Document:

exhibit 4.18 Tenth Amendment Wells Fargo

     

    TENTH
      AMENDMENT 

     

     

    TO
      LOAN
      AND SECURITY AGREEMENT 

     

    TENTH
      AMENDMENT, dated as of March 21, 2007 (the "Amendment"), to the Loan and
      Security Agreement dated as of April 13, 2001, as amended by the First Amendment
      dated as of August 3, 2001, the Second Amendment dated as of May 24, 2002,
      the
      Third Amendment dated as of November 18, 2002, the Fourth Amendment dated as
      of
      March 3, 2003, the Fifth Amendment dated as of December 31, 2003, the Sixth
      Amendment dated as of June 29, 2004, the Seventh Amendment dated as of September
      15, 2004, the Eighth Amendment dated as of February 28, 2005, and the Ninth
      Amendment dated as of February 22, 2006 (the "Loan Agreement"), by and among
      (i)
      LSB INDUSTRIES, INC., a Delaware corporation (the "Parent"), THERMACLIME, INC.,
      an Oklahoma corporation formerly known as ClimaChem, Inc. ("ThermaClime"),
      and
      each of the Subsidiaries of ThermaClime identified on the signature pages
      thereof (such Subsidiaries, together with ThermaClime, each a "Borrower", and
      collectively, the "Borrowers"), (ii) the lenders identified on the signature
      pages thereof (each a "Lender" and collectively the "Lenders") and (iii) WELLS
      FARGO FOOTHILL, INC., a California corporation formerly known as Foothill
      Capital Corporation, as the arranger and administrative agent for the Lenders
      (the "Agent"). 

     

     

    WHEREAS,
      the Borrowers have requested that the Loan Agreement be amended and modified
      to
      (i) modify the minimum EBITDA covenants and (ii) modify the maximum Capital
      Expenditures covenant, and the Agent and the Lenders have agreed to such
      amendments subject to the terms and conditions set forth herein.. 

     

     

    NOW
      THEREFORE, in consideration of the premises and other good and valuable
      consideration, the parties hereto hereby agree as follows: 

     

     

    1.
      Capitalized Terms. All capitalized terms used in this Amendment (including,
      without limitation, in the recitals hereto) and not otherwise defined shall
      have
      their respective meanings set forth in the Loan Agreement. 

     

     

    2.
      Financial
      Covenants.
      Section
      7.20 of the Loan Agreement is hereby amended as follows: 

     

     

    (a)
      Minimum EBITDA. Section 7.20(a)(i) is hereby amended as follows: 

     

     

    "(i)
      Minimum
      EBITDA.
      EBITDA,
      measured on a fiscal quarter-end basis, of not less than the required amount
      set
      forth in the following table for the applicable period set forth opposite
      thereto; 

     

    
      	
               

              Applicable
                Amount 

               

            	
               

              Applicable
                Period 

               

            
	
               

              $22,000,000
                

               

            	
               

              For
                the 12 month period ending March 31, 2007 

               

            
	
               

              $22,000,000
                

               

            	
               

              For
                the 12 month period ending June 30, 2007 

               

            
	
               

              $22,000,000
                

               

            	
               

              For
                the 12 month period ending September 30, 2007 

               

            
	
               

              $22,000,000
                

               

            	
               

              For
                the 12 month period ending December 31, 2007 

               

            

    

     

    Borrowers'
      EBITDA for the 12 month period ending each fiscal quarter after December 31,
      2007 shall not be less than the greater of (x) $22,000,000 and (y) 85% of
      Borrowers' projected EBITDA for such period as set forth in the Projections
      delivered to Agent in accordance with Section 6.3(c), which Projections are
      in
      form and substance acceptable to Agent; provided,
      that if
      Agent and Borrowers cannot agree on the EBITDA covenant number based upon
      Borrowers' projected EBITDA, for purposes of this Section 7.20(a)(i), Borrowers'
      EBITDA for such 12 month period shall be determined by Agent in its Permitted
      Discretion and shall not be less than $22,000,000." 

