Exhibit 10.27
 
 
 
 
AN SUPPLY AGREEMENT*
 
BETWEEN
 
ORICA INTERNATIONAL PTE LTD.
 
AND
 
EL DORADO CHEMICAL COMPANY
 
 
JANUARY 1, 2010
 
 
 *INFORMATION IN THIS DOCUMENT HAS BEEN OMITTED FROM THIS PUBLIC FILING PURSUANT
TO A REQUEST BY THE COMPANY FOR CONFIDENTIAL TREATMENT BY THE SECVURITIES AND
EXCHANGE COMMISSION. THE OMITTED INFORMATION HAS BEEN FILED SEPARATELY WITH THE
SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION FOR PURPOSES OF SUCH REQUEST
  1

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INDEX
 

   
Page
      1.0 References and Definitions 4      
2.0
Term
4
 
   
3.0
Supply of Ammonia by Orica 
5
     
4.0
Supply of AN by EDC
8
      5.0 Representations and Warranties  11
 
 
 
6.0
Ammonia Purity and Warranty
13
     
7.0
AN Purity and Warranty
14
     
8.0
Remedies for Noncompliance
15
 
      9.0 Quantity Measurement   16       10.0 Ammonia Delivery, Risk and Title
 17
 
 
 
11.0
AN Delivery, Risk and Title
17
     
12.0
Intentionally Left Blank 
 18
     
13.0
Contract Administration
18
     
14.0
Payments
19
     
15.0
Force Majeure
22
     
16.0
Termination
22
     
17.0
Hardship
24
      18.0
Insurance 
24      
19.0
 Dispute Resolution
27
     
20.0
Confidential Information and Announcements
27
      21.0 Security Interest 29       22.0 Safety, Health and Environment  29  
                                 

          

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23.0 Communications  31       24.0 Headings  32       25.0 Rules of
Interpretation  33       26.0 Governing Law 33       27.0 Assignment and Sale 
33       28.0 Time of Essence 34       29.0 Effect of this Agreement  34      
30.0 Waiver 34       31.0 Amendment and Severability 35        32.0 Entire
Agreement 35             

 
  

Schedule “A”
Definitions

Schedule “B”
Product Specifications

Schedule “C”
***

Schedule “C-1” 
Year 2010 Annual Budget

Schedule “D”
Measurement of Ammonia and Ammonium Nitrate Deliveries

Schedule “E” 
Types of Unusual Incidents to be Reported to Orica

Schedule “F”
True Up Report

Schedule “G”
Capital Cost Recovery for Specified Assets

 

 
 
Page 3
 
***INDICATES CERTAIN INFORMATION IN THIS DOCUMENT WHICH HAS BEEN OMITTED FROM
THIS PUBLIC FILING PURSUANT TO A REQUEST BY THE COMPANY FOR CONFIDENTIAL
TREATMENT BY THE SECURITIES AND EXCHANGE COMMISSION. THE OMITTED INFORMATION HAS
BEEN FILED SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE
COMMISSION FOR PURPOSES OF SUCH REQUEST.
 
 
 

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This AN Supply Agreement is made effective as of the 1st day of January, 2010
 
BETWEEN:
 
                      ORICA INTERNATIONAL PTE LTD.,
                      a corporation incorporated under the laws of Singapore
                      (“Orica”)
 
AND:
 
                      EL DORADO CHEMICAL COMPANY,
                      a corporation incorporated under the laws of Oklahoma
                      (“EDC”)
 
WHEREAS:
 
(a)
Orica requires AN Prills, HDAN and AN Solution for its commercial explosives
business; and

 
(b)
EDC wishes to manufacture AN Prills, HDAN and AN Solution for delivery to Orica.

 
NOW THEREFORE, in consideration of the mutual covenants contained in this
Agreement, Orica and EDC agree as follows:
 
1.0  
REFERENCES AND DEFINITIONS

 
1.1  
Capitalized words used in this Agreement and in the Schedules hereto, unless
otherwise defined herein, have the definition given to those words in Schedule
“A”.

 
1.2  
This Agreement has the following Schedules which are a part hereof:

 
Schedule “A”               Definitions
Schedule “B”                Product Specifications
 
Schedule “C”
*** Calculation and *** Calculation

Schedule “C-1”             Year 2010 Annual Budget
 
Schedule “D”
Measurement of Ammonia and Ammonium Nitrate Deliveries

Schedule “E”                Types of Unusual Incidents to be Reported to Orica
 
Schedule “F”
True Up Report

 
Schedule “G”
***

 
2.0  
TERM

 
2.1  
This Agreement shall become effective as of January 1, 2010 and, unless earlier
terminated in accordance with the provisions hereof, shall continue for an
initial term (“Initial Term”) ending on December 31, 2014. Thereafter the term
of this

 

Page 4
 
***INDICATES CERTAIN INFORMATION IN THIS DOCUMENT WHICH HAS BEEN OMITTED FROM
THIS PUBLIC FILING PURSUANT TO A REQUEST BY THE COMPANY FOR CONFIDENTIAL
TREATMENT BY THE SECURITIES AND EXCHANGE COMMISSION. THE OMITTED INFORMATION HAS
BEEN FILED SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE
COMMISSION FOR PURPOSES OF SUCH REQUEST.
 
 
 

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Agreement shall be automatically extended (as so extended, the “Term”) until
either party delivers a written notice of termination to the other; provided
that, except as provided in Section 16 hereof, the effective date of termination
in said notice shall never be earlier than December 31, 2014 and such notice
shall be given at least 2 years prior to the intended date of termination.  For
example only, if Orica or EDC gives the other notice of termination on July 15,
2013, the effective date of termination would be July 15, 2015.
 
2.2  
Notwithstanding the termination of this Agreement, the unfulfilled rights and
undischarged obligations of the parties that accrue during the Term shall
continue following the termination hereof until the same are fulfilled or
discharged.

 
3.0  
SUPPLY OF AMMONIA BY ORICA

 
3.1
The current term of the Koch Ammonia Agreement expires on December 31,
2010.  The Koch Ammonia Agreement contemplates that EDC will purchase
approximately 45,000 Tons of Ammonia that will be used in the production of AN
to be purchased by Orica under this Agreement.  . The cost to EDC of such
Ammonia shall be included in the amounts owed by Orica to EDC under Section
14.2.1 (a) of this Agreement.

 
3.1.1
Orica is not and shall not be deemed to be a party to the Koch Ammonia
Agreement.

 
3.1.2
Orica acknowledges and agrees that, prior to December 31, 2010, Orica shall not
be permitted to supply its own Ammonia in substitution for the 45,000 Tons of
Ammonia to be supplied under the Koch Ammonia Agreement nor require EDC to
supply the 50,000 Tons of Ammonia Orica will supply from another supplier, in
either case without the consent of KNC/KNI.

 
3.1.3
EDC will provide to Orica material information in EDC’s possession regarding the
operation of the Koch Ammonia Agreement and will provide copies to Orica of any
material notices or other correspondence EDC receives from or issues to KNC/KNI
in respect of the Koch Ammonia Agreement.

 
3.1.4
EDC shall consult with Orica prior to the exercise by EDC of any of the rights
conferred upon it pursuant to Sections I.H, VI.D, VII.A, XI.B, XII and XIV of
the Koch Ammonia Agreement.

 
3.1.5
EDC shall not, without obtaining Orica’s prior written approval, exercise any of
the rights conferred upon it pursuant to Sections I.P, II.B, III.B (unless the
resale, transfer, exchange or assignment does not affect Ammonia to be supplied
to Orica), V.B, or XV (unless any such amendment has no effect on Orica) of the
Koch Ammonia Agreement relating to the 45,000 Tons of Ammonia to be supplied by
EDC to Orica prior to December 31, 2010.

 

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3.1.6
EDC shall be solely responsible for any costs or expenses claimed against EDC by
KNC/KNI pursuant to Article XI Section A of the Koch Ammonia Agreement, except
to the extent that any such costs or expenses are directly attributable to any
failure by Orica to timely make payment to EDC in accordance with Section 3.6 of
this Agreement.

 
3.1.7
Notwithstanding any other provision of this Agreement and unless otherwise
agreed in writing, EDC shall not be obligated to supply Ammonia hereunder for
the manufacture of AN for Orica (a) if EDC fails to provide Ammonia prior to
December 31, 2010 but such failure is not caused by any default of EDC under the
Koch Ammonia Agreement or (b) after December 31, 2010.

 
3.2
Prior to December 31, 2010, Orica will supply 50,000 Tons of Ammonia to EDC from
a supplier other than KNI/KNC and EDC agrees to accept deliveries of such
Ammonia in the same manner as in Section 3.4 of this Agreement.  The cost to EDC
of such Ammonia shall be included in the amounts owed by Orica to EDC under
Section 14.2.1 (b) of this Agreement.

 
3.3
From and after January 1, 2011, to the extent Ammonia is available from EDC’s
supplier or suppliers at costs acceptable to Orica (which shall not exceed EDC’s
delivered to the EDC Site cost of Ammonia from EDC’s supplier), EDC shall
acquire up to 58,000 Tons of Ammonia for use to manufacture AN for Orica under
this Agreement for such periods as shall be requested by Orica. For the 58,000
Tons of Ammonia EDC is supplying, Orica shall give EDC at least 45 days’ advance
notice of the quantities of Ammonia Orica requires EDC to acquire to be used by
EDC for manufacturing AN for Orica.  The cost to EDC of such Ammonia shall be
included in the amounts owed by Orica to EDC under Section 14.2.1 (a) of this
Agreement.

 
3.4
From and after January 1, 2011, and subject to the terms and conditions hereof,
Orica shall  supply to EDC, and EDC shall receive from Orica, up to 58,000 Tons
of Ammonia from a supplier other than KNI/KNC at the times as required by EDC
for conversion by EDC to meet Orica’s demand for AN hereunder.  EDC shall
provide Orica with at least 30 days’ advance notice of (a) the quantities of
Ammonia it requires during the succeeding one-month period to meet Orica’s
demand for AN and (b) the required delivery dates of such Ammonia.  The parties
shall cooperate in arranging such Ammonia deliveries.  Upon delivery Orica shall
sell such Ammonia to EDC and EDC shall pay Orica for such Ammonia on or before
the first day of the second Month succeeding the Month in which such Ammonia was
delivered to EDC by Orica e.g. January Ammonia deliveries are paid for on March
1st. The cost to EDC of such Ammonia shall be included in the amounts owed by
Orica to EDC under Section 14.2.1 (b) of this Agreement.

 
3.5
If when Orica is supplying Ammonia, Orica is unable to supply the required
Ammonia, or if when EDC is supplying Ammonia, EDC is unable to acquire and
supply sufficient Ammonia from its supplier, Orica may request EDC to utilize

 

Page 6
 
 
 

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EDC's Ammonia stored at the EDC Site and intended for the production of products
for EDC, and upon such request and to the extent EDC has available Ammonia in
its reasonable discretion. EDC shall supply such Ammonia for use under this
Agreement.
 
3.6
If EDC is supplying Ammonia from its supplier, Orica shall reimburse EDC for its
actual out of pocket delivered to the EDC Site cost of such Ammonia within the
earlier of (a) eighteen (18) days from the Monday during the week KNC’s /KNI’s
invoice is prepared under the Koch Ammonia Agreement and faxed to EDC, or (b)
three (3) days before the date required by the payment terms in the Koch Ammonia
Agreement. If the payment due date is not a Business Day,  Orica shall make the
payment on the next Business Day.

 
3.7
Based on the current Ammonia conversion efficiency of the EDC Plant and with the
current onsite equipment, the parties agree that for each Ton of AN to be
manufactured by EDC for Orica, EDC will require *** of a Ton of Ammonia which
shall include the Ammonia utilized in the SCR abatement system.

 
3.8
When Orica is independently sourcing and delivering Ammonia to the EDC Site, and
for the purpose of storing that Ammonia, Orica shall be entitled to use 35% of
the available Ammonia storage capacity at EDC’s Site during the Term.  As of the
date of this Agreement, such useable Ammonia storage capacity is 10,000 Tons and
so Orica is entitled to use storage capacity of 3,500 Tons.  EDC shall at all
times during the Term when Orica is supplying its own ammonia to the EDC Site,
maintain an aggregate Ammonia storage capacity available to Orica at the EDC
Site of at least 3,500 Tons, less any temporary reduction in Ammonia storage
capacity as required by safety, inspection and maintenance procedures.  EDC
shall use its commercially reasonable efforts to limit the duration of any such
storage capacity reductions.  If Orica requires additional ammonia storage
capacity to be installed at the EDC Site, this requirement shall be subject to a
future negotiation between the parties.  When Orica is using EDC’s Ammonia
storage facilities for Orica’s benefit, Orica will pay to EDC the pro-rata
variable and *** associated with the operation of these facilities.

 
4.0  SUPPLY OF AN BY EDC
 
4.1
During the Term, EDC shall reserve for Orica under this Agreement at the EDC
Site and the EDC Plant:

 
(a) 250,000 Tons per annum of AN manufacturing capacity (“Reserved Capacity”);
 
(b) approximately 197,500 Tons per annum of nitric acid for use in manufacturing
the Reserved Capacity; and
 

Page 7
 
***INDICATES CERTAIN INFORMATION IN THIS DOCUMENT WHICH HAS BEEN OMITTED FROM
THIS PUBLIC FILING PURSUANT TO A REQUEST BY THE COMPANY FOR CONFIDENTIAL
TREATMENT BY THE SECURITIES AND EXCHANGE COMMISSION. THE OMITTED INFORMATION HAS
BEEN FILED SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE
COMMISSION FOR PURPOSES OF SUCH REQUEST.
 
 
 

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(c) the full manufacturing capacity of the AN Prills Plant for the manufacture
of AN Prills.
 
4.2
EDC shall use its commercially reasonable efforts to ensure that the EDC Site
and EDC Plant are capable of manufacturing the Reserved Capacity at all times
during the Term, and that sufficient nitric acid manufacturing capacity at the
EDC Site is at all times made available during the Term to allow the
manufacturing of the Reserved Capacity, provided that Orica supplies, directly
or through EDC, the necessary Ammonia to the EDC Site.  During the Term, EDC
shall operate the EDC Site in substantial compliance with all applicable Laws
and good industry practices, and with all agreements relating thereto or by or
to which EDC is bound or a party.  The parties acknowledge and agree that Orica
shall not participate in, or have any control over, the AN manufacturing
process.

