Document:

Exhibit 10.14

Execution Copy

AMENDED AND RESTATED CREDIT AGREEMENT

Among

GOLDEN OVAL EGGS, LLC,

as a Borrower and as the Borrowers’ Agent,

GOECA, LP

as a Borrower,

MIDWEST INVESTORS OF IOWA, COOPERATIVE

as a Borrower,

COBANK, ACB,

as a Lender and as Administrative Agent,

METROPOLITAN LIFE INSURANCE COMPANY,

as a Lender,

and

THE OTHER LENDERS FROM TIME TO TIME PARTY HERETO

 

 

TABLE
OF CONTENTS

	
  ARTICLE I DEFINITIONS AND ACCOUNTING TERMS

  	
  1

  
	
   

  	
   

  	
   

  
	
  Section 1.1

  	
  Defined Terms

  	
  1

  
	
  Section 1.2

  	
  Accounting Terms and Calculations

  	
  19

  
	
  Section 1.3

  	
  Computation of Time
  Periods

  	
  19

  
	
  Section 1.4

  	
  Other Definitional Terms

  	
  19

  
	
   

  	
   

  	
   

  
	
  ARTICLE II TERMS OF THE
  CREDIT FACILITIES

  	
  19

  
	
   

  	
   

  	
   

  
	
  Section 2.1

  	
  Lending Commitments

  	
  19

  
	
  Section 2.2

  	
  Procedure for Loans

  	
  20

  
	
  Section 2.3

  	
  Notes

  	
  22

  
	
  Section 2.4

  	
  Conversions and
  Continuations

  	
  23

  
	
  Section 2.5

  	
  Interest Rates, Interest
  Payments and Default Interest

  	
  24

  
	
  Section 2.6

  	
  Repayment

  	
  26

  
	
  Section 2.7

  	
  Prepayments

  	
  28

  
	
  Section 2.8

  	
  Letters of Credit

  	
  29

  
	
  Section 2.9

  	
  Procedures for Letters of
  Credit

  	
  29

  
	
  Section 2.10

  	
  Terms of Letters of Credit

  	
  29

  
	
  Section 2.11

  	
  Agreement to Repay Letter
  of Credit Drawings

  	
  29

  
	
  Section 2.12

  	
  Obligations Absolute

  	
  29

  
	
  Section 2.13

  	
  Fees

  	
  30

  
	
  Section 2.14

  	
  Computation

  	
  31

  
	
  Section 2.15

  	
  Payments

  	
  31

  
	
  Section 2.16

  	
  Use of Loan Proceeds

  	
  31

  
	
  Section 2.17

  	
  Interest Rate Not
  Ascertainable, Etc.

  	
  32

  
	
  Section 2.18

  	
  Increased Cost

  	
  32

  
	
  Section 2.19

  	
  Illegality

  	
  33

  
	
  Section 2.20

  	
  Capital Adequacy

  	
  33

  
	
  Section 2.21

  	
  Funding Losses; Quoted
  Rate and LIBOR Rate Advances

  	
  33

  
	
  Section 2.22

  	
  Discretion of Lenders as
  to Manner of Funding

  	
  34

  
	
  Section 2.23

  	
  Prepayment of Term Loans

  	
  34

  
	
  Section 2.24

  	
  Replacement of Certain Lenders

  	
  34

  
	
  Section 2.25

  	
  Taxes

  	
  34

  
	
  Section 2.26

  	
  Capitalization

  	
  36

  
	
  Section 2.27

  	
  Security

  	
  36

  
	
   

  	
   

  	
   

  
	
  ARTICLE III CONDITIONS
  PRECEDENT

  	
  36

  
	
   

  	
   

  	
   

  
	
  Section 3.1

  	
  Conditions to Closing

  	
  36

  
	
  Section 3.2

  	
  Conditions Precedent to
  All Loans and Letters of Credit

  	
  41

  
	
  Section 3.3

  	
  Conditions Subsequent

  	
  42

  
	
   

  	
   

  	
   

  
	
  ARTICLE IV REPRESENTATIONS
  AND WARRANTIES

  	
  42

  
	
   

  	
   

  	
   

  
	
  Section 4.1

  	
  Organization, Standing,
  Etc.

  	
  42

  
	
  Section 4.2

  	
  Authorization and Validity

  	
  42

  

 

 i
 

 

 

	
  Section 4.3

  	
  No Conflict; No Default

  	
  43

  
	
  Section 4.4

  	
  Government Consent

  	
  43

  
	
  Section 4.5

  	
  Financial Statements and
  Condition

  	
  43

  
	
  Section 4.6

  	
  Litigation

  	
  43

  
	
  Section 4.7

  	
  Environmental, Health and
  Safety Laws

  	
  43

  
	
  Section 4.8

  	
  ERISA

  	
  44

  
	
  Section 4.9

  	
  Federal Reserve
  Regulations

  	
  44

  
	
  Section 4.10

  	
  Title to Property; Leases;
  Liens; Subordination

  	
  44

  
	
  Section 4.11

  	
  Taxes

  	
  44

  
	
  Section 4.12

  	
  Trademarks, Patents

  	
  44

  
	
  Section 4.13

  	
  Burdensome Restrictions

  	
  44

  
	
  Section 4.14

  	
  Force Majeure

  	
  44

  
	
  Section 4.15

  	
  Investment Company Act

  	
  45

  
	
  Section 4.16

  	
  Public Utility Holding
  Company Act

  	
  45

  
	
  Section 4.17

  	
  Full Disclosure

  	
  45

  
	
  Section 4.18

  	
  Subsidiaries

  	
  45

  
	
  Section 4.19

  	
  Labor Matters

  	
  45

  
	
  Section 4.20

  	
  Security Documents

  	
  45

  
	
  Section 4.21

  	
  Solvency

  	
  46

  
	
  Section 4.22

  	
  Eligibility

  	
  46

  
	
  Section 4.23

  	
  Material Contract

  	
  46

  
	
  Section 4.24

  	
  Moark Acquisition

  	
  46

  
	
  Section 4.25

  	
  Subordinated Debt

  	
  47

  
	
   

  	
   

  	
   

  
	
  ARTICLE V AFFIRMATIVE
  COVENANTS

  	
  47

  
	
   

  	
   

  	
   

  
	
  Section 5.1

  	
  Financial Statements and
  Reports

  	
  47

  
	
  Section 5.2

  	
  Existence

  	
  49

  
	
  Section 5.3

  	
  Insurance

  	
  50

  
	
  Section 5.4

  	
  Payment of Taxes and
  Claims

  	
  50

  
	
  Section 5.5

  	
  Inspection

  	
  50

  
	
  Section 5.6

  	
  Maintenance of Properties

  	
  50

  
	
  Section 5.7

  	
  Books and Records

  	
  50

  
	
  Section 5.8

  	
  Compliance

  	
  50

  
	
  Section 5.9

  	
  ERISA

  	
  50

  
	
  Section 5.10

  	
  Environmental Matters;
  Reporting

  	
  50

  
	
  Section 5.11

  	
  Further Assurances

  	
  51

  
	
  Section 5.12

  	
  Compliance with Terms of
  Material Contracts

  	
  51

  
	
   

  	
   

  	
   

  
	
  ARTICLE VI NEGATIVE
  COVENANTS

  	
  51

  
	
   

  	
   

  	
   

  
	
  Section 6.1

  	
  Merger

  	
  51

  
	
  Section 6.2

  	
  Disposition of Assets

  	
  51

  
	
  Section 6.3

  	
  Plans

  	
  52

  
	
  Section 6.4

  	
  Change in Nature of
  Business

  	
  52

  
	
  Section 6.5

  	
  Subsidiaries

  	
  52

  
	
  Section 6.6

  	
  Negative Pledges

  	
  52

  
	
  Section 6.7

  	
  Restricted Payments

  	
  52

  
	
  Section 6.8

  	
  Transactions with
  Affiliates

  	
  52

  
	
  Section 6.9

  	
  Accounting Changes

  	
  52

  

 

 ii
 

 

 

	
  Section 6.10

  	
  Subordinated Debt

  	
  52

  
	
  Section 6.11

  	
  Investments

  	
  53

  
	
  Section 6.12

  	
  Indebtedness

  	
  53

  
	
  Section 6.13

  	
  Liens

  	
  54

  
	
  Section 6.14

  	
  Contingent Liabilities

  	
  54

  
	
  Section 6.15

  	
  Tangible Net Worth

  	
  55

  
	
  Section 6.16

  	
  Current Ratio

  	
  55

  
	
  Section 6.17

  	
  Working Capital

  	
  55

  
	
  Section 6.18

  	
  Leverage Ratio

  	
  55

  
	
  Section 6.19

  	
  Fixed Charge Coverage
  Ratio

  	
  55

  
	
  Section 6.20

  	
  Operating Leases

  	
  55

  
	
  Section 6.21

  	
  Risk Management

  	
  55

  
	
  Section 6.22

  	
  Material Contracts

  	
  55

  
	
  Section 6.23

  	
  Eligibility

  	
  55

  
	
  Section 6.24

  	
  Real Estate Plan

  	
  55

  
	
   

  	
   

  	
   

  
	
  ARTICLE VII EVENTS OF
  DEFAULT AND REMEDIES

  	
  55

  
	
   

  	
   

  	
   

  
	
  Section 7.1

  	
  Events of Default

  	
  55

  
	
  Section 7.2

  	
  Remedies

  	
  57

  
	
  Section 7.3

  	
  Offset

  	
  57

  
	
   

  	
   

  	
   

  
	
  ARTICLE VIII THE
  ADMINISTRATIVE AGENT

  	
  58

  
	
   

  	
   

  	
   

  
	
  Section 8.1

  	
  Appointment and
  Authorization

  	
  58

  
	
  Section 8.2

  	
  Note Holders

  	
  58

  
	
  Section 8.3

  	
  Consultation With Counsel

  	
  58

  
	
  Section 8.4

  	
  Loan Documents

  	
  58

  
	
  Section 8.5

  	
  CoBank and Affiliates

  	
  58

  
	
  Section 8.6

  	
  Action by Administrative
  Agent

  	
  58

  
	
  Section 8.7

  	
  Credit Analysis

  	
  59

  
	
  Section 8.8

  	
  Notices of Event of
  Default, Etc.

  	
  59

  
	
  Section 8.9

  	
  Indemnification

  	
  59

  
	
  Section 8.10

  	
  Payments and Collections

  	
  59

  
	
  Section 8.11

  	
  Sharing of Payments

  	
  61

  
	
  Section 8.12

  	
  Advice to Lenders

  	
  61

  
	
  Section 8.13

  	
  Defaulting Lender

  	
  61

  
	
  Section 8.14

  	
  Resignation

  	
  62

  
	
   

  	
   

  	
   

  
	
  ARTICLE IX MISCELLANEOUS

  	
  62

  
	
   

  	
   

  	
   

  
	
  Section 9.1

  	
  Modifications

  	
  62

  
	
  Section 9.2

  	
  Expenses

  	
  63

  
	
  Section 9.3

  	
  Waivers, etc.

  	
  64

  
	
  Section 9.4

  	
  Notices

  	
  64

  
	
  Section 9.5

  	
  Taxes

  	
  64

  
	
  Section 9.6

  	
  Successors and Assigns;
  Participations; Purchasing Lenders

  	
  64

  
	
  Section 9.7

  	
  Confidentiality of
  Information

  	
  66

  
	
  Section 9.8

  	
  Governing Law and
  Construction

  	
  67

  
	
  Section 9.9

  	
  Consent to Jurisdiction

  	
  67

  

 

 iii
 

 

 

	
  Section 9.10

  	
  Waiver of Jury Trial

  	
  67

  
	
  Section 9.11

  	
  Survival of Agreement

  	
  67

  
	
  Section 9.12

  	
  Indemnification

  	
  67

  
	
  Section 9.13

  	
  Captions

  	
  68

  
	
  Section 9.14

  	
  Entire Agreement

  	
  68

  
	
  Section 9.15

  	
  Counterparts

  	
  68

  
	
  Section 9.16

  	
  Borrower Acknowledgements

  	
  68

  
	
  Section 9.17

  	
  Appointment of and
  Acceptance by Borrowers’ Agent

  	
  69

  
	
  Section 9.18

  	
  Relationship Among
  Borrowers

  	
  69

  
	
  Section 9.19

  	
  Interest Rate Limitation

  	
  71

  
	
  Section 9.20

  	
  Ratification of Prior
  Transactions

  	
  71

  
	
   

  	
   

  	
   

  
	
  Annexes

  	
   

  	
   

  
	
  Annex I

  	
  Pricing Grid

  	
   

  
	
  Annex II

  	
  Risk Management Grid

  	
   

  
	
   

  	
   

  	
   

  
	
  Schedules

  	
   

  	
   

  
	
  Schedule 3.1(a)

  	
  Landlord/Bailee Locations

  	
   

  
	
  Schedule 3.1(l)

  	
  Material Contracts

  	
   

  
	
  Schedule 4.6

  	
  Litigation

  	
   

  
	
  Schedule 4.7

  	
  Environmental Matters

  	
   

  
	
  Schedule 4.10

  	
  Moark Leases

  	
   

  
	
  Schedule 6.11

  	
  Existing Investments

  	
   

  
	
  Schedule 6.12

  	
  Existing Indebtedness

  	
   

  
	
  Schedule 6.13

  	
  Existing Liens

  	
   

  
	
  Schedule 6.14

  	
  Existing Contingent Obligations

  	
   

  
	
   

  	
   

  	
   

  
	
  Exhibits

  	
   

  	
   

  
	
  Exhibit A-1

  	
  Form of Revolving Note

  	
   

  
	
  Exhibit A-2

  	
  Form of Term Notes

  	
   

  
	
  Exhibit B

  	
  Form of Security Agreement

  	
   

  
	
  Exhibit C

  	
  Form of Mortgage

  	
   

  
	
  Exhibit D

  	
  Form of Pricing Report

  	
   

  
	
  Exhibit E

  	
  Borrowing Base Formula

  	
   

  
	
  Exhibit F

  	
  Form of Borrowing Base Certificate

  	
   

  
	
  Exhibit G

  	
  Form of Compliance Certificate

  	
   

  
	
  Exhibit H

  	
  Form of Assignment Agreement

  	
   

  
	
  Exhibit I

  	
  Form of Environmental Indemnity

  	
   

  
	
  Exhibit J

  	
  Form of Contract Assignment

  	
   

  
				

 

 iv

 

AMENDED AND RESTATED CREDIT AGREEMENT

THIS
AMENDED AND RESTATED CREDIT AGREEMENT, dated as of June 30, 2006, is by and
between GOLDEN OVAL EGGS, LLC, a limited liability company organized under the
laws of the State of Delaware, GOECA, LP, a Delaware limited partnership, and
MIDWEST INVESTORS OF IOWA, COOPERATIVE, a cooperative organized under the laws
of the State of Iowa (individually each a “Borrower” and collectively
the “Borrowers”), the banks and other financial institutions or entities
which are signatories hereto (individually each a “Lender” and
collectively the “Lenders”), COBANK, ACB, a federally charted
instrumentality under the Farm Credit Act of 1971, as amended, one of the
Lenders and as agent for the Lenders (in such capacity, the “Administrative
Agent”), and METROPOLITAN LIFE INSURANCE COMPANY, as a Lender.

RECITALS

A.                                   The Borrowers, the Lenders and the
Administrative Agent are parties to a Credit Agreement dated as of September
13, 2004, as amended by that certain First Amendment to Credit Agreement dated
as of November 30, 2005 (as so amended and as otherwise amended, supplemented
or modified form time to time, the “Existing Credit Agreement”);

B.                                     The Borrowers, the Lenders and the
Administrative Agent each wish to amend certain provisions of the Existing
Credit Agreement; and

C.                                     This Agreement amends, restates and replaces
the Existing Credit Agreement in its entirety.

ARTICLE I

DEFINITIONS AND ACCOUNTING TERMS

Section 1.1                                      Defined
Terms.  As used in this Agreement the
following terms shall have the following respective meanings (and such meanings
shall be equally applicable to both the singular and plural form of the terms
defined, as the context may require):

“Adjusted
LIBOR Rate”:  With respect to each
day, the rate (rounded upward, if necessary, to the next one sixteenth of one
percent) determined by dividing the LIBOR Rate in effect on such day by 1.00
minus the LIBOR Reserve Percentage.

“Adjusted
Dividend Accrual”:  For any period of
determination, fifty percent (50%) of the consolidated net income of the
Borrowers’ Agent, as adjusted from time to time to reflect actual dividends or
cash patronages.

“Administrative
Agent”:  As defined in the opening
paragraph hereof.

“Advance”:  Any portion of the outstanding Revolving
Loans, Swing Line Loans or Term Loans by a Lender as to which one of the
available interest rate options and, if pertinent, an Interest Period, is
applicable.  Subject to the terms and
conditions hereof, an Advance may be a Tranche A Advance, a Quoted Rate
Advance, a LIBOR Rate Advance, a Base Rate Advance or, for the two months prior
to the applicable maturity date for a Loan only, a LIBOR Index Rate Advance.

 

“Affiliate”:  When used with reference to any Person, (a)
each Person that, directly or indirectly, controls, is controlled by or is
under common control with, the Person referred to, (b) each Person which
beneficially owns or holds, directly or indirectly, five percent or more of any
class of voting Equity Interests of the Person referred to, (c) each Person,
five percent or more of the voting Equity Interests (or if such Person is not a
corporation, five percent or more of the equity interest) of which is
beneficially owned or held, directly or indirectly, by the Person referred to,
and (d) each of such Person’s officers, directors, joint venturers and
partners.  The term control (including
the terms “controlled by” and “under common control with”) means the
possession, directly, of the power to direct or cause the direction of the
management and policies of the Person in question.

“Aggregate
Revolving Commitment Amount”:  As of
any date, the sum of the Revolving Commitment Amounts of all the Revolving
Lenders.

“Applicable
Commitment Fee Percentage”:  The
Applicable Margin at which the Commitment Fees accrue.

“Applicable
Lending Office”:  For each Lender and
for each type of Advance, the office of such Lender identified as such Lender’s
Applicable Lending Office on the signature pages hereof or such other domestic
or foreign office of such Lender (or of an Affiliate of such Lender) as such
Lender may specify from time to time, by notice given pursuant to Section 9.4,
to the Administrative Agent and the Borrowers’ Agent as the office by which its
Advances of such type are to be made and maintained.

“Applicable
Margin”:  Subject to the last
sentence of this definition, with respect to computation of the applicable
interest rate or the Applicable Commitment Fee Percentage on Advances or
Commitments under the Revolving Loans, the Second Tranche 2 Advances and the
Final Tranche 2 Advances with respect to the Tranche A2 Term Loans, the Tranche
A3 Advances with respect to the Tranche A3 Term Loans, the Tranche B Term Loans
or the Letter of Credit Fee, as the case may be, the margin payable by the
Borrowers with respect thereto, as set forth and described in Annex I,
established as of the first day of each Fiscal Quarter after the Compliance
Certificate required by Section 5.1 is delivered as of the last day of the next
preceding Fiscal Quarter (i.e. adjustments shall be made one Fiscal Quarter in
arrears); provided, however, that any adjustment in the
Applicable Margin shall not become effective until the Administrative Agent
shall have received the Compliance Certificate and related financial statements
relating to the last day of such next preceding Fiscal Quarter pursuant to Sections
5.1(c) and (d) hereof; provided, further, that
notwithstanding anything herein to the contrary, for the first two full Fiscal
Quarters following the Effective Date, the Applicable Margin shall be determined
at the highest level described in Annex I.  If a Compliance Certificate and related
financial statements of the Borrowers’ Agent and a related certification of the
Borrowers’ Agent pursuant to Sections 5.1(c) and (d) necessary to
establish the Applicable Margin hereunder are not received by the
Administrative Agent on or prior to the date required pursuant to Sections
5.1(c) and (d) hereof, the Applicable Margin shall be determined at
the highest level described in Annex I and shall remain in effect until
one Business Day after such time as the required financial statements are
received.

“Applicable
Permits”: Any permit, license or similar authorization of or from a
governmental agency or political subdivision that is necessary for a Borrower
to construct, operate, maintain, own or lease its businesses.

“Assignees”:
As defined in Section 9.6(c).

“Assignment
Agreement”: As defined in Section 9.6(c).

 2
 

 

“Base
Rate”:  The rate of interest per
annum from time to time established by CoBank as its “CoBank Base Rate.” CoBank
may lend to its customers at rates that are at, above or below the Base
Rate.  For purposes of determining any
interest rate hereunder or under any other Loan Document which is based on the
Base Rate, such interest rate shall change as and when the Base Rate shall
change.

“Base
Rate Advance”:  An Advance with
respect to which the interest rate is determined by reference to the Base Rate.

“Bear
Stearns Interest Rate Swap Agreement”: 
That certain Fixed Income Derivative Amended Confirmation, Reference
NE87521, dated May 17, 2000 between Bear Stearns and Borrowers’ Agent.

“Board”:  The Board of Governors of the Federal Reserve
System or any successor thereto.

“Borrower”:  As defined in the opening paragraph hereof.

“Borrowers’
Agent”:  Golden Oval Eggs, LLC, a
limited liability company organized under the laws of the State of Delaware.

“Borrowing
Base”:  As determined in accordance
with the formula set forth in Exhibit E hereto.

“Borrowing
Base Certificate”:  A certificate in
the form of Exhibit F hereto.

“Borrowing
Base Deficiency”:  At the time of any
determination, the amount, if any, by which Total Revolving Outstandings exceed
the Borrowing Base.

“Business
Day”:  Any day (other than a
Saturday, Sunday or legal holiday in the State of Colorado or the State of
Iowa) on which banks are permitted to be open in Denver, Colorado or Des
Moines, Iowa.

“Capital
Expenditures”:  For any period, the
sum of all amounts that would, in accordance with GAAP, be included as
additions to property, plant and equipment on a consolidated statement of cash
flows for the Borrowers’ Agent during such period, in respect of (a) the
acquisition, construction, improvement, replacement or betterment of land,
buildings, machinery, equipment or of any other fixed assets or leaseholds, (b)
to the extent related to and not included in (a) above, materials, contract
labor (excluding expenditures properly chargeable to repairs or maintenance in
accordance with GAAP), and (c) other capital expenditures and other uses
recorded as capital expenditures or similar terms having substantially the same
effect, but excluding (i) layer purchases, (ii) capitalized expenses, (iii)
expenditures incurred in connection with the Thompson Construction and (iv)
expenditures incurred in connection with the Moark Acquisition.

“Capital
Lease”:  A lease of (or other
agreement conveying the right to use) real or personal property with respect to
which at least a portion of the rent or other amounts thereon constitute
Capital Lease Obligations.

“Capital
Lease Obligations”:  As to any
Person, the obligations of such Person to pay rent or other amounts under a
lease of (or other agreement conveying the right to use) real or personal
property which obligations are required to be classified and accounted for as a
capital lease on a balance sheet of such Person under GAAP (including Statement
of Financial Accounting Standards No. 13 of the Financial Accounting Standards
Board), and, for purposes of this Agreement, the amount of such obligations
shall be the capitalized amount thereof, determined in accordance with GAAP
(including such Statement No. 13).

 3
 

 

“Change
of Control”:  The occurrence, after
the Closing Date, of any of the following circumstances: (a) any Person or two
or more Persons acting in concert (other than the current holders of the Equity
Interests of the Borrowers’ Agent) acquiring beneficial ownership (within the
meaning of Rule 13d-3 of the Securities and Exchange Commission under the
Securities Exchange Act of 1934), directly or indirectly, of Equity Interests
of the Borrowers’ Agent representing 50% or more of the combined voting power
of all Equity Interests of Borrowers’ Agent entitled to vote in the election of
directors; or (b) any Person or two or more Persons acting in concert (other
than the current holders of the Equity Interests of the Borrowers’ Agent)
acquiring by contract or otherwise, or entering into a contract or arrangement
which upon consummation will result in its or their acquisition of, control
over Equity Interests of any Borrower representing 50% or more of the combined
voting power of all Equity Interests of Borrowers’ Agent entitled to vote in
the election of directors.  For the
avoidance of doubt, acquiring membership interests in Borrowers’ Agent pursuant
to an offering does not constitute “acting in concert” for purpose of this
definition.

“Charges”:  As defined in Section 9.19.

“Closing
Date”:  June 30, 2006.

“CoBank”:  CoBank, ACB, in its capacity as one of the
Lenders hereunder.

“CoBank
Equities”:  As defined in Section 2.27.

“Code”:  The Internal Revenue Code of 1986, as
amended.

“Commitments”:  The Revolving Commitment and the Term Loan
Commitments.

“Commitment
Fees”:  As defined in Section
2.13(b).

“Contingent
Obligation”:  With respect to any
Person at the time of any determination, without duplication, any obligation,
contingent or otherwise, of such Person guaranteeing or having the economic
effect of guaranteeing any Indebtedness of any other Person (the “primary
obligor”) in any manner, whether directly or otherwise: (a) to purchase or pay
(or advance or supply funds for the purchase or payment of) such Indebtedness
or to purchase (or to advance or supply funds for the purchase of) any direct
or indirect security therefor, (b) to purchase property, securities, Equity
Interests or services for the purpose of assuring the owner of such
Indebtedness of the payment of such Indebtedness, (c) to maintain working
capital, equity capital or other financial statement condition of the primary
obligor so as to enable the primary obligor to pay such Indebtedness or
otherwise to protect the owner thereof against loss in respect thereof, or (d)
entered into for the purpose of assuring in any manner the owner of such
Indebtedness of the payment of such Indebtedness or to protect the owner
against loss in respect thereof; provided, that the term “Contingent Obligation”
shall not include endorsements for collection or deposit, in each case in the
ordinary course of business.

“Contract
Assignments”:  Those certain
Assignments of Contracts entered into pursuant to the Existing Credit Agreement
and those certain Assignments of Contracts dated as of June 30, 2006 executed
by the Borrowers’ Agent with respect to each Material Contract identified on
Schedule 3.1(l) as requested by the Administrative Agent.

“Current
Assets”:  As of any date, the
consolidated current assets of the Borrowers’ Agent, determined in accordance
with GAAP.

 4
 

 

“Current
Liabilities”:  As of any date, the
consolidated current liabilities of the Borrowers, determined in accordance
with GAAP.

“Default”:  Any event which, with the giving of notice
(whether such notice is required under Section 7.1, or under another provision
of this Agreement, or otherwise) or lapse of time, or both, would constitute an
Event of Default.

“Default
Rate”:  The sum of the interest rate
per annum otherwise applicable to an Advance plus five percent (5%).

“Defaulting
Lender”: at any time, any Lender that, at such time (a) has failed to make
a Revolving Loan or its Term Loan or any Advances thereunder required pursuant
to the terms of this Agreement, including the funding of any participation in
accordance with the terms of this Agreement, (b) has failed to pay to the
Administrative Agent or any Lender an amount owed by such Lender pursuant to
the terms of this Agreement, or (c) has been deemed insolvent or has become
subject to a bankruptcy, receivership or insolvency proceeding, or to a
receiver, trustee or similar official.

“EBITDA”:  For any period of determination, the
consolidated net income of the Borrowers’ Agent before extraordinary gains or
losses, deductions for income taxes, Interest Expense, non-layer depreciation
and amortization, all as determined in accordance with GAAP.

“Environmental
Indemnity”:  The Unsecured
Environmental Indemnity by the Borrowers in favor of the Lenders, in the form
of Exhibit I.

“Equity
Interests”: All shares, interests, participation or other equivalents,
however designated, of or in a corporation or limited liability company,
whether or not voting, including but not limited to common stock, member
interests, warrants, preferred stock, convertible debentures, and all
agreements, instruments and documents convertible, in whole or in part, into
any one or more or all of the foregoing.

“ERISA”:  The Employee Retirement Income Security Act
of 1974, as amended.

“ERISA
Affiliate”:  Any trade or business
(whether or not incorporated) that is a member of a group of which the Borrower
is a member and which is treated as a single employer under Section 414 of the
Code.

“Event
of Default”:  Any event described in
Section 7.1.

“Existing
Credit Agreement”:  As defined in the
recitals hereto.

“Federal
Funds Rate”:  For any period, a
fluctuating interest rate per annum equal for each day during such period to
the weighted average of the rates on overnight Federal funds transactions, with
members of the Federal Reserve System arranged by Federal funds brokers, as
published for such day (or, if such day is not a Business Day, for the next
preceding Business Day) by the Federal Reserve Bank of New York, or, if such
rate is not so published for any day that is a Business Day, the average of the
quotations for such day on such transactions received by the Administrative
Agent from three Federal funds brokers of recognized standing selected by it.

“Final
Tranche 2 Advances”:  The third and
final Advances made by the Tranche A2 Term Lenders or Tranche B2 Term Lenders
after the First Tranche 2 Advances and Second Tranche 2 Advances have been
made, which Advances shall be in a maximum aggregate amount equal to (i) with
respect to the Tranche A2 Term Loans, the Tranche A2 Term Loan Commitment
Amount minus the First

 5
 

 

Tranche 2 Advances made by the Tranche A2 Term Lenders minus the
aggregate amount of the Second Tranche 2 Advances made by the Tranche A2 Term
Lenders, and (ii) with respect to the Tranche B2 Term Loans, the Tranche B2
Term Loan Commitment Amount minus the First Tranche 2 Advances made by
the Tranche B2 Term Lenders minus the aggregate amount of the Second
Tranche 2 Advances made by the Tranche B2 Term Lenders.

“First
Tranche 2 Advance”:  The initial
Advance of the Tranche A2 Term Loans and the Tranche B2 Term Loans, which
Advances shall be in a maximum amount of $6,700,000 and $3,300,000,
respectively.

“Fiscal
Quarter”:  Each three (3) month
period ending November 30, February 28 (or 29, as the case may be), May 31, and
August 31.

“Fixed
Charge Coverage Ratio”:  For any
period of determination, the ratio of

(a)                                  EBITDA minus Capital Expenditures not
financed with Indebtedness minus Equity Interest re-purchases by the
Borrowers’ Agent, minus equity retirements by the Borrowers’ Agent, minus
Adjusted Dividend Accrual,

to

(b)                                 the sum of Interest Expense and all required
principal payments with respect to Total Liabilities (including but not limited
to all payments with respect to Capital Lease Obligations of the Borrowers’
Agent),

in each case determined for
said period on a consolidated basis in accordance with GAAP.

“Funded
Debt”:  At the time of determination,
the amount on a consolidated basis of all Indebtedness of the Borrowers’ Agent
for borrowed money or the deferred purchase price of property, or that bears
interest on such date, plus the face amount of any letter of credit for which
the Borrowers’ Agent is the account party.

“GAAP”:  Generally accepted accounting principles set
forth in the opinions and pronouncements of the Accounting Principles Board of
the American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity as may be approved by a significant segment of
the accounting profession, which are applicable to the circumstances as of any
date of determination.

“GOE/MII
Security Agreement”:  That certain
Security Agreement dated as of September 13, 2004 executed by the Borrowers’
Agent and Midwest Investors of Iowa, Cooperative.

“GOECA”:  GOECA, LP, a Delaware limited partnership.

“GOECA
Security Agreement”:  The Security
Agreement executed by GOECA in the form of Exhibit B attached hereto.

“Immediately
Available Funds”:  Funds with good
value on the day and in the city in which payment is received.

“Indebtedness”:  With respect to any Person at the time of any
determination, without duplication, all obligations, contingent or otherwise,
of such Person which in accordance with GAAP should be

 6
 

 

classified upon the balance sheet of such Person as liabilities, but in
any event including: (a) all obligations of such Person for borrowed money
(including non-recourse obligations), (b) all obligations of such Person
evidenced by bonds, debentures, notes or other similar instruments, (c) all
obligations of such Person upon which interest charges are customarily paid or
accrued, (d) all obligations of such Person under conditional sale or other
title retention agreements relating to property purchased by such Person, (e)
all obligations of such Person issued or assumed as the deferred purchase price
of property or services, (f) all obligations of others secured by any Lien on
property owned or acquired by such Person, whether or not the obligations
secured thereby have been assumed, (g) all Capital Lease Obligations of such
Person, (h) all obligations of such Person in respect of interest rate swap
agreements, cap or collar agreements, interest rate futures or option
contracts, currency swap agreements, currency futures or option agreements and
other similar contracts, excluding the Bear Stearns Interest Rate Swap
Agreement, (i) all obligations of such Person, actual or contingent, as an
account party in respect of letters of credit or bankers’ acceptances, (j) all
obligations of any partnership or joint venture as to which such Person is or
may become personally liable, (k) all obligations of such Person under any
Equity Interests issue by such Person, and (l) all Contingent Obligations of
such Person.

“Indemnitee”:  As defined in Section 9.12.

“Interest
Expense”:  For any period of
determination, the aggregate consolidated amount, without duplication, of
interest paid, accrued or scheduled to be paid in respect of any Indebtedness
of the Borrowers’ Agent, including (a) all but the principal component of
payments in respect of conditional sale contracts, Capital Leases and other
title retention agreements, (b) commissions, discounts and other fees and
charges with respect to letters of credit and bankers’ acceptance financings
and (c) net costs under interest rate protection agreements, in each case
determined in accordance with GAAP.

“Interest
Period”:  With respect to each LIBOR
Rate Advance, the period commencing on the date of such Advance or on the last
day of the immediately preceding Interest Period, if any, applicable to an
outstanding Advance and ending one, two, three, six or nine months thereafter,
as the Borrowers may elect in the applicable notice of borrowing, continuation
or conversion; provided that:

(1)  Any Interest Period that would otherwise end
on a day which is not a LIBOR Business Day shall be extended to the next
succeeding LIBOR Business Day unless such LIBOR Business Day falls in another
calendar month, in which case such Interest Period shall end on the next
preceding LIBOR Business Day;

(2)  Any Interest Period that begins on the last
LIBOR Business Day of a calendar month (or a day for which there is no numerically
corresponding day in the calendar month at the end of such Interest Period)
shall end on the last LIBOR Business Day of a calendar month; and

(3)  Any Interest Period that would otherwise end
after the Termination Date shall end on the Termination Date.

For
purposes of determining an Interest Period, a month means a period starting on
one day in a calendar month and ending on the numerically corresponding day in
the next calendar month; provided, however, that if there is no
numerically corresponding day in the month in which such an Interest Period is
to end or if such an Interest Period begins on the last Business Day of a
calendar month, then such Interest Period shall end on the last Business Day of
the calendar month in which such Interest Period is to end.

“Investment”:  The acquisition, purchase, making or holding
of any Equity Interests or other security, any loan, advance, contribution to
capital, extension of credit (except for trade and customer accounts receivable
for inventory sold or services rendered in the ordinary course of business and
payable

 7
 

 

in accordance with customary trade terms), any acquisitions of real or
personal property (other than real and personal property acquired in the
ordinary course of business) and any purchase or commitment or option to
purchase Equity Interests, securities or other debt of or any interest in
another Person or any integral part of any business or the assets comprising
such business or part thereof and the formation of, or entry into, any
partnership as a limited or general partner or the entry into any joint
venture.  The amount of any Investment
shall be the original cost of such Investment plus the cost of all additions
thereto, without any adjustments for increases or decreases in value, or write-ups,
write-downs or write-offs with respect to such Investment.

“Land
O’ Lakes”:  Land O’ Lakes, a
Minnesota cooperative corporation.

“Landlord
Consents”:  Each Lease Assignment
Agreement, in form and substance satisfactory to the Administrative Agent, executed
by the Borrowers’ Agent or GOECA, as applicable, and the lessor of each Moark
Lease.

“Lender”:  As defined in the opening paragraph hereof,
and includes the Swing Line Lender, as applicable.

“Letter
of Credit”:  An irrevocable letter of
credit issued by the Administrative Agent pursuant to this Agreement for the
account of a Borrower.

“Letter
of Credit Bank”:  CoBank, ACB.

“Letter
of Credit Commitment Amount”: 
$1,000,000.00.

“Letter
of Credit Fee”:  As defined in
Section 2.13(d).

“Leverage
Ratio”:  At the time of any
determination, the ratio of (a) Funded Debt to (b) EBITDA.

“LIBOR
Business Day”:  A Business Day which
is also a day for trading by and between banks in United States dollar deposits
in the interbank Eurodollar market and a day on which banks are open for
business in New York City.

“LIBOR
Index Rate”:  A rate of interest per
annum equal to the rate of interest of a LIBOR Rate Advance for an Interest
Period selected by the Administrative Agent plus the Applicable Margin; provided,
however, that the Interest Period shall not exceed the lesser of two (2)
months and the period from the date of the Advance to the maturity date of the
Loan to which such Advance relates.

“LIBOR
Index Rate Advance”:  An Advance with
respect to which the interest rate is determined by reference to the LIBOR
Index Rate; provided, that such Advance may be made and maintained for a
Loan only during the two months prior to the applicable maturity date for a
Loan.

“LIBOR
Rate”:  With respect to each Interest
Period applicable to a LIBOR Rate Advance determined by reference to the
Adjusted LIBOR Rate, the average offered rate for deposits in United States
dollars (rounded upward, if necessary, to the nearest 1/16 of 1%) for delivery
of such deposits on the first day of such Interest Period, for the number of
days in such Interest Period, which appears on Telerate page 3750 as of 11:00
A.M., London time (or such other time as of which such rate appears) two LIBOR
Business Days prior to the first day of such Interest Period, or the rate for
such deposits determined by the Administrative Agent at such time based on such
other published service of general application as shall be selected by the
Administrative Agent for such purpose; provided, that in lieu of
determining the rate in the foregoing manner, the Administrative Agent may
determine the rate based on

 8
 

 

rates at which United States dollar deposits are offered to the
Administrative Agent in the interbank Eurodollar market at such time for
delivery in Immediately Available Funds on the first day of such Interest
Period in an amount approximately equal to the Advance by the Administrative
Agent to which such Interest Period is to apply (rounded upward, if necessary,
to the nearest 1/16 of 1%).  “Telerate
page 3750” means the display designated as such on the Telerate reporting
system operated by Telerate System Incorporated (or such other page as may
replace page 3750 for the purpose of displaying London interbank offered rates
of major banks for United States dollar deposits).

“LIBOR
Rate Advance”:  An Advance with
respect to which the interest rate is determined by reference to the Adjusted
LIBOR Rate or the LIBOR Index Rate.

“LIBOR
Reserve Percentage”:  As of any day,
that percentage (expressed as a decimal) which is in effect on such day, as
prescribed by the Board for determining the maximum reserve requirement
(including any basic, supplemental or emergency reserves) for a member bank of
the Federal Reserve System, with deposits comparable in amount to those held by
the Lender, in respect of “Eurocurrency Liabilities” as such term is defined in
Regulation D of the Board. The rate of interest applicable to any outstanding
Revolving Loans shall be adjusted automatically on and as of the effective date
of any change in the LIBOR Reserve Percentage.

“Lien”:  With respect to any Person, any security
interest, mortgage, pledge, lien, charge, encumbrance, title retention
agreement or analogous instrument or device (including the interest of each
lessor under any Capital Lease), in, of or on any assets or properties of such
Person, now owned or hereafter acquired, whether arising by agreement or
operation of law.

“Loan”:
A Revolving Loan, a Term Loan or a Swing Line Loan.

“Loan
Documents”: This Agreement, the Notes, any Rate Protection Agreement, the
Subordination Agreement and the Security Documents.

“Margin Assignment”:  Collectively, that certain Assignment Of
Hedging Account and Futures Contract dated as of September 13, 2004 executed by
the Borrowers’ Agent in favor of the Administrative Agent and any other
Assignment of Hedging Account and Futures Contract in the form of Exhibit B
to the Security Agreement, executed by the Borrowers’ Agent.

“Material
Adverse Occurrence”:  Any occurrence
of whatsoever nature (including, without limitation, any adverse determination
in any litigation, arbitration, or governmental investigation or proceeding)
which could reasonably be expected to materially and adversely affect (a) the
financial condition or operations of the Borrowers, (b) impair the ability of
any Borrower to perform its obligations under any Loan Document, or any writing
executed pursuant thereto, (c) the validity or enforceability of the material
obligations of any Borrower under any Loan Document, (d) the rights and
remedies of the Lenders or the Administrative Agent against any Borrower, (e)
the timely payment of the principal of and interest on the Loans or other
amounts payable by the Borrowers hereunder, or (f) the validity of the joint
and several nature of the obligations of the Borrowers with respect to all of
the Obligations.

“Material
Contracts”:  All contracts that are
material to the ongoing and continued operations of the Borrowers’ business
operations, including all material products marketing agreements (including egg
and manure marketing agreements) and all material supply agreements.

“Maximum
Rate”:  As defined in Section 9.19.

 9
 

 

“Moark
Acquisition”:  The acquisition by the
Borrowers’ Agent of the liquid egg operations of Moark, LLC, a Missouri limited
liability company, and certain of its affiliates, as contemplated pursuant to
the Moark Acquisition Documents.

“Moark
Acquisition Documents”: 
Collectively, (i) the Asset Purchase and Sale Agreement dated as of May
22, 2006 by and among the Borrowers’ Agent, Moark, LLC, a Missouri limited
liability company, and its Affiliates party thereto, and (ii) each other
document instrument and agreement executed in accordance with such agreement.

“Moark
Leases”:  The leases identified on Schedule
4.10.

“Moark
Property”:  The approximately 5.55
acre site located in Henry County, Alabama, owned in fee simple by Borrowers’
Agent, as more particularly described in the Moark Mortgage.

“Moark
Mortgage”:  The Mortgage executed by
the Borrowers’ Agent, in substantially the form of Exhibit C hereto,
encumbering the Moark Property.

“Mortgages”:  Collectively, (a) the Thompson Mortgage, (b)
the Moark Mortgage and (c) the Renville Mortgage.

“Net
Present Value”:  With respect to a
prepayment of a Term Note, the amount of each prospective payment of principal
and interest that, without such prepayment, could otherwise have been received
by the applicable Lender over the shorter of the remaining contractual life of
its Term Note or next repricing date, discounted at a rate equal to (i) the
yield of U.S. Treasury Notes that shall be imputed, by linear interpolation,
from the current weekly yield of those United States Treasury Notes having a
maturity as close as practicable to that of each specific payment of principal
and/or interest, as published in the most recent Federal Reserve Statistical
Release H.15 (519) or any successor publication, plus (ii) 0.75%.

“Note”:  A Term Note or a Revolving Note.

“Obligations”:  The Borrowers’ obligations in respect of the
due and punctual payment of principal and interest on the Notes and Unpaid
Drawings when and as due, whether by acceleration or otherwise and all fees
(including Commitment Fees), expenses, indemnities, reimbursements and other
obligations of the Borrowers under this Agreement or any other Loan Document,
and the Rate Protection Obligations, in all cases whether now existing or
hereafter arising or incurred.

“Operating
Lease”:  For any Person, a lease of
property that would not be classified as a Capital Lease, other than a lease
under which such Person is the lessor.

“Original
Funding Date”:  September 13, 2004.

“Other
Taxes”:  As defined in Section
2.25(b).

“Participants”:  As defined in Section 9.6(b).

“PBGC”:  The Pension Benefit Guaranty Corporation,
established pursuant to Subtitle A of Title IV of ERISA, and any successor
thereto or to the functions thereof.

“Permitted
Encumbrances”:  Encumbrances
affecting the real property described in the Mortgages that are permitted in
accordance with the terms of the Mortgages and, with respect to any other

 10
 

 

property of the Borrowers, encumbrances in the nature of zoning
restrictions, easements and rights or restrictions on the use of real property
and landlord’s Liens under leases on the premises rented that do not materially
detract from the value of such property or impair the use thereof in the
business of a Borrower.

“Person”:  Any natural person, corporation, partnership,
limited partnership, limited liability company, joint venture, firm,
association, trust, unincorporated organization, government or governmental
agency or political subdivision or any other entity, whether acting in an
individual, fiduciary or other capacity.

“Plan”:  Each employee benefit plan (whether in
existence on the Original Funding Date or thereafter instituted), as such term
is defined in Section 3 of ERISA, maintained for the benefit of employees,
officers or directors of a Borrower or of any ERISA Affiliate.

“Prepayment
Event”:  Means:

(a)                                  any sale, transfer or other disposition
(including pursuant to a sale and leaseback transaction) of any property or
asset of any Borrower, other than dispositions described in clauses (a), (b)
and (c) of Section 6.2; or

(b)                                 any casualty or other insured damage to, or
any taking under power of eminent domain or by condemnation or similar proceeding
of, any property or asset of any Borrower, but only to the extent that the net
proceeds therefrom have not been applied, or committed pursuant to an agreement
(including any purchase orders) to be applied, to repair, restore or replace
such property or asset within 180 days after such event.

“Prepayment
Fee”:  As defined in Section 2.23.

“Pricing
Report”:  A pricing report in the
form attached hereto as Exhibit D.

“Quoted
Rate”:  The fixed interest rate per
annum quoted by CoBank in it its sole discretion and set forth in a Quoted Rate
Offer that has been accepted by the Borrower, which rate shall apply only to
the specific amounts with the specific maturities set forth in the Quoted Rate
Offer.

“Quoted
Rate Offer”:  A quote of a fixed
interest rate per annum provided to the Borrowers by CoBank in its sole
discretion following the receipt by CoBank of a Quoted Rate Request from the
Borrowers’ Agent.  Rates may be fixed by
CoBank on such balances and for such periods as determined by CoBank in its
sole discretion in each instance, provided that the minimum fixed period
shall be 30 days for any Quoted Rate Advances for Revolving Loans and 180 days
for any Quoted Rate Advances for Tranche B Term Loans.  The Quoted Rate Offer may, in the sole
discretion of CoBank, include the Weekly Quoted Variable Rate.

“Quoted
Rate Request”:  A request by
Borrowers’ Agent to CoBank for a Quoted Rate Offer.

“Rate
Protection Agreement”:  Any interest
rate swap, cap or option agreement, or any other agreement pursuant to which any
Borrower hedges interest rate risk with respect to a portion of the
Obligations, entered into by any Borrower with a Rate Protection Provider.

“Rate
Protection Obligations”:  The
liabilities, indebtedness and obligations of any Borrower, if any, to any Rate
Protection Provider under a Rate Protection Agreement.

 11
 

 

“Rate
Protection Provider”:  Any Lender, or
any Affiliate of any Lender, that is the counterparty of any Borrower under any
Rate Protection Agreement.

“Real
Estate Plan”:  The real estate plan
delivered to the Administrative Agent and approved by the Lenders in accordance
with Section 3.1(l).

“Regulatory
Change”:  Any change after the
Closing Date in federal, state or foreign laws or regulations or the adoption
or making after such date of any interpretations, directives or requests
applying to a class of banks including any Lender under any federal, state or
foreign laws or regulations (whether or not having the force of law) by any
court or governmental or monetary authority charged with the interpretation or
administration thereof.

“Renville
Property”:  The approximately 97.13
acre site located in Renville County, Minnesota, owned in fee simple by
Borrowers’ Agent, as more particularly described in the Renville Mortgage.

“Renville
Mortgage”:  The Mortgage executed by
the Borrowers’ Agent, in substantially the form of Exhibit C hereto,
encumbering the Renville Property.

“Replaced
Lender”:  As defined in Section 2.24.

“Replacement
Lender”: As defined in Section 2.24.

“Reportable
Event”:  A reportable event as
defined in Section 4043 of ERISA and the regulations issued under such Section,
with respect to a Plan, excluding, however, such events as to which the PBGC by
regulation has waived the requirement of Section 4043(a) of ERISA that it be
notified within 30 days of the occurrence of such event, provided that a
failure to meet the minimum funding standard of Section 412 of the Code and of
Section 302 of ERISA shall be a Reportable Event regardless of the issuance of
any waiver in accordance with Section 412(d) of the Code.

“Required
Lenders”:  At any time, Lenders,
other than Defaulting Lenders, holding at least 66.67% of the aggregate unpaid
principal amount of the Notes, excluding Notes held by Defaulting Lenders or,
if no Loans are at the time outstanding hereunder, Lenders other than
Defaulting Lenders whose Total Percentages aggregate at least 66.67% (with
Total Percentages being computed without reference to the Revolving Commitment
Amounts and Term Loan Commitment Amounts of Defaulting Lenders), provided
that, if at any date of determination, there are two Lenders, the “Required
Lenders” shall constitute 100% or the Lenders other than Defaulting Lenders.

“Restricted
Payments”:  With respect to Borrowers’
Agent, collectively, (a) all dividends or other distributions of any nature
(cash, Equity Interests, assets or otherwise), and all payments on any class of
Equity Interests (including warrants, options or rights therefor) issued by
such Borrower, whether such Equity Interests are authorized or outstanding on
the Closing Date or at any time thereafter, or (b) any redemption or purchase
of, or distribution in respect of, any of the foregoing, whether directly or
indirectly.

“Revolving
Commitment”:  With respect to a
Revolving Lender, the agreement of such Lender to make Revolving Loans to the
Borrowers in an aggregate principal amount outstanding at any time not to
exceed such Revolving Lender’s Revolving Commitment Amount upon the terms and
subject to the conditions and limitations of this Agreement.

 12
 

 

“Revolving
Commitment Amount”:  With respect to
a Revolving Lender, initially the amount set opposite such Revolving Lender’s
name on the signature page hereof as its Revolving Commitment Amount, if any.

“Revolving
Lender”:  Each Lender that has a
Revolving Loan or holds a Revolving Commitment.

“Revolving
Loan”:  As defined in Section 2.1.

“Revolving
Loan Date”:  The date of the making
of any Revolving Loans hereunder.

“Revolving
Notes”:  The promissory notes of the
Borrowers in the form of Exhibit A-1 hereto, evidencing the obligation
of the Borrowers to repay the Revolving Loans, and “Revolving Note” means any
one of such promissory notes issued hereunder without distinction.

“Revolving
Loan Percentage”:  With respect to
any Lender, the percentage equivalent of a fraction, the numerator of which is
the Revolving Commitment Amount of such Lender, if any, and the denominator of
which is the Aggregate Revolving Commitment Amount.

“Second
Tranche 2 Advance”:  The second
Advances of the Tranche A2 Term Loans and the Tranche B2 Term Loans, which
Advances shall be in a maximum amount of $6,700,000 and $3,300,000,
respectively.

“Security
Agreements”:  The GOE/MII Security
Agreement and the GOECA Security Agreement.

“Security
Documents”:  The GOE/MII Security
Agreement, the GOECA Security Agreement, the Contract Assignments, any Margin
Assignments, the Mortgages, the Landlord Consents and each other agreement,
document or instrument pursuant to which the Administrative Agent is granted a
Lien to secure the Obligations, as the same may be amended, supplemented,
extended, restated or otherwise modified from time to time.

“Series
1999 Bonds”:  Corporate Bond Series
1999 bearing 8.44% interest and due July 2014.

“Series
2000 Bonds”:  Corporate Bond Series
2000 bearing variable interest and due 2002-2015.

“Series
2001 Bonds”:  Corporate Bond Series
2001 bearing 8.75% interest and due January 2011.

“Subordinated
Debt”:  Any Indebtedness of any
Borrower, now existing or hereafter created, incurred or arising, which is
subordinated in right of payment to the payment of the Obligations in a manner
and to an extent (a) that Required Lenders have approved in writing prior to
the creation of such Indebtedness, or (b) as to any Indebtedness of any
Borrower existing on the date of this Agreement, that Required Lenders have
approved as Subordinated Debt in a writing delivered by Required Lenders to the
Borrowers’ Agent on or prior to the Closing Date.

“Subordination
Agreement”: The Subordination Agreement dated of even date herewith by and
between Land O’ Lakes and the Administrative Agent.

“Subordinated
Promissory Note”:  The Subordinated
Promissory Note dated of even date herewith executed in favor of Land O’ Lakes
by each of the Borrowers.

 13
 

 

“Subsidiary”:  Any corporation or other entity of which
Equity Interests having ordinary voting power for the election of a majority of
the board of directors or other Persons performing similar functions are owned
by any Borrower either directly or through one or more Subsidiaries.

