Document:

Exhibit
10.3

 

ANNUAL DELIVERY AGREEMENT

 

THIS AGREEMENT is entered into effective as of January 1,
2010 by and between Golden Growers Cooperative (the “Cooperative”) and the
undersigned member of the Cooperative (the “Member”).

 

WHEREAS, the Member and the Cooperative are parties to a
Uniform Member Agreement (the “Member Agreement”) by which the Member has the
right and obligation to annually deliver corn to the Cooperative;

 

WHEREAS, the parties desire to establish the method and
other terms and conditions by which Member will deliver corn to the
Cooperative; and

 

NOW, THEREFORE, in consideration of the mutual covenants
and conditions set forth herein and in the Member Agreement, the parties agree
as follows:

 

1.                                       Annual Corn
Commitment.  Member
currently owns                     
units in the Cooperative, and therefore is obligated to deliver                     
bushels of corn to the Cooperative (the “Annual Corn Commitment”) subject to
the Cooperative’s right to reduce the Annual Corn Commitment as provided in the
Member Agreement.  The Cooperative agrees
to accept Member’s delivery of the Annual Corn Commitment.

 

2.                                       Delivery Method.  Member hereby agrees that it will satisfy the
Annual Corn Commitment by utilizing the following delivery method with respect
to the bushels so designated:

 

Method
A Delivery  —                              
bushels

 

Method
B Delivery —                               
bushels

 

The
foregoing delivery method shall apply with respect to the Annual Corn
Commitment in 2010, and each subsequent year until such time as Member elects
to change the delivery method by entering into a new Annual Delivery
Agreement.  New Annual Delivery
Agreements must be executed prior to December 15 of the year prior to the
year to which the new delivery method election is to apply.

 

3.                                       Method A
Delivery Terms.  In addition
to other terms of this Agreement, the terms of the Member Agreement, and the
Articles of Incorporation and Bylaws of the Cooperative, Method A Deliveries
shall be made pursuant to the following terms and conditions:

 

a.                                       Corn Purchase
Agreement.  Member will
physically deliver all Method A bushels of corn to the location designated by
the Cooperative or its agent.  Member
will enter into a corn purchase agreement with the Cooperative, or its
designated agent, establishing the corn delivery schedule, the delivery
location, the per bushel price for corn, quality 

 

1

 

premiums/deductions,
and other terms and conditions related to corn deliveries intended to fulfill
the Annual Corn Commitment.

 

b.                                      Quality
Specifications.  All corn
delivered by Member to the Cooperative shall be in accordance with any quality
standards set from time to time by the Cooperative or its agent.  Corn of substandard quality, as determined by
the Cooperative or its agent, shall be either (a) rejected and returned to
Member with all costs relating to the rejection and return charged to Member;
or (b) accepted with deductions and allowances made and charged against
Member because of the inferior grade, quality or condition at delivery.  If, in the sole opinion of the Cooperative,
the Member continually fails to deliver acceptable corn, the Cooperative may
terminate Member’s membership in the Cooperative as provided in the Bylaws.  The Cooperative shall use accepted grading
standards on corn delivered to the Cooperative. 
The Member agrees to observe all rules and regulations, and accept
the grading, established by the Cooperative or its agent.  Member agrees that it shall apply or use no
pesticide, chemical or other substances in a manner which could result in any
residue in or on corn delivered under this Agreement, beyond the limits
permitted by law or governmental regulations.

 

c.                                       Corn Price.  Member will be paid for Method A corn
deliveries based on the contracted price for the corn at the point of delivery,
as reflected in the corn purchase agreement to be entered into between Member
and the Cooperative or its agent.  Any
quality premiums and deductions shall be reflected in the payment for the corn.

 

d.                                      Security
Interests.  Member
shall notify the Cooperative of any security interest in Member’s corn being
delivered hereunder.  The Cooperative
shall have the right to apply payments due to the Member in satisfaction of the
secured obligation.

 

e.                                       Direct Delivery
Incentive.  Member may
receive a direct delivery incentive for delivering corn through Method A, such
incentive to be calculated on a per bushel basis in an amount to be determined
from time to time by the Board of Directors. 
The direct delivery incentive shall be uniform in amount and application
with respect to similarly situated members of the Cooperative and shall be paid
following the end of the calendar year in which the deliveries were made.

 

4.                                       Method B Delivery
Terms.  In addition to the other terms
of this Agreement, the terms of the Member Agreement, and the Articles of
Incorporation and Bylaws of the Cooperative, Method B Deliveries shall be made
pursuant to the following terms and conditions:

 

a.                                       Cooperative as
Agent.  Member hereby appoints the
Cooperative as its agent to fulfill all Method B bushels.  The Cooperative accepts such 

 

2

 

appointment
and agrees to procure the corn necessary to fulfill such Method B bushels,
either directly or through an agent of the Cooperative.

 

b.                                      Corn Price.  The price of corn to be paid by the
Cooperative to Member for Method B bushels shall be equal to, and netted
against, the cost of corn incurred by the Cooperative in fulfilling Member’s
Annual Corn Commitment, such that no amount shall be payable by the Cooperative
to Member for corn delivered on Member’s behalf.

 

c.                                       Agency Fee.  Member shall pay the Cooperative an agency
fee, calculated on a per bushel basis, in an amount to be determined from time
to time by the Board of Directors to compensate the Cooperative for the cost of
acting as Member’s agent.  The agency fee
shall be uniform in amount and application with respect to all similarly
situated members of the Cooperative and shall be collected as an adjustment to
distributions to be made to Member, or in the absence of any such distribution,
Member will be billed for the agency fee.

 

5.                                       Income
Allocation/Distributions. 
Members who patronize the Cooperative will receive an allocation of the
Cooperative’s income/loss, and a possible cash distribution, based on patronage
in accordance with the Bylaws and the Member Agreement.

 

6.                                       Nature of
Agreement.  This
Agreement is intended to supplement the Member Agreement as contemplated
therein, and except as specifically provided herein, this Agreement shall not
be deemed to amend or modify the terms of the Member Agreement.  This Agreement shall automatically terminate
in the event of a termination of the Member Agreement.