     

     

    (b)
      Minimum EBITDA for the Climate Control Business. Section 7.20(a)(ii) is hereby
      amended as follows: 

     

     

    "(ii)
      Minimum
      EBITDA for the Climate Control Business.
      EBITDA
      of the Borrowers comprising the Climate Control Business, measured on a fiscal
      quarter-end basis, of not less than the required amount set forth in the
      following table for the applicable period set forth opposite thereto;

     

    
      	
               

              Applicable
                Amount 

               

            	
               

              Applicable
                Period 

               

            
	
               

              $16,000,000
                

               

            	
               

              For
                the 12 month period ending March 31, 2007 

               

            
	
               

              $16,000,000
                

               

            	
               

              For
                the 12 month period ending June 30, 2007 

               

            
	
               

              $16,000,000
                

               

            	
               

              For
                the 12 month period ending September 30, 2007 

               

            
	
               

              $16,000,000
                

               

            	
               

              For
                the 12 month period ending each fiscal quarter thereafter” 

               

            

    

     

    (c)
      Capital Expenditures. Section 7.20(b)(i) is hereby amended in its entirety
      to
      read as follows: 

     

     

    "(i)
      Capital
      Expenditures.
      Capital
      Expenditures, measured on a fiscal quarter-end basis, in excess of $16,000,000
      for the trailing twelve (12) month period." 

     

     

    3.
      Conditions Precedent. The effectiveness of this Amendment is subject to the
      fulfillment, in a manner satisfactory to the Agent, of each of the following
      conditions precedent (the first date upon which all such conditions shall have
      been satisfied being herein called the "Tenth Amendment Effective Date"):

     

     

    

     

     

    (a)
      Representations and Warranties; No Event of Default. The representations and
      warranties contained herein, in Section 5 of the Loan Agreement and in each
      other Loan Document and certificate or other writing delivered to the Agent
      or
      any Lender pursuant hereto on or prior to the Tenth Amendment Effective Date
      shall be correct in all material respects on and as of the Tenth Amendment
      Effective Date as though made on and as of such date, except to the extent
      that
      such representations and warranties (or any schedules related thereto) expressly
      relate solely to an earlier date (in which case such representations and
      warranties shall be true and correct in all material respects on and as of
      such
      date); and no Default or Event of Default shall have occurred and be continuing
      on the Tenth Amendment Effective Date or would result from this Amendment
      becoming effective in accordance with its terms. 

     

     

    (b)
      Delivery of Documents. The Agent shall have received on or before the Tenth
      Amendment Effective Date the following, each in form and substance satisfactory
      to the Agent and, unless indicated otherwise, dated the Tenth Amendment
      Effective Date: 

     

     

    (i)
      counterparts of this Amendment duly executed by the Borrowers, the Agent and
      the
      Lenders; and 

     

     

    (ii)
      such
      other agreements, instruments, approvals, opinions and other documents as the
      Agent may reasonably request from the Borrowers. 

     

     

    (c)
      Amendment Fee. The Borrowers shall have paid to the Agent, for the benefit
      of
      the Lenders, in immediately available funds, a fully earned and nonrefundable
      amendment fee equal to $10,000 the payment of which shall be effected by Agent
      charging such fee to Borrowers' Loan Account. 

     

     

    (d)
      Proceedings. All proceedings in connection with the transactions contemplated
      by
      this Amendment, and all documents incidental thereto, shall be satisfactory
      to
      the Agent and its special counsel, and the Agent and such special counsel shall
      have received from the Borrowers all such information and such counterpart
      originals or certified copies of documents, and such other agreements,
      instruments, approvals, opinions and other documents, as the Agent or such
      special counsel may reasonably request. 

     

     

    4.
      Representations and Warranties. Each Borrower hereby represents and warrants
      to
      the Agent and the Lenders as follows: 

     

     

    (a)
      Representations and Warranties; No Event of Default. The representations and
      warranties herein, in Section 5 of the Loan Agreement and in each other Loan
      Document and certificate or other writing delivered to the Agent or any Lender
      pursuant hereto on or prior to the Tenth Amendment Effective Date are correct
      in
      all material respects on and as of the Tenth Amendment Effective Date as though
      made on and as of such date, except to the extent that such representations
      and
      warranties (or any schedules related thereto) expressly relate solely to an
      earlier date (in which case such representations and warranties are true and
      correct in all material respects on and as of such date); and no Default or
      Event of Default has occurred and is continuing on the Tenth Amendment Effective
      Date or would result from this Amendment becoming effective in accordance with
      its terms. 

