Exhibit 10.36
 
CHS INC.
$50,000,000 PRIVATE SHELF FACILITY
PRIVATE SHELF AGREEMENT
August 11, 2008
 

 

--------------------------------------------------------------------------------

 

TABLE OF CONTENTS

                              Page
 
                1.    AUTHORIZATION OF ISSUE OF NOTES     1  
 
                2.    PURCHASE AND SALE OF NOTES     1  
 
               
 
  2.1    Facility     1  
 
  2.2    Issuance Period     2  
 
  2.3    Request for Purchase     2  
 
  2.4    Rate Quotes     2  
 
  2.5    Acceptance     3  
 
  2.6    Market Disruption     3  
 
  2.7    Facility Closings     3  
 
  2.8    Issuance Fee     4  
 
  2.9    Breakage Fees     4  
 
                3.    CONDITIONS OF CLOSING     4  
 
               
 
  3.1    Conditions to Effectiveness of Agreement     4  
 
  3.2    Conditions to Each Closing     5  
 
                4.    REPRESENTATIONS AND WARRANTIES OF THE COMPANY     6  
 
               
 
  4.1    Organization; Power and Authority     6  
 
  4.2    Authorization, etc     6  
 
  4.3    Disclosure     7  
 
  4.4    Organization and Ownership of Shares of Subsidiaries; Affiliates     7
 
 
  4.5    Financial Statements; Material Liabilities     8  
 
  4.6    Compliance with Laws, Other Instruments, etc     8  
 
  4.7    Governmental Authorizations, etc     8  
 
  4.8    Litigation; Observance of Agreements, Statutes and Orders     9  
 
  4.9    Taxes     9  
 
  4.10    Title to Property; Leases     9  
 
  4.11    Permits and Other Operating Rights     10  
 
  4.12    Intellectual Property     10  
 
  4.13    Compliance with ERISA     10  
 
  4.14    Private Offering by the Company     11  
 
  4.15    Use of Proceeds; Margin Regulations     11  
 
  4.16    Existing Debt; Future Liens     12  
 
  4.17    Foreign Assets Control Regulations, etc     12  
 
  4.18    Status Under Certain Statutes     12  
 
  4.19    Environmental Matters     13  
 
  4.20    Solvency     13  
 
  4.21    Hostile Tender Offers     13  
 
  4.22    Ranking of Notes     13  
 
               

i

--------------------------------------------------------------------------------

 

TABLE OF CONTENTS
(continued)

                              Page
 
                5.    REPRESENTATIONS OF THE PURCHASER     14  
 
               
 
  5.1    Purchase for Investment     14  
 
  5.2    Source of Funds     14  
 
                6.    INFORMATION AS TO COMPANY     15  
 
               
 
  6.1    Financial and Business Information     15  
 
  6.2    Officer's Certificate     18  
 
  6.3    Inspection     18  
 
                7.    INTEREST; PAYMENT OF THE NOTES     19  
 
               
 
  7.1    Interest Payments     19  
 
  7.2    Required Principal Payments     19  
 
  7.3    Optional Prepayments with Make-Whole Amount     20  
 
  7.4    Allocation of Partial Prepayments     20  
 
  7.5    Maturity; Surrender, etc     21  
 
  7.6    Purchase of Notes     21  
 
  7.7    Make-Whole Amount     21  
 
                8.    AFFIRMATIVE COVENANTS     22  
 
               
 
  8.1    Compliance with Law     22  
 
  8.2    Insurance     23  
 
  8.3    Maintenance of Properties     23  
 
  8.4    Payment of Taxes and Claims     23  
 
  8.5    Corporate Existence, etc     23  
 
  8.6    Pari Passu     24  
 
                9.    NEGATIVE COVENANTS     24  
 
               
 
  9.1    Transactions with Affiliates     24  
 
  9.2    Merger, Consolidation, etc     24  
 
  9.3    Consolidated Funded Debt to Consolidated Cash Flow     25  
 
  9.4    Adjusted Consolidated Funded Debt to Consolidated Members' and Patrons'
Equity     25  
 
  9.5    Priority Debt     25  
 
  9.6    Working Capital     25  
 
  9.7    Liens     25  
 
  9.8    Sale of Assets     28  
 
  9.9    Line of Business     31  
 
  9.10    Subsidiary Distribution Restrictions     31  
 
  9.11    Subsidiary Preferred Stock     31  
 
  9.12    Issuance of Stock by Subsidiaries     31  
 
  9.13    Terrorism Sanctions Regulations     31  
 
               

ii

--------------------------------------------------------------------------------

 

TABLE OF CONTENTS
(continued)

                              Page
 
                10.    EVENTS OF DEFAULT     32  
 
                11.    REMEDIES ON DEFAULT, ETC     34  
 
               
 
  11.1    Acceleration     34  
 
  11.2    Other Remedies     34  
 
  11.3    Rescission     34  
 
  11.4    No Waivers or Election of Remedies, Expenses, etc     35  
 
                12.    REGISTRATION; EXCHANGE; SUBSTITUTION OF NOTES     35  
 
               
 
  12.1    Registration of Notes     35  
 
  12.2    Transfer and Exchange of Notes     35  
 
  12.3    Replacement of Notes     36  
 
                13.    PAYMENTS ON NOTES     36  
 
                14.    EXPENSES, ETC     36  
 
               
 
  14.1    Transaction Expenses     36  
 
  14.2    Survival     37  
 
                15.    SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ENTIRE
AGREEMENT     37  
 
                16.    AMENDMENT AND WAIVER     37  
 
               
 
  16.1    Requirements     37  
 
  16.2    Solicitation of Holders of Notes     38  
 
  16.3    Binding Effect, etc     38  
 
  16.4    Notes Held by Company, etc     38  
 
                17.    NOTICES     39  
 
                18.    REPRODUCTION OF DOCUMENTS     39  
 
                19.    CONFIDENTIAL INFORMATION     39  
 
                20.    SUBSTITUTION OF PURCHASER     40  
 
                21.    MISCELLANEOUS     41  
 
               
 
  21.1    Successors and Assigns     41  
 
  21.2    Payments Due on Non-Business Days     41  
 
  21.3    Accounting Terms     41  
 
  21.4    Severability     41  
 
  21.5    Construction     41  

iii

--------------------------------------------------------------------------------

 

TABLE OF CONTENTS
(continued)

                              Page
 
               
 
  21.6    Severability of Obligations     41  
 
  21.7    Binding Agreement     42  
 
  21.8    Counterparts     42  
 
  21.9    Governing Law     42  
 
  21.10    Jurisdiction and Process; Waiver of Jury Trial     42  

iv

--------------------------------------------------------------------------------

 

EXHIBITS AND SCHEDULES
Information Schedule
Schedule of Defined Terms

         
Exhibit A
  -   Form of Private Shelf Note
Exhibit B
  -   Form of Request for Purchase
Exhibit C
  -   Form of Confirmation of Acceptance
Exhibit D
  -   Form of Opinion of General Counsel for the Company
Exhibit E
  -   Form of Opinion of Special Counsel for Hancock
 
       
Schedule 4.3
  -   Disclosure Materials
Schedule 4.4
  -   Subsidiaries of the Company and Ownership of Subsidiary Stock
 
       
Schedule 4.5
  -   Financial Statements
Schedule 4.12
  -   Intellectual Property
Schedule 4.16
  -   Existing Debt

v

--------------------------------------------------------------------------------

 

CHS INC.
5500 Cenex Drive
Inver Grove Heights, MN 55077
August 11, 2008
John Hancock Life Insurance Company (“Hancock”)
Each Hancock Affiliate (as hereinafter
defined) which becomes bound by certain
provisions of this Agreement as hereinafter
provided (together with Hancock, the “Purchasers”)
c/o John Hancock Life Insurance Company
197 Clarendon Street
Boston, MA 02116
Ladies and Gentlemen:
     The undersigned, CHS Inc., a nonstock agricultural cooperative corporation
organized under the laws of Minnesota formerly known as Cenex Harvest States
Cooperatives (herein called the “Company”), hereby agrees with you as set forth
below.
1. AUTHORIZATION OF ISSUE OF NOTES.
     The Company has authorized the issue of its Senior Unsecured Notes (the
“Notes”) in the aggregate principal amount of $50,000,000, to be dated the date
of issue thereof, to mature, in the case of each Note so issued, no more than
10 years after the date of original issuance thereof, to have an average life,
in the case of each Note so issued, of no more than eight years after the date
of original issuance thereof, to bear interest on the unpaid balance thereof
from the date thereof at the rate per annum, payable quarterly in arrears, and
to have such other particular terms, as shall be set forth, in the case of each
Note so issued, in the Confirmation of Acceptance with respect to such Note
delivered pursuant to Section 2.5, and to be substantially in the form of
Exhibit A attached hereto. The terms “Note” and “Notes” as used herein shall
include each Note delivered pursuant to any provision of this Agreement and each
Note delivered in substitution or exchange for any such Note pursuant to any
such provision. Notes which have (i) the same final maturity, (ii) the same
principal prepayment dates, (iii) the same principal prepayment amounts (as a
percentage of the original principal amount of each Note), (iv) the same
interest rate, (v) the same interest payment periods and (vi) the same date of
issuance (which, in the case of a Note issued in exchange for another Note,
shall be deemed for these purposes the date on which such Note’s ultimate
predecessor Note was issued), are herein called a “Series” of Notes.
2. PURCHASE AND SALE OF NOTES.
     2.1 Facility. Hancock is willing to consider, in its sole discretion and
within limits which may be authorized for purchase by Hancock and/or Hancock
Affiliates from time to time, the purchase of Notes pursuant to this Agreement.
The willingness of Hancock to consider such purchase of Notes is herein called
the “Facility.” At any time, the aggregate principal amount of

1

--------------------------------------------------------------------------------

 

Notes stated in Section 1, minus the aggregate principal amount of Notes
purchased and sold pursuant to this Agreement prior to such time, minus the
aggregate principal amount of Accepted Notes (as hereinafter defined) which have
not yet been purchased and sold hereunder prior to such time, is herein called
the “Available Facility Amount” at such time. NOTWITHSTANDING THE WILLINGNESS OF
HANCOCK TO CONSIDER PURCHASES OF NOTES BY HANCOCK AFFILIATES, THIS AGREEMENT IS
ENTERED INTO ON THE EXPRESS UNDERSTANDING THAT NEITHER HANCOCK NOR ANY HANCOCK
AFFILIATE SHALL BE OBLIGATED TO MAKE OR ACCEPT OFFERS TO PURCHASE NOTES, OR TO
QUOTE RATES, SPREADS OR OTHER TERMS WITH RESPECT TO SPECIFIC PURCHASES OF NOTES,
AND THE FACILITY SHALL IN NO WAY BE CONSTRUED AS A COMMITMENT BY HANCOCK OR ANY
HANCOCK AFFILIATE.
     2.2 Issuance Period. Notes may be issued and sold pursuant to this
Agreement until the earlier of (i) August 31, 2010 (or if such date is not a
Business Day, the Business Day next preceding such anniversary), (ii) the 30th
day after Hancock shall have given to the Company, or the Company shall have
given to Hancock, a written notice stating that it elects to terminate the
issuance and sale of Notes pursuant to this Agreement (or if such 30th day is
not a Business Day, the Business Day next preceding such 30th day), (iii) the
last Closing Day after which there is no Available Facility Amount, (iv) the
termination of the Facility under Section 11 of this Agreement, and (v) the
acceleration of any Note under Section 11 of this Agreement. The period during
which Notes may be issued and sold pursuant to this Agreement is herein called
the “Issuance Period.”
     2.3 Request for Purchase. The Company may from time to time during the
Issuance Period make requests for purchases of Notes (each such request being
herein called a “Request for Purchase”). Each Request for Purchase shall be made
to Hancock by telecopier or overnight delivery service, and shall (i) specify
the aggregate principal amount of Notes covered thereby, which shall not be less
than $10,000,000 and not be greater than the Available Facility Amount at the
time such Request for Purchase is made, (ii) specify the principal amounts,
final maturities (which shall be no more than 10 years from the date of
issuance), average life (which shall be no more than 8 years from the date of
issuance), and principal prepayment dates (if any) and amounts of the Notes
covered thereby (interest on all Notes shall be payable quarterly in arrears),
(iii) specify the use of proceeds of such Notes, (iv) specify the proposed day
for the closing of the purchase and sale of such Notes (the “Closing Day”),
which shall be a Business Day during the Issuance Period not less than 20 days
and not more than 50 days after the making of such Request for Purchase,
(v) specify the number of the account and the name and address of the depository
institution to which the purchase prices of such Notes are to be transferred on
the Closing Day for such purchase and sale, (vi) certify that the
representations and warranties contained in Section 4 are true on and as of the
date of such Request for Purchase and that there exists on the date of such
Request for Purchase no Event of Default or Default, and (vii) be substantially
in the form of Exhibit B attached hereto. Each Request for Purchase shall be in
writing and shall be deemed made when received by Hancock.
     2.4 Rate Quotes. Not later than five Business Days after the Company shall
have given Hancock a Request for Purchase pursuant to Section 2.3, Hancock may,
but shall be under no obligation to, provide to the Company by telephone or
telecopier, in each case between 9:30 A.M. and 1:30 P.M. New York City local
time (or such later time as Hancock may elect) interest

2

--------------------------------------------------------------------------------

 

rate quotes for the several principal amounts, maturities and principal
prepayment schedules of the Notes specified in such Request for Purchase. Each
quote shall represent the interest rate per annum payable on the outstanding
principal balance of such Notes at which Hancock or one or more Hancock
Affiliates would be willing to purchase such Notes at 100% of the principal
amount thereof.
     2.5 Acceptance. Within two Business Days after Hancock shall have provided
any interest rate quotes pursuant to Section 2.4 (the “Acceptance Window”), the
Company may, subject to Section 2.6, elect to accept such interest rate quotes
as to not less than $10,000,000 aggregate principal amount of the Notes
specified in the related Request for Purchase. Such election shall be made by an
Authorized Officer of the Company notifying Hancock by telephone or telecopier
within the Acceptance Window that the Company elects to accept such interest
rate quotes, specifying the Notes (each such Note being herein called an
“Accepted Note”) as to which such acceptance (herein called an “Acceptance”)
relates. The day the Company notifies Hancock of an Acceptance with respect to
any Accepted Notes is herein called the “Acceptance Day” for such Accepted
Notes. Any interest rate quotes as to which Hancock does not receive an
Acceptance within the Acceptance Window shall expire, and no purchase or sale of
Notes hereunder shall be made based on such expired interest rate quotes.
Subject to Section 2.6 and the other terms and conditions hereof, the Company
agrees to sell to Hancock and/or a Hancock Affiliate or Affiliates, and Hancock
agrees to cause the purchase by Hancock and/or a Hancock Affiliate or Affiliates
of, the Accepted Notes at 100% of the principal amount of such Notes. As soon as
practicable following the Acceptance Day, the Company and Hancock and/or each
Hancock Affiliate which is to purchase any such Accepted Notes will execute a
confirmation of such Acceptance substantially in the form of Exhibit C attached
hereto (herein called a “Confirmation of Acceptance”). If the Company should
fail to execute and return to Hancock within three Business Days following the
Company’s receipt thereof a Confirmation of Acceptance with respect to any
Accepted Notes, Hancock or any Hancock Affiliate may at its election at any time
prior to Hancock’s receipt thereof cancel the closing with respect to such
Accepted Notes by so notifying the Company in writing.
     2.6 Market Disruption. Notwithstanding the provisions of Section 2.5, if
Hancock shall have provided interest rate quotes pursuant to Section 2.4 and
thereafter prior to the time an Acceptance with respect to such quotes shall
have been notified to Hancock in accordance with Section 2.5 the domestic market
for U.S. Treasury securities or other financial instruments shall have closed or
there shall have occurred a general suspension, material limitation, or
significant disruption of trading in securities generally on the New York Stock
Exchange or in the domestic market for U.S. Treasury securities or other
financial instruments, then such interest rate quotes shall expire, and no
purchase or sale of Notes hereunder shall be made based on such expired interest
rate quotes. If the Company thereafter notifies Hancock of the Acceptance of any
such interest rate quotes, such Acceptance shall be ineffective for all purposes
of this Agreement, and Hancock shall promptly notify the Company that the
provisions of this Section 2.6 are applicable with respect to such Acceptance.
     2.7 Facility Closings. Not later than 11:00 A.M. (New York City local time)
on the Closing Day for any Accepted Notes, the Company will deliver to each
Purchaser listed in the Confirmation of Acceptance relating thereto at the
offices of Hancock’s special counsel, or to such other address as the parties
may agree, the Accepted Notes to be purchased by such

3

--------------------------------------------------------------------------------

 

Purchaser in the form of one or more Notes in authorized denominations as such
Purchaser may request for each Series of Accepted Notes to be purchased on the
Closing Day, dated the Closing Day and registered in such Purchaser’s name (or
in the name of its nominee), against payment of the purchase price thereof by
transfer of immediately available funds for credit to the Company’s account
specified in the Request for Purchase of such Notes. If the Company fails to
tender to any Purchaser the Accepted Notes to be purchased by such Purchaser on
the scheduled Closing Day for such Accepted Notes as provided above in this
Section 2.7, or any of the conditions specified in Section 3 shall not have been
fulfilled by the time required on such scheduled Closing Day, Hancock (on behalf
of each Purchaser) may, at its election, at any time thereafter on such
scheduled Closing Day notify the Company in writing that such closing is
canceled.
     2.8 Issuance Fee. The Company will pay to each Purchaser in immediately
available funds a fee (herein called the “Issuance Fee”) on each Closing Day in
an amount equal to 0.10% of the aggregate principal amount of Notes sold to such
Purchaser on such Closing Day.
     2.9 Breakage Fees. If (a) the Company fails to return a Confirmation of
Acceptance within the time provided in Section 2.5, (b) the Company shall refuse
to accept the purchase price of any Notes on a Closing Day, or (c) Hancock shall
terminate a purchase of Notes on any Closing Day pursuant to Section 2.7, then
upon demand of any prospective purchaser of the applicable Notes the Company
shall promptly compensate such purchaser for and hold such purchaser harmless
from and against any loss, cost or expense incurred by such purchaser as a
result thereof, including any loss or expense arising from the liquidation or
reemployment of funds obtained by it to fund such Notes or from fees payable to
terminate the deposits from which such funds were obtained (all such losses,
costs and expenses are herein collectively called “Breakage Fees”).
3. CONDITIONS OF CLOSING.
     The effectiveness of this Agreement, and the obligation of any Purchaser to
purchase and pay for any Notes, is subject in each case to the satisfaction, on
or before the applicable Closing Day, of the following conditions:
     3.1 Conditions to Effectiveness of Agreement.
          (a) Hancock shall have received the following:
               (i) this Agreement;
               (ii) certified copies of the resolutions of the board of
directors of the Company authorizing the execution and delivery of this
Agreement and the issuance of the Notes, and of all documents evidencing other
necessary corporate action and governmental approvals, if any, with respect to
this Agreement and the Notes;
               (iii) a certificate of the secretary or assistant secretary and
one other officer of the Company certifying the names and true signatures of the
officers of the Company authorized to sign this Agreement and the Notes and the
other documents to be delivered hereunder and to execute any Request for
Purchase and Confirmation of Acceptance.

