CHS INC (Form: 10-Q, Received: 07/10/2008 15:10:01)

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

Form 10-Q


(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, 2008

o		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

		for the transition period from to .

Commission File Number 0-50150

CHS Inc.

(Exact name of registrant as specified in its charter)


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 (Registrant’s telephone number, including area code)

Include by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES þ NO o

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer, or a smaller reporting company. See definition of “accelerated filer”, “large accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):


Large accelerated filer o	Accelerated filer o	Non-accelerated filer þ	Smaller reporting company o

(Do not check if a smaller reporting company)

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). YES o NO þ

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.


		Number of shares outstanding at
Class		July 10, 2008

NONE		NONE

INDEX


		Page No.

PART I. FINANCIAL INFORMATION
Item 1.	Financial Statements (unaudited)		3
	Consolidated Balance Sheets as of May 31, 2008, August 31, 2007 and May 31, 2007		3
	Consolidated Statements of Operations for the three and nine months ended May 31, 2008 and 2007		4
	Consolidated Statements of Cash Flows for the nine months ended May 31, 2008 and 2007		5
	Notes to Consolidated Financial Statements		6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		20
Item 3.	Quantitative and Qualitative Disclosures about Market Risk		41
Item 4T.	Controls and Procedures		41

PART II. OTHER INFORMATION
Item 1.	Legal Proceedings		42
Item 6.	Exhibits		42
SIGNATURE PAGE			43
Fourth Amendment to 2006 Amended and Restated Credit Agreement
First Amendment to Credit Agreement
First Amendment to $150 Million Term Loan Credit Agreement
$75 Million Uncommitted Demand Facility
Third Amendment to the CHS Inc. Deferred Compensation Plan
$60 Million Uncommitted Trade Finance Facility
Certification
Certification
Section 1350 Certification
Section 1350 Certification

PART I. FINANCIAL INFORMATION

SAFE HARBOR STATEMENT UNDER THE PRIVATE
SECURITIES LITIGATION REFORM ACT OF 1995

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements involve risks and uncertainties that may cause the Company’s actual results to differ materially from the results discussed in the forward-looking statements. These factors include those set forth in Item 2, Management’s Discussion and Analysis of Financial Condition and Results of Operations, under the caption “Cautionary Statement Regarding Forward-Looking Statements” to this Quarterly Report on Form 10-Q for the quarterly period ended May 31, 2008.


Item 1.	*Financial Statements*

CHS INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(Unaudited)


	May 31,		August 31,		May 31,
	2008		2007 *		2007 *
	(dollars in thousands)

ASSETS
Current assets:
Cash and cash equivalents	$	249,715	$	357,712	$	245,911
Receivables		2,234,061		1,401,251		1,440,022
Inventories		2,165,907		1,666,632		1,197,178
Derivative assets		683,065		247,082		235,334
Other current assets		532,426		264,181		325,322

Total current assets		5,865,174		3,936,858		3,443,767
Investments		784,091		880,592		811,037
Property, plant and equipment		1,923,637		1,728,171		1,625,669
Other assets		231,340		208,752		287,269

Total assets	$	8,804,242	$	6,754,373	$	6,167,742


LIABILITIES AND EQUITIES
Current liabilities:
Notes payable	$	405,877	$	672,571	$	528,628
Current portion of long-term debt		111,973		98,977		60,471
Customer credit balances		164,379		110,818		94,920
Customer advance payments		623,995		161,525		88,899
Checks and drafts outstanding		153,639		143,133		90,032
Accounts payable		1,785,115		1,120,822		1,029,336
Derivative liabilities		400,482		177,209		166,303
Accrued expenses		296,215		255,631		244,674
Dividends and equities payable		263,386		374,294		199,677

Total current liabilities		4,205,061		3,114,980		2,502,940
Long-term debt		1,123,609		589,344		630,449
Other liabilities		409,174		377,208		420,560
Minority interests in subsidiaries		200,924		197,386		210,649
Commitments and contingencies
Equities		2,865,474		2,475,455		2,403,144

Total liabilities and equities	$	8,804,242	$	6,754,373	$	6,167,742


*		Adjusted to reflect adoption of FASB Staff Position No. AUG AIR-1; see Note 2

The accompanying notes are an integral part of the consolidated financial statements (unaudited).

CHS INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)


	For the Three Months Ended						For the Nine Months Ended
	May 31,						May 31,
	2008			2007 *			2008			2007 *
	(dollars in thousands)

Revenues	$	9,336,609		$	4,732,465		$	22,753,340		$	12,218,115
Cost of goods sold		9,055,967			4,401,557			21,900,436			11,516,832

Gross profit		280,642			330,908			852,904			701,283
Marketing, general and administrative		86,571			64,871			228,035			175,564

Operating earnings		194,071			266,037			624,869			525,719
(Gain) loss on investments		(5,305	)		251			(100,483	)		(16,497	)
Interest, net		22,183			9,272			53,786			25,963
Equity income from investments		(51,820	)		(67,490	)		(128,423	)		(84,336	)
Minority interests		16,666			61,287			52,476			94,669

Income before income taxes		212,347			262,717			747,513			505,920
Income taxes		23,631			23,121			89,866			46,272

Net income	$	188,716		$	239,596		$	657,647		$	459,648


*		Adjusted to reflect adoption of FASB Staff Position No. AUG AIR-1; see Note 2

The accompanying notes are an integral part of the consolidated financial statements (unaudited).

CHS INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)


	For the Nine Months Ended
	May 31,
	2008			2007 *
	(dollars in thousands)

Cash flows from operating activities:
Net income	$	657,647		$	459,648
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		130,005			103,374
Amortization of deferred major repair costs		21,652			17,581
Income from equity investments		(128,423	)		(84,336	)
Distributions from equity investments		72,777			60,099
Minority interests		52,476			94,669
Noncash patronage dividends received		(1,619	)		(1,346	)
Gain on sale of property, plant and equipment		(5,707	)		(4,080	)
Gain on investments		(100,483	)		(16,497	)
Deferred taxes		89,866			15,787
Other, net		233			328
Changes in operating assets and liabilities:
Receivables		(765,766	)		(314,184	)
Inventories		(317,696	)		(58,834	)
Derivative assets		(435,983	)		(161,061	)
Other current assets and other assets		(416	)		(106,558	)
Customer credit balances		53,531			28,132
Customer advance payments		256,236			6,513
Accounts payable and accrued expenses		604,352			124,654
Derivative liabilities		321,084			68,493
Other liabilities		8,342			38,483

Net cash provided by operating activities		512,108			270,865

Cash flows from investing activities:
Acquisition of property, plant and equipment		(255,818	)		(249,648	)
Proceeds from disposition of property, plant and equipment		8,132			9,263
Expenditures for major repairs		(21,662	)		(8,225	)
Investments		(336,117	)		(84,208	)
Investments redeemed		35,498			4,438
Proceeds from sale of investments		120,758			10,918
Joint venture distribution transaction, net		(4,737	)
Changes in notes receivable		(62,478	)		(54,215	)
Acquisition of intangibles		(2,463	)		(8,144	)
Business acquisitions		(45,891	)
Other investing activities, net		(3,813	)		(2,143	)

Net cash used in investing activities		(568,591	)		(381,964	)

Cash flows from financing activities:
Changes in notes payable		(265,299	)		506,583
Long-term debt borrowings		600,000
Principal payments on long-term debt		(54,639	)		(54,150	)
Payments for bank fees on debt		(3,486	)
Changes in checks and drafts outstanding		10,105			32,313
Distribution to minority owners		(55,437	)		(32,725	)
Costs incurred — capital equity certificates redeemed		(135	)		(145	)
Preferred stock dividends paid		(11,764	)		(9,484	)
Retirements of equities		(75,899	)		(64,856	)
Cash patronage dividends paid		(194,960	)		(133,051	)

Net cash (used in) provided by financing activities		(51,514	)		244,485

Net (decrease) increase in cash and cash equivalents		(107,997	)		133,386
Cash and cash equivalents at beginning of period		357,712			112,525

Cash and cash equivalents at end of period	$	249,715		$	245,911


*		Adjusted to reflect adoption of FASB Staff Position No. AUG AIR-1; see Note 2

The accompanying notes are an integral part of the consolidated financial statements (unaudited).

CHS INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

(dollars in thousands)


Note 1.	Accounting Policies

The unaudited consolidated balance sheets as of May 31, 2008 and 2007, the statements of operations for the three and nine months ended May 31, 2008 and 2007, and the statements of cash flows for the nine months ended May 31, 2008 and 2007 reflect, in the opinion of our management, all normal recurring adjustments necessary for a fair statement of the financial position and results of operations and cash flows for the interim periods presented. The results of operations and cash flows for interim periods are not necessarily indicative of results for a full fiscal year because of, among other things, the seasonal nature of our businesses. The consolidated balance sheet data as of August 31, 2007 has been derived from our audited consolidated financial statements, but does not include all disclosures required by accounting principles generally accepted in the United States of America.

The consolidated financial statements include our accounts and the accounts of all of our wholly-owned and majority-owned subsidiaries and limited liability companies. The effects of all significant intercompany accounts and transactions have been eliminated.

These statements should be read in conjunction with the consolidated financial statements and notes thereto for the year ended August 31, 2007, included in our Annual Report on Form 10-K, filed with the Securities and Exchange Commission.

Commodity Price Risk

We are exposed to price fluctuations on energy, grain and oilseed transactions due to fluctuations in the market value of inventories and fixed or partially fixed purchase and sales contracts. Our use of derivative instruments reduces the effects of price volatility, thereby protecting against adverse short-term price movements, while somewhat limiting the benefits of short-term price movements. However, fluctuations in inventory valuations may not be completely hedged, due in part to the absence of satisfactory hedging facilities for certain commodities and geographical areas and in part to our assessment of its exposure from expected price fluctuations.

We generally enter into opposite and offsetting positions using futures contracts or options to the extent practical, in order to arrive at a net commodity position within the formal position limits we set and deem prudent for each of those commodities. These contracts are purchased and sold through regulated commodity exchanges. The contracts are economic hedges of price risk, but are not currently designated or accounted for as hedging instruments for accounting purposes. These contracts are recorded on the Consolidated Balance Sheets at fair values based on quotes listed on regulated commodity exchanges. Unrealized gains and losses on these contracts are recognized in cost of goods sold in our Consolidated Statements of Operations using market-based prices.

We also manage our risk by entering into fixed-price purchase and sales contracts with pre-approved producers and by establishing appropriate limits for individual suppliers. Fixed-price contracts are entered into with customers of acceptable creditworthiness, as internally evaluated. We are also exposed to loss in the event of nonperformance by the counterparties to the contracts and therefore, contract values are reviewed and adjusted to reflect potential nonperformance. These contracts are recorded on the Consolidated Balance Sheets at fair values based on the market prices of the underlying products listed on regulated commodity exchanges, except for certain fixed-price contracts related to propane in our Energy segment. The propane contracts within our Energy segment meet the normal purchase and sales exemption, and thus are not required to be marked to fair value. Unrealized gains and losses on fixed-price contracts are recognized in cost of goods sold in our Consolidated Statements of Operations using market-based prices.

CHS INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) — (Continued)

Goodwill and Other Intangible Assets

Goodwill was $3.8 million on May 31, 2008, August 31, 2007 and May 31, 2007, and is included in other assets in the Consolidated Balance Sheets.

Intangible assets subject to amortization primarily include trademarks, customer lists, supply contracts and agreements not to compete, and are amortized over the number of years that approximate their respective useful lives (ranging from 1 to 15 years). Excluding goodwill, the gross carrying amount of our intangible assets was $76.0 million with total accumulated amortization of $21.4 million as of May 31, 2008. Intangible assets of $32.2 million (includes $9.9 million related to the crop nutrients business transaction and $2.3 million other non-cash) and $11.1 million ($3.0 million non-cash) were acquired during the nine months ended May 31, 2008 and 2007, respectively. During the nine months ended May 31, 2008, acquisitions of intangible assets included $11.4 million related to the purchase of a soy-based food products business in our Processing segment, of which $8.9 million was trademarks. Total amortization expense for intangible assets during the nine-month periods ended May 31, 2008 and 2007, was $9.9 million and $2.1 million, respectively. The estimated annual amortization expense related to intangible assets subject to amortization for the next five years will approximate $10.6 million annually for the first two years, $6.8 million for the next two years and $3.5 million for the following year.

Recent Accounting Pronouncements

In September 2006, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards (SFAS) No. 157, “Fair Value Measurements” (SFAS No. 157) which defines fair value, establishes a framework for measuring fair value in accordance with accounting principles generally accepted in the United States of America, and expands disclosures about fair value measurements. SFAS No. 157 is effective for financial assets and liabilities for fiscal years beginning after November 15, 2007. In February 2008, the FASB issued FASB Staff Position (FSP) 157-2, “Effective Date of FASB Statement No. 157.” FSP 157-2 delays the effective date of SFAS No. 157 for all non-financial assets and non-financial liabilities that are not remeasured at fair value on a recurring basis until fiscal years beginning after November 15, 2008. Any amounts recognized upon adoption of this rule as a cumulative effect adjustment will be recorded to the opening balance of retained earnings in the year of adoption. We are in the process of evaluating the effect that the adoption of SFAS No. 157 will have on our consolidated results of operations and financial condition.

In February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities.” SFAS No. 159 provides entities with an option to report certain financial assets and liabilities at fair value, with changes in fair value reported in earnings, and requires additional disclosures related to an entity’s election to use fair value reporting. It also requires entities to display the fair value of those assets and liabilities for which the entity has elected to use fair value on the face of the balance sheet. SFAS No. 159 is effective for fiscal years beginning after November 15, 2007. We are in the process of evaluating the effect that the adoption of SFAS No. 159 will have on our consolidated results of operations and financial condition.

In December 2007, the FASB issued SFAS No. 141R, “Business Combinations.” SFAS No. 141R provides companies with principles and requirements on how an acquirer recognizes and measures in its financial statements the identifiable assets acquired, liabilities assumed, and any noncontrolling interest in the acquiree, as well as the recognition and measurement of goodwill acquired in a business combination. SFAS No. 141R also requires certain disclosures to enable users of the financial statements to evaluate the nature and financial effects of the business combination. Acquisition costs associated with the business combination will generally be expensed as incurred. SFAS No. 141R is effective for business combinations occurring in fiscal years beginning after December 15, 2008. Early adoption of SFAS No. 141R is not permitted. The impact on our consolidated financial statements of adopting SFAS No. 141R will depend on the nature, terms and size of business combinations completed after the effective date.

CHS INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) — (Continued)

In December 2007, the FASB issued SFAS No. 160, “Noncontrolling Interests in Consolidated Financial Statements, an Amendment of Accounting Research Bulletin (ARB) No. 51.” This statement amends ARB No. 51 to establish accounting and reporting standards for the noncontrolling interest (minority interest) in a subsidiary and for the deconsolidation of a subsidiary. Upon its adoption, noncontrolling interests will be classified as equity in our Consolidated Balance Sheets. Income and comprehensive income attributed to the noncontrolling interest will be included in our Consolidated Statements of Operations and our Consolidated Statements of Equities and Comprehensive Income. SFAS No. 160 is effective for fiscal years beginning after December 15, 2008. The provisions of this standard must be applied retrospectively upon adoption. We are in the process of evaluating the impact the adoption of SFAS No. 160 will have on our consolidated financial statements.

In March 2008, the FASB issued SFAS No. 161, “Disclosures about Derivative Instruments and Hedging Activities, an Amendment of SFAS No. 133 . ” SFAS No. 161 requires disclosures of how and why an entity uses derivative instruments, how derivative instruments and related hedged items are accounted for and how derivative instruments and related hedged items affect an entity’s financial position, financial performance, and cash flows. SFAS No. 161 is effective for fiscal years beginning after November 15, 2008, with early adoption permitted. We are currently evaluating the impact of the adoption of SFAS No. 161 on our consolidated financial statements.

Reclassifications

Certain reclassifications have been made to prior period’s amounts to conform to current period classifications. These reclassifications had no effect on previously reported net income, equities or total cash flows.


Note 2.	Change in Accounting Principle — Turnarounds

During the first quarter of fiscal 2008, we changed our accounting method for the costs of turnarounds from the accrual method to the deferral method. Turnarounds are the scheduled and required shutdowns of refinery processing units for significant overhaul and refurbishment. Under the deferral accounting method, the costs of turnarounds are deferred when incurred and amortized on a straight-line basis over the period of time estimated to lapse until the next turnaround occurs. The new method of accounting for turnarounds was adopted in order to adhere to FSP No. AUG AIR-1 “Accounting for Planned Major Maintenance Activities” which prohibits the accrual method of accounting for planned major maintenance activities. The comparative financial statements for the three months and nine months ended May 31, 2007 have been adjusted to apply the new method retrospectively. These deferred costs are included in our Consolidated Balance Sheets in other assets. The amortization expenses are included in cost of goods sold in our Consolidated Statements of Operations. The following consolidated financial statement line items as of August 31, 2007 and May 31,

CHS INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) — (Continued)

2007 and for the three months and nine months ended May 31, 2007, were affected by this change in accounting principle:


	August 31, 2007							May 31, 2007
	As		FSP AUG					As		FSP AUG
	Previously		AIR-1			As		Previously		AIR-1			As
	Reported		Adjustment			Adjusted		Reported		Adjustment			Adjusted

Consolidated Balance Sheets
Other assets	$	147,965	$	60,787		$	208,752	$	245,042	$	42,227		$	287,269
Accrued expenses		261,875		(6,244	)		255,631		267,995		(23,321	)		244,674
Other liabilities		359,198		18,010			377,208		400,927		19,633			420,560
Minority interests in subsidiaries		190,830		6,556			197,386		204,093		6,556			210,649
Equities		2,432,990		42,465			2,475,455		2,363,785		39,359			2,403,144


	For the							For the
	Three Months Ended							Nine Months Ended
	May 31, 2007							May 31, 2007
	As		FSP AUG					As			FSP AUG
	Previously		AIR-1			As		Previously			AIR-1			As
	Reported		Adjustment			Adjusted		Reported			Adjustment			Adjusted

Consolidated Statements of Operations
Cost of goods sold	$	4,404,540	$	(2,983	)	$	4,401,557	$	11,522,206		$	(5,374	)	$	11,516,832
Income before income taxes		259,734		2,983			262,717		500,546			5,374			505,920
Income taxes		21,961		1,160			23,121		44,182			2,090			46,272
Net income		237,773		1,823			239,596		456,364			3,284			459,648
Consolidated Statements of Cash Flows
Operating activities
Net income									456,364			3,284			459,648
Amortization of deferred major repair costs												17,581			17,581
Deferred taxes									13,697			2,090			15,787
Changes in operating assets and liabilities:
Accounts payable and accrued expenses									128,584			(3,930	)		124,654
Other liabilities									49,283			(10,800	)		38,483
Net cash provided by operating activities									262,640			8,225			270,865
Investing activities
Expenditures for major repairs												(8,225	)		(8,225	)
Net cash used in investing activities									(373,739	)		(8,225	)		(381,964	)

CHS INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) — (Continued)


Note 3.	Receivables


	May 31,		August 31,		May 31,
	2008		2007		2007

Trade	$	2,140,795	$	1,366,428	$	1,394,391
Other		165,646		97,783		105,471

		2,306,441		1,464,211		1,499,862
Less allowances for doubtful accounts		72,380		62,960		59,840

	$	2,234,061	$	1,401,251	$	1,440,022


Note 4.	Inventories


	May 31,		August 31,		May 31,
	2008		2007		2007

Grain and oilseed	$	887,765	$	928,567	$	546,938
Energy		617,238		490,675		422,274
Crop nutrients		289,010
Feed and farm supplies		310,696		178,167		180,267
Processed grain and oilseed		55,147		66,407		45,023
Other		6,051		2,816		2,676

	$	2,165,907	$	1,666,632	$	1,197,178


Note 5.	Investments

Through March 31, 2008, we were recognizing our share of the earnings of US BioEnergy Corporation (US BioEnergy) in our Processing segment, using the equity method of accounting. Effective April 1, 2008, US BioEnergy and VeraSun Energy Corporation (VeraSun) completed a merger, and our current ownership interest in the combined entity was reduced to approximately 8%, compared to an approximate 20% interest in US BioEnergy prior to the merger. As part of the merger transaction, our shares held in US BioEnergy were converted to shares held in the surviving company, VeraSun, at .810 per share. As a result of our change in ownership interest we no longer have significant influence, and account for VeraSun as an available for sale investment. As of May 31, 2008, the fair value of our investment in VeraSun based on quoted market prices was $87.8 million, and we recorded a $58.2 million charge to equity, as other comprehensive (loss) income, during the three months then ended to value our investment accordingly. Management does not consider the decline in market value to be permanent, but rather reflective of currently high corn prices and relatively low ethanol prices. VeraSun is an ethanol production company and corn is a major input in the production process.

During the nine months ended May 31, 2008, we invested $30.3 million in a joint venture (37.5% ownership) included in our Ag Business segment, that acquired production farmland and related operations in Brazil, intended to strengthen our ability to serve customers around the world. The operations include production of soybeans, corn, cotton and sugarcane, as well as cotton processing in four locations.

During the nine months ended May 31, 2007, we sold 540,000 shares of our CF Industries Holdings, Inc. (CF) stock, included in our Ag Business segment, for proceeds of $10.9 million, and recorded a pretax gain of $5.3 million, reducing our ownership interest in CF to approximately 2.9%. During the nine months ended May 31, 2008, we sold all of our remaining 1,610,396 shares of CF stock for proceeds of $108.3 million and recorded a pretax gain of $91.7 million.

Agriliance LLC (Agriliance) is owned and governed by United Country Brands, LLC (50%) and Land O’Lakes, Inc. (Land O’Lakes) (50%). United Country Brands, LLC is a 100% owned subsidiary of CHS. We

CHS INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) — (Continued)

account for our share of the Agriliance investment using the equity method of accounting. In June 2007, we announced that two business segments of Agriliance were being repositioned. In September 2007, Agriliance distributed the assets of the crop nutrients business to us, and the assets of the crop protection business to Land O’Lakes. Agriliance continues to exist as a 50-50 joint venture and primarily operates an agronomy retail distribution business. We currently are exploring, with Land O’Lakes, the repositioning options for the remaining portions of the Agriliance retail distribution business. During the nine months ended May 31, 2008, our net contribution to Agriliance was $255.0 million which supported their working capital requirements, with Land O’Lakes making equal contributions to Agriliance, primarily for crop nutrient and crop protection product net trade payables that were not assumed by us or Land O’Lakes upon the distribution of the crop nutrients and crop protection assets, as well as Agriliance’s ongoing retail operations.

Due to our 50% ownership interest in Agriliance and the 50% ownership interest of Land O’Lakes, we were each entitled to receive 50% of the distributions from Agriliance. Given the different preliminary values assigned to the assets of the crop nutrients and the crop protection businesses of Agriliance, at the closing of the distribution transactions Land O’Lakes owed us $133.5 million. Land O’Lakes paid us $32.6 million in cash, and in order to maintain equal capital accounts in Agriliance, they also paid down certain portions of Agriliance’s debt on our behalf in the amount of $100.9 million. Values of the distributed assets were determined after the closing and in October 2007, we made a true-up payment to Land O’Lakes in the amount of $45.7 million, plus interest. The final true-up is expected to occur during our current fiscal year.

The distribution of assets we received from Agriliance for the crop nutrients business had a book value of $248.2 million. We recorded 50% of the value of the net assets received at book value due to our ownership interest in those assets when they were held by Agriliance, and 50% of the value of the net assets at fair value using the purchase method of accounting. Preliminary values assigned to the net assets acquired were:


Receivables	$	5,219
Inventories		174,620
Other current assets		256,390
Investments		6,096
Property, plant and equipment		29,682
Other assets		11,717
Customer advance payments		(206,252	)
Accounts payable		(5,584	)
Accrued expenses		(3,163	)

Total net assets received	$	268,725

We have a 50% interest in Ventura Foods, LLC, (Ventura Foods), a joint venture which produces and distributes primarily vegetable oil-based products, and is included in our Processing segment.

As of May 31, 2008, the carrying value of our equity method investees, Agriliance and Ventura Foods, exceeded our share of their equity by $42.6 million. Of this basis difference, $3.0 million is being amortized over the remaining life of the corresponding assets, which is approximately four years. The balance of the basis difference represents equity method goodwill.

CHS INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) — (Continued)

The following provides summarized unaudited financial information for our unconsolidated significant equity investment in Agriliance, for the balance sheets as of May 31, 2008, August 31, 2007 and May 31, 2007 and statements of operations for the three-month and nine-month periods as indicated below.


	For the Three Months Ended				For the Nine Months Ended
	May 31,				May 31,
	2008		2007		2008			2007

Net sales	$	389,113	$	1,832,590	$	787,363		$	3,000,107
Gross profit		59,414		208,656		113,651			300,200
Net income (loss)		20,893		108,036		(26,293	)		49,255


	May 31,		August 31,		May 31,
	2008		2007		2007

Current assets	$	678,267	$	1,549,691	$	1,754,732
Non-current assets		42,044		115,087		162,822
Current liabilities		322,813		1,214,774		1,468,437
Non-current liabilities		10,201		137,417		141,932


Note 6.	Notes Payable and Long-term Debt

As of August 31, 2007, we had a five-year revolving line of credit with a syndication of domestic and international banks in the amount of $1.1 billion, with the ability to expand the facility an additional $200.0 million. In October 2007, we expanded that facility, receiving additional commitments of $200.0 million from certain lenders under the agreement. The additional commitments increased the total borrowing capacity to $1.3 billion on the facility, and on May 31, 2008, we had $400.0 million outstanding.

In October 2007, we entered into a private placement with several insurance companies and banks for long-term debt of $400.0 million with an interest rate of 6.18%. The debt is due in equal annual installments of $80.0 million during years 2013 through 2017.

In December 2007, we established a ten-year $150.0 million long-term credit agreement through a syndication of cooperative banks, with an interest rate of 5.59%. Repayments are due in equal semi-annual installments of $15.0 million each, starting in June 2013 through December 2018.

We have an existing Note Purchase and Private Shelf Agreement with Prudential Investment Management, Inc. and several other participating insurance companies with an uncommitted shelf facility. We borrowed $50.0 million under the shelf arrangement in February 2008, for which the aggregate long-term notes have an interest rate of 5.78% and are due in equal annual installments of $10.0 million during the years 2014 through 2018.

In February 2008, we increased our short-term borrowing capacity by establishing a $500.0 million committed line of credit with a syndication of banks consisting of a 364-day revolving facility. There was no amount outstanding on this facility on May 31, 2008.


Note 7.	Interest, net

Interest, net for the three and nine months ended May 31, 2008 and 2007 is as follows:


	For the Three Months Ended				For the Nine Months Ended
	May 31,				May 31,
	2008		2007				2007

Interest expense	$	24,798	$	13,567	$	65,227	$	37,694
Interest income		2,615		4,295		11,441		11,731

Interest, net	$	22,183	$	9,272	$	53,786	$	25,963

CHS INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) — (Continued)


Note 8.	Income Taxes

Effective September 1, 2007, we adopted FASB Interpretation No. 48, “Accounting for Uncertainty in Income Taxes” (FIN 48). This interpretation clarifies the criteria for recognizing income tax benefits under FASB Statement 109, “Accounting for Income Taxes”, and requires additional disclosures about uncertain tax positions. FIN 48 requires a taxpayer to determine whether a tax position is more likely than not (greater than 50 percent) to be sustained based solely on the technical merits of the position. If this threshold is met, the tax benefit is measured and recognized at the largest amount that is greater than 50 percent likely of being realized.

The total amount of unrecognized tax benefits as of September 1, 2007 and May 31, 2008, were $7.5 million and $6.1 million, respectively. There was no impact to our equity as a result of adoption of FIN 48. Recognition of all or a portion of the unrecognized tax benefits would affect our effective income tax rate in the respective period of change.

Any applicable interest and penalties on uncertain tax positions were included as a component of income tax expense prior to the adoption of FIN 48, and we have continued this classification subsequent to the adoption. The liability for uncertain income taxes as of September 1, 2007 and May 31, 2008, includes estimated interest and penalties of $0.3 million.

We file income tax returns in the U.S. federal jurisdiction and various U.S. state and foreign jurisdictions. The U.S. income tax returns for periods ended after August 31, 2004, remain subject to examination. With limited exceptions, we are not subject to state and local income tax examinations for years before August 31, 2001. We do not expect that the amount of unrecognized tax benefits will significantly change within the next twelve months.

The federal and state statutory rate applied to nonpatronage business activity is 38.9%. The income taxes and effective tax rate vary based on profitability and nonpatronage business activity each period.


Note 9.	Equities

Changes in equity for the nine-month periods ended May 31, 2008 and 2007 are as follows:


	Fiscal 2008*			Fiscal 2007*

Balances, September 1, 2007 and 2006	$	2,475,455		$	2,053,466
Net income		657,647			459,648
Other comprehensive (loss) income		(95,424	)		44,706
Patronage distribution		(555,419	)		(379,838	)
Patronage accrued		550,000			374,000
Equities retired		(75,899	)		(64,856	)
Equity retirements accrued		165,511			100,755
Equities issued in exchange for elevator properties		1,909			4,652
Preferred stock dividends		(11,764	)		(9,484	)
Preferred stock dividends accrued		2,413			1,955
Accrued dividends and equities payable		(249,516	)		(183,513	)
Other, net		561			1,653

Balances, May 31, 2008 and 2007	$	2,865,474		$	2,403,144


*		Adjusted to reflect adoption of FASB Staff Position No. AUG AIR-1; see Note 2

CHS INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) — (Continued)

During the nine months ended May 31, 2008 and 2007, we redeemed $46.4 million and $35.9 million, respectively, of our capital equity certificates by issuing shares of our 8% Cumulative Redeemable Preferred Stock.


Note 10.	Comprehensive Income

Total comprehensive income was $149.5 million and $245.1 million for the three months ended May 31, 2008 and 2007, respectively. For the nine months ended May 31, 2008 and 2007, total comprehensive income was $562.2 million and $504.4 million, respectively. Total comprehensive income primarily consisted of net income and unrealized net gains or losses on available for sale investments for the three-month and nine-month periods in fiscal 2008. Accumulated other comprehensive loss on May 31, 2008, was $82.4 million and primarily consisted of pension liability adjustments and unrealized net gains or losses on available for sale investments. On August 31, 2007 and May 31, 2007, accumulated other comprehensive income was $13.0 million and $57.8 million, respectively.


Note 11.	Employee Benefit Plans

Employee benefits information for the three and nine months ended May 31, 2008 and 2007 is as follows:


	Qualified						Non-Qualified
	Pension Benefits						Pension Benefits				Other Benefits
	2008			2007			2008		2007		2008			2007

Components of net periodic benefit costs for the three months ended May 31:
Service cost	$	3,847		$	3,590		$	312	$	255	$	358		$	239
Interest cost		5,311			4,816			548		361		510			417
Expected return on plan assets		(7,824	)		(7,296	)
Unrecognized net asset obligation amortization												184
Prior service cost amortization		541			217			144		115		(79	)		(127	)
Actuarial loss (gain) amortization		1,218			1,442			210		27		5			(9	)
Transition amount amortization												50			233

Net periodic benefit cost	$	3,093		$	2,769		$	1,214	$	758	$	1,028		$	753

Components of net periodic benefit costs for the nine months ended May 31:
Service cost	$	11,540		$	10,770		$	935	$	767	$	881		$	718
Interest cost		15,935			14,450			1,643		1,083		1,360			1,252
Expected return on plan assets		(23,475	)		(21,887	)
Unrecognized net asset obligation amortization												551
Prior service cost amortization		1,623			650			433		346		(239	)		(383	)
Actuarial loss (gain) amortization		3,653			4,325			631		82		(124	)		(29	)
Transition amount amortization												151			701

Net periodic benefit cost	$	9,276		$	8,308		$	3,642	$	2,278	$	2,580		$	2,259

CHS INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) — (Continued)

Employer Contributions:

National Cooperative Refinery Association (NCRA), of which we own approximately 74.5%, expects to contribute $3.3 million to its pension plan during fiscal 2008. We contributed $22.0 million to the CHS pension plans in June 2008.


Note 12.	Segment Reporting

We have aligned our business segments based on an assessment of how our businesses operate and the products and services they sell. Our three business segments: Energy, Ag Business and Processing, create vertical integration to link producers with consumers. Our Energy segment produces and provides primarily for the wholesale distribution of petroleum products and transportation of those products. Our Ag Business segment purchases and resells grains and oilseeds originated by our country operations business, by our member cooperatives and by third parties, and also serves as wholesaler and retailer of crop inputs. Our Processing segment converts grains and oilseeds into value-added products.

Corporate administrative expenses are allocated to all three business segments, and Corporate and Other, based on direct usage for services that can be tracked, such as information technology and legal, and other factors or considerations relevant to the costs incurred.

Many of our business activities are highly seasonal and operating results will vary throughout the year. Overall, our income is generally lowest during the second fiscal quarter and highest during the third fiscal quarter. Our business segments are subject to varying seasonal fluctuations. For example, in our Ag Business segment, agronomy and country operations businesses experience higher volumes and income during the spring planting season and in the fall, which corresponds to harvest. Also in our Ag Business segment, our grain marketing operations are subject to fluctuations in volumes and earnings based on producer harvests, world grain prices and demand. Our Energy segment generally experiences higher volumes and profitability in certain operating areas, such as refined products, in the summer and early fall when gasoline and diesel fuel usage is highest and is subject to global supply and demand forces. Other energy products, such as propane, may experience higher volumes and profitability during the winter heating and crop drying seasons.

Our revenues, assets and cash flows can be significantly affected by global market prices for commodities such as petroleum products, natural gas, grains, oilseeds, crop nutrients and flour. Changes in market prices for commodities that we purchase without a corresponding change in the selling prices of those products can affect revenues and operating earnings. Commodity prices are affected by a wide range of factors beyond our control, including the weather, crop damage due to disease or insects, drought, the availability and adequacy of supply, government regulations and policies, world events, and general political and economic conditions.

While our revenues and operating results are derived from businesses and operations which are wholly-owned and majority-owned, a portion of our business operations are conducted through companies in which we hold ownership interests of 50% or less and do not control the operations. We account for these investments primarily using the equity method of accounting, wherein we record our proportionate share of income or loss reported by the entity as equity income from investments, without consolidating the revenues and expenses of the entity in our Consolidated Statements of Operations. These investments principally include our 50% ownership in each of the following companies: Agriliance LLC (Agriliance), TEMCO, LLC (TEMCO) and United Harvest, LLC (United Harvest), and our 37.5% ownership in Multigrain S.A. included in our Ag Business segment; our 50% ownership in Ventura Foods, LLC (Ventura Foods), our 24% ownership in Horizon Milling, LLC (Horizon Milling) and Horizon Milling G.P., and US BioEnergy prior to the decrease in equity ownership on April 1, 2008, as described in Note 5, included in our Processing segment; and our 49% ownership in Cofina Financial, LLC (Cofina Financial) included in Corporate and Other.

CHS INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) — (Continued)

The consolidated financial statements include the accounts of CHS and all of our wholly-owned and majority-owned subsidiaries and limited liability companies, including NCRA in our Energy segment. The effects of all significant intercompany transactions have been eliminated.

Reconciling Amounts represent the elimination of revenues between segments. Such transactions are executed at market prices to more accurately evaluate the profitability of the individual business segments.

Segment information for the three and nine months ended May 31, 2008 and 2007 is as follows:


				Ag						Corporate			Reconciling
	Energy*			Business			Processing			and Other			Amounts			Total*

For the Three Months Ended May 31, 2008
Revenues	$	3,058,367		$	6,005,755		$	353,475		$	7,095		$	(88,083	)	$	9,336,609
Cost of goods sold		3,000,380			5,811,948			332,188			(466	)		(88,083	)		9,055,967

Gross profit		57,987			193,807			21,287			7,561			—			280,642
Marketing, general and administrative		28,250			44,126			6,704			7,491						86,571

Operating earnings		29,737			149,681			14,583			70			—			194,071
(Gain) loss on investments		(18	)		(5,848	)		562			(1	)					(5,305	)
Interest, net		1,739			15,310			6,471			(1,337	)					22,183
Equity income from investments		(753	)		(40,101	)		(9,593	)		(1,373	)					(51,820	)
Minority interests		16,265			401												16,666

Income before income taxes	$	12,504		$	179,919		$	17,143		$	2,781		$	—		$	212,347

Intersegment revenues	$	(75,557	)	$	(11,671	)	$	(855	)				$	88,083		$	—

For the Three Months Ended May 31, 2007
Revenues	$	2,186,568		$	2,411,945		$	193,553		$	6,121		$	(65,722	)	$	4,732,465
Cost of goods sold		1,926,275			2,354,272			187,502			(770	)		(65,722	)		4,401,557

Gross profit		260,293			57,673			6,051			6,891			—			330,908
Marketing, general and administrative		23,938			27,381			5,928			7,624						64,871

Operating earnings (losses)		236,355			30,292			123			(733	)		—			266,037
Loss on investments								251									251
Interest, net		(1,925	)		8,956			4,151			(1,910	)					9,272
Equity income from investments		(952	)		(55,826	)		(9,431	)		(1,281	)					(67,490	)
Minority interests		61,268			19												61,287

Income before income taxes	$	177,964		$	77,143		$	5,152		$	2,458		$	—		$	262,717

Intersegment revenues	$	(54,936	)	$	(10,677	)	$	(109	)				$	65,722		$	—

CHS INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) — (Continued)


				Ag						Corporate			Reconciling
	Energy*			Business			Processing			and Other			Amounts			Total*

For the Nine Months Ended May 31, 2008
Revenues	$	7,979,099		$	14,114,990		$	886,820		$	23,868		$	(251,437	)	$	22,753,340
Cost of goods sold		7,696,745			13,618,477			838,947			(2,296	)		(251,437	)		21,900,436

Gross profit		282,354			496,513			47,873			26,164			—			852,904
Marketing, general and administrative		75,650			110,722			18,722			22,941						228,035

Operating earnings		206,704			385,791			29,151			3,223			—			624,869
(Gain) loss on investments		(35	)		(100,393	)		943			(998	)					(100,483	)
Interest, net		(7,845	)		47,855			16,936			(3,160	)					53,786
Equity income from investments		(3,069	)		(66,775	)		(54,051	)		(4,528	)					(128,423	)
Minority interests		51,948			528												52,476

Income before income taxes	$	165,705		$	504,576		$	65,323		$	11,909		$	—		$	747,513

Intersegment revenues	$	(224,880	)	$	(25,521	)	$	(1,036	)				$	251,437		$	—

Goodwill	$	3,654		$	150											$	3,804

Capital expenditures	$	207,527		$	40,970		$	4,015		$	3,306					$	255,818

Depreciation and amortization	$	76,134		$	37,374		$	11,720		$	4,777					$	130,005

Total identifiable assets at May 31, 2008	$	3,097,313		$	4,197,684		$	710,419		$	798,826					$	8,804,242

For the Nine Months Ended May 31, 2007
Revenues	$	5,753,660		$	6,100,397		$	526,513		$	21,869		$	(184,324	)	$	12,218,115
Cost of goods sold		5,258,380			5,942,916			501,541			(1,681	)		(184,324	)		11,516,832

Gross profit		495,280			157,481			24,972			23,550			—			701,283
Marketing, general and administrative		67,149			70,369			17,928			20,118						175,564

Operating earnings		428,131			87,112			7,044			3,432			—			525,719
Gain on investments					(5,348	)		(11,149	)								(16,497	)
Interest, net		(2,164	)		21,538			10,917			(4,328	)					25,963
Equity income from investments		(3,089	)		(37,027	)		(40,626	)		(3,594	)					(84,336	)
Minority interests		94,677			(8	)											94,669

Income before income taxes	$	338,707		$	107,957		$	47,902		$	11,354		$	—		$	505,920

Intersegment revenues	$	(171,188	)	$	(12,853	)	$	(283	)				$	184,324		$	—

Goodwill	$	3,654		$	150											$	3,804

Capital expenditures	$	212,450		$	24,754		$	10,657		$	1,787					$	249,648

Depreciation and amortization	$	63,719		$	24,847		$	10,862		$	3,946					$	103,374

Total identifiable assets at May 31, 2007	$	2,669,680		$	2,320,757		$	634,745		$	542,560					$	6,167,742


*		Adjusted to reflect adoption of FASB Staff Position No. AUG AIR-1; see Note 2

CHS INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) — (Continued)


Note 13.	Commitments and Contingencies

Guarantees

We are a guarantor for lines of credit for related companies. As of May 31, 2008, our bank covenants allowed maximum guarantees of $500.0 million, of which $43.0 million was outstanding. All outstanding loans with respective creditors are current as of May 31, 2008.

