Document:

ANTICUS EXHIBIT 10.1

EXHIBIT 10.1

ANTICUS INTERNATIONAL CORPORATION

STOCK SUBSCRIPTION AGREEMENT

TO: ANTICUS INTERNATIONAL CORPORATION (the "Company"), SELLER

All subscribers are subject to the provisions of the Stock Subscription Agreement.

1.

The undersigned hereby subscribes for ________________ shares of Anticus International Corporation (the "Company") at a purchase price of $0.10 per share, in accordance with the terms and conditions of this Stock Subscription Agreement (the “Agreement”).

2.

This subscription is one of a limited number of such subscriptions for shares of common stock of the Company.  The execution of this Agreement shall constitute an offer by the undersigned to subscribe for common shares of stock in the amount specified above.  The Seller, Anticus International Corporation, shall have the right, in its sole discretion, to reject such offer for any reason whatsoever, or, by executing a copy of this  Agreement, to accept such offer.  If such offer is accepted, Anticus International Corporation will return an executed copy of this Agreement to the undersigned, and will subsequently direct its transfer agent by way of a treasury order to issue a share certificate in the number of shares as specified above and in such name or names as the undersigned has directed in this Agreement.

If this Agreement is rejected by the Company or if the offering is not consummated for any reason, the subscription payment of the undersigned will be returned, in full, as soon as practicable following termination of the offering or the date of rejection, as applicable.  It is understood that this Agreement is not binding upon Anticus International Corporation unless and until it is accepted by Anticus International Corporation, as evidenced by its execution of this Agreement where indicated below.

3.

The undersigned hereby makes the following representations and warranties:

a.

the undersigned has been furnished with a copy of the prospectus contained in the Company's SB2 Registration Statement;

b.

the undersigned is of legal majority and of sufficient legal capacity to execute this  Agreement, and warrants that all information provided to Anticus International Corporation is true and correct and complete in all respects as of the date hereof;

c.

the undersigned is acquiring the shares of common stock for his own account for investment purposes only and is not purchasing the subject shares for an undisclosed third party;

d.

if the undersigned is a corporation, partnership, trust or other entity, it represents:

(i)

it is duly organized, validly existing, and in good standing under the laws of the United States of America or elsewhere, and has all of the requisite power and authority to subscribe for the shares as provided herein;

(ii)

such subscription does not result in any violation of, or conflict with, any term of the charter or bylaws of the undersigned or an instrument to which it is bound or any law or regulation applicable to it;

(iii)

such subscription has been duly authorized by all the necessary actions required on behalf of the undersigned;

(iv)

this Agreement has been duly executed and delivered on behalf of the undersigned and constitutes a legal, valid and binding agreement upon the undersigned.

The foregoing representations and warranties shall be true and accurate as of the date hereof and as of the date of delivery of the purchase price to Anticus International Corporation and shall survive such delivery period.

4.

Miscellaneous

A.

This Stock Subscription Agreement, any amendments or replacements thereof, and the legality, validity and performance of the terms hereof, shall be governed by, and enforced, determined and construed in accordance with the laws of the State of Nevada applicable to contracts, transactions and obligations entered into and to be performed in such State.

B.

This Agreement contains the entire agreement between the parties hereto.  The provisions of this Agreement may not be modified or waived except in writing.  References to the masculine in this Agreement includes the feminine and neuter.

C.

This Agreement and the rights, powers and duties set forth herein shall, except as set forth herein, bind and inure to the benefit of the heirs, executors, administrators, legal representatives, successors and assigns of the parties hereto.  The undersigned may not assign any or his rights or interests in and under this Agreement without the prior written consent of Anticus International Corporation, and any attempted assignment without such consent shall be void and without effect.

D.

It is understood that this subscription is offered on a subject to prior sale basis and is not binding on Anticus International Corporation until the Company accepts it, which acceptance is at the sole discretion of the Company, by executing this Agreement where indicated.

5.

Subscription

The undersigned hereby subscribes for the purchase of common shares of the stock of Anticus International Corporation and encloses payment of $________________ (@ $0.10 per share) payable to Anticus International Corporation.

EXECUTED this ______________ day of ______________________, 200___, at

________________________________________________

________________________________

________________________________

Signature of Subscriber, or, if Subscriber

Name of Subscriber- PLEASE PRINT

is a corporation, partnership or trust,

signature of authorized signatory

________________________________

Social Security or other identification number

________________________________

Office of Authorized Signatory

_____________________________ 

Address of Subscriber

_____________________________

If the subscriber is a partnership,

City

corporation or trust, complete the

following:

_____________________________

State/Province

Zip Code

____________________________________

Name of Partnership, Corporation or Trust

PLEASE PRINT

(affix seal, if any)

This Stock Subscription Agreement is accepted by Anticus International Corporation this 

_________________ day of _______________________, 200_____.

ANTICUS INTERNATIONAL CORPORATION

By:_________________________

PresidentExhibit

10.29

 

FINAL EXECUTION

 

 

 

AMERICAN CRYSTAL

SUGAR COMPANY

 

 

$20,000,000 4.78%

Senior Secured Guaranteed Notes, due February 1, 2010

 

 

NOTE PURCHASE

AGREEMENT

 

 

 

Dated as of

January 15, 2003

 

 

 

 

	

  SECTION 1.                                  AUTHORIZATION OF

  NOTES

  
	

  SECTION 2.                                  SALE AND PURCHASE OF NOTES

  
	

  SECTION 3.                                  CLOSING

  
	

  SECTION 4.                                  CONDITIONS TO CLOSING

  
	

  Section 4.1

  	

  Representations

  and Warranties

  
	

  Section 4.2

  	

  Performance; No

  Default

  
	

  Section 4.3

  	

  Compliance

  Certificates

  
	

  Section 4.4

  	

  Opinions of Counsel

  
	

  Section

  4.5

  	

  Purchase

  Permitted By Applicable Law, Etc.

  
	

  Section

  4.6

  	

  Sale

  of Other Notes; Amendment of 1998 Note Purchase Agreement

  
	

  Section

  4.7

  	

  Payment

  of Special Counsel Fees

  
	

  Section 4.8

  	

  Private

  Placement Number

  
	

  Section

  4.9

  	

  Changes in

  Corporate Structure

  
	

  Section

  4.10

  	

  Execution

  of Security Documents

  
	

  Section

  4.11

  	

  Filing

  and Recording; Collateral Due Diligence

  
	

  Section 4.12

  	

  Evidence of

  Insurance

  
	

  Section

  4.13

  	

  Consent

  of Holders of Other Securities

  
	

  Section 4.14

  	

  Funding Instructions

  
	

  Section

  4.15

  	

  Payment

  of Recording Fees, Charges and Taxes

  
	

  Section 4.16

  	

  Proceedings and

  Documents

  
	

  SECTION

  5.                                REPRESENTATIONS

  AND WARRANTIES OF THE COMPANY

  
	

  Section

  5.1

  	

  Organization;

  Power and Authority

  
	

  Section 5.2

  	

  Authorization, Etc.

  
	

  Section 5.3

  	

  Disclosure.

  
	

  Section

  5.4

  	

  Organization

  and Ownership of Shares of Subsidiaries; Affiliates

  
	

  Section 5.5

  	

  Financial Statements

  
	

  Section

  5.6

  	

  Compliance

  with Laws, Other Instruments, Etc.

  
	

  Section

  5.7

  	

  Governmental

  Authorizations, Etc.

  
	

  Section

  5.8

  	

  Litigation;

  Observance of Agreements, Statutes and Orders

  
	

  Section 5.9

  	

  Taxes

  
	

  Section 5.10

  	

  Title to

  Property; Leases

  
	

  Section 5.11

  	

  Licenses, Permits,

  Etc.

  

 

i

 

	

  Section 5.12

  	

  Compliance with

  ERISA

  
	

  Section

  5.13

  	

  Private

  Offering by the Company

  
	

  Section

  5.14

  	

  Use of

  Proceeds; Margin Regulations

  
	

  Section 5.15

  	

  Existing

  Debt; Future Liens

  
	

  Section

  5.16

  	

  Foreign

  Assets Control Regulations, Etc.

  
	

  Section 5.17

  	

  Status under

  Certain Statutes

  
	

  Section 5.18

  	

  Environmental

  Matters

  
	

  Section 5.19

  	

  Collateral Matters

  
	

  Section 5.20

  	

  Parity of

  Obligations

  
	

  SECTION

  6.                                REPRESENTATIONS

  OF THE PURCHASER

  
	

  Section 6.1

  	

  Purchase for

  Investment

  
	

  Section 6.2

  	

  Source of Funds

  
	

  SECTION 7.                                INFORMATION AS TO

  COMPANY

  
	

  Section

  7.1

  	

  Financial

  and Business Information

  
	

  Section 7.2

  	

  Officer’s

  Certificate

  
	

  Section 7.3

  	

  Inspection

  
	

  SECTION 8.                                  PREPAYMENT OF THE

  NOTES

  
	

  Section 8.1

  	

  Required Prepayments

  
	

  Section

  8.2

  	

  Optional

  Prepayments with Make-Whole Amount

  
	

  Section 8.3

  	

  Change in Control

  
	

  Section

  8.4

  	

  Allocation

  of Partial Prepayments

  
	

  Section 8.5

  	

  Maturity;

  Surrender, Etc.

  
	

  Section 8.6

  	

  Purchase of Notes

  
	

  Section 8.7

  	

  Make-Whole Amount

  
	

  SECTION 9.                                AFFIRMATIVE COVENANTS

  
	

  Section 9.1

  	

  Compliance with Law

  
	

  Section 9.2

  	

  Insurance

  
	

  Section 9.3

  	

  Maintenance of

  Properties

  
	

  Section 9.4

  	

  Payment of

  Taxes and Claims

  
	

  Section 9.5

  	

  Corporate

  Existence, Etc.

  
	

  Section 9.6

  	

  Notes to Rank

  Pari Passu

  
	

  Section 9.7

  	

  Further Assurances

  

 

ii

 

	

  Section 9.8

  	

  Post Closing

  Matters

  
	

  Section

  9.9

  	

  Incorporation

  of Additional Covenants, Events of Default and Additional Information

  Requests

  
	

  Section 9.10

  	

  Additional

  Collateral

  
	

  Section 9.11

  	

  Minimum Net

  Working Capital

  
	

  Section

  9.12

  	

  Consolidated

  Funded Debt to Capitalization

  
	

  Section

  9.13

  	

  Minimum

  Average Net Funds Generated plus Interest Expense

  
	

  SECTION 10.                            NEGATIVE COVENANTS

  
	

  Section 10.1

  	

  Transactions

  with Affiliates

  
	

  Section 10.2

  	

  Merger,

  Consolidation, Etc.

  
	

  Section 10.3

  	

  Liens

  
	

  Section 10.4

  	

  Consolidated Net

  Worth

  
	

  Section 10.5

  	

  Sale of Assets

  
	

  Section 10.6

  	

  Limitations on

  Funded Debt

  
	

  Section 10.7

  	

  Line of Business

  
	

  Section 10.8

  	

  Loans To Growers

  
	

  SECTION 11.                            EVENTS OF DEFAULT

  
	

  SECTION 12.                            REMEDIES ON

  DEFAULT, ETC.

  
	

  Section 12.1

  	

  Acceleration

  
	

  Section 12.2

  	

  Other Remedies

  
	

  Section 12.3

  	

  Rescission

  
	

  Section

  12.4

  	

  No

  Waivers or Election of Remedies, Expenses, etc.

  
	

  SECTION

  13.                           REGISTRATION;

  EXCHANGE; SUBSTITUTION OF NOTES

  
	

  Section 13.1

  	

  Registration of

  Notes

  
	

  Section

  13.2

  	

  Transfer

  and Exchange of Notes

  
	

  Section 13.3

  	

  Replacement of Notes

  
	

  SECTION 14.                          PAYMENT OF NOTES

  
	

  Section 14.1

  	

  Place of Payment

  
	

  Section 14.2

  	

  Home Office Payment

  
	

  SECTION 15.                          EXPENSES,

  ETC.

  
	

  Section 15.1

  	

  Transaction Expenses

  
	

  Section 15.2

  	

  Survival

  

 

iii

 

	

  SECTION

  16.                          SURVIVAL

  OF REPRESENTATIONS AND WARRANTIES; ENTIRE AGREEMENT

  
	

  SECTION 17.                          AMENDMENT AND WAIVER

  
	

  Section 17.1

  	

  Requirements

  
	

  Section

  17.2

  	

  Solicitation

  of Holders of Notes

  
	

  Section 17.3

  	

  Binding Effect, etc.

  
	

  Section 17.4

  	

  Notes held by

  Company, Etc.

  
	

  SECTION 18.                          NOTICES

  
	

  SECTION 19.                          REPRODUCTION OF

  DOCUMENTS

  
	

  SECTION 20.                          CONFIDENTIAL

  INFORMATION

  
	

  SECTION 21.                          SUBSTITUTION OF

  PURCHASER

  
	

  SECTION 22.                          MISCELLANEOUS

  
	

  Section 22.1

  	

  Successors and

  Assigns

  
	

  Section

  22.2

  	

  Payments

  Due on Non-Business Days

  
	

  Section 22.3

  	

  Severability

  
	

  Section 22.4

  	

  Construction

  
	

  Section 22.5

  	

  Counterparts

  
	

  Section 22.6

  	

  Governing Law

  
	

  Section 22.7

  	

  Additional

  Indebtedness

  

 

iv

 

	

  SCHEDULES

  	

   

  
	

   

  	

   

  
	

  Schedule A

  	

  Information Relating to

  Purchasers

  
	

  Schedule B

  	

  Defined Terms

  
	

  Schedule 5.4

  	

  Subsidiaries of the Company

  
	

  Schedule 5.5

  	

  Financial

  Statements and Other Reports

  
	

  Schedule 5.12(b)

  	

  ERISA Exceptions

  
	

  Schedule 5.15

  	

  Existing Debt and Existing Liens

  
	

   

  	

   

  
	

  EXHIBITS

  	

   

  
	

   

  	

   

  
	

  Exhibit 1

  	

  Form of Note

  
	

  Exhibit

  1(b)

  	

  Form of Guarantee

  Agreement

  
	

  Exhibit 4.1

  	

  Representations

  and Warranties of Guarantor

  
	

  Exhibit 4.4(a)

  	

  Description

  of Closing Opinion of Counsel to the Company and the Guarantor

  
	

  Exhibit 4.4(b)

  	

  Description

  of Special Counsel’s Closing Opinion

  
	

  Exhibit 4.4(c)

  	

  Description

  of Closing Opinion of Special Local Counsel to the Purchasers

  
	

  Exhibit 4.4(d)

  	

  Description

  of Closing Opinion of Counsel to the Collateral Agent

  

 

v

 

AMERICAN CRYSTAL

SUGAR COMPANY

101 NORTH 3RD

STREET

MOORHEAD,

MINNESOTA  56560

 

$20,000,000 4.78%

Senior Secured Guaranteed Notes, due February 1, 2010

 

Dated as of

January 15, 2003

 

TO

EACH OF THE PURCHASERS LISTED IN

THE ATTACHED SCHEDULE A:

 

Ladies and Gentlemen:

 

American Crystal Sugar

Company, a Minnesota cooperative 

corporation (the “Company”), agrees with you as follows:

 

SECTION 1.  AUTHORIZATION OF NOTES.

 

(a)                                  The

Company will authorize the issue and sale of its $20,000,000 4.78% Senior

Secured Guaranteed Notes, due February 1, 2010 (the “Notes”), such term to include

any such notes issued in substitution therefor pursuant to Section 13 of this

Agreement or the Other Agreements (as hereinafter defined). The Notes shall be

substantially in the form set out in Exhibit 1 with such changes therefrom, if

any, as may be approved by you and the Company.  Certain capitalized terms used in this Agreement are defined in

Schedule B; references to a “Schedule” or an “Exhibit” are, unless otherwise

specified, to a Schedule or an Exhibit attached to this Agreement.

 

(b)                                 The

payment and performance obligations of the Company under and pursuant to this

Agreement and the Notes are to be fully and unconditionally guaranteed by the

Guarantor pursuant to the Guarantee Agreement in substantially the form

attached hereto as Exhibit 1(b).

 

(c)                                  The

obligations of the Guarantor under the Guarantee Agreement shall be secured by

the Sidney Mortgage and the Notes shall be secured, equally and ratably with

the other Senior Secured Obligations (as defined in the Intercreditor and

Collateral Agency Agreement) by the Collateral (as defined in the Intercreditor

and Collateral Agency Agreement).

 

SECTION 2.  SALE AND PURCHASE OF NOTES.

 

Subject to the terms and

conditions of this Agreement, the Company will issue and sell to you and you

will purchase from the Company, at the Closing provided for in Section 3, Notes

in the principal amount specified opposite your name in Schedule A at the

purchase price of 100% of the principal amount thereof.  Contemporaneously with entering into this

Agreement, the Company is entering into separate Note Purchase Agreements (the “Other

Agreements”) identical with this Agreement with each of the other

purchasers named in Schedule A (the 

 

 

“Other Purchasers”), providing for the sale

at such Closing to each of the Other Purchasers of Notes in the principal

amount specified opposite its name in Schedule A.  Your obligation hereunder and the

obligations of the Other Purchasers under the Other Agreements are several and

not joint obligations and you shall have no obligation under any Other Agreement

and no liability to any Person for the performance or non-performance by any

Other Purchaser thereunder.  You and the

Other Purchasers are sometimes referred to hereunder as the “Purchasers”.

 

SECTION 3.  CLOSING.

 

The sale and purchase of

the Notes to be purchased by you and the Other Purchasers shall occur at the

offices of McDermott, Will & Emery, 227 W. Monroe, Suite 4400, Chicago,

Illinois 60606 at 10:00 A.M. Chicago, Illinois time, at a closing (the “Closing”)

on January 31, 2003 or on such other Business Day thereafter on or prior to

January 31, 2003 as may be agreed upon by the Company and you and the Other

Purchasers.  At the Closing the Company

will deliver to you the Notes to be purchased by you in the form of a single

Note (or such greater number of Notes in denominations of at least $250,000 as

you may request) dated the date of the Closing and registered in your name (or

in the name of your nominee), against delivery by you to the Company or its

order of immediately available funds in the amount of the purchase price

therefor by wire transfer of immediately available funds for the account of the

Company at Wells Fargo Bank Northwest, Minneapolis, Routing #091000019, for

credit to the Company’s account no. 0720017777.  If at the Closing the Company shall fail to tender such Notes to

you as provided above in this Section 3, or any of the conditions specified in

Section 4 shall not have been fulfilled to your satisfaction, you shall, at

your election, be relieved of all further obligations under this Agreement,

without thereby waiving any rights you may have by reason of such failure or

such non-fulfillment.

 

SECTION 4.  CONDITIONS TO CLOSING.

 

Your obligation to

purchase and pay for the Notes to be sold to you at the Closing is subject to

the fulfillment to your satisfaction, prior to or at the Closing, of the

following conditions:

 

Section

4.1                                   Representations

and Warranties.  The

representations and warranties of the Company in this Agreement, of the

Guarantor in the Guarantee Agreement 

and contained in Exhibit 4.1 to this Agreement and the Security

Documents shall be correct when made and at the time of the Closing.

 

Section

4.2                                   Performance;

No Default.  The Company and

the Guarantor shall have performed and complied with all agreements and

conditions contained in this Agreement required to be performed or complied

with by it prior to or at the Closing and after giving effect to the issue and

sale of the Notes (and the application of the proceeds thereof as contemplated

by Section 5.14) no Default or Event of Default shall have occurred and be

continuing.

 

2

 

Section

4.3           

                     Compliance

Certificates.

 

(a)                                  Officer’s

Certificate of the Company. 

The Company shall have delivered to you an Officer’s Certificate, dated

the date of the Closing, certifying that the conditions specified in Sections

4.1, 4.2 and 4.9 have been fulfilled.

 

(b)                                 Secretary’s

Certificate of the Company. 

The Company shall have delivered to you a certificate certifying as to

the resolutions attached thereto and other corporate proceedings relating to

the authorization, execution and delivery of the Notes, the Agreements and the

Existing Mortgages.

 

(c)                                  Officer’s

Certificate of the Guarantor. 

The Guarantor shall have delivered to you an Officer’s Certificate,

dated the date of the Closing, certifying that the conditions specified in

Sections 4.1 and 4.2 have been fulfilled.

 

(d)                                 Secretary’s

Certificate of the Guarantor. 

The Guarantor shall have delivered to you a certificate certifying as to

the resolutions attached thereto and other corporate proceedings relating to

the authorization, execution and delivery of the Guarantee Agreement and the

Sidney Mortgage.

 

(e)                                  Officer’s

Certificate.  The Collateral

Agent shall have delivered to you an Officer’s Certificate, dated the date of

the Closing, certifying that (i) the representations and warranties of the

Collateral Agent set forth in Section 2.2 of the Intercreditor and Collateral

Agency Agreement shall be correct when made and at the time of the Closing,

(ii) the Collateral Agent shall have performed and complied with all agreements

and conditions contained in the Intercreditor and Collateral Agency Agreement

required to be performed or complied with by it prior to or at the Closing and

after giving effect to the issue and sale of the Notes (and the application of

the proceeds thereof as contemplated by Section 5.14) no Default or Event of

Default shall have occurred and be continuing, and (iii) the Collateral Agent

shall not have changed its jurisdiction of incorporation or been a party to any

merger or consolidation.

 

(f)                                    Secretary’s

Certificate.  The Collateral

Agent shall have delivered to you a certificate certifying as to the

resolutions attached thereto and other corporate proceedings relating to the

authorization, execution and delivery of the Intercreditor and Collateral

Agency Agreement.

 

Section

4.4           

                     Opinions

of Counsel.  You shall have

received opinions in form and substance satisfactory to you, dated the date of

the Closing (a) from Oppenheimer, Wolff & Donnelly, counsel for the Company

and the Guarantor, covering the matters set forth in Exhibit 4.4(a) and

covering such other matters incident to the transactions contemplated hereby as

you or your counsel may reasonably request (and the Company hereby instructs

its counsel to deliver such opinion to you), (b) from McDermott, Will

& Emery, your special counsel in connection with such transactions,

substantially in the form set forth in Exhibit 4.4(b) and covering such other

matters incident to such transactions as you may reasonably request, (c) from

Holland & Hart, as special Montana counsel, and Oppenheimer, Wolff &

Donnelly, as special Minnesota and North Dakota counsel, covering the matters

set forth in Exhibit 4.4(c) and covering such 

 

3

 

other matters incident to

the transactions contemplated hereby as you or your special counsel may

reasonably request, and (d) from the Associate General Counsel of the

Collateral Agent substantially in the form set forth in Exhibit 4.4(d) and

covering such other matters incident to such transactions as you may reasonably

request.

 

Section

4.5           

                     Purchase

Permitted By Applicable Law, Etc. 

On the date of the Closing your purchase of Notes shall (a) be

permitted by the laws and regulations of each jurisdiction to which you are

subject, without recourse to provisions (such as Section 1405(a)(8) of the New

York Insurance Law) permitting limited investments by insurance companies

without restriction as to the character of the particular investment,

(b) not violate any applicable law or regulation (including, without

limitation, Regulation T, U or X of the Board of Governors of the Federal

Reserve System) and (c) not subject you to any tax, penalty or liability

under or pursuant to any applicable law or regulation, which law or regulation

was not in effect on the date hereof. 

If requested by you, you shall have received an Officer’s Certificate

certifying as to such matters of fact as you may reasonably specify to enable

you to determine whether such purchase is so permitted.

 

Section

4.6           

                     Sale

of Other Notes; Amendment of 1998 Note Purchase Agreement.  Contemporaneously with the Closing the

Company shall sell to the Other Purchasers and the Other Purchasers shall

purchase the Notes to be purchased by them at the Closing as specified in

Schedule A, and the original 1998 Note Purchase Agreement shall have been

amended by the Company and the 1998 Purchasers in form and substance reasonably

satisfactory to the Company, the 1998 Purchasers and the Purchasers.

 

Section

4.7           

                     Payment

of Special Counsel Fees.  Without limiting the provisions of

Section 15.1, the Company shall have paid on or before the Closing the

fees, charges and disbursements of your special counsel and your special local

counsel referred to in Section 4.4 to the extent reflected in a statement of

such counsel rendered to the Company at least one Business Day prior to the

Closing.

 

Section

4.8           

                     Private

Placement Number.  A Private

Placement Number issued by Standard & Poor’s CUSIP Service Bureau (in

cooperation with the Securities Valuation Office of the National Association of

Insurance Commissioners) shall have been obtained for the Notes.

 

Section

4.9           

                     Changes

in Corporate Structure. The Company shall not have changed its

jurisdiction of incorporation or been a party to any merger or consolidation

and shall not have succeeded to all or any substantial part of the liabilities

of any other entity, at any time following the date of the most recent

financial statements referred to in Schedule 5.5.

 

Section

4.10                            Execution

of Security Documents.  On or

prior to the Closing:

 

(a)                                  the

Guarantor shall have executed and delivered the Guarantee Agreement, the 1998

Guarantee Agreement and the Bank Guarantee Agreement and each of said agreements

shall be in full force and effect and you shall have received true, correct and

complete copies thereof;

 

4

 

(b)                                 the

Collateral Agent, the Banks and you shall have entered into and delivered the

Intercreditor and Collateral Agency Agreement and the Company and the Guarantor

shall have acknowledged the execution and delivery of such agreement and the

Intercreditor and Collateral Agency Agreement shall be in full force and effect

and you shall have received true, correct and complete copies thereof;

 

(c)                                  the

Guarantor and the Collateral Agent shall have entered into and delivered the

Sidney Mortgage in form and substance satisfactory to you and the Sidney

Mortgage shall be in full force and effect and you shall have received true,

correct and complete copies thereof; and

 

(d)                                 the

Existing Mortgage shall be modified or amended in form and substance reasonably

satisfactory to the Purchasers to the effect that such Existing Mortgage shall

continue to secure the Notes following execution of the Modification Agreement

as may be required by local law.

 

Section

4.11                            Filing

and Recording; Collateral Due Diligence. 