     

     

    (b)
      Organization, Good Standing, Etc. Each Borrower (i) is a corporation duly
      organized, validly existing and in good standing under the laws of the state
      of
      its organization, (ii) has all requisite power and authority to execute, deliver
      and perform this Amendment and the other Loan Documents to which it is a party
      being executed in connection with this Amendment, and to perform the Loan
      Agreement, as amended hereby, and (iii) is duly qualified to do business and
      is
      in good standing in each jurisdiction in which the character of the properties
      owned or leased by it or in which the transaction of its business makes such
      qualification necessary except where the failure to be so qualified reasonably
      could not be expected to have a Material Adverse Change. 

     

     

    (c)
      Authorization, Etc. The execution, delivery and performance by each Borrower
      of
      this Amendment, and the performance by each Borrower of the Loan Agreement,
      as
      amended hereby, (i) have been duly authorized by all necessary action on the
      part of such Borrower, (ii) do not and will not contravene such Borrower's
      charter or by-laws, any applicable law or any material contractual restriction
      binding on or otherwise affecting it or any of its properties, (iii) do not
      and
      will not result in or require the creation of any Lien (other than pursuant
      to
      any Loan Document) upon or with respect to any of its properties, and (iv)
      do
      not and will not result in any suspension, revocation, impairment, forfeiture
      or
      nonrenewal of any permit, license, authorization or approval applicable to
      its
      operations or any of its properties. 

     

     

    5.
      Miscellaneous. 

     

     

    (a)
      Continued Effectiveness of the Loan Agreement. Except as otherwise expressly
      provided herein, the Loan Agreement and the other Loan Documents are, and shall
      continue to be, in full force and effect and are hereby ratified and confirmed
      in all respects, except that on and after the Tenth Amendment Effective Date
      (i)
      all references in the Loan Agreement to "this Agreement", "hereto", "hereof",
      "hereunder" or words of like import referring to the Loan Agreement shall mean
      the Loan Agreement as amended by this Amendment, and (ii) all references in
      the
      other Loan Documents to which any Borrower is a party to the "Loan Agreement",
      "thereto", "thereof", "thereunder" or words of like import referring to the
      Loan
      Agreement shall mean the Loan Agreement as amended by this Amendment. Except
      as
      expressly provided herein, the execution, delivery and effectiveness of this
      Amendment shall not operate as an amendment of any right, power or remedy of
      the
      Lender under the Loan Agreement or any other Loan Document, nor constitute
      an
      amendment of any provision of the Loan Agreement or any other Loan Document.
      

     

     

    (b)
      Counterparts. This Amendment may be executed in any number of counterparts
      and
      by different parties hereto in separate counterparts, each of which shall be
      deemed to be an original, but all of which taken together shall constitute
      one
      and the same agreement. 

     

     

    (c)
      Headings. Section headings herein are included for convenience of reference
      only
      and shall not constitute a part of this Amendment for any other purpose.

     

     

    (d)
      Governing Law. This Amendment shall be governed by, and construed in accordance
      with, the law of the State of New York. 

     

     

    (e)
      Costs
      and Expenses. The Borrowers jointly and severally agree to pay on demand all
      reasonable fees, costs and expenses of the Agent and each Lender in connection
      with the preparation, execution and delivery of this Amendment and the other
      related agreements, instruments and documents. 

     

     

    (f)
      Amendment as Loan Document. Each Borrower hereby acknowledges and agrees that
      this Amendment constitutes a "Loan Document" under the Loan Agreement.
      Accordingly, it shall be an Event of Default under the Loan Agreement (i) if
      any
      representation or warranty made by a Borrower under or in connection with this
      Amendment shall have been untrue, false or misleading in any material respect
      when made or (ii) if Borrowers fail to perform, keep, or observe any term,
      provision, condition, covenant, or agreement contained in this Amendment.

