Document:

EX-10.5.1

 

Exhibit 10.5.1

J. Aron & Company | 85 Broad Street | New York, New York 10004

Tel: 212-902-1000

June 26, 2007

Coffeyville Resources, LLC

10 East Cambridge Circle, Suite #250

Kansas City, Kansas 66103

Attention: Tim Rens

Telecopier: (913) 981-0000

			
	Re:	 	Settlement Deferral 

Ladies and Gentlemen:

This is with reference to the ISDA Master Agreement, dated as of June 24, 2005 (the “Agreement”),
between J. Aron & Company (“Aron”) and Coffeyville Resources, LLC (“Coffeyville”), and the
Transactions thereunder (the “Transactions”) memorialized in:

	 	1.	 	Confirmation 887311561, with an amended and restated trade date of June 29, 2006;
	 
	 	2.	 	Confirmation WNP2HLD, with a trade date of June 16, 2005; and
	 
	 	3.	 	Confirmation WNS2HLB, with a trade date of June 16, 2005 (collectively, the “Confirmations”).

Capitalized terms not otherwise defined herein shall have the meaning set forth in the
Agreement and the Confirmations.

You have requested that we permit you to defer the first $45,000,000 of any payment that may be
due from you to us under the Transactions at the conclusion of the Determination Period ending
on June 30, 2007 (the “Current Determination Period”). Aron is prepared to permit such deferral
on the following terms and conditions:

	 	(a)	 	The Payment Date for the first $45,000,000 (the “Deferral Amount”) of
any payments due from Coffeyville to Aron under the Transactions in
respect of the Current Determination Period shall be August 7, 2007
(the “Deferred Payment Date”). Amounts in excess of the Deferral
Amount, if any, shall be payable on the original Payment Date for the
Current Determination Period (the “Original Payment Date”), as set forth
in the Confirmations.

 

 

			
	Coffeyville Resources, LLC

June 26, 2007
	 	-2-

	 	(b)	 	Interest shall accrue and be payable on the Deferral Amount from (and including) the Original
Payment Date to (but excluding) the date of actual payment, at the rate of LIBOR plus 3.25% (as
determined by Aron).

All other provisions of the Agreement, the Transactions and the Confirmations shall remain in full
force and effect.

This letter agreement may be executed in any number of counterparts, each of which shall constitute
an original, but all of which, taken together, shall be deemed to constitute one and the same
agreement.

THIS LETTER AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK (WITHOUT
REFERENCE TO ANY CONFLICT OF LAW RULES).

J. ARON & COMPANY

			
	By:	 	/s/ Stanley W.
Preston
 
Name:
Stanley Preston 
Title: Vice President
J. Aron & Company

ACCEPTED
AND AGREED TO THIS 
      DAY
OF JUNE, 2007.

COFFEYVILLE RESOURCES, LLC

			
	By:	 	
 
Name:
Title:

 

 

J. Aron & Company | 85 Broad Street | New York, New York 10004

Tel: 212-902-1000

July 11, 2007

Coffeyville Resources, LLC

10 East Cambridge Circle, Suite #250

Kansas City, Kansas 66103

Attention: Tim Rens

Telecopier: (913) 981-0000

			
	Re:	 	Settlement Deferral

Ladies and Gentlemen:

This is with reference to the ISDA Master Agreement, dated as of June 24, 2005 (including
the schedule thereto, the “Agreement’), between J. Aron & Company (“Aron”) and
Coffeyville Resources, LLC (“Coffeyville”), and the Transactions thereunder (the
“Transactions”) memorialized in:

1. Confirmation 887311561, with an amended and restated trade date of
June 29, 2006;

2. Confirmation WNP2HLD, with a trade date of June 16, 2005; and

3. Confirmation WNS2HLB, with a trade date of June 16, 2005 (collectively,
with the Confirmations listed at 1 and 2 above, the “Confirmations”).

Reference is also made to (a) the letter from us to you dated
June 26, 2007 (the “June 26
Letter”) with respect to the deferral of the first $45,000,000 (the “Original Deferred
Amount”) of payment that was due at the conclusion of the Determination Period ending
June 30, 2007 (the “June Determination Period”) and (b) the letter from us to you dated
July 9, 2007 with respect to the deferral of the amount in excess of the Original Deferral
Amount (the “July 9 Letter”). Such excess, which is in an amount equal to $43,680,925.47
million, is referred to herein as the “Current Deferred Amount.”

Capitalized terms not otherwise defined herein shall have the meaning set forth in the
Agreement, the Confirmations, the June 26 Letter and the July 9 Letter.

You have requested that we permit you to defer the Current Deferred Amount (in addition
to the Original Deferred Amount previously deferred) which is due from you to us under
the Transactions in respect of the June Determination Period.

 

 

-2-

Coffeyville Resources, LLC

July 11, 2007

Aron is prepared to permit the deferral of the Current Deferred Amount, but only to July 25,
2007, on the following terms and conditions:

(a) each of GS Capital Partners V Fund, L.P., a limited partnership duly organized
under the laws of the State of Delaware (“GSCPV”), and
Kelso Investment Associates VII, L.P., a limited partnership duly organized under the laws of the
State of Delaware (“Kelso” and, together with GSCPV, the “Guarantors”), agrees to
guaranty one half of the Current Deferred Amount pursuant to guaranties in the
form attached to this letter agreement (each, a “Guaranty” and collectively, the
“Guaranties”); and

(b) interest shall accrue and be payable on the Current Deferred Amount
from (and including) July 9, 2007 to (but excluding) the date of actual
payment, at the rate of LlBOR plus 1.50% (as determined by Aron).

The Agreement shall be amended as follows, for so long as the Guaranties are in effect:

(i) Section 4(f) of the Schedule to the Agreement is amended to add the following at
the end of such Section, “The Guaranties, as defined in the July 11, 2007 Letter
Agreement between Aron and Counterparty.”; and

(ii) Section 4(g) of the Schedule to the Agreement is amended to add the following
sentence at the end of such Section, “Notwithstanding the foregoing, the Guarantors,
as defined in the July 11, 2007 Letter Agreement between Aron
and Counterparty,
shall be Credit Support Providers in relation to Counterparty.”.

As a
condition to the settlement deferral described above, Coffeyville hereby represents
that it has, on the date hereof, and covenants that at all times prior to the payment of the
Current Deferred Amount will maintain, available liquidity of not less than the Current
Deferred Amount. Unless Aron and Coffeyville agree to a different arrangement
subsequent to the date hereof, Coffeyville covenants that it will apply such available
liquidity on July 25, 2007 to pay the Current Deferred Amount to Aron.

All other provisions of the Agreement, the Transactions and the Confirmations shall remain
in full force and effect.

This letter agreement may be executed in any number of counterparts, each of which shall
constitute an original, but all of which, taken together, shall be deemed to constitute one
and the same agreement.

 

 

-3-

Coffeyvile Resources, LLC

July 11, 2007

THIS LETTER AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK (WITHOUT
REFERENCE TO ANY CONFLICT OF LAW RULES).

J. ARON & COMPANY

By:                                   

Name:

Title:

ACCEPTED AND AGREED TO THIS 11th DAY

OF JULY, 2007.

COFFEYVILLE RESOURCES, LLC

By:                                   

Name:

Title:

 

 

J. Aron & Company  l  85 Broad Street  l  New York, New York 10004

Tel: 212-902-1000

July 26, 2007

Coffeyville Resources, LLC

10 East Cambridge Circle, Suite #250

Kansas City, Kansas 66103

Attention: Tim Rens

Telecopier: (913) 981-0000

			
	Re:	 	Revised Settlement Deferral

Ladies and Gentlemen:

This is with reference to the letter from us to you dated July 11, 2007 (as amended by this
letter agreement, the “July 11 Letter”). Capitalized terms not otherwise defined herein
shall have the meaning set forth in the July 11 Letter.

You have requested that we permit you to defer further the Original Deferred Amount and
the Current Deferred Amount and interest that has accrued on the Original Deferred
Amount and the Current Deferred Amount in accordance with the June 26 Letter and the
July 11 Letter, respectively (the “Accrued Interest and, together with the Original Deferred
Amount and the Current Deferred Amount, the “Deferred Amounts”).

Aron is prepared to extend the deferral of the Deferred Amounts to September 7, 2007, on
the following terms and conditions:

(a) each of the Guarantors agrees to guaranty one half of the Deferred Amounts
pursuant to guaranties in the form attached to this letter agreement (each, a “Revised Guaranty” and collectively, the “Revised Guaranties”); and

(b) interest shall accrue and be payable on the Original Deferred Amount
and the Current Deferred Amount from (and including) July 26, 2007 to (but
excluding) the date of actual payment, at the rate of LIBOR plus 1.50% (as
determined by Aron).