 

IN WITNESS WHEREOF, this Agreement has been
executed as of the date set forth above.

 

	
  MEMBER

  	
  GOLDEN
  GROWERS COOPERATIVE

  
	
   

  	
   

  
	
  By

  	
   

  	
   

  	
  By

  	
   

  
	
   

  	
  Its

  	
   

  	
   

  	
   

  	
  Its

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Member
  Name

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Member
  Address

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Member
  #

  	
   

  	
   

  
							

 

3Exhibit 10.4

 

PROGOLD LIMITED LIABILITY COMPANY

 

 

AMENDED AND RESTATED

MEMBER CONTROL AGREEMENT

 

(CONTAINS RESTRICTIONS ON TRANSFER

OF MEMBERSHIP INTERESTS)

 

 

September 1, 2009

 

 

PROGOLD LIMITED LIABILITY COMPANY

AMENDED AND RESTATED

MEMBER CONTROL AGREEMENT

(CONTAINS RESTRICTIONS ON TRANSFER

OF MEMBERSHIP INTERESTS)

 

Table of Contents

 

	
  Article

  	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  ARTICLE I DEFINITIONS

  	
  1

  
	
   

  	
   

  
	
  ARTICLE II MEMBERS AND BUSINESS

  	
  4

  
	
  2.1.

  	
  Members

  	
  4

  
	
  2.2.

  	
  Additional Members

  	
  4

  
	
  2.3.

  	
  Business of the Company

  	
  4

  
	
  2.4.

  	
  Actions Requiring Member and Board Approval

  	
  4

  
	
   

  	
   

  	
   

  
	
  ARTICLE III MEMBERSHIP
  INTERESTS

  	
  4

  
	
  3.1.

  	
  Membership Interests

  	
  4

  
	
  3.2.

  	
  Voting

  	
  5

  
	
   

  	
  (a)

  	
  Voting Power

  	
  5

  
	
   

  	
  (b)

  	
  Voting Representatives

  	
  5

  
	
   

  	
  (c)

  	
  Consents

  	
  5

  
	
  3.3.

  	
  No Cumulative Voting

  	
  5

  
	
  3.4.

  	
  Preemptive Rights

  	
  5

  
	
   

  	
  (a)

  	
  When Preemptive Rights Arise

  	
  5

  
	
   

  	
  (b)

  	
  Exemptions from Preemptive Rights

  	
  5

  
	
   

  	
  (c)

  	
  Extent of Preemptive Rights

  	
  5

  
	
   

  	
  (d)

  	
  Waiver of Preemptive Rights

  	
  5

  
	
   

  	
  (e)

  	
  Notice of Preemptive Rights

  	
  6

  
	
   

  	
  (f)

  	
  Valuation of Contributions Other Than Money

  	
  6

  
	
  3.5.

  	
  Waiver of Dissenters’ Rights

  	
  6

  
	
   

  	
   

  	
   

  
	
  ARTICLE IV CAPITAL
  CONTRIBUTIONS

  	
  6

  
	
  4.1.

  	
  Initial Capital Contributions of Members

  	
  6

  
	
  4.2.

  	
  Additional Capital Contributions of Members

  	
  7

  
	
   

  	
  (a)

  	
  Voluntary Additional Capital Contributions of Members

  	
  7

  
	
   

  	
  (b)

  	
  Required Additional Capital Contributions of Members

  	
  7

  
	
  4.3.

  	
  Capital Contributions of New Members

  	
  7

  
	
  4.4.

  	
  Capital Accounts

  	
  8

  
	
  4.5.

  	
  Transferee Succeeds to Transferor’s Capital Account

  	
  8

  
	
  4.6.

  	
  No Right to Return of Contributions

  	
  8

  
	
  4.7.

  	
  No Interest on Capital

  	
  8

  
	
  4.8.

  	
  Loans to Company

  	
  8

  
	
  4.9.

  	
  Default by Member

  	
  8

  
					

 

i

 

	
  ARTICLE V ALLOCATIONS

  	
  9

  
	
  5.1.

  	
  Allocation of Net Income and Net Losses

  	
  9

  
	
  5.2.

  	
  Consent to Allocation

  	
  9

  
	
   

  	
   

  	
   

  
	
  ARTICLE VI DISTRIBUTIONS

  	
  9

  
	
  6.1.

  	
  Basis of Distributions

  	
  9

  
	
  6.2.

  	
  Tax Withholding Obligations Constitute a Distribution

  	
  9

  
	
  6.3.

  	
  Allocation of Marketing Costs

  	
  9

  
	
  6.4.

  	
  Periodic Distributions

  	
  10

  
	
   

  	
   

  	
   

  
	
  ARTICLE VII BOARD OF GOVERNORS

  	
  10

  
	
  7.1.

  	
  Limitation of Governors’ Liability

  	
  10

  
	
  7.2.

  	
  Written Action By Governors

  	
  11

  
	
   

  	
   

  	
   

  
	
  ARTICLE VIII REQUIRED
  RECORDS:  ACCOUNTING AND TAX MATTERS

  	
  11

  
	
  8.1.

  	
  Required Records

  	
  11

  
	
  8.2.

  	
  Books of Account

  	
  11

  
	
  8.3.

  	
  Report to Members

  	
  11

  
	
  8.4.

  	
  Tax Characterization and Returns

  	
  12

  
	
  8.5.

  	
  Tax Information

  	
  12

  
	
  8.6.

  	
  Tax Matters Partner

  	
  12

  
	
   

  	
   

  	
   

  
	
  ARTICLE IX ASSIGNMENT
  MEMBERSHIP INTERESTS

  	
  13

  
	
  9.1.