Cofina Financial, in which we have a 49% ownership interest, makes seasonal and term loans to cooperatives and individual agricultural producers. We may, at our own discretion, choose to guarantee certain loans made by Cofina Financial. In addition, we also guarantee certain debt and obligations under contracts for our subsidiaries and members.

Our obligations pursuant to our guarantees as of May 31, 2008 are as follows:

Guarantee/

Exposure on

Maximum

May 31,

Triggering

Recourse

Assets Held

Entities

Exposure

2008

Nature of Guarantee

Expiration Date

Event

Provisions

as Collateral

Mountain Country, LLC

150

Obligations by Mountain Country, LLC under credit agreement

None stated, but may be terminated upon 90 days prior notice in regard to future obligations

Credit agreement default

Subrogation against borrower

Some or all assets of borrower are held as collateral and should be sufficient to cover guarantee exposure

Morgan County Investors, LLC

400

Obligations by Morgan County Investors, LLC under credit agreement

When obligations are paid in full, scheduled for year 2018

Credit agreement default

Subrogation against borrower

Some or all assets of borrower are held as collateral and should be sufficient to cover guarantee exposure

Horizon Milling, LLC

5,000

Indemnification and reimbursement of 24% of damages related to Horizon Milling, LLC’s performance under a flour sales agreement

None stated, but may be terminated by any party upon 90 days prior notice in regard to future obligations

Nonperformance under flour sale agreement

Subrogation against Horizon Milling, LLC

None

TEMCO, LLC

35,000

5,000

Obligations by TEMCO, LLC under credit agreement

None stated

Credit agreement default

Subrogation against TEMCO, LLC

None

TEMCO, LLC

1,000

Obligations by TEMCO, LLC under counterparty agreement

None stated, but may be terminated upon 5 days prior notice in regard to future obligations

Nonpayment

Subrogation against TEMCO, LLC

None

Third parties

1,000

Surety for, or indemnificaton of surety for sales contracts between affiliates and sellers of grain under deferred payment contracts

Annual renewal on December 1 in regard to surety for a third party, otherwise none stated and may be terminated by the Company at any time in regard to future obligations

Nonpayment

Subrogation against affiliates

Some or all assets of borrower are held as collateral but might not be sufficient to cover guarantee exposure

Cofina Financial, LLC

17,131

11,175

Loans to our customers that are originated by Cofina and then sold to ProPartners, which is an affiliate of CoBank

None stated

Credit agreement default

Subrogation against borrower

Some or all assets of borrower are held as collateral but might not be sufficient to cover guarantee exposure

CHS INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) — (Continued)

Guarantee/

Exposure on

Maximum

May 31,

Triggering

Recourse

Assets Held

Entities

Exposure

2008

Nature of Guarantee

Expiration Date

Event

Provisions

as Collateral

Cofina Financial, LLC

18,200

Loans made by Cofina to our customers

None stated

Credit agreement default

Subrogation against borrower

Some or all assets of borrower are held as collateral but might not be sufficient to cover guarantee exposure

Agriliance LLC

5,674

Outstanding letter of credit from CoBank to Agriliance LLC

None stated

Default under letter of credit reimbursement agreement

Subrogation against borrower

None

Agriliance LLC

500

Vehicle operating lease obligations of Agriliance LLC

None stated, but may be terminated upon 90 days prior notice in regard to future obligations

Lease agreement default

Subrogation against Agriliance LLC

None

Ag Business segment subsidiaries

4,993

Contribution obligations as a participating employer in the Co-op Retirement Plan

None stated

Nonpayment

None

43,029


*		The maximum exposure on any given date is equal to the actual guarantees extended as of that date.


Item 2.	*Management’s Discussion and Analysis of Financial Condition and Results of Operations*

General

The following discussions of financial condition and results of operations should be read in conjunction with the unaudited interim financial statements and notes to such statements and the cautionary statement regarding forward-looking statements found at the beginning of Part I, Item 1, of this Form 10-Q, as well as our consolidated financial statements and notes thereto for the year ended August 31, 2007, included in our Annual Report on Form 10-K, filed with the Securities and Exchange Commission. This discussion contains forward-looking statements based on current expectations, assumptions, estimates and projections of management. Actual results could differ materially from those anticipated in these forward-looking statements as a result of certain factors, as more fully described in the cautionary statement and elsewhere in this Form 10-Q.

CHS Inc. (CHS, we or us) is a diversified company, which provides grain, foods and energy resources to businesses and consumers on a global basis. As a cooperative, we are owned by farmers, ranchers and their member cooperatives from the Great Lakes to the Pacific Northwest and from the Canadian border to Texas. We also have preferred stockholders that own shares of our 8% Cumulative Redeemable Preferred Stock.

We provide a full range of production agricultural inputs such as refined fuels, propane, farm supplies, animal nutrition and agronomy products, as well as services, which include hedging, financing and insurance services. We own and operate petroleum refineries and pipelines and market and distribute refined fuels and other energy products under the Cenex ^® brand through a network of member cooperatives and independents. We purchase grains and oilseeds directly and indirectly from agricultural producers primarily in the midwestern and western United States. These grains and oilseeds are either sold to domestic and international customers, or further processed into a variety of grain-based food products.

The consolidated financial statements include the accounts of CHS and all of our wholly-owned and majority-owned subsidiaries and limited liability companies, including National Cooperative Refinery Association (NCRA) in our Energy segment. The effects of all significant intercompany transactions have been eliminated.

We operate three business segments: Energy, Ag Business and Processing. Together, our three business segments create vertical integration to link producers with consumers. Corporate and Other primarily represents our business solutions operations, which consists of commodities hedging, insurance and financial services related to crop production. Our Energy segment produces and provides for the wholesale distribution of petroleum products and transports those products. Our Ag Business segment purchases and resells grains and oilseeds originated by our country operations business, by our member cooperatives and by third parties, and also serves as wholesaler and retailer of crop inputs. Our Processing segment converts grains and oilseeds into value-added products.

Many of our business activities are highly seasonal and operating results will vary throughout the year. Overall, our income is generally lowest during the second fiscal quarter and highest during the third fiscal quarter. Our business segments are subject to varying seasonal fluctuations. For example, in our Ag Business segment, our retail agronomy, crop nutrients and country operations businesses generally experience higher volumes and income during the spring planting season and in the fall, which corresponds to harvest. Also in our Ag Business segment, our grain marketing operations are subject to fluctuations in volume and earnings based on producer harvests, world grain prices and demand. Our Energy segment generally experiences higher volumes and profitability in certain operating areas, such as refined products, in the summer and early fall when gasoline and diesel fuel usage is highest and is subject to global supply and demand forces. Other energy products, such as propane, may experience higher volumes and profitability during the winter heating and crop drying seasons.

While our revenues and operating results are derived from businesses and operations which are wholly-owned and majority-owned, a portion of our business operations are conducted through companies in which we hold ownership interests of 50% or less and do not control the operations. We account for these investments primarily using the equity method of accounting, wherein we record our proportionate share of income or loss reported by the entity as equity income from investments, without consolidating the revenues and expenses of the entity in our Consolidated Statements of Operations. These investments principally include our 50% ownership in each of the following companies: Agriliance LLC (Agriliance), TEMCO, LLC (TEMCO) and United Harvest, LLC (United Harvest), and our 37.5% ownership in Multigrain S.A. included in our Ag Business segment; our 50% ownership in Ventura Foods, LLC (Ventura Foods), our 24% ownership in Horizon Milling, LLC (Horizon Milling) and Horizon Milling G.P., and US BioEnergy Corporation (US BioEnergy) prior to the decrease in equity ownership on April 1, 2008, included in our Processing segment; and our 49% ownership in Cofina Financial, LLC (Cofina Financial) included in Corporate and Other.

Agriliance is owned and governed by United Country Brands, LLC (50%) and Land O’Lakes, Inc. (Land O’Lakes) (50%). United Country Brands, LLC is a 100% owned subsidiary of CHS. We account for our share of the Agriliance investment using the equity method of accounting. In June 2007, we announced that two business segments of Agriliance were being repositioned. In September 2007, Agriliance distributed the assets of the crop nutrients business to us, and the assets of the crop protection business to Land O’Lakes. Agriliance continues to exist as a 50-50 joint venture and primarily operates an agronomy retail distribution business. We currently are exploring, with Land O’Lakes, the repositioning options for the remaining portions of the Agriliance retail distribution business. During the nine months ended May 31, 2008, we contributed $255.0 million, net to Agriliance to support their working capital requirements, with Land O’Lakes making equal contributions to Agriliance, primarily for crop nutrient and crop protection product net trade payables that were not assumed by us or Land O’Lakes upon the distribution of the crop nutrients and crop protection assets, as well as Agriliance’s ongoing retail operations.

Due to our 50% ownership interest in Agriliance and the 50% ownership interest of Land O’Lakes, we were each entitled to receive 50% of the distributions from Agriliance. Given the different preliminary values assigned to the assets of the crop nutrients and the crop protection businesses of Agriliance, at the closing of the distribution transactions Land O’Lakes owed us $133.5 million. Land O’Lakes paid us $32.6 million in cash, and in order to maintain equal capital accounts in Agriliance, they also paid down certain portions of Agriliance debt on our behalf in the amount of $100.9 million. Values of the distributed assets were determined after the closing and in October 2007, we made a true-up payment to Land O’Lakes in the amount of $45.7 million, plus interest. The final true-up is expected to occur during our current fiscal year.

costs of turnarounds are deferred when incurred and amortized on a straight-line basis over the period of time estimated to lapse until the next turnaround occurs. The new method of accounting for turnarounds was adopted in order to adhere to FASB Staff Position (“FSP”) No. AUG AIR-1 “Accounting for Planned Major Maintenance Activities” which prohibits the accrual method of accounting for planned major maintenance activities. The affect of this change in accounting principle to our Consolidated Statements of Operations for the three and nine months ended May 31, 2007, was to increase net income by $1.8 million and $3.3 million, respectively. In addition, equity was increased by $42.5 million and $39.4 million as of August 31, 2007 and May 31, 2007, respectively.

Effective September 1, 2007, we adopted Financial Accounting Standards Board (FASB) Interpretation No. 48, “Accounting for Uncertainty in Income Taxes” (FIN 48). This interpretation clarifies the criteria for recognizing income tax benefits under FASB Statement 109, “Accounting for Income Taxes”, and requires additional disclosures about uncertain tax positions. FIN 48 requires a taxpayer to determine whether a tax position is more likely than not (greater than 50 percent) to be sustained based solely on the technical merits of the position. If this threshold is met, the tax benefit is measured and recognized at the largest amount that is greater than 50 percent likely of being realized. The total amount of unrecognized tax benefits as of September 1, 2007 and May 31, 2008, were $7.5 million and $6.1 million, respectively. There was no impact to our equity as a result of adoption of FIN 48. Recognition of all or a portion of the unrecognized tax benefits would affect our effective income tax rate in the respective period of change. Any applicable interest and penalties on uncertain tax positions were included as a component of income tax expense prior to the adoption of FIN 48, and we have continued this classification subsequent to the adoption. The liability for uncertain income taxes as of September 1, 2007 and May 31, 2008, includes estimated interest and penalties of $0.3 million. We file income tax returns in the U.S. federal jurisdiction and various U.S. state and foreign jurisdictions. The U.S. income tax returns for periods ended after August 31, 2004, remain subject to examination. With limited exceptions, we are not subject to state and local income tax examinations for years before August 31, 2001. We do not expect that the amount of unrecognized tax benefits will significantly change within the next twelve months.

Recent Events

On June 11, 2008 we entered into a Purchase Agreement with Cenex Finance Association (CFA) to purchase their 51% interest in Cofina Financial. The sale was subject to approval by the members of CFA, and on July 7, 2008, the members approved the sale. The final purchase price for CFA’s interest in Cofina Financial has not been determined, but the amount should range between approximately $48.0 million and $50.0 million, with an anticipated closing date of September 1, 2008. We will be the sole owner of Cofina Financial as of the closing date.

Results of Operations

Comparison of the three months ended May 31, 2008 and 2007

General. We recorded income before income taxes of $212.3 million during the three months ended May 31, 2008 compared to $262.7 million during the three months ended May 31, 2007, a decrease of $50.4 million (19%). These results reflected lower pretax earnings in our Energy segment and were partially offset by increased pretax earnings in our Ag Business and Processing segments and Corporate and Other.

Our Energy segment generated income before income taxes of $12.5 million for the three months ended May 31, 2008 compared to $178.0 million in the three months ended May 31, 2007. This decrease in earnings of $165.5 million (93%) is primarily from a net reduction to margins on refined fuels, which resulted mainly from lower margins at both our Laurel, Montana refinery and at our NCRA refinery in McPherson, Kansas. Earnings in our propane, lubricants and renewable fuels marketing businesses increased, while transportation operations earnings slightly decreased during the three months ended May 31, 2008 when compared to the same three-month period of the previous year.

Our Ag Business segment generated income before income taxes of $179.9 million for the three months ended May 31, 2008 compared to $77.1 million in the three months ended May 31, 2007, an increase in

earnings of $102.8 million (133%). As previously discussed, during the first quarter of fiscal 2008, the crop nutrients business of Agriliance was distributed to us and generated $54.9 million in earnings for the three months ended May 31, 2008. Prior to the distribution, we reflected 50% of these earnings through our equity income from our investment in Agriliance. We are not recording wholesale earnings of crop protection products, which along with other reduced Agriliance margins, decreased our net earnings in Agriliance by $43.5 million. Strong demand and increased volumes for grain and oilseed products, much of it driven by increased U.S. ethanol production, contributed to improved performances by both our grain marketing and country operations businesses. Our grain marketing operations improved earnings by $65.5 million during the three months ended May 31, 2008 compared with the same three-month period in fiscal 2007, primarily from increased grain volumes, greater margins on those grains, and strong earning performances from our joint ventures. Our country operations earnings increased $25.9 million, primarily as a result of overall improved product margins, including historically high volumes and margins on grain, and improved margins on agronomy, feed and energy transactions. Continued market expansion into Colorado, Oklahoma and Kansas also increased country operations volumes. Volatility in the grain markets creates opportunities for increased grain margins, and additionally during fiscal 2007 and 2008, increased interest in renewable fuels, and changes in transportation costs, shifted marketing patterns and dynamics for our grain marketing business.

Our Processing segment generated income before income taxes of $17.1 million for the three months ended May 31, 2008 compared to $5.2 million in the three months ended May 31, 2007, an increase in earnings of $11.9 million (233%). Oilseed processing earnings increased $13.4 million during the three months ended May 31, 2008 compared to the same period in the prior year, primarily due to improved margins in our crushing operations, partially offset by slightly decreased margins in our refining operations. Our share of earnings, net of allocated internal expenses, related to US BioEnergy, an ethanol manufacturing company in which we held a minority ownership interest, decreased $0.6 million for the three months ended May 31, 2008 compared to the same period in the prior year. Effective April 1, 2008, US BioEnergy and VeraSun completed a merger, and as a result of our change in ownership interest we no longer have significant influence, and account for VeraSun, the surviving entity, as an available for sale investment. Our share of earnings from our wheat milling joint ventures, net of allocated internal expenses, generated improved net earnings of $6.0 million for the three months ended May 31, 2008 compared to the same period in the prior year. Our share of earnings from Ventura Foods, our packaged foods joint venture, net of allocated internal expenses, decreased $6.5 million during the three months ended May 31, 2008, compared to the same period in the prior year, primarily as a result of increased commodity prices, reducing margins on the products sold.

Corporate and Other generated income before income taxes of $2.8 million for the three months ended May 31, 2008 compared to $2.5 million in the three months ended May 31, 2007, an increase in earnings of $0.3 million (13%). This improvement in earnings is primarily attributable to our business solutions’ financial services, partially offset by our hedging and insurance services.

Net Income. Consolidated net income for the three months ended May 31, 2008 was $188.7 million compared to $239.6 million for the three months ended May 31, 2007, which represents a $50.9 million (21%) decrease.

Revenues. Consolidated revenues were $9.3 billion for the three months ended May 31, 2008 compared to $4.7 billion for the three months ended May 31, 2007, which represents a $4.6 billion (97%) increase.

Total revenues include other revenues generated primarily within our Ag Business segment and Corporate and Other. Our Ag Business segment’s country operations elevators and agri-service centers derive other revenues from activities related to production agriculture, which include grain storage, grain cleaning, fertilizer spreading, crop protection spraying and other services of this nature, and our grain marketing operations receive other revenues at our export terminals from activities related to loading vessels. Corporate and Other derives revenues primarily from our hedging and insurance operations.

Our Energy segment revenues, after elimination of intersegment revenues, of $3.0 billion increased by $851.2 million (40%) during the three months ended May 31, 2008 compared to the three months ended May 31, 2007. During the three months ended May 31, 2008 and 2007, our Energy segment recorded revenues from our Ag Business segment of $75.6 million and $54.9 million, respectively. The net increase in revenues

of $851.2 million is comprised of a net increase of $715.1 million related to price appreciation on refined fuels and propane products and $136.1 million net increase is related to higher sales volume. Refined fuels revenues increased $669.4 million (45%), of which $648.1 million was related to a net average selling price increase and $21.3 million was attributable to increased volumes, compared to the same period in the previous year. The sales price of refined fuels increased $0.95 per gallon (43%) and volumes increased 1% when comparing the three months ended May 31, 2008 with the same period a year ago. Higher crude oil prices, strong global demand and limited refining capacity contributed to the increase in refined fuels selling prices. Renewable fuels marketing revenues increased $77.0 million (32%), mostly from a 22% increase in volumes along with an increase of $0.17 (8%) per gallon, when compared with the same three-month period in the previous year. Propane revenues increased by $39.8 million (44%), of which $34.8 million related to an increase in the net average selling price and $5.0 million related to an increase in volumes, when compared to the same period in the previous year. The average selling price of propane increased $0.43 per gallon (38%) and sales volume increased 4% in comparison to the same period of the prior year. Propane prices tend to follow the prices of crude oil and natural gas, both of which increased during the three months ended May 31, 2008 compared to the same period in 2007. Propane prices are also affected by changes in propane demand and domestic inventory levels. The decrease in propane volumes primarily reflects reduced demand caused by higher prices.

Our Ag Business segment revenues, after elimination of intersegment revenues, of $6.0 billion, increased $3.6 billion (150%) during the three months ended May 31, 2008 compared to the three months ended May 31, 2007. Grain revenues in our Ag Business segment totaled $4,288.0 million and $1,863.9 million during the three months ended May 31, 2008 and 2007, respectively. Of the grain revenues increase of $2,424.1 million (130%), $945.6 million is attributable to increased volumes and $1,478.5 million is due to increased average grain selling prices during the three months ended May 31, 2008 compared to the same period last fiscal year. The average sales price of all grain and oilseed commodities sold reflected an increase of $4.51 per bushel (79%), over the same three-month period in fiscal 2007. The 2007 fall harvest produced good yields throughout most of the United States, with the quality of most grains rated as excellent or good. Despite the good harvest, prices for nearly all grain commodity prices increased because of strong demand, particularly for corn, which is used as the feedstock for most ethanol plants as well as for livestock feed. The average month-end market price per bushel of spring wheat, soybeans and corn increased approximately $6.18, $5.22 and $2.15, respectively, when compared to the prices of those same grains for the three months ended May 31, 2007. Volumes increased 28% during the three months ended May 31, 2008 compared with the same period of a year ago. Corn, soybeans and barley reflected the largest volume increases compared to the three months ended May 31, 2007. Beginning in September 2007, we began recording revenues from our crop nutrients business reflecting $935.1 million for the three months ended May 31, 2008. Our Ag Business segment non-grain or non-wholesale crop nutrients product revenues of $729.3 million increased by $225.6 million (45%) during the three months ended May 31, 2008 compared to the three months ended May 31, 2007, primarily the result of increased revenues in our country operations business of retail crop nutrients, energy, feed, seed, crop protection and processed sunflower products. Other revenues within our Ag Business segment of $41.7 million during the three months ended May 31, 2008 increased $8.0 million (24%) compared to the three months ended May 31, 2007, primarily from grain handling and service revenues.

Our Processing segment revenues, after elimination of intersegment revenues, of $352.6 million increased $159.2 million (82%) during the three months ended May 31, 2008 compared to the three months ended May 31, 2007. Because our wheat milling and packaged foods operations are operated through non-consolidated joint ventures, revenues reported in our Processing segment are entirely from our oilseed processing operations. Higher average sales prices of processed oilseed increased revenues by $80.3 million, while processed soybean volumes increased 10%, accounting for an increase in revenues of $16.6 million. Oilseed refining revenues increased $56.9 million (60%), of which $76.7 million was due to higher average sales prices, partially offset by a $19.8 million (12%) net decrease in sales volume. The average selling price of processed oilseed increased $159 per ton (86%) and the average selling price of refined oilseed products increased $0.26 per pound (81%) compared to the same three-month period of fiscal 2007. The changes in the average selling price of products are primarily driven by the average higher price of soybeans.

Cost of Goods Sold. Consolidated cost of goods sold were $9.1 billion for the three months ended May 31, 2008 compared to $4.4 billion for the three months ended May 31, 2007, which represents a $4.7 billion (106%) increase.

Our Energy segment cost of goods sold, after elimination of intersegment costs, of $2.9 billion increased by $1,053.5 million (56%) during the three months ended May 31, 2008 compared to the same period of the prior year. The increase in cost of goods sold is primarily due to increased per unit costs for refined fuels and propane products. On a more product-specific basis, the average cost of refined fuels increased $1.07 (51%) per gallon and volumes increased 1% compared to the three months ended May 31, 2007. We process approximately 55,000 barrels of crude oil per day at our Laurel, Montana refinery and 80,000 barrels of crude oil per day at NCRA’s McPherson, Kansas refinery. The average cost increase is primarily related to higher input costs at our two crude oil refineries and higher average prices on the refined products that we purchased for resale compared to the three months ended May 31, 2007. The average per unit cost of crude oil purchased for the two refineries increased 86% compared to the three months ended May 31, 2007. Renewable fuels marketing cost increased $77.0 million (32%), mostly from a 22% increase in volumes when compared with the same three-month period in the previous year. The average cost of propane increased $0.41 (37%) per gallon and volumes increased 4% compared to the three months ended May 31, 2007.

Our Ag Business segment cost of goods sold, after elimination of intersegment costs, of $5.8 billion increased $3.5 billion (148%) during the three months ended May 31, 2008 compared to the same period of the prior year. Grain cost of goods sold in our Ag Business segment totaled $4,234.9 million and $1,846.4 million during the three months ended May 31, 2008 and 2007, respectively. The cost of grains and oilseed procured through our Ag Business segment increased $2,388.5 million (129%) compared to the three months ended May 31, 2007. This is primarily the result of a 42% net increase in bushels sold and an increase of $3.45 (61%) in the average cost per bushel as compared to the prior year. Corn, soybeans and barley reflected the largest volume increases compared to the three months ended May 31, 2007. Commodity prices on spring wheat, soybeans and corn have increased compared to the prices that were prevalent during the same three-month period in 2007. Beginning in September 2007, we began recording cost of goods sold from our crop nutrients business reflecting $866.8 million for the three months ended May 31, 2008. Our Ag Business segment cost of goods sold, excluding the cost of grains procured through this segment, increased during the three months ended May 31, 2008 compared to the three months ended May 31, 2007, primarily due to higher volumes and price per unit costs for crop nutrients, seed, feed, energy, crop protection and processed sunflower products. The volume increases resulted primarily from acquisitions made and reflected in the reporting periods.

Our Processing segment cost of goods sold, after elimination of intersegment costs, of $331.3 million, increased $143.9 million (77%) compared to the three months ended May 31, 2007, which was primarily due to increased costs of soybeans in addition to volume increases in soybean crushing.

Marketing, General and Administrative. Marketing, general and administrative expenses of $86.6 million for the three months ended May 31, 2008 increased by $21.7 million (34%) compared to the three months ended May 31, 2007. The net increase of $21.7 million includes $11.3 million from our crop nutrients business reflected in our Ag Business segment, which in fiscal 2007 were previously recorded in our equity investment reported earnings of Agriliance. The remaining net change of $10.4 million (16%) includes increased performance-based incentive plan expense, in addition to other employee benefits (primarily medical and pension), general inflation and acquisitions.

(Gain) Loss on Investments. (Gain) loss on investments of $5.3 million for the three months ended May 31, 2008 increased by $5.6 million compared to the three months ended May 31, 2007. The majority of this increase is from gains received in the three months ended May 31, 2008 on several investments sold during that period, primarily included in our Ag Business segment. During the three months ended May 31, 2008 and May 31, 2007, our investment in US BioEnergy, prior to the merger with VeraSun, reflected net losses of $0.6 million and $0.3 million, respectively, and is reflected in our Processing segment.

Interest, net. Net interest of $22.2 million for the three months ended May 31, 2008 increased $12.9 million (139%) compared to the same period in fiscal 2007. Interest expense for the three months ended May 31, 2008 and 2007 was $24.8 million and $13.6 million, respectively. Interest income, generated

primarily from marketable securities, was $2.6 million and $4.3 million, for the three months ended May 31, 2008 and 2007, respectively. The interest expense increase of $11.2 million (83%) includes an increase in borrowings, primarily created by higher working capital needs and a decrease in capitalized interest of $2.8 million, and was partially offset by a decrease in the average short-term interest rate. For the three months ended May 31, 2008 and 2007, we capitalized interest of $0.6 million and $3.4 million, respectively, primarily related to construction projects in our Energy segment for financing interest on our coker project. The average level of short-term borrowings increased $549.0 million during the three months ended May 31, 2008 compared to the same three-month period in fiscal 2007, while the average short-term interest rate decreased 2.47%. Higher volumes and commodity prices within our Ag Business segment in addition to increased volumes and working capital needs from our crop nutrients business increased that segment’s interest, net by $6.4 million. Also, in October, 2007, we entered into a private placement with several insurance companies and banks for additional long-term debt in the amount of $400.0 million with an interest rate of 6.18%, which primarily replaced short-term debt. The net decrease in interest income of $1.7 million (39%) was primarily in Corporate and Other relating to a decrease of interest income on our hedging and other services, which were partially offset by increased interest income at NCRA within our Energy segment, which primarily relates to marketable securities.

Equity Income from Investments. Equity income from investments of $51.8 million for the three months ended May 31, 2008 decreased $15.7 million (23%) compared to the three months ended May 31, 2007. We record equity income or loss from the investments in which we have an ownership interest of 50% or less and have significant influence, but not control, for our proportionate share of income or loss reported by the entity, without consolidating the revenues and expenses of the entity in our Consolidated Statements of Operations. The net decrease in equity income from investments was attributable to reduced earnings from investments in our Ag Business and Energy segments, and was partially offset by improved equity income from investments in our Processing segment and Corporate and Other. The reduction in earnings included $15.7 million for Ag Business and $0.2 million for Energy segments, and was partially offset by improved earnings of $0.2 million for our Processing segment and $92 thousand for Corporate and Other.

Our Ag Business segment generated reduced earnings of $15.7 million from equity investments. Our share of equity investment earnings or losses in Agriliance decreased earnings by $43.5 million. In September 2007, Agriliance distributed the assets of the crop nutrients business to us, and the assets of the crop protection business to Land O’Lakes, Inc. Agriliance continues to exist as a 50-50 joint venture and primarily operates an agronomy retail distribution business. We had a net improvement of $27.2 million from our share of equity investment earnings in our grain marketing joint ventures during the three months ended May 31, 2008 compared to the same period the previous year. The improvement in earnings is primarily related to increased volumes at export terminals. Our country operations business reported an aggregate increase in equity investment earnings of $0.6 million from several small equity investments.

Our Processing segment generated improved earnings of $0.2 million from equity investments. Ventura Foods, our vegetable oil-based products and packaged foods joint venture, recorded reduced earnings of $6.1 million, and Horizon Milling, our domestic and Canadian wheat milling joint ventures, recorded improved earnings of $6.5 million, net compared to the same three-month period in fiscal 2007. Ventura Foods’ decrease in earnings was primarily due to higher commodity prices resulting in lower margins on the products sold. A shifting demand balance for soybeans for both food and renewable fuels meant addressing supply and price challenges for both CHS and our Ventura Foods joint venture. Horizon Milling’s improved results were related to merchandising margins during the three months ended May 31, 2008. Typically results are affected by U.S. dietary habits and although the preference for a low carbohydrate diet appears to have reached the bottom of its cycle, milling capacity, which had been idled over the past few years because of lack of demand for flour products, can easily be put back into production as consumption of flour products increases, which may depress gross margins in the milling industry.

Our Energy segment generated decreased equity investment earnings of $0.2 million related to reduced margins in an equity investment held by NCRA, and Corporate and Other generated improved earnings of $92 thousand from equity investment earnings, as compared to the three months ended May 31, 2007.

Minority Interests. Minority interests of $16.7 million for the three months ended May 31, 2008 decreased by $44.6 million (73%) compared to the three months ended May 31, 2007. This net decrease was a result of less profitable operations within our majority-owned subsidiaries compared to the same three-month period in the prior year. Substantially all minority interests relate to NCRA, an approximately 74.5% owned subsidiary, which we consolidate in our Energy segment.

Income Taxes. Income tax expense of $23.6 million for the three months ended May 31, 2008 compares with $23.1 million for the three months ended May 31, 2007, resulting in effective tax rates of 11.1% and 8.8%, respectively. The federal and state statutory rate applied to nonpatronage business activity was 38.9% for the three-month periods ended May 31, 2008 and 2007. The income taxes and effective tax rate vary each year based upon profitability and nonpatronage business activity during each of the comparable years.

Comparison of the nine months ended May 31, 2008 and 2007

General. We recorded income before income taxes of $747.5 million during the nine months ended May 31, 2008 compared to $505.9 million during the nine months ended May 31, 2007, an increase of $241.6 million (48%). These results reflected increased pretax earnings in each of our Ag Business and Processing segments and in Corporate and Other, and were partially offset by decreased pretax earnings in our Energy segment.

Our Energy segment generated income before income taxes of $165.7 million for the nine months ended May 31, 2008 compared to $338.7 million in the nine months ended May 31, 2007. This decrease in earnings of $173.0 million (51%) is primarily from lower margins at the NCRA refinery in McPherson, Kansas and at our Laurel refinery, in addition to reduced margins on refined fuels from a planned major maintenance, during which time our production was reduced at our Laurel, Montana refinery. Earnings in our lubricants, propane, renewable fuels marketing and transportation businesses improved during the nine months ended May 31, 2008 when compared to the same nine-month period of the previous year.

Our Ag Business segment generated income before income taxes of $504.6 million for the nine months ended May 31, 2008 compared to $108.0 million in the nine months ended May 31, 2007, an increase in earnings of $396.6 million. In our first fiscal quarter of 2007, we sold approximately 25% of our investment in CF, a domestic fertilizer manufacturer in which we held a minority interest, for which we received cash of $10.9 million and recorded a gain of $5.3 million. During the first quarter of fiscal 2008, we sold all of our remaining 1,610,396 shares of CF stock for proceeds of $108.3 million and recorded a pretax gain of $91.7 million. As previously discussed, during the first quarter of fiscal 2008, the crop nutrients business of Agriliance was distributed to us and generated $75.0 million in earnings for the nine months ended May 31, 2008. Prior to the distribution, we reflected 50% of these earnings through our equity income from our investment in Agriliance. Strong demand and increased volumes for grain and oilseed products, much of it driven by increased U.S. ethanol production, contributed to improved performances by our grain marketing, crop nutrients and country operations businesses. Our country operations earnings increased $70.7 million, primarily as a result of overall improved product margins, including historically high margins on grain and agronomy transactions. Continued market expansion into Colorado, Oklahoma and Kansas also increased country operations volumes. Our grain marketing operations improved earnings by $199.6 million during the nine months ended May 31, 2008 compared with the same nine-month period in fiscal 2007, primarily from increased grain volumes and improved margins on those grains, and also included strong earning performances from our joint ventures. Volatility in the grain markets creates opportunities for increased grain margins, and additionally during fiscal 2007 and 2008, increased interest in renewable fuels, and changes in transportation costs, shifted marketing patterns and dynamics for our grain marketing business. Due to the distribution by Agriliance of the wholesale and some of the retail businesses to us and Land O’Lakes, the operating performance remaining within the Agriliance operations for the nine-months ended May 31, 2008 is primarily the retail business. Our share of the distributed operations of Agriliance resulted in a decrease in equity income from investments of $27.9 million. Our remaining share of the agronomy operations, net of allocated internal expenses, reported reduced retail margins generated by Agriliance of $7.1 million for our share of those joint venture’s earnings.

Our Processing segment generated income before income taxes of $65.3 million for the nine months ended May 31, 2008 compared to $47.9 million in the nine months ended May 31, 2007, an increase in earnings of $17.4 million (36%). Oilseed processing earnings increased $19.1 million during the nine months ended May 31, 2008 compared to the same period in the prior year, primarily due to improved margins in our crushing operations, partially offset by slightly reduced margins in our refining operations. Our share of earnings from our wheat milling joint ventures, net of allocated internal expenses, reported improved net earnings of $24.2 million for the nine months ended May 31, 2008 compared to the same period in the prior year. Our share of earnings, net of allocated internal expenses, related to US BioEnergy, an ethanol manufacturing company in which we held a minority ownership interest, decreased $7.0 million for the nine months ended May 31, 2008 compared to the same period in the prior year. Effective April 1, 2008, US BioEnergy and VeraSun completed a merger, and as a result of our change in ownership interest we no longer have significant influence, and account for VeraSun, the surviving entity, as an available for sale investment. Also, in August 2006, US BioEnergy filed a registration statement with the Securities and Exchange Commission to register shares of common stock for sale in an initial public offering (IPO), and in December 2006, the IPO was completed. The affect of the issuance of additional shares of US BioEnergy was to dilute our ownership interest down from approximately 25% to 21%. Due to US BioEnergy’s increase in equity, we recognized a non-cash net gain of $11.4 million during fiscal 2007 on our investment to reflect our proportionate share of the increase in the underlying equity of US BioEnergy. Our share of earnings from Ventura Foods, our packaged foods joint venture, net of allocated internal expenses, had decreased $6.9 million during the nine months ended May 31, 2008, compared to the same period in the prior year, primarily as the result of increased commodity prices reducing margins on the products sold.

Corporate and Other generated income before income taxes of $11.9 million for the nine months ended May 31, 2008 compared to $11.4 million in the nine months ended May 31, 2007, an increase in earnings of $0.5 million (5%). This improvement is primarily attributable to our business solutions’ financial services.

Net Income. Consolidated net income for the nine months ended May 31, 2008 was $657.6 million compared to $459.6 million for the nine months ended May 31, 2007, which represents a $198.0 million (43%) increase.

Revenues. Consolidated revenues were $22.8 billion for the nine months ended May 31, 2008 compared to $12.2 billion for the nine months ended May 31, 2007, which represents a $10.6 billion (86%) increase.

Our Energy segment revenues, after elimination of intersegment revenues, of $7.8 billion increased by $2.2 billion (39%) during the nine months ended May 31, 2008 compared to the nine months ended May 31, 2007. During the nine months ended May 31, 2008 and 2007, our Energy segment recorded revenues from our Ag Business segment of $224.9 million and $171.2 million, respectively. The net increase in revenues of $2,171.7 million is comprised of a net increase of $1,739.9 million related to price appreciation and a $431.8 million net increase in sales volume primarily on refined fuels and propane products. Refined fuels revenues increased $1,603.5 million (42%), of which $1,501.3 million was related to a net average selling price increase and $102.2 million was attributable to increased volumes, compared to the same period in the previous year. The sales price of refined fuels increased $0.77 per gallon (40%) and volumes increased 2% when comparing the nine months ended May 31, 2008 with the same period a year ago. Higher crude oil prices, strong global demand and limited refining capacity contributed to the increase in refined fuels selling prices. Renewable fuels marketing revenues increased $233.9 million (40%), mostly from a 41% increase in volumes when compared with the same nine-month period in the previous year. Propane revenues increased by $106.4 million (20%), of which $162.3 million related to an increase in the net average selling price, and were partially offset by $55.9 million related to a decrease in volumes, when compared to the same period in the

previous year. Propane sales volume decreased 8% in comparison to the same period of the prior year, while the average selling price increased $0.34 per gallon (31%). Propane prices tend to follow the prices of crude oil and natural gas, both of which increased during the nine months ended May 31, 2008 compared to the same period in 2007. Propane prices are also affected by changes in propane demand and domestic inventory levels. The decrease in propane volumes primarily reflects a loss of crop drying season with less moisture in the fall 2007 crop and reduced demand due to higher prices.

