In choosing the Call Option, Member may choose to place all or a portion of the cotton to be delivered on any farm serial number on call the December futures contract. If Member elects to utilize Staplcotn's Call Option, Member commits to deliver and Staplcotn commits to receive delivery of a specific quantity of bales of cotton for marketing in Staplcotn's Call Option, but Member chooses to retain some of his rights to set the price which he will receive for that cotton. The final date to sign up in the Call Option is March 31 of the year in which the crop is to be planted, unless closed earlier by the Board of Directors.

Member acknowledges the risks and uncertainties of the cotton market, and actual marketing opportunities that develop may be different than those expected by Member at the time of committing his bales to the Call Option. Member's results could be materially and adversely affected by numerous market and industry factors outside of his control.

A Call Option Member may designate all or any portion of any farm serial number for marketing in the Call Option. The number of bales for a farm serial number that may be designated for the Call Option will be determined by calculating expected yield by the farm's intended planted acreage. The "expected yield" will be calculated using the five year average yields for the farm serial number whenever this information is available.

For all bales designated for marketing in the Call Option, Member reserves the right to establish a fixation price based on the No. 2 ICE Futures U.S. futures market contract month quotation for December; provided, however, Member agrees not to establish a fixation price on any of such bales prior to July 1 of the calendar year immediately preceding planting, and Member agrees not to establish a fixation price on more than 25% of the number of bales designated for the Call Option prior to December 1 of the calendar year immediately preceding planting. It is understood and agreed that the price of the cotton will remain unfixed until the Member instructs Staplcotn as to the price at which to fix and the fixation order is successfully executed. A fixation price is not established until Staplcotn issues a call confirmation in writing. If a fixation price based on the December ICE Futures U.S. futures market contract month quotation is not established by the Member as of the close of trading on the last trading day of October following planting, then it is agreed that Member's right to call such bales shall expire automatically and Member authorizes Staplcotn to establish the fixation price in any manner it deems necessary. Member understands and agrees that before harvest, the Board of Directors will set an advance basis for cotton placed in the Call Option. Any progress payments will be on the basis as merchandising gains are realized. The difference between the futures market contract month quotation and the final price paid will be determined by Staplcotn's Board of Directors.

Member agrees that cotton designated for the Call Option shall be fixed in 100 bale increments approximating 50,000 pounds, basis the December contract. If less than 100 bales remain unfixed, then one fixation can be made to cover this amount of less than 100 bales. Staplcotn has the right to adjust the number of bales for each price fixation if such an adjustment is deemed necessary by Staplcotn to meet weight requirements; however, Staplcotn has no obligation to make such an adjustment.

When a fixation price for a stated number of bales is established, the Member agrees to deliver the stated number of bales. As cotton is received, fixations will be filled in the order in which they were made. Member shall deliver first cotton harvested in performance of Member's obligations for cotton designated for marketing in the Call Option. Member agrees to immediately notify Staplcotn if production will be less than number of Call Option bales fixed. Excess fixations will be lifted by Staplcotn immediately upon such notification, but not later than December 31 of the year in which the crop was planted or upon completion of harvest and ginning, with any loss for the account of the producer.

Member agrees and understands that Staplcotn, in reliance on this Call Option Contract and the fixations hereunder, will enter into offsetting contractual commitments, and should the Member fail to deliver the stated number of bales confirmed, Member agrees to pay to Staplcotn, on demand, any and all losses or damages suffered by reason of the Member's failure to so deliver. Inasmuch as damages would be difficult to calculate, it is agreed that the liquidated damages provisions of the Membership and Marketing Agreement shall be applicable in the event of a breach of the terms of the Call Option by the Member. With respect to the non-delivery of bales of cotton designated for marketing in the Call Option for which the price has been fixed by the Member, it is further agreed that in addition to the liquidated damages, Member shall be liable to Staplcotn for any and all losses and expenses suffered by Staplcotn relating to any hedging transaction entered into with respect to the bales of cotton for which the price has been fixed by the Member.

Member may elect by March 31 of the calendar year in which the crop is to be planted to change marketing options from the Call Option to the Seasonal Option for any unfixed bales; provided, however, the total number of unfixed bales for which the marketing option may be changed from the Call Option to the Seasonal shall be limited to a number that does not exceed sixty percent (60%) of the expected yield, as defined above. In order to change marketing options, Member must have executed a Staplcotn Option Change Form by the said March 31 date.

All remedies of Staplcotn in the enforcement of this contract, both injunctive and for damages, shall be cumulative and not exclusive, including Staplcotn's right to an injunction to prevent a breach and to a decree of specific performance to enforce this agreement all as provided for in the Membership and Marketing Agreement.

Death of Member shall not in any way terminate or limit the obligation of Member hereunder and this agreement shall bind the heirs, administrators, executors, and successors in interest and assigns of Member. Successors in interest shall include, but not to be limited to, any person or entity gaining actual or physical possession and control over the cotton covered by this agreement, and shall specifically include lessees, donees, and grantees of Members as well as assignees for the benefit of creditors, trustees in bankruptcy, court appointed keepers and general or secured creditors. Persons coming into possession shall be treated as successors in interests whether their possessory interest is voluntarily or involuntarily acquired and whether or not said possession results from judgments or agreements that predate this agreement.

No event, act of God, occurrence, contingency, or circumstances whatsoever, shall relieve or excuse Member from making delivery of the cotton covered by this Call Option contract, and no such event shall constitute or be a legal defense in any action for damages or injunctive relief by Staplcotn for non-delivery of cotton.

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