  	
  Assignment

  	
  13

  
	
   

  	
  (a)

  	
  General Restriction on Assignment

  	
  13

  
	
   

  	
  (b)

  	
  Conditions Precedent to Assignment of a Membership Interest
  to a Non-Member

  	
  13

  
	
   

  	
  (c)

  	
  Consent to Proposed Assignment of a Membership Interest to
  a Non-Member

  	
  13

  
	
   

  	
  (d)

  	
  Effective Date of Assignment

  	
  14

  
	
  9.2.

  	
  Acquit Company

  	
  14

  
	
  9.3.

  	
  Restriction on Assignment

  	
  14

  
	
  9.4.

  	
  First Right of Refusal Upon Proposed Sale of Membership
  Interest

  	
  14

  
	
   

  	
  (a)

  	
  Notice of Proposed Sale

  	
  14

  
	
   

  	
  (b)

  	
  Options to Other Members

  	
  14

  
	
   

  	
  (c)

  	
  Exercise and Lapse of Options

  	
  15

  
	
   

  	
  (d)

  	
  Proposed Sale to Another Member

  	
  15

  
	
   

  	
  (e)

  	
  Restrictions on Assignment Apply

  	
  15

  
	
  9.5.

  	
  Option to Purchase Membership Interest

  	
  15

  
	
   

  	
  (a)

  	
  Purchase Events

  	
  15

  
	
   

  	
  (b)

  	
  American Crystal Option

  	
  16

  
	
   

  	
  (c)

  	
  Purchase Price and Payment

  	
  16

  
	
   

  	
   

  	
   

  
	
  ARTICLE X DISSOLUTION:  DISSOLUTION AVOIDANCE

  	
  16

  
	
  10.1.

  	
  Dissolution

  	
  16

  
	
   

  	
  (a)

  	
  Events of Dissolution

  	
  16

  
	
   

  	
   

  	
  (i)

  	
  Expiration of Fixed Period

  	
  16

  
					

 

ii

 

	
   

  	
   

  	
  (ii)

  	
  Member and Board Approval

  	
  16

  
	
   

  	
   

  	
  (iii)

  	
  Termination of Membership of a Member

  	
  16

  
	
   

  	
  (b)

  	
  Notice of Dissolution

  	
  17

  
	
   

  	
  (c)

  	
  Winding Up of Business

  	
  17

  
	
  10.2.

  	
  Dissolution Avoidance

  	
  17

  
	
   

  	
  (a)

  	
  Member Consent to Continuation of the Company

  	
  17

  
	
   

  	
  (b)

  	
  Status of Member Whose Membership Interest is Terminated

  	
  17

  
	
   

  	
  (c)

  	
  No Obligation to Purchase Membership Interest of Terminated
  Member

  	
  17

  
	
   

  	
  (d)

  	
  Agreement Not to Retire or Resign

  	
  17

  
	
  10.3.

  	
  Distributions Upon Liquidation

  	
  18

  
	
   

  	
   

  	
   

  
	
  ARTICLE XI NEW MEMBERS BOUND BY
  AGREEMENT

  	
  18

  
	
   

  	
   

  
	
  ARTICLE XII REMEDIES

  	
  18

  
	
   

  	
   

  
	
  ARTICLE XIII MISCELLANEOUS

  	
  19

  
	
  13.1.

  	
  Entire Agreement

  	
  19

  
	
  13.2.

  	
  Amendment

  	
  19

  
	
  13.3.

  	
  Severability

  	
  19

  
	
  13.4.

  	
  Consent and Waiver

  	
  19

  
	
  13.5.

  	
  No Third Party Beneficiary

  	
  19

  
	
  13.6.

  	
  Notices

  	
  19

  
	
  13.7.

  	
  Binding Effect

  	
  20

  
	
  13.8.

  	
  Necessary Instruments and Acts

  	
  20

  
	
  13.9.

  	
  Number and Gender

  	
  20

  
	
  13.10.

  	
  Interpretation

  	
  20

  
	
  13.11.

  	
  Counterparts

  	
  20

  
	
  13.12.

  	
  Governing Law

  	
  20

  

 

iii

 

PROGOLD LIMITED LIABILITY COMPANY

AMENDED AND RESTATED

MEMBER CONTROL AGREEMENT

(CONTAINS RESTRICTIONS ON TRANSFER

OF MEMBERSHIP INTERESTS)

 

THIS
AMENDED AND RESTATED MEMBER CONTROL AGREEMENT is made effective as of the 1st
day of September, 2009, by and between Golden Growers Cooperative, a Minnesota
cooperative association, and American Crystal Sugar Company, a Minnesota
cooperative association.

 

RECITALS

 

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

 

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

 

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

 

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

 

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

 

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

 

ARTICLE I

DEFINITIONS

 

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

 

1.1                                 “Act” means the
Minnesota Limited Liability Company Act contained in Minnesota Statutes,
Chapter 322B, as amended, and any successor thereto.

 

1.2                                 “Agreement”
means this Member Control Agreement as amended, modified or supplemented from
time to time, including any schedules to the Agreement.

 

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

 

1

 

1.4                                 “Articles of
Organization” means the articles of organization filed on behalf of the Company
with the Minnesota Secretary of State, as amended from time to time.

 

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

 

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

 

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

 

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

 

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

 

1.10                           “Contribution
Agreement” means a written agreement between the Company and a Person desiring
to make a contribution which sets forth the terms of such Person’s agreement to
make a contribution (and admission as a Member if not already a Member),
including without limitation the agreed value of the contribution that shall be
made by such Person to the capital of the Company and the Percentage Interest
and Voting Interest to which such Person shall be entitled.

 

1.11                           “Contribution
Allowance Agreement” means a written agreement between the Company and a Person
which sets forth the terms upon which such Person has the right, but not the
obligation, to make a contribution (and be admitted as a Member if not already
a Member), including without limitation the agreed value of the contribution
that may be made by such Person to the capital of the Company and the
Percentage Interest and Voting Interest to which such Person shall be entitled.

 

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

 

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

 

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

 

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

 

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

 

2

 

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

 

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

 

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

 

1.20                           [Intentionally
Omitted]

 

1.21                           “Net Income”
and “Net Losses” mean the profits and losses of the Company, as the case may
be, as determined under Commonly Accepted Accounting Principles as of the close
of each of the fiscal years of the Company.