Our Ag Business segment revenues, after elimination of intersegment revenues, of $14.1 billion, increased $8.0 billion (131%) during the nine months ended May 31, 2008 compared to the nine months ended May 31, 2007. Grain revenues in our Ag Business segment totaled $10,746.3 million and $5,031.5 million during the nine months ended May 31, 2008 and 2007, respectively. Of the grain revenues increase of $5,714.8 million (114%), $2,689.7 million is attributable to increased volumes and $3,025.1 million is due to increased average grain selling prices during the nine months ended May 31, 2008 compared to the same period last fiscal year. The average sales price of all grain and oilseed commodities sold reflected an increase of $3.10 per bushel (60%). The 2007 fall harvest produced good yields throughout most of the United States, with the quality of most grains rated as excellent or good. Despite the good harvest, prices for nearly all grain commodities increased because of strong demand, particularly for corn, which is used as the feedstock for most ethanol plants as well as for livestock feed. The average month-end market price per bushel of spring wheat, soybeans and corn increased approximately $6.42, $5.12 and $1.22, respectively, when compared to the prices of those same grains for the nine months ended May 31, 2007. Volumes increased 33% during the nine months ended May 31, 2008 compared with the same period of a year ago. Wheat, corn, soybeans and barley reflected the largest volume increases compared to the nine months ended May 31, 2007. Beginning in September 2007, we began recording revenues from the distributed crop nutrients business of Agriliance reflecting $1,866.4 million for the nine months ended May 31, 2008. Our Ag Business segment non-grain or non-wholesale crop nutrients product revenues of $1,360.4 million increased by $394.8 million (41%) during the nine months ended May 31, 2008 compared to the nine months ended May 31, 2007, primarily the result of increased revenues of retail crop nutrients, energy, feed, crop protection and processed sunflower products. Other revenues within our Ag Business segment of $116.3 million during the nine months ended May 31, 2008 increased $25.9 million (29%) compared to the nine months ended May 31, 2007, primarily from grain handling and service revenues.

Our Processing segment revenues, after elimination of intersegment revenues, of $885.8 million increased $359.6 million (68%) during the nine months ended May 31, 2008 compared to the nine months ended May 31, 2007. Because our wheat milling and packaged foods operations are operated through non-consolidated joint ventures, revenues reported in our Processing segment are entirely from our oilseed processing operations. Higher average sales prices of processed oilseed increased revenues by $166.3 million, while processed soybean volumes increased 11%, accounting for an increase in revenues of $44.8 million. Oilseed refining revenues increased $140.1 million (56%), of which $141.7 million was due to higher average sales prices and were partially offset by $1.6 million due to a less than 1% net decrease in sales volume. Oilseed flour revenues increased $4.9 million (41%). The average selling price of processed oilseed increased $110 per ton (64%) and the average selling price of refined oilseed products increased $0.18 per pound (56%) compared to the same nine-month period of fiscal 2007. The changes in the average selling price of products are primarily driven by the higher price of soybeans.

Cost of Goods Sold. Consolidated cost of goods sold were $21.9 billion for the nine months ended May 31, 2008 compared to $11.5 billion for the nine months ended May 31, 2007, which represents a $10.4 billion (90%) increase.

Our Energy segment cost of goods sold, after elimination of intersegment costs, of $7.5 billion increased by $2.4 billion (47%) during the nine months ended May 31, 2008 compared to the same period of the prior year. The increase in cost of goods sold is primarily due to increased per unit costs for refined fuels and propane products. On a more product-specific basis, the average cost of refined fuels increased $0.84 (44%) per gallon and volumes increased 2% compared to the nine months ended May 31, 2007. We process approximately 55,000 barrels of crude oil per day at our Laurel, Montana refinery and 80,000 barrels of crude oil per day at NCRA’s McPherson, Kansas refinery. The average cost increase is primarily related to higher input costs at our two crude oil refineries and higher average prices on the refined products that we purchased

for resale compared to the nine months ended May 31, 2007. The average per unit cost of crude oil purchased for the two refineries increased 62% compared to the nine months ended May 31, 2007. The average cost of propane increased $0.33 (31%) per gallon, while volumes decreased 8% compared to the nine months ended May 31, 2007.

Our Ag Business segment cost of goods sold, after elimination of intersegment costs, of $13.6 billion increased $7.7 billion (129%) during the nine months ended May 31, 2008 compared to the same period of the prior year. Grain cost of goods sold in our Ag Business segment totaled $10.5 billion and $5.0 billion during the nine months ended May 31, 2008 and 2007, respectively. The cost of grains and oilseed procured through our Ag Business segment increased $5.5 billion (112%) compared to the nine months ended May 31, 2007. This is the result of an increase of $2.98 (59%) in the average cost per bushel along with a 33% net increase in bushels sold as compared to the prior year. Wheat, corn, soybeans and barley reflected the largest volume increases compared to the nine months ended May 31, 2007. Commodity prices on soybeans, spring wheat and corn have increased compared to the prices that were prevalent during the same nine-month period in 2007. In September 2007, we began recording cost of goods sold from the distributed crop nutrients business of Agriliance reflecting $1,755.4 million for the nine months ended May 31, 2008. Our Ag Business segment cost of goods sold, excluding the cost of grains procured through this segment, increased during the nine months ended May 31, 2008 compared to the nine months ended May 31, 2007, primarily due to higher volumes and price per unit costs for crop nutrients, energy, feed, seed and processed sunflower products. The volume increases resulted primarily from acquisitions made and reflected in the reporting periods.

Our Processing segment cost of goods sold, after elimination of intersegment costs, of $837.9 million, increased $336.7 million (67%) compared to the nine months ended May 31, 2007, which was primarily due to increased costs of soybeans in addition to volume increases in soybean crushing.

Marketing, General and Administrative. Marketing, general and administrative expenses of $228.0 million for the nine months ended May 31, 2008 increased by $52.5 million (30%) compared to the nine months ended May 31, 2007. The net increase of $52.5 million includes $25.5 million from our crop nutrients business reflected in our Ag Business segment, which were previously recorded in our equity investment reported earnings of Agriliance. The remaining net change of $27.0 million (15%) includes increased performance-based incentive plan expense, in addition to other employee benefits (primarily medical and pension), general inflation and acquisitions.

(Gain) Loss on Investments. During our first fiscal quarter in 2007, we sold 540,000 shares of our CF Industries Holdings, Inc. (CF) stock, included in our Ag Business segment, for proceeds of $10.9 million, and recorded a pretax gain of $5.3 million, reducing our ownership interest in CF to approximately 2.9%. During the nine months ended May 31, 2008, we sold all of our remaining 1,610,396 shares of CF stock for proceeds of $108.3 million and recorded a pretax gain of $91.7 million. Also during the nine months ended May 31, 2008 included in our Energy and Ag Business segments and Corporate and Other were gains on available for sale securities sold of $35 thousand, $8.7 million and $1.0 million, respectively. These gains were partially offset by losses on investments of $0.9 million in our Processing segment. In August 2006, US BioEnergy, now VeraSun, filed a registration statement with the Securities and Exchange Commission to register shares of common stock for sale in an initial public offering (IPO), and in December 2006, the IPO was completed. The affect of the issuance of additional shares of US BioEnergy was to dilute our ownership interest down from approximately 25% to 21%. Due to US BioEnergy’s increase in equity, we recognized a non-cash net gain of $11.1 million on our investment to reflect our proportionate share of the increase in the underlying equity of US BioEnergy.

Interest, net. Net interest of $53.8 million for the nine months ended May 31, 2008 increased $27.8 million (107%) compared to the same period in fiscal 2007. Interest expense for the nine months ended May 31, 2008 and 2007 was $65.2 million and $37.7 million, respectively. Interest income, generated primarily from marketable securities, was $11.4 million and $11.7 million, for the nine months ended May 31, 2008 and 2007, respectively. The interest expense increase of $27.5 million (73%) primarily relates to an increase in borrowings, which was created by higher working capital, partially offset by a decrease in the average short-term interest rate and an increase in capitalized interest of $1.3 million. For the nine months

ended May 31, 2008 and 2007, we capitalized interest of $9.1 million and $7.8 million, respectively, primarily related to construction projects in our Energy segment for financing interest on our coker project. The average level of short-term borrowings increased $568.3 million during the nine months ended May 31, 2008 compared to the same nine-month period in fiscal 2007, while the average short-term interest rate decreased 1.32%. Higher volumes and commodity prices primarily within our Ag Business segment in addition to increased volumes and working capital needs from our crop nutrients business increased that segment’s interest, net by $26.3 million. Also, in October, 2007, we entered into a private placement with several insurance companies and banks for additional long-term debt in the amount of $400.0 million with an interest rate of 6.18%, which primarily replaced short-term debt. The net decrease in interest income of $0.3 million (2%), was primarily Corporate and Other relating to a decrease of interest income on our hedging and other services, and were partially offset by increased interest income at NCRA within our Energy segment, which primarily relates to marketable securities.

Equity Income from Investments. Equity income from investments of $128.4 million for the nine months ended May 31, 2008 increased $44.1 million (52%) compared to the nine months ended May 31, 2007. We record equity income or loss from the investments in which we have an ownership interest of 50% or less and have significant influence, but not control, for our proportionate share of income or loss reported by the entity, without consolidating the revenues and expenses of the entity in our Consolidated Statements of Operations. The net increase in equity income from investments was attributable to improved earnings from investments in our Ag Business and Processing segments and Corporate and Other, and was partially offset by a slight reduction in earnings within our Energy segment. These improvements included $29.7 million for Ag Business, $13.4 million for Processing and $0.9 million for Corporate and Other, with a reduction of $20 thousand for Energy.

Our Ag Business segment generated improved earnings of $29.7 million from equity investments. Our share of equity investment earnings or losses in Agriliance and a Canadian agronomy joint venture decreased earnings by $38.5 million and includes decreased margins for their retail operations, in addition to the loss of their wholesale crop nutrient and crop protection products businesses. In September 2007, Agriliance distributed the assets of the crop nutrients business to us, and the assets of the crop protection business to Land O’Lakes. Agriliance continues to exist as a 50-50 joint venture and primarily operates an agronomy retail distribution business. We had an improvement of $65.9 million from our share of equity investment earnings in our grain marketing joint ventures during the nine months ended May 31, 2008 compared to the same period the previous year. The improvement in earnings is primarily related to increased volumes at export terminals. Our country operations business reported an aggregate increase in equity investment earnings of $2.3 million from several small equity investments.

Our Processing segment generated improved earnings of $13.4 million from equity investments. Our equity investment earnings from US BioEnergy, prior to the merger with VeraSun, were $5.1 million less during the nine months ended May 31, 2008 compared to the same period in the previous year, primarily from reduced margins resulting from higher input costs. Ventura Foods, our vegetable oil-based products and packaged foods joint venture, recorded reduced earnings of $6.6 million, and Horizon Milling, our domestic and Canadian wheat milling joint ventures, recorded improved earnings of $25.5 million, net compared to the same nine-month period in fiscal 2007. Ventura Foods’ decrease in earnings was primarily due to higher commodity prices resulting in lower margins on the products sold. A shifting demand balance for soybeans for both food and renewable fuels meant addressing supply and price challenges for both CHS and our Ventura Foods joint venture. Horizon Milling’s improved results were related to merchandising margins during the nine months ended May 31, 2008. Typically results are affected by U.S. dietary habits and although the preference for a low carbohydrate diet appears to have reached the bottom of its cycle, milling capacity, which had been idled over the past few years because of lack of demand for flour products, can easily be put back into production as consumption of flour products increases, which may depress gross margins in the milling industry.

Our Energy segment generated decreased equity investment earnings of $20 thousand related to reduced margins in an equity investment held by NCRA, and Corporate and Other generated improved earnings of

$0.9 million from equity investment earnings, primarily from Cofina Financial, our financial services equity investment, as compared to the nine months ended May 31, 2007.

Minority Interests. Minority interests of $52.5 million for the nine months ended May 31, 2008 decreased by $42.2 million (45%) compared to the nine months ended May 31, 2007. This net decrease was a result of less profitable operations within our majority-owned subsidiaries compared to the same nine-month period in the prior year. Substantially all minority interests relate to NCRA, an approximately 74.5% owned subsidiary, which we consolidate in our Energy segment.

Income Taxes. Income tax expense of $89.9 million for the nine months ended May 31, 2008 compares with $46.3 million for the nine months ended May 31, 2007, resulting in effective tax rates of 12.0% and 9.1%, respectively. The federal and state statutory rate applied to nonpatronage business activity was 38.9% for the nine-month periods ended May 31, 2008 and 2007. The income taxes and effective tax rate vary each year based upon profitability and nonpatronage business activity during each of the comparable years.

Liquidity and Capital Resources

On May 31, 2008, we had working capital, defined as current assets less current liabilities, of $1,660.1 million and a current ratio, defined as current assets divided by current liabilities, of 1.4 to 1.0, compared to working capital of $821.9 million and a current ratio of 1.3 to 1.0 on August 31, 2007. On May 31, 2007, we had working capital of $940.8 million and a current ratio of 1.4 to 1.0 compared to working capital of $848.3 million and a current ratio of 1.5 to 1.0 on August 31, 2006. During the nine months ended May 31, 2008, increases in working capital included the impact of the cash received from additional long-term borrowings of $600.0 million and the distribution of crop nutrients net assets from Agriliance, our agronomy joint venture, as previously discussed.

On May 31, 2008, our committed lines of credit consisted of a five-year revolving facility in the amount of $1.3 billion which expires in May 2011 and a 364-day revolving facility in the amount of $500.0 million which expires in February 2009. These credit facilities are established with a syndicate of domestic and international banks, and our inventories and receivables financed with it are highly liquid. On May 31, 2008, we had $400.0 million outstanding on the five-year revolver compared with $475.0 million outstanding on May 31, 2007. On May 31, 2008, we had no outstanding balance on the 364-day revolver. In addition, we have two commercial paper programs totaling $125.0 million with banks participating in our five-year revolver. On May 31, 2008, we had no commercial paper outstanding compared with $44.1 million outstanding on May 31, 2007. Due to recent appreciation in commodity prices, as further discussed in “Cash Flows from Operations”, our average borrowings during the current fiscal year have been much higher in comparison to prior years. With our recent long-term borrowings and our additional short-term borrowing capacity, we believe that we have adequate liquidity to cover any increase in net operating assets and liabilities in the foreseeable future.

Cash Flows from Operations

Cash flows from operations are generally affected by commodity prices and the seasonality of our businesses. These commodity prices are affected by a wide range of factors beyond our control, including weather, crop conditions, drought, the availability and the adequacy of supply and transportation, government regulations and policies, world events, and general political and economic conditions. These factors are described in the preceding cautionary statements and may affect net operating assets and liabilities, and liquidity.

Our cash flows provided by operating activities were $512.1 million and $270.9 million for the nine months ended May 31, 2008 and 2007, respectively. The fluctuation in cash flows when comparing the two periods is primarily from greater net income and gains on investments, and a smaller net increase in operating assets and liabilities during the nine months ended May 31, 2008 compared to 2007. Commodity prices have been volatile, and higher prices affect inventory and receivable balances which consume cash until inventories are sold and receivables are collected.

Our operating activities provided net cash of $512.1 million during the nine months ended May 31, 2008. Net income of $657.6 million and net non-cash expenses and cash distributions from equity investments of $130.8 million were partially offset by an increase in net operating assets and liabilities of $276.3 million. The primary components of net non-cash expenses and cash distributions from equity investments included depreciation and amortization, including major repair costs, of $151.7 million, deferred tax expense of $89.9 million and minority interests of $52.5 million, partially offset by gains on investments of $100.5 million and income from equity investments, net of redemptions from those investments, of $55.6 million. Gains on investments were previously discussed in “Results of Operations”, and primarily includes the gain on the sale of all of our shares of CF common stock. The increase in net operating assets and liabilities was caused primarily by increased commodity prices reflected in increased receivables, inventories and derivative assets, partially offset by an increase in accounts payable and accrued expenses, derivative liabilities and customer advance payments on May 31, 2008, when compared to August 31, 2007. On May 31, 2008, the market prices of our three primary grain commodities, corn, soybeans and spring wheat, increased by $2.75 (85%) per bushel, $4.96 (57%) per bushel and $3.63 (52%) per bushel, respectively, when compared to the prices on August 31, 2007. Crude oil market prices increased $53.31 (72%) per barrel on May 31, 2008 when compared to August 31, 2007. In addition, on May 31, 2008, fertilizer commodity prices affecting our wholesale crop nutrients and country operations retail businesses generally had increases between 43% and 139%, depending on the product, compared to prices on August 31, 2007.

Our operating activities provided net cash of $270.9 million during the nine months ended May 31, 2007. Net income of $459.6 million and net non-cash expenses and cash distributions from equity investments of $185.6 million were partially offset by an increase in net operating assets and liabilities of $374.3 million. The primary components of net non-cash expenses and cash distributions from equity investments included depreciation and amortization, including major repair costs, of $121.0 million, minority interests of $94.7 million and deferred taxes of $15.8 million, which were partially offset by income from equity investments, net of redemptions from those investments, of $24.2 million, a pretax gain of $5.3 million from the sale of 540,000 shares of our CF stock included in our Ag Business segment, and an $11.2 million non-cash gain in our Processing segment from our ownership changes in US BioEnergy and their IPO transaction as previously discussed in “Results of Operations”. The increase in net operating assets and liabilities was primarily caused by an increase in trade receivables as well as derivative assets and hedging deposits (included in other current assets) of $337.9 million and $246.8 million, respectively, partially offset by an increase in accounts payable and derivative liabilities of $125.2 million and $68.5 million, respectively, due to increases in grain prices on May 31, 2007 when compared to August 31, 2006. Increases in inventories also caused an increase in net operating assets and liabilities. On May 31, 2007, the market prices of our three primary grain commodities, corn, soybeans and spring wheat, increased by $1.58 per bushel (68%), $2.64 per bushel (49%) and $0.82 per bushel (18%), respectively, when compared to August 31, 2006. In addition to grain prices affecting grain inventories, our feed and farm supplies inventories in our Ag Business segment increased as well during the period (31%), primarily at our country operations retail locations mainly due to the spring planting season and also acquisitions.

Crude oil prices are expected to be volatile in the foreseeable future, but related inventories and receivables turn over in a relatively short period, thus somewhat mitigating the effects on operating assets and liabilities. Grain prices are influenced significantly by global projections of grain stocks available until the next harvest. Demand for corn by the ethanol industry created an incentive to divert acres from soybeans and wheat to corn this past planting year. The effect has been to stabilize corn prices at a relatively high level, with soybeans and wheat also showing price appreciation. Grain prices were volatile during fiscal 2007 and have continued to be volatile during fiscal 2008. We anticipate that high demand for all grains and oilseeds, in addition to recent flooding in the midwest, will likely continue to create higher prices and price volatility for those commodities.

Cash usage in our operating activities has generally been the lowest during our fourth fiscal quarter. Historically by this time we have sold a large portion of our seasonal agronomy related inventories in our Ag Business segment operations and continue to collect cash from the related receivables. Although this trend is likely to continue, we expect that the current high commodity prices will cause our cash usage to be higher

during the fourth quarter of fiscal 2008 compared to prior years. We believe that we have adequate capacity through our committed credit facilities to meet any likely increase in net operating assets and liabilities.

Cash Flows from Investing Activities

For the nine months ended May 31, 2008 and 2007, the net cash flows used in our investing activities totaled $568.6 million and $382.0 million, respectively.

Excluding investments in Agriliance, further discussed below, the acquisition of property, plant and equipment comprised the primary use of cash totaling $255.8 million and $249.6 million for the nine months ended May 31, 2008 and 2007, respectively. For the year ending August 31, 2008, we expect to spend approximately $355.0 million for the acquisition of property, plant and equipment. Included in our projected capital spending through fiscal 2008 is completion of the installation of a coker unit at our Laurel, Montana refinery, along with other refinery improvements, which will allow us to extract a greater volume of higher value gasoline and diesel fuel from a barrel of crude oil and less relatively lower value asphalt, that is expected to increase yields by about 14 percent. The coker unit is currently operational with total expenditures of $411.0 million as of May 31, 2008, of which $126.7 million and $151.8 million were incurred during the nine months ended May 31, 2008 and 2007, respectively.

During the first fiscal quarter of 2008, we retrospectively changed our accounting method for the costs of turnarounds from the accrual method to the deferral method, as previously discussed. Turnarounds are the scheduled and required shutdowns of refinery processing units for significant overhaul and refurbishment. Expenditures for these major repairs during the nine months ended May 31, 2008 and 2007 were $21.7 million and $8.2 million, respectively.

In October 2003, we and NCRA reached agreements with the EPA and the State of Montana’s Department of Environmental Quality and the State of Kansas Department of Health and Environment regarding the terms of settlements with respect to reducing air emissions at our Laurel, Montana and NCRA’s McPherson, Kansas refineries. These settlements are part of a series of similar settlements that the EPA has negotiated with major refiners under the EPA’s Petroleum Refinery Initiative. The settlements take the form of consent decrees filed with the U.S. District Court for the District of Montana (Billings Division) and the U.S. District Court for the District of Kansas. Each consent decree details potential capital improvements, supplemental environmental projects and operational changes, that we and NCRA have agreed to implement at the relevant refinery, over several years. The consent decrees also required us and NCRA to pay approximately $0.5 million in aggregate civil cash penalties. As of May 31, 2008, the aggregate capital expenditures for us and NCRA related to these settlements was approximately $24 million, and we anticipate spending an additional $8 million before December 2011. We do not believe that the settlements will have a material adverse effect on us or NCRA.

The Montana Department of Environmental Quality (MDEQ) issued a Notice of Violation to us dated September 4, 2007 alleging that our refinery in Laurel, Montana exceeded nitrogen oxides (NOx) limits under a refinery operating permit. Following receipt of the letter, we provided certain facts and explanations regarding the matter to the MDEQ. By letter dated June 27, 2008, the MDEQ has proposed a civil penalty of approximately $0.2 million with respect to the incident. We intend to enter into settlement discussions with the MDEQ in an attempt to alleviate the civil penalty. We believe we are currently in compliance with the NOx limits under the permit, and do not believe that the civil penalty will have a material adverse affect on us.

Investments made during the nine months ended May 31, 2008 and 2007, totaled $336.1 million and $84.2 million, respectively. As previously discussed, in September 2007, Agriliance distributed primarily its wholesale crop nutrients and crop protection assets to us and Land O’Lakes, respectively, and continues to operate primarily its retail distribution business until further repositioning of that business occurs. During the nine months ended May 31, 2008, we made a $13.0 million net cash payment to Land O’Lakes in order to maintain equal capital accounts in Agriliance, as previously discussed, and during the third quarter of fiscal 2008, Land O’Lakes paid us $8.3 million for additional assets distributed by Agriliance related to joint venture ownership interests. During the same nine-month period, our net contribution to Agriliance was $255.0 million

which supported their working capital requirements, with Land O’Lakes making equal contributions to Agriliance, primarily for crop nutrient and crop protection product trade payables that were not assumed by us or Land O’Lakes upon the distribution of the crop nutrients and crop protection assets, as well as for Agriliance’s ongoing retail operations. Also during the nine months ended May 31, 2008, we invested $30.3 million in a joint venture (37.5% ownership) included in our Ag Business segment, that acquired production farmland and related operations in Brazil, intended to strengthen our ability to serve customers around the world. These operations include production of soybeans, corn, cotton and sugarcane, as well as cotton processing at four locations. Another investment was the $6.5 million purchase of additional shares of common stock in US BioEnergy, included in our Processing segment, during the nine months ended May 31, 2008, compared to $35.3 million during the nine months ended May 31, 2007. An additional investment during the nine months ended May 31, 2007, included $22.2 million for an equity position in a Brazil-based grain handling and merchandising company, Multigrain S.A., an agricultural commodities business headquartered in Sao Paulo, Brazil, in which we have a current ownership interest of 37.5% and is included in our Ag Business segment. This venture, which includes grain storage and export facilities, builds on our South American soybean origination, and helps meet customer needs year-round. We also invested $15.6 million in Horizon Milling G.P. (24% CHS ownership) during the nine months ended May 31, 2007, a joint venture included in our Processing segment, that acquired the Canadian grain-based foodservice and industrial businesses of Smucker Foods of Canada, which includes three flour milling operations and two dry baking mixing facilities in Canada.

During the nine months ended May 31, 2008 and 2007, changes in notes receivable resulted in decreases in cash flows of $62.5 million and $54.2 million, respectively. The notes were primarily from related party notes receivable at NCRA from its minority owners, Growmark, Inc. and MFA Oil Company. During the nine months ended May 31, 2008, $29.8 million of the decrease in cash flows resulted from a note receivable from our finance company joint venture, Cofina Financial. During the nine months ended May 31, 2007, $8.0 million of the decrease in cash flows resulted from a note receivable related to our investment in Multigrain S.A.

Various cash acquisitions of intangibles were $2.5 million and $8.1 million for the nine months ended May 31, 2008 and 2007, respectively.

Business acquisitions of $45.9 million during the nine months ended May 31, 2008, include $24.1 million from the purchase of an energy and convenience store business included in our Energy segment, $15.6 million from a soy-based food products business included in our Processing segment and $6.2 million from a distillers dried grain business included in our Ag Business segment.

Partially offsetting our cash outlays for investing activities for the nine months ended May 31, 2008 and 2007, were proceeds from the sale of investments of $120.8 million and $10.9 million, respectively, which were previously discussed in “Results of Operations”, and primarily include proceeds from the sale of all of our shares of CF common stock. Also partially offsetting cash usages for the nine months ended May 31, 2008 and 2007, were proceeds from the disposition of property, plant and equipment of $8.1 million and $9.3 million, respectively, and investments redeemed totaling $35.5 million and $4.4 million, respectively.

Cash Flows from Financing Activities

We finance our working capital needs through short-term lines of credit with a syndication of domestic and international banks. In May 2006, we renewed and expanded our committed lines of revolving credit to include a five-year revolver in the amount of $1.1 billion, with the ability to expand the facility an additional $200.0 million. In October 2007, we expanded that facility, receiving additional commitments in the amount of $200.0 million from certain lenders under the agreement. The additional commitments increased the total borrowing capacity to $1.3 billion on the facility. On May 31, 2008, interest rates for amounts outstanding on this credit facility ranged from 3.04% to 3.15%. In February 2008, we increased our short-term borrowing capacity by establishing a $500.0 million committed line of credit with a syndication of banks consisting of a 364-day revolver, with no amount outstanding on May 31, 2008. In addition to these lines of credit, we have a revolving credit facility dedicated to NCRA, with a syndication of banks in the amount of $15.0 million committed. In November 2007, the line of credit dedicated to NCRA was renewed for an additional year. We

also have a committed revolving line of credit dedicated to Provista Renewable Fuels Marketing, LLC (Provista), which expires in November 2009, in the amount of $25.0 million. During the third quarter of fiscal 2008, our wholly-owned subsidiary, CHS Europe S.A., entered into an uncommitted $75.0 million line of credit facility to finance its normal trade grain transactions, which are collateralized by $0.1 million of inventories and receivables as of May 31, 2008. In June 2008, CHS Europe S.A. entered into an additional uncommitted $60.0 million line of credit facility. On May 31, 2008, August 31, 2007 and May 31, 2007, we had total short-term indebtedness outstanding on these various facilities and other miscellaneous short-term notes payable totaling $405.9 million, $620.7 million and $484.5 million, respectively. Proceeds from our long-term borrowings totaling $600.0 million during the nine months ended May 31, 2008, were used to pay down our five-year revolver and are explained in further detail below.

During the first quarter of fiscal 2007, we instituted two commercial paper programs, totaling up to $125.0 million, with two banks participating in our five-year revolving credit facility. Terms of our five-year revolving credit facility allow a maximum usage of commercial paper of $200.0 million at any point in time. These commercial paper programs do not increase our committed borrowing capacity in that we are required to have at least an equal amount of undrawn capacity available on our five-year revolving facility as to the amount of commercial paper issued. On May 31, 2008, we had no commercial paper outstanding, compared to $51.9 million and $44.1 million outstanding on August 31, 2007 and May 31, 2007, respectively.

We typically finance our long-term capital needs, primarily for the acquisition of property, plant and equipment, with long-term agreements with various insurance companies and banks. In June 1998, we established a long-term credit agreement through cooperative banks. This facility committed $200.0 million of long-term borrowing capacity to us, with repayments through fiscal 2009. The amount outstanding on this credit facility was $55.8 million, $75.4 million and $81.2 million on May 31, 2008, August 31, 2007 and May 31, 2007, respectively. Interest rates on May 31, 2008 ranged from 3.52% to 7.13%. Repayments of $19.7 million and $17.2 million were made on this facility during the nine months ended May 31, 2008 and 2007, respectively.

Also in June 1998, we completed a private placement offering with several insurance companies for long-term debt in the amount of $225.0 million with an interest rate of 6.81%. Repayments are due in equal annual installments of $37.5 million each, in the years 2008 through 2013.

In January 2001, we entered into a note purchase and private shelf agreement with Prudential Insurance Company. The long-term note in the amount of $25.0 million has an interest rate of 7.9% and is due in equal annual installments of approximately $3.6 million in the years 2005 through 2011. A subsequent note for $55.0 million was issued in March 2001, related to the private shelf facility. The $55.0 million note has an interest rate 7.43% and is due in equal annual installments of approximately $7.9 million in the years 2005 through 2011. Repayments of $11.4 million were made during each of the nine months ended May 31, 2008 and 2007.

In October 2002, we completed a private placement with several insurance companies for long-term debt in the amount of $175.0 million, which was layered into two series. The first series of $115.0 million has an interest rate of 4.96% and is due in equal semi-annual installments of approximately $8.8 million during the years 2007 through 2013. The second series of $60.0 million has an interest rate of 5.60% and is due in equal semi-annual installments of approximately $4.6 million during years 2012 through 2018. Repayments of $17.7 million were made on the first series notes during each of the nine months ended May 31, 2008 and 2007.

In March 2004, we entered into a note purchase and private shelf agreement with Prudential Capital Group, and in April 2004, we borrowed $30.0 million under this arrangement. One long-term note in the amount of $15.0 million has an interest rate of 4.08% and is due in full at the end of the nine-year term in 2010. Another long-term note in the amount of $15.0 million has an interest rate of 4.39% and is due in full at the end of the seven-year term in 2011. In April 2007, we amended our Note Purchase and Private Shelf Agreement with Prudential Investment Management, Inc. and several other participating insurance companies to expand the uncommitted facility from $70.0 million to $150.0 million. We borrowed $50.0 million under

the shelf arrangement in February 2008, for which the aggregate long-term notes have an interest rate of 5.78% and are due in equal annual installments of $10.0 million during the years 2014 through 2018.

In September 2004, we entered into a private placement with several insurance companies for long-term debt in the amount of $125.0 million with an interest rate of 5.25%. Repayments are due in equal annual installments of $25.0 million during years 2011 through 2015.

In October 2007, we entered into a private placement with several insurance companies and banks for long-term debt in the amount of $400.0 million with an interest rate of 6.18%. Repayments are due in equal annual installments of $80.0 million during years 2013 through 2017.

In December 2007, we established a ten-year long-term credit agreement through a syndication of cooperative banks in the amount of $150.0 million, with an interest rate of 5.59%. Repayments are due in equal semi-annual installments of $15.0 million each, starting in June 2013 through December 2018.

Through NCRA, we had revolving term loans outstanding of $0.8 million, $3.0 million and $3.8 million on May 31, 2008, August 31, 2007 and May 31, 2007, respectively. The interest rate on May 31, 2008 was 6.48%. Repayments of $2.3 million were made during each of the nine months ended May 31, 2008 and 2007.

On May 31, 2008, we had total long-term debt outstanding of $1,235.6 million, of which $206.5 million was bank financing, $1,003.9 million was private placement debt and $25.2 million was industrial development revenue bonds, and other notes and contracts payable. The aggregate amount of long-term debt payable presented in the Management’s Discussion and Analysis in our Annual Report on Form 10-K for the year ended August 31, 2007 has not changed materially during the nine months ended May 31, 2008, other than for the $600.0 million of additional long-term borrowings discussed previously, of which repayments will start in fiscal 2013. On May 31, 2007, we had long-term debt outstanding of $690.9 million. Our long-term debt is unsecured except for other notes and contracts in the amount of $7.8 million; however, restrictive covenants under various agreements have requirements for maintenance of minimum working capital levels and other financial ratios. In addition, NCRA term loans of $0.8 million are collateralized by NCRA’s investment in CoBank, ACB. We were in compliance with all debt covenants and restrictions as of May 31, 2008.

In December 2006, NCRA entered into an agreement with the City of McPherson, Kansas related to certain of its ultra-low sulfur fuel assets, with a cost of approximately $325.0 million. The City of McPherson issued $325.0 million of Industrial Revenue Bonds (IRBs) which were transferred to NCRA, as consideration in a financing agreement between the City of McPherson and NCRA, related to the ultra-low sulfur fuel assets. The term of the financing obligation is ten years, at which time NCRA has the option of extending the financing obligation or purchasing the assets for a nominal amount. NCRA has the right at anytime to offset the financing obligation to the City of McPherson against the IRBs. No cash was exchanged in the transaction and none is anticipated to be exchanged in the future. Due to the structure of the agreement, the financing obligation and the IRBs are shown net in our consolidated financial statements. In March 2007, notification was sent to the bond trustees to pay the IRBs down by $324.0 million, at which time the financing obligation to the City of McPherson was offset against the IRBs. The balance of $1.0 million will remain outstanding until the final ten-year maturity.

During the nine months ended May 31, 2008, we borrowed on a long-term basis, $600.0 million, and did not have any new long-term borrowings during the nine months ended May 31, 2007. During the nine months ended May 31, 2008 and 2007, we repaid long-term debt of $54.6 million and $54.2 million, respectively.

Distributions to minority owners for the nine months ended May 31, 2008 and 2007, were $55.4 million and $32.7 million, respectively, and were primarily related to NCRA.

During the nine months ended May 31, 2008 and 2007, changes in checks and drafts outstanding resulted in an increase in cash flows of $10.1 million and $32.3 million, respectively.

In accordance with the bylaws and by action of the Board of Directors, annual net earnings from patronage sources are distributed to consenting patrons following the close of each fiscal year. Patronage refunds are calculated based on amounts using financial statement earnings. The cash portion of the patronage

distribution is determined annually by the Board of Directors, with the balance issued in the form of capital equity certificates. The patronage earnings from the fiscal year ended August 31, 2007, were distributed during the nine months ended May 31, 2008. The cash portion of this distribution deemed by the Board of Directors to be 35%, was $195.0 million. During the nine months ended May 31, 2007, we distributed cash patronage of $133.1 million.

Redemptions of capital equity certificates, approved by the Board of Directors, are divided into two pools, one for non-individuals (primarily member cooperatives) who may participate in an annual pro-rata program for equities held by them, and another for individuals who are eligible for equity redemptions at age 70 or upon death. The amount that each non-individual receives under the pro-rata program in any year is determined by multiplying the dollars available for pro-rata redemptions, if any that year, as determined by the Board of Directors, by a fraction, the numerator of which is the amount of patronage certificates eligible for redemption held by them, and the denominator of which is the sum of the patronage certificates eligible for redemption held by all eligible holders of patronage certificates that are not individuals. In addition to the annual pro-rata program, the Board of Directors approved additional equity redemptions targeting older capital equity certificates which were redeemed in cash in fiscal 2008 and 2007. In accordance with authorization from the Board of Directors, we expect total redemptions related to the year ended August 31, 2007, that will be distributed in fiscal 2008, to be approximately $136.2 million, of which $75.9 million was redeemed in cash during the nine months ended May 31, 2008 compared to $64.9 million during the nine months ended May 31, 2007. We also redeemed $46.4 million of capital equity certificates during the nine months ended May 31, 2008, by issuing shares of our 8% Cumulative Redeemable Preferred Stock (Preferred Stock) pursuant to a registration statement filed with the Securities and Exchange Commission. During the nine months ended May 31, 2007, we redeemed $35.9 million of capital equity certificates by issuing shares of our Preferred Stock.

Our Preferred Stock is listed on the NASDAQ Global Select Market under the symbol CHSCP. On May 31, 2008, we had 9,047,780 shares of Preferred Stock outstanding with a total redemption value of approximately $226.2 million, excluding accumulated dividends. Our Preferred Stock accumulates dividends at a rate of 8% per year, which are payable quarterly, and is redeemable at our option after February 1, 2008. At this time, we have no current plan or intent to redeem any Preferred Stock. Dividends paid on our preferred stock during the nine months ended May 31, 2008 and 2007, were $11.8 million and $9.5 million, respectively.

Off Balance Sheet Financing Arrangements

Lease Commitments:

Our lease commitments presented in Management’s Discussion and Analysis in our Annual Report on Form 10-K for the year ended August 31, 2007, have not materially changed during the nine months ended May 31, 2008.

Guarantees:

Debt:

There is no material off balance sheet debt.

Contractual Obligations

Our contractual obligations are presented in Management’s Discussion and Analysis in our Annual Report on Form 10-K for the year ended August 31, 2007. The total obligations have not materially changed during the nine months ended May 31, 2008, except for the balance sheet changes in payables and long-term debt,

and an approximate 85% increase in grain purchase contracts primarily related to recent appreciation in grain prices.

On September 1, 2007, Agriliance distributed the net assets of their crop nutrients business to us, as previously discussed. We now have additional purchase obligations as of that date related to the crop nutrients business that were previously obligations of Agriliance. On May 31, 2008, we had obligations to purchase approximately 3.4 million tons of fertilizer through 2010. The average price per ton estimated for these purchase obligations was approximately $595.

Critical Accounting Policies

Our Critical Accounting Policies are presented in our Annual Report on Form 10-K for the year ended August 31, 2007. There have been no changes to these policies during the nine months ended May 31, 2008.

Effect of Inflation and Foreign Currency Transactions

Inflation and foreign currency fluctuations have not had a significant effect on our operations. We have some grain marketing, wheat milling and energy operations that impact our exposure to foreign currency fluctuations, but to date, there have been no material effects.

Recent Accounting Pronouncements

No. 51 to establish accounting and reporting standards for the noncontrolling interest (minority interest) in a subsidiary and for the deconsolidation of a subsidiary. Upon its adoption, noncontrolling interests will be classified as equity in our Consolidated Balance Sheets. Income and comprehensive income attributed to the noncontrolling interest will be included in our Consolidated Statements of Operations and our Consolidated Statements of Equities and Comprehensive Income. SFAS No. 160 is effective for fiscal years beginning after December 15, 2008. The provisions of this standard must be applied retrospectively upon adoption. We are in the process of evaluating the impact the adoption of SFAS No. 160 will have on our consolidated financial statements.

CAUTIONARY STATEMENTS FOR PURPOSES OF THE SAFE HARBOR PROVISIONS OF THE SECURITIES LITIGATION REFORM ACT

Any statements contained in this report regarding the outlook for our businesses and their respective markets, such as projections of future performance, statements of our plans and objectives, forecasts of market trends and other matters, are forward-looking statements based on our assumptions and beliefs. Such statements may be identified by such words or phrases as “will likely result,” “are expected to,” “will continue,” “outlook,” “will benefit,” “is anticipated,” “estimate,” “project,” “management believes” or similar expressions. These forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from those discussed in such statements and no assurance can be given that the results in any forward-looking statement will be achieved. For these statements, we claim the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. Any forward-looking statement speaks only as of the date on which it is made, and we disclaim any obligation to subsequently revise any forward-looking statement to reflect events or circumstances after such date or to reflect the occurrence of anticipated or unanticipated events.

