Limited Liability Company Agreement

CONFIDENTIAL TREATMENT REQUESTED.
CERTAIN PORTIONS HAVE BEEN
OMITTED AND HAVE BEEN SEPARATELY
FILED WITH THE COMMISSION.


LIMITED LIABILITY COMPANY AGREEMENT
OF
CRYSTECH, LLC


TABLE OF CONTENTS


Page
---- I. DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1


II. ORGANIZATIONAL AND MEMBERSHIP MATTERS . . . . . . . . . . . . . . . . . 4


2.1 Office and Agent . . . . . . . . . . . . . . . . . . . . . . . . 4
2.2 Purposes and Powers. . . . . . . . . . . . . . . . . . . . . . . 4
2.3 Members. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.4 Membership Interests . . . . . . . . . . . . . . . . . . . . . . 5
2.5 Voting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5


III. CAPITAL CONTRIBUTIONS . . . . . . . . . . . . . . . . . . . . . . . . . 5


3.1 Initial Capital Contributions of Members . . . . . . . . . . . . 5
3.2 Additional Capital Contributions of Members. . . . . . . . . . . 6
(a) Voluntary Additional Capital Contributions of Members . . . 6
(b) No Required Additional Capital Contributions of Members . . 6
3.3 Capital Accounts . . . . . . . . . . . . . . . . . . . . . . . . 6
3.4 Transferee Succeeds to Transferor's Capital Account. . . . . . . 7
3.5 No Right to Return of Contributions. . . . . . . . . . . . . . . 7
3.6 No Interest on Capital Contributions . . . . . . . . . . . . . . 7
3.7 Loans to the Company . . . . . . . . . . . . . . . . . . . . . . 7


IV. ALLOCATIONS AND DISTRIBUTIONS . . . . . . . . . . . . . . . . . . . . . 7


4.1 Allocation of Net Income and Net Losses. . . . . . . . . . . . . 7
4.2 Operating Distributions. . . . . . . . . . . . . . . . . . . . . 7
4.3 Tax Withholding Obligations Constitute a Distribution. . . . . . 8


V. MEETINGS OF MEMBERS . . . . . . . . . . . . . . . . . . . . . . . . . . 8


5.1 Place of Meetings. . . . . . . . . . . . . . . . . . . . . . . . 8
5.2 Regular Meetings . . . . . . . . . . . . . . . . . . . . . . . . 8
5.3 Special Meetings . . . . . . . . . . . . . . . . . . . . . . . . 8
5.4 Notice of Meetings . . . . . . . . . . . . . . . . . . . . . . . 8
5.5 Waiver of Notice . . . . . . . . . . . . . . . . . . . . . . . . 8
5.6 Quorum . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
5.7 Proxies. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
5.8 Action Without Meeting . . . . . . . . . . . . . . . . . . . . . 8
5.9 Telephonic Meetings. . . . . . . . . . . . . . . . . . . . . . . 9


VI. BOARD OF MANAGERS . . . . . . . . . . . . . . . . . . . . . . . . . . . 9


6.1 Board of Managers. . . . . . . . . . . . . . . . . . . . . . . . 9
6.2 Chairman of the Board; Other Officers. . . . . . . . . . . . . . 9
6.3 Delegation of Rights and Powers to Manage. . . . . . . . . . . .10
6.4 Term . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10
6.5 Vacancies. . . . . . . . . . . . . . . . . . . . . . . . . . . .10
6.6 Place of Meetings. . . . . . . . . . . . . . . . . . . . . . . .10
6.7 Regular Meetings . . . . . . . . . . . . . . . . . . . . . . . .10
6.8 Special Meetings . . . . . . . . . . . . . . . . . . . . . . . .10
6.9 Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10
6.10 Waiver of Notice . . . . . . . . . . . . . . . . . . . . . . . .10
6.11 Quorum . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10
6.12 Board Actions Requiring Unanimous Approval of Members. . . . . .11
6.13 Absent Managers. . . . . . . . . . . . . . . . . . . . . . . . .11
6.14 Action Without Meeting . . . . . . . . . . . . . . . . . . . . .12
6.15 Telephonic Meetings. . . . . . . . . . . . . . . . . . . . . . .12
6.16 Compensation . . . . . . . . . . . . . . . . . . . . . . . . . .12