 

1.22                           “Operating
Agreement” means the operating agreement of the Company adopted pursuant to the
Act containing rules, resolutions, or other provisions that relate to the
management of the business or the regulation of the affairs of the Company.

 

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

 

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

 

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

 

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

 

1.27                           “Tax
Withholding Obligation” means an amount equal to the portion of any amount
allocated, credited, or otherwise distributable to a Member which the Company
is required to withhold for income tax purposes pursuant to any applicable
federal, state, local, or other governmental agency law or regulation.

 

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

 

3

 

ARTICLE II

MEMBERS AND BUSINESS

 

2.1.                              Members.  The names and addresses of the Members are
set forth on Schedule A. Each Member shall give the Board of Governors at least
ten (10) days prior written notice of any change in such Member’s address
as shown on Schedule A.  The Members
acknowledge and agree that in addition to this Agreement, the relationship
among the Members and the Company is established and governed by the
Administrative Services Agreement dated as of September 1, 1996 between
the Company and American Crystal.

 

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

 

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

 

2.4.                              Actions
Requiring Member and Board Approval .  Notwithstanding anything to the contrary in
this Agreement and without limiting the authority of either the Members or the
Board of Governors, the following Company actions must be approved by both the
affirmative vote of Members owning a majority of the Voting Interests at a duly
held meeting of the Members and the affirmative vote of a majority of the
Governors present at a duly held meeting of the Board of Governors:  (a) mergers or consolidations involving
the Company, (b) sale or liquidation of substantially all of the assets of
the Company, (c) amendment of the Articles of Organization or Operating
Agreement of the Company, (d) dissolution of the Company as provided in Section 10.1(a),
(e) approval of the strategic plan of the Company and any amendments
thereto, which plan shall include, but need not be limited to, product mix,
primary customers, marketing plans, pricing/margin expectations, and
capitalization plans, (f) the approval of new Members as provided in Section 4.3,
and (g) the approval of loans to the Company by Members as provided in Section 4.8.  A vote on any of the foregoing actions may
take place at a meeting of the Board or Members only if the notice of such
meeting includes specific notice of the action to be considered.

 

ARTICLE III

MEMBERSHIP INTERESTS

 

3.1.                              Membership
Interests.  The
Membership Interests reflected in Schedule A are ordinary Membership Interests
of one class, without series, and shall have the rights provided by 

 

4

 

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

 

3.2.                              Voting.

 

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

 

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

 

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

 

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

 

3.4.                              Preemptive
Rights.

 

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

 

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

 

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

 

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

 

5

 

only
for the proposed contribution or Contribution Allowance Agreement described in
the waiver.

 

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

 

(f)                                    Valuation of
Contributions Other Than Money.  In the event the Company proposes to accept
contributions from (or enter into Contribution Agreements with) Persons or
enter into Contribution Allowance Agreements with Persons when the contribution
is to be made in a form other than money, then the value of such contribution
shall be determined by appraisals as provided in this Section 3.4(f).  The value of the contribution shall first be
determined by the opinion of two independent appraisers, one of which shall be
selected by the Person who is to make the contribution and one of which shall
be selected by Members owning a majority of the Voting Interests.  If the results of the two appraisers do not
differ by more than ten percent (10%) of the higher appraisal, then the average
of the two appraisals shall be considered the value of the contribution.  If the results of the two appraisers differ
by more than ten percent (10%) of the higher appraisal, a third appraiser shall
be selected by mutual agreement of the first two appraisers.  The average of the two closest appraisals
among the three appraisals shall then be considered the value of the
contribution.  All such appraisals shall
be completed prior to notice of Preemptive Rights being given to Members
pursuant to Section 3.4(e).  The
cost of all appraisals shall be paid by the Company.

 

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

 

ARTICLE IV

CAPITAL CONTRIBUTIONS

 

4.1.                              Initial Capital
Contributions of Members.  The
names of the Members and the respective initial contributions are reflected on
Schedule A. Each Member shall be credited with their respective Percentage
Interest set forth on Schedule A.

 

6

 

4.2.                              Additional
Capital Contributions of Members.

 

(a)                                  Voluntary
Additional Capital Contributions of Members.  Additional voluntary contributions from
Members shall be accepted and additional Contribution Agreements or
Contribution Allowance Agreements shall be entered into with Members by the
Board of Governors only upon (i) the prior written directive of Members
owning at least a majority of the Voting Interests, regardless of whether the
Board approves of such contribution of additional capital, and (ii) in
cases where Preemptive Rights provided for in Section 3.4 apply, only to
the extent that the Members have (1) waived in writing such Preemptive
Rights, or (2) failed to exercise such Preemptive Rights by the date fixed
by the Board for the exercise of those Preemptive Rights in the Notice of
Preemptive rights required by Section 3.4(e), provided that within one
year of such date the Board may accept contributions or enter into Contribution
Agreements or Contribution Allowance Agreements as directed by the Members only
on terms no less favorable to the Company than those offered to the
Members.  Upon such written directive and
contribution of additional capital, Schedule A shall be deemed to be appropriately
amended.  There shall be no limit on the
Voting Interest or Percentage Interest which any Member may own.

 

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

 

4.3.                              Capital
Contributions of New Members.  New contributions from Persons seeking to
become Members shall be accepted and new Contribution Agreements or
Contribution Allowance Agreements shall be entered into with Persons seeking to
become Members (and new Membership Interests shall be thereby granted) by the
Board of Governors only upon (a) both the affirmative vote of a majority
of the Governors present at a duly held meeting of the Board and the prior
written approval of Members owning at least a majority of the Voting Interests,
and (b) in cases where Preemptive Rights provided for in Section 3.4
apply, only to the extent that the Members have (i) waived in writing such
Preemptive Rights, or (ii) failed to exercise such Preemptive Rights by
the date fixed by the Board for the exercise of those Preemptive Rights in the
Notice of Preemptive rights required by Section 3.4(e), provided that
within one year of such date the Board may accept contributions or enter into
Contribution Agreements or Contribution Allowance Agreements only on terms no
less favorable to the Company than those offered to the Members.  Upon such approval and issuance of additional
Membership Interests, Schedule A shall be deemed to be appropriately
amended.  Nothing in this Section 4.3
shall be construed to limit the effect of Section 9.1 with respect to the
Assignment of Membership Interests by Members.