 
4.3
Orica shall determine the rate at which the AN Prills Plant will operate
provided that Orica will endeavor to avoid and minimize both the frequency and
duration of any cessation of production.  Cessation and resumption of production
will be subject to the following:

 
 
(a)  Orica will provide no less than:

 
 
(i) 2 days notice to EDC to have AN Prills production reduced or increased by up
to 10%;

 
 
(ii) 5 days notice to EDC to have AN Prills production reduced by an amount over
10% down to the minimum production rate of approximately 400 Tons per day, or
increased by an amount over 10% up to the maximum production rate of
approximately 900 Tons per day, such production rates being subject to the
impact of seasonal (ambient temperature and humidity) effects on the process and
the availability of higher strength nitric acid to achieve a minimum AN Solution
strength of 88 percent; and

 
 
(iii) 10 days notice to EDC to have AN Prills production shutdown.  Upon receipt
of such notice, and if EDC is supplying Ammonia to Orica, EDC will provide
notice to its then-current Ammonia and Ammonia pipeline transportation
supplier(s) of the reduction of Ammonia demand. Orica’s notice to EDC will also
specify the expected duration of the shutdown, if known, and Orica must give EDC
4 days notice prior to Orica’s requested date for restart of the AN Prills
Plant.  During a cessation of production, EDC shall obtain Orica’s approval
prior to commencing any optional maintenance or optional repair work which
cannot be completed within 4 days from receiving an Orica notice to restart the
AN Prills Plant.

 
 
(b) In order to enable EDC to mitigate costs resulting from a production
shutdown at the AN Prills Plant, Orica will use reasonable efforts to provide
EDC with as

 

Page 8
 
 
 

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much prior notice as possible if Orica expects to purchase less than 17,500 Tons
of AN Prills during any Month.
 
(c) If the cessation or resumption of production causes EDC to directly incur
*** costs in excess of amounts budgeted for the operation of the AN Prills Plant
then those additional fixed or variable costs shall be billed to and paid by
Orica as ***, net of any credits owing by EDC to Orica for ***.
 
(d)  To resume production after a cessation of production, the Parties will
cooperate to achieve an orderly start up and to arrange availability of
transportation equipment.
 
4.4
Orica shall pay to EDC the *** calculated in accordance with Schedule “C” hereof
for each Ton of Ammonium Nitrate delivered to Orica which conforms to the
Specifications set forth in Schedule “B” hereto and otherwise in accordance with
this Agreement.  Orica shall also pay to EDC the *** as set forth in Schedule
“C” hereto.

 
4.5
Provided that Orica timely supplies Ammonia in the quantities required and
meeting the quality specifications set forth in Schedule “B” hereto, and Orica
is otherwise in compliance with this Agreement, EDC shall deliver to Orica AN
produced by EDC in the quantities and at the times required by Orica and
provided for herein, except to the extent excused by the terms of this Agreement
or any applicable Law prohibiting or preventing the manufacture of AN generally,
but in no event at a rate in excess of the operating capacity of the EDC Plant
and quantities that can be shipped from any storage.

 
4.6
No changes shall be made by EDC to the additives in, or the coatings on, the AN
Prills without prior written notice to and the prior written consent of Orica.

 
4.7
The Ammonium Nitrate supplied to Orica shall be in the form of AN Solution, AN
Prills and/or HDAN.  Orica may elect to take the AN as AN Prills, HDAN or AN
Solution, at its discretion and as designated by Orica at least 15 days in
advance of the first day of a production Month, provided however that Orica
shall have the right to take a maximum Yearly quantity of 12,000 Tons of HDAN
and a maximum Monthly quantity of 1,000 Tons of HDAN as part of the Reserved
Capacity and at the pricing for HDAN in Schedule “C” hereto.  At Orica’s request
and at EDC’s election, EDC may supply additional quantities of HDAN to Orica for
use in the commercial explosives industry at the pricing for HDAN in Schedule
“C” hereto which quantities above 12,000 Tons of HDAN per Year, if supplied,
shall not be part of the Reserved Capacity.  EDC and Orica acknowledge that the
mix of AN designated by Orica may vary from Month to Month but in no event shall
the AN Prills volume designated by Orica for a Month exceed the AN Prills Plant
capacity for a Month.  For purposes of the AN to be delivered under this

 

Page 9
 
***INDICATES CERTAIN INFORMATION IN THIS DOCUMENT WHICH HAS BEEN OMITTED FROM
THIS PUBLIC FILING PURSUANT TO A REQUEST BY THE COMPANY FOR CONFIDENTIAL
TREATMENT BY THE SECURITIES AND EXCHANGE COMMISSION. THE OMITTED INFORMATION HAS
BEEN FILED SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE
COMMISSION FOR PURPOSES OF SUCH REQUEST.
 
 
 

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Agreement, one Ton of AN Solution, on a 100% basis, shall be deemed the
equivalent replacement of one Ton of AN Prills.
 
4.8
Orica shall be the sole marketer to the commercial explosives industry of AN
Solution and AN Prills manufactured at the EDC Site. Orica shall be the sole
marketer to the commercial explosives industry of HDAN manufactured at the EDC
Site and destined for use in the United States, Canada and Mexico (“North
America”).  EDC shall refer to Orica any inquiries EDC receives during the Term
concerning the supply by EDC of AN from the EDC Site to commercial explosives
customers for use in North America.  Subject to Section 4.7 above, Orica shall
have the right to purchase HDAN, at the HDAN price herein, for use in the
commercial explosives industry outside North America.  EDC will not sell any
nitric acid manufactured at the EDC Site to anyone for use in North America if
EDC knows that such party will use such nitric acid for the manufacture of AN
Solution for conversion into emulsion explosives, provided that nothing herein
is intended to prevent or limit the sale by EDC of nitric acid or nitric acid
mixtures for use in the production of ordnance or for use in the production of
nitrated explosives for the commercial explosives industry.  However if
regulatory changes occur in the United States after the date of this Agreement
which changes have the effect of totally or substantially preventing the
manufacture of HDAN at the EDC Site, or substantially negatively impact the
commercial viability of the sale or distribution of HDAN from the EDC Site, with
the result that EDC’s requirement for nitric acid for use to manufacture HDAN is
substantially lessened, then if EDC desires to sell such nitric acid for use in
the production of commercial explosives, EDC will offer such available nitric
acid to Orica and if Orica elects not to purchase such nitric acid, then EDC
shall be free to sell such nitric acid without restriction.

 
4.9
All AN Prills supplied to Orica shall be manufactured using EDC’s current
technology, and shall meet the specifications set forth in the AN Prill
Specifications set forth on Schedule “B” hereto  Orica’s rights and EDC’s
liabilities and obligations with respect to AN Prills which do not meet the AN
Prill Specifications shall be governed by Section 8.1.

 
5.0           REPRESENTATIONS AND WARRANTIES
 
5.1           EDC represents and warrants to Orica that:
 
5.1.1
EDC is duly organized, validly existing, and in good standing under the laws of
the State of Oklahoma, and has all requisite power and authority to own and
lease the properties and assets it currently owns and leases, including at the
EDC Site, and to conduct its activities as such activities are currently
conducted.

 
5.1.2
EDC has all requisite corporate power, authority and capacity to execute,
deliver, and perform this Agreement and to consummate the transactions
contemplated hereby.  The execution, delivery, and performance of this Agreement
and the

 

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consummation of the transactions contemplated hereby by EDC have been duly and
validly authorized by all necessary action on the part of EDC (including
approval by the board of directors and shareholders of EDC), and this Agreement
has been duly and validly executed and delivered by EDC, and is the valid and
binding obligation of EDC, enforceable against EDC in accordance with its terms,
subject to applicable laws of bankruptcy, insolvency and similar laws affecting
creditors’ rights and remedies generally.

 
5.1.3
The execution, delivery, and performance by EDC of this Agreement does not and
will not (i) conflict with or violate any provision of the articles of
incorporation or bylaws of EDC; (ii) violate any provision of any Laws;
(iii) conflict with, violate, result in a breach of, constitute a default under
(without regard to requirements of notice, lapse of time, or elections of other
persons, or any combination thereof) or accelerate or permit the acceleration of
the performance required by, any material contracts to which either EDC is a
party or by which either EDC or the EDC Site are bound or affected; (iv) result
in the creation or imposition of any lien against or upon the EDC Site or any
portion thereof, or the Ammonia, or the AN; or (v) require any consent,
approval, or authorization of, or filing of any certificate, notice,
application, report, or other document with, any Government or other person.

 
5.1.4
EDC is currently in compliance with all Laws applicable to the ownership and
operation of the EDC Site, except for such non-compliance as would not have a
material adverse effect on EDC’s ability to perform hereunder, and EDC is not
subject to any Law, judgment, decree or sanction that would preclude the
delivery, receipt and processing of the Ammonia, or any of the other activities
contemplated to be performed by it under the Agreement.

 
5.2           Orica represents and warrants to EDC that:
 
5.2.1
Orica is duly organized, validly existing, and in good standing under the laws
of Singapore, and has all requisite power and authority to own and lease the
properties and assets it currently owns and leases and to conduct its activities
as such activities are currently conducted.

 
5.2.2
Orica has all requisite corporate power, authority and capacity to execute,
deliver, and perform this Agreement and to consummate the transactions
contemplated hereby.  The execution, delivery, and performance of this Agreement
and the consummation of the transactions contemplated hereby by Orica have been
duly and validly authorized by all necessary action on the part of Orica
(including approval by the board of directors and shareholders of Orica), and
this Agreement has been duly and validly executed and delivered by Orica, and is
the valid and binding obligation of Orica, enforceable against Orica in
accordance with its terms, subject to applicable laws of bankruptcy, insolvency
and similar laws affecting creditors’ rights and remedies generally.

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5.2.3
The execution, delivery, and performance by Orica of this Agreement does not and
will not (i) conflict with or violate any provision of the articles of
incorporation or bylaws of Orica; (ii) violate any provision of any Laws;
(iii) conflict with, violate, result in a breach of, constitute a default under
(without regard to requirements of notice, lapse of time, or elections of other
persons, or any combination thereof) or accelerate or permit the acceleration of
the performance required by, any material contracts to which either Orica is a
party or by which Orica is bound or affected; (iv) result in the creation or
imposition of any lien against or upon the Ammonia or AN; or (v) require any
consent, approval, or authorization of, or filing of any certificate, notice,
application, report, or other document with, any Government or other person.

 
5.2.4
Orica is currently in compliance with all Laws applicable to the ownership and
operation of Orica’s business, except for such non-compliance as would not have
a material adverse effect on Orica’s ability to perform hereunder and Orica is
not subject to any Law, judgment, decree or sanction that would preclude the
delivery of the Ammonia and receipt of the AN, or any of the other activities
contemplated to be performed by it under the Agreement.

 
5.2.5
Orica shall also deliver to EDC during the Term within 15 days after the release
of Orica Limited’s results to the Australian stock exchange, annual (as of
September 30) and semi-annual (as of March 31), consolidated balance sheets,
income statements and statements of cash flow for Orica and for any subsidiary
of Orica in which it then owns at least 51% of the equity interest (“Financial
Statements”).  The Financial Statements shall be audited and prepared in
accordance with Australian generally accepted accounting principles, and signed
by an authorized financial officer of Orica.  Orica shall also deliver to EDC
during the Term within 15 days after the preparation thereof, quarterly (as of
December 31 and June 30) Financial Statements. Without limiting the generality
of the other confidentiality provisions of this Agreement, EDC acknowledges and
agrees that the December 31 and June 30 Financial Statements contain highly
confidential non-public information, and covenants that it shall not, and it
shall cause its officers, directors, employees, agents and representatives not
to, disclose the Financial Statements or information contained therein to any
person or entity other than EDC’s officers for the purposes of conducting
periodic credit reviews, on a need to know basis, nor use such Financial
Statements to the detriment of Orica nor for any other purpose.

 
6.0 
AMMONIA PURITY AND WARRANTY

 
6.1
Orica warrants that the Ammonia delivered by Orica to EDC from time to time
hereunder will be delivered by pipeline and will conform to the Ammonia
Specifications set forth in Schedule “B” hereto.  EDC agrees to use the same
efforts it expends on its own behalf  to ensure that the Ammonia acquired and
supplied by EDC to Orica will conform to the Ammonia Specifications set forth in
Schedule “B” hereto. EDC shall reject any ammonia from its supplier which does

 

Page 12
 
 
 

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not conform to such specifications, and shall be responsible for arranging with
its supplier adequate supplies of conforming replacement Ammonia. Such Ammonia
will be shipped by pipeline provided such pipeline is available for shipments.

 
6.2
Orica shall use commercially reasonable efforts, at its own expense, to cause
its Ammonia supplier to provide a certificate of analysis. Further, at its own
expense, Orica shall periodically cause such Ammonia to be analyzed prior to
delivery into EDC’s storage tank as may be reasonably required by EDC and the
report of such analysis shall be provided to EDC upon request.  Additional
sampling and subsequent analysis of the Ammonia may be conducted by EDC in its
discretion in accordance with standard methods of the American Society of
Testing Materials, or by such other methods as may be agreed by Orica and
EDC.  EDC and Orica will retain any samples that such party takes for at least
60 days from the date of delivery to be analyzed if a dispute arises as to the
quality of the Ammonia.

 
6.3
If, based on the supplier’s certificate of analysis or the analysis of the
samples by EDC, any ammonia delivered by Orica to EDC does not meet the Ammonia
Specifications, EDC shall, as soon as practicable following such determination,
notify Orica in writing that such ammonia does not meet such
Specifications.  Orica shall be solely responsible for any demurrage, freight or
transportation costs, removal costs, tank cleaning costs and other costs which
are a direct result of Orica’s delivery of nonconforming Ammonia.  If EDC does
not notify Orica that such ammonia does not meet the Ammonia Specifications
within 30 days after delivery to the EDC Site, the Ammonia shall be deemed to
meet the Ammonia Specifications.  In the event that Orica disagrees with EDC’s
analysis, Orica will give EDC notice within 30 days of receipt of EDC’s notice,
in which event the sample retained by EDC will be, and any sample retained by
Orica may be, submitted for independent analysis to a mutually acceptable
commercial laboratory.  The laboratory’s analysis of such sample or samples
shall be final and binding on the parties.  The cost of the laboratory’s
independent analysis will be borne by Orica if the ammonia is off-specification
and by EDC if the Ammonia meets the Specifications.