The Agreement shall be amended as follows, for so long as the Revised Guaranties are
in effect:

(i) Section 4(f) of the Schedule to the Agreement is amended to add the following at
the end of such Section, “The Revised Guaranties, as defined in the July 26, 2007
Letter Agreement between Aron and Counterparty.”; and

 

 

-2-

Coffeyville Resources, LLC

July 26, 2007

(ii) Section 4(g) of the Schedule to the Agreement is amended to add the following
sentence at the end of such Section, “Notwithstanding the foregoing, the Guarantors,
as defined in the July 26, 2007 Letter Agreement between Aron
and Counterparty,
shall be Credit Support Providers in relation to Counterparty.”.

Upon receipt of a Revised Guaranty from a Guarantor, the Guaranty previously issued
by such Guarantor shall be deemed terminated. All other provisions of the Agreement,
the Transactions, the Confirmations, the June 26 Letter and the July 11 Letter shall remain
in full force and effect; provided, however, that the third to last paragraph on page 2 of the
July 11 Letter (beginning “As a condition . . . .”) is deleted in its entirety and shall have no
force or effect.

This letter agreement may be executed in any number of counterparts, each of which shall

constitute an original, but all of which, taken together, shall be deemed to constitute one

and the same agreement.

     [REMAINDER
OF PAGE IS LEFT BLANK]

 

 

-3-

Coffeyville Resources, LLC

July 28, 2007

THIS LETTER AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK (WITHOUT
REFERENCE TO ANY CONFLICT OF LAW RULES).

J. ARON & COMPANY

By: /s/
Colleen Foster
 

Name: Colleen Foster

Title:    Managing Director

ACCEPTED
AND AGREED TO THIS 26th DAY

OF JULY, 2007.

COFFEYVILLE RESOURCES, LLC

By: /s/
Stanley A. Riemann
 

Name: Stanley A. Riemann

Title:    C.O.O.

 

 

July 26, 2007

J. Aron & Company

85 Broad Street

New York, New York 10004

Ladies and Gentlemen:

For value received, GS Capital Partners V, L.P., a limited partnership duly organized
under the laws of the State of Delaware (“GSCP V” or the “Guarantor”) hereby
unconditionally guarantees the prompt and complete payment, whether by acceleration
or otherwise, of 50% of the Deferred Amounts (as defined in the Letter Agreement
referred to below) plus accrued and unpaid interest (as provided in such Letter
Agreement) (collectively, the “Obligations”) of Coffeyville Resources, LLC, a limited
liability company that is owned by affiliates of GSCP V, Kelso Investment Associates
VII, L.P. (“Kelso”), and certain members of the management of the Company (as
defined below) and is duly organized under the laws of the State of Delaware (the
“Company”), to J. Aron & Company (the “Counterparty”) under the ISDA Master
Agreement between the Company and the Counterparty dated as of June 24, 2005 and
the Schedule to the ISDA Master Agreement dated as of June 24, 2005 under the Letter
Agreement from the Counterparty to the Company, dated July 26, 2007 (without giving
effect to any further amendments thereto, the “Letter Agreement”). Both the
Counterparty and the Guarantor agree and acknowledge that upon execution of this
Guaranty, the previous Guaranty of the Guarantor, dated as of July 11, 2007, will
automatically terminate. GSCP V shall receive on or prior to the date of this Guaranty a
copy of the guarantee provided by Kelso dated as of July 26, 2007 (as amended from
time to time, the “Kelso Guaranty”). GSCP V authorizes the Counterparty to provide a
copy of this Guaranty to Kelso.

Counterparty agrees that at any time that a payment is requested under this Guaranty,
Counterparty shall make a pro rata request for payment under the Kelso Guaranty and
the Guarantor shall at no time be required to pay an amount in excess of its pro rata
share of the aggregate amount of payment required at such time. This Guaranty is one
of payment and not of collection.

The Guarantor hereby waives notice of acceptance of this Guaranty and notice of any
obligation or liability to which it may apply, and waives presentment, demand for
payment, protest, notice of dishonor or non-payment of any such obligation or liability,
suit or the taking of other action by Counterparty against, and any
other notice to, the Company, the Guarantor or others.

 

The Guarantor represents and warrants that it will have sufficient cash and available
capital commitments, amounts available for retention or recall by the Guarantor and/or
other sources of liquidity to make payment of the Obligations when
due and payable.

Counterparty may at any time and from time to time without notice to or consent of the
Guarantor and without impairing or releasing the obligations of the Guarantor
hereunder: (1) agree with the Company to make any change in the terms of any
obligation or liability of the Company to Counterparty (provided that the Counterparty
shall obtain the consent of the Guarantor, such consent not to be unreasonably
withheld, prior to making a change that would cause the Deferred Amounts (as defined
in the Letter Agreement), excluding interest thereon and the Accrued Interest, to exceed
$88,700,000),(2) take or fail to take any action of any kind in respect of any security for
any obligation or liability of the Company or any other guarantor to Counterparty, (3)
exercise or refrain from exercising any rights against the Company or others, (4)
release, surrender, compromise, settle, rescind, waive alter, subordinate or modify and
other guaranties of the Obligations or (5) compromise or subordinate any obligation or
liabilty of the Company to Counterparty including any security therefor. Any other
suretyship defenses are hereby waived by the Guarantor.

This Guaranty is irrevocable and shall remain in full force and effect and be binding
upon Guarantor, its successors and assigns, until all of the Obligations have been
satisfied in full. The Guarantor further agrees that this Guaranty shall continue to be
effective or be reinstated, as the case may be, if at any time payment or any part
thereof, of any Obligations payable by it or interest thereon, is rescinded or must
otherwise be restored or returned by Counterparty upon the bankruptcy, insolvency,
dissolution or reorganization of the Company.

The Guarantor may not assign its rights nor delegate its obligations under this
Guaranty, in whole or in part, without prior written consent of the Counterparty, and any
purported assignment or delegation absent such consent is void, except for (1) one
or more assignments and delegations of all or a portion of its obligations hereunder to any
of GS Capital Partners V Institutional, L.P., GS Capital Partners V Offshore, L.P., GS
Capital Partners V GmbH & Co. KG., GS Capital Partners V Fund, L.P., GS Capital
Partners V Employee Fund, L.P., and GS Capital Partners V Offshore Fund, L.P. such
that each such fund has assumed by contract its pro rata portion of the Obligations
and/or (2) an assignment and delegation of all of the Guarantor’s rights and obligations
hereunder in whatever form the Guarantor determines may be appropriate to a
partnership, corporation, trust or other organization in whatever form that succeeds to
all or substantially all of the Guarantor’s assets and business and that assumes such
obligations by contract, operation of law or otherwise. Upon any such delegation and
assumption of obligations, the Guarantor shall be relieved of and fully discharged from
all obligations hereunder, whether such obligations arose before or after such
delegation and assumption.

-2-

 

Guarantor acknowledges that the Kelso Guaranty may not be amended or waived nor
any consent or departure be effective without its prior written consent. Guarantor
agrees that any such consent shall not be unreasonably withheld.

No amendment or waiver of any provision of this Guaranty nor consent to any departure
by the Guarantor herefrom shall in any event be effective unless the same shall be in
writing and signed by the Guarantor and the Counterparty, and which amendment,
waiver, consent or departure shall be consented to by Kelso.

THIS GUARANTY SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK
WITHOUT GIVING EFFECT TO PRINCIPLES OF CONFLICTS OF LAW. THE
GUARANTOR AGREES TO THE EXCLUSIVE JURISDICTION OF COURTS
LOCATED IN THE STATE OF NEW YORK, UNITED STATES OF AMERICA, OVER
ANY DISPUTES ARISING UNDER OR RELATING TO THIS GUARANTY.

Very truly yours,

GS Capital Partners V, L.P.

On behalf of GS Capital Partners V

Institutional, L.P., GS Capital Partners

V Offshore, L.P., GS Capital Partners V

GmbH & Co. KG., GS Capital Partners

V Fund, L.P., GS Capital Partners V

Employee Fund, L.P., and GS Capital

Partners V Offshore Fund, L.P.