“Swing
Line Lender”:  CoBank.

“Swing
Line Loans”:  As defined in
Section 2.1.

“Swing
Line Loan Date”:  The date of the
making of any Swing Line Loans hereunder.

“Swing
Line Loan Outstandings”:  As of any
date of determination, the aggregate unpaid principal balance of Swing Line
Loans outstanding on such date.

“Swing
Line Sublimit”:  $5,000,000.

“Tangible
Net Worth”:  As of any date of
determination, the sum of the amounts set forth on the balance sheet of the
Borrowers as the aggregate equity of the members of the Borrowers, less the
book value of all intangible assets of the Borrowers, including all such items
as goodwill, trademarks, trade names, service marks, copyrights, patents,
licenses, unamortized debt discount and expenses, deferred tax assets and the
excess of the purchase price of the assets of any business acquired by the
Borrowers over the book value of such assets.

“Term
Lenders”:  Collectively, the Tranche
A Term Lenders and the Tranche B Term Lenders.

“Term
Loan”:  Collectively, the Tranche A
Term Loans and the Tranche B Term Loans.

“Term
Loan Commitment”:  With respect to
any Lender, the agreement of such Lender to make a Term Loan to the Borrowers
in an amount equal to such Lender’s Term Loan Commitment Amount.

“Term
Loan Commitment Amount”:  With respect
to any Lender, the aggregate amount of such Lender’s Tranche A1 Term Loan
Commitment Amount, Tranche A2 Term Loan Commitment Amount, Tranche A3 Term Loan
Commitment Amount, Tranche B1 Term Loan Commitment Amount, Tranche B2 Term Loan
Commitment Amount and Tranche B3 Term Loan Commitment Amount.

“Term
Loan Date”:  The date of the making
of the Tranche A3 Term Loans and the Tranche B3 Term Loans, which date shall be
a single Business Day during the Tranche 3 Availability Period.

“Term
Loan Maturity Date”:  The later of
the Tranche A1 Maturity Date, the Tranche A2 Maturity Date, the Tranche A3
Maturity Date, the Tranche B1 Maturity Date, the Tranche B2 Maturity Date and
the Tranche B3 Maturity Date.

“Term
Loan Percentage”:  With respect to
any Lender, the percentage equivalent of a fraction, the numerator of which is
the amount of the Term Loan Commitment of such Lender and the denominator of
which is the sum of the Term Loan Commitments of all the Lenders.

“Term
Notes”:  The promissory notes of the
Borrowers in the form of Exhibit A-2 hereto, evidencing the obligation
of the Borrowers to repay the Term Loans, and “Term Note” means any one of such
promissory notes without distinction.

“Termination
Date”:  The earlier of (a) April 30,
2007 and (b) the date on which the Revolving Commitments are terminated
pursuant to Section 7.2 hereof, provided that at the written request of
the

 14
 

 

Borrowers’ Agent to the Administrative Agent, the Revolving Commitment
may be renewed for any number of successive one-year periods in the sole
discretion of the Revolving Lenders, in which case the Termination Date shall
be extended for a period corresponding to each such renewal, if any.

“Thompson
Property”:  The approximately
240-acre site located in Winnebago County, Iowa, owned in fee simple by Midwest
Investors of Iowa, Cooperative and leased to Borrowers’ Agent, on which the
Borrowers’ Agent’s layer facility is located, as more particularly described in
the Thompson Mortgage.

“Thompson
Construction”:  The construction of
commercial facilities at the Thompson Property.

“Thompson
Mortgage”:  The Mortgage dated
September 13, 2004 executed by Midwest Investors of Iowa, Cooperative
encumbering, inter alia, the
Thompson Property, and recorded in the office of the Recorder of the County of
Winnebago, State of Iowa, as document No. 41992, as amended, supplemented or
modified from time to time.

“Total
Percentage”:  With respect to any
Lender, the percentage equivalent of a fraction, the numerator of which is the
sum of the Revolving Commitment Amount of such Lender and the Term Loan
Commitment Amount of such Lender and the denominator of which is the sum of the
Revolving Commitment Amounts and Term Loan Commitment Amounts of all the
Lenders.

“Total
Revolving Outstandings”:  As of any
date of determination, the sum of (a) the aggregate unpaid principal balance of
Revolving Loans outstanding on such date, (b) the aggregate unpaid principal
balance of Swing Line Loans outstanding on such date, (c) the aggregate maximum
amount available to be drawn under Letters of Credit outstanding on such date
and (d) the aggregate amount of Unpaid Drawings on such date.

“Total
Term Outstandings”:  As of any date
of determination, the sum of (a) the aggregate unpaid principal balance of the
Term Loans outstanding on such date and (b) the aggregate unpaid principal
balance of any another term Indebtedness of the Borrowers outstanding on such
date.

“Tranche
A Advances”:  A Tranche A1 Advance, a
Tranche A2 Advance or a Tranche A3 Advance.

“Tranche
A Term Lenders”:  Collectively, the
Tranche A1 Term Lenders, the Tranche A2 Term Lenders and the Tranche A3 Term
Lenders.

“Tranche
A Term Loans”:  Collectively, the
Tranche A1 Term Loans, the Tranche A2 Term Loans and the Tranche A3 Term Loans.

“Tranche
A1 Advance”:  An Advance with respect
to which the interest rate is determined by reference to the Tranche A1 Rate.

“Tranche
A1 Maturity Date”:  September 20,
2014.

“Tranche
A1 Rate”:  A rate of interest per
annum equal to 6.08%.

“Tranche
A1 Term Lender”:  Each Lender that
has a Tranche A1 Term Loan or holds a Tranche A1 Term Loan Commitment.

 15
 

 

“Tranche
A1 Term Loan”:  The term loan made to
the Borrowers, jointly and severally, on the Original Funding Date by each
Tranche A1 Term Lender in an amount equal to its Tranche A1 Term Loan
Commitment Amount.

“Tranche
A1 Term Loan Commitment”:  With
respect to any Tranche A1 Term Lender, the agreement of such Lender to make a
Tranche A1 Term Loan to the Borrowers in an amount equal to such Lender’s
Tranche A1 Term Loan Commitment Amount upon the terms and subject to the
conditions of this Agreement.

“Tranche
A1 Term Loan Commitment Amount”: 
With respect to a Lender, the amount set opposite such Lender’s name on
the signature pages hereof as its Tranche A1 Term Loan Commitment Amount, if any.

“Tranche
A2 Advance”:  An Advance with respect
to which the interest rate is determined by reference to the Tranche A2 Rate.

“Tranche
A2 Maturity Date”:  December 20,
2015.

“Tranche
A2 Rate”:  With respect to the First
Tranche 2 Advance in respect of the Tranche A2 Term Loans, a rate of interest
per annum equal to 5.86%, and, with respect to the Second Tranche 2 Advance and
the Final Tranche 2 Advance in respect of the Tranche A2 Term Loans, a rate of
interest per annum equal to the rate of interest of a LIBOR Rate Advance with
an Interest Period of 90 days plus the Applicable Margin.

“Tranche
A2 Term Lender”:  Each Lender that
has a Tranche A2 Term Loan or holds a Tranche A2 Term Loan Commitment.

“Tranche
A2 Term Loan”:  The term loan made to
the Borrowers, jointly and severally, during the Tranche 2 Availability Period
by each Tranche A2 Term Lender in an amount equal to its Tranche A2 Term Loan
Commitment Amount.

“Tranche
A2 Term Loan Commitment”:  With
respect to any Tranche A2 Term Lender, the agreement of such Lender to make a
Tranche A2 Term Loan to the Borrowers in an amount equal to such Lender’s
Tranche A2 Term Loan Commitment Amount upon the terms and subject to the
conditions of this Agreement.

“Tranche
A2 Term Loan Commitment Amount”: 
With respect to a Lender, the amount set opposite such Lender’s name on
the signature pages hereof as its Tranche A2 Term Loan Commitment Amount, if
any.

“Tranche
A3 Advance”:  An Advance with respect
to which the interest rate is determined by reference to the Tranche A3 Rate.

“Tranche
A3 Maturity Date”:  The ten (10) year
anniversary of the Closing Date.

“Tranche
A3 Rate”:  A rate of interest per
annum equal to the rate of interest of a LIBOR Rate Advance with an Interest
Period of 90 days plus the Applicable Margin.

“Tranche
A3 Term Loan”:  As defined in Section
2.1.

 16
 

 

“Tranche
A3 Term Lender”:  Each Lender that
has a Tranche A3 Term Loan or holds a Tranche A3 Term Loan Commitment.

“Tranche
A3 Term Loan Commitment”:  With
respect to any Tranche A3 Term Lender, the agreement of such Lender to make a
Tranche A3 Term Loan to the Borrowers in an amount equal to such Lender’s
Tranche A3 Term Loan Commitment Amount upon the terms and subject to the
conditions of this Agreement.

“Tranche
A3 Term Loan Commitment Amount”: 
With respect to a Lender, the amount set opposite such Lender’s name on
the signature pages hereof as its Tranche A3 Term Loan Commitment Amount.

“Tranche
B Maturity Date”:  The Tranche B1
Maturity Date, Tranche B2 Maturity Date or Tranche B3 Maturity Date, as
applicable.

“Tranche
B Term Lenders”:  Collectively, the
Tranche B1 Term Lenders, the Tranche B2 Term Lenders and the Tranche B3 Term
Lenders.

“Tranche
B Term Loans”:  Collectively, the
Tranche B1 Term Loans, the Tranche B2 Term Loans and the Tranche B3 Term Loans.

“Tranche
B1 Maturity Date”:  September 20,
2014.

“Tranche
B1 Term Lender”:  Each Lender that
has a Tranche B1 Term Loan or holds a Tranche B1 Term Loan Commitment.

“Tranche
B1 Term Loan”:  The term loan made to
the Borrowers, jointly and severally, on the Original Funding Date by each
Tranche B1 Term Lender in an amount equal to its Tranche B1 Term Loan
Commitment Amount.

“Tranche
B1 Term Loan Commitment”:  With
respect to any Tranche B1 Term Lender, the agreement of such Lender to make a Tranche
B1 Term Loan to the Borrowers in an amount equal to such Lender’s Tranche B1
Term Loan Commitment Amount upon the terms and subject to the conditions of
this Agreement.

“Tranche
B1 Term Loan Commitment Amount”: 
With respect to a Lender, the amount set opposite such Lender’s name on
the signature pages hereof as its Tranche B1 Term Loan Commitment Amount, if
any.

“Tranche
B2 Maturity Date”:  December 20,
2015.

“Tranche
B2 Term Lender”:  Each Lender that
has a Tranche B2 Term Loan or holds a Tranche B2 Term Loan Commitment.

“Tranche
B2 Term Loan”:  The term loan made to
the Borrowers, jointly and severally, during the Tranche 2 Availability Period
by each Tranche B2 Term Lender in an amount equal to its Tranche B2 Term Loan
Commitment Amount.

“Tranche
B2 Term Loan Commitment”:  With
respect to any Tranche B2 Term Lender, the agreement of such Lender to make a
Tranche B2 Term Loan to the Borrowers in an amount equal to such

 17
 

 

Lender’s Tranche B2 Term Loan Commitment Amount upon the terms and
subject to the conditions of this Agreement.

“Tranche
B2 Term Loan Commitment Amount”: 
With respect to a Lender, the amount set opposite such Lender’s name on
the signature pages hereof as its Tranche B2 Term Loan Commitment Amount.

“Tranche
B3 Maturity Date”:  The ten (10) year
anniversary of the Closing Date.

“Tranche
B3 Term Lender”:  Each Lender that
has a Tranche B3 Term Loan or holds a Tranche B3 Term Loan Commitment.

“Tranche
B3 Term Loan”:  As defined in Section
2.1.

“Tranche
B3 Term Loan Commitment”:  With respect
to any Tranche B3 Term Lender, the agreement of such Lender to make a Tranche
B3 Term Loan to the Borrowers in an amount equal to such Lender’s Tranche B3
Term Loan Commitment Amount upon the terms and subject to the conditions of
this Agreement.

“Tranche
B3 Term Loan Commitment Amount”: 
With respect to a Lender, the amount set opposite such Lender’s name on
the signature pages hereof as its Tranche B3 Term Loan Commitment Amount.

“Tranche
2 Availability Period”:  The period
that commenced on the later of (i) November 1, 2004 and (ii) the Business Day
immediately following the day on which the Phase II Thompson Construction was
completed and ending on January 20, 2006.

“Tranche
3 Availability Period”:  The period
commencing on the later of (i) the date on which the Moark Acquisition is
effectively completed, as determined by the Administrative Agent in its sole
discretion and (ii) the date on which all conditions precedent to the
effectiveness of this Agreement are completed and ending on the Closing Date.

“United
Mills”:  United Mills, a Minnesota
Cooperative, partially owned and affiliated with the Borrower’s Agent, with it
primary address at 340 Dupont Avenue NE, Renville, Minnesota.

“Unpaid
Drawing”:  As defined in Section
2.11.

“Unused
Commitment”:  With respect to any
Lender as of any date of determination, the amount by which the sum of such
Lender’s Revolving Commitment Amount, if any, exceeds such Lender’s Revolving
Loan Percentage of the Total Revolving Outstandings on such date minus
the aggregate maximum amount to be drawn on any Letters of Credit outstanding
on such date.

“U.S.
Taxes”: As defined in Section 2.25(f).

“Weekly Quoted
Variable Rate”:  A rate per annum
equal at all times to the rate of interested established by CoBank on the first
Business Day of each week, which CoBank may offer in its sole discretion from
time to time.  The rate established by
CoBank shall be effective until the first Business Day of the next week.  Each change in the rate shall be applicable
to all balances subject to the Weekly Quoted Variable Rate and information
about the then current rate shall be made available upon telephonic request by
the Borrowers’ Agent.

 18

 

“Working
Capital”:  The amount of the excess,
if any, of the Current Assets over the Current Liabilities of the Borrowers’
Agent on a consolidated basis.

Section 1.2                                      Accounting Terms and Calculations. 
Except as may be expressly provided to the contrary herein, all
accounting terms used herein shall be interpreted and all accounting
determinations hereunder shall be made in accordance with GAAP.  To the extent any change in GAAP affects any
computation or determination required to be made pursuant to this Agreement,
such computation or determination shall be made as if such change in GAAP had
not occurred unless the Borrowers and Required Lenders agree in writing on an
adjustment to such computation or determination to account for such change in
GAAP.

Section 1.3                                      Computation of Time Periods.  In
this Agreement, in the computation of a period of time from a specified date to
a later specified date, unless otherwise stated the word “from” means “from and
including” and the word “to” or “until” each means “to but excluding”.

Section 1.4                                      Other Definitional Terms. The words “hereof,” “herein” and “hereunder”
and words of similar import when used in this Agreement shall refer to this
Agreement as a whole and not to any particular provision of this
Agreement.  References to Sections,
Exhibits, schedules and like references are to this Agreement unless otherwise
expressly provided.  The words “include,”
“includes” and “including” shall be deemed to be followed by the phrase “without
limitation.”  Unless the context in which
used herein otherwise clearly requires, “or” has the inclusive meaning
represented by the phrase “and/or.”  All
incorporation by reference of covenants, terms, definitions or other provisions
from other agreements are incorporated into this Agreement as if such
provisions were fully set forth herein, and such incorporation shall include
all necessary definitions and related provisions from such other agreements but
including only amendments thereto agreed to by the Required Lenders (unless
otherwise provided herein or therein), and shall survive any termination of
such other agreements until the obligations of the Borrowers under this
Agreement and the Notes are irrevocably paid in full, all Letters of Credit
have expired without renewal or been returned to the Letter of Credit Bank, and
the commitments of any Lender to advance funds to any Borrower are terminated.

ARTICLE II

TERMS OF THE CREDIT FACILITIES

Part
A —  Terms of Lending

Section 2.1                                      Lending Commitments.

(a)                                  Revolving Credit. 
Subject to the terms and conditions hereof, each Revolving Lender
severally agrees to make a revolving credit facility available as loans (each,
a “Revolving Loan” and, collectively, the “Revolving Loans”) to
the Borrowers, jointly and severally, on a revolving basis at any time and from
time to time from the Closing Date to the Termination Date, during which period
the Borrowers may borrow, repay and reborrow in accordance with the provisions
hereof, provided, that no Revolving Loan will be made in any amount
which, after giving effect thereto, would cause Total Revolving Outstandings to
exceed (A) the Aggregate Revolving Commitment Amount or (B) the Borrowing
Base.  Revolving Loans hereunder shall be
made by the several Revolving Lenders ratably in the proportion of their
respective Revolving Commitment Amounts. 
Revolving Loans may be obtained and maintained, at the election of the
Borrowers’ Agent but subject to the limitations hereof, as Base Rate Advances,
LIBOR Rate Advances or Quoted Rate Advances or any combination thereof; provided,
however, that no more than five (5) LIBOR Rate Advances (excluding any
LIBOR Rate Advances bearing interest at the

 19
 

 

LIBOR Index Rate) and no
more than five (5) Quoted Rate Advances may be outstanding at any one time.

(b)                                 Term Loans.  The Tranche A1 Term Loan, the
Tranche B1 Term Loan, the Tranche A2 Term Loan and the Tranche B2 Term Loan
have been fully funded.  Tranche A1 Term
Loans may be maintained only as Tranche A1 Advances and Tranche A2 Term Loans
may be maintained only as Tranche A2 Advances. Subject to the terms and
conditions hereof, (a) each Tranche A3 Term Lender severally agrees to make
term loans (each, a “Tranche A3 Term Loan” and, collectively, the “Tranche
A3 Term Loans”) to the Borrowers, jointly and severally, from time to time
during the Tranche 3 Availability Period, in an aggregate amount not to exceed
its Tranche A3 Term Loan Commitment Amount and (b) each Tranche B3 Term Lender
severally agrees to make term loans (each, a “Tranche B3 Term Loan” and,
collectively, the “Tranche B3 Term Loans”) to the Borrowers, jointly and
severally, from time to time during the Tranche 3 Availability Period, in an
aggregate amount not to exceed its Tranche B3 Term Loan Commitment Amount.  Tranche A3 Term Loans may be obtained and
maintained only as Tranche A3 Advances. 
Tranche B Term Loans may be obtained and maintained, at the election of
the Borrowers’ Agent but subject to the limitations hereof, as Base Rate
Advances, LIBOR Rate Advances or Quoted Rate Advances, or any combination thereof;
provided, however, that no more than five (5) LIBOR Rate Advances
(excluding any LIBOR Rate Advances bearing interest at the LIBOR Index Rate)
and no more than five (5) Quoted Rate Advances may be outstanding at any one
time.

(c)                                  Swing Line Loans. 
Subject to the terms and conditions hereof, the Swing Line Lender agrees
to lend to the Borrowers, jointly and severally, at any time and from time to
time from the Closing Date to the Termination Date, such sums (each, a “Swing
Line Loan” and, collectively, the “Swing Line Loans”) as the
Borrowers’ Agent may request in an aggregate amount up to the Swing Line
Sublimit; provided, that no Swing Line Loan will be made in any amount
which, after giving effect thereto, would cause (i) Swing Line Outstandings to
exceed the Swing Line Sublimit or (ii) Total Revolving Outstandings to exceed
the lesser of (A) the Aggregate Revolving Commitment Amount or (B) the
Borrowing Base.  All Swing Line Loans
shall be obtained and maintained as Base Rate Advances.

Section 2.2                                      Procedure for Loans.

(a)                                  Procedure for Revolving Loans.  Not
later than 2:00 P.M. (Central time) three LIBOR Business Days prior to the
requested Revolving Loan Date if the Revolving Loans (or any portion thereof)
are requested as LIBOR Rate Advances and not later than 2:00 P.M. (Central
time) on the requested Revolving Loan Date if the Revolving Loans are requested
as Quoted Rate Advances or Base Rate Advances, Borrowers’ Agent shall submit to
the Administrative Agent a written or telephonic request for borrowing, provided
that no more than one request for Borrowing may be made on any Business
Day.  Each request for Revolving Loans
hereunder shall be irrevocable and shall be deemed a representation by each
Borrower that on the requested Revolving Loan Date and after giving effect to
the requested Revolving Loans the applicable conditions specified in Article
III have been and will be satisfied. 
Each request for Revolving Loans hereunder shall specify (i) the requested
Revolving Loan Date, (ii) the aggregate amount of Revolving Loans to be made on
such date which shall be in a minimum amount of $200,000 or, if more, a whole
multiple of $100,000 in excess thereof, provided that no minimums shall
apply if the Revolving Loans are funded as (A) Base Rate Loans or (B) Quoted
Rate Loans for which the Quoted Rate is the Weekly Quoted Variable Rate, (iii)
whether such Revolving Loans are to be funded as Base Rate Advances, LIBOR Rate
Advances or Quoted Rate Advances (and, if such Revolving Loans are to be made
with more than one applicable interest rate choice, specifying the

 20
 

 

amount to which each
interest rate choice is applicable) and (iv) in the case of LIBOR Rate
Advances, the duration of the initial Interest Period applicable thereto.  The Administrative Agent may rely on any
telephone request by the Borrowers’ Agent for Revolving Loans hereunder which
it believes in good faith to be genuine; and each Borrower hereby waives the
right to dispute the Administrative Agent’s record of the terms of such
telephone request.  The Administrative
Agent shall promptly notify each other Revolving Lender of the receipt of such
request, the matters specified therein, and of such Lender’s ratable share of
the requested Revolving Loans.  On the
date of the requested Revolving Loans, each Lender shall provide its share of
the requested Revolving Loans to the Administrative Agent in Immediately
Available Funds not later than 4:00 P.M. (Central time).  Unless the Administrative Agent determines
that any applicable condition specified in Article III has not been satisfied,
the Administrative Agent will make available to the Borrowers at the
Administrative Agent’s principal office in Denver, CO in Immediately Available
Funds not later than 4:00 P.M. (Central time) on the requested Revolving Loan
Date the amount of the requested Revolving Loans.  If the Administrative Agent has made a
Revolving Loan to the Borrowers on behalf of a Revolving Lender but has not
received the amount of such Revolving Loan from such Lender by the time herein
required, such Lender shall pay interest to the Administrative Agent on the
amount so advanced at the Federal Funds Rate from the date of such Revolving
Loan to the date funds are received by the Administrative Agent from such
Lender, such interest to be payable with such remittance from such Lender of
the principal amount of such Revolving Loan (provided, however,
that the Administrative Agent shall not make any Revolving Loan on behalf of a
Lender if the Administrative Agent has received prior notice from such Lender
that it will not make such Revolving Loan). 
If the Administrative Agent does not receive payment from such Lender by
the next Business Day after the date of any Revolving Loan, the Administrative
Agent shall be entitled to recover such Revolving Loan, with interest thereon
at the rate (or rates) then applicable to such Revolving Loan, on demand, from
the Borrowers, without prejudice to the Administrative Agent’s and the
Borrowers’ rights against such Lender. 
If such Lender pays the Administrative Agent the amount herein required
with interest at the Federal Funds Rate before the Administrative Agent has
recovered from the Borrowers, such Lender shall be entitled to the interest
payable by the Borrowers with respect to the Revolving Loan in question
accruing from the date the Administrative Agent made such Revolving Loan.

(b)                                 Procedure for Term Loans.  Not
later than 2:00 P.M. (Central time) three LIBOR Business Days prior to the
requested Term Loan Date for the Advances in respect of the Tranche A3 Term
Loans and for the portions of the Tranche B3 Term Loans that are requested as
LIBOR Rate Advances and not later than 2:00 P.M. (Central time) on the
requested Term Loan Date for the portions of the Term Loans that are requested
as Base Rate Advances or Quoted Rate Advances, the Borrowers’ Agent shall
submit to the Administrative Agent a written request for borrowing.  Such request for Term Loans hereunder shall
be irrevocable and shall be deemed a representation by each Borrower that on
the requested Term Loan Date and after giving effect to the requested Term
Loans the applicable conditions specified in Article III have been and will be
satisfied.  Each request for Term Loans
hereunder shall specify (i) the requested Term Loan Date, (ii) the aggregate
amount of Term Loans to be made on such date which, except for Base Rate
Advances or Quoted Rated Advances, shall be in a minimum amount of $200,000 or,
if more, a whole multiple of $100,000 in excess thereof, (iii) the type of
Advance  the Term Loans are to be funded
as (and, if such Term Loans are to be made with more than type of Advance,
specifying the amount to which each type of Advance is applicable) and (iv) in
the case of LIBOR Rate Advances, the duration of the initial Interest Period
applicable thereto.  The Administrative
Agent shall promptly notify each other Term Lender of the receipt of such
request, the matters specified therein, and of such Lender’s ratable share of
the requested Term Loans.  On the date of
the requested Term Loans, each Lender shall provide its share of the requested
Term Loans to the

 21
 

 

Administrative Agent in
Immediately Available Funds not later than 4:00 P.M. (Central time).  Unless the Administrative Agent determines
that any applicable condition specified in Article III has not been satisfied,
the Administrative Agent will make available to the Borrowers at the
Administrative Agent’s principal office in Denver, CO in Immediately Available
Funds not later than 4:00 P.M. (Central time) on the requested Term Loan Date
the amount of the requested Term Loans. 
If the Administrative Agent has made a Term Loan to the Borrowers on
behalf of a Term Lender but has not received the amount of such Term Loan from
such Lender by the time herein required, such Lender shall pay interest to the
Administrative Agent on the amount so advanced at the Federal Funds Rate from
the date of such Term Loan to the date funds are received by the Administrative
Agent from such Lender, such interest to be payable with such remittance from
such Lender of the principal amount of such Term Loan (provided, however,
that the Administrative Agent shall not make any Term Loan on behalf of a
Lender if the Administrative Agent has received prior notice from such Lender
that it will not make such Term Loan).  If
the Administrative Agent does not receive payment from such Lender by the next
Business Day after the date of any Term Loan, the Administrative Agent shall be
entitled to recover such Term Loan, with interest thereon at the rate (or
rates) then applicable to such Term Loan, on demand, from the Borrowers,
without prejudice to the Administrative Agent’s and the Borrowers’ rights
against such Lender.  If such Lender pays
the Administrative Agent the amount herein required with interest at the
Federal Funds Rate before the Administrative Agent has recovered from the
Borrowers, such Lender shall be entitled to the interest payable by the
Borrowers with respect to the Term Loan in question accruing from the date the
Administrative Agent made such Term Loan.

(c)                                  Procedure for Swing Line Loans.  Not
later than 2:00 P.M. (Central time) on the requested Swing Line Loan Date,
Borrower’s Agent shall submit to the Swing Line Lender a verbal, written or
electronic request for borrowing.  Each
request for Swing Line Loans hereunder shall be irrevocable and shall be deemed
a representation by each Borrower that on the requested Swing Line Loan Date
and after giving effect to the requested Swing Line Loans the applicable
conditions specified in Article III have been and will be satisfied.  Each request for Swing Line Loans hereunder
shall specify (i) the requested Swing Line Loan Date, and (ii) the aggregate
amount of Swing Line Loans to be made on such date.  The Administrative Agent may rely on any
telephone request of the Borrower’s Agent for Swing Line Loans hereunder which
it believes in good faith to be genuine; and each Borrower hereby waives the
right to dispute the Administrative Agent’s record of the terms of such
telephone request.   Unless the Swing
Line Lender determines that any applicable condition specified in Article III
has not been satisfied, the Swing Line Lender will make available to the
Borrowers in Immediately Available Funds not later than 4:00 P.M. (Central
time) on the requested Swing Line Loan Date, the amount of the requested Swing
Line Loans.

Section 2.3                                      Notes.  The Revolving Loans and Swing
Line Loans (if applicable) of each Lender shall be evidenced by a single
Revolving Note payable to the order of such Lender in a principal amount equal
to such Lender’s Revolving Commitment Amount originally in effect. The Term
Loans of each Lender shall be evidenced by Term Notes payable to the order of
such Lender in the principal amount equal to such Lender’s Tranche A1 Term Loan
Commitment Amount, Tranche A2 Term Loan Commitment Amount, Tranche A3 Term Loan
Commitment Amount, Tranche B1 Term Loan Commitment Amount, Tranche B2 Term Loan
Commitment Amount or Tranche B3 Term Loan Commitment Amount, as applicable; provided,
however, that the Term Loans in respect to the Tranche A2 Term Loan
Commitment Amount may be evidenced by one or more Term Notes in amounts equal
to the maximum amount of the First Tranche 2 Advance, the Second Tranche 2
Advance or the Final Tranche 2 Advance in respect of such Term Loans, or any
combination thereof.  Upon receipt of
each Lender’s Notes from the Borrowers, the Administrative Agent shall mail
such Notes to such Lender.

 22
 

 

Each
Lender shall enter in its ledgers and records the amount of its Term Loans and
each Revolving Loan, the various Advances made, converted or continued and the
payments made thereon, and each Lender is authorized by the each Borrower to
enter on a schedule attached to its Term Notes or Revolving Note, as
appropriate, a record of such Term Loans, Revolving Loans, Advances and
payments; provided, however that the failure by any Lender to make any such
entry or any error in making such entry shall not limit or otherwise affect the
obligation of the Borrowers hereunder and on the Notes, and, in all events, the
principal amounts owing by the Borrowers in respect of the Revolving Note shall
be the aggregate amount of all Revolving Loans made by the Lenders less all
payments of principal thereof made by the Borrowers and the principal amount
owing by the Borrowers in respect of the Term Notes shall be the aggregate
amount of all Term Loans made by the Lenders less all payments of principal
thereof made by the Borrowers.

Section
2.4                                      Conversions and Continuations. 
Tranche A Advances may not be converted into any other type of Advance
and no other type of Advance may be converted into a Tranche A Advance.  On the terms and subject to the limitations
hereof, the Borrowers shall have the option at any time and from time to time
to convert all or any portion of the Advances in respect of the Revolving Loans
or the Tranche B Term Loans into Base Rate Advances, LIBOR Rate Advances or
Quoted Rate Advances, or to continue a LIBOR Rate Advance or Quoted Rate
Advance as such; provided, however that a LIBOR Rate Advance may
be converted or continued only on the last day of the Interest Period
applicable thereto, a Quoted Rate Advance may be converted or continued only on
the last day of the fixed rate period set forth in the corresponding Quoted
Rate Offer and no Advance may be converted or continued as a LIBOR Rate Advance
or a Quoted Rate Advance if a Default or Event of Default has occurred and is
continuing on the proposed date of continuation or conversion.  Advances in respect of the Revolving Loans or
Tranche B Term Loans may be converted to, or continued as, LIBOR Rate Advances
or Quoted Rate Advances only in integral multiples, as to the aggregate amount
of the Advances of all Lenders so converted or continued, of $200,000.  The Borrowers’ Agent shall give the
Administrative Agent written notice of any continuation or conversion of any
such Advances and such notice must be given so as to be received by the
Administrative Agent not later than 2:00 P.M. (Central time) three LIBOR
Business Days prior to requested date of conversion or continuation in the case
of the continuation of, or conversion to, LIBOR Rate Advances and not later
than 2:00 P.M. (Central time) on the date of the requested continuation of, or
conversion to, Quoted Rate Advances or Base Rate Advances.  Each such notice shall specify (a) the amount
to be continued or converted, (b) the date for the continuation or conversion
(which must be (i) the last day of the preceding Interest Period for any
continuation or conversion of LIBOR Rate Advances, (ii) the last day of the
fixed rate period set forth in the corresponding Quoted Rate Offer for any
continuation or conversion of a Quoted Rate Advance, (iii) a LIBOR Business Day
in the case of conversions to or continuations as LIBOR Rate Advances, and (iv)
a Business Day in the case of continuations or conversions to Quoted Rate
Advances or Base Rate Advances), and (c) in the case of conversions to or
continuations as LIBOR Rate Advances, the Interest Period applicable
thereto.  Any notice given by the
Borrowers’ Agent under this Section shall be irrevocable.  If the Borrowers’ Agent shall fail to notify
the Administrative Agent of the continuation of any LIBOR Rate Advances within
the time required by this Section, at the option of the Administrative Agent,
such Advances shall, on the last day of the Interest Period applicable thereto,
(A) automatically be continued as LIBOR Rate Advances with the same principal
amount and the same Interest Period or (B) automatically be converted into Base
Rate Advances with the same principal amount. 
If the Borrowers’ Agent shall fail to notify the Administrative Agent of
the continuation of any Quoted Rate Advances within the time required by this
Section, or if CoBank declines to make a Quoted Rate Offer with respect to such
Quote Rate Advances and the Borrowers’ Agent has not requested an alternative
Advance, such Quoted Rate Advances shall, on the last day of the fixed rate
period applicable thereto, automatically accrue interest at the Weekly Quoted
Variable Rate until repaid or converted into another Advance.  Notwithstanding anything herein to the
contrary, the Second Tranche 2 Advance and the Final Tranche 2 Advance in
respect of the Tranche A2 Term Loans shall, on the last day of the 90 day Interest
Period applicable thereto, automatically be

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continued at the Tranche A2 Rate applicable thereto with the same
principal amount and the same Interest Period, unless otherwise agreed to by
the Tranche A2 Term Lender.

Section 2.5                                      Interest Rates, Interest Payments and Default
Interest.

(a)                                  The Revolving Loans. 
Interest shall accrue and be payable on the Revolving Loans as follows:

(i)                                     Subject to paragraph (iv) below, each LIBOR
Rate Advance shall bear interest on the unpaid principal amount thereof during
the Interest Period applicable thereto at a rate per annum equal to the sum of
(A) the Adjusted LIBOR Rate for such Interest Period, plus (B) the
Applicable Margin; provided  that, any LIBOR Rate Advance made or
continued during the two (2) month period ending on the Termination Date shall
bear interest at the LIBOR Index Rate.

(ii)                                  Subject to paragraph (iv) below, each Quoted
Rate Advance shall bear interest on the unpaid principal amount thereof at a
rate per annum equal to the Quoted Rate.

(iii)                               Subject to paragraph (iv) below, each Base
Rate Advance shall bear interest on the unpaid principal amount thereof at a
varying rate per annum equal to the sum of (A) the Base Rate, plus (B)
the Applicable Margin.

(iv)                              Upon the occurrence of any Event of Default,
each Advance in respect of the Revolving Loans shall, at the option of the
Revolving Lenders, bear interest until paid in full at a rate per annum equal
to the Default Rate.

(v)                                 Interest shall be payable (A) with respect to
each LIBOR Rate Advance, on the last day of the Interest Period applicable
thereto (and, in the case of any LIBOR Rate Advance having an Interest Period
greater than three months, on the three month anniversary of the first day of
such Interest Period); provided  that, with respect to each LIBOR
Rate Advance made during the two (2) month period ending on the Termination
Date, interest shall be payable, in arrears, on the twentieth (20th) day of
each month; (B) with respect to any Base Rate Advance or Quoted Rate Advance,
on the twentieth (20th) day of each month; (C) with respect to all Advances,
upon any permitted prepayment (on the amount prepaid); and (D) with respect to
all Advances, on the Termination Date; provided that interest under
paragraph (a)(iv) of this Section shall be payable on demand.

(b)                                 The Term Loans. 
Interest shall accrue and be payable on the Term Loans as follows:

(i)                                     Subject to paragraph (vii) below, each
Tranche A1 Advance shall bear interest on the unpaid principal amount thereof
at a rate per annum equal to the Tranche A1 Rate.

(ii)                                  Subject to paragraph (vii) below, each
Tranche A2 Advance shall bear interest on the unpaid principal amount thereof
at a rate per annum equal to the Tranche A2 Rate.

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(iii)                               Subject to paragraph (vii) below, each
Tranche A3 Advance shall bear interest on the unpaid principal amount thereof
at a rate per annum equal to the Tranche A3 Rate.

(iv)                              Subject to paragraph (vii) below, each LIBOR
Rate Advance in respect of the Tranche B Term Loans shall bear interest on the
unpaid principal amount thereof during the Interest Period applicable thereto
at a rate per annum equal to the sum of (A) the Adjusted LIBOR Rate for such
Interest Period, plus (B) the Applicable Margin; provided  that,
any LIBOR Rate Advance made or continued during the two (2) month period ending
on the applicable Tranche B Maturity Date shall bear interest at the LIBOR
Index Rate.

(v)                                 Subject to paragraph (vii) below, each Quoted
Rate Advance in respect of the Tranche B Term Loans shall bear interest on the
unpaid principal amount thereof at a rate per annum equal to the Quoted Rate.

(vi)                              Subject to paragraph (vii) below, each Base
Rate Advance in respect of the Tranche B Term Loans shall bear interest on the
unpaid principal amount thereof at a varying rate per annum equal to the sum of
(A) the Base Rate, plus (B) the Applicable Margin.

(vii)                           Upon the occurrence of any Event of Default,
each Tranche A Advance shall, upon thirty (30) days notice to the Borrowers
from the Tranche A Term Lenders, and each Advance in respect of the Tranche B
Term Loans shall, upon thirty (30) days written notice to the Borrowers from
the Tranche B Term Lenders, bear interest until paid in full or until such
Event of Default is cured at a rate per annum equal to the Default Rate.

(viii)                        Interest shall be payable (A) with respect to
each LIBOR Rate Advance, on the last day of the Interest Period applicable
thereto (and, in the case of any LIBOR Rate Advance an Interest Period greater
than three months, on the three month anniversary of the first day of such
Interest Period); provided  that, with respect to each LIBOR Rate
Advance made or continued during the two (2) month period ending on the
applicable Tranche B Maturity Date, interest shall be payable, in arrears, on
the twentieth (20th) day of each month; (B) with respect to any Base Rate Advance,
in arrears, on the twentieth (20th) Business Day
of each month; (C) with respect to all Advances, upon any permitted prepayment
(on the amount prepaid); and (D) with respect to all Advances, on the
Termination Date; provided that interest under paragraph (b)(vii) of
this Section shall be payable on demand.

(c)          The Swing Line Loans. 
Interest shall accrue and be payable on the Swing Line Loans as follows:

(i)                                     Subject to paragraph (ii) below, each Swing
Line Loan shall bear interest on the unpaid principal amount thereof at a
varying rate per annum equal to the Base Rate.

(ii)                                  Upon the occurrence of any Event of Default,
each Advance in respect of the Swing Line Loans shall, at the option of the
Swing Line Lender, bear interest until paid in full at a rate per annum equal
to the Default Rate.

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(iii)                               Interest shall be payable (A) on the
twentieth (20th) day of each month; (B) with respect to all Advances, upon any
permitted prepayment (on the amount prepaid); and (C) with respect to all
Advances, on the Termination Date; provided that interest under
paragraph (c)(ii) of this Section shall be payable on demand.

(d)                                 Any amount of interest which shall not have
been paid or have been underpaid hereunder resulting from Borrowers’ Agent’s
failure to correctly report or calculate the Funded Debt to EBITDA ratio in the
Compliance Certificate delivered in accordance with Section 5.1(g), shall
constitute an Obligation hereunder immediately due and payable upon the earlier
to occur of Borrowers’ Agent discovery of such error or demand by the
Administrative Agent.  Such amounts shall
bear interest for the period they are outstanding at the Default Rate.

Section 2.6                                      Repayment.

(a)                                  Revolving Loans.  The
unpaid principal balance of all Revolving Notes, together with all accrued and
unpaid interest thereon, shall be due and payable on the Termination Date.

(b)                                 Term Loans.  The principal of each Term
Loan shall be payable monthly as follows:

(i)                                     Tranche A1 Term Loans.  The
Borrowers shall make principal payments for application to the Tranche A1 Term
Loans in the amount of $122,500 on the twentieth (20th)
day of each month commencing on October 20, 2004, provided that in the
event that any amount of principal or interest remains unpaid with respect to
the Tranche A1 Term Loans on the Tranche A1 Maturity Date, such remaining
amounts shall be due and payable in full on such date;

(ii)                                  Tranche A2 Term Loans.  The
Borrowers shall make principal payments for application to the Tranche A2 Term
Loans in the amount of $127,500 on the twentieth (20th)
day of each month commencing on January 20, 2006,  provided that in the event that any
amount of principal or interest remains unpaid with respect to the Tranche A2
Term Loans on the Tranche A2 Maturity Date, such remaining amounts shall be due
and payable in full on such date; and

(iii)                               Tranche A3 Term Loans.  The
Borrowers shall make principal payments for application to the Tranche A3 Term
Loans in the amount of $150,000 on the twentieth (20th)
day of each month commencing on July 20, 2006, provided that in the
event that any amount of principal or interest remains unpaid with respect to
the Tranche A3 Term Loans on the Tranche A3 Maturity Date, such remaining
amounts shall be due and payable in full on such date;

(iv)                              Tranche B1 Term Loans.  The
Borrowers shall make principal payments for application to the Tranche B1 Term
Loans in the amount of $60,833.33 on the twentieth (20th)
day of each month commencing on October 20, 2004, provided that in the
event that any amount of principal or interest remains unpaid with respect to
the Tranche B1 Term Loans on the Tranche B1 Maturity Date, such remaining
amounts shall be due and payable in full on such date;

(v)                                 Tranche B2 Term Loans.  The
Borrowers shall make principal payments for application to the Tranche B2 Term
Loans in the amount of $64,166.66 on the twentieth (20th)
day of each month commencing on January 20, 2006, provided that in the

 26
 

 

event that any amount of
principal or interest remains unpaid with respect to the Tranche B2 Term Loans
on the Tranche B2 Maturity Date, such remaining amounts shall be due and
payable in full on such date; and

(vi)                              Tranche B3 Term Loans.  The
Borrowers shall make principal payments for application to the Tranche B3 Term
Loans in the amount of $167,000.00 on the twentieth (20th)
day of each month commencing on July 20, 2006, provided that in the
event that any amount of principal or interest remains unpaid with respect to
the Tranche B3 Term Loans on the Tranche B3 Maturity Date, such remaining
amounts shall be due and payable in full on such date.

Amounts paid on the Term Notes may not be reborrowed.

(c)                                  Repayment of Swing Line Loans with Revolving
Loans.  The Swing Line Lender may, at any time, in
its sole discretion, by written notice to Borrower’s Agent and the Lenders,
demand repayment of its Swing Line Loans by way of one or more Revolving Loans,
in which case Borrowers shall be deemed to have requested a Revolving Loan
comprised solely of Base Rate Advances in the amount of such Swing Line Loans; provided,
that any such demand shall be deemed to have been given one Business Day prior
to the Termination Date and on the date of the occurrence of any Event of
Default described in Section 7.1 and upon acceleration of the
indebtedness hereunder and the exercise of remedies in accordance with the
provisions of Section 7.2.  Each
Lender hereby irrevocably agrees to make its pro rata share of each such
Revolving Loan in the amount, in the manner and on the date specified in the
preceding sentence, notwithstanding the following: (i) the amount of
such borrowing may not comply with the minimum amount for Revolving Loans
otherwise required hereunder, (ii) whether any conditions specified in Article
III are then satisfied, (iii) whether a Default or an Event of Default then
exists, (iv) failure of any such request or deemed request for a Revolving Loan
to be made by the time otherwise required hereunder, (v) whether the date of
such borrowing is a date on which Revolving Loans are otherwise permitted to be
made hereunder, or (vi) any termination of the Commitments relating thereto
immediately prior to or contemporaneously with such borrowing.  In the event that any Revolving Loan cannot
for any reason be made on the date otherwise required above (including, as a
result of the commencement of a proceeding under the U.S. Bankruptcy Code with
respect to Borrower or any other Person), then each Lender hereby agrees that
it shall forthwith purchase (as of the date such borrowing would otherwise have
occurred, but adjusted for any payments received from Borrower on or after such
date and prior to such purchase) from the Swing Line Lender such participations
in the outstanding Swing Line Loans as shall be necessary to cause each such
Lender to share in such Swing Line Loans ratably based upon its Revolving
Commitment Amount (determined before giving effect to any termination of the
Commitments pursuant to this Agreement), provided, that (A) all interest
payable on the Swing Line Loans shall be for the account of the Swing Line Lender
until the date as of which the respective participation is purchased and (B) at
the time any purchase of participations pursuant to this sentence is actually
made, the purchasing Lender shall be required to pay to the Swing Line Lender,
to the extent not paid to the Swing Line Lender by Borrower in accordance with
the terms of the relevant Revolving Note, interest on the principal amount of
participation purchased for each day from and including the day upon which such
borrowing would otherwise have occurred to but excluding the date of payment
for such participation, at the rate equal to the Federal Funds Rate.  Notwithstanding any provision of this
Agreement to the contrary, the obligation of each Lender holding a Revolving
Commitment to make Revolving Loans for the purpose of repaying Swing Line Loans
and each such Lender’s obligation to purchase a participation in any unpaid
Swing Line Loans shall be absolute and unconditional and shall not be affected
by any circumstance or event whatsoever, including without limitation (x) any
setoff,

 27
 

 

counterclaim, recoupment,
defense or any other right that such Lender may have against the Swing Line
Lender, Administrative Agent or the Borrowers or any other Person for any
reason whatsoever, (y) the occurrence of a Default or Event of Default, or (z)
any breach of this Agreement by any part hereto.

Section 2.7                                      Prepayments.

(a)                                  Mandatory Prepayments for Borrowing Base
Deficiency.  If at any time a Borrowing Base Deficiency
exists, the Borrowers shall immediately pay on the principal of the Advances in
respect of the Revolving Loans and the Swing Line Loans an amount equal to such
Borrowing Base Deficiency.  Any such
payments shall be applied first against Swing Line Loans and then against
Revolving Loans consisting of Base Rate Advances and then to Revolving Loans
consisting of Quoted Rate and LIBOR Rate Advances, in order, starting with the
Quoted Rate or LIBOR Rate Advances having the shortest time to the end of the
applicable Interest Period.  Following
payment of the Swing Line Loans as required by this paragraph (a), the
remaining amount of any such prepayment shall be for the account of each
Revolving Lender in proportion to its share of outstanding Revolving Loans.

(b)                                 Mandatory Prepayments for a Prepayment Event.  If
at any time a Prepayment Event occurs, the Borrowers shall immediately pay to
the Administrative Agent for the ratable benefit of the Lenders the net
proceeds realized by such Prepayment Event and any prepayment fee payable under
Section 2.23.  Any such prepayments shall
be applied first, to the Term Loans, second, to any outstanding
Swing Line Loans and third, to any outstanding Revolving Loans.  All prepayments applied to the Term Loans
shall be applied to the scheduled principal payments on the Term Loans in the
inverse order of their maturities.

(c)                                  Other Mandatory Prepayments.  If
at any time Total Revolving Outstandings exceed the Aggregate Revolving
Commitment Amount, the Borrowers shall immediately repay to the Administrative
Agent for the account of the Revolving Lenders and Swing Line Lender the amount
of such excess.  Any such payments shall
be applied first against Swing Line Loans and then against Revolving Loans
consisting of Base Rate Advances and then to Revolving Loans consisting of Quoted
Rate and LIBOR Rate Advances, in order, starting with the Quoted Rate or LIBOR
Rate Advances having the shortest time to the end of the applicable Interest
Period.  Following payment of the Swing
Line Loans as required by this paragraph (a), the remaining amount of any such
prepayment shall be for the account of each Revolving Lender in proportion to
its share of outstanding Revolving Loans.

(d)                                 Optional Prepayments.   The
Term Loans may be prepaid only in accordance with Section 2.23.  The Borrowers may prepay Base Rate Advances
in respect of the Revolving Loans and Swing Line Loans, in whole or in part, at
any time, without premium or penalty. 
Any such prepayment must be accompanied by accrued and unpaid interest
on the amount prepaid.  Each partial
prepayment shall be in a minimum aggregate amount for all the Lenders of
$200,000 or a whole integral of $100,000 in excess thereof.  Except upon an acceleration following an
Event of Default or upon termination of the Revolving Commitments in whole, the
Borrowers may pay LIBOR Rate Advances only on the last day of the Interest
Period applicable thereto.  The Borrowers
may prepay Quote Rate Advances in respect of the Revolving Loans only if
permitted by the Quoted Rate Offer. 
Amounts paid (unless following an acceleration or upon termination of
the Revolving Commitments in whole) or prepaid on Advances in respect of the
Revolving Loans under this paragraph (d) may be reborrowed upon the terms and
subject to the conditions and limitations of this Agreement.  Amounts paid or prepaid on the Advances under

 28
 

 

this paragraph (d) shall be
for the account of each Revolving Lender in proportion to its share of
outstanding Revolving Loans.

Part
B — Terms of the Letter of Credit Facility

Section 2.8                                      Letters of Credit.  Upon
the terms and subject to the conditions of this Agreement, the Letter of Credit
Bank agrees to issue Letters of Credit for the account of the Borrowers from
time to time between the Closing Date and thirty (30) days prior to the
Termination Date in such amounts as the Borrowers’ Agent shall request up to an
aggregate amount at any time outstanding not exceeding the Letter of Credit
Commitment Amount; provided that no Letter of Credit will be issued in
any amount which, after giving effect to such issuance, would cause Total
Revolving Outstandings to exceed the lesser of (a) the Aggregate Revolving
Commitment Amount or (b) the Borrowing Base. 
Letters of Credit issued pursuant to the Existing Credit Agreement shall
remain outstanding as Letters of Credit hereunder.

Section 2.9                                      Procedures for Letters of Credit.  Each
request for a Letter of Credit shall be made by the Borrowers’ Agent in
writing, by telex, facsimile transmission or electronic conveyance received by
the Letter of Credit Bank by 11:00 A.M. (Central time) on a Business Day that
is not less than one Business Day preceding the requested date of issuance
(which shall also be a Business Day). 
Each request for a Letter of Credit shall be deemed a representation by
the each Borrower that on the date of issuance of such Letter of Credit and
after giving effect thereto the applicable conditions specified in Article III
have been and will be satisfied.  The
Letter of Credit Bank may require that such request be made on such letter of
credit application and reimbursement agreement form as the Letter of Credit
Bank may from time to time specify, along with satisfactory evidence of the
authority and incumbency of the officials of the Borrowers’ Agent making such
request.  The Letter of Credit Bank shall
promptly notify the other Revolving Lenders of the receipt of the request and
the matters specified therein.  On the
date of each issuance of a Letter of Credit the Letter of Credit Bank shall
send notice to the other Revolving Lenders of such issuance, accompanied by a
copy of the Letter or Letters of Credit so issued.

Section 2.10                                Terms of Letters of Credit. 
Letters of Credit shall be issued in support of obligations of the
Borrowers’ Agent in accordance with Section 2.16.  Unless the proposed Letter of Credit is cash
collateralized, each Letter of Credit must expire not later than the Business
Day preceding the Termination Date and no Letter of Credit may have a term
longer than 12 months.

Section 2.11                                Agreement to Repay Letter of Credit Drawings.  If
the Letter of Credit Bank has received documents purporting to draw under a
Letter of Credit that the Letter of Credit Bank believes conform to the
requirements of the Letter of Credit, or if the Letter of Credit Bank has
decided that it will comply with the Borrowers’ Agent written or oral request
or authorization to pay a drawing on any Letter of Credit that the Letter of
Credit Bank does not believe conforms to the requirements of the Letter of
Credit, it will notify the Borrowers’ Agent of that fact.  The Borrowers shall reimburse the Letter of
Credit Bank by 9:30 A.M. (Central time) on the day on which such drawing is to
be paid in Immediately Available Funds in an amount equal to the amount of such
drawing.  Any amount by which the
Borrowers have failed to reimburse the Letter of Credit Bank for the full
amount of such drawing by 10:00 A.M. (Central t ime) on the date on which the
Letter of Credit Bank in its notice indicated that it would pay such drawing,
until reimbursed by the Borrowers, is an “Unpaid Drawing.”

