Document:

form10q11062008g.htm

    

    
      

      

    

    Exhibit 10.8

    

    

    

    

    

    February
14, 2008

    

    

    Stephen
F. Reeves

    c/o The
Black & Decker Corporation

    701 East
Joppa Road

    Towson,
Maryland  21286

    

    Dear
Steve:

    

    The Black
& Decker Corporation (the “Corporation”) considers it essential to the best
interests of its stockholders to foster the continuous employment of key
management personnel.  In this connection, the Board of Directors of
the Corporation (the “Board”) recognizes that, as is the case with many publicly
held corporations, the possibility of a change in control of the Corporation may
exist and that such possibility, and the uncertainty and questions that it may
raise among management, may result in the departure or dis­traction of
management personnel to the detriment of the Corporation and its
stock­holders.  The Board has determined that appropriate steps
should be taken to reinforce and encourage the continued attention and
dedication of members of the Corporation’s management, including you, to their
assigned duties without distraction in the face of potentially disturbing
circumstances arising from the possibility of a change in control of the
Corporation, although no such change is now contemplated.

    

    In order
to induce you to remain in the employ of the Corporation, the Corporation agrees
that you shall receive the severance benefits set forth in this letter agreement
(this “Agree­ment”) in the event of a “Change in Control of the Corporation”
(as defined in Section 2) under the circumstances described below.

    

    1.           Term of
Agreement.  This Agreement shall commence on the date hereof
and shall continue in effect through December 31, 2013; provided, however,
that if a Change in Control of the Corporation shall have occurred prior to
December 31, 2013, this Agreement shall continue in effect for a period of
36 months beyond the month in which the Change in Control of the Corporation
occurred, at which time this Agreement shall
terminate.  Notwithstanding the foregoing, and provided no Change in
Control of the Corporation shall have occurred, this Agreement shall
automatically terminate upon the earlier to occur of (a) your termination of
employment with the Corporation, or (b) the Corporation’s giving you notice of
termination of this Agreement, regardless of the effective date of such
termination.

    

    2.           Change in
Control.  No benefits shall be payable under this Agreement
unless there shall have been a Change in Control of the
Corporation.  For purposes of this Agreement, a “Change in Control of
the Corporation” shall mean a change in control of a nature that would
be

    

    
      
        
           

        

        
           

          
            

          

        

        
           

          
            Stephen
F. Reeves

            February
14, 2008

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    required
to be reported in response to Item 6(e) of Schedule 14A of Regulation 14A
promul­gated under the Securities Exchange Act of 1934, as amended (the
“Exchange Act”), whether or not the Corporation is in fact required to comply
therewith, provided that, without limitation, such a change in control shall be
deemed to have occurred if (A) any “person” (as that term is used in Sections
13(d) and 14(d) of the Exchange Act), other than a trustee or other fiduciary
holding securities under an employee benefit plan of the Corpo­ration or any
of its subsidiaries or a corporation owned, directly or indirectly, by the
stockholders of the Corporation in substantially the same pro­portions as
their ownership of stock of the Corporation, is or becomes the “beneficial
owner” (as defined in Rule 13d-3 under the Exchange Act), directly or
indirectly, of securities of the Corporation representing 35% or more of the
combined voting power of the Corporation’s then outstanding securities; (B)
during any period of two consecutive years, individuals who at the beginning of
that period constitute the Board and any new direc­tor (other than a
director designated by a person who has entered into an agreement with the
Corporation to effect a transaction described in clauses (A) or (D) of this
Section) whose election by the Board or nomination for election by the
Corporation’s stockholders was approved by a vote of at least two-thirds of the
directors then still in office who either were directors at the beginning of the
period or whose election or nomination for election was previously so approved
cease for any reason to const­itute a majority of the Board; (C) the
Corporation enters into an agreement, the consummation of which would result in
the occur­rence of a Change in Control of the Corporation; or (D) the
stockholders of the Corporation approve a merger, share exchange or
consolidation of the Corporation with any other corporation or entity, other
than a merger, share exchange or consolidation that would result in the voting
securi­ties of the Corporation outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by being converted
into voting securities of the surviving entity) at least 60% of the combined
voting power of the voting securi­ties of the Corporation or the surviving
entity outstanding immediately after the merger, share exchange or
consolidation, or the stock­holders of the Corporation approve a plan of
complete liquidation of the Corporation or an agreement for the sale or
disposition by the Corporation of all or substantially all the Corporation’s
assets.

    

    3.           Vesting of Stock
Options.  Upon a Change in Control of the Corporation, you
shall fully vest in all outstanding stock options granted to you under the
Corporation’s stock option plans.  Each stock option shall continue to
be exercisable for the term of that stock option. In accordance with the terms
of the Corporation’s restricted stock plans, all shares of restricted stock held
by you shall become fully vested and no longer subject to forfeiture upon the
occurrence of a Change in Control of the Corporation.

    

    4.           Termination Following Change
in Control of the Corporation.  If a Change in Control of the
Corporation shall have occurred, you shall be entitled to the benefits provided
in Section 5.2 upon the subsequent termination of your employment during the
term of this Agreement unless the termina­tion is (A) because of your death
or Disability (as defined in Section 4.1), (B) by the Corporation for Cause (as
defined in Section 4.2), or (C) by you other than for Good Reason (as defined in
Section 4.3).

    

    
      
        
           

        

        
           

          
            

          

        

        
           

          
            Stephen
F. Reeves

            February
14, 2008

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    4.1           Disability.  If,
as a result of your incapacity due to physical or mental illness, you shall have
been absent from the full-time performance of your duties with the Corporation
for six consecutive months and, within 30 days after a Notice of Termination (as
defined in Section 4.4) is given to you, shall not have returned to the
full-time performance of your duties, your employ­ment may be terminated for
“Disability.”

    

    4.2           Cause.  Termination
by the Corporation of your employment for “Cause” shall mean termination upon
(a) the willful and continued failure by you to substantially perform your
duties with the Corporation (other than any such failure resulting from your
incapacity due to physical or mental illness or any such actual or anticipated
failure after the issuance by you of a Notice of Termination for Good Reason)
after a written demand for s­ubstantial performance is delivered to you by
the Board, which demand specifically identifies the manner in which the Board
believes that you have not substantially performed your duties, or (b) the
willful engaging by you in conduct that is demonstrably and materially injurious
to the Corporation, mone­tarily or otherwise.  For purposes of
this Section 4.2, no act or failure to act on your part shall be deemed
“willful” unless done, or omitted to be done, by you not in good faith and
without reasonable belief that your action or omission was in the best interest
of the Corporation. Notwithstanding the foregoing, you shall not be deemed to
have been terminated for Cause unless and until there shall have been delivered
to you a copy of a resolu­tion duly adopted by the affirmative vote of not
less than three-quarters of the entire membership of the Board at a meeting of
the Board called and held for that purpose (after reasonable notice to you and
an opportunity for you, together with your counsel, to be heard before the
Board), finding that in the good faith opinion of the Board you were guilty of
conduct set forth above in clauses (a) or (b) of the first sentence of this
Section 4.2 and specifying the particulars thereof in detail.

    

    4.3           Good
Reason.  You shall be entitled to terminate your employment for
Good Reason.  For purposes of this Agreement, “Good Reason” shall
mean, without your express written consent, the occurrence after a Change in
Control of the Corporation of any of the following circumstances unless the
circumstances are fully corrected prior to the Date of Termination specified in
the Notice of Termination given in respect thereof:

    

    (a)           the
assignment to you of any duties incon­sistent with your current status as an
executive of the Corporation or a substantial adverse altera­tion in the
nature or status of your responsibilities from those in effect immediately prior
to the Change in Control of the Corporation;

    

    (b)           a
reduction by the Corporation in your annual base salary as in effect on the date
of this Agreement or any subsequently established higher annual base salary,
except for across-the-­board salary reductions similarly affecting all
senior executives of the Corporation and all senior executives of any person in
control of the Corporation;

    

    (c)           your
relocation to a location not within 25 miles of your office or job location
immediately prior to the Change in Control of the Corporation, except
for

    

    
      
        
           

        

        
           

          
            

          

        

        
           

          
            Stephen
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            February
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    required
travel on the Corporation’s business to an extent substantially consistent with
your busi­ness travel obligations immediately prior to the Change in Control
of the Corporation;

    

    (d)           the
failure by the Corporation, without your consent, to pay to you any portion of
your compen­sation to which you are entitled when such compensation is
due;

    

    (e)           the
failure by the Corporation to continue in effect any compen­sation plan in
which you participated immediately prior to the Change in Control of the
Corporation that is material to your total compensation, including but not
limited to the Corporation’s (i) Executive Annual Incentive Plan (“EAIP”),
Annual Incentive Plan (“AIP”) or other comparable annual compensation plan, (ii)
stock option and restricted stock plans, and (iii) 2008 Executive Long-Term
Incentive/Retention Plan or other comparable medium- or long-term compensation
plan, or any substitute plan or plans adopted prior to the Change in Control of
the Corporation; unless an equitable arrangement (embodied in an ongoing
­substitute or alterna­tive plan) has been made with respect to the plan
and the equitable arrangement provides substantially equivalent benefits not
materially less favorable to you (both in terms of the amount of benefits
provided and the level of your participation relative to other participants), or
the failure by the Corporation to continue your participation therein (or in
such substitute or alternative plan) on a basis not materially less
favor­able (both in terms of the amount of benefits provided and the level
of your partici­pation relative to other partici­pants) than those you
enjoyed immediately prior to the Change in Control of the
Corporation;

    

    (f)           the
failure by the Corporation to continue in effect any material benefit available
to you immediately prior to the Change in Control of the Corporation, including
without limitation (i) the failure to provide to you benefits substantially
similar to those enjoyed by you under any of the Corporation’s retirement,
savings, life insur­ance, medical, dental, health and accident, or
disability plans in which you were participating at the time of the Change in
Control of the Corporation, (ii) the failure to continue to provide to you any
material perquisite provided to you at the time of the Change in Control of the
Corporation, (iii) the failure by the Corpora­tion to provide to you the
number of paid vacation days to which you are entitled on the basis of years of
service with the Corporation in accordance with the Corporation’s normal
vacation policy in effect at the time of the Change in Control of the
Corporation, or (iii) the taking of any action by the Corporation that would
directly or indirectly materially reduce any of these benefits or deprive you of
any material benefit or perquisite enjoyed by you at the time of the Change in
Control of the Corporation;

    

    (g)           the
failure of the Corporation to obtain a satisfactory agreement from any successor
to assume and agree to perform this Agreement, as contemplated in
Section 7.1; or

    

    
      
        
           

        

        
           

          
            

          

        

        
           

          
            Stephen
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            February
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      (h)           any
purported termination of your employment that is not effected pursuant to a
Notice of Termination satisfying the requirements of Section 4.4 (and, if
applicable, the requirements of Section 4.2), which purported termina­tion
shall not be effective for purposes of this Agreement.

      

      Your
rights to terminate your employment pursuant to this Section 4.3 shall not be
affected by your incapacity due to physical or mental illness.  Your
continued employment shall not constitute consent to, or a waiver of rights with
respect to, any circumstance constituting Good Reason under this Section
4.3.

      

      4.4           Notice of
Termination.  Any purported termination of your employment by
the Corporation for Cause or Disability or by you for Good Reason shall be
commu­nicated by written Notice of Termination to the other party in
accordance with Section 8.  For purposes of this Agreement, a “Notice
of Termination” shall mean a notice that indicates the specific termination
provision in this Agree­ment relied upon and that sets forth in reasonable
detail the facts and circumstances claimed to provide a basis for
termina­tion of your employment under the provision so
indicated.

      

      4.5           Date of
Termination.  Subject to the following sentence, “Date of
Termination” shall mean (a) if your employment is terminated by your death, the
date of your death; (b) if your employment is terminated for Disability, 30 days
after Notice of Termination is given (provided that you shall not have returned
to the full-time performance of your duties during the 30-day period); and (c)
if your employment is terminated for any reason other than death or Disability,
the date specified in the Notice of Termination.  For purposes of
clause (c) in the immediately preceding sentence, the date specified in the
Notice of Termination shall not be less than 30 days from the date the Notice of
Termination is given, except in the case of a termination pursuant to Section
4.3 such date shall not be less than 15 nor more than 60 days from the date that
the Notice of Termination is given.  If the party receiving the Notice
of Termination notifies the other party within 15 days of receiving the Notice
of Termination or, if later, prior to the Date of Termination (as determined
without regard to this sentence) that a dispute exists concerning the
termination, the Date of Termina­tion shall be the date on which the dispute
is finally deter­mined, either by mutual written agreement of the parties,
by a binding arbitration award, or by a final judgment, order or decree of a
court of competent jurisdiction (which is not appealable or with respect to
which the time for appeal has expired and no appeal has been
perfected).  The Date of Termination shall be extended by a notice of
dispute only if the notice is given in good faith and the party giving the
notice pursues the resolution of the dispute with reasonable
diligence.  Notwithstanding the pendency of the dispute, the
Corporation will continue to pay you your full compensation in effect when the
Notice of Termination giving rise to the dispute wa­s given (including, but
not limited to, base salary) and continue you as a participant in all
compensation, benefit and insurance plans in which you were participating when
the notice giving rise to the dispute was given, until the dispute is finally
resolved in accordance with this Section 4.5.  Amounts paid under this
Section 4.5 are in addition to all other amounts due under this Agreement and
shall not be offset against or reduce any other amounts due under this
Agreement.

    
      
        
           

        

        
           

          
            

          

        

        
           

          
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    5.           Compensation Upon
Termination.  Upon termination of your employment following a
Change in Control of the Corporation, you shall be entitled to the following
benefits:

    

    5.1           Termination for Cause or
Without Good Reason or upon Disability or Death.  If your
employment shall be terminated by your death, by the Corporation for Cause or
Disability, or by you without Good Reason, the Corporation shall pay you your
full base salary through the Date of Termination at the rate in effect at the
time of your death or Notice of Termination is given, as the case may be, plus
all other amounts to which you are entitled under any retirement, insurance and
other compensation programs of the Corporation at the time the payments are due,
and the Corporation shall have no further obligations to you under this
Agreement.

    

    5.2           Termination Without Cause or
Disability or for Good Reason.  If your employment by the
Corporation shall be terminated (A) by the Corporation other than for Cause or
Disability or (B) by you for Good Reason, then you shall be entitled to the
benefits provided below:

    

    (a)           The
Corporation shall pay you your full base salary through the Date of Termination
at the rate in effect at the time Notice of Termination is given, plus all other
amounts to which you are entitled under any compensation plan of the
Corporation, at the time those payments are due, except as otherwise provided
below.

    

    (b)           In
lieu of any further salary payments to you for periods subsequent to the Date of
Termination, the Corporation shall pay as severance pay to you a lump sum
severance payment (the “Severance Payment”) in an amount equal to three times
the sum of your (1) annual base salary in effect immediately prior to the
occurrence of the circum­stance giving rise to the Notice of Termination,
(2) Maximum Participant Award (as defined below); plus (3) the LTP
Amount (as defined below).

    

    “Maximum
Participant Award” means the maximum award that could be payable to you under
the terms of the EAIP (if you were a participant in the EAIP immediately prior
to the occurrence of the circumstances giving rise to the Notice of
Termination), the AIP (if you were a participant in the AIP immediately prior to
the occurrence of the circumstances giving rise to the Notice of Termination),
or other comparable or substitute annual compensation plan for the year in which
the Date of Termination occurs, determined as if you remained a participant
until the end of the year and all performance goals for that year that would
entitle you to a maximum payment were met or exceeded.  “LTP Amount”
means an amount equal to 60% of your annual base salary in effect immediately
prior to the occurrence of the circumstance giving rise to the Notice of
Termination, as such amount is adjusted (i) upward proportionately to the extent
the closing sale price per share of the Corporation’s common stock as finally
reported by the New York Stock Exchange on the trading date immediately prior to
the Date of Termination (the “Stock Price Measure”) exceeds the average daily
closing sale price of the Corporation’s common stock as finally reported by the
New York Stock Exchange during the first quarter of 2008 (the “Stock

    
      
        
           

        

        
           

          
            

          

        

        
           

          
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    Base
Amount”) or (ii) downward proportionately to the extent the Stock Price Measure
is less  than the Stock Base Amount.

     

    (c)           The
Corporation shall also pay to you all legal fees and expenses incurred by you as
a result of the termination (including all legal fees and expenses, if any,
incurred in contesting or disputing the termination or in seeking to obtain or
enforce any right or benefit pro­vided by this Agreement or in connection
with any tax audit or proceeding to the extent attributable to the application
of Section 4999 of the Internal Revenue Code (the “Code”) to any payment or
benefit provided under this Agreement).

    

    (d)           The
Severance Payment plus interest shall be made on the date that is six months and one day
following your “separation from service” as defined in Section 409A of the Code
and the regulations promulgated thereunder.  The Severance Payment
shall bear interest at an annualized rate of 4.5% from and after your
“separation from service” until paid pursuant to this Section
5.2(d).

    

    5.3           Additional
Benefits.  If your employment shall be terminated (a) by the
Corporation other than for Cause or Disability or (b) by you for Good
Reason, then for a 36-month period after such termination, the Corporation shall
arrange to provide to you life, disability, accident, medical, dental and health
insurance benefits sub­stantially similar to those that you are receiving
immediately prior to the Notice of Termination.  Benefits otherwise
receiv­able by you pursuant to this Section 5.3 shall be reduced to the
extent comparable benefits are actually received by you from another employer
during the 36-month period following your termination, and any such benefits
actually received by you shall be reported to the Corporation.

    

    5.4           Mitigation.  You
shall not be required to mitigate the amount of any payment provided for in this
Agreement by seeking other employment or otherwise.  The Corporation
shall not be entitled to set off against the amount of any payment or benefit
provided for in this Agreement any amounts owed to the Corporation by you, any
compensation earned by you as the result of employment by another employer, or
any retirement benefits to which you may be entitled under the Corporation’s
retirement or savings plans.

    

    5.5           Other Compensation and
Benefit Plans.  In addition to all other amounts payable to you
under this Section 5, you shall be entitled to receive all compensation,
retirement benefits and any other benefits payable to you under any plan or
arrangement sponsored by the Corporation or any of its subsidiaries in
accordance with the terms of such plans or arrangements, and, except as
otherwise provided in this Agreement, the amounts payable under this Agreement
shall not in any way affect, diminish, or impair any compensation or benefits
payable to you under such plans or arrangements.

    

    
      6.           Gross-Up
Payment.

      

      6.1           Calculation of Gross-Up
Payment.  If the Severance Payment or any other portion of the
Total Payments (as defined below) will be subject to the tax imposed by Section

    

    
      
        
           

        

        
           

          
            

          

        

        
           

          
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    4999 of
the Code (the “Excise Tax”), the Corporation shall pay to you at the time
specified in Section 6.2 an additional amount (the “Gross-Up Payment”) such that
the net amount retained by you, after deduction of any Excise Tax on the
Severance Payment and such other Total Payments and any fed­eral and state
and local income tax and Excise Tax upon the Gross-Up Payment, shall be equal to
the Severance Payment and such other Total Payments.  For purposes of
determining whether any of the payments will be subject to the Excise Tax and
the amount of such Excise Tax, (i) any other payments or benefits received or to
be received by you in connection with a Change in Control of the Corporation or
your termination of employment (whether payable pursuant to the terms of this
Agreement or any other plan, arrangement or agreement with the Corporation, its
successors, any person whose actions result in a Change in Control of the
Corporation or any corporation affiliated (or which, as a result of the
completion of a transaction causing a Change in Control of the Corporation, will
become affiliated) with the Corporation within the meaning of Section 1504 of
the Code) (together with the Severance Payment, the “Total Payments”) shall be
treated as “para­chute payments” within the meaning of Section 280G(b)(2) of
the Code, and all “excess parachute payments” within the meaning of Section
280G(b)(1) shall be treated as subject to the Excise Tax, unless in the opinion
of tax counsel selected by the Corpo­ration and acceptable to you (“Tax
Counsel”) the Total Payments (in whole or in part) do not constitute parachute
payments, or such excess parachute payments (in whole or in part) represent
reason­able compensation for services actually rendered within the meaning
of Section 280G(b)(4)(B) of the Code either to the extent such reasonable
compensation is in excess of the base amount within the meaning of Section
280G(b)(3) of the Code or are otherwise not subject to the Excise Tax, (ii) the
amount of the Total Payments that shall be treated as subject to the Excise Tax
shall be equa­l to the lesser of (A) the total amount of the Total Payments
or (B) the amount of excess parachute payments within the meaning of Section
280G(b)(1) (after applying clause (i), above), and (iii) the value of any
non-cash benefits or any deferred payment or benefit shall be determined by Tax
Counsel in accordance with the principles of Sections 280G(d)(3) and (4) of the
Code.  For purposes of determining the amount of the Gross-Up Payment,
you shall be deemed to pay federal income taxes at the highest marginal rate of
federal income taxation in the calendar year in which the Gross-Up Payment is to
be made and state and local income taxes at the highest marginal rate of
taxation in the state and locality of your residence on the Date of Termination,
net of the maximum reduction in fed­eral income taxes which could be
obtained from deduction of such state and local taxes.  If the Excise
Tax is subsequently determined to be less than the amount taken into account
under this Section 6.1 at the time of payment of the Gross-Up Payment, you shall
repay to the Corporation at the time that the amount of such reduction in the
Excise Tax is finally determined the portion of the Gross-Up Payment
attributable to such reduc­tion (plus the portion of the Gross-Up Payment
attributable to the Excise Tax and federal and state and local income tax
imposed on the Gross-Up Payment being repaid by you if such repayment results in
a reduction in Excise Tax and/or a federal and state and local income tax
deduction) plus interest on the amount of such repayment at the rate provided in
Section 1274(d) of the Code.  If the Excise Tax is determined to
exceed the amount taken into account hereunder at the time of payment of the
Gross-Up Payment (including by reason of any payment resulting from the
existence or amount of which cannot be determined at the time of the payment of
the Gross-Up Payment), the Corporation shall make an additional Gross-Up Payment
in respect of such excess (plus any interest, penalties, and professional fees

    
      
        
           

        

        
           

          
            

          

        

        
           

          
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     incurred
by you with respect to such excess, including all such taxes with respect to
such additional amount) at the time that the amount of such excess is finally
determined.

