Document:

Exhibit 10.2

 

June 30, 2008

 

Gerard T. Feeney

Chief Financial Officer

Wave Systems Corp.

480 Pleasant Street

Lee, MA 01238

 

Dear Mr. Feeney:

 

We are pleased to confirm the
arrangements under which Security Research Associates, Inc. (“SRA”) is
engaged by Wave Systems Corp. (the “Company”) as non-exclusive placement agent on a “best-efforts” basis in connection
with one or more equity financing transactions to be completed by the Company
(a “Financing”).  The term of this
Agreement shall extend to June 30, 2008 (the “Term”).

 

During the term of our
engagement, we will provide you with assistance in connection with the
Financing, which may include performing valuation analyses and assisting you in
negotiating the financial aspects of the transaction.  During the term of our engagement, we will
also identify and contact potential investors for the Company (the “SRA
Investors”).

 

In the event the Financing is
consummated, the Company agrees to pay to SRA a transaction fee (the “Transaction
Fee”) consisting of (i) 6% (six percent) of the gross proceeds from the
Financing received by the Company at closing, and (ii) 18 month warrants
to acquire a number of shares of the Company’s Common Shares equal to 6% (six
percent) of the aggregate gross proceeds from the Financing received by the
Company divided by the price per share of the Company’s securities paid by all
of the investors in the Financing received by the Company at closing (the “SRA
Warrants”).  The warrants will not be
exercisable for a period of 180 days following the closing.  There will be no Transaction Fees or Warrants
issued to SRA on the exercise of Warrants by Investors.

 

The SRA Warrants issued to SRA
pursuant to this agreement will have a “cashless exercise” provision and will
have an exercise price which will be the same as the price of such warrants
issued to the SRA Investors in the Financing and the underlying shares will be
fully registered and issued from the Company’s shelf.  Notwithstanding the above to the extent that
the Company places its securities with SRA’s Investors, the Company will
provide the same rights to SRA with respect to the Warrants as the rights
granted by the Company to the SRA Investors.

 

The SRA Warrants received by
SRA from the Company pursuant to this agreement shall be subject to a lock-up
restriction which complies with NASD Conduct Rule 2710(g)(1). The SRA
warrants shall not be sold by SRA during the offering, or sold, transferred,
assigned, pledged, or hypothecated, or be the subject of any hedging, short
sale, derivative, put, or call transaction that would result in the effective
economic disposition of the securities by any person for a period of 180 days
immediately following the date of effectiveness or commencement of sales of the
public offering of the Company’s stock, except as provided in NASD Conduct Rule 2710(g) (2).

 

If the Company, in lieu of or
in addition to a Financing or a Financing Commitment, enters into a
transaction, during the term of this Agreement or within 6 months of the
termination of this Agreement, pursuant to which the Company sells or licenses
to SRA Investors any of the Company’s divisions, 

 

 

business segments or material assets, (“Asset
Sale”) the Company will, so long as the Asset Sale occurs as a result of SRA’s
efforts, pay to SRA an Asset Sale Fee equal to two and a half percent (2.5%) of
the value attributable to the deal (the acquisition price). The Asset Sale Fee
shall be paid upon consummation of the transaction.  Upon the termination or expiration of this
Agreement, SRA and the Company shall agree to a list of SRA Investors
introduced to the Company by SRA pursuant hereto.

 

Subject to applicable laws, rules and regulations, the Company
agrees to provide all information and documents reasonably required to permit
the SRA Investors to make an informed investment decision with respect to an
investment in the Company. Such information and documents shall be provided at
the cost of the Company.

 

The Company also agrees to reimburse SRA periodically, upon request, or
upon termination of our services pursuant to this letter (the “Agreement”), for
our reasonable and reasonably documented out-of-pocket expenses, incurred in
connection with our financial advisory services and the Financing, including
the reasonable fees and expenses of legal counsel, travel expenses and
printing. All such out-of-pocket fees and expenses shall not exceed a combined
aggregate amount of $10,000.

 

Please note that any written or oral opinion or advice provided by SRA
in connection with our engagement is exclusively for the information of the
Board of Directors and senior management of the Company, and may not be
disclosed to any third party (other than the Company’s legal, accounting or
other advisors, who shall have been instructed with respect to the confidentiality
of such advice) or circulated or referred to publicly without our prior written
consent, except as to the extent required by law, judicial or administrative
process or regulatory demand.

 

The Company or SRA shall be entitled to terminate this Agreement before
the end of the agreement Term on written notice to the other party at the
address set forth for such party on the signature page hereof.  In the event of the termination of this
Agreement, SRA shall be entitled to be paid its existing reasonable out-of-pocket
expenses subject to the terms described above. 
The confidentiality provisions of this Agreement shall be unaffected by
the termination of this agreement.  The
Company shall not be obligated to reimburse any expenses incurred by SRA or its
advisors with respect to activities undertaken after notification of
termination is given.  In the event this
Agreement is terminated and prior to the expiration of 6 (six) months from the
date of such termination, an agreement is entered into by the Company with
respect to any transaction contemplated by this agreement with any SRA
Investors, SRA will be entitled to the Transaction Fee set forth above,
including transactions involving the sale of the company, its divisions or its
material assets.  Upon the termination or
expiration of this Agreement, SRA and the Company shall agree to a list of SRA
Investors introduced to the Company by SRA pursuant hereto.

 

SRA is an independent contractor and placement agent of the Company.
SRA will not have any right or authority to bind the Company or otherwise
create any obligations of any kind on behalf of the Company and will make no
representation to any third party to the contrary.

 

During the term of this Agreement and thereafter, each of the Company
and SRA agrees to keep confidential and not disclose to any third party any
confidential information of the other party, and to use such confidential
information only in connection with the engagement hereunder; provided,
however, the foregoing will not prohibit disclosures (i) to the parties’
employees, agents and other representatives to the extent necessary to enable
the Company or SRA to perform its responsibilities under this Agreement, (ii) to
the extent required by law, judicial or administrative process or regulatory
demand, or (iii) with respect to matters which become public other than by
the actions of the disclosing party hereunder. This section will survive the
termination of this Agreement for a period of five years.

 

 

Each of the Company and SRA agrees that in connection with any
Financing intended to qualify for the exemption from the registration
requirements of the Securities Act of 1933, as amended (the “Act”), provided by
Section 4(2) of the Act, the Company and SRA shall limit offers to
sell, and solicitations of offers to buy, securities of the Company in
connection with the Financing to persons reasonably believed by it to be “qualified
institutional buyers” as such term is defined in Rule 144A under the Act
or “accredited investors” as such term is defined in Rule 501(a) of
Regulation D promulgated under the Act.

 

Each of the Company and SRA agrees that any offers it makes in
connection with the Financing will be made only to prospective purchasers on an
individual basis and that it will not engage in any form of general
solicitation or general advertising (within the meaning of Rule 502 under
the Act) in connection with the Financing. 
Each of the Company and SRA agrees to conduct the Financing in a manner
intended to comply with the registration or qualification requirements, or
available exemptions there from, under applicable state “blue sky” laws and
applicable securities laws of other jurisdictions.

 

The Company may decline to consummate the Financing with any
prospective purchaser in the Company’s sole discretion.