BY: GSCP
Advisors, L.L.C.

       its General Partner

By: /s/
        [illegible]
 

            Authorized Officer

-3-

 

July 26, 2007

J. Aron & Company

85 Broad Street

New York, New York 10004

Ladies and Gentlemen:

For value received, Kelso Investment Associates VII, L.P., a limited partnership
duly organized under the laws of the State of Delaware (“Kelso” or the
“Guarantor”) hereby unconditionally guarantees the prompt and complete
payment, whether by acceleration or otherwise, of 50% of the Deferred Amounts
(as defined in the Letter Agreement referred to below) plus accrued
and unpaid interest (as provided
in such Letter Agreement) (collectively, the “Obligations”) of
Coffeyville Resources, LLC, a limited liability company that is owned by Kelso,
GS Capital Partners V, L.P. (“GSCP V”) and certain members of the
management of the Company (as defined below) and is duly organized under the
laws of the State of Delaware (the “Company”), to J. Aron & Company (the
“Counterparty”) under the ISDA Master Agreement between the Company and
the Counterparty dated as of June 24, 2005 and the Schedule to the ISDA
Master Agreement dated as of June 24, 2005 that are due in accordance with the
Letter Agreement from the Counterparty to the Company, dated July 26, 2007
(the “Letter Agreement”) within 12 days following receipt by the Guarantor of a
written request from the Counterparty. Both the Counterparty and the Guarantor
agree and acknowledge that upon execution of this Guaranty, the previous
Guaranty of the Guarantor, dated as of July 11, 2007, wil
automatically terminate. Kelso shall receive on or prior to the date of this Guaranty a copy of the
guarantee provided by GSCP V dated as of July 26, 2007 (as amended from
time to time, the “GSCP V Guaranty”). Kelso authorizes the Counterparty to
provide a copy of this Guaranty to GSCP V.

Counterparty agrees that at any time that a payment is requested under this
Guaranty, Counterparty shall make a pro rata request for payment
under the GSCP V Guaranty and the Guarantor shall at no time be required to pay an
amount in excess of its pro rata share of the aggregate amount of payment
required at such time. This Guaranty is one of payment and not of collection.

The Guarantor hereby waives notice of acceptance of this Guaranty and notice of
any obligation or liability to which it may apply, and waives presentment, demand
for payment, protest, notice of dishonor or non-payment of any such obligation or
liability, suit or the taking of other action by Counterparty against, and any other
notice to, the Company, the Guarantor or others.

 

The Guarantor represents and warrants that it has sufficient cash and available
capital commitments to make payment of the Obligations and covenants to
maintain such cash and available capital commitments until satisfaction and
release of all obligations of the Guarantor hereunder.

Without limiting the Guarantor’s obligations under the immediately preceding
paragraph, the Guarantor and its respective general partners agree to take all
action as may be necessary so that, at all time prior to the satisfaction and
release of all obligations of the Guarantor under this Guaranty pursuant to the
terms herein, the Guarantor and/or its general partners shall have caused its
respective affiliates to reserve capital in amounts sufficient to fund in a timely
manner all obligations of the Guarantor under the this Guaranty.

Counterparty may at any time and from time to time without notice to or consent
of the Guarantor and without impairing or releasing the obligations of the
Guarantor hereunder: (1) agree with the Company to make any change in the
terms of any obligation or liability of the Company to Counterparty, (2) take or fail
to take any action of any kind in respect of any security for any obligation or
liability of the Company or any other guarantor to Counterparty, (3) exercise or
refrain from exercising any rights against the Company or others, (4) release,
surrender, compromise, settle, rescind, waive alter, subordinate or modify and
other guaranties of the Obligations or (5) compromise or subordinate any
obligation or liability of the Company to Counterparty including any security
therefor; provided that notwithstanding the foregoing, the Counterparty shall not,
without the consent of the Guarantor (i) change the duration of the deferral
provided in the Letter Agreement, (ii) increase the Deferred Amounts (as defined
in the Letter Agreement), (ii) otherwise amend, waive or modify any other
provision of the Letter Agreement or (iv) take any affirmative action to release
any Collateral (as defined in the Loan Agreement). Any other suretyship
defenses are hereby waived by the Guarantor.

This Guaranty is irrevocable and shall remain in full force and effect and be
binding upon Guarantor, its successors and assigns, until all of the Obligations
have been satisfied in cash in full (the date on which the Obligations are so
satisfied being the “Satisfaction Date”). The Guarantor
further agrees that this Guaranty shall continue to be effective or be reinstated, as the case may be, if at
any time payment or any part thereof, of any Obligations or interest thereon, is
rescinded or must otherwise be restored or returned by Counterparty; provided,
however, that this sentence shall cease to be operative on the earlier of (i) the
date twelve months plus one calendar day after the Satisfaction Date (if within
such period (a) the Company has not become a debtor under the United States
Bankruptcy Code 11 U.S.C. § 101 et seq. (as now and hereafter in effect, or any
successor statute) or any similar State or Federal statue and (b) no action has
been brought against the Counterparty seeking to recover or rescind any such
payment) and (ii) the date, following the Satisfaction Date, when the Company
consummates initial public offering of the Company’s common stock following

-2-

 

which the Company’s common stock is listed on any internationally recognized
exchange of dealer quotation system, all or a portion of the net proceeds of
which are used to payor prepay at least $280,000,000 of the Company’s
indebtedness (a “Qualified IPO”); provided that if a Qualified IPO occurs prior to
the Satisfaction Date, the obligations hereunder shall terminate on the
Satisfaction Date.

The Guarantor may not assign its rights nor delegate its obligations under this
Guaranty, in whole or in part, without prior written consent of the Counterparty,
and any purported assignment or delegation absent such consent is void, except
for an assignment and delegation of all of the Guarantor’s rights and obligations
hereunder in whatever form the Guarantor determines may be appropriate to a
partnership, corporation, trust or other organization in whatever form that
succeeds to all or substantially all of the Guarantor’s assets and business and
that assumes such obligations by contract, operation of law or otherwise. Upon
any such delegation and assumption of obligations, the Guarantor shall be
relieved of and fully discharged from all obligations hereunder, whether such
obligations arose before or after such delegation and assumption.

The Guarantor and the Counterparty acknowledges that the GSCP V Guaranty
may not be amended or waived nor any consent or departure be effective without
the Guarantor’s prior written consent. Guarantor agrees that any such consent
shall not be unreasonably withheld.

No amendment or waiver of any provision of this Guaranty nor consent to any
departure by the Guarantor herefrom shall in any event be effective unless the
same shall be in writing and signed by the Guarantor and the Counterparty, and
which amendment, waiver, consent or departure shall be consented to by GSCP V.

THIS GUARANTY SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK
WITHOUT GIVING EFFECT TO PRINCIPLES OF CONFLICTS OF LAW. THE
GUARANTOR AGREES TO THE EXCLUSIVE JURISDICTION OF COURTS
LOCATED IN THE STATE OF NEW YORK, UNITED STATES OF AMERICA,
OVER ANY DISPUTES ARISING UNDER OR RELATING TO THIS
GUARANTY.

-3-

 

Very truly yours,

Kelso Investment Associates VII, L.P.

By: Kelso
GP VII, L.P., the General Partner

By: Kelso
GP VII, LLC, its general partner

By: /s/ [illegible]

 

Authorized Officer

 

 

Accepted
and agreed to with respect

to the 2nd, 6th, 9th and 10th paragraphs above, as of

the date first above written:

	 	 	 	 
	J. Aron & Company
	 
	By:	 	/s/ Colleen Foster

	Name:	 	Colleen Foster
	Title:	 	Managing Director

-5-

 

August 23,
2007

Coffeyville Resources, LLC

10 East Cambridge Circle, Suite #250

Kansas City, Kansas 66103

Attention: Tim Rens

Telecopier: (913) 981-0000

			
	Re:	 	Revised Settlement Deferral

Ladies and Gentlemen:

This is with reference to the letters from us to you dated July 11, 2007 and July 26, 2007 (as
amended by this letter agreement, collectively, the “July Letter”). Capitalized terms not otherwise
defined herein shall have the meaning set forth in the July Letter.

You have requested that we permit you to (a) defer further (i) the Original Deferred Amount
and the Current Deferred Amount and (ii) interest that has accrued on the Original Deferred Amount
and the Current Deferred Amount in accordance with the June 26 Letter and the July 11 Letter,
respectively, and as modified by the July 26 Letter (the “Accrued Interest”), and (b) defer
$35,000,000 of the payment due at the conclusion of the Determination Period ending September 30,
2007 (the “Third Quarter Deferral Amount”, and, together with the Accrued Interest, the Original
Deferred Amount and the Current Deferred Amount, the “Deferred Amounts”, such amounts to be
scheduled payments to be made according to this letter and current liabilities of Coffeyville
Resources, LLC (the “Company”)).

Aron is prepared to extend the deferral of the Deferred Amounts as provided herein subject to the
following terms and conditions:

(a) each of the Guarantors agrees to guaranty one half of the Deferred Amounts pursuant to
guaranties in the forms attached to this letter agreement (each, a
“Revised Guaranty” and collectively, the “Revised Guaranties”); and

(b) interest shall accrue and be payable on (x) the Original Deferred
Amount from (and including) July 11, 2007, (y) the Current Deferred Amount from (and
including) July 26, 2007 and (z) the Third Quarter Deferral Amount from (and
including) October 5, 2007, in each case to (but excluding) the date of actual
payment, at the rate of LIBOR plus 1.50% (as determined by Aron).