    

    6.2           Payment of Gross-Up
Payments.  The payments provided for in Section 6.1 shall be
made on the date that is six months and one day following your “separation of
service” as defined in Section 409A of the Code and the regulations promulgated
thereunder.

    

    
      7.           Successors; Binding
Agreement.

      

      7.1           Successors.  The
Corporation will require any successor to all or substantially all of the
business or assets of the Corporation (whether direct or indirect, by purchase,
merger, share exchange, consolidation or otherwise) to assume expressly and
agree to perform this Agreement in the same manner and to the same extent that
the Corporation would be required to perform it if the succession had not taken
place.  Failure of the Corpora­tion to obtain the assumption and
agreement prior ­to the effectiveness of the succession shall be a breach of
this Agreement and shall entitle you to terminate your employment for Good
Reason following a Change in Control of the Corporation.  As used in
this Agreement, “Corporation” shall mean the Corporation as hereinbefore defined
and any successor to its business or assets as described above that assumes and
­agrees to perform this Agreement by operation of law or
otherwise.

    

    

    7.2           Binding
Agreement.  This Agreement shall inure to the benefit of and be
enforceable by your personal or legal representatives, executors,
administrators, heirs, distributees, and legatees. Any amount payable to you
under this Agreement at the time of your death, unless otherwise provided
herein, shall be paid in accordance with the terms of this Agreement to your
legatee or other designee or, if there is no such designee, to your
estate.

    

    7.3           Employment by a
Subsidiary.  If you are employed by a subsidiary of the
Corporation, wherever in this Agreement reference is made to the “Corporation,”
unless the context otherwise requires, the reference shall also include the
subsidiary.  The Corporation shall cause the subsidiary to carry out
the terms of this Agreement insofar as they relate to the employment
relationship between you and the subsidiary, and the Corporation sh­all
indemnify you and save you harmless from and against all liability and damage
that you may suffer as a consequence of the subsidiary’s failure to perform and
carry out such terms.  Wherever reference is made to any benefit
program of the Corpo­ration, the reference shall include, where appropriate,
the corresponding benefit program of the subsidiary if you were a participant in
the benefit program on the date a Change in Control of the Corporation has
occurred.

    

    8.           Notice.  For
the purpose of this Agreement, notices and all other communications provided for
in the Agreement shall be in writing and shall be deemed to have been duly given
when delivered or mailed by United States registered mail, return receipt
request­ed, postage prepaid.  All notices to the Corporation shall
be sent to the Corporation at 701 East Joppa Road, Towson,
Maryland  21286 and directed to the attention of the Board with a copy
to the Secretary of the Corporation and to you at your address listed on the
Corporation’s payroll, or to such other

    

    
      
        
           

        

        
           

          
            

          

        

        
           

          
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    address
as either party may have furnished to the other in writing in accordance
herewith, except that notice of change of address shall be effective only upon
receipt.

    

    9.           Miscellaneous.  No
provision of this Agreement may be modified, waived or discharged unless the
waiver, modification or discharge is agreed to in writing and signed by you and
an officer of the Corporation specifically designated by the
Board.  No waiver by either party at any time of any breach by the
other party of any condition or provision of this Agreement to be per­formed
by the other party shall be deemed a waiver of similar or dissimilar provisions
or conditions at the same or at any prior or subsequent time.  This
Agreement constitutes the entire agreement between the parties hereto in respect
of the matters set forth herein, and all prior negotiations, writings and
understandings relating to the subject matter of this Agreement are superseded
and cancelled by this Agreement.  The validity, interpretation,
construction and performance of this Agreement shall be governed by the laws of
the State of Maryland, without regard to its principles of conflicts of
laws.  All references to sections of the Exchange Act or the Code
shall be deemed also to refer to any successor provisions to such
sections.  Any payments provided for hereunder shall be paid net of
any applicable withholding re­quired under federal, state or local
law.  The obligations of the Corporation under Sections 5 and 6 shall
survive the expiration of the term of this Agreement, provided that the Date of
Termination occurred prior to such expiration.

    

    10.           Validity.  The
invalidity or unenforceability of any provision of this Agreement shall not
affect the validity or enforceability of any other provision of this Agreement,
which shall remain in full force and effect.

    

    11.           Counterparts.  This
Agreement may be executed in several counterparts, each of which shall be deemed
to be an original but all of which together will constitute one and the same
instrument.

    

    12.           Arbitration.  Any
dispute or controversy arising under or in connection with this Agreement shall
be settled exclusively by arbitration in the State of Maryland, in accordance
with the Commercial Arbitration Rules of the American Arbitration Association
then in effect.  Judgment may be entered on the arbitrator’s award in
any court having jurisdiction; provided, however, that you shall be entitled to
seek specific performance of your right to be paid until the Date of Termination
during the pendency of any dispute or controversy arising under or in connection
with this Agreement.

    

    13.           Section
Headings.  The Section headings contained in this Agreement are
for convenience of reference only and shall not limit or otherwise affect the
meaning or interpretation of this Agreement or any of its terms and
conditions.  All references to Sections in this Agreement are to
Sections of this Agreement.

    

    
      
        
           

        

        
           

          
            

          

        

        
           

          
            Stephen
F. Reeves

            February
14, 2008

            Page
11

            

             

          

        

      

    

     

      If you
agree to the terms of this letter, please sign and return to the Corporation the
enclosed copy which will then constitute our agreement on this
subject.

      

      Sincerely,

      

      THE BLACK
& DECKER CORPORATION

      

      

      

      By: /S/ NOLAN D.
ARCHIBALD

      Nolan D.
Archibald, Chairman

      

      

      

      Agreed to
as of the 14th day of
February, 2008

      

      

      

      /S/ STEPHEN F.
REEVES

      Stephen
F. Reevesex_101.htm

    

    

    

    NITRIC
ACID SUPPLY, OPERATING AND MAINTENANCE

    AGREEMENT

    

    By
and Among

    

    EL
DORADO NITROGEN, L.P., EL DORADO CHEMICAL COMPANY,

    

    and

    

    BAYER
MATERIALSCIENCE LLC

     

     

     

     

     

     

     

     

     

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

        

         

      

      
         

        
          

        

      

      
         

      

    

    Nitric
Acid Supply, Operating and Maintenance Agreement

    

    TABLE OF
CONTENTS

     PAGE

    

    
    

    
      	
               
      

            	
               

            

    

    
      	 	 	 	 Page
	 	SECTION
      1:	DEFINITIONS 	
              4

            
	 	1.1	Additives	
              4

            
	
               
      

            	
              1.2

            	
              Affiliate 

            	
              4

            

    

    
      	
               
      

            	
              1.3

            	
              Ammonia 

            	
              4

            

    

    
      	
               
      

            	
              1.4

            	
              Ammonia
      Specifications 

            	
              4

            

    

    
    

    
      	 	1.5	Aqua
      Ammonia	
              4

            
	 	1.6	Aqua
      Ammonia Specification	
              5

            

    

    
      	
               
      

            	
              1.7

            	
              Back-up
      Supply Plan 

            	
              5

            

    

    
      	
               
      

            	
              1.8

            	
              Battery
      Limits 

            	
              5

            

    

    
      	
               
      

            	
              1.9

            	
              Bayer
      Baytown Plant 

            	
              5

            

    

    
    

    
      	 	1.10	Baytown
      Nitric Acid Project and Supply Agreement	
              5

            
	
               
      

            	
              1.11

            	
              BMS 

            	
              5

            

    

    
      	
               
      

            	
              1.12

            	
              BMS
      Capital Additions 

            	
              5

            

    

    
      	
               
      

            	
              1.13

            	
              BMS
      Capital Component

            	
              6

            
	 	1.14	BMS
      Catalyst Balance	
              6

            

    

    
    

    
      	
               
      

            	
              1.15

            	
              Boiler
      Blowdown 

            	
              6

            

    

    
      	
               
      

            	
              1.16

            	
              Business
      Day 

            	
              6

            

    

    
      	
               
      

            	
              1.17

            	
              Capital
      Costs Monthly Charge 

            	
              6

            

    

    
    

    
      	 	1.18	Catalyst	
              6

            
	
               
      

            	
              1.19

            	
              Change
      of Control Event 

            	
              6

            

    

    
      	
               
      

            	
              1.20

            	
              Commencement
      Date 

            	
              9

            

    

    
      	
               
      

            	
              1.21

            	
              Compliance
      Program 

            	
              9

            

    

    
    

    
      	 	1.22	
              Condensate

            	
              9

            
	
               
      

            	
              1.23

            	
              Delivered
      Unit Cost 

            	
              9

            

    

    
      	
               
      

            	
              1.24

            	
              Delivery
      Systems 

            	
              10

            

    

    
      	
               
      

            	
              1.25

            	
              Demonstrated
      Capacity 

            	
              10

            

    

    
      	
               
      

            	
              1.26

            	
              EDNLP 

            	
              10

            

    

    
    

    
      	 	1.27	EDNLP
      Catalyst Balance	
              10

            
	
               
      

            	
              1.28

            	
              EDNLP
      Default Termination Fee 

            	
              11

            

    

    
      	
               
      

            	
              1.29

            	
              EDNLP
      Net Book Value 

            	
              11

            

    

    
      	
               
      

            	
              1.30

            	
              Effective
      Date 

            	
              11

            

    

    
      	
               
      

            	
              1.31

            	
              Egress
      Fee 

            	
              11

            

    

    
      	
               
      

            	
              1.32

            	
              El
      Dorado 

            	
              11

            
	 	1.33	El
      Dorado Catalyst Balance	
              11 

            
	 	1.34	Environmental
      Assessments	
              11

            
	 	1.35	Environmental,
      Health and Safety Laws	
              12

            

    

    
    

    
    

    
    

     

     

    
      
        
        

      

      
        - ii
-

        
          

        

      

      
        TABLE
OF CONTENTS (Cont'd)

      

    

     

     

    
      	 	 	 	 Page
	
               
      

            	
              1.36

            	
              Event
      of Default 

            	
              12

            

    

    
      	
               
      

            	
              1.37

            	
              Excess
      Steam 

            	
              12

            

    

    
      	
               
      

            	
              1.38

            	
              Excluded
      Fixed Costs 

            	
              13

            

    

    
      	
               
      

            	
              1.39

            	
              Expiration
      Termination Fee 

            	
              13

            

    

    
    

    
      	 	1.40	Facility	
              13

            
	
               
      

            	
              1.41

            	
              First
      Operating Period 

            	
              13

            

    

    
      	
               
      

            	
              1.42

            	
              Fixed
      Costs 

            	
              13

            

    

    
      	
               
      

            	
              1.43

            	
              Fixed
      Costs Monthly Charge 

            	
              14

            

    

    
    

    
      	 	1.44	Fixed
      Price Purchase Option	
              15

            
	
               
      

            	
              1.45

            	
              Force
      Majeure Event 

            	
              15

            

    

    
      	
               
      

            	
              1.46

            	
              Fugitive
      Emissions

            	
              15

            

    

    
      	
               
      

            	
              1.47

            	
              GAAP 

            	
              16

            

    

    
      	
               
      

            	
              1.48

            	
              Guarantor 

            	
              16

            
	 	1.49	Industrial
      District Payments	
              16

            
	 	1.50	Initial
      Capital Investment	
              16

            

    

    
    

    
    

    
      	
               
      

            	
              1.51

            	
              Initial
      Term 

            	
              16

            

    

    
      	
               
      

            	
              1.52

            	
              Laws 

            	
              16

            

    

    
      	
               
      

            	
              1.53

            	
              Maximum
      Use 

            	
              16

            

    

    
      	
               
      

            	
              1.54

            	
              Moving
      Average Actual Cost 

            	
              16

            
	 	1.55	NBV	
              17

            
	 	1.56	NBV
      Payback	
              17

            

    

    
    

    
    

    
      	
               
      

            	
              1.57

            	
              Net
      Distributed Cost 

            	
              17

            

    

    
      	
               
      

            	
              1.58

            	
              Net
      Sales Price 

            	
              17

            

    

    
      	
               
      

            	
              1.59

            	
              Nitric
      Acid

            	
              18

            

    

    
      	
               
      

            	
              1.60

            	
              Nitric
      Acid Facility 

            	
              18

            

    

    
      	
               
      

            	
              1.61

            	
              Nitric
      Acid Specifications 

            	
              18

            

    

    
      	
               
      

            	
              1.62

            	
              Operating
      Fee Monthly Charge 

            	
              18

            
	 	1.63	Operating
      Period	
              18

            

    

    
    

    
      	
               
      

            	
              1.64

            	
              Permits 

            	
              18

            
	 	1.65	Precious
      Metals	
              18

            

    

    
    

    
      	
               
      

            	
              1.66

            	
              Production
      Shortfall 

            	
              19

            

    

    
      	
               
      

            	
              1.67

            	
              Project
      Agreements 

            	
              19

            
	 	1.68	Rebate
      Reconciliation Statement	
              19

            
	 	1.69	Recovery	
              19

            

    

    
    

    
    

    
      	
               
      

            	
              1.70

            	
              Renewal
      Term 

            	
              19

            
	 	1.71	
              Return
      on NBV

            	
              19

            

    

    
    

    
      	
               
      

            	
              1.72

            	
              Right
      of First Refusal 

            	
              19

            

    

    
      	
               
      

            	
              1.73

            	
              Safety
      Improvement Program 

            	
              19

            
	 	1.74	
              Seasonal
      Effects

            	
              20

            

    

    
    

    
      	
               
      

            	
              1.75

            	
              Services 

            	
              20

            

    

    
      	
               
      

            	
              1.76

            	
              Spill 

            	
              20

            

    

    
      	
               
      

            	
              1.77

            	
              Start-up
      Nitric Acid 

            	
              20

            

    

     

     

    
      
        
        

      

      
        - iii
-

        
          

        

      

      
        TABLE
OF CONTENTS (Cont'd)

      

    

     

     

    
      	 	 	 	 Page
	
               
      

            	
              1.78

            	
              Substitute
      Blended Nitric Acid 

            	
              20

            

    

    
      	
               
      

            	
              1.79

            	
              Surplus
      Nitric Acid 

            	
              20

            

    

    
      	
               
      

            	
              1.80

            	
              Technology
      Agreement 

            	
              20

            

    

    
      	
               
      

            	
              1.81

            	
              Term 

            	
              20

            

    

    
      	
               
      

            	
              1.82

            	
              Termination
      Date 

            	
              21

            

    

    
      	
               
      

            	
              1.83

            	
              Total
      Estimates 

            	
              21

            

    

    
      	
               
      

            	
              1.84

            	
              Utilities 

            	
              21

            
	 	1.85	Variable
      Costs Adjustments	
              21

            

    

    
      	
               
      

            	
              1.86

            	
              Variable
      Costs Component 

            	
              21

            
	 	1.87	Voting
      Stock	
              21

            
	 	1.88	Washdown
      Water	
              21

            

    

    
    

    
    

    
      	
               
      

            	
              1.89

            	
              Waste 

            	
              21

            
	 	1.90	Waste
      Treatment Facilities	
              23

            
	 	1.91	Waste
      Treatment Services	
              23

            

    

    
    

    
    

    

    
    

    
      	 	SECTION
      2:	NITRIC
      ACID 	
              23

            
	
               
      

            	
              2.1

            	
              Supply 

            	
              23

            

    

    
      	
               
      

            	
              2.2(A)

            	
              Nitric
      Acid Specifications 

            	
              24

            

    

    
      	
               
      

            	
              2.2(B)

            	
              Start-up
      Nitric Acid and Substitute Blended Nitric
      Acid:  Specifications 

            	
              24

            

    

    
      	
               
      

            	
              2.3

            	
              Place
      of Delivery 

            	
              25

            

    

    
      	
               
      

            	
              2.4

            	
              Most
      Favored Customer 

            	
              25

            

    

    
      	
               
      

            	
              2.5

            	
              Sales
      Optimization 

            	
              27

            

    

    
      	
               
      

            	
              2.6

            	
              Swaps 

            	
              27

            

    

    

    
    

    
      	
            	 SECTION
      3:	MAINTENANCE
      AND OPERATING SERVICES	
              27

            

    

     

    

    
    

    
      	 	 SECTION
      4:	PRICE
      	
              30

            
	
               
      

            	
              4.1

            	
              Operating
      Period Costs 

            	
              30

            

    

    
      	
               
      

            	
              (A)

            	
              Variable
      Costs Component 

            	
              30

            

    

    
      	
               
      

            	
              (B)

            	
              Fixed
      Costs Monthly Charge 

            	
              30

            

    

    
      	
               
      

            	
              (C)

            	
              Monthly
      Capital Charge 

            	
              30

            

    

    
      	
               
      

            	
              (D)

            	
              Operating
      Fee Monthly Charge 

            	
              30

            

    

    
      	
               
      

            	
              (E)

            	
              Reconciliation
      of Fixed Costs; Adjustments to Fixed Costs Monthly
      Charge 

            	
              31

            

    

    

    
      	
               
      

            	
              4.2

            	
              Adjustments
      to Variable Costs Component (All
    Operating Periods) 

            	
              32

            

    

    
      	
               
      

            	
              (A)

            	
              Ammonia 

            	
              32

            

    

    
      	
               
      

            	
              (B)

            	
              Precious
      Metals 

            	
              32

            
	 	 	(1)
      Catalyst Composition Adjustment	
              33

            

    

    
    

     

     

    
      
        
        

      

      
        - iv
-

        
          

        

      

      
        TABLE
OF CONTENTS (Cont'd)

      

    

     

    
 

    
      	 	 	 	
              Page

            
	
               
      

            	
              (C)

            	
              Electricity 

            	
              33

            

    

    
      	
               
      

            	
              (D)

            	
              All
      Other Variable Costs 

            	
              33

            
	 	(E) 	Monthly
      Payments	
              33

            

    

    
      	
               
      

            	
               

            

    

    

    
      	
               
      

            	
              4.3

            	
              Fixed
      Costs Reimbursements by EDNLP 

            	
              33

            

    

    
      	
               
      

            	
              (A)

            	
              Reimbursement
      of Fixed Costs for Production Shortfalls 

            	
              33

            

    

    
      	
               
      

            	
              (B)

            	
              Calculation
      of Reimbursement Payments 

            	
              34

            

    

    
      	
               
      

            	
              (i)

            	
              Quarterly 

            	
              34

            
	 	(ii)	End
      of Operating Period Reconciliation	
              34

            

    

    
    

    

    
    

    
      	
               
      

            	
                    
                4.4

              

            	
              Operating
      Fee Reimbursements by EDNLP

            	
              35

            

    

    
      	 	(A)	Reimbursement
      of Operating Fee Monthly Charge for Production Shortfalls	
              35

            
	
               
      

            	
              (B)

            	
              Calculation
      of Reimbursement Payments, Production Shortfalls 

            	
              36

            

    

    
    

    
    

    
      	
            	
              (i)

            	
              Quarterly 

            	
              36

            
	 	(ii)	End
      of Operating Period Reconciliation	
              36

            

    

     

    
      	
               
      

            	
              4.5

            	
              Miscellaneous
      (Invoices, Forecasts and Planned Outages) Provisions 

            	
              37

            

    

    
      	
               
      

            	
              (A)

            	
              Forecasts
      by BMS 

            	
              37

            

    

    
      	
               
      

            	
              (B)

            	
              Forecasts
      by EDNLP 

            	
              37

            

    

    
      	
               
      

            	
              (C)

            	
              Effect
      of Forecasts 

            	
              38

            

    

    
      	
               
      

            	
              (D)

            	
              Monthly
      Requirement Plans 

            	
              38

            

    

    
      	
               
      

            	
              (E)

            	
              Planned
      Outages 

            	
              39

            
	 	(F)	Contract
      Maintenance Expenditures	
              39

            

    

    
    

    

    
      	
               
      

            	
              4.6

            	
              Taxes 

            	
              39

            

    

     

    
      	
               
      

            	
                

            

    

    
      	 	SECTION
      5:	BMS
      REIMBURSEMENT, REBATE AND EGRESS FEE	
              41

            
	
               
      

            	
              5.1

            	
              Reimbursement
      and Rebate 

            	
              41

            
	 	5.2	Egress
      Fee	
              46

            

    

    
    

    

    
    

    
      	 	SECTION
      6:	TITLE
      AND RISK OF LOSS	
              46

            
	
               
      

            	
              6.1

            	
              Ammonia 

            	
              46

            

    

    
      	
               
      