 

The Company agrees to:

 

(a)                                  Indemnify and hold
SRA harmless against any and all losses, claims, damages or liabilities to
which SRA may become subject arising out of or in connection with any of the
services rendered by SRA pursuant to this Agreement, unless such losses,
claims, damages or liabilities resulting 
from the gross negligence or willful misconduct of SRA or a breach of
this agreement by SRA; and

 

(b)                                 Reimburse SRA
periodically for reasonable legal or other expenses incurred by SRA in
connection with investigating, preparing to defend or defending, or providing
evidence in or preparing to serve or serving as a witness with respect to, any
lawsuits, investigations, claims or other proceedings arising in any manner out
of or in connection with the rendering of services by SRA pursuant to this
Agreement (including, without limitation, in connection with the enforcement of
this Agreement and the indemnification obligations set forth herein); it being
understood however that the Company shall have no obligation to reimburse SRA
for any such expenses and SRA shall immediately repay any such reimbursements
by the Company in the event any losses, claims, damages or liabilities are
finally judicially determined to have resulted from the gross negligence or
willful misconduct of SRA or a breach of this agreement by SRA.

 

The Company agrees that the indemnification
and reimbursement commitments set forth in this document shall apply whether or
not SRA is a formal party to any lawsuits, arbitrations, claims or other
proceedings and that such commitments shall extend upon the terms set forth in
this paragraph to any controlling person, affiliate, director, officer,
employee or agent of SRA (each, with SRA, an “Indemnified Person”).  In the event an Indemnified Person is made a
formal party to a lawsuit, claim or other proceeding arising out of or in
connection with any of the services rendered by SRA pursuant to this Agreement,
and the Company takes over the defense of such action for an Indemnified
Person, the Company further agrees that it will not, without such Indemnified
Person’s prior written consent, which consent shall not be unreasonably
withheld, enter into any settlement of a lawsuit, claim or other proceeding
arising out of or in connection with the transaction unless such settlement
includes an express and unconditional release from the party bringing the
lawsuit, claim or other proceeding of all Indemnified Persons.  With respect to the immediately preceding
sentence, in the event an Indemnified 

 

 

Person reasonably withholds their consent to a settlement, the
Indemnified Person shall be responsible for all subsequent costs and expenses
arising out of the defense of the Indemnified Person.

 

The Company further agrees that the Indemnified
Persons are entitled to retain separate counsel of their selection in
connection with any of the matters in respect of which indemnification,
reimbursement or contribution may be sought under this Agreement, provided
that, in connection with any one action or proceeding, the Company shall not be
responsible for the fees and expenses of more than one separate law firm or
individual attorney in any one jurisdiction for all Indemnified Persons.

 

Any dispute arising out of this Agreement
shall be resolved in an arbitration conducted pursuant to the rules of the
National Association of Securities Dealers, Inc. in New York, NY.

 

Please confirm that the foregoing is in
accordance with your understanding by signing and returning to us the enclosed
copy of this Agreement, which shall become a binding agreement upon our
receipt. We are delighted to accept this engagement and look forward to working
with you on this assignment.

 

Very truly yours,

 

Brian G. Swift, Chairman and CEO

 

Agreement Confirmed by:

 

 

	
  Security Research
  Associates, Inc.

  	
   

  	
  Wave Systems Corp.

  
	
  80 E. Sir Francis Drake Boulevard,
  Suite 3F

  	
   

  	
  480 Pleasant Street

  
	
  Larkspur, CA 94939

  	
   

  	
  Lee, MA 01238

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/David N. Olson

  	
   

  	
  By:

  	
  /s/ Gerard T. Feeney

  
	
   

  	
  David N. Olson

  	
   

  	
  Mr. Gerard T. Feeney

  
	
   

  	
  Managing Director

  	
   

  	
  Chief Financial Officer

  
	
   

  	
   

  	
   

  	
   

  
	
  Date: June 30, 2008

  	
   

  	
  Date: June 30, 2008Exhibit 10.1

 

***** PORTIONS OF THIS EXHIBIT HAVE BEEN
OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION.  THE
OMISSIONS HAVE BEEN INDICATED BY ASTERISKS (“*****”), AND THE OMITTED TEXT HAS
BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

MULTIPLE
YEAR CONTRACT

FOR THE

PURCHASE AND SALE OF FERTILIZER

 

THIS AGREEMENT is made and entered into as of this 1st
day of July, 2008 by and between CF INDUSTRIES, INC., a Delaware corporation, having
its principal place of business at 4 Parkway North (Suite 400), Deerfield,
Illinois 60015-2590 (hereinafter referred to as “Supplier”) and GROWMARK, INC.,
a Delaware corporation, having its principal place of business at 1701 Towanda
Avenue, Bloomington, Illinois (hereinafter referred to as “Customer”).

 

W  I  T
N  E  S  S  E  T  H:

 

WHEREAS, Supplier is engaged in selling ammonia, UAN
solution (as 28% equivalent), urea, DAP and MAP (“Product”);

 

WHEREAS, Customer desires to purchase, and Supplier
desires to sell, Product in accordance with the terms and conditions
hereinafter set forth.

 

NOW, THEREFORE, in consideration of the premises and
the mutual covenants and agreements herein contained Customer and Supplier
hereby agree as follows:

 

1.             Purchase and Sale Commitment.

 

(a)           Customer shall purchase and Supplier
shall sell the Requirement Volume of Product set forth below during the initial
Contract Year (as hereinafter defined) of this Agreement:

 

	
  Product

  	
   

  	
  Requirement Volume

  	
   

  	
  Sales Target Volume

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Ammonia

  	
   

  	
  ***** S.T.

  	
   

  	
  ***** S.T.

  
	
  UAN Solution (as 28% equivalent)

  	
   

  	
  ***** S.T.

  	
   

  	
  ***** S.T.

  
	
  Urea

  	
   

  	
  ***** S.T.

  	
   

  	
  ***** S.T.

  
	
  DAP/MAP

  	
   

  	
  ***** S.T.

  	
   

  	
  ***** S.T.

  

 

 

The Requirement Volume for each subsequent Contract
Year shall be set forth in a notice from Customer to Supplier delivered on or
before May 15 preceding a Contract Year and, for each Product, shall be
not less than sixty-five percent (65%) of the Sales Target Volume for such
Product as of May 15 of the current Contract Year nor more than
one-hundred percent (100%) of the Sales Target Volume for such Product for such
subsequent Contract Year.

 

(b)           Customer also intends, but shall not
be obligated, to purchase and Supplier also intends, but shall not be
obligated, to sell for each Product an additional volume (the “Additional
Volume”) equal to the Sales Target Volume less the Requirement Volume.  The Sales Target Volume for the initial
Contract Year is set forth in Section 1(a) of this Agreement.  The Sales Target Volume for each Product for
each subsequent Contract Year shall be set by mutual agreement of the parties
on or before the first day of May preceding a Contract Year and, in the
absence of such mutual agreement on or before the first day of May, shall be
set by Supplier for each Product in a notice to Customer and shall be not more
than one hundred five percent (105%) of the Sales Target Volume for such
Product set at the beginning of the preceding Contract Year (i.e., unadjusted
by any change pursuant to Section 1(c), Section 1(d), Section 1(f),
Section 1(g) or Section 15(c) of this Agreement).

 

(c)           In the event Customer receives a bona
fide offer from a third party during any Contract Year, which offer (i) provides
for the sale of Product to Customer, (ii) Customer desires to accept and (iii) may
impact Customer’s ability or willingness to purchase the Sales Target Volume,
Customer shall notify Supplier (the “Third Party Purchase Notice”) of the
volume of Product it intends to purchase, the terms and conditions of such
purchase and the date and time by which Supplier must respond to such Third
Party Purchase Notice.  Supplier shall
have until the time and date set forth in such Third Party Purchase Notice to
agree to sell the specified volume of Product to Customer on the terms and
conditions set forth in the Third Party Purchase Notice.  If Supplier fails to respond to the Third
Party Purchase Notice within the time specified, or if Supplier declines to
sell the specified volume of Product to Customer, Customer may purchase the
specified volume of Product from such third party on the terms and conditions
set forth in the Third Party Purchase Notice and the Sales Target Volume shall
be reduced by an amount equal to the volume of Product so purchased by Customer
(provided, however, that the Sales Target Volume shall not be reduced below the
Requirement Volume).