Section 2.12                                Obligations Absolute.  The
obligation of the Borrowers under Section 2.11 to repay the Letter of Credit
Bank for any amount drawn on any Letter of Credit and to repay the Revolving
Lenders to cover Unpaid Drawings shall be absolute, unconditional and
irrevocable, shall continue for so long as any Letter of Credit is outstanding
notwithstanding any termination of this Agreement, and shall

 29
 

 

be
paid strictly in accordance with the terms of this Agreement, under all
circumstances whatsoever, including without limitation the following
circumstances:

(a)                                  Any lack of validity or enforceability of any
Letter of Credit;

(b)                                 The existence of any claim, setoff, defense
or other right which any Borrower may have or claim at any time against any beneficiary,
transferee or holder of any Letter of Credit (or any Person for whom any such
beneficiary, transferee or holder may be acting), the Letter of Credit Bank,
the Administrative Agent, the Swing Line Lender, any Lender or any other
Person, whether in connection with a Letter of Credit, this Agreement, the
transactions contemplated hereby, or any unrelated transaction; or

(c)                                  Any statement or any other document presented
under any Letter of Credit proving to be forged, fraudulent, invalid or
insufficient in any respect or any statement therein being untrue or inaccurate
in any respect whatsoever.

None
of the Letter of Credit Bank, the Administrative Agent, the Swing Line Lender
or any Lender or officers, directors or employees of any thereof shall be liable
or responsible for, and the obligations of the Borrowers to the Letter of
Credit Bank, the Administrative Agent, the Swing Line Lender and the Lenders
shall not be impaired by:

(i)                                     The use which may be made of any Letter of
Credit or for any acts or omissions of any beneficiary, transferee or holder
thereof in connection therewith;

(ii)                                  The validity, sufficiency or genuineness of
documents, or of any endorsements thereon, even if such documents or
endorsements should, in fact, prove to be in any or all respects invalid,
insufficient, fraudulent or forged;

(iii)                               The acceptance by the Letter of Credit Bank
of documents that appear on their face to be in order, without responsibility
for further investigation, regardless of any notice or information to the
contrary; or

(iv)                              Any other action of the Letter of Credit Bank
in making or failing to make payment under any Letter of Credit if in good
faith and in conformity with U.S. or foreign laws, regulations or customs
applicable thereto.

Notwithstanding
the foregoing, the Borrowers shall have a claim against the Letter of Credit
Bank, and the Letter of Credit Bank shall be liable to the Borrowers, to the
extent, but only to the extent, of any direct, as opposed to consequential,
damages suffered by the Borrowers which were caused by the Letter of Credit
Bank’s willful misconduct or gross negligence in determining whether documents
presented under any Letter of Credit comply with the terms thereof.

Part
C —  General

Section 2.13                                Fees.

(a)                                  Closing Fees.  The
Borrowers shall pay to the Administrative Agent for the benefit of the Lenders
a non-refundable closing fee in the amount of $155,500 (the “Closing Fee”).

 30
 

 

(b)                                 Commitment Fee.  The
Borrowers shall pay to the Administrative Agent for the account of each Revolving
Lender and the Swing Line Lender fees (the “Commitment Fees”) in an
amount determined by applying the Applicable Commitment Fee Percentage to the
average daily Unused Commitment of such Lender for the period from the Closing
Date to the Termination Date.  Such
Commitment Fees are payable in arrears quarterly on the last day of each
calendar quarter and on the Termination Date.

(c)                                  Administrative Agent’s Fees.  On
or before the Closing Date, the Borrowers will pay to the Administrative Agent
the fees set forth in the separate letter agreement dated the date hereof
between the Administrative Agent and the Borrowers.

(d)                                 Letter of Credit Fees.  For
each Letter of Credit issued, the Borrowers shall pay to the Administrative
Agent for the account of the Revolving Lenders, in advance on the date of
issuance, a fee (a “Letter of Credit Fee”) in an amount equal to the
greater of (i) $1,000 and (ii) the amount determined by applying a per annum
rate equal to the Applicable Margin for LIBOR Rate Advances in respect of the
Revolving Loans then in effect to the original face amount of the Letter of
Credit for the period from the date of issuance to the scheduled expiration
date of such Letter of Credit.  In
addition to the Letter of Credit Fee, the Borrowers shall pay to the Letter of
Credit Bank, on demand, all issuance, amendment, drawing and other fees
regularly charged by the Letter of Credit Bank to its letter of credit
customers and all out-of-pocket expenses incurred by the Letter of
Credit Bank in connection with the issuance, amendment, administration or
payment of any Letter of Credit.

Section 2.14                                Computation.  Commitment Fees, Letter of
Credit Fees, interest on Revolving Loans, Term Loans and Swing Line Loans and
the Default Rate shall be computed on the basis of actual days elapsed (or, in
the case of Letter of Credit Fees which are paid in advance, actual days to
elapse) and a year of 360 days.

Section 2.15                                Payments.  Payments and prepayments of
principal of, and interest on, the Notes and all fees, expenses and other
obligations under this Agreement payable to the Administrative Agent or the
Lenders shall be made without setoff or counterclaim in Immediately Available
Funds not later than 1:00 P.M. (Central time) on the dates called for under
this Agreement and the Notes to the Administrative Agent at its main office in
Denver, Colorado.  Funds received after
such time shall be deemed to have been received on the next Business Day.  The Administrative Agent will distribute in
like funds to each Lender its ratable share of each such payment of principal,
interest and fees received by the Administrative Agent for the account of the
Lenders on Business Day or deemed Business Day that such funds were received by
the Administrative Agent.  Whenever any
payment to be made hereunder or on the Notes shall be stated to be due on a day
which is not a Business Day, such payment shall be made on the next succeeding
Business Day and such extension of time, in the case of a payment of principal,
shall be included in the computation of any interest on such principal payment;
provided, however, that if such extension would cause payment of
interest on or principal of a LIBOR Rate Advance to be made in the next
following calendar month, such payment shall be made on the next preceding
Business Day.

Section 2.16                                Use of Loan Proceeds.  The
proceeds of the Tranche A1 Term Loans, Tranche A2 Term Loans, Tranche B1 Term
Loans and Tranche B2 Term Loans have been used for refinancing the Series 2000
Bonds,  the Thompson Construction and working
capital for the Borrowers’ Agent.  The
proceeds of the Tranche A3 Term Loans and Tranche B3 Term Loans shall be used
to finance the Moark Acquisition.  The
proceeds of the Revolving Loans shall be used to fund working capital
requirements and for the general business purposes of the Borrowers’ Agent in a
manner not in conflict with any of the Borrowers’ covenants in this
Agreement.  Swing Line Loans may be used
for general corporate purposes of the Borrowers in accordance with the
Borrowers’ covenants in this Agreement. In no event shall the

 31
 

 

Loan
proceeds be used (i) to purchase, or refinance the purchase price of, the
Thompson Property, (ii) to purchase or carry margin stock (as defined in
Regulation U of the Board) or to extend credit to others for the purpose of
purchasing or carrying margin stock or to refund Indebtedness originally
incurred for such purpose, or (iii) for any purpose that entail a violation of,
or that is inconsistent with, the provisions of Regulations U or X of the
Board.

Section 2.17                                Interest Rate Not Ascertainable, Etc.  If,
on or prior to the date for determining the Adjusted LIBOR Rate in respect of
the Interest Period for any LIBOR Rate Advance, any Revolving Lender or Term B
Lender determines (which determination shall be conclusive and binding, absent
error) that:

(a)                                  deposits in dollars (in the applicable
amount) are not being made available to such Lender in the relevant market for
such Interest Period, or

(b)                                 the Adjusted LIBOR Rate will not adequately
and fairly reflect the cost to such Lender of funding or maintaining LIBOR Rate
Advances for such Interest Period,

such
Lender shall forthwith give notice to the Borrowers’ Agent and the other
Revolving Lenders or Term B Lenders, as the case may be, of such determination,
whereupon the obligation of such Lender to make or continue, or to convert any
Advances to, LIBOR Rate Advances shall be suspended until such Lender notifies
the Borrowers’ Agent and the Administrative Agent that the circumstances giving
rise to such suspension no longer exist. 
While any such suspension continues, all further Advances by such Lender
shall be made with an interest rate option to which such suspension does not
apply.  No such suspension shall affect
the interest rate then in effect during the applicable Interest Period for any
LIBOR Rate Advance outstanding at the time such suspension is imposed.

Section 2.18                                Increased Cost.  If
any Regulatory Change:

(a)                                   shall subject any Revolving Lender or Term B
Lender (or its Applicable Lending Office) to any tax, duty or other charge with
respect to its LIBOR Rate Advances, its Revolving or Term B Note or its
obligation to make LIBOR Rate Advances or shall change the basis of taxation of
payment to any Lender (or its Applicable Lending Office) of the principal of or
interest on its LIBOR Rate Advances or any other amounts due under this
Agreement in respect of its LIBOR Rate Advances or its obligation to make LIBOR
Rate Advances (except for changes in the rate of tax on the overall net income
of such Lender or its Applicable Lending Office imposed by the jurisdiction in
which such Lender’s principal office or Applicable Lending Office is located);
or

(b)                                 shall impose, modify or deem applicable any
reserve, special deposit or similar requirement (including, without limitation,
any such requirement imposed by the Board, but excluding any such requirement
to the extent included in calculating the applicable Adjusted LIBOR Rate)
against assets of, deposits with or for the account of, or credit extended by,
any such Lender’s Applicable Lending Office or against Letters of Credit issued
by the Letter of Credit Bank or shall impose on any such Lender (or its
Applicable Lending Office) or on the United States market for certificates of
deposit or the interbank Eurodollar market any other condition affecting its
LIBOR Rate Advances, its Revolving or Term B Note or its obligation to make
LIBOR Rate Advances or affecting any Letter of Credit;

and
the result of any of the foregoing is to increase the cost to such Lender (or
its Applicable Lending Office) of making or maintaining any LIBOR Rate Advance
or issuing or maintaining any Letter of Credit, or to reduce the amount of any
sum received or receivable by such Lender (or its Applicable

 32
 

 

Lending
Office) under this Agreement or under its Revolving or Term B Note, then,
within 30 days after demand by such Lender (with a copy to the Administrative
Agent), the Borrowers shall pay to such Lender such additional amount or
amounts as will compensate such Lender for such increased cost or
reduction.  Each Revolving and Term B
Lender will promptly notify the Borrowers’ Agent and the Administrative Agent
of any event of which it has knowledge, occurring after the date hereof, which
will entitle such Lender to compensation pursuant to this Section and will
designate a different Applicable Lending Office if such designation will avoid
the need for, or reduce the amount of, such compensation and will not, in the
judgment of such Lender, be otherwise disadvantageous to such Lender.  A certificate of any Revolving and Term B
Lender claiming compensation under this Section, setting forth the additional
amount or amounts to be paid to it hereunder and stating in reasonable detail
the basis for the charge and the method of computation, shall be conclusive in
the absence of error.  In determining
such amount, such Lender may use any reasonable averaging and attribution
methods.  Failure on the part of any
Revolving and Term B Lender to demand compensation for any increased costs or
reduction in amounts received or receivable with respect to any Interest Period
shall not constitute a waiver of such Lender’s rights to demand compensation
for any increased costs or reduction in amounts received or receivable in any
subsequent Interest Period.

Section 2.19                                Illegality.  If any Regulatory Change shall
make it unlawful or impossible for any Revolving and Term B Lender to make,
maintain or fund any LIBOR Rate Advance, such Lender shall notify the Borrowers’
Agent and the Administrative Agent, whereupon the obligation of such Lender to
make or continue, or to convert any Advances to, LIBOR Rate Advances shall be
suspended until such Lender notifies the Borrowers’ Agent and the
Administrative Agent that the circumstances giving rise to such suspension no longer
exist.  Before giving any such notice,
such Lender shall designate a different Applicable Lending Office if such
designation will avoid the need for giving such notice and will not, in the
judgment of such Lender, be otherwise disadvantageous to such Lender.  If any Revolving and Term B Lender determines
that it may not lawfully continue to maintain any LIBOR Rate Advances to the
end of the applicable Interest Period, all of the affected Advances shall be
automatically converted to Base Rate Advances as of the date of such Lender’s
notice, and upon such conversion the Borrowers shall indemnify such Lender in
accordance with Section 2.23.

Section 2.20                                Capital Adequacy.  In
the event that any Regulatory Change reduces or shall have the effect of
reducing the rate of return on any Revolving or Term B Lender’s capital or the
capital of its parent corporation (by an amount such Lender deems material) as
a consequence of its Commitments and/or its Loans and/or any Letters of Credit
or any Revolving Lender’s obligations to make Advances to cover Letters of
Credit to a level below that which such Lender or its parent corporation could
have achieved but for such Regulatory Change (taking into account such Lender’s
policies and the policies of its parent corporation with respect to capital
adequacy), then the Borrowers shall, within 30 days after written notice and
demand from such Lender (with a copy to the Administrative Agent), pay to such
Lender additional amounts sufficient to compensate such Lender or its parent
corporation for such reduction.  Any
determination by any Revolving or Term B Lender under this Section and any
certificate as to the amount of such reduction given to the Borrowers’ Agent by
such Lender shall be final, conclusive and binding for all purposes, absent
error.

Section 2.21                                Funding Losses; Quoted Rate and LIBOR Rate
Advances.  The Borrowers shall compensate each Revolving
or Term B Lender, upon its written request, for all losses, expenses and
liabilities (including any interest paid by such Lender to lenders of funds
borrowed by it to make or carry LIBOR Rate Advances to the extent not recovered
by such Lender in connection with the re-employment of such funds and
including loss of anticipated profits) which such Lender may sustain:  (i) if for any reason, other than a default
by such Lender, a funding of a LIBOR Rate Advance does not occur on the date
specified therefor in the Borrowers’ Agent’s request or notice as to such
Advance under Section 2.2 or 2.4, or (ii) if, for whatever reason (including,
but not limited to, acceleration of the maturity of

 33
 

 

Advances
following an Event of Default), any repayment of a LIBOR Rate Advance, or a
conversion pursuant to Section 2.19, occurs on any day other than the last day
of the Interest Period applicable thereto. 
A Revolving or Term B Lender’s request for compensation shall set forth
the basis for the amount requested and shall be final, conclusive and binding,
absent error.

Section 2.22                                Discretion of Lenders as to Manner of Funding.  Each
Revolving and Term B Lender shall be entitled to fund and maintain its funding
of LIBOR Rate Advances in any manner it may elect, it being understood,
however, that for the purposes of this Agreement all determinations hereunder
(including, but not limited to, determinations under Section 2.21) shall be
made as if such Lender had actually funded and maintained each LIBOR Rate
Advance during the Interest Period for such Advance through the issuance of its
certificates of deposit, or the purchase of deposits, having a maturity
corresponding to the last day of the Interest Period and bearing an interest
rate equal to the LIBOR Rate for such Interest Period.

Section 2.23                                Prepayment of Term Loans.  The
Borrowers may prepay the principal amount of the Term Loans only if such
payment is accompanied by accrued and unpaid interest on the amount paid and a
prepayment fee (the “Prepayment Fee”) equal to (i) the Net Present Value
of such Lender’s Term Note to be prepaid minus (ii) the portion of its
Term Note to be prepaid.  If the
Borrowers fail to pay any Prepayment Fee when due, the amount of such
Prepayment Fee shall thereafter bear interest until paid at the Default
Rate.  Each partial principal prepayment
shall be in a minimum amount of the lesser of (i) $200,000 or a whole integral
of $100,000 in excess thereof and (ii) the entire remaining principal balance
of the Term Loans, and shall be applied to the principal installments in
inverse order of their maturity.  Except
upon an acceleration following an Event of Default or upon termination of the
Term Loan Commitments in whole, the Borrowers may pay LIBOR Rate Advances only
on the last day of the Interest Period applicable thereto (or, in the case of
LIBOR Rate Advances made during the sixty (60) day period ending on the Termination
Date, on the Termination Date).  Amounts
paid or prepaid on the Term Notes under this Section shall be for the account
of each Lender in proportion to its share of outstanding Term Loans, and shall
be paid or prepaid ratably among the Term A Loans and the Term B Loans.  Amounts paid or prepaid on the Term Loans may
not be reborrowed.

Section 2.24                                Replacement of Certain Lenders.  If
any Lender shall become affected by any of the changes or events described in Section 2.17, 2.18, 2.19 or 2.20 (any such Lender
hereinafter referred to as a “Replaced Lender”) and shall give notice to
the Borrowers for any increased cost or amounts thereunder, the Borrowers may,
so long as no Event of Default has occurred and is continuing, upon at least
five (5) Business Days’ notice to the Administrative Agent and such Replaced
Lender by the Borrowers’ Agent, designate a replacement lender (a “Replacement
Lender”) reasonably acceptable to the Administrative Agent, to which such
Replaced Lender shall, subject to its receipt (unless a later date for the
remittance thereof shall be agreed upon by the Borrowers and the Replaced
Lender) of all amounts due and owing to such Replaced Lender under Section
2.17, 2.18, 2.19 or 2.20 assign all (but not less than all) of its rights, obligations,
Loans, Revolving Loan Commitment and Term Loan Commitment pursuant to an
Assignment Agreement; provided, that all amounts owed to such Replaced
Lender by the Borrowers (except liabilities which by the terms hereof survive
the payment in full of the Loans and termination of this Agreement) shall be
paid in full as of the date of such assignment. 
Upon any assignment by any Lender pursuant to this Section becoming
effective, the Replacement Lender shall thereupon be deemed to be a “Lender”
for all purposes of this Agreement and such Replaced Lender shall thereupon
cease to be a “Lender” for all purposes of this Agreement and shall have no
further rights or obligations hereunder (other than pursuant to Section 2.17,
2.18, 2.19 or 2.20 while such Replaced Lender was a Lender).  No Prepayment Fee shall be payable as a
result of replacement of a Lender under this Section 2.24.

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Section 2.25                                Taxes.

(a)                                  Any and all payments by the Borrowers
hereunder or under the Notes shall be made free and clear of and without
deduction for any and all present or future taxes, levies, imposts, deductions,
charges of withholdings, and all liabilities with respect thereto, excluding,
in the case of  each Lender and the
Administrative Agent, taxes imposed on its overall net income and franchise
taxes imposed on it in lieu of net income taxes (all such non-excluded taxes,
levies, imposts, deductions, charges, withholdings and liabilities in respect
of payments hereunder or under the Notes being hereinafter referred to as “Taxes”).

(b)                                 The Borrowers agree to pay any present or
future stamp or documentary taxes or any other excise or property taxes,
charges or similar levies that arise from any payment made hereunder or under
the Notes or from the execution, delivery or registration of, performing under,
or otherwise with respect to, this Agreement or the Notes (hereinafter referred
to as “Other Taxes”).

(c)                                  The Borrowers shall indemnify each Lender and
the Administrative Agent for the full amount of Taxes or Other Taxes imposed on
or paid by such Lender or the Administrative Agent and any penalties, interest
and expenses with respect thereto. 
Payments on this indemnification shall be made within 30 days from the
date such Lender or the Administrative Agent makes written demand therefor.

(d)                                 Within 30 days after the date of any payment
of Taxes, the Borrowers shall furnish to the Administrative Agent, at its
address referred to on the signature page hereof, a certified copy of a receipt
evidencing payment thereof.  In the case
of any payment hereunder or under the Notes by or on behalf of the Borrowers
through an account or branch outside the United States or by or on behalf of
the Borrowers by a payor that is not a United States person, if the Borrowers
determine that no Taxes are payable in respect thereof, the Borrowers shall
furnish or shall cause such payor to furnish, to the Administrative Agent, at
such address, an opinion of counsel reasonably acceptable to the Administrative
Agent stating that such payment is exempt from Taxes. For purposes of this
subsection (d) and subsection (e), the terms “United States” and “United
States person” shall have the meanings specified in Section 7701 of the
Internal Revenue Code.

(e)                                  Each Lender, as of the date in becomes a
party hereto, represents to the Borrowers and the Administrative Agent that it
is either (i) a corporation organized under the laws of the United States or
any State thereof or (ii) is entitled to complete exemption from United States
withholding tax imposed on or with respect to any payments, including fees, to
be made pursuant to this Agreement (x) under an applicable provision of a tax
convention to which the United States is a party or (y) because it is acting
through a branch, agency or office in the United States and any payment to be
received by it hereunder is effectively connected with a trade or business in
the United States.  Each Lender that is
not a United States person (as such term is defined in Section 7701(a)(30) of the
Code) shall submit to the Borrowers’ Agent and the Administrative Agent, on or
before the day on which such Lender becomes a Lender, a duly completed and
signed copy of either Form W-8BEN or Form W-8ECI of the United States Internal
Revenue Service.  Form W-8BEN shall
include the foreign Lender’s United States taxpayer identification number if
required under the current regulations to claim exemption from withholding
pursuant to a tax convention.  Thereafter
and from time to time, each such Lender shall submit to the Borrowers’ Agent
and the Administrative Agent such additional duly completed and signed copies
of one or the other of such forms (or such successor forms as shall be adopted
from time to time by the relevant United States taxing authorities) as may be
(i) reasonably requested by the Borrowers’ Agent or the Administrative Agent
and (ii) required and permitted under then-current United States law or
regulations to avoid United States withholding

 35
 

 

taxes on payments in respect
of all payments to be received by such Lender hereunder.  Upon the request of the Borrowers’ Agent or
the Administrative Agent, each Lender that is a United States person (as such
term is defined in Section 7701(a)(30) of the Code) shall submit to the
Borrowers’ Agent and the Administrative Agent a certificate on Internal Revenue
Service Form W-9 or such substitute form as is reasonably satisfactory to the
Borrowers’ Agent and the Administrative Agent to the effect that it is such a
United States person.

(f)                                    If any Borrower shall be required by law or
regulation to make any deduction, withholding or backup withholding of any
taxes, levies, imposts, duties, fees, liabilities or similar charges of the
United States of America, any possession or territory of the United States of
America (including the Commonwealth of Puerto Rico) or any area subject to the
jurisdiction of the United States of America (“U.S. Taxes”) from any
payments to a Lender pursuant to any Loan Document in respect of the
Obligations payable to  such then or
thereafter outstanding, such Borrower shall make such withholdings or
deductions and pay the full amount withheld or deducted to the relevant
taxation authority or other authority in accordance with applicable law.

Section 2.26                                Capitalization. 
Borrowers’ Agent 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
each Borrower shall be obligated to purchase in connection with any Loan may
not exceed the maximum amount permitted by the Bylaws at the time that Loan is
entered into or such Loan is renewed or refinanced by CoBank.

Section 2.27                                Security.  Each party hereto acknowledges
that CoBank has a statutory first Lien on all of the Borrowers’ Agent’s stock
and other equities in CoBank (the “CoBank Equities”) pursuant to 12
U.S.C. § 2131.  Accordingly, and
notwithstanding any other provision of this Agreement or any other Loan
Document to the contrary:

(a)                                  CoBank’s statutory Lien on the CoBank
Equities shall be for CoBank’s sole and exclusive benefit and shall not be
subject to this Agreement or any other Loan Document nor shall the CoBank
Equities (or the proceeds thereof) be subject to pro rata sharing hereunder;

(b)                                 CoBank shall have no obligation to retire the
CoBank equities upon the Borrowers’ default or at any other time, either for
application to the Obligations or 
otherwise; and

(c)                                  the CoBank Equities shall not be offset
against the Obligations to CoBank for purposes of determining the Lenders’ pro
rata shares hereunder.

ARTICLE III

CONDITIONS PRECEDENT

Section 3.1                                      Conditions to Closing.  The
making of the Tranche A3 and Tranche B3 Term Loans and the Revolving Loans, the
Swing Line Loans and the issuance of the initial Letter of Credit shall be
subject to the prior or simultaneous fulfillment of the following conditions:

(a)                                  Documents.  The Administrative Agent shall
have received the following in sufficient counterparts (except for the Notes)
for each Lender:

 36

 

(i)                                     A Revolving Note and the Term Notes drawn to
the order of each applicable Lender, executed by a duly authorized officer of
each Borrower and dated on or before the Closing Date.

(ii)                                  The GOE/MII Security Agreement duly executed
by the Borrowers’ Agent and Midwest Investors of Iowa, Cooperative and dated on
or before the Closing Date.

(iii)                               The GOECA Security Agreement duly executed by
GOECA and dated on or before the Closing Date.

(iv)                              Each Contract Assignment duly executed by the
Borrowers’ Agent and dated on or before the Closing Date.

(v)                                 Each Margin Assignment duly executed by the
Borrowers’ Agent and dated on or before the Closing Date.

(vi)                              The Moark Mortgage duly executed by the
Borrowers’ Agent and dated on or before the Closing Date.

(vii)                           The Renville Mortgage duly executed by the
Borrowers’ Agent and dated on or before the Closing Date.

(viii)                        The Thompson Mortgage duly executed by the
Borrowers’ Agent and dated on or before the Closing Date.

(ix)                                Each Landlord Consent duly executed by the
parties thereto and dated on or before the Closing Date.

(x)                                   the Subordination Agreement, duly executed by
the respective parties thereto and dated on or before the Closing Date.

(xi)                                The Environmental Indemnity duly executed by
the Borrowers and dated on or before the Closing Date.

(xii)                             A certificate of the Secretary or Assistant
Secretary (or other appropriate officer) of each Borrower dated as of the
Closing Date and certifying to the following:

(A)                              A true and accurate copy of the limited
liability company or corporate resolutions of such Borrower authorizing the
execution, delivery and performance of the Loan Documents to which such
Borrower is a party contemplated hereby and thereby;

(B)                                The incumbency, names, titles and signatures
of the officers of such Borrower authorized to execute the Loan Documents to
which such Borrower is a party and to request Advances;

(C)                                A true and accurate copy of the Certificate
of Formation or Articles of Incorporation (or the equivalent) of such Borrower
with all amendments thereto, certified by the appropriate governmental official
of the

 37
 

 

jurisdiction
of organization as of a date acceptable to the Administrative Agent; and

(D)                               A true and accurate copy of the operating
agreement or bylaws (or other constitutive documents) for such Borrower.

(xiii)                          A certificate of good standing for each
Borrower in the jurisdiction of its formation or incorporation and, with
respect to the Borrowers’ Agent, in the States of Iowa and Minnesota and each
other jurisdiction where the character of the properties owned or leased by
such Borrower makes such qualification necessary, certified by the appropriate
governmental officials as of a date acceptable to the Administrative Agent.

(xiv)                         A certificate dated the Closing Date of the
chief executive officer or chief financial officer of each Borrower certifying
as to the matters set forth in Sections 3.3 (a) and  (b) below.

(xv)                            The initial Borrowing Base Certificate, as of
the last day of the most recent month end prior to the Closing Date.

(xvi)                         Insurance certificates in form and substance
reasonably satisfactory to the Lenders listing the Administrative Agent as loss
payee thereof and indicating that the Borrower has obtained insurance in
compliance with Section 5.3 with respect to each of the businesses and real
properties of the Borrowers in such amounts and with such carriers reasonably
acceptable to the Lenders.

(xvii)                      Landlord’s waivers and/or bailee’s waivers
for locations identified on Schedule 3.1(a).

(b)                                 Opinions.  The Administrative Agent shall
have received executed legal opinions of Lindquist & Vennum and Ramsey,
Baxley & McDougle, counsel to the Borrowers, dated the Closing Date,
delivered to the Administrative Agent in sufficient counterparts for each
Lender and in form and substance reasonably satisfactory to the Lenders.

(c)                                  Compliance.  Each Borrower shall have
performed and complied with all agreements, terms and conditions contained in
this Agreement required to be performed or complied with by such Borrower prior
to or simultaneously with the Closing Date.

(d)                                 Lien Searches.  The
Administrative Agent shall have received the results of a recent lien search in
each of the jurisdictions where the assets of the Borrowers are located, and
such search shall reveal no Liens on any of the assets of the Borrowers except
for those Liens permitted by Section 6.13 or discharged on or prior to the
Closing Date pursuant to a document reasonably satisfactory to the
Administrative Agent.

(e)                                  Environmental Matters.  The
Administrative Agent shall have received a Phase I environmental site
assessment with respect to the Moark Property and Renville Property prepared by
the Borrowers’ environmental consultant, along with a corresponding reliance
letter from such environmental consultant, confirming that no hazardous
substances were found in, on or under the Moark Property or Renville Property
and the Lenders shall otherwise be satisfied in all respects with an
environmental due diligence investigation of the Borrowers, including with
respect to the Thompson Property.

 38
 

 

(f)                                    Appraisal.  The Administrative Agent shall
have received a real property appraisal of each parcel of real property
described in a Mortgage (including an appraisal of all buildings thereon on an
as-built basis), which appraisal shall be in form and substance reasonably
satisfactory to the Lenders.

(g)                                 Title Insurance.  The
Administrative Agent shall have received a commitment for a mortgagee’s title
insurance policy or marked up unconditional binder for such insurance (or
equivalent thereof reasonably satisfactory to the Administrative Agent) with
respect to each Mortgage.  Each such
policy shall (i) be in an amount reasonably satisfactory to the Lenders;
(ii) be issued at ordinary rates; (iii) insure that the Mortgage
insured thereby creates a valid first Lien on the mortgaged property described
therein free and clear of all defects and encumbrances, except (A) as disclosed
therein and (B) with respect to the Renville Mortgage, subject only to the Lien
against the Renville Property in favor of U.S. Bank National Association, as
trustee for the holders of the 1999 Series Bonds and the 2001 Series Bonds;
(iv) name the Administrative Agent for the benefit of the Lenders as the
insured thereunder; (v) be in the form of ALTA Loan Policy - 1970 (Amended
10/17/70 and 10/17/84) (or equivalent thereof reasonably satisfactory to the
Administrative Agent); (vi) contain such endorsements and affirmative
coverage as the Administrative Agent may reasonably request and (vii) be
issued by a title company reasonably satisfactory to the Administrative Agent
(including any such title companies acting as coinsurers or reinsurers, at the
option of the Administrative Agent).  The
Administrative Agent shall have received evidence reasonably satisfactory to it
that all premiums in respect of each such policy, all charges for mortgage
recording tax, and all related expenses, if any, have been paid.

(h)                                 A.L.T.A. Surveys.  The
Administrative Agent shall have received as-built A.L.T.A. surveys of the Moark
Property, the Renville Property and each property that is subject to a Landlord
Consent, reasonably satisfactory in form and substance to the Administrative
Agent, reasonably current and certified to the Administrative Agent for the
benefit of the Lenders and the title company issuing the mortgagee’s title
insurance policy by a licensed surveyor reasonably satisfactory to the
Administrative Agent, showing (i) the locations on each such property of
all the buildings, structures and other improvements and the established building
setback lines, (ii) the lines of streets abutting each such property and
width thereof, (iii) all access and other easements appurtenant to each
such property, (iv) all roadways, paths, driveways, easements,
encroachments and overhanging projections and similar encumbrances affecting
each such property, whether recorded, apparent from a physical inspection of
the sites or otherwise known to the surveyor, (v) any encroachments on any
adjoining property by the building structures and improvements on each such
property, (vi) if each such property is described as being on a filed map,
a legend relating the survey to said map, and (vii) the flood zone
designations, if any, in which each such property is located.

(i)                                     Moark Leases.  The
Administrative Agent shall have received evidence satisfactory to the Lenders
that (i) each Moark Lease has been validly assigned to a Borrower, and (ii)
such Borrower’s leasehold interest is clear of all defects and encumbrances on
title, other than those approved by the Administrative Agent in its sole
discretion.

(j)                                     Risk Management Policy.  The
Administrative Agent shall have received a Risk Management Policy for the
Borrowers’ Agent that (i) has been approved by the Borrowers’ Agent’s board of
directors, (ii) addresses ingredients (corn and soybean meal) utilized in the
operations of the Borrowers’ Agent’s operations and the finished egg products
therefrom and (iii) is in form and substance reasonably satisfactory to the
Lenders.

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(k)                                  Real Estate Plan.  The
Administrative Agent shall have received a real estate plan from the Borrower’s
Agent setting forth its short and long term plans with respect to owned and
leased properties in a form and substance acceptable to the Lenders in their
sole discretion (the “Real Estate Plan”).

(l)                                     Material Contracts.  The
Borrowers shall have delivered to the Administrative Agent true and complete
copies of each Material Contract identified on Schedule 3.1(l),
including any supplements or amendments thereto, and a certificate of an
authorized officer of Borrowers’ Agent certifying that all such Material
Contracts are true, complete and correct and are on the Closing Date in full
force and effect and that neither the Borrowers’ Agent nor, to the Borrowers’
Agent’s knowledge, any other party to any such Material Contract is or, but for
the passage of time or giving of notice or both, will be in breach of any
material obligation thereunder.

(m)                               Filings, Registrations and Recordings.  Each
document (including any Uniform Commercial Code or CNS financing statement)
required by the Security Documents or under law or reasonably requested by the
Administrative Agent to be filed, registered or recorded in order to create in
favor of the Administrative Agent for the benefit of the Lenders, a perfected
Lien on the collateral described therein, prior and superior in right to any
other Person (other than with respect to Liens expressly permitted by
Section 6.13), shall be in proper form for filing, registration or
recordation, any pledged collateral shall have been duly delivered to the
Administrative Agent, and the priority and perfection of the Liens created by
the Security Documents shall have been established to the satisfaction of the
Administrative Agent and its counsel.

(n)                                 Existing Indebtedness.  The
Administrative Agent shall have received evidence reasonably satisfactory to
the Lenders that all Indebtedness of the Borrowers other than Indebtedness
permitted to remain outstanding after the Closing Date pursuant to this
Agreement shall have been repaid or will, as permitted hereunder, be repaid
with the proceeds of the Term A3 Loan and Term B3 Loan and the initial Advance
under the Revolving Loan to be made on the Closing Date.

(o)                                 Moark Acquisition.  The
Administrative Agent shall have received (i) evidence, reasonably satisfactory to the
Administrative Agent, that the Borrowers’ Agent has received  cash equity contributions from Land O’ Lakes
in an amount not less than $5,000,000, (ii) evidence, reasonably satisfactory
to the Administrative Agent, that the Borrowers’ Agent has completed, or
concurrently with the initial credit extension hereunder will complete, the
Moark Acquisition in accordance with the terms of the Moark Acquisition
Documents (without any amendment thereto or waiver thereunder unless consented
to by the Lenders); and (iii) all of the following, each duly executed and
dated the Closing Date (or such earlier date as shall be satisfactory to the
Administrative Agent), in form and substance satisfactory to the Administrative
Agent:

(i)                                     Opinions.  Opinions of counsel for each
Borrower, including local counsel reasonably requested by the Administrative
Agent, and all other opinions issued pursuant to the Moark
Acquisition;

(ii)                                  Copies of Documents. 
Copies of the Moark Acquisition Documents, certified by the secretary or
assistant secretary (or similar officer) of the Borrowers’ Agent as being true,
accurate and complete.

(iii)                               Closing Certificate, Consents and Permits.  A
certificate executed by an officer of the Borrowers’ Agent on behalf of the
Borrowers’ Agent certifying (A) the

 40
 

 

matters
set forth in Section 3.2 as of the Closing Date and (B) the occurrence of the
closing of the Moark Acquisition and that such closing has been consummated in
accordance with the terms of the Moark Acquisition Documents without waiver of
any material condition thereof; together with evidence that (1) all necessary
governmental, regulatory, creditor, member, partner and other material
consents, approvals and exemptions required to be obtained by the Borrowers’ Agent
in connection with the Moark Acquisition, including in respect of the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, have been duly obtained
and are in full force and effect and (ii) all material permits necessary for
the operation of any business(es) acquired in connection with the Moark
Acquistion have been obtained.

(p)                                 No Adverse Change.  
Since March 31, 2006, in the judgment of the Lenders, no Material
Adverse Occurrence shall have occurred.

(q)                                 Other Matters.  All
corporate and legal proceedings relating to the Borrowers and all instruments
and agreements in connection with the transactions contemplated by this
Agreement shall be satisfactory in scope, form and substance to the
Administrative Agent, the Lenders and the Administrative Agent’s counsel, and
the Administrative Agent shall have received all information and copies of all
documents, including records of corporate proceedings, as any Lender or such
counsel may reasonably have requested in connection therewith, such documents
where appropriate to be certified by proper corporate or governmental
authorities.

(r)                                    Fees and Expenses.  The
Administrative Agent shall have received for itself and for the account of the
Lenders all fees and other amounts due and payable by the Borrowers on or prior
to the Closing Date, including the reasonable fees and expenses of counsel to
the Administrative Agent payable pursuant to Section 9.2.

(s)                                  No Default; Representations and Warranties.  The
Administrative Agent shall have received a certificate dated the requested
borrowing date of the chief executive officer or chief financial officer of
each Borrower certifying as to the matters set forth in Sections 3.2 (a)
and  (b) below.

Any
one or more of the conditions set forth above which have not been satisfied by
the Borrowers on or prior to the date of disbursement of the initial Loan under
this Agreement shall not be deemed permanently waived by the Administrative
Agent or any Lender unless the Administrative Agent or such Lender, as the case
may be, shall waive the same in a writing which expressly states that the
waiver is permanent, and in all cases in which the waiver is not stated to be
permanent the Administrative Agent or any Lender may at any time subsequent
thereto insist upon compliance and satisfaction of any such condition as a
condition to any subsequent Loan or Letter of Credit hereunder and failure by
the Borrowers to comply with any such condition within five (5) Business Day’s
written notice from the Administrative Agent or any Lender to the Borrowers’
Agent shall constitute an Event of Default under this Agreement.

Section 3.2                                      Conditions Precedent to All Loans and Letters
of Credit.  The obligation of the Lenders to make any
Loans hereunder (including the Term Loans and the initial Revolving Loans) and
of the Letter of Credit Bank to issue each Letter of Credit (including the
initial Letter of Credit) shall be subject to the fulfillment of the following
conditions:

(a)                                  Representations and Warranties.  The
representations and warranties contained in Article IV shall be true and
correct on and as of the Closing Date and on the date of each

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Revolving
Loan or the date of issuance of each Letter of Credit, with the same force an
effect as if made on such date.

(b)                                 No Default.  No Default or Event of Default
shall have occurred and be continuing on the Closing Date and on the date of
each Revolving Loan, the date of each Term Loan or the date of issuance of each
Letter of Credit or will exist after giving effect to the Revolving Loans or
Term Loans made on such date or the Letters of Credit so issued.

(c)                                  Notices and Requests.  The
Administrative Agent shall have received the Borrowers’ Agent’s request for
such Loans as required under Section 2.2 or its application for such Letters of
Credit specified under Section 2.9.

Section 3.3                                      Conditions
Subsequent.  Whether or not the
Borrowers’ Agent or any Borrower has requested an Advance, the Borrowers shall,
in each case within thirty (30) days of the Closing Date, (a) satisfy the
conditions specified in Sections 3.1(e) with respect to the Renville property,
(b) deliver the A.L.T.A. Surveys for the Renville Property and each property
that is subject to a Landlord Consent set forth in Section 3.1(h) and (c)
deliver the Direct Rail Agreement between the Borrower’s Agent and the Bay Line
Railroad, L.L.C. (“Bay Line”) allowing Bay Line to cross the Moark
Property.

ARTICLE IV

REPRESENTATIONS AND WARRANTIES

To
induce the Lenders to enter into this Agreement and to make Loans hereunder and
to induce the Letter of Credit Bank to issue Letters of Credit, each Borrower
represents and warrants to the Lenders and the Letter of Credit Bank for itself
and each other Borrower that, both before and after giving effect to the Moark
Acquisition:

Section 4.1                                      Organization, Standing, Etc. 
Midwest Investors of Iowa, Cooperative is a cooperative association duly
incorporated and validly existing and in good standing under the laws of State
of Iowa.  Golden Oval Eggs, LLC is a
limited liability company duly organized and validly existing and in good
standing under the laws of the State of Delaware.  GOECA, LP is a limited partnership duly
organized and validly existing under the laws of the State of Delaware, Each
Borrower has all requisite power and authority to carry on its business as now
conducted, to enter into this Agreement, to issue the Notes and to perform its
obligations under the Loan Documents. 
Each Borrower (a) holds all certificates of authority, licenses and
permits necessary to carry on its business as presently conducted in each
jurisdiction in which it is carrying on such business, except where the failure
to hold such certificates, licenses or permits would not constitute a Material
Adverse Occurrence, and (b) is duly qualified and in good standing as a foreign
company or corporation in each jurisdiction in which the character of the
properties owned, leased or operated by it or the business conducted by it
makes such qualification necessary and the failure so to qualify would
permanently preclude such Borrower from enforcing its rights with respect to
any assets or expose such Borrower to any Material Adverse Occurrence.

Section 4.2                                      Authorization and Validity.  The
execution, delivery and performance by each Borrower of the Loan Documents have
been duly authorized by all necessary corporate or company action by such
Borrower.  This Agreement constitutes,
and the Notes and other Loan Documents when executed will constitute, the
legal, valid and binding obligations of each Borrower, enforceable against such
Borrower in accordance with their respective terms, subject to limitations as
to enforceability which might result from bankruptcy, insolvency, moratorium
and other similar laws affecting creditors’ rights generally and subject to
limitations on the availability of equitable remedies.

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Section 4.3                                      No Conflict; No Default.  The
execution, delivery and performance by each Borrower of the Loan Documents will
not (a) violate any provision of any law, statute, rule or regulation or any
order, writ, judgment, injunction, decree, determination or award of any court,
governmental agency or arbitrator presently in effect having applicability to
such Borrower, (b) violate or contravene any provision of the Certificate of
Formation, Articles of Incorporation, bylaws or limited liability company
agreement, as applicable, of such Borrower, or (c) result in a breach of or
constitute a default under any indenture, loan or credit agreement or any other
agreement, lease or instrument to which such Borrower is a party or by which it
or any of its properties may be bound or result in the creation of any Lien
thereunder.  No Borrower is in default
under or in violation of any such law, statute, rule or regulation, order,
writ, judgment, injunction, decree, determination or award or any such indenture,
loan or credit agreement or other agreement, lease or instrument in any case in
which the consequences of such default or violation could constitute a Material
Adverse Occurrence.

Section 4.4                                      Government Consent.  No
order, consent, approval, license, authorization or validation of, or filing,
recording or registration with, or exemption by, any governmental or public
body or authority is required on the part of any Borrower to authorize, or is
required in connection with the execution, delivery and performance of, or the
legality, validity, binding effect or enforceability of, the Loan Documents,
except for any necessary filing or recordation of or with respect to any of the
Security Documents.

Section 4.5                                      Financial Statements and Condition.  The Borrowers’
audited consolidated  financial
statements as at August 31, 2005 and their unaudited financial statements as at
June 30, 2006, as heretofore furnished to the Lenders, have been prepared in
accordance with GAAP on a consistent basis (except for the absence of footnotes
and subject to year-end audit adjustments as to the interim statements)
and fairly present the financial condition of the Borrowers as at such dates
and the results of their operations and changes in financial position for the
respective periods then ended.  As of the
dates of such financial statements, no Borrower had any material obligation,
contingent liability, liability for taxes or long-term lease obligation
which is not reflected in such financial statements or in the notes thereto.

Section 4.6                                      Litigation.  Except as disclosed on Schedule
4.6, there are no actions, suits or proceedings pending or, to the
knowledge of any Borrower, threatened against or affecting any Borrower or any
of their properties before any court or arbitrator, or any governmental
department, board, agency or other instrumentality which, if determined
adversely to any Borrower, would constitute a Material Adverse Occurrence, and
there are no unsatisfied judgments against any Borrower, the satisfaction or payment
of which would constitute a Material Adverse Occurrence.

Section 4.7                                      Environmental, Health and Safety Laws. 
There does not exist any violation by any Borrower of any applicable
federal, state or local law, rule or regulation or order of any government,
governmental department, board, agency or other instrumentality relating to
environmental, pollution, health or safety matters which has, will or threatens
to impose a material liability on a Borrower or which has required or would
require a material expenditure by a Borrower to cure.  No property of any Borrower is used for the
production, storage or disposal of hazardous wastes, substances or
materials.  No Borrower has received any
notice to the effect that any part of its operations or properties is not in
material compliance with any such law, rule, regulation or order or notice that
it or its property is the subject of any governmental investigation evaluating
whether any remedial action is needed to respond to any release of any toxic or
hazardous waste or substance into the environment, which non-compliance
or remedial action could reasonably be expected to constitute a Material
Adverse Occurrence.  Except as set out on
Schedule 4.7, no Borrower has knowledge that it or its property will
become subject to environmental laws or regulations during the term of this
Agreement, compliance with which could reasonably be expected to require
Capital Expenditures that could reasonably be expected to constitute a Material
Adverse Occurrence.

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Section 4.8                                      ERISA.  Each Plan is in substantial
compliance with all applicable requirements of ERISA and the Code and with all
material applicable rulings and regulations issued under the provisions of
ERISA and the Code setting forth those requirements.  No Reportable Event has occurred and is
continuing with respect to any Plan.  All
of the minimum funding standards applicable to such Plans have been satisfied
and there exists no event or condition which would reasonably be expected to
result in the institution of proceedings to terminate any Plan under Section
4042 of ERISA.

Section 4.9                                      Federal Reserve Regulations.  No
Borrower is engaged principally or as one of its important activities in the
business of extending credit for the purpose of purchasing or carrying margin
stock (as defined in Regulation U of the Board).  The value of all margin stock owned by each
Borrower does not constitute more than 25% of the value of the assets of such
Borrower.

Section 4.10                                Title to Property; Leases; Liens;
Subordination.  Each Borrower has (i) good and marketable
title to its real properties and (ii) good and sufficient title to, or valid,
subsisting and enforceable leasehold interest in, its other material
properties, including the real property subject to the Moark Leases and all other
real properties, other properties and assets, referred to as owned by a
Borrower in the most recent financial statement referred to in Section 5.1
(other than property disposed of since the date of such financial statements in
the ordinary course of business).  None
of such properties is subject to a Lien, except as allowed under Section
6.13.  No Borrower has subordinated any
of its rights under any obligation owing to it to the rights of any other
person.  Schedule 4.10 identifies
each lease that was (or, upon consummation of the Moark Acquistition, will be)
assigned to a Borrower in connection with the Moark Acquisition, and the
Borrower to which such lease was assigned.

Section 4.11                                Taxes.  Each Borrower has filed all
federal, state and local tax returns required to be filed and has paid or made
provision for the payment of all taxes due and payable pursuant to such returns
and pursuant to any assessments made against it or any of its property and all
other taxes, fees and other charges imposed on it or any of its property by any
governmental authority (other than taxes, fees or charges the amount or
validity of which is currently being contested in good faith by appropriate
proceedings and with respect to which reserves in accordance with GAAP have been
provided on the books of such Borrower). 
No tax Liens have been filed and no material claims are being asserted
with respect to any such taxes, fees or charges.  The charges, accruals and reserves on the
books of the Borrowers in respect of taxes and other governmental charges are
adequate and the Borrowers know of no proposed material tax assessment against
it or any basis therefor.

Section 4.12                                Trademarks, Patents.  Each
Borrower possesses or has the right to use all of the patents, trademarks, trade
names, service marks and copyrights, and applications therefor, and all
technology, know-how, processes, methods and designs used in or necessary
for the conduct of its business, without known conflict with the rights of
others.

Section 4.13                                Burdensome Restrictions.   No
Borrower is a party to or otherwise bound by any indenture, loan or credit
agreement or any lease or other agreement or instrument or subject to any
charter, corporate or partnership restriction which would foreseeably
constitute a Material Adverse Occurrence.

Section 4.14                                Force Majeure. 
Since the date of the most recent financial statement referred to in
Section 5.1, the business, properties and other assets of the Borrowers have
not been materially and adversely affected in any way as the result of any fire
or other casualty, strike, lockout, or other labor trouble, embargo, sabotage,
confiscation, condemnation, riot, civil disturbance, activity of armed forces
or act of God.

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Section 4.15                                Investment Company Act.  No
Borrower is an “investment company” or a company “controlled” by an investment
company within the meaning of the Investment Company Act of 1940, as amended.

Section 4.16                                Public Utility Holding Company Act.   No
Borrower is a “holding company” or a “subsidiary company” of a holding company
or an “affiliate” of a holding company or of a subsidiary company of a holding
company within the meaning of the Public Utility Holding Company Act of 2005,
as amended.

Section 4.17                                Full Disclosure. 
Subject to the following sentence, neither the financial statements
referred to in Section 5.1 nor any other certificate, written statement,
exhibit or report furnished by or on behalf of the Borrowers in connection with
or pursuant to this Agreement contains any untrue statement of a material fact
or omits to state any material fact necessary in order to make the statements
contained therein not misleading. 
Certificates or statements furnished by or on behalf of the Borrowers to
the Lenders consisting of projections or forecasts of future results or events
have been prepared in good faith and based on good faith estimates and
assumptions of the management of the Borrower, and the Borrowers have no reason
to believe that such projections or forecasts are not reasonable.

Section 4.18                                Subsidiaries.  No
Borrower has any Subsidiaries.

Section 4.19                                Labor Matters. 
There are no pending or threatened strikes, lockouts or slowdowns
against either Borrower.  No Borrower has
been or is in violation in any material respect of the Fair Labor Standards Act
or any other applicable Federal, state, local or foreign law dealing with such
matters. All payments due from any Borrower on account of wages and employee
health and welfare insurance and other benefits (in each case, except for de
minimus amounts), have been paid or accrued as a liability on the books of such
Borrower.  The consummation of the
transactions contemplated under the Loan Documents will not give rise to any
right of termination or right of renegotiation on the part of any union under
any collective bargaining agreement to which any Borrower is bound.

Section 4.20                                Security Documents.

(a)                                  Each Security Agreement is effective to
create in favor of the Administrative Agent for the benefit of the Lenders, a
legal, valid and enforceable Lien on the collateral described therein and the
proceeds thereof, and when financing statements in appropriate form are filed
with the Secretary of State of Iowa, the Secretary of State of Delaware and in
Minnesota, each Security Agreement shall constitute a fully perfected Lien on,
and security interest in, the collateral described therein and the proceeds
thereof to the extent a security interest may be perfected by filing under the
applicable Uniform Commercial Code, in each case prior and superior in right to
any other Person (except with respect to Liens permitted by
Sections 6.13(b) and Liens permitted by Section 6.13(c) and (g) that have
priority by operation of law).

(b)                                 The Thompson Mortgage is effective to create
in favor of the Administrative Agent, for the benefit of the Lenders, a valid
and enforceable Lien on the Mortgage property described therein and the
proceeds thereof and such Mortgage constitutes a fully perfected Lien of record
on, and security interest in, the mortgaged property described therein and the
proceeds thereof, as security for the Obligations prior  and superior in right to any other Person
(except with respect to Permitted Encumbrances and Liens permitted by Sections
6.13(b) and (d)).  Each of the Renville
Mortgage and the Moark Mortgage, when executed in accordance with this
Agreement, is effective to create in favor of the Administrative Agent for the
benefit of the Lenders, a legal, valid and enforceable Lien on the mortgaged
property described therein and the

 45
 

 

proceeds
thereof, and when (i) the Thompson Mortgage is filed in the applicable office
of Winnebago County, Iowa, (ii) the Renville Mortgage is filed in the
applicable office of Renville County, Minnesota and (iii) the Moark Mortgage is
filed in the applicable office of Henry County, Alabama, each such Mortgage
shall constitute a fully perfected Lien of record on, and security interest in,
the mortgaged property described in such Mortgage and the proceeds thereof, as
security for the Obligations, prior and superior in right to any other Person
(except with respect to Permitted Encumbrances and Liens permitted by
Sections 6.13(b) and (d) and, with respect to the Renville Mortgage, the
Lien against the Renville Property in favor of U.S. Bank National Association,
as trustee for the benefit of the holders of the 1999 Series Bonds and the 2001
Series Bonds).

Section 4.21                                Solvency.  After the making of any Loan
and after giving effect thereto, (a) the fair value of the assets of each
Borrower, at a fair valuation, will exceed its debts and liabilities,
subordinated, contingent or otherwise; (b) the present fair saleable value of
the property of each Borrower will be greater than the amount that will be
required to pay the probable liability of its debts and other liabilities,
subordinated, contingent or otherwise, as such debts and other liabilities
become absolute and matured; (c) each Borrower will be able to pay its debts
and liabilities, subordinated, contingent or otherwise, as such debts and
liabilities become absolute and matured; and (d) no Borrower will have
unreasonably small capital with which to conduct the business in which it is
engaged as such business is proposed to be conducted following the Closing
Date.

