.

 

**SECTION 1.  The Revolving Credit Facility. **On the terms and conditions set forth in the MLA and this Supplement,CoBank agrees to make loans to the Company during the period set forth below inan aggregate principal amount not to exceed, at any one time outstanding, thelesser of the “Borrowing Base” (as calculated pursuant to the Borrowing BaseCertificate, the form of which is attached hereto as Exhibit A) or$235,000,000.00 (the “Commitment”). Within the limits of the Commitment, but subject to the Borrowing Base,the Company may borrow, repay and reborrow.

 

**SECTION 2.  Purpose. **The purpose ofthe Commitment is to finance the Company’s general corporate purposes, fundworking capital requirements, and support the Company’s commercial paperprogram.

 

**SECTION 3.  Term. **The term ofthe Commitment shall be from the date hereof, up to and includingAugust 1, 2004, or such later date as CoBank may, in its sole discretion,authorize in writing.

 

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

 

**(A)**                                **Base Rate Option. **At a rate per annum at all times equal to the Base Rate.  For the purposes hereof, Base Rate meansthat rate in effect from day to day defined as the “prime rate” as publishedfrom time to time in the Eastern Edition of The Wall Street Journal as theaverage prime lending rate for seventy-five percent (75%) of theUnited States’ thirty (30) largest commercial banks, or if The Wall StreetJournal shall cease publication or cease publishing the “prime rate” on aregular basis, such other regularly published average prime rate applicable tosuch commercial banks as is acceptable to the Lender in its reasonablediscretion.  Loans for which the BaseRate option is selected are referred to herein as “Base Rate Loans”.  Base Rate Loans shall be:  (a) in minimum amounts of $5,000,000 andincremental multiples of $1,000,000; 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 discretionin each instance.  Under this option,rates may be fixed on such balances and for such periods, as may be agreeableto CoBank in its sole discretion in each instance, provided that: (1) themaximum fixed period shall be 1 day; and (2) the minimum amount that may befixed each time shall be $5,000,000.00.

 

**(C)****                               ****LIBOR Option. **At a fixed rate equal to “LIBOR” (as hereinafter defined) plus 100basis points per annum.  Under thisoption: (a) rates may be fixed for “Interest Periods” (as hereinafter defined)of 1, 2, 3 or 6 months, or 1 year, as selected by the Company; (b) the minimumamount that may be fixed at any one time shall be $5,000,000.00; and (c) ratesmay only be fixed on a “Banking Day” (as hereinafter defined) or, at the optionof the Company, on 3 Banking Days’ prior notice.  For purposes hereof: (i) “LIBOR” shall mean the rate (roundedupward to the nearest sixteenth and adjusted for reserves required on“Eurocurrency Liabilities” (as hereinafter defined) for banks subject to “FRBRegulation D” (as hereinafter defined) or required by any other federal law orregulation) quoted by the British Bankers Association (the “BBA”) at 11:00 a.m.London time 2 Banking Days before the commencement of the Interest Period forthe offering of U.S. dollar deposits in the London interbank market for theInterest Period designated by the Company, as published by Bloomberg or anothermajor

 

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information vendor listed on the BBA’s officialwebsite; (ii) “Banking Day” shall mean a day on which CoBank is open forbusiness, dealings in U.S. dollar deposits are being carried out in the Londoninterbank market, and banks are open for business in New York City and London,England; (iii) “Interest Period” shall mean a period commencing on the day theCompany elects to fix a rate under this option and ending on the numericallycorresponding day in the next calendar month or the month that is 2, 3 or 6months 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 shall beextended to the next Banking Day unless such next Banking Day falls in the nextcalendar month, in which case it shall end on the preceding Banking Day; and(y) if there is no numerically corresponding day in the month, then such periodshall end 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)                                    Notwithstanding anything herein to thecontrary, if, on or prior to the determination of the LIBOR rate for any LIBORInterest Period, CoBank determines (which determination shall be conclusive)that quotations of interest rates in accordance with the definition of LIBOR rateare not being provided in the relevant amounts or for the relevant maturitiesfor purposes of determining rates of interest for LIBOR rate advances asprovided in this Supplement, then CoBank shall give the Company prompt noticethereof, and so long as such condition remains in effect, CoBank shall be underno obligation to make LIBOR rate loans, convert Base Rate loans into LIBOR rateloans, or continue LIBOR rate loans, and the Company shall, on the last day(s)of the then current applicable LIBOR Interest Period(s) for the outstandingLIBOR rate loans, either prepay such LIBOR rate loans or such LIBOR rate loansshall automatically be converted into a Base Rate loan in accordance with thisSection 4

 

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

 

(3)                                If CoBank shall determine that, after thedate hereof, the adoption of any applicable Law, rule or regulation regardingcapital adequacy, or any change therein, or any change in the interpretation oradministration thereof by any governmental authority, central bank orcomparable agency charged with the interpretation or administration thereof, orany request or directive regarding capital adequacy (whether or not having theforce of law) of any such governmental authority, central bank or comparableagency, has or would have the effect of

 

