Document:

Exhibit
10.31

 

MLA No. Z269F

 

AMENDED
AND RESTATED

MASTER LOAN AGREEMENT

 

THIS AMENDED AND
RESTATED MASTER LOAN AGREEMENT (“Agreement”) is
entered into as of July 21, 2003, between CoBANK, ACB (“CoBank”) and AMERICAN
CRYSTAL SUGAR COMPANY, Moorhead, Minnesota (the “Company”), and
amends and restates that Master Loan Agreement dated as of March 31, 2000.

 

BACKGROUND

 

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

 

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

 

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

 

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

 

 

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

 

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

 

SECTION 5.                            Security.  The Company’s obligations under this
Agreement, all Supplements (whenever executed), and all instruments and
documents contemplated hereby or thereby, shall be secured by a statutory first
lien on all equity which the Company may now own or hereafter acquire in
CoBank. This security shall be in addition to any other security that may
otherwise be required or provided.

 

SECTION 6.                            Conditions
Precedent.

 

(A)                               Conditions
to Initial Supplement. 
CoBank’s obligation to extend credit under the initial Supplement hereto
is subject to the conditions precedent that CoBank receive, in form and
substance satisfactory to CoBank, each of the following:

 

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

 

(ii)                                Opinion of Counsel.  A favorable opinion from the Company’s
counsel addressed to CoBank covering each matter as CoBank may reasonably
require.

 

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

 

(B)                               Conditions
to Each Supplement.  CoBank’s
obligation to extend credit under each Supplement, including the initial
Supplement, is subject to the conditions precedent that CoBank receive, in form
and content satisfactory to CoBank, each of the following:

 

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

 

(ii)                                Fees and
Other Charges.  All fees and
other charges specifically permitted by this Agreement or the Supplements, as
well as reasonable expenses for outside counsel.

 

(iii)                            Evidence of
Perfection, Etc. Such evidence as CoBank may require that CoBank has
a duly perfected first priority lien on all security for the Company’s
obligations, and that the Company is in compliance with Section 8(D) hereof.

 

2

 

(C)                               Conditions
to Each Loan.  CoBank’s
obligation under each Supplement to make any loan to the Company thereunder is
subject to the condition that no “Event of Default” (as defined in Section 11
hereof) or event that with the giving of notice and/or the passage of time
would become an Event of Default hereunder (a “Potential Default”), shall have
occurred and be continuing.

 

SECTION 7.                            Representations
and Warranties.

 

(A)                               Compliance
With Agreement. The Company represents and warrants to CoBank that
as of the date of this Agreement the Company and, to the extent contemplated
hereunder, each Subsidiary (as defined in Section 10(D)(xix) below), is in
compliance with all of the terms of this Agreement, and no Event of Default or
Potential Default exists hereunder.

 

(B)                               Each
Supplement.  The execution by
the Company of each Supplement hereto shall constitute a representation and
warranty to CoBank that:

 

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

 

(ii)                                Conflicting
Agreements, Etc.  This
Agreement, the Supplements, and all security and other instruments and
documents relating hereto and thereto (collectively, at any time, the “Loan
Documents”), do not conflict with, or require the consent of any party to, any
other Agreement to which the Company is a party or by which it or its property
may be bound or affected, and do not conflict with any provision of the
Company’s bylaws, articles of incorporation, or other organizational documents.

 

(iii)                            Compliance.  The Company and, to the extent contemplated
hereunder, each Subsidiary, is in compliance with all of the terms of the Loan
Documents (including, without limitation, Section 8(A) of this Agreement on
eligibility to borrow from CoBank).

 

(iv)                               Binding
Agreement.  The Loan
Documents create legal, valid, and binding obligations of the Company that are
enforceable in accordance with their terms, except to the extent that
enforcement may be limited by applicable bankruptcy, insolvency, or similar
laws affecting creditors’ rights generally.

 

SECTION 8.                            Affirmative
Covenants.  Unless otherwise
agreed to in writing by CoBank, while this Agreement is in effect, the Company
agrees to, and with respect to Subsections 8(B) through 8(G) and 8(H)(v)-(ix)
hereof, agrees to cause each Subsidiary to:

 

(A)                               Eligibility.  Maintain its status as an entity eligible to
borrow from CoBank.

 

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

 

3

 

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

 

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

 

(E)                                 Property
Maintenance.  Maintain all of
its property that is necessary to or useful in the proper conduct of its
business in good working condition, ordinary wear and tear excepted.

 

(F)                                 Books and
Records.  Keep adequate
records and books of account in which complete entries will be made in
accordance with generally accepted accounting principles (“GAAP”) consistently
applied.

 

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

 

(H)                               Reports and
Notices.  Furnish to CoBank:

 

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

 

(ii)                                Interim
Financial Statements.  As
soon as available after the end of each quarter, but in no event more than 5
days after the Company’s quarterly filing with the Securities Exchange
Commission, a balance sheet of the Company and its consolidated Subsidiaries,
if any, as of the end of such fiscal quarter, a statement of income for the
Company and its consolidated Subsidiaries, if any, for such period and for the
period year to date, and such other interim statements as CoBank may
specifically request, all prepared in reasonable detail and in comparative form
in accordance with GAAP consistently applied.

 

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

 

4

 

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

 

(v)                                   Notice of Default.  Promptly after becoming
aware thereof, notice of the occurrence of an Event of Default or a Potential
Default.

 

(vi)                               Notice of
Non-Environmental Litigation. 
Promptly after the commencement thereof, notice of the commencement of
all actions, suits, or proceedings before any court, arbitrator, or
governmental department, commission, board, bureau, agency, or instrumentality
affecting the Company or any Subsidiary which, if determined adversely to the
Company or any such Subsidiary, could have a material adverse effect on the
financial condition, properties, profits, or operations of the Company or any
such Subsidiary.

 

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

 

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

 

(ix)                              Other
Information.  Such other
information regarding the condition or operations, financial or otherwise, of
the Company or any Subsidiary as CoBank may from time to time reasonably
request, including but not limited to copies of all pleadings, notices, and
communications referred to in Subsections 8(H)(vi) and (vii) above.

 

(x)                                  Officer
Certificate.  A quarterly
officers certificate within 45 days of each fiscal quarter end, in a form
acceptable to CoBank, certified by an officer of the Company, that measures
compliance with Minimum Net Working Capital; Interest Coverage Ratio and Long
Term Debt to Capitalization. (Section 10 (A) & (B) & (C)).

 

(I)                                    Grower
Agreements.  The Company
shall abide by the terms and conditions of its member grower agreements; make
no material amendments or changes to the agreements without the written consent
of the Bank; and extend the agreements for an additional five years when the
current contracts expire.

 

5

 

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

 

(i)                                    Annual
Financial Statements. As soon as available, but in no event more than 120 days
after the end of each fiscal year of Crystech occurring during the term hereof,
annual financial statements of Crystech prepared in accordance with GAAP
consistently applied. Such financial statements shall: (a) be audited by
independent certified public accountants selected by Crystech and acceptable to
CoBank; (b) be accompanied by a report of such accountants containing an
opinion thereon acceptable to CoBank; (c) be prepared in reasonable detail and
in comparative form; and (d) include a balance sheet, a statement of income, a
statement of retained earnings, a statement of cash flows, and all notes and
schedules relating thereto.

 

(ii)                                Interim
Financial Statements. As soon as available, but in no event more than 60 days
after the end of each quarter, a balance sheet of Crystech as of the end of
such fiscal quarter, a statement of income for Crystech for such period and for
the period year to date, and such other interim statements as CoBank may
specifically request, all prepared in reasonable detail and in comparative form
in accordance with GAAP consistently applied.

 

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

 

SECTION 9.                            Negative
Covenants.

 

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

 

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

 

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

 

6

 

ordinary course of business as conducted on the date hereof; (e) Liens
imposed by Law in favor of mechanics, materialmen, warehousemen, and like
persons that secure obligations that are not past due or that are being
contested in good faith by the Company or Subsidiary, as applicable; (f) Liens
created in connection with the Note Purchase Agreements described in subsection
9(A)(i) above (provided that said Liens shall be shared with CoBank in a manner
acceptable to CoBank); and (g) easements, rights-of-way, restrictions, and
other similar encumbrances which, in the aggregate, do not materially interfere
with the occupation, use, and enjoyment of the property or assets encumbered
thereby in the normal course of its business or materially impair the value of
the property subject thereto except for the permitted Liens identified on
Attachment B, without the prior written consent of the Bank.  In addition, the Company agrees that it will
not agree to a negative pledge with any other lender or third party.

 

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

 

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

 

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

 

(vi)                               Contingent
Liabilities.  Assume,
guarantee, become liable as a surety, endorse, contingently agree to purchase,
or otherwise be or become liable, directly or indirectly (including, but not
limited to, by means of a maintenance agreement, an asset or stock purchase
agreement, or any other agreement designed to ensure any creditor against
loss), for or on account of the obligation of any person or entity, except by
the endorsement of negotiable instruments for deposit or collection or similar
transactions in the ordinary course of the Company’s or Subsidiaries’ business
and except for (1) any liability on account of a Company guaranty of the
indebtedness of Midwest Agri Commodities; and (2) any guarantees created in
connection with the Note Purchase Agreements described in subsection 9(A)(i)
above.

 

(vii)                           Change in
Business.  Engage in any
business activities or operations substantially different from or unrelated to
the Company’s present business activities or operations.

 

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

 

7

 

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

 

SECTION 10.                     Financial
Covenants.  Unless otherwise
agreed to in writing, while this Agreement is in effect:

 

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

 

(B)                               Long Term
Debt to Capitalization.  The
Company and its Subsidiaries, on a consolidated basis, shall maintain at all
times and measured as of the end of each Fiscal Quarter a ratio of Long Term
Debt divided by the sum of Long Term Debt plus Equity of no greater than
fifty-five percent (55%).

 

(C)                               Interest
Coverage Ratio.  The Company
and its Subsidiaries, on a consolidated basis, shall maintain at all times, and
measured as of the end of each Fiscal Quarter, a minimum ratio of Average Net
Funds Generated plus Average Interest Expense to Average Interest Expense of
2.5:1

 

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

 

(i)                                    Average
Interest Expense shall mean 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), all determined on a consolidated
basis in accordance with GAAP, for the most recent twelve (12) Fiscal Quarters
divided by four (4).

 

(ii)                                Average Net
Funds Generated shall mean the sum of the following for the most
recent twelve (12) Fiscal Quarters divided by four (4):

 

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

 

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

 

(iii)                            Borrowing
Base shall mean a maximum dollar amount available to the Company
under the terms of the Commitment (as set forth in a Supplement) as determined
on the basis of the most recent Borrowing Base Certificate.

 

8

 

(iv)                               Borrowing
Base Certificate shall mean a certification of the value of
specified assets of the Company used in computing the Borrowing Base prepared
in a form acceptable to CoBank.

 

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

 

(vi)                               Current
Assets. The current assets of the Company and its Subsidiaries as
measured in accordance with GAAP.

 

(vii)                           Current
Liability shall mean the current liabilities of the Company and its
Subsidiaries as measured in accordance with GAAP.

 

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

 

(ix)                              Debt shall
mean as to any Person: (a) indebtedness or liability of such Person for
borrowed money, or for the deferred purchase price of property or services; (b)
obligations of such Person as lessee under capital leases; (c) obligations of
such Person arising under bankers’ or trade acceptance facilities; (d) all
guarantees, endorsements (other than for collection or deposit in the ordinary
course of business), and other contingent obligations of such Person to
purchase any of the items included in this definition, to provide funds for
payment, to supply funds to invest in any other Person, or otherwise to assure
a creditor of another Person against loss; (e) all obligations secured by a
lien on property owned by such Person, whether or not the obligations have been
assumed; and (f) all obligations of such Person under any agreement providing
for an interest rate swap, cap, cap and floor, contingent participation or
other hedging mechanisms with respect to interest payable on any of the items
described in this definition.

 

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

 

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

 

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

 

(xiii)                      GAAP shall mean generally accepted
accounting principles in effect from time to time.

 

(xiv)                         Interest Expense shall mean current cost of
borrowing funds that is shown as a financial expense in the income statement
and as measured in accordance with GAAP.

 

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

 

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

 

9

 

(xvii)                     Net Working
Capital shall mean the Total Current Assets minus the Total Current
Liabilities of the Company and its Subsidiaries as determined in accordance
with GAAP accounting principles, consistently applied.

 

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

 

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

 

SECTION 11.                     Events of
Default.  Each of the
following shall constitute an “Event of Default” under this Agreement:

 

(A)                               Payment
Default.  The Company should
fail to make any payment to, or to purchase any equity in, CoBank when due. Any
payment received by CoBank after its due date shall not be subject to an
increase in the interest rate, as provided for in Section 12 below, if the
Company is not responsible for the payment delay.

 

(B)                               Representations
and Warranties.  Any
representation or warranty made or deemed made by the Company herein or in any
Supplement, application, agreement, certificate, or other document related to
or furnished in connection with this Agreement or any Supplement, shall prove
to have been false or misleading in any material respect on or as of the date
made or deemed made.

 

(C)                               Certain
Affirmative Covenants.  The
Company or, to the extent required hereunder, any Subsidiary should fail to
perform or comply with Sections 8(A) through 8(H)(ii), 8(H)(viii), or any
reporting covenant set forth in any Supplement hereto, and such failure
continues for 15 days after written notice thereof shall have been delivered by
CoBank to the Company.

 

(D)                               Other
Covenants and Agreements. 
The Company or, to the extent required hereunder, any Subsidiary should
fail to perform or comply with any other covenant or agreement contained herein
or in any other Loan Document or shall use the proceeds of any loan for an
unauthorized purpose.

 

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

 

(F)                                 Other
Indebtedness.  The Company
or, to the extent required hereunder, any Subsidiary should fail to pay when
due any indebtedness to any other person or entity for borrowed money or any
long-term obligation for the deferred purchase price of property (including any
capitalized lease), or any other event occurs which, under any agreement or
instrument relating to such indebtedness or obligation,

 

10

 

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

 

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

 

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

 

(I)                                    Material
Adverse Change.  Any material
adverse change occurs, as reasonably determined by CoBank, in the Company’s
financial condition, results of operation, or ability to perform its
obligations hereunder or under any instrument or document contemplated hereby.

 

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

 

SECTION 12.                     Remedies.

 

(A)                               Rights.  Upon the occurrence and during the
continuance of an Event of Default or any Potential Default, CoBank shall have
no obligation to continue to extend credit to the Company and may discontinue
doing so at any time without prior notice. 
CoBank shall promptly notify the Company subsequent to any action to
discontinue extending credit to the Company. In addition, upon the occurrence
and during the continuance of any Event of Default, CoBank may, upon notice to
the Company, terminate any commitment and declare the entire unpaid principal
balance of the loans, all accrued interest thereon, and all other amounts
payable under this Agreement, all Supplements, and the other Loan Documents to
be immediately due and payable. Upon such a declaration, the unpaid principal
balance of the loans and all such other amounts shall become immediately due
and payable, without protest, presentment, demand, or further notice of any
kind, all of which are hereby expressly waived by the Company. In addition,
upon such an acceleration:

 

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

 

11

 

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

 

(ii)                                Application
of Funds.  CoBank may apply
all payments received by it to the Company’s obligations to CoBank in such
order and manner as CoBank may elect in its sole discretion.

 

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

 

SECTION 13.                     Broken
Funding Surcharge. 
Notwithstanding any provision contained in any Supplement giving the
Company the right to repay any loan prior to the date it would otherwise be due
and payable, the Company agrees to provide three Business Days’ prior written
notice for any prepayment of a fixed rate balance and that in the event it
repays any fixed rate balance prior to its scheduled due date or prior to the
last day of the fixed rate period applicable thereto (whether such payment is
made voluntarily, as a result of an acceleration, or otherwise), the Company
will pay to CoBank a surcharge in an amount which would result in CoBank being
made whole (on a present value basis) for the actual or imputed funding losses
incurred by CoBank as a result thereof 
Notwithstanding the foregoing, in the event any fixed rate balance is
repaid as a result of the Company refinancing the loan with another lender or
by other means, then in lieu of the foregoing, the Company shall pay to CoBank
a surcharge in an amount sufficient (on a present value basis) to enable CoBank
to maintain the yield it would have earned during the fixed rate period on the
amount repaid. Such surcharges will be calculated in accordance with
methodology established by CoBank (a copy of which will be made available to
the Company upon request).