Section 4.22                                Eligibility.  As of the Closing Date, (i)
each Borrower is eligible to borrow from CoBank, and (ii) the percentage of voting control of the
Borrowers’ Agent held by producers or cooperatives is 100%.

Section 4.23                                Material Contract.  Each
Material Contract in effect on the Closing Date is identified on Schedule
3.1(l) and copies of each such Material Contract have been delivered to the
Administrative Agent.  Except as has been
previously disclosed to the Administrative Agent in writing, none of such
Material Contracts has been amended, modified or terminated.

Section 4.24                                Moark Acquisition.

(a)                                  The Borrowers’ Agent has heretofore furnished
the Administrative Agent a true and correct copy of the Moark Acquisition
Documents.

(b)                                 Each Borrower and, to the Borrowers’
knowledge, each other party to the Moark Acqusition Documents, has duly taken
all necessary corporate, partnership or other organizational action to
authorize the execution, delivery and performance of the Moark Acquisition
Documents and the consummation of transactions contemplated thereby.

(c)                                  The Moark Acquisition will comply with all
applicable legal requirements, and all necessary governmental, regulatory,
creditor, shareholder, partner and other material consents, approvals and
exemptions required to be obtained by the Borrowers party thereto and, to the Borrowers’
knowledge, each other party to the Moark Acquisition Documents in connection
with the Moark Acquisition will be, prior to consummation of the Moark
Acquisition, duly obtained and will be in full force and effect.  As of the date of the Moark Acquisition
Documents, all applicable waiting periods with respect to the Moark Acquisition
will have expired without any action being taken by any competent governmental
authority which restrains, prevents or imposes material adverse conditions upon
the consummation of the Moark Acquisition.

 46
 

 

(d)                                 The execution and delivery of the Moark
Acquisition Documents did not, and the consummation of the Moark Acquisition
will not, violate any statute or regulation of the United States (including any
securities law) or of any state or other applicable jurisdiction, or any order,
judgment or decree of any court or governmental body binding on any Borrower
or, to the Borrowers’ knowledge, any other party to the Moark Acquisition
Documents, or result in a breach of, or constitute a default under, any
material agreement, indenture, instrument or other document, or any judgment,
order or decree, to which any Borrower is a party or by which any Borrower is
bound or, to the Borrowers’ knowledge, to which any other party to the Moark
Acquisition Documents is a party or by which any such party is bound.

(e)                                  No statement or representation made in the
Moark Acquisition Documents by any Borrower or, to the Borrowers’ knowledge,
any other Person, contains any untrue statement of a material fact or omits to
state any material fact required to be stated therein or necessary in order to
make the statements made therein, in light of the circumstances under which
they are made, not misleading.

Section 4.25                                Subordinated
Debt.  The subordination provisions
of the Subordinated Promissory Note and the Subordination Agreement are
enforceable against the holders of the Subordinated Promissory Note by the
Administrative Agent and the Lenders. 
All Obligations constitute senior Debt entitled to the benefits of the
subordination provisions contained in the Subordinated Promissory Note and the
Subordination Agreement.  The Borrowers
acknowledge that the Administrative Agent and each Lender are entering into
this Agreement and are extending the Commitments and making the Loans in
reliance upon the subordination provisions of the Subordinated Promissory Note,
the Subordination Agreement and this Section 4.25.

ARTICLE V

AFFIRMATIVE COVENANTS

Until
any obligation of the Lenders hereunder to make the Term Loans, Revolving Loans
and Swing Line Loans and of the Letter of Credit Bank to issue Letters of
Credit shall have expired or been terminated and the Notes and all of the other
Obligations have been paid in full and all outstanding Letters of Credit shall
have expired or the liability of the Letter of Credit Bank thereon shall have
otherwise been discharged:

Section 5.1                                      Financial Statements and Reports.  The
Borrowers’ Agent will furnish to the Lenders:

(a)                                  As soon as available and in any event within
90 days after the end of each fiscal year of the Borrowers’ Agent (including
the fiscal year that ended August 31, 2005), the consolidated financial
statements of the Borrowers’ Agent consisting of at least statements of income,
cash flow and changes in the members’ equity, and a consolidated balance sheet
as at the end of such year, setting forth in each case in comparative form
corresponding figures from the previous annual audit, certified without
qualification by Moore Stephens Frost or another independent certified public
accountants of recognized national standing selected by the Borrowers and
reasonably acceptable to the Administrative Agent, together with (a) any
management letters, management reports or other supplementary comments or
reports to the Borrowers’ Agent or its board of directors furnished by such
accountants and (b) a letter from such accountants addressed to the Lenders
acknowledging that the Lenders are extending credit in reliance on such
financial statements and authorizing such reliance.

 47
 

 

(b)                                 Together with the audited financial
statements required under Section 5.1(a), a statement by the accounting firm
performing such audit to the effect that it has reviewed this Agreement and
that in the course of performing its examination nothing came to its attention
that caused it to believe that any Default or Event of Default exists, or, if
such Default or Event of Default exists, describing its nature.

(c)                                  Together with the audited financial
statements required under Section 5.1(a), unaudited consolidating statements of
income, cash flow and changes in the members’ equity for the Borrowers’ Agent
for the most recent fiscal year and a consolidating balance sheet of the
Borrowers’ Agent as at the end of such year, setting forth in comparative form
figures for the corresponding period for the preceding fiscal year, accompanied
by a certificate signed by the chief financial officer of the Borrowers’ Agent
stating that such financial statements present fairly the financial condition
of the Borrowers’ Agent and that the same have been prepared in accordance with
GAAP.

(d)                                 As soon as available and in any event within
90 days after the end of each fiscal year of United Mills, (i) the financial
statements of United Mills consisting of at least statements of income, cash
flow and changes in the members’ equity, and a consolidated balance sheet as at
the end of such year, setting forth in each case in comparative form
corresponding figures from the previous annual audit, certified without
qualification by an independent certified public accountant of recognized
national standing selected by United Mills and reasonably acceptable to the
Administrative Agent.

(e)                                  As soon as available and in any event within
60 days after the end of each quarter, unaudited consolidated statements of
income, cash flow and changes in the members’ equity for the Borrowers’ Agent
for such quarter and for the period from the beginning of such fiscal year to
the end of such quarter, and a consolidated balance sheet of the Borrowers’
Agent as at the end of such quarter, setting forth in comparative form figures
for the corresponding period for the preceding fiscal year, accompanied by a
certificate signed by the chief financial officer of the Borrowers’ Agent
stating that such financial statements present fairly the financial condition
of the Borrowers’ Agent and that the same have been prepared in accordance with
GAAP (except for the absence of footnotes and subject to year-end audit
adjustments as to the interim statements).

(f)                                    As soon as available and in any event within
45 days after the end of each month, other than the last month of each quarter,
unaudited and unconsolidated statements of income for the Borrowers’ Agent for
such month and for the period from the beginning of such fiscal year to the end
of such month, and unconsolidated balance sheets of the Borrowers’ Agent as at
the end of such month, setting forth in comparative form figures for the
corresponding period for the preceding fiscal year, accompanied by a
certificate signed by the chief financial officer of the Borrowers’ Agent
stating that such financial statements present fairly the financial condition
of the Borrowers’ Agent and that the same have been prepared in accordance with
GAAP (except for the absence of footnotes and subject to year-end audit
adjustments as to the interim statements).

(g)                                 As soon as practicable and in any event
within 60 days after the end of each fiscal quarter, a Compliance Certificate
in the form attached hereto as Exhibit G signed by the chief financial
officer of the Borrowers’ Agent demonstrating in reasonable detail compliance
(or noncompliance, as the case may be) with Section 6.15, Section 6.16, Section
6.17, Section 6.18, Section 6.19 and Section 6.21, as at the end of such
quarter and stating that as at the end of such quarter there did not exist any
Default or Event of Default or, if such Default or Event of Default

 48
 

 

existed,
specifying the nature and period of existence thereof and what action the
Borrowers propose to take with respect thereto.

(h)                                 As soon as practicable and in any event
within 45 days after the end of each month, a Borrowing Base Certificate signed
by the chief financial officer of the Borrowers’ Agent, reporting the Borrowing
Base as of the last day of the month just ended.

(i)                                     As soon as practicable and in any event
within 90 days after the beginning of each fiscal year of the Borrowers’ Agent,
statements of forecasted consolidated income for the Borrowers’ Agent for each
fiscal month in such fiscal year and a forecasted consolidated balance sheet of
the Borrowers’ Agent, together with supporting assumptions, as at the end of
each fiscal month, all in reasonable detail and reasonably satisfactory in
scope to the Lenders.

(j)                                     Immediately upon any officer or manager of
any Borrower becoming aware of any Default or Event of Default, a written
notice from the Borrowers’ Agent describing the nature thereof and what action
Borrowers propose to take with respect thereto.

(k)                                  Immediately upon any officer or manager of a
Borrower becoming aware of any matter that has resulted or is reasonably likely
to result in a Material Adverse Occurrence, a written notice from the Borrowers’
Agent describing the nature thereof and what action Borrowers propose to take
with respect thereto.

(l)                                     Immediately upon any officer or manager of a
Borrower becoming aware of (i) the commencement of any action, suit,
investigation, proceeding or arbitration before any court or arbitrator or any
governmental department, board, agency or other instrumentality affecting a
Borrower or any property of such Person, or to which a Borrower is a party
(other than litigation where the insurance insures against the damages claimed
and the insurer has assumed defense of the litigation without reservation) and
in which an adverse determination or result could reasonably be expected to
constitute a Material Adverse Occurrence; or (ii) any adverse development which
occurs in any litigation, arbitration or governmental investigation or
proceeding previously disclosed by a Borrower which, if determined adversely to
a Borrower, could reasonably be expected to constitute a Material Adverse
Occurrence, a written notice from the Borrowers’ Agent describing the nature
and status thereof and what action the Borrowers propose to take with respect
thereto.

(m)                               Promptly upon the mailing or filing thereof,
copies of all financial statements, reports and proxy statements mailed to any
Borrower’s members or shareholders, and copies of all registration statements,
periodic reports and other documents filed with the Securities and Exchange
Commission (or any successor thereto) or any national securities exchange.

(n)                                 Promptly following receipt, copies of any
notices received in connection with the Moark Acquisition.

(o)                                 From time to time, such other information
regarding the business, operation and financial condition of any Borrower as
any Lender may reasonably request.

Section 5.2                                      Existence.  Each Borrower will maintain
its corporate or company existence (as the case may be) in good standing under
the laws of its jurisdiction of organization and its qualification to transact
business in each jurisdiction where failure so to qualify would permanently
preclude such Borrower from enforcing its rights with respect to any material
asset or would expose such Borrower to any material liability.

 49
 

 

Section 5.3                                      Insurance.  Each Borrower shall maintain
with financially sound and reputable insurance companies such insurance as may
be required by law and such other insurance in such amounts and against such
hazards as is customary in the case of reputable firms engaged in the same or
similar business and similarly situated.

Section 5.4                                      Payment of Taxes and Claims.  Each
Borrower shall file all tax returns and reports which are required by law to be
filed by it and will pay before they become delinquent all taxes, assessments
and governmental charges and levies imposed upon it or its property and all
claims or demands of any kind (including but not limited to those of suppliers,
mechanics, carriers, warehouses, landlords and other like Persons) which, if
unpaid, might result in the creation of a Lien upon its property; provided
that the foregoing items need not be paid if they are being contested in good
faith by appropriate proceedings, and as long as such Borrower’s title to its
property is not materially adversely affected, its use of such property in the
ordinary course of its business is not materially interfered with and adequate
reserves with respect thereto have been set aside on such Borrower’s books in
accordance with GAAP.

Section 5.5                                      Inspection.  Each Borrower shall permit any
Person designated by the Administrative Agent or any Lender to visit and
inspect any of the properties, books and financial records of such Borrower, to
examine and to make copies of the books of accounts and other financial records
of such Borrower, and to discuss the affairs, finances and accounts of such
Borrower with, and to be advised as to the same by, its officers and managers
at such reasonable times and intervals as the Administrative Agent or any
Lender may designate.

Section 5.6                                      Maintenance of Properties.  Each
Borrower will maintain its properties used or useful in the conduct of its
business in good condition, repair and working order, and supplied with all
necessary equipment, and make all necessary repairs, renewals, replacements,
betterments and improvements thereto, all as may be necessary so that the
business carried on in connection therewith may be properly and advantageously
conducted at all times.

Section 5.7                                      Books and Records.  Each
Borrower will keep adequate and proper records and books of account in which
full and correct entries will be made of its dealings, business and affairs.

Section 5.8                                      Compliance.  Each Borrower (a) will comply
in all material respects with all laws, rules, regulations, orders, writs,
judgments, injunctions, decrees or awards to which it may be subject and (b)
will maintain and comply in all material respects with all Applicable Permits; provided,
however, that failure to so comply, obtain or maintain shall not be a
breach of this covenant if such failure cannot reasonably be expected to
constitute a Material Adverse Occurrence and such Borrower is acting in good
faith and with reasonable dispatch to cure such failure.

Section 5.9                                      ERISA.  Each Borrower will maintain
each Plan in compliance with all material applicable requirements of ERISA and
of the Code and with all applicable rulings and regulations issued under the
provisions of ERISA and of the Code.

Section 5.10                                Environmental Matters; Reporting.  Each
Borrower will observe and comply with all laws, rules, regulations and orders
of any government or government agency relating to health, safety, pollution,
hazardous materials or other environmental matters to the extent non-compliance
could result in a material liability or otherwise constitute a Material Adverse
Occurrence.  No Borrower shall use its
property (including any portion of the Thompson Property, the Moark Property or
the Renville Property) for the production, storage or disposal of hazardous
substances, wastes or materials.  The
Borrowers’ Agent will give the Administrative Agent prompt written notice of
any violation as to any environmental matter by any Borrower and of the
commencement of any judicial or administrative proceeding relating to health,
safety or environmental matters (a) in which an adverse determination or

 50
 

 

result
could result in the revocation of or have a material adverse effect on any
operating permits, air emission permits, water discharge permits, hazardous
waste permits or other permits held by any Borrower which are material to the
operations of such Borrower, including the Applicable Permits, or (b) which
will or threatens to impose a material liability on such Borrower to any Person
or which will require a material expenditure by the Borrower to cure any
alleged problem or violation.

Section 5.11                                Further Assurances.  Each
Borrower shall promptly correct any defect or error that may be discovered in
any Loan Document or in the execution, acknowledgment or recordation
thereof.  Promptly upon request by the
Administrative Agent or the Required Lenders, each Borrower also shall do,
execute, acknowledge, deliver, record, re-record, file, re-file, register and
re-register, any and all deeds, conveyances, mortgages, deeds of trust, trust
deeds, assignments, estoppel certificates, financing statements and
continuations thereof, notices of assignment, transfers, certificates,
assurances and other instruments as the Administrative Agent or the Required
Lenders may reasonable require from time to time in order: (a) to carry out
more effectively the purposes of the Loan Documents; (b) to perfect and
maintain the validity, effectiveness and priority of any security interests
intended to be created by the Loan Documents including, without limitation, the
delivery of a landlord waiver from any landlord required by the Administrative
Agent or the Required Lenders; and (c) to better assure, convey, grant, assign,
transfer, preserve, protect and confirm unto the Lenders the rights granted now
or hereafter intended to be granted to the Lenders under any Loan Document or
under any other instrument executed in connection with any Loan Document or
that any Borrower may be or become bound to convey, mortgage or assign to the
Administrative Agent for the benefit of the Lenders in order to carry out the
intention or facilitate the performance of the provisions of any Loan
Document.  The Borrowers’ Agent shall
furnish to the Administrative Agent evidence reasonably satisfactory to the Administrative
Agent of every such recording, filing or registration.

Section 5.12                                Compliance with Terms of Material Contracts.  Each
Borrower shall make all payments and otherwise perform all obligations in
respect of all Material Contracts to which such Borrower is a party and shall
promptly provide the Administrative Agent with copies of any notices of default
under any Material Contract given or received by any Borrower.

ARTICLE VI

NEGATIVE COVENANTS

Until
any obligation of the Lenders hereunder to make the Term Loans and Revolving
Loans and of the Letter of Credit Bank to issue Letters of Credit shall have
expired or been terminated and the Notes and all of the other Obligations have
been paid in full and all outstanding Letters of Credit shall have expired or
the liability of the Letter of Credit Bank thereon shall have otherwise been
discharged:

Section 6.1                                      Merger.  No Borrower will merge or
consolidate or enter into any analogous reorganization or transaction with any
Person or liquidate, wind up or dissolve itself (or suffer any liquidation or
dissolution).

Section 6.2                                      Disposition of Assets.  No
Borrower will directly or indirectly, sell, assign, lease, convey, transfer or
otherwise dispose of (whether in one transaction or a series of transactions)
any property (including accounts and notes receivable, with or without
recourse) or enter into any agreement to do any of the foregoing, except:

(a)                                  dispositions of inventory in the ordinary
course of business;

 51
 

 

(b)                                 dispositions of used, worn-out or obsolete
equipment, furniture, furnishings, machinery or fixtures if (i) such equipment,
furniture, furnishings, machinery or fixtures is replaced by property of equal
kind and value, or (ii) if the value of such disposed equipment, furniture,
furnishings, machinery or fixtures at the time of disposal is less than
$150,000 for any single transaction or less than $300,000 in the aggregate in
any fiscal year; and

(c)                                  other dispositions of property if the net
book value of the disposed property does not exceed (i) in any fiscal year, 10%
of such Borrower’s total consolidated assets as shown on its balance sheet as
of the end of the immediately preceding fiscal year, or for its most recent
prior fiscal quarter, or (ii) in the aggregate during the term of this
Agreement, 30% of such Borrower’s total consolidated assets as shown on its
balance sheet as of the Closing Date, in each case unless the proceeds from
such disposition are reinvested within twelve (12) months of such disposition
to purchase other property useful and intended to be used in the business of
the Borrowers’ Agent.

Section 6.3                                      Plans.  No Borrower will permit any
event to occur or condition to exist which would permit any Plan to terminate
under any circumstances which would cause the Lien provided for in Section 4068
of ERISA to attach to any assets of any Borrower.

Section 6.4                                      Change in Nature of Business.  No
Borrower will make any material change in the nature of the business of such
Borrower, as carried on at the date hereof.

Section 6.5                                      Subsidiaries.  No
Borrower will form or acquire any corporation which would thereby become a
Subsidiary.

Section 6.6                                      Negative Pledges.  No
Borrower will enter into any agreement, bond, note or other instrument with or
for the benefit of any Person other than the Lenders which would (i) prohibit
such Borrower from granting, or otherwise limit the ability of the such
Borrower to grant, to the Lenders any Lien on any assets or properties of such
Borrower, or (ii) require such Borrower to grant a Lien to any other Person if such
Borrower grants any Lien to the Lenders.

Section 6.7                                      Restricted Payments.  No
Borrower will make any Restricted Payments if a Default or Event of Default has
occurred and is continuing or if a Default or Event of Default would occur as a
result of such Restricted Payment.

Section 6.8                                      Transactions with Affiliates.  No
Borrower will enter into any transaction with any Affiliate of such Borrower,
except upon fair and reasonable terms no less favorable than such Borrower
would obtain in a comparable arm’s-length transaction with a Person not an
Affiliate.

Section 6.9                                      Accounting Changes.  No
Borrower will make any significant change in accounting treatment or reporting
practices, except as required by GAAP, or change its fiscal year.

Section 6.10                                Subordinated Debt.  No
Borrower will (a) make any scheduled payment of the principal of or interest on
any Subordinated Debt that would be prohibited by the terms of such
Subordinated Debt and any related subordination agreement (including the
Subordination Agreement); (b) directly or indirectly make any prepayment on or
purchase, redeem or defease any Subordinated Debt or offer to do so (whether
such prepayment, purchase or redemption, or offer with respect thereto, is
voluntary or mandatory); (c) amend or cancel the subordination provisions
applicable to any Subordinated Debt; (d) take or omit to take any action if as
a result of such action or omission the subordination of such Subordinated
Debt, or any part thereof, to the Obligations might be terminated, impaired or
adversely affected; or (e) omit to give the Administrative Agent prompt notice
of any notice received from any

 52
 

 

holder
of Subordinated Debt, or any trustee therefor, or of any default under any
agreement or instrument relating to any Subordinated Debt by reason whereof
such Subordinated Debt might become or be declared to be due or payable, .

Section 6.11                                Investments.  No Borrower will acquire for
value, make, have or hold any Investments, except:

(a)                                  Investments existing on the date of this
Agreement and described on Schedule 6.11.

(b)                                 Travel advances to management personnel and
employees in the ordinary course of business.

(c)                                  Investments in readily marketable direct
obligations issued or guaranteed by the United States or any agency thereof and
supported by the full faith and credit of the United States.

(d)                                 Certificates of deposit or bankers’
acceptances issued by any commercial bank organized under the laws of the
United States or any State thereof which has (i) combined capital and surplus
of at least $100,000,000, and (ii) a credit rating with respect to its
unsecured indebtedness from a nationally recognized rating service that is
reasonably satisfactory to the Administrative Agent.

(e)                                  Commercial paper given the highest rating by
a nationally recognized rating service.

(f)                                    Repurchase agreements relating to securities
issued or guaranteed as to principal and interest by the United States of
America with a term of not more than seven (7) days; provided all such
agreements shall require physical delivery of the securities securing such
repurchase agreement, except those delivered through the Federal Reserve Book
Entry System

(g)                                 Other readily marketable Investments in debt
securities which are reasonably acceptable to the Required Lenders.

(h)                                 Any other Investment if the aggregate
consideration therefor does not exceed $500,000.

(i)                                     The Moark Acquisition.

Any
Investments under clauses (c), (d), (e) or (f) above must mature within one
year of the acquisition thereof by the Borrower.

Section 6.12                                Indebtedness.  The
Borrower will not incur, create, issue, assume or suffer to exist any
Indebtedness, except:

(a)                                  The Obligations.

(b)                                 Current Liabilities, other than for borrowed
money, incurred in the ordinary course of business.

(c)                                  Indebtedness existing on the date of this
Agreement and disclosed on Schedule 6.12, but not including any
extension or refinancing thereof.

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(d)                                 Indebtedness secured by Liens permitted under
Section 6.13 hereof.

(e)                                  Subordinated Debt.

Section 6.13                                Liens.  No Borrower will create, incur,
assume or suffer to exist any Lien, or enter into, or make any commitment to
enter into, any arrangement for the acquisition of any property through
conditional sale, lease-purchase or other title retention agreements,
with respect to any property now owned or hereafter acquired by the Borrower,
except:

(a)                                  Liens granted to the Administrative Agent and
the Lenders under the Security Documents to secure the Obligations.

(b)                                 Liens existing on the date of this Agreement
and disclosed on Schedule 6.13.

(c)                                  Deposits or pledges to secure payment of
workers’ compensation, unemployment insurance, old age pensions or other social
security obligations, in the ordinary course of business of the Borrower.

(d)                                 Liens for taxes, fees, assessments and
governmental charges not delinquent or to the extent that payment therefor
shall not at the time be required to be made in accordance with the provisions
of Section 5.4.

(e)                                  Liens of carriers, warehousemen, mechanics
and materialmen, and other like Liens arising in the ordinary course of
business, for sums not due or to the extent that payment therefor shall not at
the time be required to be made in accordance with the provisions of Section
5.4.

(f)                                    Liens incurred or deposits or pledges made or
given in connection with, or to secure payment of, indemnity, performance or
other similar bonds.

(g)                                 Liens arising solely by virtue of any
statutory or common law provision relating to banker’s liens, rights of set-off
or similar rights and remedies as to deposit accounts or other funds maintained
with a creditor depository institution; provided  that (i) such
deposit account is not a dedicated cash collateral account and is not subject
to restriction against access by a Borrower in excess of those set forth by
regulations promulgated by the Board, and (ii) such deposit account is not
intended by the Borrower to provide collateral to the depository institution.

(h)                                 Permitted Encumbrances.

(i)                                     The interest of any lessor under any Capital
Lease entered into after the Closing Date or purchase money Liens on property
acquired after the Closing Date; provided, that, (i) the Indebtedness secured
thereby is otherwise permitted by this Agreement and (ii) such Liens are
limited to the property acquired and do not secure Indebtedness other than the
related Capital Lease Obligations or the purchase price of such property.

(j)                                     CoBank’s statutory Lien on the CoBank
Equities.

Section 6.14                                Contingent Liabilities.  No
Borrower will be or become liable on any Contingent Obligations except
Contingent Obligations existing on the date of this Agreement and described on Schedule
6.14 and Contingent Obligations for the benefit of the Lenders.

 54

 

Section 6.15                                Tangible Net Worth.  The
Borrower’s Agent will not permit its Tangible Net Worth at any time to be less
than $28,000,000, plus forty percent (40%) of net earnings accumulated
after August 31, 2005, plus one hundred percent (100%) of all equity
contributed after August 31, 2005.

Section 6.16                                Current Ratio.  The
Borrower’s Agent will not permit the ratio of its Current Assets to its Current
Liabilities to be less than 1.25 to 1.0 at any time.

Section 6.17                                Working Capital. The Borrower’s Agent will not permit its
Working Capital to be less than $7,000,000 at any time.

Section 6.18                                Leverage Ratio.  The
Borrower’s Agent will not permit the Leverage Ratio, as of the last day of any
fiscal quarter for the four consecutive fiscal quarters ending on that date, to
be more than (a) for the period from November 30, 2006 to May 31, 2007, 6.50 to
1.0, or (b) for the period from June 1, 2007 to the Term Loan Maturity Date,
4.25 to 1.0.

Section 6.19                                Fixed Charge Coverage Ratio.  The
Borrower’s Agent will not permit the Fixed Charge Coverage Ratio, as of the
last day of any fiscal quarter for the four consecutive fiscal quarters ending
on that date, to be less than (a) for the period from the Closing Date to May
31, 2008, 1.00 to 1.00, and (b) for the period from June 1, 2008 to the Term
Loan Maturity Date, 1.15 to 1.0.

Section 6.20                                Operating Leases.  No
Borrower will enter into any Operating Lease that would cause the aggregate
lease payments for all Operating Leases of the Borrowers to exceed $1,600,000
on a consolidated basis per fiscal year of the Borrowers’ Agent, provided
that rents paid by any Borrower for real property consisting solely of land
located in the State of Iowa and leased from Midwest Investors of Iowa,
Cooperative shall not be included in such calculation.

Section 6.21                                Risk Management.  The
Borrowers’ Agent shall not fail to have the minimum required percentage of
finished egg products under contract as set forth and described on Annex II,
established as of the first day of each fiscal quarter after the Compliance
Certificate required by Section 5.1 is delivered.

Section 6.22                                Material Contracts.  No
Borrower shall amend or modify a Material Contract in any material respect, or
terminate a Material Contract, without the prior written consent of the
Required Lenders.

Section 6.23                                Eligibility.  No Borrower will take any
action that causes it to become ineligible to borrow from CoBank.

Section 6.24                                Real
Estate Plan.  The Borrowers shall not
fail to take the actions required to be taken, and at the times required to be
taken, with respect to its owned and leased real properties as set forth in the
Real Estate Plan.

ARTICLE VII

EVENTS OF DEFAULT AND REMEDIES

Section 7.1                                      Events of Default.  The
occurrence of any one or more of the following events shall constitute an Event
of Default:

(a)                                  The Borrowers shall fail to make when due,
whether by acceleration or otherwise, any payment of principal of any Note.

 55
 

 

(b)                                 The Borrowers shall fail to make when due,
whether by acceleration or otherwise, any payment of interest on any Note or on
or of any other Obligation required to be made to the Administrative Agent, the
Letter of Credit Bank or any Lender pursuant to this Agreement and such failure
to pay shall continue for five (5) Business Days after the date on which such
payment was due.

(c)                                  Any representation or warranty made by or on
behalf of any Borrower in this Agreement or any other Loan Document or by or on
behalf of any Borrower in any certificate, statement, report or document
herewith or hereafter furnished to any Lender or the Administrative Agent
pursuant to this Agreement or any other Loan Document shall prove to have been
false or misleading in any material respect on the date as of which the facts
set forth are stated or certified.

(d)                                 Any Borrower shall fail to comply with
Sections 2.16, 5.2 or 5.3 hereof or any Section of Article VI hereof.

(e)                                  Any Borrower shall fail to comply with any
other agreement, covenant, condition, provision or term contained in this
Agreement (other than those hereinabove set forth in this Section 7.1) and such
failure to comply shall continue for 30 calendar days after whichever of the
following dates is the earliest:  (i) the
date any Borrower or the Borrowers’ Agent gives notice of such failure to the
Lenders, (ii) the date any Borrower should have given notice of such failure to
the Administrative Agent pursuant to Section 5.1, or (iii) the date the
Administrative Agent or any Lender gives notice of such failure to the
Borrower.

(f)                                    Any default (however denominated or defined)
shall occur under any Security Document.

(g)                                 Any Borrower shall become insolvent or shall
generally not pay its debts as they mature or shall apply for, shall consent
to, or shall acquiesce in the appointment of a custodian, trustee or receiver
of such Borrower or for a substantial part of the property thereof or, in the
absence of such application, consent or acquiescence, a custodian, trustee or
receiver shall be appointed for any Borrower or for a substantial part of the
property thereof and shall not be discharged within 45 days, or any Borrower
shall make an assignment for the benefit of creditors.

(h)                                 Any bankruptcy, reorganization, debt
arrangement or other proceedings under any bankruptcy or insolvency law shall
be instituted by or against any Borrower, and, if instituted against any
Borrower, shall have been consented to or acquiesced in by such Borrower, or
shall remain undismissed for 60 days, or an order for relief shall have been
entered against such Borrower.

(i)                                     Any dissolution or liquidation proceeding
shall be instituted by or against any Borrower, and, if instituted against any
Borrower, shall be consented to or acquiesced in by such Borrower or shall
remain for 45 days undismissed.

(j)                                     A judgment or judgments for the payment of
money in excess of the sum of $250,000 in the aggregate shall be rendered
against any Borrower and either (i) the judgment creditor executes on such
judgment or (ii) such judgment remains unpaid or undischarged for more than 60
days from the date of entry thereof or such longer period during which
execution of such judgment shall be stayed during an appeal from such judgment.

 56
 

 

(k)                                  The maturity of any material Indebtedness of
any Borrower (other than Indebtedness under this Agreement) shall be
accelerated, or any Borrower shall fail to pay any such material Indebtedness
when due (after the lapse of any applicable grace period) or, in the case of
such Indebtedness payable on demand, when demanded (after the lapse of any
applicable grace period), or any event shall occur or condition shall exist and
shall continue for more than the period of grace, if any, applicable thereto
and shall have the effect of causing, or permitting the holder of any such
Indebtedness or any trustee or other Person acting on behalf of such holder to
cause, such material Indebtedness to become due prior to its stated maturity or
to realize upon any collateral given as security therefor.  For purposes of this Section, Indebtedness of
any Borrower shall be deemed “material” if it is Indebtedness under the
Subordinated Promissory Note or if it exceeds $1,000,000 as to any item of
Indebtedness or in the aggregate for all items of Indebtedness with respect to
which any of the events described in this Section 7.1(k) has occurred.

(l)                                     Any execution or attachment shall be issued
whereby any substantial part of the property of any Borrower shall be taken or
attempted to be taken and the same shall not have been vacated or stayed within
30 days after the issuance thereof.

(m)                                Any Security Document shall, at any time,
cease to be in full force and effect or shall be judicially declared null and
void, or the validity or enforceability thereof shall be contested by any
Borrower, or the Administrative Agent or the Lenders shall cease to have a
valid and perfected security interest having the priority contemplated
thereunder in all of the collateral described therein, other than by action or
inaction of the Administrative Agent or the Lenders if (i) the aggregate value
of the collateral affected by any of the foregoing exceeds $150,000 and (ii)
any of the foregoing shall remain unremedied for ten (10) days or more after
receipt of notice thereof by the Borrowers’ Agent from the Administrative
Agent.

(n)                                 Any Change of Control shall occur.

Section 7.2                                      Remedies.   If (a) any Event of Default
described in Sections 7.1 (g), (h) or (i) shall occur, the Commitments shall
automatically terminate and the Notes and all other Obligations shall
automatically become immediately due and payable, and the Borrowers shall
without demand cash collateralize an amount equal to the aggregate face amount
of all outstanding Letters of Credit; or (b) any other Event of Default shall
occur and be continuing, then, upon receipt by the Administrative Agent of a
request in writing from the Required Lenders, the Administrative Agent shall
take any of the following actions so requested: (i) declare the Commitments
terminated, whereupon the Commitments shall terminate, (ii) declare the
outstanding unpaid principal balance of the Notes, the accrued and unpaid
interest thereon and all other Obligations to be forthwith due and payable,
whereupon the Notes, all accrued and unpaid interest thereon and all such
Obligations shall immediately become due and payable, in each case without
presentment, demand, protest or other notice of any kind, all of which are
hereby expressly waived, anything in this Agreement or in the Notes to the
contrary notwithstanding, and (iii) demand that the Borrowers cash
collateralize an amount equal to the aggregate face amount of all outstanding
Letters of Credit.  Upon the occurrence
of any of the events described in clause (a) of the preceding sentence, or upon
the occurrence of any of the events described in clause (b) of the preceding
sentence when so requested by the Required Lenders, the Administrative Agent
may exercise all rights and remedies under any of the Loan Documents, and
enforce all rights and remedies under any applicable law.

Section 7.3                                      Offset.  In addition to the remedies
set forth in Section 7.2, upon the occurrence of any Event of Default and
thereafter while the same be continuing, each Borrower hereby irrevocably
authorizes each Lender to set off any Obligations owed to such Lender against
all deposits and credits of

 57
 

 

such
Borrower with, and any and all claims of such Borrower against, such
Lender.  Such right shall exist whether
or not such Lender shall have made any demand hereunder or under any other Loan
Document, whether or not the Obligations, or any part thereof, or deposits and
credits held for the account of the Borrowers is or are matured or unmatured,
and regardless of the existence or adequacy of any collateral, guaranty or any
other security, right or remedy available to such Lender or the Lenders.  Each Lender agrees that, as promptly as is
reasonably possible after the exercise of any such setoff right, it shall
notify the Borrowers’ Agent of its exercise of such setoff right; provided,
however, that the failure of any Lender to provide such notice shall not
affect the validity of the exercise of such setoff rights.  Nothing in this Agreement shall be deemed a
waiver or prohibition of or restriction on any Lender to all rights of banker’s
Lien, setoff and counterclaim available pursuant to law.

ARTICLE VIII

THE ADMINISTRATIVE AGENT

The
following provisions shall govern the relationship of the Administrative Agent
with the Lenders.

Section 8.1                                      Appointment and Authorization.  Each
Lender appoints and authorizes the Administrative Agent to take such action as
agent on its behalf and to exercise such respective powers under the Loan
Documents as are delegated to the Administrative Agent by the terms thereof,
together with such powers as are reasonably incidental thereto.  Neither the Administrative Agent nor any of
its directors, officers or employees shall be liable for any action taken or
omitted to be taken by it under or in connection with the Loan Documents,
except for its own gross negligence or willful misconduct.  The Administrative Agent shall act as an independent
contractor in performing its obligations as Administrative Agent
hereunder.  The duties of the
Administrative Agent shall be mechanical and administrative in nature, and
nothing herein contained shall be deemed to create any fiduciary relationship
among or between the Administrative Agent, any Borrower or the Lenders.

Section 8.2                                      Note Holders.  The
Administrative Agent may treat the payee of any Note as the holder thereof
until written notice of transfer shall have been filed with it, signed by such
payee and in form reasonably satisfactory to the Administrative Agent.

Section 8.3                                      Consultation With Counsel.  The
Administrative Agent may consult with legal counsel selected by it and shall
not be liable for any action taken or suffered in good faith by it in
accordance with the advice of such counsel.

Section 8.4                                      Loan Documents.  The
Administrative Agent shall not be responsible to any Lender for any recitals,
statements, representations or warranties in any Loan Document or be under a
duty to examine or pass upon the validity, effectiveness, genuineness or value
of any of the Loan Documents or any other instrument or document furnished
pursuant thereto, and the Administrative Agent shall be entitled to assume that
the same are valid, effective and genuine and what they purport to be.

Section 8.5                                      CoBank and Affiliates.  With
respect to its Commitments and the Loans made by it, CoBank shall have the same
rights and powers under the Loan Documents as any other Lender and may exercise
the same as though it were not the Administrative Agent consistent with the
terms thereof, and CoBank and its Affiliates may accept deposits from, lend
money to and generally engage in any kind of business with the Borrower as if
it were not the Administrative Agent.

Section 8.6                                      Action by Administrative Agent.  Except
as may otherwise be expressly stated in this Agreement, the Administrative
Agent shall be entitled to use its discretion with respect to exercising 

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or
refraining from exercising any rights which may be vested in it by, or with
respect to taking or refraining from taking any action or actions which it may
be able to take under or in respect of, the Loan Documents.  The Administrative Agent shall be required to
act or to refrain from acting (and shall be fully protected in so acting or
refraining from acting) upon the instructions of the Required Lenders, and such
instructions shall be binding upon all holders of Notes; provided, however,
that the Administrative Agent shall not be required to take any action which
exposes the Administrative Agent to personal liability or which is contrary to
the Loan Documents or applicable law. 
The Administrative Agent shall incur no liability under or in respect of
any of the Loan Documents by acting upon any notice, consent, certificate,
warranty or other paper or instrument believed by it to be genuine or authentic
or to be signed by the proper party or parties and to be consistent with the
terms of this Agreement.

Section 8.7                                      Credit Analysis.  Each
Lender has made, and shall continue to make, its own independent investigation
or evaluation of the operations, business, property and condition, financial
and otherwise, of any Borrower in connection with entering into this Agreement
and has made its own appraisal of the creditworthiness of each Borrower.  Except as explicitly provided herein, the
Administrative Agent has no duty or responsibility, either initially or on a
continuing basis, to provide any Lender with any credit or other information
with respect to such operations, business, property, condition or creditworthiness,
whether such information comes into its possession on or before the first Event
of Default or at any time thereafter.

Section 8.8                                      Notices of Event of Default, Etc.  In
the event that the Administrative Agent shall have acquired actual knowledge of
any Event of Default or Default, the Administrative Agent shall promptly give
notice thereof to the Lenders.  The
Administrative Agent shall not be deemed to have knowledge or notice of any
Default or Event of Default, except with respect to actual defaults in the
payment of principal, interest and fees required to be paid to the
Administrative Agent for the account of the Lenders, unless the Administrative
Agent shall have received written notice from a Lender or a Borrower referring
to this Agreement, describing such Default or Event of Default and stating that
such notice is a “Notice of Default”.

Section 8.9                                      Indemnification.  Each
Lender agrees to indemnify the Administrative Agent, as Administrative Agent
(to the extent not reimbursed by the Borrower), ratably according to such
Lender’s share of the aggregate Revolving and Term Loan Commitment Amounts from
and against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements of any kind or
nature whatsoever which may be imposed on or incurred by the Administrative
Agent in any way relating to or arising out of the Loan Documents or any action
taken or omitted by the Administrative Agent under the Loan Documents, provided
that no Lender shall be liable for any portion of such liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements resulting from the Administrative Agent’s gross
negligence or willful misconduct.  No
payment by any Lender under this Section shall relieve the Borrower of any of
its obligations under this Agreement.

Section 8.10                                Payments and Collections.  All
funds received by the Administrative Agent in respect of any payments made by
any Borrower on the Tranche A Term Notes shall be distributed forthwith by the
Administrative Agent among the Tranche A Term Lenders, in like currency and
funds as received, ratably according to each such Lender’s Term Loan
Percentage.  All funds received by the
Administrative Agent in respect of any payments made by any Borrower on the
Tranche B Term Notes shall be distributed forthwith by the Administrative Agent
among the Tranche B Term Lenders, in like currency and funds as received,
ratably according to each such Lender’s Term Loan Percentage.  All funds received by the Administrative
Agent in respect of any payments made by any Borrower on the Revolving Notes,
Commitment Fees or Letter of Credit Fees shall be distributed forthwith by the

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Administrative
Agent among the Revolving Lenders, in like currency and funds as received,
ratably according to each such Lender’s Revolving Loan Percentage.

(a)                                  Personal Property. 
After any Event of Default has occurred, all funds received by the
Administrative Agent as realization on collateral that constitutes personal
property (excluding any machinery and equipment that are fixtures to any real
estate) shall (except as may otherwise be required by law) be distributed by
the Administrative Agent in the following order:  (a) first, to the Administrative Agent
in an amount equal to the amounts, if any, as are necessary to pay the costs
and expenses (including reasonable attorneys’ fees) incurred by the
Administrative Agent in connection with any enforcement action or collection
proceeding in relation to the relevant personal property collateral, (b) second,
to the Lenders, ratably in an amount equal to the amounts, if any, as are
necessary to pay the costs and expenses (including reasonable attorneys’ fees)
incurred by each Lender in connection with any enforcement action or collection
proceeding in relation to the relevant personal property collateral, (c) third,
to the Revolving Lenders in an amount up to but not exceeding the amount of
principal then outstanding in respect of the Revolving Loans and any portion of
the Obligations relating thereto and any accrued and unpaid interest thereon
(including any interest that, but for the provisions of the Bankruptcy Code
would have accrued on such amounts), (d) fourth, to the Term Lenders
ratably, in an amount up to but not exceeding the amount of the principal of
the Obligations then outstanding and any accrued but unpaid interest thereon
(including any interest that, but for the provisions of the Bankruptcy Code
would have accrued on such amounts), (e) fifth, to the Lenders, ratably,
in an amount up to but not exceeding the amount of any other Obligations then
outstanding, and (f) sixth, the remainder, if any, to the Borrowers’
Agent for the benefit of the Borrowers or as a court of competent jurisdiction
may otherwise direct.

(b)                                 Real Property. 
After any Event of Default has occurred, all funds received by the
Administrative Agent as realization on collateral that constitutes real
property (including any machinery and equipment that are fixtures to such real
property) shall (except as may otherwise be required by law) be distributed by
the Administrative Agent in the following order:  (a) first, to the Administrative Agent
in an amount equal to the amounts, if any, as are necessary to pay the costs
and expenses (including reasonable attorneys’ fees) incurred by the
Administrative Agent in connection with any enforcement action or collection
proceeding in relation to the relevant real property collateral, (b) second,
to the Lenders, ratably in an amount equal the amounts, if any, as are
necessary to pay the costs and expenses (including reasonable attorneys’ fees)
incurred by each Lender in connection with any enforcement action or collection
proceeding in relation to the relevant real property collateral, (c) third,
to the Term Lenders ratably, in an amount up to but not exceeding the amount
the amount of the principal of the Obligations then outstanding and any accrued
but unpaid interest thereon (including any interest that, but for the
provisions of the Bankruptcy Code would have accrued on such amounts), (d) fourth,
to the Revolving Lenders in an amount up to but not exceeding the amount of
principal then outstanding in respect of the Revolving Loans and any portion of
the Obligations relating thereto and any accrued and unpaid interest thereon
(including any interest that, but for the provisions of the Bankruptcy Code
would have accrued on such amounts), (e) fifth, to the Lenders, ratably,
in an amount up to but not exceeding the amount of any other Obligations then
outstanding, and (f) sixth, the remainder, if any, to the Borrowers’
Agent for the benefit of the Borrowers or as a court of competent jurisdiction
may otherwise direct.

(c)                                  General.  After any Event of Default has
occurred, all funds received by the Administrative Agent, whether as payments
by the Borrowers or as realization on collateral not constituting personal
property or real property (which shall be distributed in accordance with
subsections (a) and (b) of this Section 8.10, as applicable) or on any
guaranties, shall (except as

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may otherwise be required by
law) be distributed by the Administrative Agent in the following order:  (a) first, to the Administrative Agent
in an amount equal to the amounts, if any, as are necessary to pay the costs and
expenses (including reasonable attorneys’ fees) incurred by the Administrative
Agent in connection with any enforcement action or collection proceeding
hereunder, (b) second, to the Lenders, ratably in an amount equal the
amounts, if any, as are necessary to pay the costs and expenses (including
reasonable attorneys’ fees) incurred by each Lender in connection with any
enforcement action or collection proceeding, (c) third, to the Lenders
in an amount up to but not exceeding the amount of principal then outstanding
on the Obligations and any accrued and unpaid interest thereon (including any
interest that, but for the provisions of the Bankruptcy Code would have accrued
on such amounts), (d) fourth, to the Lenders, ratably, in an amount up
to but not exceeding the amount of any other Obligations then outstanding, and
(e) fifth, the remainder, if any, to the Borrowers’ Agent for the
benefit of the Borrowers or as a court of competent jurisdiction may otherwise
direct.

Section 8.11                                Sharing of Payments.  If
any Lender shall receive and retain any payment, voluntary or involuntary,
whether by setoff, application of deposit balance or security, or otherwise, in
respect of Indebtedness under this Agreement or the Notes in excess of such
Lender’s share thereof as determined under this Agreement, then such Lender
shall purchase from the other Lenders for cash and at face value and without
recourse, such participation in the Notes held by such other Lenders as shall
be necessary to cause such excess payment to be shared ratably as aforesaid
with such other Lenders; provided, that if such excess payment or part
thereof is thereafter recovered from such purchasing Lender, the related
purchases from the other Lenders shall be rescinded ratably and the purchase
price restored as to the portion of such excess payment so recovered, but
without interest.  Subject to the
participation purchase obligation above, each Lender agrees to exercise any and
all rights of setoff, counterclaim or banker’s lien first fully against any Notes
and participations therein held by such Lender, next to any other Indebtedness
of the Borrowers to such Lender arising under or pursuant to this Agreement and
to any participations held by such Lender in Indebtedness of the Borrowers
arising under or pursuant to this Agreement, and only then to any other
Indebtedness of any Borrower to such Lender.

Section 8.12                                Advice to Lenders.  The
Administrative Agent shall forward to the Lenders copies of all notices,
financial reports and other material communications received hereunder from the
Borrowers by it as Administrative Agent, excluding, however, notices, reports
and communications which by the terms hereof are to be furnished by the
Borrowers directly to each Lender.

Section 8.13                                Defaulting Lender.

(a)                                  Remedies Against a Defaulting Lender.  In
addition to the rights and remedies that may be available to the Administrative
Agent or the Borrowers’ Agent under this Agreement or applicable law, if at any
time a Lender is a Defaulting Lender such Defaulting Lender’s right to
participate in the administration of the Loans, this Agreement and the other
Loan Documents, including without limitation, any right to vote in respect of,
to consent to or to direct any action or inaction of the Administrative Agent
or to be taken into account in the calculation of the Required Lenders, shall
be suspended while such Lender remains a Defaulting Lender.  If a Lender is a Defaulting Lender because it
has failed to make timely payment to the Administrative Agent of any amount required
to be paid to the Administrative Agent hereunder (without giving effect to any
notice or cure periods), in addition to other rights and remedies which the
Administrative Agent or the Borrower may have under the immediately preceding
provisions or otherwise, the Administrative Agent shall be entitled (i) to
collect interest from such Defaulting Lender on such delinquent payment for the
period from the date on which the payment was due until the date on which the
payment is made at the overnight Federal Funds rate, (ii) to withhold or setoff
and to apply in satisfaction of the defaulted payment and any related interest,
any amounts otherwise

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payable to such Defaulting
Lender under this Agreement or any other Loan Document until such defaulted
payment and related interest has been paid in full and such default no longer
exists and (iii) to bring an action or suit against such Defaulting Lender in a
court of competent jurisdiction to recover the defaulted amount and any related
interest.  Any amounts received by the
Administrative Agent in respect of a Defaulting Lender’s Loans shall not be
paid to such Defaulting Lender and shall be held uninvested by the
Administrative Agent and either applied against the purchase price of such
Loans under the following subsection (b) or paid to such Defaulting Lender upon
the default of such Defaulting Lender being cured.

(b)                                 Purchase from Defaulting Lender.  Any
Lender that is not a Defaulting Lender shall have the right, but not the
obligation, in its sole discretion, to acquire all of a Defaulting Lender’s
Commitments.  If more than one Lender
exercises such right, each such Lender shall have the right to acquire such
proportion of such Defaulting Lender’s Commitments on a pro rata basis.  Upon any such purchase, the Defaulting Lender’s
interest in its Loans and its rights hereunder (but not its liability in
respect thereof or under the Loan Documents or this Agreement to the extent the
same relate to the period prior to the effective date of the purchase) shall
terminate on the date of purchase, and the Defaulting Lender shall promptly
execute all documents reasonably requested to surrender and transfer such
interest to the purchaser thereof subject to and in accordance with the
requirements set forth in 9.6, including an Assignment in form reasonably
acceptable to the Administrative Agent. 
The purchase price for the Commitments of a Defaulting Lender shall be
equal to the amount of the principal balance of the Loans outstanding and owed
by the Borrower to the Defaulting Lender. The purchaser shall pay to the
Defaulting Lender in Immediately Available Funds on the date of such purchase
the principal of and accrued and unpaid interest and fees on the Loans made by
such Defaulting Lender hereunder (it being understood that such accrued and
unpaid interest and fees may be paid pro rata to the purchasing Lender and the
Defaulting  Lender by the Administrative
Agent at a subsequent date upon receipt of payment of such amounts from the Borrower).  Prior to payment of such purchase price to a
Defaulting Lender, the Administrative Agent shall apply against such purchase
price any amounts retained by the Administrative Agent pursuant to the last
sentence of the immediately preceding subsection (a).  The Defaulting Lender shall be entitled to
receive amounts owed to it by the Borrower under the Loan Documents which
accrued prior to the date of the default by the Defaulting Lender, to the
extent the same are received by the Administrative Agent from or on behalf of
the Borrower.  There shall be no recourse
against any Lender or the Administrative Agent for the payment of such sums
except to the extent of the receipt of payments from any other party or in
respect of the Loans.

Section 8.14                                Resignation.  If at any time CoBank shall
deem it advisable, in its sole discretion, it may submit to each of the Lenders
and the Borrowers’ Agent a written notification of its resignation as
Administrative Agent under this Agreement, such resignation to be effective
upon the appointment of a successor Administrative Agent, but in no event later
than 30 days from the date of such notice. 
Upon submission of such notice, the Required Lenders may appoint a
successor Administrative Agent.

ARTICLE IX

MISCELLANEOUS

Section 9.1                                      Modifications. 
Neither this Agreement, any other Loan Document, nor any terms hereof or
thereof may be amended, supplemented or modified except in accordance with the
provisions of this Section 9.1.  The
Required Lenders and each Borrower party to the relevant Loan Document may, or
with the written consent of the Required Lenders, the Administrative Agent and
each such Borrower may, from time to time, (i) enter into written amendments,
supplements or modifications hereto and to the other

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Loan
Documents for the purpose of adding any provisions to this Agreement or the
other Loan Documents or changing in any manner the rights of the Lenders or of
the Borrowers hereunder or thereunder or (ii) waive, on such terms and
conditions as the Required Lenders or the Administrative Agent, as the case may
be, may specify in such instrument, any of the requirements of this Agreement
or the other Loan Documents or any Default or Event of Default and its
consequences; provided, however, no such amendment, modification,
waiver or consent shall:

(a)                                  Reduce the rate or extend the time of payment
of interest thereon, or reduce the amount of the principal thereof, or modify
any of the provisions of any Note with respect to the payment or repayment
thereof, without the consent of the holder of each Note so affected; or

(b)                                 Increase the amount or extend the time of any
Commitment of any Lender, without the consent of such Lender; or

(c)                                  Reduce the rate or extend the time of payment
of any fee payable to a Lender, without the consent of the Lender affected; or

(d)                                 Except as may otherwise be expressly provided
in any of the other Loan Documents, release any material portion of collateral
securing, or any guaranties for, all or any part of the Obligations without the
consent of all the Lenders; or

(e)                                  Amend the definition of Required Lenders or
otherwise reduce the percentage of the Lenders required to approve or
effectuate any such amendment, modification, waiver, or consent, without the
consent of all the Lenders; or

(f)                                    Require the consent of any Lender (i) other than
the Revolving Lenders if such amendment, waiver or consent relates solely to
the Revolving Loans, (ii) other than the Tranche A Term Lenders if such
amendment, waiver or consent relates solely to the Tranche A Term Loans, or
(iii) other the Tranche B Term Lenders if such amendment, waiver or consent
relates solely to the Tranche B Term Loans

(g)                                 Amend any of the foregoing Subsections (a)
through (f) of this Section or this Subsection (g) without the consent of all
the Lenders; or

(h)                                 Amend any provision of this Agreement
relating to the Administrative Agent (in its capacity as agent for the Lenders)
without the consent of the Administrative Agent; or

(i)                                     Amend any provision of this Agreement
relating to the issuance of Letters of Credit without the consent of the
Administrative Agent.