            	
              6.2

            	
              Nitric
      Acid Produced by EDNLP at the Nitric Acid Facility for
      BMS 

            	
              46

            

    

    
      	
               
      

            	
              6.3

            	
              Nitric
      Acid From El Dorado and Third Party Suppliers Under the Back-up
      Supply Plan 

            	
              46

            

    

    
      	
               
      

            	
              6.4

            	
              Surplus
      Nitric Acid 

            	
              46

            

    

     

     

    
      
        
        

      

      
        - v
-

        
          

        

      

      
        TABLE
OF CONTENTS (Cont'd)

      

    

    
 

    
      	 	 	 	
              Page

            
	
               
      

            	
              6.5

            	
              Aqua
      Ammonia 

            	
              47

            

    

     

    
      
        	 	SECTION
      7: 	CATALYST
      PAYMENT AND RECOVERY	
                47

              
	 	7.1	Term	
                47

              
	 	7.2	Initial
      Balance	
                47

              
	 	7.3	Additions	
                48

              
	 	7.4	Recoveries	
                49

              
	 	7.5	Reductions	
                 50

              
	 	7.6	Catalyst
      Balance	
                50

              
	 	7.7	Schedule	
                50

              
	
                 
      

              	
                7.8

              	
                Settlement

              	
                50

              

      

    

     

    
      	 	SECTION
      8: 	NITRIC
      ACID WARRANTY AND TECHNOLOGY	
              51

            
	
               
      

            	
              8.1

            	
              Title 

            	
              51

            

    

    
      	
               
      

            	
              8.2

            	
              Technology
      Approval 

            	
              51

            

    

    

    
    

    
      	 	SECTION
      9: 	REPRESENTATIONS,
      WARRANTIES AND COVENANTS	
              52

            
	
               
      

            	
              9.1

            	
              Representations,
      Warranties and Covenants of EDNLP 

            	
              52

            

    

    
      	
               
      

            	
              (A)

            	
              Corporate
      Standing 

            	
              52

            

    

    
      	
               
      

            	
              (B)

            	
              Binding
      Effect of Project Agreements 

            	
              52

            

    

    
      	
               
      

            	
              (C)

            	
              Consents 

            	
              52

            

    

    
      	
               
      

            	
              (D)

            	
              Conflicts 

            	
              53

            

    

    
      	
               
      

            	
              (E)

            	
              Health
      and Safety Covenants 

            	
              53

            

    

    
      	
               
      

            	
              (F)

            	
              Compliance
      with Laws & Permits 

            	
              54

            

    

    
      	
               
      

            	
              (G)

            	
              Nitric
      Acid Facility Capacity 

            	
              55

            

    

    
      	
               
      

            	
              (H)

            	
              Hazards
      Analyses 

            	
              55

            

    

    
      	
               
      

            	
              (I)

            	
              Common
      Carriers 

            	
              55

            

    

    
      	
               
      

            	
              (J)

            	
              Bankruptcy
      Remote 

            	
              55

            

    

    
      	
               
      

            	
              (K)

            	
              Quality
      Standards 

            	
              56

            
	 	 (L)	Environmental
      Covenants	
              56

            

    

    
    

     

    
      
      

      
        	 	 9.2	

                Representations,
      Warranties and Covenants of El Dorado

              	
                57

              

      

    

    
    

    
    

    
      	
               
      

            	
              (A)

            	
              Corporate
      Standing 

            	
              57

            

    

    
      	
               
      

            	
              (B)

            	
              Binding
      Effect of Project Agreements 

            	
              57

            

    

    
      	
               
      

            	
              (C)

            	
              Consents 

            	
              57

            

    

    
      	
               
      

            	
              (D)

            	
              Conflicts 

            	
              58

            

    

    
      	
               
      

            	
              (E)

            	
              Back-up
      and Start-up Supply 

            	
              58

            

    

    

    
      	
               
      

            	
              9.3

            	
              Representations,
      Warranties and Covenants of BMS 

            	
              59

            

    

    
      	
               
      

            	
              (A)

            	
              Corporate
      Standing 

            	
              59

            

    

    
      	
               
      

            	
              (B)

            	
              Binding
      Effect of Project Agreements 

            	
              59

            

    

     

     

    
      
        
        

      

      
        - vi
-

        
          

        

      

      
        TABLE
OF CONTENTS (Cont'd)

      

    

    

 

    
      	 	 	 	Page
	
               
      

            	
              (C)

            	
              Consents 

            	
              59

            

    

    
      	
               
      

            	
              (D)

            	
              Conflicts 

            	
              59

            

    

    
      	
               
      

            	
              (E)

            	
              Quality
      Standards 

            	
              60

            
	 	(F)	No
      Material Interference	
              60

            
	 	(G)	Environmental
      Covenants	
              60

            
	 	(H)	Compliance
      with Laws	
              61

            

    

    
    

    
    

    
    

    

    
    

    
      	 	SECTION
      10:	AMMONIA	
              61

            
	
               
      

            	
              10.1

            	
              Supply
      by BMS 

            	
              61

            

    

    
      	
               
      

            	
              10.2

            	
              Supply
      by EDNLP 

            	
              62

            

    

    
      	
               
      

            	
              10.3

            	
              Measurement
      of Ammonia Supplied 

            	
              62

            

    

    
      	
               
      

            	
              (A)

            	
              Metering 

            	
              62

            
	 	(B)	Calibration	
               63

            

    

    
      	
               
      

            	
              10.4

            	
              Aqua
      Ammonia Supply

            	
              63

            

    

     

     

    
      
      

      
        	 	SECTION
      11:	UTILITIES
      AND CHEMICAL ADDITIVES 	
                64

              
	
                 

              	
                11.1

              	
                Provision
      of Utilities

              	
                64

              

      

      
        	
                 
      

              	
                11.2

              	
                Utility
      Quality

              	
                69

              

      

      
        	 	11.3	Utility
      Cross Connections	
                69

              
	 	11.4 	Utility
      Meters	
                69

              
	 	11.5	Resale
      of Utilities	
                71

              

      

    

     

    
      
        
        

        
          	 	SECTION
      12:	WASTE	
                  71

                
	
                   

                	
                  12.1

                	
                  Use
      of Sanitary Sewers 

                	
                  72

                

        

        
          	
                   
      

                	
                  12.2

                	
                  Cooling
      Tower Blowdown 

                	
                  73.

                

        

        
          	 	12.3	Routine
      Process Waste 	
                  73

                
	 	12.4 	Initial
      Stormwater and Additional Stormwater 	
                  74

                
	 	12.5	Uncollected
      Stormwater 	
                  75

                
	 	12.6	EDLNP’s
      Disposal of Waste 	
                  75

                
	 	12.7	General	
                  76

                

        

      

       

    

    
       

      
        
        

        
          	 	SECTION
      13:	Fire
      Protection and Safety 	
                  77

                
	
                   

                	
                  13.1

                	
                  Fire
      Protection 

                	
                  77

                

        

        
          	
                   
      

                	
                  13.2

                	
                  Safety

                	
                  78

                

        

        
          	 	13.3	Security	
                  80

                
	 	13.4 	Parking
      and Access 	
                  80

                

        

      

       

    

    

    
    

    
      	 	SECTION
      14:	INTERRUPTION
      OF AMMONIA, UTILITIES OR NITRIC ACID 	
              81

            
	
               
      

            	
              14.1

            	
              Interruption
      of EDNLP Feedstock 

            	
              81

            

    

    
      	
               
      

            	
              14.2

            	
              Interruption
      of Nitric Acid 

            	
              82

            

    

     

     

    
      
        
        

      

      
        - vii
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OF CONTENTS (Cont'd)

      

    

    

 

    
    

    
      	 	 	 	
              Page

            
	 	SECTION
      15: 	PIPELINE
      AND DELIVERY SYSTEM	
              82

            
	
               
      

            	
              15.1

            	
              Plant
      System 

            	
              82

            

    

    
      	
               
      

            	
              15.2

            	
              Connection
      Points 

            	
              82

            

    

     

    
      
      

      
        	 	SECTION
      16:	PERMITS	
                83

              

      

    

     

    
    

    
      	 	SECTION
      17: 	INSURANCE	
              83

            
	
               
      

            	
              17.1

            	
              EDNLP's
      Insurance 

            	
              83

            

    

    
    

    
      	 	(A)	Insurance
      Against Public Liability	
              83

            
	
               
      

            	
              (B)

            	
              Workers'
      Compensation and Other Insurance 

            	
              84

            
	 	(C)	Business
      Interruption	
              84

            
	 	(D)	Pollution
      Liability Insurance	
              84

            

    

    
    

    
    

    
      	
               
      

            	
              (E)

            	
              Insurance
      Certificates 

            	
              85

            
	 	(F)	Deductibles	
              85

            

    

    
    

    

    
      	
               
      

            	
              17.2

            	
              BMS's
      Insurance 

            	
              85

            

    

    
      	
               
      

            	
              (A)

            	
              Insurance
      Against Loss or Damage 

            	
              85

            

    

    
    

    
      	 	(B)	Insurance
      Against Public Liability	
              85

            
	
               
      

            	
              (C)

            	
              Workers'
      Compensation and Other Insurance 

            	
              86

            

    

    
      	
               
      

            	
              17.3

            	
              Waiver
      of Subrogation Rights 

            	
              86

            

    

    
      	
               
      

            	
              17.4

            	
              Miscellaneous
      Insurance Provisions 

            	
              87

            

    

    
      	
               
      

            	
              17.5

            	
              Form
      of Policies 

            	
              88

            

    

    
      	
               
      

            	
              17.6

            	
              Self-Insurance 

            	
              88

            

    

    
      	
               
      

            	
              17.7

            	
              Blanket
      Coverage 

            	
              89

            

    

    
      	
               
      

            	
              17.8

            	
              Failure
      of EDNLP to Insure 

            	
              89

            

    

    

    
    

    
      	 	SECTION
      18:	DEFAULT
      AND REMEDIES	
              89

            
	
               
      

            	
              18.1

            	
              EDNLP
      Events of Default 

            	
              89

            

    

    
      	
               
      

            	
              18.2

            	
              EDNLP
      Cure Periods 

            	
              91

            

    

    
      	
               
      

            	
              18.3

            	
              BMS
      Events of Default 

            	
              92

            

    

    
      	
               
      

            	
              18.4

            	
              BMS
      Cure Periods 

            	
              93

            

    

    
      	
               
      

            	
              18.5

            	
              BMS
      Remedies for EDNLP Events of Default 

            	
              94

            

    

    
      	
               
      

            	
              18.6

            	
              EDNLP
      Remedies for BMS Events of Default 

            	
              95

            

    

    

    
    

    
    

    
    

    
      	 	SECTION
      19:	TERMINATION	
              97

            
	 	19.1	BMS's
      Optional Termination Rights	
              97

            
	 	19.2	EDNLP’s
      Optional Termination Rights	
              97

            
	
               
      

            	
              19.3

            	
              Automatic
      Termination 

            	
              97

            

    

    
      	
               
      

            	
              19.4

            	
              Effects
      of Termination 

            	
              98

            

    

     

     

    
      
      

      
        
          	 	SECTION
      20:	INDEMNIFICATION
      	
                  101

                

        

      

    

     

    
      
        
        

      

      
        - viii
-

        
          

        

      

      
        TABLE
OF CONTENTS (Cont'd)

      

    

    
 

    
    

    
      	 	 	 	
              Page

            
	 	20.1	EDNLP
      Indemnification	
              102

            
	
               
      

            	
              20.2

            	
              BMS
      Indemnification 

            	
              102

            
	 	20.3	Indemnification
      Details	
              104

            

    

    
    

    
      	
               
      

            	
              20.4

            	
              Notice
      of Proceedings 

            	
              106

            

    

    
      	
               
      

            	
              20.5

            	
              Insurance 

            	
              107

            

    

     

    
      
      

    

    
      
        
          	 	SECTION
      21:	INJUNCTIVE
      RELIEF	
                  107

                

        

    

    
    

    
      	 	SECTION
      22: 	TERM
      AND RENEWALS	
              108

            
	
               
      

            	
              22.1

            	
              Initial
      Term 

            	
              108

            

    

    
      	
               
      

            	
              22.2

            	
              Renewals 

            	
              108

            

    

     

     

    
      
      

      
        
          	 	SECTION
      23: 	RIGHT
      OF FIRST REFUSAL	
                  108

                
	 	23.1(A)	Change
      of Control Event	
                  109

                
	 	23.1(B)	Third
      Party Offer	
                  109

                
	 	

                  23.2

                	Injunctive
      Relief and Specific Performance	 

        

    

    
    

    
    

    
    

    
      	
               
      

            	
              SECTION
      24:

            	
              DISPUTE
      RESOLUTION

            	
              110

            

    

    
    

    
      	
               
      

            	
              24.1

            	
              General 

            	
              110

            

    

    
      	
               
      

            	
              24.2

            	
              Dispute
      Resolution 

            	
              110

            

    

    
      	
               
      

            	
              24.3

            	
              Commencement
      of Legal Actions 

            	
              111

            

    

    
      	
               
      

            	
              24.4

            	
              Governing
      Law 

            	
              111

            

    

    
      	
               
      

            	
              24.5

            	
              Submission
      to Jurisdiction 

            	
              111

            

    

    
      	
               
      

            	
              24.6

            	
              Consent
      to Service of Process 

            	
              112

            

    

     

    
      
      

      
        
          	 	SECTION
      25: 	ENTIRE
      AGREEMENT	
                  112

                

        

         

        
          
            
            

            
              
                	 	SECTION
      26: 	MODIFICATION	
                        112

                      

              

            

          

        

         

        
          
            
            

            
              
                	 	SECTION
      27: 	PAYMENTS	
                        112

                      

              

            

          

        

      

    

    
    

     

    
      
        
        

        
          
            	 	SECTION
      28: 	DEMURRAGE	
                    113

                  

          

           

          
            
            

            
              
                	 	SECTION
      29: 	COOPERATION	
                        113

                      

              

            

          

        

      

    

    
    

    
       

      
        
        

        
          
            	 	SECTION
      30: 	NOTICES	
                    114

                  

          

           

          
            
              
              

              
                
                  	 	SECTION
      31: 	BINDING
      AGREEMENT	
                          115

                        

                

                 

              

            

          

          
            
            

            
              
                	 	SECTION
      32: 	WAIVER	
                        115

                      

              

               

               

              
                
                  
                  

                

                
                  - ix
-

                  
                    

                  

                

                
                  TABLE
OF CONTENTS (Cont'd)

                

              

            

          

        

      

    

     

     

    
       

      
        
        

        
          
            	 	SECTION
      33: 	CONSTRUCTION	
                    115

                  

          

           

          
            
              
              

              
                
                  	 	SECTION
      34: 	COUNTERPARTS	
                          116

                        

                

              

            

          

           

          
            
              
              

              
                
                  	 	SECTION
      35: 	ASSIGNMENT	
                          116

                        

                

              

            

          

        

      

      
      

       

      
        
          
          

          
            
              	 	SECTION
      36: 	AUDIT RIGHTS	
                      116

                    

            

             

            
              
              

              
                
                  	 	SECTION
      37: 	GUARANTY	
                          117

                        

                

              

            

          

        

      

      
      

      
         

        
          
          

          
            
              	 	SECTION
      38: 	FORCE MAJEURE	
                      118

                    

            

             

            
              
                
                

                
                  
                    	 	SECTION
      39: 	CONTROLLING AGREEMENT	
                            118

                          

                  

                   

                   

                  
                    
                      
                      

                    

                    
                      - x
-

                      
                        

                      

                    

                    
                      
                      

                    

                  

                

              

            

          

        

      

    

    NITRIC ACID SUPPLY,
OPERATING AND MAINTENANCE AGREEMENT

     

    THIS
NITRIC ACID SUPPLY, OPERATING AND MAINTENANCE AGREEMENT (this "Agreement") is
made and entered into this 23rd day of
October in 2008  (the "Effective
Date"), by and among EL DORADO NITROGEN, L.P., a Texas limited partnership
("EDNLP"), EL DORADO CHEMICAL COMPANY, an Oklahoma corporation
("El Dorado") and BAYER MATERIALSCIENCE LLC, a Delaware limited liability
company ("BMS").

    

    W I T N E
S S E T H:

    

    WHEREAS, BMS owns and operates a
chemical manufacturing facility located in Baytown, Chambers County, Texas (the
"Bayer Baytown Plant");

     

    WHEREAS, BMS engages in a manufacturing
process at the Bayer Baytown Plant that requires Nitric Acid meeting certain
agreed-upon specifications described in Section 2 hereof ("Nitric
Acid");

     

    WHEREAS, BMS desires to obtain Nitric
Acid for use in connection with the Bayer Baytown Plant;

     

    WHEREAS, the parties entered into a
Baytown Nitric Acid Project and Supply Agreement on June 27, 1997, which
provided that EDNLP build, operate and maintain a manufacturing facility capable
of producing Nitric Acid (the "Nitric Acid Facility") on real property leased to
EDNLP by BMS and located at the Bayer Baytown Plant;

    
      
         

      

      
        - 1
-  

        
          

        

      

       

    

    WHEREAS, the Baytown Nitric Acid
Project and Supply Agreement is expected to terminate on June 23, 2009, after
the payment of the Fixed Price Purchase Option by BMS, upon which title to all
assets comprising the Nitric Acid Facility, with the exception of any assets
comprising the EDNLP Net Book Value as defined herein shall reside with BMS and
where title to the assets comprising the EDNLP Net Book Value shall reside with
EDNLP;

     

    WHEREAS, this Agreement shall succeed
the Baytown Nitric Acid Project and Supply Agreement and the terms of this
Agreement shall become effective as of the Commencement Date;

     

    WHEREAS, BMS agrees to supply ammonia
that is required for the production of Nitric Acid and that is requested by
EDNLP in connection with the operation of the Nitric Acid Facility and to
accept, at no charge to BMS, excess steam produced therefrom;

     

    WHEREAS, BMS agrees, in accordance with
the terms and conditions of this Agreement, to supply to EDNLP certain
utilities, chemical additives and services that are required for the production
of Nitric Acid at the Nitric Acid Facility and to share certain facilities and
services with EDNLP;

     

    WHEREAS, EDNLP agrees to supply Nitric
Acid to BMS, subject to and in accordance with the terms and conditions of this
Agreement;

     

    WHEREAS, beginning on the Commencement
Date, as hereinafter defined, BMS desires to purchase from EDNLP all
of

    
      
         

      

      
        - 2
-  

        
          

        

      

       

    

    BMS's
requirements for Nitric Acid for use at the Bayer Baytown Plant;
and

     

    WHEREAS, beginning on the Commencement
Date, EDNLP will use reasonable efforts to market and distribute to third
parties Surplus Nitric Acid manufactured at the Nitric Acid Facility that is not
required by BMS;

     

    WHEREAS, BMS and EDNLP agree that all
calculations for the period of June 24, 2009 through June 30, 2009 shall be
performed in accordance with the terms and conditions of the Baytown Nitric Acid
Project and Supply Agreement as amended and all calculations for the purchase of
Nitric Acid and related services performed after this period, with the exception
of any reconciliation related to activities performed prior to that date, shall
be in accordance with the terms and conditions herein; and

     

    WHEREAS,
EDNLP agrees to provide to BMS at no charge, its co-product aqueous ammonia
through facilities and pipelines designed and installed by BMS, and according to
the agreed upon specifications described in Section 1.6 ("Aqua Ammonia
Specifications").

     

    NOW, THEREFORE, in consideration of the
premises, and other good and valuable consideration, the receipt and sufficiency
of all of which is hereby acknowledged, and intending to be legally bound, the
parties hereby agree as follows:

    
      
         

      

      
        - 3
-  

        
          

        

      

       

    

    AGREEMENT

     

    The preamble and recitals above are
incorporated in this  Agreement as though each had been fully repeated
herein.

     

    SECTION
1:  DEFINITIONS

    Unless otherwise defined herein, the
following terms have the respective meanings assigned to them for purposes of
this Agreement:

     

    1.1    Additives – Shall
mean chlorine, 32 percent caustic and 98 percent sulfuric acid as described more
fully in Schedule
1.

     

    1.2    Affiliate - Shall
mean any person, partnership, corporation, or other entity that controls, is
controlled by or is under common control with a specified person, partnership,
corporation or other entity.  For purposes of this definition,
"control" shall mean the power, whether direct or indirect, and whether by
exercise of voting power or contract or otherwise, to direct the management
policies and decisions of another entity.

     

    1.3             Ammonia - All ammonia
necessary for the manufacture of Nitric Acid by EDNLP at the Nitric Acid
Facility at the operating rates necessary to meet BMS's requirements of Nitric
Acid and EDNLP's sales requirements of Surplus Nitric Acid, which ammonia shall
be supplied to EDNLP by BMS for its use and
as required by EDNLP at the Nitric Acid Facility pursuant to the terms of this
Agreement.

    
      
         

      

      
        - 4
-  

        
          

        

      

       

    

    1.4           Ammonia
Specifications - Shall mean the specifications for Ammonia set forth on
Schedule 2 to
this Agreement.

     

    1.5           Aqua Ammonia – shall
mean a co-product of the production process supplied to BMS by EDNLP as more
fully described in Section 10.4.

     

     

    1.6  Aqua Ammonia
Specification — Shall mean the appearance, component concentrations,
delivery pressures and delivery temperature as described in Section 10.4 Aqua
Ammonia Supply.