 

SECTION 14.                     Complete
Agreement, Amendments.  This
Agreement, all Supplements, and all other instruments and documents
contemplated hereby and thereby, are intended by the parties to be a complete
and final expression of their agreement. No amendment, modification, or waiver
of any provision hereof or thereof, and no consent to any departure by the
Company herefrom or therefrom, shall be effective unless approved by CoBank and
contained in a writing signed by or on behalf of CoBank, and then such waiver
or consent shall be effective only in the specific instance and for the
specific purpose for which given. In the event this Agreement is amended or
restated, each such amendment or restatement shall be applicable to all
Supplements hereto.

 

SECTION 15.                     Other Types
of Credit.  From time to
time, CoBank may issue letters of credit or extend other types of credit to or
for the account of the Company.  In the
event the parties desire to do so under the terms of this Agreement, such
extensions of credit may be set forth in any Supplement hereto and this
Agreement shall be applicable thereto.

 

12

 

SECTION 16.                     Applicable
Law.  Except to the extent
governed by applicable federal law, this Agreement and each Supplement shall be
governed by and construed in accordance with the laws of the State of Colorado,
without reference to choice of law doctrine.

 

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

 

	
  If to CoBank as follows:

  	
  If to the Company, as follows:

  
	
  CoBank, ACB

  	
  American Crystal Sugar Company

  
	
  Corporate Finance

  	
  ATTN: Treasurer

  
	
  P.O. Box 5110

  	
  101 North 3rd Street, Moorhead, Minnesota 56560

  
	
  Denver, Colorado 80217 – Fax # (303) 694-5830

  	
  FAX#:  (218) 236-4702

  

 

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

 

SECTION 19.                     Effectiveness
and Severability.  This
Agreement shall continue in effect until: (i) all indebtedness and obligations
of the Company under this Agreement, all Supplements, and all other Loan
Documents shall have been paid or satisfied; (ii) CoBank has no commitment to
extend credit to or for the account of the Company under any Supplement; and
(iii) either party sends written notice to the other terminating this
Agreement. Any provision of this Agreement or any other Loan Document which 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 or thereof.

 

SECTION 20.                     Successors
and Assigns.  This Agreement,
each Supplement, and the other Loan Documents shall be binding upon and inure
to the benefit of the Company and CoBank and their respective successors and
assigns, except that the Company may not assign or transfer its rights or
obligations under this Agreement, any Supplement or any other Loan Document
without the prior written consent of CoBank.

 

SECTION 21.                     Participations.  From time to time, CoBank may sell to one or
more banks, financial institutions or other lenders a participation in one or
more of the loans or other extensions of credit made pursuant to this
agreement.  However, no such
participation shall relieve CoBank of any commitment made to the Company under
any Supplement hereto.  In connection
with the foregoing, CoBank may disclose information concerning the Company and
its Subsidiaries to any participant or prospective participant, provided that
such participant or prospective participant agrees to keep such information
confidential.  CoBank agrees that all
Loans that are made by CoBank and that are retained for its own

 

13

 

account and are not included in a sale of participation interest shall
be entitled to patronage distributions in accordance with the bylaws of CoBank
and its practices and procedures related to patronage distribution.
Accordingly, all Loans that are included in a sale of participation interest
shall not be entitled to patronage distributions.  A sale of participation interest may include certain voting
rights of the participants regarding the loans hereunder (including without
limitation the administration, servicing and enforcement thereof). CoBank
agrees to give written notification to the Company of any sale of participation
interests.

 

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

 

	
  CoBANK, ACB

  	
  AMERICAN CRYSTAL
  SUGAR COMPANY

  
	
   

  
	
  By

  	
  /s/ Michael Tousignant

  	
   

  	
  By:

  	
  /s/ Sam Wai

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Title

  	
  Vice President

  	
   

  	
  Title:

  	
  TREASURER

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  7/30/03

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  [ILLEGIBLE]

  
							

 

14

 

Attachment “A”

 

 

AMERICAN CRYSTAL SUGAR COMPANY (ACSC)

AND SUBSIDIARIES

Permitted Borrowings

 

	
  Lender

  	
   

  	
  Amount

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Commercial Paper

  	
   

  	
  Variable

  Maximum Outstanding: $225 million

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Minn-Dak Farmers Cooperative

  	
   

  	
  Variable

  	
   

  
	
  Southern Minnesota Beet Sugar Cooperative

  	
   

  	
   

  	
   

  
	
  United States Sugar Corporation

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Private Placement of Debt

  	
   

  	
   

  	
   

  
	
  John Hancock Mutual Life Insurance Co.

  	
   

  	
  $26 million

  	
   

  
	
  John Hancock Variable Life Insurance Co.

  	
   

  	
  $1.5 million

  	
   

  
	
  Paul Revere Life Insurance Company

  	
   

  	
  $22.5 million

  	
   

  
	
  John Hancock Ins. Co.

  	
   

  	
  $20 million

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Wells Fargo

  	
   

  	
  $1 million

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Commodity Credit Corporation

  	
   

  	
  Variable

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  East Grand Forks Pollution Control
  Refunding Series A

  	
   

  	
  $4,090,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  East Grand Forks Industrial Development
  Series B

  	
   

  	
  $915,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  1996 Traill County Series A, B & C
  Bonds

  	
   

  	
  $18 million

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  1997 City of Moorhead Bonds

  	
   

  	
  $5.5 million

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  1998 Traill County Bonds

  	
   

  	
  $5.75 million

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  1999 Traill County Bonds

  	
   

  	
  $3.58million

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  2000 City of East Grand Forks Bonds

  	
   

  	
  $5.75 million

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Intercompany Loan(s) from ACSC to Sidney
  Sugars

  Incorporated

  	
   

  	
  $60 million

  	
   

  

 

 

Attachment “B”

 

 

AMERICAN CRYSTAL SUGAR COMPANY (ACSC)

AND SUBSIDIARIES

Permitted Liens

 

	
  Asset

  	
   

  	
  Lien
  Holder

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Sugar

  	
   

  	
  Commodity Credit Corporation

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Real Estate, Equipment, Intangibles

  	
   

  	
  CoBank as Collateral Agent

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  ACSC’s Equity in Crystech, LLC

  	
   

  	
  First Union Trust Company, National

  Association, as Collateral Agent

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Pollution
  control Equipment located at ACSC’s

  Moorehead, MN Facility

  	
   

  	
  Security Agreement

  American National Bank and Trust Company

  (now known as Firstar Bank)

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Industrial Development Revenue Bond

  	
   

  	
  Security Agreement

  	
   

  
	
  Equipment Located at ACSC’s Moorhead, MN
  Facility

  	
   

  	
  Wells Fargo (successor to Firstar Bank)

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Marketing Assets

  	
   

  	
  Minn-Dak Farmers Cooperative

  	
   

  
	
   

  	
   

  	
  Southern Minnesota Beet Sugar Cooperative

  	
   

  
	
   

  	
   

  	
  United States Sugar Corporation

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Fixed Assets – Collateral Pool

  	
   

  	
  Private Placement of Debt

  	
   

  
	
   

  	
   

  	
  John Hancock Mutual Life Insurance Co.

  	
   

  
	
   

  	
   

  	
  John Hancock Variable Life Insurance Co.

  	
   

  
	
   

  	
   

  	
  Paul Revere Life Insurance Co.

  	
   

  

 

 

CoBANK,
ACB

 

COMPLIANCE
CERTIFICATE – CERTIFIED INTERIM FINANCIALS

 

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

 

This
certificate is attached to and made a part of the Company’s interim financial
statements for the reporting period ending
                           .

 

	
   

  	
   

  	
  Required

  	
   

  	
  Actual

  
	
  Net Working Capital

  	
   

  	
   

  	
   

  	
   

  
	
  1.                                       Current Assets
  as measured in accordance with GAAP

  2.                                       Current
  Liabilities as measured in accordance with GAAP

  3.                                       Net Working
  Capital (1. minus 2.)

  	
   

  	
  Minimum Net Working Capital required

  for fiscal quarters other than fiscal year

  end = $15,000,000

  

  Minimum Net Working Capital required for fiscal year end = $35,000,000

  	
   

  	
  1.

  

  2.

  

  3.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Interest Coverage Ratio

  	
   

  	
   

  	
   

  	
   

  
	
  1.                                       Average Net
  Funds Generated which is the sum of the following for the most recent 12
  Fiscal Quarters divided by 4.

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

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

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

  3.                                       Interest
  Coverage Ratio (Sum of 1. and 2., divided by 2.)

  	
   

  	
  Maintain at all times, and measured as of the end of each Fiscal
  Quarter, a minimum ratio of Average Net Funds Generated plus Average Interest
  Expense to Average Interest Expense of at least 2.5:1.0.

  	
   

  	
  1.

  

  2.

  

  3.

  

 

 

	
   

  	
   

  	
  Required

  	
   

  	
  Actual

  
	
  Long Term Debt to
  Capitalization

  	
   

  	
   

  	
   

  	
   

  
	
  1.                                       Long Term Debt
  (excluding current maturities) calculated in accordance with GAAP

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

  3.                                       Long Term Debt
  to Capitalization (1. divided by 2.)

  	
   

  	
  Maintain at all times and measured as of the end of each Fiscal
  Quarter the ratio of Long Term Debt divided by the sum of Long Term Debt plus
  Equity of no greater than fifty-five percent (55%).

  	
   

  	
  1.

  

  2.

  

  3.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Note: For purposes of this calculation the
  long term debt and equity associated with the consolidation of Pro Gold LLC
  are to be excluded.

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Leverage Ratio (and Term Performance
  Pricing)

  	
   

  	
   

  	
   

  	
   

  
	
  1.                                       Long Term Debt
  (excluding current maturities) calculated in accordance with GAAP

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

  3.                                       Total members
  investments

  4.                                       Estimated unit
  retains

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

   

  	
   

  	
  Maintain a leverage ratio of not more than 1.50:1.0

  	
   

  	
  1.

  

  2.

  

  3.

  

  4.

  

  5.

   

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

  

 

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

 

	
   

  	
  AMERICAN CRYSTAL
  SUGAR COMPANY

  
	
   

  	
  (“Company”)

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Authorized Signature

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Title

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Date

  

 

 

Loan No. Z269T01D

 

REVOLVING
TERM LOAN SUPPLEMENT

 

THIS SUPPLEMENT to
the Amended and Restated Master Loan Agreement dated July 21, 2003 the (“MLA”),
is entered into as of July 21, 2003, between CoBANK, ACB (“CoBank”) and AMERICAN
CRYSTAL SUGAR COMPANY, Moorhead, Minnesota (the “Company”), and
amends and restates the Supplement dated November 6, 2002 and numbered
Z269T01C.

 

SECTION 1.                            The Revolving Term Loan Commitment.  On the terms and conditions set forth in the
MLA and this Supplement, CoBank agrees to make loans to the Company during the
period set forth below in an aggregate principal amount not to exceed
$58,276,702.22 at any one time outstanding (the “Commitment”). Within the
limits of the Commitment, the Company may borrow, repay and reborrow.

 

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

 

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

 

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

 

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

 

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

 

(C)                               LIBOR Option.  At a fixed rate equal to
“LIBOR” (as hereinafter defined) plus 90 basis points per annum (the “LIBOR”
Spread). Under this option: (a) rates may be fixed for “Interest Periods” (as
hereinafter defined) of 1, 2, 3, or 6 months, or 1 year, as selected by the
Company; (b) the minimum amount that may be fixed at any one time shall be
$2,000,000.00; and (c) rates may only be fixed on a “Banking Day” (as
hereinafter defined) or, at the option of the Company, on 3 Banking Days’ prior
notice. For purposes hereof: (i) “LIBOR” shall mean the rate (rounded upward to
the nearest sixteenth and adjusted for reserves required on “Eurocurrency
Liabilities” (as hereinafter defined) for banks subject to “FRB Regulation D”
(as hereinafter defined) or required by any other federal law or regulation)
quoted by the British Bankers Association (the “BBA”) at 11:00 a.m. London time
two Banking Days before the commencement of the Interest Period for the
offering of U.S. dollar deposits in the London interbank market for the Interest
Period designated by the Company; (ii) “Banking Day” shall mean a day on which
CoBank is open for business, dealings in U.S. dollar deposits are being carried
out in the London interbank market, and banks are open for business in New York
City and London, England; and (iii) “Interest Period” shall mean a period
commencing on the day the Company elects to fix a rate under this option and
ending on the numerically corresponding day in the next calendar month or the
month that is 2, 3, or 6 months or 1 year thereafter, as the case may be;
provided, however, that: (x) in the event such

 

 

ending day is not a Banking Day, such period shall be extended to the
next Banking Day unless such next Banking Day falls in the next calendar month,
in which case it shall end on the preceding Banking Day; and (y) if there is no
numerically corresponding day in the month, then such period shall end on the
last Banking Day in the relevant month; and (v) “FRB Regulation D” shall mean
Regulation D as promulgated by the Board of Governors of the Federal Reserve
System, 12 CFR Part 204, as amended.

 

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

 

TREASURY MARGINS

 

	
  FIXED RATE

  PRODUCT

  	
   

  	
  INDEX

  	
   

  	
  SPREAD OVER INDEX IN BASIS

  POINTS (Applicable Treasury Margin)

  
	
  Two Years

  	
   

  	
  U.S.$ Constant Maturity

  Treasury Rate (“US$CMT”)

  	
   

  	
  125 bps

  
	
  Three Years

  	
   

  	
  US$CMT

  	
   

  	
  125 bps

  
	
  Four Years

  	
   

  	
  US$CMT

  	
   

  	
  125 bps

  
	
  Five Years

  	
   

  	
  US$CMT

  	
   

  	
  125 bps

  
	
  Seven Years

  	
   

  	
  US$CMT

  	
   

  	
  140 bps

  
	
  Ten Years

  	
   

  	
  US$CMT

  	
   

  	
  140 bps

  
	
  Floor
  (Minimum) Rate (For Two to Ten Year Fixed Rate Products Only)

  	
   

  	
  CoBank’s
  cost of funds (as reasonably determined by CoBank in its sole discretion)

  	
   

  	
  105bps

  

 

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

 

2

 

	
  LEVERAGE
  RATIO
(as defined below)

  	
   

  	
  INCREASE/DECREASE
TO SPREAD

  	
   

  	
  CHANGE TO
APPLICABLE LIBOR
and TREASURY
MARGINS
(IN BASIS POINTS)

  
	
  A. Equal to or greater than 1.35:1.00

  	
   

  	
  Increase

  	
   

  	
  20

  
	
  B. Equal to or greater than 1.20:1.00, but less than 1.35:1.00

  	
   

  	
  None

  	
   

  	
  0

  
	
  C. Less than 1.20:1.00, but greater than or equal to 1.00:1.00

  	
   

  	
  Decrease

  	
   

  	
  10

  
	
  D. Less than 1.00:1.00

  	
   

  	
  Decrease

  	
   

  	
  20

  

 

Leverage Ratio: The
Company will maintain a leverage ratio of not more than 1.50:1.0. Leverage
ratio is long term (excluding current maturities) calculated in accordance with
GAAP plus or minus the difference between actual working capital and Minimum
Net Working Capital (as defined in the MLA No. Z269, Section 10, as it may be
amended), divided by total members investments plus the estimated unit retains.

 

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

 

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

 

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

 

3

 

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

 

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

 

SECTION 6.                            Prepayment.  Subject
to Section 13 of the MLA, the loans may be prepaid in whole or in part on one
CoBank business day’s prior written notice. 
During the term of the Commitment, prepayments shall be applied to such
balances, fixed or variable, as the Company shall specify.  After the expiration of the term of the
Commitment, prepayments shall, unless CoBank otherwise agrees, be applied to
principal installments in the inverse order of their maturity and to such
balances, fixed or variable, as CoBank shall specify.