 

 

	 	 	 
	Coffeyville Resources, LLC
	 	 
	August 23, 2007

	 	-2-

The Deferred Amounts shall be due and payable in full on January 31, 2008 unless a IPO (as
defined in the 2007 Credit Agreement (as defined below)) occurs, in which case the
following terms will apply:

(i) thereafter, in the event that the Company and its Subsidiaries shall have
Consolidated Excess Cash Flow (as defined below) for any calendar quarter ending
after January 31, 2008, the Company shall, no later than the fifth Local Business
Day (as defined in the Agreement) following the conclusion of each such calendar
quarter, prepay the Deferred Amounts in an aggregate amount equal to 37.5% of such
Consolidated Excess Cash Flow (For purposes of this letter agreement “Consolidated
Excess Cash Flow” shall mean, for any quarter, an amount (if positive) equal to: (i)
the sum, without duplication, of the amounts for such period of (a) Consolidated
Adjusted EBITDA, plus (b) the Consolidated Working Capital Adjustment
plus (c) extraordinary Cash gains excluded from Consolidated Adjusted
EBITDA, plus (d) net decreases in cash required to be on deposit with
counterparties pursuant to outstanding derivative instruments permitted under the
2006 Credit Agreement (as defined below), minus (ii) the sum, without duplication,
of the amounts for such period of (a) scheduled repayments of Consolidated Total
Debt (excluding repayments of Revolving Loans or Swing Line Loans except to the
extent the Revolving Commitments under and as defined in the 2007 Credit Agreement
are permanently reduced in connection with such repayments and except to the extent
that such repayments of Revolving Loans under and as defined in the 2007 Credit
Agreement are subject to the $25,000,000 limitation set forth in Section 6.16 of the
2007 Credit Agreement referred to below), (b) Consolidated Capital Expenditures ((x)
excluding any Consolidated Capital Expenditures funded through the utilization of
the Available Amount (calculated after giving effect to amounts that have been
applied to, or will be required to be applied to, the payment of the Deferred
Amounts, plus interest accrued thereon, pursuant to this letter) and (y) net of any
proceeds of (1) any related financings with respect to such Consolidated Capital
Expenditures and (2) any sales of assets used to finance such Consolidated Capital
Expenditures), (c) Consolidated Cash Interest Expense, (d) provisions for (x)
current taxes of Holdings, the Company and its Subsidiaries and payable in cash with
respect to such period and (y) (1) cash payments that will be settled and payable by
the Company and its Subsidiaries under the Agreement during the next period that are
associated with earnings for the current period, to the extent such payments have
not otherwise been deducted from, used to reduce or excluded from the sum calculated
pursuant to clause (i) above, less (2) cash payments received by the Companies and
its Subsidiaries under the Agreement during such period, to the extent such payments
have not otherwise been added to, used to increase or included in the sum calculated
pursuant to clause (i) above; provided that (A) any payments included in clause (1)
immediately above shall not reduce Consolidated Net Income in the next period for

 

 

	 	 	 
	Coffeyville Resources, LLC
	 	 
	August 23, 2007

	 	-3-

purposes of the calculation of Consolidated Excess Cash Flow and (B) any
payments included in clause (2) immediately above shall not increase Consolidated
Net Income in the next period for purposes of the calculation of Consolidated Excess
Cash Flow, (e) any Cash amounts made by Holdings pursuant to Sections 6.5(a)(i)
through (iv) and 6.5(a)(vi) of the 2006 Credit Agreement referred to below to the
extent such amounts have not been deducted from Consolidated Net
Income, (f) Cash
amounts which have been included in Consolidated Adjusted EBITDA for such period
pursuant to clauses (i)(g), (i)(h), (i)(i), (i)(j), (i)(k), (i)(l), (i)(m) and (i)(n)
of the definition thereof, (g) extraordinary Cash losses (including any premiums
associated with the prepayment of Indebtedness to the extent such payment is
accounted for as an extraordinary item), (h) net increases in cash required to be on
deposit with counterparties pursuant to outstanding derivative instruments permitted
under the 2006 Credit Agreement) and (i) payments of the Deferred Amounts pursuant
to the operation of this clause (i) during such (to the extent not deducted in the
calculation of Consolidated Working Capital Adjustment); and

(ii) all remaining Deferred Amounts, plus interest accrued thereon, shall be due and
payable in full on August 31, 2008.

Terms used in clause (i) above and not otherwise defined shall have the meaning
set forth in the Second Amended and Restated Credit and Guaranty Agreement, dated as
of December 28, 2006, among the Company, Holdings, the Guarantors, the lenders party
thereto from time to time, Goldman Sachs Credit Partners, L.P. and Credit Suisse
Securities (USA) LLC, as joint lead arrangers and joint bookrunners, Credit Suisse,
as administrative agent, collateral agent, funded L/C issuing bank and as revolving
issuing bank, Deutsche Bank Trust Company Americas, as syndication agent and ABN
AMRO Bank N.V., as documentation agent, as amended by the First Amendment to Second
Amended and Restated Credit and Guaranty Agreement dated on or about the date
hereof, among the Company, Holdings, the Guarantors, the lenders listed on the
signature pages thereto, GSCP and Credit Suisse Securities (USA) LLC, as joint lead
arrangers and joint bookrunners, and Credit Suisse, as administrative agent and
collateral agent (collectively, the “2006 Credit Agreement”).

The Agreement is hereby amended as follows, for so long as the Revised Guaranties are in effect:

(1) Section 4(f) of the Schedule to the Agreement is amended to add the
following at the end of such Section, “The Revised Guaranties, as defined in the August 23,
2007 Letter Agreement between Aron and Counterparty.”; and

(2) Section 4(g) of the Schedule to the Agreement is amended to add the following
sentence at the end of such Section, “Notwithstanding the foregoing, GS Capital

 

 

	 	 	 
	Coffeyville Resources, LLC
	 	 
	August 23,
2007

	 	-4-

Partners V, L.P. and Kelso Investment Associates VII, L.P., as the Guarantors, shall be
Credit Support Providers in relation to Counterparty.”; and

The Agreement is further hereby amended as follows, for so long as any portion of any of the
Deferred Amounts or the interest thereon remains outstanding:

(A) The provisions (including the definitions used therein) included in Section 6 of the
Secured Credit and Guaranty Agreement, dated as of August 23, 2007 among the Company,
Coffeyville Pipeline, Inc., Coffeyville Refining & Marketing, Inc., Coffeyville
Nitrogen Fertilizers, Inc., Coffeyville Crude Transportation, Inc., Coffeyville Terminal,
Inc., CL HV Holdings, LLC, as Holdings, Certain Subsidiaries of Holdings, as Guarantors,
Various Lenders, Goldman Sachs Credit Partners L.P. (“GSCP”), as Sole Lead Arranger, Sole
Bookrunner, Administrative Agent and Collateral Agent (as in effect on the date hereof,
without giving effect to any subsequent amendment, modification, supplement, waiver,
amendment and restatement or termination thereof, the “2007 Credit Agreement”) are
incorporated by reference into the Agreement under Section 4 of the Agreement as
additional subparagraphs and default under any such provision shall constitute an Event of
Default with respect to the Company as the Defaulting Party under Section 5(a)(ii) of the
Agreement; provided that the phrase “if such failure is not remedied on or before the
thirtieth day after notice of such failure is given to the party” at the end of Section
5(a)(ii) is hereby deleted in relation to these incorporated provisions; and

(B) Section 3(b) of the Agreement is hereby amended to include the following as an
addition to the table set forth therein:

	 	 	 	 	 	 	 
	 	 	 	 	 	 	Covered bv
	Party required	 	 	 	Date by which to be	 	Section 3(d)
	to deliver	 	Form/Document/Certificate	 	delivered	 	Representation
	Counterparty

	 	Certificate from Chief
Financial Officer
setting forth in detail
the calculation of the
Consolidated Excess Cash
Flow for the immediately
preceding calendar
quarter
	 	Not later than the
fifth Local
Business Day
following the
conclusion of each
calendar quarter
after a Designated
IPO has occurred
	 	Yes

Upon receipt of a Revised Guaranty from a Guarantor, the Guaranty dated July 26, 2007
previously issued by such Guarantor shall be deemed terminated. All other provisions of the
Agreement, the Transactions, the Confirmations, the June 26 Letter and the July Letters shall
remain in full force and effect.

This letter agreement may be executed in any number of counterparts, each of which shall constitute
an original, but all of which, taken together, shall be deemed to constitute one and the same
agreement.

 

 

	 	 	 
	Coffeyville Resources, LLC
	 	 
	August 23, 2007

	 	-5-

     

[Remainder of Page is Left Blank]

 

 

	 	 	 
	Coffeyville Resources, LLC
	 	 
	August 23, 2007

	 	-6-

THIS LETTER AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NEW YORK (WITHOUT REFERENCE TO ANY CONFLICT OF LAW RULES).