     

    1.7             Back-up Supply Plan –
Shall mean that certain Back-up Supply Plan set forth in the attached Exhibit
B.

     

    1.8             Battery Limits –
Shall mean the boundary lines of the Nitric Acid Facility and described more
fully in Exhibit A.

     

    1.9             Bayer Baytown Plant -
Shall have the meaning set forth in the recitals.

     

    1.10 Baytown Nitric Acid Project
and Supply Agreement – Shall mean that agreement entered into by and
among the parties to this Agreement on June 27, 1997 which provides the terms
and conditions upon which EDNLP leased land from BMS to build the Nitric Acid
Facility, as well as the terms and conditions
of supplying Nitric Acid and operating and maintaining the Nitric Acid Facility,
as amended.

    
      
         

      

      
        - 5
-  

        
          

        

      

       

    

     

    1.11     BMS - Shall have the
meaning set forth in the preamble.

     

    1.12     BMS Capital Additions
– Shall mean all capital investments after the Commencement Date made by or on
behalf of BMS at the Nitric Acid Facility as determined in accordance with GAAP,
including without limitation capitalized maintenance expenditures.

     

    1.13     BMS Capital Component
– Shall mean the sum of *** divided by 120 plus the monthly amortization of the
BMS Capital Additions amortized evenly over a 10 year period.

     

    1.14     BMS Catalyst Balance
– Shall mean BMS’s initial balance of catalyst paid for to use in the production
process of the Nitric Acid Facility, plus additions, minus reductions, that
result expressed in troy ounces, and further described in Section 7 of this
Agreement.

     

    1.15     Boiler Blowdown -
Shall mean water discharged from the Nitric Acid Facility to maintain optimum
boiler operations at the Nitric Acid Facility.

     

    1.16             Business Day – Shall
mean any day other than a (i) Saturday, (ii) Sunday or (iii) holiday
on which national banks in New York City, New York are not open for
business.

    1.17             Capital Costs Monthly
Charge - Shall mean the sum of the EDNLP *** and
***.

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

        

      

      
        - 6
-  

        
          

        

      

       

    

     

    1.18    Catalyst – Shall mean
the Precious Metals formed into a gauze for use in the conversion of Ammonia
within the production process of the Nitric Acid Facility.

     

    1.19    Change of Control
Event - Shall mean any of the following events:

     

    (A)           EDNLP,
El Dorado or LSB Industries, Inc. (a Delaware corporation and the parent
company of El Dorado, hereinafter "LSB") is merged or
consolidated into or with another corporation or other legal person not
affiliated with EDNLP, El Dorado or LSB and, as a result, (i) EDNLP,
El Dorado or LSB, whichever is applicable, is not the surviving entity and
(ii) shareholders of the acquiring party have directly or indirectly
acquired more than a majority of the combined voting power of the
then-outstanding voting securities of such corporation or person immediately
after such transaction;

     

    (B)           EDNLP,
El Dorado or LSB sells or otherwise transfers all or substantially all of
its assets (other than pursuant to a sale-leaseback transaction) to any other
corporation or other legal person not affiliated with EDNLP, El Dorado or
LSB, or LSB sells or otherwise transfers a majority of all of the voting equity
securities of EDNLP or El Dorado to any other corporation or other legal person
not affiliated with LSB and, as a result of such sale or transfer, less than a
majority of the combined voting power of the then-outstanding voting securities
of such corporation or person immediately 

    
      
         

      

      
        - 7
-  

        
          

        

      

       

    

    after
such sale or transfer is held in the aggregate by the holders of Voting Stock
(as defined below) of EDNLP, El Dorado or LSB, whichever is applicable,
immediately prior to such sale or transfer;

     

    (C)           There
is a report filed on Schedule 13D or Schedule 14D-1 (or any successor schedule,
form or report), each as promulgated pursuant to the Securities Exchange Act of
1934, as amended, disclosing that any person (as the term "person" is used in
Section 13(d)(3) or Section 14(d)(2) of the Securities Exchange Act of 1934) has
become the beneficial owner (as the term "beneficial owner" is defined under
Rule 13d-3 or any successor rule or regulation promulgated under the Securities
Exchange Act of 1934) of securities representing ten percent (10%) or more of
the combined voting power of the then-outstanding securities entitled to vote
generally in the election of directors of EDNLP, El Dorado or LSB (the
"Voting Stock"), and such person has publicly disclosed or otherwise manifested
an intention to cause the occurrence of an event described in subparagraphs (A),
(B), (D) or (E) of this Section 1.18 in respect of EDNLP, El Dorado or LSB,
and such person is ultimately successful in affecting the occurrence of an event
described in subparagraphs (A), (B), (D) or (E) of this
Section 1.18;

    (D)           EDNLP,
El Dorado or LSB files a report or proxy statement with the Securities and
Exchange Commission, 

    

      
        
           

        

        
          - 8
-  

          
            

          

        

         

      

    

     

    pursuant
to the Securities Exchange Act of 1934, disclosing in response to Form 8-K or
Schedule 14A (or any successor schedule, form or report or item therein) that a
change of control of EDNLP, El Dorado or LSB has occurred or will occur in
the future pursuant to any then-existing contract or transaction (provided, however, that the
pledge of the capital stock of LSB, EDNLP or El Dorado to a third party lender
in connection with a bona fide financing transaction will not, absent a default
under such financing transaction, be considered in determining whether a Change
of Control Event has occurred under this Section 1.18(D)); or

     

    (E)           If
during any period of two (2) consecutive years, individuals who at the beginning
of any such period constitute the directors of EDNLP, El Dorado or LSB
cease for any reason to constitute at least a majority thereof, unless the
election, or the nomination for election by the relevant company's stockholders,
of each director of the relevant company first elected during such period was
approved by a vote of at least a majority of the directors of the relevant
company then still in office.

     

    1.20    Commencement Date -
Shall mean June 24, 2009, upon default free termination of the Baytown Nitric
Acid Project and Supply Agreement.

    1.21    Compliance Program -
Shall have the meaning set forth in Section 9.1(F) hereof.

    

      
        
           

        

        
            - 9
-

          
            

          

        

         

      

    

     

    
      1.22    Condensate – Shall
mean Excess Steam or condensate that meets the requirements of Schedule 1
hereof.

       

    

    1.23    Delivered Unit Cost -
Shall mean:

     

    
      	
               
      

            	
              ***

            

    

     

    
      	
               
      

            	
              Where:

            

    

     

    
      	
               
      

            	
              ***

            

    

     

    1.24           Delivery Systems -
All pipelines, powerlines and other fixtures and improvements to the Bayer
Baytown Plant (including, without limitation, pipe racks and other related
fixtures) that comprise the systems that are necessary to transport to or from
the Battery Limits: (i) Ammonia to be used

    

     

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

        

         

      

      
          -
10 -

        
          

        

      

       

    

     

    in the
Nitric Acid Facility; (ii) Utilities and Additives to be supplied to the Nitric
Acid Facility, including water treatment sewers and pipelines; (iii) Nitric
Acid produced at the Nitric Acid Facility; (iv) Excess Steam (as defined herein)
and Condensate; and (v) Aqua Ammonia produced at the Nitric Acid
Facility.

     

    1.25    Demonstrated Capacity
- Shall mean the sum of the highest level of production of Nitric Acid at the
Nitric Acid Facility during each month of any Operating Period, adjusted for
normal outages and turnarounds and adjusted by Seasonal Effects.

     

    1.26    EDNLP - Shall have
the meaning set forth in the preamble.

     

    1.27    EDNLP Catalyst Balance -
Shall mean EDNLP’s initial balance of Catalyst purchased for use in the
production process at the Nitric Acid Facility through the Initial Term of the
Baytown Nitric Acid Project and Supply Agreement and not reimbursed by BMS,
minus reductions, that result expressed in troy ounces, and further described in
Section 7 of this Agreement.

     

    1.28    EDNLP Default Termination
Fee - Shall mean the EDNLP Net Book Value.

    1.29    EDNLP Net Book Value
- The then current Net Book Value (NBV) of assets contained within the Nitric
Acid Facility purchased by EDNLP which are not included within the Initial

    

      
        
           

        

        
            -
11 -

          
            

          

        

         

      

    

     

     

    Capital
Investment and for which BMS did not elect to pay for directly (as per Schedule
3).

     

    1.30    Effective Date -
Shall have the meaning set forth in the preamble.

     

    1.31    Egress Fee - The
throughput charge of *** per ton of Surplus Nitric Acid (one hundred percent
assay basis) shipped from the Nitric Acid Facility pursuant to Section 5.2
hereof.

     

    1.32    El Dorado – Shall
have the meaning set forth in the Preamble.

     

    1.33    El Dorado Catalyst
Balance – Shall be equal to zero, as related to El Dorado as Guarantor of
the Agreement.

     

    1.34    Environmental
Assessments – Shall mean:  (i) the Geotechnical Study and
Environmental Baseline Assessment, report number LA1387.001, dated December 9,
1996, prepared by Geraghty & Miller, Inc. and relating to the Nitric Acid
Facility; and (ii) the subsequent Geotechnical Study and Environmental Baseline
Assessment prepared by Geraghty & Miller, Inc. performed July 18, 1997,
prior to the date of the groundbreaking for construction of the Nitric Acid
Facility.  The parties acknowledge that at the termination of this
Agreement, BMS shall promptly cause a qualified environmental engineering firm
to conduct an exit assessment and provide copies thereof to EDNLP and
BMS.

     

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

      

      
        - 12
-  

        
          

        

      

       

    

     

    1.35    Environmental, Health and
Safety Laws - Any and all federal, state and local laws, statutes,
ordinances, rules, regulations, orders, codes and notices relating to pollution
or protection of human health or the environment (including, without limitation,
those relating to releases or threatened releases of pollutants, contaminants,
toxic or hazardous substances or wastes into the environment) including, without
limitation, the following statutes, as amended from time to
time:  (a) the Resource Conservation and Recovery Act , 42
U.S.C.§ 6901 et
seq.; (ii) Comprehensive Environmental Response, Compensation and
Liability Act of 1980, 42 U.S.C.§ 9601 et seq.;
(iii) Superfund Amendments and Reauthorization Act of 1986; (iv) Clean
Air Act, 42 U.S.C. § 7401 et seq.; (v) The
Clean Water Act, 33 U.S.C. § 1251 et seq.;
(vi) Safe Drinking Water Act, 42 U.S.C. § 300f et seq.; and
(vii) Toxic Substances Control Act, 15 U.S.C. § 2601 et seq. and (viii)
the Occupational Safety and Health Act, 29 U.S.C. § 651 et seq.

     

    1.36            Event of Default -
Shall have the meaning set forth in Section 18 hereof.

     

    1.37    Excess Steam – Shall
mean all excess steam or Condensate that meets the requirements of Schedule 1 hereof,
and results from the production of Nitric Acid at the Nitric Acid Facility and
is not required for the operation of the Nitric Acid Facility. Excess Steam
shall be saturated, have a minimum pressure of seven hundred (700) P.S.I.G. at
the inlet

    
      
         

      

      
        - 13
-  

        
          

        

      

       

    

     control/letdown
valve at the Battery Limits and shall have a minimum of five hundred eight
degrees Fahrenheit(508° F)
superheat.

     

    1.38            Excluded Fixed Costs
- Shall mean any tax other than those based upon revenue or income,
insurance premiums, BMS's net distributed unit costs or allocation rates for
services and utilities, contract maintenance and expenses, and EDNLP hourly or
salaried wage rates and benefits.

     

    1.39            Expiration Termination
Fee - Shall mean (i) $6,318,857 (ii) plus 1.1 times the EDNLP Net Book
Value.

     

    1.40           
Facility –
Shall have the meaning set forth in Section 11.

     

                        1.41    First Operating
Period - Shall mean the period from June 24, 2009 through December 31,
2009.

     

    1.42    Fixed Costs - Shall
collectively mean the total amount of all fixed costs incurred by EDNLP for
spending categories, as defined and as set forth on Schedule 4 hereto, in
the operation, maintenance, repair and improvement of the Nitric Acid Facility
other than BMS Capital Additions or Variable Costs. Fixed Costs include without
limitation: ***; provided, however, that
(i) all such Fixed Costs shall be directly related to the manufacture of
Nitric Acid at the Nitric Acid Facility

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

      

      
        - 14
-  

        
          

        

      

       

    

     

     

    and
(ii) such Fixed Costs shall not include expenditures incurred in connection
with:

    ***

    

     

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

      

      
        - 15
-  

        
          

        

      

      
         

      

    

     

    1.43    Fixed Costs Monthly
Charge - Shall mean the mutually agreed upon level of Fixed Costs
spending as determined pursuant to Sections 4.1(B) and 4.1(E), hereof, in each
case divided by the number of full calendar months in the relevant Operating
Period.

     

    1.44    Fixed Price Purchase
Option – Shall mean *** which shall be paid by BMS in conjunction with
the expiration or termination of the Baytown Nitric Acid Project and Supply
Agreement in exchange for title to all assets comprising the Nitric Acid
Facility except for those assets comprising the EDNLP Net Book
Value.

     

    1.45    Force Majeure Event –
Shall mean any circumstance materially interfering with the performance of this
Agreement that is reasonably beyond the control of the party hereto that is
affected by such circumstances, such as but not limited to fire; storm; flood;
act of God; war; terrorist act or response to threat of terrorist act;
explosion;
sabotage; strike or other labor trouble; shortage of labor, utilities, fuel or
energy; embargo; car shortage; accident; any new occurrence of a material
environmental hazard or catastrophe; expropriation of plant, product, raw
materials, utilities, fuel or energy in whole or in part by federal or state
authority; inability to secure
machinery or other equipment for the manufacture of the product; acts of the
federal, state or local government or any

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

      

      
        - 16
-  

        
          

        

      

       

    

     

    agency
thereof, including, without limitation, any material change in Environmental,
Health and Safety Laws.

     

    1.46    Fugitive Emissions -
Shall mean any gaseous or particulate contaminant entering the atmosphere
without first passing through a vent designed to direct or control its
flow.

     

               1.47    GAAP - Shall mean
generally accepted United States accounting principles consistently
applied.

     

    1.48    Guarantor - Shall
mean El Dorado Chemical Company.

     

    1.49    Industrial District
Payments – Shall mean those taxes levied on the Nitric Acid Facility by
the City of Baytown, Texas pursuant to the Industrial District Agreements
between Bayer and the City of Baytown and EDNLP and the City of Baytown, which
may be amended from time to time.

     

    1.50    Initial Capital
Investment – Shall have the meaning set forth in the Baytown Nitric Acid
Project and Supply Agreement.

     

    1.51    Initial Term - Shall
mean the initial term of this Agreement commencing on the Effective Date and
ending on June 30th of the
fifth (5th) year following the Commencement Date; unless (a) sooner terminated
as provided hereunder, (b) extended in accordance with Section 22 of
this Agreement or (c) extended for a period equal to the duration of a
Force Majeure Event as agreed by the parties.

    
      
         

      

      
        - 17
-  

        
          

        

      

       

    

     

    1.52                        Laws - Shall have the
meaning set forth in Section 9.1(F) hereof.

     

    1.53 Maximum Use – Shall
mean the monthly quantities of Utilities and Additives as outlined in Schedule
1.

     

    1.54                        Moving Average Actual
Cost - Shall mean the inventory cost valuation method employed by BMS
from time to time for the valuation of all raw materials utilized at the Bayer
Baytown Plant.

     

    1.55                        NBV – Shall have the
meaning set forth in Schedule 3
hereof.

     

    1.56                        NBV Payback – Shall
have the meaning set forth in Schedule 3
hereof.

     

    1.57                        Net Distributed Cost
- Shall mean *** consistent with the terms and provisions of this Agreement.
Such *** shall be determined and allocated in a manner consistent with the
methods used by BMS from time to time ***.

     

    1.58                        Net Sales Price -
Shall mean the gross invoice price of Surplus Nitric Acid (as defined in Section
1.79 hereof)

    

     

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

      

      
        - 18
-  

        
          

        

      

       

    

     

    sold by
EDNLP, net of ***.

     

    1.59    Nitric Acid – Shall
mean all product produced at the Nitric Acid Facility in accordance with the
terms of the Agreement and conforming to the Nitric Acid
Specifications.

     

    1.60    Nitric Acid Facility
- Shall have the meaning set forth in the recitals.

     

    1.61    Nitric Acid
Specifications - Shall mean the specifications for Nitric Acid set forth
in Section 2.2 hereof.

     

    1.62    Operating Fee Monthly
Charge- Shall mean a fixed fee of *** per year divided by 12. The
Operating Fee Monthly Charge is subject to adjustment upon mutual written
agreement after the Initial Term and upon the expiration of each subsequent
Renewal Term.

     

    1.63    Operating Period -
Shall mean the First Operating Period and any subsequent calendar year beginning
on the first (1st) day of January immediately after the conclusion of the First
Operating Period and ending on the last day of each December until the end of
the Term; provided, however, that
the

    

     

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

      

      
        - 19
-  

        
          

        

      

       

    

     

    final
Operating Period shall terminate on the date of termination or expiration of
this Agreement.

     

    1.64    Permits - All
necessary federal, state and local governmental permits, approvals, licenses,
authorizations and consents required in connection with the design, construction
and operation of the Nitric Acid Facility, including, without limitation, all
construction and environmental permits.

     

    1.65    Precious Metals –
Shall mean metals, such as palladium, platinum, and rhodium, which make up the
Catalyst used in the production process in the Nitric Acid
Facility.

     

    1.66    Production Shortfall
- Shall mean any failure by EDNLP to provide Nitric Acid requested by BMS
subject to the conditions as set forth in the Section 4.5(E) herein, up to the
higher of the nameplate or Demonstrated Capacity of the Nitric Acid Facility if
(and to the extent) such failure is not caused by (a) a Force Majeure Event, (b)
BMS's failure to provide Ammonia, Utilities or Services (as defined herein), (c)
the misalignment of a planned outage that has been properly noticed and agreed
upon pursuant to Section 4.5(E) hereof, or (d) the Seasonal Effects upon the
production capabilities of the Nitric Acid Facility.

     

    
      1.67    Project Agreements -
Shall collectively mean this Agreement and the Confidentiality Agreements dated
June 24, 2002 and August 21, 2002 and any respective amendments
thereto.

    

    
      
         

      

      
        - 20
-  

        
          

        

      

       

    

     

    1.68    Rebate Reconciliation
Statement – Shall have the meaning as set forth in Section 5
hereof.

     

    1.69    Recovery – Shall mean
the extraction of Precious Metals from the production process of the Nitric Acid
Facility, either through sludge or gauze refining, which results in Precious
Metals that will not be reintroduced into the production process, and which will
be sold or held on account for one of the parties.

     

    1.70    Renewal Term - The
renewal term of this Agreement subsequent to the Initial Term shall be five (5)
years in duration unless sooner terminated as provided hereunder.

    1.71    Return on NBV – Shall
have the meaning set forth in Schedule 3
hereof.

     

    1.72    Right of First
Refusal - Shall have the meaning set forth in Section 23
hereof.

     

    1.73    Safety Improvement
Program - Shall have the meaning set forth in Section 9.1(E)(2)(b)
hereof.

     

    1.74    Seasonal Effects -
Shall mean the varying ambient conditions that may limit the Nitric Acid
Facility's maximum operating rates, including but not limited to ambient
temperature and humidity.

     

    1.75    Services – Shall mean
any services provided by BMS to EDNLP.

     

    1.76    Spill - Shall mean
any spilling, leaking, pumping, pouring, emitting, emptying, discharging,
injecting, 

    
       

      
        -21
-  

        
          

        

      

       

    

     

    escaping,
leaching, pumping or dispersing of gaseous, solid or liquid substances into the
environment, excluding discharges allowed or permitted under Environmental,
Health and Safety Laws.

     

    1.77    Start-up Nitric Acid
- Shall have the meaning set forth in Section 2.2 hereof.

     

    1.78    Substitute Blended Nitric
Acid - Shall have the meaning set forth in Section 2.2
hereof.

     

    1.79    Surplus Nitric Acid -
Shall mean any Nitric Acid produced by EDNLP at the Nitric Acid Facility that is
sold to any party other than BMS and its Affiliates.

     

    1.80 Technology Agreement
- That certain Technology Sublicense and Non-Disclosure Agreement, by and
between Bayer Corporation, El Dorado Nitrogen Company, ICF Kaiser Engineers,
Inc. and La Grande Paroisse S.A., executed on July 28,1997.

     

    1.81    Term - The Initial
Term and all Renewal Terms of this Agreement, as determined in accordance with
Section 22 hereof.

     

    1.82    Termination Date -
The date of termination of the Agreement pursuant to Section 19 or Section 23
hereof.

     

    
      1.83    Total Estimates -
Shall have the meaning specified in Section 4.5(C) hereof.

       

      1.84    Utilities – Shall
have the meaning set forth in Section 11 hereof. BMS shall invoice EDNLP monthly
for utilities and Additives provided.

       

      
        
          
            
              -  -

            

             

          

          
             

            
              

            

          

           

        

      

      

    

    1.85    Variable Costs
Adjustments - Shall have the meaning specified in Section 4.2
hereof.

     

    1.86    Variable Costs
Component - Shall mean EDNLP's variable costs in manufacturing Nitric
Acid as set forth on Schedule 6 hereto and
as adjusted in accordance with Section 4.2 hereof.