 

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

 

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

 

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

 

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

 

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

 

	
  CoBANK, ACB

  	
  AMERICAN CRYSTAL
  SUGAR COMPANY

  
	
   

  
	
   

  
	
  By:

  	
  /s/ Michael Tousignant

  	
   

  	
  By:

  	
  /s/ Sam Wai

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Title:

  	
  Vice President

  	
   

  	
  Title:

  	
  TREASURER

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  7-30-03

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  [ILLEGIBLE]

  
							

 

4

 

Loan No. Z269T01DNP 

 

REVOLVING
TERM LOAN SUPPLEMENT

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

(C)                              LIBOR Option.  At a fixed rate equal to “LIBOR” (as hereinafter defined) plus 90 basis
points per annum (the “LIBOR Spread”). Under this option: (a) rates may be
fixed for “Interest Periods” (as hereinafter defined) of 1, 2, 3 or 6 months,
or 1 year, as selected by the Company; (b) the minimum amount that may be fixed
at any one time shall be $2,000,000.00; and (c) rates may only be fixed on a
“Banking Day” (as hereinafter defined) or, at the option of the Company, on 3
Banking Days’ prior notice.   For
purposes hereof: (i) “LIBOR” shall mean the rate (rounded upward to the nearest
sixteenth and adjusted for reserves required on “Eurocurrency Liabilities” (as
herein after defined) for banks subject to “FRB Regulation D” (as herein after
defined) or required by any other federal law or regulation) quoted by the
British Bankers Association (the “BBA”) at 11:00 a.m. London time 2 Banking
Days before the commencement of the Interest for Period for the offering of
U.S. dollar deposits in the London interbank market for the Interest Period
designated by the Company, as published by Bloomberg or another major
information vendor listed on the BBA’s official website; (ii) “Banking Day”
shall mean a day on which CoBank is open for business, dealings in U.S. dollar
deposits are being carried out in the London interbank market, and banks are
open for business in New York City and London, England; (iii) “Interest Period”
shall mean a period commencing on the day the Company elects to fix a rate
under this option and ending on
the numerically corresponding day in the next calendar month or the month that
is 2, 3 or 6

 

 

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

 

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

 

TREASURY MARGINS

 

	
  FIXED RATE

  PRODUCT

  	
   

  	
  INDEX

  	
   

  	
  SPREAD
  OVER INDEX IN BASIS

  POINTS (Applicable Treasury Margin)

  
	
  Two
  Years

  	
   

  	
  U.S. $ Constant Maturity

  Treasury (“US$CMT”)

  	
   

  	
  125 bps

  
	
  Three
  Years

  	
   

  	
  US$CMT

  	
   

  	
  125 bps

  
	
  Four
  Years

  	
   

  	
  US$CMT

  	
   

  	
  125 bps

  
	
  Five
  Years

  	
   

  	
  US$CMT

  	
   

  	
  125 bps

  
	
  Seven
  Years

  	
   

  	
  US$CMT

  	
   

  	
  140 bps

  
	
  Ten
  Years

  	
   

  	
  US$CMT

  	
   

  	
  140 bps

  
	
  Floor (Minimum) Rate (For
  Two to Ten Year Fixed Rate Products Only)

  	
   

  	
  CoBank’s cost of funds (as
  reasonably determined by CoBank in its sole discretion)

  	
   

  	
  105bps

  

 

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

 

2

 

	
  LEVERAGE RATIO

  (as defined below)

  	
   

  	
  INCREASE/DECREASE

  TO SPREAD

  	
   

  	
  CHANGE TO

  APPLICABLE LIBOR

  and TREASURY

  MARGINS

  (IN BASIS POINTS)

  
	
  A.
  Equal to or greater than 1.35:1.00

  	
   

  	
  Increase

  	
   

  	
  20

  
	
  B.
  Equal to or greater than 1.20:1.00, but less than 1.35:1.00

  	
   

  	
  None

  	
   

  	
  0

  
	
  C.
  Less than 1.20:1.00, but greater than or equal to 1.00:1.00

  	
   

  	
  Decrease

  	
   

  	
  10

  
	
  D.
  Less than 1.00:1.00

  	
   

  	
  Decrease

  	
   

  	
  20

  

 

Leverage Ratio: The Company will maintain a leverage ratio of
not more than 1.50:1.0. Leverage ratio is long term debt (excluding current
maturities) calculated in accordance with GAAP plus or minus the difference
between actual working capital and Minimum Net Working Capital (as defined in
the MLA No. Z269,  Section 10, as
it may be amended), divided by total members investments plus the estimated
unit retains.

 

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

 

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

 

SECTION 5.                            Promissory Note.  The Company promises to repay the loans that are outstanding in 6
equal, consecutive annual principal payments of $7,603,420.83, with the first
such payment due on or before December 31, 2003, and a final principal payment
due in an amount equal to the remaining unpaid principal balance on or before
December 31, 2009.  If any installment due date is not a day on
which CoBank is open for
business, then such payment shall be made on the next day on which CoBank is
open for business. In addition to the above, the Company promises to pay interest
on the unpaid principal balance hereof at the times and in accordance with the
provisions set forth in Section 4 hereof. This note replaces and supersedes,
but does not constitute payment of the indebtedness evidenced by, the
promissory note set forth in the Supplement being amended and restated hereby.

 

3

 

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

 

SECTION 6.                            Prepayment.  Subject
to Section 13 of the MLA, the loans may be prepaid in whole or in part on one
CoBank business day’s prior written notice. During the term of the Commitment,
prepayments shall be applied to such balances, fixed or variable, as the
Company shall specify. After the expiration of the term of the Commitment,
prepayments shall, unless CoBank otherwise agrees, be applied to principal
installments in the inverse order of their maturity and to such balances, fixed
or variable, as CoBank shall specify.

 

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

 

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

 

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

 

SECTION 10.                     Amendment Fee.  In consideration of the amendment, the
Company agrees to pay to CoBank on the execution hereof a fee in the amount of
$7,603.43.

 

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

 

	
  CoBANK, ACB

  	
  AMERICAN CRYSTAL
  SUGAR COMPANY

  
	
   

  
	
   

  
	
  By:

  	
  /s/ Michael Tousignant

  	
   

  	
  By:

  	
  /s/ Sam Wai

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Title:

  	
  Vice President

  	
   

  	
  Title:

  	
  TREASURER

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  7-30-03

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  [ILLEGIBLE]

  
								

 

4

 

Loan No. Z269T02DNP

 

REVOLVING
TERM LOAN SUPPLEMENT

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

(C)                              LIBOR Option.  At a fixed rate equal to “LIBOR” (as hereinafter defined) plus 90 basis
points per annum (the “LIBOR Spread”). 
Under this option: (a) rates may be fixed for “Interest Periods” (as
hereinafter defined) of 1, 2, 3 or 6 months, or 1 year, as selected by the
Company; (b) the minimum amount that may be fixed at any one time shall be
$2,000,000.00; and (c) rates may only be fixed on a “Banking Day” (as hereinafter
defined) or, at the option of the Company, on 3 Banking Days’ prior
notice.  For purposes hereof: (i)
“LIBOR” shall mean the rate (rounded upward to the nearest sixteenth and
adjusted for reserves required on “Eurocurrency Liabilities” (as herein after
defined) for banks subject to “FRB Regulation D” (as herein after defined) or
required by any other federal law or regulation) quoted by the British Bankers
Association (the “BBA”) at 11:00 a.m. London time 2 Banking Days before the
commencement of the Interest for Period for the offering of U.S. dollar
deposits in the London interbank market for the Interest Period designated by
the Company, as published by Bloomberg or another major information vendor
listed on the BBA’s official website; (ii) “Banking Day” shall mean a day on
which CoBank is open for business, dealings in U.S. dollar deposits are being
carried out in the London interbank market, and banks are open for business in
New York City and London, England; (iii) “Interest Period” shall mean a period
commencing on the day the Company elects to fix a rate under this

 

 

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

 

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

 

TREASURY
MARGINS

 

	
  FIXED RATE

  PRODUCT

  	
   

  	
  INDEX

  	
   

  	
  SPREAD
  OVER INDEX IN BASIS

  POINTS (Applicable Treasury Margin)

  
	
  Two Years

  	
   

  	
  U.S.$ Constant Maturity
  Treasury (“US$CMT”)

  	
   

  	
  125bps

  
	
  Three Years

  	
   

  	
  US$CMT

  	
   

  	
  125bps

  
	
  Four Years

  	
   

  	
  US$CMT

  	
   

  	
  125bps

  
	
  Five Years

  	
   

  	
  US$CMT

  	
   

  	
  125bps

  
	
  Seven Years

  	
   

  	
  US$CMT

  	
   

  	
  140bps

  
	
  Ten Years

  	
   

  	
  US$CMT

  	
   

  	
  140bps

  
	
  Floor (Minimum) Rate (For Two to Ten Year Fixed Rate Products Only)

  	
   

  	
  CoBank’s cost of funds (as reasonably determined by CoBank in its
  sole discretion)

  	
   

  	
  105bps

  

 

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

 

2

 

	
  LEVERAGE RATIO

  (as defined below)

  	
   

  	
  INCREASE/DECREASE

  TO SPREAD

  	
   

  	
  CHANGE TO

  APPLICABLE LIBOR

  and TREASURY

  MARGINS

  (IN BASIS POINTS)

  
	
  A.  Equal to or greater than
  1.35:1.00

  	
   

  	
  Increase

  	
   

  	
  20

  
	
  B.  Equal to or greater than
  1.20:1.00, but less than 1.35:1.00

  	
   

  	
  None

  	
   

  	
  0

  
	
  C. Less than 1.20:1.00, but greater than or equal to 1.00:1.00

  	
   

  	
  Decrease

  	
   

  	
  10

  
	
  D.  Less than 1.00:1.00

  	
   

  	
  Decrease

  	
   

  	
  20

  

 

Leverage
Ratio: The Company
will maintain a leverage ratio of not more than 1.50:1.0.  Leverage ratio is long term debt (excluding
current maturities) calculated in accordance with GAAP plus or minus the
difference between actual working capital and Minimum Net Working Capital (as
defined in the MLA No. Z269,  Section 10,
as it may be amended), divided by total members investments plus the estimated
unit retains.

 

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

 

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

 

SECTION 5.  Promissory Note.  The
Company promises to repay the loans that are outstanding in 2 equal,
consecutive annual principal payments of $2,000,000.00, with the first such
payment due on or before December 31, 2003, and the second such payment
due on or before December 31, 2004, and a final principal payment due in
an amount equal to the remaining unpaid principal balance on or before December 31, 2005.  If any installment due date is not a day on
which

 

3

 

CoBank is open for business,
then such payment shall be made on the next day on which CoBank is open for
business.  In addition to the above, the
Company promises to pay interest on the unpaid principal balance hereof at the
times and in accordance with the provisions set forth in Section 4
hereof.  This note replaces and supersedes,
but does not constitute payment of the indebtedness evidenced by, the
promissory note set forth in the Supplement being amended and restated hereby. 

 

SECTION 6.  Prepayment. 
Subject to
Section 13 of the MLA, the loans may be prepaid in whole or in part on one
CoBank business day’s prior written notice. 
During the term of the Commitment, prepayments shall be applied to such
balances, fixed or variable, as the Company shall specify.  After the expiration of the term of the
Commitment, prepayments shall, unless CoBank otherwise agrees, be applied to
principal installments in the inverse order of their maturity and to such
balances, fixed or variable, as CoBank shall specify.

 

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

 

SECTION 8.  Letters of Credit.  If
agreeable to CoBank in its sole discretion in each instance, in addition to loans,
the Company may utilize the Commitment to open irrevocable letters of credit
for its account.  Each letter of credit
will be issued within a reasonable period of time after receipt of a duly
completed and executed copy of CoBank’s then current form of application (or,
if applicable, in accordance with the terms of any CoTrade-Agreement between
the parties), and shall reduce the amount available under the Commitment by the
maximum amount capable of being drawn thereunder.  Any draw under any letter of credit issued hereunder shall be
deemed an advance under the Commitment. 
Each letter of credit must be in form and content acceptable to CoBank
in its sole discretion, must expire no later than the maturity date of the
loans.  There shall be a fee for issuing
each letter of Credit that shall be determined by CoBank at the time of
application and paid by the Company at or before issuance or as otherwise
agreed.

 

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

 

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

 

	
  CoBANK, ACB

  	
   

  	
  AMERICAN CRYSTAL SUGAR COMPANY

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
    /s/ Michael Tousignant

  	
   

  	
  By:

  	
  /s/ Sam Wai

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Title:

  	
    Vice President

  	
   

  	
  Title:

  	
  TREASURER

  

 

4

 

Loan No. Z269T03BNP

 

SINGLE
ADVANCE TERM LOAN SUPPLEMENT

 

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

 

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

 

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

 

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

 

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

 

SECTION 5.  Promissory Note.  The
Company promises to repay the Loan in accordance with the repayment terms of
the Note Agreement.  If any installment
due date is not a day on which CoBank is open for business, then such payment
shall be made on the next day on which CoBank is open for business.  In addition to the above, the Company
promises to pay interest on the unpaid principal balance hereof at the times
and in accordance with the terms of the Note Agreement.  This note replaces and supersedes, but does
not constitute payment of the indebtedness evidenced by, the promissory note
set forth in the Supplement being amended and restated hereby.

 

 

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

 

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

 

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

 

	
  CoBANK, ACB

  	
   

  	
  AMERICAN CRYSTAL SUGAR COMPANY

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
   /s/ Michael Tousignant

  	
   

  	
  By:

  	
  /s/ Sam Wai

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Title:

  	
  Vice President

  	
   

  	
  Title:

  	
  TREASURER

  

 

2

 

Loan No. Z269T04A

 

NON-REVOLVING
CREDIT SUPPLEMENT

(Letter of
Credit)

 

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

 

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

 

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

 

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

 

SECTION 4.  Interest. 
The Company
agrees to pay interest on the unpaid principal balance of the loan(s), in
accordance with the following interest rate:

 

CoBank Base
Rate.  The unpaid principal balance shall bear
interest at a rate per annum equal at all times to the rate of interest
established by CoBank from time to time as its CoBank Base Rate, which Rate is
intended by CoBank to be a reference and not its lowest rate.  The CoBank Base Rate will change on the date
established by CoBank as the effective date of any change therein and CoBank agrees
to notify the Company of any such change.

 

Interest shall be calculated
on the actual number of days each loan is outstanding on the basis of a year
consisting of 360 days and shall be payable monthly in arrears by the 20th
day of the following month or such other date that CoBank shall require in a
written notice to the Company.

 

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

 

SECTION 6.  Letters of Credit.  If
agreeable to CoBank in its sole discretion in each instance, in addition to
loans, the Company may utilize the Commitment to open irrevocable letters of
credit for its account.  Each letter of
credit will be issued within a reasonable period of time after receipt of a
duly completed and executed copy of CoBank’s then current form of application
(or, if applicable, in accordance with the terms of any CoTrade Agreement
between the parties), and shall reduce the amount available under the
Commitment by the maximum amount capable of being drawn thereunder.  Any draw under any letter of credit issued
hereunder shall be deemed an advance under the Commitment.  Each

 

 

letter of credit must be in
form and content acceptable to CoBank in its sole discretion, must expire no
later than the Maturity Date. There shall be a fee for issuing each letter of
Credit that shall be determined by CoBank at the time of application and paid
by the Company at or before issuance or as otherwise agreed.

 

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

 

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

 

	
  CoBANK, ACB

  	
   

  	
  AMERICAN CRYSTAL SUGAR COMPANY

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Michael Tousignant

  	
   

  	
  By:

  	
  /s/ Sam Wai

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Title:

  	
  Vice President

  	
   

  	
  Title:

  	
  TREASURER

  

 

2

 

Loan No. Z269T05

 

REVOLVING TERM LOAN SUPPLEMENT

 

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

 

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

 

SECTION 2.  Purpose. 
The purpose of
the Commitment is to provide for short-term commercial and standby letters of
credit, and, if the Commitment under the Statused Revolving Credit Supplement
No. Z269S01E (as it may be amended from time to time) is fully advanced, then
to provide for the operating needs of the Company.