 

(d)           In the event Supplier receives a bona
fide offer from a third party during any Contract Year, which offer (i) provides
for the purchase of Product from Supplier, (ii) Supplier desires to accept
and (iii) may impact Supplier’s ability or willingness to supply the Sales
Target Volume, Supplier shall notify Customer (the “Third Party Sale Notice”)
of the volume of Product it intends to sell, the terms and conditions of such
sale and the date and time by which Customer must respond to such Third Party
Sale Notice.  Customer shall have until
the time and date set forth in such Third Party Sale Notice to agree to
purchase the specified volume of Product from Supplier on the terms and
conditions set forth in the Third Party Sale Notice.  If Customer fails to respond to the Third
Party Sale Notice within the time specified, or if Customer declines to
purchase the specified volume of Product from Supplier, Supplier shall be free
to sell the specified volume of Product to such third party on the terms and
conditions set forth in the Third Party Sale Notice and the Sales Target Volume
shall be reduced by an amount equal to the volume of Product so sold by
Supplier (provided, however, that the Sales Target Volume shall not be reduced
below the Requirement Volume).

 

2

 

(e)           Notwithstanding the provision of Section 17(b) of
this Agreement, the Third Party Purchase Notice and the Third Party Sale Notice
shall be delivered to the following individuals:

 

	
  Supplier

  	
   

  	
  Customer

  
	
   

  	
   

  	
   

  
	
  Sales Manager and Product Sales Manager

  	
   

  	
  Market Manager, Plant Food

  

 

The
Third Party Purchase Notice and the Third Party Sale Notice, again
notwithstanding the provisions of Section 17(b) of this Agreement,
may be sent by email provided the sender has been notified of the recipient’s
email address.

 

(f)            Without limiting Supplier’s
obligations under Section 1(d) of this Agreement, in the event that,
at any time during a Contract Year, Supplier reduces the volume of Product
available for sale and such action may impact Supplier’s ability to supply the
Sales Target Volume, Supplier may reduce the Sales Target Volume for such
Contract Year (but not below the Requirement Volume) by delivering notice to
Customer advising Customer of such reduction in the Sales Target Volume.

 

(g)           Supplier shall not be obligated to
accept any order for Product if, at the time Customer orders such Product, the
cumulative volume of such Product ordered by Customer is in excess of the
volume set forth in the Take Pattern (as hereinafter defined).  If, after accepting an order from Customer,
Supplier determines that Supplier cannot supply the Product ordered in
accordance with the Take Pattern, Supplier shall promptly notify Customer (the “Order
Modification”) of the revised manner and date the Product will be
supplied.  Customer shall then have the
option, exercisable by delivering notice to Supplier on or before 5:00 p.m.
Central Time on the second business day following delivery of the Order
Modification, of either (i) terminating the order without obligation for
payment (in which case the volume of Product ordered shall reduce the
Requirement Volume and the Sales Target Volume) and, at Customer’s option,
purchasing the Product ordered from a third party at a commercially reasonable
price or (ii) accepting the changes set forth in the Order
Modification.  In the event Customer
fails to notify Supplier of its election on or before 5:00 p.m. Central
Time on the second business day following delivery of an Order Modification,
Customer shall be deemed to have accepted the changes set forth in the Order
Modification.

 

2.             Price.  Product purchased by Customer under this
Agreement, except to the extent purchased under Section 1(c) or Section 1(d) of
this Agreement, shall be purchased either as (i) a Cash Sale, (ii) an
Index Sale, (iii) a Forward Pricing Sale or (iv) a Negotiated Sale
(each of which “Sales” is hereinafter defined). 
Customer shall notify Supplier with each order for Product whether it
will purchase Product as a Cash Sale, an Index Sale, a Forward Pricing Sale or
a Negotiated Sale and the Delivery Terms (as hereinafter defined) subject, at
all times, to the Take Pattern.  In the
absence of an election by Customer of the type of “Sale” applicable to a
specific Product purchase, such purchase shall be deemed to be a Cash
Sale.  In the absence of an election by
Customer of the Delivery Terms applicable to a specific Product purchase as set
forth in Section 8 of this Agreement, such purchase shall be deemed to be
on an FOB (Customer pays freight) basis. 
Orders for MAP must be placed (i) not less than fifteen (15) days
prior to the first 

 

3

 

day of the month in which
the Customer has requested shipment (the “Shipment Month”) for Product sourced
from Plant City, Florida and (ii) not less than forty-five (45) days prior
to the first day of the Shipment Month for Product sourced from all other
locations.

 

Supplier covenants with Customer
(which covenant is intended to be for the sole benefit of Customer) that the
price published by Supplier (excluding prices published for turf sales and
nonagricultural sales) at any specific time during the term of this Agreement
for Cash Sales, Index Sales and Forward Pricing Sales shall be the same for all
customers.  The price published by
Supplier for any Product may be changed from time to time by Supplier.  The foregoing covenant shall not be deemed
violated by spot sales or negotiated sales which sales, at times, may include
incentives.

 

Supplier further covenants with Customer that, in the
event Supplier has entered into an agreement for a negotiated sale of Product (i) at
a price (before applicable incentives) which is less than the price published
by Supplier for such Product by at least $***** per short ton under any “Sale”
type available at the time of the negotiated sale and having the same mode of
transport, the same source of supply as is available to Customer according to
the Take Pattern and the same market of delivery and (ii) which is for a
volume of ***** or more short tons, Supplier shall notify Customer (the “Negotiated
Sale Notice”) of the price, volume and other terms and conditions of such sale
and the date and time by which Customer must respond to such Negotiated Sale
Notice.  Customer shall have until the
time and date set forth in the Negotiated Sale Notice to agree to purchase the
specified volume of Product from Supplier on the terms and conditions set forth
in the Negotiated Sale Notice.  If
Customer fails to respond to the Negotiated Sale Notice within the time
specified, or if Customer declines to purchase the specified volume of Product
from Supplier on the terms and conditions set forth in the Negotiated Sale
Notice, Customer shall be deemed to have waived its right to purchase the
specified volume of Product at the price, in the manner and on the terms set
forth in the Negotiated Sale Notice.

 

(a)           Cash Sale.  “Cash Sale” shall refer to a sale of Product
at the price set forth in Supplier’s published weekly cash price list in effect
(i) on the requested ship date in the case of delivery by rail (or, if the
Product is not available from Supplier for shipment on such date, on the
earliest date thereafter that Product is available from Supplier for shipment)
or (ii) on the actual date of shipment in all other cases.

 

(b)           Index Sale.  “Index Sale” shall refer to a sale of Product
at the published index price specified under a special index based pricing
program for purchase of Product that may, from time to time, be offered by
Supplier (the “Index Pricing Program”) plus applicable freight charges at the
time of shipment to the extent such Index Pricing Program is offered by
Supplier during the term of this Agreement and subject to the terms and
conditions of such Index Pricing Program. 
The terms and conditions set forth in the Index Pricing Program shall
supplement the terms and conditions set forth in this Agreement and, in the
event of any conflict between specific terms or conditions set forth in the
Index Pricing Program and specific terms or conditions set forth in this
Agreement, the specific terms and conditions set forth in the Index Pricing
Program shall control provided that Customer has agreed, in writing, to the terms
and conditions set forth in the Index Pricing Program.