 
6.4
Orica warrants that it has good title to, and the right to supply, all Ammonia
delivered or supplied by Orica to EDC from time to time hereunder free and clear
of all Claims, liens, security interests, encumbrances and charges.

 
6.5
EXCEPT AS SPECIFICALLY PROVIDED IN SUBSECTIONS 5.2, 6.1 and 6.4 HEREOF, ORICA
MAKES NO, AND HEREBY DISCLAIMS ANY, REPRESENTATION OR WARRANTY, EXPRESS OR
IMPLIED, STATUTORY OR OTHERWISE, RELATING TO THE AMMONIA DELIVERED BY ORICA OR
SUPPLIED TO EDC BY ORICA HEREUNDER INCLUDING, WITHOUT LIMITATION, WARRANTIES AS
TO CONDITION, QUANTITY OR QUALITY, MERCHANTABILITY, FITNESS FOR PARTICULAR
PURPOSE, OR OTHERWISE.

 

Page 13
 
 
 

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7.0 
AN PURITY AND WARRANTY

 
7.1
Provided that Orica supplies to EDC, or EDC is able to obtain from its supplier,
sufficient Ammonia to meet the Monthly forecast AN requirements and the Ammonia
Specifications, EDC warrants that all AN delivered to Orica from time to time
hereunder shall conform to the Specifications set forth in Schedule “B” hereto,
as applicable.

 
7.2
EDC shall take samples of AN delivered by EDC to Orica from each truck or rail
car upon loading at the EDC Plant.  Orica may take samples of AN upon arrival at
Orica’s destination.  Analysis of the samples shall be conducted by the sampling
party in accordance with the standard methods of the American Society of Testing
Materials, or by such other methods as may be agreed by Orica and EDC.  Each
party shall retain any such samples for at least 60 days from the date of
sampling to be analyzed if a dispute arises as to the quality of the AN.

 
7.3
If, based on analysis of the samples by EDC, any AN delivered or to be delivered
by EDC to Orica does not meet the applicable AN Specifications, EDC shall so
notify Orica in writing and shall not ship such AN without Orica’s written
approval.  Subject to the terms of sale agreed in writing between Orica and EDC
regarding such shipments, which terms may vary from those set forth in this
Agreement, any nonconforming AN shipped with Orica’s approval shall be deemed to
be in compliance with this Agreement, provided that any such acceptance shall
not be deemed a waiver for any other nonconforming AN.  If Orica does not notify
EDC that AN does not meet the applicable Specifications within (45) days of the
date of receipt thereof, the AN shall be deemed to meet the relevant
Specifications.  In the event that either party disagrees with the other party’s
analysis of the samples, the disagreeing party shall give the other party notice
within 15 days of receipt of the results of the analysis, in which event the
retained sample or samples shall be submitted for independent analysis to a
mutually acceptable commercial laboratory.  The laboratory’s independent
analysis shall be final and binding on the parties.  The cost of the independent
laboratory’s analysis will be borne by EDC if the AN is off-Specification and by
Orica if the AN meets the Specifications.

 
7.4
EDC agrees to apply the same loading inspection standards and procedures to all
trucks, tank trucks and rail cars used to transport AN, irrespective of the
carrier.  EDC agrees to promptly provide to Orica a copy of such standards and
procedures in effect as of the Effective Date, together with copies of any
revised standards and procedures subsequently adopted by EDC.

 
7.5
EDC warrants that it has good title to, and the right to supply, all AN supplied
and delivered to Orica from time to time hereunder free and clear of all Claims,
liens, security interests, encumbrances and charges, and that EDC has the
manufacturing and conversion capability and capacity, and the right, to supply
such AN to Orica at the rates, times and quantities contemplated by this

 

Page 14
 
 
 

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Agreement.  EDC has all necessary authorizations, approvals and permits to
receive the Ammonia at EDC’s Site, to process the same to produce AN, and to
undertake all of the other activities contemplated to be performed by it in
accordance with this Agreement.

 
7.6
EXCEPT AS SPECIFICALLY PROVIDED IN SUBSECTIONS 5.1, 7.1 and 7.5 HEREOF, EDC
MAKES NO, AND HEREBY DISCLAIMS ANY, REPRESENTATION OR WARRANTY, EXPRESS OR
IMPLIED, STATUTORY OR OTHERWISE, RELATING TO THE AN DELIVERED BY EDC OR SUPPLIED
TO ORICA BY EDC HEREUNDER INCLUDING, WITHOUT LIMITATION, WARRANTIES AS TO
CONDITION, QUANTITY OR QUALITY, MERCHANTABILITY, FITNESS FOR PARTICULAR PURPOSE,
OR OTHERWISE.

 
8.0 
REMEDIES FOR NONCOMPLIANCE

 
8.1
Orica’s exclusive remedies for any non-conforming AN supplied hereunder, other
than any nonconformance to the extent caused by non-conforming Ammonia, shall
be, at Orica’s option, to (a) reject such non-conforming AN without penalty, or
(b) accept such AN but at a price per Ton reduced by agreement of the
parties.  In the event that Orica rejects any nonconforming AN, EDC will cause
such nonconforming AN to be promptly removed from its current location at EDC’s
cost, and EDC will take all necessary measures to promptly provide Orica with
replacement AN meeting the applicable Specifications at that location at no
additional cost to Orica.  EDC will be responsible for any additional demurrage,
freight or transportation costs or other actual out-of-pocket costs incurred by
Orica which are a direct result of EDC’s delivery of non-conforming AN.  In the
further event that Orica rejects the nonconforming AN, but EDC is unable to
deliver replacement AN to Orica within the time period necessary to meet the
needs of Orica’s customers, Orica shall have the right, commencing on the
business day following delivery of written notice to EDC,  to purchase a like
quantity of AN from an alternative supplier and EDC shall reimburse Orica for
Orica’s cost to purchase and deliver replacement AN from the alternative
supplier to the location of the nonconforming AN. In the event of production or
delivery by EDC of non-conforming AN, the parties shall cooperate in good faith
in identifying means by which to mitigate loss or damage attributable to such
nonconformance; provided that Orica shall be solely responsible for any
nonconformance of AN supplied hereunder to the extent caused by non-conforming
Ammonia.  EDC may dispose of any such non-conforming AN returned to it by sale
to agricultural customers.

 
8.2
EDC shall have no liability to Orica for loss of or shortage in quantity of AN
supplied or to be supplied hereunder solely as a result of EDC’s loading of, or
the short-filling of, rail cars or trucks unless Orica notifies EDC in writing
within 45 days from the date of receipt of the AN.  Provided that Orica has
timely given such notice, its exclusive remedy for any loss of or shortage in
quantity of AN

 

Page 15
 
 
 

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resulting from EDC’s loading of rail cars or trucks shall be the refund of the
*** for such AN that was invoiced but not delivered plus the cost of freight to
the point at which the loss or shortage was detected.  EDC shall not be liable
to the extent a railroad or trucking company is liable for such loss or
shortage.
 
8.3
Except with respect to Orica’s rights set out in Sections 8.1 and 8.2, Orica
hereby releases and forever discharges EDC, its agents, employees, successors
and assigns, from all Claims relating to non-conformance with Specifications, or
loss or shortage in quantity, of AN supplied by EDC pursuant to this
Agreement.  In no event whatsoever shall either party be liable to the other for
loss of profits or special, indirect or consequential damages, save and except
for Orica’s obligation to pay the *** as set out in Section 14.2.1 (e) hereof
and EDC’s obligation, if applicable, to refund the *** (included in the ***) as
set out in Section 8.2 hereof and to refund, if already paid,  the *** when
Orica is relieved from its obligation to pay to EDC the *** as set out in
Schedule “C” hereto.

 
8.4
Subject to Section 8.1, following the delivery of AN to Orica hereunder and
removal of such AN from the EDC Site, Orica assumes all risks and responsibility
in connection with the further handling or use of such AN, whether used singly
or in combination with other products.  Orica agrees to indemnify, defend and
hold harmless EDC and its Affiliates from and against any and all Claims
incurred or suffered by, or threatened against EDC or its Affiliates in
connection with such further handling or use of such AN.

 
9.0           QUANTITY MEASUREMENT
 
9.1
Actual measurement of quantities of Ammonia and AN delivered and the supplied
party’s rights to dispute such measurements will be as set out in Schedule ”D”.

 
10.0           AMMONIA DELIVERY, RISK AND TITLE
 
10.1
All Ammonia which is supplied by Orica shall be supplied by pipeline. All
Ammonia acquired and supplied by EDC hereunder shall be supplied by pipeline,
and EDC shall be responsible for making the necessary  shipment arrangements to
the extent Ammonia is available to EDC.

 
10.2
Ammonia supplied by pipeline shall be delivered to EDC’s Ammonia storage tanks
and metered by the NuStar metering device at the EDC Site.  Absent demonstrable
error, EDC and Orica agree that the amount of Ammonia delivered by pipeline
shall be conclusively determined by the NuStar metering device and the amount of
Ammonia so metered shall be used for billing to Orica hereunder.

 

Page 16
 
***INDICATES CERTAIN INFORMATION IN THIS DOCUMENT WHICH HAS BEEN OMITTED FROM
THIS PUBLIC FILING PURSUANT TO A REQUEST BY THE COMPANY FOR CONFIDENTIAL
TREATMENT BY THE SECURITIES AND EXCHANGE COMMISSION. THE OMITTED INFORMATION HAS
BEEN FILED SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE
COMMISSION FOR PURPOSES OF SUCH REQUEST.
 
 
 

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11.0 
AN DELIVERY, RISK AND TITLE

 
11.1
Unless otherwise agreed, EDC shall deliver all AN supplied hereunder into
trucks, tank trucks or rail cars supplied by Orica.

 
11.2
Unless otherwise agreed, EDC shall load (a) AN Solution into Orica’s rail tank
cars and release such cars within 7 days from the arrival of such cars at EDC’s
Site provided that EDC shall not be required to load more than 2 rail tank cars
per 24 hour period, (b) AN Prills and HDAN into Orica’s rail hopper cars and
release such cars within 7 days from the arrival of such cars at EDC’s Site
provided that EDC shall not be required to load more than 10 rail hopper cars
per 24 hour period, and (c) AN into Orica’s trucks and release such trucks
within the free loading period allowed by the carrier provided that EDC shall
not be required to load more than 24 trucks per 24 hour period. All of the
foregoing time frames shall be extended by any intervening weekend, holiday, or
Force Majeure event; and provided further that in no event shall EDC be required
to load in one day any more than one day’s actual production rate of AN Solution
and one day’s actual production of AN Prills.  Should EDC fail to comply with
the foregoing, EDC shall reimburse Orica, within 30 days of receipt of an
invoice from Orica, for all demurrage and other out-of-pocket expenses incurred
by Orica resulting from such delay.  Orica shall use commercially reasonable
efforts to schedule rail cars or trucks for the EDC Plant at a rate that will
permit EDC to load such cars and trucks within the time frames set forth in
clauses (a) through (c) above, taking into account reasonably anticipated AN
production rates.***

 
11.3
Title to all AN manufactured hereunder shall be in Orica, and delivery to Orica
shall occur and all risks of loss and otherwise in relation thereto shall pass
to Orica upon and after the delivery of the AN into Orica’s owned or
contracted-for trucks or railcars at the EDC Plant.  EDC shall physically
segregate all AN Prills manufactured for Orica from all other AN at the EDC
Site.

 
11.4
EDC shall weigh, by means of certified scales and otherwise in accordance with
Schedule “D”, all trucks and rail cars before and after they have been loaded,
to determine the net weight of AN delivered to Orica.

 
11.5
EDC shall promptly confirm to Orica any shipment made, specifying the carrier,
the date of departure, the weight of AN in each rail car or truck and its
destination.  EDC shall also promptly forward to Orica one copy of each bill of
lading issued with respect to such shipments.  Absent demonstrable error, the
carrier’s weight measurements shall be deemed correct and shall be
controlling.  The carrier which shall receive delivery of AN at EDC’s Plant
shall be deemed authorized by Orica to execute the bill of lading for the
shipment; provided, however, that authorization shall not affect Orica’s rights
pursuant to Sections 7 and 8 hereof.

 

Page 17
 
***INDICATES CERTAIN INFORMATION IN THIS DOCUMENT WHICH HAS BEEN OMITTED FROM
THIS PUBLIC FILING PURSUANT TO A REQUEST BY THE COMPANY FOR CONFIDENTIAL
TREATMENT BY THE SECURITIES AND EXCHANGE COMMISSION. THE OMITTED INFORMATION HAS
BEEN FILED SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE
COMMISSION FOR PURPOSES OF SUCH REQUEST.
 
 
 

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11.6
Orica may from time to time request EDC to assist Orica in obtaining repair of
Orica’s rail cars at EDC’s facilities located at the EDC Site.  EDC shall use
its commercially reasonable efforts to obtain such services on Orica’s behalf,
and at Orica’s expense.

 
11.7
EDC shall use its commercially reasonable efforts to minimize loss and shrinkage
of AN during storage and handling, but such loss and shrinkage shall be to
Orica’s account.

 
12.0 
INTENTIONALLY LEFT BLANK

 
13.0 
CONTRACT ADMINISTRATION

 
13.1
No later than August 31 of each Year during the Term, Orica shall deliver to EDC
a forecast of its requirements for AN for the succeeding Year.  Orica shall also
deliver to EDC Monthly a forecast of its requirements for AN for the succeeding
120 days.  The Monthly forecast is an estimate for planning purposes and is not
a commitment to take AN at the Monthly rates estimated.

 
13.2
Orica and EDC will conduct quarterly contract review meetings during the Term of
this Agreement which meetings shall include a review of cost performance Year to
date versus the Annual Budget for that Year.

 
13.3
Orica shall have the right to verify (“Verification Right”) that the ***
calculated by EDC for any Year properly applies the methodology set forth in
Schedule “C” by giving written notice to EDC within the 30-day period following
receipt of EDC’s calculation of the *** for the applicable Year.  If Orica
exercises its Verification Right, the verification shall be completed within the
30-day period after notice of Orica's exercise of its Verification Right, at
Orica’s expense and at the EDC Site, and EDC shall provide Orica with all
information reasonably requested by Orica relating to the calculation of the ***
to enable Orica to carry out such verification. In the event that Orica wishes
to exercise its Verification Right, Orica shall pay all undisputed amounts owing
to EDC within 30 days after receiving EDC’s calculation of the *** which payment
shall not waive Orica’s right to dispute the remainder. If, as determined by the
verification, the actual *** is more than the ***, including adjustments, paid
by Orica for the applicable Year, Orica shall pay the amount of such
underpayment to EDC within 30 days of such determination.  If, on the other
hand, the actual *** is less than the ***, including adjustments, paid by Orica
for the applicable Year, EDC shall pay the amount of such overpayment to Orica
within 30 days of such determination.

 

Page 18
 
***INDICATES CERTAIN INFORMATION IN THIS DOCUMENT WHICH HAS BEEN OMITTED FROM
THIS PUBLIC FILING PURSUANT TO A REQUEST BY THE COMPANY FOR CONFIDENTIAL
TREATMENT BY THE SECURITIES AND EXCHANGE COMMISSION. THE OMITTED INFORMATION HAS
BEEN FILED SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE
COMMISSION FOR PURPOSES OF SUCH REQUEST.
 
 
 

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14.0
PAYMENTS

 
14.1
In consideration of EDC making available the Reserved Capacity for Orica, Orica
shall pay to EDC the *** calculated on the basis set out in Schedule “C” to this
Agreement.

 
14.2.1
EDC shall invoice Orica and Orica shall pay to EDC the amounts owing by Orica to
EDC under this Agreement for:

 
(a) Ammonia, if supplied by EDC to manufacture AN for Orica, weekly and at EDC’s
delivered cost from its Ammonia supplier;
 
and be paid by Orica as required by Section 3.6 of this Agreement;
 
(b) Ammonia, if supplied by Orica and purchased by EDC from Orica to manufacture
AN for Orica pursuant to Section 3.4 of this Agreement;
 
and be paid by Orica on or before the first day of the second Month succeeding
the Month in which such Ammonia was supplied by Orica;
 
and monthly for:
 
***
 
***
 
***
 
 
and be paid by Orica on or before the first day of the second Month succeeding
the Month in which the AN was delivered to Orica e.g. January deliveries are ***
paid for on March 1st.

 
The individual price components set out in (c), (d) and (e) above will be
determined in accordance with Schedule “C” hereto.
 
Orica shall also pay to EDC any other amounts owing in accordance with Schedule
“C” hereto when they become due in accordance with such Schedule.
 

Page 19
 
***INDICATES CERTAIN INFORMATION IN THIS DOCUMENT WHICH HAS BEEN OMITTED FROM
THIS PUBLIC FILING PURSUANT TO A REQUEST BY THE COMPANY FOR CONFIDENTIAL
TREATMENT BY THE SECURITIES AND EXCHANGE COMMISSION. THE OMITTED INFORMATION HAS
BEEN FILED SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE
COMMISSION FOR PURPOSES OF SUCH REQUEST.
 
 
 

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If Orica has disputed any invoice in good faith prior to the expiration of the
applicable payment period, Orica shall timely pay any undisputed amount, and
shall have 30 days from receipt of a corrected invoice within which to remit
payment for any agreed-upon amount related to disputed items.  If EDC identifies
an error in an invoice previously issued to Orica or EDC determines that it has
not invoiced Orica for AN delivered hereunder then EDC may issue to Orica,
during the Year in which the AN is supplied and until January 31 of following
Year, a corrected invoice or initial invoice for payment.

 
14.2.2
The *** billed pursuant to 14.2.1 (b) will be adjusted to actual costs by the
15th day of the following Month and any adjustments will be applied to the
original billing and paid on the due date of the original billing.  The “True Up
Report” attached as Schedule “F” hereto shall be used to complete the
adjustments. The actual *** so determined will then be used as the estimated ***
for the next following Month.  By way of example, the estimated *** for January
will be adjusted to actual *** by February 15th.  The actual January *** will
then be used as the estimated March ***.  If the true up to actual costs cannot
be completed by the 15th day of the Month following the Month of supply then the
true up will be completed as soon as possible thereafter.

 
14.2.3
One twelfth (1/12) of the total annual budgeted *** will be charged to Orica
each Month.  The budgeted *** will then be adjusted to actual *** by the 15th
day of the following Month and any adjustments will be applied to the original
billing and paid on the due date of the original billing.  The “True Up Report”
attached as Schedule “F” hereto shall be used to complete the adjustments. The
*** component of the Annual Budget shall be used for interim billing purposes
save and except that, for quarters commencing on and after April 1st each Year,
if the actual *** for the preceding quarter exceed the interim billed *** for
that quarter by 5% or more then the interim billed *** shall be adjusted for the
subsequent quarter to the actual *** for the preceding quarter.

 
14.2.4
The *** will be paid by Orica on 20,000 Tons per Month provided that, if Orica
takes more than 20,000 tons in a Month then Orica shall pay to EDC the *** on
the additional Tons above 20,000 Tons per Month with such additional payments to
be credited against the *** payable by Orica in the next following Month.  Orica
shall always pay the *** at a rate of 20,000 tons per Month with any *** owing
due to an annual offtake by Orica of more than 240,000 Tons to be paid by Orica
to EDC in January of the next following Year.  The “True Up Report” attached as
Schedule “F” hereto shall be used to complete the adjustments. Under any and all
circumstances Orica is obliged to pay to EDC a minimum Yearly *** for 240,000
Tons and a Monthly *** for 20,000 Tons.

 

Page 20
 
***INDICATES CERTAIN INFORMATION IN THIS DOCUMENT WHICH HAS BEEN OMITTED FROM
THIS PUBLIC FILING PURSUANT TO A REQUEST BY THE COMPANY FOR CONFIDENTIAL
TREATMENT BY THE SECURITIES AND EXCHANGE COMMISSION. THE OMITTED INFORMATION HAS
BEEN FILED SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE
COMMISSION FOR PURPOSES OF SUCH REQUEST.
 
 
 

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14.3
Orica shall, in addition to all other amounts payable hereunder, be responsible
for or shall reimburse EDC (subject to receipt of reasonable documentation
reflecting payment by EDC), as the case may be, for all sales, value added or
transfer taxes or Governmental fees levied or imposed, or charges or costs
payable to a Government and attributable to compliance with Governmental orders
or Laws issued or adopted after the date hereof, in connection with the supply
of AN hereunder; provided that in no event shall such amount include amounts
relating to fines and penalties or fees and expenses arising therefrom or income
taxes payable by EDC.  EDC may, where required by Laws, collect from Orica any
such tax, fee, charge or other cost and remit it to the appropriate
Government.  Any such tax, fee, charge or other cost shall be paid by Orica in
addition to the *** to be paid hereunder.  If any such tax or fee paid by Orica
is adjusted as a result of any reassessment by any Government, then any increase
or decrease in any such tax or fee and any interest and penalties (except to the
extent attributable to the negligence of EDC) resulting from the reassessment is
for Orica’s account.

 
15.0 
FORCE MAJEURE

 
15.1
Notwithstanding anything herein contained, each party will be excused from
performance of its obligations hereunder, other than (a) an obligation to pay
money (including Orica’s obligation to make the payments provided for in Section
14.2.1 except in the circumstances where Orica is relieved from its obligations
to pay to EDC the *** as set out in Schedule “C” hereto) or (b) to indemnify, in
the event and to the extent such failure is caused by an event of Force
Majeure.  If an event of Force Majeure occurs, the party whose performance is
excused shall immediately provide written notice to the other party of the event
of Force Majeure, the nature of the event, the extent to which the event of
Force Majeure affects or delays the affected party’s performance hereunder, the
particular obligations so affected, the steps taken and proposed to be taken to
lessen and cure the Force Majeure, and the estimated duration of the event of
Force Majeure.  If there is any material change, addition or alteration to the
circumstances giving rise to, or in the information provided pursuant to, the
written notice, the affected party shall provide the other party with written
notice of the same. At all times during an event of Force Majeure, both parties
shall use reasonable means to avoid or minimize the consequences of any event of
Force Majeure; provided that nothing contained in this Agreement shall be
construed as requiring either party hereto to accede to the demands of labor or
labor unions it considers unreasonable.  The performance of this Agreement shall
be resumed as soon as practicable after such disability has been removed.

 
15.2
If an event of Force Majeure impairs EDC’s ability to produce nitric acid or
deliver AN Solution or HDAN under this Agreement, EDC shall allocate its
available production of nitric acid, AN Solution and HDAN manufactured at EDC’s
Site and available for supply among all of EDC’s customers then supplied or
which are

 

Page 21
 
***INDICATES CERTAIN INFORMATION IN THIS DOCUMENT WHICH HAS BEEN OMITTED FROM
THIS PUBLIC FILING PURSUANT TO A REQUEST BY THE COMPANY FOR CONFIDENTIAL
TREATMENT BY THE SECURITIES AND EXCHANGE COMMISSION. THE OMITTED INFORMATION HAS
BEEN FILED SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE
COMMISSION FOR PURPOSES OF SUCH REQUEST.
 
 
 

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customarily supplied from EDC’s Site, including Orica and EDC.  This prorating
shall be based on EDC’s existing contracts for sale of nitric acid,  AN Solution
and HDAN and the previously forecasted requirements of such customers for the
period of the event of Force Majeure.

 
15.3
An event of Force Majeure shall not extend the term of this Agreement.

 
16.0 
TERMINATION

 
16.1
Either party may terminate this Agreement upon written notice to the other party
in the event the other party shall commence, or there shall be commenced against
the other party, any case, proceeding or other action (which shall not have been
dismissed within 60 days of commencement) seeking to have an order for relief
entered with respect to such party or to adjudicate such party as a bankrupt or
insolvent, or seeking reorganization, arrangement, adjustment, liquidation,
dissolution or composition under any Law relating to bankruptcy, insolvency,
reorganization or relief of debtors or seeking appointment of a receiver,
trustee, custodian or other similar fiduciary with respect to any part of such
party’s business or property or the other party makes a general assignment for
the benefit of its creditors.

 
16.2
If an event of Force Majeure claimed by EDC or Orica persists for a continuous
period of at least 180 days or if the duration of an event of Force Majeure
claimed by EDC or Orica is estimated by the party claiming Force Majeure to be
180 days or longer, then the party not claiming the Force Majeure shall have the
right, but not the obligation, to terminate this Agreement and the obligations
of the parties hereto, except for claims in dispute and payments and other
obligations then due and owing, by giving written notice of termination to the
other party. For purposes of this Section 16.2, if the period between the end of
one event of Force Majeure and the commencement of another event of Force
Majeure is less than 30 days, the Force Majeure shall be deemed to be
continuous, but the time between the Force Majeure periods shall not be counted
in determining the 180 day period required before termination hereunder is
allowed.

 
16.3
EDC may terminate this Agreement on 14 days prior written notice to Orica if
Orica delivers ammonia to EDC which does not meet Ammonia Specifications and if,
after EDC has given notice to Orica pursuant to Section 6.3, Orica has not
within 45 days of receipt of such notice, commenced deliveries of Ammonia
meeting the Ammonia Specifications.

 
16.4
Orica may terminate this Agreement on 14 days prior written notice to EDC if EDC
delivers AN to Orica which does not meet the applicable AN Specifications, and
if, after Orica has given notice to EDC pursuant to Section 7.3, EDC has not
within 45 days of receipt of such notice, commenced delivery of at least 95% of
the prior volumes of AN which meets the relevant Specifications.

Page 22
 
 
 

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16.5
Either party may terminate this Agreement if the other party defaults in the due
and punctual payment of any amounts owing to the non-defaulting party or fails
to perform any material obligation and such default or failure continues for 30
days after the non-defaulting party gives written notice to the defaulting party
advising of the default or failure and the intention to terminate this Agreement
in the absence of payment or performance.

 
16.6
Either party may terminate this Agreement pursuant to a notice given in
accordance with Section 27.5 hereof.

 
16.7
Orica may terminate this Agreement upon five days prior notice to EDC in the
event (a) of major damage to, destruction of, or a loss of production capacity
at, EDC’s Plant, and (b)(i) within 180 days of such damage, destruction or loss
of production capacity, EDC’s Plant is not or cannot be restored to a level of
production sufficient to supply the Reserved Capacity, as determined by Orica
acting in good faith and after consultation with EDC, or (ii) the cost to repair
such damage, rebuild EDC’s Plant or restore the production capacity (after
taking into account any insurance recovery by EDC) will result in an increase in
the ***.  Nothing in this Section 16.7 shall be deemed to prevent EDC from
repairing such damage, rebuilding the EDC Plant or restoring its production
capacity at its sole cost within a 180-day period, in which event such costs
shall not be included in the *** and Orica shall have no right to terminate
under this Section 16.7.

 
16.8
The termination of this Agreement for any cause whatsoever shall not release a
party from any liability which at the time of termination has already accrued to
the other party or which may thereafter accrue in respect of any act or omission
prior to termination.

 
16.9
The rights and remedies of the parties under this Agreement are cumulative and,
subject to the limitations expressed in this Agreement, the exercise of a remedy
by a party shall not preclude the right of such party to exercise any other
remedy available to such party in accordance with the terms of this Agreement or
otherwise.

 
17.0 
HARDSHIP

 
17.1
If, at any time during the Term of this Agreement, there occurs a substantial
change in the business, technical or commercial conditions which adversely
affects the business or financial condition of either party to this Agreement,
or a substantial change in Laws applicable to this Agreement or its performance
by either party, as a result of which a party incurs or would be likely to incur
substantial hardship in complying with the provisions of this Agreement, the
party experiencing hardship may notify the other in writing that it wishes to
discuss the terms and performance of this Agreement in light of such changed
conditions.

 
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17.2
Within 30 days after any notice under Section 17.1 above, the parties shall meet
in Oklahoma City at a mutually acceptable time to discuss in good faith
appropriate means, if any, to relieve such hardship in a manner equitable to
both parties and at such meeting the party alleging hardship shall make
available such data and information as it deems necessary to justify its request
for relief. For the avoidance of doubt, nothing in this Section 17 shall alter
the rights and obligations of the parties to supply and purchase AN or supply
Ammonia under this Agreement in any way except to the extent that the parties
agree to do so in writing at or following any such meeting.

 
18.0           INSURANCE
 
18.1
EDC shall procure and maintain, at EDC’s sole expense (but subject to Schedule
“C”), at all times during the Term of this Agreement:

 
18.1.1
Commercial General Liability Insurance

 
 
Commercial General Liability Insurance with limits of not less than $1,000,000
each occurrence.   Railroad Protective Liability is to be included if that
exposure exists with limits of not less than $5,000,000 each occurrence.

 
18.1.2
Automobile Liability Insurance

 
 
Business Auto Liability Insurance with a limit of liability in an amount not
less than $1,000,000 each occurrence.

 
18.1.3
Workers’ Compensation Insurance

 
 
Workers' Compensation Insurance in accordance with the laws of the State of
Arkansas, and any other applicable jurisdiction, covering all employees who are
engaged by EDC in performing its obligations under this Agreement.    Employer’s
Liability coverage is required with limits of not less than the following:

 
 
Bodily Injury by
Accident                                              $1,000,000  Each Accident

 
 
Bodily Injury by Disease                                                
$1,000,000  Each Employee

 
 
Bodilyn Injury by
Disease                                               $1,000,000  Policy Limit

 
18.1.4
Excess Liability Insurance

 
 
Umbrella Liability insurance with a limit of liability not less than $10,000,000
each occurrence.

 
18.1.5
Business Interruption Insurance

 

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Business interruption insurance including, without limitation, coverage for the
recovery of the *** which would have been paid by Orica had such AN been
manufactured and delivered to Orica.

 
18.1.6
Property Insurance

 
 
Property insurance covering all risks of loss and damage to the EDC Plant and
EDC Site, including but not limited to plant, equipment, real property, personal
property, tools, machinery and electronic data processing equipment.  Coverage
shall also be provided for any property which is in EDC’s care, custody or
control, and for which EDC is legally responsible.  Insurance valuation shall be
for reinstatement or replacement cost.

 
18.1.7
Environmental Impairment Liability (EIL) Insurance

 
 
EIL insurance coverage with an aggregate limit of liability of $20,000,000,
subject to certain deductibles and/or self-insured retentions.  At the request
and expense of Orica, EDC’s EIL policy shall be specifically endorsed to include
Orica as an Additional Named Insured with regard to exposures in which Orica has
a financial interest or for which Orica has or may have any liability.  EDC’s
policy shall be specifically endorsed to waive any rights of subrogation against
Orica, its directors, officers and employees.

 
18.1.8
General Terms

 
 
All insurance companies providing the aforesaid coverages to EDC must be
authorized to do business in the State of Arkansas.  All insurance companies
must be rated A- or better with a financial rating of VIII or better in the most
recent A.M. Best’s Rating Guide.  Certificates of insurance for all required
coverages shall be provided to Orica prior to commencement of the Agreement and
renewal certificates upon policy renewals.

 
18.2
Orica shall procure and maintain, at Orica’s sole expense, at all times during
the Term of this Agreement:

 
18.2.1
Commercial General Liability Insurance

 
 
Commercial General Liability Insurance with limits of not less than $1,000,000
each occurrence.   Railroad Protective Liability is to be included if that
exposure exists with a limit of liability not less than $5,000,000 each
occurrence.

 
18.2.2
Automobile Liability Insurance

 
 
Business Auto Liability Insurance with a limit of liability in an amount no less
than $1,000,000 each occurrence.

 

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18.2.3
Workers’ Compensation Insurance

 
 
Workers' Compensation Insurance in accordance with the laws of the State of
Arkansas, and any other applicable jurisdiction, covering all employees who are
engaged by Orica in performing its obligations under this Agreement.   
Employer’s Liability coverage is required with limits of not less than the
following:

 
 
Bodily Injury by
Accident                                              $1,000,000  Each Accident

 
 
Bodily Injury by
Disease                                                $1,000,000  Each Employee

 
 
BodilyInjury by Disease                                                
$1,000,000  Policy Limit

 
18.2.4
Excess Liability Insurance

 
 
Umbrella Liability insurance with a limit of liability not less than $10,000,000
each occurrence.

 
18.2.5
Business Interruption Insurance

 
 
Business interruption insurance relating to its explosives business covering
Claims against or incurred by Orica arising as a result of a business
interruption event at the EDC Plant or the EDC Site which impacts the ability of
EDC to manufacture and deliver AN hereunder to Orica.

 
18.2.6
Property Insurance

 
 
Property insurance covering all risks of loss and damage to its property,
including but not limited to plant, equipment, real property, personal property,
tools, machinery and electronic data processing equipment.  Coverage shall also
be provided for any property which is in Orica’s care, custody or control, and
for which Orica is legally responsible. Insurance valuation shall be for
reinstatement and replacement cost.

 
18.2.7
General

 
 
All insurance companies providing the aforesaid coverages to Orica must be
authorized to do business in the State of Arkansas.  All insurance companies
must be rated A- or better with a financial rating of VIII or better in the most
recent A.M. Best’s Rating Guide.

 
19.0           DISPUTE RESOLUTION
 
19.1
Except as otherwise provided herein, the parties shall attempt in good faith to
promptly resolve any controversy or claim arising out of or relating to this
Agreement, or the interpretation, performance or breach hereof (any of the

 

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foregoing, a “Dispute”), by negotiations between the Chief Executive Officers of
each party.  The disputing party shall give the other party written notice of
the Dispute.  Within 15 days after receipt of such notice, the receiving party
shall submit a written response to the other party.  The notice and response
shall include a statement of each party’s position on the Dispute and a summary
of the evidence and the arguments supporting its position.  The Chief Executive
Officer (or his designee) of each party shall meet at a mutually acceptable time
and place within 20 days after the date of the disputing party’s notice and
thereafter as often as they reasonably deem necessary to exchange relevant
information and to attempt to resolve the Dispute.  All negotiations and
discussions pursuant to this Section 19.1 shall be confidential and shall be
treated as compromise and settlement negotiations for purposes of the Federal
Rules of Evidence and the Colorado Rules of Evidence.

 
19.2
If the Dispute remains unresolved for a period of 60 days following delivery by
the disputing party of the notice referred to in Section 19.1, it shall be
thereafter be settled by arbitration administered by the American Arbitration
Association under its Commercial Arbitration Rules.  The arbitration shall take
place in Denver, Colorado.  The parties shall, prior to referring any Dispute to
arbitration, agree in writing upon the issue or issues to be arbitrated.  The
arbitrator(s) shall be instructed to reach a decision based only on the facts
and information supplied by the parties during the proceeding.  The parties
agree that such referral and the arbitration award shall be binding on both
parties.  Judgment upon the award rendered by the arbitrator(s) may be entered
in any court having jurisdiction thereof. Notwithstanding any of the provisions
or limitations of Sections 19.1 or 19.2, any demand for arbitration must be
filed in writing with the other party and with the American Arbitration
Association prior to the date when institution of legal or equitable proceedings
based upon the Dispute would be barred by the applicable statute of repose or
limitations.

 
20.0 
CONFIDENTIAL INFORMATION AND ANNOUNCEMENTS

 
20.1
Each of the parties acknowledges that all non-public business, technical,
proprietary or other similar information, including production cost and pricing
information and data delivered to it by the other party in the course of
entering into, performing or enforcing its rights under this Agreement, as well
as the fact and terms of this Agreement, are confidential and shall be treated
as confidential and agrees to, and to require its Affiliates, employees, legal,
financial and other advisors to, hold such information in strict confidence and
to refrain from disclosing or using such information to the detriment of the
other party, until the fifth anniversary of the expiration or termination of
this Agreement; provided however that a party may disclose confidential
information:

 
 
(a)  
if and when required to do so by Laws, provided that the disclosing party shall
cooperate with any reasonable requests of the non-disclosing party in connection
with a disclosure under this clause (a), including a request

 
 
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to review any securities filings pertaining to the entering into of this
Agreement prior to their filing;

 
(b)  
to third parties in connection with a proposed sale by such party of its
business related to the subject matter of this Agreement, or an interest
therein, provided that such third parties agree in writing to keep such
information confidential;

 
(c)  
   which was previously known to it at the time of disclosure as evidenced by
pre-existing written materials;

 
(d)  
   which is received from a third party not under an obligation of
confidentiality to the disclosing party with respect to such information as
evidenced by pre-existing written materials; or

 
(e)  
   which has been independently generated by the receiving party without
reference to or reliance on any information provided hereunder.

 
20.2
Each party agrees that if it breaches or threatens to breach Section 20.1 or any
other confidentiality provision of this Agreement, the other party may be
irreparably harmed and the remedy at law may be inadequate, and therefore,
without limiting any other remedy available at law or in equity, an injunction,
specific performance, or other forms of equitable relief to prevent further use
and/or disclosure of confidential information, or money damages, shall be
available to the other party.  All rights, powers and remedies provided for
herein are cumulative, and the other party shall, in addition to the rights,
powers and remedies herein conferred, be entitled to avail itself of all such
other rights, powers and remedies as may now or hereafter exist.

 
20.3
Neither party shall make any announcement in any way concerning this Agreement
nor any other transaction related hereto without the prior written consent of
the other party hereto, except as may be required by Law or applicable stock
exchange rule.

 
21.0 
SECURITY INTEREST

 
21.1
Orica and EDC hereby acknowledge that title to the AN manufactured for Orica
hereunder shall at all times be in Orica.  Nevertheless, in order to protect
Orica’s interest in such AN manufactured for Orica hereunder from the claims of
creditors of EDC, EDC hereby assigns, pledges and grants to Orica a security
interest in such AN manufactured for Orica hereunder.

 
21.2
Upon Orica’s request, EDC shall execute and file any financing and continuation
statements prior to and from time to time after the manufacture of AN for Orica
hereunder, as necessary to perfect such security interest, and EDC shall
cooperate with Orica in connection with the execution and delivery of any
notifications to any holders of conflicting security interests in such AN

 

Page 28
 
 
 

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manufactured for Orica hereunder to the extent such AN manufactured for Orica
hereunder is considered or could be considered or is determined or could be
determined to be the inventory of EDC in order to ensure the priority of Orica’s
security interest.  Upon Orica’s request, EDC shall notify its creditors of
Orica’s ownership and security interest in such AN manufactured for Orica
hereunder, and shall request any such creditors to subordinate any liens or
other security interests they may have in EDC’s assets to the security interest
of Orica in such AN manufactured for Orica hereunder.

 
21.3
Orica agrees not to enforce its security interest unless a creditor of EDC
asserts an interest in such AN manufactured for Orica hereunder or claims that
all or part of such AN constitute the inventory of EDC.

 
22.0 
SAFETY, HEALTH AND ENVIRONMENT

 
22.1
Prior to entering into this Agreement, Orica has provided EDC with information
regarding the safe transportation, handling, storage and use of Ammonia and AN
(the “SHE Standards”).  EDC hereby acknowledges that it has received, read and
understood the SHE Standards and agrees to take all such measures as are
necessary or desirable in order to safely manufacture, transport, handle, store
and/or use the Ammonia and AN in accordance with the SHE Standards.  For the
avoidance of doubt, for the purposes of this clause, the term “the safe
manufacture, transportation, handling, storage and use” of products relates not
only to the safety of those persons who may be affected by the acts or omissions
of EDC but also to protection of the Environment generally.

 
22.2
EDC shall comply with all safety and health Laws and Environmental Laws,
regulations and codes of conduct applicable to the performance of its duties
hereunder, and shall be solely responsible for any Claims howsoever arising in
connection with any failure so to do.  EDC shall at all times remain responsible
for the health and safety of those people affected by its operations and for
protection of the Environment.

 
22.3
Unusual incidents (as identified in Schedule “E” hereto) at EDC’s Plant shall be
reported to the Director, Sustainability of Orica USA Inc.  Such reports shall
be made initially by telephone, to be followed by a written report within 24
hours.  If EDC inadvertently fails to promptly provide such notification or
reports, such failure to notify or report shall not create any liability of EDC
to Orica provided however that EDC shall rectify such failure as soon as it
comes to EDC’s attention.

 
22.4
EDC shall indemnify, defend and save and hold harmless Orica and its Affiliates,
and each of their respective officers, directors, employees, and agents (each,
an “Orica Indemnified Party”), from and against any and all Claims sustained or
incurred by any Orica Indemnified Party relating to or resulting or arising,
directly or indirectly, from or in connection with, any of the following
(provided that EDC

 

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shall have no liability under this Section 22.4 for any Claims in respect of
which Orica has agreed to indemnify EDC in accordance with Section 8.4 hereof,
or to the extent such Claims relate to or result or arise from the negligent
actions or inactions of an Orica Indemnified Party):

 
22.4.1
any breach of a representation or warranty made herein by EDC or non-compliance
with or breach by EDC of any of the covenants or agreements contained in this
Agreement to be performed by EDC;

 
22.4.2
the physical or environmental conditions at, on, under or in the EDC Site, and,
to the extent such conditions are caused, created or contributed to by EDC, the
physical or environmental conditions in the vicinity of the EDC Site;

 
22.4.3
the construction, equipping, maintenance, operation or use of the EDC Site, or
the manufacturing or storage of Ammonia or AN, in each case in violation of any
applicable Environmental Law or Environmental Permit;

 
22.4.4
the presence of any Hazardous Material or a Release or Disposal or the threat of
a Release or Disposal of any Hazardous Material or waste on, at or from the EDC
Site, or the Arrangement for Disposal or treatment of any Hazardous Material
owned or possessed by EDC at any facility other than the EDC Site;

 
22.4.5
the failure to promptly undertake and diligently pursue to completion all
necessary, appropriate and legally authorized investigative, containment,
removal, clean up and other remedial actions with respect to a Release or the
threat of a Release of any Hazardous Material on, at or from the EDC Site,
required by any Environmental Law or Environmental Permit;

 
22.4.6
human exposure to any Hazardous Material, noises, vibrations or nuisances of
whatever kind or death, personal injury or damage to property to the extent the
same arise from the condition of the EDC Site or the construction, equipping,
ownership, use, sale, maintenance, conveyance or operation thereof in violation
of any Environmental Law; or

 
22.4.7
a violation or asserted violation of any applicable Environmental Law or
Environmental Permit at or related to the EDC Site.

 
22.5
In addition to Orica’s indemnification obligations under Section 8.4 hereof,
Orica shall indemnify, defend and save and hold harmless EDC and its Affiliates,
and each of their respective officers, directors, employees, and agents (each,
an “EDC Indemnified Party”), from and against any and all Claims sustained or
incurred by any EDC Indemnified Party relating to or resulting or arising,
directly or indirectly, from or in connection with, any of the following
(provided that Orica shall have no liability under this Section 22.5 for any
Claims to the extent such Claims relate to or result or arise from the negligent
actions or inactions of an EDC Indemnified Party):

 
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22.5.1
any breach of a representation or warranty made herein by Orica or
non-compliance with or breach by Orica of any of the covenants or agreements
contained in this Agreement to be performed by Orica;

 
22.5.2
the physical or environmental conditions at, on, or in the EDC Site to the
extent such conditions are caused, created or contributed to by Orica;

 
22.5.3
human exposure to any Hazardous Material, noises, vibrations or nuisances of
whatever kind, or death, personal injury or damage to property to the extent the
same arise from the transportation and delivery of Ammonia supplied by Orica to
the EDC Site and the shipment of AN by Orica or for Orica from the EDC Site or
the rail cars or trucks supplied to the EDC Site by Orica; or

 
22.5.4
a violation or asserted violation by Orica of any applicable Environmental Law
or other Law, or Environmental Permit or other permit, related to the
transportation of Ammonia to and AN from the EDC Site or the rail cars or trucks
supplied to the EDC Site by Orica.

 
23.0 
COMMUNICATIONS

 
23.1
All notices, requests, waivers, consents, approvals, agreements and other
communications under this Agreement must be in writing to be effective and shall
be delivered in person or by certified mail with postage prepaid and return
receipt requested, courier or delivery service with charges prepaid or facsimile
transmission,

 
if to Orica, addressed as follows:
 
Orica International Pte Ltd.
Level 6, Tower 2, 78 Shenton Way, Singapore 079120
Attention: Managing Director
 
Fax No.                      +65 6258 3425
 
with a copy to:
 
Orica USA Inc.
33101 E. Quincy Ave.
Watkins, CO 80137
Attention: General Counsel
 
Fax No.                      (303) 268-5252
 

 
and if to EDC, addressed as follows:

 
El Dorado Chemical Company
Attention:   President
 
 
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16 S. Pennsylvania Avenue
Oklahoma City, Oklahoma  73107
 
Fax No.                      (405) 235-5067

with a copy to:
 
Attention:                      General Counsel
 
Fax No.                      (405) 236-1209
 
at the same address.
 

 
Either party shall have the right to change its address by notice to the other
party at the addresses in force hereunder.

 
23.2
Any communications shall be deemed to have been received as follows:

 
23.2.1
if delivered in person, when delivered;

 
23.2.2
if forwarded by facsimile, on the date of transmission thereof as reflected on
the confirmation of the transmitting machine;

 
23.2.3
if forwarded by certified mail, on the fifth Business Day following the date of
mailing as shown on the certified mail receipt; and

 
23.2.4
if forwarded by courier or delivery service, on the third Business Day following
the date of mailing as shown on the air bill.

 
24.0 
HEADINGS

 
24.1
The headings are inserted for convenience only and are to be ignored in
construing this Agreement.

 
24.2
References to articles, sections or paragraphs are to articles, sections or
paragraphs of this Agreement.  The words “hereto”, “herein”, “hereof”,
“hereunder”, “this Agreement” and similar expressions mean and refer to this
Agreement.

 
25.0 
RULES OF INTERPRETATION

 
25.1
The singular includes the plural and vice versa, “person” includes any
individual, firm, company, partnership, corporation, Government, instrumentality
and unincorporated body of persons, or association; and “in writing” or
“written” includes printing, typewriting, or any electronic means of
communication capable of being visibly reproduced at the point of reception.

 

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25.2
In the event that there shall be any discrepancies or conflict between the
provisions of any Schedule attached to this Agreement and any of the provisions
of the Agreement itself, then in every such event the provisions of this
Agreement shall prevail and govern.

 
26.0 
GOVERNING LAW

 
26.1
This Agreement shall be governed by and interpreted in accordance with the laws
of the State of Colorado.

 
27.0 
ASSIGNMENT AND SALE

 
27.1
Neither party shall transfer, assign, convey or otherwise dispose of all or any
portion of its interest in, or its rights, benefits or obligations under, this
Agreement to a third party without first having obtained the prior written
consent of the other party, such consent not to be unreasonably withheld,
delayed or denied; provided, however, either party with prior notice to the
other party shall be permitted to assign its rights and obligations under this
Agreement to the successor of the assigning party as a result of a statutory
merger or consolidation or to the purchaser of all or substantially all of such
party’s assets, or to an Affiliate which has the capability (as determined by
the non-assigning party in the exercise of its reasonable discretion) to perform
the assigning party’s obligations hereunder (collectively a “Permitted Successor
and Assign”).

 
27.2
The parties acknowledge that Orica may, from time to time upon written notice to
EDC, nominate itself or any of its Affiliates as purchaser under this Agreement
or have its obligations under this Agreement performed, in whole or in part, by
any one or more of its Affiliates, provided that, in any such circumstance,
Orica shall remain responsible to EDC for full performance of all obligations
under this Agreement (whether or not such obligations are to be performed by an
Affiliate).  As of the Effective Date Orica hereby nominates Orica USA Inc. as
purchaser under this Agreement (which nomination shall continue until EDC is
otherwise notified in writing as provided in this Agreement) and will cause
Orica USA Inc. to perform all of Orica’s obligations under this Agreement (but
Orica shall not be released from and shall remain responsible to EDC for full
performance of all obligations under this Agreement as hereinabove provided).

 
27.3
An assignee must covenant in writing to fully assume and perform all of the
assignor’s obligations under this Agreement.  No transfer or assignment shall
discharge or relieve the assignor from any of its covenants or obligations as
are contained or provided within this Agreement which arise, are incurred, or
are to be performed, prior to the date of the transfer or assignment unless
specifically agreed to in writing by the other party. From and after the
effective date of any assignment of this Agreement, and the rights and
obligations hereunder, which has been consented to in writing by the
non-assigning party, the assigning party shall be deemed released from all
obligations and liabilities hereunder which are

 

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based on acts, omissions, facts, events or circumstances first arising,
occurring or existing after the effective date of the assignment. The rights and
obligations of the parties herein set forth shall inure to and be binding upon
Permitted Successors and Assigns.

 
27.4
Notwithstanding the foregoing, in the event either party intends to sell or
otherwise transfer all or substantially all of its assets to which this
Agreement relates to a third party purchaser or other transferee, or transfer
this Agreement to an Affiliate, the selling or transferring party shall, unless
prohibited by confidentiality undertaking, notify the other party at least 60
days before the closing of such transaction.  The selling party shall also
require its purchaser or transferee to assume the selling party’s rights and
obligations under this Agreement upon the closing of such transaction.

 
 
27.5  Any purported transfer or assignment in contravention of the foregoing
shall be null and void, shall be considered a material breach of the Agreement
and shall permit the other party, in addition to any other rights which it may
have, to terminate this Agreement upon giving 30 days written notice thereof.

 
28.0 
TIME OF ESSENCE

 
28.1
Time shall be of the essence of this Agreement.

 
29.0 
EFFECT OF THIS AGREEMENT

 
29.1
The provisions of this Agreement shall be binding upon the parties hereto and
their respective successors and permitted assigns.

 
29.2
Nothing herein is intended to create a partnership for the purposes of
subchapter K and Section 761 (a) of the Internal Revenue Code.

 
30.0
WAIVER

 
30.1
No waiver by either party of any breach hereof or of any claim, right or remedy
provided for hereunder shall be deemed a waiver unless such waiver is in writing
and signed by the party to be bound.  The failure of a party to assert or
exercise any claim, right or remedy shall not be deemed a waiver of such claim,
right or remedy in the future.

 
31.0
AMENDMENT AND SEVERABILITY

 
31.1
This Agreement may only be altered, modified, amended or changed by written
agreement executed by both parties.

 
31.2
If any court or arbitrator declares the invalidity of any provision of this
Agreement, such provision shall be either amended to make it valid or
enforceable, respecting the intention of the parties expressed in that provision
to the greatest

 

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extent possible, or, if this is not possible, deleted with the remainder of the
Agreement remaining in full force, validity and effect.

 
32.0
ENTIRE AGREEMENT

 
 
32.1
The parties hereto agree that the terms and provisions of this Agreement
together with the Schedules hereto constitute the entire agreement between the
parties hereto concerning the subject matter hereof and supersede any and all
prior negotiations, understandings and agreements, whether written oral, between
the parties with respect thereto.  There is no warranty, representation,
collateral agreement or condition affecting this Agreement other than those
herein set forth.

 
IN WITNESS WHEREOF the parties hereto have executed this Agreement in the
presence of their respective officers duly authorized in this regard on the day
and Year first above written.
 
The Common Seal of
ORICA INTERNATIONAL PTE LTD. `       EL DORADO CHEMICAL COMPANY
was affixed in accordance with its
Articles of Association
 
 
By: /s/ John R. Beevers                By:  /s/ Jack E. Golsen   
Name:  John R. Beevers                                                     
Name: Jack E. Golsen
Title:    CEO Orica Mining Services                                  Title:
Chairman
 

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SCHEDULE “A”
 
DEFINITIONS
 
In the Agreement to which this Schedule “A” is attached and in all Schedules
thereto, the following words have the meanings given to such words below:
 
 “***” shall have the meaning set forth in Schedule “C” to this Agreement;
 
“Affiliate” means any person which, directly or indirectly, Controls, is
Controlled by or is under common Control with a party to this Agreement;
 
“Approved Investment” shall have the meaning set forth in Schedule “C” to this
Agreement;
 
“Approved Investment Project” shall have the meaning set forth in Schedule “C”
to this Agreement;
 
“Agreement” means this Agreement, including the Schedules hereto, and any future
amendments or supplements;
 
“Ammonia” means fertilizer grade anhydrous ammonia (82-0-0) which meets or
exceeds the applicable specifications set out in Schedule “B” hereto;
 
“Ammonium Nitrate” or “AN” means, individually and collectively, AN Prills, HDAN
and/or AN Solution;
 
“Annual Budget” shall have the meaning set out in Schedule “C” hereto;
 
“AN Prills” means industrial grade ammonium nitrate prills manufactured by EDC
at the AN Prills Plant which meet or exceed the applicable Specifications in
Schedule “B” hereto;
 
“AN Prills Plant” means the AN Prill tower and related equipment used to
manufacture AN Prills located on the EDC Site, sometimes referred to as the “KT
Plant”;
 
“AN Solution” means ammonium nitrate solution which meets or exceeds the
applicable AN Solution Specifications in Schedule “B” hereto, except that “Tons
of AN Solution” shall be measured on a one hundred percent (100%) basis;
 
“Arrangement for Disposal” has the same meaning as given to that term in the
case law interpreting Section 107(a)(3) of CERCLA;
 
“***” shall having the meaning given in Schedule “C” hereto;
 
“Business Day” means a day on which banking institutions in Denver, Colorado are
open for business;
 

Page 36
 
 
 

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“CERCLA” means the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended, 42 U.S.C. § 9601(22), and the regulations and
agency guidance promulgated thereunder;
 
“Claim” means any claim, demand, suit, action, cause of action, assessment,
loss, cost, expense, liability (whether contingent, fixed or unfixed, liquidated
or unliquidated, or otherwise), obligation, fine, penalty, interest, payment,
damage, requirement to do work or requirement to perform an activity (whether as
a result of civil action, criminal action, Government order or on any other
basis whatsoever), including costs or expenses of any and all investigations or
proceedings and reasonable fees and expenses of attorneys, accountants and other
experts, but excluding special, consequential, incidental or punitive damages
claimed by a party to this Agreement;
 
“Controls”, “is Controlled by” and “is under common Control with” means, with
respect to either party to this Agreement, the possession, direct or indirect,
of the power to direct or cause the direction of the management and policies of
a party, whether through ownership of voting securities, by contract or
otherwise;
 
“Disposal” has the same meaning as given to that term in CERCLA;
 
“Dispute” shall having the meaning given in Section 19.1 hereto;
 
“Dollar” or “$” shall mean dollars in United States currency;
 
“EDC’s Plant” or “EDC Plant” means the portion of the EDC Site useable by Orica
for the storage of Ammonia pursuant to Section 3.8 of the Agreement, the portion
of the nitric acid production facilities at the EDC Site utilized to supply
nitric acid for the production of AN for Orica, the portion of the AN Solution
production and storage facilities at the EDC Site utilized to supply AN Solution
for shipments and for the production of AN for Orica, the portion of the EDC
Site dedicated to the manufacture of AN Prills, including the AN Prills Plant,
the portion of the supporting facilities at the EDC Site used to manufacture
steam, to unload Ammonia, to load and ship AN manufactured for Orica and for
ingress to and egress from the AN Prills Plant and any assets that Orica
requests EDC to add to the EDC Site as a result of this Agreement;
 
“EDC’s Site” or “EDC Site” means the facilities existing and land utilized as at
the Effective Date by EDC at El Dorado, Arkansas for the storage of Ammonia and
the manufacture of 420,000 Tons of nitric acid, sulfuric acid, 450,000 Tons of
AN Solution, 250,000 Tons of AN Prills and 200,000 Tons of HDAN;
 
“EDC Indemnified Party” shall have the meaning set forth in Section 22.5 of this
Agreement;
 
“Effective Date” means January 1, 2010;
 
“Environment” means any water or water vapor, any land, including land surface
or subsurface, air, fish, wildlife, flora, fauna, biota and all other natural
resources;
 
Page 37
 
 
 

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“Environmental Law” means any and all federal, state or local environmental,
land use, zoning, health, chemical use, safety and sanitation laws, statutes,
ordinances, codes, and regulations, whether currently in effect or enacted or
amended after the Effective Date of this Agreement, relating to the protection,
preservation or remediation of the Environment and/or governing the use,
storage, treatment, generation, transportation, processing, handling,
production, Disposal, or Arrangement for Disposal of Hazardous Materials and the
rules, regulations, written and published notices, guidelines, decisions, orders
and directives of federal, state and local governmental agencies and authorities
with respect thereto;
 
“Environmental Permit” means all permits, licenses, approvals, authorizations,
consents or registrations required by any applicable Environmental Law in
connection with the ownership, development, construction, equipping, use and/or
operation of the EDC Site or the EDC Plant, as applicable, for the storage,
treatment, generation, transportation, processing, handling, production or
Disposal of Hazardous Materials;
 
“Financial Statements” shall have the meaning set forth in Section 5.2.5 of this
Agreement;
 
“Force Majeure” means any cause or causes beyond the reasonable control of the
party claiming such Force Majeure which prevents the performance by such party
of any obligation under the Agreement, other than (a) an obligation to pay money
(including Orica’s obligation to make the payments provided for in Section
14.2.1 except in the circumstances where Orica is relieved from its obligations
to pay to EDC the *** (including Depreciation) and *** components of the *** as
set out in Schedule “C” hereto) or (b) to indemnify, including, without limiting
the generality of the foregoing, acts of God, compliance with Laws, including
Environmental Laws, or any order or directive of any Government which, in the
reasonable judgment of the party affected, makes it necessary to cease or reduce
production or delivery, storm, lightning, riot, sabotage, rebellion,
insurrection, war, threat of war, embargo, flood, fire, lightning, accident,
explosion, inability to obtain sufficient fuel, transportation equipment, power
or raw materials, including specifically Ammonia, to maintain production of AN
at EDC’s Plant or to deliver AN to Orica, breakdown of machinery or equipment
and shutdown or partial shutdown of EDC’s Plant, provided that lack of funds
shall not be a cause beyond the reasonable control of a party.  Labor
Difficulties shall be events of Force Majeure if they occur within the regular
operations of a party and significantly affect such party’s ability to perform
its obligations hereunder.  Labor Difficulties affecting transportation
facilities with respect to the delivery and supply of goods, raw material
supplies and services to EDC’s Plant shall constitute events of Force Majeure to
the extent that such Labor Difficulties affect EDC’s ability to perform its
obligations hereunder;
 
“Government” means federal, state and municipal governments and authorities,
whether executive, administrative, municipal or quasi-judicial, and departments,
organizations and agencies of such governments and authorities, in the United
States;

Page 21
 
***INDICATES CERTAIN INFORMATION IN THIS DOCUMENT WHICH HAS BEEN OMITTED FROM
THIS PUBLIC FILING PURSUANT TO A REQUEST BY THE COMPANY FOR CONFIDENTIAL
TREATMENT BY THE SECURITIES AND EXCHANGE COMMISSION. THE OMITTED INFORMATION HAS
BEEN FILED SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE
COMMISSION FOR PURPOSES OF SUCH REQUEST.
 
 

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“Hazardous Material” means, without limitation, any element, compound, mixture,
solution, substance, product, waste or byproduct designated as “hazardous” or
“toxic” or as a pollutant or contaminant pursuant to any Environmental Law or
Environmental Permit, and Ammonium Nitrate, and any element, compound, mixture,
solution, substance, product, waste or byproduct produced therefrom or created
thereby;
 
“HDAN” means agricultural grade ammonium nitrate which meets or exceeds the
applicable Specifications in Schedule “B” hereto manufactured by EDC at the EDC
Site, and sometimes known as “E2”;
 
“Initial Term” shall have the meaning set forth in Section 2.1 of this
Agreement;
 
“Koch Ammonia Agreement” means the Anhydrous Ammonia Sales Agreement between
Koch Nitrogen Company (“KNC”), Koch Nitrogen International SARL (“KNI”) and EDC
dated March 9, 2005, which was subsequently amended by (a) that certain First
Amendment to Anhydrous Ammonia Sales Agreement, effective August 29, 2005; (b)
that certain Second Amendment to Anhydrous Ammonia Sales Agreement dated
November 3, 2006 and effective July 1, 2006; and (c) that certain Third
Amendment to Anhydrous Ammonia Sales Agreement dated December 3, 2008 and
effective January 1, 2009;
 
“Labor Difficulties” means strikes and lockouts, both legal and illegal, and
other forms of organized actions, howsoever called, by labor or other personnel
to stop or significantly reduce or slow-down work or production or to withdraw
or withhold labor or services;
 
“Laws” means common law, statute law, other laws, rules, regulations, by-laws,
ordinances, orders, codes, licensing requirements, and other lawful enactments
promulgated by any Government and published guidelines or standards set by any
Government;
 
“***” shall have the meaning set forth in Schedule “C” hereto;
 
“Month” means a calendar month;
 
“Orica Indemnified Party” shall have the meaning set forth in Section 22.4 of
this Agreement;
 
“Permitted Successor and Assign” shall have the meaning set forth in Section
27.1 of this Agreement;
 
 “Release” has the same meaning as given to that term in CERCLA;
 
“Reserved Capacity” shall have the meaning set forth in Section 4.1 of this
Agreement;
 
 “SHE Standards” shall have the meaning set forth in Section 22.1 of this
Agreement;
 
Page 39
 
***INDICATES CERTAIN INFORMATION IN THIS DOCUMENT WHICH HAS BEEN OMITTED FROM
THIS PUBLIC FILING PURSUANT TO A REQUEST BY THE COMPANY FOR CONFIDENTIAL
TREATMENT BY THE SECURITIES AND EXCHANGE COMMISSION. THE OMITTED INFORMATION HAS
BEEN FILED SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE
COMMISSION FOR PURPOSES OF SUCH REQUEST.
 
 
 

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“Specifications” shall mean the specifications in Schedule “B” hereto;
 
“Term” shall have the meaning set forth in Section 2.1 of this Agreement;
 
“Ton” means 2000 pounds;
 
“True Up Report” shall mean the report attached as Schedule “F” hereto used to
complete the adjustments referred to in Sections 14.2.2, 14.2.3 and 14.2.4 of
the Agreement;
 
“Verification Right” shall have the meaning set forth in Section 13.3 of this
Agreement ; and
 
“Year” means a 12 month period beginning each January 1st and ending on
December 31st.
 

Page 40
 
 
 

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SCHEDULE “B”
 
PRODUCT SPECIFICATIONS
 
AMMONIA
 
Fertilizer Grade Anhydrous Ammonia
 
(82-0-0)
 
Parameter
Specification
Purity (wt%)
99.5% NH3 Minimum
Nitrogen (wt%)
81.8% Minimum
Moisture (wt%)
0.2% Minimum to 0.5% Maximum
Oil
6 parts per million Maximum
Iron
1 part per million Maximum
   

 
AN PRILLS
 
(34-0-0)
 
UN NUMBER 1942
 
Parameter
Specification
Typical Value
Total Nitrogen (wt%)
34.0% Minimum
34.67%
Moisture (wt%)
0.15% Maximum
0.06%
Bulk Density
45.0 lbs/ft3 Minimum
47.7
Oil Absorption (wt%)
8.0 – 13.0%
10.4%
Internal Surfactant*
450 – 700 ppm (Winter)
650 – 1000 ppm (Summer)
550 ppm (Winter)
800 ppm (Summer)
 
External Surfactant*
 
600 - 1200 ppm (Winter)
800 – 1200 ppm (Summer)
 
807 ppm (Winter)
1000 ppm (Summer)
 
Talc (External Coating) (wt%)
 
0.4 – 0.75%
 
0.50%
Screen Analysis (U.S. Standard)
+6 Mesh (wt%)
0.0% Maximum
0.0%
+14 Mesh (wt%)
90.0% Minimum
98.1%
+20 Mesh (wt%)
10% Maximum
1.8%
-20 Mesh (wt%)
0.5% Maximum
0.1%
 

 
 
* Winter means October through April; Summer means May through September
 

Page 41
 
 
 

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HDAN
 
Parameter
Specification
Typical Value
Total Nitrogen (wt%)
34.0% Min
34.5%
Water Insoluble
0.1% Max
0.01%
Moisture (wt%)
0.5% Max
0.3%
Bulk Density (Loose)
60 lbs/ft3 Min
61 lbs/ft3 Min
pH (10% w/w Solution)
5.5 to 6.5
6.0
E-2 Additive (%Mg)
0.18% - 0.40%
0.25%
     
Screen Analysis (U.S. Standard)
   
+6 Mesh (wt%)
2.0%
1.0%
+10 Mesh (wt%)
40.0% Min
45.0%
+14 Mesh (wt%)
75% Max
47.0%
+20 Mesh (wt%)
10% Max
7.0%
-20 Mesh (wt%)
1.0% Max
0.7%
 

 
AN SOLUTION
 
Parameter
Specification
AN Concentration (wt%)
85%-90%
pH Range
4.5 – 6
Loading Temperature
110 – 120 degrees C

 
Note: These specifications are based on EDC’s analytical methods.
 
Page 42
 
 
 

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SCHEDULE "C"
 
*** CALCULATION AND *** CALCULATION
 
*** CALCULATION
 
Annual Budget
 
EDC shall propose, on or before November 1st in each Year in respect of the
following Year, an *** budget (“Annual Budget”) for the *** (to be calculated as
set out below) ***.  Such Annual Budget shall be subject to Orica’s approval,
such approval not to be unreasonably withheld. The agreed Annual Budget for Year
2010 is attached as Schedule “C-1” hereto. The Annual Budget for Years
subsequent to Year 2010 shall be prepared utilizing the same methodology and
format as used for Year 2010 recognizing that the actual figures for Years
subsequent to Year 2010 will vary.  In the event that Orica does not agree to
any portion of the Annual Budget proposed by EDC, Orica shall, on or before
December 1st , identify in writing to EDC, with particularity, all items of such
Budget to which Orica does not agree.  All other items in such proposed Annual
Budget shall be deemed agreed.  For any disputed item(s) regarding a proposed
Annual Budget, the amount specified in the previous Year’s Annual Budget for
such disputed item(s) shall continue to apply until the dispute is resolved.  In
the event that the dispute is not resolved until after the commencement of a
Year, the resolution of the dispute will be applied retroactively to January 1st
of that Year and any amount owing as a result of such retroactivity will be paid
within 15 days of such amount being determined.
 
Prior to finalization of the Annual Budget, the parties shall meet to discuss
their respective needs in the next Year for AN and other products manufactured
at the EDC Site.
 
Calculation of ***
 
Orica shall pay to EDC a “***” which shall be the sum of the following ***:
 
·  
***

 
·  
***

 
·  
***

 
·  
***

 
 
Page 43
 
***INDICATES CERTAIN INFORMATION IN THIS DOCUMENT WHICH HAS BEEN OMITTED FROM
THIS PUBLIC FILING PURSUANT TO A REQUEST BY THE COMPANY FOR CONFIDENTIAL
TREATMENT BY THE SECURITIES AND EXCHANGE COMMISSION. THE OMITTED INFORMATION HAS
BEEN FILED SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE
COMMISSION FOR PURPOSES OF SUCH REQUEST.
 
 
 

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

 
 
***
 
***
 
***
 
***
 
***
 
***
 
***
 
***
 
***
 
***

Page 44
 
***INDICATES CERTAIN INFORMATION IN THIS DOCUMENT WHICH HAS BEEN OMITTED FROM
THIS PUBLIC FILING PURSUANT TO A REQUEST BY THE COMPANY FOR CONFIDENTIAL
TREATMENT BY THE SECURITIES AND EXCHANGE COMMISSION. THE OMITTED INFORMATION HAS
BEEN FILED SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE
COMMISSION FOR PURPOSES OF SUCH REQUEST.
 
 
 

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

 

***
 
***
 
***
 
1.  
***

2.  
***

3.  
***

4.  
***

5.  
***

6.  
***

7.  
***

8.  
***

 
***
 
***
 
***

Page 45
 
***INDICATES CERTAIN INFORMATION IN THIS DOCUMENT WHICH HAS BEEN OMITTED FROM
THIS PUBLIC FILING PURSUANT TO A REQUEST BY THE COMPANY FOR CONFIDENTIAL
TREATMENT BY THE SECURITIES AND EXCHANGE COMMISSION. THE OMITTED INFORMATION HAS
BEEN FILED SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE
COMMISSION FOR PURPOSES OF SUCH REQUEST.
 
 
 

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

 

 
***
 
***
 
***
 
***
 
***
 
***

Page 46
 
***INDICATES CERTAIN INFORMATION IN THIS DOCUMENT WHICH HAS BEEN OMITTED FROM
THIS PUBLIC FILING PURSUANT TO A REQUEST BY THE COMPANY FOR CONFIDENTIAL
TREATMENT BY THE SECURITIES AND EXCHANGE COMMISSION. THE OMITTED INFORMATION HAS
BEEN FILED SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE
COMMISSION FOR PURPOSES OF SUCH REQUEST.
 
 
 

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

 

***
 
***
 
***
 
***
 
***
 
***
***
***
***
***
***
 
***
 
***

Page 47
 
***INDICATES CERTAIN INFORMATION IN THIS DOCUMENT WHICH HAS BEEN OMITTED FROM
THIS PUBLIC FILING PURSUANT TO A REQUEST BY THE COMPANY FOR CONFIDENTIAL
TREATMENT BY THE SECURITIES AND EXCHANGE COMMISSION. THE OMITTED INFORMATION HAS
BEEN FILED SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE
COMMISSION FOR PURPOSES OF SUCH REQUEST.
 
 
 

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

 

***
 
***
 
***
 
***
 
***
 
Cost Reduction
 
If, for any reason, Orica determines that it will not take delivery on a Monthly
basis of its previously forecasted AN offtake, Orica shall promptly so advise
EDC.  The parties shall then consult as to the best method to operate the assets
at the EDC Plant to deliver AN in accordance with Orica’s new forecast and at
reduced costs.  During any production curtailment or shut down period, including
as a result of Orica declaring Force Majeure, EDC will use best efforts, without
expenditure of funds, to mitigate costs, *** to implement agreed cost reduction
initiatives and any costs so avoided (“***”) shall be to Orica’s benefit and
shall reduce the ***.  These cost reductions will initially be achieved by, to
the extent feasible, re-deploying the people, assets and products manufactured
at the EDC Plant for other purposes. *** include those which relate to the
voluntary use by EDC in another one of its operations at the EDC Site, or the
sale by EDC of, inputs the costs of which would otherwise be charged to Orica
pursuant to Schedule “C” to this Agreement. If a cost reduction opportunity
necessitates an expenditure of funds in order to achieve the savings and both
parties agree to make the expenditure, those funds will be expended by Orica and
EDC in proportion to the benefit each will receive.
 
If Orica identifies a cost-savings opportunity which, based on Orica’s
evaluation, it believes can be implemented at the EDC Plant and, taking into
account the operation of the remainder of the EDC Site, will, if implemented,
reduce the *** payable by Orica hereunder, Orica may present a proposal to EDC
to effect such cost-savings opportunity.  The parties thereafter shall use their
best efforts, without
 

Page 48
 
***INDICATES CERTAIN INFORMATION IN THIS DOCUMENT WHICH HAS BEEN OMITTED FROM
THIS PUBLIC FILING PURSUANT TO A REQUEST BY THE COMPANY FOR CONFIDENTIAL
TREATMENT BY THE SECURITIES AND EXCHANGE COMMISSION. THE OMITTED INFORMATION HAS
BEEN FILED SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE
COMMISSION FOR PURPOSES OF SUCH REQUEST.
 
 
 

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

 

expenditure of funds, to agree upon Orica’s proposal or a variation thereof.  If
the parties do agree and such cost-savings opportunity necessitates an
expenditure of funds in order to achieve the savings, and the parties agree to
such expenditure of funds, those funds will be expended by Orica and EDC in
proportion to the benefit each will receive and the resulting cost savings will
be reflected in the ***.
 
Relief of Orica’s Obligation to Pay ***
 
After the occurrence of the following circumstances, and to the extent caused
thereby, Orica shall be relieved from its obligations herein to pay to EDC the
***:
 
(a)   If EDC is unable to supply Ammonia to the EDC Site during such periods as
EDC is supplying Ammonia pursuant to Sections 3.1 and 3.3 of the Agreement and
if such failure is due to an act or omission of EDC or the breach by EDC of the
supply contract with its Ammonia supplier; or
 
(b)           If EDC is unable to supply AN Prills to Orica from the AN Prills
Plant, that Orica has ordered in compliance with the terms of this Agreement,
for a period of 15 or more consecutive days, irrespective of the cause of such
failure, including where such failure is due to an act or omission of EDC or a
result of EDC declaring Force Majeure, except if such failure is due to the acts
or omissions of Orica,and the relief conferred by EDC upon Orica pursuant to
this paragraph (b) above shall be Orica’s sole remedy for EDC’s inability to
supply AN Prills to Orica from the AN Prills Plant as a result of EDC declaring
Force Majeure but such shall not limit Orica’s remedies where such failure is
due to an act or omission of EDC.
 
Relief of Orica’s obligations shall cease upon the cessation of the applicable
circumstance above.
 
*** CALCULATION
 
In addition to the ***, Orica shall pay to EDC the ***, as provided below:
 
***
 
 
***
 
 
·  
***

 
·  
***

 
·  
***

 
 
Page 49
 
***INDICATES CERTAIN INFORMATION IN THIS DOCUMENT WHICH HAS BEEN OMITTED FROM
THIS PUBLIC FILING PURSUANT TO A REQUEST BY THE COMPANY FOR CONFIDENTIAL
TREATMENT BY THE SECURITIES AND EXCHANGE COMMISSION. THE OMITTED INFORMATION HAS
BEEN FILED SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE
COMMISSION FOR PURPOSES OF SUCH REQUEST.
 
 
 

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

 
 
which EDC wishes to recover from Orica, Orica must first agree upon such
investment (“Approved Investment Project”).  In the event the parties so agree
on an investment, EDC shall manage the Approved Investment Project, provided
that Orica shall be consulted by EDC respecting all major project
decisions.  Approved Investment Projects shall at all times be owned by
EDC.  All efficiencies resulting from such improvements shall be recognized as
savings when calculating the ***.
 
EDC’s investment plus the cost of funds (including, without limitation,
interest) (collectively, the “Approved Investment”) associated with an Approved
Investment Project shall be repaid by Orica to EDC in equal Monthly amounts over
the agreed lifetime of the asset, in addition to Orica’s payment of the
***.   Orica shall have no further obligations respecting Approved Investments
upon the termination of this Agreement nor shall Orica have any further
obligations in respect of an Approved Investment Project after the agreed
lifetime of the asset which lifetime was used to calculate Orica’s financial
obligations relating to the investment.
 
In the event an Approved Investment Project will enhance the operations at the
EDC Site in addition to the EDC Plant, then Orica shall pay only the proportion
of the investment relating to the EDC Plant as Orica and EDC may agree.  If
Orica disagrees with an investment EDC proposes to make, EDC shall be entitled
to make such investment, however the *** hereunder shall not increase as a
result thereof and Orica shall have no obligation to repay any portion of such
investment.
 
***
 
All *** incurred by EDC in connection with the:
 
·  
Ammonia storage facilities when operated for Orica’s benefit;

 
·  
unusual shipping or handling services; and

 
·  
cessation or resumption of production under Section 4.3 of the Agreement which
causes EDC to directly incur additional fixed or variable costs not otherwise
included in the *** and in excess of amounts budgeted for the operation of the
AN Prills Plant

 
required by Orica and which are not otherwise charged to Orica under the ***
shall be separately charged to Orica, and paid by Orica to EDC, at EDC’s actual
cost to provide such services ("***").    EDC shall invoice Orica for ***
Monthly.  Orica shall pay such invoices within 15 days of invoice.
 
Insurance Premiums
 
Page 50
 
***INDICATES CERTAIN INFORMATION IN THIS DOCUMENT WHICH HAS BEEN OMITTED FROM
THIS PUBLIC FILING PURSUANT TO A REQUEST BY THE COMPANY FOR CONFIDENTIAL
TREATMENT BY THE SECURITIES AND EXCHANGE COMMISSION. THE OMITTED INFORMATION HAS
BEEN FILED SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE
COMMISSION FOR PURPOSES OF SUCH REQUEST.
 
 
 

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

 
 
EDC shall invoice Orica for the additional environmental impairment liability
insurance premium if Orica has exercised its right to be an Additional Named
Insured in accordance with Section 18.1.7 of the Agreement.  Orica shall pay
such invoices within 15 days of invoice.
 

Page 51
 
***INDICATES CERTAIN INFORMATION IN THIS DOCUMENT WHICH HAS BEEN OMITTED FROM
THIS PUBLIC FILING PURSUANT TO A REQUEST BY THE COMPANY FOR CONFIDENTIAL
TREATMENT BY THE SECURITIES AND EXCHANGE COMMISSION. THE OMITTED INFORMATION HAS
BEEN FILED SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE
COMMISSION FOR PURPOSES OF SUCH REQUEST.
 
 
 

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SCHEDULE “C-1”
 
***
 
El Dorado Chemical Company
Summary Invoice
Proposed 2010 Budget
 
***
Page 1 of 1

 

El Dorado Chemical Company
Proposed 2010 Budget – Material Flow
 
***
 
Page 1 of 1
 

*** Billing
El Dorado Chemical Company
Proposed 2010 Budget
 
***
Page 1 of 1

 

AN Pills and AN Solution *** Billing (includes both ***)
El Dorado Chemical Company
Proposed 2010 Budget
 
***
Page 1 of 1

 

HDAN *** Billing (includes both ***)
El Dorado Chemical Company
Proposed 2010 Budget
 
***
Page 1 of 1

 

Treated Water Allocation
El Dorado Chemical Company
Proposed 2010 Budget
 
***
 
Page 52
 
***INDICATES CERTAIN INFORMATION IN THIS DOCUMENT WHICH HAS BEEN OMITTED FROM
THIS PUBLIC FILING PURSUANT TO A REQUEST BY THE COMPANY FOR CONFIDENTIAL
TREATMENT BY THE SECURITIES AND EXCHANGE COMMISSION. THE OMITTED INFORMATION HAS
BEEN FILED SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE
COMMISSION FOR PURPOSES OF SUCH REQUEST.
 
 
 

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

 
 
SCHEDULE “D”
 
MEASUREMENT OF AMMONIA DELIVERIES
 
EDC shall maintain appropriate metering facilities designed to measure the
quantities of Ammonia delivered by pipeline pursuant to the Agreement.  The
metering facilities shall include a device which records the quantities of
product delivered, with automatic temperature compensation near the meter
intake, a gas eliminator, and other appropriate devices, all of said equipment
to be of standard manufacture and reasonably acceptable to Orica.  All metering
equipment shall be tested by EDC in a manner consistent with manufacturer’s
recommendations, but no less frequently than once a Year, and EDC will give
Orica reasonable notice of the date and approximate hour of each test.  The
testing method and facilities will be those agreed between the parties.  Orica
may have representatives present to witness all metering equipment tests and
shall have the right to inspect metering equipment in the presence of EDC’s
representatives.  Orica may request special tests of the metering equipment in
addition to the regular Monthly tests.  The expense of special tests will be
borne by Orica unless such tests show that the metering equipment is in error by
an amount in excess of the rated accuracy of the metering system, in which case
the expense of the special test shall be borne by EDC.
 
If any test shows that the metering equipment is in error by an amount exceeding
the rated accuracy of the system, the equipment shall be adjusted to record
accurately, and the previous readings of such equipment shall be corrected to
zero error for any period of error that is known definitely or agreed upon.  If
the period of error is not known definitely or agreed upon, the correction shall
be for a period comprising the last half of the time elapsed since the date of
the last test.
 
If the metering equipment becomes inoperative, or outside the rated accuracy of
the metering system, the quantities of Ammonia so delivered hereunder for each
day during which the metering equipment is inoperative or outside the rated
accuracy of the meter system shall be estimated and agreed upon on the basis of
the best data available, using the first of the following methods which is
feasible:
 
1.
By using the registration of EDC’s check meters if accurately registering:

 
2.
By correcting the error if the percentage of error is ascertainable by
calibration, test or mathematical calculations; or

 
3.
Other mutually agreeable means.

 
On a daily basis, EDC shall determine the quantities delivered to EDC.  Monthly
statements for Ammonia shall show deliveries on a daily basis.
 
If Orica does not protest within 30 days after receipt of EDC’s notice of the
quantities delivered, then the quantities of Ammonia as computed by EDC shall be
final and conclusive.  In the event of any dispute, the parties shall endeavour
to resolve such dispute and mutually agree on the appropriate measurement to be
used for invoicing
 
 
Page 53
 
 
 

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

 
 
purposes.  If the parties hereto cannot agree on such quantities, then they
shall select a disinterested technically appropriate third party which shall
re-compute the quantities in dispute.  The quantities re-computed by such
disinterested third party shall be accepted by the parties hereto as final and
conclusive.  The charges made by such disinterested third party shall be borne
equally by the parties hereto.  EDC shall retain quantity measurement records
hereunder for a period of at least one Year from the date on which such
measurements were made.
 
MEASUREMENT OF AMMONIUM NITRATE DELIVERIES
 
EDC shall maintain appropriate scale facilities designed to measure the
quantities of AN delivered by rail car and truck pursuant to the
Agreement.    Orica shall have the right to independently meter or weigh AN
delivered hereunder.
 
EDC agrees to provide copies of available testing records respecting its
measurement facilities to Orica upon Orica’s written request.
 
Monthly invoices for AN shall show deliveries on a daily basis.
 
If Orica does not protest within the time specified in Section 8.2 of the
Agreement in respect of quantities of AN delivered, then the quantities as
computed by EDC shall be final and conclusive.  In the event of any dispute, the
parties shall endeavour to resolve such dispute and mutually agree on the
appropriate measurement to be used for invoicing purposes.  If the parties
hereto cannot agree on such quantities, then they shall select a disinterested
technically appropriate third party which shall re-compute quantities in
dispute.  The quantities computed by such disinterested third party shall be
accepted by the parties hereto as final and conclusive.  The charges made by
such disinterested party shall be borne equally by the parties hereto.  EDC
shall retain quantity measurement records hereunder for a period of at least one
Year from the date on which such measurements were made.
 

 

Page 54
 
 
 

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SCHEDULE “E”

 
 
TYPES OF UNUSUAL INCIDENTS TO BE REPORTED TO ORICA

 
The following major unusual incidents at the EDC Plant shall be reported to
Orica  within 8 hours:
 
Any incident which does or is likely to:
 
·  
result in death of an employee or the hospitalization of 3 or more employees

 
·  
result in serious damage to property or to the environment

 
·  
lead to a report in, or attract the attention of, the media

 
·  
cause notification to, or filing a report with, a regulatory agency

 
The following unusual incidents at the EDC Plant shall be reported to Orica
within 48 hours:
 
1.           Any OSHA recordable injury or illness.
 
2.           Any explosion or fire which results in the interruption of normal
work.
 
3.
Any uncontrolled release of materials likely to threaten the external
environment, including incidents that occurred during the transport of hazardous
substances.

 
4.           The explosion or collapse of any pressure vessel.
 
5.
Any material unexplained or abnormal occurrence, including any loss of product
or material through theft, neglect or paperwork discrepancy.

 
6.
Any incident whereby AN could be affected by contamination, non-compatibility or
incorrect manufacturing procedures or processes.

 
7.           Transportation/distribution incidents related to shipments to or
from the EDC Plant.
 
 
Page 55
 
 
 
 

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SCHEDULE “F”
 
TRUE UP REPORT
 
***
 
Schedule F True Up Report
El Dorado Chemical Company
***
Amounts Based Upon Proforma Assumptions

***
Page 1 of 1

 
Schedule F True Up Report
 El Dorado Chemical Company
***
 Amounts Based Upon Proforma Assumptions

***
Page 1 of 1

 
Schedule F True Up Report
 El Dorado Chemical Company
***
 Amounts Based Upon Proforma Assumptions

***
Page 1 of 1

 
El Dorado Chemical Company
 Orica Contract - *** Billing
 AN Prills Detail True-Up Report

***

El Dorado Chemical Company
Orica Contract - *** Billing
AN Prills and AN Solution Detail True-up Report

***

El Dorado Chemical Company
Orica Contract - *** Billing
HDAN Detail True-up Report

 
 

Page 56
 
***INDICATES CERTAIN INFORMATION IN THIS DOCUMENT WHICH HAS BEEN OMITTED FROM
THIS PUBLIC FILING PURSUANT TO A REQUEST BY THE COMPANY FOR CONFIDENTIAL
TREATMENT BY THE SECURITIES AND EXCHANGE COMMISSION. THE OMITTED INFORMATION HAS
BEEN FILED SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE
COMMISSION FOR PURPOSES OF SUCH REQUEST.
 
 
 

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SCHEDULE “G”
 
***
 
 
 
 
 

Page 57
 
***INDICATES CERTAIN INFORMATION IN THIS DOCUMENT WHICH HAS BEEN OMITTED FROM
THIS PUBLIC FILING PURSUANT TO A REQUEST BY THE COMPANY FOR CONFIDENTIAL
TREATMENT BY THE SECURITIES AND EXCHANGE COMMISSION. THE OMITTED INFORMATION HAS
BEEN FILED SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE
COMMISSION FOR PURPOSES OF SUCH REQUEST.
 
 
 

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