 

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

 

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

 

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

 

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

 

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

 

 

information vendor listed on the BBA’s official
website; (ii) “Banking Day” shall mean a day on which CoBank is open for
business, dealings in U.S. dollar deposits are being carried out in the London
interbank market, and banks are open for business in New York City and London,
England; (iii) “Interest Period” shall mean a period commencing on the day the
Company elects to fix a rate under this option and ending on the numerically
corresponding day in the next calendar month or the month that is 2, 3 or 6
months or 1 year thereafter, as the case may be; provided, however, that: (x)
in the event such ending day is not a Banking Day, such period shall be
extended to the next Banking Day unless such next Banking Day falls in the next
calendar month, in which case it shall end on the preceding Banking Day; and
(y) if there is no numerically corresponding day in the month, then such period
shall end on the last Banking Day in the relevant month: (iv) “Eurocurrency
Liabilities” shall have meaning as set forth in FRB Regulation D; and (v) “FRB
Regulation D” shall mean Regulation D as promulgated by the Board of Governors
of the Federal Reserve System, 12 CFR Part 204, as amended.

 

(1)                                 Notwithstanding anything herein to the
contrary, if, on or prior to the determination of the LIBOR rate for any LIBOR
Interest Period, CoBank determines (which determination shall be conclusive)
that quotations of interest rates in accordance with the definition of LIBOR
rate are not being provided in the relevant amounts or for the relevant
maturities for purposes of determining rates of interest for LIBOR rate
advances as provided in this Supplement, then CoBank shall give the Company
prompt notice thereof, and so long as such condition remains in effect, CoBank
shall be under no obligation to make LIBOR rate loans, convert Base Rate loans
into LIBOR rate loans, or continue LIBOR rate loans, and the Company shall, on
the last day(s) of the then current applicable LIBOR Interest Period(s) for the
outstanding LIBOR rate loans, either prepay such LIBOR rate loans or such LIBOR
rate loans shall automatically be converted into a Base Rate loan in accordance
with this Section 4.

 

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

 

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

 

2

 

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

 

The Company shall select the
applicable rate option at the time it requests a loan hereunder and may,
subject to the limitations set forth above, elect to convert balances bearing
interest at the variable rate option to one of the fixed rate options.  Upon the expiration of any fixed rate
period, interest shall automatically accrue at the variable rate unless the
amount fixed is repaid or fixed for an additional period.  Notwithstanding the foregoing, rates may not
be fixed for periods expiring after the maturity date of the loans.  All elections provided for herein shall be
made telephonically or in writing and must be received by 12:00 Noon Company’s
local time; in the case of LIBOR rate loans, all such elections must be made in
writing.  Interest shall be calculated
on the actual number of days each loan is outstanding on the basis of a year
consisting of 360 days and shall be payable monthly in arrears by the 20th day
of the following month or such other day that CoBank shall require in a written
notice to the Company, and at maturity; provided, however, in the event the
Company elects to fix all or a portion of the indebtedness outstanding under
the LIBOR interest rate option above, interest shall be payable at the maturity
of the interest period and if the LIBOR interest rate fix is for a period
longer than 3 months, interest on that portion of the indebtedness outstanding
shall be payable quarterly in arrears on each anniversary of the date the LIBOR
interest rate fix was made and at maturity.

 

SECTION 5.  Promissory Note.  The
Company promises to repay the loans that are outstanding at the time the
Commitment expires.  If any installment
due date is not a day on which CoBank is open for business, then such payment
shall be made on the next day on which CoBank is open for business.  In addition to the above, the Company
promises to pay interest on the unpaid principal balance hereof at the times
and in accordance with the provisions set forth in Section 4 thereof.

 

SECTION 6.  Letters of Credit.  If
agreeable to CoBank in its sole discretion in each instance, in addition to
loans, the Company may utilize the Commitment to open irrevocable letters of
credit for its account.  Each letter of
credit will be issued within a reasonable period of time after receipt of a
duly completed and executed copy of CoBank’s then current form of application
(or, if applicable, in accordance with the terms of any CoTrade Agreement
between the parties), and shall reduce the amount available under the
Commitment by the maximum amount capable of being drawn thereunder.  Any draw under any letter of credit issued
hereunder shall be deemed an advance under the Commitment.  Each letter of credit must be in form and
content acceptable to CoBank in its sole discretion, must expire no later than
the time the Commitment expires.  The
fee for issuing each letter of credit shall be 100 basis points of the face
amount of each letter of credit, along with an issuance fee to CoBank, for its
own account, equal to the greater of (a) 1/8% of the face amount of the letter
of credit, or (b) $2,000, payable by the Company at or before issuance or as
otherwise agreed.  The Company promises
to repay the outstanding balance on the Commitment in full on demand, or if no
demand is made, then any time on or before the Commitment expiration date of
August 1, 2005.

 

3

 

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

 

SECTION 8.  Loan Origination Fee.  In consideration of the Commitment, the Company agrees to pay to CoBank
on the execution hereof a loan origination fee in the amount of $11,250.00.

 

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

 

	
  CoBANK, ACB

  	
   

  	
  AMERICAN CRYSTAL SUGAR COMPANY

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Michael Tousignant

  	
   

  	
  By:

  	
  /s/ Sam Wai

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Title:

  	
  Vice President

  	
   

  	
  Title:

  	
  TREASURER

  

 

4

 

Loan No. Z269T06

 

REVOLVING
TERM LOAN SUPPLEMENT

 

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

 

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

 

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

 

SECTION 3.  Term. 
Intentionally
Omitted.

 

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

 

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

 

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

 

(C)                               LIBOR Option.  At a fixed rate equal to “LIBOR” (as hereinafter defined) plus 100
basis points per annum (the “LIBOR Spread”). 
Under this option: (a) rates may be fixed for “Interest Periods” (as
hereinafter defined) of 1, 2, 3 or 6 months, or 1 year, as selected by the
Company; (b) the minimum amount that may be fixed at any one time shall be
$2,000,000.00; and (c) rates may only be fixed on a “Banking Day” (as
hereinafter defined) or, at the option of the Company, on 3 Banking Days’ prior
notice.  For purposes hereof: (i)
“LIBOR” shall mean the rate (rounded upward to the nearest sixteenth and
adjusted for reserves required on “Eurocurrency Liabilities” (as hereinafter
defined) for banks subject to “FRB Regulation D” (as hereinafter defined) or
required by any other federal law or regulation) quoted by the British Bankers
Association (the “BBA”) at 11:00 a.m. London time 2 Banking Days before the
commencement of the Interest for Period for the offering of U.S. dollar
deposits in the London interbank market for the Interest Period designated by
the Company, as published by Bloomberg or another major information vendor
listed on the BBA’s official website; (ii) “Banking Day” shall mean a day on
which CoBank is open for business, dealings in U.S. dollar deposits are being
carried out in the London interbank market, and banks are open for business in
New York City and London, England; (iii) “Interest Period” shall mean a period
commencing on the day the Company elects to fix a rate under this option

 

 

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

 

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

 

	
  LEVERAGE RATIO

  (as defined below)

  	
   

  	
  INCREASE/DECREASE

  TO LIBOR SPREAD

  	
   

  	
  CHANGE TO
  THE

  LIBOR SPREAD (IN

  BASIS POINTS)

  
	
  A.  Equal to or greater than
  1.35:1.00

  	
   

  	
  Increase

  	
   

  	
  20

  
	
  B. Equal to or greater than 1.20:1.00, but less than 1.35:1.00

  	
   

  	
  None

  	
   

  	
  0

  
	
  C.  Less than 1.20:1.00, but
  greater than or equal to 1.00:1.00

  	
   

  	
  Decrease

  	
   

  	
  10

  
	
  D.  Less than 1.00:1.00

  	
   

  	
  Decrease

  	
   

  	
  20

  

 

Leverage Ratio: The Company will maintain a leverage ratio of
not more than 1.50:1.0. Leverage ratio is long term debt (excluding current
maturities) calculated in accordance with GAAP plus or minus the difference
between actual working capital and Minimum Net Working Capital (as defined in the
MLA No. Z269, Section 10, as it may be amended), divided by total members
investments plus the estimated unit retains.

 

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

 

The Company shall select the
applicable rate option at the time it requests a loan hereunder and may,
subject to the limitations set forth above, elect to convert balances bearing
interest at the variable rate option to one of the fixed rate options.  Upon the expiration of any fixed rate
period, interest shall automatically accrue at the variable rate option unless
the amount fixed is repaid or fixed for an additional period in accordance with
the terms hereof.  Notwithstanding the
foregoing, unless CoBank otherwise consents in its sole discretion in each
instance, rates may not be fixed for periods expiring after the maturity date
of the loans.  In the event CoBank
consents to one or more balances being fixed for a period or periods extending
beyond the maturity date of the loans and the Commitment is not renewed, then
each such balance shall be due and payable on the last day of its fixed rate
period and the promissory note set

 

2

 

forth below shall be deemed
amended accordingly.  All elections
provided for herein shall be made telephonically or in writing and must be
received by 12:00 Noon Company’s local time. 
Interest shall be calculated on the actual number of days each loan is
outstanding on the basis of a year consisting of 360 days and shall be payable
monthly in arrears by the 20th day of the following month; provided, however,
in the event the Company elects to fix all or a portion of the indebtedness
outstanding under the LIBOR interest rate option above, interest shall be
payable at the maturity of the interest period and if the LIBOR interest rate
fix is for a period longer than 3 months, interest on that portion of the
indebtedness outstanding shall be payable quarterly in arrears by the 20th day
of the following month and at maturity.

 

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

 

	
  Payment
  Date

  	
   

  	
  Reducing
  Commitment Amount

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  December 31, 2004

  	
   

  	
  $

  	
  12,857,142.86

  	
   

  
	
  December 31, 2005

  	
   

  	
  $

  	
  10,714,285.72

  	
   

  
	
  December 31, 2006

  	
   

  	
  $

  	
  8,571,428.58

  	
   

  
	
  December 31, 2007

  	
   

  	
  $

  	
  6,428,571.44

  	
   

  
	
  December 31, 2008

  	
   

  	
  $

  	
  4,285,714.30

  	
   

  
	
  December 31, 2009

  	
   

  	
  $

  	
  2,142,857.16

  	
   

  

 

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

 

SECTION 6.  Prepayment. 
Subject to
Section 13 of the MLA, the loans may be prepaid in whole or in part on one
CoBank business day’s prior written notice. 
During the term of the Commitment, prepayments shall be applied to such
balances, fixed or variable, as the Company shall specify.  After the expiration of the term of the
Commitment, prepayments shall, unless CoBank otherwise agrees, be applied to
principal installments in the inverse order of their maturity and to such
balances, fixed or variable, as CoBank shall specify.

 

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

 

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

 

3

 

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

 

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

 

	
  CoBANK, ACB

  	
   

  	
  AMERICAN CRYSTAL SUGAR COMPANY

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Michael Tousignant

  	
   

  	
  By:

  	
  /s/ Sam Wai

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Title:

  	
  Vice President

  	
   

  	
  Title:

  	
  TREASURER

  

 

4

 

Loan No. Z269S01E 

 

STATUSED
REVOLVING CREDIT SUPPLEMENT

 

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

 

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

 

SECTION 2.  Purpose. 
The purpose of
the Commitment is to finance the Company’s general corporate purposes, fund
working capital requirements, and support the Company’s commercial paper
program.

 

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

 

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

 

(A)                                Base Rate Option.  At a rate per annum at all times equal to the Base Rate.  For the purposes hereof, Base Rate means
that rate in effect from day to day defined as the “prime rate” as published
from time to time in the Eastern Edition of The Wall Street Journal as the
average prime lending rate for seventy-five percent (75%) of the
United States’ thirty (30) largest commercial banks, or if The Wall Street
Journal shall cease publication or cease publishing the “prime rate” on a
regular basis, such other regularly published average prime rate applicable to
such commercial banks as is acceptable to the Lender in its reasonable
discretion.  Loans for which the Base
Rate option is selected are referred to herein as “Base Rate Loans”.  Base Rate Loans shall be:  (a) in minimum amounts of $5,000,000 and
incremental multiples of $1,000,000; and (b) made available on any Banking Day.

 

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

 

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

 

 

information vendor listed on the BBA’s official
website; (ii) “Banking Day” shall mean a day on which CoBank is open for
business, dealings in U.S. dollar deposits are being carried out in the London
interbank market, and banks are open for business in New York City and London,
England; (iii) “Interest Period” shall mean a period commencing on the day the
Company elects to fix a rate under this option and ending on the numerically
corresponding day in the next calendar month or the month that is 2, 3 or 6
months or 1 year thereafter, as the case may be; provided, however, that: (x)
in the event such ending day is not a Banking Day, such period shall be
extended to the next Banking Day unless such next Banking Day falls in the next
calendar month, in which case it shall end on the preceding Banking Day; and
(y) if there is no numerically corresponding day in the month, then such period
shall end on the last Banking Day in the relevant month; (iv) “Eurocurrency
Liabilities” shall have meaning as set forth in FRB Regulation D; and (v) “FRB
Regulation D” shall mean Regulation D as promulgated by the Board of Governors
of the Federal Reserve System, 12 CFR Part 204, as amended.

 

(1)                                    Notwithstanding anything herein to the
contrary, if, on or prior to the determination of the LIBOR rate for any LIBOR
Interest Period, CoBank determines (which determination shall be conclusive)
that quotations of interest rates in accordance with the definition of LIBOR rate
are not being provided in the relevant amounts or for the relevant maturities
for purposes of determining rates of interest for LIBOR rate advances as
provided in this Supplement, then CoBank shall give the Company prompt notice
thereof, and so long as such condition remains in effect, CoBank shall be under
no obligation to make LIBOR rate loans, convert Base Rate loans into LIBOR rate
loans, or continue LIBOR rate loans, and the Company shall, on the last day(s)
of the then current applicable LIBOR Interest Period(s) for the outstanding
LIBOR rate loans, either prepay such LIBOR rate loans or such LIBOR rate loans
shall automatically be converted into a Base Rate loan in accordance with this
Section 4

 

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

 

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

 

2

 

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

 

The Company shall select the
applicable rate option at the time it requests a loan hereunder and may,
subject to the limitations set forth above, elect to convert balances bearing
interest at the variable rate option to one of the fixed rate options.  Upon the expiration of any fixed rate
period, interest shall automatically accrue at the variable rate unless the
amount fixed is repaid or fixed for an additional period.  Notwithstanding the foregoing, rates may not
be fixed for periods expiring after the maturity date of the loans.  All elections provided for herein shall be
made telephonically or in writing and must be received by 12:00 Noon Company’s
local time; in the case of LIBOR rate loans, all such elections must be made in
writing.  Interest shall be calculated
on the actual number of days each loan is outstanding on the basis of a year
consisting of 360 days and shall be payable monthly in arrears by the 20th day
of the following month or such other day that CoBank shall require in a written
notice to the Company, and at maturity; provided, however, in the event the
Company elects to fix all or a portion of the indebtedness outstanding under
the LIBOR interest rate option above, interest shall be payable at the maturity
of the interest period and if the LIBOR interest rate fix is for a period
longer than 3 months, interest on that portion of the indebtedness outstanding
shall be payable quarterly in arrears on each anniversary of the date the LIBOR
interest rate fix was made and at maturity.

 

SECTION 5.  Promissory Note.  The
Company promises to repay the unpaid principal balance of the loans on the
first CoBank business day following the last day of the term of the
Commitment.  In addition to the above,
the Company promises to pay interest on the unpaid principal balance of the
loans at the times and in accordance with the provisions set forth in
Section 4 hereof.  This note
replaces and supersedes, but does not constitute payment of the indebtedness
evidenced by, the promissory note set forth in the Supplement being amended and
restated hereby.

 

SECTION 6.  Borrowing Base Certificate, Etc.  The Company agrees to furnish a Borrowing Base Certificate to CoBank at
such times or intervals as CoBank may from time to time request.  Until receipt of such a request, the Company
agrees to furnish a Borrowing Base Certificate to CoBank as soon as available
after the end of each quarter, but in no event more than 5 days after the
Company’s quarterly filing with the Securities Exchange Commission, calculating
the Borrowing Base as of the last day of the quarter for which the Certificate
is being furnished.  However, if no
balance is outstanding hereunder on the last day of such period, no Report need
be furnished.  Regardless of the
frequency of the reporting, if

 

3

 

at any time the amount
outstanding under the Commitment exceeds the Borrowing Base, the Company shall
immediately notify CoBank and repay so much of the loans as is necessary to
reduce the amount outstanding under the Commitment to the limits of the
Borrowing Base.

