Document:

EX-10.1

CHS INC.

_______________________________

NOTE PURCHASE AGREEMENT

_______________________________

Dated as of September 21, 2004

$125,000,000 5.25% Series H Senior Notes due September 21, 2014

1

TABLE OF CONTENTS

Page

1. AUTHORIZATION OF NOTES.

2. SALE AND PURCHASE OF NOTES.

3. CLOSING.

4. CONDITIONS TO CLOSING.

	 	 	 
	4.1.

4.2.

4.3.

4.4.

4.5.

4.6.

4.7.

4.8.

4.9.

4.10.

4.11.

	 	Representations and Warranties.

Performance; No Default.

Compliance Certificates.

Opinions of Counsel.

Purchase Permitted By Applicable Law, etc.

Sale of Other Notes.

Payment of Special Counsel Fees.

Private Placement Number.

Changes in Corporate Structure.

Offeree Letter.

Proceedings and Documents.

5. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.

	 	 	 
	5.1.

5.2.

5.3.

5.4.

5.5.

5.6.

5.7.

5.8.

5.9.

5.10.

5.11.

5.12.

5.13.

5.14.

5.15.

5.16.

5.17.

5.18.

5.19.

5.20.

5.21.

5.22.

	 	Organization; Power and Authority.

Authorization, etc.

Disclosure.

Organization and Ownership of Shares of Subsidiaries; Affiliates.

Financial Statements.

Compliance with Laws, Other Instruments, etc.

Governmental Authorizations, etc.

Litigation; Observance of Agreements, Statutes and Orders.

Taxes.

Title to Property; Leases.

Permits and Other Operating Rights.

Intellectual Property.

Compliance with ERISA.

Private Offering by the Company.

Use of Proceeds; Margin Regulations.

Existing Debt; Future Liens.

Foreign Assets Control Regulations, etc.

Status under Certain Statutes.

Environmental Matters.

Solvency.

Hostile Tender Offers.

Ranking of Notes.

6. REPRESENTATIONS OF THE PURCHASER.

6.1. Purchase for Investment.

6.2. Source of Funds.

7. INFORMATION AS TO COMPANY.

	 	 	 
	7.1.

7.2.

7.3.

	 	Financial and Business Information.

Officer’s Certificate.

Inspection.

8. INTEREST; PAYMENT OF THE NOTES.

	 	 	 
	8.1.

8.2.

8.3.

8.4.

8.5.

8.6.

8.7.

	 	Interest Payments.

Required Principal Payments.

Optional Prepayments with Make-Whole Amount.

Allocation of Partial Prepayments.

Maturity; Surrender, etc.

Purchase of Notes.

Make-Whole Amount.

9. AFFIRMATIVE COVENANTS.

	 	 	 
	9.1.

9.2.

9.3.

9.4.

9.5.

9.6.

	 	Compliance with Law.

Insurance.

Maintenance of Properties.

Payment of Taxes and Claims.

Corporate Existence, etc.

Pari Passu

10. NEGATIVE COVENANTS.

	 	 	 
	10.1.

10.2.

10.3.

	 	Transactions with Affiliates.

Merger, Consolidation, etc.

Funded Debt to Consolidated Cash Flows.

	 	10.4.	 	Adjusted Consolidated Funded Debt to Consolidated Members’ and
Patrons’ Equity.	 

	 	 	 
	10.5.

10.6.

10.7.

10.8.

10.9.

10.10.

10.11.

	 	Priority Debt.

Liens.

Sale of Assets.

Line of Business.

Subsidiary Distribution Restrictions.

Subsidiary Preferred Stock.

Issuance of Stock by Subsidiaries.

11. EVENTS OF DEFAULT.

12. REMEDIES ON DEFAULT, ETC.

	 	 	 
	12.1.

12.2.

12.3.

12.4.

	 	Acceleration.

Other Remedies.

Rescission.

No Waivers or Election of Remedies, Expenses, etc.

13. REGISTRATION; EXCHANGE; SUBSTITUTION OF NOTES.

	 	 	 
	13.1.

13.2.

13.3.

	 	Registration of Notes.

Transfer and Exchange of Notes.

Replacement of Notes.

14. PAYMENTS ON NOTES.

15. EXPENSES, ETC.

15.1. Transaction Expenses.

15.2. Survival.

16. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ENTIRE AGREEMENT.

17. AMENDMENT AND WAIVER.

	 	 	 
	17.1.

17.2.

17.3.

17.4.

	 	Requirements.

Solicitation of Holders of Notes.

Binding Effect, etc.

Notes held by Company, etc.

18. NOTICES.

19. REPRODUCTION OF DOCUMENTS.

20. CONFIDENTIAL INFORMATION.

21. SUBSTITUTION OF PURCHASER.

22. MISCELLANEOUS.

	 	 	 
	22.1.

22.2.

22.3.

22.4.

22.5.

22.6.

	 	Successors and Assigns.

Payments Due on Non-Business Days.

Severability.

Construction.

Counterparts.

Governing Law.
	 
	 	 

2

Schedules and Exhibits

	 	 	 	 	 	 	 
	Schedule A

Schedule B

	 	—

—
	 	Information Relating To Purchasers

Defined Terms
	 	

	 
	 	 	 	 	 	 
	Schedule 4.9

Schedule 5.3

	 	—

—
	 	Changes in Corporate Structure

Disclosure Materials
	 	

	 
	 	 	 	 	 	 
	Schedule 5.4	 	—	 	Subsidiaries of the Company and Ownership of Subsidiary Stock

	 
	 	 	 	 	 	 
	Schedule 5.5

Schedule 5.6

Schedule 5.12

Schedule 5.15

Schedule 5.16

	 	—

—

—
	 	Financial Statements

Restrictions on Debt

—

—

Existing Debt
	 	

Intellectual Property

Use of Proceeds

	 
	 	 	 	 	 	 
	Exhibit 1	 	—	 	Form of 5.25% Series H Senior Notes due September 21, 2014

	 
	 	 	 	 	 	 
	Exhibit 3

	 	—
	 	Form of Pay Proceeds Letter
	 	

	 
	 	 	 	 	 	 
	Exhibit 4.4(a)	 	—	 	Form of Opinion of General Counsel for the Company

	 
	 	 	 	 	 	 
	Exhibit 4.4(b)

	 	 	 	—
	 	Form of Opinion of Special Counsel for the Purchasers

3

CHS INC.

5500 Cenex Drive

Inver Grove Heights, MN 55077

$125,000,000 5.25% Series H Senior Notes due September 21, 2014

Dated as of September 21, 2004

Separately addressed to each of the Purchasers

listed in the attached Schedule A

Ladies and Gentlemen:

CHS Inc., a nonstock agricultural cooperative corporation organized under the laws of the
State of Minnesota (the “Company”), agrees with you as follows:

1. AUTHORIZATION OF NOTES.

The Company will authorize the issue and sale of $125,000,000 aggregate principal amount of
its 5.25% Series H Senior Notes due September 21, 2014 (the “Notes”, such term to include any such
notes issued in substitution therefor pursuant to Section 13 of this Agreement or the Other
Agreements (as hereinafter defined)). The Notes shall be substantially in the form set out in
Exhibit 1 hereof, with such changes therefrom, if any, as may be approved by you and the Company.
Certain capitalized terms used in this Agreement are defined in Schedule B hereto; references to a
“Schedule” or an “Exhibit” are, unless otherwise specified, to a Schedule or an Exhibit attached to
this Agreement; and references to a “Section” are, unless otherwise specified, references to a
Section of this Agreement.

2. SALE AND PURCHASE OF NOTES.

Subject to the terms and conditions of this Agreement, the Company will issue and sell to you
and you will purchase from the Company, at the Closing provided for in Section 3, Notes in the
principal amount specified below your name in Schedule A at the purchase price of 100% of the
principal amount thereof. Contemporaneously with entering into this Agreement, the Company is
entering into separate Note Purchase Agreements (the “Other Agreements”) identical with this
Agreement with each of the other purchasers named in Schedule A (the “Other Purchasers”), providing
for the sale at such Closing to each of the Other Purchasers of Notes in the principal amounts
specified below its name in Schedule A. Your obligation hereunder and the obligations of the Other
Purchasers under the Other Agreements are several and not joint obligations and you shall have no
obligation under any Other Agreement and no liability to any Person for the performance or
non-performance by any Other Purchaser thereunder. This Agreement and the other Agreements shall
constitute one single agreement for purposes of New York General Obligations Law section 5-501.

3. CLOSING.

The sale and purchase of the Notes to be purchased by you and the Other Purchasers shall occur
at the offices of Bingham McCutchen LLP, One State Street, Hartford, Connecticut 06103, at 10:00
a.m., local time, at a closing (the “Closing”) on September 21, 2004. At the Closing, the Company
will deliver to you the Notes to be purchased by you in the form of a single Note (or such greater
number of Notes in denominations of at least $500,000 as you may request), dated the date of the
Closing and registered in your name (or in the name of your nominee), as indicated in Schedule A,
against delivery by you to the Company or its order of immediately available funds in the amount of
the purchase price therefor by wire transfer of immediately available funds for credit to such
account or accounts as shall be specified in a letter on the Company’s letterhead, in substantially
the form of Exhibit 3 attached hereto, from the Company to you and each of the Other Purchasers.
If, at the Closing, the Company shall fail to tender such Notes to you as provided above in this
Section 3, or any of the conditions specified in Section 4 shall not have been fulfilled to your
satisfaction, you shall, at your election, be relieved of all further obligations under this
Agreement, without thereby waiving any rights you may have by reason of such failure or such
nonfulfillment.

4. CONDITIONS TO CLOSING.

Your obligation to purchase and pay for the Notes to be sold to you at the Closing is subject
to the fulfillment to your satisfaction, prior to or at the Closing, of the following conditions:

4.1. Representations and Warranties.

The representations and warranties of the Company in this Agreement shall be correct when made
and at the time of the Closing.

4.2. Performance; No Default.

The Company shall have performed and complied with all agreements and conditions contained in
the Financing Documents required to be performed or complied with by the Company prior to or at the
Closing and after giving effect to the issue and sale of the Notes (and the application of the
proceeds thereof as contemplated by Schedule 5.15) no Default or Event of Default shall have
occurred and be continuing. Neither the Company nor any Subsidiary shall have entered into any
transaction since the date of the Memorandum that would have been prohibited by any of Sections
10.1, 10.3, 10.4, 10.5, 10.6 or 10.7 hereof had such Sections applied since such date.

4.3. Compliance Certificates.

(a) Officer’s Certificate. The Company shall have delivered to you an Officer’s
Certificate, dated the date of the Closing, certifying that the conditions specified in
Sections 4.1, 4.2 and 4.9 have been fulfilled.

(b) Secretary’s Certificate. The Company shall have delivered to you a certificate,
signed on its behalf by its Secretary or its Assistant Secretary, and one other officer of
the Company, dated the date of the Closing, certifying as to the resolutions attached
thereto and other corporate proceedings relating to the authorization, execution and
delivery of the Notes, this Agreement and the Other Agreements.

4.4. Opinions of Counsel.

You shall have received opinions in form and substance satisfactory to you, dated the date of
the Closing, from

(a) David A. Kastelic, General Counsel for the Company, substantially in the form set
forth in Exhibit 4.4(a) and covering such other matters incident to the transactions
contemplated hereby as you or your counsel may reasonably request (and the Company hereby
instructs such counsel to deliver such opinion to you); and

(b) Bingham McCutchen LLP, your special counsel in connection with such transactions,
substantially in the form set forth in Exhibit 4.4(b) and covering such other matters
incident to such transactions as you may reasonably request.

4.5. Purchase Permitted By Applicable Law, etc.

On the date of the Closing, your purchase of Notes and all other proceedings taken in
connection with the transaction contemplated by this Agreement and the other Financing Documents
shall (a) be permitted by the laws and regulations of each jurisdiction to which you are subject,
without recourse to provisions (such as Section 1405(a)(8) of the New York Insurance Law)
permitting limited investments by insurance companies without restriction as to the character of
the particular investment, (b) not violate any applicable law or 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 (c) not subject you to any tax, penalty or liability under or
pursuant to any applicable law or regulation, which law or regulation was not in effect on the date
hereof. If requested by you, you shall have received an Officer’s Certificate certifying as to
such matters of fact as you may reasonably specify to enable you to determine whether such purchase
is so permitted.

4.6. Sale of Other Notes.

Contemporaneously with the Closing, the Company shall sell to the Other Purchasers and the
Other Purchasers shall purchase the Notes to be purchased by them at the Closing as specified in
Schedule A.

4.7. Payment of Special Counsel Fees.

Without limiting the provisions of Section 15.1, the Company shall have paid on or before the
Closing the fees, charges and disbursements of your special counsel referred to in Section 4.4(b)
to the extent reflected in a statement of such counsel rendered to the Company at least one (1)
Business Day prior to the Closing.

4.8. Private Placement Number.

A Private Placement number issued by Standard & Poor’s CUSIP Service Bureau (in cooperation
with the Securities Valuation Office of the National Association of Insurance Commissioners) shall
have been obtained for the Notes.

4.9. Changes in Corporate Structure.

Except as specified in Schedule 4.9, the Company shall not have changed its jurisdiction of
incorporation or been a party to any merger or consolidation and shall not have succeeded to all or
any substantial part of the liabilities of any other entity, at any time following the date of the
most recent financial statements referred to in Schedule 5.5.

4.10. Offeree Letter.

Mitsubishi Securities (USA), Inc. shall have delivered to the Company, their counsel, you,
each Other Purchaser and your special counsel an offeree letter, in form and substance satisfactory
to you, confirming the manner of the offering of the Notes by Mitsubishi Securities (USA), Inc.

4.11. Proceedings and Documents.

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
you and your special counsel, and you and your special counsel shall have received all such
counterpart originals or certified or other copies of such documents as you or they may reasonably
request.

5. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.

	 	 	 
	The Company represents and warrants to you that:

	 
	 	 
	5.1.

	 	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, the Other Agreements and the Notes
and to perform the provisions hereof and thereof.

5.2. 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 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, each of the Financing
Documents 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).

5.3. Disclosure.

The Company, through its agent, Mitsubishi Securities (USA), Inc. has delivered to you and
each Other Purchaser a copy of a Confidential Private Placement Memorandum, dated August 11, 2004
(the “Memorandum”), relating to the transactions contemplated hereby. The Memorandum fairly
describes, in all material respects, the general nature of the business and principal properties of
the Company and its Subsidiaries. Except as disclosed in Schedule 5.3, this Agreement, the other
Financing Documents, the Memorandum, the documents, certificates or other writings delivered to you
by or on behalf of the Company in connection with the transactions contemplated by the Financing
Documents and the financial statements listed in Schedule 5.5, taken as a whole, do not 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 Memorandum or as expressly described in Schedule 5.3, or in one
of the documents, certificates or other writings identified therein, or in the financial statements
listed in Schedule 5.5, since August 31, 2003, there has been no change in the financial condition,
operations, business, properties or prospects 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 Memorandum or in the other documents,
certificates and other writings delivered to you by or on behalf of the Company specifically for
use in connection with the transactions contemplated hereby.

5.4. Organization and Ownership of Shares of Subsidiaries; Affiliates.

(a) Schedule 5.4 contains (except as noted therein) complete and correct lists 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 5.4 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 5.4).

(c) Each Subsidiary identified in Schedule 5.4 is a corporation or other legal entity
duly organized, validly existing and in good standing under the laws of its jurisdiction of
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.

(d) No Subsidiary is a party to, or otherwise subject to any legal restriction or any
agreement (other than the agreements listed on Schedule 5.4 and customary limitations
imposed by corporate law 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.

5.5. Financial Statements.

The Company has delivered to you and each Other Purchaser copies of the financial statements
of the Company and its Subsidiaries listed on Schedule 5.5. 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).

5.6. 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, and the Company is not a party to, or otherwise subject to any provision contained in,
any instrument evidencing Debt of the Company, any agreement relating thereto or any other contract
or agreement (including its charter) which limits the amount of, or otherwise imposes restrictions
on the incurring of, Debt of the Company of the type to be evidenced by the Notes except as set
forth in the agreements listed in Schedule 5.6 attached hereto (as such Schedule 5.6 may have been
modified from time to time by written supplements thereto delivered by the Company and accepted in
writing by the Required Holders). The provisions of this Agreement and the Notes do not contravene
any agreement listed in Schedule 5.6.

5.7. 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.

5.8. 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 and 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.

5.9. Taxes.

The Company and its Subsidiaries have filed all Federal, state and other tax returns that are,
to the knowledge of the officers of the Company, 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, 2000.
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.

5.10. Title to Property; Leases.

Except for 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 most recent audited balance
sheet referred to in Section 5.5 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.

5.11. 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.

5.12. Intellectual Property.

Except as disclosed in Schedule 5.12,

(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 patent, copyright, 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, service mark, trademark, trade name or other right owned or used by the Company
or any of its Subsidiaries.

5.13. 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, 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 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 the Financing Documents 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 in the first sentence of
this Section 5.13(e) is made in reliance upon and subject to the accuracy of your
representation in Section 6.2 as to the sources of the funds used to pay the purchase price
of the Notes to be purchased by you.

5.14. Private Offering by the Company.

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 you, the Other
Purchasers and not more than 15 other Institutional Investors, 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 provisions of any securities
or “blue sky” laws of any applicable jurisdiction.

5.15. Use of Proceeds; Margin Regulations.

(a) Use of Proceeds. The Company will apply the proceeds of the sale of the Notes as
set forth in Schedule 5.15.

(b) Margin Regulations. None of the Company or any of its Subsidiaries owns or has any
present intention of acquiring any “margin stock” as defined in Regulation U (12 CFR Part
221) of the Board of Governors of the Federal Reserve System of the United States (herein
called “margin stock”) under such circumstances as to involve either the Company or any
Subsidiary in a violation of said Regulation U. No part of the proceeds from the sale of
the Notes hereunder will be used, directly or indirectly, for the purpose, whether
immediate, incidental or ultimate, of purchasing or carrying any margin stock or for the
purpose of maintaining, reducing or retiring any Debt which was originally incurred to
purchase or carry any stock that is currently a margin stock or for any other purpose which
might constitute this transaction a “purpose credit” within the meaning of such Regulation
U. The Company is not engaged principally, or as one of its important activities, in the
business of extending credit for the purpose of purchasing or carrying margin stock.
Neither the Company nor any agent acting on its behalf has taken or will take any action
which might cause this Agreement or the Notes to violate Regulation T, Regulation U or any
other regulation of the Board of Governors of the Federal Reserve System of the United
States or to violate the Exchange Act, in each case as in effect now or as the same may
hereafter be in effect.

5.16. Existing Debt; Future Liens.

(a) Except as described therein, Schedule 5.16 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 of the Closing. 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 5.16 does not exceed $5,000,000.

(c) Except as disclosed in Schedule 5.16, 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 10.6.

5.17. 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 of its Subsidiaries has violated, nor will any of them
violate, the provisions of United States Executive Order 13224 of September 23, 2001
Blocking Property and Prohibiting Transactions With Persons Who Commit, Threaten to Commit,
or Support Terrorism (Exec. Order No. 13224, 66 Fed. Reg. 49079 (2001)).

5.18. 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 Holding Company Act of 1935, as amended, the ICC
Termination Act of 1995, as amended, or the Federal Power Act, as amended.

5.19. Environmental Matters.

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. Except as otherwise disclosed to you in writing,

(a) 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;

(b) 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;
and

(c) 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.

5.20. Solvency.

The Company, after giving effect to the transactions contemplated by the Financing Documents,
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.

5.21. Hostile Tender Offers.

None of the proceeds of the sale of any Notes will be used to finance a Hostile Tender Offer.

5.22. 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.

6. REPRESENTATIONS OF THE PURCHASER.

6.1. Purchase for Investment.

You represent that you are purchasing the Notes for your own account or for one or more
separate accounts maintained by you 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 your or their
property shall at all times be within your or their control. You understand 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.

6.2. Source of Funds.

You represent that at least one of the following statements is an accurate representation as
to each source of funds (a “Source”) to be used by you to pay the purchase price of the Notes to be
purchased by you 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 your state of domicile; or

(b) the Source is a separate account that is maintained solely in connection with your
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 you 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 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(h) 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 6.2, the terms “employee benefit plan”, “governmental plan” and “separate
account” shall have the respective meanings assigned to such terms in Section 3 of ERISA.

7. INFORMATION AS TO COMPANY.

7.1. Financial and Business Information.

The Company shall deliver to each holder of Notes that is an Institutional Investor:

(a) Quarterly Statements — within 45 days 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

(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 Quarterly Report on Form 10-Q prepared in
compliance with the requirements therefor and filed with the Securities and Exchange
Commission shall be deemed to satisfy the requirements of this Section 7.1(a);

(b) Annual Statements — within 90 days 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,

(A) 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, and

(B) a certificate of such accountants stating that they have reviewed this
Agreement and stating further whether, in making their audit, they have become aware
of any condition or event that then constitutes a Default or an Event of Default
arising under Section 10.2 insofar as such Default or Event of Default relates to
Section 10.2(b)(iii)(B), Sections 10.3 through 10.5 and Section 10.7(b), and, if
they are aware that any such condition or event then exists, specifying the nature
and period of the existence thereof (it being understood that such accountants shall
not be liable, directly or indirectly, for any failure to obtain knowledge of any
such Default or Event of Default unless such accountants should have obtained
knowledge thereof in making an audit in accordance with generally accepted auditing
standards or did not make such an audit);

provided that the delivery within the time period specified above of the Company’s Annual
Report on 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 Securities and Exchange
Commission, together with the accountant’s certificate described in clause (B) above, shall
be deemed to satisfy the requirements of this Section 7.1(b).

(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 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 Securities and Exchange Commission 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 11(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
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 Financing Documents as from time
to time may be reasonably requested by any such holder of Notes; and

(h) Information Required by Rule 144A – with reasonable promptness, upon the request of
any such holder, such financial and other information as such holder may reasonably
determine to be necessary in order to permit compliance with the information requirements of
Rule 144A under the Securities Act in connection with the resale of Notes, except at such
times as the Company is subject to and in compliance with the reporting requirements of
section 13 or 15(d) of the Exchange Act.

7.2. Officer’s Certificate.

Each set of financial statements delivered to a holder of Notes pursuant to Section 7.1(a) or
Section 7.1(b) hereof shall be accompanied by a certificate of a Senior Financial Officer setting
forth:

(a) Covenant Compliance — the information (including detailed calculations) required
in order to establish whether the Company was in compliance with the requirements of
Sections 10.3 through 10.5 and Section 10.7 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.

7.3. 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 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.

8. INTEREST; PAYMENT OF THE NOTES.

8.1. 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 as
provided in the Notes.

8.2. Required Principal Payments.

(a) Required Principal Payments. The Company shall pay, and there shall become due and
payable with respect to the Notes, the principal amount of $25,000,000 (each such payment a
“Required Principal Payment”) on September 21 in each year commencing on September 21,
2010 to and including September 21, 2013; provided, however, that the principal amount
of the Notes prepaid or purchased pursuant to Section Section 8.3 shall be applied against
the principal amount of each Required Principal Payment becoming due under this Section
8.2(a) in inverse order of their scheduled due dates; and provided further that upon any
partial prepayment of the Notes pursuant to Section 8.2(b) or Section 10.7, the principal
amount of each Required Principal Prepayment of the Notes becoming due under this Section
8.2(a) on and after the date of such prepayment shall be reduced in the same proportion as
the aggregate unpaid principal amount of the Notes is reduced as a result of such
prepayment. Each Required Principal Payment shall be at 100% of the principal amount paid,
together with interest accrued thereon to the date of payment. The entire remaining
outstanding principal amount of the Notes, together with all accrued and unpaid interest
thereon, shall be due and payable on September 21, 2014.

(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 18. 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
8.2(b)(i) and, contemporaneously with such action, the Company prepays all Notes
required to be prepaid in accordance with Section 8.2(b)(ii) hereof.

(ii) Acceptance and Payment. A holder of Notes may accept the offer to prepay
made pursuant to Section 8.2(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 8.2(b)(ii) from some, but not all
of, the holders of the Notes, then the Company will, within two (2) Business Days
after the receipt of such acceptance, give written notice of such acceptance to each
other holder of the Notes.

(iii) Officer’s Certificate. Each offer to prepay the Notes pursuant to
Section 8.2(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 8.2(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 8.2(b) have been fulfilled; and

(F) in reasonable detail, the nature and date or proposed date of the
Change in Control.

8.3. 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, 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 Notes written notice of each optional prepayment
under this Section 8.3 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, the
aggregate principal amount of the 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 8.4), 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 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 8.3 shall be applied
in satisfaction of required payments of principal in inverse order of their scheduled due dates.

8.4. Allocation of Partial Prepayments.

In the case of each partial prepayment of the Notes pursuant to Section 8.3, the principal
amount of the Notes to be prepaid shall be allocated among all of the Notes at the time outstanding
in proportion, as nearly as practicable, to the respective unpaid principal amounts thereof not
theretofore called for prepayment.

8.5. Maturity; Surrender, etc.

In the case of each prepayment of Notes pursuant to this Section 8, 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 8.3, 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.

8.6. 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.

8.7. 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 8.3 or has become or is declared to be immediately due and
payable pursuant to Section 12.1, 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, the sum
of (a) 0.50% per annum plus (b) the yield to maturity implied by (i) the yields reported, as
of 10:00 A.M. (New York City time) on the second Business Day preceding the Settlement Date
with respect to such Called Principal, on the display designated as “Page PX1” on the
Bloomberg Financial Market Service (or such other display as may replace Page PX1 on the
Bloomberg Financial Market Service) for actively traded 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, 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 Settlement Date with respect to such Called Principal, 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. Such implied yield will be determined, if
necessary, by (a) converting U.S. Treasury bill quotations to bond-equivalent yields in
accordance with accepted financial practice and (b) interpolating linearly between (i) the
actively traded U.S. Treasury security with the maturity closest to and greater than the
Remaining Average Life and (ii) the actively traded U.S. Treasury security with the maturity
closest to and less than the Remaining Average Life.

“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 8.3 or 12.1.

“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 8.3 or has become or is
declared to be immediately due and payable pursuant to Section 12.1, as the context
requires.

9. AFFIRMATIVE COVENANTS.

	 	 	 
	The Company covenants that so long as any of the Notes are outstanding:

	 
	 	 
	9.1.

	 	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, 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 governmental authorizations could not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect.

9.2. 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.

9.3. 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.

9.4. 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.

9.5. Corporate Existence, etc.

Subject to Section 10.2, 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 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.

9.6. 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.

10. NEGATIVE COVENANTS.

	 	 	 
	The Company covenants that so long as any of the Notes are outstanding:

	 
	 	 
	10.1.

	 	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.

10.2. 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, 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, the Other Agreements 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

(iii) immediately after giving effect to such transaction,

(A) no Default or Event of Default shall exist, and

(B) the Surviving Corporation is permitted to incur at least $1.00 of
additional Funded Debt under the provisions of Section 10.3 (on the
assumption that such transaction was consummated immediately prior to the
end of the most recently ended fiscal quarter) and Section 10.4 and at least
$1.00 of additional Priority Debt under the provisions of Section 10.5.

10.3. Funded Debt to Consolidated Cash Flows.

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.

10.4. 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.

10.5. 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.

10.6. 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 10.6), 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;

(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 10.6(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 5.16 hereto;

(e) any Lien renewing, extending or refunding any Lien permitted by clause (d) of this
Section 10.6, 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;

(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
10.6 securing Debt, provided that the creation, issuance, incurrence or assumption of such
Debt is permitted under Sections 10.3, 10.4 and 10.5 hereof.

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 10.6
(but including any Liens in respect of the Primary Bank Facility whether or not permitted by
paragraphs (a) – (j) of this Section 10.6), 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.

10.7. 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 10.7(a), the Company or any
Subsidiary may Transfer any of its properties at the Fair Market Value thereof;
provided that

(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 hereof, 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 Funded Debt under the provisions of Section 10.3 and
Section 10.4 hereof and at least $1.00 of additional Priority Debt under the
provisions of Section 10.5 hereof.

(ii) If, notwithstanding the certificate referred to in the foregoing clause
10.7(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
10.7(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
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,

“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

(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 subject, with respect
to both such property and all such other property, to the provisions of Section
10.7(b)) during the then current fiscal year of the Company, exceeds an amount equal
to 25% of Consolidated Total Assets for 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.

10.8. 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, (ii) in the food industry or (iii) in which the Company and
its Subsidiaries are otherwise engaged on the date hereof as described in the Memorandum or
businesses reasonably related thereto or in furtherance thereof.

10.9. 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.

10.10. 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.

10.11. 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.

11. 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 7.1(d), Section 8.2 (other than any payment default occurring under Sections
11(a) and/or 11(b)) or Section 10 (other than Section 10.8) 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 11) 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 11); 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) 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
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
11(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.

12. REMEDIES ON DEFAULT, ETC.

12.1. Acceleration.

(a) If an Event of Default with respect to the Company described in clause (g) or (h)
of Section 11 (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 11 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 12.1, whether automatically or by
declaration, such Notes will forthwith mature and the entire unpaid principal amount of such Notes,
plus (x) all accrued and unpaid interest thereon 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. 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.

12.2. 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 12.1, 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 Financing Document, 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.

12.3. Rescission.

At any time after any Notes have been declared due and payable pursuant to clause (b) or (c)
of Section 12.1, 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 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 17, 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 12.3 will extend to or affect any subsequent Event of Default or Default or impair any
right consequent thereon.

12.4. 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 any Financing Document 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 15, 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 12, including, without limitation,
reasonable attorneys’ fees, expenses and disbursements.

13. REGISTRATION; EXCHANGE; SUBSTITUTION OF NOTES.

13.1. 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.

13.2. 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 1. 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 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 6.2.

13.3. 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.

14. PAYMENTS ON NOTES.

So long as you or your nominee shall be the holder of any Note, the Company will pay all sums
becoming due on such Note for principal, Make-Whole Amount, if any, and interest by the method and
at the address specified for such purpose below your name in Schedule A, or by such other method or
at such other address as you shall have from time to time specified to the Company in writing for
such purpose, without the presentation or surrender of such Note or the making of any notation
thereon, except that upon written request of the Company made concurrently with or reasonably
promptly after payment or prepayment in full of any Note, you shall surrender such Note for
cancellation, reasonably promptly after any such request, to the Company at its principal executive
office. Prior to any sale or other disposition of any Note held by you or your nominee you will,
at your election, either endorse thereon the amount of principal paid thereon and the last date to
which interest has been paid thereon or surrender such Note to the Company in exchange for a new
Note or Notes pursuant to Section 13.2. The Company will afford the benefits of this Section 14 to
any Qualified Institutional Buyer or Institutional Investor that is the direct or indirect
transferee of any Note purchased by you under this Agreement and that has made the same agreement
relating to such Note as you have made in this Section 14.

15. EXPENSES, ETC.

15.1. 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 you and each Other Purchaser or holder of a Note in
connection with such transactions and in connection with any amendments, waivers or consents under
or in respect of the Financing Documents (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 the Financing
Documents or in responding to any subpoena or other legal process or informal investigative demand
issued in connection with the Financing Documents, 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
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 Financing Documents. The Company
will pay, and will save you 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 retained by you).

15.2. Survival.

The obligations of the Company under this Section 15 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.

16. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ENTIRE AGREEMENT.

All representations and warranties contained in any Financing Document shall survive the
execution and delivery of this Agreement and the Notes, the purchase or transfer by you 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
you 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 any Financing Document. Subject to the
preceding sentence, the Financing Documents embody the entire agreement and understanding between
you and the Company and supersede all prior agreements and understandings relating to the subject
matter hereof.

17. AMENDMENT AND WAIVER.

17.1. 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), with (and only with) the written
consent of the Company and the Required Holders, except that (a) no amendment or waiver of any of
the provisions of Sections 1, 2, 3, 4, 5, 6 or 21 hereof, or any defined term (as it is used
therein), will be effective as to you unless consented to by you in writing, and (b) no such
amendment or waiver may, without the written consent of the holder of each Note at the time
outstanding affected thereby, (i) subject to the provisions of Section 12 relating to acceleration
or rescission, change the amount or time of any prepayment or payment of principal of, or reduce
the rate or change the time of payment or method of computation of interest or of the Make-Whole
Amount on, the Notes, (ii) change the percentage of the principal amount of the Notes the holders
of which are required to consent to any such amendment or waiver, or (iii) amend any of Sections 8,
11(a), 11(b), 12, 17 or 20.

17.2. 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 17 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, to any holder of Notes 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, on the same terms, ratably to each holder of Notes then outstanding even if such
holder did not consent to such waiver or amendment.

17.3. Binding Effect, etc.

Any amendment or waiver consented to as provided in this Section 17 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.

17.4. 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 any of the Financing Documents, or have directed the taking of any
action provided in any of the Financing Documents 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.

18. NOTICES.

All notices and communications provided for hereunder shall be in writing and sent (a) by
telecopy if the sender on the same day sends a confirming copy of such notice by a recognized
overnight delivery service (charges prepaid), or (b) by registered or certified mail with return
receipt requested (postage prepaid), or (c) by a recognized overnight delivery service (with
charges prepaid). Any such notice must be sent:

(i) if to you or your nominee, to you or it at the address specified for such
communications in Schedule A, or at such other address as you or it shall have
specified to the Company in writing,

(ii) if to any other holder of any Note, to such holder at such address as such
other holder shall have specified to the Company in writing, or

(iii) if to the Company, to the Company at its address set forth at the
beginning hereof to the attention of John Schmitz, Executive Vice President and
Chief Financial Officer, or at such other address as the Company shall have
specified to the holder of each Note in writing.

Notices under this Section 18 will be deemed given only when actually received.

19. 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 you
at the Closing (except the Notes themselves), and (c) financial statements, certificates and other
information previously or hereafter furnished to you, may be reproduced by you by any photographic,
photostatic, microfilm, microcard, miniature photographic or other similar process and you 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 you in the regular course of business) and any
enlargement, facsimile or further reproduction of such reproduction shall likewise be admissible in
evidence. This Section 19 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.

20. CONFIDENTIAL INFORMATION.

For the purposes of this Section 20, “Confidential Information” means information delivered to
you 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 you as being
confidential information of the Company or such Subsidiary, provided that such term does not
include information that (a) was publicly known or otherwise known to you prior to the time of such
disclosure, (b) subsequently becomes publicly known through no act or omission by you or any person
acting on your behalf, (c) otherwise becomes known to you other than through disclosure by the
Company or any Subsidiary or (d) constitutes financial statements delivered to you under Section
7.1 that are otherwise publicly available. You will maintain the confidentiality of such
Confidential Information in accordance with procedures adopted by you in good faith to protect
confidential information of third parties delivered to you, provided that you may deliver or
disclose Confidential Information to (i) your directors, officers, employees, agents, attorneys and
affiliates (to the extent such disclosure reasonably relates to the administration of the
investment represented by your Notes), (ii) your financial advisors and other professional advisors
who agree to hold confidential the Confidential Information substantially in accordance with the
terms of this Section 20, (iii) any other holder of any Note, (iv) any Institutional Investor to
which you sell or offer 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 20), (v) any Person from which you offer 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 20), (vi) any Federal or state regulatory
authority having jurisdiction over you, (vii) the National Association of Insurance Commissioners
or any similar organization, or any nationally recognized rating agency that requires access to
information about your 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 you, (x) in response to any subpoena or other legal process, (y) in
connection with any litigation to which you are a party or (z) if an Event of Default has occurred
and is continuing, to the extent you may reasonably determine such delivery and disclosure to be
necessary or appropriate in the enforcement or for the protection of the rights and remedies under
the Financing Documents. 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 20 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
20.

21. SUBSTITUTION OF PURCHASER.

You shall have the right to substitute any one of your Affiliates as the purchaser of the
Notes that you have agreed to purchase hereunder, by written notice to the Company, which notice
shall be signed by both you 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 6. Upon receipt of such notice, wherever
the word “you” is used in this Agreement (other than in this Section 21), such word shall be deemed
to refer to such Affiliate in lieu of you. In the event that such Affiliate is so substituted as a
purchaser hereunder and such Affiliate thereafter transfers to you all of the Notes then held by
such Affiliate, upon receipt by the Company of notice of such transfer, wherever the word “you” is
used in this Agreement (other than in this Section 21), such word shall no longer be deemed to
refer to such Affiliate, but shall refer to you, and you shall have all the rights of an original
holder of the Notes under this Agreement.

22. MISCELLANEOUS.

22.1. 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.

22.2. Payments Due on Non-Business Days.

Anything in this Agreement or the Notes to the contrary notwithstanding, 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.

22.3. 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.

22.4. 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.

22.5. 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.

22.6. 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 REQUIRE THE APPLICATION OF THE LAWS OF A JURISDICTION OTHER
THAN SUCH STATE.

4

If you are in agreement with the foregoing, please sign the form of agreement on the
accompanying counterpart of this Agreement and return it to the Company, whereupon the foregoing
shall become a binding agreement between you and the Company.

Very truly yours,

CHS INC.

By:    s/John Schmitz/   

Name: John Schmitz

Title: Executive Vice President & CFO

The foregoing is hereby agreed to

as of the date thereof.

[PURCHASER]

By:    

Name:

Title:

5

SCHEDULE A

INFORMATION RELATING TO PURCHASERS

	 	 	 	 	 
	Purchaser Name
	 	THE VARIABLE ANNUITY LIFE INSURANCE COMPANY
	 	 	 
	Name in Which Note is Registered
	 	THE VARIABLE ANNUITY LIFE INSURANCE COMPANY

	 	 	 
	Note Registration Numbers; Principal

Amounts
	 	RH-1; $30,000,000

	 	 	 
	 
	 	Federal Funds Wire Transfer

	 
	 	The Bank of New York

	 
	 	ABA # 021-000-018

	 
	 	BNF Account #: IOC 566

	Payment on Account of Note
	 	Credit to: The Variable Annuity Life Insurance Company

	Method
	 	Private Placement

	Account Information
	 	Re: (see “Accompanying Information” below)

	 
	 	Name of Company: CHS INC.

	 
	 	Description of  Security: 5.25% Series H Senior Notes

	 
	 	due September 21, 2014

	 
	 	PPN: 21542R A# 7

	 
	 	Due Date and Application (as among principal, make whole

	Accompanying Information
	 	and interest) of the payment being made:

	 	 	 	 	 
	 
	 	AIG Global Investment Group

	 
	 	c/o The Bank of New York
	 
	 	P.O. Box 19266
	 
	 	Newark, NJ  07195

	 
	 	Attn: P&I Department

	 
	 	Fax: 718-315-3076

	 
	 	with a copy to:

	 
	 	 	 	 
	 
	 	The Variable Annuity Life Insurance Company

	 
	 	c/o AIG Global Investment Group
	 
	 	2929 Allen Parkway, A36-04
	 
	 	Houston, TX 77019

	Address for Notices Related to Payments
	 	Attn: Private Placement Department

	—
	 	Fax: 713-831-1072

	 
	 	The Variable Annuity Life Insurance Company

	 
	 	c/o AIG Global Investment Group
	 
	 	2929 Allen Parkway, A36-04
	 
	 	Houston, TX  77019

	 
	 	Attn: Private Placement Department

	 
	 	Fax: 713-831-1072

	 
	 	with a copy to:

	 
	 	 	 	 
	 
	 	AIG Global Investment Group

	 
	 	2929 Allen Parkway, A36-01
	 
	 	Houston, TX  77019

	Address for All Other Notices
	 	Attn: Legal Department – Investment Management

	—
	 	Fax: 713-831-2328

	 
	 	THE VARIABLE ANNUITY LIFE INSURANCE COMPANY

	 
	 	FIRST SUNAMERICA LIFE INSURANCE COMPANY

	 
	 	By: AIG Global Investment Corp., Investment Advisor

	 
	 	By: ________________________________

	 
	 	Name:

	Other Instructions
	 	Title:

	 	 	 	 	 
	 
	 	The Bank of New York

	 
	 	One Wall Street

	 
	 	3rd Floor, Window A
	 
	 	New York, NY  10286

	 
	 	Attn: Arthur Cassidy

	 
	 	Ref: The Variable Annuity Life Insurance Company Private

	 
	 	Placement

	 
	 	Account # 260735

	 
	 	with a request that Mr. Cassidy confirm receipt of original

	 
	 	securities and forward a copy of same to:

	 
	 	 	 	 
	 
	 	Susie Hayes

	 
	 	AIG Global Investment Corp.

	 
	 	2929 Allen Parkway, A36-01
	 
	 	Houston, TX  77019

	 
	 	provide a carbon copy of the above to:

	 
	 	 	 	 
	Instructions re Delivery of Notes
	 	Ed Holmes

	—
	 	Fax: 713-831-2328

	Tax Identification Number
	 		74-1625348	
	 
	 	 	 	 

6

	 	 	 	 	 
	Purchaser Name
	 	FIRST SUNAMERICA LIFE INSURANCE COMPANY
	 	 	 
	Name in Which Note is Registered
	 	HARE & CO.

	 	 	 
	Note Registration Numbers; Principal

Amounts
	 	RH-2; $10,000,000

	 	 	 
	 
	 	Federal Funds Wire Transfer

	 
	 	The Bank of New York

	 
	 	ABA # 021-000-018

	Payment on Account of Note
	 	BNF Account #: IOC 566

	Method
	 	Credit to: First SunAmerica Life Insurance Company

	Account Information
	 	Re: (see “Accompanying Information” below)

	 
	 	Name of Company: CHS INC.

	 
	 	Description of  Security: 5.25% Series H Senior Notes

	 
	 	due September 21, 2014

	 
	 	PPN: 21542R A# 7

	 
	 	Due Date and Application (as among principal, make whole

	Accompanying Information
	 	and interest) of the payment being made:

	 	 	 	 	 
	 
	 	AIG Global Investment Group

	 
	 	c/o The Bank of New York
	 
	 	P.O. Box 19266
	 
	 	Newark, NJ  07195

	 
	 	Attn: P&I Department

	 
	 	Fax: 718-315-3076

	 
	 	with a copy to:

	 
	 	 	 	 
	 
	 	First SunAmerica Life Insurance Company

	 
	 	c/o AIG Global Investment Group
	 
	 	2929 Allen Parkway, A36-04
	 
	 	Houston, TX 77019

	Address for Notices Related to Payments
	 	Attn: Private Placement Department

	—
	 	Fax: 713-831-1072

	 
	 	First SunAmerica Life Insurance Company

	 
	 	c/o AIG Global Investment Group
	 
	 	2929 Allen Parkway, A36-04
	 
	 	Houston, TX  77019

	 
	 	Attn: Private Placement Department

	 
	 	Fax: 713-831-1072

	 
	 	with a copy to:

	 
	 	 	 	 
	 
	 	AIG Global Investment Group

	 
	 	2929 Allen Parkway, A36-01
	 
	 	Houston, TX  77019

	Address for All Other Notices
	 	Attn: Legal Department – Investment Management

	—
	 	Fax: 713-831-2328

	 
	 	THE VARIABLE ANNUITY LIFE INSURANCE COMPANY

	 
	 	FIRST SUNAMERICA LIFE INSURANCE COMPANY

	 
	 	By: AIG Global Investment Corp., Investment Advisor

	 
	 	By: ________________________________

	 
	 	Name:

	Other Instructions
	 	Title:

	 	 	 	 	 
	 
	 	The Bank of New York

	 
	 	One Wall Street

	 
	 	3rd Floor, Window A
	 
	 	New York, NY  10286

	 
	 	Attn: Arthur Cassidy

	 
	 	Ref: First SunAmerica Life Insurance Company

	 
	 	Account # 113617

	 
	 	with a request that Mr. Cassidy confirm receipt of original

	 
	 	securities and forward a copy of same to:

	 
	 	 	 	 
	 
	 	Susie Hayes

	 
	 	AIG Global Investment Corp.

	 
	 	2929 Allen Parkway, A36-01
	 
	 	Houston, TX  77019

	 
	 	provide a carbon copy of the above to:

	 
	 	 	 	 
	Instructions re Delivery of Notes
	 	Ed Holmes

	—
	 	Fax: 713-831-2328

	 
	 	06-0992729  (First SunAmerica Life Insurance Company)
	Tax Identification Number
	 	13-6062916  (Hare & Co.)
	 
	 	 	 	 

7

	 	 	 	 	 
	Purchaser Name
	 	THE PRUDENTIAL INSURANCE COMPANY OF AMERICA
	 	 	 
	Name in Which Note is Registered
	 	THE PRUDENTIAL INSURANCE COMPANY OF AMERICA

	 	 	 
	Note Registration Numbers; Principal

Amounts
	 	RH-3; $7,092,000

	 	 	 
	 
	 	Federal Funds Wire Transfer

	 
	 	The Bank of New York

	 
	 	New York, NY

	 
	 	ABA #  021-000-018

	Payment on Account of Note
	 	Account # 890-0304-391

	Method
	 	Re: (See “Accompanying information” below)

	Account Information
	 	!INV10602!
	 
	 	Name of Company: CHS INC.

	 
	 	Description of  Security: 5.25% Series H Senior Notes

	 
	 	due September 21, 2014

	 
	 	PPN: 21542R A# 7

	 
	 	Due Date and Application (as among principal, make whole

	Accompanying Information
	 	and interest) of the payment being made:

	 	 	 	 	 
	 
	 	The Prudential Insurance Company of America

	 
	 	c/o Investment Operations Group
	 
	 	Gateway Center Two, 10th Floor

	 
	 	100 Mulberry Street
	 
	 	Newark, NJ  07102-4077

	 
	 	Attn: Manager, Billings and Collections

	 
	 	with telephonic prepayment notices to:

	 
	 	 	 	 
	 
	 	Manager, Trade Management Group

	Address for Notices Related to Payments
	 	Tel: 973-367-3141

	—
	 	Fax: 800-224-2278

	 
	 	The Prudential Insurance Company of America

	 
	 	c/o Prudential Capital Group
	 
	 	Two Prudential Plaza, Suite 5600

	 
	 	180 North Stetson Avenue
	 
	 	Chicago, IL  60601

	Address for All Other Notices
	 	Attn: Managing Director

	 	 	 	 	 
	 
	 	THE PRUDENTIAL INSURANCE COMPANY OF AMERICA

	 
	 	By: ________________________________

	 
	 	Name:

	Other Instructions
	 	Title: Vice President

	 	 	 	 	 
	 
	 	Prudential Capital Group

	 
	 	Two Prudential Plaza, Suite 5600

	 
	 	180 North Stetson Avenue
	 
	 	Chicago, IL  60601

	Instructions re Delivery of Notes
	 	Attn: Wiley Adams

	 	 	 	 	 
	Tax Identification Number
	 	 	22-1211670	 
	 
	 	 	 	 

8

	 	 	 	 	 
	Purchaser Name
	 	ZURICH AMERICAN INSURANCE COMPANY
	 	 	 
	Name in Which Note is Registered
	 	HARE & CO.

	 	 	 
	Note Registration Numbers; Principal

Amounts
	 	RH-4; $5,350,000

	 	 	 
	 
	 	Federal Funds Wire Transfer

	 
	 	The Bank of New York

	 
	 	New York, NY

	 
	 	ABA #  021-000-018

	Payment on Account of Note
	 	Account #: 399141

	Method
	 	Zurich American Insurance Co. – Private Placements

	Account Information
	 	Re: (See “Accompanying information” below)

	 
	 	Name of Company: CHS INC.

	 
	 	Description of  Security: 5.25% Series H Senior Notes

	 
	 	due September 21, 2014

	 
	 	PPN: 21542R A# 7

	 
	 	Due Date and Application (as among principal, make whole and interest) of

	Accompanying Information
	 	the payment being made:

	 	 	 	 	 
	 
	 	Zurich North America

	 
	 	1400 American Lane, T1-19
	 
	 	Schaumburg, IL  60196-1056

	 
	 	Attn: Mary Fran Callahan

	 
	 	Treasury Department

	 
	 	Fax: 847-605-7895

	Address for Notices Related to Payments
	 	Email: mary.callahan@zurichna.com

	 	 	 	 	 
	 
	 	Prudential Private Placement Investors, L.P.

	 
	 	Four Gateway Center

	 
	 	100 Mulberry Street
	 
	 	Newark, NJ 07102-4069

	 
	 	Attn: Albert Trank

	 
	 	Managing Director

	 
	 	Fax: 973-624-6432

	Address for All Other Notices
	 	Email: albert.trank@prudential.com

	 	 	 	 	 
	 
	 	ZURICH AMERICAN INSURANCE COMPANY

	 
	 	By:    Prudential Private Placement Investors, L.P., as Investment Advisor

	 
	 	By:    Prudential Private Placement Investors, Inc., as its General Partner

	 
	 	By: ________________________________

	 
	 	Name:

	Other Instructions
	 	Title: Vice President

	 	 	 	 	 
	 
	 	Bank of New York

	 
	 	One Wall Street

	 
	 	3rd Floor, Window A
	 
	 	New York, NY  10286

	 
	 	Ref: Zurich American Insurance Co. – Private Placements

	 
	 	Account # 399141

	 
	 	with a copy to:

	 
	 	 	 	 
	 
	 	Prudential Capital Group

	 
	 	Four Gateway Center, 7th Floor

	 
	 	100 Mulberry Street
	Instructions re Delivery of Notes
	 	Newark, NJ 07102

	—
	 	Attn: Manager, Trade Management

	Tax Identification Number
	 	 	36-4233459	 
	 
	 	 	 	 

9

	 	 	 	 	 
	Purchaser Name
	 	PRUDENTIAL RETIREMENT CEDED BUSINESS TRUST
	 	 	 
	Name in Which Note is Registered
	 	PRU & CO.

	 	 	 
	Note Registration Numbers; Principal

Amounts
	 	RH-5; $4,908,000

	 	 	 
	 
	 	Federal Funds Wire Transfer

	 
	 	JPMorgan Chase Bank

	 
	 	New York, NY

	Payment on Account of Note
	 	ABA #  021-000-021

	Method
	 	Account # 9009002925

	Account Information
	 	Re: (See “Accompanying information” below)

	 
	 	Name of Company: CHS INC.

	 
	 	Description of  Security: 5.25% Series H Senior Notes

	 
	 	due September 21, 2014

	 
	 	PPN: 21542R A# 7

	 
	 	Due Date and Application (as among principal, make whole and

	Accompanying Information
	 	interest) of the payment being made:

	 	 	 	 	 
	 
	 	Prudential Retirement Ceded Business Trust

	 
	 	c/o Prudential Investment Management, Inc.
	 
	 	Gateway Center Four, 7th Floor

	 
	 	100 Mulberry Street
	 
	 	Newark, NJ  07102

	 
	 	Attn: Private Placement Trade Management

	 
	 	PRIAC Administration

	Address for Notices Related to Payments
	 	Fax: 800-224-2278

	 	 	 	 	 
	 
	 	Prudential Retirement Ceded Business Trust

	 
	 	c/o Prudential Capital Group
	 
	 	Two Prudential Plaza

	 
	 	180 North Stetson Avenue
	 
	 	Chicago, IL  60601

	Address for All Other Notices
	 	Attn: Managing Director

	 	 	 	 	 
	 
	 	PRUDENTIAL RETIREMENT CEDED BUSINESS TRUST

	 
	 	By:    Prudential Investment Management, Inc., as investment manager

	 
	 	By: ________________________________

	 
	 	Name:

	Other Instructions
	 	Title: Vice President

	 	 	 	 	 
	 
	 	Prudential Capital Group

	 
	 	Two Prudential Plaza, Suite 5600

	 
	 	180 North Stetson Avenue
	 
	 	Chicago, IL  60601

	Instructions re Delivery of Notes
	 	Attn: Wiley Adams

	 	 	 	 	 
	Tax Identification Number
	 	 	20-0765614	 
	 
	 	 	 	 

10

	 	 	 	 	 
	Purchaser Name
	 	CONNECTICUT GENERAL LIFE INSURANCE COMPANY
	 	 	 
	Name in Which Note is Registered
	 	CIG & CO.

	 	 	 
	Note Registration Numbers; Principal

Amounts
	 	RH-6; $3,400,000

	 	 	 
	 
	 	Federal Funds Wire Transfer

	 
	 	JPMorgan Chase

	 
	 	New York, NY

	 
	 	ABA #  021-000-021

	Payment on Account of Note
	 	Beneficiary A/C #: 900-9002-925

	Method
	 	BBI: A/C of Prudential for G09404

	Account Information
	 	Re: (See “Accompanying information” below)

	 
	 	Name of Company: CHS INC.

	 
	 	Description of  Security: 5.25% Series H Senior Notes

	 
	 	due September 21, 2014

	 
	 	PPN: 21542R A# 7

	 
	 	Due Date and Application (as among principal, make whole and

	Accompanying Information
	 	interest) of the payment being made:

	 	 	 	 	 
	 
	 	Connecticut General Life Insurance Company

	 
	 	c/o CIGNA Retirement & Investment Services
	 
	 	280 Trumbull Street
	 
	 	Hartford, CT  06103

	 
	 	Fax: 860-534-7203

	 
	 	with a copy to:

	 
	 	 	 	 
	 
	 	J.P. Morgan Chase Bank
	 
	 	14201 Dallas Parkway, 13th Floor
	 
	 	Dallas, TX  75254

	 
	 	Attn: Heather Frisina

	Address for Notices Related to Payments
	 	Mail Code 300-116

	—
	 	Fax 469-477-1904

	 
	 	Prudential Private Placement Investors, L.P.

	 
	 	Four Gateway Center

	 
	 	100 Mulberry Street
	 
	 	Newark, NJ 07102

	 
	 	Attn: Albert Trank

	 
	 	Managing Director

	 
	 	Fax: 973-624-6432

	Address for All Other Notices
	 	Email: albert.trank@prudential.com

	 	 	 	 	 
	 
	 	CONNECTICUT GENERAL LIFE INSURANCE COMPANY

	 
	 	By:    Prudential Investment Management, Inc., as investment manager

	 
	 	By: ________________________________

	 
	 	Name:

	Other Instructions
	 	Title: Vice President

	 	 	 	 	 
	 
	 	JPMorgan Chase Bank

	 
	 	4 New York Plaza
	 
	 	Ground Floor Window

	 
	 	New York, NY  10004

	 
	 	Attn: John Cobelo

	 
	 	Ref: Connecticut General Life Insurance Company

	 
	 	Account # G09404

	 
	 	with a copy to:

	 
	 	 	 	 
	 
	 	Prudential Capital Group

	 
	 	Four Gateway Center, 7th Floor

	 
	 	100 Mulberry Street
	 
	 	Newark, NJ 07102

	Instructions re Delivery of Notes
	 	Attn: Ranae D’Alessio

	—
	 	Trade Management

	Tax Identification Number
	 	 	13-3574027	 
	 
	 	 	 	 

11

	 	 	 	 	 
	Purchaser Name
	 	SECURITY BENEFIT LIFE INSURANCE COMPANY, INC.
	 	 	 
	Name in Which Note is Registered
	 	UMBTRU & CO.

	 	 	 
	Note Registration Numbers; Principal

Amounts
	 	RH-7; $3,250,000

	 	 	 
	 
	 	Federal Funds Wire Transfer

	 
	 	UMB Bank N.A.

	 
	 	ABA #  101-000-695

	 
	 	Account Name: Trust Operations

	 
	 	Account #: 9870161974

	Payment on Account of Note
	 	Ref: Security Benefit Life Insurance Co.

	Method
	 	Account # 126139.1

	Account Information
	 	Re: (See “Accompanying information” below)

	 
	 	Name of Company: CHS INC.

	 
	 	Description of  Security: 5.25% Series H Senior Notes

	 
	 	due September 21, 2014

	 
	 	PPN: 21542R A# 7

	 
	 	Due Date and Application (as among principal, make whole and interest) of

	Accompanying Information
	 	the payment being made:

	 	 	 	 	 
	 
	 	UMB Bank

	 
	 	928 Grand Boulevard, 10th Floor
	 
	 	Kansas City, MO  64106

	Address for Notices Related to Payments
	 	Attn: Mike Ortiz

	 	 	 	 	 
	 
	 	Prudential Private Placement Investors, L.P.

	 
	 	Four Gateway Center

	 
	 	100 Mulberry Street
	 
	 	Newark, NJ 07102

	 
	 	Attn: Albert Trank

	 
	 	Managing Director

	 
	 	Fax: 973-624-6432

	Address for All Other Notices
	 	Email: albert.trank@prudential.com

	 	 	 	 	 
	 
	 	SECURITY BENEFIT LIFE INSURANCE COMPANY, INC.

	 
	 	By:    Prudential Private Placement Investors, L.P., as Investment Advisor

	 
	 	By:    Prudential Private Placement Investors, Inc., as its General Partner

	 
	 	By: ________________________________

	 
	 	Name:

	Other Instructions
	 	Title: Vice President

	 	 	 	 	 
	 
	 	United Missouri Bank

	 
	 	DTC/NY WINDOW

	 
	 	55 Water Street, Concourse Level
	 
	 	New York, NY  10041

	 
	 	Ref: Security Benefit – Private Placement Account # 690308200

	 
	 	Account 2450 UMB Bank

	 
	 	with a copy to:

	 
	 	 	 	 
	 
	 	Prudential Capital Group

	 
	 	Four Gateway Center, 7th Floor

	 
	 	100 Mulberry Street
	Instructions re Delivery of Notes
	 	Newark, NJ 07102

	—
	 	Attn: Manager, Trade Management

	Tax Identification Number
	 	 	43-6295832	 
	 
	 	 	 	 

12

	 	 	 	 	 
	Purchaser Name
	 	FIRST COLONY LIFE INSURANCE COMPANY
	 	 	 
	Name in Which Note is Registered
	 	HARE & CO.

	 	 	 
	Note Registration Numbers; Principal

Amounts
	 	RH-8; $16,000,000

	 	 	 
	 
	 	Federal Funds Wire Transfer

	 
	 	The Bank of New York

	 
	 	ABA # 021-000-018

	 
	 	Account # / Beneficiary: GLA111566

	 
	 	SWIFT code: IRVTBEBB

	 
	 	Attn: PPP&I Department

	Payment on Account of Note
	 	Ref: First Colony Life Insurance Company

	Method
	 	Account # 127970

	Account Information
	 	Re:  (See “Accompanying information” below)

	 
	 	Name of Company: CHS INC.

	 
	 	Description of  Security: 5.25% Series H Senior Notes

	 
	 	due September 21, 2014

	 
	 	PPN: 21542R A# 7

	 
	 	Due Date and Application (as among principal, make whole

	Accompanying Information
	 	and interest) of the payment being made:

	 	 	 	 	 
	 
	 	Genworth Financial

	 
	 	601 Union Street, Suite 2200
	 
	 	Seattle, WA  98101

	 
	 	Attn: Private Placements

	 
	 	Account: First Colony Life Insurance Company

	 
	 	Tel: 206-516-4515

	 
	 	Fax: 206-516-4578

	 
	 	Email: GEAM.privateplacements@corporate.ge.com

	 
	 	with a copy to:

	 
	 	 	 	 
	 
	 	State Street

	 
	 	801 Pennsylvania
	 
	 	Kansas City, MO  64105

	 
	 	Attn: Klaus Diem

	 
	 	Account: First Colony Life Insurance Company

	 
	 	Tel: 816-691-8646

	 
	 	Fax: 816-691-5593

	 
	 	Email: geam@statestreetkc.com (preferred delivery method)

	 
	 	and a copy to:

	 
	 	 	 	 
	 
	 	Hare & Co.

	 
	 	The Bank of New York

	 
	 	Income Collection Department

	 
	 	P.O. Box 11203
	 
	 	New York, NY  10286

	 
	 	Attn: PPP&I Department

	 
	 	P&I Contact: Anthony Largo
	 
	 	Tel: 212-437-6541

	 
	 	Ref: First Colony Life Insurance Company

	Address for Notices Related to Payments
	 	Account # 127970

	—
	 	(See “Accompanying information” above)
	 
	 	Genworth Financial

	 
	 	601 Union Street, Suite 2200
	 
	 	Seattle, WA  98101

	 
	 	Attn: Private Placements

	 
	 	Account: First Colony Life Insurance Company

	Address for All Other Notices
	 	Fax: 206-516-4578

	 	 	 	 	 
	 
	 	FIRST COLONY LIFE INSURANCE COMPANY

	 
	 	By: ________________________________

	 
	 	Name:

	Other Instructions
	 	Title: Investment Officer

	 	 	 	 	 
	 
	 	The Bank of New York

	 
	 	One Wall Street

	 
	 	3rd Floor, Window A
	 
	 	New York, NY  10286

	 
	 	Ref: First Colony Life Insurance Company

	Instructions re Delivery of Notes
	 	Account # 127970

	 	 	 	 	 
	Tax Identification Number
	 	 	54-0596414	 
	 
	 	 	 	 

13

	 	 	 	 	 
	Purchaser Name
	 	GENERAL ELECTRIC CAPITAL ASSURANCE COMPANY
	 	 	 
	Name in Which Note is Registered
	 	HARE & CO.

	 	 	 
	Note Registration Numbers; Principal

Amounts
	 	RH-9; $6,000,000

	 	 	 
	 
	 	Federal Funds Wire Transfer

	 
	 	The Bank of New York

	 
	 	ABA # 021-000-018

	 
	 	Account # / Beneficiary: GLA111566

	 
	 	SWIFT code: IRVTBEBB

	 
	 	Attn: PPP&I Department

	Payment on Account of Note
	 	Ref: General Electric Capital Assurance Company

	Method
	 	Account # 127939

	Account Information
	 	Re:  (See “Accompanying information” below)

	 
	 	Name of Company: CHS INC.

	 
	 	Description of  Security: 5.25% Series H Senior Notes

	 
	 	due September 21, 2014

	 
	 	PPN: 21542R A# 7

	 
	 	Due Date and Application (as among principal, make whole

	Accompanying Information
	 	and interest) of the payment being made:

	 	 	 	 	 
	 
	 	Genworth Financial

	 
	 	601 Union Street, Suite 2200
	 
	 	Seattle, WA  98101

	 
	 	Attn: Private Placements

	 
	 	Account: General Electric Capital Assurance Company

	 
	 	Tel: 206-516-4515

	 
	 	Fax: 206-516-4578

	 
	 	Email: GEAM.privateplacements@corporate.ge.com

	 
	 	with a copy to:

	 
	 	 	 	 
	 
	 	State Street

	 
	 	801 Pennsylvania
	 
	 	Kansas City, MO  64105

	 
	 	Attn: Klaus Diem

	 
	 	Account: General Electric Capital Assurance Company

	 
	 	Tel: 816-691-8646

	 
	 	Fax: 816-691-5593

	 
	 	Email: geam@statestreetkc.com (preferred delivery method)

	 
	 	and a copy to:

	 
	 	 	 	 
	 
	 	Hare & Co.

	 
	 	The Bank of New York

	 
	 	Income Collection Department

	 
	 	P.O. Box 11203
	 
	 	New York, NY  10286

	 
	 	Attn: PPP&I Department

	 
	 	P&I Contact: Anthony Largo
	 
	 	Tel: 212-437-6541

	 
	 	Ref: General Electric Capital Assurance Company

	Address for Notices Related to Payments
	 	Account # 127939

	—
	 	(See “Accompanying information” above)
	 
	 	Genworth Financial

	 
	 	601 Union Street, Suite 2200
	 
	 	Seattle, WA  98101

	 
	 	Attn: Private Placements

	 
	 	Account: General Electric Capital Assurance Company

	Address for All Other Notices
	 	Fax: 206-516-4578

	 	 	 	 	 
	 
	 	GENERAL ELECTRIC CAPITAL ASSURANCE COMPANY

	 
	 	By: ________________________________

	 
	 	Name:

	Other Instructions
	 	Title: Investment Officer

	 	 	 	 	 
	 
	 	The Bank of New York

	 
	 	One Wall Street

	 
	 	3rd Floor, Window A
	 
	 	New York, NY  10286

	 
	 	Ref: General Electric Capital Assurance Company

	Instructions re Delivery of Notes
	 	Account # 127939

	 	 	 	 	 
	Tax Identification Number
	 	 	91-6027719	 
	 
	 	 	 	 

14

	 	 	 	 	 
	Purchaser Name
	 	FEDERAL HOME LIFE INSURANCE COMPANY
	 	 	 
	Name in Which Note is Registered
	 	HARE & CO.

	 	 	 
	Note Registration Numbers; Principal

Amounts
	 	RH-10; $2,000,000

	 	 	 
	 
	 	Federal Funds Wire Transfer

	 
	 	The Bank of New York

	 
	 	ABA # 021-000-018

	 
	 	Account # / Beneficiary: GLA111566

	 
	 	SWIFT code: IRVTBEBB

	 
	 	Attn: PPP&I Department

	Payment on Account of Note
	 	Ref: Federal Home Life Insurance Company

	Method
	 	Account # 127924

	Account Information
	 	Re:  (See “Accompanying information” below)

	 
	 	Name of Company: CHS INC.

	 
	 	Description of  Security: 5.25% Series H Senior Notes

	 
	 	due September 21, 2014

	 
	 	PPN: 21542R A# 7

	 
	 	Due Date and Application (as among principal, make whole

	Accompanying Information
	 	and interest) of the payment being made:

	 	 	 	 	 
	 
	 	Genworth Financial

	 
	 	601 Union Street, Suite 2200
	 
	 	Seattle, WA  98101

	 
	 	Attn: Private Placements

	 
	 	Account: Federal Home Life Insurance Company

	 
	 	Tel: 206-516-4515

	 
	 	Fax: 206-516-4578

	 
	 	Email: GEAM.privateplacements@corporate.ge.com

	 
	 	with a copy to:

	 
	 	 	 	 
	 
	 	State Street

	 
	 	801 Pennsylvania
	 
	 	Kansas City, MO  64105

	 
	 	Attn: Klaus Diem

	 
	 	Account: Federal Home Life Insurance Company

	 
	 	Tel: 816-691-8646

	 
	 	Fax: 816-691-5593

	 
	 	Email: geam@statestreetkc.com (preferred delivery method)

	 
	 	and a copy to:

	 
	 	 	 	 
	 
	 	Hare & Co.

	 
	 	The Bank of New York

	 
	 	Income Collection Department

	 
	 	P.O. Box 11203
	 
	 	New York, NY  10286

	 
	 	Attn: PPP&I Department

	 
	 	P&I Contact: Anthony Largo
	 
	 	Tel: 212-437-6541

	 
	 	Ref: Federal Home Life Insurance Company

	Address for Notices Related to Payments
	 	Account # 127924

	—
	 	(See “Accompanying information” above)
	 
	 	Genworth Financial

	 
	 	601 Union Street, Suite 2200
	 
	 	Seattle, WA  98101

	 
	 	Attn: Private Placements

	 
	 	Account: Federal Home Life Insurance Company

	Address for All Other Notices
	 	Fax: 206-516-4578

	 	 	 	 	 
	 
	 	FEDERAL HOME LIFE INSURANCE COMPANY

	 
	 	By: ________________________________

	 
	 	Name:

	Other Instructions
	 	Title: Investment Officer

	 	 	 	 	 
	 
	 	The Bank of New York

	 
	 	One Wall Street

	 
	 	3rd Floor, Window A
	 
	 	New York, NY  10286

	 
	 	Ref: Federal Home Life Insurance Company

	Instructions re Delivery of Notes
	 	Account # 127924

	 	 	 	 	 
	Tax Identification Number
	 	 	35-0576390	 
	 
	 	 	 	 

15

	 	 	 	 	 
	Purchaser Name
	 	HARTFORD LIFE INSURANCE COMPANY
	 	 	 
	Name in Which Note is Registered
	 	HARTFORD LIFE INSURANCE COMPANY

	 	 	 
	 
	 	RH-11; $5,000,000

	Note Registration Numbers; Principal Amounts
	 	RH-12; $5,000,000

	 	 	 	 	 
	 
	 	Federal Funds Wire Transfer

	 
	 	JPMorgan Chase

	 
	 	4 New York Plaza
	 
	 	New York, NY  10004

	 
	 	ABA # 021-000-021

	 
	 	Chase NYC/Cust

	 
	 	Attn: Bond Interest/Principal

	Payment on Account of Note
	 	 	A/C #: 900-9-000200	 
	Method
	 	FFC to: G06641-CRC

	Account Information
	 	Re: (See “Accompanying information” below)

	 
	 	Name of Company: CHS INC.

	 
	 	Description of  Security: 5.25% Series H Senior Notes

	 
	 	due September 21, 2014

	 
	 	PPN: 21542R A# 7

	 
	 	Due Date and Application (as among principal, make whole and interest) of

	Accompanying Information
	 	the payment being made:

	 	 	 	 	 
	 
	 	Hartford Investment Management Company

	 
	 	c/o Portfolio Support
	 
	 	P.O. Box 1744
	 
	 	Hartford, CT  06144-1744

	Address for Notices Related to Payments
	 	Fax: 860-297-8875 / 8876

	 	 	 	 	 
	 
	 	Hartford Investment Management Company

	 
	 	c/o Investment Department – Private Placements
	 
	 	P.O. Box 1744
	 
	 	Hartford, CT  06144-1744

	Address for All Other Notices
	 	Fax: 860-297-8884

	 	 	 	 	 
	 
	 	HARTFORD LIFE INSURANCE COMPANY

	 
	 	By:     Hartford Investment Services, Inc., its Agent and Attorney-in-Fact

	 
	 	By______________________________

	 
	 	Name:

	Other Instructions
	 	Title:

	 	 	 	 	 
	 
	 	JPMorgan Chase

	 
	 	North America Insurance

	 
	 	3 Chase MetroTech Center, 5th Floor South
	 
	 	Brooklyn, NY  11245

	 
	 	Attn: Bettye Carrera

	Instructions re Delivery of Notes
	 	Custody Account # G06641-CRC must appear on outside of envelope
	 	 	 	 	 
	Tax Identification Number
	 	 	06-0974148	 
	 
	 	 	 	 

16

	 	 	 	 	 
	Purchaser Name
	 	PACIFIC LIFE INSURANCE COMPANY
	 	 	 
	Name in Which Note is Registered
	 	MAC & CO.

	 	 	 
	 
	 	RH-13; $5,000,000

	 
	 	RH-14; $1,000,000

	 
	 	RH-15; $1,000,000

	 
	 	RH-16; $1,000,000

	Note Registration Numbers; Principal
	 	RH-17; $1,000,000

	Amounts
	 	RH-18; $1,000,000

	 	 	 	 	 
	 
	 	Federal Funds Wire Transfer

	 
	 	Mellon Trust of New England

	 
	 	ABA # 011-001-234

	 
	 	DDA # 125261

	 
	 	Attn: MBS Income CC: 1253

	Payment on Account of Note
	 	A/C: Pacific Life General Account
	Method
	 	PLCF1810132

	Account Information
	 	Re: (See “Accompanying information” below)

	 
	 	Name of Company: CHS INC.

	 
	 	Description of  Security: 5.25% Series H Senior Notes

	 
	 	due September 21, 2014

	 
	 	PPN: 21542R A# 7

	 
	 	Due Date and Application (as among principal, make whole

	Accompanying Information
	 	and interest) of the payment being made:

	 	 	 	 	 
	 
	 	Mellon Trust

	 
	 	Three Mellon Bank Center

	 
	 	Pittsburgh, PA 15259

	 
	 	Attn: Pacific Life Accounting Team

	 
	 	AIM # 153-3610

	 
	 	Fax: 412-236-7529

	 
	 	with a copy to:

	 
	 	 	 	 
	 
	 	Pacific Life Insurance Company

	 
	 	700 Newport Center Drive
	 
	 	Newport Beach, CA  92660-6397

	 
	 	Attn: Cash Team

	Address for Notices Related to Payments
	 	Securities Administration

	—
	 	Fax: 949-640-4013

	 
	 	Pacific Life Insurance Company

	 
	 	700 Newport Center Drive
	 
	 	Newport Beach, CA  92660-6397

	 
	 	Attn: Securities Department

	Address for All Other Notices
	 	Fax: 949-219-5406

	 	 	 	 	 
	 
	 	PACIFIC LIFE INSURANCE COMPANY

	 
	 	(Nominee:  Mac & Co.)
	 
	 	By: _______________________

	 
	 	Name:

	 
	 	Title:

	 
	 	By: _______________________

	 
	 	Name:

	Other Instructions
	 	Title:

	 	 	 	 	 
	 
	 	Mellon Securities Trust Company

	 
	 	120 Broadway, 13th Floor
	 
	 	New York, NY  10271

	 
	 	Attn: Robert Ferraro

	 
	 	A/C: Pacific Life General Acct
	 
	 	PLCF1810132

	Instructions re Delivery of Notes
	 	Tel: 212-374-1918

	 	 	 	 	 
	Tax Identification Number
	 	 	95-1079000	 
	 
	 	 	 	 

17

	 	 	 	 	 
	Purchaser Name
	 	BLUE CROSS AND BLUE SHIELD OF FLORIDA, INC.
	 	 	 
	Name in Which Note is Registered
	 	HARE & CO.

	 	 	 
	Note Registration Numbers; Principal

Amounts
	 	RH-19;  $1,500,000

	 	 	 
	 
	 	Federal Funds Wire Transfer

	 
	 	Bank of New York

	 
	 	ABA # 021-000-018

	 
	 	BBK=IOC 363

	Payment on Account of Note
	 	Account: Blue Cross and Blue Shield of Florida, Inc.

	Method
	 	Account # 531463

	Account Information
	 	Re: see “Accompanying Information” below

	 
	 	Name of Company: CHS INC.

	 
	 	Description of  Security: 5.25% Series H Senior Notes

	 
	 	due September 21, 2014

	 
	 	PPN: 21542R A# 7

	 
	 	Due Date and Application (as among principal, make whole

	Accompanying Information
	 	and interest) of the payment being made:

	 	 	 	 	 
	 
	 	Blue Cross and Blue Shield of Florida, Inc.

	 
	 	c/o Advantus Capital Management, Inc.
	 
	 	400 Robert Street North
	 
	 	St. Paul, MN  55101

	Address for Notices Related to Payments
	 	Attn: Client Administrator

	 	 	 	 	 
	 
	 	Blue Cross and Blue Shield of Florida, Inc.

	 
	 	c/o Advantus Capital Management, Inc.
	 
	 	400 Robert Street North
	 
	 	St. Paul, MN  55101

	Address for All Other Notices
	 	Attn: Client Administrator

	 	 	 	 	 
	 
	 	BLUE CROSS AND BLUE SHIELD OF FLORIDA, INC.

	 
	 	By: Advantus Capital Management, Inc.

	 
	 	By: ________________________

	 
	 	Name:

	Other Instructions
	 	Title:

	 	 	 	 	 
	 
	 	The Bank of New York

	 
	 	One Wall Street

	 
	 	3rd Floor, Window A
	 
	 	New York, NY  10286

	 
	 	Ref: Blue Cross and Blue Shield of Florida, Inc.

	Instructions for Delivery of Notes
	 	Account # 531463

	 	 	 	 	 
	Tax Identification Number
	 	 	59-2015694	 
	 
	 	 	 	 

18

	 	 	 	 	 
	Purchaser Name
	 	FORT DEARBORN LIFE INSURANCE COMPANY
	 	 	 
	Name in Which Note is Registered
	 	STRAFE & CO.

	 	 	 
	Note Registration Numbers; Principal

Amounts
	 	RH-20;  $1,000,000

	 	 	 
	 
	 	Federal Funds Wire Transfer

	 
	 	Bank One Colorado

	 
	 	ABA # 044-000-037

	 
	 	For credit to: 980401787

	 
	 	Account: Fort Dearborn Life Insurance Company (separate)

	 
	 	Account # 2600218706

	Payment on Account of Note
	 	Attn: Roslind Catling-Ileaboya

	Method
	 	 	877-246-9483	 
	Account Information
	 	Re: see “Accompanying Information” below

	 
	 	Name of Company: CHS INC.

	 
	 	Description of  Security: 5.25% Series H Senior Notes

	 
	 	due September 21, 2014

	 
	 	PPN: 21542R A# 7

	 
	 	Due Date and Application (as among principal, make whole

	Accompanying Information
	 	and interest) of the payment being made:

	 	 	 	 	 
	 
	 	Fort Dearborn Life Insurance Company

	 
	 	c/o Advantus Capital Management, Inc.
	 
	 	400 Robert Street North
	 
	 	St. Paul, MN  55101

	Address for Notices Related to Payments
	 	Attn: Client Administrator

	 	 	 	 	 
	 
	 	Fort Dearborn Life Insurance Company

	 
	 	c/o Advantus Capital Management, Inc.
	 
	 	400 Robert Street North
	 
	 	St. Paul, MN  55101

	Address for All Other Notices
	 	Attn: Client Administrator

	 	 	 	 	 
	 
	 	FORT DEARBORN LIFE INSURANCE COMPANY

	 
	 	By: Advantus Capital Management, Inc.

	 
	 	By: ________________________

	 
	 	Name:

	Other Instructions
	 	Title:

	 	 	 	 	 
	 
	 	Banc One Investment Management Group

	 
	 	340 South Cleveland Avenue, Building 350
	 
	 	Westerville, OH  43081

	 
	 	Attn: Non-Depository Trading Desk

	Instructions for Delivery of Notes
	 	Tel: 614-248-1317

	 	 	 	 	 
	Tax Identification Number
	 	 	36-2598882	 
	 
	 	 	 	 

19

	 	 	 	 	 
	Purchaser Name
	 	UNITED INSURANCE COMPANY OF AMERICA
	 	 	 
	Name in Which Note is Registered
	 	HARE & CO.

	 	 	 
	Note Registration Numbers; Principal

Amounts
	 	RH-21;  $1,000,000

	 	 	 
	 
	 	Federal Funds Wire Transfer

	 
	 	Bank of New York

	 
	 	ABA # 021-000-018

	 
	 	Account: United Insurance Company of America

	 
	 	(Advantus Capital Management)
	 
	 	Account # 367937

	 
	 	Interest Payments: GLA # 111-363

	Payment on Account of Note
	 	Principal Payments: GLA # 111-566

	Method
	 	Amendment Fees: GLA # 111-565

	Account Information
	 	Re: see “Accompanying Information” below

	 
	 	Name of Company: CHS INC.

	 
	 	Description of  Security: 5.25% Series H Senior Notes

	 
	 	due September 21, 2014

	 
	 	PPN: 21542R A# 7

	 
	 	Due Date and Application (as among principal, make whole

	Accompanying Information
	 	and interest) of the payment being made:

	 	 	 	 	 
	 
	 	United Insurance Company of America

	 
	 	c/o Advantus Capital Management, Inc.
	 
	 	400 Robert Street North
	 
	 	St. Paul, MN  55101

	Address for Notices Related to Payments
	 	Attn: Client Administrator

	 	 	 	 	 
	 
	 	United Insurance Company of America

	 
	 	c/o Advantus Capital Management, Inc.
	 
	 	400 Robert Street North
	 
	 	St. Paul, MN  55101

	Address for All Other Notices
	 	Attn: Client Administrator

	 	 	 	 	 
	 
	 	UNITED INSURANCE COMPANY OF AMERICA

	 
	 	By: Advantus Capital Management, Inc.

	 
	 	By: ________________________

	 
	 	Name:

	Other Instructions
	 	Title:

	 	 	 	 	 
	 
	 	Bank of New York

	 
	 	One Wall Street, 3rd Floor

	 
	 	Special Processing, Window A

	 
	 	New York, NY  10286

	 
	 	Ref: United Insurance Company of America

	 
	 	(Advantus Capital Management)
	Instructions for Delivery of Notes
	 	Account # 367937

	 	 	 	 	 
	Tax Identification Number
	 	 	36-1896670	 
	 
	 	 	 	 

20

	 	 	 	 	 
	Purchaser Name
	 	WORLD INSURANCE COMPANY
	 	 	 
	 
	 	WELLS FARGO BANK, N.A. AS CUSTODIAN FOR WORLD INSURANCE

	Name in Which Note is Registered
	 	COMPANY

	 
	 	 	 	 
	Note Registration Numbers; Principal

Amounts
	 	RH-22;  $500,000

	 	 	 
	 
	 	Federal Funds Wire Transfer

	 
	 	Wells Fargo Bank, N.A.

	 
	 	ABA # 121-000-248

	 
	 	BNFA: 0000840245

	 
	 	BNF: Trust Wire Clearing

	 
	 	FFC: Income Collections

	Payment on Account of Note
	 	 	A/C 12667400	 
	Method
	 	Further credit to: World Insurance Company, Account # 12667400

	Account Information
	 	Re: see “Accompanying Information” below

	 
	 	Name of Company: CHS INC.

	 
	 	Description of  Security: 5.25% Series H Senior Notes

	 
	 	due September 21, 2014

	 
	 	PPN: 21542R A# 7

	 
	 	Due Date and Application (as among principal, make whole and

	Accompanying Information
	 	interest) of the payment being made:

	 	 	 	 	 
	 
	 	World Insurance Company

	 
	 	c/o Advantus Capital Management, Inc.
	 
	 	400 Robert Street North
	 
	 	St. Paul, MN  55101

	Address for Notices Related to Payments
	 	Attn: Client Administrator

	 	 	 	 	 
	 
	 	World Insurance Company

	 
	 	c/o Advantus Capital Management, Inc.
	 
	 	400 Robert Street North
	 
	 	St. Paul, MN  55101

	Address for All Other Notices
	 	Attn: Client Administrator

	 	 	 	 	 
	 
	 	WORLD INSURANCE COMPANY

	 
	 	By: Advantus Capital Management, Inc.

	 
	 	By: ________________________

	 
	 	Name:

	Other Instructions
	 	Title:

	 	 	 	 	 
	 
	 	Wells Fargo Bank Minnesota, N.A.

	 
	 	MAC N9306-059

	 
	 	733 Marquette Avenue, Investors Building, 5th Floor
	 
	 	Minneapolis, MN  55479

	 
	 	Attn: Linh Nguyen

	 
	 	Security Control and Transfer

	 
	 	Tel: 612-667-7197

	 
	 	Ref: World Insurance Company

	Instructions for Delivery of Notes
	 	Account # 12667400

	 	 	 	 	 
	Tax Identification Number
	 	 	47-0339860	 
	 
	 	 	 	 

	 	 	 	 	 
	Purchaser Name
	 	MTL INSURANCE COMPANY
	 	 	 
	Name in Which Note is Registered
	 	ELL & CO.

	 	 	 
	Note Registration Numbers; Principal

Amounts
	 	RH-23;  $500,000

	 	 	 
	 
	 	Federal Funds Wire Transfer

	 
	 	The Northern Chgo/Trust

	 
	 	ABA # 071-000-152

	 
	 	For credit to: Account # 5186041000

	 
	 	Further credit to: MTL Insurance Company

	Payment on Account of Note
	 	Account # 26-00621

	Method
	 	Income Collections

	Account Information
	 	Re: see “Accompanying Information” below

	 
	 	Name of Company: CHS INC.

	 
	 	Description of  Security: 5.25% Series H Senior Notes

	 
	 	due September 21, 2014

	 
	 	PPN: 21542R A# 7

	 
	 	Due Date and Application (as among principal, make whole

	Accompanying Information
	 	and interest) of the payment being made:

	 	 	 	 	 
	 
	 	MTL Insurance Company

	 
	 	c/o Advantus Capital Management, Inc.
	 
	 	400 Robert Street North
	 
	 	St. Paul, MN  55101

	Address for Notices Related to Payments
	 	Attn: Client Administrator

	 	 	 	 	 
	 
	 	MTL Insurance Company

	 
	 	c/o Advantus Capital Management, Inc.
	 
	 	400 Robert Street North
	 
	 	St. Paul, MN  55101

	Address for All Other Notices
	 	Attn: Client Administrator

	 	 	 	 	 
	 
	 	MTL INSURANCE COMPANY

	 
	 	By: Advantus Capital Management, Inc.

	 
	 	By: ________________________

	 
	 	Name:

	Other Instructions
	 	Title:

	 	 	 	 	 
	 
	 	Northern Trust Company of New York

	 
	 	40 Broad Street, 8th Floor
	 
	 	New York, NY  10004

	 
	 	Attn: Settlements for Account # 26-00621

	Instructions for Delivery of Notes
	 	MTL Insurance Company

	 	 	 	 	 
	Tax Identification Number
	 	 	36-1516780	 
	 
	 	 	 	 

21

	 	 	 	 	 
	Purchaser Name
	 	THE RELIABLE LIFE INSURANCE COMPANY
	 	 	 
	Name in Which Note is Registered
	 	HARE & CO.

	 	 	 
	Note Registration Numbers; Principal

Amounts
	 	RH-24;  $500,000

	 	 	 
	 
	 	Federal Funds Wire Transfer

	 
	 	Bank of New York

	 
	 	ABA # 021-000-018

	 
	 	Account: The Reliable Life Insurance Company

	 
	 	(Advantus Capital Management)
	 
	 	Account # 276073

	 
	 	Interest Payments: GLA # 111-363

	Payment on Account of Note
	 	Principal Payments: GLA # 111-566

	Method
	 	Amendment Fees: GLA # 111-565

	Account Information
	 	Re: see “Accompanying Information” below

	 
	 	Name of Company: CHS INC.

	 
	 	Description of  Security: 5.25% Series H Senior Notes

	 
	 	due September 21, 2014

	 
	 	PPN: 21542R A# 7

	 
	 	Due Date and Application (as among principal, make whole

	Accompanying Information
	 	and interest) of the payment being made:

	 	 	 	 	 
	 
	 	The Reliable Life Insurance Company

	 
	 	c/o Advantus Capital Management, Inc.
	 
	 	400 Robert Street North
	 
	 	St. Paul, MN  55101

	Address for Notices Related to Payments
	 	Attn: Client Administrator

	 	 	 	 	 
	 
	 	The Reliable Life Insurance Company

	 
	 	c/o Advantus Capital Management, Inc.
	 
	 	400 Robert Street North
	 
	 	St. Paul, MN  55101

	Address for All Other Notices
	 	Attn: Client Administrator

	 	 	 	 	 
	 
	 	THE RELIABLE LIFE INSURANCE COMPANY

	 
	 	By: Advantus Capital Management, Inc.

	 
	 	By: ________________________

	 
	 	Name:

	Other Instructions
	 	Title:

	 	 	 	 	 
	 
	 	Bank of New York

	 
	 	One Wall Street, 3rd Floor

	 
	 	Special Processing, Window A

	 
	 	New York, NY  10286

	 
	 	Ref: The Reliable Life Insurance Company

	 
	 	(Advantus Capital Management)
	Instructions for Delivery of Notes
	 	Account # 276073

	 	 	 	 	 
	Tax Identification Number
	 	 	43-0476110	 
	 
	 	 	 	 

22

	 	 	 	 	 
	Purchaser Name
	 	UNION NATIONAL LIFE INSURANCE COMPANY
	 	 	 
	Name in Which Note is Registered
	 	HARE & CO.

	 	 	 
	Note Registration Numbers; Principal

Amounts
	 	RH-25;  $500,000

	 	 	 
	 
	 	Federal Funds Wire Transfer

	 
	 	Bank of New York

	 
	 	ABA # 021-000-018

	 
	 	Account: Union National Life Insurance Company

	 
	 	(Advantus Capital Management)
	 
	 	Account # 367716

	 
	 	Interest Payments: GLA # 111-363

	Payment on Account of Note
	 	Principal Payments: GLA # 111-566

	Method
	 	Amendment Fees: GLA # 111-565

	Account Information
	 	Re: see “Accompanying Information” below

	 
	 	Name of Company: CHS INC.

	 
	 	Description of  Security: 5.25% Series H Senior Notes

	 
	 	due September 21, 2014

	 
	 	PPN: 21542R A# 7

	 
	 	Due Date and Application (as among principal, make whole

	Accompanying Information
	 	and interest) of the payment being made:

	 	 	 	 	 
	 
	 	Union National Life Insurance Company

	 
	 	c/o Advantus Capital Management, Inc.
	 
	 	400 Robert Street North
	 
	 	St. Paul, MN  55101

	Address for Notices Related to Payments
	 	Attn: Client Administrator

	 	 	 	 	 
	 
	 	Union National Life Insurance Company

	 
	 	c/o Advantus Capital Management, Inc.
	 
	 	400 Robert Street North
	 
	 	St. Paul, MN  55101

	Address for All Other Notices
	 	Attn: Client Administrator

	 	 	 	 	 
	 
	 	UNION NATIONAL LIFE INSURANCE COMPANY

	 
	 	By: Advantus Capital Management, Inc.

	 
	 	By: ________________________

	 
	 	Name:

	Other Instructions
	 	Title:

	 	 	 	 	 
	 
	 	Bank of New York

	 
	 	One Wall Street, 3rd Floor

	 
	 	Special Processing, Window A

	 
	 	New York, NY  10286

	 
	 	Ref: Union National Life Insurance Company

	 
	 	(Advantus Capital Management)
	Instructions for Delivery of Notes
	 	Account # 367716

	 	 	 	 	 
	Tax Identification Number
	 	 	72-0340280	 
	 
	 	 	 	 

23

	 	 	 	 	 
	Purchaser Name
	 	RESERVE NATIONAL INSURANCE COMPANY
	 	 	 
	Name in Which Note is Registered
	 	HARE & CO.

	 	 	 
	Note Registration Numbers; Principal

Amounts
	 	RH-26;  $500,000

	 	 	 
	 
	 	Federal Funds Wire Transfer

	 
	 	Bank of New York

	 
	 	ABA # 021-000-018

	 
	 	Account: Reserve National Insurance Company

	 
	 	(Advantus Capital Management)
	 
	 	Account # 264222

	 
	 	Interest Payments: GLA # 111-363

	Payment on Account of Note
	 	Principal Payments: GLA # 111-566

	Method
	 	Amendment Fees: GLA # 111-565

	Account Information
	 	Re: see “Accompanying Information” below

	 
	 	Name of Company: CHS INC.

	 
	 	Description of  Security: 5.25% Series H Senior Notes

	 
	 	due September 21, 2014

	 
	 	PPN: 21542R A# 7

	 
	 	Due Date and Application (as among principal, make whole

	Accompanying Information
	 	and interest) of the payment being made:

	 	 	 	 	 
	 
	 	Reserve National Insurance Company

	 
	 	c/o Advantus Capital Management, Inc.
	 
	 	400 Robert Street North
	 
	 	St. Paul, MN  55101

	Address for Notices Related to Payments
	 	Attn: Client Administrator

	 	 	 	 	 
	 
	 	Reserve National Insurance Company

	 
	 	c/o Advantus Capital Management, Inc.
	 
	 	400 Robert Street North
	 
	 	St. Paul, MN  55101

	Address for All Other Notices
	 	Attn: Client Administrator

	 	 	 	 	 
	 
	 	RESERVE NATIONAL INSURANCE COMPANY

	 
	 	By: Advantus Capital Management, Inc.

	 
	 	By: ________________________

	 
	 	Name:

	Other Instructions
	 	Title:

	 	 	 	 	 
	 
	 	Bank of New York

	 
	 	One Wall Street, 3rd Floor

	 
	 	Special Processing, Window A

	 
	 	New York, NY  10286

	 
	 	Ref: Reserve National Insurance Company

	 
	 	(Advantus Capital Management)
	Instructions for Delivery of Notes
	 	Account # 264222

	 	 	 	 	 
	Tax Identification Number
	 	 	73-0661453	 
	 
	 	 	 	 

24

	 	 	 	 	 
	Purchaser Name
	 	ST. PAUL FIRE AND MARINE COMPANY
	 	 	 
	Name in Which Note is Registered
	 	ST. PAUL FIRE AND MARINE INSURANCE COMPANY

	 	 	 
	Note Registration Numbers; Principal

Amounts
	 	RH-27; $5,000,000

	 	 	 
	 
	 	Federal Funds Wire Transfer

	 
	 	Until 1/1/05:

	 
	 	 	 	 
	 
	 	Citibank Delaware

	 
	 	One Penn’s Way OPS2

	 
	 	New Castle, DE  19720

	 
	 	ABA # 031-100-209

	 
	 	Credit to: St. Paul Fire & Marine A/C 3859-4764

	 
	 	After 1/1/05:

	 
	 	 	 	 
	 
	 	JPMorgan Chase Bank

	 
	 	4 Chase MetroTech Center
	Payment on Account of Note
	 	Brooklyn NY  11245

	Method
	 	ABA 021-000-021

	Account Information
	 	Credit to: Travelers Indemnity Co. A/C 323954421

	 
	 	Re: (see “Accompanying Information” below)

	 
	 	Name of Company: CHS INC.

	 
	 	Description of  Security: 5.25% Series H Senior Notes

	 
	 	due September 21, 2014

	 
	 	PPN: 21542R A# 7

	 
	 	Due Date and Application (as among principal, make whole

	Accompanying Information
	 	and interest) of the payment being made:

	 	 	 	 	 
	 
	 	St. Paul Fire and Marine Insurance Company

	 
	 	385 Washington Street
	 
	 	St. Paul, MN  55102

	Address for Notices Related to Payments
	 	Attn: Treasury Department

	 	 	 	 	 
	 
	 	St. Paul Fire and Marine Insurance Company

	 
	 	385 Washington Street
	 
	 	St. Paul, MN  55102

	Address for All Other Notices
	 	Attn: Treasury Department

	 	 	 	 	 
	 
	 	ST. PAUL FIRE AND MARINE INSURANCE COMPANY

	 
	 	By: _______________________

	 
	 	Name:

	Other Instructions
	 	Title:

	 	 	 	 	 
	 
	 	St. Paul Fire and Marine Insurance Company

	 
	 	385 Washington Street
	 
	 	St. Paul, MN  55102

	Instructions re Delivery of Notes
	 	Attn: Treasury Department

	 	 	 	 	 
	Tax Identification Number
	 	 	41-0406690	 
	 
	 	 	 	 

25

	 	 	 	 	 
	Purchaser Name
	 	MODERN WOODMEN OF AMERICA
	 	 	 
	Name in Which Note is Registered
	 	MODERN WOODMEN OF AMERICA

	 	 	 
	Note Registration Numbers; Principal Amounts
	 	RH-28; $4,000,000

	 	 	 
	 
	 	Federal Funds Wire Transfer

	 
	 	The Northern Trust Company

	 
	 	50 South LaSalle Street
	 
	 	Chicago, IL  60675

	 
	 	ABA # 071-000-152

	Payment on Account of Note
	 	Account Name: Modern Woodmen of America

	Method
	 	Account #: 84352

	Account Information
	 	Re: (see “Accompanying Information” below)

	 
	 	Name of Company: CHS INC.

	 
	 	Description of  Security: 5.25% Series H Senior Notes

	 
	 	due September 21, 2014

	 
	 	PPN: 21542R A# 7

	 
	 	Due Date and Application (as among principal, make whole

	Accompanying Information
	 	and interest) of the payment being made:

	 	 	 	 	 
	 
	 	Modern Woodmen of America

	 
	 	1701 First Avenue
	 
	 	Rock Island, IL  61201

	Address for Notices Related to Payments
	 	Attn: Investment Accounting Department

	 	 	 	 	 
	 
	 	Modern Woodmen of America

	 
	 	1701 First Avenue
	 
	 	Rock Island, IL  61201

	 
	 	Attn: Investment Department

	Address for All Other Notices
	 	Email: Investment.Department@Modern-Woodmen.org

	 	 	 	 	 
	 
	 	MODERN WOODMEN OF AMERICA

	 
	 	By: _______________________

	 
	 	Name:

	Other Instructions
	 	Title:

	 	 	 	 	 
	 
	 	Modern Woodmen of America

	 
	 	1701 First Avenue
	 
	 	Rock Island, IL 61201

	Instructions re Delivery of Notes
	 	Attn: Doug Pannier

	 	 	 	 	 
	Tax Identification Number
	 	 	36-1493430	 
	 
	 	 	 	 

26

	 	 	 	 	 
	Purchaser Name
	 	ASSURITY LIFE INSURANCE COMPANY
	 	 	 
	Name in Which Note is Registered
	 	ASSURITY LIFE INSURANCE COMPANY

	 	 	 
	Note Registration Numbers; Principal Amounts
	 	RH-29; $1,000,000

	 	 	 
	 
	 	Federal Funds Wire Transfer

	 
	 	US Bank National Association

	 
	 	13th and M Streets
	 
	 	Lincoln, NE  68508

	 
	 	ABA # 104-000-029

	Payment on Account of Note
	 	For credit to: Assurity Life Insurance Company

	Method
	 	General Fund Account # 1-494-0092-9092

	Account Information
	 	Re: (see “Accompanying Information” below)

	 
	 	Name of Company: CHS INC.

	 
	 	Description of  Security: 5.25% Series H Senior Notes

	 
	 	due September 21, 2014

	 
	 	PPN: 21542R A# 7

	 
	 	Due Date and Application (as among principal, make whole and

	Accompanying Information
	 	interest) of the payment being made:

	 	 	 	 	 
	 
	 	Assurity Life Insurance Company

	 
	 	1526 K Street
	 
	 	Lincoln, NE  68508

	Address for Notices Related to Payments
	 	Attn: Investment Division

	 	 	 	 	 
	 
	 	Assurity Life Insurance Company

	 
	 	1526 K Street
	 
	 	Lincoln, NE  68508

	Address for All Other Notices
	 	Attn: Investment Division

	 	 	 	 	 
	 
	 	ASSURITY LIFE INSURANCE COMPANY

	 
	 	By: _______________________

	 
	 	Name:

	Other Instructions
	 	Title:

	 	 	 	 	 
	 
	 	Assurity Life Insurance Company

	 
	 	1526 K Street
	 
	 	Lincoln, NE  68508

	Instructions re Delivery of Notes
	 	Attn: Vic Weber

	 	 	 	 	 
	Tax Identification Number
	 	 	38-1843471	 
	 
	 	 	 	 

27

	 	 	 	 	 
	Purchaser Name
	 	ACACIA LIFE INSURANCE COMPANY
	 	 	 
	Name in Which Note is Registered
	 	CHIMEBRIDGE & CO.

	 	 	 
	Note Registration Numbers; Principal Amounts
	 	RH-30; $1,000,000

	 	 	 
	 
	 	Federal Funds Wire Transfer

	 
	 	State Street Bank & Trust Company

	 
	 	ABA # 011-000-028

	 
	 	BNF: Physical Income Account

	 
	 	DDA: Clearing Account # 00076026

	Payment on Account of Note
	 	Further credit to: Acacia Life Insurance Company

	Method
	 	Custody Fund # 1EJP

	Account Information
	 	Re: (see “Accompanying Information” below)

	 
	 	Name of Company: CHS INC.

	 
	 	Description of  Security: 5.25% Series H Senior Notes

	 
	 	due September 21, 2014

	 
	 	PPN: 21542R A# 7

	 
	 	Due Date and Application (as among principal, make whole

	Accompanying Information
	 	and interest) of the payment being made:

	 	 	 	 	 
	 
	 	in duplicate to:

	 
	 	 	 	 
	 
	 	State Street Bank

	 
	 	P.O. Box 5756
	 
	 	Boston, MN  02206

	 
	 	Attn: Michael Rodelle

	 
	 	Ref: Acacia Life Insurance Company, Account # 1EJP,

	 
	 	for the account of State Street

	 
	 	and:

	 
	 	 	 	 
	 
	 	Acacia Life Insurance Company

	 
	 	c/o Ameritas Investment Advisors Inc.
	 
	 	390 North Cotner Boulevard
	 
	 	Lincoln, NE  68505

	Address for Notices Related to Payments
	 	Attn: James Mikus

	—
	 	Fax: 402-467-6970

	 
	 	in duplicate to:

	 
	 	 	 	 
	 
	 	State Street Bank

	 
	 	P.O. Box 5756
	 
	 	Boston, MN  02206

	 
	 	Attn: Michael Rodelle

	 
	 	Ref: Acacia Life Insurance Company, Account # 1EJP,

	 
	 	for the account of State Street

	 
	 	and:

	 
	 	 	 	 
	 
	 	Acacia Life Insurance Company

	 
	 	c/o Ameritas Investment Advisors Inc.
	 
	 	390 North Cotner Boulevard
	 
	 	Lincoln, NE  68505

	Address for All Other Notices
	 	Attn: James Mikus

	—
	 	Fax: 402-467-6970

	 
	 	ACACIA LIFE INSURANCE COMPANY

	 
	 	By: Ameritas Investment Advisors Inc., as Agent

	 
	 	By: ____________________________________

	 
	 	Name: Andrew S. White

	Other Instructions
	 	Title: Vice President – Fixed Income Securities

	 	 	 	 	 
	 
	 	DTCC / New York Window

	 
	 	55 Water Street
	 
	 	Plaza Level, 3rd Floor

	 
	 	New York, NY  10041

	 
	 	Attn: Robert Mendez

	 
	 	Ref: Acacia Life Insurance Company, Account # 1EJP,

	 
	 	for the account of State Street

	 
	 	with a copy to:

	 
	 	 	 	 
	 
	 	Acacia Life Insurance Company

	 
	 	c/o Ameritas Investment Advisors Inc.
	 
	 	390 North Cotner Boulevard
	Instructions re Delivery of Notes
	 	Lincoln, NE  68505

	—
	 	Attn: James Mikus

	 
	 	53-0022880  (Acacia Life Insurance Company)
	Tax Identification Number
	 	65-1186790  (Chimebridge & Co.)
	 
	 	 	 	 

28

SCHEDULE B

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:

“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 corporation 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 17.3.

“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.

“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 20.

“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 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 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 10.7(c).

“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.

“Designated Portion” is defined in Section 10.7(b).

“Disposition Value” is defined in Section 10.7(c).

“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.

“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 11.

“Exchange Act” means the Securities Exchange Act of 1934, as amended.

“Excluded Transfers” is defined in Section 10.7(a).

“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).

“Financing Documents” means, collectively, this Agreement, the Other Agreements and the Notes.

“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
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.

“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).

“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 13.1.

“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 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 6.2(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.

“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 8.7.

“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 the Financing Documents,
or (c) the validity or enforceability of any of the Financing Documents.

“Memorandum” is defined in Section 5.3.

“Multiemployer Plan” means any Plan that is a “multiemployer plan” (as such term is defined in
section 4001(a)(3) of ERISA).

“NAIC Annual Statement” is defined in Section 6.2(a).

“NCRA” means National Cooperative Refinery Association, a Kansas cooperative association.

“Net Proceeds Amount” is defined in Section 10.7(c).

“Notes” is defined in Section 1.

“Officer’s Certificate” means a certificate of a Senior Financial 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 10.7(a).

“Other Agreements” is defined in Section 2.

“Other Purchasers” is defined in Section 2.

“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 (h) of Section 10.6), 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 8.2(b)(i).

“PTE” is defined in Section 6.2(a).

“QPAM Exemption” means Prohibited Transaction Class Exemption 84-14 issued by the United
States Department of Labor.

“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 10.7(c).

“Reinvested Transfer” is defined in Section 10.7(b).

“Required Holders” means, at any time, the holders of a majority in aggregate principal amount
of the Notes at the time outstanding (exclusive of Notes then owned by the Company or any of its
Affiliates).

“Required Principal Payment” is defined in Section 8.2(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.

“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 6.2.

“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 10.7(c).

“Surviving Corporation” is defined in Section 10.2(b)(i).

“Transfer” is defined in Section 10.7(c)(v).

“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.

29

SCHEDULE 4.9

CHANGES IN CORPORATE STRUCTURE

None.

30

SCHEDULE 5.3

DISCLOSURE MATERIALS

None.

31

SCHEDULE 5.4

SUBSIDIARIES OF THE COMPANY AND OWNERSHIP OF SUBSIDIARY STOCK

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Active/

Inactive

	 	Corporation
	 	Address
	 	Type
	 	Business
	 	Ownership By
	 	Fiscal Year End
	 	Jurisdiction of

Incorporation
	 	Date of

Incorporation
	 	

Federal ID
	 

	 	 
	 	 
	 	 
	 	 
	 	 
	 	 
	 	 
	 	 
	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	A

	 	Ag States Agency of

Montana, Inc.
	 	5500 Cenex Drive

PO Box 64089

St. Paul, MN 55164
	 	

SUB
	 	

Insurance Agency
	 	

100% CHS
	 	

31-Dec
	 	

Montana
	 	

10/11/1977
	 	

81-0372838
	 

	 	 
	 	 	 	 
	 	 
	 	 
	 	 
	 	 
	 	 
	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	A

	 	Ag States Agency, LLC
	 	5500 Cenex Drive

PO Box 64089

St. Paul, MN 55164
	 	JV
	 	Independent Insurance Agency
	 	80% by CHS; 20% by

Cooperative Service

Agency
	 	

31-May
	 	

Minnesota
	 	

12/27/1994
	 	

41-1795536
	 

	 	 
	 	 	 	 
	 	 
	 	 
	 	 
	 	 
	 	 
	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	A

	 	AgXML, LLC
	 	Suite 2000

666

Grand Avenue

Des Moines, IA

50309-2510
	 	LLC
	 	Organized for the purpose of

achieving efficiencies by

establishing standards for

grain & oilseed industries in

electronic commerce
	 	

CHS — 1,200

Membership Units
	 	

	 	

Iowa
	 	

4/9/2001
	 	

42-6619123
	 

	 	 
	 	 
	 	 
	 	 
	 	 
	 	 	 	 
	 	 
	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	A

	 	CENEX AG, Inc.

(formerly FUCEI-E,

Inc.)
	 	5500 Cenex Drive

PO Box 64089

St. Paul, MN 55164
	 	

Sub
	 	

Sale of feed and seed products.
	 	

100% CHS
	 	

31-Aug
	 	

Delaware
	 	

10/23/1974
	 	

41-1248837
	 

	 	 
	 	 	 	 
	 	 
	 	 
	 	 
	 	 
	 	 
	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	A

	 	Cenex Petroleum, Inc.
	 	5500 Cenex Drive

PO Box 64089

St. Paul, MN 55164
	 	Sub
	 	Retail sales and distribution

of petroleum and other related

products.
	 	

100% CHS
	 	

	 	

Minnesota
	 	

7/11/1996
	 	

41-1847046
	 

	 	 
	 	 	 	 
	 	 
	 	 
	 	 	 	 
	 	 
	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	A

	 	CENEX Pipeline LLC
	 	5500 Cenex Drive

PO Box 64089

St. Paul, MN 55164
	 	

LLC
	 	

Operating Subsidiary for

pipeline operations
	 	

100% CHS
	 	

	 	

Minnesota
	 	

5/4/1998
	 	

	 

	 	 
	 	 	 	 
	 	 
	 	 
	 	 	 	 
	 	 
	 	

	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 

32

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Active/

Inactive

	 	Corporation
	 	Address
	 	Type
	 	Business
	 	Ownership By
	 	Fiscal Year End
	 	Jurisdiction of

Incorporation
	 	Date of

Incorporation
	 	

Federal ID
	 

	 	 
	 	 
	 	 
	 	 
	 	 
	 	 
	 	 
	 	 
	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	A

	 	Central Montana

Propane, LLC
	 	Highway 191 North

Box 22 Lewistown,

Montana59457
	 	SUB
	 	Owning and operating a

propane wholesale and

resale operatintion
	 	CHS 53.38% and

Moore Farmers Oil

Company 46.62%
	 	

31-Aug
	 	

Montana
	 	

9/16/1997
	 	

81-0513866
	 

	 	 
	 	 
	 	 
	 	 
	 	 
	 	 
	 	 
	 	 
	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	A

	 	CHS Aggressive

Growth Fund, Inc.
	 	11 East Chase

Street Baltimore,

MD 21202
	 	

Corp
	 	

Investment Company
	 	

100% CHS
	 	

31-Aug
	 	

Maryland
	 	

5/1/2001
	 	

52-2316147
	 

	 	 
	 	 
	 	 
	 	 
	 	 
	 	 
	 	 
	 	 
	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	A

	 	CHS Conservative

Growth Fund, Inc.
	 	11 East Chase

Street Baltimore,

MD 21202
	 	

Corp
	 	

Investment Company
	 	

100% CHS
	 	

31-Aug
	 	

Maryland
	 	

5/1/2001
	 	

52-2316152
	 

	 	 
	 	 
	 	 
	 	 
	 	 
	 	 
	 	 
	 	 
	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	A

	 	CHS do Brasil Ltda.
	 	Sao Paulo, Brazil
	 	 	 	Origination and marketing

of soybeans for export to

Pacific Rim and European

buyers
	 	

100% CHS
	 	

	 	

	 	

Feb-03
	 	

	 

	 	 
	 	 
	 	 	 	 
	 	 
	 	 	 	 	 	 
	 	

	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	A

	 	CHS Energy Canada,

Inc.
	 	5500 Cenex DrivePO

Box 64089St. Paul,

MN 55164
	 	

Sub
	 	

Petroleum; does no business
	 	

100% CHS
	 	

	 	

Alberta, Canada
	 	

6/12/1987
	 	

Canadian 8874 8884
	 

	 	 
	 	 
	 	 
	 	 
	 	 
	 	 	 	 
	 	 
	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	A

	 	CHS Fixed Income

Fund, Inc.
	 	11 East Chase

Street Baltimore,

MD 21202
	 	

Corp
	 	

Investment Company
	 	

100% CHS
	 	

31-Aug
	 	

Maryland
	 	

6/13/2001
	 	

41-2008912
	 

	 	 
	 	 
	 	 
	 	 
	 	 
	 	 
	 	 
	 	 
	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
 
	 	 	 	5500 Cenex Drive

PO Box 64089
	 	 	 	Holding Company for

membership interests in

the new LLC formed re:
	 	

	 	

	 	

	 	

	 	

	A

	 	CHS Holdings, Inc.
	 	St. Paul, MN 55164
	 	SUB
	 	Terra
	 	100% CHS
	 	31-Aug
	 	Minnesota
	 	4/20/1999
	 	41-1947300
	 

	 	 
	 	 	 	 
	 	 
	 	 
	 	 
	 	 
	 	 
	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	A

	 	CHS Inc.
	 	5500 Cenex Drive

PO Box 64089

St. Paul, MN 55164
	 	

Self
	 	

Combined Corporation

(Cenex and HSC)
	 	

100% CHS
	 	

	 	

Minnesota
	 	

7/15/1936
	 	

41-0251095
	 

	 	 
	 	 	 	 
	 	 
	 	 
	 	 	 	 
	 	 
	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	A

	 	CHS Moderate Growth

Fund, Inc.
	 	11 East Chase

Street Baltimore,

MD 21202
	 	

Corp
	 	

Investment Company
	 	

100% CHS
	 	

31-Aug
	 	

Maryland
	 	

5/1/2001
	 	

52-2316156
	 

	 	 
	 	 
	 	 
	 	 
	 	 
	 	 
	 	 
	 	 
	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 

33

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Active/

Inactive

	 	Corporation
	 	Address
	 	Type
	 	Business
	 	Ownership By
	 	Fiscal Year End
	 	Jurisdiction of

Incorporation
	 	Date of

Incorporation
	 	

Federal ID
	 

	 	 
	 	 
	 	 
	 	 
	 	 
	 	 
	 	 
	 	 
	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	A

	 	CHS-Browns Valley
	 	5500 Cenex Drive

PO Box 64089

St.

Paul, MN 55164
	 	SUB
	 	Carrying on a

supply business, as

a cooperative,

engaging in any

activity or service

in connection with

the sale of crop

inputs, energy

products and

agricultural supply

products
	 	

100% CHS
	 	

31-Aug
	 	

Minnesota
	 	

8/21/2003
	 	

75-3133234
	 

	 	 
	 	 
	 	 
	 	 
	 	 
	 	 
	 	 
	 	 
	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	A

	 	CHS-Chinook
	 	135 First Street,

Chinook, MT

59523-0339
	 	SUB
	 	Carrying on a farm

supply business

engaging in the

purchase, sale and

handling of

agricultural

products and

agricultural

supplies, energy

products and

machinery.
	 	

100% CHS
	 	

31-Aug
	 	

Montana
	 	

2/11/2002
	 	

73-1630482
	 

	 	 
	 	 
	 	 
	 	 
	 	 
	 	 
	 	 
	 	 
	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	A

	 	CHS-Clinton/Wilmot
	 	5500 Cenex Drive

Inver Grove

Heights, MN

55077-2112
	 	

Corp
	 	

Grain Handling and

Marketing of Grain
	 	

100% CHS
	 	

31-Aug
	 	

Minnesota
	 	

5/21/2003
	 	

87-0711575
	 

	 	 
	 	 
	 	 
	 	 
	 	 
	 	 
	 	 
	 	 
	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	A

	 	CHS-Connell, Inc.
	 	433 North Columbia

Avenue

Connell, WA 99326
	 	SUB
	 	Transaction of any

and all lawful

business for which

associations may be

incorporated.
	 	

100% CHS
	 	

31-Aug
	 	

Washington
	 	

5/21/2001
	 	

36-4454350
	 

	 	 
	 	 
	 	 
	 	 
	 	 
	 	 
	 	 
	 	 
	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	A

	 	CHS-Dickinson
	 	3645 98th R Avenue

SW, Taylor, ND

58656
	 	SUB
	 	organized for the

purpose of carrying

on a grain elevator

and warehouse

business
	 	

100% CHS
	 	

31-Aug
	 	

North Dakota
	 	

10/9/2003
	 	

75-3133243
	 

	 	 
	 	 
	 	 
	 	 
	 	 
	 	 
	 	 
	 	 
	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 

34

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Active/

Inactive

	 	Corporation
	 	Address
	 	Type
	 	Business
	 	Ownership By
	 	Fiscal Year End
	 	Jurisdiction of

Incorporation
	 	Date of

Incorporation
	 	

Federal ID
	 

	 	 
	 	 
	 	 
	 	 
	 	 
	 	 
	 	 
	 	 
	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	A

	 	CHS-Drayton
	 	2002 North

Washington Street

Grand Forks, ND

58203
	 	SUB
	 	Engage in any

activity within the

purposes for which

a cooperative may

be organized under

North Dakota

Statute 10-15
	 	

100% CHS
	 	

31-Aug
	 	

North Dakota
	 	

1/27/2003
	 	

82-0585676
	 

	 	 
	 	 
	 	 
	 	 
	 	 
	 	 
	 	 
	 	 
	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	A

	 	CHS-Edgeley
	 	602 — 2nd Street,

Edgeley, ND 58433
	 	SUB
	 	organized for the

purpose of carrying

on a grain elevator

and warehouse

business
	 	

100% CHS
	 	

31-Aug
	 	

North Dakota
	 	

5/26/2000
	 	

45-0457956
	 

	 	 
	 	 
	 	 
	 	 
	 	 
	 	 
	 	 
	 	 
	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	A

	 	CHS-Garrison
	 	2100 Railroad

Street Garrison, ND

58540
	 	SUB
	 	organized for the

purpose of carrying

on a grain elevator

and warehouse

business
	 	

100% CHS
	 	

31-Aug
	 	

North Dakota
	 	

5/9/2001
	 	

41-2011668
	 

	 	 
	 	 
	 	 
	 	 
	 	 
	 	 
	 	 
	 	 
	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	A

	 	CHS-Glasgow
	 	225 Railroad Alley

Glasgow, MT 59230
	 	SUB
	 	organized for the

purpose of carrying

on a grain elevator

and warehouse

business
	 	

100% CHS
	 	

31-Aug
	 	

Montana
	 	

6/12/2000
	 	

81-0535014
	 

	 	 
	 	 
	 	 
	 	 
	 	 
	 	 
	 	 
	 	 
	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	A

	 	CHS-Grangeville, Inc.
	 	1001 North A

P.O. Box 70

Grangeville, ID

83530-0070
	 	SUB
	 	The transaction of

any and all lawful

business of which

corporations may be

incorporated under

the Idaho Business

Corporations Act
	 	

100% CHS
	 	

31-Aug
	 	

Idaho
	 	

2/23/2001
	 	

36-4456100
	 

	 	 
	 	 
	 	 
	 	 
	 	 
	 	 
	 	 
	 	 
	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 

35

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Active/

Inactive

	 	Corporation
	 	Address
	 	Type
	 	Business
	 	Ownership By
	 	Fiscal Year End
	 	Jurisdiction of

Incorporation
	 	Date of

Incorporation
	 	

Federal ID
	 

	 	 
	 	 
	 	 
	 	 
	 	 
	 	 
	 	 
	 	 
	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	A

	 	CHS-Highmore
	 	123 First Street

Highmore, SD 57345
	 	SUB
	 	organized for the

purpose of carrying

on a grain elevator

and warehouse

business
	 	

100% CHS
	 	

31-Aug
	 	

South Dakota
	 	

6/20/2000
	 	

46-0457674
	 

	 	 
	 	 
	 	 
	 	 
	 	 
	 	 
	 	 
	 	 
	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	A

	 	CHS-Hoffman
	 	5500 Cenex Drive,

Inver Grove

Heights, MN 55077
	 	SUB
	 	Carrying on a

supply business, as

a cooperative,

engaging in any

activity or service

in connection with

the sale of crop

inputs, energy

products and

agricultural supply

products
	 	

100% CHS
	 	

31-Aug
	 	

Minnesota
	 	

12/23/2003
	 	

43-2042326
	 

	 	 
	 	 
	 	 
	 	 
	 	 
	 	 
	 	 
	 	 
	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	A

	 	CHS-Jasper
	 	401 South Railroad

Avenue, Jasper, MN

56144.
	 	SUB
	 	carrying on a grain

elevator and

warehouse business
	 	

100% CHS
	 	

31-Aug
	 	

South Dakota
	 	

3/8/2000
	 	

91-2064383
	 

	 	 
	 	 
	 	 
	 	 
	 	 
	 	 
	 	 
	 	 
	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	A

	 	CHS-Kindred
	 	41 Fifth Avenue

South Kindred, ND

58051
	 	SUB
	 	Owns and leased to

CHSC grain elevator

and warehouse

businesses
	 	

100% CHS
	 	

31-Aug
	 	

North Dakota
	 	

11/20/2001
	 	

41-2023309
	 

	 	 
	 	 
	 	 
	 	 
	 	 
	 	 
	 	 
	 	 
	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	A

	 	CHS-Lewistown
	 	190 HC 191 North,

Lewistown, MT 59457
	 	SUB
	 	Owns and leases to

CHSC grain elevator

and warehouse

businesses
	 	

100% CHS
	 	

31-Aug
	 	

Montana
	 	

2/8/2001
	 	

36-4430427
	 

	 	 
	 	 
	 	 
	 	 
	 	 
	 	 
	 	 
	 	 
	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	A

	 	CHS-Philip
	 	300 East Cherry

Street Philip, SD

57567-0400
	 	SUB
	 	Owns and leases to

CHSC grain elevator

and agricultural

and agronomy

businesses
	 	

100% CHS
	 	

31-Aug
	 	

South Dakota
	 	

9/11/2000
	 	

41-1985526
	 

	 	 
	 	 
	 	 
	 	 
	 	 
	 	 
	 	 
	 	 
	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 

36

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Active/

Inactive

	 	Corporation
	 	Address
	 	Type
	 	Business
	 	Ownership By
	 	Fiscal Year End
	 	Jurisdiction of

Incorporation
	 	Date of

Incorporation
	 	

Federal ID
	 

	 	 
	 	 
	 	 
	 	 
	 	 
	 	 
	 	 
	 	 
	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	A

	 	CHS-Sioux Falls
	 	3900 North Cliff

Ave. Sioux Falls,

SD 57118
	 	SUB
	 	Farm Supply

business, as a

cooperative,

engaging in any

activity or service

in connection with

the purchase, sale

and handling of

energy products.
	 	

100% CHS
	 	

31-Aug
	 	

South Dakota
	 	

11/29/2000
	 	

41-1991671
	 

	 	 
	 	 
	 	 
	 	 
	 	 
	 	 
	 	 
	 	 
	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	A

	 	CHS-Starbuck
	 	5500 Cenex Drive

Inver Grove

Heights, MN

55077-2112
	 	

SUB
	 	

Grain and supply

business as a

cooperative
	 	

100% CHS
	 	

31-Aug
	 	

Minnesota
	 	

5/28/2003
	 	

87-0711576
	 

	 	 
	 	 
	 	 
	 	 
	 	 
	 	 
	 	 
	 	 
	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	A

	 	Circle Land

Management, Inc.
	 	 	 	 	 	Land Mgt. for

property around

Laurel MT refinery
	 	

100% CHS
	 	

	 	

Minnesota
	 	

5/5/1993
	 	

41-1750051
	 

	 	 
	 	 	 	 	 	 
	 	 
	 	 	 	 
	 	 
	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	A

	 	CoGrain
	 	560 W. Grain

Terminal Rd.,

Pasco, WA 99301
	 	 	 	 	 	Ritzville Warehouse

Company 7.273%; CHS

54.5%; Pendleton

Grain Growers

1.818%; Odessa

Union Warehouse

Co-op 36.364%
	 	

	 	

Washington
	 	

9/21/1990
	 	

	 

	 	 
	 	 
	 	 	 	 	 	 
	 	 	 	 
	 	 
	 	

	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	A

	 	Country Energy, LLC
	 	5500 Cenex Drive

PO Box 64089

St. Paul, MN 55164
	 	JV
	 	Alliance between

CHS and Farmland
	 	100% CHS — (CHS

acquired Farmland’s

50% 12/1/01)
	 	

31-Aug
	 	

Delaware
	 	

4/9/1998
	 	

43-1813211
	 

	 	 
	 	 	 	 
	 	 
	 	 
	 	 
	 	 
	 	 
	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	A

	 	Country Hedging, Inc.
	 	5500 Cenex Drive

PO Box 64089

St. Paul, MN 55164
	 	SUB
	 	Full service

commodity futures

and option

brokerage
	 	

100% CHS
	 	

31-Aug
	 	

Delaware
	 	

8/20/1986
	 	

41-1556399
	 

	 	 
	 	 	 	 
	 	 
	 	 
	 	 
	 	 
	 	 
	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 

37

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Active/
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	Jurisdiction of	 	Date of	 	 	 	 
	Inactive
	 	Corporation	 	Address	 	Type	 	Business	 	Ownership By	 	Fiscal Year End	 	Incorporation	 	Incorporation	 	Federal ID
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	Provides cattle feeding and	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	4001 South Westport	 	 	 	 	 	swine financing loans;	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	AvenueP.O. Box	 	 	 	 	 	facility financing loans; crop	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	88808Sioux Falls,	 	 	 	 	 	production loans, and	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	A
	 	Fin-Ag, Inc.	 	SD  57105	 	SUB	 	consulting services	 	100% CHS	 	31-Aug	 	South Dakota	 	 	12/17/1987	 	 	 	46-0398764	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	5500 Cenex Drive	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	Front Range Pipeline	 	PO Box 64089	 	 	 	 	 	To own and operate the Front	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	A
	 	LLC	 	St. Paul, MN  55164	 	LLC	 	Range Pipeline	 	100% CHS	 	 	 	 	 	Minnesota	 	 	3/23/1999	 	 	 	41-1935715	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	5500 Cenex Drive	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	PO Box 64089	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	A
	 	Grain Suppliers	 	St.	 	 	 	 	 	 	 	 	 	100% CHS (effective	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Diss. Pending
	 	Company, LLC	 	Paul, MN 55164	 	LLC	 	Sale of feed grains to feedlots	 	 	6/30/03	)	 	31-Aug	 	Delaware	 	 	4/20/2001	 	 	 	41-2003239	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	Dienstenstraat 15	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	Harvest States	 	NL 3161 GN	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	Cooperatives Europe	 	Rhoon         The	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	A
	 	 	B.V.	 	 	Netherlands	 	LLC	 	Grain Marketing	 	100% CHS	 	31-Aug	 	Netherland	 	 	5/9/2001	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	Acquired with	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	Sparta Foods,	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	5500 Cenex Drive,	 	 	 	 	 	 	 	 	 	wholly owned	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	La Canasta of	 	Inver Grove	 	 	 	 	 	 	 	 	 	subsidiary of	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	A
	 	Minnesota, Inc.	 	Heights, MN 55077	 	SUB	 	 	 	 	 	Sparta Foods	 	 	 	 	 	 	 	 	 	 	11/18/1980	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	5500 Cenex Drive	 	 	 	 	 	 	 	 	 	Financial:  33%	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	PO Box 64089	 	 	 	 	 	 	 	 	 	FUOC; 67% CHS;	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	St.	 	 	 	 	 	Acquiring, owning, operating	 	Governance 50%	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	A
	 	Montevideo Grain, LLC	 	Paul, MN 55164	 	LLC	 	and managing grain assets	 	FUOC, 50% CHS	 	31-Aug	 	Delaware	 	 	8/9/2001	 	 	 	41-2015718	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	National Cooperative	 	 	 	 	 	 	 	 	 	Manufacturer, marketing, and	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	Refinery Association	 	534 S. Kansas Ave.	 	 	 	 	 	wholesale distribution of	 	CHS - 74.2%, 25.5	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	A
	 	(NCRA)	 	Topeka, KS 66603	 	Corp.	 	petroleum products.	 	Growmark and MFA	 	30-Sep	 	Kansas	 	 	7/7/1943	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	300 West Feedville	 	 	 	 	 	 	 	 	 	80% - CHS and 20%	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	PGG/HSC Feed	 	Road	 	 	 	 	 	 	 	 	 	Pendleton Grain	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	A
	 	Company, LLC.	 	Hermiston, OR  97838	 	JV	 	Feed Manufacturer	 	Growers	 	31-May	 	Oregon	 	 	10/26/1994	 	 	 	93-1156470	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 

38

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Active/

Inactive

	 	Corporation
	 	Address
	 	Type
	 	Business
	 	Ownership By
	 	Fiscal Year End
	 	Jurisdiction of

Incorporation
	 	Date of

Incorporation
	 	

Federal ID
	 

	 	 
	 	 
	 	 
	 	 
	 	 
	 	 
	 	 
	 	 
	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	A

	 	Sparta Foods, Inc.
	 	920 Second Avenue

South, Suite 1100,

Minneapolis, MN

55402
	 	SUB
	 	Production and

distribution of

tortilla and

value-added

tortilla products
	 	

100% CHSC (Acquired

Stock 6/1/00)
	 	

	 	

Minnesota
	 	

7/7/1988
	 	

41-1618240
	 

	 	 
	 	 
	 	 
	 	 
	 	 
	 	 	 	 
	 	 
	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	A

	 	St. Paul Maritime

Corporation
	 	 	 	SUB
	 	Company employing

stevedores at

Myrtle Grove

Terminal
	 	

100% CHSC
	 	

31-Aug
	 	

Minnesota
	 	

8/18/1995
	 	

	 

	 	 
	 	 	 	 
	 	 
	 	 
	 	 
	 	 
	 	 
	 	

	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	A

	 	United Country

Brands LLC
	 	5500 Cenex Drive

PO Box 64089

St. Paul, MN 55164

and 3315 North Oak

Trafficway Kansas

City, MO 64116
	 	

LLC
	 	

Holding Company for

membership

interests in

Agriliance LLC
	 	

100% CHS
	 	

31-Aug
	 	

Delaware
	 	

01/05/00
	 	

41-1961040
	 

	 	 
	 	 	 	 
	 	 
	 	 
	 	 
	 	 
	 	 
	 	 

39

SCHEDULE 5.5

FINANCIAL STATEMENTS

	 	1.	 	Consolidated Balance Sheets for fiscal years 2000 through 2003 and third quarter ended
May 31, 2004.

	 	2.	 	Consolidated Income Statements for fiscal years 2000 through 2003 and third quarter
ended May 31, 2004.

3. Consolidated Cash Flow Statements for fiscal years 2000 through 2003.

40

SCHEDULE 5.6

RESTRICTIONS ON DEBT

	 	1.	 	$225,000,000 6.81% Series A Notes due June 19, 2013 issued pursuant to Note Agreement
dated as of June 19, 1998 among the Company and each of the investors listed on the
Purchase Schedule attached thereto.

	 	2.	 	$25,000,000 7.90% Series B Notes due January 10, 2011 issued pursuant to Note Purchase
and Private Shelf Agreement dated as of January 10, 2001 among the Company and The
Prudential Insurance Company and certain of affiliates thereof (the “Shelf Agreement”) and
$55,000,000 Private Shelf Facility established thereunder.

	 	3.	 	$55,000,000 7.43% Series C Notes dated March 2, 2001 due March 2, 2011 issued pursuant
to the Shelf Agreement.

	 	4.	 	$115,000,000 4.96% Series D Senior Notes due October 18, 2012 and $60,000,000 5.60%
Series E Senior Notes due October 18, 2017, issued pursuant to Note Purchase Agreement
dated as of October 18, 2002 among the Company and each of the investors listed on the
Purchase Schedule attached thereto.

	 	5.	 	$15,000,000 4.08% Series F Senior Notes due April 13, 2010 and $15,000,000 4.39% Series
G Senior Notes due April 13, 2011 issued pursuant to Note Purchase and Private Shelf
Agreement dated as of April 13, 2004 among the Company and The Prudential Insurance Company
and certain of affiliates thereof and $70,000,000 Private Shelf Facility established
thereunder.

41

SCHEDULE 5.12

INTELLECTUAL PROPERTY

None.

42

SCHEDULE 5.15

USE OF PROCEEDS

The proceeds from the Notes may be used for general corporate purposes, including the repayment of
other long-term debt, and for budgeted capital expenditures.

43

SCHEDULE 5.16

EXISTING DEBT

CHS Inc. & Subsidiaries

Outstanding Debt & Committed Lines of Credit as of August 31, 2004.

See attached spreadsheet.

44

	 	 	 	 	 	 	 	 	 
	CHS Inc. & Subsidiaries

	Outstanding Debt & Committed Lines of Credit

	August 31, 2004

	Short-Term Notes

	 	 	 	 	 	 	 	 
	 
	 	$			 	(represents commitment - actual drawn was
	CHS 364 Seasonal Line
	 		750,000,000.00		 	$	115,000,000	)
	 
	 	$			 	 	 	 
	3yr Revolver
	 		150,000,000.00		 	(represents commitment - actual drawn was -0- )
	NCRA’s 2yr Revolver
	 		15,000,000.00		 	(represents commitment - actual drawn was -0- )
	Misc Notes
	 		1,113,934.00		 	 	 	 
	 
	 		916,113,934.00		 	 	 	 
	 
	 	 	 	 	 	 	 	 
	Indust Rev Bonds

	 	 	 	 	 	 	 	 
	Montana Econ
	 		3,925,000.00		 	 	 	 
	 
	 	 	 	 	 	 	 	 
	Private Placement

	 	 	 	 	 	 	 	 
	Private Placement
	 		225,000,000.00		 	 	 	 
	Private Placement
	 		175,000,000.00		 	 	 	 
	Prudential Shelf Note
	 		55,000,000.00		 	 	 	 
	Prudential Shelf Note
	 		25,000,000.00		 	 	 	 
	Prudential Shelf Note
	 		15,000,000.00		 	 	 	 
	Prudential Shelf Note
	 		15,000,000.00		 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 
	 		510,000,000.00		 	 	 	 
	 
	 	 	 	 	 	 	 	 
	Cobank

	 	 	 	 	 	 	 	 
	Building Loan
	 		12,583,969.00		 	 	 	 
	Term Debt
	 		131,200,000.00		 	 	 	 
	NCRA’s Term Debt
	 		12,000,000.00		 	 	 	 
	 
	 		155,783,969.00		 	 	 	 
	 
	 	 	 	 	 	 	 	 
	Other Notes Payable

	 	 	 	 	 	 	 	 
	Corp Books

	 	 	 	 	 	 	 	 
	Robert L. Nygaard
	 		72,500.00		 	 	 	 
	Lemmon-Thunder Hawk

(DISC)
	 		447,101.00		 	 	 	 
	Mahnomen MN
	 		587,421.00		 	 	 	 
	Greenbush MN
	 		203,696.00		 	 	 	 
	Country Operations

	 	 	 	 	 	 	 	 
	Ag Svc Center-Elrosa
	 		103,326.00		 	 	 	 
	Prairie Lakes — GMAC
	 		12,266.00		 	 	 	 
	Prairie Lakes — State

of MN
	 		143,914.00		 	 	 	 
	Milk River — Big Sandy
	 		192,850.00		 	 	 	 
	CHS-French-Fergus Falls
	 		77,242.00		 	 	 	 
	Oilseed

	 	 	 	 	 	 	 	 
	Rural Electric
	 		289,709.00		 	 	 	 
	MN Rail
	 		131,777.00		 	 	 	 
	Grain Marketing

	 	 	 	 	 	 	 	 
	Met Life
	 		9,980,212.00		 	 	 	 
	Hall Prommisory Note
	 		121,134.00		 	 	 	 
	Milling

	 	 	 	 	 	 	 	 
	MDT Rail Rehabilitation
	 		74,886.00		 	 	 	 
	Rural Econ Development

Loan
	 		210,951.00		 	 	 	 
	Foods

	 	 	 	 	 	 	 	 
	Mn Ag & Econ Development
	 		854,686.00		 	 	 	 
	MN Loan-Coulson Svc Corp
	 		118,351.00		 	 	 	 
	Sellers Note-Rodriquez
	 		500,000.00		 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 
	 		14,122,022.00		 	 	 	 
	 
	 	 	 	 	 	 	 	 
	Consolidated Total
	 		1,599,944,925		 	 	 	 

45

	 	 	 	 	 	 	 	 	 
	CHS Inc.

	Financial Guarantees

	8/31/04

	 
	 	 Limit of	 		8/31/04	
	 
	 	Guarantee	 	Exposure
	 
	 	 	 	 	 	 	 	 
	Financial Services- CoBank Note Purchase Agrmt
	 	 	 	 	 	 	 	 
	10% of Loan Balance
	 		15,000,000		 		5,927,170	
	Temco Credit Facility
	 	 	 	 	 	 	 	 
	50% of Loan Balance
	 		15,000,000		 		—	
	FinAg Guarnatees
	 	 	 	 	 	 	 	 
	15% Seasonal & Term
	 		15,000,000		 		5,729,983	
	50% Seasonal & Term
	 		23,500,000		 		9,470,976	
	100% Seasonal & Term
	 		10,000,000		 		9,874,883	
	Horizon Milling performance guarantee
	 		5,000,000		 		—	
	Deferred Payment Contracts
	 	 	 	 	 	 	 	 
	Souris River Grain - 100%
	 		4,000,000		 		—	
	NFI - 20%
	 		1,000,000		 		1,000,000	
	Total Guarantees **
	 		88,500,000		 		32,003,012	
	 
	 	 	 	 	 	 	 	 
	** Bank Covenants allow up to $150 million
	 	 	 	 

46

EXHIBIT 1

[FORM OF NOTE]

CHS INC.

5.25% SERIES H SENIOR NOTE DUE SEPTEMBER 21, 2014

	 	 	 
	No. RH-[   ]

$[   ]

	 	[Date]

PPN: 12542R A# 7

FOR VALUE RECEIVED, the undersigned, CHS INC. (herein called 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 September 21, 2014, with interest (computed on
the basis of a 360-day year of twelve 30-day months) (a) on the unpaid balance thereof at the rate
of 5.25% per annum from the date hereof, payable semiannually on March 21 and September 21 in each
year, commencing on the March 21 or September 21 next succeeding the date hereof until the
principal hereof shall have become due and payable, and (b) to the extent permitted by law on any
overdue payment (including any overdue prepayment) of principal, any overdue payment of interest
and any overdue payment of any Make-Whole Amount (as defined in the Note Purchase Agreements
referred to below), payable semiannually 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) 7.25% or (ii)
2% over the rate of interest publicly announced from time to time by The Bank of New York in New
York, New York (or its successor) as its “base” or “prime” rate.

Payments of principal of, interest on and any Make-Whole Amount with respect to this Note are
to be made in lawful money of the United States of America at the address shown in the register
maintained by the Company for such purpose or at such other place as the Company shall have
designated by written notice to the holder of this Note as provided in the Note Purchase Agreements
referred to below.

This Note is one of the Series H Senior Notes (herein called the “Notes”) issued pursuant to
those certain separate Note Purchase Agreements, each dated as of September 21, 2004 (collectively,
as from time to time amended, the “Note Purchase Agreements”), between the Company and the
respective purchasers named therein and is entitled to the benefits thereof. Each holder of this
Note will be deemed, by its acceptance hereof, (i) to have agreed to the confidentiality provisions
set forth in Section 20 of the Note Purchase Agreements and (ii) to have made the representation
set forth in Section 6.2 of the Note Purchase Agreements.

This Note is a registered Note and, as provided in the Note Purchase Agreements, 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 will not be affected by
any notice to the contrary.

The Company will make required prepayments of principal on the dates and in the amounts
specified in the Note Purchase Agreements. This Note is also subject to optional prepayment, in
whole or from time to time in part, at the times and on the terms specified in the Note Purchase
Agreements, but not otherwise.

If an Event of Default, as defined in the Note Purchase Agreements, occurs and is continuing,
the principal of this Note may be declared or otherwise become due and payable in the manner, at
the price (including any applicable Make-Whole Amount) and with the effect provided in the Note
Purchase Agreements.

THIS NOTE AND THE NOTE PURCHASE AGREEMENTS ARE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH,
THE LAW OF THE STATE OF NEW YORK, EXCLUDING CHOICE-OF-LAW PRINCIPLES OF THE LAW OF SUCH STATE THAT
WOULD REQUIRE THE APPLICATION OF THE LAWS OF A JURISDICTION OTHER THAN SUCH STATE.

CHS INC.

By:    

Name:

Title:

47

EXHIBIT 3

[FORM OF PAY PROCEEDS LETTER]

[Company Letterhead]

September [   ], 2004

To each of the purchasers listed on Annex 1 hereto:

Re: CHS Inc.

5.25% Series H Senior Notes due September 21, 2014

Ladies and Gentlemen:

Reference is made to those certain separate Note Purchase Agreements, each dated as of
September 21, 2004 (as amended or otherwise modified from time to time, the “Note Purchase
Agreement”), among CHS Inc. (the “Company”) and each of the purchasers set forth on Schedule A
attached thereto (the “Purchasers”). Capitalized terms used but not defined herein shall have the
same meanings as given to them in the Note Purchase Agreement.

Pursuant to Section 3 of the Note Purchase Agreement, the Company hereby requests that the
Purchasers transfer by federal funds wire transfer an aggregate of $125,000,000, as payment in full
for the purchase of the Notes to be purchased by the Purchasers (in the respective amounts as
provided on Schedule A to the Note Purchase Agreement), to the following account:

	 	 	 	 	 	 	 	 	 
	Wire to:
	 	CHS Inc.	 	 	 	 
	Bank Name:
	 	Wells Fargo Bank, N.A.	 	 	 	 
	 
	 	San Francisco, CA
	 	 	 	 
	Routing No.:
	 	 	121000248	 	 	 	 	 
	Account No.
	 	 	0000044070	 	 	 	 	 
	 
	 	 	 	 	 	Very truly yours,

	 
	 	 	 	 	 	CHS INC.
	 
	 	 	 	 	 	By:

	 
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	Name:

	 
	 	 	 	 	 	Title:

48

Annex 1

Purchasers

The Variable Annuity Life Insurance Company

c/o AIG Global Investment Group

2929 Allen Parkway, A36-04

Houston, TX 77019

First SunAmerica Life Insurance Company

c/o AIG Global Investment Group

2929 Allen Parkway, A36-04

Houston, TX 77019

The Prudential Insurance Company of America

c/o Prudential Capital Group

Two Prudential Plaza, Suite 5600

180 North Stetson Avenue

Chicago, IL 60601

Zurich American Insurance Company

c/o Prudential Private Placement Investors, L.P.

Four Gateway Center

100 Mulberry Street

Newark, NJ 07102-4069

Prudential Retirement Ceded Business Trust

c/o Prudential Capital Group

Two Prudential Plaza

180 North Stetson Avenue

Chicago, IL 60601

Connecticut General Life Insurance Company

c/o Prudential Private Placement Investors, L.P.

Four Gateway Center

100 Mulberry Street

Newark, NJ 07102

Security Benefit Life Insurance Company, Inc.

c/o Prudential Private Placement Investors, L.P.

Four Gateway Center

100 Mulberry Street

Newark, NJ 07102

First Colony Life Insurance Company

c/o Genworth Financial

601 Union Street, Suite 2200

Seattle, WA 98101

49

General Electric Capital Assurance Company

c/o Genworth Financial

601 Union Street, Suite 2200

Seattle, WA 98101

Federal Home Life Insurance Company

c/o Genworth Financial

601 Union Street, Suite 2200

Seattle, WA 98101

Hartford Life Insurance Company

c/o Hartford Investment Management Company

c/o Investment Department – Private Placements

P.O. Box 1744

Hartford, CT 06144-1744

Pacific Life Insurance Company

700 Newport Center Drive

Newport Beach, CA 92660-6397

Blue Cross and Blue Shield of Florida, Inc.

c/o Advantus Capital Management, Inc.

400 Robert Street North

St. Paul, MN 55101

Fort Dearborn Life Insurance Company

c/o Advantus Capital Management, Inc.

400 Robert Street North

St. Paul, MN 55101

United Insurance Company of America

c/o Advantus Capital Management, Inc.

400 Robert Street North

St. Paul, MN 55101

World Insurance Company

c/o Advantus Capital Management, Inc.

400 Robert Street North

St. Paul, MN 55101

MTL Insurance Company

c/o Advantus Capital Management, Inc.

400 Robert Street North

St. Paul, MN 55101

The Reliable Life Insurance Company

c/o Advantus Capital Management, Inc.

400 Robert Street North

St. Paul, MN 55101

50

Union National Life Insurance Company

c/o Advantus Capital Management, Inc.

400 Robert Street North

St. Paul, MN 55101

Reserve National Insurance Company

c/o Advantus Capital Management, Inc.

400 Robert Street North

St. Paul, MN 55101

St. Paul Fire and Marine Insurance Company

385 Washington Street

St. Paul, MN 55102

Modern Woodmen of America

1701 First Avenue

Rock Island, IL 61201

Assurity Life Insurance Company

1526 K Street

Lincoln, NE 68508

Acacia Life Insurance Company

c/o Ameritas Investment Advisors Inc.

390 North Cotner Boulevard

Lincoln, NE 68505

51

EXHIBIT 4.4(a)

[FORM OF OPINION OF GENERAL COUNSEL FOR THE COMPANY]

52

EXHIBIT 4.4(b)

[FORM OF OPINION OF SPECIAL COUNSEL FOR THE PURCHASERS]

53ASSET PURCHASE AGREEMENT

                                     among:

                            SAGAMORE HOLDINGS, INC.,
                        a Florida corporation ("Parent"),

                             NECI Acquisition, Inc.
                      a Florida corporation ("Purchaser"),

                         NEXUS CUSTOM ELECTRONICS, INC.,
                       a Delaware corporation ("Seller"),

                                       and

                             JACO ELECTRONICS, INC.,
                     a New York corporation ("Shareholder")

                                                         `

                         Dated as of September 20, 2004

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

<TABLE>

<PAGE>

                                TABLE OF CONTENTS

<C>                                                                                                             <C>
1.       DEFINITIONS.............................................................................................1
--       -----------
         1.1.     Code...........................................................................................2
         ----     -----
         1.2.     Company Plan...................................................................................2
         ----     -------------
         1.3.     Consent........................................................................................2
         ----     --------
         1.4.     Contract.......................................................................................2
         ----     ---------
         1.5.     Contract Year..................................................................................2
         ----     --------------
         1.6.     Damages........................................................................................2
         ----     --------
         1.7.     Disclosure Schedules...........................................................................2
         ----     ---------------------
         1.8.     Encumbrance....................................................................................2
         ----     ------------
         1.9.     Entity.........................................................................................2
         ----     -------
         1.10. GAAP. 2
         1.11.    Governmental Authorization.....................................................................2
         -----    ---------------------------
         1.12.    Governmental Body..............................................................................3
         -----    ------------------
         1.13.    Hazardous Material.............................................................................3
         -----    -------------------
         1.14.    Knowledge......................................................................................4
         -----    ----------
         1.15.    Legal Requirement..............................................................................4
         -----    ------------------
         1.16.    Liability......................................................................................4
         -----    ----------
         1.17.    Material.......................................................................................4
         -----    ---------
         1.18.    Material Seller Contracts......................................................................4
         -----    --------------------------
         1.19.    Net Working Capital............................................................................4
         -----    --------------------
         1.20. Order. 4
         1.21.    Ordinary Course of Business....................................................................5
         -----    ----------------------------
         1.22.    Permitted Distribution.........................................................................6
         -----    -----------------------
         1.23. Person. 6
         1.24.    Proceeding.....................................................................................6
         -----    -----------
         1.25.    Proprietary Asset..............................................................................6
         -----    ------------------
         1.26.    Purchaser Group................................................................................6
         -----    ----------------
         1.27.    Seller Contracts...............................................................................6
         -----    -----------------
         1.28.    Supply Agreement...............................................................................6
         -----    -----------------
         1.29. Tax. 6
         1.30.    Tax Return.....................................................................................7
         -----    -----------
         1.31.    Transaction Documents..........................................................................7
         -----    ----------------------
         1.32.    Transactions...................................................................................7
         -----    -------------
2.       SALE AND PURCHASE OF ASSETS; ASSUMPTION OF ASSUMED LIABILITIES..........................................8
--       --------------------------------------------------------------
         2.1.     Sale and Purchase of Assets....................................................................8
         ----     ----------------------------
         2.2.     Excluded Assets................................................................................9
         ----     ----------------
         2.3.     No Encumbrances...............................................................................10
         ----     ----------------
         2.4.     Passage of Title..............................................................................10
         ----     -----------------
         2.5.     Transfer Taxes................................................................................10
         ----     ---------------
         2.6.     Assumed Liabilities...........................................................................10
         ----     --------------------
         2.7.     Excluded Liabilities..........................................................................10
         ----     ---------------------
         2.8.     Employees.....................................................................................11
         ----     ----------

<PAGE>

         2.9.     Consideration Paid by Purchaser...............................................................11
         ----     --------------------------------
         2.10. Closing. 14
3.       REPRESENTATIONS AND WARRANTIES OF THE SELLER AND SHAREHOLDER...........................................16
--       ------------------------------------------------------------
         3.1.     Due Organization; No Subsidiaries; Etc........................................................16
         ----     ---------------------------------------
         3.2.     Certificate of Incorporation and Bylaws; Records..............................................16
         ----     -------------------------------------------------
         3.3.     Capitalization, Etc...........................................................................17
         ----     --------------------
         3.4.     Financial Statements..........................................................................17
         ----     ---------------------
         3.5.     Absence of Material Changes...................................................................18
         ----     ----------------------------
         3.6.     Title to Assets...............................................................................18
         ----     ----------------
         3.7.     Inventories...................................................................................19
         ----     ------------
         3.8.     Receivables...................................................................................19
         ----     ------------
         3.9.     Fixed Assets..................................................................................19
         ----     -------------
         3.10.    Real Property.................................................................................19
         -----    --------------
         3.11.    Proprietary Assets............................................................................19
         -----    -------------------
         3.12.    Contracts.....................................................................................20
         -----    ----------
         3.13.    Liabilities...................................................................................21
         -----    ------------
         3.14.    Compliance With Legal Requirements............................................................22
         -----    -----------------------------------
         3.15.    Governmental Authorizations...................................................................22
         -----    ----------------------------
         3.16.    Tax Matters...................................................................................23
         -----    ------------
         3.17.    Employee and Labor Matters....................................................................23
         -----    ---------------------------
         3.18.    Company Plans.................................................................................25
         -----    --------------
         3.19.    Environmental Matters.........................................................................25
         -----    ----------------------
         3.20.    Proceedings; Orders...........................................................................25
         -----    --------------------
         3.21.    Authority; Binding Nature of Agreements.......................................................26
         -----    ----------------------------------------
         3.22.    Non-Contravention Consents....................................................................26
         -----    ---------------------------
         3.23. Brokers. 27
4.       REPRESENTATIONS AND WARRANTIES OF PARENT AND PURCHASER.................................................27
--       ------------------------------------------------------
         4.1.     Due Organization..............................................................................27
         ----     -----------------
         4.2.     Authority; Binding Nature of Agreement........................................................27
         ----     ---------------------------------------
         4.3.     Employees.....................................................................................28
         ----     ----------
         4.4.     Brokers.......................................................................................28
         ----     --------
5.       CONDITIONS PRECEDENT TO PURCHASER'S OBLIGATION TO CLOSE................................................28
--       --------------------------------------------------------
         5.1.     Accuracy of Representations...................................................................28
         ----     ----------------------------
         5.2.     Performance of Obligations....................................................................28
         ----     ---------------------------
         5.3.     Consents......................................................................................28
         ----     ---------
         5.4.     No Material Adverse Change....................................................................28
         ----     ---------------------------
         5.5.     Additional Documents..........................................................................28
         ----     ---------------------
         5.6.     No Claim Regarding the Purchased Assets or Sale Proceeds......................................29
         ----     ---------------------------------------------------------
         5.7.     No Prohibition................................................................................29
         ----     ---------------
         5.8.     No Actions Outside of the Ordinary Course of Business.........................................29
         ----     ------------------------------------------------------
         5.9.     Compliance with Legal Requirements............................................................29
         ----     -----------------------------------
         5.10.    2004 EBITDA Target............................................................................29
         -----    -------------------
         5.11.    No Injunction.................................................................................29
         -----    --------------
6.       CONDITIONS PRECEDENT TO THE SELLER AND SHAREHOLDER'S OBLIGATION TO CLOSE...............................29
--       ------------------------------------------------------------------------

<PAGE>

         6.1.     Accuracy of Representations...................................................................30
         ----     ----------------------------
         6.2.     Purchaser's Performance.......................................................................30
         ----     ------------------------
         6.3.     No Injunction.................................................................................30
         ----     --------------
         6.4.     No Prohibition................................................................................30
         ----     ---------------
7.       INDEMNIFICATION, ETC...................................................................................30
--       ---------------------
         7.1.     Survival of Representations and Covenants.....................................................30
         ----     ------------------------------------------
         7.2.     Indemnification by the Seller and Shareholder.................................................31
         ----     ----------------------------------------------
         7.3.     Remediation Obligation........................................................................32
         ----     -----------------------
         7.4.     Setoff........................................................................................32
         ----     -------
         7.5.     Defense of Third Party Claims.................................................................32
         ----     ------------------------------
         7.6.     Exercise of Remedies by Purchaser Indemnitees Other Than Purchaser............................33
         ----     -------------------------------------------------------------------
         7.7.     Indemnification by Parent and Purchaser.......................................................33
         ----     ----------------------------------------
         7.8.     Threshold for Indemnification by the Seller and Shareholder...................................33
         ----     ------------------------------------------------------------
         7.9.     Threshold for Indemnification by Parent and Purchaser.........................................34
         ----     ------------------------------------------------------
         7.10.    Limitation on Indemnification.................................................................34
         -----    ------------------------------
         7.11.    Exclusivity of Indemnification Remedies.......................................................34
         -----    ----------------------------------------
8.       OTHER AGREEMENTS.......................................................................................34
--       ----------------
         8.1.     Non-Compete...................................................................................34
         ----     ------------
         8.2.     Nonsolicitation...............................................................................35
         ----     ----------------
         8.3.     Confidentiality...............................................................................35
         ----     ---------------
         8.4.     Severability..................................................................................36
         ----     -------------
         8.5.     Judicial Modification.........................................................................36
         ----     ----------------------
         8.6.     Specific Enforcement..........................................................................36
         ----     ---------------------
         8.7.     Tolling of Time Periods.......................................................................37
         ----     ------------------------
         8.8.     Confirmation as to Scope......................................................................37
         ----     -------------------------
         8.9.     Access to Records.............................................................................37
         ----     ------------------
         8.10.    No Resale of Purchased Assets.................................................................37
         -----    ------------------------------
         8.11.    Post-Audit Closing Cooperation................................................................38
         -----    -------------------------------
         8.12.    Transitional Services.........................................................................38
         -----    ----------------------
9.       MISCELLANEOUS..........................................................................................38
--       -------------
         9.1.     Counterparts; Interpretation..................................................................38
         ----     -----------------------------
         9.2.     Governing Law.................................................................................38
         ----     --------------
         9.3.     Successors and Assigns; Assignment............................................................38
         ----     -----------------------------------
         9.4.     Partial Invalidity and Severability...........................................................38
         ----     ------------------------------------
         9.5.     Waiver........................................................................................39
         ----     -------
         9.6.     Headings......................................................................................39
         ----     ---------
         9.7.     Acceptance by Fax.............................................................................39
         ----     ------------------
         9.8.     Expenses......................................................................................39
         ----     ---------
         9.9.     Attorneys' Fees...............................................................................39
         ----     ----------------
         9.10.    Specific Performance..........................................................................39
         -----    ---------------------
         9.11.    Further Assurances............................................................................39
         -----    -------------------
         9.12. Notices. 40
         9.13.    NO JURY TRIAL.................................................................................41
         -----    --------------

</TABLE>

<PAGE>

                            ASSET PURCHASE AGREEMENT

         THIS ASSET PURCHASE AGREEMENT (this "Agreement") is made and entered
into as of this 20th day of September, 2004 by and between SAGAMORE HOLDINGS,
INC., a Florida corporation ("Parent"); NECI ACQUISITION, INC., a Florida
corporation ("Purchaser"); NEXUS CUSTOM ELECTRONICS, INC., a Delaware
corporation ("Seller"); and JACO ELECTRONICS, INC., a New York corporation
("Shareholder"). Parent Purchaser, Seller and Shareholder are each referred to,
at times, as a "Party" and collectively as the "Parties".

                                    RECITALS

     WHEREAS,  Seller  operates a printed  circuit board contract  manufacturing
business (the "Business"); --------

         WHEREAS, Seller, which is 100% owned by Shareholder, desires to sell to
Purchaser, which is 100% owned by Parent, and Purchaser desires to purchase from
Seller, substantially all of the assets of Seller upon the terms and conditions
set forth herein; and

         WHEREAS, Parent shall execute an agreement (the "Guaranty") pursuant to
which the Parent shall guarantee the obligations of the Purchaser under this
Agreement.

                                   AGREEMENT:

         NOW, THEREFORE, in consideration of the mutual promises herein
contained, and for other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the Parties agree as follows:

1.       DEFINITIONS

         Set forth below are definitions, for the purposes of the Agreement, for
certain capitalized terms. Other capitalized terms are defined throughout the
Agreement.
<PAGE>

     1.1. Code. "Code" shall mean the Internal Revenue Code of 1986, as amended.

     1.2.  Company Plan.  "Company Plan" shall mean any current  benefit plan or
past benefit plan under which employees, officers or directors of the Seller has
received benefits.

     1.3.  Consent.  "Consent" shall mean any approval,  consent,  ratification,
permission, waiver or authorization (including any Governmental Authorization).

     1.4.  Contract.  "Contract" shall mean any written,  oral, implied or other
agreement,  contract,  understanding,  arrangement,  instrument, note, guaranty,
indemnity,  representation,  warranty,  deed,  assignment,  power  of  attorney,
certificate,  purchase  order,  work  order,  insurance  policy,  benefit  plan,
commitment, covenant, assurance or undertaking of any nature.

     1.5. Contract Year. "Contract Year" shall mean (i) the period commencing on
the Closing Date and ending  September 30, 2005 and thereafter  (ii) each twelve
(12) month period beginning on October 1.

     1.6. Damages.  "Damages" shall include any loss, damage, injury, decline in
value, lost opportunity,  Liability, claim, demand, settlement, judgment, award,
fine, penalty,  Tax, fee (including any legal fee, expert fee, accounting fee or
advisory fee), charge,  cost (including any cost of investigation) or expense of
any nature.

     1.7. Disclosure Schedules.  "Disclosure Schedules" shall mean the schedules
(dated as of the date of the  Agreement)  delivered  to the  Purchaser  by or on
behalf of the Seller and  Shareholder as set forth in the  Agreement,  copies of
which are  attached  to the  Agreement  and  incorporated  in the  Agreement  by
reference.

     1.8. Encumbrance. "Encumbrance" shall mean any lien, pledge, hypothecation,
charge,  mortgage,  security interest,  encumbrance,  equity,  trust,  equitable
interest,  claim,  preference,  right of possession,  lease,  tenancy,  license,
encroachment, covenant, infringement,  interference, Order, proxy, option, right
of first refusal, preemptive right, community property interest, legend, defect,
impediment,  exception,  reservation,  limitation,  impairment,  imperfection of
title,  condition or restriction of any nature (including any restriction on the
voting of any security, any restriction on the transfer of any security or other
asset,  any restriction on the receipt of any income derived from any asset, any
restriction  on the use of any  asset  and any  restriction  on the  possession,
exercise or transfer of any other attribute of ownership of any asset).

     1.9. Entity.  "Entity" shall mean any corporation (including any non-profit
corporation),   general  partnership,  limited  partnership,  limited  liability
partnership,  joint venture, estate, trust,  cooperative,  foundation,  society,
political party,  union,  company  (including any limited  liability  company or
joint stock company),  firm or other  enterprise,  association,  organization or
entity.

     1.10.  GAAP."GAAP"  shall mean generally  accepted  accounting  principles,
applied on a consistent basis.

     1.11. Governmental Authorization.  "Governmental  Authorization" shall mean
any permit, license,  certificate,  franchise,  concession,  approval,  Consent,
ratification, permission, clearance, confirmation, endorsement, route authority,

                                       2
<PAGE>

waiver,  certification,  designation,  rating,  registration,  qualification  or
authorization that is, has been or may in the future be issued,  granted,  given
or otherwise made available by or under the authority of any  Governmental  Body
or pursuant to any Legal Requirement or under any Contract with any Governmental
Body.

     1.12. Governmental Body."Governmental Body" shall mean any:

                    (a)  Nation,  principality,  state, commonwealth,  province,
                         territory,  county,  municipality,  district  or  other
                         jurisdiction of any nature;

                    (b)  Federal,  state,  local,  municipal,  foreign  or other
                         government;

                    (c)  Governmental  or  quasi-governmental  authority  of any
                         nature    (including   any    governmental    division,
                         subdivision,   department,   agency,   bureau,  branch,
                         office,  commission,  council, boars,  instrumentality,
                         officer, official, representative,  organization, unit,
                         body or Entity and any court or other tribunal);

                    (d)  Multi-national organization or body; or

                    (e)  Individual,  Entity or body exercising,  or entitled to
                         exercise,   any   executive,   legislative,   judicial,
                         administrative,  regulatory, police, military or taxing
                         authority or power of any nature.

     1.13. Hazardous Material. "Hazardous Material" shall include:

                    (a)  Any  petroleum,  waste oil, crude oil,  asbestos,  urea
                         formaldehyde or polychlorinated biphenyl;

                    (b)  Any waste,  gas or other  substance or material that is
                         explosive or radioactive;

                    (c)  Any "hazardous substance," "pollutant,"  "contaminant,"
                         "hazardous  waste," "regulated  substance,"  "hazardous
                         chemical" or "toxic chemical" as designated,  listed or
                         defined  (whether  expressly  or by  reference)  in any
                         statute,   regulation   or  other   Legal   Requirement
                         (including CERCLA,  any other so-called  "superfund" or
                         "superlien"  law,  the Resource  Conservation  Recovery
                         Act, the Federal Water Pollution Control Act, the Toxic
                         Substances  Control  Act,  the  Emergency  Planning and
                         Community   Right-to-Know   Act  and   the   respective
                         regulations promulgated thereunder);

                    (d)  Any other substance or material (regardless of physical
                         form) or form of energy  that is  subject  to any Legal
                         Requirement which regulates or establishes standards of
                         conduct in connection with, or which otherwise  relates
                         to, the protection of human health,  plant life, animal
                         life, natural  resources,  property or the enjoyment of
                         life or property  from the presence in the  environment
                         of any  solid,  liquid,  gas,  odor,  noise  or form of
                         energy; and

                                       3
<PAGE>

                    (e)  Any  compound,  mixture,  solution,  product  or  other
                         substance or material  that  contains any  substance or
                         material referred to in clause "(a)",  "(b)",  "(c)" or
                         "(d)" above.

     1.14.  Knowledge.  An individual  shall be deemed to have  "Knowledge" of a
particular fact or other matter if:

                    (a)  Such individual is actually aware of such fact or other
                         matter; or

                    (b)  A  prudent   individual  in  the   performance  of  his
                         fiduciary  responsibilities  would  be  expected  to be
                         aware of such fact or other matter.

     A Party shall be deemed to have  "Knowledge" of a particular  fact or other
matter if any executive  officer or director of such Party has Knowledge of such
fact or other matter.

     1.15. Legal Requirement. "Legal Requirement" shall mean any federal, state,
local,  municipal,  foreign or other law,  statute,  legislation,  constitution,
principle  of  common  law,   resolution,   ordinance,   code,  edict,   decree,
proclamation,   treaty,   convention,   rule,  regulation,   ruling,  directive,
pronouncement requirement,  specification,  determination,  decision, opinion or
interpretation  that  is,  has been or may in the  future  be  issued,  enacted,
adopted, passed, approved,  promulgated, made, implemented or otherwise put into
effect by or under the authority of any Governmental Body.

     1.16.  Liability.  "Liability"  shall  mean any debt,  obligation,  duty or
liability  of  any  nature  (including  any  unknown,  undisclosed,   unmatured,
unaccrued, unasserted,  contingent,  indirect, conditional,  implied, vicarious,
derivative,  joint, several or secondary liability),  regardless of whether such
debt,  obligation,  duty or  liability  would be required to be  disclosed  on a
balance sheet prepared in accordance  generally accepted  accounting  principles
and  regardless  of  whether  such  debt,  obligation,   duty  or  liability  is
immediately due and payable.

     1.17.  Material.  "Material"  shall  mean  more than de  minimis,  minor or
insignificant.

     1.18.  Material Seller Contracts.  "Material Seller Contracts" means Seller
Contracts  which required the expenditure by Seller of more than $250,000 in any
of  Seller's  last 3 fiscal  years,  or  which  accounted  for more  than 10% of
Seller's revenues in any of Seller's last 3 fiscal years.

     1.19. Net Working  Capital.  "Net Working Capital" shall mean total current
assets,  less total current  liabilities,  as computed in accordance  with GAAP,
after adjustment for any Permitted Distribution.

     1.20. Order. "Order" shall mean any,

                    (a)  Order,  judgment,  injunction,  edict, decree,  ruling,
                         pronouncement,    determination,   decision,   opinion,
                         verdict,  sentence,  subpoena, writ or award that is or
                         has been issued,  made, entered,  rendered or otherwise
                         put into effect by or under the authority of any court,
                         administrative agency or other Governmental Body or any
                         arbitrator or arbitration panel; or

                                       4
<PAGE>

                    (b)  Contract  with  any  Governmental  Body  that  has been
                         entered into in connection with any Proceeding.

     1.21.  Ordinary Course of Business.  An action taken by or on behalf of the
Seller  shall  not be  deemed  to have  been  taken in the  "Ordinary  Course of
Business" unless:

                    (a)  Such action is recurring in nature,  is consistent with
                         the  Seller's  past  practices  and  is  taken  in  the
                         ordinary  course  of  the  Seller's  normal  day-to-day
                         operations:

                    (b)  Such  action  is taken in  accordance  with  sound  and
                         prudent business practices; and

                    (c)  Such  action is not  required to be  authorized  by the
                         Seller's stockholders,  the Seller's board of directors
                         or any committee of the Seller's board of directors and
                         does  not  require   any  other   separate  or  special
                         authorization of any nature.

     Actions  outside of the Ordinary  Course of Business  include,  but are not
limited to, (i) selling any of the Purchased  Assets other than inventory  sales
in the  Ordinary  Course of  Business  and  dispositions  of assets in excess of
$50,000 individually or $100,000 collectively,  in the aggregate, during any one
(1) month period;  (ii) obtaining any loans,  incurring any Liability other than
routine  accounts  payable,  routine  accrued  expenses,  and entering  into any
Contracts;  (iii)  transactions  that  would  result in Net  Working  Capital at
Closing  which  is not  reflective  of a  continuation  of  historical  business
practices;  (iv)  payment  of  excess  salary,  bonuses  or  dividends;  and (v)
acquisitions of assets in excess of $50,000 individually.

                                       5
<PAGE>

     1.22.  Permitted  Distribution.  "Permitted  Distribution"  shall  mean any
payment or  provision  for payment of any  dividend or other amount by Seller to
Shareholder  to the  extent  that same  results  in a zero Net  Working  Capital
adjustment.

     1.23.  Person.  "Person" shall mean any individual,  Entity or Governmental
Body.

     1.24.  Proceeding.  "Proceeding" shall mean any action,  suit,  litigation,
arbitration,   proceeding  (including  any  civil,   criminal,   administrative,
investigative or appellate proceeding and any informal proceeding), prosecution,
contest, hearing, inquiry, inquest, audit, examination or investigation that is,
has been or may in the future be  commenced,  brought,  conducted or heard by or
before, or that otherwise has involved or may involve,  any Governmental Body or
any arbitrator or arbitration panel.

     1.25. Proprietary Asset. "Proprietary Asset" shall mean any patent, patent,
application,  trademark  (whether  registered or unregistered and whether or not
relating to a published work),  trademark  application,  trade name,  fictitious
business name, service mark (whether  registered or unregistered),  service mark
application,   copyright   (whether   registered  or  unregistered),   copyright
application,  goodwill, maskwork, maskwork application,  trade secret, know-how,
franchise, system, computer software, invention, design, blueprint,  proprietary
product,  technology,  proprietary right or other intellectual properly right or
intangible asset including any route authority.

     1.26.  Purchaser  Group.  "Purchaser  Group"  shall  collectively  mean the
Purchaser and the Parent.

     1.27. Seller  Contracts.  "Seller  Contracts" shall  collectively mean each
Contract:

                    (a)  To which the Seller is a party;

                    (b)  By which  the  Seller or any of its  assets  are or may
                         become  bound or under  which the  Seller  has,  or may
                         become subject to, any obligation; or

                    (c)  Under  which the Seller has or may acquire any right or
                         interest.

     1.28. Supply Agreement. "Supply Agreement" shall mean an agreement executed
and delivered by Purchaser,  Parent and Shareholder at the Closing,  the form of
which is attached hereto as Exhibit A, pursuant to which Purchaser, Parent shall
purchase at least Fifteen  Percent (15%) of their annual  electronic  components
from Shareholder, subject to the terms set forth in the Supply Agreement.

     1.29.  Tax.  (a)  "Tax"  shall  mean any tax  (including  any  income  tax,
franchise  tax,  capital  gains tax, ---  estimated  tax,  gross  receipts  tax,
value-added  tax, surtax,  excise tax, ad valorem tax,  transfer tax, stamp tax,
tax, use tax,  property  tax,  business  tax,  occupation  tax,  inventory  tax,
occupancy  tax,  withholding  tax or payroll  tax),  levy,  assessment,  tariff,
impost, imposition,  toll, duty (including any customs duty), deficiency or fee,
and any related charge or amount (including any fine, penalty or interest), that
is or has been  imposed,  assessed or collected by or under the authority of any
Governmental Body.

                                       6
<PAGE>

     1.30.  Tax  Return.  "Tax  Return"  shall  mean any return  (including  any
information return), report, statement, declaration, estimate, schedule, notice,
notification,  form, election, certificate or other document or information that
is or has been  filed  with or  submitted  to, or  required  to be filed with or
submitted  to,  any  Governmental  Body in  connection  with the  determination,
assessment,  collection  or  payment  of  any  Tax  or in  connection  with  the
administration,  implementation  or enforcement of or compliance  with any Legal
Requirement relating to any Tax.

     1.31. Transaction Documents. "Transaction Documents" shall mean:

                    (a)  The Agreement including the Disclosure Schedules; and

                    (b)  The Bills of Sale;

                    (c)  The Assumption Agreement;

                    (d)  The Assignment;

                    (e)  The Seller Note;

                    (f)  The Supply Agreement;

                    (g)  The Employment Agreement;

                    (h)  The Guaranty; and

                    (i)  Such  other   documents   necessary   to  complete  the
                         Transactions,  including without  limitation a contract
                         between  Purchaser  and  Seller  with  respect  to  the
                         purchase  and  sale of the  Real  Property  (the  "Real
                         Property Contract").

     1.32. Transactions. "Transactions" shall mean:

                    (a)  The   execution   and   delivery   of  the   respective
                         Transaction Documents, and

                    (b)  All of the transactions  contemplated by the respective
                         Transaction Document including:

                    (i)  the sale of the  Purchased  Assets by the Seller to the
                         Purchaser in accordance with the Agreement;

                    (ii) the assumption of the Assumed  Liabilities by Purchaser
                         in accordance with the Agreement; and

                    (iii)the  performance  by the  Seller,  Shareholder  and the
                         Purchaser  of their  respective  obligations  under the
                         Transaction  Documents  and the exercise by the Seller,
                         Shareholder  and  the  Purchaser  of  their  respective
                         rights under the Transaction Documents.

                                       7
<PAGE>

     2. SALE AND PURCHASE OF ASSETS; ASSUMPTION OF ASSUMED LIABILITIES

     2.1. Sale and Purchase of Assets.  The Seller shall sell,  convey,  assign,
transfer and deliver to Purchaser at the Closing (as hereinafter  defined),  and
Purchaser  will  purchase  and accept at the  Closing,  all assets,  properties,
privileges,  rights,  interests,  business and goodwill  belonging to the Seller
(except  the  Excluded  Assets,  as  hereinafter  defined),  of  every  kind and
description,  real,  personal and mixed,  tangible and  intangible  and wherever
located (such assets, properties,  privileges,  rights, interests,  business and
goodwill being transferred hereunder are hereinafter referred to collectively as
the "Purchased Assets").  Without limiting the generality of the foregoing,  the
Purchased Assets shall include all of the Seller's right,  title and interest in
and to the  following  (except  to the extent  any of the  following  constitute
Excluded Assets):

                    (a)  Fixed  Assets.  All  machinery,  equipment,  computers,
                         vehicles,  furniture,  tools and other fixed assets and
                         goods and other  Material  items of  tangible  personal
                         property   owned  or  leased  by  the  Seller  from  an
                         independent   third  party  as  of  the  date  of  this
                         Agreement  and  used  by the  Seller,  other  than  the
                         Excluded  Assets,  as more fully set forth on  Schedule
                         3.9 (the "Fixed Assets");

                    (b)  Inventories.  All inventories of raw materials, work in
                         process,  components,  subassemblies,  finished  goods,
                         projects,  supplies,  packaging materials,  and similar
                         items  used  in  the  conduct  of the  Business  by the
                         Seller,  all as more  fully set forth on  Schedule  3.7
                         (the "Inventory");

                    (c)  Accounts  Receivable.  All notes receivables,  accounts
                         receivable and other  receivables of Seller of any kind
                         arising  out of the  Business  of the  Seller as of the
                         Closing  Date (as  defined  below),  whether  billed or
                         unbilled,  all as more fully set forth on Schedule  3.8
                         ("Accounts Receivable");

                    (d)  Real  Property  and  Real  Property  Leases.  All  real
                         property owned by the Seller and used in the conduct of
                         the Business  (the "Real  Property")  and all Lease and
                         Sublease  Agreements (the "Lease  Agreements"),  all of
                         which are listed in Schedule 3.10;

                    (e)  Seller  Contracts.   The  Seller  Contracts  listed  on
                         Schedule 3.12;

                    (f)  Proprietary  Assets.  All Proprietary  Assets listed on
                         Schedule  3.13,  which  also  contains a summary of the
                         Material Proprietary Assets;

                    (g)  Files and  Records.  All files  and  records  of Seller
                         related  to the  conduct  of the  Business,  including,
                         without  limitation,  all of Seller's  books,  records,
                         manuals,  documents, books of account,  correspondence,
                         sales and credit reports,  customer lists,  literature,
                         brochures,  advertising material and the like, provided
                         that  Purchaser  shall be provided  with only a copy of
                         Seller's  books of account and Seller  shall retain the
                         original  books of account and such other  records (the
                         "Retained  Data") as Seller requires for income tax and
                         other reporting purposes;

                                       8
<PAGE>

                    (h)  Capital Leases.  All rights of Seller under the capital
                         leases listed on Schedule  3.12 (the  "Assumed  Capital
                         Leases");

                    (i)  Goodwill.  All  of  Seller's  goodwill  related  to the
                         Seller,  and the  going  concern  value  of the  Seller
                         ("Goodwill");

                    (j)  Net Working  Capital  Cash.  Cash in the  possession of
                         Seller  to the  extent  such  cash is  included  in Net
                         Working Capital as of the Closing Date;

                    (k)  Operating  Leases.  All  rights  of  Seller  under  the
                         operating   leases  described  in  Schedule  3.12  (the
                         "Assumed Operating Leases").

     2.2. Excluded Assets. There shall be excluded from the Purchased Assets and
retained by Seller all of the following (collectively, the "Excluded Assets"):

                    (a)  Cash and  Investments.  All cash items,  securities and
                         financial  instruments  of the Seller,  not included in
                         Net Working Capital as of the Closing Date;

                    (b)  Books and Records. The minute books, seal, stock record
                         books  and  transfer  records  of the  Seller  and  the
                         Retained Data;

                    (c)  Other  Excluded  Assets.  Equipment  leased  under  any
                         capital leases other than the Assumed Capital Leases.

                                       9
<PAGE>

     2.3. No  Encumbrances.  The Purchased  Assets shall be sold and conveyed to
Purchaser  free and clear of all  Encumbrances,  except  (i) those  Encumbrances
identified on Schedule 2.3, (ii) with respect to the Real  Property,  easements,
rights  of  way,  restrictions,   encroachments,  and  other  minor  defects  or
irregularities  in title which do not interfere with the ordinary conduct of the
Business,  and (iii)  rights of the  lessors  under  the Lease  Agreements,  the
Assumed Capital Leases and the Assumed Operating Leases.

     2.4. Passage of Title. Title to all of the Purchased Assets shall pass from
Seller to Purchaser at Closing.

     2.5.  Transfer  Taxes.  The Purchaser  shall pay at Closing all  applicable
transfer,  recording and other  charges,  taxes or fees in  connection  with the
transfer of the Real  Property  hereunder.  The  Purchaser  and the Seller shall
equally  divide the  payment of any other  transfer,  sales,  use and bulk sales
taxes, ad valorem and property taxes, and similar  assessments  which arise from
the consummation of the transactions contemplated herein. The Purchaser shall be
responsible for all documentary, filing, recording and vehicle registration fees
payable as a result of the transfer of the Purchased Assets. The Purchaser shall
furnish  the Seller with such  information  and  certificates  as the Seller may
reasonably  request  to enable  the  Seller to obtain  any  available  sales tax
clearance certificates.

     2.6.  Assumed  Liabilities.  The Purchaser hereby agrees to assume from the
Seller,  and the Seller agrees to assign to the  Purchaser,  on the Closing Date
(i) the  liabilities  specifically  set forth on  Schedule  2.6,  as modified to
include all  accounts  payable and  accrued  expenses  included in the final Net
Working  Capital  Statement  Closing  Balance  Sheet  and (ii)  the  prospective
obligations of the Seller under the Lease Agreements,  Seller Contracts, Assumed
Operating Leases and Assumed Capital Leases  (collectively,  with respect to the
liabilities  and  obligations  described  in clauses (i) and (ii),  the "Assumed
Liabilities") and no other  liabilities.  From and after the Closing,  Purchaser
shall have complete  control over the payment,  settlement or other  disposition
of, or any dispute  involving,  any of the Assumed  Liabilities,  and  Purchaser
shall have the right to conduct  and control all  negotiations  and  proceedings
with respect thereto. The Seller shall notify Purchaser immediately of any claim
made with respect to any of the Assumed  Liabilities  and shall not, except with
the prior  written  consent of  Purchaser,  voluntarily  make any payment of, or
settle or offer to settle,  or consent to any compromise with respect to, any of
the Assumed Liabilities.

     2.7.  Excluded  Liabilities.   Except  for  the  Assumed  Liabilities,  the
Purchaser  is not assuming any  liability  or  obligation  of the Seller (or any
predecessor  owner  of all or part of the  Purchased  Assets)  and will not pay,
discharge,  perform or otherwise be liable for any liabilities,  indebtedness or
obligations  which relate to the Seller or the Purchased  Assets existing on the
Closing Date or arising out of any  transactions  entered  into, or any state of
facts  existing,  on or prior to the Closing Date  (collectively,  the "Excluded
Liabilities").  All such Excluded  Liabilities and obligations shall be retained
by and remain  obligations and liabilities of the Seller.  Without  limiting the
generality of the foregoing,  the Excluded Liabilities shall include, except for
the Assumed Liabilities:

                                       10
<PAGE>

                    (a)  All liabilities and obligations of Seller for costs and
                         expenses  incurred in connection with this Agreement or
                         the  consummation of the  transactions  contemplated by
                         this Agreement;

                    (b)  All  liabilities  and obligations of the Seller for any
                         Taxes  incurred,  or  attributed  to the  Seller or the
                         Purchased Assets prior to the Closing Date;

     2.8.  Employees.  Purchaser shall, as of the Closing Date,  employ Dan Shea
pursuant  to  the  terms  and  conditions  of an  employment  agreement  between
Purchaser  and Dan  Shea  (the  "Employment  Agreement",  the  form of  which is
attached hereto as Exhibit B).

     2.9. Consideration Paid by Purchaser.  Subject to any adjustments set forth
in Section 2.9(d),  Purchaser shall (i) pay to the Seller the Purchase Price (as
hereinafter defined in Section 2.9(a)); (ii) assume the Assumed Liabilities; and
(iii) pay to the Seller the Earn-Out in an amount up to a maximum of One Million
Dollars  ($1,000,000),  as more fully set forth in Section 2.9(c)  (collectively
the "Consideration").

                    (a)  Purchase  Price.  Purchaser shall pay to the Seller the
                         total amount of Twelve  Million  Dollars  ($12,000,000)
                         paid in accordance with Section 2.9(b),  subject to any
                         adjustment pursuant to Section 2.9(d).

                    (b)  Payment of Purchase Price.  The Purchase Price shall be
                         paid as follows:

                    (i)  Nine  Million  Two  Hundred  Fifty   Thousand   Dollars
                         ($9,250,000)  paid to or as  directed  by the Seller in
                         cash at Closing by wire transfer to such  account(s) as
                         Seller may designate;  subject to any  adjustments  set
                         forth in Section 2.9(d) ("Cash at Closing").

                    (ii) Two  Million  Seven  Hundred  Fifty  Thousand   Dollars
                         ($2,750,000)  in the form of a five (5) year promissory
                         note (the form of which is  attached  hereto as Exhibit
                         C) delivered to Seller at Closing (the "Seller  Note"),
                         which shall bear interest at a  fluctuating  rate equal
                         to the  prime  rate  set by the  Wall  Street  Journal,
                         capped  at  seven  percent  (7%)  per  annum,   payable
                         quarterly, with principal payable as follows:

                    (A)  Five Hundred  Thousand Dollars  ($500,000),  payable at
                         the two (2) year anniversary of the Seller Note;

                    (B)  One  Hundred  Fifty-Six   Thousand  Two  Hundred  Fifty
                         Dollars  ($156,250) on or before the end of each of the
                         next eight (8)  quarters,  beginning  with the  quarter
                         commencing  after the two (2) year  anniversary  of the
                         Seller Note; and

                    (C)  Two Hundred Fifty Thousand  ($250,000) on or before the
                         end of each of the four (4) quarters  commencing  after
                         the four (4) year anniversary of the Seller Note.

                                       11
<PAGE>

     The Seller Note is subject to offset as set forth in Section 7, and is also
subject to  acceleration  following  a default  and as further  provided  in the
Seller Note.

                    (c)  Earn-Out. The Purchaser shall pay to Shareholder (or as
                         otherwise   directed  by   Shareholder)   five  percent
                         -------- (5%) of the Purchaser Group's net sales (gross
                         sales  less  returns,  allowances  and sales  taxes) in
                         excess of $20,000,000  per Contract Year, as determined
                         in accordance  with GAAP, for each of the first six (6)
                         Contract Years after the Closing Date (the "Earn-Out").
                         The Earn-Out  payment  shall be due within  thirty (30)
                         days after the end  --------- of each Contract Year and
                         shall be accompanied by reasonable documentation of the
                         amount of such net sales for such  Contract  Year.  Net
                         sales shall include net sales from  existing  customers
                         of   Seller,   Purchaser   Group   and   any   existing
                         subsidiaries  of  Purchaser  Group,  as  well  as  from
                         customers of Purchaser Group and of their  subsidiaries
                         acquired  after the Closing Date as a result of merger,
                         acquisition or otherwise.  Notwithstanding  anything to
                         the contrary  contained herein, the total amount of all
                         Earn-Out  payments shall not exceed One Million Dollars
                         ($1,000,000).  If the Seller Note is accelerated,  then
                         provided that at least (i) $100,000 of Earn-Out payment
                         was due and payable  for the first  Contract  Year,  or
                         (ii)  $150,000 of Earn-Out  payment was due and payable
                         for the second  Contract Year,  the difference  between
                         $1,000,000  and the  aggregate  amount  paid under this
                         Section 2.9(c) shall become due and payable.

                    (d)  Adjustments to Purchase Price. The Purchase Price shall
                         be subject to the following adjustments:

     The Cash at Closing shall be adjusted on a  dollar-for-dollar  basis to the
extent the Net  Working  Capital as of the  Closing  Date,  as  determined  by a
post-closing  review (described below), is different from the target Net Working
Capital  amount  of  $7,331,000  by  more  than  Two  Hundred  Thousand  Dollars
($200,000) (the "Net Working Capital Adjustment"). The maximum amount of the Net
Working Capital Adjustment shall be Five Hundred Thousand Dollars ($500,000).

                    (e)  Net Working Capital Calculation. After the Closing, the
                         Seller  shall   prepare  a  statement  of  Net  Working
                         --------------------------------   Capital  as  of  the
                         close of business on the Closing Date (the "Net Working
                         Capital ----------------------  Statement"). The Seller
                         shall deliver the Net Working Capital  Statement to the
                         ---------  Purchaser  within thirty (30) days after the
                         Closing  Date.  The Seller shall  provide the Purchaser
                         with complete access to all relevant  information  used
                         by the  Seller in  preparing  the Net  Working  Capital
                         Statement.  The Net Working Capital Statement delivered
                         to the Purchaser shall be conclusive and binding on the
                         Parties  for  purposes of  determining  any Net Working
                         Capital  Adjustment,  unless the Purchaser notifies the
                         Seller  of the  Purchaser's  disagreement  with the Net
                         Working  Capital  Adjustment  in writing  within thirty
                         (30) days  after  the  Purchaser's  receipt  of the Net
                         Working Capital Statement.  The Purchaser's notice must
                         state with  specificity the amounts and the reasons for
                         Purchaser's disagreement.  If Purchaser notifies Seller
                         of  its  disagreement  with  the  Net  Working  Capital
                         Statement,  Purchaser  and Seller  shall use their good
                         faith efforts to agree on the amount of the Net Working
                         Capital Adjustment.

                                       12
<PAGE>

                    (f)  Arbitration.  If the  Purchaser  and the  Seller do not
                         agree  on  the  amount  of  the  Net  Working   Capital
                         -----------  Adjustment  within  forty-five  (45)  days
                         following  the  Purchaser's  receipt of the Net Working
                         Capital  Statement,  the  amount  of  the  Net  Working
                         Capital Adjustment that is undisputed, if any, shall be
                         paid at such time,  to the extent  that the  undisputed
                         amount  would not be offset by the  amount in  dispute.
                         The  Purchaser and the Seller shall  promptly  engage a
                         nationally  recognized firm of independent  accountants
                         to resolve any such  dispute.  In the absence of prompt
                         agreement   on  the   identity   of   the   independent
                         accountants,  the Parties shall cause their  respective
                         accounting  firms to jointly  designate  an  accounting
                         firm to resolve the dispute  within ninety (90) days of
                         the  engagement.  The  Seller and the  Purchaser  shall
                         furnish  or cause to be  furnished  to the  independent
                         accountants  such work papers and other  documents  and
                         information  relating  to the  disputed  issues  as the
                         independent  accountants  may request and are available
                         to that party or its agents and shall be  afforded  the
                         opportunity to present to the  independent  accountants
                         any  material  relating to the  disputed  issues and to
                         discuss  the issues with the  independent  accountants.
                         Absent fraud,  the  independent  accountants'  decision
                         shall be final, binding and conclusive upon the Parties
                         and shall be the  Parties'  sole and  exclusive  remedy
                         regarding  any  dispute   concerning  any  Net  Working
                         Capital  Adjustment and the amount so determined  shall
                         be paid by  Purchaser  or  Seller,  as the case may be,
                         within 10 days of such determination. The Purchaser and
                         the Seller shall share equally the fees and expenses of
                         the independent accountants.

                    (g)  Allocation  of  Consideration  Paid by  Purchaser.  The
                         Consideration  shall be  allocated in  accordance  with
                         ----------------------------------------------     Code
                         Section  1060  and  the   allocation   statement   (the
                         "Allocation Statement") prepared  ---------------------
                         by the Parties within One Hundred Sixty-Five (165) days
                         after the  Closing  Date.  The  Parties  each  agree to
                         prepare and file on a timely  basis any  necessary  Tax
                         forms  setting  forth an  allocation  set  forth in the
                         Allocation  Statement.  The  Parties  further  agree to
                         report  this  transaction  for income tax  purposes  in
                         accordance with the Allocation Statement and each Party
                         agrees  to  act  in  accordance  with  such  Allocation
                         Statement in the course of any Tax audit, Tax review or
                         Tax  litigation  concerning  such  Party  and  relating
                         thereto (except as otherwise  required by law). Neither
                         the  Seller  nor   Purchaser   will   assert  that  the
                         allocation  set forth in the  Allocation  Statement was
                         not  separately  bargained  for at arm's  length and in
                         good faith.  The Parties  confirm that  $450,000 of the
                         Consideration shall be allocated to the Real Property.

                                       13
<PAGE>

                    (h)  Pro-Rating  Adjustment.  The Parties  confirm that they
                         shall  pro-rate  and  adjust  for the  following  items
                         ----------------------  only: rent and security deposit
                         under  the  Lease   Agreement  and  under  the  Assumed
                         Operating Leases,  other monthly expenses,  real estate
                         taxes on the Real Property,  the health insurance costs
                         described in Section 8.12 and customer  deposits,  and,
                         the net result thereof, (the "Pro-Rating  Adjustment"),
                         shall    be    paid   to   the    Purchaser    or   the
                         ---------------------- Shareholder, as the case may be,
                         when the Net Working Capital  Adjustment is required to
                         be paid,  provided,  however,  that if any such item is
                         included in the  calculation  of Net  Working  Capital,
                         then  it  shall  be   excluded   from  the   Pro-Rating
                         Adjustment.  The Shareholder and Seller further confirm
                         that  they  have  paid,  or will  pay upon  receipt  of
                         appropriate   bills,  all  utility  costs  through  the
                         Closing Date  applicable  to the Real  Property and the
                         Lease Agreement.

     2.10. Closing.

                    (a)  The closing of the  Transactions  (the "Closing") shall
                         take place at the offices of Seller's counsel, Morrison
                         Cohen Singer & Weinstein,  LLP, 750  Lexington  Avenue,
                         New York,  New York,  at 10:00 a.m.  (Eastern  Standard
                         Time), on the date hereof, or on such other date as the
                         Parties may agree in writing (the "Closing Date").

                    (b)  At the Closing,  the Seller shall execute to the extent
                         the  execution by the Seller is  necessary  and deliver
                         to,  or  cause  to  be  delivered  to,   Purchaser  the
                         following:

                    (i)  bills of sale, deeds, certificates of title and general
                         instruments  of  assignment  and  transfer  to transfer
                         ownership  of the  Purchased  Assets from the Seller to
                         Purchaser  in  a  form  reasonably  acceptable  to  the
                         Parties and duly  executed by the Seller (the "Bills of
                         Sale");

                    (ii) an assignment and assumption agreement  transferring to
                         the Purchaser from the Seller all  Proprietary  Assets,
                         Governmental  Authorizations and warranties relating to
                         the Purchased Assets and responsibility for the Assumed
                         Liabilities  in a  form  reasonably  acceptable  to the
                         Parties   and  duly   executed   by  the  Seller   (the
                         "Assignment and Assumption Agreement");

                    (iii)the books and  records of the Seller  required  by this
                         Agreement,  the  certified  copies of the  articles  of
                         incorporation  of the  Seller as set  forth in  Section
                         3.2(a)(i),  the  certificates  of good  standing as set
                         forth in Section 3.2(a)(ii),  the Consents as set forth
                         in   Section   3.22,   copies   of   the   Governmental
                         Authorizations  as set  forth in  Section  3.15(a)  and
                         copies of the documents  relating to any Proceedings as
                         set forth in Section 3.20(b);

                                       14
<PAGE>

                    (iv) an opinion  from the  Seller's  attorney  to the effect
                         that  this  Agreement  and all  other  documents  to be
                         delivered  by the Seller at the Closing  have been duly
                         authorized,  executed and  delivered,  and,  subject to
                         customary  exceptions and limitations,  are enforceable
                         against the Seller;

                    (v)  the Supply Agreement executed by the Shareholder;

                    (vi) the Employment Agreement executed by Dan Shea; and

                    (vii)a certified  copy of  resolutions  duly  adopted by the
                         Board  of  Directors  of  Seller  and  of  Shareholder,
                         together with a copy of Seller's  By-Laws,  a certified
                         copy of Seller's  Certificate  of  Incorporation  and a
                         good standing certificate with respect to Seller.

                    (c)  At  the  Closing,  Purchaser  shall  make  the  payment
                         provided for in Section 2.9(b)(i) and shall execute and
                         deliver to the Seller,  to the extent the  execution by
                         the Purchaser is necessary, the following:

                    (i)  the Seller Note;

                    (ii) the Bills of Sale executed by Purchaser;

                    (iii)the  Assignment and  Assumption  Agreement  executed by
                         the Purchaser;

                    (iv) the Supply Agreement  executed by the Purchaser and the
                         Parent;

                    (v)  the Employment Agreement executed by the Purchaser;

                    (vi) a Guaranty executed by the Parent, the form of which is
                         attached hereto as Exhibit D;

                    (vii)an opinion from the Purchaser's  attorney to the effect
                         that  this  Agreement  and all  other  documents  to be
                         delivered  by the  Purchaser  at the Closing  have been
                         duly authorized, executed and delivered and, subject to
                         customary  exceptions and limitations,  are enforceable
                         against the Purchaser; and

                    (viii) a certified copy of  resolutions  duly adopted by the
                         Board of Directors of Purchaser and of Parent, together
                         with a copy of Purchaser's By-Laws, a certified copy of
                         Purchaser's  Certificate  of  Incorporation  and a good
                         standing certificate with respect to Purchaser.

                    (d)  At the Closing, in addition to the foregoing,  the Real
                         Property  Contract  shall be executed and delivered and
                         each  Party  shall  deliver  to the  other  such  other
                         agreements  and  documents  as  such  other  Party  may
                         reasonably request.

                                       15
<PAGE>

     3. REPRESENTATIONS AND WARRANTIES OF THE SELLER AND SHAREHOLDER

         The Seller and Shareholder jointly and severally represent and warrant,
to and for the benefit of the Purchaser and Parent, as follows:

     3.1. Due Organization; No Subsidiaries; Etc.

                    (a)  The Seller is a  corporation  duly  organized,  validly
                         existing  and in good  standing  under  the laws of the
                         State  of  Delaware  and has all  necessary  power  and
                         authority:

                    (i)  to  conduct  its  Business  in the  manner in which its
                         Business is currently being conducted;

                    (ii) to own and use its  assets  in the  manner in which its
                         assets  are  currently  owned  and  used;  and (iii) to
                         perform its obligations under the Seller Contracts.

                    (b)  The  Seller  has not  during  the past  three (3) years
                         conducted any business under or otherwise used, for any
                         purpose or in any  jurisdiction,  any fictitious  name,
                         assumed  name,  or  other  name,  other  than  the name
                         "Nexus".

                    (c)  The Seller is in good standing as a foreign corporation
                         in each of the  jurisdictions  identified  in  Schedule
                         3.1.

                    (d)  Schedule 3.1 accurately sets forth (i) the names of the
                         members of the Seller's  board of  directors,  and (ii)
                         the names and titles of the Seller's officers.

                    (e)  Neither the Seller nor  Shareholder has during the past
                         three (3) years  approved,  or commenced any proceeding
                         or made any election contemplating,  the dissolution or
                         liquidation   of  the  Seller  or  the  winding  up  or
                         cessation of the Seller's Business or affairs.

                    (f)  The Seller has no subsidiaries,  and the Seller has not
                         during the past three (3) years owned,  beneficially or
                         otherwise,  any shares or other  securities  of, or any
                         direct or indirect interest of any nature in, any other
                         Entity.

     3.2. Certificate of Incorporation and Bylaws; Records.

                    (a)  The Seller has  delivered  to  Purchaser  accurate  and
                         complete copies of:

                                       16
<PAGE>

                    (i)  the Seller's  certificate of  incorporation  (certified
                         copy) and bylaws, including all amendments thereto;

                    (ii) a certificate of good standing for the Seller;

                    (iii) stock records of the Seller; and

                    (iv) the minutes and other records of the meetings and other
                         proceedings  (including  any  actions  taken by written
                         consent  or   otherwise   without  a  meeting)  of  the
                         Shareholder,  the board of  directors of the Seller and
                         all committees of the board of directors of the Seller.

                    (b)  The books of account,  stock records,  minute books and
                         other  records of the Seller are  accurate,  up-to date
                         and complete,  in all Material respects,  and have been
                         maintained  in   accordance   with  sound  and  prudent
                         business  practices.  All of the  records of the Seller
                         are in the actual  possession and direct control of the
                         Seller or the Shareholder.

     3.3. Capitalization, Etc.

                    (a)  The  authorized  and issued capital stock of the Seller
                         consists solely of 200 shares of common stock $0.01 par
                         value per share (the "Shares").

                    (b)  All of the  Shares  are owned of  record,  legally  and
                         beneficially by  Shareholder.  All rights and powers to
                         vote the Shares are held exclusively by Shareholder.

                    (c)  All of the  Shares  (i) have been duly  authorized  and
                         validly issued, (ii) are fully paid and non-assessable,
                         and (iii) have been issued in full  compliance with all
                         applicable  securities laws and other  applicable Legal
                         Requirements.

     3.4. Financial Statements.

                    (a)  The Seller has delivered to the Purchaser the following
                         financial  statements  and  notes,  (collectively,  the
                         "Seller Financial Statements"):

                    (i)  Balance sheet,  statement of  operations,  statement of
                         cash flows and statement of  stockholder's  equity with
                         respect to the Seller for the fiscal  years  ended June
                         30, 2004, June 30, 2003 and June 30, 2002;

                    (ii) Balance  sheet  and  statement  of  operations  for the
                         two-month  period ended  September 3, 2004  attached as
                         Schedule 3.4(a); and

                    (iii)Statements  showing the accounts  receivable,  accounts
                         payable,  any other  liabilities,  and other statements
                         requested by  Purchaser  with respect to the Seller for
                         the two-month  period ended  September 3, 2004 attached
                         as Schedule 3.4(a).

                                       17
<PAGE>

                    (b)  All of the Seller Financial Statements are accurate and
                         complete in all Material respects. The Seller Financial
                         Statements in clauses (i) and (ii) above present fairly
                         the  financial   position  of  the  Seller  as  of  the
                         respective  dates thereof and the results of operations
                         for the periods covered  thereby.  The Seller Financial
                         Statements  in  clauses  (i) and (ii)  above  have been
                         prepared  in  accordance   with  GAAP,   applied  on  a
                         consistent basis throughout the periods covered, except
                         for the absence of footnotes.

     3.5. Absence of Material Changes. After June 30, 2004:

                    (a)  There has not been any Material  adverse  change in the
                         Seller's  Business,  ability to operate  the  Business,
                         condition, assets, liabilities,  operations,  financial
                         performance,  net income (or in any Material  aspect or
                         portion thereof),  and no event has occurred that might
                         have  a  Material   adverse   effect  on  the  Seller's
                         Business,  ability to operate the Business,  condition,
                         assets, liabilities, operations, financial performance,
                         net  income  (or  on any  Material  aspect  or  portion
                         thereof);

                    (b)  The  Seller  has not  forgiven  any  debt or  otherwise
                         released  or waived  any  right or claim  except in the
                         Ordinary Course of Business; and

                    (c)  The  Seller has not  entered  into any  transaction  or
                         taken any other action  outside the Ordinary  Course of
                         Business,  other than  transactions  contemplated by or
                         taken  in  connection  with  the  consummation  of this
                         Agreement and a transaction described in Schedule 3.13,
                         and except  nothing  contained  herein  shall  restrict
                         Seller   from   declaring   or  paying  any   Permitted
                         Distribution.

     3.6. Title to Assets.

                    (a)  The Seller  owns,  and has good,  valid and  marketable
                         title to, all of the following assets:

                    (i)  all  assets   reflected  on  the   Seller's   Financial
                         Statements   (except  for  inventory  and  non-Material
                         assets  sold by the Seller  since June 30,  2004 in the
                         Ordinary Course of Business);

                    (ii) all assets  acquired by the Seller  since June 30, 2004
                         (except for inventory sold by the Seller since June 30,
                         2004 in the Ordinary Course of Business):

                    (iii)all assets  referred to in Schedules  3.7, 3.8, 3.9 and
                         3.11   and   the    Real    Property    described    in
                         ------------------------------------   Schedule   3.10;
                         -------------

                    (iv) all other assets  reflected  in the Seller's  books and
                         records as being owned by the Seller; and

                                       18
<PAGE>

                    (v)  the  Purchased  Assets,  to the extent not  included in
                         clauses "(i)" through "(iv)" above.

                    (b)  Schedule  3.6.  identifies  all  assets  that are being
                         leased or licensed to the Seller. Except for the rights
                         of the lessors or  licensors of the assets set forth in
                         Schedule  3.6,  all of said  assets  are  owned  by the
                         Seller free and clear of any Encumbrances.

     3.7. Inventories.  All of the Inventory owned by the Seller as of September
3, 2004 is identified on, and located at the locations  identified on,  Schedule
3.7.  The  Inventory is valued on the books and records of the Seller and in the
Seller  Financial  Statements  at the lower of cost or market.  All inventory is
accounted  for  using the  average  cost in  accordance  with  GAAP.  All of the
finished  goods  Inventory   included  in  the  Purchased  Assets  is  in  good,
merchantable  and usable  condition  and is salable  in the  Ordinary  Course of
Business  within a  reasonable  time and at normal  profit  margins  (except  as
reserved in the Seller Financial  Statements),  except for not more than $25,000
thereof.

     3.8. Receivables.

                    (a)  Schedule   3.8   provides  an  accurate   and  complete
                         breakdown  and aging of all Accounts  Receivable of the
                         Seller as of September 3, 2004.

                    (b)  Except  as set  forth on  Schedule  3.8,  all  existing
                         Accounts  Receivable  of  the  Seller  represent  valid
                         obligations  of  customers  of the Seller  arising from
                         bona fide  transactions  entered  into in the  Ordinary
                         Course of Business.

     3.9.  Fixed Assets.  Schedule 3.9  accurately  identifies  all Fixed Assets
owned by the Seller. Schedule 3.9 also accurately identifies all tangible assets
leased to the Seller.  The Fixed Assets  identified in Schedule 3.9 are adequate
for the conduct of the Seller's Business in the manner in which such Business is
currently being conducted.

     3.10.  Real  Property.  The Seller  does not own any real  property  or any
interest in real property,  except for real property and the leaseholds  created
under the Lease  Agreements  identified  in  Schedule  3.10,  which  provides an
accurate and complete  description of the real property and the premises covered
by said Lease Agreements and the facilities located on such premises. The Seller
enjoys peaceful and undisturbed  possession of such premises.  The manufacturing
facility  located on the Real Property is a one-story  building.  The Seller has
not,  during the past three (3) years received  notice of any claim that the use
of the Real Property creates smoke,  noxious fumes,  odors or noise offensive to
the neighboring inhabitants.

     3.11. Proprietary Assets.

                    (a)  Except  as set  forth  in  Schedule  3.11,  there is no
                         Proprietary  Asset that is owned by or  licensed to the
                         Seller  or  that  is   otherwise   used  or  useful  in
                         connection with the conduct of the Seller's Business.

                                       19
<PAGE>

                    (b)  The  Seller  has taken such  measures  and  precautions
                         which  the  Seller   has   considered   necessary   and
                         appropriate to protect the confidentiality and value of
                         each  Proprietary  Asset  identified  or required to be
                         identified in Schedule 3.11.

                    (c)  To the  Knowledge  of the Seller and  Shareholder,  the
                         Seller is not infringing  and has not,  during the past
                         three (3) years,  infringed  or received  any notice or
                         other  communication  (in writing or  otherwise) of any
                         actual,   alleged,   possible  or  potential   Material
                         infringement of, any Material  Proprietary  Asset owned
                         or used by any other  Person.  To the  Knowledge of the
                         Seller and Shareholder,  no other Person is infringing,
                         and no  Proprietary  Asset  owned or used by any  other
                         Person  infringes or conflicts  with,  any  Proprietary
                         Asset owned or used by the Seller.

     3.12. Contracts.

                    (a)  Schedule 3.12  identifies  and provides an accurate and
                         complete  description  of each of the  Material  Seller
                         Contracts, Assumed Capital Leases and Assumed Operating
                         Leases.  The  Seller  has  delivered  to the  Purchaser
                         accurate  and  complete  copies of all of the  Material
                         Seller  Contracts,  the Assumed  Capital Leases and the
                         Assumed  Operating Leases  identified in Schedule 3.12,
                         including all amendments thereto.

                    (b)  Each Material  Seller  Contract,  Assumed Capital Lease
                         and Assumed  Operating Lease is valid and in full force
                         and  effect,  and  is  enforceable  by  the  Seller  in
                         accordance with their terms.

                    (c)  Except as set forth in Schedule 3.12:

                    (i)  no Person has  violated  or  breached,  or  declared or
                         committed  any  Material  default  under,  any  of  the
                         Material Seller Contracts or the Assumed Capital Leases
                         or the Assumed Operating Leases;

                    (ii) no event has occurred, and no circumstance or condition
                         exists,  that might (with or without notice or lapse of
                         time) (A) result in a violation or breach of any of the
                         provisions of any of the Material  Seller  Contracts or
                         the Assumed  Capital Leases,  or the Assumed  Operating
                         Leases  (B) give any  Person  the  right to  declare  a
                         default  or  exercise  any  remedy  under  any  of  the
                         Material Seller Contracts or the Assumed Capital Leases
                         or the Assumed  Operating  Leases,  (C) give any Person
                         the right to accelerate  the maturity or performance of
                         any of the  Material  Seller  Contracts  or the Assumed
                         Capital Leases or the Assumed  Operating Leases, or (D)
                         give any  Person  the  right to  cancel,  terminate  or
                         modify  any of the  Material  Seller  Contracts  or the
                         Assumed Capital Leases or the Assumed Operating Leases;
                         and

                                       20
<PAGE>

                    (iii)the  Seller  has  not  received  any  notice  or  other
                         communication  (in writing or otherwise)  regarding any
                         actual,  alleged,  possible or  potential  violation or
                         breach of, or default under, any of the Material Seller
                         Contracts or the Assumed  Capital Leases or the Assumed
                         Operating Leases.

                    (d)  Schedule  3.22 sets forth all of the Consents  that are
                         required  to be  obtained  resulting  from  a  transfer
                         --------------  or an assignment of the Material Seller
                         Contracts,  the Assumed  Capital Leases and the Assumed
                         Operating  Leases and Seller and Shareholder  shall use
                         reasonable   efforts  to  cause  such  Consents  to  be
                         delivered  to  Purchaser  by  the  Seller  at  Closing,
                         provided  that if any of  such  Consents  disclosed  on
                         Schedule  3.22 are not obtained  and the  -------------
                         Closing  nonetheless occurs, the failure to obtain same
                         shall be deemed to have been waived.

     3.13. Liabilities.

                    (a)  The Seller has no Liabilities, except for:

                    (i)  liabilities  identified  as such  in the  "liabilities"
                         column  of  the  Seller's   June  30,  2004   Financial
                         Statements;

                    (ii) accounts  payable  and  accrued  expenses  (of the type
                         required to be reflected as current  liabilities in the
                         "liabilities"  column of a balance  sheet  prepared  in
                         accordance  with  GAAP)  incurred  by the Seller in the
                         Ordinary Course of Business since June 30, 2004;

                    (iii)the Seller's  obligations  under the Seller  Contracts,
                         including the Material  Seller  Contracts,  the Assumed
                         Capital Leases,  the Assumed  Operating  Leases and the
                         Lease  Agreement  and  such  other  Liabilities  not in
                         excess  of  $100,000  in the  aggregate  which  are not
                         required to be included in the "liabilities"  column of
                         a balance sheet prepared in accordance with GAAP; and

                    (iv) the liabilities identified on Schedule 3.13.

                    (b)  Schedule 3.13

                    (i)  provides an accurate and complete  breakdown  and aging
                         of the  Seller's  accounts  payable as of  September 3,
                         2004; and

                    (ii) provides  an accurate  and  complete  breakdown  of all
                         customer deposits and other deposits held by the Seller
                         as of September 3, 2004.

                                       21
<PAGE>

     3.14. Compliance With Legal Requirements.

         Except as set forth in Schedule 3.14
                                -------------

                    (i)  the Seller is in  compliance  in all Material  respects
                         with each Legal Requirement that is applicable to it or
                         to the conduct of its Business or the  ownership of any
                         of its assets; and

                    (ii) the Seller  has not  received,  at any time  within the
                         past three (3) years, any notice or other communication
                         (in writing or otherwise) from any Governmental Body or
                         any other  Person  regarding  (i) any actual,  alleged,
                         possible  or  potential  violation  of, or  failure  to
                         comply with, any Legal Requirement, or (ii) any actual,
                         alleged,  possible or potential  obligation on the part
                         of the  Seller  to  undertake,  or to  bear  all or any
                         portion  of the cost of, any  cleanup or any  remedial,
                         corrective or response action of any nature.

     3.15. Governmental Authorizations.

                    (a)  Schedule 3.15 identifies:

                    (i)  each  Governmental  Authorization  that  is held by the
                         Seller; and

                    (ii) each  other  Governmental  Authorization  that,  to the
                         Knowledge of the Seller and Shareholder, is held by any
                         of the Seller's  employees  and relates to or is useful
                         in connection with the Seller's Business.

     The Seller has delivered to the Purchaser  accurate and complete  copies of
all of the Governmental  Authorizations  identified in Schedule 3.15,  including
all renewals thereof and all amendments thereto. Each Governmental Authorization
identified  or required to be  identified  in Schedule 3.15 is valid and in full
force and effect.

                    (b)  Except as set forth in Schedule 3.15:

                    (i)  the Seller and its  employees  are in compliance in all
                         Material   respects   with   all  of  the   terms   and
                         requirements   of   each   Governmental   Authorization
                         identified  or  required to be  identified  in Schedule
                         3.15; and

                    (ii) the Seller has not  received  during the past three (3)
                         years,  and,  to  the  Knowledge  of  Shareholder,   no
                         employee  of the  Seller has  received  during the past
                         three (3) years, any notice or other  communication (in
                         writing or otherwise) from any Governmental Body or any
                         other  Person   regarding  (A)  any  actual,   alleged,
                         possible or potential violation of or failure to comply
                         with  any  term  or  requirement  of  any  Governmental
                         Authorization, or (B) any actual, proposed, possible or
                         potential    revocation,     withdrawal,    suspension,
                         cancellation,   termination  or   modification  of  any
                         Governmental Authorization.

                                       22
<PAGE>

                    (c)  The Governmental  Authorizations identified in Schedule
                         3.15 constitute all of the Governmental  Authorizations
                         necessary  to enable the Seller to conduct its Business
                         in the manner in which its Business is currently  being
                         conducted.

     3.16. Tax Matters.

                    (a)  Any  Material  Tax  required  to have  been paid by the
                         Seller   (whether   pursuant   to  any  Tax  Return  or
                         otherwise)  with  respect to the  Purchased  Assets has
                         been duly paid in full.  Any  Material  Tax required to
                         have been  withheld  or  collected  by the Seller  with
                         respect to the Purchased  Assets has been duly withheld
                         and collected;  and (to the extent  required) each such
                         Tax has been paid to the appropriate Governmental Body.

                    (b)  Schedule  3.16  accurately  identifies  all Tax Returns
                         required to be filed by or on behalf of the Seller with
                         respect to the Purchased  Assets with any  Governmental
                         Body with  respect to any taxable  period  ending on or
                         before the three (3) year period  ending on the Closing
                         Date  (the  "Seller  Returns").   All  Material  Seller
                         Returns  (i) have been  filed  when due,  and (ii) have
                         been accurately and completely prepared in all Material
                         respects  in  accordance  with  all  applicable   Legal
                         Requirements.

                    (c)  Schedule 3.16 accurately identifies each examination or
                         audit  of  any  Seller   Return  with  respect  to  the
                         -------------  Purchased Assets that has been conducted
                         at any time during the past three (3) years. The Seller
                         has  delivered to the  Purchaser  accurate and complete
                         copies of all audit  reports and similar  documents (to
                         which the Seller has  access)  relating  to such Seller
                         Returns.  Except  as set  forth in  Schedule  3.16,  no
                         extension  or waiver of the  --------------  limitation
                         period  applicable  to any of the Seller  Returns  with
                         respect to the  Purchased  Assets has been  granted (by
                         the Seller or any other Person),  and no such extension
                         or waiver has been requested from the Seller.

                    (d)  Except as set forth in Schedule 3.16, no claim or other
                         Proceeding is pending or has been threatened against or
                         with   respect  to  the  Seller  with  respect  to  the
                         Purchased Assets in respect of any Tax.

     3.17. Employee and Labor Matters.

                    (a)  Schedule 3.17  accurately  sets forth,  with respect to
                         each employee of the Seller  (including any employee of
                         the  Seller  who is on a leave of  absence or on layoff
                         status):

                    (i)  the name of such employee and the date as of which such
                         employee  was  originally   hired  by  the  Seller  and
                         responsibilities;

                                       23
<PAGE>

                    (ii) such  employee's  title,  and  a  description  of  such
                         employee's duties;

                    (iii)the  dollar  amount  of  the  compensation   (including
                         wages,  salary,  commissions,  director's fees,  fringe
                         benefits,  bonuses,  profit-sharing  payments and other
                         payments  or  benefits  of any type)  received  by such
                         employee  from the  Seller  with  respect  to  services
                         performed in 2003;

                    (iv) such employee's annualized  compensation as of the date
                         of this Agreement; and

                    (v)  any  Governmental  Authorization  that  is held by such
                         employee  and that  relates to is useful in  connection
                         with the Seller's Business.

                    (b)  Except as set forth in Schedule 3.17, the Seller is not
                         a party to or bound  by,  and the  Seller  has not been
                         during the past three (3) years a party to or bound by,
                         any employment  agreement with any current  employee or
                         any union contract,  collective bargaining agreement or
                         similar Contract.

                    (c)  Except as set forth in Schedule 3.17, the employment of
                         each of the  Seller's  employees is  terminable  by the
                         Seller  at  will.  The  Seller  has  delivered  to  the
                         Purchaser  accurate and complete copies of all employee
                         manuals and  handbooks,  disclosure  materials,  policy
                         statements   and  other   materials   relating  to  the
                         employment of the current employees of the Seller.

                    (d)  The Seller agrees to pay, perform and discharge any all
                         Liabilities or obligations  owed to any employee of the
                         Seller for wages or  benefits  accruing  on or prior to
                         the Closing Date, except to the extent same is included
                         as a liability in the Net Working Capital calculation.

                                       24
<PAGE>

     3.18.  Company  Plans.  The Seller does not currently  maintain any Company
Plans, and is not currently  obligated to pay benefits to any former employee or
their family members, except for the Company Plans identified on Schedule 3.18.

     3.19.  Environmental  Matters.  Except as set forth on Schedule  3.19,  the
Seller  has not  during  the past six (6)  years  received  any  notice or other
communication  (in writing or  otherwise)  from any  Governmental  Body or other
Person regarding any actual,  alleged,  possible or potential  Liability arising
from  or  relating  to  the  presence,  generation,   manufacture,   production,
transportation,  importation, use, treatment, refinement,  processing, handling,
storage, discharge,  release, emission or disposal of any Hazardous Material. No
Person or  Governmental  Body has  during  the past six (6) years  commenced  or
threatened to commence any contribution  action or other Proceeding  against the
Seller in  connection  with any such  actual,  alleged,  possible  or  potential
Liability;  and,  except as set forth on Schedule  3.19,  no event has  occurred
during the past six (6) years, and no condition or circumstance exists, that may
directly or indirectly  give rise to, or result in the Seller  becoming  subject
to, any such Liability.

     3.20. Proceedings; Orders.

                    (a)  Except  as set  forth  in  Schedule  3.20,  there is no
                         pending Proceeding, and, to the Knowledge of Seller and
                         the  Shareholder,  no Person has threatened to commence
                         any Proceeding;

                    (i)  that involves the Seller or that  otherwise  relates to
                         or might  affect the  Seller's  Business  or any of the
                         Purchased Assets (whether or not the Seller is named as
                         a party thereto); or

                    (ii) that  challenges,  or  that  may  have  the  effect  of
                         preventing,  delaying,  making  illegal or  interfering
                         with, any of the Transactions.

     Except as set forth in Schedule 3.20, no event has occurred,  and no claim,
dispute or other  condition  or  circumstance  exists,  that might  directly  or
indirectly  give  rise to or serve as a basis for the  commencement  of any such
Proceeding.

                    (b)  The Seller has delivered to the Purchaser  accurate and
                         complete  copies of all pleadings,  correspondence  and
                         other written  materials to which the Seller has access
                         that relate to the  Proceedings  identified in Schedule
                         3.20.

                    (c)  There is no Order to which  the  Seller,  or any of the
                         assets  owned or used by the Seller,  is  subject;  and
                         Shareholder is not subject to any Order that relates to
                         the  Seller's  Business  or to  any  of  the  Purchased
                         Assets.

                    (d)  To the  Knowledge  of the  Seller and  Shareholder,  no
                         officer  or  employee  of the  Seller is subject to any
                         Order that  prohibits an employee  from  engaging in or
                         continuing any conduct,  activity or practice  relating
                         to the Seller's Business.

                                       25
<PAGE>

     3.21. Authority; Binding Nature of Agreements.

                    (a)  The Seller has the  absolute  and  unrestricted  right,
                         power and  authority  to enter into and to perform  its
                         obligations  under this  Agreement;  and the execution,
                         delivery  and   performance   by  the  Seller  of  this
                         Agreement  have been duly  authorized  by all necessary
                         action  on the  part  of  the  Seller.  This  Agreement
                         constitutes the legal,  valid and binding obligation of
                         the   Seller,   enforceable   against   the  Seller  in
                         accordance with its terms.

                    (b)  Shareholder  has the absolute and  unrestricted  right,
                         power  and  capacity  to  enter  into  and  to  perform
                         Shareholder's obligations under each of the Transaction
                         Documents  to  which  Shareholder  is or may  become  a
                         party. This Agreement  constitutes the legal, valid and
                         binding obligation of Shareholder,  enforceable against
                         Shareholder  in  accordance  with its  terms.  Upon the
                         execution of each of the other Transaction Documents at
                         the Closing,  each of such other Transaction  Documents
                         will constitute the legal, valid and binding obligation
                         of  Shareholder,   and  will  be  enforceable   against
                         Shareholder in accordance with its terms.

     3.22.  Non-Contravention  Consents.  Except as set forth in Schedule  3.22,
neither the execution nor delivery of any of the Transaction Documents,  nor the
consummation  or  performance  of any  of the  Transactions,  will  directly  or
indirectly (with or without notice or lapse of time):

                    (a)  Contravene,  conflict  with or result in a violation of
                         (i) any of the  provisions of the Seller's  certificate
                         of  incorporation  or  bylaws,  or (ii) any  resolution
                         adopted  by the  Shareholder,  the  Seller's  board  of
                         directors or any  committee  of the  Seller's  board of
                         directors;

                    (b)  Contravene,  conflict with or result in a violation of,
                         or give any Governmental Body or other Person the right
                         to challenge any of the Transactions or to exercise any
                         remedy  or  obtain   any   relief   under,   any  Legal
                         Requirement  or  any  Order  to  which  the  Seller  or
                         Shareholder,  or any of the assets owned or used by the
                         Seller, is subject;

                    (c)  Contravene,  conflict  with or result in a violation of
                         any of the  terms  or  requirements  of,  or  give  any
                         Governmental  Body  the  right  to  revoke,   withdraw,
                         suspend,  cancel, terminate or modify, any Governmental
                         Authorization  that  is held  by the  Seller  or any of
                         their  employees  or  that  otherwise  relates  to  the
                         Seller's Business or to any of the Purchased Assets;

                    (d)  Contravene,  conflict  with or result in a violation or
                         breach of, or result in a default under,  any provision
                         of any of the Material Seller Contracts;

                    (e)  Give any Person  the right to (i)  declare a default or
                         exercise any remedy  under any of the  Material  Seller
                         Contracts,  (ii) accelerate the maturity or performance
                         of any of  the  Material  Seller  Contracts,  or  (iii)
                         cancel,  terminate or modify any of the Material Seller
                         Contracts;

                                       26
<PAGE>

                    (f)  Contravene,  conflict  with or result in a violation or
                         breach of or a default  under any provision of, or give
                         any Person the right to  declare a default  under,  any
                         Contract  to which  Shareholder  is a party or by which
                         Shareholder is bound; or

                    (g)  Result in the imposition or creation of any Encumbrance
                         upon or with respect to any of the Purchased Assets.

     Except as set forth in Schedule 3.22, the Seller and Shareholder are not or
will not be required to obtain any Consent from,  any Person in connection  with
the  execution  and  delivery  of  any  of  the  Transaction  Documents  or  the
consummation or performance of any of the Transactions.

     3.23. Brokers. Except as set forth in Schedule 3.23, neither the Seller nor
Shareholder has agreed or will become  obligated to pay, or has taken any action
that  might  result in any  Person  claiming  to be  entitled  to  receive,  any
brokerage  commission,  finder's fee or similar  commission or fee in connection
with any of the  Transactions.  The Shareholder shall pay or cause the Seller to
pay such amount as is payable  pursuant to  separate  agreement  with any Person
included in Schedule 3.23.

     4. REPRESENTATIONS AND WARRANTIES OF PARENT AND PURCHASER

         The Parent and Purchaser, jointly and severally, represent and warrant,
to and for the benefit of the Seller and Shareholder, as follows:

     4.1. Due  Organization.  The Parent and Purchaser are each duly  organized,
validly existing and in good standing, under the laws of the State of Florida.

     4.2. Authority; Binding Nature of Agreement.

                    (a)  The Parent and the Purchaser each have the absolute and
                         unrestricted  right,  power and authority to enter into
                         and perform its  obligations  under this  Agreement and
                         under each of the other Transaction  Documents to which
                         the, Parent or Purchaser is a party.

                    (b)  The execution,  delivery and  performance by the Parent
                         and the Purchaser of each of the Transaction  Documents
                         to which the  Parent or  Purchaser  is a party has been
                         duly authorized by all necessary  action on the part of
                         the Parent or Purchaser and their  respective  board of
                         directors.

                    (c)  This  Agreement  and  each  of  the  other  Transaction
                         Documents  to which the  Parent or the  Purchaser  is a
                         party,   constitutes  the  legal,   valid  and  binding
                         obligation  of the  Parent  or  Purchaser,  enforceable
                         against the Parent or Purchaser in accordance  with its
                         terms.

                                       27
<PAGE>

     4.3.  Employees.  Immediately after the Closing Date, the Purchaser intends
to hire all or substantially all of the Seller's  employees on substantially the
same terms as their  employment  with the Seller;  provided  however,  except as
provided  in any  employment  agreements  entered  into  by the  Purchaser,  the
Purchaser has no obligation to employ any employee for any definitive  amount of
time.

     4.4.  Brokers.  Neither  the  Purchaser  nor the  Parent has agreed or will
become obligated to pay, or has taken any action that might result in any Person
claiming to be entitled to receive,  any brokerage  commission,  finder's fee or
similar commission or fee in connection with any of the Transactions.

     5. CONDITIONS PRECEDENT TO PURCHASER'S OBLIGATION TO CLOSE.

         The Purchaser's obligation to purchase the Purchased Assets, assume the
Assumed Liabilities, and to take the other actions required to be taken by the
Purchaser at the Closing is subject to the satisfaction, at or prior to the
Closing, of each of the following conditions (any of which may be waived by the
Purchaser, in whole or in part, in accordance with Section 9.5):

     5.1. Accuracy of Representations. All of the representations and warranties
made by the Seller and Shareholder in this Agreement (considered  collectively),
and each of said representations and warranties (considered individually), shall
have been accurate in all Material respects as of the date of this Agreement and
as of the Closing Date.

     5.2. Performance of Obligations.

                    (a)  The Seller shall have  executed and  delivered  each of
                         the documents  required to be executed and delivered by
                         the Seller pursuant to Section 2.10(b).

                    (b)  All of the other  covenants  and  obligations  that the
                         Seller and  Shareholder  are required to comply with or
                         to  perform  at or  prior  to the  Closing  (considered
                         collectively),   and   each  of  said   covenants   and
                         obligations (considered individually),  shall have been
                         duly  complied  with  and  performed  in  all  Material
                         respects.

     5.3. Consents.  Each of the Consents identified in Schedule 3.22 shall have
been obtained and shall be in full force and effect.

     5.4. No Material Adverse Change.  There shall have been no Material adverse
change in the Seller's  Business,  ability to operate the  Business,  condition,
assets, liabilities,  operations,  financial performance,  net income (or in any
aspect or portion thereof) since July 31, 2004.

     5.5.  Additional  Documents.  Purchaser shall have received and reviewed to
its satisfaction the following documents:

                    (a)  Such documents as the Purchaser may reasonably  request
                         in good  faith for the  purpose of (i)  evidencing  the
                         accuracy of any  representation or warranty made by the
                         Seller or  Shareholder,  (ii) evidencing the compliance
                         by the Seller or Shareholder  with, or the  performance
                         by the  Seller  or  Shareholder  of,  any  covenant  or
                         obligation   set   forth  in  this   Agreement,   (iii)
                         evidencing the  satisfaction of any condition set forth
                         in this Section 5, or (iv) otherwise  facilitating  the
                         consummation or performance of any of the Transactions.

                                       28
<PAGE>

                    (b)  Any  document  required to be  delivered  to  Purchaser
                         pursuant to this  Agreement  that has not already  been
                         delivered to the  Purchaser  prior to the Closing Date,
                         including but not limited to the Disclosure Schedules.

     5.6. No Claim  Regarding the Purchased  Assets or Sale Proceeds.  No Person
shall have made or threatened  any claim  asserting  that such Person (a) may be
the  holder or the  beneficial  owner of, or may have the right to acquire or to
obtain  beneficial  ownership  of, any of the  Purchased  Assets;  or (b) may be
entitled to all or any portion of the Consideration.

     5.7. No Prohibition.  Neither the  consummation  nor the performance of any
the Transactions  will,  directly or indirectly (with or without notice or lapse
of time),  contravene or conflict with or result in a violation of, or cause the
Purchaser  or any Person  affiliated  with the  Purchaser  to suffer any adverse
consequence  under,  (a) any applicable  Legal  Requirement or Order, or (b) any
Legal  Requirement or Order that has been proposed by or before any Governmental
Body.

     5.8. No Actions  Outside of the  Ordinary  Course of  Business.  The Seller
shall be operated only in the Ordinary Course of Business  between  September 3,
2004 and the Closing  Date,  except as otherwise  permitted  herein,  including,
without limitation, the declaration and/or payment of any Permitted Distribution
..

     5.9. Compliance with Legal Requirements.  The Seller shall be in compliance
in all Material respects with each Legal Requirement that is applicable to it or
to the conduct of the  Business or the  ownership of any of its assets as of the
Closing Date.

     5.10. 2004 EBITDA Target.  Purchaser shall be reasonably satisfied that the
Seller's  Business  shall  have  achieved   Earnings  Before  Interest,   Taxes,
Depreciation  and  Amortization  for the fiscal  year ended June 30,  2004 of at
least Two Million Dollars ($2,000,000.00).

     5.11. No Injunction.

         There shall not be in effect any injunction that shall have been
entered by a court of competent jurisdiction since the date of this Agreement
that prohibits the purchase of the Purchased Assets by the Purchaser from the
Seller and no Person shall have threatened to obtain any such injunction.

     6. CONDITIONS PRECEDENT TO THE SELLER AND SHAREHOLDER'S OBLIGATION TO CLOSE

         The Seller's and Shareholder's obligation to sell the Purchased Assets
and to take the other actions required to be taken by the Seller and Shareholder
at the Closing is subject to the satisfaction, at or prior to the Closing, of
each of the following conditions (any of which may be waived by the Seller and
Shareholder, in whole or in part, in accordance with Section 9.5):

                                       29
<PAGE>

     6.1. Accuracy of Representations. All of the representations and warranties
made by the Parent or Purchaser in this Agreement (considered collectively), and
each of said  representations and warranties  (considered  individually),  shall
have been accurate in all Material respects as of the date of this Agreement and
as of the Closing Date.

     6.2. Purchaser's Performance.

                    (a)  The Parent and  Purchaser  shall have made the payments
                         and  shall  have  executed  and  delivered  each of the
                         documents  required to be executed and delivered by the
                         Parent and Purchaser pursuant to Section 2.10(c).

                    (b)  All of the other  covenants  and  obligations  that the
                         Parent and  Purchaser are required to comply with or to
                         perform  pursuant to this  Agreement at or prior to the
                         Closing  (considered  collectively),  and  each of said
                         covenants and  obligations  (considered  individually),
                         shall  have been  complied  with and  performed  in all
                         Material respect.

     6.3. No Injunction.  There shall not be in effect any injunction that shall
have been  entered by a court of competent  jurisdiction  since the date of this
Agreement that  prohibits the sale of the Purchased  Assets by the Seller to the
Purchaser and no Person shall have threatened to obtain any such injunction.

     6.4. No Prohibition.  Neither the  consummation  nor the performance of any
the Transactions  will,  directly or indirectly (with or without notice or lapse
of time),  contravene or conflict with or result in a violation of, or cause the
Seller or the Shareholder or any Person affiliated with either of them to suffer
any adverse consequence under, (a) any applicable Legal Requirement or Order, or
(b) any Legal  Requirement  or Order  that has been  proposed  by or before  any
Governmental Body.

     7. INDEMNIFICATION, ETC.

     7.1. Survival of Representations and Covenants.

                    (a)  The   representations,    warranties,   covenants   and
                         obligations  of  each  Party  shall  survive   (without
                         limitation):

                    (i)  the  Closing and the sale of the  Purchased  Assets to,
                         and the assumption of the Assumed  Liabilities  by, the
                         Purchaser;

                    (ii) any  sale  or  other  disposition  of any or all of the
                         Purchased Assets by the Purchaser;

                    (iii)the  transfer  or  assignment  of any  of  the  Assumed
                         Liabilities by the Purchaser; and

                                       30
<PAGE>

                    (iv) any  acquisition  transaction  effected by or otherwise
                         involving the Purchaser or the Seller.

     All of said  representations  and warranties shall remain in full force and
effect and shall survive until March 31, 2006;  provided,  however,  any Damages
arising from any representation or warranty set forth in Sections 3.1, 3.3, 3.6,
3.16 or 3.17,  3.18,  3.19 shall survive for the entire period of any applicable
statutes of limitations but not in excess of six (6) years. All of the covenants
and agreements of the Parties set forth herein  including  under Sections 2.9(c)
and Article 8 hereof or in any of the Transaction Documents, including under the
Seller Note, the Supply Agreement and the Assumption  Agreement shall survive in
accordance with their terms.

                    (b)  The   representations,    warranties,   covenants   and
                         obligations  of the  Seller  and  Shareholder,  and the
                         rights and remedies that may be exercised in connection
                         therewith,  shall not be limited or otherwise  affected
                         by or as a result of any  information  furnished to, or
                         any investigation made by or Knowledge of the Parent or
                         Purchaser.

                    (c)  For purposes of this Agreement, each statement or other
                         item  of  information   set  forth  in  the  Disclosure
                         Schedules  shall be deemed to be a  representation  and
                         warranty  made by the  Seller and  Shareholder  in this
                         Agreement.

     7.2.  Indemnification  by  the  Seller  and  Shareholder.  Subject  to  the
limitations in Sections 7.1, 7.8 and 7.10, the Seller and  Shareholder,  jointly
and  severally,  shall hold  harmless  and  indemnify  each of the  Parent,  the
Purchaser, their respective directors,  officers and their respective successors
and assigns (collectively,  "Purchaser Indemnitees") from and against, and shall
compensate  and  reimburse  each of the Purchaser  Indemnitees  for, any Damages
which are directly or  indirectly  suffered or incurred by any of the  Purchaser
Indemnitees or to which any of the Purchaser  Indemnitees  may otherwise  become
subject  (regardless  of whether or not such Damages  relate to any  third-party
claim) which arise from or as a result of:

                    (a)  any breach of any  representation  or warranty  made by
                         the Seller or  Shareholder  in this Agreement or in any
                         of the other Transaction Documents;

                    (b)  any breach of any representation,  warranty, statement,
                         information  or provision  contained in the  Disclosure
                         Schedules;

                    (c)  any breach of any covenant or  obligation of the Seller
                         or  of  the  Shareholder  in  any  of  the  Transaction
                         Documents;

                    (d)  any  Liability  of the Seller  other  than the  Assumed
                         Liabilities; or

                    (e)  any Proceeding  relating  directly or indirectly to any
                         breach, alleged breach, Liability or matter of the type
                         referred  to in clause  "(a),"  "(b),  "(c)," or "(d),"
                         above  (including  any  Proceeding   commenced  by  any
                         Purchaser  Indemnitee  for the purpose of enforcing any
                         of its rights under this Section 7).

                                       31
<PAGE>

     7.3. Remediation Obligation.

         The Parties acknowledge that Schedule 3.19 and the Continuation thereof
disclose that a portion of the building on the Real Property has been treated
for a mold condition (the "Treated Portion") and the remaining portion of the
building requires such treatment (the "Remaining Portion"). The Seller and the
Shareholder shall expeditiously cause the Remaining Portion to be treated for
such condition, at their sole cost and expense, (the "Remediation Obligation").
The Purchaser and Parent shall make the premises available for such purpose
(during business hours whenever possible and during non-business hours) and
shall reasonably cooperate with Seller, Shareholder and such Persons as they
hire for such purpose. The method of treatment shall be similar to the method
employed in remedying the Treated Portion, or such other method as Shareholder
shall determine, provided in any event that the result of the treatment is
comparable to that achieved with respect to the Treated Portion.

     7.4.  Setoff.  Upon sixty (60) days' notice to Shareholder and Seller,  the
Purchaser  shall have the right to set off up to $462,500 of any amount that may
be owed to any  Purchaser  Indemnitee  under this  Section 7 against  any amount
payable by any Purchaser Indemnitee under the Seller Note, provided however that
any such notice shall specify with  particularity  the basis for any such setoff
and, no amount shall be setoff if, within such sixty (60) day period,  Seller or
Shareholder   commences  an  action  submitting  such  dispute  to  a  court  of
appropriate jurisdiction.

     7.5.  Defense  of Third  Party  Claims.  In the event of the  assertion  or
commencement  by any  Person  not a Party  hereto  of any  claim  or  Proceeding
(whether  against the  Purchaser  Indemnitees  or against any other Person) with
respect to which the Seller and Shareholder  may become  obligated to indemnify,
hold harmless, compensate or reimburse any Purchaser Indemnitee pursuant to this
Section 7, the Seller and Shareholder  shall assume the defense of such claim or
Proceeding at the sole expense of the Seller and Shareholder  and, in connection
therewith:

                    (a)  The Seller and Shareholder shall proceed to defend such
                         claim or Proceeding  in a diligent  manner with counsel
                         reasonably satisfactory the Purchaser;

                    (b)  The  Purchaser  shall make  available to the Seller and
                         Shareholder any non-privileged  documents and materials
                         in  the   possession  of  the  Purchaser  that  may  be
                         necessary to the defense of such claim or Proceeding;

                    (c)  The Seller  and  Shareholder  shall keep the  Purchaser
                         informed  of  all  Material   developments  and  events
                         relating to such claim or Proceeding;

                    (d)  The Purchaser  shall have the right to  participate  in
                         the defense of such claim or Proceeding at the cost and
                         expense of Purchaser,  provided  however,  if Seller or
                         Shareholder  fails to  comply  with  the  terms of this
                         Section  7.5,  the cost and  expense of defense of such
                         claim   expended  by  Parent  or  Purchaser   shall  be
                         reimbursed   to  Parent  or   Purchaser  by  Seller  or
                         Shareholder;

                                       32
<PAGE>

                    (e)  The Seller and Shareholder shall not settle,  adjust or
                         compromise  such claim or Proceeding if such settlement
                         would have a Material  adverse  effect on the Purchaser
                         (after taking into account this indemnity)  without the
                         prior written  consent of the Purchaser,  which consent
                         shall not be unreasonably withheld.

     7.6. Exercise of Remedies by Purchaser Indemnitees Other Than Purchaser. No
Purchaser  Indemnitee  (other than the  Purchaser  or any  successor  thereto or
assign  thereof)  shall be  permitted  to assert  any  indemnification  claim or
exercise any other  remedy under this  Agreement  unless the  Purchaser  (or any
successor  thereto or assign  thereof)  shall have consented to the assertion of
such indemnification clause or the exercise of such other remedy.

     7.7. Indemnification by Parent and Purchaser. Subject to the limitations in
Sections 7.1, 7.9 and 7.10,  the Parent and  Purchaser,  jointly and  severally,
shall hold harmless and indemnify the Seller and  Shareholder  from and against,
and  shall  compensate  and  reimburse  the  Seller  and  Shareholder  and their
respective  directors and officers and their  respective  successors and assigns
(collectively,  "Seller/Shareholder  Indemnitees")  for,  any Damages  which are
directly or  indirectly  suffered  or incurred by any of the  Seller/Shareholder
Indemnitees or to which any of the Seller/Shareholder  Indemnitees may otherwise
become  subject  (regardless  of  whether  or not  such  Damages  relate  to any
third-party  claim),  including all costs and reasonable  attorneys' fees, which
arise from or as a result of:

                    (a)  any breach of any  representation  or warranty  made by
                         the Parent or Purchaser in this Agreement;

                    (b)  any breach of any covenant or  obligation of the Parent
                         or  Purchaser  in  any  of  the  Transaction  Documents
                         including  Purchaser's  covenants  and  obligations  in
                         respect of the Assumed  Liabilities,  the Seller  Note,
                         the Earn-Out and the Supply Agreement; or

                    (c)  any Proceeding  relating  directly or indirectly to any
                         breach, alleged breach, Liability or matter of the type
                         referred to in clause "(a)," or "(b)" above  (including
                         any  Proceeding  commenced  by  any  Seller/Shareholder
                         Indemnitee  for the  purpose  of  enforcing  any of its
                         rights under this Section 7).

     7.8.  Threshold  for  Indemnification  by the Seller and  Shareholder.  The
Seller and Shareholder shall not be required to make any indemnification payment
pursuant  to  Section  7.2 for any  breach of any of their  representations  and
warranties and the setoff rights under Section 7.4 shall not be applicable until
such time as the total amount of all Damages (including the Damages arising from
such  breach  and all  other  Damages  arising  from any other  breaches  of any
representations or warranties) that have been directly or indirectly suffered or
incurred by any one or more of the Purchaser Indemnitees, or to which any one or
more of the Purchaser Indemnitees has or have otherwise become subject,  exceeds
$250,000 (the  "Basket") in the  aggregate.  At such time as the total amount of
such Damages  exceeds the Basket in the  aggregate,  the  Purchaser  Indemnitees
shall be entitled to be  indemnified  against all Damages in excess of the first
$150,000 of Damages.  The  provisions of this Section 7.8 shall not apply to the
obligations of Seller and the  Shareholder in respect of any Net Working Capital
Adjustment or any  Pro-Rating  Adjustment or the  Remediation  Obligation or the
obligations under Section 3.23.

                                       33
<PAGE>

     7.9. Threshold for Indemnification by Parent and Purchaser.  The Parent and
Purchaser shall not be required to make any indemnification  payment pursuant to
Section 7.7 for any breach of any of its  representations  and warranties  until
such time as the total amount of all Damages (including the Damages arising from
such  breach  and all  other  Damages  arising  from any other  breaches  of any
representations or warranties) that have been directly or indirectly suffered or
incurred   by   the   Seller/Shareholder    Indemnitees,   or   to   which   the
Seller/Shareholder Indemnitees have otherwise become subject, exceeds the Basket
in the aggregate.  At such time as the total amount of such Damages  exceeds the
Basket in the aggregate, the Seller/Shareholder Indemnitees shall be entitled to
be  indemnified  against all Damages in excess of the first $150,000 of Damages.
The  provisions  of this  Section  7.9  shall not  apply to the  obligations  of
Purchaser  and the Parent  under or in respect  of the Seller  Note,  the Supply
Agreement,  the  Earn-Out,  the Assumed  Obligations,  any Net  Working  Capital
Adjustment or any Pro-Rating Adjustment.

     7.10. Limitation on Indemnification. The maximum aggregate dollar amount of
the collective  indemnification  liability of the Seller and the  Shareholder to
the Purchaser  Indemnitees  shall be the Purchase  Price to the extent  actually
paid plus the sum of any  Earn-Out  payments  actually  paid to the Seller  (the
"Seller/ Shareholder  Limitation") except (i) if the Seller or Shareholder shall
have made any  representation  or warranty  herein  that,  in either  case,  was
fraudulent  or (ii) for  breaches of Section 8 hereof,  in either of which event
the  Seller/Shareholder  Limitation  shall not apply and  Section  7.8 shall not
apply. The maximum aggregate dollar amount of the  indemnification  liability of
the Parent and  Purchaser  to the  Seller/Shareholder  Indemnitees  shall be the
Purchase Price to the extent  actually paid plus the sum of any actual  Earn-Out
payments  paid to the  Seller  (the  "Purchaser  Limitation")  except (i) if the
Parent or Purchaser shall have made any  representation  or warranty herein that
was  fraudulent  or (ii) for  breaches  of Section 8 hereof,  in either of which
event the Purchaser Limitation shall not apply and Section 7.9 shall not apply.

     7.11. Exclusivity of Indemnification Remedies. The indemnification remedies
and other  remedies  provided in this Section 7 shall be deemed to be exclusive.
Accordingly,  the exercise by any Person of any of its rights under this Section
7 shall  be  deemed  to be an  election  of  remedies  and  shall be  deemed  to
prejudice, or to constitute or operate as a waiver of, any other right or remedy
that such  Person may be entitled to  exercise  (whether  under this  Agreement,
under any other Contract, under any statute, rule or other Legal Requirement, at
common  law, in equity or  otherwise),  except for the  exercise  of  subsequent
remedies  under this  Section 7 and the  exercise of  remedies  under any of the
Transaction Documents.

     8. OTHER AGREEMENTS

     8.1.   Non-Compete.   The  Seller   and   Shareholder,   collectively   and
individually,  agree that during the period  starting  on the  Closing  Date and
continuing  through two (2) years from the Closing  Date and  provided  that the
Purchaser  has not  previously  committed a Material  breach of its  obligations
under the Seller Note, the Supply Agreement, or in respect of the Earn-Out which
remains uncured after any required notice (the "Restrictive Period"), the Seller

                                       34
<PAGE>

and  Shareholder,  shall not,  directly or indirectly,  anywhere that the Seller
currently  does  Business:  (i)  participate  or  engage in any  business  which
competes  with the  Business,  whether as owner,  operator,  officer,  director,
creditor,  consultant,  partner,  agent,  employee or  otherwise or (ii) hire or
attempt to hire,  or  contract  or  attempt  to  contract  with,  any  officers,
employees,  agents,  independent  contractors  or  other  persons  that  have an
employment related relationship  (whether written or oral) with the Seller prior
to the Closing  Date,  provided  however  that the  foregoing  shall not prevent
Shareholder  from  continuing  to employ or engage any such person who currently
performs  services  for both  Seller  and  Shareholder  so long as same does not
substantially  interfere with the performance by such person of his services for
Purchaser.  Notwithstanding  the foregoing,  Shareholder may, without  violating
this Section 8.1, (i) continue its business of the  integration  and assembly of
components  utilized with flat-panel displays (commonly known in the industry as
box build) and (ii) own up to a five percent (5%) passive equity interest in any
publicly traded company. This covenant is expressly enforceable by all assignees
and/or successors of Purchaser.

     8.2. Nonsolicitation.

                    (a)  Third  Parties.  During  the  Restrictive  Period,  the
                         Seller  and   Shareholder   shall  not,   directly   or
                         indirectly,  solicit,  encourage,  facilitate or induce
                         any customer,  supplier,  agent, sales  representative,
                         employee,  consultant,  or licensee of the Seller prior
                         to  the  Closing  Date  or  Purchaser  or  any  of  its
                         affiliates to breach any agreement or discontinue  his,
                         her, or its business  relationships  with the Purchaser
                         or its affiliates.

                    (b)  Employees.  The Seller  and  Shareholder  covenant  and
                         agree that during the  Restrictive  Period,  the Seller
                         ---------  and  Shareholder   shall  not   specifically
                         solicit to be an employee, or independent contractor of
                         Seller or Shareholder, any person who is an employee of
                         Purchaser,  except  with the prior  written  consent of
                         Purchaser,  provided  however that the foregoing  shall
                         not prevent  Shareholder  from  continuing to employ or
                         engage any such person who currently  performs services
                         for both  Seller and  Shareholder  so long as same does
                         not  substantially  interfere  with the  performance by
                         such person of his services for Purchaser.

     8.3. Confidentiality

                    (a)  Purchaser  Confidential  Information.  The  Seller  and
                         Shareholder shall not, directly or indirectly, disclose
                         to anyone,  or use in  competition  with the Purchaser,
                         any Purchaser Confidential Information. For purposes of
                         this Agreement,  "Purchaser  Confidential  Information"
                         shall mean information  relating to the Purchaser,  its
                         business and  potential  business,  including,  without
                         limitation,  information  relating to the  Business and
                         the  Purchased   Assets,   trade   secrets,   financial
                         information,  marketing and business plans,  methods of
                         providing services, practices, documentation, drawings,
                         facilities,  customers,  policies,  suppliers, pricing,
                         customer  lists and leads,  and other  information  and
                         know-how that has actual or potential economic value to
                         the  Purchaser  because  it is not  generally  known to
                         others and is not readily  ascertainable  by them.  The
                         restrictions  of this  Section  8.3  shall not apply to
                         information  (i) which enters the public domain through
                         no  fault  of  the  Seller  or  Shareholder;  (ii)  the
                         disclosure  of which is  required  by final  order of a
                         court  of   competent   jurisdiction;   or  (iii)   the
                         disclosure  of  which  is  required  to be  made by the
                         Seller or Shareholder in any public filing.

                                       35
<PAGE>

                    (b)  Shareholder  Confidential  Information.  The Parent and
                         Purchaser   shall   not,    directly   or   indirectly,
                         --------------------------------------    disclose   to
                         anyone,  or use in competition  with  Shareholder,  any
                         Shareholder Confidential  Information.  For purposes of
                         this     Agreement,      "Shareholder      Confidential
                         -------------------------   Information"   shall   mean
                         information  relating to the Shareholder,  its business
                         and ----------- potential business,  including, without
                         limitation,   trade  secrets,   financial  information,
                         marketing  and  business  plans,  methods of  providing
                         services,    practices,    documentation,     drawings,
                         facilities,  customers,  policies,  suppliers, pricing,
                         customer  lists and leads,  and other  information  and
                         know-how that has actual or potential economic value to
                         the  Purchaser  because  it is not  generally  known to
                         others  and  is  not  readily   ascertainable  by  them
                         provided   however,   does  not   include   information
                         concerning  the Seller,  the Business or the  Purchased
                         Assets.  The restrictions of this Section 8.3 shall not
                         apply to information (i) which enters the public domain
                         through no fault of the Purchaser;  (ii) the disclosure
                         of  which  is  required  by  final  order of a court of
                         competent  jurisdiction;  or (iii)  the  disclosure  of
                         which is  required to be made by the  Purchaser  in any
                         public filing.

     8.4.  Severability.  The  covenants  set  forth in this  Section 8 shall be
deemed  severable,  and the  invalidity  of any  covenant  shall not  affect the
validity  or  enforceability  of any  other  covenant  or the  validity  of this
Agreement.  The  existence  of any claim or cause of action by a Party shall not
constitute a defense to the  enforcement by any other Party of these  covenants.
The failure by a Party to object to any conduct in  violation  of this Section 8
shall  not be  deemed a waiver  by such  Party,  but such  Party  may,  if it so
desires,  specifically  waive  any  part or any of these  covenants  only to the
extent that such waiver is set forth in writing.

     8.5. Judicial Modification.  In the event that any court finally holds that
the  time  or  territory  or any  other  provision  stated  in  this  Section  8
constitutes  an  unreasonable  restriction,   then  the  Parties  hereto  hereby
expressly  agree that the  provisions  of this  Agreement  shall not be rendered
void,  but shall apply as to time and  territory or to such other extent as such
court may judicially determine or indicate constitutes a reasonable  restriction
under the circumstances involved.

     8.6.  Specific  Enforcement.  The restrictive  covenants  contained in this
Section 8 are covenants independent of any other provision of this Agreement and
the  existence  of any claim that any Party may allege  against any other Party,
whether based on this Agreement or otherwise,  shall not prevent the enforcement
of these  covenants.  The Parties  acknowledge  that the  restrictions  on their
activities  as  contained  in this  Section 8 are  required  for the  reasonable
protection  of the  interests  of the  Parties as a result of the  Transactions.

                                       36
<PAGE>

Therefore,  the Parties  hereby  agree that,  in the event of a violation of any
provision of this Section 8, each Party will be  entitled,  if it so elects,  to
institute and prosecute  proceedings  at law or in equity to obtain damages with
respect to such violation or to enforce  specific  performance of this Section 8
against the other  Parties or to enjoin the other  Parties from  engaging in any
activity in violation  hereof without the posting of any bond in addition to any
other remedies which such Party may have.

     8.7.  Tolling of Time Periods.  In the event that Shareholder or the Seller
violate the provisions of Section 8.1 or 8.2 of this Agreement,  the Restrictive
Period shall toll during any period of non-compliance, and shall not continue to
elapse until  Shareholder  and the Seller is in full compliance with Section 8.1
and 8.2 of this Agreement.

     8.8.  Confirmation as to Scope. The Parties hereto  acknowledge and confirm
that:  (i) the  length  of the  term of the  restrictions  and the  geographical
restrictions contained in this Section 8 are fair and reasonable and are not the
result  of  overreaching,  duress  or  coercion  of any  kind;  (ii)  the  full,
uninhibited and faithful  observance of each of the covenants  contained in this
Section 8 shall not cause any undue hardship,  financial or otherwise; and (iii)
the Seller's and  Shareholder's  special Knowledge of the Business of the Seller
is such as would  cause  Purchaser  serious  injury  and loss if the  Seller  or
Shareholder  uses such  Knowledge  to benefit a  competitor  of  Purchaser or to
compete  with  Purchaser.  The  Parties  hereto  acknowledge  and agree that the
provisions  of this Section 8 are  essential to protect  Purchaser's  legitimate
business interest as contemplated  under New York law and are in addition to any
rights  Purchaser  may have to  enforce  its  rights  with  respect to the trade
secrets of Purchaser pursuant to New York law.

     8.9.  Access to  Records.  The  Parties  agree to furnish or to cause to be
furnished  to  each  other  upon  request  as  promptly  as  practicable,   such
information and assistance relating to the Seller as is reasonably necessary for
the filing of any Tax return,  declaration or report, the making of any election
related to Taxes, the preparation for any audit by any taxing authority,  or the
prosecution  or defense of any claim,  suit, or proceeding;  provided,  however,
that such information and assistance shall be provided in a manner that will not
unreasonably  disrupt  the  business  of  the  Party  providing  information  or
assistance, at the requesting Party's own cost and expense.

     8.10. No Resale of Purchased Assets.  The Parent and Purchaser covenant and
agree that until the Seller Note is paid in full and the Earn-Out, to the extent
earned,  has been paid in full, the Purchaser will not,  directly or indirectly,
unless  consented to in writing by Purchaser,  (i) sell,  transfer or assign any
Material  portion of the  Purchased  Assets to any  Person,  other than sales of
inventory in the Ordinary Course of Business,  (ii) grant or permit to exist any
Encumbrance  on any  Material  portion of the  Purchased  Assets in favor of any
Person other than a Person with which the Seller or the  Shareholder has entered
into a  subordination  agreement,  except for any  Encumbrance  on the Purchased
Assets  existing  immediately  prior  to the  consummation  of the  transactions
contemplated hereby, and (iii) be a party to any merger,  consolidation or other
transaction  as a result of which a Change in Control  (as defined in the Seller
Note) occurs or will occur.

                                       37
<PAGE>

     8.11.   Post-Audit  Closing  Cooperation.   Shareholder  and  Seller  shall
cooperate with Purchaser in connection with Purchaser causing to be conducted at
Purchaser's  cost  and  expense,  an  audit  by  Purchaser's   certified  public
accountants of the last two (2) fiscal years of the operation of the Business as
conducted by Seller, or of Seller with respect to its last two (2) fiscal years.

     8.12.  Transitional  Services.  The  Shareholder  shall continue to include
under its health  insurance  coverage  employees  of the  Seller  working at the
Seller's Woburn, MA premises until the earlier of such time as Purchaser is able
to include such employees  under a policy  procured by Purchaser,  or October 1,
2004,  and  the  cost  thereof  shall  be  included  in the  calculation  of the
Pro-Rating Adjustment.

9.                          MISCELLANEOUS

     9.1.  Counterparts;  Interpretation.  This Agreement may be executed in any
number of counterparts,  each of which shall be deemed an original,  and both of
which shall  constitute one and the same instrument.  This Agreement  supersedes
all prior  discussions  and  agreements  between the Parties with respect to the
subject matter hereof, and this Agreement contains the sole and entire agreement
among the Parties with respect to the matters  covered  hereby.  All  Disclosure
Schedules hereto shall be deemed a part of this Agreement.  This Agreement shall
not be altered or amended  except by an  instrument  in writing  signed by or on
behalf of all of the Parties hereto.  No ambiguity in any provision hereof shall
be construed  against a Party by reason of the fact it was drafted by such Party
or its counsel.  References to "including"  means including without limiting the
generality of any description  preceding such term. Nothing expressed or implied
in this Agreement is intended, or shall be construed, to confer upon or give any
person other than the Parties any rights or remedies  under or by reason of this
Agreement.

     9.2.  Governing  Law. The validity  and effect of this  Agreement  shall be
governed by and construed  and enforced in accordance  with the laws of New York
without  regard  to  principles  of  conflicts  of laws  thereof.  Any  dispute,
controversy or question of  interpretation  arising under, out of, in connection
with or in relation to this Agreement or any amendments hereof, or any breach or
default  hereunder,  shall be litigated  exclusively  in the courts of competent
jurisdiction  located  in  New  York,  New  York.  Each  of the  Parties  hereby
irrevocably  submits to the jurisdiction of any court of competent  jurisdiction
located in New York,  New York.  Each Party hereby  irrevocably  waives,  to the
fullest extent it may effectively do so, the defense of an inconvenient forum to
the maintenance of any such action in New York, New York.

     9.3.  Successors and Assigns;  Assignment.  This Agreement shall be binding
upon and shall inure to the benefit of the Parties and their  respective  heirs,
executors, legal representatives, and successors. Neither this Agreement nor the
rights and  obligations  hereunder  may be assigned by either  Party  absent the
express prior written consent of the other.

     9.4.  Partial  Invalidity  and  Severability.  All rights and  restrictions
contained  herein may be exercised and shall be  applicable  and binding only to
the extent that they do not violate any  applicable  laws and are intended to be
limited  to the extent  necessary  to render  this  Agreement  legal,  valid and
enforceable.  If any terms of this  Agreement  not  essential to the  commercial
purpose of this Agreement shall be held to be illegal,  invalid or unenforceable

                                       38
<PAGE>

by a court of competent  jurisdiction,  it is the  intention of the Parties that
the remaining terms hereof shall  constitute their agreement with respect to the
subject  matter hereof and all such  remaining  terms shall remain in full force
and  effect.  To  the  extent  legally  permissible,  any  illegal,  invalid  or
unenforceable provision of this Agreement shall be replaced by a valid provision
which  will  implement  the  commercial  purpose  of  the  illegal,  invalid  or
unenforceable provision.

     9.5.  Waiver.  Any term or condition of this Agreement may be waived at any
time by the Party which is entitled  to the  benefit  thereof,  but only if such
waiver is evidenced by a writing signed by such Party. No failure on the part of
a Party to  exercise,  and no delay in  exercising,  any right,  power or remedy
created  hereunder,  shall operate as a waiver thereof,  nor shall any single or
partial  exercise of any right,  power or remedy by any such Party  preclude any
other  future  exercise  thereof or the  exercise of any other  right,  power or
remedy.  No  waiver  by any Party to any  breach  of or  default  in any term or
condition  of this  Agreement  shall  constitute  a waiver  of or  assent to any
succeeding  breach  of or  default  in the same or any other  term or  condition
hereof. Upon the Closing of the transactions contemplated hereby, all conditions
to  Closing  set forth in  Sections  5 and 6 hereof  shall be  deemed  waived or
satisfied, except as otherwise provided in any agreement executed by the Parties
at the Closing.

     9.6. Headings.  The headings as to contents of particular  sections of this
Agreement are inserted for convenience only and shall not be construed as a part
of this  Agreement or as a limitation on the scope of any terms or provisions of
this Agreement.

     9.7.  Acceptance by Fax. This  Agreement  shall be accepted,  effective and
binding, for all purposes, when the Parties shall have signed and transmitted to
each other, by telecopier or otherwise, copies of the signature pages hereto.

     9.8.  Expenses.  All costs and expenses  incurred in  connection  with this
Agreement  and the  transactions  contemplated  hereby will be paid by the Party
incurring such costs and expenses.

     9.9.  Attorneys'  Fees.  In the event of any  litigation  arising under the
terms  of any of the  Transaction  Documents,  the  prevailing  Party  shall  be
entitled to recover its or their reasonable attorneys' fees and court costs from
the other Party, including trial and appellate proceedings, as well as the costs
of collecting any judgment.

     9.10.  Specific  Performance.   Each  Party  agrees  that  the  Transaction
Documents  are  intended  to be legally  binding  and  specifically  enforceable
pursuant to their terms and that the other Party would be irreparably  harmed if
any  of the  provisions  of the  Transaction  Documents  are  not  performed  in
accordance with their specific terms and that monetary damages would not provide
adequate remedy in such event.  Accordingly,  in addition to any other remedy to
which a non-breaching  party may be entitled at law, a non-breaching party shall
be  entitled  to  injunctive  relief  without the posting of any bond to prevent
breaches of the Transaction  Documents and specifically to enforce the terms and
provisions hereof.

     9.11.  Further  Assurances.  The  Parties  shall  from  time to time do and
perform such additional  acts and execute and deliver such additional  documents
and  instruments  as may be required  or  reasonably  requested  by any Party to
establish, maintain or protect its rights and remedies or to effect the purposes
of this Agreement.

                                       39
<PAGE>

     9.12. Notices. All notices and other  communications  hereunder shall be in
writing and shall be deemed to have been given: (i) when delivered by hand; (ii)
one (1) day after delivery by internationally  recognized express courier (i.e.,
Federal Express, DHL); or (iii) three (3) days after delivery by certified mail,
postage  prepaid,  to the Parties at the  following  addresses (or at such other
address for a Party as shall be specified by like notice):

    If to Shareholder:         Jaco Electronics, Inc.
                               145 Oser Avenue
                               Hauppauge, New York  11788
                               Attention:        Mr. Jeffrey Gash
                               Telephone:        (631) 273-5500
                               Facsimile:        (631) 273-3621

    With a copy to:            Morrison Cohen Singer & Weinstein, LLP
                               750 Lexington Avenue
                               New York, New York  10022
                               Attention:        Stephen I. Budow, Esq.
                               Telephone:        (212) 735-8668
                               Facsimile:        (212) 735-8708

        If to Seller:           Nexus Custom Electronics, Inc.
                                c/o Jaco Electronics, Inc.
                                145 Oser Avenue
                                Hauppauge, New York  11788
                                Attention:        Mr. Jeffrey Gash
                                Telephone:        (631) 273-5500
                                Facsimile:        (631) 273-3621

        With a copy to:         Morrison Cohen Singer & Weinstein, LLP
                                750 Lexington Avenue
                                New York, New York  10022
                                Attention:        Stephen I. Budow, Esq.
                                Telephone:        (212) 735-8668
                                Facsimile:        (212) 735-8708

        If to Purchaser         NECI Acquisition, Inc.
                                33 South Wood Avenue - Suite 600
                                Iselin, NJ 08830
                                Attention:        Robert Farrell/ Joseph Donohue
                                Telephone:        (732) 603-4967
                                Facsimile:        (732) 603-3883

        With a copy to:         Kirkpatrick & Lockhart LLP
                                201 South Biscayne Boulevard, Suite 2000
                                Miami, Florida 33131
                                Attention:        Harris C. Siskind, Esq.
                                Telephone:        (305) 539-3316
                                Facsimile:        (305) 358-7095

                                       40
<PAGE>

        If to Parent:          Sagamore Holdings, Inc.
                               33 South Wood Avenue - Suite 600
                               Iselin, NJ 08830
                               Attention:    Robert Farrell/ Joseph Donohue
                               Telephone:        (732) 603-4967
                               Facsimile:        (732) 603-3883

         With a copy to:       Kirkpatrick & Lockhart LLP
                               201 South Biscayne Boulevard, Suite 2000
                               Miami, Florida 33131
                               Attention:        Harris C. Siskind, Esq.
                               Telephone:        (305) 539-3300
                               Facsimile:        (305) 358-7095

9.13. NO JURY TRIAL. THE PARTIES HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY
WAIVE THE RIGHT ANY OF THEM MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY
LITIGATION BASED HEREON OR ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS
AGREEMENT AND ANY OF THE TRANSACTION DOCUMENTS CONTEMPLATED TO BE EXECUTED IN
CONJUNCTION HEREWITH, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS
(WHETHER VERBAL OR WRITTEN) OR ACTIONS OF ANY PARTY. THIS PROVISION IS A
MATERIAL INDUCEMENT FOR THE PARTIES' ACCEPTANCE OF THIS AGREEMENT.

                                           [SIGNATURE BLOCK ON FOLLOWING PAGE]

                                       41
<PAGE>

<TABLE>

         IN WITNESS WHEREOF, the parties hereto have executed this Asset
Purchase Agreement on the date first set forth above.

SELLER:                                                          PURCHASER:

NEXUS CUSTOM ELECTRONICS, INC.,                                  NECI ACQUISITION, INC.,
a Delaware corporation                                           a Florida corporation

<S>     <C>                                                        <C>
By:               /s/  Jeffrey D. Gash                           By:      /s/ Robert P. Farrell
         --------------------------------------------                     ------------------------------
Name:             Jeffrey D. Gash                                Name:       Robert P. Farrell
         -----------------------------------                              --------------------------
Its:              Vice President                                 Its:       President
         --------------------------------------------                     ------------------

SHAREHOLDER:                                                     PARENT:

JACO ELECTRONICS, INC.,                                          SAGAMORE HOLDINGS, INC.,
a New York corporation                                           A Florida corporation

By:               /s/  Jeffrey D. Gash                           By:      /s/ Robert P. Farrell
         --------------------------------------------                     ------------------------------
Name:             Jeffrey D. Gash                                Name:        Robert P. Farrell
         -----------------------------------                              --------------------------
Its:              Vice President                                 Its:         President
         --------------------------------------------                     ------------------

</TABLE>

<PAGE>                                               42

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00072-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00072-of-00352.parquet"}]]