The Purchasers shall have received the following, in form and

substance satisfactory to the Purchasers:

 

(a)          evidence

that all filings, registrations and recordings have been made in the

appropriate governmental offices, and all other action has been taken, which

shall be necessary to create, in favor of the Collateral Agent on behalf of the

Purchasers, a perfected first, priority Lien on the Collateral, including

evidence of recordation of the Mortgages (which may consist of a written or

telephonic confirmation from the title insurance company), and filing of

completed UCC-1 financing statements, in each case in the appropriate

governmental offices;

 

(b)         the

results, dated as of a recent date prior to the Closing Date, of searches

conducted in the UCC filing records in each of the governmental offices in each

jurisdiction in which personal property and fixture Collateral is located,

which shall have revealed no Liens with respect to any of the Collateral except

Permitted Liens;

 

(c)          a title

insurance policy (or a binding commitment therefor) for the Sidney Mortgage (i) issued by a title insurance company of recognized

standing satisfactory to the Purchasers, (ii) on

an ALTA (1970 Form) lender’s extended coverage policy, in an amount and form

satisfactory to the Purchasers, (iii) naming

the Collateral Agent, for the ratable benefit of the Secured Parties, as the

insured thereunder, (iv) insuring that the

Sidney Mortgage insured thereby creates a valid first priority Lien on the

property covered by the Sidney Mortgage, subject to no other Liens, other than

Permitted Liens, and to no other exceptions, other than those satisfactory to

the Purchasers, and (v) containing such

endorsements and affirmative coverage as the Purchasers or the Bank (through

the Purchasers) may reasonably request;

 

(d)         “Date Down”

Endorsement to the existing loan title policies for the Existing Mortgage

issued by Richland Abstract to the Collateral Agent insuring that the Sidney

Mortgage insured thereby creates a valid first priority Lien on the property 

 

5

 

covered by the

Sidney Mortgage, subject to no other Liens, other than Permitted Liens; and

 

(e)          such other

documents and instruments in connection with the Sidney Mortgage as shall

reasonably be deemed necessary by the Purchasers.

 

Section

4.12                            Evidence

of Insurance.  You shall have

received a certificate dated the Closing executed by the independent insurance

broker of the Company or the Guarantor certifying to the existence of the

insurance required by the Security Documents and the payment of all premiums

thereon.  The original of the policies

or certificates thereof evidencing such insurance issued by the insurers shall

be delivered to the Collateral Agent for safekeeping on your behalf immediately

upon receipt thereof by the Guarantor.

 

Section

4.13                            Consent

of Holders of Other Securities. 

The Company and the 1998 Purchasers shall have executed and delivered

the First Amendment to the 1998 Note Purchase Agreement dated as of the date

hereof in form satisfactory to you. The Company and the Banks shall have

executed and delivered the Fifth Amendment to Loan Agreement in form

satisfactory to you.  Any other consents

or approvals required to be obtained from any holder or holders of any

outstanding Security of the Company and the Guarantor and any amendments of

agreements pursuant to which any Security may have been issued which shall be

necessary to permit the consummation of the transactions contemplated hereby or

by the Security Documents shall have been obtained and all such consents or

amendments shall be satisfactory in form and substance to you and your special

counsel.

 

Section

4.14                            Funding

Instructions.  At least 3

Business Days prior to the Closing, you shall have received written

instructions executed by a Responsible Officer of the Company directing the

manner of the payment of funds and setting forth (a) the name of the transferee

bank, (b) such transferee bank’s ABA number, (c) the account name and number

into which the purchase price for the Notes is to be deposited, and (d) the

name and telephone number of the account representative responsible for

verifying receipt of such funds.

 

Section

4.15                            Payment

of Recording Fees, Charges and Taxes.  All fees, charges and taxes in connection with the recordation or

filing and re-recordation or re-filing of the Security Documents and any other

agreement or instrument, financing statement or any publication of notice

required to be filed or recorded to protect the validity of the liens securing

the obligations of the Notes shall have been paid in full.

 

Section

4.16                            Proceedings

and Documents.  All corporate

and other proceedings in connection with the transactions contemplated by this

Agreement and all documents and instruments incident to such transactions shall

be satisfactory to you and your special counsel, and you and your special counsel

shall have received all such counterpart originals or certified or other copies

of such documents as you or they may reasonably request.

 

6

 

SECTION 5.  REPRESENTATIONS AND WARRANTIES

OF THE COMPANY.

 

The Company represents

and warrants to you that:

 

Section

5.1           

                     Organization;

Power and Authority.  The

Company is a corporation duly organized, validly existing and in good standing

under the laws of its jurisdiction of incorporation, and is duly qualified as a

foreign corporation and is in good standing in each jurisdiction in which such

qualification is required by law, other than those jurisdictions as to which

the failure to be so qualified or in good standing could not, individually or

in the aggregate, reasonably be expected to have a Material Adverse

Effect.  The Company has the corporate

power and authority to own or hold under lease the properties it purports to

own or hold under lease, to transact the business it transacts and proposes to

transact, to execute and deliver this Agreement, the Other Agreements, the

Mortgage and the Notes and to perform the provisions hereof and thereof.

 

Section

5.2           

                     Authorization,

Etc.  This Agreement, the Other Agreements, the

Mortgage and the Notes have been duly authorized by all necessary corporate

action on the part of the Company, and this Agreement constitutes, and upon

execution and delivery thereof each Note will constitute, a legal, valid and

binding obligation of the Company enforceable against the Company in accordance

with its terms, except as such enforceability may be limited by (a) applicable

bankruptcy, insolvency, reorganization, moratorium or other similar laws

affecting the enforcement of creditors’ rights generally and (b) general

principles of equity (regardless of whether such enforceability is considered

in a proceeding in equity or at law).

 

Section

5.3           

                     Disclosure.  This Agreement, the Mortgage, the

documents, certificates or other writings delivered to you by or on behalf of

the Company in connection with the transactions contemplated hereby and the

financial statements listed in Schedule 5.5, taken as a whole, do not

contain any untrue statement of a material fact or omit to state any material

fact necessary to make the statements therein not misleading in light of the

circumstances under which they were made. Since August 31, 2002, other than the

acquisition of the Guarantor by the Company, there has been no change in the

financial condition, operations, business, properties or prospects of the

Company or any Subsidiary except changes that individually or in the aggregate

could not reasonably be expected to have a Material Adverse Effect.  There is no fact known to the Company that

could reasonably be expected to have a Material Adverse Effect that has not

been set forth herein or in the other documents, certificates and other

writings delivered to you by or on behalf of the Company specifically for use

in connection with the transactions contemplated hereby.

 

Section

5.4           

                     Organization

and Ownership of Shares of Subsidiaries; Affiliates.

 

(a)                                  Schedule

5.4 contains (except as noted therein) complete and correct lists (i) of the

Company’s Subsidiaries, showing, as to each Subsidiary, the correct name

thereof, the jurisdiction of its organization, and the percentage of shares of

each class of its capital stock or similar equity interests outstanding owned

by the Company and each other Subsidiary, (ii) of the Company’s Affiliates,

other than Subsidiaries, and (iii) of the Company’s directors and senior

officers.

 

7

 

(b)                                 All

of the outstanding shares of capital stock or similar equity interests of each

Subsidiary shown in Schedule 5.4 as being owned by the Company and its

Subsidiaries have been validly issued, are fully paid and nonassessable and are

owned by the Company or another Subsidiary free and clear of any Lien (except

as otherwise disclosed in Schedule 5.4).

 

(c)                                  Each

Subsidiary identified in Schedule 5.4 is a corporation or other legal entity

duly organized, validly existing and in good standing under the laws of its

jurisdiction of organization, and is duly qualified as a foreign corporation or

other legal entity and is in good standing in each jurisdiction in which such

qualification is required by law, other than those jurisdictions as to which

the failure to be so qualified or in good standing could not, individually or

in the aggregate, reasonably be expected to have a Material Adverse

Effect.  Each such Subsidiary has the

corporate or other power and authority to own or hold under lease the

properties it purports to own or hold under lease and to transact the business

it transacts and proposes to transact.

 

(d)                                 No

Subsidiary is a party to, or otherwise subject to any legal restriction or any

agreement (other than this Agreement, the agreements listed on Schedule 5.4 and

customary limitations imposed by corporate law statutes) restricting the

ability of such Subsidiary to pay dividends out of profits or make any other

similar distributions of profits to the Company or any of its Subsidiaries that

owns outstanding shares of capital stock or similar equity interests of such

Subsidiary.

 

Section

5.5           

                     Financial

Statements.  The Company has

delivered to each Purchaser copies of the financial statements of the Company

and its Subsidiaries listed on Schedule 5.5. 

All of said financial statements (including in each case the related

schedules and notes) fairly present in all material respects the consolidated

financial position of the Company and its Subsidiaries as of the respective

dates specified in such financial statements and the consolidated results of

their operations and cash flows for the respective periods so specified and

have been prepared in accordance with GAAP consistently applied throughout the

periods involved except as set forth in the notes thereto (subject, in the case

of any interim financial statements, to normal year-end adjustments).

 

Section

5.6           

                     Compliance

with Laws, Other Instruments, Etc. 

The execution, delivery and performance by the Company of this

Agreement, the Existing Mortgage and the Notes will not (a) contravene,

result in any breach of, or constitute a default under, or result in the

creation of any Lien in respect of any property of the Company or any Subsidiary

under, any indenture, mortgage, deed of trust, loan, purchase or credit

agreement, lease, corporate charter or by-laws, or any other agreement or

instrument to which the Company or any Subsidiary is bound or by which the

Company or any Subsidiary or any of their respective properties may be bound or

affected, (b) conflict with or result in a breach of any of the terms,

conditions or provisions of any order, judgment, decree, or ruling of any

court, arbitrator or Governmental Authority applicable to the Company or any

Subsidiary or (c) violate any provision of any statute or other rule or

regulation of any Governmental Authority applicable to the Company or any

Subsidiary.

 

Section

5.7           

                     Governmental

Authorizations, Etc.  No

consent, approval or authorization of, or registration, filing or declaration

with, any Governmental Authority is required in 

 

8

 

connection with the

execution, delivery or performance by the Company of this Agreement, the

Mortgage or the Notes.

 

Section

5.8           

                     Litigation;

Observance of Agreements, Statutes and Orders.

 

(a)                                  There

are no actions, suits or proceedings pending or, to the knowledge of the

Company, threatened against or affecting the Company or any Subsidiary or any

property of the Company or any Subsidiary in any court or before any arbitrator

of any kind or before or by any Governmental Authority that, individually or in

the aggregate, could reasonably be expected to have a Material Adverse Effect.

 

(b)                                 Neither

the Company nor any Subsidiary is in default under any term of any agreement or

instrument to which it is a party or by which it is bound, or any order,

judgment, decree or ruling of any court, arbitrator or Governmental Authority

or is in violation of any applicable law, ordinance, rule or regulation

(including without limitation Environmental Laws) of any Governmental

Authority, which default or violation, individually or in the aggregate, could

reasonably be expected to have a Material Adverse Effect.

 

Section

5.9           

                     Taxes.  The Company and its Subsidiaries have filed

all tax returns that are required to have been filed in any jurisdiction, and

have paid all taxes shown to be due and payable on such returns and all other

taxes and assessments levied upon them or their properties, assets, income or

franchises, to the extent such taxes and assessments have become due and

payable and before they have become delinquent, except for any taxes and

assessments (a) the amount of which is not individually or in the

aggregate Material or (b) the amount, applicability or validity of which

is currently being contested in good faith by appropriate proceedings and with

respect to which the Company or a Subsidiary, as the case may be, has

established adequate reserves in accordance with GAAP.  The Company knows of no basis for any other

tax or assessment that could reasonably be expected to have a Material Adverse

Effect.  The charges, accruals and

reserves on the books of the Company and its Subsidiaries in respect of

Federal, state or other taxes for all fiscal periods are adequate.  The Federal income tax liabilities of the

Company and its Subsidiaries have been determined by the Internal Revenue

Service and paid for all fiscal years up to and including the fiscal year ended

August 31, 1992.

 

Section

5.10                            Title

to Property; Leases.  The

Company and its Subsidiaries have good and sufficient title to their respective

properties that individually or in the aggregate are Material, including all

such properties reflected in the most recent audited balance sheet referred to

in Section 5.5 or purported to have been acquired by the Company or any

Subsidiary after said date (except as sold or otherwise disposed of in the

ordinary course of business), in each case free and clear of Liens prohibited

by this Agreement.  All leases that

individually or in the aggregate are Material are valid and subsisting and are

in full force and effect in all material respects.

 

Section

5.11                            Licenses,

Permits, Etc.

 

(a)                                  The

Company and its Subsidiaries own or possess all licenses, permits, franchises,

authorizations, patents, copyrights, service marks, trademarks and trade names,

or rights thereto, 

 

9

 

that individually or in

the aggregate are Material, without known conflict with the rights of others.

 

(b)                                 To

the best knowledge of the Company, no product of the Company infringes in any

material respect any license, permit, franchise, authorization, patent,

copyright, service mark, trademark, trade name or other right owned by any

other Person.

 

(c)                                  To

the best knowledge of the Company, there is no Material violation by any Person

of any right of the Company or any of its Subsidiaries with respect to any

patent, copyright, service mark, trademark, trade name or other right owned or

used by the Company or any of its Subsidiaries.

 

Section

5.12                            Compliance

with ERISA.

 

(a)                                  The

Company and each ERISA Affiliate have operated and administered each Plan in

compliance with all applicable laws except for such instances of noncompliance

as have not resulted in and could not reasonably be expected to result in a

Material Adverse Effect.  Neither the

Company nor any ERISA Affiliate has incurred any liability pursuant to Title I

or IV of ERISA or the penalty or excise tax provisions of the Code relating to

employee benefit plans (as defined in Section 3 of ERISA), and no event,

transaction or condition has occurred or exists that could reasonably be

expected to result in the incurrence of any such liability by the Company or

any ERISA Affiliate, or in the imposition of any Lien on any of the rights,

properties or assets of the Company or any ERISA Affiliate, in either case

pursuant to Title I or IV of ERISA or to such penalty or excise tax provisions

or to Section 401(a)(29) or 412 of the Code, other than such liabilities

or Liens as would not be individually or in the aggregate Material.

 

(b)                                 Except

as set forth in Schedule 5.12(b), the present value of the aggregate

benefit liabilities under each of the Plans (other than Multiemployer Plans), determined

as of the end of such Plan’s most recently ended plan year on the basis of the

actuarial assumptions specified for funding purposes in such Plan’s most recent

actuarial valuation report, did not exceed the aggregate current value of the

assets of such Plan allocable to such benefit liabilities.  The term “benefit liabilities” has the

meaning specified in section 4001 of ERISA and the terms “current value”

and “present value” have the meaning specified in section 3 of ERISA.

 

(c)                                  The

Company and its ERISA Affiliates have not incurred withdrawal liabilities (and

are not subject to contingent withdrawal liabilities) under section 4201

or 4204 of ERISA in respect of Multiemployer Plans that individually or in the

aggregate are Material.

 

(d)                                 The

expected postretirement benefit obligation (determined as of the last day of

the Company’s most recently ended fiscal year in accordance with Financial

Accounting Standards Board Statement No. 106, without regard to liabilities

attributable to continuation coverage mandated by section 4980B of the Code) of

the Company and its Subsidiaries is not Material.

 

(e)                                  The

execution and delivery of this Agreement and the issuance and sale of the Notes

hereunder will not involve any transaction that is subject to the prohibitions

of section 406 

 

10

 

of ERISA or in connection

with which a tax could be imposed pursuant to section 4975(c)(1)(A)-(D) of

the Code.  The representation by the

Company in the first sentence of this Section 5.12(e) is made in reliance upon

and subject to (i) the accuracy of your representation in Section 6.2 as to the

sources of the funds used to pay the purchase price of the Notes to be

purchased by you and (ii) the assumption, made solely for the purpose of making

such representation, that Department of Labor Interpretive Bulletin 75-2 with

respect to prohibited transactions remains valid in the circumstances of the

transactions contemplated herein.

 

Section

5.13                            Private

Offering by the Company. 

Neither the Company nor anyone acting on its behalf has offered the

Notes or any similar securities for sale to, or solicited any offer to buy any

of the same from, or otherwise approached or negotiated in respect thereof

with, any Person other than you and the Other Purchasers, each of which has

been offered the Notes at a private sale for investment.  Neither the Company nor anyone acting on its

behalf has taken, or will take, any action that would subject the issuance or

sale of the Notes to the registration requirements of Section 5 of the

Securities Act.

 

Section

5.14                            Use

of Proceeds; Margin Regulations. 

The Company will apply the proceeds of the sale of the Notes to repay

short-term Debt and seasonal Debt and for general corporate purposes.  No part of the proceeds from the sale of the

Notes hereunder will be used, directly or indirectly, for the purpose of buying

or carrying any margin stock within the meaning of Regulation U of the Board of

Governors of the Federal Reserve System (12 CFR 221), or for the purpose of

buying or carrying or trading in any securities under such circumstances as to

involve the Company in a violation of Regulation X of said Board (12 CFR 224)

or to involve any broker or dealer in a violation of Regulation T of said Board

(12 CFR 220).  Margin stock does not

constitute more than 1% of the value of the consolidated assets of the Company

and its Subsidiaries and the Company does not have any present intention that

margin stock will constitute more than 1% of the value of such assets. As used

in this Section, the terms “margin stock” and “purpose of buying or carrying”

shall have the meanings assigned to them in said Regulation U.

 

Section

5.15                            Existing

Debt; Future Liens.

 

(a)                                  Schedule

5.15 sets forth a complete and correct list of all outstanding Debt of the

Company and its Subsidiaries as of November 30, 2002, since which date there

has been no Material change in the amounts, interest rates, sinking funds,

installment payments or maturities of the Debt of the Company or its Subsidiaries.

Neither the Company nor any Subsidiary is in default and no waiver of default

is currently in effect, in the payment of any principal or interest on any Debt

of the Company or such Subsidiary and no event or condition exists with respect

to any Debt of the Company or any Subsidiary that would permit (or that with

notice or the lapse of time, or both, would permit) one or more Persons to

cause such Debt to become due and payable before its stated maturity or before

its regularly scheduled dates of payment.

 

(b)                                 Neither

the Company nor any Subsidiary has agreed or consented to cause or permit in

the future (upon the happening of a contingency or otherwise) any of its

property, whether now owned or hereafter acquired, to be subject to a Lien not

permitted by Section 10.3.

 

11

 

Section

5.16                            Foreign

Assets Control Regulations, Etc. 

Neither the sale of the Notes by the Company hereunder nor its use of

the proceeds thereof will violate the Trading with the Enemy Act, as amended,

or any of the foreign assets control regulations of the United States Treasury

Department (31 CFR, Subtitle B, Chapter V, as amended) or any enabling

legislation or executive order relating thereto.

 

Section

5.17                            Status

under Certain Statutes. 

Neither the Company nor any Subsidiary is (a) subject to regulation

under the Investment Company Act of 1940, as amended, the Public Utility

Holding Company Act of 1935, as amended, the Interstate Commerce Act, as

amended, or the Federal Power Act, as amended, or (b) is a person or entity

described in Section 1 of Executive Order 13224, of September 24, 2002, and, to

the best knowledge of the Company, neither the Company nor any Subsidiary

engage, and will not engage in, dealings or transactions with, or are or will

be associated with, any such Person or entities.

 

Section 5.18                            Environmental

Matters.  Neither the Company

nor any Subsidiary, except for the matter set forth in

Section 9.8(c) hereof, has knowledge of any claim or has received any

notice of any claim, and no proceeding has been instituted raising any claim

against the Company or any of its Subsidiaries or any of their respective real

properties now or formerly owned, leased or operated by any of them or other

assets, alleging any damage to the environment or violation of any

Environmental Laws, except, in each case, such as could not reasonably be

expected to result in a Material Adverse Effect.  Except as otherwise disclosed to you in writing,

 

(a)                                  neither

the Company nor any Subsidiary has knowledge of any facts which would give rise

to any claim, public or private, of violation of Environmental Laws or damage

to the environment emanating from, occurring on or in any way related to real

properties now or formerly owned, leased or operated by any of them or to other

assets or their use, except, in each case, such as could not reasonably be

expected to result in a Material Adverse Effect;

 

(b)                                 neither

the Company nor any of its Subsidiaries has stored any Hazardous Materials on

real properties now or formerly owned, leased or operated by any of them and

has not disposed of any Hazardous Materials in a manner contrary to any

Environmental Laws in each case in any manner that could reasonably be expected

to result in a Material Adverse Effect; and

 

(c)                                  all

buildings on all real properties now owned, leased or operated by the Company

or any of its Subsidiaries are in compliance with applicable Environmental

Laws, except where failure to comply could not reasonably be expected to result

in a Material Adverse Effect.

 

Section

5.19                            Collateral

Matters.

 

(a)                                  The

provisions of each of the Security Documents are effective to create in favor

of the Collateral Agent for the benefit of the Purchasers, a legal, valid and

(subject to the qualifications to enforceability in Section 5.2) enforceable

security interest (with the priorities 

 

12

 

provided for therein and

limited to the extent the Collateral described therein is within the scope of

the UCC) in all right, title and interest of the Company, the Guarantor and

their Subsidiaries in the collateral described therein; and executed financing

statements have been, or on or before the Closing will be, filed in all public

offices wherein such filing is necessary to perfect the security interests in

the Collateral therein described as against creditors of and purchasers from

the Company and the Guarantor.

 

(b)                                 All

representations and warranties of the Company, the Guarantor and any of their

Subsidiaries party thereto contained in the Security Documents are true and

correct.

 

(c)                                  All

fees, charges and taxes in connection with the recordation or filing and

re-recordation or re-filing of the Security Documents and any other agreement

or instrument, financing statement or any publication of notice required to be

filed or recorded to protect the validity of the liens securing the obligations

of the Notes shall have been paid in full.

 

Section

5.20                            Parity

of Obligations.  All

obligations hereunder and under the Notes are direct and secured obligations of

the Company ranking pari passu as against the assets of the Company with all

other present and future secured Debt (actual or contingent) of the Company

which is not expressed to be subordinate or junior in rank to any other secured

Debt of the Company except for Debt secured by liens permitted by Sections

10.3(f), (g) or (h).

 

SECTION 6.  REPRESENTATIONS OF THE

PURCHASER.

 

Section

6.1           

                     Purchase

for Investment.  You

represent that you are purchasing the Notes for your own account or for one or

more separate accounts maintained by you or for the account of one or more

pension or trust funds and not with a view to the distribution thereof,

provided that the disposition of your or their property shall at all times be

within your or their control.  You

understand that the Notes have not been registered under the Securities Act and

may be resold only if registered pursuant to the provisions of the Securities

Act or if an exemption from registration is available, except under circumstances

where neither such registration nor such an exemption is required by law, and

that the Company is not required to register the Notes.

 

Section

6.2           

                     Source

of Funds.  You represent that

at least one of the following statements is an accurate representation as to

each source of funds (a “Source”) to be used by you to pay the purchase price

of the Notes to be purchased by you hereunder:

 

(a)                                  the

Source is an “insurance company general account” within the meaning of

Department of Labor Prohibited Transaction Exemption (“PTE”) 95-60 (issued July

12, 1995) and there is no employee benefit plan, treating as a single plan, all

plans maintained by the same employer or employee organization, with respect to

which the amount of the general account reserves and liabilities for all

contracts held by or on behalf of such plan, exceed ten percent (10%) of the

total reserves and liabilities of such general account (exclusive of separate

account liabilities) plus surplus, as set forth in the NAIC Annual Statement filed

with your state of domicile; or

 

(b)                                 the

Source is either (i) an insurance company pooled separate account, within the

meaning of PTE 90-1 (issued January 29, 1990), or (ii) a bank collective 

 

13

 

investment fund, within the meaning of the PTE 91-38

(issued July 12, 1991) and, except as you have disclosed to the Company in

writing pursuant to this paragraph (b), no employee benefit plan or group of

plans maintained by the same employer or employee organization beneficially

owns more than 10% of all assets allocated to such pooled separate account or

collective investment fund; or

 

(c)                                  the

Source constitutes assets of an “investment fund” (within the meaning of Part V

of the QPAM Exemption) managed by a “qualified professional asset manager” or

“QPAM” (within the meaning of Part V of the QPAM Exemption), no employee

benefit plan’s assets that are included in such investment fund, when combined

with the assets of all other employee benefit plans established or maintained

by the same employer or by an affiliate (within the meaning of Section V(c)(1)

of the QPAM Exemption) of such employer or by the same employee organization

and managed by such QPAM, exceed 20% of the total client assets managed by such

QPAM, the conditions of Part I(c) and (g) of the QPAM Exemption are satisfied,

neither the QPAM nor a person controlling or controlled by the QPAM (applying

the definition of “control” in Section V(e) of the QPAM Exemption) owns a 5% or

more interest in the Company and (i) the identity of such QPAM and

(ii) the names of all employee benefit plans whose assets are included in

such investment fund have been disclosed to the Company in writing pursuant to

this paragraph (c); or

 

(d)                                 the

Source is a governmental plan; or

 

(e)                                  the

Source is one or more employee benefit plans, or a separate account or trust

fund comprised of one or more employee benefit plans, each of which has been

identified to the Company in writing pursuant to this paragraph (e); or

 

(f)                                    the

Source does not include assets of any employee benefit plan, other than a plan

exempt from the coverage of ERISA.

 

If you or any subsequent

transferee of the Notes indicates that you or such transferee are relying on

any representation contained in paragraph (b), (c) or (e) above, the

Company shall deliver on the date of Closing and on the date of any applicable

transfer a certificate, which shall either state that (i) it is neither a

party in interest nor a “disqualified person” (as defined in Section 4975(e)(2)

of the Internal Revenue Code of 1986, as amended), with respect to any plan

identified pursuant to paragraphs (b) or (e) above, or (ii) with respect

to any plan, identified pursuant to paragraph (c) above, neither it nor any

“affiliate” (as defined in Section V(c) of the QPAM Exemption) has at such

time, and during the immediately preceding one year, exercised the authority to

appoint or terminate said QPAM as manager of any plan identified in writing

pursuant to paragraph (c) above or to negotiate the terms of said QPAM’s

management agreement on behalf of any such identified plan. As used in this

Section 6.2, the terms “employee benefit plan”, “governmental

plan”, “party in interest” and “separate

account” shall have the respective meanings assigned to such terms

in Section 3 of ERISA.