     

     

    (g)
      Waiver of Jury Trial. EACH BORROWER, THE AGENT AND THE LENDERS HEREBY
      IRREVOCABLY WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE
      OF ACTION BASED UPON OR ARISING OUT OF THIS AMENDMENT OR ANY OF THE TRANSACTIONS
      CONTEMPLATED HEREIN, INCLUDING CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY
      CLAIMS, AND ALL OTHER COMMON LAW OR STATUTORY CLAIMS. 

     

     

    IN
      WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed
      and delivered as of the date first above written. 

     

     

    Borrowers:
      

     

     

    THERMACLIME,
      INC. (formerly known as ClimaChem, Inc.), an Oklahoma corporation 

     

    By:
      ___________________________ 

     

    Title:
      _______________________ 

     

     

    CHEROKEE
      NITROGEN COMPANY, 

    a
      Oklahoma corporation 

     

     

    By:
      ___________________________ 

     

    Title:
      _______________________ 

     

     

    CLIMATE
      MASTER, INC., 

    a
      Delaware corporation 

     

     

    By:
      ___________________________ 

     

    Title:
      _______________________ 

     

     

    CLIMATECRAFT,
      INC., 

    an
      Oklahoma corporation 

     

     

    By:
      ___________________________ 

     

    Title:
      _______________________ 

     

     

    CLIMACOOL,
      CORP., 

    an
      Oklahoma corporation 

     

     

    By:
      ___________________________ 

     

    Title:
      _______________________ 

     

     

    INTERNATIONAL
      ENVIRONMENTAL CORPORATION, an Oklahoma corporation 

     

    By:
      ___________________________ 

     

    Title:
      _______________________ 

     

     

    THERMACLIME
      TECHNOLOGIES, INC., an Oklahoma corporation 

     

    By:
      ___________________________ 

     

    Title:
      _______________________ 

     

    KOAX
      CORP., an Oklahoma corporation 

     

    By:
      ___________________________ 

     

    Title:
      _______________________ 

     

     

    LSB
      CHEMICAL CORP., 

    an
      Oklahoma corporation 

     

     

    By:
      ___________________________ 

     

    Title:
      _______________________ 

     

     

    XPEDIAIR,
      INC., 

    an
      Oklahoma corporation 

     

     

    By:
      ___________________________ 

     

    Title:
      _______________________ 

     

     

    EL
      DORADO
      CHEMICAL COMPANY, 

    an
      Oklahoma corporation 

     

     

    By:
      ___________________________ 

     

    Title:
      _______________________ 

     

     

    CHEMEX
      I
      CORP., 

    an
      Oklahoma corporation 

     

     

    By:
      ___________________________ 

     

    Title:
      _______________________ 

     

     

    TRISON
      CONSTRUCTION, INC., 

    an
      Oklahoma corporation 

     

     

    By:
      ___________________________ 

     

    Title:
      _______________________ 

     

     

    CHEMEX
      II
      CORP., 

    an
      Oklahoma corporation 

     

     

    By:
      ___________________________ 

     

    Title:
      _______________________ 

     

     

    Agent
      and
      Lender: 

    WELLS
      FARGO FOOTHILL, INC., 

    a
      California corporation 

     

     

    By:
      ___________________________ 

     

    Title:
      _______________________ 

     

    Lender:
      

     

    CONGRESS
      FINANCIAL CORPORATION (SOUTHWEST), 

    a
      Texas
      corporation 

     

     

    By:
      ___________________________ 

     

    Title:_______________________exhibit 10.40 Koch Purchase Confirmation

    KOCH                                

    KOCH
      NITROGEN COMPANY

    4111
      E. 37th
      St. N. Wichita, Ks 67220

    Tel:
      316-828-8778 Fax: 316-828-4084 

     Contract
      #

    July
      1st,
      2006

    

    To:  Paul
      Rydlund    Fax: 405-236-0728

    

    From: Todd
      Minnihan    Fax: 316-828-4084

    

    Re: PURCHASE
      OF UREA-AMMONIUM NITRATE SOLUTION 

    ______________________________________________________________________________

    