 

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

 

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

 

SECTION 9.  Facility Fee.  In
consideration of the Commitment, the Company agrees to pay to CoBank on the
execution hereof, a fee in the amount of $176,250.00.

 

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

 

	
  CoBANK, ACB

  	
   

  	
  AMERICAN CRYSTAL SUGAR COMPANY

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Teresa Fountain

  	
   

  	
  By:

  	
  /s/ Mark Lembke

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Title:

  	
  Assistant Corporate Secretary

  	
   

  	
  Title:

  	
  Assistant Treasurer

  

 

4

 

EXHIBIT “A”

 

[Form of Borrowing Base]

American Crystal Sugar Company

Monthly Borrowing Base

For the month ended
                          

 

	
  Trade Accounts Receivables

  	
   

  	
  $

  	
  @ 80%

  	
  $

  	
   

  
	
  (a)

  	
   

  	
   

  	
   

  	
   

  	
   

  

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

 

	
  Inventory

  	
   

  	
  $

  	
  (b)

  	
   

  	
   

  

 

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

 

	
  Crop Payments due Non-members and members

  	
   

  	
  $

  	
  (c)

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Net Inventory Value (b-c)

  	
   

  	
  $

  	
  @ 75%

  	
  $

  	
   

  
	
  (d)

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Borrowing Base (a+d)

  	
   

  	
   

  	
   

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Commercial Paper

  	
   

  	
   

  	
   

  	
  $

  	
   

  
	
  (e)

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Seasonal Loan

  	
   

  	
   

  	
   

  	
   

  	
  (f)

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Commodity Credit Corp. loans

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (g)

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Total Short-term Loans (e+f+g)

  	
   

  	
  $Exhibit 10.1

 

AMENDED AND RESTATED ADVISORY
AGREEMENT

 

DIVIDEND CAPITAL TRUST INC.

 

 

TABLE OF CONTENTS

 

	
  1.

  	
  DEFINITIONS.

  	
   

  
	
   

  	
   

  	
   

  
	
  2.

  	
  APPOINTMENT

  	
   

  
	
   

  	
   

  	
   

  
	
  3.

  	
  DUTIES OF THE ADVISOR

  	
   

  
	
   

  	
   

  	
   

  
	
  4.

  	
  AUTHORITY OF ADVISOR

  	
   

  
	
   

  	
   

  	
   

  
	
  5.

  	
  BANK ACCOUNTS

  	
   

  
	
   

  	
   

  	
   

  
	
  6.

  	
  RECORDS; ACCESS

  	
   

  
	
   

  	
   

  	
   

  
	
  7.

  	
  LIMITATIONS ON ACTIVITIES

  	
   

  
	
   

  	
   

  	
   

  
	
  8.

  	
  RELATIONSHIP WITH DIRECTORS

  	
   

  
	
   

  	
   

  	
   

  
	
  9.

  	
  FEES

  	
   

  
	
   

  	
   

  	
   

  
	
  10.

  	
  EXPENSES

  	
   

  
	
   

  	
   

  	
   

  
	
  11.

  	
  OTHER SERVICES

  	
   

  
	
   

  	
   

  	
   

  
	
  12.

  	
  FIDELITY BOND

  	
   

  
	
   

  	
   

  	
   

  
	
  13.

  	
  REIMBURSEMENT TO THE
  ADVISOR

  	
   

  
	
   

  	
   

  	
   

  
	
  14.

  	
  OTHER ACTIVITIES OF THE
  ADVISOR

  	
   

  
	
   

  	
   

  	
   

  
	
  15.

  	
  RELATIONSHIP OF
  ADVISOR AND COMPANY

  	
   

  
	
   

  	
   

  	
   

  
	
  16.

  	
  TERM; TERMINATION OF
  AGREEMENT

  	
   

  
	
   

  	
   

  	
   

  
	
  17.

  	
  TERMINATION BY EITHER PARTY

  	
   

  
	
   

  	
   

  	
   

  
	
  18.

  	
  ASSIGNMENT TO AN AFFILIATE

  	
   

  
	
   

  	
   

  	
   

  
	
  19.

  	
  PAYMENTS
  TO AND DUTIES OF ADVISOR UPON TERMINATION

  	
   

  
	
   

  	
   

  	
   

  
	
  20.

  	
  INDEMNIFICATION BY THE
  COMPANY

  	
   

  
	
   

  	
   

  	
   

  
	
  21.

  	
  INDEMNIFICATION BY ADVISOR

  	
   

  
	
   

  	
   

  	
   

  
	
  22.

  	
  NOTICES

  	
   

  
	
   

  	
   

  	
   

  
	
  23.

  	
  MODIFICATION

  	
   

  
	
   

  	
   

  	
   

  
	
  24.

  	
  SEVERABILITY

  	
   

  
	
   

  	
   

  	
   

  
	
  25.

  	
  CONSTRUCTION

  	
   

  
	
   

  	
   

  	
   

  
	
  26.

  	
  ENTIRE AGREEMENT

  	
   

  
	
   

  	
   

  	
   

  
	
  27.

  	
  INDULGENCES, NOT WAIVERS

  	
   

  
	
   

  	
   

  	
   

  
	
  28.

  	
  GENDER

  	
   

  
	
   

  	
   

  	
   

  
	
  29.

  	
  TITLES NOT TO
  AFFECT INTERPRETATION

  	
   

  
	
   

  	
   

  	
   

  
	
  30.

  	
  EXECUTION IN COUNTERPARTS

  	
   

  
	
   

  	
   

  	
   

  
	
  31.

  	
  INITIAL INVESTMENT

  	
   

  

 

i

 

AMENDED AND RESTATED ADVISORY
AGREEMENT

 

THIS AMENDED AND RESTATED ADVISORY AGREEMENT, dated as
of November 21, 2003, as amended, is between Dividend Capital Trust Inc.,
a Maryland corporation (the “Company”), and Dividend Capital Advisors LLC, a
Colorado limited liability company (the “Advisor”) and amends the Advisory
Agreement (the “Original Agreement”) dated as of July 11, 2002 by and
among the same parties.

 

W I T N E S S E T H

 

WHEREAS, the Company has filed with the Securities and
Exchange Commission a Registration Statement on Form S-11 covering a public
offering of shares of its common stock (“Shares”) and the Company may
subsequently issue securities other than such Shares (“Securities”) or otherwise
raise additional capital;

 

WHEREAS, the Company and the Advisor wish to amend and
restate the Original Agreement;

 

WHEREAS, the Company intends to qualify as a REIT (as
defined below), and to invest its funds in investments permitted by the terms
of the Registration Statement and Sections 856 through 860 of the Code (as
defined below);

 

WHEREAS, the Company desires to avail itself of the
experience, sources of information, advice, assistance and certain facilities
of the Advisor and to have the Advisor undertake the duties and
responsibilities hereinafter set forth, on behalf of, and subject to the
supervision, of the Board of Directors of the Company all as provided herein;
and

 

WHEREAS, the Advisor is willing to undertake to render
such services, subject to the supervision of the Board of Directors, on the
terms and conditions hereinafter set forth;

 

NOW, THEREFORE, in consideration of the foregoing and
of the mutual covenants and agreements contained herein, the parties hereto
agree as follows:

 

1.                                       DEFINITIONS.  As
used in this Amended and Restated Advisory Agreement (the “Agreement”), the
following terms have the definitions hereinafter indicated:

 

Acquisition Expenses. Any and all
expenses, exclusive of Acquisition Fees, incurred by the Company, the Advisor,
or any Affiliate of either in connection with the selection or acquisition of
any Property, whether or not acquired, including, without limitation, legal
fees and expenses, travel and communications expenses, costs of appraisals,
nonrefundable option payments on property not acquired, accounting fees and
expenses, and title insurance.

 

Acquisition Fees. Any and all fees
and commissions, exclusive of Acquisition Expenses, paid by any person or
entity to any other person or entity (including any fees or commissions paid by
or to any Affiliate of the Company or the Advisor) in connection with making or
investing in mortgage loans and the selection or acquisition of any Property,
including, without limitation, real estate commissions, acquisition fees, finder’s
fees, selection fees, nonrecurring management fees, consulting fees, loan fees,
points, or any other fees or commissions of a similar nature.

 

Advisor. Dividend Capital Advisors
LLC, a Colorado limited liability company, any successor advisor to the
Company, or any person or entity to which Dividend Capital Advisors LLC or any
successor advisor subcontracts substantially all of its functions.

 

 

Advisor Asset Management Fee. An
amount of up to 0.75% per annum of the Company’s aggregate Real Estate Value
(excluding the Real Estate Asset Value of any Properties for which the Company
paid an acquisition fee in accordance with Section 9(a)(i)).

 

Affiliate or Affiliated. As to any
individual, corporation, partnership, trust or other association, (i) any Person
or entity, directly or indirectly, through one or more intermediaries
controlling, controlled by, or under common control with such other person or
entity; (ii) any Person or entity, directly or indirectly owning or controlling
ten percent (10%) or more of the outstanding voting securities of such other
person or entity; (iii) any officer, director, partner, or trustee of such
other person or entity; (iv) any Person ten percent (10%) or more of whose
outstanding voting securities are directly or indirectly owned, controlled, or
held, with power to vote, by such other person; and (v) if such other person or
entity is an officer, director, partner, or trustee of a Person or entity, the
Person or entity for which such Person or entity acts in any such capacity.

 

Appraised Value. Value according to
an appraisal made by an Independent Appraiser.

 

Articles of Incorporation. The
Articles of Incorporation of the Company, as amended from time to time.

 

Average Invested Assets. For a
specified period, the average of the aggregate book value of the assets of the
Company invested, directly or indirectly, in Properties and loans made by the
Company which are secured by real estate before reserves for depreciation or
bad debts or other similar non-cash reserves, computed by taking the average of
such values at the end of each month during such period.

 

Board of Directors or Board. The
persons holding such office, as of any particular time, under the Articles of
Incorporation of the Company, whether they be the Directors named therein or
additional or successor Directors.

 

Bylaws. The bylaws of the Company,
as the same are in effect from time to time.

 

Cash from Financings. Net cash
proceeds realized by the Company from the financing of Company Property or from
the refinancing of any Company indebtedness.

 

Cash from Sales. Net cash proceeds
realized by the Company from the sale, exchange or other disposition of any of
its assets after deduction of all expenses incurred in connection therewith.
Cash from Sales shall not include Cash from Financings.

 

Cash from Sales and Financings. The
total sum of Cash from Sales and Cash from Financings.

 

Cause. With respect to the
termination of this Agreement, fraud, criminal conduct, willful misconduct or
willful or negligent breach of fiduciary duty by the Advisor, breach of this
Agreement, a default by the Sponsor under the guarantee by the Sponsor to the
Company or the bankruptcy of the Sponsor.

 

Change of Control. A change of
control of the Company of such a nature that would be required to be reported
in response to the disclosure requirements of Schedule 14A of Regulation
14A promulgated under the Securities Exchange Act of 1934, as amended, as
enacted and in force on the date hereof (the “Exchange Act”), whether or not
the Company is then subject to such reporting requirements; provided, however,
that, without limitation, a change of control shall be deemed to have occurred
if: (i) any “person” (within the meaning of Section 13(d) of the Exchange
Act) is or becomes the “beneficial owner” (as that term is defined in Rule
13d-3, as enacted and in force on the date hereof, under the

 

2

 

Exchange Act) of securities of the Company representing 8.5% or more of
the combined voting power of the Company’s securities then outstanding; (ii)
there occurs a merger, consolidation or other reorganization of the Company
which is not approved by the Board of Directors of the Company; (iii) there
occurs a sale, exchange, transfer or other disposition of substantially all of
the assets of the Company to another entity, which disposition is not approved
by the Board of Directors of the Company; or (iv) there occurs a contested
proxy solicitation of the Stockholders of the Company that results in the contesting
party electing candidates to a majority of the Board of Directors’ positions
next up for election.

 

Code. Internal Revenue Code of 1986,
as amended from time to time, or any successor statute thereto. Reference to
any provision of the Code shall mean such provision as in effect from time to
time, as the same may be amended, and any successor provision thereto, as
interpreted by any applicable regulations as in effect from time to time.

 

Company. Dividend Capital Trust
Inc., a corporation organized under the laws of the State of Maryland.

 

Company Property. Any and all
property, real, personal or otherwise, tangible or intangible, which is
transferred or conveyed to the Company (including all rents, income, profits
and gains therefrom), and which is owned or held by, or for the account of, the
Company.

 

Competitive Real Estate Commission.
A real estate or brokerage commission for the purchase or sale of property
which is reasonable, customary, and competitive in light of the size, type, and
location of the property.  The total of
all real estate commissions paid by the Company to all Persons (including the
Subordinated Disposition Fee payable to the Advisor) in connection with any
Sale of one or more of the Company’s Properties shall not exceed the lesser of
(i) a Competitive Real Estate Commission or (ii) six percent of the gross sales
price of the Property or Properties.

 

Contract Purchase Price. The amount
actually paid or allocated (as of the date of purchase) to the purchase,
development, construction or improvement of property, exclusive of Acquisition
Fees and Acquisition Expenses.

 

Contract Sales Price. The total
consideration received by the Company for the sale of a Company Property.

 

Cumulative Return. For the period
for which the calculation is being made, the percentage resulting from dividing
(A) the total Distributions paid on each Distribution date during such period
(without regard to Distributions paid out of Cash from Sales and Financings),
by (B) the product of (i) the average Invested Capital for such period
(calculated on a daily basis), and (ii) the number of years (including
fractions thereof) elapsed during such period.

 

Dealer Manager.  Dividend Capital Securities LLC, an
Affiliate of the Advisor, or such other Person or entity selected by the Board
of Directors to act as the dealer manager for the Offering.  Dividend Capital Securities LLC is a member
of the National Association of Securities Dealers, Inc.

 

Dealer Manager Fee.  Up to: (a) 2.5% of Gross Proceeds payable to
the Dealer Manager for serving as the dealer manager of the Offering with
respect to the first $100 million of Gross Proceeds; and (b) 2.0% of Gross
Proceeds payable to the Dealer Manager for serving as the dealer manager of the
Offering with respect to any Gross Proceeds thereafter.

 

Director. A member of the Board of
Directors of the Company.

 

3

 

Distributions. Any distributions of
money or other property by the Company to owners of Shares, including
distributions that may constitute a return of capital for federal income tax
purposes.

 

Equity Interest. The stock of or
other interests in, or warrants or other rights to purchase the stock of or
other interests in, any entity that has borrowed money from the Company or that
is a tenant of the Company or that is a parent or controlling Person of any
such borrower or tenant.

 

Equity Shares. Transferable shares
of beneficial interest of the Company of any class or series, including common
shares or preferred shares.

 

Final Closing Date. The last date on
which purchasers of Shares offered pursuant to the Prospectus are issued such
Shares.

 

Good Reason. With respect to the
termination of this Agreement, (i) any failure to obtain a satisfactory
agreement from any successor to the Company to assume and agree to perform the
Company’s obligations under this Agreement; or (ii) any material breach of this
Agreement of any nature whatsoever by the Company.

 

Gross Proceeds. The aggregate
purchase price of all Shares sold for the account of the Company through the
Offering, without deduction for Selling Commissions, volume discounts, the
marketing support and due diligence expense reimbursement fee or Organization
and Offering Expenses. For the purpose of computing Gross Proceeds, the purchase
price of any Share for which reduced Selling Commissions are paid to the Dealer
Manager or a Soliciting Dealer (where net proceeds to the Company are not
reduced) shall be deemed to be $10.00.

 

Independent Appraiser. A qualified
appraiser of real estate as determined by the Board. Membership in a nationally
recognized appraisal society such as the American Institute of Real Estate
Appraisers (“M.A.I.”) or the Society of Real Estate Appraisers (“S.R.E.A.”)
shall be conclusive evidence of such qualification.