 

7

 

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

 

4.5.                              Transferee
Succeeds to Transferor’s Capital Account.  Any transfers permitted by Article IX of
this Agreement by a Member to a transferee of all or a part of such Member’s
Financial Rights in the Company shall vest in such permitted transferee (and
such permitted transferee shall become a successor in interest to) the
proportionate interest of the transferor Member’s Capital Account to the extent
of the Membership Interest transferred.

 

4.6.                              No Right to
Return of Contributions.  The
Members shall have no right to the withdrawal or the return of their respective
contributions to the capital of the Company except to the extent set forth in Section 10.4
upon liquidation of the Company.

 

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

 

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

 

4.9.                              Default by
Member.  In the event that a Member
fails to make any payment, or any installment thereof, when due, of any
contribution or other obligation hereunder or under a Contribution Agreement,
the Board of Governors may enforce such obligation in such manner as may be
permitted by law.  Without limiting the
generality of the foregoing, the Board of Governors may, in its sole
discretion, (i) bring an action at law or in equity to enforce such
obligation, (ii) assess interest on the unpaid amount at the highest rate
of interest then being charged to the Company by any lender, (iii) allow
the remaining Members to loan funds to the Company in the amount of the
deficiency, (iv) retain amounts of Distributions otherwise distributable
to the defaulting Member as an offset to the deficiency, and/or (v) allow
the 

 

8

 

remaining
Members to contribute the amount of the deficiency, thereby increasing their
Membership Interests in relation to the defaulting Member.  If the Board allows the remaining Members to
contribute the amount of the deficiency pursuant to clause (v) above, each
remaining Member shall have the right to contribute an amount in the proportion
which each such remaining Member’s Percentage Interest bears to the aggregate
Percentage Interests of all remaining Members who desire to participate in such
contribution.  Upon such contribution by
the remaining Members, Schedule A shall be deemed to be appropriately
amended.  If the Board elects to pursue
remedies other than as provided in clause (v) above, the Voting Interest
and Percentage Interest of the defaulting Member shall remain unaffected by the
default.  Each Member agrees that in the
event such Member fails to make any payment, or any installment thereof, when
due, of any contribution or other obligation hereunder or under a Contribution
Agreement, such Member and the voting representatives of such Member and
Governors appointed by such Member shall not be permitted in person or by proxy
to vote either as a Member or a Governor on the question of what action the
Company shall take with respect to such default.

 

ARTICLE V

ALLOCATIONS

 

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

 

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

 

ARTICLE VI

DISTRIBUTIONS

 

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

 

6.2.                              Tax Withholding
Obligations Constitute a Distribution.  Any Tax Withholding Obligation which is
withheld by the Company shall constitute a Distribution of such amount by the
Company to the Member to whom such Tax Withholding Obligation is attributable.

 

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

 

9

 

reimburse
United and Midwest for their marketing costs through the payment of a “Structural
Charge,” “Transactional Charges” and “Direct Costs” (as such terms are defined
therein).  It is the intention of the
Members that Golden Growers be effectively responsible for payment of one
hundred percent (100%) of the Structural Charge and Transactional Charges paid
by the Company to United and Midwest during the first five (5) years that
such charges are payable pursuant to the Marketing Agreements.  Thereafter, the Structural Charges and
Transactional Charges shall be the responsibility of all Members in proportion
to their respective Percentage Interests. 
In furtherance of the foregoing intentions, the Members hereby agree
that the Company shall make appropriate adjustments to the respective
allocations of Net Income and Net Losses and Distributions to Members in order
to reduce the allocations of Net Income and the Distributions (and increase the
allocations of Net Losses) to Golden Growers, and increase the allocations of
Net Income and the Distributions (and reduce the allocations of Net Losses) to
American Crystal and Minn-Dak (on the basis of their respective Percentage
Interests) during such five year period, to provide that Golden Growers will
effectively pay such Structural Charge and Transactional Charges.

 

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

 

ARTICLE VII

BOARD OF GOVERNORS

 

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

 

10

 

7.2.                              Written Action
By Governors.  Any action
required or permitted to be taken at a meeting of the Board of Governors not
needing approval by the Members, may be taken by written action signed by the
number of Governors that would be required to take such action at a meeting of
the Board of Governors at which all Governors are present; provided, however,
that at least one Governor appointed by each Member must sign such written
action.  The written action is effective
when signed by the required number of Governors, unless a different effective
time is provided in the written action. 
When written action is taken by less than all Governors, notice of the
text and effective date of such written action must be immediately given to all
Governors.

 

ARTICLE VIII

REQUIRED RECORDS:  ACCOUNTING AND TAX
MATTERS

 

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

 

8.2.                              Books of
Account.  The Board of Governors shall
keep complete and accurate accounts of all transactions of the Company in
proper books of account and shall enter or cause to be entered therein a full
and accurate account of each and every Company transaction in accordance with
accounting principles and methods as determined by the Board of Governors with
the advice of the Company’s accountants. 
The books of account of the Company shall be closed and balanced as of
the end of each fiscal year.  The books
of account and other records of the Company shall at all times be kept at the
principal executive office of the Company or such other place or places within
the United States as the Board of Governors may determine.

 

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

 

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

 

11

 

8.4.                              Tax
Characterization and Returns.  The Members acknowledge that the Company will
be characterized as a partnership for income tax purposes.  The Chief Manager of the Company shall
prepare or cause to be prepared and shall file on or before the due date (or
any extension thereof) any federal, state or local tax returns required to be
filed by the Company.  Members owning at
least a majority of the Voting Interests shall have complete discretion and
authority concerning any tax election required or permitted to be made by the
Company.