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reducing the rate of returnon capital of CoBank as a consequence of CoBank’s obligations hereunder to alevel below that which CoBank could have achieved but for such adoption,change, request or directive (taking into consideration its policies with respectto capital adequacy existing on the date of this Supplement) by an amountdeemed by CoBank to be material, then from time to time, within fifteen (15)days after demand by CoBank, the Company shall pay to CoBank such additionalamount or amounts as will compensate CoBank for such reduction.  CoBank agrees to take reasonable steps toreduce the amount of such increase, provided, however, that CoBank shall not berequired to take any such step, if in CoBank’s sole opinion, CoBank wouldsuffer an economic loss or any negative legal or regulatory consequences as aresult thereof.  If CoBank is to requirethe Company to make payments under this Section then CoBank must make ademand on the Company to make such payment within ninety (90) days of the laterof (1) the date on which such capital costs are actually incurred by CoBank, or(2) the date on which CoBank knows, or should have known, that such capitalcosts have been incurred by CoBank.

 

The Company shall select theapplicable rate option at the time it requests a loan hereunder and may,subject to the limitations set forth above, elect to convert balances bearinginterest at the variable rate option to one of the fixed rate options.  Upon the expiration of any fixed rateperiod, interest shall automatically accrue at the variable rate unless theamount fixed is repaid or fixed for an additional period.  Notwithstanding the foregoing, rates may notbe fixed for periods expiring after the maturity date of the loans.  All elections provided for herein shall bemade telephonically or in writing and must be received by 12:00 Noon Company’slocal time; in the case of LIBOR rate loans, all such elections must be made inwriting.  Interest shall be calculatedon the actual number of days each loan is outstanding on the basis of a yearconsisting of 360 days and shall be payable monthly in arrears by the 20th dayof the following month or such other day that CoBank shall require in a writtennotice to the Company, and at maturity; provided, however, in the event theCompany elects to fix all or a portion of the indebtedness outstanding underthe LIBOR interest rate option above, interest shall be payable at the maturityof the interest period and if the LIBOR interest rate fix is for a periodlonger than 3 months, interest on that portion of the indebtedness outstandingshall be payable quarterly in arrears on each anniversary of the date the LIBORinterest rate fix was made and at maturity.

 

**SECTION 5.  Promissory Note. **TheCompany promises to repay the unpaid principal balance of the loans on thefirst CoBank business day following the last day of the term of theCommitment.  In addition to the above,the Company promises to pay interest on the unpaid principal balance of theloans at the times and in accordance with the provisions set forth inSection 4 hereof.  This notereplaces and supersedes, but does not constitute payment of the indebtednessevidenced by, the promissory note set forth in the Supplement being amended andrestated hereby.

 

**SECTION 6.  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 receipt of such a request, the Companyagrees to furnish a Borrowing Base Certificate to CoBank as soon as availableafter the end of each quarter, but in no event more than 5 days after theCompany’s quarterly filing with the Securities Exchange Commission, calculatingthe Borrowing Base as of the last day of the quarter for which the Certificateis being furnished.  However, if nobalance is outstanding hereunder on the last day of such period, no Report needbe furnished.  Regardless of thefrequency of the reporting, if

 

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at any time the amountoutstanding under the Commitment exceeds the Borrowing Base, the Company shallimmediately notify CoBank and repay so much of the loans as is necessary toreduce the amount outstanding under the Commitment to the limits of theBorrowing Base.

 

**SECTION 7.  Commitment Fee. **Inconsideration of the Commitment, the Company agrees to pay to CoBank acommitment 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 calendarquarter.  Such fee shall be payable foreach calendar quarter (or portion thereof) occurring during the original or anyextended term of the Commitment.

 

**SECTION 8.  Utilization Fee. **For anyday on which the outstanding principal amount of loans shall be greater than25% of the Commitment (but no greater than 50% of the Commitment), the Companyshall pay to CoBank a utilization fee equal to 0.125% per annum (calculated ona 360 day basis) on the aggregate amount outstanding on such day.  For any day on which the outstandingprincipal amount of loans shall be greater than 50% of the Commitment, theCompany shall pay to CoBank a utilization fee equal to 0.25% per annum(calculated on a 360 day basis) on the aggregate amount outstanding on suchday.  Accrued and unpaid utilizationfees, if any, shall be payable quarterly in arrears by the 20th dayfollowing each calendar quarter.

 

**SECTION 9.  Facility Fee. **Inconsideration of the Commitment, the Company agrees to pay to CoBank on theexecution hereof, a fee in the amount of $176,250.00.

 

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

 
| **CoBANK, ACB** |                          | **AMERICAN CRYSTAL SUGAR COMPANY** |
|-----------------|-------------------------------|------------------------------------|
|            |                          |                               |
| By:             | /s/ Teresa Fountain           |                               | By: | /s/ Mark Lembke |
|            |                          |                               |   |   |
| Title:          | Assistant Corporate Secretary |                               | Title: | Assistant Treasurer |

 

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**EXHIBIT “A”**

 

[Form of Borrowing Base]**American Crystal Sugar Company**

Monthly Borrowing BaseFor the month ended                          

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

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

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

 

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

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

 

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