 

Independent Director. A Director who
is not and within the last two years has not been directly or indirectly
associated with the Advisor by virtue of (i) ownership of an interest in the
Advisor or its Affiliates, (ii) employment by the Advisor or its Affiliates,
(iii) service as an officer or director of the Advisor or its Affiliates, (iv)
performance of services, other than as a Director, for the Company, (v) service
as a director or trustee of more than three real estate investment trusts advised
by the Advisor, or (vi) maintenance of a material business or professional
relationship with the Advisor or any of its Affiliates. A business or
professional relationship is considered material if the gross revenue derived
by the Director from the Advisor and Affiliates exceeds 5% of either the
Director’s annual gross revenue during either of the last two years or the
Director’s net worth on a fair market value basis. An indirect relationship
shall include circumstances in which a Director’s spouse, parents, children,
siblings, mothers- or fathers-in-law, sons- or daughters-in-law, or brothers-
or sisters-in-law is or has been associated with the Advisor, any of its
Affiliates, or the Company.

 

Independent Expert. A person or
entity with no material current or prior business or personal relationship with
the Advisor or the Directors and who is engaged to a substantial extent in the
business of rendering opinions regarding the value of assets of the type held
by the Company.

 

Invested Capital. The amount calculated
by multiplying the total number of Shares purchased by stockholders by the
issue price, reduced by the portion of any Distribution that is attributable to
Net Sales Proceeds and by any amounts paid by the Company to repurchase Shares
pursuant to the Company’s plan for redemption of Shares.

 

4

 

Joint Ventures. The joint venture or
partnership arrangements (other than Dividend Capital Operating Partnership LP)
in which the Company is a co-venturer or general partner which are established
to acquire Properties.

 

Listing. The listing of the Shares
of the Company on a national securities exchange or over-the-counter market.

 

Net Income. For any period, the
total revenues applicable to such period, less the total expenses applicable to
such period excluding additions to reserves for depreciation, bad debts or
other similar non-cash reserves; provided, however, Net Income for purposes of
calculating total allowable Operating Expenses (as defined herein) shall
exclude the gain from the sale of the Company’s assets.

 

Net Sales Proceeds. In the case of a
transaction described in clause (A) of the definition of Sale, the proceeds of
any such transaction less the amount of all real estate commissions and closing
costs paid by the Operating Partnership. 
In the case of a transaction described in clause (B) of such definition,
Net Sales Proceeds means the proceeds of any such transaction less the amount
of any legal and other selling expenses incurred by the Operating Partnership
in connection with such transaction.  In
the case of a transaction described in clause (C) of such definition, Net Sales
Proceeds means the proceeds of any such transaction actually distributed to the
Operating Partnership from the Joint Venture less any expenses incurred by the
Operating Partnership in connection with such transaction.  In the case of a transaction described in
clause (D) of the definition of Sale, Net Sales Proceeds means the proceeds of
such transaction or series of transactions less the amount of all commissions
and closing costs paid by the Operating Partnership.  In the case of transactions described in clause (E) of such
definition, Net Sales Proceeds means the proceeds of any such transaction less
the amount of all selling costs and other expenses incurred by the Operating
Partnership in connection with such transaction.  Net Sales Proceeds shall also include, in the case of any lease
of a Property consisting of a building only, any amounts that the Company
determines, in its discretion, to be economically equivalent to proceeds of a
Sale.  Net Sales Proceeds shall not
include any amounts used to repay the outstanding indebtedness secured by the
asset disposed of in the sale.

 

Offering. The initial public
offering of Shares pursuant to the Prospectus.

 

Operating Expenses. All costs and
expenses incurred by the Company, as determined under generally accepted
accounting principles, which in any way are related to the operation of the
Company or to Company business, including advisory fees and the Advisor Asset
Management Fees, but excluding (i) the expenses of raising capital such as
Organizational and Offering Expenses, the Dealer Manager Fee, Selling
Commissions, legal, audit, accounting, underwriting, brokerage, listing, registration,
and other fees, printing and other such expenses and tax incurred in connection
with the issuance, distribution, transfer, registration and Listing of the
Shares, (ii) interest payments, (iii) taxes, (iv) non-cash expenditures such as
depreciation, amortization and bad loan reserves, (v) the Property Management
Fee and (vi) Acquisition Fees and Acquisition Expenses, real estate
commissions on the sale of property, and other expenses connected with the
acquisition, and ownership of real estate interests, mortgage loans or other
property (such as the costs of foreclosure, insurance premiums, legal services,
maintenance, repair and improvement of property).

 

Operating Partnership.  Dividend Capital Operating Partnership LP,
the limited partnership through which the Company will own the Properties.

 

OP Unit.  Units of limited partnership interest in the Operating
Partnership.

 

5

 

Organizational and Offering Expenses.  Any and all costs and expenses, other than
Selling Commissions and the Dealer Manager Fee and due diligence expense
reimbursement fee, incurred by the Advisor or any Affiliate in connection with
the formation, qualification and registration of the Company and the marketing
and distribution of Shares, including, without limitation, the following: total
underwriting and brokerage discounts and commissions (including fees of the
underwriters’ attorneys); legal, accounting and escrow fees; printing,
amending, supplementing, mailing and distribution costs; salaries of employees
while engaged in registering, marketing and wholesaling the Shares; filing,
registration and qualification fees and taxes; telegraph and telephone costs;
and all advertising and marketing expenses, including the costs related to
investor and broker-dealer sales meetings. 
The Organizational and Offering Expenses paid by the Company in
connection with formation of the Company will not exceed (a) 3% of the
first $100 million of Gross Proceeds raised in connection with the Offering;
and (b) 2% of any Gross Proceeds raised in connection with the Offering
thereafter.

 

Permitted Affiliate.  Any Affiliate of the Advisor other than an
Affiliate that is a property management company engaged to manage any
properties or other assets owned directly or indirectly by the Company.

 

Person. An individual, corporation,
partnership, trust, joint venture, limited liability company or other entity.

 

Property or Properties. (i) The real
properties, including the buildings located thereon, or (ii) the real
properties only, or (iii) the buildings only, which are acquired by the Company
or the Operating Partnership, either directly or through joint venture
arrangements or other partnerships.

 

Property Management Fee.  Fees paid to a property management company
(which may be an Affiliate of the Advisor) in consideration for the management
and leasing of Properties.

 

Prospectus. “Prospectus” has the
meaning set forth in Section 2(10) of the Securities Act of 1933, as
amended (the “Securities Act”), including a preliminary Prospectus, an offering
circular as described in Rule 256 of the General Rules and Regulations under
the Securities Act or, in the case of an intrastate offering, any document by
whatever name known, utilized for the purpose of offering and selling
securities to the public.

 

Real Estate Asset Value. The amount
actually paid or allocated to the purchase, development, construction or
improvement of a Property, exclusive of Acquisition Fees and Acquisition
Expenses.

 

Registration Statement. The
Registration Statement filed on Form S-11 with respect to the Offering, of
which the Prospectus is a part.

 

REIT. A “real estate investment
trust” under Sections 856 through 860 of the Code.

 

Sale or Sales.  Any transaction or series of transactions whereby:
(A) the Operating Partnership sells, grants, transfers, conveys, or
relinquishes its ownership of any Property or portion thereof, including the
lease of any Property consisting of the building only, and including any event
with respect to any Property which gives rise to a significant amount of
insurance proceeds or condemnation awards; (B) the Operating Partnership sells,
grants, transfers, conveys, or relinquishes its ownership of all or
substantially all of the interest of the Operating Partnership in any Joint
Venture in which it is a co-venturer or partner; or (C) any Joint Venture in
which the Operating Partnership is a co-venturer or partner sells, grants,
transfers, conveys, or relinquishes its ownership of any Property or portion
thereof, including any event with respect to any Property which gives rise to
insurance claims or condemnation awards; (D) the Operating Partnership sells,
grants, conveys, or relinquishes its interest in any asset, or portion thereof,

 

6

 

including any event with respect to any asset which gives rise to a
significant amount of insurance proceeds or similar awards; or (E) the
Operating Partnership sells or otherwise disposes of or distributes all of its
assets in liquidation of the Operating Partnership.

 

Securities. Any Equity Shares,
Excess Shares, as such term is defined in the Company’s Articles of
Incorporation, any other stock, shares or other evidences of equity or
beneficial or other interests, voting trust certificates, bonds, debentures,
notes or other evidences of indebtedness, secured or unsecured, convertible,
subordinated or otherwise, or in general any instruments commonly known as
“securities” or any certificates of interest, shares or participations in, temporary
or interim certificates for, receipts for, guarantees of, or warrants, options
or rights to subscribe to, purchase or acquire, any of the foregoing.

 

Selling Commissions.  Up to: (a) 7% of Gross Proceeds payable to
the Dealer Manager or Soliciting Dealers with respect to Securities sold by
them with respect to the first $100 million of Gross Proceeds; and (b) 6% of
Gross Proceeds payable to the Dealer Manager or Soliciting Dealers with respect
to Securities sold by them with respect to any Gross Proceeds thereafter;
provided that the selling commission may be up to 7% with respect to Gross
Proceeds resulting from a sale of Securities to a purchaser that elects to pay
a deferred commission.  The Company
shall restrict the Dealer Manager from re-allowing in excess of 1% of the fee
it receives for acting as Dealer Manager.

 

Shares. The shares of the common
stock of the Company to be sold in the Offering.

 

Soliciting Dealers. Broker-dealers
who are members of the National Association of Securities Dealers, Inc., or
that are exempt from broker-dealer registration, and who, in either case, have
executed participating broker or other agreements with the Dealer Manager to
sell Shares.

 

Special OP Units.  The separate series of limited partnership
interests to be issued in accordance with Paragraph 9(d).

 

Sponsor. Any Person directly or
indirectly instrumental in organizing, wholly or in part, the Company or any
Person who will control, manage or participate in the management of the
Company, and any Affiliate of such Person. 
Not included is any Person whose only relationship with the Company is
that of an independent property manager of Company assets, and whose only
compensation is as such. Sponsor does not include wholly independent third
parties such as attorneys, accountants, and underwriters whose only
compensation is for professional services.

 

Stockholders. The registered holders
of the Company’s Shares.

 

Stockholders’ 7% Return. As of each
date, an aggregate amount equal to a 7% cumulative, noncompounded, annual
return on Invested Capital.

 

Termination Date. The date of
termination of the Agreement.

 

Termination Event.  The termination or nonrenewal of this
Agreement (i) in connection with a merger, sale of assets or transaction
involving the Company pursuant to which a majority of the Directors then in
office are replaced or removed, (ii) by the Advisor for Good Reason or (iii) by
the Company other than for Cause.

 

Total Property Cost. With regard to
any Company Property, an amount equal to the sum of the Real Estate Asset Value
of such Property plus the Acquisition Fees paid in connection with such
Property.

 

7

 

2%/25% Guidelines. For any year in
which the Company qualifies as a REIT, the requirement pursuant to the
guidelines of the North American Securities Administrators Association, Inc.
that, in any 12 month period, total Operating Expenses not exceed the greater
of 2% of the Company’s Average Invested Assets during such 12 month period or
25% of the Company’s Net Income over the same 12 month period.

 

Valuation. An estimate of value of
the assets of the Company as determined by an Independent Expert.

 

2.                                       APPOINTMENT. The Company hereby appoints the Advisor to
serve as its advisor on the terms and conditions set forth in this Agreement,
and the Advisor hereby accepts such appointment.

 

3.                                       DUTIES OF THE ADVISOR. The Advisor undertakes to
use its best efforts to present to the Company potential investment
opportunities and to provide a continuing and suitable investment program
consistent with the investment objectives and policies of the Company as
determined and adopted from time to time by the Directors. In performance of
this undertaking, subject to the supervision of the Directors and consistent
with the provisions of the Registration Statement, Articles of Incorporation
and Bylaws of the Company, the Advisor shall, either directly or by engaging a
Permitted Affiliate:

 

(a)                                  serve
as the Company’s investment and financial advisor and provide research and economic
and statistical data in connection with the Company’s assets and investment
policies;

 

(b)                                 provide
the daily management of the Company and perform and supervise the various
administrative functions reasonably necessary for the management of the Company;

 

(c)                                  investigate,
select, and, on behalf of the Company, engage and conduct business with such
Persons as the Advisor deems necessary to the proper performance of its
obligations hereunder, including but not limited to consultants, accountants,
correspondents, lenders, technical advisors, attorneys, brokers, underwriters,
corporate fiduciaries, escrow agents, depositaries, custodians, agents for
collection, insurers, insurance agents, banks, builders, developers, property
owners, mortgagors, and any and all agents for any of the foregoing, including
Affiliates of the Advisor, and Persons acting in any other capacity deemed by
the Advisor necessary or desirable for the performance of any of the foregoing
services, including but not limited to entering into contracts in the name of
the Company with any of the foregoing;

 

(d)                                 consult
with the officers and Directors of the Company and assist the Directors in the
formulation and implementation of the Company’s financial policies, and, as
necessary, furnish the Directors with advice and recommendations with respect
to the making of investments consistent with the investment objectives and
policies of the Company and in connection with any borrowings proposed to be
undertaken by the Company;

 

(e)                                  subject
to the provisions of Paragraphs 3(g) and 4 hereof, (i) locate, analyze and
select potential investments in Properties, (ii) structure and negotiate the
terms and conditions of transactions pursuant to which investment in Properties
will be made; (iii) make investments in Properties on behalf of the Company in
compliance with the investment objectives and policies of the Company; (iv)
arrange for financing and refinancing and make other changes in the asset or
capital structure of, and dispose of, reinvest the proceeds from the sale of,
or otherwise deal with the investments in, Property; and (v) enter into leases
and service contracts for Company Property and, to the extent necessary,
perform all other operational functions for the maintenance and administration of
such Company Property;

 

8

 

(f)                                    provide
the Directors with periodic reports regarding prospective investments in
Properties;

 

(g)                                 obtain
the prior approval of the Directors (including a majority of all Independent
Directors) for any and all investments in Properties;

 

(h)                                 negotiate
on behalf of the Company with banks or lenders for loans to be made to the
Company, and negotiate on behalf of the Company with investment banking firms
and broker-dealers or negotiate private sales of Shares and Securities or
obtain loans for the Company, but in no event in such a way so that the Advisor
shall be acting as broker-dealer or underwriter; and provided, further, that
any fees and costs payable to third parties incurred by the Advisor in
connection with the foregoing shall be the responsibility of the Company;

 

(i)                                     obtain
reports (which may be prepared by the Advisor or its Affiliates), where
appropriate, concerning the value of investments or contemplated investments of
the Company in Properties;

 

(j)                                     from
time to time, or at any time reasonably requested by the Directors, make
reports to the Directors of its performance of services to the Company under
this Agreement;

 

(k)                                  provide
the Company with all necessary cash management services;

 

(l)                                     do
all things necessary to assure its ability to render the services described in
this Agreement;

 

(m)                               deliver
to or maintain on behalf of the Company copies of all appraisals obtained in
connection with the investments in Properties; and

 

(n)                                 notify
the Board of all proposed material transactions before they are completed.

 

4.                                       AUTHORITY OF ADVISOR.

 

(a)                                  Pursuant
to the terms of this Agreement (including the restrictions included in this
Paragraph 4 and in Paragraph 7), and subject to the continuing and exclusive
authority of the Directors over the management of the Company, the Directors
hereby delegate to the Advisor the authority to (1) locate, analyze and select
investment opportunities, (2) structure the terms and conditions of transactions
pursuant to which investments will be made or acquired for the Company, (3)
acquire Properties in compliance with the investment objectives and policies of
the Company, (4) arrange for financing or refinancing Property, (5) enter into
leases and service contracts for the Company’s Property, (6) oversee Affiliated
and non-Affiliated property managers who perform services for the Company; and
(7) manage accounting and other record-keeping functions for the Company.

 

(b)                                 Notwithstanding
the foregoing, any investment in Properties, including any acquisition of
Property by the Company (as well as any financing acquired by the Company in
connection with such acquisition), will require the prior approval of the
Directors (including a majority of the Independent Directors).