4

--------------------------------------------------------------------------------

 

               (iv) certified copies of the articles of incorporation and
by-laws of the Company, dated as of a recent date.
               (v) a favorable opinion of (A) David A. Kastelic, Esq., general
counsel to the Company (or such other counsel designated by the Company and
acceptable to Hancock), substantially in the form of Exhibit D attached hereto,
and covering such other matters incident to the transactions contemplated hereby
as Hancock or its counsel may reasonably request (and the Company hereby
instruct its counsel to deliver such opinion to Hancock); and (B) Farella Braun
+ Martel LLP, special counsel to Hancock in connection with the Agreement, in
the form of Exhibit E attached hereto and covering such other matters incident
to the transactions contemplated hereby as Hancock may reasonably request; and
               (vi) a good standing certificate for the Company from the
Secretary of State of the State of Minnesota, dated as of a recent date, and
such other evidence of the status of the Company as Hancock reasonably may
request.
          (b) The Company shall have paid to Hancock’s special counsel its
reasonable fees and expenses then owing in connection with the transactions
contemplated by this Agreement.
     3.2 Conditions to Each Closing.
          (a) Such Purchaser shall have received the following, each dated the
date of the applicable Closing Day:
               (i) the Note(s) to be purchased by such Purchaser;
               (ii) certified copies of the resolutions of the board of
directors of the Company authorizing the execution and delivery and the issuance
of the Notes, and of all documents evidencing other necessary corporate action
and governmental approvals, if any, with respect to the Notes;
               (iii) a certificate of the secretary or assistant secretary and
one other officer of the Company certifying the names and true signatures of the
officers of the Company authorized to sign the Notes and the other documents to
be delivered hereunder;
               (iv) certified copies of the articles of incorporation and
by-laws of the Company;
               (v) a good standing certificate for the Company from the
Secretary of State of the State of Minnesota, dated as of a recent date, and
such other evidence of the status of the Company as such Purchaser reasonably
may request;
               (vi) certified copies of Requests for Information or Copies (Form
UCC-11) or equivalent reports listing all effective financing statements which
name the Company or any Subsidiary (under its present name and previous names)
as debtor, together with copies of such financing statements; and

5

--------------------------------------------------------------------------------

 

               (vii) additional documents or certificates with respect to legal
matters or corporate or other proceedings related to the transactions
contemplated hereby as may reasonably be requested by such Purchaser.
          (b) The representations and warranties contained in Section 4 hereof
shall be true on and as of the applicable Closing Day; there shall exist on the
applicable Closing Day (before and after giving effect to the funding of the
Accepted Notes on such Closing Day) no Default or Event of Default; and the
Company shall have delivered to such Purchaser an Officer’s Certificate, dated
the applicable Closing Day, to both such effects.
          (c) On or before each Closing Day, the Company shall have paid any
fees due hereunder.
          (d) The purchase of and payment for the Notes to be purchased by such
Purchaser on the terms and conditions herein provided, and the use of the
proceeds of such Notes by the Company, shall not violate any applicable law or
governmental regulation (including, without limitation, Section 5 of the
Securities Act or Regulation T, U or X of the Board of Governors of the Federal
Reserve System) and shall not subject such Purchaser to any tax, penalty,
liability or other onerous condition under or pursuant to any applicable law or
governmental regulation, and such Purchaser shall have received such
certificates or other evidence as it may request to establish compliance with
this condition.
          (e) A Private Placement Number (or Numbers) issued by Standard &
Poor’s CUSIP Service Bureau (in cooperation with the SVO) shall have been
obtained for the Notes.
          (f) All corporate and other proceedings in connection with the
transactions contemplated by this Agreement and all documents and instruments
incident to such transactions shall be satisfactory to such Purchaser and its
special counsel, and such Purchaser and its special counsel shall have received
all such counterpart originals or certified or other copies of such documents as
such Purchaser or such special counsel may reasonably request.
4. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
     The Company represents and warrants to Hancock, each Hancock Affiliate and
each Purchaser that:
     4.1 Organization; Power and Authority. The Company is a nonstock
agricultural cooperative corporation duly organized, validly existing and in
good standing under the laws of the State of Minnesota, and is duly qualified as
a foreign corporation and is in good standing in each jurisdiction in which such
qualification is required by law, other than those jurisdictions as to which the
failure to be so qualified or in good standing could not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect. The Company
has the corporate power and authority to own or hold under lease the properties
it purports to own or hold under lease, to transact the business it transacts
and proposes to transact, to execute and deliver this Agreement and the Notes
and to perform the provisions hereof and thereof.
     4.2 Authorization, etc. The Company has all requisite corporate power to
own and operate its respective properties and to conduct its business as
currently conducted and as

6

--------------------------------------------------------------------------------

 

currently proposed to be conducted. The Company has all requisite corporate
power to execute, deliver and perform its obligations under this Agreement and
the Notes. The Company has taken all necessary corporate action to authorize the
execution and delivery of, and the performance of its obligations under, this
Agreement and the Notes, and this Agreement constitutes, and upon execution and
delivery thereof each Note will constitute, a legal, valid and binding
obligation of the Company enforceable against the Company in accordance with its
terms, except, in each case, as such enforceability may be limited by
(i) applicable bankruptcy, insolvency, reorganization, moratorium or other
similar laws affecting the enforcement of creditors’ rights generally and
(ii) general principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law).
     4.3 Disclosure. The Annual Report on Form 10-K of the Company for the
fiscal year ended August 31, 2007, along with the Quarterly Reports on Form 10-Q
of the Company for the quarters ended November 30, 2007, February 29, 2008 and
May 31, 2008 and any Current Reports on Form 8-K filed since August 31, 2007,
fairly describe, in all material respects, the general nature of the business
and principal properties of the Company and its Subsidiaries as of the date
hereof. Except as disclosed in Schedule 4.3, this Agreement, the foregoing SEC
reports and the documents, certificates or other writings delivered to Hancock
by or on behalf of the Company in connection with the transactions contemplated
hereby and identified in Schedule 4.3, and the financial statements listed in
Schedule 4.5 (this Agreement, such SEC Reports and such documents, certificates
or other writings and such financial statements being referred to, collectively,
as the “Disclosure Documents”), taken as a whole, do not as of the date hereof
contain any untrue statement of a material fact or omit to state any material
fact necessary to make the statements herein or therein not misleading in light
of the circumstances under which they were made. Except as disclosed in the
Disclosure Documents, since August 31, 2007, there has been no change in the
financial condition, operations, business or properties of the Company or any
Subsidiary except changes that individually or in the aggregate could not
reasonably be expected to have a Material Adverse Effect. There is no fact known
to the Company that could reasonably be expected to have a Material Adverse
Effect that has not been set forth herein or in the Disclosure Documents.
     4.4 Organization and Ownership of Shares of Subsidiaries; Affiliates.
          (a) Schedule 4.4 contains (except as noted therein) complete and
correct lists as of the date hereof of (i) the Company’s Subsidiaries, showing,
as to each Subsidiary, the correct name thereof, the jurisdiction of its
organization, and the percentage of shares of each class of its capital stock or
similar equity interests outstanding owned by the Company and each other
Subsidiary, (ii) the Company’s Affiliates, other than Subsidiaries, and
(iii) the Company’s directors and senior officers.
          (b) All of the outstanding shares of capital stock or similar equity
interests of each Subsidiary shown in Schedule 4.4 as being owned by the Company
or its Subsidiaries have been validly issued, are fully paid and nonassessable
and are owned by the Company or another Subsidiary free and clear of any Lien
(except as otherwise disclosed in Schedule 4.4).
          (c) Each Subsidiary identified in Schedule 4.4 is a corporation or
other legal entity duly organized, validly existing and in good standing under
the laws of its jurisdiction of

7

--------------------------------------------------------------------------------

 

organization, and is duly qualified as a foreign corporation or other legal
entity and is in good standing in each jurisdiction in which such qualification
is required by law, other than those jurisdictions as to which the failure to be
so qualified or in good standing could not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect. Each such Subsidiary
has the corporate or other power and authority to own or hold under lease the
properties it purports to own or hold under lease and to transact the business
it transacts and proposes to transact.
          (d) No Subsidiary is a party to, or otherwise subject to any legal,
regulatory, contractual or other restriction (other than this Agreement, the
agreements listed on Schedule 4.4 and customary limitations imposed by corporate
law or similar statutes) restricting the ability of such Subsidiary to pay
dividends out of profits or make any other similar distributions of profits to
the Company or any of its Subsidiaries that owns outstanding shares of capital
stock or similar equity interests of such Subsidiary.
     4.5 Financial Statements; Material Liabilities. The Company has delivered
to each Purchaser copies of the financial statements of the Company and its
Subsidiaries listed on Schedule 4.5. All of said financial statements (including
in each case the related schedules and notes) fairly present in all material
respects the consolidated financial position of the Company and its Subsidiaries
as of the respective dates specified in such Schedule and the consolidated
results of their operations and cash flows for the respective periods so
specified and have been prepared in accordance with GAAP consistently applied
throughout the periods involved except as set forth in the notes thereto
(subject, in the case of any interim financial statements, to normal year-end
adjustments). The Company and its Subsidiaries do not have any Material
liabilities as of the date hereof that are not disclosed on such financial
statements or otherwise disclosed in the Disclosure Documents.
     4.6 Compliance with Laws, Other Instruments, etc. The execution, delivery
and performance by the Company of this Agreement and the Notes will not
(a) contravene, result in any breach of, or constitute a default under, or
result in the creation of any Lien in respect of any property of the Company or
any Subsidiary under, any indenture, mortgage, deed of trust, loan, purchase or
credit agreement, lease, corporate charter or by-laws, or any other agreement or
instrument to which the Company or any Subsidiary is bound or by which the
Company or any Subsidiary or any of their respective properties may be bound or
affected, (b) conflict with or result in a breach of any of the terms,
conditions or provisions of any order, judgment, decree, or ruling of any court,
arbitrator or Governmental Authority applicable to the Company or any Subsidiary
or (c) violate any provision of any statute or other rule or regulation of any
Governmental Authority applicable to the Company or any Subsidiary. The Company
is not a party to any contract or agreement or subject to any charter or other
corporate restrictions which materially and adversely affects its business,
property, assets, financial condition or results of operations. The provisions
of this Agreement and the Notes do not contravene any contract or agreement
evidencing Debt to which the Company is a party or by which it is bound.
     4.7 Governmental Authorizations, etc. No consent, approval or authorization
of, or registration, filing or declaration with, any Governmental Authority is
required in connection with the execution, delivery or performance by the
Company of this Agreement or the Notes.

8

--------------------------------------------------------------------------------

 

     4.8 Litigation; Observance of Agreements, Statutes and Orders.
          (a) There are no actions, suits, investigations or proceedings pending
or, to the knowledge of the Company or any of its Subsidiaries, threatened
against or affecting the Company or any Subsidiary or any properties or rights
of the Company or any Subsidiary in any court or before any arbitrator of any
kind or before or by any Governmental Authority that, individually or in the
aggregate, could reasonably be expected to have a Material Adverse Effect.
          (b) Neither the Company nor any Subsidiary is in default under any
term of any agreement or instrument to which it is a party or by which it is
bound, or any order, judgment, decree or ruling of any court, arbitrator or
Governmental Authority or is in violation of any applicable law, ordinance, rule
or regulation (including, without limitation, Environmental Laws or the USA
Patriot Act) of any Governmental Authority, which default or violation,
individually or in the aggregate, could reasonably be expected to have a
Material Adverse Effect.
     4.9 Taxes. The Company and its Subsidiaries have filed all Federal, state
and, to the knowledge of the officers of the Company, other tax returns that are
required to have been filed in any jurisdiction, and have paid all taxes shown
to be due and payable on such returns and all other taxes and assessments levied
upon them or their properties, assets, income or franchises, to the extent such
taxes and assessments have become due and payable and before they have become
delinquent, except for any taxes and assessments (a) the amount of which is not
individually or in the aggregate Material or (b) the amount, applicability or
validity of which is currently being contested in good faith by appropriate
proceedings and with respect to which the Company or a Subsidiary, as the case
may be, has established adequate reserves in accordance with GAAP. The Company
knows of no basis for any other tax or assessment that could reasonably be
expected to have a Material Adverse Effect. The charges, accruals and reserves
on the books of the Company and its Subsidiaries in respect of Federal, state or
other taxes for all fiscal periods are adequate. The Federal income tax
liabilities of the Company and its Subsidiaries have been determined by the
Internal Revenue Service and paid for all fiscal years up to and including the
fiscal year ended August 31, 2004. The Company is a cooperative association
taxed under the provisions of “subchapter T” of the Code and the Company does
not presently intend to alter its status as a subchapter T cooperative
association for Federal income tax purposes.
     4.10 Title to Property; Leases. Except for minor defects in title which,
individually or in the aggregate, could not reasonably be expected to have a
Material Adverse Effect, the Company has and each of its Subsidiaries has good
and indefeasible title to its respective real properties (other than properties
which it leases) and good title to all of its other respective properties and
assets that individually or in the aggregate are Material, including all such
properties reflected in the balance sheet (whether audited or unaudited) most
recently delivered pursuant to this Agreement or purported to have been acquired
by the Company or any Subsidiary after said date (except as sold or otherwise
disposed of in the ordinary course of business), in each case free and clear of
Liens prohibited by this Agreement. All leases that individually or in the
aggregate are Material are valid and subsisting and are in full force and effect
in all material respects.

9

--------------------------------------------------------------------------------

 

     4.11 Permits and Other Operating Rights. The Company and each Subsidiary of
the Company has all such valid and sufficient certificates of convenience and
necessity, franchises, licenses, permits, operating rights and other
authorizations from all Governmental Authorities having jurisdiction over the
Company or any Subsidiary or any of its properties, as are necessary for the
ownership, operation and maintenance of its businesses and properties, as
presently conducted and as proposed to be conducted while the Notes are
outstanding, subject to exceptions and deficiencies which, individually or in
the aggregate, would not reasonably be expected to have a Material Adverse
Effect, and such certificates of convenience and necessity, franchises,
licenses, permits, operating rights and other authorizations from all
Governmental Authorities or any of its properties are free from restrictions or
conditions which, individually or in the aggregate, would reasonably be expected
to have a Material Adverse Effect.
     4.12 Intellectual Property. Except as disclosed in Schedule 4.12,
          (a) the Company and its Subsidiaries own or possess all patents,
copyrights, service marks, trademarks and trade names, or rights thereto, that
individually or in the aggregate are Material, without known conflict with the
rights of others;
          (b) to the best knowledge of the Company, no product or practice of
the Company or any Subsidiary infringes in any material respect any license,
permit, franchise, authorization, patent, copyright, proprietary software,
service mark, trademark, trade name or other right owned by any other Person;
and
          (c) to the best knowledge of the Company, there is no Material
violation by any Person of any right of the Company or any of its Subsidiaries
with respect to any patent, copyright, proprietary software, service mark,
trademark, trade name or other right owned or used by the Company or any of its
Subsidiaries.
     4.13 Compliance with ERISA.
          (a) The Company and each ERISA Affiliate have operated and
administered each Plan in compliance with all applicable laws except for such
instances of noncompliance as have not resulted in and could not reasonably be
expected to result in a Material Adverse Effect. Neither the Company nor any
ERISA Affiliate has incurred any liability pursuant to Title I or IV of ERISA
(aside from ordinary claims for benefits under the Plans) or the penalty or
excise tax provisions of the Code relating to employee benefit plans (as defined
in section 3 of ERISA), and no event, transaction or condition has occurred or
exists that could reasonably be expected to result in the incurrence of any such
liability by the Company or any ERISA Affiliate, or in the imposition of any
Lien on any of the rights, properties or assets of the Company or any ERISA
Affiliate, in either case pursuant to Title I or IV of ERISA or to such penalty
or excise tax provisions or to section 401(a)(29) or 412 of the Code or section
4068 of ERISA, other than such liabilities or Liens as would not be individually
or in the aggregate Material.
          (b) The present value of the aggregate benefit liabilities under each
of the Plans (other than Multiemployer Plans), determined as of the end of such
Plan’s most recently ended plan year on the basis of the actuarial assumptions
specified for funding purposes in such Plan’s most recent actuarial valuation
report, did not exceed the aggregate current value of the

10

--------------------------------------------------------------------------------

 

assets of such Plan allocable to such benefit liabilities by more than
$15,000,000 for any single Plan or by more than $20,000,000, in the aggregate,
for all such Plans. The term “benefit liabilities” has the meaning specified in
section 4001 of ERISA and the terms “current value” and “present value” have the
meaning specified in section 3 of ERISA.
          (c) The Company and its ERISA Affiliates have not incurred withdrawal
liabilities (and are not subject to contingent withdrawal liabilities) under
section 4201 or 4204 of ERISA in respect of Multiemployer Plans that
individually or in the aggregate are Material.
          (d) The expected postretirement benefit obligation (determined as of
the last day of the Company’s most recently ended fiscal year in accordance with
Financial Accounting Standards Board Statement No. 106, without regard to
liabilities attributable to continuation coverage mandated by section 4980B of
the Code) of the Company and its Subsidiaries is not Material.
          (e) The execution and delivery of this Agreement and the issuance and
sale of the Notes hereunder will not involve any transaction that is subject to
the prohibitions of section 406 of ERISA or in connection with which a tax could
be imposed pursuant to section 4975(c)(1)(A)-(D) of the Code. The representation
by the Company to each Purchaser in the first sentence of this Section 4.13(e)
is made in reliance upon and subject to the accuracy of such Purchaser’s
representation in Section 5.2 as to the sources of the funds used to pay the
purchase price of the Notes to be purchased by such Purchaser.
     4.14 Private Offering by the Company. Since January 18, 2008, neither the
Company nor anyone acting on its behalf has, directly or indirectly, offered the
Notes or any similar securities for sale to, or solicited any offer to buy any
of the same from, or otherwise approached or negotiated in respect thereof with,
any Person other than Hancock and not more than five other Institutional
Investors (as defined in clause (c) of the definition of such term), each of
which has been offered the Notes at a private sale for investment. Neither the
Company nor anyone acting on its behalf has taken, or will take, any action that
would subject the issuance or sale of the Notes to the registration requirements
of Section 5 of the Securities Act or to the registration requirements of any
securities or “blue sky” laws of any applicable jurisdiction.
     4.15 Use of Proceeds; Margin Regulations. The Company will apply the
proceeds of the sale of the Notes for working and general capital requirements
to pay off/refinance other Debt. No part of the proceeds from the sale of the
Notes hereunder will be used, directly or indirectly, for the purpose of buying
or carrying any margin stock within the meaning of Regulation U of the Board of
Governors of the Federal Reserve System (12 CFR 221), or for the purpose of
buying or carrying or trading in any securities under such circumstances as to
involve the Company in a violation of Regulation X of said Board (12 CFR 224) or
to involve any broker or dealer in a violation of Regulation T of said Board (12
CFR 220). Margin stock does not constitute more than 5% of the value of the
consolidated assets of the Company and its Subsidiaries and the Company does not
have any present intention that margin stock will constitute more than 5% of the
value of such assets. As used in this Section, the terms “margin stock” and
“purpose of buying or carrying” shall have the meanings assigned to them in said
Regulation U.