 

14

 

SECTION 7.  INFORMATION AS TO COMPANY.

 

Section

7.1           

                     Financial

and Business Information. 

The Company shall deliver to each holder of the Notes that is an

Institutional Investor:

 

(a)                                  Quarterly

Statements — within 60 days after the end of each quarterly fiscal period in

each fiscal year of the Company (other than the last quarterly fiscal period of

each such fiscal year), duplicate copies of,

 

(i)                                     a

consolidated balance sheet of the Company and its Subsidiaries as at the end of

such quarter, and

 

(ii)                                  consolidated

statements of income, changes in shareholders’ equity and cash flows of the

Company and its Subsidiaries, for such quarter and (in the case of the second

and third quarters) for the portion of the fiscal year ending with such

quarter,

 

(iii)                               setting

forth in each case in comparative form the figures for the corresponding

periods in the previous fiscal year, all in reasonable detail, prepared in

accordance with GAAP applicable to quarterly financial statements generally,

and certified by a Senior Financial Officer as fairly presenting, in all

material respects, the financial position of the companies being reported on

and their results of operations and cash flows, subject to changes resulting

from year-end adjustments;

 

(b)                                 Annual

Statements — within 120 days after the end of each fiscal year of the Company,

duplicate copies of,

 

(i)                                     a

consolidated balance sheet of the Company and its Subsidiaries, as at the end

of such year, and

 

(ii)                                  consolidated

statements of income, changes in shareholders’ equity and cash flows of the

Company and its Subsidiaries, for such year,

 

setting forth in each

case in comparative form the figures for the previous fiscal year, all in

reasonable detail, prepared in accordance with GAAP, and accompanied by

 

(1)                                  an

opinion thereon of Eide Bailly LLP or any other independent certified public

accountants of recognized national standing, which opinion shall state that

such financial statements present fairly, in all material respects, the

financial position of the companies being reported upon and their results of

operations and cash flows and have been prepared in conformity with GAAP, and

that the examination of such accountants in connection with such financial

statements has been made in accordance with generally accepted auditing

standards, and that such audit provides a reasonable basis for such opinion in

the circumstances, and

 

(2)                                  a

certificate of such accountants stating that they have reviewed this Agreement

and stating further whether, in making their 

 

15

 

audit, they have become

aware of any condition or event that then constitutes a Default or an Event of

Default, and, if they are aware that any such condition or event then exists,

specifying the nature and period of the existence thereof (it being understood

that such accountants shall not be liable, directly or indirectly, for any

failure to obtain knowledge of any Default or Event of Default unless such

accountants should have obtained knowledge thereof in making an audit in

accordance with generally accepted auditing standards or did not make such an

audit);

 

(c)                                  SEC

and Other Reports — promptly upon their becoming available, one copy of (i)

each financial statement, report, notice or proxy statement sent by the Company

or any Subsidiary to public securities holders generally, and (ii) each

regular or periodic report, each registration statement (without exhibits

except as expressly requested by such holder), and each prospectus and all

amendments thereto filed by the Company or any Subsidiary with the Securities

and Exchange Commission and of all press releases and other statements made

available generally by the Company or any Subsidiary to the public concerning

developments that are Material;

 

(d)                                 Notice

of Default or Event of Default — promptly, and in any event within five days

after a Responsible Officer becoming aware of the existence of any Default or

Event of Default or that any Person has given any notice or taken any action

with respect to a claimed default hereunder or that any Person has given any

notice or taken any action with respect to a claimed default of the type

referred to in Section 11(f), a written notice specifying the nature and period

of existence thereof and what action the Company is taking or proposes to take

with respect thereto;

 

(e)                                  ERISA

Matters — promptly, and in any event within five days after a Responsible

Officer becoming aware of any of the following, a written notice setting forth

the nature thereof and the action, if any, that the Company or an ERISA

Affiliate proposes to take with respect thereto:

 

(i)                                     with

respect to any Plan, any reportable event, as defined in section 4043(b)

of ERISA and the regulations thereunder, for which notice thereof has not been

waived pursuant to such regulations as in effect on the date hereof; or

 

(ii)                                  the

taking by the PBGC of steps to institute, or the threatening by the PBGC of the

institution of, proceedings under section 4042 of ERISA for the

termination of, or the appointment of a trustee to administer, any Plan, or the

receipt by the Company or any ERISA Affiliate of a notice from a Multiemployer

Plan that such action has been taken by the PBGC with respect to such

Multiemployer Plan; or

 

(iii)                               any

event, transaction or condition that could result in the incurrence of any

liability by the Company or any ERISA Affiliate pursuant to Title I or IV of

ERISA or the penalty or excise tax provisions of the Code relating 

 

16

 

to employee benefit

plans, or in the imposition of any Lien on any of the rights, properties or

assets of the Company or any ERISA Affiliate pursuant to Title I or IV of ERISA

or such penalty or excise tax provisions, if such liability or Lien, taken

together with any other such liabilities or Liens then existing, could

reasonably be expected to have a Material Adverse Effect;

 

(f)                                    Notices

from Governmental Authority — promptly, and in any event within 30 days of

receipt thereof, copies of any notice to the Company or any Subsidiary from any

Federal or state Governmental Authority relating to any order, ruling, statute

or other law or regulation that could reasonably be expected to have a Material

Adverse Effect; and

 

(g)                                 Requested

Information — with reasonable promptness, such other data and information

relating to the business, operations, affairs, financial condition, assets or

properties of the Company or any of its Subsidiaries or relating to the ability

of the Company to perform its obligations hereunder and under the Notes as from

time to time may be reasonably requested by any such holder of Notes.

 

Section

7.2           

                     Officer’s

Certificate.  Each set of

financial statements delivered to a holder of Notes pursuant to Section (a) or

Section (b) of Section 7.1 shall be accompanied by a certificate of a Senior

Financial Officer setting forth:

 

(a)                                  Covenant

Compliance — the information (including detailed calculations) required in

order to establish whether the Company was in compliance with the requirements

of Sections 9.11, 9.12, 9.13, 10.2, 10.3, 10.4, 10.5, 10.6 and 10.8 hereof,

during the quarterly or annual period covered by the statements then being

furnished (including with respect to each such Section, where applicable, the

calculations of the maximum or minimum amount, ratio or percentage, as the case

may be, permissible under the terms of such Sections, and the calculation of

the amount, ratio or percentage then in existence); and

 

(b)                                 Event

of Default — a statement that such officer has reviewed the relevant terms

hereof and has made, or caused to be made, under his or her supervision, a

review of the transactions and conditions of the Company and its Subsidiaries

from the beginning of the quarterly or annual period covered by the statements

then being furnished to the date of the certificate and that such review shall

not have disclosed the existence during such period of any condition or event

that constitutes a Default or an Event of Default or, if any such condition or

event existed or exists (including, without limitation, any such event or

condition resulting from the failure of the Company or any Subsidiary to comply

with any Environmental Law), specifying the nature and period of existence thereof

and what action the Company shall have taken or proposes to take with respect

thereto.

 

Section

7.3           

                     Inspection.  The Company shall permit the representatives

of each holder of Notes that is an Institutional Investor:

 

17

 

(a)                                  No

Default — if no Default or Event of Default then exists, at the expense of such

holder and upon reasonable prior notice to the Company, to visit the principal

executive office of the Company, to discuss the affairs, finances and accounts

of the Company and its Subsidiaries with the Company’s officers, and (with the

consent of the Company, which consent will not be unreasonably withheld) its

independent public accountants, and (with the consent of the Company, which

consent will not be unreasonably withheld) to visit the other offices and

properties of the Company and each Subsidiary, all at such reasonable times and

as often as may be reasonably requested in writing; and

 

(b)                                 Default

— if a Default or Event of Default then exists, at the expense of the Company,

to visit and inspect any of the offices or properties of the Company or any

Subsidiary, to examine all their respective books of account, records, reports

and other papers, to make copies and extracts therefrom, and to discuss their

respective affairs, finances and accounts with their respective officers and

independent public accountants (and by this provision the Company authorizes

said accountants to discuss the affairs, finances and accounts of the Company

and its Subsidiaries), all at such times and as often as may be requested.

 

SECTION 8.  PREPAYMENT OF THE NOTES.

 

Section

8.1           

                     Required

Prepayments.  On March 1,

2003 and on the first day of each calendar month thereafter to and including

February 1, 2010, the Company will prepay $238,095.24 principal amount (or such

lesser principal amount as shall then be outstanding) of the Notes at par and

without payment of the Make-Whole Amount or any premium, provided that upon any

partial prepayment of the Notes pursuant to Section 8.2 or purchase of the

Notes permitted by Section 8.6 the principal amount of each required prepayment

of the Notes becoming due under this Section 8.1(a) on and after the date of

such prepayment or purchase shall be reduced in the same proportion as the aggregate

unpaid principal amount of the Notes is reduced as a result of such prepayment

or purchase.

 

Section

8.2           

                     Optional

Prepayments with Make-Whole Amount. 

The Company may, at its option, upon notice as provided below, prepay at

any time all, or from time to time any part of,  the Notes, in an amount not less than 5% of the aggregate

principal amount of all series of the Notes then outstanding in the case of a

partial prepayment, at 100% of the principal amount so prepaid, together with

interest accrued thereon to the date of such prepayment, plus the Make-Whole

Amount determined for the prepayment date with respect to such principal

amount.  The Company will give each

holder of Notes written notice of each optional prepayment under this Section

8.2 not less than 30 days and not more than 60 days prior to the date fixed for

such prepayment.  Each such notice shall

specify such date, the aggregate principal amount of the Notes to be prepaid on

such date, the principal amount of each Note held by such holder to be prepaid

(determined in accordance with Section 8.4), and the interest to be paid on the

prepayment date with respect to such principal amount being prepaid, and shall

be accompanied by a certificate of a Senior Financial Officer as to the estimated

Make-Whole Amount due in connection with such prepayment (calculated as if the

date of such notice were the date of the prepayment), setting forth the details

of such computation.  Two Business Days

prior to such 

 

18

 

prepayment, the Company

shall deliver to each holder of Notes a certificate of a Senior Financial

Officer specifying the calculation of such Make-Whole Amount as of the

specified prepayment date.

 

Section

8.3           

                     Change

in Control.

 

(a)                                  Notice of

Change in Control or Control Event. 

The Company will, within two Business Days after any Responsible Officer

has knowledge of the occurrence of any Change in Control or Control Event, give

written notice of such Change in Control or Control Event to each holder of

Notes unless notice in respect of such Change in Control (or the Change in

Control contemplated by such Control Event) shall have been given pursuant to

subparagraph (b) of this Section 8.3. 

If a Change in Control has occurred, such notice shall contain and

constitute an offer to purchase Notes as described in subparagraph (c) of this

Section 8.3 and shall be accompanied by the certificate described in

subparagraph (g) of this Section 8.3.

 

(b)                                 Condition to

Company Action.  The Company

will not take any action that consummates or finalizes a Change in Control

unless (i) at least 60 days prior to such action it shall have given to each

holder of Notes written notice containing and constituting and offer to

purchase Notes as described in subparagraph (c) of this Section 8.3,

accompanied by the certificate described in subparagraph (g) of this Section

8.3, and (ii) contemporaneously with such action, it purchases all Notes

required to be purchased in accordance with this Section 8.3.

 

(c)                                  Offer to

Purchase Notes.  The offer to

purchase Notes contemplated by subparagraphs (a) and (b) of this Section 8.3

shall be an offer to purchase, in accordance with and subject to this Section

8.3, all, but not less than all, of the Notes held by each holder (in this case

only, “holder” in respect of any Note registered in the name of a nominee for a

disclosed beneficial owner shall mean such beneficial owner) on a date

specified in such offer (the “Proposed Purchase Date”). If such Proposed

Purchase Date is in connection with an offer contemplated by subparagraph (a)

of this Section 8.3, such date shall be not less than 60 days and not more than

90 days after the date of such offer (if the Proposed Purchase Date shall not

be specified in such offer, the Proposed Purchase Date shall be the 75th day

after the date of such offer).

 

(d)                                 Acceptance.  A holder of Notes may accept or reject the

offer to purchase made pursuant to this Section 8.3 by causing a notice of such

acceptance or rejection to be delivered to the company at least 15 days prior

to the Proposed Purchase Date.  A

failure by a holder of Notes to respond to an offer to purchase made pursuant

to this Section 8.3 shall be deemed to constitute an acceptance of such offer

by such holder.

 

(e)                                  Purchase.  Purchase of the Notes to be purchased

pursuant to this Section 8.3 shall be at 100% of the principal amount of such

Notes, together with interest on such Notes accrued to the date of purchase.

The purchase shall be made on the Proposed Purchase Date except as provided in

subparagraph (f) of this Section 8.3.

 

(f)                                    Deferral

Pending Change in Control. 

The obligation of the Company to purchase Notes pursuant to the offers

required by subparagraph (b) and accepted in accordance 

 

19

 

with subparagraph (d) of

this Section 8.3 is subject to the occurrence of the Change in Control in

respect of which such offers and acceptances shall have been made.  In the event that such Change in Control

does not occur on or prior to the Proposed Purchase Date in respect thereof,

the purchase shall be deferred until and shall be made on the date on which

such Change in Control occurs.  The  Company shall keep each holder of Notes

reasonably and timely informed of (i) any such deferral of the date of

purchase, (ii) the date on which such Change in Control and the purchase are

expected to occur, and (iii) any determination by the Company that efforts to

effect such Change in Control have ceased or been abandoned (in which case the

offers and acceptances made pursuant to this Section 8.3 in respect of such

Change in Control shall be deemed rescinded).

 

(g)                                 Officer’s

Certificate.  Each offer to

purchase the Notes pursuant to this Section 8.3 shall be accompanied by a

certificate, executed by a Senior Financial Officer of the Company and dated

the date of such offer, specifying: (i) the Proposed Purchase Date; (ii) that

such offer is made pursuant to this Section 8.3; (iii) the principal amount of

each Note offered to be purchased; (iv) the interest that would be due on each

Note offered to be purchased, accrued to the Proposed Purchase Date; (v) that

the conditions of this Section 8.3 have been fulfilled; and (vi) in reasonable

detail, the nature and date or proposed date of the Change in Control.

 

(h)                                 Definitions.

 

“Change in Control” shall be deemed to have

occurred if any person (as such term is used in section 13(d) and section

14(d)(2) of the Exchange Act as in effect on the date of the Closing) or

related persons constituting a Group (other than one or more Permitted

Investors) become the “beneficial owners” (as such term is used in Rule 13d-3

under the Exchange Act as in effect on the date of the Closing), directly or

indirectly, of more than 50% of the total voting power of all classes then

outstanding of the Company’s voting stock.

 

“Group” shall mean any group of related

persons constituting a “Group” for the purposes of Section 13(d) of the

Exchange Act, or any successor provision.

 

“Control

Event” means:

 

(i)                                     the

execution by the Company or any of its Subsidiaries or Affiliates of any

agreement or letter of intent with respect to any proposed transaction or event

or series of transactions or events which, individually or in the aggregate,

may reasonably be expected to result in a Change of Control,

 

(ii)                                  the

execution of any written agreement which, when fully performed by the parties

thereto, would result in a Change in Control, or

 

(iii)                               the

making of any written offer by any person (as such term is used in section

13(d) and section 14(d)(2) of the Exchange Act as in effect on the date of the

Closing) or related persons constituting a Group to the holders of the common

stock of the Company, which offer, if accepted by the requisite number of

holders, would result in a Change in Control.

 

20

 

Section

8.4           

                     Allocation

of Partial Prepayments.  In

the case of each partial prepayment of the Notes pursuant to Section 8.2, the

principal amount of the Notes to be prepaid shall be allocated among all of the

Notes at the time outstanding in proportion, as nearly as practicable, to the

respective unpaid principal amounts thereof not theretofore called for

prepayment.

 

Section

8.5           

                     Maturity;

Surrender, Etc. 

In the case of each prepayment or purchase of Notes pursuant to this

Section 8, the principal amount of each Note to be prepaid or purchased shall

mature and become due and payable on the date fixed for such prepayment or

purchase, together with interest on such principal amount accrued to such date

and the applicable Make-Whole Amount, if any. 

From and after such date, unless the Company shall fail to pay such

principal amount when so due and payable, together with the interest and

Make-Whole Amount, if any, as aforesaid, interest on such principal amount

shall cease to accrue.  Any Note paid,

purchased or prepaid in full shall be surrendered to the Company and cancelled

and shall not be reissued, and no Note shall be issued in lieu of any prepaid

or purchased principal amount of any Note.

 

Section

8.6           

                     Purchase

of Notes.  The Company will

not and will not permit any Affiliate to purchase, redeem, prepay or otherwise

acquire, directly or indirectly, any of the outstanding Notes except upon the

purchase, payment or prepayment of the Notes in accordance with the terms of

this Agreement and the Notes.  The

Company will promptly cancel all Notes acquired by it or any Affiliate pursuant

to any payment, prepayment or purchase of Notes pursuant to any provision of this

Agreement and no Notes may be issued in substitution or exchange for any such

Notes.

 

Section

8.7           

                     Make-Whole

Amount.  The term “Make-Whole

Amount” means, with respect to any Note, an amount equal to the excess, if any,

of the Discounted Value of the Remaining Scheduled Payments with respect to the

Called Principal of such Note over the amount of such Called Principal,

provided that the Make-Whole Amount may in no event be less than zero.  For the purposes of determining the

Make-Whole Amount, the following terms have the following meanings:

 

“Called Principal” means,

with respect to any Note, the principal of such Note that is to be prepaid or

purchased pursuant to Section 8.2 or Section 8.3 or has become or is

declared to be immediately due and payable pursuant to Section 12.1, as

the context requires.

 

“Discounted Value” means,

with respect to the Called Principal of any Note, the amount obtained by

discounting all Remaining Scheduled Payments with respect to such Called

Principal from their respective scheduled due dates to the Settlement Date with

respect to such Called Principal, in accordance with accepted financial

practice and at a discount factor (applied on the same periodic basis as that

on which interest on the Notes of the series is payable) equal to the

Reinvestment Yield with respect to such Called Principal.

 

“Reinvestment Yield” means,

with respect to the Called Principal of any Note, .50% over the yield to

maturity  implied

by (i) the yields reported, as of 10:00 A.M. (New York City time) on

the second Business Day preceding the Settlement Date with respect to such

Called Principal, on the display designated as “Page 678” on the Telerate

Access Service (or such other display as 

 

21

 

may replace Page 678 on

Telerate Access Service) for actively traded U.S. Treasury securities having a

maturity equal to the maturity of the Notes as of such Settlement Date, or

(ii) if such yields are not reported as of such time or the yields

reported as of such time are not ascertainable, the Treasury Constant Maturity

Series Yields reported, for the latest day for which such yields have been so

reported as of the second Business Day preceding the Settlement Date with

respect to such Called Principal, in Federal Reserve Statistical Release H.15

(519) (or any comparable successor publication) for actively traded U.S.

Treasury securities having a constant maturity equal to the maturity of the

Notes as of such Settlement Date.  Such

implied yield will be determined, if necessary, by (a) converting U.S. Treasury

bill quotations to bond-equivalent yields in accordance with accepted financial

practice and (b) interpolating linearly between (1) the actively traded

U.S. Treasury security with the maturity closest to and greater than the

maturity of the Notes and (2) the actively traded U.S. Treasury security with

the maturity closest to and less than the maturity of the Notes.

 

“Remaining Scheduled Payments”

means, with respect to the Called Principal of any Note, all payments of such

Called Principal and interest thereon that would be due after the Settlement

Date with respect to such Called Principal if no payment or purchase of such

Called Principal were made prior to its scheduled due date, provided

that if such Settlement Date is not a date on which interest payments are due

to be made under the terms of the Notes, then the amount of the next succeeding

scheduled interest payment will be reduced by the amount of interest accrued to

such Settlement Date and required to be paid on such Settlement Date pursuant

to Section 8.2, 8.3 or 12.1.

 

“Settlement Date” means, with

respect to the Called Principal of any Note, the date on which such Called

Principal is to be prepaid or purchased pursuant to Section 8.2 or Section

8.3 or has become or is declared to be immediately due and payable pursuant to

Section 12.1, as the context requires.

 

SECTION 9.  AFFIRMATIVE COVENANTS.

 

The Company covenants

that so long as any of the Notes are outstanding:

 

Section

9.1           

                     Compliance

with Law.  The Company will,

and will cause each of its Subsidiaries, to comply with all laws, ordinances or

governmental rules or regulations to which each of them is subject, including,

without limitation, Environmental Laws, and will obtain and maintain in effect

all licenses, certificates, permits, franchises and other governmental

authorizations necessary to the ownership of their respective properties or to

the conduct of their respective businesses, in each case to the extent

necessary to ensure that non-compliance with such laws, ordinances or governmental

rules or regulations or failures to obtain or maintain in effect such licenses,

certificates, permits, franchises and other governmental authorizations could

not, individually or in the aggregate, reasonably be expected to have a

Material Adverse Effect.

 

Section

9.2           

                     Insurance.  The Company will, and will cause each of its

Subsidiaries, to maintain, with financially sound and reputable insurers,

insurance with respect to their respective properties and businesses against

such casualties and contingencies, of such types, on such terms and in such

amounts (including deductibles, co-insurance and self-insurance, if adequate

reserves 

 

22

 

are maintained with

respect thereto) as is customary in the case of entities of established

reputations engaged in the same or a similar business and similarly situated.

 

Section

9.3           

                     Maintenance

of Properties.  The Company

will, and will cause each of its Subsidiaries to, maintain and keep, or cause

to be maintained and kept, their respective properties in good repair, working

order and condition (other than ordinary wear and tear), so that the business

carried on in connection therewith may be properly conducted at all times,

provided that this Section shall not prevent the Company or any Subsidiary from

discontinuing the operation and the maintenance of any of its properties if

such discontinuance is desirable in the conduct of its business and the Company

has concluded that such discontinuance could not, individually or in the

aggregate, reasonably be expected to have a Material Adverse Effect.

 

Section

9.4           

                     Payment

of Taxes and Claims.  The

Company will, and will cause each of its Subsidiaries to, file all tax returns

required to be filed in any jurisdiction and to pay and discharge all taxes

shown to be due and payable on such returns and all other taxes, assessments,

governmental charges, or levies imposed on them or any of their properties,

assets, income or franchises, to the extent such taxes and assessments have

become due and payable and before they have become delinquent and all claims

for which sums have become due and payable that have or might become a Lien on

properties or assets of the Company or any Subsidiary, provided that neither

the Company nor any Subsidiary need pay any such tax or assessment or claims if

(a) the amount, applicability or validity thereof is contested by the

Company or such Subsidiary on a timely basis in good faith and in appropriate

proceedings, and the Company or a Subsidiary has established adequate reserves

therefor in accordance with GAAP on the books of the Company or such Subsidiary

or (b) the nonpayment of all such taxes and assessments in the aggregate

could not reasonably be expected to have a Material Adverse Effect.

 

Section

9.5           

                     Corporate

Existence, Etc. 

The Company will at all times preserve and keep in full force and effect

its corporate existence as a cooperative corporation organized and existing

under the laws of the United States or any State thereof (including the

District of Columbia); provided that the Company may convert its

form of organization to a limited liability company so long as it shall

maintain Investment Grade Status. 

Subject to Section 10.2, the Company will at all times preserve and keep

in full force and effect the corporate existence of each of its Subsidiaries

and all rights and franchises of the Company and its Subsidiaries unless, in

the good faith judgment of the Company, the termination of or failure to

preserve and keep in full force and effect such corporate existence, right or

franchise could not, individually or in the aggregate, have a Material Adverse

Effect.

 

Section

9.6           

                     Notes

to Rank Pari Passu.  The

Notes and all other obligations of the Company under this Agreement are and at

all times shall remain direct and secured obligations of the Company ranking

pari passu as against the assets of the Company with all other Notes from time

to time issued and outstanding hereunder without any preference among

themselves and pari passu with all other present and future secured Debt

(actual or contingent, of the Company which is not expressed to be subordinate

or junior in rank to any other secured Debt of the Company, except for Debt

secured by Liens permitted by Sections 10.3(f), (g) or (h).

 

23

 

Section

9.7           

                     Further

Assurances.  Promptly upon

request by the Collateral Agent, the Company shall (and shall cause its

Subsidiaries including all entities which become Subsidiaries after the date

hereof to) execute, acknowledge, deliver, record, re-record, file, re-file,

register and re-register, any and all such further conveyances, security

agreements, charges, debentures, guaranties, mortgages, assignments, estoppel

certificates, financing statements and continuations thereof, termination

statements, notices of assignment, transfers, certificates, assurances and

other instruments the Collateral Agent may reasonably require from time to time

in order (i) to carry out more effectively the purposes of this Agreement

or any Security Document, (ii) to subject to the Liens created by any of

the Security Documents any of the properties, rights or interests covered by

any of the Security Documents, (iii) to perfect and maintain the validity,

effectiveness and priority of any of the Security Documents and the Liens

intended to be created thereby, and (iv) to better assure, convey, grant,

assign, transfer, preserve, protect and confirm to the Collateral Agent the

rights granted or now or hereafter intended to be granted to the Purchasers

under any Security Document or under any other document executed in connection

therewith (including the granting of a mortgage on any now or hereafter

acquired owned real property).  In connection

with the execution of the foregoing, the Company shall cause to be delivered to

the Collateral Agent such opinions of counsel and other supporting documents as

the Collateral Agent shall reasonably require.

 

Section

9.8           

                     Post

Closing Matters.

 

(a)                                  Survey.