(j)                                     Amend any provision of this Agreement
relating to the Swing Line Loans without the consent of the Swing Line Lender.

Section 9.2                                      Expenses. Whether or not the transactions contemplated hereby are consummated,
the Borrowers agree to reimburse the Administrative Agent upon demand for all
reasonable out-of-pocket expenses paid or incurred by the
Administrative Agent (including the fees and expenses of Dorsey & Whitney
LLP, counsel to the Administrative Agent, and any filing and recording costs)
in connection with the negotiation, preparation, approval, review, execution,
delivery, administration, amendment, modification and interpretation of this
Agreement and the other Loan Documents and any commitment letters relating thereto.  The Borrowers shall also reimburse the
Administrative Agent and each Lender upon demand for all reasonable out-of-pocket
expenses (including

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expenses
of legal counsel) paid or incurred by the Administrative Agent or any Lender in
connection with the collection and enforcement of this Agreement and any other
Loan Document. The obligations of the Borrowers under this Section shall
survive any termination of this Agreement.

Section 9.3                                      Waivers, etc.  No
failure on the part of the Administrative Agent or the holder of a Note to
exercise and no delay in exercising any power or right hereunder or under any
other Loan Document shall operate as a waiver thereof; nor shall any single or
partial exercise of any power or right preclude any other or further exercise
thereof or the exercise of any other power or right.  The remedies herein and in the other Loan
Documents provided are cumulative and not exclusive of any remedies provided by
law.

Section 9.4                                      Notices.  Except when telephonic notice
is expressly authorized by this Agreement, any notice or other communication to
any party in connection with this Agreement shall be in writing and shall be
sent by manual delivery, facsimile transmission, overnight courier or United
States mail (postage prepaid) addressed to such party at the address specified
on the signature page hereof, or at such other address as such party shall have
specified to the other party hereto in writing. 
All periods of notice shall be measured from the date of delivery
thereof if manually delivered, from the date of sending thereof if sent by
facsimile transmission, from the first Business Day after the date of sending
if sent by overnight courier, or from four days after the date of mailing if
mailed; provided, however, that any notice to the Administrative
Agent or any Lender under Article II hereof shall be deemed to have been given
only when received by the Administrative Agent or such Lender.

Section 9.5                                      Taxes.  The Borrowers agrees to pay,
and save the Administrative Agent and the Lenders harmless from all liability
for, any stamp or other taxes which may be payable with respect to the
execution or delivery of this Agreement or the issuance of the Notes, which
obligation of the Borrowers shall survive the termination of this Agreement.

Section 9.6                                      Successors and Assigns; Participations;
Purchasing Lenders.

(a)                                  This Agreement shall be binding upon and
inure to the benefit of the Borrowers, the Administrative Agent, the Lenders,
all future holders of the Notes, and their respective successors and assigns,
except that the Borrowers may not assign or transfer any of their rights or
obligations under this Agreement without the prior written consent of  each Lender.

(b)                                 Any Lender may, in the ordinary course of its
commercial banking business and in accordance with applicable law, at any time
sell to one or more banks or other financial institutions (“Participants”)
participating interests in a minimum amount of $250,000 in any Revolving Loan
or any Term Loan or other Obligation owing to such Lender, any Revolving Note
or any Term Note held by such Lender, and any Revolving Commitment or any Term
Loan Commitment of such Lender, or any other interest of such Lender
hereunder.  In the event of any such sale
by any Lender of participating interests to a Participant, (i) such Lender’s
obligations under this Agreement to the other parties to this Agreement shall
remain unchanged, (ii) such Lender shall remain solely responsible for the
performance thereof, (iii) such Lender shall remain the holder of any such
Revolving Note or any such Term Note for all purposes under this Agreement,
(iv) the Borrowers, the Borrowers’ Agent and the Administrative Agent shall
continue to deal solely and directly with such Lender in connection with such
Lender’s rights and obligations under this Agreement and (v) the agreement
pursuant to which such Participant acquires its participating interest herein
shall provide that such Lender shall retain the sole right and responsibility
to enforce the Obligations, including, without limitation the right to consent
or agree to any amendment, modification, consent or waiver with respect to this
Agreement or any other Loan Document, provided that such agreement may provide
that such Lender will not

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consent or agree to any such
amendment, modification, consent or waiver with respect to the matters set
forth in Sections 9.1(a) through (e) without the prior consent of such
Participant.  Each Borrower agrees that
if amounts outstanding under this Agreement, the Revolving Notes, the Term
Notes and the Loan Documents are due and unpaid, or shall have been declared or
shall have become due and payable upon the occurrence of an Event of Default,
each Participant shall be deemed to have, to the extent permitted by applicable
law, the right of setoff in respect of its participating interest in amounts
owing under this Agreement and any Revolving Note, any Term Note or other Loan
Document to the same extent as if the amount of its participating interest were
owing directly to it as a Lender under this Agreement or any Revolving Note,
any Term Note or other Loan Document; provided, that such right of
setoff shall be subject to the obligation of such Participant to share with the
Lenders, and the Lenders agree to share with such Participant, as provided in
Section 8.11.  Each Borrower also agrees
that each Participant shall be entitled to the benefits of Sections 2.18, 2.19,
2.20, 2.21 and 9.2 with respect to its participation in the Revolving
Commitments, Term Loan Commitments, Revolving Loans and Term Loans; provided,
that no Participant shall be entitled to receive any greater amount pursuant to
such subsections than the transferor Lender would have been entitled to receive
in respect of the amount of the participation transferred by such transferor
Lender to such Participant had no such transfer occurred.

(c)                                  Each Lender may, from time to time, with the
consent of the Administrative Agent and the Borrowers’ Agent (neither of which
consents shall be unreasonably withheld or delayed; and if an Event of Default
shall have occurred and be continuing, then consent of the Borrowers’ Agent
shall not be required), assign to other lenders (“Assignees”) all or
part of its rights or obligations hereunder or under any Loan Document in a
minimum amount of $1,000,000 evidenced by any Revolving Note then held by that
Lender, together with equivalent proportions of its Revolving Commitment, any
Term Note then held by that Lender, its Term Loan Commitment pursuant to
written agreements executed by such assigning Lender, such Assignee(s), the
Borrowers and the Administrative Agent in substantially the form of Exhibit
H, which agreements shall specify in each instance the portion of the
Obligations evidenced by the Revolving Notes and Term Notes which is to be
assigned to each Assignee and the portion of the Revolving Commitment and Term
Loan Commitment of such Lender to be assumed by each Assignee (each, an “Assignment
Agreement”); provided, however, that the assigning Lender
must pay to the Administrative Agent a processing and recordation fee of $3,500
per assignment.  Upon the execution of
each Assignment Agreement by the assigning Lender, the relevant Assignee, the
Borrowers and the Administrative Agent, payment to the assigning Lender by such
Assignee of the purchase price for the portion of the Obligations being
acquired by it and receipt by the Borrowers’ Agent of a copy of the relevant
Assignment Agreement, (x) such Assignee lender shall thereupon become a “Lender”
for all purposes of this Agreement with a pro rata share of the Revolving
Commitment and a Term Loan Commitment in the amount set forth in such
Assignment Agreement and with all the rights, powers and obligations afforded a
Lender under this Agreement, (y) such assigning Lender shall have no further
liability for funding the portion of its Commitment assumed by such Assignee
and (z) the address for notices to such Assignee shall be as specified in the
Assignment Agreement executed by it. 
Concurrently with the execution and delivery of each Assignment Agreement,
the assigning Lender shall surrender to the Administrative Agent the Revolving
Note and Term Note a portion of which is being assigned, and the Borrowers
shall execute and deliver a Revolving Note and Term Note to the Assignee in the
amount of  its Revolving Commitment and
its Term Loan Commitment, respectively, and a new Revolving Note and Term Note
to the assigning Lender in the amount of its Revolving Commitment and Term Loan
Commitment, respectively, after giving effect to the reduction occasioned by
such assignment, all such Notes to constitute “Revolving Notes” and “Term Notes”
for all purposes of this Agreement and of the other Loan Documents.

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(d)                                 The Borrowers shall not be liable for any
costs incurred by the Lenders in effecting any participation under subparagraph
(b) of this subsection or by the Lenders in effecting any assignment under
subparagraph (c) of this subsection except with respect to the Administrative
Agent as provided in this Section 9.6.

(e)                                  Each Lender may disclose to any Assignee or
Participant and to any prospective Assignee or Participant any and all
financial information in such Lender’s possession concerning the Borrowers or
any of their Subsidiaries (if any) which has been delivered to such Lender by
or on behalf of the Borrowers or any of their Subsidiaries pursuant to this
Agreement or which has been delivered to such Lender by or on behalf of the
Borrowers or any of their Subsidiaries in connection with such Lender’s credit
evaluation of such Borrower or any of its Subsidiaries prior to entering into
this Agreement, provided that prior to disclosing such information, such
Lender shall first obtain the agreement of such prospective Assignee or
Participant to comply with the provisions of Section 9.7.

(f)                                    Notwithstanding any other provision in this
Agreement, any Lender may at any time create a security interest in, or pledge,
all or any portion of its rights under and interest in this Agreement and any
note held by it in favor of any federal reserve bank in accordance with Regulation
A of the Board or U. S. Treasury Regulation 31 CFR § 203.14, and such Federal
Reserve Bank may enforce such pledge or security interest in any manner
permitted under applicable law.

(g)                                 Notwithstanding any other provision in this
Agreement, (i) all Revolving Loan, Term Loan or other Obligations owing to
CoBank hereunder that are retained by CoBank for its own account and are not
part of a sale of a participation interest or the assignment of any rights or
obligations under the Loan Documents, shall be entitled to patronage
distributions in accordance with the bylaws of CoBank and its practices and
procedures related to patronage distributions and (ii) any Revolving Loan, Term
Loan or other Obligations owing to CoBank hereunder that are not retained by
CoBank for its own account and are part of a sale of a participation interest
or the assignment of any rights or obligations under the Loan Documents, shall
not be entitled to any such patronage distributions.

Section 9.7                                      Confidentiality of Information.  The
Administrative Agent and each Lender shall use reasonable efforts to assure
that information about the Borrower and its operations, affairs and financial
condition, not generally disclosed to the public or to trade and other
creditors, which is furnished to the Administrative Agent or such Lender
pursuant to the provisions hereof is used only for the purposes of this
Agreement and any other relationship between such Lender and the Borrower and
shall not be divulged to any Person other than the Lender, their Affiliates and
their respective officers, directors, employees and agents, except: (a) to
their attorneys and accountants, (b) in connection with the enforcement of the
rights of the Administrative Agent and the Lenders hereunder and under the Loan
Documents or otherwise in connection with applicable litigation, (c) in
connection with assignments and participations and the solicitation of
prospective assignees and participants referred to in the immediately preceding
Section, (d) if such information is generally available to the public other
than as a result of disclosure by the Administrative Agent or any Lender, (e)
to any direct or indirect contractual counterparty in any hedging arrangement
or such contractual counterparty’s professional advisor, (f) to any nationally
recognized rating agency that requires information about any Lender’s
investment portfolio in connection with ratings issued with respect to
such  Lender, and (g) as may otherwise
be  required or requested by any
regulatory authority having jurisdiction over the Administrative Agent or any
Lender or by any applicable law, rule, regulation or judicial process, the
opinion of any Lender’s counsel concerning the making of such disclosure to be
binding on the parties hereto.  No Lender
shall incur any liability to the Borrower by reason of any disclosure permitted
by this Section.

 66
 

 

Section 9.8                                      Governing Law and Construction.  THE
VALIDITY, CONSTRUCTION AND ENFORCEABILITY OF THIS AGREEMENT AND THE NOTES SHALL
BE GOVERNED BY THE INTERNAL LAWS OF THE STATE OF COLORADO, WITHOUT GIVING
EFFECT TO CONFLICT OF LAWS PRINCIPLES THEREOF. 
Whenever possible, each provision of this Agreement and the other Loan
Documents and any other statement, instrument 
or transaction contemplated hereby or thereby or relating hereto or
thereto shall be interpreted in such manner as to be effective and valid under
such applicable law, but, if any provision of this Agreement, the other Loan
Documents or any other statement, instrument or transaction contemplated hereby
or thereby or relating hereto or thereto shall be held to be prohibited or
invalid under such applicable law, such provision shall be ineffective only to
the extent of such prohibition or invalidity, without invalidating the
remainder of such provision or the remaining provisions of this Agreement, the
other Loan Documents or any other statement, instrument or transaction
contemplated hereby or thereby or relating hereto or thereto.

Section 9.9                                      Consent to Jurisdiction.  AT
THE OPTION OF THE ADMINISTRATIVE AGENT, THIS AGREEMENT AND THE OTHER LOAN
DOCUMENTS MAY BE ENFORCED IN ANY FEDERAL COURT OR COLORADO STATE COURT SITTING
IN CITY OR COUNTY OF DENVER; AND EACH BORROWER CONSENTS TO THE JURISDICTION AND
VENUE OF ANY SUCH COURT AND WAIVES ANY ARGUMENT THAT VENUE IN SUCH FORUMS IS
NOT CONVENIENT.  IN THE EVENT ANY
BORROWER COMMENCES ANY ACTION IN ANOTHER JURISDICTION OR VENUE UNDER ANY TORT
OR CONTRACT THEORY ARISING DIRECTLY OR INDIRECTLY FROM THE RELATIONSHIP CREATED
BY THIS AGREEMENT, THE ADMINISTRATIVE AGENT AT ITS OPTION SHALL BE ENTITLED TO
HAVE THE CASE TRANSFERRED TO ONE OF THE JURISDICTIONS AND VENUES ABOVE-DESCRIBED,
OR IF SUCH TRANSFER CANNOT BE ACCOMPLISHED UNDER APPLICABLE LAW, TO HAVE SUCH
CASE DISMISSED WITHOUT PREJUDICE.

Section 9.10                                Waiver of Jury Trial.  EACH
BORROWER, THE ADMINISTRATIVE AGENT AND EACH LENDER IRREVOCABLY WAIVES ANY AND
ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING
TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED
HEREBY OR THEREBY.

Section 9.11                                Survival of Agreement.  All
representations, warranties, covenants and agreement made by each Borrower
herein or in the other Loan Documents and in the certificates or other
instruments prepared or delivered in connection with or pursuant to this
Agreement or any other Loan Document shall be deemed to have been relied upon
by the Lenders and shall survive the making of the Loans by the Lenders and the
execution and delivery to the Lenders by the Borrowers of the Notes, regardless
of any investigation made by or on behalf of the Lenders, and shall continue in
full force and effect as long as any Obligation is outstanding and unpaid and
so long as the Commitments have not been terminated; provided, however, that
the obligations of the  under 9.2,  9.5 and 9.12 shall survive payment in full of
the Obligations and the termination of the Commitments.

Section 9.12                                Indemnification.  The
Borrowers hereby agree to defend, protect, indemnify and hold harmless the
Administrative Agent and the Lenders and their respective Affiliates and the
directors, officers, employees, attorneys and agents of the Administrative
Agent and the Lenders and their respective Affiliates (each of the foregoing
being an “Indemnitee” and all of the foregoing being collectively the “Indemnitees”)
from and against any and all claims, actions, damages, liabilities, judgments,
costs and expenses (including all reasonable fees and disbursements of counsel
which may be incurred in the investigation or defense of any matter) imposed
upon, incurred by or asserted against any Indemnitee, whether direct, indirect
or consequential and whether based on any federal, state, local or

 67
 

 

foreign
laws or regulations (including securities laws, environmental laws, commercial
laws and regulations), under common law or on equitable cause, or on contract
or otherwise:

(a)                                  by reason of, relating to or in connection
with the execution, delivery, performance or enforcement of any Loan Document,
any commitments relating thereto, or any transaction contemplated by any Loan
Document; or

(b)                                  by reason of, relating to or in connection
with any credit extended or used under the Loan Documents or any act done or
omitted by any Person, or the exercise of any rights or remedies thereunder,
including the acquisition of any collateral by the Lenders by way of
foreclosure of the Lien thereon, deed or bill of sale in lieu of such
foreclosure or otherwise;

provided,
however, that the Borrowers shall not be liable to any Indemnitee for any
portion of such claims, damages, liabilities and expenses resulting from such
Indemnitee’s gross negligence or willful misconduct.  In the event this indemnity is unenforceable
as a matter of law as to a particular matter or consequence referred to herein,
it shall be enforceable to the full extent permitted by law.

This
indemnification applies, without limitation, to any act, omission, event or
circumstance existing or occurring on or prior to the later of the Termination
Date or the date of payment in full of the Obligations, including specifically
Obligations arising under clause (b) of this Section.  The indemnification provisions set forth
above shall be in addition to any liability the Borrowers may otherwise have.  Without prejudice to the survival of any
other obligation of the Borrowers hereunder the indemnities and obligations of
the Borrowers contained in this Section shall survive the payment in full of
the other Obligations.

Section 9.13                                Captions.  The captions or headings
herein and any table of contents hereto are for convenience only and in no way
define, limit or describe the scope or intent of any provision of this
Agreement.

Section 9.14                                Entire Agreement.  This
Agreement and the other Loan Documents embody the entire agreement and
understanding between the Borrowers, the Administrative Agent and the Lenders
with respect to the subject matter hereof and thereof.  This Agreement supersedes all prior
agreements and understandings relating to the subject matter hereof.  Nothing contained in this Agreement or in any
other Loan Document, expressed or implied, is intended to confer upon any
Persons other than the parties hereto any rights, remedies, obligations or
liabilities hereunder or thereunder.

Section 9.15                                Counterparts.  This
Agreement may be executed in any number of counterparts, all of which taken
together shall constitute one and the same instrument, and any of the parties
hereto may execute this Agreement by signing any such counterpart.

Section 9.16                                Borrower Acknowledgements.  Each
Borrower hereby acknowledges that (a) it has been advised by counsel in the
negotiation, execution and delivery of this Agreement and the other Loan
Documents, (b) neither the Administrative Agent nor any Lender has any
fiduciary relationship to such Borrower, the relationship being solely that of
debtor and creditor, (c) no joint venture exists between such Borrower and the
Administrative Agent or any Lender, and (d) neither the Administrative Agent
nor any Lender undertakes any responsibility to such Borrower to review or
inform such Borrower of any matter in connection with any phase of the business
or operations of such Borrower and such Borrower shall rely entirely upon its
own judgment with respect to its business, and any review, inspection or
supervision of, or information supplied to, the Borrowers by the Administrative
Agent or any Lender is for the protection of the Lenders and neither such
Borrower nor any third party is entitled to rely thereon.

 68
 

 

Section 9.17                                Appointment of and Acceptance by Borrowers’
Agent.  Midwest Investors of Iowa, Cooperative hereby
appoints and authorizes the Borrowers’ Agent to take such action as its agent
on its behalf and to exercise such powers under the Loan Documents as are
delegated to the Borrowers’ Agent by the terms thereof, together with such
power that are reasonably incidental thereto, and Golden Oval Eggs, LLC hereby
accepts such appointment.

Section 9.18                                Relationship Among Borrowers.

(a)                                  JOINT AND SEVERAL LIABILITY.  EACH
BORROWER AGREES THAT IT IS LIABLE, JOINTLY AND SEVERALLY WITH EACH OTHER
BORROWER, FOR THE PAYMENT OF ALL OBLIGATIONS OF THE BORROWERS UNDER THIS
AGREEMENT, AND THAT THE LENDERS AND THE ADMINISTRATIVE AGENT CAN ENFORCE SUCH
OBLIGATIONS AGAINST ANY OR ALL BORROWERS, IN THE LENDERS’ OR THE ADMINISTRATIVE
AGENT’S SOLE AND UNLIMITED DISCRETION.

(b)                                 Waivers of Defenses.  The
obligations of the Borrowers hereunder shall not be released, in whole or in
part, by any action or thing which might, but for this provision of this
Agreement, be deemed a legal or equitable discharge of a surety or guarantor,
other than irrevocable payment and performance in full of the Obligations
(except for contingent indemnity and other contingent Obligations not yet due
and payable) at a time after any obligation of the Lenders hereunder to make
the Term Loans and Revolving Loans and of the Letter of Credit Bank  to issue Letters of Credit shall have expired
or been terminated and all outstanding Letters of Credit shall have expired or
the liability of the Letter of Credit Bank thereon shall have otherwise been
discharged.  The purpose and intent of
this Agreement is that the Obligations constitute the direct and primary
obligations of each Borrower and that the covenants, agreements and all
obligations of each Borrower hereunder be absolute, unconditional and
irrevocable.  Each Borrower shall be and
remain liable for any deficiency remaining after foreclosure of any mortgage,
deed of trust or security agreement securing all or any part of the
Obligations, whether or not the liability of any other Person for such
deficiency is discharged pursuant to statute, judicial decision or otherwise.

(c)                                  Other Transactions.  The
Lenders and the Administrative Agent are expressly authorized to exchange,
surrender or release with or without consideration any or all collateral and
security which may at any time be placed with it by the Borrowers or by any
other Person on behalf of the Borrowers, or to forward or deliver any or all
such collateral and security directly to the Borrowers for collection and
remittance or for credit.  No invalidity,
irregularity or unenforceability of any security for the Obligations or other
recourse with respect thereto shall affect, impair or be a defense to the
Borrowers’ obligations under this Agreement. The liabilities of each Borrower hereunder
shall not be affected or impaired by any failure, delay, neglect or omission on
the part of any Lender or the Administrative Agent to realize upon any of the
Obligations of any other Borrower to the Lenders or the Administrative Agent,
or upon any collateral or security for any or all of the  Obligations, nor by the taking by any Lender
or the Administrative Agent of (or the failure to take) any guaranty or
guaranties to secure the Obligations, nor by the taking by any Lender or the
Administrative Agent of (or the failure to take or the failure to perfect its
security interest in or other lien on) collateral or security of any kind.  No act or omission of  any Lender or the Administrative Agent,
whether or not such action or failure to act varies or increases the risk of,
or affects the rights or remedies of a Borrower, shall affect or impair the
obligations of the Borrowers hereunder.

(d)                                 Actions Not Required.  Each
Borrower, to the extent permitted by applicable law, hereby waives any and all
right to cause a marshaling of the assets of any other Borrower or any

 69
 

 

other action by any court or
other governmental body with respect thereto or to cause any Lender or the
Administrative Agent to proceed against any security for the Obligations or any
other recourse which any Lender or the Administrative Agent may have with
respect thereto and further waives any and all requirements that any Lender or
the Administrative Agent institute any action or proceeding at law or in
equity, or obtain any judgment, against any other Borrower or any other Person,
or with respect to any collateral security for the Obligations, as a condition
precedent to making demand on or 
bringing an action or obtaining and/or enforcing a judgment against,
such Borrower under this Agreement.

(e)                                  No Subrogation. 
Notwithstanding any payment or payments made by any Borrower hereunder
or any setoff or application of funds of any Borrower by any Lender or the
Administrative Agent, such Borrower shall not be entitled to be subrogated to
any of the rights of any Lender or the Administrative Agent against any other
Borrower or any other guarantor or any collateral security or guaranty or right
of offset held by any Lender or the Administrative Agent for the payment of the
Obligations, nor shall such Borrower seek or be entitled to seek any
contribution or reimbursement from any other Borrower or any other guarantor in
respect of payments made by such Borrower hereunder, until all amounts owing to
the Lenders and the Administrative Agent by the Borrowers on account of the
Obligations are irrevocably paid in full. 
If any amount shall be paid to a Borrower on account of such subrogation
rights at any time when all of the Obligations shall not have been irrevocably
paid in full, such amount shall be held by that Borrower in trust for the
Lenders and the Administrative Agent, segregated from other funds of that
Borrower, and shall, forthwith upon receipt by the Borrower, be turned over to
the Administrative Agent in the exact form received by the Borrower (duly
indorsed by the Borrower to the Administrative Agent, if required), to be
applied against the Obligations, whether matured or unmatured, in such order as
the Administrative Agent may determine.

(f)                                    Application of Payments.  Any
and all payments upon the Obligations made by the Borrowers or by any other
Person, and/or the proceeds of any or all collateral or security for any of the
Obligations, may be applied by the Lenders on such items of the Obligations as
the Lenders may elect.

(g)                                 Recovery of Payment.  If
any payment received by the Lenders or the Administrative Agent and applied to
the Obligations is subsequently set aside, recovered, rescinded or required to
be returned for any reason (including, without limitation, the bankruptcy,
insolvency or reorganization of a Borrower or any other obligor), the
Obligations to which such payment was applied shall, to the extent permitted by
applicable law, be deemed to have continued in existence, notwithstanding such
application, and each Borrower shall be jointly and severally liable for such
Obligations as fully as if such application had never been made.  References in this Agreement to amounts “irrevocably
paid” or to “irrevocable payment” refer to payments that cannot be set aside,
recovered, rescinded or required to be returned for any reason.

(h)                                 Borrowers’ Financial Condition.  Each
Borrower is familiar with the financial condition of the other Borrowers, and
each Borrower has executed and delivered this Agreement based on that Borrower’s
own judgment and not in reliance upon any statement or representation of the
Lenders or the Administrative Agent.  The
Lenders and the Administrative Agent shall have no obligation to provide any
Borrower with any advice whatsoever or to inform any Borrower at any time of
any  Lender’s actions, evaluations or
conclusions on the financial condition or any other matter concerning the
Borrowers.

(i)                                     Bankruptcy of the Borrowers.  Each
Borrower expressly agrees that, to the extent permitted by applicable law, the
liabilities and obligations of that Borrower under this Agreement

 70
 

 

shall not in any way be
impaired or otherwise affected by the institution by or against any other
Borrower or any other Person of any bankruptcy, reorganization, arrangement,
insolvency or liquidation proceedings, or any other similar proceedings for
relief under any bankruptcy law or similar law for the relief of debtors and
that any discharge of any of the Obligations pursuant to any such bankruptcy or
similar law or other law shall not diminish, discharge or otherwise affect in
any way the obligations of that Borrower under this Agreement, and that upon
the institution of any of the above actions, such obligations shall be
enforceable against that Borrower.

(j)                                     Limitation; Insolvency Laws.  As used
in this Section 9.18(j): (a) the term “Applicable Insolvency Laws” means
the laws of the United States of America or of any State, province, nation or
other governmental unit relating to bankruptcy, reorganization, arrangement,
adjustment of debts, relief of debtors, dissolution, insolvency, fraudulent
transfers or conveyances or other similar laws (including, without limitation,
11 U. S. C. §547, §548, §550 and other “avoidance” provisions of Title 11 of
the United Stated Code) as applicable in any proceeding in which the validity
and/or enforceability of this Agreement against any Borrower, or any Specified
Lien is in issue; and (b) “Specified Lien” means any security interest,
mortgage, lien or encumbrance granted by any Borrower securing the Obligations,
in whole or in part.  Notwithstanding any
other provision of this Agreement, if, in any proceeding, a court of competent
jurisdiction determines that with respect to any Borrower, this Agreement or
any Specified Lien would, but for the operation of this Section, be subject to
avoidance and/or recovery or be unenforceable by reason of Applicable
Insolvency Laws, this Agreement and each such Specified Lien shall be valid and
enforceable against such Borrower, only to the maximum extent that would not cause
this Agreement or such Specified Lien to be subject to avoidance, recovery or
unenforceability.  To the extent that any
payment to, or realization by, the Lenders or the Administrative Agent on the
Obligations exceeds the limitations of this Section and is otherwise subject to
avoidance and recovery in any such proceeding, the amount subject to avoidance
shall in all events be limited to the amount by which such actual payment or
realization exceeds such limitation, and this Agreement as limited shall in all
events remain in full force and effect and be fully enforceable against such
Borrower.  This Section is intended
solely to reserve the rights of the Lenders and the Administrative Agent
hereunder against each Borrower, in such proceeding to the maximum extent
permitted by Applicable Insolvency Laws and neither the Borrowers, any
guarantor of the Obligations nor any other Person shall have any right, claim
or defense under this Section that would not otherwise be available under
Applicable Insolvency Laws in such proceeding.

Section 9.19                                Interest Rate Limitation. Notwithstanding anything herein to the
contrary, if at any time the interest rate applicable to any Loan, together
with all fees, charges and other amounts that are treated as interest on such Loan
under applicable law (collectively, the “Charges”), shall exceed the
maximum lawful rate (the “Maximum Rate”) that may be contracted for,
charged, taken, received or reserved by the Lender holding such Loan in
accordance with applicable law, the rate of interest payable in respect of such
Loan hereunder, together with all Charges payable in respect thereof, shall be
limited to the Maximum Rate and, to the extent lawful, the interest and Charges
that would have been payable in respect of such Loan but were not payable as a
result of the operation of this Section shall be cumulated and the interest and
Charges payable to such Lender in respect of other Loans or periods shall be
increased (but not above the Maximum Rate therefor) until such cumulated amount,
together with interest thereon at the Federal Funds Effective Rate to the date
of repayment, shall have been received by such Lender.

Section 9.20                                Ratification
of Prior Transactions.  Each Borrower
acknowledges and affirms that all transactions and loans made pursuant to the
Existing Credit Agreement that took place or were

 71
 

 

advanced prior to the date hereof are ratified in all respects and
shall hereafter be governed solely by the terms of this Agreement and the
Notes.

[The next page is the signature page.]

 72

 

IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed as of the date first above written.

	
  

  	
  GOLDEN OVAL EGGS, LLC,

  
	
   

  	
  as a Borrower and the Borrowers’ Agent

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Douglas Leifermann

  	
   

  
	
   

  	
  Name:   Douglas Leifermann

  
	
   

  	
  Title:   Chief Financial Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  MIDWEST INVESTORS OF IOWA,

  COOPERATIVE, as a Borrower

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Douglas Leifermann

  	
   

  
	
   

  	
  Name:   Douglas Leifermann

  
	
   

  	
  Title:   Chief Financial Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
  Address for the Borrowers

  	
  GOECA, LP, as a Borrower

  
	
  For Purposes of Notice:

  	
  By its General Partner

  
	
   

  	
  GOEMCA, Inc.

  
	
  1800 Park Avenue East

  	
   

  
	
  P.O. Box 615

  	
  By:

  	
  /s/ Douglas Leifermann

  	
   

  
	
  Renville, MN 56284

  	
  Name:   Douglas Leifermann

  
	
  Fax: (320) 329-3276

  	
  Title:   Chief Financial Officer

  
	
  Attention: Doug Leifermann, Vice President –

  Finance

  	
   

  

 

 S-1
 

 

 

Commitment
Amounts

 

	
  Revolving:

  	
  $15,000,000

  	
  COBANK, ACB,

  
	
  Tranche A1 Term:

  	
  N/A

  	
  as a Lender and as the Administrative Agent

  
	
  Tranche A2 Term:

  	
  N/A

  	
   

  
	
  Tranche A3 Term:

  	
  N/A

  	
  By:

  	
  /s/ Jeff Doorenbos

  	
   

  
	
  Tranche B1 Term:

  	
  $7,300,000

  	
  Name:  Jeff Doorenbos

  
	
  Tranche B2 Term:

  	
  $7,700,000

  	
  Title:  Vice President

  
	
  Tranche B3 Term:

  	
  $20,000,000

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Address for funding notices:

  
	
   

  	
   

  	
  5500 South Quebec Street

  
	
   

  	
   

  	
  Greenwood Village, CO 80111

  
	
   

  	
   

  	
  P.O. Box 5110

  
	
   

  	
   

  	
  Denver, CO 80217

  
	
   

  	
   

  	
  Attention: Kelly Purtell

  
	
   

  	
   

  	
  Fax: (303) 740-4021

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Address for all other notices:

  
	
   

  	
   

  	
  Interchange Tower, Suite 300

  
	
   

  	
   

  	
  600 Highway 169 South

  
	
   

  	
   

  	
  Minneapolis, MN 55426-1219

  
	
   

  	
   

  	
  Fax: (303) 224-2582

  
	
   

  	
   

  	
  Attention: Jeff Doorenbos

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Revolving:

  	
  N/A

  	
  METROPOLITAN LIFE INSURANCE COMPANY, as a Bank

  
	
  Tranche A1 Term:

  	
  $14,700,000

  	
   

  
	
  Tranche A2 Term:

  	
  $15,300,000

  	
  By:

  	
  /s/ Steven W. Craig

  	
   

  
	
  Tranche A3 Term:

  	
  $18,000,000

  	
  Name:

  	
  Steven W. Craig

  	
   

  
	
  Tranche B1 Term:

  	
  N/A

  	
  Title:

  
	
  Tranche B2 Term:

  	
  N/A

  	
   

  
	
  Tranche B3 Term:

  	
  N/A

  	
   

  
	
   

  	
   

  	
  Address for funding notices:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Address for all other notices:

  
	
   

  	
   

  	
  4401 Westown Parkway

  
	
   

  	
   

  	
  Suite 220

  
	
   

  	
   

  	
  West Des Moines, IA 50266

  
	
   

  	
   

  	
  Fax: (515) 223-0757

  
	
   

  	
   

  	
  Attention: Tony Jennings

  
								

 

 S-2

 

ANNEX I

PRICING
GRID

Revolving Loans (numbers in parentheses constitute negative amounts)

	
  Funded Debt to EBITDA

  	
   

  	
  LIBOR Margin

  	
   

  	
  Base Margin

  	
   

  	
  Unused Fee

  	
   

  
	
  3 5.25:1.00

  	
   

  	
  3.75

  	
  %

  	
  1.50

  	
  %

  	
  0.625

  	
  %

  
	
  3 4.50:1.00 <
  5.25:1.00

  	
   

  	
  3.25

  	
  %

  	
  1.00

  	
  %

  	
  0.500

  	
  %

  
	
  3 3.75:1.00 <
  4.50:1.00

  	
   

  	
  2.75

  	
  %

  	
  0.50

  	
  %

  	
  0.500

  	
  %

  
	
  3 3.00:1.00 <
  3.75:1.00

  	
   

  	
  2.25

  	
  %

  	
  0

  	
  %

  	
  0.375

  	
  %

  
	
  3 2.25:1.00 <
  3.00:1.00

  	
   

  	
  1.75

  	
  %

  	
  (0.50

  	
  )%

  	
  0.375

  	
  %

  
	
  < 2.25:1.00

  	
   

  	
  1.25

  	
  %

  	
  (1.00

  	
  )%

  	
  0.250

  	
  %

  

 

Tranche B Term Loans, Second Tranche 2 Advance and Final
Tranche 2 Advance of Tranche A2 Term Loans and Tranche A3 Term Loans (numbers in parentheses constitute negative
amounts)

	
  Funded Debt to EBITDA

  	
   

  	
  LIBOR Margin

  	
   

  	
  Base Margin

  (Tranche B loans only)

  	
   

  
	
  3 5.25:1.00

  	
   

  	
  4.00

  	
  %

  	
  1.75

  	
  %

  
	
  3 4.50:1.00 <
  5.25:1.00

  	
   

  	
  3.50

  	
  %

  	
  1.25

  	
  %

  
	
  3 3.75:1.00 <
  4.50:1.00

  	
   

  	
  3.00

  	
  %

  	
  0.75

  	
  %

  
	
  3 3.00:1.00 <
  3.75:1.00

  	
   

  	
  2.50

  	
  %

  	
  0.25

  	
  %

  
	
  3 2.25:1.00 <
  3.00:1.00

  	
   

  	
  2.00

  	
  %

  	
  (0.25

  	
  )%

  
	
  < 2.25:1.00

  	
   

  	
  1.50

  	
  %

  	
  (0.75

  	
  )%

  

 

 

ANNEX II

RISK MANAGEMENT GRID

	
  Current Ratio

  	
   

  	
  Minimum Percentage of Eggs Contracted

  
	
  Greater than or equal to 1.25 to 1.00 but less than

  1.50 to 1.00

  	
   

  	
  3 50%

  
	
  Greater than or equal to 1.50 to 1.00 but less than

  2.00 to 1.00

  	
   

  	
  3 40%

  
	
  Greater than or equal to 2.00 to 1.00

  	
   

  	
  3 30%Exhibit
10.24

AMENDED AND RESTATED LOAN
AGREEMENT

between

AMERICAN CRYSTAL SUGAR
COMPANY, 

as Borrower,

and

COBANK, ACB, 

as Lender

July 31, 2006

 

TABLE OF CONTENTS

	
  ARTICLE I DEFINITIONS AND ACCOUNTING TERMS

  	
   

  	
  1

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 1.1

  	
   

  	
  Defined Terms

  	
   

  	
  1

  
	
  Section 1.2

  	
   

  	
  Accounting Terms and Calculations

  	
   

  	
  14

  
	
  Section 1.3

  	
   

  	
  Computation of Time Periods

  	
   

  	
  14

  
	
  Section 1.4

  	
   

  	
  Other Definitional Terms

  	
   

  	
  14

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE II TERMS OF THE CREDIT FACILITIES

  	
   

  	
  15

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 2.1

  	
   

  	
  Lending Commitments

  	
   

  	
  15

  
	
  Section 2.2

  	
   

  	
  Existing Loans

  	
   

  	
  16

  
	
  Section 2.3

  	
   

  	
  Procedure for Loans

  	
   

  	
  16

  
	
  Section 2.4

  	
   

  	
  Notes

  	
   

  	
  18

  
	
  Section 2.5

  	
   

  	
  Conversions and Continuations

  	
   

  	
  19

  
	
  Section 2.6

  	
   

  	
  Interest Rates, Interest Payments and Default
  Interest

  	
   

  	
  20

  
	
  Section 2.7

  	
   

  	
  Repayment

  	
   

  	
  21

  
	
  Section 2.8

  	
   

  	
  Prepayments

  	
   

  	
  22

  
	
  Section 2.9

  	
   

  	
  Letters of Credit

  	
   

  	
  23

  
	
  Section 2.10

  	
   

  	
  Procedures for Letters of Credit

  	
   

  	
  23

  
	
  Section 2.11

  	
   

  	
  Terms of Letters of Credit

  	
   

  	
  23

  
	
  Section 2.12

  	
   

  	
  Agreement to Repay Letter of Credit Drawings

  	
   

  	
  23

  
	
  Section 2.13

  	
   

  	
  Obligations Absolute

  	
   

  	
  24

  
	
  Section 2.14

  	
   

  	
  Fees

  	
   

  	
  25

  
	
  Section 2.15

  	
   

  	
  Computation

  	
   

  	
  25

  
	
  Section 2.16

  	
   

  	
  Payments

  	
   

  	
  25

  
	
  Section 2.17

  	
   

  	
  Use of Loan Proceeds

  	
   

  	
  26

  
	
  Section 2.18

  	
   

  	
  Interest Rate Not Ascertainable, Etc.

  	
   

  	
  26

  
	
  Section 2.19

  	
   

  	
  Increased Cost

  	
   

  	
  27

  
	
  Section 2.20

  	
   

  	
  Illegality

  	
   

  	
  27

  
	
  Section 2.21

  	
   

  	
  Capital Adequacy

  	
   

  	
  27

  
	
  Section 2.22

  	
   

  	
  Funding Losses; LIBOR Rate Advances

  	
   

  	
  28

  
	
  Section 2.23

  	
   

  	
  Discretion of Lender as to Manner of Funding

  	
   

  	
  28

  
	
  Section 2.24

  	
   

  	
  Broken Funding Surcharge

  	
   

  	
  28

  
	
  Section 2.25

  	
   

  	
  Taxes

  	
   

  	
  29

  
	
  Section 2.26

  	
   

  	
  Capitalization

  	
   

  	
  30

  
	
  Section 2.27

  	
   

  	
  Security

  	
   

  	
  30

  
	
  Section 2.28

  	
   

  	
  Security Interests

  	
   

  	
  30

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE III CONDITIONS PRECEDENT

  	
   

  	
  30

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 3.1

  	
   

  	
  Conditions Precedent to All Loans and Letters of
  Credit

  	
   

  	
  30

  

 

 i
 

 

 

	
  ARTICLE IV REPRESENTATIONS AND WARRANTIES

  	
   

  	
  33

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 4.1

  	
   

  	
  Organization, Standing, Etc.

  	
   

  	
  33

  
	
  Section 4.2

  	
   

  	
  Authorization and Validity

  	
   

  	
  33

  
	
  Section 4.3

  	
   

  	
  No Conflict; No Default

  	
   

  	
  33

  
	
  Section 4.4

  	
   

  	
  Government Consent

  	
   

  	
  34

  
	
  Section 4.5

  	
   

  	
  Financial Statements and Condition

  	
   

  	
  34

  
	
  Section 4.6

  	
   

  	
  Litigation

  	
   

  	
  34

  
	
  Section 4.7

  	
   

  	
  Environmental, Health and Safety Laws

  	
   

  	
  34

  
	
  Section 4.8

  	
   

  	
  ERISA

  	
   

  	
  34

  
	
  Section 4.9

  	
   

  	
  Federal Reserve Regulations

  	
   

  	
  35

  
	
  Section 4.10

  	
   

  	
  Title to Property; Leases; Liens; Subordination

  	
   

  	
  35

  
	
  Section 4.11

  	
   

  	
  Taxes

  	
   

  	
  35

  
	
  Section 4.12

  	
   

  	
  Trademarks, Patents

  	
   

  	
  35

  
	
  Section 4.13

  	
   

  	
  Burdensome Restrictions

  	
   

  	
  35

  
	
  Section 4.14

  	
   

  	
  Force Majeure

  	
   

  	
  35

  
	
  Section 4.15

  	
   

  	
  Investment Company Act

  	
   

  	
  36

  
	
  Section 4.16

  	
   

  	
  Public Utility Holding Company Act

  	
   

  	
  36

  
	
  Section 4.17

  	
   

  	
  Full Disclosure

  	
   

  	
  36

  
	
  Section 4.18

  	
   

  	
  Subsidiaries

  	
   

  	
  36

  
	
  Section 4.19

  	
   

  	
  Labor Matters

  	
   

  	
  36

  
	
  Section 4.20

  	
   

  	
  Solvency

  	
   

  	
  36

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE V AFFIRMATIVE COVENANTS

  	
   

  	
  37

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 5.1

  	
   

  	
  Financial Statements and Reports

  	
   

  	
  37

  
	
  Section 5.2

  	
   

  	
  Existence

  	
   

  	
  39

  
	
  Section 5.3

  	
   

  	
  Insurance

  	
   

  	
  39

  
	
  Section 5.4

  	
   

  	
  Payment of Taxes and Claims

  	
   

  	
  39

  
	
  Section 5.5

  	
   

  	
  Inspection

  	
   

  	
  39

  
	
  Section 5.6

  	
   

  	
  Maintenance of Properties

  	
   

  	
  39

  
	
  Section 5.7

  	
   

  	
  Books and Records

  	
   

  	
  39

  
	
  Section 5.8

  	
   

  	
  Compliance

  	
   

  	
  40

  
	
  Section 5.9

  	
   

  	
  ERISA

  	
   

  	
  40

  
	
  Section 5.10

  	
   

  	
  Environmental Matters; Reporting

  	
   

  	
  40

  
	
  Section 5.11

  	
   

  	
  Further Assurances

  	
   

  	
  40

  
	
  Section 5.12

  	
   

  	
  Compliance with Terms of Material Contracts

  	
   

  	
  41

  
	
  Section 5.13

  	
   

  	
  Eligibility

  	
   

  	
  41

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE VI NEGATIVE COVENANTS

  	
   

  	
  41

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 6.1

  	
   

  	
  Merger

  	
   

  	
  41

  
	
  Section 6.2

  	
   

  	
  Disposition of Assets

  	
   

  	
  41

  
	
  Section 6.3

  	
   

  	
  Plans

  	
   

  	
  41

  
	
  Section 6.4

  	
   

  	
  Change in Nature of Business

  	
   

  	
  41

  

 

 ii
 

 

 

	
  Section 6.5

  	
   

  	
  Subsidiaries

  	
   

  	
  42

  
	
  Section 6.6

  	
   

  	
  Negative Pledges

  	
   

  	
  42

  
	
  Section 6.7

  	
   

  	
  Restricted Payments

  	
   

  	
  42

  
	
  Section 6.8

  	
   

  	
  Transactions with Affiliates

  	
   

  	
  42

  
	
  Section 6.9

  	
   

  	
  Accounting Changes

  	
   

  	
  42

  
	
  Section 6.10

  	
   

  	
  Subordinated Debt

  	
   

  	
  42

  
	
  Section 6.11

  	
   

  	
  Investments

  	
   

  	
  42

  
	
  Section 6.12

  	
   

  	
  Indebtedness

  	
   

  	
  43

  
	
  Section 6.13

  	
   

  	
  Liens

  	
   

  	
  44

  
	
  Section 6.14

  	
   

  	
  Contingent Liabilities

  	
   

  	
  45

  
	
  Section 6.15

  	
   

  	
  Net Working Capital

  	
   

  	
  45

  
	
  Section 6.16

  	
   

  	
  Capitalization Ratio

  	
   

  	
  45

  
	
  Section 6.17

  	
   

  	
  Interest Coverage Ratio

  	
   

  	
  45

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE VII EVENTS OF DEFAULT AND REMEDIES

  	
   

  	
  45

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 7.1

  	
   

  	
  Events of Default

  	
   

  	
  45

  
	
  Section 7.2

  	
   

  	
  Remedies

  	
   

  	
  47

  
	
  Section 7.3

  	
   

  	
  Offset

  	
   

  	
  47

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE VIII MISCELLANEOUS

  	
   

  	
  48

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 8.1

  	
   

  	
  Modifications

  	
   

  	
  48

  
	
  Section 8.2

  	
   

  	
  Expenses

  	
   

  	
  48

  
	
  Section 8.3

  	
   

  	
  Waivers, etc.

  	
   

  	
  48

  
	
  Section 8.4

  	
   

  	
  Notices

  	
   

  	
  48

  
	
  Section 8.5

  	
   

  	
  Taxes

  	
   

  	
  49

  
	
  Section 8.6

  	
   

  	
  Successors and Assigns; Participations; Purchasing
  Lender

  	
   

  	
  49

  
	
  Section 8.7

  	
   

  	
  Confidentiality of Information

  	
   

  	
  50

  
	
  Section 8.8

  	
   

  	
  Governing Law and Construction

  	
   

  	
  50

  
	
  Section 8.9

  	
   

  	
  Consent to Jurisdiction

  	
   

  	
  51

  
	
  Section 8.10

  	
   

  	
  Waiver of Jury Trial

  	
   

  	
  51

  
	
  Section 8.11

  	
   

  	
  Survival of Agreement

  	
   

  	
  51

  
	
  Section 8.12

  	
   

  	
  Indemnification

  	
   

  	
  51

  
	
  Section 8.13

  	
   

  	
  Captions

  	
   

  	
  52

  
	
  Section 8.14

  	
   

  	
  Entire Agreement

  	
   

  	
  52

  
	
  Section 8.15

  	
   

  	
  Counterparts

  	
   

  	
  52

  
	
  Section 8.16

  	
   

  	
  Borrower Acknowledgements

  	
   

  	
  52

  
	
  Section 8.17

  	
   

  	
  Relationship Among Borrower

  	
   

  	
  53

  
	
  Section 8.18

  	
   

  	
  Interest Rate Limitation

  	
   

  	
  55

  

 

 iii
 

 

 

	
  Annexes

  	
   

  	
   

  	
   

  	
   

  
	
  Annex I

  	
   

  	
  Pricing Grid

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Schedules

  	
   

  	
   

  	
   

  	
   

  
	
  Schedule 3.l(a)

  	
   

  	
  Landlord/Bailee Locations

  	
   

  	
   

  
	
  Schedule 4.6

  	
   

  	
  Litigation

  	
   

  	
   

  
	
  Schedule 4.7

  	
   

  	
  Environmental Matters

  	
   

  	
   

  
	
  Schedule 4.18

  	
   

  	
  Subsidiaries

  	
   

  	
   

  
	
  Schedule 6.11

  	
   

  	
  Existing Investments

  	
   

  	
   

  
	
  Schedule 6.12

  	
   

  	
  Existing Indebtedness

  	
   

  	
   

  
	
  Schedule 6.13

  	
   

  	
  Existing Liens

  	
   

  	
   

  
	
  Schedule 6.14

  	
   

  	
  Existing Contingent Obligations

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Exhibits

  	
   

  	
   

  	
   

  	
   

  
	
  Exhibit A-l

  	
   

  	
  Form of Revolving Note

  	
   

  	
   

  
	
  Exhibit A-2

  	
   

  	
  Form of Term Note T01

  	
   

  	
   

  
	
  Exhibit A-3

  	
   

  	
  Form of Term Note T01NP

  	
   

  	
   

  
	
  Exhibit A-4

  	
   

  	
  Form of Term Note T06

  	
   

  	
   

  
	
  Exhibit B

  	
   

  	
  Borrowing Base Formula

  	
   

  	
   

  
	
  Exhibit C

  	
   

  	
  Form of Borrowing Base Certificate

  	
   

  	
   

  
	
  Exhibit D

  	
   

  	
  Form of Compliance Certificate

  	
   

  	
   

  
	
  Exhibit E

  	
   

  	
  Form of Bid Request

  	
   

  	
   

  

 

 iv

AMENDED AND RESTATED LOAN
AGREEMENT

THIS AMENDED AND RESTATED
LOAN AGREEMENT (this “Loan Agreement”), dated as of July 31, 2006, is by and
between AMERICAN CRYSTAL SUGAR COMPANY, a Minnesota cooperative corporation (“Borrower”),
and COBANK, ACB, a federally chartered instrumentality under the Farm Credit
Act of 1971, as amended (“Lender”). This Loan Agreement amends and
restates that certain Amended and Restated Master Loan Agreement dated as of
July 21, 2003, which amended and restated that certain Master Loan Agreement
dated as of March 31, 2000.

ARTICLE I

DEFINITIONS AND ACCOUNTING TERMS

Section 1.1 Defined
Terms. As used in this Agreement the following terms shall have the
following respective meanings (and such meanings shall be equally applicable to
both the singular and plural form of the terms defined, as the context may
require):

“Adjusted LIBOR Rate”:
With respect to each day, the rate (rounded upward, if necessary, to the next
one hundredth of one percent) determined by dividing the LIBOR Rate in effect
on such day by 1.00 minus the LIBOR Reserve Percentage.

“Advance”: Any
portion of the outstanding Loans as to which one of the available interest rate
options and, if pertinent, an Interest Period, is applicable. Subject to the
terms and conditions hereof, an Advance may be a LIBOR Rate Advance, a Quoted
Rate Advance or a Base Rate Advance.

“Affiliate”: When
used with reference to any Person, (a) each Person that, directly or
indirectly, controls, is controlled by or is under common control with, the Person
referred to, (b) each Person which beneficially owns or holds, directly or
indirectly, five percent or more of any class of voting Equity Interests of the
Person referred to, (c) each Person, five percent or more of the voting Equity
Interests (or if such Person is not a corporation, five percent or more of the
equity interest) of which is beneficially owned or held, directly or
indirectly, by the Person referred to, and (d) each of such Person’s officers,
directors, joint venturers and partners. The term control (including the terms “controlled
by” and “under common control with”) means the possession, directly, of the
power to direct or cause the direction of the management and policies of the
Person in question.