 

8.5.                              Tax Information.  The Chief Manager of the Company shall
deliver or cause to be delivered to each Member within ninety (90) days after
the end of each fiscal year (or within a reasonable time thereafter if the
Company’s due date for a tax return is extended) such information concerning
the Company as is necessary or appropriate to permit each Member to properly
complete any federal, state or local income tax return in which Members must
include items attributable to the Company. 
The Chief Manager shall endeavor to provide sufficient information from
time to time during the year as may be appropriate to permit the Members to pay
federal, state and local estimated taxes.

 

8.6.                              Tax Matters
Partner.  The Tax Matters Partner shall
be the Member so designated in accordance with Sections 6221-33 of the Code and
related Treasury Regulations and such Member shall assume the responsibilities
assigned to tax matters partners therein. 
American Crystal shall be the Tax Matters Partner until such time as
Members owning at least a majority of the Voting Interests may designate a
successor Tax Matters Partner.  If on
advice of counsel the Tax Matters Partner determines that it is in the best
interest of the Members that the final results of any administrative proceeding
be appealed by the institution of legal proceedings, the Tax Matters Partner is
hereby authorized to commence such legal proceedings in such forum as the Tax
Matters Partner, on advice of counsel, determines to be appropriate.  In the event the Tax Matters Partner selects
a forum for appeal in which the Members are required to deposit a proportionate
share of any disputed tax before making such appeal, the Tax Matters Partner
must obtain the approval of Members owning at least a majority of the Voting
Interests.  If such approval is obtained,
each of the Members will be required to deposit and pay such Member’s
proportionate share of such disputed tax before participating in such
appeal.  The Members acknowledge that
such deposit under current law does not earn interest and that the failure to
so deposit may preclude a Member from pursuing any other sort of appeal by
court action.  The Tax Matters Partner
shall not be liable to any other Member for any action taken with respect to
any such administrative proceedings or appeal so long as the Tax Matters
Partner is not grossly negligent or guilty of willful misconduct.  Any costs paid or incurred by the Tax Matters
Partner in connection with its activities in such capacity shall be reimbursed
by the Company.  Each Member acknowledges
that any cost a Member may incur in connection with an audit of such Member’s
income tax return, including an audit of such Member’s investment in this
Company, is such Member’s sole responsibility and obligation; and neither the
Company, the Board of Governors, the Managers nor the Tax Matters Partner shall
be liable to any Member for reimbursement or sharing of any such costs.

 

12

 

ARTICLE IX

ASSIGNMENT MEMBERSHIP INTERESTS

 

9.1.                              Assignment.

 

(a)                                  General
Restriction on Assignment.  No
Member may Assign all or part of such Member’s Membership Interest except as
permitted under this Section 9.1.  A
Member’s Membership Interest may be Assigned in whole or in part, without the
consent of any other Member, to another Person already a Member at the time of
the Assignment.  Notwithstanding anything
to the contrary in this Agreement, no Member may assign all or a part of such
Member’s Membership Interest to any person who is not already a Member at the
time of the assignment without Cargill’s prior written consent during the term
of Cargill’s lease of the Facility or any extension thereof.  Any other Assignment of a Membership
Interest, in whole or in part, is effective only if (1) Members owning a
majority of the Voting Interests and a majority of the Percentage Interests
collectively owned by Members (excluding the Member seeking to make the
Assignment and such Member’s Voting Interest and Percentage Interest), approve
the Assignment by written consent, which consent may be granted or withheld as
the remaining Members may determine in their sole discretion, and (2) the
Member seeking to make the Assignment and the assignee comply with the
provisions of Section 9.1(b).

 

(b)                                 Conditions
Precedent to Assignment of a Membership Interest to a Non-Member.  Any Member desiring to Assign such Member’s
Membership Interest, in whole or in part, to a non-Member shall notify the
Board of Governors of such desire.  Such
notice to the Board of Governors shall include (i) an opinion of counsel (whose
fees and expenses shall be borne by such assigning Member), satisfactory in
form and substance to the Board, to the effect that either (1) the Assignment
constitutes an exempt transaction, and does not require registration under
applicable state and federal securities laws, or (2) the Membership Interest,
or portion thereof, to be Assigned is duly and properly registered under all
applicable state and federal securities laws; (ii) evidence satisfactory to the
Board that the assignee of the Membership Interest is eligible to become a
Member pursuant to this Article IX and of such assignee’s agreement to comply
with and be bound by the terms of this Member Control Agreement and to execute
any and all documents that the Board may deem necessary in connection with such
assignee becoming a Member as provided for in Article XI; (iii) evidence
satisfactory to the Board that the transfer will not impair the ability of the
Company to be taxed as a partnership for federal income tax purposes or to take
advantage of accelerated depreciation under the Code; (iv) representations in
form and substance satisfactory to the Board that the assignee is acquiring the
Membership Interest for such assignee’s own account for investment and not with
a view to the distribution thereof; and (v) a written agreement signed by the
assignee that the Membership Interest being acquired will in no event be resold
unless properly registered under all applicable state and securities laws or
exempt therefrom.

 

(c)                                  Consent to
Proposed Assignment of a Membership Interest to a Non-Member.  In the event that a Member seeks to Assign
such Member’s Membership Interest, in whole or in part, to a non-Member, the
Board of Governors shall (i) so notify the Members and, by special meeting
called on thirty (30) days written notice (or by solicitation of signatures on
fifteen (15) days written notice), (ii) request in writing the decision of each
Member to grant or withhold consent pursuant to this Section 9.1.  Failure of a Member to respond either
affirmatively or negatively to such request within sixty (60) days of such
written notice shall be construed as withholding such consent.  Consent to a proposed Assignment of a
Membership Interest (which includes all of a Member’s Governance Rights)
pursuant to this Section 9.1 also constitutes the consent necessary to avoid
the dissolution of the Company which would otherwise occur under the Act on
account of the assignor ceasing to be a Member if the quantum 

 

13

 

of
consent required to avoid such dissolution is not greater than the consent
pursuant to this Section 9.1.