 

4

 

(c)           Forward Pricing Sale.  “Forward Pricing Sale” shall refer to a sale
of Product at the published forward price specified under a special pricing program
for advance purchase of Product (the “Forward Pricing Program”) plus applicable
freight charges at the time of shipment. 
Supplier may, from time to time, offer Product for sale under the
Forward Pricing Program.  The terms and
conditions set forth in the Forward Pricing Program shall supplement the terms
and conditions set forth in this Agreement and, in the event of any conflict
between specific terms and conditions set forth in the Forward Pricing Program
and specific terms and conditions set forth in this Agreement, the specific
terms and conditions set forth in the Forward Pricing Program shall control
unless otherwise agreed to by Supplier and Customer.

 

(d)           Negotiated Sale.  “Negotiated Sale” shall refer to the sale of
Product at a price offered by Customer and accepted by Supplier, or at a price
offered by Supplier and accepted by Customer, as the case may be; provided,
however, that except as otherwise provided in Section 2 of this Agreement
Supplier shall have no obligation to accept any offer made by Customer, to make
any offer to Customer or to make any sales of Product on a “Negotiated Sale”
basis.

 

3.             Term.  The initial term of this Agreement shall
commence on July 1, 2008 and shall continue through June 30,
2013.  At the expiration of the then
current term of this Agreement, the term of this Agreement shall be
automatically renewed for successive periods of one-year each unless terminated
in writing by either party on or before January 1 of the then current
Contract Year.  For purposes of this
Agreement, “Contract Year” shall mean the twelve month period beginning on July 1
and including the following June 30.

 

4.             Incentives.  The Performance Incentives set forth on Exhibit A
attached hereto and made a part hereof will be available to Customer and will
be applied as an adjustment to the purchase price of Product in the manner and
at the times set forth on Exhibit A provided Customer satisfies the
requirements for the Performance Incentives as set forth on Exhibit A.

 

5.             Scheduling.  Customer shall submit a requested take
pattern for Product not later than April 1 preceding each Contract Year
(or by such other date as may be requested by Supplier) and Supplier and
Customer shall then agree, on or before May 15 preceding each Contract
Year of this Agreement, to a mutually acceptable take pattern (the “Take
Pattern”) for the Sales Target Volume and the Requirement Volume including,
among other things, the monthly rate of delivery of Product (it being intended
that Product will be supplied, to the extent possible, ratably during any
specific month of the Contract Year), the source and region of delivery from
which Product will be provided to Customer and the mode of transportation
desired by Customer (truck, rail, barge, vessel or pipeline).  The parties agree that the rate of delivery
of the Requirement Volume shall be spread ratably over each quarter of the
Contract Year on the same percentage basis as the Sale Target Volume.  Supplier and Customer will revise, as
necessary, and agree upon a mutually acceptable revised Take Pattern on or
before September 15, December 15 and March 1 during each
Contract Year; provided, however, that the Take Pattern for ammonia shall be
revised only on December 15 of each Contract Year.  Customer acknowledges that Supplier may have
certain limitations on specific modes of transport that must be considered when
establishing the Take Pattern and that Supplier reserves the right to determine
the sources and regions of delivery from which Product will be provided to 

 

5

 

Customer; provided,
however, that the established and the revised Take Pattern shall be generally
consistent with the Take Pattern of the immediately preceding Contract Year.

 

6.             Payment.  Except in the case of Forward Pricing Sales
(where payment terms are specified in the Forward Pricing Program), Customer
shall pay Supplier in full for all Product purchased and for all other charges
invoiced hereunder not later than twenty-five (25) calendar days after the date
of Supplier’s invoice in the case of shipments by rail, truck or pipeline, not
later than ten (10) calendar days after the date of Supplier’s invoice in
the case of shipments by barge and upon receipt of Seller’s invoice (and the
Certificate of Analysis, Certificate of Weight and Draft Survey if not
previously delivered to Customer) in the case of shipments by vessel.  Payment for all invoices shall be made by
electronic funds transfer (ACH) for the credit of Supplier to such banking
institution as may be specified by Supplier. 
If the due date for any payment falls on a weekend or a holiday, the
payment must be received by the Supplier on the next day on which the Federal
Reserve Bank of Chicago is open for business.

 

7.             Taxes and Other Charges.  Any tax, duty, inspection fee or other charge
levied upon the sale, shipment, delivery, use or storage of Product sold
hereunder (but excluding any income taxes payable on the sale of Product and
any taxes or duties on the import of Product into the United States) shall be
separately itemized on Supplier’s invoice and shall be paid by Customer.  Any such payment shall either be made
directly by Customer or added to the purchase price and remitted by Supplier as
required by applicable law.  Customer
shall obtain, at its expense, any licenses, permits or other registrations
required to accept delivery of Product.

 

8.             Delivery Terms.  Customer may elect among the following
delivery types and freight payment options to the extent offered by Supplier
when submitting an order for Product:

 

(a)           FOB (Supplier pays freight).  FOB (Supplier pays freight) means that
Supplier arranges the transportation of Product, that Supplier advances the
costs of transportation and that Customer reimburses Supplier for such costs;

 

(b)           FOB (Customer pays freight).  FOB (Customer pays freight) means that
Customer arranges and pays for the transportation of Product;

 

(c)           FOB (Consignee pays freight).  FOB (Consignee pays freight) means that the
consignee receiving the Product arranges and pays for the transportation of
Product;

 

(d)           FOB (Third Party pays freight).  FOB (Third Party pays freight) means that a
third party selected by Customer arranges and pays for the transportation of
Product;

 

(e)           FOB (Third Party Supplier pays
freight).  FOB (Third Party Supplier
pays freight) applies in those cases where Product is sourced from a facility
other than Supplier’s and the third party supplier arranges and pays for the
transportation of Product.  In such
cases, Supplier reimburses the third party supplier for the cost of
transportation and Customer reimburses Supplier for such costs;

 

(f)            Delivered (other than truck
shipments with freight allowance). 
Delivered (other than truck shipments with freight allowance) means that
Supplier arranges and pays for the transportation of Product; and

 

6

 

(g)           Delivered (truck shipments with
freight allowance).  Delivered (truck
shipments with freight allowance) means that Customer arranges and pays for the
transportation and that the Product price is reduced by Supplier’s applicable
freight allowance for the delivery point shown on Supplier’s transportation
documents.  In the event the Product is
delivered to a delivery point other than that shown on Supplier’s transportation
documents, (i) the price for the Product will be recalculated as of the
date of shipment for the market of actual delivery and (ii) the applicable
freight allowance (determined by Supplier) will be recalculated as of the date
of shipment for the market of actual delivery (such freight allowance to be
reduced by all costs incurred in such recalculation); provided, however, that
the price for the Product shall not be reduced below the price for the Product
in the market shown on Supplier’s transportation documents and the freight
allowance shall not be increased above the allowance (determined by Supplier)
for the market shown on Supplier’s transportation documents.

 

9.             Title and Risk of Loss.  Except in those cases described later in this
Section, title to all Product and risk of loss shall pass to Customer at the
time the Product is loaded onto barge, truck, railcar or other applicable
transport (or, in the case of distribution by pipeline, at the time the Product
passes the flange connection of Customer’s intake manifold at Customer’s
terminal).  In the case where the order
or contract specifies that the Product will be “Delivered” and delivery is by a
method other than truck with a freight allowance, title to all Product and risk
of loss shall pass to Customer when the Product is constructively placed at its
destination.  In the case of a “Bulk”
transfer (i.e., where the Product remains in storage and is not transported to
a new location), title to all Product and risk of loss shall pass to Customer
as of the date on Supplier’s invoice for the Product.