     

    1.87    Voting Stock – Shall
mean securities representing ten percent (10%) or more of the combined voting
power of the then-outstanding securities entitled to vote generally in the
election of directors of an entity.

     

    1.88    Washdown Water –
Shall mean waste water periodically generated from essential maintenance
activities within the Nitric Acid Facility’s Battery Limits and meeting the
specifications in Schedule
5.

     

    1.89    Waste - The
water-borne liquid, gaseous or solid substances resulting from the Nitric Acid
manufacturing process at the Nitric Acid Facility and falling within at least
one of the following categories:

     

    (A)           Sanitary Sewage -
Non-Waste effluent generated in kitchens, change rooms and bathrooms at the
Nitric Acid
Facility as a result of activities necessary to preserve and maintain human
health and hygiene.

     

    
      (B)           Cooling Tower
Blowdown - Shall mean waste water discharged from the Nitric Acid
Facility meeting the specifications in Schedule
5.

    

     

    
      
         

      

      
        - 23
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    (C)           Routine Process Waste
- waste of the general types listed below, with the characteristics set forth in
the attached Schedule
5:

     

    
      	
               
      

            	
              (a)

            	
              Washdown
      Water;

            

    

    
      	
               
      

            	
              (b)

            	
              Lab
      Samples;

            

    

    
      	
               
      

            	
              (c)

            	
              Process
      Purges;

            

    

    
      	
               
      

            	
              (d)

            	
              Leaks;

            

    

    (e)           Boiler
Blowdown; and

    
      	
               
      

            	
              (f)

            	
              Ammonia
      Vaporizer Blowdown.

            

    

    

    Subject
to any contrary provisions of this Agreement, the Nitric Acid Facility may
discharge into the overhead waste water piping to the Waste Treatment
Facilities, via existing lines or those to be constructed, Routine Process Waste
that meets the quality and quantity specifications set forth in Schedule
5;

     

    (D)           Stormwater - Shall
mean the following three types of precipitation falling within the Battery
Limits and meeting the specifications in Schedule
5:

     

    (1)           Initial Stormwater -
Shall mean the first inch of precipitation falling on the padded areas within a
twenty-four (24) hour period;

     

    (2)           Additional Stormwater
- Shall mean any precipitation falling on the padded areas in excess of the
Initial Stormwater; and

     

    (3)           Uncollected
Stormwater - Shall mean any precipitation falling on unpadded areas
within the Battery Limits.

    

      
        
           

        

        
          - 24
-  

          
            

          

        

         

      

    

     

    (E)    Other Wastes - Shall
mean any waste other than the wastes defined in this section generated at the
Nitric Acid Facility (including, without limitation, oily sludge generated in
the blowdown process, waste lubricating oils, construction debris and
production/maintenance generated wastes). 

     

    1.90    Waste Treatment
Facilities – The portion of the Nitric Acid Facility that accepts the
Waste for necessary treatment and all pipelines, equipment, fixtures, and
improvements appurtenant thereto.

     

    1.91    Waste Treatment
Services – The services for the treatment and disposal of Waste to be
provided to the Nitric Acid Facility by BMS pursuant to the requirements of this
Agreement.

    

    SECTION 2:  NITRIC
ACID

     

    2.1      Supply - From the
Commencement Date until the Termination Date, BMS and EDNLP agree that BMS shall
acquire, and EDNLP shall supply, BMS's monthly requirements of Nitric Acid
meeting the requirements set forth in Section 2.2(A) hereof, to the extent of
BMS's needs for facilities located at the Bayer Baytown Plant, from the Nitric
Acid Facility, up to the maximum monthly production of the Nitric Acid
Facility.  BMS may obtain any nitric acid requirements at the Bayer
Baytown Plant in excess of the available production of the Nitric
Acid

    
       

      
        - 25
-  

        
          

        

      

       

    

     Facility
from El Dorado or from any other source whatsoever. In the event of any
planned or unplanned outage, BMS, EDNLP and El Dorado agree that the Back-up
Supply Plan, attached hereto as Exhibit B, shall
become operative, if required.

     

    2.2 (A) Nitric Acid
Specifications - EDNLP covenants that it will operate the Nitric Acid
Facility to provide Nitric Acid of:

     

    (i)  an
assay of at least sixty-five percent (65%);

     

    (ii)  an iron content of not
more than one and three-tenths parts per million (1.3 ppm) on a thirty (30) day
rolling average, and in no event to exceed ten parts per million (10
ppm);

     

    (iii)  total oxides of
nitrogen, as N2O3, of not
more than one hundred parts per million (100 ppm);

     

    (iv)  color of less than one
hundred (100) APHA units; and

     

    (v)  a chloride content of
not more than ten parts per million (10 ppm).

     

               During the first five hours
following any start-up of the Nitric Acid Facility, EDNLP may provide Nitric
Acid meeting the minimum criteria set forth in Section 2.2(B) hereof ("Start-up
Nitric Acid").  During any planned or unplanned outage, EDNLP shall be
permitted to provide nitric acid meeting the minimum criteria set forth in
Section 2.2(B) hereof ("Substitute Blended 

     

    
      
         

      

      
        - 26
-  

        
          

        

      

       

    

    Nitric
Acid") pursuant to the Back-up Supply Plan set forth in Exhibit B
hereto.

     

    2.2 (B)  Start-up Nitric Acid and
Substitute Blended Nitric Acid: Specifications - EDNLP covenants that
Start-up Nitric Acid and Substitute Blended Nitric Acid shall meet the following
minimum specifications:

     

      (i)  an assay of
at least sixty-four percent (64%);

     

     (ii)  an iron content
of not more than ten parts per million (10 ppm);

     

    (iii)  total oxides of
nitrogen, as N2O3, content
of not more than one hundred fifty parts per million (150 ppm);

     

     (iv)  a color of not
more than one hundred fifty (150) APHA units; and

     

      (v)  a chloride
content of not more than ten parts per million (10 ppm).

     

    BMS may from time to time, in its sole
discretion and in the interest of improved operating efficiency or other
factors, waive or relax EDNLP's compliance with  any specification set
forth in Section 2.2(A) or Section 2.2(B) hereof. Any such waiver or relaxation
set forth in a letter executed by BMS making reference to this Section 2.2 shall
operate as an effective amendment hereto; provided, however,
that no such waiver or relaxation shall preclude BMS from later

    
      
         

      

      
        - 27
-  

        
          

        

      

       

    

    restoring
the previous specification by written notice to EDNLP if necessary in BMS's sole
discretion.

     

    2.3           Place of Delivery -
Unless otherwise provided herein, BMS shall accept physical delivery of Nitric
Acid that is purchased hereunder at the product output flange at the Battery
Limits.

     

    2.4           Most Favored Customer
-

     

    (A)  If EDNLP sells or otherwise
provides Surplus Nitric Acid out of the Nitric Acid Facility, directly or
indirectly through any affiliated party, to a third party for an end use similar
to BMS’s end use at a total delivered price that is lower than the Delivered
Unit Cost, EDNLP will immediately reduce the Variable Costs Component and/or the
Operating Fee Monthly Charge for an equivalent volume of Nitric Acid by an
amount sufficient to make the Delivered Unit Cost to BMS hereunder at least ***
per short ton lower than the total delivered price on the Surplus Nitric Acid
sold or provided to such end user.

     

    All in-kind transfers ("swap"
arrangements) otherwise permitted by Section 2.6 hereof are excluded from the
operation of this paragraph.

    (B)If at any time subsequent to the
Commencement Date, the Nitric Acid Facility is operating at a projected
production rate (after proportional adjustments for planned outages) of less
than (a) 25,842 short tons of Nitric 

    

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

        

        
            -
28 -

          
            

          

        

         

      

    

     

    Acid per
month and (b) 310,100 short tons of Nitric Acid per Operating Period, EDNLP may
request BMS's consent to sell Surplus Nitric Acid to another customer at a total
delivered price that is less than the Delivered Unit Cost (after proportional
adjustment for planned outages) to BMS without reducing the Variable Costs
Component and/or the Operating Fee Monthly Charge as provided by Section 2.4(A)
hereof.  BMS may grant or withhold such consent in its sole
discretion.

     

          (C)           If,
in any calendar month subsequent to the Commencement Date, the Nitric Acid
Facility has produced less than 25,842 short tons of Nitric Acid as a
consequence of materially insufficient demand by BMS attributable to unplanned
outages at downstream production units and, as a result, the Delivered Unit Cost
for that calendar month exceeds the Net Sales Price divided by the number of
tons of Surplus Nitric Acid sold to any third party under a pre-existing written
contract between EDNLP and such third party, EDNLP shall be excused from the
provisions of Section 2.4(A) in respect of third party sales under
such pre-existing written contract until such time as the unit(s) causing the
unplanned outage are placed back in service.

     

    2.5           Sales Optimization -
EDNLP hereby covenants that it will exercise reasonable efforts to maximize
sales to third parties of Nitric Acid produced at the Nitric Acid Facility to
the extent such Nitric Acid is not purchased by BMS.

    
      
         

      

      
        - 29
-  

        
          

        

      

       

    

     

    2.6           Swaps - All in-kind
transfers, or swap arrangements, entered into by EDNLP shall provide for the
return of inventory to, or replacement of inventory by, the Nitric Acid
Facility.

    

    SECTION 3: MAINTENANCE AND
OPERATING SERVICES

     

    The Baytown Nitric Acid Project and
Supply Agreement is expected to terminate on June 23, 2009, with the exception
of certain calculations outlined herein, if no defaults occur, and after the
payment of the Fixed Price Purchase Option by BMS who will obtain title to all
assets comprising the Nitric Acid Facility, with the exception of those assets
comprising the EDNLP Net Book Value.  After the Commencement Date, BMS
agrees to allow EDNLP to keep those assets comprising the EDNLP Net Book Value
at the Nitric Acid Facility for use in the production process.  EDNLP
shall be responsible for the maintenance and operation of all assets that
comprise the Nitric Acid Facility.

    EDNLP shall use reasonable efforts to
operate the Nitric Acid Facility in accordance with applicable industry
engineering standards, past operating practices developed by EDNLP, and within
the parameters prescribed in the operating and maintenance manuals. EDNLP shall
monitor and document the operation and maintenance of the Nitric Acid Facility
in accordance with manufacturer’s recommendations unless otherwise agreed upon
by the parties during periodic review meetings. 

    

      
        
          
          

        

        
          - 30
-  

          
            

          

        

         

      

    

     

    EDNLP
shall comply with all applicable Laws, and shall provide BMS upon its reasonable
request access to all documentation related to the operation and maintenance of
the Nitric Acid Facility.

     

    EDNLP shall be obliged to use
reasonable efforts to maintain the Nitric Acid Facility in good repair and
operating condition and shall maintain the Nitric Acid Facility in regular
intervals as prescribed and provided for in the maintenance manuals (if
available) and shall apply at least the same standard of care it has observed in
the past with the objective to maintain the Nitric Acid Facility in continuous
and safe operation consistent with good engineering practices. EDNLP shall
furthermore use reasonable efforts to repair the Nitric Acid Facility, whenever
needed, in a proper and workman like manner using original replacement parts or
replacement parts which correspond to the originals in all relevant respects
including technical standards and applicable warranties. EDNLP shall
periodically inform BMS of the actual maintenance and repair condition of the
Nitric Acid Facility and shall also inform BMS in advance of any major
maintenance work that exceeds $100,000, if reasonably possible, and as soon as
reasonably possible prior to any work that requires a shutdown of the Nitric
Acid Facility.

     

    EDNLP shall not make capital
investments in the Nitric Acid Facility without the prior written approval of
BMS. BMS 

    

      
        
          
          

        

        
          - 31
-  

          
            

          

        

         

      

    

     

    shall be
free to grant or deny such approval, as the cost for such capital investments
shall be borne by BMS.

     

    If productivity advances are possible
only as a result of investments or other additional costs, EDNLP shall describe
to BMS in writing the reasons therefore and propose that BMS make such
investments and BMS shall incur such additional costs without mark up or
additions from EDNLP upon BMS approval.

     

    If BMS determines on its own to improve
the operation capacity and/or efficiency of the Nitric Acid Facility, EDNLP
shall not unreasonably withhold its cooperation or participation in such
projects.

     

    EDNLP shall not perform or implement
changes which may have a significant influence on the process, operation,
construction, yields and safety of the Nitric Acid Facility, including any
sub-soil work without BMS’s prior written approval, which shall, where
applicable, be subject to the provisions in this Agreement.

    SECTION 4:
PRICE

     

    4.1           Operating Period Costs
- For all Nitric Acid that EDNLP supplies to BMS during Operating
Periods, BMS shall pay to EDNLP the following:

     

    (A)           Variable Costs
Component - For each short ton of Nitric Acid provided hereunder, BMS
shall pay to EDNLP, on a monthly basis, an amount equal to the Variable Costs

    

      
        
          
          

        

        
          - 32
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    Component
as defined in Schedule
6 (as adjusted pursuant to Section 4.2 hereof).

     

    (B)           Fixed Costs Monthly
Charge - Within fifteen (15) days of the conclusion of each calendar
month, BMS shall also pay to EDNLP the Fixed Costs Monthly
Charge.  The Fixed Costs Monthly Charge in each Operating Period shall
be 1/12 of the annually agreed upon fixed cost budget. The annually agreed upon
fixed cost budget will be determined in the quarter prior to the start of the
Operating Period but not less than thirty (30) days before the start of the new
Operating Period subject to any possible adjustments as provided in Section
4.1(E) hereof.

     

    (C)           Monthly Capital
Charge - Within fifteen (15) days of the conclusion of each calendar
month, BMS shall also pay to EDNLP the Capital Costs Monthly
Charge.

     

    (D)           Operating Fee Monthly
Charge - Within fifteen (15) days of the conclusion of each calendar
month during each Operating Period, BMS shall also pay to EDNLP the Operating
Fee Monthly Charge in respect of the preceding calendar month.

     

    (E)           Reconciliation of Fixed
Costs; Adjustments to Fixed Costs Monthly Charge - (i) At the end of each
Operating Period, EDNLP shall provide BMS with a detailed statement of
Fixed
Costs actually incurred during such period and in the form set forth in Schedule
4 hereto.  BMS shall reimburse EDNLP for 

    

      
        
          
          

        

        
          - 33
-  

          
            

          

        

         

      

    

     

    *** of
all Fixed Costs incurred in such Operating Period in excess of the aggregate of
all Fixed Costs Monthly Charges paid by BMS during the Operating Period, or
EDNLP shall reimburse BMS *** of the aggregate of all Fixed Costs Monthly
Charges paid by BMS during the Operating Period, in excess of the Fixed Costs
actually incurred; provided, however, that the
reimbursements described above shall be adjusted to reflect the elimination of
changes in Excluded Fixed Costs from such reimbursement.  Increases or
decreases attributable to an expansion or contraction of the hourly or salaried
work force shall in all cases be subject to the Fixed Costs sharing arrangement
described in the second sentence of this Section 4.1(E).

    (ii) At the end of each Operating
Period, EDNLP shall reimburse BMS for *** of the excess of those Fixed Costs
constituting estimated Excluded Fixed Costs paid by BMS in any Operating Period
over the level of actual Excluded Fixed Costs incurred by EDNLP in the subject
Operating Period, and BMS shall reimburse EDNLP for *** of the excess of actual
Excluded Fixed Costs incurred by EDNLP over those Fixed Costs constituting
estimated Excluded Fixed Costs paid by BMS in any Operating
Period.

    (iii) Reimbursement amounts due under
this Section 4.1(E) shall be issued through either a debit or
credit,

    

    

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

        

        
          - 34
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    as
appropriate, by EDNLP within forty-five (45) days of the end of the relevant
Operating Period.

     

    (iv) In the event that the annual
reconciliations hereunder result in consistent changes in the level of end of
Operating Period Fixed Costs, the parties agree to negotiate in good faith
appropriate adjustments to the Fixed Costs Monthly Charges to minimize the cash
flow impact of such consistent changes.

     

    4.2           Adjustments to Variable
Costs Component (All Operating Periods) - During each Operating Period,
the Variable Costs Component shall be adjusted in accordance with the
following:

     

      (A)           Ammonia - BMS shall
pay to EDNLP the actual cost of Ammonia each month and at the actual consumption
rate per ton Nitric Acid.

    (B)           Precious Metals – BMS
shall pay to EDNLP the Precious Metals charges at the agreed-to unit cost for
Precious Metals and the agreed-to consumption levels in troy ounces per ton
Nitric Acid produced at the Nitric Acid Facility set forth in Section 4.2(B)(1)
herein. Within fifteen (15) days after completion of fabrication of the
replacement gauze, EDNLP will issue a debit or credit to BMS for: (i) the
difference of the actual unit cost versus the agreed to unit cost for
replacement metals; (ii) for the actual consumption quantities of Precious
Metals; and (iii) for the Precious

    
      
         

      

      
        - 35
-  

        
          

        

      

       

    

     Metals
cost and consumption quantities applicable to the sale of Surplus Nitric Acid as
as described more fully in Section 5.1(A) herein.

     

    (1) Catalyst Composition
Adjustments. For each production campaign, the parties will evaluate and
agree to in writing, the composition of catalyst gauze used in the Nitric Acid
Facility in an effort to improve ammonia conversion efficiency and/or reduce
associated operating costs.

     

    (C)           Electricity -EDNLP
shall bill BMS the actual cost of electricity each month at a consumption rate
not to exceed 65,000 KWH per day.

     

     
(D)           All Other Variable
Costs – BMS shall pay EDNLP (using actual tons Nitric Acid delivered to
BMS) for all other variable costs.

     

    The adjustments described in this
Section 4.2 are hereinafter collectively referred to as the "Variable Costs
Adjustments."

     

    (E)  Monthly Payments –
All variable costs and fees described in this Section 4.2 shall be netted such
that one payment shall occur per month.

     

    4.3           Fixed Costs Reimbursements
by EDNLP

     

    (A)           Reimbursement of Fixed Costs
for Production Shortfalls - During each Operating Period, EDNLP shall
reimburse BMS for those Fixed Costs absorbed by Production
Shortfalls.  Reimbursement payments due under this Section 4.3 shall
be made 

    

      
        
          
          

        

        
          - 36
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    by EDNLP,
on an estimated basis, within thirty (30) days of the end of each calendar
quarter and, on a final reconciliation basis, within forty-five (45) days of the
end of the relevant Operating Period, as provided below:

     

    (B)           Calculation of Reimbursement
Payments

     

    (i)           Quarterly - Quarterly
Fixed Costs reimbursement payments shall be calculated in accordance with the
following formula:

    
      	
               
      

            	
              ***

            

    

     

    
      	
               
      

            	
              Where:

            

    

     

    
      	
               
      

            	
              ***

            

    

     

    

    If
seasonal fluctuations in Nitric Acid Facility throughput make the quarterly
reimbursement payments hereunder impracticable, the parties hereto may agree to
an annual reimbursement by EDNLP to BMS of Fixed Costs absorbed by Production
Shortfalls.

     

    (ii)                      End of Operating Period
Reconciliation - At the end of each Operating Period, the parties shall
calculate

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

      

      
        - 37
-  

        
          

        

      

       

    

    the
actual Fixed Costs reimbursement payments due BMS in respect of such Operating
Period in accordance with the following formula:

    ***

    Where:

    

    
      	
               
      

            	
              ***

            

    

    

    The
end-of-Operating-Period reimbursement payment due BMS shall be reduced by the
amount of any estimated payments made by EDNLP under Section 4.3(B)(i)
hereof.  In the event the amount due BMS under this Section 4.3(B)(ii)
is less than the aggregate amount of the estimated payments under Section
4.3(B)(i), BMS shall promptly reimburse the overpayment.

     

    4.4           Operating Fee Reimbursements
by EDNLP

     

    (A)           Reimbursement of Operating
Fee Monthly Charge for Production Shortfalls - During each Operating
Period, EDNLP shall reimburse BMS for the portion of the Operating Fee Monthly
Charge absorbed by Production Shortfalls. Reimbursement

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

      

      
        - 38
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    payments
due under this Section 4.4 shall be made by EDNLP, on an estimated basis, within
thirty (30) days of the end of each calendar quarter and, on a final
reconciliation basis, within forty-five (45) days of the end of the relevant
Operating Period, as provided below:

     

    (B)           Calculation of Reimbursement
Payments, Production Shortfalls -

    (i)           Quarterly - Quarterly
operating fee  reimbursement payments shall be calculated in
accordance with the following formula:

    ***

    Where:

    ***

    

    If
seasonal fluctuations in Nitric Acid Facility throughput make the quarterly
reimbursement of the Operating Fee Monthly Charge hereunder impracticable, the
parties hereto may agree to an annual
reimbursement by EDNLP to BMS of the Operating Fee Monthly Charge absorbed by
Production Shortfall.

     

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

      

      
        - 39
-  

        
          

        

      

       

    

    
      (ii)                      End of Operating Period
Reconciliation - At the end of each Operating Period, the parties shall
calculate the actual Operating Fee reimbursement payments due BMS in respect of
such Operating Period in accordance with the following formula:

      ***

      Where:

      
        	
                 
      

              	
                ***

              

      

      

      
        	
                 
      

              	
                ***

              

      

      

      The
reimbursement payment due BMS shall be reduced by the amount of any estimated
payments made by EDNLP under Section 4.4(B)(i) hereof.  In the event
the amount due BMS under this Section 4.4(B)(ii) is less than the aggregate
amount of the estimated payments under Section 4.4(B)(i), BMS shall promptly
reimburse the overpayment.