11

--------------------------------------------------------------------------------

 

     4.16 Existing Debt; Future Liens.
          (a) Except as described therein, Schedule 4.16 sets forth a complete
and correct list of all outstanding Debt of the Company and its Subsidiaries in
excess of $10,000,000, or having commitments in excess thereof, as of the date
hereof. Neither the Company nor any Subsidiary is in default and no waiver of
default is currently in effect, in the payment of any principal or interest on
any Debt of the Company or such Subsidiary and no event or condition exists with
respect to any Debt of the Company or any Subsidiary that would permit (or that
with notice or the lapse of time, or both, would permit) one or more Persons to
cause such Debt to become due and payable before its stated maturity or before
its regularly scheduled dates of payment.
          (b) The aggregate amount of all outstanding Debt of the Company and
its Subsidiaries not set forth on Schedule 4.16 does not as of the date hereof
exceed $5,000,000.
          (c) Except as disclosed in Schedule 4.16, neither the Company nor any
Subsidiary has agreed or consented to cause or permit in the future (upon the
happening of a contingency or otherwise) any of its property, whether now owned
or hereafter acquired, to be subject to a Lien not permitted by Section 9.7.
          (d) As of the date hereof, neither the Company nor any Subsidiary is a
party to, or otherwise subject to any provision contained in, any instrument
evidencing Debt of the Company or such Subsidiary, any agreement relating
thereto or any other agreement (including, but not limited to, its charter or
other organizational document) which limits the amount of, or otherwise imposes
restrictions on the incurring of, Debt of the Company, except as specifically
indicated in Schedule 4.16.
     4.17 Foreign Assets Control Regulations, etc.
          (a) Neither the sale of the Notes by the Company hereunder nor its use
of the proceeds thereof will violate the Trading with the Enemy Act, as amended,
or any of the foreign assets control regulations of the United States Treasury
Department (31 CFR, Subtitle B, Chapter V, as amended) or any enabling
legislation or executive order relating thereto.
          (b) Neither the Company nor any Subsidiary (i) is a Person described
or designated in the Specially Designated Nationals and Blocked Persons List of
the Office of Foreign Assets Control or in Section 1 of the Anti Terrorism Order
or (ii) knowingly engages in any dealings or transactions with any such Person.
The Company and its Subsidiaries are in compliance, in all material respects,
with the USA Patriot Act.
          (c) No part of the proceeds from the sale of the Notes hereunder will
be used, directly or indirectly, for any payments to any governmental official
or employee, political party, official of a political party, candidate for
political office, or anyone else acting in an official capacity, in order to
obtain, retain or direct business or obtain any improper advantage, in violation
of the United States Foreign Corrupt Practices Act of 1977.
     4.18 Status Under Certain Statutes. Neither the Company nor any Subsidiary
is subject to regulation under the Investment Company Act of 1940, as amended,
the Public Utility

12

--------------------------------------------------------------------------------

 

Holding Company Act of 2005, as amended, the ICC Termination Act of 1995, as
amended, or the Federal Power Act, as amended.
     4.19 Environmental Matters.
          (a) Neither the Company nor any Subsidiary has knowledge of any claim
or has received any notice of any claim, and no proceeding has been instituted
raising any claim against the Company or any of its Subsidiaries or any of their
respective real properties now or formerly owned, leased or operated by any of
them or other assets, alleging any damage to the environment or violation of any
Environmental Laws, except, in each case, such as could not reasonably be
expected to result in a Material Adverse Effect.
          (b) Neither the Company nor any Subsidiary has knowledge of any facts
which would give rise to any claim, public or private, of violation of
Environmental Laws or damage to the environment emanating from, occurring on or
in any way related to real properties now or formerly owned, leased or operated
by any of them or to other assets or their use, except, in each case, such as
could not reasonably be expected to result in a Material Adverse Effect.
          (c) Neither the Company nor any of its Subsidiaries has stored any
Hazardous Materials on real properties now or formerly owned, leased or operated
by any of them and has not disposed of any Hazardous Materials in a manner
contrary to any Environmental Laws in each case in any manner that could
reasonably be expected to result in a Material Adverse Effect.
          (d) All buildings on all real properties now owned, leased or operated
by the Company or any of its Subsidiaries are in compliance with applicable
Environmental Laws, except where failure to comply could not reasonably be
expected to result in a Material Adverse Effect.
     4.20 Solvency. The Company, after giving effect to the transactions
contemplated by this Agreement and the Notes, will not be engaged in any
business or transaction, or about to engage in any business or transaction, for
which the Company has unreasonably small assets or capital (within the meaning
of the Uniform Fraudulent Transfer Act, the Uniform Fraudulent Conveyance Act
and Section 548 of Title 11 of the United States Code), and the Company does not
have any intent to hinder, delay or defraud any Person to which it is, or will
become, on or after the date of Closing, indebted to or to incur debts that
would be beyond its ability to pay as they mature.
     4.21 Hostile Tender Offers. None of the proceeds of the sale of any Notes
will be used to finance a Hostile Tender Offer.
     4.22 Ranking of Notes. The Company’s obligations under the Notes and this
Agreement will, upon issuance of the Notes, rank at least pari passu, without
preference or priority, with all of its other outstanding unsecured and
unsubordinated obligations, except for those obligations that are, or are liable
to be, mandatorily preferred by law.

13

--------------------------------------------------------------------------------

 

5. REPRESENTATIONS OF THE PURCHASER.
     5.1 Purchase for Investment. Each Purchaser severally represents that, on
any and each date it purchases any Note or Notes, it is purchasing the Notes for
its own account or for one or more separate accounts maintained by such
Purchaser or for the account of one or more pension or trust funds and not with
a view to the distribution thereof, provided that the disposition of such
Purchaser’s or their property shall at all times be within such Purchaser’s or
their control. Each Purchaser understands that the Notes have not been
registered under the Securities Act and may be resold only if registered
pursuant to the provisions of the Securities Act or if an exemption from
registration is available, except under circumstances where neither such
registration nor such an exemption is required by law, and that the Company is
not required to register the Notes.
     5.2 Source of Funds. Each Purchaser severally represents that, on any and
each date it purchases any Note or Notes, at least one of the following
statements is an accurate representation as to each source of funds (a “Source”)
to be used by such Purchaser to pay the purchase price of the Notes to be
purchased by such Purchaser hereunder:
          (a) the Source is an “insurance company general account” (as the term
is defined in the United States Department of Labor’s Prohibited Transaction
Exemption (“PTE”) 95-60) in respect of which the reserves and liabilities (as
defined by the annual statement for life insurance companies approved by the
National Association of Insurance Commissioners (the “NAIC Annual Statement”))
for the general account contract(s) held by or on behalf of any employee benefit
plan together with the amount of the reserves and liabilities for the general
account contract(s) held by or on behalf of any other employee benefit plans
maintained by the same employer (or affiliate thereof as defined in PTE 95-60)
or by the same employee organization in the general account do not exceed 10% of
the total reserves and liabilities of the general account (exclusive of separate
account liabilities) plus surplus as set forth in the NAIC Annual Statement
filed with such Purchaser’s state of domicile; or
          (b) the Source is a separate account that is maintained solely in
connection with such Purchaser’s fixed contractual obligations under which the
amounts payable, or credited, to any employee benefit plan (or its related
trust) that has any interest in such separate account (or to any participant or
beneficiary of such plan (including any annuitant)) are not affected in any
manner by the investment performance of the separate account; or
          (c) the Source is either (i) an insurance company pooled separate
account, within the meaning of PTE 90-1 or (ii) a bank collective investment
fund, within the meaning of the PTE 91-38 and, except as disclosed by such
Purchaser to the Company in writing pursuant to this clause (c), no employee
benefit plan or group of plans maintained by the same employer or employee
organization beneficially owns more than 10% of all assets allocated to such
pooled separate account or collective investment fund; or
          (d) the Source constitutes assets of an “investment fund” (within the
meaning of Part V of PTE 84-14 (the “QPAM Exemption”)) managed by a “qualified
professional asset manager” or “QPAM” (within the meaning of Part V of the QPAM
Exemption), no employee benefit plan’s assets that are included in such
investment fund, when combined with the assets of

14

--------------------------------------------------------------------------------

 

all other employee benefit plans established or maintained by the same employer
or by an affiliate (within the meaning of Section V(c)(1) of the QPAM Exemption)
of such employer or by the same employee organization and managed by such QPAM,
exceed 20% of the total client assets managed by such QPAM, the conditions of
Part I(c) and (g) of the QPAM Exemption are satisfied, neither the QPAM nor a
person controlling or controlled by the QPAM (applying the definition of
“control” in Section V(e) of the QPAM Exemption) owns a 5% or more interest in
the Company and (i) the identity of such QPAM and (ii) the names of all employee
benefit plans whose assets are included in such investment fund have been
disclosed to the Company in writing pursuant to this clause (d); or
          (e) the Source constitutes assets of a “plan(s)” (within the meaning
of Section IV of PTE 96-23 (the “INHAM Exemption”)) managed by an “in-house
asset manager” or “INHAM” (within the meaning of Part IV of the INHAM
Exemption), the conditions of Part I(a), (g) and (h) of the INHAM Exemption are
satisfied, neither the INHAM nor a person controlling or controlled by the INHAM
(applying the definition of “control” in Section IV(d) of the INHAM Exemption)
owns a 5% or more interest in the Company and (i) the identity of such INHAM and
(ii) the name(s) of the employee benefit plan(s) whose assets constitute the
Source have been disclosed to the Company in writing pursuant to this clause
(e); or
          (f) the Source is a governmental plan; or
          (g) the Source is one or more employee benefit plans, or a separate
account or trust fund comprised of one or more employee benefit plans, each of
which has been identified to the Company in writing pursuant to this clause (g);
or
          (h) the Source does not include assets of any employee benefit plan,
other than a plan exempt from the coverage of ERISA.
As used in this Section 5.2, the terms “employee benefit plan”, “governmental
plan” and “separate account” shall have the respective meanings assigned to such
terms in section 3 of ERISA.
6. INFORMATION AS TO COMPANY.
     6.1 Financial and Business Information. During the Issuance Period and
thereafter as long as any Notes are outstanding, the Company shall deliver to
each holder of Notes that is an Institutional Investor:
          (a) Quarterly Statements — within 45 days (or such shorter period as
is 15 days greater than the period applicable to the filing of the Company’s
Quarterly Report on Form 10-Q (the “Form 10-Q”) with the SEC regardless of
whether the Company is subject to the filing requirements thereof) after the end
of each quarterly fiscal period in each fiscal year of the Company (other than
the last quarterly fiscal period of each such fiscal year), duplicate copies of,
          (i) a consolidated balance sheet of the Company and its Subsidiaries
as at the end of such quarter, and

15

--------------------------------------------------------------------------------

 

          (ii) consolidated statements of income, changes in members’ equity and
cash flows of the Company and its Subsidiaries, for such quarter and (in the
case of the second and third quarters) for the portion of the fiscal year ending
with such quarter,
setting forth in each case in comparative form the figures for the corresponding
periods in the previous fiscal year, all in reasonable detail, prepared in
accordance with GAAP applicable to quarterly financial statements generally, and
certified by a Senior Financial Officer as fairly presenting, in all material
respects, the financial position of the companies being reported on and their
results of operations and cash flows, subject to changes resulting from year-end
adjustments, provided that delivery within the time period specified above of
copies of the Company’s Form 10-Q prepared in compliance with the requirements
therefor and filed with the SEC shall be deemed to satisfy the requirements of
this Section 6.1(a), provided, further, that the Company shall be deemed to have
made such delivery of such Form 10-Q if it shall have timely made such Form 10-Q
available on “EDGAR” and on its home page on the worldwide web (at the date of
this Agreement located at: http//www.chsinc.com) and shall have given each
holder of Notes prior notice of such availability on EDGAR and on its home page
in connection with each delivery (such availability and notice thereof being
referred to as “Electronic Delivery”);
          (b) Annual Statements — within 90 days (or such shorter period as is
15 days greater than the period applicable to the filing of the Company’s Annual
Report on Form 10-K (the “Form 10-K”) with the SEC regardless of whether the
Company is subject to the filing requirements thereof) after the end of each
fiscal year of the Company, duplicate copies of,
          (i) consolidated and consolidating balance sheets of the Company and
its Subsidiaries, as at the end of such year, and
          (ii) consolidated and consolidating statements of income and cash
flows and a consolidated statement of members’ equity of the Company and its
Subsidiaries, for such year,
setting forth in each case, in comparative form, the figures for the previous
fiscal year, all in reasonable detail, prepared in accordance with GAAP, and
accompanied by an opinion thereon of independent certified public accountants of
recognized national standing, which opinion shall state that such financial
statements present fairly, in all material respects, the financial position of
the companies being reported upon and their results of operations and cash flows
and have been prepared in conformity with GAAP, and that the examination of such
accountants in connection with such financial statements has been made in
accordance with generally accepted auditing standards, and that such audit
provides a reasonable basis for such opinion in the circumstances; provided that
the delivery within the time period specified above of the Company’s Form 10-K
for such fiscal year (together with the Company’s annual report to members, if
any, prepared pursuant to Rule 14a-3 under the Exchange Act) prepared in
accordance with the requirements therefor and filed with the SEC shall be deemed
to satisfy the requirements of this Section 6.1(b), provided, further, that the
Company shall be deemed to have made such delivery of such Form 10-K if it shall
have timely made Electronic Delivery thereof;

16

--------------------------------------------------------------------------------

 

          (c) SEC and Other Reports — promptly upon their becoming available,
one copy of (i) each financial statement, report, notice or proxy statement sent
by the Company or any Subsidiary to its public securities holders generally, and
(ii) each regular or periodic report, each registration statement (without
exhibits except as expressly requested by such holder), and each prospectus and
all amendments thereto filed by the Company or any Subsidiary with the SEC and
of all press releases and other statements made available generally by the
Company or any Subsidiary to the public concerning developments that are
Material;
          (d) Notice of Default or Event of Default — promptly, and in any event
within five days after a Responsible Officer becoming aware of the existence of
any Default or Event of Default or that any Person has given any notice or taken
any action with respect to a claimed default hereunder or that any Person has
given any notice or taken any action with respect to a claimed default of the
type referred to in Section 10(f), a written notice specifying the nature and
period of existence thereof and what action the Company is taking or proposes to
take with respect thereto;
          (e) ERISA Matters — promptly, and in any event within five days after
a Responsible Officer becoming aware of any of the following, a written notice
setting forth the nature thereof and the action, if any, that the Company or an
ERISA Affiliate proposes to take with respect thereto:
          (i) with respect to any Plan, any reportable event, as defined in
section 4043(b) of ERISA and the regulations thereunder, for which notice
thereof has not been waived pursuant to such regulations as in effect on the
date hereof; or
          (ii) the taking by the PBGC of steps to institute, or the threatening
by the PBGC of the institution of, proceedings under section 4042 of ERISA for
the termination of, or the appointment of a trustee to administer, any Plan, or
the receipt by the Company or any ERISA Affiliate of a notice from a
Multiemployer Plan that such action has been taken by the PBGC with respect to
such Multiemployer Plan; or
          (iii) any event, transaction or condition that could result in the
incurrence of any liability by the Company or any ERISA Affiliate pursuant to
Title I or IV of ERISA or the penalty or excise tax provisions of the Code
relating to employee benefit plans, or in the imposition of any Lien on any of
the rights, properties or assets of the Company or any ERISA Affiliate pursuant
to Title I or IV of ERISA or such penalty or excise tax provisions, if such
liability or Lien, taken together with any other such liabilities or Liens then
existing, could reasonably be expected to have a Material Adverse Effect;
          (f) Notices from Governmental Authority — promptly, and in any event
within 30 days of receipt thereof, copies of any notice to the Company or any
Subsidiary from any Governmental Authority relating to any order, ruling,
statute or other law or regulation that could reasonably be expected to have a
Material Adverse Effect; and
          (g) Requested Information — with reasonable promptness, such other
data and information relating to the business, operations, affairs, financial
condition, assets or

17

--------------------------------------------------------------------------------

 

properties of the Company or any of its Subsidiaries or relating to the ability
of the Company to perform its obligations hereunder and under the Notes as from
time to time may be reasonably requested by any such holder of Notes.
     6.2 Officer’s Certificate. Each set of financial statements delivered to a
holder of Notes pursuant to Section 6.1(a) or Section 6.1(b) hereof shall be
accompanied by a certificate of a Senior Financial Officer setting forth (which,
in the case of Electronic Delivery of any such financial statements, shall be by
separate concurrent delivery of such certificate to each holder of Notes):
          (a) Covenant Compliance — the information (including detailed
calculations) required in order to establish whether the Company was in
compliance with the requirements of Sections 9.3 through and including 9.6 and
Section 9.8 hereof, inclusive, during the quarterly or annual period covered by
the statements then being furnished (including with respect to each such
Section, where applicable, the calculations of the maximum or minimum amount,
ratio or percentage, as the case may be, permissible under the terms of such
Sections, and the calculation of the amount, ratio or percentage then in
existence); and
          (b) Event of Default — a statement that such officer has reviewed the
relevant terms hereof and has made, or caused to be made, under his or her
supervision, a review of the transactions and conditions of the Company and its
Subsidiaries from the beginning of the quarterly or annual period covered by the
statements then being furnished to the date of the certificate and that such
review shall not have disclosed the existence during such period of any
condition or event that constitutes a Default or an Event of Default or, if any
such condition or event existed or exists (including, without limitation, any
such event or condition resulting from the failure of the Company or any
Subsidiary to comply with any Environmental Law), specifying the nature and
period of existence thereof and what action the Company shall have taken or
proposes to take with respect thereto.
     6.3 Inspection. The Company shall permit the representatives of each holder
of Notes that is an Institutional Investor:
          (a) No Default — if no Default or Event of Default then exists, at the
expense of such holder and upon reasonable prior notice to the Company, to visit
the principal executive office of the Company or any Subsidiary, to discuss the
affairs, finances and accounts of the Company and its Subsidiaries with the
Company’s officers, and (with the consent of the Company, which consent will not
be unreasonably withheld) its independent public accountants, and (with the
consent of the Company, which consent will not be unreasonably withheld) to
visit the other offices and properties of the Company and each Subsidiary, all
at such reasonable times and as often as may be reasonably requested in writing;
and
          (b) Default — if a Default or Event of Default then exists, at the
expense of the Company to visit and inspect any of the offices or properties of
the Company or any Subsidiary, to examine all their respective books of account,
records, reports and other papers, to make copies and extracts therefrom, and to
discuss their respective affairs, finances and accounts with their respective
officers and independent public accountants (and by this provision the