 

(c)                                  If
a transaction requires approval by the Independent Directors, the Advisor will
deliver to the Independent Directors all documents required by them to properly
evaluate the proposed investment in the Property.

 

9

 

The prior approval of a majority of the Independent
Directors and a majority of the Directors not otherwise interested in the
transaction will be required for each transaction which is proposed for the
Company by the Advisor or its Affiliates. The Directors may, at any time upon
the giving of notice to the Advisor, modify or revoke the authority set forth
in this Paragraph 4. If and to the extent the Directors so modify or revoke the
authority contained herein, the Advisor shall henceforth submit to the
Directors for prior approval such proposed transactions involving investments
in Property as thereafter require prior approval, provided however, that such
modification or revocation shall be effective upon receipt by the Advisor and
shall not be applicable to investment transactions to which the Advisor has
committed the Company prior to the date of receipt by the Advisor of such
notification.

 

5.                                       BANK ACCOUNTS. 
The Advisor may establish and maintain one or more bank accounts in its
own name for the account of the Company or in the name of the Company and may
collect and deposit into any such account or accounts, and disburse from any
such account or accounts, any money on behalf of the Company, under such terms
and conditions as the Directors may approve, provided that no funds shall be
commingled with the funds of the Advisor; and the Advisor shall from time to
time render appropriate accountings of such collections and payments to the
Directors and to the auditors of the Company.

 

6.                                       RECORDS; ACCESS. 
The Advisor shall maintain appropriate records of all its activities
hereunder and make such records available for inspection by the Directors and
by counsel, auditors and authorized agents of the Company, at any time or from
time to time during normal business hours. The Advisor shall at all reasonable
times have access to the books and records of the Company.

 

7.                                       LIMITATIONS ON ACTIVITIES.  Anything else in this Agreement to the
contrary notwithstanding, the Advisor shall refrain from taking any action
which, in its sole judgment made in good faith, would (a) adversely affect the
status of the Company as a REIT, (b) subject the Company to regulation under
the Investment Company Act of 1940, as amended, or (c) violate any law, rule,
regulation or statement of policy of any governmental body or agency having
jurisdiction over the Company, its Shares or its Securities, or otherwise not
be permitted by the Articles of Incorporation or Bylaws of the Company, except
if such action shall be ordered by the Directors, in which case the Advisor
shall notify promptly the Directors of the Advisor’s judgment of the potential
impact of such action and shall refrain from taking such action until it
receives further clarification or instructions from the Directors. In such
event the Advisor shall have no liability for acting in accordance with the
specific instructions of the Directors so given. Notwithstanding the foregoing,
the Advisor, its directors, officers, employees and stockholders, and
stockholders, directors and officers of the Advisor’s Affiliates shall not be
liable to the Company or to the Directors or stockholders for any act or
omission by the Advisor, its directors, officers or employees, or stockholders,
directors or officers of the Advisor’s Affiliates taken or omitted to be taken
in the performance of their duties under this Agreement except as provided in
Paragraphs 20 and 21 of this Agreement.

 

8.                                       RELATIONSHIP WITH DIRECTORS.  Subject to paragraph 7 of this Agreement and
to restrictions advisable with respect to the qualification of the Company as a
REIT, directors, officers and employees of the Advisor or an Affiliate of the
Advisor or any corporate parents of an Affiliate, or directors, officers or
stockholders of any director, officer or corporate parent of an Affiliate may
serve as a Director and as officers of the Company, except that no director,
officer or employee of the Advisor or its Affiliates who also is a Director or
officer of the Company shall receive any compensation from the Company for
serving as a Director or officer other than reasonable reimbursement for travel
and related expenses incurred in attending meetings of the Directors.

 

10

 

9.                                       FEES.

 

(a)                                  Acquisition
Fees. The Advisor shall receive as compensation for services rendered in
connection with the investigation, selection and acquisition (by purchase,
investment or exchange) of Property an Acquisition Fee payable by the Company.
The Acquisition Fees shall be reduced to the extent that, and, if necessary to
limit, the total compensation paid to all persons involved in the acquisition
of any Property to the amount customarily charged in arm’s-length transactions
by other persons or entities rendering similar services as an ongoing public
activity in the same geographical location and for comparable types of
Properties and to the extent that other acquisition fees, finder’s fees, real
estate commissions, or other similar fees or commissions are paid by any person
in connection with the transaction.  The
total Acquisition Fees paid to the Advisor or its Affiliates shall not exceed
(i) 3%  of
the Contract Purchase Price of Properties acquired directly or indirectly by
the Company for the first $170 million in aggregate Contract Purchase Price of
Properties acquired; and (ii) 1% of the Contract Purchase Price of Properties
acquired directly or indirectly by the Company thereafter.  Acquisition Fees shall be payable on the
acquisition of a specific property or the acquisition of a portfolio of
properties through a purchase of assets, merger or similar transaction.  However, the total of all Acquisition Fees
and Acquisition Expenses payable with respect to any Property shall not exceed
6% of the Contract Purchase Price of such Property unless fees in excess of
such amount are approved by a majority of the Directors not interested in such
transaction and by a majority of the Independent Directors not interested in
such transaction.

 

(b)                                 Subordinated
Disposition Fee. If the Advisor or an Affiliate provides a substantial
amount of the services (as determined by a majority of the Independent
Directors) in connection with the Sale of one or more Properties, the Advisor
or an Affiliate shall receive a Subordinated Disposition Fee equal to the
lesser of (i) one-half of a Competitive Real Estate Commission or (ii) 3% of
the sales price of such Property or Properties. The Subordinated Disposition
Fee will be paid only if Stockholders have received total Distributions in an
amount equal to the sum of their aggregate Invested Capital and their aggregate
Stockholders’ 7% Return. To the extent that Subordinated Disposition Fees are
not paid by the Company on a current basis due to the foregoing limitation, the
unpaid fees will be accrued and paid at such time as the subordination
conditions have been satisfied. The Subordinated Disposition Fee may be paid in
addition to real estate commissions paid to non-Affiliates, provided that the
total real estate commissions paid to all Persons by the Company shall not
exceed an amount equal to the lesser of (i) 6% of the Contract Sales Price of a
Property or (ii) the Competitive Real Estate Commission. In the event this
Agreement is terminated prior to such time as the Stockholders have received total
Distributions in an amount equal to 100% of Invested Capital plus an amount
sufficient to pay the Stockholders’ 7% Return through the Termination Date, an
appraisal of the Properties then owned by the Company shall be made and the
Subordinated Disposition Fee on Properties previously sold will be deemed
earned if the Appraised Value of the Properties then owned by the Company plus
total Distributions received prior to the Termination Date equals 100% of
Invested Capital plus an amount sufficient to pay the Stockholders’ 7% Return
through the Termination Date. Upon Listing, if the Advisor has accrued but not
been paid such Subordinated Disposition Fee, then for purposes of determining
whether the subordination conditions have been satisfied, Stockholders will be
deemed to have received a Distribution in the amount equal to the product of
the total number of Shares outstanding and the average closing price of the
Shares over a period, beginning 180 days after Listing, of 30 days during which
the Shares are traded.

 

(c)                                  Advisor
Asset Management Fee. The Advisor shall receive as compensation for
services rendered in connection with the management of the Company’s assets the
Advisor Asset Management Fee.  The
Advisor Asset Management Fee shall be payable by the Company in cash or in
Shares at the option of the Advisor, and may be deferred, in whole or in part,
from time to time, by the Advisor (without interest).  The Advisor Asset Management Fee shall be calculated monthly, not
to

 

11

 

exceed a rate of 0.0625% per month. 
The Advisor Asset Management Fee calculated with respect to each month
shall be payable by the Company on the first business day following the last
day of such month.

 

(d)                                 Operating
Partnership Interests.  The Advisor
will make a capital contribution of $200,000 to the Operating Partnership in
exchange for OP Units.  An affiliate of
the Advisor also will be issued OP Units constituting a separate series of
limited partnership interests (the “Special OP Units”).  The holder of the Special OP Units will be
entitled to distributions from the Operating Partnership in an amount equal to
15% of the Net Sales Proceeds after the holders of regular partnership interests
have received cumulative distributions from the Operating Partnership from
operating income, sales proceeds or other sources equal to their capital
contributions to the Operating partnership plus a 7% cumulative, noncompounded
annualized return thereon.  Upon the
earliest to occur of the termination of this Agreement for Cause, a
Termination  Event or the Listing, all
of the Special OP Units shall be redeemed by the Operating Partnership.  In the case of a redemption upon a
Termination Event or the Listing, the Special OP Units shall be redeemed for an
aggregate amount equal to the Net Sales Proceeds that would have been
distributed to the holders of Special OP Units in accordance with the preceding
sentence if a transaction within the meaning of clause (E) of the definition of
Sale had occurred on such date, all assets of the Operating Partnership had
been sold for their fair market value and all liabilities of the Operating
Partnership had been satisfied in full according to their terms.  In determining the fair market value of the
assets of the Operating Partnership, (i) in connection with a Termination
Event, the Company shall obtain an appraisal of the properties of the Operating
Partnership and (ii) in connection with the Listing, the Company shall make
such determination taking into account the market value of the Company’s listed
Shares based upon the average closing price, or average of bid and asked
prices, as the case may be, during a period of 30 days during which such Shares
are traded beginning 180 days after the Listing.  If the Agreement is terminated or not renewed by the Company for
Cause, the Special OP Units shall be redeemed by the Operating Partnership for
$1.  The Operating Partnership will
redeem the Special OP Units for cash. 
There shall be a corresponding allocation of profits of the Operating
Partnership made to the holder of the Special OP Units in connection with the
amounts payable hereunder and such amounts will be payable only out of profits
of the Operating Partnership.

 

(e)                                  Loans
from Affiliates. If any loans are made to the Company by an Affiliate of
the Advisor, the maximum amount of interest that may be charged by such
Affiliate shall be the lesser of (i) 1% above the prime rate of interest
charged from time to time by the principal bank then used by the Company and
(ii) the rate that would be charged to the Company by unrelated lending
institutions on comparable loans for the same purpose. The terms of any such
loans shall be no less favorable than the terms available between
non-Affiliated Persons for similar commercial loans.

 

(f)                                    Changes
to Fee Structure. In the event of Listing, the Company and the Advisor
shall negotiate in good faith to establish a fee structure appropriate for a
perpetual-life entity. A majority of the Independent Directors must approve the
new fee structure negotiated with the Advisor. In negotiating a new fee
structure, the Independent Directors shall consider all of the factors they
deem relevant, including, but not limited to: (i) the amount of the advisory
fee in relation to the asset value, composition and profitability of the
Company’s portfolio; (ii) the success of the Advisor in generating
opportunities that meet the investment objectives of the Company; (iii) the
rates charged to other REITs and to investors other than REITs by Advisors
performing the same or similar services; (iv) additional revenues realized by
the Advisor and its Affiliates through their relationship with the Company,
including loan administration, underwriting or broker commissions, servicing,
engineering, inspection and other fees, whether paid by the REIT or by others
with whom the REIT does business; (v) the quality and extent of service and
advice furnished by the Advisor; (vi) the performance of the investment
portfolio of the REIT, including income, conversion or appreciation of capital,
and number and frequency of problem investments; and (vii) the quality of the
Property portfolio of the Company in relationship to the

 

12

 

investments generated by the Advisor for its own account.  The new fee structure can be no more
favorable to the Advisor than the current fee structure.

 

(g)                                 Exclusion
of Certain Transactions.  In the
event the Company shall propose to enter into any transaction in which an
officer or director of the Company, the Advisor, or any Affiliate of the
Company or the Advisor has a direct or indirect interest, then (i) such
transaction shall be approved by a majority of the Board of Directors and also
by a majority of the Independent Directors and (ii) any commissions or
remuneration received by any such persons in connection with such transaction
shall be deducted from the fees payable under this Agreement.

 

10.                                 EXPENSES.

 

(a)                                  In
addition to the compensation paid to the Advisor pursuant to Paragraph 9
hereof, the Company shall pay directly or reimburse the Advisor for all of the
expenses paid or incurred by the Advisor in connection with the services it
provides to the Company pursuant to this Agreement, including, but not limited
to:

 

(i)                                     the
Company’s Organizational and Offering Expenses; provided, however, that within
60 days after the end of the month in which the Offering terminates, the
Advisor shall reimburse the Company for any Organizational and Offering
Expenses reimbursement received by the Advisor pursuant to this Paragraph 10,
to the extent that such reimbursement exceeds the maximum amount permitted or,
at the option of the Company, such excess shall be subtracted from the next
reimbursement of expense to be made by the Company pursuant to this paragraph
10.  The Advisor shall be responsible
for the payment of all the Company’s Organizational and Offering Expenses in
excess of the maximum amount permitted;

 

(ii)                                  Acquisition
Expenses incurred in connection with the selection and acquisition of
Properties at the lesser of the actual cost or 90% of the competitive rate
charged by unaffiliated persons providing similar goods and services in the
same geographic location;

 

(iii)                               the actual cost of goods
and services used by the Company and obtained from entities not affiliated with
the Advisor, other than Acquisition Expenses, including brokerage fees paid in
connection with the purchase and sale of securities;

 

(iv)                              interest
and other costs for borrowed money, including discounts, points and other similar
fees;

 

(v)                                 taxes
and assessments on income of the Company or Properties;

 

(vi)                              costs
associated with insurance required in connection with the business of the
Company or by the Directors;

 

(vii)                           expenses of managing and
operating Properties owned by the Company, whether payable to an Affiliate of
the Company or a non-affiliated Person.

 

(viii)                        all expenses in connection with
payments to the Directors and meetings of the Directors and Stockholders;

 

(ix)                                expenses
associated with Listing or with the issuance and distribution of Shares and
Securities, such as selling commissions and fees, advertising expenses, taxes,
legal and accounting fees, Listing and registration fees, and other
Organization and Offering Expenses;

 

13

 

(x)                                   expenses
connected with payments of Distributions in cash or otherwise made or caused to
be made by the Company to the Stockholders;

 

(xi)                                expenses
of organizing, revising, amending, converting, modifying, or terminating the
Company or the Articles of Incorporation;

 

(xii)                             expenses of maintaining
communications with Stockholders, including the cost of preparation, printing,
and mailing annual reports and other Stockholder reports, proxy statements and
other reports required by governmental entities;

 

(xiii)                          administrative service
expenses (including personnel costs; provided, however, that no reimbursement
shall be made for costs of personnel to the extent that such personnel perform
services in transactions for which the Advisor receives a separate fee); and

 

(xiv)                         audit, accounting and legal
fees.

 

(b)                                 Expenses
incurred by the Advisor on behalf of the Company and payable pursuant to this
Paragraph 10 shall be reimbursed no less than monthly to the Advisor. The
Advisor shall prepare a statement documenting the expenses of the Company and
the calculation of the Advisor Asset Management Fee during each quarter, and
shall deliver such statement to the Company within 45 days after the end of
each quarter.

 

11.                                 OTHER SERVICES. 
Should the Directors request that the Advisor or any director, officer
or employee thereof render services for the Company other than set forth in
Paragraph 3, such services shall be separately compensated at such rates and in
such amounts as are agreed by the Advisor and the Independent Directors of the
Company, subject to the limitations contained in the Articles of Incorporation,
and shall not be deemed to be services pursuant to the terms of this Agreement.

 

12.                                 FIDELITY BOND. 
The Advisor shall maintain a fidelity bond for the benefit of the
Company which bond shall insure the Company from losses of up to $200,000 per
occurrence and shall be of the type customarily purchased by entities
performing services similar to those provided to the Company by the Advisor.

 

13.                                 REIMBURSEMENT TO THE ADVISOR.  For any year in which the Company qualifies
as a REIT, the Company shall not reimburse the Advisor at the end of any fiscal
quarter Operating Expenses that, in the four consecutive fiscal quarters then
ended (the “Expense Year”) exceed (the “Excess Amount”) the greater of 2% of
Average Invested Assets or 25% of Net Income (the “2%/25% Guidelines”) for such
year. Any Excess Amount paid to the Advisor during a fiscal quarter shall be
repaid to the Company or, at the option of the Company, subtracted from the
Operating Expenses reimbursed during the subsequent fiscal quarter.  If there is an Excess Amount in any Expense
Year and the Independent Directors determine that such excess was justified,
based on unusual and nonrecurring factors which they deem sufficient, the
Excess Amount may be carried over and included in Operating Expenses in
subsequent Expense Years, and reimbursed to the Advisor in one or more of such
years, provided that Operating Expenses in any Expense Year, including any
Excess Amount to be paid to the Advisor, shall not exceed the 2%/25%
Guidelines.  Within 60 days after the
end of any fiscal quarter of the Company for which total Operating Expenses for
the Expense Year exceed the 2%/25% Guidelines, there shall be sent to the
stockholders a written disclosure of such fact, together with an explanation of
the factors the Independent Directors considered in determining that such
excess expenses were justified. Such determination shall be reflected in the
minutes of the meetings of the Board of Directors. The Company will not
reimburse the Advisor or its Affiliates for services for which the Advisor or
its Affiliates are entitled to compensation in the form of a separate fee. All
figures used in the foregoing

 

14

 

computation shall be determined in accordance with generally accepted
accounting principles applied on a consistent basis.

 

14.                                 OTHER ACTIVITIES OF THE ADVISOR.  Nothing herein contained shall prevent the
Advisor from engaging in other activities, including, without limitation, the
rendering of advice to other Persons (including other REITs) and the management
of other programs advised, sponsored or organized by the Advisor or its
Affiliates; nor shall this Agreement limit or restrict the right of any
director, officer, employee, or stockholder of the Advisor or its Affiliates to
engage in any other business or to render services of any kind to any other
partnership, corporation, firm, individual, trust or association. The Advisor
may, with respect to any investment in which the Company is a participant, also
render advice and service to each and every other participant therein. The
Advisor shall report to the Directors the existence of any condition or circumstance,
existing or anticipated, of which it has knowledge, which creates or could
create a conflict of interest between the Advisor’s obligations to the Company
and its obligations to or its interest in any other partnership, corporation,
firm, individual, trust or association. The Advisor or its Affiliates shall
promptly disclose to the Directors knowledge of such condition or circumstance.
If the Sponsor, Advisor, Director or Affiliates thereof have sponsored other
investment programs with similar investment objectives which have investment
funds available at the same time as the Company, it shall be the duty of the
Directors (including the Independent Directors) to adopt the method set forth
in the Registration Statement or another reasonable method by which properties
are to be allocated to the competing investment entities and to use their best
efforts to apply such method fairly to the Company.

 

The Advisor shall be required to use its best efforts
to present a continuing and suitable investment program to the Company which is
consistent with the investment policies and objectives of the Company, but
neither the Advisor nor any Affiliate of the Advisor shall be obligated
generally to present any particular investment opportunity to the Company even
if the opportunity is of character which, if presented to the Company, could be
taken by the Company.

 

The Advisor or its Affiliates may make such an
investment in a property only after (i) such investment has been offered to the
Company and all public partnerships and other investment entities Affiliated
with the Company with funds available for such investment and (ii) such
investment is found to be unsuitable for investment by the Company, such
partnerships and investment entities.

 

In the event that the Advisor or its Affiliates is
presented with a potential investment which might be made by the Company and by
another investment entity which the Advisor or its Affiliates advises or
manages, the Advisor shall consider the investment portfolio of each entity, cash
flow of each entity, the effect of the acquisition on the diversification of
each entity’s portfolio, rental payments during any renewal period, the
estimated income tax effects of the purchase on each entity, the policies of
each entity relating to leverage, the funds of each entity available for
investment and the length of time such funds have been available for
investment. In the event that an investment opportunity becomes available which
the Advisor determines is suitable for the Company based on the criteria set
forth above, then the investment opportunity shall be offered to the
Company.  The Advisor may consider the
property for its own investment only if such property is deemed inappropriate
for any investment entity which is advised or managed by the Advisor, including
the Company.

 

15.                                 RELATIONSHIP OF ADVISOR AND COMPANY.  The Company and the Advisor are not partners
or joint venturers with each other, and nothing in this Agreement shall be
construed to make them such partners or joint venturers or impose any liability
as such on either of them.

 

16.                                 TERM; TERMINATION OF AGREEMENT.  This Agreement shall continue in force for a
period of one year from the date hereof, subject to an unlimited number of
successive one-year renewals

 

15

 

upon mutual consent of the parties. It is the duty of the Directors to
evaluate the performance of the Advisor annually before renewing the Agreement,
and each such renewal shall be for a term of no more than one year.

 

17.                                 TERMINATION BY EITHER PARTY.  This Agreement may be terminated upon 60
days written notice with or without Cause and without penalty, by either party
(by a majority of the Independent Directors of the Company or a majority of the
Board of Directors of the Advisor, as the case may be).

 

18.                                 ASSIGNMENT TO AN AFFILIATE.  This Agreement may be assigned by the
Advisor to a Permitted Affiliate with the approval of a majority of the
Directors (including a majority of the Independent Directors). The Advisor may
assign any rights to receive fees or other payments under this Agreement
without obtaining the approval of the Directors. This Agreement shall not be
assigned by the Company without the consent of the Advisor, except in the case
of an assignment by the Company to a corporation or other organization which is
a successor to all of the assets, rights and obligations of the Company, in
which case such successor organization shall be bound hereunder and by the
terms of said assignment in the same manner as the Company is bound by this
Agreement.

 

19.                                 PAYMENTS TO AND DUTIES OF ADVISOR UPON
TERMINATION.  Payments to the
Advisor of unpaid expense reimbursements pursuant to this Section 19 shall
be subject to the 2%/25% Guidelines to the extent applicable.

 

(a)                                  After
the Termination Date, the Advisor shall not be entitled to compensation for
further services hereunder except it shall be entitled to receive from the
Company within 30 days after the effective date of such termination all unpaid
reimbursements of expenses and all earned but unpaid fees payable to the
Advisor prior to termination of this Agreement.

 

(b)                                 The
Advisor shall promptly upon termination:

 

(i)                                     pay
over to the Company all money collected and held for the account of the Company
pursuant to this Agreement, after deducting any accrued compensation and
reimbursement for its expenses to which it is then entitled;

 

(ii)                                  deliver
to the Directors a full accounting, including a statement showing all payments
collected by it and a statement of all money held by it, covering the period
following the date of the last accounting furnished to the Directors;

 

(iii)                               deliver to the Directors
all assets, including Properties, and documents of the Company then in the
custody of the Advisor; and

 

(iv)                              cooperate
with the Company to provide an orderly management transition.

 

20.                                 INDEMNIFICATION BY THE COMPANY.  The Company shall indemnify and hold
harmless the Advisor and its Affiliates, including their respective officers,
directors, partners and employees, from all liability, claims, damages or
losses arising in the performance of their duties hereunder, and related
expenses, including reasonable attorneys’ fees, to the extent such liability,
claims, damages or losses and related expenses are not fully reimbursed by insurance,
subject to any limitations imposed by the laws of the State of Maryland or the
Articles of Incorporation of the Company. Notwithstanding the foregoing, the
Advisor shall not be entitled to indemnification or be held harmless pursuant
to this paragraph 20 for any activity which the Advisor shall be required to
indemnify or hold

 

16

 

harmless the Company pursuant to paragraph 21. Any indemnification of
the Advisor may be made only out of the net assets of the Company and not from
Stockholders.  Notwithstanding the
foregoing, the Company may not indemnify or hold harmless the Advisor, its
Affiliates, or any of their respective officers, directors, partners or employees
in any manner that would be inconsistent with the provisions of
Section II.G of the REIT Guidelines adopted by the North American
Securities Administrators Association (the “Indemnification Guideline”).  A copy of the Indemnification Guideline is
attached hereto as Exhibit A and is incorporated herein by reference.

 

21.                                 INDEMNIFICATION BY ADVISOR.  The Advisor shall indemnify and hold
harmless the Company from contract or other liability, claims, damages, taxes
or losses and related expenses including attorneys’ fees, to the extent that
such liability, claims, damages, taxes or losses and related expenses are not
fully reimbursed by insurance and are incurred by reason of the Advisor’s bad
faith, fraud, willful misfeasance, misconduct, negligence or reckless disregard
of its duties, but the Advisor shall not be held responsible for any action of
the Board of Directors in following or declining to follow any advice or
recommendation given by the Advisor. 
Notwithstanding the foregoing, the Company may not indemnify or hold
harmless the Advisor, its Affiliates, or any of their respective officers,
directors, partners or employees in any manner that would be inconsistent with
the provisions of Section II.G of the REIT Guidelines adopted by the North
American Securities Administrators Association.

 

22.                                 NOTICES.  Any notice,
report or other communication required or permitted to be given hereunder shall
be in writing unless some other method of giving such notice, report or other
communication is required by the Articles of Incorporation, the Bylaws, or
accepted by the party to whom it is given, and shall be given by being
delivered by hand or by overnight mail or other overnight delivery service to
the addresses set forth herein:

 

	
  To the Directors and to the Company:

  	
   

  	
  Dividend Capital Trust Inc.

  518 17th Street

  Suite 1700

  Denver, CO 80202

  
	
   

  	
   

  	
   

  
	
  To the Advisor:

  	
   

  	
  Dividend Capital Advisors LLC

  518 17th Street

  Suite 1700

  Denver, CO 80202

  

 

Either party may at any time give notice in writing to
the other party of a change in its address for the purposes of this Paragraph
22.

 

23.                                 MODIFICATION. 
This Agreement shall not be changed, modified, terminated, or
discharged, in whole or in part, except by an instrument in writing signed by
both parties hereto, or their respective successors or assignees.

 

24.                                 SEVERABILITY. 
The provisions of this Agreement are independent of and severable from
each other, and no provision shall be affected or rendered invalid or
unenforceable by virtue of the fact that for any reason any other or others of
them may be invalid or unenforceable in whole or in part.

 

25.                                 CONSTRUCTION. 
The provisions of this Agreement shall be construed and interpreted in
accordance with the laws of the State of Colorado.

 

26.                                 ENTIRE AGREEMENT. 
This Agreement contains the entire agreement and understanding among the
parties hereto with respect to the subject matter hereof, and supersedes all
prior

 

17

 

and contemporaneous agreements, understandings, inducements and
conditions, express or implied, oral or written, of any nature whatsoever with
respect to the subject matter hereof. The express terms hereof control and
supersede any course of performance and/or usage of the trade inconsistent with
any of the terms hereof. This Agreement may not be modified or amended other
than by an agreement in writing.

 

27.                                 INDULGENCES, NOT WAIVERS.  Neither the failure nor any delay on the
part of a party to exercise any right, remedy, power or privilege under this
Agreement shall operate as a waiver thereof, nor shall any single or partial
exercise of any right, remedy, power or privilege preclude any other or further
exercise of the same or of any other right, remedy, power or privilege, nor
shall any waiver of any right, remedy, power or privilege with respect to any occurrence
be construed as a waiver of such right, remedy, power or privilege with respect
to any other occurrence. No waiver shall be effective unless it is in writing
and is signed by the party asserted to have granted such waiver.

 

28.                                 GENDER.  Words used herein
regardless of the number and gender specifically used, shall be deemed and
construed to include any other number, singular or plural, and any other
gender, masculine, feminine or neuter, as the context requires.

 

29.                                 TITLES NOT TO AFFECT INTERPRETATION.  The titles of paragraphs and subparagraphs
contained in this Agreement are for convenience only, and they neither form a
part of this Agreement nor are they to be used in the construction or
interpretation hereof.

 

30.                                 EXECUTION IN COUNTERPARTS.  This Agreement may be executed in any number
of counterparts, each of which shall be deemed to be an original as against any
party whose signature appears thereon, and all of which shall together
constitute one and the same instrument. This Agreement shall become binding
when one or more counterparts hereof, individually or taken together, shall
bear the signatures of all of the parties reflected hereon as the signatories.

 

31.                                 INITIAL INVESTMENT.  The Advisor has made a capital contribution of $200,000 to the
Operating Partnership in exchange for OP Units. The Advisor may not sell any of
the OP Units while the Advisor acts in such advisory capacity to the Company,
provided, that such OP Units may be transferred to Affiliates of the Advisor.
The restrictions included above shall not apply to any other Securities
acquired by the Advisor or its Affiliates. The Advisor shall not vote any
Shares it now owns, or hereafter acquires, in any vote for the election of
Directors or any vote regarding the approval or termination of any contract
with the Advisor or any of its Affiliates.

 

18

 

IN WITNESS WHEREOF, the parties hereto have executed
this Amended and Restated Advisory Agreement as of the date and year first
above written.

 

	
   

  	
  DIVIDEND CAPITAL TRUST INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
   /s/ Evan H. Zucker

  	
   

  
	
   

  	
  Name:

  	
  Evan H. Zucker

  
	
   

  	
  Title:

  	
  President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  DIVIDEND CAPITAL ADVISORS LLC

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   /s/ James R. Mulvihill

  	
   

  
	
   

  	
  Name:

  	
  James R. Mulvihill

  
	
   

  	
  Title:

  	
  Member

  

 

19

 

EXHIBIT
A

 

INDEMNIFICATION
GUIDELINE

 

(a)                                  Liability
and Indemnification

 

(i)                                     The
REIT shall not provide for indemnification of the TRUSTEES, ADVISORS or
AFFILIATES for any liability or loss suffered by the TRUSTEES, ADVISORS or AFFILIATES,
nor shall it provide that the TRUSTEES, ADVISORS or AFFILIATES be held harmless
for any loss or liability suffered by the REIT, unless all of the following
conditions are met:

 

(1)                                  The
TRUSTEES, ADVISORS or AFFILIATES have determined, in good faith, that the
course of conduct which caused the loss or liability was in the best interests
of the REIT.

 

(2)                                  The
TRUSTEES, ADVISORS or AFFILIATES were acting on behalf of or performing
services for the REIT.

 

(3)                                  Such
liability or loss was not the result of:

 

(a)                                  negligence
or misconduct by the TRUSTEES, excluding the INDEPENDENT TRUSTEES, ADVISORS or
AFFILIATES; OR

 

(b)                                 gross
negligence or willful misconduct by the INDEPENDENT TRUSTEES.

 

(4)                                  Such
indemnification or agreement to hold harmless is recoverable only out of REIT
net assets and not from SHAREHOLDERS.

 

(ii)                                  Notwithstanding
anything to the contrary contained in Section II.G.1, the TRUSTEES,
ADVISORS or AFFILIATES and any persons acting as a broker-dealer shall not be
indemnified by the REIT for any losses, liabilities or expenses arising from or
out of an alleged violation of federal or state securities laws by such party
unless one or more of the following conditions are met:

 

(1)                                  There
has been a successful adjudication on the merits of each count involving
alleged securities law violations as to the particular indemnitee.

 

(2)                                  Such
claims have been dismissed with prejudice on the merits by a court of competent
jurisdiction as to the particular Indemnitee.

 

(3)                                  A
court of competent jurisdiction approves a settlement of the claims against a
particular indemnitee and finds that indemnification of the settlement and the
related costs should be made, and the court considering the request for
indemnification has been advised of the position of the Securities and Exchange
Commission and of the published position of any state securities regulatory
authority in which securities of the REIT were offered or sold as to
indemnification for violations of securities laws.

 

(iii)                               The advancement of REIT
funds to the TRUSTEES, ADVISORS or AFFILIATES for legal expenses and other
costs incurred as a result of any legal action for which indemnification is
being sought is permissible only if all of the following conditions are
satisfied:

 

A-20

 

(1)                                  The
legal action relates to acts or omissions with respect to the performance of
duties or services on behalf of the REIT.

 

(2)                                  The
legal action is initiated by a third party who is not a SHAREHOLDER or the
legal action is initiated by a SHAREHOLDER acting in his or her capacity as
such and a court of competent jurisdiction specifically approves such
advancement.

 

(3)                                  The
TRUSTEES, ADVISORS and AFFILIATES undertake to repay the advanced funds to the
REIT, together with the applicable legal rate of interest thereon, in cases in
which such TRUSTEES, ADVISORS or AFFILIATES are found not to be entitled to
indemnification.

 

A-21

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