	 	 	 	 	 
	J. ARON & COMPANY
	 
	 	 	 	 
	 
	 	 	 	 
	By:

	 	/s/ [illegible]	 	 
	 

	 	 	 	 
	 

	 	Name:	 	 
	 

	 	Title:	 	 

	 	 	 	 	 
	 
	 	 	 	 
	ACCEPTED AND AGREED TO THIS 23rd DAY
	OF AUGUST, 2007.
	 
	 	 	 	 
	COFFEYVILLE RESOURCES, LLC
	 
	 	 	 	 
	 
	 	 	 	 
	By:

	 	 	 	 
	 

	 	 	 	 
	 

	 	Name:	 	 
	 

	 	Title:	 	 

 

 

	 	 	 
	Coffeyville Resources, LLC
	 	 
	August 23, 2007

	 	-6-

THIS LETTER AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF
THE STATE OF NEW YORK (WITHOUT REFERENCE TO ANY CONFLICT OF LAW RULES).

	 	 	 	 	 
	J. ARON & COMPANY
	 
	 	 	 	 
	 
	 	 	 	 
	By:

	 	 	 	 
	 

	 	 	 	 
	 

	 	Name:	 	 
	 

	 	Title:	 	 

	 	 	 	 	 
	 
	 	 	 	 
	ACCEPTED AND AGREED TO THIS 23rd DAY
	OF AUGUST, 2007.
	 
	 	 	 	 
	COFFEYVILLE RESOURCES, LLC
	 
	 	 	 	 
	 
	 	 	 	 
	By:

	 	/s/ James T. Rens	 	 
	 

	 	 	 	 
	 

	 	Name: James T. Rens	 	 
	 

	 	Title: CFOEX-10.16

 

Exhibit 10.16

AMENDMENT NUMBER 1

TO EMPLOYMENT AGREEMENT

     AMENDMENT NUMBER 1 TO EMPLOYMENT AGREEMENT, dated as of December 13, 2006,
by and between Coffeyville Resources, LLC, a Delaware limited liability company
(the “Company”), and Robert W. Haugen (the “Executive”).

     WHEREAS, the Company and the Executive entered into an employment
agreement dated as of July 12, 2005 (the “Employment Agreement”); and

     WHEREAS, the Company and the Executive desire to amend the Employment
Agreement with respect to the Executive’s target Annual Bonus beginning with
the 2007 fiscal year.

     NOW THEREFORE, the parties hereby agree to amend the Employment Agreement
as follows:

     1.     Section 2.2 is hereby deleted in its entirety and replaced with the
following:

		
	 	2.2. Annual Bonus. For each completed fiscal year occurring
during the Term, the Executive shall be eligible to receive an
annual cash bonus (the “Annual Bonus”). Commencing with fiscal
year 2007, the target Annual Bonus shall be 120% of the Executive’s
Base Salary as in effect at the beginning of such fiscal year 2007
and at the beginning of each such fiscal year thereafter during the
Term, the actual Annual Bonus to be based upon such individual
and/or Company performance criteria established for each such
fiscal year by the Board.

     2.     In all other respects the Employment Agreement shall remain in effect
and is hereby confirmed by the parties.

COFFEYVILLE RESOURCES, LLC

				
	/s/   Robert W. Haugen	 	By:	/s/   John J. Lipinski
	Robert W. Haugen	 	 	Name:   John J. Lipinski
	 	 	 	Title:    CEO

 

EMPLOYMENT AGREEMENT

     EMPLOYMENT
AGREEMENT, dated as of July 12, 2005 (the “Employment
Agreement”), by and between Coffeyville Resources, LLC, a Delaware limited
liability company (the “Company”), and Robert W.
Haugen (the “Executive”).

     WHEREAS, pursuant to the Stock Purchase Agreement, dated as of May 15,
2005 (the “Stock Purchase Agreement”), between Coffeyville Group Holdings, LLC,
a Delaware limited liability company (“Seller”) and Coffeyville Acquisition
LLC, a Delaware limited liability company (“Buyer”), Buyer purchased from
Seller all of the issued and outstanding shares of capital stock of Coffeyville
Pipeline, Inc., Coffeyville Refining & Marketing, Inc., Coffeyville Nitrogen
Fertilizers, Inc., Coffeyville Crude Transportation, Inc. and Coffeyville
Terminal, Inc.; and

     WHEREAS, the Company and the Executive desire to, effective as of the
consummation of the transactions contemplated in the Stock Purchase Agreement,
enter into this Employment Agreement.

     NOW, THEREFORE, in consideration of the mutual covenants contained herein
and other valid consideration the sufficiency of which is acknowledged, the
parties hereto agree as follows:

Section 1.  Employment.

     1.1.
Term. The Company agrees to employ the Executive, and the Executive
agrees to be employed by the Company, in each case pursuant to this Employment
Agreement, for a period commencing on the “Closing Date” (as such term is
defined in the Stock Purchase Agreement) and ending on the earlier of (i) the
third (3rd) anniversary of the Closing Date and (ii) the termination of the
Executive’s employment in accordance with Section 3 hereof
(the “Term”).

     1.2.
Duties. During the Term, the Executive shall serve as Executive Vice
President — Engineering and Construction of the Company and such other
positions as an officer or director of the Company and such affiliates of the
Company as the Executive and the board of directors of the Company (the
“Board”) shall mutually agree from time to time. In such positions, the
Executive shall perform such duties, functions and responsibilities during the
Term commensurate with the Executive’s positions as reasonably directed by the
Board.

     1.3.
Exclusivity. During the Term, the Executive shall devote
substantially all of his working time and attention to the business and affairs
of the Company, shall faithfully serve the Company, and shall in all material
respects conform to and comply with the lawful and reasonable directions and
instructions given to him by the Board, consistent with Section 1.2 hereof.
During the Term, the Executive shall use his best efforts during his working
time to promote and serve the interests of the Company and shall not engage in
any other business activity, whether or not such activity shall be engaged in
for pecuniary profit. The provisions of this Section 1.3 shall not be
construed to prevent the Executive from investing his personal, private assets
as a passive investor in such form or manner as will not require any active
services on the part of the Executive in the management or operation of the
affairs of the

1

 

companies, partnerships, or other business entities in which any such
passive investments are made. Notwithstanding the foregoing, during the Term
the Executive shall not engage in any activity related to the construction or
operation of ammonia, urea ammonium nitrate or fertilizer plants or facilities
anywhere outside of the United States.

Section 2.  Compensation.

     2.1.
Salary. As compensation for the performance of the Executive’s
services hereunder, during the Term, the Company shall pay to the Executive a
salary at an annual rate of Two Hundred Twenty-Five Thousand Dollars
($225,000), payable in accordance with the Company’s standard payroll policies,
as may be adjusted upward by the Board in its discretion (as adjusted, the
“Base Salary”).

     2.2.
Bonus.

     (a) 
Annual Bonus. For each completed fiscal year occurring during the
Term, the Executive shall be eligible to receive an annual cash bonus (the
“Annual Bonus”). The target Annual Bonus shall be 52% of the Executive’s Base
Salary as in effect at the beginning of such fiscal year, the actual Annual
Bonus to be based upon such individual and/or Company performance criteria
established for each such fiscal year by the Board. For 2005, the Executive
will be eligible to receive an Annual Bonus under the 2005 Coffeyville
Resources, LLC and Affiliated Companies Performance Based Income Sharing Plan
(the “2005 Plan”) with appropriate adjustments to the performance criteria
thereunder to reflect the impact, if any, of the transactions contemplated in
the Stock Purchase Agreement. Notwithstanding the foregoing, the Executive
shall not be eligible for any pro rata bonus upon termination of the
Executive’s employment under the 2005 Plan (or any successor plan).

     (b) 
Special Bonus. The Executive shall be eligible to participate in any
special bonus program that the Board may implement to reward senior management
for extraordinary performance on terms and conditions established by the Board.

     2.3.
Employee Benefits. During the Term, the Executive shall be eligible
to participate in such health, insurance, retirement, and other employee
benefit plans and programs of the Company as in effect from time to time on the
same basis as other senior executives of the Company.

     2.4.
Vacation. During the Term, the Executive shall be entitled to paid
vacation in accordance with the Company’s vacation policy as in effect on the
date hereof.

     2.5.
Business Expenses. The Company shall pay or reimburse the Executive
for all commercially reasonable business out-of-pocket expenses that the
Executive incurs during the Term in performing his duties under this Employment
Agreement upon presentation of documentation and in accordance with the expense
reimbursement policy of the Company as approved by the Board and in effect from
time to time.

Section 3.  Employment
Termination.