       

      4.5           Miscellaneous (Invoices,
Forecasts and Planned Outages) Provisions –

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

          

          
            - 40
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    (A)           Forecasts by BMS -
Not less than ninety (90) days before the end of each Operating Period, BMS
shall provide to EDNLP an eighteen (18) month written forecast as to the
anticipated quantity of Nitric Acid to be purchased by BMS during each month of
the following Operating Period and as to the schedule on which Nitric Acid is to
be purchased.  Such forecasts shall include anticipated daily use
rates of Nitric Acid by BMS.

    (B)           Forecasts by EDNLP -
Prior to the Commencement Date and not less than ninety (90) days before the end
of each Operating Period, EDNLP shall provide to BMS (a) an eighteen (18)
month written sales forecast as to the quantity of Nitric Acid produced at the
Nitric Acid Facility anticipated to be sold to third parties by EDNLP during the
subsequent eighteen (18) month period and the schedule on which Nitric Acid is
to be sold.

        (C)           Effect of Forecasts -
The parties shall add five percent (5%) to the monthly and total estimates
provided by BMS under Section 4.5(A), the sum of each of which shall be
hereinafter referred to as the "Total Estimates."  For Nitric Acid in
excess of the Total Estimates, EDNLP may sell to third parties at any time
Nitric Acid produced at the Nitric Acid Facility on a daily, monthly or annual
basis, and BMS shall have no claim to such Nitric Acid in excess of the Total
Estimates.  Except as provided in the foregoing sentence, all
forecasts and 

    

      
        
           

        

        
          - 41
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    estimates
provided under this Section 4.5 shall be for information and planning purposes
only and shall not be construed as firm orders or firm commitments on either
party's part.

     

    (D)           Monthly Requirement
Plans - Not less than five (5) days prior to the end of each month, BMS
shall provide a 90 day requirements plan for Nitric Acid.  Such
requirement plans shall be subject to reasonable revision, modification or
cancellation, and to unplanned outages at the Bayer Baytown Plant or the Nitric
Acid Facility.  Not less than five (5) days prior to the end of each
month, EDNLP shall provide BMS with a monthly total requirements plan for Nitric
Acid.  Such EDNLP total requirements plan shall be subject to
reasonable revisions, modification or cancellation and to unplanned outages at
the Bayer Baytown Plant, the Nitric Acid Facility or plants of third party
customers, or El Dorado's Arkansas plant.

     

     

                    (E)           Planned Outages -
EDNLP shall provide to BMS at least sixty (60) days' notice of any planned
outage of the Nitric Acid Facility, and shall schedule any such outage only with
the prior written consent of BMS (which shall not be unreasonably
withheld).  BMS shall provide to EDNLP at least sixty (60) days'
notice of any planned outage of any relevant production unit located at
Baytown.  Initial scheduling of planned outages of the Nitric Acid
Facility shall be completed prior to December 15th of the previous year for the
subsequent 

    

      
        
           

        

        
          - 42
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    year.  However,
circumstances may arise which require a change to the initial
schedule.  When BMS or EDNLP discover that a change to the
planned outage schedule is necessary, the request shall be communicated to the
other party as soon as reasonably possible.  EDNLP agrees to work with
BMS and use reasonable efforts to accommodate all requested changes to the
planned outage schedule.

     

    The parties shall make reasonable
efforts to work together to coordinate outages to prevent any adverse impact
that may be caused by a planned outage of the Nitric Acid Facility or any other
relevant production unit in Baytown.

     

    (F)           Contract Maintenance
Expenditures - EDNLP shall consult with BMS on all major contract
maintenance activities to manage contract maintenance costs as referenced in
Schedule 4
hereof.

     

    
      4.6                      Taxes –

      (A)
During the Term, EDNLP shall be responsible for and pay all Industrial District
Payments and ad valorem taxes and assessments, both general and special, levied
on the Nitric Acid Facility or the assets comprising the EDNLP Net Book Value in
accordance with this Section 4.6.  Such payments shall be reimbursed
by BMS as part of the Fixed Costs described in Section 4 and Schedule
4.

    

    
      
         

      

      
        - 43
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    (B) EDNLP has executed an agreement
with the City of Baytown, Texas (the “City”) regarding additional payment to the
City as a result of the construction and operation of the Nitric Acid
Facility.  As soon as practical, BMS and EDNLP shall make reasonable
efforts to enter into new or modified agreements with the City of Baytown in
accordance with this section to separate the ownership of the Nitric Acid
Facility and EDNLP Net Book Value for future taxing purposes.

     

    (C)  Other
Taxes:  In addition to the above taxes, EDNLP shall also pay all
federal, state or local sales, excise or use taxes levied against the activities
at the Nitric Acid Facility, or against the assets comprising the EDNLP Net Book
Value.  EDNLP shall also submit a list of the personal property leased
by EDNLP and maintained at the Nitric Acid Facility to the appropriate official
of Chambers County and shall pay all taxes applicable thereto.  At the
request of BMS, EDNLP shall provide BMS with evidence of such
payments.  Such

    payments
shall be reimbursed by BMS as part of the Fixed Costs described in Section 4 and
Schedule
4.

    (D)  Information:  Any
appropriate taxing authority shall have reasonable access to the Nitric Acid
Facility upon reasonable notice to EDNLP and subject to compliance with BMS and
EDNLP health, safety and welfare policies.  EDNLP shall also furnish
such documentary information as reasonably required by such
authority.

    

      
        
           

        

        
          - 44
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    (E)  All new taxes, excises
and other governmental charges, including, without limitation, all charges for
Waste, sewer, solid waste disposal and similar services, and all increases in
existing taxes, excises and charges, except taxes on or measured by revenues or
income or similar taxes imposed after the Commencement Date of this Agreement,
or after the date any price is determined or modified, on or as a result of the
production, sale or transportation of the goods sold hereunder that EDNLP may be
required to pay, may be added to the Fixed Costs.

    

    SECTION 5:  BMS
REIMBURSEMENT, REBATE AND EGRESS FEE

     

    
      	
               
      

            	
              5.1

            	
              Reimbursement and
      Rebate–

            

    

    (A) In
addition to the various reimbursement payments due to BMS, in any Operating
Period, EDNLP shall reimburse BMS for a portion of the Precious Metals charges
attributable to Surplus Nitric Acid sales paid to EDNLP by BMS under
section 4.2(B). Reimbursement payments due under this section 5.1(A) shall be
made by EDNLP, on an estimated basis within 30 days of the end of each calendar
quarter and on an actual basis through a final reconciliation within forty-five
(45) days of the end of the relevant Operating Period as provided
below:

     

    (i) Quarterly – The
quarterly reimbursement payment shall be calculated in accordance with the
following formula:

    

      
        
           

        

        
          - 45
-  

          
            

          

        

         

      

    

     

    ***

     
Where:

     

    ***

     

    (ii)
End of Operating
Period Reconciliation – At the end of each Operating Period EDNLP shall
calculate the actual reimbursement payment due BMS in respect of such Operating
Period in accordance with the following formula:

     

     

    ***

     

    
       
Where:

    

     

    

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

        

        
          - 46
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    ***

     

    The
reimbursement payment due BMS shall be adjusted by the amount of any estimated
payments made by EDNLP under Section 5.1(A)(i) hereof. In the event the amount
due BMS under this Section 5.1(A)(ii) is less than the aggregate amount of the
estimated payments made under Section 5.1(A)(i), BMS shall promptly reimburse
the overpayment.

     

    (B) In addition to the various
reimbursement payments due to BMS, in any Operating Period EDNLP shall pay to
BMS a rebate for a portion of the aggregate Net Sales Price of all Surplus
Nitric Acid sold by EDNLP.

     

    

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

        

        
          - 47
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    Reimbursement
payment due under this section 5.1(B) shall be made by EDNLP, on an estimated
basis within 30 days of the end of each calendar quarter and on a final
reconciliation basis within forty-five (45) days of the end of the relevant
Operating Period as provided below:

    
       

      (i) Quarterly – Quarterly
rebate payment shall be calculated in accordance with the following
formula:

       

       

      ***

       

      
         
Where:

      

       

      ***

    

    (ii) End of Operating Period
Reconciliation – At the end of each Operating Period, EDNLP shall
calculate the actual rebate payment due BMS in respect of such Operating Period
in accordance with the following formula:

     

                    ***

       

      
         
Where:

      

       

       

      ***

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

        

        
          - 48
-  

          
            

          

        

         

      

    

         

    ***

     

    The
rebate payment due BMS shall be adjusted by the amount of any estimated payments
made by EDNLP under Section 5.1(B)(i) hereof. In the event the amount due BMS
under this Section 5.1(B)(ii) is less than the aggregate amount of the estimated
payments made under Section 5.1(B)(i), BMS shall promptly reimburse the
overpayment.

     

    Notwithstanding
the foregoing, the rebate payments due BMS under this Section 5.1(B) shall not
result in EDNLP’s retention of less than *** per short ton (***) from such
Surplus Nitric Acid sales; provided, however, that in the event that the Net
Sales Price less the reimbursement made under Section 5.1(A), that amount
divided by the total tons of Surplus Nitric Acid sold to third parties, is less
than *** per short ton of Surplus Nitric Acid, EDNLP will not retain more than
the Net Sales Price less the reimbursement made under Section
5.1(A).

                                                    (C)    Within
forty-five (45) days of the end of each Operating Period, EDNLP shall deliver to
BMS a statement containing the detailed calculation of such rebate (each,
a

    

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

        

        
          - 49
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    "Rebate
Reconciliation Statement"). The Rebate Reconciliation Statement shall be
supported by a summary sales report prepared by EDNLP which shall reflect the
total quantity and sales of Surplus Nitric Acid sold from the Nitric Acid
Facility during the relevant Operating Period.

     

    5.2           Egress Fees - EDNLP
shall pay to BMS an Egress Fee for all Surplus Nitric Acid sold by
EDNLP.

    

    SECTION 6:  TITLE
AND RISK OF LOSS

     

    6.1           Ammonia - EDNLP shall
have title to and risk of loss of Ammonia when such Ammonia enters the input
flange to the Nitric Acid Facility.

     

    6.2           Nitric Acid Produced by
EDNLP at the Nitric Acid Facility for BMS - When BMS receives the Nitric
Acid at the Nitric Acid output flange, title to and risk of loss of the Nitric
Acid shall pass to BMS.

    6.3           Nitric Acid From El Dorado
and Third Party Suppliers Under the Back-up Supply Plan - When nitric
acid is shipped from El Dorado or a third party to BMS at the Bayer Baytown
Plant pursuant to the Back-up Supply Plan, title to and risk of loss of the
nitric acid shall pass to BMS at the battery limits of the El Dorado plant or
the third party plant, F.O.B. such producing plant.

     

    6.4           Surplus Nitric Acid -
When Surplus Nitric Acid is shipped from the Nitric Acid Facility to a third
party customer, 

    

      
        
          
          

        

        
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    EDNLP's
standard terms and conditions of sale shall be F.O.B. Nitric Acid Facility and
shall provide that title to and risk of loss of the Nitric Acid pass to the
third party customer at the Battery Limits of the Nitric Acid
Facility.

     

    6.5           Aqua Ammonia — BMS
shall have title to and risk of loss of Aqua Ammonia at the EDNLP output flange
at the Battery Limits of the Nitric Acid Facility.

    SECTION
7:   CATALYST PAYMENT AND RECOVERY

     

    7.1  Term -
This Section shall remain in full force and effect for a period of twenty years
from the Commencement Date of this Agreement, notwithstanding the termination of
this Agreement, in part or in whole.

     

    7.2  Initial Balance -
Both EDNLP and BMS have previously invested in Catalyst, comprised of Precious
Metals, which have been or continue to be used in the production process of the
Nitric Acid Facility, represented by an initial balance which
represents each party’s total unrecovered investment in the Catalyst to
date.  The BMS initial Catalyst balance contains: (i) the amount of
Catalyst purchased as part of the Initial Capital Investment; (ii) plus the
quantity of Precious Metals paid for by BMS to replenish or repair Catalyst
subsequent to the start up of the Nitric Acid Facility up to the Commencement
Date of this Agreement; (iii) less any sludge or other Precious Metals
recoveries from the process credited to BMS subsequent to the start up of the
Nitric Acid Facility up to 

    

      
        
          
          

        

        
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    the
Commencement Date of this Agreement; (iv) less any metals sold by EDNLP on
behalf of BMS prior to the Commencement Date.

     

    The EDNLP
initial Catalyst balance contains: (i) that amount of Catalyst paid for by
EDNLP, for which EDNLP has not been reimbursed, subsequent to the start up of
the Nitric Acid Facility up to the Commencement Date of this Agreement; (ii)
less any sludge or other Precious Metals recoveries from the process credited to
EDNLP subsequent to the start up of the Nitric Acid Facility up to the
Commencement Date of this Agreement; (iv) less any metals allocated to EDNLP and
sold by EDNLP prior to the Commencement Date.

     

    Initial balances shall be adjusted for
any Catalyst credits or debits resulting from the reconciliation of the refining
and Recovery of the Catalyst in use as of the Commencement Date.

     

    7.3  Additions – All
Catalyst or Precious Metals purchased under this Agreement shall be added to the
Catalyst balance of BMS.

     

    7.4  Recoveries - During
the effective period of this Agreement, EDNLP’s third party provider shall
conduct, at EDNLP’s request, attempted Recoveries by (i) removing sludge or
Precious Metals found within the Nitric Acid Facility, if any, and (ii) having
the sludge or Precious Metals processed and refined to recover any Precious
Metals.  Upon termination or expiration of this Agreement and
continuing for the twenty (20) 

    

      
        
          
          

        

        
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    year term
of this Section 7, the attempted Recovery shall be conducted by (i) removing
sludge or Precious Metals found within the Nitric Acid Facility, if any, and
(ii) having the sludge or Precious Metals processed and refined to recover any
Precious Metals.

     

    Any Precious Metals Recovery from the
production process at the Nitric Acid Facility shall be allocated among the
parties based on the then-current EDNLP Catalyst Balance and BMS Catalyst
Balance.  For example, if 100 troy ounces of Precious Metals are
recovered and the EDNLP Catalyst Balance is 1,000 troy ounces and the BMS
Catalyst Balance is 9,000 troy ounces, then 90 troy ounces would be allocated to
the BMS Catalyst Balance, because the BMS Catalyst Balance represents 90% of the
sum of the BMS Catalyst Balance and the EDNLP Catalyst Balance. The
remaining 10 troy ounces would be allocated to the EDNLP Catalyst
Balance.

     

    During the term of this Agreement, upon
receiving the Precious Metals from the Recovery, EDNLP shall, based on the
allocation method described above and at BMS’s option, either (i) transfer to
BMS its allocation of the actual metals; or (ii) sell the BMS allocation of
Precious Metals at the then current market price and provide BMS with the
proceeds from such sale, as directed by BMS.  After the expiration or
termination of this Agreement, upon receiving the Precious Metals from the
Recovery, BMS shall, based on the allocation method described above and at

    

      
        
          
          

        

        
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    EDNLP’s
option, either (i) transfer to EDNLP its allocation of the actual metals; or
(ii) sell the EDNLP allocation of Precious Metals at the then current market
price and provide EDNLP with the proceeds from such sale, as directed by
EDNLP.  During the effective term of this Agreement and upon
termination or expiration of this Agreement, EDNLP shall bear the appropriate
proportion of Recovery charges based on the allocation method described
above.

     

    7.5  Reductions – Each
party’s Catalyst balance shall be decreased by the troy ounces of Precious
Metals recovered under the previous section, if any.

     

    7.6  Catalyst Balance -
BMS shall maintain, or instruct EDNLP to maintain, balances of each Precious
Metal used in the Catalyst in troy ounces.  The BMS Catalyst Balance
shall be
calculated by increasing the initial catalyst balance by the additions referred
to above, minus the reductions referred to above.  The EDNLP Catalyst
Balance shall be calculated by reducing the initial Catalyst balance by the
reductions referred to above.

    

    7.7 Schedule – Any
attempt to recover Catalyst or to remove sludge at the Nitric Acid Facility
shall require the prior written consent of BMS.  EDNLP shall further
have the right, and BMS shall provide reasonable notice to EDNLP of its
occurrence, to direct a mutually agreed upon third party 

    

      
        
          
          

        

        
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    observer
to witness any Catalyst sludge or Precious Metals recoveries performed by BMS in
accordance with this Section 7 of this Agreement.  The parties shall
be required to employ industry standards to reach a settlement for each sludge
or Precious Metals recovery.

     

    7.8 Settlement - Upon the
expiration of this Section 7 which has a term of twenty years, the parties agree
to negotiate in good faith to reach a settlement as to the remaining EDNLP
Catalyst Balance.  The parties recognize that the value of this
settlement shall be dependent on the timing of the recoveries, the then-current
market value of the Precious Metals, the expected recovery rates, and the
recoveries previously credited to EDNLP during the term of this Section 7 of
this Agreement.

    Upon termination of this Agreement, any
amounts paid by BMS under Section 4.2 as a prepayment for Catalyst or Precious
Metals and not used for refining or refabricating of Catalyst, and that has not
been reimbursed by EDNLP to BMS under Section 5.1, shall be returned to BMS
within thirty (30) days of the termination date.

     

    SECTION 8:  NITRIC
ACID WARRANTY AND TECHNOLOGY

     

    8.1           Title - EDNLP
warrants that the Nitric Acid delivered by it shall conform to the Nitric Acid
Specifications and shall be free of all liens and encumbrances.  Upon
delivery to BMS, BMS shall obtain good and marketable title to the Nitric
Acid.  EDNLP shall be released from this warranty if and to the

    

      
        
          
          

        

        
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    extent
that the failure to meet the Nitric Acid Specifications was attributable to
BMS's failure to meet the specifications for, or quantities of, Ammonia or
Utilities.  The parties hereby agree to take reasonable efforts to
mitigate the application of this Section by promptly notifying the other party
of any detected deficiency in the Ammonia and Utilities provided.

     

    8.2           Technology Approval
-  The Technology Agreement became effective on July 28, 1997 provides
that Bayer Corporation or its assignees, designees or affiliates have and shall
continue to have the right to continue to use the technology necessary to
operate the Nitric Acid Facility from and after the Termination
Date.

    SECTION
9:  REPRESENTATIONS, WARRANTIES AND COVENANTS

     

    9.1           Representations, Warranties
and Covenants of EDNLP - EDNLP hereby represents and warrants
to BMS as follows:

     

    (A)           Corporate Standing -
EDNLP is a Limited Partnership duly organized, validly existing and in good
standing under the laws of the State of Texas, and is duly qualified to transact
business and is in good standing in each jurisdiction in which the conduct of
its business requires such qualification.  EDNLP has the full
corporate power and authority to enter into and perform this Agreement and to
consummate the transactions therein.  The execution, delivery and
performance 

    

      
        
          
          

        

        
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    of this
Agreement is authorized by all necessary corporate action of EDNLP.

     

    (B)           Binding Effect of Project
Agreements - This Agreement constitutes legal, valid and binding
obligations of EDNLP, enforceable against EDNLP in accordance with their
terms.  The execution, delivery and performance of this Agreement does
not violate or conflict with any provision of the Certificate of Limited
Partnership or Agreement of Limited Partnership of EDNLP.

     

    (C)           Consents - Except for
the Permits, no consent, approval or authorization from, notice to, or filing or
registration with, any governmental authority or agency, or from, to or with any
other person or entity under any contract, license or agreement to which EDNLP
is a party, is necessary or

    required
to be obtained or made by EDNLP in connection with the execution, delivery or
performance of this Agreement by EDNLP or the consummation by EDNLP of the
transactions contemplated by this Agreement.

    (D)           Conflicts - There is
no:

     

    (1)           litigation
or governmental proceeding pending or, so far as is known to any officer of
EDNLP, threatened, which in any such case, would prohibit or materially delay
the ability of EDNLP to execute, deliver and perform this Agreement in
accordance with its terms;

    

      
        
          
          

        

        
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    (2)           asserted
claim or basis for any claim of default, breach of liability under or violation
of any law, rule or regulation applicable to EDNLP, which in any such case,
would prohibit or materially delay the ability of EDNLP to execute, deliver and
perform this Agreement in accordance with its terms; nor

     

    (3)           any
agreement or order to which EDNLP is a party or by which EDNLP is bound, which
in any such case, would prohibit or materially delay the ability of EDNLP to
execute, deliver and perform this Agreement in accordance with its
terms.

     

    (E)           Health and Safety
Covenants -

     

    (1)           EDNLP
represents and warrants that EDNLP is a member in good standing of the American
Chemistry Council.

    (2)(a)  EDNLP hereby agrees
to exercise reasonable efforts to operate the Nitric Acid Facility with the
objective of achieving an Occupational Health and Safety Administration total
Recordable Occupational Injury or Illness rate (as defined in 29 C.F.R.
§ 1904.12 (1996); hereinafter "Recordable Incidence Rate") goal consistent
with BMS's Recordable Incidence Rate goal for the Bayer Baytown
Plant.

