**The Seam®**

## Capability STatement

# The Seam is an online cotton technology firm with U.S. domestic operations as well as an international marketplace serving buyers and sellers around the world. The Seam currently operates four cotton-related markets for physical trading and risk management. The Seam's customer centric approach to building marketplaces has made it the leading online commodity marketplace in the world. 

# 

# The Seam began in December 2000 and has since traded over 4 million bales of cotton, accounting for transaction revenues of over \$5 million.

The Seam's mission is to provide the most efficient, active market in
the world delivering both maximum opportunity and reduced costs. Sellers
receive maximum market exposure for their cotton while buyers will have
real-time access to the most complete inventory available anywhere.
Central to the success of The Seam is the guaranteed trading feature of
its domestic online cotton marketing service. Because buyers and sellers
operate anonymously, The Seam guarantees all transactions on its
business-to-business (B2B) and grower-to-business (G2B) services. Buyers
and sellers can anonymously negotiate with confidence that The Seam will
complete the trade.

The Seam's first two services were modeled after Plains Cotton
Cooperative Association's (PCCA) highly successful electronic marketing
system. That system, known as TELCOT®, handled more than 25 million
bales during its 25 years of operation. The Seam transformed that
successful regional technology into a nationwide system operating
securely on the Internet, with an ordinary personal computer. The Seam
has created additional services that streamline cotton marketing for its
customers. These services include Web LSA for putting cotton into the
CCC loan, an International Marketplace and Cotton Swaps, a tool for risk
management.

The Seam's investor group represents a broad cross-section of the entire
cotton industry. Included are the three largest U.S. grower-owned
marketing cooperatives, three of the largest textile companies in the
U.S., and many of the most significant U.S. and international cotton
merchandising companies. Together, these companies represent a
substantial share of economic activity in the cotton industry. By virtue
of its broad industry participation, The Seam is a neutral enterprise
dedicated to the benefit of all industry participants. Investors
include:

+------------------------------+---+--------------------------------------+
| **Cotton Merchants:**        |   | **Cooperatives:**                    |
|                              |   |                                      |
| Allenberg Cotton Company\    |   | Calcot, Ltd.\                        |
| Anderson-Clayton             |   | Plains Cotton Cooperative            |
| Corporation\                 |   | Association\                         |
| Dunavant Enterprises Inc\    |   | Staple Cotton Cooperative            |
| Ecom USA, Inc.\              |   | Association                          |
| Cargill Cotton\              |   |                                      |
| Jess Smith & Sons Cotton\    |   | **Textile Mills:**                   |
| Paul Reinhart, Inc.\         |   |                                      |
| Weil Brothers-Cotton Inc.    |   | Avondale Mills\                      |
|                              |   | National Textiles\                   |
|                              |   | Parkdale Mills                       |
|                              |   |                                      |
|                              |   | **E-commerce:**                      |
|                              |   |                                      |
|                              |   | EWR, Inc.                            |
+------------------------------+---+--------------------------------------+

The Seam currently maintains and operates a domestic online cotton
marketing service, a loan service agent (LSA), the Cotton Swaps risk
management tool and an International Marketplace. The domestic marketing
service is comprised of our grower-to-business service (G2B) and the
business-to-business service (B2B). The LSA service was launched in
October 2001. The Cotton Swap service was launched in June 2002 while
the International Marketplace began operating in February 2003.

Regarding The Seam's domestic marketing services, sales have been split
almost equally between the G2B and B2B services. The single largest
sales day on the G2B marketing service occurred when 40,031 bales were
sold on November 13, 2001, while the single largest sales day on the B2B
occurred when 100,939 bales were sold on November 28, 2001. Single day
volume that has been listed on The Seam has been as high as 800,000
bales. The Seam's infrastructure and software can accommodate hundreds
of thousands of transactions daily. Participants in the domestic
marketing service negotiate bids and offers online. The Seam allows
cotton to be offered in a dynamic "bid and ask" environment. Some key
features of The Seam's domestic service include:

-   interactive Bid and Ask with anonymity;

-   guaranteed trading in the U.S. market;

-   automated clearing;

-   superior price discovery;

-   inclusive, neutral and transparent platforms;

-   the opportunity to market grower-owned CCC loan options;

-   USDA data verification;

-   the ability to combine multiple offers;

-   "Best in Class" technology; and

-   state-of-the-art security.