2

 

     3.1.
Termination of Employment. The Company may terminate the Executive’s
employment for any reason during the Term, and the Executive may voluntarily
terminate his employment for any reason during the Term, in each case (other
than a termination by the Company for Cause) at any time upon not less than
thirty (30) days’ notice to the other party. Upon the termination of the
Executive’s employment with the Company for any reason (whether during the Term
or thereafter), the Executive shall be entitled to any Base Salary earned but
unpaid through the date of termination, any earned but unpaid Annual Bonus for
completed fiscal years, and any unreimbursed expenses in accordance with
Section 2.5 hereof (collectively, the “Accrued Amounts”).

     3.2.
Certain Terminations.

     (a) 
Termination by the Company Other Than For Cause or Disability;
Termination by the Executive for Good Reason. If (i) the Executive’s
employment is terminated by the Company during the Term other than for Cause or
Disability or (ii) the Executive resigns for Good Reason, in addition to the
Accrued Amounts the Executive shall be entitled to the following payments and
benefits: (x) the continuation of his Base Salary at the rate in effect
immediately prior to the date of termination for a period of twelve (12) months
and (y) the continuation on the same terms as an active employee of medical
benefits the Executive would otherwise be eligible to receive as an active
employee of the Company for twelve (12) months or until such time as the
Executive becomes eligible for medical benefits from a subsequent employer
(such payments, the “Severance Payments”). The Company’s obligations to make
the Severance Payments shall be conditioned upon: (i) the Executive’s continued
compliance with his obligations under Section 4 of this Employment Agreement
and (ii) the Executive’s execution, delivery and non-revocation of a valid and
enforceable release of claims arising in connection with the Executive’s
employment and termination of employment with the Company and its affiliates
(the “Release”) in a form reasonably acceptable to the Company and the
Executive. In the event that the Executive breaches any of the covenants set
forth in Section 4 of this Employment Agreement, the Executive will immediately
return to the Company any portion of the Severance Payments that have been paid
to the Executive pursuant to this Section 3.2(a). Subject to Section 3.2(c),
the Severance Payments will commence to be paid to the Executive as soon as
practicable following the effectiveness of the Release.

     (b) 
Definitions. For purposes of this Section 3.2, the following terms
shall have the following meanings:

     (1) 
A termination for “Good Reason” shall mean a termination by the
Executive within thirty (30) days following the date on which the Company has
engaged in any of the following: (i) the assignment of duties or
responsibilities to the Executive that reflect a material diminution of the
Executive’s position with the Company; (ii) a relocation of the Executive’s
principal place of employment that increases the Executive’s commute by more
than fifty (50) miles; or (iii) a reduction in the Executive’s Base Salary,
other than across-the-board reductions applicable to similarly situated
employees of the Company; provided, however, that the Executive must provide
the Company with notice promptly following the occurrence of any of foregoing
and at least ten (10) business days to cure.

     (2)
“Cause” shall mean that the Executive has engaged

3

 

in any of the following: (i) willful misconduct or breach of fiduciary
duty; (ii) intentional failure or refusal to perform reasonably assigned duties
after written notice of such willful failure or refusal and the failure or
refusal is not corrected within ten (10) business days; (iii) the indictment
for, conviction of or entering a plea of guilty or nolo contendere to a crime
constituting a felony (other than a traffic violation or other offense or
violation outside of the course of employment which does not adversely affect
the Company and its affiliates or their reputation or the ability of the
Executive to perform his employment-related duties or to represent the
Company); provided, however, that (A) if the Executive is terminated for Cause
by reason of his indictment pursuant to this clause (iii) and the indictment is
subsequently dismissed or withdrawn or the Executive is found to be not guilty
in a court of law in connection with such indictment, then the Executive’s
termination shall be treated for purposes of this Employment Agreement as a
termination by the Company other than for Cause, and the Executive will be
entitled to receive (without duplication of benefits and to the extent
permitted by law and the terms of the then-applicable medical benefit plans)
the payments and benefits set forth in Section 3.2(a) following such dismissal,
withdrawal or finding, payable in the manner and subject to the conditions set
forth in such Section and (B) if such indictment relates to environmental
matters and does not allege that the Executive was directly involved in or
directly supervised the action(s) forming the basis of the indictment, Cause
shall not be deemed to exist under this Employment Agreement by reason of such
indictment until the Executive is convicted or enters a plea of guilty or nolo
contendere in connection with such indictment; or (iv) material breach of the
Executive’s covenants in Section 4 of this Employment Agreement or any material
written policy of the Company after written notice of such breach and failure
by the Executive to correct such breach within ten (10) business
days, provided
that no notice of, nor opportunity to correct, such breach shall be required
hereunder if such breach cannot be cured by the Executive.

     (3) 
“Disability” shall mean the Executive’s inability, due to physical or
mental ill health, to perform the essential functions of the Executive’s job,
with or without a reasonable accommodation, for 180 days during any 365 day
period irrespective of whether such days are consecutive.

     (c) 
Section 409A. Any payments under Section 2.2 of this Employment
Agreement shall be made no later than two and one-half months after the later
of the end of the Company’s fiscal year in which all conditions entitling the
Executive to such payments have been satisfied or the calendar year in which
all conditions entitling the Executive to such payments have been satisfied.
If the Executive is a “specified employee” for purposes of Section 409A of the
Code and the regulations thereunder, any Severance Payments required to be made
pursuant to Section 3.2(a) which are subject to Section 409A shall not commence
until six (6) months from the date of termination, with the first payment
equaling six (6) months of his Base Salary at the rate in effect immediately
prior to the date of termination.

     3.3.
Exclusive Remedy. The foregoing payments upon termination of the
Executive’s employment shall constitute the exclusive severance payments due
the Executive upon a termination of his employment under this Employment
Agreement.

     3.4.
Resignation from All Positions. Upon the termination of the
Executive’s employment with the Company for any reason, the Executive shall be
deemed to have resigned, as of the date of such termination, from all positions
he then holds as an officer,

4

 

director, employee and member of the board (and any committee thereof) of
the Company and any of its direct or indirect subsidiaries (collectively, the
“Subsidiaries”).

     3.5.
Cooperation. For one (1) year following the termination of the
Executive’s employment with the Company for any reason, the Executive agrees to
reasonably cooperate with the Company upon reasonable request of the Board and
to be reasonably available to the Company with respect to matters arising out
of the Executive’s services to the Company and its Subsidiaries. The Company
shall reimburse the Executive for expenses reasonably incurred in connection
with such matters as agreed by the Executive and the Board and the Company
shall compensate the Executive for such cooperation at an hourly rate based on
the Executive’s most recent base salary rate assuming two thousand (2,000)
working hours per year; provided, that if the Executive is required to spend
more than forty (40) hours in any month on Company matters pursuant to this
Section 3.5, the Executive and the Board shall mutually agree to an appropriate
rate of compensation for the Executive’s time over such forty (40) hour
threshold.

Section 4. Unauthorized Disclosure; Non-Solicitation; Non-Competition;
Proprietary Rights.

     4.1.
Unauthorized Disclosure. The Executive agrees and understands that
in the Executive’s position with the Company, the Executive has been and will
be exposed to and has and will receive information relating to the confidential
affairs of the Company and its affiliates, including, without limitation,
technical information, intellectual property, business and marketing plans,
strategies, customer information, software, other information concerning the
products, promotions, development, financing, expansion plans, business
policies and practices of the Company and its affiliates and other forms of
information considered by the Company and its affiliates to be confidential and
in the nature of trade secrets (including, without limitation, ideas, research
and development, know-how, formulas, technical data, designs, drawings,
specifications, customer and supplier lists, pricing and cost information and
business and marketing plans and proposals) (collectively, the
“Confidential
Information”); provided, however, that Confidential Information shall not
include information which (i) is or becomes generally available to the public
not in violation of this Employment Agreement or any written policy of the
Company; or (ii) was in the Executive’s possession or knowledge on a
non-confidential basis prior to such disclosure. The Executive agrees that at
all times during the Executive’s employment with the Company and thereafter,
the Executive shall not disclose such Confidential Information, either directly
or indirectly, to any individual, corporation, partnership, limited liability
company, association, trust or other entity or organization, including a
government or political subdivision or an agency or instrumentality thereof
(each a “Person”) without the prior written consent of the Company and shall
not use or attempt to use any such information in any manner other than in
connection with his employment with the Company, unless required by law to
disclose such information, in which case the Executive shall provide the
Company with written notice of such requirement as far in advance of such
anticipated disclosure as possible. This confidentiality covenant has no
temporal, geographical or territorial restriction. Upon termination of the
Executive’s employment with the Company, the Executive shall promptly supply to
the Company all property, keys, notes, memoranda, writings, lists, files,
reports, customer lists, correspondence, tapes, disks, cards, surveys, maps,
logs, machines, technical data and any other tangible product or document which
has been produced by, received

5

 

by or otherwise submitted to the Executive during or prior to the
Executive’s employment with the Company, and any copies thereof in his (or
capable of being reduced to his) possession.