 

10.           Product Warranty.  Supplier warrants that the Product will (i) conform
to Supplier’s Product Specification Sheet in effect at the time an order for
Product is submitted, (ii) be delivered free and clear of all liens,
claims, security interests, encumbrances or other agreements that create an
interest in or encumbrance on the Product by any third party and (iii) comply
with all applicable federal, state and local laws and ordinances applicable to
the manufacture, sale and transportation of Product.  A copy of Supplier’s current Product
Specification Sheet is attached hereto as Exhibit B.  Supplier reserves the right, at any time and
from time to time, to amend the Product specifications by sending to Customer a
revised Product Specification Sheet prior to shipment of the Product
affected.  THIS WARRANTY IS IN LIEU OF
ALL OTHER WARRANTIES, EXPRESS OR IMPLIED, BY OPERATION OF LAW OR OTHERWISE,
INCLUDING BUT NOT LIMITED TO THE IMPLIED WARRANTIES OF MERCHANTABILITY AND
FITNESS FOR A PARTICULAR PURPOSE.

 

11.           Product Weight.  The volume of Product purchased shall be
equal to the weight of shipped Product determined in the manner set forth in
this Section.  For Product shipped by
trucks and railcars, the weight of the Product shipped shall be determined by
the scale or metered weight measured at origin. 
For dry Product (for example, urea, DAP and MAP) shipped by barge, the
weight of the Product shipped shall be determined by the origin barge
survey.  For liquid Product (for example,
UAN Solution or ammonia) shipped by barge, the weight of the Product shipped
shall be determined, in the case of FOB sales, by an origin survey and, in all
other cases, by a destination shore tank survey.  For Product shipped by vessel, the weight of
the Product shipped shall be determined by an origin survey; provided, however,
that in the case of liquid Product sold Delivered, the weight of the Product
shipped shall be determined by a 

 

7

 

destination survey.  All origin and destination surveys shall be
performed by an independent surveyor selected and paid by Supplier.

 

12.           Demurrage.  Customer shall be responsible for the cost of
demurrage based upon Supplier’s demurrage policy in effect at the time the
demurrage is incurred.

 

13.           Force Majeure.  Neither party shall be liable for any failure
or delay in performance of any provision of this Agreement (other than to make
payment due hereunder) if such failure or delay is caused by fire, flood,
explosion, war, insurrection, strikes, labor disputes, breakage of machinery or
equipment, compliance with governmental orders, curtailment of operations to
remedy violations of environmental, health or safety regulations, inability to
obtain Product or fuel, supplies, materials or equipment or other cause beyond
the reasonable control of a party hereunder. 
In the event a force majeure event renders a party unable to carry out
its obligations under this Agreement, such party shall give notice and full
particulars, including the expected duration of such force majeure event, to
the other party within seventy-two (72) hours after the occurrence of such
force majeure event.  The obligations of
the parties, so far as they are affected by such force majeure event, shall
suspend during the continuance of any such force majeure event and the disabled
party shall use commercially reasonable efforts to remedy the disability with
all reasonable dispatch.  In the event a
force majeure condition occurs affecting Supplier, Supplier may elect to reduce
the quantity of Product delivered or, upon the agreement of the parties, to
postpone the delivery of Product.  In the
event Supplier elects to reduce the quantity of Product delivered, Supplier
may, but shall not be obligated, to allocate its available supply among any or
all customers and on such basis as Supplier, in its sole discretion, may elect
without liability for failure to comply with the terms of this Agreement;
provided, however, that Supplier shall use commercially reasonable efforts,
after first filling orders from customers for which Supplier has received
advance payment, to allocate its available supply among “Requirements Contract”
customers (that is, customers that have a contract with Supplier by which the
customer is obligated to purchase, over a fixed period of time, a fixed amount
of Product or a fixed percentage of that customer’s requirements for Product).

 

14.           Confidentiality.  Each party shall keep and maintain, and shall
cause its officers, employees, agents and contractors to keep and maintain, the
confidentiality of all information contained in or relating to the performance
of this Agreement and shall not disclose any information to any third party
except (i) to the extent necessary to perform its obligations under this
Agreement, (ii) to a party’s professional advisors or (iii) to a
possible purchaser of all or any portion of a party’s business operations
provided such prospective purchaser agrees to the terms and conditions of this
confidentiality provision and (iv) that Supplier may disclose all or any
portion of this Agreement as part of any federal or state securities law
filings or disclosures and except that neither party shall have any obligation
of confidentiality with respect to information that (i) is generally
available to the public, (ii) is or becomes known to such party through
sources not bound by any obligation of confidentiality or (iii) is
required to be disclosed under applicable law.

 

15.           Certain Remedies.

 

(a)

 

8

 

(1)           In
the event that Customer shall at any time (i) fail to make payment when
due and such failure continues for a period of ten (10) days after written
notice from Supplier to Customer of such failure, (ii) become insolvent, (iii) commit
any act of bankruptcy, (iv) take advantage of any law for the benefit of
debtors, (v) have appointed a receiver for itself or its properties and
such receiver is not discharged within sixty (60) days or (vi) fail to
comply with any other terms or conditions of this Agreement and such failure
continues for a period of thirty (30) days after written notice from Supplier
of such failure, the Supplier may then or thereafter upon notice to Customer (a) refuse
to make further deliveries hereunder, (b) terminate this Agreement (but in
such event Customer shall remain liable for the payment of all Product
theretofore delivered) and (c) exercise such other and further rights and
remedies as it may have under this Agreement or otherwise in law or at
equity.  Such rights and remedies may be
exercised independently and shall not be mutually exclusive.

 

(2)           In
the event that Supplier shall at any time (i) become insolvent, (ii) commit
any act of bankruptcy, (iii) take advantage of any law for the benefit of
debtors, (iv) have appointed a receiver for itself or its properties and
such receiver is not discharged within sixty (60) days or (v) fail to
comply with any other terms or conditions of this Agreement and such failure
continues for a period of thirty (30) days after written notice from Customer
of such failure, the Customer may then or thereafter upon notice to Supplier (a) refuse
to take further deliveries hereunder, (b) terminate this Agreement (but in
such event Customer shall remain liable for the payment of all Product
theretofore delivered) and (c) exercise such other and further rights and
remedies as it may have under this Agreement or otherwise in law or at
equity.  Such rights and remedies may be
exercised independently and shall not be mutually exclusive.

 

(b)           If, at the end of any quarter (or, in
the case of ammonia, each semi-annual period) during each Contract Year of this
Agreement, or at the termination or expiration of this Agreement, Customer has
not purchased the Requirement Volume for that period as established by the Take
Pattern for reasons other than Force Majeure as set forth in Section 13 of
this Agreement, Customer shall pay to Supplier an amount equal to the
difference between the Customer’s Requirement Volume for that period and the
actual volume Customer purchased during that period (the “Unfulfilled
Commitment”) multiplied by the greater of (i) the weighted average (using
the Take Pattern as of the first day of the period) of the Supplier’s weekly
cash price for the Product in effect during the period or (ii) the average
of the Supplier’s weekly cash price for the Product in effect during the last
four weeks of the period.  Customer shall
be entitled to take delivery of the Unfulfilled Commitment at any time prior to
the last day of the sixth (6th) month following the end of the applicable
period provided, however, that Customer shall pay to Supplier (i) the
increase, if any, in the freight cost incurred by Supplier and (ii) a
storage fee of $***** per ton on the Unfulfilled Commitment beginning as of the
first day of the second month following the month there is an Unfilled
Commitment and then $***** per ton on the first day of each month thereafter
and continuing until Customer takes delivery of the Unfulfilled Commitment.  Customer’s right to take delivery of any
Unfulfilled Commitment shall cease, and Customer shall have no right to take
delivery of any such Unfulfilled Commitment, from and after the first day of
the seventh (7th) month following the end of the applicable period.