The operation of the system is simple. Sellers of cotton upload their
bale data and establish prices. Once offers are uploaded and priced,
buyers can make use of powerful filters to browse the bales on the
system or search for lots by specific attributes such as quality, price
and locations. Buyers are immediately able to purchase cotton with The
Seam's "Quick Buy" feature or consolidate several lots for review before
purchase. Buyers may also download bale data into in-house software in
order to quickly analyze and determine how well the particular recap
matches their needs.

Buyers and sellers negotiate a price and complete the transaction
entirely online. The Seam clears all elements of the transaction,
including the transfer of funds and electronic warehouse receipts
(ewrs). Because domestic transactions are guaranteed, sellers are
assured they will receive payment and buyers are assured they will
receive the cotton they purchased. All buyers and sellers agree to abide
by the same standardized terms and conditions for trading, so that there
is uniformity in understand of their obligations to on another and to
The Seam.

The Seam's Web LSA service allows growers an online solution regarding
cotton that is placed in the CCC loan. The most attractive feature of
this service is that growers can quickly place cotton in the CCC loan
program and then easily market their loan options on The Seam's domestic
marketing service.

The Seam's Cotton Swaps service offers six different indexes in the swap
market. This service provides a flexible way for buyers and sellers of
physical cotton to hedge forward price fluctuations in world prices.
This tool allows participants to more accurately protect basis risk in
growths not traded in futures markets.

The Seam has developed an International Marketplace that allows buyers
and sellers to negotiate on standardized contract terms and recognized
quality types 24 hours a day. Initial target markets include Australia,
West Africa, CIS and the US.

Anonymity

The Seam's domestic cotton marketing service addresses two needs within
the industry. First, it allows growers, through their service providers,
the ability to anonymously market cotton directly to merchants and
textile mills. Second, merchants can anonymously market cotton to
competitors in order to better manage inventory. The benefits of
anonymity are two-fold: 1) participants are put on a level playing field
whereby no one grower or firm has an advantage over another and 2)
trading positions are not revealed in any way to participants as The
Seam anonymously clears the trade.

Security

Within The Seam\'s application framework, passwords are encoded in SQL
Server using the Secure Hash Algorithm (SHA-1), which was developed by
National Institute of Standards and Technology, a division of the U.S.
Department of Commerce. All data transmitted from the client to The
Seam\'s web servers are 128-bit encrypted using Secure Socket Layer
(SSL). In order to provide application function security, The Seam
incorporates a role-based security model allowing client-company
specific policy enforcement. The role the user plays (trader, manager,
bank, etc.) determines what rights or access the user is entitled to
within the application. The combination of SHA-1, SSL and role-based
security provide the security strength needed for state-of-the-art
web-based systems.

Within The Seam's network infrastructure, system functionality is
distributed across multiple servers. This reduces the likelihood of a
single piece of hardware adversely affecting the entire production web
system. Each of these distributed servers is either supplemented by a
redundant server in stand-by (passive mode) or by multiple servers
load-balanced in an active mode configuration. Our application framework
is architected in a "stateless" fashion allowing data to be served to
the user interface from multiple servers simultaneously. By architecting
the production web farm in this fashion, we enable our staff to perform
upgrades as well as scheduled maintenance to the production environment
without affecting the end user. Additionally, this configuration
enhances the system's performance by serving more simultaneous user
requests while reducing the load placed on the web servers. To date, our
systems have achieved 99.99 percent availability. Our development
methodology consists of industry standard code migration policies;
sources code management, load and regression testing as well as a
separate test lab for benchmarking the multiple browser and operating
system versions.

The Seam has a redundant state of the art co-location facility connected
via 100 megabyte Ethernet to our main production data center. This
center houses systems identical in type and configuration to our
production systems. These systems are updated every five minutes with
current transaction data. System changes are made concurrently with
those in our production environment. Remote access and phone system
capabilities are also implemented to allow for standard business
operations to continue in the event of an outage at our primary data
center. We also have a redundant two-megabyte connection to the Internet
that enables us to load balance incoming and outgoing traffic depending
on the requesting user's location on the Internet.