    PURCHASE
      CONFIRMATION

    

    Koch
      Nitrogen Company is pleased to confirm our purchase of urea-ammonium nitrate
      solution (“UAN”) as per the following terms and conditions:  

    

    Buyer:     
Koch
      Nitrogen Company
          
          4111
      East
      37th
      Street
      North
         
Wichita,
      KS 67220

     

    Seller:         
      Cherokee
      Nitrogen 

    P.O.
      Box
      250

    1080
      Industrial Drive

    Cherokee,
      AL 35616-0250

     

    Product:     32%
      urea-ammonium nitrate solution (“UAN 32%”); provided, if requested by Buyer in
      writing, Seller will provide to Buyer 28% urea-ammonium nitrate solution (“UAN
      28%”). Unless the context otherwise requires, the terms UAN 32% and UAN 28%
      shall collectively be referred as Product. 

    Seller’s
      

    Facility:     
Seller
      will
      produce and supply all Product from its production unit located at Seller’s
      Cherokee, Alabama facility. 

    

    Quality:    
       Product
      specifications for UAN 32%: 

     

    Total
      Nitrogen, weight %          32.0
      %
      minimum

    Free
      Ammonia, weight %          <0.1
      %

    Salt-Out
      Temperature            32
      degrees F or lower
                Inhibitor
      (GE-Betz UAN 9764)      
50
      ppm
      minimum

    pH                        6.5
      to
      7.2

    Specific
      Gravity @ 60 Degrees F  1.32

    Appearance                  Clear

    
      
        1

      

      
        

          PORTIONS
            OF THIS DOCUMENT HAVE 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.

        

        
          

        

      

      
        
        

      

    

    Product
      specifications for UAN 28%: 

     

    Total
      Nitrogen, weight %    28.0
      %
      minimum

    Free
      Ammonia, weight %          <0.1
      %

    Salt-Out
      Temperature             0
      degrees
      F or lower
                Inhibitor
      (GE-Betz UAN 9764)        50
      ppm
      minimum

    pH                       6.5
      to
      7.2

    Specific
      Gravity @ 60 Degrees F  1.32

    Appearance                  Clear

    

    Term:    July
      1,
      2006 to June 30, 2007, except as otherwise terminated by Buyer as described
      in
      the section titled “Buyout Option” below. 

    

    Quantity:   6,000
      short tons per calendar month. at Buyers sole discretion, the monthly quantity
      can be increased to 8,000 short tons per calendar month, with notice in writing
      no less than 30 days prior to the beginning of the calendar month. Any quantity
      less than 6,000 or greater than 8,000 short tons per calendar month shall be
      mutually agreed to by Buyer and Seller in writing. 

    

    Exclusive

    Rights:        
      Buyer
      will have the exclusive right to purchase and market one hundred percent (100%)
      of the UAN produced by Seller at Seller’s Facility, except for the following:
      (i) direct sales by Seller for railcar deliveries into Alabama and Georgia,
      and
      (ii) truck shipments by Seller from Seller’s Facility; provided the quantity of
      Seller’s UAN production available for such truck shipments shall not exceed
      5,000 short tons per calendar month on average during the Term. If Seller elects
      not to maintain the marketing rights described in (i) or (ii) of the preceding
      sentence, then the rights not so maintained by Seller shall automatically revert
      to Buyer. 

     

    Delivery:    
       F.O.B.
      Seller’s Facility loaded by Seller into railcars and/or barges supplied by
      Buyer. 

    

    Prices:      (A) UAN
      32% Price:
      - F.O.B
      Seller’s Facility, $ per short ton = (Ammonia Cost ***)

    

    Where,

    1)
      Ammonia
      Cost,
      $ per
      short ton = ***

    2)
      ***

    3)
      ***

     

    ***
      Index Price”):
      The ***
      Index Price shall mean *** Index Price reported for the corresponding month
      which the Quantity of Product is to be produced by Seller. The ***

    
      
        2

      

      
        

          ***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.

        

        
          

        

      

      
        
        

      

    

    ***Index
      Price for such month will apply for the entire monthly Quantity to be produced
      by Seller regardless of the month the Product is actually delivered by Buyer
      to
      Seller. For example, if Product was agreed to be produced during the month
      of
      June 2005, the corresponding month would be June 2005, the table would be dated
      June 2005, the publication would be dated June 2005, and the *** Index Price
      would be *** per MMBtu.

    

    The
      current *** Fee is based upon a) the current published pipeline tariff for
      the
      ***, b) the applicable fuel rate for the *** Index Price, c) the negotiated
      pipeline tariff for the *** and d) taxes. The *** Fee is subject to changes
      as
      the costs constituting the *** Fee may change. Seller shall promptly notify
      Buyer in writing of, and provide all documentation reasonably requested by
      Buyer
      related to, any such change to the *** Fee.

    

    The
      current published pipeline tariff (a) is ***/MMBTU transportation demand and
      ***/MMBTU transportation usage.

    

    The
      current applicable fuel rate for *** INDEX Price is *** Index Price multiplied
      by ***.

    

    The
      current *** tariff is ***/MMBTU.

    

    Taxes
      are
      currently $0.07/MMBTU.

    

    For
      example, the current *** Fee at a *** Index Price of ***/MMBTU is ***

    

    During
      any given calendar month of production of Product, Seller will purchase the
      necessary quantity of gas required to produce the Quantity of Product stipulated
      in the Quantity section above, unless an alternative Quantity of Product has
      been agreed to by Buyer and Seller in writing at least seven (7) days prior
      to
      the beginning of such month. 

    

    
      	 	 	
              Example
                of UAN 32% Price
                calculation:

            

    

    
      	 	
              1)

            	
              ***

            

    

    
      	 	
              2)

            	
              ***

            

    

    
      	 	
              3)

            	
              ***

            

    

    
      	 	
              4)

            	
              UAN
                32% Price = ***

            

    

     

    (B)
       UAN
      28% Price: =
      UAN 32%
      Price per short ton multiplied by ***. 

    

    Example
      of 28% Price calculation:

    
      	 	
              1)

            	
              UAN
                32% Price = *** per short ton

            

    

    
      	 	
              2)

            	
              UAN
                28% Price = *** = *** per short ton.

            

    

    

    
      
        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.

        

        
          

        

      

      
        
        

      

    

    (C)
      UAN
      with Low Nitrogen Content:
      If the
      nitrogen content of the (i) UAN 32% is less than 31.8 percent (31.8%) or (ii)
      UAN 28% is less than 27.8 percent (27.8%) (in either case, “Low Nitrogen
      Content”), the Price, at Buyer’s sole option, will be reduced by Seller on a
      pro-rata basis based on the actual nitrogen content and the minimum
      specification of UAN 32% or UAN 28%, as applicable. 

    

    Example
      of 32% Price Adjustment Due to Low Nitrogen Content:

    
      	 	
              1)

            	
              Price
                for UAN 32% per formula = *** per short
                ton.

            

    

    
      	 	
              2)

            	
              Actual
                Nitrogen content of 31.5%.

            

    

    3)
      Adjusted Price = *** x [1-(31.8-31.5)/31.8] = *** per short ton

    

    Example
      of 28% Price Adjustment Due to Low Nitrogen Content:

    
      	 	
              1)

            	
              Price
                for UAN 28% per formula = *** per short
                ton.

            

    

    
      	 	
              2)

            	
              Actual
                Nitrogen content of 27.5%.

            

    

    3)
      Adjusted Price = *** x [1-(27.8-27.5)/27.8] = *** per short ton

    

    Shortfall:   In
      the
      event Seller is unable or unwilling to produce Product (even if caused by Force
      Majeure), whereby Seller does not have enough Product to deliver or sell the
      agreed to monthly Quantity to Buyer (a “Shortfall”), then (i) eighty percent
      (80%) of the available Product in inventory at Seller’s Facility shall be
      allocated for Buyer, regardless of Seller’s own sales commitments to other
      persons or entities, and (ii) Buyer shall have the option (in addition to its
      other available remedies at law or in equity) to either (i) take delivery of
      the
      Shortfall during any of the following month(s) during the Term with the
      Shortfall having a Price based on the month’s gas price the Product was agreed
      to be produced by Seller or (ii) refuse to take delivery of the
      Shortfall.