 

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

 

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

 

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

 

9.4.                              First Right of
Refusal Upon Proposed Sale of Membership Interest.

 

(a)                                  Notice of
Proposed Sale.  In the
event that a Member desires to Assign its Membership Interest, in whole or in
part, by a sale for consideration to another Person who is not a Member
pursuant to a bona fide offer, such Member shall give written notice of such
fact to the Company and the other Members. 
Such notice shall include (i) the portion of such Member’s Membership
Interest to be sold, (ii) the identity of the Person making the bona fide
offer, and (iii) a copy of the bona fide offer, which shall include the
purchase price, payment terms, and all other terms and conditions of the offer.

 

(b)                                 Options to
Other Members.  For a
period of forty-five (45) days from the date of receipt of the notice of a
proposed sale, each other Member shall have an initial option to purchase a
portion of the Membership Interest offered for sale based on the proportion
which such Member’s Voting Interest bears to the total Voting Interests of all
the other Members.  In the event all of
the other Members do not exercise such initial option, the Company shall give
notice, within five days of the end of such forty-five (45) day initial option
period, to all of the Members who exercised their initial option advising them
of the portion of the Membership Interest offered for sale remaining.  For a period of fifteen (15) days after the-
Company gives such notice, the Members who exercised their initial option shall
then have a secondary option to purchase a portion of such remaining portion of
the Membership Interest offered for sale based on the proportion which such
Member’s Voting Interest bears to the total Voting Interests of all the Members
who exercised their initial option. 
Similar options shall continue to arise in favor of those Members who
continue to exercise their options hereunder in the same manner as the
secondary option provided for in the preceding sentence until all of the
Membership Interest 

 

14

 

offered
for sale has been purchased or no Member desires to purchase the remaining
portion of such Membership Interest. 
Notwithstanding the foregoing, the other Members may agree among
themselves as to the portion of the Membership Interest offered for sale or
remaining portion thereof, as the case may be, to be purchased by each,
provided all of the Membership Interest offered for sale is purchased.  The purchase price of any Membership
Interest, or portion thereof, purchased by exercise of an option granted
hereunder shall be the purchase price pursuant to the bona fide offer, which
shall be payable in such amounts and at such times and pursuant to such other
terms and conditions as provided in the bona fide offer.

 

(c)                                  Exercise and
Lapse of Options.  The options
provided in Section 9.4(b) may be exercised by giving timely written notice to
the Member whose Membership Interest is the subject of such option and to the
Company.  In the event that the other
Members fail to exercise their respective options to collectively purchase the
entire Membership Interest offered for sale, then all of the options exercised
as provided in Sections 9.4(b) and 9.4(c) shall be deemed to be rescinded from
the outset as though they never had been exercised.  The Member whose Membership Interest, or
portion thereof, is offered for sale may at any time within sixty (60) days
after lapse or rescission of the options provided in Section 9.4(b) sell such
Membership Interest to the Person specified in the notice of proposed sale;
provided, that (i) such sale shall be at the purchase price pursuant to the
bona fide offer and according to the other terms and conditions as provided in
the bona fide offer, (ii) all consents required under the Act and this
Agreement are obtained, (iii) such Member and the proposed purchaser comply
with all applicable provisions of the Act and this Agreement, and (iv) the
proposed purchaser agrees in writing to become subject to this Agreement.  In the event that the Member shall fail to
make such sale within such sixty (60) day period, the Member shall again comply
with the terms of this Section 9.4 as a condition precedent to any subsequent
sale of the Membership Interest.

 

(d)                                 Proposed Sale
to Another Member. 
Notwithstanding anything to the contrary herein, the provisions of this Section
9.4 shall not apply and need not be complied with if the proposed purchaser is
currently a Member of the Company.

 

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

 

9.5.                              Option to
Purchase Membership Interest.

 

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

 

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

 

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

 

15

 

(b)                                 American
Crystal Option.  Upon the
occurrence of a Purchase Event, American Crystal shall have the option to
purchase all of the Membership Interest of Golden Growers.  Golden Growers shall provide written notice
to American Crystal within sixty (60) days following the occurrence of a
Purchase Event.  American Crystal shall
have sixty (60) days following receipt of the notice in which to exercise its
option to purchase Golden Growers’ Membership Interest.  American Crystal may exercise its option by
providing written notice to Golden Growers of its desire to exercise the
option, which notice must be sent to Golden Growers within such sixty (60) day
period.  American Crystal’s failure to
exercise the option within such sixty (60) day period shall result in a waiver
of the option.

 

(c)                                  Purchase Price
and Payment.  The
Purchase Price for Golden Growers’ Membership Interest shall be equal to the
appraised value using the following procedure. 
The value of the Golden Growers’ Membership Interest shall first be
determined by the opinion of two independent appraisers, one of which shall be
selected by Golden Growers and one of which shall be selected by American
Crystal.  If the results of the two
appraisers do not differ by more than ten percent (10%) of the higher
appraisal, then the average of the two appraisals shall be considered the value
of the Membership Interest.  If the
results of the two appraisers differ by more than ten percent (10%) of the
higher appraisal, a third appraiser shall be selected by mutual agreement of
the first two appraisers.  The average of
the two closest appraisals among the three appraisals shall then be considered
the value of the Membership Interest. 
All such appraisals shall be completed within 60 days following the
exercise of the option to purchase by American Crystal.  The cost of all appraisals shall be paid by
the Company.  The closing on sale of the
Membership Interest shall occur within sixty (60) days following completion of
the final appraisal; provided that, ACSC may elect not to proceed with the
closing in the event Purchase Price established pursuant to the foregoing
procedure is, in the sole judgment of American Crystal, not satisfactory.  The Purchase Price shall be paid in cash at
closing.

 

ARTICLE X

DISSOLUTION:  DISSOLUTION
AVOIDANCE

 

10.1.                        Dissolution.

 

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

 

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

 

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

 

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

 

16

 

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

 

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

 

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

 

10.2.                        Dissolution
Avoidance.

 

(a)                                  Member Consent
to Continuation of the Company.  The Company shall not be dissolved and is not
required to be wound up by reason of the occurrence of an event that terminates
the continued membership of a Member in the Company (including the events
enumerated in Section 322B.80, Subd. 1, clause (5) of the Act) if (i) either
there are at least two remaining Members or a new Member is admitted as
provided in Section 3228.11 of the Act, and (ii) the existence and business of
the Company is continued by the consent of all the remaining Members, no later
than ninety (90) days after the termination of the continued membership.  Pursuant to Section 9.1(c), the consent to a
proposed Assignment of Governance Rights may also constitute the consent
necessary to avoid the dissolution of the Company.  Notwithstanding anything to the contrary, a
new Member may not be appointed during the term of Cargill’s lease of the
Facility or any extension thereof without Cargill’s prior written consent.

 

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

 

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

 

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

 

17

 

Member
shall be liable to the Company and the remaining Members for any damages caused
by such retirement or resignation.

 

10.3.                        Distributions
Upon Liquidation.  Upon
liquidation, the business of the Company shall be wound up, the Board of
Governors shall take full account of the Company assets and liabilities, and
all assets shall be liquidated as promptly as is consistent with obtaining the
fair value thereof.  If any assets are
not sold, gain or loss shall be allocated to the Members in accordance with Article
V as if such assets had been sold at their fair market value at the time of the
liquidation.  If any assets are
distributed to a Member, rather than sold, the Distribution shall be treated as
a Distribution equal to the fair market value of the assets at the time of the
liquidation.  The assets of the Company
shall be applied and distributed in the following order of priority:

 

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

 

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

 

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

 

ARTICLE XI

NEW MEMBERS BOUND BY AGREEMENT

 

Any
Person who is admitted to the Company as a Member shall be subject to and bound
by all the provisions of this Agreement as if originally a party to this
Agreement.  Such Person shall execute and
acknowledge all documents and instruments, in form and substance satisfactory
to the Board of Governors, as the Board of Governors shall deem necessary or
advisable to effect such admission and to confirm the agreement of the Person
being admitted to be bound by all the terms and provisions of this
Agreement.  Such Person shall pay all
reasonable expenses in connection with such admission as a Member, including
without limitation legal fees and costs of preparation of any amendment to or
restatement of this Agreement, if necessary or desirable in connection
therewith.

 

ARTICLE XII

REMEDIES

 

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

 

18

 

not
being a bar to the pursuit of other remedies which may be available.  The Members and the Company further agree
that the breaching party or parties shall pay all reasonable costs, expenses,
and attorneys’ fees incurred by the non-breaching party or parties in pursuing
their remedies for a breach of this Agreement.

 

ARTICLE XIII

MISCELLANEOUS

 

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

 

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

 

13.3.                        Severability.  If any provision of this Agreement is held to
be illegal, invalid, or unenforceable under the present or future laws
effective during the term of this Agreement, such provision will be fully
severable; this Agreement will be construed and enforced as if such illegal,
invalid, or unenforceable provision had never comprised a part of this
Agreement; and the remaining provisions of this Agreement will remain in full
force and effect and will not be affected by the illegal, invalid, or
unenforceable provision or by its severance from this Agreement.  Furthermore, in lieu of such illegal,
invalid, or unenforceable provision, there will be added automatically as a
part of this Agreement a provision as similar in terms to such illegal,
invalid, or unenforceable provision as may be possible and be legal, valid, and
enforceable.

 

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

 

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

 

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

 

19

 

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

 

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

 

13.8.                        Necessary
Instruments and Acts.  The Members
covenant and agree that they shall execute any further instruments and shall
perform any acts which are or may become necessary to effectuate and to carry
out the terms and conditions of this Agreement.

 

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

 

13.10.                  Interpretation.  All references herein to Articles, Sections
and subsections refer to Articles, Sections and subsections of this
Agreement.  All Article, Section and
subsection headings are for reference purposes only and shall not affect the
interpretation of this Agreement.

 

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

 

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

 

IN
WITNESS WHEREOF, the undersigned have executed this Amended and Restated Member
Control Agreement as of the day and year first above written.

 

	
   

  	
  GOLDEN
  GROWERS COOPERATIVE

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Harvey Pyle

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Its:
  Chairperson

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  AMERICAN
  CRYSTAL SUGAR COMPANY

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Thomas Astrup

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Its: Chief Financial Officer

  

 

20

 

SCHEDULE A

 

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

 

 

	
  Member

  and

  Address

  	
   

  	
  Form of

  Contribution

  	
   

  	
  Agreed

  Value of

  Contribution

  	
   

  	
  Percentage

  Interest

  (Financial
  Rights)

  	
   

  	
  Voting

  Interest

  (Governance

  Rights)

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Golden
  Growers Cooperative

  101 North Tenth Street 

  Suite 110 

  P.O. Box 2484 

  Fargo, North Dakota 58102

  	
   

  	
  Cash

  	
   

  	
  $

  	
  51,156,000

  	
   

  	
  49

  	
  %

  	
  49

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  American
  Crystal Sugar

  Company

  101 Third Street North

  Moorhead, Minnesota 56560

  	
   

  	
  Cash

  	
   

  	
  $

  	
  53,244,000

  	
  *

  	
  51

  	
  %

  	
  51

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  TOTAL

  	
   

  	
   

  	
   

  	
  $

  	
  104,400,000

  	
   

  	
  100

  	
  %

  	
  100

  	
  %

  

 

 

	
  Dated:
  September 1, 2009.

  	
  GOLDEN
  GROWERS COOPERATIVE

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Harvey Pyle

  
	
   

  	
  Its:
  Chairperson

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  AMERICAN
  CRYSTAL SUGAR COMPANY

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Thomas Astrup

  
	
   

  	
  Its:
  Chief Financial Officer

  

 

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

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00172-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00172-of-00352.parquet"}]]