18

--------------------------------------------------------------------------------

 

Company authorizes said accountants to discuss the affairs, finances and
accounts of the Company and its Subsidiaries), all at such times and as often as
may be requested.
7. INTEREST; PAYMENT OF THE NOTES.
     7.1 Interest Payments. Interest on the Notes shall accrue on the unpaid
principal balance of the Notes at the rates, and shall be computed on the basis,
as described in the Notes. Interest shall be due and payable quarterly in
arrears as provided in the Notes.
     7.2 Required Principal Payments.
          (a) Required Principal Payments. Each Series of Notes shall be subject
to required payments of principal set forth in the Notes of such Series.
          (b) Offer to Pay Notes Upon Change in Control.
               (i) Notice and Offer. The Company will not take any action that
consummates or finalizes a Change in Control unless at least thirty (30) days
prior to such action it shall have given to each holder of the Notes written
notice of such impending Change in Control. The Company will, within five
(5) Business Days after any Responsible Officer has knowledge of the occurrence
of any Change in Control, give written notice of such Change in Control to each
holder of Notes in the manner set forth in Section 17. If a Change in Control
has occurred, such written notice shall contain, and shall constitute an
irrevocable offer to prepay all or (at such holder’s option) any portion of the
Notes held by such holder on a date specified in such notice (the “Proposed
Prepayment Date”) that is not less than thirty (30) days and not more than sixty
(60) days after the date of such notice. If the Proposed Prepayment Date shall
not be specified in such notice, the Proposed Prepayment Date shall be the 30th
day after the date such notice shall have been sent by the Company. In no event
will the Company take any action to consummate or finalize a Change in Control
unless the Company has given the notice required by this Section 7.2(b)(i) and,
contemporaneously with such action, the Company prepays all Notes required to be
prepaid in accordance with Section 7.2(b)(ii) hereof.
               (ii) Acceptance and Payment. A holder of Notes may accept the
offer to prepay made pursuant to Section 7.2(b)(i) by causing a notice of
acceptance of such offered prepayment (specifying in such notice the amount of
Notes with respect to which such acceptance applies) to be delivered to the
Company prior to the Proposed Prepayment Date (it being understood that the
failure by a holder to respond to such written offer of prepayment prior to the
Proposed Prepayment Date shall be deemed to constitute a rejection of such offer
with respect to all Notes held by such holder). If so accepted, such offered
prepayment shall be due and payable on the Proposed Prepayment Date. Such
offered prepayment shall be made at 100% of the principal amount of such Notes
so prepaid, plus interest on all such Notes accrued to the Proposed Prepayment
Date. If the Company shall at any time receive an acceptance of an offer to
prepay Notes pursuant to this Section 7.2(b)(ii) from some, but not all of, the
holders of the Notes, then the Company will, within two Business Days after the
receipt of such acceptance, give written notice of such acceptance to each other
holder of the Notes.

19

--------------------------------------------------------------------------------

 

               (iii) Officer’s Certificate. Each offer to prepay the Notes
pursuant to Section 7.2(b) shall be accompanied by a certificate, executed by a
Responsible Officer of the Company and dated the date of such offer, specifying:
          (A) the Proposed Prepayment Date;
          (B) that such payment is to be made pursuant to the provisions of
Section 7.2(b) of this Agreement;
          (C) the outstanding principal amount as of the Proposed Prepayment
Date of each Note offered to be prepaid;
          (D) the unpaid interest that would be due on each such Note offered to
be prepaid, accrued to the date fixed for payment;
          (E) that the conditions of Section 7.2(b) have been fulfilled; and
          (F) in reasonable detail, the nature and date or proposed date of the
Change in Control.
     7.3 Optional Prepayments with Make-Whole Amount. The Company may, at its
option, upon notice as provided below, prepay at any time all, or from time to
time any part of, the Notes of any Series, in integral multiples of $1,000,000
and in a minimum amount of $5,000,000, at 100% of the principal amount so
prepaid, plus interest thereon to the prepayment date and the Make-Whole Amount
determined for the prepayment date with respect to such principal amount. The
Company will give each holder of the Series of Notes to be prepaid written
notice of each optional prepayment under this Section 7.3 not less than ten
(10) Business Days and not more than sixty (60) days prior to the date fixed for
such prepayment. Each such notice shall specify such prepayment date (which
shall be a Business Day), the aggregate principal amount of the Series of Notes
to be prepaid on such date, the principal amount of each Note held by such
holder to be prepaid (determined in accordance with Section 7.4), and the
interest to be paid on the prepayment date with respect to such principal amount
being prepaid, and shall be accompanied by a certificate of a Senior Financial
Officer as to the estimated Make-Whole Amount due in connection with such
prepayment (calculated as if the date of such notice were the date of the
prepayment), setting forth the details of such computation. Two (2) Business
Days prior to such prepayment, the Company shall deliver to each holder of such
Notes a certificate of a Senior Financial Officer specifying the calculation of
such Make-Whole Amount as of the specified prepayment date. Any partial
prepayment of the Notes pursuant to this Section 7.3 shall be applied in
satisfaction of required payments of principal in inverse order of their
scheduled due dates.
     7.4 Allocation of Partial Prepayments. In the case of each partial
prepayment of any Series of Notes pursuant to Section 7.3, the principal amount
of such Notes to be prepaid shall be allocated among all of such Notes at the
time outstanding in proportion, as nearly as practicable, to the respective
unpaid principal amounts thereof not theretofore called for prepayment.

20

--------------------------------------------------------------------------------

 

     7.5 Maturity; Surrender, etc. In the case of each prepayment of any Notes
pursuant to this Section 7, the principal amount of each Note to be prepaid
shall mature and become due and payable on the date fixed for such prepayment,
together with interest on such principal amount accrued to such date and, in the
case of any such prepayment pursuant to Section 7.3, the applicable Make-Whole
Amount, if any. From and after such date, unless the Company shall fail to pay
such principal amount when so due and payable, together with the interest and
Make-Whole Amount, if any, as aforesaid, interest on such principal amount shall
cease to accrue. Any Note paid or prepaid in full shall be surrendered to the
Company and cancelled and shall not be reissued, and no Note shall be issued in
lieu of any prepaid principal amount of any Note.
     7.6 Purchase of Notes. The Company will not and will not permit any
Affiliate to purchase, redeem, prepay or otherwise acquire, directly or
indirectly, any of the outstanding Notes except upon the payment or prepayment
of the Notes in accordance with the terms of this Agreement and the Notes. The
Company will promptly cancel all Notes acquired by it or any Affiliate pursuant
to any payment, prepayment or purchase of Notes pursuant to any provision of
this Agreement and no Notes may be issued in substitution or exchange for any
such Notes.
     7.7 Make-Whole Amount. The term “Make-Whole Amount” means, with respect to
any Note, an amount equal to the excess, if any, of the Discounted Value of the
Remaining Scheduled Payments with respect to the Called Principal of such Note
over the amount of such Called Principal, provided that the Make-Whole Amount
may in no event be less than zero. For the purposes of determining the
Make-Whole Amount, the following terms have the following meanings:
     “Called Principal” means, with respect to any Note, the principal of such
Note that is to be prepaid pursuant to Section 7.3 or has become or is declared
to be immediately due and payable pursuant to Section 11.1, as the context
requires.
     “Discounted Value” means, with respect to the Called Principal of any Note,
the amount obtained by discounting all Remaining Scheduled Payments with respect
to such Called Principal from their respective scheduled due dates to the
Settlement Date with respect to such Called Principal, in accordance with
accepted financial practice and at a discount factor (applied on the same
periodic basis as that on which interest on the Notes is payable) equal to the
Reinvestment Yield with respect to such Called Principal.
     “Reinvestment Yield” means, with respect to the Called Principal of any
Note, 0.50% plus the yield to maturity calculated by using (i) the yields
reported, as of 10:00 A.M. (New York City time) on the second Business Day
preceding the Settlement Date on screen “PX 1” on the Bloomberg Financial Market
Service (or such other display on the Bloomberg Financial Market Service as may
be agreed upon by the Company and Hancock having the same information if “PX-1”
is replaced by Bloomberg Financial Market Service) for the most recently issued,
actively traded, on-the-run benchmark U.S. Treasury securities, having a
maturity equal to the Remaining Average Life of such Called Principal as of such
Settlement Date or (ii) if such yields are not reported as of such time or the
yields reported as of such time are not ascertainable, (including by way of
interpolation), the Treasury Constant Maturity Series Yields reported, for the
latest day for which such yields have been so reported as of the second Business
Day preceding the

21

--------------------------------------------------------------------------------

 

Settlement Date, in Federal Reserve Statistical Release H.15 (519) (or any
comparable successor publication) for actively traded U.S. Treasury securities
having a constant maturity equal to the Remaining Average Life of such Called
Principal as of such Settlement Date. In either case, the yield will be
determined using the applicable screen or report as determined above, if
necessary, by (a) converting U.S. Treasury bill quotations to bond equivalent
yields in accordance with accepted financial practice and (b) interpolating
linearly on a straight line basis between (1) the applicable U.S. Treasury
security with the maturity closest to and greater than the Remaining Average
Life and (2) the applicable U.S. Treasury security with the maturity closest to
and less than the Remaining Average Life. The Reinvestment Yield shall be
rounded to the number of decimal places as appears in the interest rate of the
applicable Note.
     “Remaining Average Life” means, with respect to any Called Principal, the
number of years (calculated to the nearest one-twelfth year) obtained by
dividing (a) such Called Principal into (b) the sum of the products obtained by
multiplying (i) the principal component of each Remaining Scheduled Payment with
respect to such Called Principal by (ii) the number of years (calculated to the
nearest one-twelfth year) that will elapse between the Settlement Date with
respect to such Called Principal and the scheduled due date of such Remaining
Scheduled Payment.
     “Remaining Scheduled Payments” means, with respect to the Called Principal
of any Note, all payments of such Called Principal and interest thereon that
would be due after the Settlement Date with respect to such Called Principal if
no payment of such Called Principal were made prior to its scheduled due date,
provided that if such Settlement Date is not a date on which interest payments
are due to be made under the terms of the Notes, then the amount of the next
succeeding scheduled interest payment will be reduced by the amount of interest
accrued to such Settlement Date and required to be paid on such Settlement Date
pursuant to Section 7.3 or 11.1.
     “Settlement Date” means, with respect to the Called Principal of any Note,
the date on which such Called Principal is to be prepaid pursuant to Section 7.3
or has become or is declared to be immediately due and payable pursuant to
Section 11.1, as the context requires.
8. AFFIRMATIVE COVENANTS.
     The Company covenants that during the Issuance Period and thereafter so
long as any of the Notes are outstanding:
     8.1 Compliance with Law. The Company will and will cause each of its
Subsidiaries to comply with all laws, ordinances or governmental rules or
regulations to which each of them is subject, including, without limitation,
ERISA, the USA Patriot Act and Environmental Laws, and will obtain and maintain
in effect all licenses, certificates, permits, franchises and other governmental
authorizations necessary to the ownership of their respective properties or to
the conduct of their respective businesses, in each case to the extent necessary
to ensure that non-compliance with such laws, ordinances or governmental rules
or regulations or failures to obtain or maintain in effect such licenses,
certificates, permits, franchises and other

22

--------------------------------------------------------------------------------

 

governmental authorizations could not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect.
     8.2 Insurance. The Company will and will cause each of its Subsidiaries to
maintain, with financially sound and reputable insurers, insurance with respect
to their respective properties and businesses against such casualties and
contingencies, of such types, on such terms and in such amounts (including
deductibles, co-insurance and self-insurance, if adequate reserves are
maintained with respect thereto) as is customary in the case of entities of
established reputations engaged in the same or a similar business and similarly
situated; provided, however, the Company may, to the extent permitted by law,
provide for appropriate self-insurance with respect to workers’ compensation.
     8.3 Maintenance of Properties. The Company will and will cause each of its
Subsidiaries to maintain and keep, or cause to be maintained and kept, their
respective properties in good repair, working order and condition (other than
ordinary wear and tear), so that the business carried on in connection therewith
may be properly conducted at all times, provided that this Section shall not
prevent the Company or any Subsidiary from discontinuing the operation and the
maintenance of any of its properties if such discontinuance is desirable in the
conduct of its business and the Company has concluded that such discontinuance
could not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect.
     8.4 Payment of Taxes and Claims. The Company will and will cause each of
its Subsidiaries to file all tax returns required to be filed in any
jurisdiction and to pay and discharge all taxes shown to be due and payable on
such returns and all other taxes, assessments, governmental charges, or levies
imposed on them or any of their properties, assets, income or franchises, and to
pay and discharge all amounts payable for work, labor and materials, in each
case to the extent such taxes, assessments, charges, levies and amounts have
become due and payable and before they have become delinquent and all claims for
which sums have become due and payable that have or might become a Lien on
properties or assets of the Company or any Subsidiary, provided that neither the
Company nor any Subsidiary need pay any such tax, assessment, charge, levy or
amount payable if (a) the amount, applicability or validity thereof is being
actively contested by the Company or such Subsidiary on a timely basis in good
faith and in appropriate proceedings, and the Company or a Subsidiary has
established adequate reserves therefor in accordance with GAAP on the books of
the Company or such Subsidiary or (b) the nonpayment of all such taxes,
assessments, charges, levies and amounts payable in the aggregate could not
reasonably be expected to have a Material Adverse Effect.
     8.5 Corporate Existence, etc. Subject to Section 9.2, the Company will at
all times preserve and keep in full force and effect its corporate existence and
will at all times preserve and keep in full force and effect the corporate
existence of each of its Subsidiaries, except to the extent that, with respect
to Subsidiaries, in the good faith judgment of the Company, the failure to do so
could not reasonably be expected to, individually or in the aggregate, have a
Material Adverse Effect. The Company will at all times preserve and keep in full
force and effect all certificates of convenience and necessity, rights and
franchises, licenses, permits, operating rights and other authorization from any
Governmental Authorities as are necessary for the ownership, operation and
maintenance of its and its Subsidiaries’ respective businesses and properties,
unless the termination of or failure to preserve and keep in full force and
effect such

23

--------------------------------------------------------------------------------

 

right, certificate or franchise, license, permit, operating right or other
authorization would not reasonably be expected, individually or in the
aggregate, to have a Material Adverse Effect.
     8.6 Pari Passu. The Company covenants that all Debt owing under the Notes
and under this Agreement will rank at least pari passu with all its other
present and future unsecured Senior Debt.
9. NEGATIVE COVENANTS.
     The Company covenants that during the Issuance Period and thereafter so
long as any of the Notes are outstanding:
     9.1 Transactions with Affiliates. The Company will not, and will not permit
any Subsidiary to, enter into directly or indirectly any transaction or Material
group of related transactions (including, without limitation, the purchase,
lease, sale or exchange of properties of any kind or the rendering of any
service) with any Affiliate, except in the ordinary course and pursuant to the
reasonable requirements of the Company’s or such Subsidiary’s business and upon
fair and reasonable terms no less favorable to the Company or such Subsidiary
than would be obtainable in a comparable arm’s-length transaction with a Person
not an Affiliate.
     9.2 Merger, Consolidation, etc. The Company will not, and will not permit
any Subsidiary to, directly or indirectly, consolidate with, or merge into, any
other Person or permit any other Person to consolidate with, or merge into, it,
or convey, transfer or lease all or substantially all of its assets in a single
transaction or series of transactions to any Person, except that
          (a) any Subsidiary may consolidate with, or merge into, the Company or
any Wholly-Owned Subsidiary if the Company or such Wholly-Owned Subsidiary is
the surviving corporation; and
          (b) the Company may consolidate with, or merge into, any other Person,
or permit any other Person to consolidate with, or merge into, it, if
          (i) the successor formed by such consolidation or the survivor of such
merger (the “Surviving Corporation”), is a solvent corporation organized under
the laws of the United States of America or any State thereof (including the
District of Columbia),
          (ii) if the Company is not the Surviving Corporation, (A) the
Surviving Corporation shall have executed and delivered to each holder of the
Notes its written assumption of the due and punctual performance and payment of
each covenant and condition of the Company in this Agreement and the Notes,
which assumption shall be in form and substance approved in writing by the
Required Holders, and (B) the Company shall have caused to be delivered to each
holder of the Notes an opinion of nationally recognized independent counsel, or
other independent counsel reasonably satisfactory to the Required Holders, to
the effect that all agreements or instruments effecting such assumption are
enforceable in accordance with their terms and comply with the terms hereof, and

24

--------------------------------------------------------------------------------

 

          (iii) immediately after giving effect to such transaction,
          (A) no Default or Event of Default shall exist, and
          (B) the Surviving Corporation and its Subsidiaries are permitted to
incur at least $1.00 of additional Priority Debt under the provisions of
Section 9.5.
No such conveyance, transfer or lease of substantially all of the assets of the
Company shall have the effect of releasing the Company or any successor
corporation, limited liability company or other entity that shall theretofore
have become such in the manner prescribed in this Section 9.2 from its liability
under this Agreement or the Notes.
     9.3 Consolidated Funded Debt to Consolidated Cash Flow. The Company will
not permit the ratio of (i) Consolidated Funded Debt to (ii) Consolidated Cash
Flow determined as of the end of the four fiscal quarter period then most
recently ended, to exceed 3.00 to 1.00 at any time.
     9.4 Adjusted Consolidated Funded Debt to Consolidated Members’ and Patrons’
Equity. The Company shall not permit the ratio of Adjusted Consolidated Funded
Debt to Consolidated Members’ and Patrons’ Equity to exceed .80 to 1.00 at any
time.
     9.5 Priority Debt. The Company covenants that it will not, and will not
permit any of its Subsidiaries to, directly or indirectly, create, issue, incur
or assume any Priority Debt if after giving effect thereto the aggregate
outstanding principal amount of all Priority Debt would exceed 20% of
Consolidated Net Worth at the time of such creation, issuance, incurrence or
assumption.
     9.6 Working Capital. The Company covenants that it will not permit Working
Capital at any time to be less than the minimum level of Working Capital (or
comparable term) that the Company is then required to maintain under the
Company’s Primary Bank Facility without causing a default or event of default
thereunder. As used herein, the term “Working Capital” means Consolidated
Current Assets minus Consolidated Current Liabilities.
     9.7 Liens. The Company will not, and will not permit any of its
Subsidiaries to, directly or indirectly create, incur, assume or suffer to be
created, incurred or assumed or to exist (upon the happening of a contingency or
otherwise), any Lien on or with respect to any property of the Company or any
such Subsidiary, whether now owned or held or hereafter acquired (unless
provision is made whereby the Notes will be equally and ratably secured with any
and all other obligations thereby secured as provided in the last paragraph of
this Section 9.7), except:
          (a) Liens for taxes, assessments or other governmental charges or
levies securing obligations not overdue, or if overdue, being actively contested
in good faith by appropriate proceedings that will prevent the forfeiture or
sale of any property, provided that adequate reserves are established in
accordance on the books of the Company or a Subsidiary of the Company in
accordance with GAAP;