“Applicable Commitment
Fee Percentage”: The Applicable Margin at which the Term Loan Commitment
Fees accrue, as set forth and described in Annex I.

“Applicable Margin”:
Subject to the last sentence of this definition, with respect to computation of
the applicable interest rate or the Applicable Commitment Fee Percentage on
Advances under the Term Loans, as the case may be, the margin payable by
Borrower with respect thereto, as set forth and described in Annex I.
The initial Applicable Margin shall be

 

determined by reference to Borrower’s Compliance
Certificate and related financial statements as of the Closing Date, and
continuing each Fiscal Quarter thereafter, the Applicable Margin shall be
determined by the Compliance Certificate required by Section 5.1 as of Borrower’s
last Fiscal Quarter; provided, however, that any adjustment in
the Applicable Margin shall not become effective until the Agent shall have
received the Compliance Certificate and related financial statements relating
to the last Fiscal Quarter end pursuant to Sections 5.1(c) and (d)
hereof. If a Compliance Certificate and related financial statements of
Borrower and a related certification of Borrower pursuant to Sections 5.1(c)
and (d) necessary to establish the Applicable Margin hereunder are not
received by the Agent on or prior to the date required pursuant to Sections
5.1(c) and (d) hereof,
at the Lender’s sole discretion, the Applicable Margin shall be determined at
the highest level described in Annex I and shall remain in effect until
one Banking Day after such time as the required financial statements are
received.

“Average Interest
Expense”: Interest Expense for the most recent twelve (12) Fiscal Quarters,
divided by four (4).

“Average Net Funds
Generated”: The sum of the following for the most recent twelve (12) Fiscal
Quarters, divided by four (4):

(a)                                  Unit
retains, retained patronage, 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

(b)                                 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.

“Banking Day”: Any
day of the year on which commercial banks in New York, New York and Denver,
Colorado are not required or authorized to close.

“Base Rate”: 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. 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.

“Base Rate Advance”:
An Advance with respect to which the interest rate is determined by reference
to the Base Rate.

 2
 

 

“Board”: The Board
of Governors of the Federal Reserve System or any successor thereto.

“Borrower”: As
defined in the opening paragraph hereof.

“Borrowing Base”:
As determined in accordance with the formula set forth in Exhibit B hereto.

“Borrowing Base
Certificate”: A certificate in the form of Exhibit C hereto.

“Borrowing Base
Deficiency”: At the time of any determination, the amount, if any, by which
Total Revolving Outstandings exceed the Borrowing Base.

“Broken Funding
Surcharge”: As defined in Section 2.24.

“Capital Expenditures”:
For any period, the sum of all amounts that would, in accordance with GAAP, be
included as additions to property, plant and equipment on a consolidated
statement of cash flows for the Borrower during such period, in respect of (a)
the acquisition, construction, improvement, replacement or betterment of land,
buildings, machinery, equipment or of any other fixed assets or leaseholds, (b)
to the extent related to and not included in (a) above, materials, contract
labor (excluding expenditures properly chargeable to repairs or maintenance in
accordance with GAAP), and (c) other capital expenditures and other uses
recorded as capital expenditures or similar terms having substantially the same
effect.

“Capitalization”:
The sum of shareholders’ equity and Indebtedness.

“Capitalization Ratio”:
For any period of determination, the ratio of

(a)                                  long
term debt in accordance with GAAP (excluding current maturities),

to

(b)                                 the
sum of long term debt (excluding current maturities) plus equity, all in
accordance with GAAP.

“Capitalized Lease”:
A lease of (or other agreement conveying the right to use) real or personal
property with respect to which at least a portion of the rent or other amounts
thereon constitute Capitalized Lease Obligations.

“Capitalized Lease
Obligations”: As to any Person, the obligations of such Person to pay rent
or other amounts under a lease of (or other agreement conveying the right to
use) real or personal property which obligations are required to be classified
and accounted for as a capital lease on a balance sheet of such Person under
GAAP (including Statement of Financial Accounting Standards No. 13 of the
Financial Accounting Standards Board), and, for purposes of

 3
 

 

this Agreement, the amount of such obligations shall
be the capitalized amount thereof, determined in accordance with GAAP
(including such Statement No. 13).

“Change of Control”:
The occurrence, after the Closing Date, of any of the following circumstances:
(a) any Person or two or more Persons acting in concert (other than the current
holders of the Equity Interests of the Borrower) acquiring beneficial ownership
(within the meaning of Rule 13d-3 of the Securities and Exchange Commission
under the Securities Exchange Act of 1934), directly or indirectly, of Equity
Interests of the Borrower representing 50% or more of the combined voting power
of all Equity Interests of Borrower entitled to vote in the election of
directors; or (b) any Person or two or more Persons acting in concert (other
than the current holders of the Equity Interests of the Borrower) acquiring by
contract or otherwise, or entering into a contract or arrangement which upon
consummation will result in its or their acquisition of, control over Equity
Interests of the Borrower representing 50% or more of the combined voting power
of all Equity Interests of Borrower entitled to vote in the election of
directors.

“Charges”: As
defined in Section 8.18.

“Closing Date”:
The date in the opening paragraph hereof.

“CoBank Equities”:
As defined in Section 2.27.

“Code”: The
Internal Revenue Code of 1986, as amended.

“Commitments”: The
Revolving Loan, Term Loans and Existing Loans.

“Contingent Obligation”:
With respect to any Person at the time of any determination, without
duplication, any obligation, contingent or otherwise, of such Person
guaranteeing or having the economic effect of guaranteeing any Indebtedness of
any other Person (the “primary obligor”) in any manner, whether directly or
otherwise: (a) to purchase or pay (or advance or supply funds for the purchase
or payment of) such Indebtedness or to purchase (or to advance or supply funds
for the purchase of) any direct or indirect security therefor, (b) to purchase
property, securities, Equity Interests or services for the purpose of assuring
the owner of such Indebtedness of the payment of such Indebtedness, (c) to
maintain working capital, equity capital or other financial statement condition
of the primary obligor so as to enable the primary obligor to pay such
Indebtedness or otherwise to protect the owner thereof against loss in respect
thereof, or (d) entered into for the purpose of assuring in any manner the
owner of such Indebtedness of the payment of such Indebtedness or to protect
the owner against loss in respect thereof; provided, that the term “Contingent
Obligation” shall not include endorsements for collection or deposit, in each
case in the ordinary course of business.

“Current Assets”:
As of any date, the consolidated current assets of the Borrower, determined in
accordance with GAAP.

 4
 

 

“Current Liabilities”:
As of any date, the consolidated current liabilities of the Borrower,
determined in accordance with GAAP.

“Default”: The
occurrence or existence of (a) an event which through the passage of time or
the service of notice or both would (assuming no action is taken by the
Borrower or any other Person to cure the same) mature into an Event of Default,
(b) an event which requires neither the passage of time nor the service of
notice to mature into an Event of Default, or (c) the occurrence of a breach or
a default of any Material Indebtedness.

“Default Rate”:
The rate that is equal to the Base Rate then in effect plus two percent (2%).

“Eligible Accounts
Receivable:” Accounts Receivables of the Borrower 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 the Borrower; (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 Lender; and (8) are not
government receivables. the above provisions notwithstanding, Accounts
Receivables shall also exclude (i) any accounts that are past due more than 90 days,
and (ii) any contra account regardless of the date.

“Eligible Net
Inventory”: Inventory of the Borrower as determined on the basis of “Net
Realizable Value,” less crop payments owing to members and non-members of the
Borrower. “Net Realizable Value” is defined as the expected selling price of an
inventory item less expected costs to complete and dispose, as determined in
accordance with GAAP.

“Equity Interests”:
All shares, interests, participation or other equivalents, however designated,
of or in a corporation or limited liability company, whether or not voting,
including but not limited to common stock, member interests, warrants,
preferred stock, convertible debentures, and all agreements, instruments and
documents convertible, in whole or in part, into any one or more or all of the
foregoing.

“ERISA”: The
Employee Retirement Income Security Act of 1974, as amended.

“Event of Default”:
Any event described in Section 7.1.

“Existing Loans”:
Existing Term Loan T03NP and Existing Term Loan T04.

“Existing Term Loan
T03NP”: As defined in Section 2.2.

“Existing Term Loan
T04”: As defined in Section 2.2.

 5
 

 

“Federal Funds Rate”:
For any period, a fluctuating interest rate per annum equal for each day during
such period to the weighted average of the rates on overnight Federal funds
transactions, with members of the Federal Reserve System arranged by Federal
funds brokers, as published for such day (or, if such day is not a Banking Day,
for the next preceding Banking Day) by the Federal Reserve Bank of New York,
or, if such rate is not so published for any day that is a Banking Day, the
average of the quotations for such day on such transactions received by the
Lender from three Federal funds brokers of recognized standing selected by it.

“Fiscal Quarter”:
Each three (3) month period beginning on the first day of each September,
December, March and June.

“GAAP”: Generally
accepted accounting principles set forth in the opinions and pronouncements of
the Accounting Principles Board of the American Institute of Certified Public
Accountants and statements and pronouncements of the Financial Accounting
Standards Board or in such other statements by such other entity as may be
approved by a significant segment of the accounting profession, which are
applicable to the circumstances as of any date of determination.

“Immediately Available
Funds”: Funds with good value on the day and in the city in which payment
is received.

“Indebtedness”:
With respect to any Person at the time of any determination, without
duplication, all obligations, contingent or otherwise, of such Person which in
accordance with GAAP should be classified upon the balance sheet of such Person
as liabilities, but in any event including: (a) all obligations of such Person
for borrowed money (including non-recourse obligations), (b) all obligations of
such Person evidenced by bonds, debentures, notes or other similar instruments,
(c) all obligations of such Person upon which interest charges are customarily
paid or accrued, (d) all obligations of such Person under conditional sale or
other title retention agreements relating to property purchased by such Person,
(e) all obligations of such Person issued or assumed as the deferred purchase
price of property or services, (f) all obligations of others secured by any
Lien on property owned or acquired by such Person, whether or not the
obligations secured thereby have been assumed, (g) all Capitalized Lease
Obligations of such Person, (h) all obligations of such Person in respect of
interest rate swap agreements, cap or collar agreements, interest rate futures
or option contracts, currency swap agreements, currency futures or option
agreements and other similar contracts (i) all obligations of such Person,
actual or contingent, as an account party in respect of letters of credit or
bankers’ acceptances, (j) all obligations of any partnership or joint venture
as to which such Person is or may become personally liable, (k) all obligations
of such Person under any Equity Interests issued by such Person, and (1) all
Contingent Obligations of such Person.

“Indemnitee”: As
defined in Section 8.12.

“Intercreditor
Agreement”: That certain Intercreditor and Collateral Agency Agreement
dated as of September 15, 1998, by and among St. Paul Bank for Cooperatives, as
Collateral

 6
 

 

Agent, St. Paul Bank for Cooperatives, as Bank Lender,
the Noteholders party thereto and the Additional Creditors party thereto.

“Interest Coverage
Ratio”: For any period of determination, the ratio of

(a)                                  Average
Net Funds Generated plus Average Interest Expense,

to

(b)                                 Average
Interest Expense.

“Interest Expense”:
For any period of determination, the aggregate consolidated amount, without
duplication, of interest paid, accrued or scheduled to be paid in respect of
any Indebtedness of the Borrower and its Subsidiaries, including (a) all but
the principal component of payments in respect of conditional sale contracts,
Capitalized Leases and other title retention agreements, (b) commissions,
discounts and other fees and charges with respect to letters of credit and
bankers’ acceptance financings and (c) net costs under interest rate protection
agreements, in each case determined in accordance with GAAP.

“Interest Period”:
With respect to each LIBOR Rate Advance, the period commencing on the date of
such Advance or on the last day of the immediately preceding Interest Period,
if any, applicable to an outstanding Advance and ending one month, two months,
three months, six months or one year thereafter, as the Borrower may elect in
the applicable notice of borrowing, continuation or conversion; provided
that:

(1)           Any Interest Period that would
otherwise end on a day which is not a LIBOR Banking Day shall be extended to
the next succeeding LIBOR Banking Day unless such LIBOR Banking Day falls in
another calendar month, in which case such Interest Period shall end on the
next preceding LIBOR Banking Day;

(2)           Any Interest Period that begins on
the last LIBOR Banking Day of a calendar month (or a day for which there is no
numerically corresponding day in the calendar month at the end of such Interest
Period) shall end on the last LIBOR Banking Day of a calendar month; and

(3)           Any Interest Period that would
otherwise end after the Termination Date shall end on the Termination Date.

For purposes of determining an Interest Period, a
month means a period starting on one day in a calendar month and ending on the
numerically corresponding day in the next calendar month; provided, however,
that if there is no numerically corresponding day in the month in which such an
Interest Period is to end or if such an Interest Period begins on the last
Banking Day of a calendar month, then such Interest Period shall end on the
last Banking Day of the calendar month in which such Interest Period is to end.

 7
 

 

“Investment”: The
acquisition, purchase, making or holding of any Equity Interests or other
security, any loan, advance, contribution to capital, extension of credit
(except for trade and customer accounts receivable for inventory sold or
services rendered in the ordinary course of business and payable in accordance
with customary trade terms, and Investments of less than $7,500,000), any
acquisitions of real or personal property (other than real and personal
property acquired in the ordinary course of business) and any purchase or
commitment or option to purchase Equity Interests, securities or other debt of
or any interest in another Person or any integral part of any business or the
assets comprising such business or part thereof and the formation of, or entry
into, any partnership as a limited or general partner or the entry into any
joint venture. The amount of any Investment shall be the original cost of such
Investment plus the cost of all additions thereto, without any adjustments for
increases or decreases in value, or write-ups, write-downs or write-offs with
respect to such Investment.

“Lender”: As
defined in the opening paragraph hereof.

“Letter of Credit”:
A Seasonal Letter of Credit, Term Letter of Credit, or both.

“Letter of Credit Fees”:
As defined in Section 2.14(c).

“Leverage Ratio”:
For any period of determination, the ratio of

(a)                                  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 required under Section 6.15,

to

(b)                                 total
members investments plus estimated unit retains and retained patronage.

“LIBOR Banking Day”:
A Banking Day which is also a day for trading by and between banks in United
States dollar deposits in the interbank Eurodollar market and a day on which
banks are open for business in New York City.

“LIBOR Rate”: With
respect to each Interest Period applicable to a LIBOR Rate Advance, the average
offered rate for deposits in United States dollars (rounded upward, if
necessary, to the next one hundredth of one percent) for delivery of such
deposits on the first day of such Interest Period, for the number of days in
such Interest Period, which appears on Telerate page 3750 as of 11:00 A.M.,
London time (or such other time as of which such rate appears) two LIBOR
Banking Days prior to the first day of such Interest Period, or the rate for
such deposits determined by the Lender at such time based on such other
published service of general application as shall be selected by the Lender for
such purpose; provided, that in lieu of determining the rate in the
foregoing manner, the Lender may determine the rate based on rates at which
United States dollar deposits are offered to the Lender in the interbank
Eurodollar market at such time for delivery in Immediately Available Funds on
the first day of such Interest

 8
 

 

Period in an
amount approximately equal to the Advance by the Lender to which such Interest
Period is to apply (rounded upward, if necessary, to the next one hundredth of
one percent). “Telerate page 3750” means the display designated as such on the
Telerate reporting system operated by Telerate System Incorporated (or such
other page as may replace page 3750 for the purpose of displaying London
interbank offered rates of major banks for United States dollar deposits).

“LIBOR Rate Advance”:
An Advance with respect to which the interest rate is determined by applying
the Adjusted LIBOR Rate.

“LIBOR Reserve
Percentage”: As of any day, that percentage (expressed as a decimal) which
is in effect on such day, as prescribed by the Board for determining the
maximum reserve requirement (including any basic, supplemental or emergency
reserves) for a member bank of the Federal Reserve System, with deposits
comparable in amount to those held by the Lender, in respect of “Eurocurrency
Liabilities” as such term is defined in Regulation D of the Board. The rate of
interest applicable to any outstanding Revolving Loans shall be adjusted
automatically on and as of the effective date of any change in the LIBOR
Reserve Percentage.

“Lien”: With
respect to any Person, any security interest, mortgage, pledge, lien, charge,
encumbrance, title retention agreement or analogous instrument or device
(including the interest of each lessor under any Capitalized Lease), in, of or on
any assets or properties of such Person, now owned or hereafter acquired,
whether arising by agreement or operation of law.

“Loan”: The
Revolving Loan, Term Loan T01, Term Loan T01NP or Term Loan T06 (collectively
referred to as the “Loans”).

“Loan Documents”:
This Agreement, the Notes, agreements evidencing the Existing Loans and the
Security Documents.

“Material Adverse
Occurrence”: Any occurrence of whatsoever nature (including, without
limitation, any adverse determination in any litigation, arbitration, or
governmental investigation or proceeding) which has materially and adversely
affected (a) the financial condition or operations of the Borrower, (b) impair
the ability of the Borrower to perform its obligations under any Loan Document,
or any writing executed pursuant thereto, (c) the validity or enforceability of
the material obligations of the Borrower under any Loan Document, or (d) the
timely payment of the principal of and interest on the Loans or other amounts
payable by the Borrower hereunder.

“Material Indebtedness”:
Any contractual indebtedness of the Borrower existing at any time of $7,500,000
or more.

“Maximum Rate”: As
defined in Section 8.18.

 9
 

 

“Mortgage”: That
certain Restated Mortgage and Security Agreement - Mortgage Short-Term Redemption
dated as of 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, which was recorded in Pembina County, North Dakota on
September 23, 1998, Document No. 214908, Traill County, North Dakota on
September 23, 1998, Document No. 149700, Clay County, Minnesota on September
23, 1998, Document No. 515813, and Polk County, Minnesota, on September 23,
1998, Document No. 563067, as amended by that certain Modification Agreement to
Restated Mortgage and Security Agreement - Mortgage Short-Term Redemption,
dated as of January 31, 2003, which was recorded in Pembina County, North
Dakota on February 3, 2003, Document No. 224279, Traill County, North Dakota on
February 3, 2003, Document No. 155874, Clay County, Minnesota on February 3,
2003, Document No. 572459, and Polk County, Minnesota on February 4, 2003,
Document No. 600131, as further amended from time to time.

“Net Working Capital”:
As of any date of determination, total Current Assets minus total Current
Liabilities, on a consolidated basis, determined in accordance with GAAP,
consistently applied.

“Note”: The
Revolving Note, Term Note T01, Term Note T01NP or Term Note T06 (collectively
referred to as the “Notes”).

“Obligations”: The
Borrower’s obligations in respect of the due and punctual payment of principal
and interest on the Notes, Unpaid Drawings and Existing Loans when and as due,
whether by acceleration or otherwise, and all fees (including Revolving Commitment
Fees), expenses, indemnities, reimbursements and other obligations of the
Borrower under this Agreement or any other Loan Document, in all cases whether
now existing or hereafter arising or incurred.

“Other Taxes”: As
defined in Section 2.25(b).

“Participants”: As
defined in Section 8.6(b).

“PBGC”: The
Pension Benefit Guaranty Corporation, established pursuant to Subtitle A of
Title IV of ERISA, and any successor thereto or to the functions thereof.

“Person”: Any
natural person, corporation, partnership, limited partnership, limited
liability company, joint venture, firm, association, trust, unincorporated
organization, government or governmental agency or political subdivision or any
other entity, whether acting in an individual, fiduciary or other capacity.

“Plan”: Each
employee benefit plan (whether in existence on the Closing Date or thereafter
instituted), as such term is defined in Section 3 of ERISA, maintained for the
benefit of employees, officers or directors of a Borrower.

 10
 

 

“Prepayment Event”:
Means:

(a)           any sale, transfer or other
disposition (including pursuant to a sale and leaseback transaction) of any
property or asset of the Borrower, other than dispositions described in clauses
(a), (b) and (c) of Section 6.2; or

(b)           any casualty or other insured damage
to, or any taking under power of eminent domain or by condemnation or similar
proceeding of, any property or asset of the Borrower, but only to the extent
that the net proceeds therefrom have not been applied, or committed pursuant to
an agreement (including any purchase orders) to be applied, to repair, restore
or replace such property or asset within 180 days after such event.

“Quoted Rate”: The
rate of interest quoted by the Lender in its sole discretion.

“Quoted Rate Offer”:
A quote of a fixed interest rate per annum for maximum periods of one (1) day
provided to Borrower by the Lender in its sole discretion following the receipt
by the Lender of a Quoted Rate Request from Borrower.

“Quoted Rate Request”:
A request by Borrower to the Lender for a Quoted Rate Offer.

“Regulatory Change”:
Any change after the Closing Date in federal, state or foreign laws or
regulations or the adoption or making after such date of any interpretations,
directives or requests applying to a class of banks including any Lender under
any federal, state or foreign laws or regulations (whether or not having the
force of law) by any court or governmental or monetary authority charged with
the interpretation or administration thereof.

“Reportable Event”:
A reportable event as defined in Section 4043 of ERISA and the regulations
issued under such Section, with respect to a Plan, excluding, however, such
events as to which the PBGC by regulation has waived the requirement of Section
4043(a) of ERISA that it be notified within 30 days of the occurrence of such
event, provided that a failure to meet the minimum funding standard of Section
412 of the Code and of Section 302 of ERISA shall be a Reportable Event
regardless of the issuance of any waiver in accordance with Section 412(d) of
the Code.

“Restricted Payments”:
With respect to Borrower, collectively, (a) all dividends or other
distributions of any nature (cash, Equity Interests, assets or otherwise), and
all payments on any class of Equity Interests (including warrants, options or
rights therefor) issued by the Borrower, whether such Equity Interests are
authorized or outstanding on the Closing Date or at any time thereafter, or (b)
any redemption or purchase of, or distribution in respect of, any of the
foregoing, whether directly or indirectly (except for the annual revolvment of
unit retains, or retained patronage which occurs in the ordinary course of
business).

“Revolving Loan”:
As defined in Section 2.1.

 11

 

“Revolving Loan Amount”:
An amount which shall not at any time be greater than Three Hundred Million
Dollars ($300,000,000), as determined from time to time according to the terms
of this Agreement.

“Revolving Loan Date”:
The date of the making of any Revolving Loan Advance hereunder.

“Revolving Loan Fees”:
As defined in Section 2.14(a).

“Revolving Note”:
The promissory note of the Borrower in the form of Exhibit A-l hereto,
evidencing the obligation of the Borrower to repay the Revolving Loan.

“Seasonal Letter of
Credit”: An irrevocable letter of credit issued under the Revolving Loan
pursuant to this Agreement of the account of Borrower.

“Seasonal Letter of
Credit Commitment Amount”: Twenty Million Dollars ($20,000,000).

“Secured Obligations”:
The Obligations, excluding the Revolving Note, Unpaid Drawings related to a
Seasonal Letter of Credit, and all fees, including Revolving Loan Fees,
associated therewith.

“Security Documents”:
The Mortgage and each other agreement, document or instrument pursuant to which
the Lender is granted a Lien to secure the Secured Obligations, as the same may
be amended, supplemented, extended, restated or otherwise modified from time to
time.

“Subordinated Debt”:
Any interest bearing Indebtedness of the Borrower, now existing or hereafter
created, incurred or arising, which is subordinated in right of payment to the
payment of the Obligations.

“Subsidiary”: With
respect to any Person, (a) any corporation in which such Person, directly or
indirectly (i) owns more than 50% of the outstanding stock thereof, or (ii) has
the power under ordinary circumstances to elect a majority of the directors
thereof, or (b) any partnership, association, joint venture, limited liability
company, or other unincorporated association 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 Loan
Agreement, ProGold Limited Liability Company (“Progold”) (for as long as
ProGold’s current lease with Cargill remains in effect) and Crystech, L.L.C. (“Crystech”)
shall not be deemed a Subsidiary.

“Termination Date”:
The earliest of (a) August 1, 2008, and (b) the date on which the Revolving
Commitments are terminated pursuant to Section 7.2 hereof.

 12
 

 

“Term Letter of Credit”:
An irrevocable letter of credit issued under Term Loan T06 pursuant to this
Agreement for the account of Borrower.

“Term Letter of Credit
Commitment Amount”: Ten Million Dollars ($10,000,000).

“Term Loan”: The
Term Loan T01, Term Loan T01NP or Term Loan T06 (collectively, the “Term Loans”).

‘Term Loan
Availability Period”: The period beginning on the Closing Date to August 1,
2008.

“Term Loan Fees”:
As defined in Section 2.14(a).

“Term Loan Maturity
Date”: December 31, 2011.

“Term Loan T01”:
As defined in Section 2.1.

“Term Loan T01 Amount”:
An amount which shall not at any time be greater than Fifty-Eight Million Two
Hundred Seventy-Six Thousand Seven Hundred Two Dollars ($58,276,702), as
determined from time to time according to the terms of this Agreement.

“Term Loan T01NP Loan”:
As defined in Section 2.1.

“Term Loan T01NP
Amount”: An amount which shall not at any time be greater than Twenty-Five
Million One Hundred Six Thousand Six Hundred Dollars ($25,106,600), as
determined from time to time according to the terms of this Agreement.

“Term Loan T06”:
As defined in Section 2.1.

“Term Loan T06 Amount”:
An amount which shall not at any time be greater than Eighty-Five Million
Dollars ($85,000,000), as determined from time to time according to the terms
of this Agreement.

“Term Note T01”:
The promissory note of the Borrower in the form of Exhibit A-2 hereto,
evidencing the obligation of the Borrower to repay the Term Loan T01.

“Term Note T01NP”:
The promissory note of the Borrower in the form of Exhibit A-3 hereto,
evidencing the obligation of the Borrower to repay the Term Loan T01NP.

“Term Note T06”:
The promissory note of the Borrower in the form of Exhibit A-4 hereto,
evidencing the obligation of the Borrower to repay the Term Loan T06.

“Total Revolving
Outstandings”: As of any date of determination, the sum of (a) the
aggregate unpaid principal balance of the Revolving Loan outstanding on such
date, (b) the aggregate maximum amount available to be drawn under Letters of
Credit outstanding on such

 13
 

 

date, and (c) the aggregate amount of Unpaid Drawings related to a
Seasonal Letter of Credit on such date.

“Total Term
Outstandings”: As of any date of determination, the sum of (a) the
aggregate unpaid principal balance of Term Loan T01, (b) the aggregate unpaid
principal balance of Term Loan T01NP, (c) the aggregate unpaid principal
balance of Term Loan T06, and (d) the aggregate amount of Unpaid Drawings
related to a Term Letter of Credit on such date.

“Unpaid Drawing”:
As defined in Section 2.12.

“Unused Revolving Loan
Amount”: As of any date of determination, the amount by which the Revolving
Loan Amount exceeds the Total Revolving Outstandings on such date.

“Unused Term Loan
Amount”: As of any date of determination, the amount by which the Term Loan
T01 Amount plus the Term Loan T01NP Amount plus the Term Loan T06 Amount
exceeds the Total Term Outstandings.

“U.S. Taxes”: As
defined in Section 2.25(e).

Section 1.2 Accounting
Terms and Calculations. Except as may be expressly provided to the contrary
herein, all accounting terms used herein shall be interpreted and all
accounting determinations hereunder shall be made in accordance with GAAP. To
the extent any change in GAAP affects any computation or determination required
to be made pursuant to this Agreement, such computation or determination shall
be made as if such change in GAAP had not occurred unless the Borrower and
Required Lender agree in writing on an adjustment to such computation or
determination to account for such change in GAAP.

Section 1.3 Computation
of Time Periods. In this Agreement, in the computation of a period of time
from a specified date to a later specified date, unless otherwise stated the
word “from” means “from and including” and the word “to” or “until” each means “to
but excluding”.

Section 1.4 Other
Definitional Terms. The words “hereof,” “herein” and “hereunder” and words
of similar import when used in this Agreement shall refer to this Agreement as
a whole and not to any particular provision of this Agreement. References to
Sections, Exhibits, schedules and like references are to this Agreement unless
otherwise expressly provided. The words “include,” “includes” and “including”
shall be deemed to be followed by the phrase “without limitation.” Unless the
context in which used herein otherwise clearly requires, “or” has the inclusive
meaning represented by the phrase “and/or.” All incorporation by reference of
covenants, terms, definitions or other provisions from other agreements are
incorporated into this Agreement as if such provisions were fully set forth
herein, and such incorporation shall include all necessary definitions and
related provisions from such other agreements, and shall survive any
termination of such other agreements until the obligations of the Borrower
under this Agreement and the Notes are irrevocably paid in full, all Letters of
Credit have expired without

 14
 

 

renewal or been returned to the issuer, and the
commitments of Lender to advance funds to the Borrower are terminated.

ARTICLE II

TERMS OF THE CREDIT FACILITIES

Section 2.1             Lending
Commitments.

(a)           Revolving Loan. Subject to the
terms and conditions hereof, the Lender agrees to make a revolving credit
facility available to the Borrower on a revolving basis at any time and from
time to time from the Closing Date to the Termination Date, during which period
the Borrower may borrow, repay and reborrow in accordance with the provisions
hereof, provided, that no Revolving Loan will be made in any amount
which, after giving effect thereto, would cause the Total Revolving
Outstandings to exceed the (i) Revolving Loan Amount, or (ii) the Borrowing
Base. Revolving Loan Advances may be obtained and maintained, at the election
of the Borrower but subject to the limitations hereof, as LIBOR Rate Advances,
Quoted Rate Advances or Base Rate Advances or any combination thereof; provided,
however, that no more than five (5) LIBOR Rate Advances may be
outstanding at any one time, and no more than ten (10) Quoted Rate Advances may
be outstanding at any one time under the Revolving Loan.

(b)           Term Loan T01. Subject to the
terms and conditions hereof, the Lender agrees to make a revolving term
facility available to the Borrower, jointly and severally, on a revolving basis
at any time and from time to time during the Term Loan T01 Availability Period,
up to the Term Loan T01 Amount, during which period the Borrower may borrow,
repay and reborrow in accordance with the provisions hereof. Term Loan T01
Advances may be obtained and maintained, at the election of the Borrower but
subject to the limitations hereof, as LIBOR Rate Advances, Quoted Rate Advances
or Base Rate Advances or any combination thereof; provided, however,
that no more than five (5) LIBOR Rate Advances may be outstanding at any one
time, and no more than ten (10) Quoted Rate Advances may be outstanding at any
one time under Term Loan T01.

(c)           Term Loan T01NP. Subject to
the terms and conditions hereof, the Lender agrees to make a revolving term
facility available to the Borrower, jointly and severally, on a revolving basis
at any time and from time to time during the Term Loan T01NP Availability
Period, up to the Term Loan T01NP Amount, during which period the Borrower may
borrow, repay and reborrow in accordance with the provisions hereof. Term Loan
T01NP Advances may be obtained and maintained, at the election of the Borrower
but subject to the limitations hereof, as LIBOR Rate Advances, Quoted Rate
Advances or Base Rate Advances or any combination thereof; provided, however,
that no more than five (5) LIBOR Rate Advances may be outstanding at any one
time, and no more than ten (10) Quoted Rate Advances may be outstanding at any
one time under Term Loan T01NP.

 15
 

 

(d)           Term Loan T06. Subject to the
terms and conditions hereof, the Lender agrees to make a revolving term
facility available to the Borrower, jointly and severally, on a revolving basis
at any time and from time to time during the Term Loan T06 Availability Period,
up to the Term Loan T06 Amount, during which period the Borrower may borrow, repay
and reborrow in accordance with the provisions hereof. Term Loan T06 Advances
may be obtained and maintained, at the election of the Borrower but subject to
the limitations hereof, as LIBOR Rate Advances, Quoted Rate Advances or Base
Rate Advances or any combination thereof; provided, however, that
no more than five (5) LIBOR Rate Advances may be outstanding at any one time,
and no more than ten (10) Quoted Rate Advances may be outstanding at any one
time under Term Loan T06.

Section 2.2             Existing Loans. The Lender
has previously extended to the Borrower (i) the Term Loan T03NP pursuant to
that certain Single Advance Term Loan Supplement dated as of July 21, 2003, and
numbered Z269T03BNP, in the original principal amount of $12,000,000, which has
an unpaid principal balance of $2,400,000, and a maturity date of February 1,
2010, and (ii) the Term Loan T04 pursuant to that certain Non-Revolving Credit
Supplement dated as of December 12, 2005, and numbered Z269T04B, in the
original principal amount of $36,000,000, which has an unpaid principal balance
of $36,000,000, and a maturity date of April 30, 2013. As of the date of this
Agreement, Term Loan T03NP and Term Loan T04 shall become subject to all of the
terms and conditions of this Agreement; provided,  however, if any
provision of this Agreement is in conflict with any provision of any Term Loan
Supplement, the applicable Term Loan Supplement shall control with respect to
such provision.

Section 2.3             Procedure for Loans.

(a)           Procedure for Revolving Loan.

(i)            Not later than 11:00 A.M. (Denver
time) two LIBOR Banking Days prior to the requested Revolving Loan Date if the
Revolving Loan Advance is requested as a LIBOR Rate Advance, not later than
11:00 A.M. (Denver time) one Banking Day prior to the requested Revolving Loan
Date if the Revolving Loan Advance is requested as a Quoted Rate Advance, and
not later than 11:00 A.M. (Denver time) on the requested Revolving Loan Date if
the Revolving Loan Advance is requested as a Base Rate Advance, Borrower’s
Agent shall submit to the Lender a written on telephonic request for borrowing,
provided that no more than one request for Borrowing may be made on any
Banking Day. Each request for a Revolving Loan Advance hereunder shall be
irrevocable and shall be deemed a representation by Borrower that on the
requested Revolving Loan Date, and after giving effect to the requested
Revolving Loan Advance, the applicable conditions specified in Article III have
been and will be satisfied. Each request for a Revolving Loan Advance hereunder
shall specify (i) the requested Revolving Loan Date, (ii) the amount of the
Revolving Loan Advance to be made on such date which shall be in a minimum
amount of $5,000,000 or, if more, a whole multiple of $1,000,000 in excess thereof, (iii) whether such
Revolving

 16
 

 

Loan Advance is to be funded as a LIBOR Rate Advance,
Quoted Rate Advance or Base Rate Advance (and, if such Revolving Loan Advance
is to be made with more than one applicable interest rate choice, specifying
the amount to which each interest rate choice is applicable) and (iv) in the
case of LIBOR Rate Advances, the duration of the initial Interest Period
applicable thereto. The Lender may rely on any telephone request by the
Borrower for Revolving Loan Advances hereunder which it believes in good faith
to be genuine; and Borrower hereby waives the right to dispute the Lender’s
record of the terms of such telephone request.

(ii)           The Lender agrees that the Borrower
may from time to time request the Lender to submit an offer to make a Revolving
Loan Advance to the Borrower, provided, however, that the Lender may, but shall
have no obligation to, submit such offer and the Borrower may, but shall have
no obligation to, accept any such offer. A request that the Lender submit an
offer to make a Revolving Loan Advance hereunder shall be referred to herein as
a “bid request,” and an offer to make a loan that specifies the loan amount,
interest rate and interest period shall be referred to herein as the “bid.” Bid
requests may be made orally or in writing (in the form attached hereto as Exhibit
E) but if made orally shall be confirmed promptly by telecopy (facsimile)
of a written completed bid request in a form approved by the Lender. Each bid
request shall specify (A) the amount of the requested Revolving Loan Advance,
which amount must be in a minimum amount of $1,000,000 or integral multiples
thereof (or the entire available balance of the Revolving Loan), (B) the date
of the Revolving Loan Advance, and (C) the Interest Period of the Revolving Loan
Advance. The Lender may, in response to a bid request, in its discretion,
irrevocably submit to the Borrower, a bid containing an offer to make the
Revolving Loan Advance. Each bid, if submitted, must be submitted to the
Lender, whether orally or in writing, by 10:00 A.M. (Denver time) on the day
following the bid request. Each bid shall specify (X) the amount of the
Revolving Loan Advance for which the bid is being made, (Y) the rate of
interest per annum offered for the Revolving Loan Advance (which shall be
expressed in the form of an index plus any margin), and (Z) the Interest Period
of the Revolving Loan Advance, which date shall not be beyond the Termination
Date. Not later than 11:00 A.M. (Denver time) on the day the Borrower receives
the Lender’s bid (or at such later time as the Lender may agree), the Borrower
shall either reject the bid or accept the bid by giving notice to the Lender by
telephone in either case, confirmed by facsimile. Failure to properly notify
the Lender of an acceptance of the bid may be treated by the Lender as a
rejection. Any Revolving Loan Advance made as a result of the Borrower’s
acceptance of the Lender’s bid (such Revolving Loan Advance to be referred to
herein as a “Bid Advance”) shall be subject to the terms of this Agreement. If
the Lender has sold participation interests in the Revolving Loan, then Bid
Advances by the Lender shall be deemed to reduce only the

 17
 

 

Lender’s pro rata share of the Revolving Loan. the sum
of all Bid Advances outstanding may not at any time exceed the lesser of (L)
$50,000,000, or (M) the dollar amount of the Lender’s pro rata share of the
Revolving Loan (as said amount may be reduced a result of other Revolving Loan
Advances made pursuant to the Revolving Loan).

(b)           Procedure for Term Loans. Not
later than 11:00 A.M. (Denver time) two LIBOR Banking Days prior to the
requested Term Loan Date if the Term Loan Advance is requested as a LIBOR Rate
Advance, not later than 11:00 A.M. (Denver time) one Banking Day prior to the
requested Term Loan Date if the Term Loan Advance is requested as a Quoted Rate
Advance, and not later than 11:00 A.M. (Denver time) on the requested Term Loan
Date if the Term Loan Advance is requested as a Base Rate Advance, Borrower’s
Agent shall submit to the Lender a written or telephonic request for borrowing,
provided that no more than one request for Borrowing may be made on any
Banking Day. Each request for a Term Loan Advance hereunder shall be
irrevocable and shall be deemed a representation by Borrower that on the requested
Term Loan Date, and after giving effect to the requested Term Loan Advance, the
applicable conditions specified in Article III have been and will be satisfied.
Each request for a Term Loan Advance hereunder shall specify (i) the requested
Term Loan Date, (ii) the Term Loan to which the Term Loan Advance relates,
(iii) the amount of the Term Loan Advance to be made on such date which shall
be in a minimum amount of $2,000,000 or, if more, a whole multiple of $500,000
in excess thereof, (iv) whether such Term Loan Advance is to be funded as a
LIBOR Rate Advance, Quoted Rate Advance or Base Rate Advance (and, if such Term
Loan Advance is to be made with more than one applicable interest rate choice,
specifying the amount to which each interest rate choice is applicable) and (v)
in the case of LIBOR Rate Advances, the duration of the initial Interest Period
applicable thereto. The Lender may rely on any telephone request by the
Borrower for Term Loan Advances hereunder which it believes in good faith to be
genuine; and Borrower hereby waives the right to dispute the Lender’s record of
the terms of such telephone request.

Section 2.4             Notes. The Revolving Loan
shall be evidenced by the Revolving Note payable to the order of the Lender in
a principal amount equal to the Revolving Loan Amount. The Term Loans shall be
evidenced by the Term Notes payable to the order of the Lender in principal
amounts equal to the respective Term Loan Amount. The Lender shall enter in its
ledgers and records the amount of the Revolving Loan and each Term Loan, the
various Advances made, converted or continued and the payments made thereon,
and the Lender is authorized by the Borrower to enter on a schedule attached to
the Revolving Note or Term Notes, as appropriate, a record of such Revolving
Loan, Term Loans, Advances and payments; provided, however that the failure by
the Lender to make any such entry or any error in making such entry shall not
limit or otherwise affect the obligation of the Borrower hereunder and on the
Notes, and, in all events, the principal amounts owing by the Borrower in
respect of the Revolving Note shall be the aggregate amount of all Revolving
Loan Advances made by the

 18
 

 

Lender less all payments of principal thereof made by
the Borrower, and the principal amount owing by Borrower in respect of the Term
Notes shall be aggregate amount of all Term Note Advances made by the Lender
less all payments of principal thereon made by the Borrower.

Section 2.5             Conversions and Continuations.
On the terms and subject to the limitations hereof, the Borrower shall have the
option at any time and from time to time to convert all or any portion of the
Advances in respect of the Revolving Loan or the Term Loans into Base Rate
Advances, LIBOR Rate Advances or Quoted Rate Advances, or to continue a LIBOR
Rate Advance or Quoted Rate Advance as such; provided, however
that a LIBOR Rate Advance may be converted or continued only on the last day of
the Interest Period applicable thereto, a Quoted Rate Advance may be converted
or continued only on the last day of the fixed rate period set forth in the
corresponding Quoted Rate Offer, and no Advance may be converted or continued
as a LIBOR Rate Advance or a Quoted Rate Advance if a Default or Event of
Default has occurred and is continuing on the proposed date of continuation or
conversion. Advances in respect of the Revolving Loan or Term Loans may be
converted to, or continued as, LIBOR Rate Advances only in a minimum amount of
$500,000 or, if more, a whole multiple of $500,000 in excess thereof. Advances
in respect of the Revolving Loan or Term Loans may be converted to, or
continued as, Quoted Rate Advances only in a minimum amount of $500,000 or, if
more, a whole multiple of $500,000 in excess thereof. The Borrower shall give
the Lender written notice of any continuation or conversion of any such
Advances and such notice must be given so as to be received by the Lender not
later than 11:00 A.M. (Denver Time) two LIBOR Banking Days prior to requested
date of conversion or continuation in the case of the continuation of, or
conversion to, LIBOR Rate Advances, not later than 11:00 A.M. (Denver Time) on
the requested date of conversion or continuation in the case of the
continuation of, or conversion to, Quoted Rate Advances, and not later than
11:00 A.M. (Denver Time) on the date of the requested continuation of, or
conversion to, Base Rate Advances. Each such notice shall specify (a) the
amount to be continued or converted, (b) the date for the continuation or
conversion (which must be (i) the last day of the preceding Interest Period for
any continuation or conversion of LIBOR Rate Advances, (ii) the last day of the
fixed rate period set forth in the corresponding Quoted Rate Offer for any
continuations or conversion of a Quoted Rate Advance, (iii) a LIBOR Banking Day
in the case of conversions to or continuations as LIBOR Rate Advances, and (iv)
a Banking Day in the case of continuations or conversions to Base Rate
Advances), and (c) in the case of conversions to or continuations as LIBOR Rate
Advances, the Interest Period applicable thereto. Any notice given by the
Borrower under this Section shall be irrevocable. If the Borrower shall fail to
notify the Lender of the continuation of any LIBOR Rate Advances within the
time required by this Section, at the option of the Lender, such Advances
shall, on the last day of the Interest Period applicable thereto, automatically
be converted into Base Rate Advances with the same principal amount. If the
Borrower shall fail to notify the Lender of the continuation of any Quoted Rate
Advances within the time required by this Section, or if the Lender declines to
make a Quoted Rate Offer with respect to such Quoted Rate Advances and the
Borrower has not requested an alternate Advance, such Quoted Rate Advances
shall, on the last day of the fixed rate period applicable thereto,
automatically accrue interest at the Base Rate until repaid or converted into
another Advance.

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Section 2.6             Interest
Rates, Interest Payments and Default Interest.

(a)           Revolving Loan. Interest shall
accrue and be payable on the Revolving Loan as follows:

(i)            Subject to paragraph (iv) below,
each LIBOR Rate Advance shall bear interest on the unpaid principal amount
thereof during the Interest Period applicable thereto at a rate per annum equal
to the sum of (A) the Adjusted LIBOR Rate for such Interest Period, plus
(B) 65 basis points.

(ii)           Subject to paragraph (iv) below, each
Quoted Rate Advance shall bear interest on the unpaid principal amount thereof
at a rate per annum equal to the Quoted Rate;

(iii)          Subject to paragraph (iv) below, each
Base Rate Advance shall bear interest on the unpaid principal amount thereof at
a varying rate per annum equal to the Base Rate.

(iv)          Upon the occurrence of any Event of
Default, each Advance in respect of the Revolving Loan shall, at the option of
the Lender, bear interest until paid in full at a rate per annum equal to the
Default Rate.

(v)           Interest shall be payable (A) with
respect to each LIBOR Rate Advance, on the last day of the Interest Period
applicable thereto (and, in the case of any LIBOR Rate Advance having an
Interest Period greater than three months, on the three month anniversary of
the first day of such Interest Period); (B) with respect to any Base Rate
Advance or Quoted Rate Advance, in arrears on the 20th day of each month; (C)
with respect to all Advances, upon any permitted prepayment (on the amount
prepaid); and (D) with respect to all Advances, on the Termination Date; provided
that interest under paragraph (a)(iv) of this Section shall be payable on
demand.

(b)           Term Loan. Interest shall
accrue and be payable on the Term Loan as follows:

(i)            Subject to paragraph (iv) below,
each LIBOR Rate Advance in respect of the Term Loan shall bear interest on the
unpaid principal amount thereof during the Interest Period applicable thereto
at a rate per annum equal to the sum of (A) the Adjusted LIBOR Rate for such
Interest Period, plus (B) the Applicable Margin.

(ii)           Subject to paragraph (iv) below, each
Quoted Rate Advance in respect of the Term Loan shall bear interest on the
unpaid principal amount thereof at a rate per annum equal to the Quoted Rate.

 20
 

 

(iii)          Subject to paragraph (iv) below, each
Base Rate Advance in respect of the Term Loan shall bear interest on the unpaid
principal amount thereof at a varying rate per annum equal to the sum of (A)
the Base Rate, plus (B) the Applicable Margin.

(iv)          Upon the occurrence of any Event of
Default, each Term Loan Advance shall, at the option of the Lenders, bear
interest until paid in full at a rate per annum equal to the Default Rate.

(v)           Interest shall be payable (A) with
respect to each LIBOR Rate Advance in respect of the Term Loan, on the last day
of the Interest Period applicable thereto (and, in the case of any LIBOR Rate
Advance in respect of the Term Loan having an Interest Period greater than
three months, on the three month anniversary of the first day of such Interest
Period); (B) with respect to any Base Rate Advance or Quoted Rate Advance in
respect of the Term Loan in arrears, on the 20th day of each month; (C) with
respect to all Advances, upon any permitted prepayment (on the amount prepaid);
and (D) with respect to all Advances, on the Termination Date; provided
that interest under paragraph (b)(iv) of this Section shall be payable on
demand.

Section 2.7             Repayment.

(a)           Revolving Loan. The unpaid
principal balance of the Revolving Note, together with all accrued and unpaid
interest thereon, shall be due and payable on the Termination Date.

(b)           Term Loan T01. The principal
of Term Loan T01 shall be payable in three annual installments in the amount of
$9,400,000 due on December 31 of each year beginning December 31, 2008, and any
amount of principal or interest remaining unpaid with respect to Term Loan T01
on the Term Loan Maturity Date shall be immediately due and payable on such
date.

(c)           Term Loan T01NP. The principal
of Term Loan T01NP shall be payable in three annual installments in the amount
of $7,600,000 due on December 31 of each year beginning December 31, 2008, and
any amount of principal or interest remaining unpaid with respect to Term Loan
T01NP on the Term Loan Maturity Date shall be immediately due and payable on
such date.

(d)           Term Loan T06. The unpaid
principal of Term Loan T06 shall be payable as follows: On December 31, 2008, a
principal payment shall be due in an amount equal to 25% of the outstanding
principal balance of Term Loan T06 as of the last day of the Term Loan
Availability Period; the remaining principal balance shall be payable in three
equal annual installments due on December 31 of each year beginning December
31, 2009, and any amount of principal or interest remaining unpaid with respect
to Term

 21
 

 

Loan T06 on the Term Loan Maturity Date shall be
immediately due and payable on such date.

Section 2.8             Prepayments.

(a)           Mandatory Prepayments for
Borrowing Base Deficiency. If at any time a Borrowing Base Deficiency
exists, the Borrower shall immediately pay on the principal of the Advances in
respect of the Revolving Loan an amount equal to such Borrowing Base
Deficiency. Any such payments shall be applied first against Base Rate Advances
and then to Quoted Rate and LIBOR Rate Advances in order starting with the
Quoted Rate or LIBOR Rate Advances having the shortest time to the end of the
applicable Interest Period.

(b)           Mandatory Prepayments for a
Prepayment Event. If at any time a Prepayment Event occurs, the Borrower
shall immediately pay to the Lender the net proceeds realized by such
Prepayment Event and any prepayment fee payable under Section 2.24. Any such
prepayments shall be applied, pro rata, to the Term Loans (first against Base
Rate Advances and then to Quoted Rate and LIBOR Rate Advances in order starting
with the Quoted Rate or LIBOR Rate Advances having the shortest time to the end
of the applicable Interest Period), second, to any outstanding Revolving
Loans, and third to cash collateralize any issued and outstanding
Letters of Credit. All prepayments applied to the Term Loans shall be applied
to the scheduled principal payments on the Term Loans, pro rata, in the inverse
order of their maturities.

(c)           Other Mandatory Prepayments.
If at any time Total Revolving Outstandings exceed the Revolving Loan Amount,
the Borrower shall immediately repay to the Lender the amount of such excess.
Any such prepayments shall be applied to the Revolving Loan.

(d)           Optional Prepayments. The
Loans may be prepaid at any time, in whole or in part, subject to Section 2.24,
in minimum amounts of $1,000,000.00, and in integral multiples of $100,000.00
(or the entire outstanding balance, if less) on any Banking Day; provided,
however, in the event of any prepayment of a LIBOR Rate Advance, Borrower must
provide three (3) Banking Days’ prior written notice to the Agent. Any such
prepayment must be accompanied by accrued and unpaid interest on the amount
prepaid. Amounts paid (unless following an acceleration or upon termination of
the Revolving Loan in whole) or prepaid on Advances in respect of the Revolving
Loan or the Term Loans under this paragraph (d) may be reborrowed upon the
terms and subject to the conditions and limitations of this Agreement. All
prepayments shall be applied to the Loans, as designated by Borrower, and all
prepayments on a Term Loan shall be applied to the scheduled principal payments
on such Term Loan in the inverse order of their maturities.

 22
 

 

Section 2.9             Letters of Credit. Upon the
terms and subject to the conditions of this Agreement, the Lender agrees to
issue Letters of Credit for the account of the Borrower from time to time
between the Closing Date and thirty (30) days prior to the Termination Date in
such amounts as the Borrower shall request up to an aggregate amount at any
time outstanding not exceeding the Seasonal Letter of Credit Commitment Amount
or Term Letter of Credit Commitment Amount, as applicable; provided that
(i) the face amount of any Seasonal Letter of Credit shall automatically
reduce, dollar for dollar, the amount which Borrower may borrow as Revolving
Loan Advances, (ii) the face amount of any Term Letter of Credit shall automatically
reduce, dollar for dollar, the amount which Borrower may borrow as Term Loan
T06 Advances; (iii) the aggregate face amount of all issued and outstanding
Seasonal Letters of Credit shall not exceed $20,000,000, (iv) the aggregate
amount of all issued and outstanding Letters of Credit shall not exceed
$10,000,000, (v) no Seasonal Letter of Credit will be issued in any amount
which, after giving effect to such issuance, would cause Total Revolving
Outstandings to exceed the Revolving Loan Amount, and (vi) no Term Letter of
Credit will be issued in any amount which, after giving effect to such
issuance, would cause the aggregate unpaid principal balance of Term Loan T06
and the aggregate amount of Unpaid Drawings related to a Term Letter of Credit
to exceed the Term Loan T06 Amount. Each Letter of Credit request shall set
forth (i) the face amount of and expiry date, (ii) the beneficiary, (iii) the
terms thereof, and (iv) such other information as the Lender may request.