An ALTA survey for the property that is secured by the Sidney Mortgage dated

within three (3) months of the date of this Agreement and prepared in

accordance with the “Minimum Standard Detail Requirements for ALTA/ACSM Land

Title Surveys” jointly established by and adopted by ALTA, ACSM and NSPS in

1999, and including items 1, 2, 3, 4, 6, 7(a), 7(b), 8, 9, 10 and 13 of Table A

thereof (the “Survey”) The Survey shall be prepared by a surveyor of

recognized standing satisfactory to the Purchasers and shall be certified to

the Purchasers and the Collateral Agent.

 

(b)                                 Easement.  The Company shall obtain, or shall cause the

Guarantor to obtain, on or prior to December 31, 2003 (i) a perpetual easement,

or similar right, in clear title, that allows the Guarantor to discharge

through an existing pipeline into the discharge pool and from there to the

irrigated land at the property secured by the Sidney Mortgage, and such

easement shall be reasonably satisfactory in scope and form to the Noteholders

and their special counsel; and (ii) a “Date Down” endorsement to the title

policy for the property secured by the Sidney Mortgage delivered pursuant to

Section 4.11(c) of this Agreement that provides affirmative coverage for the

easement.

 

(c)                                  Pond.  The Company shall obtain, or shall cause the

Guarantor to obtain, on or prior to June 30, 2004 (i) fee simple

absolute title, or similar title by agreement or through legal proceedings in,

to, and under the property commonly known as the “pond” or “discharge pool”

parcel, and such title shall be reasonably satisfactory in scope and form to

the Noteholders and their special counsel; (ii) an amendment to the Sidney

Mortgage and such other documents reasonably required by Noteholders and their

special counsel; and (iii) a “Date Down” endorsement to the title policy

for the property secured by the Sidney Mortgage delivered 

 

24

 

pursuant to

Section 4.11(c) of this Agreement that provides affirmative coverage for

the pond or discharge pool parcel.

 

(d)                                 Environmental

Release. The Montana Department of Environmental Quality (“MDEQ”)

shall have issued, and the Guarantor shall have received, on or prior to

December 31, 2003, a letter or other documentation that states that the

property secured by the Sidney Mortgage has passed the mandated pulp dryer

emissions tests conducted by the MDEQ.

 

The Company shall

deliver, or shall cause the Guarantor to deliver, all documents referenced in

this Section 9 to the Noteholders, through their special counsel, as soon as

they become available to the Company or the Guarantor.  Notwithstanding the foregoing Post Closing

Matters set forth in this Section 9.8, if the Company has not satisfied a

Post Closing Matter on or before the date(s) established herein, the Company

shall be allowed an extension of the applicable deadline to satisfy a Post

Closing Matter for a period of time up to an additional six (6) months, provided,

that (i) the Company is using its good faith efforts to satisfy the

applicable Post Closing Matter(s) herein; (ii) the property secured by the

Sidney Mortgage continues to be operated as a sugar beet processing facility;

and (iii) the failure to satisfy the required Post Closing Matter does not

have a Material Adverse Effect.

 

Section

9.9                                   Incorporation

of Additional Covenants, Events of Default and Additional Information Requests.  In the event that the Company shall agree in

any agreement under which Funded Debt is issued which Funded Debt is secured by

the Mortgage to include in such agreement either (a) financial covenants or

restrictions which are not included in this Agreement or to an increase in the

restrictiveness of a financial covenant or restriction which is contained in

this Agreement, (b) any events of default which are not contained in this

Agreement or (c) any informational requests which are not included in this

Agreement (collectively, the “Additional Provision”), such Additional

Provision shall be incorporated in this Agreement as if fully set forth

herein.  In the event such Additional

Provision is deleted from such other agreement or waived by the holders of the

related Funded Debt, such Additional Provision shall be deemed to be deleted

from or waived under this Agreement without further action.

 

Section

9.10                            Additional

Collateral. In the event that an Event of Default

has occurred, the Purchasers may require the Company and/or the Guarantor to

secure the Notes and the Guarantee Agreement pursuant to additional Security

Documents with respect to the Hereford, Texas Property and the Torrington,

Wyoming Property in form and substance satisfactory to the Purchasers granting

to the Collateral Agent for the benefit of the Secured Parties, a first

priority mortgage on and security interest in said Properties. The Company and

the Guarantor shall in connection with the grant of such security interest

provide the same type of environmental reports, mortgage title insurance,

insurance policies, ALTA surveys and other due diligence as was delivered on

the date hereof, or required to be delivered pursuant to Section 9.8(a) and

(b),  with respect to the property which

is subject to the Sidney Mortgage within 60 days of the request of the

Purchasers to so provide.

 

Section

9.11                            Minimum

Net Working Capital. 

Consolidated Current Assets will at the end of each fiscal quarter

(other than the last fiscal quarter of each fiscal year) exceed Consolidated

Current Liabilities by at least $15,000,000. Consolidated Current Assets will

at the 

 

25

 

end of the last fiscal

quarter of each fiscal year exceed Consolidated Current Liabilities by at least

$35,000,000.

 

Section

9.12                            Consolidated

Funded Debt to Capitalization. The Company will at all times keep and

maintain a ratio of Consolidated Funded Debt to Consolidated Total

Capitalization of no greater than 0.55:1.00, determined at the end of each

fiscal quarter.

 

Section

9.13                            Minimum

Average Net Funds Generated plus Interest Expense.  The Company will at all times keep and

maintain a ratio of Average Net Funds Generated plus Interest Expense to

Interest Expense of at least 2.50:1.00, determined at the end of each fiscal

quarter.

 

Section

9.14                            Grower

Agreements. The Company will (a) at all times abide

by the terms and conditions of all Grower Agreements; (b) not amend Grower

Agreements in a manner that would make the Grower Agreements less restrictive

or have a Material Adverse Effect on the Company’s ability to make payments on

the Notes or otherwise comply with this Agreement; and (c) extend the current

Grower Agreements with its Growers for an additional five years when such

Grower Agreements expire.

 

SECTION 10. NEGATIVE COVENANTS.

 

The Company covenants that so long as any of the Notes

are outstanding:

 

Section

10.1                            Transactions

with Affiliates.  The Company

will not and will not permit any Subsidiary to enter into directly or

indirectly any transaction or Material group of related transactions

(including, without limitation, the purchase, lease, sale or exchange of

properties of any kind or the rendering of any service with any Affiliate

(other than the Company or another Subsidiary or Guarantor; provided Guarantor

remains as a Wholly-Owned Subsidiary of the Company), except in the ordinary

course and pursuant to the reasonable requirements of the Company’s or such

Subsidiary’s business and upon fair and reasonable terms no less favorable to

the Company or such Subsidiary than would be obtainable in a comparable

arm’s-length transaction with a Person not an Affiliate other than Permitted

Specified Affiliate Transactions.

 

Section

10.2                            Merger,

Consolidation, Etc. The Company will not, and will not

permit any Subsidiary to, consolidate with or be a party to a merger with any

other Person, or sell, lease or otherwise dispose of all or substantially all

of its assets; provided that:

 

(a)                                  any

Subsidiary may merge or consolidate with or into the Company or any other

Subsidiary so long as in any merger or consolidation involving the Company, the

Company shall be the surviving or continuing corporation; and

 

(b)                                 the

Company may consolidate or merge with or into or transfer all or substantially

all of its assets to any other corporation or limited liability company if (i)

the successor formed by such consolidation or the survivor of such merger or

the Person that acquires by conveyance, transfer or lease substantially all of

the assets of the Company as an entirety, as the case may be, shall be

organized and existing under the 

 

26

 

laws of the United States or any State thereof

(including the District of Columbia), and, if in the event the Company is not

such successor, survivor or transferee, (ii) the due and punctual payment of

the principal of and premium, if any, and interest on all of the Notes,

according to their tenor, and the due and punctual performance and observation

of all of the covenants in the Notes and this Agreement to be performed or

observed by the Company are expressly assumed in writing by the surviving

corporation (if other than the Company) and the surviving corporation shall furnish

to the Holders an opinion of counsel satisfactory to such Holders to the effect

that the instrument of assumption has been duly authorized, executed and

delivered and constitutes the legal, valid and binding contract and agreement

of the surviving corporation enforceable in accordance with its terms, except

as enforcement of such terms may be limited by bankruptcy, insolvency,

reorganization, moratorium and similar laws affecting the enforcement of

creditors’ rights generally and by general equitable principles; (iii)

immediately prior to and after giving effect to such transaction, (A) no

Default or Event of Default shall have occurred and be continuing and (B) the

surviving corporation would be permitted by the provisions of Section 10.6(c)

to incur at least $1.00 of additional Funded Debt; and (iv) shall maintain

Investment Grade Status.

 

No such conveyance,

transfer or lease of substantially all of the assets of the Company shall have

the effect of releasing the Company or any successor corporation that shall

theretofore have become such in the manner prescribed in this Section 10.2

from its liability under this Agreement or the Notes.

 

Section

10.3                            Liens.

The Company will not, and will not permit any Subsidiary to, create, assume,

incur, or suffer to be created, assumed, or incurred or to exist, any Lien on

its or their property or assets, whether now owned or hereafter acquired, or

upon any income or profits therefrom, or transfer any property for the purpose

of subjecting the same to the payment of obligations in priority to the payment

of its or their general creditors, or acquire or agree to acquire, or permit

any Subsidiary to acquire, any property or assets upon conditional sales

agreements or other title retention devices, except:

 

(a)                                  Liens

for property taxes and assessments or governmental charges or levies and Liens

securing claims or demands of mechanics and materialmen, provided that payment

thereof is not at the time required by Section 9.4;

 

(b)                                 Liens

of or resulting from any judgment or award, the time for the appeal or petition

for rehearing of which shall not have expired, or in respect of which the

Company or a Subsidiary shall at any time in good faith be prosecuting an

appeal or proceeding for a review and in respect of which a stay of execution

pending such appeal or proceeding for review shall have been secured within 60

days after the expiration of any such stay;

 

(c)                                  Liens

incidental to the conduct of business or the ownership of properties and assets

(including, without limitation, Liens in connection with worker’s compensation,

unemployment insurance and other like laws, warehousemen’s and attorneys’ liens

and statutory landlords’ liens) and Liens to secure the performance of 

 

27

 

bids, tenders or trade contracts, or to secure

statutory obligations, surety or appeal bonds or other Liens of like general

nature, in any such case incurred in the ordinary course of business and not in

connection with the borrowing of money and which do not in any event materially

impair the use of such property in the operation of the business of the Company

and its Subsidiaries taken as a whole, or the value of such property for the

purposes of such business, provided in each case, the obligation

secured is not overdue or, if overdue, is being contested in good faith by

appropriate actions or proceedings;

 

(d)                                 minor

survey exceptions or minor encumbrances, easements or reservations, or rights

of others for rights-of-way, utilities and other similar purposes, or zoning or

other restrictions as to the use of real properties, which are necessary for

the conduct of the activities of the Company and its Subsidiaries or which

customarily exist on properties of corporations engaged in similar activities

and similarly situated and which do not in any event materially impair their

use in the operation of the business of the Company and its Subsidiaries taken

as a whole, or the value of the property for the purposes of such business;

 

(e)                                  Liens

securing Debt of a Subsidiary to the Company or to a Wholly-Owned Subsidiary;

 

(f)                                    (i)

Liens existing as of the Closing and described on Schedule 5.15 hereto

including, without limitation, Liens securing Funded Debt (including Funded

Debt incurred after the Closing under and pursuant to 10.6(c)) which are

evidenced by the Mortgages and the CoBank Stock Lien and (ii) Permitted Current

Asset Liens;

 

(g)                                 Liens

incurred after the Closing given to secure the payment of the purchase price

incurred in connection with the acquisition, construction or improvement of

fixed assets of the Company or any Subsidiary, which Liens are incurred

contemporaneously with or within 180 days after the payment of such

purchase price or completion of such construction, and Liens existing on such

fixed assets at the time of acquisition thereof or at the time of acquisition

by the Company or any Subsidiary of any business entity then owning such fixed

assets, whether or not such existing Liens were given to secure the payment of

the purchase price of the fixed assets to which they attach, provided that

(i) the Lien shall attach solely to the fixed assets acquired, constructed

or improved, (ii) at the time of acquisition, construction or improvement

of such fixed assets, the aggregate amount remaining unpaid on all Indebtedness

secured by Liens on such fixed assets whether or not assumed by the Company or

any Subsidiary shall not exceed an amount equal to 100% of the fair market

value at the time of acquisition, construction or improvement of such fixed

assets (as determined in good faith by the Board of Directors of the Company),

and (iii) all Debt secured by such Liens shall have been incurred within

the applicable limitations of this Agreement including, without limitation,

Section 10.6; and

 

(h)                                 in

addition to the liens permitted under Section 10.3(a) through (g), Liens, other than Current Asset

Liens, securing Debt of the Company or any Subsidiary incurred 

 

28

 

within the limitations of Section 10.6(d); provided

that no lien shall be permitted on or with respect to the Hereford, Texas

Property or the Torrington, Wyoming Property.

 

Section

10.4                            Consolidated

Net Worth.  The Company will

at all times keep and maintain Consolidated Net Worth at an amount not less than

the sum of $190,000,000.

 

Section

10.5                            Sale

of Assets.  The Company shall

not, and shall not permit any Subsidiary thereof to, sell, lease, transfer or

otherwise dispose of assets (except assets sold in the ordinary course of

business for fair market value and except as provided in Section 10.2(b)); provided

that the foregoing restrictions do not apply to:

 

(a)                                  the

sale, lease, transfer or other disposition of assets of a Subsidiary to the

Company or a Wholly-Owned Subsidiary; or

 

(b)                                 the

sale of assets for cash or other property to a person or persons if all the

following conditions are met:

 

(i)                                     such

assets (valued at net book value) do not, together with all other assets of the

Company and its Subsidiaries previously disposed of during the period from the

date of this Agreement to and including the date of the sale of such assets

(other than in the ordinary course of business), exceed 25% of Consolidated

Total Assets, determined at the end of the immediately preceding fiscal

quarter;

 

(ii)                                  in

the opinion of the Company’s board of directors, the sale is for fair value and

is in the best interests of the Company and its Subsidiaries, taken as a whole;

and

 

(iii)                               immediately

prior to and after the consummation of the transaction and prior to and after

giving effect thereto (A) no Default or Event of Default would exist and (B)

the Company would be permitted by the provisions of Section 10.6(c) to incur at

least $1.00 of additional Funded Debt;

 

provided,

however, that for the purposes of the foregoing calculation,

there shall not be included any assets to the extent that the net proceeds of

the sale of such assets were or are applied within 270 days of the date of sale

of such assets to either (A) the acquisition of fixed assets useful and

intended to be used in the operation of the business of the Company and its

Subsidiaries as described in Section 10.7 and having a fair market value (as

determined in good faith by the board of directors of the Company) at least

equal to that of the net proceeds applied from the sale of the assets so

disposed of or (B) the prepayment of senior Funded Debt on a pro rata

basis.  It is understood and agreed by

the Company that any such proceeds paid and applied to the prepayment of the Notes

as hereinabove provided shall be prepaid as and to the extent provided in

Section 8.2.

 

Section

10.6                            Limitations

on Funded Debt.  The Company

will not, and the Company will not permit any Subsidiary to, create, assume,

guarantee or otherwise incur or in any manner become liable in respect of any

Funded Debt except:

 

29

 

(a)                                  Funded

Debt evidenced by the Notes;

 

(b)                                 Funded

Debt of the Company and its Subsidiaries outstanding as of the date of this

Agreement and described on Schedule 5.15 hereto or any extension, renewal or

refunding of any Funded Debt without increase in the principal amount thereof

at the time of such extension, renewal or refunding;

 

(c)                                  additional

Funded Debt of the Company and of its Subsidiaries incurred after the Closing, provided,

however, that Consolidated Funded Debt shall not exceed 55% of

Consolidated Total Capitalization, determined at the end of the immediately

preceding fiscal quarter; and

 

(d)                                 additional

Priority Debt, provided, however, that the Company will not at any time

permit the aggregate amount of outstanding Priority Debt (other than (i) the

Indebtedness incurred under the Permitted Guarantee Agreements and (ii) the

Permitted Intercompany Debt) to exceed an amount equal to 15% of Consolidated

Net Worth, determined at the end of the immediately preceding fiscal quarter.

 

Any Person which becomes a Subsidiary after the date

hereof shall for all purposes of this Section 10.6 be deemed to have created,

assumed or incurred at the time it becomes a Subsidiary all Debt of such Person

existing immediately after it becomes a Subsidiary.

 

Section

10.7                            Line

of Business.  The Company

will not, and will not permit any of its Subsidiaries to, engage in any

business if, as a result, the general nature of the business in which the

Company, or the Company and its Subsidiaries, taken as a whole, would then be

engaged would be substantially changed from the general nature of the business

in which the Company and it Subsidiaries, taken as a whole, are engaged on the

date of this Agreement.

 

Section

10.8                            Loans

To Growers.  The Company

shall not, and will not permit any of its Subsidiaries to, make any loans to

Growers that in the aggregate exceed $10,000,000.00 (other than loans to

Growers in connection with the purchase of common shares and/or preferred

shares issued by the Company).

 

SECTION 11. EVENTS OF DEFAULT.

 

An “Event of Default” shall exist if any of

the following conditions or events shall occur and be continuing:

 

(a)                                  the

Company defaults in the payment of any principal or Make-Whole Amount, if any,

on any Note when the same becomes due and payable, whether at maturity or at a

date fixed for prepayment or by declaration or otherwise; or

 

(b)                                 the

Company defaults in the payment of any interest on any Note after the same becomes

due and payable; or

 

30

 

(c)                                  the

Company defaults in the performance of or compliance with any term contained in

Sections 9.11, 9.12, 9.13, 10.4, 10.5, 10.6, 10.7 or 10.8; or

 

(d)                                 the

Company or the Guarantor defaults in the performance of or compliance

with any term contained herein (other than those referred to in

paragraphs (a), (b) and (c) of this Section 11) or in the Security

Documents and such default is not remedied within 30 days after the earlier of

(i) a Responsible Officer obtaining actual knowledge of such default and

(ii) the Company or the Guarantor, as the case may be,  receiving written notice of such default

from any holder of a Note (any such written notice to be identified as a

“notice of default” and to refer specifically to this paragraph (d) of

Section 11); or

 

(e)                                  any

representation or warranty made in writing by or on behalf of the Company or

the Guarantor or by any officer of the Company or the Guarantor in this

Agreement, the Guarantee Agreement or the Security Documents or in any writing

furnished in connection with the transactions contemplated hereby proves to

have been false or incorrect in any material respect on the date as of which

made; or

 

(f)                                    (i)

the Company or any Subsidiary is in default (as principal or as guarantor or

other surety) in the payment of any principal of or premium or make-whole

amount or interest on any Debt that is outstanding in an aggregate principal

amount of at least $2,500,000 beyond any period of grace provided with respect

thereto, or (ii) the Company or any Subsidiary is in default in the performance

of or compliance with any term of any evidence of any Debt in an aggregate

outstanding principal amount of at least $2,500,000 or of any mortgage, indenture

or other agreement relating thereto or any other condition exists, and such

failure continues unremedied for 30 days after the applicable grace or notice

period, if any, specified in the relevant document on the date of such failure,

or (iii) the Company or any Subsidiary is in default in the performance of or

compliance with any term of any evidence of any Debt in an aggregate

outstanding principal amount of at least $2,500,000 or of any mortgage,

indenture or other agreement relating thereto or any other condition exists,

and as a consequence of such default or condition such Debt has become, or has

been declared, due and payable before its stated maturity or before its

regularly scheduled dates of payment, or (iv) as a consequence of the occurrence

or continuation of any event or condition (other than the passage of time or

the right of the holder of Debt to convert such Debt into equity interests),

the Company or any Subsidiary has become obligated to purchase or repay Debt

before its regular maturity or before its regularly scheduled dates of payment

in an aggregate outstanding principal amount of at least $2,500,000; or

 

(g)                                 the

Company, the Guarantor or any Subsidiary (i) is generally not paying, or

admits in writing its inability to pay, its debts as they become due,

(ii) files, or consents by answer or otherwise to the filing against it

of, a petition for relief or reorganization or arrangement or any other

petition in bankruptcy, for liquidation or to take advantage of any bankruptcy,

insolvency, reorganization, moratorium or other similar law of any

jurisdiction, (iii) makes an assignment for the benefit of its creditors,

(iv) consents to the appointment of a custodian, receiver, trustee or

other officer with 

 

31

 

similar powers with respect to it or with respect to

any substantial part of its property, (v) is adjudicated as insolvent or

to be liquidated, or (vi) takes corporate action for the purpose of any of

the foregoing; or

 

(h)                                 a

court or governmental authority of competent jurisdiction enters an order

appointing, without consent by the Company, the Guarantor or any of its

Subsidiaries, a custodian, receiver, trustee or other officer with similar

powers with respect to it or with respect to any substantial part of its

property, or constituting an order for relief or approving a petition for

relief or reorganization or any other petition in bankruptcy or for liquidation

or to take advantage of any bankruptcy or insolvency law of any jurisdiction,

or ordering the dissolution, winding-up or liquidation of the Company, the

Guarantor or any of their Subsidiaries, or any such petition shall be filed

against the Company, the Guarantor or any of their Subsidiaries and such

petition shall not be dismissed within 60 days; or

 

(i)                                     a

final judgment or judgments for the payment of money aggregating in excess of

$5,000,000 are rendered against one or more of the Company, the Guarantor and

their Subsidiaries and which judgments are not, within 60 days after entry

thereof, bonded, discharged or stayed pending appeal, or are not discharged

within 60 days after the expiration of such stay; or

 

(j)                                     (i)

any Security Document shall for any reason (other than pursuant to the terms

thereof) cease to create a valid security interest in the Collateral purported

to be covered thereby or such security interest shall for any reason cease to

be a perfected security interest (having the priority provided for therein)

subject only to Liens permitted pursuant to Section 10.3, or (ii) any material

provision of any Security Document shall for any reason cease to be valid and

binding on or enforceable against the Company, the Guarantor or any Subsidiary

party thereto or the Company, the Guarantor or any Subsidiary shall so state in

writing or bring an action to limit its obligations or liabilities thereunder;

or

 

(k)                                  (i) any

Plan shall fail to satisfy the minimum funding standards of ERISA or the Code

for any plan year or part thereof or a waiver of such standards or extension of

any amortization period is sought or granted under section 412 of the

Code, (ii) a notice of intent to terminate any Plan shall have been or is

reasonably expected to be filed with the PBGC or the PBGC shall have instituted

proceedings under ERISA section 4042 to terminate or appoint a trustee to

administer any Plan or the PBGC shall have notified the Company or any ERISA

Affiliate that a Plan may become a subject of any such proceedings,

(iii) the aggregate “amount of unfunded benefit liabilities” (within the

meaning of section 4001(a)(18) of ERISA) under all Plans, determined in

accordance with Title IV of ERISA, shall exceed an amount equal to 5% of

Consolidated Net Worth, (iv) the Company or any ERISA Affiliate shall have

incurred or is reasonably expected to incur any liability pursuant to Title I

or IV of ERISA or the penalty or excise tax provisions of the Code relating to

employee benefit plans, (v) the Company or any ERISA Affiliate withdraws from

any Multiemployer Plan, or (vi) the Company or any Subsidiary establishes or

amends any employee welfare benefit plan that provides post-employment

 

32

 

welfare benefits in a manner that would increase the

liability of the Company or any Subsidiary thereunder; and any such event or

events described in clauses (i) through (vi) above, either individually or

together with any other such event or events, could reasonably be expected to

have a Material Adverse Effect.

 

As used in Section 11(j),

the terms “employee

benefit plan” and “employee welfare benefit plan” shall have

the respective meanings assigned to such terms in Section 3 of ERISA.

 

SECTION 12. REMEDIES ON DEFAULT, ETC.

 

Section

12.1                            Acceleration.

 

(a)                                  If

an Event of Default with respect to the Company described in paragraph (g)

or (h) of Section 11 (other than an Event of Default described in clause (i) of

paragraph (g) or described in clause (vi) of paragraph (g) by virtue

of the fact that such clause encompasses clause (i) of paragraph (g)) has

occurred, all the Notes then outstanding shall automatically become immediately

due and payable.

 

(b)                                 If

any other Event of Default has occurred and is continuing, any holder or

holders of more than 25% in principal amount of the Notes at the time

outstanding may at any time at its or their option, by notice or notices to the

Company, declare all the Notes then outstanding to be immediately due and

payable.

 

(c)                                  If

any Event of Default described in paragraph (a) or (b) of Section 11 has

occurred and is continuing, any holder or holders of Notes at the time

outstanding affected by such Event of Default may at any time, at its or their

option, by notice or notices to the Company, declare all the Notes held by it

or them to be immediately due and payable.

 

Upon any Notes becoming due and payable under this

Section 12.1, whether automatically or by declaration, such Notes will

forthwith mature and the entire unpaid principal amount of such Notes, plus (x)

all accrued and unpaid interest thereon and (y) the Make-Whole Amount

determined in respect of such principal amount (to the full extent permitted by

applicable law), shall all be immediately due and payable, in each and every

case without presentment, demand, protest or further notice, all of which are

hereby waived.  The Company

acknowledges, and the parties hereto agree, that each holder of a Note has the

right to maintain its investment in the Notes free from repayment by the

Company (except as herein specifically provided for) and that the provision for

payment of a Make-Whole Amount by the Company in the event that the Notes are

prepaid or are accelerated as a result of an Event of Default, is intended to

provide compensation for the deprivation of such right under such

circumstances.

 

Section

12.2                            Other

Remedies.  If any Default or

Event of Default has occurred and is continuing, and irrespective of whether

any Notes have become or have been declared immediately due and payable under

Section 12.1, the holder of any Note at the time outstanding may proceed to

protect and enforce the rights of such holder by an action at law, suit in

equity or other appropriate proceeding, whether for the specific performance of

any agreement contained 

 

33

 

herein or in any Note, or

for an injunction against a violation of any of the terms hereof or thereof, or

in aid of the exercise of any power granted hereby or thereby or by law or

otherwise.