25

--------------------------------------------------------------------------------

 

          (b) attachment, judgment and other similar Liens arising in connection
with court proceedings, provided the execution or other enforcement of such
Lien(s) is effectively stayed and the claims secured thereby are being actively
contested in good faith in such manner that the property subject to such Lien(s)
is not subject to forfeiture or sale, and further provided that adequate
reserves are established on the books of the Company or a Subsidiary of the
Company in accordance with GAAP;
          (c) Liens incidental to the normal conduct of the business of the
Company or a Subsidiary of the Company or to the ownership by the Company or a
Subsidiary of its property which were not incurred in connection with the
borrowing of money or the obtaining of credit or advances and which do not in
the aggregate materially detract from the value of the property of the Company
or any Subsidiary of the Company for the purpose of such business or materially
impair the use thereof in the operation of the business of the Company or any
Subsidiary of the Company, including, without limitation, Liens
          (i) in connection with workers’ compensation, unemployment insurance,
social security and other like laws,
          (ii) to secure (or to obtain letters of credit that secure) the
performance of tenders, statutory obligations, surety and performance bonds (of
a type other than set forth in Section 9.7(b)), bids, leases (other than Capital
Leases), purchase, construction or sales contracts and other similar
obligations, in each case not incurred or made in connection with the borrowing
of money, the obtaining of advances or credit or the payment of the deferred
purchase price of property,
          (iii) to secure the claims or demands of materialmen, mechanics,
carriers, warehousemen, vendors, repairmen, landlords, lessors and other like
Persons, arising in the ordinary course of business, and
          (iv) in the nature of reservations, exceptions, encroachments,
easements, rights-of-way, covenants, conditions, restrictions, leases and other
similar title exceptions or encumbrances affecting real property;
provided that any amounts secured by such Liens are not yet due and payable.
          (d) Liens existing as of the date of this Agreement securing Debt and
set forth on Schedule 4.16 hereto;
          (e) any Lien renewing, extending or refunding any Lien permitted by
clause (d) of this Section 9.7, provided that (a) the principal amount of the
Debt secured by such Lien immediately prior to such extension, renewal or
refunding is not increased or the maturity thereof reduced, (b) such Lien is not
extended to any other property, and (c) immediately after such extension,
renewal or refunding no Default or Event of Default would exist;
          (f) Liens on property of the Company or any of its Subsidiaries
securing Debt owing to the Company or to any of its Wholly-Owned Subsidiaries;

26

--------------------------------------------------------------------------------

 

          (g) any Lien created to secure all or any part of the purchase price
or cost of construction, or to secure Debt incurred or assumed to pay all or a
part of the purchase price or cost of construction, of any property (or any
improvement thereon) acquired or constructed by the Company or a Subsidiary of
the Company after the date of the Closing, provided that
          (i) no such Lien shall extend to or cover any property other than the
property (or improvement thereon) being acquired or constructed or rights
relating solely to such item or items of property (or improvement thereon),
          (ii) the principal amount of Debt secured by any such Lien shall at no
time exceed an amount equal to the lesser of (A) the cost to the Company or such
Subsidiary of the property (or improvement thereon) being acquired or
constructed or (B) the Fair Market Value (as determined in good faith by the
Company) of such property, determined at the time of such acquisition or at the
time of substantial completion of such construction, and
          (iii) such Lien shall be created contemporaneously with, or within
180 days after, the acquisition or completion of construction of such property
(or improvement thereon);
          (h) any Lien existing on property acquired by the Company or any
Subsidiary of the Company at the time such property is so acquired (whether or
not the Debt secured thereby is assumed by the Company or such Subsidiary) or
any Lien existing on property of a Person immediately prior to the time such
Person is merged into or consolidated with the Company or any Subsidiary of the
Company, provided that
          (i) no such Lien shall have been created or assumed in contemplation
of such acquisition of property or such consolidation or merger,
          (ii) such Lien shall extend only to the property acquired or the
property of such Person merged into or consolidated with the Company or
Subsidiary which was subject to such Lien as of the time of such consolidation
or merger, and
          (iii) the principal amount of the Debt secured by any such Lien shall
at no time exceed an amount equal to 100% of the Fair Market Value (as
determined in good faith by the board of directors of the Company or such
Subsidiary) of the property subject thereto at the time of the acquisition
thereof or at the time of such merger or consolidation;
          (i) Liens to CoBank and other cooperatives with respect to equity held
by the Company in such banks or other cooperatives securing Debt, provided that
the aggregate Fair Market Value of such equity securing Debt shall not exceed
$50,000,000 at any one time; and
          (j) other Liens not otherwise permitted under clause (a) through
(i) of this Section 9.7 securing Debt, provided that the existence, creation,
issuance, incurrence or assumption of such Debt is permitted under Sections 9.3,
9.4, 9.5 and 9.6 hereof.

27

--------------------------------------------------------------------------------

 

If, notwithstanding the prohibition contained herein, the Company shall, or
shall permit any of its Subsidiaries to, directly or indirectly create, incur,
assume or permit to exist any Lien, other than those Liens permitted by the
provisions of paragraphs (a) through (j) of this Section 9.7 (but including any
Liens in respect of the Primary Bank Facility whether or not permitted by
paragraphs (a) — (j) of this Section 9.7), it will make or cause to be made
effective provision whereby the Notes will be secured equally and ratably with
any and all other obligations thereby secured, such security to be pursuant to
agreements reasonably satisfactory to the Required Holders (including
intercreditor arrangements providing for the pari passu treatment of the Notes
and all such secured Debt) and, in any such case, the Notes shall have the
benefit, to the fullest extent that, and with such priority as, the holders of
the Notes may be entitled under applicable law, of an equitable Lien on such
property. For the avoidance of doubt, the Company acknowledges that it will not,
and will not permit any Subsidiary to, secure or grant any Liens in respect of
the Primary Bank Facility, unless an equal and ratable Lien is granted in
respect of the Notes.
     9.8 Sale of Assets.
          (a) Sale of Assets. The Company will not, and will not permit any of
its Subsidiaries to, make any Transfer, provided that the foregoing restriction
does not apply to a Transfer if:
          (i) the property that is the subject of such Transfer constitutes
either (A) inventory held for sale, or (B) equipment, fixtures, supplies or
materials no longer required, in the opinion of the Company or such Subsidiary,
in the operation of the business of the Company or such Subsidiary or that is
obsolete, and, in the case of any Transfer described in clause (A) or clause
(B), such Transfer is in the ordinary course of business (an “Ordinary Course
Transfer”);
          (ii) such Transfer is from a Subsidiary to the Company or a
Wholly-Owned Subsidiary, so long as immediately before and immediately after the
consummation of such transaction, and after giving effect thereto, no Default or
Event of Default exists or would exist (each such Transfer, collectively with
any Ordinary Course Transfers, “Excluded Transfers”); or
          (iii) such Transfer is a lease of the assets of the Company or any
Subsidiary of the Company to any joint venture entity, of which the Company or
any Subsidiary of the Company holds an ownership interest and shares in the
earnings; provided that the terms of any such lease and the division of the
joint venture’s earnings, when viewed as a whole, can be reasonably expected to
generate the same or greater book earnings and cash flow for the Company or
Subsidiary of the Company as would be generated absent such lease.
          (b) Debt Prepayment Applications and Reinvested Transfers.
          (i) Notwithstanding the provisions of Section 9.8(a), the Company or
any Subsidiary may Transfer any of its properties at the Fair Market Value
thereof; provided that

28

--------------------------------------------------------------------------------

 

          (A) either (1) such Transfer is not an Excluded Transfer and does not
involve a Substantial Portion of the property of the Company and its
Subsidiaries, or (2) the Net Proceeds Amount with respect to such Transfer (the
“Designated Portion”) is either (x) applied to the acquisition by the Company or
the Subsidiary making such Transfer of assets of a nature similar to, and of at
least an equivalent value of, the assets which were the subject of such Transfer
(a “Reinvested Transfer”), or (y) applied to a Debt Prepayment Application, in
either case, within one year of the consummation of such Transfer, as specified
in an Officer’s Certificate delivered to each holder of Notes prior to, or
contemporaneously with, the consummation of such Transfer; and
          (B) immediately after giving effect to such Transfer (1) no Default or
Event of Default shall exist and (2) the Company is able to incur at least $1.00
of additional Priority Debt under the provisions of Section 9.5 hereof.
          (ii) If, notwithstanding the certificate referred to in the foregoing
clause 9.8(b)(i)(A), the Company shall fail to apply the entire amount of the
Designated Portion as specified in such certificate within the period stated in
Section 9.8(b)(i), an Event of Default shall be deemed to have existed as of the
expiration of such period and shall be deemed to be continuing.
          (c) Certain Definitions. The following terms have the following
meanings:
          (i) “Debt Prepayment Application” means, with respect to any Transfer
by the Company or any Subsidiary, the application by the Company or such
Subsidiary of cash in an amount equal to the Net Proceeds Amount with respect to
such Transfer to pay the outstanding principal of all Funded Debt of the Company
or such Subsidiary (other than Funded Debt owing to any of the Subsidiaries or
any Affiliate and Funded Debt in respect of any revolving credit or similar
facility providing the Company or such Subsidiary with the right to obtain loans
or other extensions of credit from time to time, except to the extent that in
connection with such payment of Funded Debt, the availability of loans or other
extensions of credit under such credit facility is permanently reduced by an
amount not less than the amount of such proceeds applied to the payment of such
Funded Debt), provided that in the course of making such application the Company
shall offer to prepay each outstanding Note in a principal amount that equals
the Ratable Portion for such Note plus interest on all such Notes accrued to the
date of such payment. The Company will give each holder of Notes written notice
of such offered prepayment not less than ten (10) Business Days and not more
than sixty (60) days prior to the date fixed for such prepayment, specifying
such prepayment date, the aggregate principal amount of the Notes to be prepaid
on such date and the Ratable Portion payable with respect to each such Note. A
holder of Notes may accept or reject such offer to prepay by causing a notice of
such acceptance or rejection to be delivered to the Company at least two
(2) Business Days prior to the prepayment date specified by the Company in such
offer. If a holder of Notes has not responded to such offer by a date which is
at least two (2) Business Days prior to such specified prepayment date, such
holder shall be deemed to have rejected such offer of prepayment. If any holder
of a Note rejects or is deemed to have rejected such offer of prepayment, then,
for purposes of

29

--------------------------------------------------------------------------------

 

determining the extent to which any Net Proceeds Amount has been applied to a
Debt Prepayment Application, the Company nevertheless will be deemed to have
paid Funded Debt in an amount equal to the Ratable Portion for such Note.
As used in this definition,
          (i) “Ratable Portion” means, for any Note, an amount equal to the
product of
          (a) the Net Proceeds Amount (or any portion thereof) being so offered
to be applied to the payment of Funded Debt, multiplied by
          (b) a fraction the numerator of which is the outstanding principal
amount of such Note and the denominator of which is the aggregate outstanding
principal amount of Funded Debt of the Company and its Subsidiaries, after
eliminating all offsetting debits and credits between the Company and its
Subsidiaries and all other items required to be eliminated in the course of the
preparation of consolidated financial statements of the Company and its
Subsidiaries in accordance with GAAP.
          (ii) “Disposition Value” means, at any time, with respect to any
Transfer,
          (A) in the case of property that does not constitute capital stock of
or other ownership interests in any Subsidiary of the Company, the book value
thereof, valued at the time of such Transfer in good faith by the board of
directors of the Company, and
          (B) in the case of property that constitutes capital stock of or other
ownership interests in any Subsidiary of the Company, an amount equal to that
percentage of the book value of the assets of the Subsidiary that issued such
capital stock or other ownership interests as is equal to the percentage that
the book value that such capital stock or other ownership interests represents
of the book value of all of the outstanding capital stock of or other ownership
interests in such Subsidiary (assuming, in making such calculations, that all
securities convertible into such capital stock or other ownership interests are
so converted and giving full effect to all transactions that would occur or be
required in connection with such conversion), determined as of time of such
Transfer in good faith by the board of directors of the Company.
          (iii) “Net Proceeds Amount” means, with respect to any Transfer of any
property by any Person, an amount equal to the difference of
          (A) the aggregate amount of the consideration (valued at the Fair
Market Value of such consideration at the time of the consummation of such
Transfer) received by such Person in respect of such Transfer, minus

30

--------------------------------------------------------------------------------

 

          (B) all ordinary and reasonable out of pocket costs and expenses
actually incurred by such Person in connection with such Transfer and any income
taxes fairly attributable to such Transfer.
          (iv) “Substantial Portion” means, at any time, any property subject to
a Transfer if the Disposition Value of such property, when added to the
Disposition Value of all other property of the Company and its Subsidiaries that
shall have been the subject of a Transfer (other than an Excluded Transfer and
Transfers of such other property to the extent the Net Proceeds Amount arising
therefrom has been applied to a Reinvested Transfer or a Debt Prepayment
Application) during the then current fiscal year of the Company, exceeds an
amount equal to 25% of Consolidated Total Assets as of the end of the fiscal
year of the Company then most recently ended.
          (v) “Transfer” means, with respect to any Person, any transaction in
which such Person sells, conveys, transfers or leases (as lessor) any of its
property, including, without limitation, capital stock of or other ownership
interests in, any other Person.
     9.9 Line of Business. The Company will not, and will not permit any
Subsidiary to, engage to any Material extent in any business activity or
operations other than operations or activities (a) in or reasonably related to
the agriculture industry, (b) in the food industry or (c) in which the Company
and its Subsidiaries are otherwise engaged on the date hereof as described in
the Disclosure Documents or businesses reasonably related thereto or in
furtherance thereof.
     9.10 Subsidiary Distribution Restrictions. The Company covenants that it
will not, and will not permit any Subsidiary (other than NCRA) of the Company
to, enter into, or be otherwise subject to, any contract or agreement (including
its certificate of incorporation) which limits the amount of, or otherwise
imposes restrictions on the payment of, Distributions by any Subsidiary of the
Company.
     9.11 Subsidiary Preferred Stock. The Company covenants that it will not
permit any Subsidiary of the Company to issue or permit to be outstanding any
class of capital stock which has priority over any other class of capital stock
of such Subsidiary as to Distributions or in liquidation.
     9.12 Issuance of Stock by Subsidiaries. The Company covenants that it will
not permit any Subsidiary of the Company to issue, sell or otherwise dispose of
any shares of any class of its stock (either directly or indirectly by the
issuance of rights or options for, or securities convertible into, such shares)
except to the Company or another Subsidiary of the Company.
     9.13 Terrorism Sanctions Regulations. The Company will not and will not
permit any Subsidiary to (a) become a Person described or designated in the
Specially Designated Nationals and Blocked Persons List of the Office of Foreign
Assets Control or in Section 1 of the Anti Terrorism Order or (b) knowingly
engage in any dealings or transactions with any such Person.

31

--------------------------------------------------------------------------------

 

10. EVENTS OF DEFAULT.
     An “Event of Default” shall exist if any of the following conditions or
events shall occur and be continuing:
          (a) the Company defaults in the payment of any principal or Make-Whole
Amount, if any, on any Note when the same becomes due and payable, whether at
maturity or at a date fixed for prepayment or by declaration or otherwise; or
          (b) the Company defaults in the payment of any interest on any Note
for more than five (5) Business Days after the same becomes due and payable; or
          (c) the Company defaults in the performance of or compliance with any
term contained in any of Section 6.1(d), Section 7.2 (other than any payment
default occurring under Sections 10(a) and/or 10(b)) or Section 9 (other than
Section 9.8) hereof; or
          (d) the Company defaults in the performance of or compliance with any
term contained herein (other than those referred to in clauses (a), (b) and
(c) of this Section 10) and such default is not remedied within 30 days after
the earlier of (i) a Responsible Officer obtaining actual knowledge of such
default and (ii) the Company receiving written notice of such default from any
holder of a Note (any such written notice to be identified as a “notice of
default” and to refer specifically to this clause (d) of Section 10); or
          (e) any representation or warranty made in writing by or on behalf of
the Company or by any officer of the Company in this Agreement or in any writing
furnished in connection with the transactions contemplated hereby proves to have
been false or incorrect in any material respect on the date as of which made; or
          (f) (i) the Company or any Subsidiary is in default (as principal or
as guarantor or other surety) in the payment of any principal of or premium or
make-whole amount or interest on any Debt that is outstanding in an aggregate
principal amount of at least $10,000,000 beyond any period of grace provided
with respect thereto, or (ii) the Company or any Subsidiary is in default in the
performance of or compliance with any agreement, term or condition contained in
any instrument or agreement evidencing any Debt in an aggregate outstanding
principal amount of at least $10,000,000 or of any mortgage, indenture or other
agreement relating thereto or any other condition exists, and as a consequence
of such default or condition such Debt has become, or has been declared (or one
or more Persons are entitled to declare such Debt to be) due and payable before
its stated maturity or before its regularly scheduled dates of payment, or
(iii) as a consequence of the occurrence or continuation of any event or
condition (other than the passage of time or the right of the holder of Debt to
convert such Debt into equity interests), (x) the Company or any Subsidiary has
become obligated to purchase or repay Debt before its regular maturity or before
its regularly scheduled dates of payment in an aggregate outstanding principal
amount of at least $10,000,000, or (y) one or more Persons have the right to
require the Company or any Subsidiary so to purchase or repay such Debt; or
          (g) the Company or any Subsidiary (i) is generally not paying, or
admits in writing its inability to pay, its debts as they become due,
(ii) files, or consents by answer or

32

--------------------------------------------------------------------------------

 

otherwise to the filing against it of, a petition for relief or reorganization
or arrangement or any other petition in bankruptcy, for liquidation or to take
advantage of any bankruptcy, insolvency, reorganization, moratorium or other
similar law of any jurisdiction, (iii) makes an assignment for the benefit of
its creditors, (iv) consents to the appointment of a custodian, receiver,
trustee or other officer with similar powers with respect to it or with respect
to any substantial part of its property, (v) is adjudicated as insolvent or to
be liquidated, or (vi) takes corporate action for the purpose of any of the
foregoing; or
          (h) a court or Governmental Authority of competent jurisdiction enters
an order appointing, without consent by the Company or any of its Subsidiaries,
a custodian, receiver, trustee or other officer with similar powers with respect
to it or with respect to any substantial part of its property, or constituting
an order for relief or approving a petition for relief or reorganization or any
other petition in bankruptcy or for liquidation or to take advantage of any
bankruptcy or insolvency law of any jurisdiction, or ordering the dissolution,
winding-up or liquidation of the Company or any of its Subsidiaries, or any such
petition shall be filed against the Company or any of its Subsidiaries and such
petition shall not be dismissed within 60 days; or
          (i) a final judgment or judgments for the payment of money aggregating
in excess of $5,000,000 are rendered against one or more of the Company and its
Subsidiaries and which judgments are not, within 45 days after entry thereof,
bonded, discharged or stayed pending appeal, or are not discharged within
45 days after the expiration of such stay; or
          (j) if (i) any Plan shall fail to satisfy the minimum funding
standards of ERISA or the Code for any plan year or part thereof or a waiver of
such standards or extension of any amortization period is sought or granted
under section 412 of the Code, (ii) a notice of intent to terminate any Plan
shall have been or is reasonably expected to be filed with the PBGC or the PBGC
shall have instituted proceedings under ERISA section 4042 to terminate or
appoint a trustee to administer any Plan or the PBGC shall have notified the
Company or any ERISA Affiliate that a Plan may become a subject of any such
proceedings, (iii) the aggregate “amount of unfunded benefit liabilities”
(within the meaning of section 4001(a)(18) of ERISA) under all Plans, determined
in accordance with Title IV of ERISA, shall exceed five percent (5%) of
Consolidated Net Worth for any period of ten (10) consecutive calendar days or
more, (iv) the Company or any ERISA Affiliate shall have incurred or is
reasonably expected to incur any liability pursuant to Title I or IV of ERISA or
the penalty or excise tax provisions of the Code relating to employee benefit
plans, (v) the Company or any ERISA Affiliate withdraws from any Multiemployer
Plan, or (vi) the Company or any Subsidiary establishes or amends any employee
welfare benefit plan that provides post-employment welfare benefits in a manner
that would increase the liability of the Company or any Subsidiary thereunder;
and any such event or events described in clauses (i) through (vi) above, either
individually or together with any other such event or events, could reasonably
be expected to have a Material Adverse Effect. As used in this Section 10(j),
the terms “employee benefit plan” and “employee welfare benefit plan” shall have
the respective meanings assigned to such terms in section 3 of ERISA.

33

--------------------------------------------------------------------------------

 

11. REMEDIES ON DEFAULT, ETC.
     11.1 Acceleration.
          (a) If an Event of Default with respect to the Company described in
clause (g) or (h) of Section 10 (other than an Event of Default described in
subclause (i) of clause (g) or described in subclause (vi) of clause (g) by
virtue of the fact that such clause encompasses subclause (i) of clause (g)) has
occurred, all the Notes then outstanding shall automatically become immediately
due and payable.
          (b) If any other Event of Default has occurred and is continuing, any
holder or holders of more than 66-2/3% in principal amount of the Notes at the
time outstanding may at any time at its or their option, by notice or notices to
the Company, declare all the Notes then outstanding to be immediately due and
payable.
          (c) If any Event of Default described in clause (a) or (b) of
Section 10 has occurred and is continuing, any holder or holders of Notes at the
time outstanding affected by such Event of Default may at any time, at its or
their option, by notice or notices to the Company, declare all the Notes held by
it or them to be immediately due and payable.
     Upon any Notes becoming due and payable under this Section 11.1, whether
automatically or by declaration, (A) such Notes will forthwith mature and the
entire unpaid principal amount of such Notes, plus (x) all accrued and unpaid
interest thereon (including, but not limited to, interest accrued thereon at the
Default Rate) and (y) the Make-Whole Amount determined in respect of such
principal amount (to the full extent permitted by applicable law), shall all be
immediately due and payable, in each and every case without presentment, demand,
protest or further notice, all of which are hereby waived, and (B) the Facility
shall automatically be terminated. The Company acknowledges, and the parties
hereto agree, that each holder of a Note has the right to maintain its
investment in the Notes free from repayment by the Company (except as herein
specifically provided for) and that the provision for payment of a Make-Whole
Amount by the Company in the event that the Notes are prepaid or are accelerated
as a result of an Event of Default, is intended to provide compensation for the
deprivation of such right under such circumstances.
     11.2 Other Remedies. If any Default or Event of Default has occurred and is
continuing, and irrespective of whether any Notes have become or have been
declared immediately due and payable under Section 11.1, the holder of any Note
at the time outstanding may proceed to protect and enforce the rights of such
holder by an action at law, suit in equity or other appropriate proceeding,
whether for the specific performance of any agreement contained herein or in any
Note, or for an injunction against a violation of any of the terms hereof or
thereof, or in aid of the exercise of any power granted hereby or thereby or by
law or otherwise.
     11.3 Rescission. At any time after any Notes have been declared due and
payable pursuant to clause (b) or (c) of Section 11.1, the Required Holders may,
by written notice to the Company, rescind and annul any such declaration and its
consequences if (a) the Company has paid all overdue interest on the Notes, all
principal of and Make-Whole Amount, if any, on any Notes that are due and
payable and are unpaid other than by reason of such declaration, and all

34

--------------------------------------------------------------------------------

 

interest on such overdue principal and Make-Whole Amount, if any, and (to the
extent permitted by applicable law) any overdue interest in respect of the
Notes, at the Default Rate, (b) all Events of Default and Defaults, other than
non-payment of amounts that have become due solely by reason of such
declaration, have been cured or have been waived pursuant to Section 16, and
(c) no judgment or decree has been entered for the payment of any monies due
pursuant hereto or to the Notes. No rescission and annulment under this
Section 11.3 will extend to or affect any subsequent Event of Default or Default
or impair any right consequent thereon.
     11.4 No Waivers or Election of Remedies, Expenses, etc. No course of
dealing and no delay on the part of any holder of any Note in exercising any
right, power or remedy shall operate as a waiver thereof or otherwise prejudice
such holder’s rights, powers or remedies. No right, power or remedy conferred by
this Agreement or any Note upon any holder of any Note shall be exclusive of any
other right, power or remedy referred to herein or therein or now or hereafter
available at law, in equity, by statute or otherwise. Without limiting the
obligations of the Company under Section 14, the Company will pay to the holder
of each Note on demand such further amount as shall be sufficient to cover all
costs and expenses of such holder incurred in any enforcement or collection
under this Section 11, including, without limitation, reasonable attorneys’
fees, expenses and disbursements.
12. REGISTRATION; EXCHANGE; SUBSTITUTION OF NOTES.
     12.1 Registration of Notes. The Company shall keep at its principal
executive office a register for the registration and registration of transfers
of Notes. The name and address of each holder of one or more Notes, each
transfer thereof and the name and address of each transferee of one or more
Notes shall be registered in such register. Prior to due presentment for
registration of transfer, the Person in whose name any Note shall be registered
shall be deemed and treated as the owner and holder thereof for all purposes
hereof, and the Company shall not be affected by any notice or knowledge to the
contrary. The Company shall give to any holder of a Note that is an
Institutional Investor promptly upon request therefor, a complete and correct
copy of the names and addresses of all registered holders of Notes.
     12.2 Transfer and Exchange of Notes. Upon surrender of any Note at the
principal executive office of the Company for registration of transfer or
exchange (and in the case of a surrender for registration of transfer, duly
endorsed or accompanied by a written instrument of transfer duly executed by the
registered holder of such Note or its attorney duly authorized in writing and
accompanied by the address for notices of each transferee of such Note or part
thereof), the Company shall execute and deliver, at the Company’s expense
(except as provided below), one or more new Notes (as requested by the holder
thereof) in exchange therefor, in an aggregate principal amount equal to the
unpaid principal amount of the surrendered Note. Each such new Note shall be
payable to such Person as such holder may request and shall be substantially in
the form of Exhibit A. Each such new Note shall be dated and bear interest from
the date to which interest shall have been paid on the surrendered Note or dated
the date of the surrendered Note if no interest shall have been paid thereon.
The Company may require payment of a sum sufficient to cover any stamp tax or
governmental charge imposed in respect of any such transfer of Notes. Notes
shall not be transferred in denominations of less than $500,000, provided that
if necessary to enable the registration of transfer by a holder of its entire
holding of Notes, one Note may be in a denomination of less than $500,000. Any
transferee, by

35

--------------------------------------------------------------------------------

 

its acceptance of a Note registered in its name (or the name of its nominee),
shall be deemed to have made the representation set forth in Section 5.2.
     12.3 Replacement of Notes. Upon receipt by the Company of evidence
reasonably satisfactory to it of the ownership of and the loss, theft,
destruction or mutilation of any Note (which evidence shall be, in the case of
an Institutional Investor, notice from such Institutional Investor of such
ownership and such loss, theft, destruction or mutilation), and
          (a) in the case of loss, theft or destruction, of indemnity reasonably
satisfactory to it (provided that if the holder of such Note is, or is a nominee
for, an original Purchaser or a Qualified Institutional Buyer, such Person’s own
unsecured agreement of indemnity shall be deemed to be satisfactory), or
          (b) in the case of mutilation, upon surrender and cancellation
thereof,
the Company at its own expense shall execute and deliver, in lieu thereof, a new
Note, dated and bearing interest from the date to which interest shall have been
paid on such lost, stolen, destroyed or mutilated Note or dated the date of such
lost, stolen, destroyed or mutilated Note if no interest shall have been paid
thereon.
13. PAYMENTS ON NOTES.
     The Company agrees that, so long as any Purchaser shall hold any Note, it
will make payments of principal of, interest on, and any Make-Whole Amount
payable with respect to, such Note, which comply with the terms of this
Agreement, by wire transfer of immediately available funds for credit (not later
than 11:00 a.m. Chicago local time, on the date due) to (i) the account or
accounts of such Purchaser specified in the Confirmation of Acceptance with
respect to such Note or (ii) such other account or accounts in the United States
of America as such Purchaser may from time to time designate in writing,
notwithstanding any contrary provision herein or in any Note with respect to the
place of payment. Each Purchaser agrees that, before disposing of any Note, it
will make a notation thereon (or on a schedule attached thereto) of all
principal payments previously made thereon and of the date to which interest
thereon has been paid. The Company agrees to afford the benefits of this
Section 13 to any transferee of the Notes that is an Institutional Investor.
14. EXPENSES, ETC.
     14.1 Transaction Expenses. Whether or not the transactions contemplated
hereby are consummated, the Company will pay all costs and expenses (including
reasonable attorneys’ fees of a special counsel and, if reasonably required,
local or other counsel) incurred by the Purchasers and each other holder of a
Note in connection with such transactions and in connection with any amendments,
waivers or consents under or in respect of this Agreement or the Notes (whether
or not such amendment, waiver or consent becomes effective), including, without
limitation: (a) the costs and expenses incurred in enforcing or defending (or
determining whether or how to enforce or defend) any rights under this Agreement
or the Notes or in responding to any subpoena or other legal process or informal
investigative demand issued in connection with this Agreement or the Notes, or
by reason of being a holder of any Note, and (b) the costs and expenses,
including financial advisors’ fees, incurred in connection with the

36

--------------------------------------------------------------------------------

 

insolvency or bankruptcy of the Company or any Subsidiary or in connection with
any work-out or restructuring of the transactions contemplated hereby and by the
Notes. The Company will pay, and will save each Purchaser and each other holder
of a Note harmless from, all claims in respect of any fees, costs or expenses if
any, of brokers and finders (other than those, if any, retained by a Purchaser
or other holder in connection with its purchase of the Notes).
     14.2 Survival. The obligations of the Company under this Section 14 will
survive the payment or transfer of any Note, the enforcement, amendment or
waiver of any provision of this Agreement or the Notes, and the termination of
this Agreement.
15. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ENTIRE AGREEMENT.
     All representations and warranties contained herein shall survive the
execution and delivery of this Agreement and the Notes, the purchase or transfer
by any Purchaser of any Note or portion thereof or interest therein and the
payment of any Note, and may be relied upon by any subsequent holder of a Note,
regardless of any investigation made at any time by or on behalf of such
Purchaser or any other holder of a Note. All statements contained in any
certificate or other instrument delivered by or on behalf of the Company
pursuant to this Agreement shall be deemed representations and warranties of the
Company under this Agreement. Subject to the preceding sentence, this Agreement
and the Notes embody the entire agreement and understanding between each
Purchaser and the Company and supersede all prior agreements and understandings
relating to the subject matter hereof.
16. AMENDMENT AND WAIVER.
     16.1 Requirements. This Agreement and the Notes may be amended, and the
observance of any term hereof or of the Notes may be waived (either
retroactively or prospectively) if the Company shall obtain the written consent
to such amendment, action or omission to act, of the Required Holders of the
Notes except that, (a) with the written consent of the holders of all Notes of a
particular Series, and if an Event of Default shall have occurred and be
continuing, of the holders of all Notes of all Series, at the time outstanding
(and not without such written consents), the Notes of such Series may be amended
or the provisions thereof waived to change the maturity thereof, to change or
affect the principal thereof, to change or affect the rate or time of payment or
method of computation of interest on or any Make-Whole Amount payable with
respect to the Notes of such Series, (b) without the written consent of the
holder or holders of all Notes at the time outstanding, no amendment to or
waiver of the provisions of this Agreement shall change or affect the provisions
of Sections 7, 10(a), 10(b), 11, 16 or 19 of this Agreement, (c) no amendment or
waiver of any of the provisions of Sections 1, 2, 3, 4, 5 or 20 hereof, or any
defined term (as it is used herein), will be effective as to any Purchaser
unless consented to by such Purchaser in writing, (d) with the written consent
of Hancock (and not without the written consent of Hancock) the provisions of
Section 2 may be amended or waived (except insofar as any such amendment or
waiver would affect any rights or obligations with respect to the purchase and
sale of Notes which shall have become Accepted Notes prior to such amendment or
waiver), and (iv) with the written consent of Purchasers which shall have become
obligated to purchase a majority of the Accepted Notes of any Series (and not
without the written consent of such Purchasers), any of the provisions of
Sections 2 and 3 may be

37

--------------------------------------------------------------------------------

 

amended or waived insofar as such amendment or waiver would affect only rights
or obligations with respect to the purchase and sale of the Accepted Notes of
such Series or the terms and provisions of such Accepted Notes.
     16.2 Solicitation of Holders of Notes.
          (a) Solicitation. The Company will provide each holder of the Notes
(irrespective of the amount of Notes then owned by it) with sufficient
information, sufficiently far in advance of the date a decision is required, to
enable such holder to make an informed and considered decision with respect to
any proposed amendment, waiver or consent in respect of any of the provisions
hereof or of the Notes. The Company will deliver executed or true and correct
copies of each amendment, waiver or consent effected pursuant to the provisions
of this Section 16 to each holder of outstanding Notes promptly following the
date on which it is executed and delivered by, or receives the consent or
approval of, the requisite holders of Notes.
          (b) Payment. The Company will not directly or indirectly pay or cause
to be paid any remuneration, whether by way of supplemental or additional
interest, fee or otherwise, or grant any security or provide other credit
support, to any holder of Notes (or Notes of any Series, as applicable) as
consideration for or as an inducement to the entering into by any holder of
Notes of any waiver or amendment of any of the terms and provisions hereof
unless such remuneration is concurrently paid, or security is concurrently
granted or other credit support is concurrently provided, on the same terms,
ratably to each holder of Notes (or Notes of any Series, as applicable) then
outstanding even if such holder did not consent to such waiver or amendment.
     16.3 Binding Effect, etc. Any amendment or waiver consented to as provided
in this Section 16 applies equally to all holders of Notes and is binding upon
them and upon each future holder of any Note and upon the Company without regard
to whether such Note has been marked to indicate such amendment or waiver. No
such amendment or waiver will extend to or affect any obligation, covenant,
agreement, Default or Event of Default not expressly amended or waived or impair
any right consequent thereon. No course of dealing between the Company and the
holder of any Note nor any delay in exercising any rights hereunder or under any
Note shall operate as a waiver of any rights of any holder of such Note. As used
herein, the term “this Agreement” and references thereto shall mean this
Agreement as it may from time to time be amended or supplemented.
     16.4 Notes Held by Company, etc. Solely for the purpose of determining
whether the holders of the requisite percentage of the aggregate principal
amount of Notes then outstanding approved or consented to any amendment, waiver
or consent to be given under this Agreement or the Notes, or have directed the
taking of any action provided herein or in the Notes to be taken upon the
direction of the holders of a specified percentage of the aggregate principal
amount of Notes then outstanding, Notes directly or indirectly owned by the
Company or any of its Affiliates shall be deemed not to be outstanding.

38

--------------------------------------------------------------------------------

 

17. NOTICES.
     All written communications provided for hereunder (other than
communications provided for under Section 2) shall be sent by hand delivery or
nationwide overnight delivery service (with charges prepaid) and (i) if to any
Purchaser, addressed as specified for such communications in the Purchaser
Schedule attached to the applicable Confirmation of Acceptance or at such other
address as any such Purchaser shall have specified to the Company in writing,
(ii) if to any other holder of any Note, addressed to it at such address as it
shall have specified in writing to the Company or, if any such holder shall not
have so specified an address, then addressed to such holder in care of the last
holder of such Note which shall have so specified an address to the Company, and
(iii) if to the Company, addressed to it at its address set forth at the
beginning hereof to the attention of John Schmitz, Executive Vice President and
Chief Financial Officer, or such other address as the Company shall have
provided to the holder of each Note in writing. Any communication pursuant to
Section 2 shall be made by the method specified for such communication in
Section 2, and shall be effective to create any rights or obligations under this
Agreement only if, in the case of a facsimile communication, the communication
is signed by an Authorized Officer of the party conveying the information,
addressed to the attention of an Authorized Officer of the party receiving the
information, and in fact received at the facsimile terminal the number of which
is listed for the party receiving the communication in the Information Schedule
or at such other facsimile terminal as the party receiving the information shall
have specified in writing to the party sending such information.
18. REPRODUCTION OF DOCUMENTS.
     This Agreement and all documents relating thereto, including, without
limitation, (a) consents, waivers and modifications that may hereafter be
executed, (b) documents received by any Purchaser at the Closing (except the
Notes themselves), and (c) financial statements, certificates and other
information previously or hereafter furnished to any Purchaser, may be
reproduced by such Purchaser by any photographic, photostatic, microfilm,
microcard, miniature photographic, electronic or digital, or other similar
process and such Purchaser may destroy any original document so reproduced. The
Company agrees and stipulates that, to the extent permitted by applicable law,
any such reproduction shall be admissible in evidence as the original itself in
any judicial or administrative proceeding (whether or not the original is in
existence and whether or not such reproduction was made by such Purchaser in the
regular course of business) and any enlargement, facsimile or further
reproduction of such reproduction shall likewise be admissible in evidence. This
Section 18 shall not prohibit the Company or any other holder of Notes from
contesting any such reproduction to the same extent that it could contest the
original, or from introducing evidence to demonstrate the inaccuracy of any such
reproduction.
19. CONFIDENTIAL INFORMATION.
     For the purposes of this Section 19, “Confidential Information” means
information delivered to Hancock or any Purchaser by or on behalf of the Company
or any Subsidiary in connection with the transactions contemplated by or
otherwise pursuant to this Agreement that is proprietary in nature and that was
clearly marked or labeled or otherwise adequately identified when received by
Hancock or such Purchaser as being confidential information of the Company