     

    Freight

    Rates:      Seller
      will provide to Buyer, at no additional cost, any and all negotiated Norfolk
      Southern (“NS”) freight rates provided to Seller for destinations that Buyer
      desires to ship Product via railcars, subject to the consent of NS or
      availability of such freight rates to Buyer. However, Seller shall use its
      reasonable efforts to obtain such consent from NS or obtain such rates for
      Buyer. Additionally, Seller will provide written approval to NS, as well as
      take
      such other actions as reasonably required by Buyer or NS, to allow Buyer to
      request and obtain negotiated freight rates from NS. 

    

    Railcars:     Seller
      will load up to eight (8) railcars per calendar day during a six (6) day week,
      commencing Monday through Saturday. Seller may store up to one hundred fifty
      (150) railcars on Seller’s rail siding if required, at no cost to Buyer.

    

    Bill
      of 

    Lading:      Seller
      will prepare a provisional Bill of Lading as railcars are loaded by Seller,
      each
      in the format supplied by Buyer. When Buyer provides shipping instructions
      to
      Seller, Seller will prepare an actual Bill of Lading in the format supplied
      by
      Buyer. 

    
      
        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.

        

        
          

        

      

      
        
        

      

    

    Shipments:    Buyer
      will use reasonable efforts to provide Seller with at least twenty-four (24)
      hours notification, along with appropriate documentation, to schedule shipments
      in Buyer’s railcars and/or barges. 

    

    On
      a
      daily basis, Seller will provide Buyer with all of the current day’s shipping
      information (including copies of all Bills of Lading) by facsimile to Buyer,
      attention Kevin Flahive at (316) 828-4084. Seller will retain the original
      Bill
      of Lading.

    

    Seller
      will be responsible for promptly notifying the railroad to pickup each
      railcar.

    

    Invoice:      Seller
      will invoice Buyer for the total Quantity of Product loaded into Buyer’s
      railcars and/or barges during any given week. The term “week” shall mean Sunday
      through Saturday.

    

         
The
      invoice Price for any week will be
      calculated pursuant to the formula in the section titled “Prices” above;
      provided, however, that the *** Index Price used to calculate the weekly price
      will be based on the month when the Product was to be produced by Seller as
      stated in the Quantity section. The Price will be accounted for on a
      first-in-first out (“FIFO”) basis. The following example illustrates the
      intentions of the Parties: 

     

    Example:  

    
      	 	
              1)

            	
              Seller
                purchases specified quantity of gas to produce 6,000 short tons of
                Product
                during September 2006.

            

    

    
      	 	
              2)

            	
              September
                2006 *** Index Price = *** per
                MMBtu.

            

    

    
      	 	
              3)

            	
              September
                2006 UAN 32% Price = *** per short
                ton.

            

    

    
      	 	
              4)

            	
              Seller
                loads 4,000 short tons of Product during September 2006 with an invoice
                price of *** per short ton.

            

    

    
      	 	
              5)

            	
              Seller
                purchases specified quantity of gas to produce 6,000 short tons during
                October 2006.

            

    

    
      	 	
              6)

            	
              October
                2006 *** Index Price = *** per
                MMBtu.

            

    

    
      	 	
              7)

            	
              October
                2006UAN 32% Price = *** per short
                ton.

            

    

    
      	 	
              8)

            	
              Seller
                loads 8,000 short tons of Product during October
                2006

            

    

    
      	 	
              a)

            	
              First
                2,000 short tons = *** per short ton

            

    

    
      	 	
              b)

            	
              Next
                6,000 short tons = *** per short
                ton

            

    

    

    Payment:   Net
      five
      (5) days from invoice date. All payments will be made by wire transfer to an
      account designated by Seller in writing.