 

Section

12.3                            Rescission.  At any time after any Notes have been

declared due and payable pursuant to clause (b) or (c) of Section 12.1, the

holders of not less than 66 2/3% in principal amount of the Notes then

outstanding, by written notice to the Company, may rescind and annul any such

declaration and its consequences if (a) the Company has paid all overdue

interest on the Notes, all principal of and Make-Whole Amount, if any, on any

Notes that are due and payable and are unpaid other than by reason of such

declaration, and all interest on such overdue principal and Make-Whole Amount,

if any, and (to the extent permitted by applicable law) any overdue interest in

respect of the Notes, at the Default Rate, (b) all Events of Default and

Defaults, other than non-payment of amounts that have become due solely by

reason of such declaration, have been cured or have been waived pursuant to

Section 17, and (c) no judgment or decree has been entered for the

payment of any monies due pursuant hereto or to the Notes.  No rescission and annulment under this Section

12.3 will extend to or affect any subsequent Event of Default or Default or

impair any right consequent thereon.

 

Section

12.4                            No

Waivers or Election of Remedies, Expenses, etc.  No course of dealing and no delay on the part of any holder of

any Note in exercising any right, power or remedy shall operate as a waiver

thereof or otherwise prejudice such holder’s rights, powers or remedies.  No right, power or remedy conferred by this

Agreement or by any Note upon any holder thereof shall be exclusive of any

other right, power or remedy referred to herein or therein or now or hereafter

available at law, in equity, by statute or otherwise.  Without limiting the obligations of the Company under Section 15,

the Company will pay to the holder of each Note on demand such further amount

as shall be sufficient to cover all costs and expenses of such holder incurred

in any enforcement or collection under this Section 12, including, without

limitation, reasonable attorneys’ fees, expenses and disbursements.

 

SECTION 13. REGISTRATION; EXCHANGE; SUBSTITUTION

OF NOTES.

 

Section

13.1                            Registration

of Notes.  The Company shall

keep at its principal executive office a register for the registration and

registration of transfers of Notes.  The

name and address of each holder of one or more Notes, each transfer thereof and

the name and address of each transferee of one or more Notes shall be

registered in such register.  Prior to

due presentment for registration of transfer, the Person in whose name any Note

shall be registered shall be deemed and treated as the owner and holder thereof

for all purposes hereof, and the Company shall not be affected by any notice or

knowledge to the contrary.  The Company

shall give to any holder of a Note that is an Institutional Investor promptly

upon request therefor, a complete and correct copy of the names and addresses

of all registered holders of Notes.

 

Section

13.2                            Transfer

and Exchange of Notes.  Upon

surrender of any Note at the principal executive office of the Company for

registration of transfer or exchange (and in the case of a surrender for

registration of transfer, duly endorsed or accompanied by a written instrument

of transfer duly executed by the registered holder of such Note or his attorney

duly authorized in writing and accompanied by the address for notices of each

transferee of such Note 

 

34

 

or part thereof), the

Company shall execute and deliver, at the Company’s expense (except as provided

below), one or more new Notes (as requested by the holder thereof) in exchange

therefor, in an aggregate principal amount equal to the unpaid principal amount

of the surrendered Note.  Each such new

Note of such shall be payable to such Person as such holder may request and

shall be substantially in the form of Exhibit 1.  Each such new Note shall be dated and bear interest from the date

to which interest shall have been paid on the surrendered Note or dated the

date of the surrendered Note if no interest shall have been paid thereon.  The Company may require payment of a sum

sufficient to cover any stamp tax or governmental charge imposed in respect of

any such transfer of Notes.  Notes shall

not be transferred in denominations of less than $1,000,000, provided that if

necessary to enable the registration of transfer by a holder of its entire

holding of Notes, one Note may be in a denomination of less than

$1,000,000.  Any transferee, by its

acceptance of a Note registered in its name (or the name of its nominee), shall

be deemed to have made the representation set forth in Section 6.2.

 

Section

13.3                            Replacement

of Notes.  Upon receipt by

the Company of evidence reasonably satisfactory to it of the ownership of and

the loss, theft, destruction or mutilation of any Note (which evidence shall

be, in the case of an Institutional Investor, notice from such Institutional

Investor of such ownership and such loss, theft, destruction or mutilation),

and

 

(a)                                  in

the case of loss, theft or destruction, of indemnity reasonably satisfactory to

it (provided that if the holder of such Note is, or is a nominee for, an

original Purchaser or another holder of a Note with a minimum net worth of at

least $25,000,000, such Person’s own unsecured agreement of indemnity shall be

deemed to be satisfactory), or

 

(b)                                 in

the case of mutilation, upon surrender and cancellation thereof, the Company at

its own expense shall execute and deliver, in lieu thereof, a new Note, dated

and bearing interest from the date to which interest shall have been paid on

such lost, stolen, destroyed or mutilated Note or dated the date of such lost,

stolen, destroyed or mutilated Note if no interest shall have been paid

thereon.

 

SECTION 14. PAYMENT OF NOTES.

 

Section

14.1                            Place

of Payment.  Subject to

Section 14.2, payments of principal, Make-Whole Amount, if any, and interest

becoming due and payable on the Notes shall be made in New York, New York at

the principal office of Citibank, N.A. in such jurisdiction.  The Company may at any time, by notice to

each holder of a Note, change the place of payment of the Notes so long as such

place of payment shall be either the principal office of the Company in such

jurisdiction or the principal office of a bank or trust company in such

jurisdiction.

 

Section

14.2                            Home

Office Payment.  So long as

you or your nominee shall be the holder of any Note, and notwithstanding

anything contained in Section 14.1 or in such Note to the contrary, the Company

will pay all sums becoming due on such Note for principal, Make-Whole Amount,

if any, and interest by the method and at the address specified for such purpose

below your name in Schedule A, or by such other method or at such other address

as you shall have 

 

35

 

from time to time

specified to the Company in writing for such purpose, without the presentation

or surrender of such Note or the making of any notation thereon, except that

upon written request of the Company made concurrently with or reasonably

promptly after payment or prepayment in full of any Note, you shall surrender

such Note for cancellation, reasonably promptly after any such request, to the

Company at its principal executive office or at the place of payment most

recently designated by the Company pursuant to Section 14.1.  Prior to any sale or other disposition of

any Note held by you or your nominee you will, at your election, either endorse

thereon the amount of principal paid thereon and the last date to which

interest has been paid thereon or surrender such Note to the Company in

exchange for a new Note or Notes pursuant to Section 13.2.  The Company will afford the benefits of this

Section 14.2 to any Institutional Investor that is the direct or indirect

transferee of any Note purchased by you under this Agreement and that has made

the same agreement relating to such Note as you have made in this Section 14.2.

 

SECTION 15. EXPENSES, ETC.

 

Section

15.1                            Transaction

Expenses.  Whether or not the

transactions contemplated hereby are consummated, the Company will pay all

costs and expenses (including reasonable attorneys’ fees of a special counsel and,

if reasonably required, local or other counsel) incurred by you and each Other

Purchaser or holder of a Note in connection with such transactions and in

connection with any amendments, waivers or consents under or in respect of this

Agreement or the Notes (whether or not such amendment, waiver or consent

becomes effective), including, without limitation: (a) the costs and expenses

incurred in enforcing or defending (or determining whether or how to enforce or

defend) any rights under this Agreement, the Security Documents or the Notes or

in responding to any subpoena or other legal process or informal investigative

demand issued in connection with this Agreement, the Security Documents or the

Notes, or by reason of being a holder of any Note, and (b) the costs and

expenses, including financial advisors’ fees, incurred in connection with the

insolvency or bankruptcy of the Company or any Subsidiary or in connection with

any work-out or restructuring of the transactions contemplated hereby and by

the Notes.  The Company will pay, and

will save you and each other holder of a Note harmless from, all claims in

respect of any fees, costs or expenses if any, of brokers and finders (other

than those retained by you).

 

Section

15.2                            Survival.  The obligations of the Company under this

Section 15 will survive the payment or transfer of any Note, the

enforcement, amendment or waiver of any provision of this Agreement or the

Notes, and the termination of this Agreement.

 

SECTION 16. SURVIVAL OF REPRESENTATIONS AND WARRANTIES;

ENTIRE AGREEMENT.

 

All representations and warranties contained herein

shall survive the execution and delivery of this Agreement and the Notes, the

purchase or transfer by you of any Note or portion thereof or interest therein

and the payment of any Note, and may be relied upon by any subsequent holder of

a Note, regardless of any investigation made at any time by or on behalf of 

 

36

 

you or any other holder

of a Note.  All statements contained in

any certificate or other instrument delivered by or on behalf of the Company

pursuant to this Agreement  shall be

deemed representations and warranties of the Company under this Agreement.  Subject to the preceding sentence, this

Agreement and the Notes embody the entire agreement and understanding between

you and the Company and supersede all prior agreements and understandings

relating to the subject matter hereof.

 

SECTION 17. AMENDMENT AND WAIVER.

 

Section

17.1                            Requirements.  This Agreement and the Notes may be amended,

and the observance of any term hereof or of the Notes may be waived (either

retroactively or prospectively), with (and only with) the written consent of

the Company and the Required Holders, except that (a) no amendment or waiver of

any of the provisions of Section 1, 2, 3, 4, 5, 6 or 21 hereof, or any

defined term (as it is used therein), will be effective as to you unless

consented to by you in writing, and (b) no such amendment or waiver may,

without the written consent of the holder of each Note at the time outstanding

affected thereby, (i) subject to the provisions of Section 12

relating to acceleration or rescission, change the amount or time of any

prepayment or payment of principal of, or reduce the rate or change the time of

payment or method of computation of interest or of the Make-Whole Amount on,

the Notes, (ii) change the percentage of the principal amount of the Notes

the holders of which are required to consent to any such amendment or waiver,

or (iii) amend any of Sections 8, 11(a), 11(b), 12, 17 or 20.

 

Section

17.2                            Solicitation

of Holders of Notes.

 

(a)                                  Solicitation.  The Company will provide each holder of the

Notes (irrespective of the amount of Notes then owned by it) with sufficient

information, sufficiently far in advance of the date a decision is required, to

enable such holder to make an informed and considered decision with respect to

any proposed amendment, waiver or consent in respect of any of the provisions

hereof or of the Notes.  The Company

will deliver executed or true and correct copies of each amendment, waiver or

consent effected pursuant to the provisions of this Section 17 to each

holder of outstanding Notes promptly following the date on which it is executed

and delivered by, or receives the consent or approval of, the requisite holders

of Notes.

 

(b)                                 Payment.  The Company will not directly or indirectly

pay or cause to be paid any remuneration, whether by way of supplemental or

additional interest, fee or otherwise, or grant any security, to any holder of Notes

as consideration for or as an inducement to the entering into by any holder of

Notes or any waiver or amendment of any of the terms and provisions hereof

unless such remuneration is concurrently paid, or security is concurrently

granted, on the same terms, ratably to each holder of Notes then outstanding

even if such holder did not consent to such waiver or amendment.

 

Section

17.3                            Binding

Effect, etc.  Any amendment

or waiver consented to as provided in this Section 17 applies equally to

all holders of Notes and is binding upon them and upon each future holder of

any Note and upon the Company without regard to whether such Note has been

marked to indicate such amendment or waiver. 

No such amendment or waiver will extend to or affect any obligation, covenant,

agreement, Default or Event of Default not expressly amended or waived or

impair any right consequent thereon.  No

course of dealing between the Company 

 

37

 

and the holder of any

Note nor any delay in exercising any rights hereunder or under any Note shall

operate as a waiver of any rights of any holder of such Note.  As used herein, the term “this Agreement”

and references thereto shall mean this Agreement as it may from time to time be

amended or supplemented.

 

Section

17.4    Notes

held by Company, Etc. 

Solely for the purpose of determining whether the holders of the

requisite percentage of the aggregate principal amount of Notes then

outstanding approved or consented to any amendment, waiver or consent to be

given under this Agreement or the Notes, or have directed the taking of any

action provided herein or in the Notes to be taken upon the direction of the

holders of a specified percentage of the aggregate principal amount of Notes

then outstanding, Notes directly or indirectly owned by the Company or any of

its Affiliates shall be deemed not to be outstanding.

 

SECTION 18. NOTICES.

 

All notices and communications provided for hereunder

shall be in writing and sent (a) by telecopy if the sender on the same day

sends a confirming copy of such notice by a recognized overnight delivery

service (charges prepaid), or (b) by registered or certified mail with return

receipt requested (postage prepaid), or (c) by a recognized overnight delivery

service (with charges prepaid).  Any

such notice must be sent:

 

(i)                                     if

to you or your nominee, to you or it at the address specified for such

communications in Schedule A, or at such other address as you or it shall have

specified to the Company in writing,

 

(ii)                                  if

to any other holder of any Note, to such holder at such address as such other

holder shall have specified to the Company in writing, or

 

(iii)                               if

to the Company, to the Company at its address set forth at the beginning hereof

to the attention of Vice President-Finance, or at such other address as the

Company shall have specified to the holder of each Note in writing.

 

Notices under this

Section 18 will be deemed given only when actually received.

 

SECTION 19. REPRODUCTION OF DOCUMENTS.

 

This Agreement and all documents relating thereto,

including, without limitation, (a) consents, waivers and modifications that may

hereafter be executed, (b) documents received by you at the Closing (except the

Notes themselves), and (c) financial statements, certificates and other

information previously or hereafter furnished to you, may be reproduced by you

by any photographic, photostatic, microfilm, microcard, miniature photographic

or other similar process and you may destroy any original document so

reproduced.  The Company agrees and

stipulates that, to the extent permitted by applicable law, any such

reproduction shall be admissible in evidence as the original itself in any

judicial or administrative proceeding (whether or not the original is in

existence and whether or not such reproduction was made by you in the regular

course of business) and any enlargement, facsimile or further reproduction of

such reproduction shall likewise be admissible in evidence.  This Section 19 shall not prohibit the

Company or any 

 

38

 

other holder of Notes

from contesting any such reproduction to the same extent that it could contest

the original, or from introducing evidence to demonstrate the inaccuracy of any

such reproduction.

 

SECTION 20. CONFIDENTIAL INFORMATION.

 

For the purposes of this Section 20, “Confidential

Information” means information delivered to you by or on behalf of

the Company or any Subsidiary in connection with the transactions contemplated

by or otherwise pursuant to this Agreement that is proprietary in nature and

that was clearly marked or labeled or otherwise adequately identified when

received by you as being confidential information of the Company or such

Subsidiary, provided that such term does not include information that

(a) was publicly known or otherwise known to you prior to the time of such

disclosure, (b) subsequently becomes publicly known through no act or omission

by you or any Person acting on your behalf, (c) otherwise becomes known to you

other than through disclosure by the Company or any Subsidiary or (d)

constitutes financial statements delivered to you under Section 7.1 that are

otherwise publicly available.  You will

maintain the confidentiality of such Confidential Information in accordance

with procedures adopted by you in good faith to protect confidential

information of third parties delivered to you, provided that you may

deliver or disclose Confidential Information to (i) your directors, officers,

trustees, employees, agents, attorneys and affiliates (to the extent such

disclosure reasonably relates to the administration of the investment

represented by your Notes), (ii) your financial advisors and other professional

advisors who agree to hold confidential the Confidential Information substantially

in accordance with the terms of this Section 20, (iii) any other holder of any

Note, (iv) any Institutional Investor which is not a Competitor to which you

sell or offer to sell such Note or any part thereof or any participation

therein (if such Person has agreed in writing prior to its receipt of such

Confidential Information to be bound by the provisions of this Section 20); provided

that if an Event of Default described in Section 11 has occurred and is continuing

or if the Notes have been accelerated pursuant to Section 12.1, any such

Institutional Investor may be a Competitor, (v) any Person from which you offer

to purchase any security of the Company (if such Person has agreed in writing

prior to its receipt of such Confidential Information to be bound by the

provisions of this Section 20), (vi) any federal or state regulatory

authority having jurisdiction over you, (vii) the National Association of

Insurance Commissioners or any similar organization, or any nationally

recognized rating agency that requires access to information about your

investment portfolio or (viii) any other Person to which such delivery or

disclosure may be necessary or appropriate (w) to effect compliance with any

law, rule, regulation or order applicable to you, (x) in response to any

subpoena or other legal process, (y) in connection with any litigation to which

you are a party or (z) if an Event of Default has occurred and is continuing,

to the extent you may reasonably determine such delivery and disclosure to be

necessary or appropriate in the enforcement or for the protection of the rights

and remedies under your Notes and this Agreement.  Each holder of a Note, by its acceptance of a Note, will be

deemed to have agreed to be bound by and to be entitled to the benefits of this

Section 20 as though it were a party to this Agreement.  On reasonable request by the Company in

connection with the delivery to any holder of a Note of information required to

be delivered to such holder under this Agreement or requested by such holder

(other than a holder that is a party to this 

 

39

 

Agreement or its

nominee), such holder will enter into an agreement with the Company embodying

the provisions of this Section 20.

 

SECTION 21. SUBSTITUTION OF PURCHASER.

 

You shall have the right to substitute any one of your

Affiliates as the purchaser of the Notes that you have agreed to purchase

hereunder, by written notice to the Company, which notice shall be signed by

both you and such Affiliate, shall contain such Affiliate’s agreement to be

bound by this Agreement and shall contain a confirmation by such Affiliate of

the accuracy with respect to it of the representations set forth in Section

6.  Upon receipt of such notice,

wherever the word “you” is used in this Agreement (other than in this Section

21), such word shall be deemed to refer to such Affiliate in lieu of you.  In the event that such Affiliate is so

substituted as a purchaser hereunder and such Affiliate thereafter transfers to

you all of the Notes then held by such Affiliate, upon receipt by the Company

of notice of such transfer, wherever the word “you” is used in this Agreement

(other than in this Section 21), such word shall no longer be deemed to

refer to such Affiliate, but shall refer to you, and you shall have all the

rights of an original holder of the Notes under this Agreement.

 

SECTION 22. MISCELLANEOUS.

 

Section 22.1                            Successors

and Assigns.  All covenants

and other agreements contained in this Agreement by or on behalf of any of the

parties hereto bind and inure to the benefit of their respective successors and

assigns (including, without limitation, any subsequent holder of a Note)

whether so expressed or not.

 

Section 22.2                            Payments

Due on Non-Business Days. 

Anything in this Agreement or the Notes to the contrary notwithstanding,

any payment of principal of or Make-whole Amount or interest on any Note that

is due on a date other than a Business Day shall be made on the next succeeding

Business Day without including the additional days elapsed in the computation

of the interest payable on such next succeeding Business Day.

 

Section 22.3                            Severability.  Any provision of this Agreement that is

prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,

be ineffective to the extent of such prohibition or unenforceability without

invalidating the remaining provisions hereof, and any such prohibition or

unenforceability in any jurisdiction shall (to the full extent permitted by

law) not invalidate or render unenforceable such provision in any other

jurisdiction.

 

Section 22.4                            Construction.  Each covenant contained herein shall be

construed (absent express provision to the contrary) as being independent of

each other covenant contained herein, so that compliance with any one covenant

shall not (absent such an express contrary provision) be deemed to excuse

compliance with any other covenant. 

Where any provision herein refers to action to be taken by any Person,

or which such Person is prohibited from taking, such provision shall be

applicable whether such action is taken directly or indirectly by such Person.

 

Section 22.5                            Counterparts.  This Agreement may be executed in any number

of counterparts, each of which shall be an original but all of which together

shall constitute one 

 

40

 

instrument.  Each counterpart may consist of a number of

copies hereof, each signed by less than all, but together signed by all, of the

parties hereto.

 

Section 22.6                            Governing

Law.  This Agreement shall be

construed and enforced in accordance with, and the rights of the parties shall

be governed by, the law of the State of New York excluding choice-of-law

principles of the law of such State that would require the application of the

laws of a jurisdiction other than such State.

 

Section 22.7                            Additional

Indebtedness. 

Subject to the terms and provisions hereof, the Company may, from time

to time, issue and sell additional senior promissory notes and may, in

connection with the documentation thereof, incorporate by reference various

provisions of this Agreement.  Such

incorporation by reference shall not modify, dilute or otherwise affect the

terms and provisions hereof including, without limitation, the priority of the

Notes and the percentage of the Notes required to approve an amendment or

effectuate a waiver under the provisions of Section 17 or the percentages of

the Notes required to accelerate the Notes or rescind such an acceleration

under provisions of Section 12.

 

*    *   

*    *    *

 

41

 

If you are in agreement with the foregoing, please

sign the form of agreement on the accompanying counterpart of this Agreement

and return it to the Company, whereupon the foregoing shall become a binding

agreement between you and the Company.

 

 

	

   

  	

  Very truly yours,

  
	

   

  	

   

  
	

   

  	

  AMERICAN CRYSTAL SUGAR

  COMPANY

  
	

   

  	

   

  
	

   

  	

   

  
	

   

  	

  By:

  	

  /s/ Sam Wai

  	

   

  
	

   

  	

   

  	

  Its:

  	

  TREASURER

  	

   

  
						

 

42

 

	

  The foregoing is hereby

  agreed to as of the date thereof.

  	

   

  
	

   

  	

   

  
	

   

  	

   

  
	

   

  	

  JOHN

  HANCOCK LIFE INSURANCE

  COMPANY

  
	

   

  	

   

  
	

   

  	

   

  
	

   

  	

  By:

  	

  /s/ Greg Hennenfent

  	

   

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

  Its:

  	

  DIRECTOR

  	

   

  
						

 

43

 

	

   

  	

  JOHN

  HANCOCK VARIABLE LIFE

  INSURANCE COMPANY

  
	

   

  	

   

  
	

   

  	

   

  
	

   

  	

  By:

  	

  /s/ Greg Hennenfent

  	

   

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

  Its:

  	

  DIRECTOR

  	

   

  
					

 

44

 

	

   

  	

  JOHN

  HANCOCK LIFE INSURANCE

  COMPANY OF VERMONT

  
	

   

  	

   

  
	

   

  	

   

  
	

   

  	

  By:

  	

  /s/ Greg Hennenfent

  	

   

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

  Its:

  	

  DIRECTOR

  	

   

  
					

 

45

     

	

  Name and Address of Purchaser

  	

   

  	

  Principal

  Amount of 

  Notes to be Purchased

  	

   

  
	

   

  	

   

  	

   

  	

   

  
	

  John

  Hancock Life Insurance Company

  	

   

  	

  $

  	

  3,000,000

  	

   

  
	

  200

  Clarendon Street

  	

   

  	

  $

  	

  15,250,000

  	

   

  
	

  Boston,

  Massachusetts 02117

  	

   

  	

   

  	

   

  
	

  Facsimile

  Number: 617-572-1605

  	

   

  	

   

  	

   

  
	

  Confirmation

  Number: 617-572-5323

  	

   

  	

   

  	

   

  

 

Payments

 

All payments on or in

respect of the Notes or other obligations in accordance with the provisions of

this Agreement are to be by bank wire transfer of Federal or other immediately

available funds for credit by 12 Noon, Chicago time (identifying each payment

as “American Crystal Sugar Company, 4.78% Senior Secured Guaranteed Notes, due

February 1, 2010, PPN 02530# AD 3 principal, premium or interest”) to:

 

Bank One, Illinois

ABA No. 071100269

Champaign Service Center

– Mortgage/Bond

Account Number 617423603

On order of:  American Crystal Sugar Company & [PPN

Number]

Wire Deadline:  12 Noon, Chicago Time.

 

Contemporaneous with the

above wire transfer, advice setting forth:

 

(1)                    the full name,

interest rate and maturity date of the Notes or other obligations;

(2)                    allocation of

payment between principal and interest and any special payment; and

(3)                    name and

address of Bank or Trustee from which wire transfer was sent, shall be

delivered or faxed AND mailed to:

 

John Hancock Life

Insurance Company

200 Clarendon Street

Boston, Massachusetts

02117

Attn: Investment

Accounting Division, B-3

Facsimile Number:  617-572-0628

 

Notices

 

Notices with respect to

scheduled and unscheduled payments, written confirmation of each such payment

to:

 

 

Schedule A

(to Note Purchase

Agreement)

 

 

	

  John Hancock

  Life Insurance Company

  201 Knollwood

  Drive, Suite A

  Champaign,

  Illinois  61820-7594

  Attn:  Accounting

  Facsimile

  Number:  217-356-1031

   

  	

  AND:

  John Hancock

  Life Insurance Company

  200 Clarendon

  Street

  Boston,

  Massachusetts 02117

  Attention:     Bond and Corporate Finance Group, T-57

  Facsimile

  Number:  617-572-1165

  

 

Notices with respect to

change in Issuer’s name, address, principal place of business, change in

location of collateral, copies of legal opinions to:

 

John Hancock Life Insurance

Company

200 Clarendon Street

Boston, Massachusetts

02117

Attention: Investment Law

Division, T-30

Facsimile Number:   617-572-9269

 

All other communications

which shall include, but not be limited to, financial statements and

certificates of compliance with financial covenants, shall be delivered or

faxed AND mailed to:

 

John Hancock Life

Insurance Company

200 Clarendon Street

Boston, Massachusetts

02117

Attention: Bond and

Corporate Finance Group, T-57

Facsimile Number:   617-572-1605

 

With a Copy to:

 

1622 Colonial Parkway

Suite 1A

Inverness, Illinois  60067

Attention:  Greg Hennenfent

Facsimile Number:  847-776-5835

 

Name of Nominee in which

Notes are to be issued:  None

 

Taxpayer I.D.

