EXHIBIT 10.2
MLA No. ML0988
**MASTER LOAN AGREEMENT**
     **THIS MASTER LOAN AGREEMENT**is entered into as of January 22, 2004, between**CoBANK, ACB**(“CoBank”) and **CHS Inc., Inver Grove Heights, MN**(the “Company”).
**BACKGROUND**
          From time to time CoBank may make loans to the Company. In order toreduce the amount of paperwork associated therewith, CoBank and the Companywould like to enter into a master loan agreement. For that reason, and inconsideration of CoBank making one or more loans to the Company, CoBank and theCompany agree as follows:
     **SECTION 1. Supplements.**In the event the Company desires to borrow fromCoBank and CoBank is willing to lend to the Company, or in the event CoBank andthe Company desire to consolidate any existing loans hereunder, the partieswill enter into a Supplement to this agreement (a “Supplement”). EachSupplement will set forth the amount of the loan, the purpose of the loan, theinterest rate or rate options applicable to that loan, the repayment terms ofthe loan, and any other terms and conditions applicable to that particularloan. Each loan will be governed by the terms and conditions contained in thisagreement and in the Supplement relating to the loan.
     **SECTION 2. Availability.**Loans will be made available on any day on whichCoBank and the Federal Reserve Banks are open for business upon the telephonicor written request of the Company. Requests for loans must be received nolater than 12:00 Noon Company’s local time on the date the loan is desired.Loans will be made available by wire transfer of immediately available funds tosuch account or accounts as may be authorized by the Company. The Companyshall furnish to CoBank a duly completed and executed copy of a CoBankDelegation and Wire and Electronic Transfer Authorization Form, and CoBankshall be entitled to rely on (and shall incur no liability to the Company inacting on) any request or direction furnished in accordance with the termsthereof.
     **SECTION 3. Repayment.**The Company’s obligation to repay each loan shallbe evidenced by the promissory note set forth in the Supplement relating tothat loan or by such replacement note as CoBank shall require. CoBank shallmaintain a record of all loans, the interest accrued thereon, and all paymentsmade with respect thereto, and such record shall, absent proof of manifesterror, be conclusive evidence of the outstanding principal and interest on theloans. All payments shall be made by wire transfer of immediately availablefunds, by check, or by automated clearing house or other similar cash handlingprocesses as specified by separate agreement between the Company and CoBank.Wire transfers shall be made to ABA No. 307088754 for advice to and credit ofCoBank (or to such other account as CoBank may direct by notice). The Companyshall give CoBank telephonic notice no later than 12:00 Noon Company’s localtime of its intent to pay by wire and funds received after 3:00 p.m. Company’slocal time shall be credited on the next business day. Checks shall be mailedto CoBank, Department 167, Denver, Colorado 80291-0167 (or to such other placeas CoBank may direct by notice). Credit for payment by check will not be givenuntil the later of: (a) the day on which CoBank receives immediately availablefunds; or (b) the next business day after receipt of the check.
     **SECTION 4. Capitalization.**The Company agrees to purchase such equity inCoBank as CoBank may from time to time require in accordance with its Bylaws.However, the maximum amount of equity which the Company shall be obligated topurchase in connection with any loan may not exceed the maximum amount
 

 