     4.2.
Non-Competition. By and in consideration of the Company’s entering
into this Employment Agreement and the payments to be made and benefits to be
provided by the Company hereunder, and in further consideration of the
Executive’s exposure to the Confidential Information of the Company and its
affiliates, the Executive agrees that the Executive shall not, during the
Executive’s employment with the Company (whether during the Term or thereafter)
and for a period of twelve (12) months thereafter (the
“Restriction Period”),
directly or indirectly, own, manage, operate, join, control, be employed by, or
participate in the ownership, management, operation or control of, or be
connected in any manner with, including, without limitation, holding any
position as a stockholder, director, officer, consultant, independent
contractor, employee, partner, or investor in, any Restricted Enterprise (as
defined below); provided, that in no event shall ownership of one percent (1%)
or less of the outstanding securities of any class of any issuer whose
securities are registered under the Securities Exchange Act of 1934, as
amended, standing alone, be prohibited by this Section 4.2, so long as the
Executive does not have, or exercise, any rights to manage or operate the
business of such issuer other than rights as a stockholder thereof. For
purposes of this paragraph, “Restricted Enterprise” shall mean any Person that
is actively engaged in any business which is either (i) in competition with the
business of the Company or any of its Subsidiaries conducted during the
preceding twelve (12) months (or following the Executive’s termination of
employment, the twelve (12) months preceding the date of termination of the
Executive’s employment with the Company) or (ii) proposed to be conducted by
the Company or any of its Subsidiaries in the Company’s business plan as in
effect at that time (or following the Executive’s termination of employment,
the business plan as in effect as of the date of termination of the Executive’s
employment with the Company); provided, that (x) with respect to any Person
that is actively engaged in the refinery business, a Restricted Enterprise
shall only include such a Person that operates or markets in any geographic
area in which the Company or any of its Subsidiaries operates or markets with
respect to its refinery business and (y) with respect to any Person that is
actively engaged in the fertilizer business, a Restricted Enterprise shall only
include such a Person that operates or markets in any geographic area in which
the Company or any of its Subsidiaries operates or markets with respect to its
fertilizer business. During the Restriction Period, upon request of the
Company, the Executive shall notify the Company of the Executive’s then-current
employment status. For the avoidance of doubt, a Restricted Enterprise shall
not include any Person or division thereof that is engaged in the business of
supplying (but not refining) crude oil or natural gas.

     4.3.
Non-Solicitation of Employees. During the Restriction Period, the
Executive shall not directly or indirectly contact, induce or solicit (or
assist any Person to contact, induce or solicit) for employment any person who
is, or within twelve (12) months prior to the date of such solicitation was, an
employee of the Company or any of its Subsidiaries.

     4.4.
Non-Solicitation of Customers/Suppliers. During the Restriction
Period, the Executive shall not (i) contact, induce or solicit (or assist any
Person to contact, induce or solicit) any Person which has a business
relationship with the Company or of any of its Subsidiaries in order to
terminate, curtail or otherwise interfere with such business relationship or
(ii) solicit, other than on behalf of the Company and its Subsidiaries, any
Person that the

6

 

Executive knows or should have known (x) is a current customer of the
Company or any of its Subsidiaries in any geographic area in which the Company
or any of its Subsidiaries operates or markets or (y) is a Person in any
geographic area in which the Company or any of its Subsidiaries operates or
markets with respect to which the Company or any of its Subsidiaries has,
within the twelve (12) months prior to the date of such solicitation, devoted
more than de minimis resources in an effort to cause such Person to become a
customer of the Company or any of its Subsidiaries in that geographic area.
For the avoidance of doubt, the foregoing does not preclude the Executive from
soliciting, outside of the geographic areas in which the Company or any of its
Subsidiaries operates or markets, any Person that is a customer or potential
customer of the Company or any of its Subsidiaries in the geographic areas in
which it operates or markets.

     4.5.
Extension of Restriction Period. The Restriction Period shall be
tolled for any period during which the Executive is in breach of any of
Sections 4.2, 4.3 or 4.4 hereof.

     4.6.
Proprietary Rights. The Executive shall disclose promptly to the
Company any and all inventions, discoveries, and improvements (whether or not
patentable or registrable under copyright or similar statutes), and all
patentable or copyrightable works, initiated, conceived, discovered, reduced to
practice, or made by him, either alone or in conjunction with others, during
the Executive’s employment with the Company and related to the business or
activities of the Company and its affiliates (the
“Developments”). Except to
the extent any rights in any Developments constitute a work made for hire under
the U.S. Copyright Act, 17 U.S.C. § 101 et seq. that are owned ab initio by the
Company and/or its applicable affiliate, the Executive assigns all of his
right, title and interest in all Developments (including all intellectual
property rights therein) to the Company or its nominee without further
compensation, including all rights or benefits therefor, including without
limitation the right to sue and recover for past and future infringement. The
Executive acknowledges that any rights in any developments constituting a work
made for hire under the U.S. Copyright Act, 17 U.S.C. § 101 et seq. are owned
upon creation by the Company and/or its applicable affiliate as the Executive’s
employer. Whenever requested to do so by the Company, the Executive shall
execute any and all applications, assignments or other instruments which the
Company shall deem necessary to apply for and obtain trademarks, patents or
copyrights of the United States or any foreign country or otherwise protect the
interests of the Company and its affiliates therein. These obligations shall
continue beyond the end of the Executive’s employment with the Company with
respect to inventions, discoveries, improvements or copyrightable works
initiated, conceived or made by the Executive while employed by the Company,
and shall be binding upon the Executive’s employers, assigns, executors,
administrators and other legal representatives. In connection with his
execution of this Employment Agreement, the Executive has informed the Company
in writing of any interest in any inventions or intellectual property rights
that he holds as of the date hereof. If the Company is unable for any reason,
after reasonable effort, to obtain the Executive’s signature on any document
needed in connection with the actions described in this Section 4.6, the
Executive hereby irrevocably designates and appoints the Company and its duly
authorized officers and agents as the Executive’s agent and attorney in fact to
act for and in the Executive’s behalf to execute, verify and file any such
documents and to do all other lawfully permitted acts to further the purposes
of this section with the same legal force and effect as if executed by the
Executive.

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     4.7.
Confidentiality of Agreement. Other than with respect to information
required to be disclosed by applicable law, the parties hereto agree not to
disclose the terms of this Employment Agreement to any Person; provided the
Executive may disclose this Employment Agreement and/or any of its terms to the
Executive’s immediate family, financial advisors and attorneys.
Notwithstanding anything in this Section 4.7 to the contrary, the parties
hereto (and each of their respective employees, representatives, or other
agents) may disclose to any and all Persons, without limitation of any kind,
the tax treatment and tax structure of the transactions contemplated by this
Employment Agreement, and all materials of any kind (including opinions or
other tax analyses) related to such tax treatment and tax structure; provided
that this sentence shall not permit any Person to disclose the name of, or
other information that would identify, any party to such transactions or to
disclose confidential commercial information regarding such transactions.

     4.8.
Remedies. The Executive agrees that any breach of the terms of this
Section 4 would result in irreparable injury and damage to the Company for
which the Company would have no adequate remedy at law; the Executive therefore
also agrees that in the event of said breach or any threat of breach, the
Company shall be entitled to an immediate injunction and restraining order to
prevent such breach and/or threatened breach and/or continued breach by the
Executive and/or any and all Persons acting for and/or with the Executive,
without having to prove damages, in addition to any other remedies to which the
Company may be entitled at law or in equity, including, without limitation, the
obligation of the Executive to return any Severance Payments made by the
Company to the Company. The terms of this paragraph shall not prevent the
Company from pursuing any other available remedies for any breach or threatened
breach hereof, including, without limitation, the recovery of damages from the
Executive. The Executive and the Company further agree that the provisions of
the covenants contained in this Section 4 are reasonable and necessary to
protect the businesses of the Company and its affiliates because of the
Executive’s access to Confidential Information and his material participation
in the operation of such businesses.

Section 5. Representation.

     The Executive represents and warrants that (i) he is not subject to any
contract, arrangement, policy or understanding, or to any statute, governmental
rule or regulation, that in any way limits his ability to enter into and fully
perform his obligations under this Employment Agreement and (ii) he is not
otherwise unable to enter into and fully perform his obligations under this
Employment Agreement.

Section 6. Withholding.

     All amounts paid to the Executive under this Employment Agreement during
or following the Term shall be subject to withholding and other employment
taxes imposed by applicable law.

Section 7. Effect of
Section 280G of the Internal Revenue Code.