Certain factors could cause our future results to differ materially from those expressed or implied in any forward-looking statements contained in this report. These factors include the factors discussed in Item 1A of our Annual Report on Form 10-K for the fiscal year ended August 31, 2007 under the caption “Risk Factors,” the factors discussed below and any other cautionary statements, written or oral, which may be made or referred to in connection with any such forward-looking statements. Since it is not possible to foresee all such factors, these factors should not be considered as complete or exhaustive.


	•	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.

	•	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.

	•	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*

We did not experience any material changes in market risk exposures for the period ended May 31, 2008, that affect the quantitative and qualitative disclosures presented in our Annual Report on Form 10-K for the year ended August 31, 2007.


Item 4T.	*Controls and Procedures*

Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we evaluated the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934 (the “Exchange Act”)) as of May 31, 2008. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of that date, our disclosure controls and procedures were effective.

During the third fiscal quarter ended May 31, 2008, there was no change in our internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II. OTHER INFORMATION


Item 1.	*Legal Proceedings*


Item 1A.	*Risk Factors*

There were no material changes to our risk factors during the period covered by this report. See the discussion of risk factors in Item 1A of our Annual Report on Form 10-K for the fiscal year ended August 31, 2007.


Item 2.	*Not applicable*


Item 3.	*Not applicable*


Item 4.	*Not applicable.*


Item 5.	*Not applicable*


Item 6.	*Exhibits*


Exhibit			Description

	10	.1	Fourth Amendment to 2006 Amended and Restated Credit Agreement by and among CHS Inc., CoBank, ACB and the Syndication Parties dated May 1, 2008
	10	.2	First Amendment to Credit Agreement (364-day Revolving Loan) by and between CHS Inc., CoBank, ACB and the Syndication Parties dated as of May 1, 2008
	10	.3	First Amendment to $150 Million Term Loan Credit Agreement by and between CHS Inc., CoBank, ACB and the Syndication Parties dated as of December 12, 2007
	10	.4	$75 Million Uncommitted Demand Facility by and between CHS Europe S.A. and Fortis Bank (Nederland) N.V. dated April 18, 2008
	10	.5	Third Amendment to the CHS Inc. Deferred Compensation Plan
	10	.6	$60 Million Uncommitted Trade Finance Facility by and between CHS Europe S.A. and Societe Generale dated June 6, 2008
	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

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

CHS Inc.

(Registrant)

/s/ John Schmitz

John Schmitz

Executive Vice President and

Chief Financial Officer

July 10, 2008

Exhibit 10.1

FOURTH AMENDMENT TO CREDIT AGREEMENT

Parties:


	“CoBank”:	CoBank, ACB
		5500 South Quebec Street
		Greenwood Village, Colorado 80111

	“Borrower”:	CHS Inc.
		5500 Cenex Drive
		Inver Grove Heights, Minnesota 55077

	“Syndication Parties”:	The entities name below on the signature pages

Execution Date:		May 1, 2008

Recitals:

A. CoBank, in its capacity as Administrative Agent (“ Administrative Agent ”) and as a Syndication Party, the Syndication Parties signatory thereto (collectively with any Persons who have become or who become Syndication Parties, “ Syndication Parties ”), and Borrower have entered into that certain 2006 Amended and Restated Credit Agreement (Revolving Loan) dated as of May 18, 2006, that certain First Amendment to Credit Agreement dated as of May 8, 2007, that certain Second Amendment to Credit Agreement dated as of October 18, 2007, and that certain Third Amendment to Credit Agreement dated as of March 5, 2008 (as amended, and as further amended, modified, or supplemented from time to time, the “ Credit Agreement ”) pursuant to which the Syndication Parties have extended certain credit facilities to Borrower under the terms and conditions set forth in the Credit Agreement.

B. Borrower has requested that the Agent and the Syndication Parties amend certain terms of the Credit Agreement, which the Agent and the Syndication Parties are willing to do under the terms and conditions as set forth in this Fourth Amendment to Credit Agreement (“Fourth Amendment”).

Agreement :

Now, therefore, in consideration of the mutual covenants and agreements herein contained and other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties hereto hereby agree as follows:

1. Amendments to Credit Agreement . The Credit Agreement is amended as of the Effective Date as follows:

1.1 Section 9.18 is amended in its entirety to read as follows:

9.18 Trademarks, Trade Names, etc . Borrower owns or licenses all patents, trademarks, trade names, service marks and copyrights (collectively, “ Intellectual Property ”) that it utilizes in its business as presently being conducted and as anticipated to be conducted, except where the failure to do so could not reasonably be expected to result in a Material Adverse Effect on Borrower. The Intellectual Property is in full force and effect, and Borrower has taken or caused to be taken all action, necessary to maintain the Intellectual Property in full force and effect and has not taken or failed to take or cause to be taken any action which, with the giving of notice, or the expiration of time, or both, could result in any such Intellectual Property being revoked, invalidated, modified, or limited.

2. Conditions to Effectiveness of this Fourth Amendment. The effectiveness of this Fourth Amendment is subject to satisfaction, in the Administrative Agent’s sole discretion, of each of the following conditions precedent (the date on which all such conditions precedent are so satisfied (except those that may be satisfied at a later date) shall be the “ Effective Date ”):

2.1 Delivery of Executed Loan Documents. Borrower and the Required Lenders shall have delivered to the Administrative Agent, for the benefit of, and for delivery to, the Administrative Agent and the Syndication Parties, this Fourth Amendment (or their approval thereof, in the case of Voting Participants), duly executed.

2.2 Representations and Warranties. The representations and warranties of Borrower in the Credit Agreement shall be true and correct in all material respects on and as of tile Effective Date as though made on and as of such date.

2.3 No Event of Default. No Event of Default shall have occurred and be continuing under the Credit Agreement as of the Effective Date of this Fourth Amendment.

2.4 Payment of Fees and Expenses. Borrower shall have paid the Administrative Agent, by wire transfer of immediately available federal funds all fees and expenses presently due under the Credit Agreement (as amended by this Fourth Amendment).

3. General Provisions .

3.1 No Other Modifications. The Credit Agreement, as expressly modified herein, shall continue in full force and effect and be binding upon the parties thereto.

3.2 Successors and Assigns. This Fourth Amendment shall be binding upon and inure to the benefit of Borrower, Agent, and the Syndication Parties, and their respective successors

and assigns, except that Borrower may not assign or transfer its rights or obligations hereunder without the prior written consent of all the Syndication Parties.

3.3 Definitions. Capitalized terms used, but not defined, in this Fourth Amendment shall have the meaning set forth in the Credit Agreement.

3.4 Severability . Should any provision of this Fourth Amendment be deemed unlawful or unenforceable, said provision shall be deemed several and apart from all other provisions of this Fourth Amendment and all remaining provision of this Fourth Amendment shall be fully enforceable.

3.5 Governing Law. To the extent not governed by federal law, this Fourth Amendment and the rights and obligations of the parties hereto shall be governed by, interpreted and enforced in accordance with the laws of the State of Colorado.

3.6 Headings . The captions or headings in this Fourth Amendment are for convenience only and in no way define, limit or describe the scope or intent of any provision of this Fourth Amendment.

3.7 Counterparts . This Fourth Amendment may be executed by the parties hereto in separate counterparts, each of which, when so executed and delivered, shall be an original, but all such counterparts shall together constitute one and the same 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. Copies of documents or signature pages bearing original signatures, and executed documents or signature pages delivered by a party by telefax, facsimile, or e-mail transmission of an Adobe ^® file format document (also known as a PDF file) shall, in each such instance, be deemed to be, and shall constitute and be treated as, an original signed document or counterpart, as applicable. Any party delivering an executed counterpart of this Fourth Amendment by telefax, facsimile, or e-mail transmission of an Adobe ^® file format document also shall deliver an original executed counterpart of this Fourth Amendment, but the failure to deliver an original executed counterpart shall not affect the validity, enforceability, and binding effect of this Fourth Amendment.

IN WITNESS WHEREOF, the parties hereto have caused this Fourth Amendment to be executed as of the Effective Date.

[Signature Pages Follow]


		BORROWER:

		CHS INC., a cooperative corporation formed under the laws of the State of Minnesota

		By:

		Name: John Schmitz
		Title: Executive Vice President and Chief Financial Officer

		ADMINISTRATIVE AGENT:

		COBANK, ACB

		By:

		Name: Michael Tousignant
		Title: Vice President

		SYNDICATION PARTIES:


		CoBank, ACB

		By:

		Name:		Michael Tousignant
		Title:		Vice President

		The Bank of Tokyo-Mitsubishi UFJ, Ltd., New York Branch

		By:

		Name:
		Title:

[Signature Page to Fourth Amendment to Credit Agreement]


		SunTrust Bank

		By:

		Name:
		Title:

		Bank of America, N.A.

		By:

		Name:
		Title:

		Wells Fargo Bank, National Association

		By:

		Name:
		Title:

		BNP Paribas

		By:

		Name:
		Title:

		By:

		Name:
		Title:

[Signature Page to Fourth Amendment to Credit Agreement]


		Harris N. A.

		By:

		Name:
		Title:

		Cooperatieve Centrale Raiffeisen-Boerenleenbank B.A., “Rabobank International” New York Branch

		By:

		Name:
		Title:

		By:

		Name:
		Title:

		Deere Credit, Inc.

		By:

		Name:
		Title:

		U.S. Bank National Association

		By:

		Name:
		Title:

[Signature Page to Fourth Amendment to Credit Agreement]


		Natixis (f/k/a Natexis Banques Populaires)

		By:

		Name:
		Title:

		By:

		Name:
		Title:

		Fortis Capital Corp.

		By:

		Name:
		Title:

		By:

		Name:
		Title:

		The Bank of Nova Scotia

		By:

		Name:
		Title:

[Signature Page to Fourth Amendment to Credit Agreement]


		Calyon New York Branch

		By:

		Name:
		Title:

		By:

		Name:
		Title:

		National City Bank (successor by merger to National City Bank of Indiana

		By:

		Name:
		Title:

		M&I Marshall & Ilsley Bank

		By:

		Name:
		Title:

		By:

		Name:
		Title:

		Farm Credit Services of America, PCA

		By:

		Name: Steven L. Moore
		Title: Vice President

[Signature Page to Fourth Amendment to Credit Agreement]


		ING Capital LLC

		By:

		Name:
		Title:

		Comerica Bank

		By:

		Name:
		Title:

		AgStar Financial Services, PCA

		By:

		Name:
		Title:

		HSH Nordbank AG New York Branch

		By:

		Name:
		Title:

		By:

		Name:
		Title:

[Signature Page to Fourth Amendment to Credit Agreement]


		Société Générale

		By:

		Name:
		Title:

		Wachovia Bank, National Association

		By:

		Name:
		Title:

		AgFirst Farm Credit Bank

		By:

		Name:
		Title:

		U.S. AgBank

		By:

		Name:
		Title:

		LaSalle Bank National Association

		By:

		Name:
		Title:

[Signature Page to Fourth Amendment to Credit Agreement]

Exhibit 10.2

FIRST AMENDMENT TO CREDIT AGREEMENT

Parties:


	“CoBank”:	CoBank, ACB 5500 South Quebec Street Greenwood Village, Colorado 80111

	“Borrower”:	CHS Inc. 5500 Cenex Drive Inver Grove Heights, Minnesota 55077

	“Syndication Parties”:	The entities name below on the signature pages

Execution Date:		May 1, 2008

Recitals:

A. CoBank, in its capacity as Administrative Agent (“ Administrative Agent ”) and as a Syndication Party, the Syndication Parties signatory thereto (collectively with any Persons who have become or who become Syndication Parties, “ Syndication Parties ”), and Borrower have entered into that certain Credit Agreement (364-Day Revolving Loan) dated as of February 14, 2008 (as amended, and as further amended, modified, or supplemented from time to time, the “ Credit Agreement ”), pursuant to which the Syndication Parties have extended certain credit facilities to Borrower under the terms and conditions set forth in the Credit Agreement.

B. Borrower has requested that the Agent and the Syndication Parties amend certain terms of the Credit Agreement, which the Agent and the Syndication Parties are willing to do under the terms and conditions as set forth in this First Amendment to Credit Agreement (“First Amendment”).

Agreement :

1. Amendments to Credit Agreement . The Credit Agreement is amended as of the Effective Date as follows:

1.1 Section 8.18 is amended in its entirety to read as follows:

8.18 Trademarks, Trade Names, etc . Borrower owns or licenses all patents, trademarks, trade names, service marks and copyrights (collectively, “ Intellectual Property ”) that it utilizes in its business as presently being conducted and as anticipated to be conducted, except where the failure to do so could not reasonably be expected to result in a Material Adverse Effect on Borrower. The Intellectual Property is in full force and effect, and Borrower has taken or caused to be taken all action, necessary to maintain the Intellectual Property in full force and effect and has not taken or failed to take or cause to be taken any action which, with the giving of notice, or the expiration of time, or both, could result in any such Intellectual Property being revoked, invalidated, modified, or limited.

2. Conditions to Effectiveness of this First Amendment. The effectiveness of this First Amendment is subject to satisfaction, in the Administrative Agent’s sole discretion, of each of the following conditions precedent (the date on which all such conditions precedent are so satisfied (except those that may be satisfied at a later date) shall be the “ Effective Date ”):

2.1 Delivery of Executed Loan Documents. Borrower and the Required Lenders shall have delivered to the Administrative Agent, for the benefit of, and for delivery to, the Administrative Agent and the Syndication Parties, this First Amendment (or their approval thereof, in the case of Voting Participants), duly executed.

2.3 No Event of Default. No Event of Default shall have occurred and be continuing under the Credit Agreement as of the Effective Date of this First Amendment.

3. General Provisions .

3.1 No Other Modifications. The Credit Agreement, as expressly modified herein, shall continue in full force and effect and be binding upon the parties thereto.

3.2 Successors and Assigns. This First Amendment shall be binding upon and inure to the benefit of Borrower, Agent, and the Syndication Parties, and their respective successors

and assigns, except that Borrower may not assign or transfer its rights or obligations hereunder without the prior written consent of all the Syndication Parties.

3.3 Definitions. Capitalized terms used, but not defined, in this First Amendment shall have the meaning set forth in the Credit Agreement.

3.4 Severability . Should any provision of this First Amendment be deemed unlawful or unenforceable, said provision shall be deemed several and apart from all other provisions of this First Amendment and all remaining provision of this First Amendment shall be fully enforceable.

3.5 Governing Law. To the extent not governed by federal law, this First Amendment and the rights and obligations of the parties hereto shall be governed by, interpreted and enforced in accordance with the laws of the State of Colorado.

3.6 Headings . The captions or headings in this First Amendment are for convenience only and in no way define, limit or describe the scope or intent of any provision of this First Amendment.

3.7 Counterparts . This First Amendment may be executed by the parties hereto in separate counterparts, each of which, when so executed and delivered, shall be an original, but all such counterparts shall together constitute one and the same 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. Copies of documents or signature pages bearing original signatures, and executed documents or signature pages delivered by a party by telefax, facsimile, or e-mail transmission of an Adobe ^® file format document (also known as a PDF file) shall, in each such instance, be deemed to be, and shall constitute and be treated as, an original signed document or counterpart, as applicable. Any party delivering an executed counterpart of this First Amendment by telefax, facsimile, or e-mail transmission of an Adobe ^® file format document also shall deliver an original executed counterpart of this First Amendment, but the failure to deliver an original executed counterpart shall not affect the validity, enforceability, and binding effect of this First Amendment.

IN WITNESS WHEREOF, the parties hereto have caused this First Amendment to be executed as of the Effective Date.

[Signature Pages Follow]


		BORROWER:

		CHS INC., a cooperative corporation formed under the laws of the State of Minnesota

		By:

		Name: John Schmitz Title: Executive Vice President Finance and Administration, and Chief Financial Officer

		ADMINISTRATIVE AGENT:

		COBANK, ACB

		By:

		Name: Michael Tousignant Title: Vice President

		BID AGENT:

		CoBANK, ACB

		By:

		Name: Michael Tousignant Title: Vice President


		SYNDICATION PARTIES:

		CoBank, ACB

		By:

		Name: Michael Tousignant Title: Vice President

		The Bank of Tokyo-Mitsubishi UFJ, Ltd., New York Branch

		By:

		Name:
		Title:

		SunTrust Bank

		By:

		Name:
		Title:

		Bank of America, N.A.

		By:

		Name: A. Quinn Richardson Title: Authorized Signatory

		Wells Fargo Bank, National Association

		By:

		Name:
		Title:

[Signature Page to First Amendment to Credit Agreement (364-Day)]


		BNP Paribas

		By:

		Name:
		Title:

		By:

		Name:
		Title:

		Harris N. A.

		By:

		Name:
		Title:

		The Northern Trust Company

		By:

		Name:
		Title:

		Deere Credit, Inc.

		By:

		Name:
		Title:


		U.S. Bank National Association

		By:

		Name:
		Title:

		Natixis

		By:

		Name:
		Title:

		By:

		Name:
		Title:

		The Bank of Nova Scotia

		By:

		Name:
		Title:

		ING Capital LLC

		By:

		Name:
		Title:

[Signature Page to First Amendment to Credit Agreement (364-Day)]


		Comerica Bank

		By:

		Name:
		Title:

		Société Générale

		By:

		Name:
		Title:

		Wachovia Bank, National Association

		By:

		Name:
		Title:

[Signature Page to First Amendment to Credit Agreement (364-Day)]

Exhibit 10.3

FIRST AMENDMENT TO CREDIT AGREEMENT

Parties:


	“CoBank”:	CoBank, ACB
		5500 South Quebec Street
		Greenwood Village, Colorado 80111

	“Borrower”:	CHS Inc.
		5500 Cenex Drive
		Inver Grove Heights, Minnesota 55077

	“Syndication Parties”:	The entities name below on the signature pages

Execution Date:		May 1, 2008

Recitals:

A. CoBank, in its capacity as Administrative Agent (“ Administrative Agent ”) and as a Syndication Party, the Syndication Parties signatory thereto (collectively with any Persons who have become or who become Syndication Parties, “ Syndication Parties ”), and Borrower have entered into that certain Credit Agreement (10 Year Term Loan) dated as of December 12, 2007 (as amended, and as further amended, modified, or supplemented from time to time, the “ Credit Agreement ”), pursuant to which the Syndication Parties have extended certain credit facilities to Borrower under the terms and conditions set forth in the Credit Agreement.

B. Borrower has requested that the Agent and the Syndication Parties amend certain terms of the Credit Agreement, which the Agent and the Syndication Parties are willing to do under the terms and conditions as set forth in this First Amendment to Credit Agreement (“First Amendment”).

Agreement :

1. Amendments to Credit Agreement . The Credit Agreement is amended as of the Effective Date as follows:

1.1 Section 7.18 is amended in its entirety to read as follows:

7.18 Trademarks, Trade Names, etc. Borrower owns or licenses all patents, trademarks, trade names, service marks and copyrights (collectively, “ Intellectual Property ”) that it utilizes in its business as presently being conducted and as anticipated to be conducted, except where the failure to do so could not reasonably be expected to result in a Material Adverse Effect on Borrower. The Intellectual Property is in full force and effect, and Borrower has taken or caused to be taken all action, necessary to maintain the Intellectual Property in full force and effect and has not taken or failed to take or cause to be taken any action which, with the giving of notice, or the expiration of time, or both, could result in any such Intellectual Property being revoked, invalidated, modified, or limited.

2.1 Delivery of Executed Loan Documents. Borrower and the Required Lenders shall have delivered to the Administrative Agent, for the benefit of, and for delivery to, the Administrative Agent and the Syndication Parties, this First Amendment (or their approval thereof, in the case of Voting Participants), duly executed.

2.3 No Event of Default. No Event of Default shall have occurred and be continuing under the Credit Agreement as of the Effective Date of this First Amendment.

3. General Provisions .

3.1 No Other Modifications. The Credit Agreement, as expressly modified herein, shall continue in full force and effect and be binding upon the parties thereto.

3.2 Successors and Assigns. This First Amendment shall be binding upon and inure to the benefit of Borrower, Agent, and the Syndication Parties, and their respective successors

and assigns, except that Borrower may not assign or transfer its rights or obligations hereunder without the prior written consent of all the Syndication Parties.

3.3 Definitions. Capitalized terms used, but not defined, in this First Amendment shall have the meaning set forth in the Credit Agreement.

3.6 Headings . The captions or headings in this First Amendment are for convenience only and in no way define, limit or describe the scope or intent of any provision of this First Amendment.

IN WITNESS WHEREOF, the parties hereto have caused this First Amendment to be executed as of the Effective Date.

[Signature Pages Follow]


		BORROWER:

		CHS INC., a cooperative corporation formed under the laws of the State of Minnesota

		By:

		Name: John Schmitz
		Title: Executive Vice President Finance and
		Administration, and Chief Financial Officer

		ADMINISTRATIVE AGENT:

		COBANK, ACB

		By:

		Name: Michael Tousignant
		Title: Vice President

		SYNDICATION PARTIES:

		CoBank, ACB

		By:

		Name: Michael Tousignant
		Title: Vice President

[Signature Page to First Amendment to Credit Agreement (10 Year)]

Exhibit 10.4

CHS Europe S.A.
Attn. Jean-Claude Favre
Avenue des Morgines 12,
1213 Petit-Lancy,
Switzerland


Date		18 April 2008
Our Ref.		CHS-08
Subject		Facility Agreement

Dear Sirs,

We are pleased to make available to you the following Facility, which shall be uncommitted and repayable on demand, on the terms and conditions set out in this letter, hereinafter referred to as the Facility Agreement:


Borrower	CHS Europe S.A. , having its registered address at, Avenue des Morgines 12, 1213 Petit-Lancy, Switzerland, hereinafter referred to as the Client.

Lender	Fortis Bank (Nederland) N.V ., hereinafter referred to as the Bank.

1. Facility

Facility A	USD 75,000,000 (in words: seventy five million US Dollars) or its equivalent in any freely convertible currency.

Purpose	For the financing of your normal self-liquidating trade transactions in grains and edible oil; the purchase of pre-sold goods under import Letter of Credits (L/C’s) or documentary collections payable with us and the subsequent sales through L/C’s or Cash Against Documents (CAD), with a maximum transaction tenor of 180 days, as further defined under Collateral.

Availability	The Facility may be utilized, subject to our prior approval by means of (i) overdrafts in current account, (ii) the issuance of guarantees on terms acceptable to the Bank, (iii) the opening of (stand-by) L/C’s and by means of short —term loans for your account and at your own risk.

	Within the facility the following sub-limits are available:

Sub-limit 1	USD 35,000,000 (in words: thirty five million US Dollars) or its equivalent in any freely convertible currency is available for the financing of goods stored inland, goods in transit on rail and the subsequent storage of goods at Russian and/or Ukrainian ports, within this sub-limit the following collateral caps will apply:

	(i)	a maximum aggregate amount of USD 10,000,000 (in words: ten million US Dollars) in respect of goods in transit on railway wagons;

	(ii)	a maximum aggregate amount of USD 20,000,000 (in

Fortis Bank (Nederland) N.V.
ECT Commodities / Agri

Coolsingel 93
P.O. Box 749
3000 AS
Rotterdam
The Netherlands
www.fortisbank.nl

Telephone +31 (0)10 401 6508
Fax +31 (0)10 401 6558
E-Mail phiroze.mogrelia@nl . fortis.com


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		words: twenty million US Dollars) in respect of goods held under Forwarder’s Certificate of Receipt (FCRs) at Russian and/or Ukrainian ports.

	All of which is further defined below under Collateral.

Sub-limit 2	USD 15,000,000 . — (in words: fifteen million US Dollars) or its equivalent in any freely convertible currency is available for the financing of:

	(i)	goods at destinations in Europe, the Middle East and Africa, accompanied by transactional information in the event no local pledge over the goods is available;

	(ii)	goods stored in the Client’s own warehouses in the Former Soviet Union (FSU) accompanied by transactional information wherever possible;

	(iii)	freight in respect of transactions financed by the Bank, Payment will be made upon completion of the loading of the vessel directly to the ship-owner or charterer for the full freight amount only against receipt by us of copies of the respective freight invoice and the corresponding B/L, or other acceptable evidence of shipment;

	(iv)	to issue bid bonds with a maximum tenor of 180 days and performance bonds with a maximum tenor of 360 days, up to an aggregate amount of USD 10,000,000;

	(v)	Variation margins for futures positions relating to transactions financed by the Bank.

Facility B FX-forwards/options	The Bank has reserved an internal limit for your foreign exchange (FX) transactions (including FX forwards and options) for a maximum tenor of 1 year. For any such transaction between you and the Bank, the internal limit will automatically be applied. In the event that this internal limit (as calculated by the Bank) is exceeded or about to be exceeded, the Bank reserves the right not to engage in new transactions with you, until such moment that under the limit sufficient availability exists for new transaction(s). However, exceeding this internal limit does not automatically imply that the Bank will close your exceeding positions and/or will demand the granting of security in a form and to the extent desired by the Bank, unless you are in default of your obligations under any derivative related agreement(s) as signed between you and the Bank.

2. Security documents	You undertake to the Bank that during the period that this Facility is available, in whole or in part, or that any amount or liability remains


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Subject		Facility Agreement–CHS08


		outstanding thereunder, you shall execute or have executed in favour of the Bank the following documents, acceptable in form and substance, to act as security to the Bank for the payment of all amounts which may be due to the Bank, now or at any time and in whatever regard ( hereinafter referred to as the Security Documents):

		• First ranking lien on negotiable documents (such as acceptable warrants and acceptable full sets of B/L’s issued or assigned to bearer or endorsed either in blank or to the order of the Bank) that are or will be in the possession of the Bank, in accordance with the General Banking Conditions, in particular article 18 thereof,

		• Pledge of Stock to be provided by you according to Swiss law. (enclosed)

		• Pledge of Stock to be provided by you according to Russian law. (to be sent separately)

		• Pledge of Stock to be provided by you according to Ukrainian law. (to be sent separately)

		• General Assignments of Receivables to be provided by you according to Swiss law. (enclosed)

		• Letter of Comfort to be provided by CHS Inc USA in wording acceptable to the Bank. (enclosed)

		• Corporate Guarantee to be provided by CHS Inc USA., according to US law. (enclosed)

		• Stock Monitoring Agreement with an acceptable surveyor for stocks stored in third party warehouses in Russia and Ukraine. (to be arranged)

		• International Swaps and Derivatives Association (ISDA) Agreement in respect of your Foreign Exchange contracts. (to be executed separately)

3. Collateral		Pursuant to the Security Documents as detailed above and/or further documents to be executed in our favour and the General Banking Conditions, including articles 18 and 19 thereof, and without prejudice to the Bank’s rights therein, you are required to deliver to the Bank the following, acceptable in form and substance, that will act as collateral to the Bank:

Bills of Lading		Goods paid for and sold to acceptable buyers, represented by a full set of original Bills of Lading (B/L’s ), in the possession of the Bank, in negotiable form issued to order and endorsed in blank or to the Bank’s order, may act as collateral under the Facility A.

		Such B/L’s will have an advance rate equal to 100% of the lower of either the purchase price or market value when (i) (to be) received under import L/C’s (front to back and straight L/C) or (ii) (to be) presented under export L/C or (iii) (to be)


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Date		17 April 2008
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Subject		Facility Agreement–CHS08


	presented under bank collection. The maximum financing tenor shall be 180 days.

Freight	An acceptable copy B/L plus copy freight invoice representing transport charges related to a transaction financed by the Bank, may act as collateral under sub-limit 3 and will have an advance rate of 100% of the freight invoice value. The maximum financing tenor is 60 days, during which the full set original B/L’s issued to our order will have to reach our counters.

Goods	Goods that are fully paid for, sold to acceptable buyers and pledged to the Bank may act as collateral to the Bank when represented by

	(i)	FCR’s issued by acceptable forwarders in respect of stocks stored at Russian and Ukrainian ports and will have an advance rate of 90% of the lower of the purchase or market value within sub-limit 1, for a maximum financing tenor of 30 days;

	(ii)	Copies of acceptable domestic Warehouse Receipts (WRs) attorning the material to the sole order of the Bank provided by an acceptable surveyor under a Stock Monitoring Agreement, in respect of stocks stored in third party inland silos in Russia and Ukraine, which will have advance rate of 80% of the lower of the purchase or market value within sub-limit 1. In cases where the stock are stored on the Client’s premises transactional information is to be provided in lieu of a SMA and will have will have advance rate of 80% of the lower of the purchase or market value within sub-limit 1, with a maximum financing tenor of 120 days;

	(iii)	Lists of Railway Bills (RWB) for goods in transit on rail and will have an advance rate of 80% of the lower of the purchase or market value within sub-limit 1, for a maximum financing tenor of 30 days.

Receivables	Receivables duly assigned to the Bank, domiciling payment to your account with the Bank, may act as collateral under the Facility and its sub-limits. Such receivables will have an advance rate of 100% of the sales invoice value up to the maximum credit limit of the credit insurance on that particular debtor and within the overall Facility amount. The maximum financing tenor is 45 days, commencing from sales invoice date.

	Receivables that do not comply with the above or that are unpaid 30 days after their due date will not be assigned an advance rate, without prejudice to the Bank’s rights under the Security Documents.

	You are obliged to notify the debtors that the debt is assigned to the Bank. The Bank however reserves the right to notify debtors of the


Initials:		Clients		Bank


Date		17 April 2008
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Subject		Facility Agreement–CHS08


		assigning of their debt to the Bank and/or take any such action as it may deem necessary to ensure the Bank’s security over the debt is perfected. Such action will be notified to you when considered appropriate.

		In the event that any of the collateral exceeds the maximum tenor as specified or the Bank, in its sole discretion, considers that certain collateral no longer provides adequate security, the Bank may decide to not apply an advance rate, without prejudice to the Bank’s rights under this Facility Agreement and the Security Documents. If such decision leads to a situation where the total amount actually outstanding under the Facility exceeds the value of the collateral available, then you are under an obligation to grant to the Bank immediately on its request other acceptable collateral as replacement, or to reduce the amount outstanding so that the outstanding is fully covered by the available collateral.

4. Insurance
Transport insurance		You undertake to the Bank that the goods financed by the Bank are at all times properly insured against the usual risks, including but not limited to political risks, occurring during transportation, transit and storage of the goods.

		Where you are contractually obliged to insure said goods, adequate insurance cover is to be evidenced by submission to the Bank of a copy of your transport/storage or individual insurance certificate where appropriate or other appropriate documents as the Bank may require, issued by an insurance company acceptable to the Bank. Where your contractual responsibility does not extend to the insurance of the goods then you are required to take out Seller’s Risk insurance for the goods and lodge a copy of the policy with the Bank.

		Further, you undertake to the Bank that all goods financed by the Bank are shipped on vessels which comply with the International Management Code for the Safe Operation of Ships and for Pollution Prevention (ISM Code) and the International Ship and Port Facility Security Code (ISPS). You shall provide a copy of the relevant Safety Management Certificate (SMC), which verifies that the shipping company and shipboard management of the vessel concerned operate in accordance with the approved safety management system and evidence compliance with the aforementioned codes, should the Bank so request.

Credit insurance		You undertake to the Bank that the receivables advanced by the Bank are covered by a credit insurance policy with acceptable terms.


Initials:		Clients		Bank


Date		17 April 2008
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Subject		Facility Agreement–CHS08


Interest & loss payee		Adequate insurance cover is to be evidenced by submission to the Bank of a copy of your transport insurance policy and credit insurance policy and where appropriate (or other appropriate documents as the Bank may require) issued by an acceptable insurance company. The Bank is to be nominated as a loss payee in your transport and credit insurance policy. A note of the Bank’s interest must be provided to the Bank

		Evidence must also be provided by you of receipt of the relevant premiums by the insurance broker on an annual basis or at such intervals as the Bank shall specify and if requested by the Bank, a letter from the relevant broker undertaking to effect payment to the Bank of the proceeds of any claim.

5. Undertakings and covenants		You undertake to the Bank that during the period that this Facility is available, in whole or in part, or that any amount or liability remains outstanding thereunder, you shall:

		1. Provide the following:

		• Your statutory annual reports and the audited annual reports of CHS Inc USA, at the latest within 6 months after the end of the financial year.

		• Your internal quarterly financial reports, at the latest within 3 months after the end of the aforementioned financial period.

		2. Comply with the following:

		• You shall attain and maintain a minimum Working Capital of USD 15,000,000 (in words: fifteen million US Dollars) before the commencement of financing which is to be substantiated by your opening Balance Sheet and verified on a quarterly basis by the Bank.

		• You shall attain and maintain a Bank Debt to Liable Capital ratio of 6:1 which is to be verified on a quarterly basis by the Bank.

		Compliance with the financial covenants shall be established, or not, by the financial statements delivered to the Bank pursuant to 1 above and are determined on the basis of your — currently applicable and broadly accepted — accounting rules. If at any time these rules would be changed, or if, due to international developments like the implementation of International Financial Reporting Standards, different accounting rules would be applied causing a change in the outcome of the mentioned covenants whilst other circumstances


Initials:		Clients		Bank


Date		17 April 2008
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Subject		Facility Agreement–CHS08


		regarding your company remain unchanged, you undertake to inform the Bank as soon as reasonably possible of the nature and consequences of the changed accounting rules.

		The Bank has then the right to redefine the level of the referred financial covenants or the way of computing these covenants. Prior to redefining financial covenants, the Bank will consult you in order to enable you to render your opinion on the new covenants.

		3. Agree to the following:

		• to evidence that all consents required enabling you to enter into the Facility Agreement and to perform your obligations thereunder have been obtained and are in full force and effect;

		• that the Bank reserves the right to carry-out due diligence in respect of cargoes financed by the Bank which may include the monitoring of vessel movements and the verification and authentication of Bills of Lading. The Bank may select parties at its sole discretion to execute these tasks which may include the International Maritime Bureau;

		• that the Bank will have the right to check your stock position at random at the warehouses;

		• that the Bank will have the right to pre-approved storage facilities and request stock audits;

		• a Cross Default Clause in respect to the Syndicated Credit Facility provided to CHS Inc USA;

		• a Pari — Passu clause being applicable;

		• that the Bank will have the right to request an audit of your risk management procedures.

		4. Procure that:

		• the Bank will receive monthly overviews of warehouse charges or other amounts due to the warehouse by you;

		• the Bank will receive statements from your local offices in Russia and Ukraine in the event goods are stored in your warehouses;

		• ensure that each transaction or cycle of transactions, including any request for variation margin payment, is subject to separate approval by the Bank. As such you shall provide the Bank with relevant transaction information in advance, indicating seller, quantity, purchase price, purchase conditions, freight costs, shipment details, buyer, sales price, sales conditions and any other information the Bank may require.

6. Charges
Interest rate debit		The interest rate for debit balances on current account will fluctuate


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Subject		Facility Agreement–CHS08


		and is based on the cost of funds for the respective currency and increased by a margin of

		– 0.65% per annum for debit balances under facility A;

		– 1% per annum for debit balances under sub-limit 1;

		– 0.80% per annum for debit balances under sub-limit 2.

		The rates are regularly adjusted by the Bank as market conditions change.

		Interest will be charged in arrears on a monthly basis.

Facility Arrangement Fee		A one time arrangement fee of USD 15,000 will be charged upon the acceptance of this Facility Agreement.

Expenses and costs		Expenses and costs, including but not limited to legal fees and out-of-pocket expenses, if any, incurred by the Bank in preparing, perfecting and maintaining the Facility granted under this Facility Agreement are to be borne by you and charged to your account with the Bank.

7. Other conditions
Conditions Precedent		The Bank will not make the Facility available until we have received in each case in form and substance satisfactory to us in all respects, the documents, items and evidence specified below (or we have waived any one or more of them at our absolute discretion subject to any condition(s) which we deem fit):

		• Duly signed acceptance of this Facility Agreement;

		• Duly executed originals of each of the Security Documents;

		• Documentation as required under clause 4 above;

		• Duly executed originals of all other documents required from time to time by the Bank to establish a client relationship and conforming to guidelines as may be laid down by applicable banking and regulatory bodies.

Notices		All notices, demands or other communications between the Bank and the Clients shall be made in writing to the following addresses:

		If to the Client:
		Avenue des Morgines 12,
		1213 Petit-Lancy,
		Switzerland
		Fax. no.: +41 22 7090112
		Attention: Jean-Claude Favre


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Subject		Facility Agreement–CHS08


		If to the Bank:
		Fortis Bank (Nederland) N.V.
		ECT Commodities — Agri
		P.O. Box 749
		3000 AS Rotterdam
		The Netherlands
		Fax. no.: +31 10 401 6558
		Attention: Phiroze Mogrelia

		Any written notices, demands or other communications are subject to the terms and conditions as defined in clause 9 of the Facility Agreement Definitions, Terms and Conditions.

8. General conditions		The Bank’s General Banking Conditions and the Facility Agreement Definitions, Terms and Conditions, as these may be amended from time to time are applicable to and form an integral part of this Facility Agreement.

		In case of discrepancies between these documents the Facility Agreement will prevail to the extent of such conflict only. In the event of discrepancies between such General Banking Conditions and the Facility Agreement Definitions, Terms and Conditions, the latter will prevail to the extent of such conflict only.

		A copy of the General Banking Conditions and the Facility Agreement Definitions, Terms and Conditions is enclosed and your acceptance of the Facility Agreement implies receipt and acceptance of these documents.

9. Governing law		This Facility Agreement is governed by and construed in accordance with Dutch law. All disputes arising from this Facility Agreement shall be settled by the competent court in the Netherlands, without prejudice to the Bank’s right to bring any dispute before any foreign court of competent jurisdiction.

		You irrevocably waive any objection you may now or hereafter have to the commencement of any action or proceeding in any court and any claim you may now or hereafter have that any action or proceeding has been brought in an inconvenient forum.

This offer will expire if the Bank does not receive your signed acceptance of this Facility Agreement initialled one ach page and duly signed, within 30 days after the date of this letter.


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Date		17 April 2008
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Subject		Facility Agreement–CHS08

We trust this arrangement meets with your requirements and look forward to start our mutually successful relationship.

Yours faithfully
Fortis Bank (Nederland) N.V.


U. Zutshi		P. Mogrelia

Acceptance for and on behalf of CHS Europe S.A.


Name:						Name:

Title:						Title:


Enclosed		Facility Agreement: Definitions, Terms and Conditions
		General Banking Conditions
		Pledge of Stocks according to Swiss law
		General Assignments of Receivables according to Swiss law
		Corporate Guarantee according to US law
		Letter of Comfort


Initials:		Clients		Bank

Facility Agreement: Definitions, Terms and Conditions

These are the definitions, terms and conditions upon which the Facility, as set out in the Bank’s Facility Agreement, is granted and are incorporated into the Facility Agreement as expressly set out therein.