Section 2.10           Procedures for Letters of Credit.
Each request for a Letter of Credit shall be made by the Borrower in writing,
by telex, facsimile transmission or electronic conveyance received by the
Lender by 11:00 A.M. (Denver Time) on a Banking Day that is not less than one
Banking Day preceding the requested date of issuance (which shall also be a
Banking Day). Each request for a Letter of Credit shall be deemed a
representation by the Borrower that on the date of issuance of such Letter of
Credit and after giving effect thereto the applicable conditions specified in
Article III have been and will be satisfied. The Lender may require that such
request be made on such letter of credit application and reimbursement
agreement form as the Lender may from time to time specify, along with satisfactory
evidence of the authority and incumbency of the officials of the Borrower.

Section 2.11           Terms of Letters of Credit.
Letters of Credit shall be issued in support of obligations of the Borrower in
accordance with Section 2.17. Each Seasonal Letter of Credit must expire not
later than the Banking Day preceding the Termination Date, each Term Letter of
Credit must expire not later than the Banking Day preceding the Term Loan
Maturity Date, and no Letter of Credit may have a term longer than the underlying
Loan.

Section 2.12           Agreement to Repay Letter of
Credit Drawing. If the Lender has received documents purporting to draw
under a Letter of Credit that the Lender believes conform to the requirements
of such Letter of Credit, or if the Lender has decided that it will comply with
the Borrower’s written or oral request or authorization to pay a drawing on any
Letter of Credit that the Lender does not believe conforms to the requirements
of such Letter of Credit, it will notify the Borrower of that fact. The
Borrower shall reimburse the Lender by 9:30 A.M. (Denver Time) on the day on
which such drawing is to be paid in Immediately Available Funds

 23
 

 

in an amount equal to the amount of such drawing. Any
amount by which the Borrower has failed to reimburse the Lender for the full
amount of such drawing by 10:00 A.M. on the date on which the Lender in its
notice indicated that it would pay such drawing, until reimbursed by the
Borrower, is an “Unpaid Drawing.”

Section 2.13           Obligations Absolute. The obligation
of the Borrower under Section 2.12 to repay the Lender for any amount drawn on
any Letter of Credit and to repay the Lender to cover Unpaid Drawings shall be
absolute, unconditional and irrevocable, shall continue for so long as any
Letter of Credit is outstanding notwithstanding any termination of this
Agreement, and shall be paid strictly in accordance with the terms of this
Agreement, under all circumstances whatsoever, including without limitation the
following circumstances:

(a)           Any lack of validity or enforceability
of any Letter of Credit;

(b)           The existence of any claim, setoff,
defense or other right which the Borrower may have or claim at any time against
any beneficiary, transferee or holder of any Letter of Credit (or any Person
for whom any such beneficiary, transferee or holder may be acting), the Lender
or the Lender or any other Person, whether in connection with a Letter of
Credit, this Agreement, the transactions contemplated hereby, or any unrelated
transaction; or

(c)           Any statement or any other document
presented under any Letter of Credit proving to be forged, fraudulent or
invalid in any respect or any statement therein being untrue or inaccurate in
any respect whatsoever.

Neither the Lender nor its officers, directors or
employees shall be liable or responsible for, and the obligations of the
Borrower to the Lender shall not be impaired by:

(i)            The use which may be made of any
Letter of Credit or for any acts or omissions of any beneficiary, transferee or
holder thereof in connection therewith;

(ii)           The validity or genuineness of
documents, or of any endorsements thereon, even if such documents or
endorsements should, in fact, prove to be in any or all respects invalid,
fraudulent or forged;

(iii)          The acceptance by the Lender of
documents that appear on their face to be in order, without responsibility for
further investigation, regardless of any notice or information to the contrary;
or

(iv)          Any other action of the Lender in
making or failing to make payment under any Letter of Credit if in good faith
and in conformity with U.S. or foreign laws, regulations or customs applicable
thereto.

 24
 

 

Section 2.14           Fees.

(a)           Loan Fees. The Borrower shall
pay to the Lender fees with respect to (i) the Revolving Loan in the amount of
$225,000.00 (“Revolving Loan Fees”); (ii) the Term Loan T01 in the
amount of $43,708.53; (iii) the Term Loan T01NP in the amount of $18,829,95;
and (iv) the Term Loan T06 in the amount of $63,750.00 (“Term Loan Fees”).
Such fees are payable on the Closing Date and are not refundable to the
Borrower.

(b)           Commitment Fees. The Borrower
shall pay to the Lender fees (the “Revolving Commitment Fees”) in an
amount determined by multiplying the average daily Unused Revolving Loan Amount
by fifteen (15) basis points per annum, based on a 360 day year, for the period
from the Closing Date to the Termination Date. The Borrower shall further pay
to the Lender fees (the “Term Loan Commitment Fees”) in an amount
determined by applying the Applicable Commitment Fee Percentage to the daily
Unused Term Loan Amount during the Term Loan Availability Period.

Such Revolving Commitment Fees are payable in arrears
quarterly on the last day of each calendar quarter and on the Termination Date.

(c)           Letter of Credit Fees. For
each Letter of Credit issued, the Borrower shall pay to the Lender in advance
on the date of issuance, fees (“Letter of Credit Fees”) in an amount
equal to the greater of (i) $2,500.00, or (ii) the amount determined by
applying a per annum rate to the Applicable Margin for LIBOR Rate Advances in
respect of the Revolving Loan then in effect to the original face amount of
such Letter of Credit for the period from the date of issuance to the scheduled
expiration date of such Letter of Credit. In addition to the Letter of Credit
Fees, the Borrower shall pay to the Lender, on demand, all issuance, amendment,
drawing and other fees regularly charged by the Lender to its letter of credit
customers and all out-of-pocket expenses incurred by the Lender in connection
with the issuance, amendment, administration or payment of any Letter of
Credit.

Section 2.15           Computation. Revolving
Commitment Fees, Term Loan Commitment Fees, Letter of Credit Fees, interest on
the Revolving Loan, the Term Loans and the Default Rate shall be computed on
the basis of actual days elapsed (or, in the case of Letter of Credit Fees
which are paid in advance, actual days to elapse) and a year of 360 days.

Section 2.16           Payments. Payments and
prepayments of principal of, and interest on, the Notes and all fees, expenses
and other obligations under this Agreement payable to the Lender or the Lender
shall be made without setoff or counterclaim in Immediately Available Funds not
later than 1:00 P.M. (Denver Time) on the dates called for under this Agreement
and the Notes to the Lender at its main office in Denver, Colorado. Funds
received after such time shall be deemed to have been received on the next
Banking Day. Whenever any payment to be made hereunder or on the Notes shall be
stated to be due on a day which is not a Banking Day, such

 25
 

 

payment shall be made on the next succeeding Banking
Day and such extension of time, in the case of a payment of principal, shall be
included in the computation of any interest on such principal payment; provided,
however, that if such extension would cause payment of interest on or
principal of a LIBOR Rate Advance to be made in the next following calendar
month, such payment shall be made on the next preceding Banking Day.

Section 2.17           Use of Loan Proceeds. The
proceeds of the Revolving Loan shall be used to refinance the outstanding
obligations of Borrower under the Statused Revolving Term Loan Supplement dated
July 11, 2005, and numbered Z269T07, and to continue to finance Borrower’s
accounts receivable and inventory, for the issuance of letters of credit, and
to finance the general business purposes of Borrower in a manner not in
conflict with any of Borrower’s covenants in this Agreement. The proceeds of
the Term Loan T01 shall be used to refinance the outstanding obligations of the
Borrower under the Revolving Term Loan Supplement dated July 11, 2005, and
numbered Z269T01F, and to continue to finance the Borrower’s operating needs.
The proceeds of the Term Loan T01NP shall be used to refinance the outstanding
obligations of the Borrower under the Revolving Term Loan Supplement dated July
8, 2005, and numbered Z260T01FNP, and to continue to finance the Borrower’s
operating needs. The proceeds of the Term Loan T06 shall be used to refinance
the outstanding obligations of the Borrower under the Revolving Term Loan
Supplement dated July 11, 2005, and numbered Z269T06C, and to continue to
finance the Borrower’s operating needs. In no event shall the Loan proceeds be
used (i) to purchase or carry margin stock (as defined in Regulation U of the
Board) or to extend credit to others for the purpose of purchasing or carrying
margin stock or to refund Indebtedness originally incurred for such purpose, or
(ii) for any purpose that entails a violation of, or that is inconsistent with,
the provisions of Regulations U or X of the Board.

Section 2.18           Interest Rate Not Ascertainable,
Etc. If, on or prior to the date for determining the Adjusted LIBOR Rate in
respect of the Interest Period for any LIBOR Rate Advance, the Lender
determines (which determination shall be conclusive and binding, absent error)
that:

(a)           deposits in dollars (in the
applicable amount) are not being made available to the Lender in the relevant
market for such Interest Period, or

(b)           the Adjusted LIBOR Rate will not
adequately and fairly reflect the cost to the Lender of funding or maintaining
LIBOR Rate Advances for such Interest Period,

the Lender shall forthwith give notice to the Borrower
of such determination, whereupon the obligation of the Lender to make or
continue, or to convert any Advances to, LIBOR Rate Advances shall be suspended
until the Lender notifies the Borrower that the circumstances giving rise to
such suspension no longer exist. While any such suspension continues, all
further Advances by the Lender shall be made with an interest rate option to
which such suspension does not apply. No such suspension shall affect the
interest rate then in effect during the applicable Interest Period for any
LIBOR Rate Advance outstanding at the time such suspension is imposed.

 26

 

Section 2.19           Increased
Cost. If any Regulatory Change:

(a)           shall subject the Lender to any
additional tax, duty or other charge with respect to its LIBOR Rate Advances,
the Revolving Note, the Term Notes or its obligation to make LIBOR Rate
Advances or shall change the basis of taxation of payment to the Lender of the
principal of or interest on its LIBOR Rate Advances or any other amounts due
under this Agreement in respect of its LIBOR Rate Advances or its obligation to
make LIBOR Rate Advances (except for changes in the rate of tax on the overall
net income of the Lender imposed by the jurisdiction in which the Lender’s
principal office located); or

(b)           shall impose, modify or deem
applicable any reserve, special deposit or similar requirement (including without
limitation, any such requirement imposed by the Board, but excluding any such
requirement to the extent included in calculating the applicable Adjusted LIBOR
Rate) against assets of, deposits with or for the account of, or credit
extended by, or against Letters of Credit issued by the Lender or shall impose
on the Lender or on the United States market for certificates of deposit or the
interbank Eurodollar market any other condition affecting its LIBOR Rate Advances, the Revolving Note,
the Term Notes or its obligation to make LIBOR Rate Advances or affecting any
Letter of Credit;

and the result of any of the foregoing is to increase
the cost to the Lender of making or maintaining any LIBOR Rate Advance or
issuing or maintaining any Letter of Credit, or to reduce the amount of any sum
received or receivable by the Lender under this Agreement or under the
Revolving Note or the Term Notes, then, within 30 days after written notice and
demand by the Lender, which notice shall describe the Regulatory Change, the
Borrower shall pay to the Lender such additional amount or amounts as will
compensate such Lender for such increased cost or reduction.

Section 2.20           Illegality. If any Regulatory Change
shall make it unlawful or impossible for the Lender to make, maintain or fund any LIBOR Rate Advance,
the Lender shall notify the Borrower, whereupon the obligation of the Lender to
make or continue, or to convert any Advances to, LIBOR Rate Advances shall be
suspended until the Lender notifies the Borrower that the circumstances giving
rise to such suspension no longer exist. Before giving any such notice, the
Lender shall designate a different lending office if such designation will
avoid the need for giving such notice and will not, in the judgment of such
Lender, be otherwise disadvantageous to such Lender. If the Lender determines
that it may not lawfully continue to maintain any LIBOR Rate Advances to the
end of the applicable Interest Period, all of the affected Advances shall be
automatically converted to Base Rate Advances as of the date of the Lender’s
notice.

Section 2.21           Capital Adequacy. In the event
that any Regulatory Change reduces or shall have the effect of reducing the
rate of return on the Lender’s capital or the capital of its parent corporation
(by an amount the Lender deems material) as a consequence of its Loans

 27
 

 

and/or any Letters of Credit or the Lender’s
obligations to make Advances to cover Letters of Credit to a level below that
which such the Lender or its parent corporation could have achieved but for
such Regulatory Change (taking into account the Lender’s policies and the
policies of its parent corporation with respect to capital adequacy), then the
Borrower shall, within 30 days after written notice and demand from the Lender,
pay to such Lender additional amounts sufficient to compensate the Lender or
its parent corporation for such reduction. Any determination by the Lender
under this Section and any certificate as to the amount of such reduction given
to the Borrower by the Lender shall be final, conclusive and binding for all
purposes, absent error.

Section 2.22           Funding Losses; LIBOR Rate
Advances. The Borrower shall compensate the Lender, upon its written
request, for all losses, expenses and liabilities which the Lender may sustain:
(i) if for any reason, other than a default by the Lender, a funding of a LIBOR
Rate Advance does not occur on the date specified therefor in the Borrower’s
request or notice as to such Advance under Section 2.2 or 2.4, or (ii) if, for
whatever reason (including, but not limited to, acceleration of the maturity of
Advances following an Event of Default), any repayment of a LIBOR Rate Advance,
or a conversion pursuant to Section 2.20, occurs on any day other than the last
day of the Interest Period applicable thereto. The Lender’s request for
compensation shall set forth the basis for the amount requested and shall be
final, conclusive and binding, unless Borrower contests the request for
compensation within thirty (30) days of such written request.

Section 2.23           Discretion of Lender as to Manner
of Funding. The Lender shall be entitled to fund and maintain its funding
of LIBOR Rate Advances in any manner it may elect, it being understood,
however, that for the purposes of this Agreement all determinations hereunder
(including, but not limited to, determinations under Section 2.22) shall be
made as if the Lender had actually funded and maintained each LIBOR Rate
Advance during the Interest Period for such Advance through the issuance of its
certificates of deposit, or the purchase of deposits, having a maturity
corresponding to the last day of the Interest Period and bearing an interest
rate equal to the LIBOR Rate for such Interest Period.

Section 2.24           Broken Funding Surcharge.
Notwithstanding any provision contained in this Agreement giving the Borrower
the right to prepay any loan prior to the date it would otherwise be due and
payable, the Borrower agrees to provide three (3) 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 Interest Period applicable thereto (whether such payment is
made voluntarily, as a result of acceleration or otherwise), the Borrower will
pay to the Lender a surcharge in an amount which would result in the Lender
being made whole (on a present value basis) for the actual or imputed funding
losses incurred by the Lender as a result thereof. Notwithstanding the
foregoing, in the event any fixed rate balance is repaid as a result of the
Borrower refinancing the loan with another lender, then in lieu of the
foregoing, the Borrower shall pay to the Lender a surcharge of 50% of an amount
sufficient (on a present value basis) to enable the Lender to maintain the
yield it would have

 28
 

 

earned during the fixed rate period on the amount
repaid. Such surcharges will be calculated in accordance with methodology
established by the Lender.

Section 2.25           Taxes.

(a)           Any and all payments by the Borrower
hereunder or under the Notes shall be made free and clear of and without
deduction for any and all present or future taxes, levies, imposts, deductions,
charges of withholdings, and all liabilities with respect thereto, excluding,
in the case of the Lender, taxes imposed on its overall net income and
franchise taxes imposed on it in lieu of net income taxes (all such
non-excluded taxes, levies, imposts, deductions, charges, withholdings and
liabilities in respect of payments hereunder or under the Notes being hereinafter
referred to as “Taxes”).

(b)           The Borrower agree to pay any present
or future stamp or documentary taxes or any other excise or property taxes,
charges or similar levies that arise from any payment made hereunder or under
the Notes or from the execution, delivery or registration of, performing under,
or otherwise with respect to, this Agreement or the Notes (hereinafter referred
to as “Other Taxes”).

(c)           The Borrower shall indemnify the
Lender for the full amount of Taxes or Other Taxes imposed on or paid by the
Lender and any penalties, interest and expenses with respect thereto. Payments
on this indemnification shall be made within 30 days from the date the Lender
makes written demand therefor.

(d)           Within 30 days after the date of any
payment of Taxes, the Borrower shall furnish to the Lender, at its address
referred to on the signature page hereof, a certified copy of a receipt
evidencing payment thereof. In the case of any payment hereunder or under the
Notes by or on behalf of the Borrower through an account or branch outside the
United States or by or on behalf of the Borrower by a payor that is not a
United States person, if the Borrower determine that no Taxes are payable in
respect thereof, the Borrower shall furnish or shall cause such payor to furnish,
to the Lender, at such address, an opinion of counsel reasonably acceptable to
the Lender stating that such payment is exempt from Taxes. For purposes of this
subsection (d) and subsection (e), the terms “United States” and “United
States person” shall have the meanings specified in Section 7701 of the
Internal Revenue Code.

(e)           If the Borrower shall be required by
law or regulation to make any deduction, withholding or backup withholding of
any taxes, levies, imposts, duties, fees, liabilities or similar charges of the
United States of America, any possession or territory of the United States of
America (including the Commonwealth of Puerto Rico) or any area subject to the
jurisdiction of the United States of America (“U.S. Taxes”) from any
payments to a Lender pursuant to any Loan Document in respect of the
Obligations payable to such then or thereafter outstanding, the Borrower shall
make such

 29
 

 

withholdings or deductions and pay the full amount
withheld or deducted to the relevant taxation authority or other authority in
accordance with applicable law.

Section 2.26           Capitalization. The Borrower
agrees to purchase such equity in the Lender as the Lender may from time to
time require in accordance with its Bylaws.

Section 2.27           Security. Each party hereto acknowledges
that the Lender has a statutory first Lien on all of the Borrower’s stock and
other equities in the Lender (the “CoBank Equities”), respectively,
pursuant to 12 U.S.C. § 2131. The Lender’s statutory Lien on the CoBank
Equities shall be for the Lender’s sole and exclusive benefit and shall not be
subject to this Agreement or any other Loan Document.

Section 2.28           Security Interests. The
payment and performance of the Secured Obligations shall be secured by the
Security Documents. The payment of the Revolving Note, Unpaid Drawings related
to a Seasonal Letter of Credit, and all fees, including Revolving Loan Fees,
associated therewith, is unsecured.

ARTICLE III

CONDITIONS PRECEDENT

Section 3.1             Conditions Precedent to All
Loans and Letters of Credit. The obligation of the Lender to make any Loans
hereunder or to issue each Letter of Credit shall be subject to the fulfillment
of the following conditions on or before the Closing Date:

(a)           Documents. The Lender shall
have received the following:

(i)                                     The
Notes drawn to the order of the Lender executed by a duly authorized officer of
the Borrower and dated the Closing Date.

(ii)                                  The
Security Documents duly executed by the respective parties thereto.

(iii)                               A
certificate of the Secretary or Assistant Secretary (or other appropriate
officer) of the Borrower dated as of the Closing Date and certifying to the
following:

(A)                              true
and accurate copy of the corporate resolutions of the Borrower authorizing the
execution, delivery and performance of the Loan Documents to which the Borrower
is a party contemplated hereby and thereby;

(B)                                The
incumbency, names, titles and signatures of the officers of the Borrower
authorized to execute the Loan

 30
 

 

Documents to which the Borrower is a party and to
request Advances;

(C)                                A
true and accurate copy of the Articles of Incorporation (or the equivalent) of
the Borrower with all amendments thereto, certified by the appropriate
governmental official of the jurisdiction of organization as of a date
acceptable to the Lender; and

(D)                               A true
and accurate copy of the bylaws (or other constitutive documents) for the
Borrower.

(iv)                              A
certificate of good standing for the Borrower in the jurisdiction of its
formation or incorporation and each other jurisdiction where the character of
the properties owned or leased by the Borrower makes such qualification
necessary, certified by the appropriate governmental officials as of a date
acceptable to the Lender.

(v)                                 Insurance
certificates in form and substance reasonably satisfactory to the Lender listing
the Lender as loss payee thereof and indicating that the Borrower has obtained
insurance in compliance with Section 5.3 with respect to each of the businesses
and real properties of the Borrower in such amounts and with such carriers
reasonably acceptable to the Lender.

(vi)                              Acknowledgment
of this Agreement and any pertinent Security Document by the parties to the
Intercreditor Agreement.

(b)           Compliance. The Borrower shall
have performed and complied with all agreements, terms and conditions contained
in this Agreement required to be performed or complied with by the Borrower
prior to or simultaneously with the Closing Date.

(c)           Filings, Registrations and
Recordings. Each document required by the Security Documents or under law
or reasonably requested by the Lender to be filed, registered or recorded in
order to create in favor of the Lender for the benefit of the Lender, a
perfected Lien on the collateral described therein, prior and superior in right
to any other Person (other than with respect to Liens expressly permitted by
Section 6.13), shall be in proper form for filing, registration or recordation,
any pledged collateral shall have been duly delivered to the Lender, and the
priority and perfection of the Liens created by the Security Documents shall
have been established to the satisfaction of the Lender and its counsel.

(d)           Financial Statements. The
Lender shall have received copies of the balance sheet and the related
statements of income, retained earnings and cash flows of

 31
 

 

the Borrower for the most recently ended Fiscal
Quarter ending more than sixty (60) days prior to the Closing Date, the most
recent management letter issued by Borrower’s certified public accountants, and
such other information as the Lender may reasonably request. All such financial
statements, including the related schedules and notes thereto, shall have been
prepared in accordance with GAAP

(e)           Other Matters.  All corporate and legal proceedings relating
to the Borrower and all instruments and agreements in connection with the
transactions contemplated by this Agreement shall be satisfactory in scope,
form and substance to the Lender and its counsel, and the Lender shall have
received all information and copies of all documents, including records of
corporate proceedings, as the Lender or its counsel may reasonably have
requested in connection therewith,  such
documents where appropriate to be certified by proper corporate or governmental
authorities.

(f)            Fees and Expenses. The Lender
shall have received for itself and for the account of the Lender all fees and
other amounts due and payable by the Borrower on or prior to the Closing Date,
including the reasonable fees and expenses of counsel to the Lender payable
pursuant to Section 8.2.

(g)           Representations and Warranties.  The representations and warranties contained
in Article IV shall be true and correct on and as of the Closing Date and on
the date of each Advance or the date of issuance of each Letter of Credit, with
the same force an effect as if made on such date.

(h)           No Default. No Default or
Event of Default shall have occurred and be continuing on the Closing Date and
on the date of each Advance or the date of issuance of each Letter of Credit or
will exist after giving effect to the Advances made on such date or the Letters
of Credit so issued.

(i)            Notices and Requests. The
Lender shall have received the Borrower’s request for such Loans as required
under Section 2.3 or its application for such Letters of Credit specified under
Section 2.10.

Any one or more of the conditions set forth above
which have not been satisfied by the Borrower on or prior to the date of
disbursement of the initial Advance under this Agreement shall not be deemed
permanently waived by the Lender or any Lender unless the Lender or such
Lender, as the case may be, shall waive the same in a writing which expressly
states that the waiver is permanent, and in all cases in which the waiver is
not stated to be permanent the Lender or any Lender may at any time subsequent
thereto insist upon compliance and satisfaction of any such condition as a
condition to any subsequent Advance or Letter of Credit hereunder and failure
by the Borrower to comply with any such condition within five (5) Banking Day’s
written notice from the Lender or any Lender to the Borrower shall constitute
an Event of Default under this Agreement.

 32
 

 

ARTICLE IV

REPRESENTATIONS AND WARRANTIES

To induce the Lender to
enter into this Agreement and to make the Loans hereunder and to induce the
Lender to issue Letters of Credit, the Borrower represents and warrants to the
Lender:

Section 4.1             Organization, Standing, Etc. The
Borrower is a cooperative corporation duly incorporated and validly existing
and in good standing under the laws of State of Minnesota. The Borrower has all
requisite power and authority to carry on its business as now conducted, to
enter into this Agreement, to issue the Notes and to perform its obligations
under the Loan Documents. The Borrower (a) holds all certificates of authority,
licenses and permits necessary to carry on its business as presently conducted
in each jurisdiction in which it is carrying on such business, except where the
failure to hold such certificates, licenses or permits would not constitute a
Material Adverse Occurrence, and (b) is duly qualified and in good standing as
a foreign company or corporation in each jurisdiction in which the character of
the properties owned, leased or operated by it or the business conducted by it
makes such qualification necessary and the failure so to qualify would permanently
preclude the Borrower from enforcing its rights with respect to any assets or
expose the Borrower to any Material Adverse Occurrence.

Section 4.2             Authorization and Validity.
The execution, delivery and performance by the Borrower of the Loan Documents
have been duly authorized by all necessary corporate action by the Borrower.
This Agreement constitutes, and the Notes and other Loan Documents when
executed will constitute, the legal, valid and binding obligations of the
Borrower, enforceable against the Borrower in accordance with their respective
terms, subject to limitations as to enforceability which might result from
bankruptcy, insolvency, moratorium and other similar laws affecting creditors’
rights generally and subject to limitations on the availability of equitable
remedies.

Section 4.3             No Conflict: No Default. The
execution, delivery and performance by the Borrower of the Loan Documents will
not (a) violate any provision of any law, statute, rule or regulation or any
order, writ, judgment, injunction, decree, determination or award of any court,
governmental agency or arbitrator presently in effect having applicability to
the Borrower, (b) violate or contravene any provision of the Articles of
Incorporation or bylaws of the Borrower, or (c) result in a breach of or
constitute a default under any indenture, loan or credit agreement or any other
agreement, lease or instrument to which the Borrower is a party or by which it
or any of its properties may be bound or result in the creation of any Lien
thereunder. Borrower is not in default under or in violation of any such law,
statute, rule or regulation, order, writ, judgment, injunction, decree,
determination or award or any such indenture, loan or credit agreement or other
agreement, lease or instrument in any case in which the consequences of such
default or violation could constitute a Material Adverse Occurrence.

 33
 

 

Section 4.4             Government Consent. No
order, consent, approval, license, authorization or validation of, or filing,
recording or registration with, or exemption by, any governmental or public
body or authority is required on the part of the Borrower to authorize, or is
required in connection with the execution, delivery and performance of, or the
legality, validity, binding effect or enforceability of, the Loan Documents,
except for any necessary filing or recordation of or with respect to any of the
Security Documents.

Section 4.5             Financial Statements and
Condition. The Borrower’s audited financial statements as heretofore
furnished to the Lender, have been prepared in accordance with GAAP on a
consistent basis (except for the absence of footnotes and subject to year-end
audit adjustments as to the interim statements) and fairly present the
financial condition of the Borrower as at such dates and the results of their
operations and changes in financial position for the respective periods then
ended. As of the dates of such financial statements, no Borrower had any
material obligation, contingent liability, liability for taxes or long-term lease
obligation which is not reflected in such financial statements or in the notes
thereto.

Section 4.6             Litigation. Except as
disclosed on Schedule 4.6, there are no actions, suits or proceedings
pending or, to the knowledge of the Borrower, threatened against or affecting
the Borrower or any of its properties before any court or arbitrator, or any
governmental department, board, agency or other instrumentality which, if
determined adversely to the Borrower, would exceed $7,500,000, and there are no
unsatisfied judgments against the Borrower, the satisfaction or payment of
which would exceed $7,500,000.

Section 4.7             Environmental, Health and Safety
Laws. Except as set out on Schedule 4.7, to Borrower’s knowledge
there does not exist any violation by the Borrower of any applicable federal,
state or local law, rule or regulation or order of any government, governmental
department, board, agency or other instrumentality relating to environmental,
pollution, health or safety matters which has, will or threatens to impose a
liability on Borrower or which has required or would require an expenditure by
Borrower to cure in excess of $7,500,000 per violation or $25,000,000 in the
aggregate. No property of the Borrower is used for the production, storage or
disposal of hazardous wastes, substances or materials, except for incidental
uses in the ordinary course of business. Borrower has not received any notice
to the effect that any part of its operations or properties is not in material
compliance with any such law, rule, regulation or order or notice that it or
its property is the subject of any governmental investigation evaluating
whether any remedial action is needed to respond to any release of any toxic or
hazardous waste or substance into the environment, which non-compliance or
remedial action could reasonably be expected to exceed $7,500,000 per
occurrence or $25,000,000 in the aggregate. Except as set out on Schedule
4.7, Borrower has no knowledge that it or its property will become subject
to environmental laws or regulations during the term of this Agreement,
compliance with which could reasonably be expected to require Capital
Expenditures that could reasonably be expected to exceed $7,500,000 per
occurrence or $25,000,000 in the aggregate.

Section 4.8             ERISA. Each Plan is in
substantial compliance with all applicable requirements of ERISA and the Code
and with all material applicable rulings and regulations

 34
 

 

issued under the provisions of ERISA and the Code
setting forth those requirements. No Reportable Event has occurred and is
continuing with respect to any Plan. All of the minimum funding standards
applicable to such Plans have been satisfied and there exists no event or
condition which would reasonably be expected to result in the institution of
proceedings to terminate any Plan under Section 4042 of ERISA.

Section 4.9             Federal Reserve Regulations.
Borrower is not engaged principally or as one of its important activities in
the business of extending credit for the purpose of purchasing or carrying
margin stock (as defined in Regulation U of the Board). The value of all margin
stock owned by the Borrower does not constitute more than 25% of the value of
the assets of the Borrower.

Section 4.10           Title to Property; Leases: Liens;
Subordination. The Borrower has (a) good and marketable title to its real
properties and (b) good and sufficient title to, or valid, subsisting and
enforceable leasehold interest in, its other material properties, including all
real properties, other properties and assets, referred to as owned by a
Borrower in the most recent financial statement referred to in Section 5.1
(other than property disposed of since the date of such financial statements in
the ordinary course of business). None of such properties is subject to a Lien,
except as allowed under Section 6.13. No Borrower has subordinated any of its
rights under any obligation owing to it to the rights of any other person.

Section 4.11           Taxes. The Borrower has filed
all federal, state and local tax returns required to be filed and has paid or
made provision for the payment of all taxes due and payable pursuant to such
returns and pursuant to any assessments made against it or any of its property
and all other taxes, fees and other charges imposed on it or any of its
property by any governmental authority (other than taxes, fees or charges the
amount or validity of which is currently being contested in good faith by
appropriate proceedings and with respect to which reserves in accordance with
GAAP have been provided on the books of the Borrower). No tax Liens have been
filed and no material claims are being asserted with respect to any such taxes,
fees or charges. The charges, accruals and reserves on the books of the
Borrower in respect of taxes and other governmental charges are adequate and
the Borrower knows of no proposed material tax assessment against it or any
basis therefor.

Section 4.12           Trademarks, Patents. The
Borrower possesses or has the right to use all of the patents, trademarks,
trade names, service marks and copyrights, and applications therefor, and all
technology, know-how, processes, methods and designs used in or necessary for
the conduct of its business, without known conflict with the rights of others.

Section 4.13           Burdensome Restriction.
Borrower is not a party to or otherwise bound by any indenture, loan or credit
agreement or any lease or other agreement or instrument or subject to any
charter, corporate or partnership restriction exceeding $7,500,000.

Section 4.14           Force Majeure. Since the date
of the most recent financial statement referred to in Section 5.1, the
business, properties and other assets of the Borrower have not been

 35
 

 

materially and adversely affected in any way as the
result of any fire or other casualty, strike, lockout, or other labor trouble,
embargo, sabotage, confiscation, condemnation, riot, civil disturbance,
activity of armed forces or act of God.

Section 4.15           Investment Company Act.
Borrower is not an “investment company” or a company “controlled” by an
investment company within the meaning of the Investment Company Act of 1940, as
amended.

Section 4.16           Public Utility Holding Company Act.
Borrower is not a “holding company” or a “subsidiary company” of a holding
company or an “affiliate” of a holding company or of a subsidiary company of a
holding company within the meaning of the Public Utility Holding Company Act of
1935, as amended.

Section 4.17           Full Disclosure. Subject to
the following sentence, neither the financial statements referred to in Section
5.1 nor any other certificate, written statement, exhibit or report furnished
by or on behalf of the Borrower in connection with or pursuant to this
Agreement contains any untrue statement of a material fact or omits to state
any material fact necessary in order to make the statements contained therein
not misleading. Certificates or statements furnished by or on behalf of the
Borrower to the Lender consisting of projections or forecasts of future results
or events have been prepared in good faith and based on good faith estimates
and assumptions of the management of the Borrower, and the Borrower has no
reason to believe that such projections or forecasts are not reasonable.

Section 4.18           Subsidiaries. The Borrower has
no Subsidiaries other than those disclosed to the Lender in Schedule 4.18.

Section 4.19           Labor Matters. There are no
pending or threatened strikes, lockouts or slowdowns against either Borrower.
Borrower has not been or is not in violation in any material respect of the
Fair Labor Standards Act or any other applicable Federal, state, local or
foreign law dealing with such matters. All payments due from the Borrower on
account of wages and employee health and welfare insurance and other benefits
(in each case, except for de minimus amounts), have been paid or accrued as a
liability on the books of the Borrower. The consummation of the transactions
contemplated under the Loan Documents will not give rise to any right of
termination or right of renegotiation on the part of any union under any
collective bargaining agreement to which the Borrower is bound.

Section 4.20           Solvency. After the making of
any Advance and after giving effect thereto, (a) the fair value of the assets
of the Borrower, at a fair valuation, will exceed its debts and liabilities,
subordinated, contingent or otherwise; (b) the present fair saleable value of
the property of the Borrower will be greater than the amount that will be
required to pay the probable liability of its debts and other liabilities,
subordinated, contingent or otherwise, as such debts and other liabilities become
absolute and matured; (c) the Borrower will be able to pay its debts and
liabilities, subordinated, contingent or otherwise, as such debts and
liabilities become absolute and matured; and (d) Borrower will not have
unreasonably small capital with which to

 36
 

 

conduct the business in which it is engaged as such
business is proposed to be conducted following the Closing Date.

ARTICLE V

AFFIRMATIVE COVENANTS

Until any obligation of
the Lender hereunder to make the Loans and to issue Letters of Credit shall
have expired or been terminated and the Notes and all of the other Obligations
have been paid in full and all outstanding Letters of Credit shall have expired
or the liability of the Lender thereon shall have otherwise been discharged:

Section 5.1             Financial Statements and Reports.
The Borrower will furnish to the Lender:

(a)           As soon as available and in any event
within 120 days after the end of each fiscal year of the Borrower, the
consolidated and consolidating financial statements of the Borrower and their
consolidated Subsidiaries consisting of at least statements of income, cash
flow and changes in the members’ equity, and a consolidated balance sheet as at
the end of such year, setting forth in each case in comparative form
corresponding figures from the previous annual audit, certified without
qualification by Eide Bailly, LLP, or another independent certified public
accountants of recognized national standing selected by the Borrower and
reasonably acceptable to the Lender, together with any management letters,
management reports or other supplementary comments or reports to the Borrower’s
board of director furnished by such accountants.

(b)           As soon as available and in any event
within 5 days after the Borrower’s quarterly filing with the Securities and
Exchange Commission, unaudited consolidated statements of income, cash flow and
changes in the members’ equity for the Borrower and their consolidated
Subsidiaries for such quarter and for the period from the beginning of such
fiscal year to the end of such quarter, and a consolidated balance sheet of the
Borrower as at the end of such quarter, setting forth in comparative form
figures for the corresponding period for the preceding fiscal year, accompanied
by a certificate signed by an officer of the Borrower stating that such
financial statements present fairly the financial condition of the Borrower and
that the same have been prepared in accordance with GAAP (except for the
absence of footnotes and subject to year-end audit adjustments as to the interim
statements).

(c)           As soon as practicable and in any
event within 45 days after the end of each Fiscal Quarter, a Compliance
Certificate in the form attached hereto as Exhibit D signed by an
officer of the Borrower demonstrating in reasonable detail compliance (or
noncompliance, as the case may be) with Section 6.11(h), Section 6.15, Section
6.16 and Section 6.17, as of the end of such quarter and stating that as at the
end of such quarter there did not exist any Default or Event of Default or, if
such Default or Event of

 37
 

 

Default existed, specifying the nature and period of
existence thereof and what action the Borrower propose to take with respect
thereto.

(d)           As soon as practicable and in any
event within 30 days after the end of each month, a Borrowing Base Certificate
signed by an officer of Borrower, reporting the Borrowing Base as of the last
day of such month.

(e)           As soon as practicable and in any
event not more than 60 days after the end of any fiscal year, annual budgets
and forecasts of operations, all in reasonable detail and reasonably
satisfactory in scope to the Lender.

(f)            As soon as practicable and in any
event not more than 60 days after the end of any fiscal year, an annual capital
expenditure budget. The Borrower will also furnish a revised budget if
increases of more than 20% over the original capital expenditures budget are
approved by the board of directors.

(g)           With respect to Crystech, annual
financial statements within 120 days after and as of the end of each fiscal
year substantially in the form of (a) above, and quarterly financial statements
within 60 days after as of the end of each Fiscal Quarter in the form of (b)
above.

(h)           Immediately upon any officer of the
Borrower becoming aware of any Default or Event of Default, a written notice
from the Borrower describing the nature thereof and what action Borrower
propose to take with respect thereto.

(i)            Immediately upon any officer of the
Borrower becoming aware of any matter resulting in expenditures exceeding
$7,500,000, a written notice from the Borrower describing the nature thereof
and what action Borrower propose to take with respect thereto.

(j)            Immediately upon any officer of the
Borrower becoming aware of (i) the commencement of any action, suit,
investigation, proceeding or arbitration before any court or arbitrator or any
governmental department, board, agency or other instrumentality affecting a
Borrower or any property of such Person, or to which a Borrower is a party
(other than litigation where the insurance insures against the damages claimed
and the insurer has assumed defense of the litigation without reservation) and
in which an adverse determination or result could reasonably be expected to
constitute a Material Adverse Occurrence; or (ii) any adverse development which
occurs in any litigation, arbitration or governmental investigation or
proceeding previously disclosed by a Borrower which, if determined adversely to
a Borrower, could reasonably be expected to result in expenditures exceeding
$7,500,000, a written notice from the Borrower describing the nature and status
thereof and what action the Borrower propose to take with respect thereto.

 38
 

 

(k)           From time to time, such other
information regarding the business, operation and financial condition of the
Borrower as any Lender may reasonably request.

Section 5.2             Existence. The Borrower will
maintain its corporate existence in good standing under the laws of its
jurisdiction of organization and its qualification to transact business in each
jurisdiction where failure so to qualify would permanently preclude the
Borrower from enforcing its rights with respect to any material asset or would
expose the Borrower to any material liability.

Section 5.3             Insurance. The Borrower
shall maintain with financially sound and reputable insurance companies such
insurance as may be required by law and such other insurance in such amounts
and against such hazards as is customary in the case of reputable firms engaged
in the same or similar business and similarly situated.

Section 5.4             Payment of Taxes and Claims.
The Borrower shall file all tax returns and reports which are required by law
to be filed by it and will pay before they become delinquent all taxes,
assessments and governmental charges and levies imposed upon it or its property
and all claims or demands of any kind (including but not limited to those of
suppliers, mechanics, carriers, warehouses, landlords and other like Persons)
which, if unpaid, might result in the creation of a Lien upon its property; provided
that the foregoing items need not be paid if they are being contested in good
faith by appropriate proceedings, and as long as the Borrower’s title to its
property is not materially adversely affected, its use of such property in the
ordinary course of its business is not materially interfered with and adequate
reserves with respect thereto have been set aside on the Borrower’s books in
accordance with GAAP.

Section 5.5             Inspection. The Borrower
shall permit any Person designated by the Lender or any Lender to visit and
inspect any of the collateral and the properties, books and financial records
of the Borrower, to examine and to make copies of the books of accounts and
other financial records of the Borrower, and to discuss the affairs, finances
and accounts of the Borrower with, and to be advised as to the same by, its
officers at such reasonable times and intervals as the Lender or any Lender may
designate. Provided that no Default or Event of Default has occurred and is
continuing, such inspections shall take place no more frequently than annually
unless the Borrower first consent to additional inspections.

Section 5.6             Maintenance of Properties.
The Borrower will maintain its properties used or useful in the conduct of its
business in good condition, repair and working order, and supplied with all
necessary equipment, and make all necessary repairs, renewals, replacements,
betterments and improvements thereto, all as may be necessary so that the
business carried on in connection therewith may be properly and advantageously
conducted at all times.

Section 5.7             Books and Records. The
Borrower will keep adequate and proper records and books of account in which
full and correct entries will be made of its dealings, business and affairs.

 39
 

 

Section 5.8             Compliance. The Borrower
will comply in all material respects with all laws, rules, regulations, orders,
writs, judgments, injunctions, decrees or awards to which it may be subject; provided,
however, that failure so to comply shall not be a breach of this
covenant if such failure cannot reasonably be expected to constitute a Material
Adverse Occurrence and the Borrower is acting in good faith and with reasonable
dispatch to cure such noncompliance.

Section 5.9             ERISA. The Borrower will
maintain each Plan in compliance with all material applicable requirements of
ERISA and of the Code and with all applicable rulings and regulations issued
under the provisions of ERISA and of the Code.

Section 5.10           Environmental Matters: Reporting.
The Borrower will observe and comply with all laws, rules, regulations and
orders of any government or government agency relating to health, safety,
pollution, hazardous materials or other environmental matters to the extent
non-compliance could result in a material liability or otherwise constitute a
Material Adverse Occurrence. The Borrower will give the Lender prompt written
notice of any violation as to any environmental matter by the Borrower and of
the commencement of any judicial or administrative proceeding relating to
health, safety or environmental matters (a) in which an adverse determination
or result could result in the revocation of or have a material adverse effect
on any operating permits, air emission permits, water discharge permits,
hazardous waste permits or other permits held by the Borrower which are
material to the operations of the Borrower, or (b) which will or threatens to
impose a material liability on the Borrower to any Person or which will require
expenditures by the Borrower exceeding $7,500,000 to cure any alleged problem
or violation.

Section 5.11           Further Assurances. The
Borrower shall promptly correct any defect or error that may be discovered in
any Loan Document or in the execution, acknowledgment or recordation thereof.
Promptly upon request by the Lender or the Required Lender, the Borrower also
shall do, execute, acknowledge, deliver, record, re-record, file, re-file,
register and re­register, any and all deeds, conveyances, mortgages, deeds of
trust, trust deeds, assignments, estoppel certificates, financing statements
and continuations thereof, notices of assignment, transfers, certificates,
assurances and other instruments as the Lender or the Required Lender may
reasonable require from time to time in order: (a) to carry out more
effectively the purposes of the Loan Documents; (b) to perfect and maintain the
validity, effectiveness and priority of any security interests intended to be
created by the Loan Documents including, without limitation, the delivery of a
landlord waiver from any landlord required by the Lender or the Required
Lender; and (c) to better assure, convey, grant, assign, transfer, preserve,
protect and confirm unto the Lender the rights granted now or hereafter
intended to be granted to the Lender under any Loan Document or under any other
instrument executed in connection with any Loan Document or that the Borrower
may be or become bound to convey, mortgage or assign to the Lender for the
benefit of the Lender in order to carry out the intention or facilitate the
performance of the provisions of any Loan Document. The Borrower shall furnish
to the Lender evidence reasonably satisfactory to the Lender of every such
recording, filing or registration.

 40
 

 

Section 5.12           Compliance with Terms of Material
Contracts. The Borrower shall make all payments and otherwise perform all
obligations in respect of all material contracts to which the Borrower is a
party, the failure of which would constitute a Material Adverse Occurrence.

Section 5.13           Eligibility. The Borrower
shall maintain its status as an entity eligible to borrow from the Lender. If
requested, the Borrower agrees to submit any documentation reasonably requested
by the Lender to evidence such eligibility.

ARTICLE VI

NEGATIVE COVENANTS

Until any obligation of
the Lender hereunder to make the Loans or to issue Letters of Credit shall have
expired or been terminated and the Notes and all of the other Obligations have
been paid in full and all outstanding Letters of Credit shall have expired or
the liability of the Lender thereon shall have otherwise been discharged:

Section 6.1             Merger. The Borrower will
not merge or consolidate or enter into any analogous reorganization or
transaction with any Person or liquidate, wind up or dissolve itself (or suffer
any liquidation or dissolution).

Section 6.2             Disposition of Assets. The
Borrower will not directly or indirectly, sell, assign, lease, convey, transfer
or otherwise dispose of (whether in one transaction or a series of
transactions) any property (including accounts and notes receivable, with or
without recourse) or enter into any agreement to do any of the foregoing,
except:

(a)           dispositions of inventory in the
ordinary course of business;

(b)           dispositions of used, worn-out or
obsolete equipment, furniture, furnishings, machinery or fixtures if the value
of such disposed equipment, furniture, furnishings, machinery or fixtures at
the time of disposal is less than $7,500,000 in the aggregate in any fiscal
year; and

(c)           other dispositions of property if the
net book value of the disposed property does not exceed in any fiscal year, 5%
of the Borrower’s total consolidated assets as shown on its balance sheet as of
the end of the immediately preceding fiscal year.

Section 6.3             Plans. The Borrower will not
permit any event to occur or condition to exist which would permit any Plan to
terminate under any circumstances which would cause the Lien provided for in
Section 4068 of ERISA to attach to any assets of the Borrower.

Section 6.4             Change in Nature of Business.
The Borrower will not make any material change in the nature of the business of
the Borrower, as carried on at the date hereof.

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Section 6.5             Subsidiaries. The Borrower
will not form or acquire any Person which would thereby become a Subsidiary,
with the exception of Investments permitted under Section 6.11.

Section 6.6             Negative Pledges. Except as
otherwise permitted hereunder, the Borrower will not enter into any agreement,
bond, note or other instrument with or for the benefit of any Person other than
the Lender which would (i) prohibit the Borrower from granting, or otherwise
limit the ability of the Borrower to grant, to the Lender any Lien on any
assets or properties of the Borrower, or (ii) require the Borrower to grant a
Lien to any other Person if the Borrower grants any Lien to the Lender.

Section 6.7             Restricted Payments. The
Borrower will not make any Restricted Payments if a Default or Event of Default
has occurred and is continuing or if a Default or Event of Default would occur
as a result of such Restricted Payment.

Section 6.8             Transactions with Affiliates.
The Borrower will not enter into any transaction with any Affiliate of the
Borrower, except upon fair and reasonable terms no less favorable than the
Borrower would obtain in a comparable arm’s-length transaction with a Person
not an Affiliate.

Section 6.9             Accounting Changes. The
Borrower will not make any significant change in accounting treatment or
reporting practices, except as required by GAAP, or change its fiscal year.

Section 6.10           Subordinated Debt. The
Borrower will not (a) make any scheduled payment of the principal of or
interest on any Subordinated Debt that would be prohibited by the terms of such
Subordinated Debt and any related subordination agreement; (b) directly or
indirectly make any prepayment on or purchase, redeem or defease any
Subordinated Debt or offer to do so (whether such prepayment, purchase or
redemption, or offer with respect thereto, is voluntary or mandatory); (c)
amend or cancel the subordination provisions applicable to any Subordinated
Debt; (d) take or omit to take any action if as a result of such action or
omission the subordination of such Subordinated Debt, or any part thereof, to
the Obligations might be terminated, impaired or adversely affected; or (e)
omit to give the Lender prompt notice of any notice received from any holder of
Subordinated Debt, or any trustee therefor, or of any default under any
agreement or instrument relating to any Subordinated Debt by reason whereof
such Subordinated Debt might become or be declared to be due or payable.

Section 6.11           Investments. The Borrower will
not acquire for value, make, have or hold any Investments, except:

(a)           Investments existing on the date of
this Agreement and described on Schedule 6.11.

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(b)           Travel advances to management
personnel and employees in the ordinary course of business.

(c)           Investments in readily marketable
direct obligations issued or guaranteed by the United States or any agency
thereof and supported by the full faith and credit of the United States.

(d)           Certificates of deposit or bankers’
acceptances issued by any commercial bank organized under the laws of the United
States or any State thereof which has (i) combined capital and surplus of at
least $100,000,000, and (ii) a credit rating with respect to its unsecured
indebtedness from a nationally recognized rating service that is reasonably
satisfactory to the Lender.

(e)           Commercial paper given the highest
rating by a nationally recognized rating service.

(f)            Repurchase agreements relating to
securities issued or guaranteed as to principal and interest by the United
States of America with a term of not more than seven (7) days; provided
all such agreements shall require physical delivery of the securities securing
such repurchase agreement, except those delivered through the Federal Reserve
Book Entry System.

(g)           Other readily marketable Investments
in debt securities which are reasonably acceptable to the Required Lender.

(h)           Any other Investment if the aggregate
consideration therefor does not exceed $7,500,000.

Any Investments under clauses (c), (d), (e) or (f)
above must mature within one year of the acquisition thereof by the Borrower.

Section 6.12           Indebtedness. The Borrower
will not incur, create, issue, assume or suffer to exist any Indebtedness,
except:

(a)           The Obligations.

(b)           Current Liabilities, other than for
borrowed money, incurred in the ordinary course of business.

(c)           Indebtedness existing on the date of
this Agreement and disclosed on Schedule 6.12, but not including any
extension or refinancing thereof.

(d)           Indebtedness secured by Liens
permitted under Section 6.13 hereof and disclosed on Schedule 6.12.

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Section 6.13           Liens. The Borrower will not
create, incur, assume or suffer to exist any Lien, or enter into, or make any
commitment to enter into, any arrangement for the acquisition of any property
through conditional sale, lease-purchase or other title retention agreements,
with respect to any property now owned or hereafter acquired by the Borrower,
except:

(a)           Liens granted to the Lender under the
Security Documents to secure the Obligations.

(b)           Liens existing on the date of this
Agreement and disclosed on Schedule 6.13.

(c)           Deposits or pledges to secure payment
of insurance, old age pensions or other social security obligations, in the
ordinary course of business of the Borrower.

(d)           Liens for taxes, fees, assessments
and governmental charges not delinquent or to the extent that payment therefor
shall not at the time be required to be made in accordance with the provisions
of Section 5.4.

(e)           Liens of carriers, warehousemen,
mechanics and materialmen, and other like Liens arising in the ordinary course
of business, for sums not due or to the extent that payment therefor shall not
at the time be required to be made in accordance with the provisions of Section
5.4.

(f)            Liens incurred or deposits or
pledges made or given in connection with, or to secure payment of, indemnity,
performance or other similar bonds.

(g)           Liens arising solely by virtue of any
statutory or common law provision relating to banker’s liens, rights of set-off
or similar rights and remedies as to deposit accounts or other funds maintained
with a creditor depository institution; provided  that (i) such
deposit account is not a dedicated cash collateral account and is not subject
to restriction against access by a Borrower in excess of those set forth by
regulations promulgated by the Board, and (ii) such deposit account is not
intended by the Borrower to provide collateral to the depository institution.

(h)           The interest of any lessor under any
Capitalized Lease entered into after the Closing Date or purchase money Liens
on property acquired after the Closing Date; provided, that, (i) the
Indebtedness secured thereby is otherwise permitted by this Agreement and (ii)
such Liens are limited to the property acquired and do not secure Indebtedness
other than the related Capitalized Lease Obligations or the purchase price of
such property.

(i)            Liens created in connection with
transactions permitted under Section 6.12(e) hereof.

 44
 

 

(j)            Lender’s statutory Lien on the
CoBank Equities.

Section 6.14           Contingent Liabilities. The
Borrower will not be or become liable on any Contingent Obligations except
Contingent Obligations existing on the date of this Agreement and described on Schedule
6.14 and Contingent Obligations for the benefit of the Lender.

Section 6.15           Net Working Capital. As of the
end of each Fiscal Quarter, other than fiscal year end, Net Working Capital of
the Borrower and their consolidated Subsidiaries (excluding ProGold and
Crystech) shall not be less than $15,000,000. As of the end of each fiscal
year, Net Working Capital of the Borrower and their consolidated Subsidiaries
shall not be less than $35,000,000.