VII. REQUIRED RECORDS; ACCOUNTING AND TAX MATTERS. . . . . . . . . . . . . .12


7.1 Required Records . . . . . . . . . . . . . . . . . . . . . . . .12
7.2 Books of Account . . . . . . . . . . . . . . . . . . . . . . . .12
7.3 ACSC as Operator . . . . . . . . . . . . . . . . . . . . . . . .13
7.4 Tax Characterization and Returns . . . . . . . . . . . . . . . .13
7.5 Fiscal Year. . . . . . . . . . . . . . . . . . . . . . . . . . .13


VIII. INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . . . . . . . .13


8.1 Indemnification. . . . . . . . . . . . . . . . . . . . . . . . .13
8.2 Insurance. . . . . . . . . . . . . . . . . . . . . . . . . . . .14


IX. TRANSFER OF MEMBERSHIP INTEREST . . . . . . . . . . . . . . . . . . . .14


9.1 Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . .14
(a) General Restriction on Assignment . . . . . . . . . . . .14
(b) Assignment of Governance Rights . . . . . . . . . . . . .14
(c) Assignment of Financial Rights. . . . . . . . . . . . . .14
(d) Conditions Precedent to Assignment of Governance
Rights or Financial Rights to Members . . . . . . . . . .14
(e) Effective Date of Assignment. . . . . . . . . . . . . . .15
(f) Pledge and Assignment . . . . . . . . . . . . . . . . . .15
9.2 Rights to Purchase and Sell Membership Interests . . . . . . . .15
(a) ACSC Right to Buy-Out Other Members . . . . . . . . . . .15
(b) Newcourt Right to Sell Membership Interest to ACSC . . .16


(c) Notice; Timing; Payment . . . . . . . . . . . . . . . . .16
9.3 Acquit Company . . . . . . . . . . . . . . . . . . . . . . . . .16
9.4 Restriction on Transfer. . . . . . . . . . . . . . . . . . . . .16


X. DISSOLUTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .16


10.1 Dissolution. . . . . . . . . . . . . . . . . . . . . . . . . . .16
10.2 Winding Up of Business . . . . . . . . . . . . . . . . . . . . .17
10.3 Distributions Upon Liquidation . . . . . . . . . . . . . . . . .17
10.4 Statement of Cancellation. . . . . . . . . . . . . . . . . . . .17
10.5 Termination of Membership. . . . . . . . . . . . . . . . . . . .18
(a) Continuation of the Company . . . . . . . . . . . . . . .18
(b) Status of Member Whose Membership is Terminated . . . . .18
(c) No Obligation to Purchase Financial Rights of
Terminated Member . . . . . . . . . . . . . . . . . . . .18


XI. NEW MEMBERS BOUND BY AGREEMENT. . . . . . . . . . . . . . . . . . . . .18


XII. REPRESENTATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . .18


12.1 Representations of ACSC. . . . . . . . . . . . . . . . . . . . .18
12.2 Representations of Newcourt. . . . . . . . . . . . . . . . . . .19


XIII. MOLASSES DESUGARIZATION PROJECT . . . . . . . . . . . . . . . . . . . .20


XIV. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . .20


14.1 Duration . . . . . . . . . . . . . . . . . . . . . . . . . . . .20
14.2 Corporate Bank Account . . . . . . . . . . . . . . . . . . . . .20
14.3 Actions or Organizer . . . . . . . . . . . . . . . . . . . . . .21
14.4 Acceptance of Capital Contributions. . . . . . . . . . . . . . .21
14.5 Certificates of Membership Interest. . . . . . . . . . . . . . .21
14.6 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . .21
14.7 Amendment. . . . . . . . . . . . . . . . . . . . . . . . . . . .21
14.8 Severability . . . . . . . . . . . . . . . . . . . . . . . . . .21
14.9 Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . .21
14.10 Consent and Waiver . . . . . . . . . . . . . . . . . . . . . . .22
14.11 No Third Party Beneficiary . . . . . . . . . . . . . . . . . . .22
14.12 Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . .22
14.13 Binding Effect . . . . . . . . . . . . . . . . . . . . . . . . .22
14.14 Necessary Instruments and Acts . . . . . . . . . . . . . . . . .22
14.15 Number and Gender. . . . . . . . . . . . . . . . . . . . . . . .22
14.16 Interpretation . . . . . . . . . . . . . . . . . . . . . . . . .22
14.17 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . .22