permitted by the Bylaws at the time the Supplement relating to that loan isentered into or such loan is renewed or refinanced by CoBank.
     **SECTION 5. Security.**The Company’s obligations under this agreement, allSupplements (whenever executed), and all instruments and documents contemplatedhereby or thereby, shall be secured by a statutory first lien on all equitywhich the Company may now own or hereafter acquire in CoBank. Except forCoBank’s lien on the Company’s equity in CoBank, the Company’s obligationhereunder each Supplement shall be unsecured.
     **SECTION 6. Conditions Precedent.**
          **(A) Conditions to Initial Supplement.**CoBank’s obligation to extendcredit under the initial Supplement hereto is subject to the conditionsprecedent that CoBank receive, in form and content satisfactory to CoBank, eachof the following:
               **(i) This Agreement, Etc.**A duly executed copy of this agreement and allinstruments and documents contemplated hereby.
          **(B) Conditions to Each Supplement.**CoBank’s obligation to extend creditunder each Supplement, including the initial Supplement, is subject to theconditions precedent that CoBank receive, in form and content satisfactory toCoBank, each of the following:
               **(i) Supplement.**A duly executed copy of the Supplement and allinstruments and documents contemplated thereby.
               **(ii) Evidence of Authority.**Such certified board resolutions,certificates of incumbency, and other evidence that CoBank may require that theSupplement, all instruments and documents executed in connection therewith,and, in the case of initial Supplement hereto, this agreement and allinstruments and documents executed in connection herewith, have been dulyauthorized and executed.
               **(iii) Fees and Other Charges.**All fees and other charges provided forherein or in the Supplement.
               **(iv) Evidence of Perfection, Etc.**Such evidence as CoBank may requirethat CoBank has a duly perfected first priority lien on all security for theCompany’s obligations, and that the Company is in compliance with Section 8(D)hereof.
          **(C) Conditions to Each Loan.**CoBank’s obligation under each Supplement tomake any loan to the Company thereunder is subject to the condition that no“Event of Default” (as defined in Section 11 hereof) or event which with thegiving of notice and/or the passage of time would become an Event of Defaulthereunder (a “Potential Default”), shall have occurred and be continuing.
     **SECTION 7. Representations and Warranties.**
          **(A) This Agreement.**The Company represents and warrants to CoBank that asof the date of this Agreement:
               **(i) Compliance.**The Company and, to the extent contemplated hereunder,each “Subsidiary” (as defined below), is in compliance with all of the terms ofthis agreement, and no Event of Default or Potential Default exists hereunder.
 

 

               **(ii) Subsidiaries.**The Company has Subsidiaries. For purposes hereof, a“Subsidiary” shall mean a corporation of which shares of stock having ordinaryvoting power to elect a majority of the board of directors or other managers ofsuch corporation are owned, directly or indirectly, by the Company.
          **(B) Each Supplement.**The execution by the Company of each Supplementhereto shall constitute a representation and warranty to CoBank that:
               **(i) Applications.**Each representation and warranty and all informationset forth in any application or other documents submitted in connection with,or to induce CoBank to enter into, such Supplement, is correct in all materialrespects as of the date of the Supplement.
               **(ii) Conflicting Agreements, Etc.**This agreement, the Supplements, andall security and other instruments and documents relating hereto and thereto(collectively, at any time, the “Loan Documents”), do not conflict with, orrequire the consent of any party to, any other agreement to which the Companyis a party or by which it or its property may be bound or affected, and do notconflict with any provision of the Company’s bylaws, articles of incorporation,or other organizational documents.
               **(iii) Compliance.**The Company and, to the extent contemplated hereunder,each Subsidiary, is in compliance with all of the terms of the Loan Documents(including, without limitation, Section 8 of this agreement on eligibility toborrow from CoBank).
               **(iv) Binding Agreement.**The Loan Documents create legal, valid, andbinding obligations of the Company which are enforceable in accordance withtheir terms, except to the extent that enforcement may be limited by applicablebankruptcy, insolvency, or similar laws affecting creditors’ rights generally.
     **SECTION 8. Affirmative Covenants.**Unless otherwise agreed to in writingby CoBank, while this agreement is in effect, the Company agrees that it willobserve and comply with all the affirmative covenants set forth in Article 12of the Credit Agreement (as hereinafter defined), all said covenants, includingthe definitions of all defined terms used therein, being hereby incorporatedherein by reference as if fully set forth, except that the terms AdministrativeAgent and Syndication Party shall mean only CoBank in its capacity as lenderhereunder and Borrower shall mean the Company. As long as this agreement is ineffect, those covenants and definitions shall also remain in effect even if theCredit Agreement is terminated or if CoBank ceases to be a Syndication Partythereunder. Any amendment to any of the covenants or definitions shall beincorporated in this agreement and shall, as of its effective date, also applyto this agreement, unless, within one month of the effective date of suchamendment, CoBank notifies the Company that it objects to such amendment, inwhich case the covenants or definitions in effect prior to such amendment shallcontinue to apply under this agreement. “Credit Agreement” as used in thisagreement means the Credit Agreement (Revolving Loan) dated May 21, 2003, byand between CoBank, as Syndication Party and Administrative Agent, theSyndication Parties named therein, and the Company, as Borrower therein (as thesame may be amended, restated, supplemented or otherwise modified from time totime.
The Company also agrees that it will maintain its status as an entity eligibleto borrow from CoBank.
     **SECTION 9. Negative Covenants.**Unless otherwise agreed to in writing byCoBank, while this agreement is in effect, the Company agrees that it willobserve and comply with all the negative covenants set forth in Article 13 ofthe Credit Agreement, all said covenants, including the definitions of alldefined terms used therein, being hereby incorporated herein by reference as iffully set forth, except that the terms Administrative Agent and SyndicationParty shall mean only CoBank in its capacity as lender hereunder and Borrowershall mean the Company. As long as this agreement is in effect, thosecovenants and definitions shall also remain in effect even if the CreditAgreement is terminated or if CoBank ceases to be a Syndication Partythereunder. Any amendment to any of the covenants or definitions shall beincorporated in this agreement and
 