39

--------------------------------------------------------------------------------

 

or such Subsidiary, provided that such term does not include information that
(a) was publicly known or otherwise known to Hancock or such Purchaser prior to
the time of such disclosure, (b) subsequently becomes publicly known through no
act or omission by Hancock or such Purchaser or any person acting on behalf of
Hancock or such Purchaser, (c) otherwise becomes known to Hancock or such
Purchaser other than through disclosure by the Company or any Subsidiary or
(d) constitutes financial statements delivered to Hancock or such Purchaser
under Section 6.1 that are otherwise publicly available. Hancock and each
Purchaser will maintain the confidentiality of such Confidential Information in
accordance with procedures adopted by it in good faith to protect confidential
information of third parties delivered to it, provided that Hancock or such
Purchaser may deliver or disclose Confidential Information to (i) its directors,
officers, employees, agents, attorneys, trustees and affiliates (to the extent
such disclosure reasonably relates to the administration of the investment
represented by its Notes), (ii) its financial advisors and other professional
advisors who agree to hold confidential the Confidential Information
substantially in accordance with the terms of this Section 19, (iii) any other
holder of any Note, (iv) any Institutional Investor to which it sells or offers
to sell such Note or any part thereof or any participation therein (if such
Person has agreed in writing prior to its receipt of such Confidential
Information to be bound by the provisions of this Section 19), (v) any Person
from which it offers to purchase any security of the Company (if such Person has
agreed in writing prior to its receipt of such Confidential Information to be
bound by the provisions of this Section 19), (vi) any Federal or state
regulatory authority having jurisdiction over it, (vii) the NAIC or the SVO or,
in each case, any similar organization, or any nationally recognized rating
agency that requires access to information about its investment portfolio or
(viii) any other Person to which such delivery or disclosure may be necessary or
appropriate (w) to effect compliance with any law, rule, regulation or order
applicable to Hancock or such Purchaser, (x) in response to any subpoena or
other legal process, (y) in connection with any litigation to which Hancock or
such Purchaser is a party or (z) if an Event of Default has occurred and is
continuing, to the extent Hancock or such Purchaser may reasonably determine
such delivery and disclosure to be necessary or appropriate in the enforcement
or for the protection of its rights and remedies under such Notes and this
Agreement. Each holder of a Note, by its acceptance of a Note, will be deemed to
have agreed to be bound by and to be entitled to the benefits of this Section 19
as though it were a party to this Agreement. On reasonable request by the
Company in connection with the delivery to any holder of a Note of information
required to be delivered to such holder under this Agreement or requested by
such holder (other than a holder that is a party to this Agreement or its
nominee), such holder will enter into an agreement with the Company embodying
the provisions of this Section 19.
20. SUBSTITUTION OF PURCHASER.
     Each Purchaser shall have the right to substitute any one of its Affiliates
as the purchaser of the Notes that it has agreed to purchase hereunder, by
written notice to the Company, which notice shall be signed by both such
Purchaser and such Affiliate, shall contain such Affiliate’s agreement to be
bound by this Agreement and shall contain a confirmation by such Affiliate of
the accuracy with respect to it of the representations set forth in Section 5.
Upon receipt of such notice, any reference to such Purchaser in this Agreement
(other than in this Section 20), shall be deemed to refer to such Affiliate in
lieu of such original Purchaser. In the event that such Affiliate is so
substituted as a Purchaser hereunder and such Affiliate thereafter transfers to
such original Purchaser all of the Notes then held by such Affiliate, upon
receipt by the Company of

40

--------------------------------------------------------------------------------

 

notice of such transfer, any reference to such Affiliate as a “Purchaser” in
this Agreement (other than in this Section 20), shall no longer be deemed to
refer to such Affiliate, but shall refer to such original Purchaser, and such
original Purchaser shall again have all the rights of an original holder of the
Notes under this Agreement.
21. MISCELLANEOUS.
     21.1 Successors and Assigns. All covenants and other agreements contained
in this Agreement by or on behalf of any of the parties hereto bind and inure to
the benefit of their respective successors and assigns (including, without
limitation, any subsequent holder of a Note) whether so expressed or not.
     21.2 Payments Due on Non-Business Days. Anything in this Agreement or the
Notes to the contrary notwithstanding (but without limiting the requirement in
Section 7.3 that the notice of any optional prepayment specify a Business Day as
the date fixed for such prepayment), any payment of principal of or Make-Whole
Amount or interest on any Note that is due on a date other than a Business Day
shall be made on the next succeeding Business Day without including the
additional days elapsed in the computation of the interest payable on such next
succeeding Business Day; provided that if the maturity date of any Notes is a
date other than a Business Day, the payment otherwise due on such maturity date
shall be made on the next succeeding Business Day and shall include the
additional days elapsed in the computation of interest payable on such next
succeeding Business Day.
     21.3 Accounting Terms. All accounting terms used herein which are not
expressly defined in this Agreement have the meanings respectively given to them
in accordance with GAAP. Except as otherwise specifically provided herein,
(i) all computations made pursuant to this Agreement shall be made in accordance
with GAAP, and (ii) all financial statements shall be prepared in accordance
with GAAP.
     21.4 Severability. Any provision of this Agreement that is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall (to the full extent permitted by law) not invalidate or
render unenforceable such provision in any other jurisdiction.
     21.5 Construction. Each covenant contained herein shall be construed
(absent express provision to the contrary) as being independent of each other
covenant contained herein, so that compliance with any one covenant shall not
(absent such an express contrary provision) be deemed to excuse compliance with
any other covenant. Where any provision herein refers to action to be taken by
any Person, or which such Person is prohibited from taking, such provision shall
be applicable whether such action is taken directly or indirectly by such
Person.
     21.6 Severability of Obligations. The sales of Notes to the Purchasers are
to be several sales, and the obligations of Hancock and the Purchasers under
this Agreement are several obligations. No failure by Hancock or any Purchaser
to perform its obligations under this Agreement shall relieve any other
Purchaser or the Company of any of its obligations hereunder,

41

--------------------------------------------------------------------------------

 

and neither Hancock nor any Purchaser shall be responsible for the obligations
of, or any action taken or omitted by, any other such Person hereunder.
     21.7 Binding Agreement. When this Agreement is executed and delivered by
the Company and Hancock, it shall become a binding agreement between the Company
and Hancock. This Agreement shall also inure to the benefit of each Purchaser
which shall have executed and delivered a Confirmation of Acceptance, and each
such Purchaser shall be bound by this Agreement to the extent provided in such
Confirmation of Acceptance.
     21.8 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be an original but all of which together shall
constitute one instrument. Each counterpart may consist of a number of copies
hereof, each signed by less than all, but together signed by all, of the parties
hereto.
     21.9 Governing Law. This Agreement shall be construed and enforced in
accordance with, and the rights of the parties shall be governed by, the law of
the State of New York excluding choice of law principles of the law of such
State that would permit the application of the laws of a jurisdiction other than
such State.
     21.10 Jurisdiction and Process; Waiver of Jury Trial.
          (a) The Company irrevocably submits to the non-exclusive jurisdiction
of any New York State or federal court sitting in the Borough of Manhattan, The
City of New York, over any suit, action or proceeding arising out of or relating
to this Agreement or the Notes. To the fullest extent permitted by applicable
law, the Company irrevocably waives and agrees not to assert, by way of motion,
as a defense or otherwise, any claim that it is not subject to the jurisdiction
of any such court, any objection that it may now or hereafter have to the laying
of the venue of any such suit, action or proceeding brought in any such court
and any claim that any such suit, action or proceeding brought in any such court
has been brought in an inconvenient forum.
          (b) The Company consents to process being served by or on behalf of
any holder of Notes in any suit, action or proceeding of the nature referred to
in Section 21.10(a) by mailing a copy thereof by registered or certified mail
(or any substantially similar form of mail), postage prepaid, return receipt
requested, to it at its address specified in Section 17 or at such other address
of which such holder shall then have been notified pursuant to said Section. The
Company agrees that such service upon receipt (i) shall be deemed in every
respect effective service of process upon it in any such suit, action or
proceeding and (ii) shall, to the fullest extent permitted by applicable law, be
taken and held to be valid personal service upon and personal delivery to it.
Notices hereunder shall be conclusively presumed received as evidenced by a
delivery receipt furnished by the United States Postal Service or any reputable
commercial delivery service.
          (c) Nothing in this Section 21.10 shall affect the right of any holder
of a Note to serve process in any manner permitted by law, or limit any right
that the holders of any of the Notes may have to bring proceedings against the
Company in the courts of any appropriate

42

--------------------------------------------------------------------------------

 

jurisdiction or to enforce in any lawful manner a judgment obtained in one
jurisdiction in any other jurisdiction.
          (d) The parties hereto hereby waive trial by jury in any action
brought on or with respect to this Agreement, the Notes or any other document
executed in connection herewith or therewith.

            CHS INC.
      By:           Name:   John Schmitz        Title:   Executive Vice
President and Chief Financial Officer     

The foregoing Agreement is
hereby accepted as of the
date first above written.
John Hancock Life Insurance Company

                By:           Title: Director               

43

--------------------------------------------------------------------------------

 

INFORMATION SCHEDULE
Authorized Officers for Company

     
John Johnson
  John Schmitz
President and Chief Executive Officer
  Executive Vice President and Chief Financial Officer
CHS Inc.
  CHS Inc.
5500 Cenex Drive
  5500 Cenex Drive
Inver Grove Heights, MB 55077
  Inver Grove Heights, MB 55077
Telephone: 651-355-3764
  Telephone: 651-355-3778
Facsimile: 651-355-6417
  Facsimile: 651-355-3743

 

--------------------------------------------------------------------------------

 

SCHEDULE
OF
DEFINED TERMS
     As used herein, the following terms have the respective meanings set forth
below or set forth in the Section hereof following such term:
     “Acceptance” is defined in Section 2.5.
     “Acceptance Day” is defined in Section 2.5.
     “Acceptance Window” is defined in Section 2.5.
     “Accepted Note” is defined in Section 2.5.
     “Adjusted Consolidated Funded Debt” means Consolidated Funded Debt, plus
the net present value of all rentals payable under operating leases of the
Company and its Subsidiaries as discounted by a rate of 10% per annum.
     “Affiliate” means, at any time, and with respect to any Person, (a) any
other Person that at such time directly or indirectly through one or more
intermediaries Controls, or is Controlled by, or is under common Control with,
such first Person, and (b) any Person beneficially owning or holding, directly
or indirectly, 10% or more of any class of voting or equity interests of the
Company or any Subsidiary or any Person of which the Company and its
Subsidiaries beneficially own or hold, in the aggregate, directly or indirectly,
10% or more of any class of voting or equity interests. As used in this
definition, “Control” means the possession, directly or indirectly, of the power
to direct or cause the direction of the management and policies of a Person,
whether through the ownership of Voting Interests, by contract or otherwise.
Unless the context otherwise clearly requires, any reference to an “Affiliate”
is a reference to an Affiliate of the Company.
     “Agreement, this” is defined in Section 16.3.
     “Anti-Terrorism Order” means Executive Order No. 13,224 of September 23,
2001, Blocking Property and Prohibiting Transactions with Persons Who Commit,
Threaten to Commit or Support Terrorism, 66 U.S. Fed. Reg. 49079 (2001), as
amended.
     “Authorized Officer” shall mean in the case of the Company, its chief
executive officer, its chief financial officer, its treasurer, any vice
president of the Company designated as an “Authorized Officer” of the Company in
the Information Schedule attached hereto or any vice president of the Company
designated as an “Authorized Officer” of the Company for the purpose of this
Agreement in an Officer’s Certificate executed by one of its Authorized Officers
and delivered to Hancock. The Company may, by written notice to the other given
by an Authorized Officer, de-designate any person as one of its Authorized
Officers hereunder. Any action taken under this Agreement on behalf of the
Company by any individual who on or after the date of this Agreement shall have
been an Authorized Officer of the Company, and whom Hancock in good faith
believes to be an Authorized Officer of the Company, at the time of such action
shall be binding on the Company even though such individual shall have ceased to
be an Authorized Officer of the Company.

1

--------------------------------------------------------------------------------

 

     “Available Facility Amount” is defined in Section 2.1.
     “Breakage Fee” is defined in Section 2.9.
     “Business Day” means any day other than a Saturday, a Sunday or a day on
which commercial banks in New York, New York are required or authorized to be
closed.
     “Capital Lease” means, at any time, a lease with respect to which the
lessee is required concurrently to recognize the acquisition of an asset and the
incurrence of a liability in accordance with GAAP.
     “Capitalized Lease Obligation” means with respect to any Person and a
Capital Lease, the amount of the obligation of such Person as the lessee under
such Capital Lease (net of interest expenses) which would, in accordance with
GAAP, appear as a liability on a balance sheet of such Person.
     “Change in Control” means any Person or Persons acting in concert, together
with the Affiliates thereof, directly or indirectly controlling or owning
(beneficially or otherwise) in the aggregate more than 50% of the aggregate
voting power of the issued and outstanding Voting Interests of the Company.
     “Closing” is defined in Section 3.
     “Closing Day” is defined in Section 2.3.
     “CoBank” means Co-Bank, ACB, a United States Agricultural Credit Bank.
     “Code” means the Internal Revenue Code of 1986, as amended from time to
time, and the rules and regulations promulgated thereunder from time to time.
     “Company” is defined in the introductory paragraph hereof.
     “Confidential Information” is defined in Section 19.
     “Confirmation of Acceptance” is defined in Section 2.5.
     “Consolidated Cash Flow” means for any period the sum of (a) earnings
before income taxes of the Company and its Subsidiaries for such period
determined on a consolidated basis in accordance with GAAP, plus (b) the amounts
that have been deducted in the determination of such earnings before income
taxes for such period for (i) interest expense for such period,
(ii) depreciation for such period, (iii) amortization for such period and
(iv) extraordinary non-cash losses for such period, minus (c) the amounts that
have been included in the determination of such earnings before income taxes for
such period for (i) one-time gains, (ii) extraordinary income, (iii) non-cash
patronage income, and (iv) non-cash equity earnings in joint ventures.
     “Consolidated Current Assets” means total current assets of the Company and
its Subsidiaries determined on a consolidated basis in accordance with generally
accepted accounting principles.

2

--------------------------------------------------------------------------------

 

     “Consolidated Current Liabilities” means total current liabilities of the
Company and its Subsidiaries determined on a consolidated basis in accordance
with generally accepted accounting principles.
     “Consolidated Funded Debt” means as of any date of determination, the total
of all Funded Debt of the Company and its Subsidiaries outstanding on such date,
after eliminating all offsetting debits and credits between the Company and its
Subsidiaries and all other items required to be eliminated in the course of
preparation of consolidated financial statements of the Company and its
Subsidiaries in accordance with GAAP.
     “Consolidated Members’ and Patrons’ Equity” means, with respect to the
Company and its Subsidiaries, the amount of equity accounts, plus (or minus in
the case of a deficit) the amount of surplus and retained earnings accounts of
the Company and its Subsidiaries, plus (or minus in the case of a deficit), to
the extent not included in such equity accounts, the minority interests in
Subsidiaries; provided that the total amount of intangible assets of the Company
and its Subsidiaries (including, without limitation, unamortized debt discount
and expense, deferred charges and goodwill) included therein shall not exceed
$30,000,000 (and to the extent such intangible assets exceed $30,000,000, they
will not be included in the calculation of Consolidated Members’ and Patrons’
Equity); all as determined on a consolidated basis in accordance with GAAP
consistently applied.
     “Consolidated Net Worth” means as of any date, total equity of the Company
and its Subsidiaries as of such date, determined on a consolidated basis in
accordance with GAAP.
     “Consolidated Total Assets” means at any time, the total assets of the
Company and its Subsidiaries that would be shown on a consolidated balance sheet
of the Company and its Subsidiaries at such time prepared in accordance with
GAAP.
     “Debt” means with respect to any Person
     (a) all obligations of such Person for borrowed money (including all
obligations for borrowed money secured by any Lien with respect to any property
owned by such Person whether or not such Person has assumed or otherwise become
liable for such obligations),
     (b) all obligations of such Person for the deferred purchase price of
property acquired by such Person (excluding accounts payable arising in the
ordinary course of business but including all liabilities created or arising
under any conditional sale or other title retention agreement with respect to
such property),
     (c) all Capitalized Lease Obligations of such Person and
     (d) all Guaranties of such Person with respect to liabilities of the type
described in clause (a), (b) or (c) of any other Person,
provided that (i) Debt of a Subsidiary of the Company shall exclude such
obligations and Guaranties of such Subsidiary if owed or guaranteed by such
Subsidiary to the Company or a Wholly-Owned Subsidiary of the Company, (ii) Debt
of the Company shall exclude such

3

--------------------------------------------------------------------------------

 

obligations and Guaranties if owed or guaranteed by the Company to a
Wholly-Owned Subsidiary of the Company and (iii) Debt of the Company shall
exclude any unfunded obligations which may exist now and in the future in the
Company’s pension plans.
     “Debt Prepayment Application” is defined in Section 9.8.
     “Default” means an event or condition the occurrence or existence of which
would, with the lapse of time or the giving of notice or both, become an Event
of Default.
     “Default Rate” means that rate of interest that is the greater of (a) 2%
per annum above the rate of interest stated in clause (a) of the first paragraph
of the Notes or (b) 2% over the rate of interest publicly announced by The Bank
of New York in New York, New York as its “base” or “prime” rate, but in any
event not greater than the highest rate permitted by applicable law.
     “Designated Portion” is defined in Section 9.8.
     “Disclosure Documents” is defined in Section 4.3.
     “Disposition Value” is defined in Section 9.8.
     “Distribution” means, in respect of any corporation, association or other
business entity:
     (a) dividends or other distributions or payments on capital stock or other
equity interests of such corporation, association or other business entity
(except distributions in such stock or other equity interest); and
     (b) the redemption or acquisition of such stock or other equity interests
or of warrants, rights or other options to purchase such stock or other equity
interests (except when solely in exchange for such stock or other equity
interests) unless made, contemporaneously, from the net proceeds of a sale of
such stock or other equity interests.
     “Electronic Delivery” is defined in Section 6.1(a).
     “Environmental Laws” means any and all Federal, state, local, and foreign
statutes, laws, regulations, ordinances, rules, judgments, orders, decrees,
permits, concessions, grants, franchises, licenses, agreements or governmental
restrictions relating to pollution and the protection of the environment or the
release of any materials into the environment, including but not limited to
those related to hazardous substances or wastes, air emissions and discharges to
waste or public systems.
     “ERISA” means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and the rules and regulations promulgated thereunder
from time to time in effect.
     “ERISA Affiliate” means any trade or business (whether or not incorporated)
that is treated as a single employer together with the Company under section 414
of the Code.
     “Event of Default” is defined in Section 10.

4

--------------------------------------------------------------------------------

 

     “Exchange Act” means the Securities Exchange Act of 1934, as amended.
     “Excluded Transfers” is defined in Section 9.8.
     “Facility” is defined in Section 2.1.
     “Fair Market Value” means, at any time and with respect to any property,
the sale value of such property that would be realized in an arm’s-length sale
at such time between an informed and willing buyer and an informed and willing
seller (neither being under a compulsion to buy or sell, respectively).
     “Form 10-Q” is defined in Section 6.1(a).
     “Form 10-K” is defined in Section 6.1(b).
     “Funded Debt” means with respect to any Person, all Debt which would, in
accordance with GAAP, be required to be classified as a long term liability on
the books of such Person, and shall include, without limitation (i) any Debt
which by its terms or by the terms of any instrument or agreement relating
thereto matures, or which is otherwise payable or unpaid, more than one year
from the date of creation thereof, (ii) any Debt outstanding under a revolving
credit or similar agreement providing for borrowings (and renewals and
extensions thereof) which would, in accordance with GAAP, be required to be
classified as a long term liability of such Person, (iii) any Capitalized Lease
Obligation of such Person, and (iv) any Guaranty of such Person with respect to
Funded Debt of another Person. Notwithstanding anything to the contrary
contained herein, any Debt outstanding under a revolving credit or similar
agreement providing for borrowings where no amount of such Debt is outstanding
for a period of 30 consecutive days during each 12 month period (and which has
not been refinanced with other Debt which does not constitute Funded Debt) will
not be deemed to constitute Funded Debt.
     “GAAP” means generally accepted accounting principles as in effect from
time to time in the United States of America.
     “Governmental Authority” means
     (a) the government of
     (i) the United States of America or any State or other political
subdivision thereof, or
     (ii) any jurisdiction in which the Company or any Subsidiary conducts all
or any part of its business, or which asserts jurisdiction over any properties
of the Company or any Subsidiary, or
     (b) any entity exercising executive, legislative, judicial, regulatory or
administrative functions of, or pertaining to, any such government.
     “Guaranty” means, with respect to any Person, any obligation (except the
endorsement in the ordinary course of business of negotiable instruments for
deposit or collection) of such Person

5

--------------------------------------------------------------------------------

 

guaranteeing or in effect guaranteeing any Debt, dividend or other obligation of
any other Person in any manner, whether directly or indirectly, including
(without limitation) obligations incurred through an agreement, contingent or
otherwise, by such Person:
     (a) to purchase such Debt or obligation or any property constituting
security therefor;
     (b) to advance or supply funds (i) for the purchase or payment of such Debt
or obligation, or (ii) to maintain any working capital or other balance sheet
condition or any income statement condition of any other Person or otherwise to
advance or make available funds for the purchase or payment of such Debt or
obligation;
     (c) to lease properties or to purchase properties or services primarily for
the purpose of assuring the owner of such Debt or obligation of the ability of
any other Person to make payment of the Debt or obligation; or
     (d) otherwise to assure the owner of such Debt or obligation against loss
in respect thereof.
     In any computation of the Debt or other liabilities of the obligor under
any Guaranty, the Debt or other obligations that are the subject of such
Guaranty shall be assumed to be direct obligations of such obligor.
     “Hancock” shall have the meaning specified in the introductory paragraph
hereof.
     “Hancock Affiliate” shall mean (i) any corporation or other entity
controlling, controlled by, or under common control with, Hancock and (ii) any
managed account or investment fund which is managed by Hancock or a Hancock
Affiliate described in clause (i) of this definition. For purposes of this
definition the terms “control”, “controlling” and “controlled” shall mean the
ownership, directly or through subsidiaries, of a majority of a corporation’s or
other Person’s voting stock or equivalent voting securities or interests.
     “Hazardous Material” means any and all pollutants, toxic or hazardous
wastes or any other substances that might pose a hazard to health or safety, the
removal of which may be required or the generation, manufacture, refining,
production, processing, treatment, storage, handling, transportation, transfer,
use, disposal, release, discharge, spillage, seepage, or filtration of which is
or shall be restricted, prohibited or penalized by any applicable law
(including, without limitation, asbestos, urea formaldehyde foam insulation and
polychlorinated biphenyls).
     “Hedge Treasury Note(s)” means, with respect to any Accepted Note, the
United States Treasury Note or Notes whose duration (as determined by Hancock)
most closely matches the duration of such Accepted Note.
     “holder” means, with respect to any Note, the Person in whose name such
Note is registered in the register maintained by the Company pursuant to
Section 12.1.
     “Hostile Tender Offer” means, with respect to the use of proceeds of any
Note, any offer to purchase, or any purchase of, shares of capital stock of any
corporation or equity interests in

6

--------------------------------------------------------------------------------

 

any other entity, or securities convertible into or representing the beneficial
ownership of, or rights to acquire, any such shares or equity interests, if such
shares, equity interests, securities or rights are of a class which is publicly
traded on any securities exchange or in any over-the-counter market, other than
purchases of such shares, equity interests, securities or rights representing
less than 5% of the equity interests or beneficial ownership of such corporation
or other entity for portfolio investment purposes, and such offer or purchase
has not been duly approved by the board of directors of such corporation or the
equivalent governing body of such other entity prior to the date of the Closing.
     “INHAM Exemption” is defined in Section 5.2(e).
     “Institutional Investor” means (a) any original purchaser of a Note,
(b) any holder of a Note holding more than 5% of the aggregate principal amount
of the Notes then outstanding, and (c) any bank, trust company, savings and loan
association or other financial institution, any pension plan, any investment
company, any insurance company, any broker or dealer, or any other similar
financial institution or entity, regardless of legal form.
     “Issuance Period” is defined in Section 2.2.
     “Lien” means, with respect to any Person, any mortgage, lien, pledge,
charge, security interest or other encumbrance, or any interest or title of any
vendor, lessor, lender or other secured party to or of such Person under any
conditional sale or other title retention agreement or Capital Lease, upon or
with respect to any property or asset of such Person (including in the case of
stock, stockholder agreements, voting trust agreements and all similar
arrangements).
     “Make-Whole Amount” is defined in Section 7.7.
     “Material” means material in relation to the business, operations, affairs,
financial condition, assets, properties, or prospects of the Company and its
Subsidiaries taken as a whole.
     “Material Adverse Effect” means a material adverse effect on (a) the
business, operations, affairs, financial condition, assets or properties of the
Company and its Subsidiaries taken as a whole, or (b) the ability of the Company
to perform its obligations under this Agreement and the Notes, or (c) the
validity or enforceability of this Agreement or the Notes.
     “Multiemployer Plan” means any Plan that is a “multiemployer plan” (as such
term is defined in section 4001(a)(3) of ERISA).
     “NAIC” means the National Association of Insurance Commissioners or any
successor thereto.
     “NAIC Annual Statement” is defined in Section 5.2(a).
     “NCRA” means National Cooperative Refinery Association, a Kansas
cooperative association.
     “Net Proceeds Amount” is defined in Section 9.8.

7

--------------------------------------------------------------------------------

 

     “Notes” is defined in Section 1.
     “Officer’s Certificate” means a certificate of a Responsible Officer or of
any other officer of the Company whose responsibilities extend to the subject
matter of such certificate.
     “Ordinary Course Transfer” is defined in Section 9.8.
     “PBGC” means the Pension Benefit Guaranty Corporation referred to and
defined in ERISA or any successor thereto.
     “Person” means an individual, partnership, corporation, limited liability
company, association, trust, unincorporated organization, or a government or
agency or political subdivision thereof.
     “Plan” means an “employee benefit plan” (as defined in section 3(3) of
ERISA) that is or, within the preceding five years, has been established or
maintained, or to which contributions are or, within the preceding five years,
have been made or required to be made, by the Company or any ERISA Affiliate or
with respect to which the Company or any ERISA Affiliate may have any liability.
     “Primary Bank Facility” means an agreement, guaranty or other instrument
(or agreements, guaranties or other instruments to the extent such agreements,
guaranties or other instruments were entered into in concert in one or a series
of transactions): (i) entered into by the Company in connection with the
provision of recourse credit in the form of revolving loans, term loans, letters
of credit or other extensions of credit commonly provided under syndicated bank
credit agreements to the Company or any of its Subsidiaries and (ii) under which
the aggregate amount of credit extended (whether in the form of loans or
commitments) to the Company or for which the Company is obligated as a guarantor
or otherwise is $150,000,000 or more.
     “Priority Debt” means, at any time, without duplication, the sum of
     (a) all then outstanding Debt of the Company or any Subsidiary secured by
any Lien on any property of the Company or any Subsidiary (other than Debt
secured only by Liens permitted under paragraphs (a) through (i) of
Section 9.7), plus
     (b) all Funded Debt of Subsidiaries of the Company.
     “property” or “properties” means, unless otherwise specifically limited,
real or personal property of any kind, tangible or intangible, choate or
inchoate.
     “Proposed Prepayment Date” is defined in Section 7.2(b)(i).
     “PTE” is defined in Section 5.2(a).
     “Purchaser” means Hancock or any Hancock Affiliate purchasing any Accepted
Note.
     “QPAM Exemption” means Prohibited Transaction Class Exemption 84-14 issued
by the United States Department of Labor.

8

--------------------------------------------------------------------------------

 

     “Qualified Institutional Buyer” means any Person who is a “qualified
institutional buyer” within the meaning of such term as set forth in
Rule 144A(a)(1) under the Securities Act.
     “Ratable Portion” is defined in Section 9.8.
     “Reinvested Transfer” is defined in Section 9.8.
     “Request for Purchase” is defined in Section 2.3.
     “Required Holders” means, at any time, the holders of a majority in
aggregate principal amount of the Notes or any Series of Notes, as the context
may require, at the time outstanding (exclusive of Notes then owned by the
Company or any of its Affiliates) and, if no Notes are outstanding, means
Hancock.
     “Required Principal Payment” is defined in Section 7.2(a).
     “Responsible Officer” means any Senior Financial Officer and any other
officer of the Company with responsibility for the administration of the
relevant portion of this Agreement.
     “SEC” shall mean the Securities and Exchange Commission of the United
States, or any successor thereto.
     “Securities Act” means the Securities Act of 1933, as amended from time to
time.
     “Senior Debt” means the Notes and any Debt of the Company or its
Subsidiaries that by its terms is not in any manner subordinated in right of
payment to any other unsecured Debt of the Company or any Subsidiary.
     “Senior Financial Officer” means the chief financial officer, principal
accounting officer, treasurer or comptroller of the Company.
     “Source” is defined in Section 5.2.
     “Subsidiary” shall mean, with respect to any Person, any other Person
greater than 50% of the total combined voting power of all classes of Voting
Interests of which shall, at the time as of which any determination is being
made, be owned by such first Person either directly or through other
Subsidiaries of such first Person.
     “Substantial Portion” is defined in Section 9.8.
     “Surviving Corporation” is defined in Section 9.2.
     “SVO” means the Securities Valuation Office of the NAIC or any successor to
such Office.
     “Transfer” is defined in Section 9.8.

9

--------------------------------------------------------------------------------

 

     “USA Patriot Act” means United States Public Law 107-56, United and
Strengthening America by Providing Appropriate Tools Required to Intercept and
Obstruct Terrorism (USA PATRIOT Act) Act of 2001.
     “Voting Interests” shall mean (a) with respect to any stock corporation,
any shares of stock of such corporation whose holders are entitled under
ordinary circumstances to vote for the election of directors of such corporation
or persons performing similar functions (irrespective of whether at the time
stock of any other class or classes shall have or might have voting power by
reason of the happening of any contingency), and (b) with respect to the Company
or any other entity, membership or other ownership interests in the Company or
such other entity whose holders are entitled under ordinary circumstances to
vote for the election of the directors of the Company or such other entity or
persons performing similar functions (irrespective of whether at the time
membership or other ownership interests of any other class or classes shall have
or might have voting power by reasoning of the happening of any contingency).
     “Wholly-Owned Subsidiary” means, at any time, any Subsidiary one hundred
percent (100%) of all of the equity interests (except directors’ qualifying
shares) and voting interests of which are owned by any one or more of the
Company and the Company’s other Wholly-Owned Subsidiaries at such time.

10

--------------------------------------------------------------------------------

 

     THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR APPLICABLE STATE SECURITIES LAWS AND MAY NOT BE SOLD, TRANSFERRED,
OR OTHERWISE DISPOSED OF, EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
UNDER SUCH ACT AND APPLICABLE STATE SECURITIES LAWS OR PURSUANT TO AN APPLICABLE
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF SUCH ACT AND SUCH LAWS.
EXHIBIT A
[FORM OF PRIVATE SHELF NOTE]
CHS INC.
SENIOR UNSECURED NOTE

     
Series __________
  [Date]          
No. ____________
   
ORIGINAL PRINCIPAL AMOUNT:
   
ORIGINAL ISSUE DATE:
   
INTEREST RATE:
   
FINAL MATURITY DATE:
   

     FOR VALUE RECEIVED, the undersigned, CHS INC. (the “Company”), a nonstock
agricultural cooperative corporation organized and existing under the laws of
the State of Minnesota, hereby promises to pay to [____________], or registered
assigns, the principal sum of ____________DOLLARS on the Final Maturity Date
specified above, payable on the Principal Prepayment Dates and in the amounts
specified on the Schedule attached hereto, and on the Final Maturity Date
specified above in an amount equal to the unpaid balance of the principal
hereof, with interest (computed on the basis of a 360-day year, 30-day month)
(a) on the unpaid balance thereof at the Interest Rate per annum specified
above, payable on each Interest Payment Date specified on the Schedule attached
hereto and on the Final Maturity Date specified above, commencing with the
Interest Payment Date next succeeding the date hereof, until the principal
hereof shall have become due and payable, and (b) on any overdue payment
(including any overdue prepayment) of principal, any overdue payment of
interest, and any overdue payment of any Make-Whole Amount, payable on each
Interest Payment Date as aforesaid (or, at the option of the registered holder
hereof, on demand) at a rate per annum from time to time equal to the greater of
(i) *% or (ii) 2% over the rate of interest publicly announced by The Bank of
New York from time to time in New York City as its base rate, but in any event
such rate under clauses (i) or (ii) not to be greater than the highest rate
permitted by applicable law.
 

*   2% over the stated coupon

A-1

--------------------------------------------------------------------------------

 

     Payments of principal of, interest on and any Make-Whole Amount payable
with respect to this Note are to be made at such place as the holder hereof
shall designate to the Company in writing, in lawful money of the United States
of America.
     This Note is one of the senior unsecured notes (herein called the “Notes”)
issued pursuant to a Private Shelf Agreement, dated as of August ___, 2008 (the
“Agreement”), between the Company, on the one hand, and the other Persons named
as parties thereto, on the other, and is entitled to the benefits thereof. As
provided in the Agreement, this Note is subject to optional prepayment, in whole
or from time to time in part, on the terms specified in the Agreement.
Capitalized terms used and not otherwise defined herein shall have the meanings
provided in the Agreement.
     This Note is a registered Note and, as provided in and subject to the terms
of the Agreement, upon surrender of this Note for registration of transfer, duly
endorsed, or accompanied by a written instrument of transfer duly executed, by
the registered holder hereof or such holder’s attorney duly authorized in
writing, a new Note for a like principal amount will be issued to, and
registered in the name of, the transferee. Prior to due presentment for
registration of transfer, the Company may treat the person in whose name this
Note is registered as the owner hereof for the purpose of receiving payment and
for all other purposes, and the Company shall not be affected by any notice to
the contrary.
     In case an Event of Default, as defined in the Agreement, shall occur and
be continuing, the principal of this Note may be declared or otherwise become
due and payable in the manner and with the effect provided in the Agreement.
     This Note shall be construed and enforced in accordance with, and the
rights of the parties shall be governed by, the internal laws of the State of
New York without giving effect to principles of conflicts of laws.

            CHS INC.
          By:                 Its:    

                  By:                 Its:    

A-2

--------------------------------------------------------------------------------

 

EXHIBIT B
[FORM OF REQUEST FOR PURCHASE]
CHS INC.
     Reference is made to the Private Shelf Agreement (the “Agreement”), dated
as of August ___, 2008, between CHS Inc. (the “Company”), on the one hand, and
John Hancock Life Insurance Company and certain other Persons that may become
bound by certain provisions thereof, on the other hand. All terms herein that
are defined in the Agreement have the respective meanings specified in the
Agreement. Pursuant to Section 2.3 of the Agreement, the Company hereby makes
the following Request for Purchase:

1.   Aggregate principal amount of the Notes covered hereby (the “Notes”) $

2.   Individual specifications of the Notes:

                  Principal     Final   Prepayment Principal Amount   Maturity
Date   Dates and Amounts
*
  **   ***

3.   Use of proceeds of the Notes:

4.   Proposed day for the closing of the purchase and sale of the Notes:

5.   The aggregate purchase price of the Notes is to be transferred to:

          Name, Address and ABA Routing       Name & Telephone Number of Bank  
Number of Account   No. of Bank Officer
 
       

6.   The Company certifies that (a) the representations and warranties contained
in Section 4 of the Agreement are true on and as of the date of this Request for
Purchase and (b) there exists on the date of this Request for Purchase no Event
of Default or Default.

7.   The Issuance Fee to be paid pursuant to the Agreement will be paid by the
Company on the closing date.

                CHS INC.
Dated:
    By:    
 
       
 
      Authorized Officer

 

*   Minimum of $5,000,000   **   Not later than August 31, 2018.   ***   Average
life of not more than eight years.

B-1

--------------------------------------------------------------------------------

 

EXHIBIT C
[FORM OF CONFIRMATION OF ACCEPTANCE]

CHS INC.
     Reference is made to the Private Shelf Agreement (the “Agreement”), dated
as of August ___, 2008, between CHS Inc. (the “Company”), on the one hand, and
John Hancock Life Insurance Company and certain other Persons that may become
bound by certain provisions thereof, on the other hand. All terms used herein
that are defined in the Agreement have the respective meanings specified in the
Agreement.
     Each Person named below as a Purchaser of Notes hereby confirms the
representations as to such Notes set forth in Section 5 of the Agreement, and
agrees to be bound by the provisions of Sections 2.5 and 2.7 of the Agreement.
     Pursuant to Section 2.5 of the Agreement, an Acceptance with respect to the
following Accepted Shelf Notes is hereby confirmed:

I.   Accepted Shelf Notes: Aggregate principal amount $___.

         
(A)
  (a)   Name of Purchaser:
 
  (b)   Principal amount:
 
  (c)   Final maturity date:
 
  (d)   Principal prepayment dates and amounts:
 
  (e)   Interest rate:
 
  (f)   Interest payment period: quarterly
 
  (g)   Payment and notice instructions: As set forth on attached Purchaser
Schedule.  
(B)
  (a)   Name of Purchaser:
 
  (b)   Principal amount:
 
  (c)   Final maturity date:
 
  (d)   Principal prepayment dates and amounts:
 
  (e)   Interest rate:
 
  (f)   Interest payment period: quarterly
 
  (g)   Payment and notice instructions: As set forth on attached Purchaser
Schedule. [(C), (D) . . . same information as above.]

II.   Closing Day:

--------------------------------------------------------------------------------

 

           
Dated:
    CHS INC.    
 
    By:    
 
               
 
    Title:    
 
         
 
         
 
            JOHN HANCOCK LIFE INSURANCE COMPANY
 
            By:               Title:        
 
            [HANCOCK AFFILIATE]
    By:               Title: