10-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

x       Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the fiscal year ended August 31, 2009

or

o        Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Commission File Nos. 33-83868; 333-11693 and 333-32251

AMERICAN CRYSTAL SUGAR COMPANY

(Exact name of registrant as specified in its charter)

Minnesota	84-0004720
(State of incorporation)	(I.R.S. Employer Identification Number)
101 North Third Street
Moorhead, MN 56560	(218) 236-4400
(Address of principal executive offices)	(Registrant’s telephone number)

Securities registered pursuant to Section 12(b) of the Act:

NONE

Securities registered pursuant to Section 12(g) of the Act:

NONE

Indicate by check mark if the registrant is a well known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes  o  No  x

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act.  Yes  o  No  x

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes  x No  o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  YES  o  NO  o

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. x

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer.  See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act.  (Check one)

Large accelerated filer o	Accelerated filer o
Non-accelerated filer x	Smaller reporting company o

Indicate by check mark whether the registrant is a shell company (as defined in rule 12b-2 of the Act). Yes  o No  x

As of October 29, 2009, 2,812 shares of the Registrant’s Common Stock and 498,570 shares of the Registrant’s Preferred Stock were outstanding.  There is no established public market for the Registrant’s Common Stock or Preferred Stock.  Although there is a limited, private market for shares of the Registrant’s stock, the Registrant does not obtain information regarding the transfer price in transactions between its members and therefore is unable to estimate the aggregate market value of the Registrant’s shares held by non-affiliates.

DOCUMENTS INCORPORATED BY REFERENCE

NONE

PART I

This report contains forward-looking statements and information based upon assumptions by the American Crystal Sugar Company’s management, including assumptions about risks and uncertainties faced by the Company.  These forward-looking statements can be identified by the use of forward-looking terminology such as “expects”, “believes”, “will” or similar verbs or expressions.  If any of management’s assumptions prove incorrect or should unanticipated circumstances arise, the Company’s actual results could materially differ from those anticipated by such forward-looking statements.  The differences could be caused by a number of factors or combination of factors, including, but not limited to, those factors influencing the Company and its business which are described in this report in the “Risk Factors” section below.  Readers are urged to consider these factors when evaluating any forward-looking statement.  The Company undertakes no obligation to update any forward-looking statements in this report to reflect future events or developments.

Item 1.BUSINESS

GENERAL

The Company is a Minnesota agricultural cooperative corporation owned by approximately 2,800 sugarbeet growers in the Minnesota and North Dakota portions of the Red River Valley.  The Red River Valley is the largest sugarbeet growing area in the United States, forming a band approximately 35 miles wide on either side of the North Dakota and Minnesota border and extending approximately 200 miles south from the border of the United States and Canada.  The Company was organized in 1973 by sugarbeet growers to acquire the business and assets of the American Crystal Sugar Company, then a publicly held New Jersey corporation in operation since 1899.  The Company’s Board of Directors establishes sugarbeet acreage planting requirements in the Red River Valley (the Red River Valley Crop) each year based on factory processing capacity, expected crop quality, government regulations and other factors.  Based on the tons of sugarbeets required to meet sugar production levels, the total authorized acres to be planted are allocated ratably to each preferred share held by the members.  The Company processed sugarbeets from approximately 408,000 acres for the 2008 crop and expects to process sugarbeets from approximately 445,000 acres for the 2009 crop.  By owning and operating five sugarbeet processing facilities in the Red River Valley, the Company provides its shareholders with the ability to process their sugarbeets into sugar and agri-products such as: molasses; sugarbeet pulp; and by-products of the molasses desugarization process, betaine and concentrated separated by-product (CSB).

The Company, through its wholly-owned subsidiary, Sidney Sugars Incorporated (Sidney Sugars), owns two sugarbeet processing facilities.  At the Sidney, Montana, facility, the Company processed non-member sugarbeets from approximately 15,000 acres for the 2008 crop and expects to process from approximately 25,000 acres for the 2009 crop.  The Torrington, Wyoming, facility has been leased on a long-term basis to another sugar producer.

The Company, through its wholly-owned subsidiary, Crab Creek Sugar Company (Crab Creek), controls the long-term production of sugar at a sugarbeet processing facility at Moses Lake, Washington.  Neither Crab Creek nor the Company currently operates or intends to operate the Moses Lake facility.

The Company is the controlling member of ProGold Limited Liability Company (ProGold), which owns a corn wet-milling plant in Wahpeton, North Dakota, that is currently being leased to Cargill, Incorporated (Cargill).  On November 6, 2007, ProGold entered into an amended lease agreement with Cargill that superseded and replaced the previous 10 year lease between ProGold and Cargill and provides that (1) Cargill will pay ProGold average annual rental payments equal to $21,900,000, and (2) that the term of the lease be extended until December 31, 2017.

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On May 1, 2007, the Company acquired CIT Capital USA Inc.’s  50 percent ownership interest in Crystech, LLC (Crystech) resulting in the Company’s 100 percent ownership of Crystech.  Crystech owned the molasses desugarization facility adjacent to the Company’s processing facility in Hillsboro, North Dakota.  Effective May 31, 2007, Crystech was dissolved with all assets and liabilities transferred to the Company.

The Company’s sugar marketing agent, United Sugars Corporation (United), is a cooperative owned by the Company, Minn-Dak Farmers Cooperative and United States Sugar Corporation.  The Company’s agri-products are marketed through a marketing agent, Midwest Agri-Commodities Company (Midwest).  Midwest is a cooperative owned by the Company, Minn-Dak Farmers Cooperative, Southern Minnesota Beet Sugar Cooperative and Michigan Sugar Company.

Operating Segments

The Company has identified two reportable operating segments: Sugar and Leasing.  The Sugar segment is engaged primarily in the production and marketing of sugar from sugarbeets.  It also sells agri-products and sugarbeet seed.  The Leasing segment is engaged in the leasing of a corn wet milling plant used in the production of high-fructose corn syrup.  For financial information by segment see Note 12 of “Notes to the Consolidated Financial Statements.”

Principal Products Produced

The Company is engaged primarily in the production and marketing of sugar from sugarbeets.  Total sugar sales accounted for 85.6 percent, 87.1 percent and 88.6 percent of the Company’s consolidated total revenues for the years ended August 31, 2009, 2008 and 2007, respectively.  United Sugars Corporation, the Company’s sugar marketing agent, sells sugar primarily to industrial users such as confectioners, breakfast cereal manufacturers and bakeries.  For the fiscal year ended August 31, 2009, 87.4 percent (by weight) of the sugar was sold to industrial users.  The remaining portion is marketed by United Sugars Corporation to wholesalers and retailers under the “Crystal Sugar” and various private labels for household consumption.  With regard to brand name sales, the Company licenses the use of the “Crystal” trademark to United Sugars Corporation.

The majority of United Sugars Corporation’s sugar sales are contracted one or more quarters in advance.

The Company also sells agri-products such as: molasses; sugarbeet pulp; betaine and concentrated separated by-product (CSB), by-products of the molasses desugarization process; and sugarbeet seed.  Substantially all of the Company’s agri-products are marketed through Midwest Agri-Commodities Company, a common marketing agency.  Sugarbeet pulp is marketed to livestock feed mixers and livestock feeders in the United States and foreign markets.  A large proportion of the Company’s pulp production is exported to Japan and Europe.  The market for sugarbeet pulp is affected by the availability and quality of competitive feedstuffs and foreign exchange rates.  Sugarbeet molasses is marketed primarily to yeast manufacturers, livestock feed mixers and livestock feeders.  Total agri-product sales accounted for 10.4 percent of the Company’s consolidated total revenues during fiscal 2009, of which export agri-product sales accounted for 4.8 percent of such revenues.  Agri-products sales accounted for 9.9 percent and 8.8 percent of the Company’s consolidated total revenues in fiscal 2008 and fiscal 2007, respectively, while agri-product export sales accounted for 4.4 percent and 3.3 percent of the Company’s total revenues in fiscal 2008 and fiscal 2007, respectively.

There is no single customer of United or Midwest attributable to the Company that accounts for 10 percent or more of the revenues of the Company.

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The Company’s total annual sugar and agri-product production is influenced by the amount and the quality of sugarbeets grown by its members and non-members, the processing capacity of the Company’s plants, by its ability to store harvested sugarbeets and by government programs and regulations.

Raw Materials

The Company purchases all of its Red River Valley sugarbeets from members under contract with the Company.  All members are party to a five year contract for the 2008 through 2012 crop years which will automatically renew for additional five-year terms unless terminated by one of the parties at the end of the current term.  In addition, each member has an annual contract with the Company specifying the number of acres the member is obligated to grow during that year.  Each share of Preferred Stock held by a member requires that member to grow one acre of sugarbeets, subject to the planting tolerance, for sale to the Company.  The Company’s Board of Directors has the discretion to adjust the acreage that is required to be planted for each share of Preferred Stock held by the members.  The Company’s Board of Directors set the planting tolerance for the 2009 crop year at .83 acres per share of preferred stock, with a planting tolerance of minus .03 or plus .09 (.80 minimum and .92 maximum).  Based on current market conditions and processing capacity, the Company estimates planting tolerances for the 2010 crop year and beyond will be in the range of ..80 to .85 acres per Preferred Share.  The Board of Directors and management regularly review and determine the relationship between the ownership of Preferred Stock and acreage planting.

The gross beet payment is the value of recovered sugar from the sugarbeets a member delivers plus the member’s share of agri-product revenues, minus the member’s share of member business operating costs.  The following allowances, costs and deductions, if applicable, are used to adjust the gross beet payment to arrive at the net beet payment: hauling program allowance and costs, pre-pile quality premium and costs, tare incentive premium/penalty program, late harvest program costs and unit retains.  Members are paid a hauling allowance based on the distance they must transport sugarbeets for delivery to the Company and may also receive an allowance for early delivery of sugarbeets prior to the commencement of the stockpiling of harvested sugarbeets.  The costs of these programs are shared among members on the basis of the net tonnage of sugarbeets delivered by each member.

Under the grower contracts, payments to members for sugarbeets must be made in at least three installments: (i) on or about November 15, the Company pays its members an amount equal to 65 percent of the Company’s estimate of the member’s net beet payment; (ii) on or about March 31, the Company pays an amount, which combined with the November payment, equals 90 percent of the member’s estimated net beet payment; (iii) and not more than 15 days after completion and acceptance of the audit of the Company’s annual consolidated financial statements by the Board of Directors, the Company pays the remainder of the member’s net beet payment.  Except for unit retains, the Company must pay to its members for their sugarbeets all proceeds from the sale of the members’ sugar and agri-products in excess of related member business operating costs, as described above.

All of the sugarbeets processed at the Sidney, Montana, factory are purchased from non-member growers under contract with Sidney Sugars.  Each non-member grower has an annual contract with Sidney Sugars specifying the number of acres the non-member grower is obligated to grow during each year.

The price per ton of sugarbeets paid to the growers who deliver to Sidney Sugars (the Scale Payment) is determined according to the sugarbeet payment scale contained in the grower contract and is calculated based on Sidney Sugars’ average net return for sugar from that year’s crop, the adjusted average sugar content of each grower’s sugarbeets and sugarbeet storage results.

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Under grower contracts between Sidney Sugars and its growers, payments to these growers for sugarbeets must be made in three installments following delivery of the crop: (i) in November, Sidney Sugars pays the growers an amount equal to 65 percent of the estimated Scale Payment for that year’s crop; (ii) in April, Sidney Sugars pays an amount, which combined with the November payment, equals 90 percent of the estimated Scale Payment for that year’s crop; (iii) and in October, Sidney Sugars pays the remainder of the actual Scale Payment.

Seasonality

The period during which the Company’s plants are in operation to process sugarbeets into sugar and agri-products is referred to as the “campaign.”  During the campaign, the Company’s factories operate twenty-four hours per day, seven days per week.  In the Red River Valley, the campaign typically begins in September and continues until the available supply of sugarbeets has been depleted, which generally occurs in May of the following year.  Based on current processing capacity, an average campaign lasts approximately 250 days, assuming normal crop yields.  At the Sidney, Montana factory, the campaign begins in late September or early October.  Due to a reduction in acres planted by the non-member growers, the 2009 campaign at the Sidney, Montana factory lasted approximately 60 days while the 2010 campaign, due to an increase in the acres planted, is expected to last approximately 100 days.

The sales of sugar and agri-products occur ratably throughout the year with modest increases in sugar sales occurring prior to holiday seasons.

Sales Backlog

The backlog of any unfilled sales orders at August 31, 2009 and 2008, was not material to the Company.

Market and Competition

Current United States government statistics estimate total United States sugar consumption at approximately 204 million hundredweight for the year beginning October 1, 2008 and ending September 30, 2009.  For the same period ending September 2008, total consumption was approximately 201 million hundredweight.  Comparing the two years shows an increase in demand of approximately one percent.

The United States refined sugar market has grown over the past twenty years, despite the demand lost to the substitution of high fructose corn syrups for sugar in beverages and certain food products.  Non-nutritive sweeteners such as aspartame have also been developed to substitute for sugar.  Corn sweeteners and non-nutritive sweeteners constitute a large portion of the overall sweetener market.  The Company believes that the United States market for sugar will reflect minimal increases or be relatively flat in the near future.

The United States sugar industry has been subject to industry consolidation.  Today, there are fewer than 10 sugar sellers, with approximately 68 percent of United States sugar market share concentrated in the top three sellers.  The Company’s sugar production and sales represent approximately 15 percent of the total domestic market for refined sugar in 2008/2009.  The Company had the right to market, or to have marketed on its behalf, approximately 35 million hundredweight of sugar from the 2008 crop.  Sugar sales by United Sugars Corporation, the Company’s marketing agent, represent approximately 25 percent of the United States sugar market.

United is currently the second largest marketer of sugar in the United States. Main competitors in the domestic market are: The American Sugar Refining Company; Imperial Sugar Company; Cargill, Incorporated; The Amalgamated Sugar Company LLC; Michigan Sugar Company; and The Western

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Sugar Cooperative.  Because sugar is a fungible commodity, competition in the United States sugar industry is primarily based upon price, customer service and reliability as a supplier.

Government Programs and Regulations

Food, Conservation and Energy Act of 2008

The Food, Conservation and Energy Act of 2008 (the Farm Bill) enacted in May, 2008, contains several provisions related to the domestic sugar industry aimed at achieving balance and stability in the U.S. sugar market while minimizing the cost to the Federal government.  The Farm Bill applies to the 2008 through 2012 crop years.  Generally, the Farm Bill:

·maintains a non-recourse loan program,

·sets a minimum overall allotment quantity for U.S. producers at no less than 85% of domestic consumption,

·maintains a system of marketing allocations for sugarbeet and sugar cane producers,

·restricts imports of foreign sugar and

·provides a new market balancing mechanism to divert any oversupply of sugar from sugar producers to ethanol producers.

Under the Farm Bill, sugar processors can borrow funds on a non-recourse basis from the Commodity Credit Corporation (CCC), with repayment of such funds secured by sugar.  If the price of sugar drops below the forfeiture price, the processors can forfeit the sugar securing the loans to the CCC in lieu of repayment.  Processors may also obtain CCC loans for “in-process” sugar or syrups at 80 percent of the loan rate.

The Farm Bill incorporates gradual loan rate increases for raw and refined sugar.  For raw sugar, the loan rate will increase three-quarters of a cent per pound, raw value, phased-in in quarter-cent increments over crop years 2009-2011.  Raw cane loan rates will remain at 18.00 cents/lb in 2008 then rise gradually to 18.75 cents by 2011, and they will remain at 18.75 cents/lb for the 2012 crop year.  Refined beet sugar loan rates are set at 22.90 cents/lb for the 2008 crop and thereafter are set at a rate equal to 128.5 percent of the loan rate per pound for raw cane sugar for each of the 2009 through 2012 crop years.

The United States Department of Agriculture (USDA) has historically maintained raw and refined sugar prices above the forfeiture price without cost to the U.S. Treasury by regulating the supply of sugar in the U.S. market through management of a tariff rate quota system.  Currently, forty exporting countries retain guaranteed preferential access to the U.S. market under World Trade Organization (WTO) and Free Trade Agreement (FTA) rules.  Mexico’s access has been unlimited since January 1, 2008.  The Farm Bill sets a minimum overall allotment quantity for U.S. producers at no less than 85% of domestic consumption and provides a market balancing mechanism if there is an oversupply in the domestic sugar market.  If the Secretary of Agriculture determines there is an oversupply of sugar, the new market balancing mechanism requires the Secretary to divert the excess sugar from sugar producers to ethanol producers while minimizing the cost to the U.S Treasury.  Although the market balancing mechanism will provide sustainability to the sugar industry in the short term, there is no assurance that the sugar-to-ethanol program will be in place after the Farm Bill expires.

The marketing allotments and allocations set forth under the Farm Bill affect the sugar produced from the 2008 crop through the 2012 crop.  On an annual basis, the marketing allotments and the corresponding allocation to the Company will dictate the amount of sugar the Company can sell into the

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domestic market.  The Company’s marketing allocation for the 2008 crop was set at approximately 35 million hundredweight.  The Company’s marketing allocation for the 2009 crop is also currently set at approximately 35 million hundredweight.  The Company’s allocation may reduce or increase the amount of sugar the Company can market for a given year, thus affecting the number of acres of sugarbeets required for processing to produce that amount of sugar.

North American Free Trade Agreement

The North American Free Trade Agreement (NAFTA) governs sweetener trade between the United States and Mexico.  Under the NAFTA, tariffs on over-quota imports of sugar from and exports of sugar to Mexico expired on January 1, 2008.  Imports of Mexican sugar could cause material harm to the United States sugar market.  During the year ended September 30, 2008, Mexico exported approximately 13 million hundredweight of sugar into the United States.  During the year ended September 30, 2009, Mexico exported approximately 26 million hundredweight of sugar into the United States.  The Company has no way to predict the extent to which Mexico will take advantage of its export opportunities.

Regional and Bilateral Free Trade Agreements

The United States government may continue to pursue international trade agreements.  The Company monitors the U.S. government’s international trade policy because it may lead to additional commitments to import sugar into the U.S. market.  Some of the countries who have either participated in trade agreements or are contemplated for new negotiations are major producers of sugar.  The primary agreements affecting sugar that are completed or are being negotiated, to the Company’s knowledge, include the Colombian Free Trade Agreement, Panama Free Trade Agreement, the Trans-Pacific Free Trade Agreement, the Association of Southeast Asian Nations, South Africa, Thailand, and others.  The Company believes these agreements, if they reach fruition, could negatively impact the Company’s profitability.  If increases in guaranteed access or reductions in sugar tariffs are included in these agreements, excess sugar from these regions could enter the U.S. market and reduce domestic sugar prices.

The Peru Free Trade Agreement has been ratified by the U.S. Congress and it became effective on February 1, 2009.  Sugar trade with Peru is subject to a net surplus producer requirement.  Peru, typically a net importer, is unlikely to meet that requirement most years.  Negotiations have been completed on the U.S.-Colombian Free Trade Agreement and the U.S.-Panama Free Trade Agreement but they have not been ratified by the U.S. Congress.  The Company does not know when these trade agreements will be brought before Congress for a vote.

The Doha Round negotiations of the WTO may be pursued by the U.S. Administration and some of its international counterparts.  It is unclear at this time whether negotiations will be completed.  If the negotiations are completed, the outcome of any negotiated arrangement could have significant adverse consequences for the Company.

The U.S. sugar industry and the Company, as an influential member of such industry, recognize the potential negative impact that could result if these agreements are entered into by the United States and are taking steps to attempt to positively influence the outcome.  The Company and the sugar industry intend to continue to focus significant attention on trade issues in the future.

The impact of the various trade agreements on the Company cannot be assessed at this time due to the uncertainty concerning the terms of the agreements and whether they will ultimately be

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implemented.  It is possible, however, that the passage of various trade agreements could have a material adverse effect on the Company through a reduction in sugar selling prices, and a corresponding reduction in the beet payment to its shareholders.

Employees

As of October 1, 2009, the Company had 1,369 full-time employees, of which 1,108 were hourly and 261 were salaried.  The Company had 14 part-time employees.  In addition, the Company employs approximately 813 hourly seasonal workers, approximately 370 during the sugarbeet harvest and approximately 443 during the remainder of the sugarbeet processing campaign.  During the sugarbeet harvest, the Company also contracts with third party agencies for approximately another 1,300 additional workers.

Substantially all of the hourly employees at the Company’s factories, including full-time and seasonal employees, are represented by the Bakery, Confectionery, Tobacco Workers and Grain Millers (BCTGM) AFL-CIO, and are covered by collective bargaining agreements expiring July 31, 2011 for the Red River Valley factory employees and April 30, 2012 for the Sidney, Montana, factory employees.  Office, clerical and management employees are not unionized, except for certain office employees at the Moorhead and Crookston, Minnesota, and Hillsboro, North Dakota, factories who are covered by the collective bargaining agreement with the BCTGM.  The Company considers its employee relations to be good.

Environmental Matters

The Company is subject to extensive federal and state environmental laws and regulations with respect to water and air quality, solid waste disposal and odor and noise control.  The Company conducts an ongoing compliance program designed to meet these environmental laws and regulations.  The Company believes that it is in substantial compliance with applicable environmental laws and regulations.  From time to time, however, the Company may be involved in investigations or determinations regarding matters that may arise in the normal course of business.  The Company works closely with all affected government agencies to resolve environmental issues that arise and believes they will be resolved without any adverse effect on the Company.

The Company’s sugar manufacturing process is energy intensive and generates carbon dioxide and other “Greenhouse Gases” (GHGs).  Several bills have been introduced in the United States Senate and House of Representatives that would regulate GHGs and carbon dioxide emissions to reduce the impact of global climate change.  The Company believes it is likely that industries generating GHGs, including the Company, will be subject to either federal or state regulation relating to climate change policies in the relatively near future.  These policies, if adopted, will increase the Company’s energy and other operating costs.  Depending on how these policies address imports, the domestic sugar market may have a competitive disadvantage with imported sugar.  These policies could have a significant negative impact on the Company’s beet payment to shareholders if we are not able to pass the increased costs on to the Company’s customers.  On June 26, 2009, the United States House of Representatives passed H.R. 2454, the American Clean Energy and Security Act.  This bill creates a system for regulating emissions of GHG’s and also creates a market for emission allowances or credits. It is uncertain whether the steps necessary to move this bill or similar bills through the legislative process will be completed this year.

On November 25, 2008, the Company entered into a stipulation agreement with the Minnesota Pollution Control Agency (MPCA) related to hydrogen sulfide emissions from its Crookston, East Grand Forks and Moorhead, Minnesota factories.  As part of the stipulation agreement, the Company has agreed to make certain capital expenditures over the next three years and implement specified

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changes in operating procedures to contain hydrogen sulfide emissions at those factories.  The required capital expenditures are currently estimated to be approximately $12 million.

Including the expenditures related to the MPCA stipulation agreement, the Company has identified capital expenditures for environmental related projects over the next three years at the Company’s factory locations of approximately $15.8 million.

Available Information

The Company’s corporate headquarters are located at 101 North Third Street, Moorhead, Minnesota 56560, telephone number (218) 236-4400.  The Company’s fiscal year ends August 31.  The Company’s website is www.crystalsugar.com.  The Company files annual, quarterly and periodic reports with the United States Securities and Exchange Commission (SEC).  These reports can be accessed by selecting “Links” on the Company’s website or electronic or paper copies can be obtained free of charge upon request.  In addition, the Company’s reports may be read or copied at the SEC Public Reference Room at 100 F. Street, N.E., Washington, D.C. 20549.  The public may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330.  The SEC maintains an Internet site at http://www.sec.gov that contains reports and other information filed electronically about the Company.

Item 1A.          RISK FACTORS

The risks described below together with all of the other information included in this Annual Report on Form 10-K should be considered carefully.  The risks and uncertainties described below and elsewhere in this Annual Report on Form 10-K are not the only ones we face.  If any of the following risks actually occur, our business, financial condition or results of operations would likely suffer.  In that case, the beet payments made to our members may decrease, the value of our Preferred Stock could fall, and a member could lose all or part of their investment.

If we do not continue to minimize our operating expenses, we may not be able to compete effectively in our industry.

Our Company operates in a commodity market environment.  Our strategy involves, to a substantial degree, maximizing profitability by continuing to control operating expenses. In furtherance of this strategy, we have engaged in ongoing, company-wide efficiency activities intended to increase productivity and reduce costs.  These activities have included realigning and streamlining our operations and optimizing the efficiency of our production facilities.  We cannot assure that our efforts will result in our continued or increased profitability.

While we believe that we currently have adequate internal control procedures in place, we are still exposed to potential risks from recent legislation requiring companies to evaluate controls under Section 404 of the Sarbanes-Oxley Act of 2002.

As directed by Section 404 of the Sarbanes-Oxley Act of 2002, the Securities and Exchange Commission adopted rules requiring us to include a report of management on our internal control over financial reporting in our annual reports on Form 10-K that contains an assessment by management of the effectiveness of our internal control over financial reporting.  In addition, the independent registered public accounting firm auditing our financial statements will be required, as of August 31, 2010, to attest to and report on management’s assessment of the effectiveness of our internal control over financial reporting.  Management has conducted a rigorous review of our internal control over financial reporting

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in order to assure compliance with the Section 404 requirements.  However, if our independent auditors interpret the Section 404 requirements and the related rules and regulations differently from us or if our independent auditors are not satisfied with our internal control over financial reporting or with the level at which it is documented, operated or reviewed, they may, when required, decline to attest to management’s assessment or issue a qualified report.

An oversupply of sugar could reduce the price of sugar and our profitability.

The domestic sugar market is reactive to any oversupply of refined sugar.  Many factors can lead to an oversupply of sugar.  Excess supply may result in a decline in domestic sugar prices.  Lower sugar prices directly impact profitability of selling refined sugar in the United States.  If the selling price of sugar decreases, our revenues will decrease which will result in a direct negative impact on our profitability.

Under the current terms of the NAFTA and other government regulations, imports of sugar from Mexico may enter the U.S. market.  These imports could oversupply the U.S. market and reduce the price of sugar.

The United States government has been engaged in regional and bilateral trade negotiations with countries that produce sugar.  If the United States government enters into bilateral trade agreements with sugar producing countries, the amount of sugar in the domestic sugar market could increase.  An increase in the supply of sugar could reduce the price of sugar, which would reduce our profitability.

The success or failure of our business is linked to certain government programs, regulations and legislation that may change in the future.

The nature and scope of future legislation and regulation affecting the sugar market and industry cannot be predicted.  The current price supports and market protections for sugar in place may not continue in their present forms.  If the price support programs were eliminated in their entirety, or if certain protections the federal government provides from foreign competitors were materially reduced, the amount of sugar we can sell, the amount of sugarbeets we can process and the price for which we can sell our sugar may be impacted, which could reduce the profitability of our business.  If legislation or government programs change, we may not be able to adopt strategies that would allow us to compete effectively in a greatly changed domestic market for sugar and the adverse effects could negatively impact the desirability of growing sugarbeets for delivery to us for processing, our financial results, and our continued viability.

If we are unable to compete in the sweetener market, our operating results may suffer.

Sugar is a fungible commodity with competition for sales volume based primarily upon customer service, price and reliability, though differences in proximity to various geographic markets within the United States result in differences in freight and shipping costs which in turn generally affect pricing and competitiveness.  The overall sweetener market, in addition to sugar, includes corn-based sweeteners, such as regular and high fructose corn syrups, and non-nutritive, high-intensity sweeteners such as aspartame.  Differences in functional properties and prices have tended to define the use of these various sweeteners.  Although the various sweeteners are not interchangeable in all applications, the substitution of other sweeteners for sugar has occurred in certain products, such as soft drinks.  We cannot predict the availability, development or potential use of these and other alternative sweeteners and their possible impact on us or our members.  We believe that we possess the ability to compete successfully with other producers of sugar in the United States.  In spite of this competitive advantage, substitute products could reduce the demand for sugar which could lower the price of sugar, resulting in reduced profitability in the future.

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Our Board of Directors authorized the planting of Roundup Ready® sugarbeets beginning with the 2008 crop.  Sugar and agri-products produced from Roundup Ready® sugarbeets have received regulatory approval in most of the countries in which we have direct or indirect sales of our products.  While the sale of sugar and agri-products from Roundup Ready® sugarbeet seed has been approved in most markets, marketing risks still exist.  United Sugars Corporation and Midwest Agri-Commodities, our sugar and agri-product marketing agents, respectively, feel they can successfully sell and distribute products from Roundup Ready® sugarbeets with minimal affect on our revenue.  However, customers’ views on the use of products from biotechnology derived crops such as Roundup Ready® sugarbeets may change over time which could negatively impact our profitability.

Our operations are sensitive to energy prices.

The prices we pay for energy related products, such as natural gas, coal and coke, have been volatile and may continue to be volatile.  We use substantial amounts of these products in our manufacturing process.  We believe that the prices for energy related products including natural gas, coal, coke and diesel fuel will continue to be volatile and higher than historical levels.  Higher energy prices may also increase the costs of many goods and services we acquire.  These higher prices may materially increase our cost of production, thus reducing our profitability.

Quantity and quality of sugarbeets is sensitive to weather and other factors such as seed varieties.

The sugarbeet, as with most other crops, is affected by many factors, including seed varieties and weather conditions during the growing season.  Additionally, the quantity of sugarbeets to be processed and weather conditions during the processing season affect our ability to store sugarbeets held for processing.  Growing and storage conditions different from what we predict or expect may change the quantity and quality of sugarbeets available for processing and therefore may affect the quantity of the sugar we produce.

A significant decrease in the quantity or quality of sugarbeets harvested due to poor weather conditions would result in higher unit operating costs and lower earnings.

A significant increase in the quantity or quality of sugarbeets harvested due to good weather conditions or improved seed varieties could result in an unpredictably large quantity of sugarbeets to be processed.  If we are required to process a larger than anticipated quantity of sugarbeets we may experience increased per unit of sugar processing cost which in turn would have an adverse financial consequence to us and our members.

In order to manage the quantity and quality of sugarbeets that are harvested or available for processing, our Grower Contract allows for a reduction in the number of acres to be planted at the beginning of a crop year or harvested at the end of a crop year.

Adequate storage conditions during a processing campaign are critical to ensure that the quantity and quality of sugarbeets available for processing are maintained.  If we are not able to obtain or maintain adequate storage conditions, the sugarbeets stored for processing at a later date may deteriorate, resulting in increased production costs, and decreased production which in turn would have an adverse financial consequence to us and our members.

Based on results of recent yield trials and crop results, we expect that new sugarbeet varieties may continue to result in increases in the average sugarbeet crop yields over the next five years.  As a result, we anticipate that there may continue to be a need to reduce the number of acres of sugarbeets

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that can be planted by each shareholder in order to match the sugarbeet crop volume to our processing and marketing capacity.  This reduction, if necessary, would be accomplished by reducing the per share planting tolerance by an amount that may be material.  Assuming there are no changes in other variables, the increased yield per acre expected to result from the continued use of the new sugarbeet varieties would allow shareholders to deliver substantially the same number of tons of sugarbeets to us from fewer acres.  Individual shareholder profitability will continue to depend on the circumstances unique to each shareholder.

On January 24, 2008, the Center for Food Safety along with other groups filed a lawsuit against the USDA regarding the decision to deregulate Roundup Ready® sugarbeets, specifically whether a full environmental impact study should have been completed.  On September 21, 2009 the U.S. District Court (Court) ruled against the USDA finding that the USDA violated federal law by failing to prepare an Environmental Impact Statement before deregulating Roundup Ready® sugarbeets.  The Court has determined that the USDA now needs to prepare a full Environmental Impact Statement.  The actual direct impact of the decision on sugarbeet producers and us will become more defined during the “remedy phase” of the case, which will occur over the next several months.  The Center for Food Safety has not asked the Court to prohibit planting of Roundup Ready® sugarbeets.  However, if the Court restricts planting in 2010, conventional varieties would need to be utilized which would have a negative impact on our crop yields.  Chemical manufacturers have significantly reduced planned production of conventional herbicides due to the rapid increase in planting of Roundup Ready® sugarbeets.  Weed control for conventional varieties could be difficult if there is an inadequate supply of conventional herbicides.  While we are taking precautionary measures, the risk of Roundup Ready® sugarbeet restrictions still exists and the negative financial impact to us and our members could be significant.

If we are unable to manage the quantity and quality of sugarbeets available for processing, we could experience adverse financial consequences that would impact both us and our members.

Increased profitability of alternative crops could adversely affect the desirability of growing sugarbeets.

The prices growers receive from crops other than sugarbeets could impact their decisions as to which crop to plant and how much to plant.  Higher prices and increased profitability for alternative crops could negatively impact the desirability of growing sugarbeets for delivery to us for processing, our financial results, and our continued viability.

Federal, state and local environmental laws and regulations may impact our operations.

We are subject to extensive federal and state environmental laws and regulations with respect to water and air quality and solid waste disposal.  We conduct on-going programs designed to meet these environmental laws and regulations.  Changes in environmental laws or regulations or complying with existing environmental laws and regulations or enforcement action brought under such environmental laws and regulations might increase the cost of operating our facilities or result in significant capital investment.  Any such changes or compliance costs could reduce our profitability.

Our sugar manufacturing process is energy intensive and generates carbon dioxide and other “Greenhouse Gases” (GHGs).  Several bills have been introduced in the United States Senate and House of Representatives that would regulate GHGs and carbon dioxide emissions to reduce the impact of global climate change.  We believe it is likely that industries generating GHGs, including us, will be subject to either federal or state regulation under climate change policies in the relatively near future.  These policies, if adopted, will increase our energy and other operating costs.  Depending on how these

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policies address imports, the domestic sugar market may have a competitive disadvantage with imported sugar.  These policies could have a significant negative impact on the beet payment to our shareholders if we are not able to pass the increased costs on to our customers.

Item 2.PROPERTY AND PROCESSING FACILITIES

The Company operates five sugarbeet processing factories in the Red River Valley and one in Sidney, Montana.  The Company owns all of its factories and the land on which they are located.  The factories range in size from 150,000 to 400,000 square feet.  These properties are used in the Company’s sugar segment.

The location and processing capacity of the Company’s factories are:

Location	Approximate Daily Slicing Capacity (Tons of Sugarbeets)
Crookston, MN	5,900
East Grand Forks, MN	9,200
Moorhead, MN	5,900
Drayton, ND	7,000
Hillsboro, ND	9,000
Sidney, MT	6,400

Each of the processing factories includes the physical facilities and equipment necessary to process sugarbeets into sugar.  Each factory has space for sugarbeet storage, including ventilated storage sites.  The Red River Valley factories also have cold storage facilities.  Each of the Red River Valley factories is currently operating at or near its capacity.  The Sidney, Montana factory is currently operating at less than full capacity.  The Company owns molasses desugarization (MDS) plants at its East Grand Forks and Hillsboro facilities.  The MDS plants process molasses to extract additional sugar.  The Company has sugar packaging facilities located at the Moorhead, Hillsboro, Crookston, East Grand Forks and Sidney factories.

The Company also owns a sugarbeet processing plant in Torrington, Wyoming.  The Torrington, Wyoming, facility is leased on a long-term basis to another sugar company.

ProGold owns a corn wet-milling plant in Wahpeton, North Dakota, which is currently being leased to Cargill.  The corn wet-milling plant is capable of processing corn to produce corn sweeteners (including high fructose corn syrups) and various agri-products.  This property is used in the Company’s leasing segment.  On November 6, 2007, ProGold entered into an amended lease agreement with Cargill that superseded and replaced the previous 10 year lease between ProGold and Cargill and provides that (1) Cargill will pay ProGold average annual rental payments equal to $21,900,000, and (2) that the term of the lease be extended until December 31, 2017.

The Company’s corporate office is located in a 30,000 square foot, two-story office building in Moorhead, Minnesota.  The Company also has a 100,000 square foot Technical Services Center situated on approximately 200 acres in Moorhead, Minnesota.  The Company owns both facilities.  The Company also owns numerous sites as sugarbeet receiving and storage stations located within proximity of their factories.  Substantially all non-current assets are mortgaged or pledged as collateral for its indebtedness to various financial institutions.

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Item 3.LEGAL PROCEEDINGS

From time to time and in the ordinary course of its business, the Company is named as a defendant in legal proceedings related to various issues, including worker’s compensation claims, tort claims and contractual disputes.  The Company is currently involved in certain legal proceedings which have arisen in the ordinary course of the Company’s business.  The Company is also aware of certain other potential claims which could result in the commencement of legal proceedings.  The Company carries insurance which provides protection against certain types of claims.  With respect to current litigation and potential claims of which the Company is aware, the Company’s management believes that (i) the Company has insurance protection to cover all or a portion of any judgments which may be rendered against the Company with respect to certain claims or actions and (ii) any judgments which may be entered against the Company and which may exceed such insurance coverage or which may arise in actions involving potential liabilities not covered by insurance policies are not likely to have a material adverse effect upon the Company, or its assets or operations.

On February 11, 2009, the Ninth Circuit Court of Appeals (the Court) issued its decision in the case of Amalgamated Sugar Co, LLC v. Thomas Vilsack; Department of Agriculture, a case that involved Amalgamated Sugar’s challenge of a decision by the USDA to transfer certain sugar marketing allocations to the Company.  The Court reversed the lower court’s decision which confirmed the USDA’s transfer of the marketing allocations, and remanded the case back to the lower court for further action.  On May 19, 2009, the USDA announced, subject to further proceedings, that it was redistributing a portion of the Company’s sugar marketing allocations to other sugar beet processors in response to legal proceedings contesting the transfer of certain sugar marketing allocations to the Company.  To protect the Company’s interests in the marketing allocations, the Company appealed the Court’s decision to the U.S. Supreme Court.  The U.S. Supreme Court has since denied hearing the case, essentially putting an end to the case.  As a result, the Company will experience a net reduction of marketing allocations of approximately 1 million CWT.  The Company does not believe that the loss of these marketing allocations will have a material impact on the Company’s planted acres going forward, assuming average crop yield, crop quality and continued domestic consumption trends.

Item 4.SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

No matters were submitted to a vote of the Company’s shareholders during the quarter ended August 31, 2009.

PART II

Item 5.MARKET FOR REGISTRANT’S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

As of August 31, 2009, the Company had 2,812 shares of the Common Stock and 498,570 shares of the Preferred Stock issued and outstanding.  There is no established public market for the Company’s Common Stock or Preferred Stock, as such shares may be held only by farmer-producers who are eligible for membership in the Company.  The Company’s shares are not listed for trading on any exchange or quotation system.  Although transfers of the Company’s shares may occur only with the consent of the Board of the Directors, the Company does not obtain information regarding the transfer price in connection with such transfers.  As a result, the Company is not able to provide information regarding the prices at which the Company’s shares have been transferred.

Because the number of acres of sugarbeets a member may grow for sale to the Company is directly related to the number of shares of Preferred Stock owned, a limited, private market for Preferred Stock exists.  It is not anticipated that a general public market for the Company’s shares of Common

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Stock or Preferred Stock will develop due to the limitations on transfer and the various membership requirements which must be satisfied in order to acquire such shares.

A member desiring to sell his or her Common Stock or Preferred Stock must first offer them to the Company for purchase at par value.  If the Company declines to purchase such shares, either class may be sold to a new member (i.e., another farm operator not already a member) and Preferred Stock may be sold to one or more existing members or farm operators approved for membership, in each case subject to approval by the Board of Directors.  To date, the Company’s Board of Directors has not exercised the Company’s right of first refusal to purchase preferred shares offered for sale by its members.  Because the Company does not require parties seeking approval for transfers to provide information regarding the transfer price, the Company does not possess verifiable information regarding the transfer price involved in recent transfers of the Company’s Preferred Stock.

Item 6.SELECTED FINANCIAL DATA

The selected financial data of the Company should be read in conjunction with the consolidated financial statements and related notes included in Appendix A of this report.

	Fiscal Year Ended August 31, (In Thousands, except for ratios)
	2009			2008			2007			2006			2005
Net Revenues	$	1,200,229		$	1,232,832		$	1,222,857		$	1,005,716		$	965,474
Net Proceeds (1)	$	536,151		$	542,693		$	601,392		$	445,091		$	373,260
Total Assets	$	761,258		$	813,299		$	875,315		$	839,997		$	774,024
Long-Term Debt, Net of Current Maturities	$	143,073		$	157,801		$	157,974		$	200,037		$	216,842
Members’ Investments	$	284,578		$	331,276		$	333,885		$	323,256		$	315,698
Property and Equipment Additions, net of retirements	$	47,687		$	45,188		$	63,032		$	45,453		$	42,595
Working Capital	$	50,482		$	57,775		$	36,929		$	58,214		$	47,514
Ratio of Long-Term Debt to Equity (2)	.50:1			.48:1			.47:1			.62:1			.69:1
	Fiscal Year Ended August 31, (In Thousands, except for Tons purchased per acre harvested and Sugar content of sugarbeets)
Crop Data (3)	2009			2008			2007			2006			2005
Acres harvested	422			529			507			507			526
Tons purchased	10,707			12,465			12,845			9,628			10,217
Tons purchased per acre harvested	25.4			23.6			25.3			19.0			19.4
Sugar Content of Sugarbeets	17.6		%	18.1		%	18.2		%	18.0		%	17.8		%
Sugar hundredweight
Produced	30,679			36,613			37,193			29,728			30,524
Sold, including purchased sugar	32,870			36,879			35,243			29,691			31,509
Purchased sugar sold	618			179			7			45			523
Agri-Products tons
Produced	695			849			930			717			732
Sold	672			871			898			721			761

(1) Net Proceeds are the Company’s gross revenues, less the costs and expenses of producing and marketing sugar, agri-products and sugarbeet seed, but before payments to members for sugarbeets.  (For a more complete description of the calculation of the payment to members for sugarbeets, see “Item 1.  Business – Raw Materials.”)

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(2) Calculated by dividing the Company’s long term debt, exclusive of the current maturities of such debt, by members’ investments.

(3) Information for a fiscal year relates to the crop planted and harvested in the preceding calendar year (i.e., information for the fiscal year ended August 31, 2009 relates to the crop of 2008).  Crop data reflect the combined data of the Red River Valley crop and the Sidney crop.

Item 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion of the financial conditions and results of operations of the Company should be read in conjunction with the Company’s consolidated financial statements and notes thereto included in Appendix A of this report.

Liquidity and Capital Resources

Under the Company’s Bylaws and Member Grower Contracts, payments for member-delivered sugarbeets, the principal raw material used in producing the sugar and agri-products it sells, are subordinated to all member business expenses.  In addition, the beet payments made to member growers and non-member growers are paid in three payments over the course of a year, and the member payments are made net of any anticipated unit retain for the crop.  These procedures have the effect of providing the Company with an additional source of short-term financing.

Because sugar is sold throughout the year (while sugarbeets are processed primarily in the fall, winter and spring) and because substantial amounts of equipment are required for its operations, the Company has utilized substantial outside financing on both a seasonal and long-term basis to fund its operations.  The majority of such financing has been provided by a consortium of lenders led by CoBank, ACB.

During the current national economic downturn and financial market instability, the Company, due to its strong financial position and relationships with its lenders, has continued to secure the necessary financing for its working capital requirements and capital expenditures.

The Company has a seasonal line of credit through July 30, 2012, with a consortium of lenders led by CoBank, ACB of $320.0 million, against which there was no outstanding balance as of August 31, 2009 and a line of credit with Wells Fargo Bank for $1.0 million, against which there was no outstanding balance as of August 31, 2009.  The Company’s commercial paper program provides short-term borrowings of up to $320 million of which approximately $46.0 million was outstanding as of August 31, 2009.  The Company had $2.7 million of short-term letters of credit outstanding as of August 31, 2009.  Any borrowings under the commercial paper program along with outstanding short-term letters of credit will act to reduce the available credit under the CoBank, ACB seasonal line of credit by a commensurate amount.  The unused short-term line of credit as of August 31, 2009, was $272.3 million.

The Company also has long-term debt availability through December 31, 2011, with CoBank, ACB of $174.6 million, of which $40.3 million in loans and $70.8 million in long-term letters of credit were outstanding as of August 31, 2009.  The unused long-term line of credit as of August 31, 2009, was $63.5 million.  In addition, the Company had long-term debt outstanding, as of August 31, 2009, of $50 million from a private placement of Senior Notes that occurred in September of 1998; $1.4 million from a private placement of Senior Notes that occurred in January of 2003; and $70.1 million from five separate issuances of Pollution Control and Industrial Development Revenue Bonds.

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The Company had outstanding purchase commitments totaling $5.7 million as of August 31, 2009, for equipment and construction contracts related to various capital projects.

As of August 31, 2009, Midwest had outstanding short-term debt with CoBank, ACB of $5.5 million, of which $3.2 million was guaranteed by the Company.

The net cash provided by operations was $72.1 million for the year ended August 31, 2009, as compared to $94.3 million for the year ended August 31, 2008.  This decrease in the cash provided of $22.2 million was primarily the result of the following:

·Reflected in the change in the net cash provided by operating activities is a net decrease of $1.2 million from the prior year which was the result of decreased revenue of $32.6 million partially offset by lower costs and expenses of $10.0 million, a reduction in the member gross beet payment of $13.6 million and an increase in unit retains withheld of $7.8 million primarily resulting from a $3.00 per ton unit retain for the 2008 crop versus a $2.00 per ton unit retain in the previous year.  These changes were primarily due to the reduction in the tons of sugarbeets harvested and products produced partially offset by increased product selling prices.

·The increase in cash used related to the changes in amount due growers was $11.4 million. Although the total payment due to members for sugarbeets, net of unit retains was lower in 2009, 83 percent of the total payment was issued to the growers during 2009 as compared to 78 percent of the total payment being issued to the growers during 2008.  This is due to differences between the forecasted payments due to members for sugarbeets, net of unit retains, upon which the interim payments are based, and the actual payment as determined at the end of the fiscal year.

·The decrease in cash provided related to the changes in accounts receivable of $11.1 million was due to increased collections in 2008 on a larger beginning of the year receivable balance resulting from increased sales volume in 2007.

·The decrease in cash provided related to the changes in inventories of $21.2 million is due to no beginning inventory of unprocessed sugarbeets in 2009, a 14 percent increase in the per hundredweight net realizable value of sugar inventory as of August 31, 2009 as compared to August 31, 2008, a 172 percent increase in the tons of pulp inventory as of August 31, 2009 as compared to August 31, 2008 and a 68 percent increase in the per ton net realizable value of pulp inventory as of August 31, 2009 as compared to August 31, 2008, offset by a 26 percent decrease in the hundredweight of sugar inventory as of August 31, 2009 as compared to August 31, 2008.

·The above decreases were partially offset by increases in cash provided or decreases in cash used related to changes in advances to related parties of $8.3 million due primarily to the timing of the cash requirements of our marketing agents, other liabilities of $14.6 million due to a higher beginning balance in 2008 resulting from deferred net proceeds due to an early campaign start-up in August 2007.

The net cash used in investing activities was $49.8 million for the year ended August 31, 2009, as compared to $44.8 million for the year ended August 31, 2008.  The increase of $5.0 million was primarily due to a change in other assets of $4.0 million and an equity distribution from CoBank LLC in 2008 of $1.8 million partially offset by decreased purchases of property and equipment of $ .9 million.

The net cash used for financing activities was $22.3 million for the year ended August 31, 2009, as compared to $49.5 million for the year ended August 31, 2008.  This decrease of $27.2 million was primarily due to increased net proceeds from short-term debt of $40.4 million, increased proceeds from long term debt of $74.3 million, partially offset by increased payments on long term debt of $80.8

17

million, increased distributions to minority interest of $2.2 million and increased payments of unit retains of $4.5 million.

The Company anticipates that the funds necessary for working capital requirements and future capital expenditures will be derived from operations and unit retains along with short-term and long-term borrowings.

The following table provides information regarding the Company’s contractual obligations as of August 31, 2009:

(In Thousands)	Total		Less than One Year		One to Three Years		Four to Five Years		After Five Years
Long-Term Debt	$	161,862	$	18,789	$	29,713	$	615	$	112,745
Interest on Fixed Rate L-T Debt	57,781		5,318		11,477		7,564		33,422
Purchase Obligations	11,547		8,284		3,095		112		56
Operating Lease Obligations	13,443		1,497		3,697		2,106		6,143
Other Long-Term Obligations(1)	55,170		4,608		8,033		4,364		38,165
Pension Plan Contributions(2)	4,300		4,300
Total Contractual Obligations	$	304,103	$	42,796	$	56,015	$	14,761	$	190,531

(1) Accrued Employee benefits of $1.9 million with corresponding offsetting assets and requiring no future payments have been excluded from the amounts presented.  Other Long-Term Liabilities of $2.9 million, which relate to deferred revenue also requiring no future payments, have also been excluded from the table.

(2) The Company expects to make contributions of approximately $4.3 million to the defined benefit pension plans during the next fiscal year.  Contributions for future years are not known at this time and therefore are not included in the above table.  The Company expects to make contributions in the next fiscal year of approximately $99,000 related to Supplemental Executive Retirement Plans.  This amount is reflected in Other Long-Term Obligations in the above table.

Critical Accounting Policies and Estimates

Preparation of the Company’s consolidated financial statements requires estimates and judgments to be made that affect the amounts of assets, liabilities, revenues and expenses reported.  Such decisions include the selection of the appropriate accounting principles to be applied and the assumptions on which to base accounting estimates.  Management continually evaluates these estimates based on historical experience and other assumptions we believe to be reasonable under the circumstances.

The difficulty in applying these policies arises from the assumptions, estimates and judgments that have to be made currently about matters that are inherently uncertain, such as future economic conditions, operating results and valuations as well as management intentions.  As the difficulty increases, the level of precision decreases, meaning that actual results can and probably will be different from those currently estimated.

Estimates are considered to be critical if they meet both of the following criteria: (1) the estimate requires assumptions about material matters that are uncertain at the time the accounting estimates are made, and (2) other materially different estimates could have been reasonably made or material changes in the estimates are reasonably likely to occur from period to period.  The Company’s critical accounting estimates include the following:

Inventory Valuation

Sugar, pulp, molasses and other agri-product inventories are valued at estimated net realizable value.  The Company derives its estimates from sales contracts, recent sales and evaluations of market

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conditions and trends.  Changes in market conditions may cause management’s estimates to differ from actual results.

Property and Equipment, Property and Equipment Held for Lease, and Depreciation

Property and equipment, and property and equipment held for lease are depreciated for financial reporting purposes principally using straight-line methods with estimated useful lives ranging from 3 to 40 years.  Economic circumstances or other factors may cause management’s estimates of expected useful lives to differ from actual.

The Company reviews its property and equipment, and property and equipment held for lease for impairment whenever events indicate that the carrying amount of the asset may not be recoverable.  An impairment loss is recorded when the sum of the future cash flows is less than the carrying amount of the asset.  An impairment loss is measured as the amount by which the carrying amount of the asset exceeds its fair value.  Considerable management judgment is necessary to estimate future cash flows and may differ from actual results.

Intangible Assets and Amortization

Intangible assets are amortized for financial reporting purposes principally using straight-line methods based on the expected useful lives of the assets.  Economic circumstances or other factors may cause management’s estimates of expected useful lives to differ from actual.

Pension Plan and Other Post-Retirement Benefits

Accumulated plan benefits are those future periodic payments, including lump-sum distributions, which are attributable under the Company’s Pension Plan and Post-Retirement Plan to the service employees have rendered. Accumulated plan benefits include benefits expected to be paid to retired or vested terminated employees or their beneficiaries; beneficiaries of employees who have died; and present employees or their beneficiaries.

The actuarial present value of accumulated plan benefits is determined by an actuary and is the amount that results from applying actuarial assumptions to adjust the accumulated plan benefits to reflect the time value of money and the probability of payment.

The significant actuarial assumptions used in the determination of the actuarial present value of accumulated pension plan benefits for fiscal 2009 were as follows: Valuation Funding Method - Entry age normal, frozen initial liability; Life Expectancy – RP-2000 Mortality Table; Retirement Age – graded rates from 1 percent retiring at age 55 to 100 percent retired by age 70 ;  Investment Return - 8.00 percent compounded annually for funding;  Discount Rate- 6.55 percent compounded annually;  Salary Scale - 3.5 percent compounded annually (Plan A only).

The significant actuarial assumptions used in the determination of the actuarial present value of accumulated post-retirement benefits for fiscal 2009 were as follows: Healthcare Cost Trend - a 10.0 percent annual rate of increase in the per capita cost of covered healthcare benefits for participants under age 65 was assumed for 2009.  The rate is assumed to decline to 7.0 percent over the next five years.  For participants age 65 and older, an 11.0 percent annual rate of increase in the per capita cost of covered healthcare benefits was assumed for 2009.  The rate is assumed to decline to 8.0 percent over the next five years; Discount Rate- 6.55 percent compounded annually.

Actual events may differ from the assumptions used and may result in plan benefit payments differing significantly from these current estimates.

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Self-Insurance

The Company is self-insured for a portion of the risks related to workers’ compensation claims and employees’ health insurance.  The estimate of self-insurance liability is based upon known claims and an estimate of incurred but not reported (IBNR) claims.  IBNR claims are estimated using historical claims lag information received by a third party claims administrator.  Actual events may differ from the assumptions used and may result in claim payments differing from the current estimates.

Results of Operations

The Company’s operational results and the resulting beet payment to its members are substantially dependent on market factors, including domestic prices for refined sugar.  These factors are continuously influenced by a wide variety of market forces, including domestic sugarbeet and cane production, weather conditions and United States’ farm and trade policy, which the Company is unable to predict.

In addition, highly variable weather conditions during the growing, harvesting and processing seasons, as well as diseases and insects, may materially affect the quality and quantity of sugarbeets available for purchase as well as the unit costs of raw materials and processing.

Comparison of the Years Ended August 31, 2009 and 2008

The harvest of the Red River Valley and Sidney sugarbeet crops grown during 2008 and processed during fiscal 2009 produced a total of 10.7 million tons of sugarbeets, or approximately 25.4 tons of sugarbeets per acre from approximately 422,000 acres.  This represents a decrease in total tons harvested of approximately 14.1 percent compared to the 2007 crop.  The sugar content of the 2008 crop was 17.6 percent as compared to the 18.1 percent sugar content of the 2007 crop.  The Company produced a total of approximately 30.7 million hundredweight of sugar from the 2008 crop, a decrease of approximately 16.2 percent compared to the 2007 crop.

Revenue for the year ended August 31, 2009 was $1.2 billion, a decrease of $32.6 million from the year ended August 31, 2008.  The table below reflects the percentage changes in product revenues, prices and volumes for the year ended August 31, 2009, as compared to the year ended August 31, 2008.

Product	Revenue		Selling Price		Volume
Sugar	-4.4	%	7.3	%	-10.9	%
Pulp	14.9	%	40.4	%	-18.1	%
Molasses	-48.2	%	21.9	%	-57.5	%
CSB	14.1	%	17.1	%	-2.5	%
Betaine	-0.8	%	32.1	%	-24.9	%

The increases in selling prices for our products reflect strong markets due to supply and demand factors. The decrease in the volume of sugar sold reflects the impact of less product availability due to a 16.2 percent decline in sugar produced this year as compared to last year. The decreases in the volumes of pulp and molasses sold were due in part to lower product availability resulting from an 11.5 percent decrease in pulp produced and a 65.8 percent decrease in molasses produced this year as compared to last year. Lower beginning inventory levels for both pulp and molasses this year as compared to prior year also contributed to the reduction in the availability of these products for sale.

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Cost of sales for the year ended August 31, 2009, exclusive of payments to members for sugarbeets, increased $2.8 million as compared to the year ended August 31, 2008.  This increase was primarily related to the following:

·The change in the net realizable value of the product inventories from the beginning of the reporting period is recorded on the balance sheet as either an increase or decrease to inventories with a corresponding dollar for dollar adjustment to cost of sales on the statement of operations.  The decrease in the net realizable value of product inventories for the year ended August 31, 2009 was $13.0 million as compared to a decrease of $5.8 million for the year ended August 31, 2008 resulting in a $7.2 million unfavorable change in the cost of sales between the two years as shown in the table below:

Change in the Net Realizable Value of Product Inventories

	For the Years Ended August 31
(In Millions)	2009			2008			Change
Beginning Product Inventories at Net Realizable Value	$	150.6		$	156.4		$	(5.8	)(1)
Ending Product Inventories at Net Realizable Value	(137.6		)	(150.6		)	13.0		(2)
(Increase)/Decrease in the Net Realizable Value of Product Inventories	$	13.0		$	5.8		$	7.2

(1) The change is primarily due to lower quantities of products as of August 31, 2008 as compared to August 31, 2007.

(2) The change is primarily due to a 26 percent decrease in the hundredweight of sugar inventory as of August 31, 2009 as compared to August 31, 2008 partially offset by a 14 percent increase in the per hundredweight net realizable value of sugar inventory as of August 31, 2009 as compared to August 31, 2008, a 172 percent increase in the tons of pulp inventory as of August 31, 2009 as compared to August 31, 2008 and a 68 percent increase in the per ton net realizable value of pulp inventory as of August 31, 2009 as compared to August 31, 2008.

·Factory operating costs increased $9.2 million for the year ended August 31, 2009, as compared to the year ended August 31, 2008 primarily due to higher costs associated with coke, chemicals, operating supplies, property taxes and maintenance costs. These costs were partially offset by lower natural gas costs.

·An impairment loss of $11.9 million related to the property and equipment at the Sidney, Montana facility was recognized in 2008 and included in cost of sales. There was no impairment loss in 2009.

·The cost recognized associated with the non-member sugarbeets decreased $18.8 million for the year ended August 31, 2009, when compared to last year.  This decrease was primarily due to a 56.6 percent decrease in tons purchased.

·Due to lower than anticipated sugar production and inventory levels during the first quarter of this year, the Company’s sugar marketing agent, United Sugars Corporation, purchased and sold additional sugar to meet our customers’ needs.  As a result, the costs associated with purchased sugar increased $14.2 million for the year ended August 31, 2009, as compared to the year ended August 31, 2008.

·The cost of beet seed sold increased $4.0 million for the year ended August 31, 2009, as compared to the year ended August 31, 2008. This increase was due to higher seed processing costs along with a 93.8 percent increase in the volume of beet seed sold.

Selling, general and administrative expenses decreased $23.4 million for the year ended August 31, 2009, as compared to the year ended August 31, 2008.  Selling expenses decreased $24.5 million primarily due to the decrease in the volumes of products sold and decreased transportation rates

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resulting in decreased shipping and handling expenses.  General and administrative expenses increased $ 1.1 million due to general cost increases.

Interest expense decreased $4.7 million for the year ended August 31, 2009, as compared to the year ended August 31, 2008.  This reflects a decrease in the average borrowing levels and lower average interest rates for both short-term and long-term debt.

Other income, net increased $4.1 million for the year ended August 31, 2009, as compared to the year ended August 31, 2008.  This was due primarily to the receipt of $4.8 million in November 2008 related to a legal settlement.

Non-member business activities resulted in a gain of $2.3 million for the year ended August 31, 2009, as compared to a loss of $4.8 million for the year ended August, 2008.  The change was primarily related to the impairment loss recognized in 2008 for Sidney Sugars Incorporated.

Payments to members for sugarbeets together with unit retains declared, decreased by $13.6 million from $547.4 million in 2008 to $533.8 million in 2009.  This decrease was primarily due to fewer tons harvested and a lower sugar content of the sugarbeets partially offset by increased product selling prices.

Comparison of the Years Ended August 31, 2008 and 2007

Due to the large size of the 2007 Red River Valley crop, the Company, for the second consecutive year, commenced the harvest and processing of the crop in August as compared to a typical start-up in September.  All the costs incurred prior to the beginning of the Company’s 2008 fiscal year that related to receiving and processing the 2007 sugarbeet crop were deferred in fiscal 2007 and recognized in fiscal 2008.  Similarly, the net realizable values of products produced prior to the beginning of the Company’s 2008 fiscal year that related to the 2007 sugarbeet crop were deferred in fiscal 2007 and recognized in fiscal 2008.