The headings herein are for convenience only and are to be ignored in constructing the Facility Agreement: Definitions, Terms and Conditions.


1. Definitions

Acceptable		Acceptable to the Bank.

Advance		Each and any sum drawn by you under the Facility however utilised.

Advance Rate		The percentage applied to the value of acceptable collateral to determine the amount of an advance that may be granted by the Bank.

Bank		Fortis Bank (Nederland) N.V.

Bank Debt		Total of bank loans, bank overdrafts and credit-replacing guarantees.

Bank Leverage		Liable Capital to Bank Debt.

Capital		Total of paid-up capital, distributable and non-distributable reserves and retained earnings.

Client(s)		Party(ies) mentioned as Borrower(s) within the Facility Agreement.

Cost of Funds		Such rate of interest as determined by the Bank, to be the cost of funding any overdrafts or other extensions of credit using funding sources selected by the Bank in its sole discretion, based on short-term money market rates (tomorrow’s next) for the respective currency.

Cross Default Clause		The occurrence of any or all events as per Clause 4(d) of this Facility Agreement: Definitions, Terms and Conditions

Current Ratio		Current assets minus loans to shareholders or directors, minus non-trade receivables on related companies, divided by current liabilities.

Daily Delivery Limit or DDL		The maximum amount of the counter value of the spot or forward transactions that mature on any one day and will be transferred from or to the account of the Client(s) with another bank.

EBITDA		Earnings before interest, tax, depreciation and amortisation.

Encumbrance		Any mortgage charge pledge lien hypothecation assignment security interest or other encumbrance securing any obligation of any person.

EURIBOR		European Inter Bank Offered Rate. In respect of any interest

Page 1 of 8

Facility Agreement: Definitions, Terms and Conditions


		period or other period and in relation to the advance or any unpaid sum, the rate per annum determined by the Bank to be the rate of interest at which it is offered deposits for a period equal to the relevant interest period or other period in the European Inter-Bank Market, two business days before the commencement of such interest period.

Euro or EUR		The current lawful currency of certain European Union Member States.

Facility		The total overall credit line available under any or all facilities as defined in the Facility Agreement.

Facility Agreement		The facility agreement entered into between the Client(s) and the Bank to which this Facility Agreement: Definitions, Terms and Conditions forms an integral part.

FBNBR		Fortis Bank Nederland Basis Rate (FBNBR). The rate of interest for Euro, determined by the Bank to be the cost of funding any overdrafts or other extension of credit using funding sources selected by the Bank in its sole discretion. This rate is daily published in Het Financiële Dagblad.

Fortis Bank (Nederland) N.V.		Fortis Bank (Nederland) N.V. having its registered address at Blaak 555, 3011 GB Rotterdam, The Netherlands, also having offices at Coolsingel 93, 3012 AE Rotterdam, The Netherlands, and at Herengracht 548, 3017 CG Amsterdam, The Netherlands, and its respective successors.

Gearing		Liable Capital to the total interest bearing debt.

General Banking Conditions		General Banking Conditions of the Bank, as compiled by the Dutch Bankers Association (Nederlandse Vereniging van Banken) and lodged at the office of the Amsterdam and Rotterdam District Courts.

Guarantor		Any party providing a Guarantee in favour of the Bank in respect of the obligations of the Client(s) under the Facility Agreement.

Initial Margin		The amount required as a returnable good faith deposit in connection with futures or options contracts executed on a futures exchange. The applicable sum is defined by the relevant exchange or clearing house and adjusted from time to time according to market conditions.

Intangible Assets		Total of goodwill, licences, software and other immaterial assets.

Interest Coverage Ratio		EBITDA divided by total gross interest payable.

Leverage		Liable Capital to current liabilities.

Liable Capital		Total of Capital, minority interests and subordinated debt, minus loans to shareholders or directors, minus non-trade

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Facility Agreement: Definitions, Terms and Conditions


		receivables on related companies, minus Intangible Assets.

LIBOR		London Inter-Bank Offered Rate. In respect of any interest period or other period and in relation to the advance or any unpaid sum, the rate per annum determined by the Bank to be the rate of interest at which it is offered deposits for a period equal to the relevant interest period or other period in the London Inter-Bank Market, two business days before the commencement of such interest period.

Major(s) or Major Companies		Companies defined at the sole discretion of the Bank as having acceptable counterpart risk.

Market Value		Such value as to be determined at the sole discretion of the Bank.

Maximum Transaction Limit or MTL		The maximum total amount of outstanding spot and forward foreign exchange contracts permitted at any one time. The total counter value in the currency of the Facility of all purchase and sales transactions will be set-off by the Bank to determine the free balance under the MTL for closing new foreign exchange transactions. All spot and forward transactions will be executed through Client(s)’s current account(s).

Obligor		Any or all of the Client(s) and the Guarantor(s) and any other party to the Facility Agreement or any of the Security Documents, other than the Bank.

Positive Net Equity		The positive cash balance on the Client(s)’s broker account readily available for the Client(s) to be transferred to the Client(s)’s account with the Bank. The positive net equity is derived from the positive balance of the sum of the Current Ledger and the Variation Margin.

Pounds Sterling or GBP		The current lawful currency of the United Kingdom of Great Britain and Northern Ireland.

Risk Exposure Limit or REL		The maximum total amount of a possible loss on account of the (fictitious) liquidation of all outstanding foreign exchange contracts permitted at any one time.

		All contracts will be daily re-valued by the Bank on the basis of the difference between the agreed contract rates and current market prices. A possible negative result will be set-off against the REL.

Security Document(s)		Any or all of the documents mentioned in Clause 2 of the Facility Agreement and any other document from time to time executed by any party in favour of the Bank as security for the obligations of the Client(s) towards the Bank.

Solvency		Liable Capital divided by balance sheet total.

Sub-Limit		Part of a Facility that is made available by the Bank for

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Facility Agreement: Definitions, Terms and Conditions


		another purpose than that of the overall facility where it is a part of.

Subordinated Debt		Debt that is subordinated to the Bank, which may only qualify as such if: (i) a written agreement in the Bank’s standard format has been executed by the relevant parties, confirming that the relevant debts are subordinated to the liabilities owing by Client to Bank; or (ii) an acceptable auditor confirms the subordinated status of the debt.

Total Bank Debt		Total of bank loans, bank overdrafts, guarantees and letters of credit.

Total Bank Leverage		Liable Capital to Total Bank Debt.

US Dollars or USD		The current lawful currency of the United States of America.

Variation Margin		The amount required to be paid in support of outstanding futures / options contracts executed on a futures exchange which, when re-valued, would result in a loss if liquidation of the contracts was to occur. The variation margin is calculated on a daily basis by re-valuing existing contracts at the prevailing prices.

We, Us and Our		The Bank.

Working Capital		Current assets minus current liabilities, minus loans to shareholders or directors, minus non-trade receivables on related companies.

You, Your and Company		Client(s).

2. Terms and Conditions

1. General

1.1

Unless the contrary intention appears, a reference herein to

	(a)		a provision of a law is a reference to that provision as amended or re-enacted;

	(b)		a Clause or an Appendix is a reference to a clause or an appendix to the Facility Agreement: Definitions, Terms and Conditions;

	(c)		a person, whether being legal and/or natural, includes its permitted successor, transferees and assigns.

1.2		Words used in the Facility Agreement and Facility Agreement: Definitions, Terms and Conditions such as hereunder, hereto, hereof and herein and other words commencing with here, shall, unless the context clearly indicates the contrary, refer to the whole of this Facility Agreement and Facility Agreement: Definitions, Terms and Conditions and not to any particular clause, sub-clause, paragraph or sub-paragraph hereof. Any reference to any clause, sub-clause, paragraph or sub-paragraph shall be reference to the clause, sub-clause, paragraph or sub-paragraph, whichever is applicable, of the Facility Agreement and Facility Agreement: Definitions, Terms and Conditions, unless it is indicated that reference to some other provision is intended.

1.3		Definitions in the Facility Agreement and Facility Agreement: Definitions, Terms and Conditions importing the singular include the plural and vice versa, definitions importing a gender include every gender and references to persons include bodies corporate and unincorporated. The headings in the Facility Agreement and Facility Agreement: Definitions, Terms and Conditions are inserted for convenience only

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Facility Agreement: Definitions, Terms and Conditions

		and shall be ignored in interpreting and/or enforcing the Facility Agreement and Facility Agreement: Definitions, Terms and Conditions or any clause hereof.

2.		Interest, Commission, Fees and Other

2.1		All interest, commission, fees, and any other payments of an annual nature shall accrue from day to day and be calculated on the basis of actual days elapsed and a 360 day year, in the case of amounts payable in currencies other than Pounds Sterling, and a 365 day year, in the case of amounts payable in Pounds Sterling.

2.2		If you fail to pay any sum or sums payable under the Facility on demand or fail to adhere to any of the terms and conditions of the Facility Agreement, you will pay to us interest, in addition to any sum or sums due, in the currency of such sum on the amount of the sum not paid or, in the case of non-adherence to the terms and conditions of the Facility Agreement, on an amount as determined by the Bank, but in any case limited to the maximum amount outstanding under the Facility, from the date of such failure to the date of actual payment or adherence (as well after as before judgement) at such rate over the Bank’s cost of funds and for such period as the Bank in its absolute discretion shall determine. Such interest shall accrue daily and be compounded on our usual monthly charging days and shall be payable at any time on demand.

2.3		You will pay all taxes and duties (including any payable by us) in connection with the Facility Agreement and all documents and Security Documents issued pursuant to it.

2.4		You shall make each payment due to be made to the Bank under the Facility Agreement free and clear of, and without deduction or set-off whatsoever, including, without limitation, for or on account of tax, unless the Client(s) is required by law to make such a payment subject to the deduction or withholding of tax. If the Client(s) is required so to deduct or withhold any tax or amounts in respect of tax, or make any other deductions from any amount to be paid by the Client(s) to the Bank under the Facility Agreement, the Client(s) shall pay such additional amounts as may be necessary to ensure that, after the making of such deduction or withholding, the Bank receives and retains (free from any liability in respect of any such deduction or withholdings other than in respect of tax on its own overall net income) a net sum equal to the sum which it would have so received and so retained had no such deduction or withholding been made.

2.5		You will pay to us on demand any amount (as certified by us) which we may from time to time certify to be necessary to compensate us for any increased costs or reduction in return resulting from compliance with any change in, or in the interpretation of, any law or regulation or any official directive or request (whether or not having the force of law) including without limitation any such change relating to mandatory liquid asset and special deposit requirements.

3.		Representations and Warranties

		You represent warrant and undertake to us, on the date of your acceptance of the Facility Agreement and on each date that the Facility is available or any sum is outstanding (with reference to the facts and circumstances then existing), as follows:

(a)		you are duly incorporated and validly existing under the laws of the place of incorporation. You have power to carry on your business as now carried on, to own all of your assets and to enter into and perform your obligations under the Facility Agreement and the Security Documents;

(b)		the Facility Agreement and each Security Document (i) constitutes legal valid and binding obligations in accordance with their respective terms on your part, (ii) has been duly authorised and executed by you and (iii) does not and its execution, delivery and performance and the use of the Facility will not breach your Articles of Association or any agreement or obligation by which you are bound or violate any applicable law;

(c)		your obligations under the Facility Agreement and each Security Document to which you are a party are your unconditional and un-subordinated obligations and rank at least pari passu with all of your unsecured and un-subordinated indebtedness (present or future, and actual or contingent) other than obligations which are mandatory preferred by law;

(d)		all approvals, authorisations, consents, licences, permissions and registrations which it is necessary or advisable for you to obtain from any governmental local public or other authority or without limitation any third party for the purpose of or relating to the Facility and the Facility Agreement and the Security Documents have been obtained and are in force and all provisions and conditions thereof have been complied with;

(e)		there are no pending or to your knowledge (after due and careful enquiry) threatened actions or legal proceedings affecting you which may have a material adverse effect on your business, assets or financial condition;

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Facility Agreement: Definitions, Terms and Conditions

(f)		you are not in breach of or in default under any agreement or obligation relating to (or analogous to) financial indebtedness;

(g)		all information supplied to us in contemplation of the Facility was true at the date of the Facility Agreement and did not omit anything material to be known by any proposed lender to you, no change has occurred since the date of the information already supplied which renders it untrue or misleading and all projections and statements of belief and opinion given by you to us were made in good faith after due and careful enquiry;

(h)		your latest financial statements give a true and fair view of your affairs and fairly present your financial position and your results and operations as at and for the period ended on the date up to which those financial statements were prepared and there has been no material adverse change in your business, assets or financial position since that date;

(i)		you have good and marketable title to all your assets and all the information provided by you or on your behalf was true in all respects.

4.		Undertakings

So long as any Facility is available or amounts are outstanding thereunder you undertake to us that:

(a)		you shall not without the prior written consent of the Bank create, assume, permit and shall procure that your subsidiaries shall not create, assume or permit any mortgage, charge, pledge, lien or other encumbrance upon all or any part of your or your subsidiaries present or future current assets (including but not limited to stocks and receivables) other than for short term transactional finance provided by other banks and to the banks who finance those transactions, limited to those goods which have been financed by those banks provided that those goods are not subject of an encumbrance granted in favour of the Bank;

(b)		if the Facility Agreement is made available to more than one Client, each Client is jointly and severally liable for all claims that the Bank has or will have on (any of) the Client(s) under any heading whatsoever. By signing the Facility Agreement each Client subordinates in favour of the Bank all of its present and future claims on any other Client to all present and future claims that the Bank has on such Client in whatever regard. In the event the Bank has released any of the Clients from such joint and several liability or makes some arrangement with any Client, whether or not for final receipt of payment, such will only be subject to the reservation that all the other Clients remain fully jointly and severally liable for the obligations of the Clients;

(c)		you will notify us forthwith of any occurrence, since the period covered in the most recent financial reports as required and duly received by the Bank, which in the opinion of the Bank might have a materially adverse effect on (i) your or any of the other Obligors’ financial condition, results of operation or business or (ii) your or any of the other Obligors’ ability to duly and punctually perform the obligations under the Facility Agreement, or under any of the Security Documents or (iii) the validity, legality or enforceability of any of the Facility Agreement or the Security Documents;

(d)		in the event that the Facility Agreement mentions that a cross default clause is applicable, you will notify us forthwith when (i) any indebtedness of any of the Obligors is not paid when due and/or (ii) any indebtedness of any of the Obligors is declared to be or otherwise becomes due and payable prior to its specified maturity and/or (iii) any commitment for any indebtedness of any of the Obligors is cancelled or suspended by any one of the Obligors’ creditors and/or (iv) any of the Obligors’ creditors becomes entitled to declare any indebtedness of any of the Obligors’ due and payable prior to its specified maturity;

(e)		you will permit the Bank at any time on written notice to enter in any warehouse or other premises in which goods financed by the Bank are stored and to inspect such goods. You will procure the co-operation of the warehouse owners and operators and procure that they provide to us all such information as to the identity, location and condition of the goods as we shall from time to time demand;

(f)		you empower the Bank at any time with the right to verify the details of the Bank’s collateral administration at your offices and agree to provide the Bank’s chosen auditors with such information as they may require;

(g)		you will indemnify the Bank against any loss or expense (including but not limited to legal expenses) which the Bank may certify as incurred by it as a consequence of any default in payment by you of any sum when due or demanded and/or any breach by you of any provision of the Facility Agreement or any of the Security Documents, as to which in each case the Bank’s certificate shall (save for manifest error) be conclusive.

5.		Risk Exposure Clause

		Should the Risk Exposure Limit (REL) be exceeded at any time, the Bank reserves the

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Facility Agreement: Definitions, Terms and Conditions

		right to require the Client(s) to provide such cash collateral or other security as the Bank may reasonably require, as security for the payment and discharge of your obligations to the Bank in respect of such contracts between the Client(s) and the Bank and represent the excess of the Risk Exposure Limit as mentioned in the Facility Agreement, failure to provide such extra security shall constitute an event of default under the Facility Agreement. All contracts are to be settled across your accounts held at the Bank.

6.		Default

		Unless otherwise agreed the Facility granted under the Facility Agreement is daily revocable and repayable on demand. Without any limitation of the Bank’s rights under such a Facility, the sum of the indebtedness and/or outstandings of the Client(s) to the Bank will be claimable without the need for prior notice of default — and the Client(s) will be in default vis-à-vis the Bank — in, though not limited to, the following cases:

	–		if an Obligor does not pay on the due date any amount payable pursuant to the Facility Agreement of any of the Security Documents at the place at and in the currency in which it is expressed to be payable unless such payment is made within three (3) days of the due date;

	–		if one or more of the conditions or provisions relating to the indebtedness and/or outstandings granted to the Client(s) and the offer accepted by the Client(s) is/are not met or is/are no longer being met;

	–		if any of the other obligations of any of the Obligors under the Facility Agreement and/or the Security Documents is not complied with and such default is not remedied within a period of seven (7) days;

	–		if the Bank has grounds to fear that any of the Obligors will fail on the performance of the above mentioned commitments;

	–		if any of the Obligors files a petition for suspension of payment;

	–		if any of the Obligors is granted a temporary suspension of payment;

	–		if the bankruptcy of any of the Obligors has/have been petitioned for;

	–		if any of the Obligors is declared bankrupt;

	–		if the assets of any of the Obligors are made subject to executory seizure or garnishee, which seizure or garnishee is not lifted within seven (7) days, during which period the Bank is entitled to suspend any and all of its obligations under the Facility;

	–		if changes in the legal form of any of the Obligors or if any of the Obligors ceases to exist or goes into liquidation, or if any of the Obligors ceases their business in whole or in part or if the business is halted in whole or in part;

	–		if any of the Obligors is a natural person: upon death of or appointment of a guardian over any of the Obligors or in the event of any change or the matrimonial property regime subject to which the Obligor is married without the prior approval of the Bank;

	–		upon transfer of (part of) the business of any of the Obligors or of the control in the business of (any of) the Obligors without the prior permission of the Bank;

	–		if a third party imposes seizure on (part of) the goods of any of the Obligors;

	–		if any of the events described in Sub-clauses 4(c) and 4(d) of this Facility Agreement: Definitions, Terms and Condition occurs or is likely to occur;

	–		if any representation or statement made or deemed to be made by an Obligor in the Facility Agreement or any of the Security Documents or other document delivered by or on behalf of any Obligor under or in connection with the Facility Agreement is or proves to have been incorrect or misleading in any material respect.

7.		Termination and Demand

		Upon termination or demand of the indebtedness and/or outstanding, any and all amounts outstanding under the Facility shall be immediately due and payable by the Client(s) and the Client(s) shall be obliged to place cash collateral for the full amount of any contingent liabilities incurred by the Bank pursuant to the Facility. The Facility Agreement, Facility Agreement: Definitions, Terms and Conditions and General Banking Conditions and the Security Documents will remain in effect as long as the Client(s) has not performed their commitments to the Bank under any heading whatsoever.

8.		Assignment and Transfer

8.1		You may not assign or transfer any of your rights or obligations under the Facility Agreement or any of the Security Documents nor may you disclose any details hereof to any third party without the Bank’s prior written consent.

8.2		We may on giving written notice to you assign or transfer all or any of our rights and obligations under the Facility Agreement and/or any of the Security Documents provided that the effect thereof is not to impose further costs on you. You will enter into all documents specified by us to be necessary to give effect to any such assignment or transfer. We may upon giving written notice to you change our lending office at any time.

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Facility Agreement: Definitions, Terms and Conditions

8.3		The Facility Agreement and each of the Security Documents shall be binding upon and enure for the benefit of you and us and our respective successors.

9.		Communications

9.1		Any communication to be made between the Bank and the Client(s) shall be made in writing by fax or letter to the addresses and numbers indicated in the Facility Agreement.

9.2		Where notices and other communications and/or instructions under the Facility are given by you to the Bank by facsimile transmission you hereby undertake and agree that, notwithstanding that the signature of any person(s) signing such notices, communications or instructions appears only as a facsimile copy, the Bank may rely upon such notice, communication or instruction and that you shall indemnify the Bank from and against all loss, costs, damages, expenses including legal fees and demands of whatever nature which the Bank may incur or sustain or which may result from the Bank having complied with any such notice, communication or instruction whether or not any account becomes overdrawn or closed in consequence or any signature is forged or the notice, communication or instruction is otherwise given, issued, sent or signed without due authority from you and you hereby waive all rights that you may have to renounce forged or unauthorised notices, communications or instructions and the Bank shall have no liability to you for acting upon such notices, communications or instructions.

9.3		Notwithstanding the indemnity provided by you to the Bank under Sub-clause 9.2, the Bank has the right to decline, at its sole discretion, to act on any notices, communications or instructions by facsimile until the same is confirmed in writing to the Bank’s satisfaction.

9.4		Every certificate, notice or demand sent by facsimile shall be deemed to have been received at the time of despatch thereof (provided that it is sent during working hours of a business day in the country of the recipient, otherwise on the next following business day) or if given by means of a judicial act served in accordance with the laws of the addressee. Every certificate, notice or demand by letter shall not be deemed to have been received unless and until actually delivered.

10.		No waivers, remedies cumulative

		No failure or delay on our part to exercise any power right or remedy under the Facility Agreement shall operate as a waiver thereof nor shall any single or partial exercise by us of any power right or remedy preclude any other or further exercise thereof or the exercise of any other power right or remedy. The remedies provided in the Facility Agreement are cumulative and are not exclusive of any remedies provided by law.

11.		Partial invalidity

		The illegality, invalidity or un-enforceability of any provisions of the Facility Agreement to be provided hereunder shall not affect the legality, validity or enforceability of any other provision.

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CHS EUROPE S.A.

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FORTIS BANK (NEDERLAND) N.V.

GENERAL ASSIGNMENT OF RECEIVABLES

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THIS GENERAL ASSIGNMENT OF RECEIVABLES is made

BETWEEN:

(1)		CHS EUROPE S.A. (the “ Company ”), a company incorporated in Geneva, Switzerland whose registered office is Avenue des Morgines 12, 1213 Petit-Lancy, Switzerland as ASSIGNOR; and

(2)		FORTIS BANK (NEDERLAND) N.V. (the “ Bank ”), a company incorporated in The Netherlands whose registered office is at Blaak 555, 3011 GB, Rotterdam, The Netherlands as ASSIGNEE.

WHEREAS the Bank has agreed to make available or to continue to make available to the Company loans or advances or other banking facilities or instruments subject to the terms set out in the Facility Agreement (as defined below). The Company has agreed in consideration thereof to assign to the Bank the Receivables more particularly described in this General Assignment of Receivables Agreement (the “ Agreement ”) and subject to the terms and conditions set out herein.

Definitions


“Debtor”		Means any person, firm or company which is or may become indebted to the Company in respect of any Receivables and prospective Receivables.

“Designated Account”		Means such account of the Bank as the Bank may, at its sole discretion, determine from time to time.

“Facility Agreement”		Means the Facility Agreement between the Company and the Bank dated 18 April 2008, as may be amended and/or supplemented and/or replaced from time to time.

“Losses”		Means all losses, costs, damages, expenses, including but not limited to legal fees, taxes, bank charges, stamp duties and all other liabilities, actions, claims and demands whatsoever.

“Receivables”		Means all moneys due or to become due to the Company by a Debtor, payable now or in the future, arising from or in any way

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		related to Transactions for which the Bank has provided financing (whether directly or indirectly) under or pursuant to the terms of the Facility Agreement (including, without limitation, sales receivables, insurance claims, claims under Letters of Indemnity, etc...), together with all ancillary rights in relation to the goods including but not limited to retention of title, rights of lien, stoppage in transit, recovery of possession and all rights, benefits and actions under insurance contracts, drafts, undertakings or guarantees and all other securities given to the Company in relation to the receivables,

“Secured Liabilities”		Means all present and future outstanding indebtedness, obligations and liabilities of the Company to the Bank whether actual, contingent, joint or several including, without limitation, all expenses, legal fees, taxes and any charges or costs incurred by the Bank in relation to the Facility Agreement.

“Transactions”		Means any current or future trade or trade related transactions entered into by the Company with any Debtor, including (without limitation) the purchase and sale of grains and edible oil.

Assignment

2.1

The Company, with full title guarantee, assigns (within the meaning of Article 164 et seq. of the Swiss Code of Obligations) herewith absolutely as a first priority assignment to the Bank all its right, title and interest in and to the Receivables as an independent and continuing security for the payment or discharge of the Secured Liabilities. This Assignment is in addition to, and without prejudice to, any other security the Bank may now or hereafter hold in respect of the Secured Liabilities.

Re-Assignment

3.1

On repayment and discharge in full of the Secured Liabilities to the satisfaction of the Bank and on the condition that the Company remains under no obligation of any kind to the Bank,

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the Bank shall, at the Company’s expense, reassign to the Company or its nominee such of the Receivables as may exceed the Secured Liabilities.

Notification of the Assignment

4.1

Whenever the Bank may, at its sole discretion, deem necessary for purposes of the preservation and exercise of its rights under or pursuant to this Agreement and at any time (and from time to time) thereafter, the Bank shall be authorised at the Company’s expense, and in such form as the Bank may at its sole discretion deem appropriate, to give to the Debtors notification of the assignment, and to instruct the Debtors that payment must henceforth be made in a Designated Account.

Undertakings

5.1

The Company hereby irrevocably undertakes as follows:

	i.		To deliver to the Bank all the documents, as the Bank may direct, evidencing or relating to the Receivables forthwith on demand of the Bank;

	ii.		To hold on a fiduciary basis (in accounts clearly denominated as such) for the Bank and separately from its own property any Receivables which shall fail to be assigned to the Bank effectively under this Agreement for any reason;

	iii.		To deliver to the Bank, at the Bank’s first request, a print-out of the full names and addresses of the Debtors in respect of the Receivables outstanding as per the date of the Bank’s request;

	iv.		To deliver to the Bank all such further information, documents, accounting records and data the Bank may from time to time reasonably request.

	v.		To comply promptly with all instructions given by the Bank in relation to the assigned Receivables and the goods to which the Receivables relate.

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	vi.		Not to undertake anything which might endanger or have any whatsoever impact on the rights/position of the Bank in respect of the Receivables or the goods to which the Receivables relate without the prior written consent of the Bank.

	vii.		To execute all such documents and do all such things as the Bank shall from time to time require in its absolute discretion to perfect, preserve, secure or enforce its rights pursuant to this Agreement or under any of the Receivables assigned to it.

	viii.		The Company will notify the Bank of any event or circumstances which could reasonably be of importance to the Bank with a view to the preservation and exercise of the Bank’s rights under or pursuant to this Agreement, such as (without limitation): (i) the occurrence of events detrimental or potentially detrimental to the financial situation of the Company, (ii) the filing by the Company or any of its creditors of a petition for the bankruptcy or any other steps/actions made in connection with the insolvency or illiquidity of the Company, (ii) the occurrence of a situation of overindebtedness of the Company, (iii) the intended or actual material change in the Company’s activities, or (iv) the intended or actual termination of the Company’s commercial activities.

Indemnity/Liability

6.1		The Company shall indemnify the Bank against all losses which the Bank may incur or sustain and which may be made against the Bank in connection with the performance/exercise of this Agreement or any breach of obligations under this Agreement.

6.2		The Bank, including but not limited to its agents, managers, officers, employees and advisers, shall not be liable under this Agreement for any claim, loss, expense, damage or delay howsoever caused and assumes no liability whatever and in connection with any of the Receivables or the contracts related to them, except for unlawful intent and gross negligence.

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Power of Attorney

7.1		The Company hereby irrevocably appoints the Bank as its attorney to execute, sign and register all documents, and to complete and endorse such instruments, to institute or defend such proceedings and perform such other acts in the name of the Company as the Bank may require to effect collection of or to perfect its title to any Receivable, and to secure performance of any of the Company’s obligations under this Agreement.

8.		Waiver Clause

8.1		No failure or delay on the Bank’s part to exercise any power, right or remedy under this Agreement shall operate as a waiver thereof nor shall any single or partial exercise by the Bank of any power, right or remedy preclude any other or further exercise of any other power, right or remedy.

8.2		The remedies provided in this Agreement are cumulative and are not exclusive of any remedies provided by law.

9.		General Regulations

9.1		The illegality, invalidity or unenforceability of any provisions of this Agreement to be provided hereunder shall not affect the legality, validity or enforceability of any other provision.

9.2		The Agreement shall be valid, notwithstanding the liquidation, incapacity or any change in the constitution of the Bank or the Company.

9.3		The Agreement shall be binding on the Company and its successors but the Company may not assign or transfer all or any of its rights or obligations under this Agreement without the prior written consent of the Bank.

9.4		Any certificate, document or determination by the Bank as to any amount of Secured Liabilities pursuant to this Agreement shall save manifest error be conclusive and binding upon the Company.

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9.5

This Agreement shall

	i.		take effect on and from the date of signature hereof

	ii.		not be amended or otherwise modified expect in writing signed by the authorised signatories of the Bank;

	iii.		be construed such that words importing the plural shall import the singular and vice versa; that references to a person include references to its successors or assigns, agents or correspondents and that clause headings are for convenience only.

10.		Law and Jurisdiction

10.1		This Agreement is governed by and shall be construed in accordance with Swiss Law.

10.2		For the benefit of the Bank the Company irrevocably and unconditionally (a) agrees that any legal action or proceedings arising out of or in connection with this Agreement or any Obligation against the Company or any of its assets may be brought in the courts of [ city in Switzerland], Switzerland, (b) submits to the jurisdiction of such courts and (c) (where the Company is incorporated in a jurisdiction outside the Switzerland) appoints the person specified for such purpose below to receive on its behalf service of any proceedings in such courts. The submission to such jurisdiction shall not (and shall not be construed so as to) limit the right of the Bank to take proceedings against the Company in the courts of any other competent jurisdiction, nor shall the taking of proceedings in any one or more jurisdictions preclude the taking of proceedings in any other jurisdiction, whether concurrently or not.

10.3		The Company irrevocably waives any objection it may now or hereafter have to the commencement of any action or proceeding in any court and any claim it may now or hereafter have that any action or proceeding has been brought in an inconvenient forum.

- 8 -

Name of Process Agent:

Address of Process Agent:

EXECUTED on 2008 for and on behalf of the Company pursuant to a resolution of the Board of Directors dated 2008.

[ ]

authorised signatory

Name:

Title:

[ ]

authorised signatory


Name:

Title:

- 9 -


EXECUTED by FORTIS BANK (NEDERLAND) N.V.



Authorised Signatory

Name:


Title:


Authorised Signatory

Name:


Title:

GENERAL PLEDGE AND ASSIGNMENT

THE UNDERSIGNED:

CHS Europe S.A. , a company under the laws of Switzerland, having its registered office at the following address: Avenue des Morgines 12, 1213 Petit-Lancy, Switzerland, hereinafter referred to as: the “Pledgor” and/or the “Borrower”;

and

Fortis Bank (Nederland) N.V. , a company under the laws of the Netherlands, established at Blaak 555, 3011 GB Rotterdam, The Netherlands, also having an office at Coolsingel 93, 3012 AE Rotterdam, The Netherlands, hereinafter referred to as: the “Bank”,

HAVE AGREED AS FOLLOWS:

1.1		The Pledgor herewith grants the Bank a lien as continuing security with respect to all goods which will from case to case be designated in greater detail by special correspondence, hereinafter referred to as: the “Goods”, as well as all claims arising from titles, if any, issued on such Goods (such as bills of lading, warehouse warrants, etc.) and herewith assigns to the Bank, for the purpose of providing collateral security, all of its present or future credit balances, claims and other rights relating to said Goods or the titles representing them, in respect of third parties (such as shipping companies, warehouse companies, insurance companies, etc.). The Pledgor also assigns in particular to the Bank all claims arising from the sale of such Goods. Pledged items may be exchanged or substituted only with the consent to the Bank whereby the new items automatically serve as collateral security.

1.2		The pledged items as well as the assigned claims shall secure all claims of the Bank against the Borrower arising out of contracts already concluded or to be concluded in the future within the framework of existing business relationship between the Borrower and the Bank, including all the interest and commissions due and to become due thereon, as well as other court and out-of-court costs and expenses arising in connection therewith or with the disposal of the pledged items or assigned claims and other rights. The collateral security granted to one business office of the Bank also represents a lien as security for the claims of all other business offices of the Bank. In the event of coverall claims, the Bank decides which claim is to be covered by the collateral security or the proceeds from the disposal of the pledged items.

1.3		Should any decrease in value have occurred or be imminent in the Bank’s opinion or should the Bank, for other reasons, no longer regard the security as adequate with respect to its claims, the Borrower is obligated at any time, at the Bank’s option, either to improve the collateral’s in a manner thought fit by the Bank or to effect the requested repayments.


Initials Bank:		Intials Borrower:

- 1 -

Should the Borrower fail to meet this obligation, the Bank shall also be entitled, at its discretion, to dispose of the pledged items freely or by enforcement, whether or not its claim is then due and payable and without regard to the formalities provided in the Federal Code on Collection Proceedings and Bankruptcy or the legal provisions applicable at the place outside of Switzerland where disposal takes place, provided that reasonable notification has been given to the Borrower.

In the event that the Borrower is in default in respect of its other obligations to the Bank, the latter shall be entitled in equal manner to dispose of the pledged items freely or by enforcement.

1.4		The Pledgor hereby declares that it holds full title to the Goods, that it is empowered to pledge the Goods and that, except as stated at the foot of this document, no attachment has been levied upon the Goods and no pledge other than that in favour of the Bank, nor any right of usufruct, right of retention or any other right, by whatever name, has been vested in any third party.

2.1		The Pledgor further declares that the Goods which do not yet belong to the Pledgor have not already been surrendered or given in pledge to any party other than the Bank and nor any right of usufruct nor any other right has already been constituted thereon.

2.2		The Pledgor undertakes to ensure that, on its taking possession of the Goods, no limited rights have been retained by the supplier.

2.3		To the extent that the supplier of the Goods has made the transfer of title conditional upon the fulfilment of an obligation by the Pledgor, the Pledgor undertakes to fulfil that obligation properly and in due time, in order that an unassailable first pledge shall be created in favour of the Bank in accordance with this agreement.

3.		If and to the extent that the Goods are subject to one or more rights of pledge which take precedence over that vested in the Bank, the pledge will still vest in the Bank, without prejudice to its rights in respect of default by the Pledgor.

4.		Should the Goods still be in transit at the time the advance is granted, the Pledgor undertakes to endorse, as far as possible in blank, and to present to the Bank forthwith the related documents such as bills of lading, waybills and the like. These documents must be forwarded immediately to the Bank and, if transferable, be delivered by way of pledge into the possession of the Bank.

5.1		The Bank hereby grants the Pledgor permission to dispose of the Goods in the course of its normal business activities in accordance with their nature and/or purpose and on the customary conditions and at reasonable prices, provided that the pledge remains in force on all of the Goods up to the time of transfer of title to a third party. The Bank will have the right to withdraw this permission at all times. The permission shall be deemed to be withdrawn with immediate effect on the day on which a petition is made for the bankruptcy or suspension of payments with regard to the Borrower.

5.2		The Pledgor shall transfer the net proceeds arising from the sale of the pledged Goods


Initials Bank:		Intials Borrower:

- 2 -

to the Bank. If the Goods are not sold for cash, the Pledgor is obliged to grant a first pledge to the Bank of all receivables in respect of the transaction relating to the Goods and/or to forward to the Bank by way of pledge the bills of exchange or other trade bills, endorsed without restriction in favour of the Bank or to order.

5.3		Goods that may remain unsold must be stored by the Pledgor upon approval by the Bank whereby notification of the lien held by the Bank on such Goods must be given to the respective warehouse company or the like, where the Goods are stored.

6.1		The Pledgor shall at its own costs ensure that proper care is exercised in the custody of the Goods during shipment and storage, having due regard for the Bank’s interests. The Pledgor must keep the Goods in good condition and must take all necessary steps, including measures with regard to the premises or the part of the premises where the Goods are kept, to maintain the Goods in good condition.

6.2		The Pledgor will not, by any act or omission in respect of the Goods, cause the interests of the Bank, such at the Bank’s discretion, to be jeopardised.

6.3		In the event of the Pledgor failing to fulfil the obligations referred to in article 6.1. or article 6.2 above, the Bank is entitled, but not bound, to take such precautions itself at the expense and risk of the Pledgor. The Bank shall be entitled, in particular, to take all such actions and issue all such declarations in Switzerland and abroad which are necessary for the creation, maintenance and/or disposal of the collateral’s.

6.4		Where the Pledgor and the Borrower are not one and the same the Pledgor hereby irrevocably waives its rights to claim reimbursement from the Bank of expenses which it has incurred in respect of the Goods.

7.1		If it has not already done so, the Pledgor is obliged immediately to insure the Goods and keep them insured against the usual risks, to the Bank’s satisfaction. The Pledgor must on request submit the relevant insurance policy or policies to the Bank for inspection.

7.2		If no evidence is submitted to the Bank which demonstrates that the Goods have been insured to the Bank’s satisfaction, the Bank will itself be entitled if necessary to insure the Goods in its own name but at the expense of the Pledgor and/or the Borrower, at the Bank’s discretion.

7.3		The Pledgor assigns to the Bank all insurance claims with respect to the pledged items as well as all other claims to damages under private and public law (including expropriation compensation) for the purpose of providing collateral security and authorizes the Bank to effect the necessary notifications as well as to receive the aforementioned compensation for damages on its behalf and to issue receipt thereof with full legal effect. These powers do not expire upon the bankruptcy liquidation or the like of the Pledgor or for any other reasons stipulated in Article 35 of Swiss Federal Code of Obligations and are deemed to have been irrevocably conferred in the interest of the Bank.


Initials Bank:		Intials Borrower:

- 3 -

8.1		The Pledgor is obliged, as often as the Bank may require, to provide the Bank with a list of the Goods, duly signed by the Pledgor, stating the location or locations where the Goods are kept. The Bank is hereby authorised by the Pledgor to require such list of the Goods directly from the receiver/warehouse or the like.

8.2		Omission from any list of or failure to disclose one or more of the Goods may not be invoked as evidence that the Goods have not been pledged in favour of the Bank.

8.3		Notwithstanding clauses 8.1 and 8.2, the Pledgor hereby undertakes to the Bank as follows:

	a.		it will deposit goods which make up the Goods only at the Warehouse or at any other warehouse previously approved by the Bank in writing;

	b.		it will send to the Warehouse immediately upon delivery and storage of Goods a notice that the Goods are pledged in favour of the Bank and shall procure execution by the Warehouse of a confirmation in the format attached in Exhibit I hereto;

	c.		it will be responsible for and promptly discharge all rent and other warehouse charges and will indemnify the Bank on first written demand for such rent or other warehouse charges paid by the Bank;

	d.		it will procure that notice shall be given by the Warehouse to the Bank in writing, at least on a monthly basis, of any non-payment by the Pledgor of warehouse charges or other amounts due to the warehouse(s) for 60 days or more, or in the event of the imminent termination or expiration of the storage agreement.