Architecture:

Servers: Compaq

SANs: Compaq

OS: Microsoft Windows 2000 Advanced Server

Application Framework: Microsoft .NET Framework -- All systems are web
based and modular in design for maximum flexibility.

Network Hardware: Cisco

Internet and Local Connectivity: OC3 Ring (Dual Fiber Runs into data
center)

DS3 for Internet access

Co-location Connectivity: 2 Megabyte public interface to co-location
site and out to the Internet

> Private 100 megabyte Ethernet connection between data centers

On separate fiber run than primary OC3 ring

Generator / Battery Backup Redundant generator / battery backup systems
including power to IP phone systems and IS staff offices (Automatic
transfer switching from battery to generator power) with full power
outage tests performed weekly

Data Center Security: Electronic keypad with individual 6-digit code
required for entry (only data center operational staff have access
codes)

Redundant Air Conditioners: Alternate operations on 30-day cycles unless
needed to stabilize humidity (both run simultaneously in that event)

FM200 Fire Protection: Non Liquid fire protection for data centers

Active Customer Base

The Seam currently has over 90 buyer firms, including merchants and
textile mills, which represent a significant share of the buying power
in the U.S. Sellers include growers, represented by marketing
cooperatives, cotton gins and small merchants. Merchants also sell to
other merchants and textile mills. Given The Seam's interactive bid and
ask technology, multiple buyers may be bidding on any lot of cotton at
any given time. The Seam makes it easy for sellers to manage multiple
and simultaneous bids. Within the Seller menu on The Seam's domestic
service is a feature called *accept / reject bids*. This feature allows
sellers the ability to quickly review bids on one or many lots of cotton
for sale, compare those bids, reject, accept or negotiate for a higher
price. If a bid is accepted, the system quickly removes that offer from
the *accept / reject bids* tab and instead places them under *sold
offers* so that sellers may quickly review transacted business on The
Seam. Buyers are not able to see other buyers' bids.

Offering Cotton on The Seam

Following a proper upload file, The Seam then uses the bale data
provided in the upload to form offers on the system. Cotton may be
uploaded and offered on The Seam at any time during normal business
hours at the seller's discretion. Once an offer is established on the
system, it is easily managed through *offers review*. CCC can
anonymously offer its inventory by utilizing existing local trading
terms on the system.

Electronic Funds and Title Transfer

All funds and title transfers are completed electronically on The Seam.
Through The Seam's accounting features, participants can monitor title
and funds transfer.

-   The Seam makes payment to the seller upon receipt of ewrs
    holdership.

-   Holdership of ewrs of cotton is transferred to the buyer upon
    receipt of good funds from the buyer.

The Seam guarantees every domestic trade that is completed online within
its domestic cotton marketing service. Essentially, The Seam utilizes
ewrs as collateral.

Customer Satisfaction

The Seam's staff communicates with its users on a regular basis making
sure that the users' requests are addressed. The Seam also regularly
contacts participants to promote the system as their primary channel for
marketing cotton.

Customer input is critical at The Seam and is evidenced by the business
development model. As customers request enhancements to the system, an
advisory group is formed to analyze the usefulness and profitability of
proposed enhancements. These advisory groups may include growers,
ginners, merchants and textile mill representatives and rely on the
expertise of these participants to bring necessary and complete services
to the cotton trade. Further, The Seam's framework lends itself to easy
adjustment of the services and, when recommended adjustments serve the
trade well, The Seam makes every effort to follow through.

In addition to frequent communication between The Seam's senior staff
and the customers, The Seam employs account managers who travel the
Midsouth and Southeast encouraging sellers to list cotton and buyers to
purchase cotton on The Seam. As an additional service to the customers,
The Seam hosts training sessions each year throughout the U.S.

The Seam provides technical support through its help desk and account
managers. Help desk personnel are available during normal business hours
and on call for emergencies 24 hours weekdays. All support calls are
logged and analyzed to improve customer service.