(Mark One) | ||
þ
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |
for the quarterly period ended May 31, 2010. | ||
or
|
||
o
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |
for the transition period from to . |
Minnesota
|
41-0251095 | |
(
State
or other jurisdiction of
incorporation or organization) |
(
I.R.S. Employer
Identification Number ) |
5500 Cenex Drive
Inver Grove Heights, MN 55077 ( Address of principal executive offices, including zip code) |
(651) 355-6000
( Registrants telephone number, including area code ) |
Large accelerated filer o | Accelerated filer o | Non-accelerated filer þ | Smaller reporting company o |
Number of Shares Outstanding at
|
||
Class
|
July 8, 2010
|
|
NONE
|
NONE |
1
2
Table of Contents
ITEM 1.
FINANCIAL
STATEMENTS
May 31,
August 31,
May 31,
2010
2009
2009
(Dollars in thousands)
(Unaudited)
$
305,322
$
772,599
$
166,480
2,038,681
1,827,749
2,089,913
1,650,579
1,526,280
2,022,804
103,196
171,340
274,913
466,043
447,655
682,538
4,563,821
4,745,623
5,236,648
653,460
727,925
757,848
2,195,028
2,099,325
2,054,692
280,199
296,972
321,241
$
7,692,508
$
7,869,845
$
8,370,429
LIABILITIES AND EQUITIES
$
213,811
$
246,872
$
554,981
108,336
83,492
95,821
170,866
274,343
235,012
268,344
320,688
487,730
105,732
86,845
153,735
1,234,604
1,289,139
1,223,207
183,935
306,116
352,545
320,868
308,720
308,644
136,191
203,056
108,701
2,742,687
3,119,271
3,520,376
915,504
988,461
1,026,402
456,079
428,949
412,119
2,182,100
2,214,824
2,019,579
319,368
282,694
282,694
(157,624
)
(156,270
)
(83,958
)
972,357
749,054
944,980
3,316,201
3,090,302
3,163,295
262,037
242,862
248,237
3,578,238
3,333,164
3,411,532
$
7,692,508
$
7,869,845
$
8,370,429
3
Table of Contents
For the Three Months Ended
For the Nine Months Ended
May 31,
May 31,
2010
2009
2010
2009
(Dollars in thousands)
(Unaudited)
$
6,575,978
$
6,163,119
$
18,649,712
$
19,074,107
6,324,000
6,004,851
18,028,348
18,380,355
251,978
158,268
621,364
693,752
96,024
90,417
268,585
277,131
155,954
67,851
352,779
416,621
(10,368
)
3,726
(24,143
)
55,701
14,526
16,312
44,997
50,262
(29,682
)
(42,985
)
(80,782
)
(74,096
)
181,478
90,798
412,707
384,754
21,983
14,226
44,518
47,178
159,495
76,572
368,189
337,576
14,046
12,003
20,122
53,476
$
145,449
$
64,569
$
348,067
$
284,100
4
Table of Contents
For the Nine Months Ended
May 31,
2010
2009
(Dollars in thousands)
(Unaudited)
$
368,189
$
337,576
151,603
144,683
14,091
18,324
(80,782
)
(74,096
)
79,175
57,214
(1,902
)
(3,229
)
(4,437
)
(3,453
)
(24,143
)
55,701
24,136
17,814
(1,952
)
2,839
(159,689
)
505,076
(124,252
)
366,904
69,827
94,589
(16,541
)
(46,230
)
(103,477
)
8,652
(52,344
)
(161,799
)
(41,113
)
(716,003
)
(122,181
)
78,954
3,471
(5,276
)
(22,321
)
678,240
(237,477
)
(225,888
)
8,081
8,902
(5,112
)
(34
)
(15,389
)
(115,657
)
113,979
10,836
41,612
850
(56,793
)
71,454
(1,014
)
(1,320
)
(76,364
)
320
(193,725
)
(285,289
)
(33,061
)
60,758
(46,885
)
(68,572
)
(100
)
(1,584
)
18,886
(52,412
)
(1,987
)
(18,610
)
(17,112
)
(14,536
)
(17,034
)
(40,835
)
(153,891
)
(227,590
)
(47
)
370
(251,231
)
(363,011
)
(467,277
)
29,940
772,599
136,540
$
305,322
$
166,480
5
Table of Contents
Note 1.
Accounting
Policies
6
Table of Contents
2010
2009
Purchase
Sales
Purchase
Sales
Contracts
Contracts
Contracts
Contracts
(Units in thousands)
474,276
696,814
565,847
778,279
9,372
11,126
14,270
15,658
253
426
495
739
3,316
2,197
3,229
1,478
May 31,
August 31,
May 31,
2010
2009
2009
$
246,988
$
296,416
$
412,148
91
$
246,988
$
296,416
$
412,239
$
326,235
$
426,281
$
483,632
1,143
749
2,033
4,911
5,490
$
329,411
$
431,192
$
489,871
May 31,
2010
$
1,684
7
Table of Contents
Amount of
Gain (Loss)
For the Three Months
For the Nine Months
Location of
Ended May 31,
Ended May 31,
Gain (Loss)
2010
2009
2010
Cost of goods sold
$
18,850
$
(38,047
)
$
50,632
Cost of goods sold
(1,197
)
(2,754
)
(1,144
)
Interest, net
229
(1,145
)
(779
)
$
17,882
$
(41,946
)
$
48,709
May 31,
2010
$
1,029
8
Table of Contents
Note 2.
Receivables
May 31,
August 31,
May 31,
2010
2009
2009
$
1,640,507
$
1,482,921
$
1,680,703
288,560
254,419
386,733
201,477
189,434
122,733
2,130,544
1,926,774
2,190,169
91,863
99,025
100,256
$
2,038,681
$
1,827,749
$
2,089,913
9
Table of Contents
Note 3.
Inventories
May 31,
August 31,
May 31,
2010
2009
2009
$
644,583
$
638,622
$
900,394
569,214
496,114
504,039
83,332
114,832
175,812
285,839
198,440
346,519
57,563
69,344
86,712
10,048
8,928
9,328
$
1,650,579
$
1,526,280
$
2,022,804
Note 4.
Investments
10
Table of Contents
For the Three Months Ended
For the Nine Months Ended
May 31,
May 31,
2010
2009
2010
2009
$
496,622
$
491,687
$
1,446,023
$
1,569,855
60,805
93,962
177,462
191,080
25,060
52,669
62,616
81,425
12,530
26,335
31,308
40,713
May 31,
August 31,
May 31,
2010
2009
2009
$
494,464
$
441,406
$
418,311
457,906
464,356
469,500
162,292
141,844
153,342
308,015
303,665
305,504
Note 5.
Notes
Payable
May 31,
August 31,
May 31,
2010
2009
2009
$
12,978
$
19,183
$
278,447
200,833
227,689
276,534
$
213,811
$
246,872
$
554,981
Note 6.
Interest,
net
For the Three Months Ended
For the Nine Months Ended
May 31,
May 31,
2010
2009
2010
2009
$
17,337
$
20,030
$
53,131
$
62,361
(1,527
)
(1,446
)
(4,578
)
(3,660
)
(1,284
)
(2,272
)
(3,556
)
(8,439
)
$
14,526
$
16,312
$
44,997
$
50,262
11
Table of Contents
Note 7.
Equities
Fiscal 2010
Fiscal 2009
$
3,090,302
$
2,955,686
348,067
284,100
(1,354
)
(15,916
)
(438,014
)
(643,444
)
426,500
652,000
(17,034
)
(40,835
)
50,122
90,781
616
6,344
(17,112
)
(14,536
)
3,659
3,016
(136,191
)
(105,659
)
6,640
(8,242
)
$
3,316,201
$
3,163,295
$
242,862
$
205,732
20,122
53,476
(1,987
)
(18,610
)
1,014
3,762
26
3,877
$
262,037
$
248,237
Note 8.
Comprehensive
Income
12
Table of Contents
Note 9.
Employee
Benefit Plans
Qualified
Non-Qualified
Pension Benefits
Pension Benefits
Other Benefits
2010
2009
2010
2009
2010
2009
$
5,168
$
4,117
$
305
$
309
$
374
$
264
5,774
5,745
564
611
551
521
(9,220
)
(8,232
)
548
528
104
137
136
(49
)
2,655
1,313
149
176
27
(78
)
51
234
$
4,925
$
3,471
$
1,122
$
1,233
$
1,139
$
892
$
15,580
$
12,239
$
921
$
901
$
1,033
$
821
17,269
17,127
1,706
1,799
1,586
1,642
(27,671
)
(23,340
)
1,645
1,586
314
410
410
(148
)
7,926
3,839
467
500
4
(161
)
152
702
$
14,749
$
11,451
$
3,408
$
3,610
$
3,185
$
2,856
Note 10.
Segment
Reporting
13
Table of Contents
14
Table of Contents
Ag
Corporate
Reconciling
Energy
Business
Processing
and Other
Amounts
Total
$
2,170,778
$
4,213,640
$
258,367
$
10,820
$
(77,627
)
$
6,575,978
2,063,829
4,084,233
254,672
(1,107
)
(77,627
)
6,324,000
106,949
129,407
3,695
11,927
251,978
30,767
47,819
6,777
10,661
96,024
76,182
81,588
(3,082
)
1,266
155,954
(10,012
)
(356
)
(10,368
)
3,656
6,000
5,161
(291
)
14,526
(1,549
)
(9,019
)
(18,882
)
(232
)
(29,682
)
$
74,075
$
94,619
$
10,639
$
2,145
$
$
181,478
$
(72,255
)
$
(5,094
)
$
(278
)
$
77,627
$
$
1,564,568
$
4,388,338
$
252,067
$
11,630
$
(53,484
)
$
6,163,119
1,482,775
4,326,980
249,437
(857
)
(53,484
)
6,004,851
81,793
61,358
2,630
12,487
158,268
31,876
38,704
6,667
13,170
90,417
49,917
22,654
(4,037
)
(683
)
67,851
112
3,614
3,726
(67
)
10,285
8,337
(2,243
)
16,312
(1,079
)
(11,396
)
(30,197
)
(313
)
(42,985
)
$
51,063
$
23,653
$
14,209
$
1,873
$
$
90,798
$
(48,384
)
$
(4,533
)
$
(567
)
$
53,484
$
$
6,472,886
$
11,595,989
$
786,969
$
31,925
$
(238,057
)
$
18,649,712
6,276,720
11,238,883
754,589
(3,787
)
(238,057
)
18,028,348
196,166
357,106
32,380
35,712
621,364
87,782
132,010
18,657
30,136
268,585
108,384
225,096
13,723
5,576
352,779
(23,787
)
(356
)
(24,143
)
7,515
19,860
14,921
2,701
44,997
(3,845
)
(27,400
)
(48,793
)
(744
)
(80,782
)
$
104,714
$
256,423
$
47,595
$
3,975
$
$
412,707
$
(221,699
)
$
(14,735
)
$
(1,623
)
$
238,057
$
$
1,166
$
8,465
$
6,898
$
16,529
$
139,504
$
90,192
$
4,651
$
3,130
$
237,477
$
88,700
$
43,741
$
12,714
$
6,448
$
151,603
$
2,941,232
$
3,185,137
$
651,300
$
914,839
$
7,692,508
$
5,661,267
$
12,758,575
$
833,585
$
35,209
$
(214,529
)
$
19,074,107
5,229,906
12,563,133
804,056
(2,211
)
(214,529
)
18,380,355
431,361
195,442
29,529
37,420
693,752
93,369
125,812
20,946
37,004
277,131
337,992
69,630
8,583
416
416,621
(15,748
)
(2,889
)
74,338
55,701
5,110
33,718
15,442
(4,008
)
50,262
(2,906
)
(18,501
)
(51,936
)
(753
)
(74,096
)
$
351,536
$
57,302
$
(29,261
)
$
5,177
$
$
384,754
$
(189,989
)
$
(22,644
)
$
(1,896
)
$
214,529
$
$
1,983
$
8,065
$
6,898
$
16,946
$
170,373
$
47,929
$
5,684
$
1,902
$
225,888
$
87,404
$
38,889
$
12,503
$
5,887
$
144,683
$
2,681,788
$
3,842,218
$
691,711
$
1,154,712
$
8,370,429
15
Table of Contents
Note 11.
Fair
Value Measurements
Fair Value Measurements
Quoted Prices in
Significant
Active Markets for
Significant Other
Unobservable
Identical Assets
Observable Inputs
Inputs
(Level 1)
(Level 2)
(Level 3)
Total
$
702,146
$
702,146
$
18,226
84,970
103,196
56,801
56,801
$
75,027
$
787,116
$
862,143
$
15,812
$
166,090
$
181,902
2,033
2,033
$
15,812
$
168,123
$
183,935
16
Table of Contents
Level 3 Short-Term
Investments
2010
2009
$
1,932
$
7,154
38
(908
)
(1,970
)
(3,836
)
$
$
2,410
Note 12.
Commitments
and Contingencies
17
Table of Contents
ITEM 2.
MANAGEMENTS
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
18
Table of Contents
19
Table of Contents
20
Table of Contents
21
Table of Contents
22
Table of Contents
23
Table of Contents
24
Table of Contents
25
Table of Contents
26
Table of Contents
27
Table of Contents
28
Table of Contents
29
Table of Contents
30
Table of Contents
31
Table of Contents
32
Table of Contents
33
Table of Contents
34
Table of Contents
35
Table of Contents
Our revenues and operating results could be adversely affected
by changes in commodity prices.
Our operating results could be adversely affected if our members
were to do business with others rather than with us.
We participate in highly competitive business markets in which
we may not be able to continue to compete successfully.
36
Table of Contents
Changes in federal income tax laws or in our tax status could
increase our tax liability and reduce our net income.
We incur significant costs in complying with applicable laws and
regulations. Any failure to make the capital investments
necessary to comply with these laws and regulations could expose
us to financial liability.
Changing environmental and energy laws and regulation, including
those related to climate change and Green House Gas
(GHG) emissions, may result in increased operating
costs and capital expenditures and may have an adverse effect on
our business operations.
Environmental liabilities could adversely affect our results and
financial condition.
Actual or perceived quality, safety or health risks associated
with our products could subject us to liability and damage our
business and reputation.
Our operations are subject to business interruptions and
casualty losses; we do not insure against all potential losses
and could be seriously harmed by unexpected liabilities.
Our cooperative structure limits our ability to access equity
capital.
Consolidation among the producers of products we purchase and
customers for products we sell could adversely affect our
revenues and operating results.
If our customers choose alternatives to our refined petroleum
products our revenues and profits may decline.
Operating results from our agronomy business could be volatile
and are dependent upon certain factors outside of our control.
Technological improvements in agriculture could decrease the
demand for our agronomy and energy products.
We operate some of our business through joint ventures in which
our rights to control business decisions are limited.
ITEM 3.
QUANTITATIVE
AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
ITEM 4.
CONTROLS
AND PROCEDURES
37
Table of Contents
ITEM 1A.
Risk
Factors
38
Table of Contents
ITEM 6.
Exhibits
3
.1
Amended Article III, Section 3(b) of Bylaws of CHS
Inc. (Incorporated by reference to our Current Report on
Form 8-K,
filed May 5, 2010)
10
.1
CHS Inc. Nonemployee Director Retirement Plan
10
.2
Trust Under the CHS Inc. Nonemployee Director Retirement
Plan
10
.3
CHS Inc. Supplemental Executive Retirement Plan (2010
Restatement)
31
.1
Certification Pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002
31
.2
Certification Pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002
32
.1
Certification Pursuant to 18 U.S.C. Section 1350, as
Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002
32
.2
Certification Pursuant to 18 U.S.C. Section 1350, as
Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002
39
Table of Contents
(Registrant)
40
2
3
CHS Inc. | ||||||
|
||||||
|
By |
/s/ John D. Johnson
|
||||
|
Its President and CEO | |||||
|
4
(a) | The principal of the Trust shall be held, administered and disposed of by Trustee as provided in this Trust Agreement. |
(b) | The Trust shall be irrevocable. | ||
(c) | The Trust is intended to be a grantor trust, of which CHS is the grantor, within the meaning of subpart E, part 1, subchapter J, chapter 1, subtitle A of the Internal Revenue Code of 1986, as amended, and shall be construed accordingly. | ||
(d) | The principal of the Trust, and any earnings thereon shall be held separate and apart from other funds of CHS and shall be used exclusively for the uses and purposes of Plan participants and general creditors as herein set forth. Plan participants and their beneficiaries shall have no preferred claim on, or any beneficial ownership interest in, any assets of the Trust. Any rights created under the Plan and this Trust Agreement shall be mere unsecured contractual rights of Plan participants and their beneficiaries against CHS. Any assets held by the Trust will be subject to the claims of CHS general creditors under federal and state law in the event of Insolvency, as defined in Section 3(a) herein. | ||
(e) | CHS, in its sole discretion, may at any time, or from time to time, make additional deposits of cash or other property in trust with Trustee to augment the principal to be held, administered and disposed of by Trustee as provided in this Trust Agreement. Neither Trustee nor any Plan participant or beneficiary shall have any right to compel such additional deposits. |
(a) | CHS shall deliver to Trustee a schedule (the Payment Schedule) that indicates the amounts payable in respect of each Plan participant (and his or her beneficiaries), that provides a formula or other instructions acceptable to Trustee for determining the amounts so payable, the form in which such amounts are to be paid (as provided for or available under the Plan), and the time of commencement for payment of such amounts. Except as otherwise provided herein, Trustee shall make payments to the Plan participants and their beneficiaries in accordance with such Payment Schedule. The Trustee shall make provision for the reporting and withholding of any federal, state or local taxes that may be required to be withheld with respect to the payment of benefits pursuant to the terms of the Plan and shall pay amounts withheld to the appropriate taxing authorities or determine that such amounts have been reported, withheld and paid by CHS. | ||
(b) | The entitlement of a Plan participant or his or her beneficiaries to benefits under the Plan shall be determined by CHS or such party as it shall designate under the Plan, and any claim for such benefits shall be considered and reviewed under the procedures set out in the Plan. | ||
(c) | CHS may make payment of benefits directly to Plan participants or their beneficiaries as they become due under the terms of the Plan, and thereafter seek |
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reimbursement from the Trust for the same amount. CHS shall notify Trustee of its decision to make payment of benefits directly prior to the time amounts are payable to participants or their beneficiaries. In addition, if the principal of the Trust, and any earnings thereon, are not sufficient to make payments of benefits in accordance with the terms of the Plan, CHS shall make the balance of each such payment as it falls due. Trustee shall notify CHS where principal and earnings are not sufficient. |
(a) | Trustee shall cease payment of benefits to Plan participants and their beneficiaries if CHS is Insolvent. CHS shall be considered Insolvent for purposes of this Trust Agreement if (i) CHS is unable to pay its debts as they become due, or (ii) CHS is subject to a pending proceeding as a debtor under the United States Bankruptcy Code. | ||
(b) | At all times during the continuance of this Trust, as provided in Section l(d) hereof, the principal and income of the Trust shall be subject to claims of general creditors of CHS under federal and state law as set forth below. |
(1) | The Board of Directors and the Chief Executive Officer of CHS shall have the duty to inform Trustee in writing of CHS Insolvency. If a person claiming to be a creditor of CHS alleges in writing to Trustee that CHS has become Insolvent, Trustee shall determine whether CHS is Insolvent and, pending such determination, Trustee shall discontinue payment of benefits to Plan participants or their beneficiaries. | ||
(2) | Unless Trustee has actual knowledge of CHS Insolvency, or has received notice from CHS or a person claiming to be a creditor alleging that CHS is Insolvent, Trustee shall have no duty to inquire whether CHS is Insolvent. Trustee may in all events rely on such evidence concerning CHS solvency as may be furnished to Trustee and that provides Trustee with a reasonable basis for making a determination concerning CHS solvency. | ||
(3) | If at any time Trustee has determined that CHS is Insolvent, Trustee shall discontinue payments to Plan participants or their beneficiaries and shall ho1d the assets of the Trust for the benefit of CHS general creditors. Nothing in this Trust Agreement shall in any way diminish any rights of Plan participants or their beneficiaries to pursue their rights as general creditors of CHS with respect to benefits due under the Plan or otherwise. | ||
(4) | Trustee shall resume the payment of benefits to Plan participants or their beneficiaries in accordance with Section 2 of this Trust Agreement only |
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after Trustee has determined that CHS is not Insolvent (or is no longer Insolvent). |
(c) | Provided that there are sufficient assets, if Trustee discontinues the payment of benefits from the Trust pursuant to Section 3(b) hereof and subsequently resumes such payments, the first payment following such discontinuance shall include the aggregate amount of all payments due to Plan participants or their beneficiaries under the terms of the Plan for the period of such discontinuance, less the aggregate amount of any payments made to Plan participants or their beneficiaries by CHS in lieu of the payments provided for hereunder during any such period of discontinuance. |
(a) | Trustee may invest in securities (including stock or rights to acquire stock) or obligations issued by CHS. All rights associated with assets of the Trust shall be exercised by Trustee or the person designated by Trustee, and shall in no event be exercisable by or rest with Plan participants. | ||
(b) | CHS shall have the right at anytime, and from time to time in its sole discretion, to substitute assets of equal fair market value for any asset held by the Trust. This right is exercisable by CHS in a nonfiduciary capacity without the approval or consent of any person in a fiduciary capacity. |
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(a) | Trustee shall act with the care, skill, prudence and diligence under the circumstances then prevailing that a prudent person acting in like capacity and familiar with such matters would use in the conduct of an enterprise of a like character and with like aims, provided, however, that Trustee shall incur no liability to any person for any action taken pursuant to a direction, request or approval given by CHS which is contemplated by, and in conformity with, the terms of the Plan or this Trust and is given in writing by CHS. In the event of a dispute between CHS and a party, Trustee may apply to a court of competent jurisdiction to resolve the dispute. | ||
(b) | If Trustee undertakes or defends any litigation arising in connection with this Trust, CHS agrees to indemnify Trustee against Trustees costs, expenses and liabilities (including, without limitation, attorneys fees and expenses) relating thereto and to be primarily liable for such payments provided that the Trustee did not act dishonestly or in willful or negligent violation of the law or regulation under which such liability, cost or expense arose. If CHS does not pay such costs, expenses and liabilities in a reasonably timely manner, Trustee may obtain payment from the Trust. | ||
(c) | Trustee may consult with legal counsel (who may also be counsel for CHS generally) with respect to any of its duties or obligations hereunder. | ||
(d) | Trustee may hire agents, accountants, actuaries, investment advisors, financial consultants or other professionals to assist it in performing any of its duties or obligations hereunder. | ||
(e) | Trustee shall have, without exclusion, all powers conferred on trustees by applicable law, unless expressly provided otherwise herein, provided, however, that if an insurance policy is held as an asset of the Trust, Trustee shall have no power to name a beneficiary of the policy other than the Trust, to assign the policy (as distinct from conversion of the policy to a different form) other than to a successor Trustee, or to loan to any person the proceeds of any borrowing against such policy. | ||
(f) | Notwithstanding any powers granted to Trustee pursuant to this Trust Agreement or to applicable law, Trustee shall not have any power that could give this Trust the objective of carrying on a business and dividing the gains therefrom, within the meaning of section 301.7701-2 of the Procedure and Administrative Regulations promulgated pursuant to the Internal Revenue Code. |
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(a) | Trustee may resign at any time by written notice to CHS which shall be effective 30 days after receipt of such notice unless CHS and Trustee agree otherwise. | ||
(b) | Trustee may be removed by CHS on 30 days notice or upon shorter notice accepted by Trustee. | ||
(c) | Upon a Change of Control, as defined herein, Trustee may not be removed by CHS for five (5) years. | ||
(d) | If Trustee resigns within five (5) years after a Change of Control, as defined herein, CHS shall apply to a court of competent jurisdiction for the appointment of a successor Trustee or for instructions. | ||
(e) | Upon resignation or removal of Trustee and appointment of a successor Trustee, all assets shall subsequently be transferred to the successor Trustee. The transfer shall be completed within 30 days after receipt of notice of resignation, removal or transfer, unless CHS extends the time limit. | ||
(f) | If Trustee resigns or is removed, a successor shall be appointed, in accordance with Section 11 hereof, by the effective date of resignation or removal under paragraph (a) or (b) of this section. If no such appointment has been made, Trustee may apply to a court of competent jurisdiction for appointment of a successor or for instructions. All expenses of Trustee in connection with the proceeding shall be allowed as administrative expenses of the Trust. |
(a) | If Trustee resigns or is removed in accordance with Section 10(a) or (b) hereof, CHS may appoint any third party, such as a bank trust department or other party that may be granted corporate trustee powers under state law, as a successor to replace Trustee upon resignation or removal. The appointment shall be effective when accepted in writing by the new Trustee, who shall have all of the rights and powers of the former Trustee, including ownership rights in the Trust assets. The former Trustee shall execute any instrument necessary or reasonably requested by CHS or the successor Trustee to evidence the transfer. |
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(b) | The successor Trustee need not examine the records and acts of any prior Trustee and may retain or dispose of existing Trust assets, subject to Sections 7 and 8 hereof. |
(a) | This Trust Agreement may be amended by a written instrument executed by Trustee and CHS. Notwithstanding the foregoing, no such amendment shall conflict with the terms of the Plan or shall make the Trust revocable. | ||
(b) | The Trust shall not terminate until the date on which Plan participants and their beneficiaries are no longer entitled to benefits pursuant to the terms of the Plan. Upon termination of the Trust any assets remaining in the Trust shall be returned to CHS. | ||
(c) | Upon written approval of participants or beneficiaries entitled to payment of benefits pursuant to the terms of the Plan, CHS may terminate this Trust prior to the time all benefit payments under the Plan have been made. All assets in the Trust at termination shall be returned to CHS. |
(a) | CHS shall have the responsibility for establishing and carrying out a funding policy and method, consistent with the objectives of the Plan, taking into consideration the Plans short-term and long-term financial needs. The Trustees responsibility for investment and diversification of the assets in the Trust shall be subject to, and is limited by, the investment instructions issued to it by CHS in accordance with its funding policy. It is understood that, unless otherwise agreed in writing, CHS, rather than the Trustee, shall be responsible for the overall investment of Trust assets. | ||
(b) | The Trustee shall invest and reinvest the Trust fund assets only to the extent and in the manner directed by CHS and confirmed in writing. Communication of any such direction to the Trustee shall be in a manner acceptable to the Trustee and shall conclusively be deemed an authorization to the Trustees designee or broker-dealer to implement the direction even though coming from a person other than the Trustee. Neither the Trustee nor any other person shall have liability for following such directions improperly or failing to act in the absence of any such directions. The Trustee shall have no liability for the acts or omissions of CHS directing the investment or reinvestment of Trust Fund assets. Neither shall the Trustee have any duty or obligation to review any such investment or other direction, act, or omission, or except upon receipt of a proper direction, to invest or otherwise manage any assets of the Trust Fund which is subject to the control of CHS. To the extent that CHS has not directed the Trustee as to the investment |
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of any portion of Trust assets before they are contributed to the Trust, CHS hereby directs the investment of such assets into the default investment fund specified on an exhibit hereto. CHS hereby acknowledges that (i) the Trustee will be what is commonly known as a directed trustee; (ii) the Trustee will not have some investment discretion within the meaning of Revenue Procedure 92-64; and (iii) the Trustee has no duty to request or obtain a ruling or other guidance from the Internal Revenue Service or from any other governmental authority as to (or to otherwise determine or monitor) the tax consequences of the form and operation of the Plan, the Plan document, the Trust, or this Trust Agreement, including but not limited to whether the arrangement established hereunder merits the favorable treatment afforded to safe harbor rabbi trusts under Revenue Procedure 92-64 or whether the Plan complies in form and operation with Internal Revenue Code Section 409A. |
(c) | At the direction of CHS, the Trustee or the Trustees designee or a broker-dealer referred to in Section 5(c), is authorized and empowered: |
(i) | to invest and reinvest principal and income of the Trust in common, preferred, and other stocks of any corporation; voting trust certificates; interests in investment trusts, including, without limiting the generality thereof, participations issued by an investment company as defined in the Investment Company Act of 1940, as from time to time amended; bonds, notes, and debentures, secured or unsecured; mortgages on real or personal property; conditional sales contracts; and real estate and leases; | ||
(ii) | to invest and reinvest principal and income of the Trust through any common or collective trust fund or pooled investment fund maintained by the Trustee for the collective investment of funds held by it in a fiduciary capacity (and the provisions of the documents governing any such common or collective trust fund as it may be amended from time to time shall govern any investment therein and are hereby made a part of this Trust); | ||
(iii) | to invest and reinvest principal and income of the Trust in deposits (including savings accounts, savings certificates, and similar interest bearing instruments or accounts) in itself or its affiliates; and | ||
(iv) | to do all other acts, although not specifically mentioned herein, as the Trustee may deem necessary to carry out any of the foregoing powers and purposes of this Trust Agreement. |
(d) | Notwithstanding the foregoing, in no event may the Trustee invest in securities (including stock or rights to acquire stock) or obligations issued by CHS, other |
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than a de minimis amount held in common investment vehicles in which the Trustee invests. |
(a) | Any provision of this Trust Agreement prohibited by law shall be ineffective to the extent of any such prohibition, without invalidating the remaining provisions hereof. | ||
(b) | Benefits payable to Plan participants and their beneficiaries under this Trust Agreement may not be anticipated, assigned (either at law or in equity), alienated, pledged, encumbered or subjected to attachment, garnishment, levy, execution or other legal or equitable process. | ||
(c) | This Trust Agreement shall be governed by and construed in accordance with the laws of the State of Minnesota. | ||
(d) | For purposes of this Trust, Change of Control shall mean the purchase or other acquisition by any person, entity or group of persons, within the meaning of Section 13(d) or 14(d) of the Securities Exchange Act of 1934 (Act), or any comparable successor provisions, of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Act) of 30% or more of either the outstanding shares of common stock or the combined voting power of CHS then outstanding voting securities entitled to vote generally, or the approval by the stockholders of CHS of a reorganization, merger or consolidation, in each case, with respect to which persons who were stockholders of CHS immediately prior to such reorganization, merger or consolidation do not, immediately thereafter, own more than 50% of the combined voting power entitled to vote generally in the election of directors of the reorganized, merged or consolidated CHS then outstanding securities, or a liquidation or dissolution of CHS or of the sale of all or substantially all of CHS assets. |
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CHS INC.
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By | /s/ John D. Johnson | |||
Its President and CEO | ||||
U.S. BANK NATIONAL ASSOCIATION
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By | /s/ Michelle Carlson | |||
Its Vice President | ||||
By | /s/ Deborah Burnett | |||
Its Assistant Vice President | ||||
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CHS INC.
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By: | /s/ John D. Johnson | |||
Title: President and CEO | ||||
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