 

shall, as of its effective date, also apply to this agreement, unless, withinone month of the effective date of such amendment, CoBank notifies the Companythat it objects to such amendment, in which case the covenants or definitionsin effect prior to such amendment shall continue to apply under this agreement.
     **SECTION 10. Events of Default.**Each of the following shall constitute an“Event of Default” under this agreement:
          **(A) Payment Default.**The Company should fail to make any payment to, orto purchase any equity in, CoBank when due.
          **(B) Representations and Warranties.**Any representation or warranty madeor deemed made by the Company herein or in any Supplement, application,agreement, certificate, or other document related to or furnished in connectionwith this agreement or any Supplement, shall prove to have been false ormisleading in any material respect on or as of the date made or deemed made.
          **(C) Certain Affirmative Covenants.**The Company or, to the extent requiredhereunder, any Subsidiary should fail to perform or comply with any reportingcovenant set forth herein or in any Supplement hereto, and such failurecontinues for 15 days after written notice thereof shall have been delivered byCoBank to the Company.
          **(D) Other Covenants and Agreements.**The Company or, to the extentrequired hereunder, any Subsidiary should fail to perform or comply with anyother covenant or agreement contained herein or in any other Loan Document orshall use the proceeds of any loan for an unauthorized purpose.
          **(E) Cross-Default.**The Company should, after any applicable grace period,breach or be in default under the terms of any other agreement between theCompany and CoBank.
          **(F) Other Indebtedness.**The Company or any Subsidiary should fail to paywhen due any indebtedness to any other person or entity for borrowed money orany long-term obligation for the deferred purchase price of property (includingany capitalized lease), or any other event occurs which, under any agreement orinstrument relating to such indebtedness or obligation, has the effect ofaccelerating or permitting the acceleration of such indebtedness or obligation,whether or not such indebtedness or obligation is actually accelerated or theright to accelerate is conditioned on the giving of notice, the passage oftime, or otherwise ; provided that no such failure will be deemed to be anEvent of Default hereunder unless and until the aggregate amount owing underobligations with respect to which such failures have occurred and arecontinuing is at least $10,000,000.
          **(G) Judgments.**A judgment, decree, or order for the payment of money inan amount in excess of $5,000,000 shall be rendered against the Company or anySubsidiary and either: (i) enforcement proceedings shall have been commenced;(ii) a Lien prohibited under Article 13 of the Credit Agreement of shall havebeen obtained; or (iii) such judgment, decree, or order shall continueunsatisfied and in effect for a period of 20 consecutive days without beingvacated, discharged, satisfied, or stayed pending appeal.
          **(H) Insolvency, Etc.**The Company or any Subsidiary shall: (i) becomeinsolvent or shall generally not, or shall be unable to, or shall admit inwriting its inability to, pay its debts as they come due; or (ii) suspend itsbusiness operations or a material part thereof or make an assignment for thebenefit of creditors; or (iii) apply for, consent to, or acquiesce in theappointment of a trustee, receiver, or other custodian for it or any of itsproperty or, in the absence of such application, consent, or acquiescence, atrustee, receiver, or other custodian is so appointed; or (iv) commence or havecommenced against it any proceeding under any bankruptcy, reorganization,arrangement, readjustment of debt, dissolution, or liquidation Law of anyjurisdiction.
 

 

          **(I) Material Adverse Change.**Any material adverse change occurs, asreasonably determined by CoBank, in the Company’s financial condition, resultsof operation, or ability to perform its obligations hereunder or under anyinstrument or document contemplated hereby.
          **(J) **The Company should, after any applicable grace period, breach or be indefault under the terms of the Credit Agreement.
     **SECTION 11. Remedies.**Upon the occurrence and during the continuance ofan Event of Default or any Potential Default, CoBank shall have no obligationto continue to extend credit to the Company and may discontinue doing so at anytime without prior notice. For all purposes hereof, the term “PotentialDefault” means the occurrence of any event which, with the passage of time orthe giving of notice or both would become an Event of Default. In addition,upon the occurrence and during the continuance of any Event of Default, CoBankmay, upon notice to the Company, terminate any commitment and declare theentire unpaid principal balance of the loans, all accrued interest thereon, andall other amounts payable under this agreement, all Supplements, and the otherLoan Documents to be immediately due and payable. Upon such a declaration, theunpaid principal balance of the loans and all such other amounts shall becomeimmediately due and payable, without protest, presentment, demand, or furthernotice of any kind, all of which are hereby expressly waived by the Company.In addition, upon such an acceleration:
          **(A) Enforcement.**CoBank may proceed to protect, exercise, and enforcesuch rights and remedies as may be provided by this agreement, any other LoanDocument or under Law. Each and every one of such rights and remedies shall becumulative and may be exercised from time to time, and no failure on the partof CoBank to exercise, and no delay in exercising, any right or remedy shalloperate as a waiver thereof, and no single or partial exercise of any right orremedy shall preclude any other or future exercise thereof, or the exercise ofany other right. Without limiting the foregoing, CoBank may hold and/or setoff and apply against the Company’s obligations to CoBank the proceeds of anyequity in CoBank, any cash collateral held by CoBank, or any balances held byCoBank for the Company’s account (whether or not such balances are then due).
          **(B) Application of Funds.**CoBank may apply all payments received by it tothe Company’s obligations to CoBank in such order and manner as CoBank mayelect in its sole discretion.
In addition to the rights and remedies set forth above: (i) if the Companyfails to purchase any equity in CoBank when required or fails to make anypayment to CoBank when due, then at CoBank’s option in each instance, suchpayment shall bear interest from the date due to the date paid at 4% per annumin excess of the rate(s) of interest that would otherwise be in effect on thatloan; and (ii) after the maturity of any loan (whether as a result ofacceleration or otherwise), the unpaid principal balance of such loan(including without limitation, principal, interest, fees and expenses) shallautomatically bear interest at 4% per annum in excess of the rate(s) ofinterest that would otherwise be in effect on that loan. All interest providedfor herein shall be payable on demand and shall be calculated on the basis of ayear consisting of 360 days.
     **SECTION 13. Broken Funding Surcharge.**Notwithstanding any provisioncontained in any Supplement giving the Company the right to repay any loanprior to the date it would otherwise be due and payable, the Company agrees toprovide three Business Days’ prior written notice for any prepayment of a fixedrate balance and that in the event it repays any fixed rate balance prior toits scheduled due date or prior to the last day of the fixed rate periodapplicable thereto (whether such payment is made voluntarily, as a result of anacceleration, or otherwise), the Company will pay to CoBank a surcharge in anamount equal to the greater of: (i) an amount which would result in CoBankbeing made whole (on a present value basis) for the actual or imputed fundinglosses incurred by CoBank as a result thereof; or (ii) $300.00.Notwithstanding the foregoing, in the event any fixed rate balance is repaid asa result of the Company refinancing the loan with another lender or by othermeans, then in lieu of the foregoing, the Company shall pay to CoBank asurcharge in an amount sufficient (on a present value basis) to enable CoBankto maintain the yield it would have earned during the
 

 

fixed rate period on the amount repaid. Such surcharges will be calculated inaccordance with methodology established by CoBank (a copy of which will be madeavailable to the Company upon request).
     **SECTION 14. Complete Agreement, Amendments.**This agreement, allSupplements, and all other instruments and documents contemplated hereby andthereby, are intended by the parties to be a complete and final expression oftheir agreement. No amendment, modification, or waiver of any provision hereofor thereof, and no consent to any departure by the Company herefrom ortherefrom, shall be effective unless approved by CoBank and contained in awriting signed by or on behalf of CoBank, and then such waiver or consent shallbe effective only in the specific instance and for the specific purpose forwhich given. In the event this agreement is amended or restated, each suchamendment or restatement shall be applicable to all Supplements hereto.
     **SECTION 15. Other Types of Credit.**From time to time, CoBank may issueletters of credit or extend other types of credit to or for the account of theCompany. In the event the parties desire to do so under the terms of thisagreement, such extensions of credit may be set forth in any Supplement heretoand this agreement shall be applicable thereto.
     **SECTION 16. Applicable Law.**Except to the extent governed by applicablefederal law, this agreement and each Supplement shall be governed by andconstrued in accordance with the laws of the State of Colorado, withoutreference to choice of law doctrine.
     **SECTION 17. Notices.**All notices hereunder shall be in writing and shallbe deemed to be duly given upon delivery if personally delivered or sent bytelegram or facsimile transmission, or three days after mailing if sent byexpress, certified or registered mail, to the parties at the followingaddresses (or such other address for a party as shall be specified by likenotice):   If to CoBank, as follows: If to the Company, as follows:   For general correspondence purposes: P.O. Box 64089, MS685P.O. Box 5110 St. Paul, MN 55164-0089Denver, Colorado 80217-5110     For direct delivery purposes, when desired:  5500 South Quebec Street  Greenwood Village, Colorado 80111-1914     Attention: Credit Information Services Attention: John SchmitzFax No.: (303) 224-6101 Fax No.: 651-355-3778
     **SECTION 18. Taxes and Expenses.**To the extent allowed by law, the Companyagrees to pay all reasonable out-of-pocket costs and expenses (including thefees and expenses of counsel retained or employed by CoBank) incurred by CoBankand any participants from CoBank in connection with the origination,administration, collection, and enforcement of this agreement and the otherLoan Documents, including, without limitation, all costs and expenses incurredin perfecting, maintaining, determining the priority of, and releasing anysecurity for the Company’s obligations to CoBank, and any stamp, intangible,transfer, or like tax payable in connection with this agreement or any otherLoan Document.
     **SECTION 19. Effectiveness and Severability.**This agreement shall continuein effect until: (i) all indebtedness and obligations of the Company underthis agreement, all Supplements, and all other Loan Documents shall have beenpaid or satisfied; (ii) CoBank has no commitment to extend credit to or for theaccount of the Company under any Supplement; and (iii) either party sendswritten notice to the other
 

 

terminating this agreement. Any provision of this agreement or any other LoanDocument which is prohibited or unenforceable in any jurisdiction shall, as tosuch jurisdiction, be ineffective to the extent of such prohibition orunenforceability without invalidating the remaining provisions hereof orthereof.
     **SECTION 20. Successors and Assigns.**This agreement, each Supplement, andthe other Loan Documents shall be binding upon and inure to the benefit of theCompany and CoBank and their respective successors and assigns, except that theCompany may not assign or transfer its rights or obligations under thisagreement, any Supplement or any other Loan Document without the prior writtenconsent of CoBank.
     **SECTION 21. Participations, Etc.**From time to time, CoBank may sell toone or more banks, financial institutions or other lenders a participation inone or more of the loans or other extensions of credit made pursuant to thisagreement. However, no such participation shall relieve CoBank of anycommitment made to the Company under any Supplement hereto. In connection withthe foregoing, CoBank may disclose information concerning the Company and itsSubsidiaries to any participant or prospective participant, provided that suchparticipant or prospective participant agrees to keep such informationconfidential. CoBank agrees that all Loans that are made by CoBank and thatare retained for its own account and are not included in a sale ofparticipation interest shall be entitled to patronage distributions inaccordance with the bylaws of CoBank and its practices and procedures relatedto patronage distribution. Accordingly, all Loans that are included in a saleof participation interest shall not be entitled to patronage distributions. Asale of participation interest may include certain voting rights of theparticipants regarding the loans hereunder (including without limitation theadministration, servicing and enforcement thereof). CoBank agrees to givewritten notification
     **IN WITNESS WHEREOF**, the parties have caused this agreement to be executedby their duly authorized officers as of the date shown above.   **CoBANK, ACB** **CHS INC.**   By: By:    Title: Title: