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<SEC-DOCUMENT>0000897101-02-000830.txt : 20021125
<SEC-HEADER>0000897101-02-000830.hdr.sgml : 20021125
<ACCEPTANCE-DATETIME>20021125170647
ACCESSION NUMBER:		0000897101-02-000830
CONFORMED SUBMISSION TYPE:	10-K
PUBLIC DOCUMENT COUNT:		13
CONFORMED PERIOD OF REPORT:	20020831
FILED AS OF DATE:		20021125

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			CENEX HARVEST STATES COOPERATIVES
		CENTRAL INDEX KEY:			0000823277
		STANDARD INDUSTRIAL CLASSIFICATION:	WHOLESALE-FARM PRODUCT RAW MATERIALS [5150]
		IRS NUMBER:				410251095
		STATE OF INCORPORATION:			MN
		FISCAL YEAR END:			0831

	FILING VALUES:
		FORM TYPE:		10-K
		SEC ACT:		1934 Act
		SEC FILE NUMBER:	333-17865
		FILM NUMBER:		02839680

	BUSINESS ADDRESS:	
		STREET 1:		5500 CENEX DRIVE
		CITY:			INVER GROVE HEIGHTS
		STATE:			MN
		ZIP:			55077
		BUSINESS PHONE:		6129469433

	MAIL ADDRESS:	
		STREET 1:		5500 CENEX DRIVE
		CITY:			INVER GROVE HEIGHTS
		STATE:			MN
		ZIP:			55077

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	HARVEST STATES COOPERATIVES
		DATE OF NAME CHANGE:	19961212
</SEC-HEADER>
<DOCUMENT>
<TYPE>10-K
<SEQUENCE>1
<FILENAME>cenex025288_10k.txt
<DESCRIPTION>CENEX HARVEST STATES COOPERATIVES FORM 10-K
<TEXT>
- --------------------------------------------------------------------------------
                      SECURITIES AND EXCHANGE COMMISSION

                            WASHINGTON, D.C. 20549
                               -----------------
                                   FORM 10-K
                               -----------------
 [X]     ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
         EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED AUGUST 31, 2002 OR


 [ ]     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: 333-17865

                               -----------------
                       CENEX HARVEST STATES COOPERATIVES
            (Exact name of registrant as specified in its charter)

            MINNESOTA                                       41-0251095
  (State or other jurisdiction of                       (I.R.S. Employer
   incorporation or organization)                     Identification Number)

        5500 CENEX DRIVE                                 (651) 451-5151
INVER GROVE HEIGHTS, MINNESOTA 55077             (Registrant's Telephone number,
(Address of principal executive office)                including area code)


                               -----------------
       SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT: NONE
       SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: NONE
                               -----------------
     Indicate 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 __X__  NO _____

     Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to
the best of the registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K: Not applicable

     State the aggregate market value of the voting stock held by
non-affiliates of the registrant: The registrant has no voting stock
outstanding.

     Indicate the number of shares outstanding of each of the registrant's
classes of common stock, as of the latest practicable date: The registrant has
no common stock outstanding.

                      DOCUMENTS INCORPORATED BY REFERENCE

None.
- --------------------------------------------------------------------------------
<PAGE>


                                     INDEX

<TABLE>
<CAPTION>
<S>        <C>                                                                                        <C>
PART I.                                                                                               PAGE NO.
                                                                                                      --------
Item 1.    Business
           Cautionary Statement ...................................................................       1

           The Company ............................................................................       1

           Agronomy ...............................................................................       2

           Energy .................................................................................       4

           Country Operations .....................................................................       6

           Grain Marketing ........................................................................       7

           Processed Grains and Foods .............................................................       9

           Price Risk and Hedging .................................................................      12

           Employees ..............................................................................      13

           Membership in the Company and Authorized Capital .......................................      13

Item 2.    Properties .............................................................................      16

Item 3.    Legal Proceedings ......................................................................      17

Item 4.    Submission of Matters to a Vote of Security Holders ....................................      17


PART II.

Item 5.    Market for Registrant's Common Equity and Related Stockholder Matters ..................      18

Item 6.    Selected Financial Data ................................................................      18

Item 7.    Management's Discussion and Analysis of Financial Condition and
             Results of Operations ................................................................      20

Item 7(a). Quantitative and Qualitative Disclosures about Market Risk .............................      30

Item 8.    Financial Statements and Supplementary Data ............................................      31

Item 9.    Changes in and Disagreements with Accountants on Accounting and Financial Disclosure ...      31


PART III.

Item 10.   Directors and Executive Officers of the Registrant
           Board of Directors .....................................................................      32

           Executive Officers .....................................................................      36

Item 11.   Executive Compensation .................................................................      38

Item 12.   Security Ownership of Certain Beneficial Owners and Management .........................      44

Item 13.   Certain Relationships and Related Transactions .........................................      44


PART IV.

Item 14.   Controls and Procedures ................................................................      45

Item 15.   Exhibits, Financial Statements and Reports Filed on Form 8-K ...........................      45

SUPPLEMENTAL INFORMATION ..........................................................................      48

SIGNATURES ........................................................................................      49

SECTION 302 CERTIFICATIONS ........................................................................      50

</TABLE>
<PAGE>


                                    PART I.

ITEM 1. BUSINESS

        CAUTIONARY STATEMENT FOR PURPOSES OF THE SAFE HARBOR PROVISIONS
             OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995

     THE INFORMATION IN THIS ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED
AUGUST 31, 2002, INCLUDES "FORWARD-LOOKING STATEMENTS" WITHIN THE MEANING OF
THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995 WITH RESPECT TO THE
COMPANY. IN ADDITION, THE COMPANY AND ITS REPRESENTATIVES AND AGENTS MAY FROM
TIME TO TIME MAKE OTHER WRITTEN OR ORAL FORWARD-LOOKING STATEMENTS, INCLUDING
STATEMENTS CONTAINED IN THE COMPANY'S FILINGS WITH THE SECURITIES AND EXCHANGE
COMMISSION AND ITS REPORTS TO ITS MEMBERS AND SECURITYHOLDERS. WORDS AND
PHRASES SUCH AS "WILL LIKELY RESULT," "ARE EXPECTED TO," "WILL CONTINUE," "IS
ANTICIPATED," "ESTIMATE," "PROJECT" AND SIMILAR EXPRESSIONS IDENTIFY
FORWARD-LOOKING STATEMENTS. THE COMPANY WISHES TO CAUTION READERS NOT TO PLACE
UNDUE RELIANCE ON ANY FORWARD-LOOKING STATEMENTS, WHICH SPEAK ONLY AS OF THE
DATE MADE.

     THE COMPANY'S FORWARD-LOOKING STATEMENTS ARE SUBJECT TO RISKS AND
UNCERTAINTIES THAT COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE
DISCUSSED IN THE FORWARD-LOOKING STATEMENTS. THESE RISKS AND UNCERTAINTIES
INCLUDE, BUT ARE NOT LIMITED TO, RISKS RELATED TO THE LEVEL OF COMMODITY
PRICES, LOSS OF MEMBER BUSINESS, COMPETITION, CHANGES IN THE TAXATION OF
COOPERATIVES, COMPLIANCE WITH LAWS AND REGULATIONS, PERCEPTIONS OF FOOD QUALITY
AND SAFETY, BUSINESS INTERRUPTIONS AND CASUALTY LOSSES, ACCESS TO EQUITY
CAPITAL, CONSOLIDATION OF PRODUCERS AND CUSTOMERS, FLUCTUATIONS IN PRICES FOR
CRUDE OIL AND REFINED PETROLEUM PRODUCTS, ALTERNATIVE ENERGY SOURCES, THE
PERFORMANCE OF OUR AGRONOMY BUSINESS AND JOINT VENTURES. THESE RISKS AND
UNCERTAINTIES ARE FURTHER DESCRIBED IN EXHIBIT 99.1 TO THIS ANNUAL REPORT ON
FORM 10-K, AND OTHER RISKS OR UNCERTAINTIES MAY BE DESCRIBED FROM TIME TO TIME
IN THE COMPANY'S FUTURE FILINGS WITH THE SECURITIES AND EXCHANGE COMMISSION.

     THE COMPANY UNDERTAKES NO OBLIGATION TO REVISE ANY FORWARD-LOOKING
STATEMENTS TO REFLECT FUTURE EVENTS OR CIRCUMSTANCES.


                                  THE COMPANY

     Cenex Harvest States Cooperatives (CHS Cooperatives, CHS or the Company)
is one of the nation's leading integrated agricultural companies. As a
cooperative, the Company is owned by farmers and ranchers and their local
cooperatives from the Great Lakes to the Pacific Northwest and from the
Canadian border to Texas. CHS Cooperatives buys commodities from and provides
products and services to its members and other customers. The Company provides
a wide variety of products and services, from initial agricultural inputs such
as fuels, farm supplies and crop nutrients, to agricultural outputs that
include grains and oilseeds, grain and oilseed processing and food products. A
portion of the Company's operations are conducted through equity investments
and joint ventures whose operating results are not consolidated with the
Company's results; rather, a proportionate share of the income from those
entities is included as a component in the Company's net income under the
equity method of accounting. For the fiscal year ended August 31, 2002, the
Company's total revenues were $7.8 billion.

     The Company's operations are organized into five business segments:
Agronomy, Energy, Country Operations, Grain Marketing and Processed Grains and
Foods. Together these business segments create vertical integration to link
producers with consumers. The first two segments, Agronomy and Energy, produce
and provide for the wholesale distribution of inputs that are essential for
crop production. The third segment, Country Operations, serves as the
Company-owned retailer of a portion of these crop inputs and also serves as the
first handler of a significant portion of the crops marketed and processed by
the Company. The fourth segment, Grain Marketing, purchases and resells grains
and oilseeds originated by the Country Operations segment, by member
cooperatives and by third parties. The fifth business segment, Processed Grains
and Foods, converts grains and oilseeds into value-added products.

     Only producers of agricultural products and associations of producers of
agricultural products may be members of CHS Cooperatives. The Company's
earnings are allocated to members based on the


                                       1
<PAGE>


volume of business they do with the Company. Members receive earnings in the
form of patronage refunds in cash and patron's equities, which may be redeemed
over time.

     The origins of CHS Cooperatives date back to the early 1930s with the
founding of the predecessor companies of Cenex, Inc. and Harvest States
Cooperatives. Cenex Harvest States Cooperatives, now headquartered in Inver
Grove Heights, Minnesota, emerged as the result of the merger of the two
entities in 1998.

     The international sales information and segment information in Notes 2 and
11 to the financial statements are incorporated by reference into the following
business segment descriptions.

     The business segment financial information presented below does not
represent the results that would have been obtained had the relevant business
segment been operated as an independent business.


                                   AGRONOMY

OVERVIEW
     Through the Agronomy business segment, the Company is engaged in the
manufacture of crop nutrients and the wholesale distribution of crop nutrients
and crop protection products. The Company conducts its agronomy operations
primarily through two investments -- a 20% cooperative ownership interest in CF
Industries, Inc. (CF Industries) and, effective January 2000, a 25% ownership
interest in Agriliance, LLC (Agriliance). CF Industries manufactures crop
nutrient products, particularly nitrogen and phosphate fertilizers, and is one
of the largest suppliers to Agriliance. Agriliance is one of North America's
largest wholesale distributors of crop nutrients, crop protection products and
other agronomy products.

     There is significant seasonality in the sale of crop nutrients and crop
protection products and services, with peak activity coinciding with the
planting and input seasons.

     The Company's minority ownership interests in CF Industries and Agriliance
are treated as investments, and therefore, those entities' revenues and
expenses are not reflected in the Company's operating results. Each of CF
Industries and Agriliance has its own line of financing, without recourse to
the Company.

OPERATIONS
     CF INDUSTRIES. CF Industries is an interregional agricultural cooperative
involved in the manufacturing of crop nutrient products. It is one of North
America's largest producers of nitrogen and phosphate fertilizers. Through its
members, CF Industries' nitrogen and phosphate fertilizer products reach
farmers and ranchers in 48 states and two Canadian provinces. CF Industries
conducts its operations primarily from the following facilities:

     o    a nitrogen manufacturing and processing facility at Donaldsonville,
          Louisiana;

     o    a phosphate mine and phosphate fertilizer plant in central Florida;
          and

     o    a 66% ownership interest in a nitrogen fertilizer manufacturing and
          processing facility in Alberta, Canada.

     AGRILIANCE. Agriliance is the one of the nation's largest wholesale
distributors of crop nutrients (fertilizers) and crop protection products
(insecticides, fungicides and pesticides), accounting for an estimated 30% of
the U.S. market for crop nutrients and approximately 25% of the U.S. market for
crop protection products. As a wholesale distributor, Agriliance has warehouse,
distribution and service facilities located throughout the country. Agriliance
also owns and operates retail agricultural units in the southeastern United
States. Agriliance purchases most of its fertilizer from CF Industries and
Farmland Industries, Inc. (Farmland) and its crop protection products from
Monsanto and Sygenta.

     Agriliance was formed in 2000 when CHS Cooperatives, Farmland and Land
O'Lakes, Inc. (Land O'Lakes) contributed their respective agronomy businesses
to the new company in consideration for ownership interests (25% each for CHS
and Farmland and 50% for Land O'Lakes) in the venture. CHS Cooperatives and
Farmland hold their interests in Agriliance through United Country Brands, LLC,
a jointly-owned holding company.


                                       2
<PAGE>


PRODUCTS AND SERVICES
     CF Industries manufactures crop nutrient products, primarily nitrogen and
phosphate fertilizers and potash. Agriliance wholesales crop nutrient products
and crop protection products that include insecticides, fungicides, and
pesticides. Agriliance also provides field and technical services, including
soil testing, adjuvant and herbicide formulation, application and related
services.

SALES AND MARKETING; CUSTOMERS
     CF Industries sells its crop nutrient products to large agricultural
cooperatives and distributors. Its largest customers are Land O'Lakes, CHS and
seven other regional cooperatives that wholesale the products to their members.
Agriliance distributes agronomy products through approximately 1,000 local
cooperatives from Ohio to the West Coast and from the Canadian border south to
Kansas. Agriliance also provides sales and services through 48 Agriliance
Service Centers and other retail outlets. Agriliance's largest customer is the
Company's Country Operations business segment. In 2002, Agriliance sold
approximately $1.4 billion of crop nutrient products and approximately $2.2
billion of crop protection and other products.

INDUSTRY; COMPETITION

     CF INDUSTRIES. North American fertilizer producers operate in a highly
competitive, global industry. Commercial fertilizers are world-traded
commodities and producers compete principally on the basis of price and
service. Many of the raw materials that are used in fertilizer production, such
as natural gas, are often more expensive in the U.S. than other parts of the
world. Crop nutrient margins have historically been cyclical; large profits
generated throughout the mid-1990's attracted additional capital and expansion
and the industry now suffers from excess capacity. These factors have produced
depressed margins for North American fertilizer manufacturers over the past
several years, although recently fertilizer margins have stabilized as natural
gas prices have declined.

     CF Industries competes with numerous domestic and international crop
nutrient manufacturers, including Farmland.

     AGRILIANCE. The wholesale distribution of agronomy products is highly
competitive and dependent upon relationships with agricultural producers and
local cooperatives, proximity to producers and local cooperatives and
competitive pricing. Moreover, the crop protection products industry is mature
with slow growth predicted for the future, which has led distributors and
suppliers to turn to consolidation and strategic partnerships to benefit from
economies of scale and increased market share. Agriliance competes with other
large agronomy distributors, as well as other regional or local distributors
and retailers. Agriliance competes on the strength of its relationships with
the members of the Company, Farmland and Land O'Lakes, its purchasing power and
competitive pricing, and its attention to service in the field.

     Major competitors of Agriliance in crop nutrient distribution include
Agrium, Growmark, United Suppliers and West Central. Major competitors of
Agriliance in crop protection products distribution include Helena, ConAgra
(UAP), Tenkoz and numerous smaller distribution companies.

SUMMARY OPERATING RESULTS
     The Company accounts for its Agronomy business segment as follows:

     CF INDUSTRIES. The Company's investment in CF Industries of $153 million
on August 31, 2002, is carried on the balance sheet at cost, including
allocated patronage. Since CF Industries is a cooperative, the Company
recognizes income from the investment only if it receives patronage refunds. In
recent years, CF Industries has realized operating losses and as such, it has
not issued any patronage refunds to its members. Historically, crop nutrients
manufacturing earnings have been cyclical in nature.

     AGRILIANCE. At August 31, 2002 the Company's equity investment in
Agriliance was $86 million. The Company recognizes earnings from Agriliance
using the equity method of accounting, which results in the Company including
its ownership percentage of Agriliance's net earnings as equity income from
investments. The Company applies related internal expenses against those
earnings.


                                       3
<PAGE>


     Summary operating results for the Agronomy business segment for the fiscal
years ended August 31, 2002, 2001 and 2000 are shown below:

<TABLE>
<CAPTION>
                                                       2002          2001          2000
                                                   -----------   -----------   -----------
                                                           (DOLLARS IN THOUSANDS)
<S>                                                <C>           <C>           <C>
Revenues:
 Net sales* ....................................                                $808,659
 Patronage dividends ...........................    $     (89)    $    196           224
 Other revenues ................................                                   5,817
                                                    ---------     --------      --------
                                                          (89)         196       814,700
Cost of goods sold .............................                                 764,744
Marketing, general and administrative ..........        8,957        8,503        20,832
                                                    ---------     --------      --------
Operating (losses) earnings ....................       (9,046)      (8,307)       29,124
Interest .......................................       (1,403)      (4,529)       (3,512)
Equity (income) loss from investments ..........      (13,425)      (7,360)        4,336
                                                    ---------     --------      --------
Income before income taxes .....................    $   5,782     $  3,582      $ 28,300
                                                    =========     ========      ========
Total identifiable assets -- August 31 .........    $ 242,015     $230,051      $228,277
                                                    =========     ========      ========
</TABLE>

- ------------------
* Net sales in 2000 reflect sales from the Company's agronomy business prior to
  the time it was contributed to Agriliance. Earnings from the Company's
  interest in Agriliance are shown as equity (income) loss from investments.


                                    ENERGY

OVERVIEW
     CHS Cooperatives is the nation's largest cooperative energy company, with
operations that include petroleum refining and pipelines; the supply, marketing
and distribution of refined fuels (gasoline, diesel, and other energy
products); the blending, sale and distribution of lubricants; and the wholesale
and retail supply of propane. The Energy business segment processes crude oil
into refined petroleum products at refineries in Laurel, Montana (wholly-owned)
and McPherson, Kansas (owned by an entity in which CHS has an approximate 74.5%
ownership interest) and sells those products under the Cenex brand to CHS's
member cooperatives and others through a network of approximately 1,400
independent retailers, including approximately 800 that operate Cenex/Ampride
convenience stores.

OPERATIONS
     LAUREL REFINERY. The Company's Laurel, Montana refinery processes medium
and high sulfur crude oil into refined petroleum products that primarily
include gasoline, diesel, and asphalt. The Laurel refinery sources
approximately 90% of its crude oil supply from Canada, with the balance
obtained from domestic sources. Laurel has access to Canadian and northwest
Montana crude through the Company's wholly-owned Front Range Pipeline and other
common carrier pipelines. The Laurel refinery also has access to Wyoming crude
via common carrier pipelines from the south.

     The Laurel facility processes approximately 55,000 barrels of crude oil
per day to produce refined products that consist of approximately 42% gasoline,
30% diesel and 28% asphalt and other residual products. Refined fuels produced
at Laurel, Montana are available via the Yellowstone Pipeline to western
Montana terminals and to Spokane and Moses Lake, Washington, south via common
carrier pipelines to Wyoming terminals and Denver, Colorado, and east via the
Company's wholly-owned Cenex Pipeline to Glendive, Montana, and Minot and
Fargo, North Dakota.

     MCPHERSON REFINERY. The McPherson, Kansas refinery is owned and operated
by the National Cooperative Refinery Association (NCRA), of which the Company
owns approximately 74.5%. The McPherson refinery processes low and medium
sulfur crude oil into gasoline, diesel and other distillates, propane, and
other products. McPherson sources approximately 95% of its crude oil from
Kansas, Oklahoma, and Texas through NCRA-owned and common carrier pipelines.

     The McPherson refinery processes approximately 80,000 barrels of crude oil
per day to produce refined products that consist of approximately 57% gasoline,
34% diesel and other distillates, and 9% propane and other products.
Approximately 90% of the refined fuels are shipped via NCRA's


                                       4
<PAGE>


proprietary products pipeline to its terminal in Council Bluffs, Iowa and to
other markets via common carrier pipelines. The balance of the fuels are loaded
into trucks at the refinery.

     OTHER ENERGY OPERATIONS. The Company owns and operates ten propane plants
and three propane terminals, four asphalt terminals, three lubricants blending
and packaging facilities, and 36 convenience stores. The Company also owns and
leases a fleet of liquid and pressure trailers and tractors which are used to
transport refined fuels, propane and anhydrous ammonia.


PRODUCTS AND SERVICES

     The Energy business segment produces and sells (primarily wholesale)
gasoline, diesel, propane, asphalt, and lubricants. It obtains the petroleum
products that it sells both from the Laurel and McPherson refineries and from
third parties.


SALES AND MARKETING; CUSTOMERS

     The Company makes approximately 85% of its refined fuel sales to members,
with the balance sold to non-members. Sales are made wholesale to member
cooperatives and through a network of independent retailers that operate
convenience stores under the Cenex/Ampride tradename. The Company sold
approximately 1.3 billion gallons of gasoline and approximately 1.2 billion
gallons of diesel fuel in fiscal year 2002. The Company also wholesales auto
and farm machinery lubricants to both members and non-members. In fiscal year
2002, energy operations sold approximately 26.4 million gallons of lubricants.
The Company is one of the nation's largest propane wholesalers. In fiscal year
2002, energy operations sold approximately 0.7 billion gallons of propane. Most
of the propane sold in rural areas is for heating and agricultural consumption.
Annual sales volumes of propane vary greatly depending on weather patterns and
crop conditions.


INDUSTRY; COMPETITION

     Governmental regulations and policies, particularly in the areas of
taxation, energy and the environment, have a significant impact on the
Company's energy operations segment. Like many other refineries, the Energy
business segment's refineries are currently focusing their capital spending on
reducing pollution. In particular, these refineries are currently working to
comply with the federal government's initiatives to lower the sulfur content of
gasoline and diesel. The Company currently expects that the cost of compliance,
which will be spread out over the next four years, will be approximately $340
million in total for the McPherson and Laurel refineries. It is expected that
over 80% of the costs will be incurred at the McPherson refinery.

     The energy business is highly cyclical. Demand for crude oil and its
products are driven by the condition of local and worldwide economies, local
and regional weather patterns and taxation relative to other energy sources.
Most of the Company's energy product market is located in rural areas, so sales
activity tends to follow the planting and harvesting cycles. More fuel
efficient equipment, reduced crop tillage, depressed prices for crops, warm
winter weather, and government programs which encourage idle acres may all
reduce demand for the Company's energy products.

     The refining and wholesale fuels business is very competitive. Among the
Company's competitors are some of the world's largest integrated petroleum
companies, which have their own crude oil supplies, distribution and marketing
systems. The Company also competes with smaller domestic refiners and marketers
in the midwestern and northwestern United States, with foreign refiners who
import products into the United States and with producers and marketers in
other industries supplying other forms of energy and fuels to consumers. Given
the commodity nature of the end products, profitability in the refining and
marketing industry depends largely on margins, as well as operating efficiency,
product mix, and costs of product distribution and transportation. The retail
gasoline market is highly competitive, with much larger competitors that have
greater brand recognition and distribution outlets throughout the country and
the world. CHS Cooperatives owned and non-owned retail outlets are located
primarily in the southern, midwestern and northwestern United States.


                                       5
<PAGE>


SUMMARY OPERATING RESULTS
     Summary operating results for the Energy business segment for the fiscal
years ended August 31, 2002, 2001 and 2000 are shown below:

<TABLE>
<CAPTION>
                                                        2002            2001            2000
                                                   -------------   -------------   -------------
                                                              (DOLLARS IN THOUSANDS)
<S>                                                <C>             <C>             <C>
Revenues:
 Net sales .....................................    $2,657,689      $2,781,243      $2,959,622
 Patronage dividends ...........................           458             712             311
 Other revenues ................................         6,392           4,036           2,792
                                                    ----------      ----------      ----------
                                                     2,664,539       2,785,991       2,962,725
Cost of goods sold .............................     2,489,352       2,549,099       2,862,715
Marketing, general and administrative ..........        66,731          48,432          43,332
                                                    ----------      ----------      ----------
Operating earnings .............................       108,456         188,460          56,678
Interest .......................................        16,875          25,097          27,926
Equity loss (income) from investments ..........         1,166           4,081            (856)
Minority interests .............................        14,604          34,713          24,443
                                                    ----------      ----------      ----------
Income before income taxes .....................    $   75,811      $  124,569      $    5,165
                                                    ==========      ==========      ==========
Total identifiable assets -- August 31 .........    $1,305,828      $1,154,036      $1,379,019
                                                    ==========      ==========      ==========
</TABLE>

                              COUNTRY OPERATIONS

OVERVIEW
     The Country Operations business segment purchases wheat and other grains
from the Company's producer members and provides cooperative members and
producers with access to a full range of products and services including farm
supplies, programs for crop and livestock production, hedging and insurance
services, and agricultural operations financing. Country Operations operates at
approximately 300 locations dispersed throughout Minnesota, North Dakota, South
Dakota, Nebraska, Montana, Idaho, Washington and Oregon. Most of these
locations purchase grain from farmers and sell agronomy products, energy
products and feed to those same producers and others, although not all
locations provide every product and service.

PRODUCTS AND SERVICES
     GRAIN PURCHASING. The Company is one of the largest country elevator
operators in North America. Through a majority of its elevator locations, the
Country Operations business segment purchases grain from member and non-member
producers and other elevators and grain dealers. Most of the grain purchased is
either sold through the Company's Grain Marketing business segment or used for
local feed and processing operations. In the year ended August 31, 2002, the
Company purchased approximately 280 million bushels of grain, primarily wheat
(131 million bushels), corn (77 million bushels) and soybeans (45 million
bushels). Of these bushels, 255 million were purchased from members and 239
million were sold through the Grain Marketing business segment.

     FARM SUPPLIES. Country Operations manufactures and sells farm supplies,
both directly and through ownership interests in other entities. These include
seed; plant food; energy products; animal feed ingredients, supplements and
products; animal health products; and crop protection products. The Company
sells agronomy products at 160 locations, feed products at 135 locations and
energy products at 94 locations. Farm supplies are purchased through
cooperatives whenever possible.

     FINANCIAL SERVICES. The Company has provided open account financing to
more than 150 CHS members that are cooperatives (Cooperative Association
Members) in the past year. These arrangements involve the discretionary
extension of credit in the form of term and seasonal loans and can also be used
as a clearing account for settlement of grain purchases and as a cash
management tool. A substantial part of the term and seasonal loans are sold to
the National Bank for Cooperatives (CoBank), with CoBank purchasing up to 90%
of any loan. The Company's borrowing arrangements with CoBank limit loan
balances outstanding under this program to not more than $150.0 million at any
one time.


                                       6
<PAGE>


     Through its wholly-owned subsidiary Fin-Ag, Inc. the Company provides
seasonal cattle feeding and swine financing loans, facility financing loans and
crop production loans. It also provides consulting services to member
cooperatives. Most loans are sold to CoBank under a separate program from that
described above, under which the Company has guaranteed a portion of the loans.
The Company's exposure at August 31, 2002 was approximately $40.8 million.
Under the Company's borrowing arrangements, the maximum amount of the loans
outstanding at any one time may not exceed $125.0 million and the Company's
maximum guarantee exposure would be $48.5 million.

     The Company's wholly-owned subsidiary Country Hedging, Inc., which is a
registered futures commission merchant and a clearing member of both the
Minneapolis Grain Exchange and the Kansas City Board of Trade, is a full
service commodity futures and options broker.

     Ag States Agency, LLC is an independent insurance agency in which the
Company holds a majority ownership interest. It sells insurance, including
group benefits, property and casualty, and bonding programs. Its more than
1,700 customers are primarily agricultural businesses, including local
cooperatives and independent elevators, oil stations, agronomy and feed/seed
plants, implement dealers, fruit and vegetable packers/warehouses, and food
processors.

INDUSTRY; COMPETITION
     Competitors for the purchase of grain include other elevators and large
grain marketing companies. Competitors for farm supply include a variety of
cooperatives, privately held and large national companies. The Company competes
primarily on the basis of price, services and patronage.

     The financing operations are not significant, however, competitors for the
Company's financing operations are primarily other financial institutions. The
Company competes primarily on the basis of price, services and patronage.
Country Hedging's competitors include international brokerage firms, national
brokerage firms, regional brokerage firms (both cooperatives and
non-cooperatives) as well as local introducing brokers, with competition driven
both by price and level of service. Ag States competes with other insurance
agencies, primarily on the basis of price and services.

SUMMARY OPERATING RESULTS
     Summary operating results for the Country Operations business segment for
the fiscal years ended August 31, 2002, 2001 and 2000 are shown below:

<TABLE>
<CAPTION>
                                                        2002            2001            2000
                                                   -------------   -------------   -------------
                                                              (DOLLARS IN THOUSANDS)
<S>                                                <C>             <C>             <C>
Revenues:
 Net sales .....................................    $1,474,553      $1,577,268      $1,409,892
 Patronage dividends ...........................         2,572           3,683           3,830
 Other revenues ................................        80,789          80,479          68,436
                                                    ----------      ----------      ----------
                                                     1,557,914       1,661,430       1,482,158
Cost of goods sold .............................     1,471,422       1,569,884       1,404,120
Marketing, general and administrative ..........        47,995          53,417          44,136
                                                    ----------      ----------      ----------
Operating earnings .............................        38,497          38,129          33,902
Interest .......................................        13,851          15,695          12,782
Equity income from investments .................          (283)           (246)         (1,007)
Minority interests .............................           786             385             103
                                                    ----------      ----------      ----------
Income before income taxes .....................    $   24,143      $   22,295      $   22,024
                                                    ==========      ==========      ==========
Total identifiable assets -- August 31 .........    $  799,711      $  679,053      $  660,358
                                                    ==========      ==========      ==========
</TABLE>

                                GRAIN MARKETING

OVERVIEW
     CHS Cooperatives is the nation's largest cooperative marketer of grain and
oilseed, handling about 1.1 billion bushels annually. During fiscal year 2002,
the Company purchased approximately 76% of total


                                       7
<PAGE>


grain volumes from individual and member cooperatives and the Country
Operations business segment, with the balance purchased from third parties. CHS
Cooperatives arranges for the transportation of the grains either directly to
customers or to Company owned or leased grain terminals and elevators pending
delivery to domestic and foreign purchasers. The Company primarily conducts its
Grain Marketing operations directly, but does conduct some of its business
through three 50% owned joint ventures.

OPERATIONS
     The Grain Marketing segment purchases grain directly and indirectly from
agricultural producers primarily in the Midwestern and Western United States.
The purchased grain is typically sold for future delivery at a specified
location, with the Company responsible for handling the grain and arranging for
its transportation to that location. The Company's ability to arrange efficient
transportation, including loading capabilities onto unit trains, ocean-going
vessels, and barges, is a significant part of the service it offers to its
customers. Rail, vessel, barge and truck transportation is carried out by third
parties, often under long-term freight agreements with the Company. Grain
intended for export is usually shipped by rail or barge to an export terminal,
where it is loaded onto ocean-going vessels. Grain intended for domestic use is
usually shipped by rail or truck to various locations throughout the country.

     CHS owns export terminals, river terminals, and elevators involved in the
handling and transport of grain. River terminals at Kansas City, Missouri, St.
Paul, Savage, and Winona, Minnesota, and Davenport, Iowa are used to load
grains onto barges for shipment to both domestic and export customers via the
Mississippi River System. The Company's export terminal at Superior, Wisconsin
provides access to the Great Lakes and St. Lawrence Seaway, and an export
terminal at Myrtle Grove, Louisiana serves the Gulf market. In the Pacific
Northwest, the Company conducts its grain marketing operations through United
Harvest, LLC (a 50% joint venture with United Grain Corporation) and TEMCO, LLC
(a 50% joint venture with Cargill, Incorporated). United Harvest, LLC operates
grain terminals in Vancouver and Kalama, Washington. TEMCO, LLC operates a
large export terminal in Tacoma, Washington. These facilities serve the Pacific
market, as well as domestic grain customers in the Western United States. Grain
Supplier, LLC (a 50% joint venture with Commodity Specialists Company) will
begin operating an elevator facility in Friona, Texas and one in Collins,
Mississippi beginning in late fiscal year 2003 or early fiscal year 2004.

     Grain Marketing purchases most of its grain during the summer and fall
harvest period. Because of the Company's geographic location and the fact that
it is further from its export facilities, grain tends to be sold later than in
other parts of the country. However, as many producers have significant on-farm
storage capacity and in light of the Company's own storage capacity, the Grain
Marketing business segment buys and ships grain throughout the year. Due to the
amount of grain purchased and held in inventory, the Grain Marketing business
segment has significant working capital needs at various times of the year. The
amount of borrowings for this purpose, and the interest rate charged on those
borrowings, directly affect the profitability of the Grain Marketing segment.

PRODUCTS AND SERVICES
     The primary grains purchased by the Grain Marketing business segment for
the year ended August 31, 2002 were wheat (362 million bushels), corn (393
million bushels) and soybeans (241 million bushels). Of the total grains
purchased by the Grain Marketing segment during the year ended August 31, 2002,
571 million bushels were purchased from the Company's individual and
cooperative association members, 239 million bushel were purchased from the
Country Operations business segment and the remainder were purchased from third
parties.

SALES AND MARKETING; CUSTOMERS
     Purchasers include domestic and foreign millers, maltsters, feeders,
crushers, and other processors. To a much lesser extent purchasers include
intermediaries and distributors. Grain marketing operations are not dependent
on any one customer. The Grain Marketing segment has supply relationships
calling for delivery of grain at prevailing market prices.

INDUSTRY; COMPETITION
     The Grain Marketing business segment competes for both the purchase and
sale of grain. Competition is intense and margins are low. Some competitors are
integrated food producers, which may also be customers. A few major competitors
have substantially greater financial resources than the Company.


                                       8
<PAGE>


     In the purchase of grain from producers, location of the delivery facility
is a prime consideration, but producers are increasingly willing to truck grain
longer distances for sale. Price is affected by the capabilities of the
facility; for example, if it is cheaper to deliver to a customer by unit train
than by truck, a facility with unit train capability provides a price
advantage. The Company believes that its relationships with individual members
serviced by local Country Operations locations and with cooperative members
gives it a broad origination capability.

     The Grain Marketing business segment competes for grain sales based on
price, services and ability to provide the desired quantity and quality of
grains required. Location of facilities is a major factor in the ability to
compete. Grain marketing operations compete with numerous grain merchandisers,
including major grain merchandising companies such as Archer Daniels Midland
(ADM), Cargill, Incorporated (Cargill), ConAgra, Bunge and Louis Dreyfus, each
of which handle grain volumes of more than one billion bushels annually.

     The results of the grain marketing business may be adversely affected by
relative levels of supply and demand, both domestic and international,
commodity price levels (including grain prices reporting on national markets)
and transportation costs and conditions. Supply is affected by weather
conditions, disease, insect damage, acreage planted and government regulations
and policies. Demand may be affected by foreign governments and their programs,
relationships of foreign countries with the United States, the affluence of
foreign countries, acts of war, currency exchange fluctuations and substitution
of commodities. Demand may also be affected by changes in eating habits, by
population growth, and by increased or decreased per capita consumption of some
products.

SUMMARY OPERATING RESULTS
     Summary operating results for the Grain Marketing business segment for the
fiscal years ended August 31, 2002, 2001 and 2000 are shown below:

<TABLE>
<CAPTION>
                                                        2002            2001            2000
                                                   -------------   -------------   -------------
                                                              (DOLLARS IN THOUSANDS)
<S>                                                <C>             <C>             <C>
Revenues:
 Net sales .....................................    $3,787,322      $3,514,314      $3,453,807
 Patronage dividends ...........................           497             840             861
 Other revenues ................................        21,902          22,964          15,440
                                                    ----------      ----------      ----------
                                                     3,809,721       3,538,118       3,470,108
Cost of goods sold .............................     3,778,838       3,514,575       3,439,863
Marketing, general and administrative ..........        22,213          22,396          21,412
                                                    ----------      ----------      ----------
Operating earnings .............................         8,670           1,147           8,833
Interest .......................................         4,807           8,144           8,701
Equity income from investments .................        (4,257)         (4,519)         (6,452)
                                                    ----------      ----------      ----------
Income (loss) before income taxes ..............    $    8,120      $   (2,478)     $    6,584
                                                    ==========      ==========      ==========
Total identifiable assets -- August 31 .........    $  481,232      $  345,696      $  321,813
                                                    ==========      ==========      ==========
</TABLE>

                          PROCESSED GRAINS AND FOODS

OVERVIEW
     The Processed Grains and Foods business segment converts raw agricultural
commodities into ingredients for finished food products or into finished
consumer food products. The Company has focused on areas that allow it to
utilize the products supplied by member producers. These areas are oilseed
processing and refining, wheat milling and foods.

OILSEED PROCESSING AND REFINING
     The Company's oilseed processing operations convert soybeans into soybean
meal, soyflour, crude soyoil, refined soybean oil and associated by-products.
These operations are conducted at a facility in Mankato, Minnesota that can
crush 39 million bushels of soybeans on an annual basis, producing


                                       9
<PAGE>


approximately 940,000 short tons of soybean meal and 460 million pounds of
crude soybean oil. The same facility is able to refine approximately 1 billion
pounds of refined soybean oil annually. Another crushing facility is under
construction in Fairmont, Minnesota that will have a crushing capacity and
crude soyoil output similar to the Mankato facility. The facility in Fairmont
is anticipated to be ready for the 2003 harvest and is estimated to cost
approximately $90 million, of which approximately $23 million has been spent
through August 31, 2002.

     The Company's oilseed processing and refining operations produce three
primary products: refined oils, soybean meal and soyflour. Refined oils are
used in processed foods, such as margarine, shortening, salad dressings and
baked goods and, to a lesser extent for certain industrial uses for plastics,
inks and paints. Soybean meal has a high protein content and is used for
feeding livestock. Soyflour is used in the baking industry, as a milk
replacement in animal feed and in industrial applications.

     The Company's soy processing facilities are located in areas with a strong
production base of soybeans and end-user market for the meal and soyflour. The
Company purchases virtually all of its soybeans from members. The oilseed
crushing operations currently produce approximately 45% of the crude oil that
the Company refines; it purchases the balance from outside suppliers.

     The Company's customers for refined oil are principally large food product
companies located throughout the United States. However, over 50% of the
customers are located in the Midwest due to lower freight costs and slightly
higher profitability. The largest customer for refined oil products is Ventura
Foods, LLC (Ventura Foods), in which the Company holds a 50% ownership interest
and with which the Company has a long-term supply agreement to supply minimum
quantities of edible soybean oils as long as the Company maintains a minimum
25.5% ownership interest and the price is comparative with other suppliers of
the product. The Company's sales to Ventura Foods were $49.8 million in fiscal
year 2002. The Company also sells soymeal to over 500 customers, primarily feed
lots and feed mills in southern Minnesota; six of these customers accounted for
approximately 61% of the soymeal sold. Land O'Lakes/Farmland Feeds, LLC
accounts for 29% of soymeal sold and Commodity Specialists Company accounts for
10% of soymeal sold. The Company sells soyflour to customers in the baking
industry both domestically and for export.

     The refined soybean products industry is highly competitive. Major
industry competitors include ADM, Cargill, Ag Processing, Inc., and Bunge.
These and other competitors have acquired other processors and have expanded
existing plants, or are proposing to construct new plants, both domestically
and internationally. Price, transportation costs, services and product quality
drive competition. The Company estimates that it has a market share of
approximately 6% to 8% of the domestic refined soybean oil market and less than
3% of the domestic soybean crushing capacity.

     Soybeans are a commodity and their price can fluctuate significantly
depending on production levels, demand for the refined products, and other
supply and demand factors.

WHEAT MILLING
     In January 2002, the Company and Cargill formed Horizon Milling, LLC
(Horizon Milling), in which the Company owns 24% and Cargill owns the remaining
76%. Horizon Milling is the largest U.S. wheat miller. Sales of wheat and durum
by the Company to Horizon Milling during fiscal year 2002 were $114.4 million.

     The Company ceased operations at its Huron, Ohio mill prior to the
formation of Horizon Milling and the Company's facility lease expired on
September 30, 2002. The Company is currently dismantling and negotiating for
the sale of the milling equipment. The Processed Grains and Foods business
segment established an impairment of approximately $6.5 million on the
equipment during the fourth quarter of fiscal year 2002.

FOODS
     The Company has two primary areas of focus in the foods area: Ventura
Foods, which produces oilseed based products such as margarine and salad
dressing and which is 50% owned by the Company, and the production of Mexican
foods such as tortillas, tortilla chips and entrees.


                                       10
<PAGE>


     VENTURA FOODS. Ventura Foods manufactures, packages, distributes and
markets bulk margarine, salad dressings, mayonnaise, salad oils, syrups, soup
bases and sauces, many of which utilize soybean oil as a primary ingredient.
Approximately 20% of Ventura Food's volume, based on sales revenues, comes from
products for which Ventura Foods owns the brand, and the remainder comes from
products that it produces for third parties. A variety of Ventura Food's
product formulations and processes are proprietary to it or its customers.
Ventura Foods is the largest manufacturer of margarine in the U.S. and is a
major producer of many other products.

     Ventura Foods has 13 manufacturing and distribution locations across the
United States. It sources its raw materials, which consists primarily of
soybean oil, canola oil, cottonseed oil, peanut oil and various ingredients and
supplies, from various national suppliers, including the Company's oilseed
processing and refining operations. It sells the products it manufactures to
third parties as a contract manufacturer, as well as directly to retailers,
food distribution companies and large institutional food service companies.
Ventura Foods' sales are approximately 65% in foodservice and the remainder
split between retail and industrial customers who use edible oil products as
ingredients in foods they manufacture for resale.

     Ventura Foods competes with a variety of large companies in the food
manufacturing industry. Some of its major competitors are ADM, Cargill, Bunge,
Unilever, ConAgra, ACH, Smuckers, Kraft, and CF Sauer.

     Ventura Foods was created in 1996 and at the time was owned 40% by the
Company and 60% by Wilsey Foods, Inc., a majority owned subsidiary of Mitsui
USA, Inc. In March 2000, Wilsey Foods, Inc. sold an additional 10% interest
bringing the Company's total equity investment in Ventura Foods to 50%. The
Company accounts for the Ventura Foods investment under the equity method of
accounting.

     MEXICAN FOODS. Since June 2000, the Company has acquired three regional
producers of Mexican foods. Through its Mexican foods operations, the Company
manufactures, packages and distributes tortillas, tortilla chips and prepared
frozen Mexican food products such as burritos and tamales. The Company sells
these products under a variety of local and regional brand names and also
produces private label products and co-packs for customers. The current
operational focus is on integrating these disparate operations into a single
business entity with consistent standards, systems and sales practices. The
Company is also working to develop a national brand from its predominantly
local and regional brand platforms.

     The tortilla and tortilla chip industry in the United States is comprised
of a large number of small regional manufacturers and a few dominant
manufacturers. The Company estimates that its Mexican foods operation has
approximately a 1.5% share of the national tortilla market and less than a 1%
share of the national tortilla chip market. On a national basis, the primary
competitors are large chip and snack companies such as Frito Lay.


                                       11
<PAGE>


SUMMARY OPERATING RESULTS
     Summary operating results for the Processed Grains and Foods business
segment for the fiscal years ended August 31, 2002, 2001 and 2000 are shown
below:

<TABLE>
<CAPTION>
                                                       2002          2001          2000
                                                   -----------   -----------   -----------
                                                           (DOLLARS IN THOUSANDS)
<S>                                                <C>           <C>           <C>
Revenues:
 Net sales* ....................................    $ 496,084     $ 662,726     $ 584,052
 Patronage dividends ...........................          260           339           100
 Other revenues ................................       (1,469)         (238)          (10)
                                                    ---------     ---------     ---------
                                                      494,875       662,827       584,142
Cost of goods sold .............................      457,538       619,184       547,234
Marketing, general and administrative ..........       36,930        44,870        21,462
                                                    ---------     ---------     ---------
Operating earnings (losses) ....................          407        (1,227)       15,446
Interest .......................................        9,514        13,026         9,851
Equity income from investments .................      (41,331)      (35,505)      (24,367)
                                                    ---------     ---------     ---------
Income before income taxes .....................    $  32,224     $  21,252     $  29,962
                                                    =========     =========     =========
Total identifiable assets -- August 31 .........    $ 439,942     $ 430,871     $ 391,286
                                                    =========     =========     =========
</TABLE>

- ------------------
* The sales decline in 2002 is primarily due to the formation of Horizon
  Milling. Since January 2002 the Company has accounted for the operating
  results of its milling operations under the equity method of accounting.
  Earnings from the Company's interest in Horizon Milling are included as part
  of equity income from investments.


                            PRICE RISK AND HEDGING

     Depending on the terms and conditions of the particular contract, the
Company incurs risks of carrying inventory, including risks related to price
changes and performance (including delivery, quality, quantity and shipment
period) whenever it enters into a commodity purchase commitment. The Company is
exposed to risk of loss in the market value of positions held, consisting of
inventory and purchase contracts at a fixed or partially fixed price in the
event market prices decrease. The Company is also exposed to risk of loss on
its fixed price or partially fixed price sales contracts in the event market
prices increase.

     To reduce the price change risks associated with holding fixed price
positions, the Company generally takes opposite and offsetting positions by
entering into commodity futures contracts (either a straight futures contract
or an options futures contract) on regulated commodity futures exchanges for
grain, and regulated mercantile exchanges for refined products and crude oil.
The crude oil and most of the grain and oilseed volume handled by the Company
can be hedged. Some grains cannot be hedged because there are no futures for
certain commodities. For those commodities, risk is managed through the use of
forward sales and different pricing arrangements and to some extent
cross-commodity futures hedging. While hedging activities reduce the risk of
loss from changing market values of inventory, such activities also limit the
gain potential which otherwise could result from changes in market prices of
inventory. The Company's policy is to generally maintain hedged positions in
grain. The Company's profitability from operations is primarily derived from
margins on products sold and grain merchandised, not from hedging transactions.
Hedging arrangements do not protect against nonperformance of a contract.

     When a futures contract is entered into, an initial margin deposit must be
sent to the applicable exchange or broker. The amount of the deposit is set by
the exchange and varies by commodity. If the market price of a short futures
contract increases, then an additional margin deposit (maintenance margin)
would be required. Similarly, if the price of a long futures contract
decreases, a maintenance margin deposit would be required and sent to the
applicable exchange. Subsequent price changes could require additional
maintenance margins or could result in the return of maintenance margins.


                                       12
<PAGE>


     At any one time inventory and purchase contracts for delivery to the
Company may be substantial. The Company has risk management policies and
procedures that include net position limits. It is defined by commodity and
includes both trader and management limits. This policy, and computerized
procedures in grain marketing operations, triggers a review by operations
management when any trader is outside of position limits and also triggers
review by senior management of the Company if operating areas are outside of
position limits. A similar process is used in energy operations. The position
limits are reviewed at least annually with management of the Company. The
Company monitors current market conditions and may expand or reduce the
purchasing program in response to changes in those conditions. In addition,
certain purchase and sale contracts are subject to credit approvals and
appropriate terms and conditions.


                                   EMPLOYEES

     As of August 31, 2002, CHS Cooperatives had approximately 6,750 full and
part-time employees, which included approximately 550 employees of NCRA. Of
that total, approximately 2,180 were employed in the Energy segment, 2,260 in
the Country Operations segment (not including an estimated 720 seasonal and
temporary employees), 390 in the Grain Marketing segment, 970 in the Processed
Grains and Foods business segment and 230 in corporate and administrative
functions.

     In addition to those employed directly by the Company, many employees work
directly for the joint ventures in which the Company has an ownership interest.
All of the employees in the Agronomy segment and a portion of the Grain
Marketing and Processed Grains and Foods segments are employed as such.

     Employees in certain areas are represented by collective bargaining
agreements. Refinery workers in Laurel, Montana (233 employees), are
represented by agreements with two unions (Paper, Allied-Industrial, Chemical
and Energy Workers International Union (PACE) and Oil Basin Pipeliners Union
(OBP)), for which agreements are in place through 2006 for PACE and under
negotiation for OBP with anticipation of a successful resolution. The contracts
covering the McPherson, Kansas refinery (254 employees in the PACE union) are
also in place through 2006. There are approximately 160 employees in
transportation and lubricant plant operations that are covered by collective
bargaining agreements that expire at various times. Production workers in grain
marketing operations (143 employees) are represented by agreements with four
unions which expire at various times from 2003 through 2005. Finally, certain
production workers in Oilseed Processing and Refining operations are subject to
collective bargaining agreements with the American Federation of Grain Millers
(126 employees) and the Pipefitters' Union (2 employees). Both of these
contracts have expired and are currently being negotiated with the Company
anticipating a successful resolution.


               MEMBERSHIP IN THE COMPANY AND AUTHORIZED CAPITAL

INTRODUCTION
     The Company is an agricultural membership cooperative organized under
Minnesota cooperative law to do business with member and non-member patrons.
Patrons, and not the Company, are subject to income taxes on income from
patronage. The Company is subject to income taxes on non-patronage-sourced
income. See "-- Tax Treatment" below.

DISTRIBUTION OF NET INCOME; PATRONAGE DIVIDENDS
     The Company is required by its organizational documents annually to
distribute net earnings derived from patronage business with members, after
payment of dividends on equity capital, to members on the basis of patronage,
except that the Board of Directors may elect to retain and add to the Company's
unallocated capital reserve an amount not to exceed 10% of the distributable
net income from patronage business. Net income from non-patronage business may
be distributed to members or added to the unallocated capital reserve, in
whatever proportions the Board of Directors deems appropriate.


                                       13
<PAGE>


     These distributions, referred to as "patronage dividends," may be
distributed in cash, patrons' equities, revolving fund certificates, securities
of the Company or others or any combination designated by the Board of
Directors. Since 1998, the Board of Directors has distributed patronage
dividends in the form of 30% cash and 70% patrons' equities (see "-- Patrons'
Equities" below). The Board of Directors may change the mix in the form of the
patronage dividend in the future. In making distributions, the Board of
Directors may use any method of allocation as may, in its judgment, be
reasonable and equitable. Patronage dividends distributed during the years
ended August 31, 2002, 2001 and 2000 were $132.6 million ($40.1 million in
cash), $86.4 million ($26.1 million in cash) and $59.1 million($17.9 million in
cash), respectively.

PATRONS' EQUITIES
     Patrons' equities are in the form of a bookkeeping entry and represent a
right to receive cash when redeemed by the Company. Patrons' equities form part
of the capital of the Company, do not bear interest and are not subject to
redemption upon request of a member. Patrons' equities are redeemable only at
the discretion of the Board of Directors and in accordance with the terms of a
redemption policy adopted by the Board of Directors, which may be modified at
any time without member consent. The Company's current policy is to redeem the
equities of those members who were age 61 and older on June 1, 1998 when they
reach the age of 72 and upon death. The current policy is also to redeem
equities older than 10 years held by active members on a pro-rata basis as
determined by the Board of Directors.

     Redemptions of patrons' and other equities, including equity participation
units (discussed in Note 9 to the Financial Statements), during the years ended
August 31, 2002, 2001 and 2000 were $31.1 million, $33.0 million and $28.7
million, respectively.

GOVERNANCE
     The Company is managed by a Board of Directors of at least 17 persons
elected by the members at the Company's annual meeting. Terms of Directors are
staggered so that no more than seven directors are elected in any year. The
Board of Directors is currently comprised of 17 directors. The articles of
incorporation and bylaws of the Company may be amended only upon approval of a
majority of the votes cast at an annual or special meeting of the members,
except for the higher vote described under "-- Certain Antitakeover Measures"
below.

MEMBERSHIP
     Membership in the Company is restricted to certain producers of
agricultural products and to associations of producers of agricultural products
that are organized and operating so as to adhere to the provisions of the
Agricultural Marketing Act and the Capper-Volstead Act, as amended. The Board
of Directors may establish other qualifications for membership as it may from
time to time deem advisable.

     As a membership cooperative, the Company does not have common stock. The
Company may issue equity or debt securities, on a patronage basis or otherwise,
to its members. The Company has two classes of outstanding membership.
Individual members are individuals actually engaged in the production of
agricultural products. Cooperative associations are associations of
agricultural producers, either cooperatives or other associations organized and
operated under the provisions of the Agricultural Marketing Act and the
Capper-Volstead Act.

VOTING RIGHTS
     Voting rights arise by virtue of membership in the Company, not because of
ownership of any equity or debt security. Members that are cooperative
associations are entitled to vote based upon a formula that takes into account
the number of producer members of such cooperative, the equity held by the
cooperative in the Company and the average amount of business done with the
Company over the previous three years.

     Members who are individuals are entitled to one vote. Individual members
may exercise their voting power directly or through a patrons' association
associated with a grain elevator, feed mill, seed plant or any other Company
facility (with certain historical exceptions) recognized by the Board of
Directors. The number of votes of patrons' associations is determined under the
same formula as cooperative association members.


                                       14
<PAGE>


     The Board of Directors has proposed an amendment to the Company's bylaws
to eliminate the number of producers as a factor in determining the number of
votes of cooperative association members and patrons' associations. The
proposed amendment is expected to be voted upon at the annual members' meeting
in December 2002.

     Most matters submitted to a vote of the members require the approval of a
majority of the votes cast at a meeting of the members, although the approval
of not less than two-thirds of the votes cast at a meeting is required to
approve "Change of Control" transactions, which include a merger,
consolidation, liquidation, dissolution, or the sale of all or substantially
all of the Company's assets and, in certain circumstances, a greater vote may
be required. See "Certain Antitakeover Measures" below.

DEBT AND EQUITY INSTRUMENTS
     The Company may issue debt and equity instruments to its current members
and patrons, on a patronage basis or otherwise, and to persons who are neither
members nor patrons. Debt or equity issued by the Company is subject to a first
lien in favor of the Company for all indebtedness of the holder thereof to the
Company. As of August 31, 2002 the Company's outstanding capital included
patrons' equities (consisting of capital equity certificates and non-patronage
earnings certificates), 8% Preferred Stock and certain capital reserves. A best
efforts offering of 8% Preferred Stock begun in late 2001 has been suspended
after raising approximately $9.5 million in new capital.

DISTRIBUTION OF ASSETS UPON DISSOLUTION; MERGER AND CONSOLIDATION
     In the event of any dissolution, liquidation or winding up of the Company,
whether voluntary or involuntary, all debts and liabilities would be paid first
according to their respective priorities. As more particularly provided in the
Company's bylaws, the remaining assets would be paid to the holders of equity
capital to the extent of their interests and any excess would be paid to
patrons on the basis of their past patronage. The bylaws provide for the
allocation among the members and nonmember patrons of the consideration
received in any merger or consolidation to which the Company is a party.

CERTAIN ANTITAKEOVER MEASURES
     The governing documents may be amended upon the approval of a majority of
the votes cast at an annual or special meeting. However, if the Board of
Directors, in its sole discretion, declares that a proposed amendment to the
Company's governing documents involves or is related to a "hostile takeover,"
the amendment must be adopted by 80% of the total voting power of the members
of the Company. Further, if the Board of Directors determines that a proposed
change of control transaction involves a hostile takeover, the 80% approval
requirement applies. The term "hostile takeover" is not further defined in the
Minnesota cooperative law or the governing documents of the Company.

TAX TREATMENT
     Subchapter T of the Internal Revenue Code sets forth rules for the tax
treatment of cooperatives and applies to both cooperatives exempt from taxation
under Section 521 of the Internal Revenue Code and to nonexempt corporations
operating on a cooperative basis. The Company is a nonexempt cooperative.

     As a cooperative, the Company is not taxed on patronage paid to its
members either in the form of equities or cash. Consequently, such amounts are
taxed only at the patron level. However, the amounts of any allocated but
undistributed patronage earnings (called non-qualified unit retains) are
taxable to the Company when allocated. Upon redemption of any such
non-qualified unit retains, the amount is deductible to the Company and taxable
at the member level.

     Income derived by the Company from non-patronage sources is not entitled
to the "single tax" benefit of Subchapter T and is taxed to the Company at
corporate income tax rates.


                                       15
<PAGE>


ITEM 2. PROPERTIES

     The Company owns or leases energy, grain handling and processing, food
manufacturing and agronomy related facilities throughout the United States.
Below is a summary of these locations.

ENERGY
     Facilities in the Company's Energy business segment include the following,
all of which are owned except where indicated as leased:

<TABLE>
<S>                                 <C>
Refinery                            Laurel, Montana
Propane Plants                      10 locations in Iowa, Idaho, and Oregon
Propane Terminals                   3 locations in Minnesota, North Dakota and Wisconsin
Transportation Terminals/Repair     10 locations in Iowa, Minnesota, Montana, North Dakota, South
 Facilities                           Dakota, Washington and Wisconsin, 2 of which are leased
Petroleum & Asphalt                 9 locations in Montana, North Dakota and Wisconsin
 Terminals/Storage Facilities
Pump Stations                       10 locations in Montana and North Dakota
Pipelines:
 Cenex Pipeline, LLC                Laurel, Montana to Fargo, North Dakota
 Front Range Pipeline, LLC          Canadian Border to Laurel, Montana
Convenience Stores/Gas              36 locations in Iowa, Minnesota, Montana, South Dakota and
 Stations                             Wyoming
Lube Plants/Warehouses              3 locations in Minnesota, Ohio and Texas

 The Company has a 74.5% interest in NCRA, which operates the following facilities:

Refinery                            McPherson, Kansas
Petroleum Terminals/Storage         2 locations in Iowa and Kansas
Pipeline                            McPherson, Kansas to Council Bluffs, Iowa
Jayhawk Pipeline                    Throughout Kansas, with branches in Oklahoma and Texas
Jayhawk Stations                    40 locations located in Kansas and Oklahoma
</TABLE>

GRAIN MARKETING
     The Company owns or leases grain terminals used in the Grain Marketing
business segment at the following locations:

                         Davenport, Iowa (2 owned terminals)
                         Kalama, Washington (leased)
                         Kansas City, Missouri (2 leased terminals)
                         Myrtle Grove, Louisiana (owned)
                         St. Paul, Minnesota (leased)
                         Savage, Minnesota (owned)
                         Spokane, Washington (owned)
                         Superior, Wisconsin (owned)
                         Winona, Minnesota (owned)

COUNTRY OPERATIONS
     In the Country Operations business segment the Company owns approximately
300 Agri Operations locations (of which some of the facilities are on leased
land), 7 feed manufacturing facilities and 2 sunflower plants (one was
purchased in September 2002) located in Minnesota, Nebraska, North Dakota,
South Dakota, Montana, Washington, Oregon and Idaho.


                                       16
<PAGE>


PROCESSED GRAINS AND FOODS
     Within the Processed Grains and Foods business segment, the Company owns
and leases the following facilities:

Oilseed Processing and Refining

     The Company owns a campus in Mankato, Minnesota, comprised of a crushing
plant, an oilseed refinery, a soyflour plant and a quality control laboratory.
A new crushing plant is currently under construction at Fairmont, Minnesota
which the Company expects to complete in the fall of 2003.

Wheat Milling

     The Company owns five flour milling facilities at the following locations
that are leased to Horizon Milling, LLC:

                               Rush City, Minnesota
                               Kenosha, Wisconsin
                               Houston, Texas
                               Mount Pocono, Pennsylvania
                               Fairmount, North Dakota

Foods
     The Company leases manufacturing facilities in New Brighton, Minnesota and
Phoenix, Arizona, and two facilities in Newton, North Carolina. In addition,
the Company owns three manufacturing facilities in Ft. Worth, Texas. A new
facility is currently under construction near Newton, North Carolina, which the
Company expects to complete during its fiscal year ended August 31, 2003. All
facilities are related to Mexican foods operations.

CORPORATE HEADQUARTERS
     The Company is headquartered in Inver Grove Heights, Minnesota. The
33-acre campus consists of one main building with approximately 320,000 square
feet of office space and two smaller buildings with approximately 13,400 and
9,000 square feet of space.

ITEM 3. LEGAL PROCEEDINGS
     The Company is a party to various lawsuits and administrative proceedings
incidental to its business. It is impossible at this time to estimate what the
ultimate legal and financial liability of the Company will be; nevertheless,
management believes, based on the information available to date and the
resolution of prior proceedings, that the ultimate liability of all litigation
and proceedings will not have a material impact on the financial position of
the Company taken as a whole.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
     None.


                                       17
<PAGE>


                                   PART II.

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
     The Company sold no equity securities during the three years ended August
31, 2002 that were not registered under the Securities Act of 1933, as amended.

     On August 31, 2002 the Company had 9,325,374 shares of 8% Preferred Stock
outstanding. There is no active trading market for the Preferred Stock.

ITEM 6. SELECTED FINANCIAL DATA
     The selected financial information below has been derived from the
Company's consolidated financial statements for the periods indicated. The
selected consolidated financial information subsequent to August 31, 1999
should be read in conjunction with the Company's consolidated financial
statements and notes thereto included elsewhere in this filing.


                      SUMMARY CONSOLIDATED FINANCIAL DATA

<TABLE>
<CAPTION>
                                                 YEARS ENDED AUGUST 31,                     THREE MONTHS
                                 -------------------------------------------------------  ENDED AUGUST 31,    YEAR ENDED
                                      2002          2001          2000          1999            1998         MAY 31, 1998
                                 ------------- ------------- ------------- ------------- ------------------ -------------
                                                                  (DOLLARS IN THOUSANDS)
<S>                              <C>           <C>           <C>           <C>           <C>                <C>
Income Statement Data:
 Revenues:
   Net sales ...................  $7,731,867    $7,753,012    $8,497,850    $6,381,334       $1,531,124      $8,410,030
   Patronage dividends .........       3,885         5,977         5,494         5,876            5,111          70,387
   Other revenues ..............     109,459       116,254        97,471        81,180           17,706          85,127
                                  ----------    ----------    ----------    ----------       ----------      ----------
                                   7,845,211     7,875,243     8,600,815     6,468,390        1,553,941       8,565,544
 Cost of goods sold ............   7,513,369     7,470,203     8,300,494     6,193,287        1,475,407       8,209,448
 Marketing, general and
  administrative ...............     187,292       184,046       155,266       152,031           34,998         126,061
                                  ----------    ----------    ----------    ----------       ----------      ----------
 Operating earnings ............     144,550       220,994       145,055       123,072           43,536         230,035
 Interest ......................      42,455        61,436        57,566        42,438           12,311          34,620
 Equity (income) loss from
  investments ..................     (58,133)      (28,494)      (28,325)      (22,363)           9,142          (8,381)
 Minority interests ............      15,390        35,098        24,546        10,017            3,252           6,880
                                  ----------    ----------    ----------    ----------       ----------      ----------
 Income before income taxes ....     144,838       152,954        91,268        92,980           18,831         196,916
 Income taxes ..................      18,700       (25,600)        3,880         6,980            2,895          19,615
                                  ----------    ----------    ----------    ----------       ----------      ----------
 Net income ....................  $  126,138    $  178,554    $   87,388    $   86,000       $   15,936      $  177,301
                                  ==========    ==========    ==========    ==========       ==========      ==========
Balance Sheet Data (at end of
 period):
 Working capital ...............  $  249,115    $  305,280    $  214,223    $  219,045       $  284,452      $  235,721
 Net property, plant and
  equipment ....................   1,057,421     1,023,872     1,034,768       968,333          915,770         868,073
 Total assets ..................   3,481,727     3,057,319     3,172,680     2,787,664        2,469,103       2,436,515
 Long-term debt, including
  current maturities ...........     572,124       559,997       510,500       482,666          456,840         378,408
 Total equities ................   1,289,638     1,261,153     1,164,426     1,117,636        1,065,877       1,029,973
</TABLE>

                                       18
<PAGE>


     The selected financial statement information below has been derived from
the Company's five business segments, and Corporate and Other, for the fiscal
years ended August 31, 2002, 2001 and 2000. The intracompany sales between
segments were $683.8 million, $782.5 million and $718.2 million for the fiscal
years ended August 31, 2002, 2001 and 2000, respectively.

                  SUMMARY FINANCIAL DATA BY BUSINESS SEGMENT

<TABLE>
<CAPTION>
                                                              AGRONOMY                                   ENERGY
                                             ----------------------------------------- -----------------------------------------
                                                  2002          2001          2000          2002          2001          2000
                                             ------------- ------------- ------------- ------------- ------------- -------------
                                                                              (DOLLARS IN THOUSANDS)
<S>                                           <C>            <C>           <C>           <C>             <C>           <C>
Revenues:
 Net sales .................................                              $  808,659    $2,657,689    $2,781,243    $2,959,622
 Patronage dividends .......................  $      (89)   $      196           224           458           712           311
 Other revenues ............................                                   5,817         6,392         4,036         2,792
                                              ----------    ----------    ----------    ----------    ----------    ----------
                                                     (89)          196       814,700     2,664,539     2,785,991     2,962,725
Cost of goods sold .........................                                 764,744     2,489,352     2,549,099     2,862,715
Marketing, general and
 administrative ............................       8,957         8,503        20,832        66,731        48,432        43,332
                                              ----------    ----------    ----------    ----------    ----------    ----------
Operating (losses) earnings ................      (9,046)       (8,307)       29,124       108,456       188,460        56,678
Interest ...................................      (1,403)       (4,529)       (3,512)       16,875        25,097        27,926
Equity (income) loss from
 investments ...............................     (13,425)       (7,360)        4,336         1,166         4,081          (856)
Minority interests .........................                                                14,604        34,713        24,443
                                              ----------    ----------    ----------    ----------    ----------    ----------
Income before income taxes .................  $    5,782    $    3,582    $   28,300    $   75,811    $  124,569    $    5,165
                                              ==========    ==========    ==========    ==========    ==========    ==========
Total identifiable assets -- August 31 .....  $  242,015    $  230,051    $  228,277    $1,305,828    $1,154,036    $1,379,019
                                              ==========    ==========    ==========    ==========    ==========    ==========

<CAPTION>

                                                         COUNTRY OPERATIONS                         GRAIN MARKETING
                                             ----------------------------------------- -----------------------------------------
                                                  2002          2001          2000          2002          2001          2000
                                             ------------- ------------- ------------- ------------- ------------- -------------
                                                                           (DOLLARS IN THOUSANDS)
<S>                                           <C>           <C>           <C>           <C>           <C>           <C>
Revenues:
 Net sales .................................  $1,474,553    $1,577,268    $1,409,892    $3,787,322    $3,514,314    $3,453,807
 Patronage dividends .......................       2,572         3,683         3,830           497           840           861
 Other revenues ............................      80,789        80,479        68,436        21,902        22,964        15,440
                                              ----------    ----------    ----------    ----------    ----------    ----------
                                               1,557,914     1,661,430     1,482,158     3,809,721     3,538,118     3,470,108
Cost of goods sold .........................   1,471,422     1,569,884     1,404,120     3,778,838     3,514,575     3,439,863
Marketing, general and
 administrative ............................      47,995        53,417        44,136        22,213        22,396        21,412
                                              ----------    ----------    ----------    ----------    ----------    ----------
Operating earnings .........................      38,497        38,129        33,902         8,670         1,147         8,833
Interest ...................................      13,851        15,695        12,782         4,807         8,144         8,701
Equity income from investments .............        (283)         (246)       (1,007)       (4,257)       (4,519)       (6,452)
Minority interests .........................         786           385           103
                                              ----------    ----------    ----------    ----------    ----------    ----------
Income (loss) before income taxes ..........  $   24,143    $   22,295    $   22,024    $    8,120    $   (2,478)   $    6,584
                                              ==========    ==========    ==========    ==========    ==========    ==========
Total identifiable assets -- August 31 .....  $  799,711    $  679,053    $  660,358    $  481,232    $  345,696    $  321,813
                                              ==========    ==========    ==========    ==========    ==========    ==========

<CAPTION>

                                                     PROCESSED GRAINS AND FOODS                    CORPORATE AND OTHER
                                             ----------------------------------------- -----------------------------------------
                                                  2002          2001          2000          2002          2001          2000
                                             ------------- ------------- ------------- ------------- ------------- -------------
                                                                           (DOLLARS IN THOUSANDS)
<S>                                           <C>           <C>           <C>           <C>           <C>           <C>
Revenues:
 Net sales .................................  $  496,084    $  662,726    $  584,052
 Patronage dividends .......................         260           339           100    $      187    $      207    $      168
 Other revenues ............................      (1,469)         (238)          (10)        1,845         9,013         4,996
                                              ----------    ----------    ----------    ----------    ----------    ----------
                                                 494,875       662,827       584,142         2,032         9,220         5,164
Cost of goods sold .........................     457,538       619,184       547,234
Marketing, general and
 administrative ............................      36,930        44,870        21,462         4,466         6,428         4,092
                                              ----------    ----------    ----------    ----------    ----------    ----------
Operating earnings (losses) ................         407        (1,227)       15,446        (2,434)        2,792         1,072
Interest ...................................       9,514        13,026         9,851        (1,189)        4,003         1,818
Equity (income) loss from
 investments ...............................     (41,331)      (35,505)      (24,367)           (3)       15,055            21
                                              ----------    ----------    ----------    ----------    ----------    ----------
Income (loss) before income taxes ..........  $   32,224    $   21,252    $   29,962    $   (1,242)   $  (16,266)   $     (767)
                                              ==========    ==========    ==========    ==========    ==========    ==========
Total identifiable assets -- August 31 .....  $  439,942    $  430,871    $  391,286    $  212,999    $  217,612    $  191,927
                                              ==========    ==========    ==========    ==========    ==========    ==========
</TABLE>

                                       19
<PAGE>


ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS
     Cenex Harvest States Cooperatives (CHS Cooperatives, CHS or the Company)
is one of the nation's leading integrated agricultural companies. As a
cooperative, the Company is owned by farmers, ranchers and their local
cooperatives from the Great Lakes to the Pacific Northwest and from the
Canadian border to Texas. CHS Cooperatives buys commodities from, and provides
products and services to members and other customers. The Company provides a
wide variety of products and services, from initial agricultural inputs such as
fuels, farm supplies and crop nutrients, to agricultural outputs that include
grains and oilseeds, grain and oilseed processing, and food products.

     The Company has five distinct business segments: Agronomy, Energy, Country
Operations, Grain Marketing and Processed Grains and Foods. Summary data for
each of these segments for the fiscal years ended August 31, 2002, 2001 and
2000 is shown on prior pages.

     Many of the Company's businesses are highly seasonal. Due to this,
operating income will vary throughout the year, but overall revenues remain
fairly constant, partly because the Company does not consolidate revenues in
the Agronomy segment as explained below. Overall, the Company's income is
generally lowest during the second fiscal quarter and highest during the third
fiscal quarter. Certain business segments are subject to varying seasonal
fluctuations. For example, Agronomy and Country Operations segments experience
higher volumes and income during the spring planting season and in the fall,
which corresponds to harvest. The Grain Marketing segment, as well, is somewhat
subject to fluctuations in revenue and earnings based on producer harvests. The
Company's Energy segment generally experiences higher revenues and
profitability in certain operating areas, such as refined products, in the
summer when gasoline and diesel usage is highest. Other energy products, such
as propane, experience higher revenues and profitability during the winter
heating season.

     While the Company's sales and operating income are derived from businesses
and operations which are wholly-owned and majority-owned, a portion of business
operations are conducted through companies in which the Company holds ownership
interests of 50% or less. The Company accounts for these investments primarily
using the equity method of accounting, wherein CHS Cooperatives records as
equity income from investments its proportionate share of income or loss
reported by the entity, without consolidating the revenues and expenses of the
entity in the Company's consolidated statements of operations. These
investments principally include the Company's 25% ownership in Agriliance, LLC
(Agriliance), the 50% ownership in TEMCO, LLC, the 50% ownership in United
Harvest, LLC, the 24% ownership in Horizon Milling, LLC (Horizon) and the 50%
ownership in Ventura Foods, LLC (Ventura).

RESULTS OF OPERATIONS

     COMPARISON OF THE YEARS ENDED AUGUST 31, 2002 AND 2001

     NET INCOME. Consolidated net income for the year ended August 31, 2002 was
$126.1 million compared to $178.6 million for the year ended August 31, 2001,
which represents a $52.5 million (29%) decrease. This decrease in profitability
is primarily attributable to a tax benefit of $34.2 million in the prior year
and decreased earnings in the Company's Energy segment compared to the year
ended August 31, 2001.

     NET SALES. Consolidated net sales of $7.7 billion for the year ended
August 31, 2002 decreased $21.1 million compared to the year ended August 31,
2001.

     Energy net sales of $2.6 billion decreased $119.1 million (4%) during the
year ended August 31, 2002 compared to the year ended August 31, 2001. Sales
for the year ended August 31, 2002 and 2001 were $2,657.7 million and $2,781.2
million, respectively. The Company eliminated all intracompany sales from the
Energy segment to the Country Operations segment of $67.4 million and $71.8
million for the years ended August 31, 2002 and 2001, respectively. Prior to
December 31, 2000 the company consolidated the business activity of Cooperative
Refining LLC (CRLLC), a refining joint venture into the Energy segment. The
Company held a 58% interest in CRLLC, which was dissolved effective December
31, 2000. The decrease in Energy sales is primarily due to this dissolution.
The decrease was partially offset by an increase in refined fuel sales that
were not part of CRLLC, which consisted of a 49% increase in volume, which was
partially offset by a sales price decrease of $0.21 per gallon


                                       20
<PAGE>


compared to the year ended August 31, 2001. The average sales price of propane
decreased by $0.21 per gallon, which was partially offset by a volume increase
of 28% compared to the year ended August 31, 2001. Refined fuels and propane
volume increases were primarily a result of acquisitions, with the most
substantial acquisition taking place in November 2001, when the Company
purchased for $39.0 million, the wholesale energy business of Farmland
Industries, Inc. (Farmland), as well as all interest in Country Energy, LLC a
joint venture formerly with Farmland.

     Country Operations farm supply sales of $612.5 million decreased by $51.3
million (8%) during the year ended August 31, 2002 compared to the year ended
August 31, 2001. The decrease is primarily due to a reduction in the average
retail sales price of energy products compared to the prior year.

     Company-wide grain and oilseed net sales of $4.0 billion increased $315.7
million (8%) during the year ended August 31, 2002 compared to the year ended
August 31, 2001. Sales for the year ended August 31, 2002 were $3,787.3 million
and $862.0 million from Grain Marketing and Country Operations segments,
respectively. Sales for the year ended August 31, 2001 were $3,514.3 million
and $913.4 million from Grain Marketing and Country Operations segments,
respectively. The Company eliminated all intracompany sales from the Country
Operations segment to the Grain Marketing segment, of $615.8 million and $709.9
million, for the years ended August 31, 2002 and 2001, respectively. The net
increase in sales was primarily due to an increase of $0.60 (20%) per bushel in
the average sales price of all grain and oilseed marketed by the Company, which
was partially offset by a decrease in grain volume of 9% compared to the prior
year.

     Processed Grains and Foods segment net sales of $495.5 million decreased
$166.4 million (25%) during the year ended August 31, 2002 compared to the year
ended August 31, 2001. Intracompany sales between segments were eliminated. The
decrease in sales is primarily due to the formation of Horizon, a wheat flour
milling and processing joint venture that was formed in January 2002. After
that date, the Company accounted for operating results of Horizon under the
equity method of accounting. The Company has a 24% interest in Horizon, and
Cargill, Incorporated (Cargill) has a 76% interest. The Company is leasing five
mills and related equipment to Horizon.

     PATRONAGE DIVIDENDS. Patronage dividends received of $3.9 million
decreased $2.1 million (35%) during the year ended August 31, 2002 compared to
the year ended August 31, 2001, primarily due to reduced patronage dividends
from cooperatives.

     OTHER REVENUES. Other revenues of $109.5 million decreased $6.8 million
(6%) during the year ended August 31, 2002 compared to the year ended August
31, 2001. The most significant changes were within the Energy segment, and
Corporate and Other compared to the prior year.

     COST OF GOODS SOLD. Cost of goods sold of $7.5 billion increased $43.2
million (1%) during the year ended August 31, 2002, compared to the year ended
August 31, 2001. The cost of all grains and oilseed procured by the Company
through its Grain Marketing and Country Operations segments increased 9%
compared to the year ended August 31, 2001 primarily due to a $0.59 (20%)
average cost per bushel increase, which was partially offset by a 9% decrease
in volume. This increase was partially offset by decreases in cost of goods
sold in the Processed Grains and Foods, Country Operations and Energy segments.
Processed Grains and Foods segment cost of goods sold decreased by 26% compared
to the year ended August 31, 2001, primarily due to the formation of Horizon,
as previously described. Country Operations segment farm supply cost of goods
sold decreased by 9% during the year ended August 31, 2002 compared to the
prior year primarily due to the reduced cost of energy products. The Energy
segment cost of goods sold decreased by 2% during the year ended August 31,
2002 compared to the prior year, primarily due to the dissolution of CRLLC, as
previously discussed. However, the volumes of refined fuels that were not
associated with the dissolution of CRLLC increased by 49%, which was partially
offset by an average cost decrease of $0.18 per gallon compared to the year
ended August 31, 2001. The average cost of propane decreased by $0.19 per
gallon, which was partially offset by a 28% volume increase compared to the
prior year. These volume increases were primarily the result of acquisitions.

     MARKETING, GENERAL AND ADMINISTRATIVE. Marketing, general and
administrative expenses of $187.3 million for the year ended August 31, 2002
increased by $3.2 million (2%) compared to the year


                                       21
<PAGE>


ended August 31, 2001. The net increase is primarily due to additional expenses
resulting from Energy segment acquisitions, which was partially offset by
reduced expenses within the Processed Grains and Foods segment due to the
formation of Horizon described earlier.

     INTEREST. Interest expense of $42.5 million for the year ended August 31,
2002 decreased by $19.0 million (31%) compared to the year ended August 31,
2001. The average level of short-term borrowings decreased 24% and the average
short-term interest rate decreased 3.6% during the year ended August 31, 2002
compared to the prior year. The net decrease in interest expense from
short-term borrowings was partially offset by an increase due to an additional
$80.0 million of long-term debt from a private placement, of which $25.0
million and $55.0 million were issued in January and March 2001, respectively.

     EQUITY INCOME FROM INVESTMENTS. Equity income from investments of $58.1
million for the year ended August 31, 2002 increased by $29.6 million (104%)
compared to the year ended August 31, 2001. The increase was primarily
attributable to decreased losses from Corporate and Other technology
investments of $15.1 million that was dissolved. In addition, earnings from
Agronomy, and Processed Grains and Foods segments investments increased in
fiscal year 2002 by $6.1 million and $5.8 million, respectively compared to the
prior year.

     MINORITY INTERESTS. Minority interests of $15.4 million for the year ended
August 31, 2002 decreased by $19.7 million (56%) compared to the year ended
August 31, 2001. The change in minority interests during the year ended August
31, 2002 compared to the prior year was primarily a result of less profitable
operations within the Company's majority-owned subsidiaries and the dissolution
of CRLLC. Substantially all minority interests relate to National Cooperative
Refinery Association (NCRA) an approximately 74.5% owned subsidiary.

     INCOME TAXES. Income tax expense of $18.7 million for the year ended
August 31, 2002 compares to a tax benefit of $25.6 million for the year ended
August 31, 2001, resulting in effective tax rates of a 12.9% expense and a
16.7% benefit, respectively. The federal and state statutory rate applied to
nonpatronage business activity was 38.9% for the years ended August 31, 2002
and 2001. An income tax benefit of $34.2 million for the year ended August 31,
2001 resulted from a change in the tax rate applied to the Company's cumulative
temporary differences between income for financial statement purposes and
income used for tax reporting purposes. The Company's calculation of its
patronage distribution using earnings for financial statement purposes rather
than tax basis earnings prompted the rate change. The Company recorded income
tax expense of $18.7 million for the year ended August 31, 2002, which compares
to $8.6 million for the year ended August 31, 2001, exclusive of the $34.2
million benefit related to the change in patronage determination described
above. 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 YEARS ENDED AUGUST 31, 2001 AND 2000

     NET INCOME. The Company's consolidated net income of $178.6 million for
the year ended August 31, 2001 represents a $91.2 million (104%) increase
compared to the year ended August 31, 2000. This net increase in profitability
is primarily attributable to an increase in income from the Company's Energy
segment, which was partially offset by decreases from the Agronomy and Grain
Marketing segments, and Corporate and Other.

     NET SALES. Consolidated net sales of $7.8 billion for the year ended
August 31, 2001 represent a $744.8 million (9%) decrease compared to the year
ended August 31, 2000.

     The Company did not record Agronomy sales during the year ended August 31,
2001 compared to sales of $768.4 million net of intracompany elimination of
$40.3 million from the Agronomy segment to the Country Operations segment for
the year ended August 31, 2000. During 2000, the Company exchanged its agronomy
operations for an ownership interest in Agriliance, LLC, owned indirectly
through United Country Brands, LLC. As of July 31, 2000, the Company recorded
results of its 25% ownership in Agriliance, LLC on the equity method, and as
such, income or losses are reflected in equity income from investments.


                                       22
<PAGE>


     Energy net sales of $2.7 billion decreased $194.5 million (7%) during the
year ended August 31, 2001 compared to the year ended August 31, 2000. Sales
for the years ended August 31, 2001 and 2000 were $2,781.2 million and $2,959.6
million, respectively. The Company eliminated all intracompany sales from the
Energy segment to the Country Operations segment of $71.8 million and $55.7
million for the years ended August 31, 2001 and 2000, respectively. The
decrease is primarily attributable to a net volume decrease compared to the
year ended August 31, 2000 due to the dissolution of CRLLC effective December
31, 2000. The Company owned 58% of CRLLC through its ownership in NCRA and
therefore consolidated CRLLC business activity up to the time of dissolution.
The decrease related to the dissolution was partially offset by an increase in
refined fuels that were not part of CRLLC of $0.12 per gallon in the average
sales price and 2% in volume compared to the year ended August 31, 2000. In
addition, propane volumes increased by 39% and the average sales price of
propane increased by $0.21 per gallon compared to the year ended August 31,
2000.

     Country Operations farm supply sales of $663.9 million increased $73.0
million (12%) for the year ended August 31, 2001 compared to the year ended
August 31, 2000. The net increase is primarily attributable to average sales
price increases in agronomy and energy products and additional volumes from
acquisitions.

     Company-wide grain and oilseed net sales of $3.7 billion increased $67.0
million (2%) during the year ended August 31, 2001 compared to the year ended
August 31, 2000. Sales for the year ended August 31, 2001 were $3,514.3 million
and $913.4 million from Grain Marketing and Country Operations segments,
respectively. Sales for the year ended August 31, 2000 were $3,453.8 million
and $819.0 million from Grain Marketing and Country Operations segments,
respectively. The Company eliminated all intracompany sales from the Country
Operations segment to the Grain Marketing segment of $709.9 million and $622.0
million for the years ended August 31, 2001 and 2000, respectively. This
increase in sales was primarily due to an increase of $0.06 (2%) per bushel in
the average sales price while volumes were essentially unchanged on all grain
and oilseed marketed by the Company compared to the prior year.

     Processed Grains and Foods segment net sales of $661.9 million increased
$78.1 million (12%) for the year ended August 31, 2001 compared to the year
ended August 31, 2000. Intracompany sales between segments were eliminated.
This increase is primarily due to foods acquisitions, which increased sales by
$47.3 million compared to the prior year. In addition, sales of processed wheat
increased by $22.6 million compared to the prior year, primarily due to
increased volumes from the acquisition of a wheat mill in April 2000 and an
increase in the average sales price of all wheat products. Sales of processed
oilseed increased by $8.8 million primarily due to volume and price increases
compared to the prior year.

     OTHER REVENUES. Other revenues of $116.3 million increased $18.8 million
(19%) for the year ended August 31, 2001 compared to the year ended August 31,
2000. The most significant increases were within the Country Operations and
Grain Marketing segments. These increases were partially offset by a prior year
gain of $7.4 million from the sale of 1.455% of the Company's economic interest
in Agriliance, LLC which was recorded in March 2000 in the Agronomy segment.

     COST OF GOODS SOLD. Cost of goods sold of $7.5 billion decreased $830.3
million (10%) during the year ended August 31, 2001 compared to the year ended
August 31, 2000. The decrease was primarily attributable to the impact of
recording the Company's share of its agronomy operations on the equity method
in 2001 as previously discussed, which caused a reduction in cost of goods sold
of $764.7 million compared to the year ended August 31, 2000. In addition,
during the year ended August 31, 2001 the cost of goods sold of the Energy
segment decreased by 11% primarily due to a decrease in volume as a result of
the dissolution of CRLLC. The decrease was partially offset by volume and price
increases on refined fuels purchases that were not part of CRLLC, and propane
products. The cost of all grain and oilseed procured by the Company through its
Grain Marketing and Country Operations segments increased 2% compared to the
previous year end primarily due to a $0.06 (2%) cost per bushel increase with
volumes remaining essentially unchanged. Country Operations segment farm supply
cost of goods sold increased by 14% during the year ended August 31, 2001
compared to the year ended August 31, 2000, primarily due to cost increases in
agronomy and energy products and higher volumes due to acquisitions. Cost of
goods sold within the Processed Grains and Foods segment increased by 13% due
to volume increases primarily as a result of acquisitions.


                                       23
<PAGE>


     MARKETING, GENERAL AND ADMINISTRATIVE. Marketing, general and
administrative expenses of $184.0 million for the year ended August 31, 2001
increased by $28.7 million (19%) compared to the year ended August 31, 2000.
This increase is primarily due to increases in expenses within the Processed
Grains and Foods segment of $23.4 million, which is primarily due to additional
expenses of $12.9 million related to acquisitions and a loss on assets held for
disposal of $7.5 million related to the closing of a wheat mill compared to the
prior year. In addition, expenses within the Country Operations segment
increased by $9.3 million primarily due to acquisitions. These increases were
partially offset by a decrease in expenses of $12.3 million in the Agronomy
segment.

     INTEREST. Interest expense of $61.4 million for the year ended August 31,
2001 increased by $3.8 million (7%) compared to the year ended August 31, 2000.
The average level of short-term borrowings increased 11% and the average
short-term interest rate decreased 0.55% during the year ended August 31, 2001
compared to the previous year. Interest expense also increased due to an
additional $80.0 million of long-term debt from a private placement of which
$25.0 million and $55.0 million were issued in January and March 2001,
respectively.

     EQUITY INCOME FROM INVESTMENTS. Equity income from investments of $28.5
million for the year ended August 31, 2001 increased by $0.2 million (1%)
compared to the year ended August 31, 2000. The increase was primarily
attributable to increases in earnings from investments within the Agronomy and
Processed Grains and Foods segments of $11.7 million and $11.1 million,
respectively, during the year ended August 31, 2001 compared to the prior year.
The Company records its 25% share of its Agronomy segment investment in
Agriliance, LLC on the equity method as previously discussed. The net increase
was partially offset by losses from technology investments of $15.1 million and
decreased earnings of $4.9 million and $1.9 million from Energy and Grain
Marketing segment investments, respectively.

     MINORITY INTERESTS. Minority interests of $35.1 million for the year ended
August 31, 2001 increased by $10.6 million (43%) compared to the year ended
August 31, 2000. Substantially all minority interests were related to NCRA.
This net change in minority interests was reflective of more profitable
operations within the Company's majority-owned subsidiaries during the year
ended August 31, 2001 compared to the previous year.

     INCOME TAXES. An income tax benefit of $25.6 million for the year ended
August 31, 2001 compares to expense of $3.9 million for the year ended August
31, 2000 resulting in effective tax rates of 16.7% benefit and 4.3% expense,
respectively. The federal and state statutory rate applied to nonpatronage
business activity was 38.9% for the years ended August 31, 2001 and 2000. An
income tax benefit of $34.2 million for the year ended August 31, 2001 resulted
from a change in the tax rate applied to the Company's cumulative temporary
differences between income for financial statement purposes and income used for
tax reporting purposes. The Company's change in the calculation of its
patronage distribution using earnings for financial statement purposes rather
than tax basis earnings prompted the rate change. The Company recorded an
income tax expense of $8.6 million and $3.9 million for the years ended August
31, 2001 and 2000 excluding the effects of the adjustment. The income taxes and
effective tax rates vary each year based upon profitability and nonpatronage
business activity during each of the comparable years.

LIQUIDITY AND CAPITAL RESOURCES

     CASH FLOWS FROM OPERATIONS
     Operating activities of the Company used net cash of $41.7 million during
the year ended August 31, 2002. Net income of $126.1 million and net non-cash
expenses of $62.4 million were offset by increased working capital requirements
of $230.2 million. This increase in working capital requirements is primarily
due to stronger commodity prices.

     Operating activities of the Company provided net cash of $252.8 million
during the year ended August 31, 2001. Net income of $178.6 million, net
non-cash expenses of $50.5 million and decreased working capital requirements
of $23.7 million provided this net cash from operating activities.

     Operating activities of the Company provided net cash of $128.4 million
during the year ended August 31, 2000. Net income of $87.4 million and net
non-cash expenses of $79.7 million were partially offset by increased working
capital requirements of $38.7 million.


                                       24
<PAGE>


     CASH FLOWS FROM INVESTING ACTIVITIES
     For the years ended August 31, 2002, 2001 and 2000, the net cash flows
used in the Company's investing activities totaled $141.8 million, $69.1
million and $184.9 million, respectively.

     The acquisition of property, plant and equipment comprised the primary use
of cash totaling $140.2 million, $97.6 million and $153.8 million for the years
ended August 31, 2002, 2001 and 2000, respectively. For the year ended August
31, 2003 the Company expects to spend approximately $216.8 million for the
acquisition of property, plant and equipment, which includes $57.0 million of
expenditures for the construction of an oilseed processing facility in
Fairmont, Minnesota. Total expenditures related to the construction of the
facility are projected to be approximately $90.0 million, of which $22.9
million was used for construction through the year ended August 31, 2002.
Capital expenditures primarily related to the Environmental Protection Agency
low sulfur fuel regulations required by 2006, are expected to be approximately
$340 million in total for the Company's Laurel, Montana and NCRA's McPherson,
Kansas refineries over the next four years. It is expected that over 80% of the
costs will be incurred at NCRA.

     Investments made during the years ended August 31, 2002, 2001 and 2000
totaled $6.2 million, $14.2 million and $35.3 million, respectively.
Investments during the year ended August 31, 2000 included the purchase of an
additional 10% interest in Ventura Foods, LLC, the Company's foods joint
venture, for $25.6 million. The Company has a 50% interest in that joint
venture.

     Acquisitions of intangibles were $29.5 million, $7.3 million and $26.5
million for the years ended August 31, 2002, 2001 and 2000, respectively.
During the year ended August 31, 2002, $26.4 million of the acquisitions of
intangibles were related to the purchase of Farmland's interest in its
wholesale energy business, as previously discussed, and represents trademarks,
tradenames and non-compete agreements. During the previous two years, the
intangibles resulted primarily from the purchase of Rodriguez Festive Foods,
Inc. in fiscal 2001 and the purchase of Sparta Foods, Inc. and the wholesale
propane marketing business of Williams Energy Marketing and Trading Company in
fiscal 2000.

     During the year ended August 31, 2002 the changes in notes receivable
resulted in a decrease of $22.0 million primarily from related party notes
receivables at NCRA from its minority owners, Growmark, Inc. and MFA Oil
Company. During the years ended August 31, 2001 and 2000 the changes in notes
receivable resulted in increases of $0.5 million and $0.6 million,
respectively.

     Distributions to minority owners for the years ended August 31, 2002, 2001
and 2000 were $7.4 million, $19.3 million and $21.1 million, respectively, and
were primarily related to NCRA. For the years ended August 31, 2001 and 2000,
NCRA's distributions also included the distributions made by CRLLC.

     Partially offsetting cash outlays in investing activities were proceeds
from the disposition of property, plant and equipment of $20.2 million, $35.3
million and $7.7 million for the years ended August 31, 2002, 2001 and 2000,
respectively. During the year ended August 31, 2002, the proceeds were
primarily from disposals of propane plants in the Energy segment and of
non-strategic agri-operations locations in the Country Operations segment.
During the year ended August 31, 2001, the proceeds were primarily from the
disposal of feed plants and other assets in the Country Operations segment.
Also partially offsetting cash usages were distributions received from joint
ventures and investments totaling $44.0 million, $31.8 million and $43.9
million for the years ended August 31, 2002, 2001 and 2000, respectively.

     CASH FLOWS FROM FINANCING ACTIVITIES
     The Company finances its working capital needs through short-term lines of
credit with a syndication of banks. In May 2002, the Company renewed its
364-day credit facility of $550.0 million committed. In addition to these lines
of credit, the Company has a 364-day credit facility dedicated to NCRA, with a
syndication of banks in the amount of $30.0 million committed. On August 31,
2002 and 2001, the Company had total short-term indebtedness outstanding on
these various facilities and other short-term notes payable totaling $332.5
million and $97.2 million, respectively. The increase from 2001 to 2002 is
primarily due to increases in inventories in the Grain Marketing and Energy
segments related to higher grain prices and the purchase of Farmland's
wholesale energy business, discussed previously.


                                       25
<PAGE>


     In June 1998, the Company established a five-year revolving credit
facility with a syndication of banks, with $200.0 million committed. On August
31, 2002 and 2001 the Company had outstanding balances on this facility of
$75.0 million and $45.0 million, respectively. The outstanding balance on
August 31, 2002 includes $30.0 million, which was drawn during the first
quarter of the fiscal year.

     The Company has financed its long-term capital needs in the past,
primarily for the acquisition of property, plant and equipment, with long-term
agreements through the banks for cooperatives. In June 1998, the Company
established a long-term credit agreement through the banks for cooperatives.
This facility committed $200.0 million of long-term borrowing capacity to the
Company, with repayments through fiscal year 2009. The amount outstanding on
this credit facility was $144.3 million and $150.9 million on August 31, 2002
and 2001, respectively. Repayments of $6.6 million were made on this facility
during each of the years ended August 31, 2002 and 2001.

     Also in June 1998, the Company issued a private placement with several
insurance companies for long-term debt in the amount of $225.0 million.
Repayments will be made in equal annual installments of $37.5 million each in
the years 2008 through 2013.

     In January 2001, the Company entered into a note purchase and private
shelf agreement with Prudential Insurance Company. The long-term note in the
amount of $25.0 million will be repaid 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 will be repaid in equal annual installments of
approximately $7.9 million, in the years 2005 through 2011.

     The Company, through NCRA, had revolving term loans outstanding of $18.0
million and $21.0 million for the years ended August 31, 2002 and 2001,
respectively. Repayments of $3.0 million were made during each of the years
ended August 31, 2002 and 2001.

     On August 31, 2002, the Company had total long-term debt outstanding of
$572.1 million, of which $255.0 million was bank financing, $305.0 million was
private placement proceeds and $12.1 million was industrial development revenue
bonds, capitalized leases and other notes and contracts payable. On August 31,
2001, the Company had long-term debt outstanding of $560.0 million. The
aggregate amount of long-term debt payable as of August 31, 2002 was as follows
(dollars in thousands):

                        2002 ...............    $ 89,032
                        2003 ...............      15,079
                        2004 ...............      34,511
                        2005 ...............      34,938
                        2006 ...............      41,709
                        Thereafter .........     356,855
                                                --------
                                                $572,124
                                                ========

     During the years ended August 31, 2002, 2001 and 2000, the Company
borrowed on a long-term basis $30.0 million, $116.9 million and $49.9 million,
respectively, and during the same periods repaid long-term debt of $18.0
million, $67.4 million and $22.5 million, respectively.

     On October 18, 2002 (fiscal year 2003) the Company entered into 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 will be repaid 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 will be
repaid in equal semi-annual installments of approximately $4.6 million during
fiscal years 2012 through 2018.

     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. Effective September 1, 2000,
patronage refunds are calculated based on earnings for financial statement
purposes rather than based on amounts reportable for federal income tax
purposes as had been the Company's practice prior to this date. This change was
authorized through a bylaw amendment at the Company's annual meeting on
December 1, 2000. The patronage earnings from the fiscal year ended August 31,


                                       26
<PAGE>


2001 were distributed in January 2002. The cash portion of this distribution,
deemed by the Board of Directors to be 30% was $40.1 million. During the years
ended August 31, 2001 and 2000, the Company distributed cash patronage of $26.1
million and $17.9 million, respectively.

     Cash patronage for the year ended August 31, 2002, deemed by the Board of
Directors to be 30% and to be distributed in fiscal year 2003, is expected to
be approximately $27.9 million and is classified as a current liability on the
August 31, 2002 consolidated balance sheet.

     The current equity redemption policy, as authorized by the Board of
Directors, allows for the redemption of capital equity certificates held by
inactive direct members and patrons and active direct members and patrons at
age 72 or death that were of age 61 or older on June 1, 1998. For active direct
members and patrons who were of age 60 or younger on June 1, 1998, and member
cooperatives, equities older than 10 years will be redeemed annually based on a
prorata formula where the numerator is dollars available for such purpose as
determined by the Board of Directors, and the denominator is the sum of the
patronage certificates older than 10 years held by such eligible members and
patrons. For the years ended August 31, 2002, 2001 and 2000, the Company
redeemed patronage related equities in accordance with authorization from the
Board of Directors in the amounts of $31.1 million, $18.7 million and $28.7
million, respectively. Total redemptions related to the year ended August 31,
2002, to be distributed in fiscal year 2003, are expected to be approximately
$28.6 million and are classified as a current liability on the August 31, 2002
consolidated balance sheet.

     During the year ended May 31, 1997, the Company offered securities in the
form of Equity Participation Units (EPUs) in its Wheat Milling and Oilseed
Processing and Refining Defined Business Units. These EPUs gave the holder the
right and obligation to deliver to the Company a stated number of bushels in
return for a prorata share of the undiluted grain based patronage earnings of
these respective Defined Business Units. The offering resulted in the issuance
of such equity with a stated value of $13,870,000 and generated additional
capital and cash of $10,837,000, after issuance cost and conversion privileges.
Conversion privileges allowed a member to elect to use outstanding patrons'
equities for the payment of up to one-sixth the purchase price of the EPUs.
During 2001, the Company's Board of Directors adopted a resolution to issue, at
no charge, to each Defined Member of the Oilseed Processing and Refining
Defined Business Unit an additional 1/4 Equity Participation Unit (EPU) for
each EPU held, due to increased crush volume.

     In August 2001, the CHS Cooperatives Board of Directors approved and
consummated a plan to end the Defined Investment Program. The Company redeemed
all of the EPUs and allocated the assets of the Oilseed Processing and Refining
and Wheat Milling Defined Business Units to the Company as provided in the
plan. Due to loss carry-forwards incurred by the Wheat Milling Defined Business
Unit the plan also provided for the cancellation of all outstanding Preferred
Capital Certificates issued to the EPU holders, totaling $0.2 million. The plan
further provided to the Oilseed Processing Defined Member EPU holders for the
redemption of all outstanding Preferred Capital Certificates issued and a 100%
cash distribution during 2002 for the patronage refunds earned for the fiscal
year ended August 31, 2001.

     The Board of Directors authorized the sale and issuance of up to
50,000,000 shares of 8% Preferred Stock at a price of $1.00 per share. The
Company filed a registration statement on Form S-2 with the Securities and
Exchange Commission registering the Preferred Stock. The registration statement
was declared effective on October 31, 2001 and sales of the Preferred Stock
were $9.3 million through August 31, 2002. Expenses related to the issuance of
the Preferred Stock were $3.4 million through the same period. Sales of the
preferred shares have been suspended.

OFF BALANCE SHEET FINANCING ARRANGEMENTS

LEASE COMMITMENTS:
     The Company has commitments under operating leases for various refinery,
manufacturing and transportation equipment, rail cars, vehicles and office
space. Some leases include purchase options at not less than fair market value
at the end of the leases.

     Total rental expense for all operating leases, net of rail car mileage
credits received from the railroad and sublease income for the years ended
August 31, 2002, 2001 an 2000 was $30.2 million, $35.5 million and $38.0
million, respectively.


                                       27
<PAGE>


     Minimum future lease payments, required under noncancellable operating
leases as of August 31, 2002, were as follows:

                                                      TOTAL
                                             ----------------------
                                              (DOLLARS IN MILLIONS)
                2003 .....................          $  33.0
                2004 .....................             24.2
                2005 .....................             16.0
                2006 .....................              8.9
                2007 .....................              5.1
                Thereafter ...............              4.8
                                                    -------
                Total minimum future lease
                payments .................          $  92.0
                                                    =======

GUARANTEES:
     The Company is a guarantor for lines of credit for related companies
totaling up to $86.2 million, of which $45.1 million was outstanding as of
August 31, 2002. The Company's bank covenants allow maximum guarantees of
$100.0 million. All outstanding loans with respective creditors are current as
of August 31, 2002.

DEBT:
     There is no material off balance sheet debt.

CRITICAL ACCOUNTING POLICIES
     The consolidated financial statements of the Company are prepared in
conformity with accounting principles generally accepted in the United States
of America. The preparation of these consolidated financial statements requires
the use of estimates as well as management's judgments and assumptions
regarding matters that are subjective, uncertain or involve a high degree of
complexity, all of which affect the results of operations and financial
condition for the periods presented. The Company believes that of its
significant accounting policies, the following may involve a higher degree of
estimates, judgments, and complexity.

ALLOWANCES FOR DOUBTFUL ACCOUNTS
     The allowances for doubtful accounts are maintained at a level considered
appropriate by management based on analyses of credit quality for specific
accounts, historical trends of charge-offs and recoveries, and current and
projected economic and market conditions. Different assumptions, changes in
economic circumstances or the deterioration of the financial condition of the
Company's customers could result in additional provisions to the allowances for
doubtful accounts and increased bad debt expense.

INVENTORY VALUATION AND RESERVES
     Grain, processed grain, oilseed and processed oilseed are stated at net
realizable values, which approximates market values. All other inventories are
stated at the lower of cost or market. The cost of certain energy inventories
(wholesale refined products, crude oil and asphalt) are determined on the
last-in, first-out (LIFO) method; all other energy inventories are valued on
the first-in, first-out (FIFO) and average cost methods. Estimates are used in
determining the net realizable value of grain and oilseed and processed grain
and oilseed inventories. These estimates include the measurement of grain in
bins and other storage facilities, which use formulas in addition to actual
measurements taken to arrive at appropriate quantity. Other determinations made
by management include quality of the inventory and estimates for freight. Grain
shrink reserves and other reserves that account for spoilage also affect
inventory valuation. If estimates regarding the valuation of inventory or the
adequacy of reserves are less favorable than management's assumptions, then
additional reserves or write-downs of inventory may be required.

DERIVATIVE FINANCIAL INSTRUMENTS
     The Company enters into exchange-traded commodity futures and options
contracts to hedge its exposure to price fluctuations on energy, grain and
oilseed transactions to the extent considered


                                       28
<PAGE>


practicable for minimizing risk. The Company does not use derivatives for
speculative purposes. Futures and options contracts used for hedging are
purchased and sold through regulated commodity exchanges. Fluctuations in
inventory valuations, however, 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 the Company's assessment of its exposure from
expected price fluctuations. The Company also manages its risks by entering
into fixed price purchase contracts with pre-approved producers and
establishing appropriate limits for individual suppliers. Fixed price sales
contracts are entered into with customers of acceptable creditworthiness, as
internally evaluated. The Company is exposed to loss in the event of
nonperformance by the counterparties to the contracts. However, the Company
does not anticipate nonperformance by counterparties. The fair value of futures
and options contracts are determined primarily from quotes listed on regulated
commodity exchanges. Fixed price purchase and sales contracts are with various
counterparties, and the fair values of such contracts are determined from the
market price of the underlying product.

     The Company adopted Financial Accounting Standards Board (FASB) Statement
of Financial Accounting Standards (SFAS) No. 133, as amended, a standard
related to the accounting for derivative transactions and hedging activities,
effective September 1, 2000. Such accounting is complex, evidenced by
significant interpretations of the primary accounting standard, which continues
to evolve.

PENSION AND POSTRETIREMENT BENEFITS
     Pension and other postretirement benefits costs and obligations are
dependent on assumptions used in calculating such amounts. These assumptions
include discount rates, health care cost trend rates, benefits earned, interest
cost, expected return on plan assets, mortality rates, and other factors. In
accordance with accounting principles generally accepted in the United States
of America, actual results that differ from the assumptions are accumulated and
amortized over future periods and, therefore, generally affect recognized
expense and the recorded obligation in future periods. While management
believes that the assumptions used are appropriate, differences in actual
experience or changes in assumptions may affect the Company's pension and other
postretirement obligations and future expense.

DEFERRED TAX ASSETS
     The Company assesses whether a valuation allowance is necessary to reduce
its deferred tax assets to the amount that it believes is more likely than not
to be realized. While the Company has considered future taxable income as well
as other factors in assessing the need for the valuation allowance, in the
event that the Company were to determine that it would not be able to realize
all or part of its net deferred tax assets in the future, an adjustment to the
deferred tax assets would be charged to income in the period such determination
was made.

LONG-LIVED ASSETS
     Depreciation and amortization of the Company's property, plant and
equipment is provided on the straight-line method by charges to operations at
rates based upon the expected useful lives of individual or groups of assets.
Economic circumstances or other factors may cause management's estimates of
expected useful lives to differ from actual.

     All long-lived assets, including property plant and equipment, goodwill,
investments in unconsolidated affiliates and other identifiable intangibles,
are evaluated for impairment on the basis of undiscounted cash flows at least
annually for goodwill, and whenever events or changes in circumstances indicate
that the carrying amount of an asset may not be recoverable. An impaired asset
is written down to its estimated fair market value based on the best
information available. Estimated fair market value is generally measured by
discounting estimated future cash flows. Considerable management judgment is
necessary to estimate discounted future cash flows and may differ from actual.

ENVIRONMENTAL LIABILITIES
     Liabilities related to remediation of contaminated properties are
recognized when the related costs are considered probable and can be reasonably
estimated. Estimates of these costs are based on current available facts,
existing technology, undiscounted site-specific costs and currently enacted
laws and regulations. Recoveries, if any, are recorded in the period in which
recovery is considered probable. It is


                                       29
<PAGE>


often difficult to estimate the cost of environmental compliance, remediation
and potential claims given the uncertainties regarding the interpretation and
enforcement of applicable environmental laws and regulations, the extent of
environmental contamination and the existence of alternate cleanup methods. All
liabilities are monitored and adjusted as new facts or changes in law or
technology occur and management believes adequate provisions have been made for
environmental liabilities. Changes in facts or circumstances may have an
adverse impact on the Company's financial results.

EFFECT OF INFLATION AND FOREIGN CURRENCY TRANSACTIONS
     The Company believes that inflation and foreign currency fluctuations have
not had a significant effect on its operations.

RECENT ACCOUNTING PRONOUNCEMENTS
     Effective September 1, 2001 the Company adopted the provisions of
Financial Accounting Standards Board (FASB) Statement of Financial Accounting
Standards (SFAS) No. 142, "Goodwill and Other Intangible Assets". The adoption
of this pronouncement did not have a material impact on the Company's
consolidated financial statements.

     The FASB issued SFAS No. 143, "Accounting for Asset Retirement
Obligations" which addresses financial accounting and reporting for obligations
associated with the retirement of tangible long-lived assets and the associated
asset retirement costs. SFAS No. 143 is effective for financial statements
issued for fiscal years beginning after June 15, 2002. The adoption of this
statement does not have a material affect on the Company.

     The FASB also issued SFAS No. 144, "Accounting for the Impairment or
Disposal of Long-Lived Assets." This statement addresses financial accounting
and reporting for the impairment or disposal of long-lived assets. SFAS No. 144
retains and expands upon the fundamental provisions of existing guidance
related to the recognition and measurement of the impairment of long-lived
assets to be held and used and the measurement of long-lived assets to be
disposed of by sale. Generally, the provisions of SFAS No. 144 are effective
for financial statements issued for fiscal years beginning after December 15,
2001 and interim periods within those fiscal years. The adoption of this
statement does not have a material affect on the Company.

     The FASB issued SFAS No. 146, "Accounting for Costs Associated with Exit
or Disposal Activities". This statement addresses financial accounting and
reporting for costs associated with an exit activity that does not involve an
entity newly acquired in a business combination or with a disposal activity
covered by SFAS No. 144. The costs addressed in SFAS No. 146 include, but are
not limited to, termination benefits, costs to terminate a contract that is not
a capital lease and costs to consolidate facilities or relocate employees. SFAS
No. 146 is effective for exit or disposal activities that are initiated after
December 31, 2002.

ITEM 7(A). QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

COMMODITY PRICE RISK
     The Company utilizes futures and options contracts offered through
regulated commodity exchanges to reduce risk. The Company is exposed to risk of
loss in the market value of inventories and fixed or partially fixed purchase
and sales contracts. So as to reduce that risk, the Company generally takes
opposite and offsetting positions using futures contracts or options.

     Certain commodities cannot be hedged with futures or options contracts
because such contracts are not offered for these commodities by regulated
commodity exchanges. Inventories and purchase contracts for those commodities
are hedged with forward sales contracts to the extent practical so as to arrive
at a net commodity position within the formal position limits set by the
Company and deemed prudent for each of those commodities. Commodities for which
futures contracts and options are available are also typically hedged first in
this manner, with futures and options used to hedge within position limits that
portion not covered by forward contracts. These futures and options contracts
and forward purchase and sales cash contracts used to hedge against price level
change risks are effective economic hedges of specified risks, but they are not
designated as and accounted for as hedging instruments for accounting purposes.


                                       30
<PAGE>


     Unrealized gains and losses on futures contracts and options used as
economic hedges of grain and oilseed inventories and fixed price contracts are
recognized in cost of goods sold for financial reporting. Inventories and fixed
price contracts are marked to market so that gains or losses on the derivative
contracts are offset by gains or losses on inventories and fixed priced
contracts during the same accounting period.

     Through August 31, 2000, unrealized gains and losses on futures contracts
and options used to hedge energy inventories and fixed price contracts were
deferred until such futures contracts and options were closed. Effective
September 1, 2000 those gains and losses are recognized as a component of net
income for financial reporting. The inventories hedged with these derivatives
are valued at lower of cost or market, and effective September 1, 2000, the
fixed price contracts are marked to market. Some derivatives related to propane
in the Energy segment meet the normal purchase and sales exemption, and thus
are not required to be marked to fair value.

     A 10% adverse change in market prices would not materially affect the
Company's results of operations, financial position or liquidity, since the
Company's operations have effective economic hedging requirements as a general
business practice.

INTEREST RATE RISK

     The Company manages interest expense using a mix of fixed and floating
rate debt. These debt instruments are carried at amounts approximating
estimated fair value. Short-term debt used to finance inventories and
receivables is represented by notes payable within thirty days or less so that
the blended interest rate to the Company for all such notes approximates
current market rates. Long-term debt used to finance non-current assets carries
various fixed interest rates and is payable at various dates as to minimize the
effect of market interest rate changes. The effective interest rate to the
Company on fixed rate debt outstanding on August 31, 2002 was approximately
6.4%; a 10% adverse change in market rates would not materially affect the
Company's results of operations, financial position or liquidity.

     In August 2002, the Company entered into interest rate swap instruments
related to private placement debt issued on October 18, 2002 in order to
protect against a potential increase in interest rates. In fact, interest rates
declined between the dates of the interest swaps and the closing of the
borrowing transaction. These derivative instruments are designated and
effective as cash flow hedges for accounting purposes and the changes in fair
values of these instruments are recorded as a component of other comprehensive
income. The Company expects to record additional interest expense of $0.8
million during the year ended August 31, 2003 related to these derivative
instruments as an offset to the lower interest rates actually obtained on the
debt instruments.

FOREIGN CURRENCY RISK

     The Company conducts essentially all of its business in U.S. dollars and
had essentially no risk regarding foreign currency fluctuations on August 31,
2002. Foreign currency fluctuations do, however, impact the ability of foreign
buyers to purchase U.S. agricultural products and the competitiveness of U.S.
agricultural products compared to the same products offered by alternative
sources of world supply.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

     The financial statements listed in 15(a)(1) are set forth beginning on
page F-1. The Company is not required to provide the supplementary financial
information required by Item 302 of Regulation S-K in this Annual Report on
Form 10-K. Financial statement schedules are omitted because they are not
applicable or the required information is shown in the financial statements or
notes thereto.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
        FINANCIAL DISCLOSURE

   None.


                                       31
<PAGE>


                                   PART III.

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

                              BOARD OF DIRECTORS

   The table below lists the directors of the Company as of August 31, 2002.

                                                 DIRECTOR
NAME AND ADDRESS                         AGE     DISTRICT     SINCE
- -------------------------------------   -----   ----------   ------
  Bruce Anderson                         50         3         1995
  13500 42nd St NE
  Glenburn, ND 58740-9564

  Robert Bass                            48         5         1994
  E 639 -- 1 Bass Road
  Reedsburg, WI 53959

  Steven Burnet                          62         6         1983
  94699 Monkland Lane
  Moro, OR 97039-9705

  Dennis Carlson                         41         3         2001
  3255 50th Street
  Mandan, ND 58554

  Curt Eischens                          50         1         1990
  2153 -- 330th St North
  Minneota, MN 56264-1880

  Robert Elliott                         52         8         1996
  324 Hillcrest
  Alliance, NE 69301

  Robert Grabarski                       53         5         1999
  1770 Highway 21
  Arkdale, WI 54613

  Jerry Hasnedl                          56         1         1995
  RR 1, Box 39
  St. Hilaire, MN 56754

  Glen Keppy                             55         7         1999
  21316 -- 155th Avenue
  Davenport, IA 52804

  James Kile                             54         6         1992
  508 W. Bell Lane
  St. John, WA 99171

  Randy Knecht                           52         4         2001
  40193 -- 112th Street
  Houghton, SD 57449

  Leonard Larsen                         66         3         1993
  5128 -- 11th Ave. N.
  Granville, ND 58741-9595

  Richard Owen                           48         2         1999
  PO Box 129
  Geraldine, MT 59446


                                       32
<PAGE>


NAME AND ADDRESS                        AGE     DISTRICT     SINCE
- ------------------------------------   -----   ----------   ------
  Duane Stenzel                         56         1         1993
  RR 2, Box 173
  Wells, MN 56097

  Michael Toelle                        40         1         1992
  RR 1, Box 190
  Browns Valley, MN 56219

  Merlin Van Walleghen                  66         4         1993
  24106 -- 408th Avenue
  Letcher, SD 57359-6021

  Elroy Webster                         69         1         1982
  Route 2, Box 123
  Nicollet, MN 56074

     BRUCE ANDERSON was elected to the board in 1995. He has held positions
with North Dakota Farmers Union, Farmers Union Mutual Insurance Co. and has
served a four-year term in the North Dakota House of Representatives. He is a
member of the North Dakota Agricultural Products Utilization Commission. Mr.
Anderson and his wife raise small grains on their farm near Glenburn, North
Dakota.

     ROBERT BASS, elected to the board in 1994, operates a 500-acre dairy and
feed grain farm with his wife and brother near Reedsburg, Wisconsin. Mr. Bass
currently serves as a member of the board of Co-op Country Partners in Baraboo,
Wisconsin. He holds a B.S. degree from the University of Wisconsin in
agricultural education and is a former vo-ag teacher.

     STEVEN BURNET has been a board member since 1983, has served as Chairman
of the board since 1999, and has served as past Chairman of Harvest States
Cooperatives from 1992 through 1997. He is a member of the Oregon Wheat Growers
League and the Oregon Cattlemen's Association. Mr. Burnet is a past president
of Mid-Columbia Grain Growers and past vice president of North Pacific Grain
Growers. He serves as a director on the Agricultural Co-op Council of Oregon
and is a former board member of the Oregon State University Alumni Association.
Mr. Burnet and his wife grow dryland wheat and barley, and support a cow/calf
and yearling operation with irrigated hay and pasture.

     DENNIS CARLSON was elected to the board in 2001. He is chairman of Farmers
Union Oil Co. of Bismarck/Mandan, N.D. and has served on that board since 1989.
Mr. Carlson, a third-generation cooperative member, has a diversified farm in
partnership with his parents that include wheat, sunflowers and a cow/calf
operation.

     CURT EISCHENS was elected to the board in 1990. He has been a director for
Farmers Co-op Association in Canby for ten years, nine as chairman. He is
director of the Minnesota Association of Cooperatives, and a member of the
Minnesota Soybean Association and Minnesota Farmers Union. Mr. Eischens and his
wife operate a corn and soybean farm near Canby, Minnesota.

     ROBERT ELLIOTT, elected to the board in 1996, is the first director for
the region consisting of Nebraska, Kansas, Oklahoma, Colorado, Texas and New
Mexico. He and his wife operate a 6,000-acre farm near Alliance, Nebraska. Mr.
Elliott is president of the Hemingford Scholarship Foundation and serves on the
Nationwide Insurance Board Counsel. He is past president of the Nebraska Wheat
Growers Association and served on the boards of Western Cooperative Alliance
(Westco) and New Alliance Bean & Grain Company.

     ROBERT GRABARSKI was elected to the Board in 1999, and has a long history
of cooperative leadership. He currently serves as Board Chairman of Wisconsin
River Cooperative, Adams, Wisconsin, and as First Vice Chairman of Alto Dairy
Cooperative, Waupun, Wisconsin. He is active in a wide range of civic
organizations, including serving on the fire department in the Adams Volunteer
Fire District, as well as volunteer auctioneering for local charitable
organizations. Mr. Grabarski and his wife and son operate a 1,900 acre-farm and
milk 90 registered Holsteins.


                                       33
<PAGE>


     JERRY HASNEDL was elected to the board in 1995. He is a member and past
director of Northwest Grain, a Cenex Harvest States Cooperatives
regionalization; a member of Farmers Union Oil Co. in Thief River Falls; Garden
Valley Telephone Co-op in Erskine; Red Lake Electric Co-op in Red Lake Falls;
Minnesota Wheat Growers; and Minnesota Barley Growers. He is currently serving
on the interim board for Minnesota Marketplace. He and his wife raise wheat,
barley, corn, soybeans, sunflowers and alfalfa on their northern Minnesota
farm.

     GLEN KEPPY was elected to the board in 1999. Active in a wide range of
agricultural and civic organizations, Mr. Keppy has served on the boards of the
Iowa and National Pork Producer Associations. He is a three-time Master Soybean
Grower contest winner and the recipient of the Iowa Farm Bureau's distinguished
service award. A graduate of the University of Wisconsin-Platteville with a
degree in technical agriculture, Mr. Keppy was drafted by the Pittsburgh
Steelers and also played for the Detroit Lions and Green Bay Packers. He and
his wife operate a third-generation family farm consisting of a
farrow-to-finish hog operation and 1,000 acres of corn, soybeans, oats and
alfalfa hay.

     JAMES KILE, the first graduate of Young Producer Institute to join the
board, was elected in 1992. He served 18 years, 10 as chairman, on the board of
his local St. John Grange Supply, and represents CHS Cooperatives on the
Washington State Council of Farmer Cooperatives and is a member of Grange and
Washington Association of Wheat Growers. He and his wife operate a 1,300-acre
dryland wheat, barley and pea operation near St. John, Washington.

     RANDY KNECHT was elected to the board in 2001. Mr. Knecht has served on
the board of Four Seasons Cooperative, Britton, S.D., for seven years, is
chairman of the Northern Electric Cooperative board and is a member of the
board of Dakota Value Capture Cooperative, Pierre, S.D. He holds a B.S. degree
in agriculture from South Dakota University. With his father and a son, Mr.
Knecht raises 4,000 acres of corn, beans, wheat and alfalfa. He also maintains
a 450-head cow/calf operation.

     LEONARD LARSEN has been a board member since 1993. He is a member of the
Farmers Union Oil Companies in Minot and Velva, Cenex Harvest States Sunprairie
Grain, and Dakota Growers Pasta Company. Starting as a board member of the
Simcoe Elevator in 1970, Leonard served through the unification with the Minot
Farmers Union Elevator, where he was a board member for 11 years and chairman
for six. He has served on the Hendrickson Township board, the First Lutheran
Church council, and the Granville Economic Development Corporation. He is a
member of the North Dakota Farmers Union and a 34-year member of the American
Legion. He and his wife and a son, farm a grain, sunflower, canola and flax
operation.

     RICHARD OWEN was elected to the board in 1999. His involvement in
agriculture and civic organizations includes serving as secretary of the
Central Montana Co-op, Geraldine, Mont., since 1994. Mr. Owen has served as
president of the Equity Co-op Association, Geraldine, Mont., and vice chair of
the Montana International Agricultural Exchange Association. He is a graduate
of Montana State University, Bozeman, and has served on the university's board
of directors. Mr. Owen and his wife operate a 2,200-acre dryland wheat, barley
and safflower operation.

     DUANE STENZEL was elected to the board in 1993. He is a member of Watonwan
Farm Service; Wells Farmers Elevator, where he served as board president and
secretary. He raises 665 acres of soybeans, sweet corn and corn on his farm in
south central Minnesota.

     MICHAEL TOELLE was elected to the board in 1992. He has been serving on
the board of Country Partners Cooperative of Browns Valley for 12 years and as
chairman for the past eight years. He also is actively involved in National FFA
Organization, Ag Council of America, Minnesota Wheat Growers, Minnesota Corn
Growers and Minnesota Soybean Growers associations. He currently serves as
chairman of the Finance & Investment Committee for the Cenex Harvest States
Foundation. He and his wife operate a grain, hog and beef farm with his brother
and parents near Browns Valley.

     MERLIN VAN WALLEGHEN has been a board member since 1993. He is a former
director of Farmers Co-op Elevator Association of Mitchell, Letcher and
Alexandria, serving as board president for 11 years. Mr. Van Walleghen also
served 10 years on the South Dakota Association of Cooperatives board of
directors, eight as president. A former FmHA committee member, he is currently
chairman of the


                                       34
<PAGE>


Sanborn County Development board and also a member of Heartland Consumer Power
District board. He and his wife and a son, operate a grain farm producing corn
and soybeans.

     ELROY WEBSTER was elected to the board in 1982 and served as the chairman
from 1987 to 1999. His leadership record includes service as a director for the
Minnesota Association of Cooperatives, Western Co-op Transport Association and
Agland Cooperative. Mr. Webster is past chairman of the Agricultural Council of
America and is chairman of the Board of Trustees for the Cenex Harvest States
Foundation. He also works with Southwest State University as an advisor for its
Cooperative Studies program. He is an active farmer with a corn and soybean
operation near Nicollet, Minnesota.

     Elections are for three-year terms and are open to any eligible candidate.
To be eligible, a candidate must meet the following qualifications:

     o    At the time of the election, the individual must be less than the age
          of 68.

     o    The individual must be a member of this cooperative or a member of a
          Cooperative Association Member.

     o    The individual must reside in the region from which he or she is to be
          elected.

     o    The individual must be an active farmer or rancher. "Active farmer or
          rancher" means an individual whose primary occupation is that of a
          farmer or rancher, excluding any full-time employee of the Company or
          of a Cooperative Association Member.

     o    The individual must currently be serving or shall have served at least
          one full term as a director of a Cooperative Association Member of
          this cooperative.

     The following positions on the Board of Directors will be elected at the
2002 Annual Meeting of Members:

REGION                                             CURRENT INCUMBENT
- -------------------------------------------   --------------------------
Region 1 (Minnesota)                          Curt Eischens
                                              Jerry Hasnedl

Region 2 (Montana, Wyoming)                   Richard Owen

Region 3 (North Dakota)                       Bruce Anderson

Region 5 (Connecticut, Indiana, Illinois,     Robert Grabarski
       Kentucky, Michigan, Ohio,
       Wisconsin)

Region 6 (Alaska, Arizona, California,        Steve Burnet (not seeking
       Idaho, Oregon, Washington,             re-election)
       Utah)

Region 7 (Alabama, Arkansas, Florida,         Glen Keppy
       Iowa, Louisiana, Missouri,
       Mississippi)


                                       35
<PAGE>


                              EXECUTIVE OFFICERS

     The table below lists the executive officers and other senior officers of
the Company as of August 31, 2002. Officers are appointed annually by the Board
of Directors.

<TABLE>
<CAPTION>
NAME                   AGE                                POSITION
- -------------------   -----   ---------------------------------------------------------------
<S>                   <C>     <C>
John D. Johnson        54     President and Chief Executive Officer
Patrick Kluempke       54     Executive Vice President -- Corporate Planning
Tom Larson             54     Executive Vice President -- Public Affairs
Mark Palmquist         45     Executive Vice President/Chief Operating Officer -- Grains and
                                Foods
John Schmitz           52     Executive Vice President and Chief Financial Officer
Leon E. Westbrock      55     Executive Vice President/Chief Operating Officer -- Energy and
                                Crop Inputs
</TABLE>

     JOHN D. JOHNSON was born in Rhame, North Dakota, and grew up in Spearfish,
South Dakota. He earned a degree in business administration and a minor in
economics from Black Hills State University. In 1976, he joined Harvest States
Cooperatives as a feed consultant in the GTA Feeds Division, later becoming
regional sales manager, Director of Sales and Marketing and then General
Manager of GTA Feeds. In 1992, he was elected Group Vice President of Farm
Marketing and Supply for Harvest States Cooperatives and was selected President
and CEO in January 1995. Mr. Johnson became President and General Manager of
Cenex Harvest State Cooperatives upon its creation June 1, 1998 and was named
President and Chief Executive Officer on June 1, 2000. Mr. Johnson serves on CF
Industries, Inc. and National Cooperative Refinery Association boards of
directors.

     PATRICK KLUEMPKE, Executive Vice President of Corporate Planning, was
raised on a family dairy farm in central Minnesota, and received a Bachelor of
Science degree in Finance and Accounting from St. Cloud University and the
University of Minnesota. Mr. Kluempke served in the United States Army in South
Vietnam and South Korea, as Aide to General J. Guthrie. He began his
agribusiness career in grain procurement and merchandising at General Mills and
later with Louis Dreyfus Corporation in export marketing. Mr. Kluempke joined
the predecessor to CHS Cooperatives when G.T.A. was being merged with North
Pacific Grain Growers, in 1983, to form Harvest States Cooperatives and has
held various positions in the commodity marketing division and at the corporate
level. He was named to the position of Senior Vice President of Corporate
Planning and Business Development in 1993 and held that position until 2000
when he was named to his current position. Mr. Kluempke serves on the board of
Ventura Foods, a joint venture company between CHS Cooperatives and Mitsui &
Company, Japan.

     TOM LARSON is Executive Vice President, Public Affairs at CHS
Cooperatives. After growing up on a 480-acre crop and hog farm near Slayton,
Minnesota, he earned a Bachelor's degree in Agriculture Education from South
Dakota State University. After working as a vo-ag teacher, he took an agronomy
sales position with Cenex, Inc. and later managed the local cooperative at
Hoffman, Minnesota, for two years. Mr. Larson returned to the regional
cooperative in 1978 and held positions in marketing and planning. He moved to
Agronomy in 1987 and became director of Agronomy Services for Cenex/Land
O'Lakes Agronomy Company in 1988. He was later named Vice President of Agronomy
Services until 1996 when he became Vice President of Cenex Supply and Marketing
which included overseeing the operation of more than two dozen Cenex-owned
agricultural supply outlets. Mr. Larson was named to his current position in
January 1999. He oversees the public affairs area of the Company, which
includes communications, corporate giving, meetings and travel and governmental
affairs, including the Washington, D.C. office. He is active in the FFA
organization and is a recipient of its Honorary American Degree.

     MARK PALMQUIST is the Executive Vice President and Chief Operating Officer
of Grains and Foods. He is responsible for all related areas of grains
including country operations, terminal operations, exports, logistics,
transportation and grain marketing joint ventures. He is also responsible for
the operations of wheat milling, oilseed processing and refining, and food
manufacturing and packaging. Mr. Palmquist has worked for CHS Cooperatives for
21 years. Starting as a grain buyer and moving into merchandising, he has
traded many different commodities including corn, soybeans and spring wheat. In


                                       36
<PAGE>


1990, he assumed the role of Vice President and director of Grain Marketing and
then in 1993, was promoted to Senior Vice President, which he held until 2000
when he was named to his current position. Mr. Palmquist attended Gustavus
Adolphus College in St. Peter, Minnesota, graduating in 1979. He also attended
the Master of Business Administration program at the University of Minnesota.
Mr. Palmquist serves on Ventura Foods board of directors.

     JOHN SCHMITZ is the Executive Vice President and Chief Financial Officer
of the Company. Mr. Schmitz joined Harvest States Cooperatives in 1974 as
Corporate Accountant and has held a number of accounting and finance positions
within the Company, including divisional controller positions in Country
Services, Farm Marketing & Supply and Grain Marketing. In 1986, he was named
Vice President and Controller of Harvest States Cooperatives, and had served in
that position up to the time of the merger with Cenex when he became Vice
President, Finance, of CHS Cooperatives. In May 1999, Mr. Schmitz became Senior
Vice President and Chief Financial Officer. Mr. Schmitz earned a Bachelor of
Science Degree in Accounting from St. Cloud State University, and is a member
of the American Institute of Certified Public Accountants, the Minnesota
Society of CPA's and the National Society of Accountants for Cooperatives. Mr.
Schmitz serves on National Cooperative Refinery Association and Ventura Foods
boards of directors.

     LEON E. WESTBROCK is the Executive Vice President and Chief Operating
Officer of Energy and Crop Inputs for the Company. He joined the cooperative
system in 1976 and managed three local cooperatives before joining the regional
system. At the regional level, Mr. Westbrock served in the Merchandising
Department at Cenex, Inc. and then later as Manager of the Lubricants
Department and as Director of Retailing. Since January 1, 1987, he served as
Vice President and Executive Vice President in the Energy Division of the
Company. On March 1, 2000 Mr. Westbrock was appointed to his current position.
He serves as chairman for both National Cooperative Refinery Association and
Universal Cooperatives, Inc. boards of directors and also serves as a member of
the Agriliance, LLC board of directors. Mr. Westbrock received a Bachelor's
Degree from St. Cloud State University and served a tour in the U.S. Army.


                                       37
<PAGE>


ITEM 11. EXECUTIVE COMPENSATION

     SUMMARY COMPENSATION. The following table sets forth the cash and noncash
compensation earned by the Chief Executive Officer and each of the executive
officers of the Company whose total salary and bonus or similar incentive
payment earned during the year ended August 31, 2002, exceeded $100,000 (the
"Named Executive Officers"):

                          SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
                                                                                                                     LONG-TERM
                                                               ANNUAL COMPENSATION                                  COMPENSATION
                                 -------------------------------------------------------------------------------   -------------
  NAME AND                                                                    OTHER ANNUAL         ALL OTHER            LTIP
PRINCIPAL POSITION                YEAR ENDED     SALARY(1)     BONUS(1)     COMPENSATION(2)     COMPENSATION(3)      PAYOUTS(1)
- -------------------------------- ------------   -----------   ----------   -----------------   -----------------   -------------
<S>                              <C>            <C>           <C>          <C>                 <C>                 <C>
John. D. Johnson                   8/31/02       $820,000      $811,750         $30,376             $10,216
 President and Chief Executive     8/31/01        787,500       747,338           8,600               9,606
 Officer                           8/31/00        600,000       540,000          14,672              12,720           $719,280

Patrick Kluempke                   8/31/02        223,000       166,875          15,120              10,873
 Executive Vice President --       8/31/01        200,000       162,675           3,780               6,010
 Corporate Planning                8/31/00        176,500        68,664           8,194               7,068             92,995

Tom Larson                         8/31/02        229,100       172,200          18,878              10,214
 Executive Vice President --       8/31/01        200,000       167,850          16,130               8,189
 Public Affairs                    8/31/00        182,768        71,665           6,240               7,160             97,060

Mark Palmquist                     8/31/02        453,400       342,000          15,120              11,081
 Executive Vice President and      8/31/01        375,000       232,680          14,111               5,863
 Chief Operating Officer --        8/31/00        262,932       235,168           2,620               7,068            184,273
 Grains and Foods

John Schmitz                       8/31/02        317,300       244,500          21,856              12,255
 Executive Vice President and      8/31/01        275,000       232,500           2,520               7,080
 Chief Financial Officer           8/31/00        210,583       100,377              82               8,566            135,947

Leon E. Westbrock                  8/31/02        453,400       342,000          15,120              12,057
 Executive Vice President and      8/31/01        375,000       332,400           7,320               5,116
 Chief Operating Officer --        8/31/00        323,750        86,745                               4,808            184,273
 Energy and Crop Inputs
</TABLE>

- ------------------
(1) Amounts shown include amounts deferred at the employee's election under the
    Company's Deferred Compensation Program and amounts waived in exchange for
    options under the Company's Share Option Plan.

(2) Amounts shown include personal use of a Company vehicle.

(3) Other compensation includes the Company's matching contributions under the
    Company's 401(k) Plan and the portion of group term life insurance
    premiums paid by the Company.

     On September 1, 2000, the Company entered into an employment agreement
with John D. Johnson, the President and CEO. The employment agreement provides
for a rolling three-year period of employment commencing on September 1, 2000
at an initial base salary of at least $787,500, subject to annual review.
Either party, subject to the rights and obligations set forth in the employment
agreement, may terminate Mr. Johnson's employment at any time. The Company is
obligated to pay Mr. Johnson a severance allowance of 2.99 times his base
salary and target bonus in the event Mr. Johnson's employment is terminated for
any reason other than for cause (as such term is defined in the employment
agreement), death, disability or voluntary termination. The employment
agreement includes a provision to pay Mr. Johnson a severance allowance of 2.99
times his base salary and target bonus in the event of the consolidation of the
Company's business with the business of any other entity, if Johnson is not
offered the position of Chief Executive Officer of the combined entity. The
contract provides for a gross-up for any possible excise tax. Mr. Johnson has
also agreed to a non-compete clause of two years, in the event of his
termination.


                       REPORT ON EXECUTIVE COMPENSATION
     The Corporate Responsibility Committee of the Board of Directors, subject
to the approval of the Board of Directors, determines the compensation of Cenex
Harvest States Cooperatives chief executive officer and oversees the
administration of the executive compensation programs.


                                       38
<PAGE>


EXECUTIVE COMPENSATION POLICIES AND PROGRAMS
     Cenex Harvest States Cooperatives executive compensation programs are
designed to attract and retain highly qualified executives and to motivate them
to optimize member owner returns by achieving aggressive goals. The
compensation program links executive compensation directly to the Company's
performance. A significant portion of each executive's compensation is
dependent upon value-added operations and meeting financial goals and other
individual performance objectives.

     Each year, the Committee reviews the executive compensation policies with
respect to the correlation between executive compensation and the creation of
member owner value, as well as the competitiveness of the programs. The
Committee determines what, if any, changes are appropriate to executive
compensation programs of Cenex Harvest States Cooperatives. The Committee
recommends to the total Board of Directors, salary actions relative to the
chief executive officer and determines the amount of annual variable pay and
the amount of long-term awards.

     The Company intends to the extent possible, to preserve the deductibility
under the Internal Revenue Code of compensation paid to its executive officers
while maintaining compensation programs to attract and retain highly qualified
executives in a competitive environment. Accordingly, compensation paid under
Cenex Harvest States Cooperatives share option plan and incentive compensation
plan is generally deductible.

COMPONENTS OF COMPENSATION
     There are three basic components to the Cenex Harvest States Cooperatives
executive compensation plan: base pay; annual variable pay; and long-term
variable pay (grants in the share option plan). Each component is designed to
be competitive within the executive compensation market. In determining
competitive compensation levels, the Company analyzes information from several
independent compensation surveys, which include information regarding a
comparable all-industrial market and other companies that compete for executive
talent.

     BASE PAY: Base pay is designed to be competitive at the 50th percentile of
other large companies for equivalent positions. The executive's actual salary
relative to this competitive benchmark varies based on individual performance
and the individual's skills, experience and background.

     ANNUAL VARIABLE PAY: Award levels, like the base pay levels, are set with
reference to competitive conditions and are intended to motivate the executives
by providing substantial incentive payments for the achievement of aggressive
goals. The actual amounts paid for 2002 were determined based on two factors:
first, profitability and financial performance of the Company and the
executive's business unit; and second, the individual executive's performance
against other specific management objectives such as revenue growth, value
added performance, talent development. Financial objectives are given greater
weight than individual performance objectives in determining individual awards.
The types and relative importance of specific financial and other business
objectives varied among executives depending upon their positions and the
particular business unit for which they were responsible.

     LONG-TERM VARIABLE PAY: The main purpose of the long-term variable pay
program is to encourage the Cenex Harvest States Cooperatives' executives to
increase the value of doing business with the Company by increasing and
improving value added business opportunities and therefore the value of member
owners doing business with Cenex Harvest States Cooperatives. The long-term
variable pay component of the compensation program (through extended vesting)
is also designed to create an incentive for the individual to remain with the
Company.

     The long-term variable pay program consists of grants of shares in the
restricted investment corporations sponsored by Cenex Harvest States
Cooperatives. These options vest over a multi-year period. The Company
periodically grants new awards to provide continuing incentives for future
performance. Like the annual variable pay, award levels are set with regard to
competitive considerations and each individual's actual award is based on
financial performance of the Company, collectively. No grant was awarded in
2002 due to the fact that no award period had matured during the fiscal year.

COMPENSATION OF THE CHIEF EXECUTIVE OFFICER
     In determining the compensation of the chief executive officer, the
Committee considers three factors: the absolute and relative performance of the
business particularly as it relates to variable pay;


                                       39
<PAGE>


the market for such positions; and Cenex Harvest States Cooperatives
compensation strategy in determining the mix of base, annual, and long-term
variable pay.

     In general, the Company's strategy is to distribute pay for the chief
executive officer among the three basic components so that it effectively
reflects the competitive market with major consideration for achievement of
individual performance objectives.

     Mr. Johnson's actual base salary for fiscal year 2002 was $820,000. Based
on Cenex Harvest States Cooperatives financial performance in terms of
profitability and other individual goals related to achieving communications
objectives, business partner accountability and other strategic objectives, Mr.
Johnson received an annual variable pay award of $811,750 for fiscal year 2002.
This incentive payment was consistent with his achievement of performance
standards set by the Board of Directors.

     Mr. Johnson received no long-term variable pay award for fiscal year 2002
as no award period had matured during that time.

     THE FOLLOWING SUMMARIZES CERTAIN BENEFITS IN EFFECT AS OF AUGUST 31, 2002
TO THE NAMED EXECUTIVE OFFICERS.

MANAGEMENT COMPENSATION INCENTIVE PROGRAM
     Each Named Executive Officer is eligible to participate in the Management
Compensation Incentive Program (the "Incentive Program") for the year ending
August 31, 2002. The Incentive Program is based on Company, group or division
performance and individual performance. These amounts will be paid after August
31, 2002. The target incentive is 50% of base compensation except for the
President and Chief Executive Officer, where target incentive is 67% of base
compensation.

LONG-TERM INCENTIVE PLAN
     Each Named Executive Officer is eligible to participate in the Long-Term
Incentive Plan. The plan consists of a three-year performance period. Award
opportunities are expressed as a percentage of a participating employee's
position mid-point. Company performance must meet a minimum level of pre-tax
earnings per unit of sales and net income levels before any grants are made
from this plan. Awards from the plan are grants to the Company's Share Option
Plan at the end of each plan period.

            LONG-TERM INCENTIVE PLANS -- AWARDS IN LAST FISCAL YEAR

<TABLE>
<CAPTION>
                                                          MATURATION
NAME AND PRINCIPAL POSITION                     AWARD      OF AWARD     THRESHOLD       TARGET        MAXIMUM
- --------------------------------------------   -------   -----------   -----------   -----------   ------------
<S>                                              <C>      <C>            <C>          <C>           <C>
John. D. Johnson                                 -0-      2001-2003      $82,000      $549,400      $ 820,000
 President and Chief Executive Officer

Patrick Kluempke                                 -0-      2001-2003       16,875       111,806        166,875
 Executive Vice President -- Corporate
 Planning

Tom Larson                                       -0-      2001-2003       17,220       115,374        172,200
 Executive Vice President -- Public Affairs

Mark Palmquist                                   -0-      2001-2003       34,200       229,140        342,000
 Executive Vice President and Chief
 Operating Officer -- Grain and Foods

John Schmitz                                     -0-      2001-2003       24,450       163,815        244,500
 Executive Vice President and Chief
 Financial Officer

Leon E. Westbrock                                -0-      2001-2003       34,200       229,140        342,000
 Executive Vice President and Chief
 Operating Officer -- Energy and Crop
 Inputs
</TABLE>

RETIREMENT PLAN
     Each of the Named Executive Officers is entitled to receive benefits under
the Company's Cash Balance Retirement Plan (the "Retirement Plan"). An
employee's benefit under the Retirement Plan


                                       40
<PAGE>


depends on credits to the employee's account, which are based on the employee's
total salary each year the employee works for the Company, the length of
service with the Company and the rate of interest credited to the employee's
account balance each year. Credits are made to the employee's account from Pay
Credits, Special Career Credits and Investment Credits.

     The amount of Pay Credits added to an employee's account each year is a
percentage of the employee's gross salary, including overtime pay, commissions,
severance pay, bonuses, any compensation reduction pursuant to the 401(k) Plan
and any pretax contribution to any of the Company's welfare benefit plans, paid
vacations, paid leaves of absence and pay received if away from work due to a
sickness or injury. The Pay Credits percentage received is determined on a
yearly basis, based on the years of Benefit Service completed as of January 1
of each year. An employee receives one year of Benefit Service for every
calendar year of employment in which the employee completed at least 1,000
hours of service.

     Effective January 1, 2002, Pay Credits are earned according to the
following schedule:

<TABLE>
<CAPTION>
                                  PAY BELOW SOCIAL SECURITY     PAY ABOVE SOCIAL SECURITY
YEARS OF BENEFIT SERVICE              TAXABLE WAGE BASE             TAXABLE WAGE BASE
- ------------------------------   ---------------------------   --------------------------
<S>                                          <C>                           <C>
   1 to 3 years ..............               3%                             6%
   4 to 7 years ..............               4%                             8%
   8 to 11 years .............               5%                            10%
   12 to 15 years ............               6%                            12%
   16 years and more .........               7%                            14%
</TABLE>

     The Company credits an employee's account at the end of the year with an
Investment Credit based on the balance at the beginning of the year. The
Investment Credit is based on the average return for one-year U.S. Treasury
Bills for the preceding 12-month period. The maximum Investment Credit will not
exceed 12% for any year.

     As of December 31, 2001, the dollar value of the account and years of
service for each of the Named Executive Officers was:

                                   DOLLAR VALUE     YEARS OF SERVICE
                                  --------------   -----------------
   John D. Johnson ............      $884,775              26
   Patrick Kluempke ...........       433,378              19
   Tom Larson .................       361,813              25
   Mark Palmquist .............       474,183              22
   John Schmitz ...............       414,876              27
   Leon E. Westbrock ..........       942,075              21

SHARE OPTION PLAN
     In October 1997, the Company adopted a Share Option Plan. Participants in
the plan, which include all Named Executive Officers, are select management of
the Company who have been designated as eligible by the President of the
Company to participate in such plan. The Share Option Plan allows participants
to waive bonuses and up to 30 percent of salary in exchange for options to
purchase at a discount, shares of selected mutual funds. The Company has filed
a Form S-8, dated December 12, 1997 on this program. This plan allows officers
to buy investments at a specific price. Some options have vesting schedules.


                                       41
<PAGE>


     The following is a share option grants table showing each Named Executive
Officer option activity for the fiscal year ended August 31, 2002. The dollars
in the "Realizable Value" columns of the table are computed as of the
expiration date. All grants are salary exchanges, and not additional income to
the employee.

<TABLE>
<CAPTION>
                                            % OF           $
                         NUMBER OF         TOTAL       EXERCISE     EXPIRATION     REALIZABLE     REALIZABLE     REALIZABLE
NAME                     SECURITIES       OPTIONS        PRICE         DATE         VALUE 5%       VALUE 10%      VALUE 0%
- -------------------   ---------------   -----------   ----------   ------------   ------------   ------------   -----------
<S>                     <C>                <C>         <C>          <C>            <C>            <C>            <C>
John. D. Johnson          5,555.5556        12.20%     $  9.00       9/30/2021     $  139,298     $  370,013     $  37,500
John. D. Johnson        107,328.2050        28.77%        9.75      12/31/2021      2,776,543      7,039,992       784,837
John. D. Johnson          7,723.9960        14.31%        9.70       3/31/2022        198,997        504,562        56,192
John. D. Johnson          8,522.720         19.59%        8.80       6/30/2022        198,997        504,562        56,250
Patrick Kluempke         22,430.1960         6.01%        9.67      12/31/2021        575,501      1,459,195       162,675
Mark Palmquist              860.2151         1.89%        9.30       9/30/2021         21,227         51,373         6,000
Mark Palmquist           32,308.6290         8.66%        9.85      12/31/2021        844,386      2,140,960       238,680
Mark Palmquist              816.3270         1.51%        9.79       3/31/2022         21,227         51,373         5,994
Mark Palmquist              876.2320         2.01%        9.13       6/30/2022         21,227         51,373         6,000
Leon E. Westbrock        45,832.4720        12.28%        9.67      12/31/2021      1,175,941      2,981,628       332,400
</TABLE>

     The following is a share option grants table showing each Named Executive
Officer, along with the number and value of shares exercised for the fiscal
year ended August 31, 2002, and the number of underlying unexercised options
and the value of unexercised in-the-money options, as of the most recent
statement period ended June 30, 2002.

<TABLE>
<CAPTION>
                                                             NUMBER OF         NUMBER OF         VALUE OF         VALUE OF
                                                            SECURITIES         SECURITIES       UNEXERCISED      UNEXERCISED
                                             VALUE OF       UNDERLYING         UNDERLYING      IN-THE-MONEY     IN-THE-MONEY
                           NUMBER OF          SHARES          OPTIONS           OPTIONS           OPTIONS          OPTIONS
NAME                   SHARES EXERCISED     EXERCISED       EXERCISABLE      UNEXERCISABLE      EXERCISABLE     UNEXERCISABLE
- -------------------   ------------------   -----------   ----------------   ---------------   --------------   --------------
<S>                   <C>                  <C>               <C>                <C>             <C>                <C>
John. D. Johnson                                             312,229.323        8,522.727       $1,969,996         $56,250
Patrick Kluempke                                             103,183.870                           640,424
Thomas Larson                                                 56,364.534                           357,119
Mark Palmquist        31,036.000           $221,287           33,110.324          876.232          220,737           6,000
John Schmitz                                                  34,297.224                           234,644
Leon E. Westbrock                                            479,558.960                         3,091,117
</TABLE>

401(k) PLAN
     Each Named Executive Officer is eligible to participate in the Cenex
Harvest States Savings Plan (the 401(k) Plan). All benefit-eligible employees
of the Company are eligible to participate in the 401(k) Plan. Effective
January 1, 2002, participants may contribute between 1% and 50% (not to exceed
6% in the case of "highly compensated" employees) of their pay on a pre-tax
basis. Each of the Named Executive Officers is a "highly compensated" employee.
The Company matches 50% of the first 6% of pay contributed each year. The
Company's Board of Directors may elect to reduce or eliminate matching
contributions for any year or any portion thereof. Participants are 100% vested
in their own contributions and are fully vested after three years of service in
any Company matching contribution made on the participant's behalf.

DEFERRED COMPENSATION SUPPLEMENTAL RETIREMENT PLAN
     Each of the Named Executive Officers may participate in the Company's
Deferred Compensation Supplemental Retirement Plan (the Supplemental Plan).
Participants in the Supplemental Plan are select management or highly
compensated employees of the Company who have been designated as eligible by
the President of the Company to participate in such plan. Compensation waived
under the Share Option Plan is not eligible for Pay Credits under the Cash
Balance Retirement Plan or matching contributions under the 401(k) Plan. The
Supplemental Plan is intended to replace the benefits lost under those plans
due to Section 415 of the Internal Revenue Code of 1986, as amended (the Code)
which cannot be considered for purposes of benefits due to Section 401(a)(17)
of the Code under the qualified plans that the Company offers. The Supplemental
Plan is not funded or qualified for special tax treatment under the Code.


                                       42
<PAGE>


     As of December 31, 2001, the dollar value of the account of each of the
Named Executive Officers was approximately:

                 John D. Johnson .................    $1,601,593
                 Patrick Kluempke ................        65,334
                 Tom Larson ......................       246,945
                 Mark Palmquist ..................       158,241
                 John Schmitz ....................       128,210
                 Leon E. Westbrock ...............       790,757

DIRECTORS' COMPENSATION
     The Board of Directors met monthly during the year ended August 31, 2002.
Through August 31, 2002, the Company provided each director with compensation
of $42,000, paid in twelve monthly payments, with the Chairman of the Board
receiving an additional annual compensation of $12,000, paid in twelve monthly
payments. Each director receives a per diem of $300 plus actual expenses and
travel allowance for each day spent on Company meetings (other than regular
Board meetings and the Annual Meeting), life insurance and health and dental
insurance. Each director has a retirement benefit of $125 per month per year of
service, with a maximum benefit of $1,875 per month, for life with a guarantee
of 120 months (paid to beneficiary in the event of death). This benefit
commences at age 60 or retirement, whichever is later. This retirement benefit
may be converted to a lump sum. The retired directors may also continue health
benefits until eligible for Medicare and thereafter pay at their own expense
for a Medicare supplemental policy. The retirement benefit was raised to $175
per month effective for retirements after December 31, 2002.

COMMITTEES OF THE BOARD OF DIRECTORS
     The Board of Directors appoints ad hoc committees from time to time to
review certain matters and make reports and recommendations to the full Board
of Directors for action. The entire Board of Directors determines the salaries
and incentive compensation for the President and Chief Executive Officer using
industry and compensation studies. The Board of Directors has a standing
committee to review the results and scope of the annual audit and other
services provided by the Company's independent auditors, and another standing
committee to review equity redemption policy and its application to situations
believed by the equity holder or patron's equity department to be unusual.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
     As noted above, the Company's Board of Directors did not have a
Compensation Committee. The entire Board of Directors determined the
compensation of the President and Chief Executive Officer and the terms of the
employment agreement with the President and Chief Executive Officer. The
President and Chief Executive Officer determined the compensation for all other
executive officers.


                                       43
<PAGE>


ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

   Beneficial ownership of equity securities as of August 31, 2002, is shown
         below:

<TABLE>
<CAPTION>
                                                                                AMOUNT AND
                                                                                NATURE OF
                                                                                BENEFICIAL
TITLE OF CLASS                     NAME OF BENEFICIAL OWNER(1)                   OWNERSHIP       % OF CLASS
- --------------       -------------------------------------------------------   --------------    ----------
<S>                  <C>                                                        <C>                 <C>
8% Preferred Stock   Directors:
                       Steven Burnet .......................................               --
                       Bruce Anderson ......................................               --
                       Robert Bass .........................................     3,000 shares        *
                       Dennis Carlson ......................................     1,500 shares        *
                       Curt Eischens .......................................     3,000 shares        *
                       Robert Elliott ......................................     6,000 shares        *
                       Robert Grabarski ....................................    12,000 shares        *
                       Jerry Hasnedl .......................................     1,000 shares        *
                       Glen Keppy ..........................................     5,000 shares        *
                       Jim Kile ............................................     3,000 shares        *
                       Randy Knecht ........................................     1,000 shares        *
                       Leonard Larsen ......................................     2,000 shares        *
                       Richard Owen ........................................     6,000 shares        *
                       Duane Stenzel .......................................    10,000 shares        *
                       Michael Toelle ......................................     5,500 shares        *
                       Merlin Van Walleghen ................................    30,000 shares        *
                       Elroy Webster .......................................    10,000 shares        *

                     Executive Officers:
                       John D. Johnson .....................................    60,000 shares        *
                       Patrick Kluempke ....................................     6,000 shares        *
                       Tom Larson ..........................................     1,000 shares        *
                       Mark Palmquist ......................................    10,000 shares        *
                       John Schmitz ........................................    25,000 shares        *
                       Leon E. Westbrock ...................................    10,000 shares        *
                                                                               --------------      ---
                       Directors and executive officers as a group .........   211,000 shares      2.3%
</TABLE>

- ------------------
(1) Includes shares held by spouse and children.

 *  Less than 1%.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
     Because directors must be active patrons of the Company or an Affiliated
Association, transactions between the Company and directors are customary and
expected. Transactions include the sale of commodities to the Company and the
purchase of products and services from the Company, as well as patronage
refunds and equity redemptions received from the Company. During the period
indicated, the value of those transactions between a particular director (and
members of such directors' immediate family, which includes such director's
spouse; parents; children; siblings; mothers and fathers-in-law; sons and
daughters-in-law; and brothers and sisters-in-law) and the Company that
exceeded $60,000 are shown below.

                                                                YEAR ENDED
   NAME                                                       AUGUST 31, 2002
   ----                                                       ---------------
   Bruce Anderson .........................................      $ 66,777
   Jerry Hasnedl ..........................................       442,288
   Leonard Larsen .........................................       140,893
   Merlin Van Walleghen ...................................       106,643


                                       44
<PAGE>


                                   PART IV.

ITEM 14. CONTROLS AND PROCEDURES
     The Company's Chief Executive Officer and Chief Financial Officer have
concluded, based on their evaluation within 90 days of the filing date of this
report, that the Company's disclosure controls and procedures are adequately
designed to ensure that information required to be disclosed by the Company in
the reports that it files or submits under the Securities and Exchange Act of
1934, as amended, is recorded, processed, summarized and reported, within the
time periods specified in applicable rules and forms. There have not been any
significant changes in the Company's internal controls or in other factors that
could significantly affect those controls, subsequent to the date of such
evaluation, including any corrective actions taken with regard to significant
deficiencies and material weaknesses.

ITEM 15. EXHIBITS, FINANCIAL STATEMENTS AND REPORTS FILED ON FORM 8-K

(a)(1) FINANCIAL STATEMENTS
     The following financial statements and the Reports of Independent
Accountants are filed as part of this Form 10-K.

<TABLE>
<CAPTION>
                                                                                                          PAGE NO.
                                                                                                         ---------
<S>    <C>                                                                                               <C>
       CENEX HARVEST STATES COOPERATIVES
       Consolidated Balance Sheets as of August 31, 2002 and 2001 ....................................      F-1
       Consolidated Statements of Operations for the years ended August 31, 2002, 2001 and 2000 ......      F-2
       Consolidated Statements of Equities and Comprehensive Income for the years ended
         August 31, 2002, 2001 and 2000 ..............................................................      F-4
       Consolidated Statements of Cash Flows for the years ended August 31, 2002, 2001 and 2000 ......      F-6
       Notes to Consolidated Financial Statements ....................................................      F-7
       Report of Independent Accountants .............................................................      F-26

       VENTURA FOODS, LLC, A NON-CONSOLIDATED 50% OWNED EQUITY INVESTMENT
       Independent Auditors' Report ..................................................................      F-27
       Consolidated Balance Sheets as of March 31, 2002 and 2001 .....................................      F-28
       Consolidated Statements of Income for the years ended March 31, 2002, December 31, 2000
         and 1999 and the three months ended March 31, 2001 ..........................................      F-29
       Consolidated Statements of Members' Capital for the years ended March 31, 2002,
         December 31, 2000 and 1999 and the three months ended March 31, 2001 ........................      F-30
       Consolidated Statements of Cash Flows for the years ended March 31, 2002, December 31,
         2000 and 1999 and the three months ended March 31, 2001 .....................................      F-31
       Notes to Consolidated Financial Statements for the years ended March 31, 2002, December 31,
         2000 and 1999 and the three months ended March 31, 2001 .....................................      F-32
</TABLE>

- ------------------
*Audited financial statements for Ventura Foods, LLC, as of and for the year
ended March 31, 2003 will be filed by an amendment to this Form 10-K.

(a)(2) FINANCIAL STATEMENT SCHEDULES
     Financial statement schedules are omitted because they are not applicable
or the required information is shown in the financial statements or notes
thereto.

(a)(3) EXHIBITS

<TABLE>
<S>          <C>
  3.1        Amended and Restated Articles of Incorporation of the Company. (1)
  3.2        Amended and Restated By-Laws of the Company. (15)
  4.1        Cenex Harvest States Cooperatives Certificate of Designations for the 8% Preferred
             Stock. (12)
 10.1        Lease between the Port of Kalama and North Pacific Grain Growers, Inc., dated
             November 22, 1960. (2)
 10.2        Limited Liability Company Agreement for the Wilsey-Holsum Foods, LLC dated July 24,
             1996. (2)
</TABLE>

                                       45
<PAGE>


<TABLE>
<S>         <C>
10.3        Long Term Supply Agreement between Wilsey-Holsum Foods, LLC and Harvest States
            Cooperatives dated August 30, 1996. (*) (2)
10.4        TEMCO, LLC Limited Liability Company Agreement between Cargill, Incorporated and
            Cenex Harvest States Cooperatives dated as of August 26, 2002. (15)
10.5        Cenex Harvest States Cooperatives Supplemental Savings Plan. (9)
10.6        Cenex Harvest States Cooperatives Supplemental Executive Retirement Plan. (9)
10.7        Cenex Harvest States Cooperatives Senior Management Compensation Plan. (9)
10.8        Cenex Harvest States Cooperatives Executive Long-Term Variable Compensation Plan. (9)
10.9        Cenex Harvest States Cooperatives Share Option Plan. (9)
10.9A       Amendment to Cenex Harvest States Share Option Plan, dated June 28, 2001. (12)
10.10       $225,000,000 Note Agreement (Private Placement Agreement) dated as of June 19, 1998
            among Cenex Harvest States Cooperatives and each of the Purchases of the Notes. (3)
10.11       $400 Million 364-day and $200 Million 5-Year Revolving Loan Credit Agreement dated as
            of June 1, 1998 among Cenex Harvest States Cooperatives, CoBank, ACB, St. Paul Bank
            for Cooperatives, et al., including Exhibit 2.4 (form of 364-Day Facility Note) and Exhibit
            3.4 (form of 5-Year Note). (3)
10.11A      First Amendment to Credit Agreement (Revolving Loan), effective as of May 31, 1999
            among Cenex Harvest States Cooperatives, CoBank, ACB, NationsBank, N.A. and St. Paul
            Bank for Cooperatives. (5)
10.11B      Second Amendment to Credit Agreement (Revolving Loan) dated May 23, 2000 by and
            among Cenex Harvest States Cooperatives, CoBank, ACB, Bank of America, SunTrust
            Bank and the Syndication Parties. (8)
10.11C      Third Amendment to Credit Agreement (Revolving Loan) dated May 23, 2001 among
            Cenex Harvest States Cooperatives, CoBank, ACB, Cooperatieve Centrale Raiffeisen-
            Boerenleenbank, B.A., SunTrust Bank, BNP Paribas and the Syndication Parties. (11)
10.11D      Fourth Amendment to Credit Agreement (Revolving Loan) dated May 22, 2002 among
            Cenex Harvest States Cooperatives, CoBank, ACB, Cooperatieve Centrale Raiffeisen-
            Boerenleenbank, B.A., SunTrust Bank, Deere Credit, Inc., Credit Lyonnais Chicago Branch
            and the Syndication Parties. (14)
10.12       $200 Million Term Loan Credit Agreement dated as of June 1, 1998 among Cenex Harvest
            States Cooperatives, CoBank, ACB, and St. Paul Bank for Cooperatives, including Exhibit
            2.4 (form of $200 Million Promissory Note). (3)
10.12A      First Amendment to Credit Agreement (Term Loan), effective as of May 31, 1999 among
            Cenex Harvest States Cooperatives, CoBank, ACB, and St. Paul Bank for Cooperatives. (5)
10.12B      Second Amendment to Credit Agreement (Term Loan) dated May 23, 2000 by and among
            Cenex Harvest States Cooperatives, CoBank, ACB, St. Paul Bank for Cooperatives and the
            Syndication Parties. (8)
10.12C      Third Amendment to Credit Agreement (Term Loan) dated May 23, 2001 among Cenex
            Harvest States Cooperatives, CoBank, ACB, and the Syndication Parties. (11)
10.12D      Fourth Amendment to Credit Agreement (Term Loan) dated May 22, 2002 among Cenex
            Harvest States Cooperatives, CoBank, ACB and the Syndication Parties. (14)
10.13       Limited Liability Agreement of United Harvest, LLC dated November 9, 1998 between
            United Grain Corporation and Cenex Harvest States Cooperatives. (4)
</TABLE>

                                       46
<PAGE>


<TABLE>
<S>          <C>
10.14        $50 Million 364-Day Revolving Loan Credit Agreement dated as of December 21, 1999
             among National Cooperative Refinery Association, CoBank, ACB, Mercantile Bank and
             Bank of America, N.A. (6)
10.14A       First Amendment to Credit Agreement (364-Day Revolving Loan) dated December 19,
             2000 by and among National Cooperative Refinery Association, CoBank, ACB and Firstar
             Bank, N.A. (13)
10.15        Joint Venture Agreement for Agriliance LLC, dated as of January 1, 2000 among Farmland
             Industries, Inc., Cenex Harvest States Cooperatives, United Country Brands, LLC and
             Land O' Lakes, Inc. (7)
10.16        Employment Agreement dated September 1, 2000 by and between John D. Johnson and
             Cenex Harvest States Cooperatives. (9)
10.17        Note purchase and Private Shelf Agreement dated as of January 10, 2001 between Cenex
             Harvest States Cooperatives and The Prudential Insurance Company of America. (10)
10.17A       Amendment No. 1 to Note Purchase and Private Shelf Agreement, dated as of March 2,
             2001. (10)
10.18        Note Purchase Agreement and Series D & E Senior Notes dated October 18, 2002. (15)
21.1         Subsidiaries of the Registrant. (15)
23.1         Consent of Independent Accountants. (15)
23.2         Independent Auditors' Consent. (15)
24.1         Power of Attorney. (15)
99.1         Cautionary Statement. (15)
99.2         Statement under oath of John D. Johnson, principal executive officer regarding the facts
             and circumstances relating to Exchange Act filings required by Order 4-460. (15)
99.3         Statement under oath of John Schmitz, principal financial officer regarding the facts and
             circumstances relating to Exchange Act filings required by Order 4-460. (15)
99.4         Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of
             the Sarbanes-Oxley Act of 2002. (15)
99.5         Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of
             the Sarbanes-Oxley Act of 2002. (15)
</TABLE>

- ------------------
 (*) Pursuant to Rule 406 of the Securities Act of 1933, as amended,
     confidential portions of Exhibit 10.3 have been deleted and filed
     separately with the Securities and Exchange Commission pursuant to a
     request for confidential treatment.

 (1) Incorporated by reference to the Company's Form 8-K filed June 10, 1998.

 (2) Incorporated by reference to the Company's Registration Statement on Form
     S-1 (File No. 333-17865), effective February 14, 1997.

 (3) Incorporated by reference to the Company's Form 10-Q Transition Report for
     the period June 1, 1998 to August 31, 1998, filed October 14, 1998.

 (4) Incorporated by reference to the Company's Form 10-Q for the quarterly
     period ended November 30, 1998, filed January 13, 1999.

 (5) Incorporated by reference to the Company's Form 10-Q for the quarterly
     period ended May 31, 1999, filed July 13, 1999.

 (6) Incorporated by reference to the Company's Form 10-Q for the quarterly
     period ended November 30, 1999, filed January 12, 2000.

 (7) Incorporated by reference to the Company's Form 10-Q for the quarterly
     period ended February 29, 2000 filed April 11, 2000.


                                       47
<PAGE>


 (8) Incorporated by reference to the Company's Form 10-Q for the quarterly
     period ended May 31, 2000, filed July 10, 2000.

 (9) Incorporated by reference to the Company's Form 10-K for the year ended
     August 31, 2000, filed November 22, 2000.

(10) Incorporated by reference to the Company's Form 10-Q for the quarterly
     period ended February 28, 2001, filed April 10, 2001.

(11) Incorporated by reference to the Company's Form 10-Q for the quarterly
     period ended May 31, 2001, filed July 3, 2001.

(12) Incorporated by reference to the Company's Registration Statement on Form
     S-2 (File No. 333-65364), effective October 31, 2001.

(13) Incorporated by reference to the Company's Form 10-K for the year ended
     August 31, 2001, filed November 19, 2001.

(14) Incorporated by reference to the Company's Form 10-Q for the quarterly
     period ended May 31, 2002, filed July 3, 2002.

(15) Filed herewith.

(b) REPORTS ON FORM 8-K
     No reports on Form 8-K have been filed by the Registrant during the fourth
quarter of the year ended August 31, 2002.

(c) EXHIBITS
     The exhibits shown in Item 15(a)(3) above are being filed herewith.

(d) SCHEDULES
     None.

SUPPLEMENTAL INFORMATION
     As a cooperative, the Company does not utilize proxy statements.


                                       48
<PAGE>


                                  SIGNATURES

     Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, as amended, the Registrant has duly caused this Report to
be signed on its behalf by the undersigned, thereunto duly authorized, on
November 25, 2002.
                         CENEX HARVEST STATES COOPERATIVES

                         By: /s/ JOHN D. JOHNSON
                             -----------------------------
                                 John D. Johnson
                     PRESIDENT AND CHIEF EXECUTIVE OFFICER

     Pursuant to the requirements of the Securities Exchange Act of 1934, this
Report has been signed below by the following persons on behalf of the
Registrant and in the capacities indicated on November 25, 2002:

<TABLE>
<CAPTION>
                           SIGNATURE                                                      TITLE
- ---------------------------------------------------------------   -----------------------------------------------------
<S>                                                               <C>
           /s/ JOHN D. JOHNSON                                    President and Chief Executive Officer
 -------------------------------------                              (principal executive officer)
                John D. Johnson

           /s/ JOHN SCHMITZ                                       Executive Vice President and Chief Financial Officer
 -------------------------------------                              (principal financial officer)
               John Schmitz

          /s/ JODELL HELLER                                       Vice President and Controller
 -------------------------------------                              (principal accounting officer)
               Jodell Heller

Steven Burnet*                                                    Chairman of the Board of Directors

Bruce Anderson*                                                   Director
Robert Bass*                                                      Director
Dennis Carlson*                                                   Director
Curt Eischens*                                                    Director
Robert Elliott*                                                   Director
Robert Grabarski*                                                 Director
Jerry Hasnedl*                                                    Director
Glen Keppy*                                                       Director
James Kile*                                                       Director
Randy Knecht*                                                     Director
Leonard Larsen*                                                   Director
Richard Owen*                                                     Director
Duane Stenzel*                                                    Director
Michael Toelle*                                                   Director
Merlin Van Walleghen*                                             Director
Elroy Webster*                                                    Director

* By: /s/ JOHN D. JOHNSON
      -------------------
        John D. Johnson
        ATTORNEY-IN-FACT
</TABLE>

                                       49
<PAGE>


                           SECTION 302 CERTIFICATION

I, John D. Johnson, certify that:

   1. I have reviewed this annual report on Form 10-K of Cenex Harvest States
      Cooperatives;

   2. Based on my knowledge, this annual 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 annual report.

   3. Based on my knowledge, the financial statements, and other financial
      information included in this annual 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
      annual report;

   4. The registrant's other certifying officers and I are responsible for
      establishing and maintaining disclosure controls and procedures (as
      defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and
      have:

      a. designed such disclosure controls and procedures 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 annual report
         is being prepared;

      b. evaluated the effectiveness of the registrant's disclosure controls
         and procedures as of a date within 90 days prior to the filing date of
         this annual report (the "Evaluation Date"); and

      c. presented in this annual report our conclusions about the
         effectiveness of the disclosure controls and procedures based on our
         evaluation as of the Evaluation Date;

   5. The registrant's other certifying officers and I have disclosed, based
      on our most recent evaluation, to the registrant's auditors and the audit
      committee of registrant's board of directors (or persons performing the
      equivalent functions):

      a. all significant deficiencies in the design or operation of internal
         controls which could adversely affect the registrant's ability to
         record, process, summarize and report financial data and have
         identified for the registrant's auditors any material weaknesses in
         internal controls; and

      b. any fraud, whether or not material, that involves management or other
         employees who have a significant role in the registrant's internal
         controls; and

   6. The registrant's other certifying officers and I have indicated in this
      annual report whether there were significant changes in internal controls
      or in other factors that could significantly affect internal controls
      subsequent to the date of our most recent evaluation, including any
      corrective actions with regard to significant deficiencies and material
      weaknesses.

Date: November 25, 2002

                                        /s/ John D. Johnson
                                        -------------------
                                        John D. Johnson
                                        President and Chief Executive Officer


                                       50
<PAGE>


                           SECTION 302 CERTIFICATION

I, John Schmitz, certify that:

   1. I have reviewed this annual report on Form 10-K of Cenex Harvest States
      Cooperatives;

   2. Based on my knowledge, this annual 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 annual report.

   3. Based on my knowledge, the financial statements, and other financial
      information included in this annual 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
      annual report;

   4. The registrant's other certifying officers and I are responsible for
      establishing and maintaining disclosure controls and procedures (as
      defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and
      have:

      a. designed such disclosure controls and procedures 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 annual report
         is being prepared;

      b. evaluated the effectiveness of the registrant's disclosure controls
         and procedures as of a date within 90 days prior to the filing date of
         this annual report (the "Evaluation Date"); and

      c. presented in this annual report our conclusions about the
         effectiveness of the disclosure controls and procedures based on our
         evaluation as of the Evaluation Date;

   5. The registrant's other certifying officers and I have disclosed, based
      on our most recent evaluation, to the registrant's auditors and the audit
      committee of registrant's board of directors (or persons performing the
      equivalent functions):

      a. all significant deficiencies in the design or operation of internal
         controls which could adversely affect the registrant's ability to
         record, process, summarize and report financial data and have
         identified for the registrant's auditors any material weaknesses in
         internal controls; and

      b. any fraud, whether or not material, that involves management or other
         employees who have a significant role in the registrant's internal
         controls; and

   6. The registrant's other certifying officers and I have indicated in this
      annual report whether there were significant changes in internal controls
      or in other factors that could significantly affect internal controls
      subsequent to the date of our most recent evaluation, including any
      corrective actions with regard to significant deficiencies and material
      weaknesses.

Date: November 25, 2002

                                        /s/ John Schmitz
                                        ----------------
                                        John Schmitz
                                        Executive Vice President and
                                        Chief Financial Officer


                                       51
<PAGE>


              CENEX HARVEST STATES COOPERATIVES AND SUBSIDIARIES

                          CONSOLIDATED BALANCE SHEETS
                           AUGUST 31, 2002 AND 2001

<TABLE>
<CAPTION>
                                                                     2002            2001
                                                                -------------   -------------
                                                                   (DOLLARS IN THOUSANDS)
<S>                                                             <C>             <C>
ASSETS
CURRENT ASSETS:
 Cash and cash equivalents ..................................    $  108,192      $  113,458
 Receivables ................................................       741,578         686,140
 Inventories ................................................       759,663         510,443
 Other current assets .......................................       140,944          60,995
                                                                 ----------      ----------
   Total current assets .....................................     1,750,377       1,371,036
Investments .................................................       496,607         467,953
Property, plant and equipment ...............................     1,057,421       1,023,872
Other assets ................................................       177,322         194,458
                                                                 ----------      ----------
   TOTAL ASSETS .............................................    $3,481,727      $3,057,319
                                                                 ==========      ==========
LIABILITIES AND EQUITIES
CURRENT LIABILITIES:
 Notes payable ..............................................    $  332,514      $   97,195
 Current portion of long-term debt ..........................        89,032          17,754
 Customer credit balances ...................................        26,461          38,486
 Customer advance payments ..................................       169,123         109,135
 Checks and drafts outstanding ..............................        84,251          87,808
 Accounts payable ...........................................       517,667         495,198
 Accrued expenses ...........................................       225,704         148,026
 Patronage dividends and equity retirements payable .........        56,510          72,154
                                                                 ----------      ----------
   Total current liabilities ................................     1,501,262       1,065,756
Long-term debt ..............................................       483,092         542,243
Other liabilities ...........................................       118,280          99,906
Minority interests in subsidiaries ..........................        89,455          88,261
Commitments and contingencies
Equities ....................................................     1,289,638       1,261,153
                                                                 ----------      ----------
   TOTAL LIABILITIES AND EQUITIES ...........................    $3,481,727      $3,057,319
                                                                 ==========      ==========
</TABLE>

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


                                      F-1
<PAGE>


              CENEX HARVEST STATES COOPERATIVES AND SUBSIDIARIES

                     CONSOLIDATED STATEMENTS OF OPERATIONS
                        FOR THE YEARS ENDED AUGUST 31,
<TABLE>
<CAPTION>
                                                       2002            2001            2000
                                                  -------------   -------------   -------------
                                                             (DOLLARS IN THOUSANDS)
<S>                                               <C>             <C>             <C>
REVENUES:
 Net sales ....................................    $7,731,867      $7,753,012      $8,497,850
 Patronage dividends ..........................         3,885           5,977           5,494
 Other revenues ...............................       109,459         116,254          97,471
                                                   ----------      ----------      ----------
                                                    7,845,211       7,875,243       8,600,815
Cost of goods sold ............................     7,513,369       7,470,203       8,300,494
Marketing, general and administrative .........       187,292         184,046         155,266
                                                   ----------      ----------      ----------
Operating earnings ............................       144,550         220,994         145,055
Interest ......................................        42,455          61,436          57,566
Equity income from investments ................       (58,133)        (28,494)        (28,325)
Minority interests ............................        15,390          35,098          24,546
                                                   ----------      ----------      ----------
INCOME BEFORE INCOME TAXES ....................       144,838         152,954          91,268
INCOME TAXES ..................................        18,700         (25,600)          3,880
                                                   ----------      ----------      ----------
NET INCOME ....................................    $  126,138      $  178,554      $   87,388
                                                   ==========      ==========      ==========
DISTRIBUTION OF NET INCOME:
 Patronage refunds ............................    $   92,900      $  128,900      $   87,400
 Unallocated capital reserve ..................        33,238          49,654             (12)
                                                   ----------      ----------      ----------
   Net income .................................    $  126,138      $  178,554      $   87,388
                                                   ==========      ==========      ==========
</TABLE>

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


                                      F-2
<PAGE>


                (This page has been left blank intentionally.)


                                      F-3
<PAGE>


              CENEX HARVEST STATES COOPERATIVES AND SUBSIDIARIES

          CONSOLIDATED STATEMENTS OF EQUITIES AND COMPREHENSIVE INCOME
              FOR THE YEARS ENDED AUGUST 31, 2002, 2001 AND 2000

<TABLE>
<CAPTION>
                                                                    CAPITAL       NONPATRONAGE                     WHEAT
                                                                    EQUITY           EQUITY        PREFERRED      MILLING
                                                                 CERTIFICATES     CERTIFICATES       STOCK         EPUS
                                                                --------------   --------------   -----------   ----------
                                                                                  (DOLLARS IN THOUSANDS)
<S>                                                               <C>               <C>              <C>         <C>
BALANCES, SEPTEMBER 1, 1999 .................................     $  912,294        $28,785                      $  9,258
 Patronage and equity retirement determination ..............         25,750
 Patronage distribution .....................................         41,182
 Equities retired ...........................................        (28,615)           (82)
 Equities issued ............................................          7,921
 Other, net .................................................           (178)          (194)                          (12)
 Comprehensive income:
  Net income ................................................
  Other comprehensive loss ..................................
 Total comprehensive income .................................
 Patronage dividends and equity retirements payable .........        (17,474)
                 --- ----                                         ----------        -------                      --------
BALANCES, AUGUST 31, 2000 ...................................        940,880         28,509                         9,246
 Patronage and equity retirement determination ..............         17,474
 Patronage distribution .....................................         60,304
 Equities retired ...........................................        (18,662)           (74)
 Equities issued ............................................          5,481
 Equity Participation Units issued ..........................
 Equity Participation Units redeemed ........................                                                      (9,066)
 Other, net .................................................           (120)          (277)                         (180)
 Comprehensive income:
  Net income ................................................
  Other comprehensive income ................................
 Total comprehensive income .................................
 Patronage dividends and equity retirements payable .........        (33,484)
                 --- ----                                         ----------        -------                      --------
BALANCES, AUGUST 31, 2001 ...................................        971,873         28,158                            --
 Patronage and equity retirement determination ..............         33,484
 Patronage distribution .....................................         92,484
 Equities retired ...........................................        (31,099)           (46)
 Equities issued ............................................          2,600
 Preferred stock issued, net ................................                                        $9,325
 Preferred stock dividends ..................................
 Other, net .................................................           (106)          (339)
 Comprehensive income:
  Net income ................................................
  Other comprehensive loss ..................................
 Total comprehensive income .................................
 Patronage dividends and equity retirements payable .........        (28,640)
                 --- ----                                         ----------        -------          ------      --------
BALANCES, AUGUST 31, 2002 ...................................     $1,040,596        $27,773          $9,325      $     --
                                                                  ==========        =======          ======      ========
</TABLE>

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


                                      F-4
<PAGE>


              CENEX HARVEST STATES COOPERATIVES AND SUBSIDIARIES

          CONSOLIDATED STATEMENTS OF EQUITIES AND COMPREHENSIVE INCOME
              FOR THE YEARS ENDED AUGUST 31, 2002, 2001 AND 2000
<TABLE>
<CAPTION>
 OILSEED PROCESSING                     UNALLOCATED     ACCUMULATED OTHER     ALLOCATED
     & REFINING          PATRONAGE        CAPITAL         COMPREHENSIVE        CAPITAL        TOTAL
        EPUS              REFUNDS         RESERVE         INCOME (LOSS)        RESERVE       EQUITIES
- --------------------   -------------   -------------   -------------------   ----------   -------------
                                        (DOLLARS IN THOUSANDS)
<C>                     <C>              <C>                <C>                <C>         <C>
      $   4,188         $   40,250       $115,883           $  (1,170)         $8,148      $1,117,636
                            17,250                                                             43,000
                           (57,500)        (1,588)                                            (17,906)
                                                                                              (28,697)
                                                                                                7,921
             (6)                              453                                 (28)             35

                            87,400            (12)                                             87,388
                                                               (1,257)                         (1,257)
                                                                                           ----------
                                                                                               86,131
                                                                                           ----------
                           (26,220)                                                           (43,694)
      ---------         ----------       --------           ---------          ------      ----------
          4,182             61,180        114,736              (2,427)          8,120       1,164,426
                            26,220                                                             43,694
                           (87,400)           967                                             (26,129)
                                                                                              (18,736)
                                                                                                5,481
          1,045                            (1,045)                                                 --
         (5,227)                                                                              (14,293)
                                              445                                 (70)           (202)

                           128,900         49,654                                             178,554
                                                                  512                             512
                                                                                           ----------
                                                                                              179,066
                                                                                           ----------
                           (38,670)                                                           (72,154)
      ---------         ----------       --------           ---------          ------      ----------
             --             90,230        164,757              (1,915)          8,050       1,261,153
                            38,670                                                             72,154
                          (128,900)        (3,666)                                            (40,082)
                                                                                              (31,145)
                                                                                                2,600
                                           (3,428)                                              5,897
                                             (240)                                               (240)
                                              100                                                (345)

                            92,900         33,238                                             126,138
                                                              (49,982)                        (49,982)
                                                                                           ----------
                                                                                               76,156
                                                                                           ----------
                           (27,870)                                                           (56,510)
      ---------         ----------       --------           ---------          ------      ----------
      $      --         $   65,030       $190,761           $ (51,897)         $8,050      $1,289,638
      =========         ==========       ========           =========          ======      ==========
</TABLE>

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


                                      F-5
<PAGE>


              CENEX HARVEST STATES COOPERATIVES AND SUBSIDIARIES

                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                        FOR THE YEARS ENDED AUGUST 31,

<TABLE>
<CAPTION>
                                                                             2002            2001           2000
                                                                        -------------   -------------   ------------
                                                                                    (DOLLARS IN THOUSANDS)
<S>                                                                      <C>             <C>             <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
 Net income .........................................................    $  126,138      $  178,554      $   87,388
 Adjustments to reconcile net income to net cash (used in)
  provided by operating activities:
  Depreciation and amortization .....................................       103,986         109,180          92,699
  Noncash net income from equity investments ........................       (58,133)        (28,494)        (28,325)
  Minority interests ................................................        15,390          35,098          24,546
  Noncash portion of patronage dividends received ...................        (2,327)         (3,896)         (6,825)
  (Gain) loss on sale of property, plant and equipment ..............        (6,418)        (13,941)          1,167
  Deferred tax expense (benefit) ....................................         4,400         (46,625)           (467)
  Other, net ........................................................         5,467            (801)         (3,130)
  Changes in operating assets and liabilities:
   Receivables ......................................................       (32,881)        147,641        (229,067)
   Inventories ......................................................      (259,209)         37,543           1,717
   Other current assets and other assets ............................       (88,941)        (24,129)         (7,041)
   Customer credit balances .........................................       (12,025)          1,707          (8,191)
   Customer advance payments ........................................        59,988         (22,800)          4,180
   Accounts payable and accrued expenses ............................        93,802        (129,258)        202,980
   Other liabilities ................................................         9,079          13,050          (3,244)
                                                                         ----------      ----------      ----------
    Net cash (used in) provided by operating activities .............       (41,684)        252,829         128,387
                                                                         ----------      ----------      ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
 Acquisition of property, plant and equipment .......................      (140,169)        (97,610)       (153,796)
 Proceeds from disposition of property, plant and equipment .........        20,205          35,263           7,655
 Investments ........................................................        (6,211)        (14,247)        (35,297)
 Equity investments redeemed ........................................        37,689          30,104          41,250
 Investments redeemed ...............................................         6,310           1,672           2,638
 Changes in notes receivable ........................................       (22,031)            533             600
 Acquisitions of intangibles ........................................       (29,501)         (7,328)        (26,513)
 Distribution to minority owners ....................................        (7,413)        (19,256)        (21,089)
 Other investing activities, net ....................................          (685)          1,775            (339)
                                                                         ----------      ----------      ----------
    Net cash used in investing activities ...........................      (141,806)        (69,094)       (184,891)
                                                                         ----------      ----------      ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
 Changes in notes payable ...........................................       235,319        (120,731)         20,940
 Long-term debt borrowings ..........................................        30,000         116,861          49,914
 Principal payments on long-term debt ...............................       (17,968)        (67,364)        (22,502)
 Changes in checks and drafts outstanding ...........................        (3,557)          3,722          35,481
 Proceeds from sale of preferred stock, net of expenses .............         5,897
 Preferred stock dividends paid .....................................          (240)
 Retirements of equity ..............................................       (31,145)        (18,736)        (28,697)
 Equity Participation Units redeemed ................................                       (14,293)
 Cash patronage dividends paid ......................................       (40,082)        (26,129)        (17,906)
                                                                         ----------      ----------      ----------
    Net cash provided by (used in) financing activities .............       178,224        (126,670)         37,230
                                                                         ----------      ----------      ----------
NET (DECREASE) INCREASE IN CASH AND
 CASH EQUIVALENTS ...................................................        (5,266)         57,065         (19,274)
CASH AND CASH EQUIVALENTS AT BEGINNING
 OF PERIOD ..........................................................       113,458          56,393          75,667
                                                                         ----------      ----------      ----------
CASH AND CASH EQUIVALENTS AT END OF PERIOD ..........................    $  108,192      $  113,458      $   56,393
                                                                         ==========      ==========      ==========
</TABLE>

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


                                      F-6
<PAGE>


              CENEX HARVEST STATES COOPERATIVES AND SUBSIDIARIES

                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     ORGANIZATION -- Cenex Harvest States Cooperatives (CHS Cooperatives or the
Company) is an agricultural cooperative organized for the mutual benefit of its
members. Members of the cooperative are located throughout the United States.
In addition to grain marketing, wheat milling, oilseed processing and refining
and foods, the Company provides its patrons with energy and agronomy products
as well as other farm supplies. Sales are both domestic and international.

     Effective September 1, 2000, the Company's Board of Directors approved a
resolution providing for the computation of patronage distributions based on
earnings for financial statement purposes rather than federal income tax basis
earnings. On December 1, 2000, this resolution was ratified by the Company's
members, the by-laws were amended and beginning with fiscal year 2001 patronage
distributions have been calculated based on financial statement earnings. The
by-laws further provide that an amount of up to 10% of the distributable annual
net savings from patronage sources be added to the unallocated capital reserve
as determined by the Board of Directors.

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

     On September 1, 1999, NCRA and Farmland Industries, Inc. (Farmland) formed
Cooperative Refining, LLC (CRLLC), which was established to operate and manage
the refineries and related pipelines and terminals of NCRA and Farmland. On
December 31, 2000, NCRA and Farmland signed an Agreement of Dissolution and
dissolved CRLLC.

     During 2000, the Company entered into a series of transactions, the result
of which was the exchange of its agronomy operations, consisting primarily of
its interests in and ownership of the Cenex/Land O'Lakes Agronomy Company and
Agro Distribution, LLC and related entities for a 25% equity ownership interest
in Agriliance, LLC (Agriliance). Agriliance is a distributor of crop nutrients,
crop protection products and other agronomy inputs and services formerly owned
by the Company, Land O'Lakes, Inc. (Land O'Lakes) and Farmland. The company
accounts for the Agriliance investment under the equity method.

     During 2002 and 2001, the Company had various other acquisitions, which
have been accounted for using the purchase method of accounting. Operating
results of the acquisitions are included in the consolidated financial
statements since the respective acquisition dates. The respective purchase
prices were allocated to the assets and liabilities acquired based upon the
estimated fair values. The excess purchase price over the estimated fair values
of the net assets acquired has been reported as identifiable intangible assets
and goodwill.

     CASH EQUIVALENTS -- Cash equivalents include short-term highly liquid
investments with original maturities of three months or less at date of
acquisition.

     INVENTORIES -- Grain, processed grain, oilseed and processed oilseed are
stated at net realizable values which approximates market values. All other
inventories are stated at the lower of cost or market. The cost of certain
energy inventories (wholesale refined products, crude oil and asphalt) is
determined on the last-in, first-out (LIFO) method; all other energy
inventories are valued on the first-in, first-out (FIFO) and average cost
methods.

     DERIVATIVE FINANCIAL INSTRUMENTS -- The Company enters into
exchange-traded commodity futures and options contracts to hedge its exposure
to price fluctuations on energy, grain and oilseed transactions to the extent
considered practicable for minimizing risk. Futures and options contracts used
for hedging are purchased and sold through regulated commodity exchanges.
Fluctuations in inventory valuations, however, 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 the Company's assessment of
its


                                      F-7
<PAGE>


              CENEX HARVEST STATES COOPERATIVES AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

 1.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

exposure from expected price fluctuations. The Company also manages its risks
by entering into fixed price purchase contracts with preapproved producers and
establishing appropriate limits for individual suppliers. Fixed price sales
contracts are entered into with customers of acceptable creditworthiness, as
internally evaluated. The Company is exposed to loss in the event of
nonperformance by the counterparties to the contracts. However, the Company
does not anticipate nonperformance by counterparties.

     Commodity trading in futures and options contracts is a natural extension
of cash market trading. The commodity futures and options markets have
underlying principles of increased liquidity and longer trading periods than
the cash market, and hedging is one method of reducing exposure to price
fluctuations. The Company's use of the derivative instruments described above
reduces the effects of price volatility, thereby protecting against adverse
short-term price movements while somewhat limiting the benefits of short-term
price movements. Changes in market value of the derivative instruments
described above are recognized in the consolidated statements of operations in
the period such changes occur. The fair value of futures and options contracts
are determined primarily from quotes listed on regulated commodity exchanges.
Fixed price purchase and sales contracts are with various counterparties, and
the fair values of such contracts are determined from the market price of the
underlying product. At August 31, 2002, the Company's derivative assets and
liabilities were $53.8 million and $67.9 million, respectively.

     COMMODITY PRICE RISK. The Company utilizes futures and options contracts
offered through regulated commodity exchanges to reduce risk. The Company is
exposed to risk of loss in the market value of inventories and fixed or
partially fixed purchase and sale contracts. So as to reduce that risk, the
Company generally takes opposite and offsetting positions using future
contracts or options. Certain commodities cannot be hedged with futures or
options contracts because such contracts are not offered for these commodities
by regulated commodity exchanges. Inventories and purchase contracts for those
commodities are hedged with forward sales contracts, to the extent practical,
so as to arrive at a net commodity position within the formal position limits
set by the Company and deemed prudent for each of those commodities.
Commodities for which future contracts and options are available are also
typically hedged first in this manner, with futures and options used to hedge
within position limits that portion not covered by forward contracts. These
futures and options contracts and forward purchase and sales contracts used to
hedge against price level change risks are effective economic hedges of
specified risks, but they are not designated as and accounted for as hedging
instruments for accounting purposes.

     Unrealized gains and losses on futures contracts and options used as
economic hedges of grain and oilseed inventories and fixed price contracts are
recognized in cost of goods sold for financial reporting. Inventories and fixed
price contracts are marked to market so that gains or losses on the derivative
contracts are offset by gains or losses on inventories and fixed price
contracts during the same accounting period.

     Through August 31, 2000, unrealized gains and losses on futures contracts
and options used to hedge energy inventories and fixed price contracts were
deferred until such future contracts and options were closed. Effective
September 1, 2000, those gains and losses are recognized as a component of net
income for financial reporting. The inventories hedged with these derivatives
are valued at lower of cost or market, and effective September 1, 2000, the
fixed price contracts are marked to market. Some derivatives related to propane
in the Energy segment meet the normal purchase and sales exemption, and thus
are not required to be marked to fair value.

     A 10% adverse change in market prices would not materially affect the
Company's results of operations, financial position or liquidity, since the
Company's operations have effective economic hedging requirements as a general
business practice.


                                      F-8
<PAGE>


              CENEX HARVEST STATES COOPERATIVES AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

 1.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

     INTEREST RATE RISK. The Company manages interest expense using a mix of
fixed and floating rate debt. These debt instruments are carried at amounts
approximating estimated fair value. Short-term debt used to finance inventories
and receivables is represented by notes payable within thirty days or less so
that the blended interest rate to the Company for all such notes approximates
current market rates. Long-term debt used to finance non-current assets carries
various fixed interest rates and is payable at various dates as to minimize the
effect of market interest rate changes. The effective interest rate to the
Company on fixed rate debt outstanding on August 31, 2002 was approximately
6.4%; a 10% adverse change in market rates would not materially affect the
Company's results of operations, financial position or liquidity.

     In August 2002, the Company entered into interest rate swap instruments
related to private placement debt issued on October 18, 2002. These derivative
instruments are designated and effective as cash flow hedges for accounting
purposes, and the changes in the fair values of these instruments are recorded
as a component of other comprehensive income. The Company expects to record
operating losses through interest expense of $0.8 million during the year ended
August 31, 2003 related to these derivative instruments.

     FOREIGN CURRENCY RISK. The Company conducts essentially all of its
business in U.S. dollars and had minimal risk regarding foreign currency
fluctuations on August 31, 2002. Foreign currency fluctuations do, however,
impact the ability of foreign buyers to purchase U.S. agricultural products and
the competitiveness of U.S. agricultural products compared to the same products
offered by alternative sources of world supply.

     The Company adopted Financial Accounting Standards Board (FASB) Statement
of Financial Accounting Standards (SFAS) No. 133, as amended, related to the
accounting for derivative transactions and hedging activities, effective
September 1, 2000. The effect of the adoption did not have a material effect on
the Company's earnings or financial position.

     INVESTMENTS -- Investments in other cooperatives are stated at cost, plus
patronage dividends received in the form of capital stock and other equities.
Patronage dividends are recorded at the time qualified written notices of
allocation are received. Joint ventures and other investments, in which the
Company has significant ownership and influence, but not control, are accounted
for in the consolidated financial statements under the equity method of
accounting. Investments in other debt and equity securities are considered
available for sale financial instruments and are stated at market value, with
unrealized amounts included as a component of accumulated other comprehensive
income (loss).

     PROPERTY, PLANT AND EQUIPMENT -- Property, plant and equipment are stated
at cost less accumulated depreciation and amortization. Depreciation and
amortization are provided on the straight-line method by charges to operations
at rates based upon the expected useful lives of individual or groups of assets
(primarily 15 to 40 years for land improvements and buildings and 3 to 20 years
for machinery, equipment, office and other). The cost and related accumulated
depreciation and amortization of assets sold or otherwise disposed of are
removed from the related accounts and resulting gains or losses are reflected
in operations. Expenditures for maintenance and repairs and minor renewals are
expensed, while costs of major renewals and betterments are capitalized.

     The Company periodically reviews property, plant and equipment and other
long-lived assets in order to assess recoverability based on projected income
and related cash flows on an undiscounted basis. Should the sum of the expected
future net cash flows be less than the carrying value, an impairment loss would
be recognized. An impairment loss would be measured by the amount by which the
carrying value of the asset exceeds the fair value of the asset.

     GOODWILL AND OTHER INTANGIBLE ASSETS -- Effective September 1, 2001 the
Company adopted the provisions of Statement of Financial Accounting Standards
(SFAS) No. 142, "Goodwill and Other


                                      F-9
<PAGE>


              CENEX HARVEST STATES COOPERATIVES AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

 1.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Intangible Assets." This statement discontinued the amortization of goodwill
and indefinite-lived intangible assets, subject to periodic impairment testing.
At August 31, 2001, goodwill (net of accumulated amortization) prior to the
adoption of SFAS No. 142, was $29.2 million and was included as a component of
other assets. The effect of adopting the new standard will reduce goodwill
amortization expense by approximately $2.0 million annually. The Company has
completed its transitional impairment testing and no changes to the carrying
value of goodwill and other intangible assets were required as a result of the
adoption of SFAS No. 142. Subsequent impairment testing will take place
annually as well as when a triggering event indicating impairment may have
occurred. In addition, the classification of the intangible assets was
reviewed, along with the remaining useful lives of intangibles being amortized,
and no changes were required.

     The Company's net income, net of taxes, of retroactive application of the
discontinuance of the amortization of goodwill as if SFAS No. 142 had been in
effect during the years ended August 31, 2001 and 2000 would have been $181.1
million and $88.5 million, respectively. For the years ended August 31, 2001
and 2000, discontinued amortization expense of goodwill included in other
assets would have been $1.9 million and $0.8 million, respectively, and
included in equity investments would have been $0.7 million and $0.3 million,
respectively.

     REVENUE RECOGNITION -- Grain and oilseed sales are recorded at time of
settlement. All other sales are recognized upon shipment and transfer of title
to customers. Amounts billed to a customer in a sale transaction related to
shipping and handling are included in sales. Country Operations segment
services revenue and rebates are included in other revenues.

     ENVIRONMENTAL EXPENDITURES -- Liabilities related to remediation of
contaminated properties are recognized when the related costs are considered
probable and can be reasonably estimated. Estimates of these costs are based on
current available facts, existing technology, undiscounted site-specific costs
and currently enacted laws and regulations. Recoveries, if any, are recorded in
the period in which recovery is considered probable. Liabilities are monitored
and adjusted as new facts or changes in law or technology occur. Environmental
expenditures are capitalized when such costs provide future economic benefits.

     INCOME TAXES -- The Company is a nonexempt agricultural cooperative and
files a consolidated federal income tax return with its 80% or more owned
subsidiaries. The Company is subject to tax on income from nonpatronage sources
and undistributed patronage-sourced income. Deferred income taxes reflect the
impact of temporary differences between the amounts of assets and liabilities
recognized for financial reporting purposes and such amounts recognized for
federal and state income tax purposes, at each year end, based on enacted tax
laws and statutory tax rates applicable to the periods in which the differences
are expected to affect taxable income. Valuation allowances are established,
when necessary, to reduce deferred tax assets to the amount expected to be
realized.

     In October 2001, members of NCRA ratified a resolution to compute
patronage distributions based on earnings for financial statement purposes
rather than amounts reportable for federal income tax purposes, and beginning
with the year ended August 31, 2002, NCRA's patronage distributions have been
calculated based on financial statement earnings.

     COMPREHENSIVE INCOME -- The Company accounts for comprehensive income
(defined as the change in equity of a business enterprise during a period from
sources other than those resulting from investments by owners and distribution
to owners) in accordance with Financial Accounting Standards Board (FASB) SFAS
No. 130, "Reporting Comprehensive Income." At August 31, 2002, comprehensive
income for the Company primarily includes net income and the effects of minimum
pension liability adjustments. Total comprehensive income is reflected in the
consolidated statements of equities and comprehensive income.


                                      F-10
<PAGE>


              CENEX HARVEST STATES COOPERATIVES AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

 1.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

     USE OF ESTIMATES -- The preparation of financial statements in conformity
with accounting principles generally accepted in the United States of America
requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. Actual results could differ
from those estimates.

     RECENT ACCOUNTING PRONOUNCEMENTS -- The FASB issued SFAS No. 143,
"Accounting for Asset Retirement Obligations," which addresses financial
accounting and reporting for obligations associated with the retirement of
tangible long-lived assets and the associated asset retirement costs. SFAS No.
143 is effective for financial statements issued for fiscal years beginning
after June 15, 2002. The adoption of this statement does not have a material
affect on the Company.

     The FASB also issued SFAS No. 144, "Accounting for the Impairment or
Disposal of Long-Lived Assets." This statement addresses financial accounting
and reporting for the impairment or disposal of long-lived assets. SFAS No. 144
retains and expands upon the fundamental provisions of existing guidance
related to the recognition and measurement of the impairment of long-lived
assets to be held and used and the measurement of long-lived assets to be
disposed of by sale. Generally, the provisions of SFAS No. 144 are effective
for financial statements issued for fiscal years beginning after December 15,
2001 and interim periods within those fiscal years. The adoption of this
statement does not have a material affect on the Company.

     The FASB issued SFAS No. 146, "Accounting for Costs Associated with Exit
or Disposal Activities." This statement addresses financial accounting and
reporting for costs associated with an exit activity that does not involve an
entity newly acquired in a business combination or with a disposal activity
covered by SFAS No. 144. The costs addressed in SFAS No. 146 include, but are
not limited to, termination benefits, costs to terminate a contract that is not
a capital lease and costs to consolidate facilities or relocate employees. SFAS
No. 146 is effective for exit or disposal activities that are initiated after
December 31, 2002.

     RECLASSIFICATIONS -- Certain amounts in the 2001 financial statements have
been reclassified to conform with the current year's presentation. These
reclassifications had no effect on previously reported net income, equities and
comprehensive income, or cash flows.

 2.  RECEIVABLES

     Receivables as of August 31, 2002 and 2001 are as follows:

<TABLE>
<CAPTION>
                                                         2002          2001
                                                     -----------   -----------
                                                      (DOLLARS IN THOUSANDS)
<S>                                                  <C>           <C>
   Trade .........................................    $717,888      $682,593
   Other .........................................      49,846        28,864
                                                      --------      --------
                                                       767,734       711,457
   Less allowances for doubtful accounts .........      26,156        25,317
                                                      --------      --------
                                                      $741,578      $686,140
                                                      ========      ========
</TABLE>

                                      F-11
<PAGE>


              CENEX HARVEST STATES COOPERATIVES AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

 2.  RECEIVABLES (CONTINUED)


     All international sales are denominated in U.S. dollars. International
sales for the years ended August 31, 2002, 2001 and 2000 are as follows:

<TABLE>
<CAPTION>
                                2002        2001        2000
                             ---------   ---------   ---------
                                   (DOLLARS IN MILLIONS)
<S>                          <C>         <C>         <C>
   Africa ................    $  135      $  138      $  191
   Asia ..................       407         403         552
   Europe ................       282         255         304
   North America .........       298         317         324
   South America .........       100         101         119
                              ------      ------      ------
                              $1,222      $1,214      $1,490
                              ======      ======      ======
</TABLE>

 3.  INVENTORIES

     Inventories as of August 31, 2002 and 2001 are as follows:

<TABLE>
<CAPTION>
                                               2002          2001
                                           -----------   -----------
                                            (DOLLARS IN THOUSANDS)
<S>                                        <C>           <C>
   Grain and oilseed ...................    $393,095      $237,498
   Energy ..............................     229,981       163,710
   Feed and farm supplies ..............      91,138        76,570
   Processed grain and oilseed .........      36,264        28,648
   Other ...............................       9,185         4,017
                                            --------      --------
                                            $759,663      $510,443
                                            ========      ========
</TABLE>

     As of August 31, 2002, the Company valued approximately 26% of
inventories, primarily related to energy, using the lower of cost, determined
on the LIFO method, or market (28% as of August 31, 2001). If the FIFO method
of accounting for these inventories had been used, inventories would have been
higher than the reported amount by $40.5 million and $34.0 million at August
31, 2002 and 2001, respectively.

 4.  INVESTMENTS

     Investments as of August 31, 2002 and 2001 are as follows:

                                                           2002          2001
                                                         --------      --------
                                                          (DOLLARS IN THOUSANDS)
   Cooperatives:
    CF Industries, Inc. .............................    $152,996      $152,996
    National Bank for Cooperatives (CoBank) .........      30,069        33,080
    Ag Processing, Inc. .............................      25,797        24,967
    Land O'Lakes, Inc. ..............................      26,232        24,604
   Joint ventures:
    Ventura Foods, LLC ..............................     108,981       101,089
    United Country Brands, LLC ......................      86,175        74,457
    Tacoma Export Marketing Company .................       8,414        11,638
   Other ............................................      57,943        45,122
                                                         --------      --------
                                                         $496,607      $467,953
                                                         ========      ========


                                      F-12
<PAGE>


              CENEX HARVEST STATES COOPERATIVES AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

 4.  INVESTMENTS (CONTINUED)

     In March 2000, the Company purchased an additional 10% interest in Ventura
Foods, LLC, its consumer products and packaging joint venture, for $25.6
million, of which $13.8 million was goodwill. The Company has a 50% interest in
this joint venture. The following provides summarized information for Ventura
Foods, LLC, balance sheets as of August 31, 2002 and 2001 and statements of
operations for the twelve months ended August 31, 2002, 2001 and 2000:

                                           2002          2001
                                       -----------   -----------
                                        (DOLLARS IN THOUSANDS)
   Current assets ..................    $171,084      $159,062
   Non-current assets ..............     231,045       221,000
   Current liabilities .............     133,230       114,883
   Non-current liabilities .........      90,819       104,144


                                 2002           2001          2000
                            -------------   -----------   -----------
                                     (DOLLARS IN THOUSANDS)
   Net sales ............    $1,013,475      $925,962      $896,941
   Gross profit .........       181,217       161,405       143,394
   Net income ...........        75,368        71,148        55,115

     Effective January 1, 2000, CHS Cooperatives, Farmland and Land O'Lakes
created Agriliance, a distributor of crop nutrients, crop protection products
and other agronomy inputs and services. At formation, Agriliance managed the
agronomy marketing operations of CHS Cooperatives, Farmland and Land O'Lakes,
with the Company exchanging the right to use its agronomy operations for
26.455% of the results of the jointly managed operations.

     In March 2000, the Company sold 1.455% of its economic interest in
Agriliance to Land O'Lakes, resulting in a gain of $7.4 million. On July 31,
2000, the Company exchanged its ownership interest in the Cenex/Land O'Lakes
Agronomy Company and in Agro Distribution, LLC, with a total investment of
$64.7 million, for a 25% equity interest in Agriliance. Agriliance ownership
also includes Farmland (25%) and Land O'Lakes (50%). The interests of the
Company and Farmland are held through equal ownership in United Country Brands,
LLC, a joint venture holding company whose sole operations consist of the
ownership of a 50% interest in Agriliance. Equity in the joint venture was
recorded at historical carrying value of its ownership in Cenex/Land O'Lakes
Agronomy Company and Agro Distribution, LLC and no gain or loss was recorded on
the exchange. In July 2000, Agriliance secured its own financing, which is
without recourse to the Company. Also in July 2000, Agriliance purchased the
net working capital related to agronomy operations from each of its member
owners, consisting primarily of trade accounts receivable and inventories, net
of accounts payable.

     The following provide summarized information for Agriliance balance sheets
as of August 31, 2002 and 2001 and statements of operations for the years ended
August 31, 2002 and 2001:

                                           2002          2001
                                       -----------   -----------
                                        (DOLLARS IN THOUSANDS)
   Current assets ..................    $922,958      $956,496
   Non-current assets ..............     134,247       158,107
   Current liabilities .............     700,903       802,341
   Non-current liabilities .........     107,960       110,964


                                      F-13
<PAGE>


              CENEX HARVEST STATES COOPERATIVES AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

 4.  INVESTMENTS (CONTINUED)

                                             2002            2001
                                        -------------   -------------
                                           (DOLLARS IN THOUSANDS)
   Net sales ........................    $3,625,849      $4,072,248
   Earnings from operations .........        57,604          50,423
   Net income .......................        47,044          25,053

     The Company's contribution of its equity interest in Agriliance occurred
on July 31, 2000, and as such, net sales, gross profits and net income for the
one month ended August 31, 2000 have been excluded from the above summarized
information of statements of operations, as they were not material.

     Disclosure of the fair value of financial instruments to which the Company
is a party includes estimates and assumptions which may be subjective in nature
and involve uncertainties and matters of significant judgment and therefore
cannot be determined with precision. Financial instruments are carried at
amounts that approximate estimated fair value. Investments in cooperatives and
joint ventures have no quoted market prices and, as such, it is not practicable
to estimate their fair value.

     Various agreements with other owners of investee companies and a
majority-owned subsidiary set out parameters whereby CHS Cooperatives may buy
and sell additional interests in those companies, upon the occurrence of
certain events, at fair values determinable as set forth in the specific
agreements.

5.  PROPERTY, PLANT AND EQUIPMENT

     A summary of property, plant and equipment as of August 31, 2002 and 2001
is as follows:

<TABLE>
<CAPTION>
                                                                  2002           2001
                                                              ------------   ------------
                                                                (DOLLARS IN THOUSANDS)
<S>                                                           <C>            <C>
   Land and land improvements .............................   $   63,045     $   55,092
   Buildings ..............................................      371,107        348,081
   Machinery and equipment ................................    1,470,475      1,434,598
   Office and other .......................................       62,144         56,740
   Construction in progress ...............................       71,540         38,723
                                                              ----------     ----------
                                                               2,038,311      1,933,234
   Less accumulated depreciation and amortization .........      980,890        909,362
                                                              ----------     ----------
                                                              $1,057,421     $1,023,872
                                                              ==========     ==========
</TABLE>

     In January 2002, the Company formed a limited liability company (LLC) with
Cargill, Incorporated to engage in wheat flour milling and processing. The
Company holds a 24% interest in the entity, which is known as Horizon Milling,
LLC (Horizon). The Company is leasing its wheat milling facilities and related
equipment to Horizon under operating lease agreements. The book value of the
leased milling assets at August 31, 2002 was $104.9 million, net of accumulated
depreciation of $25.3 million.

     For the years ended August 31, 2002, 2001 and 2000, the Company
capitalized interest of $2.1 million, $1.2 million and $2.7 million,
respectively, related to long-term construction projects.


                                      F-14
<PAGE>


              CENEX HARVEST STATES COOPERATIVES AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

6.  OTHER ASSETS

     Other assets as of August 31, 2002 and 2001 are as follows:

<TABLE>
<CAPTION>
                                                                               2002         2001
                                                                            ----------   ----------
                                                                            (DOLLARS IN THOUSANDS)
<S>                                                                          <C>          <C>
   Goodwill .............................................................    $ 27,926     $ 29,153
   Non-compete covenants, less accumulated amortization of $2,896 and
    $1,329, respectively ................................................      11,204        1,765
   Customer lists, less accumulated amortization of $3,511 and $1,946,
    respectively ........................................................       8,447        8,095
   Other intangible assets, less accumulated amortization of $2,462 and
    $1,513, respectively ................................................      15,795          239
   Prepaid pension and other benefit assets .............................      54,230      100,727
   Deferred tax asset ...................................................      50,544       44,316
   Notes receivable .....................................................       4,822        5,629
   Other ................................................................       4,354        4,534
                                                                             --------     --------
                                                                             $177,322     $194,458
                                                                             ========     ========
</TABLE>

     Intangible assets subject to amortization are amortized on a straight-line
basis over the number of years that approximate their respective useful lives
(ranging from 2 to 15 years). The straight-line method of amortization reflects
an appropriate allocation of the cost of the intangible assets to earnings in
proportion to the amount of economic benefit obtained by the Company in each
reporting period. Amortization expense for the year ended August 31, 2002 was
$4.2 million. The estimated amortization expense related to intangible assets
subject to amortization for the next five years will approximate $4.0 million
annually.

     Through Country Energy, LLC, formerly a joint venture with Farmland, the
Company marketed refined petroleum products including gasoline, diesel fuel,
propane and lubricants under the Cenex brand. On November 30, 2001, the Company
purchased the wholesale energy business of Farmland, as well as all interest in
Country Energy, LLC. Based on estimated fair values, $26.4 million of the
purchase price was allocated to intangible assets, primarily trademarks,
tradenames and non-compete agreements. The intangible assets have a
weighted-average life of approximately 12 years. The Company also entered into
an exclusive two-year supply agreement to purchase, at prevailing market
prices, all of the refined fuels production from Farmland's Coffeyville, Kansas
facility.


                                      F-15
<PAGE>


              CENEX HARVEST STATES COOPERATIVES AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

7.  NOTES PAYABLE AND LONG-TERM DEBT

     Notes payable and long-term debt as of August 31, 2002 and 2001 consisted
of the following:

<TABLE>
<CAPTION>
                                                            INTEREST RATES
                                                            AT AUGUST 31,
                                                                 2002              2002          2001
                                                         -------------------   -----------   -----------
                                                                                (DOLLARS IN THOUSANDS)
<S>                                                      <C>                    <C>           <C>
   Notes payable (a)(g) ..............................   2.32% to 2.78%         $332,514      $ 97,195
                                                                                ========      ========
   Long-term debt:
    Revolving term loans from cooperative and
     other banks, payable in installments through
     2009, when the balance is due (b)(c)(g) .........   2.16% to 13.00%        $254,962      $236,611
    Private placement, payable in equal
     installments beginning in 2008 through
     2013 (d)(g) .....................................   6.81%                   225,000       225,000
    Private placement, payable in equal
     installments beginning in 2005 through
     2011 (e)(g) .....................................   7.43% to 7.90%           80,000        80,000
    Industrial Revenue Bonds, payable in
     installments through 2011 (f) ...................   5.23% to 12.97%           7,444        12,806
    Other notes and contracts ........................   4.00% to 14.00%           4,718         5,580
                                                                                --------      --------
    Total long-term debt .............................                           572,124       559,997
    Less current portion .............................                            89,032        17,754
                                                                                --------      --------
    Long-term portion ................................                          $483,092      $542,243
                                                                                ========      ========
</TABLE>

     Weighted average interest rates at August 31:

                                   2002         2001
                                ----------   ----------
   Short-term debt ..........       2.58%        4.18%
   Long-term debt ...........       6.38%        6.91%

- ------------------
(a) The Company finances its working capital needs through short-term lines of
    credit with a syndication of banks. The Company has a 364-day credit
    facility of $550.0 million, all of which is committed, and of which $332.0
    million was outstanding on August 31, 2002. In addition to this short-term
    line of credit, the Company has a 364-day credit facility dedicated to
    NCRA with a syndication of banks in the amount of $30.0 million, all of
    which is committed, with no amounts outstanding on August 31, 2002. Other
    miscellaneous notes payable totaled $0.5 million at August 31, 2002.

(b) The Company established a $200.0 million five-year revolving credit
     facility with a syndication of banks. On August 31, 2002, the Company had
     an outstanding balance of $75.0 million.

(c) The Company established a long-term credit agreement which committed $200.0
    million of long-term borrowing capacity to the Company through May 31,
    1999, of which $164.0 million was drawn before the expiration date of that
    commitment. On August 31, 2002, $144.3 million was outstanding. NCRA term
    loans of $18.0 million are collateralized by NCRA's investment in CoBank.

(d) The Company entered into a private placement with several insurance
     companies for long-term debt in the amount of $225.0 million.

(e) In January 2001, the Company entered into a note purchase and private shelf
    agreement with Prudential Insurance Company. A long-term note was issued
    for $25.0 million. A subsequent note for $55.0 million was issued in March
    2001, related to the private shelf facility.


                                      F-16
<PAGE>


              CENEX HARVEST STATES COOPERATIVES AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

7.  NOTES PAYABLE AND LONG-TERM DEBT (CONTINUED)

(f) Industrial Revenue Bonds in the amount of $2.7 million are collateralized
    by property, plant and equipment, primarily energy refinery equipment,
    with a cost of approximately $152.0 million, less accumulated depreciation
    of approximately $115.2 million on August 31, 2002.

(g) Restrictive covenants under various agreements have requirements for
    maintenance of minimum working capital levels and other financial ratios.

     The fair value of long-term debt approximates book value as of August 31,
2002 and 2001.

     The aggregate amount of long-term debt payable as of August 31, 2002 is as
follows (dollars in thousands):

   2003 ...............    $ 89,032
   2004 ...............      15,079
   2005 ...............      34,511
   2006 ...............      34,938
   2007 ...............      41,709
   Thereafter .........     356,855
                           --------
                           $572,124
                           ========

     On October 18, 2002, the Company entered into 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 will be repaid 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 will be repaid in
equal semi-annual installments of approximately $4.6 million during fiscal
years 2012 through 2018. The proceeds were used to pay down the Company's
short-term debt.

8.  INCOME TAXES

     As a result of the Company's by-law changes during 2001, and the by-law
changes of its majority-owned subsidiary (NCRA) in 2002, to distribute
patronage based on financial statement earnings (see Note 1), the statutory
rate applied to the cumulative differences between financial statement earnings
and tax basis earnings, has been changed. In connection with this change the
Company recorded a deferred tax benefit of $10.9 million as of August 31, 2002
and $34.2 million as of August 31, 2001. The $10.9 million deferred tax benefit
recorded as a result of the change in patronage distribution by NCRA as of
August 31, 2002 has been offset by a $10.9 million NCRA valuation allowance. An
additional $6.2 million of deferred tax benefit generated by NCRA was also
offset by a valuation allowance.

     The provision for income taxes for the years ended August 31, 2002, 2001
and 2000 is as follows:

                                       2002           2001          2000
                                   ------------   ------------   ---------
                                           (DOLLARS IN THOUSANDS)
   Current .....................    $  14,300      $  21,025      $4,347
   Deferred ....................      (12,700)       (49,025)       (467)
   Valuation allowance .........       17,100          2,400
                                    ---------      ---------      ------
   Income taxes ................    $  18,700      $ (25,600)     $3,880
                                    =========      =========      ======


                                      F-17
<PAGE>


              CENEX HARVEST STATES COOPERATIVES AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

 8.  INCOME TAXES (CONTINUED)

     The tax effect of temporary differences that give rise to significant
portions of deferred tax assets and liabilities as of August 31, 2002 and 2001
is as follows:

<TABLE>
<CAPTION>
                                                                         2002          2001
                                                                     ------------   ----------
                                                                      (DOLLARS IN THOUSANDS)
<S>                                                                   <C>            <C>
   Deferred tax assets:
    Accrued expenses and valuation reserves ......................    $  49,236      $ 42,704
    Postretirement health care and deferred compensation .........       32,671        24,842
    Property, plant and equipment ................................       11,532         9,570
    Alternative minimum tax credit and patronage loss
     carryforward ................................................        6,993         4,540
    Other ........................................................       12,439        12,885
                                                                      ---------      --------
     Total deferred tax assets ...................................      112,871        94,541
                                                                      ---------      --------
   Deferred tax liabilities:
    Pension, including minimum liability .........................        2,635         9,536
    Equity method investments ....................................       20,482        27,893
    Other ........................................................          730         1,314
                                                                      ---------      --------
   Total deferred tax liabilities ................................       23,847        38,743
                                                                      ---------      --------
   Deferred tax assets valuation reserve .........................      (19,466)       (2,400)
                                                                      ---------      --------
   Net deferred tax asset ........................................    $  69,558      $ 53,398
                                                                      =========      ========
</TABLE>

     As of August 31, 2002, net deferred tax assets of $19.0 million and $50.5
million are included in current assets and other assets, respectively ($9.1
million and $44.3 million, respectively, as of August 31, 2001). At August 31,
2002, NCRA recognized a valuation allowance for the entire tax benefit
associated with its net deferred tax assets, as it is considered more likely
than not, based on the weight of available information, that the future tax
benefits related to these items will not be realized. At August 31, 2002,
NCRA's net deferred tax assets of approximately $19.5 million were comprised of
deferred tax assets of $23.4 million and deferred tax liabilities of $3.9
million. Deferred tax assets are comprised of basis differences related to
inventories, investments, lease obligations, accrued liabilities and certain
federal and state tax credits. NCRA files a separate tax return and, as such,
these items must be assessed independently of the Company's deferred tax assets
when determining recoverability. At August 31, 2001, NCRA also recorded a
valuation allowance of $2.4 million to account for uncertainties regarding the
recoverability of certain state tax credits.

     The reconciliation of the statutory federal income tax rate to the
effective tax rate for the years ended August 31, 2002, 2001 and 2000 is as
follows:

<TABLE>
<CAPTION>
                                                                       2002          2001          2000
                                                                    ----------   ------------   ----------
<S>                                                                    <C>           <C>           <C>
   Statutory federal income tax rate ............................       35.0%         35.0%         35.0%
   State and local income taxes, net of federal income
    tax benefit .................................................        3.9           3.9           3.9
   Patronage earnings ...........................................      (25.0)        (32.8)        (37.3)
   Tax effect of changes in deferred patronage ..................                                    4.4
   Change in patronage determination ............................       (7.5)        (22.4)
   Export activities at rates other than the
    U.S. statutory rate .........................................       (1.9)
   Deferred tax asset valuation allowance .......................       11.8           1.6
   Rate changes on deferred tax assets and liabilities ..........                                   (2.5)
   Other ........................................................       (3.4)         (2.0)          0.8
                                                                       -----         -----         -----
   Effective tax rate ...........................................       12.9%        (16.7)%         4.3%
                                                                       =====         =====         =====
</TABLE>

                                      F-18
<PAGE>


              CENEX HARVEST STATES COOPERATIVES AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

 8.  INCOME TAXES (CONTINUED)

     The principal differences between financial statement income and taxable
income for the years ended August 31, 2002, 2001 and 2000 are as follows:

<TABLE>
<CAPTION>
                                                        2002           2001           2000
                                                    -----------   -------------   ------------
                                                              (DOLLARS IN THOUSANDS)
<S>                                                  <C>           <C>             <C>
   Income before income taxes ...................    $ 144,838     $  152,954      $  91,268
   Financial reporting/tax differences: .........
    Environmental reserves ......................        1,939          4,453           (728)
    Oil and gas activities, net .................        1,540        (22,230)         2,600
    Energy inventory market reserves ............         (933)        (2,441)           (19)
    Pension and compensation ....................      (21,491)         8,981
    Investments in other entities ...............        1,898         26,495
    Export activities ...........................       (7,141)
    Other, net ..................................       (2,291)        10,038          3,255
    Patronage refund provisions .................      (92,900)      (128,900)       (87,400)
                                                     ---------     ----------      ---------
   Taxable income ...............................    $  25,459     $   49,350      $   8,976
                                                     =========     ==========      =========
</TABLE>

 9.  EQUITIES

     In accordance with the by-laws and by action of the Board of Directors,
annual net savings from patronage sources are distributed to consenting patrons
following the close of each year, and are 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.

     Annual net savings from sources other than patronage may be added to the
unallocated capital reserve or, upon action by the Board of Directors,
allocated to members in the form of nonpatronage equity certificates.

     Inactive direct members and patrons and active direct members and patrons
age 61 and older on June 1, 1998 are eligible for redemption of their capital
equity certificates at age 72 or death. For other active direct members and
patrons and member cooperatives, equities will be redeemed annually as
determined by the Board of Directors.

     On May 31, 1997, the Company completed an offering for the sale of Equity
Participation Units (EPUs) in its Wheat Milling Defined Business Unit and its
Oilseed Processing and Refining Defined Business Unit to qualified subscribers.
Qualified subscribers were identified as Defined Members or representatives of
Defined Members who were persons or associations of producers actually engaged
in the production of agricultural products. Subscribers were allowed to
purchase a portion of their EPUs by exchanging existing patronage certificates.
The purchasers of EPUs had the right and obligation to deliver annually the
number of bushels of wheat or soybeans equal to the number of units held. Unit
holders participated in the net patronage-sourced income from operations of the
applicable Defined Business Unit as patronage refunds. Retirements of patrons'
equities attributable to EPUs, were at the discretion of the Board of
Directors, and it was the Board's goal to retire such equity on a revolving
basis seven years after declaration.

     During 2001, the Company's Board of Directors adopted a resolution to
issue, at no charge, to each Defined Member of the Oilseed Processing and
Refining Defined Business Unit an additional 1/4 EPU, for each EPU held, due to
increased crush volume.

     In August 2001, the CHS Cooperatives Board of Directors approved and
consummated a plan to end the Defined Investment Program. The Company redeemed
all of the EPUs and allocated the assets


                                      F-19
<PAGE>


              CENEX HARVEST STATES COOPERATIVES AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

 9.  EQUITIES (CONTINUED)

of the Oilseed Processing and Refining and Wheat Milling Defined Business Units
to the Company as provided in the plan. The amounts redeemed to the Oilseed
Processing and Refining and Wheat Milling Defined Member EPU holders were $5.2
million and $9.1 million, respectively. Due to loss carry-forwards incurred by
the Wheat Milling Defined Business Unit, the plan also provided for the
cancellation of all outstanding Preferred Capital Certificates issued to the
Wheat Milling EPU holders, totaling $0.2 million. The plan further provided to
the Oilseed Processing and Refining Defined Member EPU holders for the
redemption of all outstanding Preferred Capital Certificates issued of $0.2
million and a 100% cash distribution during 2002 for the patronage refunds
earned for the fiscal year ended August 31, 2001.

     The Board of Directors has authorized the sale and issuance of up to
50,000,000 shares of 8% Preferred Stock at a price of $1.00 per share. The
Company filed a registration statement on Form S-2 with the Securities and
Exchange Commission registering the Preferred Stock. The registration statement
was declared effective on October 31, 2001 and sales of the Preferred Stock
were $9.3 million (9,325,374 shares) through August 31, 2002. Cash dividends
are paid at a rate of 8% per annum per share and are fully cumulative. There is
no sinking fund requirement and the Company may redeem all or any portion of
the preferred stock upon 30 days written notice at $1.00 per share. Expenses
related to the issuance of the Preferred Stock were $3.4 million through the
year ended August 31, 2002 and have been included as a component of unallocated
capital reserve.

10.   EMPLOYEE BENEFIT PLANS

     The Company has various pension and other defined benefit and defined
contribution plans, in which substantially all employees may participate.

     Financial information on changes in benefit obligation and plan assets
funded and balance sheet status as of August 31, 2002 and 2001 is as follows:

<TABLE>
<CAPTION>
                                                           PENSION BENEFITS            OTHER BENEFITS
                                                       -------------------------   -----------------------
                                                           2002          2001         2002         2001
                                                       -----------   -----------   ----------   ----------
                                                                     (DOLLARS IN THOUSANDS)
<S>                                                     <C>           <C>           <C>          <C>
Change in benefit obligation:
 Benefit obligation at beginning of period .........    $ 253,564     $ 258,059     $ 22,667     $ 21,439
 Service cost ......................................       10,443         8,506          557          566
 Interest cost .....................................       18,559        18,487        1,586        1,569
 Plan participants contributions ...................                                     189
 Plan amendments ...................................        2,383             6                    (1,005)
 Transfers .........................................        3,677        (2,387)
 Actuarial loss (gain) .............................        2,764        (2,842)       1,716        1,902
 Assumption change .................................                      2,534          638
 Settlements .......................................                        643
 Benefits paid .....................................      (22,979)      (29,442)      (2,438)      (1,804)
                                                        ---------     ---------     --------     --------
 Benefit obligation at end of period ...............    $ 268,411     $ 253,564     $ 24,915     $ 22,667
                                                        =========     =========     ========     ========
</TABLE>

                                      F-20
<PAGE>


              CENEX HARVEST STATES COOPERATIVES AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

 10.   EMPLOYEE BENEFIT PLANS (CONTINUED)

<TABLE>
<CAPTION>
                                                                PENSION BENEFITS                 OTHER BENEFITS
                                                          -----------------------------   -----------------------------
                                                               2002            2001            2002            2001
                                                          -------------   -------------   -------------   -------------
                                                                              (DOLLARS IN THOUSANDS)
<S>                                                         <C>             <C>             <C>             <C>
Change in plan assets:
 Fair value of plan assets at beginning of period .....     $ 230,121       $ 266,896
 Actual loss on plan assets ...........................       (14,810)        (16,206)
 Company contributions ................................         5,554          11,669       $   2,249       $   1,804
 Participants contributions ...........................                                           189
 Net transfers ........................................         3,677          (2,796)
 Benefits paid ........................................       (22,979)        (29,442)         (2,438)         (1,804)
                                                            ---------       ---------       ---------       ---------
 Fair value of plan assets at end of period ...........     $ 201,563       $ 230,121       $      --       $      --
                                                            =========       =========       =========       =========
 Funded status ........................................     $ (66,848)      $ (23,443)      $ (24,915)      $ (22,667)
 Employer contributions after measurement date                 31,394           1,262             269             264
 Unrecognized actuarial loss (gain) ...................        85,082          47,368          (3,505)         (6,363)
 Unrecognized transition (asset) obligation ...........                          (708)         10,197          11,133
 Unrecognized prior service cost ......................        10,569           9,639          (1,336)         (1,534)
                                                            ---------       ---------       ---------       ---------
 Prepaid benefit cost (accrued) .......................     $  60,197       $  34,118       $ (19,290)      $ (19,167)
                                                            =========       =========       =========       =========
Amounts recognized on balance sheets
 consist of:
 Prepaid benefit cost .................................                     $  43,918
 Accrued benefit liability ............................     $ (23,837)        (12,214)      $ (19,290)      $ (19,167)
 Intangible asset .....................................         7,995           1,055
 Minority interests ...................................         6,195
 Accumulated other comprehensive loss .................        69,844           1,359
                                                            ---------       ---------       ---------       ---------
 Net amounts recognized ...............................     $  60,197       $  34,118       $ (19,290)      $ (19,167)
                                                            =========       =========       =========       =========
</TABLE>

     For measurement purposes, a 7.5% annual rate of increase in the per capita
cost of covered health care benefits was assumed for the year ended August 31,
2002. The rate was assumed to decrease gradually to 6.0% for 2004 and remain at
that level thereafter. Components of net periodic benefit costs for the years
ended August 31, 2002, 2001 and 2000 are as follows:

<TABLE>
<CAPTION>
                                                             PENSION BENEFITS                          OTHER BENEFITS
                                                ------------------------------------------   -----------------------------------
                                                    2002           2001           2000          2002         2001         2000
                                                ------------   ------------   ------------   ----------   ----------   ---------
                                                                                (DOLLARS IN THOUSANDS)
<S>                                              <C>            <C>            <C>            <C>          <C>          <C>
Components of net periodic
 benefit cost:
 Service cost ...............................    $  10,443      $   8,506      $   8,777       $  557       $  566      $  657
 Interest cost ..............................       18,559         18,487         18,058        1,586        1,569       1,470
 Expected return on assets ..................      (21,386)       (22,855)       (20,485)
 Prior service cost amortization ............        1,314          1,193          1,182         (197)        (131)        (77)
 Actuarial loss (gain) amortization .........        1,387            375           (530)        (505)        (538)       (604)
 Transition amount amortization .............         (708)          (861)        (1,120)         936          936         936
 Other ......................................                                                                  (22)
                                                 ---------      ---------      ---------       ------       ------      ------
 Net periodic benefit cost ..................    $   9,609      $   4,845      $   5,882       $2,377       $2,380      $2,382
                                                 =========      =========      =========       ======       ======      ======
Weighted-average assumptions:
 Discount rate ..............................         7.10%          7.30%          7.50%        7.10%        7.30%       7.50%
 Expected return on plan assets .............         9.00%          9.00%          9.00%         N/A          N/A         N/A
 Rate of compensation increase ..............         5.00%          5.00%          5.00%        5.00%        5.00%       5.00%
</TABLE>

                                      F-21
<PAGE>


              CENEX HARVEST STATES COOPERATIVES AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

 10.   EMPLOYEE BENEFIT PLANS (CONTINUED)


     The aggregate projected benefit obligation, accumulated benefit obligation
and fair value of plan assets for pension plans with accumulated benefit
obligations in excess of plan assets were as follows as of August 31, 2002 and
2001:

                                                  2002         2001
                                              -----------   ----------
                                               (DOLLARS IN THOUSANDS)
   Projected benefit obligation ...........    $268,411      $23,247
   Accumulated benefit obligation .........     256,795       18,599
   Fair value of plan assets ..............     201,563        6,385

     Assumed health care cost trend rates have a significant effect on the
amounts reported for the health care plans. A one-percentage point change in
the assumed health care cost trend rates would have the following effects:

<TABLE>
<CAPTION>
                                                                        1% POINT      1% POINT
                                                                        INCREASE      DECREASE
                                                                       ----------   -----------
                                                                        (DOLLARS IN THOUSANDS)
<S>                                                                      <C>         <C>
   Effect on total of service and interest cost components .........     $  177      $   (202)
   Effect on postretirement benefit obligation .....................      1,435        (1,210)
</TABLE>

     The Company provides defined life insurance and health care benefits for
certain retired employees. The plan is contributory based on years of service
and family status, with retiree contributions adjusted annually.

     The Company has other contributory defined contribution plans covering
substantially all employees. Total contributions by the Company to these plans
were $11.0 million, $6.1 million and $4.6 million, for the years ended August
31, 2002, 2001 and 2000, respectively.

11.  SEGMENT REPORTING

     The Company manages five business segments, which are based on products
and services, and are Agronomy, Energy, Country Operations, Grain Marketing,
and Processed Grains and Foods. Reconciling Amounts represent the elimination
of sales between segments. Due to cost allocations and intersegment activity,
management does not represent that these segments, if operated independently,
would report the income before income taxes and other financial information as
presented.

     Segment information for the years ended August 31, 2002, 2001 and 2000 is
as follows:

<TABLE>
<CAPTION>
                                                                                  PROCESSED     CORPORATE
                                                         COUNTRY       GRAIN      GRAINS AND       AND      RECONCILING
                              AGRONOMY      ENERGY     OPERATIONS    MARKETING      FOODS         OTHER       AMOUNTS      TOTAL
                             ----------   ----------   ----------   -----------   ----------   ----------   ----------   ----------
                                                                     (DOLLARS IN THOUSANDS)
<S>                          <C>          <C>          <C>           <C>          <C>          <C>          <C>          <C>
For the year ended
 August 31, 2002:
Net sales ................                $2,657,689   $1,474,553    $3,787,322   $  496,084                $ (683,781)  $7,731,867
Patronage dividends ......   $      (89)         458        2,572           497          260   $      187                     3,885
Other revenues ...........                     6,392       80,789        21,902       (1,469)       1,845                   109,459
                             ----------   ----------   ----------    ----------   ----------   ----------   ----------   ----------
                                    (89)   2,664,539    1,557,914     3,809,721      494,875        2,032     (683,781)   7,845,211
Cost of goods sold .......                 2,489,352    1,471,422     3,778,838      457,538                  (683,781)   7,513,369
Marketing, general and
 administrative ..........        8,957       66,731       47,995        22,213       36,930        4,466                   187,292
Interest .................       (1,403)      16,875       13,851         4,807        9,514       (1,189)                   42,455
Equity (income) loss from
 investments .............      (13,425)       1,166         (283)       (4,257)     (41,331)          (3)                  (58,133)
Minority interests .......                    14,604          786                                                            15,390
                             ----------  -----------   ----------    ----------   ----------   ----------   ----------   ----------
Income (loss) before
 income taxes ............   $    5,782  $    75,811   $   24,143    $    8,120   $   32,224   $   (1,242)  $       --   $  144,838
                             ==========  ===========   ==========    ==========   ==========   ==========   ==========   ==========
</TABLE>

                                      F-22
<PAGE>


              CENEX HARVEST STATES COOPERATIVES AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

 11.  SEGMENT REPORTING (CONTINUED)

<TABLE>
<CAPTION>
                                                                                 PROCESSED    CORPORATE
                                                       COUNTRY       GRAIN      GRAINS AND       AND      RECONCILING
                             AGRONOMY      ENERGY     OPERATIONS    MARKETING     FOODS         OTHER       AMOUNTS        TOTAL
                            ----------   ----------   ----------   ----------   ----------   ----------   -----------   ----------
                                    (DOLLARS IN THOUSANDS)                                (DOLLARS IN THOUSANDS)
<S>                         <C>          <C>          <C>          <C>          <C>          <C>          <C>           <C>
For the year ended
 August 31, 2002:
Goodwill ................                $    4,059   $      262                $   23,605                              $   27,926
                                         ==========   ==========                ==========                              ==========
Capital expenditures ....                $   54,576   $   34,305   $   14,851   $   35,144   $    1,293                 $  140,169
                                         ==========   ==========   ==========   ==========   ==========                 ==========
Depreciation and
 amortization ...........   $    1,247   $   58,701   $   21,214   $    6,235   $   13,436   $    3,153                 $  103,986
                            ==========   ==========   ==========   ==========   ==========   ==========                 ==========
Total identifiable assets
 at August 31, 2002 .....   $  242,015   $1,305,828   $  799,711   $  481,232   $  439,942   $  212,999                 $3,481,727
                            ==========   ==========   ==========   ==========   ==========   ==========                 ==========
For the year ended
 August 31, 2001:
Net sales ...............                $2,781,243   $1,577,268   $3,514,314   $  662,726                $  (782,539)  $7,753,012
Patronage dividends .....   $      196          712        3,683          840          339   $      207                      5,977
Other revenues ..........                     4,036       80,479       22,964         (238)       9,013                    116,254
                            ----------   ----------   ----------   ----------   ----------   ----------   -----------   ----------
                                   196    2,785,991    1,661,430    3,538,118      662,827        9,220      (782,539)   7,875,243
Cost of goods sold ......                 2,549,099    1,569,884    3,514,575      619,184                   (782,539)   7,470,203
Marketing, general and
 administrative .........        8,503       48,432       53,417       22,396       44,870        6,428                    184,046
Interest ................       (4,529)      25,097       15,695        8,144       13,026        4,003                     61,436
Equity (income) loss from
 investments ............       (7,360)       4,081         (246)      (4,519)     (35,505)      15,055                    (28,494)
Minority interests ......                    34,713          385                                                            35,098
                            ----------   ----------   ----------   ----------   ----------  ----------    -----------   ----------
Income (loss) before
 income taxes ...........   $    3,582   $  124,569   $   22,295   $   (2,478)  $   21,252   $  (16,266)  $        --   $  152,954
                            ==========   ==========   ==========   ==========   ==========   ==========   ===========   ==========
Goodwill ................                $    5,175   $      373                $   23,605                              $   29,153
                                         ==========   ==========                ==========                              ==========
Capital expenditures ....                $   38,984   $   32,448   $    3,715   $   20,485   $    1,978                 $   97,610
                                         ==========   ==========   ==========   ==========   ==========                 ==========
Depreciation and
 amortization ...........   $    1,250   $   55,343   $   21,738   $    4,917   $   22,304   $    3,628                 $  109,180
                            ==========   ==========   ==========   ==========   ==========   ==========                 ==========
Total identifiable assets
 at August 31, 2001 .....   $  230,051   $1,154,036   $  679,053   $  345,696   $  430,871   $  217,612                 $3,057,319
                            ==========   ==========   ==========   ==========   ==========   ==========                 ==========
For the year ended
 August 31, 2000:
Net sales ...............   $  808,659   $2,959,622   $1,409,892   $3,453,807   $  584,052                $  (718,182)  $8,497,850
Patronage dividends .....          224          311        3,830          861          100   $      168                      5,494
Other revenues ..........        5,817        2,792       68,436       15,440          (10)       4,996                     97,471
                            ----------   ----------   ----------   ----------   ----------   ----------   -----------   ----------
                               814,700    2,962,725    1,482,158    3,470,108      584,142        5,164      (718,182)   8,600,815
Cost of goods sold ......      764,744    2,862,715    1,404,120    3,439,863      547,234                   (718,182)   8,300,494
Marketing, general and
 administrative .........       20,832       43,332       44,136       21,412       21,462        4,092                    155,266
Interest ................       (3,512)      27,926       12,782        8,701        9,851        1,818                     57,566
Equity loss (income) from
 investments ............        4,336         (856)      (1,007)      (6,452)     (24,367)          21                    (28,325)
Minority interests ......                    24,443          103                                                            24,546
                            ----------   ----------   ----------   ----------   ----------   ----------   -----------   ----------
Income (loss) before
 income taxes ...........   $   28,300   $    5,165   $   22,024   $    6,584   $   29,962   $     (767)  $        --   $   91,268
                            ==========   ==========   ==========   ==========   ==========   ==========   ===========   ==========
Capital expenditures ....                $   65,017   $   38,514   $   12,096   $   36,494   $    1,675                 $  153,796
                                         ==========   ==========   ==========   ==========   ==========                 ==========
Depreciation and
 amortization ...........   $      106   $   52,017   $   21,717   $    3,803   $   11,440   $    3,616                 $   92,699
                            ==========   ==========   ==========   ==========   ==========   ==========                 ==========
</TABLE>

12.  COMMITMENTS AND CONTINGENCIES

     ENVIRONMENTAL -- The Company is required to comply with various
environmental laws and regulations incidental to its normal business
operations. In order to meet its compliance requirements, the Company
establishes reserves for the future costs of remediation of identified issues,
which are


                                      F-23
<PAGE>


              CENEX HARVEST STATES COOPERATIVES AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

 12.  COMMITMENTS AND CONTINGENCIES (CONTINUED)

included in cost of goods sold in the consolidated statements of operations.
Additional costs for matters, which may be identified in the future, cannot be
presently determined. The resolution of any such matters may have an impact on
the Company's consolidated financial results for a particular reporting period;
however, management believes any such matters will not have a material adverse
effect on the consolidated financial position, results of operations or cash
flows of the Company.

     In connection with certain refinery upgrades and enhancements that are
necessary in order to comply with existing environmental regulations, the
Company expects to incur additional capital expenditures of approximately $340
million in relation to these projects over the next four years, primarily at
the NCRA refinery. The Company anticipates funding these projects with a
combination of cash flows from operations and additional indebtedness.

     OTHER LITIGATION AND CLAIMS -- The Company is involved as a defendant in
various lawsuits, claims and disputes which are in the normal course of the
Company's business. The resolution of any such matters may have an impact on
the Company's consolidated financial results for a particular reporting period;
however, management believes any resulting liability will not have a material
adverse effect on the consolidated financial position, results of operations or
cash flows of the Company.

     GRAIN STORAGE -- As of August 31, 2002 and 2001, the Company stored grain
and processed grain products for third parties totaling $148.0 million and
$177.0 million, respectively. Such stored commodities and products are not the
property of the Company and therefore are not included in the Company's
inventories.

     GUARANTEES -- The Company is a guarantor for lines of credit for related
companies totaling up to $86.2 million, of which $45.1 million was outstanding
as of August 31, 2002. All outstanding loans with respective creditors are
current as of August 31, 2002.

     LEASE COMMITMENTS -- The Company leases approximately 1,700 rail cars with
remaining lease terms of one to 10 years. In addition, the Company has
commitments under other operating leases for various refinery, manufacturing
and transportation equipment, vehicles and office space. Some leases include
purchase options at not less than fair market value at the end of the leases.

     Total rental expense for all operating leases, net of rail car mileage
credits received from the railroad and sublease income was $30.2 million, $35.5
million and $38.0 million for the years ended August 31, 2002, 2001 and 2000,
respectively. Mileage credits and sublease income were $9.5 million, $11.0
million and $10.6 million for the years ended August 31, 2002, 2001 and 2000,
respectively.

     Minimum future lease payments, required under noncancellable operating
leases as of August 31, 2002, are as follows:

<TABLE>
<CAPTION>
                                                                               EQUIPMENT
                                                    RAIL CARS     VEHICLES     AND OTHER       TOTAL
                                                   -----------   ----------   -----------   ----------
                                                                  (DOLLARS IN THOUSANDS)
<S>                                                  <C>          <C>           <C>          <C>
   2003 ........................................     $ 9,100      $ 9,436       $14,417      $32,953
   2004 ........................................       7,091        6,992        10,116       24,199
   2005 ........................................       5,525        5,183         5,286       15,994
   2006 ........................................       2,018        3,321         3,561        8,900
   2007 ........................................       1,042        1,657         2,433        5,132
   Thereafter ..................................       4,025          255           515        4,795
                                                     -------      -------       -------      -------
   Total minimum future lease payments .........     $28,801      $26,844       $36,328      $91,973
                                                     =======      =======       =======      =======
</TABLE>

                                      F-24
<PAGE>


              CENEX HARVEST STATES COOPERATIVES AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

13.  SUPPLEMENTAL CASH FLOW AND OTHER INFORMATION

     Additional information concerning supplemental disclosures of cash flow
activities for the years ended August 31, 2002, 2001 and 2000 is as follows:

<TABLE>
<CAPTION>
                                                             2002           2001           2000
                                                         ------------   ------------   ------------
                                                                   (DOLLARS IN THOUSANDS)
<S>                                                       <C>            <C>            <C>
   Net cash paid during the period for:
    Interest .........................................    $  44,231      $  63,034      $  57,062
    Income taxes .....................................       27,965         11,709          3,785
   Other significant noncash transactions:
    (Distributions)/contributions of inventories of
     minority interests ..............................                     (54,399)        54,399
    Capital equity certificates issued in exchange for
     elevator properties .............................        1,842          5,481          7,921
    Equity Participation Units issued ................                       1,045
    Accrual of patronage dividends and equity
     retirements payable .............................      (56,510)       (72,154)       (43,694)
    Other comprehensive (loss) income ................      (49,982)           512         (1,257)
</TABLE>

14.  RELATED PARTIES TRANSACTIONS

     As of August 31, 2002, the Company had related party transactions, which
consisted of sales of $550.0 million, purchases of $502.4 million, receivables
of $21.2 million and payables of $18.3 million with its equity investees. These
related party transactions were primarily with Agriliance, CF Industries, Inc.,
Horizon Milling, Tacoma Export Marketing Company and Ventura Foods, LLC.

15.  COMPREHENSIVE INCOME

     The components of comprehensive income for the years ended August 31,
2002, 2001 and 2000 are as follows:

<TABLE>
<CAPTION>
                                                                   2002          2001         2000
                                                               -----------   -----------   ----------
                                                                       (DOLLARS IN THOUSANDS)
<S>                                                             <C>           <C>           <C>
   Net income ..............................................    $ 126,138     $178,554      $ 87,388
    Additional minimum pension liability, net of taxes .....      (48,797)         (15)          153
    Financial instruments, net of taxes ....................         (548)         527        (1,410)
    Cash flow hedges, net of taxes .........................         (637)
                                                                ---------     --------      --------
   Comprehensive income ....................................    $  76,156     $179,066      $ 86,131
                                                                =========     ========      ========
</TABLE>

     The components of accumulated other comprehensive loss as of August 31,
2002 and 2001 are as follows:

<TABLE>
<CAPTION>
                                                                     2002         2001
                                                                  ----------   ---------
                                                                  (DOLLARS IN THOUSANDS)
<S>                                                                <C>          <C>
   Additional minimum pension liability, net of taxes .........    $50,051      $1,254
   Financial instruments, net of taxes ........................      1,209         661
   Cash flow hedges, net of taxes .............................        637
                                                                   -------      ------
   Accumulated other comprehensive loss .......................    $51,897      $1,915
                                                                   =======      ======
</TABLE>

                                      F-25
<PAGE>


                       REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors and Members and Patrons of
Cenex Harvest States Cooperatives:

     In our opinion, the accompanying consolidated balance sheets and the
related consolidated statements of operations, of equities and comprehensive
income and of cash flows present fairly, in all material respects, the
financial position of Cenex Harvest States Cooperatives and subsidiaries as of
August 31, 2002 and 2001, and the results of their operations and their cash
flows for each of the three years in the period ended August 31, 2002, in
conformity with accounting principles generally accepted in the United States
of America. These financial statements are the responsibility of the Company's
management; our responsibility is to express an opinion on these financial
statements based on our audits. We conducted our audits of these statements in
accordance with auditing standards generally accepted in the United States of
America, which require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.

PRICEWATERHOUSECOOPERS, LLP
October 18, 2002
Minneapolis, Minnesota

                                      F-26
<PAGE>


                         INDEPENDENT AUDITORS' REPORT

Members Committee of Ventura Foods, LLC:

     We have audited the accompanying consolidated balance sheets of Ventura
Foods, LLC and subsidiary (the "Company") as of March 31, 2002 and 2001, and
the related consolidated statements of income, members' capital, and cash flows
for the year ended March 31, 2002, the three months ended March 31, 2001, and
the years ended December 31, 2000 and 1999. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.

     We conducted our audits in accordance with auditing standards generally
accepted in the United States of America. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.

     In our opinion, such consolidated financial statements present fairly, in
all material respects, the financial position of Ventura Foods, LLC and
subsidiary as of March 31, 2002 and 2001, and the results of their operations
and their cash flows for the year ended March 31, 2002, the three months ended
March 31, 2001, and the years ended December 31, 2000 and 1999 in conformity
with accounting principles generally accepted in the United States of America.

     As discussed in Note 2 to the consolidated financial statements, the
Company changed its method of accounting for start-up activities in 1999.

DELOITTE & TOUCHE LLP

Los Angeles, California
June 19, 2002

                                      F-27
<PAGE>


                       VENTURA FOODS, LLC AND SUBSIDIARY

                          CONSOLIDATED BALANCE SHEETS
                            MARCH 31, 2002 AND 2001

<TABLE>
<CAPTION>
                                                                                      2002              2001
                                                                                 --------------   ---------------
ASSETS (NOTE 4)
<S>                                                                               <C>              <C>
CURRENT ASSETS:
 Cash and cash equivalents (Note 2) ..........................................    $  9,300,000     $ 14,150,000
 Trade receivables, net of allowance for doubtful accounts of $1,543,000 and
  $2,000,000 at 2002 and 2001, respectively (Notes 2, 4 and 5) ...............      57,139,000       56,368,000
 Inventories (Notes 2, 4 and 5) ..............................................      62,799,000       66,680,000
 Prepaid expenses and other current assets ...................................       2,283,000        1,490,000
 Due from Wilsey Foods, Inc. (Note 5) ........................................                           47,000
 Derivative contract asset (Note 2) ..........................................      13,298,000       12,193,000
                                                                                  ------------     ------------
   TOTAL CURRENT ASSETS ......................................................     144,819,000      150,928,000
                                                                                  ------------     ------------
PROPERTY (Notes 2 and 4):
 Land, buildings, and improvements ...........................................      98,840,000       96,082,000
 Machinery and equipment .....................................................     129,133,000      120,932,000
 Construction-in-progress ....................................................       6,489,000        7,581,000
 Other property ..............................................................      10,494,000        8,798,000
                                                                                  ------------     ------------
   Total .....................................................................     244,956,000      233,393,000
 Less accumulated depreciation and amortization ..............................      95,052,000       84,178,000
                                                                                  ------------     ------------
   Property, net .............................................................     149,904,000      149,215,000
GOODWILL, Net of amortization of $18,087,000 and $15,180,000 at 2002 and
 2001, respectively (Notes 2 and 3) ..........................................      43,156,000       46,063,000
TRADEMARKS, Net of amortization of $8,814,000 and $5,862,000 at 2002 and
 2001, respectively (Notes 2 and 4) ..........................................      19,991,000       22,838,000
DEFERRED COMPENSATION PLAN TRUST (Note 6) ....................................      14,240,000
OTHER ASSETS, Net of amortization of $4,181,000 and $3,813,000 (Note 2) ......       4,879,000        5,304,000
                                                                                  ------------     ------------
 TOTAL .......................................................................    $376,989,000     $374,348,000
                                                                                  ============     ============
LIABILITIES AND MEMBERS' CAPITAL
CURRENT LIABILITIES:
 Accounts payable (Note 5) ...................................................    $ 52,045,000     $ 56,536,000
 Accrued liabilities (Note 5) ................................................      25,784,000       22,891,000
 Deferred compensation obligations (Note 6) ..................................                        9,660,000
 Dividends payable ...........................................................       9,550,000       18,625,000
 Bank lines of credit (Note 4) ...............................................       8,000,000        5,000,000
 Current portion of long-term debt (Note 4) ..................................      12,758,000       12,603,000
 Current portion of long-term liability -- Wilsey Foods, Inc. (Note 1) .......         491,000          978,000
 Derivative contract liability (Note 2) ......................................       4,120,000        4,818,000
                                                                                  ------------     ------------
   Total current liabilities .................................................     112,748,000      131,111,000
                                                                                  ------------     ------------
LONG-TERM DEBT (Note 4) ......................................................      97,178,000      109,936,000
                                                                                  ------------     ------------
DEFERRED COMPENSATION OBLIGATIONS (Note 6) ...................................      16,347,000        1,557,000
                                                                                  ------------     ------------
   Total liabilities .........................................................     226,273,000      242,604,000
COMMITMENTS AND CONTINGENCIES (Notes 6 and 7) ................................
MEMBERS' CAPITAL .............................................................     150,716,000      131,744,000
                                                                                  ------------     ------------
 TOTAL .......................................................................    $376,989,000     $374,348,000
                                                                                  ============     ============
</TABLE>

                See notes to consolidated financial statements.


                                      F-28
<PAGE>


                       VENTURA FOODS, LLC AND SUBSIDIARY

                       CONSOLIDATED STATEMENTS OF INCOME
             YEAR ENDED MARCH 31, 2002 AND THE THREE MONTHS ENDED
         MARCH 31, 2001 AND THE YEARS ENDED DECEMBER 31, 2000 AND 1999

<TABLE>
<CAPTION>
                                                                       THREE MONTHS                   YEAR ENDED
                                                     YEAR ENDED            ENDED                     DECEMBER 31,
                                                      MARCH 31,          MARCH 31,      -----------------------------------
                                                        2002               2001               2000               1999
                                                  ----------------   ----------------   ----------------   ----------------
<S>                                                <C>                <C>                <C>                <C>
NET SALES (Notes 2 and 5) .....................    $ 965,728,000      $ 215,187,000      $ 890,042,000      $ 918,043,000
COST OF GOODS SOLD
 (Notes 2 and 5) ..............................      792,689,000        177,748,000        744,282,000        798,891,000
                                                   -------------      -------------      -------------      -------------
 GROSS PROFIT .................................      173,039,000         37,439,000        145,760,000        119,152,000
                                                   -------------      -------------      -------------      -------------
OPERATING EXPENSES:
 Selling, general, and administrative
  (Notes 2 and 5) .............................       92,034,000         20,121,000         78,145,000         69,127,000
 Amortization of intangibles (Note 2) .........        6,227,000          1,581,000          6,431,000          6,379,000
                                                   -------------      -------------      -------------      -------------
   Total operating expenses ...................       98,261,000         21,702,000         84,576,000         75,506,000
                                                   -------------      -------------      -------------      -------------
OPERATING INCOME ..............................       74,778,000         15,737,000         61,184,000         43,646,000
INTEREST EXPENSE, Net .........................        7,474,000          2,071,000          9,585,000         10,146,000
OTHER INCOME (Note 7) .........................       (3,182,000)          (702,000)        (5,907,000)        (2,413,000)
                                                   -------------      -------------      -------------      -------------
INCOME BEFORE CUMULATIVE EFFECT
 OF ACCOUNTING CHANGE .........................       70,486,000         14,368,000         57,506,000         35,913,000
CUMULATIVE EFFECT OF ACCOUNTING
 CHANGE (Note 2) ..............................                                                                   563,000
                                                   -------------      -------------      -------------      -------------
NET INCOME ....................................    $  70,486,000      $  14,368,000      $  57,506,000      $  35,350,000
                                                   =============      =============      =============      =============
</TABLE>


                See notes to consolidated financial statements.


                                      F-29
<PAGE>


                       VENTURA FOODS, LLC AND SUBSIDIARY

                  CONSOLIDATED STATEMENTS OF MEMBERS' CAPITAL
             YEAR ENDED MARCH 31, 2002 AND THE THREE MONTHS ENDED
         MARCH 31, 2001 AND THE YEARS ENDED DECEMBER 31, 2000 AND 1999

<TABLE>
<CAPTION>
                                                                   CENEX
                                                                  HARVEST
                                                WILSEY            STATES
                                             FOODS, INC.       COOPERATIVES           TOTAL
                                           ---------------   ----------------   -----------------
<S>                                         <C>               <C>                <C>
BALANCE, JANUARY 1, 1999 ...............    $  48,371,000     $  32,248,000       $  80,619,000
 Net income ............................       21,210,000        14,140,000          35,350,000
 Contributions .........................       12,000,000         8,000,000          20,000,000
 Dividends .............................      (14,266,000)       (9,511,000)        (23,777,000)
                                            -------------     -------------       -------------
BALANCE, DECEMBER 31, 1999 .............       67,315,000        44,877,000         112,192,000
 Net income ............................       30,593,000        26,913,000          57,506,000
 Transfer of interest (Note 1) .........      (11,775,000)       11,775,000
 Dividends .............................      (23,288,000)      (20,720,000)        (44,008,000)
                                            -------------     -------------       -------------
BALANCE, DECEMBER 31, 2000 .............       62,845,000        62,845,000         125,690,000
 Net income ............................        7,184,000         7,184,000          14,368,000
 Dividends .............................       (4,157,000)       (4,157,000)         (8,314,000)
                                            -------------     -------------       -------------
BALANCE, MARCH 31, 2001 ................       65,872,000        65,872,000         131,744,000
 Net income ............................       35,243,000        35,243,000          70,486,000
 Dividends .............................      (25,757,000)      (25,757,000)        (51,514,000)
                                            -------------     -------------       -------------
BALANCE, MARCH 31, 2002 ................    $  75,358,000     $  75,358,000       $ 150,716,000
                                            =============     =============       =============
</TABLE>

                See notes to consolidated financial statements.


                                      F-30
<PAGE>


                       VENTURA FOODS, LLC AND SUBSIDIARY

                     CONSOLIDATED STATEMENTS OF CASH FLOWS
             YEAR ENDED MARCH 31, 2002 AND THE THREE MONTHS ENDED
         MARCH 31, 2001 AND THE YEARS ENDED DECEMBER 31, 2000 AND 1999

<TABLE>
<CAPTION>
                                                                             THREE MONTHS              YEAR ENDED
                                                             YEAR ENDED         ENDED                 DECEMBER 31,
                                                              MARCH 31,       MARCH 31,    ---------------------------------
                                                                2002             2001            2000             1999
                                                          ---------------- --------------- ---------------- ---------------
<S>                                                        <C>              <C>             <C>              <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
 Net income .............................................  $  70,486,000    $ 14,368,000    $  57,506,000    $  35,350,000
 Adjustments to reconcile net income to
  net cash provided by operating activities:
   Depreciation and amortization ........................     12,186,000       2,833,000       10,829,000        9,740,000
   Amortization of intangibles ..........................      6,227,000       1,581,000        6,431,000        6,379,000
   Loss (gain) on disposal/impairment of assets .........        324,000         128,000         (139,000)       2,576,000
   Derivative contract asset ............................     (1,803,000)     (7,375,000)
   Gain on deferred compensation plan
    trust assets ........................................       (264,000)
   Changes in operating assets and liabilities:
    Trade receivables ...................................       (771,000)        980,000         (359,000)       6,198,000
    Inventories .........................................      3,881,000       5,089,000       (3,246,000)       4,600,000
    Prepaid expenses and other current assets ...........       (793,000)        330,000          234,000        2,442,000
    Accounts payable ....................................     (4,491,000)     (2,943,000)      (4,654,000)      (1,023,000)
    Accrued liabilities .................................      2,893,000      (2,540,000)       2,499,000        5,932,000
    Deferred compensation obligations ...................      5,130,000      (1,767,000)       6,747,000        3,835,000
    Due from/to affiliates ..............................         47,000           1,000          293,000         (266,000)
                                                           -------------    ------------    -------------    -------------
      Net cash provided by operating activities .........     93,052,000      10,685,000       76,141,000       75,763,000
                                                           -------------    ------------    -------------    -------------
CASH FLOWS FROM INVESTING ACTIVITIES:
 Acquisition of property ................................    (13,268,000)     (4,869,000)     (13,037,000)     (17,841,000)
 Proceeds from sale of property .........................         69,000          23,000        1,021,000           51,000
 Acquisitions, net of cash acquired (Note 3) ............                                      (5,312,000)     (50,028,000)
 Acquisition of trademarks ..............................                                         (47,000)
 Investment in rabbi trust ..............................    (13,976,000)
 Other assets ...........................................        (48,000)         67,000         (201,000)      (1,355,000)
                                                           -------------    ------------    -------------    -------------
      Net cash used in investing activities .............    (27,223,000)     (4,779,000)     (17,576,000)     (69,173,000)
                                                           -------------    ------------    -------------    -------------
CASH FLOWS FROM FINANCING ACTIVITIES:
 Borrowings of long-term debt ...........................                                                       35,000,000
 Repayment of long-term debt ............................    (12,603,000)       (554,000)     (12,417,000)      (9,490,000)
 Net borrowings (payments) on line of credit ............      3,000,000       5,000,000      (15,000,000)     (26,000,000)
 Payment to Wilsey Foods, Inc. (Note 1) .................       (487,000)       (487,000)                         (487,000)
 Payment of bank loan fees ..............................                                                         (105,000)
 Dividends paid .........................................    (60,589,000)                     (38,539,000)     (23,274,000)
 Contributions received .................................                                                       20,000,000
                                                           -------------    ------------    -------------    -------------
      Net cash (used in) provided by
       financing activities .............................    (70,679,000)      3,959,000      (65,956,000)      (4,356,000)
                                                           -------------    ------------    -------------    -------------
NET (DECREASE) INCREASE IN CASH
 AND CASH EQUIVALENTS ...................................     (4,850,000)      9,865,000       (7,391,000)       2,234,000
CASH AND CASH EQUIVALENTS,
 BEGINNING OF PERIOD ....................................     14,150,000       4,285,000       11,676,000        9,442,000
                                                           -------------    ------------    -------------    -------------
CASH AND CASH EQUIVALENTS,
 END OF PERIOD ..........................................  $   9,300,000    $ 14,150,000    $   4,285,000    $  11,676,000
                                                           =============    ============    =============    =============
SUPPLEMENTAL DISCLOSURE OF
 CASH FLOW INFORMATION -- Cash paid
 during the period for interest .........................  $   8,129,000    $    653,054    $  10,181,000    $  10,296,000
                                                           =============    ============    =============    =============
</TABLE>

                See notes to consolidated financial statements.


                                      F-31
<PAGE>


                       VENTURA FOODS, LLC AND SUBSIDIARY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
             YEAR ENDED MARCH 31, 2002 AND THE THREE MONTHS ENDED
         MARCH 31, 2001 AND THE YEARS ENDED DECEMBER 31, 2000 AND 1999

1.  GENERAL MATTERS

     Ventura Foods, LLC and its subsidiary (the "Company") is a processor and
distributor of edible oils used in food preparation and a packager of food
products. The Company sells its products to national and regional restaurant
chains, food wholesalers, and retail chains.

     The Company was formed pursuant to a Joint Venture Agreement (the
"Agreement") dated August 30, 1996 between Wilsey Foods, Inc. ("Wilsey") and
Cenex Harvest States Cooperatives ("Cenex") whereby substantially all the
assets and liabilities of Wilsey and Holsum Foods (a division of Cenex) were
transferred and assigned, with certain exclusions, to the Company. Wilsey is a
majority-owned subsidiary of Mitsui & Co., Ltd. From the period of inception
through March 31, 2000, Wilsey and Cenex owned 60 percent and 40 percent of the
Company, respectively. On March 31, 2000, Wilsey sold a 10 percent interest in
the Company to Cenex. Accordingly, Wilsey and Cenex each own 50 percent of the
Company.

     At the formation date, a liability equal to the net deferred income tax
liability of Wilsey at August 30, 1996 was assumed by the Company and was
included in long-term liability -Wilsey Foods, Inc. The amount is payable in
five equal annual installments of $487,000 plus a final installment of
$491,000.

2.  ACCOUNTING POLICIES

     BASIS OF PRESENTATION AND PRINCIPLES OF CONSOLIDATION -- The consolidated
financial statements include the accounts of Ventura Foods, LLC and its 100
percent-owned subsidiary, Ventura Jets, Inc. All material intercompany
transactions have been eliminated.

     FISCAL YEAR-END -- During 2001, the Company changed its fiscal year-end to
March 31. Prior to such change, the Company's fiscal year-end had been December
31.

     CUMULATIVE EFFECT OF ACCOUNTING CHANGE -- In connection with the adoption
of Statement of Position 98-5, REPORTING ON THE COSTS OF START-UP ACTIVITIES,
on January 1, 1999, the Company charged $563,000 of previously deferred
start-up costs to expense.

     CASH AND CASH EQUIVALENTS -- The Company considers all highly liquid
investments purchased with a maturity of three months or less to be cash
equivalents.

     INVENTORIES -- Inventories consist of the following at March 31, 2002 and
2001:

                                                  2002             2001
                                             --------------   --------------
       Bulk oil ..........................    $17,654,000      $24,642,000
       Finished goods ....................     27,696,000       24,692,000
       Ingredients and supplies ..........     17,449,000       17,346,000
                                              -----------      -----------
        Total ............................    $62,799,000      $66,680,000
                                              ===========      ===========

     Inventories are accounted for at the lower of cost or market, using the
first-in first-out method.

     DERIVATIVE FINANCIAL INSTRUMENTS -- The Company's use of derivative
financial instruments is limited to forwards, futures, and certain other
delivery contracts as discussed below. The Company enters into these contracts
to limit its exposure to price volatility of various food oils that are
critical to its processing and distribution activities. It is the Company's
policy to remain substantially hedged with respect to edible oil product price
risk; derivative contracts are used to maintain this hedged position. Forward
purchase and sales contracts with established market participants as well as
exchange traded futures contracts are entered into in amounts necessary to
protect against price changes on raw materials needed for the Company's food
oil processing and distribution activities. The Company also enters into
purchase and sales commitments with major suppliers and customers at a
specified premium or discount from a future market price ("Basis Contracts").
Additionally, the Company's policies do not permit


                                      F-32
<PAGE>


                       VENTURA FOODS, LLC AND SUBSIDIARY

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
             YEAR ENDED MARCH 31, 2002 AND THE THREE MONTHS ENDED
         MARCH 31, 2001 AND THE YEARS ENDED DECEMBER 31, 2000 AND 1999

 2.  ACCOUNTING POLICIES (CONTINUED)


speculative trading of such contracts. All of these qualify as derivatives
under Statement of Financial Accounting Standards ("SFAS") No. 133, ACCOUNTING
FOR DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES, and are stated at market
value. Changes in market value are recognized in the consolidated statements of
income, through cost of sales, in the periods such changes occur. The adoption
of SFAS No. 133, on January 1, 2001, did not have a significant impact on the
Company's results of operations, as the Company historically recorded its
financial instruments at market value. Prior to the adoption of SFAS No. 133,
the market value of futures contracts, basis contracts, and forward purchase
and sales contracts were recorded as a component of inventory. Beginning with
the adoption of SFAS No. 133, the market value of these contracts is now
recorded separately on the balance sheet as derivative contract assets or
liabilities. These contracts have maturities of less than one year.

     The following summarizes the Company's various derivative contracts
outstanding at March 31, 2002 and 2001:

                                                      NET UNREALIZED
FORWARD CONTRACTS AND COMMITMENTS        POUNDS        GAIN (LOSS)
- -----------------------------------   ------------   ---------------
                                                      (IN THOUSANDS)
MARCH 31, 2002
Forward purchases .................      490,500        $  7,873
Forward sales .....................      454,100          (1,117)
Basis purchase ....................      390,300           2,304
Basis sales .......................       62,600            (303)
Futures contracts .................       96,100             421
                                       ---------        --------
                                       1,493,600        $  9,178
                                       =========        ========
MARCH 31, 2001
Forward purchases .................      391,800        $  3,836
Forward sales .....................      395,200             741
Basis purchase ....................    1,316,200           1,989
Basis sales .......................      151,500             163
Futures contracts .................      117,900             646
                                       ---------        --------
                                       2,372,600        $  7,375
                                       =========        ========

     The fair value of futures contracts are determined from quotes listed on
the Chicago Board of Trade or other market makers. Forward purchase and sales
contracts are with various counterparties, and the fair values of such
contracts are determined from the market price of the underlying product.

     The Company is exposed to loss in the event of nonperformance by the other
parties to the contracts. However, the Company does not anticipate
nonperformance by counterparties.

     PROPERTY AND DEPRECIATION -- Property is stated at cost, and depreciation
is provided for using the straight-line method over the estimated useful lives
of the assets, as follows:

  Buildings .................................        40 years
  Leasehold improvements ....................    3 - 19 years
  Machinery and equipment ...................   10 - 25 years
  Other fixed assets ........................    3 - 20 years


                                      F-33
<PAGE>


                       VENTURA FOODS, LLC AND SUBSIDIARY

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
             YEAR ENDED MARCH 31, 2002 AND THE THREE MONTHS ENDED
         MARCH 31, 2001 AND THE YEARS ENDED DECEMBER 31, 2000 AND 1999

 2.  ACCOUNTING POLICIES (CONTINUED)

     FAIR VALUE OF FINANCIAL INSTRUMENTS -- The Company estimates the fair
value of financial instruments using the following methods and assumptions:

       ACCOUNTS RECEIVABLE AND ACCOUNTS PAYABLE -- The carrying amounts
   approximate fair value, due to the short maturities of these instruments.

       LINES OF CREDIT -- The carrying amounts approximate fair value, as the
   interest rates are based upon variable reference rates.

       LONG-TERM DEBT -- Based on the borrowing rates currently available to
   the Company for bank loans with similar terms and remaining maturities, the
   carrying amounts approximate fair value.

       FUTURES CONTRACTS -- The fair value of futures contracts (used for
   hedging purposes) is determined from quotes listed principally on the
   Chicago Board of Trade.

     CONCENTRATION OF CREDIT RISK -- During the year ended March 31, 2002 and
the three months ended March 31, 2001 and the years ended December 31, 2000 and
1999, net sales to one customer were 22 percent, 22 percent, 21 percent, and 18
percent of total net sales, respectively. This customer represents
approximately 19 percent and 17 percent of trade receivables at March 31, 2002
and 2001, respectively. The Company performs ongoing credit evaluations of its
customers and maintains an allowance for potential credit losses.

     The Company maintains cash deposits with various financial institutions.
The Company periodically evaluates the credit standing of these financial
institutions and has not sustained any credit losses relating to such balances.


     MARKETABLE SECURITIES -- The Company's marketable securities are composed
of equity securities that have been classified as trading securities. The
equity securities are carried at fair market value based upon quoted market
prices of those investments at March 31, 2002. Unrealized gains and losses on
equity securities are recognized in net income.

     GOODWILL AND TRADEMARKS -- The Company's goodwill relates to various
acquisitions of businesses and is being amortized using the straight-line
method over periods ranging from 15 to 20 years. Trademarks are amortized using
the straight-line method over 10 to 15 years. Patents and other intangibles are
amortized using the straight-line method over 1 to 15 years (see "Recent
Accounting Pronouncements").

     IMPAIRMENT OF LONG-LIVED ASSETS -- Long-lived assets, including
identifiable intangibles and goodwill, are reviewed for impairment whenever
events or changes in circumstances indicate that the carrying amount of an
asset may not be recoverable. In performing the review for recoverability,
future cash flows expected to result from the use of the asset and its eventual
disposition are estimated. If the sum of the expected future cash flows
(undiscounted and without interest charges) is less than the carrying amount of
the asset, an impairment loss is recorded under the discounted future cash flow
method. Impairment losses of $1,277,000 were recognized during 1999.

     ADVERTISING COSTS -- The Company expenses advertising costs in the period
incurred. For the year ended March 31, 2002 and the three months ended March
31, 2001 and the years ended December 31, 2000 and 1999, the Company incurred
advertising expenses of approximately $7,100,000, $1,300,000, $6,100,000, and
$4,500,000, respectively.

     INCOME TAXES -- The Company is a limited liability company and has no
liability for federal and state income taxes. Income is taxed to the members
based on their allocated share of taxable income or loss. However, certain
states tax the income of limited liability companies. The Company's liability
for such state income taxes is not significant.


                                      F-34
<PAGE>


                       VENTURA FOODS, LLC AND SUBSIDIARY

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
             YEAR ENDED MARCH 31, 2002 AND THE THREE MONTHS ENDED
         MARCH 31, 2001 AND THE YEARS ENDED DECEMBER 31, 2000 AND 1999

 2.  ACCOUNTING POLICIES (CONTINUED)


     REVENUE RECOGNITION -- Revenue is recognized after the related product has
been shipped and title has transferred to the customer. Sales are presented net
of discounts and sales allowances.

     USE OF ESTIMATES -- The preparation of financial statements in conformity
with accounting principles generally accepted in the United States of America
requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. Actual results could differ
from those estimates.

     RECLASSIFICATIONS -- Certain reclassifications have been made to the prior
periods' financial statements to conform to the 2002 presentation.

     RECENT ACCOUNTING PRONOUNCEMENTS -- In June 2001, the Financial Accounting
Standards Board ("FASB") approved the issuance of SFAS No. 141, BUSINESS
COMBINATIONS, and SFAS No. 142, GOODWILL AND OTHER INTANGIBLE ASSETS. SFAS No.
141 requires that the purchase method of accounting be used for all business
combinations initiated after June 30, 2001. SFAS No. 142 changes the accounting
for goodwill from an amortization method to an impairment-only approach.
Amortization of goodwill, including goodwill recorded in business combinations
occurring prior to June 30, 2001, will cease upon adoption of this statement.
In addition, the standard includes provisions for the reclassification of
certain existing recognized intangibles as goodwill, reassessment of the useful
lives of existing recognized intangibles, reclassification of certain
intangibles out of previously reported goodwill, and the identification of
reporting units for purposes of assessing potential future impairments of
goodwill. Under SFAS Nos. 141 and 142, goodwill and other intangibles are
initially assessed for impairment upon adoption of the statements, with
subsequent assessments required annually and when there is reason to suspect
that their values have been diminished or impaired and with any corresponding
write-downs recognized as necessary.

     The Company adopted SFAS No. 141 on July 1, 2001. The adoption did not
have a material impact on its consolidated financial statements. The Company
adopted SFAS No. 142 on April 1, 2002. SFAS No. 142 requires the Company to
complete a transitional goodwill and other intangible assets impairment test.
The Company does not believe that the results of the impairment tests will have
a material impact on its consolidated financial statements. Annual goodwill
amortization of approximately $4,000,000 ceased upon the adoption of SFAS No.
142. Amortization of other intangible assets for the year ended March 31, 2002
and the three months ended March 31, 2001 and the years ended December 31, 2000
and 1999 was approximately $1,900,000, $430,000, $1,750,000 and $1,700,000,
respectively.

     In June 2001, the FASB issued SFAS No. 143, ACCOUNTING FOR ASSET
RETIREMENT OBLIGATIONS, which addresses financial accounting and reporting for
obligations associated with the retirement of tangible long-lived assets and
the associated asset retirement costs. This statement will be adopted as
required in fiscal year 2004. The Company is currently assessing, but has not
yet determined, the impact this statement will have on its consolidated
financial statements.

     In July 2001, the FASB issued SFAS No. 144, ACCOUNTING FOR THE IMPAIRMENT
OR DISPOSAL OF LONG-LIVED ASSETS, which addresses financial accounting and
reporting for the impairment or disposal of long-lived assets and supersedes
SFAS No. 121, ACCOUNTING FOR THE IMPAIRMENT OF LONG-LIVED ASSETS AND FOR
LONG-LIVED ASSETS TO BE DISPOSED OF, and the accounting and reporting
provisions of Accounting Principles Board Opinion No. 30, REPORTING THE RESULTS
OF OPERATIONS - REPORTING THE EFFECTS OF DISPOSAL OF A SEGMENT OF A BUSINESS,
AND EXTRAORDINARY, UNUSUAL AND INFREQUENTLY OCCURRING EVENTS AND TRANSACTIONS.
This statement retains the requirements of SFAS No. 121 to (a) recognize an
impairment loss only if the carrying amount of a long-lived asset is not
recoverable from its undiscounted cash flows


                                      F-35
<PAGE>


                       VENTURA FOODS, LLC AND SUBSIDIARY

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
             YEAR ENDED MARCH 31, 2002 AND THE THREE MONTHS ENDED
         MARCH 31, 2001 AND THE YEARS ENDED DECEMBER 31, 2000 AND 1999

 2.  ACCOUNTING POLICIES (CONTINUED)


and (b) measure an impairment loss as the difference between the carrying
amount and fair value of the asset, and establishes a single accounting model,
based on the framework established in SFAS No. 121, for long-lived assets to be
disposed of by sale. This statement will be adopted as required in fiscal year
2003. The Company is currently assessing, but has not yet determined, the
impact this statement will have on its consolidated financial statements.

     In November 2001, the Emerging Issues Task Force ("EITF") issued EITF
Issue No. 01-09, ACCOUNTING FOR CONSIDERATION GIVEN BY A VENDOR TO A CUSTOMER
OR A RESELLER OF THE VENDOR'S PRODUCTS, which addresses the accounting for
consideration given by a vendor to a customer or a reseller of the vendor's
products. This new guidance provides that consideration from a vendor to a
reseller is generally presumed to be a reduction of the selling prices of the
vendor's products and therefore should be characterized as a reduction of
revenue when recognized in the vendor's income statement. This statement will
be adopted as required in fiscal year 2003. The Company is currently assessing,
but has not yet determined, the impact this guidance will have on its
consolidated financial statements.

3.  ACQUISITIONS

     During 2000, the Company acquired substantially all the assets and
liabilities of Sona and Hollen for $5,740,000. Sona and Hollen is a portion
packing company located in Los Alamitos, California. The acquisition has been
accounted for as a purchase, and accordingly, the purchase price has been
allocated based on the estimated fair values of the assets acquired. The excess
of the purchase price over the fair value of the assets acquired, approximately
$4,276,000, was recorded as goodwill and had been amortized using a 15-year
life. The following is a summary of the assets acquired at estimated fair
market value:

            Inventories ...............................    $  637,000
            Prepaid expenses and other assets .........       208,000
            Property and equipment ....................       600,000
            Trademark .................................        19,000
            Goodwill ..................................     4,276,000
                                                           ----------
            Net assets of business acquired ...........    $5,740,000
                                                           ==========

     On January 11, 1999, the Company acquired substantially all the assets and
liabilities of Sunnyland Refining Company ("Sunnyland") from its parent,
Kane-Miller Corp, for $53.2 million in cash. Sunnyland is a manufacturer and
national distributor of margarine products located in Birmingham, Alabama.

     The acquisition has been accounted for as a purchase, and accordingly, the
purchase price has been allocated based on the estimated fair values of the
assets acquired. The excess of the purchase price over the fair value of the
assets acquired, approximately $38.8 million, was recorded as goodwill and has
been amortized using a 15-year life.


                                      F-36
<PAGE>


                       VENTURA FOODS, LLC AND SUBSIDIARY

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
             YEAR ENDED MARCH 31, 2002 AND THE THREE MONTHS ENDED
         MARCH 31, 2001 AND THE YEARS ENDED DECEMBER 31, 2000 AND 1999

 3.  ACQUISITIONS (CONTINUED)


     The following is a summary of the assets acquired and liabilities assumed
at estimated fair market value:

            Cash ......................................    $   3,201,000
            Accounts receivable .......................        6,513,000
            Inventories ...............................        2,577,000
            Prepaid expenses and other assets .........          486,000
            Property and equipment ....................       12,445,000
            Goodwill ..................................       38,837,000
                                                           -------------
            Assets acquired ...........................       64,059,000
                                                           -------------
            Accounts payable ..........................       (7,653,000)
            Accrued liabilities .......................       (3,177,000)
                                                           -------------
            Liabilities assumed .......................      (10,830,000)
                                                           -------------
            Net assets of business acquired ...........    $  53,229,000
                                                           =============

4.  LINES OF CREDIT AND LONG-TERM DEBT

     LINES OF CREDIT -- At March 31, 2002, the Company had a revolving
line-of-credit agreement with a banking group to provide for borrowings of up
to an aggregate of $72,000,000. Borrowings at March 31, 2002 and 2001 under
such lines were $8,000,000 and $5,000,000, respectively. The interest rates
applicable to borrowings are based, at the option of the Company, at a London
Interbank Offered Rate ("LIBOR") or a term federal funds rate ("TFFR") option.
The weighted-average rate at March 31, 2002 and 2001 was 2.24 percent and 5.67
percent, respectively. The credit agreement is subject to renewal annually with
the banking group.

     LONG-TERM DEBT -- At March 31, 2002 and 2001, balances outstanding on
long-term debt were $109,936,000 and $122,539,000, respectively, and represent
term loans with a banking group. The interest rate applicable to these term
loans is based, at the option of the Company, at a TFFR-based, LIBOR-based, or
a fixed rate option. The weighted-average interest rate on borrowings at March
31, 2002 and 2001 was 6.59 percent and 6.83 percent, respectively.

     The term loans are collateralized by substantially all property,
equipment, and intellectual property rights, and the lines of credit are
collateralized by substantially all trade receivables and inventories of the
Company. The loan agreements contain various covenants, including compliance
with tangible net worth (as defined) and other financial ratios, restrictions
on the payment of dividends, and restrictions on the incurrence of additional
debt.

     Annual maturities of long-term debt at March 31, 2002 are as follows:

  2003 ...........................    $ 12,758,000
  2004 ...........................      74,223,000
  2005 ...........................       2,799,000
  2006 ...........................       2,987,000
  2007 ...........................       3,187,000
  Thereafter .....................      13,982,000
                                      ------------
  Total ..........................     109,936,000
  Less current portion ...........      12,758,000
                                      ------------
  Long-term debt .................    $ 97,178,000
                                      ============


                                      F-37
<PAGE>


                       VENTURA FOODS, LLC AND SUBSIDIARY

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
             YEAR ENDED MARCH 31, 2002 AND THE THREE MONTHS ENDED
         MARCH 31, 2001 AND THE YEARS ENDED DECEMBER 31, 2000 AND 1999

5.  TRANSACTIONS WITH AFFILIATES

     At March 31, 2002, the Company had a receivable balance of $47,000 due
from Wilsey for reimbursement of expenses paid by the Company on behalf of
Wilsey.

     Included in accounts payable at March 31, 2002 and 2001 were $5,976,000
and $3,347,000, respectively, payable to Cenex for purchases of oil. Purchases
from Cenex for the year ended March 31, 2002 and for the three months ended
March 31, 2001 and the years ended December 31, 2000 and 1999 were $47,745,000,
$8,575,000, $48,916,000, and $84,872,000, respectively. Sales to Cenex for the
year ended March 31, 2002 and for the three months ended March 31, 2001 and the
years ended December 31, 2000 and 1999, totaled $883,000, $109,000, $950,000,
and $1,130,000, respectively.

     Included in accounts payable at March 31, 2002 and 2001 were $817,000 and
$448,000, respectively, payable to Mitsui USA for the Company's participation
in Mitsui USA's insurance plans. During the year ended March 31, 2001 and the
three months ended March 31, 2001 and the years ended December 31, 2000 and
1999, the Company recorded expenses of $8,487,000, $1,380,000, $5,049,000, and
$5,677,000, respectively, in connection with its participation in such plans.

     Included in trade receivables at March 31, 2002 and 2001 were $69,000 and
$110,000, respectively, of receivables from Mitsui USA for product sales. Sales
to Mitsui USA for the year ended March 31, 2002 and the three months ended
March 31, 2001 and the years ended December 31, 2000 and 1999, totaled
$1,406,000, $341,000, $1,569,000, and $2,509,000, respectively.

     Forward purchase contracts as of March 31, 2002 included commitments for
purchases of 78,653,000 pounds of oil from Cenex. The Company recognized gains
(losses) of $934,000, $1,788,000, $(363,000), and $(25,000), respectively, on
such related party commitments for the year ended March 31, 2002 and for the
three months ended March 31, 2001 and the years ended December 31, 2000 and
1999.

6.  EMPLOYEE BENEFIT PLANS

     The Company had long-term incentive arrangements for certain key
executives. Benefits under the arrangements were based on earnings over a
three-to five-year period (as defined) from inception of the arrangements
(January 1, 1997) through December 31, 2001. The incentive period ended on
December 31, 2001. An amount equal to the obligation incurred under the plan
was contributed to a rabbi trust that would be available to general creditors
in the event of bankruptcy. The trust holds investments primarily in marketable
securities that are recorded at market value (classified as trading
securities). The assets in the trust are to be distributed to the employees
upon retirement. The liability under the arrangements was $14,240,000 and
$8,774,000 as of March 31, 2002 and 2001, respectively, and is included in
accrued compensation in the accompanying consolidated balance sheets.

     On January 1, 2002, the Company established new long-term incentive
arrangements with certain key executives under which they can earn additional
compensation. Under these arrangements, the amount of additional compensation
is based on the attainment of cumulative income-based or equity-based targets
over a two-to three-year period. At the end of such periods, amounts earned by
individual executives will be contributed to a rabbi trust, unless
representatives of Wilsey and Cenex elect to pay such amounts directly to the
respective key executives. At March 31, 2002, a liability for such awards of
$439,000 is classified as accrued compensation in the accompanying consolidated
balance sheets.

     For the year ended March 31, 2002 and the three months ended March 31,
2001 and the years ended December 31, 2000 and 1999, the Company recognized
compensation expense under the long-term incentive arrangements of $5,657,544,
$749,815, $5,883,929, and $1,780,445, respectively.


                                      F-38
<PAGE>


                       VENTURA FOODS, LLC AND SUBSIDIARY

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
             YEAR ENDED MARCH 31, 2002 AND THE THREE MONTHS ENDED
         MARCH 31, 2001 AND THE YEARS ENDED DECEMBER 31, 2000 AND 1999

 6.  EMPLOYEE BENEFIT PLANS (CONTINUED)

     The Company has a combined 401(k) and defined contribution profit-sharing
plan (the "Plan") covering substantially all employees not covered by
collective bargaining agreements. Under the Plan, employees can make annual
voluntary contributions not to exceed the lesser of an amount equal to 15
percent of their compensation or limits established by the Internal Revenue
Code. The Company is required by the Plan to make certain matching
contributions of up to 4 percent of each participant's salary and may make
discretionary profit-sharing contributions. The Company also established a
401(k) defined contribution plan covering employees under certain collective
bargaining agreements. Under this plan, employees can make annual voluntary
contributions of up to 15 percent of their compensation. Expense for the years
ended March 31, 2002 and the three months ended March 31, 2001 and the years
ended December 31, 2000 and 1999 was $5,855,000, $1,343,000, $5,139,000, and
$5,212,000, respectively. Certain of the Company's union employees are
participants in multi-employer plans. Payments to multi-employer pension plans
are negotiated in various collective bargaining agreements and aggregated
$1,162,000, $416,000, $1,641,000, and $1,465,000, for the year ended March 31,
2002 and for the three months ended March 31, 2001 and the years ended December
31, 2000 and 1999, respectively. The actuarial present value of accumulated
plan benefits and net assets available for benefits to union employees under
these multi-employer pension plans are not available, as the Company does not
administer these plans.

     Effective January 1, 1999, the Company established a Supplemental
Executive Retirement Plan for certain of its employees. The projected benefit
obligation as of March 31, 2002 and 2001 was $2,049,000 and $1,484,000,
respectively. A liability of $1,668,000 and $1,557,000, as of March 31, 2002
and 2001, respectively, is included in long-term accrued compensation in the
accompanying consolidated balance sheets. The plan is unfunded. During the year
ended March 31, 2002 and the three months ended March 31, 2001 and the years
ended December 31, 2000 and 1999, the Company recorded benefit expense related
to the plan of $111,000, $420,000, $379,000, and $412,000, respectively.

     The assumptions used in the measurement of the Company's benefit
obligation are as follows:

<TABLE>
<CAPTION>
                                                         MARCH 31,             DECEMBER 31,
                                                   ---------------------   ---------------------
                                                      2002        2001        2000        1999
                                                   ---------   ---------   ---------   ---------
<S>                                                    <C>         <C>         <C>         <C>
         Discount rate .........................       7.0%        7.0%        7.0%        7.5%
         Rate of compensation increase .........       3.0%        3.0%        3.0%        4.0%
</TABLE>

     The Company accrues the actuarially determined amount necessary to fund
the participants' benefits in accordance with the requirements of the Employee
Retirement Income Security Act of 1974.

7.  COMMITMENTS AND CONTINGENCIES

     Future minimum annual payments under noncancelable operating leases with
lease terms in excess of one year at March 31, 2002 are as follows:

  2003 .................    $  4,960,000
  2004 .................       3,881,000
  2005 .................       3,092,000
  2006 .................       1,826,000
  2007 .................         669,000
  Thereafter ...........         203,000
                            ------------
  Total ................    $ 14,631,000
                            ============

     Under the lease agreements, the Company is obligated to pay certain
property taxes, insurance, and maintenance costs. Certain leases contain
renewal and purchase options. Rental expense for the year


                                      F-39
<PAGE>


                       VENTURA FOODS, LLC AND SUBSIDIARY

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
             YEAR ENDED MARCH 31, 2002 AND THE THREE MONTHS ENDED
         MARCH 31, 2001 AND THE YEARS ENDED DECEMBER 31, 2000 AND 1999

 7.  COMMITMENTS AND CONTINGENCIES (CONTINUED)

ended March 31, 2002 and for the three months ended March 31, 2001 and the
years ended December 31, 2000 and 1999 under operating leases totaled
$5,671,000, $1,476,000, $5,205,000, and $5,121,000, respectively.

     During the year ended December 31, 2000, the Company received a payment of
approximately $2.4 million in connection with the settlement of a class action
lawsuit. This amount has been recorded as a component of other income in the
accompanying consolidated statements of income.

     The Company is involved from time to time in routine legal matters
incidental to its business. The Company believes that the resolution of such
matters will not have a material adverse effect on the Company's business,
financial condition, or results of operations.

8.  QUARTERLY INFORMATION (UNAUDITED)

     As discussed in Note 2, the Company changed its fiscal year-end to March
31. Audited financial information for the three months ended March 31, 2001 has
been included herein. For comparison purposes, selected unaudited financial
information for the three months ended March 31, 2000 is as follows:

  Sales ........................    $211,815,000
  Cost of goods sold ...........     172,818,000
  Net income ...................      17,123,000
  Total assets .................     362,382,000
  Total liabilities ............     231,789,000
  Members' capital .............     130,593,000


                                      F-40

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-3.(II)
<SEQUENCE>3
<FILENAME>cenex025288_ex3-2.txt
<DESCRIPTION>BYLAWS
<TEXT>
                                                                     EXHIBIT 3.2

                                     BYLAWS
                                       OF
                        CENEX HARVEST STATES COOPERATIVES
                          (EFFECTIVE DECEMBER 1, 2000)

                                   ARTICLE I.
                                   MEMBERSHIP

                  SECTION 1 - QUALIFICATIONS. Producers of agricultural products
and associations of producers of agricultural products who are eligible under
Article IV, Section 2 of the Articles of Incorporation of this cooperative and
who patronize this cooperative under conditions established by the Board of
Directors of this cooperative or as elsewhere provided in these Bylaws may, upon
approval or pursuant to the authorization of the Board of Directors, become
members of this cooperative. Each transaction between this cooperative and each
member shall be subject to and shall include as a part of its terms each
provision of the Articles of Incorporation of this cooperative and these Bylaws,
whether or not the same be expressly referred to in said transaction.

                  SECTION 2 - CLASSES OF MEMBERS. In accordance with the
Articles of Incorporation, there shall be three classes of members of this
cooperative, which are hereby designated as the "Cooperative Association" class,
"Individual Member" class and the "Defined Member" class. Membership in a
particular class of members shall be determined as follows:

                  (a) COOPERATIVE ASSOCIATION MEMBERS. All members which are
cooperative associations shall belong to and be part of the Cooperative
Association class of members and shall become known and be designated as
"Cooperative Association Members."

                  (b) INDIVIDUAL MEMBERS. All members who are individuals shall
belong to and be part of the Individual Member class of members, and shall
become known and be designated as "Individual Members;" and

                  (c) DEFINED MEMBERS. All members who are holders of Equity
Participation Units (as described in the Articles of Incorporation of this
cooperative) shall belong to and be part of the Defined Member class of members,
and shall become known and be designated as "Defined Members."

                  SECTION 3 - DEFINED MEMBERS AND DEFINED BUSINESS UNITS.

                  (a) DEFINED BUSINESS UNITS. Each Defined Member holding Equity
Participation Units in a Defined Business Unit (as such unit is established in
the Articles of Incorporation) shall be eligible to receive patronage
distributions from the Defined Business Unit as a separate allocation unit.

<PAGE>


                  (b) DELIVERY RIGHTS AND OBLIGATIONS. The delivery rights and
obligations of each Defined Member shall be as specified in the member marketing
agreement between such Defined Member and this cooperative. Each such member
marketing agreement shall at all times be subject to modification by this
cooperative upon written notice to the Defined Member in question, provided that
such modification is first approved by Defined Members holding a majority of the
voting power of the Defined Business Unit in question who are present and voting
at a meeting of Defined Members holding Equity Participation Units in such
Defined Business Unit, where the notice of such meeting contains a statement of
the proposed modification.

                  (c) DEFINED MEMBER BOARDS. Each Defined Business Unit shall be
represented by a Defined Member Board. The initial members of each Defined
Member Board shall be selected by the Board of Directors of this cooperative.
Subsequently, the members of the Defined Business Unit in question shall be
entitled to elect, on a one Defined Member/one vote basis, the members of the
Defined Member Board. Each Defined Member Board shall be made up of at least
five (5) but not more than ten (10) individuals. Each member of a Defined Member
Board must be (i) either a Defined Member or a representative of a Defined
Member, and (ii) in good standing as a Defined Member and in full compliance
with delivery obligations in and to such member's Defined Business Unit;
provided, however, that no employee of this cooperative may serve as a member of
any Defined Member Board. Each Defined Member Board shall be headed by a
Chairperson selected by and from the Board of Directors of this cooperative.
Each Defined Member Board shall meet at least quarterly (one of which meetings
may be its annual meeting), and shall be charged with reflecting Defined Member
concerns and providing a direct communication mechanism to the Board of
Directors of this cooperative. Individuals serving on a Defined Member Board
shall serve for staggered terms of three (3) years and until their successors
are elected and have qualified.

                  SECTION 4 - TERMINATION OF MEMBERSHIP. If the Board of
Directors determines that a member has become ineligible for membership in this
cooperative, such member shall have no rights or privileges on account of such
membership in the management of the affairs of this cooperative, and the
membership of such member may be terminated by the Board of Directors.
Membership may, at the discretion of the Board of Directors, be terminated
whenever the Board of Directors by resolution finds that a member has:

                  (a) intentionally or repeatedly violated any provision of the
Articles of Incorporation, Bylaws or Board policies of this cooperative; or

                  (b) failed to patronize this cooperative for a period of
twelve (12) consecutive months; or

                  (c) breached any contract with this cooperative; or

                  (d) willfully obstructed any lawful purpose or activity of
this cooperative; or


                                       2
<PAGE>


                  (e) remained indebted to this cooperative for ninety (90) days
after such indebtedness becomes payable; or

                  (f) died or legally dissolved;

provided, however, that termination of any member's membership as a result of
any of the circumstances listed in paragraphs (a) through (f) above shall not be
deemed to revoke such member's consent contained in Article VIII hereof but
rather such member may only revoke such consent in writing. Upon termination of
membership said member shall thereafter have no voting rights in this
cooperative. A terminated member's patronage credits shall be revolved or
retired in the same manner as the patronage credits of members. No action taken
hereunder shall impair the obligations or liabilities of either party under any
contract with the cooperative which may be terminated only as provided therein.

                                   ARTICLE II.
                               MEETINGS OF MEMBERS

                  SECTION 1 - ANNUAL AND SPECIAL MEETINGS. The annual meeting of
the members of this cooperative shall be held at a time and place fixed by the
Board of Directors. Special meetings of the members of this cooperative may be
called by the Board of Directors or upon the written petition of twenty percent
(20%) of the members. The special members' meeting shall be held at the time and
place specified in the notice of the meeting, and the notice shall also state
the purpose of the special members' meeting. No business shall be considered at
the special members' meeting except as mentioned in the notice of the meeting.

                  SECTION 2 - NOTICE OF MEETINGS. Notice of the annual meeting
of the members of this cooperative shall be published or mailed as prescribed by
Minnesota Statutes Section 308A.611, Subdivision 5. Notice of a special meeting
of the members of this cooperative shall be published or mailed as prescribed by
Minnesota Statutes Section 308A.615, Subdivision 2. The notice of meetings must
be published at least two weeks before the date of the meeting or mailed at
least 15 days before the date of the meeting. The notice shall state the date,
time, and place of the meeting, and in the case of a special meeting, the
purposes for which the meeting is called. The Secretary shall execute a
certificate which contains a copy of the notice, shows the date of mailing or
publication (as the case may be), and states the notice was mailed or published
(as the case may be) as prescribed by these Bylaws. The certificate shall be
made a part of the meeting. The failure of any member to receive notice shall
not invalidate any action which may be taken by the members at a meeting.

                  SECTION 3 - VOTING POWER. The voting power of the members of
this cooperative shall be exercised as follows:

                  (a) COOPERATIVE ASSOCIATION MEMBERS. Each Cooperative
Association Member shall be entitled to the number of permitted votes designated
by the Board of Directors of this cooperative, which shall be determined based
on the following formula:


                                       3
<PAGE>


                           (i) One (1) vote for each $10,000, or major fraction
         thereof, of the average annual business transacted with this
         cooperative and with CENEX, Inc. (combined sales to and purchases from)
         during the three years ending on the last day of this cooperative's
         fiscal year last ended prior to the meeting; plus

                           (ii) One (1) vote for each $1,000, or major fraction
         thereof, of equity issued by this cooperative as a patronage refund and
         standing on the books of this cooperative in the name of such
         Cooperative Association Member.

For purposes of Section 3(a)(i), the dollar value of commodities delivered by a
Defined Member to a Cooperative Association Member for handling by and on behalf
of this cooperative and the Defined Member shall be included in the calculation
for determining the number of permitted votes of the Cooperative Association
Member. For purposes of Section 3(a)(ii), the face amount of any Equity
Participation Units issued to and held by a Cooperative Association Member shall
be included in the determination of the amount of equity in this cooperative
held by such Cooperative Association Member. In determining the number of
permitted votes of a Cooperative Association Member, the Board of Directors of
this cooperative shall give due consideration to the membership eligibility
criteria set forth in these Bylaws and the Articles of Incorporation of this
cooperative, and shall have the authority to suspend or adjust voting power to
reflect such criteria, including without limitation the authority to establish
reasonable procedures to address special circumstances, for example, procedures
to annualize the average annual business of Cooperative Association Members
having less than three full years of business included in the averaging period
and procedures to equitably measure the business transacted by Cooperative
Association Members that have acquired or merged with other entities that did
business with this cooperative or with CENEX, Inc. within the averaging period.
The Board of Directors of this cooperative also may require such supporting
information from Cooperative Association Members as it deems necessary or
appropriate to determine the number of permitted votes of the Cooperative
Association Members hereunder.

Each Cooperative Association Member shall be represented at members' meetings of
this cooperative by elected or appointed delegates, which delegates shall
exercise the voting rights of such Cooperative Association Member at such
meetings as hereinafter provided.

                  (b) INDIVIDUAL MEMBERS AND DEFINED MEMBERS., Except for votes
of Defined Members for elections to Defined Member Boards, each Individual
Member or Defined Member shall be grouped with other Individual Members and
Defined Members in local units (hereinafter referred to as "Patrons'
Associations") as may be established from time to time by the Board of Directors
of this cooperative. An Individual Member or a Defined Member may, however,
elect to exercise such Individual Member's or Defined Member's vote
individually, in which case such Individual Member shall have one (1) vote, only
after obtaining a certificate on a form provided by this cooperative and signed
by the manager of the line elevator, feed mill or other facility patronized by
such Individual Member, certifying that such Individual Member is a member of
this cooperative. A Defined Member who intends to exercise such Defined Member's
vote individually hereunder shall be entitled to do so after giving notice of
such intent to this cooperative on a form provided by this cooperative. SUCH


                                       4
<PAGE>


CERTIFICATE OR NOTICE (AS THE CASE MAY BE) SHALL BE SENT TO THIS COOPERATIVE BY
SUCH MEMBER OR MANAGER NO LESS THAN TEN (10) DAYS OR MORE BEFORE THE ANNUAL OR
SPECIAL MEETING CONCERNED, PROVIDED THAT IN THE DISCRETION OF THE CREDENTIALS
COMMITTEE, ANY CERTIFICATES OR NOTICES (AS THE CASE MAY BE) SENT THEREAFTER MAY
ALSO BE HONORED. [IS THIS ENOUGH TIME TO REDUCE THEIR PATRON'S ASSOCIATION
COUNT?]

If an Individual Member or a Defined Member elects to cast their vote
individually, such Member's business transacted with and equity held by such
Member in this Company shall be excluded from determining the number of votes
held by such Member's Patron's Association pursuant to Sections 3(c)(i) and
3(c)(ii) below.

Each Defined Member shall have one (1) vote for the election of Defined Member
Boards which shall be cast individually in person at an annual or special
meeting (as hereinafter provided), or by mail when a mail ballot has been
provided for

                  (c) PATRONS' ASSOCIATIONS. The delegates representing
Individual Members and Defined Members (as provided herein) grouped in each
Patrons' Association shall be entitled (in the aggregate) to the number of
permitted votes designated by the Board of Directors of this cooperative, which
shall be determined based on the following formula:

                           (i) One (1) vote for each $10,000, or major fraction
         thereof, of the average annual business transacted with this
         cooperative (combined sales to and purchases from) by the Individual
         Members and Defined Members grouped in such Patrons' Associations,
         during the three years ending on the last day of this cooperative's
         fiscal year last ended prior to the meeting; plus

                           (ii) One (1) vote for each $1,000, or major fraction
         thereof, of equity issued by this cooperative as a patronage refund and
         standing on the books of this cooperative in the name of the Individual
         Members and Defined Members grouped in such Patrons' Associations,
         calculated on an aggregate basis.

For purposes of Section 3(c)(ii), the face amount of any Equity Participation
Units issued to and held by an Individual Member or a Defined Member shall be
included in the determination of the amount of equity held by such members. In
determining the number of permitted votes of a Patron Association, the Board of
Directors of this cooperative shall have the authority to establish reasonable
procedures to address special circumstances. For example, procedures to
annualize the average annual business of Individual Members and Defined Members
having less than three full years of business included in the averaging period
and procedures to equitably measure the business transacted by Individual
Members and Defined Members that patronized entities that were acquired or
merged with this cooperative within the averaging period. The Board of Directors
of this cooperative also may require such supporting information from or
relating to the Individual Members and Defined Members grouped in Patrons'
Associations as it deems necessary or appropriate to determine the number of
permitted votes of the Patrons' Associations hereunder.


                                       5
<PAGE>


The Individual Members and Defined Members grouped in each Patrons' Association
shall be represented at members' meetings of this cooperative by elected
delegates, which delegates shall exercise the voting rights of the Individual
Members and Defined Members grouped in such Patrons' Association at such
meetings as hereinafter provided. Such delegates and their alternates shall be
elected on a one member/one vote basis by the Individual Members and the Defined
Members grouped in the Patrons' Association, at an annual meeting of such
Patrons' Association held following reasonable notice, and pursuant to such
other procedures as the Board of Directors of this cooperative may establish
from time to time. In no instance shall managers or other employees of this
cooperative appoint such delegates or alternates. Such delegates shall exercise
the same powers at such members' meetings as the delegates of Cooperative
Association Members may exercise.

                  SECTION 4 - MANNER OF VOTING. At annual and special meetings
of members of this cooperative, the designated number of permitted votes of
members as hereinabove provided shall be cast in the following manner:

                  (a) Each Individual Member and each Defined Member who is
certified or has provided notice to vote individually as further provided in
these Bylaws shall be entitled to cast such Member's own vote in person.

                  (b) Each Cooperative Association Member and the Individual
Members and Defined Members grouped in each Patrons' Association shall cast its
designated number of permitted votes through duly selected delegates (or their
duly selected alternates). The maximum number of delegates that may represent a
Cooperative Association Member or the Individual Members and Defined Members
grouped in a Patrons' Association at members' meetings, and the maximum number
of votes that each delegate may carry at such meetings, shall be as authorized
by the Board of Directors.

                  (c) There shall be no mail voting except in cases where, in
the notice of the meeting, the Board of Directors of this cooperative shall have
submitted a specific issue or issues for a mail vote. In such case, a mail vote
cast by a Cooperative Association Member shall be binding upon the delegates
representing such Cooperative Association Member at the meeting (if any) on the
issue or issues so submitted. The voting power of a Cooperative Association
Member may not be split between mail voting and voting in person by delegates of
the Cooperative Association Member upon an issue or issues submitted for mail
vote. No combination of mail voting and voting in person by delegates of the
same Patrons' Association upon an issue or issues submitted for mail vote shall
be permitted. An attempt by a Cooperative Association Member or delegates of a
Patrons' Association to do such splitting or combining shall be treated as
having the effect of not voting on the issue or issues so submitted. Delegates
of Cooperative Association Members and Patrons' Associations which have not cast
a vote by mail upon the issue or issues submitted for mail vote shall cast the
vote or votes of the respective members they are representing upon said issue or
issues in the manner prescribed by the chairman of said meeting. Nothing in this
section shall, however, prevent an annual or special meeting of this cooperative
from considering and acting upon issues in addition to those submitted for mail
vote, to the extent permitted by law; and such issues shall be voted upon by
delegates (and alternates) in the manner hereinabove provided for other than
mail votes.


                                       6
<PAGE>


                  (d) The mail vote of a Cooperative Association Member shall be
cast as determined by the Board of Directors of the Cooperative Association
Member and the voting power of such mail vote may not be split between yes and
no votes, unless expressly authorized by the Board of Directors of this
cooperative in the notice of the meeting which provides for the mail vote. The
mail ballot used by a Cooperative Association Member to cast its vote shall
contain the certificate of the secretary or the president of the Cooperative
Association Member that the vote shown thereon is so cast by the direction of
said member's Board of Directors and stating such supporting information as may
be prescribed by the Board of Directors of this cooperative.

                  (e) The mail vote cast by each Patrons' Association shall be
determined by the delegate or delegates last certified by the Patrons'
Association to this cooperative as provided in these Bylaws. The mail ballot
used by the delegate or delegates of a Patrons' Association to cast its mail
vote shall contain the certificate of the delegate or delegates that the vote
shown thereon is so cast, and stating such supporting information as may be
prescribed by the Board of Directors of this cooperative.

                  (f) The mail vote cast by each Individual Member or Defined
Member of this cooperative shall be on such form of ballot as may be prescribed
by the Board of Directors of this cooperative, and shall include (i) in the case
of Individual Members, the certificate that such member is a member of this
cooperative; and (ii) in the case of a Defined Member, the notice of intent to
vote individually, in either case as provided for in Section 3(b) of this
Article II.

                  (g) There shall be no voting by proxy or under power of
attorney at any annual or special meeting of this cooperative.

                  SECTION 5 -  QUORUM AND REGISTRATION.

                  (a) A quorum necessary to the transaction of business at any
annual or special meeting of this cooperative shall be at least ten percent
(10%) of the total number of members in this cooperative represented in person
by delegates or by mail votes when the members do not exceed five hundred (500)
in number. If the members of this cooperative exceed five hundred (500) in
number, fifty (50) members of this cooperative represented in person by
delegates (or alternates) or by mail votes shall constitute a quorum. In
determining a quorum at any meeting, on a question submitted to a vote by mail,
as hereinabove provided, members represented in person by delegates (or
alternates) or represented by mail vote shall be counted. The fact of the
attendance of a sufficient number of members to constitute a quorum shall be
established by a registration of the members of this cooperative present at such
meeting, which registration shall be verified by the Chairman and Secretary of
this cooperative and shall be reported in the minutes of the meeting.


                                       7
<PAGE>


                  (b) Registration of Individual Members and Defined Members and
of delegates (or alternates) of Cooperative Association Members and Patrons'
Associations shall close at such hour on the day for which an annual or special
meeting is called (or in case it is called for a series of days, at such hour on
the first day thereof) as the Board of Directors of this cooperative shall
determine and specify in the Notice of Meeting, or at such later time to which
the close of registration may be extended by majority vote of those registered
before said initial time for closing of registration. Persons otherwise eligible
to vote, either as Individual Members, Defined Members or as delegates or
alternates, but not registered as in attendance at or before said time (original
or as extended), shall have no right to vote in any of the affairs of the
meeting (including, but not limited to, election of Directors).

                  (c) Each Cooperative Association Member and Patrons'
Association shall certify its delegates and alternates to this cooperative, in
the manner prescribed by the Board of Directors of this cooperative. The
delegates (and alternates) so certified, and found by this cooperative to be
eligible to be seated at the meeting or meetings of this cooperative, shall
represent their Cooperative Association Members or Patrons' Associations, as the
case may be, to the extent and in the manner provided in this Article. In
matters of which advance notice has been given, such delegates and alternates
shall endeavor to inform themselves as to the views of the membership of the
Cooperative Association Member or Patrons' Association which they represent.

                  (d) No individual shall serve as a delegate for more than one
member of this cooperative. Delegates and alternates representing Patrons'
Associations must be an Individual Member or Defined Member grouped with such
Patrons' Association. The Board of Directors may establish such additional
eligibility criteria, procedures, standards and structure with respect to the
delegate system of this cooperative as it from time to time deems advisable. No
employee of this cooperative shall serve as a delegate or alternate at any
meeting of this cooperative; if any such person shall be certified as a delegate
or alternate of a member, such person shall nevertheless not be seated as such.

                  (e) Duly selected delegates and alternates certified in the
manner described above shall serve in such capacity in accordance with these
Bylaws until such delegate's (or alternate's) successor is selected and
qualified, but in no event shall such certificate of selection be valid for more
than two years; provided, further, that the election or appointment of any
delegate or alternate may be revoked by the Cooperative Association Member that
a delegate or alternate represents (effective as of the date this cooperative
receives notice of such revocation) or, in the case of delegates or alternates
representing Patrons' Associations, the election shall terminate in the event
the delegate or alternate ceases to be an Individual Member or Defined Member of
this cooperative.

                  (f) A cooperative association which conducts business with
this cooperative on a patronage basis as a nonmember patron in the manner
prescribed by these Bylaws may have a representative present at a meeting of the
members of this cooperative only as authorized by the Board of Directors of this
cooperative. A representative so authorized shall have no voting rights and
shall only be recognized to speak at the discretion of the Chairman of the
meeting.


                                       8
<PAGE>


                  (g) Nothing herein shall prevent Individual Members or Defined
Members of this cooperative or of Cooperative Association Members, who are not
delegates to the annual meetings or special meetings of this cooperative from
serving as chairperson of a regional meeting or as chairperson or member of a
committee.

                  (h) Each member of the Board of Directors of this cooperative
shall have the right to speak on any subject during annual or special meetings
of this cooperative.

                                  ARTICLE III.
                                    DIRECTORS

                  SECTION 1 - BOARD OF DIRECTORS. The business and affairs of
this cooperative shall be governed by the Board of Directors of this
cooperative, which shall consist of seventeen (17) directors.

                  SECTION 2 - DIRECTOR QUALIFICATIONS. The qualifications for
the office of director shall be as follows:

                  (a) At the time of the election, the individual must be less
than the age of 68.

                  (b) The individual must be a member of this cooperative or a
member of a Cooperative Association Member.

                  (c) The individual must reside in the Region from which he or
she is to be elected.

                  (d) The individual must be an active farmer or rancher. For
purposes of this section, "active farmer or rancher" means an individual whose
primary occupation is that of a farmer or rancher.

                  (e) The definition of "farmer or rancher" shall not include
anyone who is a full-time employee of this cooperative, or of a Cooperative
Association Member.

                  (f) The individual must currently be serving or shall have
served at least one full term as a director of a Cooperative Association Member
of this cooperative.

                  (g) The qualifications set forth in this Section 2 shall
become effective immediately upon the adoption of these Bylaws, except that the
qualifications in (f) above shall not apply to any individual serving as a
director of this cooperative on the date of said adoption.


                                       9
<PAGE>


                  SECTION 3 - ELECTION OF DIRECTORS.

                  (a) At each annual meeting of the members of this Association,
directors shall be elected to fill vacancies created by expired terms. The term
of office of such directors shall be three (3) years and until their respective
successors are elected and qualified.

                  (b) The nomination and election of directors of this
cooperative shall be by Region. The territory served by this cooperative shall
be divided into the following Regions, with the Board of Directors, composed of
the following number of directors from each Region:

                  REGION NUMBER 1 - which shall include the State of Minnesota,
         and shall be represented by five (5) persons who must be residents of
         Region Number 1;

                  REGION NUMBER 2 - which shall include the States of Montana
         and Wyoming, and shall be represented by one (1) person who must be a
         resident of Region Number 2;

                  REGION NUMBER 3 - which shall include the State of North
         Dakota, and shall be represented by (3) persons who must be residents
         of Region Number 3;

                  REGION NUMBER 4 - which shall include the State of South
         Dakota, and shall be represented by two (2) persons who must be
         residents of Region Number 4;

                  REGION NUMBER 5 - which shall include the States of Wisconsin,
         Michigan and Illinois, and shall be represented by two (2) persons who
         must be residents of Region Number 5;

                  REGION NUMBER 6 - which shall include the States of Alaska,
         Arizona, California, Idaho, Oregon, Washington and Utah, and shall be
         represented by two (2) persons who must be residents of Region Number
         6;

                  REGION NUMBER 7 - which shall include the States of Iowa and
         Missouri, and shall be represented by one (1) person who must be a
         resident of Region Number 7; and

                  REGION NUMBER 8 - which shall include the States of Colorado,
         Nebraska, Kansas, Oklahoma and Texas, and shall be represented by one
         (1) person who must be a resident of Region Number 8.

                  (c) From time to time, the Board of Directors shall review
member representation. Future redistricting plans shall be designed to maintain
equitable representation. Any redistricting plan shall be determined by using a
weighted formula based on sales/purchases and equity by Region. All future
redistricting plans shall be subject to member approval at either a special or
annual meeting of the members of this cooperative.

                  (d) With respect to elections at each annual meeting of the
members of this cooperative, Individual Members, Defined Members, and delegates
from each Region who are registered in accordance with these Bylaws shall meet
separately by Region for the purpose of nominating and electing the directors of
this cooperative from such Region. At each such regional meeting, nominations


                                       10
<PAGE>


for the election of directors shall be made by the members or delegates of this
cooperative and may be made by balloting, nominating committee, petition of
members or from the floor; provided that nominations from the floor shall be
requested in addition to nominations made by petition or nominating committee.
Before each annual meeting of the members of this cooperative, the Board of
Directors may appoint a nominating committee to supervise the nominating
procedure for election of directors, which procedure shall be prescribed by the
Board of Directors.

                  (e) When nominations have been closed, the Individual Members,
Defined Members and delegates at each regional meeting shall vote on each of the
nominees, and the director or directors from such Region shall be elected by a
majority of the votes cast at such regional meeting. The Board of Directors
shall have the power and authority to adopt a policy and procedure for assigning
to an existing Region those members who are not residents of any Region
established in Section 3(b) above. Such policy and procedure may be amended from
time to time at the discretion of the Board of Directors. Each such regional
election shall be binding upon the annual meeting and upon this cooperative,
without any ratification or right of rescission or veto by Individual Members or
Defined Members or delegates, or any combination thereof, of other Regions. A
temporary Chairman of each such regional meeting shall be selected by the
Chairman of this cooperative, to serve until a Chairman of such regional meeting
is elected by the Individual Members, Defined Members and delegates at such
regional meeting. Election of directors shall be by balloting when there are two
or more nominees for a position to be filled, or when there are more nominees
than there are positions to be filled.

                  SECTION 4 - VACANCIES. Each vacancy occurring on the Board of
Directors may be filled by the remaining directors until the next annual meeting
of the members when the members shall elect a director to serve for the
unexpired term, provided that vacancies on the Board created by any amendment of
the Articles of Incorporation or Bylaws shall first be filled at the annual
meeting of the members next following the adoption of such amendment unless
otherwise provided in the amendment.

                  SECTION 5 - MEETINGS. The Board of Directors shall meet
regularly at such times and places as the Board may determine. Special meetings
may be called by the Chairman or any three directors. All meetings shall be held
on such notice as the Board may prescribe provided that any business may be
transacted at any meeting without specification of such business in the notice
of such meeting. Directors may participate in any such meeting by means of a
conference telephone conversation or other comparable method of communication by
which all persons participating in the meeting can hear and communicate with
each other; and for purposes of taking any action at the meeting, any such
directors shall be deemed present in person at the meeting.

                  SECTION 6 - QUORUM AND VOTING. A quorum shall consist of a
majority of the directors. A majority vote of the directors present shall decide
all questions except where a greater vote is required by the Articles of
Incorporation, by these Bylaws or by law.


                                       11
<PAGE>


                  SECTION 7 - ACTION WITHOUT MEETING. Any action required or
permitted to be taken at a meeting of the Board of Directors may be taken
without a meeting if all directors consent thereto in writing and the writing or
writings are held with the minutes or proceedings of the Board of Directors.

                  SECTION 8 - BORROWINGS. The Board of Directors shall have
power to authorize and approve the borrowing of money and the pledging and
mortgaging of any or all of the assets of this cooperative as security for the
sums so borrowed.

                                   ARTICLE IV.
                               DUTIES OF DIRECTORS

                  SECTION 1 - GENERAL POWERS. The business and affairs of this
cooperative shall be governed by the Board of Directors of this cooperative. The
Board of Directors shall exercise all of the powers of this cooperative except
such as are by law, the Articles of Incorporation, or these Bylaws conferred
upon or reserved to the members. The Board of Directors shall adopt such
policies, rules, regulations, and actions not inconsistent with law, the
Articles of Incorporation, or these Bylaws, as it may deem advisable. The Board
of Directors may establish one or more than one committee having such powers and
authority as are delegated to it by the Board of Directors.

                  SECTION 2 - BONDS AND INSURANCE. The Board of Directors may
require the officers, agents, or employees charged by this cooperative with
responsibility for the custody of any of its funds or property to give adequate
bonds. Such bonds, unless cash security is given, shall be furnished by a
responsible bonding company and approved by the Board of Directors and the cost
thereof shall be paid by this cooperative. The Board of Directors shall provide
for the adequate insurance of the property of the cooperative, or property which
may be in the possession of this cooperative, or stored by it, and not otherwise
adequately insured, and in addition adequate insurance covering liability for
accidents to all employees and the public.

                  SECTION 3 - ACCOUNTING SYSTEM AND AUDIT. The Board of
Directors shall install and maintain an adequate system of accounts and records.
At least once in each year the books and accounts of this cooperative shall be
audited and a review of such audit shall be published annually, and a report of
such audit shall in addition be made at the next annual meeting of the members.

                  SECTION 4 - DEPOSITORY. The Board of Directors shall have
power to select one or more banks to act as depositories of the funds of this
cooperative, and to determine the manner of receiving, depositing, and
disbursing the funds of this cooperative, the form of checks, and the person or
persons by whom they shall be signed, with the power to change such banks and
the person or persons signing such checks and the form thereof at will.


                                       12
<PAGE>


                                   ARTICLE V.
                                    OFFICERS

                  SECTION 1 - ELECTION OF OFFICERS. Promptly following each
annual meeting of the members, the Board of Directors shall elect from its
membership a Chairman, one or more Vice Chairmen, a Secretary, a Treasurer, and
such other officers as it shall deem necessary. The Board of Directors shall
also elect a Chief Executive Officer, who need not be a director of this
cooperative. Upon the recommendation of the Chief Executive Officer, the Board
of Directors may elect a President and General Manager, a Chief Financial
Officer, one or more Vice Presidents (with such designations as recommended by
the Chief Executive Officer), Assistant Secretaries and Assistant Treasurers,
and such additional officers with such authority and duties as may be prescribed
by the Board of Directors upon the recommendation of the Chief Executive
Officer, none of whom need be a director of this cooperative. Other than the
office of Chairman and Vice Chairman, one person may hold one or more of the
offices provided for above, if eligible to hold each such office. If any vacancy
shall occur among the offices of Chairman, Vice Chairmen, Secretary or
Treasurer, it shall be filled by the Board of Directors at its next regular
meeting following the vacancy.

                  SECTION 2 - CHAIRMAN. The Chairman shall preside at all
meetings of the members and the Board of Directors. Except where the signature
of the Chief Executive Officer is required, the Chairman shall possess the same
power as the Chief Executive Officer to sign all certificates, contracts and
other instruments of this cooperative which may be authorized by the Board of
Directors.

                  SECTION 3 - VICE CHAIRMEN. In the absence or disability of the
Chairman, the Vice Chairmen, in the order designated by the Board of Directors,
shall perform the duties and exercise the powers of the Chairman. Each Vice
Chairman shall have such other duties as are assigned to such Vice Chairman from
time to time by the Board of Directors.

                  SECTION 4 - CHIEF EXECUTIVE OFFICER. The Chief Executive
Officer shall be the chief executive officer of this cooperative, shall have
general supervision of the affairs of this cooperative, shall sign or
countersign all certificates, contracts or other instruments of this cooperative
as authorized by the Board of Directors, shall make reports to the Board of
Directors and members, shall recommend the officers of this cooperative to the
Board of Directors for election (except the offices of Chairman, Vice Chairmen,
Secretary or Treasurer), and shall perform such other duties as are incident to
the Chief Executive Officer's office or are properly required by the Board of
Directors. In the event the office of President and General Manager is not
filled, the Chief Executive Officer shall also serve as the President of this
cooperative and may exercise the authority of the office of Chief Executive
Officer in either or both capacities.

                  SECTION 5 - PRESIDENT AND GENERAL MANAGER. The President and
General Manager shall report to the Chief Executive Officer of this cooperative,
and shall perform such duties as the Board of Directors may prescribe upon the
recommendation of the Chief Executive Officer. In the absence or disability of
the Chief Executive Officer, the President and General Manager shall perform the
duties and exercise the powers of the Chief Executive Officer.


                                       13
<PAGE>


                  SECTION 6 - VICE PRESIDENTS. In the absence or disability of
the President and General Manager, the Vice Presidents, in the order designated
by the Board of Directors, shall perform the duties and exercise the powers of
the President. Each Vice President shall have such other duties as are assigned
to such Vice President from time to time by the Chief Executive Officer or the
President and General Manager.

                  SECTION 7 - SECRETARY. The Secretary shall keep complete
minutes of each meeting of the members and of the Board of Directors, and shall
sign with Chairman or the Chief Executive Officer all notes, conveyances and
encumbrances of real estate, capital securities and instruments requiring the
corporate seal; provided that the Secretary, in writing, may authorize any other
officer or employee to execute or sign the Secretary's name to any or all such
instruments. The Secretary shall keep a record of all business of this
cooperative, prepare and submit to the annual meeting of the members a report of
the previous fiscal year's business, and give all notice as required by law. The
Secretary shall perform such other duties as may be required by the Board of
Directors. The Board of Directors may delegate, or authorize the Secretary to
delegate, to any other officer or employee, under the supervision of the
Secretary, all or any of the duties enumerated in this section.

                  SECTION 8 - TREASURER. The Treasurer shall supervise the
safekeeping of all funds and property of this cooperative, supervise the books
and records of all financial transactions of this cooperative, and perform such
other duties as may be required by the Board of Directors. The Board of
Directors may delegate, or authorize the Treasurer to delegate, to any other
officer or employee, under the supervision of the Treasurer, all or any of the
duties enumerated in this section.

                                   ARTICLE VI.
                          INDEMNIFICATION AND INSURANCE

                  SECTION 1 - INDEMNIFICATION. This cooperative shall indemnify
each person who is or was a director, officer, manager, employee, or agent of
this cooperative, and any person serving at the request of this cooperative as a
director, officer, manager, employee, or agent of another corporation,
partnership, joint venture, trust, or other enterprise, against expenses,
including attorneys' fees, judgments, fines, and amounts paid in settlement
actually and reasonably incurred to the fullest extent to which such directors,
officers, managers, employees or agents of an cooperative may be indemnified
under the law of the State of Minnesota or any amendments thereto or
substitutions therefor.

                  SECTION 2 - INSURANCE. This cooperative shall have power to
purchase and maintain insurance on behalf of any person who is or was a
director, officer, manager, employee, or agent of this cooperative, or is or was
serving at the request of this cooperative as a director, officer, manager,
employee, or agent of another corporation, partnership, joint venture, trust, or
other enterprise against any liability asserted against that person and incurred
by that person in any such capacity.


                                       14
<PAGE>


                                  ARTICLE VII.
                     METHOD OF OPERATION - PATRONAGE REFUNDS

                  SECTION 1 - COOPERATIVE OPERATION. This cooperative shall be
operated upon the cooperative basis in carrying out its business within the
scope of the powers and purposes defined in the Articles of Incorporation.
Accordingly, the net income of this cooperative in excess of amounts credited by
the Board of Directors to Capital Reserves and amounts of dividends, if any,
paid with respect to equity capital shall be accounted for and distributed
annually on the basis of allocation units as provided in this Article VII. In
determining the net income or net loss of this cooperative or its allocation
units, there shall be taken into account this cooperative's share of the net
income or net loss of any unincorporated entity in which it owns an equity
interest, patronage dividends distributed by other cooperatives of which it is a
patron and, to the extent determined by the Board of Directors, its share of the
undistributed net income or net loss of any corporation in which it owns an
equity interest.

                  Each transaction between this cooperative and each member
shall be subject to and shall include as a part of its terms each provision of
the Articles of Incorporation and Bylaws of this cooperative, whether or not the
same be expressly referred to in said transaction. Each member for whom this
cooperative markets or procures goods or services shall be entitled to the net
income arising out of said transaction as provided in this Article VII unless
such member and this cooperative have expressly agreed to conduct said business
on a nonpatronage basis. No nonmember for whom this cooperative markets or
procures goods or services shall be entitled to the net income arising out of
said transactions as provided in this Article VII unless this cooperative agrees
to conduct said business on a patronage basis.

                  SECTION 2 - PATRONS; PATRONAGE BUSINESS; NONPATRONAGE
BUSINESS. As used in this Article VII, the following definitions shall apply:

                  (a) The term "patron" shall refer to any member or nonmember
with respect to business conducted with this cooperative on a patronage basis in
accordance with Section 1 of this Article VII.

                  (b) The term "patronage business" shall refer to business done
by this cooperative with or for patrons.

                  (c) The term "nonpatronage business" shall refer to business
done by this cooperative that does not constitute "patronage business."

                  SECTION 3 - ESTABLISHMENT OF ALLOCATION UNITS. Allocation
units shall be established by the Board of Directors on a reasonable and
equitable basis and they may be functional, divisional, departmental,
geographic, or otherwise; provided, that each Defined Business Unit shall be
accounted for as a separate allocation unit. The Board of Directors shall adopt
such reasonable and equitable accounting procedures as will, in the Board's
judgment, equitably allocate among such allocation units this cooperative's
income, gains, expenses and losses and, to the extent provided in Section 1 of


                                       15
<PAGE>


this Article VII, patronage dividends received by this cooperative and its share
of income, gain, loss and deduction of other entities in which it owns an
interest.

                  SECTION 4 - DETERMINATION OF THE PATRONAGE INCOME OR LOSS OF
AN ALLOCATION UNIT. The net income or net loss of an allocation unit from
patronage business for each fiscal year shall be the sum of (1) the gross
revenues directly attributable to goods or services marketed or procured for
patrons of such allocation unit, plus (2) an equitably apportioned share of
other items of income or gain attributable to this cooperative's patronage
business, less (3) all expenses and costs of goods or services directly
attributable to goods or services marketed or procured for patrons of such
allocation unit, less (4) an equitably apportioned share of all other expenses
or losses attributable to this cooperative's patronage business, dividends on
equity capital and distributable net income from patronage business that is
credited to the Capital Reserve pursuant to Section 8(c) of this Article VII.
The foregoing amounts shall be determined using the accounting methods and
principles used by the cooperative in preparation of its annual audited
financial statements; provided, however, that the Board of Directors may
prospectively adopt a reasonable alternative method. Expenses and cost of goods
or services shall include without limitation such amounts of depreciation, cost
depletion and amortization as may be appropriate, any unit retentions provided
in Section 10 of this Article VII, amounts incurred for the promotion and
encouragement of cooperative organization, and taxes other than federal income
taxes. Such net income or net loss shall be subject to adjustment as provided in
Sections 6 and 9(b) of this Article VII relating to losses.

                  SECTION 5 - ALLOCATION OF PATRONAGE INCOME WITHIN ALLOCATION
UNITS. The net income of an allocation unit from patronage business for each
fiscal year, less any amounts thereof that are otherwise allocated in
dissolution pursuant to Article IX, shall be allocated among the patrons of such
allocation unit in the ratio that the quantity or value of the business done
with or for each such patron bears to the quantity or value of the business done
with or for all patrons of such allocation unit. The Board of Directors shall
reasonably and equitably determine whether allocations within any allocation
unit shall be made on the basis of quantity or value.

                  SECTION 6 - TREATMENT OF PATRONAGE LOSSES OF AN ALLOCATION
UNIT.

                  (a) METHODS FOR HANDLING PATRONAGE LOSSES. If an allocation
unit incurs a net loss in any fiscal year from patronage business, this
cooperative may take one or more of the following actions:

                           (i) Offset all or part of such net loss against the
         net income of other allocation units for such fiscal year to the extent
         allowed by law; provided, however, that the net income or net loss of a
         Defined Business Unit shall not be offset by the net loss of nor netted
         against the net income of other allocation units;


                                       16
<PAGE>


                           (ii) Establish accounts payable by patrons of the
         allocation unit that incurs the net loss that may be satisfied out of
         any future amounts that may become payable by this cooperative to each
         such patron;

                           (iii) Carry all or part of the loss forward to be
         charged against future net income of the allocation unit that incurs
         the loss;

                           (iv) Offset all or part of such net loss against the
         Capital Reserve;

                           (v) Cancel outstanding Patrons' Equities; provided,
         however, that the net loss of a Defined Business Unit shall not be
         applied in cancellation of Patrons' Equities of patrons of other
         allocation units and net losses of other allocation units may not be
         applied in cancellation of Patrons' Equities of patrons of Defined
         Business Units;

                  (b) ALLOCATION OF NET LOSS AMONG PATRONS OF LOSS UNIT. Any
cancellation of equities and/or establishment of accounts payable pursuant to
this Section 6 shall be made among the patrons of an allocation unit in a manner
consistent with the allocation of net income of such allocation unit.

                  (c) RESTORATION OF NET LOSS OUT OF FUTURE NET INCOME. The
future net income of an allocation unit that incurs a net loss may be reduced by
part or all of such net loss that was offset against the Capital Reserve,
Patrons' Equities of patrons of another allocation unit or against the net
income of another allocation unit and may be used to restore the Capital
Reserve, restore such Patrons' Equities or to increase the future net income of
such other allocation unit; provided that reasonable notice of the intent to do
so is given to the patrons of the loss unit.

                  (d) BOARD DISCRETION. The provisions of this Section 6 shall
be implemented by the Board of Directors, having due consideration for all of
the circumstances which caused the net loss, in a manner that it determines is
both equitable and in the overall best interest of this cooperative.

                  (e) NO ASSESSMENTS AGAINST MEMBERS OR NONMEMBER PATRONS. There
shall be no right of assessment against members or nonmember patrons for the
purpose of restoring impairments to capital caused by net losses.

                  SECTION 7 - DISTRIBUTION OF NET INCOME.

                  (a) PATRONAGE REFUNDS. The net income allocated to a patron
pursuant to Sections 5 and 9 of this Article VII shall be distributed annually
or more often to such patron as a patronage refund; provided, however, that no
distribution need be made where the amount otherwise to be distributed to a
patron is less than a de minimus amount that may be established from time to
time by the Board of Directors.


                                       17
<PAGE>


                  (b) FORM OF PATRONAGE REFUNDS. Patronage refunds shall be
distributed in cash, allocated patronage equities, revolving fund certificates,
securities of this cooperative, other securities, or any combination thereof
designated by the Board of Directors (all such patronage refunds referred to
collectively herein as "Patrons' Equities), including, without limitation, the
following instruments:

                           (i) CAPITAL EQUITY CERTIFICATES, in one or more than
         one class or series, in such designations or denominations, and with
         such relative rights, preferences, privileges and limitations as may be
         fixed by the Board of Directors, and bearing no interest, dividend or
         other annual payment.

                           (ii) CERTIFICATES OF INDEBTEDNESS in one or more than
         one class or series, in such designations or denominations, and with
         such relative rights, preferences, privileges and limitations as may be
         fixed by the Board of Directors, and bearing such maturity and rate of
         interest, if any, as may be fixed by the Board of Directors. Such
         certificates shall be callable for payment in cash or other assets at
         such times as may be determined by the Board of Directors.

                           (iii) NON-PATRONAGE EARNINGS CERTIFICATES, in one or
         more than one class or series, in such designations or denominations,
         and with such relative rights, preferences, privileges and limitations
         as may be fixed by the Board of Directors, with no maturity date, and
         bearing no interest, dividend or other annual payment. Non-Patronage
         Earnings Certificates may be distributed only to members and to
         nonmember patrons as part of the allocation and distribution of
         nonpatronage income. Such certificates shall be callable for payment in
         cash or other assets at such times as may be determined by the Board of
         Directors.

                           (iv) PREFERRED CAPITAL CERTIFICATES in one or more
         than one class or series, in such designations or denominations, and
         with such relative rights, preferences, privileges and limitations as
         may be fixed by the Board of Directors.

                  (c) WRITTEN NOTICES OF ALLOCATION. The noncash portion of a
patronage refund distribution that is attributable to patronage business shall
constitute a written notice of allocation as defined in 26 U.S.C. Section 1388
which shall be designated by the Board of Directors as a qualified written
notice of allocation, as a nonqualifed written notice of allocation or any
combination thereof as provided in said section.

                  (d) NO VOTING RIGHTS. Patrons' Equities shall not entitle the
holders thereof to any voting or other rights to participate in the affairs of
this cooperative (which rights are reserved solely for the members of this
cooperative), provided that Patrons' Equities held by members of this
cooperative shall be a factor in determining the voting power of such members as
more particularly provided in these Bylaws.


                                       18
<PAGE>


                  (e) TRANSFER RESTRICTION. Patrons' Equities may only be
transferred with the consent and approval of the Board of Directors, and by such
instrument of transfer as may be required or approved by this cooperative.

                  (f) BOARD AUTHORITY TO ALLOW CONVERSION. The Board of
Directors of this cooperative also shall have the authority to allow conversion
of Patrons' Equities into Equity Participation Units, Preferred Equities or such
other debt and/or equity instruments of this cooperative on such terms as shall
be established by the Board of Directors.

                  (g) REVOLVEMENT DISCRETIONARY. No person shall have any right
whatsoever to require the retirement or redemption of any Patrons' Equities
except in accordance with their term, or of any allocated capital reserve. Such
redemption or retirement is solely within the discretion and on such terms as
determined from time to time by the Board of Directors of this cooperative.

                  SECTION 8 - CAPITAL RESERVE. The Board of Directors shall
cause to be created a Capital Reserve and, except as otherwise provided in
Section 9 of this Article VII, shall annually add to the Capital Reserve the sum
of the following amounts:

                  (a) The annual net income of this cooperative attributable to
nonpatronage business;

                  (b) Annual net income from patrons who are unidentified or to
whom the amount otherwise to be distributed is less than the de minimus amount
provided in Section 7(a) of this Article VII; and

                  (c) An amount not to exceed 10% of the distributable net
income from patronage business. The discretion to credit patronage income to a
Capital Reserve shall be reduced or eliminated with respect to the net income of
any period following the adoption of a Board resolution that irrevocably
provides for such reduction or elimination with respect to such period.

Federal income taxes shall be charged to the Capital Reserve.

                  SECTION 9 - ALLOCATION AND DISTRIBUTION OF NONPATRONAGE INCOME
AND LOSS.

                  (a) NONPATRONAGE INCOME. The Board of Directors shall have the
discretion to allocate to allocation units amounts that are otherwise to be
added to the Capital Reserve pursuant to Section 8(a) of this Article VII. Such
allocation may be made on the basis of any reasonable and equitable method.
Amounts so allocated to allocation units shall be further allocated among the
patrons thereof on a patronage basis using such method as the Board of Directors
determines to be reasonable and equitable. Amounts so allocated shall be
distributed to patrons thereof in the form of cash, property, Non-Patronage
Earnings Certificates, or any combination thereof designated by the Board of
Directors. The Board of Directors may determine whether and to what extent
nonmember patrons may share in such distributions.


                                       19
<PAGE>


                  (b) NONPATRONAGE LOSS. If the cooperative incurs a net loss on
its nonpatronage business or if a net loss is incurred with respect to the
nonpatronage business of an allocation unit, such net loss generally shall be
chargeable against Capital Reserve unless and to the extent the Board of
Directors, having due consideration for the circumstances giving rise to such
net loss, determines that it is reasonable and equitable to allocate all or part
of such a net loss among allocation units generally or to a specific allocation
unit or units. Any such loss allocated to an allocation unit shall reduce such
unit's net income from patronage business to the extent thereof and the excess,
if any, shall be treated generally in accordance with Section 6(a)(ii), (iii)
and (v) of this Article VII. Notwithstanding the foregoing, a net loss incurred
by a Defined Business Unit with respect to nonpatronage business conducted by
such unit shall be borne entirely by such unit and no other net loss incurred on
nonpatronage business shall be allocated to a Defined Business Unit.

                  SECTION 10 - DEFINED BUSINESS UNIT RETENTIONS. This
cooperative may require from time to time, investment in its capital in addition
to the investments from retained patronage and Equity Participation Units. These
investments shall be direct capital investments from a retain on a per unit
basis for the products received by the cooperative from its Defined Members, and
the same may be determined on either a Qualified or a Nonqualified basis as
defined in Subchapter T of the United States Internal Revenue Code. The per unit
retention, if required, shall be made on products delivered, in the same amount
per unit and shall not become a part of the net annual income available for
patronage.

                  Each member, by continuing to be such, agrees to invest in the
capital of this cooperative. Such investment shall be accounted for separately
in a unit retention account set up on the books of the cooperative. All such
amounts, from the moment of receipt by this cooperative, are received and
retained with the understanding that they are furnished by members as capital.
This cooperative is obligated to account to each member in such manner that the
amount of per unit retains furnished by each member is annually credited to an
appropriate record to the per unit retains capital account of each member.
Within a reasonable time after the close of its fiscal year, this cooperative
shall notify each member of the amount of capital retains and credit it to the
member's account by reflection upon this cooperative's books.

                  When the Board of Directors determines in its sole discretion
that this cooperative has sufficient working capital in the applicable Defined
Business Unit, unit retains may be called for payment at the lesser of their
stated or book value. Unit retains may be paid, redeemed, or revolved in whole
or in part at a time and manner determined by the Board of Directors.

                                  ARTICLE VIII.
                                     CONSENT

                  SECTION 1 - CONSENT. Each individual or entity that hereafter
applies for and is accepted to membership in this cooperative and each member of
this cooperative as of the effective date of this bylaw who continues as a
member after such date shall, by such act alone, consent that the amount of any


                                       20
<PAGE>


distributions with respect to its patronage which are made in written notices of
allocation (as defined in 26 U.S.C. ss.1388), and which are received by the
member from this cooperative, will be taken into account by the member at their
stated dollar amounts in the manner provided in 26 U.S.C. ss.1385(a) in the
taxable year in which such written notices of allocation are received by the
member.

                  SECTION 2 - CONSENT NOTIFICATION TO MEMBERS AND PROSPECTIVE
MEMBERS. Written notification of the adoption of this Bylaw, a statement of its
significance and a copy of the provision shall be given separately to each
member and prospective member before becoming a member of this cooperative.

                  SECTION 3 - CONSENT OF NONMEMBER PATRONS. If this cooperative
obligates itself to do business with a nonmember on a patronage basis, such
nonmember must either: (a) agree in writing, prior to any transaction to be
conducted on a patronage basis, that the amount of any distributions with
respect to patronage which are made in written notices of allocation (as defined
in 26 U.S.C. ss.1388), and which are received by the nonmember patron from this
cooperative, will be taken into account by the nonmember patron at their stated
dollar amounts in the manner provided in 26 U.S.C. ss.1385(a) in the taxable
year in which such written notices of allocation are received by the nonmember
patron and further, that any revocation of such agreement will terminate this
cooperative's obligation to distribute patronage with respect to transactions
with such nonmember that occur after the close of this cooperative's fiscal year
in which the revocation is received; or (b) consent to take the stated dollar
amount of any written notice of allocation into account in the manner provided
in 26 U.S.C. ss.1385 by endorsing and cashing a qualified check as defined in
and within the time provided in 26 U.S.C. ss.1388(c)(2)(C); provided that
failure to so consent shall cause the written notice of allocation that
accompanies said check to be canceled with no further action on the part of this
cooperative.

                                   ARTICLE IX.
                      MERGER OR CONSOLIDATION; DISSOLUTION

                  SECTION 1 - MERGER OR CONSOLIDATION. If the terms of a merger
or consolidation of which this cooperative is a party do not provide the members
and nonmember patrons of this cooperative with an economic interest in the
surviving entity that is substantially similar to the economic interest
possessed by such members and nonmember patrons in this cooperative immediately
before such merger or consolidation, the value of the consideration received
shall be divided among them in the same manner as a comparable amount of net
liquidation proceeds would distributed pursuant to Section 2 of this Article IX.
This shall not be construed to prevent issuance of differing forms of
consideration to different groups of members and nonmember patrons to the extent
allowed by law.

                  SECTION 2 - LIQUIDATION, DISSOLUTION AND WINDING-UP. Subject
to the Articles of Incorporation, in the event of any liquidation, dissolution
or winding up of the affairs of this cooperative, whether voluntary or
involuntary, equity capital shall be distributed to the holders thereof as
follows: first to payment of the face amount (par value) of all Preferred
Equities whose priority was so established upon the issuance of such Preferred
Equities, second to payment of the face amount (par value) of all Equity


                                       21
<PAGE>


Participation Units and all Preferred Capital Certificates, third to payment of
the face amount (par value) of all Capital Equity Certificates and other
outstanding equities (other than Non-Patronage Earnings Certificates), and
fourth to payment of the face amount (par value) of Non-Patronage Earnings
Certificates; provided, however, that assets held at such time by any Defined
Business Unit shall first be used to redeem the Equity Participation Units and
Preferred Capital Certificates of the Defined Business Unit on a pro rata basis.
Any assets remaining after the foregoing payments have been made shall be
allocated among the allocation units in such manner as the Board of Directors,
having taken into consideration the origin of such amounts, shall determine to
be reasonable and equitable. Amounts so allocated shall be paid to current and
former patrons of each such allocation unit in proportion to their patronage of
such unit over such period as may be determined to be equitable and practicable
by the Board of Directors. Such obligation to distribute shall be construed as a
preexisting duty to distribute any patronage sourced net gain realized in the
winding up process to the maximum extent allowable by law.

                                   ARTICLE X.
                                      SEAL

                  The Board of Directors may, by resolution, adopt, alter or
abandon the use of a corporate seal.

                                   ARTICLE XI.
                                   AMENDMENTS

                  These Bylaws may be amended in accordance with the Minnesota
Cooperative Law, Minnesota Statutes Chapter 308A; upon the approval of a
majority of the votes cast in person or by mail vote at any annual or special
meeting of the members called in accordance with Section 1 of Article II of
these Bylaws; provided, however, in the event the Board of Directors of this
cooperative declares, by resolution adopted by a majority of the Board of
Directors present and voting, that the amendment involves or is related to a
hostile take over, then the amendment may be adopted only upon the approval of
eighty percent (80%) of the total voting power of the members of this
cooperative, whether or not present and/or voting on the amendment; and provided
further that notice of such amendment shall have been given in accordance with
Section 2 of Article II of these Bylaws to the members in or with the notice of
such meeting.


                                       22

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.4
<SEQUENCE>4
<FILENAME>cenex025288_ex10-4.txt
<DESCRIPTION>LIMITED LIABILITY COMPANY AGREEMENT
<TEXT>
                                                                    EXHIBIT 10.4


                       LIMITED LIABILITY COMPANY AGREEMENT
                                     BETWEEN
                              CARGILL, INCORPORATED
                                       AND
                        CENEX HARVEST STATES COOPERATIVES


         THIS LIMITED LIABILITY COMPANY AGREEMENT ("Agreement") is made and
entered into on this 26th day of August 2002 (the "Effective Date") by and
between CENEX HARVEST STATES COOPERATIVES, a corporation organized and existing
under the laws of Minnesota ("CHS") and CARGILL, INCORPORATED, a corporation
organized and existing under the laws of Delaware ("Cargill"), each hereafter
individually referred to as a "Member" and collectively referred to as
"Members".

         WHEREAS, CHS and Continental Grain Company ("Continental") formed a
general partnership, namely the Tacoma Export Marketing Company ("TEMCO"), on or
about the 15th day of September, 1992 for the purpose of engaging in the buying,
selling, storing and handling of certain Feedgrains and Oilseeds for export from
the Pacific Northwest, United States primarily through Continental's leased
facility at Tacoma, Washington ("Tacoma Facility") and such other business
activities as were related thereto; and

         WHEREAS, Cargill purchased and took assignment of Continental's
interest in TEMCO, the Tacoma Facility and the sublease between Continental and
TEMCO, and Cargill and CHS subsequently entered into an Amended and Restated
Partnership Agreement on the 12th day of July 1999; and

         WHEREAS, Cargill and CHS intend to convert TEMCO from a Washington
general partnership to a Delaware limited liability company, to be known as
TEMCO, LLC (the "Company") and to be formed as a limited liability company
organized and existing under the Delaware Limited Liability Company Act, 6 Del.
C.ss. 8-101, et seq., and as required thereunder, do hereby adopt this Agreement
as the operating agreement of the Company;

         NOW, THEREFORE, in consideration of the promises and the mutual
agreements contained herein, the Members hereto agree as follows:


                                    ARTICLE I
                                   DEFINITIONS

1.1 TERMS DEFINED HEREIN. As used herein, the following terms shall have the
following meanings, unless the context otherwise specifies:

         "Accountant" shall have the meaning set forth in Section 5.5(r).

         "Act" means the Delaware Limited Liability Company Act, 6 Del. C.
Section 8-101, et seq., as amended from time to time.

         "Additional Contribution" shall have the meaning set forth in Section
3.2.1.

         "Adjusted Capital Account Deficit" means, with respect to any Member,
the deficit balance, if any, in such Member's Capital Account as of the end of
the relevant Fiscal Year, after giving effect to the following adjustments: (i)
increased for any amounts such Member is unconditionally obligated to restore
under Treasury Regulations 1.704-1(b)(2)(ii.)(c), and the amount of such
Member's share of Company Minimum Gain and Member Minimum Gain after taking into
account any changes during such year in


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accordance with Treasury Regulations 1.7042(g)(1) and (i.)(5); and (ii) reduced
by the items described in Treasury Regulation ss.1.704-1(b)(2)(ii)(d) (4), (5)
and (6).

         "Affiliate" means, with respect to any Member, any Person that directly
controls, is controlled by or is under common control with that Member. As used
in this definition, the term "control" means the possession of the power to
direct or cause the direction of the management and policies of a Person or
through the direct or indirect ownership of over 50% of the outstanding capital
stock or other equity interest having ordinary voting power.

         "Available Cash" means that portion of the aggregate amount of cash on
hand or in bank, money market or similar accounts of the Company at any given
time derived from any source and which the Board of Managers determine is
available for distribution after taking in account amounts required or
appropriate to maintain a reasonable amount of working capital and reserves for
outstanding obligations and anticipated future expenditures of the Company.

         "Bankruptcy" with respect to any Person, means the entry of an order
for relief against such Person under the Federal Bankruptcy Code.

         "Board of Managers" shall have the meaning set forth in Section 5.1.

         "Business" means the Company's business conducted in accordance with
the Business Purpose.

         "Business Plan" has the meaning set forth in Section 2.7.

         "Business Purpose" means to engage in the business of buying, trading,
selling, handling and transporting for export and exporting Feedgrains and
Oilseeds from the Pacific Northwest, United States through the Tacoma Facility,
and through the Seattle Facility pursuant to a put through agreement with the
operator of the Seattle Facility, to Pacific Basin destinations and engaging in
such other activities and business as may be incidental or related thereto or
necessary or desirable in furtherance of such purpose. The Company shall
establish or cause to be established such business organizations and shall own,
directly or indirectly, such assets as the Company determines are appropriate to
achieve the purpose set forth herein.

         "Capital Account" means the separate account established and maintained
for each Member by the Company pursuant to Section 3.3.

         "Cash for Distribution" has the meaning set forth in Section 8.8.

         "Cash Needs" has the meaning set forth in Section 8.2.1.

         "Cobank" has the meaning set forth in Section 10.2.5.

         "Code" means the Internal Revenue Code of 1986, as amended from time to
time, or any successor Internal Revenue Code.

         "Collateral" has the meaning set forth in Section 14.1.1.

         "Company" means TEMCO, LLC, a Delaware limited liability company.

         "Company Minimum Gain" shall have the same meaning as partnership
minimum gain set forth in Treasury Regulations ss.ss. 1.704-2(b)(2) and
1.704-2(d).


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         "Confidential Information" has the meaning set forth in Section 11.1.

         "Contributing Member" has the meaning set forth in Section 3.2.4.

         "Credits" means all credits allowed by the Code with respect to
activities of the Company or the Property.

         "Deadlock" has the meaning set forth in Section 5.6.

         "Delinquent Member" has the meaning set forth in Section 3.2.4.

         "Depreciation" means, for each fiscal year or other period, an amount
equal to the depreciation, amortization or other cost recovery deduction
allowable with respect to an asset for such year or other period; provided,
however, that (a) if the Gross Asset Value of an asset differs from its adjusted
basis for federal income tax purposes and such difference is being eliminated by
use of the "remedial allocation method" defined by Treasury Regulations
ss.1.704-3(d), Depreciation for such Fiscal Year shall be the amount of basis
recovered for such fiscal year under the rules prescribed by Treasury
Regulations ss.1.704-3(d)(2), and (b) in any other case in which the Gross Asset
Value of an asset differs from its adjusted basis for federal income tax
purposes at the beginning of such year or other period, Depreciation shall be an
amount which bears the same ratio to such beginning Gross Asset Value as the
federal income tax deduction, amortization or other cost recovery deduction for
such year or other period bears to such beginning adjusted tax basis; provided,
however, that if the adjusted basis of an asset at the beginning of the Fiscal
Year is zero for federal income tax purposes, then Depreciation shall be
determined with reference to such beginning Gross Asset Value using any
reasonable method selected by the Members.

         "Disclosing Party" has the meaning set forth in Section 10.1.

         "Effective Date" shall mean the date set forth in the preamble of this
Agreement.

         "Effective Rate" shall have the meaning set forth in Section 3.5.

         "Emergency Needs" has the meaning set forth in Section 8.2.2.

         "Fair Value" of an asset means its fair market value.

         "Feedgrains" shall mean corn and sorghum.

         "Fiscal Year" shall mean the Company's fiscal year which shall begin on
June 1 and end on May 31 of each year.

         "Fundamental Issue(s)" has the meaning set forth in Section 5.5.

         "GAAP" has the meaning set forth in Section 8.6.2.

         "General Manager" has the meaning set forth in Section 6.1.

         "Gross Asset Value" means, with respect to any asset, the asset's
adjusted basis for federal income tax purposes, except as follows:

                  (1) The initial Gross Asset Value of any asset contributed by
a Member to the


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Company shall be the Fair Value of such asset, as determined by the contributing
Member and the Company;

                  (2) The Gross Asset Value of all Company assets may be
adjusted to equal their respective gross fair market values, as determined by
the Members, as of, among other times, the following: (i) the acquisition of an
additional interest in the Company by any new or existing Member in exchange for
more than a de minimis contribution of money or other property; (ii) the
distribution by the Company of more than a de minimis amount of money or other
property to a Member as a consideration for an interest in the Company; and
(iii) the liquidation of the Company within the meaning of Treasury Regulations
ss.1.704-1(b)(2)(ii)(g) (other than a liquidation pursuant to Code Section
708(b)(1)(B));

                  (3) The Gross Asset Value of any Company asset distributed to
any Member shall be the Fair Value of such asset on the date of distribution, as
determined by the Members; and

                  (4) The Gross Asset Value of any Company assets may be
increased (or decreased) by the Members to reflect any adjustments to the
adjusted basis of such assets pursuant to Code Sections 734(b) or 743(b), but
only to the extent that such adjustments are taken into account in determining
Capital Accounts pursuant to Treasury Regulations ss.1.704-1(b)(2)(iv)(m) and
Section 4.5(h) hereof.

If the Gross Asset Value of an asset has been determined or adjusted hereunder,
such Gross Asset Value shall thereafter be adjusted by the Depreciation taken
into account with respect to such asset for purposes of computing Income and
Losses.

         "Income" and "Loss" means, respectively, for each Fiscal Year or other
period, an amount equal to the Company's taxable income or loss for such year or
period, determined in accordance with Code Section 703(a), except that for this
purpose (i) all items of income, gain, deduction or loss required to be
separately stated by Code Section 703(a)(1) shall be included in taxable income
or loss; (ii) tax exempt income shall be added to taxable income or loss; (iii)
any expenditures described in Code Section 705(a)(2)(B) (or otherwise treated in
a similar manner) and not otherwise taken into account in computing taxable
income or loss shall be subtracted; (iv) in the event the Gross Asset Value of
any Company asset is adjusted pursuant to subparagraphs (2) or (3) of the
definition of Gross Asset Value hereunder, the amount of such adjustment shall
be taken into account as gain or loss from the disposition of such asset for
purposes of computing Income or Losses; (v) gain or loss resulting from any
disposition of a Company asset with respect to which gain or loss is recognized
for federal income tax purposes shall be computed by reference to the Gross
Asset Value of the asset disposed of, notwithstanding that the adjusted tax
basis of such asset differs from its Gross Asset Value; (vi) in lieu of the
depreciation, amortization and other cost recovery deductions taken into account
in computing such taxable income or loss, there shall be taken into account
Depreciation for such Fiscal Year or other period computed in accordance with
the definition of Depreciation contained herein; (vii) to the extent an
adjustment to the adjusted tax basis of any Company asset pursuant to Code
Sections 734(b) or 743(b) is required by Treasure Regulations
ss.1.704-1(b)(2)(iv)(m)(4) to be taken into account in determining Capital
Accounts as a result of a distribution other than in liquidation of a Member's
Interest in the Company, the amount of such adjustment shall be treated as an
item of gain (if the adjustment increases the basis of the asset) or loss (if
the adjustment decreases the basis of the asset) from the disposition of the
asset and shall be taken into account for purposes of computing Income or
Losses, and (viii) notwithstanding any other provision of this definition,
taxable income or loss shall be adjusted to eliminate the impact of any item of
income or loss specifically allocated in Article IV.

         "Indemnified Parties" has the meaning set forth in Section 7.6.2.


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         "Indemnified Party" has the meaning set forth in Section 7.6.4.

         "Indemnifying Party" has the meaning set forth in Section 7.6.4.

         "Interest" refers to all of a Member's right and interest in the
Company in its capacity as a Member.

         "Intellectual Property" has the meaning set forth in Section 11.4.

         "Law" means any federal, state, or local law, rule, regulation or
ordinance.

         "Liquidation Proceeds" shall have the meaning set forth in Section
10.2.

         "Losses" has the meaning set forth in Section 7.6.1.

         "Managers" means the Person or Persons designated as Managers of the
Company in the Certificate of Formation or those Persons subsequently chosen as
the Managers of the Company from time to time pursuant to Article V.

         "Members" means those Persons who are members of the Company from time
to time, including any Substitute Members. The initial Members of the Company
shall be those Persons listed in the preamble of this Agreement.

         "Member Minimum Gain" means an amount, with respect to each Member
Nonrecourse Debt, equal to the Company Minimum Gain that would result if such
Member Nonrecourse Debt were treated as a Nonrecourse Liability, determined in
accordance with Treasury Regulations ss.1.704-2(i)(3).

         "Member Nonrecourse Debt" shall have the same meaning as partner
nonrecourse debt set forth in Treasury Regulations ss.1.704-2(b)(4).

         "Member Nonrecourse Deductions" shall have the same meaning as partner
nonrecourse deductions set forth in Treasury Regulations ss.1.704-2(i)(2).
Generally, the amount of Member Nonrecourse Deductions with respect to a Member
Nonrecourse Debt for a Fiscal Year equals the excess, if any, of the net
increase, if any, in the amount of the Member Minimum Gain attributable to such
Member Nonrecourse Debt during that Fiscal Year over the aggregate amount of any
distributions during that Fiscal Year to the Member that bears the economic risk
of loss for such Member Nonrecourse Debt to the extent distributions are from
proceeds of such Member Nonrecourse Debt and are allocable to an increase in
Member Minimum Gain determined in accordance with Treasury Regulations
ss.1.704-2(i).

         "Nonrecourse Deduction" shall have the same meaning as nonrecourse
deductions set forth in Treasury Regulations ss.ss. 1.704-2(b)(1) and
1.704-2(c). Generally, the amount of Nonrecourse Deductions for a Fiscal Year
equals the excess, if any, of any increase, if any, in the amount of Company
Minimum Gain during that Fiscal Year over the aggregate amount of any
distributions during that Fiscal Year of proceeds of a Nonrecourse Liability
that are allocable to an increase in Company Minimum Gain, determined according
to the provisions of Treasury Regulations ss.1.704-2(c) and (h).

         "Nonrecourse Liability" means a Company liability with respect to
which no Member bears the economic risk of loss as determined under Treasury
Regulations ss.ss. 1.752-1(a)(2) and 1.752-2.

         "Offer" has the meaning set forth in Section 9.2.1.


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         "Oilseeds" shall mean soybeans.

         "Other Member" has the meaning set forth in Section 9.2.1.

         "PNW" has the meaning set forth in Section 2.9.

         "Percentage Interest" means, with respect to any Member, such Member's
Percentage Interest in the Company, including such Member's percentage of the
net income, gain, loss, deduction and credits of the Company. The Percentage
Interest for each Member, prior to any adjustments thereto required by the
provisions of this Agreement, shall be as follows:

                   CARGILL, INCORPORATED                      50%
                   CENEX HARVEST STATES COOPERATIVES          50%

Unless otherwise expressly set forth in this Agreement, no changes shall be made
to the Members' Percentage Interests set forth above without the unanimous
written consent of the Members.

         "Person" means any individual, partnership, corporation, cooperative,
trust or other entity.

         "Property" means all properties and assets that the Company may own or
otherwise have an interest in from time to time.

         "Receiving Party" has the meaning set forth in Section 11.1

         "Related Party Transactions" has the meaning set forth in Section 15.1.

         "Revaluation" has the meaning set forth in Section 9.1.3.

         "Selling Member" has the meaning set forth in Section 9.2.

         "Services Agreements" has the meaning set forth in Section 2.8.1.

         "Substitute Member" shall have the meaning set forth in Section 9.1.3.

         "Tacoma Facility" shall have the meaning set forth in Section 2.10.

         "Tacoma Facility Sublease" shall have the meaning set forth in Section
2.10.

         "Tax Matters Member" shall have the meaning set forth in Section 8.11.

         "Treasurer" has the meaning set forth in Section 6.3.

         "Treasury Regulations" means the regulations promulgated by the
Treasury Department with respect to the Code, as such regulations are amended
from time to time, or corresponding provisions of future regulations.

1.2 INTERPRETATION. Words of the masculine gender shall be deemed to include the
feminine and neuter genders, and vice versa, where applicable. Words of the
singular number shall be deemed to include the plural number, and vice versa,
where applicable.


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                                   ARTICLE II
                                  ORGANIZATION

2.1 PRINCIPAL OFFICE. The principal office of the Company shall be located at
5500 Cenex Drive, Inver Grove Heights, Minnesota 55077 or at such other place(s)
as the Managers may determine from time to time.

2.2 REGISTERED AGENT. The Company shall maintain a registered office at c/o The
Corporation Trust Company, Corporation Trust Center, 1209 Orange Street,
Wilmington, Delaware 19801. The name and address of the Company's registered
agent is the Corporation Trust Company, Corporation Trust Center, 1209 Orange
Street, Wilmington, Delaware 19801.

2.3 BUSINESS PURPOSE.

         2.3.1 The Company will have all of the powers and authority granted by
the Act, any other Law and this Agreement necessary, appropriate, advisable or
convenient to the conduct, promotion or attainment of the Business Purpose of
the Company. The Company may not conduct, however, any business or activities
outside the scope of the Business Purpose.

         2.3.2 The scope of the Business Purpose may be modified only upon the
written agreement of all Members.

2.4 TERM. The Company shall continue in existence from the effective date of the
Certificate of Formation until the 11th day of July, 2004 unless earlier
terminated in accordance with this Agreement or the Act or unless otherwise
extended by the written mutual agreement of the Members.

2.5 NO LIABILITY OF MEMBERS, REPRESENTATIVES AND OFFICERS. No Member or its
representative or officer, solely by reason of such status, shall be liable,
under a judgment, decree or order of a court, or in any other manner, for any
debt, obligation or liability of the Company, whether arising in contract, tort
or otherwise, or for the acts or omissions of any other Member or its
representative or officer. The failure of the Company to observe any formalities
or requirements relating to the exercise of its powers or management of its
business or affairs under this Agreement or the Act shall not be grounds for
imposing liability on the Members, or representatives or officers of a Member,
for liabilities of the Company.

2.6 INTEREST NOT ACQUIRED FOR RESALE. Each Member warrants to the Company and
the other Members that: (a) the Member is duly organized, validly existing, and
in good standing under the laws of its state of organization and that it has the
requisite power and authority to execute this Agreement and to perform its
obligations hereunder; (b) the Member is acquiring an Interest for such Member's
own account as an investment and with no intent to distribute such Interest; and
(c) the Member acknowledges that the Interests have not been registered under
the Securities Act of 1933 or any state securities laws, and such Member's
Interest may not be resold or transferred by it except in accordance with this
Agreement, the Act and all applicable Law.

2.7 ADOPTION OF BUSINESS PLAN. At least sixty (60) days prior to the beginning
of each Fiscal Year, the Board of Managers shall adopt a business plan (the
"Business Plan") for such Fiscal Year, which may be amended from time to time;
provided, however, that the Board of Managers shall adopt an initial Business
Plan within thirty (30) days after the Effective Date. The Business Plan shall
include an annual budget for revenues, expenses, working capital reserves and
capital expenditures; any additional capital contributions anticipated to be
required for the operation of the Company's Business; and such other
information, plans and strategies as the Managers deem advisable. If the Board
of Managers fail to adopt


<PAGE>


a Business Plan for any Fiscal Year as required hereunder, the Business Plan
previously in effect shall continue in effect until a new Business Plan has been
adopted.

2.8 PROVISION OF SERVICES BETWEEN THE COMPANY AND THE MEMBERS.

         2.8.1 Upon the request of the General Manager or the Board of Managers,
either Member, without charge, shall provide to the Company basic management and
administrative advice and consultation of the kind generally provided by
corporate staff to operating line functions and, including but not limited to
legal services, loss prevention and safety counseling, transportation and human
resources counseling, and insurance counseling (but excluding management
information services), so long as the Member is providing those services to its
other business segments. Upon the request to provide such Services, the Company
and the Members shall each enter into a services agreement ("Services
Agreement"). The Services Agreements shall be substantially similar to the form
attached hereto as Exhibit 2.8.1. The Members may provide other services to the
Company as the Members and the Company mutually agree upon from time to time.

         2.8.2 The expenses incurred by Cargill in its Portland, Oregon office
to provide the Company with export administration support shall be provided at
no cost to the Company. Similarly, the expenses incurred by CHS in its St. Paul,
Minnesota office to provide the Company with accounting and trading
administration support shall be provided at no cost to the Company.

         2.8.3 The Board of Managers shall oversee the provision of services
under this Section 2.8, and in the event the contribution by the Members is not
generally equal, the Board of Managers shall take such action as it deems
necessary, such as having the Company pay one or both Members for some or all of
such services.

2.9 SCOPE OF COMPANY BUSINESS. The Company business shall be limited to the
Business Purpose. The Company intends to source Feedgrains and Oilseeds
primarily from its Members and its Members intend to supply Feedgrains and
Oilseeds on market terms from their grain originating facilities and, in the
case of CHS, its affiliated cooperatives from which it purchases such Feedgrains
and Oilseeds, customarily tributary to the Pacific Northwest, United States
("PNW") export market.

2.10 SUBLEASE OF TACOMA FACILITY. In order to facilitate the ability of the
Company to transport and handle the Feedgrains and Oilseeds which it intends to
market into export channels, TEMCO has historically utilized the Tacoma Facility
and has entered into the Sublease Agreement between Continental and the TEMCO
dated September 28, 1992 and amended by that certain Amendment No. 1 to Sublease
dated June 1, 1997 and amended and restated in that certain Amended and Restated
Sublease dated July 12, 1999, and the Company desires to utilize the Tacoma
Facility and shall obtain all rights, obligations and liabilities of that
certain Amended and Restated Sublease (the "Tacoma Facility Sublease"),
consistent with the conversion provisions of the Act. The Tacoma Facility
Sublease shall terminate on the termination, expiration or dissolution of the
Company or as otherwise provided for in the Tacoma Facility Sublease.

2.11 EXCLUSIVITY IN THE PACIFIC NORTHWEST.

         2.11.1 Each Member agrees to commit all of its Feedgrains and Oilseeds
origination that is tributary to the PNW for export to the Company. Whether
origination is tributary to the PNW for export shall be based upon what is the
best market (i.e., what is the best net value to the Member originating and
selling the grain) for such grain at the time the grain is to be liquidated. If
markets offer equal value, origination shall be split equally between the
markets, unless doing so negatively impacts the net value to


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the Member. The Members shall transfer grain to the Company at the Company's bid
price for such grain.

         2.11.2 Each Member further agrees that the Company shall be the
exclusive export-marketing vehicle for it and its Affiliates for Feedgrains and
Oilseeds exported through the PNW.

         2.11.3 Upon request of either Member, the other Member shall provide
information reasonably requested to the requesting Member to verify compliance
with the terms of this Section 2.12.

2.12 INSURANCE. The Company shall purchase and maintain commercial general
liability and property insurance on the Tacoma Facility and other insurance
coverage, with deductibles and limits, as established and approved by the Board
of Managers. The coverage, limits and deductibles shall not be changed without
the approval of the Board of Managers.

2.13 PROVISION OF THROUGHPUT SERVICES. The Company shall also provide throughput
services for wheat, barley or other commodities at the Tacoma Facility for
either Member from time to time at market rates.


                                   ARTICLE III
                   FINANCIAL MATTERS, CONTRIBUTIONS AND LOANS

3.1 INITIAL CAPITAL CONTRIBUTIONS. As of the Effective Date of this Agreement,
each Member will have made an initial contribution to the capital of the Company
as set forth on Exhibit 3.1 attached hereto and such initial contribution shall
be made contemporaneous with the execution of this Agreement. Any Additional
Contributions will become due in accordance with Section 3.2. The Members shall
make any Additional Contributions, as contemplated in Section 3.2, in proportion
to each Member's respective Percentage Interest at the time such contribution is
required to be made. For tax purposes, the LLC will be viewed as a continuation
of the partnership and assets will retain the same tax attributes for purposes
of maintaining the capital accounts.

3.2 ADDITIONAL CAPITAL CONTRIBUTIONS.

         3.2.1 The Members agree that the Company shall meet its capital needs
through the borrowing of funds as provided in Section 8.3 and that unless
specifically agreed to by the Members and except as set forth in this Section
3.2, the Members shall not be obligated to make any additional capital
contributions to the Company. However, if the Board of Managers determine that
additional capital contributions are appropriate or necessary for the Company,
the General Manager shall, by written notice, call for such additional
contributions to the capital of the Company as the Board of Managers determine
should be made by the Members. Within a period of time determined by the Board
of Managers, not to exceed thirty (30) days following the delivery of such
notice, each Member shall contribute, in cash, to the capital of the Company an
amount ("Additional Contribution") equal to such Member's Percentage Interest
multiplied by the aggregate additional capital contribution as called for by the
Board of Managers.

         3.2.2 No interest shall accrue on any Member's Capital Account. A
Member shall not be entitled to withdraw any part of its capital in the Company
or to receive any capital distribution from the Company except as part of a
distribution of capital agreed to by the Board of Managers as hereinafter
defined or as provided in Article VIII.

         3.2.3 All capital contributions and other payments required or
permitted to be made by a Member under this Agreement shall be either in cash
or, at the request of any Member and if agreed to by


<PAGE>


the Board of Managers, on such conditions and for such fair value as the Board
of Managers as hereinafter defined shall so determine, in kind.

         3.2.4 If a Member (a "Delinquent Member") shall fail to make when due a
contribution required pursuant to this Agreement, the other Member (the
"Contributing Member") may, in its sole discretion, advance all or part of that
amount to the Company. Such advance shall be deemed to be a demand loan by the
contributing Member to the Delinquent Member at an interest rate equal to 2% in
excess of the Prime Rate for the period during which the advance is outstanding.
This loan shall be repaid, together with such interest, by the Delinquent Member
promptly upon demand from any funds of the Delinquent Member, including, without
limitation, any distribution from the Company which would otherwise be payable
to the Delinquent Member. Unless and until the Delinquent Member makes such
repayment, the Company shall make no cash distribution to such Member (except
that a cash distribution shall be applied to make such repayment and the balance
then made to the formerly Delinquent Member). The Contributing Member to which
such debt is due (or to which a debt pursuant to Article VIII is due) shall have
a security interest in the Interest of the Delinquent Member to secure such
amounts owed to it, and such security interest is hereby granted by each Member.
To the extent that the principal amount of the delinquency is repaid, the
principal amount of such repayment (excluding any interest) shall be deemed a
contribution to the capital of the Company by the Delinquent Member and shall be
reflected as such in the Capital Account of the Delinquent Member.

3.3 CAPITAL ACCOUNTS. A separate Capital Account shall be maintained for each
Member in accordance with Treasury Regulations ss.1.704-1(b)(2)(iv). Each
Member's Capital Account shall be (a) increased by: (i) the amount of any cash
and the Gross Asset Value of property contributed to the Company by such Member,
including the initial contribution set forth in Section 3.1 (net of liabilities
secured by such contributed property that the Company is considered to assume or
take subject to under Code Section 752), (ii) allocations to such Member,
pursuant to Article IV, of Company income and gain (or items thereof), and (iii)
to the extent not already netted out under clause (b)(ii) below, the amount of
any Company liabilities assumed by the Member or which are secured by any
property distributed to such Member; and (b) decreased by: (i) the amount of
cash distributed to such Member by the Company, (ii) the Gross Asset Value of
property distributed to such Member (net of liabilities secured by such
distributed Property that such Member is considered to assume or take subject to
under Code Section 752), (iii) allocations to such Member, pursuant to Article
IV, of Company loss and deduction (or items thereof), and (iv) to the extent not
already netted out under clause (a)(ii) above, the amount of any liabilities of
the Member assumed by the Company or which are secured by any property
contributed by such Member to the Company.

         In the event any Interest in the Company is transferred in accordance
with the terms of this Agreement, the transferee shall succeed to the Capital
Account of the transferor to the extent it relates to the transferred Interest.

         In the event Property is subject to Code ss. 704(c) or is revalued on
the books of the Company in accordance with the first paragraph of this Section
3.3 and pursuant to Treasury Regulations ss.1.704-1(b)(2)(iv)(f), the Capital
Accounts shall be adjusted in accordance with Treasury Regulations
ss.1.704-1(b)(2)(iv)(g) for allocations to the Members of depreciation,
amortization and gain or loss, as computed for "book" purposes (and not tax
purposes) with respect to such Property.

         The foregoing provisions of this Section 3.3 and the other provisions
of this Agreement relating to the maintenance of Capital Accounts are intended
to comply with Treasury Regulations ss.ss. 1.704-1(b) and 1.704-2, and shall be
interpreted and applied in a manner consistent with such Treasury Regulations.
In the event the Board of Managers determine that it is prudent or advisable to
modify the manner in which the Capital Accounts, or any increases or decreases
thereto, are computed in order to comply with


<PAGE>


such Treasury Regulations, the Board of Managers may cause such modification to
be made, provided that it is not likely to have a material effect on the amounts
distributable to any Member upon the dissolution of the Company. In addition,
the Members may amend this Agreement in order to comply withsuch Treasury
Regulations as provided in Section 4.5(k) below.

3.4 CAPITAL WITHDRAWAL RIGHTS, INTEREST AND PRIORITY. Prior to the dissolution
and termination of the Company, no Member shall be entitled to withdraw or
reduce such Member's Capital Account or to receive any distributions from the
Company, except as provided in Articles IV and IX. No Member shall be entitled
to receive or be credited with any interest on the balance in such Member's
Capital Account at any time. Except as may be otherwise expressly provided
herein, no Member shall have any priority over any other Member as to the return
of the balance in such Member's Capital Account.


                                   ARTICLE IV
                          ALLOCATIONS AND DISTRIBUTIONS

4.1 NON-LIQUIDATION CASH DISTRIBUTIONS. Any Available Cash shall be distributed
as may be agreed to by the Board of Managers, to the Members in accordance with
their respective Percentage Interests as of the end of such Fiscal Year and at
such other times as may be agreed to by the Board of Managers.

4.2 LIQUIDATION DISTRIBUTIONS. Liquidation Proceeds shall be distributed in the
following order of priority:

         (a) To the payment of debts and liabilities of the Company (including
to Members to the extent otherwise permitted by law) and the expenses of
liquidation; then

         (b) To the setting up of such reserves as the Person required or
authorized by law to wind up the Company's affairs may reasonably deem necessary
or appropriate for any disputed, contingent or unforeseen liabilities or
obligations of the Company, if any, provided that any such reserves shall be
paid over by such Person to an independent escrow agent, to be held by such
agent or its successor for such period as such Person shall deem advisable for
the purpose of applying such reserves to the payment of such liabilities or
obligations and, at the expiration of such period, the balance of such reserves,
if any, shall be distributed as hereinafter provided; then

         (c) To the Members in accordance with and to the extent of the
positive balances in their respective Capital Accounts after taking into account
the allocation of all Income or Loss pursuant to this Agreement for the Fiscal
Year(s) in which the Company is liquidated until such Capital Accounts are
reduced to zero; then

         (d) Any remainder to the Members in proportion to their Percentage
Interests.

4.3 PROFITS, LOSSES AND DISTRIBUTIVE SHARES OF TAX ITEMS. The Company's Income
or Loss, as the case may be, for each Fiscal Year of the Company, as determined
in accordance with such method of accounting as may be adopted for the Company
pursuant to Article VII, shall be allocated to the Members for both financial
accounting and income tax purposes as set forth in this Article IV, except as
otherwise provided for herein or unless the Members unanimously agree otherwise.


<PAGE>


4.4 ALLOCATION OF INCOME, LOSS AND CREDITS.

         4.4.1 Income or Loss (other than from liquidation transactions) and
Credits for each Fiscal Year shall be allocated among the Members in accordance
with their respective Percentage Interests. To the extent there is a change in
the respective Percentage Interests of the Members during the year, Income, Loss
and Credits shall be allocated among the pre-adjustment and post-adjustment
periods as provided in Section 4.5(l).

          4.4.2 Income from liquidation transactions shall be allocated among
the Members in accordance with their respective Percentage Interests.

4.5 SPECIAL RULES REGARDING ALLOCATION OF TAX ITEMS. Notwithstanding the
foregoing provisions of Article IV, the following special rules shall apply in
allocating the Income or Loss of the Company:

          (a) Code Section 704(c) and Revaluation Allocations. In accordance
with Code ss. 704(c) and the Treasury Regulations thereunder, Income, gain, Loss
and deduction with respect to any Property contributed to the capital of the
Company shall, solely for tax purposes, be allocated among the Members so as to
take account of any variation between the adjusted basis of such property to the
Company for federal income tax purposes and its Gross Asset Value at the time of
contribution using such method of allocation as permitted under the applicable
Treasury Regulations as agreed by the Members. In the event of the adjustments
to Members' Capital Account(s) pursuant to Section 3.3 (hereinafter referred to
as a "Revaluation"), subsequent allocations of Income, gain, Loss and deduction
with respect to such property shall take account of any variation between the
adjusted basis of such property to the Company for federal income tax purposes
and its Fair Value immediately after the adjustment in the same manner as under
Code ss. 704(c) and the Treasury Regulations thereunder. If as a result of a
Revaluation, Company Minimum Gain is reduced, the reduction of such Company
Minimum Gain shall be added back to the net decrease or increase in Company
Minimum Gain otherwise determined. Any elections or other decisions relating to
such allocations shall be made by the Board of Managers in a manner that
reasonably reflects the purpose and intention of this Agreement. Allocations
pursuant to this Section 4.5(a) are solely for income tax purposes and shall not
affect, or in any way be taken into account in computing, any Member's Capital
Account or share of Income or Loss, pursuant to any provision of this Agreement.

          (b) Minimum Gain Chargeback. Notwithstanding any other provision of
this Article IV, if there is a net decrease in Company Minimum Gain during a
Fiscal Year or other taxable period, each Member shall be allocated items of
Income and gain for such year (and, if necessary, for subsequent years) in
proportion to, and to the extent of, an amount equal to the greater of: (1) the
portion of such Member's share of the net decrease in Company Minimum Gain
during such year that is allocable to the disposition of Company property
subject to Nonrecourse Liabilities; or (2) if such Person would otherwise have
an Adjusted Capital Account Deficit at the end of such year, an amount
sufficient to eliminate such Member's Adjusted Capital Account Deficit. The
items to be allocated shall be determined in accordance with Treasury
Regulations ss.1.704-2(g). For purposes of this Section 4.5(b) only, each
Member's Adjusted Capital Account Deficit shall be determined prior to any other
allocations pursuant to this Article IV with respect to such Fiscal Year and
without regard to any net decrease in Member Minimum Gain during such Fiscal
Year. The foregoing provisions of this Section 4.5(b) are intended to comply
with Treasury Regulations ss.1704-2(f) and shall be interpreted and applied in a
manner consistent with such regulation.

         A Member's share of Company Minimum Gain shall be, as of the relevant
time, the excess of (u) the sum of Nonrecourse Deductions allocated to such
Member and the aggregate distributions to such Member of Nonrecourse Liability
proceeds allocable to an increase in Company Minimum Gain, over (v) the sum of
the Member's aggregate share of the net decreases in Company Minimum Gain,
including


<PAGE>


decreases from Revaluations. In computing the above, amounts allocated or
distributed to the Member's predecessor-in-interest shall be taken into account.

         (c) Member Minimum Gain Chargeback. Notwithstanding any other
provision of this Article IV other than Section 4.5(b), if there is a net
decrease in Member Minimum Gain during a Fiscal Year or other taxable period,
each Member who has a share of the Member Minimum Gain attributable to such
Member Nonrecourse Debt shall be allocated items of Income and gain for such
year (and, if necessary, for subsequent years) in proportion to, and to the
extent of, an amount equal to the greater of: (1) the portion of such Member's
share of the net decrease in Member Minimum Gain attributable to such Member
Nonrecourse Debt during such year that is allocable to the disposition of
Company property subject to such Member Nonrecourse Debt; or (2) if such Person
would otherwise have an Adjusted Capital Account Deficit at the end of such
year, an amount sufficient to eliminate such Member's Adjusted Capital Account
Deficit. The items to be allocated shall be determined in accordance with
Treasury Regulations ss.1.704-2(i)(4) and (5). For purposes of this Section
4.5(c) only, each Member's Adjusted Capital Account Deficit shall be determined
prior to any other allocations pursuant to this Article IV with respect to such
Fiscal Year, other than allocations of Company Minimum Gain pursuant to Section
4.5(b) hereof. The foregoing provisions of this Section 4.5(c) are intended to
comply with Treasury Regulations ss.1.704-2(i)(4) and shall be interpreted and
applied in a manner consistent with such regulation.

         (d) Qualified Income Offset. In the event any Member unexpectedly
receives an adjustment, allocation or distribution described in Treasury
Regulations ss.1.704.1(b)(2)(ii)(d)(4), (5) or (6), which causes or increases
such Member's Adjusted Capital Account Deficit, items of Company Income and gain
shall be specially allocated to such Member in an amount and manner sufficient
to eliminate such Adjusted Capital Account Deficit as quickly as possible,
provided that an allocation under this Section 4.5(d) shall be made if and only
to the extent such Member would have an Adjusted Capital Account Deficit after
all other allocations under this Article IV have been made. It is intended that
this Section 4.5(d) be interpreted to comply with the alternate test for
economic effect set forth in Treasury Regulations ss.1.704-1(b)(2)(ii)(d).

         (e) Nonrecourse Deductions. Nonrecourse Deductions for any Fiscal Year
or other period shall be allocated to the Members in proportion to their
Percentage Interests.

         (f) Member Nonrecourse Deductions. Any Member Nonrecourse Deduction
shall be allocated to the Member who bears the risk of loss with respect to the
loan to which such Member Nonrecourse Deductions are attributable in accordance
with Treasury Regulations ss.1.704-2(i)(1).

         (g) Curative Allocations. Any special allocations of items of Income,
gain, deduction or Loss pursuant to Sections 4.5(b), (c), (d), (e) and (f) shall
be taken into account in computing subsequent allocations of income and gain
pursuant to this Article IV, so that the net amount of any items so allocated
and all other items allocated to each Member pursuant to this Article IV shall,
to the extent possible, be equal to the net amount that would have been
allocated to each such Member pursuant to the provisions of this Article IV if
such adjustments, allocations or distributions had not occurred. No allocations
pursuant to Sections 4.5(b) and (c) shall be made prior to the Fiscal Year or
other taxable period during which there is a net decrease in Company Minimum
Gain or Member Minimum Gain, respectively, and in any such case then only to the
extent necessary to avoid the potential distortion. In addition, allocations
pursuant to this Section 4.5(g) with respect to Nonrecourse Deductions in
Section 4.5(e) and Member Nonrecourse Deductions in Section 4.5(f) shall be
deferred to the extent the Members reasonably determine that such allocations
are likely to be offset by subsequent allocations of Company Minimum Gain or
Member Minimum Gain, respectively.


<PAGE>


         (h) Code Section 754 Adjustments. To the extent an adjustment to the
adjusted tax basis of any Company asset pursuant to Code ss.ss. 734(b) or 743(b)
is required, pursuant to Treasury Regulations ss.ss. 1.704-1(b)(2)(iv)(m)(2) or
1.704-1(b)(2)(iv)(m)(4), to be taken into account in determining Capital
Accounts as the result of a distribution to a Member in complete liquidation of
its interest in the Company, the amount of such adjustment to the Capital
Accounts shall be treated as an item of gain (if the adjustment increases the
basis of the asset) or loss (if the adjustment decreases such basis) and such
gain or loss shall be specially allocated to the Members in accordance with
their interests in the Company if Treasury Regulations
ss.1.704-1(b)(2)(iv)(m)(2) applies, or to the Member to whom such distributions
was made in the event that Treasury Regulations ss.1.704-1(b)(2)(iv)(m)(4)
applies.

         (i) Loss Allocation Limitation. Notwithstanding the other provisions
of this Article IV, unless otherwise agreed to by the Managers, no Member shall
be allocated Loss in any Fiscal Year or other taxable period that would cause or
increase an Adjusted Capital Account Deficit as of the end of such Fiscal Year
or other taxable period.

         (j) Share of Nonrecourse Liabilities. Solely for purposes of
determining a Member's proportionate share of the "excess nonrecourse
liabilities" of the Company within the meaning of Treasury Regulation
ss.1.752-3(a)(3), each Member's Interest in Company profits is equal to such
Member's respective Percentage Interest.

         (k) Compliance with Treasury Regulations. The foregoing provisions of
this Section 4.5 are intended to comply with Treasury Regulations ss.ss.
1.704-1(b), 1.704-2 and 1.752-1 through 5, and shall be interpreted and applied
in a manner consistent with such Treasury Regulations.

         (l) General Allocation Provisions. Except as otherwise provided in
this Agreement, all items that are components of Income or Loss shall be divided
among the Members in the same proportions as they share such Income or Loss, as
the case may be, for the year. For purposes of determining the Income, Loss or
any other items for any period, Income, Loss or any such other items shall be
determined on a daily, monthly or other basis, on an accrual method of
accounting.

4.6 WITHHOLDING OF DISTRIBUTIONS. Notwithstanding any other provision of this
Agreement, the Board of Managers (or any Person(s) required or authorized by law
to wind up the Company's affairs) may determine in their absolute discretion,
when in their opinion it is in the best interest of the Company, to suspend or
restrict distributions.

4.7 NO PRIORITY. Except as may be otherwise expressly provided herein, no Member
shall have priority over any other Member as to Company Income, gain, Loss,
Credits and deductions or distributions.

4.8 TAX WITHHOLDING. Notwithstanding any other provision of this Agreement, the
Board of Managers are authorized to take any action that they determine to be
necessary or appropriate to cause the Company to comply with any withholding
requirements established under any federal, state or local tax law, including,
without limitation, withholding on any distribution to any Member. For all
purposes of this Article IV, any amount withheld on any distribution and paid
over to the appropriate governmental body shall be treated as if such amount had
in fact been distributed to the Member.


                                    ARTICLE V
                            MANAGEMENT OF THE COMPANY


<PAGE>


5.1 BOARD OF MANAGERS. Except as reserved to the Members in this Agreement, the
business and affairs of the Company shall be managed under the direction of the
Board of Managers ("Board of Managers"), and the Board of Managers shall have
power and authority to manage and direct the business and affairs of the
Company. Approval by or actions taken by the Board of Managers in accordance
with this Agreement shall constitute approval or action by the Company.

5.2 DESIGNATION OF MANAGERS. The Board of Managers shall at all times consist of
six (6) Managers. Two Managers shall be appointed by Cargill and two Managers
shall be appointed by CHS and each Member may appoint such alternate Managers as
such Member deems advisable. Each of the Members may initially appoint or
replace any or all of its Managers or alternate Managers of the Board of
Managers by written notice to the Company and the other Member. Each of the
Members shall at all times maintain in effect the appointment of at least one
(1) Manager. Each Manager shall serve for indefinite terms at the pleasure of
the appointing Member. The initial Managers of the Company, as appointed by each
Member, are set forth on Exhibit 5.2

5.3 POWERS OF THE MANAGERS. In addition to the powers and authorities conferred
upon them by this Agreement, the Certificate of Formation and the Act, the Board
of Managers may exercise all of the powers of the Company, and do all such
lawful acts and things, that are not by statute or by the Certificate of
Formation or by this Agreement directed or required to be exercised or done by
the Members. Notwithstanding the foregoing, except as provided below with
respect to the General Manager, the Managers individually are not agents of the
Company and do not have any authority to take any actions or execute any
instruments on behalf of the Company or otherwise act for or bind the Company.

5.4 MEETINGS.

          5.4.1 The Board of Managers shall meet not less than quarterly at such
times and places as it may determine. Meetings of the Board of Managers may be
called by one (1) Manager. Notice of each meeting of the Board of Managers shall
be sent by facsimile (with confirmation receipt) or mail or delivered
personally, or by telephone, to each regular and alternate Manager not later
than ten (10) Business Days before the date on which the meeting is to be held.
The Manager(s) entitled to notice of meetings may waive such notice.

          5.4.2 The attendance of two (2) Managers from each Member shall
constitute a quorum for the transaction of business of the Board of Managers.
Each Manager at the meeting shall be entitled to one vote for each matter to be
voted upon by the Board of Managers. Any decision or approval before the Board
of Managers shall be taken by majority vote of those of the Board of Managers
present or participating in a meeting at which a quorum is present; provided,
however, no action shall be authorized unless at least one (1) Manager appointed
by each Member votes affirmatively on such action. The failure of the Board of
Managers to authorize action with respect to any matter pursuant to the
foregoing sentence shall constitute a Deadlock pursuant to Section 5.6.

          5.4.3 The regular Managers shall alternately act as chairperson of
meetings of the Board of Managers. Minutes of all meeting shall be prepared by
the Secretary and shall be distributed to all regular Managers (and alternate
Managers if present at a meeting) within thirty (30) days following any meeting.

5.5 FUNDAMENTAL ISSUES. No action may be taken or decision made which binds the
Company by the General Manager, any Member on behalf of the Company, or the
Company, with regard to any of the Fundamental Issues without the vote (or
written consent) of the Board of Managers in accordance with Section 5.4.2.
Fundamental Issues shall include decisions and actions on the following matters,
and such other matters as may be deemed Fundamental Issues, from time to time,
by the Board of Managers:


<PAGE>


          (a)  calls for Additional Contributions or guarantees hereunder;

          (b) the issuance of any notes, bonds, debentures or other obligations
by the Company, or the incurrence of or assumption of any indebtedness if, after
giving effect thereto, the aggregate principal amount of all such indebtedness
of the Company, other than indebtedness previously approved by the Board of
Managers (including, without limitation, the utilization by the Company of lines
of credit previously approved by the Board of Managers for the purpose of
financing the business of the Company in the ordinary course), would either (i)
exceed the amounts specifically provided therefor and sufficiently identified in
the Company's current annual budgets referred to in Sections 5.5(p) and 8.1, or
(ii) result in direct or indirect liability on either or both of the Members for
repayment of such indebtedness;

          (c) any acquisition, disposition, sale, conveyance, lease, sublease,
exchange or other disposition of any interest in the Tacoma Facility other than
the sublease contemplated by Section 2.10 hereof;

          (d) the acquisition, disposition, sale, conveyance, lease, sublease,
exchange or other disposition of real property having a value greater than a
threshold amount to be determined by the Board of Managers;

          (e) the acquisition, disposition, sale, conveyance, lease, sublease,
exchange or other disposition of personal property, other than agricultural
commodities traded in the ordinary course of business, with a value greater than
a threshold amount to be determined by the Board of Managers;

          (f)  investing in any Person;

          (g) the establishment of trading position limits for agricultural
commodities traded by the Company;

          (h) the making of loans or provision of guaranties, or the extension
or pledge of credit to others, except endorsements and extensions of credit in
the ordinary course of business;

          (i) the sale of any equity interests (or operation, warrant,
conversion in similar rights with respect thereto) in the Company;

          (j) the selection, appointment, remuneration, removal and
determination of the terms and conditions of employment agreements of officers,
executives and key employees of the Company;

          (k) the payment of bonuses and perquisites to officers, executives and
key employees of the Company;

          (l) the confession of any judgment against the Company or the
creation, assumption, incurrence, or suffering to be created, assumed or
incurred or to exist of, any encumbrance upon any of the assets or property of
the Company, or the acquisition or holding or agreement to acquire or hold such
property or assets subject to any encumbrance other than (i) liens for taxes not
yet due or which are being contested in good faith by appropriate proceedings,
and (ii) other minor encumbrances incidental to the conduct of the business of
the Company or the ownership of its property and assets which are not incurred
in connection with the borrowing of money or the obtaining of advances or
credit, and which do not in the aggregate materially detract from the value of
such property or assets or materially impair the use thereof in the operation of
the business of the Company;


<PAGE>


          (m) the compromise or submission to arbitration (other than by
contract specifically providing for arbitration) or litigation of any claim due,
or any dispute or controversy involving the Company for any claim, dispute or
controversy in excess of any amount to be determined by the Board of Managers;

          (n) the entering into of any contract or commitment (other than those
contracts made in the ordinary course of business) involving aggregate
expenditures in excess of an amount to be determined by the Board of Managers;

          (o) the entering into any contract or commitment (other than those
commodity, sales and purchase contracts made in the ordinary course of the
Company's grain merchandising business) involving either Member, or any of their
Affiliates;

          (p) the approval of the annual business operating budget, capital
expenditure budget and business plan and the amount of Cash for Distribution and
adoption of other major financial policies of the Company;

          (q) the approval of the opening financial statements of the Company as
referred to in Section 8.6;

          (r) the appointment and removal of the independent third party
accountants ("Accountants") for the Company;

          (s) any material changes in the purposes of the Company beyond that
expressly contemplated by this Agreement as provided in Section 2.3;

          (t) the voluntary dissolution and winding-up of the Company, provided,
however, that this provision shall in no way limit the rights of the Members
under Article XI.

          (u) any changes in the scope or method of operations or business
policies of the Company which is likely to materially increase the working
capital or cash requirements of the Company.

          (v) approval of the credit policy applicable to export sales and any
material deviation therefrom.

5.6 DEADLOCK. If the Board of Managers cannot agree on any Fundamental Issue
within thirty (30) days following the Board of Managers' meeting at which a
decision on such Fundamental Issue was sought, or within thirty (30) days of any
such Fundamental Issue being submitted to the Managers for approval, then such
matter shall be submitted to the Chief Executive Officer of CHS and the
appropriate Business Unit President of Cargill to resolve. If the above
mentioned executives of the Members are unable to resolve such deadlocked
Fundamental Issue within thirty (30) days following submission of the matter to
them for resolution, and such Fundamental Issue has or will have a material
adverse effect on the business of the Company, then the matter shall be
submitted to arbitration in accordance with Section 13.2 of this Agreement.

5.7 SUBCOMMITTEES. The Board of Managers may appoint such subcommittees as it
deems advisable, each with an equal number of representatives from each Member.

5.8 WAIVER OF NOTICE. Whenever any notice is required to be given hereunder, a
written waiver thereof, signed by the Person entitled to such notice, whether
before or after the time stated therein, shall be deemed equivalent to notice.
Attendance or participation of a Person at a meeting shall constitute a waiver
of notice of such meeting, except when the Person attends or participates in a
meeting for the express purpose of objecting, at the beginning of the meeting,
to the transaction of any business because


<PAGE>


the meeting is not lawfully called or convened. Neither the business to be
transacted at, nor the purpose of, any regular meeting of the Managers need be
specified in any written waiver of notice, but the business to be transacted at,
or the purpose of, any special meeting of the Managers shall be specified in any
written waiver of notice.

5.9 MEETINGS BY CONFERENCE TELEPHONE OR SIMILAR COMMUNICATIONS EQUIPMENT.
Notwithstanding Section 5.4.1, any Manager may participate in a meeting by means
of conference telephone or similar communications equipment by means of which
all Persons participating in the meeting can hear each other, and participation
in a meeting pursuant hereto shall constitute presence in Person at such
meeting.

5.10 ACTION WITHOUT MEETING. Any action required, or permitted, to be taken at
any meeting of the Board of Managers may be taken without a meeting if written
consent thereto is signed by all of the Managers and such written consent is
filed with the books and records of the Company.

5.11 POWERS OF MEMBERS. Notwithstanding anything contained in this Article V,
only the Members shall have the power and authority, and unanimous consent of
the Members shall be required, to (a) admit a new Member, except as provided in
Article IX; (b) amend or repeal this Agreement or the Certificate of Formation
or adopt a new limited liability company agreement; and (c) amend or repeal any
resolution of the Members which, by its terms, is not amendable or repealable.


                                   ARTICLE VI
                             OFFICERS AND EMPLOYEES

6.1 THE GENERAL MANAGER.

          6.1.1 Cargill shall appoint the General Manager so long as the
administration and trading functions of the Company are predominantly operated
out of CHS' facilities. If the Company's administration and trading functions
are moved to any Cargill facility, the General Manager shall be appointed by
CHS. The General Manager is hereby vested with such executive and financial
authority as to enable him to direct the business and affairs of the Company,
subject to the directions of the Board of Managers and in accordance with this
Agreement and the annual budget adopted by the Board of Managers. The General
Manager shall be authorized to execute documents within the scope of his
authority on behalf of the Company that will bind the Company without the
necessity of obtaining the signature of either of the Members. The General
Manager shall be responsible for the implementation of the various decisions of
the Board of Managers and for the day-to-day management and operation of the
Company. The General Manager shall regularly inform the Board of Managers of the
Company's ongoing activities. The General Manager shall report to and take
direction from the Board of Managers. The General Manager shall enter into
transactions on behalf of the Company except that the General Manager is not
authorized to take any action on a Fundamental Issue unless the Board of
Managers shall have approved such action pursuant to Section 5.4.2.

          6.1.2 The General Manager shall provide the following reports to the
Board of Managers:

                   (i)  daily position reports;

                   (ii) a weekly management report;

                  (iii) a monthly report on the financial condition and the
business prospects of the Company;


<PAGE>


                   (iv) a monthly report summarizing all claims made and suits
filed against the Company, all potential claims and suits, and the final
settlement or other resolution of claims and suits; and

                   (v)  other reports requested by the Board of Managers or one
of the Members.

          The provision of any such reports shall be subject to any
communication guidelines to be established by the Members and the Company.

6.2 SECRETARY. The Secretary shall be appointed by the Board of Managers and
shall report to the General Manager. The Secretary shall act as Secretary of all
meetings of the Board of Managers, shall keep the minutes thereof in the proper
book or books to be provided for that purpose, shall see that all notices
required to be given by the Company are duly given and served, shall have charge
of the books, records and papers of the Company relating to its organization and
management as a Company, and shall see that the reports, statements and other
documents required by law are properly kept and filed; and shall, in general,
perform all the duties incident to the office of Secretary and such other duties
as from time to time may be assigned to him by the Board of Managers and the
General Manager.

6.3 TREASURER. The Board of Managers shall appoint the Treasurer. The Treasurer
shall report to the Board of Managers. The Treasurer shall perform all the
duties assigned to him by this Agreement including, without limitation, (a)
arranging for the Company to borrow funds pursuant to Section 8.3; (b)
submission to each Member of quarterly comparisons pursuant to Section 8.1.2,
current cash estimates pursuant to Section 8.2, and statements relating to
Emergency Needs pursuant to Section 8.2.2; (c) determination of the amount of
Cash for Distribution and the distribution of such Cash for Distribution
pursuant to Section 8.7; (d) causing to be prepared and given to each Member
un-audited financial statements pursuant to Section 8.6.2; (e) having charge of,
and being responsible for, all funds, securities and notes of the Company; (f)
receiving and giving receipts for moneys due and payable to the Company from any
sources whatsoever; (g) depositing all such moneys in the name of the Company in
such banks, trust companies or other depositaries as shall be selected by the
Board of Managers; (h) against proper vouchers, causing such funds to be
disbursed by checks or drafts on the authorized depositaries of the Company, and
being responsible for accuracy of the amounts of all moneys so disbursed; (i)
regularly entering or causing to be entered into books to be kept by him or
under his discretion full and adequate account of all moneys received or paid by
him for the account of the Company; (j) having the right to require, from time
to time, reports or statements giving such information as he may desire with
respect to any and all financial transactions of the Company from the officers
or agents transacting the same; and, (k) in general, all the duties incident to
the office of Treasurer and such other duties as from time to time may be
assigned to him by the Board of Managers or the General Manager.

6.4 OTHER PERSONS. The Board of Managers may appoint such other executive and
management employees, including Persons employed by Cargill or CHS, as it shall
from time to time deem appropriate, and may approve a plan for hiring of other
salaried employees including employees from Cargill and CHS.

6.5 APPOINTMENT AND REMOVAL OF OFFICERS AND EMPLOYEES. The Board of Managers
shall make the appointment and removal of officers and employees of the Company.
Either Member may request the removal of any officer or employee.

6.6 AFFILIATIONS. The officers, executives and other employees of the Company
may also be employees of the Members or their Affiliates, and shall not be
required (except as may be determined by the Board of Managers) to be full-time
employees of the Company. The Board of Managers and the Members will agree on
the designation of employees of the respective Members to be made available by
the respective Members for the purpose of providing marketing, transportation,
logistics, export


<PAGE>


administration, grain settlements, accounting and other services, for and on
behalf of the Company. Such designated employees shall at all times remain
employees of the respective Members. The duties performed by such designated
employees for and on behalf of the Company in conducting and performing Company
business shall be Company business activities. In consideration of each of the
Members making such employees available to the Company, the Company shall pay to
each of the Members the charges for services by and other expenses incurred by
such designated employees in performing Company business and agreed by the Board
of Managers as reflected in the operating budget. The Company shall have the
right to direct the action of such designated employees in performance of their
duties for and on behalf of the Company. If the Company does not desire to
maintain the services of any such designated employee, the Company may so advise
the respective Member employing such designated employee and such Member shall
cause the designated employee to cease performing such services for and on
behalf of the Company. Each Member retains the right to fire its employees even
if designated to the Company or to transfer any such employee to other duties
within the business of such Member; provided, however, that such Member will
cooperate with the Company to provide a suitable replacement so that the
services of like kind provided by such dismissed or transferred employee will
continue to be provided to the Company.


                                   ARTICLE VII
          COMPENSATION, LIABILITY, INDEMNIFICATION AND NON-COMPETITION

7.1 COMPENSATION. No Manager will receive any compensation from the Company for
serving as Manager, and each Manager will be responsible for its own costs and
expenses in acting in such capacity.

7.2 LIABILITY OF MANAGERS. Except in the case where the Managers are guilty of
fraud, gross negligence, misconduct, reckless disregard of duty or a criminal
act which is a felony, no Manager shall be liable to the Company or any Member
for any loss, damage, liability or expense suffered by the Company or any Member
on account of any action taken or omitted to be taken by him as a Manager.

7.3 INDEMNIFICATION OF MANAGERS.

         7.3.1 Subject to Subsection 7.3.4, the Company shall indemnify any
Person who was or is a party, or is threatened to be made a party, to any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative, other than an action by or in the
right of the Company, by reason of the fact that such Person is or was a
Manager, manager, officer, employee or agent of the Company, or is or was
serving at the request of the Company as a Manager, manager, officer, employee
or agent of another limited liability company, corporation, partnership, joint
venture, trust or other enterprise, against expenses, judgments, fines and
amounts paid in settlement actually and reasonably incurred by such Person in
connection with such action, suit or proceeding, including attorneys' fees, if
such Person acted in good faith and in a manner such Person reasonably believed
to be in (or not opposed to) the best interests of the Company, and, with
respect to any criminal action or proceeding, had no reasonable cause to believe
such Person's conduct was unlawful. The termination of any action, suit or
proceeding by judgment, order, settlement, conviction, or upon a plea of nolo
contendere or its equivalent, shall not, of itself, create a presumption that
the Person did not act in good faith and in a manner which such Person
reasonably believed to be in or not opposed to the best interests of the
Company, and with respect to any criminal action or proceeding, had reasonable
cause to believe that such Person's conduct was unlawful.

          7.3.2 Subject to Subsection 7.3.4, the Company shall indemnify any
Person who was or is a party, or is threatened to be made a party, to any
threatened, pending or completed action or suit by or in the right of the
Company to procure a judgment in its favor by reason of the fact that such
Person is or was a Manager, manager, officer, employee or agent of the Company,
or is or was serving at the request


<PAGE>


of the Company as a Manager, manager, officer, employee or agent of another
limited liability company, corporation, partnership, joint venture, trust or
other enterprise against expenses actually and reasonably incurred by such
Person in connection with the defense or settlement of such action or suit,
including attorneys' fees, if such Person acted in good faith and in a manner
such Person reasonably believed to be in (or not opposed to) the best interests
of the Company and except that no indemnification shall be made in respect of
any claim, issue or matter as to which such Person shall have been adjudged to
be liable to the Company unless and only to the extent that the court in which
such action or suit was brought shall determine upon application that, despite
the adjudication of liability but in view of all the circumstances of the case,
such Person is fairly and reasonably entitled to indemnity for such expenses
which the court shall deem proper.

          7.3.3 To the extent that a Manager, manager, officer, employee or
agent of the Company has been successful on the merits or otherwise in defense
of any action, suit or proceeding referred to in Subsections 7.3.1 and 7.3.2, or
in defense of any claim, issue or matter therein, such Manager, manager,
officer, employee or agent shall be indemnified against expenses actually and
reasonably incurred by such Person in connection therewith, including attorneys'
fees.

          7.3.4 Any indemnification under Subsections 7.3.1 and 7.3.2, unless
ordered by a court, shall be made by the Company only as authorized in the
specific case upon a determination that indemnification of the Manager, manager,
officer, employee or agent is proper in the circumstances because such Manager,
officer, employee or agent has met the applicable standard of conduct set forth
in Subsections 7.3.1 and 7.3.2. The Board of Managers shall make such
determination.

          7.3.5 Expenses incurred by a Manager or officer in defending a civil
or criminal action, suit or proceeding may be paid by the Company in advance of
the final disposition of such action, suit or proceeding upon receipt of an
undertaking by or on behalf of the Manager or officer to repay such amount if it
is ultimately determined that the Manager or officer is not entitled to be
indemnified by the Company as authorized in this Section 7.3. Such expenses may
be so paid upon such terms and conditions, if any, as prescribed by the Board of
Managers.

          7.3.6 The indemnification and advancement of expenses provided by, or
granted pursuant to, the other subsections of this Section 7.3 shall not be
deemed exclusive of any other rights to which those seeking indemnification or
advancement of expenses may be entitled.

          7.3.7 The Company may purchase and maintain insurance on behalf of any
Person who is or was a Manager, manager, officer, employee or agent of the
Company, or is or was serving at the request of the Company as a Manager,
manager, officer, employee or agent of another limited liability company,
corporation, partnership, joint venture, trust or other enterprise against any
liability asserted against such Person and incurred by such Person in any such
capacity, or arising out of such Person's status as such, whether or not the
Company would have the power to indemnify such Person against such liability
under the provisions of this Section 6.3.

         7.3.8 For purposes of this Section 7.3, references to the "Company"
shall include, in addition to the limited liability company, any constituent
company or corporation (including any constituent of a constituent) absorbed in
a consolidation or merger which, if its separate existence had continued, would
have had power and authority to indemnify its Managers, managers, officers and
employees or agents, so that any Person who is or was a Manager, manager,
officer, employee or agent of such constituent entity, or is or was serving at
the request of such constituent entity as a Manager, manager, officer, employee
or agent of another limited liability company, corporation, partnership, joint
venture, trust or other enterprise, shall stand in the same position under this
Section 7.3 with respect to the resulting or surviving


<PAGE>


entity as such Person would have with respect to such constituent entity if its
separate existence had continued.

         7.3.9 For purposes of this Section 7.3, references to "other
enterprises" shall include employee benefit plans; references to "fines" shall
include any excise taxes assessed to a Person with respect to any employee
benefit plan; and references to "serving at the request of the Company" shall
include any service as a Manager, manager, officer, employee or agent of the
Company which imposes duties on, or involves services by, such Manager, manager,
officer, employee or agent with respect to an employee benefit plan, its
participants or beneficiaries; and a Person who acted in good faith and in a
manner such Person reasonably believed to be in the interest of the participants
and beneficiaries of an employee benefit plan shall be deemed to have acted in a
manner "not opposed to the best interests of the Company" as referred to in this
Section 7.3.

         7.3.10 The indemnification and advancement of expenses provided by, or
granted pursuant to, this Section 7.3 shall, unless otherwise provided when
authorized or ratified, continue as to a Person who has ceased to be a Manager,
manager, officer, employee or agent and shall inure to the benefit of the heirs,
executors and administrators of such a Person.

7.4 OTHER BUSINESS VENTURES. Except as otherwise provided herein, any Member may
engage in or possess an interest in other business ventures of any nature or
description, independently or with others, similar or dissimilar to the business
of the Company, and the Company and the Members shall have no rights by virtue
of this Agreement in and to such independent ventures or the income or profits
derived therefrom, and the pursuit of any such venture, even if competitive with
the business of the Company, shall not be deemed wrongful or improper. No Member
shall be obligated to present any particular investment opportunity to the
Company even if such opportunity is of a character that, if presented to the
Company, could be taken by the Company, and either Member shall have the right
to take for its own account (individually or as a partner or fiduciary) or to
recommend to others, any such particular investment opportunity.

7.5 NON-SOLICITATION CLAUSE. During the duration of this Agreement each Member
represents that it will not initiate employment discussions with personnel
employed by the other Member by direct contact or through executive search
firms, employment agencies, or other indirect means, for so long as such
personnel is employed by the Member and for an additional six (6) months after
such personnel leaves that Member's employ. It being understood that this would
not apply in instances where personnel from either Member are responding to
general advertisements of job

7.6 INDEMNIFICATION OF MEMBERS AND THE COMPANY.

         7.6.1 Each Member shall hold harmless and indemnify the other Member,
the other Member's Affiliates and the Company, and their respective officers,
directors, managers, employees, agents and representatives from and against and
in respect of any and all claims, liabilities, losses, damages, fines,
penalties, costs or expenses (including reasonable attorneys' fees, expert and
consultant fees, investigation costs and response, removal and corrective action
and other remediation or clean-up costs) (collectively, the "Losses") suffered
or incurred by the other Member, the other Member's Affiliates or the Company to
the extent that such Losses arise from, by reason of or are in connection with
(i) any negligent act or omission of the indemnifying Member or any of its
officers, directors, employees, agents or representatives, and/or (ii) any
misrepresentation, breach or nonfulfillment of any warranty, representation,
obligation or responsibility owed to the other Member or the Company under the
terms of this Agreement.


<PAGE>


         7.6.2 The Members agree that the Company shall hold harmless and
indemnify the Members, the Members' Affiliates, and their respective officers,
directors, employees, agents and representatives (collectively, the "Indemnified
Parties") from and against and in respect of any and all Losses suffered or
incurred by the Indemnified Parties to the extent that such losses arise from,
by reason of or are in connection with (i) any negligent act or omission of the
Company or any of its Managers, officers, managers, employees, agents or
representatives, and (ii) the operation or ownership by the Company of the
Facility and the conduct of business therein, thereabout, thereon or with regard
thereto at all times on and after September 19, 1992 of the Company, including
without limitation environmental and Title VII claims, suits, cases or charges.

         7.6.3 If and to the extent that either Member becomes liable for or
pays more than its Percentage Interest of any Company obligation or liability,
other than those which arise under the circumstances described in Section 7.6.1,
then (i) the other Member will pay any such excess that is unpaid or reimburse
the other Member which has paid any of that excess for the amount paid by the
other Member, and (ii) will indemnify and hold harmless that Member from and
against any and all liability for that excess.

         7.6.4 In the event that either a Member or the Company has a claim of
indemnification pursuant to this Section 7.6, then such Member or the Company
(the "Indemnified Party") shall provide written notice promptly to the party
from which the Indemnified Party seeks indemnification (the "Indemnifying
Party"). Such written notice shall specify in reasonable detail the nature of
the Losses suffered or incurred by the Indemnified Party, and, if known, the
amount or an estimate of the amount of the Losses; provided, however, that
failure to give such notice shall relieve the Indemnifying Party from liability
only to the extent that it has been damaged by such failure to notify. If the
claim for indemnification arises out of a claim or action by a third party, the
Indemnifying Party may assume the defense and prosecution thereof at its own
cost and expense, with counsel reasonably acceptable to the Indemnified Party,
by giving prompt written notice to the Indemnified Party. In such event, the
Indemnified Party shall have the right to employ, at its own expense, counsel
separate from the counsel employed by the Indemnifying Party and to participate
in such defense and prosecution, at its own expense, subject to the management
and control of the claim by the Indemnifying Party. The Indemnifying Party shall
not settle any claim without the prior written consent of the Indemnified Party,
which consent shall not be unreasonably withheld. Each party to this Agreement
shall cooperate fully with the other party in the defense, prosecution,
negotiation of a settlement or any other matter with respect to any claim by a
third party which is subject to the indemnification rights set forth herein. Any
indemnification that is required to be paid by one of the Members or the Company
pursuant to this Section 7.6 shall be paid within thirty (30) days after demand
for the payment has been given by the indemnified Member or Company, in each
case together with interest at the Effective Rate from the date on which the
obligation to pay first arose to the date of payment.

         7.6.5 The respective rights and obligations of the Members, Members'
Affiliates, Managers, and the Company under this Article VII shall survive the
termination of this Agreement and the dissolution of the Company.


                                  ARTICLE VIII
                          ACCOUNTING AND BANK ACCOUNTS

8.1 PROGRAMS AND BUDGETS.


<PAGE>


          8.1.1 The General Manager shall, not later than one (1) month prior to
the commencement of the next succeeding Fiscal Year of the Company, prepare and
submit to the Board of Managers for its review and approval a business operating
budget and a capital expenditure budget for such Fiscal Year.

          8.1.2 Not later than the 25th calendar day after the close of each
fiscal quarter, the Treasurer shall submit to each Member a comparison, for the
immediately preceding quarter and for the year to date, of the results of
operations of the Company with the applicable Fiscal Year budget.

8.2 ESTIMATES ON CASH NEEDS.

          8.2.1 Based on the budgets referred to in Section 8.1.1 and the
quarterly comparisons referred to in Section 8.1.2, the Treasurer will, at such
time and for such periods as requested by the Board of Managers, submit to the
Board of Managers a current cash estimate showing: (i) the estimated cash
disbursements which the Company will be required to make during the next
succeeding calendar period for operating costs; (ii) estimated receipts; (iii)
amounts needed for additional working capital; and (iv) the amount of funds
("Cash Needs") that will be required to cover the amount, if any, by which
estimated cash disbursements and amounts needed for additional working capital
exceed estimated receipts available to cover such cash disbursements and
additional working capital. The current cash estimate shall also specify the
dates on which the Company must receive the necessary funds.

          8.2.2 If, in the event of an emergency, the Company requires cash
payments ("Emergency Needs") not provided for by such current cash estimates,
the General Manager or the Treasurer, may at any time furnish a statement
thereof to the Board of Managers, giving the maximum period of notice for any
such additional cash payments as is practicable in the circumstances, specifying
in detail the reasons for such emergency cash payment and the amount thereof.
Upon receipt of such emergency cash statement, the Board of Managers shall
promptly decide, taking into account the circumstances, how the Emergency Needs
shall be met.

         8.2.3 Unless otherwise agreed by the Board of Managers, the Cash Needs
and the Emergency Needs shall be made through borrowings of the Company in
accordance with Section 8.3.

8.3 LOANS.

         8.3.1 In the event that the Board of Managers decides at any time
during the term of this Agreement that it is desirable for the Company to borrow
funds to acquire significant inventories or to meet the Cash Needs, Emergency
Needs or other requirements of the Company, the Treasurer shall, within the
limits of his authority as defined by the Board of Managers, negotiate on behalf
of the Company to borrow such funds from financial institutions. The Board of
Managers may approve, reject, or modify the terms negotiated by the Treasurer
and may negotiate or authorize others to negotiate borrowings on behalf of the
Company in order to find terms more beneficial to the Company.

         8.3.2 Any Member or Affiliate may make direct loans to the Company in
such amounts, at such times and on such terms and conditions as may be approved
by the Board of Managers. Loans by any Member to the Company shall not be
considered as contributions to the Capital Account of the Member making such
loan to the Company. Any loans to the Company shall (a) be evidenced by a
promissory note maturing on a date that is agreed to by the Board of Managers at
the time at which the loan is made, and (b) bear interest at a rate that is
agreed to by the Board of Managers at the time at which the loan is made or, if
no rate is agreed to by the Board of Managers, at a floating rate (the
"Effective Rate") that is equal to the lower of (i) the prime rate for corporate
loans at U.S. money center commercial banks as reported in THE WALL STREET
JOURNAL, and (ii) the highest lawful rate. Each of the loans that is referred to
in this Section 3.5 shall be treated as a fixed obligation of the Company, and
advances of


<PAGE>


principal of those loans and payments of principal and interest on those loans
shall be treated as transactions between the Company and a Person who is not a
Member in accordance with Section 707(a) of the Code.

8.4 FISCAL YEAR AND ACCOUNTING METHOD. The Fiscal Year and taxable year of the
Company shall be determined in accordance with the provisions of Code ss. 706
and the Treasury Regulations thereunder and unless otherwise required by such
regulations shall annually begin on the 1st of September and end on the 31st of
August and shall permit the minimum tax deferral in accordance with federal
Internal Revenue Code or Treasury Regulations. The Company shall use the accrual
method of accounting.

8.5 BOOKS AND RECORDS.

          8.5.1 The Company shall keep at its principal office true and accurate
records of the following:

                  (i)   A current list of the full name and last known business,
residence, or mailing address of each Member and Manager, both past and present;

                  (ii)  A copy of the Certificate of Formation, and all
amendments thereto, together with executed copies of any powers of attorney
pursuant to which any amendment has been executed;

                  (iii) Copies of the Company's federal, state, and local income
tax returns and reports, if any, for the three (3) most recent years;

                  (iv)  Copies of this Agreement and copies of any financial
statements of the Company for the three (3) most recent years;

                  (v)   Minutes of every regular and special meeting of the
Board of Managers; and

                  (vi)  Any written consents obtained from the Members or
Managers pursuant to Section 5.7.

          8.5.2 Each Member (or such Member's designated representative) shall
have the right during ordinary business hours to inspect and copy (at such
Member's own expense) all books and records of Company.

8.6 BOOKS OF ACCOUNT

          8.6.1 The Board of Managers shall approve the opening financial
statements for the Company as of the date hereof.

          8.6.2 Accurate books of account of the Company shall be maintained in
accordance with Generally Accepted Accounting Principles ("GAAP") consistently
applied. In those instances in which more than one GAAP can be applied, the
Board of Managers shall determine, in consultation with the Member's independent
accountants, which principle the Company will adopt. Such books shall at any
reasonable time be available for examination by either Member, or Persons acting
on its behalf, at the sole expense of such Member.

8.7 FINANCIAL STATEMENTS.


<PAGE>


          8.7.1 Within ninety (90) days after the close of each Fiscal Year of
the Company there shall be prepared and submitted to each Member the following
financial statements, accompanied by the report thereon of the Accountants for
the Company:

                   (i)   a balance sheet of the Company as at the end of such
Fiscal Year;

                   (ii)  a statement of profit and loss for such Fiscal Year;

                   (iii) a statement of changes in financial position; and

                   (iv)  a statement of the respective Member Accounts and
changes therein for such Fiscal Year.

          8.7.2 Within twenty (20) Business Days after the close of each fiscal
month the Treasurer will cause to be prepared and given to each Member
un-audited financial statements comparable to those referred to in Subsections
8.7(i) and 8.7(ii).

8.8 CASH FOR DISTRIBUTION. The Treasurer shall determine, at such times as
requested by the Board of Managers, the amount of cash for distribution ("Cash
for Distribution") and shall distribute such Cash for Distribution, if any, to
the Members, in accordance with each Member's respective Percentage Inventory;
provided, however, that (a) if any Member has advanced loans to a Delinquent
Member, the distributions otherwise payable to the Delinquent Member shall be
made to the other Member up to an amount sufficient to repay such loans in full
with interest, and (b) if any Member is in default or delinquent in respect of
an obligation to the Company, no distribution shall be made to such Member until
such default is cured or such delinquent obligation is paid.

8.9 TAX RETURNS. The Company shall cause to be prepared and timely filed all
federal, state and local income tax returns or other returns or statements
required by applicable law. The Members shall be afforded an opportunity to
review and comment upon each tax return and election of the Company, and for
this purpose a final draft of each such return or election shall be distributed
to the Members at least fifteen (15) days prior to the anticipated date of
filing with the tax authorities concerned. If a Member disagrees with the
proposed treatment of any item on a proposed tax return of the Company, then
such Member shall give prompt written notice to the other Member(s) and the
Company. The parties shall negotiate in good faith to resolve proper treatment
of the item; however, failing such agreement the Company shall treat such item
in the manner determined by a majority of the Managers. No Member shall file, or
file a notice of, an inconsistent position with respect to any Company tax item
pursuant to Code Section 6222(b) or otherwise, or institute proceedings, under
Code Sections 6226(b) or 6228(b) or otherwise, without first notifying the other
Members and the Company of such intention and the nature of the proceeding.

         The Company shall ensure that all workpapers related to the preparation
of the Company's federal, state, and local tax returns for any tax year are
retained by the Company for a period of not less than ten (10) years after the
due date for filing (including extensions) the Company's annual or short period
tax return or the period such records remain relevant with respect to open tax
years of the Members, if longer. The Company shall provide each Member with an
opportunity, at the expense of such Member, to obtain a complete set of such
workpapers or true and accurate photocopies of such workpapers prior to their
destruction. Upon the dissolution of the Company, the rights of the Company to
obtain such workpapers (if retained by outside preparers) shall pass to each
former Member.

8.10 CODE SECTION 754 ELECTION. In the event a distribution of Company assets
occurs which satisfies the provisions of ss. 734 of the Code or in the event a
transfer of an Interest occurs which satisfies the


<PAGE>


provisions of ss. 743 of the Code, absent an election by the Members to the
contrary, the Company shall elect, pursuant to ss. 754 of the Code, to adjust
the basis of the Company's property to the extent allowed by such ss.ss. 734 or
743 and shall cause such adjustments to be made and maintained.

8.11 TAX MATTERS MEMBER. The Company shall not elect, pursuant to ss.
6231(a)(1)(B)(ii) of the Code, to have Section 6231(a)(1)(B)(i) of the Code
apply to the Company until otherwise determined by the Members. If the Members
subsequently determine to elect to have this provision apply to the Company,
then Cargill shall serve as the "Tax Matters Member" of the Company under the
Code. [IF THERE IS GOING TO BE A TAX MATTERS PARTNER, CARGILL WOULD LIKE TO BE
THE TAX MATTERS PARTNER; HOWEVER, SINCE BOTH PARTNERS ARE C-CORPORATIONS, AND
THERE ARE LESS THAN TEN PARTNERS, WE DO NOT NEED TO ELECT INTO THIS PROVISION.
IN OTHER WORDS, WE DO NOT NEED TO SELECT A TAX MATTERS PARTNER PURSUANT TO CODE
SEC. 6031(a).].

         The Tax Matters Member shall be entitled to reimbursement for any and
all reasonable expenses incurred with respect to any administrative and/or
judicial proceedings affecting the Company.

         The Tax Matters Member shall incur no liability to the other Member(s)
to the extent it acts in good faith in connection with its role as Tax Matters
Member or otherwise in connection with the Tax Matters Member's activities in
representing the Company with respect to tax matters, and the other Member
agrees to cooperate with the Tax Matters Member's efforts to comply with the
applicable provisions of the Code and the Treasury Regulations thereunder. The
Company (and to the extent the Company resources are insufficient therefore, the
other Member(s)) agrees to indemnify the Tax Matters Member with respect to any
liabilities or costs the Tax Matters Member may incur in connection with its
activity as Tax Matters Member of the Company, except in the case of fraud or
willful misconduct of the Tax Matter Member. The Tax Matters Member may resign
upon thirty (30) days notice to the other Member(s).

8.12 DEPOSITS AND INVESTMENTS. The funds of the Company shall be deposited in
the name of the Company in accounts designated by the Board of Managers in banks
or banking institutions to be selected by the Board of Managers or invested in
such manner as shall be authorized by the Board of Managers. The Board of
Managers shall prescribe such procedures as its shall deem necessary with
respect to making such investments.


                                   ARTICLE IX
                             TRANSFERS OF INTERESTS

9.1 GENERAL.

          9.1.1 No Member may sell, transfer, assign, give, mortgage, alienate,
pledge, hypothecate or otherwise encumber or dispose of all or any part of such
Member's Interest, except as provided in this Agreement or except with the
written consent of the other Member. Any purported encumbrance or disposition of
an Interest in violation of the terms of this Agreement shall be null and void
and of no legal effect whatsoever.

          9.1.2 Each Member shall have the right to sell, transfer or assign,
for cash (but not to substitute the assignee as a Substitute Member in such
Member's place, except in accordance with Section 9.1.3 below), by a written
instrument, all or part of its Interest, provided that (i) the transfer would
not result in the "termination" of the Company pursuant to Section 708 of the
Code or cause a material adverse tax consequence to the Company or any Member,
and (ii) the transferor has complied with the provisions of Section 9.2.


<PAGE>


          9.1.3 A "Substitute Member" is a Person admitted to the Company as a
Member and entitled to all the rights and bound by all the obligations of the
Member for which such Person is substituted. No assignee of all or part of a
Member's Interest shall become a Substitute Member in place of the assignor
unless and until all other Members have consented thereto in writing and the
assignor and the assignee execute such documents as the Company may reasonably
deem necessary or desirable to effect such substitution, including the written
acceptance and adoption by the assignee of the provisions of this Agreement;
provided, however, that such consent shall not be unreasonably withheld in the
event that a Member intends to assign such Member's Interest to an Affiliate.
Unless and until such documents have been duly executed and delivered to the
Company, the assignee shall have no rights to vote with respect to such Interest
or to participate in the management of the Company or to require any information
or account of the Company's transactions or to inspect the Company's books but
shall only be entitled to receive distributions of cash or other property from
the Company attributable to the Interest so acquired. Unless and until a
permitted assignee shall become a Substitute Member in accordance with the
provisions of this Section 9.1.3, the assignee shall not be entitled to vote
with respect to any Company matters, such rights to remain with the assigning
Member. Upon the admission of an assignee as a Substitute Member, the assigning
Member shall cease to be a Member and the Substitute Member shall thereafter be
deemed to be a Member and subject to all of the terms and conditions of this
Agreement.

9.2 RIGHT OF FIRST REFUSAL. If at any time a Member ("Selling Member") desires
to transfer any or all of its Interest to a third party pursuant to a bona fide
offer to purchase such Interest for cash, the following shall apply:

          9.2.1 The Selling Member shall submit to the other Member (the "Other
Member") a copy of the written offer, the name of the proposed purchaser, the
price and payment terms and other terms and conditions of the third party offer
(the "Offer").

          9.2.2 The Other Member shall have thirty (30) days from receipt of the
Offer to accept the terms and conditions set forth in the Offer, by giving
written notice thereof to the Selling Member. Failure to give notice of
acceptance as required shall be deemed to be a rejection of the Offer.

          9.2.3 If the Other Member agrees to purchase the Selling Member's
Interest, then the Selling Member and the Other Member shall close the purchase
upon the terms and conditions of the Offer within ninety (90) days after the
Offer is made (or later, if consistent with the closing date set forth in the
Offer or if required by law).

          9.2.4 If the Other Member rejects the terms and conditions set forth
in the Offer, the Selling Member shall have the right to consummate the sale or
conveyance of its Interest (but not the substitution of the transferee of such
Interest as a Substitute Member, except in accordance with Section 8.1(c)) so
long as (i) the purchaser is the proposed purchaser named in the Offer, (ii) the
price, payment and other terms are at least as favorable to the Selling Member
as those set forth in the Offer, and (iii) the closing occurs no more than sixty
(60) days from when the Member is first notified of the Offer.

          9.2.5 Any transferee of the Selling Member's Interest who does not
become a Substitute Member pursuant to Section 8.1(c) shall agree in writing to
be bound by this Section 8.2 with respect to any further sale or conveyance of
that Interest which such transferee may desire to make.

9.3 REASONABLENESS OF RESTRICTIONS. Each Member acknowledges and agrees that the
restrictions on the transfer of interests herein are reasonable in view of the
purpose and intent of the Members.

9.4 CERTAIN ENCUMBRANCES PERMITTED. Anything in this Agreement to the contrary
notwithstanding, any Member (and the Affiliates of any Member) may encumber all
or part of such


<PAGE>


Member's Share to the extent and in the manner which may be required pursuant to
financing agreements contemplated by Section 8.3.


                                    ARTICLE X
                           DISSOLUTION AND TERMINATION

10.1 EVENTS CAUSING DISSOLUTION. This Agreement shall be terminated and the
Company shall be dissolved upon the first to occur of the following events:

          (a) the expiration of the term of the Company;

          (b) the unanimous written agreement of the Members to terminate this
Agreement and to dissolve the Company;

          (c) the sale, abandonment or disposal by the Company of all or
substantially all of its assets not in the ordinary course of business;

          (d) if the Company incurs a net loss for any fiscal year in excess of
$10 million, and either Member requests dissolution in writing within thirty
(30) days of receipt of the financial statements referred to in Section 10.8(a)
of this Agreement;

          (e) the Company or either Member shall (i) file a petition in
bankruptcy, (ii) petition or apply to any tribunal for the appointment of a
receiver or any trustee for it or a substantial part of its assets, (iii)
commence any proceeding under any bankruptcy, reorganization, arrangement,
readjustment of debt, dissolution or liquidation law or statute of any
jurisdiction, whether now or hereafter in effect, or (iv) make an assignment for
the benefit of creditors or take any other similar action for the protection or
benefit of creditors; or if there shall have been filed any such petition or
application, or any such petition shall have been commenced against it, in which
an order for relief is entered or which remains un-dismissed for a period of
forty-five (45) days or more; or the Company or either Member by any act or
omission shall indicate its consent to, approval of or acquiescence in any such
petition, application or proceeding or order for relief or the appointment of a
receiver or any trustee for it or any substantial part of any of its properties,
or shall suffer any such receivership or trusteeship to continue un-discharged
for a period of forty-five (45) days or more;

          (f) if all or any portion of the Member's Interest is levied upon or
attached (other than by the other Member) in any proceeding, including any suit
in equity, action at law or other judicial, arbitral or administrative
proceeding, and that levy or attachment is not vacated or discharged within
sixty (60) days after the date on which it is made;

          (g) if a Member becomes subject to any legal incapacity affecting its
right or power to participate in the Company or if there is an attempted or
purported voluntary or involuntary sale, transfer, conveyance, pledge or
disposal, whether direct or indirect, of the Member's Interest, except in
compliance with Section 9.1;

          (h) an entry of a decree of judicial dissolution against the Company;
or

          (i) except as otherwise agreed upon in this Agreement, any other event
causing a dissolution of the Company under the provisions of the Act.


<PAGE>


10.2 EFFECT OF DISSOLUTION. Except as otherwise provided in this Agreement, upon
the dissolution of the Company, the Board of Managers shall take such actions as
may be required pursuant to the Act and shall proceed to wind up, liquidate and
terminate the business and affairs of the Company. In connection with such
winding up, the Board of Managers shall have the authority to liquidate and
reduce to cash (to the extent necessary or appropriate) the Property of the
Company as promptly as is consistent with obtaining a Fair Value therefor, to
apply and distribute the proceeds of such liquidation and any remaining Property
("Liquidation Proceeds") in accordance with the provisions of Section 4.2, and
to do any and all acts and things authorized by, and in accordance with, the Act
and other applicable laws for the purpose of winding up and liquidation.

         10.2.1 All accounting on termination shall be done by the Accountants,
and any determination made by the Accountants as to accounting matters shall be
binding upon the Members.

         10.2.2 The Board of Managers shall determine the disposition of any
other matter in connection with the sale and distribution of Property. If the
Board of Managers cannot agree as to those matters, those matters shall be
determined in accordance with Article XIII.

         10.2.3 Each Member shall pay to the Company all amounts owing by such
Member to the Company.

         10.2.4 In conjunction with dissolution and liquidation of the Company,
Cargill shall pay to the Company the then book value (net of accumulated
depreciation) of all capital improvements and/or repairs made by (i) TEMCO to
the Tacoma Facility during the term of the TEMCO partnership and which have been
authorized to be made by its Board of Managers; and (ii) the Company to the
Tacoma Facility and which have been authorized by the Company's Board of
Managers.

          10.2.5 In conjunction with dissolution and liquidation of the Company,
the shares of the Bank of Cooperatives ("COBANK") held by the Company shall be
distributed equally to the Members; provided, however, that in the even that
COBANK will not transfer the Company's shares in COBANK stock to Cargill, then
CHS will purchase all of the COBANK shares owned by the Company from the Company
at the Net Present Value (NPV) of the stated carrying value of such shares as
expressed on the Company's financial statements. It being understood that the
NPV would be computed based upon the cash payout formula for stock redemption in
use by COBANK at the date of the dissolution. The discount factor to be used for
calculating the NPV would be 100 basis points over the applicable United States
Treasury Note rate for the cash payout period.

10.3 PUT-THROUGH AGREEMENT. Upon dissolution of the Company pursuant to
Subsection 10.1.1(a), (b), (c), (d) or (e), Cargill and CHS shall enter into a
put-through agreement giving CHS the right to access the Tacoma Facility for
put-through of Feedgrains and Oilseeds for the balance of the term of Cargill's
lease of the Tacoma Facility (including any extensions, renewals or amendments
thereof) at market put-through rates. The put-through agreement shall be
substantially in accordance with the terms of the Put-Through Agreement attached
hereto as Exhibit 10.3.


                                   ARTICLE XI
               CONFIDENTIALITY AND INTELLECTUAL PROPERTY OWNERSHIP

11.1 CONFIDENTIALITY. During the term of this Agreement, the Members may
exchange certain Confidential Information with one another; and also, each
Member may exchange certain Confidential Information with the Company.
"Confidential Information" shall mean all information of either Member or the
Company, that is not generally known to the public, whether of a technical,
business or other nature (including, without limitation, inventions, trade
secrets, know-how and information relating to the


<PAGE>


customers, business plans, promotional and market activities, finances and other
business affairs of such party) that is disclosed by a Member, or the Company,
(the "Disclosing Party") to a Member, or the Company, (the "Receiving Party") in
furtherance of this Agreement.

11.2 NON-DISCLOSURE AND NON-USE. The Receiving Party agrees to treat as secret
and hold in strict confidence all Confidential Information it receives from a
Disclosing Party under this Agreement. The Receiving Party agrees that it will
not disclose any Confidential Information to any third party without the prior
written permission of the Disclosing Party (or as otherwise specifically
provided in this Agreement). The Receiving Party also agrees that it will only
use the Confidential Information received under this Agreement as specifically
provided herein and in furtherance of this Agreement. In the event a Receiving
Party is required by court order, or by law or legal process, to disclose
Confidential Information of a Disclosing Party, the Receiving Party shall inform
the Disclosing Party in writing prior to making such disclosure to provide
sufficient time to request a protective order or other appropriate measure, and
the Receiving Party will disclose only such information that is legally required
and will use its reasonable best efforts to obtain confidential treatment for
any Confidential Information that is so disclosed.

11.3 EXCLUSIONS TO CONFIDENTIAL INFORMATION. Confidential Information shall not
include information that (a) was in the public domain, in its entirety in a
unified form, at the time of disclosure to the Receiving Party; (b) was known by
the Receiving Party prior to its disclosure by the Disclosing Party; (c) becomes
part of the public domain after the date of disclosure by the Disclosing Party
through no fault of the Receiving Party; or, (d) is disclosed by a third party
to the Receiving Party after the date of disclosure by the Disclosing Party,
where the third party did not require the Receiving Party to hold such
information in confidence and did not acquire such information directly or
indirectly from the Disclosing Party;

11.4 OWNERSHIP. Except as otherwise specifically provided in this Agreement, all
rights to Confidential Information, trade secrets, know-how, inventions,
patents, patents pending, copyrights, trademarks, and tradenames (hereinafter,
"Intellectual Property") owned by a Member shall be fully retained by that
Member and no rights or licenses are provided the other Member or the Company.
In the event that the Company develops any Intellectual Property based upon a
Member's Intellectual Property, the new Intellectual Property shall be owned by
that Member with a non-exclusive, royalty-free, non-transferrable, perpetual,
worldwide license being granted to the Company for use of the new Intellectual
Property consistent with the Business Purpose. In the event that the Company
develops any Intellectual Property that is not based upon the Intellectual
Property of a Member, the new Intellectual Property shall be owned by the
Company with a non-exclusive, royalty-free, non-transferrable, perpetual,
worldwide license being granted to each Member.

11.5 SURVIVAL. The provisions of this Article X shall survive the dissolution
and liquidation of the Company and the termination of this Agreement for a
period of three (3) years.


                                   ARTICLE XII
                    REPRESENTATIONS, WARRANTIES AND COVENANTS

12.1 REPRESENTATIONS AND WARRANTIES. Each Member represents and warrants to the
other Member that:

         (a) it is a corporation duly organized, validly existing, and in good
standing under the laws of the jurisdiction of its incorporation;


<PAGE>


         (b) it is duly licensed or qualified to do business and in good
standing in each of the jurisdictions in which the failure to be so licensed or
qualified would have a material adverse effect on its financial condition or its
ability to perform its obligations under this Agreement;

         (c) it has full power, authority and legal right to enter into and
perform its obligations under this Agreement;

         (d) neither the execution, delivery, and performance of this Agreement,
nor the consummation by it of the transactions contemplated by this Agreement,
will:

                  (i) conflict with, violate, or result in a breach of any of
the terms, conditions, or provisions of any law, regulation, order, writ,
injunction, decree, determination, or award of any court, any governmental
department, board, agency, or instrumentality, domestic or foreign, or any
arbitrator, applicable to it;

                  (ii) conflict with, violate, result in a breach of, or
constitute a default under any terms, conditions, or provisions of its articles
of incorporation, bylaws, or operating agreement, or of any material agreement
or instrument to which it is a party or by which it is or may be bound or to
which any of its material properties or assets is subject;

                  (iii) conflict with, violate, result in a breach of,
constitute a default under (whether with notice or lapse of time or both),
accelerate or permit the acceleration of the performance required by, give to
others any material interests or rights, or require any consent, authorization
or approval under any indenture, mortgage, lease agreement, or instrument to
which it is a party or by which it may be bound; or

                  (iv) result in the creation or imposition of any lien upon any
of its material properties or assets;

         (e) any registration, declaration or filing with, or consent, approval,
license, permit or other authorization or order by, any governmental or
regulatory authority, domestic or foreign, that is required in connection with
the valid execution, delivery, acceptance and performance by it of this
Agreement or its consummation of any transaction contemplated by this Agreement
has been completed, made or obtained on or before the effective date of this
Agreement;

         (f) except as set forth on Exhibit 12.1(f), there are no actions,
suits, proceedings or investigations pending or, to its knowledge, threatened
against or affecting it or any of its properties, assets, or businesses in any
court or before or by any governmental department, board, agency, or
instrumentality, domestic or foreign, or any arbitrator which could, if
adversely determined (or, in the case of an investigation could lead to any
action, suit, or proceeding, which if adversely determined could) reasonably be
expected to materially impair its ability to perform its obligations under this
Agreement or to have a material adverse effect on its financial condition, and
it has not received any currently effective notice of any default, under any
applicable order, writ, injunction, decree permit, determination, or award of
any court, any governmental department, board, agency or instrumentality,
domestic or foreign, or any arbitrator which could reasonably be expected to
materially impair its ability to perform its obligations under this Agreement or
to have a material adverse effect on its financial condition;

         (g) neither it nor any of its Affiliates is, nor will the Company as a
result of it holding an interest in the Company be, an "investment company" as
defined in, or subject to regulation under, the Investment Company Act of 1940;
and


<PAGE>


         (h) it is acquiring its interest in the Company based upon its own
investigation, and the exercise by it of its rights and the performance of its
obligations under this Agreement will be based upon its own investigation,
analysis and expertise, and its interest in the Company is being made for its
own account for investment, and not with a view to its sale or distribution.

12.2 COVENANTS. Each Member covenants that it shall:

         (a) except as otherwise is provided in this Agreement, not (i) sell,
assign, transfer, mortgage, encumber or dispose of any part of its Interest, or
(ii) consent to the imposition or permit to exist any lien or charge upon all or
any portion of its Interest, except for liens in favor of the other Member under
this Agreement and liens for taxes which either are not yet due or are being
contested in good faith by appropriate proceedings;

         (b) cause to be executed and delivered such instruments as the other
Member or the Board of Managers reasonably requests in order to carry out the
Company's purposes or to give effect to the terms of this Agreement; and

         (c) assist the Company in preparing any tax returns which Company is
responsible for preparing, cooperate fully in preparing for any audits of or
disputes with taxing governmental authorities relating to the transaction set
forth in this Agreement, and make available to the Company and other Member(s)
such reasonably requested information, records and documentation relating to and
necessary to prepare tax returns or respond to audit requests.


                                  ARTICLE XIII
                             RESOLUTION OF DISPUTES

13.1 RESOLUTION OF CONTROVERSIES. Any dispute, controversy or claim between the
Members arising from this Agreement or the performance thereof shall be settled
solely by arbitration in accordance with the provisions of Section 13.2.

13.2 METHOD OF ARBITRATION. The arbitration shall be effected by arbitrators
selected as hereinafter provided and shall be conducted by the American
Arbitration Association in Minneapolis, Minnesota applying the Commercial
Arbitration Rules then in effect on the date thereof. The dispute shall be
submitted to three arbitrators, each of whom shall have had at least five (5)
years' experience in connection with the Business of the Company, one arbitrator
being selected by the Member submitting the controversy or dispute to
arbitration, the second arbitrator being selected by the other Member and the
third arbitrator being selected by the two arbitrators so selected. Conditions
of any such arbitration shall include (a) that the arbitrators shall not have
the authority to modify, amend or supplement the terms of this Agreement, and
shall interpret this Agreement strictly in accordance with its terms; (b) that
the amount of capital required to be contributed by a Member to the Company
shall not be increased; and (c) that the Member submitting such controversy or
dispute to arbitration shall appoint its arbitrator within fifteen (15) Business
Days after the date of such submission. The failure of the Member requesting
arbitration to timely appoint such arbitrator shall void the effectiveness of
the notice of submission of the matter to arbitration. The second arbitrator to
be selected by the other Member as hereinbefore provided shall be selected
within fifteen (15) Business Days after receipt of notice by such Member of the
selection of the submitting arbitrator and, if the second arbitrator is not so
selected, the determination of the single arbitrator selected by the submitting
Member shall be binding and conclusive. If the non-submitting Member shall have
timely selected the second arbitrator, then the two selected arbitrators shall
select the third arbitrator within five (5) Business Days following the
selection of the second arbitrator. The


<PAGE>


meetings of the arbitrators shall be held at such place or places as may be
agreed upon by the arbitrators, and each Member shall bear the cost of the fees
and expenses of the arbitrator selected by or for it, with the fees and expenses
of the third arbitrator to be borne equally. Upon making any order or award,
which order may include an order to dissolve the Company pursuant to the
provisions of Article X, the arbitrators shall retain jurisdiction to determine
any subsequent claim that a defaulting Member has failed to comply with terms of
any such order or award. The arbitrators shall have no authority to impose a
fine or penalty.


                                   ARTICLE XIV
                                SECURITY INTEREST

14.1 SECURITY FOR INDEMNITY.

          14.1.1 To secure their respective indemnity obligations hereunder,
each Member hereby grants to the Company and to the other Member, pursuant to
Article IX of the Uniform Commercial Code, a security interest in its respective
interest in and to the Company, and under this Agreement, including all present
and future rights to any profits, payments, distributions, or other rights to
payment arising under or in connection with this Agreement (the "Collateral");
provided, however, that for so long as a Member is not in default of any of its
indemnity obligations hereunder, that Member may receive all payments or
distributions to which its is entitled as Member of the Company. In the event a
Member is in default under its indemnity obligation, to the extent such default
may be cured by the payment of money, the Company may, at the request of the
non-defaulting Member, make such payment and pay to the non-defaulting Member
the next available funds which would otherwise have been distributed to the
defaulting Member, up to an amount which will make the non-defaulting Member
whole, together with interest thereon from the date paid by the Company until
reimbursed to the other Member at the rate of 2% in excess of the Prime Rate.

          14.1.2 Alternatively, if the other Member incurs such loss, such other
Member shall be entitled to receive all subsequent distributions otherwise
payable to the defaulting Member until the non-defaulting Member has recovered
the full amount of its loss together with interest at the rate of 2% in excess
of the Prime Rate.

          14.1.3 Neither Member will transfer or assign, grant a security
interest in or otherwise dispose of its respective interests as debtor in and to
the Collateral and will maintain the Collateral free and clear of all other
liens, claims and security interests whatsoever. Provided that a Member has
discharged its respective obligations under and is not otherwise in default of
its obligations hereunder, and is not the subject of any bankruptcy or
insolvency proceeding, this security interest shall terminate only upon the
settlement of all debts and claims outstanding with respect to the dissolution
of the Company. Each Member shall furnish to the Company and the other Member,
upon request, duly executed UCC1 financing statements covering the Collateral
and such other documents, certifications and instruments as requested by the
Company or the other Member, to evidence, grant, perfect and prioritize the
security interest granted in the Collateral.


                                   ARTICLE XV
                                  MISCELLANEOUS

15.1 RELATED PARTY TRANSACTIONS. Any contract, commitment or understanding
between the Company and any Member or an Affiliate ("Related Party
Transactions"), shall be on terms and


<PAGE>


conditions that are as competitive as would be found in a similar contract,
commitment or understanding entered into by unrelated third parties on an
arms-length basis.

15.2 ADDITIONAL MEMBERS. Additional Members may be admitted to the Company only
upon the written consent of all Members and upon such terms and conditions as
such consent may specify.

15.3 NATURE OF INTEREST IN THE COMPANY. A Member's Interest shall be personal
property for all purposes.

15.4 ORGANIZATIONAL EXPENSES. The Company shall pay all organization expenses
incurred in connection with the creation and formation of the Company. Such
expenses may be paid directly by the Company or may be reimbursed by the Company
to the Members.

15.5 NOTICES. Except for the Notices required by Sections 5.5 and 6.6 which
shall be governed by those Sections, any notice, demand, request, call, offer or
other communication required or permitted to be given by this Agreement shall be
sufficient if in writing and if hand delivered or sent by overnight mail or
facsimile to the address and representative of the Member as follows:

If to Cargill:                                   With a copy to:
- --------------                                   ---------------
Cargill, Incorporated                          Cargill, Incorporated
15407 McGinty Road West                        15407 McGinty Road West
Wayzata, Minnesota 55391-2399                  Wayzata, MN 55391-5624
Attention: Grain & Oilseeds Supply Chain NA    Attention:  Grain & Oilseeds
Fax: (952)742-7242                                         Supply Chain NA
                                               Fax: (952)742-6349

If to CHS:                                     with a copy to:
- --------------------------------------------------------------
Cenex Harvest States Cooperatives              Cenex Harvest States Cooperatives
5500 Cenex Drive                               5500 Cenex Drive
Inver Grove Heights, MN 55077                  Inver Grove Heights, MN 55077
Attention:  Vice President, Aligned Grain      Attention: Legal Department
Fax: (651) 451-4554                            Fax: 651-451-4554

or to such other address(es) or representative(s) as either Member may designate
to the other Member in writing. All mailed notices shall be deemed to be given
when deposited in the United States mail, postage prepaid.

15.6 WAIVER OF DEFAULT. No consent or waiver, express or implied, by the Company
or a Member with respect to any breach or default by another Member hereunder
shall be deemed or construed to be a consent or waiver with respect to any other
breach or default by such Member of the same provision or any other provision of
this Agreement. Failure on the part of the Company or a Member to complain of
any act or failure to act of another Member or to declare such other Member in
default shall not be deemed or constitute a waiver by the Company or the Member
of any rights hereunder.

15.7 NO THIRD PARTY RIGHTS. None of the provisions contained in this Agreement
shall be for the benefit of or enforceable by any third parties, including
creditors of the Company.

15.8 INTEGRATION. This Agreement, together with the Certificate of Formation,
contains the entire Agreement between the Members, in such capacity, relative to
the formation, operation and continuation of the Company, and this Agreement
shall not be altered, modified or changed except by a written document duly
executed by the Members at the time of such alteration, modification or change.


<PAGE>


15.9 SEVERABILITY. In the event any provision of this Agreement is held to be
illegal, invalid or unenforceable to any extent, the legality, validity and
enforceability of the remainder of this Agreement shall not be affected thereby
and shall remain in full force and effect and shall be enforced to the greatest
extent permitted by law.

15.10 BINDING AGREEMENT. Subject to the restrictions on the disposition of
Interests herein contained, the provisions of this Agreement shall be binding
upon, and inure to the benefit of, the Members and their respective heirs,
personal representatives, successors and permitted assigns.

15.11 HEADINGS. The headings of the Articles and Sections of this Agreement are
for convenience only and shall not be considered in construing or interpreting
any of the terms or provisions hereof.

15.12 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original and all of which
shall constitute one (1) agreement that is binding upon the Members,
notwithstanding that all Members are not signatories to the same counterpart.

15.13 LIMITATION OF DAMAGES. In no event shall either Member be liable for the
punitive, incidental or consequential damages, or loss of profit, suffered by
the other Member except to the extent any such damage or loss arises pursuant to
Section 7.6.

15.14 GOVERNING LAW. Except as otherwise specifically provided herein, this
Agreement shall be governed by and construed in accordance with the laws of
Minnesota without giving effect to the choice of law principles of the State of
Minnesota that would result in the application of the laws of another
jurisdiction.

15.15 COMMERCIAL EFFICACY. The Members shall take all reasonable actions to give
commercial efficacy to the terms and conditions of this Agreement and to promote
the business of the Company, including, but not limited to, taking or causing
the Managers of the Board of Managers appointed by them to take all necessary
actions in a timely fashion, in order for the Company to pursue the business
contemplated by this Agreement, entering into all the agreements contemplated
hereby and any additional agreements or instruments of further assurance, as on
advice from legal counsel, the Members shall reasonably deem necessary, and
seeking all necessary governmental approvals.

15.16 GAAP BASIS. In the event the auditors of the Company are required
hereunder to determine the values, accounts, give opinions or make, any other
valuation of any nature, the auditors shall employ and apply GAAP consistently
unless the context otherwise requires the application of the principles of tax
accounting (or differing regulatory rules).

15.17 FIRST RIGHT ON TACOMA FACILITY. In the event Cargill wishes to sell,
transfer or assign its lease of the Tacoma Facility to a third party during the
term of the Company, Cargill shall provide CHS with thirty (30) days prior
written notice of its desire to do so. During such thirty day period CHS shall
have the first right to acquire the Tacoma Facility, and the Members shall
negotiate in good faith the terms and conditions of such proposed transaction.
In the event the Members cannot reach a mutually acceptable agreement for such
transaction in the thirty day period, Cargill shall be free to pursue and
consummate the sale, transfer or assignment of the Tacoma Facility to and with
any third party, provided that such sale, transfer or assignment is on no less
favorable terms and conditions to Cargill than the last offer of CHS to Cargill
for same and CHS is still willing to agree to such terms and conditions (i.e.,
Cargill cannot sell, transfer or assign the Tacoma Facility to a third party on
terms and conditions less favorable to Cargill than the last offer of CHS to
Cargill for same). This section 15.18 shall not apply in the event Cargill is
also transferring its Percentage Interest in the Company to a third party.


<PAGE>


         IN WITNESS WHEREOF, CHS and Cargill have caused this Agreement to be
duly executed as of the date first written above.

MEMBERS:

CARGILL, INCORPORATED                            CENEX HARVEST STATES
                                                 COOPERATIVES


By:      /s/ Wayne Teddy                         By: /s/ Richard H. Browne
    ---------------------------------------          --------------------

Name:    Wayne Teddy                             Name:   Richard H. Browne
      -------------------------------------

Title:   President - Cargill Grai & Oilseed      Title:  Senior Vice President
       ------------------------------------
         Supply Chain N.A.



<PAGE>

                                  EXHIBIT 2.8.1


                           FORM OF SERVICES AGREEMENT

                               SERVICES AGREEMENT

         This Services Agreement ("Agreement") dated as of ________ between
_________________ ("Provider"), a _____ corporation having an office at
______________ and THE TEMCO, LLC ("Company"), a Delaware limited liability
company. Provider and Company may be referred to individually as a "Party" and
together as the "Parties". All Capitalized terms used and not defined herein
shall have the meaning assigned them in the LLC Agreement.


                                    RECITALS

         A.       Pursuant to a Limited Liability Company Agreement dated as of
                  ____________. 2002 (the "LLC Agreement"), Cenex Harvest States
                  Cooperatives ("CHS") and Cargill, Incorporated ("Cargill")
                  have formed Company, in which they each have a 50 percent
                  ownership interest.

         B.       Company wishes Provider, and Provider is willing, to provide
                  to Company certain administrative, support and other services
                  (as further described below, the "Services") in connection
                  with the operation of Company.


                                   AGREEMENTS

         Company and Provider agree as follows:

         1.       Services.

                  (a) Subject to the terms of this Agreement, Provider shall
provide the Services set forth on each Schedule of Services, the form of which
is attached as Exhibit A. Each Schedule of Services shall describe the Services
to be provided by Provider and shall make reference to this Agreement. A
Schedule of Services shall be binding upon the Parties only upon having been
executed by both Parties. Each Schedule of Services executed by the Parties
shall be governed by this Agreement. Any conflict between the terms of this
Agreement and the terms set forth in a Schedule of Services shall be resolved in
favor of the terms set forth in the Schedule of Services.

                  (b) With Company's consent, which may not be unreasonably
withheld, Provider may enter into arrangements with any of Provider's affiliates
for the performance of the Services to be provided by Provider under this
Agreement. The Services shall be provided to Company at such locations as may be
mutually determined by the Parties. Provider shall be responsible for obtaining
(at its own cost) any licenses, permits or other approvals that may be necessary
for Provider or any of its employees or affiliates to provide the Services.

         2. Provider's Standard of Conduct. In providing the Services, Provider
shall use commercially reasonable efforts, shall act in good faith, shall act in
accordance with normal business practices and shall act in accordance with
Company's established policies.


<PAGE>


         3. Compensation for Services. Provider shall be compensated for the
Services provided to Company under this Agreement as set forth in each Schedule
of Services. Provider shall be free to increase or decrease the number of its
employees and otherwise to incur expenses as it deems necessary in providing the
Services and in accordance with the standard set forth in Section 2 of this
Agreement; provided, however, that any such action by Provider shall not
increase the fees for Services unles mutually agreed by the Parties.

         4. Payment for Services. Except as may otherwise be provided in each
Schedule of Services, as soon as practicable at the end of each month Provider
shall submit invoices for Services rendered to Company during that month
including, when required, all sales, use, excise or similar taxes which may be
applicable to the Services. All invoices shall describe in reasonable detail the
Services provided during the month and shall be due and payable twenty (20) days
after the date of issue. Company shall pay all undisputed amounts on each
invoice, but shall be entitled to withhold payment of any amount in dispute and
shall promptly notify Provider of the dispute. Company shall promptly provide
Provider with records relating to the disputed amount so as to enable the
Parties to resolve the dispute and, to the extent Provider is entitled to any
amounts withheld by Company as determined by the resolution of any such dispute,
the withheld amount shall be due and payable on the last day of the month in
which the dispute is resolved together with interest calculated from the
original due date. Company shall pay interest on all overdue amounts at a
floating rate that is equal to the lower of (i) two percent above the base rate
on corporate loans at U.S. money center commercial banks as reported in THE WALL
STREET JOURNAL and (ii) the highest lawful rate.

         5. Relationship Among the Parties. Provider in rendering Services under
this Agreement is acting as an independent contractor. As such, Provider or, if
applicable, its affiliates, shall, at all times, remain the sole employer of the
employees providing Services and shall be responsible for the overall control
and management of those employees, including evaluation, discipline and
termination of those employees. Nothing contained in this Agreement shall be
construed as granting Provider or any of its employees any rights to future
employment with, or compensation or benefits from, Company, or rights under any
employee benefit plan of Company. Provider shall be responsible for the
compensation, benefits, insurance (including workers' compensation), taxes, FICA
and expenses (business or otherwise) paid to, or on behalf, of the employees
providing Services. Nothing in this Agreement and no actions of the Parties
under this Agreement shall be construed such that (a) Provider or the employees
or affiliates providing Services shall be or be deemed to be an employee,
servant or agent of Company or (b) any partnership, joint venture or agency
relationship shall be created or be deemed to be created and neither Company nor
any of the employees or affiliates providing Services shall represent that it
has or is in any such relationship with Company. Other than as specifically
provided in this Agreement, nothing in this Agreement shall confer on Provider
or any of its employees, affiliates, agents or representatives any authority to
obligate or make any contractual commitments whatsoever on behalf of Company.

         6. Non-Exclusivity. Company acknowledges that Provider has other
commercial activities and that Provider will allocate its resources between the
provision of Services under this Agreement and those other commercial activities
according to its best commercial judgment, which in no event shall be less than
commercially reasonable judgment. Nothing in this Agreement shall be construed
as requiring Provider to devote its resources exclusively to performing Services
under this Agreement.

         7. Compliance With Laws. Company shall use the Services only in
accordance with all applicable federal, state and local laws and regulations and
the reasonable requirements of Provider. Provider reserves the right to take all
actions, including termination of any particular Services, that Provider
reasonably believes to be necessary to assure compliance with applicable laws,
regulations and tariffs. In performing the Services, Provider shall comply with
all applicable federal, state and local laws, rules and regulations, as well as
the reasonable requirements of Company.


<PAGE>


         8. Indemnities.

                  (a) Each of the Parties will hold harmless the other Party and
the other Party's affiliates and its directors, officers, partners, employees,
servants, agents, and consultants and successors and permitted assigns of any of
the foregoing from and against any and all losses, costs, liabilities, claims,
demands, actions, suits and proceedings and expenses (including without
limitation reasonable attorneys' fees and expenses and any and all expenses
incurred in investigating, preparing or defending against any action, claim or
proceeding, commenced, threatened or pending) ("Damages") which result from (i)
any act or omission by the indemnifying Party (or with respect to Provider, any
act or omission of Provider's affiliates) or any director, officer, employee,
agent, consultant or representative of the indemnifying Party (or with respect
to Provider, of its affiliates) that is outside the scope of or in breach of the
terms of this Agreement, and/or (ii) the failure of that indemnifying Party (or
with respect to Provider, the failure by Provider's affiliates) or any director,
officer, employee, agent, consultant or representative of the indemnifying Party
(or with respect ot Provider, of its affiliates) to perform its obligations
under this Agreement, except to the extent that the Damages result from the
other Party's negligence, bad faith or willful misconduct. The amount of any
claim made by one Party against the other under this Section 8 shall be reduced
by the amount of proceeds of any insurance for the benefit of the Party seeking
indemnification that is paid on account of the claim for which indemnification
is required. The rights and obligations of the Parties under this Section 8(a)
will survive the termination of this Agreement.

                  (b) Each Party ("Indemnifying Party") shall indemnify and hold
harmless the other Party ("Indemnified Party") from and against all liabilities,
costs, expenses and damages (collectively, "Loss") incurred by the Indemnified
Party arising from the death or personal injury of the Indemnified Party's
employees, agents or representatives or damage to the Indemnified Party's
property, to the extent that any such Loss is caused by Indemnifying Party's
negligent act or omission or willful misconduct.

                  (c) Any indemnification that is required to be paid by one of
the Parties pursuant to Sections 8(a) or 8(b) shall be paid within thirty (30)
days after demand for the payment, accompanied by evidence of the computation of
the amount demanded, has been given by the other Party, except to the extent of
any dispute between the Parties with respect to such indemnification, in which
event such indemnification, if any, will be paid within thirty (30) days of
resolution of such dispute.

         9. Representations, Warranties and Covenants. In addition to any other
representations, warranties and covenants in this Agreement, each of the Parties
(a) represents and warrants that it has full power, authority and legal right to
enter into and perform its obligations under this Agreement, and (b) will:

                  (i) promptly notify the other Party of all matters that come
to its attention that relate to the performance of this Agreement; and

                  (ii) cause to be executed and delivered such instruments as
the other Party reasonably requests in order to give effect to the terms of this
Agreement.

Further, Provider represents and warrants the following:

                (i) Provider has the capability, experience, and means necessary
to perform the Services contemplated by this Agreement. Provider shall perform
the Services using appropriate skill and attention. Services will be performed
using personnel, equipment, and material qualified and suitable to do the work
requested.


<PAGE>


                (ii) Provider shall provide the Services with properly trained
and informed personnel. Provider shall be solely responsible for the acts and
omissions of its employees, permitted affiliates and agents and for any other
person performing Services under this Agreement at the direct request of
Provider.

         10. Right of Supervision and Inspection. In the performance of the
Services required by this Agreement, Provider is an independent contractor with
full authority to direct and control the performance of the details of the
Services. However, the quality of the Services must meet the approval of Company
and are subject to Company's general rights of inspection to ensure satisfactory
completion.

         11. Nondisclosure. The Nondisclosure Provisions attached as Exhibit B
are incorporated into this Agreement as if fully set forth herein.

         12. Excuse.

                  If either Party is unable in whole or in part by reason of any
cause not reasonably within its control to perform any of its obligations under
this Agreement when such performance is due (other than the obligation to pay
when due all amounts that are owed to the other, which shall not be excused),
then upon that Party's giving notice describing that cause and if that Party
uses its commercially reasonable best efforts to remedy the cause of the excuse
as promptly as possible (i) that obligation shall be excused, but only to the
extent of such inability and during the continuance of such inability, (ii) the
Party affected shall be excused from any liability for any failure to perform
such obligation to the extent so excused and (iii) the other Party shall be
excused from any corresponding obligation to the appropriate extent.

         13. Term and Termination.

                  (a) This Agreement shall remain in effect for a period which
is coextensive with the term of the LLC Agreement and shall terminate when the
LLC Agreement terminates unless this Agreement is earlier terminated either (i)
by written notice given by the nondefaulting Party to the defaulting Party that
the defaulting Party has failed to perform its obligations under this Agreement
for at least thirty (30) days after notice of that failure to perform was given
to the defaulting Party by the nondefaulting Party, (ii) by Company on sixty
(60) days written notice, or (iii) by Provider on six (6) months written notice.

                  (b) Upon termination of this Agreement, all of the obligations
of each of the Parties under this Agreement shall terminate except (i) the
Parties shall remain liable for any obligation or provision under this Agreement
which has accrued prior to termination, and/or which expressly or by implication
is intended to survive termination of this Agreement and (ii) each Party shall
remain liable for the obligation to pay when due all amounts owed to the other.

                  (c) The non-disclosure and non-use provisions of Exhibit B
shall terminate two (2) years following the termination of this Services
Agreement or termination of the Limited Liability Company Agreement between
Cargill, Incorporated and Cenex Harvest States Cooperatives, which ever
terminates later.

         14. Assignment. This Agreement shall inure to the benefit of and be
fully binding upon the Parties and their respective successors and permitted
assigns. Neither Party may assign or delegate any of its rights or obligations
under this Agreement without the prior written consent of the other Party.

         15. Claims and Litigation. Each Party shall notify the other Party of
any significant claim,


<PAGE>


demand, right or cause of action asserted, threatened or instituted against
either Party which may affect in a material way the performance of this
Agreement. Any negotiations or litigation of any such claim, demand, right or
cause of action shall be conducted by the Party against which such claim,
demand, right or cause of action is asserted, threatened or instituted, with the
other Party having the right to be reasonably advised as to the status of and to
participate in such negotiations or litigation if its interests under this
Agreement are involved. If a Party (the "Indemnitee") desires to settle a claim
that has been made against it and for which it may be entitled to
indemnification by the other party (the "Indemnitor") under Section 8
("Indemnification"), then the Indemnitee shall notify the Indemnitor in writing
(the "Settlement Notice") of the terms on which the Indemnitee desires to settle
the claim (the "Settlement Terms") and that it intends to seek Indemnification.
If the Indemnitee provides the Settlement Notice to the Indemnitor, unless the
Indemnitor notifies the Indemnitee within fifteen (15) business days after the
Indemnitor receives the Settlement Notice that the Indemnitor objects to the
making of the settlement on the Settlement Terms, the Indemnitee may settle the
claim on the Settlement Terms and shall be entitled to Indemnification in
accordance with and subject to the terms of this Agreement. If the Indemnitor
notifies the Indemnitee that the Indemnitor objects to the making of the
settlement on the Settlement Terms, then the Indemnitor shall assume the defense
and pay the entire amount, if any, that is recovered on account of the claim. If
the Indemnitor so assumes the defense and is successful in reducing the amount
of the claim (whether by litigation or settlement) to an amount that is less
than that payable under the Settlement Terms, then the Indemnitee shall
reimburse the Indemnitor for the lesser of (i) all legal fees and expenses that
were incurred by the Indemnitor in reducing the claim and (ii) the amount of the
reduction.

         16. Limitation of Liability. EXCEPT AS EXPRESSLY SET FORTH IN THIS
AGREEMENT, PROVIDER MAKES NO WARRANTIES OR REPRESENTATIONS WHATSOVEVER, EXPRESS
OR IMPLIED, WITH RESPECT TO THE SERVICES. In no event shall either Party be
liable to the other Party for any indirect (including without limitation lost
profits or loss of business opportunity), incidental, consequential or punitive
damages resulting from the Services or from any breach of this Agreement.

         17. Notices. All notices and other communications required or permitted
to be given under this Agreement or which either Party elects to give, shall be
in writing and, except as otherwise specifically provided, shall be either
delivered personally or sent by independent courier or express delivery service
or by electronic facsimile transmission to the other Party at the address
indicated below (or to such other address as the Party designates for itself by
notice given in accordance with this Section 16). All notices shall be deemed
given (a) upon delivery, if personally delivered or (b) three (3) days after
being dispatched with the independent courier or express delivery service or (c)
upon the effective sending of an electronic facsimile transmission.

                           IF TO PROVIDER:

                           _____________________
                           _____________________
                           _____________________
                           Attention:___________
                           Facsimile No: (___) ________
                           Telephone No: (___) ________

                           IF TO COMPANY:

                           _____________________
                           _____________________


<PAGE>


                           _____________________
                           Attention:___________
                           Facsimile No: (___) ________
                           Telephone No: (___) ________

         18. Severability. If any term or provision of this Agreement or the
application thereof to any person or circumstance is, to any extent, invalid or
unenforceable, the remainder of this Agreement or the application of that term
or provision to persons or circumstances other than those as to which it is held
invalid or unenforceable, shall not be affected and each term and provision of
this Agreement shall be valid and enforceable to the extent permitted by law.

         19. Governing Law. This Agreement shall be governed by and construed,
and performance thereof shall be determined, in accordance with the laws of the
State of Minnesota, without giving effect to the conflicts of law provisions
thereof.

         20. Dispute Resolution. All disputes arising under this Lease will be
resolved by the parties through the dispute resolution procedures described on
Exhibit C attached hereto and incorporated herein by this reference.

         21. Records and Reports. Provider will maintain the records relating to
the Services separate from the records that it otherwise maintains, and shall
maintain the records relating to Company and the Services in strictest
confidence, and in accordance with the Nondisclosure Provisions attached as
Exhibit B. Provider will provide Company with such reports and information
concerning the Services which Company reasonably requests.

         22. Antitrust Compliance. Company and Provider shall fully abide by all
relevant antitrust laws, rules and regulations which may govern the operation of
Company and Company's relationship with Provider under this Agreement. Company
and Provider shall establish an antitrust training program to ensure that their
employees are made aware of relevant antitrust laws. In addition, Company and
Provider will implement operating principles and/or communication guidelines
related to the provision of Services designed to comply with all relevant
antitrust laws, rules and regulations.

         23. Further Assurances. Each Party agrees from time to time to do and
perform such other and further acts and execute and deliver any and all such
other instruments as may be required by law or reasonably requested by the other
Party to carry out and effect the intent and purpose of this Agreement.

         24. Nonwaiver. The failure or delay of a Party to insist upon strict
performance of any of the provisions of this Agreement, to exercise any rights
or remedies provided under this Agreement or by law, or to notify the other
Party in the event of breach or default under this Agreement, shall not release
or relieve such other Party from any of its obligations under this Agreement and
shall not be deemed a waiver of any right to insist upon strict performance of
this Agreement or any of the rights or remedies under this Agreement, nor shall
any purported modification or rescission of this Agreement operate as a waiver
of any of the provisions of this Agreement.

         25. Third Party Beneficiaries. Nothing in this Agreement, express or
implied, is intended to confer upon any party, other than the Parties and their
respective permitted successor and assigns, any rights, remedies, obligations or
liabilities under or by reason of this Agreement.

         26. Entire Agreement; Amendment. This Agreement (a) constitutes the
entire agreement between the parties with respect to the the subject matter
hereof and supersedes any prior oral or written


<PAGE>


agreement or representation by or between the Parties, and (b) may be amended
only by an instrument in writing executed by both of the Parties.

         27. Counterparts. This Agreement may be executed in counterparts, all
of which counterparts taken together shall constitute one original agreement.

         IN WITNESS WHEREOF, Company and Provider each has caused this Agreement
to be executed by its duly authorized officer.


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



                                            By:
                                                ------------------------------
                                            Name:
                                            Title:


                                            TACOMA EXPORT AND MARKETING, LLC



                                            By:
                                                ------------------------------
                                            Name:
                                            Title:





<PAGE>


                                    EXHIBIT A

                          FORM OF SCHEDULE OF SERVICES



Date:___________________________

         This SCHEDULE OF SERVICES is issued pursuant to the Services Agreement
dated as of _____ between TEMCO, LLC ("Company") and ________________
("Provider") which is hereby incorporated into this Schedule of Services by
reference.

I.       Description of Services. Provider shall perform the following Services
         for Company:



II.      Compensation.



III.     Special Provisions.



TACOMA EXPORT MARKETING, LLC                 _______________________________


By:                                          By:
    -------------------------------              -------------------------------


Name:                                        Name:
      -----------------------------                -----------------------------


Title:                                       Title:
       ----------------------------                 ----------------------------


<PAGE>


                                    EXHIBIT B

                   NONDISCLOSURE AND I.P. OWNERSHIP PROVISIONS

         CONFIDENTIALITY. During the term of this Services Agreement, Company
and Provider may exchange certain Confidential Information with one another.
"Confidential Information" shall mean all information owned by or in possession
of either Company or the Provider, that is not generally known to the public,
whether of a technical, business or other nature (including, without limitation,
inventions, trade secrets, know-how and information relating to the customers,
business plans, promotional and market activities, finances and other business
affairs of such party) that is disclosed by a party, (the "Disclosing Party") to
the other party (the "Receiving Party") in furtherance of this Services
Agreement.

         NON-DISCLOSURE AND NON-USE. The Receiving Party agrees to treat as
secret and hold in strict confidence all Confidential Information it receives
from the Disclosing Party under this Services Agreement. The Receiving Party
agrees that it will not disclose any Confidential Information to any third party
without the prior written permission of the Disclosing Party (or as otherwise
specifically provided in this Agreement), however, in the case of disclosure by
Company to the Company Member that is not the Provider under this Services
Agreement oral permission is sufficient). The Receiving Party also agrees that
it will only use the Confidential Information received under this Services
Agreement as specifically provided herein and in furtherance of this Agreement.
The Receiving Party agrees that only its employees with a bona fide need to
know, and who have signed the Appendix To Nondisclosure Provisions, shall be
provided access to the Confidential Information of the Disclosing Party. In the
event the Receiving Party is required by court order, or by law or legal
process, to disclose Confidential Information of the Disclosing Party, the
Receiving Party shall inform the Disclosing Party in writing prior to making
such disclosure to provide sufficient time to request a protective order or
other appropriate measure, and the Receiving Party will disclose only such
information that is legally required and will use its reasonable best efforts to
obtain confidential treatment for any Confidential Information that is so
disclosed.

         EXCLUSIONS TO CONFIDENTIAL INFORMATION. Confidential Information shall
not include information that (a) was in the public domain, in its entirety in a
unified form, at the time of disclosure to the Receiving Party; (b) was known by
the Receiving Party prior to its disclosure by the Disclosing Party; (c) becomes
part of the public domain after the date of disclosure by the Disclosing Party
through no fault of the Receiving Party; or, (d) is disclosed by a third party
to the Receiving Party after the date of disclosure by the Disclosing Party,
where the third party did not require the Receiving Party to hold such
information in confidence and did not acquire such information directly or
indirectly from the Disclosing Party;

          OWNERSHIP. Except as otherwise specifically provided in this Services
Agreement, all rights to Confidential Information, trade secrets, know-how,
inventions, patents, patents pending, copyrights, trademarks, and tradenames
(hereinafter, "Intellectual Property") owned by Provider shall be fully retained
by Provider and no rights or licenses are provided to Company. In the event that
any Intellectual Property based upon Provider's Intellectual Property is created
under this Services Agreement, the new Intellectual Property shall be owned by
Provider with a non-exclusive, royalty-free, non-transferrable, perpetual,
worldwide license being granted to Company for use of the new Intellectual
Property consistent with the Business Purpose.

1.


<PAGE>


                      APPENDIX TO NONDISCLOSURE PROVISIONS

                             EMPLOYEE AND AFFILIATE
                          ACKNOWLEDGEMENT AND AGREEMENT


I, the undersigned, hereby acknowledge that I have received and read the
Nondisclosure and I.P. Provisions of the Services Agreement dated _______
between ____________ and Tacoma Export and Marketing Company, LLC ("Company"),
and that I understand all of the provisions thereof. I further acknowledge that
I may receive Confidential Information (as defined in the Nondisclosure
Provisions), and my receipt of that Confidential Information is conditioned upon
my execution of this Acknowledgement and Agreement. By signing below, I agree to
abide by the terms of the Services Agreement.



Date:_________________________                    ______________________________
                                                  Company


                                                  ------------------------------
                                                  Signature


                                                  ------------------------------
                                                  Print Name


<PAGE>

                                   EXHIBIT 3.1


                    INITIAL CAPITAL CONTRIBUTIONS OF MEMBERS


CARGILL MEMBER: Cargill's 50% partnership interest in Tacoma Export Marketing
Company, a Washington general partnership.





CHS MEMBER: CHS's 50% partnership interest in Tacoma Export Marketing Company, a
Washington general partnership.


<PAGE>


                                   EXHIBIT 5.2


                         DESIGNATION OF INITIAL MANAGERS


CARGILL'S INITIAL MANAGERS:

(1)      William M. Hale
(2)      Frank L. Sims
(3)      R. Wayne Teddy



CHS' INITIAL MANAGERS:

(1)      Rick Browne
(2)      David Kastelic
(3)      Brian Schouvieller


<PAGE>
                                  EXHIBIT 10.3

                              Put-through Agreement





<PAGE>
                                 EXHIBIT 12.1(f)

       PENDING OR THREATENED ACTIONS, SUITS, PROCEEDINGS OR INVESTIGATIONS


1. The Port of Tacoma claims that ContiGroup (formerly known as Continental
Grain Company) ("Conti") and/or Cargill are responsible for certain additional
rent relating to a lease of aquatic tidelands that the Port of Tacoma executed
with the State of Washington in October 1972. The Port of Tacoma has sought to
pass on such rent to Conti/Cargill, which relates to the water lot required for
the placement, maintenance and operation of the wharves, docks, dock walls and
marine gallery and similar water-based structures benefiting the facility. Conti
and Cargill have objected to the Port's claim for additional rent.

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.18
<SEQUENCE>5
<FILENAME>cenex025288_ex10-18.txt
<DESCRIPTION>NOTE PURCHASE AGREEMENT
<TEXT>
================================================================================





                        CENEX HARVEST STATES COOPERATIVES





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

                             NOTE PURCHASE AGREEMENT

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




                          DATED AS OF OCTOBER 18, 2002







          $115,000,000 4.96% SERIES D SENIOR NOTES DUE OCTOBER 18, 2012
          $60,000,000 5.60% SERIES E SENIOR NOTES DUE OCTOBER 18, 2017





================================================================================
<PAGE>


                                TABLE OF CONTENTS

                                                                            PAGE
                                                                            ----

1.       AUTHORIZATION OF NOTES...............................................1


2.       SALE AND PURCHASE OF NOTES...........................................1


3.       CLOSING. 2


4.       CONDITIONS TO CLOSING................................................2

         4.1.     Representations and Warranties..............................2
         4.2.     Performance; No Default.....................................2
         4.3.     Compliance Certificates.....................................3
         4.4.     Opinions of Counsel.........................................3
         4.5.     Purchase Permitted By Applicable Law, etc...................3
         4.6.     Sale of Other Notes.........................................3
         4.7.     Payment of Special Counsel Fees.............................4
         4.8.     Private Placement Number....................................4
         4.9.     Changes in Corporate Structure..............................4
         4.10.    Offeree Letter..............................................4
         4.11.    Proceedings and Documents...................................4

5.       REPRESENTATIONS AND WARRANTIES OF THE COMPANY........................4

         5.1.     Organization; Power and Authority...........................4
         5.2.     Authorization, etc..........................................5
         5.3.     Disclosure..................................................5
         5.4.     Organization and Ownership of Shares of
                    Subsidiaries; Affiliates..................................5
         5.5.     Financial Statements........................................6
         5.6.     Compliance with Laws, Other Instruments, etc................6
         5.7.     Governmental Authorizations, etc............................7
         5.8.     Litigation; Observance of Agreements, Statutes
                    and Orders................................................7
         5.9.     Taxes.......................................................7
         5.10.    Title to Property; Leases...................................8
         5.11.    Permits and Other Operating  Rights.........................8
         5.12.    Intellectual Property.......................................8
         5.13.    Compliance with ERISA.......................................9
         5.14.    Private Offering by the Company............................10
         5.15.    Use of Proceeds; Margin Regulations........................10
         5.16.    Existing Debt; Future Liens................................10
         5.17.    Foreign Assets Control Regulations, etc....................11
         5.18.    Status under Certain Statutes..............................11
         5.19.    Environmental Matters......................................11
         5.20.    Solvency...................................................12
         5.21.    Hostile Tender Offers......................................12
         5.22.    Ranking of Notes...........................................12


                                       i
<PAGE>


6.       REPRESENTATIONS OF THE PURCHASER....................................12

         6.1.     Purchase for Investment....................................12
         6.2.     Source of Funds............................................13

7.       INFORMATION AS TO COMPANY...........................................14

         7.1.     Financial and Business Information.........................14
         7.2.     Officer's Certificate......................................17
         7.3.     Inspection.................................................17

8.       INTEREST; PAYMENT OF THE NOTES......................................18

         8.1.     Interest Payments..........................................18
         8.2.     Required Principal Payments................................18
         8.3.     Optional Prepayments with Make-Whole Amount................20
         8.4.     Allocation of Partial Prepayments..........................20
         8.5.     Maturity; Surrender, etc...................................21
         8.6.     Purchase of Notes..........................................21
         8.7.     Make-Whole Amount..........................................21

9.       AFFIRMATIVE COVENANTS...............................................22

         9.1.     Compliance with Law........................................22
         9.2.     Insurance..................................................23
         9.3.     Maintenance of Properties..................................23
         9.4.     Payment of Taxes and Claims................................23
         9.5.     Corporate Existence, etc...................................24
         9.6.     Pari Passu.................................................24

10.      NEGATIVE COVENANTS..................................................24

         10.1.    Transactions with Affiliates...............................24
         10.2.    Merger, Consolidation, etc.................................24
         10.3.    Funded Debt to Consolidated Cash Flows.....................25
         10.4.    Adjusted Consolidated Funded Debt to Consolidated
                    Members' and Patrons' Equity.............................25
         10.5.    Priority Debt..............................................25
         10.6.    Liens......................................................26
         10.7.    Sale of Assets.............................................28
         10.8.    Line of Business...........................................32
         10.9.    Subsidiary Distribution Restrictions.......................32
         10.10.   Subsidiary Preferred Stock.................................32
         10.11.   Issuance of Stock by Subsidiaries..........................32

11.      EVENTS OF DEFAULT...................................................32


                                       ii
<PAGE>


12.      REMEDIES ON DEFAULT, ETC............................................34

         12.1.    Acceleration...............................................34
         12.2.    Other Remedies.............................................35
         12.3.    Rescission.................................................35
         12.4.    No Waivers or Election of Remedies, Expenses, etc..........36

13.      REGISTRATION; EXCHANGE; SUBSTITUTION OF NOTES.......................36

         13.1.    Registration of Notes......................................36
         13.2.    Transfer and Exchange of Notes.............................36
         13.3.    Replacement of Notes.......................................37

14.      PAYMENTS ON NOTES...................................................37

15.      EXPENSES, ETC.......................................................37

         15.1.    Transaction Expenses.......................................37
         15.2.    Survival...................................................38

16.      SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ENTIRE AGREEMENT........38

17.      AMENDMENT AND WAIVER................................................38

         17.1.    Requirements...............................................38
         17.2.    Solicitation of Holders of Notes...........................39
         17.3.    Binding Effect, etc........................................39
         17.4.    Notes held by Company, etc.................................39

18.      NOTICES. 39

19.      REPRODUCTION OF DOCUMENTS...........................................40

20.      CONFIDENTIAL INFORMATION............................................40

21.      SUBSTITUTION OF PURCHASER...........................................41

22.      MISCELLANEOUS.......................................................42

         22.1.    Successors and Assigns.....................................42
         22.2.    Payments Due on Non-Business Days..........................42
         22.3.    Severability...............................................42
         22.4.    Construction...............................................42
         22.5.    Counterparts...............................................42
         22.6.    Governing Law..............................................42


                                      iii
<PAGE>


                             Schedules and Exhibits
                             ----------------------

Schedule A           --       Information Relating To Purchasers
Schedule B           --       Defined Terms

Schedule 4.9         --       Changes in Corporate Structure
Schedule 5.3         --       Disclosure Materials
Schedule 5.4         --       Subsidiaries of the Company and Ownership of
                                Subsidiary Stock
Schedule 5.5         --       Financial Statements
Schedule 5.6         --       Restrictions on Debt
Schedule 5.12        --       Intellectual Property
Schedule 5.15        --       Use of Proceeds
Schedule 5.16        --       Existing Debt

Exhibit 1A           --       Form of 4.96% Series D Senior Notes due
                                October 18, 2012
Exhibit 1B           --       Form of 5.60% Series E Senior Notes due
                                October 18, 2017

Exhibit 3            --       Form of Pay Proceeds Letter

Exhibit 4.4(a)       --       Form of Opinion of General Counsel for the Company
Exhibit 4.4(b)       --       Form of Opinion of Special Counsel for the
                                Purchasers


                                       iv
<PAGE>


                        CENEX HARVEST STATES COOPERATIVES
                                5500 CENEX DRIVE
                          INVER GROVE HEIGHTS, MN 55077

          $115,000,000 4.96% Series D Senior Notes due October 18, 2012
          $60,000,000 5.60% Series E Senior Notes due October 18, 2017

                                                    Dated as of October 18, 2002

Separately addressed to each of the Purchasers
  listed in the attached Schedule A

Ladies and Gentlemen:

         Cenex Harvest States Cooperatives, a nonstock agricultural cooperative
corporation organized under the laws of the State of Minnesota (the "COMPANY"),
agrees with you as follows:


1.       AUTHORIZATION OF NOTES.

         The Company will authorize the issue and sale of (a) $115,000,000
aggregate principal amount of its 4.96% Series D Senior Notes due October 18,
2012 (the "SERIES D NOTES", such term to include any such notes issued in
substitution therefor pursuant to Section 13 of this Agreement or the Other
Agreements (as hereinafter defined)) and (b) $60,000,000 aggregate principal
amount of its 5.60% Series E Senior Notes due October 18, 2017 (the "SERIES E
NOTES", such term to include any such notes issued in substitution therefor
pursuant to Section 13 of this Agreement or the Other Agreements (as hereinafter
defined)). The Series D Notes shall be substantially in the form set out in
Exhibit 1A and the Series E Notes shall be substantially in the form set out in
Exhibit 1B, in each case with such changes therefrom, if any, as may be approved
by you and the Company. The term "NOTES" as used herein, shall include each of
the Series D Notes and the Series E Notes (each a "SERIES") and any promissory
note delivered in substitution or exchange for any Notes pursuant to Section 13,
and the term "NOTE" shall refer to any one of such Notes. Certain capitalized
terms used in this Agreement are defined in Schedule B hereto; references to a
"Schedule" or an "Exhibit" are, unless otherwise specified, to a Schedule or an
Exhibit attached to this Agreement; and references to a "Section" are, unless
otherwise specified, references to a Section of this Agreement.


2.       SALE AND PURCHASE OF NOTES.

         Subject to the terms and conditions of this Agreement, the Company will
issue and sell to you and you will purchase from the Company, at the Closing
provided for in Section 3, Notes in the principal amount and the Series
specified opposite your name in Schedule A at the purchase price of 100% of the
principal amount thereof. Contemporaneously with entering into this Agreement,
the Company is entering into separate Note Purchase Agreements (the "OTHER
AGREEMENTS") identical with this Agreement with each of the other purchasers
named in Schedule A (the "OTHER PURCHASERS"), providing for the sale at such
Closing to each of the Other Purchasers of Notes in the principal amounts and
the Series specified below its name in Schedule A. Your obligation hereunder and
the obligations of the Other Purchasers under the Other


<PAGE>


Agreements are several and not joint obligations and you shall have no
obligation under any Other Agreement and no liability to any Person for the
performance or non-performance by any Other Purchaser thereunder. This Agreement
and the other Agreements shall constitute one single agreement for purposes of
New York General Obligations Law section 5-501.


3.       CLOSING.

         The sale and purchase of the Notes to be purchased by you and the Other
Purchasers shall occur at the offices of Bingham McCutchen LLP, One State
Street, Hartford, Connecticut 06103, at 10:00 a.m., local time, at a closing
(the "CLOSING") on October 18, 2002. At the Closing, the Company will deliver to
you the Notes to be purchased by you in the form of, respectively, a single
Series D Note or Series E Note, as the case may be (or such greater number of
Series D Notes or Series E Notes in denominations of at least $500,000 as you
may request), dated the date of the Closing and registered in your name (or in
the name of your nominee), as indicated in Schedule A, against delivery by you
to the Company or its order of immediately available funds in the amount of the
purchase price therefor by wire transfer of immediately available funds for
credit to such account or accounts as shall be specified in a letter on the
Company's letterhead, in substantially the form of Exhibit 3 attached hereto,
from the Company to you and each of the Other Purchasers. If, at the Closing,
the Company shall fail to tender such Notes to you as provided above in this
Section 3, or any of the conditions specified in Section 4 shall not have been
fulfilled to your satisfaction, you shall, at your election, be relieved of all
further obligations under this Agreement, without thereby waiving any rights you
may have by reason of such failure or such nonfulfillment.


4.       CONDITIONS TO CLOSING.

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


         4.1.     REPRESENTATIONS AND WARRANTIES.

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


         4.2.     PERFORMANCE; NO DEFAULT.

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


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<PAGE>


         4.3.     COMPLIANCE CERTIFICATES.

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

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


         4.4.     OPINIONS OF COUNSEL.

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

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

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


         4.5.     PURCHASE PERMITTED BY APPLICABLE LAW, ETC.

         On the date of the Closing, your purchase of Notes and all other
proceedings taken in connection with the transaction contemplated by this
Agreement and the other Financing Documents shall (a) be permitted by the laws
and regulations of each jurisdiction to which you are subject, without recourse
to provisions (such as Section 1405(a)(8) of the New York Insurance Law)
permitting limited investments by insurance companies without restriction as to
the character of the particular investment, (b) not violate any applicable law
or regulation (including, without limitation, Section 5 of the Securities Act or
Regulation T, U or X of the Board of Governors of the Federal Reserve System)
and (c) not subject you to any tax, penalty or liability under or pursuant to
any applicable law or regulation, which law or regulation was not in effect on
the date hereof. If requested by you, you shall have received an Officer's
Certificate certifying as to such matters of fact as you may reasonably specify
to enable you to determine whether such purchase is so permitted.


         4.6.     SALE OF OTHER NOTES.

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


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<PAGE>


         4.7.     PAYMENT OF SPECIAL COUNSEL FEES.

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


         4.8.     PRIVATE PLACEMENT NUMBER.

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


         4.9.     CHANGES IN CORPORATE STRUCTURE.

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


         4.10.    OFFEREE LETTER.

         SunTrust Capital Markets, Inc. shall have delivered to the Company,
their counsel, you, each Other Purchaser and your special counsel an offeree
letter, in form and substance satisfactory to you, confirming the manner of the
offering of the Notes by SunTrust Capital Markets, Inc.


         4.11.    PROCEEDINGS AND DOCUMENTS.

         All corporate and other proceedings in connection with the transactions
contemplated by this Agreement and all documents and instruments incident to
such transactions shall be satisfactory to you and your special counsel, and you
and your special counsel shall have received all such counterpart originals or
certified or other copies of such documents as you or they may reasonably
request.


5.       REPRESENTATIONS AND WARRANTIES OF THE COMPANY.

         The Company represents and warrants to you that:


         5.1.     ORGANIZATION; POWER AND AUTHORITY.

         The Company is a nonstock agricultural cooperative corporation duly
organized, validly existing and in good standing under the laws of the State of
Minnesota , and is duly qualified as a foreign corporation and is in good
standing in each jurisdiction in which such qualification is required by law,
other than those jurisdictions as to which the failure to be so qualified or in
good standing could not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect. The Company has the corporate power
and authority to own or hold under lease the properties it purports to own or
hold under lease, to transact the business it


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<PAGE>


transacts and proposes to transact, to execute and deliver this Agreement, the
Other Agreements and the Notes and to perform the provisions hereof and thereof.


         5.2.     AUTHORIZATION, ETC.

         The Company has all requisite corporate power to own and operate its
respective properties and to conduct its business as currently conducted and as
currently proposed to be conducted. The Company has all requisite corporate
power to execute, deliver and perform its obligations under this Agreement and
the Notes. The Company has taken all necessary corporate action to authorize the
execution and delivery of, and the performance of its obligations under, each of
the Financing Documents and this Agreement constitutes, and upon execution and
delivery thereof each Note will constitute a legal, valid and binding obligation
of the Company enforceable against the Company in accordance with its terms,
except, in each case, as such enforceability may be limited by (i) applicable
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting the enforcement of creditors' rights generally and (ii) general
principles of equity (regardless of whether such enforceability is considered in
a proceeding in equity or at law).


         5.3.     DISCLOSURE.

         The Company, through its agent, SunTrust Capital Markets, Inc. has
delivered to you and each Other Purchaser a copy of a Confidential Private
Placement Memorandum, dated September 2002 (the "MEMORANDUM"), relating to the
transactions contemplated hereby. The Memorandum fairly describes, in all
material respects, the general nature of the business and principal properties
of the Company and its Subsidiaries. Except as disclosed in Schedule 5.3, this
Agreement, the other Financing Documents, the Memorandum, the documents,
certificates or other writings delivered to you by or on behalf of the Company
in connection with the transactions contemplated by the Financing Documents and
the financial statements listed in Schedule 5.5, taken as a whole, do not
contain any untrue statement of a material fact or omit to state any material
fact necessary to make the statements herein or therein not misleading in light
of the circumstances under which they were made. Except as disclosed in the
Memorandum or as expressly described in Schedule 5.3, or in one of the
documents, certificates or other writings identified therein, or in the
financial statements listed in Schedule 5.5, since August 31, 2001, there has
been no change in the financial condition, operations, business, properties or
prospects of the Company or any Subsidiary except changes that individually or
in the aggregate could not reasonably be expected to have a Material Adverse
Effect. There is no fact known to the Company that could reasonably be expected
to have a Material Adverse Effect that has not been set forth herein or in the
Memorandum or in the other documents, certificates and other writings delivered
to you by or on behalf of the Company specifically for use in connection with
the transactions contemplated hereby.


         5.4.     ORGANIZATION AND OWNERSHIP OF SHARES OF SUBSIDIARIES;
                  AFFILIATES.

                  (a) Schedule 5.4 contains (except as noted therein) complete
         and correct lists of (i) the Company's Subsidiaries, showing, as to
         each Subsidiary, the correct name thereof, the jurisdiction of its
         organization, and the percentage of shares of each class of its capital
         stock or similar equity interests outstanding owned by the Company and
         each


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<PAGE>


         other Subsidiary, (ii) the Company's Affiliates, other than
         Subsidiaries, and (iii) the Company's directors and senior officers.

                  (b) All of the outstanding shares of capital stock or similar
         equity interests of each Subsidiary shown in Schedule 5.4 as being
         owned by the Company or its Subsidiaries have been validly issued, are
         fully paid and nonassessable and are owned by the Company or another
         Subsidiary free and clear of any Lien (except as otherwise disclosed in
         Schedule 5.4).

                  (c) Each Subsidiary identified in Schedule 5.4 is a
         corporation or other legal entity duly organized, validly existing and
         in good standing under the laws of its jurisdiction of organization,
         and is duly qualified as a foreign corporation or other legal entity
         and is in good standing in each jurisdiction in which such
         qualification is required by law, other than those jurisdictions as to
         which the failure to be so qualified or in good standing could not,
         individually or in the aggregate, reasonably be expected to have a
         Material Adverse Effect.

                  (d) No Subsidiary is a party to, or otherwise subject to any
         legal restriction or any agreement (other than the agreements listed on
         Schedule 5.4 and customary limitations imposed by corporate law
         statutes) restricting the ability of such Subsidiary to pay dividends
         out of profits or make any other similar distributions of profits to
         the Company or any of its Subsidiaries that owns outstanding shares of
         capital stock or similar equity interests of such Subsidiary.


         5.5.     FINANCIAL STATEMENTS.

         The Company has delivered to you and each Other Purchaser copies of the
financial statements of the Company and its Subsidiaries listed on Schedule 5.5.
All of said financial statements (including in each case the related schedules
and notes) fairly present in all material respects the consolidated financial
position of the Company and its Subsidiaries as of the respective dates
specified in such Schedule and the consolidated results of their operations and
cash flows for the respective periods so specified and have been prepared in
accordance with GAAP consistently applied throughout the periods involved except
as set forth in the notes thereto (subject, in the case of any interim financial
statements, to normal year-end adjustments).


         5.6.     COMPLIANCE WITH LAWS, OTHER INSTRUMENTS, ETC.

         The execution, delivery and performance by the Company of this
Agreement and the Notes will not (a) contravene, result in any breach of, or
constitute a default under, or result in the creation of any Lien in respect of
any property of the Company or any Subsidiary under, any indenture, mortgage,
deed of trust, loan, purchase or credit agreement, lease, corporate charter or
by-laws, or any other agreement or instrument to which the Company or any
Subsidiary is bound or by which the Company or any Subsidiary or any of their
respective properties may be bound or affected, (b) conflict with or result in a
breach of any of the terms, conditions or provisions of any order, judgment,
decree, or ruling of any court, arbitrator or Governmental Authority applicable
to the Company or any Subsidiary or (c) violate any provision of any statute or
other rule or regulation of any Governmental Authority applicable to the Company
or any Subsidiary.


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<PAGE>


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


         5.7.     GOVERNMENTAL AUTHORIZATIONS, ETC.

         No consent, approval or authorization of, or registration, filing or
declaration with, any Governmental Authority is required in connection with the
execution, delivery or performance by the Company of this Agreement or the
Notes.


         5.8.     LITIGATION; OBSERVANCE OF AGREEMENTS, STATUTES AND ORDERS.

                  (a) There are no actions, suits, investigations or proceedings
         pending or, to the knowledge of the Company or any of its Subsidiaries,
         threatened against or affecting the Company or any Subsidiary or any
         properties or rights of the Company or any Subsidiary in any court or
         before any arbitrator of any kind or before or by any Governmental
         Authority that, individually or in the aggregate, could reasonably be
         expected to have a Material Adverse Effect.

                  (b) Neither the Company nor any Subsidiary is in default under
         any term of any agreement or instrument to which it is a party or by
         which it is bound, or any order, judgment, decree or ruling of any
         court, arbitrator or Governmental Authority or is in violation of any
         applicable law, ordinance, rule or regulation (including, without
         limitation, Environmental Laws and the USA Patriot Act) of any
         Governmental Authority, which default or violation, individually or in
         the aggregate, could reasonably be expected to have a Material Adverse
         Effect.


         5.9.     TAXES.

         The Company and its Subsidiaries have filed all federal, state and
other tax returns that are, to the knowledge of the officers of the Company,
required to have been filed in any jurisdiction, and have paid all taxes shown
to be due and payable on such returns and all other taxes and assessments levied
upon them or their properties, assets, income or franchises, to the extent such
taxes and assessments have become due and payable and before they have become
delinquent, except for any taxes and assessments (a) the amount of which is not
individually or in the aggregate Material or (b) the amount, applicability or
validity of which is currently being contested in good faith by appropriate
proceedings and with respect to which the Company or a Subsidiary, as the case
may be, has established adequate reserves in accordance with GAAP. The Company
knows of no basis for any other tax or assessment that could reasonably be


                                       7
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expected to have a Material Adverse Effect. The charges, accruals and reserves
on the books of the Company and its Subsidiaries in respect of Federal, state or
other taxes for all fiscal periods are adequate. The Federal income tax
liabilities of the Company and its Subsidiaries have been determined by the
Internal Revenue Service and paid for all fiscal years up to and including the
fiscal year ended December 31, 1998. The Company is a cooperative association
taxed under the provisions of "subchapter T" of the Code and the Company does
not presently intend to alter its status as a subchapter T cooperative
association for federal income tax purposes.


         5.10.    TITLE TO PROPERTY; LEASES.

         Except for defects in title which, individually or in the aggregate,
could not reasonably be expected to have a Material Adverse Effect, the Company
has and each of its Subsidiaries has good and indefeasible title to its
respective real properties (other than properties which it leases) and good
title to all of its other respective properties and assets that individually or
in the aggregate are Material, including all such properties reflected in the
most recent audited balance sheet referred to in Section 5.5 or purported to
have been acquired by the Company or any Subsidiary after said date (except as
sold or otherwise disposed of in the ordinary course of business), in each case
free and clear of Liens prohibited by this Agreement. All leases that
individually or in the aggregate are Material are valid and subsisting and are
in full force and effect in all material respects.


         5.11.    PERMITS AND OTHER OPERATING RIGHTS.

         The Company and each Subsidiary of the Company has all such valid and
sufficient certificates of convenience and necessity, franchises, licenses,
permits, operating rights and other authorizations from all Governmental
Authorities having jurisdiction over the Company or any Subsidiary or any of its
properties, as are necessary for the ownership, operation and maintenance of its
businesses and properties, as presently conducted and as proposed to be
conducted while the Notes are outstanding, subject to exceptions and
deficiencies which, individually or in the aggregate, would not reasonably be
expected to have a Material Adverse Effect, and such certificates of convenience
and necessity, franchises, licenses, permits, operating rights and other
authorizations from all Governmental Authorities or any of its properties are
free from restrictions or conditions which, individually or in the aggregate,
would reasonably be expected to have a Material Adverse Effect.


         5.12.    INTELLECTUAL PROPERTY.

         Except as disclosed in Schedule 5.12,

                  (a) the Company and its Subsidiaries own or possess all
         patents, copyrights, service marks, trademarks and trade names, or
         rights thereto, that individually or in the aggregate are Material,
         without known conflict with the rights of others;

                  (b) to the best knowledge of the Company, no product or
         practice of the Company or any Subsidiary infringes in any material
         respect any patent, copyright, service mark, trademark, trade name or
         other right owned by any other Person; and


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                  (c) to the best knowledge of the Company, there is no Material
         violation by any Person of any right of the Company or any of its
         Subsidiaries with respect to any patent, copyright, service mark,
         trademark, trade name or other right owned or used by the Company or
         any of its Subsidiaries.


         5.13.    COMPLIANCE WITH ERISA.

                  (a) The Company and each ERISA Affiliate have operated and
         administered each Plan in compliance with all applicable laws except
         for such instances of noncompliance as have not resulted in and could
         not reasonably be expected to result in a Material Adverse Effect.
         Neither the Company nor any ERISA Affiliate has incurred any liability
         pursuant to Title I or IV of ERISA (aside from ordinary claims for
         benefits under the Plans) or the penalty or excise tax provisions of
         the Code relating to employee benefit plans (as defined in Section 3 of
         ERISA), and no event, transaction or condition has occurred or exists
         that could reasonably be expected to result in the incurrence of any
         such liability by the Company or any ERISA Affiliate, or in the
         imposition of any Lien on any of the rights, properties or assets of
         the Company or any ERISA Affiliate, in either case pursuant to Title I
         or IV of ERISA or to such penalty or excise tax provisions or to
         Section 401(a)(29) or 412 of the Code, other than such liabilities or
         Liens as would not be individually or in the aggregate Material.

                  (b) The present value of the aggregate benefit liabilities
         under each of the Plans (other than Multiemployer Plans), determined as
         of the end of such Plan's most recently ended plan year on the basis of
         the actuarial assumptions specified for funding purposes in such Plan's
         most recent actuarial valuation report, did not exceed the aggregate
         current value of the assets of such Plan allocable to such benefit
         liabilities by more than $15,000,000 for any single Plan or by more
         than $20,000,000, in the aggregate, for all such Plans. The term
         "BENEFIT LIABILITIES" has the meaning specified in section 4001 of
         ERISA and the terms "CURRENT VALUE" and "PRESENT VALUE" have the
         meaning specified in section 3 of ERISA.

                  (c) The Company and its ERISA Affiliates have not incurred
         withdrawal liabilities (and are not subject to contingent withdrawal
         liabilities) under section 4201 or 4204 of ERISA in respect of
         Multiemployer Plans that individually or in the aggregate are Material.

                  (d) The expected postretirement benefit obligation (determined
         as of the last day of the Company's most recently ended fiscal year in
         accordance with Financial Accounting Standards Board Statement No. 106,
         without regard to liabilities attributable to continuation coverage
         mandated by section 4980B of the Code) of the Company and its
         Subsidiaries is not Material.

                  (e) The execution and delivery of the Financing Documents and
         the issuance and sale of the Notes hereunder will not involve any
         transaction that is subject to the prohibitions of section 406 of ERISA
         or in connection with which a tax could be imposed pursuant to section
         4975(c)(1)(A)-(D) of the Code. The representation by the Company in the
         first sentence of this Section 5.13(e) is made in reliance upon and
         subject to the


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         accuracy of your representation in Section 6.2 as to the sources of the
         funds used to pay the purchase price of the Notes to be purchased by
         you.


         5.14.    PRIVATE OFFERING BY THE COMPANY.

         Neither the Company nor anyone acting on its behalf has, directly or
indirectly, offered the Notes or any similar securities for sale to, or
solicited any offer to buy any of the same from, or otherwise approached or
negotiated in respect thereof with, any Person other than you, the Other
Purchasers and not more than 31 other Institutional Investors, each of which has
been offered the Notes at a private sale for investment. Neither the Company nor
anyone acting on its behalf has taken, or will take, any action that would
subject the issuance or sale of the Notes to the registration requirements of
Section 5 of the Securities Act or to the provisions of any securities or "blue
sky" laws of any applicable jurisdiction.


         5.15.    USE OF PROCEEDS; MARGIN REGULATIONS.

                  (a) USE OF PROCEEDS. The Company will apply the proceeds of
         the sale of the Notes as set forth in Schedule 5.15.

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


         5.16.    EXISTING DEBT; FUTURE LIENS.

                  (a) Except as described therein, Schedule 5.16 sets forth a
         complete and correct list of all outstanding Debt of the Company and
         its Subsidiaries in excess of $10,000,000 or having commitments in
         excess thereof as of the date of the Closing. Neither the Company nor
         any Subsidiary is in default and no waiver of default is currently in
         effect, in the payment of any principal or interest on any Debt of the
         Company or such Subsidiary and no event or condition exists with
         respect to any Debt of the Company or any Subsidiary that would permit
         (or that with notice or the lapse of


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<PAGE>


         time, or both, would permit) one or more Persons to cause such Debt to
         become due and payable before its stated maturity or before its
         regularly scheduled dates of payment.

                  (b) The aggregate amount of all outstanding Debt of the
         Company and its Subsidiaries not set forth on Schedule 5.16 does not
         exceed $5,000,000 in the aggregate.

                  (c) Except as disclosed in Schedule 5.16, neither the Company
         nor any Subsidiary has agreed or consented to cause or permit in the
         future (upon the happening of a contingency or otherwise) any of its
         property, whether now owned or hereafter acquired, to be subject to a
         Lien not permitted by Section 10.6.


         5.17.    FOREIGN ASSETS CONTROL REGULATIONS, ETC.

                  (a) Neither the sale of the Notes by the Company hereunder nor
         its use of the proceeds thereof will violate the Trading with the Enemy
         Act, as amended, or any of the foreign assets control regulations of
         the United States Treasury Department (31 CFR, Subtitle B, Chapter V,
         as amended) or any enabling legislation or executive order relating
         thereto.

                  (b) Neither the Company nor any of its Subsidiaries has
         violated, nor will any of them violate, the provisions of United States
         Executive Order 13224 of September 23, 2001 Blocking Property and
         Prohibiting Transactions With Persons Who Commit, Threaten to Commit,
         or Support Terrorism (Exec. Order No. 13224, 66 Fed. Reg. 49079
         (2001)).

         5.18.    STATUS UNDER CERTAIN STATUTES.

         Neither the Company nor any Subsidiary is subject to regulation under
the Investment Company Act of 1940, as amended, the Public Utility Holding
Company Act of 1935, as amended, the ICC Termination Act of 1995, as amended, or
the Federal Power Act, as amended.

         5.19.    ENVIRONMENTAL MATTERS.

         Neither the Company nor any Subsidiary has knowledge of any claim or
has received any notice of any claim, and no proceeding has been instituted
raising any claim against the Company or any of its Subsidiaries or any of their
respective real properties now or formerly owned, leased or operated by any of
them or other assets, alleging any damage to the environment or violation of any
Environmental Laws, except, in each case, such as could not reasonably be
expected to result in a Material Adverse Effect. Except as otherwise disclosed
to you in writing,

                  (a) neither the Company nor any Subsidiary has knowledge of
         any facts which would give rise to any claim, public or private, of
         violation of Environmental Laws or damage to the environment emanating
         from, occurring on or in any way related to real properties now or
         formerly owned, leased or operated by any of them or to other assets or
         their use, except, in each case, such as could not reasonably be
         expected to result in a Material Adverse Effect;


                                       11
<PAGE>


                  (b) neither the Company nor any of its Subsidiaries has stored
         any Hazardous Materials on real properties now or formerly owned,
         leased or operated by any of them and has not disposed of any Hazardous
         Materials in a manner contrary to any Environmental Laws in each case
         in any manner that could reasonably be expected to result in a Material
         Adverse Effect; and

                  (c) all buildings on all real properties now owned, leased or
         operated by the Company or any of its Subsidiaries are in compliance
         with applicable Environmental Laws, except where failure to comply
         could not reasonably be expected to result in a Material Adverse
         Effect.


         5.20.    SOLVENCY.

         The Company, after giving effect to the transactions contemplated by
the Financing Documents, will not be engaged in any business or transaction, or
about to engage in any business or transaction, for which the Company has
unreasonably small assets or capital (within the meaning of the Uniform
Fraudulent Transfer Act, the Uniform Fraudulent Conveyance Act and Section 548
of Title 11 of the United States Code), and the Company does not have any intent
to hinder, delay or defraud any Person to which it is, or will become, on or
after the date of Closing, indebted to or to incur debts that would be beyond
its ability to pay as they mature.

         5.21. HOSTILE TENDER OFFERS.

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


         5.22.    RANKING OF NOTES.

         The Company's obligations under the Notes and this Agreement will, upon
issuance of the Notes, rank at least PARI PASSU, without preference or priority,
with all of its other outstanding unsecured and unsubordinated obligations,
except for those obligations that are, or are liable to be, mandatorily
preferred by law.


6.       REPRESENTATIONS OF THE PURCHASER.


         6.1.     PURCHASE FOR INVESTMENT.

         You represent that you are purchasing the Notes for your own account or
for one or more separate accounts maintained by you or for the account of one or
more pension or trust funds and not with a view to the distribution thereof,
PROVIDED that the disposition of your or their property shall at all times be
within your or their control. You understand that the Notes have not been
registered under the Securities Act and may be resold only if registered
pursuant to the provisions of the Securities Act or if an exemption from
registration is available, except under circumstances where neither such
registration nor such an exemption is required by law, and that the Company is
not required to register the Notes.


                                       12
<PAGE>


         6.2.     SOURCE OF FUNDS.

         You represent that at least one of the following statements is an
accurate representation as to each source of funds (a "SOURCE") to be used by
you to pay the purchase price of the Notes to be purchased by you hereunder:

                  (a) the Source is an "insurance company general account" (as
         the term is defined in the United States Department of Labor's
         Prohibited Transaction Exemption ("PTE") 95-60) in respect of which the
         reserves and liabilities (as defined by the annual statement for life
         insurance companies approved by the National Association of Insurance
         Commissioners (the "NAIC ANNUAL STATEMENT")) for the general account
         contract(s) held by or on behalf of any employee benefit plan together
         with the amount of the reserves and liabilities for the general account
         contract(s) held by or on behalf of any other employee benefit plans
         maintained by the same employer (or affiliate thereof as defined in PTE
         95-60) or by the same employee organization in the general account do
         not exceed 10% of the total reserves and liabilities of the general
         account (exclusive of separate account liabilities) plus surplus as set
         forth in the NAIC Annual Statement filed with your state of domicile;
         or

                  (b) the Source is a separate account that is maintained solely
         in connection with your fixed contractual obligations under which the
         amounts payable, or credited, to any employee benefit plan (or its
         related trust) that has any interest in such separate account (or to
         any participant or beneficiary of such plan (including any annuitant))
         are not affected in any manner by the investment performance of the
         separate account; or

                  (c) the Source is either (i) an insurance company pooled
         separate account, within the meaning of PTE 90-1 or (ii) a bank
         collective investment fund, within the meaning of the PTE 91-38 and,
         except as disclosed by you to the Company in writing pursuant to this
         clause (c), no employee benefit plan or group of plans maintained by
         the same employer or employee organization beneficially owns more than
         10% of all assets allocated to such pooled separate account or
         collective investment fund; or

                  (d) the Source constitutes assets of an "investment fund"
         (within the meaning of Part V of PTE 84-14 (the "QPAM EXEMPTION"))
         managed by a "qualified professional asset manager" or "QPAM" (within
         the meaning of Part V of the QPAM Exemption), no employee benefit
         plan's assets that are included in such investment fund, when combined
         with the assets of all other employee benefit plans established or
         maintained by the same employer or by an affiliate (within the meaning
         of Section V(c)(1) of the QPAM Exemption) of such employer or by the
         same employee organization and managed by such QPAM, exceed 20% of the
         total client assets managed by such QPAM, the conditions of Part I(c)
         and (g) of the QPAM Exemption are satisfied, neither the QPAM nor a
         person controlling or controlled by the QPAM (applying the definition
         of "control" in Section V(e) of the QPAM Exemption) owns a 5% or more
         interest in the Company and (i) the identity of such QPAM and (ii) the
         names of all employee benefit plans whose assets are included in such
         investment fund have been disclosed to the Company in writing pursuant
         to this clause (d); or


                                       13
<PAGE>


                  (e) the Source constitutes assets of a "plan(s)" (within the
         meaning of Section IV of PTE 96-23 (the "INHAM EXEMPTION")) managed by
         an "in-house asset manager" or "INHAM" (within the meaning of Part IV
         of the INHAM Exemption), the conditions of Part I(a), (g) and (h) of
         the INHAM Exemption are satisfied, neither the INHAM nor a person
         controlling or controlled by the INHAM (applying the definition of
         "control" in Section IV(h) of the INHAM Exemption) owns a 5% or more
         interest in the Company and (i) the identity of such INHAM and (ii) the
         name(s) of the employee benefit plan(s) whose assets constitute the
         Source have been disclosed to the Company in writing pursuant to this
         clause (e); or

                  (f) the Source is a governmental plan; or

                  (g) the Source is one or more employee benefit plans, or a
         separate account or trust fund comprised of one or more employee
         benefit plans, each of which has been identified to the Company in
         writing pursuant to this paragraph (g); or

                  (h) the Source does not include assets of any employee benefit
         plan, other than a plan exempt from the coverage of ERISA.

As used in this Section 6.2, the terms "EMPLOYEE BENEFIT PLAN", "GOVERNMENTAL
PLAN" and "SEPARATE ACCOUNT" shall have the respective meanings assigned to such
terms in Section 3 of ERISA.


7.       INFORMATION AS TO COMPANY.


         7.1.     FINANCIAL AND BUSINESS INFORMATION.

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

                  (a) QUARTERLY STATEMENTS -- within 45 days after the end of
         each quarterly fiscal period in each fiscal year of the Company (other
         than the last quarterly fiscal period of each such fiscal year),
         duplicate copies of,

                           (i) a consolidated balance sheet of the Company and
                  its Subsidiaries as at the end of such quarter, and

                           (ii) consolidated statements of income, changes in
                  members' equity and cash flows of the Company and its
                  Subsidiaries, for such quarter and (in the case of the second
                  and third quarters) for the portion of the fiscal year ending
                  with such quarter,

         setting forth in each case in comparative form the figures for the
         corresponding periods in the previous fiscal year, all in reasonable
         detail, prepared in accordance with GAAP applicable to quarterly
         financial statements generally, and certified by a Senior Financial
         Officer as fairly presenting, in all material respects, the financial
         position of the companies being reported on and their results of
         operations and cash flows, subject to changes resulting from year-end
         adjustments, provided that delivery within the time period specified
         above of copies of the Company's Quarterly Report on Form 10-Q prepared
         in compliance with the


                                       14
<PAGE>


         requirements therefor and filed with the Securities and Exchange
         Commission shall be deemed to satisfy the requirements of this Section
         7.1(a);

                  (b) ANNUAL STATEMENTS -- within 90 days after the end of each
         fiscal year of the Company, duplicate copies of,

                           (i) consolidated and consolidating balance sheets of
                  the Company and its Subsidiaries, as at the end of such year,
                  and

                           (ii) consolidated and consolidating statements of
                  income and cash flows and a consolidated statement of members'
                  equity of the Company and its Subsidiaries, for such year,

         setting forth in each case, in comparative form, the figures for the
         previous fiscal year, all in reasonable detail, prepared in accordance
         with GAAP, and accompanied by,

                           (A) an opinion thereon of independent certified
                  public accountants of recognized national standing, which
                  opinion shall state that such financial statements present
                  fairly, in all material respects, the financial position of
                  the companies being reported upon and their results of
                  operations and cash flows and have been prepared in conformity
                  with GAAP, and that the examination of such accountants in
                  connection with such financial statements has been made in
                  accordance with generally accepted auditing standards, and
                  that such audit provides a reasonable basis for such opinion
                  in the circumstances, and

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

         provided that the delivery within the time period specified above of
         the Company's Annual Report on Form 10-K for such fiscal year (together
         with the Company's annual report to members, if any, prepared pursuant
         to Rule 14a-3 under the Exchange Act) prepared in accordance with the
         requirements therefor and filed with the Securities and Exchange
         Commission, together with the accountant's certificate described in
         clause (B) above, shall be deemed to satisfy the requirements of this
         Section 7.1(b).

                  (c) SEC AND OTHER REPORTS -- promptly upon their becoming
         available, one copy of (i) each financial statement, report, notice or
         proxy statement sent by the Company or any Subsidiary to public
         securities holders generally, and (ii) each regular or


                                       15
<PAGE>


         periodic report, each registration statement (without exhibits except
         as expressly requested by such holder), and each prospectus and all
         amendments thereto filed by the Company or any Subsidiary with the
         Securities and Exchange Commission and of all press releases and other
         statements made available generally by the Company or any Subsidiary to
         the public concerning developments that are Material;

                  (d) NOTICE OF DEFAULT OR EVENT OF DEFAULT -- promptly, and in
         any event within five days after a Responsible Officer becoming aware
         of the existence of any Default or Event of Default or that any Person
         has given any notice or taken any action with respect to a claimed
         default hereunder or that any Person has given any notice or taken any
         action with respect to a claimed default of the type referred to in
         Section 11(f), a written notice specifying the nature and period of
         existence thereof and what action the Company is taking or proposes to
         take with respect thereto;

                  (e) ERISA MATTERS -- promptly, and in any event within five
         days after a Responsible Officer becoming aware of any of the
         following, a written notice setting forth the nature thereof and the
         action, if any, that the Company or an ERISA Affiliate proposes to take
         with respect thereto:

                           (i) with respect to any Plan, any reportable event,
                  as defined in section 4043(b) of ERISA and the regulations
                  thereunder, for which notice thereof has not been waived
                  pursuant to such regulations as in effect on the date hereof;
                  or

                           (ii) the taking by the PBGC of steps to institute, or
                  the threatening by the PBGC of the institution of, proceedings
                  under section 4042 of ERISA for the termination of, or the
                  appointment of a trustee to administer, any Plan, or the
                  receipt by the Company or any ERISA Affiliate of a notice from
                  a Multiemployer Plan that such action has been taken by the
                  PBGC with respect to such Multiemployer Plan; or

                           (iii) any event, transaction or condition that could
                  result in the incurrence of any liability by the Company or
                  any ERISA Affiliate pursuant to Title I or IV of ERISA or the
                  penalty or excise tax provisions of the Code relating to
                  employee benefit plans, or in the imposition of any Lien on
                  any of the rights, properties or assets of the Company or any
                  ERISA Affiliate pursuant to Title I or IV of ERISA or such
                  penalty or excise tax provisions, if such liability or Lien,
                  taken together with any other such liabilities or Liens then
                  existing, could reasonably be expected to have a Material
                  Adverse Effect;

                  (f) NOTICES FROM GOVERNMENTAL AUTHORITY -- promptly, and in
         any event within 30 days of receipt thereof, copies of any notice to
         the Company or any Subsidiary from any Governmental Authority relating
         to any order, ruling, statute or other law or regulation that could
         reasonably be expected to have a Material Adverse Effect; and

                  (g) REQUESTED INFORMATION -- with reasonable promptness, such
         other data and information relating to the business, operations,
         affairs, financial condition, assets or properties of the Company or
         any of its Subsidiaries or relating to the ability of the


                                       16
<PAGE>


         Company to perform its obligations hereunder and under the Financing
         Documents as from time to time may be reasonably requested by any such
         holder of Notes; and

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

         7.2.     OFFICER'S CERTIFICATE.

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

                  (a) COVENANT COMPLIANCE -- the information (including detailed
         calculations) required in order to establish whether the Company was in
         compliance with the requirements of Sections 10.3 through 10.5 and
         Section 10.7 hereof, inclusive, during the quarterly or annual period
         covered by the statements then being furnished (including with respect
         to each such Section, where applicable, the calculations of the maximum
         or minimum amount, ratio or percentage, as the case may be, permissible
         under the terms of such Sections, and the calculation of the amount,
         ratio or percentage then in existence); and

                  (b) EVENT OF DEFAULT -- a statement that such officer has
         reviewed the relevant terms hereof and has made, or caused to be made,
         under his or her supervision, a review of the transactions and
         conditions of the Company and its Subsidiaries from the beginning of
         the quarterly or annual period covered by the statements then being
         furnished to the date of the certificate and that such review shall not
         have disclosed the existence during such period of any condition or
         event that constitutes a Default or an Event of Default or, if any such
         condition or event existed or exists (including, without limitation,
         any such event or condition resulting from the failure of the Company
         or any Subsidiary to comply with any Environmental Law), specifying the
         nature and period of existence thereof and what action the Company
         shall have taken or proposes to take with respect thereto.


7.3.     INSPECTION.

         The Company shall permit the representatives of each holder of Notes
that is an Institutional Investor:

                  (a) NO DEFAULT -- if no Default or Event of Default then
         exists, at the expense of such holder and upon reasonable prior notice
         to the Company, to visit the principal executive office of the Company
         or any Subsidiary, to discuss the affairs, finances and accounts of the
         Company and its Subsidiaries with the Company's officers, and (with the
         consent of the Company, which consent will not be unreasonably
         withheld) its independent public accountants, and (with the consent of
         the Company, which consent


                                       17
<PAGE>


         will not be unreasonably withheld) to visit the other offices and
         properties of the Company and each Subsidiary, all at such reasonable
         times and as often as may be reasonably requested in writing; and

                  (b) DEFAULT -- if a Default or Event of Default then exists,
         at the expense of the Company to visit and inspect any of the offices
         or properties of the Company or any Subsidiary, to examine all their
         respective books of account, records, reports and other papers, to make
         copies and extracts therefrom, and to discuss their respective affairs,
         finances and accounts with their respective officers and independent
         public accountants (and by this provision the Company authorizes said
         accountants to discuss the affairs, finances and accounts of the
         Company and its Subsidiaries), all at such times and as often as may be
         requested.


8.       INTEREST; PAYMENT OF THE NOTES.


         8.1.     INTEREST PAYMENTS.

         Interest on the Series D Notes shall accrue on the unpaid principal
balance of the Series D Notes at the rates and shall be computed on the basis as
described in the Series D Notes. Interest on the Series E Notes shall accrue on
the unpaid principal balance of the Series E Notes at the rates and shall be
computed on the basis as described in the Series E Notes. In each case, interest
shall be due and payable as provided in the respective Notes.


         8.2.     REQUIRED PRINCIPAL PAYMENTS.

                  (a) Required Principal Payments; Maturity.

                           (i) SERIES D NOTES. The Company shall pay, and there
                  shall become due and payable with respect to the Series D
                  Notes, the principal amount of $8,846,154 (each such payment a
                  "SERIES D REQUIRED PRINCIPAL PAYMENT") on October 18th and
                  April 18th in each year commencing on October 18, 2006 to and
                  including April 18, 2012; PROVIDED, however, that the
                  principal amount of the Series D Notes prepaid or purchased
                  pursuant to Section 8.2(b), Section 8.3 or Section 10.7 shall
                  be applied against the principal amount of each Series D
                  Required Principal Payment becoming due under this Section
                  8.2(a) in inverse order of their scheduled due dates. Each
                  Series D Required Principal Payment shall be at 100% of the
                  principal amount paid, together with interest accrued thereon
                  to the date of payment. The entire remaining outstanding
                  principal amount of the Series D Notes, together with all
                  accrued and unpaid interest thereon, shall be due and payable
                  on October 18, 2012.

                           (ii) SERIES E NOTES. The Company shall pay, and there
                  shall become due and payable with respect to the Series E
                  Notes, the principal amount of $4,615,385 (each such payment a
                  "SERIES E REQUIRED PRINCIPAL PAYMENT") on October 18th and
                  April 18th in each year commencing on October 18, 2011 to and
                  including April 18, 2017; PROVIDED, however, that the
                  principal amount of the Series E Notes prepaid or purchased
                  pursuant to Section 8.2(b), Section 8.3 or Section 10.7 shall
                  be applied against the principal amount of each Series E


                                       18
<PAGE>


                  Required Principal Payment becoming due under this Section
                  8.2(a) in inverse order of their scheduled due dates. Each
                  Series E Required Principal Payment shall be at 100% of the
                  principal amount paid, together with interest accrued thereon
                  to the date of payment. The entire remaining outstanding
                  principal amount of the Series E Notes, together with all
                  accrued and unpaid interest thereon, shall be due and payable
                  on October 18, 2017.

                  (b)      OFFER TO PAY NOTES UPON CHANGE IN CONTROL.

                           (i) NOTICE AND OFFER. The Company will not take any
                  action that consummates or finalizes a Change in Control
                  unless at least thirty (30) days prior to such action it shall
                  have given to each holder of the Notes written notice of such
                  impending Change in Control. The Company will, within five (5)
                  Business Days after any Responsible Officer has knowledge of
                  the occurrence of any Change in Control, give written notice
                  of such Change in Control to each holder of Notes in the
                  manner set forth in Section 18. If a Change in Control has
                  occurred, such written notice shall contain, and shall
                  constitute an irrevocable offer to prepay all or (at such
                  holder's option) any portion of the Notes held by such holder
                  on a date specified in such notice (the "PROPOSED PREPAYMENT
                  DATE") that is not less than thirty (30) days and not more
                  than sixty (60) days after the date of such notice. If the
                  Proposed Prepayment Date shall not be specified in such
                  notice, the Proposed Prepayment Date shall be the 30th day
                  after the date such notice shall have been sent by the
                  Company. In no event will the Company take any action to
                  consummate or finalize a Change in Control unless the Company
                  has given the notice required by this Section 8.2(b)(i) and,
                  contemporaneously with such action, the Company prepays all
                  Notes required to be prepaid in accordance with Section
                  8.2(b)(ii) hereof.

                           (ii) ACCEPTANCE AND PAYMENT. A holder of Notes may
                  accept the offer to prepay made pursuant to Section 8.2(b)(i)
                  by causing a notice of acceptance of such offered prepayment
                  (specifying in such notice the amount of Notes with respect to
                  which such acceptance applies and the Series of Notes) to be
                  delivered to the Company prior to the Proposed Prepayment Date
                  (it being understood that the failure by a holder to respond
                  to such written offer of prepayment prior to the Proposed
                  Prepayment Date shall be deemed to constitute a rejection of
                  such offer with respect to all Notes held by such holder). If
                  so accepted, such offered prepayment shall be due and payable
                  on the Proposed Prepayment Date. Such offered prepayment shall
                  be made at 100% of the principal amount of such Notes so
                  prepaid, PLUS interest on all such Notes accrued to the
                  Proposed Prepayment Date. If the Company shall at any time
                  receive an acceptance to an offer to prepay Notes pursuant to
                  this Section 8.2(b)(ii) from some, but not all of, the holders
                  of the Notes, then the Company will, within two (2) Business
                  Days after the receipt of such acceptance, give written notice
                  of such acceptance to each other holder of the Notes.


                                       19
<PAGE>


                           (iii) OFFICER'S CERTIFICATE. Each offer to prepay the
                  Notes pursuant to Section 8.2(b) shall be accompanied by a
                  certificate, executed by a Responsible Officer of the Company
                  and dated the date of such offer, specifying:

                                    (A) the Proposed Prepayment Date;

                                    (B) that such payment is to be made pursuant
                           to the provisions of Section 8.2(b) of this
                           Agreement;

                                    (C) the outstanding principal amount as of
                           the Proposed Prepayment Date of each Note offered to
                           be prepaid;

                                    (D) the unpaid interest that would be due on
                           each such Note offered to be prepaid, accrued to the
                           date fixed for payment;

                                    (E) that the conditions of Section 8.2(b)
                           have been fulfilled; and

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


         8.3.     OPTIONAL PREPAYMENTS WITH MAKE-WHOLE AMOUNT.

         The Company may, at its option, upon notice as provided below, prepay
at any time all, or from time to time any part of, the Notes, in integral
multiples of $1,000,000 and in a minimum amount of $5,000,000, at 100% of the
principal amount so prepaid, plus interest thereon to the prepayment date and
the Make-Whole Amount determined for the prepayment date with respect to such
principal amount. The Company will give each holder of Notes written notice of
each optional prepayment under this Section 8.3 not less than ten (10) Business
Days and not more than sixty (60) days prior to the date fixed for such
prepayment. Each such notice shall specify such prepayment date, the aggregate
principal amount of the Notes to be prepaid on such date, the principal amount
of each Note held by such holder to be prepaid (determined in accordance with
Section 8.4), and the interest to be paid on the prepayment date with respect to
such principal amount being prepaid, and shall be accompanied by a certificate
of a Senior Financial Officer as to the estimated Make-Whole Amount due in
connection with such prepayment (calculated as if the date of such notice were
the date of the prepayment), setting forth the details of such computation. Two
(2) Business Days prior to such prepayment, the Company shall deliver to each
holder of Notes a certificate of a Senior Financial Officer specifying the
calculation of such Make-Whole Amount as of the specified prepayment date. Any
partial prepayment of the Notes pursuant to this Section 8.3 shall be applied in
satisfaction of required payments of principal in inverse order of their
scheduled due dates.


         8.4.     ALLOCATION OF PARTIAL PREPAYMENTS.

         In the case of each partial prepayment of the Notes pursuant to Section
8.3, the principal amount of the Notes to be prepaid shall be allocated among
all of the Notes (without distinguishing among the different Series) at the time
outstanding in proportion, as nearly as


                                       20
<PAGE>


practicable, to the respective unpaid principal amounts thereof not theretofore
called for prepayment.


         8.5.     MATURITY; SURRENDER, ETC.

         In the case of each prepayment of Notes pursuant to this Section 8, the
principal amount of each Note to be prepaid shall mature and become due and
payable on the date fixed for such prepayment, together with interest on such
principal amount accrued to such date and, in the case of any such prepayment
pursuant to Section 8.3, the applicable Make-Whole Amount, if any. From and
after such date, unless the Company shall fail to pay such principal amount when
so due and payable, together with the interest and Make-Whole Amount, if any, as
aforesaid, interest on such principal amount shall cease to accrue. Any Note
paid or prepaid in full shall be surrendered to the Company and cancelled and
shall not be reissued, and no Note shall be issued in lieu of any prepaid
principal amount of any Note.


         8.6.     PURCHASE OF NOTES.

         The Company will not and will not permit any Affiliate to purchase,
redeem, prepay or otherwise acquire, directly or indirectly, any of the
outstanding Notes except upon the payment or prepayment of the Notes in
accordance with the terms of this Agreement and the Notes. The Company will
promptly cancel all Notes acquired by it or any Affiliate pursuant to any
payment, prepayment or purchase of Notes pursuant to any provision of this
Agreement and no Notes may be issued in substitution or exchange for any such
Notes.


         8.7.     MAKE-WHOLE AMOUNT.

         The term "MAKE-WHOLE AMOUNT" means, with respect to any Note, an amount
equal to the excess, if any, of the Discounted Value of the Remaining Scheduled
Payments with respect to the Called Principal of such Note over the amount of
such Called Principal, PROVIDED that the Make-Whole Amount may in no event be
less than zero. For the purposes of determining the Make-Whole Amount, the
following terms have the following meanings:

                  "CALLED PRINCIPAL" means, with respect to any Note, the
         principal of such Note that is to be prepaid pursuant to Section 8.3 or
         has become or is declared to be immediately due and payable pursuant to
         Section 12.1, as the context requires.

                  "DISCOUNTED VALUE" means, with respect to the Called Principal
         of any Note, the amount obtained by discounting all Remaining Scheduled
         Payments with respect to such Called Principal from their respective
         scheduled due dates to the Settlement Date with respect to such Called
         Principal, in accordance with accepted financial practice and at a
         discount factor (applied on the same periodic basis as that on which
         interest on the Notes is payable) equal to the Reinvestment Yield with
         respect to such Called Principal.

                  "REINVESTMENT YIELD" means, with respect to the Called
         Principal of any Note, the sum of (a) 0.50% per annum PLUS (b) the
         yield to maturity implied by (i) the yields reported, as of 10:00 A.M.
         (New York City time) on the second Business Day preceding the
         Settlement Date with respect to such Called Principal, on the display
         designated as "Page PX1" on the Bloomberg Financial Market Service (or
         such other display as may


                                       21
<PAGE>


         replace Page PX1 on the Bloomberg Financial Market Service) for
         actively traded U.S. Treasury securities having a maturity equal to the
         Remaining Average Life of such Called Principal as of such Settlement
         Date, or (ii) if such yields are not reported as of such time or the
         yields reported as of such time are not ascertainable, the Treasury
         Constant Maturity Series Yields reported, for the latest day for which
         such yields have been so reported as of the second Business Day
         preceding the Settlement Date with respect to such Called Principal, in
         Federal Reserve Statistical Release H.15 (519) (or any comparable
         successor publication) for actively traded U.S. Treasury securities
         having a constant maturity equal to the Remaining Average Life of such
         Called Principal as of such Settlement Date. Such implied yield will be
         determined, if necessary, by (a) converting U.S. Treasury bill
         quotations to bond-equivalent yields in accordance with accepted
         financial practice and (b) interpolating linearly between (i) the
         actively traded U.S. Treasury security with the maturity closest to and
         greater than the Remaining Average Life and (ii) the actively traded
         U.S. Treasury security with the maturity closest to and less than the
         Remaining Average Life.

                  "REMAINING AVERAGE LIFE" means, with respect to any Called
         Principal, the number of years (calculated to the nearest one-twelfth
         year) obtained by dividing (a) such Called Principal into (b) the sum
         of the products obtained by multiplying (i) the principal component of
         each Remaining Scheduled Payment with respect to such Called Principal
         by (ii) the number of years (calculated to the nearest one-twelfth
         year) that will elapse between the Settlement Date with respect to such
         Called Principal and the scheduled due date of such Remaining Scheduled
         Payment.

                  "REMAINING SCHEDULED PAYMENTS" means, with respect to the
         Called Principal of any Note, all payments of such Called Principal and
         interest thereon that would be due after the Settlement Date with
         respect to such Called Principal if no payment of such Called Principal
         were made prior to its scheduled due date, PROVIDED that if such
         Settlement Date is not a date on which interest payments are due to be
         made under the terms of the Notes, then the amount of the next
         succeeding scheduled interest payment will be reduced by the amount of
         interest accrued to such Settlement Date and required to be paid on
         such Settlement Date pursuant to Section 8.3 or 12.1.

                  "SETTLEMENT DATE" means, with respect to the Called Principal
         of any Note, the date on which such Called Principal is to be prepaid
         pursuant to Section 8.3 or has become or is declared to be immediately
         due and payable pursuant to Section 12.1, as the context requires.

9.       AFFIRMATIVE COVENANTS.

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

         9.1.     COMPLIANCE WITH LAW.

         The Company will and will cause each of its Subsidiaries to comply with
all laws, ordinances or governmental rules or regulations to which each of them
is subject, including, without limitation, Environmental Laws, and will obtain
and maintain in effect all licenses,


                                       22
<PAGE>


certificates, permits, franchises and other governmental authorizations
necessary to the ownership of their respective properties or to the conduct of
their respective businesses, in each case to the extent necessary to ensure that
non-compliance with such laws, ordinances or governmental rules or regulations
or failures to obtain or maintain in effect such licenses, certificates,
permits, franchises and other governmental authorizations could not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect.


         9.2.     INSURANCE.

         The Company will and will cause each of its Subsidiaries to maintain,
with financially sound and reputable insurers, insurance with respect to their
respective properties and businesses against such casualties and contingencies,
of such types, on such terms and in such amounts (including deductibles,
co-insurance and self-insurance, if adequate reserves are maintained with
respect thereto) as is customary in the case of entities of established
reputations engaged in the same or a similar business and similarly situated;
provided, however, the Company may, to the extent permitted by law, provide for
appropriate self-insurance with respect to workers' compensation.


         9.3.     MAINTENANCE OF PROPERTIES.

         The Company will and will cause each of its Subsidiaries to maintain
and keep, or cause to be maintained and kept, their respective properties in
good repair, working order and condition (other than ordinary wear and tear), so
that the business carried on in connection therewith may be properly conducted
at all times, PROVIDED that this Section shall not prevent the Company or any
Subsidiary from discontinuing the operation and the maintenance of any of its
properties if such discontinuance is desirable in the conduct of its business
and the Company has concluded that such discontinuance could not, individually
or in the aggregate, reasonably be expected to have a Material Adverse Effect.


         9.4.     PAYMENT OF TAXES AND CLAIMS.

         The Company will and will cause each of its Subsidiaries to file all
tax returns required to be filed in any jurisdiction and to pay and discharge
all taxes shown to be due and payable on such returns and all other taxes,
assessments, governmental charges, or levies imposed on them or any of their
properties, assets, income or franchises, and to pay and discharge all amounts
payable for work, labor and materials, in each case to the extent such taxes,
assessments, charges, levies and amounts have become due and payable and before
they have become delinquent and all claims for which sums have become due and
payable that have or might become a Lien on properties or assets of the Company
or any Subsidiary, PROVIDED that neither the Company nor any Subsidiary need pay
any such tax, assessment, charge, levy or amount payable if (a) the amount,
applicability or validity thereof is being actively contested by the Company or
such Subsidiary on a timely basis in good faith and in appropriate proceedings,
and the Company or a Subsidiary has established adequate reserves therefor in
accordance with GAAP on the books of the Company or such Subsidiary or (b) the
nonpayment of all such taxes, assessments, charges, levies and amounts payable
in the aggregate could not reasonably be expected to have a Material Adverse
Effect.


                                       23
<PAGE>


         9.5.     CORPORATE EXISTENCE, ETC.

         Subject to Section 10.2, the Company will at all times preserve and
keep in full force and effect its corporate existence and will at all times
preserve and keep in full force and effect the corporate existence of each of
its Subsidiaries, except to the extent that, with respect to Subsidiaries, in
the good faith judgment of the Company, the failure to do so could not
reasonably be expected to, individually or in the aggregate, have a Material
Adverse Effect. The Company will at all times preserve and keep in full force
and effect all certificates of convenience and necessity, rights and franchises,
licenses, permits, operating rights and other authorization from any
Governmental Authorities as are necessary for the ownership, operation and
maintenance of its and its Subsidiaries' respective businesses and properties,
unless the termination of or failure to preserve and keep in full force and
effect such right, certificate or franchise, license, permit, operating right or
other authorization would not reasonably be expected, individually or in the
aggregate, to have a Material Adverse Effect.


         9.6.     PARI PASSU

         The Company covenants that all Debt owing under the Notes and under
this Agreement will rank at least pari passu with all its other present and
future unsecured Senior Debt.


10.      NEGATIVE COVENANTS.

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


         10.1.    TRANSACTIONS WITH AFFILIATES.

         The Company will not, and will not permit any Subsidiary to, enter into
directly or indirectly any transaction or Material group of related transactions
(including, without limitation, the purchase, lease, sale or exchange of
properties of any kind or the rendering of any service) with any Affiliate,
except in the ordinary course and pursuant to the reasonable requirements of the
Company's or such Subsidiary's business and upon fair and reasonable terms no
less favorable to the Company or such Subsidiary than would be obtainable in a
comparable arm's-length transaction with a Person not an Affiliate.


10.2.    MERGER, CONSOLIDATION, ETC.

         The Company will not, and will not permit any Subsidiary to, directly
or indirectly, consolidate with, or merge into, any other Person or permit any
other Person to consolidate with, or merge into, it, except that

                  (a) any Subsidiary may consolidate with, or merge into, the
         Company or any Wholly-Owned Subsidiary if, the Company or such
         Wholly-Owned Subsidiary is the surviving corporation; and

                  (b) the Company may consolidate with, or merge into, any other
         Person, or permit any other Person to consolidate with, or merge into,
         it, if


                                       24
<PAGE>


                           (i) the successor formed by such consolidation or the
                  survivor of such merger (the "SURVIVING CORPORATION"), is a
                  solvent corporation organized under the laws of the United
                  States of America or any State thereof (including the District
                  of Columbia),

                           (ii) if the Company is not the Surviving Corporation,
                  (A) the Surviving Corporation shall have executed and
                  delivered to each holder of the Notes its written assumption
                  of the due and punctual performance and payment of each
                  covenant and condition of the Company in this Agreement, the
                  Other Agreements and the Notes, which assumption shall be in
                  form and substance approved in writing by the Required
                  Holders, and (B) the Company shall have caused to be delivered
                  to each holder of the Notes an opinion of nationally
                  recognized independent counsel, or other independent counsel
                  reasonably satisfactory to the Required Holders, to the effect
                  that all agreements or instruments effecting such assumption
                  are enforceable in accordance with their terms and comply with
                  the terms hereof, and

                           (iii) immediately after giving effect to such
                  transaction,

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

                                    (B) the Surviving Corporation is permitted
                           to incur at least $1.00 of additional Funded Debt
                           under the provisions of Section 10.3 and Section 10.4
                           and at least $1.00 of additional Priority Debt under
                           the provisions of Section 10.5.


         10.3. FUNDED DEBT TO CONSOLIDATED CASH FLOWS.

         The Company will not permit the ratio of (i) Consolidated Funded Debt
to (ii) Consolidated Cash Flow determined as of the end of the four fiscal
quarter period then most recently ended, to exceed 3.00 to 1.00 at any time.


         10.4. ADJUSTED CONSOLIDATED FUNDED DEBT TO CONSOLIDATED MEMBERS' AND
PATRONS' EQUITY.

         The Company shall not permit the ratio of Adjusted Consolidated Funded
Debt to Consolidated Members' and Patrons' Equity to exceed .80 to 1.00 at any
time.


10.5.    PRIORITY DEBT.

         The Company covenants that it will not, and will not permit any of its
Subsidiaries to, directly or indirectly, create, issue, incur or assume any
Priority Debt if after giving effect thereto the aggregate outstanding principal
amount of all Priority Debt would exceed 20% of Consolidated Net Worth at the
time of such creation, issuance, incurrence or assumption.


                                       25
<PAGE>


         10.6.    LIENS.

         The Company will not, and will not permit any of its Subsidiaries to,
directly or indirectly create, incur, assume or suffer to be created, incurred
or assumed or to exist (upon the happening of a contingency or otherwise), any
Lien on or with respect to any property of the Company or any such Subsidiary,
whether now owned or held or hereafter acquired (unless provision is made
whereby the Notes will be equally and ratably secured with any and all other
obligations thereby secured as provided in the last paragraph of this Section
10.6), except:

                  (a) Liens for taxes, assessments or other governmental charges
         or levies securing obligations not overdue, or if overdue, being
         actively contested in good faith by appropriate proceedings that will
         prevent the forfeiture or sale of any property, provided that adequate
         reserves are established in accordance on the books of the Company or a
         Subsidiary of the Company in accordance with GAAP;

                  (b) attachment, judgment and other similar Liens arising in
         connection with court proceedings, provided the execution or other
         enforcement of such Lien(s) is effectively stayed and the claims
         secured thereby are being actively contested in good faith in such
         manner that the property subject to such Lien(s) is not subject to
         forfeiture or sale, and further provided that adequate reserves are
         established on the books of the Company or a Subsidiary of the Company
         in accordance with GAAP;

                  (c) Liens incidental to the normal conduct of the business of
         the Company or a Subsidiary of the Company or to the ownership by the
         Company or a Subsidiary of its property which were not incurred in
         connection with the borrowing of money or the obtaining of credit or
         advances and which do not in the aggregate materially detract from the
         value of the property of the Company or any Subsidiary of the Company
         for the purpose of such business or materially impair the use thereof
         in the operation of the business of the Company or any Subsidiary of
         the Company, including, without limitation, Liens

                           (i) in connection with workers' compensation,
                  unemployment insurance, social security and other like laws,

                           (ii) to secure (or to obtain letters of credit that
                  secure) the performance of tenders, statutory obligations,
                  surety and performance bonds (of a type other than set forth
                  in Section 10.6(b)), bids, leases (other than Capital Leases),
                  purchase, construction or sales contracts and other similar
                  obligations, in each case not incurred or made in connection
                  with the borrowing of money, the obtaining of advances or
                  credit or the payment of the deferred purchase price of
                  property,

                           (iii) to secure the claims or demands of materialmen,
                  mechanics, carriers, warehousemen, vendors, repairmen,
                  landlords, lessors and other like Persons, arising in the
                  ordinary course of business, and


                                       26
<PAGE>


                           (iv) in the nature of reservations, exceptions,
                  encroachments, easements, rights-of-way, covenants,
                  conditions, restrictions, leases and other similar title
                  exceptions or encumbrances affecting real property;

         PROVIDED that any amounts secured by such Liens are not yet due and
payable.

                  (d) Liens existing as of the date of this Agreement securing
         Debt and set forth on Schedule 5.16 hereto;

                  (e) any Lien renewing, extending or refunding any Lien
         permitted by paragraph (d) of this Section 10.6, provided that (a) the
         principal amount of the Debt secured by such Lien immediately prior to
         such extension, renewal or refunding is not increased or the maturity
         thereof reduced, (b) such Lien is not extended to any other property,
         and (c) immediately after such extension, renewal or refunding no
         Default or Event of Default would exist;

                  (f) Liens on property of the Company or any of its
         Subsidiaries securing Debt owing to the Company or to any of its
         Wholly-Owned Subsidiaries;

                  (g) any Lien created to secure all or any part of the purchase
         price or cost of construction, or to secure Debt incurred or assumed to
         pay all or a part of the purchase price or cost of construction, of any
         property (or any improvement thereon) acquired or constructed by the
         Company or a Subsidiary of the Company after the date of the Closing,
         PROVIDED that

                           (i) no such Lien shall extend to or cover any
                  property other than the property (or improvement thereon)
                  being acquired or constructed or rights relating solely to
                  such item or items of property (or improvement thereon),

                           (ii) the principal amount of Debt secured by any such
                  Lien shall at no time exceed an amount equal to the lesser of
                  (A) the cost to the Company or such Subsidiary of the property
                  (or improvement thereon) being acquired or constructed or (B)
                  the Fair Market Value (as determined in good faith by the
                  Company) of such property, determined at the time of such
                  acquisition or at the time of substantial completion of such
                  construction, and

                           (iii) such Lien shall be created contemporaneously
                  with, or within 180 days after, the acquisition or completion
                  of construction of such property (or improvement thereon);

                  (h) any Lien existing on property acquired by the Company or
         any Subsidiary of the Company at the time such property is so acquired
         (whether or not the Debt secured thereby is assumed by the Company or
         such Subsidiary) or any Lien existing on property of a Person
         immediately prior to the time such Person is merged into or
         consolidated with the Company or any Subsidiary of the Company,
         PROVIDED that

                           (i) no such Lien shall have been created or assumed
                  in contemplation of such acquisition of property or such
                  consolidation or merger,


                                       27
<PAGE>


                           (ii) such Lien shall extend only to the property
                  acquired or the property of such Person merged into or
                  consolidated with the Company or Subsidiary which was subject
                  to such Lien as of the time of such consolidation or merger,
                  and

                           (iii) the principal amount of the Debt secured by any
                  such Lien shall at no time exceed an amount equal to 100% of
                  the Fair Market Value (as determined in good faith by the
                  board of directors of the Company or such Subsidiary) of the
                  property subject thereto at the time of the acquisition
                  thereof or at the time of such merger or consolidation;

                  (i) Liens to CoBank and other cooperatives with respect to
         equity held by the Company in such banks or other cooperatives securing
         Debt, provided that the aggregate amount of such equity securing Debt
         shall not exceed $50,000,000 at any one time; and

                  (j) other Liens not otherwise permitted under clause (a)
         through (i) of this Section 10.6 securing Debt, provided that the
         creation, issuance, incurrence or assumption of such Debt is permitted
         under Sections 10.3, 10.4 and 10.5 hereof.

If, notwithstanding the prohibition contained herein, the Company shall, or
shall permit any of its Subsidiaries to, directly or indirectly create, incur,
assume or permit to exist any Lien, other than those Liens permitted by the
provisions of paragraphs (a) through (j) of this Section 10.6 (but including any
Liens in respect of the Primary Bank Facility whether or not permitted by
paragraphs (a) - (j) of this Section 10.6), it will make or cause to be made
effective provision whereby the Notes will be secured equally and ratably with
any and all other obligations thereby secured, such security to be pursuant to
agreements reasonably satisfactory to the Required Holders (including
intercreditor arrangements providing for the pari passu treatment of the Notes
and all such secured Debt) and, in any such case, the Notes shall have the
benefit, to the fullest extent that, and with such priority as, the holders of
the Notes may be entitled under applicable law, of an equitable Lien on such
property. For the avoidance of doubt, the Company acknowledges that it will not,
and will not permit any Subsidiary to, secure or grant any Liens in respect of
the Primary Bank Facility, unless an equal and ratable Lien is granted in
respect of the Notes.


         10.7.    SALE OF ASSETS.

                  (a) SALE OF ASSETS. The Company will not, and will not permit
         any of its Subsidiaries to, make any Transfer, PROVIDED that the
         foregoing restriction does not apply to a Transfer if:

                           (i) the property that is the subject of such Transfer
                  constitutes either (A) inventory held for sale, or (B)
                  equipment, fixtures, supplies or materials no longer required,
                  in the opinion of the Company or such Subsidiary, in the
                  operation of the business of the Company or such Subsidiary or
                  that is obsolete, and, in the case of any Transfer described
                  in clause (A) or clause (B), such Transfer is in the ordinary
                  course of business (an "ORDINARY COURSE TRANSFER");


                                       28
<PAGE>


                           (ii) such Transfer is from a Subsidiary to the
                  Company or a Wholly-Owned Subsidiary, so long as immediately
                  before and immediately after the consummation of such
                  transaction, and after giving effect thereto, no Default or
                  Event of Default exists or would exist (each such Transfer,
                  collectively with any Ordinary Course Transfers, "EXCLUDED
                  TRANSFERS"); or

                           (iii) such Transfer is a lease of the assets of the
                  Company or any Subsidiary of the Company to any joint venture
                  entity, of which the Company or any Subsidiary of the Company
                  holds an ownership interest and shares in the earnings;
                  PROVIDED that the terms of any such lease and the division of
                  the joint venture's earnings, when viewed as a whole, can be
                  reasonably expected to generate the same or greater book
                  earnings and cash flow for the Company or Subsidiary of the
                  Company as would be generated absent such lease.

                  (b) DEBT PREPAYMENT APPLICATIONS AND REINVESTED TRANSFERS.

                           (i) Notwithstanding the provisions of Section
                  10.7(a), the Company or any Subsidiary may Transfer any of its
                  properties at the Fair Market Value thereof; PROVIDED that

                                    (A) either (1) such Transfer is not an
                           Excluded Transfer and does not involve a Substantial
                           Portion of the property of the Company and its
                           Subsidiaries, or, (2) concurrently with the making of
                           such Transfer the Net Proceeds Amount with respect to
                           such Transfer (the "DESIGNATED PORTION") is either
                           (x) applied to the acquisition by the Company or the
                           Subsidiary making such Transfer of assets of a nature
                           similar to, and of at least an equivalent value of
                           the assets which were the subject of such Transfer,
                           or is committed to be applied to such acquisition
                           within one year of the date of such Transfer (a
                           "REINVESTED TRANSFER"), or (y) applied to a Debt
                           Prepayment Application with respect to such Transfer,
                           in either case hereof, within one year of the
                           consummation of such Transfer, as specified in an
                           Officer's Certificate delivered to each holder of
                           Notes prior to, or contemporaneously with, the
                           consummation of such Transfer; and

                                    (B) immediately after giving effect to such
                           Transfer (1) no Default or Event of Default shall
                           exist and (2) the Company is able to incur at least
                           $1.00 of additional Funded Debt under the provisions
                           of Section 10.3 and Section 10.4 hereof and at least
                           $1.00 of additional Priority Debt under the
                           provisions of Section 10.5 hereof.

                           (ii) If, notwithstanding the certificate referred to
                  in the foregoing clause 10.7(b)(i)(A), the Company shall fail
                  to apply the entire amount of the Designated Portion as
                  specified in such certificate within the period stated in
                  Section 10.7(b)(i), an Event of Default shall be deemed to
                  have existed as of the expiration of such period and shall be
                  deemed to be continuing.


                                       29
<PAGE>


                  (c) CERTAIN DEFINITIONS. The following terms have the
         following meanings:

                           (i) "DEBT PREPAYMENT APPLICATION" means, with respect
                  to any Transfer by the Company or any Subsidiary, the
                  application by the Company or such Subsidiary of cash in an
                  amount equal to the Net Proceeds Amount with respect to such
                  Transfer to pay the outstanding principal of all Funded Debt
                  of the Company or such Subsidiary (other than Funded Debt
                  owing to any of the Subsidiaries or any Affiliate and Funded
                  Debt in respect of any revolving credit or similar facility
                  providing the Company or such Subsidiary with the right to
                  obtain loans or other extensions of credit from time to time,
                  except to the extent that in connection with such payment of
                  Funded Debt, the availability of loans or other extensions of
                  credit under such credit facility is permanently reduced by an
                  amount not less than the amount of such proceeds applied to
                  the payment of such Funded Debt), PROVIDED that in the course
                  of making such application the Company shall offer to prepay
                  each outstanding Note in a principal amount that equals the
                  Ratable Portion for such Note PLUS interest on all such Notes
                  accrued to the date of such payment. The Company will give
                  each holder of Notes written notice of such offered prepayment
                  not less than ten (10) Business Days and not more than sixty
                  (60) days prior to the date fixed for such prepayment,
                  specifying such prepayment date, the aggregate principal
                  amount of the Notes to be prepaid on such date and the Ratable
                  Portion payable with respect to each such Note. A holder of
                  Notes may accept or reject such offer to prepay by causing a
                  notice of such acceptance or rejection to be delivered to the
                  Company at least two (2) Business Days prior to the prepayment
                  date specified by the Company in such offer. If a holder of
                  Notes has not responded to such offer by a date which is at
                  least two (2) Business Days prior to such specified prepayment
                  date, such holder shall be deemed to have rejected such offer
                  of prepayment. If any holder of a Note rejects or is deemed to
                  have rejected such offer of prepayment, then, for purposes of
                  determining the extent to which any Net Proceeds Amount has
                  been applied to a Debt Prepayment Application, the Company
                  nevertheless will be deemed to have paid Funded Debt in an
                  amount equal to the Ratable Portion for such Note.

                           As used in this definition,

                           "RATABLE PORTION" means, for any Note, an amount
                  equal to the product of

                                    (a) the Net Proceeds Amount (or any portion
                           thereof) being so offered to be applied to the
                           payment of Funded Debt, MULTIPLIED BY

                                    (b) a fraction the numerator of which is the
                           outstanding principal amount of such Note and the
                           denominator of which is the aggregate outstanding
                           principal amount of Funded Debt of the Company and
                           its Subsidiaries, after eliminating all offsetting
                           debits and credits between the Company and its
                           Subsidiaries and all other items required to be
                           eliminated in the course of the


                                       30
<PAGE>


                           preparation of consolidated financial statements of
                           the Company and its Subsidiaries in accordance with
                           GAAP.

                           (ii) "DISPOSITION VALUE" means, at any time, with
                  respect to any Transfer,

                                    (A) in the case of property that does not
                           constitute capital stock of or other ownership
                           interests in any Subsidiary of the Company, the book
                           value thereof, valued at the time of such Transfer in
                           good faith by the board of directors of the Company,
                           and

                                    (B) in the case of property that constitutes
                           capital stock of or other ownership interests in any
                           Subsidiary of the Company, an amount equal to that
                           percentage of the book value of the assets of the
                           Subsidiary that issued such capital stock or other
                           ownership interests as is equal to the percentage
                           that the book value that such capital stock or other
                           ownership interests represents of the book value of
                           all of the outstanding capital stock of or other
                           ownership interests in such Subsidiary (assuming, in
                           making such calculations, that all securities
                           convertible into such capital stock or other
                           ownership interests are so converted and giving full
                           effect to all transactions that would occur or be
                           required in connection with such conversion),
                           determined as of time of such Transfer in good faith
                           by the board of directors of the Company.

                           (iii) "NET PROCEEDS AMOUNT" means, with respect to
                  any Transfer of any property by any Person, an amount equal to
                  the difference of

                                    (a) the aggregate amount of the
                           consideration (valued at the Fair Market Value of
                           such consideration at the time of the consummation of
                           such Transfer) received by such Person in respect of
                           such Transfer, MINUS

                                    (b) all ordinary and reasonable
                           out-of-pocket costs and expenses actually incurred by
                           such Person in connection with such Transfer and any
                           income taxes fairly attributable to such Transfer.

                           (iv) "SUBSTANTIAL PORTION" means, at any time, any
                  property subject to a Transfer if the Disposition Value of
                  such property, when added to the Disposition Value of all
                  other property of the Company and its Subsidiaries that shall
                  have been the subject of a Transfer (other than an Excluded
                  Transfer and subject, with respect to both such property and
                  all such other property, to the provisions of Section 10.7(b))
                  during the then current fiscal year of the Company, exceeds an
                  amount equal to 25% of Consolidated Total Assets as reflected
                  (or as would be reflected) in the consolidated balance sheet
                  of the Company for the fiscal year of the Company then most
                  recently ended.


                                       31
<PAGE>


                           (iv) "TRANSFER" means, with respect to any Person,
                  any transaction in which such Person sells, conveys, transfers
                  or leases (as lessor) any of its property, including, without
                  limitation, capital stock of or other ownership interests in,
                  any other Person.


         10.8.    LINE OF BUSINESS.

         The Company will not, and will not permit any Subsidiary to, engage to
any Material extent in any business activity or operations other than operations
or activities, (a) in or reasonably related to the agriculture industry, (ii) in
the food industry or (iii) in which the Company and its Subsidiaries are
otherwise engaged on the date hereof as described in the Memorandum or
businesses reasonably related thereto or in furtherance thereof.


         10.9.    SUBSIDIARY DISTRIBUTION RESTRICTIONS.

         The Company covenants that it will not, and will not permit any
Subsidiary (other than NCRA) of the Company to, enter into, or be otherwise
subject to, any contract or agreement (including its certificate of
incorporation) which limits the amount of, or otherwise imposes restrictions on
the payment of, Distributions by any Subsidiary of the Company.


         10.10.   SUBSIDIARY PREFERRED STOCK.

         The Company covenants that it will not permit any Subsidiary of the
Company to issue or permit to be outstanding any class of capital stock which
has priority over any other class of capital stock of such Subsidiary as to
Distributions or in liquidation.


         10.11.   ISSUANCE OF STOCK BY SUBSIDIARIES.

         The Company covenants that it will not permit any Subsidiary of the
Company to issue, sell or otherwise dispose of any shares of any class of its
stock (either directly or indirectly by the issuance of rights or options for,
or securities convertible into, such shares) except to the Company or another
Subsidiary of the Company.


11.      EVENTS OF DEFAULT.

         An "EVENT OF DEFAULT" shall exist if any of the following conditions or
events shall occur and be continuing:

                  (a) the Company defaults in the payment of any principal or
         Make-Whole Amount, if any, on any Note when the same becomes due and
         payable, whether at maturity or at a date fixed for prepayment or by
         declaration or otherwise; or

                  (b) the Company defaults in the payment of any interest on any
         Note for more than five (5) Business Days after the same becomes due
         and payable; or

                  (c) the Company defaults in the performance of or compliance
         with any term contained in any of Section 7.1(d), Section 8.2 (other
         than any payment default occurring under Sections 11(a) and/or 11(b))
         or Section 10 (other than Section 10.8) hereof; or


                                       32
<PAGE>


                  (d) the Company defaults in the performance of or compliance
         with any term contained herein (other than those referred to in
         paragraphs (a), (b) and (c) of this Section 11) and such default is not
         remedied within 30 days after the earlier of (i) a Responsible Officer
         obtaining actual knowledge of such default and (ii) the Company
         receiving written notice of such default from any holder of a Note (any
         such written notice to be identified as a "notice of default" and to
         refer specifically to this paragraph (d) of Section 11); or

                  (e) any representation or warranty made in writing by or on
         behalf of the Company or by any officer of the Company in this
         Agreement or in any writing furnished in connection with the
         transactions contemplated hereby proves to have been false or incorrect
         in any material respect on the date as of which made; or

                  (f) the Company or any Subsidiary is in default (as principal
         or as guarantor or other surety) in the payment of any principal of or
         premium or make-whole amount or interest on any Debt that is
         outstanding in an aggregate principal amount of at least $10,000,000
         beyond any period of grace provided with respect thereto, or (ii) the
         Company or any Subsidiary is in default in the performance of or
         compliance with any agreement, term or condition contained in any
         instrument or agreement evidencing any Debt in an aggregate outstanding
         principal amount of at least $10,000,000 or of any mortgage, indenture
         or other agreement relating thereto or any other condition exists, and
         as a consequence of such default or condition such Debt has become, or
         has been declared (or one or more Persons are entitled to declare such
         Debt to be) due and payable before its stated maturity or before its
         regularly scheduled dates of payment, or (iii) as a consequence of the
         occurrence or continuation of any event or condition (other than the
         passage of time or the right of the holder of Debt to convert such Debt
         into equity interests), (x) the Company or any Subsidiary has become
         obligated to purchase or repay Debt before its regular maturity or
         before its regularly scheduled dates of payment in an aggregate
         outstanding principal amount of at least $10,000,000, or (y) one or
         more Persons have the right to require the Company or any Subsidiary so
         to purchase or repay such Debt; or

                  (g) the Company or any Subsidiary (i) is generally not paying,
         or admits in writing its inability to pay, its debts as they become
         due, (ii) files, or consents by answer or otherwise to the filing
         against it of, a petition for relief or reorganization or arrangement
         or any other petition in bankruptcy, for liquidation or to take
         advantage of any bankruptcy, insolvency, reorganization, moratorium or
         other similar law of any jurisdiction, (iii) makes an assignment for
         the benefit of its creditors, (iv) consents to the appointment of a
         custodian, receiver, trustee or other officer with similar powers with
         respect to it or with respect to any substantial part of its property,
         (v) is adjudicated as insolvent or to be liquidated, or (vi) takes
         corporate action for the purpose of any of the foregoing; or

                  (h) a court or Governmental Authority of competent
         jurisdiction enters an order appointing, without consent by the Company
         or any of its Subsidiaries, a custodian, receiver, trustee or other
         officer with similar powers with respect to it or with respect to any
         substantial part of its property, or constituting an order for relief
         or approving a


                                       33
<PAGE>


         petition for relief or reorganization or any other petition in
         bankruptcy or for liquidation or to take advantage of any bankruptcy or
         insolvency law of any jurisdiction, or ordering the dissolution,
         winding-up or liquidation of the Company or any of its Subsidiaries, or
         any such petition shall be filed against the Company or any of its
         Subsidiaries and such petition shall not be dismissed within 60 days;
         or

                  (i) a final judgment or judgments for the payment of money
         aggregating in excess of $5,000,000 are rendered against one or more of
         the Company and its Subsidiaries and which judgments are not, within 45
         days after entry thereof, bonded, discharged or stayed pending appeal,
         or are not discharged within 45 days after the expiration of such stay;
         or

                  (j) if (i) any Plan shall fail to satisfy the minimum funding
         standards of ERISA or the Code for any plan year or part thereof or a
         waiver of such standards or extension of any amortization period is
         sought or granted under section 412 of the Code, (ii) a notice of
         intent to terminate any Plan shall have been or is reasonably expected
         to be filed with the PBGC or the PBGC shall have instituted proceedings
         under ERISA section 4042 to terminate or appoint a trustee to
         administer any Plan or the PBGC shall have notified the Company or any
         ERISA Affiliate that a Plan may become a subject of any such
         proceedings, (iii) the aggregate "amount of unfunded benefit
         liabilities" (within the meaning of section 4001(a)(18) of ERISA) under
         all Plans, determined in accordance with Title IV of ERISA, shall
         exceed five percent (5%) of Consolidated Net Worth for any period of
         ten (10) consecutive calendar days or more, (iv) the Company or any
         ERISA Affiliate shall have incurred or is reasonably expected to incur
         any liability pursuant to Title I or IV of ERISA or the penalty or
         excise tax provisions of the Code relating to employee benefit plans,
         (v) the Company or any ERISA Affiliate withdraws from any Multiemployer
         Plan, or (vi) the Company or any Subsidiary establishes or amends any
         employee welfare benefit plan that provides post-employment welfare
         benefits in a manner that would increase the liability of the Company
         or any Subsidiary thereunder; and any such event or events described in
         clauses (i) through (vi) above, either individually or together with
         any other such event or events, could reasonably be expected to have a
         Material Adverse Effect.

As used in Section 11(j), the terms "EMPLOYEE BENEFIT PLAN" and "EMPLOYEE
WELFARE BENEFIT PLAN" shall have the respective meanings assigned to such terms
in Section 3 of ERISA.


12.      REMEDIES ON DEFAULT, ETC.


         12.1.    ACCELERATION.

                  (a) If an Event of Default with respect to the Company
         described in paragraph (g) or (h) of Section 11 (other than an Event of
         Default described in clause (i) of paragraph (g) or described in clause
         (vi) of paragraph (g) by virtue of the fact that such clause
         encompasses clause (i) of paragraph (g)) has occurred, all the Notes
         then outstanding shall automatically become immediately due and
         payable.


                                       34
<PAGE>


                  (b) If any other Event of Default has occurred and is
         continuing, any holder or holders of more than 66-2/3% in principal
         amount of the Notes at the time outstanding may at any time at its or
         their option, by notice or notices to the Company, declare all the
         Notes then outstanding to be immediately due and payable.

                  (c) If any Event of Default described in paragraph (a) or (b)
         of Section 11 has occurred and is continuing, any holder or holders of
         Notes at the time outstanding affected by such Event of Default may at
         any time, at its or their option, by notice or notices to the Company,
         declare all the Notes held by it or them to be immediately due and
         payable.

         Upon any Notes becoming due and payable under this Section 12.1,
whether automatically or by declaration, such Notes will forthwith mature and
the entire unpaid principal amount of such Notes, plus (x) all accrued and
unpaid interest thereon and (y) the Make-Whole Amount determined in respect of
such principal amount (to the full extent permitted by applicable law), shall
all be immediately due and payable, in each and every case without presentment,
demand, protest or further notice, all of which are hereby waived. The Company
acknowledges, and the parties hereto agree, that each holder of a Note has the
right to maintain its investment in the Notes free from repayment by the Company
(except as herein specifically provided for) and that the provision for payment
of a Make-Whole Amount by the Company in the event that the Notes are prepaid or
are accelerated as a result of an Event of Default, is intended to provide
compensation for the deprivation of such right under such circumstances.


         12.2.    OTHER REMEDIES.

         If any Default or Event of Default has occurred and is continuing, and
irrespective of whether any Notes have become or have been declared immediately
due and payable under Section 12.1, the holder of any Note at the time
outstanding may proceed to protect and enforce the rights of such holder by an
action at law, suit in equity or other appropriate proceeding, whether for the
specific performance of any agreement contained herein or in any Financing
Document, or for an injunction against a violation of any of the terms hereof or
thereof, or in aid of the exercise of any power granted hereby or thereby or by
law or otherwise.


         12.3.    RESCISSION.

         At any time after any Notes have been declared due and payable pursuant
to clause (b) or (c) of Section 12.1, the Required Holders may, by written
notice to the Company, rescind and annul any such declaration and its
consequences if (a) the Company has paid all overdue interest on the Notes, all
principal of and Make-Whole Amount, if any, on any Notes that are due and
payable and are unpaid other than by reason of such declaration, and all
interest on such overdue principal and Make-Whole Amount, if any, and (to the
extent permitted by applicable law) any overdue interest in respect of the
Notes, at the Default Rate, (b) all Events of Default and Defaults, other than
non-payment of amounts that have become due solely by reason of such
declaration, have been cured or have been waived pursuant to Section 17, and (c)
no judgment or decree has been entered for the payment of any monies due
pursuant hereto or to the Notes. No rescission and annulment under this Section
12.3 will extend to or affect any subsequent Event of Default or Default or
impair any right consequent thereon.


                                       35
<PAGE>


         12.4.    NO WAIVERS OR ELECTION OF REMEDIES, EXPENSES, ETC.

         No course of dealing and no delay on the part of any holder of any Note
in exercising any right, power or remedy shall operate as a waiver thereof or
otherwise prejudice such holder's rights, powers or remedies. No right, power or
remedy conferred by any Financing Document upon any holder of any Note shall be
exclusive of any other right, power or remedy referred to herein or therein or
now or hereafter available at law, in equity, by statute or otherwise. Without
limiting the obligations of the Company under Section 15, the Company will pay
to the holder of each Note on demand such further amount as shall be sufficient
to cover all costs and expenses of such holder incurred in any enforcement or
collection under this Section 12, including, without limitation, reasonable
attorneys' fees, expenses and disbursements.


13.      REGISTRATION; EXCHANGE; SUBSTITUTION OF NOTES.


         13.1.    REGISTRATION OF NOTES.

         The Company shall keep at its principal executive office a register for
the registration and registration of transfers of Notes. The name and address of
each holder of one or more Notes, each transfer thereof and the name and address
of each transferee of one or more Notes shall be registered in such register.
Prior to due presentment for registration of transfer, the Person in whose name
any Note shall be registered shall be deemed and treated as the owner and holder
thereof for all purposes hereof, and the Company shall not be affected by any
notice or knowledge to the contrary. The Company shall give to any holder of a
Note that is an Institutional Investor promptly upon request therefor, a
complete and correct copy of the names and addresses of all registered holders
of Notes.


         13.2.    TRANSFER AND EXCHANGE OF NOTES.

         Upon surrender of any Note at the principal executive office of the
Company for registration of transfer or exchange (and in the case of a surrender
for registration of transfer, duly endorsed or accompanied by a written
instrument of transfer duly executed by the registered holder of such Note or
his attorney duly authorized in writing and accompanied by the address for
notices of each transferee of such Note or part thereof), the Company shall
execute and deliver, at the Company's expense (except as provided below), one or
more new Notes (as requested by the holder thereof) in exchange therefor, in an
aggregate principal amount equal to the unpaid principal amount of the
surrendered Note. Each such new Note shall be payable to such Person as such
holder may request and shall be substantially in the form of Exhibit 1A or
Exhibit 1B, as applicable. Each such new Note shall be dated and bear interest
from the date to which interest shall have been paid on the surrendered Note or
dated the date of the surrendered Note if no interest shall have been paid
thereon. The Company may require payment of a sum sufficient to cover any stamp
tax or governmental charge imposed in respect of any such transfer of Notes.
Notes shall not be transferred in denominations of less than $500,000, PROVIDED
that if necessary to enable the registration of transfer by a holder of its
entire holding of Notes, one Note may be in a denomination of less than
$500,000. Any transferee, by its acceptance of a Note registered in its name (or
the name of its nominee), shall be deemed to have made the representation set
forth in Section 6.2.


                                       36
<PAGE>


         13.3.    REPLACEMENT OF NOTES.

         Upon receipt by the Company of evidence reasonably satisfactory to it
of the ownership of and the loss, theft, destruction or mutilation of any Note
(which evidence shall be, in the case of an Institutional Investor, notice from
such Institutional Investor of such ownership and such loss, theft, destruction
or mutilation), and

                  (a) in the case of loss, theft or destruction, of indemnity
         reasonably satisfactory to it (PROVIDED that if the holder of such Note
         is, or is a nominee for, an original Purchaser or a Qualified
         Institutional Buyer, such Person's own unsecured agreement of indemnity
         shall be deemed to be satisfactory), or

                  (b) in the case of mutilation, upon surrender and cancellation
         thereof,

the Company at its own expense shall execute and deliver, in lieu thereof, a new
Note, dated and bearing interest from the date to which interest shall have been
paid on such lost, stolen, destroyed or mutilated Note or dated the date of such
lost, stolen, destroyed or mutilated Note if no interest shall have been paid
thereon.


14.      PAYMENTS ON NOTES.

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


15.      EXPENSES, ETC.


         15.1.    TRANSACTION EXPENSES.

         Whether or not the transactions contemplated hereby are consummated,
the Company will pay all costs and expenses (including reasonable attorneys'
fees of a special counsel and, if reasonably required, local or other counsel)
incurred by you and each Other Purchaser or holder of a Note in connection with
such transactions and in connection with any amendments, waivers or consents
under or in respect of the Financing Documents (whether or not such amendment,
waiver or consent becomes effective), including, without limitation: (a) the
costs and expenses incurred in enforcing or defending (or determining whether or
how to enforce or defend) any


                                       37
<PAGE>


rights under the Financing Documents or in responding to any subpoena or other
legal process or informal investigative demand issued in connection with the
Financing Documents, or by reason of being a holder of any Note, and (b) the
costs and expenses, including financial advisors' fees, incurred in connection
with the insolvency or bankruptcy of the Company or any Subsidiary or in
connection with any work-out or restructuring of the transactions contemplated
hereby and by the Financing Documents. The Company will pay, and will save you
and each other holder of a Note harmless from, all claims in respect of any
fees, costs or expenses if any, of brokers and finders (other than those
retained by you).


         15.2.    SURVIVAL.

         The obligations of the Company under this Section 15 will survive the
payment or transfer of any Note, the enforcement, amendment or waiver of any
provision of this Agreement or the Notes, and the termination of this Agreement.


16.      SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ENTIRE AGREEMENT.

         All representations and warranties contained in any Financing Document
shall survive the execution and delivery of this Agreement and the Notes, the
purchase or transfer by you of any Note or portion thereof or interest therein
and the payment of any Note, and may be relied upon by any subsequent holder of
a Note, regardless of any investigation made at any time by or on behalf of you
or any other holder of a Note. All statements contained in any certificate or
other instrument delivered by or on behalf of the Company pursuant to this
Agreement shall be deemed representations and warranties of the Company under
any Financing Document. Subject to the preceding sentence, the Financing
Documents embody the entire agreement and understanding between you and the
Company and supersede all prior agreements and understandings relating to the
subject matter hereof.


17.      AMENDMENT AND WAIVER.


         17.1.    REQUIREMENTS.

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


                                       38
<PAGE>


         17.2.    SOLICITATION OF HOLDERS OF NOTES.

                  (a) SOLICITATION. The Company will provide each holder of the
         Notes (irrespective of the amount of Notes then owned by it) with
         sufficient information, sufficiently far in advance of the date a
         decision is required, to enable such holder to make an informed and
         considered decision with respect to any proposed amendment, waiver or
         consent in respect of any of the provisions hereof or of the Notes. The
         Company will deliver executed or true and correct copies of each
         amendment, waiver or consent effected pursuant to the provisions of
         this Section 17 to each holder of outstanding Notes promptly following
         the date on which it is executed and delivered by, or receives the
         consent or approval of, the requisite holders of Notes.

                  (b) PAYMENT. The Company will not directly or indirectly pay
         or cause to be paid any remuneration, whether by way of supplemental or
         additional interest, fee or otherwise, or grant any security, to any
         holder of Notes as consideration for or as an inducement to the
         entering into by any holder of Notes of any waiver or amendment of any
         of the terms and provisions hereof unless such remuneration is
         concurrently paid, or security is concurrently granted, on the same
         terms, ratably to each holder of Notes then outstanding even if such
         holder did not consent to such waiver or amendment.


         17.3.    BINDING EFFECT, ETC.

         Any amendment or waiver consented to as provided in this Section 17
applies equally to all holders of Notes and is binding upon them and upon each
future holder of any Note and upon the Company without regard to whether such
Note has been marked to indicate such amendment or waiver. No such amendment or
waiver will extend to or affect any obligation, covenant, agreement, Default or
Event of Default not expressly amended or waived or impair any right consequent
thereon. No course of dealing between the Company and the holder of any Note nor
any delay in exercising any rights hereunder or under any Note shall operate as
a waiver of any rights of any holder of such Note. As used herein, the term
"THIS AGREEMENT" and references thereto shall mean this Agreement as it may from
time to time be amended or supplemented.


         17.4.    NOTES HELD BY COMPANY, ETC.

         Solely for the purpose of determining whether the holders of the
requisite percentage of the aggregate principal amount of Notes then outstanding
approved or consented to any amendment, waiver or consent to be given under any
of the Financing Documents, or have directed the taking of any action provided
in any of the Financing Documents to be taken upon the direction of the holders
of a specified percentage of the aggregate principal amount of Notes then
outstanding, Notes directly or indirectly owned by the Company or any of its
Affiliates shall be deemed not to be outstanding.


         18.      NOTICES.

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


                                       39
<PAGE>


with return receipt
requested (postage prepaid), or (c) by a recognized overnight delivery service
(with charges prepaid). Any such notice must be sent:

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

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

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

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


19.      REPRODUCTION OF DOCUMENTS.

         This Agreement and all documents relating thereto, including, without
limitation, (a) consents, waivers and modifications that may hereafter be
executed, (b) documents received by you at the Closing (except the Notes
themselves), and (c) financial statements, certificates and other information
previously or hereafter furnished to you, may be reproduced by you by any
photographic, photostatic, microfilm, microcard, miniature photographic or other
similar process and you may destroy any original document so reproduced. The
Company agrees and stipulates that, to the extent permitted by applicable law,
any such reproduction shall be admissible in evidence as the original itself in
any judicial or administrative proceeding (whether or not the original is in
existence and whether or not such reproduction was made by you in the regular
course of business) and any enlargement, facsimile or further reproduction of
such reproduction shall likewise be admissible in evidence. This Section 19
shall not prohibit the Company or any other holder of Notes from contesting any
such reproduction to the same extent that it could contest the original, or from
introducing evidence to demonstrate the inaccuracy of any such reproduction.


20.      CONFIDENTIAL INFORMATION.

         For the purposes of this Section 20, "CONFIDENTIAL INFORMATION" means
information delivered to you by or on behalf of the Company or any Subsidiary in
connection with the transactions contemplated by or otherwise pursuant to this
Agreement that is proprietary in nature and that was clearly marked or labeled
or otherwise adequately identified when received by you as being confidential
information of the Company or such Subsidiary, PROVIDED that such term does not
include information that (a) was publicly known or otherwise known to you prior
to the time of such disclosure, (b) subsequently becomes publicly known through
no act or omission by you or any person acting on your behalf, (c) otherwise
becomes known to you other than through disclosure by the Company or any
Subsidiary or (d) constitutes financial statements delivered to you under
Section 7.1 that are otherwise publicly available. You will maintain the
confidentiality of such Confidential Information in accordance with procedures
adopted by you


                                       40
<PAGE>


in good faith to protect confidential information of third parties delivered to
you, PROVIDED that you may deliver or disclose Confidential Information to (i)
your directors, officers, employees, agents, attorneys and affiliates (to the
extent such disclosure reasonably relates to the administration of the
investment represented by your Notes), (ii) your financial advisors and other
professional advisors who agree to hold confidential the Confidential
Information substantially in accordance with the terms of this Section 20, (iii)
any other holder of any Note, (iv) any Institutional Investor to which you sell
or offer to sell such Note or any part thereof or any participation therein (if
such Person has agreed in writing prior to its receipt of such Confidential
Information to be bound by the provisions of this Section 20), (v) any Person
from which you offer to purchase any security of the Company (if such Person has
agreed in writing prior to its receipt of such Confidential Information to be
bound by the provisions of this Section 20), (vi) any federal or state
regulatory authority having jurisdiction over you, (vii) the National
Association of Insurance Commissioners or any similar organization, or any
nationally recognized rating agency that requires access to information about
your investment portfolio or (viii) any other Person to which such delivery or
disclosure may be necessary or appropriate (w) to effect compliance with any
law, rule, regulation or order applicable to you, (x) in response to any
subpoena or other legal process, (y) in connection with any litigation to which
you are a party or (z) if an Event of Default has occurred and is continuing, to
the extent you may reasonably determine such delivery and disclosure to be
necessary or appropriate in the enforcement or for the protection of the rights
and remedies under the Financing Documents. Each holder of a Note, by its
acceptance of a Note, will be deemed to have agreed to be bound by and to be
entitled to the benefits of this Section 20 as though it were a party to this
Agreement. On reasonable request by the Company in connection with the delivery
to any holder of a Note of information required to be delivered to such holder
under this Agreement or requested by such holder (other than a holder that is a
party to this Agreement or its nominee), such holder will enter into an
agreement with the Company embodying the provisions of this Section 20.


21.      SUBSTITUTION OF PURCHASER.

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


                                       41
<PAGE>


22.      MISCELLANEOUS.


         22.1.    SUCCESSORS AND ASSIGNS.

         All covenants and other agreements contained in this Agreement by or on
behalf of any of the parties hereto bind and inure to the benefit of their
respective successors and assigns (including, without limitation, any subsequent
holder of a Note) whether so expressed or not.


         22.2.    PAYMENTS DUE ON NON-BUSINESS DAYS.

         Anything in this Agreement or the Notes to the contrary
notwithstanding, any payment of principal of or Make-Whole Amount or interest on
any Note that is due on a date other than a Business Day shall be made on the
next succeeding Business Day without including the additional days elapsed in
the computation of the interest payable on such next succeeding Business Day.


         22.3.    SEVERABILITY.

         Any provision of this Agreement that is prohibited or unenforceable in
any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall (to the full extent permitted by law) not invalidate or
render unenforceable such provision in any other jurisdiction.


         22.4.    CONSTRUCTION.

         Each covenant contained herein shall be construed (absent express
provision to the contrary) as being independent of each other covenant contained
herein, so that compliance with any one covenant shall not (absent such an
express contrary provision) be deemed to excuse compliance with any other
covenant. Where any provision herein refers to action to be taken by any Person,
or which such Person is prohibited from taking, such provision shall be
applicable whether such action is taken directly or indirectly by such Person.


         22.5.    COUNTERPARTS.

         This Agreement may be executed in any number of counterparts, each of
which shall be an original but all of which together shall constitute one
instrument. Each counterpart may consist of a number of copies hereof, each
signed by less than all, but together signed by all, of the parties hereto.


         22.6.    GOVERNING LAW.

         THIS AGREEMENT SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, AND
THE RIGHTS OF THE PARTIES SHALL BE GOVERNED BY, THE LAW OF THE STATE OF NEW
YORK, EXCLUDING CHOICE-OF-LAW PRINCIPLES OF THE LAW OF SUCH STATE THAT WOULD
REQUIRE THE APPLICATION OF THE LAWS OF A JURISDICTION OTHER THAN SUCH STATE.


                                       42
<PAGE>


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


                                               Very truly yours,

                                               CENEX HARVEST STATES COOPERATIVES


                                               By:  ____________________________
                                               Name:
                                               Title:


The foregoing is hereby agreed to
as of the date thereof.

[PURCHASER]


By:  ___________________________
Name:
Title:






                  [Signature Page to Note Purchase Agreement]
<PAGE>


                                   SCHEDULE A

                       INFORMATION RELATING TO PURCHASERS

<TABLE>
<CAPTION>
============================================= ===========================================================================
PURCHASER NAME                                THE PRUDENTIAL INSURANCE COMPANY OF AMERICA
- --------------------------------------------- ---------------------------------------------------------------------------
<S>                                           <C>
Name in Which Note is Registered              THE PRUDENTIAL INSURANCE COMPANY OF AMERICA
- --------------------------------------------- ---------------------------------------------------------------------------
Note Registration Number; Principal Amount    RD-1; $21,500,000
- --------------------------------------------- ---------------------------------------------------------------------------
Payment on Account of Note

         Method                               Federal Funds Wire Transfer

         Account Information                  The Bank of New York
                                              New York, NY ABA # 021-000-018
                                              Acct. # 890-0304-391

                                              Re:      (See "Accompanying information" below)
- --------------------------------------------- ---------------------------------------------------------------------------
Accompanying Information                      Name of Issuer:            CENEX HARVEST STATES COOPERATIVES

                                              Description of Security:   4.96% Series D Senior Notes due October 18, 2012

                                              PPN:                       15131# AD 8

                                              Due date and application (as among principal, premium and interest) of the
                                              payment being made.
- --------------------------------------------- ---------------------------------------------------------------------------
Address for Notices Related to Payments       The Prudential Insurance Company of America
                                              c/o Investment Operations Group
                                              Gateway Center Two, 10th Floor
                                              100 Mulberry Street
                                              Newark, NJ 07102-4077
                                              Attn:    Manager, Billings and Collections

                                              Fax:     973-802-8764

                                              with a copy to:
                                              --------------

                                              The Prudential Insurance Company of America
                                              c/o Prudential Capital Group
                                              Two Prudential Plaza
                                              180 North Stetson Street, Suite 5600
                                              Chicago, IL 60601
                                              Attn:    Managing Director

                                              Tel:     312-540-0931
                                              Fax:     312-540-4222

                                              with receipt of telephonic prepayment notices to:
                                              ------------------------------------------------

                                              Manager, Trade Management Group

                                              Tel:     973-802-6009
                                              Fax:     800-224-2278
- --------------------------------------------- ---------------------------------------------------------------------------
</TABLE>

                                  Schedule A-1
<PAGE>

<TABLE>
<CAPTION>
============================================= ===========================================================================
PURCHASER NAME                                THE PRUDENTIAL INSURANCE COMPANY OF AMERICA
- --------------------------------------------- ---------------------------------------------------------------------------
<S>                                           <C>
Address for All Other Notices                 The Prudential Insurance Company of America
                                              c/o Prudential Capital Group
                                              Two Prudential Plaza
                                              180 North Stetson Street, Suite 5600
                                              Chicago, IL 60601
                                              Attn:    Managing Director

                                              Tel:     312-540-0931
                                              Fax:     312-540-4222
- --------------------------------------------- ---------------------------------------------------------------------------
Other Instructions                            THE PRUDENTIAL INSURANCE COMPANY OF AMERICA

                                              By: ________________________________
                                              Name:
                                              Title: Vice President
- --------------------------------------------- ---------------------------------------------------------------------------
Instructions re Delivery of Notes             The Prudential Insurance Company of America
                                              c/o Prudential Capital Group
                                              Two Prudential Plaza
                                              180 North Stetson Street, Suite 5600
                                              Chicago, IL 60601
                                              Attn:    Wiley S. Adams
- --------------------------------------------- ---------------------------------------------------------------------------
Tax Identification Number                     22-1211670
============================================= ===========================================================================
</TABLE>

                                  Schedule A-2
<PAGE>

<TABLE>
<CAPTION>
============================================= ===========================================================================
PURCHASER NAME                                PRUCO LIFE INSURANCE COMPANY
- --------------------------------------------- ---------------------------------------------------------------------------
<S>                                           <C>
PURCHASER NAME                                PRUCO LIFE INSURANCE COMPANY
- --------------------------------------------- ---------------------------------------------------------------------------
Name in Which Note is Registered              PRUCO LIFE INSURANCE COMPANY
- --------------------------------------------- ---------------------------------------------------------------------------
Note Registration Number; Principal Amount    RD-2; $1,000,000
- --------------------------------------------- ---------------------------------------------------------------------------
Payment on Account of Note

         Method                               Federal Funds Wire Transfer

         Account Information                  The Bank of New York
                                              New York, NY ABA # 021-000-018
                                              Acct. # 890-0304-421

                                              Re:      (See "Accompanying information" below)
- --------------------------------------------- ---------------------------------------------------------------------------
Accompanying Information                      Name of Issuer:            CENEX HARVEST STATES COOPERATIVES

                                              Description of Security:   4.96% Series D Senior Notes due October 18, 2012

                                              PPN:                       15131# AD 8

                                              Due date and application (as among principal, premium and interest) of the
                                              payment being made.
- --------------------------------------------- ---------------------------------------------------------------------------
Address for Notices Related to Payments       Pruco Life Insurance Company
                                              c/o Investment Operations Group
                                              Gateway Center Two, 10th Floor
                                              100 Mulberry Street
                                              Newark, NJ 07102-4077
                                              Attn:    Manager, Billings and Collections

                                              Fax:     973-802-8764

                                              with a copy to:
                                              --------------

                                              Pruco Life Insurance Company
                                              c/o Prudential Capital Group
                                              Two Prudential Plaza
                                              180 North Stetson Street, Suite 5600
                                              Chicago, IL 60601
                                              Attn:    Managing Director

                                              Tel:     312-540-0931
                                              Fax:     312-540-4222

                                              with receipt of telephonic prepayment notices to:
                                              ------------------------------------------------

                                              Manager, Trade Management Group

                                              Tel:     973-802-6009
                                              Fax:     800-224-2278
- --------------------------------------------- ---------------------------------------------------------------------------
Address for All Other Notices                 Pruco Life Insurance Company
                                              c/o Prudential Capital Group
                                              Two Prudential Plaza
                                              180 North Stetson Street, Suite 5600
                                              Chicago, IL 60601
                                              Attn:    Managing Director

                                              Tel:     312-540-0931
                                              Fax:     312-540-4222
============================================= ===========================================================================
</TABLE>

                                  Schedule A-3
<PAGE>

<TABLE>
<CAPTION>
============================================= ===========================================================================
PURCHASER NAME                                PRUCO LIFE INSURANCE COMPANY
- --------------------------------------------- ---------------------------------------------------------------------------
<S>                                           <C>
Other Instructions                            PRUCO LIFE INSURANCE COMPANY

                                              By: ________________________________
                                              Name:
                                              Title: Vice President
- --------------------------------------------- ---------------------------------------------------------------------------
Instructions re Delivery of Notes             Pruco Life Insurance Company
                                              c/o Prudential Capital Group
                                              Two Prudential Plaza
                                              180 North Stetson Street, Suite 5600
                                              Chicago, IL 60601
                                              Attn:    Wiley S. Adams
- --------------------------------------------- ---------------------------------------------------------------------------
Tax Identification Number                     22-1944557
=============================================== =========================================================================
</TABLE>

                                  Schedule A-4
<PAGE>

<TABLE>
<CAPTION>
============================================= ===========================================================================
PURCHASER NAME                                HARTFORD LIFE INSURANCE COMPANY
- --------------------------------------------- ---------------------------------------------------------------------------
<S>                                           <C>
Name in Which Note is Registered              HARTFORD LIFE INSURANCE COMPANY
- --------------------------------------------- ---------------------------------------------------------------------------
Note Registration Number; Principal Amount    RD-3; $3,750,000
- --------------------------------------------- ---------------------------------------------------------------------------
Payment on Account of Note

         Method                               Federal Funds Wire Transfer

         Account Information                  Chase Manhattan Bank
                                              4 New York Plaza New York, NY
                                              10004 ABA # 021-000-021 Chase
                                              NYC/Cust Acct. # 900-9-000200
                                              For further credit to G 08965 CRD

                                              Re:  Hartford  Life  Insurance  Company and  "Accompanying  information"
                                              below
- --------------------------------------------- ---------------------------------------------------------------------------
Accompanying Information                      Name of Issuer:            CENEX HARVEST STATES COOPERATIVES

                                              Description of Security:   4.96% Series D Senior Notes due October 18, 2012

                                              PPN:                       15131# AD 8

                                              Due date and application (as among principal, premium and interest) of the
                                              payment being made.
- --------------------------------------------- ---------------------------------------------------------------------------
Address for Notices Related to Payments       Hartford Investment Management Company
                                              c/o Portfolio Support
                                              P.O. Box 1744
                                              Hartford, CT 06144-1744

                                              Fax:   860-297-8875 / 8876
- --------------------------------------------- ---------------------------------------------------------------------------
Address for All Other Notices                 Prudential Private Placement Investors, L.P.
                                              4 Gateway Center
                                              100 Mulberry Street
                                              Newark, NJ 07102
                                              Attn:  Albert Trank, Senior Vice President

                                              Tel:   973-802-8608
                                              Fax:   973-624-6432
- --------------------------------------------- ---------------------------------------------------------------------------
Other Instructions                            HARTFORD LIFE INSURANCE COMPANY
                                              By:    Prudential Private Placement Investors, L.P. (as Investment Advisor)
                                              By:    Prudential Private Placement Investors, Inc. (as its General Partner)

                                              By: ________________________________
                                              Name:
                                              Title: Vice President
- --------------------------------------------- ---------------------------------------------------------------------------
Instructions re Delivery of Notes             Hartford Life Insurance Company
                                              c/o Prudential Capital Group
                                              Two Prudential Plaza
                                              180 North Stetson Street, Suite 5600
                                              Chicago, IL 60601
                                              Attn:  Wiley S. Adams
- --------------------------------------------- ---------------------------------------------------------------------------
Tax Identification Number                     06-9774148
============================================= ===========================================================================
</TABLE>

                                  Schedule A-5
<PAGE>

<TABLE>
<CAPTION>

============================================= ===========================================================================
PURCHASER NAME                                GOLDEN AMERICAN LIFE INSURANCE COMPANY
- --------------------------------------------- ---------------------------------------------------------------------------
<S>                                           <C>
Name in Which Note is Registered              GOLDEN AMERICAN LIFE INSURANCE COMPANY
- --------------------------------------------- ---------------------------------------------------------------------------
Note Registration Number; Principal Amount    RD-4; $7,500,000
- --------------------------------------------- ---------------------------------------------------------------------------
Payment on Account of Note

         Method                               Federal Funds Wire Transfer

         Account Information                  The Bank of New York
                                              New York, NY
                                              ABA # 021-000-018
                                              BNF:  IOC566 - Income Collections
                                              Attn: William Cashman

                                              Re:  Golden American Life Insurance Company (MVA Acct.), Acct. # 136374,
                                                   and "Accompanying information" below
- --------------------------------------------- ---------------------------------------------------------------------------
Accompanying Information                      Name of Issuer:          CENEX HARVEST STATES COOPERATIVES

                                              Description of Security: 4.96% Series D Senior Notes due October 18, 2012

                                              PPN:                     15131# AD 8

                                              Due date and application (as among principal, premium and interest) of the
                                              payment being made.
- --------------------------------------------- ---------------------------------------------------------------------------
Address for Notices Related to Payments       ING Investment Management LLC
                                              5780 Powers Ferry Road, NW, Suite 300
                                              Atlanta, GA 30327-4943
                                              Attn:  Securities Accounting

                                              Fax:   770-690-4899
- --------------------------------------------- ---------------------------------------------------------------------------
Address for All Other Notices                 Prudential Private Placement Investors, L.P.
                                              4 Gateway Center
                                              100 Mulberry Street
                                              Newark, NJ 07102
                                              Attn:  Albert Trank, Senior Vice President

                                              Tel: 973-802-8608
                                              Fax: 973-624-6432
- --------------------------------------------- ---------------------------------------------------------------------------
Other Instructions                            GOLDEN AMERICAN LIFE INSURANCE COMPANY
                                              By:  Prudential Private Placement Investors, L.P. (as Investment Advisor)
                                              By:  Prudential Private Placement Investors, Inc. (as its General Partner)

                                              By: ________________________________
                                              Name:
                                              Title: Vice President

- --------------------------------------------- ---------------------------------------------------------------------------
Instructions re Delivery of Notes             Golden American Life Insurance Company
                                              c/o Prudential Capital Group
                                              Two Prudential Plaza
                                              180 North Stetson Street, Suite 5600
                                              Chicago, IL 60601
                                              Attn:    Wiley S. Adams

- --------------------------------------------- ---------------------------------------------------------------------------
Tax Identification Number                     41-0991508
============================================= ===========================================================================
</TABLE>

                                  Schedule A-6
<PAGE>

<TABLE>
<CAPTION>
============================================= ===========================================================================
PURCHASER NAME                                GENERAL ELECTRIC CAPITAL ASSURANCE COMPANY
- --------------------------------------------- ---------------------------------------------------------------------------
<S>                                           <C>
Name in Which Note is Registered              SALKELD & CO.

- --------------------------------------------- ---------------------------------------------------------------------------
Note Registration Number; Principal Amount    RD-5; $11,250,000

- --------------------------------------------- ---------------------------------------------------------------------------
Payment on Account of Note

         Method                               Federal Funds Wire Transfer

         Account Information                  Bankers Trust Company
                                              14 Wall Street
                                              New York, NY 10005
                                              SWIFT Code:  BKTR US 33
                                              ABA # 021-001-033
                                              Acct. # 99-911-145

                                              FCC # 087738/GECA LTC - PRU

                                              Re:   (See "Accompanying information" below)
- --------------------------------------------- ---------------------------------------------------------------------------
Accompanying Information                      Name of Issuer:          CENEX HARVEST STATES COOPERATIVES

                                              Description of Security: 4.96% Series D Senior Notes due October 18, 2012

                                              PPN:                     15131# AD 8

                                              Due date and application (as among principal, premium and interest) of the
                                              payment being made.
- --------------------------------------------- ---------------------------------------------------------------------------
Address for Notices Related to Payments       GE Financial Assurance
                                              Account:  GECA LTC
                                              Two Union Square, 601 Union Street
                                              Seattle, WA 98101
                                              Attn: Investment Operations

                                              Fax:  203-356-4688
- --------------------------------------------- ---------------------------------------------------------------------------
Address for All Other Notices                 Prudential Private Placement Investors, L.P.
                                              4 Gateway Center
                                              100 Mulberry Street
                                              Newark, NJ 07102
                                              Attn: Albert Trank, Senior Vice President

                                              Tel: 973-802-8608
                                              Fax: 973-624-6432
- --------------------------------------------- ---------------------------------------------------------------------------
Other Instructions                            GENERAL ELECTRIC CAPITAL ASSURANCE COMPANY
                                              By:  Prudential Private Placement Investors, L.P. (as Investment Advisor)
                                              By:  Prudential Private Placement Investors, Inc. (as its General Partner)

                                              By: ________________________________
                                              Name:
                                              Title: Vice President
- --------------------------------------------- ---------------------------------------------------------------------------
Instructions re Delivery of Notes             General Electric Capital Assurance Company
                                              c/o Prudential Capital Group
                                              Two Prudential Plaza
                                              180 North Stetson Street, Suite 5600
                                              Chicago, IL 60601
                                              Attn: Wiley S. Adams
- --------------------------------------------- ---------------------------------------------------------------------------
Tax Identification Number                     91-6027719
============================================= ===========================================================================
</TABLE>

                                  Schedule A-7
<PAGE>

<TABLE>
<CAPTION>
============================================= ===========================================================================
PURCHASER NAME                                THE VARIABLE ANNUITY LIFE INSURANCE COMPANY
- --------------------------------------------- ---------------------------------------------------------------------------
<S>                                           <C>
Name in Which Note is Registered              THE VARIABLE ANNUITY LIFE INSURANCE COMPANY
- --------------------------------------------- ---------------------------------------------------------------------------
Note Registration Number; Principal Amount    RE-1; $20,000,000
- --------------------------------------------- ---------------------------------------------------------------------------
Payment on Account of Note

         Method                               Federal Funds Wire Transfer

         Account Information                  State Street Bank and Trust Company
                                              Boston, MA  02101
                                              ABA # 011-000-028
                                              Re:      The Variable Annuity Life Insurance Company
                                              A/C:     0125-821-9
                                              OBI = 15131# AE 6 and description of payment
                                              Fund # PA 54

                                              Re: (See "Accompanying information" below)
- --------------------------------------------- ---------------------------------------------------------------------------
Accompanying Information                      Name of Issuer:          CENEX HARVEST STATES COOPERATIVES

                                              Description of Security: 5.60% Series E Senior Notes due October 18, 2017

                                              PPN:                     15131# AE 6

                                              Due date and application (as among principal, premium and interest) of the
                                              payment being made.
- --------------------------------------------- ---------------------------------------------------------------------------
Address for Notices Related to Payments       The Variable Annuity Life Insurance Company and PA 54
                                              c/o State Street Bank Corporation
                                              801 Pennsylvania
                                              Kansas City, MO 64105
                                              Attn: Insurance Services

                                              Fax:     816-691-3619

                                              with a copy to:
                                              --------------

                                              The Variable Annuity Life Insurance Company and PA 54
                                              c/o AIG Global Investment Corporation
                                              2929 Allen Parkway, A36-04
                                              Houston, TX  77019-2155
                                              Attn:    Private Placement Department

                                              Fax:     713-831-1072

                                              and a copy to:
                                              -------------

                                              AIG Global Investment Corporation
                                              2929 Allen Parkway, A36-01
                                              Houston, TX  77019-2155
                                              Attn:    Legal Department - Investment Management

                                              Fax:     713-831-2328
=========================================================================================================================
</TABLE>

                                  Schedule A-8
<PAGE>

<TABLE>
<CAPTION>
============================================= ===========================================================================
PURCHASER NAME                                THE VARIABLE ANNUITY LIFE INSURANCE COMPANY
- --------------------------------------------- ---------------------------------------------------------------------------
<S>                                           <C>
Address for All Other Notices                 The Variable Annuity Life Insurance Company and PA 54
                                              c/o AIG Global Investment Corporation
                                              2929 Allen Parkway, A36-04
                                              Houston, TX  77019-2155
                                              Attn:    Private Placement Department

                                              Fax:     713-831-1072

                                              with a copy to:
                                              --------------

                                              AIG Global Investment Corporation
                                              2929 Allen Parkway, A36-01
                                              Houston, TX  77019-2155
                                              Attn:    Legal Department - Investment Management

                                              Fax:     713-831-2328
- --------------------------------------------- ---------------------------------------------------------------------------
Other Instructions                            THE VARIABLE ANNUITY LIFE INSURANCE COMPANY
                                              AIG ANNUITY INSURANCE COMPANY
                                              THE FRANKLIN LIFE INSURANCE COMPANY
                                              THE UNITED STATES LIFE INSURANCE COMPANY
                                              IN THE CITY OF NEW YORK
                                              By:      AIG Global Investment Corp., investment adviser

                                                       By:___________________________________
                                                       Name:
                                                       Title:
- --------------------------------------------- ---------------------------------------------------------------------------
Instructions re Delivery of Notes             State Street Bank and Trust Company
                                              Securities Services
                                              225 Franklin Street
                                              Boston, MA  02105
                                              Attn: Ana Barnes
                                                    Receive and Deliver

                                              with a request that Ms. Barnes confirm  receipt of original  securities and
                                              ---------------------------------------------------------------------------
                                              forward a copy of same to:
                                              --------------------------

                                              Susie Hayes
                                              AIG Global Investment Corp.
                                              2929 Allen Parkway, A36-01
                                              Houston, TX 77019

                                              provide a carbon copy of the above to:
                                              -------------------------------------

                                              Ed Holmes
                                              Fax:     713-831-2328
- --------------------------------------------- ---------------------------------------------------------------------------
Tax Identification Number                     74-1625348
============================================= ===========================================================================
</TABLE>

                                  Schedule A-9
<PAGE>

<TABLE>
<CAPTION>
============================================= ===========================================================================
PURCHASER NAME                                AIG ANNUITY INSURANCE COMPANY
- --------------------------------------------- ---------------------------------------------------------------------------
<S>                                           <C>
Name in Which Note is Registered              AIG ANNUITY INSURANCE COMPANY
- --------------------------------------------- ---------------------------------------------------------------------------
Note Registration Number; Principal Amount    RE-2; $10,000,000
- --------------------------------------------- ---------------------------------------------------------------------------
Payment on Account of Note

         Method                               Federal Funds Wire Transfer

         Account Information                  State Street Bank and Trust Company
                                              Boston, MA  02101
                                              ABA # 011-000-028
                                              Re:      AIG Annuity Insurance Company
                                              A/C:     7215-132-7
                                              OBI =    15131# AE 6 and description of payment
                                              Fund # WE1B

                                              Re:  (See "Accompanying information" below)
- --------------------------------------------- ---------------------------------------------------------------------------
Accompanying Information                      Name of Issuer:            CENEX HARVEST STATES COOPERATIVES

                                              Description of Security:   5.60% Series E Senior Notes due October 18, 2017

                                              PPN:                       15131# AE 6

                                              Due date and application (as among principal, premium and interest) of the
                                              payment being made.
- --------------------------------------------- ---------------------------------------------------------------------------
Address for Notices Related to Payments       AIG Annuity Insurance Company and WE1B
                                              c/o State Street Bank Corporation
                                              801 Pennsylvania
                                              Kansas City, MO  64105
                                              Attn:    Insurance Services

                                              Fax:     816-691-3619

                                              with a copy to:
                                              --------------

                                              AIG Annuity Insurance Company and WE1B
                                              c/o AIG Global Investment Corporation
                                              2929 Allen Parkway, A36-04
                                              Houston, TX  77019-2155
                                              Attn:    Private Placement Department

                                              Fax:     713-831-1072

                                              and a copy to:
                                              -------------

                                              AIG Global Investment Corporation
                                              2929 Allen Parkway, A36-01
                                              Houston, TX  77019-2155
                                              Attn:    Legal Department - Investment Management

                                              Fax:     713-831-2328
============================================= ===========================================================================
</TABLE>

                                 Schedule A-10
<PAGE>

<TABLE>
<CAPTION>
============================================= ===========================================================================
PURCHASER NAME                                AIG ANNUITY INSURANCE COMPANY
- --------------------------------------------- ---------------------------------------------------------------------------
<S>                                           <C>
Address for All Other Notices                 AIG Annuity Insurance Company and WE1B
                                              c/o AIG Global Investment Corporation
                                              2929 Allen Parkway, A36-04
                                              Houston, TX  77019-2155
                                              Attn:    Private Placement Department

                                              Fax:     713-831-1072

                                              with a copy to:
                                              --------------

                                              AIG Global Investment Corporation
                                              2929 Allen Parkway, A36-01
                                              Houston, TX  77019-2155
                                              Attn:    Legal Department - Investment Management

                                              Fax:     713-831-2328
- --------------------------------------------- ---------------------------------------------------------------------------


Other Instructions                            THE VARIABLE ANNUITY LIFE INSURANCE COMPANY
                                              AIG ANNUITY INSURANCE COMPANY
                                              THE FRANKLIN LIFE INSURANCE COMPANY
                                              THE UNITED STATES LIFE INSURANCE COMPANY
                                              IN THE CITY OF NEW YORK
                                              By:      AIG Global Investment Corp., investment adviser

                                                       By:___________________________________
                                                       Name:
                                                       Title:
- --------------------------------------------- ---------------------------------------------------------------------------
Instructions re Delivery of Notes             State Street Bank and Trust Company
                                              Securities Services
                                              225 Franklin Street
                                              Boston, MA  02105
                                              Attn: Ana Barnes
                                                    Receive and Deliver

                                              with a request that Ms. Barnes confirm  receipt of original  securities and
                                              ---------------------------------------------------------------------------
                                              forward a copy of same to:
                                              --------------------------

                                              Susie Hayes
                                              AIG Global Investment Corp.
                                              2929 Allen Parkway, A36-01
                                              Houston, TX 77019

                                              provide a carbon copy of the above to:
                                              -------------------------------------

                                              Ed Holmes
                                              Fax:     713-831-2328
- --------------------------------------------- ---------------------------------------------------------------------------
Tax Identification Number                     75-0770838
============================================= ===========================================================================
</TABLE>

                                 Schedule A-11
<PAGE>

<TABLE>
<CAPTION>
============================================= ===========================================================================
PURCHASER NAME                                THE FRANKLIN LIFE INSURANCE COMPANY
- --------------------------------------------- ---------------------------------------------------------------------------
<S>                                           <C>
Name in Which Note is Registered              THE FRANKLIN LIFE INSURANCE COMPANY
- --------------------------------------------- ---------------------------------------------------------------------------
Note Registration Number; Principal Amount    RE-3; $10,000,000
- --------------------------------------------- ---------------------------------------------------------------------------
Payment on Account of Note

         Method                               Federal Funds Wire Transfer

         Account Information                  State Street Bank and Trust Company
                                              Boston, MA  02101
                                              ABA # 011-000-028
                                              Re:      The Franklin Life Insurance Company
                                              A/C:     2492-440-9
                                              OBI = 15131# AE 6 and description of payment
                                              Fund # PA 37

                                              Re: (See "Accompanying information" below)
- --------------------------------------------- ---------------------------------------------------------------------------
Accompanying Information                      Name of Issuer:            CENEX HARVEST STATES COOPERATIVES

                                              Description of Security:   5.60% Series E Senior Notes due October 18, 2017

                                              PPN:                       15131# AE 6

                                              Due date and application (as among principal, premium and interest) of the
                                              payment being made.
- --------------------------------------------- ---------------------------------------------------------------------------
Address for Notices Related to Payments       The Franklin Life Insurance Company and PA 37
                                              c/o State Street Bank Corporation
                                              801 Pennsylvania
                                              Kansas City, MO  64105
                                              Attn:    Insurance Services

                                              Fax:     816-691-3619

                                              with a copy to:
                                              --------------

                                              The Franklin Life Insurance Company and PA 37
                                              c/o AIG Global Investment Corporation
                                              2929 Allen Parkway, A36-04
                                              Houston, TX  77019-2155
                                              Attn:    Private Placement Department

                                              Fax:     713-831-1072

                                              and a copy to:
                                              -------------

                                              AIG Global Investment Corporation
                                              2929 Allen Parkway, A36-01
                                              Houston, TX 77019-2155
                                              Attn:    Legal Department - Investment Management

                                              Fax:     713-831-2328
============================================= ===========================================================================
</TABLE>

                                 Schedule A-12
<PAGE>

<TABLE>
<CAPTION>
============================================= ===========================================================================
PURCHASER NAME                                THE FRANKLIN LIFE INSURANCE COMPANY
- --------------------------------------------- ---------------------------------------------------------------------------
<S>                                           <C>
Address for All Other Notices                 The Franklin Life Insurance Company and PA 37
                                              c/o AIG Global Investment Corporation
                                              2929 Allen Parkway, A36-04
                                              Houston, TX  77019-2155
                                              Attn:    Private Placement Department

                                              Fax:     713-831-1072

                                              with a copy to:
                                              --------------

                                              AIG Global Investment Corporation
                                              2929 Allen Parkway, A36-01
                                              Houston, TX 77019-2155
                                              Attn:    Legal Department - Investment Management

                                              Fax:     713-831-2328
- --------------------------------------------- -------------------------------------------------------------------------
Other Instructions                            THE VARIABLE ANNUITY LIFE INSURANCE COMPANY
                                              AIG ANNUITY INSURANCE COMPANY
                                              THE FRANKLIN LIFE INSURANCE COMPANY
                                              THE UNITED STATES LIFE INSURANCE COMPANY
                                              IN THE CITY OF NEW YORK
                                              By:      AIG Global Investment Corp., investment adviser

                                                       By:___________________________________
                                                       Name:
                                                       Title:
- --------------------------------------------- ---------------------------------------------------------------------------
Instructions re Delivery of Notes             State Street Bank and Trust Company
                                              Securities Services
                                              225 Franklin Street
                                              Boston, MA  02105
                                              Attn: Ana Barnes
                                                    Receive and Deliver

                                              with a request that Ms. Barnes confirm receipt of original securities and
                                              -------------------------------------------------------------------------
                                              forward a copy of same to:
                                              --------------------------

                                              Susie Hayes
                                              AIG Global Investment Corp.
                                              2929 Allen Parkway, A36-01
                                              Houston, TX 77019

                                              provide a carbon copy of the above to:
                                              -------------------------------------

                                              Ed Holmes
                                              Fax:     713-831-2328
- --------------------------------------------- ---------------------------------------------------------------------------
Tax Identification Number                     37-0281650
============================================= ===========================================================================
</TABLE>

                                 Schedule A-13
<PAGE>

<TABLE>
<CAPTION>
============================================= ===========================================================================
PURCHASER NAME                                THE UNITED STATES LIFE INSURANCE COMPANY IN THE CITY OF NEW YORK
- --------------------------------------------- ---------------------------------------------------------------------------
<S>                                           <C>
Name in Which Note is Registered              THE UNITED STATES LIFE INSURANCE COMPANY IN THE CITY OF NEW YORK
- --------------------------------------------- ---------------------------------------------------------------------------
Note Registration Number; Principal Amount    RE-4; $5,000,000
- --------------------------------------------- ---------------------------------------------------------------------------
Payment on Account of Note

         Method                               Federal Funds Wire Transfer

         Account Information                  State Street Bank and Trust Company
                                              Boston, MA  02101
                                              ABA # 011-000-028
                                              Re:      The United States Life Insurance Company in the City of New York
                                              A/C:     6956-534-9
                                              OBI = 15131# AE 6 and description of payment
                                              Fund # PA 77

                                              Re: (See "Accompanying information" below)
- --------------------------------------------- ---------------------------------------------------------------------------
Accompanying Information                      Name of Issuer:            CENEX HARVEST STATES COOPERATIVES

                                              Description of Security:   5.60% Series E Senior Notes due October 18, 2017

                                              PPN:                       15131# AE 6

                                              Due date and application (as among principal, premium and interest) of the
                                              payment being made.
- --------------------------------------------- ---------------------------------------------------------------------------
Address for Notices Related to Payments       The United States Life Insurance Company in the City of New York and PA 77
                                              c/o State Street Bank Corporation
                                              801 Pennsylvania
                                              Kansas City, MO  64105
                                              Attn:    Insurance Services

                                              Fax:     816-691-3619

                                              with a copy to:
                                              --------------

                                              The United States Life Insurance Company in the City of New York and PA 77
                                              c/o AIG Global Investment Corporation
                                              2929 Allen Parkway, A36-04
                                              Houston, TX  77019-2155
                                              Attn:    Private Placement Department

                                              Fax:     713-831-1072

                                              and a copy to:
                                              -------------

                                              AIG Global Investment Corporation
                                              2929 Allen Parkway, A36-01
                                              Houston, TX  77019-2155
                                              Attn:    Legal Department - Investment Management

                                              Fax:     713-831-2328
============================================= ===========================================================================
</TABLE>

                                 Schedule A-14
<PAGE>

<TABLE>
<CAPTION>
============================================= ===========================================================================
PURCHASER NAME                                THE UNITED STATES LIFE INSURANCE COMPANY IN THE CITY OF NEW YORK
- --------------------------------------------- ---------------------------------------------------------------------------
<S>                                           <C>
Address for All Other Notices                 The United States Life Insurance Company in the City of New York and PA 77
                                              c/o AIG Global Investment Corporation
                                              2929 Allen Parkway, A36-04
                                              Houston, TX  77019-2155
                                              Attn:    Private Placement Department

                                              Fax:     713-831-1072

                                              with a copy to:
                                              --------------

                                              AIG Global Investment Corporation
                                              2929 Allen Parkway, A36-01
                                              Houston, TX  77019-2155
                                              Attn:    Legal Department - Investment Management

                                              Fax:     713-831-2328
- --------------------------------------------- ---------------------------------------------------------------------------
Other Instructions                            THE VARIABLE ANNUITY LIFE INSURANCE COMPANY
                                              AIG ANNUITY INSURANCE COMPANY
                                              THE FRANKLIN LIFE INSURANCE COMPANY
                                              THE UNITED STATES LIFE INSURANCE COMPANY
                                              IN THE CITY OF NEW YORK
                                              By:      AIG Global Investment Corp., investment adviser

                                                       By:___________________________________
                                                       Name:
                                                       Title:
- --------------------------------------------- ---------------------------------------------------------------------------
Instructions re Delivery of Notes             State Street Bank and Trust Company
                                              Securities Services
                                              225 Franklin Street
                                              Boston, MA  02105
                                              Attn: Ana Barnes
                                                    Receive and Deliver

                                              with a request that Ms. Barnes confirm  receipt of original  securities and
                                              ---------------------------------------------------------------------------
                                              forward a copy of same to:
                                              --------------------------

                                              Susie Hayes
                                              AIG Global Investment Corp.
                                              2929 Allen Parkway, A36-01
                                              Houston, TX 77019

                                              provide a carbon copy of the above to:
                                              -------------------------------------

                                              Ed Holmes
                                              Fax:     713-831-2328
- --------------------------------------------- ---------------------------------------------------------------------------
Tax Identification Number                     13-5459480
============================================= ===========================================================================
</TABLE>

                                 Schedule A-15
<PAGE>

<TABLE>
<CAPTION>
============================================= ===========================================================================
PURCHASER NAME                                RELIASTAR LIFE INSURANCE COMPANY
- --------------------------------------------- ---------------------------------------------------------------------------
<S>                                           <C>
Name in Which Note is Registered              RELIASTAR LIFE INSURANCE COMPANY
- --------------------------------------------- ---------------------------------------------------------------------------
Note Registration Number; Principal Amount    RD-6; $20,000,000
- --------------------------------------------- ---------------------------------------------------------------------------
Payment on Account of Note

         Method                               Federal Funds Wire Transfer

         Account Information                  The Bank of New York
                                              IOC 566 - INST'L CUSTODY
                                              ABA # 021-000-018
                                              Ref:     ReliaStar Life Insurance Company
                                              Acct. #: 187035 and 15131# AD 8

                                              Re:      (see "Accompanying Information" below)
- --------------------------------------------- ---------------------------------------------------------------------------
Accompanying Information                      Name of Issuer:            CENEX HARVEST STATES COOPERATIVES

                                              Description of Security:   4.96% Series D Senior Notes due October 18, 2012

                                              PPN:                       15131# AD 8

                                              Due date and application (as among principal, premium and interest) of the
                                              payment being made.
- --------------------------------------------- ---------------------------------------------------------------------------
Address for Notices Related to Payments       ING Investment Management LLC
                                              5780 Powers Ferry Road, NW, Suite 300
                                              Atlanta, GA 30327-4349
                                              Attn:    Securities Accounting

                                              Fax:     (770) 690-4899
- --------------------------------------------- ---------------------------------------------------------------------------
Address for All Other Notices                 ING Investment Management LLC
                                              100 Washington Avenue South, Suite 1635
                                              Minneapolis, MN  55401-2121
                                              Attn:    Chris Patton

                                              Tel:     (612) 342-7576
                                              Fax:     (612) 372-5368

                                              with a copy to:
                                              --------------

                                              ING Investment Management LLC
                                              5780 Powers Ferry Road, NW, Suite 300
                                              Atlanta, GA  30327-4349
                                              Attn:    Private Placements

                                              Fax:     (770) 690-4899
- --------------------------------------------- ---------------------------------------------------------------------------
Other Instructions                            RELIASTAR LIFE INSURANCE COMPANY
                                              By:  ING Investment Management LLC, as Agent

                                              By: ____________________________________
                                              Name:
                                              Title:
============================================= ===========================================================================
</TABLE>

                                 Schedule A-16
<PAGE>
<TABLE>
<CAPTION>
============================================= ===========================================================================
PURCHASER NAME                                RELIASTAR LIFE INSURANCE COMPANY
- --------------------------------------------- ---------------------------------------------------------------------------
<S>                                           <C>
Instructions re Delivery of Notes             The Bank of New York
                                              Free Receipt / Delivery Window
                                              Window A, 3rd Floor
                                              One Wall Street
                                              New York, NY  10288
                                              Re:      Account # 187035

                                              with a copy of the above transmittal to:
                                              ---------------------------------------

                                              ING Investment Management LLC
                                              5780 Powers Ferry Road, NW, Suite 300
                                              Atlanta, GA  30327-4349
                                              Attn:    Joyce Resnick
- --------------------------------------------- ---------------------------------------------------------------------------
Tax Identification Number                     41-0451140
============================================= ===========================================================================
</TABLE>



                                 Schedule A-17
<PAGE>

<TABLE>
<CAPTION>
============================================= ===========================================================================
PURCHASER NAME                                ING LIFE INSURANCE AND ANNUITY COMPANY
- --------------------------------------------- ---------------------------------------------------------------------------
<S>                                           <C>
Name in Which Note is Registered              ING LIFE INSURANCE AND ANNUITY COMPANY
- --------------------------------------------- ---------------------------------------------------------------------------
Note Registration Number; Principal Amount    RD-7; $15,000,000
- --------------------------------------------- ---------------------------------------------------------------------------
Payment on Account of Note

         Method                               Federal Funds Wire Transfer

         Account Information                  The Bank of New York
                                              ABA # 021-000-018
                                              BNF:     IOC566
                                              Attn: P&I Department
                                              Ref:     ING Life Insurance and Annuity Company
                                              Acct. #: 216101 and 15131# AD 8

                                              Re:      (see "Accompanying Information" below)
- --------------------------------------------- ---------------------------------------------------------------------------
Accompanying Information                      Name of Issuer:            CENEX HARVEST STATES COOPERATIVES

                                              Description of Security:   4.96% Series D Senior Notes due October 18, 2012

                                              PPN:                       15131# AD 8

                                              Due date and application (as among principal, premium and interest) of the
                                              payment being made.
- --------------------------------------------- ---------------------------------------------------------------------------
Address for Notices Related to Payments       ING Investment Management LLC
                                              5780 Powers Ferry Road, NW, Suite 300
                                              Atlanta, GA 30327-4349
                                              Attn:    Securities Accounting

                                              Fax:     (770) 690-4899
- --------------------------------------------- ---------------------------------------------------------------------------
Address for All Other Notices                 ING Investment Management LLC
                                              100 Washington Avenue South, Suite 1635
                                              Minneapolis, MN  55401-2121
                                              Attn:    Chris Patton

                                              Tel:     (612) 342-7576
                                              Fax:     (612) 372-5368

                                              with a copy to:
                                              --------------

                                              ING Investment Management LLC
                                              5780 Powers Ferry Road, NW, Suite 300
                                              Atlanta, GA  30327-4349
                                              Attn:    Private Placements

                                              Fax:     (770) 690-4899
- --------------------------------------------- ---------------------------------------------------------------------------
Other Instructions                            ING LIFE INSURANCE AND ANNUITY COMPANY
                                              By:  ING Investment Management LLC, as Agent

                                              By: ____________________________________
                                              Name:
                                              Title:
============================================= ===========================================================================
</TABLE>

                                 Schedule A-18
<PAGE>
<TABLE>
<CAPTION>
============================================= ===========================================================================
PURCHASER NAME                                ING LIFE INSURANCE AND ANNUITY COMPANY
- --------------------------------------------- ---------------------------------------------------------------------------
<S>                                           <C>
Instructions re Delivery of Notes             The Bank of New York
                                              Free Receipt / Delivery Window
                                              Window A, 3rd Floor
                                              One Wall Street
                                              New York, NY  10288
                                              Re:      Account # 216101

                                              with a copy of the above transmittal to:
                                              ---------------------------------------

                                              ING Investment Management LLC
                                              5780 Powers Ferry Road, NW, Suite 300
                                              Atlanta, GA  30327-4349
                                              Attn:    Joyce Resnick
- --------------------------------------------- ---------------------------------------------------------------------------
Tax Identification Number                     71-0294708
============================================= ===========================================================================
</TABLE>



                                 Schedule A-19
<PAGE>

<TABLE>
<CAPTION>
============================================= ===========================================================================
PURCHASER NAME                                PACIFIC LIFE INSURANCE COMPANY
- --------------------------------------------- ---------------------------------------------------------------------------
<S>                                           <C>
Name in Which Note is Registered              MAC & CO.
- --------------------------------------------- ---------------------------------------------------------------------------
Note Registration Number; Principal Amount    RD-8; $5,000,000
                                              RD-9; $5,000,000
                                              RD-10; $1,000,000
                                              RD-11; $1,000,000
                                              RD-12; $1,000,000
                                              RD-13; $1,000,000
                                              RD-14; $500,000
                                              RD-15; $500,000
- --------------------------------------------- ---------------------------------------------------------------------------
Payment on Account of Note

         Method                               Federal Funds Wire Transfer

         Account Information                  Boston Safe Deposit and Trust Company
                                              ABA# 011-001-234
                                              BOS SAFE DEP
                                              DDA # 125261
                                              Attn: MBS Income CC: 1253
                                              A/C:     Pacific Life General Account
                                                       PLCF1810132

                                              Re:  (See "Accompanying information" below)
- --------------------------------------------- ---------------------------------------------------------------------------
Accompanying Information                      Name of Issuer:            CENEX HARVEST STATES COOPERATIVES

                                              Description of Security:   4.96% Series D Senior Notes due October 18, 2012

                                              PPN:                       15131# AD 8

                                              Due date and application (as among principal, premium and interest) of the
                                              payment being made.
- --------------------------------------------- ---------------------------------------------------------------------------
Address for Notices Related to Payments       Mellon Trust
                                              Three Mellon Bank Center
                                              Pittsburgh, PA 15259
                                              Attn:    Pacific Life Accounting Team
                                                       AIM # 153-3610

                                              Fax:     412-236-7529

                                              with a copy to:
                                              --------------

                                              Pacific Life Insurance Company
                                              700 Newport Center Drive
                                              Newport Beach, CA  92660-6397
                                              Attn:    Cash Team
                                                       Securities Administration

                                              Fax:     949-640-4013
- --------------------------------------------- ---------------------------------------------------------------------------
Address for All Other Notices                 Pacific Life Insurance Company
                                              700 Newport Center Drive
                                              Newport Beach, CA  92660-6397
                                              Attn:    Securities Department

                                              Fax:     949-219-5406
============================================= ===========================================================================
</TABLE>

                                 Schedule A-20
<PAGE>

<TABLE>
<CAPTION>
============================================= ===========================================================================
PURCHASER NAME                                PACIFIC LIFE INSURANCE COMPANY
- --------------------------------------------- ---------------------------------------------------------------------------
<S>                                           <C>
Other Instructions                            PACIFIC LIFE INSURANCE COMPANY

                                              By: ________________________________
                                              Name:
                                              Title:

                                              By: ________________________________
                                              Name:
                                              Title:
- --------------------------------------------- ---------------------------------------------------------------------------
Instructions re Delivery of Notes             Mellon Securities Trust Company
                                              120 Broadway, 13th Floor
                                              New York, NY 10271
                                              Attn: Robert Ferraro
                                              A/C:     Pacific Life General Acct
                                                       PLCF1810132

                                              Tel:     212-374-1918
- --------------------------------------------- ---------------------------------------------------------------------------
Tax Identification Number                     95-1079000
============================================= ===========================================================================
</TABLE>



                                 Schedule A-21
<PAGE>

<TABLE>
<CAPTION>
============================================= ===========================================================================
PURCHASER NAME                                HARTFORD FIRE INSURANCE COMPANY
- --------------------------------------------- ---------------------------------------------------------------------------
<S>                                           <C>
Name in Which Note is Registered              HARTFORD FIRE INSURANCE COMPANY
- --------------------------------------------- ---------------------------------------------------------------------------
Note Registration Number; Principal Amount    RE-5; $6,000,000
- --------------------------------------------- ---------------------------------------------------------------------------
Payment on Account of Note

         Method                               Federal Funds Wire Transfer

         Account Information                  Chase Manhattan Bank
                                              4 New York Plaza
                                              New York, NY 10004
                                              ABA # 021-000-021
                                              Chase NYC/Cust
                                              A/C # 900-9-000200 for further credit to G0244-FHO
                                              Attn:    Bond Interest/Principal - Cenex Harvest States Cooperatives]

                                              Re:  (See "Accompanying information" below)
- --------------------------------------------- ---------------------------------------------------------------------------
Accompanying Information                      Name of Issuer:            CENEX HARVEST STATES COOPERATIVES

                                              Description of Security:   5.60% Series E Senior Notes due October 18, 2017

                                              PPN:                       15131# AE 6

                                              Due date and application (as among principal, premium and interest) of the
                                              payment being made.
- --------------------------------------------- ---------------------------------------------------------------------------
Address for Notices Related to Payments       Hartford Investment Management Company
                                              c/o Portfolio Support
                                              P.O. Box 1744
                                              Hartford, CT 06144-1744

                                              Fax:     860-297-8875 / 8876
- --------------------------------------------- ---------------------------------------------------------------------------
Address for All Other Notices                 Hartford Investment Management Company
                                              c/o Investment Department - Private Placements
                                              P.O. Box 1744
                                              Hartford, CT 06144-1744

                                              Fax:     860-297-8884
- --------------------------------------------- ---------------------------------------------------------------------------
Other Instructions                            HARTFORD FIRE INSURANCE COMPANY
                                              By:      Hartford Investment Services, Inc., its Agent and Attorney-in-Fact

                                              By______________________________
                                              Name:
                                              Title:
- --------------------------------------------- ---------------------------------------------------------------------------
Instructions re Delivery of Notes             Chase Manhattan Bank
                                              North America Insurance
                                              3 MetroTech Center, 5th Floor South
                                              Brooklyn, NY 11245
                                              Attn: Bettye Carrera

                                              CUSTODY ACCOUNT # G0244-FHO MUST APPEAR ON OUTSIDE OF ENVELOPE
- --------------------------------------------- ---------------------------------------------------------------------------
Tax Identification Number                     06-0383750
============================================= ===========================================================================
</TABLE>

                                 Schedule A-22
<PAGE>

<TABLE>
<CAPTION>
============================================= ===========================================================================
PURCHASER NAME                                HARTFORD LIFE AND ACCIDENT INSURANCE COMPANY
- --------------------------------------------- ---------------------------------------------------------------------------
<S>                                           <C>
Name in Which Note is Registered              HARTFORD LIFE AND ACCIDENT INSURANCE COMPANY
- --------------------------------------------- ---------------------------------------------------------------------------
Note Registration Number; Principal Amount    RD-16; $4,000,000
- --------------------------------------------- ---------------------------------------------------------------------------
Payment on Account of Note

         Method                               Federal Funds Wire Transfer

         Account Information                  Chase Manhattan Bank
                                              4 New York Plaza
                                              New York, NY 10004
                                              ABA # 021-000-021
                                              Chase NYC/Cust
                                              A/C # 900-9-000200 for further credit to G06956-EBD
                                              Attn:    Bond Interest/Principal - Cenex Harvest States Cooperatives]

                                              Re:  (See "Accompanying information" below)
- --------------------------------------------- ---------------------------------------------------------------------------
Accompanying Information                      Name of Issuer:            CENEX HARVEST STATES COOPERATIVES

                                              Description of Security:   4.96% Series D Senior Notes due October 18, 2012

                                              PPN:                       15131# AD 8

                                              Due date and application (as among principal, premium and interest) of the
                                              payment being made.
- --------------------------------------------- ---------------------------------------------------------------------------
Address for Notices Related to Payments       Hartford Investment Management Company
                                              c/o Portfolio Support
                                              P.O. Box 1744
                                              Hartford, CT 06144-1744

                                              Fax:     860-297-8875 / 8876
- --------------------------------------------- ---------------------------------------------------------------------------
Address for All Other Notices                 Hartford Investment Management Company
                                              c/o Investment Department - Private Placements
                                              P.O. Box 1744
                                              Hartford, CT 06144-1744

                                              Fax:     860-297-8884
- --------------------------------------------- ---------------------------------------------------------------------------
Other Instructions                            HARTFORD LIFE AND ACCIDENT INSURANCE COMPANY
                                              By:      Hartford Investment Services, Inc., its Agent and Attorney-in-Fact

                                              By______________________________
                                              Name:
                                              Title:
- --------------------------------------------- ---------------------------------------------------------------------------
Instructions re Delivery of Notes             Chase Manhattan Bank
                                              North America Insurance
                                              3 MetroTech Center, 5th Floor South
                                              Brooklyn, NY 11245
                                              Attn: Bettye Carrera

                                              CUSTODY ACCOUNT # G06956-EBD MUST APPEAR ON OUTSIDE OF ENVELOPE
- --------------------------------------------- ---------------------------------------------------------------------------
Tax Identification Number                     06-0838648
============================================= ===========================================================================
</TABLE>

                                 Schedule A-23
<PAGE>

<TABLE>
<CAPTION>
============================================= ===========================================================================
PURCHASER NAME                                HARTFORD LIFE AND ACCIDENT INSURANCE COMPANY
- --------------------------------------------- ---------------------------------------------------------------------------
<S>                                           <C>
Name in Which Note is Registered              HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------- ---------------------------------------------------------------------------
Note Registration Number; Principal Amount    RD-17; $3,000,000
- --------------------------------------------- ---------------------------------------------------------------------------
Payment on Account of Note

         Method                               Federal Funds Wire Transfer

         Account Information                  Chase Manhattan Bank
                                              4 New York Plaza
                                              New York, NY 10004
                                              ABA # 021-000-021
                                              Chase NYC/Cust
                                              A/C # 900-9-000200 for further credit to G06586-ITT
                                              Attn:    Bond Interest/Principal - Cenex Harvest States Cooperatives]

                                              Re:  (See "Accompanying information" below)
- --------------------------------------------- ---------------------------------------------------------------------------
Accompanying Information                      Name of Issuer:            CENEX HARVEST STATES COOPERATIVES

                                              Description of Security:   4.96% Series D Senior Notes due October 18, 2012

                                              PPN:                       15131# AD 8

                                              Due date and application (as among principal, premium and interest) of the
                                              payment being made.
- --------------------------------------------- ---------------------------------------------------------------------------
Address for Notices Related to Payments       Hartford Investment Management Company
                                              c/o Portfolio Support
                                              P.O. Box 1744
                                              Hartford, CT 06144-1744

                                              Fax:     860-297-8875 / 8876
- --------------------------------------------- ---------------------------------------------------------------------------
Address for All Other Notices                 Hartford Investment Management Company
                                              c/o Investment Department - Private Placements
                                              P.O. Box 1744
                                              Hartford, CT 06144-1744

                                              Fax:     860-297-8884
- --------------------------------------------- ---------------------------------------------------------------------------
Other Instructions                            HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
                                              By:      Hartford Investment Services, Inc., its Agent and Attorney-in-Fact

                                              By______________________________
                                              Name:
                                              Title:
- --------------------------------------------- ---------------------------------------------------------------------------
Instructions re Delivery of Notes             Chase Manhattan Bank
                                              North America Insurance
                                              3 MetroTech Center, 6th Floor
                                              Brooklyn, NY 11245
                                              Attn: Bettye Carrera

                                              CUSTODY ACCOUNT # G06586-ITT MUST APPEAR ON OUTSIDE OF ENVELOPE
- --------------------------------------------- ---------------------------------------------------------------------------
Tax Identification Number                     39-1052598
============================================= ===========================================================================
</TABLE>

                                 Schedule A-24
<PAGE>

<TABLE>
<CAPTION>
============================================= ===========================================================================
PURCHASER NAME                                MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY
- --------------------------------------------- ---------------------------------------------------------------------------
<S>                                           <C>
Name in Which Note is Registered              MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY
- --------------------------------------------- ---------------------------------------------------------------------------
Note Registration Number; Principal Amount    RD-18; $2,900,000
- --------------------------------------------- ---------------------------------------------------------------------------
Payment on Account of Note

         Method                               Federal Funds Wire Transfer

         Account Information                  Citibank, N.A.
                                              111 Wall Street
                                              New York, NY 10043
                                              ABA # 021-000-089
                                              For MassMutual Long-Term Pool
                                              Acct. # 4067-3488

                                              Re:  (See "Accompanying information" below)
- --------------------------------------------- ---------------------------------------------------------------------------
Accompanying Information                      Name of Issuer:            CENEX HARVEST STATES COOPERATIVES

                                              Description of Security:   4.96% Series D Senior Notes due October 18, 2012

                                              PPN:                       15131# AD 8

                                              Due date and application (as among principal, premium and interest) of the
                                              payment being made.
- --------------------------------------------- ---------------------------------------------------------------------------
Address for Notices Related to Payments       Massachusetts Mutual Life Insurance Company
                                              c/o David L. Babson & Company Inc.
                                              1500 Main Street, Suite 2800
                                              Springfield, MA  01115
                                              Attn:    Securities Custody and Collection Department

                                              With telephone advice of payment to:
                                              -----------------------------------

                                              David L. Babson & Company Inc.
                                              Securities Custody and Collection Department

                                              Tel:     413-226-1803 / 1889
- --------------------------------------------- ---------------------------------------------------------------------------
Address for All Other Notices                 Massachusetts Mutual Life Insurance Company
                                              c/o David L. Babson & Company Inc.
                                              1500 Main Street, Suite 2800
                                              Springfield, MA 01115
                                              Attn:    Securities Investment Division
- --------------------------------------------- ---------------------------------------------------------------------------
Other Instructions                            MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY
                                              By:      David L. Babson & Company, Inc. as Investment Adviser

                                              By______________________________
                                              Name:
                                              Title:
- --------------------------------------------- ---------------------------------------------------------------------------
Instructions re Delivery of Notes             Massachusetts Mutual Life Insurance Company
                                              c/o David L. Babson & Company Inc.
                                              1500 Main Street, Suite 2800
                                              Springfield, MA 01115
                                              Attn: Frank Lucchesi
- --------------------------------------------- ---------------------------------------------------------------------------
Tax Identification Number                     04-1590850
============================================= ===========================================================================
</TABLE>

                                 Schedule A-25
<PAGE>

<TABLE>
<CAPTION>
============================================= ===========================================================================
PURCHASER NAME                                MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY
- --------------------------------------------- ---------------------------------------------------------------------------
<S>                                           <C>
Name in Which Note is Registered              MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY
- --------------------------------------------- ---------------------------------------------------------------------------
Note Registration Number; Principal Amount    RD-19; $2,000,000
- --------------------------------------------- ---------------------------------------------------------------------------
Payment on Account of Note

         Method                               Federal Funds Wire Transfer

         Account Information                  JPMorgan Chase Bank
                                              4 Chase MetroTech Center
                                              New York, NY 10081 ABA #
                                              021-000-021 For MassMutual IFM
                                              Non-Traditional Acct. # 910-2509073

                                              Re:      (see "Accompanying Information" below)
- --------------------------------------------- ---------------------------------------------------------------------------
Accompanying Information                      Name of Issuer:            CENEX HARVEST STATES COOPERATIVES

                                              Description of Security:   4.96% Series D Senior Notes due October 18, 2012

                                              PPN:                       15131# AD 8

                                              Due date and application (as among principal, premium and interest) of the
                                              payment being made.
- --------------------------------------------- ---------------------------------------------------------------------------
Address for Notices Related to Payments       Massachusetts Mutual Life Insurance Company
                                              c/o David L. Babson & Company Inc.
                                              1500 Main Street, Suite 800
                                              Springfield, MA  01115
                                              Attn:    Securities Custody and Collection Department

                                              With telephonic advice of payment to:
                                              ------------------------------------

                                              David L. Babson & Company Inc.
                                              Securities Custody and Collection Department

                                              Tel:     413-226-1803 / 1839
- --------------------------------------------- ---------------------------------------------------------------------------
Address for All other Notices                 Massachusetts Mutual Life Insurance Company
                                              c/o David L. Babson & Company Inc.
                                              1500 Main Street, Suite 2800
                                              Springfield, MA 01115
                                              Attn:    Securities Investment Division
- --------------------------------------------- ---------------------------------------------------------------------------
Other Instructions                            MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY
                                              By:      David L. Babson & Company Inc. as Investment Adviser

                                              By:___________________________________
                                              Name:
                                              Title:
- --------------------------------------------- ---------------------------------------------------------------------------
Instructions re Delivery of Notes             Massachusetts Mutual Life Insurance Company
                                              c/o David L. Babson & Company Inc.
                                              1500 Main Street, Suite 2800
                                              Springfield, MA 01115
                                              Attn: Frank Lucchesi
- --------------------------------------------- ---------------------------------------------------------------------------
Tax Identification Number                     04-1590850
============================================= ===========================================================================
</TABLE>

                                 Schedule A-26
<PAGE>

<TABLE>
<CAPTION>
============================================= ===========================================================================
PURCHASER NAME                                MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY
- --------------------------------------------- ---------------------------------------------------------------------------
<S>                                           <C>
Name in Which Note is Registered              MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY
- --------------------------------------------- ---------------------------------------------------------------------------
Note Registration Number; Principal Amount    RD-20; $900,000
- --------------------------------------------- ---------------------------------------------------------------------------
Payment on Account of Note

         Method                               Federal Funds Wire Transfer

         Account Information                  Citibank, N.A.
                                              111 Wall Street
                                              New York, NY 10043
                                              ABA # 021-000-089
                                              For MassMutual Spot Priced Contract
                                              Acct. # 3890-4953

                                              Re:      (see "Accompanying Information" below)
- --------------------------------------------- ---------------------------------------------------------------------------
Accompanying Information                      Name of Issuer:            CENEX HARVEST STATES COOPERATIVES

                                              Description of Security:   4.96% Series D Senior Notes due October 18, 2012

                                              PPN:                       15131# AD 8

                                              Due date and application (as among principal, premium and interest) of the
                                              payment being made.
- --------------------------------------------- ---------------------------------------------------------------------------
Address for Notices Related to Payments       Massachusetts Mutual Life Insurance Company
                                              c/o David L. Babson & Company Inc.
                                              1500 Main Street, Suite 800
                                              Springfield, MA  01115
                                              Attn:    Securities Custody and Collection Department

                                              With telephonic advice of payment to:
                                              ------------------------------------

                                              David L. Babson & Company Inc.
                                              Securities Custody and Collection Department

                                              Tel:     413-226-1807 / 1839
- --------------------------------------------- ---------------------------------------------------------------------------
Address for All other Notices                 Massachusetts Mutual Life Insurance Company
                                              c/o David L. Babson & Company Inc.
                                              1500 Main Street, Suite 2800
                                              Springfield, MA 01115
                                              Attn:    Securities Investment Division
- --------------------------------------------- ---------------------------------------------------------------------------
Other Instructions                            MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY
                                              By:      David L. Babson & Company Inc. as Investment Adviser

                                              By:___________________________________
                                              Name:
                                              Title:
- --------------------------------------------- ---------------------------------------------------------------------------
Instructions re Delivery of Notes             Massachusetts Mutual Life Insurance Company
                                              c/o David L. Babson & Company Inc.
                                              1500 Main Street, Suite 2800
                                              Springfield, MA 01115
                                              Attn: Frank Lucchesi
- --------------------------------------------- ---------------------------------------------------------------------------
Tax Identification Number                     04-1590850
============================================= ===========================================================================
</TABLE>

                                 Schedule A-27
<PAGE>

<TABLE>
<CAPTION>
============================================= ===========================================================================
PURCHASER NAME                                MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY
- --------------------------------------------- ---------------------------------------------------------------------------
<S>                                           <C>
Name in Which Note is Registered              MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY
- --------------------------------------------- ---------------------------------------------------------------------------
Note Registration Number; Principal Amount    RD-21; $500,000
- --------------------------------------------- ---------------------------------------------------------------------------
Payment on Account of Note

         Method                               Federal Funds Wire Transfer

         Account Information                  Citibank, N.A.
                                              111 Wall Street
                                              New York, NY  10043
                                              ABA # 021-000-089
                                              For MassMutual Structured Settlement Fund
                                              Acct. # 4065-5423

                                              Re:      (see "Accompanying Information" below)
- --------------------------------------------- ---------------------------------------------------------------------------
Accompanying Information                      Name of Issuer:            CENEX HARVEST STATES COOPERATIVES

                                              Description of Security:   4.96% Series D Senior Notes due October 18, 2012

                                              PPN:                       15131# AD 8

                                              Due date and application (as among principal, premium and interest) of the
                                              payment being made.
- --------------------------------------------- ---------------------------------------------------------------------------
Address for Notices Related to Payments       Massachusetts Mutual Life Insurance Company
                                              c/o David L. Babson & Company Inc.
                                              1500 Main Street, Suite 800
                                              Springfield, MA  01115
                                              Attn:    Securities Custody and Collection Department

                                              With telephonic advice of payment to:
                                              ------------------------------------

                                              David L. Babson & Company Inc.
                                              Securities Custody and Collection Department

                                              Tel:     413-226-1807 / 1839
- --------------------------------------------- ---------------------------------------------------------------------------
Address for All other Notices                 Massachusetts Mutual Life Insurance Company
                                              c/o David L. Babson & Company Inc.
                                              1500 Main Street, Suite 2800
                                              Springfield, MA 01115
                                              Attn:    Securities Investment Division
- --------------------------------------------- ---------------------------------------------------------------------------
Other Instructions                            MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY
                                              By:      David L. Babson & Company Inc. as Investment Adviser

                                              By:___________________________________
                                              Name:
                                              Title:
- --------------------------------------------- ---------------------------------------------------------------------------
Instructions re Delivery of Notes             Massachusetts Mutual Life Insurance Company
                                              c/o David L. Babson & Company Inc.
                                              1500 Main Street, Suite 2800
                                              Springfield, MA 01115
                                              Attn: Frank Lucchesi
- --------------------------------------------- ---------------------------------------------------------------------------
Tax Identification Number                     04-1590850
============================================= ===========================================================================
</TABLE>

                                 Schedule A-28
<PAGE>

<TABLE>
<CAPTION>
============================================= ===========================================================================
PURCHASER NAME                                C.M. LIFE INSURANCE COMPANY C/O MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY
- --------------------------------------------- ---------------------------------------------------------------------------
<S>                                           <C>
Name in Which Note is Registered              C.M. LIFE INSURANCE COMPANY c/o MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY
- --------------------------------------------- ---------------------------------------------------------------------------
Note Registration Number; Principal Amount    RD-22; $1,700,000
- --------------------------------------------- ---------------------------------------------------------------------------
Payment on Account of Note

         Method                               Federal Funds Wire Transfer

         Account Information                  Citibank, N.A.
                                              111 Wall Street
                                              New York, NY 10043
                                              ABA # 021-000-089
                                              For Segment 43 - Universal Life
                                              Acct. # 4068-6561

                                              Re:      (see "Accompanying Information" below)
- --------------------------------------------- ---------------------------------------------------------------------------
Accompanying Information                      Name of Issuer:            CENEX HARVEST STATES COOPERATIVES

                                              Description of Security:   4.96% Series D Senior Notes due October 18, 2012

                                              PPN:                       15131# AD 8

                                              Due date and application (as among principal, premium and interest) of the
                                              payment being made.
- --------------------------------------------- ---------------------------------------------------------------------------
Address for Notices Related to Payments       C.M. Life Insurance Company
                                              c/o David L. Babson & Company Inc.
                                              1500 Main Street, Suite 2800
                                              Springfield, MA 01115
                                              Attn:    Securities Custody and Collection Department - S431

                                              With telephonic advice of payment to:
                                              ------------------------------------

                                              David L. Babson & Company Inc.
                                              Securities Custody and Collection Department

                                              Tel:     413-226-1803 / 1839
- --------------------------------------------- ---------------------------------------------------------------------------
Address for All other Notices                 C.M. Life Insurance Company
                                              c/o David L. Babson & Company Inc.
                                              1500 Main Street, Suite 2800
                                              Springfield, MA 01115
                                              Attn:    Securities Investment Division
- --------------------------------------------- ---------------------------------------------------------------------------
Other Instructions                            C.M. LIFE INSURANCE COMPANY
                                              By:      David L. Babson & Company Inc. as Investment Sub-Adviser

                                              By:___________________________________
                                              Name:
                                              Title:
- --------------------------------------------- ---------------------------------------------------------------------------
Instructions re Delivery of Notes             Massachusetts Mutual Life Insurance Company
                                              c/o David L. Babson & Company Inc.
                                              1500 Main Street, Suite 2800
                                              Springfield, MA 01115
                                              Attn: Frank Lucchesi
- --------------------------------------------- ---------------------------------------------------------------------------
Tax Identification Number                     06-1041383
============================================= ===========================================================================
</TABLE>

                                 Schedule A-29
<PAGE>

<TABLE>
<CAPTION>
============================================= ===========================================================================
PURCHASER NAME                                UNITED OF OMAHA LIFE INSURANCE COMPANY
- --------------------------------------------- ---------------------------------------------------------------------------
<S>                                           <C>
Name in Which Note is Registered              UNITED OF OMAHA LIFE INSURANCE COMPANY
- --------------------------------------------- ---------------------------------------------------------------------------
Note Registration Number; Principal Amount    RD-23; $5,000,000
- --------------------------------------------- ---------------------------------------------------------------------------
Payment on Account of Note

         Method                               Federal Funds Wire Transfer

         Account Information                  JPMorgan Chase Bank
                                              ABA # 021-000-021
                                              Attn:    Private Income Processing
                                              For credit to United of Omaha Life Insurance Company
                                              Acct. #: 900-9000200
                                              A/C:     G07097

                                              Re:  (See "Accompanying information" below)
- --------------------------------------------- ---------------------------------------------------------------------------
Accompanying Information                      Name of Issuer:            CENEX HARVEST STATES COOPERATIVES

                                              Description of Security:   4.96% Series D Senior Notes due October 18, 2012

                                              PPN:                       15131# AD 8

                                              Due date and application (as among principal, premium and interest) of the
                                              payment being made.
- --------------------------------------------- ---------------------------------------------------------------------------
Address for Notices Related to Payments       JPMorgan Chase Bank
                                              14201 Dallas Parkway, 13th Floor
                                              Dallas, TX  75254-2917
                                              Attn:    G. Ruiz
                                                       Income Processing

                                              Re:      A/C:  G07097
- --------------------------------------------- ---------------------------------------------------------------------------
Address for All Other Notices                 United of Omaha Life Insurance Company
                                              4 - Investment Loan Administration
                                              Mutual of Omaha Plaza
                                              Omaha, NE 68175-1011
- --------------------------------------------- ---------------------------------------------------------------------------
Other Instructions                            UNITED OF OMAHA LIFE INSURANCE COMPANY

                                              By: ________________________________
                                              Name:
                                              Title:
- --------------------------------------------- ---------------------------------------------------------------------------
Instructions re Delivery of Notes             JPMorgan Chase Bank
                                              North America Insurance, 6th Floor
                                              3 Chase Metrotech Center
                                              Brooklyn, NY 11245
                                              Attn:    Patricia A. Radzicki
- --------------------------------------------- ---------------------------------------------------------------------------
Tax Identification Number                     47-0322111
============================================= ===========================================================================
</TABLE>

                                 Schedule A-30
<PAGE>

<TABLE>
<CAPTION>
============================================= ===========================================================================
PURCHASER NAME                                MODERN WOODMEN OF AMERICA
- --------------------------------------------- ---------------------------------------------------------------------------
<S>                                           <C>
Name in Which Note is Registered              MODERN WOODMEN OF AMERICA
- --------------------------------------------- ---------------------------------------------------------------------------
Note Registration Number; Principal Amount    RE-6; $5,000,000
- --------------------------------------------- ---------------------------------------------------------------------------
Payment on Account of Note

         Method                               Federal Funds Wire Transfer

         Account Information                  The Northern Trust Company
                                              50 South LaSalle Street
                                              Chicago, IL 60675
                                              ABA # 071-000-152
                                              Acct. Name:  Modern Woodmen of America
                                              Acct. # 84352

                                              Re:      (see "Accompanying Information" below)
- --------------------------------------------- ---------------------------------------------------------------------------
Accompanying Information                      Name of Issuer:            CENEX HARVEST STATES COOPERATIVES

                                              Description of Security:   5.60% Series E Senior Notes due October 18, 2017

                                              PPN:                       15131# AE 6

                                              Due date and application (as among principal, premium and interest) of the
                                              payment being made.
- --------------------------------------------- ---------------------------------------------------------------------------
Address for Notices Related to Payments       Modern Woodmen of America
                                              1701 First Avenue
                                              Rock Island, IL 61201
                                              Attn:    Investment Accounting Department
- --------------------------------------------- ---------------------------------------------------------------------------
Address for All Other Notices                 Modern Woodmen of America
                                              1701 First Avenue
                                              Rock Island, IL 61201
                                              Attn:    Investment Department
- --------------------------------------------- ---------------------------------------------------------------------------
Other Instructions                            MODERN WOODMEN OF AMERICA

                                              By______________________________
                                              Name:
                                              Title:
- --------------------------------------------- ---------------------------------------------------------------------------
Instructions re Delivery of Notes             Modern Woodmen of America
                                              1701 First Avenue
                                              Rock Island, IL 61201
                                              Attn:    Investment Department
- --------------------------------------------- ---------------------------------------------------------------------------
Tax Identification Number                     36-1493430
============================================= ===========================================================================
</TABLE>

                                 Schedule A-31
<PAGE>

<TABLE>
<CAPTION>
============================================= ===========================================================================
PURCHASER NAME                                AMERICAN REPUBLIC INSURANCE COMPANY
- --------------------------------------------- ---------------------------------------------------------------------------
<S>                                           <C>
Name in Which Note is Registered              WELLS FARGO BANK, N.A. AS CUSTODIAN FOR AMERICAN REPUBLIC INSURANCE
                                              COMPANY
- --------------------------------------------- ---------------------------------------------------------------------------
Note Registration Number; Principal Amount    RE-7; $2,000,000
- --------------------------------------------- ---------------------------------------------------------------------------
Payment on Account of Note

         Method                               Federal Funds Wire Transfer

         Account Information                  Wells Fargo Bank, N.A.
                                              ABA # 091-000-019
                                              BNFA = 0000840245
                                              BNF = Trust Clearing Account
                                              FFC Attn:  Income Collections, Acct. # 20983400
                                              For further credit to American Republic Insurance Co.
                                              Acct. # 20983400

                                              Re:      see "Accompanying Information" below
- --------------------------------------------- ---------------------------------------------------------------------------
Accompanying Information                      Name of Issuer:            CENEX HARVEST STATES COOPERATIVES

                                              Description of Security:   5.60% Series E Senior Notes due October 18, 2017

                                              PPN:                       15131# AE 6

                                              Due date and application (as among principal, premium and interest) of the
                                              payment being made.
- --------------------------------------------- ---------------------------------------------------------------------------
Address for Notices Related to Payments       American Republic Insurance Company
                                              c/o Advantus Capital Management, Inc.
                                              400 Robert Street North
                                              St. Paul, MN  55101
                                              Attn:    Client Administrator
- --------------------------------------------- ---------------------------------------------------------------------------
Address for All Other Notices                 American Republic Insurance Company
                                              c/o Advantus Capital Management, Inc.
                                              400 Robert Street North
                                              St. Paul, MN  55101
                                              Attn:    Client Administrator
- --------------------------------------------- ---------------------------------------------------------------------------
Other Instructions                            AMERICAN REPUBLIC INSURANCE COMPANY
                                              By:      Advantus Capital Management, Inc.

                                              By: ________________________
                                              Name:
                                              Title:
- --------------------------------------------- ---------------------------------------------------------------------------
Instructions re Delivery of Notes             Well Fargo Bank, N.A.
                                              MAC N9306-050
                                              733 Marquette Avenue, 5th Floor
                                              Minneapolis, MN 55479
                                               Attn: Brandi Pickel
                                                     Investors Building
- --------------------------------------------- ---------------------------------------------------------------------------
Tax Identification Number                     42-0113630
============================================= ===========================================================================
</TABLE>

                                 Schedule A-32
<PAGE>

<TABLE>
<CAPTION>
============================================= ===========================================================================
PURCHASER NAME                                GREAT WESTERN INSURANCE COMPANY
- --------------------------------------------- ---------------------------------------------------------------------------
<S>                                           <C>
Name in Which Note is Registered              MERRILL LYNCH FOR GREAT WESTERN INSURANCE COMPANY
- --------------------------------------------- ---------------------------------------------------------------------------
Note Registration Number; Principal Amount    RE-8; $1,000,000
- --------------------------------------------- ---------------------------------------------------------------------------
Payment on Account of Note

         Method                               Federal Funds Wire Transfer

         Account Information                  Deutsche Bank Trust Company Americas
                                              ABA # 021-001-033
                                              For credit to Merrill Lynch Pierce Fenner & Smith Inc.
                                              Acct. #:          00810935
                                              Reference Acct. #:70G-13700
                                              Reference Name:   Great Western Insurance Company
                                              Contact:          Dan Andriano
                                                                201-557-4208

                                              Re:      see "Accompanying Information" below
- --------------------------------------------- ---------------------------------------------------------------------------
Accompanying Information                      Name of Issuer:            CENEX HARVEST STATES COOPERATIVES

                                              Description of Security:   5.60% Series E Senior Notes due October 18, 2017

                                              PPN:                       15131# AE 6

                                              Due date and application (as among principal, premium and interest) of the
                                              payment being made.
- --------------------------------------------- ---------------------------------------------------------------------------
Address for Notices Related to Payments       Great Western Insurance Company
                                              c/o Advantus Capital Management, Inc.
                                              400 Robert Street North
                                              St. Paul, MN  55101
                                              Attn: Christine Rule
- --------------------------------------------- ---------------------------------------------------------------------------
Address for All Other Notices                 Great Western Insurance Company
                                              c/o Advantus Capital Management, Inc.
                                              400 Robert Street North
                                              St. Paul, MN  55101
                                              Attn: Christine Rule
- --------------------------------------------- ---------------------------------------------------------------------------
Other Instructions                            GREAT WESTERN INSURANCE COMPANY
                                              By:      Advantus Capital Management, Inc.

                                              By: ________________________
                                              Name:
                                              Title:
- --------------------------------------------- ---------------------------------------------------------------------------
Instructions re Delivery of Notes             New York Window / DTCC
                                              55 Water Street
                                              New York, NY 10041
                                              Attn: Butch Puazo
                                              Acct. #: 70G-13700
                                                       Great Western Insurance Company

                                              Tel:     201-855-2465
- --------------------------------------------- ---------------------------------------------------------------------------
Tax Identification Number                     87-0395954
============================================= ===========================================================================
</TABLE>

                                 Schedule A-33
<PAGE>

<TABLE>
<CAPTION>
============================================= ===========================================================================
PURCHASER NAME                                NATIONAL FARM LIFE INSURANCE COMPANY
- --------------------------------------------- ---------------------------------------------------------------------------
<S>                                           <C>
Name in Which Note is Registered              NATIONAL FARM LIFE INSURANCE COMPANY
- --------------------------------------------- ---------------------------------------------------------------------------
Note Registration Number; Principal Amount    RE-9; $500,000
- --------------------------------------------- ---------------------------------------------------------------------------
Payment on Account of Note

         Method                               Federal Funds Wire Transfer

         Account Information                  Chase Bank of Texas
                                              Fort Worth, TX  76102
                                              ABA # 113-000-609
                                              For credit to National Farm Life Insurance Company
                                              Acct. # 07303034907

                                              Re:      see "Accompanying Information" below
- --------------------------------------------- ---------------------------------------------------------------------------
Accompanying Information                      Name of Issuer:            CENEX HARVEST STATES COOPERATIVES

                                              Description of Security:   5.60% Series E Senior Notes due October 18, 2017

                                              PPN:                       15131# AE 6

                                              Due date and application (as among principal, premium and interest) of the
                                              payment being made.
- --------------------------------------------- ---------------------------------------------------------------------------
Address for Notices Related to Payments       National Farm Life Insurance Company
                                              c/o Advantus Capital Management, Inc.
                                              400 Robert Street North
                                              St. Paul, MN  55101
                                              Attn:    Client Administrator
- --------------------------------------------- ---------------------------------------------------------------------------
Address for All Other Notices                 National Farm Life Insurance Company
                                              c/o Advantus Capital Management, Inc.
                                              400 Robert Street North
                                              St. Paul, MN  55101
                                              Attn:    Client Administrator
- --------------------------------------------- ---------------------------------------------------------------------------
Other Instructions                            NATIONAL FARM LIFE INSURANCE COMPANY
                                              By:      Advantus Capital Management, Inc.

                                              By: ________________________
                                              Name:
                                              Title:
- --------------------------------------------- ---------------------------------------------------------------------------
Instructions re Delivery of Notes             National Farm Life Insurance Company
                                              6001 Bridge Street
                                              Fort Worth, TX 76112-2619
                                              Attn:    J. D. Davis, Jr.
- --------------------------------------------- ---------------------------------------------------------------------------
Tax Identification Number                     75-0708826
============================================= ===========================================================================
</TABLE>

                                 Schedule A-34
<PAGE>

<TABLE>
<CAPTION>
============================================= ===========================================================================
PURCHASER NAME                                PROTECTED HOME MUTUAL LIFE INSURANCE COMPANY
- --------------------------------------------- ---------------------------------------------------------------------------
<S>                                           <C>
Name in Which Note is Registered              WELLS FARGO BANK, N.A. AS CUSTODIAN FOR PROTECTED HOME MUTUAL LIFE
                                              INSURANCE COMPANY
- --------------------------------------------- ---------------------------------------------------------------------------
Note Registration Number; Principal Amount    RE-10; $500,000
- --------------------------------------------- ---------------------------------------------------------------------------
Payment on Account of Note

         Method                               Federal Funds Wire Transfer

         Account Information                  Wells Fargo Bank, N.A.
                                              ABA # 091-000-019 BNFA = 0840245
                                              BNF = Norwest Trust Clearing Mpls
                                              OBI = FFC to Norwest Client Acct. # 13371700
                                              Norwest Client Acct. Name: Protected Home Mutual Life Insurance Company

                                              Re:      see "Accompanying Information" below
- --------------------------------------------- ---------------------------------------------------------------------------
Accompanying Information                      Name of Issuer:            CENEX HARVEST STATES COOPERATIVES

                                              Description of Security:   5.60% Series E Senior Notes due October 18, 2017

                                              PPN:                       15131# AE 6

                                              Due date and application (as among principal, premium and interest) of the
                                              payment being made.
- --------------------------------------------- ---------------------------------------------------------------------------
Address for Notices Related to Payments       Protected Home Mutual Life Insurance Company
                                              c/o Advantus Capital Management, Inc.
                                              400 Robert Street North
                                              St. Paul, MN  55101
                                              Attn:    Client Administrator
- --------------------------------------------- ---------------------------------------------------------------------------
Address for All Other Notices                 Protected Home Mutual Life Insurance Company
                                              c/o Advantus Capital Management, Inc.
                                              400 Robert Street North
                                              St. Paul, MN  55101
                                              Attn:    Client Administrator
- --------------------------------------------- ---------------------------------------------------------------------------
Other Instructions                            PROTECTED HOME MUTUAL LIFE INSURANCE COMPANY
                                              By:      Advantus Capital Management, Inc.

                                              By: ________________________
                                              Name:
                                              Title:
- --------------------------------------------- ---------------------------------------------------------------------------
Instructions re Delivery of Notes             Well Fargo Bank, N.A.
                                              733 Marquette Avenue, Lower Level 1
                                              Minneapolis, MN 55479-0051
                                              Attn: Chuck Scholl
                                                    Security Control and Transfer

                                              Tel:  612-316-1916
- --------------------------------------------- ---------------------------------------------------------------------------
Tax Identification Number                     25-0740310
============================================= ===========================================================================
</TABLE>

                                 Schedule A-35
<PAGE>


                                   SCHEDULE B

                                  DEFINED TERMS

         As used herein, the following terms have the respective meanings set
forth below or set forth in the Section hereof following such term:

         "ADJUSTED CONSOLIDATED FUNDED DEBT" means Consolidated Funded Debt,
plus the net present value of operating leases of the Company and its
Subsidiaries as discounted by a rate of 10% per annum.

         "AFFILIATE" means, at any time, and with respect to any Person, (a) any
other Person that at such time directly or indirectly through one or more
intermediaries Controls, or is Controlled by, or is under common Control with,
such first Person, and (b) any Person beneficially owning or holding, directly
or indirectly, 10% or more of any class of voting or equity interests of the
Company or any Subsidiary or any corporation of which the Company and its
Subsidiaries beneficially own or hold, in the aggregate, directly or indirectly,
10% or more of any class of voting or equity interests. As used in this
definition, "CONTROL" means the possession, directly or indirectly, of the power
to direct or cause the direction of the management and policies of a Person,
whether through the ownership of Voting Interests, by contract or otherwise.
Unless the context otherwise clearly requires, any reference to an "Affiliate"
is a reference to an Affiliate of the Company.

         "AGREEMENT, THIS" is defined in Section 17.3.

         "BUSINESS DAY" means any day other than a Saturday, a Sunday or a day
on which commercial banks in New York, New York are required or authorized to be
closed.

         "CAPITAL LEASE" means, at any time, a lease with respect to which the
lessee is required concurrently to recognize the acquisition of an asset and the
incurrence of a liability in accordance with GAAP.

         "CAPITALIZED LEASE OBLIGATION" means with respect to any Person and a
Capital Lease, the amount of the obligation of such Person as the lessee under
such Capital Lease (net of interest expenses) which would, in accordance with
GAAP, appear as a liability on a balance sheet of such Person.

         "CHANGE IN CONTROL" means any Person or Persons acting in concert,
together with the Affiliates thereof, directly or indirectly controlling or
owning (beneficially or otherwise) in the aggregate more than 50% of the
aggregate voting power of the issued and outstanding Voting Interests of the
Company.

         "CLOSING" is defined in Section 3.

         "COBANK" means Co-Bank, ACB, a United States Agricultural Credit Bank.


                                  Schedule B-1
<PAGE>


         "CODE" means the Internal Revenue Code of 1986, as amended from time to
time, and the rules and regulations promulgated thereunder from time to time.

         "COMPANY" is defined in the introductory paragraph hereof.

         "CONFIDENTIAL INFORMATION" is defined in Section 20.

         "CONSOLIDATED CASH FLOW" means for any period shall mean the sum of (a)
earnings before income taxes of the Company and its Subsidiaries for such period
determined on a consolidated basis in accordance with GAAP, PLUS (b) the amounts
that have been deducted in the determination of such earnings before income
taxes for such period for (i) interest expense for such period, (ii)
depreciation for such period, (iii) amortization for such period and (iv)
extraordinary non-cash losses for such period, MINUS (c) the amounts that have
been included in the determination of such earnings before income taxes for such
period for (i) one-time gains, (ii) extraordinary income, (iii) non-cash
patronage income, and (iv) non-cash equity earnings in joint ventures.

         "CONSOLIDATED FUNDED DEBT" means as of any date of determination, the
total of all Funded Debt of the Company and its Subsidiaries outstanding on such
date, after eliminating all offsetting debits and credits between the Company
and its Subsidiaries and all other items required to be eliminated in course of
the preparation of consolidated financial statements of the Company and its
Subsidiaries in accordance with GAAP.

         "CONSOLIDATED MEMBERS' AND PATRONS' EQUITY" means, with respect to the
Company and its Subsidiaries, the amount of equity accounts, PLUS (or minus in
the case of a deficit) the amount of surplus and retained earnings accounts of
the Company and its Subsidiaries, PLUS (or minus in the case of a deficit) the
minority interests in Subsidiaries; PROVIDED that the total amount of intangible
assets of the Company and its Subsidiaries (including, without limitation,
unamortized debt discount and expense, deferred charges and goodwill) included
therein shall not exceed $30,000,000 (and to the extent such intangible assets
exceed $30,000,000, they will not be included in the calculation of Consolidated
Members' and Patrons' Equity); all as determined on a consolidated basis in
accordance with GAAP consistently applied.

         "CONSOLIDATED NET WORTH" means as of any date, members' equity of the
Company and its Subsidiaries as of such date, determined on a consolidated basis
in accordance with GAAP.

         "CONSOLIDATED TOTAL ASSETS" means at any time, the total assets of the
Company and its Subsidiaries that would be shown on a consolidated balance sheet
of the Company and its Subsidiaries at such time prepared in accordance with
GAAP.

         "DEBT" means with respect to any Person

                  (a) all obligations of such Person for borrowed money
         (including all obligations for borrowed money secured by any Lien with
         respect to any property owned by such Person whether or not such Person
         has assumed or otherwise become liable for such obligations),


                                  Schedule B-2
<PAGE>


                  (b) all obligations of such Person for the deferred purchase
         price of property acquired by such Person (excluding accounts payable
         arising in the ordinary course of business but including all
         liabilities created or arising under any conditional sale or other
         title retention agreement with respect to such property),

                  (c) all Capitalized Lease Obligations of such Person and

                  (d) all Guaranties of such Person with respect to liabilities
         of the type described in clause (a), (b) or (c) of any other Person,

         PROVIDED that (i) Debt of a Subsidiary of the Company shall exclude
such obligations and Guaranties of such Subsidiary if owed or guaranteed by a
Subsidiary to the Company or a Wholly-Owned Subsidiary of the Company, (ii) Debt
of the Company shall exclude such obligations and Guaranties if owed or
guaranteed by the Company to a Wholly-Owned Subsidiary of the Company and (iii)
Debt of the Company shall exclude any unfunded obligations which may exist now
and in the future in the Company's pension plans.

         "DEBT PREPAYMENT APPLICATION" is defined in Section 10.7(c).

         "DEFAULT" means an event or condition the occurrence or existence of
which would, with the lapse of time or the giving of notice or both, become an
Event of Default.

         "DEFAULT RATE" means that rate of interest that is the greater of (a)
2% per annum above the rate of interest stated in clause (a) of the first
paragraph of the Notes or (b) 2% over the rate of interest publicly announced by
The Bank of New York in New York, New York as its "base" or "prime" rate.

         "DESIGNATED PORTION" is defined in Section 10.7(b).

         "DISPOSITION VALUE" is defined in Section 10.7(c).

         "DISTRIBUTION" means, in respect of any corporation, association or
other business entity:

                  (a) dividends or other distributions or payments on capital
         stock or other equity interests of such corporation, association or
         other business entity (except distributions in such stock or other
         equity interest); and

                  (b) the redemption or acquisition of such stock or other
         equity interests or of warrants, rights or other options to purchase
         such stock or other equity interests (except when solely in exchange
         for such stock or other equity interests) unless made,
         contemporaneously, from the net proceeds of a sale of such stock or
         other equity interests.

         "ENVIRONMENTAL LAWS" means any and all Federal, state, local, and
foreign statutes, laws, regulations, ordinances, rules, judgments, orders,
decrees, permits, concessions, grants, franchises, licenses, agreements or
governmental restrictions relating to pollution and the protection of the


                                  Schedule B-3
<PAGE>


environment or the release of any materials into the environment, including but
not limited to those related to hazardous substances or wastes, air emissions
and discharges to waste or public systems.

         "ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and the rules and regulations promulgated thereunder
from time to time in effect.

         "ERISA AFFILIATE" means any trade or business (whether or not
incorporated) that is treated as a single employer together with the Company
under section 414 of the Code.

         "EVENT OF DEFAULT" is defined in Section 11.

         "EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.

         "EXCLUDED TRANSFERS" is defined in Section 10.7(a).

         "FAIR MARKET VALUE" means, at any time and with respect to any
property, the sale value of such property that would be realized in an
arm's-length sale at such time between an informed and willing buyer and an
informed and willing seller (neither being under a compulsion to buy or sell,
respectively).

         "FINANCING DOCUMENTS" means, collectively, this Agreement, the Other
Agreements and the Notes.

         "FUNDED DEBT" means with respect to any Person, all Debt which would,
in accordance with GAAP, be required to be classified as a long term liability
on the books of such Person, and shall include, without limitation (i) any Debt
which by its terms or by the terms of any instrument or agreement relating
thereto matures, or which is otherwise payable or unpaid, more than one year
from the date of creation thereof, (ii) any Debt outstanding under a revolving
credit or similar agreement providing for borrowings (and renewals and
extensions thereof) which would, in accordance with GAAP, be required to be
classified as a long term liability of such Person, (iii) any Capitalized Lease
Obligation of such Person, and (iv) any Guaranty of such Person with respect to
Funded Debt of another Person. Notwithstanding anything to the contrary
contained herein, any Debt outstanding under a revolving credit or similar
agreement providing for borrowings where no amount of such Debt is outstanding
for a period of 30 consecutive days during each 12 month period (and which has
not been refinanced with other Debt which does not constitute Funded Debt) will
not be deemed to constitute Funded Debt.

         "GAAP" means generally accepted accounting principles as in effect from
time to time in the United States of America.

         "GOVERNMENTAL AUTHORITY"  means

                  (a) the government of

                           (i) the United States of America or any State or
                  other political subdivision thereof, or


                                  Schedule B-4
<PAGE>


                           (ii) any jurisdiction in which the Company or any
                  Subsidiary conducts all or any part of its business, or which
                  asserts jurisdiction over any properties of the Company or any
                  Subsidiary, or

                  (b) any entity exercising executive, legislative, judicial,
         regulatory or administrative functions of, or pertaining to, any such
         government.

         "GUARANTY" means, with respect to any Person, any obligation (except
the endorsement in the ordinary course of business of negotiable instruments for
deposit or collection) of such Person guaranteeing or in effect guaranteeing any
Debt, dividend or other obligation of any other Person in any manner, whether
directly or indirectly, including (without limitation) obligations incurred
through an agreement, contingent or otherwise, by such Person:

                  (a) to purchase such Debt or obligation or any property
         constituting security therefor;

                  (b) to advance or supply funds (i) for the purchase or payment
         of such Debt or obligation, or (ii) to maintain any working capital or
         other balance sheet condition or any income statement condition of any
         other Person or otherwise to advance or make available funds for the
         purchase or payment of such Debt or obligation;

                  (c) to lease properties or to purchase properties or services
         primarily for the purpose of assuring the owner of such Debt or
         obligation of the ability of any other Person to make payment of the
         Debt or obligation; or

                  (d) otherwise to assure the owner of such Debt or obligation
         against loss in respect thereof.

         In any computation of the Debt or other liabilities of the obligor
under any Guaranty, the Debt or other obligations that are the subject of such
Guaranty shall be assumed to be direct obligations of such obligor.

          "HAZARDOUS MATERIAL" means any and all pollutants, toxic or hazardous
wastes or any other substances that might pose a hazard to health or safety, the
removal of which may be required or the generation, manufacture, refining,
production, processing, treatment, storage, handling, transportation, transfer,
use, disposal, release, discharge, spillage, seepage, or filtration of which is
or shall be restricted, prohibited or penalized by any applicable law
(including, without limitation, asbestos, urea formaldehyde foam insulation and
polychlorinated biphenyls).

         "HOLDER" means, with respect to any Note, the Person in whose name such
Note is registered in the register maintained by the Company pursuant to Section
13.1.

         "HOSTILE TENDER OFFER" means , with respect to the use of proceeds of
any Note, any offer to purchase, or any purchase of, shares of capital stock of
any corporation or equity interests in any other entity, or securities
convertible into or representing the beneficial


                                  Schedule B-5
<PAGE>


ownership of, or rights to acquire, any such shares or equity interests, if such
shares, equity interests, securities or rights are of a class which is publicly
traded on any securities exchange or in any over-the-counter market, other than
purchases of such shares, equity interests, securities or rights representing
less than 5% of the equity interests or beneficial ownership of such corporation
or other entity for portfolio investment purposes, and such offer or purchase
has not been duly approved by the board of directors of such corporation or the
equivalent governing body of such other entity prior to the date of the Closing.

         "INHAM EXEMPTION" is defined in Section 6.2(e).

         "INSTITUTIONAL INVESTOR" means (a) any original purchaser of a Note,
(b) any holder of a Note holding more than 5% of the aggregate principal amount
of the Notes then outstanding, and (c) any bank, trust company, savings and loan
association or other financial institution, any pension plan, any investment
company, any insurance company, any broker or dealer, or any other similar
financial institution or entity, regardless of legal form.

         "LIEN" means, with respect to any Person, any mortgage, lien, pledge,
charge, security interest or other encumbrance, or any interest or title of any
vendor, lessor, lender or other secured party to or of such Person under any
conditional sale or other title retention agreement or Capital Lease, upon or
with respect to any property or asset of such Person (including in the case of
stock, stockholder agreements, voting trust agreements and all similar
arrangements).

         "MAKE-WHOLE AMOUNT" is defined in Section 8.7.

         "MATERIAL" means material in relation to the business, operations,
affairs, financial condition, assets, properties, or prospects of the Company
and its Subsidiaries taken as a whole.

         "MATERIAL ADVERSE EFFECT" means a material adverse effect on (a) the
business, operations, affairs, financial condition, assets or properties of the
Company and its Subsidiaries taken as a whole, or (b) the ability of the Company
to perform its obligations under the Financing Documents, or (c) the validity or
enforceability of any of the Financing Documents.

         "MEMORANDUM" is defined in Section 5.3.

         "MULTIEMPLOYER PLAN" means any Plan that is a "multiemployer plan" (as
such term is defined in section 4001(a)(3) of ERISA).

         "NAIC ANNUAL STATEMENT" is defined in Section 6.2(a).

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

         "NET PROCEEDS AMOUNT" is defined in Section 10.7(c).

         "NOTES" is defined in Section 1.


                                  Schedule B-6
<PAGE>


         "OFFICER'S CERTIFICATE" means a certificate of a Senior Financial
Officer or of any other officer of the Company whose responsibilities extend to
the subject matter of such certificate.

         "ORDINARY COURSE TRANSFER" is defined in Section 10.7(a).

         "OTHER AGREEMENTS" is defined in Section 2.

         "OTHER PURCHASERS" is defined in Section 2.

         "PBGC" means the Pension Benefit Guaranty Corporation referred to and
defined in ERISA or any successor thereto.

         "PERSON" means an individual, partnership, corporation, limited
liability company, association, trust, unincorporated organization, or a
government or agency or political subdivision thereof.

         "PLAN" means an "employee benefit plan" (as defined in section 3(3) of
ERISA) that is or, within the preceding five years, has been established or
maintained, or to which contributions are or, within the preceding five years,
have been made or required to be made, by the Company or any ERISA Affiliate or
with respect to which the Company or any ERISA Affiliate may have any liability.

         "PRIMARY BANK FACILITY" means an agreement, guaranty or other
instrument (or agreements, guaranties or other instruments to the extent such
agreements, guaranties or other instruments were entered into in concert in one
or a series of transactions)): (i) entered into by the Company in connection
with the provision of recourse credit in the form of revolving loans, term
loans, letters of credit or other extensions of credit commonly provided under
syndicated bank credit agreements to the Company or any of its Subsidiaries and
(ii) under which the aggregate amount of credit extended (whether in the form of
loans or commitments) to the Company or for which the Company is obligated as a
guarantor or otherwise is $150,000,000 or more.

         "PRIORITY DEBT" means, at any time, without duplication, the sum of

                  (a) all then outstanding Debt of the Company or any Subsidiary
         secured by any Lien on any property of the Company or any Subsidiary
         (other than Debt secured only by Liens permitted under paragraphs (a)
         through (h) of Section 10.6), PLUS

                  (b)      all Funded Debt of Subsidiaries of the Company.

         "PROPERTY" or "PROPERTIES" means, unless otherwise specifically
limited, real or personal property of any kind, tangible or intangible, choate
or inchoate.

         "PROPOSED PREPAYMENT DATE" is defined in Section 8.2.

         "PTE" is defined in Section 6.2(a).


                                  Schedule B-7
<PAGE>


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

         "QUALIFIED INSTITUTIONAL BUYER" means any Person who is a "qualified
institutional buyer" within the meaning of such term as set forth in Rule
144A(a)(1) under the Securities Act.

         "RATABLE PORTION" is defined in Section 10.7(c).

         "REINVESTED TRANSFER" is defined in Section 10.7(b).

         "REQUIRED HOLDERS" means, at any time, the holders of a majority in
aggregate principal amount of the Notes (without regard to Series) at the time
outstanding (exclusive of Notes then owned by the Company or any of its
Affiliates).

         "RESPONSIBLE OFFICER" means any Senior Financial Officer and any other
officer of the Company with responsibility for the administration of the
relevant portion of this Agreement.

         "SECURITIES ACT" means the Securities Act of 1933, as amended from time
to time.

         "SENIOR DEBT" means the Notes and any Debt of the Company or its
Subsidiaries that by its terms is not in any manner subordinated in right of
payment to any other unsecured Debt of the Company or any Subsidiary.

         "SENIOR FINANCIAL OFFICER" means the chief financial officer, principal
accounting officer, treasurer or comptroller of the Company.

         "SERIES" is defined in Section 1.

         "SERIES D NOTES" is defined in Section 1.

         "SERIES E NOTES" is defined in Section 1.

         "SERIES D REQUIRED PRINCIPAL PAYMENT" is defined in Section 8.2(a).

         "SERIES E REQUIRED PRINCIPAL PAYMENT" is defined in Section 8.2(a).

         "SOURCE" is defined in Section 6.2.

         "SUBSIDIARY" shall mean, with respect to any Person, any other Person
greater than 50% of the total combined voting power of all classes of Voting
Interests of which shall, at the time as of which any determination is being
made, be owned by such first Person either directly or through other
Subsidiaries of such first Person.

         "SUBSTANTIAL PORTION" is defined in Section 10.7(c).

         "SURVIVING CORPORATION" is defined in Section 10.2(b).


                                  Schedule B-8
<PAGE>


         "TRANSFER" is defined in Section 10.7(c)(iv).

         "VOTING INTERESTS" shall mean (a) with respect to any stock
corporation, any shares of stock of such corporation whose holders are entitled
under ordinary circumstances to vote for the election of directors of such
corporation or persons performing similar functions (irrespective of whether at
the time stock of any other class or classes shall have or might have voting
power by reason of the happening of any contingency), and (b) with respect to
the Company or any other entity, membership or other ownership interests in the
Company or such other entity whose holders are entitled under ordinary
circumstances to vote for the election of the directors of the Company or such
other entity or persons performing similar functions (irrespective of whether at
the time membership or other ownership interests of any other class or classes
shall have or might have voting power by reasoning of the happening of any
contingency).

         "USA PATRIOT ACT" means United States Public Law 107-56, United and
Strengthening America by Providing Appropriate Tools Required to Intercept and
Obstruct Terrorism (USA PATRIOT Act) Act of 2001.

         "WHOLLY-OWNED SUBSIDIARY" means, at any time, any Subsidiary one
hundred percent (100%) of all of the equity interests (except directors'
qualifying shares) and voting interests of which are owned by any one or more of
the Company and the Company's other Wholly-Owned Subsidiaries at such time.




                                  Schedule B-9
<PAGE>


                                  SCHEDULE 4.9

                         CHANGES IN CORPORATE STRUCTURE


         None.





                                 Schedule 4.9-1
<PAGE>


                                  SCHEDULE 5.3

                              DISCLOSURE MATERIALS


         None.





                                 Schedule 5.3-1
<PAGE>


                                  SCHEDULE 5.4

          SUBSIDIARIES OF THE COMPANY AND OWNERSHIP OF SUBSIDIARY STOCK

<TABLE>
<CAPTION>
===================================================================================================================================

ACTIVE/                                                                                                                   FISCAL
INACTIVE   CORPORATION                       ADDRESS                 TYPE   BUSINESS                 OWNERSHIP BY        YEAR END
===================================================================================================================================
<S>                                          <C>                      <C>                            <C>                    <C>
    A      Ag States Agency of Montana, Inc. 5500 Cenex Drive         SUB   Insurance Agency         100% by CHSC          31-Dec
                                             PO Box 64089
                                             St. Paul, MN  55164
- -----------------------------------------------------------------------------------------------------------------------------------
    A      Ag States Agency, LLC             5500 Cenex Drive         JV    Independent Insurance    80% by CHSC; 20%      31-May
                                             PO Box 64089                   Agency                   by Cooperative
                                             St. Paul, MN  55164                                     Service Agency
- -----------------------------------------------------------------------------------------------------------------------------------
    A      AgXML, LLC                        666 Grand Avenue,        LLC   Organized for the        CHS - 1,200
                                             Suite 2000                     purpose of achieving     Membership Units
                                             Des Moines, IA                 efficiencies by
                                             50309-2510                     establishing standards
                                                                            for grain & oilseed
                                                                            industries in
                                                                            electronic commerce
- -----------------------------------------------------------------------------------------------------------------------------------
    A      Bec-Lin of Perham, Inc.           800 Fourth Street NW     SUB   Tortilla & Lefse         100% CHSC             31-Oct
                                             Perham, MN  56573              business                 (Acquired 6/1/00)
- -----------------------------------------------------------------------------------------------------------------------------------
    A      CENEX Ag, Inc.                    5500 Cenex Drive         Sub   Sale of feed and seed    100% CENEX Inc.       31-Aug
           (formerly FUCEI-E, Inc.)          PO Box 64089                   products.
                                             St. Paul, MN  55164
- -----------------------------------------------------------------------------------------------------------------------------------
    A      CENEX Canada Inc.                 5500 Cenex Drive         Sub   Petroleum; does no       100% CENEX Inc.
                                             PO Box 64089                   business
                                             St. Paul, MN  55164
- -----------------------------------------------------------------------------------------------------------------------------------
    A      Cenex Harvest States Cooperatives 5500 Cenex Drive        Self   Combined Corporation     100% CHS
                                             PO Box 64089                   (Cenex and HSC)
                                             St. Paul, MN  55164
- -----------------------------------------------------------------------------------------------------------------------------------
    A      Cenex Petroleum, Inc.             5500 Cenex Drive         Sub   Retail sales and         CENEX - 100%
                                             PO Box 64089                   distribution of
                                             St. Paul, MN  55164            petroleum and other
                                                                            related products.
- -----------------------------------------------------------------------------------------------------------------------------------
    A      CENEX Pipeline LLC                5500 Cenex Drive         LLC   Operating Subsidiary     100% Cenex, Inc.
                                             PO Box 64089                   for pipeline operations
                                             St. Paul, MN  55164
===================================================================================================================================
</TABLE>


[WIDE TABLE CONTINUED FROM ABOVE

<TABLE>
<CAPTION>
========================================================================================
                                              JURISDICTION       DATE
ACTIVE/                                           OF              OF
INACTIVE   CORPORATION                       INCORPORATION   INCORPORATION   FEDERAL ID
========================================================================================
<S>                                             <C>           <C>            <C>
    A      Ag States Agency of Montana, Inc.    Montana       10/11/1977     81-0372838


- ----------------------------------------------------------------------------------------
    A      Ag States Agency, LLC               Minnesota      12/27/1994     41-1795536


- ----------------------------------------------------------------------------------------
    A      AgXML, LLC                             Iowa        Pending






- ----------------------------------------------------------------------------------------
    A      Bec-Lin of Perham, Inc.             Minnesota      2/20/1996      41-1831251

- ----------------------------------------------------------------------------------------
    A      CENEX Ag, Inc.                       Delaware      10/23/1974     41-1248837
           (formerly FUCEI-E, Inc.)

- ----------------------------------------------------------------------------------------
    A      CENEX Canada Inc.                    Alberta,      6/12/1987      Canadian
                                                 Canada                    8874 8884

- ----------------------------------------------------------------------------------------
    A      Cenex Harvest States Cooperatives   Minnesota      7/15/1936      41-0251095


- ----------------------------------------------------------------------------------------
    A      Cenex Petroleum, Inc.               Minnesota      7/11/1996      41-1847046



- ----------------------------------------------------------------------------------------
    A      CENEX Pipeline LLC                  Minnesota      5/4/1998


========================================================================================
</TABLE>


                                 Schedule 5.4-1
<PAGE>

<TABLE>
<CAPTION>
===================================================================================================================================

ACTIVE/                                                                                                                   FISCAL
INACTIVE   CORPORATION                       ADDRESS                 TYPE   BUSINESS                 OWNERSHIP BY        YEAR END
===================================================================================================================================
<S>                                          <C>                      <C>                            <C>                    <C>
    A      Cenex-Swiss Valley Energy LLC     5500 Cenex Drive         LLC   Farm Marketing and       40% Swiss Valley      31-Aug
                                             PO Box 64089                   Supply                   Farms Dubuque, IA,
                                             St. Paul, MN  55164                                     60% CHS
- -----------------------------------------------------------------------------------------------------------------------------------
    A      Central Montana Propane, LLC      Highway 191 North,       SUB   Owning and operating a   CHSC 53.38% and       31-Aug
                                             Box 22                         propane wholesale and    Moore Farmers Oil
                                             Lewistown, MT                  resale operatintion      Company 46.62%
                                             59457
- -----------------------------------------------------------------------------------------------------------------------------------
    A      CHS Aggressive Growth Fund, Inc.  11 East Chase Street    Corp   Investment Company       100% CHS              31-Aug
                                             Baltimore, MD 21202
- -----------------------------------------------------------------------------------------------------------------------------------
    A      CHS Conservative Growth Fund,     11 East Chase Street    Corp   Investment Company       100% CHS              31-Aug
           Inc.                              Baltimore, MD  21202
- -----------------------------------------------------------------------------------------------------------------------------------
    A      CHS Fixed Income Fund, Inc.       11 East Chase Street    Corp   Investment Company       100% CHS              31-Aug
                                             Baltimore, MD 21202
- -----------------------------------------------------------------------------------------------------------------------------------
    A      CHS Holdings, Inc.                5500 Cenex Drive         SUB   Holding Company for      100% CHS              31-Aug
                                             PO Box 64089                   membership interests in
                                             St. Paul, MN  55164            the new LLC formed re:
                                                                            Terra
- -----------------------------------------------------------------------------------------------------------------------------------
    A      CHS Moderate Growth Fund, Inc.    11 East Chase Street    Corp   Investment Company       100% CHS              31-Aug
                                             Baltimore, MD 21202
- -----------------------------------------------------------------------------------------------------------------------------------
    A      CHS-Agri Valley                   1550 South 48th          SUB   organized for the        100% CHS              31-Aug
                                             Street, Suite 200              purpose of carrying on
                                             Grand Forks, ND  58201         a grain elevator and
                                                                            warehouse business
- -----------------------------------------------------------------------------------------------------------------------------------
    A      CHS-Chinook                       135 First Street         SUB   Carrying on a farm       100% CHS              31-Aug
                                             Chinook, MT 59523-0339         supply business
                                                                            engaging in the
                                                                            purchase, sale and
                                                                            handling of
                                                                            agricultural
                                                                            products and
                                                                            agricultural
                                                                            supplies, energy
                                                                            products and
                                                                            machinery.
- -----------------------------------------------------------------------------------------------------------------------------------
    A      CHS-Connell, Inc.                 433 North Columbia       SUB   Transaction of any and   100% CHS              31-Aug
                                             Avenue                         all lawful business for
                                             Connell, WA 99326              which associations may
                                                                            be incorporated.
- -----------------------------------------------------------------------------------------------------------------------------------
    A      CHS-Crookston                     1111 So. Main            SUB   organized for the        100% CHS              31-Aug
                                             Crookston, MN 56716            purpose of carrying on
                                                                            a grain elevator and
                                                                            warehouse business
===================================================================================================================================
</TABLE>

[WIDE TABLE CONTINUED FROM ABOVE]

<TABLE>
<CAPTION>
========================================================================================
                                              JURISDICTION       DATE
ACTIVE/                                           OF              OF
INACTIVE   CORPORATION                       INCORPORATION   INCORPORATION   FEDERAL ID
========================================================================================
<S>                                            <C>            <C>            <C>
    A      Cenex-Swiss Valley Energy LLC       Minnesota      Jul-98         42-1475728


- ----------------------------------------------------------------------------------------
    A      Central Montana Propane, LLC        Montana        9/16/1997      81-0513866



- ----------------------------------------------------------------------------------------
    A      CHS Aggressive Growth Fund, Inc.    Maryland       5/1/2001       52-2316147
- ----------------------------------------------------------------------------------------
    A      CHS Conservative Growth Fund,       Maryland       5/1/2001       52-2316152
           Inc.
- ----------------------------------------------------------------------------------------
    A      CHS Fixed Income Fund, Inc.         Maryland       6/13/2001      41-2008912
- ----------------------------------------------------------------------------------------
    A      CHS Holdings, Inc.                  Minnesota      4/20/1999      41-1947300



- ----------------------------------------------------------------------------------------
    A      CHS Moderate Growth Fund, Inc.      Maryland       5/1/2001       52-2316156
- ----------------------------------------------------------------------------------------
    A      CHS-Agri Valley                     North Dakota   4/1/1999       91-1978844



- ----------------------------------------------------------------------------------------
    A      CHS-Chinook                         Montana        2/11/2002      73-1630482










- ----------------------------------------------------------------------------------------
    A      CHS-Connell, Inc.                   Washington     5/21/2001      36-4454350



- ----------------------------------------------------------------------------------------
    A      CHS-Crookston                       Minnesota      8/19/1999      41-1950417



========================================================================================
</TABLE>

                                 Schedule 5.4-2
<PAGE>

<TABLE>
<CAPTION>
===================================================================================================================================

ACTIVE/                                                                                                                   FISCAL
INACTIVE   CORPORATION                       ADDRESS                 TYPE   BUSINESS                 OWNERSHIP BY        YEAR END
===================================================================================================================================
<S>                                          <C>                      <C>                            <C>                    <C>
    A      CHS-Devils Lake                   10th Street and First    SUB   organized for the        100% CHS              31-Aug
                                             Avenue                         purpose of carrying on
                                             Devils Lake, ND  58301         a grain elevator and
                                                                            warehouse business
- -----------------------------------------------------------------------------------------------------------------------------------
    A      CHS-Edgeley                       602 - 2nd Street         SUB   organized for the        100% CHS              31-Aug
                                             Edgeley, ND 58433              purpose of carrying on
                                                                            a grain elevator and
                                                                            warehouse business
- -----------------------------------------------------------------------------------------------------------------------------------
    A      CHS-Garrison                      2100 Railroad Street     SUB   organized for the        100% CHS              31-Aug
                                             Garrison, ND 58540             purpose of carrying on
                                                                            a grain elevator and
                                                                            warehouse business
- -----------------------------------------------------------------------------------------------------------------------------------
    A      CHS-Glasgow                       225 Railroad Alley       SUB   organized for the        100% CHS              31-Aug
                                             Glasgow, MT 59230              purpose of carrying on
                                                                            a grain elevator and
                                                                            warehouse business
- -----------------------------------------------------------------------------------------------------------------------------------
    A      CHS-Grangeville, Inc.             1001 North A             SUB   The transaction of any   100% CHS              31-Aug
                                             P.O. Box 70                    and all lawful business
                                             Grangeville, ID                of which corporations
                                             83530-0070                     may be incorporated
                                                                            under the Idaho
                                                                            Business Corporations
                                                                            Act
- -----------------------------------------------------------------------------------------------------------------------------------
    A      CHS-Highmore                       123 First Street        SUB   organized for the        100% CHS              31-Aug
                                             Highmore, SD 57345             purpose of carrying on
                                                                            a grain elevator and
                                                                            warehouse business
- -----------------------------------------------------------------------------------------------------------------------------------
    A      CHS-Jasper                        401 South Railroad       SUB   carrying on a grain      100% CHS              31-Aug
                                             Avenue                         elevator and warehouse
                                             Jasper, MN 56144.              business
- -----------------------------------------------------------------------------------------------------------------------------------
    A      CHS-Kalispell                     150 First Avenue W. N.   SUB   Owns and leases to CHSC  100% CHS              31-Aug
                                             Kalispell, MT  59901           grain elevator and
                                                                            agricultural and
                                                                            agronomy businesses
- -----------------------------------------------------------------------------------------------------------------------------------
    A      CHS-Kindred                       41 Fifth Avenue South    SUB   Owns and leased to CHSC  100% CHS              31-Aug
                                             Kindred, ND 58051              grain elevator and
                                                                            warehouse businesses
===================================================================================================================================
</TABLE>


[WIDE TABLE CONTINUED FROM ABOVE]

<TABLE>
<CAPTION>
========================================================================================
                                              JURISDICTION       DATE
ACTIVE/                                           OF              OF
INACTIVE   CORPORATION                       INCORPORATION   INCORPORATION   FEDERAL ID
========================================================================================
<S>                                             <C>           <C>            <C>
    A      CHS-Devils Lake                    North Dakota    6/17/1999      45-0454323



- ----------------------------------------------------------------------------------------
    A      CHS-Edgeley                        North Dakota    5/26/2000      45-0457956



- ----------------------------------------------------------------------------------------
    A      CHS-Garrison                       North Dakota    5/9/2001       41-2011668



- ----------------------------------------------------------------------------------------
    A      CHS-Glasgow                          Montana       6/12/2000      81-0535014



- ----------------------------------------------------------------------------------------
    A      CHS-Grangeville, Inc.                 Idaho        2/23/2001      36-4456100






- ----------------------------------------------------------------------------------------
    A      CHS-Highmore                       South Dakota    6/20/2000      46-0457674



- ----------------------------------------------------------------------------------------
    A      CHS-Jasper                         South Dakota    3/8/2000       91-2064383


- ----------------------------------------------------------------------------------------
    A      CHS-Kalispell                        Montana       11/18/1998     81-0523061



- ----------------------------------------------------------------------------------------
    A      CHS-Kindred                        North Dakota    11/20/2001     41-2023309


========================================================================================
</TABLE>

                                 Schedule 5.4-3
<PAGE>

<TABLE>
<CAPTION>
===================================================================================================================================

ACTIVE/                                                                                                                   FISCAL
INACTIVE   CORPORATION                       ADDRESS                 TYPE   BUSINESS                 OWNERSHIP BY        YEAR END
===================================================================================================================================
<S>                                          <C>                      <C>                            <C>                    <C>
    A      CHS-Lewistown                     190 HC 191 North,        SUB   Owns and leases to CHSC  100% CHS              31-Aug
                                             Lewistown, MT 59457            grain elevator and
                                                                            warehouse businesses
- -----------------------------------------------------------------------------------------------------------------------------------
    A      CHS-Madison                       202 South 6th Avenue     SUB   Owns and leases to CHSC  100% CHS              31-Aug
                                             Madison, MN  56557             grain elevator and
                                                                            agricultural and
                                                                            agronomy businesses
- -----------------------------------------------------------------------------------------------------------------------------------
    A      CHS-Philip                        300 East Cherry          SUB   Owns and leases to CHSC  100% CHS              31-Aug
                                             Street Philip, SD              grain elevator and
                                             57567-0400                     agricultural and
                                                                            agronomy businesses
- -----------------------------------------------------------------------------------------------------------------------------------
    A      CHS-Richey                        17 Railroad Avenue       SUB   For the purpose of       100% CHS              31-Aug
                                             Richey, MT  59259              carrying on a grain
                                                                            elevator and warehouse
                                                                            business
- -----------------------------------------------------------------------------------------------------------------------------------
    A      CHS-Salol/Roseau                  232 2nd Avenue SE        SUB   Owns and leases to CHSC  100% CHS              31-Aug
                                             Roseau, MN  56751              grain elevator and
                                                                            agricultural and
                                                                            agronomy businesses
- -----------------------------------------------------------------------------------------------------------------------------------
    A      CHS-Sioux Falls                   3900 North Cliff Ave.    SUB   Farm Supply business,    100% CHS              31-Aug
                                             Sioux Falls, SD 57118          as a cooperative,
                                                                            engaging in any
                                                                            activity or service
                                                                            in connection with
                                                                            the purchase, sale and
                                                                            handling of energy
                                                                            products.
- -----------------------------------------------------------------------------------------------------------------------------------
    A      CHS-Stevensville                  115 Main Street          SUB   Owns and leases to CHSC  100% CHS              31-Aug
                                             Stevensville, MT               grain elevator and
                                             59870                          agricultural and
                                                                            agronomy businesses
- -----------------------------------------------------------------------------------------------------------------------------------
    A      CHS-Tracy/Garvin                  301 South Street         SUB   Owns and leases to CHSC  100% CHS              31-Aug
                                             Tracy, MN  56175               grain elevator and
                                                                            agricultural and
                                                                            agronomy businesses
- -----------------------------------------------------------------------------------------------------------------------------------
    A      Circle Land Management, Inc.                                     Land Mgt. for property   FUCE 100%
                                                                            around Laurel MT
                                                                            refinery
===================================================================================================================================
</TABLE>


[WIDE TABLE CONTINUED FROM ABOVE]

<TABLE>
<CAPTION>
========================================================================================
                                              JURISDICTION       DATE
ACTIVE/                                           OF              OF
INACTIVE   CORPORATION                       INCORPORATION   INCORPORATION   FEDERAL ID
========================================================================================
<S>                                             <C>           <C>            <C>
    A      CHS-Lewistown                        Montana       2/8/2001       36-4430427


- ----------------------------------------------------------------------------------------
    A      CHS-Madison                         Minnesota      9/14/1998      41-1928427



- ----------------------------------------------------------------------------------------
    A      CHS-Philip                         South Dakota    9/11/2000      41-1985526



- ----------------------------------------------------------------------------------------
    A      CHS-Richey                           Montana       11/24/1999     81-0530416



- ----------------------------------------------------------------------------------------
    A      CHS-Salol/Roseau                    Minnesota      7/6/1998       41-1928391



- ----------------------------------------------------------------------------------------
    A      CHS-Sioux Falls                    South Dakota    11/29/2000     41-1991671







- ----------------------------------------------------------------------------------------
    A      CHS-Stevensville                     Montana       11/18/1998     91-1947297



- ----------------------------------------------------------------------------------------
    A      CHS-Tracy/Garvin                    Minnesota      8/20/1998      41-1928293



- ----------------------------------------------------------------------------------------
    A      Circle Land Management, Inc.        Minnesota      5/5/1993       41-1750051


========================================================================================
</TABLE>

                                 Schedule 5.4-4
<PAGE>

<TABLE>
<CAPTION>
===================================================================================================================================

ACTIVE/                                                                                                                   FISCAL
INACTIVE   CORPORATION                       ADDRESS                 TYPE   BUSINESS                 OWNERSHIP BY        YEAR END
===================================================================================================================================
<S>                                          <C>                      <C>                            <C>                    <C>
    A      CoGrain                           560 W. Grain Terminal                                   Ritzville
                                             Rd.                                                     Warehouse Company
                                             Pasco, WA 99301                                         7.273%; CHS 54.5%;
                                                                                                     Pendleton Grain
                                                                                                     Growers 1.818%;
                                                                                                     Odessa Union
                                                                                                     Warehouse Co-op
                                                                                                     36.364%
- -----------------------------------------------------------------------------------------------------------------------------------
    A      Cooperative Business              229 South Street        Corp   Promote international    100% CHS              31-Dec
           International, Inc.               Dover, DE 19901                trade among coops;
                                                                            provide services to
                                                                            coops engaged in
                                                                            international trade;
                                                                            promote international
                                                                            coop  business
                                                                            development
- -----------------------------------------------------------------------------------------------------------------------------------
    A      COOPS@ROOSTER L.P.                5500 Cenex Drive         LP    To invest in, buy, sell  General               31-Aug
                                             PO Box 64089                   or otherwise acquire,    Partner-CHSC;
                                             St. Paul, MN  55164            hold or dispose of       Limited Partners -
                                                                            securities of eYield     Farmland, LOL,
                                                                            Solutions, Inc.          Growmark, CoBank,
                                                                                                     FCC
- -----------------------------------------------------------------------------------------------------------------------------------
    A      Country Energy, LLC               5500 Cenex Drive         JV    Alliance between CHS     100% CHS              31-Aug
                                             PO Box 64089                   and Farmland
                                             St. Paul, MN  55164
- -----------------------------------------------------------------------------------------------------------------------------------
    A      Country Hedging, Inc.             5500 Cenex Drive         SUB   Full service commodity   100% CHS              31-Aug
                                             PO Box 64089                   futures and option
                                             St. Paul, MN  55164            brokerage
- -----------------------------------------------------------------------------------------------------------------------------------
    A      Fin-Ag, Inc.                      4001 South Westport      SUB   Provides cattle feeding  100%                  31-Aug
                                             Avenue                         and swine financing
                                             P.O. Box 88808                 loans; facility
                                             Sioux Falls, SD  57105         financing loans; crop
                                                                            production loans, and
                                                                            consulting services
- -----------------------------------------------------------------------------------------------------------------------------------
    A      Five Valleys Gas Company          5500 Cenex Drive         SUB   formed to acquire and    100% CHS              31-Aug
                                             PO Box 64089                   operate the assets of
                                             St. Paul, MN  55164            Seeley Lake Gas
                                                                            Company(propane Fuel
                                                                            Sales) in Seeley Lake,
                                                                            MT - being sold to
                                                                            Energy Partners, LLC
===================================================================================================================================
</TABLE>


[WIDE TABLE CONTINUED FROM ABOVE

<TABLE>
<CAPTION>
========================================================================================
                                              JURISDICTION       DATE
ACTIVE/                                           OF              OF
INACTIVE   CORPORATION                       INCORPORATION   INCORPORATION   FEDERAL ID
========================================================================================
<S>                                             <C>           <C>            <C>
    A      CoGrain                             Washington     9/21/1990







- ----------------------------------------------------------------------------------------
    A      Cooperative Business                 Delaware      12/31/1984
           International, Inc.






- ----------------------------------------------------------------------------------------
    A      COOPS@ROOSTER L.P.                   Delaware      Pending        41-1968191





- ----------------------------------------------------------------------------------------
    A      Country Energy, LLC                  Delaware      4/9/1998       43-1813211


- ----------------------------------------------------------------------------------------
    A      Country Hedging, Inc.                Delaware      8/20/1986      41-1556399


- ----------------------------------------------------------------------------------------
    A      Fin-Ag, Inc.                       South Dakota    12/17/1987     46-0398764





- ----------------------------------------------------------------------------------------
    A      Five Valleys Gas Company            Minnesota      4/5/1999       41-1943236






========================================================================================
</TABLE>

                                 Schedule 5.4-5
<PAGE>

<TABLE>
<CAPTION>
===================================================================================================================================

ACTIVE/                                                                                                                   FISCAL
INACTIVE   CORPORATION                       ADDRESS                 TYPE   BUSINESS                 OWNERSHIP BY        YEAR END
===================================================================================================================================
<S>                                          <C>                      <C>                            <C>                    <C>
    A      Front Range Pipeline LLC          5500 Cenex Drive         LLC   To own and operate the   100% CHS
                                             PO Box 64089                   Front Range Pipeline
                                             St. Paul, MN  55164
- -----------------------------------------------------------------------------------------------------------------------------------
    A      Full Circle, LTD.                 withdrawing from all           Does no business.        FUCE - 100%
                                             states except MN on
                                             2/2001
                                             Leon said to keep for now.
- -----------------------------------------------------------------------------------------------------------------------------------
    A      Harvest States Cooperatives       Dienstenstraat 15        LLC   Grain Marketing          100% CHSC             31-Aug
           Europe B.V.                       NL 3161 GN Rhoon
                                             The Netherlands
- -----------------------------------------------------------------------------------------------------------------------------------
    A      HSC-Edmore                        110 Viking Boulevard     SUB   Owns and leases to CHSC  100% CHS              31-Aug
                                             Box 128                        grain elevator and
                                             Edmore, ND  58330              agricultural and
                                                                            agronomy businesses
- -----------------------------------------------------------------------------------------------------------------------------------
    A      HSC-Herman/Norcross               406 Pacific Avenue       SUB   Owns and leases to CHSC  100% CHS              31-Aug
                                             Herman, MN  56248              grain elevator and
                                                                            agricultural and
                                                                            agronomy business
- -----------------------------------------------------------------------------------------------------------------------------------
    A      HSC-Minot, N.D.                   1600 27th Street SE      SUB   Owns and leases to CHSC  100% CHS              31-Aug
                                             PO Box 1947                    grain elevator and
                                             Minot, ND  58702-1947          agricultural and
                                                                            agronomy business
- -----------------------------------------------------------------------------------------------------------------------------------
    A      Montevideo Grain, LLC             5500 Cenex Drive         LLC   Acquiring, owning,       Financial:  33%       31-Aug
                                             PO Box 64089                   operating and managing   FUOC; 67% CHSC;
                                             St. Paul, MN  55164            grain assets             Governance 50%
                                                                                                     FUOC, 50% CHSC
- -----------------------------------------------------------------------------------------------------------------------------------
    A      National Cooperative Refinery     534 S. Kansas Ave.      Corp.  Manufacturer,            FUCE - 74.2%, 25.5    30-Sep
           Association (NCRA)                Topeka, KS 66603               marketing, and           Growmark and MFA
                                                                            wholesale distribution
                                                                            of petroleum products.
- -----------------------------------------------------------------------------------------------------------------------------------
    A      PGG/HSC Feed Company, LLC.        300 West Feedville       JV    Feed Manufacturer        80% - CHSC and 20%    31-May
                                             Road                                                    Pendleton Grain
                                             Hermiston, OR  97838                                    Growers
- -----------------------------------------------------------------------------------------------------------------------------------
    A      St. Paul Maritime Corporation                              SUB   Company employing        100% CHSC             31-Aug
                                                                            stevedores at Myrtle
                                                                            Grove Terminal
===================================================================================================================================
</TABLE>


[WIDE TABLE CONTINUED FROM ABOVE

<TABLE>
<CAPTION>
========================================================================================
                                              JURISDICTION       DATE
ACTIVE/                                           OF              OF
INACTIVE   CORPORATION                       INCORPORATION   INCORPORATION   FEDERAL ID
========================================================================================
<S>                                             <C>           <C>            <C>
    A      Front Range Pipeline LLC            Minnesota      3/23/1999      41-1935715


- ----------------------------------------------------------------------------------------
    A      Full Circle, LTD.                   Minnesota      10/8/1986



- ----------------------------------------------------------------------------------------
    A      Harvest States Cooperatives         Netherland     5/9/2001
           Europe B.V.

- ----------------------------------------------------------------------------------------
    A      HSC-Edmore                         North Dakota    12/22/1998     45-0452352



- ----------------------------------------------------------------------------------------
    A      HSC-Herman/Norcross                 Minnesota      4/21/1998      41-1908583



- ----------------------------------------------------------------------------------------
    A      HSC-Minot, N.D.                    North Dakota    7/16/1997      91-1858466



- ----------------------------------------------------------------------------------------
    A      Montevideo Grain, LLC                Delaware      8/9/2001       41-2015718



- ----------------------------------------------------------------------------------------
    A      National Cooperative Refinery         Kansas       7/7/1943
           Association (NCRA)


- ----------------------------------------------------------------------------------------
    A      PGG/HSC Feed Company, LLC.            Oregon       10/26/1994     93-1156470


- ----------------------------------------------------------------------------------------
    A      St. Paul Maritime Corporation       Minnesota      8/18/1995


========================================================================================
</TABLE>

                                 Schedule 5.4.6
<PAGE>


                                  SCHEDULE 5.5

                              FINANCIAL STATEMENTS


1.   Consolidated Balance Sheets for fiscal years 1998 through 2001 and third
     quarter ended May 31, 2002.

2.   Consolidated Income Statements for fiscal years 1998 through 2001 and third
     quarter ended May 31, 2002.

3.   Consolidated Cash Flow Statements for fiscal years 1998 through 2001.





                                 Schedule 5.5-1
<PAGE>


                                  SCHEDULE 5.6

                              RESTRICTIONS ON DEBT


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

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

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





                                 Schedule 5.6-1
<PAGE>


                                  SCHEDULE 5.12

                              INTELLECTUAL PROPERTY


         None.





                                 Schedule 5.12-1
<PAGE>


                                  SCHEDULE 5.15

                                 USE OF PROCEEDS


         The proceeds from the Notes may be used for general corporate purposes,
including the repayment of certain existing indebtedness of the Company.






                                 Schedule 5.15-1
<PAGE>


                                  SCHEDULE 5.16

                                  EXISTING DEBT


CENEX HARVEST STATES COOPERATIVES & SUBSIDIARIES
OUTSTANDING DEBT & COMMITTED LINES OF CREDIT AS OF AUGUST 31, 2002


      SHORT-TERM NOTES                                                 $
      ----------------                                                ---
      CHS 364 Seasonal Line(1)                           $ 550,000,000.00
      NCRA's Seasonal Line(2)                               30,000,000.00
      Misc Notes                                               560,681.00
      ----------------------------------------- -------------------------
                                         TOTAL           $ 580,560,681.00



      INDUST REV BONDS                                                 $
      ----------------                                                ---
      Rush City, MN                                            600,000.00
      Laurel, MT                                               250,000.00
      Montana Econ                                           3,925,000.00
      NCRA's IRB's                                           1,000,000.00
      ----------------------------------------- -------------------------
                                         TOTAL           $   5,775,000.00



      PRIVATE PLACEMENT                                                $
      -----------------                                               ---
      Private Placement                                    225,000,000.00
      Prudential Shelf Note                                 55,000,000.00
      Prudential Shelf Note                                 25,000,000.00
      ----------------------------------------- -------------------------
                                         TOTAL           $ 305,000,000.00





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

        (1) Amount represents commitment. Actual drawn was $331,953,296.

        (2) Amount represents commitment. Actual drawn was $0.


                                 Schedule 5.16-1
<PAGE>


      COBANK & SYNDICATION                                             $
      --------------------                                            ---
      Building Loan                                         17,642,140.60
      5 yr Revolver(3)                                     200,000,000.00
      Term Debt                                            144,320,000.00
      NCRA's Term Debt                                      19,668,462.00
      ----------------------------------------- -------------------------
                                         TOTAL           $ 381,630,602.60



OTHER NOTES PAYABLE

      CORP BOOKS                                                       $
      ----------                                                      ---
      Bunkers                                                   52,512.13
      Halvorson Grain & Feed                                    56,892.07
      Robert L. Nygaard                                        101,500.00
      CSM-SBA Loan                                             202,176.19
      Calvin N.D. (DISC)                                        41,842.08
      Lemmon-Thunder Hawk (DISC)                               522,020.00
      Tacke Oil Cottonwood ID                                   50,806.06
      Mahnomen MN                                              483,806.72
      Greenbush MN                                             219,217.98
      ----------------------------------------- -------------------------
                                         TOTAL             $ 1,730,773.23



      COUNTRY OPERATIONS                                               $
      ------------------                                              ---
      Herman R Rath Note                                        34,363.83
      Lewiston Note                                             15,885.24
      Ag Svc Center-Elrosa                                      58,642.11
      CHS-French-Fergus Falls                                  101,960.10
      ------------------------------------------ ------------------------
                                          TOTAL            $   210,851.28



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

        (3) Amount represents commitment. Actual drawn was $75,000,000.


                                 Schedule 5.16-2
<PAGE>


      MILLING                                                          $
      -------                                                         ---
      MDT Rail Rehabilitation                                   97,021.34
      Rural Econ Development Loan                              271,986.87
      ------------------------------------------ ------------------------
                                          TOTAL           $    369,008.21



      FOODS                                                            $
      -----                                                           ---
      Mn Ag & Econ Development                               1,216,319.00
      MN Loan-Coulson Svc Corp                                 191,622.00
      Sellers Note-Rodriquez                                 1,000,000.00
      ------------------------------------------ ------------------------
                                          TOTAL           $           .00

      ------------------------------------------ ------------------------
                                          TOTAL           $  4,718,573.72


      ========================================== ========================
                             CONSOLIDATED TOTAL           $ 1,277,684,857



SCHEDULE OF FINANCIAL GUARANTEES FOR PRIVATE PLACEMENT CLOSING

<TABLE>
<CAPTION>
                                                                       Limit of         Current
Guaranteed For:                                                       Guarantee        Guarantee
- ---------------                                                       ---------        ---------
<S>                                                                  <C>               <C>
Financial Services - CoBank Note Purchase Agreement, 10% up to -     15,000,000         4,065,331
TEMCO Credit Facility                                                 7,500,000                --
FINAG Guarantees - CoBank Note Purchases
   *     15% Seasonal ($40,944,502)                                  12,750,000         6,141,675
   *     15% Term ($565,023)                                            750,000            84,753
   *     100% Seasonal ($30,502,745)                                 32,000,000        30,502,742
   *     100% Term ($2,766,652)                                       3,500,000         2,766,652
Norther Valley Petro LLC (1st United Bank)                              194,450           194,450
Country Hedging to Counter-Parties                                   15,000,000                --

- -------------------------------------------------------------------------------------------------
                                              TOTAL GUARANTEES       86,694,450        43,755,604
</TABLE>


Current banking agreements limit guarantees outstanding to no more than $100
million. All debt guaranteed as of 8/31/02 is current.


                                 Schedule 5.16-3
<PAGE>


                                                                      EXHIBIT 1A


                             [FORM OF SERIES D NOTE]


                        CENEX HARVEST STATES COOPERATIVES

                 4.96% SERIES D SENIOR NOTE DUE OCTOBER 18, 2012

No. RD-[__]                                                               [Date]
$[________]                                                     PPN: 15131# AD 8


         FOR VALUE RECEIVED, the undersigned, CENEX HARVEST STATES COOPERATIVES
(herein called the "COMPANY"), a nonstock agricultural cooperative corporation
organized and existing under the laws of the State of Minnesota, hereby promises
to pay to [____________________], or registered assigns, the principal sum of
[_______________] DOLLARS ($[_________]) on October 18, 2012, with interest
(computed on the basis of a 360-day year of twelve 30-day months) (a) on the
unpaid balance thereof at the rate of 4.96% PER ANNUM from the date hereof,
payable semiannually on April 18th and October 18th in each year, commencing on
April 18, 2003, until the principal hereof shall have become due and payable,
and (b) to the extent permitted by law on any overdue payment (including any
overdue prepayment) of principal, any overdue payment of interest and any
overdue payment of any Make-Whole Amount (as defined in the Note Purchase
Agreements referred to below), payable semiannually as aforesaid (or, at the
option of the registered holder hereof, on demand), at a rate PER ANNUM from
time to time equal to the greater of (i) 6.96% or (ii) 2% over the rate of
interest publicly announced from time to time by The Bank of New York in New
York, New York (or its successor) as its "base" or "prime" rate.

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

         This Note is one of a series of Series D Senior Notes (herein called
the "NOTES") issued pursuant to separate Note Purchase Agreements, each dated as
of October 18, 2002, (as from time to time amended, the "NOTE PURCHASE
AGREEMENTS"), between the Company and the respective purchasers named therein
and is entitled to the benefits thereof. Each holder of this Note will be
deemed, by its acceptance hereof, (i) to have agreed to the confidentiality
provisions set forth in Section 20 of the Note Purchase Agreements and (ii) to
have made the representation set forth in Section 6.2 of the Note Purchase
Agreements.

         This Note is a registered Note and, as provided in the Note Purchase
Agreements, upon surrender of this Note for registration of transfer, duly
endorsed, or accompanied by a written instrument of transfer duly executed, by
the registered holder hereof or such holder's attorney


                                  Exhibit 1A-1
<PAGE>


duly authorized in writing, a new Note for a like principal amount will be
issued to, and registered in the name of, the transferee. Prior to due
presentment for registration of transfer, the Company may treat the Person in
whose name this Note is registered as the owner hereof for the purpose of
receiving payment and for all other purposes, and the Company will not be
affected by any notice to the contrary.

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

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

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


                                               CENEX HARVEST STATES COOPERATIVES


                                               By: _____________________________
                                               Name:



                                  Exhibit 1A-2
<PAGE>


                                                                      EXHIBIT 1B


                             [FORM OF SERIES E NOTE]


                        CENEX HARVEST STATES COOPERATIVES

                 5.60% SERIES E SENIOR NOTE DUE OCTOBER 18, 2017

No. RE-[__]                                                               [Date]
$[________]                                                     PPN: 15131# AE 6


         FOR VALUE RECEIVED, the undersigned, CENEX HARVEST STATES COOPERATIVES
(herein called the "COMPANY"), a nonstock agricultural cooperative corporation
organized and existing under the laws of the State of Minnesota, hereby promises
to pay to [____________________], or registered assigns, the principal sum of
[_______________] DOLLARS ($[_________]) on October 18, 2017, with interest
(computed on the basis of a 360-day year of twelve 30-day months) (a) on the
unpaid balance thereof at the rate of 5.60% PER ANNUM from the date hereof,
payable semiannually on April 18th and October 18th in each year, commencing on
April 18, 2003, until the principal hereof shall have become due and payable,
and (b) to the extent permitted by law on any overdue payment (including any
overdue prepayment) of principal, any overdue payment of interest and any
overdue payment of any Make-Whole Amount (as defined in the Note Purchase
Agreements referred to below), payable semiannually as aforesaid (or, at the
option of the registered holder hereof, on demand), at a rate PER ANNUM from
time to time equal to the greater of (i) 7.60% or (ii) 2% over the rate of
interest publicly announced from time to time by The Bank of New York in New
York, New York (or its successor) as its "base" or "prime" rate.

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

         This Note is one of a series of Series E Senior Notes (herein called
the "NOTES") issued pursuant to separate Note Purchase Agreements, each dated as
of October 18, 2002, (as from time to time amended, the "NOTE PURCHASE
AGREEMENTS"), between the Company and the respective purchasers named therein
and is entitled to the benefits thereof. Each holder of this Note will be
deemed, by its acceptance hereof, (i) to have agreed to the confidentiality
provisions set forth in Section 20 of the Note Purchase Agreements and (ii) to
have made the representation set forth in Section 6.2 of the Note Purchase
Agreements.

         This Note is a registered Note and, as provided in the Note Purchase
Agreements, upon surrender of this Note for registration of transfer, duly
endorsed, or accompanied by a written instrument of transfer duly executed, by
the registered holder hereof or such holder's attorney


                                  Exhibit 1B-1
<PAGE>


duly authorized in writing, a new Note for a like principal amount will be
issued to, and registered in the name of, the transferee. Prior to due
presentment for registration of transfer, the Company may treat the Person in
whose name this Note is registered as the owner hereof for the purpose of
receiving payment and for all other purposes, and the Company will not be
affected by any notice to the contrary.

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

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

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


                                               CENEX HARVEST STATES COOPERATIVES


                                               By: _____________________________
                                               Name:
                                               Title:




                                  Exhibit 1B-2
<PAGE>


                                                                       EXHIBIT 3


                          [FORM OF PAY PROCEEDS LETTER]


                              [Company Letterhead]

October 18, 2002

To each of the purchasers listed on Annex I hereto:

         Re:      CENEX HARVEST STATES COOPERATIVES
                  ---------------------------------
                  4.96% Series D Senior Notes due October 18, 2012
                  5.60% Series E Senior Notes due October 18, 2017

Ladies and Gentlemen:

         Reference is made to those certain separate Note Purchase Agreement,
each dated as of October 18, 2002 (as amended or otherwise modified from time to
time, the "NOTE PURCHASE AGREEMENT"), among Cenex Harvest States Cooperatives
(the "COMPANY") and each of the purchasers set forth on Schedule A attached
thereto (the "Purchasers"). Capitalized terms used but not defined herein shall
have the same meanings as given to them in the Note Purchase Agreement.

         Pursuant to Section 3 of the Note Purchase Agreement, the Company
hereby requests that the Purchasers transfer by federal funds wire transfer an
aggregate of $175,000,000, as payment in full for the purchase of the Notes to
be purchased by the Purchasers (in the respective amounts as provided on
Schedule A to the Note Purchase Agreement), to the following account:

                  WIRE TO:          Cenex Harvest States Cooperatives

                  BANK NAME:        Wells Fargo Bank Minnesota, N.A.
                                    Sixth and Marquette
                                    Minneapolis, MN 55479

                  ROUTING NO.:      091000019

                  ACCOUNT NO.       0000044070


Very truly yours,

CENEX HARVEST STATES COOPERATIVES


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


                                   Exhibit 3-1
<PAGE>


                                     ANNEX I

                                   PURCHASERS


THE PRUDENTIAL INSURANCE COMPANY OF AMERICA
c/o Prudential Capital Group
Two Prudential Plaza
180 North Stetson Street, Suite 5600
Chicago, IL 60601


PRUCO LIFE INSURANCE COMPANY
c/o Prudential Capital Group
Two Prudential Plaza
180 North Stetson Street, Suite 5600
Chicago, IL 60601


HARTFORD LIFE INSURANCE COMPANY
c/o Prudential Private Placement Investors, L.P.
4 Gateway Center
100 Mulberry Street
Newark, NJ 07102


GOLDEN AMERICAN LIFE INSURANCE COMPANY
c/o Prudential Private Placement Investors, L.P.
4 Gateway Center
100 Mulberry Street
Newark, NJ 07102


GENERAL ELECTRIC CAPITAL ASSURANCE COMPANY
c/o Prudential Private Placement Investors, L.P.
4 Gateway Center
100 Mulberry Street
Newark, NJ 07102


THE VARIABLE ANNUITY LIFE INSURANCE COMPANY AND PA 54
c/o AIG Global Investment Corporation
2929 Allen Parkway, A36-04
Houston, TX  77019-2155


AIG ANNUITY INSURANCE COMPANY AND WE1B
c/o AIG Global Investment Corporation
2929 Allen Parkway, A36-04
Houston, TX  77019-2155


                                   Exhibit 3-2
<PAGE>


THE FRANKLIN LIFE INSURANCE COMPANY AND PA 37
c/o AIG Global Investment Corporation
2929 Allen Parkway, A36-04
Houston, TX  77019-2155


THE UNITED STATES LIFE INSURANCE COMPANY IN THE CITY OF NEW YORK AND PA 77
c/o AIG Global Investment Corporation
2929 Allen Parkway, A36-04
Houston, TX  77019-2155


RELIASTAR LIFE INSURANCE COMPANY
c/o ING Investment Management LLC
100 Washington Avenue South, Suite 1635
Minneapolis, MN  55401-2121


ING LIFE INSURANCE AND ANNUITY COMPANY
c/o ING Investment Management LLC
100 Washington Avenue South, Suite 1635
Minneapolis, MN  55401-2121


PACIFIC LIFE INSURANCE COMPANY
700 Newport Center Drive
Newport Beach, CA  92660-6397


HARTFORD FIRE INSURANCE COMPANY
c/o Hartford Investment Management Company
c/o Investment Department - Private Placements
P.O. Box 1744
Hartford, CT  06144-1744


HARTFORD LIFE AND ACCIDENT INSURANCE COMPANY
c/o Hartford Investment Management Company
c/o Investment Department - Private Placements
P.O. Box 1744
Hartford, CT  06144-1744


HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
c/o Hartford Investment Management Company
c/o Investment Department - Private Placements
P.O. Box 1744
Hartford, CT  06144-1744


MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY
c/o David L. Babson & Company Inc.
1500 Main Street, Suite 2800
Springfield, MA  01115


                                   Exhibit 3-3
<PAGE>


C.M. LIFE INSURANCE COMPANY
c/o David L. Babson & Company Inc.
1500 Main Street, Suite 2800
Springfield, MA  01115


UNITED OF OMAHA LIFE INSURANCE COMPANY
4 - Investment Loan Administration
Mutual of Omaha Plaza
Omaha, NE  68175-1011


MODERN WOODMEN OF AMERICA
1701 First Avenue
Rock Island, IL 61201


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


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


NATIONAL FARM LIFE INSURANCE COMPANY
c/o Advantus Capital Management, Inc.
400 Robert Street North
St. Paul, MN  55101


PROTECTED HOME MUTUAL LIFE INSURANCE COMPANY
c/o Advantus Capital Management, Inc.
400 Robert Street North
St. Paul, MN  55101




                                   Exhibit 3-4
<PAGE>


                                                                  EXHIBIT 4.4(a)


              [FORM OF OPINION OF GENERAL COUNSEL FOR THE COMPANY]





                                Exhibit 4.4(a)-1
<PAGE>


                                                                  EXHIBIT 4.4(B)


             [FORM OF OPINION OF SPECIAL COUNSEL FOR THE PURCHASERS]





                                 Exhibit 4.4(b)1
<PAGE>




                        CENEX HARVEST STATES COOPERATIVES

                 4.96% SERIES D SENIOR NOTE DUE OCTOBER 18, 2012

No. RD-1                                                        October 18, 2002
$21,500,000                                                     PPN: 15131# AD 8

         FOR VALUE RECEIVED, the undersigned, CENEX HARVEST STATES COOPERATIVES
(herein called the "COMPANY"), a nonstock agricultural cooperative corporation
organized and existing under the laws of the State of Minnesota, hereby promises
to pay to THE PRUDENTIAL INSURANCE COMPANY OF AMERICA, or registered assigns,
the principal sum of TWENTY ONE MILLION FIVE HUNDRED THOUSAND DOLLARS
($21,500,000) on October 18, 2012, with interest (computed on the basis of a
360-day year of twelve 30-day months) (a) on the unpaid balance thereof at the
rate of 4.96% PER ANNUM from the date hereof, payable semiannually on April 18th
and October 18th in each year, commencing on April 18, 2003, until the principal
hereof shall have become due and payable, and (b) to the extent permitted by law
on any overdue payment (including any overdue prepayment) of principal, any
overdue payment of interest and any overdue payment of any Make-Whole Amount (as
defined in the Note Purchase Agreements referred to below), payable semiannually
as aforesaid (or, at the option of the registered holder hereof, on demand), at
a rate PER ANNUM from time to time equal to the greater of (i) 6.96% or (ii) 2%
over the rate of interest publicly announced from time to time by The Bank of
New York in New York, New York (or its successor) as its "base" or "prime" rate.

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

         This Note is one of a series of Series D Senior Notes (herein called
the "NOTES") issued pursuant to separate Note Purchase Agreements, each dated as
of October 18, 2002, (as from time to time amended, the "NOTE PURCHASE
AGREEMENTS"), between the Company and the respective purchasers named therein
and is entitled to the benefits thereof. Each holder of this Note will be
deemed, by its acceptance hereof, (i) to have agreed to the confidentiality
provisions set forth in Section 20 of the Note Purchase Agreements and (ii) to
have made the representation set forth in Section 6.2 of the Note Purchase
Agreements.

         This Note is a registered Note and, as provided in the Note Purchase
Agreements, upon surrender of this Note for registration of transfer, duly
endorsed, or accompanied by a written instrument of transfer duly executed, by
the registered holder hereof or such holder's attorney duly authorized in
writing, a new Note for a like principal amount will be issued to, and
registered in the name of, the transferee. Prior to due presentment for
registration of transfer, the Company may treat the Person in whose name this
Note is registered as the owner hereof for the purpose of receiving payment and
for all other purposes, and the Company will not be affected by any notice to
the contrary.


<PAGE>


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

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


<PAGE>


                        CENEX HARVEST STATES COOPERATIVES

                 4.96% SERIES D SENIOR NOTE DUE OCTOBER 18, 2012

No. RD-2                                                        October 18, 2002
$1,000,000                                                      PPN: 15131# AD 8


         FOR VALUE RECEIVED, the undersigned, CENEX HARVEST STATES COOPERATIVES
(herein called the "COMPANY"), a nonstock agricultural cooperative corporation
organized and existing under the laws of the State of Minnesota, hereby promises
to pay to PRUCO LIFE INSURANCE COMPANY, or registered assigns, the principal sum
of ONE MILLION DOLLARS ($1,000,000) on October 18, 2012, with interest (computed
on the basis of a 360-day year of twelve 30-day months) (a) on the unpaid
balance thereof at the rate of 4.96% PER ANNUM from the date hereof, payable
semiannually on April 18th and October 18th in each year, commencing on April
18, 2003, until the principal hereof shall have become due and payable, and (b)
to the extent permitted by law on any overdue payment (including any overdue
prepayment) of principal, any overdue payment of interest and any overdue
payment of any Make-Whole Amount (as defined in the Note Purchase Agreements
referred to below), payable semiannually as aforesaid (or, at the option of the
registered holder hereof, on demand), at a rate PER ANNUM from time to time
equal to the greater of (i) 6.96% or (ii) 2% over the rate of interest publicly
announced from time to time by The Bank of New York in New York, New York (or
its successor) as its "base" or "prime" rate.

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

         This Note is one of a series of Series D Senior Notes (herein called
the "NOTES") issued pursuant to separate Note Purchase Agreements, each dated as
of October 18, 2002, (as from time to time amended, the "NOTE PURCHASE
AGREEMENTS"), between the Company and the respective purchasers named therein
and is entitled to the benefits thereof. Each holder of this Note will be
deemed, by its acceptance hereof, (i) to have agreed to the confidentiality
provisions set forth in Section 20 of the Note Purchase Agreements and (ii) to
have made the representation set forth in Section 6.2 of the Note Purchase
Agreements.

         This Note is a registered Note and, as provided in the Note Purchase
Agreements, upon surrender of this Note for registration of transfer, duly
endorsed, or accompanied by a written instrument of transfer duly executed, by
the registered holder hereof or such holder's attorney duly authorized in
writing, a new Note for a like principal amount will be issued to, and
registered in the name of, the transferee. Prior to due presentment for
registration of transfer, the Company may treat the Person in whose name this
Note is registered as the owner hereof for the purpose of receiving payment and
for all other purposes, and the Company will not be affected by any notice to
the contrary.


<PAGE>


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

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


<PAGE>


                        CENEX HARVEST STATES COOPERATIVES

                 4.96% SERIES D SENIOR NOTE DUE OCTOBER 18, 2012

No. RD-3                                                        October 18, 2002
$3,750,000                                                      PPN: 15131# AD 8

         FOR VALUE RECEIVED, the undersigned, CENEX HARVEST STATES COOPERATIVES
(herein called the "COMPANY"), a nonstock agricultural cooperative corporation
organized and existing under the laws of the State of Minnesota, hereby promises
to pay to HARTFORD LIFE INSURANCE COMPANY, or registered assigns, the principal
sum of THREE MILLION SEVEN HUNDRED FIFTY THOUSAND DOLLARS ($3,750,000) on
October 18, 2012, with interest (computed on the basis of a 360-day year of
twelve 30-day months) (a) on the unpaid balance thereof at the rate of 4.96% PER
ANNUM from the date hereof, payable semiannually on April 18th and October 18th
in each year, commencing on April 18, 2003, until the principal hereof shall
have become due and payable, and (b) to the extent permitted by law on any
overdue payment (including any overdue prepayment) of principal, any overdue
payment of interest and any overdue payment of any Make-Whole Amount (as defined
in the Note Purchase Agreements referred to below), payable semiannually as
aforesaid (or, at the option of the registered holder hereof, on demand), at a
rate PER ANNUM from time to time equal to the greater of (i) 6.96% or (ii) 2%
over the rate of interest publicly announced from time to time by The Bank of
New York in New York, New York (or its successor) as its "base" or "prime" rate.

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

         This Note is one of a series of Series D Senior Notes (herein called
the "NOTES") issued pursuant to separate Note Purchase Agreements, each dated as
of October 18, 2002, (as from time to time amended, the "NOTE PURCHASE
AGREEMENTS"), between the Company and the respective purchasers named therein
and is entitled to the benefits thereof. Each holder of this Note will be
deemed, by its acceptance hereof, (i) to have agreed to the confidentiality
provisions set forth in Section 20 of the Note Purchase Agreements and (ii) to
have made the representation set forth in Section 6.2 of the Note Purchase
Agreements.

         This Note is a registered Note and, as provided in the Note Purchase
Agreements, upon surrender of this Note for registration of transfer, duly
endorsed, or accompanied by a written instrument of transfer duly executed, by
the registered holder hereof or such holder's attorney duly authorized in
writing, a new Note for a like principal amount will be issued to, and
registered in the name of, the transferee. Prior to due presentment for
registration of transfer, the Company may treat the Person in whose name this
Note is registered as the owner hereof for the purpose of receiving payment and
for all other purposes, and the Company will not be affected by any notice to
the contrary.


<PAGE>


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

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


<PAGE>


                        CENEX HARVEST STATES COOPERATIVES

                 4.96% SERIES D SENIOR NOTE DUE OCTOBER 18, 2012

No. RD-4                                                        October 18, 2002
$7,500,000                                                      PPN: 15131# AD 8

         FOR VALUE RECEIVED, the undersigned, CENEX HARVEST STATES COOPERATIVES
(herein called the "COMPANY"), a nonstock agricultural cooperative corporation
organized and existing under the laws of the State of Minnesota, hereby promises
to pay to GOLDEN AMERICAN LIFE INSURANCE COMPANY, or registered assigns, the
principal sum of SEVEN MILLION FIVE HUNDRED THOUSAND DOLLARS ($7,500,000) on
October 18, 2012, with interest (computed on the basis of a 360-day year of
twelve 30-day months) (a) on the unpaid balance thereof at the rate of 4.96% PER
ANNUM from the date hereof, payable semiannually on April 18th and October 18th
in each year, commencing on April 18, 2003, until the principal hereof shall
have become due and payable, and (b) to the extent permitted by law on any
overdue payment (including any overdue prepayment) of principal, any overdue
payment of interest and any overdue payment of any Make-Whole Amount (as defined
in the Note Purchase Agreements referred to below), payable semiannually as
aforesaid (or, at the option of the registered holder hereof, on demand), at a
rate PER ANNUM from time to time equal to the greater of (i) 6.96% or (ii) 2%
over the rate of interest publicly announced from time to time by The Bank of
New York in New York, New York (or its successor) as its "base" or "prime" rate.

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

         This Note is one of a series of Series D Senior Notes (herein called
the "NOTES") issued pursuant to separate Note Purchase Agreements, each dated as
of October 18, 2002, (as from time to time amended, the "NOTE PURCHASE
AGREEMENTS"), between the Company and the respective purchasers named therein
and is entitled to the benefits thereof. Each holder of this Note will be
deemed, by its acceptance hereof, (i) to have agreed to the confidentiality
provisions set forth in Section 20 of the Note Purchase Agreements and (ii) to
have made the representation set forth in Section 6.2 of the Note Purchase
Agreements.

         This Note is a registered Note and, as provided in the Note Purchase
Agreements, upon surrender of this Note for registration of transfer, duly
endorsed, or accompanied by a written instrument of transfer duly executed, by
the registered holder hereof or such holder's attorney duly authorized in
writing, a new Note for a like principal amount will be issued to, and
registered in the name of, the transferee. Prior to due presentment for
registration of transfer, the Company may treat the Person in whose name this
Note is registered as the owner hereof for the purpose of receiving payment and
for all other purposes, and the Company will not be affected by any notice to
the contrary.


<PAGE>


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

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


<PAGE>


                        CENEX HARVEST STATES COOPERATIVES

                 4.96% SERIES D SENIOR NOTE DUE OCTOBER 18, 2012

No. RD-5                                                        October 18, 2002
$11,250,000                                                     PPN: 15131# AD 8


         FOR VALUE RECEIVED, the undersigned, CENEX HARVEST STATES COOPERATIVES
(herein called the "COMPANY"), a nonstock agricultural cooperative corporation
organized and existing under the laws of the State of Minnesota, hereby promises
to pay to SALKELD & CO., or registered assigns, the principal sum of ELEVEN
MILLION TWO HUNDRED FIFTY THOUSAND DOLLARS ($11,250,000) on October 18, 2012,
with interest (computed on the basis of a 360-day year of twelve 30-day months)
(a) on the unpaid balance thereof at the rate of 4.96% PER ANNUM from the date
hereof, payable semiannually on April 18th and October 18th in each year,
commencing on April 18, 2003, until the principal hereof shall have become due
and payable, and (b) to the extent permitted by law on any overdue payment
(including any overdue prepayment) of principal, any overdue payment of interest
and any overdue payment of any Make-Whole Amount (as defined in the Note
Purchase Agreements referred to below), payable semiannually as aforesaid (or,
at the option of the registered holder hereof, on demand), at a rate PER ANNUM
from time to time equal to the greater of (i) 6.96% or (ii) 2% over the rate of
interest publicly announced from time to time by The Bank of New York in New
York, New York (or its successor) as its "base" or "prime" rate.

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

         This Note is one of a series of Series D Senior Notes (herein called
the "NOTES") issued pursuant to separate Note Purchase Agreements, each dated as
of October 18, 2002, (as from time to time amended, the "NOTE PURCHASE
AGREEMENTS"), between the Company and the respective purchasers named therein
and is entitled to the benefits thereof. Each holder of this Note will be
deemed, by its acceptance hereof, (i) to have agreed to the confidentiality
provisions set forth in Section 20 of the Note Purchase Agreements and (ii) to
have made the representation set forth in Section 6.2 of the Note Purchase
Agreements.

         This Note is a registered Note and, as provided in the Note Purchase
Agreements, upon surrender of this Note for registration of transfer, duly
endorsed, or accompanied by a written instrument of transfer duly executed, by
the registered holder hereof or such holder's attorney duly authorized in
writing, a new Note for a like principal amount will be issued to, and
registered in the name of, the transferee. Prior to due presentment for
registration of transfer, the Company may treat the Person in whose name this
Note is registered as the owner hereof for the purpose of receiving payment and
for all other purposes, and the Company will not be affected by any notice to
the contrary.


<PAGE>


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

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


<PAGE>


                        CENEX HARVEST STATES COOPERATIVES

                 4.96% SERIES D SENIOR NOTE DUE OCTOBER 18, 2012

No. RD-6                                                        October 18, 2002
$20,000,000                                                     PPN: 15131# AD 8


         FOR VALUE RECEIVED, the undersigned, CENEX HARVEST STATES COOPERATIVES
(herein called the "COMPANY"), a nonstock agricultural cooperative corporation
organized and existing under the laws of the State of Minnesota, hereby promises
to pay to RELIASTAR LIFE INSURANCE COMPANY, or registered assigns, the principal
sum of TWENTY MILLION DOLLARS ($20,000,000) on October 18, 2012, with interest
(computed on the basis of a 360-day year of twelve 30-day months) (a) on the
unpaid balance thereof at the rate of 4.96% PER ANNUM from the date hereof,
payable semiannually on April 18th and October 18th in each year, commencing on
April 18, 2003, until the principal hereof shall have become due and payable,
and (b) to the extent permitted by law on any overdue payment (including any
overdue prepayment) of principal, any overdue payment of interest and any
overdue payment of any Make-Whole Amount (as defined in the Note Purchase
Agreements referred to below), payable semiannually as aforesaid (or, at the
option of the registered holder hereof, on demand), at a rate PER ANNUM from
time to time equal to the greater of (i) 6.96% or (ii) 2% over the rate of
interest publicly announced from time to time by The Bank of New York in New
York, New York (or its successor) as its "base" or "prime" rate.

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

         This Note is one of a series of Series D Senior Notes (herein called
the "NOTES") issued pursuant to separate Note Purchase Agreements, each dated as
of October 18, 2002, (as from time to time amended, the "NOTE PURCHASE
AGREEMENTS"), between the Company and the respective purchasers named therein
and is entitled to the benefits thereof. Each holder of this Note will be
deemed, by its acceptance hereof, (i) to have agreed to the confidentiality
provisions set forth in Section 20 of the Note Purchase Agreements and (ii) to
have made the representation set forth in Section 6.2 of the Note Purchase
Agreements.

         This Note is a registered Note and, as provided in the Note Purchase
Agreements, upon surrender of this Note for registration of transfer, duly
endorsed, or accompanied by a written instrument of transfer duly executed, by
the registered holder hereof or such holder's attorney duly authorized in
writing, a new Note for a like principal amount will be issued to, and
registered in the name of, the transferee. Prior to due presentment for
registration of transfer, the Company may treat the Person in whose name this
Note is registered as the owner hereof for the purpose of receiving payment and
for all other purposes, and the Company will not be affected by any notice to
the contrary.


<PAGE>


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

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


<PAGE>


                        CENEX HARVEST STATES COOPERATIVES

                 4.96% SERIES D SENIOR NOTE DUE OCTOBER 18, 2012

No. RD-7                                                        October 18, 2002
$15,000,000                                                     PPN: 15131# AD 8


         FOR VALUE RECEIVED, the undersigned, CENEX HARVEST STATES COOPERATIVES
(herein called the "COMPANY"), a nonstock agricultural cooperative corporation
organized and existing under the laws of the State of Minnesota, hereby promises
to pay to ING LIFE INSURANCE AND ANNUITY COMPANY, or registered assigns, the
principal sum of FIFTEEN MILLION DOLLARS ($15,000,000) on October 18, 2012, with
interest (computed on the basis of a 360-day year of twelve 30-day months) (a)
on the unpaid balance thereof at the rate of 4.96% PER ANNUM from the date
hereof, payable semiannually on April 18th and October 18th in each year,
commencing on April 18, 2003, until the principal hereof shall have become due
and payable, and (b) to the extent permitted by law on any overdue payment
(including any overdue prepayment) of principal, any overdue payment of interest
and any overdue payment of any Make-Whole Amount (as defined in the Note
Purchase Agreements referred to below), payable semiannually as aforesaid (or,
at the option of the registered holder hereof, on demand), at a rate PER ANNUM
from time to time equal to the greater of (i) 6.96% or (ii) 2% over the rate of
interest publicly announced from time to time by The Bank of New York in New
York, New York (or its successor) as its "base" or "prime" rate.

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

         This Note is one of a series of Series D Senior Notes (herein called
the "NOTES") issued pursuant to separate Note Purchase Agreements, each dated as
of October 18, 2002, (as from time to time amended, the "NOTE PURCHASE
AGREEMENTS"), between the Company and the respective purchasers named therein
and is entitled to the benefits thereof. Each holder of this Note will be
deemed, by its acceptance hereof, (i) to have agreed to the confidentiality
provisions set forth in Section 20 of the Note Purchase Agreements and (ii) to
have made the representation set forth in Section 6.2 of the Note Purchase
Agreements.

         This Note is a registered Note and, as provided in the Note Purchase
Agreements, upon surrender of this Note for registration of transfer, duly
endorsed, or accompanied by a written instrument of transfer duly executed, by
the registered holder hereof or such holder's attorney duly authorized in
writing, a new Note for a like principal amount will be issued to, and
registered in the name of, the transferee. Prior to due presentment for
registration of transfer, the Company may treat the Person in whose name this
Note is registered as the owner hereof for the purpose of receiving payment and
for all other purposes, and the Company will not be affected by any notice to
the contrary.


<PAGE>


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

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


<PAGE>


                        CENEX HARVEST STATES COOPERATIVES

                 4.96% SERIES D SENIOR NOTE DUE OCTOBER 18, 2012

No. RD-8                                                        October 18, 2002
$5,000,000                                                      PPN: 15131# AD 8


         FOR VALUE RECEIVED, the undersigned, CENEX HARVEST STATES COOPERATIVES
(herein called the "COMPANY"), a nonstock agricultural cooperative corporation
organized and existing under the laws of the State of Minnesota, hereby promises
to pay to MAC & CO., or registered assigns, the principal sum of FIVE MILLION
DOLLARS ($5,000,000) on October 18, 2012, with interest (computed on the basis
of a 360-day year of twelve 30-day months) (a) on the unpaid balance thereof at
the rate of 4.96% PER ANNUM from the date hereof, payable semiannually on April
18th and October 18th in each year, commencing on April 18, 2003, until the
principal hereof shall have become due and payable, and (b) to the extent
permitted by law on any overdue payment (including any overdue prepayment) of
principal, any overdue payment of interest and any overdue payment of any
Make-Whole Amount (as defined in the Note Purchase Agreements referred to
below), payable semiannually as aforesaid (or, at the option of the registered
holder hereof, on demand), at a rate PER ANNUM from time to time equal to the
greater of (i) 6.96% or (ii) 2% over the rate of interest publicly announced
from time to time by The Bank of New York in New York, New York (or its
successor) as its "base" or "prime" rate.

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

         This Note is one of a series of Series D Senior Notes (herein called
the "NOTES") issued pursuant to separate Note Purchase Agreements, each dated as
of October 18, 2002, (as from time to time amended, the "NOTE PURCHASE
AGREEMENTS"), between the Company and the respective purchasers named therein
and is entitled to the benefits thereof. Each holder of this Note will be
deemed, by its acceptance hereof, (i) to have agreed to the confidentiality
provisions set forth in Section 20 of the Note Purchase Agreements and (ii) to
have made the representation set forth in Section 6.2 of the Note Purchase
Agreements.

         This Note is a registered Note and, as provided in the Note Purchase
Agreements, upon surrender of this Note for registration of transfer, duly
endorsed, or accompanied by a written instrument of transfer duly executed, by
the registered holder hereof or such holder's attorney duly authorized in
writing, a new Note for a like principal amount will be issued to, and
registered in the name of, the transferee. Prior to due presentment for
registration of transfer, the Company may treat the Person in whose name this
Note is registered as the owner hereof for the purpose of receiving payment and
for all other purposes, and the Company will not be affected by any notice to
the contrary.


<PAGE>


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

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


<PAGE>


                        CENEX HARVEST STATES COOPERATIVES

                 4.96% SERIES D SENIOR NOTE DUE OCTOBER 18, 2012

No. RD-9                                                        October 18, 2002
$5,000,000                                                      PPN: 15131# AD 8


         FOR VALUE RECEIVED, the undersigned, CENEX HARVEST STATES COOPERATIVES
(herein called the "COMPANY"), a nonstock agricultural cooperative corporation
organized and existing under the laws of the State of Minnesota, hereby promises
to pay to MAC & CO., or registered assigns, the principal sum of FIVE MILLION
DOLLARS ($5,000,000) on October 18, 2012, with interest (computed on the basis
of a 360-day year of twelve 30-day months) (a) on the unpaid balance thereof at
the rate of 4.96% PER ANNUM from the date hereof, payable semiannually on April
18th and October 18th in each year, commencing on April 18, 2003, until the
principal hereof shall have become due and payable, and (b) to the extent
permitted by law on any overdue payment (including any overdue prepayment) of
principal, any overdue payment of interest and any overdue payment of any
Make-Whole Amount (as defined in the Note Purchase Agreements referred to
below), payable semiannually as aforesaid (or, at the option of the registered
holder hereof, on demand), at a rate PER ANNUM from time to time equal to the
greater of (i) 6.96% or (ii) 2% over the rate of interest publicly announced
from time to time by The Bank of New York in New York, New York (or its
successor) as its "base" or "prime" rate.

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

         This Note is one of a series of Series D Senior Notes (herein called
the "NOTES") issued pursuant to separate Note Purchase Agreements, each dated as
of October 18, 2002, (as from time to time amended, the "NOTE PURCHASE
AGREEMENTS"), between the Company and the respective purchasers named therein
and is entitled to the benefits thereof. Each holder of this Note will be
deemed, by its acceptance hereof, (i) to have agreed to the confidentiality
provisions set forth in Section 20 of the Note Purchase Agreements and (ii) to
have made the representation set forth in Section 6.2 of the Note Purchase
Agreements.

         This Note is a registered Note and, as provided in the Note Purchase
Agreements, upon surrender of this Note for registration of transfer, duly
endorsed, or accompanied by a written instrument of transfer duly executed, by
the registered holder hereof or such holder's attorney duly authorized in
writing, a new Note for a like principal amount will be issued to, and
registered in the name of, the transferee. Prior to due presentment for
registration of transfer, the Company may treat the Person in whose name this
Note is registered as the owner hereof for the purpose of receiving payment and
for all other purposes, and the Company will not be affected by any notice to
the contrary.


<PAGE>


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

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


<PAGE>


                        CENEX HARVEST STATES COOPERATIVES

                 4.96% SERIES D SENIOR NOTE DUE OCTOBER 18, 2012

No. RD-10                                                       October 18, 2002
$1,000,000                                                      PPN: 15131# AD 8


         FOR VALUE RECEIVED, the undersigned, CENEX HARVEST STATES COOPERATIVES
(herein called the "COMPANY"), a nonstock agricultural cooperative corporation
organized and existing under the laws of the State of Minnesota, hereby promises
to pay to MAC & CO., or registered assigns, the principal sum of ONE MILLION
DOLLARS ($1,000,000) on October 18, 2012, with interest (computed on the basis
of a 360-day year of twelve 30-day months) (a) on the unpaid balance thereof at
the rate of 4.96% PER ANNUM from the date hereof, payable semiannually on April
18th and October 18th in each year, commencing on April 18, 2003, until the
principal hereof shall have become due and payable, and (b) to the extent
permitted by law on any overdue payment (including any overdue prepayment) of
principal, any overdue payment of interest and any overdue payment of any
Make-Whole Amount (as defined in the Note Purchase Agreements referred to
below), payable semiannually as aforesaid (or, at the option of the registered
holder hereof, on demand), at a rate PER ANNUM from time to time equal to the
greater of (i) 6.96% or (ii) 2% over the rate of interest publicly announced
from time to time by The Bank of New York in New York, New York (or its
successor) as its "base" or "prime" rate.

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

         This Note is one of a series of Series D Senior Notes (herein called
the "NOTES") issued pursuant to separate Note Purchase Agreements, each dated as
of October 18, 2002, (as from time to time amended, the "NOTE PURCHASE
AGREEMENTS"), between the Company and the respective purchasers named therein
and is entitled to the benefits thereof. Each holder of this Note will be
deemed, by its acceptance hereof, (i) to have agreed to the confidentiality
provisions set forth in Section 20 of the Note Purchase Agreements and (ii) to
have made the representation set forth in Section 6.2 of the Note Purchase
Agreements.

         This Note is a registered Note and, as provided in the Note Purchase
Agreements, upon surrender of this Note for registration of transfer, duly
endorsed, or accompanied by a written instrument of transfer duly executed, by
the registered holder hereof or such holder's attorney duly authorized in
writing, a new Note for a like principal amount will be issued to, and
registered in the name of, the transferee. Prior to due presentment for
registration of transfer, the Company may treat the Person in whose name this
Note is registered as the owner hereof for the purpose of receiving payment and
for all other purposes, and the Company will not be affected by any notice to
the contrary.


<PAGE>


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

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


<PAGE>


                        CENEX HARVEST STATES COOPERATIVES

                 4.96% SERIES D SENIOR NOTE DUE OCTOBER 18, 2012

No. RD-11                                                       October 18, 2002
$1,000,000                                                      PPN: 15131# AD 8


         FOR VALUE RECEIVED, the undersigned, CENEX HARVEST STATES COOPERATIVES
(herein called the "COMPANY"), a nonstock agricultural cooperative corporation
organized and existing under the laws of the State of Minnesota, hereby promises
to pay to MAC & CO., or registered assigns, the principal sum of ONE MILLION
DOLLARS ($1,000,000) on October 18, 2012, with interest (computed on the basis
of a 360-day year of twelve 30-day months) (a) on the unpaid balance thereof at
the rate of 4.96% PER ANNUM from the date hereof, payable semiannually on April
18th and October 18th in each year, commencing on April 18, 2003, until the
principal hereof shall have become due and payable, and (b) to the extent
permitted by law on any overdue payment (including any overdue prepayment) of
principal, any overdue payment of interest and any overdue payment of any
Make-Whole Amount (as defined in the Note Purchase Agreements referred to
below), payable semiannually as aforesaid (or, at the option of the registered
holder hereof, on demand), at a rate PER ANNUM from time to time equal to the
greater of (i) 6.96% or (ii) 2% over the rate of interest publicly announced
from time to time by The Bank of New York in New York, New York (or its
successor) as its "base" or "prime" rate.

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

         This Note is one of a series of Series D Senior Notes (herein called
the "NOTES") issued pursuant to separate Note Purchase Agreements, each dated as
of October 18, 2002, (as from time to time amended, the "NOTE PURCHASE
AGREEMENTS"), between the Company and the respective purchasers named therein
and is entitled to the benefits thereof. Each holder of this Note will be
deemed, by its acceptance hereof, (i) to have agreed to the confidentiality
provisions set forth in Section 20 of the Note Purchase Agreements and (ii) to
have made the representation set forth in Section 6.2 of the Note Purchase
Agreements.

         This Note is a registered Note and, as provided in the Note Purchase
Agreements, upon surrender of this Note for registration of transfer, duly
endorsed, or accompanied by a written instrument of transfer duly executed, by
the registered holder hereof or such holder's attorney duly authorized in
writing, a new Note for a like principal amount will be issued to, and
registered in the name of, the transferee. Prior to due presentment for
registration of transfer, the Company may treat the Person in whose name this
Note is registered as the owner hereof for the purpose of receiving payment and
for all other purposes, and the Company will not be affected by any notice to
the contrary.


<PAGE>


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

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


<PAGE>


                        CENEX HARVEST STATES COOPERATIVES

                 4.96% SERIES D SENIOR NOTE DUE OCTOBER 18, 2012

No. RD-12                                                       October 18, 2002
$1,000,000                                                      PPN: 15131# AD 8


         FOR VALUE RECEIVED, the undersigned, CENEX HARVEST STATES COOPERATIVES
(herein called the "COMPANY"), a nonstock agricultural cooperative corporation
organized and existing under the laws of the State of Minnesota, hereby promises
to pay to MAC & CO., or registered assigns, the principal sum of ONE MILLION
DOLLARS ($1,000,000) on October 18, 2012, with interest (computed on the basis
of a 360-day year of twelve 30-day months) (a) on the unpaid balance thereof at
the rate of 4.96% PER ANNUM from the date hereof, payable semiannually on April
18th and October 18th in each year, commencing on April 18, 2003, until the
principal hereof shall have become due and payable, and (b) to the extent
permitted by law on any overdue payment (including any overdue prepayment) of
principal, any overdue payment of interest and any overdue payment of any
Make-Whole Amount (as defined in the Note Purchase Agreements referred to
below), payable semiannually as aforesaid (or, at the option of the registered
holder hereof, on demand), at a rate PER ANNUM from time to time equal to the
greater of (i) 6.96% or (ii) 2% over the rate of interest publicly announced
from time to time by The Bank of New York in New York, New York (or its
successor) as its "base" or "prime" rate.

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

         This Note is one of a series of Series D Senior Notes (herein called
the "NOTES") issued pursuant to separate Note Purchase Agreements, each dated as
of October 18, 2002, (as from time to time amended, the "NOTE PURCHASE
AGREEMENTS"), between the Company and the respective purchasers named therein
and is entitled to the benefits thereof. Each holder of this Note will be
deemed, by its acceptance hereof, (i) to have agreed to the confidentiality
provisions set forth in Section 20 of the Note Purchase Agreements and (ii) to
have made the representation set forth in Section 6.2 of the Note Purchase
Agreements.

         This Note is a registered Note and, as provided in the Note Purchase
Agreements, upon surrender of this Note for registration of transfer, duly
endorsed, or accompanied by a written instrument of transfer duly executed, by
the registered holder hereof or such holder's attorney duly authorized in
writing, a new Note for a like principal amount will be issued to, and
registered in the name of, the transferee. Prior to due presentment for
registration of transfer, the Company may treat the Person in whose name this
Note is registered as the owner hereof for the purpose of receiving payment and
for all other purposes, and the Company will not be affected by any notice to
the contrary.


<PAGE>


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

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


<PAGE>


                        CENEX HARVEST STATES COOPERATIVES

                 4.96% SERIES D SENIOR NOTE DUE OCTOBER 18, 2012

No. RD-13                                                       October 18, 2002
$1,000,000                                                      PPN: 15131# AD 8


         FOR VALUE RECEIVED, the undersigned, CENEX HARVEST STATES COOPERATIVES
(herein called the "COMPANY"), a nonstock agricultural cooperative corporation
organized and existing under the laws of the State of Minnesota, hereby promises
to pay to MAC & CO., or registered assigns, the principal sum of ONE MILLION
DOLLARS ($1,000,000) on October 18, 2012, with interest (computed on the basis
of a 360-day year of twelve 30-day months) (a) on the unpaid balance thereof at
the rate of 4.96% PER ANNUM from the date hereof, payable semiannually on April
18th and October 18th in each year, commencing on April 18, 2003, until the
principal hereof shall have become due and payable, and (b) to the extent
permitted by law on any overdue payment (including any overdue prepayment) of
principal, any overdue payment of interest and any overdue payment of any
Make-Whole Amount (as defined in the Note Purchase Agreements referred to
below), payable semiannually as aforesaid (or, at the option of the registered
holder hereof, on demand), at a rate PER ANNUM from time to time equal to the
greater of (i) 6.96% or (ii) 2% over the rate of interest publicly announced
from time to time by The Bank of New York in New York, New York (or its
successor) as its "base" or "prime" rate.

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

         This Note is one of a series of Series D Senior Notes (herein called
the "NOTES") issued pursuant to separate Note Purchase Agreements, each dated as
of October 18, 2002, (as from time to time amended, the "NOTE PURCHASE
AGREEMENTS"), between the Company and the respective purchasers named therein
and is entitled to the benefits thereof. Each holder of this Note will be
deemed, by its acceptance hereof, (i) to have agreed to the confidentiality
provisions set forth in Section 20 of the Note Purchase Agreements and (ii) to
have made the representation set forth in Section 6.2 of the Note Purchase
Agreements.

         This Note is a registered Note and, as provided in the Note Purchase
Agreements, upon surrender of this Note for registration of transfer, duly
endorsed, or accompanied by a written instrument of transfer duly executed, by
the registered holder hereof or such holder's attorney duly authorized in
writing, a new Note for a like principal amount will be issued to, and
registered in the name of, the transferee. Prior to due presentment for
registration of transfer, the Company may treat the Person in whose name this
Note is registered as the owner hereof for the purpose of receiving payment and
for all other purposes, and the Company will not be affected by any notice to
the contrary.


<PAGE>


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

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


<PAGE>


                        CENEX HARVEST STATES COOPERATIVES

                 4.96% SERIES D SENIOR NOTE DUE OCTOBER 18, 2012

No. RD-14                                                       October 18, 2002
$500,000                                                        PPN: 15131# AD 8


         FOR VALUE RECEIVED, the undersigned, CENEX HARVEST STATES COOPERATIVES
(herein called the "COMPANY"), a nonstock agricultural cooperative corporation
organized and existing under the laws of the State of Minnesota, hereby promises
to pay to MAC & CO., or registered assigns, the principal sum of FIVE HUNDRED
THOUSAND DOLLARS ($500,000) on October 18, 2012, with interest (computed on the
basis of a 360-day year of twelve 30-day months) (a) on the unpaid balance
thereof at the rate of 4.96% PER ANNUM from the date hereof, payable
semiannually on April 18th and October 18th in each year, commencing on April
18, 2003, until the principal hereof shall have become due and payable, and (b)
to the extent permitted by law on any overdue payment (including any overdue
prepayment) of principal, any overdue payment of interest and any overdue
payment of any Make-Whole Amount (as defined in the Note Purchase Agreements
referred to below), payable semiannually as aforesaid (or, at the option of the
registered holder hereof, on demand), at a rate PER ANNUM from time to time
equal to the greater of (i) 6.96% or (ii) 2% over the rate of interest publicly
announced from time to time by The Bank of New York in New York, New York (or
its successor) as its "base" or "prime" rate.

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

         This Note is one of a series of Series D Senior Notes (herein called
the "NOTES") issued pursuant to separate Note Purchase Agreements, each dated as
of October 18, 2002, (as from time to time amended, the "NOTE PURCHASE
AGREEMENTS"), between the Company and the respective purchasers named therein
and is entitled to the benefits thereof. Each holder of this Note will be
deemed, by its acceptance hereof, (i) to have agreed to the confidentiality
provisions set forth in Section 20 of the Note Purchase Agreements and (ii) to
have made the representation set forth in Section 6.2 of the Note Purchase
Agreements.

         This Note is a registered Note and, as provided in the Note Purchase
Agreements, upon surrender of this Note for registration of transfer, duly
endorsed, or accompanied by a written instrument of transfer duly executed, by
the registered holder hereof or such holder's attorney duly authorized in
writing, a new Note for a like principal amount will be issued to, and
registered in the name of, the transferee. Prior to due presentment for
registration of transfer, the Company may treat the Person in whose name this
Note is registered as the owner hereof for the purpose of receiving payment and
for all other purposes, and the Company will not be affected by any notice to
the contrary.


<PAGE>


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

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


<PAGE>


                        CENEX HARVEST STATES COOPERATIVES

                 4.96% SERIES D SENIOR NOTE DUE OCTOBER 18, 2012

No. RD-15                                                       October 18, 2002
$500,000                                                        PPN: 15131# AD 8


         FOR VALUE RECEIVED, the undersigned, CENEX HARVEST STATES COOPERATIVES
(herein called the "COMPANY"), a nonstock agricultural cooperative corporation
organized and existing under the laws of the State of Minnesota, hereby promises
to pay to MAC & CO., or registered assigns, the principal sum of FIVE HUNDRED
THOUSAND DOLLARS ($500,000) on October 18, 2012, with interest (computed on the
basis of a 360-day year of twelve 30-day months) (a) on the unpaid balance
thereof at the rate of 4.96% PER ANNUM from the date hereof, payable
semiannually on April 18th and October 18th in each year, commencing on April
18, 2003, until the principal hereof shall have become due and payable, and (b)
to the extent permitted by law on any overdue payment (including any overdue
prepayment) of principal, any overdue payment of interest and any overdue
payment of any Make-Whole Amount (as defined in the Note Purchase Agreements
referred to below), payable semiannually as aforesaid (or, at the option of the
registered holder hereof, on demand), at a rate PER ANNUM from time to time
equal to the greater of (i) 6.96% or (ii) 2% over the rate of interest publicly
announced from time to time by The Bank of New York in New York, New York (or
its successor) as its "base" or "prime" rate.

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

         This Note is one of a series of Series D Senior Notes (herein called
the "NOTES") issued pursuant to separate Note Purchase Agreements, each dated as
of October 18, 2002, (as from time to time amended, the "NOTE PURCHASE
AGREEMENTS"), between the Company and the respective purchasers named therein
and is entitled to the benefits thereof. Each holder of this Note will be
deemed, by its acceptance hereof, (i) to have agreed to the confidentiality
provisions set forth in Section 20 of the Note Purchase Agreements and (ii) to
have made the representation set forth in Section 6.2 of the Note Purchase
Agreements.

         This Note is a registered Note and, as provided in the Note Purchase
Agreements, upon surrender of this Note for registration of transfer, duly
endorsed, or accompanied by a written instrument of transfer duly executed, by
the registered holder hereof or such holder's attorney duly authorized in
writing, a new Note for a like principal amount will be issued to, and
registered in the name of, the transferee. Prior to due presentment for
registration of transfer, the Company may treat the Person in whose name this
Note is registered as the owner hereof for the purpose of receiving payment and
for all other purposes, and the Company will not be affected by any notice to
the contrary.


<PAGE>


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

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


<PAGE>


                        CENEX HARVEST STATES COOPERATIVES

                 4.96% SERIES D SENIOR NOTE DUE OCTOBER 18, 2012

No. RD-16                                                       October 18, 2002
$4,000,000                                                      PPN: 15131# AD 8


         FOR VALUE RECEIVED, the undersigned, CENEX HARVEST STATES COOPERATIVES
(herein called the "COMPANY"), a nonstock agricultural cooperative corporation
organized and existing under the laws of the State of Minnesota, hereby promises
to pay to HARTFORD LIFE AND ACCIDENT INSURANCE COMPANY, or registered assigns,
the principal sum of FOUR MILLION DOLLARS ($4,000,000) on October 18, 2012, with
interest (computed on the basis of a 360-day year of twelve 30-day months) (a)
on the unpaid balance thereof at the rate of 4.96% PER ANNUM from the date
hereof, payable semiannually on April 18th and October 18th in each year,
commencing on April 18, 2003, until the principal hereof shall have become due
and payable, and (b) to the extent permitted by law on any overdue payment
(including any overdue prepayment) of principal, any overdue payment of interest
and any overdue payment of any Make-Whole Amount (as defined in the Note
Purchase Agreements referred to below), payable semiannually as aforesaid (or,
at the option of the registered holder hereof, on demand), at a rate PER ANNUM
from time to time equal to the greater of (i) 6.96% or (ii) 2% over the rate of
interest publicly announced from time to time by The Bank of New York in New
York, New York (or its successor) as its "base" or "prime" rate.

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

         This Note is one of a series of Series D Senior Notes (herein called
the "NOTES") issued pursuant to separate Note Purchase Agreements, each dated as
of October 18, 2002, (as from time to time amended, the "NOTE PURCHASE
AGREEMENTS"), between the Company and the respective purchasers named therein
and is entitled to the benefits thereof. Each holder of this Note will be
deemed, by its acceptance hereof, (i) to have agreed to the confidentiality
provisions set forth in Section 20 of the Note Purchase Agreements and (ii) to
have made the representation set forth in Section 6.2 of the Note Purchase
Agreements.

         This Note is a registered Note and, as provided in the Note Purchase
Agreements, upon surrender of this Note for registration of transfer, duly
endorsed, or accompanied by a written instrument of transfer duly executed, by
the registered holder hereof or such holder's attorney duly authorized in
writing, a new Note for a like principal amount will be issued to, and
registered in the name of, the transferee. Prior to due presentment for
registration of transfer, the Company may treat the Person in whose name this
Note is registered as the owner hereof for the purpose of receiving payment and
for all other purposes, and the Company will not be affected by any notice to
the contrary.


<PAGE>


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

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


<PAGE>


                        CENEX HARVEST STATES COOPERATIVES

                 4.96% SERIES D SENIOR NOTE DUE OCTOBER 18, 2012

No. RD-17                                                       October 18, 2002
$3,000,000                                                      PPN: 15131# AD 8


         FOR VALUE RECEIVED, the undersigned, CENEX HARVEST STATES COOPERATIVES
(herein called the "COMPANY"), a nonstock agricultural cooperative corporation
organized and existing under the laws of the State of Minnesota, hereby promises
to pay to HARTFORD LIFE AND ANNUITY INSURANCE COMPANY, or registered assigns,
the principal sum of THREE MILLION DOLLARS ($3,000,000) on October 18, 2012,
with interest (computed on the basis of a 360-day year of twelve 30-day months)
(a) on the unpaid balance thereof at the rate of 4.96% PER ANNUM from the date
hereof, payable semiannually on April 18th and October 18th in each year,
commencing on April 18, 2003, until the principal hereof shall have become due
and payable, and (b) to the extent permitted by law on any overdue payment
(including any overdue prepayment) of principal, any overdue payment of interest
and any overdue payment of any Make-Whole Amount (as defined in the Note
Purchase Agreements referred to below), payable semiannually as aforesaid (or,
at the option of the registered holder hereof, on demand), at a rate PER ANNUM
from time to time equal to the greater of (i) 6.96% or (ii) 2% over the rate of
interest publicly announced from time to time by The Bank of New York in New
York, New York (or its successor) as its "base" or "prime" rate.

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

         This Note is one of a series of Series D Senior Notes (herein called
the "NOTES") issued pursuant to separate Note Purchase Agreements, each dated as
of October 18, 2002, (as from time to time amended, the "NOTE PURCHASE
AGREEMENTS"), between the Company and the respective purchasers named therein
and is entitled to the benefits thereof. Each holder of this Note will be
deemed, by its acceptance hereof, (i) to have agreed to the confidentiality
provisions set forth in Section 20 of the Note Purchase Agreements and (ii) to
have made the representation set forth in Section 6.2 of the Note Purchase
Agreements.

         This Note is a registered Note and, as provided in the Note Purchase
Agreements, upon surrender of this Note for registration of transfer, duly
endorsed, or accompanied by a written instrument of transfer duly executed, by
the registered holder hereof or such holder's attorney duly authorized in
writing, a new Note for a like principal amount will be issued to, and
registered in the name of, the transferee. Prior to due presentment for
registration of transfer, the Company may treat the Person in whose name this
Note is registered as the owner hereof for the purpose of receiving payment and
for all other purposes, and the Company will not be affected by any notice to
the contrary.


<PAGE>


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

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


<PAGE>


                        CENEX HARVEST STATES COOPERATIVES

                 4.96% SERIES D SENIOR NOTE DUE OCTOBER 18, 2012

No. RD-18                                                       October 18, 2002
$2,900,000                                                      PPN: 15131# AD 8

         FOR VALUE RECEIVED, the undersigned, CENEX HARVEST STATES COOPERATIVES
(herein called the "COMPANY"), a nonstock agricultural cooperative corporation
organized and existing under the laws of the State of Minnesota, hereby promises
to pay to MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY, or registered assigns,
the principal sum of TWO MILLION NINE HUNDRED THOUSAND DOLLARS ($2,900,000) on
October 18, 2012, with interest (computed on the basis of a 360-day year of
twelve 30-day months) (a) on the unpaid balance thereof at the rate of 4.96% PER
ANNUM from the date hereof, payable semiannually on April 18th and October 18th
in each year, commencing on April 18, 2003, until the principal hereof shall
have become due and payable, and (b) to the extent permitted by law on any
overdue payment (including any overdue prepayment) of principal, any overdue
payment of interest and any overdue payment of any Make-Whole Amount (as defined
in the Note Purchase Agreements referred to below), payable semiannually as
aforesaid (or, at the option of the registered holder hereof, on demand), at a
rate PER ANNUM from time to time equal to the greater of (i) 6.96% or (ii) 2%
over the rate of interest publicly announced from time to time by The Bank of
New York in New York, New York (or its successor) as its "base" or "prime" rate.

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

         This Note is one of a series of Series D Senior Notes (herein called
the "NOTES") issued pursuant to separate Note Purchase Agreements, each dated as
of October 18, 2002, (as from time to time amended, the "NOTE PURCHASE
AGREEMENTS"), between the Company and the respective purchasers named therein
and is entitled to the benefits thereof. Each holder of this Note will be
deemed, by its acceptance hereof, (i) to have agreed to the confidentiality
provisions set forth in Section 20 of the Note Purchase Agreements and (ii) to
have made the representation set forth in Section 6.2 of the Note Purchase
Agreements.

         This Note is a registered Note and, as provided in the Note Purchase
Agreements, upon surrender of this Note for registration of transfer, duly
endorsed, or accompanied by a written instrument of transfer duly executed, by
the registered holder hereof or such holder's attorney duly authorized in
writing, a new Note for a like principal amount will be issued to, and
registered in the name of, the transferee. Prior to due presentment for
registration of transfer, the Company may treat the Person in whose name this
Note is registered as the owner hereof for the purpose of receiving payment and
for all other purposes, and the Company will not be affected by any notice to
the contrary.


<PAGE>


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

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


<PAGE>


                        CENEX HARVEST STATES COOPERATIVES

                 4.96% SERIES D SENIOR NOTE DUE OCTOBER 18, 2012

No. RD-19                                                       October 18, 2002
$2,000,000                                                      PPN: 15131# AD 8


         FOR VALUE RECEIVED, the undersigned, CENEX HARVEST STATES COOPERATIVES
(herein called the "COMPANY"), a nonstock agricultural cooperative corporation
organized and existing under the laws of the State of Minnesota, hereby promises
to pay to MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY, or registered assigns,
the principal sum of TWO MILLION DOLLARS ($2,000,000) on October 18, 2012, with
interest (computed on the basis of a 360-day year of twelve 30-day months) (a)
on the unpaid balance thereof at the rate of 4.96% PER ANNUM from the date
hereof, payable semiannually on April 18th and October 18th in each year,
commencing on April 18, 2003, until the principal hereof shall have become due
and payable, and (b) to the extent permitted by law on any overdue payment
(including any overdue prepayment) of principal, any overdue payment of interest
and any overdue payment of any Make-Whole Amount (as defined in the Note
Purchase Agreements referred to below), payable semiannually as aforesaid (or,
at the option of the registered holder hereof, on demand), at a rate PER ANNUM
from time to time equal to the greater of (i) 6.96% or (ii) 2% over the rate of
interest publicly announced from time to time by The Bank of New York in New
York, New York (or its successor) as its "base" or "prime" rate.

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

         This Note is one of a series of Series D Senior Notes (herein called
the "NOTES") issued pursuant to separate Note Purchase Agreements, each dated as
of October 18, 2002, (as from time to time amended, the "NOTE PURCHASE
AGREEMENTS"), between the Company and the respective purchasers named therein
and is entitled to the benefits thereof. Each holder of this Note will be
deemed, by its acceptance hereof, (i) to have agreed to the confidentiality
provisions set forth in Section 20 of the Note Purchase Agreements and (ii) to
have made the representation set forth in Section 6.2 of the Note Purchase
Agreements.

         This Note is a registered Note and, as provided in the Note Purchase
Agreements, upon surrender of this Note for registration of transfer, duly
endorsed, or accompanied by a written instrument of transfer duly executed, by
the registered holder hereof or such holder's attorney duly authorized in
writing, a new Note for a like principal amount will be issued to, and
registered in the name of, the transferee. Prior to due presentment for
registration of transfer, the Company may treat the Person in whose name this
Note is registered as the owner hereof for the purpose of receiving payment and
for all other purposes, and the Company will not be affected by any notice to
the contrary.


<PAGE>


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

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


<PAGE>


                        CENEX HARVEST STATES COOPERATIVES

                 4.96% SERIES D SENIOR NOTE DUE OCTOBER 18, 2012

No. RD-20                                                       October 18, 2002
$900,000                                                        PPN: 15131# AD 8

         FOR VALUE RECEIVED, the undersigned, CENEX HARVEST STATES COOPERATIVES
(herein called the "COMPANY"), a nonstock agricultural cooperative corporation
organized and existing under the laws of the State of Minnesota, hereby promises
to pay to MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY, or registered assigns,
the principal sum of NINE HUNDRED THOUSAND DOLLARS ($900,000) on October 18,
2012, with interest (computed on the basis of a 360-day year of twelve 30-day
months) (a) on the unpaid balance thereof at the rate of 4.96% PER ANNUM from
the date hereof, payable semiannually on April 18th and October 18th in each
year, commencing on April 18, 2003, until the principal hereof shall have become
due and payable, and (b) to the extent permitted by law on any overdue payment
(including any overdue prepayment) of principal, any overdue payment of interest
and any overdue payment of any Make-Whole Amount (as defined in the Note
Purchase Agreements referred to below), payable semiannually as aforesaid (or,
at the option of the registered holder hereof, on demand), at a rate PER ANNUM
from time to time equal to the greater of (i) 6.96% or (ii) 2% over the rate of
interest publicly announced from time to time by The Bank of New York in New
York, New York (or its successor) as its "base" or "prime" rate.

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

         This Note is one of a series of Series D Senior Notes (herein called
the "NOTES") issued pursuant to separate Note Purchase Agreements, each dated as
of October 18, 2002, (as from time to time amended, the "NOTE PURCHASE
AGREEMENTS"), between the Company and the respective purchasers named therein
and is entitled to the benefits thereof. Each holder of this Note will be
deemed, by its acceptance hereof, (i) to have agreed to the confidentiality
provisions set forth in Section 20 of the Note Purchase Agreements and (ii) to
have made the representation set forth in Section 6.2 of the Note Purchase
Agreements.

         This Note is a registered Note and, as provided in the Note Purchase
Agreements, upon surrender of this Note for registration of transfer, duly
endorsed, or accompanied by a written instrument of transfer duly executed, by
the registered holder hereof or such holder's attorney duly authorized in
writing, a new Note for a like principal amount will be issued to, and
registered in the name of, the transferee. Prior to due presentment for
registration of transfer, the Company may treat the Person in whose name this
Note is registered as the owner hereof for the purpose of receiving payment and
for all other purposes, and the Company will not be affected by any notice to
the contrary.


<PAGE>


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

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


<PAGE>


                        CENEX HARVEST STATES COOPERATIVES

                 4.96% SERIES D SENIOR NOTE DUE OCTOBER 18, 2012

No. RD-21                                                       October 18, 2002
$500,000                                                        PPN: 15131# AD 8

         FOR VALUE RECEIVED, the undersigned, CENEX HARVEST STATES COOPERATIVES
(herein called the "COMPANY"), a nonstock agricultural cooperative corporation
organized and existing under the laws of the State of Minnesota, hereby promises
to pay to MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY, or registered assigns,
the principal sum of FIVE HUNDRED THOUSAND DOLLARS ($500,000) on October 18,
2012, with interest (computed on the basis of a 360-day year of twelve 30-day
months) (a) on the unpaid balance thereof at the rate of 4.96% PER ANNUM from
the date hereof, payable semiannually on April 18th and October 18th in each
year, commencing on April 18, 2003, until the principal hereof shall have become
due and payable, and (b) to the extent permitted by law on any overdue payment
(including any overdue prepayment) of principal, any overdue payment of interest
and any overdue payment of any Make-Whole Amount (as defined in the Note
Purchase Agreements referred to below), payable semiannually as aforesaid (or,
at the option of the registered holder hereof, on demand), at a rate PER ANNUM
from time to time equal to the greater of (i) 6.96% or (ii) 2% over the rate of
interest publicly announced from time to time by The Bank of New York in New
York, New York (or its successor) as its "base" or "prime" rate.

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

         This Note is one of a series of Series D Senior Notes (herein called
the "NOTES") issued pursuant to separate Note Purchase Agreements, each dated as
of October 18, 2002, (as from time to time amended, the "NOTE PURCHASE
AGREEMENTS"), between the Company and the respective purchasers named therein
and is entitled to the benefits thereof. Each holder of this Note will be
deemed, by its acceptance hereof, (i) to have agreed to the confidentiality
provisions set forth in Section 20 of the Note Purchase Agreements and (ii) to
have made the representation set forth in Section 6.2 of the Note Purchase
Agreements.

         This Note is a registered Note and, as provided in the Note Purchase
Agreements, upon surrender of this Note for registration of transfer, duly
endorsed, or accompanied by a written instrument of transfer duly executed, by
the registered holder hereof or such holder's attorney duly authorized in
writing, a new Note for a like principal amount will be issued to, and
registered in the name of, the transferee. Prior to due presentment for
registration of transfer, the Company may treat the Person in whose name this
Note is registered as the owner hereof for the purpose of receiving payment and
for all other purposes, and the Company will not be affected by any notice to
the contrary.


<PAGE>


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

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


<PAGE>


                        CENEX HARVEST STATES COOPERATIVES

                 4.96% SERIES D SENIOR NOTE DUE OCTOBER 18, 2012

No. RD-22                                                       October 18, 2002
$1,700,000                                                      PPN: 15131# AD 8

         FOR VALUE RECEIVED, the undersigned, CENEX HARVEST STATES COOPERATIVES
(herein called the "COMPANY"), a nonstock agricultural cooperative corporation
organized and existing under the laws of the State of Minnesota, hereby promises
to pay to C.M. LIFE INSURANCE COMPANY C/O MASSACHUSETTS MUTUAL LIFE INSURANCE
COMPANY, or registered assigns, the principal sum of ONE MILLION SEVEN HUNDRED
THOUSAND DOLLARS ($1,700,000) on October 18, 2012, with interest (computed on
the basis of a 360-day year of twelve 30-day months) (a) on the unpaid balance
thereof at the rate of 4.96% PER ANNUM from the date hereof, payable
semiannually on April 18th and October 18th in each year, commencing on April
18, 2003, until the principal hereof shall have become due and payable, and (b)
to the extent permitted by law on any overdue payment (including any overdue
prepayment) of principal, any overdue payment of interest and any overdue
payment of any Make-Whole Amount (as defined in the Note Purchase Agreements
referred to below), payable semiannually as aforesaid (or, at the option of the
registered holder hereof, on demand), at a rate PER ANNUM from time to time
equal to the greater of (i) 6.96% or (ii) 2% over the rate of interest publicly
announced from time to time by The Bank of New York in New York, New York (or
its successor) as its "base" or "prime" rate.

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

         This Note is one of a series of Series D Senior Notes (herein called
the "NOTES") issued pursuant to separate Note Purchase Agreements, each dated as
of October 18, 2002, (as from time to time amended, the "NOTE PURCHASE
AGREEMENTS"), between the Company and the respective purchasers named therein
and is entitled to the benefits thereof. Each holder of this Note will be
deemed, by its acceptance hereof, (i) to have agreed to the confidentiality
provisions set forth in Section 20 of the Note Purchase Agreements and (ii) to
have made the representation set forth in Section 6.2 of the Note Purchase
Agreements.

         This Note is a registered Note and, as provided in the Note Purchase
Agreements, upon surrender of this Note for registration of transfer, duly
endorsed, or accompanied by a written instrument of transfer duly executed, by
the registered holder hereof or such holder's attorney duly authorized in
writing, a new Note for a like principal amount will be issued to, and
registered in the name of, the transferee. Prior to due presentment for
registration of transfer, the Company may treat the Person in whose name this
Note is registered as the owner hereof for the purpose of receiving payment and
for all other purposes, and the Company will not be affected by any notice to
the contrary.


<PAGE>


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

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


<PAGE>


                        CENEX HARVEST STATES COOPERATIVES

                 4.96% SERIES D SENIOR NOTE DUE OCTOBER 18, 2012

No. RD-23                                                       October 18, 2002
$5,000,000                                                      PPN: 15131# AD 8


         FOR VALUE RECEIVED, the undersigned, CENEX HARVEST STATES COOPERATIVES
(herein called the "COMPANY"), a nonstock agricultural cooperative corporation
organized and existing under the laws of the State of Minnesota, hereby promises
to pay to UNITED OF OMAHA LIFE INSURANCE COMPANY, or registered assigns, the
principal sum of FIVE MILLION DOLLARS ($5,000,000) on October 18, 2012, with
interest (computed on the basis of a 360-day year of twelve 30-day months) (a)
on the unpaid balance thereof at the rate of 4.96% PER ANNUM from the date
hereof, payable semiannually on April 18th and October 18th in each year,
commencing on April 18, 2003, until the principal hereof shall have become due
and payable, and (b) to the extent permitted by law on any overdue payment
(including any overdue prepayment) of principal, any overdue payment of interest
and any overdue payment of any Make-Whole Amount (as defined in the Note
Purchase Agreements referred to below), payable semiannually as aforesaid (or,
at the option of the registered holder hereof, on demand), at a rate PER ANNUM
from time to time equal to the greater of (i) 6.96% or (ii) 2% over the rate of
interest publicly announced from time to time by The Bank of New York in New
York, New York (or its successor) as its "base" or "prime" rate.

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

         This Note is one of a series of Series D Senior Notes (herein called
the "NOTES") issued pursuant to separate Note Purchase Agreements, each dated as
of October 18, 2002, (as from time to time amended, the "NOTE PURCHASE
AGREEMENTS"), between the Company and the respective purchasers named therein
and is entitled to the benefits thereof. Each holder of this Note will be
deemed, by its acceptance hereof, (i) to have agreed to the confidentiality
provisions set forth in Section 20 of the Note Purchase Agreements and (ii) to
have made the representation set forth in Section 6.2 of the Note Purchase
Agreements.

         This Note is a registered Note and, as provided in the Note Purchase
Agreements, upon surrender of this Note for registration of transfer, duly
endorsed, or accompanied by a written instrument of transfer duly executed, by
the registered holder hereof or such holder's attorney duly authorized in
writing, a new Note for a like principal amount will be issued to, and
registered in the name of, the transferee. Prior to due presentment for
registration of transfer, the Company may treat the Person in whose name this
Note is registered as the owner hereof for the purpose of receiving payment and
for all other purposes, and the Company will not be affected by any notice to
the contrary.


<PAGE>


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

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


<PAGE>


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



                                       CENEX HARVEST STATES COOPERATIVES


                                       By: _____________________________________
                                       Name:
                                       Title:



                                                                   SERIES D NOTE


<PAGE>


                        CENEX HARVEST STATES COOPERATIVES

                 5.60% SERIES E SENIOR NOTE DUE OCTOBER 18, 2017

No. RE-1                                                        October 18, 2002
$20,000,000                                                     PPN: 15131# AE 6


         FOR VALUE RECEIVED, the undersigned, CENEX HARVEST STATES COOPERATIVES
(herein called the "COMPANY"), a nonstock agricultural cooperative corporation
organized and existing under the laws of the State of Minnesota, hereby promises
to pay to THE VARIABLE ANNUITY LIFE INSURANCE COMPANY, or registered assigns,
the principal sum of TWENTY MILLION DOLLARS ($20,000,000) on October 18, 2017,
with interest (computed on the basis of a 360-day year of twelve 30-day months)
(a) on the unpaid balance thereof at the rate of 5.60% PER ANNUM from the date
hereof, payable semiannually on April 18th and October 18th in each year,
commencing on April 18, 2003, until the principal hereof shall have become due
and payable, and (b) to the extent permitted by law on any overdue payment
(including any overdue prepayment) of principal, any overdue payment of interest
and any overdue payment of any Make-Whole Amount (as defined in the Note
Purchase Agreements referred to below), payable semiannually as aforesaid (or,
at the option of the registered holder hereof, on demand), at a rate PER ANNUM
from time to time equal to the greater of (i) 7.60% or (ii) 2% over the rate of
interest publicly announced from time to time by The Bank of New York in New
York, New York (or its successor) as its "base" or "prime" rate.

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

         This Note is one of a series of Series E Senior Notes (herein called
the "NOTES") issued pursuant to separate Note Purchase Agreements, each dated as
of October 18, 2002, (as from time to time amended, the "NOTE PURCHASE
AGREEMENTS"), between the Company and the respective purchasers named therein
and is entitled to the benefits thereof. Each holder of this Note will be
deemed, by its acceptance hereof, (i) to have agreed to the confidentiality
provisions set forth in Section 20 of the Note Purchase Agreements and (ii) to
have made the representation set forth in Section 6.2 of the Note Purchase
Agreements.

         This Note is a registered Note and, as provided in the Note Purchase
Agreements, upon surrender of this Note for registration of transfer, duly
endorsed, or accompanied by a written instrument of transfer duly executed, by
the registered holder hereof or such holder's attorney duly authorized in
writing, a new Note for a like principal amount will be issued to, and
registered in the name of, the transferee. Prior to due presentment for
registration of transfer, the Company may treat the Person in whose name this
Note is registered as the owner hereof for the purpose of receiving payment and
for all other purposes, and the Company will not be affected by any notice to
the contrary.


<PAGE>


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

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


<PAGE>


                        CENEX HARVEST STATES COOPERATIVES

                 5.60% SERIES E SENIOR NOTE DUE OCTOBER 18, 2017

No. RE-2                                                        October 18, 2002
$10,000,000                                                     PPN: 15131# AE 6


         FOR VALUE RECEIVED, the undersigned, CENEX HARVEST STATES COOPERATIVES
(herein called the "COMPANY"), a nonstock agricultural cooperative corporation
organized and existing under the laws of the State of Minnesota, hereby promises
to pay to AIG ANNUITY INSURANCE COMPANY, or registered assigns, the principal
sum of TEN MILLION DOLLARS ($10,000,000) on October 18, 2017, with interest
(computed on the basis of a 360-day year of twelve 30-day months) (a) on the
unpaid balance thereof at the rate of 5.60% PER ANNUM from the date hereof,
payable semiannually on April 18th and October 18th in each year, commencing on
April 18, 2003, until the principal hereof shall have become due and payable,
and (b) to the extent permitted by law on any overdue payment (including any
overdue prepayment) of principal, any overdue payment of interest and any
overdue payment of any Make-Whole Amount (as defined in the Note Purchase
Agreements referred to below), payable semiannually as aforesaid (or, at the
option of the registered holder hereof, on demand), at a rate PER ANNUM from
time to time equal to the greater of (i) 7.60% or (ii) 2% over the rate of
interest publicly announced from time to time by The Bank of New York in New
York, New York (or its successor) as its "base" or "prime" rate.

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

         This Note is one of a series of Series E Senior Notes (herein called
the "NOTES") issued pursuant to separate Note Purchase Agreements, each dated as
of October 18, 2002, (as from time to time amended, the "NOTE PURCHASE
AGREEMENTS"), between the Company and the respective purchasers named therein
and is entitled to the benefits thereof. Each holder of this Note will be
deemed, by its acceptance hereof, (i) to have agreed to the confidentiality
provisions set forth in Section 20 of the Note Purchase Agreements and (ii) to
have made the representation set forth in Section 6.2 of the Note Purchase
Agreements.

         This Note is a registered Note and, as provided in the Note Purchase
Agreements, upon surrender of this Note for registration of transfer, duly
endorsed, or accompanied by a written instrument of transfer duly executed, by
the registered holder hereof or such holder's attorney duly authorized in
writing, a new Note for a like principal amount will be issued to, and
registered in the name of, the transferee. Prior to due presentment for
registration of transfer, the Company may treat the Person in whose name this
Note is registered as the owner hereof for the purpose of receiving payment and
for all other purposes, and the Company will not be affected by any notice to
the contrary.


<PAGE>


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

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


<PAGE>


                        CENEX HARVEST STATES COOPERATIVES

                 5.60% SERIES E SENIOR NOTE DUE OCTOBER 18, 2017

No. RE-3                                                        October 18, 2002
$10,000,000                                                     PPN: 15131# AE 6


         FOR VALUE RECEIVED, the undersigned, CENEX HARVEST STATES COOPERATIVES
(herein called the "COMPANY"), a nonstock agricultural cooperative corporation
organized and existing under the laws of the State of Minnesota, hereby promises
to pay to THE FRANKLIN LIFE INSURANCE COMPANY, or registered assigns, the
principal sum of TEN MILLION DOLLARS ($10,000,000) on October 18, 2017, with
interest (computed on the basis of a 360-day year of twelve 30-day months) (a)
on the unpaid balance thereof at the rate of 5.60% PER ANNUM from the date
hereof, payable semiannually on April 18th and October 18th in each year,
commencing on April 18, 2003, until the principal hereof shall have become due
and payable, and (b) to the extent permitted by law on any overdue payment
(including any overdue prepayment) of principal, any overdue payment of interest
and any overdue payment of any Make-Whole Amount (as defined in the Note
Purchase Agreements referred to below), payable semiannually as aforesaid (or,
at the option of the registered holder hereof, on demand), at a rate PER ANNUM
from time to time equal to the greater of (i) 7.60% or (ii) 2% over the rate of
interest publicly announced from time to time by The Bank of New York in New
York, New York (or its successor) as its "base" or "prime" rate.

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

         This Note is one of a series of Series E Senior Notes (herein called
the "NOTES") issued pursuant to separate Note Purchase Agreements, each dated as
of October 18, 2002, (as from time to time amended, the "NOTE PURCHASE
AGREEMENTS"), between the Company and the respective purchasers named therein
and is entitled to the benefits thereof. Each holder of this Note will be
deemed, by its acceptance hereof, (i) to have agreed to the confidentiality
provisions set forth in Section 20 of the Note Purchase Agreements and (ii) to
have made the representation set forth in Section 6.2 of the Note Purchase
Agreements.

         This Note is a registered Note and, as provided in the Note Purchase
Agreements, upon surrender of this Note for registration of transfer, duly
endorsed, or accompanied by a written instrument of transfer duly executed, by
the registered holder hereof or such holder's attorney duly authorized in
writing, a new Note for a like principal amount will be issued to, and
registered in the name of, the transferee. Prior to due presentment for
registration of transfer, the Company may treat the Person in whose name this
Note is registered as the owner hereof for the purpose of receiving payment and
for all other purposes, and the Company will not be affected by any notice to
the contrary.


<PAGE>


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

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


<PAGE>


                        CENEX HARVEST STATES COOPERATIVES

                 5.60% SERIES E SENIOR NOTE DUE OCTOBER 18, 2017

No. RE-4                                                        October 18, 2002
$5,000,000                                                      PPN: 15131# AE 6


         FOR VALUE RECEIVED, the undersigned, CENEX HARVEST STATES COOPERATIVES
(herein called the "COMPANY"), a nonstock agricultural cooperative corporation
organized and existing under the laws of the State of Minnesota, hereby promises
to pay to THE UNITED STATES LIFE INSURANCE COMPANY IN THE CITY OF NEW YORK, or
registered assigns, the principal sum of FIVE MILLION DOLLARS ($5,000,000) on
October 18, 2017, with interest (computed on the basis of a 360-day year of
twelve 30-day months) (a) on the unpaid balance thereof at the rate of 5.60% PER
ANNUM from the date hereof, payable semiannually on April 18th and October 18th
in each year, commencing on April 18, 2003, until the principal hereof shall
have become due and payable, and (b) to the extent permitted by law on any
overdue payment (including any overdue prepayment) of principal, any overdue
payment of interest and any overdue payment of any Make-Whole Amount (as defined
in the Note Purchase Agreements referred to below), payable semiannually as
aforesaid (or, at the option of the registered holder hereof, on demand), at a
rate PER ANNUM from time to time equal to the greater of (i) 7.60% or (ii) 2%
over the rate of interest publicly announced from time to time by The Bank of
New York in New York, New York (or its successor) as its "base" or "prime" rate.

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

         This Note is one of a series of Series E Senior Notes (herein called
the "NOTES") issued pursuant to separate Note Purchase Agreements, each dated as
of October 18, 2002, (as from time to time amended, the "NOTE PURCHASE
AGREEMENTS"), between the Company and the respective purchasers named therein
and is entitled to the benefits thereof. Each holder of this Note will be
deemed, by its acceptance hereof, (i) to have agreed to the confidentiality
provisions set forth in Section 20 of the Note Purchase Agreements and (ii) to
have made the representation set forth in Section 6.2 of the Note Purchase
Agreements.

         This Note is a registered Note and, as provided in the Note Purchase
Agreements, upon surrender of this Note for registration of transfer, duly
endorsed, or accompanied by a written instrument of transfer duly executed, by
the registered holder hereof or such holder's attorney duly authorized in
writing, a new Note for a like principal amount will be issued to, and
registered in the name of, the transferee. Prior to due presentment for
registration of transfer, the Company may treat the Person in whose name this
Note is registered as the owner hereof for the


<PAGE>


purpose of receiving payment and for all other purposes, and the Company will
not be affected by any notice to the contrary.

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

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


<PAGE>


                        CENEX HARVEST STATES COOPERATIVES

                 5.60% SERIES E SENIOR NOTE DUE OCTOBER 18, 2017

No. RE-5                                                        October 18, 2002
$6,000,000                                                      PPN: 15131# AE 6


         FOR VALUE RECEIVED, the undersigned, CENEX HARVEST STATES COOPERATIVES
(herein called the "COMPANY"), a nonstock agricultural cooperative corporation
organized and existing under the laws of the State of Minnesota, hereby promises
to pay to HARTFORD FIRE INSURANCE COMPANY, or registered assigns, the principal
sum of SIX MILLION DOLLARS ($6,000,000) on October 18, 2017, with interest
(computed on the basis of a 360-day year of twelve 30-day months) (a) on the
unpaid balance thereof at the rate of 5.60% PER ANNUM from the date hereof,
payable semiannually on April 18th and October 18th in each year, commencing on
April 18, 2003, until the principal hereof shall have become due and payable,
and (b) to the extent permitted by law on any overdue payment (including any
overdue prepayment) of principal, any overdue payment of interest and any
overdue payment of any Make-Whole Amount (as defined in the Note Purchase
Agreements referred to below), payable semiannually as aforesaid (or, at the
option of the registered holder hereof, on demand), at a rate PER ANNUM from
time to time equal to the greater of (i) 7.60% or (ii) 2% over the rate of
interest publicly announced from time to time by The Bank of New York in New
York, New York (or its successor) as its "base" or "prime" rate.

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

         This Note is one of a series of Series E Senior Notes (herein called
the "NOTES") issued pursuant to separate Note Purchase Agreements, each dated as
of October 18, 2002, (as from time to time amended, the "NOTE PURCHASE
AGREEMENTS"), between the Company and the respective purchasers named therein
and is entitled to the benefits thereof. Each holder of this Note will be
deemed, by its acceptance hereof, (i) to have agreed to the confidentiality
provisions set forth in Section 20 of the Note Purchase Agreements and (ii) to
have made the representation set forth in Section 6.2 of the Note Purchase
Agreements.

         This Note is a registered Note and, as provided in the Note Purchase
Agreements, upon surrender of this Note for registration of transfer, duly
endorsed, or accompanied by a written instrument of transfer duly executed, by
the registered holder hereof or such holder's attorney duly authorized in
writing, a new Note for a like principal amount will be issued to, and
registered in the name of, the transferee. Prior to due presentment for
registration of transfer, the Company may treat the Person in whose name this
Note is registered as the owner hereof for the purpose of receiving payment and
for all other purposes, and the Company will not be affected by any notice to
the contrary.


<PAGE>


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

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


<PAGE>


                        CENEX HARVEST STATES COOPERATIVES

                 5.60% SERIES E SENIOR NOTE DUE OCTOBER 18, 2017

No. RE-6                                                        October 18, 2002
$5,000,000                                                      PPN: 15131# AE 6


         FOR VALUE RECEIVED, the undersigned, CENEX HARVEST STATES COOPERATIVES
(herein called the "COMPANY"), a nonstock agricultural cooperative corporation
organized and existing under the laws of the State of Minnesota, hereby promises
to pay to MODERN WOODMEN OF AMERICA, or registered assigns, the principal sum of
FIVE MILLION DOLLARS ($5,000,000) on October 18, 2017, with interest (computed
on the basis of a 360-day year of twelve 30-day months) (a) on the unpaid
balance thereof at the rate of 5.60% PER ANNUM from the date hereof, payable
semiannually on April 18th and October 18th in each year, commencing on April
18, 2003, until the principal hereof shall have become due and payable, and (b)
to the extent permitted by law on any overdue payment (including any overdue
prepayment) of principal, any overdue payment of interest and any overdue
payment of any Make-Whole Amount (as defined in the Note Purchase Agreements
referred to below), payable semiannually as aforesaid (or, at the option of the
registered holder hereof, on demand), at a rate PER ANNUM from time to time
equal to the greater of (i) 7.60% or (ii) 2% over the rate of interest publicly
announced from time to time by The Bank of New York in New York, New York (or
its successor) as its "base" or "prime" rate.

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

         This Note is one of a series of Series E Senior Notes (herein called
the "NOTES") issued pursuant to separate Note Purchase Agreements, each dated as
of October 18, 2002, (as from time to time amended, the "NOTE PURCHASE
AGREEMENTS"), between the Company and the respective purchasers named therein
and is entitled to the benefits thereof. Each holder of this Note will be
deemed, by its acceptance hereof, (i) to have agreed to the confidentiality
provisions set forth in Section 20 of the Note Purchase Agreements and (ii) to
have made the representation set forth in Section 6.2 of the Note Purchase
Agreements.

         This Note is a registered Note and, as provided in the Note Purchase
Agreements, upon surrender of this Note for registration of transfer, duly
endorsed, or accompanied by a written instrument of transfer duly executed, by
the registered holder hereof or such holder's attorney duly authorized in
writing, a new Note for a like principal amount will be issued to, and
registered in the name of, the transferee. Prior to due presentment for
registration of transfer, the Company may treat the Person in whose name this
Note is registered as the owner hereof for the purpose of receiving payment and
for all other purposes, and the Company will not be affected by any notice to
the contrary.


<PAGE>


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

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


<PAGE>


                        CENEX HARVEST STATES COOPERATIVES

                 5.60% SERIES E SENIOR NOTE DUE OCTOBER 18, 2017

No. RE-7                                                        October 18, 2002
$2,000,000                                                      PPN: 15131# AE 6


         FOR VALUE RECEIVED, the undersigned, CENEX HARVEST STATES COOPERATIVES
(herein called the "COMPANY"), a nonstock agricultural cooperative corporation
organized and existing under the laws of the State of Minnesota, hereby promises
to pay to WELLS FARGO BANK, N.A. AS CUSTODIAN FOR AMERICAN REPUBLIC INSURANCE
COMPANY, or registered assigns, the principal sum of TWO MILLION DOLLARS
($2,000,000) on October 18, 2017, with interest (computed on the basis of a
360-day year of twelve 30-day months) (a) on the unpaid balance thereof at the
rate of 5.60% PER ANNUM from the date hereof, payable semiannually on April 18th
and October 18th in each year, commencing on April 18, 2003, until the principal
hereof shall have become due and payable, and (b) to the extent permitted by law
on any overdue payment (including any overdue prepayment) of principal, any
overdue payment of interest and any overdue payment of any Make-Whole Amount (as
defined in the Note Purchase Agreements referred to below), payable semiannually
as aforesaid (or, at the option of the registered holder hereof, on demand), at
a rate PER ANNUM from time to time equal to the greater of (i) 7.60% or (ii) 2%
over the rate of interest publicly announced from time to time by The Bank of
New York in New York, New York (or its successor) as its "base" or "prime" rate.

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

         This Note is one of a series of Series E Senior Notes (herein called
the "NOTES") issued pursuant to separate Note Purchase Agreements, each dated as
of October 18, 2002, (as from time to time amended, the "NOTE PURCHASE
AGREEMENTS"), between the Company and the respective purchasers named therein
and is entitled to the benefits thereof. Each holder of this Note will be
deemed, by its acceptance hereof, (i) to have agreed to the confidentiality
provisions set forth in Section 20 of the Note Purchase Agreements and (ii) to
have made the representation set forth in Section 6.2 of the Note Purchase
Agreements.

         This Note is a registered Note and, as provided in the Note Purchase
Agreements, upon surrender of this Note for registration of transfer, duly
endorsed, or accompanied by a written instrument of transfer duly executed, by
the registered holder hereof or such holder's attorney duly authorized in
writing, a new Note for a like principal amount will be issued to, and
registered in the name of, the transferee. Prior to due presentment for
registration of transfer, the Company may treat the Person in whose name this
Note is registered as the owner hereof for the


<PAGE>


purpose of receiving payment and for all other purposes, and the Company will
not be affected by any notice to the contrary.

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

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


<PAGE>


                        CENEX HARVEST STATES COOPERATIVES

                 5.60% SERIES E SENIOR NOTE DUE OCTOBER 18, 2017

No. RE-8                                                        October 18, 2002
$1,000,000                                                      PPN: 15131# AE 6


         FOR VALUE RECEIVED, the undersigned, CENEX HARVEST STATES COOPERATIVES
(herein called the "COMPANY"), a nonstock agricultural cooperative corporation
organized and existing under the laws of the State of Minnesota, hereby promises
to pay to MERRILL LYNCH FOR GREAT WESTERN INSURANCE COMPANY, or registered
assigns, the principal sum of ONE MILLION DOLLARS ($1,000,000) on October 18,
2017, with interest (computed on the basis of a 360-day year of twelve 30-day
months) (a) on the unpaid balance thereof at the rate of 5.60% PER ANNUM from
the date hereof, payable semiannually on April 18th and October 18th in each
year, commencing on April 18, 2003, until the principal hereof shall have become
due and payable, and (b) to the extent permitted by law on any overdue payment
(including any overdue prepayment) of principal, any overdue payment of interest
and any overdue payment of any Make-Whole Amount (as defined in the Note
Purchase Agreements referred to below), payable semiannually as aforesaid (or,
at the option of the registered holder hereof, on demand), at a rate PER ANNUM
from time to time equal to the greater of (i) 7.60% or (ii) 2% over the rate of
interest publicly announced from time to time by The Bank of New York in New
York, New York (or its successor) as its "base" or "prime" rate.

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

         This Note is one of a series of Series E Senior Notes (herein called
the "NOTES") issued pursuant to separate Note Purchase Agreements, each dated as
of October 18, 2002, (as from time to time amended, the "NOTE PURCHASE
AGREEMENTS"), between the Company and the respective purchasers named therein
and is entitled to the benefits thereof. Each holder of this Note will be
deemed, by its acceptance hereof, (i) to have agreed to the confidentiality
provisions set forth in Section 20 of the Note Purchase Agreements and (ii) to
have made the representation set forth in Section 6.2 of the Note Purchase
Agreements.

         This Note is a registered Note and, as provided in the Note Purchase
Agreements, upon surrender of this Note for registration of transfer, duly
endorsed, or accompanied by a written instrument of transfer duly executed, by
the registered holder hereof or such holder's attorney duly authorized in
writing, a new Note for a like principal amount will be issued to, and
registered in the name of, the transferee. Prior to due presentment for
registration of transfer, the Company may treat the Person in whose name this
Note is registered as the owner hereof for the purpose of receiving payment and
for all other purposes, and the Company will not be affected by any notice to
the contrary.


<PAGE>


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

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


<PAGE>


                        CENEX HARVEST STATES COOPERATIVES

                 5.60% SERIES E SENIOR NOTE DUE OCTOBER 18, 2017

No. RE-9                                                        October 18, 2002
$500,000                                                        PPN: 15131# AE 6


         FOR VALUE RECEIVED, the undersigned, CENEX HARVEST STATES COOPERATIVES
(herein called the "COMPANY"), a nonstock agricultural cooperative corporation
organized and existing under the laws of the State of Minnesota, hereby promises
to pay to NATIONAL FARM LIFE INSURANCE COMPANY, or registered assigns, the
principal sum of FIVE HUNDRED THOUSAND DOLLARS ($500,000) on October 18, 2017,
with interest (computed on the basis of a 360-day year of twelve 30-day months)
(a) on the unpaid balance thereof at the rate of 5.60% PER ANNUM from the date
hereof, payable semiannually on April 18th and October 18th in each year,
commencing on April 18, 2003, until the principal hereof shall have become due
and payable, and (b) to the extent permitted by law on any overdue payment
(including any overdue prepayment) of principal, any overdue payment of interest
and any overdue payment of any Make-Whole Amount (as defined in the Note
Purchase Agreements referred to below), payable semiannually as aforesaid (or,
at the option of the registered holder hereof, on demand), at a rate PER ANNUM
from time to time equal to the greater of (i) 7.60% or (ii) 2% over the rate of
interest publicly announced from time to time by The Bank of New York in New
York, New York (or its successor) as its "base" or "prime" rate.

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

         This Note is one of a series of Series E Senior Notes (herein called
the "NOTES") issued pursuant to separate Note Purchase Agreements, each dated as
of October 18, 2002, (as from time to time amended, the "NOTE PURCHASE
AGREEMENTS"), between the Company and the respective purchasers named therein
and is entitled to the benefits thereof. Each holder of this Note will be
deemed, by its acceptance hereof, (i) to have agreed to the confidentiality
provisions set forth in Section 20 of the Note Purchase Agreements and (ii) to
have made the representation set forth in Section 6.2 of the Note Purchase
Agreements.

         This Note is a registered Note and, as provided in the Note Purchase
Agreements, upon surrender of this Note for registration of transfer, duly
endorsed, or accompanied by a written instrument of transfer duly executed, by
the registered holder hereof or such holder's attorney duly authorized in
writing, a new Note for a like principal amount will be issued to, and
registered in the name of, the transferee. Prior to due presentment for
registration of transfer, the Company may treat the Person in whose name this
Note is registered as the owner hereof for the purpose of receiving payment and
for all other purposes, and the Company will not be affected by any notice to
the contrary.


<PAGE>


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

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


<PAGE>


                        CENEX HARVEST STATES COOPERATIVES

                 5.60% SERIES E SENIOR NOTE DUE OCTOBER 18, 2017

No. RE-10                                                       October 18, 2002
$500,000                                                        PPN: 15131# AE 6


         FOR VALUE RECEIVED, the undersigned, CENEX HARVEST STATES COOPERATIVES
(herein called the "COMPANY"), a nonstock agricultural cooperative corporation
organized and existing under the laws of the State of Minnesota, hereby promises
to pay to WELLS FARGO BANK, N.A. AS CUSTODIAN FOR PROTECTED HOME MUTUAL LIFE
INSURANCE COMPANY, or registered assigns, the principal sum of FIVE HUNDRED
THOUSAND DOLLARS ($500,000) on October 18, 2017, with interest (computed on the
basis of a 360-day year of twelve 30-day months) (a) on the unpaid balance
thereof at the rate of 5.60% PER ANNUM from the date hereof, payable
semiannually on April 18th and October 18th in each year, commencing on April
18, 2003, until the principal hereof shall have become due and payable, and (b)
to the extent permitted by law on any overdue payment (including any overdue
prepayment) of principal, any overdue payment of interest and any overdue
payment of any Make-Whole Amount (as defined in the Note Purchase Agreements
referred to below), payable semiannually as aforesaid (or, at the option of the
registered holder hereof, on demand), at a rate PER ANNUM from time to time
equal to the greater of (i) 7.60% or (ii) 2% over the rate of interest publicly
announced from time to time by The Bank of New York in New York, New York (or
its successor) as its "base" or "prime" rate.

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

         This Note is one of a series of Series E Senior Notes (herein called
the "NOTES") issued pursuant to separate Note Purchase Agreements, each dated as
of October 18, 2002, (as from time to time amended, the "NOTE PURCHASE
AGREEMENTS"), between the Company and the respective purchasers named therein
and is entitled to the benefits thereof. Each holder of this Note will be
deemed, by its acceptance hereof, (i) to have agreed to the confidentiality
provisions set forth in Section 20 of the Note Purchase Agreements and (ii) to
have made the representation set forth in Section 6.2 of the Note Purchase
Agreements.

         This Note is a registered Note and, as provided in the Note Purchase
Agreements, upon surrender of this Note for registration of transfer, duly
endorsed, or accompanied by a written instrument of transfer duly executed, by
the registered holder hereof or such holder's attorney duly authorized in
writing, a new Note for a like principal amount will be issued to, and
registered in the name of, the transferee. Prior to due presentment for
registration of transfer, the Company may treat the Person in whose name this
Note is registered as the owner hereof for the


<PAGE>


purpose of receiving payment and for all other purposes, and the Company will
not be affected by any notice to the contrary.

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

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


<PAGE>


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



                                       CENEX HARVEST STATES COOPERATIVES


                                       By: _____________________________________
                                       Name:
                                       Title:



                                                                   SERIES E NOTE

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-21.1
<SEQUENCE>6
<FILENAME>cenex025288_ex21-1.txt
<DESCRIPTION>SUBSIDIARIES OF THE REGISTRANT
<TEXT>
                                  EXHIBIT 21.1
                         SUBSIDIARIES OF THE REGISTRANT

<TABLE>
<CAPTION>
                                                                                STATE OF
                                                                                INCORPORATION/
SUBSIDIARY                                                                      ORGANIZATION
- ----------                                                                      ------------
<S>                                                                             <C>
ADM/CHS, LLC                                                                    Delaware
Ag States Agency, LLC                                                           Minnesota
Ag States Agency of Montana Inc, a subsidiary of Ag States Agency LLC           Montana
Agronomy Company of Canada, Ltd.                                                Nova Scotia
Allied Agronomy, LLC                                                            North Dakota
Battle Creek/CHS, LLC                                                           Delaware
Bec-Lin of Perham, Inc.                                                         Minnesota
Cenex Ag, Inc.                                                                  Delaware
Cenex Canada, Inc.                                                              Alberta
Cenex Petroleum, Inc.                                                           Minnesota
Cenex Pipeline, LLC                                                             Minnesota
Cenex-Swiss Valley Energy, LLC                                                  Minnesota
Central Montana Propane, LLC                                                    Montana
CHS-Agri Valley                                                                 North Dakota
CHS-Chinook                                                                     Montana
CHS-Connell, Inc.                                                               Washington
CHS-Crookston                                                                   Minnesota
CHS-Devils Lake                                                                 North Dakota
CHS-Edgeley                                                                     North Dakota
CHS-Garrison                                                                    North Dakota
CHS-Glasgow                                                                     Montana
CHS-Grangeville, Inc.                                                           Idaho
CHS-Highmore                                                                    South Dakota
CHS-Jasper                                                                      South Dakota
CHS-Kalispell                                                                   Montana
CHS-Kindred                                                                     North Dakota
CHS-Lewistown                                                                   Montana
CHS-Madison                                                                     Minnesota
CHS-Philip                                                                      South Dakota
CHS-Richey                                                                      Montana
CHS-Salol/Roseau                                                                Minnesota
CHS-Sioux Falls                                                                 South Dakota
CHS-Stevensville                                                                Montana
CHS-Tracy/Garvin                                                                Minnesota
Circle Land Management, Inc.                                                    Minnesota
Cooperative Agronomy Services, LLC                                              North Dakota
Cooperative Services, LLC                                                       Delaware
Coops @ Rooster L.P.                                                            Delaware
</TABLE>


<PAGE>

<TABLE>
<CAPTION>

<S>                                                                             <C>
eYield Solutions, Inc., subsidiary of Coops @ Rooster L.P.                      Delaware
Country Energy, LLC                                                             Delaware
Country Hedging, Inc.                                                           Delaware
Dakota Agronomy Partners, LLC                                                   North Dakota
Energy Partners, LLC                                                            Montana
Farmland-Harvest States, LLC                                                    Delaware
Fin-Ag, Inc.                                                                    South Dakota
Five Valleys Gas Company                                                        Minnesota
Front Range Pipeline, LLC                                                       Minnesota
Full Circle, LTD                                                                Minnesota
Genetic Marketing Group, LLC                                                    Washington
Grain Suppliers Co, LLC                                                         Delaware
Green Bay Terminal Corporation                                                  Wisconsin
Harvest States Cooperatives Europe B.V.                                         Netherlands
Heart River LP Gas, LLC                                                         North Dakota
Horizon Milling, LLC                                                            Delaware
HSC-Edmore                                                                      North Dakota
HSC-Herman/Norcross                                                             Minnesota
HSC-Minot, N.D.                                                                 North Dakota
Kropf/CHS, LLC                                                                  Oregon
Montevideo Grain, LLC                                                           Delaware
Mountain View of Montana, LLC                                                   Delaware
National Cooperative Refinery Association (NCRA)                                Kansas
Clear Creek Transportation, LLC, a subsidiary of NCRA                           Kansas
Jayhawk Pipeline, LLC, a subsidiary of NCRA                                     Kansas
Kaw Pipeline, a subsidiary of NCRA                                              Delaware
Osage Pipeline, a subsidiary of NCRA                                            Delaware
North Valley Petroleum, LLC                                                     North Dakota
Oilseed Partners, LLC                                                           Delaware
PGG/HSC Feed Company, LLC                                                       Oregon
Sparta Foods, Inc.                                                              Minnesota
St. Paul Maritime Corporation                                                   Minnesota
Tacoma Export Marketing Company (TEMCO)                                         Washington
Tillamook/GTA Feeds, LLC                                                        Oregon
United Country Brands, LLC                                                      Delaware
Agriliance, LLC, a subsidiary of United Country Brands, LLC                     Delaware
United Harvest, LLC                                                             Delaware
United Processors, LLC                                                          Delaware
Rocky Mountain Milling, LLC, a subsidiary of United Processors, LLC             Delaware
Ventura Foods, LLC                                                              Delaware
Whitman Terminal Association, LLC                                               Delaware
</TABLE>

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-23.1
<SEQUENCE>7
<FILENAME>cenex025288_ex23-1.txt
<DESCRIPTION>CONSENT OF INDEPENDENT ACCOUNTANTS
<TEXT>
                       CONSENT OF INDEPENDENT ACCOUNTANTS


We hereby consent to the incorporation by reference in the Registration
Statements on Form S-2 (No. 333-65364) and Form S-8 (No. 333-42153) of our
report dated October 18, 2002 relating to the consolidated financial statements
of Cenex Harvest States Cooperatives for the year ended August 31, 2002, which
appear in this Annual Report on Form 10-K.




PricewaterhouseCoopers LLP


Minneapolis, Minnesota
November 21, 2002


</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-23.2
<SEQUENCE>8
<FILENAME>cenex025288_ex23-2.txt
<DESCRIPTION>INDEPENDENT AUDITORS' CONSENT
<TEXT>
                                                                    Exhibit 23.2


INDEPENDENT AUDITORS' CONSENT

We consent to the incorporation by reference in Registration Statement No.
333-65364 on Form S-2 and Registration Statement No. 333-42153 on Form S-8 of
Cenex Harvest States Cooperatives of our report dated June 19, 2002 (which
report expresses an unqualified opinion and includes an explanatory paragraph
relating to the change in the Company's method of accounting for start-up
activities in 1999) on the consolidated financial statements of Ventura Foods,
LLC and subsidiary, appearing in the Annual Report on Form 10-K of Cenex Harvest
States Cooperatives for the year ended August 31, 2002.


/s/ Deloitte & Touche LLP

Los Angeles, California
November 22, 2002

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-24.1
<SEQUENCE>9
<FILENAME>cenex025288_ex24-1.txt
<DESCRIPTION>POWER OF ATTORNEY
<TEXT>


                                POWER OF ATTORNEY

         KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below hereby constitutes and appoints John D. Johnson and John Schmitz,
and each of them, his or her true and lawful attorneys-in-fact and agents, each
acting alone, with full power of substitution and resubstitution, for him or her
and in his or her name, place and stead, in any and all capacities to sign a
Form 10-K under the Securities Act of 1933, as amended, of Cenex Harvest States
Cooperatives, and any and all amendments thereto, and to file the same, with all
exhibits thereto and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, each acting alone, full power and authority to do and perform to all
intents and purposes as he or she might or could do in person, hereby ratifying
and confirming all that said attorneys-in-fact and agents, each acting alone, or
the substitutes for such attorneys-in-fact and agents, may lawfully do or cause
to be done by virtue hereof.

Name                       Title                                Date
- ----                       -----                                ----

/s/ John D. Johnson        Chief Executive Officer              November 6, 2002
- ------------------------   (principal executive officer)
John D. Johnson

/s/ John Schmitz           Executive Vice President &           November 6, 2002
- ------------------------   Chief Financial Officer
John Schmitz               (principal financial officer)

/s/ Steve Burnet           Chairman of the Board                November 6, 2002
- ------------------------
Steve Burnet

/s/ Bruce Anderson         Director                             November 6, 2002
- ------------------------
Bruce Anderson

/s/ Robert Bass            Director                             November 6, 2002
- ------------------------
Robert Bass

/s/ Dennis Carlson         Director                             November 6, 2002
- ------------------------
Dennis Carlson

/s/ Curt Eischens          Director                             November 6, 2002
- ------------------------
Curt Eischens

/s/ Robert Elliott         Director                             November 6, 2002
- ------------------------
Robert Elliott

/s/ Robert Grabarski       Director                             November 6, 2002
- ------------------------
Robert Grabarski

/s/ Jerry Hasnedl          Director                             November 6, 2002
- ------------------------
Jerry Hasnedl


<PAGE>

/s/ Glen Keppy             Director                             November 6, 2002
- ------------------------
Glen Keppy

/s/ James Kile             Director                             November 6, 2002
- ------------------------
James Kile

/s/ Randy Knecht           Director                             November 6, 2002
- ------------------------
Randy Knecht

/s/ Leonard Larsen         Director                             November 6, 2002
- ------------------------
Leonard Larsen

/s/ Richard Owen           Director                             November 6, 2002
- ------------------------
Richard Owen

/s/ Duane Stenzel          Director                             November 6, 2002
- ------------------------
Duane Stenzel

/s/ Michael Toelle         Director                             November 6, 2002
- ------------------------
Michael Toelle

/s/ Merlin Van Walleghen   Director                             November 6, 2002
- ------------------------
Merlin Van Walleghen

/s/ Elroy Webster          Director                             November 8, 2002
- ------------------------
Elroy Webster




</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.1
<SEQUENCE>10
<FILENAME>cenex025288_ex99-1.txt
<DESCRIPTION>CAUTIONARY STATEMENT
<TEXT>

                                                                   EXHIBIT 99.1

                             CAUTIONARY STATEMENT

     CENEX HARVEST STATES COOPERATIVES (THE "COMPANY", "WE", "OUR", "US") AND
ITS REPRESENTATIVES AND AGENTS MAY FROM TIME TO TIME MAKE WRITTEN OR ORAL
"FORWARD-LOOKING STATEMENTS" AS DEFINED UNDER THE PRIVATE SECURITIES LITIGATION
REFORM ACT OF 1995 (THE ACT). WORDS AND PHRASES SUCH AS "WILL LIKELY RESULT,"
"ARE EXPECTED TO," "WILL CONTINUE," "IS ANTICIPATED," "ESTIMATE," "PROJECT" AND
SIMILAR EXPRESSIONS IDENTIFY FORWARD-LOOKING STATEMENTS. THE COMPANY WISHES TO
CAUTION READERS NOT TO PLACE UNDUE RELIANCE ON ANY FORWARD-LOOKING STATEMENTS,
WHICH SPEAK ONLY AS OF THE DATE MADE.

     THESE FORWARD-LOOKING STATEMENTS ARE SUBJECT TO RISKS AND UNCERTAINTIES
THAT COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE DISCUSSED IN THE
FORWARD-LOOKING STATEMENTS. THIS CAUTIONARY STATEMENT IS FOR THE PURPOSE OF
QUALIFYING FOR THE "SAFE HARBOR" PROVISIONS OF THE ACT AND IS INTENDED TO BE A
READILY AVAILABLE WRITTEN DOCUMENT THAT CONTAINS FACTORS WHICH COULD CAUSE
RESULTS TO DIFFER MATERIALLY FROM THOSE PROJECTED IN THE FORWARD-LOOKING
STATEMENTS. THE FOLLOWING MATTERS, AMONG OTHERS, MAY HAVE A MATERIAL ADVERSE
EFFECT ON THE BUSINESS, FINANCIAL CONDITION, LIQUIDITY, RESULTS OF OPERATIONS OR
PROSPECTS, FINANCIAL OR OTHERWISE, OF THE COMPANY. REFERENCE TO THIS CAUTIONARY
STATEMENT IN THE CONTEXT OF A FORWARD-LOOKING STATEMENT SHALL BE DEEMED TO BE A
STATEMENT THAT ANY ONE OR MORE OF THE FOLLOWING FACTORS MAY CAUSE ACTUAL RESULTS
TO DIFFER MATERIALLY FROM THOSE WHICH MIGHT BE PROJECTED, FORECASTED, ESTIMATED
OR BUDGETED BY THE COMPANY IN THE FORWARD-LOOKING STATEMENT OR STATEMENTS.

     THE FOLLOWING FACTORS ARE IN ADDITION TO ANY OTHER CAUTIONARY STATEMENTS,
WRITTEN OR ORAL, WHICH MAY BE MADE OR REFERRED TO IN CONNECTION WITH ANY
FORWARD-LOOKING STATEMENT. THE FOREGOING REVIEW OF FACTORS PURSUANT TO THE ACT
SHOULD NOT BE CONSTRUED AS EXHAUSTIVE OR AS AN ADMISSION REGARDING THE ADEQUACY
OF DISCLOSURES MADE BY THE COMPANY PRIOR TO THE EFFECTIVE DATE OF THE ACT.

     THE COMPANY UNDERTAKES NO OBLIGATION TO PUBLICLY REVISE ANY
FORWARD-LOOKING STATEMENTS TO REFLECT FUTURE EVENTS OR CIRCUMSTANCES.

     OUR REVENUES AND OPERATING RESULTS COULD BE ADVERSELY AFFECTED BY CHANGES
IN COMMODITY PRICES. Our revenues and earnings are affected by market prices
for commodities such as crude oil, natural gas, grain, oilseeds, and flour.
Commodity prices generally are affected by a wide range of factors beyond our
control, including the weather, disease, insect damage, drought, the
availability and adequacy of supply, government regulation and policies, and
general political and economic conditions. Increases in market prices for
commodities that we purchase without a corresponding increase in the prices of
our products or our sales volume or a decrease in our other operating expenses
could reduce our revenues and net income. We are also exposed to fluctuating
commodity prices as the result of our inventories of commodities, typically
grain and crude oil, and purchase and sale contracts at fixed or partially
fixed prices. At any time, our inventory levels and unfulfilled fixed or
partially fixed price contract obligations may be substantial.

     OUR OPERATING RESULTS COULD BE ADVERSELY AFFECTED IF OUR MEMBERS WERE TO
DO BUSINESS WITH OTHERS RATHER THAN WITH US. We do not have an exclusive
relationship with our members and our members are not obligated to supply us
with their products or purchase products from us. Our members often have a
variety of distribution outlets and product sources available to them. If our
members were to sell their products to other purchasers or purchase products
from other sellers, our revenues would decline and our results of operations
could be adversely affected.

     WE PARTICIPATE IN HIGHLY COMPETITIVE BUSINESS MARKETS IN WHICH WE MAY NOT
BE ABLE TO CONTINUE TO COMPETE SUCCESSFULLY. We operate in several highly
competitive business segments. Competitive factors include price, service
level, proximity to markets, product quality and marketing. In some of our
business segments, such as Energy, we compete with companies that are larger,
better known and have greater marketing, financial, personnel and other
resources. Our competitors may succeed in developing new or enhanced products
that are better than ours, and may be more successful in marketing and selling
their products than we are with ours. As a result, we may not be able to
continue to compete successfully with our competitors.

     CHANGES IN FEDERAL INCOME TAX LAWS OR IN OUR TAX STATUS COULD INCREASE OUR
TAX LIABILITY AND REDUCE OUR NET INCOME. Current federal income tax laws,
regulations and interpretations regarding the taxation of cooperatives, which
allow us to exclude income generated through business with or for a member
(patronage income) from our taxable income, could be changed. If this occurred,
or if in the future we were not eligible to be taxed as a cooperative, our tax
liability would significantly increase and our net income significantly
decrease.


<PAGE>

     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. We are
subject to numerous federal, state and local provisions regulating our business
and operations. We incur and expect to incur significant capital and operating
expenses to comply with these laws and regulations, but may be unable to pass on
those expenses to customers without experiencing volume and margin losses. For
example, in the next four years, we anticipate spending approximately $340
million in total at our McPherson, Kansas and our Laurel, Montana refineries on
upgrading the facilities, largely to comply with regulations requiring the
reduction of sulfur levels in refined petroleum products. It is expected that
over 80% of the costs will be incurred at the McPherson refinery.

     We establish reserves for the future cost of meeting known compliance
obligations, such as remediation of identified environmental issues. However,
these reserves may prove inadequate to meet our actual liability. Moreover,
amended, new or more stringent requirements, stricter interpretations of
existing requirements or the future discovery of currently unknown compliance
issues may require us to make material expenditures or subject us to
liabilities that we currently do not anticipate.

     Our failure to comply with applicable laws and regulations could subject
us to administrative penalties and injunctive relief, civil remedies including
fines and injunctions, and recalls of our products. We cannot predict what
impact, if any, future laws or regulations may have on our potential business
and operations.

     ACTUAL OR PERCEIVED QUALITY, SAFETY OR HEALTH RISKS ASSOCIATED WITH OUR
PRODUCTS COULD SUBJECT US TO LIABILITY AND DAMAGE OUR BUSINESS AND
REPUTATION. If any of our food products became adulterated or misbranded, we
would need to recall those items and could experience product liability claims
if consumers were injured as a result. A widespread product recall or a
significant product liability judgment could cause our products to be
unavailable for a period of time or a loss of consumer confidence in our
products. Even if a product liability claim is unsuccessful or is not fully
pursued, the negative publicity surrounding any assertion that our products
caused illness or injury could adversely affect our reputation with existing
and potential customers and our corporate and brand image. Moreover, claims or
liabilities of this sort might not be covered by our insurance or by any rights
of indemnity or contribution that we may have against others. In addition,
general public perceptions regarding the quality, safety or health risks
associated with particular food products, such as the concern in some quarters
regarding genetically modified crops, could reduce demand and prices for some
of the products associated with our businesses. To the extent that consumer
preferences evolve away from products that our members or we produce for health
or other reasons, such as the growing demand for organic food products, and we
are unable to develop products that satisfy new consumer preferences, there
will be a decreased demand for our products.

     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 operations are subject to business interruptions
due to unanticipated events such as explosions, fires, pipeline interruptions,
transportation delays, equipment failures, crude oil or refined product spills,
inclement weather or labor disputes. For example:

   o Our oil refineries and other facilities are potential targets for
     terrorist attacks that could halt or discontinue production.

   o Our inability to negotiate acceptable contracts with unionized workers in
     our operations could result in strikes or work stoppages.

   o The significant inventories that we carry could be damaged or destroyed
     by catastrophic events, extreme weather conditions or contamination.

     We maintain insurance against many, but not all, potential losses or
liabilities arising from these operating hazards, but uninsured losses or
losses above our coverage limits are possible. Uninsured losses and liabilities
arising from operating hazards could have a material adverse effect on our
financial position or results of operations.

     OUR COOPERATIVE STRUCTURE LIMITS OUR ABILITY TO ACCESS EQUITY CAPITAL. As
a cooperative, we may not sell common equity in our company. In addition,
existing laws and our articles of incorporation and bylaws contain limitations
on dividends of 8% of any preferred stock that we may issue. These limitations
restrict our ability to raise equity capital and may adversely affect our
ability to compete with enterprises that do not face similar restrictions.

     CONSOLIDATION AMONG THE PRODUCERS OF PRODUCTS WE PURCHASE AND CUSTOMERS
FOR PRODUCTS WE SELL COULD ADVERSELY AFFECT OUR REVENUES AND OPERATING
RESULTS. Consolidation has occurred among the producers of products we
purchase, including crude oil and grain. Consolidation could increase the price



<PAGE>

of these products and allow suppliers to negotiate pricing and other contract
terms that are less favorable to us. Consolidation also may increase the
competition among consumers of these products to enter into supply
relationships with a smaller number of producers.

     Consolidation among purchasers of our products and in wholesale and retail
distribution channels has resulted in a smaller customer base for our products
and intensified the competition for these customers. For example, ongoing
consolidation among distributors and brokers of food products and food
retailers has altered the buying patterns of these businesses, as they have
increasingly elected to work with product suppliers who can meet their needs
nationwide rather than just regionally or locally. If these distributors,
brokers, and retailers elect not to purchase our products, our sales volumes,
revenues, and profitability could be significantly reduced.

     FLUCTUATIONS IN PRICES FOR CRUDE OIL AND REFINED FUEL PRODUCTS MAY
ADVERSELY AFFECT OUR EARNINGS.  Prices for crude oil and for gasoline, diesel
fuel, and other refined petroleum products fluctuate widely. The profitability
of our energy operations depends largely on the margin between the cost of
crude oil that we refine and the selling prices that we obtain for our refined
products. Factors influencing these prices, many of which are beyond our
control, include:

     o levels of worldwide and domestic supplies;

     o capacities of domestic and foreign refineries;

     o the ability of the members of OPEC to agree to and maintain oil price and
       production controls, and the price and level of foreign imports
       generally;

     o political instability or armed conflict in oil-producing regions;

     o the level of consumer demand;

     o the price and availability of alternative fuels;

     o the availability of pipeline capacity; and

     o domestic and foreign governmental regulations and taxes.

     The long-term effects of these and other conditions on the prices of crude
oil and refined petroleum products are uncertain and ever-changing.
Accordingly, we expect our margins on and the profitability of our energy
business to fluctuate, possibly significantly, over time.

     IF OUR CUSTOMERS CHOSE ALTERNATIVES TO OUR REFINED PETROLEUM PRODUCTS OUR
REVENUES AND PROFITS MAY DECLINE. Numerous alternative energy sources currently
are being developed that could serve as alternatives to our gasoline, diesel
fuel and other refined petroleum products. If any of these alternative products
become more economically viable or preferable to our products for environmental
or other reasons, demand for our energy products would decline. Demand for our
gasoline, diesel fuel and other refined petroleum products also could be
adversely affected by increased fuel efficiencies.

     OUR AGRONOMY BUSINESS IS DEPRESSED AND COULD CONTINUE TO UNDERPERFORM IN
THE FUTURE. Demand for agronomy products in general has been adversely affected
in recent years by drought and poor weather conditions, depressed grain prices,
idle acreage and development of insect and disease-resistant crops. These
factors could cause Agriliance, LLC, an agronomy marketing and distribution
venture in which we own a minority interest, to be unable to operate at
profitable margins. In addition, these and other factors, including fluctuations
in the price of natural gas and other raw materials, an increase in recent years
in domestic and foreign production of fertilizer and intense competition within
the industry, in particular from lower-cost foreign producers, have created
particular pressure on producers of fertilizers. As a result, CF Industries,
Inc. a fertilizer manufacturer in which we hold a minority cooperative interest,
has suffered losses in recent years as it has incurred increased prices for raw
materials but has been unable to pass those increased costs on to its customers.

     TECHNOLOGICAL IMPROVEMENTS IN AGRICULTURE COULD DECREASE THE DEMAND FOR
OUR AGRONOMY PRODUCTS. Improved technological advances in agriculture could
decrease the demand for crop nutrients, and other crop input products and
services. Genetically engineered seeds that resist disease and insects or meet
certain nutritional requirements could affect the demand for crop nutrients and
crop protection products, as well as the demand for fuel to operate application
equipment.

     WE OPERATE SOME OF OUR BUSINESS THROUGH JOINT VENTURES IN WHICH OUR RIGHTS
TO CONTROL BUSINESS DECISIONS ARE LIMITED. Several parts of our business,
including in particular our agronomy business and portions of our grain
marketing, wheat milling and foods businesses, are operated through joint
ventures with unaffiliated third parties. Operating a business through a joint
venture means that we have less control over business decisions than we have in
our wholly-owned businesses. In particular, we generally cannot act on major
business initiatives in our joint ventures without the consent of the other
party or parties in that venture.



</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.2
<SEQUENCE>11
<FILENAME>cenex025288_ex99-2.txt
<DESCRIPTION>STATEMENT UNDER OATH OF CEO
<TEXT>
                                                                    EXHIBIT 99.2


STATEMENT UNDER OATH OF PRINCIPAL EXECUTIVE OFFICER AND PRINCIPAL FINANCIAL
OFFICER REGARDING FACTS AND CIRCUMSTANCES RELATING TO EXCHANGE ACT FILINGS


I, John D. Johnson, state and attest that:

         1)       To the best of my knowledge, based upon a review of the
                  covered reports of Cenex Harvest States Cooperatives, and,
                  except as corrected or supplemented in a subsequent covered
                  report:

                  o        no covered report contained an untrue statement of a
                           material fact as of the end of the period covered by
                           such report (or in the case of a report of Form 8-K
                           or definitive proxy materials, as of the date on
                           which it was filed); and

                  o        no covered report omitted to state material fact
                           necessary to make the statements in the covered
                           report, in light of the circumstances under which
                           they were made, not misleading as of the end of the
                           period covered by such report (or in the case of a
                           report on Form 8-K or definitive proxy materials, as
                           of the date on which it was filed).

         2)       I have reviewed the contents of this statement with the Cenex
                  Harvest Sates Cooperatives audit committee.

         3)       In this statement under oath, each of the following, if filed
                  on or before the date of this statement, is a "covered
                  report":

                  o        August 31, 2001 Annual Report on Form 10-K of Cenex
                           Harvest States Cooperatives;

                  o        all reports on Form 10-Q, all reports on Form 8-K and
                           all definitive proxy materials of Cenex Harvest
                           States Cooperatives filed with the Commission
                           subsequent to the filing of the Form 10-K identified
                           above; and

                  o        any amendments to any of the foregoing.



  /s/ John D. Johnson                     Subscribed and sworn to before me this
- ----------------------------              19th day of November 2002
John D. Johnson
President and Chief Executive Officer



11/19/02  Date                            /s/ Nanci L. Lilja
                                          --------------------------------------
                                          Notary Public

                                          My Commission Expires:

                                                 1/31/05

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.3
<SEQUENCE>12
<FILENAME>cenex025288_ex99-3.txt
<DESCRIPTION>STATEMENT UNDER OATH OF CFO
<TEXT>
STATEMENT UNDER OATH OF PRINCIPAL EXECUTIVE OFFICER AND PRINCIPAL FINANCIAL
OFFICER REGARDING FACTS AND CIRCUMSTANCES RELATING TO EXCHANGE ACT FILINGS


I, John Schmitz, state and attest that:

         1)       To the best of my knowledge, based upon a review of the
                  covered reports of Cenex Harvest States Cooperatives, and,
                  except as corrected or supplemented in a subsequent covered
                  report:

                  o        no covered report contained an untrue statement of a
                           material fact as of the end of the period covered by
                           such report (or in the case of a report of Form 8-K
                           or definitive proxy materials, as of the date on
                           which it was filed); and

                  o        no covered report omitted to state material fact
                           necessary to make the statements in the covered
                           report, in light of the circumstances under which
                           they were made, not misleading as of the end of the
                           period covered by such report (or in the case of a
                           report on Form 8-K or definitive proxy materials, as
                           of the date on which it was filed).

         2)       I have reviewed the contents of this statement with the Cenex
                  Harvest Sates Cooperatives audit committee.

         3)       In this statement under oath, each of the following, if filed
                  on or before the date of this statement, is a "covered
                  report":

                  o        August 31, 2001 Annual Report on Form 10-K of Cenex
                           Harvest States Cooperatives;

                  o        all reports on Form 10-Q, all reports on Form 8-K and
                           all definitive proxy materials of Cenex Harvest
                           States Cooperatives filed with the Commission
                           subsequent to the filing of the Form 10-K identified
                           above; and

                  o        any amendments to any of the foregoing.



  /s/ John Schmitz                        Subscribed and sworn to before me this
- ----------------------------              19th day of November 2002
John Schmitz
Executive Vice President
Chief Financial Officer



11/19/2002  Date                          /s/ Nanci L. Lilja
                                          --------------------------------------
                                          Notary Public

                                          My Commission Expires:

                                                 1/31/05

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.4
<SEQUENCE>13
<FILENAME>cenex025288_ex99-4.txt
<DESCRIPTION>CERTIFICATION OF CEO
<TEXT>
                                                                    EXHIBIT 99.4


                            CERTIFICATION PURSUANT TO
                  SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
                            (18 U.S.C. SECTION 1350)


In connection with the Annual Report of Cenex Harvest States Cooperatives (the
"Company"), on Form 10-K for the year ending August 31, 2002 as filed with the
Securities and Exchange Commission on November 25, 2002 (the "Report"), I, John
D. Johnson, President and Chief Executive Officer of the Company, certify,
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. Section
1350), that to my knowledge:

         (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 result of
                  operations of the Company.


/s/  John D. Johnson
- ------------------
John D. Johnson
President and Chief Executive Officer
November 25, 2002

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.5
<SEQUENCE>14
<FILENAME>cenex025288_ex99-5.txt
<DESCRIPTION>CERTIFICATION OF CFO
<TEXT>
                                                                    EXHIBIT 99.5


                            CERTIFICATION PURSUANT TO
                  SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
                            (18 U.S.C. SECTION 1350)


In connection with the Annual Report of Cenex Harvest States Cooperatives (the
"Company"), on Form 10-K for the year ending August 31, 2002 as filed with the
Securities and Exchange Commission on November 25, 2002 (the "Report"), I, John
Schmitz, Executive Vice President and Chief Financial Officer of the Company,
certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C.
Section 1350), that to my knowledge:

         (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 result of
                  operations of the Company.


/s/  John Schmitz
- ------------------
John Schmitz
Executive Vice President and Chief Financial Officer
November 25, 2002

</TEXT>
</DOCUMENT>
</SEC-DOCUMENT>
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