The harvest of the Red River Valley and Sidney sugarbeet crops grown during 2007 and processed during fiscal 2008 produced a total of 12.5 million tons of sugarbeets, or approximately 23.6 tons of sugarbeets per acre from approximately 529,000 acres.  This represents a decrease in total tons harvested of approximately 3.0 percent compared to the 2006 crop.  The sugar content of the 2007 crop is 18.1 percent as compared to the 18.2 percent sugar content of the 2006 crop.  The Company produced a total of approximately 36.6 million hundredweight of sugar from the 2007 crop, a decrease of approximately 1.6 percent compared to the 2006 crop.  As of August 31, 2008, the Company had approximately 192,000 hundredweight of sugar produced from the 2007 crop that exceeded the marketing allocation limit for the time period of October 1, 2007 to September 30, 2008.

Revenue for the year ended August 31, 2008 was $1.2 billion, an increase of $10.0 million from the year ended August 31, 2007.  The table below reflects the percentage changes in product revenues, prices and volumes for the year ended August 31, 2008, as compared to the year ended August 31, 2007.

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Product	Revenue		Selling Price		Volume
Sugar	-0.9	%	-5.3	%	4.6	%
Pulp	4.5	%	22.2	%	-14.5	%
Molasses	28.6	%	0.4	%	28.1	%
CSB	15.2	%	5.7	%	9.0	%
Betaine	73.4	%	10.0	%	57.7	%

The substantial increase in the revenue and volume of betaine sold was primarily due to increased availability of saleable product resulting from a higher beginning inventory level as of September 1, 2007 as compared to the inventory level as of September 1, 2006.

Cost of sales for the year ended August 31, 2008, exclusive of payments to members for sugarbeets, increased $54.7 million as compared to the year ended August 31, 2007.  This increase was primarily related to the following:

·The change in the net realizable value of the product inventories from the beginning of the reporting period is recorded on the balance sheet as either an increase or decrease to inventories with a corresponding dollar for dollar adjustment to cost of sales on the statement of operations.  The decrease in the net realizable value of product inventories for the year ended August 31, 2008 was $5.8 million as compared to an increase of $40.4 million for the year ended August 31, 2007 resulting in a $46.2 million unfavorable change in the cost of sales between the two years as shown in the table below:

Change in the Net Realizable Value of Product Inventories

	For the Years Ended August 31
(In Millions)	2008			2007			Change
Beginning Product Inventories at Net Realizable Value	$	156.4		$	116.0		$	40.4	(1)
Ending Product Inventories at Net Realizable Value	(150.6		)	(156.4		)	5.8		(2)
(Increase)/Decrease in the Net Realizable Value of Product Inventories	$	5.8		$	(40.4	)	$	46.2

(1) The change was primarily due to a 47 percent increase in the hundredweight of sugar inventory as of August 31, 2007 as compared to August 31, 2006 partially offset by a 10 percent decrease in the per hundredweight net realizable value of sugar inventory as of August 31, 2007 as compared to August 31, 2006.

(2) The change was primarily due to lower quantities of products as of August 31, 2008 as compared to August 31, 2007.

·An impairment loss of $11.9 million related to the property and equipment at the Sidney, Montana facility was recognized in 2008 and included in cost of sales.

·The cost recognized associated with the non-member sugarbeets decreased $4.4 million for the year ended August 31, 2008, when compared to the same period last year.  This decrease was primarily due to an 11.7 percent decrease in tons purchased.

Selling, general and administrative expenses increased $20.8 million for the year ended August 31, 2008, as compared to the year ended August 31, 2007.  Selling expenses increased $22.6 million primarily due to the increase in the volumes of products sold and increased transportation rates resulting in increased shipping and handling expenses.  General and administrative expenses decreased $ 1.8 million due to general cost decreases.

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Interest expense decreased $5.5 million for the year ended August 31, 2008, as compared to the year ended August 31, 2007.  This reflects a decrease in the average borrowing levels and lower average interest rates for both short-term and long-term debt.

Non-member business activities resulted in a loss of $4.8 million for the year ended August 31, 2008, as compared to a gain of $2.3 million for the year ended August, 2007.  The decrease was primarily related to the impairment loss for Sidney Sugars Incorporated partially offset by increased income from the activities of ProGold.

Payments to members for sugarbeets together with unit retains declared, decreased by $51.7 million from $599.1 million in 2007 to $547.4 million in 2008.  This decrease was primarily due to lower sugar selling prices and fewer tons harvested partially offset by increased agri-product selling prices.

2009 Crop and Estimated Fiscal Year 2010 Information

This discussion contains the Company’s current estimate of the results to be obtained from the Company’s processing of the 2009 sugarbeet crop.  This discussion includes forward-looking statements regarding the quantity of sugar to be produced from the 2009 sugarbeet crop.  These forward-looking statements are based largely upon the Company’s expectations and estimates of future events; as a result, they are subject to a variety of risks and uncertainties.  The actual results experienced by the Company could differ materially from the forward-looking statements contained herein.

The harvest of the Red River Valley and the Sidney sugarbeet crops grown during 2009 is estimated to produce a total of 10.4 million tons of sugarbeets, or approximately 22.1 tons of sugarbeets per acre from approximately 469,000 acres.  This represents a decrease in total tons harvested of approximately 3.0 percent compared to the 2008 crop.  The sugar content of the 2009 crop is estimated to be 16.7 percent as compared to the 17.6 percent sugar content of the 2008 crop.  The Company expects to produce a total of approximately 28.3 million hundredweight of sugar from the 2009 crop, a decrease of approximately 7.8 percent compared to the 2008 crop.

Item 7A.QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Market risk is the risk of loss to future earnings, to fair values or to future cash flows that may result from changes in the price of a financial instrument.  The value of a financial instrument may change as a result of changes in the interest rates, exchange rates, commodity prices, equity prices and other market changes.  Market risk is attributed to all market-risk sensitive financial instruments, including long term debt.

The Company does not believe that it is subject to any material market risk exposure with respect to interest rates, exchange rates, commodity prices, equity prices and other market changes that would require disclosure under this item.

Item 8.FINANCIAL STATEMENTS

The consolidated financial statements of the Company for the fiscal years ended August 31, 2009, 2008 and 2007 have been audited by Eide Bailly LLP, an independent registered public accounting firm.  Such consolidated financial statements have been included herein in reliance upon the report of Eide Bailly LLP.  The consolidated financial statements of the Company are included in Appendix A to this annual report.

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Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

None

Item 9A(T). CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

The Company’s chief executive officer and chief financial officer have reviewed and evaluated the effectiveness of the Company’s disclosure controls and procedures (as defined in Rules 240.13a-15(e) and 15d-15(e) promulgated under the Securities Exchange Act of 1934) as of August 31, 2009.  Based on that review and evaluation, which included inquiries made to certain other employees of the Company, the chief executive officer and chief financial officer have concluded that the Company’s current disclosure controls and procedures, as designed and implemented, are effective in ensuring that information relating to the Company required to be disclosed in the reports the Company files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the Security and Exchange Commission’s rules and forms, including ensuring that such information is accumulated and communicated to the Company’s management, including the chief executive officer and the chief financial officer, as appropriate to allow timely decisions regarding required disclosure.

Management’s Report on Internal Control over Financial Reporting

Management isresponsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934, as amended.  Our internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.

All internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation.  Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.  Also, because of changes in conditions, the effectiveness of internal control may vary over time.

Management assessed the effectiveness of the Company’s internal control over financial reporting as of August 31, 2009, using criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control-Integrated Framework and concluded that the Company maintained effective internal control over financial reporting as of August 31, 2009 based on these criteria.

This annual report does not include an attestation report of the Company’s registered public accounting firm regarding internal control over financial reporting.  Management’s report was not subject to attestation by the Company’s registered public accounting firm pursuant to temporary rules of the Securities and Exchange Commission that permit the Company to provide only management’s report in this annual report.

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Changes in Internal Control over Financial Reporting

There were no changes in the Company’s internal control over financial reporting that occurred during the Company’s most recent fiscal quarter that may have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART III

Item 10.DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

Board of Directors

The Board of Directors of the Company consists of three directors from each of the five Red River Valley factory districts.  Directors must hold common stock of the Company or must be representatives of such shareholders belonging to the district they represent and are elected by the members of that district.  In the case of a holder of common stock who is other than a natural person, a duly appointed or elected representative of such shareholder may serve as a director.  Any holder of common stock can stand for election or be nominated from the floor at the factory district meeting where elections are held.  The directors were elected to serve three-year terms expiring in December of the years indicated in the table below.  One director is elected each year from each Red River Valley factory district.  A director cannot serve more than four consecutive three-year terms.

The table below lists certain information concerning current directors of the Company.

Name and Address	Age	Factory District	Director Since	Term Expires December
Francis L. Kritzberger (Chairman)RR 1, Box 22  Hillsboro, ND 58045	64	Hillsboro	1996	2009
Neil C. Widner (Vice-Chairman)  PO Box 47  Stephen, MN 56757	58	Drayton	2000	2009
Donald S. Andringa  422 4th Avenue NE  Crookston, MN 56716	55	Crookston	2008	2011
William Baldwin  8244 144th Ave. NE  St Thomas, ND 58276	63	Drayton	2004	2010
Richard Borgen  1544 Co. Highway 39  Perley, MN 56574	60	Moorhead	1997	2009
John Brainard  204 6th St. W  Ada, MN 56510	49	Hillsboro	2005	2011

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Brian R. Erickson  824 James Ave. SE  East Grand Forks, MN 56721	61	East Grand Forks	2005	2011
Robert M. Green  220 Park St.  Saint Thomas, ND 58276	55	Drayton	2005	2011
John F. Gudajtes  15363 County Road 15  Minto, ND 58261	60	East Grand Forks	2003	2009
Curtis E. Haugen  45508 300th St. NW  Argyle, MN 56713	48	East Grand Forks	2001	2010
William Hejl15560 28th St. SE  Amenia, ND 58004	54	Moorhead	2007	2010
Curtis Knutson  35545 290th St. SW  Fisher, MN 56723	51	Crookston	2007	2010
Dale Kuehl  12213 12th Avenue South  Glyndon, MN 56547	52	Moorhead	2008	2011
Jeff D. McInnes  16485 6th Street SE  Hillsboro, ND 58045	52	Hillsboro	2001	2010
Steve Williams515 Thompson Ave.Fisher, MN 56723	58	Crookston	2006	2009

Below is the biographical information on each Director.

Francis L. Kritzberger.  Mr. Kritzberger has been a director since 1996 and has served as Chairman since 2008.  Mr. Kritzberger has previously served as a director with the Company, from July 30, 1989 until July 30, 1993.  Mr. Kritzberger has been a farmer since 1964.  Mr. Kritzberger serves on the Board of Directors of United Sugars Corporation, the Board of Directors of Midwest Agri-Commodities Company, the Board of Governors of ProGold Limited Liability Company and is also on the Board of Directors of the North Dakota Council of Cooperatives.

Neil C. Widner.  Mr. Widner has been a director since 2000 and has served as Vice-Chairman since 2007.  Mr. Widner has farmed near Stephen, Minnesota, since 1973.  Mr. Widner serves on the Board of Directors of United Sugars Corporation, the Board of Governors of ProGold Limited Liability Company and as a director for the American Sugarbeet Growers Association.

Donald S. Andringa. Mr. Andringa was elected as a director in 2008. Mr. Andringa has been a sugarbeet farmer for 35 years with his farming operations near Crookston, Minnesota.  Mr. Andringa currently serves on the Board of Directors of the Red River Valley Farmers Insurance Pool and the

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Advisory Board for the University of Minnesota-Crookston Northwest Research and Outreach Center. Mr. Andringa previously served on Board of Directors of the Crookston Factory District Grower Association, the Red River Valley Sugarbeet Growers Association’s Executive Committee and the American Sugarbeet Growers Association Board of Directors.

William Baldwin.  Mr. Baldwin has been a director since 2004.  Mr. Baldwin has been farming in the Drayton Factory District since 1966 and is the President of Baldwin Farms Incorporated.  Mr. Baldwin is the past President of the Red River Valley Sugarbeet Growers Association, served on the American Sugarbeet Growers Executive Committee and is currently serving on the Farm Service Agency, State Committee.

Richard Borgen.  Mr. Borgen has been a director since 1997.  Mr. Borgen has farmed east of Perley, Minnesota, since 1967 and has served as a director on the Perley Co-op Elevator Board and the Norman County West school board.

John Brainard.  Mr. Brainard has been a director since 2005.  Mr. Brainard has been a sugarbeet grower since 1998.  Mr. Brainard currently serves as a director of the American Sugarbeet Growers Association. Mr. Brainard is a past director of the Minnesota Farm Bureau and has served on the executive committee of the Red River Valley Sugarbeet Growers Association.

Brian R. Erickson.  Mr. Erickson has been a director since 2005.  Mr. Erickson has been a sugarbeet grower for over 20 years.  Mr. Erickson currently serves on the Board of Directors of Midwest Agri-Commodities Company. Mr. Erickson has served as a director and Chairman of the East Grand Forks Economic Development and Housing Authority.

Robert M. Green.  Mr. Green has been a director since 2005.  Mr. Green has been a sugarbeet grower since 1976.  Mr. Green also serves as a director for the American Sugarbeet Growers Association.  Mr. Green served 12 years as a director of the Red River Valley Sugarbeet Growers Association.

John F. Gudajtes.  Mr. Gudajtes has been a director since 2003.  Mr. Gudajtes has farmed in the Minto, North Dakota area since 1967 and is the President of Gudajtes Farms.  Mr. Gudajtes is a past President of the Walsh County Historical Society.

Curtis E. Haugen.  Mr. Haugen has been a director since 2001.  Mr. Haugen has been a farmer since 1981 and farms near Argyle, Minnesota.  Mr. Haugen serves on the Board of Directors of United Sugars Corporation, as a director for the American Sugarbeet Growers Association and as a director and President of the Farmer’s Union Oil Company, Oslo, Minnesota.

William A. Hejl.  Mr. Hejl has been a director since 2007.  Mr. Hejl has farmed near Amenia, North Dakota since 1987.  Mr. Hejl currently serves as a director of the American Sugarbeet Growers Association and is a manager of the Rush River Water Resource District.  Mr. Hejl also served as President of the Red River Valley Sugarbeet Growers Association and as President of the World Association of Beet and Cane Growers.

Curtis Knutson.  Mr. Knutson has been a director since 2007.  Mr. Knutson has farmed near Fisher, Minnesota for 36 years.  Mr. Knutson currently serves on the Polk County Extension Board.

Dale Kuehl. Mr. Kuehl was elected as a director in 2008.  Mr. Kuehl has been a sugarbeet farmer for 33 years with his farming operations near Glyndon, Minnesota.  Mr. Kuehl currently serves on the Board of Governors of ProGold Limited Liability Company.  Mr. Kuehl previously served on the Boards of Directors of the Moorhead Factory District Grower Association, the Red River Valley Sugarbeet Growers Association, the American Sugarbeet Growers Association, the International Sugarbeet Institute and the Red River Valley Coop Power Association.

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Jeff D. McInnes.  Mr. McInnes has been a director since 2001.  Mr. McInnes co-manages a 4,000 acre farming operation near Hillsboro, North Dakota.  Mr. McInnes is the founder and manager of the Basement Traders Marketing Club, a grain marketing association in Hillsboro.  Mr. McInnes serves on the Board of Governors of ProGold Limited Liability Company.

Steve Williams.  Mr. Williams has been a director since 2006.  Mr. Williams has farmed near Fisher, Minnesota since 1987.  Mr. Williams serves on the Board of Directors of the American Sugarbeet Growers Association and served as its President from 2006 to 2008.  Mr. Williams is also a director of the Sugar Association and the Halstad Cooperative Telephone Company.  Mr. Williams served as a director of the Red River Valley Sugarbeet Growers Association from 1998 to 2007, and served as its Chairman from 2003 to 2007.

Audit Committee and Audit Committee Financial Expert

The Audit Committee assists the Board of Directors in fulfilling its oversight responsibilities relating to the Company’s financial reporting and controls, the annual independent audit of the Company’s consolidated financial statements and the legal compliance and ethics programs as established by management and the Board of Directors.  The Audit Committee selects the independent public accountants, approves the fees and the scope and procedural plans of the audits of the Company’s consolidated financial statements.  The Audit Committee administers the Company’s employee complaint program and handles, on behalf of the full Board of Directors, any issues that arise under the Company’s Code of Ethics.  The Audit Committee has a charter that is available from the Company upon request.

As of August 31, 2009, the Board of Directors of the Company has determined that there is no audit committee financial expert serving on the Audit Committee.  The Company is a cooperative formed in accordance with the Minnesota cooperative law of the State of Minnesota.  In accordance with the Minnesota cooperative law, the Amended and Restated Articles of Incorporation of the Company and the Amended and Restated Bylaws of the Company, the Board of Directors must be composed of members of the Company (the holders of common stock).  Membership in the Company is limited to agricultural producers who are actively involved in the production of sugarbeets.  Based on the state law requirements for both membership and board service, the Company is unable to recruit outside of its membership to elect to its Board of Directors and its audit committee an individual that possesses the attributes of an “audit committee financial expert” as defined by the SEC.  To date, the Company has been unable to recruit from its membership an individual to serve on the Board of Directors that possesses the attributes of an “audit committee financial expert.”

The Audit Committee has reviewed and discussed with management and Eide Bailly LLP our audited consolidated financials statements contained in our Annual Report on Form 10-K for the fiscal year ended August 31, 2009. The Audit Committee also discussed with Eide Bailly LLP the matters required to be discussed pursuant to SAS No. 61 (Codification of Statements of Auditing Standards, AU Section 380), which includes, among other items, matters related to the conduct of the audit of the Company’s consolidated financial statements.

The Audit Committee has received and reviewed the written disclosures and the letter from Eide Bailly LLP required by the applicable requirements of the Public Company Accounting Oversight Board regarding Eide Bailly LLP’s communications with the Audit Committee concerning its independence from the Company and has discussed with Eide Bailly LLP its independence from the Company.

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Based on the review and discussions referred to above, the Audit Committee recommended to the Board that the audited financial statements be included in our Annual Report on Form 10-K for our fiscal year ended August 31, 2009 for filing with the Commission.

On August 31, 2009, the members of the Audit Committee were John Brainard (Committee Chair), Brian R. Erickson, Robert M. Green, William A. Hejl, Dale Kuehl and Donald S. Andringa.

Company Officers

The table below lists the officers of the Company for the fiscal year covered by this report, none of whom owns any shares of Common Stock or Preferred Stock.  Officers are elected annually by the Board of Directors.

Name	Age	Position
David A. Berg	55	President and Chief Executive Officer
Thomas S. Astrup	40	Vice President-Finance and Chief Financial Officer
Joseph J. Talley	49	Chief Operating Officer
Brian F. Ingulsrud	46	Vice President-Administration
Teresa A. Warne	39	Corporate Controller, Chief Accounting Officer, Assistant Secretary and Assistant Treasurer
Daniel C. Mott	50	Secretary
Samuel S. M. Wai	55	Treasurer and Assistant Secretary
Mark L. Lembke	53	Finance Administration Manager, Assistant Secretary and Assistant Treasurer
David L. Malmskog	52	Director - Economic Analysis, Assistant Secretary and Assistant Treasurer
Ronald K. Peterson	54	Accounting & Systems Manager, Assistant Secretary and Assistant Treasurer
Lisa M. Maloy	45	Treasury Operations Manager and Assistant Secretary

David A. Berg.  Mr. Berg was named the Company’s President in March 2007 and assumed the role as the Company’s Chief Executive Officer in October 2007.  Mr. Berg served as the Company’s Vice President-Operations and Chief Operations Officer from January 2004 to March 2007.  Mr. Berg was the Company’s Vice President-Agriculture during the period December 2000 to January 2004 and the Company’s Vice President-Administration during the period from October 1998 to December 2000.  Mr. Berg currently serves on the Boards of Directors of United Sugars Corporation, Midwest Agri-Commodities Company and Sidney Sugars Incorporated.

Thomas S. Astrup.  Mr. Astrup was named the Company’s Vice President-Finance and Chief Financial Officer in May 2007.  Mr. Astrup was named the Chief Operating Officer and Chief Financial Officer of Sidney Sugars Incorporated in May 2007.  Mr. Astrup served as the Company’s Vice President-Agriculture from 2004 to 2007.  Mr. Astrup was the Company’s Vice President-Administration from 2000 to 2004 and the Company’s Corporate Controller, Assistant Treasurer and Assistant Secretary from 1999 to 2000.  Mr. Astrup currently serves on the Board of Directors for Sidney Sugars Incorporated and on the ProGold Limited Liability Company Board of Governors.

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Joseph J. Talley.  Mr. Talley was named the Company’s Chief Operating Officer in May 2007.  Mr. Talley was named as the Chairman of the Board and Chief Executive Officer of Sidney Sugars Incorporated in May 2007.  Mr. Talley served as the Company’s Vice President-Finance and Chief Financial Officer of the Company from 2003 to 2007.  Mr. Talley was the Company’s Vice President-Finance from 1998 to 2003.  Mr. Talley also served as Chief Operating Officer of Sidney Sugars Incorporated from 2002 to 2007.  He currently serves on the Board of Governors for ProGold Limited Liability Company.

Brian F. Ingulsrud.  Mr. Ingulsrud was named the Company’s Vice President-Administration in February 2004.  From 2000 to 2004, he served as the Company’s Corporate Controller, Assistant Secretary and Assistant Treasurer.

Teresa A. Warne.  Ms. Warne was named the Company’s Corporate Controller, Chief Accounting Officer, Assistant Treasurer and Assistant Secretary in March 2008.  Prior to joining the Company, Ms. Warne was the Director of Accounting with Caribou Coffee Company at its corporate headquarters in Brooklyn Center Minnesota from 2006 to 2008.  Ms. Warne previously was employed with Northwest Airlines where she held various financial positions from 1999 to 2006.

Daniel C. Mott.  Mr. Mott became the Company’s Secretary in 1999.  Previously, he had served as Assistant Secretary since 1995.  Mr. Mott also serves as the Company’s General Counsel.  He is a Shareholder in the law firm of Fredrikson & Byron, P.A.  Mr. Mott is not an employee of the Company.

Samuel S. M. Wai.  Mr. Wai was named the Company’s Treasurer and Assistant Secretary in 1999.  Mr. Wai also serves as Treasurer of the American Crystal Sugar Political Action Committee and on the Board of Directors of the Institute of Cooperative Financial Officers.

Mark L. Lembke.  Mr. Lembke was named the Company’s Assistant Secretary and Assistant Treasurer in 1996 and also currently serves as the Company’s Finance Administration Manager.

Ronald K. Peterson.  Mr. Peterson was named the Company’s Assistant Secretary and Assistant Treasurer in 1993 and also currently serves as the Company’s Accounting and Systems Manager.

David L. Malmskog.  Mr. Malmskog was named the Company’s Assistant Secretary and Assistant Treasurer in 1998 and also currently serves as the Company’s Director-Economic Analysis.

Lisa M. Maloy. Ms. Maloy was named the Company’s Assistant Secretary in 2002 and also currently serves as the Company’s Treasury Operations Manager.

Code of Ethics

The Company has adopted a code of ethics that applies to its principal executive officer, principal financial officer, principal accounting officer or controller as well as all employees and Directors of the Company.  The Company will provide at no charge a copy of the code of ethics to any person who requests a copy by sending a written request to the Company’s headquarters, attention of the Chief Executive Officer of the Company.

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Item 11.         EXECUTIVE COMPENSATION

Compensation Discussion and Analysis

Overview

This compensation discussion and analysis addresses the compensation paid to the individuals who served as our President and Chief Executive Officer, Chief Financial Officer, Chief Operating Officer and Vice President of Administration for fiscal year 2009, all of whom are identified on the Summary Compensation Table immediately following this report (Named Executive Officers).  Immediately following this compensation discussion and analysis is the Compensation Committee Report of the Board of Directors (the Committee Report).  Members of the Compensation Committee were in their role for fiscal year 2009.

Purpose and Philosophy

We believe that strong leadership is a key component of success.  To be successful, we must be able to attract, retain and motivate leaders with the skills necessary to excel in an integrated cooperative environment and understand key business and technical matters related to the diverse business influences that result from growers and owners, marketing partnerships and activities, technical manufacturing processes, and government policy.  Our goal is to provide a competitive compensation package to our Named Executive Officers combining total direct compensation, retirement income and other benefits.

Total direct compensation, which includes base salary, short-term cash incentive compensation and long-term incentive compensation, is measured against comparable companies in the market in which we compete.

We believe the market in which we compete for executive talent consists of companies with similar characteristics to the Company, for example, manufacturing companies with similar revenues in similar geographies.  We further believe that the market also includes privately owned businesses in general and exclusively as it relates to long-term incentive compensation because of the structure and nature of our business.  Therefore, we have compared our compensation versus compensation data points for these types of companies (our market).

Our management, on behalf of the Compensation Committee and Board of Directors, retained Towers Perrin, an outside compensation consultant (Compensation Consultant), to prepare market-based compensation data comparing compensation information for our Named Executive Officers with that of executive officers in our market. This analysis uses market data from published national survey sources, including Towers Perrin and Watson Wyatt.  In addition, pay data from the proxy materials from a group of comparative companies is referenced.  This group of companies, together with the survey sources, represents the market in which we believe we compete for executive talent and includes:

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·Actuant Corporation

·Ameron International Corp.

·Arctic Cat Inc.

·Barnes Group Inc.

·Brady Corporation

·Constar International Inc.

·Donaldson Company, Inc.

·Gardner Denver, Inc.

·Graco Inc.

·Herman Miller, Inc.

·IDEX Corporation

·Imperial Sugar Company

·Magellan Midstream Partners, L.P.

·Milacron Inc.

·Mine Safety Appliances Co

·Minn-Dak Farmers Cooperative

·MSC Industrial Direct Co.

·OMNOVA Solutions Inc.

·Packaging Corporation of America

·Rayonier Inc.

·Schweitzer-Mauduit International, Inc.

·The Toro Company

·Thomas & Betts Corporation

This data was provided to the Compensation Committee in September, 2008, and was utilized to establish market based pay practices for each of the Named Executive Officer positions.

Our base salary midpoint for our President and Chief Executive Officer is projected to represent less than the median of the market and total direct compensation is projected to be near the lower quartile of the market.  Currently, we generally target our other Named Executive Officers’ base salary midpoint near the median of the market and total direct compensation near the lower quartile of our market.  The Compensation Committee determined that total direct compensation as established was appropriate and reflects the compensation principles outlined in this report.

While market based information is important in terms of setting pay practices, it is not the only factor considered when making individual executive compensation decisions. Other factors considered when making individual executive compensation decisions include individual roles and responsibilities, performance, reporting structure and internal pay relationships.

Process

The Compensation Committee of the Board of Directors is responsible for annually reviewing and recommending to the Board of Directors the base salary and performance objectives for the incentive compensation (both short-term and long-term) of the President and Chief Executive Officer, as well as the performance objectives for long-term incentive compensation for all Named Executive Officers.  Board action on recommendations is taken by a vote of all of the directors, none of whom are members of management.  Decisions on executive compensation made by the Compensation Committee, the Board or the President and Chief Executive Officer have been guided by our compensation philosophy discussed above.

Our President and Chief Executive Officer sets base salary and the annual performance objectives for the short-term incentive compensation for the other Named Executive Officers.  The prospective base salary and annual performance objectives for the other Named Executive Officers are reviewed with the Board of Directors prior to being finalized by the President and Chief Executive Officer.

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Elements of Compensation

The elements of compensation paid to our Named Executive Officers for 2009 are as follows:

·Base salary

·Short-term cash incentive compensation

·Long-term incentive compensation

·Retirement and other benefits

·Perquisites

·Severance for our President and Chief Executive Officer

Each of the above are more completely described below.

Base Salary

The objective of the level of base salary paid to our Named Executive Officers is to reflect individual roles and responsibilities, performance, reporting structure, and internal pay relationships with respect to market competitiveness.  All established base salaries for fiscal year 2009 for our Named Executive Officers were in accordance with our compensation philosophy described earlier in this report.

The fiscal year 2009 base salary of our President and Chief Executive Officer, Mr. Berg, was set by the Board of Directors in September, 2008 based on the comparable market data provided by our Compensation Consultant.

Short-Term Cash Incentive Compensation

Our short-term cash incentive compensation is designed to reward the Named Executive Officers for their individual performance and our financial performance for the most recently completed fiscal year.  Short-term cash incentive compensation is paid in cash following the close of the fiscal year.

Short-term cash incentive compensation provides an annual cash incentive opportunity, expressed as a percent of base salary, for our Named Executive Officers who meet performance objectives.  For fiscal year 2009, our President and Chief Executive Officer had an opportunity to receive an additional 45% of his base salary, and the other Named Executive Officers had an opportunity to receive an additional 35% of their base salary, by meeting “target” performance levels.  Actual awards are determined based on the different performance levels achieved by the Named Executive Officers.  The potential for short-term cash incentive compensation ranges from 0% for unsatisfactory performance to a maximum of 90% for outstanding performance for the Chief Executive Officer.  For our other Named Executive Officers, the potential for short-term cash incentive compensation ranges from 0% for unsatisfactory performance to a maximum of 70% for outstanding performance.

The President and Chief Executive Officer’s performance objectives were weighted with 50% of the potential award based on our overall financial performance and 50% of the potential award based on

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the President and Chief Executive Officer’s individual performance objectives as established by the Board of Directors.  For the other Named Executive Officers, annual performance objectives were determined by the President and Chief Executive Officer at the beginning of fiscal year 2009, with 40% based on our overall financial performance and 60% based on the achievement of individual performance objectives, including personal effectiveness.  Our overall financial performance objectives are based on the final gross beet payment for the fiscal year and total on-farm profit.  Total on-farm profit is equal to total gross beet payment minus the product of Total Harvested Acres multiplied by On-Farm Costs per Acre.  On-Farm Cost per Acre is based on the Red River Valley Report from the Minnesota and North Dakota Farm Business Management Education Program. For fiscal year 2009, the final gross beet payment was below target and the total on-farm profit was at the outstanding performance level.

The individual performance objectives of our Named Executive Officers are derived primarily from our strategic initiatives, which are comprised of ten general strategies:

·Trade and policy leadership

·Cost and revenue management

·Agricultural gold standards

·Beet storage excellence

·Balanced and maximized slice and recovery

·Maintenance excellence

·Product quality

·Safety

·Training

·Technology and automation

Each Named Executive Officer, based on his area of responsibility, is tasked with objectives based on our strategies.  As indicated above, Mr. Berg’s performance objectives for fiscal year 2009 were set by the Board of Directors.  The performance objectives for fiscal year 2009 for our other Named Executive Officers were set by Mr. Berg at the beginning of fiscal year 2009.

The Board of Directors rates the President and Chief Executive Officer at the end of the fiscal year with respect to his achievement of his performance objectives, and his short-term cash incentive compensation for fiscal year 2009 is based on this rating.  The President and Chief Executive Officer rates the other Named Executive Officers with respect to their individual achievement of their performance objectives and each of them receives a short-term cash incentive compensation award based on that rating.

Long-Term Incentive Compensation

Long-term incentive compensation provides an incentive opportunity, expressed as a percent of base salary, for our Named Executive Officers as a group who meet performance objectives.  For fiscal year 2009, our President and Chief Executive Officer had an opportunity to receive an additional 40% of his base salary and the other Named Executive Officers had an opportunity to receive an additional 20% of their base salary assuming target performance levels.  Actual awards are determined based on the performance level achieved by the Named Executive Officers as a group.  The potential for long-term

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incentive compensation ranges from 0% for unsatisfactory performance to a maximum of 80% for outstanding performance for the President and Chief Executive Officer.  For our other Named Executive Officers, the potential for long-term incentive compensation ranges from 0% for unsatisfactory performance to a maximum of 40% for outstanding performance.  Unlike our short-term cash incentive compensation, long-term incentive compensation awards are based on the performance level of our Named Executive Officers as a group.  Forty-five percent (45%) of the performance objectives were based on the fiscal year’s actual on-farm profit as compared to historical profit levels while the other 55% was based on an assessment made by the Board of Directors regarding achievement of specific long-term performance objectives as established by the Board of Directors. For fiscal year 2009, the total on-farm profit was at the outstanding performance level.

Our 2005 Long-Term Incentive Plan (2005 Plan) sets forth long-term incentive compensation available to our Named Executive Officers.  Our 2005 Plan is designed to provide financial incentive awards through deferred compensation to reward the Named Executive Officers for long-term strategic performance and to encourage long-term commitment to our organization.  Originally, our long-term incentive compensation was set forth in our 1999 Long-Term Incentive Plan (1999 Plan) which has been replaced by our 2005 Plan.  Even though the 2005 Plan replaced the 1999 Plan, vested awards under the 1999 Plan are still governed by the 1999 Plan.  The 1999 Plan and the 2005 Plan are substantially similar.

Under the 2005 Plan, a long-term incentive award may be granted to a Named Executive Officer in the form of contract rights, cash, or in a combination of both cash and contract rights (incentive awards).  The value of any contract rights granted is determined by our Board of Directors.  To date, all incentive awards granted have been in the form of contract rights.  Incentive awards vest over a three-year period, with the first vesting occurring one year after the grant.  Vested incentive awards may be redeemed at the discretion of the Named Executive Officer and must be redeemed upon certain other events causing a termination of employment.  Redemptions are in the form of cash payments that may be deferred by the Named Executive Officer.  Named Executive Officers receive a profit per acre payment for vested contract rights based on the average profit per acre paid to our shareholders.  Profit per acre payments are made to the Named Executive Officers in the same manner as our shareholders receive their crop payments.  Profit per acre payments can be taken in cash or deferred until a later date.  The Board of Directors retains the discretion to determine the amount of any incentive awards to be made available to the Named Executive Officers with respect to a given fiscal year.

On September 23, 2009, 282.10 contract rights were granted to Named Executive Officers with respect to performance for the fiscal year ended August 31, 2009 at a value of $2,200 per contract right.  Correspondingly, the redemption value of the contract rights previously granted to the Named Executive Officers under the 1999 and 2005 Plans were increased from $1,750 to $2,200 per contract right.  Effective as of August 31, 2009, there were a total of 1,296.24 contract rights issued and outstanding to the Named Executive Officers under the 1999 and 2005 Plans, of which 716.09 were vested.

Retirement and other benefits

Retirement benefits are an important tool in achieving overall compensation objectives because they provide a financial security component and promote retention.  Our Named Executive Officers participate in our retirement plans like any other employee.  In addition, we provide a Supplemental Executive Retirement Plan (SERP) for our Named Executive Officers, which is a non-qualified defined contribution and defined benefit plan designed to replace benefits executives would have received if not for limits imposed by Code Section 401(a)(17) and 402(g).  The Named Executive Officers may elect to defer a portion of base salary by regular payroll deductions, and may also defer 100% of all short-term

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incentive compensation and long-term incentive compensation awards or payments related to any such awards.  All long term incentive deferrals are held in a long term incentive plan trust, all other deferrals are held in a SERP trust.  Both have seven investment options and are subject to the claims of our creditors.  The pension component of the SERP is “unfunded” with all amounts to be paid from our general assets, to the extent available, when due.

Our Named Executive Officers participate in our fully insured long-term disability program for all nonunion employees to provide income protection in the event of permanent disability.  The long-term disability plan is part of the core benefits we provide.  The long-term disability plan provides a benefit equal to 60% of base pay with a maximum monthly benefit of $10,000.  The Named Executive Officers pay tax on the value of the long-term disability premium, and as a result if they become disabled their benefit will not be taxable.  Other nonunion employees are not taxed on the value of their long-term disability premium; therefore if they become disabled their benefit will be taxable.  For the Named Executive Officers, we impute the value of the premium to provide a tax-free benefit to partially offset the impact of receiving a disability benefit less than 60% of base pay because of the $10,000 monthly benefit limitation.

Perquisites

Our Compensation Committee and the Board of Directors believe perquisites should be modest, reasonable in terms of cost, aligned with business needs and comparative to other salaried employees.  Named Executive Officers may receive some or all of the following perquisites while employed: car allowance, cell phone, minimum of 4 weeks annual vacation accrual, reimbursement for income tax preparation and executive physicals.  Additionally, the President and Chief Executive Officer is provided with a country club membership.   The above described perquisites cease upon retirement or separation of service with us.

Severance

If we terminate Mr. Berg without cause he is entitled to receive a post-termination severance payment equal to two years of his base salary in effect on the date of termination.  There are no compensatory plans or arrangements providing for payments to any of the other Named Executive Officers in conjunction with any termination of employment with us, including without limitation resignation, severance, retirement or constructive termination of employment by the Company.  Furthermore, there are no such plans or arrangements providing for payments to any of the Named Executive Officers in conjunction with a change of control or change in such Named Executive Officer’s responsibilities.

Employment Agreements

We entered into an employment agreement with Mr. Berg effective March 21, 2007.  The agreement provides that Mr. Berg shall serve as an “at will” employee at the pleasure of the Board of Directors.  The agreement also includes a two-year non-compete/non-solicitation agreement with Mr. Berg.  Mr. Berg received a gross base salary for serving as President with this base salary increasing at the time Mr. Berg assumed the position of President and Chief Executive Officer.  Thereafter, the agreement grants the Board of Directors the authority to establish Mr. Berg’s base salary each year, and also provides that he may participate in other benefit plans offered to all employees.

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Compensation Committee Report

The Compensation Committee of the Company’s Board of Directors has reviewed and discussed the Compensation Discussion and Analysis required by Item 402(b) of Regulation S-K with management and, based on such review and discussion, the Compensation Committee recommended to the Board of Directors that the Compensation Discussion and Analysis be included in this Form 10-K.

Members of the Compensation Committee, all of whom are members of the Board of Directors:

Jeff D. McInnes, Chairman

John Brainard

Brian R. Erickson

John F. Gudajtes

Curtis E. Haugen

Steve Williams

Summary Compensation Table

The following table summarizes the compensation of the Named Executive Officers for the fiscal years ended August 31, 2009, 2008 and 2007.  The Named Executive Officers are the Company’s Chief Executive Officer, Chief Financial Officer and the two other most highly compensated executive officers of the Company.

2009 SUMMARY COMPENSATION TABLE

Name and Principal Position	Year	Salary (2)		Non-Equity Short- Term Incentive Plan Compensation (2)		Non-Equity Long- Term Incentive Plan Compensation (2),(3)		Non-Equity Long- Term Incentive Plan Compensation (2),(4)			Non-Equity Long- Term Incentive Plan Compensation (2),(5)		Change in Pension Value and Nonqualified Deferred Compensation (NQDC) Earnings (6)		All Other Compensation (7)		Total
David A. Berg - President and Chief Executive Officer (1)	2009	$	508,108	$	316,575	$	343,354	$	148,829		$	87,469	$	154,366	$	41,311	$	1,600,012
	2008	$	401,169	$	256,662	$	244,493	$	(93,112	)	$	59,076	$	52,415	$	26,052	$	946,755
	2007	$	278,308	$	147,744	$	97,089	$	43,960		$	69,123	$	60,817	$	24,705	$	721,746
Thomas S. Astrup - Vice President-Finance and Chief Financial Officer	2009	$	259,902	$	135,638	$	86,218	$	113,639		$	67,348	$	37,373	$	16,043	$	716,160
	2008	$	239,400	$	114,792	$	78,453	$	(72,697	)	$	44,693	$	6,513	$	15,463	$	426,617
	2007	$	227,769	$	123,058	$	79,281	$	33,990		$	50,872	$	23,052	$	13,693	$	551,715
Joseph J. Talley - Chief Operating Officer	2009	$	337,662	$	151,704	$	112,486	$	59,972		$	13,225	$	74,408	$	30,582	$	780,039
	2008	$	302,800	$	173,970	$	99,243	$	(26,797	)	$	27,814	$	34,002	$	26,957	$	637,989
	2007	$	267,308	$	123,917	$	93,242	$	24,130		$	24,599	$	47,562	$	24,762	$	605,520
Brian F. Ingulsrud - Vice President-Administration	2009	$	236,948	$	102,617	$	78,562	$	59,342		$	23,140	$	61,841	$	16,344	$	578,794
	2008	$	218,400	$	104,723	$	71,575	$	(31,837	)	$	10,665	$	11,963	$	14,445	$	399,934
	2007	$	200,769	$	108,956	$	70,196	$	11,507		$	6,585	$	28,455	$	13,925	$	440,393

(1)Mr. Berg was named President in March 2007 and assumed the role as the Company’s Chief Executive officer in October 2007.

(2)Amounts shown are not reduced to reflect the Named Executive Officers’ elections, if any, to defer compensation into the Supplemental Executive Retirement Plan (SERP).

(3)Represents the stated value of contract rights that were earned in the fiscal year, which was the year performance targets were achieved. Contract rights vest equally over a three year period.  For further information regarding the Long-Term Incentive Plan, see “Compensation Discussion and Analysis” within this Form 10-K.

(4)Represents the change in value of the outstanding contract rights granted to the executives in prior years.  Contract rights vest equally over a three year period.  For further information regarding the Long-Term Incentive Plan, see “Compensation Discussion and Analysis” within this Form 10-K.

(5)Represents the Profit-Per-Acre payments that were earned in the fiscal year, which was the year performance targets were achieved.

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(6)Components of Change in Pension Value and NQDC Earnings. See table below for details:

Change in Pension Value and Nonqualified Deferred Compensation Earnings

Name and Principal Position	Pension (A)		SERP-(Pension) (A)		Preferential Interest on Non- Qualified Deferred Compensation (B)		Total
David A. Berg - President and Chief Executive Officer	$	63,696	$	89,263	$	1,407	$	154,366
Thomas S. Astrup - Vice President-Finance and Chief Financial Officer	$	22,437	$	14,581	$	355	$	37,373
Joseph J. Talley - Chief Operating Officer	$	36,069	$	31,839	$	6,500	$	74,408
Brian F. Ingulsrud - Vice President-Administration	$	43,005	$	18,764	$	72	$	61,841

(A) Represents the change in the present value of the accumulated benefits provided by the plan or agreement.

(B)  Interest is considered to be preferential if the rate paid to the executive exceeds 120% of the applicable long-term federal rate under the Interal Revenue Code.  Amounts reported reflect only the interest that exceeds 120% of the applicable long-term federal rate.

(7)Includes the imputed value of Company provided life insurance and long-term disability insurance, car allowance, reimbursement of health club dues, costs of tax return preparation, costs of medical physicals, Company 401(k) matching contributions, Company matching SERP contributions, flexible spending taxable cash and flexible spending dollars into 401(k).

Grants of Plan-Based Awards

The following table discloses the grants of plan-based awards to each of the Company’s Named Executive Officers for the current year related to the 2005 Long-Term Incentive Plan (LTIP).  The amounts of these awards that were expensed are shown in the Summary Compensation Table.  The table below also discloses the estimated future payouts related to contract rights under the 2005 LTIP, Short-Term Incentive Plan (STIP) and the Profit-Per-Acre (PPA) payment under the 2005 LTIP.

Grants of Plan-Based Awards Table

Name and Principal			Units	Estimated Future Payouts UnderNon- Equity Incentive Plan Awards - LTIP - Contract Rights (1)				Estimated Future Payouts Under Non- Equity Incentive Plan - STIP (2)						Estimated Future Payouts Under Non- Equity Incentive Plan Awards - PPA (3)
Position	Grant Date	Action Date	Granted	Threshold	Target		Maximum	Threshold		Target		Maximum		Threshold	Target		Maximum
David A. Berg -President and Chief Executive Officer	8/31/2009	9/23/2009	156.07		$	343,354		$	0	$	236,250	$	472,500		$	60,469
Thomas S. Astrup - Vice President-Finance and Chief Financial Officer	8/31/2009	9/23/2009	39.19		$	86,218		$	0	$	92,271	$	184,541		$	15,184
Joseph J. Talley - Chief Operating Officer	8/31/2009	9/23/2009	51.13		$	112,486		$	0	$	120,400	$	240,800		$	19,810
Brian F. Ingulsrud - Vice President-Administration	8/31/2009	9/23/2009	35.71		$	78,562		$	0	$	84,112	$	168,224		$	13,836

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(1)The “Target” amounts represent contract rights at the 8/31/2009 stated value of $2,200 per contract right.  These rights vest to the executive over three years.  Theoretically, the minimum received for these contract rights could be $0 and there is no maximum.

(2)The amounts indicated represent future potential payments under the Short-Term Incentive Plan (STIP) based on the executives’ salary as of August 31, 2009.

(3)The “Target” amount represents future Profit Per Acre (PPA) annual payments that will be paid to executives upon vesting and assuming a similar beet payment and on-farm costs to that experienced in fiscal year 2009.  PPA payments are only paid on vested contract rights.  Theoretically the minimum payment could be $0 and there is no maximum.

Pension Benefits

The table below reflects information for the Named Executive Officers pertaining to the Company’s Pension Plan and the Supplemental Executive Retirement Plan.

Name and Principal Position	Plan Name	Number of Years Credited Service	Present Value of Accumulated Benefit (1)		Payments During Last Fiscal Year
David A. Berg - President and Chief Executive Officer	Retirement Plan A For Employees of ACSC (2)	22	$	363,076	—
	Supplemental Executive Retirement Plan (2)	22	$	276,874	—
Thomas S. Astrup - Vice President-Finance and Chief Financial Officer	Retirement Plan A For Employees of ACSC (2)	15	$	90,623	—
	Supplemental Executive Retirement Plan (2)	15	$	35,916	—
Joseph J. Talley - Chief Operating Officer	Retirement Plan A For Employees of ACSC (2)	15	$	168,083	—
	Supplemental Executive Retirement Plan (2)	15	$	124,054	—
Brian F. Ingulsrud - Vice President-Administration	Retirement Plan A For Employees of ACSC (2)	18	$	160,749	—
	Supplemental Executive Retirement Plan (2)	18	$	26,126	—

(1)Footnote (10), “Employee Benefit Plans”, of the Company’s Notes to the Consolidated Financial Statements discloses the significant assumptions used in calculating this benefit.

(2)Refer to the Compensation, Discussion and Analysis (CD&A) section within this Form 10-K for a description of this benefit plan.

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Non-Qualified Deferred Compensation

The table below reflects information for the Named Executive Officers pertaining to non-qualified deferred compensation.  All non-qualified deferred compensation listed below is subject to claims of the Company’s creditors.

Name and Principal Position	Executive Contributions in Last Fiscal Year (1)		Registrant Contributions in Last Fiscal Year (2)		Aggregate Earnings in Last Fiscal Year (3)			Aggregate Withdrawals/ Distributions (4)	Aggregate Balance at Last Fiscal Year End
David A. Berg - President and Chief Executive Oficer	$	11,882	$	22,113	$	(45,424	)	—	$	508,027
Thomas S. Astrup - Vice President-Finance and Chief Financial Officer	—		$	5,154	$	2,290		—	$	62,910
Joseph J. Talley - Chief Operating Officer	$	29,979	$	10,188	$	37,548		—	$	881,239
Brian F. Ingulsrud - Vice President-Administration	—		$	3,894	$	527		—	$	12,974

(1)Executives may defer from 2% to 20% of eligible earnings above the limit for a qualified plan and up to 100% of incentive compensation (which includes short-term incentive comp, profit per acre payments and proceeds from the sale of contract rights).  These amounts are included in the Summary Compensation Table.

(2)Represents Company 401k matching above the IRS limit for a qualified plan.  These amounts are included in the “All Other Compensation” column of the Summary Compensation Table.

(3)Preferential interest included here as well as in the NQDC column of the Summary Compensation Table are as follows: Mr. Berg - $1,407, Mr. Astrup - $355, Mr. Talley - $6,500, and Mr. Ingulsrud - $72.  Executives have the option of investing funds in an S&P 500 index fund or in a money market fund guaranteeing interest at prime as of January 2 of each calendar year.  The 2009, 2008 and 2007 calendar year rates were 3.25%, 7.25%,  and 8.25%, respectively.

(4)Distributions occur upon termination of employment and can be in a lump sum or in equal installments over a period not to exceed ten years.

Potential Payments upon Termination or Change-In-Control

On March 21, 2007, the Company and Mr. Berg entered into an agreement regarding Mr. Berg’s employment by the Company.  The agreement provides that Mr. Berg shall serve as an “at will” employee at the pleasure of the Board of Directors.  The agreement also contains the provision of a two-year non-compete/non-solicitation agreement with Mr. Berg, grants the Board of Directors the authority to establish Mr. Berg’s base compensation each year, and also provides that he may participate in other incentive compensation and benefit programs available to the Company’s executive officers.

If Mr. Berg is terminated without cause, he will be eligible for severance pay equal to two times his then current base salary.  The present value of Mr. Berg’s Supplemental Executive Retirement Plan was approximately $277,000 as of August 31, 2009.

Compensation of Directors

The Board of Directors meets monthly.  For fiscal year 2009, the Company provided its directors with compensation consisting of (i) a payment of $600 per month, (ii) a per diem payment of $300 for each day spent on Company activities, including board meetings and other Company functions, and (iii) reimbursement of expenses associated with director responsibilities.  The Chairman of the Board of

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Directors received payments of $2,100 per month and a per diem in the amount of $300 for each day spent on Company activities.  The monthly compensation paid to directors and the Chairman increases by $25 per month each fiscal year.

Under the terms of the Board of Directors Deferred Compensation Plan, members of the Board of Directors can elect to defer receipt of their monthly and per diem compensation.  This is an annual irrevocable election made prior to January 1 of each calendar year the fees are to be paid.  The amounts are deferred until the earliest of the board member’s withdrawal from the Board of Directors, the board member’s death or attainment of age 65.  Two payment options are available at the election of the participant.  Payments can be received in a single lump sum or in equal installments over a period of up to ten years.  The Board of Directors, at its discretion, can elect to distribute the remaining balance at any time.  Interest is earned on the amounts deferred based on the five year Treasury bond rate.  Currently, there is one member who has elected to participate in this plan.  The amount deferred, as of August 31, 2009, was approximately $129,000.

The table below reflects director compensation for the year ended August 31, 2009.

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Name	Fees Earned (1)		Non-Equity Incentive Plan Compensation	Change in Pension Value and NQDC Earnings	All Other Compensation	Total
Francis L. Kritzberger, Director, Chairman of the Board	$	29,050	N/A	N/A	N/A	$	29,050
Neil Widner, Director,Vice-Chairman of the Board	$	31,600	N/A	N/A	N/A	$	31,600
Donald S. Andringa, Director (3)	$	20,700	N/A	N/A	N/A	$	20,700
Michael A. Astrup, Director (2)	$	63,000	N/A	N/A	N/A	$	63,000
William Baldwin, Director	$	26,650	N/A	N/A	N/A	$	26,650
Richard Borgen, Director	$	15,800	N/A	N/A	N/A	$	15,800
John Brainard, Director	$	17,650	N/A	N/A	N/A	$	17,650
Brian Erickson, Director	$	24,250	N/A	N/A	N/A	$	24,250
Robert Green, Director	$	28,150	N/A	N/A	N/A	$	28,150
John Gudajtes, Director	$	22,750	N/A	N/A	N/A	$	22,750
Curtis Haugen, Director	$	29,100	N/A	N/A	N/A	$	29,100
William Hejl, Director	$	14,650	N/A	N/A	N/A	$	14,650
Curtis Knutson, Director	$	24,700	N/A	N/A	N/A	$	24,700
Dale Kuehl, Director (3)	$	18,300	N/A	N/A	N/A	$	18,300
Jeff McInnes, Director	$	15,100	N/A	N/A	N/A	$	15,100
Ronald Reitmeier, Director (2)	$	5,800	N/A	N/A	N/A	$	5,800
Steve Williams, Director	$	34,450	N/A	N/A	N/A	$	34,450

(1)Consists of fees of $600 per month to Directors and $2,100 to the Chairman of the Board.  The Chairman and Directors also receive a per diem fee of $300 for each day spent on Company activities.

(2)Term expired in December of 2008.

(3)Term began in December of 2008.

Item 12.    SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

Under state law and the Company’s Bylaws, each member of the cooperative is entitled to one vote, regardless of the number of shares the member holds.  The Common Stock of the Company is voting stock and each member of the Company holds one share of Common Stock.  The Preferred Stock of the Company is non-voting stock.  The Company’s stock can only be held by individuals who are sugarbeet growers.  None of the officers or executives of the Company hold stock of the Company.  As members of the cooperative, each director owns one share of Common Stock and is entitled to one vote.  As

43

a group, the directors generally own approximately 2 to 3 percent of the outstanding Preferred Stock.

Item 13.    CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Each of the Company’s directors is also a sugarbeet farmer and a shareholder member or representative of a shareholder member of the Company.  By virtue of their status as such members of the Company, each director or the member he represents sells sugarbeets to the Company and receives payments for those sugarbeets.  Such payments for sugarbeets may exceed $120,000.  Such payments, however, are received by the directors or the entities they represent on exactly the same basis as payments received by other members of the Company for the delivery of their sugarbeets.  Except for the sugarbeet sales described in the preceding sentences, none of the directors or executive officers of the Company have engaged in any other transactions with the Company involving amounts in excess of $120,000.

Item 14.    PRINCIPAL ACCOUNTANT FEES AND SERVICES

The following table presents fees for professional audit services rendered by Eide Bailly LLP for the audits of the Company’s and consolidated companies’ annual financial statements for the years ended August 31, 2009 and 2008 and fees for other services rendered by Eide Bailly LLP during those periods.

(In Thousands)	2009		2008
Audit Fees	$	129	$	133
Audit-Related Fees	36		24
Tax Fees	32		51
All Other Fees	16		—
Total	$	213	$	208

Audit Fees.  The Audit Fees set forth above include the aggregate fees billed by Eide Bailly LLP to the Company for audit services related to the audit of the Company’s and consolidated companies’ annual financial statements and review of the statements included in the Company’s quarterly reports on Form 10-Q for fiscal 2009 and fiscal 2008.

Audit-Related Fees.  The Audit-Related Fees set forth above include the aggregate fees billed by Eide Bailly LLP to the Company and consolidated companies for assurance and related services provided by Eide Bailly LLP related to the performance of the audit or review of the Company’s financial statements for fiscal 2009 and fiscal 2008.  These services included benefit plan audits.

Tax Fees.  The Tax Fees set forth above include the aggregate fees billed by Eide Bailly LLP to the Company and consolidated companies for professional services rendered by Eide Bailly for tax compliance, tax advice and tax planning for fiscal 2009 and fiscal 2008.  These services include tax return preparation, tax planning and tax research.

All Other Fees.  All Other Fees set forth above include the aggregate fees billed by Eide Bailly LLP to the Company and consolidated companies for professional services provided by Eide Bailly LLP to the Company and consolidated companies for fiscal 2009 and fiscal 2008.  There were no other fees paid to Eide Bailly LLP for fiscal 2008.

The Company’s Audit Committee pre-approves all professional services provided by Eide Bailly LLP to the Company.  The Audit Committee approved all of the services and the fees billed for such services to the Company.  The Audit Committee makes its decisions on the approval of services with due consideration given to maintaining the independence of the principal accountant.  None of the hours

44

expended on the audit of the 2009 financial statements were attributed to work performed by persons who were not employed full time on a permanent basis by Eide Bailly LLP.

45

PART III

Item 15.    EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(a)Documents filed as part of this report

1.Consolidated Financial Statements

Report of Independent Registered Public Accounting Firm

Consolidated Statements of Operations for the Years Ended August 31, 2009, 2008 and 2007

Consolidated Balance Sheets as of August 31, 2009 and 2008

Consolidated Statements of Changes in Members’ Investments and Comprehensive Income for the Years Ended August 31, 2009, 2008 and 2007

Consolidated Statements of Cash Flows for the Years Ended August 31, 2009, 2008 and 2007

Notes to the Consolidated Financial Statements

2.Financial Statement Schedules

None

3.The exhibits to this Annual Report on Form 10-K are listed in the Exhibit Index on pages E-1 to E-4 of this report

(b)Exhibits

The response to this portion of Item 15 is included as a separate section of this Annual Report on Form 10-K.

46

SIGNATURES

Pursuant to the requirements of Section 13 or 15 of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, on November 4, 2009.

AMERICAN CRYSTAL SUGAR COMPANY
By:	/s/ DAVID A. BERG
	President and Chief Executive Officer
Dated: November 4, 2009

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed by the following persons on behalf of the registrant in the capacities and on the dates indicated.

Signature	Title	Date
/s/ DAVID A. BERG	President and Chief Executive Officer	November 4, 2009
	(Principal Executive Officer)
/s/ THOMAS S. ASTRUP	Vice President-Finance and Chief Financial	November 4, 2009
	Officer (Principal Financial Officer)
/s/ TERESA A. WARNE	Corporate Controller	November 4, 2009
	(Principal Accounting Officer)
/s/ FRANCIS L. KRITZBERGER	Director (Chairman)	November 4, 2009
/s/ NEIL C. WIDNER	Director (Vice-Chairman)	November 4, 2009
/s/ DONALD S. ANDRINGA	Director	November 4, 2009
/s/ WILLIAM BALDWIN	Director	November 4, 2009
/s/ RICHARD BORGEN	Director	November 4, 2009
/s/ JOHN BRAINARD	Director	November 4, 2009
/s/ BRIAN R. ERICKSON	Director	November 4, 2009
/s/ ROBERT M. GREEN	Director	November 4, 2009
/s/ JOHN F. GUDAJTES	Director	November 4, 2009
/s/ CURTIS E. HAUGEN	Director	November 4, 2009
/s/ WILLIAM A. HEJL	Director	November 4, 2009
/s/ CURTIS KNUTSON	Director	November 4, 2009
/s/ DALE KUEHL	Director	November 4, 2009
/s/ JEFF D. MCINNES	Director	November 4, 2009
/s/ STEVE WILLIAMS	Director	November 4, 2009

47

APPENDIX A

INDEX TO THE CONSOLIDATED FINANCIAL STATEMENTS

AMERICAN CRYSTAL SUGAR COMPANY
CONSOLIDATED FINANCIAL STATEMENTS:
Report of Independent Registered Public Accounting Firm	A-2
Consolidated Statements of Operations for the Years Ended August 31, 2009, 2008 and 2007	A-3
Consolidated Balance Sheets as of August 31, 2009 and 2008	A-4
Consolidated Statements of Changes in Members’ Investments and Comprehensive Income for the Years Ended August 31, 2009, 2008 and 2007	A-6
Consolidated Statements of Cash Flows for the Years Ended August 31, 2009, 2008 and 2007	A-7
Notes to the Consolidated Financial Statements	A-8

A-1

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Audit Committee of American Crystal Sugar Company

Moorhead, Minnesota

We have audited the accompanying consolidated balance sheets of American Crystal Sugar Company and Subsidiaries as of August 31, 2009 and 2008, and the related consolidated statements of operations, changes in members’ investments and comprehensive income, and cash flows for the years ended August 31, 2009, 2008, and 2007.  These consolidated financial statements are the responsibility of the Company’s management.  Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with standards of the Public Company Accounting Oversight Board (United States).  Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement.  The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.  Our audits included consideration of internal controls over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting.  Accordingly, we express no such an opinion.  An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.  We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of American Crystal Sugar Company and Subsidiaries as of August 31, 2009 and 2008, and the results of their operations and their cash flows for the years ended August 31, 2009, 2008, and 2007, in conformity with accounting principles generally accepted in the United States of America.

/s/ EIDE BAILLY LLP

Minneapolis, Minnesota

November 4, 2009

A-2

American Crystal Sugar Company

Consolidated Statements of Operations

For the Years Ended August 31

(In Thousands)

	2009			2008			2007
Net Revenue	$	1,200,229		$	1,232,832		$	1,222,857
Cost of Sales	405,714			402,928			348,274
Gross Proceeds	794,515			829,904			874,583
Selling, General and Administrative Expenses	244,174			267,539			246,785
Operating Proceeds	550,341			562,365			627,798
Other Income (Expense):
Interest Income	209			740			781
Interest Expense, Net	(10,058		)	(14,750		)	(20,281		)
Other, Net	3,943			(165		)	33
Total Other Expense	(5,906		)	(14,175		)	(19,467		)
Proceeds Before Minority Interest and Income Tax Expense	544,435			548,190			608,331
Minority Interest	(6,103		)	(6,896		)	(5,636		)
Income Tax (Expense)/Benefit	(2,181		)	1,399			(1,303		)
Net Proceeds Resulting from Member andNon-Member Business	$	536,151		$	542,693		$	601,392
Distributions of Net Proceeds:
Credited/(Charged) to Members’ Investments:
Non-Member Business Income/(Loss)	$	2,309		$	(4,787	)	$	2,286
Unit Retains Declared to Members	31,024			23,260			35,705
Net Credit to Members’ Investments	33,333			18,473			37,991
Payments to Members for Sugarbeets,Net of Unit Retains Declared	502,818			524,220			563,401
Total	$	536,151		$	542,693		$	601,392

The Accompanying Notes are an Integral Part of These Consolidated Financial Statements.

A-3

American Crystal Sugar Company

Consolidated Balance Sheets

August 31

(In Thousands)

Assets

	2009			2008
Current Assets:
Cash and Cash Equivalents	$	127		$	128
Receivables:
Trade	61,665			66,149
Members	4,480			2,535
Other	2,565			2,767
Advances to Related Parties	22,744			20,391
Inventories	181,311			188,328
Prepaid Expenses	864			1,163
Total Current Assets	273,756			281,461
Property and Equipment:
Land and Land Improvements	67,011			60,110
Buildings	116,907			112,170
Equipment	892,678			877,113
Construction in Progress	14,522			5,322
Less Accumulated Depreciation	(737,182		)	(703,134		)
Net Property and Equipment	353,936			351,581
Net Property and Equipment Held for Lease	111,015			120,001
Other Assets:
Investments in CoBank, ACB	10,111			9,946
Investments in Marketing Cooperatives	135			4,152
Pension Asset	—			35,101
Other Assets	12,305			11,057
Total Other Assets	22,551			60,256
Total Assets	$	761,258		$	813,299

The Accompanying Notes are an Integral Part of These Consolidated Financial Statements.

A-4

American Crystal Sugar Company

Consolidated Balance Sheets

August 31

(In Thousands)

Liabilities and Members’ Investments

	2009			2008
Current Liabilities:
Short-Term Debt	$	45,989		$	15,297
Current Maturities of Long-Term Debt	18,789			20,991
Accounts Payable	35,381			35,836
Advances Due to Related Parties	1,863			3,343
Other Current Liabilities	34,034			27,286
Amounts Due Growers	87,218			120,933
Total Current Liabilities	223,274			223,686
Long-Term Debt, Net of Current Maturities	143,073			157,801
Accrued Employee Benefits	46,458			33,805
Other Liabilities	8,925			6,892
Total Liabilities	421,730			422,184
Commitments and Contingencies
Minority Interest in ProGold Limited Liability Company	54,950			59,839
Members’ Investments:
Preferred Stock	38,275			38,275
Common Stock	28			28
Additional Paid-In Capital	152,261			152,261
Unit Retains	181,601			174,506
Equity Retention	—			1,155
Accumulated Other Comprehensive Income (Loss)	(63,705		)	(8,984		)
Retained Earnings (Accumulated Deficit)	(23,882		)	(25,965		)
Total Members’ Investments	284,578			331,276
Total Liabilities and Members’ Investments	$	761,258		$	813,299

The Accompanying Notes are an Integral Part of These Consolidated Financial Statements.

A-5

American Crystal Sugar Company

Consolidated Statements of Changes in Members’ Investments and Comprehensive Income

For the Years Ended August 31

(In Thousands)

														Accumulated			Retained
						Additional								Other			Earnings						Annual
	Preferred		Common			Paid-In		Unit			Equity			Comprehensive			(Accumulated						Comprehensive
	Stock		Stock			Capital		Retains			Retention			Income (Loss)			Deficit)			Total			Income (Loss)
Balance, August 31, 2006	$	38,275	$	29		$	152,261	$	153,961		$	2,694		$	(500	)	$	(23,464	)	$	323,256
Non-Member Business Income	—		—			—		—			—			—			2,286			2,286			$	2,286
Pension Minimum Liability Adjustment	—		—			—		—			—			500			—			500			500
SFAS 158 Unrecognized Prior Service Costs	—		—			—		—			—			(5,266		)	—			(5,266		)	(5,266		)
SFAS 158 Unrecognized Gain/(Loss)	—		—			—		—			—			(3,317		)	—			(3,317		)	(3,317		)
Forward Contract Foreign Currency Gain	—		—			—		—			—			31			—			31			31
Unit Retains Withheld from Members	—		—			—		35,705			—			—			—			35,705			—
Payments of Unit Retains and Equity Retention to Members	—		—			—		(19,303		)	(7		)	—			—			(19,310		)	—
Stock Issued, Net	—		—			—		—			—			—			—			—			—
Balance, August 31, 2007	38,275		29			152,261		170,363			2,687			(8,552		)	(21,178		)	333,885			$	(5,766	)
Non-Member Business Loss	—		—			—		—			—			—			(4,787		)	(4,787		)	$	(4,787	)
SFAS 158 Unrecognized Prior Service Costs	—		—			—		—			—			1,317			—			1,317			1,317
SFAS 158 Unrecognized Gain/(Loss)	—		—			—		—			—			(224		)	—			(224		)	(224		)
OCI of Equity Method Investees	—		—			—		—			—			(1,491		)	—			(1,491		)	(1,491		)
Forward Contract Foreign Currency Loss	—		—			—		—			—			(34		)	—			(34		)	(34		)
Unit Retains Withheld from Members	—		—			—		23,260			—			—			—			23,260			—
Payments of Unit Retains and Equity Retention to Members	—		—			—		(19,117		)	(1,532		)	—			—			(20,649		)	—
Stock Issued, Net	—		(1		)	—		—			—			—			—			(1		)	—
Balance, August 31, 2008	38,275		28			152,261		174,506			1,155			(8,984		)	(25,965		)	331,276			$	(5,219	)
Non-Member Business Income	—		—			—		—			—			—			2,309			2,309			$	2,309
SFAS 158 Unrecognized Prior Service Costs	—		—			—		—			—			1,644			—			1,644			1,644
SFAS 158 Unrecognized Gain/(Loss)	—		—			—		—			—			(51,624		)	—			(51,624		)	(51,624		)
SFAS 158 Measurement Date Adjustment	—		—			—		—			—			—			(226		)	(226		)	(226		)
OCI of Equity Method Investees	—		—			—		—			—			(4,755		)	—			(4,755		)	(4,755		)
Forward Contract Foreign Currency Gain	—		—			—		—			—			14			—			14			14
Unit Retains Withheld from Members	—		—			—		31,024			—			—			—			31,024			—
Payments of Unit Retains and Equity Retention to Members	—		—			—		(23,929		)	(1,155		)	—			—			(25,084		)	—
Stock Issued, Net	—		—			—		—			—			—			—			—			—
Balance, August 31, 2009	$	38,275	$	28		$	152,261	$	181,601		$	—		$	(63,705	)	$	(23,882	)	$	284,578		$	(52,638	)

The Accompanying Notes are an Integral Part of These Consolidated Financial Statements.

A-6

American Crystal Sugar Company

Consolidated Statements of Cash Flows

For the Years Ended August 31

(In Thousands)

	2009			2008			2007
Cash Provided By (Used In) Operating Activities:
Net Proceeds Resulting from Member and Non-Member Business	$	536,151		$	542,693		$	601,392
Payments To/Due Members for Sugarbeets, Net of Unit Retains Declared	(502,818		)	(524,220		)	(563,401		)
Add (Deduct) Non-Cash Items:
Depreciation and Amortization	55,046			58,197			57,481
Impairment Loss	—			11,867			—
Income/(Loss) from Equity Method Investees	(636		)	221			(333		)
Loss on the Disposition of Property and Equipment	1,049			504			995
Non-Cash Portion of Patronage Dividend from CoBank, ACB	(165		)	(121		)	(182		)
Deferred Gain Recognition	(108		)	(197		)	(197		)
Minority Interest in ProGold Limited Liability Company	6,103			6,896			5,636
Changes in Assets and Liabilities:
Receivables	2,741			13,837			373
Inventories	7,017			28,235			(41,802		)
Prepaid Expenses	312			7			3,251
Non-Current Pension Asset/Liability	634			(113		)	(3,757		)
Advances To/Due to Related Parties	(3,833		)	(12,126		)	(2,916		)
Accounts Payable	(1,399		)	(173		)	9,428
Other Liabilities	5,697			(8,894		)	7,541
Amounts Due Growers	(33,715		)	(22,327		)	19,612
Net Cash Provided By Operating Activities	72,076			94,286			93,121
Cash Provided By (Used In) Investing Activities:
Purchases of Property and Equipment	(45,479		)	(47,380		)	(60,806		)
Purchases of Property and Equipment Held for Lease	(2,331		)	(1,358		)	(859		)
Proceeds from the Sale of Property and Equipment	18			57			88
Investments in Crystech, LLC	—			—			(1,539		)
Equity Distribution from CoBank, ACB	—			1,802			1,693
Investments in Marketing Cooperatives	6			(8		)	(186		)
Changes in Other Assets	(1,978		)	2,041			(207		)
Net Cash (Used In) Investing Activities	(49,764		)	(44,846		)	(61,816		)
Cash Provided By (Used In) Financing Activities:
Net Proceeds from (Payments on) Short-Term Debt	30,692			(9,683		)	19,680
Proceeds from Issuance of Long-Term Debt	100,092			25,818			20,897
Long-Term Debt Repayment	(117,021		)	(36,227		)	(52,695		)
Distributions to Minority Interest	(10,992		)	(8,792		)	—
Changes in Common Stock	—			(1		)	—
Payment of Unit Retains and Equity Retention	(25,084		)	(20,649		)	(19,310		)
Net Cash (Used In) Financing Activities	(22,313		)	(49,534		)	(31,428		)
(Decrease) In Cash and Cash Equivalents	(1		)	(94		)	(123		)
Cash and Cash Equivalents, Beginning of Year	128			222			345
Cash and Cash Equivalents, End of Year	$	127		$	128		$	222

Non-Cash Investing Activities: Purchases of Property and Equipment include the changes in accounts payable related to these purchases of $944,000; ($2,989,000) and $2,450,000 for the years ended August 31, 2009, 2008 and 2007, respectively.

The Accompanying Notes are an Integral Part of These Consolidated Financial Statements.

A-7

American Crystal Sugar Company

Notes to the Consolidated Financial Statements

(1) PRINCIPAL ACTIVITY AND SIGNIFICANT ACCOUNTING POLICIES:

Organization

American Crystal Sugar Company (Company) is a Minnesota agricultural cooperative corporation which processes and markets sugar as well as sugarbeet pulp, molasses, concentrated separated by-product (CSB), betaine (collectively, agri-products) and sugarbeet seed.  Business done with its shareholders (members) constitutes “patronage business” as defined by the Internal Revenue Code, and the net proceeds therefrom are credited to members’ investments in the form of unit retains or distributed to members in the form of payments for sugarbeets.  Members are paid the net amounts realized from the current year’s production less member operating costs determined in conformity with accounting principles generally accepted in the United States of America.

Basis of Presentation

The Company’s consolidated financial statements are comprised of American Crystal Sugar Company, its wholly-owned subsidiaries Sidney Sugars Incorporated (Sidney Sugars) and Crab Creek Sugar Company (Crab Creek), and ProGold Limited Liability Company (ProGold), a limited liability company in which the Company holds a 51 percent ownership interest.

On May 1, 2007, the Company acquired CIT Capital USA Inc.’s  50 percent ownership interest in Crystech, LLC (Crystech) resulting in the Company’s 100 percent ownership of Crystech.  Due to the Company’s resulting controlling ownership interest in Crystech, effective May 1, 2007, the Company began to include Crystech in its consolidated financial statements.  Effective May 31, 2007, Crystech was dissolved with all assets and liabilities transferred to the Company.

Certain reclassifications have been made to the August 31, 2008 and 2007, consolidated financial statements to conform with the August 31, 2009, presentation.  These reclassifications had no effect on previously reported results of operations or Members’ Investments.

All material inter-company transactions have been eliminated.

Revenue Recognition

Revenue from the sale of sugar, agri-products and seed is recorded when the product is delivered to the customer.  Operating lease revenue is recognized as earned ratably over the term of the lease.

Operating Lease

ProGold owns a corn wet milling facility which it leases under an operating lease.  On November 6, 2007, ProGold entered into an amended operating lease agreement with Cargill, Incorporated that superseded and replaced the previous ten year lease agreement.  Payments are to be received monthly under the lease, which runs through December 31, 2017.  The operating lease revenue is recognized as earned ratably over the term of the lease and to the extent that amounts received exceed amounts earned, deferred revenue is recorded.  Expenses (including depreciation and interest) are charged against such revenue as incurred.  The lease contains provisions for extension or modification of the lease terms at the end of the lease period.  The lease also contains provisions for increased payments to be received during the lease period related to the plant’s capital additions.

A-8

Cash and Cash Equivalents

The Company considers all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents.  The Company places its temporary cash investments with high credit quality financial institutions.  At times, such investments may be in excess of the applicable insurance limit.

Accounts Receivable and Credit Policies

The Company grants credit, individually and through its marketing cooperatives, to its customers, which are primarily companies in the food processing industry located throughout the United States.

Trade receivables are uncollateralized customer obligations due under normal trade terms requiring payment within 15 to 90 days from the invoice date.  The receivables are non-interest bearing.  Trade receivables are stated at the amount billed to the customer.  Payments of trade receivables are allocated to the specific invoices identified on the customer’s remittance advice or, if unspecified, are applied to the earliest unpaid invoices.

Ongoing credit evaluations of customers’ financial condition are performed and the Company maintains a reserve for potential credit losses.  The carrying amount of trade receivables is reduced by a valuation allowance that reflects the Company’s best estimate of the amounts that will not be collected.

Inventories

Sugar, pulp, molasses and other agri-products inventories are valued at estimated net realizable value.  Maintenance parts and supplies and sugarbeet seed inventories are valued at the lower of average cost or market.  Sugarbeets are valued at the projected gross per-ton beet payment related to that year’s crop.

Net Property and Equipment

Property and equipment are recorded at cost less impairment under FAS No. 144.  See Note 4 to the consolidated financial statements.  Indirect costs and construction period interest are capitalized as a component of the cost of qualified assets.  Property and equipment are depreciated for financial reporting purposes principally using straight-line methods with estimated useful lives ranging from 3 to 33 years.

Net Property and Equipment Held for Lease

Net property and equipment held for lease are stated at cost.  Depreciation on assets placed in service is provided using the straight-line method with estimated useful lives ranging from 5 to 40 years.

Impairment of Long Lived Assets

The Company reviews its long lived assets for impairment whenever events indicate that the carrying amount of the asset may not be recoverable.  An impairment loss is recorded when the sum of the future cash flows is less than the carrying amount of the asset.  An impairment loss is measured as the amount by which the carrying amount of the asset exceeds its fair value. An impairment loss of approximately $11.9 million was recognized in 2008.  No additional impairment was recognized in 2009.  See Note 4 to the consolidated financial statements.  The fair value of assets is a significant estimate and it is at least reasonably possible that a change in the estimate could occur in the near term.

A-9

Related Parties

The following organizations are considered related parties for financial reporting purposes: United Sugars Corporation (United) and Midwest Agri-Commodities Company (Midwest).

Investments

Investments in CoBank, ACB are stated at cost plus unredeemed patronage refunds received in the form of capital stock.  Investments in marketing cooperatives are accounted for using the equity method.  Investments in Crystech, prior to its dissolution (see note 7), were accounted for using the equity method.

Members’ Investments

Preferred and Common Stock - The ownership of common and preferred stock is restricted to a “farm operator” as defined by the bylaws of the Company.  Each shareholder may own only one share of common stock and is entitled to one vote in the affairs of the Company.  Each shareholder is required to grow a specified number of acres of sugarbeets in proportion to the shares of preferred stock owned.  The preferred shares are non-voting.  All transfers of stock must be approved by the Company’s Board of Directors and any shareholder desiring to sell stock must first offer it to the Company for repurchase at its par value.  The Company has never exercised this repurchase option for preferred stock.  The Company’s articles of incorporation do not allow dividends to be paid on either the common or preferred stock.

Unit Retains - The bylaws authorize the Company’s Board of Directors to require additional direct capital investments by members in the form of a variable unit retain per ton of up to a maximum of 10 percent of the weighted average gross per ton beet payment.  All refunds and retirements of unit retains must be approved by the Board of Directors.

Equity Retention — The Payment-In-Kind (PIK) Certificate Purchase Agreement authorizes the Company to require additional direct capital investments by members participating in the PIK program. The amount of the equity contribution is calculated per hundredweight of PIK certificates and is approximately equivalent (on a Company-wide average basis) to the unit retain declared by the Company on the corresponding year’s sugarbeet crop.  All refunds and retirements of equity retains must be approved by the Board of Directors. All remaining Equity Retentions were refunded during 2009.

Accumulated Other Comprehensive Income (Loss) - Accumulated Other Comprehensive Income (Loss) represents the cumulative net increase (decrease) in equity related to the recording of the over-funded or under-funded status of defined benefit postretirement plans, the Company’s portion of the other comprehensive income(loss) of equity method investees and the gain or loss related to foreign currency forward contracts.  Consistent with the Company’s treatment of income taxes related to member-source income and expenses, accumulated other comprehensive income (loss) does not include any adjustment for income taxes.  For years prior to August 31, 2007, Accumulated Other Comprehensive Income (Loss) represented the cumulative net increase (decrease) in equity related to the recording of the minimum pension liability adjustment.

Retained Earnings (Accumulated Deficit) - Retained earnings represents the cumulative net income (loss) resulting from non-member business, the 2009 pension measurement date adjustment and, for years prior to 1996, the difference between member income as determined for financial reporting purposes and for federal income tax reporting purposes.

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Interest Expense, Net

The Company earns patronage dividends from CoBank, ACB based on the Company’s share of the net income earned by CoBank, ACB.  These patronage dividends are applied against interest expense.

Income Taxes

The Company is a non-exempt cooperative for federal income tax purposes.  As such, the Company is subject to corporate income taxes on its net income from non-member sources.  The provision for income taxes relates to the results of operations from non-member business, state income taxes and certain other permanent differences between financial and income tax reporting. The Company also has various temporary differences between financial and income tax reporting, most notable of which is depreciation.

Deferred tax assets, less any applicable valuation allowance, and deferred tax liabilities are included in the financial statements at currently enacted income tax rates applicable to the period in which the deferred tax assets and liabilities are expected to be realized or settled.

Accounting Estimates

The preparation of the financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.  Actual results could differ from those estimates.

Business Risk

The financial results of the Company’s operations may be directly and materially affected by many factors, including prevailing prices of sugar and agri-products, the Company’s ability to market its sugar competitively, the weather, government programs and regulations, and operating costs.

Concentration and Sources of Labor

Substantially all of the hourly employees at the Company’s factories, including full-time and seasonal employees, are represented by the Bakery, Confectionery, Tobacco Workers and Grain Millers (BCTGM) AFL-CIO, and are covered by collective bargaining agreements expiring July 31, 2011 for the Red River Valley factory employees and April 30, 2012 for the Sidney, Montana, factory employees.  Office, clerical and management employees are not unionized, except for certain office employees at the Moorhead and Crookston, Minnesota, and Hillsboro, North Dakota, factories who are covered by the collective bargaining agreement with the BCTGM.

Shipping and Handling Costs

The costs incurred for the shipping and handling of products sold are classified in the consolidated financial statements as a selling expense on the Consolidated Statements of Operations. Shipping and handling costs were $159.7 million, $185.8 million and $166.0 million for the years ended August 31, 2009, 2008 and 2007, respectively.

Deferred Costs and Product Values

All costs incurred prior to the end of the Company’s fiscal year that relate to receiving and processing the subsequent year’s sugarbeet crop are deferred.  Similarly, the net realizable values of products produced prior to the end of the Company’s fiscal year that relate to the subsequent year’s

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sugarbeet crop are deferred.  The net result of these deferred costs and product values are recorded in the Company’s consolidated balance sheet in “Other Current Liabilities.”  There were no deferred costs and product values as of August 31, 2009 or 2008.  Deferred costs and product values were $4.1 million as of August 31, 2007.

Recently Issued Accounting Pronouncements

The Financial Accounting Standards Board (FASB) has issued FASB Staff Positions (FSP) 157-2, which delays the effective date of the application of Statement No. 157, Fair Value Measurements (SFAS 157) for the Company to the first quarter of fiscal 2010 for all non-financial assets and non-financial liabilities that are recognized or disclosed at fair value in the financial statements on a nonrecurring basis.  The Company does not expect that the adoption of this statement will have a material effect on the Company’s financial statements.

The FASB has issued Statement No. 160, Noncontrolling Interests in Consolidated Financial Statements — an amendment of ARB  No. 51.  This statement requires all entities to report noncontrolling (minority) interests in subsidiaries as equity in the consolidated financial statements.  Its intention is to eliminate the diversity in practice regarding the accounting for transactions between an entity and noncontrolling interests.  This statement becomes effective for the Company in the first quarter of fiscal 2010.  At that time, the Company will be required on a retrospective basis to report the minority interest in ProGold as a component of equity.

The FASB has issued statement No. 141R, Business Combinations.  This statement replaces FASB Statement No. 141, Business Combinations.  This Statement retains the fundamental requirements in Statement 141 that the acquisition method of accounting (which Statement 141 called the purchase method) be used for all business combinations and for an acquirer to be identified for each business combination.  This Statement defines the acquirer as the entity that obtains control of one or more businesses in the business combination and establishes the acquisition date as the date that the acquirer achieves control.  The FASB also released FSP No. FAS 141(R)-1, Accounting for Assets Acquired and Liabilities Assumed in a Business Combination That Arise from Contingencies, to address some of the application issues under SFAS No. 141(R) Business Combinations. FSP No. FAS 141(R)-1 deals with the initial recognition and measurement of an asset acquired or a liability assumed in a business combination that arises from a contingency provided the asset or liability’s fair value on the date of acquisition can be determined. When the fair value can’t be determined, the FSP requires using the guidance under SFAS No. 5, Accounting for Contingencies and FASB Interpretation (FIN) No. 14, Reasonable Estimation of the Amount of a Loss. These statements become effective for the Company in fiscal 2010.  The Company does not expect that the adoption of these statements will have a material effect on the Company’s financial statements.

The FASB has issued FSP FAS 142-3, Determination of the Useful Life of Intangible Assets.  This FSP amends the factors that should be considered in developing renewal or extension assumptions used to determine the useful life of a recognized intangible asset under FASB Statement No. 142, Goodwill and Other Intangible Assets.  The intent of this FSP is to improve the consistency between the useful life of a recognized intangible asset under Statement 142 and the period of expected cash flows used to measure the fair value of the asset under FASB Statement No. 141 (revised 2007), Business Combinations, and other U.S. generally accepted accounting principles (GAAP).  This FSP becomes effective for the Company in Fiscal 2010.  The Company does not expect that the adoption of this FSP will have a material effect on the Company’s financial statements.

The FASB has issued FSP FAS 132(R)-1 Employers’ Disclosures about Postretirement Benefit Plan Assets.  This FSP amends FASB Statement No. 132 (revised 2003), Employers’ Disclosures about

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Pensions and Other Postretirement Benefits, to provide guidance on an employer’s disclosure about plan assets of a defined benefit pension plan or other postretirement plan.  This FSP becomes effective for the Company in fiscal 2010.  The Company does not expect that the adoption of this FSP will have a material effect on the Company’s financial statements.

The FASB has issued statement No. 166, Accounting for Transfers of Financial Assets an amendment of FASB Statement No.140. This statement improves the relevance, representational faithfulness, and comparability of the information that a reporting entity provides in its financial reports about a transfer of financial assets; the effects of a transfer on its financial position, financial performance, and cash flows; and a transferor’s continuing involvement in transferred financial assets.  This statement becomes effective for the Company in fiscal 2011.  The Company does not expect that the adoption of this statement will have a material effect on the Company’s financial statements.

The FASB has issued statement No. 167, Amendments to FASB Interpretation No 46(R). This statement amends certain requirements of FASB Interpretation No. 46 (revised December 2003), Consolidation of Variable Interest Entities, to improve financial reporting by enterprises involved with variable interest entities and to provide more relevant and reliable information to users of financial statements. This statement becomes effective for the Company in fiscal 2011.  The Company does not expect that the adoption of this statement will have a material effect on the Company’s financial statements.

The FASB has issued statement No. 168, The FASB Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting Principles.  This statement replaces Statement No.162 and establishes the FASB Accounting Standards Codification™ (Codification) as the source of authoritative accounting principles recognized by the FASB to be applied by nongovernmental entities in the preparation of financial statements in conformity with GAAP.  Rules and interpretive releases of the Securities and Exchange Commission (SEC) under authority of federal securities laws are also sources of authoritative GAAP for SEC registrants.  All guidance contained in the Codification carries an equal level of authority.  This statement becomes effective for the Company for the first quarter of fiscal 2010.  The Company does not expect that the adoption of this statement will have a material effect on the Company’s financial statements.

The FASB has issued Accounting Standards Update (ASU) No. 2009-05, Fair Value Measurements and Disclosures (Topic 820).  This ASU provides amendments to Subtopic 820-10, Fair Value Measurements and Disclosures — Overall, for the fair value measurement of liabilities.  This ASU provides clarification: of the measurement techniques required in circumstances in which a quoted price in an active market for the identical liability is not available; of the requirements related to restrictions that prevent a transfer of a liability; and of the requirements for certain Level 1 fair value measurement situations.  This ASU becomes effective for the Company for the first quarter of 2010.  The Company does not expect that the adoption of this ASU will have a material effect on the Company’s financial statements.

(2) RECEIVABLES:

There was no single customer attributable to the Company that accounted for 10 percent or more of the Company’s total receivables as of August 31, 2009 or August 31, 2008 or that accounted for 10 percent or more of the revenues of the Company for the years ended August 31, 2009, 2008 or 2007.

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(3) INVENTORIES:

The major components of inventories as of August 31, 2009 and 2008 are as follows:

(In Thousands)	2009		2008
Refined Sugar, Pulp, Molasses, Other Agri-Products and Sugarbeet Seed	$	138,039	$	151,741
Maintenance Parts and Supplies	43,272		36,587
Total Inventories	$	181,311	$	188,328

(4) NET PROPERTY AND EQUIPMENT:

Indirect costs capitalized were $1.1 million, $1.1 million and $1.2 million in 2009, 2008 and 2007, respectively.  Construction period interest capitalized was $ .4 million, $ .9 million and $ 1.1 million in 2009, 2008 and 2007, respectively. Depreciation expense was $43.1 million, $44.4 million and $43.6 million in 2009, 2008 and 2007, respectively. The Company had outstanding commitments totaling $5.7 million as of August 31, 2009, for equipment and construction contracts related to various capital projects.

In 2008, an impairment loss of $11.9 million related to property and equipment at the Sidney, Montana facility was recognized.  Sidney Sugars contracts with sugarbeet growers in the Sidney, Montana area.  The sugarbeet growers are not owners of Sidney Sugars and therefore have no requirement to grow sugarbeets on an annual basis.  Due to the high alternative crop prices compared to contracted sugarbeet prices in 2008, many growers chose to grow alternative crops.  Total harvested acres declined from approximately 35,000 acres for the 2007 crop (fiscal 2008) to approximately 15,000 acres for the 2008 crop (fiscal 2009).  The impairment loss is reflected in the Cost of Sales on the Consolidated Statements of Operations.  The property and equipment at the Sidney, Montana facility is used in the sugar segment.

As of August 31, 2009, the fair value of the property and equipment to be held and used at the Sidney, Montana facility was again determined based on numerous scenarios which were weighted according to their respective probability of occurring.  The harvested acres for the 2009 crop (fiscal 2010) have increased to approximately 25,000 acres and sugar net selling prices are higher than historical averages.  These scenarios are based on judgments regarding anticipated cash flows, future expected income/loss experience, current economic conditions and other factors.  Based on this analysis, no additional impairment of the fair value of the property and equipment was indicated.  The fair value of assets is a significant estimate and it is at least reasonably possible that a change in the estimate could occur in the near term.

(5) NET PROPERTY AND EQUIPMENT HELD FOR LEASE:

ProGold owns a corn wet-milling facility that it leases under an operating lease which runs through December 31, 2017.  Under the terms of the operating lease, the lessee manages all aspects of the operations of the ProGold corn wet-milling facility.

Net Property and Equipment Held for Lease are stated at cost, net of accumulated depreciation. Depreciation expense was $11.2 million, $11.1 million and $11.1 million in 2009, 2008 and 2007, respectively.  The components of Net Property and Equipment Held for Lease as of August 31, 2009 and 2008 are shown below:

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(In Thousands)	2009			2008
Land and Land Improvements	$	7,937		$	7,937
Buildings	41,242			41,201
Equipment	202,962			202,326
Construction in Progress	1,649			451
Less Accumulated Depreciation	(142,775		)	(131,914		)
Net Property and Equipment Held for Lease	$	111,015		$	120,001

Future minimum payments to be received under the lease are as follows:

Fiscal year ending August 31, (In Thousands)
2010	$	21,500
2011	21,500
2012	21,500
2013	21,500
2014	21,500
Thereafter	71,667
Total	$	179,167

(6) INVESTMENTS IN MARKETING COOPERATIVES:

The Company has a 65 percent ownership interest and a 33 1/3 percent voting interest in United.  The investment is accounted for using the equity method.  Substantially all sugar products produced are sold by United as an agent for the Company.  The amount of sales and related costs to be recognized by each owner of United is allocated based on its pro rata share of sugar production for the year.  The owners provide United with cash advances on an ongoing basis for operating and marketing expenses incurred by United.  The Company had outstanding advances to United of $21.6 million and $20.0 million as of August 31, 2009 and 2008, respectively.  The Company provides administrative services for United and is reimbursed for costs incurred.  The Company was reimbursed $ .9 million, $1.0 million and $1.2 million for services provided during 2009, 2008 and 2007, respectively.

The Company has a 55 percent ownership interest and a 25 percent voting interest in Midwest.  The investment is accounted for using the equity method.  Substantially all sugarbeet pulp, molasses and other agri-products produced are sold by Midwest as an agent for the Company.  The amount of sales and related costs to be recognized by each owner of Midwest is allocated based on its pro rata share of production for each product for the year.  The owners provide Midwest with cash advances on an ongoing basis for operating and marketing expenses incurred by Midwest.  The Company had outstanding advances due to Midwest of $1.9 million and $3.3 million as of August 31, 2009 and 2008, respectively.  The Company provides administrative services for Midwest and is reimbursed for costs incurred.  The Company was reimbursed $133,000, $141,000 and $129,000 for services provided during 2009, 2008 and 2007, respectively.  The owners of Midwest are guarantors of the short-term line of credit Midwest has with CoBank, ACB.  As of August 31, 2009, Midwest had outstanding short-term debt with CoBank, ACB of $5.5 million, of which $3.2 million was guaranteed by the Company.

The Company has performed a complete analysis of the conditions set forth in FIN 46(R) and has determined that its investments in United and Midwest do not meet the criteria of Variable Interest Entities and therefore such entities are not consolidated in the Company’s Consolidated Financial Statements.

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(7) CRYSTECH, LLC:

On May 1, 2007, the Company acquired CIT Capital USA Inc.’s 50 percent ownership interest in Crystech for $1.5 million.  This acquisition resulted in the Company’s 100 percent ownership of Crystech.  Due to the Company’s resulting controlling ownership interest in Crystech, effective May 1, 2007, the Company began to include Crystech in its consolidated financial statements.  Effective May 31, 2007, Crystech was dissolved with all assets and liabilities transferred to the Company.  As a result of the dissolution, the Company eliminated its investment of $17.6 million in Crystech, recorded the value of the buildings and equipment acquired of $2.7 million and $10.6 million, respectively, and settled an inter-company payable of $4.3 million.

Crystech was a special purpose entity that operated a molasses desugarization facility at the Company’s Hillsboro, North Dakota, sugar factory together with certain sugar processing equipment located at the Hillsboro, North Dakota, and Moorhead, Minnesota, sugar factories.  Prior to May 31, 2007, the Company controlled 50 percent of Crystech and accounted for its investment using the equity method.

The Company performed a complete analysis of the conditions set forth in FIN 46(R) and determined that its investment in Crystech, LLC did not meet the criteria of a Variable Interest Entity and therefore, prior to May 1, 2007, Crystech, LLC was not consolidated in the Company’s Consolidated Financial Statements.

The Company had a tolling services agreement with Crystech whereby the Company paid for tolling services for processing sugarbeet molasses delivered to Crystech with title and risk of loss throughout the process maintained by the Company.

On a cumulative basis, the Company received an annual allocation of Crystech’s net income equal to 7.5 percent of the initial value of the Preferred Equity contribution by the Company.  Following is summary financial information for Crystech prior to consolidation:

(In Thousands)	For the Eight Months Ended April 30, 2007
Revenue	$	9,841
Operating Expenses	8,624
Other Expenses	455
Net Income	$	762

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(8) LONG-TERM AND SHORT-TERM DEBT:

The long-term debt outstanding as of August 31, 2009 and 2008 is summarized below:

(In Thousands)	2009			2008
Term Loans from CoBank, ACB, due in varying amounts through fiscal 2012, interest at fixed rates of 3.66% to 5.69%, with senior lien on substantially all non-current assets	$	40,293		$	53,293
Term Loans from Insurance Companies, due in varying amounts through fiscal 2028, interest at fixed rates of 4.78% to 7.42%, with senior lien on substantially all non-current assets	51,429			54,286
Pollution Control and Industrial Development Revenue Bonds, due in varying amounts through fiscal 2022, interest at fixed rates of 5.40% to 5.94% and varying rates of .39% to .69% as of August 31, 2009, substantially secured by letters of credit	70,140			70,413
Term Loan from the Bank of North Dakota	—			800
Total Long-Term Debt	161,862			178,792
Less Current Maturities	(18,789		)	(20,991		)
Long-Term Debt, Net of Current Maturities	$	143,073		$	157,801

Minimum annual principal payments for the next five years are as follows:

(In Thousands)
2010	$	18,789
2011	$	12,022
2012	$	17,412
2013	$	280
2014	$	300

The Company has a long-term debt line of credit through December 31, 2011, with CoBank, ACB of $174.6 million, of which $40.3 million in loans and $70.8 million in long-term letters of credit were outstanding as of August 31, 2009.  The unused long-term line of credit as of August 31, 2009 was $63.5 million.

The short-term debt outstanding as of August 31, 2009 and 2008 is summarized below:

(In Thousands)	2009		2008
Commercial Paper, at fixed interest rates of .70% to .75%, due 9/1/09 through 9/3/09	$	45,989	$	15,297

During the year ended August 31, 2009, the Company borrowed from CoBank, ACB, the Commodity Credit Corporation (CCC) and issued commercial paper to meet its short-term borrowing requirements.  The Company has a seasonal line of credit through July 30, 2012, with a consortium of lenders led by CoBank, ACB of $320.0 million, against which there was no outstanding balance as of August 31, 2009 and a line of credit with Wells Fargo Bank for $1.0 million, against which there was no outstanding balance as of August 31, 2009.  The Company’s commercial paper program provides short-term borrowings up to $320 million of which approximately $46.0 million was outstanding as of August 31, 2009.  The Company had $2.7 million in short-term letters of credit outstanding as of August 31, 2009.  Any borrowings under the commercial paper program along with outstanding short-term letters of

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credit will act to reduce the available credit under the CoBank, ACB seasonal line of credit by a commensurate amount.  The unused short-term line of credit as of August 31, 2009, was $272.3 million.

Maximum borrowings, average borrowing levels and average interest rates for short-term debt for the years ended August 31, 2009 and 2008, follow:

(In Thousands, Except Interest Rates)	2009			2008
Maximum Borrowings	$	261,004		$	288,355
Average Borrowing Levels	$	134,945		$	156,444
Average Interest Rates	1.98		%	4.27		%

The terms of the loan agreements contain prepayment penalties along with certain covenants related to, among other matters, the: level of working capital; ratio of term liabilities to members’ investments; current ratio; level of term debt to net funds generated; and investment in CoBank, ACB stock in amounts prescribed by the bank.  Substantially all non-current assets are pledged to the senior lenders to provide security to support the Company’s seasonal and long-term financing.  As of August 31, 2009, the Company was in compliance with the terms of the loan agreements.

Interest paid, net of amounts capitalized, was $10.7 million, $14.9 million and $20.7 million for the years ended August 31, 2009, 2008 and 2007, respectively.

(9) OPERATING LEASES:

The Company is party to operating leases for such items as rail cars, computer hardware and vehicles.  Cargill, Incorporated has assumed responsibility for the payments on a rail car lease for the duration of that lease.  Operating lease expense was $ 2.0 million, $ .9 million and $ 2.6 million for years ended August 31, 2009, 2008 and 2007, respectively.  Future minimum payments under these obligations are as follows:

Fiscal year ending August 31, (In Thousands)
2010	$	1,497
2011	1,313
2012	1,242
2013	1,142
2014	1,053
Thereafter	7,196
Total	$	13,443

(10) EMPLOYEE BENEFIT PLANS:

Company-Sponsored Defined Benefit Pension and Other Post-Retirement Benefit Plans

Substantially all employees who meet eligibility requirements of age, date of hire and length of service are covered by a Company-sponsored retirement plan.  As of August 31, 2009, the pension plans were funded as required by the funding standards set forth by the Employee Retirement Income Security Act (ERISA).  The Company also has non-qualified supplemental executive retirement plans for certain employees.

Employees of the Company who are not members of a collective bargaining unit and who are newly hired, or rehired, and employees who transfer from a union position to a nonunion position on or

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after September 1, 2007 are not eligible for participation in the defined benefit pension plan.  These employees participate in a defined contribution plan as described later in this note.

The Investment Committee has the responsibility of managing the operations and administration of the Company’s retirement plans and trust.  The Investment Committee has an investment policy for the pension plan assets that establishes target asset allocations as shown below.  The Investment Committee is committed to diversification to reduce the risk of large losses.  To that end, the Investment Committee has adopted policies requiring that each asset class will be diversified and equity exposure will be limited to 85% of the total portfolio value. The stated goal is for each component of the plan to earn a rate of return greater than its corresponding benchmark.  Progress of the plan against its return objectives will be measured over a full market cycle.

The following schedule reflects the percentage of pension plan assets by asset class as of the latest measurement date, August 31, 2009:

Percentage of Pension Plan Assets by Asset Class as of August 31, 2009

Asset Class	Target Range	Actual Allocation
Large U.S. Stocks	20.0%-40.0%	26.1	%
Small U.S. Stocks	17.5%-27.5%	23.1	%
Non-U.S. Stocks	17.5%-27.5%	23.9	%
U.S. Bonds	15.0%-35.0%	26.5	%
Cash	0.0%-5.0%	0.4	%

To develop the expected long-term rate of return on assets assumption, the Company considered the historical returns and the future expectations for returns for each asset class, as well as, the target asset allocation of the pension portfolio.  This resulted in the selection of the 8.0% long-term rate of return on assets assumption.

The development of the discount rate was based on a bond matching model whereby a hypothetical portfolio of bonds with an “AA” or better rating by a nationally recognized debt rating agency was constructed to match the expected benefit payments under the Company’s pension plans through the year 2038.  The reinvestment rate for benefit cash flow occurring after 2038 was discounted back to the year 2038 at a rate consistent with the yields on long-term zero-coupon bonds. The resulting present value was treated as additional benefit cash flow for the year 2038 and consistently applied as any other benefit cash flow during the bond matching process.

The Company has a medical plan and a Medicare supplement plan which are available to union retirees and certain non-union retirees.  The costs of these plans are shared by the Company and plan participants.  The Company’s post-retirement plan for certain non-union employees currently coordinates with Medicare’s medical coverage and provides tiered prescription drug coverage.  The Company has determined that this plan is actuarially equivalent to Medicare Part D and therefore qualifies for the Federal subsidy provision in the Medicare Prescription Drug, Improvement, and Modernization Act of 2003.  This provision allows the Company to receive a subsidy of 28 percent of the dollars spent providing prescription drug coverage beginning in calendar year 2006.

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The assumptions used in the measurement of the Company’s benefit obligations are shown below:

Weighted Average Assumptions as of August 31,

	Pension				Post-Retirement
	2009		2008		2009		2008
Discount Rate	6.55	%	7.04	%	6.55	%	7.04	%
Expected Return on Plan Assets	8.00	%	8.00	%	N/A		N/A
Rate of Compensation Increase (Non-Union Plan Only)	3.5	%	3.5	%	N/A		N/A

The following schedule reflects the expected pension and post-retirement benefit payments during each of the next five years and the aggregate for the following five years:

	Expected Benefit Payments
(In Thousands)	Pension		Post-Retirement
2010	$	5,638	$	785
2011	6,198		1,082
2012	6,757		1,410
2013	7,425		1,680
2014	8,099		1,974
2015-2019	52,509		13,701
Total	$	86,626	$	20,632

The Company expects to make contributions of approximately $4.3 million to the defined benefit pension plans during the next fiscal year.  The Company expects to make contributions in the next fiscal year of approximately $99,000 related to Supplemental Executive Retirement Plans.  The Company also expects to contribute approximately $785,000 to the post-retirement plans during the next fiscal year.

In accordance with Statement No. 158, Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans—an amendment of FASB Statements No. 87, 88, 106, and 132(R) which required the Company in fiscal 2009 to change the annual measurement date of the funded status of the pension plans from May 31 to August 31, the Company has recorded a direct charge of approximately $226,000 to retained earnings representing a measurement date adjustment of 3/15ths of the pension cost for the period of June 1, 2008 to August 31, 2009.  The remaining 12/15ths of this pension cost was expensed and recognized during fiscal 2009.

The following schedules provide the components of the Net Periodic Pension and Post-Retirement Costs for the years ended August 31, 2009, 2008 and 2007:

Components of Net Periodic Pension Cost

(In Thousands)	2009			2008			2007
Service Cost	$	4,197		$	3,763		$	3,533
Interest Cost	10,673			8,154			7,907
Expected Return on Plan Assets	(15,456		)	(12,965		)	(10,908		)
Multiple Employer Adjustment	—			—			(131		)
Settlement Loss	—			242			—
Retained Earnings Measurement Date Adjustment	(226		)	—			—
Amortization of Prior Service Costs	1,644			1,317			2,912
Amortization of Net (Gain) Loss	70			(199		)	433
Net Periodic Pension Cost	$	902		$	312		$	3,746

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Components of Net Periodic Post-Retirement Cost

(In Thousands)	2009			2008			2007
Service Cost	$	968		$	1,076		$	1,102
Interest Cost	1,887			1,864			1,923
Settlement Gain	—			(5		)	—
Amortization of Net (Gain) Loss	(675		)	(225		)	(19		)
Net Periodic Post-Retirement Cost	$	2,180		$	2,710		$	3,006

In fiscal 2007, the Company changed the estimated amortization period for prior service costs.  It was determined that the period in which the Company expects to realize economic benefits from plan amendments granting retroactive benefits was shorter than the remaining service period of active employees.  Therefore, the amortization period was changed from the remaining service period of active employees to the lesser of seven years or the length of the union contract that included the benefit change.

For measurement purposes, a 10.0 percent annual rate of increase in the per capita cost of covered healthcare benefits for participants under age 65 was assumed for 2009.  The rate is assumed to decline to 7.0 percent over the next five years.  For participants age 65 and older, an 11.0 percent annual rate of increase in the per capita cost of covered healthcare benefits was assumed for 2009.  The rate is assumed to decline to 8.0 percent over the next five years.

Assumed healthcare trends can have a significant effect on the amounts reported for healthcare plans.  A one percent change in the assumed healthcare trend rates would have the following effects:

(In Thousands)	1% Increase		1% Decrease
Effect on total service and interest cost components of net periodic post-retirement benefit costs	$	390	$	(327	)
Effect on the accumulated post-retirement benefit obligation	$	3,311	$	(2,810	)

The following schedules set forth a reconciliation of the changes in the plans’ benefit obligation and fair value of assets for the years ending August 31, 2009 and 2008 and a statement of the funded status and amounts recognized in the Balance Sheets and Accumulated Other Comprehensive Income as of August 31, 2009 and 2008:

A-21

	Pension						Post-Retirement
(In Thousands)	2009			2008			2009			2008
Change in Benefit Obligation
Obligation at the Beginning of the Year	$	123,703		$	132,851		$	27,193		$	29,643
Retained Earnings Adjustment	2,974			—			—			—
Service Cost	3,358			3,763			968			1,076
Interest Cost	8,538			8,154			1,887			1,864
Plan Participant Contributions	—			—			448			464
Medicare Part D Subsidy	—			—			82			58
Settlement (Gain) Loss	—			242			—			—
Transfers	—			(1,414		)	—			—
Actuarial (Gain) Loss	10,094			(11,742		)	(917		)	(3,855		)
Benefits Paid	(6,290		)	(8,151		)	(933		)	(2,057		)
Obligation at the End of the Year	$	142,377		$	123,703		$	28,728		$	27,193

Change in Plan Assets
Fair Value at the Beginning of the Year	$	156,525		$	164,613		$	—		$	—
Retained Earnings Adjustment	3,091			—			—			—
Actual Return on Plan Assets	(29,477		)	(2,186		)	—			—
Plan Participant Contributions	—			—			448			464
Medicare Part D Subsidy	—			—			82			58
Transfers	—			(1,414		)	—			—
Employer Contributions	124			3,663			403			1,535
Benefits Paid	(6,290		)	(8,151		)	(933		)	(2,057		)
Fair Value at the End of the Year	$	123,973		$	156,525		$	—		$	—

Funded Status
Funded Status as of August 31,	$	(18,404	)	$	32,822	$	(28,728	)	$	(27,193	)
Net Amount Recognized	$	(18,404	)	$	32,822	$	(28,728	)	$	(27,193	)

Amounts Recognized in the Balance Sheets
Noncurrent Assets	$	—		$	35,101		$	—		$	—
Current Liabilities	(5,257		)	(115		)	(785		)	(720		)
Noncurrent Liabilities	(13,147		)	(2,164		)	(27,943		)	(26,473		)
Net Amount Recognized	$	(18,404	)	$	32,822		$	(28,728	)	$	(27,193	)

Prior Service Cost Recognized in Accumulated Other Comprehensive Income
Prior Service Cost Beginning of the Year	$	(3,949	)	$	(5,266	)	$	—	$	—
Recognized in Periodic Cost	1,644			1,317			—		—
Amount Arising During the Year	—			—			—		—
Prior Service Cost End of the Year	$	(2,305	)	$	(3,949	)	$	—	$	—

Accumulated Gain (Loss) Recognized in Accumulated Other Comprehensive Income
Accumulated Gain (Loss) Beginning of the Year	$	(10,950	)	$	(7,100	)	$	7,409		$	3,783
Recognized in Periodic Cost	70			199			(675		)	(225		)
Amount Arising During the Year	(51,936		)	(3,651			917			3,851
Accumulated Gain (Loss) End of the Year	$	(62,816	)	$	(10,950	)	$	7,651		$	7,409

The estimated amounts that will be amortized from Accumulated Other Comprehensive Income at August 31, 2009 into net periodic benefit cost in fiscal 2010 are as follows:

	Pension			Post- Retirement
Prior Service (Cost)	$	(1,316	)	$	—
Accumulated Gain (Loss)	(6,940		)	687
Total	$	(8,256	)	$	687

The accumulated pension benefit obligation was $134.1 million and $116.7 million as of August 31, 2009 and 2008, respectively.

A-22

1999 Long-Term Incentive Plan

During 2005, the granting of additional contract rights under the 1999 Long-Term Incentive Plan (1999 Plan) was discontinued with the adoption of the 2005 Long-Term Incentive Plan (2005 Plan).  All vested contract rights as of December 31, 2004, remained in the 1999 Plan while all unvested contract rights were transferred to the 2005 Plan.  The value of the contract rights remaining in the 1999 Plan is determined by the Board of Directors.  During 2009, 75.00 vested contract rights were exercised.  As of August 31, 2009, there were 70.45 vested contract rights remaining in the 1999 Plan.  At August 31, 2009, the Board of Directors increased the value of these contract rights from $1,750 to $2,200 per contract right.

2005 Long-Term Incentive Plan

The 2005 Long-Term Incentive Plan provides deferred compensation to certain key executives of the Company.  The plan creates financial incentives that are based upon contract rights which are available to the executive under the terms of the plan, the value of which is determined by the Board of Directors.  During 2009, 131.54 vested contract rights were exercised.  In 2009, 282.10 contract rights were granted at a stated value of $2,200 per contract right.  At August 31, 2009, the Board of Directors increased the value of the 943.70 contract rights previously granted from $1,750 to $2,200 per contract right.  As of August 31, 2009, there were 1,225.79 contract rights issued and outstanding at a stated value of $2,200 per contract right, of which 645.64 were vested.

Defined Contribution Plans

The Company has qualified 401(k) plans for all eligible employees.  The plans provide for immediate vesting of benefits.  Participants may contribute a percentage of their gross earnings each pay period as provided in the participation agreement.  The Company matches the non-union and eligible union year-round participants’ contributions up to 4 percent and 2 percent, respectively, of their gross earnings.  The Company’s contributions to these plans totaled $1.8 million, $1.9 million and $2.0 million for the years ended August 31, 2009, 2008 and 2007, respectively.

Employees of the Company who are not members of a collective bargaining unit and who are newly hired, or rehired, and employees who transfer from a union position to a nonunion position on or after September 1, 2007 are no longer eligible for participation in the defined benefit pension plan but receive a 4% non-elective Company Contribution to a defined contribution plan.  The Company Contribution has a six year vesting schedule.  The Company’s Contributions to this plan totaled $87,000 and $29,000 for the years ended August 31, 2009 and 2008, respectively.

(11) MEMBERS’ INVESTMENTS:

The following schedule details the Preferred Stock and Common Stock as of August 31, 2009, 2008 and 2007:

	Par		Shares	Shares Issued
	Value		Authorized	& Outstanding
Preferred Stock:
August 31, 2009	$	76.77	600,000	498,570
August 31, 2008	$	76.77	600,000	498,570
August 31, 2007	$	76.77	600,000	498,570
Common Stock:
August 31, 2009	$	10.00	4,000	2,812
August 31, 2008	$	10.00	4,000	2,839
August 31, 2007	$	10.00	4,000	2,878

A-23

(12) SEGMENT REPORTING:

The Company has identified two reportable segments: Sugar and Leasing.  The sugar segment is engaged primarily in the production and marketing of sugar from sugarbeets.  It also sells agri-products and sugarbeet seed.  The leasing segment is engaged in the leasing of a corn wet milling plant used in the production of high-fructose corn syrup.  The segments are managed separately.  There are no inter-segment sales.  The leasing segment has a major customer that accounts for all of that segment’s revenue.

Summarized financial information concerning the Company’s reportable segments is shown below:

	For the Year Ended August 31, 2009
(In Thousands)	Sugar		Leasing			Consolidated
Net Revenue from External Customers	$	1,176,289	$	23,940		$	1,200,229
Gross Proceeds	$	781,753	$	12,762		$	794,515
Depreciation and Amortization	$	43,869	$	11,177		$	55,046
Interest Income	$	207	$	2		$	209
Interest Expense	$	10,058	$	—		$	10,058
Income from Equity Method Investees	$	636	$	—		$	636
Other Income/(Expense), Net	$	4,070	$	(140	)	$	3,930
Net Proceeds	$	529,799	$	6,352		$	536,151
Capital Additions	$	46,423	$	2,331		$	48,754

	For the Year Ended August 31, 2008
(In Thousands)	Sugar			Leasing			Consolidated
Net Revenue from External Customers	$	1,208,634		$	24,198		$	1,232,832
Gross Proceeds	$	815,570		$	14,334		$	829,904
Depreciation and Amortization	$	47,071		$	11,126		$	58,197
Impairment Loss	$	11,867		$	—		$	11,867
Interest Income	$	702		$	38		$	740
Interest Expense	$	14,591		$	159		$	14,750
(Loss) from Equity Method Investees	$	(221	)	$	—		$	(221	)
Other Income/(Expense), Net	$	(158	)	$	(27	)	$	(185	)
Net Proceeds	$	535,516		$	7,177		$	542,693
Capital Additions	$	44,391		$	1,358		$	45,749

A-24

	For the Year Ended August 31, 2007
(In Thousands)	Sugar			Leasing			Consolidated
Net Revenue from External Customers	$	1,197,914		$	24,943		$	1,222,857
Gross Proceeds	$	861,386		$	13,197		$	874,583
Depreciation and Amortization	$	46,384		$	11,097		$	57,481
Interest Income	$	745		$	36		$	781
Interest Expense	$	18,680		$	1,601		$	20,281
Income from Equity Method Investees	$	367		$	—		$	367
Other Income/(Expense), Net	$	(713	)	$	(8	)	$	(721	)
Net Proceeds	$	595,526		$	5,866		$	601,392
Capital Additions	$	63,256		$	859		$	64,115

	As of August 31, 2009
(In Thousands)	Sugar		Leasing		Consolidated
Property and Equipment, Net	$	353,936	$	—	$	353,936
Assets Held for Lease, Net	$	—	$	111,015	$	111,015
Segment Assets	$	645,770	$	115,488	$	761,258

	As of August 31, 2008
(In Thousands)	Sugar		Leasing		Consolidated
Property and Equipment, Net	$	351,581	$	—	$	351,581
Assets Held for Lease, Net	$	—	$	120,001	$	120,001
Segment Assets	$	688,768	$	124,531	$	813,299

(13) FAIR VALUE OF FINANCIAL INSTRUMENTS:

Fair value is defined as the price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date.  Quoted market prices are generally not available for the Company’s financial instruments.  Fair values are based on judgments regarding anticipated cash flows, future expected loss experience, current economic conditions, risk characteristics of various financial instruments and other factors.  These estimates involve uncertainties and matters of judgment, and therefore, cannot be determined with precision.  Changes in assumptions could significantly affect the estimates.

Long-Term Debt, Inclusive of Current Maturities - Based upon current borrowing rates with similar maturities, the fair value of the long-term debt is approximately $162.6 million in comparison to the carrying value of $161.9 million.

Investments in CoBank, ACB and Investments in Marketing Cooperatives - The Company believes it is not practical to estimate the fair value of these investments without incurring excessive costs because there is no established market for these securities and equity interests, and it is inappropriate to estimate future cash flows which are largely dependent on future earnings of these organizations.

A-25

(14) INCOME TAXES:

On September 1, 2007, the Company adopted the provisions of the Financial Accounting Standards Board Interpretation No. 48, Accounting for Uncertainty in Income Taxes—an interpretation of FASB Statement No. 109.  This Interpretation clarifies the accounting for uncertainty in income taxes recognized in the financial statements in accordance with FASB Statement No. 109, Accounting for Income Taxes.

The Company had no unrecognized tax benefits on September 1, 2007.  No interest or penalties are recognized in the consolidated statements of operations or in the consolidated balance sheets.  The Company is no longer subject to U.S. Federal income tax examinations by tax authorities for fiscal years 2006 and earlier.  The Company is no longer subject to state income tax examinations by tax authorities for fiscal years 2005 and earlier.

Total income tax payments (refunds) were $1.8 million; ($33,000); and ($119,000) for the years ended August 31, 2009, 2008 and 2007, respectively.

As of August 31, 2009, the Company had accumulated approximately $7.3 million of net operating loss carry-forwards for income tax reporting purposes.  The net operating loss carry-forwards expire in the years 2018 through 2022.  The Company’s net deferred tax liability included in Other Liabilities on the Company’s Balance Sheets as of August 31, 2009 and 2008 is reflected below:

(In Thousands)	2009		2008
Deferred Tax Assets related to non-patronage source temporary differences	$	11,096	$	14,048
Deferred Tax Liability related to non-patronage source temporary differences	16,535		18,019
Net Deferred Tax Liability	$	5,439	$	3,971

Income tax expense/(benefit) for the years ended August 31, 2009, 2008 and 2007 is as follows:

(In Thousands)	2009		2008			2007
Current Income Taxes	$	713	$	653		$	403
Deferred Income Taxes	1,468		(2,052		)	900
Total Income Tax Expense/(Benefit)	$	2,181	$	(1,399	)	$	1,303

A reconciliation of the Company’s effective tax rates for the years ended August 31, 2009, 2008 and 2007 is shown below:

	2009		2008		2007
Federal tax expense at statutory rate	35.0	%	35.0	%	35.0	%
State tax expense at statutory rate	6.0	%	6.0	%	6.0	%
Payments to members	(40.6	)%	(41.7	)%	(40.8	)%
Other, net	—		(.2	)%	—
Effective tax rate	0.4	%	(0.9	)%	0.2	%

A-26

(15) ENVIRONMENTAL MATTERS:

The Company is subject to extensive federal and state environmental laws and regulations with respect to water and air quality, solid waste disposal and odor and noise control.  The Company conducts an ongoing compliance program designed to meet these environmental laws and regulations.  The Company believes that it is in substantial compliance with applicable environmental laws and regulations.  From time to time, however, the Company may be involved in investigations or determinations regarding matters that may arise in the ordinary course of business.  The Company works closely with all affected government agencies to resolve environmental issues that arise and believes they will be resolved without any adverse effect on the Company.

The Company’s sugar manufacturing process is energy intensive and generates carbon dioxide and other “Greenhouse Gases” (GHGs).  Several bills have been introduced in the United States Senate and House of Representatives that would regulate GHGs and carbon dioxide emissions to reduce the impact of global climate change.  The Company believes it is likely that industries generating GHGs, including the Company, will be subject to either federal or state regulation relating to climate change policies in the relatively near future.  These policies, if adopted, will increase the Company’s energy and other operating costs.  Depending on how these policies address imports, the domestic sugar market may have a competitive disadvantage with imported sugar.  These policies could have a significant negative impact on the Company’s beet payment to shareholders if the Company is not able to pass the increased costs on to the Company’s customers.  On June 26, 2009, the United States House of Representatives passed H.R. 2454, the American Clean Energy and Security Act.  This bill creates a system for regulating emissions of GHG’s and also creates a market for emission allowances or credits. It is uncertain whether the steps necessary to move this bill or similar bills through the legislative process will be completed this year.

On November 25, 2008, the Company entered into a stipulation agreement with the Minnesota Pollution Control Agency (MPCA) related to hydrogen sulfide emissions from its Crookston, East Grand Forks and Moorhead, Minnesota factories.  As part of the stipulation agreement, the Company has agreed to make certain capital expenditures over the next three years and implement specified changes in operating procedures to contain hydrogen sulfide emissions at the Minnesota factories.  The required capital expenditures are currently estimated to be approximately $12 million.

Including the expenditures related to the MPCA stipulation agreement, the Company has identified capital expenditures for environmental related projects over the next three years at the Company’s factory locations of approximately $15.8 million.

(16) LEGAL MATTERS:

On February 11, 2009, the Ninth Circuit Court of Appeals (the Court) issued its decision in the case of Amalgamated Sugar Co, LLC v. Thomas Vilsack; Department of Agriculture, a case that involved Amalgamated Sugar’s challenge of a decision by the USDA to transfer certain sugar marketing allocations to the Company.  The Court reversed the lower court’s decision which confirmed the USDA’s transfer of the marketing allocations, and remanded the case back to the lower court for further action.  On May 19, 2009, the USDA announced, subject to further proceedings, that it was redistributing a portion of the Company’s sugar marketing allocations to other sugar beet processors in response to legal proceedings contesting the transfer of certain sugar marketing allocations to the Company.  To protect the Company’s interests in the marketing allocations, the Company appealed the Court’s decision to the U.S. Supreme Court.  The U.S. Supreme Court has since denied hearing the case, essentially putting an end to the case.  As a result, the Company will experience a net reduction of marketing allocations of approximately 1 million CWT.  The Company does not believe that the loss of

A-27

these marketing allocations will have a material impact on the Company’s planted acres going forward, assuming average crop yield, crop quality and continued domestic consumption trends.

On September 21, 2009 the U.S. District Court (District Court) ruled against the USDA finding that the USDA violated federal law by failing to prepare an Environmental Impact Statement before deregulating Roundup Ready® sugarbeets.  The District Court has determined that the USDA now needs to prepare a full Environmental Impact Statement.  The actual direct impact of the decision on sugarbeet producers and the Company will become more defined during the “remedy phase” of the case, which will occur over the next several months.

(17) SUBSEQUENT EVENTS:

The Company has evaluated events through November 4, 2009, the date that the financial statements were issued, for potential recognition or disclosure in the August 31, 2009 financial statements.