     7.1.
Payment Reduction. Notwithstanding anything contained in this
Employment Agreement to the contrary, to the extent that any payment or
distribution of any

8

 

type to or for the Executive by the Company, any affiliate of the Company,
any Person who acquires ownership or effective control of the Company or
ownership of a substantial portion of the Company’s assets (within the meaning
of Section 280G of the Internal Revenue Code of 1986, as amended
(the “Code”)
and the regulations thereunder), or any affiliate of such Person, whether paid
or payable or distributed or distributable pursuant to the terms of this
Employment Agreement or otherwise (the “Payments”) is or will be subject to the
excise tax imposed under Section 4999 of the Code (the
“Excise Tax”), then the
Payments shall be reduced (but not below zero) if and to the extent necessary
so that no Payments to be made or benefit to be provided to the Executive shall
be subject to the Excise Tax; provided, however, that the Company shall use its
reasonable best efforts to obtain shareholder approval of the Payments provided
for in this Employment Agreement in a manner intended to satisfy requirements
of the “shareholder approval” exception to Section 280G of the Code and the
regulations promulgated thereunder, such that payment may be made to the
Executive of such Payments without the application of an Excise Tax. Unless
the Executive shall have given prior written notice to the Company specifying a
different order by which to effectuate the reduction, the Company shall reduce
or eliminate the Payments (x) by first reducing or eliminating the portion of
the Payments which are not payable in cash (other than that portion of the
Payments subject to clause (z) hereof), (y) then by reducing or eliminating
cash payments (other than that portion of the Payments subject to clause (z)
hereof) and (z) then by reducing or eliminating the portion of the Payments
(whether payable in cash or not payable in cash) to which Treasury Regulation §
1.280G-1 Q/A 24(c) (or successor thereto) applies, in each case in reverse
order beginning with payments or benefits which are to be paid the farthest in
time. Any notice given by the Executive pursuant to the preceding sentence
shall take precedence over the provisions of any other plan, arrangement or
agreement governing the Executive’s rights and entitlements to any benefits or
compensation.

     7.2.
Determination of Amount of Reduction. The determination of whether
the Payments shall be reduced as provided in Section 7.1 and the amount of such
reduction shall be made at the Company’s expense by an accounting firm selected
by the Company from among the four (4) largest accounting firms in the United
States (the “Accounting Firm”). The Accounting Firm shall provide its
determination (the “Determination”), together with detailed supporting
calculations and documentation, to the Company and the Executive within ten
(10) days after the Executive’s final day of employment. If the Accounting
Firm determines that no Excise Tax is payable by the Executive with respect to
the Payments, it shall furnish the Executive with an opinion reasonably
acceptable to the Executive that no Excise Tax will be imposed with respect to
any such payments and, absent manifest error, such Determination shall be
binding, final and conclusive upon the Company and the Executive.

Section 8. Miscellaneous.

     8.1.
Amendments and Waivers. This Employment Agreement and any of the
provisions hereof may be amended, waived (either generally or in a particular
instance and either retroactively or prospectively), modified or supplemented,
in whole or in part, only by written agreement signed by the parties hereto;
provided, that, the observance of any provision of this Employment Agreement
may be waived in writing by the party that will lose the benefit of such
provision as a result of such waiver. The waiver by any party hereto of a
breach of any provision of this Employment Agreement shall not operate or be
construed as a further or

9

 

continuing waiver of such breach or as a waiver of any other or subsequent
breach, except as otherwise explicitly provided for in such waiver. Except as
otherwise expressly provided herein, no failure on the part of any party to
exercise, and no delay in exercising, any right, power or remedy hereunder, or
otherwise available in respect hereof at law or in equity, shall operate as a
waiver thereof, nor shall any single or partial exercise of such right, power
or remedy by such party preclude any other or further exercise thereof or the
exercise of any other right, power or remedy.

     8.2.
Indemnification. To the extent provided in the Amended and Restated
Limited Liability Company Agreement of Coffeyville Acquisition LLC, dated as of
June 24, 2005, as in effect from time to time, the Company shall indemnify the
Executive for losses or damages incurred by the Executive as a result of causes
of action arising from the Executive’s performance of duties for the benefit of
the Company, whether or not the claim is asserted during the Term.

     8.3.
Assignment. This Employment Agreement, and the Executive’s rights
and obligations hereunder, may not be assigned by the Executive, and any
purported assignment by the Executive in violation hereof shall be null and
void.

     8.4.
Notices. Unless otherwise provided herein, all notices, requests,
demands, claims and other communications provided for under the terms of this
Employment Agreement shall be in writing. Any notice, request, demand, claim
or other communication hereunder shall be sent by (i) personal delivery
(including receipted courier service) or overnight delivery service, (ii)
facsimile during normal business hours, with confirmation of receipt, to the
number indicated, (iii) reputable commercial overnight delivery service courier
or (iv) registered or certified mail, return receipt requested, postage prepaid
and addressed to the intended recipient as set forth below:

If to the Company:

Coffeyville
Resources, LLC

10 E. Cambridge Circle, Suite 250

Kansas City, KS 66103

Attention: General Counsel

Facsimile: (913) 981-0000

with a copy to:

Fried, Frank, Harris, Shriver & Jacobson LLP

One New York Plaza

New York, NY 10004

Attention: Donald P. Carleen, Esq.

Facsimile: (212) 859-4000

10

 

If to the Executive:

Robert W. Haugen

5610 Lone Cedar Drive

Kingwood, TX 77478

     All such notices, requests, consents and other communications shall be
deemed to have been given when received. Any party may change its facsimile
number or its address to which notices, requests, demands, claims and other
communications hereunder are to be delivered by giving the other parties hereto
notice in the manner then set forth.

     8.5.
Governing Law. This Employment Agreement shall be construed and
enforced in accordance with, and the rights and obligations of the parties
hereto shall be governed by, the laws of the State of Kansas, without giving
effect to the conflicts of law principles thereof. Each of the parties hereto
irrevocably and unconditionally consents to submit to the exclusive
jurisdiction of the courts of Kansas (collectively, the “Selected Courts”) for
any action or proceeding relating to this Employment Agreement, agrees not to
commence any action or proceeding relating thereto except in the Selected
Courts, and waives any forum or venue objections to the Selected Courts.

     8.6.
Severability. Whenever possible, each provision or portion of any
provision of this Employment Agreement, including those contained in Section 4
hereof, will be interpreted in such manner as to be effective and valid under
applicable law but the invalidity or unenforceability of any provision or
portion of any provision of this Employment Agreement in any jurisdiction shall
not affect the validity or enforceability of the remainder of this Employment
Agreement in that jurisdiction or the validity or enforceability of this
Employment Agreement, including that provision or portion of any provision, in
any other jurisdiction. In addition, should a court or arbitrator determine
that any provision or portion of any provision of this Employment Agreement,
including those contained in Section 4 hereof, is not reasonable or valid,
either in period of time, geographical area, or otherwise, the parties hereto
agree that such provision should be interpreted and enforced to the maximum
extent which such court or arbitrator deems reasonable or valid.

     8.7.
Entire Agreement. From and after the Closing Date, this Employment
Agreement constitutes the entire agreement between the parties hereto, and
supersedes all prior representations, agreements and understandings (including
any prior course of dealings), both written and oral, between the parties
hereto with respect to the subject matter hereof.

     8.8.
Counterparts. This Employment Agreement may be executed in any
number of counterparts, each of which shall be deemed an original, but all such
counterparts shall together constitute one and the same instrument.

     8.9.
Binding Effect. This Employment Agreement shall inure to the benefit
of, and be binding on, the successors and assigns of each of the parties,
including,

11

 

without limitation, the Executive’s heirs and the personal representatives
of the Executive’s estate and any successor to all or substantially all of the
business and/or assets of the Company.

     8.10.
General Interpretive Principles. The name assigned this Employment
Agreement and headings of the sections, paragraphs, subparagraphs, clauses and
subclauses of this Employment Agreement are for convenience of reference only
and shall not in any way affect the meaning or interpretation of any of the
provisions hereof. Words of inclusion shall not be construed as terms of
limitation herein, so that references to “include”, “includes” and “including”
shall not be limiting and shall be regarded as references to non-exclusive and
non-characterizing illustrations.

     8.11.
Mitigation. Notwithstanding any other provision of this Employment
Agreement, (a) the Executive will have no obligation to mitigate damages for
any breach or termination of this Employment Agreement by the Company, whether
by seeking employment or otherwise and (b) except for medical benefits provided
pursuant to Section 3.2(a), the amount of any payment or benefit due the
Executive after the date of such breach or termination will not be reduced or
offset by any payment or benefit that the Executive may receive from any other
source.

[signature page follows]

12

 

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

				
	/s/   Robert W. Haugen	 	By:	/s/   John J. Lipinski
	Robert W. Haugen	 	 	Name:   John J. Lipinski
	 	 	 	Title:    CEO

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