8.4		The Pledgor will instruct the Warehouse operator holding the whole or part of the Goods for the Bank as pledgee to release the Goods only in accordance with the express prior written consent or instructions of the Bank, as well as to send the Bank every two weeks a written specification of all Goods released in the preceding week.

8.5		The Bank is also authorised to notify the assignment of claims to any debtor of the Pledgor at any time.

9.1		The Pledgor undertakes in all cases to notify the Bank immediately of any fact which may be relevant to the Bank in respect of the Goods or the Pledgor itself, such as an order to surrender Goods, bankruptcy, moratorium, attachment, dissolution, receivership or administration or the existence of any lien.

9.2		The Pledgor is in any event also obliged, in the cases referred to above, to notify the person demanding surrender of the Goods, the receiver in bankruptcy, the administrator, the bailiff making the attachment, the receiver or the lienholder of the existence of the pledge in favour of the Bank, failing which the Bank will be entitled to give such notification.

9.3		If the Pledgor is required to notify the appropriate executive authority of its inability to pay social insurance charges or taxes which it owes, or if it is obliged to notify the court under Article 725 of the Swiss Federal Code of Obligations, then the Pledgor is also obliged to notify the Bank immediately of such a fact.

10.		The Pledgor is obliged at all times to grant access to a person or persons designated by


Initials Bank:		Intials Borrower:

- 4 -

the Bank to the location or locations where the Goods are kept, to enable the Bank to ascertain the condition of the Goods.

11.		The Pledgor is obliged at all times, at the Bank’s request, to place all or part of the Goods, at the Bank’s discretion, immediately in the possession of the Bank or of a third party designated by the Bank.

12.		If the Borrower defaults in its obligation to the Bank, the Bank will be entitled to sell the Goods and recover the amount due from the proceeds.

13.		The Bank is not obliged to notify the Borrower, the Pledgor or any person who has constituted a pledge or usufruct or any other right or who levied an attachment on one or more of the Goods of the manner in which, the place where and the period within which the proposed sale is to take place, nor is the Bank obliged to give notice of the sale itself.

14.		Where the Pledgor and the Borrower are not one and the same, the Pledgor hereby irrevocably waives its right to demand that, if the Bank sells the Goods, the Goods or other items given by the Borrower as security are included in the sale and are collected or sold first.

15.1		The proceeds obtained from the sale of the Goods or part thereof will be applied by the Bank in reduction of the Borrower’s indebtedness towards the Bank or individual elements thereof in a sequence to be determined by the Bank.

15.2		The Bank is entitled to retain any surplus until all relations between the Borrower and the Bank have been terminated.

15.3		The Pledgor’s claim in this regard is hereby given in first pledge to the Bank, now and for the future, as security for payment of all amounts which may be owed at any time to the Bank by the Borrower in whatever regard, which pledge is hereby accepted by the Bank. This document will serve as notice of the pledge to the Bank.

16.1		The Pledgor hereby pledges to the Bank, as security for all amounts due from the Borrower to the Bank now and at any time in the future, in whatever regard, whether or not on current account and whether or not in the course of normal banking business, all rights which it may have against the Borrower by virtue of recourse or subrogation with respect to this agreement and further undertakes, immediately upon the Bank’s request, similarly to pledge as security as aforesaid all its claims on the Borrower by virtue of recourse or subrogation, if the Bank deems such to be desirable. The Bank may inform the Borrower of this pledge at any time.

16.2

Save in so far as the Bank may acquire a valid pledge on the claims which the Pledgor may have against the Borrower by virtue of recourse or subrogation in accordance with the provisions of paragraph 1 of this article, the Pledgor will subordinate such claims to all the Bank’s claims against the Borrower and the Pledgor will not demand payment of its claims in the event of the Borrower petitioning for moratorium or bankruptcy while any amount will be due from the Borrower to the Bank.


Initials Bank:		Intials Borrower:

- 5 -

17.		The Bank is only obliged to relinquish the pledge on request if, at the Bank’s discretion, all obligations of the Borrower towards the Bank have been fulfilled and the relationship between the Bank and the Borrower has been terminated.

18.		Subject to proof to the contrary, a duly signed extract from the Bank’s records shall be conclusive evidence of the Borrower’s indebtedness to the Bank. The Pledgor will at no time be entitled to suspend any obligations arising out of this agreement, even in cases where the amount due is disputed.

19.		All expenses incurred by the Bank — both legal expenses and other costs — in maintaining or exercising its rights by virtue of this agreement will be borne by the Pledgor.

20.		All communications of the Bank to the Borrower and/or the Pledgor are deemed to have been made with legal effect if dispatched to the last address notified by them to the Bank.

21.		This agreement is governed by Swiss law. The place of jurisdiction for law suits and other proceedings as well as the place of foreclosure is Zürich (1), Switzerland. However, the Bank may also sue the Pledgor at any other competent court or place of foreclosure.

Signed at , on 2008.



1. CHS Europe S.A.

Name:		Name:

Title:		Title


2. Fortis Bank (Nederland) N.V	.

Name:		Name:

Title:		Title


Initials Bank:		Intials Borrower:

- 6 -

Annex: Exhibit I

EXHIBIT I


Initials Bank:		Intials Borrower:

- 7 -

< Letterhead Warehouse >

Fortis Bank (Nederland) N.V.
TCF/[ ]
P.O. Box 749
3000 AS Rotterdam

On request of [ <Pledgor> ], we hereby confirm that we are storing for their account, not insured by us, the following Goods:


Description of Goods	Quality	Quantity

We have been informed that these Goods are financed by your bank and duly pledged to you pursuant to a deed of pledge signed by [ ] and Fortis Bank (Nederland) N.V. on [ ] 20

We undertake to hold these Goods to the order of Fortis Bank (Nederland) N.V.. We will release these Goods only in full compliance with your written instructions.

Furthermore, we undertake to transmit to you, every two weeks, the above mentioned confirmation quoting the Goods pledged to yourselves.

This letter is governed by the laws of Switzerland, place of jurisdiction is Zurich (1).

Date, 20

[ <Warehouse> ]

(Firm stamp, signature)


Initials Bank:		Intials Borrower:

- 8 -

Exhibit 10.5

THIRD AMENDMENT
OF
CHS INC.
DEFERRED COMPENSATION PLAN

WHEREAS, CHS Inc. (the “Company”) has heretofore established and maintains a nonqualified deferred compensation plan which is embodied in a document effective December 30, 2004 and entitled “CHS Inc. Deferred Compensation Plan, Master Plan Document, as amended by two amendments (collectively, the “Plan document”);

WHEREAS, since January 1, 2005, the Company has operated the Plan in compliance with Section 409A of the Internal Revenue Code, based upon a good faith interpretation of Section 409A and the notices, regulations and other guidance issued thereunder;

WHEREAS, the Company has reserved to itself the power to make further amendments of the Plan document.

NOW, THEREFORE, the Plan document is hereby amended as follows:

1. CHANGE IN CONTROL DEFINED. Effective for plan years beginning on or after January 1, 2009, Section 1.10 is amended to read in full as follows:

1.10.

“Change in Control” shall mean the occurrence of a “change in the ownership,” “change in effective control,” and/or a “change in the ownership of a substantial portion of the assets,” as defined under Treasury Regulation § 1.409A-3(i)(5), of the Affected Corporation. For this purpose, the Affected Corporation is the Participant’s Employer, or any corporation (including the Company) in a chain of corporations in which each corporation is a majority shareholder of another corporation in the chain, ending with the Participant’s Employer. A “majority shareholder” is a shareholder owning more than 50 percent of the total fair market value and total voting power of such corporation.

2. USE OF TERMINATION OF EMPLOYMENT. Effective for plan years beginning on or after January 1, 2009, Section 1.36 is amended to read in full as follows:

1.36.

“Retirement”, “Retire(s)” or “Retired” shall mean, with respect to an Employee, Termination of Employment from all Employers for any reason other than a leave of absence, death or Disability on or after the earlier of the attainment of (a) age sixty-five (65) or (b) age fifty-five (55) with ten (10) Years of Service; and shall mean with respect to a Director who is not an Employee, Termination of Employment as a Director with all Employers on or after the attainment of age sixty (60).

3. TERMINATION OF EMPLOYMENT DEFINED. Effective for plan years beginning on or after January 1, 2009, Section 1.41 is amended to read in full as follows:

1.41

“Termination of Employment” shall mean the separation from service (within the meaning of Treas. Regs. § 1.409A-1(h)) with the Company Controlled Group, voluntarily or involuntarily, for any reason other than Retirement, Disability or death. Whether a separation from service has occurred is determined under Code Section 409A and Treasury Regulation 1.409A-1(h) ( i.e ., whether the facts and circumstances indicate that

the Employer and the employee reasonably anticipated that no further services would be performed after a certain date or that the level of bona fide services the employee would perform after such date (whether as an employee or independent contractor) would permanently decrease to no more than twenty percent (20%) of the average level of bona fide services performed (whether as an employee or an independent contractor) over the immediately preceding thirty-six (36) month period (or the full period of services to the employer if the employee has been providing services to the employer less than thirty-six (36) months)). Separation from service shall not be deemed to occur while the employee is on military leave, sick leave or other bona fide leave of absence if the period does not exceed six (6) months or, if longer, so long as the employee retains a right to reemployment with any member of the Company Controlled Group under an applicable statute or by contract. For this purpose, a leave is bona fide only if, and so long as, there is a reasonable expectation that the employee will return to perform services for any member of the Company Controlled Group. Notwithstanding the foregoing, a twenty-nine (29) month period of absence will be substituted for such six (6) month period if the leave is due to any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of no less than six (6) months and that causes the employee to be unable to perform the duties of his or her position of employment. For this purpose, the “Company Controlled Group” is the Participant’s Employer and all persons with whom the Employer would be considered a single employer under Code sections 414(b) and 414(c); provided that, in applying Code sections 1563(a)(1), (2) and (3) for purposes of determining a controlled group of corporations under Code section 414(b), the language “at least 50 percent” shall be used instead of “at least 80 percent” each place it appears therein, and in applying Treas. Regs. § 1.414(c)-2 for purposes of determining trades or businesses that are under common control for purposes of Code section 414(c), “at least 50 percent” shall be used instead of “at least 80 percent” each place it appears therein. If a Participant is both an Employee and a Director, a Termination of Employment shall occur only upon the termination of the last position held.

4. MID-YEAR ENROLLMENT REQUIREMENTS. Effective for plan years beginning on or after January 1, 2009, Section 2.2(b) is amended to read in full as follows:

(b)

A Director or selected Employee who first becomes eligible to participate in this Plan (and all other deferred compensation plans required to be aggregated with the Plan under Code Section 409A) after the first day of a Plan Year must complete these requirements within thirty (30) days after he or she first becomes eligible to participate in the Plan, or within such other earlier deadline as may be established by the Committee, in its sole discretion, in order to participate for that Plan Year. In such event, such person’s participation in this Plan shall not commence earlier than the date determined by the Committee pursuant to Section 2.2(c) and such person shall not be permitted to defer under this Plan any portion of his or her Base Salary, Bonus and/or Director Fees that are paid with respect to services performed prior to his or her participation commencement date.

5. TERMINATION OF PARTICIPANT ELIGIBILITY. Effective for plan years beginning on or after January 1, 2009, Section 2.3 is amended to read in full as follows:

2.3

Termination of a Participant’s Eligibility . The Committee shall have the right, in its sole discretion, to (i) terminate any deferral election the Participant has made for the remainder of the

Plan Year in which the Committee makes such determination, (ii) prevent the Participant from making future deferral elections, and/or (iii) take further action that the Committee deems appropriate to the extent permitted under Code Section 409A. Notwithstanding the foregoing, in the event of a Termination of the Plan in accordance with Section 1.39, the termination of the affected Participants’ eligibility for participation in the Plan shall not be governed by this Section 2.3, but rather shall be governed by Section 1.39 and Section 12.1. In the event that a Participant is no longer eligible to defer compensation under this Plan, the Participant’s Account Balance shall continue to be governed by the terms of this Plan until such time as the Participant’s Account Balance is paid in accordance with the terms of this Plan.

6. DEFERRAL ELECTIONS. Effective for plan years beginning on or after January 1, 2009, Section 3.3(c) is amended to read in full as follows:

(c)

Performance-Based Compensation . Notwithstanding the foregoing, the Committee may, in its sole discretion, determine that an irrevocable deferral election pertaining to performance-based compensation may be made by timely delivering a new Election Form to the Committee, in accordance with its rules and procedures, no later than six (6) months before the end of the performance service period, provided such compensation is not yet readily ascertainable. “Performance-based compensation” shall be compensation based on services performed over a period of at least twelve (12) months, in accordance with Code Section 409A and related guidance.

7. MEASUREMENT FUNDS. Effective for plan years beginning on or after January 1, 2008, Section 3.9(a) is amended to read in full as follows:

(a)

Measurement Funds . The Participant may elect one or more of the measurement funds selected by the Committee, in its sole discretion, which are based on investment options including, but not limited to, fixed interest credits, notional mutual fund(s) or an investment index (the “Measurement Funds”), for the purpose of crediting or debiting additional amounts to his or her Account Balance. As necessary, the Committee may, in its sole discretion, discontinue, substitute or add a Measurement Fund and such changes will take effect as soon as practicable.

8. BENEFIT PAYMENTS. Effective for plan years beginning on or after January 1, 2009, the second sentence of the first paragraph of 6.2(a)(iv) shall be deleted.

9. DISABILITY BENEFIT PAYMENTS. Effective for plan years beginning on or after January 1, 2009, the second sentence of the second paragraph of 8.2(a) shall be deleted.

10. TERMINATION OF PARTICIPANT ELIGIBILITY. Effective for plan years beginning on or after January 1, 2009, Section 12.1 is amended to read in full as follows:

12.1 Termination of Plan. Although each Employer anticipates that it will continue the Plan for an indefinite period of time, there is no guarantee that any Employer will continue the Plan or will not terminate the Plan at any time in the future. Accordingly, each Employer reserves the right to Terminate the Plan (as defined in Section 1.39). In the event of a Termination of the Plan, the Measurement Funds available to Participants following the Termination of the Plan shall be comparable in number and type to those Measurement Funds available to Participants in the Plan Year preceding the Plan Year in which the Termination of the Plan is effective. Following a Termination of the Plan, Participant Account Balances shall remain in the Plan until the Participant becomes eligible for the benefits provided in Articles 4, 5, 6, 7, 8 or 9 in accordance with the provisions of those Articles. The Termination of the

Plan shall not adversely affect any Participant or Beneficiary who has become entitled to the payment of any benefits under the Plan as of the date of termination. Provided, however, to the extent permissible under Code Section 409A and related Treasury Regulations and guidance, including but not limited to such guidance and Regulations as may be issued after the effective date of this Plan, if there is a Termination of the Plan with respect to all Participants, the Company may, in its discretion, amend the Plan to accelerate the time and form of payments.

11. SAVINGS CLAUSE. Save and except as herein expressly amended, the Plan Statement shall continue in full force and effect.

IN WITNESS WHEREOF, CHS Inc. has caused its name to be hereunto subscribed on this 5 ^th day of June, 2008.


	CHS INC.
	By:
		Its President and CEO

STATE OF MINNESOTA )

)SS.

COUNTY OF DAKOTA )

On this 5 ^th day of June, 2008, before me personally appeared John D. Johnson to me personally known, who, being by me first duly sworn, did depose and say that he is the President and CEO of CHS Inc., the corporation by authority of its Board of Directors; and he acknowledged said instrument to be the free act and deed of said corporation.




	Notary

Exhibit 10.6


		Execution Version


		CHS EUROPE SA Avenue des Morgines 12 1213 Petit-Lancy, Switzerland

		For the attention of the Directors

		June 6, 2008

Dear Sirs,

Uncommitted Trade Finance Facility Letter

We have pleasure in confirming the offer of Société Générale (“SG”) to make an uncommitted trade finance facility available to CHS EUROPE SA (the “Customer”) on the terms and conditions set out below (the “Facility”).

1. Facility

(i) Each of SG and the Customer agrees that (a) this Facility Letter, (b) the Standard Terms enclosed herewith (as amended and supplemented as provided in Schedule 3 or otherwise from time to time), (c) the security agreements as listed in Schedule 1 or as provided for under the terms of any particular transaction and (d) the terms of any particular transaction (each a “Transaction”) shall form a single agreement between SG and the Customer (hereinafter together called the “Facility Documents”) and the parties would not otherwise enter into any Transaction. In the event of any inconsistency between the terms of the Facility Letter and the Standard Terms, the terms of the Facility Letter shall prevail. In the event of any inconsistency between the terms of any Transaction and either of the Facility Letter and the Standard Terms, the terms of such Transaction shall prevail. Each of the Customer and SG intend that any transactions between them in relation to trade finance whether or not referring to this Facility Letter shall be subject to the Facility Documents and be part of the Facility unless specifically stated otherwise.

(ii) The Customer acknowledges that the Facility is an uncommitted revolving commodities trade finance facility on the terms of the Facility Documents and that SG shall have no obligation to provide or to continue to provide all or any of the facilities included hereunder.

-1-

(iii) In the event that the Customer wishes to enter into a particular transaction with SG, the Customer shall contact SG for the purposes of agreeing the terms relating to such particular transaction. If agreed, the terms of any Transaction shall be confirmed in writing by exchange of fax, telex or tested telex, email or letter each of which such documents shall constitute Facility Documents as described in (i) above.

(iv) The Customer acknowledges that it is a condition precedent (among others) to the availability of the Facility that CHS Inc. (USA) (the “ Ultimate Parent ”) issues an independent first demand guarantee governed by US law to the benefit of SG to guarantee the obligations of the Customer under the Facility for an amount up to USD 12,000,000 (the “ Ultimate Parent Guarantee ”).

2. Purpose

The Facility will be used by the Customer to finance its general commodities trading activity.

3. Availability

Without prejudice to any of the terms of this Facility Letter or any of the Facility Documents, this Facility shall be available upon satisfaction of the conditions precedent listed in Schedule 1.

4. Facility Amount

(i) The amount of the Facility shall be in a maximum total aggregate amount of up to USD 60 000 000 (Sixty Million United States dollars) subject to the following sub-limits:

(1) sub-limit of USD 60,000,000 for issuing documentary letters of credit and/or documentary stand-by letters of credit with a maximum duration of 60 days inclusive of deferred payment terms, if any;

(2) sub-limit of USD 60,000,000 for advances or overdrafts for the financing of the documentary letters of credit and/or documentary stand-by letters of credit issued under paragraph 4(i) (1) when such letters of credit are drawn and for a maximum duration of 60 days; presentation of full set of Bill of lading (3/3) at SG counters and issued at SG order or blank endorsed, for presentation by SG to the end-buyers bank for payment.

(3) sub-limit of USD 60,000,000 for documentary collections for a maximum duration of 60 days; presentation of full set of Bill of lading (3/3) at SG counters and issued at SG order or blank endorsed, for presentation by SG to the end-buyers bank for payment.

(4) sublimit of USD 60,000,000 for the discount of receivables for a maximum duration of 90 days on acceptable counterparties and/or acceptable financial instruments

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(documentary letters of credit and/or documentary stand-by letters of credit and/or Bank guarantee).

The commitment rate for utilizations under these paragraphs 4(i) (1) to (4) shall not exceed 100 % of the Cost Insurance Freight (CIF) Incoterm value of the relevant documents.

(5) sublimit of USD 20,000,000 for Inventory financing

(a) Preshipment Inventory financing in Russia and/or Ukraine to be used for advances and overdrafts and for a maximum duration of 180 days on the basis of acceptable documents (FCR, warrant, warehouse receipt) issued by acceptable warehouses, and provided that and without limitation, the Customer (i) pledges the goods to SG, (ii) delegated their commercial insurance to SG and/or political insurance (if any) and (iii) assigns to SG its rights to receive proceeds under certain sale contracts and/or invoices, when issued.

The commitment rate for utilizations under this paragraph shall not exceed 85 % of the purchase price invoice value (+ the eventual cost of transportation of the goods from inland silo to port silo).

(b) Presold Inventory financing at destination (EMEA region) to be used for advances and overdrafts and for a maximum duration of 180 days on the basis of acceptable documents (FCR, warrant, warehouse receipt) issued by acceptable warehouses, and provided that and without limitation, the Customer (i) pledges the goods to SG, and (ii) delegates their commercial insurance to SG and/or political insurance (if any).

The commitment rate for utilizations under this paragraph shall not exceed 100 % of the sale price invoice value.

(6) sublimit of USD 10,000,000 for initial and margin call financing related to lots hedged on Futures under a tripartite Security Agreement over Hedging Account with Newedge or acceptable broker with a segregated Bank Account Assignment to SG and for a maximum duration of 210 days. The Futures lots shall be related to physical goods financed by SG (inventory, BL).

The commitment rate for utilizations under this paragraph shall not exceed 100 % of the nominal amount request provided by the broker.

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(7) unsecured sublimit of USD 5,000,000 for financing of working capital needs, VAT receivables, railway bills and for issuance of guarantees, issuance of bid and performance bonds for a maximum duration of 180 days.

(ii) Any annual or other adjustment to the terms of the Facility which may be agreed from time to time between the Customer and SG shall be recorded in a written amendment to this Facility Letter.

5. Interest, Fees and Expenses

Interest, fees and expenses in relation to the Facility will be charged as more particularly set out in Schedule 2.

6. Termination

Without prejudice to the terms of Clause 1(ii), the Customer accepts that SG may in its sole and absolute discretion upon 45 calendar days prior notice in writing inform the Customer that the Facility shall no longer be available and the Customer agrees that such notice period shall be a reasonable time for it to obtain alternative similar financing from other sources. Notwithstanding that SG notifies the Customer that the Facility is no longer available hereunder, any outstanding amounts shall continue to be governed by and subject to the terms of the Facility Documents.

7. Notices

Any notice or communication between the parties hereto in connection with this Agreement shall be made to the addresses given in Schedule 4(a).

8. Governing Law and Jurisdiction

(i) This Facility Letter shall be governed by and construed in accordance with English law.

(ii) Each of the Customer and SG submits to the jurisdiction of the High Court of England. Each of the Customer and SG irrevocably appoints to act as its agent for service of process the entity stated in Schedule 4(b).

9. Validity of this Proposal

The offer made by SG under the terms of this Facility Letter may be accepted by you within 15 days from the date hereof. Should you wish to accept this offer please sign and return a copy this letter.

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Yours faithfully,



By :
Duly authorized officer
for and on behalf of SOCIETE GENERALE

The Customer hereby acknowledges receipt of the Standard Terms and agrees and accepts such terms as supplemented or varied by the terms of this Facility Letter



By :				Date:
Duly authorized officer
for and on behalf of CHS EUROPE SA

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Schedule 1

Conditions Precedent

To the extent not already provided to SG in form and content satisfactory to SG:

(i) certificate of incorporation of the Customer together with evidence of the registered address of the Customer;

(ii) certified copy of the Memorandum and Articles or By-laws of the Customer;

(iii) copy of the latest annual report or audited financial statements of the Customer;

(iv) list of the Directors of the Customer;

(v) certified copy of the board resolution of the Customer approving the terms and conditions of the Facility Documents and authorizing a named person to execute and deliver the Facility Documents for and on behalf of the Customer;

(vi) certified copy of the board resolution of the Ultimate Parent approving the terms and conditions of the Ultimate Parent Guarantee and authorizing a named person to execute and deliver the Ultimate Parent Guarantee for and on behalf of the Ultimate Parent;

(vii) a certificate of the Customer (signed by a director) confirming that any form of borrowing under the Facility would not cause any borrowing or similar limit binding on the Customer to be exceeded;

(viii) a certificate of the Ultimate Parent (signed by the Executive Vice President and Chief Finance Officer) confirming that guaranteeing the Facility would not cause any guaranteeing or similar limit binding on the Ultimate Parent to be exceeded;

(ix) a duly executed copy of the Facility Letter;

(x) duly executed copies of the following security agreements

	(a)		Security Deed;

	(b)		Ultimate Parent Guarantee;

	(c)		Pledge on goods in Russia (if any) and related legal opinion;

	(d)		Pledge on goods in Ukraine (if any) and related legal opinion;

	(e)		Tripartite Security Agreement over Hedging Account (if any);

	(f)		Bank Account Assignment related to Tripartite Hedging Agreement (if any);

	(g)		Insurance certificate evidencing that SG has been named loss payee under all relevant Insurance Policies (commercial and political) and evidencing the maturity of the insurance cover.

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each of which together with any security agreement which may be entered into from time to time in relation to a Transaction referred to as a “Security Agreement”;

(xi) evidence of appointment of an agent of service of process;

(xii) a legal opinion issued by an external legal counsel in the Switzerland as to the capacity of the Customer to enter into and perform the Facility Documents together with confirmation of the legality, validity and enforceability of the obligations of the Customer hereunder and thereunder; and

(xiii) a legal opinion issued by an external legal counsel in the USA as to the capacity of the Ultimate Parent to enter into and perform the Ultimate Parent Guarantee together with confirmation of the legality, validity and enforceability of the obligations of the Ultimate Parent thereunder.

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Schedule 2

Interest Fees and Expenses

(a) Interest will be payable with respect to each advance or overdraft made pursuant to the Facility as follows:

(i) with respect to each advance, the rate determined by SG to be LIBOR for the term of the advance plus :

	•		1.05% per annum under the secured sub-limits.

	•		0.80% per annum under the unsecured sub-limit of USD 5,000,000.

Such interest will be payable on the due date for repayment of the advance; and

(ii) with respect to overdraft,

	•		1.05% per annum above SG’ base lending rate under the secured sub-limits.

	•		0.80% per annum above SG’ base lending rate under the unsecured sub-limit of USD 5,000,000.

Such interest will be payable monthly in arrears.

(b) Unless otherwise stated, fees will be charged for Letters of Credit, Standby Letters of Credit and Letters of Indemnity, Inventories as follows:

(i) with respect to each letter of credit, 1 per mille flat per quarter of the face value of each letter of credit, with a minimum charge of USD 500, payable upon opening of each letter of credit;

(ii) with respect to each documentary standby letter of credit, 1 per mille flat per quarter of the face value of each L/C, with a minimum charge of USD 500, payable upon opening of each standby letter of credit;

(iii) with respect to import letter of credit documentary collections, USD 600 per each remittance;

(iv) with respect to export letter of credit documentary collections or cash against documents documentary collections, USD 600 per each remittance;

(v) with respect to inventory financing, USD 500 payable per each lot remittance of warehouse receipt documents;

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(vii) with respect to transfer of funds abroad, USD 150 per each transfer, plus whatever other specific charges may be agreed on a case by case basis; and

(viii) with respect to amendments of any of the above, fees and out of pocket expenses (i.e. telex, courier costs) shall be charged in accordance with the standard tariffs of SG, as amended from time to time.

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Schedule 3

Amendments to Standard Terms

(1) The following amendments shall be made to the Standard Terms:

Sub-clause 2 (vii) ( Letters of Credit ) shall be replaced by the following wording:

(vii) Without prejudice to any other right which SG may have under any other Facility Document, (a) until the Customer makes due payment to SG of all moneys due and payable to SG from the Customer in respect of any Letter of Credit or any Facility Document all documents received by SG or its agents under any Letter of Credit and the goods represented thereby shall be held by SG as security or (b) following an Event of Default by the Customer under any Letter of Credit or any Facility Document, the Customer hereby irrevocably authorises SG to give all such orders as to shipment destination and delivery of any such goods as the Customer could give and to make any direct arrangement with the sellers or shippers or carriers as SG may, at its discretion think fit, including the variation or discharge of any contract, without any liability on the part of SG for any loss arising out of any such order or arrangement as aforesaid.

Sub-clause 3(b) ( Letters of Indemnity ) shall be replaced by the following wording:

(b) the Customer will use its best endeavours to obtain each bill of lading or other document relating to the goods concerned with all necessary endorsements, to produce the same to each relevant shipping company or forwarding agent concerned or to SG as may be necessary, and to procure the prompt release and discharge of SG from the relevant letter of indemnity, guarantee or agreement and the return of such document to SG duly cancelled. The Customer further authorises SG to endorse in the name of the Customer any relevant bill of lading or other document, so that the same may be delivered directly by SG to the relevant shipping company or forwarding agent.

Sub-clause 4(ii) (a) ( Advances and Overdrafts ) shall be replaced by the following wording:

(a) any request for a short term advance must be received by SG not later than 11:00 am (Paris time) one Paris business days prior to the date of the requested advance and shall specify (1) the date on which the requested short term advance is to be made, (2) the amount and currency of the short term advance, (3) the term of the short term advance and (4) the account number to be credited;

Sub-clause 5(iv) (h) ( Collections, Acceptances and Discount of Promissory Note and Bills of Exchange ) shall be replaced by the following wording:

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SG from the Customer in relation to any of the above transactions, (1) to convert into United States dollars by telegraphic remittance or otherwise at its discretion any moneys received by SG under of by virtue of such document and debit the account of the Customer with all costs, charges and losses on exchange thereby incurred and (2) accept or pay for the account of the Customer any draft drawn under any credit facility afforded by SG to the Customer; and (b) following an Event of Default by the Customer in relation to or under any of the above transactions, (1) to take conditional acceptance of any bill (including acceptance for honour) or extend the due date for payment thereof upon such conditions as SG or any of its mangers or agents think fit (2) to accept payment from any drawee or acceptor before maturity under rebate or discount (3) to accept partial payment before maturity and deliver a proportionate part of the relevant goods to any drawee or acceptor of the relevant bill or any consignee of such goods;

The following sub-clauses (h), (i) and (j) shall be added to Clause 8 ( Representations and Warranties ):

(h) it has complied in all material respects with all tax laws in all jurisdictions in which it is subject to tax and has paid all taxes due and payable by it and no claims are being asserted against it in respect of taxes except in relation to tax liabilities arising in the ordinary course of its trading activities or claims contested in good faith and in respect of which adequate provision has been made and disclosed in the latest financial statements or other information delivered to SG;

(i) the execution by it of the Facility Documents and the exercise of its rights and the performance of its obligations under the Facility Documents will not result in the creation of, or any obligation to create, any Security Interest over or in respect of any of its assets other than in favour of SG and no Security Interest exists or will come into existence over any part of the assets of the Customer that are subject to a Security Interest created or purported to be created under any Facility Document; and

(j) it has not taken any action nor (to the best of its knowledge and belief) have any steps been taken or legal proceedings been started or threatened against it for its winding-up, dissolution or re-organisation, for the enforcement of any Security Interest over its assets or for the appointment of a liquidator, supervisor, receiver, administrator, administrative receiver, compulsory manager, trustee or other similar officer of it or in respect of any of its assets, nor, to its best knowledge and belief, have any of the foregoing events occurred which might have an adverse effect on the Facility Documents.

Sub-clause 9 (d) ( Undertakings ) shall be replaced by the following wording:

(d) the Customer undertakes to sign, execute and deliver any transfer, deed or other document which SG may reasonably require the Customer or any other person to sign, execute and deliver for giving full effect to the terms of any Facility Document or any other relevant document or for taking or evidencing security over goods, documents or other property or for perfecting the title of SG to goods, documents or other property or for vesting the same in any purchaser or purchasers from SG or otherwise;

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Sub-clause 10 (i) (e) ( Events of Default ) shall be replaced by the following wording:

(e) the Customer (1) is dissolved; (2) becomes insolvent or is unable to pay its debts or fails or admits in writing its inability generally to pay its debts as they become due; (3) makes a general assignment, arrangement or composition with or for the benefit of its creditors; (4) institutes or has instituted against it a proceeding seeking a judgment of insolvency or bankruptcy or any other relief under any bankruptcy or insolvency law or other similar law affecting creditor’s rights, or a petition is presented for its winding-up or liquidation, and, in the case of any such proceeding or petition instituted or presented against it, such proceeding or petition (A) results in a judgment of insolvency or bankruptcy or the entry of an order for relief or the making of an order for its winding-up or liquidation or (B) is not dismissed, discharged, stayed or restrained in each case within 30 days of the institution or presentation thereof; (5) has a resolution passed for its winding-up, official management or liquidation (other than pursuant to a consolidation, amalgamation or merger); (6) seeks or becomes subject to the appointment of an administrator, provisional liquidator, conservator, receiver, trustee, custodian or other similar official for it or for all or substantially all its assets; (7) has a secured party take possession of all or substantially all its assets or has a distress, execution, attachment, sequestration or other legal process levied, enforced or sued on or against all or substantially all its assets and such secured party maintains possession, or any such process is not dismissed, discharged, stayed or restrained, in each case within 30 days thereafter; (8) causes or is subject to any event with respect to it which, under the applicable laws of any jurisdiction has an analogous effect to any of the events specified in clauses (1) to (7) (inclusive); or (9) takes any action in furtherance of, or indicating its consents to, approval of, or acquiescence in, any of the foregoing acts; or (10) is or may be prevented by the declaration of a moratorium, standstill, waiver, deferral or rescheduling from making any present or future payments due under any Facility Document or any step is taken by any person with a view to the seizure, compulsory acquisition, expropriation or nationalisation of all or any material part of the assets of the Customer;

Sub-clause 11 (i) ( Undertakings ) shall be replaced by the following wording:

(i) In addition to any right of set-off or general lien or other right to which SG may be entitled by law, SG may at any time at its discretion with 24 hours notice to the Customer debit any account of the Customer or combine or consolidate all or any of the accounts which the Customer may have with SG with any moneys or liabilities (including contingent liabilities) outstanding or owing or unpaid to SG by the Customer and set-off any sums standing from time to time to the credit of any account of the Customer with SG in or towards payment of the liabilities of the Customer to SG under any Facility Documents. SG is hereby authorised to purchase with the moneys standing to the credit of any account such other currencies as may be necessary to effect such application or set-off.

Sub-clauses (i), (ii) and (iv) of Clause 15 ( Miscellaneous ) shall be replaced by the following wording:

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(i) SG may at any time assign any of its rights or transfer by novation all or a portion of its rights and obligations under any of the Facility Documents to one or more banks or financial institutions and SG shall inform the Customer in writing following such assignment or novation. The Customer shall not assign or delegate any of its rights or obligations hereunder without the prior written consent of SG and any attempted assignment by the Customer without such consent shall be null and void.

(ii) The Customer hereby irrevocably and unconditionally appoints SG (with full power of delegation) in the name and on behalf of the Customer to execute, seal and deliver and otherwise perfect and do any deed, agreement, instrument, act or thing which the Customer ought reasonably to execute and do under the provisions of any of the Facility Documents or which may be reasonably required or deemed proper by SG for any purpose in respect of the perfection or realisation of any Security Interest.

(iv) Any settlements or discharge between SG and the Customer shall be conditional upon no security or payment to SG by the Customer or any other person being avoided or set aside or ordered to be refunded or reduced by virtue of any provision or enactment relating to bankruptcy, insolvency or liquidation for the time being in force and SG shall be entitled to recover from the Customer the amount of any such payment as if such settlement or discharge had not occurred.

(2) The Standard Terms shall be amended only as set out above and otherwise shall remain in full force and effect.

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Schedule 4(a)

Notices

To the Customer:

CHS EUROPE SA
Avenue des Morgines 12
1213 Petit-Lancy
Switzerland

To SG:

Société Générale,
Tour Société Générale,
17 cours Valmy,
92987 Paris La Défense 7 Cedex,
France

Attention: CTY/FIN/COR

Schedule 4(b)

Agent for Service of Process

The Customer appoints

[The Law Debenture Corporate Services Limited at Fifth Floor 100 Wood Street London EC2V 7EX in the United Kingdom]

SG appoints

SOCIETE GENERALE
SG House
41 Tower Hill
London EC3N 4SG

Attention: Head of Legal

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		Execution Version

STANDARD TERMS FOR UNCOMMITTED TRADE FINANCE FACILITY

1. General

(i) In consideration of SOCIETE GENERALE (“ SG ”) acting through its Paris or London offices from time to time issuing or confirming letters of credits, standby letters of credit, letters of indemnity, making available short term advances and overdraft facilities, issuing guarantees, bid and performance bonds, discounting promissory notes, bills of exchange and other receivables or otherwise making available to CHS EUROPE SA (the “Customer”) banking facilities of whatever nature (the “ Facility ”) as more particularly described in the facility letter from SG to the Customer (the “ Facility Letter ”), the Customer hereby agrees that these terms and conditions for trade finance facilities (the “ Standard Terms ”) shall apply to the Facility unless otherwise specifically agreed in writing between the Customer and SG.

(ii) In the event that the Customer wishes to enter into a particular transaction with SG pursuant to the Facility, the Customer shall contact SG for the purposes of agreeing the terms relating to such particular transaction. If agreed, the terms of such transaction shall be confirmed in writing by exchange of fax, telex or tested telex, email or letter. Each of the Facility Letter and these Standard Terms together with any security or other agreement or instruments relating to the Facility and fax, telex or tested telex, email or letter confirming the terms of any particular transaction shall be hereinafter called the “ Facility Documents ”).

(iii) Notwithstanding anything appearing in the Facility Documents or any course of dealing between the Customer and SG, the Customer accepts that the Facility is uncommitted and that SG shall have no obligation to provide or to continue to provide all or any of the facilities included hereunder.

(iv) The Facility Documents shall be read and construed as one and the same agreement.

2. Letters of Credit

(i) The Uniform Customs and Practice for Documentary Credits of the International Chamber of Commerce (ICC Publication UCP N°500)(as amended from time to time) shall apply to letters of credit opened by SG (each a “ Letter of Credit ”).

(ii) Letters of Credit may be opened by SG at the written request of the Customer.

(iii) The Customer authorises SG to accept and pay for its account all drafts drawn under and tendered or negotiated pursuant to any Letter of Credit.

(iv) The Customer authorises SG in respect of all payments made by SG under any Letter of Credit (including any red clause Letter of Credit) to forthwith debit any such amount paid to the account of the Customer with SG. Unless otherwise provided in the Facility

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Letter or specifically agreed, the Customer undertakes to ensure that it shall maintain a credit balance on its account sufficient to cover any payment due under any Letter of Credit as and when such amounts may be due. In the event that SG receives any amount in relation to the transaction underlying the Letter of Credit whether through assignment of any contract, assignment of any letter of credit or otherwise prior to the date of payment by SG under such Letter of Credit, unless otherwise specifically agreed, the Customer hereby instructs SG to transfer such amount pending such payment to an account opened by SG in its own name and identified as “Compte de Gage-Espèces référence CHS EUROPE SA”.

(v) If SG opens a Letter of Credit through a confirming correspondent, the Customer will indemnify SG against all liabilities to such correspondent under or in respect of such Letter of Credit.

(vi) The Customer agrees that any action taken by SG or by any of its correspondents or agents under or in connection with any Letter of Credit or the relevant drafts, instruments or demands, documents or goods, or in action or omission thereof, if taken in good faith, shall be binding on the Customer and shall not put SG or its correspondents or agents under any resulting liability to the Customer.