14.18 Governing Law. . . . . . . . . . . . . . . . . . . . . . . . . .23
14.19 Securities . . . . . . . . . . . . . . . . . . . . . . . . . . .23
14.20 Jurisdiction . . . . . . . . . . . . . . . . . . . . . . . . . .23
Schedule A Schedule B Schedule C


LIMITED LIABILITY COMPANY AGREEMENT OF
CRYSTECH, LLC


THIS LIMITED LIABILITY COMPANY AGREEMENT is entered into and made effective as of this 28th day of May, 1998, by and among AMERICAN CRYSTAL SUGAR COMPANY ("ACSC") and NEWCOURT CAPITAL USA INC. ("Newcourt").


RECITALS

WHEREAS, CRYSTECH, LLC, a Delaware limited liability company was formed on November 4, 1997 for the purpose of building and operating a molasses desugarization plant and any other lawful act, business or activity permitted under the Delaware Limited Liability Company Act; and


WHEREAS, Section 18.101 of the Act authorizes a "limited liability company agreement" as defined therein; and


WHEREAS, ACSC and Newcourt desire to enter into this Limited Liability Company 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

"Act" means the Delaware Limited Liability Company Act codified at Title 6, Subtitle II, Chapter 18 of the Delaware Statues, as amended, and any successor thereto.


"Affiliated Entity" means any entity that controls, is controlled by, or under common control of a Member, or any successor thereto.


"Agreement" means this Limited Liability Company Agreement as amended, modified or supplemented from time to time, including any schedules to the Agreement.


"Board" or "Board of Managers" means the board of managers of the Company.


"Called Principal" has the meaning given to that term in the definition of "Make Whole Amount" contained in the Note Purchase Agreement.


"Capital Account" means the account of each Member which is maintained in accordance with the provisions of Section 3.3 of this Agreement.


"Capital Contribution" means the value of the initial contributions by each Member as set forth on Schedule A, plus the value of any additional capital contributions made by the Member pursuant to Section 3.2 of this Agreement.


"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.


"Company" means Crystech, LLC, a Delaware limited liability company.


"Contribution Agreement" means a written agreement between the Company and a Person desiring to make a capital contribution which sets forth the terms of such Person's agreement to make a contribution for the purpose of becoming a Member of the Company, including without limitation the agreed value of the contribution that shall be made by such Person to the capital of the Company and the Financial Interest and Voting Interest to which such Person shall be entitled.


"Distribution Date" means the last day of August, November, January and May, commencing with the first such date to occur on or after which scheduled principal payments on the Notes are made.


"Distributions" means annual distributions of cash to the Members as may from time to time be authorized by the Board of Managers pursuant to the terms of this Agreement.


"Financial Interest" as to any Member means the "Financial Interest" reflected on Schedule A of this Agreement for such Member, and as may be amended.


"Financial Rights" means a Member's right to share in the Net Income and Net Losses and Distributions with respect to a Membership Interest in accordance with the terms of this Agreement.


"Financing Documents" has the meaning given to that term in the Note Purchase Agreement.


"Governance Rights" means a Member's right to participate in the management of the Company.


"Make-Whole Amount" has the meaning given to that term in the Note Purchase Agreement.


"Manager" or "Managers" means a natural person or persons appointed to the Board of Managers by the Members in accordance with Article VI of this Agreement.


"MDS Facility" means a molasses desugarization facility with an expected capacity of at least 600 tons per day to be constructed, owned and operated by the Company at ACS' sugarbeet processing facility in Hillsboro, North Dakota.


"Member" or "Members" means a Person reflected in the Required Records of the Company as the owner of a Membership Interest in the Company, or any of their permitted successors or assigns.


"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 the right to assign Governance Rights.


"Molasses Desugarization Project" means that desugarization project for which the Company was formed, as described in the Tolling Agreement.


"Net Income" and "Net Losses" means the profits and losses of the Company, as the case may be, as determined for book purposes in accordance with Generally Accepted Accounting Principles (GAAP) as of the close of each fiscal year of the Company.


"Note Purchase Agreement" means a Note Purchase Agreement in substantially the form of that certain draft Note Purchase Agreement dated as of May 14,1998, to be executed by and between Crystech, LLC and the Crystech Senior Lender Trust, as amended, modified or supplemented from time to time.


"Notes" shall have the meaning given to that term in the Note Purchase Agreement.


"Operating Agreement" means that an Operation and Maintenance Agreement in substantially the form of that certain draft Operation and Maintenance Agreement dated as of May 18, 1998, to be executed by and between ACSC and the Company, as amended, modified or supplemented from time to time.


"Person" means any individual, partnership, limited liability company, corporation, trust or other entity.


"Project Documents" has the meaning given to that term in the Note Purchase Agreement.


"Remaining Average Life" has the meaning given to that term in the definition of "Make Whole Amount" contained in the Note Purchase Agreement.


"Required Records" means those records of the Company required to be maintained under the Act, including (i) a current list of the name and last-known business, residence or mailing address of each Member, Manager and officer; (ii) copies of this Limited Liability Company Agreement and certificate of formation, and any amendments thereto; (iii) copies of the Company's federal, state and local tax returns and reports for each year; (iv) true and full information regarding the status of the business and financial condition of the Company; (v) true and full information regarding the amount of cash and a description and statement of the agreed value of any other property or services contributed by each Member and which each Member has agreed to contribute in the future, and the date on which each became a Member; (vi) records of all proceedings of the Members and the Board of Managers; (vii) any written consents obtained from Members under the provisions of this Agreement or the Act; (viii) a copy of all agreements, contracts or other arrangements entered into by the Company; and (ix) any other information regarding the affairs of the Company as is just and reasonable.


"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.


"Tolling Agreement" means that a Tolling Services Agreement in substantially the form of that certain draft Tolling Services Agreement dated as of April 20, 1998, to be executed by and between ACSC and the Company, as amended, modified or supplemented from time to time.


"Voting Interest" as to any Member means the "Voting Interest" reflected on SCHEDULE A for such Member.


ARTICLE II
ORGANIZATIONAL AND MEMBERSHIP MATTERS


2.1 OFFICE AND AGENT. The principal office of the Company shall be located at 101 North 3rd Street, Moorhead, Minnesota 56560-1990, or at such other location as may be determined by the Board of Managers. CT Corporation shall be the registered agent of the Company for purposes of service of process at 1209 Orange Street, Wilmington, Delaware 19801. The Board of Managers may change the identity or location of the registered office from time to time, and, if required by the Act, shall cause an appropriate amendment to the Company's Certificate of Formation to be filed in the appropriate offices in the State of Delaware to reflect such change.


2.2 PURPOSES AND POWERS.


(a) GENERALLY. The Company is organized as a special purpose
entity, for the sole purpose of acquisition, construction,
financing, operation and maintenance of the MDS Facility and
for the acquisition, construction, and lease of certain juice


softening equipment, sugar extraction equipment, storage and
receiving and related equipment to be located at both ACSC's
Hillsboro, North Dakota and Moorhead, Minnesota sugar
factories. In furtherance of the foregoing purposes, but
subject to the provisions of this Agreement, the Company
shall have the power to (1) enter into and perform its
obligations under each of the Financing Documents and the
Project Documents to which it is a party, (2) take any and
all actions necessary or desirable in connection with the
consummation of the activities and transactions contemplated
by the Financing Documents and the Project Documents, and (3)
take any action and carry on any activity necessary or
incidental to the accomplishment of the foregoing purposes,
so long as such actions or activities may be lawfully carried
on or performed under the provisions of the Act and any
applicable laws.


(b) LIMITATION ON POWERS OF COMPANY. The Company shall not do
business in any jurisdiction that would jeopardize the
limitation on liability provided herein.


2.3 MEMBERS. ACSC and Newcourt constitute all the Members of the Company. There shall be no other Members admitted to the Company except as provided in Article IX of this Agreement.


2.4 MEMBERSHIP INTERESTS. Membership Interests in the Company are reflected on SCHEDULE A attached hereto. The Membership Interests are ordinary membership interests of one class, without series, and shall have the rights provided by law, subject to any statement in this Agreement of the specific rights or terms of such Membership Interests.


2.5 VOTING. Each Member shall be entitled to one vote on matters submitted to the Members regardless of the Member's proportionate share of capital contribution to the Company.