Number:  04-1414660

 

A-2

 

	

  Name and Address of Purchaser

  	

   

  	

  Principal

  Amount of 

  Notes to be Purchased

  	

   

  
	

   

  	

   

  	

   

  	

   

  
	

  John

  Hancock Variable Life Insurance Company

  	

   

  	

  $

  	

  1,500,000

  	

   

  
	

  200

  Clarendon Street

  	

   

  	

   

  	

   

  
	

  Boston,

  Massachusetts 02117

  	

   

  	

   

  	

   

  
	

  Attn:

  Bond and Corporate Finance Group T-57

  	

   

  	

   

  	

   

  
	

  Facsimile

  Number:  617-572-1605

  	

   

  	

   

  	

   

  
	

  Confirmation

  Number:  617-572-5323

  	

   

  	

   

  	

   

  
					

 

Payments

 

All payments on or in

respect of the Notes or other obligations in accordance with the provisions of

this Agreement are to be by bank wire transfer of Federal or other immediately

available funds for credit by 12 Noon, Chicago time (identifying each

payment as “American Crystal Sugar Company, 4.78% Senior Secured Guaranteed

Notes, due February 1, 2010, PPN 02530# AD 3, principal, premium or

interest”) to:

 

Bank One, Illinois

ABA No. 071100269

Champaign Service Center

– Mortgage/Bond

Account Number 617423603

On order of:  American Crystal Sugar Company & [PPN

Number]

Wire Deadline:  12 Noon, Chicago Time

 

Contemporaneous with the

above wire transfer, advice setting forth:

 

(1)                    the full name,

interest rate and maturity date of the Notes or other obligations;

(2)                    allocation of

payment between principal and interest and any special payment; and

(3)                    name and

address of Bank or Trustee from which wire transfer was sent, shall be

delivered or faxed AND mailed to:

 

John Hancock Life

Insurance Company

200 Clarendon Street

Boston, Massachusetts

02117

Attn: Investment

Accounting Division, B-3

Facsimile Number:  617-572-0628

 

Notices

 

Notices with respect to

scheduled and unscheduled payments, written confirmation of each such payment

to:

 

A-3

 

	

  John

  Hancock Variable Life Insurance Company

  201 Knollwood

  Drive, Suite A

  Champaign,

  Illinois  61820-7594

  Attn:  Accounting

  Facsimile Number:  217-356-1031

  	

  AND:

  John

  Hancock Life Insurance Company

  200

  Clarendon Street

  Boston,

  Massachusetts  02117

  Attention:  Bond and Corporate Finance Group, T-57

  Facsimile

  Number:  617-572-1165

  

 

Notices with respect to

change in Issuer’s name, address, principal place of business, change in

location of collateral, copies of legal opinions to:

 

John Hancock Life

Insurance Company

200 Clarendon Street

Boston, Massachusetts

02117

Attention: Investment Law

Division, T-30

Facsimile

Number:   617-572-9269                  

 

All Notices regarding

Financial Statements and Certificates of Compliance with financial covenants

shall be mailed and faxed to the following:

 

John Hancock Life

Insurance Company

200 Clarendon Street

Boston, Massachusetts

02117

Attn: Bond and Corporate

Finance Group, T-57

Facsimile Number:   617-572-1605

 

All other communications

which shall include, but not be limited to, financial statements and

certificates of compliance with financial covenants, shall be delivered or

faxed AND mailed to:

 

John Hancock Life Insurance

Company

200 Clarendon Street

Boston, Massachusetts

02117

Attention: Investment Law

Division, T-30

Facsimile Number:   617-572-9269

 

With a Copy to:

 

1622 Colonial Parkway

Suite 1A

Inverness, Illinois  60067

Attention:  Greg Hennenfent

Facsimile Number:  847-776-5835

 

A-4

 

Name of nominee in which

Notes are to be issued:  None

 

Taxpayer I.D.

Number:  04-2664016

 

A-5

 

	

  Name and Address of Purchaser

  	

   

  	

  Principal

  Amount of

  Notes to be Purchased

  	

   

  
	

   

  	

   

  	

   

  	

   

  
	

  John

  Hancock Insurance Company of Vermont

  	

   

  	

  $

  	

  250,000

  	

   

  
	

  200

  Clarendon Street

  	

   

  	

   

  	

   

  
	

  Boston,

  Massachusetts 02117

  	

   

  	

   

  	

   

  
	

  Facsimile

  Number: 617-572-1605

  	

   

  	

   

  	

   

  
	

  Confirmation

  Number: 617-572-5323

  	

   

  	

   

  	

   

  
					

 

Payments

 

All payments on or in

respect of the Notes or other obligations in accordance with the provisions of

this Agreement are to be by bank wire transfer of Federal or other immediately

available funds for credit by 12 Noon, Chicago time (identifying each

payment as “American Crystal Sugar Company, 4.78% Senior Secured Guaranteed

Notes, due February 1, 2010, PPN 02530# AD 3 principal, premium or

interest”) to:

 

Bank One, Illinois

ABA No. 071100269

Champaign Service Center

– Mortgage/Bond

Account Number 617423603

On order of:  American Crystal Sugar Company & [PPN

Number]

Wire Deadline:  12 Noon, Chicago Time

 

Contemporaneous with the

above wire transfer, advice setting forth:

 

(1)                    the full name,

interest rate and maturity date of the Notes or other obligations;

(2)                    allocation of

payment between principal and interest and any special payment; and

(3)                    name and

address of Bank or Trustee from which wire transfer was sent, shall be

delivered or faxed AND mailed to:

 

John Hancock Life

Insurance Company

200 Clarendon Street

Boston, Massachusetts

02117

Attn: Investment

Accounting Division, B-3

Facsimile Number:  617-572-0628

 

Notices

 

Notices with respect to

scheduled and unscheduled payments, written confirmation of each such payment

to:

 

A-6

 

	

  John Hancock Life Insurance Company of Vermont

  c/o John Hancock

  Life Insurance Company

  201 Knollwood

  Drive, Suite A

  Champaign,

  Illinois  61820-7594

  Attn:  Accounting

  Facsimile

  Number:  217-356-1031

  	

  AND:

  John

  Hancock Life Insurance Company

  200

  Clarendon Street

  Boston,

  Massachusetts  02117

  Attention:  Bond and Corporate Finance Group, T-57

  Facsimile

  Number:  617-572-1165

  

 

Notices with respect to

change in Issuer’s name, address, principal place of business, change in

location of collateral, copies of legal opinions to:

 

John Hancock Life

Insurance Company

200 Clarendon Street

Boston, Massachusetts

02117

Attention: Investment Law

Division, T-30

Facsimile Number:   617-572-9269

 

All other communications

which shall include, but not be limited to, financial statements and

certificates of compliance with financial covenants, shall be delivered or

faxed AND mailed to:

 

John Hancock Life

Insurance Company

200 Clarendon Street

Boston, Massachusetts

02117

Attention: Bond and

Corporate Finance Group, T-57

Facsimile Number:   617-572-1605

 

With a Copy to:

 

1622 Colonial Parkway

Suite 1A

Inverness, Illinois  60067

Attention:  Greg Hennenfent

Facsimile Number:  847-776-5835

 

Name of Nominee in which

Notes are to be issued:  None

 

Taxpayer I.D.

Number:  03-0367897

 

A-7

     

DEFINED

TERMS

 

As used herein, the

following terms have the respective meanings set forth below or set forth in

the Section hereof following such term:

 

“1998 Guarantee Agreement”

means that certain Guarantee Agreement dated the date hereof from the Guarantor

to the 1998 Purchasers as amended from time to time.

 

“1998 Notes” means

those certain Senior Secured Guaranteed Notes of the Company issued and

outstanding under the 1998 Note Purchase Agreements as amended and restated as

of the date hereof.

 

“1998 Note Purchase Agreements”

means those separate and several Note Purchase Agreements dated as of September

15, 1998 between the Company and the 1998 Purchasers as amended by the First

Amendment thereto and as further amended from time to time.

 

“1998 Purchasers”

means the from time to time holders of the 1998 Notes of the Company.

 

“Additional Provision”  shall have the meaning set forth therein in

Section 9.9.

 

“Affiliate” means,

at any time, and with respect to any Person, (a) any other Person that at such

time directly or indirectly through one or more intermediaries Controls, or is

Controlled by, or is under common Control with, such first Person, (b) any

Person beneficially owning or holding, directly or indirectly, 10% or more of

any class of voting or equity interests of the Company or any Subsidiary or any

corporation of which the Company and its Subsidiaries beneficially own or hold,

in the aggregate, directly or indirectly, 10% or more of any class of voting or

equity interests, and (c) United Sugars Corporation, Midwest Agri-Commodities

Company, ProGold Limited Liability Company and Crystech LLC; provided, that for

the purposes of this definition, all Growers shall be also considered in the aggregate

as an Affiliate of the Company.  As used

in this definition, “Control” means the possession, directly

or indirectly, of the power to direct or cause the direction of the management

and policies of a Person, whether through the ownership of voting securities,

by contract or otherwise. Unless the context otherwise clearly requires, any

reference to an “Affiliate” is a reference to an Affiliate of the Company.

 

“Average Net Funds Generated”

means the sum of the following for the most recent twelve (12) fiscal quarters

divided by twelve (12):  (i) 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 (ii) 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.

 

 

Schedule B

(to Note Purchase

Agreement)

 

 

“Bank Guarantee Agreement”

means that certain Guarantee Agreement dated as of the date hereof from the

Guarantor to the Banks as amended from time to time.

 

“Banks” means

CoBank, ACB, as successor by merger with St. Paul Bank for Cooperatives, as

lender under the Loan Agreement and its successors and assigns.

 

“Business Day”

means (a) for the purposes of Section 8.6 only, any day other than a

Saturday, a Sunday or a day on which commercial banks in New York City are required

or authorized to be closed, and (b) for the purposes of any other

provision of this Agreement, any day other than a Saturday, a Sunday or a day

on which commercial banks in Minneapolis, Minnesota, or New York, New York or

Fargo, North Dakota are required or authorized to be closed.

 

“Called Principal”

is defined in Section 8.7.

 

“Capital Lease”

means, at any time, a lease with respect to which the lessee is required

concurrently to recognize the acquisition of an asset and the incurrence of a

liability in accordance with GAAP.

 

“Change in Control”

is defined in Section 8.3(h).

 

“Closing” is

defined in Section 3.

 

“CoBank Stock Lien”

means the statutory first lien on all stock and other equity of CoBank, ACB as

successor by merger to St. Paul Bank for Cooperatives held by the Company

pursuant to 12 USC 2131.

 

“Code” means the

Internal Revenue Code of 1986, as amended from time to time, and the rules and

regulations promulgated thereunder from time to time.

 

“Collateral” means all

property and interests in property and proceeds thereof now owned or hereafter

acquired by the Company or any of its respective Subsidiaries in or upon which

a Lien now or hereafter exists in favor of the Purchasers, whether under this

Agreement, the Security Documents or under any other documents executed

pursuant to this Agreement, by any such Person and delivered to the Purchasers.

 

“Collateral Agent”

means CoBank, ACB as successor by merger with St. Paul Bank for Cooperatives,

in its capacity as collateral agent for the Purchasers under and pursuant to

Intercreditor and Collateral Agency Agreement, and any permitted successor

collateral agent.

 

“Company” means

American Crystal Sugar Company, a Minnesota cooperative corporation and its

successors and assigns.

 

“Competitor”

shall mean any Person which is substantially engaged in the sugar processing

and sales industry, provided that:

 

B-2

 

(a)                                  the

provision of investment advisory services by a Person to a Plan which is owned

or controlled by a Person which would otherwise be a Competitor shall not of

itself cause the Person providing such services to be deemed to be a

Competitor;

 

(b)                                 in

no event shall an Institutional Investor be deemed a Competitor unless such

Institutional Investor controls, or is controlled by, or is under common

control with, a Person that is substantially engaged in the sugar processing

and sales industry; and

 

(c)                                  an

Institutional Investor that would otherwise be deemed a Competitor pursuant to

the foregoing provisions of this definition by virtue of its ownership or

control as a portfolio investment of the equity securities of any Person

engaged in the business of the sugar processing and sales industry shall not be

deemed a Competitor if such Institutional Investor has established procedures

which will prevent confidential information supplied to such Institutional

Investor by the Company from being transmitted or otherwise made available to

such Person.

 

“Confidential Information”

is defined in Section 20.

 

“Consolidated Current Assets”

means the current assets of the Company and its Subsidiaries, including,

without limitation, cash, cash equivalents, inventory, receivables as other

assets generally described as “current assets” in accordance with GAAP, determined

on a consolidated basis in accordance with GAAP.

 

“Consolidated Current Liabilities”

means the current liabilities of the Company and its Subsidiaries, determined

on a consolidated basis in accordance with GAAP.

 

“Consolidated Funded Debt”

means, without duplication, all Funded Debt of the Company and its

Subsidiaries, determined on a consolidated basis in accordance with GAAP.

 

“Consolidated Net Worth”

means total members’ investments in accordance with GAAP, including any

goodwill and other intangible assets.

 

“Consolidated Total Assets”

means the total assets of the Company and its Subsidiaries, determined on a

consolidated basis in accordance with GAAP.

 

“Consolidated Total Capitalization”

means the sum of Consolidated Funded Debt and Consolidated Net Worth.

 

“Control Event” is

defined in Section 8.3(h).

 

“Current Asset Liens”

shall mean Liens on the current assets of the Company and its Subsidiaries

including, without limitation, Liens on cash, cash equivalents, inventory,

receivables and other assets generally described as “current assets” in

accordance with GAAP.

 

“Debt” with

respect to any Person means, at any time, without duplication,

 

B-3

 

(a)                                  its

liabilities for borrowed money and its redemption obligations in respect of

mandatorily redeemable Preferred Stock;

 

(b)                                 its

liabilities for the deferred purchase price of property acquired by such Person

(excluding accounts payable arising in the ordinary course of business but

including all liabilities created or arising under any conditional sale or

other title retention agreement with respect to any such property);

 

(c)                                  all

liabilities appearing on its balance sheet in accordance with GAAP in respect

of Capital Leases;

 

(d)                                 all

liabilities for borrowed money secured by any Lien with respect to any property

owned by such Person (whether or not it has assumed or otherwise become liable

for such liabilities);

 

(e)                                  all

its liabilities in respect of letters of credit or instruments serving a

similar function issued or accepted for its account by banks and other

financial institutions (whether or not representing obligations for borrowed

money);

 

(f)                                    Swaps

of such Person; and

 

(g)                                 any

Guaranty of such Person with respect to liabilities of a type described in any

of clauses (a) through (f) hereof.

 

Debt of any Person shall

include all obligations of such Person of the character described in clauses

(a) through (g) to the extent such Person remains legally liable in respect

thereof notwithstanding that any such obligation is deemed to be extinguished

under GAAP.

 

“Default” means an

event or condition the occurrence or existence of which would, with the lapse

of time or the giving of notice or both, become an Event of Default.

 

“Default Rate”

means with respect to any series of Notes that rate of interest that is the

greater of (i) 2% per annum above the rate of interest stated in clause

(a) of the first paragraph of such series of Notes or (ii) 2% over the

rate of interest publicly announced by Citibank, N.A. in New York City as its

“base” or “prime” rate.

 

“Discounted Value”

is defined in Section 8.7.

 

“Environmental Laws”

means any and all Federal, state, local, and foreign statutes, laws,

regulations, ordinances, rules, judgments, orders, decrees, permits, concessions,

grants, franchises, licenses, agreements or governmental restrictions relating

to pollution and the protection of the environment or the release of any

materials into the environment, including but not limited to those related to

hazardous substances or wastes, air emissions and discharges to waste or public

systems.

 

B-4

 

“ERISA” means the

Employee Retirement Income  Security Act

of 1974, as amended from time to time, and the rules and regulations

promulgated thereunder from time to time in effect.

 

“ERISA Affiliate”

means any trade or business  (whether or

not incorporated) that is treated as a single employer together with the

Company under section 414 of the Code.

 

“Event of Default”

is defined in Section 11.

 

“Exchange Act”

means the Securities Exchange Act of 1934, as amended.

 

“Excepted Affiliates” means

Midwest Agri-Commodities Company, a North Dakota cooperative corporation,

ProGold Limited Liability Company, a limited liability company organized under

the laws of the State of Minnesota, United Sugars Corporation, a cooperative

corporation organized under the laws of the State of Minnesota and Crystech

LLC, a limited liability company organized under the laws of the State of

Delaware.

 

“Existing Mortgage” means

that certain Restated Mortgage and Security Agreement dated as of September 15,

1998 from the Company to the Collateral Agent covering certain real property

located in the States of Minnesota and North Dakota, as modified or amended as

described in Section 4.10(d), and as may be further amended.

 

“Fifth Amendment to Loan Agreement”

means that certain Fifth Amendment to, and forming a part of, the Loan

Agreement, dated as of January 15, 2003, between the Company and CoBank.

 

“Funded Debt”

means all Debt of any Person which would, in accordance with GAAP, constitute

long term Debt including, but not limited to: (a) any Debt with a maturity of

more than one year after the creation of such Debt, (b) any Debt outstanding

under a revolving credit or similar agreement providing for borrowings (and

renewals and extensions thereof) which pursuant to its terms would constitute

long term Debt in accordance with GAAP, (c) any Capital Lease obligation and

(d) any guarantee with respect to Funded Debt of another person; provided,

however, excluding any Debt (including current maturities thereof) which

would, in accordance with GAAP, constitute short term Debt, including any

revolving credit or similar agreements which have maturities of 365 days or

less.

 

“GAAP” means

generally accepted accounting principles as in effect from time to time in the

United States of America.

 

“Governmental Authority”

means

 

(a)                                  the

government of

 

(i)                                     the

United States of America or any State or other political subdivision thereof,

or

 

B-5

 

(ii)                                  any

jurisdiction in which the Company or any Subsidiary conducts all or any part of

its business, or which asserts jurisdiction over any properties of the Company

or any Subsidiary, or

 

(b)                                 any

entity exercising executive, legislative, judicial, regulatory or

administrative functions of, or pertaining to, any such government.

 

“Group” is defined

in Section 8.3(h).

 

“Grower” means the

individual member shareholders of the Company who deliver sugarbeets to the

Company.

 

“Grower Agreement”

means the agreement between Company and an individual Grower for a Grower to

supply the number of acres of sugarbeets equal to the number of preferred

shares of the Company then owned by such Grower.

 

“Guarantee Agreement”

means that certain Guarantee Agreement dated as of the date hereof from the

Guarantor to the Purchasers as amended from time to time.

 

“Guarantor” means

Sidney Sugars Incorporated, a Minnesota corporation and its successors and

assigns.

 

“Guaranty” means,

with respect to any Person, any obligation (except the endorsement in the

ordinary course of business of negotiable instruments for deposit or

collection) of such Person guaranteeing or in effect guaranteeing any

indebtedness, dividend or other obligation of any other Person in any manner,

whether directly or indirectly, including (without limitation) obligations

incurred through an agreement, contingent or otherwise, by such Person:

 

(a)                                  to

purchase such indebtedness or obligation or any property constituting security

therefor;

 

(b)                                 to

advance or supply funds (i) for the purchase or payment of such indebtedness or

obligation, or (ii) to maintain any working capital or other balance sheet

condition or any income statement condition of any other Person or otherwise to

advance or make available funds for the purchase or payment of such

indebtedness or obligation;

 

(c)                                  to

lease properties or to purchase properties or services primarily for the

purpose of assuring the owner of such indebtedness or obligation of the ability

of any other Person to make payment of the indebtedness or obligation; or

 

(d)                                 otherwise

to assure the owner of such indebtedness or obligation against loss in respect

thereof;

 

provided, however, the obligation of the

Company under the Tolling Services Agreement dated as of June 3, 1998 with

Crystech, LLC, shall not be deemed to be a Guaranty of the Debt of 

 

B-6

 

Crystech, LLC, so long as

Crystech, LLC’s assets and liabilities are not consolidated with the Company’s

assets and liabilities in accordance with GAAP.

 

In any computation of the

indebtedness or other liabilities of the obligor under any Guaranty, the

indebtedness or other obligations that are the subject of such Guaranty shall

be assumed to be direct obligations of such obligor.

 

“Hazardous Material”

means any and all pollutants, toxic or hazardous wastes or any other substances

that might pose a hazard to health or safety, the removal of which may be

required or the generation, manufacture, refining, production, processing,

treatment, storage, handling, transportation, transfer, use, disposal, release,

discharge, spillage, seepage, or filtration of which is or shall be restricted,

prohibited or penalized by any applicable law (including, without limitation,

asbestos, urea formaldehyde foam insulation and polycholorinated biphenyls).

 

“Hereford, Texas Property”

means the real and personal property of the Company or of the Guarantor, as the

case may be, and located in Deaf Smith County, Texas.

 

“holder” means,

with respect to any Note, the Person in whose name such Note is registered in

the register maintained by the Company pursuant to Section 13.1.

 

“Institutional Investor”

means (a) any original purchaser of a Note, (b) any holder of a Note

holding more than 5% of the aggregate principal amount of the Notes then

outstanding, and (c) any bank, trust company, savings and loan association or

other financial institution, any pension plan, any investment company, any

insurance company, any broker or dealer, or any other similar financial

institution or entity, regardless of legal form.

 

“Intercreditor and Collateral Agency

Agreement” means that certain Amended and Restated

Intercreditor and Collateral Agency Agreement among the Purchasers, the 1998

Purchasers and the Banks dated as of the date hereof and as amended from time

to time.

 

“Interest Expense” means the

total interest expense of the Company and its Subsidiaries (including, without

limitation, interest expense on capital leases) and, to the extent not included

therein, fees and other charges payable with respect to all Debt), determined

on a consolidated basis in accordance with GAAP.

 

“Investment Grade Status”

means, with respect to any Person, to be rated “Baa3” or above  or “BBB-” or above, respectively, by Moody’s

Investors Service, Inc. or Standard & Poor’s Ratings Group, a division of

McGraw-Hill and any successor thereto.

 

“Lien” means, with

respect to any Person, any mortgage, lien, pledge, charge, security interest or

other encumbrance, or any interest or title of any vendor, lessor, lender or

other secured party to or of such Person under any conditional sale or other

title retention agreement or Capital Lease, upon or with respect to any

property or asset of such Person (including in the case of stock, stockholder

agreements, voting trust agreements and all similar arrangements).

 

B-7

 

“Loan Agreement” means that

certain Master Loan Agreement, dated March 31, 2000, as amended by the First

Amendment, dated as of March 28, 2001, the Second Amendment, dated as of March

27, 2002, the Amendment and Waiver, dated as of October 7, 2002, the Fourth

Amendment, dated as of  November 6, 2002,

and the Fifth Amendment dated as of January 15, 2003, and as amended and

supplemented prior to the date hereof and as may be amended or supplemented

from time to time, between the Company and the Bank.

 

“Make-Whole Amount”

is defined in Section 8.7.

 

“Material” means

material in relation to the business, operations, affairs, financial condition,

assets, properties, or prospects of the Company and its Subsidiaries taken as a

whole.

 

“Material Adverse Effect”

means a material adverse effect on (a) the business, operations, affairs,

financial condition, assets or properties of the Company and its Subsidiaries

taken as a whole, or (b) the ability of the Company to perform its obligations

under this Agreement, the Security Documents and the Notes, or (c) the validity

or enforceability of this Agreement or the Notes, or (d) the validity or

perfection of the security interests granted under and pursuant to the Security

Documents.

 

“MDEQ” is defined

in Section 9.8(c).

 

“Modification Agreement”

means that certain Modification Agreement dated as of January 15, 2003 between

the Company and the Collateral Agent that modifies the Existing Mortgage

amended in connection with this Agreement.

 

“Mortgages” means,

collectively, the Existing Mortgage and the Sidney Mortgage.

 

“Multiemployer Plan”

means any Plan that is a “multiemployer plan” (as such term is defined in

section 4001(a)(3) of ERISA).

 

“Notes” is defined

in Section 1.

 

“Officer’s Certificate”

means a certificate of a Senior Financial Officer or of any other officer of

the Company whose responsibilities extend to the subject matter of such

certificate.

 

“Other Agreements”

is defined in Section 2.

 

“Other Purchasers” is defined

in Section 2.

 

“PBGC” means the Pension

Benefit Guaranty Corporation referred to and defined in ERISA or any successor

thereto.

 

“Permitted Current Asset Liens”

means Current Asset Liens against current assets securing short term Debt of

the Company incurred after the Closing that: 

(a) are Commodity Credit Corporation (“CCC”) loans or other, similar

loans made by a successor to the CCC or similar government sponsored loans or

loans associated with a governmental program; or (b) 

 

B-8

 

satisfy the following

conditions precedent:  (i) such Liens

secure the short term Debt of the Company and all Debt of the Company which is

subject to the Intercreditor and Collateral Agency Agreement at the time of

incurrence of such short term Debt on a pari passu basis, (ii) the Company

executes and delivers a security agreement evidencing such Liens which is

reasonably satisfactory to the obligees of the subject short term Debt, the

Secured Parties and the Company and which security agreement becomes subject to

the Intercreditor and Collateral Agency Agreement and (iii) the Intercreditor

and Collateral Agency Agreement is amended by the Collateral Agent, the Secured

Parties and the Company to incorporate mutually acceptable terms and provisions

relating to the administration and enforcement of the Liens so granted.

 

“Permitted Guarantee Agreements”

means the Guarantee Agreement, the 1998 Guarantee Agreement and the Bank

Guarantee Agreement.