     

    (b)  In the event that
injuries at the Nitric Acid Facility indicate to BMS in its reasonable
discretion that there exists (i) a pattern of improper safety 

    

      
        
          
          

        

        
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    practice
by EDNLP at the Nitric Acid Facility, (ii) a failure of EDNLP to maintain a safe
working environment at the Nitric Acid Facility, then EDNLP shall meet with
representatives of BMS to develop and implement a safety improvement program
("Safety Improvement Program") for the Nitric Acid Facility to bring its
operations into compliance or to cure the shortcomings BMS has identified to
EDNLP and EDNLP shall take all reasonable steps to implement such Safety
Improvement Program.

     

    (F)           Compliance with Laws &
Permits - (1) EDNLP shall exercise reasonable efforts to operate the
Nitric Acid Facility in full compliance with all applicable federal, state and
local laws, statutes, ordinances, rules, regulations, orders, codes, judgments,
decrees and other governmental requirements applicable to EDNLP and/or the
Nitric Acid Facility (including, without limitation, Environmental, Health and
Safety Laws)
(collectively, "Laws") and in compliance with the terms of all applicable
operating, environmental, occupancy and other permits and similar
requirements.  EDNLP shall promptly notify BMS of the occurrence of
any violation of any such Law and/or the occurrence of any reportable Spill or
reportable environmental release at the Nitric Acid Facility.

     

    (2)           In
the event that any occurrences at the Nitric Acid Facility indicate to BMS in
its reasonable discretion that there exists a pattern of conduct resulting in
frequent or material violations of Laws, EDNLP shall meet with 

    

      
        
          
          

        

        
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    representatives
of BMS promptly and upon request of BMS to develop and implement a remedial
program ("Compliance Program") for the Nitric Acid Facility to bring its
operations into compliance with Laws or to cure the shortcomings identified to
EDNLP by BMS, and EDNLP shall take all reasonable steps to implement such
Compliance Program.

     

    (G)           Nitric Acid Facility
Capacity - EDNLP shall use reasonable efforts to operate and maintain the
Nitric Acid Facility to have a production capacity of 476,000 short tons of
Nitric Acid per year.

     

    (H)           Hazards Analyses -
EDNLP shall perform periodic revalidation process hazards analyses (PHAs) of the
Nitric Acid Facility (including nitric acid provided under the Back-up Supply
Plan).  Representatives of BMS may participate in such safety hazards
analyses.

    (I)           Common Carriers -
EDNLP shall select common carriers for the transportation of Surplus Nitric Acid
in accordance with the principles of the Responsible Care initiative of the
American Chemistry Council.

     

    (J)           Corporate Purpose
-    EDNLP covenants that the corporate purpose of EDNLP, as
set forth in its Agreement of Limited Partnership, is (a) to engage in all
activities reasonably related to (i) the production of Nitric Acid at the Nitric
Acid Facility, (ii) the provision of Nitric Acid to BMS pursuant to this
Agreement and (iii) the sale of Surplus Nitric 

    

      
        
          
          

        

        
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    Acid
produced at the Nitric Acid Facility to third parties and (b) to engage in all
activities reasonably related to maintenance and operation of the Nitric Acid
Facility.

     

    (K)           Quality Standards -
EDNLP will cooperate with BMS to achieve such quality standards and
certifications (for example, ISO 9000 standards) as either party may reasonably
request.

     

    (L) Environmental
Covenants – EDNLP covenants and warrants (i) that no underground tanks
have been installed under the real property upon which the Nitric Acid Facility
is located during the term of the Baytown Nitric Acid Project and Supply
Agreement and EDNLP covenants and warrants that it shall not install any such
tanks without the prior written approval of BMS; (ii) EDNLP agrees to indemnify
and hold harmless BMS from and against any and all losses, damages, claims,
costs, liabilities
and expenses (including reasonable attorney’s fees and court costs) arising from
any treatment, storage or disposal of any unauthorized waste or reporting a
Spill or release of any unauthorized waste into the environment resulting from
EDNLP’s operation of the Nitric Acid Facility, and (iii) that EDNLP shall
remediate any environmental Spill or release of any unauthorized waste
identified during the environmental assessment which shall be conducted upon
termination or expiration of this Agreement that was not identified in the
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    reasonably
demonstrate that such environmental Spill or unauthorized waste was not caused,
or would not have been caused, by the operation of the Nitric Acid Facility and
by the negligence or acts of EDNLP.

     

    9.2           Representations, Warranties
and Covenants of El Dorado - El Dorado hereby represents and
warrants to BMS as follows:

     

    (A)           Corporate Standing -
El Dorado is a corporation duly organized, validly existing and in good
standing under the laws of the state of Oklahoma, and is duly qualified to
transact business and is in good standing in each jurisdiction in which the
conduct of its business requires such qualification.  El Dorado
has the full corporate power and authority to enter into and perform this
Agreement and to consummate the transactions therein.  The execution,
delivery and
performance of this Agreement is authorized by all necessary corporate action of
El Dorado.

     

    (B)           Binding Effect of Project
Agreements - This Agreement constitutes legal, valid and binding
obligations of El Dorado, enforceable against El Dorado in accordance
with their terms.  The execution, delivery and performance of this
Agreement does not violate or conflict with any provision of the Articles of
Incorporation or Bylaws of El Dorado.

     

    (C)           Consents - Except for
the Permits, no consent, approval or authorization from, notice to, or filing or

    

      
        
          
          

        

        
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    registration
with any governmental authority or agency, or from, to or with any other person
or entity under any contract, license or agreement to which El Dorado is a
party is necessary or required to be obtained or made by El Dorado in
connection with the execution, delivery or performance of this Agreement by
El Dorado or the consummation by El Dorado of the transactions
contemplated by this Agreement.

     

    (D)           Conflicts - There is
no:

     

    (1)  litigation or
governmental proceeding pending or, so far as is known to any officer of
El Dorado, threatened, which, in any such case, would prohibit or
materially delay the ability of El Dorado to execute, deliver and perform
this Agreement in accordance with its terms;

     

    (2)  asserted claim or basis
for any claim of default, breach of liability under or violation of any law,
rule or
regulation applicable to El Dorado, which, in any such case, would prohibit
or materially delay the ability of El Dorado to execute, deliver and
perform this Agreement in accordance with its terms; nor

     

    (3)  any agreement or order
to which El Dorado is a party or by which El Dorado is bound, which,
in any such case, would prohibit or materially delay the ability of
El Dorado to execute, deliver and perform this Agreement in accordance with
its terms.

    

      
        
          
          

        

        
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    (E)           Back-up Supply -
El Dorado will supply nitric acid to BMS in accordance with the Back-up
Supply Plan set forth in Exhibit B
hereof.

    

    9.3           Representations, Warranties
and Covenants of BMS - BMS hereby represents and warrants to EDNLP
as follows:

     

    (A)           Corporate Standing -
BMS is a Delaware limited liability company, validly existing and in good
standing under the laws of the State of Delaware.  BMS is duly
qualified to transact business and is in good standing in each jurisdiction in
which the conduct of its business requires such qualification. BMS has the full
power and authority to enter into and perform this Agreement to which BMS is a
party and to consummate the transactions therein.  The execution,
delivery and performance of this Agreement is authorized by all necessary action
of BMS.

    (B)           Binding Effect of Project
Agreements - This Agreement constitutes legal, valid and binding
obligations of BMS, enforceable against BMS in accordance with its
terms.  The execution, delivery and performance of this Agreement does
not violate or conflict with any provision of the certificate of formation of
BMS.

     

    (C)           Consents - Except for
the Permits, no consent, approval or authorization from, or notice to, or filing
or registration with any governmental authority or agency, or 

    

      
        
          
          

        

        
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    from, to
or with any other person or entity under any contract, license or agreement to
which BMS is a party is necessary or required to be obtained or made by BMS in
connection with the execution, delivery or performance of this Agreement by BMS
or the consummation by BMS of the transactions contemplated by this
Agreement.

     

    (D)           Conflicts - There is
no:

     

    (1)  litigation or
governmental proceeding pending or, so far as is known to any officer of BMS,
threatened, which, in any such case, would prohibit or materially delay the
ability of BMS to execute, deliver and perform this Agreement in accordance with
its terms;

     

    (2)  asserted claim or basis
for any claim of default, breach of liability under or violation of any law,
rule or regulation applicable to BMS, which, in any such case, would prohibit or
materially delay the ability of BMS to execute,
deliver and perform this Agreement in accordance with its terms;
nor

     

    (3)  any agreement or order
to which BMS is a party or by which BMS is bound; which, in any such case, would
prohibit or materially delay the ability of BMS to execute, deliver and perform
this Agreement in accordance with its terms.

     

    (E)                     Quality Standards -
BMS will cooperate with EDNLP to achieve such quality standards and
certifications (for 

    

      
        
          
          

        

        
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    example,
ISO 9000 standards) as either party may reasonably request.

     

    (F)                No Material
Interference – Subject to the performance obligations by EDNLP under this
Agreement, BMS agrees that, in the exercise of its rights under this Agreement,
BMS shall not act in a manner which would materially interfere with the
operations of the Nitric Acid Facility by EDNLP.

     

    (G)       Environmental
Covenants – (i)  Other than may be indicated in the
Environmental Assessments, BMS covenants and warrants it has not filed and has
not been required to file any notice under any Environmental, Health and Safety
Law indicating past or present treatment, storage or disposal of any
unauthorized waste or reporting a Spill or release of any unauthorized waste
into the environment onto the Nitric Acid Facility from areas within the Bayer
Baytown Plant other than the Nitric Acid Facility; and (ii) in addition to the
other indemnifications contained herein, BMS agrees to indemnify and
hold
harmless EDNLP from and against any and all losses, damages, claims, costs,
liabilities and expenses (including reasonable attorney’s fees) arising from the
soil or ground water contamination if the source of such contamination of the
Nitric Acid Facility is found to be from a location within the Bayer Baytown
Plant other than the Nitric Acid Facility.

     

                               (H)     Compliance with
Laws:  BMS shall use reasonable efforts to operate the Bayer
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    compliance
with all Laws and in compliance with the terms of all applicable operating,
environmental, occupancy and other permits and similar
requirements.  BMS will promptly notify EDNLP of the occurrence of any
violation of any such Law which would materially impact EDNLP’s operation of the
Nitric Acid Facility.

    

    SECTION
10:  AMMONIA

    10.1                      Supply by BMS - BMS
shall supply to EDNLP at the Battery Limits of the Nitric Acid Facility the
Ammonia required for EDNLP's use in manufacturing Nitric Acid and supplying Aqua
Ammonia to BMS; provided, however,
that BMS shall not be obligated to supply EDNLP with more than one hundred
twenty percent (120%) of the monthly nameplate requirements of the Nitric Acid
Facility.  BMS shall charge EDNLP for the Ammonia at BMS's Net
Distributed Cost on a Moving Average Actual Cost basis. BMS warrants that the
Ammonia supplied hereunder shall meet the applicable Ammonia Specifications set
forth on the attached
Schedule
2.  BMS covenants that such Ammonia shall be free of all liens
and encumbrances.  The Ammonia shall be delivered by or on behalf of
BMS to EDNLP at the Battery Limits of the Nitric Acid Facility via the Delivery
System or other agreed-upon mechanism. BMS shall invoice EDNLP monthly for
Ammonia provided by BMS.

     

    10.2                      Procurement of Ammonia by
EDNLP - Subject to the terms of any ammonia procurement contracts between
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    ammonia
supplier(s) and subject to the satisfactory resolution of any logistical issues
between BMS and EDNLP regarding the segregation and maintenance of ammonia
inventory, the parties hereby agree that upon EDNLP's request, the parties will
negotiate in good faith the possibility of the sourcing of ammonia for Surplus
Nitric Acid sales by EDNLP on its own behalf (provided, however, that this
clause shall not be interpreted to require BMS to pay any premium, increased
cost or penalty for Ammonia under its procurement contracts as a result of such
direct sourcing by EDNLP).

     

    10.3                      Measurement of Ammonia
Supplied

     

    (A)           Metering – The
certified pipeline delivery meter, or if necessary the back-up meter, shall be
the basis upon which any charges will be assessed against EDNLP for the
consumption of Ammonia. EDNLP shall operate and maintain metering equipment to
measure EDNLP's consumption of the Ammonia supplied by pipeline. EDNLP shall
also operate and maintain metering
equipment that measures the transfer of Aqua Ammonia to BMS supplied by
pipeline.

     

    (B)           Calibration - EDNLP
shall calibrate all meters in accordance with manufacturer's
recommendations.  EDNLP shall calibrate the meters relative to each
other.  EDNLP shall designate one meter as the primary meter from
which all readings shall be taken.  The second meter's readings shall
be used during failure, testing or recalibration of the first meter and

    

      
        
          
          

        

        
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    to
periodically verify the reading of the first meter.  EDNLP shall also
permit BMS, at BMS's expense, to inspect the meters at any time, provided such
inspection does not unreasonably interfere with EDNLP's operations at the Nitric
Acid Facility.

     

    10.4
Aqua Ammonia
Supply: EDNLP shall supply to BMS at the Battery Limits of the Nitric
Acid Facility, Aqua Ammonia that has been produced in the manufacture of Nitric
Acid. The intent is that the supply will normally meet BMS's needs although
availability will depend upon the Nitric Acid unit being on-stream. BMS will
have a back-up supply of ammonium hydroxide available as a contingency. The
estimated properties for Aqua Ammonia are described as follows:

     

    •
Appearance- Clear, colorless liquid.

    Concentration-
Ammonium hydroxide concentration 15-35% expressed as percent
ammonia.

    • Oil-
Maximum 0.7%

    • Iron-
Maximum 0.1%

    Delivery
Pressure- minimum- 60 psig, typical- 90 psig, maximum- 275 psig

    •
Delivery Temperature (F)- Typical- Ambient

    Delivery
Flow (#/hr as NH3)- Typical- 30 #/hr, Maximum- 75 #/hr

     

    BMS
expressly acknowledges that EDNLP makes no guarantee but shall put forth
reasonable efforts that Aqua Ammonia will conform to all the properties
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    Aqua
Ammonia delivered hereunder shall contain at least ten percent (10%) ammonium
hydroxide concentration expressed as a percentage ammonia, suspended in an inert
aqueous solution]. BMS agrees to accept all Aqua Ammonia from EDNLP as it is
delivered via pipeline to BMS. BMS shall not require EDNLP to perform any
chemical analyses of Aqua Ammonia prior to its delivery to BMS.

     

    SECTION
11:  UTILITIES

    11.1                      Provision of
Utilities - BMS shall supply certain utilities and additives in specified
quantities (each, a "Utility" and “Additive”) based on certain assumptions set
forth in Schedule
1, to the Nitric Acid Facility for use in the manufacture of Nitric Acid
and operation and maintenance of the Nitric Acid Facility, such supply to be in
the amounts and manner provided in this Section 11.  EDNLP warrants
that the quantities provided in Schedule 1 are a good
faith estimate of the quantities of Utilities it will consume at an annual
production
rate of 476,000 short tons of Nitric Acid per year.  It is expressly
understood that BMS shall not be obligated to supply any Utilities or Additives
other than those specifically listed in this Agreement and that BMS shall not be
obligated to supply such Utilities or Additives in excess of the quantities
provided for in Schedule
1.  BMS's obligations hereunder shall at all times remain
subject to any competing priorities BMS may have at the BMS Baytown Plant for
such Utilities or Additives.  

    

      
        
          
          

        

        
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    BMS shall
provide all such Utilities and Additives to the Nitric Acid Facility at the
Battery Limits in accordance with the specifications set forth on Schedule 1 hereto and
at BMS's Net Distributed Cost.

     

        (A)           Water - The Bayer
Baytown Plant is served by public utility-supplied and plant-supplied water that
is piped through and from the Bayer Baytown Plant. BMS agrees to supply to the
Nitric Acid Facility at the Battery Limits: (i) boiler feed water; (ii) fire
water; (iii) potable water; (iv) plant (non-potable) water; and (v)
demineralized water in the amounts and at the specifications set forth in Schedule 1. BMS shall
supply all water at BMS's Net Distributed Cost.

                

                  (B)           Nitrogen - BMS agrees
to supply to the Nitric Acid Facility at the Battery Limits, at BMS's Net
Distributed Cost, nitrogen gas through pipelines located at or on the Bayer
Baytown Plant in the amounts and in the specifications set forth in Schedule
1.

    (C)           Air - BMS agrees to
supply to the Nitric Acid Facility at the Battery Limits, at BMS's Net
Distributed Cost:  (i) plant air and (ii) instrument air
through pipelines located at or on the Bayer Baytown Plant in the amounts and in
the specifications set forth in Schedule
1.

    (D)           Steam - BMS agrees to
supply to the Nitric Acid Facility at the Battery Limits, at BMS's Net
Distributed Cost, six hundred thirty pounds per square inch gauged steam

    

      
        
          
          

        

        
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    through
pipelines located at or on the Bayer Baytown Plant in the amounts and in the
specifications set forth in Schedule
1.

     

    (E)           Natural Gas - BMS
agrees to supply to the Nitric Acid Facility at the Battery Limits, at BMS's Net
Distributed Cost, natural gas through pipelines located at or on the Bayer
Baytown Plant in the amounts and at the specifications set forth in Schedule
1.

     

    (F)           Chlorine - BMS agrees
to supply to the Nitric Acid Facility at the Battery Limits at BMS's Net
Distributed Cost, chlorine through pipelines located at or on the Bayer Baytown
Plant in the amounts and in the specifications set forth in Schedule
1.

     

    (G)           Caustic - BMS agrees
to supply to the Nitric Acid Facility at the Battery Limits at BMS's Net
Distributed Cost, 32 percent caustic through pipelines located at or on the
Bayer Baytown Plant in the amounts and in the specifications set forth in Schedule
1.

    (H)           Electrical Power -
(1) A cogeneration facility ("Facility") exists at the Bayer Baytown
Plant. The Nitric Acid Facility shall obtain its electric requirements from the
Facility at such time as the Facility supplies electric energy to the Bayer
Baytown Plant. All references to electricity for the conduct of operations at
the Nitric Acid Facility shall mean and refer to the supply of electric
requirements for the Nitric Acid Facility.

    

      
        
          
          

        

        
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    (2)           BMS
agrees to supply electrical power to the Nitric Acid Facility at the Battery
Limits. The electrical power shall be supplied at the same cost as electric
energy is supplied to BMS under the Energy Services Agreement between Bayer
Corporation and Calpine Construction Finance Company, L.P. and subsequently
assigned to BMS plus applicable BMS distribution fees.

     

    (3)           In
the event that the supply of electric requirements to the Nitric Acid Facility
as contemplated by this Section 11.1(H) does or is likely to result in a
regulatory consequence that imposes burdens upon BMS, then EDNLP will without
the expenditures of funds cooperate with BMS and engage in commercially
reasonably measures to mitigate the effects of such regulatory consequences and
burdens.

     

    (4) The
obligations of the parties hereunder will not be affected in the event that the
Facility is unable to produce electric
energy in sufficient quantities to meet EDNLP's electric requirements (e.g.,
back-up power), so long as electric energy is available from other sources,
including the grid, to supply EDNLP’s electric requirements in the same manner
and by the same means as BMS's electric energy requirements at the Bayer Baytown
Plant are supplied. In those instances when EDNLP's electric requirements are
supplied by other sources as contemplated by the preceding sentence, then the
price to EDNLP 

    

      
        
          
          

        

        
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    for the
supply of EDNLP's electric requirements shall be the cost to BMS for electric
energy from such other sources, plus EDNLP's pro rata share of the
infrastructure and distribution costs.

     

    (5)                     Notwithstanding anything to the
contrary herein contained, the parties desire to confirm that EDNLP shall be
relieved of its obligation to supply Nitric Acid to BMS to the same extent as:
(i) provided in Section 14.1 of this Agreement; (ii) as provided under the Force
Majeure Event provisions of this Agreement;(iii) and/or as otherwise provided
under this Agreement, in the event there is a failure to deliver electricity to
the Nitric Acid Facility.

     

    (I)           Sulfuric
Acid:    BMS provides 98% sulfuric acid deliveries to
EDNLP for the cooling tower via tank trucks.  Trucks are typically
scheduled on Wednesday of each week.  The supplier monitors the
sulfuric acid tank level.  Based on this information
98% sulfuric acid deliveries are scheduled by BMS as needed.  EDNLP
may also contact the BMS Environmental Control Department and Utilities (ECDU)
to be put on the schedule for the next delivery, at least one day in
advance.  Approval of the certificate of analysis is done by the
polyurethane quality area prior to delivery to EDNLP.  At the end of
the month, BMS informs EDNLP of the amount of 98% sulfuric acid delivered during
the month.  EDNLP then reports this number to BMS 

    

      
        
          
          

        

        
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    accounting,
which is then included in the monthly Variable Costs Component

     

    11.2                      Utility
Quality

     

    (A)           BMS
makes no warranty with regard to the quality or quantity of the Utilities or
Additives made available to the Nitric Acid Facility under this
Agreement.

    (B)           EDNLP
shall be released from the warranty contained in Section 8 of this Agreement as
to Nitric Acid produced at the Nitric Acid Facility if and to the extent EDNLP
can establish that the failure to meet the Nitric Acid Specifications was
attributable to BMS's failure to meet the relevant specifications for, or
quantities of, Ammonia or Utilities provided to the Nitric Acid
Facility.  EDNLP shall exercise reasonable efforts to mitigate the
application of this section by promptly notifying BMS of any detected deficiency
in the Utilities provided.