3. Letters of Indemnity

The Customer may request SG to countersign letters of indemnity or guarantees or otherwise enter into agreements with shipping companies or forwarding agents in order to enable the Customer to obtain delivery of goods without production of a relevant bill of lading or other document or to cover any discrepancy. The Customer agrees in respect of each such letter of indemnity or guarantee or agreement countersigned or given by SG that:

(a) the Customer will at all times indemnify SG against any liability arising directly or indirectly from any such letter of indemnity, guarantee or agreement and against all liabilities, claims, costs and expenses whatsoever to which SG may become exposed in respect thereof;

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(c) until release and discharge of SG from the relevant indemnity, guarantee or agreement and the due honour and discharge by the Customer of all drafts relevant to the goods concerned, the bills of lading or other documents of title shall, on their receipt by the Customer if made out to the Customer or to the Customer’s order, be endorsed to SG or as SG may direct and to no other person, firm, bank or corporation, and in any event the said goods and the proceeds of sale thereof shall be held by the Customer as agent for and on behalf of SG.

4. Advances and Overdrafts

(i) Upon request from the Customer, SG may (in its absolute discretion and upon such particular conditions as it may require) agree to make cash advances or provide overdraft facilities to the Customer for its general corporate purposes. Such advances may be made (a) for short term financing requirements (b) in respect of collections, acceptances or cash against documents (c) for freight or shipping costs (d) for stock financing (e) for initial or variation margin or (f) on a general overdraft basis.

(ii) In respect of short term advances:

(b) without prejudice to the uncommitted nature of the Facility, SG shall only consider funding short term advances if (1) the sum of all outstanding short term advances and other outstandings do not exceed the relevant Facility Limit and (2) the representations and warranties under Clause 8 are true and accurate;

(d) SG shall be entitled to assume without enquiry (1) the genuineness of any request for a short term advance purporting to be signed by an authorised signatory of the Customer and (2) that the authority of each authorised signatory

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has not been revoked or curtailed in any way unless and until SG shall have received ten days written notice of such revocation or curtailment.

5. Collections, Acceptances and Discount of Promissory Notes and Bills of Exchange

(i) Save as otherwise agreed, all collections which SG makes on behalf of the Customer of any documents or drafts in connection therewith shall be subject to the Uniform Rules for Collection, 1995 Revision, International Chamber of Commerce Publication No. URC 522 (or any modification, amendment or replacement thereof for the time being in force).

(ii) The Customer agrees that in handling any collection SG shall not be under any responsibility beyond its obligation to act in good faith and to exercise reasonable care in accordance with the relevant collection instruction from the Customer.

(iii) The Customer agrees that whether SG is acting as collecting bank, remitting bank or presenting bank, SG shall (unless otherwise specifically agreed and subject only to Clause 5(ii)) retain full recourse against the Customer in respect of any amount advanced against documents (which amount shall be an advance as described in Clause 4(i)(b)).

(iv) Without prejudice to any of other rights, powers and remedies of SG, whether conferred on SG hereunder or otherwise, the Customer hereby agrees that (inter alia) the following conditions shall apply to all transactions whereby SG has purchased or may hereafter from time to time purchase or negotiate any bill of exchange or promissory note (each hereinafter called a “bill”) drawn or endorsed by the Customer accompanied by shipping or other documents:

(a) if SG or its agent deems it inadvisable to deliver up any shipping or other document upon acceptance of any bill, SG is hereby authorised to deliver it only upon payment, notwithstanding that such procedure may be contrary to any previous instructions of the Customer;

(b) unless SG has accepted the express instructions of the Customer to the contrary, SG shall have the right at all times on the request of any drawee to delay presentation of any bill for acceptance or for payment, and such delay shall not affect the liability of the Customer to SG in respect of such bill;

(c) if any bill payable in a foreign country is paid by the drawee or acceptor in the local currency of such country or if currency regulations in such country prohibit or restrict the transmission of funds from such country, then the Customer will pay to SG in Paris or London as appropriate the amount of such bill in the currency in which it is drawn, together with any charges and expenses that SG may have incurred;

(d) the holding by SG of any security additional or collateral to any bill shall not prejudice its rights on such bill in case of dishonour and any recourse or

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proceedings taken by SG thereon or the giving of time by SG or the making of any arrangements with or accepting any composition from any party to such bill shall not affect the title of SG to any such security or the liability of the Customer under such bill or under these Standard Terms;

(e) if any bill is dishonoured by non-acceptance or non-payment, then SG is hereby authorised to dispose of the goods to which such bill relates at its discretion and at the sole risk and expense of the Customer, without being under any responsibility in respect of such disposal, provided only that, if required by the instructions accompanying the bill, before making such disposal SG shall notify the Customer or its agent. SG is free at its discretion to protest any bill, which is dishonoured, and to take any other step it may think necessary to protect its interest therein;

(f) the acceptance by SG of any shipping document relevant to any bill shall be without prejudice to the liability of the Customer on such bill if it is dishonoured for any reason whatsoever and the proceeds of the goods are insufficient to cover the amount thereof plus interest, expenses and commission;

(g) notwithstanding that SG may have debited the Customer with the amount of any bill, the Customer hereby authorises SG in its absolute discretion, at any time when the Customer is actually or contingently liable to SG on any account or in respect of any transaction whatsoever, to commence and continue any proceedings and to take any steps for the recovery from the acceptors or endorsers of any such bill of any amount due in respect thereof; and

(h) without prejudice to the generality of the powers and discretions of SG, when handling all or any of the above transactions, the Customer hereby authorises SG or any of its managers or agents, at its or their absolute discretion, to take any actions including but not limited to the following: (a) until the Customer makes due payment to SG of all moneys due and payable to SG from the Customer in relation to any of the above transactions, (1) to convert into United States dollars by telegraphic remittance or otherwise at its discretion any moneys received by SG under of by virtue of such document and debit the account of the Customer with all costs, charges and losses on exchange thereby incurred and (2) accept or pay for the account of the Customer any draft drawn under any credit facility afforded by SG to the Customer; and (b) following an Event of Default by the Customer in relation to or under any of the above transactions, (1) to take conditional acceptance of any bill (including acceptance for honour) or extend the due date for payment thereof upon such conditions as SG or any of its mangers or agents think fit (2) to accept payment from any drawee or acceptor before maturity under rebate or discount (3) to accept partial payment before maturity and deliver a proportionate part of the relevant goods to any drawee or acceptor of the relevant bill or any consignee of such goods;

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(v) For the avoidance of doubt and without prejudice to any other rights which SG may have under any of the Facility Documents, the Customer confirms that, in the event that any advance or overdraft facilities are made available to the Customer in relation to any collection, acceptance or discount of promissory note or bill of exchange, SG is irrevocably authorised to apply any monies received from any third party pursuant to such collection, acceptance or discount directly to the discharge of such advance or overdraft.

6. Repayment

The Customer shall pay to SG on demand or on their respective due dates all moneys and liabilities whatsoever which now are or at any time hereafter may be due, owing or payable, in any currency, to SG by the Customer, actually or contingently, jointly or severally with another or others, as principal or surety, on any account, with reference to any bill, note or other security, in connection with any advance, loan, credit, facility, guarantee or indemnity made or issued to or at the request of the Customer, or in any other manner whatsoever, including commission, discount and all banking, legal and other fees, costs, charges and expenses whatsoever (on a full indemnity basis), and also interest on the foregoing, and including, without prejudice to the generality of the above, all amounts whatsoever which the Facility Letter provides are to be paid by the Customer to SG.

7. Interest

(i) Interest on all amounts payable by the Customer to SG shall be payable at the rate stated in the Facility Letter or at such rate as may otherwise from time to time be agreed. If there has been no agreement on a rate, such rate shall be a rate determined by SG as its cost of funding plus such margin for the Customer as has been applied for similar previous transactions. Interest shall accrue from day to day and shall be calculated on such basis and be payable at such times as SG may determine in accordance with its usual practice.

(ii) If the Customer fails to pay any sum when due, such overdue amount shall bear interest from the due date of payment until the actual date of payment at a rate per annum equal to the rate applicable to overdrafts specified in the Facility Letter plus 2% (two percent). Such interest shall be compounded monthly and calculated for the actual number of days elapsed on the basis of a 360-day year.

8. Representations and Warranties

(i) The Customer hereby represents and warrants as of the date that any request is made to SG under the Facility Letter that:

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(a) it is duly incorporated, validly existing and in good standing under the laws of the place of its incorporation and the documents which contain or establish its constitution contain provisions which authorise the Customer to enter into the Facility Documents and to perform the transactions contemplated thereunder, and all necessary corporate or other action has been taken by the Customer to so authorise such acts;

(b) the obligations of the Customer under the Facility Documents constitute the legal, valid, binding and enforceable obligations of the Customer;

(c) the entry into the Facility Documents and the performance by the Customer of the terms thereof do not and will not constitute a breach of any law, decree, enactment instrument or contract binding on the Customer or any of its assets and will not result in the creation or imposition of any charge or encumbrance over any such assets;

(d) no authorisation, approval, consent, licence, exemption, registration, recording, filing or notarisation and no payment of any duty or tax and no other action whatsoever which has not been duly and unconditionally obtained, made or taken is necessary or desirable to ensure the validity, enforceability or priority of the liabilities and obligations of the Customer or the rights and interests of SG under any of the Facility Documents and the Customer has complied with all necessary exchange control regulations and will promptly procure, or cause to be procured, any necessary import or export licence or other permit;

(e) no Event of Default has occurred or is continuing and the Customer is not in default under any instrument or contract binding on it or any of its assets which might have a material adverse effect on the business, assets or financial condition of the Customer or its ability to perform its obligations under any of the Facility Documents;

(f) there are no proceedings or claims pending or threatened before any court or tribunal or other authority which in any case might have a material adverse effect on the business, assets or condition of the Customer or its ability to perform its obligations under any of the Facility Documents;

(g) the audited financial statements of the Customer which have been submitted to SG for the purposes of enabling SG to assess the creditworthiness of the Customer have been prepared on the basis of generally accepted accounting principles consistently applied, are complete, true and fair and accurately disclose all liabilities (actual and contingent) of the Customer and the Customer has disclosed to SG all information relating to itself and all other relevant parties which the Customer knows and which is material to be known to SG in the context of the transactions herein contemplated;

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which adequate provision has been made and disclosed in the latest financial statements or other information delivered to SG;

9. Undertakings

The Customer undertakes that until all its liabilities to SG under the Facility Documents have been fully discharged:

(a) the liabilities of the Customer under the Facility Documents will rank at least pari passu in point of priority and security with all other unsecured unsubordinated liabilities of the Customer except (i) liabilities which are subject to liens or rights of set-off arising in the normal course of trading and the aggregate amount of which is not material or (ii) liabilities which are preferred solely by the laws of country of incorporation of the Customer and not by reason of any security interest (being any mortgage, charge, pledge, lien, right of set-off, assignment, hypothecation, security right, fiduciary assignment, fiduciary transfer or other security interest or encumbrance whatsoever howsoever created or arising, hereinafter a “ Security Interest ”) granted by the Customer unless otherwise specifically agreed by SG. Furthermore, the Customer undertakes that in the event it should offer any Security Interest to any other bank or financial institution for banking facilities substantially the same or similar to the Facility, it undertakes to provide the same or substantially similar security in favour of SG;

(b) the Customer will send to SG as soon as they become available, but in any event within six (6) months of the end of the relevant year or half-year financial periods, a copy of the unaudited (if appropriate) and audited financial statements of the Customer which financial statements shall (i) contain an income statement, cash flow statement and a balance sheet, (ii) accurately disclose all its liabilities (actual and contingent), (iii) be prepared on a basis consistently applied, (iv) be audited and certified without qualification by a firm of international accountants acceptable to SG and (v) give a true and fair view of its financial condition;

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(c) the Customer shall furnish particulars of any matters concerned with or arising out of the business, finances, operation and management of the Customer to such extent and in such form and detail as SG may from time to time reasonably require;

(e) the Customer shall carry on and conduct its business in a proper and efficient manner and shall maintain in full force and effect all relevant approvals, permissions and authorisations and will promptly obtain any further approval, permission and authorisation which it may become necessary to obtain from any governmental or administrative authority or organisation to enable the Customer to perform any of the transactions contemplated in, or comply with any of the provisions of, the Facility Documents;

(f) the Customer agrees to keep all goods which are the object of the Facility provided by SG adequately covered by insurance satisfactory to SG, with companies satisfactory to SG and at the request of SG either to assign the policies or certificates of insurance to SG or to make SG the loss payee under such policy and to furnish SG upon request with evidence of acceptance by the insurers of such assignment together with proof of payment of all premiums; and

(g) the Customer shall notify SG forthwith if it becomes aware of the occurrence of an Event of Default under Clause 10 or any event which, with the giving of notice or the lapse of time or the relevant determination would constitute such an event and provide SG with full details of any steps which the Customer is taking, or is considering taking, in order to remedy or mitigate the effect of such event or otherwise in connection with it.

10. Events of Default

(i) Each of the events and circumstances set out below is an Event of Default:

(a) the Customer fails to pay any sum payable by it to SG at the time and in the manner stipulated in any Facility Document;

(b) other than a failure to pay under Clause 10(i)(a), the Customer commits any breach of or omits to observe any of the obligations or undertakings expressed to be assumed by it under any Facility Document and, in respect of any such breach or omission which in the opinion of SG is capable of remedy, such action as SG may require shall not have been

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taken within 10 days of SG notifying the Customer of such default and of such required action;

(c) any representation or warranty made by the Customer to SG in any Facility Document is or proves to have been incorrect or misleading when made or would be incorrect or misleading if repeated at any time by reference to the facts and circumstances existing at such time;

(d) the Customer transfers or disposes of a substantial part of its assets or properties or changes the nature or scope of its business, or suspends a substantial part of the present business operations it now conducts directly or indirectly, or any governmental authority expropriates all or part of its assets or properties and the result of any of the foregoing is, in the opinion of SG, materially and adversely to affect the financial condition of the Customer or its ability to perform its obligations under any Facility Document;

(f) any consent, licence, authorisation or approval of, or registration with or declaration to, governmental or public bodies or authorities or courts required in connection with

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execution, delivery, performance, validity or enforceability of any Facility Document is modified in a manner unacceptable to SG, or is not granted or is revoked or expires and is not renewed or otherwise ceases to be in full force and effect; or

(g) there occurs, in the opinion of SG, a material adverse change in the financial condition of the Customer or any other event occurs or circumstances arises which, in the opinion of SG, is likely materially and adversely to affect the ability of the Customer to perform all or any of its obligations under any of the Facility Documents.

(ii) At any time after an Event of Default occurs SG shall be entitled:

(a) to demand immediate repayment of all outstanding amounts whereupon the same shall become immediately due and payable;

(b) to suspend, vary or terminate the Facility Letter or cancel any commitment of SG under the Facility Letter or any other agreement between SG and the Customer; and

(c) to require the Customer to transfer to an account opened by SG in its own name and identified as “Compte de Gage-Espèces référence CHS EUROPE SA” such amount by way of cash collateral as SG considers in its absolute discretion will be sufficient to meet the obligations of the Customer under the Facility Documents and to execute and deliver to SG such charge or other security documents as SG may request in respect of such account.

11. Combination of Accounts and Set-off

(ii) Any moneys received by SG from the Customer in respect of any obligation of the Customer to SG under any Facility Document may be placed and kept to the credit of an account opened by SG in its own name and identified as “Compte de Gage-Espèces référence CHS EUROPE SA” for as long as SG thinks fit and the Customer hereby authorises SG to apply the same or any part thereof in or towards discharge of any money or liabilities due or incurred by the Customer to SG.

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12. Indemnities

(i) If any amount due under the Facility Documents is paid to or recovered by SG in a currency other than the currency in which the amount was due and if the amount received is insufficient when converted into the relevant currency at the date of receipt to satisfy in full the amount due, then the Customer shall, on the written demand of SG, indemnify SG against any additional amount in the currency of the amount due as is sufficient to satisfy in full the amount due in the currency of such debt.

(ii) The Customer will indemnify SG against all costs, losses and expenses, if any, incurred by SG by reason of the acceleration of repayment of all or part of any advance as provided for under any of the Facility Documents including without limitation any cost incurred by SG in relation to the amount by which the interest which SG should have received for any period from the date of receipt of an advance to its maturity date had the principal amount of such advance been paid on the maturity date exceeds the amount which SG would be able to obtain by placing an amount equal to the principal amount received by it on deposit with a leading bank in the London Interbank Market for a period starting on the Business Day following receipt or recovery of such amount and ending on the relevant maturity date.

(iii) The Customer agrees to pay to SG on demand on the basis of a full indemnity, all expenses, including legal and out-of-pocket expenses, incurred by SG in connection with any Facility Document, any approvals thereunder or variations thereof and their preservation or enforcement or attempted preservation or enforcement. The Customer shall pay all stamp and other duties and taxes, if any, to which any Facility Document and any other documents in connection therewith, may be subject or give rise.

(iv) Save only in the case of gross negligence or wilful misconduct on the part of SG, the Customer agrees to indemnify SG for and hold SG harmless from and against each and every claim, demand, action, damage, loss or liability which may arise against SG, or any correspondents or agents of SG by reason of any action taken pursuant to any Facility Document or any Letter of Credit and any documents or goods related thereto.

13. Changes in Circumstances

If at any time SG determines that it is or will become unlawful or contrary to any directive (whether or not have the effect of law) of any agency of any state for SG to allow all or part of the advances to remain outstanding, to make, fund or allow to remain outstanding all or part of any advance, to carry out all or any of its obligations under the Facility Documents or to charge or receive interest at the rate or rates applicable or which will be applicable, upon SG notifying the Customer (a) the Facility shall be cancelled and (b) the Customer shall immediately repay all advances together with accrued interest thereon and any other sum then due to SG under the Facility Documents.

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14. Taxes

All payments by the Customer shall be made without set-off or counterclaim and free and clear of any deduction or withholding on account of taxes or otherwise. If any deduction or withholding is required by law to be made from any amount due from the Customer, the Customer shall pay such additional amounts as will result in receipt by SG of the full amount which it would otherwise have received had no such deduction or withholding been made.

15. Miscellaneous

(iii) No failure to exercise, nor any delay in exercising, by SG, any right or remedy under any Facility Document shall operate as a waiver, nor shall any single or partial exercise of any right or remedy prevent any further or other exercise or the exercise of any other right or remedy. The rights and remedies provided in the Facility Documents are cumulative and not exclusive of any rights or remedies provided by law.

(v) If any provision of any of the Facility Documents becomes invalid, illegal or unenforceable in any respect under any law or in any jurisdiction, such provision shall, as to such law or jurisdiction be ineffective and the validity, legality and enforceability of the remaining provisions shall not in any way be affected, or impaired in such jurisdiction

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or in any other jurisdiction nor invalidate or render unenforceable such provision in any other jurisdiction.

(vi) Neither the Customer nor SG intend that any term under any of the Facility Documents should, by virtue of the Contracts (Rights of Third Parties) Act 1999, confer any rights or benefit on or be enforceable by any other person.

16. Law

These Standard Terms and each of the Facility Documents (unless expressly provided otherwise) shall be governed by and construed in accordance with the laws of England.

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		Execution Version

This SECURITY DEED dated June 6, 2008 is made between:

(1) CHS EUROPE SA (the “ Customer ”) having a place of business at Avenue des Morgines 12 1213 Petit-Lancy Switzerland; and

(2) SOCIETE GENERALE (“ SG ”) having its principal office at Tour Société Générale, 17 cours Valmy, 92987 Paris La Défense 7 Cedex

WHEREAS Société Générale acting through its Paris or London offices is prepared to make available to the Customer the uncommitted trade finance facilities including issuing or confirming letters of credits, standby letters of credit, letters of indemnity, making available short term advances and overdraft facilities, documentary collections and acceptances, issuing guarantees, bid and performance bonds, discounting promissory notes, bills of exchange and other receivables or otherwise making available to the Customer banking facilities of whatever nature as more particularly described in the facility letter from SG to the Customer (the “ Facility Letter ”) and subject to the standard terms and conditions of SG for trade finance facilities (the “ Standard Terms ”)(the “ Facility ”).

WHEREAS the availability of the Facility is subject inter alia to the grant by the Customer of the security described in this Security Deed.

1. Security

In consideration of SG making available the Facility, the Customer grants as continuing security for the payment or discharge to SG when due of all moneys, obligations and liabilities (whether actual or contingent and including interest, fees, commissions, expenses and other charges and all legal and other costs) now or at any time hereafter due, owing or incurred by the Customer to SG on any account or in any manner whatsoever pursuant to the Facility (all such moneys, obligations and liabilities being together the “ Secured Liabilities ”), the following security interests:

(A) Pledge of Goods and Documents

The Customer hereby pledges to SG:

(a) all goods (including any goods described in or represented by any Pledged Documents) which are now or may at any time be or be delivered into the possession (whether actual or constructive) of SG or carried, warehoused or stored in the name of, or otherwise deposited or lodged with, SG or its agent or nominee (together the “ Pledged Goods ”);

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(b) all bills of lading, airway bills, delivery orders, warrants, warehouse certificates, receipts, trust receipts, invoices, drafts, bills of exchange, promissory notes, insurance policies, documents of title or any other document whatsoever which are now or may hereafter be delivered into the possession (whether actual or constructive) of SG or its agent or nominee (together the “ Pledged Documents ”); and

(c) the proceeds of sale or realisation of the Pledged Goods or the Pledged Documents and any insurance proceeds received with respect thereto.

(B) Assignment of Rights

The Customer hereby unconditionally and irrevocably assigns to SG by way of security all its present and future right, title and interest in and to the following (together the “ Assigned Rights ”):

(a) contracts (including any proceeds of sale and claims for damages or insurance arising under such contracts) entered into by the Customer with respect to any goods which have been or are to be purchased or held by the Customer with the assistance of finance provided directly or indirectly by SG under the Facility (“ Financed Goods ”);

(b) guarantees, letters of credit, letters of indemnity or similar obligations issued or incurred by third parties to the Customer with respect to the Financed Goods or any contract of sale or purchase relating thereto;

(c) claims the Customer may have against a carrier of any Financed Goods, whether under or pursuant to a bill of lading or otherwise;

(d) wash-out, book-out, circle settlement, netting or other similar agreement or arrangement pursuant to which the rights and obligations of the parties to two or more contracts for the sale and purchase of a particular commodity are effectively cancelled and substituted by new payment obligations calculated by reference to the sale prices agreed in such contracts;

(e) rights to receive payment in respect of any currency or commodity related hedge arrangements entered into either with SG or any third party in relation to any risk related to a transaction financed by SG under the Facility whether such hedge is entered into on an exchange or over-the-counter; and

(f) things in action which may give rise to any debt, revenue or claim under or pursuant to any of the property described in 2(B)(a), (b), (c), (d) and (e) above, together with the full benefit of any guarantee, security or other rights relating to any such property including, without limitation, reservations of proprietary rights, rights of tracing, unpaid vendors liens and associated rights.

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The Customer hereby undertakes to grant to SG from time to time pledges of cash under French law (“Gage-Espèces”) which Gage-Espèces shall be subject to the following terms:

(a) all sums remitted by the Customer to SG as Gage-Espèces shall be deposited upon the specific written instructions of the Customer on an account opened by SG in its own name and identified as “Compte de Gage-Espèces référence [Customer]” (the “Gage-Espèces Account”) and all amounts standing to the credit of this account (together the “Gage-Espèces Amount”) shall be the property of SG from the time such amount is credited to the Gage-Espèces Account. Accordingly, the Customer shall have no right to dispose of, or grant any charge or lien or otherwise encumber any of the Gage-Espèces Amount;

(b) the Customer shall be compensated for any Gage-Espèces by the payment by SG of an amount equal to the Gage-Espèces Amount multiplied by a rate per annum determined by SG which shall not be less than one month LIBID for the currency of the deposit minus 1.25 per cent per annum. Unless otherwise specifically agreed, such compensation shall be credited by SG monthly to such account of the Customer as the Customer may designate from time to time;

(c) the Customer hereby irrevocably authorises SG upon any payment being due in respect of any of the Secured Liabilities to apply by way of set-off the Gage-Espèces Amount to repayment of such obligation. SG shall promptly notify the Customer of the exercise of such right, specifying the amount thereof and describing the Secured Liability which has been discharged;

(d) the Gage-Espèces Amount shall fluctuate from time to time during the term of the Facility by the transfer by the Customer to the Gage-Espèces Account of new cash as new transactions are entered into by SG with the Customer in accordance with the terms of the Facility Letter and by the release of cash by SG to the Customer if at any time the Gage-Espèces Amount exceeds of the sum of amounts of Gage-Espèces from time to time agreed between the Customer and SG pursuant to current outstanding transactions; and

(e) upon termination of the Facility Letter and full discharge of all Secured Obligations to the satisfaction of SG, SG shall transfer the Gage-Espèces Amount if any to such account of the Customer as the Customer may designate.

2. Warranties and Undertakings of the Customer

(i) The Customer hereby warrants that:

(a) it has the right to pledge the Pledged Goods and the Pledged Documents, to assign the Assigned Rights to SG and to create any Gage-Espèces;

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(b) the Pledged Goods, the Pledged Documents, the Gage-Espèces Amount and the Assigned Rights are and will remain free from any other mortgage, pledge, charge, lien or encumbrance of any kind and any other third party rights whatsoever;

(c) this Security Deed constitutes its legal, valid, binding and enforceable obligations effective in accordance with its terms;

(d) this Security Deed does not and will not conflict with or result in any breach or constitute a default under any agreement, instrument or obligation to which the Customer is a party or by which it is bound; and

(e) all necessary authorisations and consents to enable or entitle it to enter into this Security Deed have been obtained and will remain in full force and effect at all times during the subsistence of the Secured Liabilities.

(ii) The Customer undertakes:

(a) to pay all freight, warehouse charges, rent and all other costs of transportation and storage of the Pledged Goods. The Customer shall, if so required by SG, institute proceedings against any third party responsible for the storage or carriage of any Pledged Goods in the event of any breach or default by such third party in respect of its obligations to the Customer;

(b) to keep the Pledged Goods insured in their full value against all usual risks and against such other risks and contingencies and with such insurer as SG may from time to time specify or approve and, if so required by SG, procure that the interest of SG is endorsed on the policy. The Customer will pay to SG all sums received under such insurances or otherwise in respect of any loss or damage of the Pledged Goods. The Customer shall hold the policies of such insurance and proof of payment of the current premiums on behalf of SG and deliver the same to SG on demand. If the Customer fails to perform its obligations under this Clause, the Customer agrees that SG may, without further reference to the Customer, insure such Pledged Goods or pay such amounts, and any expenditure so incurred by SG shall be for the account of the Customer;

(d) to permit, or procure permission for, SG or its agents or nominees to inspect any Pledged Goods;

(e) upon the request of SG, to endorse or otherwise transfer or assign the Pledge Documents in favour of SG or notify any issuer of any warrant or warehouse certificate or receipt of the interest of SG in the goods or rights represented thereby;

(f) on request by SG, (i) to give notice of the charge hereby created to any person obliged (contingently or otherwise) to make payment to the Customer of any Assigned Rights and (ii) to give instructions to such person to pay such Assigned Rights directly to SG by credit to such account as SG may nominate and (iii) to execute a “ bordereau

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Dailly ” or complete any such other formality or document as may be desirable under the relevant applicable law for perfection of the rights of SG in respect of this Security Deed;

(g) to collect the Assigned Rights in a proper and efficient manner in the ordinary course of business, and will pay the proceeds thereof into such account as SG may direct;

(h) to perform its obligations under all contracts creating or relating to any Assigned Rights and it will notify SG of any breach of the terms of any such contract by any of the parties thereto; and

(i) to provide such information relating to the Assigned Rights and take such action with respect thereto as SG may reasonably require.

3. Agency

(i) Where any Pledged Goods or Pledged Documents have been received by or released to the Customer (whether against a trust receipt or for the purposes of sale of such goods or otherwise), the Customer will take delivery and hold to the order of SG such goods or documents as agent for and on behalf of SG but on terms that the Customer bears the entire risk and expense in relation to the same.

(ii) If any of the Pledged Goods are sold before full and complete payment of the relevant amount due under the Facility, the Customer declares that the proceeds of such sales shall be received and held by the Customer for and on behalf of SG as its agent. The Customer agrees to pay such proceeds to SG as and when received by the Customer in order that such proceeds may be applied in payment of the relevant outstanding under the Facility.

(iii) Should any of Pledged Goods or Pledged Documents be delivered to any purchaser without previous payment, the rights of the Customer against such purchaser shall be assigned to SG in accordance with the terms of Clause 1(B) of this Security Agreement.

4. Further Assurance

The Customer shall if required by SG (a) execute, sign and deliver all transfers, endorsements, notices and other documents which SG may from time to time require for constituting or perfecting any Security Interest or for vesting in SG of title to any of the Pledged Goods, the Pledged Documents, the Gage-Espèces Amount or the Assigned Rights or for facilitating the delivery of the same to SG or its nominees or any purchaser and (b) do all such other acts and things as may be necessary or expedient for effecting any sale or other disposition which SG may make in respect of all or any of the Pledged Goods, the Pledged Documents, the Gage-Espèces Amount or the Assigned Rights.

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5. Powers of Bank

(i) The Customer hereby irrevocably appoints SG its true and lawful attorney to give notices, to demand, receive and enforce payments and to endorse instruments, give receipts and releases and to sue for monies payable to the Customer.

(ii) SG may, at any time, [with 48 hours notice] [ SG to advise ], but without additional authority from the Customer or any other person, sell, assign, transfer, negotiate or otherwise dispose of the Pledged Documents or the Pledged Goods or the Assigned Rights at such times, in such manner and generally on such terms and conditions and for such consideration as SG may think fit. After payment of all costs, expenses, charges, commissions including any freight and insurance costs, the net proceeds of such disposal shall be applied by SG towards the discharge of the Secured Liabilities in such order as SG may from time to time conclusively determine. Any such disposal shall be without prejudice to the right of recourse of SG against the Customer for any deficit arising from the application of the proceeds of disposal to the Secured Liabilities. Any surplus monies (if any) following such disposal and application shall belong to the Customer.

(iii) In exercising the power of sale or disposal as aforesaid, SG shall not in any way be responsible for any loss occasioned thereby howsoever arising. SG shall not to be liable to account as a mortgagee in possession or for default by any warehouse keeper, broker, auctioneer or other person employed in connection with the said goods or the sale or other disposal thereof or for any neglect default loss or damage in connection with any Pledged Goods or Pledged Documents.

6. Miscellaneous

(i) SG may at any time and in its absolute discretion exercise any of the powers conferred upon it by this letter but it shall have no responsibility to the Customer on account of the exercise or non-exercise of any such powers or the timing thereof.

(ii) The rights of SG under this Security Deed shall be continuing security for the payment of the Secured Liabilities and not be considered as satisfied by any intermediate payment or satisfaction of the whole or any part of any sum or sums of money owing (actually or contingently).

(iii) The security granted by the Customer to SG under this Security Deed is in addition to and shall be without prejudice to any other lien, right of retention, set-off or combination of accounts or other right which SG may otherwise have against the Customer arising whether by contract, law or statute. The rights, powers and remedies provided in this Security Deed are cumulative and are not, nor are they to be construed as, exclusive of any rights, powers or remedies provided by law or otherwise.

(iv) The rights of SG hereunder will inure to the benefit of its successors and assigns.

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(v) The rights and obligations of SG hereunder may be sold, assigned, transferred or otherwise disposed of by SG in whole or in part without the consent of the Customer and SG shall inform the Customer in writing following such assignment, transfer or novation. The Customer may not sell, assign, transfer or otherwise dispose of any of its rights or obligations under this Deed without the prior written consent of SG.

(vi) The Customer shall release, waive and indemnify SG against all losses, costs, damages, expenses, claim and demands (including, without limitation, any indirect or consequential loss, loss or damage suffered as a result of an action brought by a third party) arising out of anything that may be done by SG pursuant to this Security Deed, except in the case of gross negligence or wilful misconduct on the part of SG.

(vii) No failure on the part of SG to exercise, or delay on its part in exercising, any of its rights, powers and remedies provided by this Security Deed or by law shall operate as a waiver thereof. No single or partial waiver of any of such rights preclude any further or other exercise of such right nor the exercise of any other right.

(viii) No amendments or waiver of any provision of this Security Deed and no consent to any departure by the Customer therefrom shall in any event be effective unless the same shall be in writing and signed or approved in writing by SG. Any such waiver or consent if given shall be effective only in the specific instance and for the specific purpose for which it is given.

(ix) Every provision contained in this Security Deed shall be severable and distinct from every other such provision. If at any time any provision is or becomes invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected thereby.

(x) Neither the Customer nor SG intend that any term under this Deed should, by virtue of the Contracts (Rights of Third Parties) Act 1999, confer any rights or benefit on or be enforceable by any other person.

7. Law

Without prejudice to any relevant local law applicable in relation to the constitution or perfection of the rights described hereunder, the parties agree that this Security Deed is governed by and construed in accordance with English law.

IN WITNESS whereof the Customer has caused this letter to be executed as a deed the day and year below written.


EXECUTED as a DEED by ________		)
for and on behalf of		)
CHS EUROPE SA		)

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		(Authorised Signatory)


		(Authorised Signatory)

EXECUTED as a DEED by ________		)
for and on behalf of		)
Société Générale		)


		(Authorised Signatory)

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PLEDGE AGREEMENT FOR
COMMODITIES IN CIRCULATION

OF 26 June 2008

BETWEEN

LIMITED LIABILITY COMPANY
CHS UKRAINE
AS PLEDGOR

and

SOCIÉTÉ GÉNÉRALE
AS PLEDGEE

THIS PLEDGE AGREEMENT FOR COMMODITIES IN CIRCULATION (the “ Agreement ”) is made on 26 June 2008, by and between the following Parties:

Limited Liability Company “CHS UKRAINE” (the “ Pledgor ”), a legal entity under the laws of Ukraine with its registered office at 67 Peremogy Avenue, Kiev, 03062, Ukraine, registration number 35704808, represented by General Director [ ] acting pursuant to its constituent documents; and

SOCIÉTÉ GÉNÉRALE (the “ Pledgee ”), a French banking société anonyme, with a share capital of EUR 548,431,403.75 and its registered office at 29 boulevard Haussmann, 75009 Paris, France, identification number 552 120 222 RCS Paris (the “Pledgee”), represented by [ ] acting pursuant to its constituent documents.

RECITALS:

(A) CHS Europe SA, as Customer, and the Pledgee, as Lender have entered into the Uncommitted Trade Finance Facility Letter of [ ] 2008 (the “ Facility Letter ”) and Standard Terms for Uncommitted Trade Finance Facility, pursuant to which the Pledgee has agreed to make available to CHS Europe SA an uncommitted trade finance facility (the “ Facility ”) in the aggregate maximum principal amount of USD 60,000,000 (US Dollars sixty million) for the purpose of financing of general commodities trading activity of the Pledgor.

(B) Inventory financing sub-limit under the Facility Letter is up to USD 20,000,000 (US Dollars twenty million), which includes (i) preshipment inventory financing in Russia and Ukraine that shall be used for advances and overdrafts for a maximum duration of 180 days and (ii) presold inventory financing at destination (EMEA region) to be used for advances and overdrafts and for a maximum duration of 180 days.

(C) The Pledgor is a Ukrainian subsidiary of CHS Europe SA. The Pledgor undertakes to act as a property surety in relation to the Facility as defined in Article 11 of the Law of Ukraine “On Pledge”.

(D) The Pledgor and the Pledgee accordingly wish to enter into this Agreement on the terms set forth below.

IT IS AGREED AS FOLLOWS:

1. DEFINITIONS AND INTERPRETATION

1.1. Definitions

In this Agreement:

“Commodities” means grain commodities more specifically defined in attachments according to Schedule 2 to this Agreement and stored at the approved warehouses listed in Schedule 1 to this Agreement, which constitute an integral part of this Agreement.

“Hryvna” means the lawful currency of Ukraine.

“Secured Claims” means all present and future obligations, liabilities and claims (whether actual or contingent and whether owed jointly or severally or in any other capacity whatsoever) of CHS Europe SA to the Pledgee under the Facility Letter, including, without limitation, the obligation of CHS Europe SA to pay the principal amount due in respect of the Facility and accrued interest thereon.

“Security Period” means the period beginning on the date of this Agreement and ending on the date on which either:

(i) all Secured Claims have been unconditionally and irrevocably paid and discharged in full; or

(ii) this Agreement has been terminated by mutual agreement of the Parties.

1.2. Interpretation

(a) In this Agreement, unless the contrary intention appears, a reference to:

(i) an “amendment” includes a supplement, novation or re-enactment and “amended” is to be construed accordingly;

(ii) an “authorisation” includes an authorisation, consent, approval, resolution, licence, permit, exemption, filing or registration; and

(iii) a “regulation” includes any regulation, rule, official directive, request or guideline (whether or not having the force of law, unless otherwise specified) of any governmental, intergovernmental or supranational body, agency, department or regulatory, self-regulatory or other authority or organisation;

(iv) a provision of law is a reference to that provision as amended or re-enacted;

(v) a Clause, Paragraph or a Schedule is a reference to a clause or paragraph of, or a schedule to, this Agreement;

(vi) a document is a reference to that document as amended from time to time; and

(vii) a time of day is a reference to Paris time.

(b) Save as expressly defined herein, capitalised terms defined in the Facility Letter shall have the same meanings in this Agreement.

(c) The index to and the headings in this Agreement are for convenience only and are to be ignored in construing this Agreement.

1.3. Currency Conversion

Where, at any time, an amount in Dollars falls to be converted into an amount in Hryvna (or vice versa), the applicable rate of exchange for such conversion shall be the official rate of exchange for the conversion of Dollars into Hryvna (or vice versa) determined by the National Bank of Ukraine for the date of such conversion.

2. SECURITY

2.1. Creation of Security

(a) The Pledgor hereby pledges the Commodities to the Pledgee as security for the prompt and complete payment and performance of the Secured Claims.

(b) The Secured Claims shall be discharged upon their irrevocable payment in full to the Pledgee.

(c) The Commodities remain in the ownership and possession of the Pledgor until the moment of delivery to consumers under respective sales contracts entered into between the Pledgor and consumers (“ Sales Contracts ”), and the Pledgor may dispose of the Commodities in accordance with the provisions of such Sales Contracts.

(d) The security created by this Agreement is a first ranking security. The Pledgor hereby grants to the Pledgee the right to levy execution upon the Commodities and to receive preferential satisfaction from the value of the Commodities before other creditors of the Pledgor according to the applicable legislation.

2.2. Times and Location of Pledge

(a) The Commodities shall be pledged to the Pledgee on the terms and conditions of this Agreement at all times during the period up to, and including, the time when the Commodities are delivered to the consumers pursuant to the Sales Contracts.