A-28

EXHIBIT INDEX TO ANNUAL REPORT
ON FORM 10-K
FOR FISCAL YEAR ENDED AUGUST 31, 2009

Item No.		Method of Filing
3.1	Restated Articles of Incorporation of American Crystal Sugar Company	Incorporated by reference to Exhibit 3(i) from the Company’s Registration Statement on Form S-1 (File No. 33-83868), declared effective November 23, 1994.
3.2	Restated By-laws of American Crystal Sugar Company	Incorporated by reference to Exhibit 3(ii) from the Company’s Registration Statement on Form S-1 (File No. 333-11693), declared effective November 13, 1996.
4.1	Restated Articles of Incorporation of American Crystal Sugar Company	See Exhibit 3.1
4.2	Restated By-laws of American Crystal Sugar Company	See Exhibit 3.2
10.1	Form of Operating Agreement between Registrant and ProGold Limited Liability Company	Incorporated by reference to Exhibit 10(u) from the Company’s Registration Statement on Form S-1 (File No. 33-83868), declared effective November 23, 1994.
10.2	Registrant’s Senior Note Purchase Agreement	Incorporated by reference to Exhibit 10.24 from the Company’s Annual Report on Form 10-K for the year ended August 31, 1999
10.3	Registrant’s Senior Note Inter-creditor and Collateral Agency Agreement	Incorporated by reference to Exhibit 10.25 from the Company’s Annual Report on Form 10-K for the year ended August 31, 1999
10.4	Registrant’s Senior Note Restated Mortgage and Security Agreement	Incorporated by reference to Exhibit 10.26 from the Company’s Annual Report on Form 10-K for the year ended August 31, 1999

E-1

++10.5	Long Term Incentive Plan, dated June 23, 1999	Incorporated by reference to Exhibit 10.31 from the Company’s Annual Report on Form 10-K for the year ended August 31, 2000
10.6	Registrant’s Senior Note Purchase Agreement dated January 15, 2003	Incorporated by reference to Exhibit 10.29 from the Company’s Form 10-Q for the quarter ended February 28, 2003
++10.7	Long Term Incentive Plan, dated August 24, 2005	Incorporated by reference to Exhibit 10.25 from the Company’s Annual Report on Form 10-K for the year ended August 31, 2005
++10.8	Employment Agreement dated March 21, 2007 between the Registrant and David A. Berg.	Incorporated by reference to Exhibit 10.26 from the Company’s Form 10-Q for the quarter ended February 28, 2007.
10.9	Growers’ Contract (5-year Agreement) for the crop years 2008 through 2012	Incorporated by reference to Exhibit 10.24 from the Company’s Annual Report on Form 10-K for the year ended August 31, 2007
10.10	Amended and Restated Uniform Member Sugar Marketing Agreement between the Registrant and United Sugars Corporation dated September 20, 2007.	Incorporated by reference to Exhibit 10.22 from the Company’s Annual Report on Form 10-K for the year ended August 31, 2008
10.11	Stipulation Agreement between Registrant and State of Minnesota Pollution Control Agency, dated November 25, 2008	Incorporated by reference to Exhibit 10.19 from the Company’s Form 10-Q for the quarter ended November 30, 2008
++10.12	Restated Supplemental Executive Retirement Plan, dated December 5, 2008	Incorporated by reference to Exhibit 10.20 from the Company’s Form 10-Q for the quarter ended November 30, 2008

E-2

++10.13	Restated Board of Directors Deferred Compensation Plan, dated December 8, 2008	Incorporated by reference to Exhibit 10.21 from the Company’s Form 10-Q for the quarter ended November 30, 2008
++10.14	First Amendment to 2005 Long-Term Incentive Plan, dated December 20, 2006.	Incorporated by reference to Exhibit 10.22 from the Company’s Form 10-Q for the quarter ended February 28, 2009
++10.15	Second Amendment to 2005 Long-Term Incentive Plan, dated November 5, 2007.	Incorporated by reference to Exhibit 10.23 from the Company’s Form 10-Q for the quarter ended February 28, 2009
++10.16	Third Amendment to 2005 Long-Term Incentive Plan, dated December 11, 2008.	Incorporated by reference to Exhibit 10.24 from the Company’s Form 10-Q for the quarter ended February 28, 2009
10.17	Amended and Restated Credit Agreement between the Registrant and CoBank, ACB dated July 30, 2009.	Filed herewith electronically
10.18	Amended and Restated Uniform Member Marketing Agreement between the Registrant and Midwest Agri-Commodities Company dated September 1, 2009.	Filed herewith electronically
10.19	Amended and Restated Member Control Agreement between Registrant and Golden Growers Cooperative dated September 1, 2009.	Filed herewith electronically
21.1	List of Subsidiaries of the Registrant	Filed herewith electronically
31.1	Rule 13a-14(a)/15(d)-14(a) Certification of the Chief Executive Officer	Accompanying herewith electronically
31.2	Rule 13a-14(a)/15(d)-14(a) Certification of the Chief Financial Officer	Accompanying herewith electronically
32.1	Section 1350 Certification of the Chief Executive Officer	Accompanying herewith electronically
32.2	Section 1350 Certification of the Chief Financial Officer	Accompanying herewith electronically

E-3

+              Confidential treatment under Rule 24b-2 of the Securities and Exchange Act of 1934, as amended, has been granted with respect to designated portions of this document.

++           A management contract or compensatory plan required to be filed with this report.

E-4

EX-10.17

Exhibit 10.17

AMENDED AND RESTATED CREDIT AGREEMENT

among

AMERICAN CRYSTAL SUGAR COMPANY,

as Borrower,

VARIOUS LENDERS,

and

COBANK, ACB,

as Administrative Agent and Lead Arranger

$494,556,602 Credit Facilities

TABLE OF CONTENTS

ARTICLE I DEFINITIONS		1
Section 1.1	Definitions	1
Section 1.2	Times	25
ARTICLE II CREDIT FACILITIES		25
Section 2.1	Commitments as to Facilities	25
Section 2.2	Procedures for Advances	27
Section 2.3	Converting Base Rate Loans to LIBOR Loans; Procedures	28
Section 2.4	Converting Base Rate Loans to Quoted Rate Loans; Procedures	28
Section 2.5	Procedures at End of an Interest Period	29
Section 2.6	Procedures at End of a Quoted Rate Period	29
Section 2.7	Procedures for Determining Quoted Rate and Quoted Rate Period applicable to Quoted Rate Loans	29
Section 2.8	Setting and Notice of LIBO Rate and Base Rate	30
Section 2.9	Commitment to Issue Letters of Credit	30
Section 2.10	Interest on Loans	34
Section 2.11	Obligation to Repay Advances; Representations	35
Section 2.12	Notes; Payment Dates; Mandatory Prepayments	35
Section 2.13	Computation of Interest and Fees	37
Section 2.14	Fees	38
Section 2.15	Use of Proceeds	38
Section 2.16	Voluntary Increases, Reduction or Termination of the Commitments; Prepayments	38
Section 2.17	Payments	40
Section 2.18	Increased Costs; Funding Exceptions	42
Section 2.19	Taxes	44
Section 2.20	Illegality	46
Section 2.21	Loan Losses	46
Section 2.22	Right of Lenders to Fund through Other Offices	46
Section 2.23	Discretion of Lenders as to Manner of Loan	47
Section 2.24	Conclusiveness of Statements; Survival of Provisions	47
ARTICLE III CONDITIONS TO CREDIT EXTENSIONS		47
Section 3.1	Conditions Precedent to the Initial Credit Extension	47
Section 3.2	Conditions Precedent to All Credit Extensions	49
ARTICLE IV REPRESENTATIONS AND WARRANTIES		49
Section 4.1	Legal Existence and Power; Name; Chief Executive Office	49
Section 4.2	Authorization for Borrowings and Letters of Credit; No Conflict as to Law or Agreements	49
Section 4.3	Legal Agreements	50
Section 4.4	Capitalization	50
Section 4.5	Financial Condition	50
Section 4.6	Adverse Change	50
Section 4.7	Litigation	50

Section 4.8	Regulation U	51
Section 4.9	Taxes	51
Section 4.10	Titles and Liens	51
Section 4.11	Plans	51
Section 4.12	Environmental Compliance	52
Section 4.13	Submissions to Lenders	52
Section 4.14	Financial Solvency	53
Section 4.15	Information Regarding Owned and Leased Real Estate and Warehouses	53
Section 4.16	Intellectual Property Rights	53
Section 4.17	Conflicts of Interest	54
Section 4.18	Licenses; Compliance with Laws, Other Agreements, etc.	54
Section 4.19	Investment Company Act	54
ARTICLE V AFFIRMATIVE COVENANTS		54
Section 5.1	Reporting Requirements	54
Section 5.2	Books and Records; Inspection and Examination	57
Section 5.3	Compliance with Laws	57
Section 5.4	Payment of Taxes and Other Claims	57
Section 5.5	Maintenance of Properties	58
Section 5.6	Insurance	58
Section 5.7	Preservation of Legal Existence	58
Section 5.8	Creation of New Obligors and Subsidiaries	58
Section 5.9	Minimum Interest Coverage Ratio	59
Section 5.10	Maximum Capitalization Ratio	59
Section 5.11	Minimum Net Working Capital	59
Section 5.12	Title Insurance Policy	59
ARTICLE VI NEGATIVE COVENANTS		59
Section 6.1	Liens	59
Section 6.2	Debt	60
Section 6.3	Guaranties	61
Section 6.4	Investments	61
Section 6.5	Restricted Payments	62
Section 6.6	Restrictions on Sale and Issuance of Subsidiary Stock	62
Section 6.7	Transactions With Affiliates	62
Section 6.8	Consolidation and Merger; Asset Acquisitions; Sale or Transfer of Assets; Suspension of Business Operations	62
Section 6.9	Sale and Leaseback	63
Section 6.10	Restrictions on Nature of Business	63
Section 6.11	Accounting	63
Section 6.12	Hazardous Substances	64
Section 6.13	Subordinated Debt	64
Section 6.14	Tax Consolidation	64
Section 6.15	Negative Pledges, Restrictive Agreements, etc.	64
Section 6.16	Inconsistent Agreements	64

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ARTICLE VII EVENTS OF DEFAULT; RIGHTS AND REMEDIES		65
Section 7.1	Events of Default	65
Section 7.2	Rights and Remedies	67
Section 7.3	Right of Setoff	68
ARTICLE VIII AGREEMENT AMONG LENDERS AND ADMINISTRATIVE AGENT		69
Section 8.1	Authorization; Powers; Administrative Agent for Collateral Purposes	69
Section 8.2	Application of Proceeds	69
Section 8.3	Exculpation	70
Section 8.4	Use of the Term “Administrative Agent”	70
Section 8.5	Reimbursement for Costs and Expenses	70
Section 8.6	Payments Received Directly by Lenders	71
Section 8.7	Administrative Agent and Affiliates	71
Section 8.8	Credit Investigation	71
Section 8.9	Defaults	71
Section 8.10	Obligations Several	72
Section 8.11	Resignation and Assignment of Administrative Agent	72
Section 8.12	Lead Arranger and Syndication Agent	73
Section 8.13	Borrower not a Beneficiary or Party	73
ARTICLE IX MISCELLANEOUS		73
Section 9.1	No Waiver; Cumulative Remedies	73
Section 9.2	Amendments, Requested Waivers, Etc.	73
Section 9.3	Successors and Assigns; Register	74
Section 9.4	Sharing of Payments by Lenders	78
Section 9.5	Notices; Distribution of Information Via Electronic Means	79
Section 9.6	Expenses; Indemnity; Damage Waiver	80
Section 9.7	Replacement of Non-Consenting Lender	81
Section 9.8	Disclosure of Information	82
Section 9.9	Governing Law; Jurisdiction; Waiver of Jury Trial	82
Section 9.10	Integration; Inconsistency	83
Section 9.11	Agreement Effectiveness	83
Section 9.12	Advice from Independent Counsel	83
Section 9.13	Judicial Interpretation	83
Section 9.14	Binding Effect; No Assignment by Borrower	84
Section 9.15	Severability of Provisions	84
Section 9.16	Headings	84
Section 9.17	Counterparts	84
Section 9.18	Customer Identification — USA Patriot Act Notice	84
Section 9.19	Borrower’s Acknowledgement and Agreement Regarding Participations	84
Section 9.20	Farm Credit Lender Equities	84
Section 9.21	Patronage Distributions	85
Section 9.22	CoBank Bylaws and Capital Plan	85
Section 9.23	Release	85
Section 9.24	Prior Agreements	86

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EXHIBITS AND SCHEDULES

Exhibit A	Commitments and Addresses
Exhibit B	Borrowing Base Certificate
Exhibit C	Pricing Grid
Exhibit D	Revolving Credit Facility Note
Exhibit E	Revolving Term Loan T01 Note
Exhibit F	Revolving Term Loan T06 Note
Exhibit G	Revolving Letter of Credit Note
Exhibit H	Borrowing Request
Exhibit I	Notice of Conversion to LIBO Rate
Exhibit J	Notice of Conversion to Quoted Rate
Exhibit K	Notice of Rollover of LIBO Rate
Exhibit L	Notice of Rollover of Quoted Rate
Exhibit M	Certificate of Officer as to Financial Statements
Exhibit N	Assignment and Assumption
Exhibit O	Initial Farm Credit Participants and Voting Participants
Schedule 4.1	Doing Business Names; Business Locations
Schedule 4.4	Capitalization; Organization Chart
Schedule 4.7	Litigation
Schedule 4.11	Plans
Schedule 4.12	Environmental Compliance
Schedule 4.18	Licenses, Compliance with Laws, Other Agreements
Schedule 6.1	Outstanding Liens
Schedule 6.2	Outstanding Indebtedness
Schedule 6.3	Outstanding Guaranties
Schedule 6.4	Additional Investments

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AMENDED AND RESTATED CREDIT AGREEMENT

This AMENDED AND RESTATED CREDIT AGREEMENT is entered into as of July 30, 2009, by and among AMERICAN CRYSTAL SUGAR COMPANY, a cooperative corporation formed under the laws of the State of Minnesota (the “Borrower”), the several banks and other financial institutions from time to time party hereto as lenders (the “Lenders”), and COBANK, ACB, a federally chartered banking organization (“CoBank”), in its capacity as administrative agent for the Lenders (in such capacity, the “Administrative Agent”).

The Borrower and the Administrative Agent, as a Lender, are parties to an Amended and Restated Loan Agreement dated as of July 31, 2006 (as amended, restated, supplemented or otherwise modified from time to time, the “Prior Credit Agreement”).

The Borrower and, subject to the terms and conditions set forth herein, the Administrative Agent and the Lenders now desire to amend and restate the Prior Credit Agreement in its entirety.

ACCORDINGLY, in consideration of the premises and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows:

ARTICLE I
DEFINITIONS

Section 1.1Definitions.  For all purposes of this Agreement, except as otherwise expressly provided or unless the context otherwise requires:

(a)The terms defined in the preamble have the meanings therein assigned to them.

(b)The terms defined in this Article have the meanings assigned to them in this Article and include the plural as well as the singular.

(c)All accounting terms not otherwise defined herein have the meanings assigned to them in accordance with GAAP.

(d)References to documents (including this Agreement) shall be deemed to include all subsequent amendments, renewals, replacements, extensions and other modifications thereto and restatements thereof, but only to the extent not prohibited by the terms of any Loan Document.

“Account Debtor” means any Person who is obligated under an Account.

“Accounts” means the aggregate unpaid obligations of customers and other account debtors of an Obligor arising out of the sale of goods or the rendition of services by such Obligor on an open account or deferred payment basis.

“Act” has the meaning specified in Section 9.18.

“Administrative Agent” has the meaning specified in the preamble.

“Administrative Questionnaire” means an Administrative Questionnaire in a form supplied by the Administrative Agent.

“Advance” means a loan of funds by a Lender to the Borrower under a Facility.

“Affiliate” means, with respect to a Person, (a) any officer of such Person or member of the Governing Board of such Person; (b) any Person who, individually or with his immediate family owns or holds more than 10% of the voting interest in the subject Person; and (c) any Person controlled by, controlling or under common control with such Person, including (but not limited to) any Subsidiary of such Person.  For purposes of this definition, “control,” when used with respect to a Person, means the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise; provided, however, that for purposes of this Agreement no Administrative Agent nor any Lender shall be deemed to be an Affiliate of any Obligor.  Unless otherwise specified, “Affiliate” means an Affiliate of the Borrower.

“Aggregate Commitment Amount” means the sum of the Aggregate Revolving Credit Facility Commitment Amount, the Aggregate Revolving Letter of Credit Commitment Amount, the Aggregate Revolving Term Loan T01 Commitment Amount and the Aggregate Revolving Term Loan T06 Commitment Amount then in effect.

“Aggregate Revolving Credit Facility Commitment Amount” means $320,000,000, constituting the sum of the Revolving Credit Facility Commitments of all Lenders, subject to adjustment in accordance with Section 2.16(a).

“Aggregate Revolving Letter of Credit Commitment Amount” means $60,849,200, constituting the sum of the Revolving Letter of Credit Commitments of all Lenders, subject to adjustment in accordance with Section 2.16(a).

“Aggregate Revolving Term Loan T01 Commitment Amount” means $48,707,402, constituting the sum of the Revolving Term Loan T01 Commitments of all Lenders, subject to adjustment in accordance with Section 2.16(a).

“Aggregate Revolving Term Loan T06 Commitment Amount” means $65,000,000, constituting the sum of the Revolving Term Loan T06 Commitments of all Lenders, subject to adjustment in accordance with Section 2.16(a).

“Aggregate Short-Term Loan Amount” means the sum of (a) the Revolving Credit Facility Outstanding Amount, (b) the principal amount outstanding of all Commodity Credit Corporation Loans, and (c) the principal amount outstanding of all commercial paper issued by any Obligor.

“Agreement” means this Amended and Restated Credit Agreement and all exhibits and schedules hereto.

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“Assignment and Assumption” means an assignment and assumption entered into by a Lender and an assignee of that Lender’s interest, in substantially the form of Exhibit N or any other form approved by the Administrative Agent.

“Average Interest Expense” means the Interest Expense for the most recent eight Fiscal Quarters, divided by two.

“Average Net Funds Generated” means the Net Funds Generated for the most recent eight Fiscal Quarters, divided by two.

“Base Rate” means, for any day, an annual rate equal to (a) the applicable Margin, plus (b) the higher of (i) the Prime Rate, or (ii) one hundred fifty basis points plus the rate obtained by dividing the applicable Floating LIBO Rate then in effect by a percentage equal to 1.00 minus the applicable percentage (expressed as a decimal) prescribed by the Board of Governors of the Federal Reserve System (or any successor thereto) for determining the maximum reserve requirements applicable to eurodollar fundings (currently referred to as “Eurocurrency Liabilities” in Regulation D) or any other maximum reserve requirements applicable to a member bank of the Federal Reserve System with respect to such eurodollar fundings.

“Base Rate Advance” means any Advance that bears interest at a rate determined by reference to the Base Rate.

“Base Rate Loan” means any Loan that bears interest at a rate determined by reference to the Base Rate, including Base Rate Advances.

“Borrower” has the meaning specified in the preamble.

“Borrowing” means a borrowing by the Borrower under a Facility, consisting of the aggregate of all Advances made by the Lenders to the Borrower.

“Borrowing Base” means, at any time, an amount equal to the sum of:

(a)80% of the Eligible Accounts; and

(b)75% of the Eligible Net Inventory;

in any case, computed in accordance with the most recent Borrowing Base Certificate submitted to, and accepted by, the Administrative Agent.

“Borrowing Base Certificate” means a certificate in substantially the form attached hereto as Exhibit B, duly completed and certified by the Borrower, pursuant to which the Borrower sets forth each element of the Borrowing Base and its calculation as of a particular date.

“BSA” has the meaning specified in Section 5.3.

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“Business Day” means any day other than a Saturday or Sunday on which national banks are required to be open for business in Denver, Colorado, and, in addition, if such day relates to a LIBOR Loan or fixing of a LIBO Rate, a day on which dealings in U.S. dollar deposits are carried on in the London interbank eurodollar market.

“Capital Expenditures” means, with respect to any Person, the cost of any real property, plant and equipment, and any other fixed asset or improvement, or replacement, substitution or addition thereto which is required by GAAP to be included in or reflected as property, plant and equipment or similar fixed assets on the balance sheet of such Person, having useful life of more than one (1) year, or any other payment which is otherwise required to be capitalized, including as a cost the aggregate amount of expenses, charges, goods exchanged or services rendered or payments due or arising in connection with the direct or indirect acquisition of such assets or improvements, replacements, substitutions or additions by way of increased product or service charges or offset items or barter exchange or in connection with Capital Leases, and the entire principal amount of any Debt assumed or incurred in connection therewith, in each case without duplication; provided, however, that Capital Expenditures shall not include expenditures made in connection with the replacement, substitution or restoration of assets to the extent financed (a) from insurance proceeds (or other similar recoveries) paid on account of the loss of or damage to the assets being replaced or restored, or (b) with awards of compensation arising from the taking by eminent domain or condemnation of the assets being replaced.

“Capital Lease” means, with respect to any Person, any lease of (or other agreement conveying the right to use) any real or personal property of such Person that, in conformity with GAAP, is accounted for as a capital lease on the balance sheet of such Person.

“Capital Stock” means, with respect to any Person, any and all shares, interests, participations, membership interests or other equivalents (however designated) of such Person’s capital stock or equity, whether now outstanding or issued after the date hereof, including all common stock, preferred stock, partnership interests and limited liability company member interests.

“Capitalization” means, with respect to any Person as of any Covenant Compliance Date, the aggregate of such Person’s (a) Long-Term Debt and (b) Shareholders’ Equity.

“Capitalization Ratio” means, with respect to any Person as of any Covenant Compliance Date, the ratio of such Person’s (a) Long-Term Debt to (b) Capitalization.

“Change in Law” means the occurrence, after the date of this Agreement, of any of the following:  (a) the adoption or taking effect of any law, rule, regulation or treaty; (b) any change in any law, rule, regulation or treaty or in the administration, interpretation or application thereof by any Governmental Authority; or (c) the making or issuance of any request, guideline or directive (whether or not having the force of law,

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but having general applicability to all within a class of similarly-situated Persons) by any Governmental Authority.

“Change of Control” means any event, circumstance or occurrence that results in (a) any Person or two or more Persons acting in concert (other than the current holders of the Capital Stock of the Borrower) directly or indirectly acquiring beneficial ownership (within the meaning of Rule 13d-3 of the Securities and Exchange Commission under the Securities Exchange Act of 1934) of the Capital Stock of the Borrower representing 50% or more of the combined voting power of all Capital Stock of the Borrower entitled to vote in the election of directors; (b) any Person or two or more Persons acting in concert (other than the current holders of the Capital Stock of the Borrower) acquiring by contract or otherwise, or entering into a contract or arrangement that upon consummation will result in its or their acquisition of, control over the Capital Stock of the Borrower representing 50% or more of the combined voting power of all Capital Stock of the Borrower entitled to vote in the election of directors; or (c) the Borrower failing to own, directly or indirectly through another wholly-owned Subsidiary, all issued and outstanding Capital Stock of each other Obligor.

“Closing Date” means the date of this Agreement.

“CoBank” has the meaning specified in the preamble.

“Code” means the Internal Revenue Code of 1986, as amended.

“Collateral” means all real and personal property in which the Administrative Agent, on behalf of the Lenders, has been granted a Lien pursuant to any Security Document, together with all substitutions and replacements for, and products and proceeds of, any of the foregoing.

“Commitment” means, with respect to any Lender, the Revolving Credit Facility Commitment, the Revolving Term Loan T01 Commitment, the Revolving Term Loan T06 Commitment or the Revolving Letter of Credit Commitment, as the context requires.

“Commitment Amount” means the Aggregate Revolving Credit Facility Commitment Amount, the Aggregate Revolving Letter of Credit Commitment Amount, the Aggregate Revolving Term Loan T01 Commitment Amount or the Aggregate Revolving Term Loan T06 Commitment Amount, as the context requires and subject to adjustment in accordance with Section 2.16.

“Commitment Termination Date” means the Revolving Credit Facility Termination Date, the Revolving Term Loan T01 Commitment Termination Date, the Revolving Term Loan T06 Commitment Termination Date and the Revolving Letter of Credit Commitment Termination Date, as the context requires.

“Commodity Credit Corporation Loans” means any advance of funds from the Commodity Credit Corporation to any Obligor with a maturity date not in excess of 365 days.

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“Communications” has the meaning specified in Section 9.5(a).

“Consolidated Group” means the Borrower and its Consolidated Subsidiaries, including but not limited to each Guarantor.

“Consolidated Subsidiary” means at any time, any Subsidiary, the accounts of which are or should, in accordance with GAAP, be consolidated with those of the Borrower in its consolidated financial statements at such time.

“Covenant Compliance Date” means the last day of each Fiscal Quarter of the Borrower.

“Covenant Computation Period” means the 12 consecutive calendar months immediately preceding and ending on a Covenant Compliance Date.

“Credit Exposure” means, with respect to any Lender, (a) at all times prior to termination of the Commitments, the aggregate amount of such Lender’s Commitments; and (b) thereafter, such Lender’s Facility Outstanding Amount.

“Credit Extension” means the making of any Advance, the conversion to, or continuation of, any LIBOR Loan or the issuance of any Letter of Credit.

“Debt” means, with respect to any Person, without duplication:  (a) all obligations of such Person for borrowed money; (b) all obligations of such Person evidenced by bonds, debentures, notes or other similar instruments; (c) all obligations of such Person to pay the deferred purchase price of property or services, except trade accounts payable arising in the ordinary course of business; (d) all obligations of such Person as lessee under Capital Leases that have been or should be recorded as liabilities on a balance sheet of such Person in accordance with GAAP; (e) all indebtedness secured by a Lien on any asset of such Person, whether or not such indebtedness has been assumed by such Person; (f) all indebtedness and other obligations of others guaranteed by such Person; (g) all net obligations of such Person under currency, commodity or interest rate swap program or any similar agreement, arrangement or undertaking relating to fluctuations in commodity prices, currency values or interest rates, including but not limited to Rate Hedging Obligations; (h) all obligations, contingent or otherwise, with respect to the face amount of letters of credit (whether or not drawn) and bankers’ acceptances issued for the account of such Person; (i) all Redeemable Capital Stock of such Person; (j) all obligations of such Person arising under Synthetic Leases; and (k) all obligations of such Person to advance funds to, or purchase assets, property or services from, any other Person in order to maintain the financial condition of such Person.  For all purposes of this Agreement, the Debt of any Person shall include the Debt of any partnership or joint venture in which such Person is a general partner or a joint venturer; provided, that the portion (if any) of any such Debt that exceeds the amount of such Debt as to which there is recourse to such Person shall not be included hereunder as Debt of such Person.

“Default” means an event that, with giving of notice or passage of time or both, would constitute an Event of Default.

6

“Default Rate” has the meaning specified in Section 2.10(d).

“Defaulting Lender” means at any time, any Lender that, at such time:  (a) has failed to make an Advance required pursuant to the terms of this Agreement; (b) has failed to pay to any Lender Party an amount owed by such Lender pursuant to the terms hereof; (c) has been deemed insolvent or has become subject to a bankruptcy or insolvency proceeding or to a receiver, trustee or similar official; or (d) has notified the Administrative Agent or the Borrower that such Lender does not intend to comply with its obligation to make further Advances or other payments as required under this Agreement.

“Director” means, with respect to any Person, (a) if such Person is a corporation, a member of the board of directors of such Person, (b) if such Person is a limited liability company, a governor, manager or managing member of such Person, and (c) if such Person is a partnership, a general partner of such Person.

“Disclosed Information” has the meaning specified in Section 9.8.

“Eligible Accounts” means all unpaid Accounts arising from a bona fide sale or rendition of services by an Obligor in the ordinary course of business on usual and ordinary terms, evidenced by an invoice and net of any applied or unapplied credits or other allowance (with any such unapplied credits or other allowances being applied to the most current Account of an Obligor); provided, however, that the following shall in no event be deemed Eligible Accounts:

(a)that portion of Accounts over ninety (90) days past the specified due date;

(b)Accounts owed by any unit of government, whether foreign or domestic, unless such Account is a U.S. government obligation and the Lenders’ pledge and assignment of such Account has been confirmed by duly acknowledged and accepted documents complying with the Assignment of Claims Act and delivered to and approved by the Administrative Agent;

(c)that portion of Accounts that are conditional, disputed or subject to a known claim of offset or a contra Account or with respect to which a defense, counterclaim, right to discount or deduction has been asserted;

(d)Accounts that are owed by an Account Debtor whose principal corporate office is located outside the United States or Canada unless the Account is supported by a letter of credit issued by a bank acceptable to the Administrative Agent;

(e)Accounts owed by an Account Debtor that is the subject of dissolution, liquidation, bankruptcy proceedings or has gone out of business;

(f)Accounts owed by an Affiliate of any Obligor and Accounts with Account Debtors with whom any Obligor is obligated with respect to goods sold or services rendered by such Account Debtor;

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(g)Accounts that are subject to any Lien other than Permitted Liens;

(h)that portion of Accounts that has been restructured, extended, amended or modified as a result of an Account Debtor’s inability to pay; and

(i)that portion of Accounts that are billed before the rendition of services by the applicable Obligor or that constitute a finance charge, service charge or interest.

“Eligible Lender” means:  (a) a financial institution organized under the laws of the United States, or any state thereof, and having a combined capital and surplus of at least $100,000,000; (b) a commercial bank organized under the laws of any other country that is a member of the Organization for Economic Cooperation and Development, or a political subdivision of any such country, and having a combined capital and surplus of at least $100,000,000, provided that such bank is acting through a branch or agency located in the United States; or (c) a Person controlled by, controlling, or under common control with any entity identified in clause (a) or (b) above.

“Eligible Net Inventory” means, at any time of determination, Net Inventory of any Obligor that arose in the ordinary course of business of such Obligor; provided, however, no Net Inventory shall be Eligible Net Inventory unless it satisfies each of the following requirements:

(a)such Net Inventory is located in the United States on real property assets that are either (i) owned by the Obligor, free and clear of any Liens other than Permitted Liens, or (ii) located in or with, as the case may be, a public warehouse or leased premises;

(b)the Obligor has full and unqualified right to assign and grant a Lien in such Net Inventory to the Administrative Agent for the benefit of the Lender Parties;

(c)the Obligor has full and lawful title to such Net Inventory, free and clear of all Liens other than the Permitted Liens;

(d)such Net Inventory does not consist of:  (i) items in the custody of third parties for processing, manufacture or on consignment, or on a bill-and-hold, cash-on-delivery or guaranteed sale basis; (ii) items in the Obligor’s possession, but intended by the Obligor for return to the suppliers thereof; (iii) items belonging to third parties that have not been consigned to the Obligor; (iv) items in the Borrower’s custody and possession on a sale-on-approval or sale-or-return basis subject to any other repurchase or return agreement; (v) items that are finished goods that do not meet the specifications of the purchase order for such goods; (vi) hazardous materials or goods that can be transported or sold only with licenses that are not readily available; and

(e)such Net Inventory that (i) is not obsolete, unsalable, slow moving, damaged or otherwise unfit for sale or further processing in the ordinary course of the Obligor’s business; (ii) does not consist of display items, packing or shipping materials, manufacturing surplus or replacement parts; and (iii) is covered by the casualty insurance of such Obligor that is required to be maintained pursuant to the terms of this Agreement.

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“Environmental Laws” has the meaning specified in Section 4.12.

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended.

“ERISA Affiliate” means any trade or business (whether or not incorporated) that is, along with an Obligor, a member of a controlled group of corporations or a controlled group of trades or businesses, as described in sections 414(b) and 414(c), respectively, of the Code.

“Event of Default” has the meaning specified in Section 7.1.

“Excluded Taxes” means, with respect to any Lender Party or any other recipient of any payment to be made by, or on account of, any obligation of the Borrower hereunder:  (a) taxes imposed on, or measured by, its overall net income (however denominated), and franchise taxes imposed on it (in lieu of net income taxes), by the jurisdiction (or any political subdivision thereof) under the laws of which such recipient is organized or in which its principal office is located or, in the case of any Lender, in which its applicable lending office is located; (b) any branch profits taxes imposed by the United States of America or any similar tax imposed by any other jurisdiction in which the Borrower is located; and (c) in the case of a Foreign Lender, any withholding tax that is imposed on amounts payable to such Foreign Lender at the time such Foreign Lender becomes a party hereto (or designates a new lending office) or is attributable to such Foreign Lender’s failure or inability (other than as a result of a Change in Law) to comply with Section 2.19(e), except to the extent that such Foreign Lender (or its assignor, if any) was entitled, at the time of designation of a new lending office (or assignment), to receive additional amounts from the Borrower with respect to such withholding tax pursuant to Section 2.19(a).

“Existing Indebtedness” means, collectively, the Existing Revolving Loan, the Existing Revolving Term Loan T01, the Existing Revolving Term Loan T06 and the Existing Revolving Letter of Credit Loan.

“Existing Revolving Letter of Credit Loan” means the loan from CoBank to the Borrower in the outstanding principal amount of $60,849,200 evidenced by the promissory note of the Borrower dated July 25, 2007 payable to the order of CoBank.

“Existing Revolving Loan” means the loan from CoBank to the Borrower in the outstanding principal amount of $345,000,000 evidenced by the promissory note of the Borrower dated November 3, 2006 payable to the order of CoBank.

“Existing Revolving Term Loan T01” means the loan from CoBank to the Borrower in the outstanding principal amount of $48,707,402 evidenced by the promissory note of the Borrower dated July 31, 2006 payable to the order of CoBank.

“Existing Revolving Term Loan T06” means the loan from CoBank to the Borrower in the outstanding principal amount of $65,000,000 evidenced by the promissory note of the Borrower dated July 31, 2006 payable to the order of CoBank.

9

“Facility” means the Revolving Credit Facility, the Revolving Term Loan T01 Facility, the Revolving Term Loan T06 Facility or the Revolving Letter of Credit Facility, as the context requires.

“Facility Outstanding Amount” means the Revolving Credit Facility Outstanding Amount, the Revolving Term Loan T01 Facility Outstanding Amount, the Revolving Term Loan T06 Facility Outstanding Amount or the Revolving Letter of Credit Facility Outstanding Amount, as the context requires.

“Farm Credit Lender” means a lending institution organized and existing pursuant to the provisions of the Farm Credit Act of 1971 and under the regulation of the Farm Credit Administration.

“Farm Credit Lender Equities” has the meaning specified in Section 9.20.

“Federal Funds Rate” means, for any day, the rate set forth in the weekly statistical release designated as H.15(519), or any successor publication, published by the Federal Reserve Bank of New York (including any such successor publication, “H.15(519)”) on the preceding Business Day opposite the caption “Federal Funds (Effective)”; or, if for any relevant day such rate is not so published on any such preceding Business Day, the rate for such day will be the arithmetic mean as determined by the Administrative Agent of the rates for the last transaction in overnight federal funds arranged prior to 9:00 a.m. (New York City time) on that day by each of the three leading brokers of federal funds transactions in New York City, as selected by the Administrative Agent in its discretion.

“Fee Letter” means the separate agreement of even date herewith between the Borrower and the Administrative Agent, setting forth certain fees to be paid by the Borrower to the Administrative Agent for the Administrative Agent’s own account or for the account of the Lenders, as more fully set forth therein.

“Financial Covenants” means the covenants contained in Sections 5.9, 5.10 and 5.11.

“FIRREA” means the Financial Institutions Reform, Recovery and Enforcement Act of 1989, as amended.

“Fiscal Quarter” means each three-month period ending (a) within one week prior to or following the last Saturday in November, February and May of each Fiscal Year, and (b) August 31st of each Fiscal Year; and, in each instance, beginning on the subsequent day.

“Fiscal Year” means a calendar year commencing on September 1 and ending on August 31.

“Fixed Rate Loan” means any LIBOR Loan or Quoted Rate Loan.

10

“Floating LIBO Rate” means:  (a) the rate per annum determined by the Administrative Agent as of approximately 11:00 a.m. London time on the first Business Day of each calendar week by reference to the British Bankers’ Association Interest Settlement Rates for deposits in dollars offered on the London interbank dollar market for a one month period (as displayed in the Bloomberg Financial Markets system or any successor thereto or any other service selected by the Administrative Agent that has been nominated by the British Bankers’ Association as an authorized information vendor for the purpose of displaying such rates); or (b) if such rate cannot be determined, the rate per annum equal to the rate determined by the Administrative Agent in accordance with Section 2.8 to be a rate at which U.S. dollar deposits are offered to major banks in the London interbank eurodollar market for funds to be made available on the first Business Day of each calendar week and maturing in one month, in each case rounded upwards, if necessary, to the nearest 1/16 of 1%; provided, however, that upon an Unusual LIBOR Event, Floating LIBO Rate shall mean any similar successor rate designated by the Administrative Agent in its reasonable discretion.

“Foreign Lender” means any Lender that is organized under the laws of a jurisdiction other than the United States of America, any state thereof or the District of Columbia.

“Funded Debt” of any Person means all Debt of such Person, including but not limited to all Subordinated Debt of such Person, other than any such Debt described in clauses (g) and (k) of the definition of “Debt” herein (including guaranties of any such items of Debt).

“GAAP” means generally accepted accounting principles as in effect on the Closing Date and applied on a basis consistent with the accounting practices applied in the financial statements of the Borrower referred to in Section 4.5, except for any change in accounting practices to the extent that, due to a promulgation of the Financial Accounting Standards Board changing or implementing any new accounting standard, the Borrower either (a) is required to implement such change, or (b) for future periods will be required to and for the current period may in accordance with generally accepted accounting principles implement such change, for its financial statements to be in conformity with generally accepted accounting principles (any such change is hereinafter referred to as a “Required GAAP Change”), provided that (i) the Borrower shall fully disclose in such financial statements any such Required GAAP Change and the effects of the Required GAAP Change on the Borrower’s income, retained earnings or other accounts, as applicable, and (ii) the Financial Covenants shall be adjusted as necessary to reflect the effects of such Required GAAP Change, provided that if the Required Lenders and the Borrower cannot agree on such adjustments, the Financial Covenants will be calculated without giving effect to the Required GAAP Change.

“Governing Board” means, with respect to any corporation, limited liability company or similar Person, the board of directors, board of governors or other body or entity that sets overall institutional direction for such Person.

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“Governmental Authority” means the government of the United States of America or any other nation, or of any political subdivision thereof, whether state or local, and any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government (including any supra-national bodies such as the European Union or the European Central Bank).

“Guarantor” means Sidney Sugars Incorporated, a Minnesota corporation.

“Guaranty” means the Amended and Restated Guaranty of even date herewith from Sidney Sugars Incorporated, a Minnesota corporation and a Subsidiary of the Borrower, in favor of the Agent, for the benefit of the Lender Parties, guaranteeing all present and future Obligations.

“Hazardous Substance” means any asbestos, urea-formaldehyde, polychlorinated biphenyls, nuclear fuel or material, chemical waste, radioactive material, explosives, known carcinogens, petroleum products and by-products and other dangerous, toxic or hazardous pollutants, contaminants, chemicals, materials or substances listed or identified in, or regulated by, any Environmental Laws.

“Increased Facility Amount” has the meaning specified in Section 2.16(b).

“Indemnified Taxes” means Taxes other than Excluded Taxes.

“Indemnitee” has the meaning specified in Section 9.6(b).

“Initial Farm Credit Participants” has the meaning specified in Section 9.19.

“Intellectual Property Rights” means all actual or prospective rights arising in connection with any intellectual property or other proprietary rights, including all rights arising in connection with copyrights, patents, service marks, trade dress, trade secrets, trademarks, trade names or mask works.

“Intercreditor Agreement” means the Amended and Restated Intercreditor and Collateral Agency Agreement of even date herewith among CoBank, as collateral agent; the Lenders, as bank lenders; John Hancock Mutual Life Insurance Company, John Hancock Variable Life Insurance Company, the Paul Revere Life Insurance Company and John Hancock Life Insurance Company of Vermont, as noteholders; and the Additional Creditors, as defined therein.

“Interest Coverage Ratio” means, with respect to any Person, for the applicable Covenant Computation Period, the ratio of (a) such Person’s Average Net Funds Generated, to (b) such Person’s Average Interest Expense.

“Interest Expense” means, with respect to any Person for the applicable period, the aggregate consolidated amount of interest paid, accrued or scheduled to be paid in respect of any Debt of such Person, including, but not limited to and without duplication:  (a) accrued interest (whether or not paid) on all Debt; (b) the amortization of Debt

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discounts; (c) the amortization of all fees payable in connection with the incurrence of Debt to the extent included in interest expense; (d) that portion of any Capital Lease Payment that would constitute imputed interest as determined in accordance with GAAP; and (e) all fees and charges with respect to letters of credit issued for the account of such Person.

“Interest Payment Date” means:  (a)  with respect to each LIBOR Loan, the last day of the Interest Period applicable thereto (and, if such Interest Period is longer than three months, each day prior to the last day of such Interest Period that occurs at intervals of three months’ duration after the first day of such Interest Period); (b) with respect to each Base Rate Loan or Quoted Rate Loan, the 10th day of each calendar month; and (c) with respect to each Loan, the Maturity Date.

“Interest Period” means, relative to any LIBOR Loan, the period beginning on (and including) the date on which such LIBOR Loan is made, or continued as, or converted into, a LIBOR Loan pursuant to Section 2.2, 2.3, or 2.5 and shall end on (but exclude) the day that numerically corresponds to such date one, three or six months thereafter (or, if such month has no numerically corresponding day, on the last Business Day of such month), as the Borrower may select in its relevant notice pursuant to Section 2.2, 2.3 or 2.5; provided, however, that:

(a)no more than five (5) different Interest Periods may be outstanding at any one time for each Facility;

(b)if an Interest Period would otherwise end on a day that is not a Business Day, such Interest Period shall end on the next following Business Day (unless such next following Business Day is the first Business Day of a month, in which case such Interest Period shall end on the next preceding Business Day); and

(c)no Interest Period may end later than the Maturity Date for the applicable Facility.

“Inventory” means all inventory of any Obligor, as such term is defined in the UCC, whether consisting of whole goods, spare parts or components, supplies or materials, whether acquired, held or furnished for sale, for lease or under service contracts or for manufacture or processing, and wherever located.

“Investment” means (a) the acquisition, purchase, making or holding of any Securities; (b) any loan, advance, contribution to capital or extension of credit (except for (i) 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 (ii) Investments of less than $7,500,000); (c) any acquisitions of real or personal property (other than real and personal property acquired in the ordinary course of business); and (d) any purchase or commitment or option to purchase 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

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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 (other than adjustments for the repayment of, or the refund of capital with respect to, the original or any additional principal amount of any such Investment).

“Issuing Fee” has the meaning specified in Section 2.9(b).

“Knowledge” of a Person means the actual knowledge of any officer of such Person.

“Lease” means, with respect to any Person, any leasing or similar arrangement for the lease or use of any real or personal property of such Person, including, without limitation, any Capital Lease or Operating Lease.

“Lender” has the meaning specified in the preamble.

“Lender Parties” means, collectively, the Administrative Agent, the Lenders, the Letter of Credit Issuer and each Affiliate of any Lender to whom any Rate Hedging Obligations are owed.

“Letter of Credit” has the meaning specified in Section 2.9.

“Letter of Credit Documents” means such applications, reimbursement agreements and other documents as the Letter of Credit Issuer may require as a condition to issuing a Letter of Credit.

“Letter of Credit Exposure” means the sum of (a) the aggregate remaining available amount of all issued and outstanding Letters of Credit, and (b) amounts drawn under Letters of Credit for which the Letter of Credit Issuer has not been reimbursed with proceeds of a Borrowing or otherwise.

“Letter of Credit Facility” means the Revolving Credit Facility, the Revolving Term Loan T06 Facility or the Revolving Letter of Credit Facility, as applicable.

“Letter of Credit Fee” has the meaning specified in Section 2.9(b).

“Letter of Credit Issuer” means CoBank (or, as applicable, one of its Affiliates), in its separate capacity as issuer of Letters of Credit for the account of the Borrower pursuant to Section 2.9.

“Letter of Credit Lenders” means the Revolving Credit Facility Lenders, the Revolving Term Loan T06 Lenders or the Revolving Letter of Credit Lenders, as applicable.

“Letter of Credit Sublimit” means (a) $50,000,000 in respect of the Revolving Credit Facility, (b) $20,000,000 in respect of the Revolving Term Loan T06 Facility, and

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(c) the Aggregate Revolving Letter of Credit Commitment Amount in respect of the Revolving Letter of Credit Facility; as the context requires.

“Level I,” “Level II,” and “Level III,” each means a Status as determined in accordance with the definition of “Margin.”

“LIBO Base Rate” means, with respect to an Interest Period: (a) the rate per annum determined by the Administrative Agent as of approximately 11:00 a.m. London time on the date two (2) Business Days before the commencement of such Interest Period by reference to the British Bankers’ Association Interest Settlement Rates for deposits in dollars offered on the London interbank dollar market for a period corresponding to the term of such Interest Period and in an amount comparable to the aggregate amount of the relevant Loan (as displayed in the Bloomberg Financial Markets system or any successor thereto or any other service selected by the Administrative Agent that has been nominated by the British Bankers’ Association as an authorized information vendor for the purpose of displaying such rates), or (b) if such rate cannot be determined, the rate per annum equal to the rate determined by the Administrative Agent in accordance with Section 2.8 to be a rate at which U.S. dollar deposits are offered to major banks in the London interbank eurodollar market for funds to be made available on the first day of such Interest Period and maturing at the end of such Interest Period, in each case rounded upwards, if necessary, to the nearest 1/16 of 1%.

“LIBO Rate” means, with respect to an Interest Period, the rate obtained by adding (a) the applicable Margin to (b) the rate obtained by dividing (i) the applicable LIBO Base Rate by (ii) a percentage equal to 1.00 minus the applicable percentage (expressed as a decimal) prescribed by the Board of Governors of the Federal Reserve System (or any successor thereto) for determining the maximum reserve requirements applicable to eurodollar fundings (currently referred to as “Eurocurrency Liabilities” in Regulation D) or any other maximum reserve requirements applicable to a member bank of the Federal Reserve System with respect to such eurodollar fundings.

“LIBOR Advance” means any Advance that bears interest at a rate determined by reference to a LIBO Rate.

“LIBOR Loan” means any Loan that bears interest at a rate determined by reference to a LIBO Rate, including LIBOR Advances.

“License” has the meaning specified in Section 4.18.

“Lien” means any mortgage, deed of trust, lien, pledge, security interest or other charge or encumbrance, of any kind whatsoever, including but not limited to the interest of the lessor or titleholder under any Capital Lease, title retention contract or similar agreement.

“Loan” means a designated portion of outstanding principal indebtedness under one or more Facilities that bears interest at a rate determined by reference to a particular LIBO Rate, Base Rate or Quoted Rate, as the case may be.

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“Loan Documents” means this Agreement, the Notes, the Guaranty, each Letter of Credit Document and the Security Documents.

“Long-Term Debt” means any Funded Debt of any Person having an original maturity greater than one year or renewable at the option of such Person for a period greater than one year from the date of original incurrence or issuance thereof, excluding, in any event, outstanding Advances under the Revolving Credit Facility.

“Margin” means, with respect to computation of the applicable interest rate on any Loans or the applicable Letter of Credit Fee or Unused Fee, as the case may be, the applicable increment set forth and described in the Pricing Grid, established as of the last day of each Fiscal Quarter according to the then-applicable Status.  Any adjustment in the applicable Margin shall not become effective until the first calendar day of the first month immediately following receipt by the Administrative Agent of financial statements relating to the last day of such Fiscal Quarter pursuant to Section 5.1.  If financial statements of the Consolidated Group necessary to establish the appropriate Margin hereunder are not received by the Administrative Agent on or prior to the date required pursuant to Section 5.1, the applicable Margin shall be determined as if Level III Status were in effect, and such Level III Status shall remain in effect until such time as the required financial statements are so received.

“Material Adverse Effect” means, with respect to any event or circumstance, a material adverse effect on:

(a)the business, financial condition, operations or prospects of the Obligors, taken as a whole;

(b)the ability of an Obligor to perform its obligations under any Loan Document to which it is a party;

(c)the validity, enforceability or collectibility of any Loan Document; or

(d)the status, existence, perfection, priority or enforceability of any Lien granted pursuant to any Security Document.

“Maturity Date” means (a) with respect to the Revolving Credit Facility, July 30, 2012; (b) with respect to the Revolving Term Loan T01 Facility, December 31, 2011; (c) with respect to the Revolving Term Loan T06 Facility, December 31, 2011; and (d) with respect to the Revolving Letter of Credit Facility, April 30, 2013.

“Mortgage” means each mortgage or deed of trust, as the case may be, from the appropriate Obligor owning real property, pursuant to which such Obligor grants the Administrative Agent, for the benefit of the Lender Parties, a Lien on such real property and related improvements to secure payment of the Secured Obligations and all amendments and supplements thereto and modifications thereof, including without limitation, the Primary Mortgage.

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“Multi-Employer Plan” means a multi-employer plan (as defined in section 4001(a)(3) of ERISA) to which any Obligor or any ERISA Affiliate contributes or is obligated to contribute.

“Net Funds Generated” means, with respect to any Person for the applicable period, the sum of such Person’s:

(a)unit retains, retained patronage, depreciation and amortization, Interest Expense, Net Income from non-member business, Tax Expense deducted in determining such Net Income, and cash distributions from joint ventures; minus

(b)members’ investment retirements.

“Net Income” means, with respect to any Person for the applicable period, such Person’s after-tax net income as determined in accordance with GAAP.

“Net Inventory” means (a) all Inventory of any Obligor as determined on the basis of “Net Realizable Value”, less (b) crop payments to any Person by any Obligor.  For purposes of this definition of Net Inventory, “Net Realizable Value” means (i) the expected selling price of such Inventory, less (ii) the expected costs to complete and dispose of such Inventory, all as calculated in accordance with GAAP.

“Net Proceeds” means, with respect to any transaction, the gross proceeds from such transaction, less reasonable brokerage, legal, accounting and other fees and expenses, to the extent actually paid or payable in connection with such gross proceeds.

“Net Working Capital” means, as of any date of determination, the excess of current assets of the Consolidated Group (excluding cash and cash equivalents) over the current liabilities of the Consolidated Group.

“Non-Consenting Lender” has the meaning specified in Section 9.7.

“Note” means any Revolving Credit Facility Note, Revolving Term Loan T01 Note, Revolving Term Loan T06 Note or Revolving Letter of Credit Note.

“Notice” has the meaning specified in Section 9.5(b).

“Obligations” means (a) each and every debt, liability and other obligation of every type and description arising under or in connection with any of the Loan Documents that the Borrower may now or at any time hereafter owe to any Lender Party, whether such debt, liability or obligation now exists or is hereafter created or incurred, whether it is direct or indirect, due or to become due, absolute or contingent, primary or secondary, liquidated or unliquidated, or sole, joint, several or joint and several, and including specifically, but not limited to, due and owing to a Lender from the Borrower and all indebtedness, liabilities and obligations of the Borrower arising under or evidenced by the Notes; and (b) Rate Hedging Obligations.

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“Obligor” means either the Borrower or a Guarantor, if any, including but not limited to any Person that becomes a Guarantor after the Closing Date pursuant to Section 5.8.

“OFAC” has the meaning specified in Section 5.3.

“Operating Lease” means, with respect to any Person, any leasing or similar arrangement for the lease or use of any equipment or other personal property assets that, in accordance with GAAP, would not be characterized as a Capital Lease.

“Organizational Documents” means (a) with respect to any corporation, the articles of incorporation and bylaws of such corporation; (b) with respect to any partnership, the partnership agreement of such partnership; (c) with respect to any limited liability company, the articles of organization and operating agreement of such company; and (d) with respect to any entity, any and all other shareholder, partner or member control agreements and similar organizational documents relating to such entity.

“Other Taxes” means all present or future stamp or documentary taxes or any other excise or property taxes, charges or similar levies arising from any payment made hereunder or under any other Loan Document or from the execution, delivery or enforcement of, or otherwise with respect to, this Agreement or any other Loan Document.

“Participant” has the meaning specified in 9.3(d).

“Participation Agreements” has the meaning specified in Section 9.19.

“Patron” means a member of the Borrower.

“Pension Plan” means a pension plan (as defined in section 3(2) of ERISA) maintained for employees of any Obligor or any ERISA Affiliate and covered by Title IV of ERISA.

“Percentage” means, with respect to any Lender, the ratio of that Lender’s Credit Exposure to the aggregate Credit Exposure of all Lenders.  Where the context refers to a particular Facility, “Percentage” shall be determined with respect to that Facility only; provided, however, that from and after the occurrence of an Event of Default and during the continuance thereof, “Percentage” shall not be determined with respect to any particular Facility.

“Permitted Liens” has the meaning specified in Section 6.1.

“Person” means any individual, corporation, partnership, limited liability company, joint venture, association, joint-stock company, trust, unincorporated organization or Governmental Authority.

“Plan” means an employee benefit plan (as defined in Section 3(3) of ERISA) maintained for employees of any Obligor or ERISA Affiliate.

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“Platform” has the meaning specified in Section 9.5(a).

“Pricing Grid” means the pricing grid attached as Exhibit C.

“Primary Mortgage” means (a) that certain Restated Mortgage and Security Agreement Mortgage Short-Term Redemption dated as of September 15, 1998 from the Borrower to CoBank, as successor-in-interest to St. Paul Bank for Cooperatives, 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 a Modification Agreement to Restated Mortgage and Security Agreement Mortgage Short-Term Redemption dated as of January 15, 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 amended by a Second Modification Agreement to Restated Mortgage and Security Agreement Mortgage Short-Term Redemption dated as of July 31, 2006, which was recorded in Pembina County, North Dakota on September 6, 2006, Document No. 231885, Traill County, North Dakota on September 6, 2006, Document No. 167053, Clay County, Minnesota, and Polk County, Minnesota on September 7, 2006, Document No. 632920; and as further amended by a Third Modification Agreement to Restated Mortgage and Security Agreement Mortgage Short-Term Redemption of even date herewith; and (b) that certain Mortgage and Security Agreement dated as of January 15, 2003 from the Guarantor to CoBank, as collateral agent, which was recorded in Richland County, Montana on January 31, 2003, Document No. 516256, Book B-178 at pages 540-577, as amended by a First Amendment to Mortgage and Security Agreement of even date herewith.

“Prime Rate” means, for any day, the rate of interest referred to as the “U.S. Prime Rate” as reported on such day in the Money Rates section of The Wall Street Journal, or, if The Wall Street Journal shall cease publication or publication of the “U.S. Prime Rate”, any similar successor rate designated by the Administrative Agent in its reasonable discretion. Such rate is a reference rate and does not necessarily represent the lowest or best rate actually charged to any customer.  CoBank or any other Lender may make commercial loans or other loans at rates of interest at, above or below the Prime Rate.

“Prior Credit Agreement” has the meaning specified in the preamble.

“Quoted Rate” means, for a Quoted Rate Period, the per annum rate quoted by the Administrative Agent in its sole discretion, pursuant to Section 2.7.

“Quoted Rate Advance” means any Advance that bears interest at a rate determined by reference to a Quoted Rate.

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“Quoted Rate Loan” means any Loan that bears interest at a rate determined by reference to a Quoted Rate, including Quoted Rate Advances.

“Quoted Rate Period” means, relative to any Quoted Rate Loan, the period beginning on (and including) the date on which such Quoted Rate Loan is made, or continued as, or converted into, a Quoted Rate Loan pursuant to Sections 2.2(d), 2.4, 2.6 and 2.7 and shall end on (but exclude) the day that is determined by the Administrative Agent in its sole discretion, pursuant to Section 2.7; provided, however, that:

(a)the Quoted Rate Period shall begin on a Business Day and shall continue for a period of not less than 30 days;

(b)no more than ten (10) different Quoted Rate Periods may be outstanding at any one time for each Facility;

(c)if a Quoted Rate Period would otherwise end on a day that is not a Business Day, such Quoted Rate Period shall end on the next following Business Day; and

(d) no Quoted Rate Period may end later than the Maturity Date for the applicable Facility.

“Rate Hedging Arrangements” means any arrangement of a Person having the effect of hedging, limiting or putting a cap on, or collar around, the extent to which such Person would be adversely affected by fluctuations in interest rates, currency exchange rates, or commodity or energy prices.

“Rate Hedging Obligations” means any debt, liability or other obligation of any Obligor owing to any Lender or an Affiliate of a Lender with respect to any Rate Hedging Arrangements.

“Redeemable Capital Stock” means, with respect to any Person, any Capital Stock of such Person that, either by its terms, by the terms of any security into which it is convertible or exchangeable or otherwise, (a) is or upon the happening of an event or passage of time would be required to be redeemed (for consideration other than shares of the common equity capital of such Person) on or prior to the Maturity Date; (b) is redeemable at the option of the holder thereof (for consideration other than shares of the common equity capital of such Person); or (c) is convertible into or exchangeable for debt securities.

“Register” has the meaning specified in Section 9.3(c).

“Reportable Event” means a reportable event (as defined in section 4043 of ERISA), other than an event for which the 30-day notice requirement under ERISA has been waived in regulations issued by the Pension Benefit Guaranty Corporation.

“Required Lenders” means one or more Lenders (including Voting Participants in accordance with Section 9.3(g)) having an aggregate Percentage of at least 51%;

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provided, however, that if any Lender is a Defaulting Lender at such time of determination, the Percentage of such Defaulting Lender (including any of such Defaulting Lender’s Voting Participants) shall be excluded from the determination of Required Lenders; provided, further, that at any time during which only one Lender exists, “Required Lenders” means the Lender.

“Required Payment” has the meaning specified in Section 2.17(c).

“Restricted Payment” means any payment on account of any shares, interests, participations, convertible debentures, warrants or other equivalents of any Obligor, including but not limited to any dividend or distribution and any payment in purchase, redemption, retirement or other acquisition thereof, or any other payment or distribution for any reason to or for the account or benefit of any Affiliate, together with any redemption or purchase of, or distribution in respect of, any of the foregoing; not including, however, (a) payments to officers and Directors of the Borrower in the ordinary course of business pursuant to market terms and conditions; (b) redemptions of any shares, equity interests, participation or other equivalents of a deceased member of an Obligor; and (c) the annual revolvement of unit retains, or retained patronage that occurs in the ordinary course of business.

“Revolving Credit Facility” means the revolving credit facility being made available to the Borrower by the Lenders pursuant to Section 2.1(a).

“Revolving Credit Facility Advance” means a loan of funds by a Lender to the Borrower under the Revolving Credit Facility, including Base Rate Loans, LIBOR Loans and Quoted Rate Loans made thereunder.

“Revolving Credit Facility Borrowing” means a Borrowing consisting of a Revolving Credit Facility Advance by each of the Revolving Credit Facility Lenders.

“Revolving Credit Facility Commitment” means, with respect to each Lender, (a) the amount so designated opposite such Lender’s name on Exhibit A, plus or minus any such amount assumed or assigned pursuant to any Assignment and Assumption; or (b) as the context may require, the obligation of such Lender to make Revolving Credit Facility Advances under Section 2.1(a) and participate in Letters of Credit in accordance with Section 2.9(c).

“Revolving Credit Facility Lender” means any Lender with a Revolving Credit Facility Commitment.

“Revolving Credit Facility Note” means a promissory note of the Borrower payable to a Lender in the amount of such Lender’s Revolving Credit Facility Commitment, in substantially the form of Exhibit D.

“Revolving Credit Facility Outstanding Amount” means, as of the date of determination, the sum of (a) the aggregate principal amount of all outstanding Revolving Credit Facility Advances; and (b) the Letter of Credit Exposure under the Revolving Credit Facility.

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“Revolving Credit Facility Termination Date” means the earlier of (a) the applicable Maturity Date for the Revolving Credit Facility; and (b) the date on which the Revolving Credit Facility Commitments are terminated pursuant to Section 2.16(a) or 7.2 or reduced to zero pursuant to Section 2.16(a).

“Revolving Letter of Credit Advance” means a loan of funds by a Lender to the Borrower under the Revolving Letter of Credit Facility, including Base Rate Loans, LIBOR Loans and Quoted Rate Loans made thereunder.

“Revolving Letter of Credit Borrowing” means a Borrowing consisting of a Revolving Letter of Credit Advance by each of the Revolving Letter of Credit Lenders.

“Revolving Letter of Credit Commitment” means, with respect to each Lender, (a) the amount so designated opposite such Lender’s name on Exhibit A, plus or minus any such amount assumed or assigned pursuant to any Assignment and Assumption; or (b) as the context may require, the obligation of such Lender to make Revolving Letter of Credit Advances under Section 2.1(d) and participate in Letters of Credit in accordance with Section 2.9(c).

“Revolving Letter of Credit Commitment Termination Date” means the earlier of (a) the applicable Maturity Date for such Facility; and (b) the date on which the Revolving Letter of Credit Commitments are terminated pursuant to Section 2.16(a) or 7.2 or reduced to zero pursuant to Section 2.16(a).

“Revolving Letter of Credit Facility” means the revolving credit facility being made available to the Borrower by the Lenders pursuant to Section 2.1(d).

“Revolving Letter of Credit Facility Outstanding Amount” means, as of the date of determination, the sum of (a) the aggregate principal amount of all outstanding Revolving Letter of Credit Advances; and (b) the Letter of Credit Exposure under the Revolving Letter of Credit Facility.

“Revolving Letter of Credit Lender” means any Lender with a Revolving Letter of Credit Commitment.

“Revolving Letter of Credit Note” means a promissory note of the Borrower payable to a Lender in the amount of such Lender’s Revolving Letter of Credit Commitment, in substantially the form of Exhibit G.

“Revolving Term Loan T01 Advance” means a loan of funds by a Lender to the Borrower under the Revolving Term Loan T01 Facility, including Base Rate Loans, LIBOR Loans and Quoted Rate Loans made thereunder.

“Revolving Term Loan T01 Availability Termination Date” means August 1, 2010.

“Revolving Term Loan T01 Borrowing” means a Borrowing consisting of a Revolving Term Loan T01 Advance by each of the Revolving Term Loan T01 Lenders.

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“Revolving Term Loan T01 Commitment” means, with respect to each Lender, (a) the amount so designated opposite such Lender’s name on Exhibit A, plus or minus any such amount assumed or assigned pursuant to any Assignment and Assumption; or (b) as the context may require, the obligation of such Lender to make Revolving Term Loan T01 Advances under Section 2.1(b).

“Revolving Term Loan T01 Commitment Termination Date” means the earlier of (a) the applicable Maturity Date for such Facility; (b) the Revolving Term Loan T01 Availability Termination Date; and (c) the date on which the Revolving Term Loan T01 Commitments are terminated pursuant to Section 7.2.

“Revolving Term Loan T01 Facility” means the revolving credit facility being made available to the Borrower by the Lenders pursuant to Section 2.1(b).

“Revolving Term Loan T01 Facility Outstanding Amount” means, as of the date of determination, the aggregate principal amount of all outstanding Revolving Term Loan T01 Advances.

“Revolving Term Loan T01 Lender” means any Lender with a Revolving Term Loan T01 Commitment.

“Revolving Term Loan T01 Note” means a promissory note of the Borrower payable to a Lender in the amount of such Lender’s Revolving Term Loan T01 Commitment, in substantially the form of Exhibit E.

“Revolving Term Loan T06 Advance” means a loan of funds by a Lender to the Borrower under the Revolving Term Loan T06 Facility, including Base Rate Loans, LIBOR Loans and Quoted Rate Loans made thereunder.

“Revolving Term Loan T06 Availability Termination Date” means August 1, 2010.

“Revolving Term Loan T06 Borrowing” means a Borrowing consisting of a Revolving Term Loan T06 Advance by each of the Revolving Term Loan T06 Lenders.

“Revolving Term Loan T06 Commitment” means, with respect to each Lender, (a) the amount so designated opposite such Lender’s name on Exhibit A, plus or minus any such amount assumed or assigned pursuant to any Assignment and Assumption; or (b) as the context may require, the obligation of such Lender to make Revolving Term Loan T06 Advances under Section 2.1(c).

“Revolving Term Loan T06 Commitment Termination Date” means the earlier of (a) the applicable Maturity Date for such Facility; (b) the Revolving Term Loan T06 Availability Termination Date; and (c) the date on which the Revolving Term Loan T06 Commitments are terminated pursuant to Section 7.2.

“Revolving Term Loan T06 Facility” means the revolving credit facility being made available to the Borrower by the Lenders pursuant to Section 2.1(c).

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“Revolving Term Loan T06 Facility Outstanding Amount” means, as of the date of determination, (a) the aggregate principal amount of all outstanding Revolving Term Loan T06 Advances; and (b) the Letter of Credit Exposure under the Revolving Term Loan T06 Facility.

“Revolving Term Loan T06 Lender” means any Lender with a Revolving Term Loan T06 Commitment.

“Revolving Term Loan T06 Note” means a promissory note of the Borrower payable to a Lender in the amount of such Lender’s Revolving Term Loan T06 Commitment, in substantially the form of Exhibit F.

“Secured Obligations” means the Obligations arising under the Revolving Term Loan T01 Facility, the Revolving Term Loan T06 Facility and the Revolving Letter of Credit Facility.

“Securities” means any stock, shares, partnership interests, voting trust certificates, certificates of interest or participation in any profit-sharing agreement or arrangement, options, warrants, bonds, debentures, notes, or other evidences of indebtedness, secured or unsecured, convertible, subordinated, certificated or uncertificated, or otherwise, or in general any instruments commonly known as “securities” or any certificates of interest, shares or participations in temporary or interim certificates for the purchase or acquisition of, or any right to subscribe to, purchase or acquire, any of the foregoing.

“Security Documents” means each Mortgage and each and every additional agreement entered into by any Obligor for the benefit of the Lender Parties to secure payment of the Obligations or the Secured Obligations or otherwise relating to any Collateral.

“Shareholder” means, with respect to any Person, the holder of any legal or beneficial interest in any Capital Stock of that Person.

“Shareholders’ Equity” means, with respect to any Person, the difference (positive only) between (a) the total assets of such Person and (b) the total liabilities of such Person, all calculated in accordance with GAAP.

“Subordinated Debt” means all Debt that has been subordinated to payment of the Obligations on terms and conditions satisfactory to the Required Lenders, in their sole discretion, as to the right and time of payment and as to any other rights and remedies thereunder.

“Subordination Agreement” means an agreement (in form and substance satisfactory to the Required Lenders) executed and delivered by each holder of Subordinated Debt in favor of the Administrative Agent, for the benefit of the Lender Parties, pursuant to which such Person subordinates payment of such Subordinated Debt or other obligations as therein provided to payment of the Obligations to the extent provided therein and all amendments and supplements thereto and modifications thereof.

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“Subsidiary” means, with respect to a Person, any corporation, partnership, limited liability company or other entity of which more than 50% of the outstanding Capital Stock having general voting power under ordinary circumstances to elect a majority of the Governing Board of such entity, irrespective of whether or not at the time stock or membership interests of any other class or classes shall have or might have voting power by reason of the happening of any contingency, is at the time directly or indirectly owned by such Person.  Unless otherwise specified, “Subsidiary” means a Subsidiary of the Borrower.

“Synthetic Lease” means, with respect to any Person, any lease (including leases that may be terminated by the lessee at any time) of any property (whether real, personal or mixed) (a) that is not a Capital Lease, and (b) in respect of which the lessee retains or obtains ownership of the property so leased for federal income tax purposes, other than any such lease under which such Person is the lessor.

“Tax Expense” means, with respect to any Person for the applicable period, the amount of such Person’s taxes payable in cash, and the current portion of any deferred taxes, as a result of income earned by such Person.

“Taxes” means all present or future taxes, levies, imposts, duties, deductions, withholdings, assessments, fees or other charges imposed by any Governmental Authority, including any interest, additions to tax or penalties applicable thereto.

“UCC” means the Uniform Commercial Code as in effect from time to time in the state designated in Section 9.9(a) as the state whose laws shall govern this Agreement, or in any other state whose laws are held to govern this Agreement or any portion hereof.

“Unused Fee” has the meaning specified in Section 2.14(a).

“Unusual LIBOR Event” means the occurrence of any of the events listed in Section 2.18(a)(i)-(iii).

“Voting Participant” has the meaning specified in Section 9.3(g).

“Voting Participant Notification” has the meaning specified in Section 9.3(g).

Section 1.2Times.  All references to times of day in this Agreement shall be references to Denver, Colorado time unless otherwise specifically provided.

ARTICLE II
CREDIT FACILITIES

Section 2.1Commitments as to Facilities.

(a)Revolving Credit Facility.  Each Revolving Credit Facility Lender hereby agrees, on the terms and subject to the conditions herein set forth, including but not limited to satisfaction of all conditions set forth in Section 3.2, to make Revolving Credit

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Facility Advances to the Borrower from time to time during the period from the Closing Date to and including the Revolving Credit Facility Termination Date, in an aggregate amount at any time outstanding not to exceed such Revolving Credit Facility Lender’s Percentage of each Borrowing from time to time requested by the Borrower under the Revolving Credit Facility; provided, however, that (i) the Aggregate Short-Term Loan Amount shall at no time exceed the Borrowing Base; and (ii) no Revolving Credit Facility Lender’s Percentage of the Revolving Credit Facility Outstanding Amount shall at any time exceed such Revolving Credit Facility Lender’s Revolving Credit Facility Commitment.  Within the above limits, the Borrower may obtain Revolving Credit Facility Advances, prepay Revolving Credit Facility Advances in accordance with the terms hereof and reborrow Revolving Credit Facility Advances in accordance with the applicable terms and conditions of this Article II.

(b)Revolving Term Loan T01 Facility.  Each Revolving Term Loan T01 Lender hereby agrees, on the terms and subject to the conditions herein set forth, including but not limited to satisfaction of all conditions set forth in Section 3.2, to make Revolving Term Loan T01 Advances to the Borrower from time to time during the period from the Closing Date to and including the Revolving Term Loan T01 Commitment Termination Date, in an aggregate amount at any time outstanding not to exceed such Revolving Term Loan T01 Lender’s Percentage of each Borrowing from time to time requested by the Borrower under the Revolving Term Loan T01 Facility; provided, however, that no Revolving Term Loan T01 Lender’s Percentage of the Revolving Term Loan T01 Facility Outstanding Amount shall at any time exceed such Revolving Term Loan T01 Lender’s Revolving Term Loan T01 Commitment.  Within the above limits, the Borrower may obtain Revolving Term Loan T01 Advances, prepay Revolving Term Loan T01 Advances in accordance with the terms hereof and reborrow Revolving Term Loan T01 Advances in accordance with the applicable terms and conditions of this Article II.

(c)Revolving Term Loan T06 Facility.  Each Revolving Term Loan T06 Lender hereby agrees, on the terms and subject to the conditions herein set forth, including but not limited to satisfaction of all conditions set forth in Section 3.2, to make Revolving Term Loan T06 Advances to the Borrower from time to time during the period from the Closing Date to and including the Revolving Term Loan T06 Commitment Termination Date, in an aggregate amount at any time outstanding not to exceed such Revolving Term Loan T06 Lender’s Percentage of each Borrowing from time to time requested by the Borrower under the Revolving Term Loan T06 Facility; provided, however, that no Revolving Term Loan T06 Lender’s Percentage of the Revolving Term Loan T06 Facility Outstanding Amount shall at any time exceed such Revolving Term Loan T06 Lender’s Revolving Term Loan T06 Commitment.  Within the above limits, the Borrower may obtain Revolving Term Loan T06 Advances, prepay Revolving Term Loan T06 Advances in accordance with the terms hereof and reborrow Revolving Term Loan T06 Advances in accordance with the applicable terms and conditions of this Article II.

(d)Revolving Letter of Credit Facility.  Each Letter of Credit Lender hereby agrees, on the terms and subject to the conditions herein set forth, including but not

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limited to satisfaction of all conditions set forth in Section 3.2, to make Revolving Letter of Credit Advances to the Borrower from time to time during the period from the Closing Date to and including the Revolving Letter of Credit Commitment Termination Date, in an aggregate amount at any time outstanding not to exceed such Revolving Letter of Credit Lender’s Percentage of each Borrowing from time to time requested by the Borrower under the Revolving Letter of Credit Facility; provided, however, that (i) no Revolving Letter of Credit Lender’s Percentage of the Revolving Letter of Credit Facility Outstanding Amount shall at any time exceed such Revolving Letter of Credit Lender’s Revolving Letter of Credit Commitment and (ii) Revolving Letter of Credit Advances shall only be available hereunder to fund amounts drawn under Letters of Credit issued under the Revolving Letter of Credit Facility (or to reimburse a Letter of Credit Lender for its prior payment of such amounts).  Within the above limits, the Borrower may obtain Revolving Letter of Credit Advances, prepay Revolving Letter of Credit Advances in accordance with the terms hereof and reborrow Revolving Letter of Credit Advances in accordance with the applicable terms and conditions of this Article II, but only to the extent necessary to fund Letters of Credit.

Section 2.2Procedures for Advances.

(a)Borrowings.  Each Revolving Credit Facility Borrowing shall be funded by the Revolving Credit Facility Lenders; each Revolving Term Loan T01 Borrowing shall be funded by the Revolving Term Loan T01 Lenders; each Revolving Term Loan T06 Borrowing shall be funding by the Revolving Term Loan T06 Lenders; and each Revolving Letter of Credit Borrowing shall be funded by the Revolving Letter of Credit Lenders.  Each such Borrowing shall be funded as Base Rate Advances, LIBOR Advances or Quoted Rate Advances, as the Borrower shall specify in the related notice of proposed Borrowing.  Base Rate Loans, LIBOR Loans and Quoted Rate Loans may be outstanding at the same time.

(b)Base Rate Loans.  The principal amount of any Base Rate Loan shall be in an amount equal to $1,000,000 or a higher integral multiple of $1,000,000.  The Borrower shall give notice to the Administrative Agent of each proposed Borrowing that is to bear interest initially at a Base Rate not later than 1:00 p.m. (Denver time) on a Business Day that is at least 1 Business Day prior to the proposed date of such Borrowing.

(c)LIBOR Loans.  The principal amount of any LIBOR Loan shall be in an amount equal to $5,000,000 or a higher integral multiple of $1,000,000.  The Borrower shall give notice to the Administrative Agent of each proposed Borrowing that is to bear interest initially at a LIBO Rate not later than 11:00 a.m. (Denver time) on a Business Day that is at least 3 Business Days prior to the proposed date of such Borrowing.

(d)Quoted Rate Loans.  The principal amount of any Quoted Loan shall be in an amount equal to $2,000,000 or a higher integral multiple of $500,000.  The Borrower shall give notice to the Administrative Agent of each proposed Borrowing that is to bear interest initially at a Quoted Rate not later than 11:00 a.m. (Denver time) on a Business Day that is at least 1 Business Day prior to the proposed date of such Borrowing.

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(e)Notices; Proceeds.  Each notice described in subsections (b), (c) and (d) above shall be effective upon receipt by the Administrative Agent, shall be in writing or by telephone or telecopy transmission, to be confirmed in writing by the Borrower if so requested by the Administrative Agent (in the form of Exhibit H), and shall specify whether the Borrowing is to bear interest initially at a Base Rate, a LIBO Rate or a Quoted Rate and, in the case of a Borrowing that is to bear interest initially at a LIBO Rate, shall specify the Interest Period to be applicable thereto.  Promptly upon receipt of such notice (but in no event later than the close of business on the Business Day of receipt of such notice), the Administrative Agent shall advise each Lender to the applicable Facility of the proposed Borrowing.  Subject to satisfaction of the conditions precedent set forth in Article III with respect to such Borrowing, at or before 10:00 a.m. (Denver time) on the date of the requested Borrowing for a LIBOR Advance, Base Rate Advance or Quoted Rate Advance, each of the Revolving Credit Facility Lenders, Revolving Term Loan T01 Lenders, Revolving Term Loan T06 Lenders or Revolving Letter of Credit Lenders, as applicable, shall provide the Administrative Agent at the principal office of the Administrative Agent in Denver, Colorado (or such other office as the Administrative Agent may designate), with immediately available funds covering such Lender’s Percentage of such Borrowing.  The Administrative Agent shall pay over proceeds of such Borrowing to the Borrower, in immediately available funds, prior to the close of business on the date of the requested Borrowing.

Section 2.3Converting Base Rate Loans to LIBOR Loans; Procedures.  So long as no Default or Event of Default shall exist, the Borrower may convert all or any part of any outstanding Base Rate Loan into a LIBOR Loan by giving notice to the Administrative Agent of such conversion not later than 11:00 a.m. (Denver time) on a Business Day that is at least 3 Business Days prior to the date of the requested conversion.  Each such notice shall be irrevocable, shall be effective upon receipt by the Administrative Agent, shall be in writing or by telephone or telecopy transmission, to be confirmed in writing by the Borrower if so requested by the Administrative Agent (in the form of Exhibit I), shall specify the date and amount of such conversion, the total amount of the Base Rate Loan to be so converted and the Interest Period therefor.  Each conversion of a Base Rate Loan to a LIBOR Loan shall be on a Business Day, and the aggregate amount of each such conversion of a Base Rate Loan shall be in an amount equal to $5,000,000 or a higher integral multiple of $1,000,000.

Section 2.4Converting Base Rate Loans to Quoted Rate Loans; Procedures.  So long as no Default or Event of Default shall exist, the Borrower may convert all or any part of any outstanding Base Rate Loan into a Quoted Rate Loan by giving notice to the Administrative Agent of such conversion not later than 11:00 a.m. on a Business Day that is at least 1 Business Day prior to the date of the requested conversion.  Each such notice shall be irrevocable, shall be effective upon receipt by the Administrative Agent, shall be in writing or by telephone or telecopy transmission, to be confirmed in writing by the Borrower if so requested by the Administrative Agent (in the form of Exhibit J), shall specify the date and amount of such conversion and the total amount of the Loan to be so converted.  Each conversion of a Base Rate Loan to a Quoted Rate Loan shall be on a Business Day, and the aggregate amount of each such conversion shall be an amount equal to $2,000,000 or a higher integral multiple of $500,000.

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Section 2.5Procedures at End of an Interest Period.  Unless the Borrower requests a new LIBOR Loan in accordance with the procedures set forth in this Section, or prepays the principal of an outstanding LIBOR Loan at the expiration of an Interest Period, each Lender shall automatically and without request of the Borrower convert each LIBOR Loan to a Base Rate Loan on the last day of the relevant Interest Period.  So long as no Default or Event of Default shall exist, the Borrower may cause all or any part of any outstanding LIBOR Loan to continue to bear interest at a LIBO Rate after the end of the then-applicable Interest Period by notifying the Administrative Agent not later than 11:00 a.m. on a Business Day that is at least 3 Business Days prior to the first day of the new Interest Period.  Each such notice shall be effective when received by the Administrative Agent, shall be in writing or by telephone or telecopy transmission, to be confirmed in writing by the Borrower if so requested by the Administrative Agent (in the form of Exhibit K), and shall specify the first day of the applicable Interest Period, the amount of the expiring LIBOR Loan to be continued and the new Interest Period therefor.  Each new Interest Period shall begin on a Business Day and the amount of each Loan bearing a new LIBO Rate shall be in an amount equal to $5,000,000 or a higher integral multiple of $1,000,000.

Section 2.6Procedures at End of a Quoted Rate Period.  Unless the Borrower requests a new Quoted Rate Loan in accordance with the procedures set forth in this Section, or prepays the principal of an outstanding Quoted Rate Loan at the expiration of a Quoted Rate Period, each Lender shall automatically and without request of the Borrower convert each Quoted Rate Loan to a Base Rate Loan, on the last day of the relevant Quoted Rate Period.  So long as no Default or Event of Default shall exist, the Borrower may cause all or any part of any outstanding Quoted Rate Loan to continue to bear interest at a Quoted Rate after the end of the then applicable Quoted Rate Period by notifying the Administrative Agent not later than 11:00 a.m. on a Business Day that is at least 1 Business Day prior to the first day of the new Quoted Rate Period.  Each such notice shall be effective when received by the Administrative Agent, shall be in writing or by telephone or telecopy transmission, to be confirmed in writing by the Borrower if so requested by the Administrative Agent (in the form of Exhibit L), and shall specify the first day of the applicable Quoted Rate Period, the amount of the expiring Quoted Rate Loan to be continued and the new Quoted Rate Period therefor.  Each new Quoted Rate Period shall begin on a Business Day and the amount of each Loan bearing a new Quoted Rate shall be in an amount equal to $2,000,000 or a higher integral multiple of $500,000.

Section 2.7Procedures for Determining Quoted Rate and Quoted Rate Period applicable to Quoted Rate Loans.  Upon receipt of a request for a Quoted Rate Loan from the Borrower, the Administrative Agent shall notify the Borrower of the proposed Quoted Rate and the Quoted Rate Period to be applicable to the requested Quoted Rate Loan.  The Borrower may decline to accept a proposed Quoted Rate and the applicable Quoted Rate Period by notifying the Administrative Agent not later than the close of business on the same business day as the Borrower receives notice of the proposed Quoted Rate.  If the Borrower declines to accept a proposed Quoted Rate and the applicable Quoted Rate Period, the requested Quoted Rate Loan shall automatically and without further request of the Borrower be converted into a Base Rate Loan on the first day of the requested Quoted Rate Period.

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Section 2.8Setting and Notice of LIBO Rate and Base Rate.

(a)LIBO Rate.  The applicable LIBO Rate for each Interest Period shall be determined by the Administrative Agent on the second Business Day prior to the beginning of such Interest Period, whereupon notice thereof (which may be by telephone) shall be given by the Administrative Agent to the Borrower and each Lender, as applicable.  Each such determination of the LIBO Rate shall be conclusive and binding upon the parties hereto, in the absence of manifest error.  The Administrative Agent, upon written request of the Borrower or any Lender, shall deliver to the Borrower or such requesting Lender a statement showing the computations used by the Administrative Agent in determining the applicable LIBO Rate hereunder.

(b)Base Rate.  Each determination by the Administrative Agent of the applicable Base Rate shall be conclusive and binding upon the parties hereto, in the absence of manifest error.  The Administrative Agent, upon written request of the Borrower or any Lender, shall deliver to the Borrower or such requesting Lender a statement showing the computations used by the Administrative Agent in determining the applicable Base Rate hereunder.

Section 2.9Commitment to Issue Letters of Credit.  The Letter of Credit Issuer agrees, from the Closing Date to and including the sixtieth (60th) day prior to the Revolving Credit Facility Termination Date, the Revolving Term Loan T06 Commitment Termination Date or the Revolving Letter of Credit Commitment Termination Date, as applicable, to issue one or more letters of credit for the account of the Borrower.  Each Letter of Credit Lender under a Letter of Credit Facility agrees to participate in the risk of such letters of credit issued for the account of the Borrower under such Letter of Credit Facility, on the terms and subject to the conditions set forth below:

(a)Each letter of credit issued pursuant to this Section 2.9, shall be referred to herein as a “Letter of Credit.”  No Letter of Credit shall be issued by the Letter of Credit Issuer if, after giving effect to the issuance of such Letter of Credit (i) the Letter of Credit Exposure in respect of any Letter of Credit Facility would exceed the Letter of Credit Sublimit for such Facility; or (ii) with respect to a Letter of Credit issued under the Revolving Credit Facility, the Aggregate Short-Term Loan Amount would exceed the Borrowing Base.  The expiration date of any Letter of Credit shall not be later than the earlier of (A) one year after the date of issuance of such Letter of Credit; and (B) 30 days prior to the Maturity Date for the applicable Letter of Credit Facility.  Each Letter of Credit will be issued under and pursuant to the terms and conditions of such Letter of Credit Documents as the Letter of Credit Issuer may reasonably require.  The Borrower shall request a Letter of Credit upon not less than 1 Business Day prior written application on the Letter of Credit Issuer’s standard form or such other form as may be agreed upon by the Letter of Credit Issuer and the Borrower.  Any request for a Letter of Credit shall specify the Letter of Credit Facility under which such Letter of Credit is to be issued.  If any of the terms of any Letter of Credit Document are inconsistent with the terms and provisions of this Agreement, the terms and provisions of this Agreement shall govern.  The Letter of Credit Issuer shall not be obligated to issue a Letter of Credit unless on the date of issuance all of the conditions precedent specified in Section 3.2 shall have been satisfied as fully as if the issuance of such Letter of Credit were an Advance.  Promptly after issuance of a Letter of Credit pursuant hereto, the Administrative Agent

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shall so advise each Lender under the applicable Letter of Credit Facility of all relevant information with respect thereto.

(b)The Borrower will pay to the Administrative Agent, for the sole and exclusive account of the Letter of Credit Issuer, an issuing fee with respect to each Letter of Credit in an amount equal to the greater of (i) 0.10% of the amount of such Letter of Credit or (ii) $2,500 (the “Issuing Fee”).  The Borrower also will pay to the Administrative Agent, for the pro rata account of the applicable Letter of Credit Lenders, a commission with respect to each Letter of Credit (the “Letter of Credit Fee”) at an annual rate equal to the sum of (i) the applicable Margin for Letters of Credit in effect on the date payment thereof becomes due and payable hereunder with respect to Letters of Credit constituting standby letters of credit; and (ii) such fee as shall be determined by the Required Lenders under the applicable Letter of Credit Facility with respect to Letters of Credit constituting commercial letters of credit.  The Letter of Credit Fee shall be payable quarterly in arrears on the tenth calendar day following the end of each Fiscal Quarter, and on the Maturity Date, or upon such other terms as may be agreed upon by the Borrower and the Required Lenders at the time of issuance of any such Letter of Credit; provided, however, that from and after the occurrence of an Event of Default and continuing thereafter until such Event of Default shall be remedied to the written satisfaction of the Required Lenders, upon written notice from the Administrative Agent the applicable Margin payable hereunder with respect to each Letter of Credit shall be equal to the sum of (i) the Margin otherwise in effect with respect to such Letter of Credit; and (ii) 2.00%.  Letter of Credit Fees payable by the Borrower to the Lenders in accordance with this subsection (b) shall be shared among the applicable Letter of Credit Lenders on a pro rata basis in accordance with their respective Percentages.

(c)Upon issuance of a Letter of Credit under a Letter of Credit Facility hereunder, and without any further notice to any Lender, each Letter of Credit Lender under such Letter of Credit Facility shall be deemed to, and hereby irrevocably and unconditionally agrees to, purchase from the Letter of Credit Issuer an undivided participating interest in the Letter of Credit Issuer’s risk and obligation under the Letter of Credit issued under such Letter of Credit Facility, and in the obligation of the Letter of Credit Issuer to honor drafts thereunder, and in the amount of any drawing thereunder, and in all rights of the Letter of Credit Issuer to obtain reimbursement from the Borrower in the amount of such drawing, and all other rights of the Letter of Credit Issuer with respect thereto, in an amount equal to such Letter of Credit Lender’s Percentage of the maximum amount available to be drawn under such Letter of Credit and the amount of any drawing thereunder.  Whenever a draft submitted under a Letter of Credit is paid by the Letter of Credit Issuer, the Letter of Credit Issuer shall so notify the Administrative Agent, the Administrative Agent shall so notify each Letter of Credit Lender under the applicable Letter of Credit Facility and shall request immediate reimbursement from the Borrower for the amount of the draft.  If sufficient funds are not immediately paid to the Administrative Agent by the Borrower, the Borrower shall be deemed to have requested a Borrowing pursuant to Section 2.2 and the applicable Letter of Credit Lenders shall be notified of such request in accordance with Section 2.2 and shall fund such request for a Borrowing as Base Rate Advances (in accordance with their respective Percentages) for purposes of reimbursing the Letter of Credit Issuer for the amount of such draft so paid

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by the Letter of Credit Issuer (less any amounts realized by the Letter of Credit Issuer pursuant to the second sentence of this Section 2.9(c)).  If for any reason or under any circumstance (including but not limited to the occurrence of a Default or Event of Default or the failure to satisfy any of the conditions set forth in Section 3.2) the applicable Letter of Credit Lenders do not make the Advances as contemplated above and the Borrower does not otherwise reimburse the Letter of Credit Issuer for the amount of the draft so paid by the Letter of Credit Issuer, the Borrower shall nonetheless be obligated to reimburse the amount of the draft to the Letter of Credit Issuer, with interest upon such amount at the Default Rate from and after the date such draft is paid by the Letter of Credit Issuer until the amount thereof is repaid to the Letter of Credit Issuer in full.  If the Letter of Credit Issuer shall not have obtained reimbursement for any drawing under a Letter of Credit (whether from the Borrower or as proceeds of a Borrowing), upon demand of the Administrative Agent each applicable Letter of Credit Lender shall immediately advance the amount of its participation in such drawing to the Letter of Credit Issuer and shall be entitled to interest on such participating interest at the Default Rate until reimbursed in full by the Borrower.

(d)Each Letter of Credit Lender and the Borrower agree that, in paying any drawing under a Letter of Credit, the Letter of Credit Issuer shall not have any responsibility to obtain any document (other than any sight draft and certificates expressly required by such Letter of Credit) or to ascertain or inquire as to the validity or accuracy of any such document or the authority of the Person executing or delivering any such document.  The Letter of Credit Issuer shall not be liable to any Lender for (i) any action taken or omitted in connection herewith at the request or with the approval of the Lenders (including the Required Lenders, as applicable); (ii) any action taken or omitted in the absence of gross negligence or willful misconduct; or (iii) the due execution, effectiveness, validity or enforceability of any document executed in connection with a Letter of Credit.

(e)The Borrower hereby assumes all risks of the acts or omissions of any beneficiary or transferee with respect to its use of any Letter of Credit; provided that this assumption is not intended to, and shall not, preclude the Borrower’s pursuing such rights and remedies as it may have against the beneficiary or transferee at law or under any other agreement.  The Letter of Credit Issuer shall not be liable or responsible for any of the matters described in clauses (i) through (vii) of subsection (f) below.  In furtherance and not in limitation of the foregoing: (i) the Letter of Credit Issuer may accept documents that appear on their face to be in order, without responsibility for further investigation, regardless of any notice or information to the contrary; and (ii) the Letter of Credit Issuer shall not be responsible for the validity or sufficiency of any instrument transferring or assigning, or purporting to transfer or assign, a Letter of Credit or the rights or benefits thereunder or proceeds thereof, in whole or in part, which may prove to be invalid or ineffective for any reason.

(f)The obligation of the Borrower under this Agreement to reimburse the Letter of Credit Issuer for a drawing under a Letter of Credit shall be unconditional and irrevocable, and shall be paid strictly in accordance with the terms of this Agreement under all circumstances, including the following:

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(i)any lack of validity or enforceability of this Agreement or any Letter of Credit Document;

(ii)any change in the time, manner or place of payment of, or in any other term of, all or any of the obligations of the Borrower in respect of any Letter of Credit or any other amendment or waiver of, or any consent to or departure from, any Letter of Credit Document;

(iii)the existence of any claim, set-off, defense or other right that the Borrower may have at any time against any beneficiary or any transferee of any Letter of Credit (or any Person for whom any such beneficiary or any such transferee may be acting), the Letter of Credit Issuer or any other Person, whether in connection with this Agreement, the transactions contemplated hereby or any unrelated transaction;

(iv)any draft, demand, certificate or 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; or any loss or delay in the transmission or otherwise of any document required in order to make a drawing under any Letter of Credit;

(v)any payment by the Letter of Credit Issuer under any Letter of Credit against presentation of a draft or certificate that does not strictly comply with the terms of any Letter of Credit; or any payment made by the Letter of Credit Issuer under any Letter of Credit to any Person purporting to be a trustee in bankruptcy, debtor-in-possession, assignee for the benefit of creditors, liquidator, receiver or other representative of or successor to any beneficiary or any transferee of any Letter of Credit, including any arising in connection with any insolvency proceeding;

(vi)any exchange, release or non-perfection of any collateral, or any release or amendment or waiver of, consent to or departure from, any other guarantee, for all or any of the obligations of the Borrower in respect of any Letter of Credit; and

(vii)any other circumstance or happening whatsoever, whether or not similar to any of the foregoing, including any other circumstance that might otherwise constitute a defense available to, or a discharge of, the Borrower or any Guarantor.

(g)Notwithstanding anything in this Section 2.9 to the contrary, including particularly subsections (e) and (f) above, the Borrower may have a claim against the Letter of Credit Issuer and the Letter of Credit Issuer may be liable to the Borrower, to the extent, but only to the extent, of any direct, as opposed to consequential or exemplary, damages suffered by the Borrower that the Borrower proves were caused by the Letter of Credit Issuer’s willful misconduct or gross negligence or the willful and wrongful failure by the Letter of Credit Issuer to pay under any Letter of Credit after the presentation to

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the Letter of Credit Issuer by the beneficiary of a sight draft and certificate strictly complying with the terms and conditions of such Letter of Credit.

(h)The Borrower shall indemnify, protect, defend and hold harmless each Indemnitee from and against all losses, liabilities, claims, damages, judgments, costs and expenses, including but not limited to all reasonable attorneys’ fees and legal expenses, incurred by the Indemnitees or imposed upon the Indemnitees at any time by reason of the issuance, demand for honor or honor of any Letter of Credit or the enforcement, protection or collection of the Letter of Credit Issuer’s claims against the Borrower under this Section 2.9 or by reason of any act or omission of any Indemnitee in connection with any of the foregoing; provided, however, that such indemnification shall not extend to losses, liabilities, claims, damages, judgments, costs and expenses to the extent arising from any act or omission of an Indemnitee that constitutes gross negligence or willful misconduct.

(i)The Borrower will pay to the Letter of Credit Issuer, on demand, all administrative fees charged by the Letter of Credit Issuer in the ordinary course of business in connection with the issuance of letters of credit, honoring of drafts under letters of credit, amendments thereto, transfers thereof and all other activity with respect to letters of credit, at the then-current rates established by the Letter of Credit Issuer from time to time for such services rendered on behalf of customers of the Letter of Credit Issuer generally.

Section 2.10Interest on Loans.  The Borrower will pay interest on the unpaid principal amount of each Loan for the period commencing on the date of this Agreement until the unpaid principal amount thereof is paid in full, in accordance with the following:

(a)Base Rate Loans.  Subject to subsection (d) below, while any outstanding principal of a Loan constitutes a Base Rate Loan, the outstanding principal balance thereof shall bear interest at an annual rate at all times equal to the Base Rate applicable to such Base Rate Loan.

(b)LIBOR Loans.  Subject to subsection (d) below, while any outstanding principal of a Loan constitutes a LIBOR Loan, the outstanding principal balance thereof shall bear interest for the applicable Interest Period at an annual rate equal to the LIBO Rate established with respect such LIBOR Loan.

(c)Quoted Rate Loans.  Subject to subsection (d) below, while any outstanding principal of a Loan constitutes a Quoted Rate Loan, the outstanding principal balance thereof shall bear interest at an annual rate at all times equal to the Quoted Rate applicable to such Quoted Rate Loan.

(d)Default Rate.  From and after written notice from the Administrative Agent to the Borrower following the occurrence of an Event of Default and continuing thereafter until such Event of Default shall be remedied to the written satisfaction of the Required Lenders, the outstanding principal balance of each Loan shall bear interest at an annual rate equal to the sum of (i) the higher of the Base Rate or any other interest rate

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then in effect with respect to such Loan; plus (ii) two percent (2.00%) (the “Default Rate”).  In addition, any unreimbursed amounts payable under Section 2.9 and all fees, indemnification obligations and other Obligations not paid when due hereunder shall bear interest, until paid in full, at an annual rate equal to the Default Rate.

(e)Savings Clause.  Notwithstanding anything in this Section 2.10 to the contrary, at no time shall the Borrower be obligated or required to pay interest on any Obligation at a rate that could subject any Lender to either civil or criminal liability as a result of being in excess of the maximum interest rate permitted by applicable law.  If, under the terms of this Agreement or any other Loan Document, the Borrower is at any time required or obligated to pay interest on any Obligation at a rate in excess of such maximum rate, the LIBO Rate, Base Rate, Quoted Rate or Default Rate, as the case may be, shall be deemed to be immediately reduced to such maximum rate and all previous payments in excess of the maximum rate shall be deemed to have been payments in reduction of principal and not on account of any interest thereon due hereunder.  All sums paid or agreed to be paid to a Lender for the use, forbearance or retention of any Obligation, shall, to the extent permitted by applicable law, be amortized, prorated, allocated and spread throughout the full stated term of the Obligation to which such payment applies until payment in full so that the rate or amount of interest on account of any such Obligation does not exceed the maximum lawful rate of interest from time to time in effect and applicable to such Obligation for so long as the Obligation is outstanding.

Section 2.11Obligation to Repay Advances; Representations.  The Borrower shall be obligated to repay all Advances under this Article II notwithstanding the failure of the Administrative Agent to receive any written request therefor or written confirmation thereof and notwithstanding the fact that the Person requesting the same was not in fact authorized to do so.  Any request for a Credit Extension, whether written, telephonic, telecopy or otherwise, shall be deemed to be a representation by the Borrower that (i) the statements set forth in Section 3.2 are correct as of the time of the request; and (ii) if such Credit Extension is a Revolving Credit Facility Borrowing, the amount of the requested Borrowing, when added to the Aggregate Short-Term Loan Amount, would not cause the Aggregate Short-Term Loan Amount to exceed the Borrowing Base.

Section 2.12Notes; Payment Dates; Mandatory Prepayments.

(a)Promissory Notes Optional.  The Borrower’s obligation to repay the principal of, and interest on, the Advances made by each Lender shall be evidenced in the Register and shall, if requested by such Lender, also be evidenced by a Note, duly executed and delivered by the Borrower, with blanks appropriately completed, with respect to Advances made by such Lender.

(b)Interest.  The Borrower shall pay accrued but unpaid interest on each Loan on each Interest Payment Date with respect to that Loan.

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(c)Revolving Credit Facility Principal.  The aggregate unpaid principal amount of all Revolving Credit Facility Advances shall be payable on the applicable Maturity Date.

(d)Revolving Term Loan T01 Facility Principal.  (i) A principal payment of $17,000,000 shall be due and payable on December 31, 2009 (but such amount shall not reduce the Revolving Term Loan T01 Commitment); (ii) a principal payment of fifty percent of the then-outstanding principal balance of the Revolving Term Loan T01 Facility shall be due and payable on December 31, 2010; and (iii) the entire remaining unpaid principal balance of the Revolving Term Loan T01 Facility shall be due and payable on the applicable Maturity Date.

(e)Revolving Term Loan T06 Facility Principal.  (i) A principal payment equal to fifty percent of the then-outstanding principal balance of the Revolving Term Loan T06 Facility shall be due and payable on December 31, 2010; and (ii) the entire remaining unpaid principal balance of the Revolving Term Loan T06 Facility shall be due and payable on the applicable Maturity Date.

(f)Revolving Letter of Credit Facility Principal.  The aggregate unpaid principal amount of all Revolving Letter of Credit Advances shall be payable on the applicable Maturity Date.

(g)Mandatory Prepayments From Other Sources.  In addition to the payments described elsewhere in this Section 2.12, promptly following the receipt thereof, the Borrower shall prepay the Obligations in an amount equal to 100% of the Net Proceeds realized by any Obligor from:

(i) any sale, transfer or other disposition (including pursuant to a sale and leaseback transaction) of any property or asset of any Obligor, other than dispositions described in clauses (a), (b) or (c) of Section 6.8;

(ii) 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 Obligor, 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.

Nothing in this paragraph (g) shall be deemed to authorize or constitute consent to any transaction (including but not limited to any sale of assets or the issuance of any debt or equity) that otherwise would be prohibited or restricted under this Agreement or under any other Loan Document.  Promptly upon the receipt by any Obligor of any amounts described in this paragraph (g), the treasurer of the Borrower will deliver a certificate to the Administrative Agent specifying the amount of Net Proceeds received by such Obligor, the date such amounts were received and describing the sale, casualty or condemnation giving rise thereto in reasonable detail.  On or before the one year anniversary of an Obligor receiving any amounts described in this paragraph (g), the

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treasurer of the Borrower will deliver a certificate to the Administrative Agent certifying that all such amounts have been applied in accordance with this paragraph (g).

(h)Application of Mandatory Prepayments.

(i)All amounts received pursuant to paragraph (g) shall be applied in the following order:

(A)first, to the principal balance of the Revolving Term Loan T01 Facility, the Revolving Term Loan T06 Facility and the Revolving Letter of Credit Facility, to be applied pro rata in inverse order of their maturities, and, if the amount so prepaid exceeds $15,000,000, the Commitment Amount for each such Facility shall be permanently reduced on a pro rata basis by the amount prepaid;

(B)second, to the principal balance of the Revolving Credit Facility;

(C)third, to fund a cash collateral account equal to the Letter of Credit Exposure, which cash collateral account will be held by the Administrative Agent (or its designee), without interest, as a pledged cash collateral account and promptly applied to reimbursement of all drafts submitted under outstanding Letters of Credit;

(D)fourth, to accrued but unpaid interest on the Facilities; and

(E)fifth, to any remaining Obligations, in such order as the Required Lenders may in their sole discretion designate.

(ii)Unless otherwise provided in this Agreement or the other Loan Documents, payments from the Borrower of principal within any category above shall be applied first to the principal of Base Rate Loans, then to the principal of Quoted Rate Loans, and then to the principal of LIBOR Loans (and, among such Quoted Rate Loans and LIBOR Loans, first to those with the earliest expiring Interest Periods).

(i)Mandatory Prepayments as a Result of Excess Borrowing.  If the Aggregate Short-Term Loan Amount shall on any date exceed the Borrowing Base, the Borrower, not later than the next Business Day following such date, shall prepay the Revolving Credit Facility Advances in an amount equal to such excess, without notice or demand by the Administrative Agent or any Lender.

Section 2.13Computation of Interest and Fees.  Interest accruing on the Loans and on the unreimbursed portion of any Letter of Credit Exposure, all Letter of Credit Fees, Unused Fees and other fees described in Section 2.14 shall be computed on the basis of the actual number of days elapsed in a year of 360 days.

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Section 2.14          Fees.  The Borrower will pay fees to the Lender Parties in accordance with the following:

(a)           Unused Fee.  The Borrower will pay to the Administrative Agent, for the pro rata account of the Lenders, an ongoing Unused Fee (the “Unused Fee”) computed as the product of (i) an annual rate equal to the applicable Margin relating to the Unused Fee; plus (ii) the daily average amount by which (1) the sum of the Aggregate Commitment Amount exceeds (2) the Facility Outstanding Amount, from the Closing Date to and including the Maturity Date, payable on or prior to the 10th day of each calendar month in arrears, as accrued through the last day of immediately preceding the calendar month.  Any Unused Fee remaining unpaid on the Maturity Date shall be due and payable on such date.  The Unused Fee shall be shared by the Lenders on the basis of their respective Percentages.

(b)           Fee Letter.  The Borrower shall pay to the Administrative Agent all fees required to be paid pursuant to the Fee Letter.

Section 2.15        Use of Proceeds.  Proceeds of the Facilities will be used to (i) repay, or refinance, as the case may be, the Existing Indebtedness; (ii) provide for the Borrower’s working capital and general corporate purposes; (iii) issue Letters of Credit; (iv) provide back-up liquidity for the issuance by the Borrower of commercial paper; and (v) pay fees and expenses in connection with the negotiation, execution and delivery of this Agreement and all other matters related thereto.

Section 2.16        Voluntary Increases, Reduction or Termination of the Commitments; Prepayments.

(a)           Reduction or Termination of Revolving Credit Facility Commitment Amount. The Borrower, from time to time upon not less than 30 Business Days’ prior written notice to the Administrative Agent, may permanently reduce the Commitment Amount for any Facility; provided, however, that no such reduction shall reduce the Commitment Amount for such Facility to an amount less than the Facility Outstanding Amount for such Facility.  Any voluntary reduction shall be pro rata as to all Commitments for that Facility according to each Lender’s Percentage and shall be in an aggregate amount equal to $5,000,000 or a higher integral multiple of $1,000,000.  The Borrower at any time prior to the applicable Commitment Termination Date may terminate such Commitment by (i) providing to the Administrative Agent not less than 30 Business Days’ prior written notice of its intention to so terminate such Commitment; and (ii) making payment in full of all Loans outstanding and all other monetary Obligations and terminating, or making a cash deposit with respect to all outstanding Letters of Credit for such Facility.

(b)           Optional Increases of Commitment Amount.

(i)            Request to Increase.  Following the Closing Date, and provided no Event of Default has occurred and is continuing, the Borrower may from time to time propose to increase the Commitment Amount for any Facility in accordance

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with this Section 2.16(b).  The aggregate principal amount of the increase to the Commitment Amount for such Facility (the “Increased Facility Amount”) shall not exceed $100,000,000 and each increase shall be at least $10,000,000.  The Borrower shall provide notice to the Administrative Agent of any requested Increased Facility Amount.  The Administrative Agent may, in its sole discretion, offer one or more Lenders the opportunity (but not the obligation), for a period of 20 days following receipt of such notice, to elect by notice to the Borrower and the Administrative Agent to subscribe to participate in the Increased Facility Amount to the extent of its Percentage.  Each such Lender that fails to respond to such a notice shall be deemed to have elected not to increase its Percentage in such Facility.

(ii)           Allocation of Unsubscribed Amounts.  If any Lender of such increased Facility elects not to increase its Commitment pursuant to this Section 2.16(b), the Administrative Agent may place such unsubscribed amount with one or more other financial institutions that qualify as Eligible Lenders and may (but need not) be existing Lenders.  The sum of the portion of the Increased Facility Amount subscribed under this Section 2.16(b) and the amount placed pursuant to the preceding sentence shall not exceed the Increased Facility Amount.

(iii)          Conditions Precedent.  Any increase in the Commitment Amount for such Facility under this Section 2.16(b) shall become effective upon the receipt by the Administrative Agent of:

(A)          an amendment to this Agreement, duly signed by the Borrower, the Administrative Agent and each Lender whose Commitment will be increased and each other Lender or Eligible Lender who has subscribed to provide a portion of the Increased Facility Amount, modifying the applicable definitions, setting forth any other agreements of the Borrower, the Administrative Agent and such Lenders with respect to pricing affecting the Increased Facility Amount, and setting forth the agreement of each Eligible Lender to become a party to this Agreement and to be bound by all the terms and provisions hereof;

(B)          amendments to any other Loan Documents reasonably requested by the Administrative Agent in relation to the Increased Facility Amount, which amendments the Administrative Agent is hereby authorized to execute and deliver on behalf of the Lenders;

(C)          applicable Notes, duly executed by the Borrower, as any Lender or Eligible Lender may require;

(D)          evidence of appropriate corporate authorization on the part of the Borrower with respect to the Increased Facility Amount and the execution and delivery of the documents described in this Section 2.16(b)(iii);

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(E)           such opinions of counsel for the Borrower and other assurances as the Administrative Agent may reasonably request; and

(F)           reimbursement of the Administrative Agent’s out-of-pocket costs and expenses (including reasonable attorney’s fees) incurred in connection therewith.

(c)           Prepayments.  The Borrower from time to time may voluntarily prepay the Loans in whole or in part.  In the event of either mandatory prepayment or voluntary prepayment hereunder, (i) any prepayment of a Facility shall be applied against outstanding Loans of each Lender under that Facility pro rata according to each Lender’s Percentage of that Facility; (ii) each prepayment of the Loans shall be made to the Administrative Agent not later than 2:00 p.m. on a Business Day, and funds received after that hour shall be deemed to have been received by the Administrative Agent on the next following Business Day; (iii) each prepayment of a Fixed Rate Loan shall be made upon not less than three Business Days notice to the Administrative Agent and shall be accompanied by accrued interest on such prepayment through the date of prepayment and additional compensation calculated in accordance with Section 2.21; (iv) each prepayment of a Fixed Rate Loan shall be in an aggregate amount equal to the applicable minimum Loan amount specified in Section 2.5 for LIBOR Loans and the applicable minimum Loan amount specified in Section 2.6 for Quoted Rate Loans and, after application of any such prepayment, shall not result in a Fixed Rate Loan remaining outstanding in an amount less than such minimum Loan amount; and (v) each partial prepayment of Base Rate Loans shall be in an aggregate amount equal to $1,000,000 or a higher integral multiple of $1,000,000, unless (in either case) the aggregate outstanding balance of all Loans under the Facility being prepaid is less than such minimum Loan amount, in which event any such prepayment may be in such lesser amount.  Unless otherwise provided in this Agreement or the other Loan Documents, prepayments from the Borrower of principal within any Facility above shall be applied first to the principal of Base Rate Loans and Quoted Rate Loan, on a pro rata basis, and then to the principal of LIBOR Loans (and, among such LIBOR Loans, first to those with the earliest expiring Interest Periods).

Section 2.17          Payments.

(a)           Making of Payments.  All payments of principal of and interest due with respect to a Facility shall be made to the Administrative Agent for the account of the applicable Lenders pro rata according to their respective Percentages of such Facility.  All payments of fees pursuant to Section 2.14 shall be made to the Administrative Agent for the account of the Administrative Agent or the Lenders, as specified in Section 2.14. All payments hereunder shall be made to the Administrative Agent at its office in Denver, Colorado (or at such other location as the Administrative Agent may direct by notice to the Borrower) not later than 2:00 p.m. on the date due, in immediately available funds, without set-off or counterclaim, and funds received after that hour shall be deemed to have been received on the next following Business Day.  The Borrower hereby authorizes the Administrative Agent to charge the Borrower’s demand deposit account maintained with the Administrative Agent (or with any other Lender) for the amount of

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any Obligation on its due date, but the Administrative Agent’s failure to so charge any such account shall in no way affect the obligation of the Borrower to make any such payment.  The Administrative Agent shall remit to each Lender in immediately available funds on the same Business Day as received by the Administrative Agent its share of all such payments received by the Administrative Agent for the account of such Lender.  All payments under Sections 2.18, 2.19 or 2.21 shall be made by the Borrower directly to the Lender entitled thereto.

(b)           Effect of Payments.  Each payment by the Borrower to the Administrative Agent for the account of any Lender pursuant to Section 2.17(a) shall be deemed to constitute payment by the Borrower directly to such Lender, provided, however, that in the event any such payment by the Borrower to the Administrative Agent is required to be returned to the Borrower for any reason whatsoever, then the Borrower’s obligation to such Lender with respect to such payment shall be deemed to be automatically reinstated.

(c)           Distributions by Administrative Agent.  Unless the Administrative Agent shall have been notified by a Lender or the Borrower prior to the date on which such Lender or the Borrower is scheduled to make payment to the Administrative Agent of (in the case of a Lender) the proceeds of an Advance to be made by it hereunder or (in the case of the Borrower) a payment to the Administrative Agent for the account of one or more of the Lenders hereunder (such payment by a Lender or the Borrower (as the case may be) being herein called a “Required Payment”), which notice shall be effective upon receipt, that it does not intend to make the Required Payment to the Administrative Agent, the Administrative Agent may assume that the Required Payment has been made and may, in reliance upon such assumption (but shall not be required to), make the amount thereof available to the intended recipient(s) on such date and, if such Lender or the Borrower (as the case may be) has not in fact made the Required Payment to the Administrative Agent, the recipient(s) of such payment shall, on demand, repay to the Administrative Agent the amount so made available together with interest thereon for each day during the period commencing on the date such amount was so made available by the Administrative Agent until the date the Administrative Agent recovers such amount at an annual rate (i) equal to the Federal Funds Rate for such day, in the case of a Required Payment owing by a Lender; or (ii) equal to the applicable rate of interest as provided in this Agreement, in the case of a Required Payment owing by the Borrower.

(d)           Setoff.  The Borrower agrees that each Lender, subject to such Lender’s sharing obligations set forth in Section 8.6, shall have all rights of setoff and bankers’ lien provided by applicable law, and in addition thereto, the Borrower agrees that if at any time any Obligation is due and owing by the Borrower under this Agreement to any Lender at a time when an Event of Default has occurred and is continuing hereunder, any Lender may apply any and all balances, credits, and deposits, accounts or moneys of the Borrower then or thereafter in the possession of such Lender (excluding, however, any trust or escrow accounts held by the Borrower for the benefit of any third party) to the payment thereof.

(e)           Due Date Extension.  Subject to subsection (b) of the definition of “Interest Period” with respect to LIBOR Loans, if any payment of principal of or interest

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on any Loan or any fees payable hereunder falls due on a day that is not a Business Day, then such due date shall be extended to the next following Business Day, and (in the case of principal) additional interest shall accrue and be payable for the period of such extension.

(f)            Application of Payments.  Except as otherwise provided herein, so long as no Default or Event of Default has occurred and is continuing hereunder, each payment received from the Borrower shall be applied to such Obligation as the Borrower shall specify by notice to be received by the Administrative Agent on or before the date of such payment.  In the absence of such notice and in any event during the continuance of any Default or Event of Default, (i) payments received from the Borrower (not constituting proceeds of Collateral) shall be applied, first, to payment of the Obligations, other than the Rate Hedging Obligations, in such order of application as the Required Lenders shall determine in their sole discretion, provided, however, that the application of payments to any Facility shall be distributed ratably to all Lenders in such Facility, and second, ratably, to payment of the Rate Hedging Obligations, and (ii) proceeds of Collateral, after payment of costs of collection thereof, shall be applied, first, ratably, to payment of the Revolving Term Loan T01 Facility, the Revolving Term Loan T06 Facility and the Revolving Letter of Credit Facility, and applied to principal and interest due thereunder in accordance with the Intercreditor Agreement, and second, to any remaining Obligations, in such order of application as the Required Lenders shall determine in their sole discretion.  Any such amounts so received on account of outstanding Letters of Credit issued under a Facility will be used to fund a cash collateral account equal to the Letter of Credit Exposure, to be held by the Administrative Agent (or its designee), without interest, as a pledged account and promptly applied to reimbursement of drafts submitted under such Letters of Credit.  Concurrently with each remittance to any Lender of its appropriate share of any such payment (based upon such Lender’s Percentage of the Facility to which such payment relates), the Administrative Agent shall advise such Lender as to the application of such payment.

Section 2.18        Increased Costs; Funding Exceptions.

(a)           Increased Costs Generally.  If any Change in Law shall:

(i)            impose, modify or deem applicable any reserve, special deposit, compulsory loan, insurance charge or similar requirement against assets of, deposits with or for the account of, or credit extended or participated in by, any Lender (except any reserve requirement reflected in the LIBO Rate) or the Letter of Credit Issuer;

(ii)           subject any Lender or the Letter of Credit Issuer to any tax of any kind whatsoever with respect to this Agreement, any Letter of Credit, any participation in a Letter of Credit or any Fixed Rate Loan made by it, or change the basis of taxation of payments to such Lender or the Letter of Credit Issuer in respect thereof (except for Indemnified Taxes or Other Taxes covered by Section 2.19 and the imposition of, or any change in the rate of, any Excluded Tax payable by such Lender or the Letter of Credit Issuer); or

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(iii)          impose on any Lender or the Letter of Credit Issuer or the London interbank market any other condition, cost or expense affecting this Agreement or Fixed Rate Loans made by such Lender or any Letter of Credit or participation therein;

and the result of any of the foregoing shall be to increase the cost to such Lender of making or maintaining any Fixed Rate Loan (or of maintaining its obligation to make any such Loan), or to increase the cost to such Lender or the Letter of Credit Issuer of participating in, issuing or maintaining any Letter of Credit (or of maintaining its obligation to participate in or to issue any Letter of Credit), or to reduce the amount of any sum received or receivable by such Lender or the Letter of Credit Issuer hereunder (whether of principal, interest or any other amount) then, upon request of such Lender or the Letter of Credit Issuer, the Borrower will pay to such Lender or the Letter of Credit Issuer, as the case may be, such additional amount or amounts as will compensate such Lender or the Letter of Credit Issuer, as the case may be, for such additional costs incurred or reduction suffered.

(b)           Capital Requirements.  If any Lender or the Letter of Credit Issuer determines that any Change in Law affecting such Lender or the Letter of Credit Issuer or any lending office of such Lender or such Lender’s or the Letter of Credit Issuer’s holding company, if any, regarding capital requirements has or would have the effect of reducing the rate of return on such Lender’s or the Letter of Credit Issuer’s capital or on the capital of such Lender’s or the Letter of Credit Issuer’s holding company, if any, as a consequence of this Agreement, the Commitments of such Lender or the Loans made by, or participations in Letters of Credit held by, such Lender, or the Letters of Credit issued by the Letter of Credit Issuer, to a level below that which such Lender or the Letter of Credit Issuer or such Lender’s or the Letter of Credit Issuer’s holding company could have achieved but for such Change in Law (taking into consideration such Lender’s or the Letter of Credit Issuer’s policies and the policies of such Lender’s or the Letter of Credit Issuer’s holding company with respect to capital adequacy), then from time to time the Borrower will pay to such Lender or the Letter of Credit Issuer, as the case may be, such additional amount or amounts as will compensate such Lender or the Letter of Credit Issuer or such Lender’s or the Letter of Credit Issuer’s holding company for any such reduction suffered.

(c)           Basis for Determining Interest Rate Inadequate or Unfair.  If with respect to any Interest Period:

(i)            the Administrative Agent determines that, or the Required Lenders determine and advise the Administrative Agent that, deposits in U.S. dollars (in the applicable amounts) are not being offered in the London interbank eurodollar market for such Interest Period; or

(ii)           the Administrative Agent determines, or the Required Lenders determine and advise the Administrative Agent (which determination shall be binding and conclusive on all parties), that by reason of circumstances affecting

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the London interbank eurodollar market, adequate and reasonable means do not exist for ascertaining the applicable LIBO Rate; or

(iii)          the Administrative Agent determines, or the Required Lenders determine and advise the Administrative Agent, that the LIBO Rate determined in accordance with this Agreement will not adequately and fairly reflect the cost to the Lenders of maintaining or funding a LIBOR Loan for such Interest Period, or that the making or funding of a LIBOR Loan has become impracticable or uneconomic as a result of an event occurring after the date of this Agreement which materially affects such LIBOR Loans;

then the Administrative Agent shall promptly notify the affected parties and (A) in the event of any occurrence described in the foregoing clause (i), the Borrower shall enter into good faith negotiations with each affected Lender in order to determine an alternate method to determine an appropriate interest rate for such Lender, and during the pendency of such negotiations with any Lender, such Lender shall be under no obligation to make any new LIBOR Loans, and (B) in the event of any occurrence described in the foregoing clauses (ii) or (iii), for so long as such circumstances shall continue, no Lender shall be under any obligation to make any new LIBOR Loans.

(d)           Certificates for Reimbursement.  A certificate of a Lender or the Letter of Credit Issuer setting forth the amount or amounts necessary to compensate such Lender or the Letter of Credit Issuer or its holding company, as the case may be, as specified in paragraph (a) or (b) of this Section and delivered to the Borrower shall be conclusive absent manifest error.  The Borrower shall pay such Lender or the Letter of Credit Issuer, as the case may be, the amount shown as due on any such certificate within 10 days after receipt thereof.

(e)           Delay in Requests.  Failure or delay on the part of any Lender or the Letter of Credit Issuer to demand compensation pursuant to this Section shall not constitute a waiver of such Lender’s or the Letter of Credit Issuer’s right to demand such compensation, provided that the Borrower shall not be required to compensate a Lender or the Letter of Credit Issuer pursuant to this Section for any increased costs incurred or reductions suffered more than 180 days prior to the date that such Lender or the Letter of Credit Issuer, as the case may be, notifies the Borrower of the Change in Law giving rise to such increased costs or reductions and of such Lender’s or the Letter of Credit Issuer’s intention to claim compensation therefor (except that, if the Change in Law giving rise to such increased costs or reductions is retroactive, then the 180-day period referred to above shall be extended to include the period of retroactive effect thereof).

Section 2.19        Taxes.

(a)           Payments Free of Taxes.  Any and all payments by or on account of any obligation of the Borrower hereunder or under any other Loan Document shall be made free and clear of and without reduction or withholding for any Indemnified Taxes or Other Taxes, provided that if the Borrower shall be required by applicable law to deduct any Indemnified Taxes (including any Other Taxes) from such payments, then (i) the sum

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payable shall be increased as necessary so that after making all required deductions (including deductions applicable to additional sums payable under this Section) the Lender Party entitled thereto receives an amount equal to the sum it would have received had no such deductions been made; (ii) the Borrower shall make such deductions; and (iii) the Borrower shall timely pay the full amount deducted to the relevant Governmental Authority in accordance with applicable law.

(b)           Payment of Other Taxes by the Borrower.  Without limiting the provisions of paragraph (a) above, the Borrower shall timely pay any Other Taxes to the relevant Governmental Authority in accordance with applicable law.

(c)           Indemnification by the Borrower.  The Borrower shall indemnify each Lender Party within 10 Business Days after demand therefor, for the full amount of any Indemnified Taxes or Other Taxes (including Indemnified Taxes or Other Taxes imposed or asserted on or attributable to amounts payable under this Section) paid by such Lender Party, and any penalties, interest and reasonable expenses arising therefrom or with respect thereto, whether or not such Indemnified Taxes or Other Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority.  A certificate as to the amount of such payment or liability delivered to the Borrower by a Lender Party (with a copy to the Administrative Agent) shall be conclusive absent manifest error.

(d)           Evidence of Payments.  As soon as practicable after any payment of Indemnified Taxes or Other Taxes by the Borrower to a Governmental Authority, the Borrower shall deliver to the Administrative Agent the original or a certified copy of a receipt issued by such Governmental Authority evidencing such payment, a copy of the return reporting such payment or other evidence of such payment reasonably satisfactory to the Administrative Agent.

(e)           Status of Lenders.  Any Foreign Lender that is entitled to an exemption from or reduction of withholding tax under the law of the jurisdiction in which the Borrower is resident for tax purposes, or any treaty to which such jurisdiction is a party, with respect to payments hereunder or under any other Loan Document shall deliver to the Borrower (with a copy to the Administrative Agent), at the time or times prescribed by applicable law or reasonably requested by the Borrower or the Administrative Agent, such properly completed and executed documentation prescribed by applicable law as will permit such payments to be made without withholding or at a reduced rate of withholding.  In addition, any Lender, if requested by the Borrower or the Administrative Agent, shall deliver such other documentation prescribed by applicable law or reasonably requested by the Borrower or the Administrative Agent as will enable the Borrower or the Administrative Agent to determine whether or not such Lender is subject to backup withholding or information reporting requirements.

(f)            Treatment of Certain Refunds.  If any Lender Party determines, in its sole discretion, that it has received a refund of any Taxes or Other Taxes as to which it has been indemnified by the Borrower or with respect to which the Borrower has paid additional amounts pursuant to this Section, it shall pay to the Borrower an amount equal to such refund (but only to the extent of indemnity payments made, or additional amounts

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paid, by the Borrower under this Section with respect to the Taxes or Other Taxes giving rise to such refund), net of all out-of-pocket expenses of such Lender Party and without interest (other than any interest paid by the relevant Governmental Authority with respect to such refund), provided that the Borrower, upon the request of a Lender Party will repay the amount paid over to the Borrower (plus any penalties, interest or other charges imposed by the relevant Governmental Authority) to such Lender Party in the event such Lender Party is required to repay such refund to such Governmental Authority.  This paragraph shall not be construed to require any Lender Party to make available its tax returns (or any other information relating to its taxes that it deems confidential) to the Borrower or any other Person.

Section 2.20        Illegality.  If any change in (including the adoption of any new) applicable laws or regulations, or any change in the interpretation of applicable laws or regulations by any governmental authority, central bank, comparable agency or any other regulatory body charged with the interpretation, implementation or administration thereof, or compliance by a Lender with any request or directive (whether or not having the force of law, but having general applicability to all within a class of financial institutions similar to a Lender) of any such authority, central bank, comparable agency or other regulatory body, should make it or, in the good faith judgment of the affected Lender, shall raise a substantial question as to whether it is unlawful for such Lender to make, maintain or fund either LIBOR Loans or Quoted Rate Loans, then (a) the affected Lender shall promptly notify the Borrower and the Administrative Agent; (b) the obligation of the affected Lender to make, maintain or convert into LIBOR Loans or Quoted Rate Loans, as applicable, shall, upon the effectiveness of such event, be suspended for the duration of such unlawfulness; and (c) for the duration of such unlawfulness, any notice by the Borrower pursuant to Section 2.2, 2.3, 2.4, 2.5, 2.6, or 2.7 requesting the affected Lender to make or convert into LIBOR Loans or Quoted Rate Loans, as applicable, shall be construed as a request to make or to continue making Base Rate Loans.

Section 2.21        Loan Losses.  The Borrower hereby agrees that upon demand by any Lender (which demand shall be accompanied by a statement setting forth the basis for the calculations of the amount being claimed) the Borrower will indemnify such Lender against any loss or expense which such Lender may have sustained or incurred (including but not limited to any net loss or expense incurred by reason of the liquidation or reemployment of deposits or other funds acquired by such Lender to fund or maintain Fixed Rate Loans) or which such Lender may be deemed to have sustained or incurred, as reasonably determined by such Lender, (a) as a consequence of any failure by the Borrower to make any payment when due of any amount due hereunder in connection with any Fixed Rate Loans; (b) due to any failure of the Borrower to borrow or convert any Fixed Rate Loans on a date specified therefor in a notice thereof, except as permitted by Section 2.7; or (c) due to any payment or prepayment of (i) any LIBOR Loan on a date other than the last day of the applicable Interest Period for such LIBOR Loan; or (ii) any Quoted Rate Loan on a date other than the last day of the applicable Quoted Rate Period for such Quoted Rate Loan.  For this purpose, all notices under Sections 2.2, 2.3, 2.4, 2.5, 2.6, and 2.7 shall be deemed to be irrevocable.

Section 2.22        Right of Lenders to Fund through Other Offices.  Each Lender, if it so elects, may fulfill its agreements hereunder with respect to any LIBOR Loan by causing a foreign branch or affiliate of such Lender to make such LIBOR Loan; provided, that in such

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event the obligation of the Borrower to repay such LIBOR Loan shall nevertheless be to such Lender and such LIBOR Loan shall be deemed held by such Lender for the account of such branch or affiliate.

Section 2.23        Discretion of Lenders as to Manner of Loan.  Notwithstanding any provision of this Agreement to the contrary, each Lender shall be entitled to fund and maintain all or any part of its LIBOR Loans in any manner it deems fit, it being understood, however, that for the purposes of this Agreement (specifically including but not limited to Section 2.21 hereof) all determinations hereunder shall be made as if each Lender had actually funded and maintained each LIBOR Loan during each Interest Period for such LIBOR Loan through the purchase of deposits having a maturity corresponding to such Interest Period and bearing an interest rate equal to the appropriate LIBO Rate for such Interest Period.

Section 2.24        Conclusiveness of Statements; Survival of Provisions.  Determinations and statements of a Lender pursuant to Sections 2.18, 2.19 or 2.21 shall be conclusive absent manifest error.  Each Lender shall use reasonable averaging and attribution methods in determining compensation pursuant to such Sections 2.18, 2.19 and 2.21 and the provisions of Sections 2.18, 2.19 and 2.21 shall survive termination of this Agreement.

ARTICLE III
CONDITIONS TO CREDIT EXTENSIONS

Section 3.1           Conditions Precedent to the Initial Credit Extension.  The obligation of the Lenders to effect any Credit Extension is subject to the condition precedent that, on or before the day of the first Credit Extension, and in any event on or before the Closing Date, the Administrative Agent shall have received the following, each in form and substance satisfactory to the Administrative Agent:

(a)           such Notes as shall be requested by any Lenders, each properly executed on behalf of the Borrower;

(b)           the Guaranty, properly executed on behalf of the Guarantor;

(c)           the Intercreditor Agreement, duly executed by the parties thereto;

(d)           a Third Modification Agreement to Restated Mortgage and Security Agreement Mortgage Short-Term Redemption, properly executed on behalf of the Borrower;

(e)           a First Amendment to Mortgage and Security Agreement, properly executed on behalf of the Guarantor;

(f)            evidence of all insurance required by the terms of the Security Documents, including but not limited to flood insurance if the real estate described in any Mortgage is located within the 100-year flood plain, together with certificates and loss payable endorsements showing the Administrative Agent, for the benefit of the Lender Parties, as mortgagee, additional insured and lender loss payee thereunder;

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(g)current searches of appropriate filing offices in each jurisdiction in which each Obligor is organized, has an office or otherwise conducts business (including but not limited to patent and trademark offices, secretaries of state and county recorders) showing that no state or federal tax liens have been filed and remain in effect against any Obligor, and that no financing statements or other notifications or filings have been filed and remain in effect against any Obligor, other than the Permitted Liens or those for which the Administrative Agent has received an appropriate release, termination or satisfaction;

(h)financing statements with respect to each Obligor to be filed in each jurisdiction that, in the opinion of the Administrative Agent, is reasonably necessary to maintain the Liens created by the Security Documents, to the extent such Liens can be perfected by filing;

(i)certificates of the secretary or other appropriate officer of each Obligor (i) certifying that the execution, delivery and performance of the Loan Documents and other documents contemplated hereunder to which such Obligor is a party have been duly approved by all necessary action of the Governing Board of the Obligor, and attaching true and correct copies of the applicable resolutions granting such approval; (ii) certifying that attached to such certificates are true and correct copies of the Organizational Documents of such Obligor, together with such copies; and (iii) certifying the names of the officers of such Obligor that are authorized to sign the Loan Documents and other documents contemplated hereunder, together with the true signatures of such officers;  the Lender Parties may conclusively rely on such certificates until the Administrative Agent receives a further certificate of the Secretary or Assistant Secretary of such Obligor canceling or amending the prior certificate and submitting the signatures of the officers named in such further certificate;

(j)a certificate of good standing for each Obligor from the Secretary of State (or the appropriate official) of the state of formation of such Obligor, dated not more than 30 days prior to the Closing Date;

(k)a Borrowing Base Certificate as of a date not more than 30 days prior to the Closing Date;

(l)the following financial information of the Borrower and the Consolidated Group:  (i) consolidated and consolidating financial statements for the Fiscal Years ending August 31, 2006 through August 31, 2008, audited by Eide Bailly LLP, and interim financial statements for the most recent period completed, including balance sheets, income statements and cash flow statements prepared in conformity with GAAP; (ii) a 1-year (commencing September 1, 2009) business plan and pro-forma financial projections; and (iii) such other financial information as the Administrative Agent may reasonably request;

(m)a signed copy of an opinion of counsel for each Obligor addressed to the Administrative Agent, on behalf of the Lenders, with respect to the matters contemplated by the Loan Documents;

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(n)the absence of any Material Adverse Effect, financial or otherwise, affecting the Borrower or the Consolidated Group since August 31, 2008; and

(o)payment of all fees and expenses then due and payable pursuant to Sections 2.14 and 9.6(a) hereof.

Section 3.2Conditions Precedent to All Credit Extensions.  The obligation of the Lenders to effect any Credit Extension shall be subject to the further conditions precedent that on the date of such Credit Extension:

(a)the representations and warranties contained in Article IV and in each other Loan Document are correct in all material respects on and as of the date of such Credit Extension as though made on and as of such date; and

(b)no event has occurred and is continuing, or would result from such Credit Extension, which constitutes a Default or an Event of Default.

Any request for a Credit Extension shall be deemed to be a representation and warranty that no event has occurred and is continuing, or would result from such Credit Extension, which constitutes a Default or an Event of Default.

ARTICLE IV
REPRESENTATIONS AND WARRANTIES

The Borrower represents and warrants to the Lender Parties as follows:

Section 4.1Legal Existence and Power; Name; Chief Executive Office.  Each Obligor is a legal entity duly organized, validly existing and in good standing under the laws of its respective state of organization, and is duly licensed or qualified to transact business in all jurisdictions where the character of the property owned or leased or the nature of the business transacted by it makes such licensing or qualification necessary and where failure to obtain such licensing or qualification would have a Material Adverse Effect.  Each Obligor has all requisite power and authority, corporate or otherwise, to conduct its business, to own its properties and to execute and deliver, and to perform all of its obligations under, the Loan Documents to which it is a party.  Within the last 12 months, each Obligor has done business solely under the names set forth in Schedule 4.1.  The state of organization and the chief executive office and principal place of business of each direct and indirect Subsidiary of the Borrower are designated as such in Schedule 4.1, each other place of business of each Obligor is located at the address set forth in Schedule 4.1 and all records relating to their respective businesses are kept at those locations.

Section 4.2Authorization for Borrowings and Letters of Credit; No Conflict as to Law or Agreements.  The execution, delivery and performance by each Obligor of the Loan Documents to which it is a party, and the Letters of Credit and Advances from time to time obtained hereunder, have been duly authorized by all necessary corporate action and do not and will not (a) require any consent or approval that has not been obtained prior to the date hereof; (b) require any authorization, consent or approval by, or registration, declaration or filing with (other than filing of financing statements and recording of mortgages as contemplated

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hereunder), or notice to, any governmental department, commission, board, bureau, agency or instrumentality, domestic or foreign, or any third party, except such authorization, consent, approval, registration, declaration, filing or notice as has been obtained, accomplished or given prior to the date hereof; (c) violate any provision of any law, rule or regulation (including but not limited to Regulations T, U or X of the Board of Governors of the Federal Reserve System) or of any order, writ, injunction or decree presently in effect having applicability to an Obligor or of the Organizational Documents of an Obligor; (d) result in a breach of, or constitute a default under, any indenture or loan or credit agreement or any other material agreement, lease or instrument to which an Obligor is a party or by which it or its properties may be bound or affected; or (e) result in, or require, the creation or imposition of any Lien of any nature upon or with respect to any of the properties now owned or hereafter acquired by an Obligor (other than as required hereunder in favor of the Administrative Agent or the Lender Parties or as otherwise permitted by this Agreement); in each case of (b), (c) or (d) above, the noncompliance with which would have a Material Adverse Effect.

Section 4.3Legal Agreements.  Each of the Loan Documents constitutes the legal, valid and binding obligations and agreements of the Obligor that is a party thereto, enforceable against such Obligor in accordance its terms, except to the extent that enforcement thereof may be limited by an applicable bankruptcy, insolvency or similar laws now or hereafter in effect affecting creditors’ rights generally and by general principles of equity.

Section 4.4Capitalization.  The holder, class and percentage interests of the ownership of each Obligor (other than the Borrower) and all Subsidiaries of each Obligor (both direct and indirect) are set forth and described in Schedule 4.4, wherein each Subsidiary that is a Guarantor, if any, hereunder is so noted.  All of the issued and outstanding Capital Stock of each Obligor, if any, (other than the Borrower) is duly authorized, validly issued, fully paid and nonassessable.  No violation of any preemptive rights will be triggered by virtue of the transactions contemplated by the Loan Documents.

Section 4.5Financial Condition.  The Borrower has heretofore furnished to the Administrative Agent the audited financial statements of the Consolidated Group for the Fiscal Year ended August 31, 2008 and the unaudited financial statements of the Consolidated Group for the Fiscal Quarter ended May 31, 2009.  Those financial statements fairly present the financial condition of the Consolidated Group on the date thereof and the results of operations and cash flows for the periods then ended (subject to year-end audit adjustments) and were prepared in accordance with GAAP.

Section 4.6Adverse Change.  There has been no change in the business, properties or condition (financial or otherwise) of the Consolidated Group since the date of the last financial statement referred to in Section 4.5 that could reasonably be expected to have a Material Adverse Effect.

Section 4.7Litigation.  There are no actions, suits, investigations, claims, unsatisfied judgments or proceedings pending or, to the Knowledge of any Obligor, threatened against or affecting any Obligor or the properties or business of any Obligor before any court or governmental department, commission, board, bureau, agency or instrumentality, domestic or

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foreign, which, if determined adversely to such Person, would exceed $7,500,000, except as set forth and described in Schedule 4.7.

Section 4.8Regulation U.  No Obligor has engaged in the business of extending credit for the purpose of purchasing or carrying margin stock (within the meaning of Regulation U of the Board of Governors of the Federal Reserve System), and no part of the proceeds of any Advance or Letter of Credit will be used to purchase or carry any margin stock or to extend credit to others for the purpose of purchasing or carrying any margin stock.

Section 4.9Taxes.  Each Obligor has paid or caused to be paid to the proper authorities when due all federal, state, foreign and local taxes required to be withheld by it.  Each Obligor has filed all federal, state and local tax returns which are required to be filed, and such Obligor has paid or caused to be paid to the respective taxing authorities all taxes as shown on said returns or on any assessment received by it to the extent such taxes have become due, except for any such tax, assessment, charge or claim whose amount, applicability or validity is being contested by such Obligor in good faith and by proper proceedings and for which such Obligor shall have set aside adequate reserves in accordance with GAAP.  Proper and accurate amounts have been withheld by each Obligor from its respective employees for all periods in compliance with the tax, social security and any employment withholding provisions of applicable federal and state law, and proper and accurate federal and state returns have been filed by each Obligor for all periods for which returns were due with respect to employee income tax withholding, social security and unemployment taxes, and the amounts shown thereon to be due and payable have been paid in full or provision therefor included on the books of such Obligor in accordance with and to the extent required by GAAP.  To the Knowledge of each Obligor, there is no pending investigation of any Obligor by any taxing authority.

Section 4.10Titles and Liens.  An Obligor has good and absolute fee or leasehold title, as the case may be, to all properties and assets reflected in the latest consolidated balance sheets referred to in Section 4.5, free and clear of all Liens, except for the following Liens: (a) the Permitted Liens; and (b) covenants, restrictions, rights, easements and minor irregularities in title which do not (i) materially interfere with the business or operations of any Obligor as presently conducted; or (ii) materially impair the value of the property to which they attach.  In addition, no financing statement naming any Obligor as debtor is on file in any office except to perfect the Permitted Liens.

Section 4.11Plans.  Except as disclosed on Schedule 4.11, no Obligor or any of its ERISA Affiliates (a) maintains or has maintained any Pension Plan; (b) contributes or has contributed to any Multi-Employer Plan; or (c) provides or has provided post-retirement medical or insurance benefits with respect to employees or former employees (other than benefits required under Section 601 of ERISA, Section 4980B of the Code or applicable state law).  No Obligor or any of its ERISA Affiliates has received any notice or has any Knowledge to the effect that it is not in substantial compliance with any of the requirements of ERISA, the Code or applicable state law with respect to any Plan.  No Reportable Event exists in connection with any Pension Plan.  Each Plan that is intended to qualify under the Code is so qualified, and no fact or circumstance exists which may have an adverse effect on the Plan’s tax-qualified status that is not correctable under available government correction programs.  No Obligor or any of its ERISA Affiliates has (i) any accumulated funding deficiency (as defined in Section 302 of

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ERISA and Section 412 of the Code) under any Plan, whether or not waived; (ii) any material liability under Section 4201 or 4243 of ERISA for any withdrawal, partial withdrawal, reorganization or other event under any Multi-Employer Plan; or (iii) any material liability or Knowledge of any facts or circumstances which could result in any material liability to the Pension Benefit Guaranty Corporation, the Internal Revenue Service, the Department of Labor or any participant in connection with any Plan (other than routine claims for benefits under the Plan). Other than claims for benefits in the ordinary course of business, there are no actions, suits, disputes, arbitrations or other material claims pending or, to any Obligor’s Knowledge, threatened with respect to any Plan.

Section 4.12Environmental Compliance.  Except as disclosed on Schedule 4.12, each Obligor has obtained all permits, licenses and other authorizations that are required under federal, state and local laws and regulations relating to emissions, discharges, releases of pollutants, contaminants, hazardous or toxic materials, or wastes into ambient air, surface water, ground water or land, or otherwise relating to the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of pollutants, contaminants or hazardous or toxic materials or wastes (“Environmental Laws”) at its facilities or in connection with the operation of its facilities, if the failure to obtain such permits, licenses or other authorizations would result in a Material Adverse Effect.  Except as disclosed on Schedule 4.12, each Obligor and all activities of each Obligor at its facilities comply with all material Environmental Laws and with all terms and conditions of any required permits, licenses and authorizations applicable to such Person with respect thereto, the noncompliance of which would require aggregate expenditures by the Borrower in excess of $15,000,000 in any Fiscal Year (in excess of the amounts set forth in the Obligor’s budget for such Fiscal Year delivered to the Administrative Agent hereunder).  To the Knowledge of each Obligor, each Obligor is in material compliance with all limitations, restrictions, conditions, standards, prohibitions, requirements, obligations, schedules and timetables contained in Environmental Laws or contained in any plan, order, decree, judgment or notice of which such Obligor has Knowledge and with respect to which noncompliance would require aggregate expenditures by any Obligor in excess of 15,000,000 in any Fiscal Year (in excess of the amounts set forth in the Obligor’s budget for such Fiscal Year delivered to the Administrative Agent hereunder).  Except as disclosed on Schedule 4.12, no Obligor has Knowledge of, nor has any Obligor received notice of, any events, conditions, circumstances, activities, practices, incidents, actions or plans which may interfere with or prevent continued compliance with, or which may give rise to any liability under, any Environmental Laws.

Section 4.13Submissions to Lenders.  This Agreement, together with each other Loan Document and the exhibits, schedules, attachments, written or oral statements, documents, certificates and other items prepared or supplied to any Lender Party by or on behalf of any Obligor with respect to the transactions contemplated hereby or thereby, does not contain any untrue statement of a material fact or omit a material fact necessary to make each statement contained herein or therein not misleading (and, as to projections, valuations or pro forma financial statements, all of such information presents a good faith opinion based on reasonable assumptions as of the date made as to such projections, valuations and pro forma condition and results).  There is no fact that the Borrower has not disclosed to the Lender Parties in writing and of which any Obligor has Knowledge that has had or could reasonably be expected to have a Material Adverse Effect.  Notwithstanding the foregoing, the Lender Parties acknowledge that

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the financial projections and pro forma information as to future periods contained therein are subject to general business conditions and economic factors that may be beyond any Obligor’s control or other unanticipated future events which could have an unforeseen impact on the performance or condition of the Obligors, it being understood that all such financial projections will be subject to uncertainties and contingencies and that no representation is given that any particular financial projection will ultimately be realized.  Notwithstanding the foregoing, the parties acknowledge the disclaimer set forth in that certain Confidential Information Memorandum dated as of June, 2009, which was prepared and distributed in connection with the transaction contemplated by this Agreement, and no Obligor makes any representation or warranty of any kind in respect of such Confidential Information Memorandum.

Section 4.14Financial Solvency.  Both before and after giving effect to all of the loans, guaranties and other financial accommodations contemplated herein, each of the Borrower and each other Obligor (after taking into account the Borrower’s reimbursement obligation to such Obligor in respect of any guaranty):

(a)was not and will not be insolvent, as that term is used and defined in Section 101(32) of the United States Bankruptcy Code and Section 2 of the Uniform Fraudulent Transfer Act;

(b)does not have unreasonably small capital and is not engaged or about to engage in a business or a transaction for which any remaining assets of such Obligor are unreasonably small;

(c)does not, by executing, delivering or performing its obligations under the Loan Documents or by taking any action with respect thereto, intend to nor believe that it will incur debts beyond its ability to pay them as they mature;

(d)does not, by executing, delivering or performing its obligations under the Loan Documents to which it is a party or by taking any action with respect thereto, intend to hinder, delay or defraud either its present or future creditors; and

(e)does not contemplate filing a petition in bankruptcy or for an arrangement or reorganization or similar proceeding under any law of any jurisdiction or country, and is not the subject of any bankruptcy or insolvency proceedings or similar proceedings under any law of any jurisdiction or country threatened or pending against such Obligor.

Section 4.15Information Regarding Owned and Leased Real Estate and Warehouses.  All material interests (including but not limited to all fee simple and leasehold interests) of the Obligors in any real property or fixtures, wherever located, are subject to the Primary Mortgage.

Section 4.16Intellectual Property Rights.  Each Obligor 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.

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Section 4.17Conflicts of Interest.  No Obligor nor any officer, employee, agent or any other Person acting on behalf of any of the foregoing has, directly or indirectly, given or agreed to give any money, gift or similar benefit (other than legal price concessions to customers in the ordinary course of business) to any customer, supplier, employee or agent of a customer or supplier, or official or employee of any governmental agency or instrumentality of any government (domestic or foreign) or other Person who was, is, or may be in a position to help or hinder the business of any Obligor (or assist in connection with any actual or proposed transaction), which (a) might subject any Obligor to any material damage or penalty in any civil, criminal or governmental litigation or proceeding; (b) if not given in the past, could have had a Material Adverse Effect; or (c) if not continued in the future, could reasonably be expected to have a Material Adverse Effect.

Section 4.18Licenses; Compliance with Laws, Other Agreements, etc.  Except as set forth in Schedule 4.18, each Obligor has all material franchises, permits, licenses and other rights, including all governmental approvals, authorizations, consents, licenses and permits, which are necessary or required for the conduct of the businesses currently conducted by any Obligor (collectively, the “Licenses”).  No Obligor has any Knowledge of any basis upon which the renewal of any License would be denied in the future.  Each such License has been validly issued to the relevant Obligor and is in full force and effect, and no Obligor is in violation of any such License.  No Obligor is in violation of any term of its Organizational Documents or any other contract, agreement, judgment or decree, the violation of which would have a Material Adverse Effect, and each Obligor is in full compliance with all applicable laws, regulations and rules the non-compliance with which would have a Material Adverse Effect.

Section 4.19Investment Company Act.  Neither the Borrower nor any company controlling the Borrower is required to be registered as an “investment company” within the meaning of the Investment Company Act of 1940, as amended.

ARTICLE V
AFFIRMATIVE COVENANTS

So long as any Obligations (other than contingent indemnity obligations) remain unpaid or any Facility remains outstanding, the Borrower will comply with the following requirements, unless the Required Lenders (or the Administrative Agent, with the consent of the Required Lenders) shall otherwise consent in writing:

Section 5.1Reporting Requirements.  The Borrower will deliver, or cause to be delivered, to each Lender each of the following, which shall be in form and detail reasonably acceptable to the Required Lenders:

(a)As soon as available, and in any event within 120 days after the end of each Fiscal Year of the Borrower, audited annual financial statements of the Consolidated Group with the unqualified opinion of Eide Bailly, LLP or other independent certified public accountants of nationally recognized standing selected by the Consolidated Group and reasonably acceptable to the Administrative Agent, which annual financial statements shall include the balance sheets of the Consolidated Group as at the end of such Fiscal Year and the related statements of income, retained earnings and cash flows

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of the Consolidated Group for the Fiscal Year then ended, prepared on a consolidating and consolidated basis, all in reasonable detail and prepared in accordance with GAAP, together with (i) a report signed by such accountants stating that in making the investigations necessary for said opinion they obtained no knowledge, except as specifically stated, of any Default or Event of Default hereunder and all relevant facts in reasonable detail to evidence, and the computations as to, whether or not the Borrower is in compliance with the Financial Covenants; and (ii) a certificate of the treasurer of the Borrower, substantially in the form of Exhibit M, stating that such financial statements have been prepared in accordance with GAAP and whether or not such officer has knowledge of the occurrence of any Default or Event of Default hereunder and, if so, stating in reasonable detail the facts with respect thereto.

(b)As soon as available and in any event within 5 days after the Borrower’s quarterly filing with the Securities and Exchange Commission, an unaudited interim balance sheet and statement of income, cash flow and retained earnings of the Consolidated Group as at the end of and for such Fiscal Quarter and for the Fiscal Year-to-date period then ended, prepared on a consolidating and consolidated basis, in reasonable detail and stating in comparative form the budget of the Consolidated Group for such calendar month and for the year-to-date period then ended and the figures for the corresponding date and periods in the previous year, all prepared in accordance with GAAP, subject to year-end audit adjustments; and accompanied by a certificate of the treasurer of the Borrower, substantially in the form of Exhibit M, stating (i) that such financial statements have been prepared in accordance with GAAP, subject to year-end audit adjustments; (ii) whether or not such officer has knowledge of the occurrence of any Default or Event of Default hereunder not theretofore reported and remedied and, if so, stating in reasonable detail the facts with respect thereto; and (iii) all relevant facts in reasonable detail to evidence, and the computations as to whether or not the Borrower is in compliance with the Financial Covenants.

(c)Within 30 days after the end of each month, or more frequently if desired by the Borrower, a properly completed and executed Borrowing Base Certificate as at the end of such month or such other period, as appropriate.

(d)Within 60 days after the end of each Fiscal Year of the Borrower, the annual budget and forecast of operations and Capital Expenditures budget for the Consolidated Group for the next Fiscal Year, each in reasonable detail, representing the good faith projections of the Borrower, and certified by the Borrower’s treasurer as being the projections upon which the Borrower relies, together with (i) such supporting schedules and information as the Administrative Agent from time to time may reasonably request, and (ii) revisions to any of the foregoing if the Governing Board of the Borrower approves an increase of more than 20% to the original Capital Expenditures budget.

(e)From time to time, with reasonable promptness, any and all receivables schedules, collection reports, pool reports, deposit records and such other material reports, records or information as the Administrative Agent or the Required Lenders from time to time may reasonably request.

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(f)Immediately after the commencement thereof, notice of all litigation and of all proceedings before any governmental or regulatory agency affecting any Obligor of the type described in Section 4.7 or which (i) seek a monetary recovery against any Obligor in excess of $7,500,000; or (ii) if determined adversely to any Obligor, could reasonably be expected to have a Material Adverse Effect.

(g)Immediately after the commencement thereof, notice of any violation of any Environmental Law by an Obligor and any commencement of any judicial or administrative proceeding against an Obligor relating to any Environmental Law, which, if determined adversely to any Obligor, (i) could reasonably be expected to require expenditures of any Obligor in excess of $7,500,000; or (ii) could reasonably result in the revocation of, or materially affect, any operating permits, air permission permits, water discharge permits, hazardous waste permits or other permits held by an Obligor, the results of which would have a Material Adverse Effect.

(h)Immediately after the Borrower obtains Knowledge of the occurrence of a Default or Event of Default hereunder, notice of such occurrence, together with a detailed statement by a responsible officer of the Borrower setting forth the steps being taken by the Borrower to cure the effect of such Default or Event of Default.

(i)As promptly as practicable, and in any event within 30 days after the Borrower has Knowledge that any Reportable Event with respect to any Pension Plan has occurred, the Borrower will deliver to the Administrative Agent a statement of the Borrower’s treasurer setting forth details as to such Reportable Event and the action the Borrower proposes to take with respect thereto, together with a copy of the notice of such Reportable Event to the Pension Benefit Guaranty Corporation.

(j)As promptly as practicable, and in any event within 30 days after any Obligor fails to make any quarterly contribution required with respect to any Pension Plan under Section 412(m) of the Code, the Borrower will deliver to the Administrative Agent a statement of the Borrower’s treasurer setting forth details as to such failure and the action the Borrower proposes to take with respect thereto, together with a copy of any notice of such failure required to be provided to the Pension Benefit Guaranty Corporation.

(k)As promptly as practicable, and in any event within 30 days after the Borrower has Knowledge that any Obligor has or is reasonably expected to have any liability under Section 4201 or 4243 of ERISA for any withdrawal, partial withdrawal, reorganization or other event under any Multi-Employer Plan, the Borrower will deliver to the Administrative Agent a statement of the Borrower’s treasurer setting forth details as to such liability and the action which Borrower proposes to take with respect thereto.

(l)Promptly upon obtaining Knowledge thereof, notice of the violation by any Obligor of any law, rule or regulation, the non-compliance with which could reasonably be expected to have a Material Adverse Effect.

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(m)Promptly, such additional information concerning the Borrower and each other Obligor as the Administrative Agent may reasonably request.

All required deliveries pursuant to this Section 5.1 shall be made, to the extent possible, by electronic means (e-mail transmission), followed by actual, originally executed (if required hereunder) paper copies thereof.

Section 5.2Books and Records; Inspection and Examination.  The Borrower will keep, and will cause each other Obligor to keep, accurate books of record and account for itself pertaining to its business and financial condition and such other matters as the Administrative Agent may from time to time request in which true and complete entries will be made in accordance with GAAP consistently applied and, upon request of and reasonable notice by the Administrative Agent, will permit any officer, employee, attorney or accountant for any Lender Party to audit, review, make extracts from or copy any and all corporate and financial books and records of any Obligor at all reasonable times during ordinary business hours, to send and discuss with account debtors and other obligors requests for verification of amounts owed to any Obligor, and to discuss the affairs of any Obligor with any of its Directors, officers, employees or agents.  The Borrower will permit any Lender Party or its employees, accountants, attorneys or agents, to examine and inspect any property of any Obligor at any time during ordinary business hours; provided, that each Lender Party will use reasonable efforts to conduct (or have conducted) any such examination or inspection so as to minimize disruptions to the operations of such Obligor.

Section 5.3Compliance with Laws.  The Borrower will, and will cause each other Obligor to, (a) comply in all material respects with the requirements of all applicable laws and regulations, including but not limited to all Environmental Laws; and (b) use and keep its assets, and will require that others use and keep its assets, only for lawful purposes, without violation of any federal, state or local law, statute or ordinance.  In addition, and without limiting the foregoing sentence, the Borrower shall (i) ensure, and cause each other Obligor to ensure, that no Person who owns a controlling interest in, or otherwise controls, the Borrower or any other Obligor is or shall be listed on the Specially Designated Nationals and Blocked Person List or other similar lists maintained by the Office of Foreign Assets Control (“OFAC”), the Department of the Treasury or included in any Executive Orders; (ii) not use or permit the use of the proceeds of any Advance to violate any of the foreign asset control regulations of OFAC or any enabling statute or Executive Order relating thereto; and (iii) comply, and cause each other Obligor to comply, with all applicable Bank Secrecy Act (“BSA”) laws and regulations, as amended.

Section 5.4Payment of Taxes and Other Claims.  The Borrower will pay or discharge, and will cause each other Obligor to pay or discharge, when due, (a) all taxes, assessments and governmental charges levied or imposed upon it or upon its income or profits or upon any properties belonging to it prior in each case to the date on which penalties attach thereto; (b) all federal, state and local taxes required to be withheld by it; and (c) all lawful claims for labor, materials and supplies that, if unpaid, might by law become a Lien or charge upon any properties of an Obligor; provided, that no Obligor shall be required to pay any such tax, assessment, charge or claim whose amount, applicability or validity is being contested in

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good faith by appropriate proceedings and for which such Obligor has set aside adequate reserves in accordance with GAAP.

Section 5.5Maintenance of Properties.  The Borrower will keep and maintain, and will cause each other Obligor to keep and maintain, all of its properties necessary or useful in its business in good condition, repair and working order (normal wear and tear excepted); provided, however, that nothing in this Section 5.5 shall prevent an Obligor from discontinuing the operation and maintenance of any of its properties if such discontinuance is, in the reasonable judgment of such Obligor, desirable in the conduct of such Obligor’s business.  The Borrower will, and will cause each other Obligor to, take all commercially reasonable steps necessary to protect and maintain its Intellectual Property Rights.  The Borrower will, and will cause each other Obligor to, take all commercially reasonable steps necessary to prosecute any Person infringing its Intellectual Property Rights and to defend itself against any Person accusing it of infringing any Person’s Intellectual Property Rights.

Section 5.6Insurance.  The Borrower will obtain and at all times maintain, and will cause each other Obligor to obtain and at all times maintain, insurance with insurers believed by it to be responsible and reputable in such amounts and against such risks as described in the Security Documents and otherwise as is usually carried by companies engaged in similar business and owning similar properties in the same general areas in which it operates.

Section 5.7Preservation of Legal Existence.  The Borrower will preserve and maintain, and will cause each other Obligor to preserve and maintain, its legal existence and all of its rights, privileges and franchises necessary or desirable in the normal conduct of its business and shall conduct its business in an orderly, efficient and regular manner; provided, however, that nothing in the foregoing shall prohibit any Obligor (other than the Borrower) from merging into another Obligor so long as, with respect to any such merger involving the Borrower, the Borrower shall remain as the surviving entity.

Section 5.8Creation of New Obligors and Subsidiaries.  The Borrower will obtain prior written approval of the Required Lenders prior to creating a Subsidiary or acquiring any business which would constitute a Subsidiary.  Upon receipt of any such prior written approval, the Borrower will cause each new Subsidiary to execute and deliver to the Administrative Agent, for the benefit of the Lender Parties, a Guaranty, Mortgage (if applicable) and assignment of rents and leases (if applicable), each in form and content acceptable to the Administrative Agent, whereupon such Subsidiary shall constitute an Obligor hereunder.  In addition, the Borrower will, upon the creation (or acquisition) of any such Subsidiary, execute and deliver an amendment to the Primary Mortgage with respect to such Subsidiary in favor of the Administrative Agent, for the benefit of the Lender Parties.  If any such Subsidiary is organized under a jurisdiction other than the United States of America or a state thereof, the Lender Parties will negotiate in good faith with the Borrower and such Subsidiary to (a) limit the amount of the stock so pledged to the Lender Parties; or (b) otherwise include provisions in such Subsidiary’s Guaranty designed to prevent deemed distributions to the Borrower under Section 956 of the Code; provided, however, that such provisions shall preserve the maximum security possible in such Subsidiary, its assets and the Borrower’s equity interest therein for the Lender Parties possible in connection with such considerations; provided, further, that no Lender Party

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shall be responsible to the Borrower, any Obligor, any such Subsidiary or any other Person for the sufficiency of such provisions to accomplish their stated purpose.

Section 5.9Minimum Interest Coverage Ratio.  The Borrower will maintain the Interest Coverage Ratio of the Consolidated Group as of each Covenant Compliance Date at not less than 3.25 to 1.00.

Section 5.10Maximum Capitalization Ratio.  The Borrower will maintain the Capitalization Ratio of the Consolidated Group as of each Covenant Compliance Date at not more than 0.55 to 1.00.

Section 5.11Minimum Net Working Capital.  The Borrower will maintain the Net Working Capital of Consolidated Group at not less than: (a) $35,000,000 as of each Fiscal Year-end of the Borrower; and (b) $15,000,000 as of each Covenant Compliance Date that does not constitute a Fiscal Year-end.

Section 5.12Title Insurance Policy.  Not later than sixty days after the Closing Date, the Borrower shall deliver to the Administrative Agent an endorsement to the mortgagee’s title policy, insuring the priority of the Primary Mortgage, reflecting recording of the Third Modification Agreement to Restated Mortgage and Security Agreement Mortgage Short-Term Redemption as executed by the Borrower and the First Amendment to Mortgage and Security Agreement as executed by the Guarantor, and updating title to the date of delivery of such endorsement.

ARTICLE VI

NEGATIVE COVENANTS

So long as any Obligations (other than contingent indemnity obligations) remain unpaid or any Facility remains outstanding, the Borrower will comply with the following requirements, unless the Required Lenders (or the Administrative Agent, with the consent of the Required Lenders) shall otherwise consent in writing:

Section 6.1Liens.  The Borrower will not, and will not permit any other Obligor to, create, incur or suffer to exist any Lien or other charge or encumbrance of any nature on any of its assets, now owned or hereafter acquired, or assign or otherwise convey any right to receive income or give its consent to the subordination of any right or claim of any Obligor to any right or claim of any other Person; excluding from the operation of the foregoing (collectively, the “Permitted Liens”):

(a)Liens in existence on the date hereof and listed in Schedule 6.1;

(b)Liens for taxes or assessments or other governmental charges to the extent not required to be paid by Section 5.4;

(c)materialmen’s, merchants’, carriers’, worker’s, repairer’s, landlord’s, warehouseman’s or other like liens arising in the ordinary course of business to the extent not required to be paid by Section 5.4;

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(d)pledges or deposits to secure obligations under worker’s compensation laws, unemployment insurance and social security laws, or to secure the performance of bids, tenders, contracts (other than for the repayment of borrowed money) or leases or to secure statutory obligations or surety or appeal bonds, or to secure indemnity, performance or other similar bonds in the ordinary course of business;

(e)zoning restrictions, easements, licenses, restrictions on the use of real property or minor irregularities in title thereto, which do not materially impair the use of such property in the operation of the business of any Obligor or the value of such property for the purpose of such business;

(f)Liens granted to the Administrative Agent or the Lenders pursuant to any of the Security Documents;

(g)CoBank’s statutory Lien on all of the Capital Stock of CoBank owned by the Borrower;

(h)purchase money Liens, provided that:

(i)no such Lien extends or shall extend to or cover any property of an Obligor other than the property then being acquired; and

(ii)the aggregate principal amount of the Debt secured by any such Lien shall not exceed the cost of such property so acquired in connection therewith;

(i)bankers’ liens, rights of set off or similar rights as to accounts maintained with a financial institution;

(j)Liens to secure Commodity Credit Corporation Loans; and

(k)any judgment Liens relating to judgments not constituting an Event of Default under Section 7.1(h).

Section 6.2Debt.  The Borrower will not, and will not permit any other Obligor to, incur, create, assume, permit or suffer to exist, any Debt except:

(a)Obligations arising hereunder;

(b)Debt (including Subordinated Debt) in existence on the Closing Date and listed in Schedule 6.2; together with any extension, renewal or replacement thereof (so long as such indebtedness is not increased above the amount outstanding immediately prior to giving effect to any such extension, renewal or replacement);

(c)Debt of an Obligor secured by the purchase money Liens permitted in accordance with Section 6.1(h), provided the aggregate amount of such Debt at any time outstanding does not to exceed $4,000,000;

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(d)Rate Hedging Arrangements;

(e)Commodity Credit Corporation Loans; and

(f)commercial paper issued by an Obligor.

Section 6.3Guaranties.  The Borrower will not, and will not permit any other Obligor to, assume, guarantee, endorse or otherwise become directly or contingently liable in connection with any obligations of any other Person, except:

(a)the Guaranties;

(b)the endorsement of negotiable instruments for deposit or collection or similar transactions in the ordinary course of business; and

(c)guaranties, endorsements and other direct or contingent liabilities in connection with the obligations of other Persons in existence on the Closing Date and listed in Schedule 6.3; together with any extension, renewal or replacement thereof (so long as such indebtedness is not increased above the amount outstanding immediately prior to giving effect to any such extension, renewal or replacement).

Section 6.4Investments.  The Borrower will not, and will not permit any other Obligor to, make, purchase, hold or permit to exist any Investment, except:

(a)Investments in direct obligations of the United States of America or any agency or instrumentality thereof whose obligations constitute the full faith and credit obligations of the United States of America having a maturity of 1 year or less, commercial paper issued by a U.S. corporation rated at least “A-1” or “A-2” by Standard & Poor’s Rating Group or “P-1” or “P-2” by Moody’s Investors Service, Investments in money market mutual funds whose underlying assets are exclusively Investments which would otherwise be permitted Investments under this Section 6.4(a), or repurchase agreements, certificates of deposit or bankers’ acceptances having a maturity of 1 year or less issued by members of the Federal Reserve System having deposits in excess of $500,000,000 (which certificates of deposit or bankers’ acceptances are fully insured by the Federal Deposit Insurance Corporation);

(b)trade credit extended in the ordinary course of business;

(c)advances in the form of progress payments, prepaid rent or security deposits;

(d)Investments by any Obligor in another Obligor or any joint venture or similar arrangements in which such Obligor has an interest as set forth in Schedule 6.4, including intercompany transfers, advances, loans, guarantees or other financial accommodations;

(e)other Investments of the Obligors in existence on the Closing Date, as set forth and described in Schedule 6.4;

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(f)other Investments not otherwise permitted under this Section 6.4 in an aggregate amount not to exceed $7,500,000 made and funded during each Fiscal Year; and

(g)any deposits held at, or any Investments issued by, any Lender or the Administrative Agent.

Section 6.5Restricted Payments.  The Borrower will not declare or make any Restricted Payments if a Default or Event of Default shall then exist or would exist after giving effect to such payment.

Section 6.6Restrictions on Sale and Issuance of Subsidiary Stock.  The Borrower will not:

(a)permit any of its Subsidiaries to issue or sell any shares of any class of such Subsidiary’s Capital Stock to any other Person (other than to the Borrower or a wholly-owned Subsidiary of the Borrower);

(b)sell, transfer or otherwise dispose of any shares of any class of any of its Subsidiary’s Capital Stock to any other Person (except to the Borrower or a wholly-owned Subsidiary of the Borrower); or

(c)permit any of its Subsidiaries to sell, transfer or otherwise dispose of any shares of any class of Capital Stock of any other Subsidiary of the Borrower to any other Person (other than to the Borrower or a wholly-owned Subsidiary of the Borrower).

Section 6.7Transactions With Affiliates.  The Borrower will not, and will not permit any other Obligor to, enter into or be a party to any transaction with any Affiliate of any such Obligor except in the ordinary course of, and pursuant to, the reasonable requirements of such Obligor’s business and upon fair and reasonable terms that are no less favorable to such Obligor than would be obtained in a comparable arms-length transaction with a Person not an Affiliate of such Obligor.

Section 6.8Consolidation and Merger; Asset Acquisitions; Sale or Transfer of Assets; Suspension of Business Operations.  The Borrower shall not, and shall not permit any other Obligor to, consolidate with or merge into any Person, or permit any other Person to merge into it, or acquire (in a transaction analogous in purpose or effect to a consolidation or merger) all or substantially all the assets of any other Person, or liquidate, wind-up or dissolve itself (or suffer any liquidation or dissolution), or convey, sell, lease or sub-lease (as lessor or sublessor), transfer or otherwise dispose of, in one transaction or a series of transactions, all or a substantial part of the assets of the Consolidated Group, whether now owned or hereafter acquired, and will not liquidate, dissolve or suspend its business operations, except for:

(a)the sale of Inventory in the ordinary course of business;

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(b)the sale of equipment that is obsolete, not fully functional or no longer useful in the business of an Obligor; provided that the aggregate value of such disposed equipment in any Fiscal Year is less than $7,500,000;

(c)other dispositions of personal property if the aggregate net book value of such disposed property in any Fiscal Year does not exceed 5% of Borrower’s consolidated assets as shown on its balance sheet as of the end of the immediately preceding Fiscal Year;

(d)the sale, lease or transfer of all or a substantial part of the assets of an Obligor (other than the Borrower) to another Obligor;

(e)the merger of any Obligor (other than the Borrower) with or into another Obligor, or the liquidation, winding up or dissolving of any Obligor (other than the Borrower);

(f)discounting or otherwise compromising for less than face value notes or accounts receivable in order to resolve disputes that occur in the ordinary course of business;

(g)the sale or disposing of shares of Capital Stock of any Subsidiaries to the extent permitted by Section 6.6; and

(h)the merger of any Person with or into an Obligor if the acquisition of the Capital Stock of such Person by the Obligor would have been permitted pursuant to Section 6.4; provided that (i) in the case of the Borrower, the Borrower shall be the continuing or surviving Person; (ii) if a Guarantor is not the surviving or continuing Person, the surviving Person becomes a Guarantor and complies with the provisions of Section 5.8; and (iii) no Default or Event of Default shall have occurred or be continuing after giving effect thereto.

Section 6.9Sale and Leaseback.  The Borrower will not, and will not permit any other Obligor to, enter into any arrangement, directly or indirectly, with any other Person whereby any Obligor shall sell or transfer any real or personal property, whether now owned or hereafter acquired, and then or thereafter rent or lease as lessee such property or any part thereof or any other property that an Obligor intends to use for substantially the same purpose or purposes as the property being sold or transferred.

Section 6.10Restrictions on Nature of Business.  The Borrower will not, and will not permit any other Obligor to, engage in any line of business materially different from that presently engaged in by the Borrower or any such Obligor and will not, and will not permit any other Obligor to, purchase, lease or otherwise acquire assets not related to its business.

Section 6.11Accounting.  The Borrower will not, and will not permit any other Obligor to, adopt any material change in accounting principles, other than as required by GAAP, and will not, and will not permit any other Obligor to, adopt, permit or consent to any change in its Fiscal Year.

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Section 6.12Hazardous Substances.  The Borrower will not cause or permit, and will not permit any other Obligor to cause or permit, any Hazardous Substances to be disposed of in any manner that might result in any material liability to any Obligor on, under or at any real property that is operated by any Obligor or in which any Obligor has any interest.

Section 6.13Subordinated Debt.  The Borrower will not, and will not permit any other Obligor to, issue any Subordinated Debt without first obtaining the prior written consent of the Required Lenders (it being understood that the Subordinated Debt set forth and described in Schedule 6.2 is hereby approved) and, if obtained, will not, and will not permit any other Obligor to, (a) make any payment of any principal, interest or fees due under or acquire any Subordinated Debt in violation of the Subordination Agreement or the subordination provisions applicable thereto or prepay, purchase or otherwise acquire any Subordinated Debt; (b) give security for all or any part of any Subordinated Debt unless such security is expressly permitted and contemplated under the relevant Subordination Agreement or the subordination provisions applicable thereto; (c) take any action whereby the subordination of any Subordinated Debt or any part thereof to the Obligations might be terminated, impaired or adversely affected; (d) omit to give the Administrative Agent prompt written notice of any default under any Subordinated Debt of which the Borrower has Knowledge by reason whereof any Subordinated Debt might become or be declared to be immediately due and payable; (e) amend, supplement or otherwise modify any terms or provisions of any documents evidencing or securing any Subordinated Debt without first obtaining the prior written consent of the Required Lenders.

Section 6.14Tax Consolidation.  The Borrower will not, and will not permit any other Obligor to, file or consent to the filing of, any consolidated income tax return with any Person other than a Subsidiary of any Obligor or the Borrower.

Section 6.15Negative Pledges, Restrictive Agreements, etc.  The Borrower will not, and will not permit any other Obligor to, enter into any agreement (excluding this Agreement and any agreement governing any Debt permitted by Section 6.2(c) as to the assets financed with the proceeds of such Debt) that would (a) require any Obligor to grant a Lien to any Person other than the Administrative Agent, other than the Permitted Liens; (b) prohibit the creation or assumption of any Lien in favor of the Administrative Agent upon such Obligor’s properties, revenues or assets, whether now owned or hereafter acquired, or the ability of any Obligor to amend or otherwise modify any Loan Document; or (c) prohibit the ability of any Obligor (other than the Borrower) to make any payments directly or indirectly to the Borrower, by way of dividends, advances, repayments of loans or advances, reimbursements of management and any other intercompany charges, expenses and accruals or other returns on investments, or any other agreement or arrangement that restricts the ability of any such Obligor to make any payment, directly or indirectly, to the Borrower.

Section 6.16Inconsistent Agreements.  The Borrower will not, and will not permit any other Obligor to, enter into any agreement or arrangement that is inconsistent with the obligations of any Obligor under this Agreement or any other Loan Document.

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ARTICLE VII

EVENTS OF DEFAULT; RIGHTS AND REMEDIES

Section 7.1Events of Default.  “Event of Default”, wherever used herein, means any one of the following events:

(a)Default in the payment of any principal of any Loan when it becomes due and payable, including but not limited to any such payment becoming due and payable under Section 2.12(i), and the continuation of such default for more than 5 Business Days.

(b)Default in the payment of any Obligation (other than the payment of any principal of any Loan) when the same becomes due and payable, and the continuation of such default for more than 5 Business Days.

(c)Default in the performance, or breach, of any Financial Covenant or any covenant or agreement of the Borrower under Section 2.15, Section 5.7 or Article VI.

(d)Default in the performance, or breach, of any covenant or agreement of the Borrower in this Agreement (other than a covenant or agreement a default in whose performance or whose breach is specifically dealt with elsewhere in this Section 7.1), or default in the performance, or breach, of any covenant or agreement of any Obligor in any other Loan Document (other than a covenant or agreement a default in whose performance or whose breach is specifically dealt with elsewhere in this Section 7.1), and, in each case, the continuance of such default or breach for a period of 30 calendar days after any Obligor has Knowledge thereof.

(e)(i) Any Obligor shall be or become insolvent, however defined; or admit in writing its inability to pay debts as they mature; or make a general assignment for the benefit of its creditors; or cease to do business in the ordinary course; (ii) any Obligor shall institute any bankruptcy, insolvency, reorganization, dissolution, liquidation or similar proceeding relating to itself under the laws of any jurisdiction; or any Obligor shall take any action to authorize any such proceeding; or any such proceeding shall be instituted against any Obligor and shall not be dismissed or discharged within 60 days after its commencement; or any Obligor shall admit all of the material allegations with respect to any such proceeding; or an order for relief or similar order shall be entered in any such proceeding; (iii) any Obligor shall apply for the appointment of any receiver, trustee or similar officer for itself or for all or substantially all of its property; or any Obligor shall take any action to authorize any such appointment; or an action for any such appointment shall be commenced by any other Person and such action shall not be dismissed or discharged within 60 days after its commencement; or any Obligor shall admit all of the material allegations with respect to any such action; or any such appointment shall be made, with or without the consent of the applicable Obligor; or (iv) a warrant, writ of attachment, execution or similar process shall be issued or levied against any substantial part of the property of any Obligor and shall not be fully released, stayed, vacated or bonded within 60 days after such issuance or levy.

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(f)A petition shall be filed by any Obligor under the United States Bankruptcy Code naming any Obligor as debtor; or an involuntary petition shall be filed against any Obligor under the United States Bankruptcy Code, and such petition shall not have been dismissed within 60 days after such filing; or an order for relief shall be entered in any case under the United States Bankruptcy Code naming any Obligor as debtor.

(g)Any representation or warranty made by any Obligor in any Loan Document or by the Borrower (or any of its officers) in any request for a Credit Extension, or in any other certificate, instrument, or statement contemplated by or made or delivered pursuant to or in connection with any Loan Document, shall prove to have been incorrect in any material respect when made.

(h)The rendering against any Obligor of a final judgment, decree or order for the payment of money, which, when added to all other such unsatisfied judgments, decrees or orders then outstanding, exceed $7,500,000 (unless the payment of such judgments, decrees or orders are fully insured) and either (i) the judgment creditor executes on any such judgment, or (ii) any such judgment, decree or order remains unpaid or continues unsatisfied and in effect for any period of 60 consecutive calendar days without a stay of execution.

(i)A writ of attachment, garnishment, levy or similar process shall be issued against or served on any Lender Party with respect to (i) any property of any Obligor in the possession of such Lender Party; or (ii) any indebtedness of any Lender Party to any Obligor.

(j)Maturity of any material interest-bearing Debt of any Obligor (other than Debt under this Agreement) shall be accelerated, or any Obligor shall fail to pay any such material Debt when due (after the lapse of any applicable grace period) or, in the case of such Debt payable on demand, when demand (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 Debt or any trustee or other Person acting on behalf of such holder to cause, such material Debt to become due prior to its stated maturity or to realize upon any collateral given as security therefore.  For purposes of this subsection (j), Debt of an Obligor shall be deemed “material” if it exceeds $7,500,000 as to any item of Debt or in the aggregate for all items of Debt with respect to which any of the events described in this subsection (j) has occurred, and Debt of an Obligor shall not include Commodity Credit Corporation Loans so long as such Commodity Credit Corporation Loans constitute non-recourse Debt of an Obligor.

(k)Any Guarantor shall attempt to reject, terminate or rescind its Guaranty or any Security Document to which it is a party or shall contest in any manner the validity, binding nature or enforceability of its Guaranty or any Security Document to which is a party.

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(l)Any Reportable Event, which the Administrative Agent or the Required Lenders determine in good faith may constitute grounds for the termination of any Pension Plan or for the appointment by the appropriate United States District Court of a trustee to administer any Pension Plan, shall have occurred and be continuing 30 days after written notice to such effect shall have been given to the Borrower by the Administrative Agent; or a trustee shall have been appointed by an appropriate United States District Court to administer any Pension Plan; or the Pension Benefit Guaranty Corporation shall have instituted proceedings to terminate any Pension Plan or to appoint a trustee to administer any Pension Plan; or any Obligor or any of its ERISA Affiliates shall have filed for a distress termination of any Pension Plan under Title IV of ERISA; or any Obligor or any of its ERISA Affiliates shall have failed to make any quarterly contribution required with respect to any Pension Plan under Section 412(m) of the Code, which the Administrative Agent or the Required Lenders determine in good faith may by itself, or in combination with any such failures that the Administrative Agent or the Required Lenders may determine are likely to occur in the future, result in the imposition of a Lien on any Obligor’s assets in favor of the Pension Plan; or any withdrawal, partial withdrawal, reorganization or other event occurs with respect to a Multi-Employer Plan which results or could reasonably be expected to result in a material liability of any Obligor to the Multi-Employer Plan under Title IV of ERISA.

(m)Any Change of Control shall occur.

(n)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 Obligor, or the Administrative Agent 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, 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 20 calendar days after any Obligor has Knowledge thereof.

Section 7.2Rights and Remedies.  Upon the occurrence of an Event of Default or at any time thereafter until such Event of Default is cured or waived to the written satisfaction of the Required Lenders, the Administrative Agent or the Required Lenders may (and, upon written request of the Required Lenders the Administrative Agent shall) exercise any or all of the following rights and remedies:

(a)By notice to the Borrower, declare the Commitments to be terminated, whereupon the same shall forthwith terminate.

(b)By notice to the Borrower, declare the entire unpaid principal amount of the Loans, all interest accrued and unpaid thereon, and all other amounts payable under this Agreement to be forthwith due and payable, whereupon the Loans, all such accrued interest and all such amounts shall become and be forthwith due and payable, without presentment, demand, protest or further notice of any kind, all of which are hereby expressly waived by the Borrower.

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(c)By notice to the Borrower, demand payment by the Borrower of funds with respect to each outstanding Letter of Credit in an amount sufficient to fund a cash collateral account equal to the Letter of Credit Exposure, which cash collateral account will be held by the Administrative Agent (or its designee), without interest, as a pledged cash collateral account and promptly applied to reimbursement of all drafts submitted under outstanding Letters of Credit.

(d)Without notice to the Borrower and without further action, apply any and all monies owing by any Lender Party to any Obligor to the payment of the Loans, including interest accrued thereon, and of all other Obligations then owing by the Borrower hereunder.

(e)Apply for the employment of, or taking possession by, a trustee, receiver, liquidator or other similar official of the Borrower to hold or liquidate all or any substantial part of the properties or assets of the Borrower.

(f)Exercise and enforce the rights and remedies available to any Lender Party under any Loan Document.

(g)Exercise any other rights and remedies available to any Lender Party by law or agreement.

Notwithstanding the foregoing, upon the occurrence of an Event of Default described in Section 7.1(e) or (f), the entire unpaid principal amount of the Loans, all interest accrued and unpaid thereon, and all other amounts payable under this Agreement shall be immediately due and payable without presentment, demand, protest or notice of any kind.  Notwithstanding any other provision of the Loan Documents, no Lender Party (other than the Administrative Agent) may individually exercise any rights under or with respect to the Loan Documents that arise after an Event of Default without the consent of the Required Lenders.

Section 7.3Right of Setoff.  If an Event of Default shall have occurred and shall be continuing, each Lender Party and each of their Affiliates is hereby authorized at any time and from time to time, to the fullest extent permitted by applicable law, to set off and apply any and all deposits (general or special, including but not limited to Indebtedness evidenced by certificates of deposit, whether matured or unmatured, but excluding any deposits held in escrow or pursuant to a fiduciary obligation on behalf of or for the benefit of third parties) at any time held and other obligations (in whatever currency) at any time owing by such Lender Party or any such Affiliate to or for the credit or the account of any Obligor against any and all of the obligations of such Obligor now or hereafter existing under this Agreement or any other Loan Document to such Lender Party or any such Affiliate, irrespective of whether or not such Lender Party shall have made any demand under this Agreement or any other Loan Document and although such obligations of such Obligor may be contingent or unmatured or are owed to a branch or office of such Lender Party different from the branch or office holding such deposit or obligated on such indebtedness.  The rights of each Lender Party and its Affiliates under this Section are in addition to other rights and remedies (including other rights of setoff) that such Lender Party or its Affiliates may have.

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ARTICLE VIII

AGREEMENT AMONG LENDERS AND ADMINISTRATIVE AGENT

Section 8.1Authorization; Powers; Administrative Agent for Collateral Purposes.  Each Lender irrevocably appoints and authorizes the Administrative Agent to act as administrative agent for and on behalf of such Lender to the extent provided herein, in any Loan Documents or in any other document or instrument delivered hereunder or in connection herewith, and to take such other actions as may be reasonably incidental thereto.  The Administrative Agent agrees to act as administrative agent for each Lender upon the express conditions contained in this Article VIII, but in no event shall the Administrative Agent constitute a fiduciary of any Lender, nor shall the Administrative Agent have any fiduciary responsibilities in respect of any Lender.  In furtherance of the foregoing, and not in limitation thereof, each Lender irrevocably (a) authorizes the Administrative Agent to execute and deliver and perform those obligations under each of the Loan Documents to which the Administrative Agent is a party as are specifically delegated to the Administrative Agent, and to exercise all rights, powers and remedies as may be specifically delegated hereunder or thereunder, together with such additional powers as may be reasonably incidental thereto; (b) appoints the Administrative Agent as nominal beneficiary or nominal secured party, as the case may be, under the Loan Documents and all related UCC financing statements; and (c) authorizes the Administrative Agent to act as collateral agent of and for such Lender for purposes of holding, perfecting and disposing of Collateral under the Loan Documents.  As to any matters not expressly provided for by the Loan Documents, the Administrative Agent shall not be required to exercise any discretion or take any action, but 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 or, if so required pursuant to Section 9.2, upon the instructions of all Lenders; provided, however, that except for action expressly required of the Administrative Agent hereunder, the Administrative Agent shall in all cases be fully justified in failing or refusing to act hereunder unless it shall be indemnified to its satisfaction by the Lenders against any and all liability and expense which may be incurred by it by reason of taking or continuing to take any such action, and the Administrative Agent shall not in any event be required to take any action which is contrary to the Loan Documents or applicable law.

Section 8.2Application of Proceeds.  The Administrative Agent, after deduction of any costs of collection, as provided in Section 8.5, shall remit to each Lender (to the extent a Lender is to share therein) such Lender’s pro rata share of all payments of principal, interest and fees payable hereunder in accordance with such Lender’s applicable Percentage.  Notwithstanding anything to the contrary in this Agreement or any other Loan Document, (a) all payments received by the Administrative Agent or any Lender prior to the occurrence of an Event of Default in respect of Rate Hedging Obligations shall be remitted directly to the appropriate counterparty with respect to such Rate Hedging Obligations and no other Lender shall be entitled to any portion thereof; and (b) all amounts received by the Administrative Agent or any Lender after the occurrence of an Event of Default shall be shared by the Lenders in accordance with the applicable Percentage of each Lender, irrespective of the Collateral from which such payments are derived or the Facility to which they may relate.  Each Lender’s interest under the Loan Documents shall be payable solely from payments, collections and proceeds actually received by the Administrative Agent under the Loan Documents; and the Administrative Agent’s only liability to a Lender with respect to any such payments, collections

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and proceeds shall be to account for such Lender’s Percentage of such payments, collections and proceeds in accordance with this Agreement.  If the Administrative Agent is required for any reason to refund any such payments, collections or proceeds, each Lender will refund to the Administrative Agent, upon demand, its Percentage of such payments, collections or proceeds, together with its Percentage of interest or penalties, if any, payable by the Administrative Agent in connection with such refund.  If any Lender becomes a Defaulting Lender, the Administrative Agent may remit payments received by it to the other Lenders until such payments have reduced the aggregate amounts owed by the Borrower to the extent that the aggregate amount of the Advances owing to such Defaulting Lender hereunder are equal to its Percentage of the aggregate amounts of the Advances owing under the applicable Facility to all of the Lenders hereunder.  The foregoing provision is intended only to set forth certain rules for the application of payments, proceeds and collections in the event that a Lender has breached its obligations hereunder and shall not be deemed to excuse any Lender from such obligations.

Section 8.3Exculpation.  The Administrative Agent shall not be liable for any action taken or omitted to be taken by the Administrative Agent in connection with the Loan Documents, except for its own gross negligence or willful misconduct.  The Administrative Agent shall be entitled to rely upon advice of counsel concerning legal matters, the advice of independent public accountants with respect to accounting matters and advice of other experts as to any other matters and upon any Loan Document and any schedule, certificate, statement, report, notice or other writing which it reasonably believes to be genuine or to have been presented by a proper Person.  Neither the Administrative Agent nor any of its Directors, officers, employees or agents shall be responsible or in any way liable for (a) any recitals, representations or warranties contained in, or for the execution, validity, genuineness, effectiveness or enforceability of any Loan Document, or any other instrument or document delivered hereunder or in connection herewith; (b) the validity, genuineness, perfection, effectiveness, enforceability, existence, value or enforcement of any Collateral; or (c) any action taken or omitted by it.  The designation of CoBank as administrative agent hereunder shall in no way impair or affect any of the rights and powers of, or impose any duties or obligations upon, CoBank in its individual capacity as a Lender hereunder.

Section 8.4Use of the Term “Administrative Agent”.  The term “Administrative Agent” is used herein in reference to the Administrative Agent merely as a matter of custom.  It is intended to reflect only an administrative relationship between the Administrative Agent and the Lenders as an independent contracting party.  However, the obligations of the Administrative Agent shall be limited to those expressly set forth herein and in no event shall the use of such term create or imply any fiduciary relationship or any other obligation arising under the general law of agency.

Section 8.5Reimbursement for Costs and Expenses.  All payments, collections and proceeds received or effected by the Administrative Agent may be applied first to pay or reimburse the Administrative Agent for all reasonable costs and expenses at any time incurred by or imposed upon the Administrative Agent in connection with this Agreement or any other Loan Document (including but not limited to all reasonable attorney’s fees (including allocated costs of in-house counsel), foreclosure expenses and advances made to protect the security of any Collateral, but excluding any costs, expenses, damages or liabilities arising from the gross negligence or willful misconduct of the Administrative Agent).  If the Administrative

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Agent does not receive payments, collections or proceeds sufficient to cover any such costs and expenses within 5 days after their incurrence or imposition, each Lender shall, upon demand and provision of reasonably timely invoices and other evidence of any such amounts, remit to the Administrative Agent such Lender’s Percentage of the difference between (a) such costs and expenses; and (b) such payments, collections and proceeds, together with interest on such amount for each day following the thirtieth day after demand therefor until so remitted at a rate equal to the Federal Funds Rate for each such day; provided, however, that in no event shall a Lender be obligated to reimburse the Administrative Agent for any such costs or expenses incurred in connection with Rate Hedging Arrangements or other matters undertaken by the Administrative Agent for its own benefit and not for the benefit of all Lenders generally.

Section 8.6Payments Received Directly by Lenders.  If any Lender shall obtain any payment or other recovery (whether voluntary, involuntary, by application of offset or otherwise) on account of any Obligations (other than through distributions made in accordance with Section 8.2 hereof) in excess of such Lender’s applicable Percentage with respect thereto, such Lender shall promptly give notice of such fact to the Administrative Agent and shall promptly remit to the Administrative Agent such amount as shall be necessary to cause the remitting Lender to share such excess payment or other recovery ratably with each of the Lenders in accordance with their respective Percentages, together with interest for each day on such amount until so remitted at a rate equal to the Federal Funds Rate for each such day; provided, however, that if all or any portion of the excess payment or other recovery is thereafter recovered from such remitting Lender or holder, the remittance shall be restored to the extent of such recovery.

Section 8.7Administrative Agent and Affiliates.  CoBank shall have the same rights and powers in its capacity as a Lender hereunder as any other Lender, and may exercise or refrain from exercising the same as though it were not the Administrative Agent hereunder, and CoBank and its affiliates may accept deposits from and generally engage in any kind of business with any Obligor or any Affiliate of any Obligor as fully as if CoBank were not the Administrative Agent hereunder.

Section 8.8Credit Investigation.  Each Lender acknowledges that it has made such inquiries and taken such care on its own behalf as would have been the case had its Commitments been granted and its Advances made directly by such Lender to the Borrower without the intervention of the Administrative Agent or any other Lender.  Each Lender agrees and acknowledges that no Lender Party makes any representation or warranty about the creditworthiness of any Obligor or any other party to this Agreement or with respect to the legality, validity, sufficiency or enforceability of this Agreement, any Loan Document, any Collateral or any other instrument or document delivered hereunder or in connection herewith.

Section 8.9Defaults.  The Administrative Agent shall have no duty to inquire into any performance or failure to perform by the Borrower and shall not be deemed to have knowledge of the occurrence of a Default or an Event of Default (other than under Section 7.1(a) or 7.1(b)) hereof unless the Administrative Agent has received notice from a Lender Party or the Borrower specifying the occurrence of such Default or Event of Default.  If the Administrative Agent receives such a notice of the occurrence of a Default or an Event of Default, the Administrative Agent shall give prompt notice thereof to the Lenders.  In the event of any

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Default or Event of Default, the Administrative Agent (subject to Section 8.1) shall take such actions with respect to such Default or Event of Default as shall be directed by the Required Lenders; provided that, (a) the Administrative Agent shall not need the consent or direction of the Required Lenders to provide such notices as may be required as a prerequisite to a Default becoming an Event of Default; and (b) unless and until the Administrative Agent shall have received directions as contemplated herein, the Administrative Agent may take any action, or refrain from taking any action, with respect to such Default of Event of Default as it shall deem advisable.

Section 8.10Obligations Several.  The obligations of each Lender Party hereunder are the several obligations of such Lender Party, and no Lender Party shall be responsible for the obligations of any other Lender Party hereunder, nor will the failure by any Lender Party to perform any of its obligations hereunder relieve any other Lender Party from the performance of its obligations hereunder.  Nothing contained in this Agreement, and no action taken by any Lender Party pursuant hereto or in connection herewith or pursuant to or in connection with the Loan Documents shall be deemed to constitute the Lender Parties as a partnership, association, joint venture, or other entity.

Section 8.11Resignation and Assignment of Administrative Agent.

(a)The Administrative Agent may resign as such at any time upon at least 30 days’ prior notice to the Borrower and the Lender Parties.  In the event of any resignation of the Administrative Agent, the Required Lenders shall as promptly as practicable appoint a successor Administrative Agent (provided that if no Event of Default then exists, the Borrower shall have the right to approve such successor agent, such approval not to be unreasonably withheld).  If no such successor Administrative Agent shall have been so appointed by the Required Lenders and shall have accepted such appointment within 30 days after the resigning Administrative Agent’s giving of notice of resignation, then the resigning Administrative Agent may, on behalf of the Lenders, appoint a successor Administrative Agent, which shall be a commercial bank organized under the laws of the United States of America or of any State thereof (provided that if no Event of Default then exists the Borrower shall have the right to approve such successor agent, such approval not to be unreasonably withheld).

(b)The Administrative Agent may, without the consent of the Borrower or the other Lender Parties, assign its rights and obligations as Administrative Agent hereunder and under the other Loan Documents to its parent or to any wholly owned subsidiary of its parent, and upon such assignment, the former Administrative Agent shall be deemed to have retired, and such parent or wholly owned subsidiary shall be deemed to be a successor Administrative Agent.

(c)Upon the acceptance of any appointment as Administrative Agent hereunder by a successor Administrative Agent, such successor Administrative Agent shall thereupon be entitled to receive from the prior Administrative Agent such documents of transfer and assignment as such successor Administrative Agent may reasonably request and the resigning or assigning Administrative Agent shall be discharged from its duties and obligations under this Agreement to be performed after the

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time of transfer.  After any resignation or assignment pursuant to this Section 8.11, the provisions of this Section 8.11 shall inure to the benefit of the retiring Administrative Agent as to any actions taken or omitted to be taken by it while it was acting as Administrative Agent hereunder.

Section 8.12Lead Arranger and Syndication Agent.  Any Lender identified on the title page to this Agreement as “Lead Arranger” or “Syndication Agent” shall have no right, power, obligation or liability under this Agreement or any other Loan Document other than those applicable to all Lenders as such.  Each Lender acknowledges that it has not relied, and will not rely, on any Lender so identified in deciding to enter into this Agreement or in taking or omitting any action hereunder.

Section 8.13Borrower not a Beneficiary or Party.  Except with respect to the limitation of liability applicable to the Lenders under Section 8.10 and approval rights with respect to any successor Administrative Agent under Section 8.11, the provisions and agreements in this Article VIII are solely among the Lender Parties, and the Borrower shall not be considered a party thereto or a beneficiary thereof.

ARTICLE IX

MISCELLANEOUS

Section 9.1No Waiver; Cumulative Remedies.  No failure or delay on the part of any Lender Party in exercising any right, power or remedy under the Loan Documents shall operate as a waiver thereof; nor shall any single or partial exercise of any such right, power or remedy preclude any other or further exercise thereof or the exercise of any other right, power or remedy under the Loan Documents.  The remedies provided in the Loan Documents are cumulative and not exclusive of any remedies provided by law.

Section 9.2Amendments, Requested Waivers, Etc.  No amendment, modification, termination or waiver of any provision of any Loan Document or consent to any departure by the Borrower therefrom shall be effective unless the same shall be in writing and signed by the Required Lenders and, if the rights or duties of the Administrative Agent or the Letter of Credit Issuer are affected thereby, by the Administrative Agent or the Letter of Credit Issuer, as the case may be; provided, however, that no amendment, modification, termination, waiver or consent shall do any of the following unless the same shall be in writing and signed by the Administrative Agent and each Lender affected thereby (and, as to clauses (d), (e) , (f), (g) and (i) hereof, all Lenders shall be deemed affected): (a) change the amount of any Commitment (except as permitted in accordance with Section 9.3(b)); (b) reduce the amount of any principal of or interest due on any Advances, the Unused Fees or any Letter of Credit Fees payable to a Lender hereunder; (c) postpone any date fixed for any payment of principal of or interest on any outstanding Advances or the Unused Fees or Letter of Credit Fees payable to a Lender hereunder; (d) change the definition of “Required Lenders”; (e) change the definition of “Borrowing Base” or the definition used in calculations thereof;  (f) amend this Section 9.2 or any other provision of this Agreement requiring the consent or other action of the Required Lenders or any particular Lender; (g) release any Guaranty; (h) waive any Default or Event of Default; or (i) release, subordinate or terminate any Lien in all or substantially all of the Collateral.  Any waiver or consent given hereunder shall be effective only in the specific instance

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and for the specific purpose for which given.  No notice to or demand on the Borrower in any case shall entitle the Borrower to any other or further notice or demand in similar or other circumstances.

Section 9.3Successors and Assigns; Register.

(a)Successors and Assigns Generally.  The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns permitted hereby, except that the Borrower may not assign or otherwise transfer any of its rights or obligations hereunder without the prior written consent of the Administrative Agent and each Lender, and no Lender may assign or otherwise transfer any of its rights or obligations hereunder, except (i) to an assignee in accordance with the provisions of paragraph (b) of this Section; (ii) by way of participation in accordance with the provisions of paragraph (d) of this Section; or (iii) by way of pledge or assignment of a Lien subject to the restrictions of paragraph (f) of this Section (and any other attempted assignment or transfer by any party hereto shall be null and void).  Nothing in this Agreement, express or implied, shall be construed to confer upon any Person (other than the parties hereto, their respective successors and assigns permitted hereby, Participants to the extent provided in paragraph (d) of this Section and, to the extent expressly contemplated hereby, the Affiliates of each of the Administrative Agent and the Lenders) any legal or equitable right, remedy or claim under or by reason of this Agreement.

(b)Assignments by Lenders.  Any Lender may at any time assign to one or more Eligible Lenders all or a portion of its rights and obligations under this Agreement (including all or a portion of its Commitments and the Loans at the time owing to it); provided that any such assignment shall be subject to the following conditions:

(i)Minimum Amounts.

(A)In the case of an assignment of the entire remaining amount of the assigning Lender’s Commitment and the Loans at the time owing to it, or in the case of an assignment to a Lender, no minimum amount need be assigned.

(B)In any case not described in paragraph (b)(i)(A) of this Section, the aggregate amount of the Commitment (which for this purpose includes Loans outstanding thereunder) or, if the applicable Commitment is not then in effect, the principal outstanding balance of the Loans of the assigning Lender subject to each such assignment (determined as of the date the Assignment and Assumption with respect to such assignment is delivered to the Administrative Agent or, if “Trade Date” is specified in the Assignment and Assumption, as of such Trade Date) shall not be less than $5,000,000.

(ii)Proportionate Amounts.  Each partial assignment shall be made as an assignment of a proportionate part of all the assigning Lender’s rights and

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obligations under this Agreement with respect to the Loans and the Commitment assigned.

(iii)Required Consents.  No consent shall be required for any assignment except as follows:

(A)The consent of the Borrower (such consent not to be unreasonably withheld or delayed) shall be required unless (x) a Default or Event of Default has occurred and is continuing at the time of such assignment, or (y) such assignment is to a Lender or an Affiliate of a Lender.

(B)The consent of the Administrative Agent (such consent not to be unreasonably withheld or delayed) shall be required for assignments in respect of a Facility if such assignment is to a Person that is not a Lender with a Commitment in respect of such Facility.

(C)The consent of the Letter of Credit Issuer (such consent not to be unreasonably withheld or delayed) shall be required for any assignment that increases the obligation of the assignee to participate in exposure under one or more Letters of Credit (whether or not then outstanding).

(iv)Assignment and Assumption.  The parties to each assignment shall execute and deliver to the Administrative Agent an Assignment and Assumption, together with a processing and recordation fee of $3,500, and the assignee, if it is not a Lender, shall deliver to the Administrative Agent an Administrative Questionnaire.

(v)No Assignment to Borrower.  No such assignment shall be made to the Borrower or any of the Borrower’s Affiliates.

(vi)No Assignment to Natural Persons.  No such assignment shall be made to a natural person.

Subject to acceptance and recording thereof by the Administrative Agent pursuant to paragraph (c) of this Section, from and after the effective date specified in each Assignment and Assumption, the assignee thereunder shall be a party to this Agreement and, to the extent of the interest assigned by such Assignment and Assumption, have the rights and obligations of a Lender under this Agreement, and the assigning Lender thereunder shall, to the extent of the interest assigned by such Assignment and Assumption, be released from its obligations under this Agreement (and, in the case of an Assignment and Assumption covering all of the assigning Lender’s rights and obligations under this Agreement, such Lender shall cease to be a party hereto) but shall continue to be entitled to the benefits of Sections 2.18(a) and 9.6 with respect to facts and circumstances occurring prior to the effective date of such assignment.  Any assignment or transfer by a Lender of rights or obligations under this Agreement that does not comply with this paragraph shall be treated for purposes of this Agreement as a sale by

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such Lender of a participation in such rights and obligations in accordance with paragraph (d) of this Section.

(c)           Register.  The Borrower hereby designates the Administrative Agent to serve as the Borrower’s agent, solely for purposes of this Section 9.3(c), to maintain a register (the “Register”) on which it will record the Commitments from time to time of each of the Lenders, the Loans made by each of the Lenders and each repayment in respect of the principal amount of the Loans of each Lender.  Failure to make any such recordation, or any error in such recordation, shall not affect the Borrower’s obligations in respect of such Loans.  With respect to any Lender, the transfer of any Commitment of such Lender and the rights to the principal of, and interest on, any Loan shall not be effective until such transfer is recorded on the Register maintained by the Administrative Agent with respect to ownership of such Commitment and Loans and prior to such recordation all amounts owing to the transferor with respect to such Commitment and Loans shall remain owing to the transferor.  The registration of assignment or transfer of all or part of any Commitment or Loan shall be recorded by the Administrative Agent on the Register only upon the acceptance by the Administrative Agent of a properly executed and delivered Assignment and Assumption Agreement pursuant to Section 9.3(b).  Coincident with the delivery of such an Assignment and Assumption Agreement to the Administrative Agent for acceptance and registration of assignment or transfer of all or part of a Loan, or as soon thereafter as practicable, the assigning or transferor Lender shall surrender the Note (if any) evidencing such Commitment, and thereupon one or more new Notes in the same aggregate principal amount shall be issued to the assigning or transferor Lender and/or the new Lender at the request of any such Lender. The Borrower agrees to indemnify the Administrative Agent from and against any and all losses, claims, damages and liabilities of whatsoever nature which may be imposed on, asserted against or incurred by the Administrative Agent in performing its duties under this Section 9.3(c), except as may result or arise from the Administrative Agent’s own gross negligence or willful misconduct.

(d)           Participations.  Any Lender may at any time sell participations to any Person (other than a natural person or the Borrower or any of the Borrower’s Affiliates or Subsidiaries) (each, a “Participant”) in all or a portion of such Lender’s rights and/or obligations under the Revolving Credit Facility (including all or a portion of its Commitment and/or the Loans owing to it thereunder); provided that (i) such Lender’s obligations under the Revolving Credit Facility shall remain unchanged; (ii) such Lender shall remain solely responsible to the other parties hereto for the performance of such obligations; and (iii) the Borrower, the Administrative Agent, the Lenders and the Letter of Credit Issuer shall continue to deal solely and directly with such Lender in connection with such Lender’s rights and obligations under the Revolving Credit Facility; and provided, further, that the consent of the Borrower (such consent not to be unreasonably withheld or delayed) shall be required unless (A) a Default or Event of Default has occurred and is continuing at the time of such assignment; or (B) such Participant is a Lender or an Affiliate of a Lender, and the consent of the Administrative Agent (such consent not to be unreasonably withheld or delayed) shall be required for participations if such Participant is not a Lender with a Commitment in respect of the Revolving Credit Facility.  Any agreement or instrument pursuant to which a Lender sells such a

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participation shall provide that such Lender shall retain the sole right to enforce this Agreement and to approve any amendment, modification or waiver of any  provision of this Agreement; provided that such agreement or instrument may provide that such Lender will not, without the consent of the Participant, agree to any amendment, modification or waiver that would (i) forgive any indebtedness of the Borrower under the Revolving Credit Facility or the Revolving Credit Facility Note; (ii) agree to reduce the rate of interest charged under this Agreement; or (iii) agree to extend the final maturity of any indebtedness evidenced by the Revolving Credit Facility Note, except as expressly provided by the terms of the Loan Documents, in each case to the extent that such amendment, modification or waiver would affect such Participant.  Subject to paragraph (e) of this Section, the Borrower agrees that each Participant shall be entitled to the benefits of Sections 2.18 and 2.19 to the same extent as if it were a Lender and had acquired its interest by assignment pursuant to paragraph (b) of this Section.  To the extent permitted by law, each Participant also shall be entitled to the benefits of Section 7.3 as though it were a Lender, provided such Participant agrees to be subject to Section 9.4 as though it were a Lender.

(e)           Limitations upon Participant Rights.  A Participant shall not be entitled to receive any greater payment under Sections 2.18 and 2.19 than the applicable Lender would have been entitled to receive with respect to the participation sold to such Participant, unless the sale of the participation to such Participant is made with the Borrower’s prior written consent.  A Participant that would be a Foreign Lender if it were a Lender shall not be entitled to the benefits of Section 2.19 unless the Borrower is notified of the participation sold to such Participant and such Participant agrees, for the benefit of the Borrower, to comply with Section 2.19(e) as though it were a Lender.

(f)            Certain Pledges.  Any Lender may at any time pledge or assign a Lien in all or any portion of its rights under this Agreement to secure obligations of such Lender, including any pledge or assignment to secure obligations to a Federal Reserve Bank; provided that no such pledge or assignment shall release such Lender from any of its obligations hereunder or substitute any such pledgee or assignee for such Lender as a party hereto.

(g)           Certain Rights of Farm Credit Lender Participants.  Notwithstanding anything in this Section 9.3 to the contrary, any Farm Credit Lender that (i) is the owner of a participation in a Commitment (including Loans outstanding thereunder) initially in the amount of at least $5,000,000; (ii) is, by written notice to the Borrower and the Administrative Agent (a “Voting Participant Notification”), designated by the selling Lender as being entitled to be accorded the rights of a voting participant hereunder (any Farm Credit Lender so designated being called a “Voting Participant”); and (iii) receives the prior written consent of the Borrower (unless an Event of Default has occurred and is continuing) and the Administrative Agent to become a Voting Participant, shall be entitled to vote for so long as such Farm Credit Lender owns such participation and notwithstanding any subparticipation by such Farm Credit Lender (and the voting rights of the selling Lender shall be correspondingly reduced), on a dollar for dollar basis, as if such Participant were a Lender, on any matter requiring or allowing a Lender to provide or withhold its consent, or to otherwise vote on any proposed action.

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Notwithstanding the foregoing, each Farm Credit Lender designated as a Voting Participant in Exhibit O hereto shall be a Voting Participant without delivery of a Voting Participant Notification and without the prior written consent of the Borrower and the Administrative Agent.  To be effective, each Voting Participant Notification shall, with respect to any Voting Participant, (A) state the full name, as well as all contact information required for an assignee in the Assignment and Assumption; and (B) state the dollar amount of the participation purchased.  The selling Lender and the Voting Participant shall notify the Administrative Agent and the Borrower within three (3) Business Days of any termination of, reduction or increase in the amount of, such participation.  The Borrower and the Administrative Agent shall be entitled to conclusively rely on information contained in notices delivered pursuant to this subsection (g).  The voting rights hereunder are solely for the benefit of the Voting Participants and shall not inure to any assignee or participant of a Voting Participant.

Section 9.4            Sharing of Payments by Lenders.  If any Lender shall, by exercising any right of setoff or counterclaim or otherwise, obtain payment in respect of any principal of or interest on any of its Loans or other obligations hereunder resulting in such Lender’s receiving payment of a proportion of the aggregate amount of its Loans and accrued interest thereon or other such obligations greater than its pro rata share thereof as provided herein, then the Lender receiving such greater proportion shall (a) notify the Administrative Agent of such fact; and (b) purchase (for cash at face value) participations in the Loans and such other obligations of the other Lenders, or make such other adjustments as shall be equitable, so that the benefit of all such payments shall be shared by the Lenders ratably in accordance with the aggregate amount of principal of and accrued interest on their respective Loans and other amounts owing them, provided that:

(i)            if any such participations are purchased and all or any portion of the payment giving rise thereto is recovered, such participations shall be rescinded and the purchase price restored to the extent of such recovery, without interest; and

(ii)           the provisions of this paragraph shall not be construed to apply to (A) any payment made by the Borrower pursuant to and in accordance with the express terms of this Agreement; or (B) any payment obtained by a Lender as consideration for the assignment of or sale of a participation in any of its Loans or participations in Letter of Credit Exposure to any assignee or participant, other than to the Borrower or any Subsidiary thereof (as to which the provisions of this paragraph shall apply).

The Borrower consents to the foregoing and agrees, to the extent it may effectively do so under applicable law, that any Lender acquiring a participation pursuant to the foregoing arrangements may exercise against each Obligor rights of setoff and counterclaim with respect to such participation as fully as if such Lender were a direct creditor of each Obligor in the amount of such participation.

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Section 9.5            Notices; Distribution of Information Via Electronic Means.

(a)           Use of Platform to Distribute Communications.  The Administrative Agent may make any material delivered by the Borrower to the Administrative Agent, as well as any amendments, waivers, consents, and other written information, documents, instruments and other materials relating to the Borrower, or any of its Subsidiaries, or any other materials or matters relating to any Loan Documents, or any of the transactions contemplated hereby or thereby (collectively, the “Communications”) available to the Lender Parties by posting such notices on an electronic delivery system such as IntraLinks or a substantially similar electronic system (the “Platform”).  The Borrower acknowledges that (i) the distribution of material through an electronic medium is not necessarily secure and that there are confidentiality and other risks associated with such distribution; (ii) the Platform is provided “as is” and “as available”; and (iii) neither the Administrative Agent nor any of its Affiliates warrants the accuracy, completeness, timeliness, sufficiency, or sequencing of the Communications posted on the Platform. The Administrative Agent and its Affiliates expressly disclaim with respect to the Platform any liability for errors in transmission, incorrect or incomplete downloading, delays in posting or delivery, or problems accessing the Communications posted on the Platform and any liability for any losses, costs, expenses or liabilities that may be suffered or incurred in connection with the Platform.  No warranty of any kind, express, implied or statutory, including any warranty of merchantability, fitness for a particular purpose, non-infringement of third party rights or freedom from viruses or other code defects, is made by the Administrative Agent or any of its Affiliates in connection with the Platform.

(b)           Notice by Electronic Means.  Each Lender agrees (i) on or before the date it becomes a party to this Agreement, to notify the Administrative Agent in writing of the e-mail address(es) to which a notice under this Agreement (a “Notice”) may be sent to it and from time to time thereafter to ensure that the Administrative Agent has on record an effective e-mail address for it; and (ii) that any Notice may be sent to such e-mail address(es).  Each Lender agrees that an e-mail message notice to it (as provided in the previous sentence) specifying that any Communication has been posted to the Platform shall for purposes of this Agreement constitute effective delivery to such Lender of such information, documents or other materials comprising such Communication.

(c)           Notices By Other Means.  Except as otherwise expressly provided herein, all notices, requests, demands and other communications provided for under the Loan Documents shall be in writing (including facsimile transmission or e-mail) and shall be sent to the applicable party at its address, e-mail address or facsimile number set forth on Exhibit A or on any Administrative Questionnaire, or as to each party, at such other address, e-mail address or facsimile number as shall be designated by such party in a written notice to the other party complying as to delivery with the terms of this Section 9.5.  All such notices, requests, demands and other communications shall be effective (i) when received, if sent by facsimile, e-mail, hand delivery or overnight courier; or (ii) three Business Days after the date when sent by registered or certified mail, postage prepaid; provided, however, that notices or requests to any Lender Party pursuant to any of the provisions of Article II shall not be effective until received by such Lender Party.  Notwithstanding the foregoing, no notices to the Borrower contemplated by Sections 7.1 or 7.2 will be effective if delivered solely by e-mail.

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Section 9.6           Expenses; Indemnity; Damage Waiver.

(a)           Costs and Expenses.  The Borrower shall pay (i) all reasonable out-of-pocket expenses incurred by the Administrative Agent and its Affiliates (including the reasonable fees, charges and disbursements of counsel for the Administrative Agent and specifically including allocated costs of in house counsel), in connection with the syndication of the credit facility provided for herein and the preparation, negotiation, execution, delivery and administration of this Agreement and the other Loan Documents or any amendments, modifications or waivers of the provisions hereof or thereof (whether or not the transactions contemplated hereby or thereby shall be consummated); (ii) all out-of-pocket expenses incurred by the Administrative Agent or any Lender after the occurrence and during the continuance of an Event of Default in connection with any audits or inspections of any Collateral or the operations or business of any Obligor; and (iii) all out-of-pocket expenses incurred by the Administrative Agent or any Lender (including the fees, charges and disbursements of any counsel for the Administrative Agent or any Lender and specifically including allocated costs of in house counsel) in connection with the enforcement or protection of its rights (A) in connection with this Agreement and the other Loan Documents, including its rights under this Section 9.6; or (B) in connection with the Obligations, including all such out-of-pocket expenses incurred during any workout, restructuring or negotiations in respect of the Obligations.

(b)           Indemnification by the Borrower.  The Borrower shall indemnify each Lender Party and each Affiliate of any Lender Party (each such Person being called an “Indemnitee”) against, and hold each Indemnitee harmless from, any and all losses, claims, damages, liabilities and related expenses (including the fees, charges and disbursements of any counsel for any Indemnitee and specifically including allocated costs of in house counsel) incurred by any Indemnitee or asserted against any Indemnitee by any third party or Obligor arising out of, in connection with, or as a result of (i) the execution or delivery of this Agreement, any other Loan Document or any agreement or instrument contemplated hereby or thereby, the performance by the parties hereto of their respective obligations hereunder or thereunder or the consummation of the transactions contemplated hereby or thereby; (ii) the Loans or the use or proposed use of the proceeds therefrom; (iii) any actual or alleged presence or release of Hazardous Substances on or from any property owned or operated by any Obligor or its Subsidiaries, or any liability arising from any alleged breach of Environmental Laws related in any way to any Obligor or its Subsidiaries; or (iv) any actual or prospective claim, litigation, investigation or proceeding relating to any of the foregoing, whether based on contract, tort or any other theory, whether brought by a third party or by any Obligor, and regardless of whether any Indemnitee is a party thereto, provided that such indemnity shall not, as to any Indemnitee, be available to the extent that such losses, claims, damages, liabilities or related expenses (A) are determined by a court of competent jurisdiction by final and nonappealable judgment to have resulted from the gross negligence or willful misconduct of such Indemnitee; or (B) result from a claim brought by any Obligor against an Indemnitee for breach of such Indemnitee’s obligations hereunder or under any other Loan Document, if such Obligor has obtained a final and nonappealable judgment in its favor on such claim as determined by a court of competent jurisdiction.

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(c)           Reimbursement by Lenders.  To the extent that the Borrower for any reason fails to indefeasibly pay any amount required under paragraph (a) or (b) of this Section 9.6 to be paid by it to the Administrative Agent (or any sub-agent thereof), or any Affiliate of any of the foregoing, each Lender severally agrees to pay to the Administrative Agent (or any such sub-agent) or such Affiliate, as the case may be, such Lender’s Percentage (determined as of the time that the applicable unreimbursed expense or indemnity payment is sought) of such unpaid amount, provided that the unreimbursed expense or indemnified loss, claim, damage, liability or related expense, as the case may be, was incurred by or asserted against the Administrative Agent (or any such sub-agent) in its capacity as such, or against any Affiliate of any of the foregoing acting for the Administrative Agent (or any such sub-agent) in connection with such capacity.  The obligations of the Lenders under this paragraph (c) are subject to the provisions of Section 8.10.

(d)           Waiver of Consequential Damages, Etc.  To the fullest extent permitted by applicable law, neither the Borrower (as one party) nor the Administrative Agent and any Lender (collectively as one party) shall assert, and each party hereby waives, any claim against the other party, on any theory of liability, for special, indirect, consequential or punitive damages (as opposed to direct or actual damages) arising out of, in connection with, or as a result of, this Agreement, any other Loan Document or any agreement or instrument contemplated hereby, the transactions contemplated hereby or thereby, the Loans or the use of the proceeds thereof.  No party shall be liable for any damages arising from the use by unintended recipients of any information or other materials distributed by it through telecommunications, electronic or other information transmission systems in connection with this Agreement or the other Loan Documents or the transactions contemplated hereby or thereby.

(e)           Payments.  All amounts due under this Section 9.6 shall be payable promptly after demand therefor.

(f)            Survival.  The agreements in this Section 9.6 shall survive the resignation of the Administrative Agent, the replacement of any Lender, the termination in full of all of the Commitments and the payment, satisfaction or discharge in full of all the other Obligations.

Section 9.7           Replacement of Non-Consenting Lender.  If any Lender (a “Non-Consenting Lender”) (i) demands compensation pursuant to Section 2.18, (ii) suspends its obligation to make, maintain or fund either LIBOR Loans or Quoted Rate Loans pursuant to Section 2.20, or (iii) refuses to consent to an amendment to, or waiver of, any Loan Document or provision thereof, which amendment or waiver requires unanimous consent of all the Lenders, or all the Lenders with a Commitment for a particular Facility, in order to be effective; then the Administrative Agent may or the Borrower may (but neither shall be obligated to), upon notice to the Non-Consenting Lender (and the Administrative Agent, if applicable), require the Non-Consenting Lender to assign and delegate, without recourse (in accordance with and subject to the restrictions contained in Section 9.3) all of its interests, rights, duties and obligations under this Agreement and the Loan Documents to an Eligible Lender that shall assume such obligations (which assignee may be a Lender, if a Lender accepts such assignment); provided that:

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(a)           if it is an assignment at the request of the Borrower, the Borrower shall have received the prior written consent of the Administrative Agent (and, if applicable, the Letter of Credit Issuer), which consent shall not unreasonably be withheld,

(b)           if it is an assignment at the request of the Administrative Agent and there is no Event of Default, the Borrower shall have consented to such assignment (and, if applicable, the Letter of Credit Issuer) which consents shall not be unreasonably withheld,

(c)           the interests, rights, duties and obligations of all Non-Consenting Lenders are similarly assigned to Eligible Lenders, and

(d)           the Non-Consenting Lender shall have received payment of an amount equal to the outstanding principal of its Loans, and participations in unreimbursed Letter of Credit Exposure, if any, accrued interest thereon, accrued fees and all other amounts payable to it hereunder and under the other Loan Documents, from the Eligible Lender (to the extent of such outstanding principal, accrued interest and accrued fees) or the Borrower (in the case of all other amounts).

Section 9.8           Disclosure of Information.  Each Lender Party shall keep confidential (and cause its officers, Directors, employees, agents and representatives to keep confidential) all information, materials and documents furnished by any Obligor or any other Lender Party (the “Disclosed Information”).  Notwithstanding the foregoing, any Lender Party may disclose Disclosed Information (a) to any other Lender Party or any Affiliate of any Lender Party; (b) to legal counsel, accountants and other professional advisors to such Lender Party; (c) to any regulatory body having jurisdiction over such Lender Party; (d) to the extent required by applicable laws and regulations or by any subpoena or similar legal process, or requested by any governmental agency or authority; (e) to the extent such Disclosed Information (i) becomes publicly available other than as a result of a breach of this Agreement; (ii) becomes available to such Lender Party on a non-confidential basis from a source other than an Obligor or a Subsidiary; or (iii) was available to such Lender Party on a non-confidential basis prior to its disclosure to such Lender Party by an Obligor or a Subsidiary; or (f) to the extent (A)  the Obligor or any Subsidiary shall have consented to such disclosure in writing; (B)  reasonably deemed necessary by any Lender Party in the enforcement of the remedies of the Lender Parties provided under the Loan Documents; or (C) necessary in connection with any potential assignment or participation in the interest granted hereunder, provided that any such potential assignee or participant shall have executed a confidentiality agreement imposing on such potential assignee or participant substantially the same obligations as are imposed on the Lender Parties under this Section 9.8.

Section 9.9           Governing Law; Jurisdiction; Waiver of Jury Trial.

(a)           Governing Law.  The Loan Documents shall be governed by, and construed in accordance with, the laws of the State of Colorado (other than its conflicts of laws rules), except to the extent the law of any other jurisdiction applies as to the perfection or enforcement of the Lender Parties’ Lien in any Collateral and except to the extent expressly provided to the contrary in any Loan Document.

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(b)           Jurisdiction.  The parties hereby irrevocably agree that any dispute arising under or in any way relating to this Agreement or any of the other Loan Documents shall be litigated solely and exclusively in a state or federal court sitting in Denver, Colorado and in no other.  The Borrower hereby agrees that if it attempts to commence any action regarding a dispute arising under or in any way relating to this Agreement or any of the other Loan Documents in any court other than a state or federal court sitting in Denver, Colorado, the Administrative Agent or any Lender Party (at its sole and exclusive option) may obtain an immediate order dismissing such action for improper venue or an order transferring venue to a state or federal court sitting in Denver, Colorado.  The Borrower hereby irrevocably submits to the personal jurisdiction of any state or federal court sitting in Denver, Colorado in any action or proceeding arising out of or in any way relating to this Agreement or any of the other Loan Documents and waives any defense of forum non conveniens.  The Borrower irrevocably consents to the service of copies of the summons and complaint and any other process which may be served in any such action or proceeding by the mailing of copies of such process to the Borrower, certified mail, return receipt requested, at its addresses specified Section 9.5 above.  The Borrower agrees that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law.

(c)           WAIVER OF JURY TRIAL.  THE BORROWER AND THE LENDER PARTIES HEREBY IRREVOCABLY WAIVE ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO ANY LOAN DOCUMENT OR ANY INSTRUMENT OR DOCUMENT DELIVERED THEREUNDER.

Section 9.10        Integration; Inconsistency.  This Agreement, together with the Loan Documents, comprise the final and complete integration of all prior expressions by the parties hereto with respect to the subject matter hereof and shall constitute the entire agreement among the parties hereto with respect to such subject matter, superseding all prior oral or written understandings.  If any provision of a Loan Document is inconsistent with or conflicts with a comparable or similar provision appearing in this Agreement, the comparable or similar provision in this Agreement shall govern.

Section 9.11        Agreement Effectiveness.  This Agreement shall become effective upon delivery of fully executed counterparts hereof to each of the parties hereto.

Section 9.12        Advice from Independent Counsel.  The parties hereto understand that this Agreement is a legally binding agreement that may affect such party’s rights.  Each party hereto represents to the others that it has received legal advice from counsel of its choice regarding the meaning and legal significance of this Agreement and that it is satisfied with its legal counsel and the advice received from it.

Section 9.13        Judicial Interpretation.  Should any provision of this Agreement require judicial interpretation, it is agreed that a court interpreting or construing the same shall not apply a presumption that the terms hereof shall be more strictly construed against any Person by reason of the rule of construction that a document is to be construed more strictly against the

83

Person who itself through its agent prepared the same, it being agreed that all parties hereto have participated in the preparation of this Agreement.

Section 9.14        Binding Effect; No Assignment by Borrower.  This Agreement shall be binding upon and inure to the benefit of the Borrower, the Lender Parties and their respective successors and assigns; provided, however, that the Borrower may not assign any or all of its rights or obligations hereunder or any of its interest herein without the prior written consent of the Required Lenders.

Section 9.15        Severability of Provisions.  Any provision of this Agreement which is prohibited or unenforceable shall be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof.

Section 9.16        Headings.  Article and Section headings in this Agreement are included herein for convenience of reference only and shall not constitute a part of this Agreement for any other purpose.

Section 9.17        Counterparts.  This Agreement and the other Loan Documents may be executed in any number of counterparts, each of which when so executed and delivered shall be deemed to be an original and all of which counterparts of this Agreement or such other Loan Document, as the case may be, taken together, shall constitute but one and the same instrument.

Section 9.18        Customer Identification — USA Patriot Act Notice.  The Administrative Agent hereby notifies the Borrower that pursuant to the requirements of the USA Patriot Act (Title III of Pub. L. 107-56, signed into law October 26, 2001) (the “Act”), and the Administrative Agent’s policies and practices, each Lender is required to obtain, verify and record certain information and documentation that identifies each Obligor, which information includes the name and address of each Obligor and such other information that will allow each Lender to identify each Obligor in accordance with the Act.

Section 9.19        Borrower’s Acknowledgement and Agreement Regarding Participations.  The Borrower acknowledges and agrees that CoBank and the Farm Credit Lenders identified on Exhibit O (the “Initial Farm Credit Participants”) have entered into certain Master Non-Recourse Participation Agreements (as may be amended, replaced, restated or supplemented from time to time, the “Participation Agreements”), whereby a certain percentage of CoBank’s Commitment and the Loans outstanding from time to time have been participated to the Initial Farm Credit Participants according to the terms of the Participation Agreements.  The Borrower and the Administrative Agent hereby consent to the Initial Farm Credit Participants becoming Voting Participants in accordance with Section 9.3(g), and acknowledge that the inclusion of this Section 9.19 in this Agreement constitutes receipt of the Voting Participant Notifications with respect to the Initial Farm Credit Participants as required by Section 9.3(g).

Section 9.20        Farm Credit Lender Equities.  Each party hereto acknowledges that each Lender that is a Farm Credit Lender has a statutory first lien on all of the Obligors’ Capital Stock in such Farm Credit Lender (the “Farm Credit Lender Equities”) pursuant to 12

84

U.S.C. §2131. Accordingly, and notwithstanding any other provision of this Agreement or any other Loan Document to the contrary: (a) the statutory lien of each Lender that is a Farm Credit Lender pursuant to 12 U.S.C. §2131 on the Farm Credit Lender Equities of such Lender shall be for the sole and exclusive benefit of such Lender, and such Farm Credit Lender Equities (or the proceeds thereof) shall not be subject to pro rata sharing with any other Lender hereunder or under the other Loan Documents; (b) no Lender that is a Farm Credit Lender shall have an obligation to retire the Farm Credit Lender Equities of such Lender upon the occurrence and during the continuance of an Event of Default or at any other time, either for application to the Obligations or otherwise; and (c) no Farm Credit Lender Equities of a Lender that is a Farm Credit Lender shall be offset against the Obligations owing to such Lender or otherwise taken into consideration for purposes of determining such Lender’s pro rata share of any interest hereunder.

Section 9.21        Patronage Distributions.  Notwithstanding any other provision in this Agreement or any other Loan Document to the contrary, (a) all Obligations owing to a Lender that is a Farm Credit Lender that are retained by such Lender 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 such Lender and its practices and procedures related to patronage distributions; and (b) any Obligations owing to a Lender that is a Farm Credit Lender that are not retained by such Farm Credit Lender 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 9.22        CoBank Bylaws and Capital Plan.  The Borrower acknowledges receipt of a copy of CoBank’s bylaws and capital plan, which describe the nature of CoBank equities and capitalization requirements. The Borrower agrees to comply with the requirements of CoBank’s bylaws and capital plan, as the same may be amended from time to time, including without limitation, provisions thereof applicable to patronage distributions. Each of the Borrower and CoBank represent to the other parties to this Agreement that the Borrower’s obligations under the terms of CoBank’s bylaws and capitalization plan do not conflict with the Borrower’s obligations under this Agreement or any other Loan Document, except as specifically provided in Section 9.20 and 9.21; provided, however, in the event such conflict is determined to exist, then to the extent of such conflict the terms of this Agreement and the other Loan Documents shall govern and be controlling.

Section 9.23        Release.  The Borrower, by its signature to this Agreement, hereby absolutely and unconditionally releases and forever discharges the Administrative Agent and the Lenders, and any and all participants, parent corporations, subsidiary corporations, affiliated corporations, insurers, indemnitors, successors and assigns thereof, together with all of the present and former Directors, officers, agents and employees of any of the foregoing, from any and all claims, demands or causes of action of any kind, nature or description, whether arising in law or equity or upon contract or tort or under any state or federal law or otherwise, which the Borrower has had, now has or has made claim to have against any such Person for or by reason of any act, omission, matter, cause or thing whatsoever occurring or arising prior to the date of this Agreement, whether such claims, demands and causes of action are matured or unmatured or known or unknown.

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Section 9.24        Prior Agreements.  Upon satisfaction of the conditions precedent set forth in Section 3.1 hereof, the Prior Credit Agreement shall be and hereby is amended, superseded and restated in its entirety by the terms and provisions of this Agreement.  This Agreement shall not constitute a novation of the Prior Credit Agreement or the indebtedness created thereunder.  The Borrower shall have the obligation to pay any fees and interest under the Prior Credit Agreement accruing through the effective date of this Agreement.

Signature Pages Follow

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their respective officers thereunto duly authorized, 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

Signature Page to Amended and Restated Credit Agreement

COBANK, ACB,
as Administrative Agent, Lead Arranger, Lender and Letter of Credit Issuer
By:	/s/ Michael Tousignant
	Name:	Michael Tousignant
	Title:	Vice President

Signature Page to Amended and Restated Credit Agreement

WELLS FARGO BANK, NATIONAL ASSOCIATION, as Lender
By:	/s/ Edward L. Cooper III
	Name:	Edward L. Cooper III
	Title:	Senior Vice President

Signature Page to Amended and Restated Credit Agreement

THE BANK OF TOKYO-MITSUBISHI UFJ, LTD., as Lender
By:	/s/ Victor Pierzchalski
	Name:	Victor Pierzchalski
	Title:	Authorized Signatory

Signature Page to Amended and Restated Credit Agreement

EXHIBITS AND SCHEDULES

Exhibit A	Commitments and Addresses
Exhibit B	Borrowing Base Certificate
Exhibit C	Pricing Grid
Exhibit D	Revolving Credit Facility Note
Exhibit E	Revolving Term Loan T01 Note
Exhibit F	Revolving Term Loan T06 Note
Exhibit G	Revolving Letter of Credit Note
Exhibit H	Borrowing Request
Exhibit I	Notice of Conversion to LIBO Rate
Exhibit J	Notice of Conversion to Quoted Rate
Exhibit K	Notice of Rollover of LIBO Rate
Exhibit L	Notice of Rollover of Quoted Rate
Exhibit M	Certificate of Officer as to Financial Statements
Exhibit N	Assignment and Assumption
Exhibit O	Initial Farm Credit Participants and Voting Participants
Schedule 4.1	Doing Business Names; Business Locations
Schedule 4.4	Capitalization; Organization Chart
Schedule 4.7	Litigation
Schedule 4.11	Plans
Schedule 4.12	Environmental Compliance
Schedule 4.18	Licenses, Compliance with Laws, Other Agreements
Schedule 6.1	Outstanding Liens
Schedule 6.2	Outstanding Indebtedness

Schedule 6.3	Outstanding Guaranties
Schedule 6.4	Additional Investments

Exhibit A

COMMITMENTS AND ADDRESSES

Name	Commitment Amounts	Notice Address
CoBank, ACB, as Administrative Agent	N/A	5500 South Quebec Street Greenwood Village, CO 80111 Attention: Jacquie Fredericks Phone: (303) 694-5833 Facsimile: (303) 796-1456 E-mail: jfreder@cobank.com
CoBank, ACB, as a Lender	Revolving Credit Facility Commitment: $242,000,000 Revolving Term Loan T01 Commitment: $48,707,402 Revolving Term Loan T06 Commitment: $65,000,000 Revolving Letter of Credit Commitment: $60,849,199.99	5500 South Quebec Street Greenwood Village, CO 80111 Attention: Jacquie Fredericks Phone: (303) 694-5833 Facsimile: (303) 796-1456 E-mail: jfreder@cobank.com

A-1

The Bank of Tokyo-Mitsubishi UFJ, Ltd.	Revolving Credit Facility Commitment: $28,000,000 Revolving Term Loan T01 Commitment: $0 Revolving Term Loan T06 Commitment: $0 Revolving Letter of Credit Commitment: $0	1251 Avenue of the Americas New York, NY 10020-1104 Attention: Portfolio Management Group Phone: (212) 782-4206 Facsimile: (212) 782-6440 With a copy to: Attention: Scott Ackerman, VP 601 Carlson Parkway, Suite 370 Minnetonka, MN 55305 Phone: (952) 473-7894 Facsimile: (952) 473-5152 E-mail: sackerman@us.mufg.jp
Wells Fargo Bank, National Association	Revolving Credit Facility Commitment: $50,000,000 Revolving Term Loan T01 Commitment: $0 Revolving Term Loan T06 Commitment: $0 Revolving Letter of Credit Commitment: $0	1740 Broadway Denver, CO 80274 Attention: Edward Cooper III Phone: (312) 845-9747 Facsimile: (312) 845-4462 Email: ed.cooper3@wellsfargo.com

A-2

Exhibit B

BORROWING BASE CERTIFICATE

Date:                        

CoBank, ACB

5500 South Quebec Street

Greenwood Village, CO 80111

Attention: Michael Tousignant

Re:Amended and Restated Credit Agreement dated as of July 30, 2009 by and among American Crystal Sugar Company, as borrower, the Lenders from time to time party thereto, and CoBank, ACB, as administrative agent

In accordance with the above referenced agreement (as amended, restated, supplemented or otherwise modified from time to time, the “Credit Agreement”), set forth below is the calculation of the Borrowing Base.

All capitalized terms used in this Certificate have the meanings given in the Credit Agreement.  All language used in this certificate is summary language, the exact language and meanings have the meanings given in the Credit Agreement.

A. ELIGIBLE ACCOUNTS
1.	Total Accounts as of                           .		$
2.	Ineligible Accounts:
	(a)	Accounts over 90 days past due;	$
	(b)	Accounts that are ineligible in accordance with subsections (b) through (i) of the definition of Eligible Accounts	$
		[List all material ineligible Accounts]
3.	Total Ineligible Accounts (sum of lines 2(a) and (b)).		$
4.	TOTAL ELIGIBLE ACCOUNTS (Line 1 minus Line 3)		$

B. ELIGIBLE NET INVENTORY:
1.	Total Net Inventory as of                   .		$
2.	Net Inventory that is ineligible in accordance with subsections (a) through (e) of the definition of Eligible Net Inventory:		$
		[List all material ineligible Net Inventory]

B-1

3.	TOTAL ELIGIBLE NET INVENTORY (Line 1 minus Line 2)		$
C. AGGREGATE SHORT-TERM LOAN AMOUNT:
1.		Revolving Credit Facility Outstanding Amount	$
2.		Principal amount outstanding of all Commodity Credit Corporation Loans	$
3.		Principal amount outstanding of all commercial paper issued by all Obligors	$
4.		AGGREGATE SHORT-TERM LOAN AMOUNT	$
D. BORROWING BASE:
1.		80% of Total Eligible Accounts	$
2.		75% of Total Eligible Net Inventory	$
3.		(Line 1 + Line 2)	$
4.		Aggregate Short-Term Loan Amount (Line C4)	$
5.		Unused Availability (Line D3 minus Line D4)	$

The Borrower hereby represents and warrants that this Borrowing Base Certificate is a true and correct statement regarding the status of matters set forth therein.  The Borrower hereby further represents and warrants that no Default or Event of Default has occurred and is continuing, except as disclosed in the accompanying letter.  In addition, the Borrower hereby acknowledges that any Revolving Credit Facility Advances made to the Borrower under the Credit Agreement will be based upon the Administrative Agent’s reliance on the information contained herein.

AMERICAN CRYSTAL SUGAR COMPANY
By:
	Name:
	Title:

B-2

Exhibit C

PRICING GRID

Level Status	Capitalization Ratio	Base Rate Margin		LIBOR Margin		Unused Commitment Fee
I	< 40%	1.00	%	2.00	%	0.375	%
II	> 40% < 50%	1.25	%	2.25	%	0.375	%
III	> 50%	1.75	%	2.75	%	0.50	%

C-1

Exhibit D

REVOLVING CREDIT FACILITY NOTE

$	, 20
	Denver, Colorado

For value received, AMERICAN CRYSTAL SUGAR COMPANY, a cooperative association formed under the laws of the State of Minnesota (the “Borrower”), promises to pay to the order of                          , a                                                    (the “Lender”), at such place as the Administrative Agent under the Credit Agreement defined below may from time to time designate in writing, in lawful money of the United States of America and in immediately available funds, the principal sum of                                                    Dollars ($              ), or, if less, the aggregate unpaid principal amount of all Revolving Credit Facility Advances (as defined in the Credit Agreement) made by the Lender to the Borrower under the Amended and Restated Credit Agreement dated as of July 30, 2009 by and among the Borrower, the Lender, certain other Lenders from time to time party thereto and CoBank, ACB, as administrative agent (as amended, restated, supplemented or otherwise modified from time to time, the “Credit Agreement”), together with interest on the unpaid principal balance hereof at such interest rates and payable at such times as are specified in the Credit Agreement.

This Note is a Revolving Credit Facility Note as defined in the Credit Agreement, and is issued subject and pursuant to the Credit Agreement, which, among other things, provides for the amount and date of payments of principal and interest required hereunder, acceleration of the maturity hereof upon the occurrence of an Event of Default (as defined in the Credit Agreement), and prepayment hereof upon the occurrence of certain events.

The Borrower shall pay all costs of collection, including reasonable attorneys’ fees and legal expenses, if this Note is not paid when due, whether or not legal proceedings are commenced.

Presentment or other demand for payment, notice of dishonor and protest are expressly waived.

AMERICAN CRYSTAL SUGAR COMPANY
By:
	Name:
	Title:

D-1

Exhibit E

REVOLVING TERM LOAN T01 NOTE

$	, 20
	Denver, Colorado

For value received, AMERICAN CRYSTAL SUGAR COMPANY, a cooperative association formed under the laws of the State of Minnesota (the “Borrower”), promises to pay to the order of                          , a                                                    (the “Lender”), at such place as the Administrative Agent under the Credit Agreement defined below may from time to time designate in writing, in lawful money of the United States of America and in immediately available funds, the principal sum of                                                    Dollars ($              ), or, if less, the aggregate unpaid principal amount of all Revolving Term Loan T01 Advances (as defined in the Credit Agreement) made by the Lender to the Borrower under the Amended and Restated Credit Agreement dated as of July 30, 2009 by and among the Borrower, the Lender, certain other Lenders from time to time party thereto and CoBank, ACB, as administrative agent (as amended, restated, supplemented or otherwise modified from time to time, the “Credit Agreement”), together with interest on the unpaid principal balance hereof at such interest rates and payable at such times as are specified in the Credit Agreement.

This Note is a Revolving Term Loan T01 Note as defined in the Credit Agreement, and is issued subject and pursuant to the Credit Agreement, which, among other things, provides for the amount and date of payments of principal and interest required hereunder, acceleration of the maturity hereof upon the occurrence of an Event of Default (as defined in the Credit Agreement), and prepayment hereof upon the occurrence of certain events.

The Borrower shall pay all costs of collection, including reasonable attorneys’ fees and legal expenses, if this Note is not paid when due, whether or not legal proceedings are commenced.

Presentment or other demand for payment, notice of dishonor and protest are expressly waived.

AMERICAN CRYSTAL SUGAR COMPANY
By:
	Name:
	Title:

E-1

Exhibit F

REVOLVING TERM LOAN T06 NOTE

$	, 20
	Denver, Colorado

For value received, AMERICAN CRYSTAL SUGAR COMPANY, a cooperative association formed under the laws of the State of Minnesota (the “Borrower”), promises to pay to the order of                          , a                                                    (the “Lender”), at such place as the Administrative Agent under the Credit Agreement defined below may from time to time designate in writing, in lawful money of the United States of America and in immediately available funds, the principal sum of                                                    Dollars ($               ), or, if less, the aggregate unpaid principal amount of all Revolving Term Loan T06 Advances (as defined in the Credit Agreement) made by the Lender to the Borrower under the Amended and Restated Credit Agreement dated as of July 30, 2009 by and among the Borrower, the Lender, certain other Lenders from time to time party thereto and CoBank, ACB, as administrative agent (as amended, restated, supplemented or otherwise modified from time to time, the “Credit Agreement”), together with interest on the unpaid principal balance hereof at such interest rates and payable at such times as are specified in the Credit Agreement.

This Note is a Revolving Term Loan T06 Note as defined in the Credit Agreement, and is issued subject and pursuant to the Credit Agreement, which, among other things, provides for the amount and date of payments of principal and interest required hereunder, acceleration of the maturity hereof upon the occurrence of an Event of Default (as defined in the Credit Agreement), and prepayment hereof upon the occurrence of certain events.

The Borrower shall pay all costs of collection, including reasonable attorneys’ fees and legal expenses, if this Note is not paid when due, whether or not legal proceedings are commenced.

Presentment or other demand for payment, notice of dishonor and protest are expressly waived.

AMERICAN CRYSTAL SUGAR COMPANY
By:
	Name:
	Title:

F-1

Exhibit G

REVOLVING LETTER OF CREDIT NOTE

$	, 20
	Denver, Colorado

For value received, AMERICAN CRYSTAL SUGAR COMPANY, a cooperative association formed under the laws of the State of Minnesota (the “Borrower”), promises to pay to the order of                          , a                                                   (the “Lender”), at such place as the Administrative Agent under the Credit Agreement defined below may from time to time designate in writing, in lawful money of the United States of America and in immediately available funds, the principal sum of                                                   Dollars ($                 ), or, if less, the aggregate unpaid principal amount of all Revolving Letter of Credit Advances (as defined in the Credit Agreement) made by the Lender to the Borrower under the Amended and Restated Credit Agreement dated as of July 30, 2009 by and among the Borrower, the Lender, certain other Lenders from time to time party thereto and CoBank, ACB, as administrative agent (as amended, restated, supplemented or otherwise modified from time to time, the “Credit Agreement”), together with interest on the unpaid principal balance hereof at such interest rates and payable at such times as are specified in the Credit Agreement.

This Note is a Revolving Letter of Credit Note as defined in the Credit Agreement, and is issued subject and pursuant to the Credit Agreement, which, among other things, provides for the amount and date of payments of principal and interest required hereunder, acceleration of the maturity hereof upon the occurrence of an Event of Default (as defined in the Credit Agreement), and prepayment hereof upon the occurrence of certain events.

The Borrower shall pay all costs of collection, including reasonable attorneys’ fees and legal expenses, if this Note is not paid when due, whether or not legal proceedings are commenced.

Presentment or other demand for payment, notice of dishonor and protest are expressly waived.

AMERICAN CRYSTAL SUGAR COMPANY
By:
	Name:
	Title:

G-1

Exhibit H

BORROWING REQUEST

[                                  ,           ]

To:CoBank, ACB, as Administrative Agent

5500 South Quebec Street

Greenwood Village, CO 80111

Attention: Michael Tousignant

We refer to that certain Amended and Restated Credit Agreement dated as of July 30, 2009 by and among AMERICAN CRYSTAL SUGAR COMPANY, a cooperative association formed under the laws of the State of Minnesota (the “Borrower”), the Lenders from time to time party thereto, and CoBank, ACB, a federally chartered banking organization, as administrative agent (as amended, restated, supplemented or otherwise modified from time to time, the “Credit Agreement”).  Capitalized terms used herein but not otherwise defined shall have the same meanings assigned to them in the Credit Agreement.

We hereby request or confirm our request for a Borrowing under the                      Facility, on the date, of the type(s) and in the amount(s) specified in Annex I attached hereto and request or confirm our request that each Lender make Advance(s) in such Lender’s Percentage of the requested Borrowing (the “Requested Advances”).

To induce the Lenders to make the Requested Advances, we hereby represent and warrant to the Lenders that:

(a)For the Revolving Credit Facility Advances Only:  As of the date hereof and before giving effect to the Requested Advances, the Aggregate Short-Term Loan Amount was [$                        ].  After giving effect to the Requested Advances, the Aggregate Short-Term Loan Amount will be [$                            ].

(b)No Default or Event of Default exists or will result from the making of the Requested Advances.

(c)The conditions precedent set forth in Section 3.2 of the Credit Agreement are fully satisfied as of the date of the Requested Advances.

H-1

AMERICAN CRYSTAL SUGAR COMPANY
By:
	Name:
	Title:

H-2

ANNEX I

to Borrowing Request

Dated [                            ,          ]

Facility Amount of
Borrowing
Request Type of Advance
(Base Rate, LIBO
Rate, Quoted
Rate) Date of
Borrowing Interest Period
(LIBO Rate) Expiry Date of
Interest Period
(LIBO Rate) Quoted Rate
(*if applicable) Quoted Rate
Period (*if
applicable)

* [To be completed by Administrative Agent]

H-3

Exhibit I

NOTICE OF CONVERSION TO LIBO RATE

[                              ,           ]

To:CoBank, ACB, as Administrative Agent

5500 South Quebec Street

Greenwood Village, CO 80111

Attention: Michael Tousignant

We refer to that certain Amended and Restated Credit Agreement dated as of July 30, 2009 by and among AMERICAN CRYSTAL SUGAR COMPANY, a cooperative association formed under the laws of the State of Minnesota (the “Borrower”), the Lenders from time to time party thereto, and CoBank, ACB, a federally chartered banking organization, as administrative agent (as amended, restated, supplemented or otherwise modified from time to time, the “Credit Agreement”).  Capitalized terms used herein but not otherwise defined shall have the same meanings assigned to them in the Credit Agreement.

Pursuant to Section 2.3 of the Credit Agreement, we hereby request or confirm our request that Base Rate Loans in the aggregate amount(s) specified in Annex I attached hereto be converted into LIBOR Loans (the “Requested Conversion(s)”) on the date(s) and for the Interest Period(s) specified in Annex I attached hereto and that each Lender make such conversion(s) in such Lender’s Percentage of the Requested Conversion(s).

To induce the Lenders to make the Requested Conversion(s), we hereby represent and warrant to the Lenders that no Default or Event of Default exists or will result from the making of any Requested Conversion(s).

AMERICAN CRYSTAL SUGAR COMPANY
By:
	Name:
	Title:

I-1

ANNEX I

to Notice of Conversion to LIBO Rate

Dated [               ,            ]

Facility under which
Loans to be
Converted are
Outstanding Amount to
be Converted Date of
Conversion Interest
Period Expiry Date of
Interest Period LIBO Rate*

* [To be completed by Administrative Agent]

I-2

Exhibit J

NOTICE OF CONVERSION TO QUOTED RATE

[                                 ,              ]

To:CoBank, ACB, as Administrative Agent

5500 South Quebec Street

Greenwood Village, CO 80111

Attention: Michael Tousignant

We refer to that certain Amended and Restated Credit Agreement dated as of July 30, 2009 by and among AMERICAN CRYSTAL SUGAR COMPANY, a cooperative association formed under the laws of the State of Minnesota (the “Borrower”), the Lenders from time to time party thereto, and CoBank, ACB, a federally chartered banking organization, as administrative agent (as amended, restated, supplemented or otherwise modified from time to time, the “Credit Agreement”).  Capitalized terms used herein but not otherwise defined shall have the same meanings assigned to them in the Credit Agreement.

Pursuant to Section 2.4 of the Credit Agreement, we hereby request or confirm our request that Base Rate Loans in the aggregate amount(s) specified in Annex I attached hereto be converted into Quoted Rate Loans (the “Requested Conversion(s)”) on the date(s) specified in Annex I attached hereto and that each Lender make such conversion(s) in such Lender’s Percentage of the Requested Conversion(s).

To induce the Lenders to make the Requested Conversion(s), we hereby represent and warrant to the Lenders that no Default or Event of Default exists or will result from the making of any Requested Conversion(s).

AMERICAN CRYSTAL SUGAR COMPANY
By:
	Name:
	Title:

J-1

ANNEX I

to Notice of Conversion to Quoted Rate
Dated [               ,            ]

Facility under which
Loans to be
Converted are
Outstanding Amount to
be
Converted Date of
Conversion Type of
Loan to be
Converted Quoted
Rate* Quoted Rate
Period*

* [To be completed by Administrative Agent]

J-2

Exhibit K

NOTICE OF ROLLOVER OF LIBO RATE

[                                 ,              ]

To:CoBank, ACB, as Administrative Agent

5500 South Quebec Street

Greenwood Village, CO 80111

Attention: Michael Tousignant

We refer to that certain Amended and Restated Credit Agreement dated as of July 30, 2009 by and among AMERICAN CRYSTAL SUGAR COMPANY, a cooperative association formed under the laws of the State of Minnesota (the “Borrower”), the Lenders from time to time party thereto, and CoBank, ACB, a federally chartered banking organization, as administrative agent (as amended, restated, supplemented or otherwise modified from time to time, the “Credit Agreement”).  Capitalized terms used herein but not otherwise defined shall have the same meanings assigned to them in the Credit Agreement.

Pursuant to Section 2.5 of the Credit Agreement, we hereby request or confirm our request that LIBOR Loans in the aggregate amount(s) specified in Annex I attached hereto be renewed (the “Requested Renewal(s)”) on the date(s) and for the Interest Period(s) specified in Annex I attached hereto and that each Lender make such renewal(s) in such Lender’s Percentage of the Requested Renewal(s).

To induce the Lenders to make the Requested Renewal(s), we hereby represent and warrant to the Lenders that no Default or Event of Default exists or will result from the making of any such Requested Renewal(s).

AMERICAN CRYSTAL SUGAR COMPANY
By:
	Name:
	Title:

K-1

ANNEX I

to Notice of Rollover of LIBO Rate

Dated [               ,            ]

Facility under
which Loans to be
Renewed are
Outstanding Amount of
LIBOR Loans
to be Renewed Expiring
Interest Period New
Interest
Period Expiry Date of
Interest Period

K-2

Exhibit L

NOTICE OF ROLLOVER OF QUOTED RATE

[                        ,             ]

To:CoBank, ACB, as Administrative Agent

5500 South Quebec Street

Greenwood Village, CO 80111

Attention: Michael Tousignant

We refer to that certain Amended and Restated Credit Agreement dated as of July 30, 2009 by and among AMERICAN CRYSTAL SUGAR COMPANY, a cooperative association formed under the laws of the State of Minnesota (the “Borrower”), the Lenders from time to time party thereto, and CoBank, ACB, a federally chartered banking organization, as administrative agent (as amended, restated, supplemented or otherwise modified from time to time, the “Credit Agreement”).  Capitalized terms used herein but not otherwise defined shall have the same meanings assigned to them in the Credit Agreement.

Pursuant to Section 2.6 of the Credit Agreement, we hereby request or confirm our request that Quoted Rate Loans in the aggregate amount(s) specified in Annex I attached hereto be renewed (the “Requested Renewal(s)”) on the date(s) and for the Quoted Rate Period(s) specified in Annex I attached hereto and that each Lender make such renewal(s) in such Lender’s Percentage of the Requested Renewal(s).

To induce the Lenders to make the Requested Renewal(s), we hereby represent and warrant to the Lenders that no Default or Event of Default exists or will result from the making of any such Requested Renewal(s).

AMERICAN CRYSTAL SUGAR COMPANY
By:
	Name:
	Title:

L-1

ANNEX I

to Notice of Rollover of Quoted Rate

Dated                 ,          

Facility under
which Loans to be
Renewed are
Outstanding Amount of
Quoted Rate
Loans to be
Renewed Expiring
Quoted Rate
Period New
Quoted
Rate Period Expiry Date of
Quoted Rate
Period Quoted
Rate*

* [To be completed by Administrative Agent]

L-2

Exhibit M

CERTIFICATE OF OFFICER AS TO FINANCIAL STATEMENTS

[                          ,          ]

To:CoBank, ACB, as Administrative Agent

5500 South Quebec Street

Greenwood Village, CO 80111

Attention: Michael Tousignant

RE: Financial Statements — AMERICAN CRYSTAL SUGAR COMPANY(the “Borrower”)

We refer to that certain Amended and Restated Credit Agreement dated as of July 30, 2009 by and among AMERICAN CRYSTAL SUGAR COMPANY, a cooperative association formed under the laws of the State of Minnesota (the “Borrower”), the Lenders from time to time party thereto, and CoBank, ACB, a federally chartered banking organization, as administrative agent (as amended, restated, supplemented or otherwise modified from time to time, the “Credit Agreement”).  Capitalized terms used herein but not otherwise defined shall have the same meanings assigned to them in the Credit Agreement.

I hereby certify on behalf of the Borrower as follows:

1.I am the duly qualified and acting treasurer of the Borrower, and I am familiar with the financial statements and financial affairs of the Consolidated Group, and am authorized to execute this Certificate on behalf of the Borrower.

2.Pursuant to Section 5.1 of the Credit Agreement, attached are the required [audited financial statements of the Consolidated Group prepared by [                          ] as of and for the Fiscal Year ended [                                    , 20    ] / unaudited financial statements of the Consolidated Group as of and for the Fiscal Quarter ended [                 ,         ]] (the “Applicable Covenant Computation Date”).  Such financial statements have been prepared in accordance with GAAP, fairly present the financial condition of the Consolidated Group as of such date and the results of the Consolidated Group’s operations for the period then ended, prepared on a consolidated and consolidating basis, subject to year-end adjustments and footnotes, and conform to the applicable requirements of Section 5.1 of the Credit Agreement.

3.The Borrower has obtained no knowledge of any Default or Event of Default, except as specifically stated on an attachment hereto (if any).

M-1

4.The computations attached hereto in Annex I set forth the Borrower’s compliance or non-compliance with the requirements set forth in the Financial Covenants as of the Applicable Covenant Computation Date. Such computations have been prepared from, and on a basis consistent with, the financial statements attached hereto.

AMERICAN CRYSTAL SUGAR COMPANY
By:
	Name:
	Title:

M-2

Annex I
to Exhibit M

FINANCIAL COVENANT CALCULATIONS

Covenant	Required	Actual
Section 5.9 — Minimum Interest Coverage Ratio	Not less than 3.25 to 1.00	to 1.00
Section 5.10 — Maximum Capitalization Ratio	Not more than 0.55 to 1.00	to 1.00
Section 5.11 — Minimum Net Working Capital	Not less than: (a) $35,000,000 as of each Fiscal Year End; and (b) $15,000,000 as of each Covenant Compliance Date	(a)               (b)

M-3

EXHIBIT N

ASSIGNMENT AND ASSUMPTION

This Assignment and Assumption (the “Assignment and Assumption”) is dated as of the Effective Date set forth below and is entered into by and between [the][each](1) Assignor identified in item 1 below ([the][each, an] “Assignor”) and [the][each](2) Assignee identified in item 2 below ([the][each, an] “Assignee”).  [It is understood and agreed that the rights and obligations of [the Assignors][the Assignees](3) hereunder are several and not joint.](4)  Capitalized terms used but not defined herein shall have the meanings given to them in the Amended and Restated Credit Agreement dated as of July 30, 2009 by and among AMERICAN CRYSTAL SUGAR COMPANY, a cooperative association formed under the laws of the State of Minnesota (the “Borrower”), the Lenders from time to time party thereto, and CoBank, ACB, a federally chartered banking organization, as administrative agent (as amended, restated, supplemented or otherwise modified from time to time, the “Credit Agreement”).  Capitalized terms used herein but not otherwise defined shall have the same meanings assigned to them in the Credit Agreement.

[The][Each] Assignee hereby acknowledges receipt of a copy of the Credit Agreement.  The Standard Terms and Conditions set forth in Annex 1 attached hereto are hereby agreed to and incorporated herein by reference and made a part of this Assignment and Assumption as if set forth herein in full.

For an agreed consideration, [the][each] Assignor hereby irrevocably sells and assigns to [the Assignee][the respective Assignees], and [the][each] Assignee hereby irrevocably purchases and assumes from [the Assignor][the respective Assignors], subject to and in accordance with the Standard Terms and Conditions and the Credit Agreement, as of the Effective Date inserted by the Administrative Agent as contemplated below, (i) all of [the Assignor’s][the respective Assignors’] rights and obligations in [its capacity as a Lender][their respective capacities as Lenders] under the Credit Agreement and any other documents or instruments delivered pursuant thereto to the extent related to the amount and percentage interest identified below of all of such outstanding rights and obligations of [the Assignor][the respective Assignors] under the respective facilities identified below (including without limitation any letters of credit, and guarantees included in such facilities), and (ii) to the extent permitted to be assigned under applicable law, all claims, suits, causes of action and any other right of [the Assignor (in its capacity as a Lender)][the respective Assignors (in their respective capacities as Lenders)] against any Person, whether known or unknown, arising under or in connection with

(1)For bracketed language here and elsewhere in this form relating to the Assignor(s), if the assignment is from a single Assignor, choose the first bracketed language.  If the assignment is from multiple Assignors, choose the second bracketed language.

(2)For bracketed language here and elsewhere in this form relating to the Assignee(s), if the assignment is to a single Assignee, choose the first bracketed language.  If the assignment is to multiple Assignees, choose the second bracketed language.

(3)Select as appropriate.

(4)Include bracketed language if there are either multiple Assignors or multiple Assignees.

N-1

the Credit Agreement, any other documents or instruments delivered pursuant thereto or the loan transactions governed thereby or in any way based on or related to any of the foregoing, including but not limited to contract claims, tort claims, malpractice claims, statutory claims and all other claims at law or in equity related to the rights and obligations sold and assigned pursuant to clause (i) above (the rights and obligations sold and assigned by [the][any] Assignor to [the][any] Assignee pursuant to clauses (i) and (ii) above being referred to herein, collectively, as [the][an] “Assigned Interest”).  Each such sale and assignment is without recourse to [the][any] Assignor and, except as expressly provided in this Assignment and Assumption, without representation or warranty by [the][any] Assignor.

1.	Assignor[s]:	[
		]
2.	Assignee[s]:	[
		]
3.	Borrower(s):	[                                                             ]
4.	Administrative Agent:	[                               ], as the administrative agent under the Credit Agreement
5.	Assigned Interest[s]:

Assignor[s](5)	Assignee[s](6)	Facility Assigned(7)	Aggregate Amount of Commitment/ Loans for all Lenders(8)	Amount of Commitment/ Loans Assigned(8)	CUSIP Number
			$	$
			$	$
			$	$

(5)	List each Assignor, as appropriate.
(6)	List each Assignee, as appropriate.
(7)	Fill in the appropriate terminology for the types of facilities under the Credit Agreement that are being assigned under this Assignment (e.g. “Revolving Credit Commitment,” “Term Loan Commitment,” etc.)
(8)	Amount to be adjusted by the counterparties to take into account any payments or prepayments made between the Trade Date and the Effective Date.

N-2

[6.          Trade Date:                                                           ](9)

(9) To be completed if the Assignor(s) and the Assignee(s) intend that the minimum assignment amount is to be determined as of the Trade Date.

N-3

Effective Date:   [                                    , 20    ] [TO BE INSERTED BY ADMINISTRATIVE AGENT, WHICH SHALL BE THE EFFECTIVE DATE OF RECORDATION OF TRANSFER IN THE REGISTER THEREFOR.]

The terms set forth in this Assignment and Assumption are hereby agreed to:

ASSIGNOR[S](10)
[NAME OF ASSIGNOR]
By:
	Name:
	Title:
[NAME OF ASSIGNOR]
By:
	Name:
	Title:
ASSIGNEE[S](11)
[NAME OF ASSIGNEE]
By:
	Name:
	Title:
[NAME OF ASSIGNEE]
By:
	Name:
	Title:

(10)	Add additional signature blocks as needed.
(11)	Add additional signature blocks as needed.

N-4

[Consented to and](12) Accepted:
[NAME OF ADMINISTRATIVE AGENT], as
Administrative Agent
By
	Title:
[Consented to:](13)
[NAME OF RELEVANT PARTY]
By
	Title:

(12)	To be added only if the consent of the Administrative Agent is required by the terms of the Credit Agreement.
(13)	To be added only if the consent of the Borrower and/or other parties (e.g. Letter of Credit Issuer) is required by the terms of the Credit Agreement.

N-5

ANNEX 1

STANDARD TERMS AND CONDITIONS FOR
ASSIGNMENT AND ASSUMPTION

1.  Representations and Warranties.

1.1  Assignor[s].  [The][Each] Assignor (a) represents and warrants that (i) it is the legal and beneficial owner of [the][the relevant] Assigned Interest, (ii) [the][such] Assigned Interest is free and clear of any lien, encumbrance or other adverse claim and (iii) it has full power and authority, and has taken all action necessary, to execute and deliver this Assignment and Assumption and to consummate the transactions contemplated hereby; and (b) assumes no responsibility with respect to (i) any statements, warranties or representations made in or in connection with the Credit Agreement or any other Loan Document, (ii) the execution, legality, validity, enforceability, genuineness, sufficiency or value of the Loan Documents or any collateral thereunder, (iii) the financial condition of the Borrower, any of its Subsidiaries or Affiliates or any other Person obligated in respect of any Loan Document or (iv) the performance or observance by the Borrower, any of its Subsidiaries or Affiliates or any other Person of any of their respective obligations under any Loan Document.

1.2.  Assignee[s].  [The][Each] Assignee (a) represents and warrants that (i) it has full power and authority, and has taken all action necessary, to execute and deliver this Assignment and Assumption and to consummate the transactions contemplated hereby and to become a Lender under the Credit Agreement, (ii) it meets all the requirements to be an assignee under Section      (b)(iii), (v) and (vi) of the Credit Agreement (subject to such consents, if any, as may be required under Section      (b)(iii) of the Credit Agreement), (iii) from and after the Effective Date, it shall be bound by the provisions of the Credit Agreement as a Lender thereunder and, to the extent of [the][the relevant] Assigned Interest, shall have the obligations of a Lender thereunder, (iv) it is sophisticated with respect to decisions to acquire assets of the type represented by the Assigned Interest and either it, or the person exercising discretion in making its decision to acquire the Assigned Interest, is experienced in acquiring assets of such type, (v) it has received a copy of the Credit Agreement, and has received or has been accorded the opportunity to receive copies of the most recent financial statements delivered pursuant to Section        thereof, as applicable, and such other documents and information as it deems appropriate to make its own credit analysis and decision to enter into this Assignment and Assumption and to purchase [the][such] Assigned Interest, (vi) it has, independently and without reliance upon the Administrative Agent or any other Lender and based on such documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Assignment and Assumption and to purchase [the][such] Assigned Interest, and (vii) if it is a Foreign Lender, attached to the Assignment and Assumption is any documentation required to be delivered by it pursuant to the terms of the Credit Agreement, duly completed and executed by [the][such] Assignee; and (b) agrees that (i) it will, independently and without reliance on the Administrative Agent, [the][any] Assignor or any other Lender, and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under the Loan Documents, and (ii) it will perform in

N-6

accordance with their terms all of the obligations which by the terms of the Loan Documents are required to be performed by it as a Lender.

2.  Payments.  From and after the Effective Date, the Administrative Agent shall make all payments in respect of [the][each] Assigned Interest (including payments of principal, interest, fees and other amounts) to [the][the relevant] Assignor for amounts which have accrued to but excluding the Effective Date and to [the][the relevant] Assignee for amounts which have accrued from and after the Effective Date.

3.  General Provisions.  This Assignment and Assumption shall be binding upon, and inure to the benefit of, the parties hereto and their respective successors and assigns.  This Assignment and Assumption may be executed in any number of counterparts, which together shall constitute one instrument.  Delivery of an executed counterpart of a signature page of this Assignment and Assumption by telecopy shall be effective as delivery of a manually executed counterpart of this Assignment and Assumption.  This Assignment and Assumption shall be governed by, and construed in accordance with, the law of the State of Colorado.

N-7

Exhibit O

FARM CREDIT PARTICIPANTS

Name	Participation Amounts	Notice Address	Voting Participant
AgCountry Farm Credit Services, FLCA	Revolving Credit Facility Participation:   $18,000,000 Revolving Term Loan T01 Participation: $0 Revolving Term Loan T06 Participation: $0 Revolving Letter of Credit Participation: $5,336,397.89	Jim Baltezore AgCountry, FCS 1900 44th Street South PO Box 6020 Fargo, ND 58103 Business Phone: 701-499-2579 Business Fax: 701-277-9054 EMail: jim.baltezore@agcountry.com	Yes
AgFirst Farm Credit Bank	Revolving Credit Facility Participation: $40,000,000 Revolving Term Loan T01 Participation: $0 Revolving Term Loan T06 Participation: $2,673,797 Revolving Letter of Credit Participation: $0	John Burnside AgFirst Farm Credit Bank 1401 Hampton Street Columbia, SC 29201 Business Phone: 803-753-2221 Business Fax: 803-254-4219 EMail: jburnside-servicing@agfirst.com	Yes

O-1

Bank of North Dakota	Revolving Credit Facility Participation: $20,000,000 Revolving Term Loan T01 Participation: $0 Revolving Term Loan T06 Participation: $0 Revolving Letter of Credit Participation: $0	Tom Redmann Bank of North Dakota 700 E. Main Avenue Bismarck, ND 58502-5509 Business Phone: 701-328-5671 Business Fax: 701-328-5731 EMail: tredmann@state.nd.us	Yes
Farm Credit Bank of Texas	Revolving Credit Facility Participation: $20,000,000 Revolving Term Loan T01 Participation: $0 Revolving Term Loan T06 Participation: $0 Revolving Letter of Credit Participation: $0	Isaac E. Bennett Farm Credit Bank of Texas 4801 Plaza on the Lake Drive Austin, TX 78746 Business Phone: 512-465-0717 Business Fax: 512-465-1832 EMail: isaac.bennett@farmcreditbank.com	Yes
Farm Credit Services of America, FLCA	Revolving Credit Facility Participation: $0 Revolving Term Loan T01 Participation: $0 Revolving Term Loan T06 Participation: $11,727,807 Revolving Letter of Credit Participation: $4,438,130.33	Curt Brown Farm Credit Services of America, FLCA 5015 South 118th Street Omaha, NE 68137 Business Phone: 402-348-3668 Business Fax: 402-348-3324 EMail: brownc@fcsamerica.com	Yes

N-2

Farm Credit Services of Mid-America, FLCA	Revolving Credit Facility Participation: $22,000,000 Revolving Term Loan T01 Participation: $0 Revolving Term Loan T06 Participation: $0 Revolving Letter of Credit Participation: $0	Ralph Bowman Farm Credit Services of Mid-America, FLCA 1601 UPS Drive Louisville, KY 40223 Business Phone: 502-420-3918 Business Fax: 502-420-3618 EMail: rbowman@e-farmcredit.com	Yes
First Pioneer Farm Credit, ACA	Revolving Credit Facility Participation: $0 Revolving Term Loan T01 Participation: $0 Revolving Term Loan T06 Participation: $10,708,618 Revolving Letter of Credit Participation: $4,266,562.38	James Papai First Pioneer Farm Credit, ACA 240 South Road Enfield, CT 06082 Business Phone: 860-741-4380 x261 Business Fax: 860-253-5565 EMail: james.papai@firstpioneer.com	Yes
Northwest Farm Credit Services, FLCA	Revolving Credit Facility Participation: $0 Revolving Term Loan T01 Participation: $0 Revolving Term Loan T06 Participation: $14,705,882 Revolving Letter of Credit Participation: $15,205,663.01	Northwest Farm Credit Services, FLCA 1700 S. Assembly Street Spokane, WA 99224 EMail: participations@farm-credit.com	Yes

N-3

U.S. AgBank, FCB Revolving Credit Facility Participation:
$50,000,000 Revolving Term Loan T01 Participation:
$0 Revolving Term Loan T06 Participation:
$25,183,896 Revolving Letter of Credit Participation:
$6,545,036.93 245 N. Waco Wichita, KS 67202 Attention: Travis Ball Phone:  (316) 266-5448 Facsimile: (316) 291-5011 E-mail:  travis.ball@usagbank.com Yes

N-4

Schedule 4.1

DOING BUSINESS NAMES; BUSINESS LOCATIONS

Obligor	Names and Locations
American Crystal Sugar Company	Name, Trade Names, Etc.:  American Crystal Sugar Company State of Organization:  Minnesota Chief Executive Office: 101 Third Street North, Moorhead, MN 56560-1952 Principle Place of Business: 101 Third Street North, Moorhead, MN 56560-1952 Tax Identification Number: 84-0004720 Direct and Indirect Subsidiaries: Sidney Sugars Incorporated, ProGold Limited Liability Company, Crab Creek Sugar Company
Sidney Sugars Incorporated	Name, Trade Names, Etc.: Sidney Sugars Incorporated State of Organization: Minnesota Chief Executive Office: 101 Third Street North, Moorhead, MN 56560-1952 Principle Place of Business: 35140 County Road 125, Sidney, MT 59270 Tax Identification Number: 22-3874444 Direct and Indirect Subsidiaries: None

1

Schedule 4.4

CAPITALIZATION; ORGANIZATION CHART

Holder, Class and Percentage Interests of the Ownership of Each Obligor and Subsidiaries:

Borrower owns 100% of the outstanding capital stock of Sidney Sugars Incorporated (Guarantor).

Borrower owns 100% of the outstanding capital stock of Crab Creek Sugar Company.

Borrower owns 51% of the outstanding membership interests in ProGold Limited Liability Company.

Organization Chart:

1

Schedule 4.7

LITIGATION

None.

1

Schedule 4.11

PLANS

Retirement Plan A for Employees of American Crystal Sugar Company and for Employees of Sidney Sugars Incorporated.

Retirement Plan B for Employees of American Crystal Sugar Company and for Employees of Sidney Sugars Incorporated.

Group Employee Health Plan for Employees and Retirees of American Crystal Sugar Company.

Group Health Plan for employees and retirees of Sidney Sugars Incorporated.

1

Schedule 4.12

ENVIRONMENTAL COMPLIANCE

None.

1

Schedule 4.18

LICENSES, COMPLIANCE WITH LAWS, OTHER AGREEMENTS

None.

1

Schedule 6.1

OUTSTANDING LIENS

Liens in favor of the Noteholders (as defined in the Intercreditor Agreement) to secure the Senior Secured Notes (as defined in the Intercreditor Agreement).

Liens in favor of AgCountry Farm Credit Services, PCA, as evidenced by UCC filing #20023434494 filed on March 18, 2002, with the Minnesota Secretary of State against the Borrower as debtor.

Liens in favor of IBM Credit LLC, as evidenced by the following:  (i) UCC filing #200518456168 filed on October 21, 2005, with the Minnesota Secretary of State against the Borrower as debtor, (ii) UCC filing #200614578524 filed on December 7, 2006, with the Minnesota Secretary of State against the Borrower, and (iii) UCC filing #200716132381 filed on March 29, 2007, with the Minnesota Secretary of State against the Borrower.

Liens in favor of Farm Credit Leasing Services Corporation, as evidenced by UCC filing #200612520764 filed on June 27, 2006, with the Minnesota Secretary of State against the Borrower as debtor.

Liens in favor of RDO Equipment Co., as evidenced by the following: (i) UCC filing #200810993995 filed on March 17, 2008, with the Minnesota Secretary of State against the Borrower as debtor, and (ii) UCC filing #200811234423 filed on April 2, 2008 with the Minnesota Secretary of State against the Borrower as debtor.

Liens in favor of North Central Rental & Leasing LLC, as evidenced by the following:  (i) UCC filing #200811843478 filed on May 19, 2008, with the Minnesota Secretary of State against the Borrower as debtor, (ii) UCC filing #200915431532 filed on March 23, 2009, with the Minnesota Secretary of State against the Borrower as debtor, and (iii) UCC filing #200916118363 filed on May 15, 2009, with the Minnesota Secretary of State against the Borrower as debtor.

Liens in favor of American National Bank and Trust Company against the pollution control equipment located at Moorhead, Minnesota as security for the 2001A East Grand Forks Bonds and the 2001B East Grand Forks Bonds.

Liens in favor of Minn-Dak Farmers Cooperative and United States Sugar Corporation against marketing assets.

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Schedule 6.2

OUTSTANDING DEBT

Debt owed to the 1998 Noteholders (as defined in the Intercreditor Agreement) with respect to the 1998 Senior Secured Notes (as defined in the Intercreditor Agreement).

Debt owed to the 2003 Noteholders (as defined in the Intercreditor Agreement) with respect to the 2003 Senior Secured Notes (as defined in the Intercreditor Agreement).

Solid Waste Bonds (Traill County, North Dakota) in the aggregate principal amount of $27,330,000.

1997 City of Moorhead Bonds in the aggregate principal amount of $5,500,000.

2001A East Grand Forks Bonds in the aggregate principal amount of $2,715,000.

2001B East Grand Forks Bonds in the aggregate principal amount of $245,000.

2008 East Grand Forks Bonds in the aggregate principal amount of $34,350,000.

Debt owed to Wells Fargo Bank in connection with the Borrower’s $1,000,000 overnight line.

Debt owed by Sidney Sugars Incorporated to the Borrower in connection with intercompany loans.

Debt owed to the Obligor’s marketing pool (which includes Minn-Dak Farmers Cooperative and United States Sugar Corporation).

Debt secured by the Liens described on Schedule 6.1.

Debt guarantied pursuant to the Guaranties described on Schedule 6.3.

1

Schedule 6.3

OUTSTANDING GUARANTIES

The Borrower has guaranteed the debt of Midwest Agri-Commodities Company in the aggregate principal amount of $5,150,000 owed to Co-Bank, ACB.

The Guarantor has guaranteed the Borrower’s debt owed to the Noteholders (as defined in the Intercreditor Agreement) with respect to the Senior Secured Notes (as defined in the Intercreditor Agreement).

1

Schedule 6.4

EXISTING INVESTMENTS

Investments in the following entities as reflected on the Borrower’s financial statements:

Sidney Sugars Incorporated

ProGold Limited Liability Company

Crab Creek Sugar Company

United Sugars Corporation

Midwest Agri Commodities Company

Co-Bank, ACB

Other cooperatives (CHS and electric coops)

1

EX-10.18

Exhibit 10.18

AMENDED AND RESTATED

UNIFORM MEMBER MARKETING AGREEMENT

POOL BASIS

THIS AGREEMENT, made effective as of the 1st day of September 2009, by and between MIDWEST AGRI-COMMODITIES COMPANY, a cooperative association organized under the laws of the State of North Dakota (hereinafter referred to as “MIDWEST”) and AMERICAN CRYSTAL SUGAR COMPANY, a cooperative association organized under the laws of the State of Minnesota (hereinafter referred to as “PROCESSOR”).

W I T N E S S E T H:

WHEREAS, PROCESSOR is a producer-owned and producer-operated agricultural cooperative which is organized and operated so as to adhere to the provisions of Section 15(a) of the Agricultural Marketing Act (12 U.S.C., Sec. 1141j(a)), as amended, and the Capper-Volstead Act of 1922 (7 U.S.C., Sec. 291, 292), and which is engaged in the operation of one or more sugar beet processing plants for the purposes of producing sugar, beet pulp, beet molasses, and related products from sugar beets; and

WHEREAS, MIDWEST is organized and operated so as to adhere to the provisions of Section 15(a) of the Agricultural Marketing Act (12 U.S.C., Sec. 1141j(a)), as amended, and the Capper-Volstead Act of 1922 (7 U.S.C., Sec. 291,292), for the mutual help and benefit of its processor-members for the purposes of acting as a marketing agency for its members and of engaging in the business of marketing the dried beet pulp, beet molasses, and related products produced by its members; and

WHEREAS, PROCESSOR wishes to participate with other members (collectively the “Members”) and pooled contract patrons (“Patrons”) of MIDWEST in developing and maintaining a dependable market for certain products produced by PROCESSOR; and

WHEREAS, MIDWEST and PROCESSOR desire to enter into a membership marketing agreement on a pool basis.

NOW, THEREFORE, in consideration of the above, subject to the respective terms, conditions, and obligations of the PROCESSOR and MIDWEST herein, MIDWEST and PROCESSOR agree as follows:

1.             Appointment of MIDWEST as Sales Agent.  PROCESSOR appoints and designates MIDWEST to act as its sole worldwide agent in the sale and marketing of the following products (hereinafter collectively the “Co-Products”) produced by PROCESSOR during the term of this Agreement:

(a)           Dried beet pulp;

(b)           Beet molasses (excluding any beet molasses used by PROCESSOR for further sugar processing or in the production of yeast);

(c)           Raffinate (de-sugared beet molasses);

(d)           Betaine; and

(e)           Any other product for which the Members of MIDWEST have, by unanimous vote, created a separate pool.

MIDWEST accepts such appointment and agrees to act as the sales agent and pool administrator in accordance with the terms of this Agreement.  PROCESSOR agrees that MIDWEST may employ all such persons and agencies as it determines to be necessary to carry out its obligations under this Agreement.  MIDWEST agrees, and is hereby empowered by PROCESSOR, to sell in its own name, and pass title on behalf of PROCESSOR to, all Co-Products produced by PROCESSOR during the term of this Agreement to such third party purchasers (hereinafter “Purchaser” or “Purchasers”), in such markets, at such time or times, at such place or places, in such manner and on such prices or terms as MIDWEST determines to be in the best interests of PROCESSOR and the Members and Patrons of Midwest.  It is understood and agreed that this Agreement applies to all Co-Products produced by PROCESSOR in any state or location.

2.             Billing and Collection.  All sales made by MIDWEST shall be billed on invoices of MIDWEST and all receipts shall be collected by MIDWEST.

3.             Product Pools.  MIDWEST and PROCESSOR agree that the Co-Products to be sold by MIDWEST hereunder shall be pooled for each crop year with products of the Members of MIDWEST.  Separate pools shall be maintained for each of the Co-Products. Additional pools may be established by unanimous agreement of the Members of MIDWEST to market new or related products developed by the Members and Patrons.  As sales are made, the proceeds received by MIDWEST from the sale of the Co-Products received from PROCESSOR shall be deposited into the appropriate pool, and shall be credited to PROCESSOR and the Members on the basis of their respective pro rata shares, as defined below in this Section 3 (the “Pro-Rata Shares”), of the net proceeds of each sale.  PROCESSOR’s share of net proceeds as defined in Section 5 hereof and after adjustments for advances paid under Section 6 hereof shall be distributed to PROCESSOR by MIDWEST as rapidly as collection and accounting procedures permit.

With respect to each pool year covered by this Agreement, distributions of the net proceeds shall initially be based on MIDWEST’S best estimate of the amount of Co-Product anticipated to be produced by each participant in the pool, and shall be adjusted by MIDWEST periodically as production figures are more precisely determined.  Accordingly, the Pro-Rata Share of PROCESSOR for each product pool shall be initially equal to a fraction with PROCESSOR’s estimated annual production of that product to be pooled as the numerator and total estimated annual pool production of that product for PROCESSOR and the other MIDWEST Members and Patrons as the denominator.  As soon as practicable after the close of MIDWEST’s fiscal year, and exact production is determined, precise Pro-Rata Shares shall be established and any appropriate adjustments shall be made among the pool participants.

4.             MIDWEST’s Books and Records.  MIDWEST shall keep accurate records of sales and distribution of pool proceeds in accordance with sound and generally accepted accounting practices.  Said records shall be at all reasonable times fully available for inspection by PROCESSOR.  All records of the pools shall be audited annually by MIDWEST’s regular Independent Certified Public Auditors and the Audit report made available to PROCESSOR.

2

5.             Definition of Net Proceeds.  The net proceeds for each product pool shall be defined as the gross sales from such pool by MIDWEST, less:

(a)           All costs, charges or expenses directly attributable to the sale of the Co-Product;

(b)           All costs of transportation and handling of the Co-Product, including storage costs incurred by MIDWEST;

(c)           Insurance premiums paid by MIDWEST;

(d)           State feed inspection and all other fees and taxes incurred in the marketing of the Co-Product;

(e)           All other direct and indirect charges or expenses, including administrative and overhead, attributable to the sale of the Co-Product in the operation of the product pools; and

(f)            All losses incurred by MIDWEST as a result of uncollectible accounts receivable shall be allocated to the appropriate product pool and shall be regarded as a marketing expense in determining the net proceeds of that product pool.

6.             Budget and Advance of Marketing Costs.  MIDWEST shall prepare a monthly budget or estimate of all direct and indirect marketing costs for each product pool.  Each Member or Patron involved in the pool shall pay in advance its estimated Pro-Rata share of such marketing costs for the month.  In the alternative, the PROCESSOR authorizes MIDWEST to borrow funds pursuant to its bank line of credit to pay direct and indirect marketing costs, provided that the Members and Patrons shall reimburse MIDWEST for the marketing expenses incurred during the previous month no later than the 8th business day of the following month.

7.             Product Warranties and Quality Standards; Handling of Product of Substandard Quality.  MIDWEST shall furnish to PROCESSOR from time to time with Purchaser specifications for Co-Products prescribing standards and procedures for quality control, storing and shipping of such product.  Initially such standards shall be those set forth on Schedule “A” attached hereto.  PROCESSOR shall observe and comply with any such specifications furnished by MIDWEST.  In addition, all Co-Products delivered to or at the order of MIDWEST shall conform to quality and other standards that are prescribed by applicable state and federal rules and regulations.

Co-Product of substandard quality, as determined by MIDWEST, shall, on the joint agreement of PROCESSOR and MIDWEST, or if no agreement has been reached, at the option of Midwest:  (a) be withheld from the pool and marketed by Midwest with input from PROCESSOR on an individual agency basis with proceeds from the sale of such Co-Product, less all direct and indirect selling expenses, distributed to PROCESSOR, or (b) remain in the pool and be charged with the additional costs relating to the substandard quality of the Co-Product.

8.             Storage of Product.  PROCESSOR shall store its Co-Products in tanks, bins, and warehouses that are approved in advance by MIDWEST.  At the earliest reasonable time after processing commences each year and as soon as Co-Products are placed in storage,

3

PROCESSOR shall deliver regular inventory reports to MIDWEST.  All production included in the regular inventory report shall be included in the pool for the appropriate crop year even though the Co-Products remain on the property of the PROCESSOR.  All on-site storage expenses and on-site labor, materials, and other expenses incurred at the PROCESSOR facilities for the preparation, loading and shipment of Co-Products produced by PROCESSOR shall be paid directly by PROCESSOR and shall not be a pool expense.

9.             Risk of Loss; Insurance.

(a)           Risk of Loss.  PROCESSOR covenants and agrees that it shall bear the risk of loss of the Co-Products until the Co-Products are transferred from the various PROCESSOR facilities to a common carrier for delivery to MIDWEST or to the Purchaser.  Regardless of which party bears the risk of loss, PROCESSOR shall continue to be the owner of its Co-Products and shall retain title to the Co-Products until the Co-Products are sold to the Purchaser.  Whenever MIDWEST shall have possession or control over such Co-Products prior to sale to the Purchaser, MIDWEST shall act strictly as custodian thereof in accordance with the provisions of this Agreement.

(b)           Insurance by PROCESSOR.  Until such time as the Co-Products are turned over to a common carrier for delivery to MIDWEST or to the Purchaser, PROCESSOR covenants and agrees, at its sole cost and at all times during the term of this Agreement, to maintain in force an insurance policy or policies covering loss, theft or damage to the Co-Products from any cause whatsoever, in amounts not less than the full insurable value thereof, and product liability insurance in amounts required by MIDWEST from time to time, which product liability insurance shall name MIDWEST as an additional or named insured.  Said policies shall be taken out with responsible insurance companies, and shall not be canceled or altered without ten days’ written notice to MIDWEST.  PROCESSOR shall furnish MIDWEST with certificates of insurance, together with a summary of the terms and conditions of the policy or policies, and the date on which they expire.

(c)           Insurance by MIDWEST.  From the time of the delivery of the Co-Products to a common carrier at the various PROCESSOR facilities, MIDWEST shall, to the extent not already covered by existing PROCESSOR insurance policies, maintain in force an insurance policy or policies covering product liability and loss, theft or damage to the Co-Products in amounts not less than the full insurable value of the Co-Products.  Premiums paid for any such insurance shall be a pool expense under Section 5 of the Agreement.

10.          Logistics Function.  MIDWEST shall be responsible for performing all normal logistics functions relating to the shipment of Co-Products from PROCESSOR’s plants.  MIDWEST shall use its business judgment in determining the factory, warehouse, Member, or Patron from which to draw product, considering such factors as, but not limited to, car loadings, points of destination, capacity of tanks or warehouses, and size of inventories stored therein.  Direct or indirect costs of MIDWEST associated with the performance of the logistics function shall be allocated to PROCESSOR in accordance with Section 5 of this Agreement.

11.          Information from PROCESSOR.  PROCESSOR shall, whenever requested by MIDWEST, furnish MIDWEST product production and related statistical data related to the Co-Products, and shall make its books and records related to the Co-Products and statistics available

4

at all reasonable times for inspection by MIDWEST.  PROCESSOR further agrees, upon request of MIDWEST, to furnish MIDWEST with samples of the Co-Products for grading or selling purposes.  MIDWEST shall furnish monthly performance reports of sales and operating costs against budget no later than 15 working days from the end of the month.

12.          Sales Promotion.  MIDWEST agrees to do any and all things reasonably necessary and proper to stimulate demand for the Co-Products in efforts to improve the markets and proceeds related thereto.

13.          Term of Agreement; Termination.

(a)           Term.  The term of this Agreement shall be for 2 (two) consecutive crop years commencing on September 1, 2009 and continuing through August 31, 2011 (the “Initial Term”) and from year to year thereafter until terminated as provided herein.

(b)           Termination.  Either party has the right to terminate this Agreement at the end of the Initial Term and thereafter by giving written notice by registered mail to the other party of such termination as follows:

(i)            Notice of termination to be effective at the conclusion of the Initial Term shall be given prior to May 1, 2010;

(ii)           Notice of termination to be effective at the conclusion of a renewal term shall be given prior to May 1 of a given year to be effective on August 31 of the subsequent year (e.g., notice given on April 30, 2011 is effective August 31, 2012).

(c)           Breach by PROCESSOR.  PROCESSOR agrees that MIDWEST shall have all rights and remedies provided by law and in the Bylaws of MIDWEST in the event of a breach or threatened breach by PROCESSOR of this Agreement.

(d)           Continuing Obligations.  Following the termination of this Agreement for any reason, MIDWEST shall remain obligated to distribute the net proceeds of each pool to PROCESSOR as provided herein.

14.          Patronage Relationship.  MIDWEST and PROCESSOR agree that the business to be transacted under this Agreement will be done on a cooperative basis.  PROCESSOR agrees to treat the full amount of any patronage distribution, in excess of the net proceeds to be returned to PROCESSOR as provided herein, which is made in a written notice of allocation (as defined in 26 U.S.C. §1388) which it receives, as income received in the year in which such written notice of allocation is received at its stated dollar amount in the manner provided in 26 U.S.C. §1385(a).

15.          Compliance with MIDWEST’s Governing Instruments.  PROCESSOR accepts and agrees to conform to and abide by the provisions of the Articles of Association and Bylaws of MIDWEST and all amendments thereto during the term of this Agreement.

16.          Representations by PROCESSOR.  PROCESSOR hereby represents and warrants to MIDWEST that:

5

(a)           Cooperative Status.  PROCESSOR is a grower-owned agricultural cooperative which is organized and operated so as to adhere to the provisions of Section 15(a) of the Agricultural Marketing Act (12 U.S.C., Sec. 1141j(a)), as amended, and the Capper-Volstead Act of 1922 (7 U. S. C., Sec. 291, 292);

(b)           Marketable Title.  PROCESSOR has good and marketable title to the Co-Products, and all Co-Products which are delivered to MIDWEST or to Purchasers are free and clear of any liens, attachments, security interests, claims or encumbrances of any kind whatsoever;

(c)           No Prior Obligation.  Except as previously disclosed to MIDWEST, PROCESSOR is not under contract or obligation to sell, market, consign or deliver any of the Co-Products to any other person, firm, association, corporation or other entity; and

(d)           Biotech Product.  PROCESSOR warrants and represents that it will not knowingly deliver, without the prior written consent of MIDWEST, any Co-Product to MIDWEST that is produced in whole or in part from biotech seed or other genetically modified organisms used by PROCESSOR, PROCESSOR’s growers, or which is in any manner acquired by PROCESSOR from another party (“Biotech Product”).  PROCESSOR shall indemnify, defend and hold MIDWEST and each of its Members and their respective directors, officers, employees, representatives and agents (each an “Indemnitee”) harmless from and against all liabilities, obligations, claims, damages, penalties, causes of action, costs and expenses (including, without limitation, attorneys’ fees and expenses, product recall and/or re-routing expenses and other incidental, consequential, special and punitive damages) (collectively, the “Liabilities”) imposed upon, incurred by or asserted against the Indemnitee that result directly from the supply by PROCESSOR of any Biotech Product to MIDWEST pursuant to this Agreement.

17.          Indemnification by PROCESSOR.  PROCESSOR hereby agrees to indemnify and hold harmless, MIDWEST, its members, and their respective employees, from and against any claims, losses or liabilities, including attorneys fees incurred, arising out of, or resulting from, the production, on-site storage or loading of any product which is marketed by MIDWEST pursuant to this Agreement.  In addition, PROCESSOR shall defend and hold harmless MIDWEST from any costs, claims, liabilities, suits or other proceedings or actions of any kind whatsoever, including attorney fees incurred, arising from or connected with a breach of any of the representations contained in Section 16 of this Agreement.

18.          Representations by MIDWEST.  MIDWEST hereby represents and warrants to PROCESSOR that:

(a)           Cooperative Status.  MIDWEST is a grower-owned agricultural cooperative which is organized and operated so as to adhere to the provisions of Section 15(a) of the Agricultural Marketing Act (12 U.S.C. Sec. 1141j(a)), as amended, and the Capper-Volstead Act of 1922 (7. U.S.C., Sec. 291, 292).

(b)           Member Agreements.  All other Members either have or will be required to enter into identical pool marketing agreements for the marketing of the Co-Products.

6

19.          Complete Agreement.  The parties agree that there are no oral or other conditions, promises, representations or inducements at variance with any of the terms hereof and that this contract represents the voluntary and clear understanding of both parties fully and completely.

20.          Assignment.  Neither PROCESSOR nor MIDWEST may assign this Agreement without the prior written consent of the other party.

21.          Waiver of Breach.  No waiver of any of the agreements or provisions contained in this Agreement shall be construed to be a waiver of any subsequent breach of the same or of any other provision of this Agreement.

22.          Notices.  Whenever notice is required by the terms hereof, it shall be given in writing by delivery or by certified or registered mail to the other party at the address found at the end of this Agreement or such other address as a party shall designate by appropriate notice.  If notice is given by mail, it shall be effective two (2) days after mailing.

23.          Construction of Terms of Agreement; Modification.  The language in all parts of this Agreement shall be constructed as a whole according to its fair meaning and not strictly for or against any party hereto.  Headings in this Agreement are for convenience only and are not to be construed as a part of this Agreement or as defining, limiting or amplifying the provisions hereof.  This Agreement contains the entire agreement between the parties and shall not be modified in any manner except by an instrument in writing executed by the parties hereto.  In the event any terms, covenant or condition herein contained is held to be invalid or void by any court of competent jurisdiction, the invalidity of any such term, covenant or condition shall in no way affect any other term, covenant or condition herein contained.

24.          Successors and Assigns.  Subject to the other provisions of this Agreement, all of the terms, covenants and conditions of this Agreement shall inure to the benefit of and shall bind the parties hereto and their successors and permitted assigns.

7

IN WITNESS WHEREOF, MIDWEST and PROCESSOR have executed this Agreement effective the day and year first above written.

FOR MIDWEST:
MIDWEST AGRI-COMMODITIES COMPANY
999 Fifth Avenue, Suite 500
San Rafael, CA 94901
By	/s/ J. R. Eichenberger
	Its	President
FOR PROCESSOR:
AMERICAN CRYSTAL SUGAR COMPANY
101 North Third Street
Moorhead, MN 56560
By	/s/ David Berg
	Its	President/CEO

8

Schedule A

The Co-Products supplied under this Agreement shall be of sound and merchantable quality and shall conform to the following specifications:

Dried beet pulp

Beet pulp pellets

5/16” diameter pellets

Moisture - - maximum 11 %

Sucrose - - maximum 10.5% dry basis

Ash- maximum 8%dry basis

Fines - - maximum 3%

Length 3/4”- 1 1/4” target

Additives - - Molasses or de-sugared beet molasses may be added, subject to Midwest approval

Shipping Weight - as agreed from time to time and subject to car size

Beet Pulp Shreds- Plain

Shreds - - plain packed in 40 Lb. paper bags

Moisture - - not more than 11.0%

Sucrose- maximum 10.5% dry basis

Ash- maximum 8% dry basis

Product - - composed only of pulp from sugar beets

Beet Pulp Shreds- with molasses

Shreds - with beet molasses added packed in 40 Lb. paper bags

Moisture - - not more than 11.0%

Product - - composed only of pulp from sugar beets with added beet molasses

Beet Molasses

Beet molasses as produced in the normal operations of the factory

Double Dilution Brix - minimum 79.5 degree

Total sugars expressed as invert - minimum 48%

Raffinate (de-sugared beet molasses)

Dry matter – minimum 60%

Crude Protein - minimum 9%

Betaine

Dry matter - not less than 60%

Betaine content - not less than 32% by weight

EX-10.19

Exhibit 10.19

PROGOLD LIMITED LIABILITY COMPANY

AMENDED AND RESTATED

MEMBER CONTROL AGREEMENT

(CONTAINS RESTRICTIONS ON TRANSFER

OF MEMBERSHIP INTERESTS)

September 1, 2009

PROGOLD LIMITED LIABILITY COMPANY

AMENDED AND RESTATED

MEMBER CONTROL AGREEMENT

(CONTAINS RESTRICTIONS ON TRANSFER

OF MEMBERSHIP INTERESTS)

Table of Contents

Article				Page
ARTICLE I DEFINITIONS				1
ARTICLE II MEMBERS AND BUSINESS				4
	2.1.	Members		4
	2.2.	Additional Members		4
	2.3.	Business of the Company		4
	2.4.	Actions Requiring Member and Board Approval		4
ARTICLE III MEMBERSHIP INTERESTS				4
	3.1.	Membership Interests		4
	3.2.	Voting		5
		(a)	Voting Power	5
		(b)	Voting Representatives	5
		(c)	Consents	5
	3.3.	No Cumulative Voting		5
	3.4.	Preemptive Rights		5
		(a)	When Preemptive Rights Arise	5
		(b)	Exemptions from Preemptive Rights	5
		(c)	Extent of Preemptive Rights	5
		(d)	Waiver of Preemptive Rights	5
		(e)	Notice of Preemptive Rights	6
		(f)	Valuation of Contributions Other Than Money	6
	3.5.	Waiver of Dissenters’ Rights		6
ARTICLE IV CAPITAL CONTRIBUTIONS				6
	4.1.	Initial Capital Contributions of Members		6
	4.2.	Additional Capital Contributions of Members		6
		(a)	Voluntary Additional Capital Contributions of Members	7
		(b)	Required Additional Capital Contributions of Members	7
	4.3.	Capital Contributions of New Members		7
	4.4.	Capital Accounts		8
	4.5.	Transferee Succeeds to Transferor’s Capital Account		8
	4.6.	No Right to Return of Contributions		8
	4.7.	No Interest on Capital		8
	4.8.	Loans to Company		8
	4.9.	Default by Member		8

i

ARTICLE V ALLOCATIONS					9
	5.1.	Allocation of Net Income and Net Losses			9
	5.2.	Consent to Allocation			9
ARTICLE VI DISTRIBUTIONS					9
	6.1.	Basis of Distributions			9
	6.2.	Tax Withholding Obligations Constitute a Distribution			9
	6.3.	Allocation of Marketing Costs			9
	6.4.	Periodic Distributions			10
ARTICLE VII BOARD OF GOVERNORS					10
	7.1.	Limitation of Governors’ Liability			10
	7.2.	Written Action By Governors			11
ARTICLE VIII REQUIRED RECORDS: ACCOUNTING AND TAX MATTERS					11
	8.1.	Required Records			11
	8.2.	Books of Account			11
	8.3.	Report to Members			11
	8.4.	Tax Characterization and Returns			12
	8.5.	Tax Information			12
	8.6.	Tax Matters Partner			12
ARTICLE IX ASSIGNMENT MEMBERSHIP INTERESTS					12
	9.1.	Assignment			12
		(a)	General Restriction on Assignment		13
		(b)	Conditions Precedent to Assignment of a Membership Interest to a Non-Member		13
		(c)	Consent to Proposed Assignment of a Membership Interest to a Non-Member		13
		(d)	Effective Date of Assignment		14
	9.2.	Acquit Company			14
	9.3.	Restriction on Assignment			14
	9.4.	First Right of Refusal Upon Proposed Sale of Membership Interest			14
		(a)	Notice of Proposed Sale		14
		(b)	Options to Other Members		14
		(c)	Exercise and Lapse of Options		15
		(d)	Proposed Sale to Another Member		15
		(e)	Restrictions on Assignment Apply		15
	9.5.	Option to Purchase Membership Interest			15
		(a)	Purchase Events		15
		(b)	American Crystal Option		16
		(c)	Purchase Price and Payment		16
ARTICLE X DISSOLUTION: DISSOLUTION AVOIDANCE					16
	10.1.	Dissolution			16
		(a)	Events of Dissolution		16
			(i)	Expiration of Fixed Period	16

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			(ii)	Member and Board Approval	16
			(iii)	Termination of Membership of a Member	16
		(b)	Notice of Dissolution		17
		(c)	Winding Up of Business		17
	10.2.	Dissolution Avoidance			17
		(a)	Member Consent to Continuation of the Company		17
		(b)	Status of Member Whose Membership Interest is Terminated		17
		(c)	No Obligation to Purchase Membership Interest of Terminated Member		17
		(d)	Agreement Not to Retire or Resign		17
	10.3.	Distributions Upon Liquidation			18
ARTICLE XI NEW MEMBERS BOUND BY AGREEMENT					18
ARTICLE XII REMEDIES					18
ARTICLE XIII MISCELLANEOUS					19
	13.1.	Entire Agreement			19
	13.2.	Amendment			19
	13.3.	Severability			19
	13.4.	Consent and Waiver			19
	13.5.	No Third Party Beneficiary			19
	13.6.	Notices			19
	13.7.	Binding Effect			20
	13.8.	Necessary Instruments and Acts			20
	13.9.	Number and Gender			20
	13.10.	Interpretation			20
	13.11.	Counterparts			20
	13.12.	Governing Law			20

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PROGOLD LIMITED LIABILITY COMPANY

AMENDED AND RESTATED

MEMBER CONTROL AGREEMENT

(CONTAINS RESTRICTIONS ON TRANSFER

OF MEMBERSHIP INTERESTS)

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

RECITALS

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

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

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

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

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

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

ARTICLE I

DEFINITIONS

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

1.20         [Intentionally Omitted]

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

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

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

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

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

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

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

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

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ARTICLE II
MEMBERS AND BUSINESS

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

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

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

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

ARTICLE III
MEMBERSHIP INTERESTS

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

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

3.2.Voting.

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

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

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

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

3.4.Preemptive Rights.

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

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

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

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

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

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

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

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

ARTICLE IV
CAPITAL CONTRIBUTIONS

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

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4.2.Additional Capital Contributions of Members.

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

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

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

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

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

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

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

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

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

8

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

ARTICLE V
ALLOCATIONS

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

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

ARTICLE VI
DISTRIBUTIONS

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

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

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

9

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

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

ARTICLE VII
BOARD OF GOVERNORS

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

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

ARTICLE VIII
REQUIRED RECORDS:  ACCOUNTING AND TAX MATTERS

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

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

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

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

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

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

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

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ARTICLE IX
ASSIGNMENT MEMBERSHIP INTERESTS

9.1.Assignment.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

9.5.Option to Purchase Membership Interest.

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

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

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

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

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

ARTICLE X
DISSOLUTION:  DISSOLUTION AVOIDANCE

10.1.Dissolution.

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

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

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

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

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

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

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

10.2.Dissolution Avoidance.

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

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

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

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

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

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

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

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

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

ARTICLE XI
NEW MEMBERS BOUND BY AGREEMENT

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

ARTICLE XII
REMEDIES

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

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

ARTICLE XIII
MISCELLANEOUS

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

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

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

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

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

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

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

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

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

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

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

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

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

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

GOLDEN GROWERS COOPERATIVE
By:	/s/ Harvey A. Pyle
	Its: Chairperson
AMERICAN CRYSTAL SUGAR COMPANY
By:	/s/ Thomas S. Astrup
Its: Chief Financial Officer

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SCHEDULE A

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

Member and Address	Form of Contribution	Agreed Value of Contribution			Percentage Interest (Financial Rights)		Voting Interest (Governance Rights)
Golden Growers Cooperative 101 North Tenth Street Suite 110 P.O. Box 2484 Fargo, North Dakota 58102	Cash	$	51,156,000		49	%	49	%
American Crystal Sugar Company 101 Third Street North Moorhead, Minnesota 56560	Cash	$	53,244,000	*	51	%	51	%
TOTAL		$	104,400,000		100	%	100	%

Dated: September 1, 2009.	GOLDEN GROWERS COOPERATIVE
	By:	/s/ Harvey A. Pyle
	Its: Chairperson
	AMERICAN CRYSTAL SUGAR COMPANY
	By:	/s/ Thomas S. Astrup
		Its: Chief Financial Officer

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

EX-21.1

Exhibit 21.1

List of Subsidiaries of the Company:

Name of Entity	State of Incorporation
United Sugars Corporation	Minnesota
Midwest Agri-Commodities Company	Minnesota
ProGold Limited Liability Company	Minnesota
Sidney Sugars Incorporated	Minnesota
Crab Creek Sugar Company	Minnesota

EX-31.1

EXHIBIT 31.1

CERTIFICATIONS

I, David A. Berg, certify that:

1.I have reviewed this report on Form 10-K of American Crystal Sugar Company (the registrant);

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f))for the registrant and have:

a)designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b)designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c)evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d)disclosed in this report any changes in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and.

5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors:

a)all significant deficiencies and material weaknesses in the design or operation of the internal controls over financial reporting which are likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b)any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

November 4, 2009	/s/ DAVID A. BERG
	David A. Berg
	Chief Executive Officer

EX-31.2

EXHIBIT 31.2

CERTIFICATIONS

I, Thomas S. Astrup, certify that:

1.I have reviewed this report on Form 10-K of American Crystal Sugar Company (the registrant);

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f))for the registrant and have:

a)designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b)designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c)evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d)disclosed in this report any changes in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and.

5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors:

a)all significant deficiencies and material weaknesses in the design or operation of the internal controls over financial reporting which are likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b)any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

November 4, 2009	/s/ Thomas S. Astrup
	Thomas S. Astrup
	Chief Financial Officer

EX-32.1

Exhibit 32.1

CERTIFICATE PURSUANT TO SECTION 906

OF SARBANES — OXLEY ACT OF 2002

The undersigned, David A. Berg, Chief Executive Officer of American Crystal Sugar Company, (the “Company”), does hereby certify that to his knowledge:

1.     The Company’s Annual Report on Form 10-K for the fiscal year ended August 31, 2009 (the “Report”) fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

2.Information contained in the Report fairly presents, in all material respects, the financial condition and results of operation of the Company.

The foregoing certification is being furnished solely pursuant to 18 U.S.C. §1350 and is not being filed as part of the Report or as a separate disclosure document.

IN WITNESS WHEREOF, the undersigned has caused this instrument to be executed this 4th day of November, 2009.

By:	/s/ David A. Berg
	Name: David A. Berg
	Title: Chief Executive Officer

A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

EX-32.2

Exhibit 32.2

CERTIFICATE PURSUANT TO SECTION 906

OF SARBANES — OXLEY ACT OF 2002

The undersigned, Thomas S. Astrup, Chief Financial Officer of American Crystal Sugar Company, (the “Company”), does hereby certify that to his knowledge:

1.     The Company’s Annual Report on Form 10-K for the fiscal year ended August 31, 2009 (the “Report”) fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

2.Information contained in the Report fairly presents, in all material respects, the financial condition and results of operation of the Company.

The foregoing certification is being furnished solely pursuant to 18 U.S.C. §1350 and is not being filed as part of the Report or as a separate disclosure document.

IN WITNESS WHEREOF, the undersigned has caused this instrument to be executed this 4th day of November, 2009.

By:	/s/ Thomas S. Astrup
	Name: Thomas S. Astrup
	Title: Chief Financial Officer

A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.