    

    No
      Setoff:   Buyer
      waives the right to setoff and/or net any amounts that it owes to Seller under
      this Purchase Confirmation against any amount owed by Seller to Buyer under
      any
      other agreement. Seller waives the right to setoff and/or nets any amounts
      that
      it owes to Buyer under any other agreement against any amount owed by Buyer
      to
      Seller under this Purchase Confirmation

     

    
      
        5

      

      
        

          ***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.

        

        
          

        

      

      
        
        

      

    

    Quality/

    Quantity:   Quality
      will be based on the Product analysis at loading. Seller will provide to Buyer
      a
      Certificate of Analysis (“COA”) for each shipment of Product in the format
      supplied by Buyer. Seller’s Material Safety Data Sheet (“MSDS”) will be made
      available to Buyer for each shipment. In the event there is a discrepancy
      between the loaded Quality and discharge Quality, other then UAN with low
      nitrogen content as set forth in the Price section above, Buyer and Seller
      shall, in good faith, attempt to determine the cause of, and develop a solution
      to rectify, such discrepancy. 

    

    Quantity
      will be based on the actual measurement at loading as determined by Seller’s
      meter at Seller’s Facility. In the event there is a discrepancy between the
      loaded and discharge Quantity of Product, Buyer and Seller shall cooperate
      to
      determine the cause of, and develop a solution to rectify, such discrepancy.
      

    

    Title
      and 

    Risk
      of Loss:   Title
      and risk of loss to
      the Product will transfer from Seller to Buyer as Product passes the inlet
      flange of Buyer’s railcars or barges, as applicable. 

    

    Buyout
      

    Option: 

    If
      Buyer
      (i) provides Seller at least (30) days’ advance written notice of termination
      and (ii) pays seller an early termination fee of ***. Buyer may terminate the
      Purchase Confirmation at any time.

     

    If
      Seller
      (i) provides Buyer at least (30) days’ advance written notice of such
      termination and (ii) pays Buyer an early termination fee of ***, Seller may
      terminate this Purchase Confirmation at any time; provided, (a) Seller shall
      continue to supply any quantity of Product to Buyer on or past the actual
      termination date for which Buyer has made firm forward sales commitments for
      supply of Product from Seller’s Facility on or before receipt of Seller’s
      termination notice as per the terms and conditions of this Purchase Confirmation
      and (b) if, after Seller terminates the Purchase Confirmation as set forth
      in
      this section, Seller desires to sell Product prior to June 30, 2006 (excluding
      any sales of Product set forth in subsections (i) and (ii) under the section
      titled “Exclusive Rights”), Seller shall have the obligation to offer Product to
      Buyer on the same terms and conditions as set for the in this Purchase
      Confirmation (including quantity) until June 30, 2006”

     

    Prior
      

    Agreement:    By
      execution of this Purchase Confirmation, the parties acknowledge that the
      Purchase Confirmation between Buyer and Seller dated June 27, 2005, as amended
      August 3rd,
      September 6th, October 9th, November 9th,
      December 5th,
      2005,
      and January 6th, February 21st,
      and
      March 23rd,
      2006,
      (“Prior Confirmation”) is hereby terminated, and Seller waives any right to the
      early termination fee under the Prior Confirmation as a result
      thereof.

    

    
      
        
          
            6

          

        

        
        

      

      
        
          ***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.

        

        
          

        

      

      
        
        

        
        

      

    

    

    Terms
      and

    Conditions:    All
      the
      terms and conditions of the General Terms and Conditions of Purchase are hereby
      incorporated into and made a part of this Purchase Confirmation as essential
      terms and conditions. 

    

    

    

    [signature
      page to follow]

    
      
        7

      

      
        

          PORTIONS
            OF THIS DOCUMENT HAVE 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.

        

        
          

        

      

      
        
        

      

    

     

    Cherokee
      Nitrogen Company    Koch
      Nitrogen Company,

    as
      Seller       as
      Buyer

    

    _____________________________   _________________________

    Paul
      Rydlund, President            Todd
      B.
      Minnihan, Vice President

    

    

    

    Attachment:

    
      	 	
              1)

            	
              General
                Terms and Conditions of Purchase

            

    

    

    
 

    [SIGNATURE
      PAGE]

     

    

      
        
          
            
              8

            

          

          
          

        

        
          
            ***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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