ARTICLE III
CAPITAL CONTRIBUTIONS


3.1 INITIAL CAPITAL CONTRIBUTIONS OF MEMBERS. Each Member shall make an initial capital contribution to the Company in the amount and in the manner set forth on Schedule A. Such initial Capital Contributions shall be made by payment to the Company on the date hereof of cash in the amount specified on Schedule A, subject, however, to satisfaction of each of the following conditions:


(a) Each of the Project Agreements and Financing Agreements shall
have been executed and delivered by the respective parties
thereto; and


(b) Each Member shall have received an opinion of counsel for the
other Member in form and substance satisfactory to it; and


(c) All consents and approvals required by the terms of the
Financing Agreements and the Project Agreements to be
obtained prior to the effective dates thereof shall have been
obtained; and


(d) Each Member shall have received such certificates, documents
and other showings as it shall reasonably deem necessary to
evidence the due organization and valid existence of the
other Member and the Company and the authorization by the
other Member and the Company of its execution, delivery and
performance of this Agreement and the other Project
Agreements and Financing Agreements to which it is a party.
The Members themselves hereby authorize the Company to
execute and, deliver this Agreement, the Project Agreements
and such other documents and to perform such actions as are
necessary to give effect thereto.


3.2 ADDITIONAL CAPITAL CONTRIBUTIONS OF MEMBERS.


(a) VOLUNTARY ADDITIONAL CAPITAL CONTRIBUTIONS OF MEMBERS. Subject
to Section 3.2 (b) below, additional contributions of capital
to the Company, other than capital obtained by a loan of money
to the Company or funds provided under the Tolling Agreement,
may be made only upon the unanimous consent of the Members.


(b) NO REQUIRED ADDITIONAL CAPITAL CONTRIBUTIONS OF MEMBERS. No
Member shall be obligated to make any additional contributions
of capital to the Company, other than the Member's initial
capital contribution, or to pay any assessment to the Company,
except that (a) the Board of Managers 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 less the amount of any loans for such
purpose made to the Company pursuant to Section 3.7; and (b)
ACSC may make additional contributions to the Company in the
form and to the extent set forth in that draft Subscription
Agreement dated as of May 21, 1998, as may be amended, to be
executed by and among ACSC, the Company and First Union Trust
Company National Association as agent.


3.3 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 Member's initial Capital Contribution. The Capital Account of each Member shall be increased by the amount of (i) any additional contribution such Member makes to the capital of the Company pursuant to Section 3.2 hereof, (ii) Net Income allocated to such Member pursuant to Section 4.1, and (iii) any Distributions made by the Company pursuant to the provisions of Article IV hereof. The Capital Account of each Member shall be decreased by the amount of any Net Losses allocated to such Member pursuant to Section 4.1.


3.4 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) the interest of the transferor Member's Capital Account to the extent of the Membership Interest transferred.


3.5 NO RIGHT TO RETURN OF CONTRIBUTIONS. The Members shall have no right to the withdrawal or the return of their respective Capital Contributions except to the extent set forth in Article X upon liquidation of the Company.


3.6 NO INTEREST ON CAPITAL CONTRIBUTIONS. Other than Distributions authorized pursuant to Article IV or Article X, no Member shall be entitled to receive any interest or other property on account of the Member's Capital Contributions to the Company.


3.7 LOANS TO THE COMPANY. A Member may lend money to the Company if authorized by the Board of Managers and approved unanimously by the Members as required by Section 6.12. 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 Net Income or Net Losses of the Company or any increase in such Member's Financial Interest or share of Distributions made by the Company. The Company shall be obligated to such Member for the amount of any such loan, with interest thereon at such market rate as may have been agreed upon by such Member and the Board of Managers. ACS is hereby authorized to make subordinated loans to the Company pursuant to the Subscription Agreement referred to in Section 3.2(b).


ARTICLE IV
ALLOCATIONS AND DISTRIBUTIONS

4.1 ALLOCATION OF NET INCOME AND NET LOSSES. Net Income and Net Losses shall be allocated annually among the Members in proportion to their Financial Interest.


4.2 OPERATING DISTRIBUTIONS. Unless otherwise prohibited by law, and other than Distributions upon liquidation pursuant to Article X and Tax Withholding Obligations which constitute Distributions pursuant to Section 4.3 of this Article, Distributions shall be made to the Members to the extent revenue is available through the operation of the MDS Facility and revenues earned from the Leased Assets in an amount equal to ****** per annum on the average daily amount of each Member's Financial Interest, quarterly on each Distribution Date; provided, however, that the Board may, in its discretion, reduce the amount otherwise distributable to any Member by the amount of a Tax Withholding Obligation attributable t ...