 

“Permitted Intercompany Debt”

means (a) those certain unsecured term loans from Company to Guarantor totaling

$30,500,000 and evidenced by (i) the Promissory Note dated October 7, 2002 from

Guarantor to Company in the amount of $7,500,000 and due on August 31, 2007 and

(ii) the Promissory Note dated October 7, 2002 from Guarantor to Company in the

amount of $23,000,000 and due on August 31, 2003; and (b) that certain

unsecured line of credit currently in the aggregate amount of $50,000,000 and

evidenced by the Draw Note dated October 7, 2002 from Guarantor to Company and

due on August 31, 2003 (or as may be amended to increase the aggregate amount

of the unsecured line of credit by an additional $10,000,000 to an aggregate

amount of $60,000,000) as each such instrument is in effect on the Closing

Date, or as may be amended as allowed in (b) herein; and (c) those certain

unsecured term loans (from time to time herein) from Company to Midwest

Agri-Commodities Company in an amount not to exceed $3,000,000; provided that

if at any time after the Closing Date the Company requires the Guarantor to

execute and deliver a mortgage in substantially the same form as the Sidney Mortgage

with respect to the Mortgaged Property described therein (the “Subordinate

Sidney Mortgage”) to secure all or any portion of the indebtedness described in

clause (a) or (b) above (the “Subordinate Indebtedness”), such indebtedness

shall continue to constitute “Permitted Intercompany Debt” so long as (A) the

Company shall first obtain the written approval of the Noteholders to the

delivery of such Subordinate Sidney Mortgage, which approval shall not be

unreasonably withheld, (B) the Company and the Noteholders shall have executed

a subordination agreement in form and substance satisfactory to the Noteholders

pursuant to which the Company shall agree that the Subordinate Sidney Mortgage

and the Subordinate Indebtedness shall in all respects be subject and

subordinate to the Notes and the Sidney Mortgage and shall contain such other

provisions including deep subordination and remedies blockage provisions as

requested by the Noteholders, (C) the Company and the Noteholders shall have

executed a pledge agreement(s) in form and substance satisfactory to the

Noteholders pursuant to which the Company shall pledge its interest in the

“Subordinate Indebtedness” and the Subordinate Sidney Mortgage and the capital

stock of the Guarantor to the Collateral Agent for the benefit of the Secured

Parties to secure the payment of the Senior Secured Obligations (as defined in

the Intercreditor Agreement), (D) the Company, the Secured Parties and the

Collateral Agent shall execute and deliver any required amendments or modifications

to the Intercreditor Agreement to reflect the delivery of the Subordinate

Sidney Mortgage and the subordination agreement, and (E) the Company and the

Guarantor shall have executed and delivered all requisite UCC’s, title

insurance policies, legal opinions, and such 

 

B-9

 

other and further matters

and showings as Noteholders, the Collateral Agent or the other Secured Parties

may require in connection with the execution and delivery of the Subordinate

Sidney Mortgage.

 

“Permitted Investors”

means any of the shareholders of the Company as of the date of Closing or any

heirs or beneficiaries thereof and any of the members of the current management

team.  For purposes of this definition,

the “current management team” shall consist of all of the officers of the

Company set forth on Schedule 5.4.

 

“Permitted Specified Affiliate

Transactions”  means any

transaction by and between the Company and (i) United Sugars Corporation

(‘United Sugar’) and pertaining to the procurement, purchase, soliciting of

sales and sale of sugar by United Sugar on behalf of, and as agent for, the

Company, and the financing of such activities of United Sugar by the Company;

(ii) Midwest Agri-Commodities Company (‘Midwest’) and pertaining to the

procurement, purchase, soliciting of sales and sale of sugar beet pulp by  Midwest on behalf of, and as agent for, the

Company, and the financing of such activities of Midwest by the Company; (iii)

ProGold Limited Liability Company and pertaining to the financing, maintenance,

operation and other activities associated with, or related to, that certain

corn processing facility located just North of Wahpeton, North Dakota; and (iv)

Crystech, LLC and pertaining to the obligations of the Company to process

molasses under the terms of that certain Tolling Services Agreement dated as of

June 3, 1998.

 

“Person” means an

individual, partnership, corporation, limited liability company, association,

trust, unincorporated organization, or a government or agency or political

subdivision thereof.

 

“Plan” means an

“employee benefit plan” (as defined in section 3(3) of ERISA) that is or,

within the preceding five years, has been established or maintained, or to

which contributions are or, within the preceding five years, have been made or

required to be made, by the Company or any ERISA Affiliate or with respect to

which the Company or any ERISA Affiliate may have any liability.

 

“Preferred Stock”

means any class of capital stock of a corporation that is preferred over any

other class of capital stock of such corporation as to the payment of dividends

or the payment of any amount upon liquidation or dissolution of such

corporation.

 

“Priority Debt” means

(a) Funded Debt of any Subsidiary plus (without duplication) (b) Funded Debt

of the Company or any Subsidiary secured by a Lien which is incurred after the

Closing under and pursuant to Section 10.3(h).

 

“property” or “properties”

means, unless otherwise specifically limited, real or personal property of any

kind, tangible or intangible, choate or inchoate.

 

“ Purchasers” is

defined in Section 2.

 

“QPAM Exemption”

means Prohibited Transaction Class Exemption 84-14 issued by the United States

Department of Labor.

 

B-10

 

“Other Purchasers”

is defined in Section 1.

 

“Reinvestment Yield”

is defined in Section 8.7.

 

“Remaining Scheduled Payments”

is defined in Section 8.7.

 

“Required Holders”

means, at any time, the holders of at least 66-2/3% in principal amount of the

Notes at the time outstanding (exclusive of Notes then owned by the Company or

any of its Affiliates).

 

“Responsible Officer”

means any Senior Financial Officer and any other officer of the Company with

responsibility for the administration of the relevant portion of this

agreement.

 

“Secured Parties”

shall have the meaning assigned thereto in the Intercreditor and Collateral

Agency Agreement.

 

“Securities Act”

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

 

“Security” means

any security as defined in Section 2(1) of the Securities Act of 1933, as

amended.

 

“Security Documents”

means, collectively, (a) the Guarantee Agreement, (b) the Sidney Mortgage, the

Existing Mortgage, and all other security agreements, mortgages, deeds of

trust, lease assignments, guarantees and other similar agreements between the

Company or any Subsidiary and the Collateral Agent for the benefit of the

Purchasers pursuant to or in connection with the transactions contemplated

hereby, and all financing statements (or comparable documents now or hereafter

filed in accordance with the UCC or comparable law) against the Company or any

Subsidiary as debtor in favor of Collateral Agent, for the benefit of the

Purchasers, as secured party, and (c) any amendments, supplements, modifications,

renewals, replacements, consolidations, substitutions and extensions of any of

the foregoing.

 

“Senior Financial Officer”

means the chief financial officer, vice president-finance, principal accounting

officer, treasurer or comptroller of the Company.

 

“Settlement Date”

is defined in Section 8.7.

 

“Sidney Mortgage”

means that certain Mortgage and Security Agreement dated as of the date hereof

from the Guarantor to the Collateral Agent covering certain real and personal

property located in the State of Montana, as amended.

 

“Special Prepayment Date”

is defined in Section 8.1(b).

 

“Subsidiary”

means, as to any Person, any corporation, association or other business entity

in which such Person or one or more of its Subsidiaries or such Person and one

or more of its Subsidiaries owns sufficient equity or voting interests to

enable it or them (as a group) 

 

B-11

 

ordinarily, in the

absence of contingencies, to elect a majority of the directors (or Persons

performing similar functions) of such entity, and any partnership or joint

venture if more than a 50% interest in the profits or capital thereof is owned

by such Person or one or more of its Subsidiaries or such Person and one or

more of its Subsidiaries (unless such partnership can and does ordinarily take

major business actions without the prior approval of such Person or one or more

of its Subsidiaries) other than the Excepted Affiliates so long as each such

entity is not consolidated with the Company in accordance with GAAP.  Unless the context otherwise clearly

requires, any reference to a “Subsidiary” is a reference to a Subsidiary of the

Company.

 

“Swaps” means,

with respect to any Person, payment obligations with respect to interest rate

swaps, currency swaps and similar obligations obligating such Person to make

payments, whether periodically or upon the happening of a contingency.  For the purposes of this Agreement, the

amount of the obligation under any Swap shall be the amount determined in respect

thereof as of the end of the then most recently ended fiscal quarter of such

Person, based on the assumption that such Swap had terminated at the end of

such fiscal quarter, and in making such determination, if any agreement

relating to such Swap provides for the netting of amounts payable by and to

such Person thereunder or if any such agreement provides for the simultaneous

payment of amounts by and to such Person, then in each such case, the amount of

such obligation shall be the net amount so determined.

 

“Torrington, Wyoming Property”

means the real and personal property of the Company or the Guarantor, as the

case may be, and located in Goshen County, Wyoming.

 

“UCC” means the

Uniform Commercial Code as the same may, from time to time, be in effect in the

State of New York; provided, however, in the event that, by

reason of mandatory provisions of law, any or all of the attachment, perfection

or priority of the security interest in any Collateral is governed by the

Uniform Commercial Code as in effect in a jurisdiction other than the State of

New York, the term “UCC” shall mean the Uniform Commercial Code as in effect in

such other jurisdiction for purposes of the provisions hereof relating to such

attachment, perfection or priority and for purposes of definitions related to

such provisions.

 

“Wholly-Owned Subsidiary”

means, at any time, any Subsidiary one hundred percent (100%) of all of the

equity interests (except directors’ qualifying shares) and voting interests of

which are owned by any one or more of the Company and the Company’s other

Wholly-Owned Subsidiaries at such time.

 

B-12

     

Subsidiaries

 

Sidney Sugars

Incorporated                                                                                           100%

capital stock owned by the Company

 

Affiliates

 

None other than the

Excepted Affiliates

 

Officers

 

	

  James J. Horvath

  	

   

  	

  President and CEO

  
	

  David A. Berg

  	

   

  	

  Vice President –

  Agriculture

  
	

  Thomas S. Astrup

  	

   

  	

  Vice President –

  Administration

  
	

  Joseph J. Talley

  	

   

  	

  Vice President –

  Finance

  
	

  David A. Walden

  	

   

  	

  Vice President –

  Operations

  
	

  Daniel C. Mott

  	

   

  	

  General Counsel and

  Corporate Secretary

  
	

  Samuel

  S. M. Wai

  	

   

  	

  Treasurer and Assistant

  Secretary

  
	

  Brian Ingulsrud

  	

   

  	

  Corporate Controller,

  Assistant Secretary and Assistant Treasurer

  
	

  Ronald Peterson

  	

   

  	

  Assistant Treasurer and

  Assistant Secretary

  
	

  Mark L. Lembke

  	

   

  	

  Assistant Secretary and

  Assistant Treasurer

  

 

AMERICAN CRYSTAL SUGAR COMPANY

BOARD OF DIRECTORS – November 1, 2002

 

Michael A. Astrup

Jerry D. Bitker

Richard Borgen

Paul J. Driscoll

Curtis Haugen

Lonn M. Kiel

David J. Kragnes

Francis L. Kritzberger

Patrick D. Mahar

Jeff McInnes

Ronald Reitmeier

Jim A. Ross

G. Terry Stadstad

Robert Vivatson

Neil Widner

 

 

Schedule 5.4

(to Note Purchase

Agreement)

 

     

Financial Statements

 

Audited financial

statements of the Company for the fiscal years ended on August 31, 2002, August

31, 2001 and August 31, 2000.

 

 

Schedule 5.5

(to Note Purchase

Agreement)

 

 

SCHEDULE 5.12(b)

 

The actuarial “present

value” of the Company’s Plan A is 97.3% funded based on an accumulated

plan benefits on the funding basis (e.g., 8.25% interest rate as of

March 1, 2002) and the market value of the assets (including contributions

receivable) as shown on the IRS Form 5500 plan report.

 

 

Schedule 5.12(b)

(to Note Purchase

Agreement)

 

 

     

 

EXISTING

LIENS

 

as of November 30,

2002

 

	

  1.

  	

  Instrument:

  	

   

  	

  Intercreditor Agreement

  
	

   

  	

  Lienholder:

  	

   

  	

  St. Paul Bank for

  Cooperatives (now known as CoBank, A.C.B.) as collateral agent

  
	

   

  	

  Collateral:

  	

   

  	

  Real and Personal

  Property

  
	

   

  	

   

  	

   

  	

   

  
	

  2.

  	

  Instrument:

  	

   

  	

  Pledge Agreement

  
	

   

  	

  Lienholder:

  	

   

  	

  First Union Trust

  Company, National Association, as Collateral Agent

  
	

   

  	

  Collateral:

  	

   

  	

  The Company’s equity in

  Crystech, LLC

  
	

   

  	

   

  	

   

  	

   

  
	

  3.

  	

  Instrument:

  	

   

  	

  Lease Agreement

  
	

   

  	

  Lessor:

  	

   

  	

  Crystech, LLC

  
	

   

  	

  Property:

  	

   

  	

  Equipment

  
	

   

  	

   

  	

   

  	

   

  
	

  4.

  	

  Instrument:

  	

   

  	

  Various Lease

  Agreements

  
	

   

  	

  Lessor:

  	

   

  	

  American Technologies

  Credit, Inc.

  
	

   

  	

  Property:

  	

   

  	

  Equipment

  
	

   

  	

   

  	

   

  	

   

  
	

  5.

  	

  Instrument:

  	

   

  	

  Security Agreement

  
	

   

  	

  Lienholder:

  	

   

  	

  American National Bank

  and Trust Company (now known as Firstar Bank)

  
	

   

  	

  Collateral:

  	

   

  	

  Pollution Control

  Equipment located at the Company’s Moorhead, MN facility

  
	

   

  	

   

  	

   

  	

   

  
	

  6.

  	

  Instrument:

  	

   

  	

  Security Agreement

  
	

   

  	

  Lienholder:

  	

   

  	

  American National Bank

  and Trust Company 

  
	

   

  	

  Collateral:

  	

   

  	

  Certain equipment

  purchased with $1,000,000 Industrial Development Revenue Bond Issue and

  located at the Company’s Moorhead, MN facility

  
	

   

  	

   

  	

   

  	

   

  
	

  7.

  	

  Instrument:

  	

   

  	

  Lease Agreement

  
	

   

  	

  Lessor:

  	

   

  	

  Newcourt Communications

  Finance Corporation

  
	

   

  	

  Property:

  	

   

  	

  Equipment

  
	

   

  	

   

  	

   

  	

   

  
	

  8.

  	

  Instrument:

  	

   

  	

  Various Lease

  Agreements

  
	

   

  	

  Lessor:

  	

   

  	

  IBM Credit Corporation

  
	

   

  	

  Property:

  	

   

  	

  IBM Equipment

  

 

Schedule 5.15

(to Note Purchase

Agreement)

 

 

	

  9.

  	

  Instrument:

  	

   

  	

  Lease Agreement

  
	

   

  	

  Lessor:

  	

   

  	

  AT&T Credit

  Corporation

  
	

   

  	

  Property:

  	

   

  	

  Equipment

  
	

   

  	

   

  	

   

  	

   

  
	

  10.

  	

  Instrument:

  	

   

  	

  Lease Agreement

  
	

   

  	

  Lessor:

  	

   

  	

  AgCountry Farm Credit

  Services, PCA

  
	

   

  	

  Property:

  	

   

  	

  Equipment

  
	

   

  	

   

  	

   

  	

   

  
	

  11.

  	

  Instrument:

  	

   

  	

  Various Lease

  Agreements

  
	

   

  	

  Lessor:

  	

   

  	

  Butler Machinery

  Corporation

  
	

   

  	

  Property:

  	

   

  	

  Equipment

  
	

   

  	

   

  	

   

  	

   

  
	

  12.

  	

  Instrument:

  	

   

  	

  Various Lease

  Agreements

  
	

   

  	

  Lessor:

  	

   

  	

  Nott Company

  
	

   

  	

  Property:

  	

   

  	

  Equipment

  
	

   

  	

   

  	

   

  	

   

  
	

  13.

  	

  Instrument:

  	

   

  	

  Pledge Agreement

  
	

   

  	

  Leinholder:

  	

   

  	

  Commodity Credit

  Corporation

  
	

   

  	

  Collateral:

  	

   

  	

  2001 and 2002 sugar and

  the proceeds therefrom

  

 

EXISTING DEBT

 

American Crystal Sugar Company

Long Term Debt

(In Thousands)

November 30, 2002

 

	

  Total

  Term Loan, CoBank,ACB

  	

   

  	

  $

  	

  101,300

  	

   

  
	

  Term

  Loan, Insurance Companies

  	

   

  	

  $

  	

  50,000

  	

   

  
	

  Term

  Loan, Bank of North Dakota

  	

   

  	

  $

  	

  5,600

  	

   

  
	

  Tax

  Exempt Bonds:

  	

   

  	

   

  	

   

  
	

  East

  Grand Forks 2000 Bonds

  	

   

  	

  $

  	

  5,750

  	

   

  
	

  East

  Grand Forks 2001 Bonds

  	

   

  	

  $

  	

  4,990

  	

   

  
	

  Trail

  County Series A, B & C

  	

   

  	

  $

  	

  18,000

  	

   

  
	

  Trail

  County 1998 Bonds

  	

   

  	

  $

  	

  5,750

  	

   

  
	

  Trail

  County 1999 Bonds

  	

   

  	

  $

  	

  3,526

  	

   

  
	

  City

  of Moorhead 1997 Bonds

  	

   

  	

  $

  	

  5,500

  	

   

  
	

  Other

  	

   

  	

  $

  	

  —

  	

   

  
	

  Sub-total

  	

   

  	

  $

  	

  200,416

  	

   

  
	

  Less

  Current Maturities of Long Term Debt

  	

   

  	

  $

  	

  (18,045

  	

  )

  
	

  Total

  Long Term Debt

  	

   

  	

  $

  	

  182,371

  	

   

  

 

 

American Crystal Sugar Company

Current Maturities of Long Term Debt

(In Thousands)

November 30, 2002

 

	

  Term Loan at CoBank

  	

   

  	

   

  	

   

  
	

  Due

  December 31, 2003

  	

   

  	

  $

  	

  17,000

  	

   

  
	

   

  	

   

  	

   

  	

   

  
	

  Tax

  Exempt Bonds:  East Grand Forks 2001

  	

   

  	

   

  	

   

  
	

  Series

  A Due April 1, 2003

  	

   

  	

  $

  	

  165

  	

   

  
	

  Series

  B Due April 1, 2003

  	

   

  	

  $

  	

  80

  	

   

  
	

   

  	

   

  	

   

  	

   

  
	

  Bank

  of North Dakota

  	

   

  	

   

  	

   

  
	

  Due

  February 20, 2003

  	

   

  	

  $

  	

  800

  	

   

  
	

   

  	

   

  	

   

  	

   

  
	

  Total

  	

   

  	

  $

  	

  18,045

  	

   

  

 

American Crystal Sugar Company

Short Term Debt

(In Thousands)

November 30, 2002

 

	

  Total

  Seasonal Loan, CoBank

  	

   

  	

  $

  	

  46,000

  	

   

  
	

   

  	

   

  	

   

  	

   

  
	

  Total

  Commercial Paper

  	

   

  	

  $

  	

  149,040

  	

   

  
	

   

  	

   

  	

   

  	

   

  
	

  Total

  Seasonal Debt

  	

   

  	

  $

  	

  195,040

  	

   

  

 

     

[FORM OF NOTE]

 

AMERICAN CRYSTAL

SUGAR COMPANY

 

4.78% SENIOR

SECURED GUARANTEED NOTES, DUE FEBRUARY 1, 2010

 

	

  No.

  [         ]

  	

   

  	

  [Date]

  
	

  $[             ]

  	

   

  	

  PPN                 

  

 

FOR VALUE RECEIVED, the

undersigned, AMERICAN CRYSTAL SUGAR COMPANY (herein called the “Company”), a

cooperative corporation organized and existing under the laws of the State of

Minnesota, hereby promises to pay to

[                       ],

or registered assigns, the principal sum of

[                  ]

DOLLARS on [             ,

           ], with

interest (computed on the basis of a 360-day year of twelve 30-day months) (a)

on the unpaid balance thereof at the rate of 4.78% per annum from the date

hereof, payable monthly, on the first day of each calendar month in each year,

commencing with March 1, 2003, until the principal hereof shall have become due

and payable, and (b) to the extent permitted by law on any overdue payment

(including any overdue prepayment) of principal, any overdue payment of

interest and any overdue payment of any Make-Whole Amount (as defined in the

Note Purchase Agreements referred to below), payable monthly as aforesaid (or,

at the option of the registered holder hereof, on demand), at a rate per annum

from time to time equal to the greater of (i) 6.78%  or (ii) 2% over the rate of

interest publicly announced by Citibank N.A. from time to time in New York City

as its “base” or “prime” rate.

 

Payments of principal of,

interest on and any Make-Whole Amount with respect to this Note are to be made

in lawful money of the United States of America at the principal office of

Citibank, N.A. in New York, New York or at such other place as the Company

shall have designated by written notice to the holder of this Note as provided

in the Note Purchase Agreements referred to below.

 

This Note is one of a

series of Senior Secured Guaranteed Notes (herein called the “Notes”) issued

pursuant to separate Note Purchase Agreements, dated as of January 15, 2003 (as

from time to time amended, the “Note Purchase Agreements”), between the Company

and the respective Purchasers named therein and is entitled to the benefits

thereof.  Each holder of this Note will

be deemed, by its acceptance hereof, (i) to have agreed to the confidentiality

provisions set forth in Section 20 of the Note Purchase Agreements and (ii) to

have made the representation set forth in Section 6.2 of the Note Purchase

Agreements.

 

This Note is a registered

Note and, as provided in the Note Purchase Agreements, upon surrender of this

Note for registration of transfer, duly endorsed, or accompanied by a written

instrument of transfer duly executed, by the registered holder hereof or such

holder’s attorney duly authorized in writing, a new Note for a like principal

amount will be issued to, and registered in the name of, the transferee.  Prior to due presentment for registration of

transfer, the Company may treat the person in whose name this Note is

registered as the owner hereof for the 

 

Exhibit 1

(to Note Purchase

Agreement)

 

 

purpose of receiving

payment and for all other purposes, and the Company will not be affected by any

notice to the contrary.

 

The Company will make

required prepayments of principal on the dates and in the amounts specified in

the Note Purchase Agreements. This Note is also subject to optional prepayment,

in whole or from time to time in part, at the times and on the terms specified

in the Note Purchase Agreements, but not otherwise.

 

If an Event of Default,

as defined in the Note Purchase Agreements, occurs and is continuing, the

principal of this Note may be declared or otherwise become due and payable in

the manner, at the price (including any applicable Make-Whole Amount) and with

the effect provided in the Note Purchase Agreements.

 

This Note is equally and

ratably secured by the Collateral (as defined in the Intercreditor and

Collateral Agency Agreement).  Reference

is hereby made to the Intercreditor and Collateral Agency Agreement for a

description of the collateral thereby mortgaged, warranted, bargained, sold,

released, conveyed, assigned, transferred, pledged and hypothecated, the nature

and extent of the security for the Notes, the rights of the holders of the

Notes, the Collateral Agent (as defined in the Note Purchase Agreements) in

respect of such security and otherwise.

 

Pursuant to the Guarantee

Agreement, Sidney Sugars Incorporated, a Minnesota corporation has irrevocably,

absolutely and unconditionally guaranteed payment in full of the principal of,

Make-Whole Amount, if any, and interest on this Note and performance by the

Company of all of its obligations contained in the Note Purchase Agreements.

 

This Note shall be

construed and enforced in accordance with, and the rights of the parties shall

be governed by, the law of the State of New York excluding choice-of-law

principles of the law of such State that would require the application of the

laws of a jurisdiction other than such State.

 

PURSUANT TO NORTH DAKOTA CENTURY CODE

SECTION 32-19-06.1, THE COMPANY IS HEREBY PUT ON NOTICE THAT THE SECURED

PARTIES (AS DEFINED IN THE NOTE PURCHASE AGREEMENTS) MAY HAVE THE RIGHT TO

PROCEED TO OBTAIN AND COLLECT A DEFICIENCY JUDGMENT, TOGETHER WITH FORECLOSURE

OF THE REAL PROPERTY MORTGAGED UNDER APPLICABLE LAWS.

 

 

	

   

  	

  AMERICAN CRYSTAL SUGAR

  COMPANY

  
	

   

  	

   

  
	

   

  	

   

  
	

   

  	

  By:

  	

   

  	

   

  
	

   

  	

  Name:

  	

   

  	

   

  
	

   

  	

  Title:

  	

   

  	

   

  
								

 

 

REPRESENTATION

AND WARRANTIES OF GUARANTOR

 

The Guarantor represents

and warrants to each Purchaser as follows:

 

1.                                       Subsidiaries.  The

Guarantor has, directly and indirectly, good and marketable title to all of the

shares it purports to own of the stock of each of its subsidiaries, free and

clear in each case of any Lien.  All

such shares have been duly issued and are fully paid and non-assessable.

 

2.                                       Organization

and Authority.  The

Guarantor, and each of its subsidiaries,

 

(a)                                  is

a corporation or general partnership, duly incorporated, or duly organized, as

the case may be, amalgamated or continued, validly existing and in good

standing and has duly made all registrations and filings required given the

nature of its business under the laws of its jurisdiction of incorporation or

organization and has paid all taxes as are necessary to maintain its corporate

or partnership existence, as the case may be;

 

(b)                                 has

all requisite power and authority and all necessary licenses and permits to own

and operate its properties and to carry on its business as now conducted, where

failure to do so would materially affect adversely the business, properties,

profits or financial condition of the Guarantor or any of its subsidiaries; and

 

(c)                                  is

duly licensed or qualified and is in good standing as a foreign corporation in

each jurisdiction wherein the nature of the business transacted by it or the

nature of the property owned or leased by it makes such licensing or

qualification necessary, where failure to do so would materially affect

adversely the business, properties, profits or financial condition of the

Guarantor or any of its subsidiaries.

 

3.                                       Full

Disclosure.  Neither

the Guarantee Agreement, the Security Documents to which the Guarantor is a

signatory nor any other written statement furnished by the Guarantor to such

Purchaser in connection with the negotiation of the Guarantee Agreement and the

Security Documents to which the Guarantor is a signatory, contains any untrue

statement of a material fact or omits a material fact necessary to make the

statements contained therein or herein not misleading.  To the knowledge of the Guarantor after due

inquiry, there is no fact peculiar to the Guarantor or its subsidiaries which

the Guarantor has not disclosed to such Purchaser in writing which materially

affects adversely nor, so far as the Guarantor can now foresee, will materially

affect adversely the properties, business, profits or financial condition of

the Guarantor and its subsidiaries, taken as a whole.

 

4.                                       Pending

Litigation.  There

are no proceedings pending or, to the knowledge of the Guarantor, threatened

against or affecting the Guarantor or any of its subsidiaries in any court or

before any governmental authority or arbitration board or tribunal are

reasonably likely to materially affect adversely the properties, business,

profits or financial condition of the Guarantor and its subsidiaries.

 

1

 

5.                                       Title

to Properties.  The Guarantor and each of its subsidiaries

has good and marketable title in fee simple (or its equivalent under applicable

law) to all material parcels of real property and has good title to all the

other material items of property it purports to own, except as sold or

otherwise disposed of in the ordinary course of business and except for Liens

permitted by this Agreement.