Section 6.16           Capitalization Ratio. As of
the end of each Fiscal Quarter, the Capitalization Ratio of the Borrower and
their consolidated Subsidiaries (excluding ProGold and Crystech) shall not be
more than 0.55 to 1.0, on a consolidated basis.

Section 6.17           Interest Coverage Ratio. As of
the end of each Fiscal Quarter, the Interest Coverage Ratio of the Borrower and
their consolidated Subsidiaries (excluding ProGold and Crystech) will not be
less than 2.5 to 1.0.

ARTICLE VII

EVENTS OF DEFAULT AND REMEDIES

Section 7.1             Events of Default. The
occurrence of any one or more of the following events shall constitute an Event
of Default:

(a)           The Borrower shall fail to make when
due, whether by acceleration or otherwise, any payment of principal of any Note
and such failure to pay shall continue for five (5) Banking Days after the date
on which such payment was due.

(b)           The Borrower shall fail to make when
due, whether by acceleration or otherwise, any payment of interest on any Note
or on or of any other Obligation required to be made to the Lender or any
Lender pursuant to this Agreement and such failure to pay shall continue for
five (5) Banking Days after the date on which such payment was due.

(c)           Any representation or warranty made
by or on behalf of the Borrower in this Agreement or any other Loan Document or
by or on behalf of the Borrower in any certificate, statement, report or
document herewith or hereafter furnished to any Lender or the Lender pursuant
to this Agreement or any other Loan Document shall prove to have been false or
misleading in any material respect on the date as of which the facts set forth
are stated or certified.

 45
 

 

(d)           The Borrower shall fail to
comply with Sections 2,17, 5.2, 5.3 or 5.13 hereof
or any Section of Article VI hereof.

(e)           The Borrower shall fail to
comply with any other agreement, covenant, condition,
provision or term contained in this Agreement (other than those hereinabove set
forth in this Section 7.1) and such failure to comply shall continue for 30
calendar days after whichever of the following dates is the earliest:  (i) the date the Borrower or the Borrower give notice of such failure to the
Lender, (ii) the date the Borrower should have given notice of such
failure to the Lender pursuant to Section 5.1, or (iii) the date the Lender or any Lender gives notice of such
failure to the Borrower.

(f)            Any default (however
denominated or defined) shall occur under any Security
Document.

(g)           The Borrower shall become
insolvent or shall generally not pay its debts as they mature or shall apply
for, shall consent to, or shall acquiesce in the appointment of a custodian, trustee or receiver of the
Borrower or for a substantial part of the property thereof or, in the absence of such application,
consent or acquiescence, a custodian, trustee or receiver shall be
appointed for the Borrower or for a substantial part of the property thereof
and shall not be discharged within 45 days, or the Borrower shall make an assignment for the benefit of creditors.

(h)           Any bankruptcy, reorganization, debt
arrangement or other proceedings under any bankruptcy or insolvency law
shall be instituted by or against the Borrower, and, if instituted against the
Borrower, shall have been consented to or acquiesced in by the Borrower, or
shall remain undismissed for 60 days, or an order for relief shall have been entered against the Borrower.

(i)            Any dissolution or liquidation
proceeding shall be instituted by or against the Borrower, and, if instituted
against the Borrower, shall be consented to or acquiesced in by the Borrower or
shall remain for 45 days undismissed.

(j)            A judgment or judgments for the
payment of money in excess of the sum of $7,500,000 in the aggregate
shall be rendered against the Borrower and either (i) the judgment creditor
executes on such judgment or (ii) such judgment remains unpaid or undischarged
for more than 60 days from the date of entry thereof or such longer period
during which execution of such judgment shall be stayed during an appeal from
such judgment.

(k)           The maturity of any material
interest-bearing Indebtedness of the Borrower (other than Indebtedness
under this Agreement) shall be accelerated, or the Borrower shall fail to pay any such material Indebtedness when due
(after the lapse of any applicable grace period) or, in the case of such
Indebtedness payable on demand, when demanded (after the lapse of any
applicable grace period), or any event shall occur

 46
 

 

or condition shall exist and shall continue for more
than the period of grace, if any, applicable thereto and shall have the effect
of causing, or permitting the holder of any such Indebtedness or any trustee or
other Person acting on behalf of such holder to cause, such material
Indebtedness to become due prior to its stated maturity or to realize upon any
collateral given as security therefor. For purposes of this Section,
Indebtedness of the Borrower shall be deemed “material” if it exceeds
$7,500,000 as to any item of Indebtedness or in the aggregate for all items of
Indebtedness with respect to which any of the events described in this Section
7.1(k) has occurred.

(l)            Any execution or attachment shall be
issued whereby any substantial part of the property of the Borrower shall be
taken or attempted to be taken and the same shall not have been vacated or
stayed within 30 days after the issuance thereof.

(m)          Any Security Document shall, at any
time, cease to be in full force and effect or shall be judicially declared null
and void, or the validity or enforceability thereof shall be contested by the
Borrower, or the Lender or the Lender shall cease to have a valid and perfected
security interest having the priority contemplated thereunder in all of the
collateral described therein, other than by action or inaction of the Lender or
the Lender if (i) the aggregate value of the collateral affected by any of the
foregoing exceeds $1,000,000 and (ii) any of the foregoing shall remain
unremedied for twenty (20) days or more after receipt of notice thereof by the
Borrower from the Lender.

(n)           Any Change of Control shall occur.

Section
7.2             Remedies. If any
Event of Default described in Sections 7.1 (g), (h) or (i) shall occur, the
Loans shall automatically terminate and the Notes and all other Obligations
shall automatically become immediately due and payable, and the Borrower shall
without demand cash collateralize an amount equal to the aggregate face amount
of all outstanding Letters of Credit. Upon the occurrence of any of the
foregoing events, the Lender may exercise all rights and remedies under any of
the Loan Documents, and enforce all rights and remedies under any applicable
law.

Section
7.3             Offset. In addition
to the remedies set forth in Section 7.2, upon the occurrence of any Event of
Default and thereafter while the same be continuing, the Borrower hereby
irrevocably authorizes the Lender to set off any Obligations owed to the Lender
against all deposits and credits of the Borrower with, and any and all claims
of the Borrower against, the Lender. Such right shall exist whether or not the
Lender shall have made any demand hereunder or under any other Loan Document,
whether or not the Obligations, or any part thereof, or deposits and credits
held for the account of the Borrower is or are matured or unmatured, and
regardless of the existence or adequacy of any collateral, guaranty or any
other security, right or remedy available to the Lender. The Lender agrees
that, as promptly as is reasonably possible after the exercise of any such
setoff right, it shall notify the Borrower of its exercise of such setoff
right; provided, however, that the failure of the Lender to
provide such notice shall not affect the validity of the exercise of such
setoff rights.  Nothing in this Agreement
shall be

 47
 

 

deemed a waiver or prohibition of or restriction on the Lender to all
rights of banker’s Lien, setoff and counterclaim available pursuant to law.

ARTICLE VIII 

MISCELLANEOUS

Section
8.1             Modifications.
Neither this Agreement, any other Loan Document, nor any terms hereof or
thereof may be amended, supplemented or modified except in accordance with the
provisions of this Section 8.1. The Lender and the Borrower may, from time to
time, (i) enter into written amendments, supplements or modifications hereto
and to the other Loan Documents for the
purpose of adding any provisions to this Agreement or the other Loan Documents or changing in any manner the rights of
the Lender or of the Borrower hereunder or thereunder or (ii) waive, on such terms and conditions as the Lender
may specify in such instrument, any of the requirements of this Agreement or
the other Loan Documents or any Default or Event of Default and its
consequences.

Section
8.2             Expenses. Whether
or not the transactions contemplated hereby are consummated, the
Borrower agrees to reimburse the Lender upon demand for all reasonable
out-of-pocket expenses paid or incurred by the Lender (including the fees and
expenses of outside legal counsel to the Lender, and any filing and recording
costs) in connection with the negotiation, preparation, approval, review,
execution, delivery, administration, amendment, modification and interpretation of this Agreement and the other Loan
Documents and any commitment letters relating thereto. The Borrower
shall also reimburse the Lender upon demand for all reasonable out-of-pocket
expenses (including expenses of legal counsel) paid or incurred by the Lender in connection with the collection
and enforcement of this Agreement and any other Loan Document. The
obligations of the Borrower under this Section shall survive any termination of
this Agreement.

Section 8.3             Waivers, etc. No failure on
the part of the Lender or the holder of a Note to exercise and no delay in
exercising any power or right hereunder or under any other Loan Document shall
operate as a waiver thereof; nor shall any single or partial exercise of any
power or right preclude any other or further exercise thereof or the exercise
of any other power or right. The remedies herein and in the other Loan
Documents provided are cumulative and not exclusive of any remedies provided by
law.

Section
8.4             Notices. Except
when telephonic notice is expressly authorized by this Agreement, any
notice or other communication to any party in connection with this Agreement
shall be in writing and shall be sent by manual delivery, facsimile
transmission, overnight courier or United States mail (postage prepaid)
addressed to such party at the address specified on the signature page hereof, or at such other address as such party shall
have specified to the other party
hereto in writing. All periods of notice shall be measured from the date of
delivery thereof if manually delivered, from the date of sending thereof if
sent by facsimile transmission, from the
first Banking Day after the date of sending if sent by overnight courier, or
from four days

 48
 

 

after the date of mailing if mailed; provided, however,
that any notice to the Lender under Article II hereof shall be deemed to have
been given only when received by the Lender.

Section 8.5             Taxes. The Borrower agrees to
pay, and save the Lender harmless from all liability for, any stamp or
other taxes which may be payable with respect to the execution or delivery of
this Agreement or the issuance of the Notes, which obligation of the Borrower
shall survive the termination of this
Agreement.

Section 8.6             Successors
and Assigns; Participations; Purchasing Lender.

(a)           This Agreement shall be binding upon and inure to the benefit of the Borrower,
the Lender, all future holders of the Notes, and their respective successors and
assigns, except that the Borrower may not
assign or transfer any of their rights or obligations under this
Agreement without the prior written consent of the Lender.

(b)           The Lender may, at any time in the ordinary course of its commercial banking
business and in accordance with applicable law, with the consent of the Lender
and the Borrower (neither of which consents shall be unreasonably withheld or
delayed; and if an Event of Default shall have occurred and be continuing, then
consent of the Borrower shall not be required), sell to one or more banks or
other financial institutions (“Participants”)
participating interests in the Revolving Loan, the Term Loans or other Obligations owing to the Lender, the Revolving
Note held by the Lender, any Term Notes
held by the Lender, or any other interest of the Lender hereunder. The Borrower
agrees that if amounts outstanding under this Agreement, the Revolving
Note, the Term Notes and the Loan Documents are due and unpaid, or shall have
been declared or shall have become due and
payable upon the occurrence of an Event of Default, each Participant shall be deemed to have, to the
extent permitted by applicable law, the right of setoff in respect of
its participating interest in amounts owing under this Agreement and the
Revolving Note, any Term Note or other Loan Document to the same extent as if
the amount of its participating interest were
owing directly to it as a Lender under this Agreement or the Revolving Note, any Term Note or other Loan Document; provided.
that such right of setoff shall
be subject to the obligation of such Participant to share with the Lender, and the Lender agree to share with
such Participant. The Borrower also agrees that each Participant shall
be entitled to the benefits of Sections 2.19, 2.20, 2.21, 2.22 and 8.2 with respect to its participation in
the Loans; provided, that no Participant shall be entitled to
receive any greater amount pursuant to such subsection than the Lender would
have been entitled to receive in respect of the amount of the participation
transferred by the Lender to such Participant had no such transfer occurred.

(c)           The Borrower shall not be
liable for any costs incurred by the Lender in effecting any participation under subparagraph (b) of this subsection.

(d)           The Lender may disclose to any Participant and to any prospective Participant
any and all financial information in the Lender’s possession concerning the

 49
 

 

Borrower or any of their Subsidiaries which has been
delivered to the Lender by or on behalf of the Borrower or any of their
Subsidiaries pursuant to this Agreement or which has been delivered to the Lender by or on behalf of the Borrower or any
of their Subsidiaries in connection with the Lender’s credit evaluation
of the Borrower or any of its Subsidiaries
prior to entering into this Agreement, provided that prior to disclosing
such information, the Lender shall
first obtain the agreement of such prospective Participant to comply with the provisions of Section 8.7.

(e)           Notwithstanding
any other provision in this Agreement, any Lender may at any time create
a security interest in, or pledge, all or any portion of its rights under and
interest in this Agreement and any note held by it in favor of any federal
reserve bank in accordance with Regulation A
of the Board or U. S. Treasury Regulation 31 CFR § 203.14, and such Federal
Reserve Bank may enforce such pledge or security interest in any manner
permitted under applicable law.

Section
8.7             Confidentiality of
Information. The Lender shall use reasonable efforts to assure that
information about the Borrower and its operations, affairs and financial
condition, not generally disclosed to the public or to trade and other
creditors, which is furnished to the Lender pursuant
to the provisions hereof is used only for the purposes of this Agreement and
any other relationship between the Lender and the Borrower and shall not
be divulged to any Person other than the
Lender, their Affiliates and their respective officers, directors, employees
and agents, except: (a) to their attorneys and accountants, (b) in
connection with the enforcement of the rights
of the Lender hereunder and under the Loan Documents or otherwise in connection
with applicable litigation, (c) in connection with participations and the
solicitation of prospective participants referred to in the immediately
preceding Section, (d) if such information is generally available to the public other than as a result of disclosure by the
Lender, (e) to any direct or indirect
contractual counterparty in any hedging arrangement or such contractual
counterparty’s professional advisor,
(f) to any nationally recognized rating agency that requires information about
the Lender’s investment portfolio in connection with ratings issued with
respect to the Lender, and (g) as may otherwise be required or requested
by any regulatory authority having jurisdiction
over the Lender or by any applicable law, rule, regulation or judicial process,
the opinion of the Lender’s counsel concerning the making of such disclosure to
be binding on the parties hereto. The obligations of the Lender under this
Section shall survive payment in full of the Obligations and the termination of the Commitments. The Lender shall
not incur any liability to the
Borrower by reason of any disclosure permitted by this Section.

Section 8.8             Governing Law and Construction.
THE VALIDITY, CONSTRUCTION AND ENFORCEABILITY
OF THIS AGREEMENT AND THE NOTES SHALL BE GOVERNED BY THE INTERNAL LAWS OF THE STATE OF COLORADO, WITHOUT GIVING
EFFECT TO CONFLICT OF LAWS PRINCIPLES THEREOF. Whenever possible, each
provision of this Agreement and the other Loan Documents and any other
statement, instrument or transaction
contemplated hereby or thereby or relating hereto or thereto shall be
interpreted in such manner as to be effective and valid under such applicable
law, but, if any provision of this Agreement, the other Loan Documents
or any other statement, instrument or

 50
 

 

transaction contemplated hereby or thereby or
relating hereto or thereto shall be held to be prohibited or invalid under
such applicable law, such provision shall be ineffective only to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions
of this Agreement, the other Loan Documents or any other statement, instrument
or transaction contemplated hereby or thereby or relating hereto or thereto.

Section
8.9             Consent to
Jurisdiction. AT THE OPTION OF THE LENDER, THIS AGREEMENT AND THE
OTHER LOAN DOCUMENTS MAY BE ENFORCED IN ANY FEDERAL
COURT SITTING IN THE CITY OR COUNTY OF DENVER; AND THE BORROWER CONSENTS
TO THE JURISDICTION AND VENUE OF ANY SUCH COURT AND WAIVES ANY ARGUMENT THAT VENUE IN SUCH FORUMS IS NOT CONVENIENT. IN THE EVENT THE BORROWER COMMENCES
ANY ACTION IN ANOTHER JURISDICTION OR VENUE UNDER ANY TORT OR CONTRACT
THEORY ARISING DIRECTLY OR INDIRECTLY FROM
THE RELATIONSHIP CREATED BY THIS AGREEMENT,
THE LENDER AT ITS OPTION SHALL BE ENTITLED TO HAVE THE CASE TRANSFERRED TO ONE OF THE JURISDICTIONS AND
VENUES ABOVE-DESCRIBED, OR IF SUCH TRANSFER CANNOT BE ACCOMPLISHED UNDER
APPLICABLE LAW, TO HAVE SUCH CASE DISMISSED WITHOUT PREJUDICE.

Section
8.10           Waiver of Jury Trial.
THE BORROWER AND THE LENDER IRREVOCABLY WAIVE ANY AND ALL RIGHT TO TRIAL
BY JURY IN ANY LEGAL PROCEEDING ARISING OUT
OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.

Section 8.11           Survival of Agreement. All
representations, warranties, covenants and agreement made by the Borrower
herein or in the other Loan Documents and in the certificates or other
instruments prepared or delivered in connection with or pursuant to this
Agreement or any other Loan Document shall be deemed to have been relied upon
by the Lender and shall survive the making of the Loans by the Lender and the
execution and delivery to the Lender by the Borrower of the Notes, regardless
of any investigation made by or on behalf of the Lender, and shall continue in full force and effect as
long as any Obligation is outstanding and unpaid and so long as the Commitments
have not been terminated; provided, however, that the obligations of the Borrower under Sections 8.2, 8.5 and 8.12 shall
survive payment in full of the Obligations and the termination of the
Commitments.

Section 8.12           Indemnification. Borrower hereby
agrees to defend, protect, indemnify and hold harmless the Lender and its
respective Affiliates and the directors, officers, employees, attorneys and
agents of the Lender and its respective Affiliates (each of the foregoing being
an “Indemnitee” and all of the
foregoing being collectively the “Indemnitees”‘) from and against any and all claims, actions, damages, liabilities,
judgments, costs and expenses (including all reasonable fees and disbursements of counsel which may be incurred in
the investigation or defense of any matter) imposed upon, incurred by or
asserted against any Indemnitee, whether direct, indirect or consequential and
whether based on any federal, state, local or foreign laws or

 51
 

 

regulations (including securities laws, environmental
laws, commercial laws and regulations), under
common law or on equitable cause, or on contract or otherwise:

(a)           by reason of, relating to or in connection with the execution, delivery,
performance or enforcement of any Loan Document, any commitments
relating thereto, or any transaction
contemplated by any Loan Document; or

(b)           by reason of, relating to or in connection with any credit extended or
used under the Loan Documents or any act done or omitted by any Person,
or the exercise of any rights or remedies thereunder,
including the acquisition of any collateral by the Lender by way of
foreclosure of the Lien thereon, deed or bill of sale in lieu of such foreclosure or otherwise;

provided, however, that the
Borrower shall not be liable to any Indemnitee for any portion of such
claims, damages, liabilities and expenses resulting from such Indemnitee’s
gross negligence or willful misconduct. In
the event this indemnity is unenforceable as a matter of law as to a particular
matter or consequence referred to herein, it shall be enforceable to the full
extent permitted by law.

This
indemnification applies, without limitation, to any act, omission, event or circumstance
existing or occurring on or prior to the later of the Termination Date or the
date of payment in full of the Obligations, including specifically Obligations
arising under clause (b) of this Section.
The indemnification provisions set forth above shall be in addition to any
liability the Borrower may otherwise have. Without prejudice to the survival of
any other obligation of the Borrower hereunder the indemnities and
obligations of the Borrower contained in this Section shall survive the payment
in full of the other Obligations.

Section
8.13           Captions. The
captions or headings herein and any table of contents hereto are for
convenience only and in no way define, limit or describe the scope or intent of
any provision of this Agreement.

Section
8.14           Entire Agreement.
This Agreement and the other Loan Documents embody the entire agreement
and understanding between the Borrower and the Lender with respect to the subject matter hereof and thereof.
This Agreement supersedes all prior agreements and understandings relating to
the subject matter hereof. Nothing contained in this Agreement or in any other Loan Document, expressed or implied,
is intended to confer upon any Persons other than the parties hereto any rights, remedies, obligations or
liabilities hereunder or thereunder.

Section
8.15           Counterparts. This
Agreement may be executed in any number of counterparts, all of which
taken together shall constitute one and the same instrument, and any of the
parties hereto may execute this Agreement by signing any such counterpart.

Section
8.16           Borrower
Acknowledgements. The Borrower hereby acknowledges that (a) it has
been advised by counsel in the negotiation, execution and delivery of this
Agreement

 52
 

 

and the other Loan Documents, (b) the Lender has no
fiduciary relationship to the Borrower, the relationship being solely that of
debtor and creditor, (c) no joint venture exists between the Borrower and the
Lender, and (d) the Lender undertakes no responsibility to the Borrower to review or inform the Borrower of any matter in
connection with any phase of the business or operations of the Borrower
and the Borrower shall rely entirely upon its own judgment with respect to its business, and any review,
inspection or supervision of, or information supplied to, the Borrower
by the Lender is for the protection of the Lender and neither the Borrower nor
any third party is entitled to rely thereon.

Section 8.17           Relationship
Among Borrower.

(a)           Waivers of Defenses.
The obligations of the Borrower hereunder shall not be released, in whole or in
part, by any action or thing which might, but for this provision of this
Agreement, be deemed a legal or equitable discharge of a surety or guarantor,
other than irrevocable payment and performance in full of the Obligations
(except for contingent indemnity and other contingent Obligations not yet due
and payable) at a time after any obligation of the Lender hereunder to make the
Loans and to issue Letters of Credit shall have expired or been terminated and
all outstanding Letters of Credit shall have expired or the liability of the
Lender shall have otherwise been discharged. The purpose and intent of this Agreement is that the Obligations constitute
the direct and primary obligations of
the Borrower and that the covenants, agreements and all obligations of
the Borrower hereunder be absolute, unconditional and irrevocable. The Borrower
shall be and remain liable for any deficiency remaining after foreclosure of
any security agreement or mortgage securing all or any part of the Obligations,
whether or not the liability of any other Person for such deficiency is
discharged pursuant to statute, judicial
decision or otherwise.

(b)           Other Transactions. The
Lender is expressly authorized to exchange, surrender or release with or
without consideration any or all collateral and security which may at any time
be placed with it by the Borrower or by any other Person on behalf of the
Borrower, or to forward or deliver any or all such collateral and security
directly to the Borrower for collection and
remittance or for credit. No invalidity, irregularity or unenforceability
of any security for the Obligations or other recourse with respect thereto
shall affect, impair or be a defense to the Borrower’s obligations under this
Agreement. The liabilities of the Borrower hereunder shall not be affected or
impaired by any failure, delay, neglect or
omission on the part of the Lender to realize upon any of the Obligations
of any other Borrower to the Lender, or upon any collateral or security for any
or all of the Obligations, nor by the taking by the Lender of (or the failure
to take) any guaranty or guaranties to secure the Obligations, nor by the
taking by the Lender of (or the failure to
take or the failure to perfect its security interest in or other lien on) collateral or security of any kind. No act or
omission of the Lender, whether or not such action or failure to act
varies or increases the risk of, or affects the rights or remedies of the Borrower, shall affect or impair the
obligations of the Borrower hereunder.

 53
 

 

(c)           Actions Not Required.  The Borrower, to the extent permitted by applicable law, hereby waives any and all right
to cause a marshaling of the assets or any other action by any court or other
governmental body with respect thereto or to cause the Lender to proceed against any security for the
Obligations or any other recourse which the Lender may have with respect thereto and further waives any and all
requirements that the Lender institute
any action or proceeding at law or in equity, or obtain any judgment,
against the Borrower or any other Person, or with respect to any collateral security for the Obligations, as a condition
precedent to making demand on or bringing an action or obtaining and/or enforcing a judgment against, the Borrower
under this Agreement.

(d)           Application of Payments.
Any and all payments upon the Obligations made by the Borrower or by any other
Person, and/or the proceeds of any or all collateral or security for any of the
Obligations, may be applied by the Lender on such items of the Obligations as
the Lender may elect.

(e)           Recovery of Payment. If
any payment received by the Lender and applied to the Obligations is
subsequently set aside, recovered, rescinded or required to be returned for any
reason (including, without limitation, the bankruptcy, insolvency or reorganization of the Borrower or any other
obligor), the Obligations to which such payment was applied shall, to the extent permitted by applicable law,
be deemed to have continued in
existence, notwithstanding such application, and the Borrower shall be liable for such Obligations as fully as if such
application had never been made. References in this Agreement to amounts
“irrevocably paid” or to “irrevocable payment” refer to payments that cannot be set aside, recovered, rescinded or required to
be returned for any reason.

(f)            Limitation; Insolvency Laws.
As used in this Section 8.17(f): (a) the term “Applicable Insolvency
Laws” means the laws of the United States of America or of any State,
province, nation or other governmental unit relating to bankruptcy,
reorganization, arrangement, adjustment of debts, relief of debtors,
dissolution, insolvency, fraudulent transfers or conveyances or other similar
laws (including, without limitation, 11 U. S. C. §547, §548, §550 and other “avoidance” provisions of Title 11 of the
United States Code) as applicable in any proceeding in which the
validity and/or enforceability of this Agreement
against the Borrower, or any Specified Lien is in issue; and (b) “Specified Lien” means any security interest, mortgage, lien
or encumbrance granted by the Borrower
securing the Obligations, in whole or in part. Notwithstanding any other provision of this Agreement, if, in any
proceeding, a court of competent jurisdiction determines that with respect to the Borrower, this Agreement or any
Specified Lien would, but for the
operation of this Section, be subject to avoidance and/or recovery or be unenforceable
by reason of Applicable Insolvency Laws, this Agreement and each such Specified Lien shall be valid and enforceable
against the Borrower, only to the maximum extent that would not cause this Agreement or such Specified Lien to be
subject to avoidance, recovery or unenforceability. To the extent that
any payment to, or realization

 54
 

 

by, the Lender or the Lender on the Obligations
exceeds the limitations of this Section and is otherwise subject to avoidance
and recovery in any such proceeding, the amount subject to avoidance shall in all events be limited to the amount by
which such actual payment or realization exceeds such limitation, and
this Agreement as limited shall in all events remain in full force and effect
and be fully enforceable against the Borrower. This Section is intended solely
to reserve the rights of the Lender against the Borrower, in such proceeding to
the maximum extent permitted by Applicable Insolvency Laws and neither the Borrower, any guarantor of the
Obligations nor any other Person shall have any right, claim or defense under this Section that would not otherwise
be available under Applicable Insolvency Laws in such proceeding.

Section 8.18           Interest
Rate Limitation. Notwithstanding anything herein to the contrary, if at any
time the interest rate applicable to any Loan, together with all fees, charges
and other amounts that are treated as interest on such Loan under applicable
law (collectively, the “Charges”),
shall exceed the maximum lawful rate (the “Maximum Rate”) that may be contracted
for, charged, taken, received or reserved by the Lender in accordance with
applicable law, the rate of interest payable in respect of such Loan hereunder,
together with all Charges payable in respect thereof, shall be limited to the
Maximum Rate and, to the extent lawful, the interest and Charges that would
have been payable in respect of such Loan but were not payable as a result of
the operation of this Section shall be cumulated and the interest and Charges
payable to such Lender in respect of other Loans or periods shall be increased
(but not above the Maximum Rate therefor)
until such cumulated amount, together with interest thereon at the Federal Funds Effective Rate to the date of repayment,
shall have been received by such Lender.

 55

IN WITNESS WHEREOF, the
parties hereto have caused this Agreement to be executed as of the date first above written.

	
  

  	
  AMERICAN CRYSTAL SUGAR COMPANY,

  as Borrower

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Samuel S. M.
  Wai

  	
   

  
	
   

  	
  Name:

  	
  Samuel S. M. Wai

  	
   

  
	
   

  	
  Title:

  	
  TREASURER

  	
   

  
						

 

Address for the Borrower

For Purposes of Notice:

101
North 3rd Street

Moorhead, Minnesota 56560

 S-1

 

	
  

  	
  CoBank, ACB, as Lender

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Pat Schulz

  
	
   

  	
  Name:

  	
  Pat Schulz

  
	
   

  	
  Title:

  	
  Assistant
  Corporate Secretary

  
	
   

  	
   

  	
   

  
	
   

  	
  Address for funding notices:

  
	
   

  	
  CoBank, ACB

  
	
   

  	
  5500 South Quebec Street

  
	
   

  	
  Greenwood Village, CO 80111

  
	
   

  	
  Attention: Daphne Satriano

  
	
   

  	
  Fax: (303) 224-2521

  
	
   

  	
   

  
	
   

  	
  Address for all other notices:

  
	
   

  	
   

  
	
   

  	
  CoBank, ACB

  
	
   

  	
  5500 South Quebec Street

  
	
   

  	
  Greenwood Village, CO 80111

  
	
   

  	
  Attention: Daphne Satriano

  
	
   

  	
  Fax: (303) 224-2521

  
						

 

 

ANNEX I

PRICING
GRID

	
   

  	
   

  	
   

  	
   

  	
  LIBOR Margin

  (In basis points)

  	
   

  	
  Base Rate Margin

  (in basis points)

  	
   

  	
  Commitment Fee

  (in basis points)

  	
   

  
	
  Tier

  	
   

  	
  Leverage Ratio

  	
   

  	
  Revolving Loan

  	
   

  	
  Term Loans

  	
   

  	
  Revolving

  Loan

  	
   

  	
  Term Loans

  	
   

  	
  Revolving

  Loan

  	
   

  	
  Term Loans

  	
   

  
	
  1

  	
   

  	
  <1.0 to l.0

  	
   

  	
  n/a

  	
   

  	
  65.0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  n/a

  	
   

  	
  15.0

  	
   

  
	
  2

  	
   

  	
  <1.20 to 1.0
  and 31.0 to 1.0

  	
   

  	
  n/a

  	
   

  	
  75.0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  n/a

  	
   

  	
  17.5

  	
   

  
	
  3

  	
   

  	
  < l.35 to 1.0
  and 3
  1.20 to 1.0

  	
   

  	
  n/a

  	
   

  	
  87.5

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  n/a

  	
   

  	
  20.0

  	
   

  
	
  4

  	
   

  	
  3
  1.35 to 1.0

  	
   

  	
  n/a

  	
   

  	
  100.00

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  n/a

  	
   

  	
  25.0

  	
   

  

 

 

Schedule 3.1(a)

Landlord/Bailee Locations

None

 

Schedule 4.6

Litigation

On May 1, 2006 The
Amalgamated Sugar Company LLC (“Amalgamated”) has filed a lawsuit against the
U.S. Department of Agriculture (the “USDA”) in Federal Court in the District of
Idaho challenging the USDA’s transfer of sugar marketing allocations to the
American Crystal Sugar Company (“ACSC”). The case stems from ACSC’s acquisition
of assets from the Pacific Northwest Sugar
Company (“PNSC”) in 2003, and the associated transfer of PNSC’s sugar marketing
allocations to ACSC. The case has been in various stages of administrative
hearings, the most recent of which resulted
in the USDA’s final decision to transfer the marketing allocations to
ACSC. Amalgamated is challenging the USDA decision in Federal Court. ACSC intends to intervene in the case and play an
active role in the litigation in order to preserve its rights to the
marketing allocation. Based on certain assumptions, an adverse ruling in this
case could have an adverse impact of more
than $7,500,000.00.

 

Schedule 4.7

Environmental Matters

None

 

Schedule 6.11

Existing Investments

Investment in CoBank, ACB

Investment in Marketing
Cooperatives

Investment
in ProGold Limited Liability Company

Investment in Crystech,
LLC

Investment in Sidney
Sugars Incorporated

Investment in Crab Creek
Sugar Company

 

Schedule 6.12

Existing
Indebtedness

	
  Lender

  	
   

  	
  Amount

  
	
   

  	
   

  	
   

  
	
  Commercial Paper

  	
   

  	
  Variable

  
	
   

  	
   

  	
  Maximum Outstanding $225 million

  
	
   

  	
   

  	
   

  
	
  Minn-Dak Farmers Cooperative

  Southern Minnesota Beet Sugar Cooperative

  United States Sugar Corporation

  	
   

  	
  Variable

  
	
   

  	
   

  	
   

  
	
  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

  	
   

  	
  $3,360,000

  
	
   

  	
   

  	
   

  
	
  East Grand Forks
  Industrial Development Series B

  	
   

  	
  $560,000

  
	
   

  	
   

  	
   

  
	
  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

  	
   

  	
  $3.58 million

  
	
   

  	
   

  	
   

  
	
  2000 City of
  East Grand Forks Bonds

  	
   

  	
  $5.75 million

  
	
   

  	
   

  	
   

  
	
  Intercompany
  Loan(s) from ACSC to Sidney Sugars Incorporated

  	
   

  	
  $60 million

  
	
   

  	
   

  	
   

  
	
  2005 EGF
  Industrial Bonds

  	
   

  	
  $6.5 million

  
	
   

  	
   

  	
   

  
	
  2005B EGF Solid
  Waste Revenue Bonds

  	
   

  	
  $4.5 million

  

 

 

Schedule 6.13

Existing Liens

	
  Asset

  	
   

  	
  Lienholder

  
	
   

  	
   

  	
   

  
	
  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)

  
	
   

  	
   

  	
   

  
	
  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.

  

 

 

Schedule 6.14

Contingent
Obligations

Financial Guaranty on
behalf of Midwest Agri Commodities Company

 

Exhibit A-l

Form of Revolving Note

Attached

REVOLVING
NOTE

	
  $300,000,000.00

  	
   

  	
  July 31, 2006

  
	
   

  	
   

  	
  Denver, Colorado

  

FOR
VALUE RECEIVED, AMERICAN CRYSTAL SUGAR COMPANY, a Minnesota cooperative corporation (the “Borrower”),
hereby promises to pay to the order of CoBANK, ACB (the “Lender”), in lawful money of the
United States of America in Immediately Available Funds (as such term and each other capitalized
term used herein are defined in the Loan Agreement hereinafter referred to), the principal amount of Three
Hundred Million and 00/100 Dollars
($300,000,000.00). or such lesser amount as has actually been advanced under
the Revolving Loan, and interest in
like funds on the unpaid principal amount from time to time outstanding, at the rates and times set forth in
that certain Amended and Restated Loan Agreement
dated July 31, 2006, by and between the Borrower and the Lender, as the same
may be amended, modified, supplemented, extended renewed, restated or replaced
from time to time (the “Loan
Agreement”).

Principal
and interest shall be payable as set forth in the Loan
Agreement, and all principal and
interest remaining unpaid on the Termination Date shall be immediately due and payable.

This
note is one of the Notes referred to in the Loan Agreement and is subject to
and governed by the Loan Agreement. This maturity of this note is subject to
acceleration upon the terms provided in the Loan Agreement.

Should
any Event of Default occur as provided for in the Loan Agreement, all
principal and interest outstanding hereunder may be declared immediately due
and payable in accordance with the Loan Agreement. The Borrower and all
guarantors and endorsers, for themselves, their legal representatives,
successors and assigns, hereby severally waive presentment for payment, protest
and demand, notice of protest, demand and dishonor and nonpayment of this note,
and consent that the holder may extend
the time of payment or otherwise modify the terms of payment of any part or the whole of the
indebtedness evidenced by this note, and such consent shall not alter or
diminish the liability of the Borrower or said guarantors or endorsers. The
undersigned agrees to pay all costs and expenses of collection, including
reasonable attorney’s fees.

The
interest rate shall at no time exceed the maximum lawful rate (the “Maximum
Rate”) that may be contracted for,
charged, taken, received or reserved in accordance with applicable law, and the rate of interest payable hereunder shall be
limited to the Maximum Rate.

THE
VALIDITY, CONSTRUCTION AND ENFORCEABILITY OF THIS NOTE SHALL BE GOVERNED BY THE INTERNAL LAWS OF THE
STATE OF COLORADO WITHOUT GIVING
EFFECT TO THE CONFLICT OF LAWS PRINCIPLES THEREOF.

 

THE UNDERSIGNED AND THE HOLDER (BY ITS ACCEPTANCE HEREOF)
IRREVOCABLY WAIVE ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS NOTE
OR ANY OTHER LOAN DOCUMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.

 

	
   

  	
  AMERICAN CRYSTAL SUGAR COMPANY,

  
	
   

  	
  a Minnesota cooperative corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Its

  	
   

  	
   

  

 

 2

 

Exhibit A-2

Form
of Term Note T01

Attached

TERM
NOTE TO1

	
  $558,276,702.00

  	
   

  	
  July 31, 2006

  
	
   

  	
   

  	
  Denver, Colorado

  

FOR
VALUE RECEIVED, AMERICAN CRYSTAL SUGAR COMPANY, a Minnesota cooperative corporation (the “Borrower”),
hereby promises to pay to the order of CoBANK, ACB (the “Lender”), in lawful money of the United States of
America in Immediately Available Funds
(as such term and each other capitalized term used herein are defined in the
Loan Agreement hereinafter referred
to), the principal amount of Fifty-Eight Million Two Hundred Seventy-Six
Thousand Seven Hundred Two and 00/100 Dollars ($58,276,702.00), or such lesser amount as has actually been advanced under the Term
Loan T01, and interest in like funds on the unpaid principal amount hereof from time to time outstanding, at the
rates and time set forth in that
certain Amended and Restated Loan Agreement dated July 31, 2006, by and between
the Borrower and the Lender, as the
same may be amended, modified, supplemented, extended, renewed, restated or replaced from time to time
(the “Loan Agreement”),

Principal
and interest shall be payable as set forth in the Loan Agreement, and all principal and interest remaining unpaid on the Term
Loan Maturity Date shall be immediately due and payable.

This
note is one of the Notes referred to in the Loan Agreement and is subject to
and governed by the Loan Agreement. This note is secured, and its
maturity is subject to acceleration, in each
case upon the terms provided in the Loan Agreement.

Should
any Event of Default occur as provided for in the Loan Agreement, all principal
and interest outstanding hereunder
may be declared immediately due and payable in accordance with the Loan
Agreement The Borrower and all guarantors and endorsers, for themselves, their legal representatives, successors and assigns,
hereby severally waive presentment for payment, protest and demand, notice of protest, demand and dishonor and
nonpayment of this note, and consent
that the holder may extend the time of payment or otherwise modify the terms of
payment of any part or the whole of
the indebtedness evidenced by this note, and such consent shall not alter or diminish the liability of the
Borrower or said guarantors or endorsers. The undersigned agrees to pay all costs and expenses of collection, including
reasonable attorney’s fees.

The
interest rate shall at no time exceed the maximum lawful rate (the “Maximum
Rate”) that may be contracted for,
charged, taken, received or reserved in accordance with applicable law, and the rate of interest payable hereunder
shall be limited to the Maximum Rate.

THE
VALIDITY, CONSTRUCTION AND ENFORCEABILITY OF THIS NOTE SHALL BE GOVERNED BY THE INTERNAL LAWS OF THE
STATE OF COLORADO WITHOUT GIVING
EFFECT TO THE CONFLICT OF LAWS PRINCIPLES THEREOF.

 

THE UNDERSIGNED AND THE HOLDER (BY ITS ACCEPTANCE HEREOF)
IRREVOCABLY WAIVE ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS NOTE
OR ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.

 

	
   

  	
  AMERICAN
  CRYSTAL SUGAR COMPANY,

  a Minnesota cooperative
  corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Its

  	
   

  	
   

  

 

 2

 

Exhibit A-3

Form of Term Note T01NP

Attached

TERM NOTE T01NP

	
  $25,106,600.00

  	
   

  	
  July 31, 2006

  
	
   

  	
   

  	
  Denver, Colorado

  

FOR
VALUE RECEIVED, AMERICAN CRYSTAL SUGAR COMPANY, a Minnesota cooperative corporation (the “Borrower”),
hereby promises to pay to the order of CoBANK, ACB (the “Lender”), in lawful money of the United States of
America in Immediately Available Funds
(as such term and each other capitalized term used herein are defined in the
Loan Agreement hereinafter referred
to), the principal amount of Twenty-Five Million One Hundred Six Thousand Six
Hundred and 00/100 Dollars ($25,106,600.00), or such lesser amount as has actually been advanced under the Term Loan T01NP,
and interest in like funds on the unpaid principal amount hereof from time to time outstanding, at the rates and
time set forth in that certain Amended
and Restated Loan Agreement dated July 31, 2006, by and between the Borrower and the Lender, as the same may be
amended, modified, supplemented, extended, renewed, restated or replaced from time to time (the “Loan Agreement”).

Principal
and interest shall be payable as set forth in the Loan Agreement, and all principal and interest remaining unpaid on the Term
Loan Maturity Date shall be immediately due and payable.

This
note is one of the Notes referred to in the Loan Agreement and is subject to
and governed by the Loan Agreement. This note is secured, and its
maturity is subject to acceleration, in each
case upon the terms provided in the Loan Agreement.

Should
any Event of Default occur as provided for in the Loan Agreement, all principal
and interest outstanding hereunder
may be declared immediately due and payable in accordance with the Loan
Agreement. The Borrower and all guarantors and endorsers, for themselves, their
legal representatives, successors and assigns, hereby severally waive
presentment for payment, protest and demand, notice of protest, demand and
dishonor and nonpayment of this note, and consent that the holder may extend the time of payment or otherwise
modify the terms of payment of any
part or the whole of the indebtedness evidenced by this note, and such consent shall not alter or diminish the liability of the
Borrower or said guarantors or endorsers. The undersigned agrees to pay all costs and expenses of collection, including
reasonable attorney’s fees.

The
interest rate shall at no time exceed the maximum lawful rate (the “Maximum
Rate”) that may be contracted for,
charged, taken, received or reserved in accordance with applicable law, and the rate of interest payable hereunder
shall be limited to the Maximum Rate.

THE
VALIDITY, CONSTRUCTION AND ENFORCEABILITY OF THIS NOTE SHALL BE GOVERNED BY THE INTERNAL LAWS OF THE
STATE OF COLORADO WITHOUT GIVING
EFFECT TO THE CONFLICT OF LAWS PRINCIPLES THEREOF.

 

THE UNDERSIGNED AND THE HOLDER (BY ITS ACCEPTANCE HEREOF)
IRREVOCABLY WAIVE ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS NOTE
OR ANY OTHER LOAN DOCUMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.

 

	
  

  	
  AMERICAN
  CRYSTAL SUGAR COMPANY,

  a Minnesota cooperative
  corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Its

  	
   

  	
   

  

 

 2

 

Exhibit A-4

Form of Term Note T06

Attached

TERM NOTE T06

	
  $85,000,000.00

  	
   

  	
  July 31, 2006

  
	
   

  	
   

  	
  Denver, Colorado

  

FOR
VALUE RECEIVED, AMERICAN CRYSTAL SUGAR COMPANY, a Minnesota cooperative corporation (the “Borrower”‘),
hereby promises to pay to the order of Co BANK, ACB (the “Lender”) in lawful money of the United States of
America in Immediately Available Funds
(as such term and each other capitalized term used herein are defined in the
Loan Agreement hereinafter referred
to), the principal amount of Eighty-Five Million and 00/100 Dollars ($85,000,000.00), or such lesser amount as
has actually been advanced under the Term Loan T06, and interest in like funds on the unpaid principal amount
hereof from time to time outstanding,
at the rates and time set forth in that certain Amended and Restated Loan Agreement dated July 31, 2006, by and between the
Borrower and the Lender, as the same may be amended, modified, supplemented, extended, renewed, restated or
replaced from time to time (the “Loan Agreement”).

Principal
and interest shall be payable as set forth in the Loan Agreement, and all principal and interest remaining unpaid on the Term
Loan Maturity Date shall be immediately due and payable.

This
note is one of the Notes referred to in the Loan Agreement and is subject to
and governed by the Loan Agreement. This note is secured, and its
maturity is subject to acceleration, in each
case upon the terms provided in the Loan Agreement.

Should
any Event of Default occur as provided for in the Loan Agreement, all principal
and interest outstanding hereunder
may be declared immediately due and payable in accordance with the Loan
Agreement The Borrower and all guarantors and endorsers, for themselves, their
legal representatives, successors and assigns, hereby severally waive
presentment for payment, protest and demand, notice of protest, demand and
dishonor and nonpayment of this note, and consent that the holder may extend the time of payment or otherwise
modify the terms of payment of any
part or the whole of the indebtedness evidenced by this note, and such consent shall not alter or diminish the liability of the
Borrower or said guarantors or endorsers. The undersigned agrees to pay all costs and expenses of collection, including
reasonable attorney’s fees.

The
interest rate shall at no time exceed the maximum lawful rate (the “Maximum
Rate”) that may be contracted for,
charged, taken, received or reserved in accordance with applicable law, and the rate of interest payable hereunder
shall be limited to the Maximum Rate.

THE VALIDITY, CONSTRUCTION
AND ENFORCEABILITY OF THIS NOTE SHALL BE
GOVERNED BY THE INTERNAL LAWS OF THE STATE OF COLORADO WITHOUT GIVING EFFECT TO THE CONFLICT OF LAWS
PRINCIPLES THEREOF.

 

THE UNDERSIGNED AND THE HOLDER (BY ITS ACCEPTANCE HEREOF)
IRREVOCABLY WAIVE ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS NOTE
OR ANY OTHER LOAN DOCUMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.

 

	
  

  	
  AMERICAN CRYSTAL SUGAR COMPANY,

  a Minnesota cooperative corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Its

  	
   

  	
   

  

 

 2

Exhibit B

Borrowing
Base Formula

The Borrowing Base shall be
determined and computed by calculating the sum of:

80% of Eligible Accounts
Receivable; plus

75% of Eligible Net Inventory.

The Borrowing Base shall at no
time exceed all “Short-Term Loans” owing by Borrower, “Short-Term Loans”
is defined as the sum of the Revolving Loan, outstanding Commodity Credit Corporation loans, and all outstanding
commercial paper.

Exhibit C

Form
of Borrowing Base Certificate

Attached

Monthly Borrowing Base

For the month ended                              

	
  Eligible Accounts
  Receivables

  	
   

  	
  $

  	
   

  	
  @ 80%

  
	
   

  	
   

  	
  $

  	
   

  	
  (a)

  

 

Eligible 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)

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Statused Revolving Term – RJ0013T07

  $                            (f)

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Commodity Credit Corp. loans

                                (g)

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

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

  	
   

  	
  $

  	
   

  

 

Exhibit D

Form of Compliance Certificate

Attached

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 Amended and Restated Loan Agreement (“Loan
Agreement”) and all Promissory Note
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 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 asmeasured in accordance with GAAP

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

  	
   

  	
   

  Minimum Net Working Capital required for fiscal quarters other than fiscal year end-$l5,000,000

   

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

  	
   

  	
   

  l.                 

  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 cooperative (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 difference; 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, alldetermined
  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.

  	
   

  	
   

  l.                 

  2.                   

  3.                  

  

 

 

	
   

  	
   

  	
  Required

  	
   

  	
  Actual

  
	
  4.   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.)

   

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

  	
   

  	
   

  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.                  

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  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.

  	
   

  	
  l.                 

  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 the Loan Agreement
(which excludes the financial results of ProGold and Crystech from such
calculations and ratios).

	
   

  	
  AMERICAN CRYSTAL SUGAR COMPANY

  (“Company”)

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Authorized Signature

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Titles

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Date

  

 

Exhibit E

Form of Bid Request

Attached

AMERICAN CRYSTAL SUGAR COMPANY

REQUEST for BID LOAN

Date                           

To:                              CoBank, ACB

Attention: Syndications (Marshall
Allen)

Fax: 303-740-4021

From:
               American Crystal Sugar Company (“Borrower”)

Re:                               Bid request for Revolving Loan Advance

	
  Date
  of Borrowing

  	
   

  
	
  Aggregate
  Principal Amount of Borrowing

  	
   

  

 

	
  Principal Amount*

  	
   

  	
  Maturity Date*

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  

 

* Borrower reserves the right to
reduce or apportion this amount during the Bid selection process.

* May not extend beyond 8/1/2008
maturity date

	
   

  	
  AMERICAN CRYSTAL SUGAR COMPANY

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
    By:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
    Name:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
    Title:

  	
   

  

 

Acknowledgement:

BID RATE
CONFIRMATION

Borrower accepts offer of bid rate loan under the
following terms:

	
  Interest
  Period

  	
   

  
	
  Amount

  	
   

  
	
  Interest
  Rate

  	
   

  

 

	
    By:

  	
   

  

 

 

FIRST AMENDMENT TO AMENDED AND
RESTATED LOAN AGREEMENT

between

AMERICAN CRYSTAL SUGAR COMPANY,

as Borrower,

and

CoBANK, ACB,

as Lender,

dated
July 31, 2006

THIS FIRST AMENDMENT TO AMENDED AND RESTATED LOAN
AGREEMENT (this “First Amendment”) is dated to be effective
as of August 31, 2006, and is by and between AMERICAN CRYSTAL SUGAR COMPANY, a
Minnesota cooperative corporation (“Borrower”), and CoBANK, ACB (“Lender”), and
amends that certain Amended and Restated Loan Agreement dated July 31, 2006, as
amended from time to time (the “Loan Agreement”). All capitalized terms not
defined herein shall have the meanings set forth in the Loan Agreement.

RECITALS

The
parties have agreed to modify certain terms and provisions of the Loan
Agreement as more fully set forth in this First Amendment.

NOW, THEREFORE, in consideration
of the foregoing and for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged by each party, the parties agree
to amend the Loan Agreement in the following respects:

1.             Defined Terms. The following
terms set forth in Section 1.1 of the Loan Agreement shall be amended
and restated in their entirety as follows:

“Quoted Rate Offer”:
A quote of a fixed interest rate per annum for minimum periods of one (1) day provided
to Borrower by the Lender in its sole discretion following the receipt by the
Lender of a Quoted Rate Request from Borrower.

“Term Letter of Credit
Commitment Amount”: Thirty-Five Million Dollars ($35,000,000).

2.             Section 2.7(b) of the Loan Agreement
(Repayment; Term Loan T01), shall be amended and restated to read in
full as follows:

(b) Term Loan T01.
The principal of Term Loan T01 shall be payable in one annual installment in
the amount of $9,569,300 on December 31, 2006, and in three annual installments
in the amount of $9,400,000 due on December 31 of each year beginning December
31, 2008, and any amount of principal or interest remaining unpaid with respect
to Term Loan T01 on the Term Loan Maturity Date shall be immediately due and
payable on such date.

 

3.             Section 2.7(c) of the Loan
Agreement (Repayment; Term Loan T01NP), shall be amended and restated to
read in full as follows:

(c) Term Loan T01NP.
The principal of Term Loan T01NP shall be payable in one annual installment in
the amount of $7,430,700 on December 31, 2006, and in three annual installments
in the amount of $7,600,000 due on December 31 of each year beginning December
31, 2008, and any amount of principal or interest remaining unpaid with respect
to Term Loan T01NP on the Term Loan Maturity Date shall be immediately due and
payable on such date.

4. Representations
and Warranties. Borrower restates, represents and warrants the representations
and warranties set forth in Article IV of the Loan Agreement as of the
date of this First Amendment.

5. Incorporation
of Loan Agreement. This First Amendment shall be an integral part of the
Loan Agreement, and all terms of the Loan Agreement are hereby incorporated in
this First Amendment by reference, and all terms of this First Amendment are
hereby incorporated into the Loan Agreement as if made an original part
thereof.  Except as modified herein, all
terms and provisions of the Loan Agreement shall continue in full force and
effect, but to the extent the terms of this First Amendment conflict with the
Loan Agreement, the terms of this First Amendment shall control.

IN
WITNESS WHEREOF, the parties have executed this First Amendment to be effective
as of the day and year first above written.

	
   

  	
  AMERICAN CRYSTAL SUGAR COMPANY,

  a Minnesota cooperative corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
  /s/ Samuel S. M.
  Wai

  	
   

  
	
   

  	
  Name

  	
  Samuel S. M. Wai

  	
   

  
	
   

  	
  Title

  	
  Treasurer

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  CoBANK, ACB

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
  /s/ Teresa C.
  Fountain

  	
   

  
	
   

  	
  Name

  	
  Teresa C.
  Fountain

  	
   

  
	
   

  	
  Title

  	
  Assistant
  Corporate Secretary

  	
   

  

 

 2

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00113-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00113-of-00352.parquet"}]]