 

9

 

(c)           If, at the end of any quarter (or, in
the case of ammonia, each semi-annual period) during each Contract Year of this
Agreement, or at the termination or expiration of this Agreement, Supplier has
failed or refused to accept orders to supply the Requirement Volume for that
period as established by the Take Pattern and such failure is not caused by (i) Force
Majeure as set forth in Section 13 of this Agreement or (ii) Supplier’s
supply capability being impaired because of an Unfulfilled Commitment being
stored for Customer as set forth in Section 15(b) of this Agreement,
then the difference between the Requirement Volume for the period as
established by the Take Pattern and the actual volume supplied by Supplier
during such period (the “Unsupplied Commitment”) shall reduce the Requirement
Volume and the Sales Target Volume and shall be included in the Overall Annual
Tonnage for purposes of calculating any incentive payment under Performance Incentive
No. 5 and, as Customer’s sole and exclusive remedy, Supplier shall pay to
Customer a nonperformance fee which shall be determined based on the level of
deficiency expressed as a percentage (i.e., the Unsupplied Commitment for each
Product divided by the Requirement Volume for that Product) and shall be equal
to the Unsupplied Commitment multiplied by the Fee determined in accordance
with the following schedule:

 

	
  Deficiency

  (per Product)

  	
   

  	
  Fee

  
	
   

  	
   

  	
   

  
	
  0-20%

  	
   

  	
  $*****/ton
  on the entire Unsupplied Commitment

  
	
  >20%-50%

  	
   

  	
  $*****/ton
  on the entire Unsupplied Commitment

  
	
  >50%

  	
   

  	
  $*****/ton
  on the entire Unsupplied Commitment

  

 

(d)           Any amounts due and owing from
Customer to Supplier, and any amounts due and owing from Supplier to Customer,
pursuant to this Section shall be paid not later than ten (10) days
after the date of invoice.

 

16.           Liability Limits.  Customer’s exclusive remedy against Supplier
for any claim arising out of or in any way relating to this Agreement (whether
in contract, tort, strict liability or otherwise) shall be for damages only and
not for injunctive or other relief (whether at law or in equity); provided,
however, that the parties agree that in the event of a breach or threatened
breach of Section 14 of this Agreement, monetary damages would be an
inadequate remedy and the parties shall be entitled to seek injunctive relief
without recourse to Section 17(k) of this Agreement.  In addition, Customer’s sole and exclusive
remedy for Supplier’s failure or refusal to accept orders for the Requirement
Volume shall be as set forth in Section 15(c) of this Agreement and
Customer shall not be entitled to claim damages or other relief except as set
forth in Section 15(c) of this Agreement.  Neither party’s liability for damages shall
in any event exceed the purchase price of the Product with respect to which
such matter arises or such claim relates. 
NEITHER PARTY SHALL BE LIABLE FOR ANY SPECIAL, INCIDENTAL OR
CONSEQUENTIAL DAMAGES FOR BREACH OF THIS AGREEMENT OR ANY

 

10

 

17.           Miscellaneous.

 

(a)           Assignment.  All covenants and agreements contained in
this Agreement by or on behalf of Customer or Supplier will bind and inure to
the respective successors and assigns of the parties hereto; provided, however,
that neither party may assign this Agreement, in whole or in part, without the
prior written consent of the other party (which consent shall not be
unreasonably withheld or delayed).

 

(b)           Notices.  All notices, demands or other communications
to be given or delivered hereunder will be deemed to have been given when
delivered personally or two (2) business days after they have been mailed
by certified or registered mail, postage prepaid and return receipt requested,
or one (1) business day after they have been sent by a nationally
recognized private courier service, to the recipient at the address specified
below or to such other address or to the attention of such other person as the
recipient party has specified by prior written notice to the sending party:

 

	
  If to Supplier:

  	
   

  	
  CF
  Industries, Inc.

  
	
   

  	
   

  	
  4 Parkway North
  (Suite 400)

  
	
   

  	
   

  	
  Deerfield,
  Illinois 60015-2590

  
	
   

  	
   

  	
  Attention: Vice
  President, Sales

  
	
   

  	
   

  	
   

  
	
  If to Customer:

  	
   

  	
  GROWMARK, Inc.

  
	
   

  	
   

  	
  1701 Towanda Avenue

  
	
   

  	
   

  	
  Bloomington, Illinois

  
	
   

  	
   

  	
  Attention: Agronomy
  Division Manager

  

 

(c)           Descriptive Headings.  The descriptive headings used herein are
inserted for convenience only and do not constitute a part of this Agreement.

 

(d)           Amendments and Waivers.  This Agreement may be amended, or any
provision hereof waived, only in a writing or writings signed by the party
intended to be bound.  The waiver by a
party of any breach of this Agreement or the failure of any party to enforce
any of the terms and conditions of this Agreement at any time shall not in any
way affect, limit or waive that party’s right thereafter to enforce and compel
strict compliance with every term and condition hereof.

 

(e)           Severability.  Whenever possible, each provision of this
Agreement will be interpreted in such a manner as to be effective and valid
under applicable law, but if any provision of this Agreement is held to be
prohibited by or invalid under applicable law, such provision will be
ineffective only to the extent of such prohibition or invalidity, without
invalidating the remainder of this Agreement.

 

(f)            Survival of Claims.  Termination or expiration of this Agreement
shall not relieve either party of any obligation or deprive it of any right
arising prior to termination or expiration.

 

11

 

(g)           Conflicting Terms.  No term in any purchase order,
acknowledgement form or other document from Customer or Supplier which
conflicts with the terms hereof or increases Customer’s or Supplier’s
obligations hereunder shall be binding on either party unless issued in accordance
with Section 17(d) of this Agreement notwithstanding any provision in
any such purchase order, acknowledgement form or other document to the
contrary.

 

(h)           Time.  Time is of the essence of this Agreement and
of each and every provision thereof.

 

(i)            Finance Charges.  Amounts not paid when due shall accrue
interest from the date due until the date paid at the rate of 18% per annum or,
if less, at the highest rate allowed by applicable law and such interest shall
be due immediately from Customer to Supplier on demand.  A payment is considered past due if it is
received by Supplier after the invoice due date.

 

(j)            Credit Quality.  Supplier shall have the right, at any time
and from time to time during the term of this Agreement and upon notice to
Customer, to change the payment terms applicable to Customer, in the event the
financial condition or payment history of Customer is not satisfactory to
Supplier in its sole discretion. 
Supplier shall have no liability to Customer, whether under Section 15(c) of
this Agreement or otherwise, for any reduction or cessation in the supply of
Product as a result of the application of this Section 17(j) of this
Agreement.

 

(k)           Arbitration.  All claims of breach of this Agreement by
either party not barred and foreclosed shall be resolved by arbitration between
the parties in St. Louis, Missouri under the auspices of and pursuant to the rules for
commercial arbitration of the American Arbitration Association.  Any award thereon may include monetary or, to
the extent permitted by Section 16 of this Agreement, injunctive relief in
the discretion of the arbitrators. 
Judgment upon an award duly rendered in such an arbitration proceeding
may be entered by the party in whose favor the award has been made in any court
having jurisdiction to do so and over the party against whom such award has
been rendered.

 

(l)            Transportation Equipment.  In the event Customer supplies equipment for
the transportation of Product, Supplier shall have the right to inspect such
equipment and to reject such equipment if Supplier, in the exercise of its
reasonable discretion, believes such equipment may pose a risk of injury or
contamination to persons or property.  In
the case of barges or vessels supplied by or at the direction of Customer, the
type, size and scheduled arrival date must be approved by Supplier in the
exercise of Supplier’s reasonable discretion.

 

(m)          Examination of Records.

 

Customer shall have the right, at its expense and from
time to time upon reasonable prior notice to Supplier, but not more frequently
than once during each Contract Year of this Agreement, to retain an independent
certified public accountant to examine the relevant sections of Supplier’s
sales records covering the current Contract Year to verify compliance with Supplier’s
obligations as set forth in Section 1(d) and the third grammatical
paragraph of Section 2 of this Agreement. 
Customer shall cause any accountant so retained to maintain the 

 

12

 

confidentiality of the
records being examined and to report only to Customer and Supplier the amount
of any discrepancy discovered by such examination.

 

Supplier shall have the right, at its expense and from
time to time upon reasonable prior notice to Customer, but not more frequently
than once during each Contract Year of this Agreement, to retain an independent
certified public accountant to examine the relevant sections of Customer’s
sales records covering the current Contract Year to verify compliance with
Customer’s obligations as set forth in Section 1(c) of this
Agreement.  Supplier shall cause any
accountant so retained to maintain the confidentiality of the records being
examined and to report only to Supplier and Customer the amount of any
discrepancy discovered by such examination.

 

(n)           Calculation of Volume. For
purposes of calculating the volume of Product purchased by Customer (which
volume is relevant for purposes of calculating the Performance Incentives and
the Unfulfilled Commitment), Product shall be deemed to have been purchased on
a specific date determined in accordance with the following schedule:

 

	
   Sales Type

   	
    

   	
   Delivery Mode

   	
    

   	
   Purchase Date

   
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Cash
  Sale

  	
   

  	
  Truck

  	
   

  	
  Shipment
  Date on Bill of Lading

  
	
  Cash
  Sale

  	
   

  	
  Rail

  	
   

  	
  Requested
  Date of Shipment from Customer and accepted by Supplier

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Index
  Sale

  	
   

  	
  Truck

  	
   

  	
  Shipment
  Date on Bill of Lading

  
	
  Index
  Sale

  	
   

  	
  Rail
  and Barge

  	
   

  	
  Requested
  Date of Shipment from Customer and accepted by Supplier

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Forward
  Pricing Sale

  	
   

  	
  All

  	
   

  	
  First
  day of the shipment month requested by Customer

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Negotiated
  Sale

  	
   

  	
  Truck

  	
   

  	
  Shipment
  Date on Bill of Lading

  
	
  Negotiated Sale

  	
   

  	
  Rail, Barge,

  Vessel, Bulk
  and Pipeline

  	
   

  	
  Requested Date of Shipment from Customer

  

 

Notwithstanding the foregoing, (i) Product will
only be deemed to have been purchased by Customer if the Product is paid for in
full by Customer and (ii) in the case of orders placed for delivery by
truck, Product shall be deemed to have been purchased on the first day of the
shipment period requested by Customer and accepted by Supplier and not on the
shipment date on the bill of lading in those cases where the order placed by
Customer is subject to a storage fee if Customer does not take possession of
the Product prior to the expiration of the shipment period.

 

(o)           Entire Agreement.  Except as otherwise specifically provided in
Sections 2(b), 2(c), 10, 12 and 17(o) of this Agreement, this
Agreement embodies the complete agreement and understanding between the parties
with respect to the subject matter hereof and supersedes and preempts any prior
or contemporaneous understandings, agreements or representations by Supplier or
Customer, written or oral, relating in any way to the subject matter 

 

13

 

hereof; excepting,
however, that certain Master Product Sales Agreement between Supplier and
Customer (the “MPSA”).  Product purchased
under the MPSA shall not be included in or credited against the Requirement
Volume or the Sales Target Volume or in calculating the Performance Incentives.

 

(p)           Governing Law.  All questions concerning the construction,
validity and interpretation of this Agreement will be governed in all instances
by the law of the State of Illinois.

 

(q)           Real Estate Sale Notification.  If, during the term of this Agreement,
Supplier receives an offer or enters into negotiations to sell any or all of
the real estate, with or without any or all of the machinery or equipment
located thereon, commonly known as ***** Ammonia Terminal (*****), *****
Terminal/Warehouse (*****), ***** Warehouse (*****) or ***** Ammonia/UAN
Solution Terminal (*****) (such real estate and such machinery and equipment as
Supplier desires to sell being hereinafter referred to as the “Facility” or “Facilities”),
Supplier shall notify Customer and the parties may proceed to negotiate the
sale of such Facility or Facilities but shall have no obligation to do so and,
in any event, Supplier shall have no obligation to sell or negotiate for the
sale of such Facility or Facilities to Customer, Supplier’s only obligation being
to notify Customer as set forth herein and provided, however, that Supplier
shall have no obligation to notify Customer as set forth herein if prohibited
from doing so by any confidentiality or other agreement, law or regulation.

 

IN WITNESS WHEREOF, the
parties have executed this Agreement as of the date first above written.

 

	
  SUPPLIER:

  	
  CUSTOMER:

  
	
   

  	
   

  
	
  CF INDUSTRIES, INC.

  	
  GROWMARK, INC.

  
	
   

  	
   

  
	
  By:

  	
  /s/ Stephen R. Wilson 

  	
   

  	
  By: 

  	
  /s/ Steve Barwick

  
	
  Name:

  	
    Stephen R.
  Wilson

  	
   

  	
  Name:

  	
  Steve Barwick

  
	
  Title:

  	
    President and
  Chief Executive Officer

  	
   

  	
  Title:

  	
  V.P. Crop Marketing &
  Operations

  
									

 

14

 

EXHIBIT A

 

Performance
Incentives

 

Incentive
No. 1

 

Type:
Actual purchase volume versus Sales Target Volume

 

Description:
Incentive earned on a Product if (i) that Product is purchased in
accordance with the Take Pattern and (ii) the total volume of that Product
purchased for a Contract Year equals a minimum percentage of that Product’s
Sales Target Volume.

 

Product:
Ammonia, urea, UAN solution (as equivalent 28%), DAP, MAP

 

Time
of Payment: Forty-five (45) days after the end of a quarter or semi-annual
period, unless actual shipment of the Product purchased enabling the Customer
to earn the incentive occurs after the expiration of the quarter or semi-annual
period, whereby payment will then be made 45 days from the date of the next
quarter ending.

 

Incentive
Allowance by Product:

 

A)
Quarterly:  If total purchases for a
specific quarter (January through March, etc.) of a Contract Year for a
specific Product are equal to or greater than 95% of that Product’s Sales
Target Volume for that time period as set forth in the Take Pattern, the
quarterly incentive allowance for such Product (see Table I) will be paid on
the actual volume purchased for shipment for that Product for that time
period.  This incentive applies for urea,
UAN solution (as equivalent 28%), DAP, and MAP.

 

B)
Semi-Annual:   If total purchases for a
specific half of a Contract Year (January through June, etc.) for ammonia
are equal to or greater than 95% of the Sales Target Volume for that time
period as set forth in the Take Pattern, the semi-annual incentive allowance
(see Table IA) will be paid on the actual volume purchased for shipment for
that time period.

 

C)
Base:   If total purchases for a specific
Product are equal to or greater than 95% of the Sales Target Volume for that
Product for the Contract Year, a base incentive allowance for such Product (see
Tables I and IA) will be paid on 95% of the Sales Target Volume for that
Product for the Contract Year.

 

D)
Annual: If total purchases for a specific Product are greater than 95% of the
Sales Target Volume for that Product for the Contract Year, an annual incentive
allowance for such individual Product (see Tables I and IA) will be paid on all
purchases above 95% of the Sales Target Volume for the Contract Year.

 

15

 

Table I

$
Per Ton

 

	
   

  	
   

  	
  Quarter 

  1

  	
   

  	
  Quarter 

  2

  	
   

  	
  Quarter 

  3

  	
   

  	
  Quarter 

  4

  	
   

  	
  Base

  	
   

  	
  Annual

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Urea

  	
   

  	
  *****

  	
   

  	
  *****

  	
   

  	
  *****

  	
   

  	
  *****

  	
   

  	
  *****

  	
   

  	
  *****

  
	
  UAN-28

  	
   

  	
  *****

  	
   

  	
  *****

  	
   

  	
  *****

  	
   

  	
  *****

  	
   

  	
  *****

  	
   

  	
  *****

  
	
  DAP/MAP

  	
   

  	
  *****

  	
   

  	
  *****

  	
   

  	
  *****

  	
   

  	
  *****

  	
   

  	
  *****

  	
   

  	
  *****

  

 

Table IA

$
Per Ton

 

	
   

  	
   

  	
  Half

  1

  	
   

  	
  Half 

  2

  	
   

  	
  Base

  	
   

  	
  Annual

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Ammonia

  	
   

  	
  *****

  	
   

  	
  *****

  	
   

  	
  *****

  	
   

  	
  *****

  

 

Exclusion:  Ammonia purchases from Supplier’s Tampa
Ammonia terminal, UAN solution purchases from Supplier’s terminals at
Baltimore, Chesapeake, Wilmington and any future East Coast or Canadian
terminal, and any vessel purchases delivered to US East Coast, US West Coast, US
Texas Coast and Eastern Canada – both actual and Sales Target Volume amounts –
are excluded from all calculations for incentive allowances available per
Performance Incentive No. 1.

 

16

 

Incentive
No. 2

 

Type:
Timing of actual purchases under Supplier’s Forward Pricing Program (FPP)

 

Description:
Incentive earned on a Product if (i) that Product is purchased in
accordance with the terms and conditions of Supplier’s FPP and (ii) a
minimum period of time exists between the date the Customer places the order
and the first day of the contract ship month as defined in Table II.

 

Product:
Ammonia, urea, UAN solution (as equivalent 28%)

 

Time
of Payment: Forty-five (45) days after the end of the Contract Year, unless
actual shipment of the Product purchased enabling the Customer to earn the
incentive occurs after the expiration of the Contract Year, whereby payment
will then be made within 45 days from the date of the next quarter ending.

 

Incentive
Allowance by Product:

 

Table II

$ Per Ton

 

No. Of Months between Order Date on FPP & 1st
Day of Contract Ship Month

 

	
   

  	
   

  	
  12 months or 

  greater

  	
   

  	
  Greater than 6

  months but less 

  than 12 months

  	
   

  	
  Greater than 4

  months but less 

  than or equal

  to 6 months

  	
   

  	
  Greater than or 

  equal to 1

  months but less

  than or equal to

  4 months

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Ammonia

  	
   

  	
  *****

  	
   

  	
  *****

  	
   

  	
  *****

  	
   

  	
  *****

  
	
  Urea

  	
   

  	
  *****

  	
   

  	
  *****

  	
   

  	
  *****

  	
   

  	
  *****

  
	
  UAN-28

  	
   

  	
  *****

  	
   

  	
  *****

  	
   

  	
  *****

  	
   

  	
  *****

  

 

Exclusion:  Ammonia purchases from Supplier’s Tampa
Ammonia terminal, UAN solution purchases from Supplier’s terminals at
Baltimore, Chesapeake, Wilmington and any future East Coast or Canadian
terminal, and any vessel purchases delivered to US East Coast, US West Coast,
US Texas Coast and Eastern Canada — both actual and Sales Target Volume amounts
– are excluded from all calculations for incentive allowances available per
Performance Incentive No. 2.

 

17

 

Incentive
No. 3

 

Type:
Actual purchase volumes under Supplier’s Forward Pricing Program

 

Description:
Incentive earned on a Product if Customer purchases a minimum of 25% of that
Product’s Sales Target Volume for a Contract Year in accordance with the terms
and conditions of the Supplier’s FPP. 
Only those tons with a contract ship month which falls within the
current Contract Year, and only those tons purchased in accordance with the
terms and conditions of the Supplier’s FPP are eligible for this
incentive.  If the minimum (or next
threshold level e.g., 51%) is satisfied, the then applicable per ton Product
incentive is earned on the total eligible volume.

 

Product:
Ammonia, urea, UAN solution (as equivalent 28%), DAP, MAP

 

Time
of Payment: Forty-five (45) days after the end of the Contract Year, unless
actual shipment of the Product purchased enabling the Customer to earn the
incentive occurs after the expiration of the Contract Year, whereby payment
will then be made within 45 days from the date of the next quarter ending.

 

Incentive Allowance by
Product:

 

Table III

$
Per Ton

 

FPP
tons as a Percent of Annual Sales Target Volume

 

	
   

  	
   

  	
  25% or greater but 

  less than or equal

  to 50%

  	
   

  	
  Greater than 50%

  but less than or

  equal to 75%

  	
   

  	
  Greater than 75%

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Ammonia

  	
   

  	
  *****

  	
   

  	
  *****

  	
   

  	
  *****

  
	
  Urea

  	
   

  	
  *****

  	
   

  	
  *****

  	
   

  	
  *****

  
	
  UAN-28

  	
   

  	
  *****

  	
   

  	
  *****

  	
   

  	
  *****

  
	
  DAP/MAP

  	
   

  	
  *****

  	
   

  	
  *****

  	
   

  	
  *****

  

 

Exclusion:  Ammonia purchases from Supplier’s Tampa
Ammonia terminal, UAN solution purchases from Supplier’s terminals at
Baltimore, Chesapeake, Wilmington and any future East Coast or Canadian
terminal and any vessel purchases delivered to US East Coast, US West Coast, US
Texas Coast and Eastern Canada – both actual and Sales Target Volume amounts –
are excluded from all calculations for incentive allowances available per
Performance Incentive No. 3.

 

18

 

Incentive
No. 4

 

Type:
Requirement Volume above Contract Minimum

 

Description:
Incentive earned for establishing, for any specific Product a Requirement
Volume equal to or greater than 80% of the Sales Target Volume.  This multiplier percentage is specific by
Product and is available for application to Incentives No.1, No.2, and No.3

 

Product:
Ammonia, urea, UAN solution (as equivalent 28%), DAP, MAP

 

Time
of Payment: The multiplier incentive (Table IV) will be applied to each
incentive allowance (i.e., Incentives No.1 through No. 3) whenever a
particular incentive allowance is calculated and determined for payment.  This incentive will be paid whenever the
incentive allowances under No. 1 through No. 3 are paid.

 

Multiplier Percentage Incentive:

 

Table IV

Multiplier Percentage

 

	
  Requirement Volume as a%

  of Sales Target Volume

  	
   

  	
  Multiplier Percentage

  
	
   

  	
   

  	
   

  
	
  Equal to or greater than
  80%

  	
   

  	
  *****%

  

 

19

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