 

6.                                       Patents

and Trademarks.  The

Guarantor and each of its subsidiaries owns, possesses or has the right to use

all the patents, trademarks, trade names, service marks, copyright, licenses

and rights with respect to the foregoing necessary for the present and planned

future conduct of its business, without any known conflict with the rights of

others.

 

7.                                       Compliance

is Legal and Authorized.  Compliance

by the Guarantor with all of the provisions of the Guarantee Agreement and the

Security Documents to which the Guarantor is a signatory—

 

(a)                                  is

within the corporate or partnership powers, as the case may be, of the

Guarantor;

 

(b)                                 will

not violate any provisions of any law or any order of any court or governmental

authority or agency and will not conflict with or result in any breach of any

of the terms, conditions or provisions of, or constitute a default under the

charter or other organizational documents of the Guarantor or any indenture or

other agreement or instrument to which the Guarantor is a party or by which it

may be bound or result in the imposition of any Liens or encumbrances on any

property of the Guarantor; and

 

(c)                                  has

been duly authorized by proper corporate or partnership action, as the case may

be, on the part of the Guarantor (no action by the stockholders or partners of

the Guarantor being required by law, by the charter or other organizational

documents of the Guarantor or otherwise), and such Guarantee Agreement and Security

Documents have been duly executed and delivered by the Guarantor and constitute

the legal, valid and binding obligations, contracts and agreements of the

Guarantor enforceable in accordance with its terms.

 

8.                                       No

Defaults.  Neither the Guarantor nor any of its

subsidiaries is in default in the payment of principal or interest on any Debt

or is in default under any instrument or instruments or agreements under and

subject to which any Debt has been issued, and no event has occurred and is

continuing under the provisions of any such instrument or agreement which with

the lapse of time or the giving of notice, or both, would constitute an event

of default thereunder.

 

9.                                       Governmental

Consent.  No

approval, consent or withholding of objection on the part of, or filing,

registration or qualification with, any governmental department, regulatory

authority or court under the laws of the United States or any agency or

authority thereof, state, Federal or local, is necessary in connection with the

lawful execution and delivery by the Guarantor of its Guaranty or compliance by

the Guarantor with any of the provisions of such Guarantee Agreement and the

Security Documents including, without limitation, payments to be made under

such Guarantee Agreement.

 

10.                                 Taxes.

The Guarantor and its subsidiaries have filed all tax returns that are

required to have been filed in any jurisdiction, and have paid all taxes shown

to be due and 

 

2

 

payable on such returns

and all other taxes and assessments levied upon them or their properties,

assets, income or franchises, to the extent such taxes and assessments have

become due and payable and before they have become delinquent, except for any

taxes and assessments (i) the amount of which is not individually or in

the aggregate material, or (ii) the amount, applicability or validity of

which is currently being contested in good faith by appropriate proceedings and

with respect to which the Guarantor or a subsidiary has established adequate

reserves in accordance with GAAP.  The

Guarantor knows of no basis for any other tax or assessment that could

reasonably be expected to have a material adverse effect.  The charges, accruals and reserves on the

books of the Guarantor and its subsidiaries in respect of Federal, state or

other taxes for all fiscal periods are adequate.  As applicable, the Federal income tax liabilities of the

Guarantor and its subsidiaries have been paid for all fiscal years up to and

including the fiscal year ended August 31. 

Guarantor was formed in October, 2002 and no income tax liabilities are

yet due for this fiscal year.

 

11.                                 Employee-Related

Matters.  (a) Each pension plan maintained by the

Guarantor or any of its subsidiaries complies in all material respects with all

applicable statutes and governmental rules and regulations.  The Guarantor and each of its subsidiaries

has satisfied their respective funding obligations as required by applicable

law for all pension plans maintained by them. 

All tax returns and reports required to be filed by or with respect to

the Guarantor’s and each of its subsidiaries’ pension plans in all applicable

jurisdictions have been filed.  Such

plans are (to the extent required under applicable law, rule or regulation)

registered under, and are in compliance with, applicable federal legislation

and all reports, returns and filings required to be made thereunder have been

made.  Such plans have been at all times

administered in accordance with their terms and the provisions of applicable law.  Neither the Guarantor nor any of its

subsidiaries has incurred a liability in connection with the winding-up of a

pension plan or the withdrawal from a multiemployer plan which would have a

Material adverse effect on the properties, business, profits or condition

(financial or otherwise) of the Guarantor and each of its subsidiaries taken as

a whole or impair the ability of the Guarantor or any of its subsidiaries to

perform its respective obligations contained in the Guarantee Agreement and the

Security Documents to which the Guarantor is a signatory.  There are no controversies pending or, to

the knowledge of the Guarantor, threatened or anticipated between the Guarantor

and any of its employees which would have a material adverse effect on the

properties, business, profits or condition (financial or otherwise) of the

Guarantor or any of its subsidiaries or would materially impair the ability of

the Guarantor or any of its subsidiaries to perform its obligations contained

in the Guarantee Agreement and the Security Documents to which the Guarantor is

a signatory and there are no material labor disputes, grievances, arbitration

proceedings or any strikes, work stoppages or slow downs pending or, to the

Guarantor’s knowledge, threatened by the Guarantor’s employees and

representatives.

 

(b)                                 The

consummation of the transactions provided for in the Guarantee Agreement and

the Security Documents to which the Guarantor is a signatory and compliance by

the Guarantor with the provisions thereof will not involve any prohibited

transaction within the meaning of ERISA or Section 4975 of the Internal

Revenue Code of 1986, as amended.  No

Reportable Event has occurred and is continuing with respect to any Plan.  Neither the Guarantor nor any ERISA

Affiliate has withdrawn from any Plan or Multiemployer Plan or instituted steps

 

3

 

to

do so and no steps have been instituted to terminate any Plan.  No condition exists or event or transaction

has occurred in connection with any Plan which could result in the incurrence

by the Guarantor or any ERISA Affiliate of any material liability, fine or

penalty.  No Plan maintained by the

Guarantor or any ERISA Affiliate, nor any trust created thereunder, has

incurred any “accumulated funding deficiency” as defined in Section 302 of

ERISA nor does the present value of all benefits vested under all Plans exceed,

as of the last annual valuation date, the value of the assets of the Plans

allocable to such vested benefits. 

Neither the Guarantor nor any ERISA Affiliate has any contingent

liability with respect to any post-retirement “welfare benefit plan” (as such

term is defined in ERISA) except as has been disclosed to the Purchasers.

 

12.                                 Compliance

with Law.  Neither

the Guarantor nor any of its subsidiaries (a) is in violation of any law,

ordinance, franchise, governmental rule or regulation to which it is subject;

or (b) has failed to obtain any license, permit, franchise or other

governmental authorization necessary to the ownership of its property or to the

conduct of its business, which violation or failure to obtain would materially

adversely affect the business, prospects, profits, properties or condition

(financial or otherwise) of the Guarantor and its subsidiaries, taken as a whole,

or impair the ability of the Guarantor to perform its obligations contained in

the Guarantee Agreement and the Security Documents to which the Guarantor is a

signatory.  Neither the Guarantor nor

any of its subsidiaries is in default with respect to any order of any court or

governmental authority or arbitration board or tribunal.

 

13.                                 Compliance

with Environmental Laws.  Except

as indicated in Section 9.8(c), neither the Guarantor nor any of its

subsidiaries is in violation of any applicable United States Federal,

state, or local laws, statutes, rules, regulations or ordinances relating to

public health, safety or the environment, including, without limitation,

relating to releases, discharges, emissions or disposals to air, water, land or

ground water, to the withdrawal or use of ground water, to the use, handling or

disposal of polychlorinated biphenyls (PCBs), asbestos or urea formaldehyde, to

the treatment, storage, disposal or management of hazardous substances

(including, without limitation, petroleum, crude oil or any fraction thereof,

or other hydrocarbons), pollutants or contaminants, to exposure to toxic,

hazardous or other controlled, prohibited or regulated substances which

violation could materially affect adversely the business, profits, properties

or financial condition of the Guarantor and its subsidiaries, taken as a

whole.  The Guarantor does not know of

any liability or class of liability of the Guarantor or any of its subsidiaries

under the Comprehensive Environmental Response, Compensation and Liability Act

of 1980, as amended (42 U.S.C. Section 9601 et seq.), or the Resource

Conservation and Recovery Act of 1976, as amended (42 U.S.C. Section 6901 et seq.).

 

14.                                 Absence

of Foreign or Enemy Status.  (a) Neither the Guarantor nor any of its

subsidiaries on the date hereof, is (i) an “enemy” or an “ally of

enemy” within the meaning of Section 2 of the Trading with the

Enemy Act, (ii) a “national” of a foreign country designated in Executive Order

8389, as amended or of any “designated enemy country” as defined in Executive

Order No. 9095, as amended, of the President of the United States of America,

in each case within the meaning of said Executive Orders, as amended, or of any

regulation issued thereunder, or (iii) a “national of any designated

foreign country” within the meaning of the Foreign Assets Control Regulations

or of the Cuban Assets Control Regulations of the United States of America.

 

4

 

(b)                                 The

execution and delivery of the Guarantee Agreement and the Security Documents by

the Guarantor as contemplated hereby will not violate the Foreign Assets

Control Regulations, the Foreign Funds Control Regulations, the Transaction

Control Regulations, the Cuban Assets Control Regulations, the Iranian Assets

Control Regulations, the Libyan Sanctions Regulations, the South African

Transactions Regulations, or the Iraqi Sanctions Regulations of the United

States Treasury Department (each as set forth in 31 C.F.R., Subtitle B,

Chapter V, as amended).

 

(c)

Neither the Guarantor nor any of its subsidiaries on the date hereof is a

person or entity described in Section 1 of Executive Order 13224, of September

24, 2002, and, to the best knowledge of the Guarantor, neither the Guarantor

nor any of its subsidiaries engage, and will not engage in, dealings or

transactions with, or are or will be associated with, any such Person or

entities.

 

15.                                 Consolidated

and Integrated Business.  The Company and the Guarantor prepare

consolidated financial statements and do their financial reporting on an

integrated basis.  Both the Company and

the Guarantor process sugar beets into refined sugar and sugar

by-products.  The proceeds received by

the Company from the sale of the Notes will be used by the Company to repay indebtedness

incurred by the Company to finance the acquisition of the Guarantor’s operating

assets.  The reduction in the Company’s

indebtedness will permit the Company to have additional liquidity and capacity

to continue to lend money to Guarantor.

 

16.                                 Solvency

and Consideration.  (a) The Guarantor is solvent, has

capital not unreasonably small in relation to its business or any contemplated

or undertaken transaction and has assets having a value both at fair valuation

and at present fair salable value greater than the amount required to pay its

debts as they become due and greater than the amount that will be required to

pay its probable liability on its existing debts as they become absolute and

matured.  The Guarantor does not intend

to incur, or believes or should have believed that it will incur, debts beyond

its ability to pay such debts as they become due.  The Guarantor will not be rendered insolvent by the execution and

delivery of, and performance of its obligations under, the Guarantee Agreement

and the Security Documents to which the Guarantor is a signatory.  the Guarantor does not intend to hinder,

delay or defraud its creditors by or through the execution and delivery of, or

performance of its obligations under, the Guarantee Agreement and the Security

Documents to which the Guarantor is a signatory.

 

(b)                                 The

Guarantor has determined that the execution and delivery of the Guarantee

Agreement and the Security Documents to which the Guarantor is a signatory is

in furtherance of its corporate purposes and is in its best interest and that

it will derive substantial benefit, whether directly or indirectly, from the

making of such Guarantee Agreement and the Security Documents (i) by,

among other things, (1) enabling its direct or indirect parent company to

obtain financing deemed necessary and beneficial by such parent company for

general, consolidated corporate purposes and (2) enabling it to increase

its capitalization on a consolidated basis and (ii) in accordance with its

participation in the consolidated and integrated business described in

paragraph 15 hereof.

 

17.                                 Guarantee

Agreement to Rank Pari Passu.  The Guarantee Agreement to which the

Guarantor is a party and all other obligations thereunder are direct and

unsecured obligations 

 

5

 

of

the Guarantor ranking pari passu as against all other present

and future Debt (actual or contingent) of the Guarantor which is not secured or

the subject of any statutory trust or preference or which is not expressed to

be subordinate or junior in rank to any other Debt of the Guarantor.

 

18.                                 Investment

Company Act.  The

Guarantor is not, and is not directly or indirectly controlled by or acting on

behalf of any Person which is, required to register as an “investment company” under

the Investment Company Act of 1940, as amended.

 

19.                                 Public

Utility Holding Company Act.  The Guarantor is not, nor will it become,

solely by reason of entering into or performing its obligations under the

Guarantee Agreement to which it is a party or the carrying out of any of the

transactions contemplated thereby, a “public utility company” or a “holding

company” under the Public Utility Holding Company Act of 1935, as amended.

 

6

     

DESCRIPTION OF CLOSING

OPINION OF COUNSEL TO THE COMPANY AND THE GUARANTOR

 

The closing opinion of

Oppenheimer, Wolff & Donnelley, special counsel to the Company and the

Guarantor, which is called for by Section 4.4(a) of the Note Purchase

Agreement, shall be dated the date of Closing and addressed to the Purchasers,

shall be satisfactory in scope and form to the Purchasers and shall be to the

effect that:

 

1.                                       The

Company is a cooperative, duly organized, validly existing and in good standing

under the laws of the State of Minnesota, has the corporate power and the

corporate authority to execute and perform the Note Purchase Agreements, the

First Amendment 1998 Note Purchase Agreement and the Existing Mortgage and to

issue the Notes and has the full corporate power and the corporate authority to

conduct the activities in which it is now engaged and is duly licensed or

qualified and is in good standing as a foreign corporation in the State of

North Dakota.

 

2.                                       The

Guarantor is a corporation, duly organized, validly existing and in good

standing under the laws of the State of Minnesota, has the corporate power and

the corporate authority to execute and perform the Guarantees and the Sidney

Mortgage and has the full corporate power and the corporate authority to

conduct the activities in which it is now engaged and is duly licensed or

qualified and is in good standing as a foreign corporation in Montana, Texas

and Wyoming and all of the issued and outstanding shares of capital stock of

the Guarantor have been duly issued, are fully paid and non-assessable and are

owned by the Company.

 

3.                                       The

Transaction Documents have been duly authorized by all necessary corporate

action on the part of the Company or the Guarantor, as applicable, have been

duly executed and delivered by the Company or the Guarantor, as applicable, and

constitute the legal, valid and binding contracts of the Company and the

Guarantor, as applicable, enforceable in accordance with its terms.

 

4.                                       The

Notes have been duly authorized by all necessary corporate action on the part

of the Company, have been duly executed and delivered by the Company and

constitute the legal, valid and binding obligations of the Company enforceable

in accordance with their terms.

 

 

EXHIBIT 4.4(a)

(to Note Purchase Agreement)

 

 

5.                                       No

approval, consent or withholding of objection on the part of, or filing,

registration or qualification with, any governmental body, Federal, state or

local, is necessary in connection with the execution, delivery and performance

of the Transaction Documents.

 

6.                                       The

issuance and sale of the Notes, and the execution, delivery and performance by

the Company or the Guarantor, as applicable, of the Note Purchase Agreements,

the Existing Mortgage, the Sidney Mortgage, the First Amendment 1998 Note

Purchase Agreement and the Guarantees do not conflict with or result in any

breach of any of the provisions of or constitute a default under or result in

the creation or imposition of any Lien upon any of the property of the Company

or the Guarantor, as applicable, pursuant to the provisions of the Articles of

Incorporation or By-laws of the Company and the Guarantor, as applicable, or to

our actual knowledge, except for the consents from existing lenders required

under the Note Purchase Agreement, any agreement or other instrument to which

the Company or the Guarantor, as applicable, is a party or by which the Company

or the Guarantor, as applicable, may be bound.

 

7.                                       The

issuance, sale and delivery of the Notes under the circumstances contemplated

by the Note Purchase Agreements does not, under existing law, require the

registration of the Notes under the Securities Act of 1933, as amended, or the

qualification of an indenture under the Trust Indenture Act of 1939, as

amended.

 

8.                                       The

issuance of the Notes and the use of the proceeds of the sale of the Notes in

accordance with the provisions of and contemplated by the Note Purchase

Agreements do not violate or conflict with Regulation  T, U or X of the Board of Governors of the Federal Reserve

System.

 

9.                                       There

is no litigation pending or, to the best knowledge of such counsel, threatened

which in such counsel’s opinion could reasonably be expected to have a

materially adverse effect on the Company’s or the Guarantor’s business or

assets or which would impair the ability of the Company to issue and deliver

the Notes or the ability of the Company or the Guarantor to comply with the

provisions of the Note Purchase Agreements, the Guarantees, the Existing

Mortgage or the Sidney Mortgage, as applicable.

 

10.                                 The

Existing Mortgage constitutes a legal, valid and binding contract and agreement

of the Company enforceable in accordance with its respective terms.

 

11.                                 The

Existing Mortgage as of the Closing is in proper form under Minnesota and North

Dakota law, as applicable, such that when it shall be recorded or filed for

record in all public offices wherein such filing or recordation is necessary,

the lien thereof shall be perfected against creditors of and purchasers from

the Company or the Guarantor, as applicable; all UCC financing statements

executed and delivered by the Company or the Guarantor, as applicable, relating

to the transaction contemplated by the Transaction Documents on or prior to the

Closing are in proper form under applicable law, as applicable, have been filed

for record in the appropriate public offices and, as a result of such filings

and upon such filings being properly indexed the security interests which can

be perfected by filing and which are 

 

2

 

created under the Existing Mortgage and the Sidney

Mortgage will have been perfected as against creditors of the Company or the

Guarantor, as applicable, or purchasers from the Company or the Guarantor, as

applicable, of the property subject to such security interests.

 

The opinion of

Oppenheimer, Wolff & Donnelley shall cover such other matters relating to

the sale of the Notes as the Purchasers may reasonably request.  With respect to matters of fact on which

such opinion is based, such counsel shall be entitled to rely on appropriate

certificates of public officials and officers of the Company and of the

Guarantor.

 

3

     

DESCRIPTION OF SPECIAL

COUNSEL’S CLOSING OPINION

 

The closing opinion of

McDermott, Will & Emery, special counsel to the Purchasers, called for by Section 4.4(b)

of the Note Purchase Agreements shall be dated the date of Closing and

addressed to the Purchasers, shall be satisfactory in form and substance to the

Purchasers and shall be to the effect that:

 

1.                                       The

Note Purchase Agreements have been duly authorized by all necessary corporate

action on the part of the Company, have been duly executed and delivered by the

Company and constitute the legal, valid and binding contracts of the Company

enforceable in accordance with its terms, subject to bankruptcy, insolvency,

fraudulent conveyance or similar laws affecting creditors’ rights generally,

and general principles of equity (regardless of whether the application of

principles is considered in a proceeding in equity or at law).

 

2.                                       The

Notes have been duly authorized by all necessary corporate action on the part

of the Company, have been duly executed and delivered by the Company and

constitute the legal, valid and binding obligations of the Company enforceable

in accordance with their terms, subject to bankruptcy, insolvency, fraudulent

conveyance or similar laws affecting creditors’ rights generally, and general

principles of equity (regardless of whether the application of such principles

is considered in a proceeding in equity or at law).

 

3.                                       The

issuance, sale and delivery of the Notes under the circumstances contemplated

by the Note Purchase Agreement does not, under existing law, require the

registration of the Notes under the Securities Act of 1933, as amended, or the

qualification of an indenture under the Trust Indenture Act of 1939, as

amended.

 

The opinion of McDermott,

Will & Emery shall also state that the opinion of Oppenheimer, Wolff &

Donnelley is satisfactory in scope and form to McDermott, Will & Emery and

that, in their opinion, the Purchasers are justified in relying thereon.

 

In rendering the opinion

set forth in paragraphs 1 and 2 above with respect to the authorization of the

Note Purchase Agreements and the Notes, McDermott, Will & Emery may rely

solely upon an examination of the secretarial and incumbency certificate and

the corporate resolutions of the Company and the opinion of Oppenheimer, Wolff

& Donnelley.  The opinion of

McDermott, Will & Emery is limited to the laws of the State of New York and

the Federal laws of the United States.

 

With respect to matters

of fact upon which such opinion is based, McDermott, Will & Emery may rely

on appropriate certificates of public officials and officers of the Company.

 

 

EXHIBIT 4.4(b)

(to Note Purchase

Agreement)

 

 

     

 

DESCRIPTION OF CLOSING

OPINION OF SPECIAL LOCAL COUNSEL TO THE PURCHASERS

 

The closing opinion of

Holland & Hart, special Montana counsel and Oppenheimer, Wolff &

Donnelly, special Minnesota and North Dakota counsel to the Purchasers, which

is called for by Section 4.4(c) of the Note Purchase Agreement, shall be

dated the date of Closing and addressed to the Purchasers, shall be

satisfactory in scope and form to the Purchasers and shall be to the effect

that:

 

1.                                       Assuming

the Existing Mortgage to which the Company is a party, and the Sidney Mortgage

to which the Guarantor is a party, have been duly authorized by proper

corporate action on the part of the Company or the Guarantor, as applicable,

have been duly executed and delivered by authorized officers of the Company or

the Guarantor, as applicable, the Existing Mortgage to which the Company is a

party, and the Sidney Mortgage to which the Guarantor is a party, constitute

legal, valid and binding contracts and agreements of the Company or the

Guarantor, as applicable, enforceable in accordance with their respective

terms, except as enforcement of such terms may be limited by (i) bankruptcy,

insolvency or similar laws effecting the enforcement of creditors’ rights

generally, (ii) equitable principles of general applicability (regardless of

whether such enforceability is considered in a preceding in equity or at law),

and (iii) except that certain remedies provided for in the Existing Mortgage or

the Sidney Mortgage, as applicable, may be limited by applicable law, but none

of such limitations as to remedies will, however, in their opinion, materially

interfere with the practical realization of the security provided by the

Existing Mortgage or the Sidney Mortgage, as applicable.

 

2.                                       No

approval, consent or withholding of objection on the part of, or filing,

registration or qualification with, any Minnesota, North Dakota or Montana

governmental body, state or local, is necessary in connection with the execution,

delivery and performance by the Company or the Guarantor, as applicable, of the

Note Purchase Agreements, the Notes, the Guaranty, the Existing Mortgage or the

Sidney Mortgage.

 

3.                                       The

Existing Mortgage or the Sidney Mortgage, as applicable, and financing

statements or similar notices thereof have been recorded and filed for record

in all public offices wherein such filing or recordation is necessary to

perfect the lien thereof against creditors of and purchasers from the Company

or the Guarantor, as applicable.

 

4.                                       When

the Existing Mortgage or the Sidney Mortgage, as applicable, has been recorded

in the real estate records in the County in which the property is located and

when UCC-1 financing statements in a form provided by the applicable state law

have been filed with the office of the Secretary of State of Minnesota and the

Secretary of State of North Dakota, or the Secretary of State of Montana, as

applicable, and in the real estate records in the county in which the property

is located, the Existing Mortgage or Sidney Mortgage, as applicable, (or

financing statements with respect thereto) shall have been recorded or filed in

all public offices wherein such filing or recordation is necessary to perfect

the lien or security interest thereof as against creditors of and purchasers

from the Company or the Guarantor, as applicable.  Except for the necessity of filing continuation statements with

respect to such financing statements prior to five years from the date of

filing thereof and prior to each fifth year thereafter, no further filings or 

 

EXHIBIT 4.4(c)

 

 

recordings are necessary

to create or perfect the liens and security interests granted under such

documents.

 

The opinion of Holland

& Hart is limited to the laws of the State of Montana and the Federal laws

of the United States. The opinion of and Oppenheimer, Wolff & Donnelly is

limited to the laws of the State of Minnesota, 

the State of North Dakota and the Federal laws of the United States.

 

With respect to matters

of fact upon which such opinion is based, Holland & Hart and Oppenheimer,

Wolff & Donnelly may rely on appropriate certificates of public officials

and officers of the Company or the Guarantor, as applicable.

 

 

     

 

DESCRIPTION OF CLOSING

OPINION FOR COUNSEL FOR THE COLLATERAL AGENT

 

The closing opinion of

the Associate General Counsel of the Collateral Agent called for by Section

4.4(d) of the Note Purchase Agreement, shall be dated the date of

Closing and addressed to the Purchasers, shall be satisfactory in form and substance

to the Purchasers and shall be to the effect that:

 

1.                             The

Collateral Agent is a cooperation banking association validly existing under

the laws of the United States and is duly qualified to act as Collateral Agent

under the Intercreditor and Collateral Agency Agreement.

 

2.                             The

Collateral Agent has the requisite power and authority to execute, deliver and

perform its respective obligations under the Intercreditor and Collateral

Agency Agreement and has taken all necessary action to authorize the execution,

delivery and performance by it of each of the said agreements or instruments.

 

3.                             The

Intercreditor and Collateral Agency Agreement has been duly authorized,

executed and delivered by the Collateral Agent and constitutes the legal, valid

and binding contract of the Collateral Agent enforceable against the Collateral

Agent in accordance with its terms, subject to bankruptcy, insolvency,

fraudulent conveyance and similar laws affecting creditors’ rights generally,

and general principles of equity (regardless of whether the application of such

principles is considered in a proceeding in equity or at law).

 

4.                             No

authorization, consent, approval, license, exemption of or filing or

registration with any court or governmental department, commission, board, bureau,

agency or instrumentality by the Collateral Agent or any affiliate thereof is

necessary to the valid execution, delivery or performance of the Intercreditor

and Collateral Agency Agreement.

 

The opinion of the

Associate General Counsel of the Collateral Agent shall cover such other

matters relating to the transactions contemplated by the Note Purchase

Agreements as the Purchasers may reasonably request.  With respect to matters of fact on which such opinion is based,

such counsel shall be entitled to rely on appropriate certificates of public

officials and other officers of the parties involved in the transaction.

 

 

EXHIBIT 4.4(d)

(to Note Purchase

Agreement)

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