(b) The Parties agree that during the period described in sub-clause (a) above the Commodities may be located at the approved warehouses in Ukraine. The list of approved warehouses for storage of the Commodities is shown in Schedule 1 to this Agreement, which constitutes its integral part.

(c) The Pledgor shall submit to the Pledgee monthly reports specifying the warehouses that accepted the Commodities for storage, description of the Commodities and other information as shown in Schedule 2. The Pledgee shall countersign a copy of the report and return a copy of the countersigned report to the Pledgor. Once the report is so signed by authorised representatives of both Parties, such notice shall be deemed an integral part of this Agreement.

3. PRESERVATION OF SECURITY

During the Security Period, the pledge constituted by this Agreement shall be a continuing security and shall only be terminated on the satisfaction of all the Secured Claims and the termination in full of the obligations of CHS Europe SA (whether actual or contingent) under the Facility Letter, and shall not be satisfied by any intermediate or partial discharge or payment of the Secured Claims.

4. REPRESENTATIONS AND WARRANTIES

4.1. Representations and Warranties

The Pledgor makes the representations and warranties to the Pledgee:

(a) the Pledgor is the existing sole owner of the Commodities and the Commodities are to be paid for in accordance with the terms of the relevant Sales Contracts;

(b) to the best of Pledgor’s knowledge, there subsists no breach of any law which affects or might affect the value of the Commodities;

matters whatsoever affecting the Commodities other than the pledge created by this Agreement; and

(d) the Pledgor has been paying and will continue to pay in full all taxes with respect to the Commodities.

4.2. Times for Making Representations and Warranties

The representations and warranties set out in Clause 4.1 are made on the date of this Agreement and are deemed to be repeated by the Pledgor on the date of each request for an advance under the Facility Letter, each advance date and the first day of each interest period with reference to the facts and circumstances then existing.

5. UNDERTAKINGS

5.1. Duration

The undertakings in this Clause 5 remain in force throughout the Security Period.

5.2. Other Encumbrances

The Pledgor shall not grant or allow to exist any security over the Commodities other than the pledge over the Commodities created under this Agreement.

5.3. Access

The Pledgor shall permit the Pledgee and any person nominated by it at all reasonable times to view the state of any of the Commodities.

5.4. Power to Remedy

In case of failure by the Pledgor to perform any term of any agreement relating to the Commodities, and to which the Pledgor is a party, the Pledgor hereby permits the Pledgee or its agents and contractors to take any action as the Pledgee may reasonably consider necessary or desirable to prevent or remedy any breach of any such term (including exercising the Pledgor’s rights).

5.5. Disposal of Pledged Commodities

The Pledgor shall give two (2) calendar days notice to the Pledgee of its intention to sell or otherwise dispose of any Commodities during the Security Period. No such disposal of the Commodities by the Pledgor shall take place except with the prior written consent of the Pledgee.

5.6. Restoration of the Lost or Damaged Commodities

If during the Security Period the Commodities (or any part thereof) are lost or damaged, or if the Pledgor’s title thereto is terminated on grounds provided for by law, the Pledgor shall immediately notify the Pledgee thereof in writing and within a time period agreed with the Pledgee, restore or replace the Commodities or part thereof with other Commodities of equal value. If such replacement or restoration of the Commodities or part thereof is impossible within the time period agreed with the Pledgee, the Pledgor shall provide other security, satisfactory to the Pledgee, in relation to the Secured Claims.

6. DEALINGS WITH PROPERTY

(a) The Pledgee may, but shall not be obliged to, take any steps necessary to preserve the Commodities or any part thereof.

(b) At all times during the Security Period, the Pledgor shall only:

(i) be entitled to deal with the whole or any part of the Commodities; or

(ii) assign, transfer, novate or otherwise dispose of all or any part of its rights, title or interest in or to the Commodities,

only to the extent that such dealing, assignment, transfer, novation or other disposal is not in breach of the terms of this Agreement.

(c) The Pledgor shall remain solely and fully liable under or in respect of the Sales Contracts to which it is a party to perform all the obligations and to pay all losses, costs, expenses, taxes and damages arising in connection with the Commodities or any part thereof.

(d) Unless and until an Event of Default occurs the Pledgor shall be entitled:

(i) to receive all interest and income from use of the Commodities subject to the provisions of this Agreement;

(ii) to possess and use the Commodities and to exercise any other rights attached to any part of the Commodities but only in a manner consistent with the terms of this Agreement; and

(iii) to retain use, possession and control of the

Commodities in any lawful manner consistent with this Agreement.

7. INSURANCE

Throughout the Security Period, the Pledgor shall maintain insurance in respect of the Commodities. The Pledgor shall ensure that the Pledgee is named as loss payee under the Pledgor’s insurance policies. All insurances shall be with reputable independent insurance companies or underwriters.

8. LEVY OF EXECUTION

(a) If an Event of Default has occurred and is continuing, the security constituted by this Agreement shall become enforceable, and the Pledgee shall be entitled to enforce all or any part of the security in any manner it sees fit with or without judicial procedure or arbitration including, without limitation:

(i) settle, adjust, refer to arbitration, compromise and arrange any claims, accounts, disputes, questions and demands relating in any way to any part of the Commodities;

(ii) levy execution against any or all of the Commodities, and bring, prosecute, enforce, defend and abandon all actions, suits and proceedings in relation to any part of the Commodities which may seem to it to be expedient and execute releases or other discharges in relation thereto;

(iii) take possession of all or any part of the Commodities, sell all or any part of the Commodities in any manner permitted by law (including by way of public sale or auction);

(iv) give valid receipts for all moneys payable to the Pledgor in respect of any part of the Commodities;

(v) apply for and maintain any regulatory permission, consent or licence;

(vi) execute and do all such other acts, deeds and things as the Pledgee may consider reasonably necessary or desirable for or in relation to any of the purposes set out in this Paragraph (a), which are permitted under applicable Ukrainian law; and

(vii) collect, recover or compromise and give good

discharge for any moneys payable to the Pledgor in respect of any part of the Commodities.

(b) If the proceeds received by the Pledgee from the sale of the Commodities or otherwise exceed the amount of the Secured Claims, the excess shall be returned to the Pledgor within five (5) business days of receipt. Determination by the Pledgee of the amount of such excess shall be prima facie evidence of such amount.

9. NO LIABILITY

The Pledgee shall have no liability towards the Pledgor in respect of any cost, claim, expense, damage, loss or liability (a “ Loss ”) arising from, any action taken by the Pledgee (or failure to act) in accordance with the provisions of this Agreement or pursuant to any rights or powers conferred upon the Pledgee by this Agreement, except where such Loss arises from the gross negligence or wilful misconduct of the Pledgee.

10. RELEASE

Upon the expiry of the Security Period the Pledgee shall release to the Pledgor all the rights, title and interest of the Pledgor in the relevant Commodities and give such instructions and directions as the Pledgor may reasonably require in order to perfect such release.

11. FURTHER ASSURANCE

The Pledgor shall from time to time upon the request of the Pledgee promptly, at its own expense, execute and deliver any and all such further agreements, documents and instruments, and take such further actions, which are reasonably contemplated by this Agreement.

12. ENTIRE AGREEMENT

This Agreement shall constitute the entire agreement between the Pledgor and the Pledgee and supersedes all previous agreements and understandings between the Pledgee and the Pledgor with respect to the same subject matter.

13. APPLICATION OF PROCEEDS

Any moneys received by the Pledgee after this Agreement has become enforceable shall be applied for payment of Secured Claims.

14. AMENDMENTS AND WAIVERS

14.1. Procedure

Any term of this Agreement may be amended or waived only by an instrument in writing signed by the Parties thereto.

14.2. Waivers and Remedies Cumulative

The rights of the Pledgee under this Agreement:

(a) may be exercised as often as necessary;

(b) are cumulative and do not exclude any of its rights under the laws of any jurisdiction; and

Delay in exercising or non-exercise of any such right is not a waiver of that right.

15. NOTICES

15.1. Giving of Notices

All notices or other communications under or in connection with this Agreement shall be given in writing and, unless otherwise stated, may be made by letter or facsimile. Any such notice will be deemed to be given as follows:

(a) if by letter, when delivered personally or on actual receipt; and

(b) if by facsimile, when received in legible form.

However, a notice given in accordance with the above but received on a non-working day or after business hours in the place of receipt will only be deemed to be given on the next working day.

15.2. Addresses for Notices

(a) The postal address and facsimile number of the Pledgor are:

CHS UKRAINE
67 Peremogy Avenue
03062 Kiev Ukraine
Tel.: 380 44 537 35 98

Fax: 380 44 241 92 16

or such other as the Pledgor may notify to the Pledgee by not less than 5 business days’ notice.

(b) The address and facsimile of the Pledgee:

SOCIÉTÉ GÉNÉRALE
29 boulevard Haussmann
75009 Paris
France
Telephone:
Fax:

or such other as the Pledgee may notify to the Pledgor by not less than 5 business days’ notice.

16. LANGUAGE

(a) Any notice given under or in connection with this Agreement shall be in English.

(b) All other documents provided under or in connection with this Agreement shall be:

(i) in English; or

(ii) if not in English, accompanied by a certified English translation (except as otherwise agreed by the Pledgee) and, in this case, the English translation shall prevail unless the document is a statutory or other official document.

17. PROCEEDINGS

The Pledgor hereby consents generally in respect of any proceedings to the giving of any relief or the issue of any process in connection with such proceedings including the making, enforcement or execution against any property whatsoever (irrespective of its use or intended use) of any order or judgment which may be made or given in such proceedings.

18. SUCCESSORS AND ASSIGNS

The Pledgor may not assign, transfer, novate or dispose of any of, or any interest in, its rights and/or obligations under this Agreement without the prior written consent of the Pledgee.

19. SEVERABILITY

If any provision of this Agreement is or becomes

illegal, invalid or unenforceable in any jurisdiction in relation to any party hereto, that shall not affect the validity or enforceability:

(a) in that jurisdiction of any other provision of this Agreement; or

(b) in other jurisdictions of that or any other provision of this Agreement.

20. LAW AND DISPUTE RESOLUTION

20.1. This Agreement is governed by, and shall be construed in accordance with, the laws of Ukraine.

20.2. Any dispute arising out of this Agreement or in connection with this Agreement shall be referred for consideration and final settlement to the International Commercial Arbitration Court at the Ukrainian Chamber of Commerce and Industry. The parties agree that as to the consideration and settlement of the dispute the Rules of the International Commercial Arbitration Court at the Ukrainian Chamber of Commerce and Industry shall apply. The Arbitration Court shall be composed of three arbitrators. Place of the Arbitration Court meeting shall be Kyiv, Ukraine. Language of the Arbitration Court proceedings shall be English.

21. REGISTRATION

This Agreement shall be registered with the State Register of Ukraine of Encumbrances of Movable Properties.

IN WITNESS WHEREOF the parties have duly executed this Agreement in 2 signed originals on the date first written above, each of which will be considered to be an original but all of which shall together constitute one and the same Agreement.

SCHEDULE 1
LIST OF APPROVED WAREHOUSES


	Warehouse	Storage
№	Name	Capacity		Warehouse Address

	Poltava Region

1	LLC Agrofirma		20	village Pogreby, Zhovtneva str, 104, Globunskij region

2	LLC Burat		100	36007, Birjuzova str 43a, Poltava

3	OJSC Gadjackyj Elevator		100	37300, Gadjach, Lenina str 75

4	CJSC Globynskyj elevator		70	39000,Globyne, Lenina str. 47, 39140, Nova Galewina, Zhovtneva str 84

5	OJSC Grebinkivskij MKZ		15	37400,Grebinka, provylok Pyrjatynskuyj 52

6	LLC Elevator “Chysta Krunucja”		100	39341,Novosanzhens kuyj region, Rudenkivska,Mira str14

7	LLC Inter — Agro		20	36034,Poltava, Lyvarna str 4a, 39000, Poltavska obl., Globyne,Marksa str 65a, 37400, Grebinka, prov. Pyrjatynskyij48

8	LLC Kobeljaky Hlibprodykt		142	39237, Kobeljackij region, Butenki, Poltavska str 67

9	CSSC Lazirkivski elevator		30	37710, Orzhyckij region, Lazirky,Lenina str 79

10	CJSC Mirgorodskij Elevator		120	37600, Poltavska obl., Myrgorod, Petrivska str 15,38100, V. Baganchanskij region, v. Gogolevo, Gogolja str 50, 38300, Shyshackij region, v. Sagajdak,Fedorenko str 96


	Warehouse	Storage
№	Name	Capacity		Warehouse Address

11	LLC Mirgorodskij elevator MKZ		16	36700, Myrgorod, Khorolska str 44

12	LLC Nauka — Elevator		8	39500,Poltavska obl., Karlivka, Ogorodnaja str 1v, 37710,Poltavska obl., orzhyckij region, lazirky, Voroshylova str 1

13	PC agrofirm“Podoljaka”		10

14	LLC Poltava — Sad		10	38672, v.Tereshky, Shevchenko str 3a

15	OJSC Poltavska XPP		100	36009, Poltava, Rybchanska str 31, 38413, Poltavska obl., Reshetylivskij region, Zhovtneve, Elevatorna str 15, 39500,Poltavska obl., Karlivka, Zavodska str 1a

16	Poltavskij KXP		10	36022, Poltava, Lenina str 69

17	LLC Posullja		10	37552, Lubenskyj region, v. Zasullja, Komsomolska str 127

18	CJSC Semenivskij elevator		25	38200,Poltavska obl., v.Semenivka, Lenina str 3, 37800, Poltavska obl., Khorol, Vokzalna str 1

	Dnepropetrovsk region

19	ACTI Novomukolayivskij elevator		20	51653, Verkhnjodniprovskyij rejion, v. Novomykolayivkam, Suvorova str 1


	Warehouse	Storage
№	Name	Capacity		Warehouse Address

20	LLC AJAKS		100

21	LLC Bozhedarivskij elevator		40	52323, dnipropetrovska obl., Krynychanskyj region, Schorsk, Vykonkomivska str 1

22	LLC Greynfild-A		20	52433, Solonjanskyj region, v. Elizarovo, Pryvokzalna 1

23	PC “Intertreyid”, AF		12	52532,Synelnykivskyj region, v. Rozdory, Zaliznychna 4

24	LLC Oril’skij obednanij elevator		50	Novomoskovsryj region, Pereschepino, Vatytina str 11

25	LLC “Olimpeks—Agro”		16	51230,Novomoskovskyj rejion, v. Kilchen, Pryvokzalna 1

26	LLC Pavlogradzernoprodukt		20	51327, Juryivskyj region, v. Varvarivka, Prystanciyina

27	CJSC Pererobnuk		10	53003, Kryvorizkyj region, v Kolomiytceve.

28	OJSC Pjatikhatskij elevator		70	52100, Pjatykhatky, Klymenka str 1

	Sumy region

29	OJSC Bilovodskij KKHP		30	42070, Romenskyj region, Bilovod, Bilovodska str 2

30	CJSC Vorozhbjanskij KKHP		30	41811, Bilopilskyj region, Vorozhba, Novikova str 15

31	LLC Dubovjazivskij elevator		20	41655, Konotopskyj region, v. Dubovjazivka, Trudova str 48


	Warehouse	Storage
№	Name	Capacity		Warehouse Address

32	OJSC Kirikivska KHPP		20	42831, Veluko — Pusarivskyjregion, Kyrivka, pr.Pryvokzalnyj str 6

33	LLC Konotopske pidpryjemstvo khliboproduktiv		35	41600, Konotop, Generala Tkhora str 99

34	OJSC Krasnopil’ske KHPP		15	42400, Krasnopillja, Vokzalna str 60

35	OJSC Lebedinske KHPP		40	42200, Lebedyn, Zaliznychna str 46

36	OMHI Agro Trade, LLC		20	41400, Gloukhiv, Indystrialna str 4

37	DP Okhtirskiy KKHP		15	42700, Okhtyrka, Chervonoarmiyjska str 11

38	LLC Poltavapromservis		10	42600,Trostjanec, Gryshyna str 26a

39	CJSC Rayz		25	42305,Sumskyj region, village Stepanivka

40	DP Khlibna baza №82		50	41812, Bilopilskyj region, Vorozhba, Peremogy str 19

	Cherkassy Oblast

41	LLC Victorivske		60	20144 Victorivka, Kosmodemianska str 3, 36, Mankivsky region

42	OJSC Gladkovshinske HPP		30	197000, Gladkovshina, Zolotonosha region

43	LLC Zernogor		33	195000, Gorodiche sity, Industrialna street, 12

44	OJSC Zhazhkovski elevator		100	192000, Zhazhkiv city, Mira street, 1


	Warehouse	Storage
№	Name	Capacity		Warehouse Address

45	Lebedinski semzavod		30	Lebedin, Shpolyanskiy region, Zavodska street, 17

46	Tagancha HPP		34	09724, Ivanivka, Boguslavskiy, Kiyev region, Zaliznichna,1

47	Monastiriche HPP		30	19133, Satanivka, Monastirishchivskiy region, Franka street, 19

48	Serdiykivske HPP		30	20705, Smelianskiy region, Serdukivka

49	LLC Zernotorgivelna compania “Khors”		35,6	Drabovo Bariatinske, Drabovskiy region

50	Katerinopolski KHP		85,5	Erki Katerinopolskiy region, Lenina street, 47

51	DP Zlatodar		161,1	19700, Zolotonosha, Shevchenko street, 47

	Kharkov Oblast

52	CJSC «Vodyanske khlibopriymalne pidpriyemstvo»		20	62053, Kharkivska oblast, Krasnokutskiy region, Vodiane village, Pidlisna street 2

53	CJSC «Kolomakske khlibopriymalne pidpriyemstvo»		35	63131, Kharkivska oblast, Kolomakskiy region, Shelestove village, Sverdlova str. 1

54	CJSC «Kovyagivskiy kombinat khliboproductiv»		40,7	63021, Kharkivska oblast, Valkivskiy region, Kovyagi, Privikzalna str. 1

55	CJSC «Zolochivske khlibopriymalne pidpriyemstvo»		36	62200, Kharkivska obl., Zolochivskiy region, Zolochiv, provulok Bogdana Khmelnitskogo 5

56	LLC Novovodolazhske HPP		10	63200, Kharkivska obl., Vodolaga, Privokzalna str. 3


	Warehouse	Storage
№	Name	Capacity		Warehouse Address

57	CJSC Bliznyukivskiy KHP		35	64801, Kharkivska obl., Bliznyukivskiy region, Bliznyuki, Komsomolska str. 11

58	CJSC Likhachivskiy HPP		45	64100, Kharkivska oblast, Pervomayskiy region, Pervomaysk, Mira str. 43

59	CJSC Bogodukhivske HPP		37	62102, Kharkivska oblast, Bogodukhivskiy region, Bogodukhiv, PR Slobodka str. 69

60	CJSC Kigichivske HPP		32	64003, Kharkivska obl., Kigichivskiy region, Kigichivka, Sadova str. 19

61	CJSC Gutyanskiy elevator		50	62132, Kharkivska obl., Bogodukhivskiy region, Gubarivka village, Gutyanska str. 91-A

62	CJSC Lozovske HPP		40	64600, Kharkivska oblast, Lozovskiy region, Lozova, Krasnoarmeyska str. 50

63	CJSC Velikoburlutske HPP		45	Kharkivska obl., Velikoburlutskiy region, Velikiy Burluk, Sverdlova 6

64	CJSC Shevchenkivskiy KHP		38,8	63600, Kharkivska obl., Shevchenkivsky region, Shevchenkove, Kirova str. 1

65	OJSC «Balakleyivske khlibopriymalne pidpriyemstvo»		35	64200, Kharkivska oblast, Balakleyivskiy region, Balakleya, Vtorchermetovska str. 1

	Vinnitsa Oblast

66	Barskoye HPP		33.0	Bar, Vokzalna str.26


	Warehouse	Storage
№	Name	Capacity		Warehouse Address

67	LLC Bershadskyi KHP (Florino)		88.3	Bershadskyi region, Florino,Kolhozna str.1.

68	LLC Bershadskyi KHP (Dzhulinka)		20.0	Bershadskyi region, Dzulinka, 60-richya Zhovtnya str.1

69	LLC Reg Vin-Agroresurs		20.0	Bershadskyi region, Dzulinka, 60-richya Zhovtnya str.2

70	LLC Vapnyarskiy Elevator		102.0	Tomashpolskiy region, Vapnyarka, Gagarina str.6

71	LLC Lui Dreifus Commodities Ltd (Gaysinskyi silo)		80.0	Gaisyn, Stantsiyna str.2

72	LLC Khlib Zhmerynshiny		55.8	Zhmerinka, Barlyaeva, 2

73	LLC Kalynovske HPP		79.0	Kalynovka, Kotsyubynskogo str.33

74	LLC Karolynskyi Elevator		31.0	Nemyrovskyi region, Karolina

75	OJSC Vinnytsya HP		55.7	Kazatin, Dovzhenko str, 93

76	CJSC Kotyuzhanske zerno		43.4	Kurylovetskyi region, Obukhiv, Zaliznychna,12

77	LLC Kryzhopolskiy Elevator		60.0	Kryzhopol, Sovetska str.6

78	OJSC Kublychskyi HPP		52.0	Teplitskyi region, Kulich, Zaliznychna,12

79	LLC Lipovetskyi Elevator		51.0	Lipovetskiy region, Lipovets,18

80	OJSC Oratovske HPP		26.0	Oratov, Privokzalna str.1

81	CJSC Agrofirma Myriv		25.0	Nemirov, Lenina str.244


	Warehouse	Storage
№	Name	Capacity		Warehouse Address

82	LLC Lui Dreifus Commodities Ltd (Rahnyanskyi silo)		166.9	Shargorodskiy region, Rakhny Lisovyiye, Mira str.40

83	DP OJSC Vinnytsya HP		69.1	Pogrebische, Privokzalna str.47

84	LLC RegVinInvest		45.0	Trostyanets, Pervomayska str.1

85	OJSC Khmelnykskyi Elevator		65.0	Khmelnik, Poryka str.26

86	DP Podylske boroshno OJSC Kontsern Khleboprodukt		41.0	Shargorodskyi region, Penkovka, Chapaevska str.1

87	DP Veka Vin Vektor Oil Trade		25.0	Shargorodskyi region, Penkovka, Sovetska str.1AM

	Zhytomyr Oblast

88	OJSC Chudnovske HPP		20.0	Chudnovskyi region, Volshanka, Chudnovska str.1.

89	OJSC Andrushovske HPP		20.0	Andrushovka, Stantsiyna str.20

90	OJSC Popelnyanskyi HPP		20.0	Popelnya, Frunze str.117

	Ternopol Oblast

91	CJSC Mlynivtsi		52.0	Zborovskyi region, Mlynivtsi, Kabarovetska str.10

92	OJSC Lanovetske HPP		31.0	Lanovtsy, Zaliznodorizhna,40

93	LLC Buchachagrokhlebprom		38.0	Buchach, Galytska str.160


	Warehouse	Storage
№	Name	Capacity		Warehouse Address

94	LLC Zbarazhskyi KHP		33.0	Zbarazh, Grushevskogo str, 90

	Khmelnitsky Oblast

95	OJSC Antoniny		20.0	Krasilovskyi region, Kremenchuk, Vokzalna str.1

96	LLC Ecolinia		24.0	Dunayevskyi region, Petrovka, Kutuzova str.33

97	LLC Agrotek-HPP		40.0	Volochyskyi region, Voytovtsy, Sovetska,21

98	LLC Kombikormovyu Zavod		22.0	Starokostyantynov, Vesnyanske shosse, 5

	Kirovograd region

99	LLC Alexandria elevator prom Pantaevka		25,6	28050 Aleksandriyskiy region, Pantaivka, Dzerzhinskogo street 1

100	OJSC Schaslivske		33	28050 Aleksandriyskiy region, Dobronadiyvka, Privokzalna street 55

101	“Kirovodradoliya” elevator #2		105	25013, Kirovograd, Urozhaina street 30

102	AP LLC “Dolinskiy KZ”		19,6	28500 Dolinskiy region, Dolinskaya, Voikova 1

103	OJSC “Ermilivske HPP”		50	26533, Golovanivskiy region, Emilovka, Lenina street 2

104	LLC ACTI Znamenskiy elevator		100	27405 M.Znamianka, Osadtchego 95

105	OJSC Kuntsovskiy elevator		110	28228, Novgorodkivskiy region, Kuntsivka, Privokzalna street 5


	Warehouse	Storage
№	Name	Capacity		Warehouse Address

106	Zlinka DP Khlebnaya baza 78		230	26232, Maloviskivskiy region, Zlinka, Valegina street 1

107	KHP# 2		115	25014, Kirovograd, Prospekt Inzheneriv 2

108	Shestakovske HPP			25014, Kirovograd, Prospekt Inzheneriv 2

109	DP Novo Ukrainske KHP		120	27100, NovoUkrainka, Tchaikivskogo street 28

110	OJSC M.Viskovske HPP		25	26200, Malaya Viska, Zhovtneva street 161a

111	OJSC Novo Mirgorodskiy elevator		135	26000, Novomirgorod, Zaliznichna street 45

112	CJSC “Zernoproduct”		20	27100 NovoUkrainka, Kurchatogo street 36

113	OJSC Yosipivskiy HPP		33	26625, Olshanskiy region, Zaliznitchnoe

114	OJSC Riadovskiy		40	28237, Petrivskiy region, Ryadove, Druzhby street 14

115	Trepovske HPP		30	27400 Znamianskiy region, Kirovogradska 1A

116	OJSC Fundukleevske HPP		30	27300 Alexandrivskyi region, Alexandrivka, Vokzalnaya 3

117	OJSC Tsibulivske HPP		15	27340, Alexandrivskiy region, Mikhailivka, Vokzalna street 18

118	LLC Korolevske HPP		15	28020, Alexandrivskiy region, Gagarina 16

119	LLC UkrAgroKom		55	28043, Aleksandrivskyi region, Golovkivka, Zhovtneva street 1


	Warehouse	Storage
№	Name	Capacity		Warehouse Address

120	Aleksandrivskiy KKZ		3	27300, Aleksandrivka, Lenina street 67/17

121	Agrokontract Pomoshnaya		16	25006, Kirovograd, Shevchenka street 51

122	Krupianoy Dom		16	25014. Kirovograd, Prospekt Inzheneriv 11

123	Orion		3	27100, NovoUkrainskyi region, NovoUkrainka, Kirova 17

	Lugansk region

124	Branch “Bilokukakinskiy silo		71,1	92200, Lugansk obl., Belokurakino, 238 Chapaeva str.

125	LLC Krasnorichenske		40,5	92915, Lugansk obl., Krasnorechenskoe vill, 36 Shevchenko str.

126	Llc “Lutuginskoe Hpp”		23,7	92000, Lugansk obl., Lutugino, 2 Zheleznodorozhnaya str.

127	CJSC SPF “Agroton”		151,2	93500, Lugansk obl., Novoaydar, 42 Oktyabskaya str.

128	CJSC “Popasnaya Agro”		28,2	93301, Lugansk obl., Popasnaya, 11 Chekhova str.

129	DP “Rovenkovskiy KHP”		14	94700, Rovenki, 7 Engelsa str.

130	CJSC “Rubezhnoe Agro”		21,1	93008, Rubezhnoe, 138 Kievskaya str.

131	CJSC “Svatovo Agro”		49,9	92600, Lugansk obl., Svatovo, 24 “50 l. Pobedy” sq.

132	LLC “Dolzhanskiy Silo”		24,6	94806, Lugansk obl., Sverdlovsk, 130 Chaykovskogo str.


	Warehouse	Storage
№	Name	Capacity		Warehouse Address

133	LLC “Agrariy”		24	93720, Lugansk obl., Slavyanoserbskiy rg, Frunze, 51 Internacionalnaya str.

134	Llc “Ogorodnee”		25	93613, Lugansk obl., Stanichno-Luganskiy rg, Petrovka, 18 Centralnaya str.

135	LLC “Olhovskoe”		37,5	93653, Lugansk obl., Stanichno-Luganskiy rg, Olhoviy, 8 Sverdlova str.

136	OJSC “Starobelskiy Silo”		163	92700, Lugansk obl., Starobelsk, 4 “1st May” str.

137	CJSC “Troitskoe Agro”		24	92100, Troitskoe, 85 Chkalova str.

	Zaporozhye Oblast

138	DP “DP Agroservice 2000”		32	Zaporozhye, Zachinyayeva str. 113

139	CJSC Tokmak-Agro		63	Zaporozhye oblast, Tokmak, Shchavy str. 84

140	CJSC Gaychur-Agro		60	Zaporozhye obl., Ternovate, Elevatorna str. 4

141	CJSC Vasilivka-Agro		35	Zaporozhskaya obl., Vasilivka, Marta 8 street

142	JSC Volnyanskiy KHP		40	Zaporozhye obl., Volnyansk, per. Matrosova 22

143	DP Khlibna baza # 74		120	Zaporozhye obl., Tokmakskiy region, Molochansk, Vokzalna str. 125

144	JSC Akimovskiy elvator		100	Zaporozhye obl., Akimovka, Kurortna str. 1


	Warehouse	Storage
№	Name	Capacity		Warehouse Address

145	JSC Verkhnyotokmakskiy KHP		29	Zaporozhye obl., Chernigovskiy region, Verkhniy Tokmak

146	JSC Troyanivskiy elvator		60	Zaporozhye obl, Berdyansky region, Shkolna str. 1

147	JSC Orikhivske HHP		50	Zaporozhye obl., Orekhov, Privokzalna 44

148	JSC Magedivske HPP		26	Zaporozhye obl., Pology region, Magedovo Tsentralnaya str. 24

149	JSC Rosivskiy Elevator		60	Zaporozhye obl., Rozivka, Vokzalna str 72

150	CJSC Belmanka-Agro		25	Zaporozhye obl., Kuybyshevskiy region, Belmanka

151	LLC Primorskiy Agrotehservis		15	Zaporozhye obl., Primorsk, Chapaev str. 8a

	Dnepropetrovsk Oblast

152	CJSC Slavgorod-Agro		35	Dnepropetrovsk obl., Sinelnikovsky region, Slavgorod, Mayska str. 1

153	CJSC Sinelnikovo-Agro		35	Dnepropetrovsk obl., Sinelnikovsky region, Sinelnikovo, per. Uyutniy 10

154	“Nikopilska ZK” LLC		30	Dnepropetrovska obl., Nikopil, pr. Electrometallurgiv provulok 224

155	OJSC Chortomlikske HPP		35	Dnepropetrovsk obl., Nikopilskiy region, Chertomlik

156	Mogilivske HPP LLC		35	Dnepropetrovsk obl., Tsarichanskiy region, Mogilyov, Dniprovska str. 6


	Warehouse	Storage
№	Name	Capacity		Warehouse Address

157	OJSC Rozivsky elevator (Novomoskovsky branch)		40	Dnepropetrovsk obl., Novomoskovsk, Turgeneva str. 12

158	OJSC Rozivsky elevator (Dmitrivsky branch)		35	Dnepropetrovsk region, Petropavlivskiy region, Dmitrivka village

159	OJSC Rozivsky Elevator (Radushnyanskiy branch)		35	Dnepropetrovsk obl, Krivorizhskiy region, Radushne village

	CRIMEA

160	OJSC Dzhankoyskiy Elevator		100	Crimea, Dzhankoy city

161	OJSC Urozhaynensky KHP		150	Crimea, Krasnoperekopskiy region, Urozhayne village

	Kherson Oblast

162	Nikopolska ZK LLC/Kochakrivka branch		35	Kherson obl, berislavsky region, Kochkarivka, Voroshilova str.

163	Nikopolska ZK LLC/Blakitnyansky HPP branch		35	Kherson obl., Blakitne, Zaliznichna str. 5

	Donetsk Oblast

164	Karanskiy branch of OJSC Rozivsky Elevator		30	Donetska Obl., Telmanivskiy region, Andriyivka town

	Nikolaev Oblast

165	OJSC Lyudmilovskiy elevator		91	55423, Bratskiy region, Lyudmilivka station, Vokzalnay 1


	Warehouse	Storage
№	Name	Capacity		Warehouse Address

166	OJSC Yavkinskiy elevator		51	56156, Bashtanskiy region, Dobre, Tsentralna street 1.

167	DP Mikolaivskiy portoviy elevator		69	54002, Mikolayv, Slobidska 122/1

168	OJSC Mikolayvskiy KHP		76.5	54042, Mikolayv, 1 Slobidska 122

169	LLC Novobuzhskiy filial Agroexport Yug		70	55600, Nobiy Bug, Vatytina 1

170	OJSC Trikratskiy KHP		60	56534, Vosnesenskiy region, Trikraty

171	OJSC Varvarivskiy elevator DP Mikolayvskiy elevator		57.8	54036, Mikolayiv, Admirala Makariva 31

172	CJSC Veselinivske ZPP		27,1	57100, Veselinove, Zhovtnevoi Revolutsii 2

173	CJSC Yuzhniy elevator (Snigirivskiy)		70	57300, Snigurivka, Lenin str., 14.

174	OJSC Kamenomostivskiy HPP		70	55232, Pershotravneviy region, Kamianiy Mist, Kosmonavtiv street

175	OJSC Zaselske HPP		40	Zhovtneviy region, Zasilia

176	OJSC Kolosovskiy elevator		53.5	57030, Veselinivskiy region, Kuydrivka

177	LCC Bandurskiy elevator		60	55247, Pershotravneviy region, Bandirka

178	Kazankivskiy elevator OJSC		62	56030, Kazankivskiy region, Kazanka, Zhovtneva, 41.


	Warehouse	Storage
№	Name	Capacity		Warehouse Address

179	Agroexport Yug, Kotliarivska filia LLC		50	57263, Zhovtneviy region, Shevchenkove, Urozhaynaya street 17

180	LLC Golagonivske HPP		18	57372, Snegirivskiy region, Galovanivka, Parovozna 5

	Kherson Oblast

181	OJSC Kalanchakske HPP		100	Khersonskyi region22, Kalanchatskiy raion, Mirne, Elevatorna street 5

182	Robusta-Agro LLC (Brilivskiy elevator)		56.3	75143, Tsuyrupinskiy region, Brilivka, Radianska 64

183	Serogozskiy KHP		84	74721, Nizhneserogozskiy region, Sirogozy

	Odessa Oblast

184	OJSC“Aliyagske HPP”		60	68414,Artsizskiy region, village Novokholmskoye, str.Zernovaya,1

185	OJSC“Artsizske HPP”		50	Artsiz town,str. Chapayeva, 44

186	OJSC“Baltske HPP”		60	Baltskiy Region, village Bilyeno

187	OJSC“Byelgorod-Dnestrovskoyealtskoye KHP”		40	67700, Odesskaya obl., Belgorod-Dnestrovskiy town, str. Odesskoye shosse, 10

188	OJSC“Berezovskiy elevator”		80	67300, Odesskaya obl., Berezovka town, str. Pristantsionnaya, 4

189	“Zherebkovskiy elevator”, LLC		40	Odesskaya obl., Ananiyevskiy Region, village Zherebkovo

190	OJSC“Zaplazskoye HPP”		45	Odesskaya obl., Lyubashovka Region, village Soltanovka


	Warehouse	Storage
№	Name	Capacity		Warehouse Address

191	OJSC“Zatishanskoye HPP”		55	Odesskaya obl., Frunzovskiy Region, village Zatishiye

192	“Dunayzernoexport”, LLC		35	68600, Izmail town, str. Portovaya, 1

193	“Lad”, LLC Kiliya		65	68300, Odesskaya obl., Kiliya town, str. Dzerzhinskogo, 5

194	“Kodimskiy elevator”, LLC			66000, Odesskaya obl., Kodima, str. Dzerzhinskogo, 1

195	“Kulevchanskiy elevator”, LLC		45	Odesskaya obl., Saratskiy Region, village Kolesnoye

196	“Lyubashovskiy elevator”, LLC		110	66500, Odesskaya obl., Lyubashovka town, str. Sportivnaya, 4

197	OJSC“Razdelnyanskij elevator”, LLC		30	Odesskaya obl., Rozdeljnaya town, str. Lenina, 85

198	DP“Khlebnaya baza No. 77” Rotovo		100	67200, Odesskaya obl., Ivanovka town, Rotovskiy elevator

199	OJSC“Chubovskoye zerno”		47	Odesskaya obl., Krasno-Okhyanskij Region, village Chubovka

200	RIVA Holding		45	68600, Izmail town, str. Nakhimova, 112

SCHEDULE 2
REPORT ON STORAGE OF
COMMODITIES

[date]

SOCIÉTÉ GÉNÉRALE
29 boulevard Haussmann
75009 Paris
France

For the attention of: [name]

Re: Pledge Agreement of [date] between Société Générale and CHS Ukraine

Dear Sirs:

In accordance with clause 2.2 of the Pledge Agreement for Commodities in Circulation made on [date] between Société Générale and CHS Ukraine (the “Agreement”), we hereby submit the following information specifying the location and terms of storage of Commodities according to the Agreement:


Warehouse	Warehouse Name	Description of		Term of
Receipt Number	and Address	Commodity	Weight	Storage

Please confirm your approval by respective signing of this notice and returning it to us.

Yours respectfully,

Signed:
Name:
Director of CHS Ukraine

ACKNOWLEDGEMENT
SOCIÉTÉ GÉNÉRALE

This notice is approved by:

Signed:
Name:
Position:

SIGNATURE PAGE

This Agreement is signed by the following Parties:


The Pledgor
CHS UKRAINE


By:
Title:

The Pledgee
SOCIÉTÉ GÉNÉRALE


By:
Title:

CERTIFICATION PURSUANT TO SECTION 302 OF THE
SARBANES-OXLEY ACT OF 2002

I, John D. Johnson, certify that:

1. I have reviewed this quarterly report on Form 10-Q of CHS Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

a. designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

c. disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal controls over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a. all significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b. any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

/s/ John D. Johnson

John D. Johnson

President and Chief Executive Officer

Date: July 10, 2008

CERTIFICATION PURSUANT TO SECTION 302 OF THE
SARBANES-OXLEY ACT OF 2002

I, John Schmitz, certify that:

1. I have reviewed this quarterly report on Form 10-Q of CHS Inc.;

b. any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

/s/ John Schmitz

John Schmitz

Executive Vice President and

Chief Financial Officer

Date: July 10, 2008

CERTIFICATION PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
(18 U.S.C. SECTION 1350)

In connection with the Quarterly Report of CHS Inc. (the “Company”) on Form 10-Q for the quarterly period ended May 31, 2008 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, John D. Johnson, President and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ John D. Johnson

John D. Johnson

President and Chief Executive Officer

July 10, 2008

CERTIFICATION PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
(18 U.S.C. SECTION 1350)

In connection with the Quarterly Report of CHS Inc. (the “Company”) on Form 10-Q for the quarterly period ended May 31, 2008 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, John Schmitz, Executive Vice President and Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ John Schmitz

John Schmitz

Executive Vice President and Chief Financial Officer

July 10, 2008