     

    11.3                      Utility Cross
Connections

    EDNLP agrees to maintain and operate
the utility cross connection systems as originally designed to prevent possible
cross contamination between the Nitric Acid Facility's processes and a given
Utility or possible cross contamination between two Utility
streams.

     

    11.4                      Utility
Meters

     

    (A)           EDNLP
shall operate and maintain existing demand metering equipment to measure the
Nitric Acid Facility's demand 

    

      
        
          
          

        

        
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    and
consumption of the Utilities and Additives.  The readings will be the
basis upon which any charges will be assessed against EDNLP for the consumption
of Utilities and Additives, unless any reading is proven to be in error in
accordance with Section 11.4(B).

     

    (B)           EDNLP
shall calibrate all meters in accordance with manufacturer's
recommendations.  EDNLP shall give BMS three (3) days notice of, and
BMS has the right to observe the calibration of any meters installed by
EDNLP.  EDNLP shall recalibrate each meter as recommended by the
manufacturer.  If during any such periodic recalibration any meter is
found to be inaccurate by more than the manufacturer's tolerances, then EDNLP
shall repair or recalibrate such meter to the manufacturer's tolerances. If a
meter is inaccurate by more than the manufacturer's tolerances, the party that
has benefited from the inaccuracy shall refund to the other party one hundred
percent (100%) of the discrepancy, back to the date of the
last calibration or, if identifiable, back to the date of the failure that
triggered the inaccuracy.  EDNLP agrees to exercise reasonable efforts
to conduct all meter readings, inspections, recalibrations and repairs in such a
manner that it will not unreasonably interfere with BMS's operations at the
Bayer Baytown Plant.  BMS may, at BMS's expense, inspect the meters at
any time, provided such inspection does not 

    

      
        
          
          

        

        
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    unreasonably
interfere with the operation of the Nitric Acid Facility.

     

    (C)           If
any inspection by BMS reveals an inaccurate meter (as determined under the
preceding paragraph), then the parties shall negotiate an appropriate adjustment
to be made to the cost of the affected Utility.

     

     (D)                      EDNLP
shall provide the electricity, 32% caustic, and chlorine usage to BMS each month
to be used for monthly billing.

     

              
(E)                      BMS
shall use the data collection system (currently PI) to determine the monthly
Utility usages from the EDNLP meters.

     

    (F)                      EDNLP
shall provide BMS a summary of each Utility usage each month.  This
summary will serve as a reference to the values obtained in 11.4(E) and shall be
included in the monthly Fixed Costs Monthly Charge and Variable Costs
Component.  EDNLP and BMS shall exercise commercially reasonable
efforts to resolve any significant discrepancies in a timely
manner.

     11.5                      Resale of
Utilities

     

    EDNLP covenants that it shall not sell,
transfer or distribute to any other party (including Affiliates of EDNLP) those
Utilities or Additives provided to the Nitric Acid Facility by BMS pursuant to
this Agreement.

    

    SECTION
12:  WASTE

    

      
        
          
          

        

        
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    Wastes
from the Nitric Acid Facility may be described by the following
categories:

    
      	
               
      

            	
              1.

            	
              Sanitary
      Sewage;

            

    

    
      	
               
      

            	
              2.

            	
              Cooling
      Tower Blowdown;

            

    

    
      	
               
      

            	
              3.

            	
              Routine
      Process Wastes;

            

    

    
      	
               
      

            	
              4.

            	
              Stormwater;
      and

            

    

    
      	
               
      

            	
              5.

            	
              Other
      Wastes.

            

    

    

    BMS reserves the right to test the
Waste streams and, in the event BMS notifies EDNLP that the Waste streams do not
comply with Schedule
5, EDNLP shall promptly take all appropriate action to bring the Waste
streams into compliance with Schedule 5.  In
addition, BMS may assess EDNLP a surcharge to cover the actual costs of all
special handling and extra treatment incurred by BMS for Waste that fails to
meet established specifications.  In no case shall BMS be required to
accept Waste that will cause BMS to exceed limits imposed by
permits.  With BMS's prior approval, which shall not unreasonably be
withheld, EDNLP may construct and locate additional lines for transportation of
the Waste, provided that all such Waste, other than Sanitary Sewage, is
processed and directed
above ground.  BMS shall invoice EDNLP for such use of the Waste
Treatment Facilities on a Net Distributed Cost basis and such costs shall be
included in the Variable Cost Component.

     

     12.1                      Use of Sanitary
Sewers

     

    EDNLP shall discharge all Sanitary
Sewage or Waste into the existing sanitary sewer system or Waste Treatment
Facilities in such a manner as to ensure that such discharges 

    

      
        
          
          

        

        
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    comply
with Laws and do not unreasonably interfere with BMS operations at the Bayer
Baytown Plant.  EDNLP shall promptly correct any nonconforming
discharges. EDNLP shall not allow any third party or any other site source to
cause any substance, including Waste, to be discharged into the sanitary sewer
system on the Nitric Acid Facility or the Bayer Baytown Plant.  EDNLP
shall use reasonable efforts to make no discharges that violate
any:  (i) Laws; (ii) insurance or underwriting rules or
regulations disclosed to or known by EDNLP on or prior to the Commencement Date;
or (iii) revised insurance or underwriting rules or regulations reasonably
imposed by BMS's loss prevention consultants and insurance carriers following
the Commencement Date. EDNLP shall grant BMS access to all records and files
that relate in any manner to any discharge by EDNLP into the sanitary sewer
system during the term of this Agreement.  BMS reserves the right to
analyze, at its sole cost and expense, Sanitary Sewage at the tie-in
points.

     

     12.2                      Cooling Tower
Blowdown

    EDNLP may discharge into BMS's Cooling
Tower Blowdown header, via existing lines or lines to be constructed, Cooling
Tower Blowdown that meets the quality and quantity specifications set forth in
Schedule
5.  To ensure that the Cooling Tower Blowdown is acceptable for
treatment in the Waste Treatment Facilities, any chemicals used in the cooling
tower must be approved by BMS.

    

      
        
          
          

        

        
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     12.3                      Routine Process
Waste

     

    (1)           In
connection with the production of Nitric Acid by EDNLP at the Nitric Acid
Facility, EDNLP anticipates producing Routine Process Waste of the general types
listed below, with the characteristics set forth in the attached Schedule
5:

     

    
      	
               
      

            	
              (a)

            	
              Washdown
      Water;

            

    

    
      	
               
      

            	
              (b)

            	
              Lab
      Samples;

            

    

    
      	
               
      

            	
              (c)

            	
              Process
      Purges;

            

    

    
      	
               
      

            	
              (d)

            	
              Leaks;

            

    

    (e)           Boiler
Blowdown; and

    
      	
               
      

            	
              (f)

            	
              Ammonia
      Vaporizer Blowdown.

            

    

    

    (2)           Subject
to any contrary provisions of this Section 12, EDNLP may discharge into the
overhead waste water piping to the Waste Treatment Facilities, via existing
lines or those to be constructed, Routine Process Waste from the Nitric Acid
Facility that meets the quality and quantity specifications set forth in Schedule
5.  With BMS's prior approval, which shall not unreasonably be
withheld, EDNLP may construct and locate additional lines for transportation
of

    Routine
Process Waste, provided that all such Routine Process Waste is processed and
directed above ground.

     

     12.4                      Initial Stormwater and
Additional Stormwater

     

    EDNLP shall install, operate and
maintain facilities to capture all Initial Stormwater and Additional Stormwater
that falls on padded areas.  EDNLP shall construct such facilities so
that the Initial Stormwater is segregated from the Additional 

    

      
        
          
          

        

        
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    Stormwater.  EDNLP
shall discharge (pump) the Initial Stormwater along with the Routine Process
Wastes, via existing pipelines or those to be constructed, into the Waste
Treatment Facilities.  EDNLP shall sample the Additional Stormwater
and analyze the pH and general appearance of the Additional Stormwater to ensure
that it does not exceed the permissible contamination levels for Additional
Stormwater described in Schedule
5.  If the Additional Stormwater does not exceed the
permissible contamination levels set forth in Schedule 5, then
EDNLP shall discharge the Additional Stormwater, via existing pipelines or those
to be constructed, into the Bayer Baytown Plant's stormwater
system.  If the Additional Stormwater exceeds the permissible
contamination levels set forth in Schedule 5, then
EDNLP shall hold the Additional Stormwater until it can be discharged, via
existing pipelines or those to be constructed, into the Waste Treatment
Facilities, provided that BMS has analyzed the Additional Stormwater and
determined that based on level of
contamination and volume, the Waste Treatment Facilities can accept such
Additional Stormwater.

     

     12.5                      Uncollected
Stormwater

     

    Uncollected Stormwater will be
directed, via pipelines, existing or to be built, or by ground elevation, to
BMS's underground stormwater piping.  EDNLP will not allow
contamination of Uncollected Stormwater.

     

    
       12.6                      EDNLP's Disposal of Other
Wastes

       

    

    
      
        
        

      

      
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    EDNLP shall be solely responsible for
the proper segregation, storage and disposal of any other Waste (including,
without limitation, oily sludge from the ammonia separation system, waste
lubricating oils, construction debris and production/maintenance generated
wastes) generated at the Nitric Acid Facility, the storage, conveyance,
treatment and disposal of which shall be performed in accordance with all
applicable Environmental, Health and Safety Laws and all BMS guidelines and
procedures.  EDNLP shall use waste management services mutually agreed
upon by the parties for the segregation and disposal of such other
wastes.  BMS shall not reimburse EDNLP for any costs associated with
the storage, conveyance, treatment and disposal process of other waste except as
otherwise provided in this Agreement.

     

     12.7                      General

     

    (A)           BMS
shall maintain the Waste Treatment Facilities in good condition and repair and
in such a manner as to allow
the Waste to be treated and discharged in compliance with all applicable Laws,
including, without limitation, Environmental, Health and Safety
Laws.  EDNLP shall maintain any pipelines, sumps, sump pumps or other
facilities located on the Nitric Acid Facility in compliance with all applicable
Laws, including without limitation, Environmental, Health and Safety
Laws.

    

      
        
          
          

        

        
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    (B)           Upon
reasonable notice, EDNLP and BMS shall each grant to the other access to all
properties, records and files relating to the deliveries and discharge of
Waste.  BMS and EDNLP shall submit written reports to each other
containing such matters and information as are reasonably requested by the other
party.

     

    (C)           EDNLP
shall be responsible for ensuring that the Nitric Acid Facility maintains
compliance with all leak detection and repair programs related to Fugitive
Emissions as mandated by all applicable Environmental, Health and Safety
Laws.

     

    (D)           EDNLP
shall be responsible, at its expense, for all costs associated with the proper
containment, clean-up, treatment and disposal of all Spills and materials
contaminated by such Spills arising from EDNLP's operation of the Nitric Acid
Facility.  EDNLP shall employ the Spill remediation services and
disposal outlets mutually agreed upon by the parties.

    (E)           EDNLP
shall operate and maintain, metering equipment to measure EDNLP's discharge of
Routine Process Waste and Cooling Tower Blowdown into the Waste Treatment
System.

     

    SECTION 13:  FIRE
PROTECTION, SAFETY AND SECURITY

     

    13.1                      Fire
Protection

     

    (A)           With
the prior written approval of BMS, which will not be unreasonably withheld,
EDNLP may make such 

    

      
        
          
          

        

        
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    additions
to the fire protection system at the Nitric Acid Facility as EDNLP requires for
the protection of the Nitric Acid Facility.  BMS shall maintain in
good condition and repair and shall make available for the benefit of the Nitric
Acid Facility in case of an emergency the portion of the fire protection system
located at or on the Bayer Baytown Plant.  EDNLP, at its cost and
expense, shall maintain in good condition and repair and shall make available
for the benefit of the Bayer Baytown Plant in case of an emergency the portion
of the fire protection system located at the Nitric Acid
Facility.  EDNLP shall be responsible for notifying the designated
authority of emergencies occurring at the Nitric Acid Facility.  EDNLP
shall only use water from the fire protection system for emergency purposes and
shall immediately report any such use to the designated authority at the Bayer
Baytown Plant.

     

    (B)           BMS
agrees to furnish the fire-fighting services for the Nitric Acid Facility that
BMS has available for the
protection of its own property and personnel.  EDNLP agrees to
cooperate with BMS in furnishing such services, including participating in any
fire drill procedures at the Nitric Acid Facility, as reasonably requested by
BMS.  Subject to the prior execution of confidentiality agreements in
form and substance satisfactory to BMS and its counsel, BMS agrees to grant
EDNLP and its insurance carriers access to the Bayer Baytown Plant and the
improvements located thereon as required by EDNLP's 

    

      
        
          
          

        

        
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    insurance
carriers for inspections related to fire protection or other safety
measures.

     

     13.2                      Safety

     

    (A)           EDNLP
will use reasonable efforts to operate the Nitric Acid Facility according to
sound engineering practice and all applicable Laws and
regulations.  In the interest of promoting a safe manufacturing
environment, EDNLP and BMS agree to meet quarterly to discuss and review safety
items of mutual interest.

     

    (B)           EDNLP
shall maintain and use the public address system that is integrated with the
Bayer Baytown Plant public address system so as to permit centralized emergency
notification and other central announcements to personnel at the Nitric Acid
Facility.  BMS shall maintain connections for the public address
system at the Battery Limits.

     

    (C)           BMS
will provide EDNLP with a list of VHF radio frequencies for routine use at the
Nitric Acid Facility and for
emergency communication with the BMS disaster response office.  EDNLP
shall utilize radio equipment capable of transmitting and receiving information
on the assigned frequencies.

     

    (D)           BMS
will provide EDNLP with phosgene monitoring badges for use by EDNLP personnel at
the Nitric Acid Facility.  EDNLP shall require the use of such badges
by all personnel at the Nitric Acid Facility, and shall cause such 

    

      
        
          
          

        

        
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    badges to
be handled and examined in accordance with BMS safety rules applicable to the
use and examination of such badges.

     

    (E)           Emergency
Response – BMS shall provide an Emergency Response Team for incidents including
but not limited to firefighting and rescue.  BMS shall provide
equipment (fire truck, rescue truck, ambulance) and personnel for emergency
response.  BMS shall provide air monitoring on the Bayer Baytown Plant
perimeter and in the community, as necessary.  BMS will put any EDNLP
emergency message on the CAER (Community Awareness Emergency Response)
Line.  EDNLP is responsible for making all required
notifications.  BMS shall assist with communications with outside
emergency response teams, as necessary.  EDNLP
shall provide one representative to guide BMS if emergency response is needed at
EDNLP.  BMS schedules off-site training classes for fire brigade (Fire
School) and rescue team (Rescue School) training.  EDNLP may
participate along with BMS employees for this training, provided the EDNLP pays
for their employees.

    Bayer
shall perform annual drills and shall allow EDNLP to participate in such
drills.

     

        (F)           Hurricane
Response – During potential hurricane events BMS coordinates Bayer Baytown Plant
activities as outlined in the BMS safety procedure.  Status meetings
shall occur as needed and as outlined in the BMS safety
procedure.  EDNLP is expected to provide a representative to these
meetings.  In the event of an evacuation, EDNLP will provide one
hurricane 

    

      
        
          
          

        

        
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    “ride-out”
team member to stay in the plantsite, along with BMS ride-out personnel, during
the evacuation period.

     

     13.3                      Security

     

    For
purposes of security planning, EDNLP is included in the BMS security
requirements as regulated by the U.S. Coast Guard. EDNLP
shall be responsible for providing internal security for the Nitric Acid
Facility. BMS shall have no responsibility for the internal security of the
Nitric Acid Facility. BMS will provide perimeter security and trucking services
at the Bayer Baytown Plant perimeter.

    

    Where allowed by law, BMS will provide
security for EDNLP within the fenceline.  EDNLP will follow BMS
security procedures for EDNLP employees, visitors, and contractors and shall
participate in BMS security training and drills.  BMS is responsible
for tank truck access into and out of the Bayer Baytown Plant.  Truck
drivers are required to provide a valid drivers
license with photo identification and HazMat certification.  EDNLP is
responsible for the truck drivers from the time they arrive at the Nitric Acid
Facility until they depart back the truck gate to exit the Bayer Baytown
Plant.   EDNLP shall provide and maintain a security camera on
its absorber which can be controlled by BMS security staff.

     

                13.4                      Parking and
Access

    

      
        
          
          

        

        
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    EDNLP officers, directors, employees,
agents, contractors and invitees may park in the parking lots located on the
Bayer Baytown Plant, and such parties shall use access routes designated by BMS
to reach the Nitric Acid Facility, in each case.  EDNLP officers,
directors, employees, agents, contractors and invitees shall observe all
conditions imposed by BMS for parking and security at the Bayer Baytown
Plant.  EDNLP officers, directors, employees, agents, contractors and
invitees shall have access to the Nitric Acid Facility at all times during the
Term of this Agreement; provided, however, that EDNLP
officers, directors, employees, agents, contractors and invitees must observe
Bayer Baytown Plant security procedures at all times. BMS may restrict the
access of EDNLP officers, directors, employees, agents, contractors and invitees
in the event of an emergency.

     

                                    (A)           EDNLP
shall maintain a four (4) spot truck loading and unloading rack for nitric acid
and the three (3) spot truck unloading rack for Ammonia.

     

    SECTION
14:  INTERRUPTION OF AMMONIA, UTILITIES OR NITRIC
ACID

     

    14.1                      Interruption of EDNLP
Feedstock - If BMS is unable to or fails to deliver Ammonia, Utilities,
or Additives to the Nitric Acid Facility as required, then EDNLP may procure
such Ammonia, Utilities, or Additives elsewhere through any 

    

      
        
          
          

        

        
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    commercially
reasonable source.  Notwithstanding the foregoing, EDNLP may supply
such Ammonia, Utilities, and Additives through the infrastructure of the Bayer
Baytown Plant only with the prior approval of BMS, which shall not be
unreasonably withheld.  Any procurement by EDNLP of Ammonia,
Utilities, or Additives from parties other than BMS shall be at EDNLP's risk,
and shall have no effect on the warranty made to BMS by EDNLP pursuant to
Section 8 hereof.  Nitric acid produced using such Ammonia shall first
be supplied to BMS.  If BMS is unable to or fails to deliver Ammonia,
Utilities, or Additives, EDNLP's sole exclusive remedy for such failure is set
forth in Section 18 hereof.

     

    14.2                      Interruption of Nitric
Acid - If EDNLP is unable to or fails to provide BMS's monthly Nitric
Acid requirements for the Bayer Baytown Plant and EDNLP is unable to provide
back-up supply to BMS, then BMS may procure such nitric acid elsewhere through
any commercially reasonable source.  EDNLP shall permit BMS to use
EDNLP's four (4) spot truck loading and unloading rack if BMS requires use of
the same for the receipt of nitric
acid from third party suppliers.  EDNLP shall perform the unloading
activities.

    

    SECTION
15:  PIPELINE AND DELIVERY SYSTEM OPERATION AND
MAINTENANCE

     

    15.1                      Plant Systems - EDNLP
shall operate and maintain the systems necessary to transport Ammonia,
Utilities, 

    

      
        
          
          

        

        
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    Additives,
Waste or other material provided or handled by the Delivery Systems to or from
tie-in points at the Battery Limits to the Nitric Acid Facility.

     

    15.2                      Connection Points -
BMS shall be responsible for operating and maintaining the Delivery Systems
outside of the Battery Limits of the Nitric Acid Facility.  EDNLP
shall be responsible for operating and maintaining the Delivery Systems inside
the Nitric Acid Facility.

     

    

    SECTION
16:  PERMITS

     

    EDNLP shall be responsible for the
preparation, filing and cost of obtaining and maintaining all Permits related to
the operation of the Nitric Acid Facility.  BMS reserves the right to
approve, or to disapprove, all Permit applications prepared by EDNLP and EDNLP
shall give BMS at least ten (10) days to review permit
applications.  BMS shall provide EDNLP reasonable assistance as
necessary to obtain the Permits as EDNLP may request.  EDNLP shall
provide BMS reasonable assistance to transfer
the Permits upon the expiration or termination of this Agreement.

    

    SECTION
17:  INSURANCE

     

    17.1                      EDNLP's Insurance -
EDNLP shall maintain, or cause to be maintained, the following
insurance:

     

    (A)           Insurance Against Public
Liability - EDNLP shall procure and maintain in effect at all times from
the 

    

      
        
          
          

        

        
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    Commencement
Date until the expiration or termination of this Agreement: automobile
liability, comprehensive general and excess liability insurance policies
applying to bodily injury (including death) and third party property damage
arising from the activities of EDNLP under the Project
Agreements.  Such coverage shall have a minimum combined single limit
of liability of at least Five Million Dollars ($5,000,000) and a general
aggregate limit of at least Five Million Dollars ($5,000,000).  All
such policies shall be written to apply to all bodily injury, property damage,
personal injury and other losses occurring during the policy
term.  Such coverage shall also contain
endorsements:  (A) deleting any employee exclusion on personal
injury coverage; (B) including employees as additional insureds; (C)
deleting any liquor liability exclusion; (D) providing for coverage of
employer's automobile non-ownership liability; (E) providing for fire legal
liability coverage; (F) providing
for explosion, collapse and underground liability coverage; and
(G) providing for contractual liability.

     

    (B)           Workers' Compensation and
Other Insurance - EDNLP shall also carry workers' compensation insurance
and such other forms of insurance that EDNLP is required by law to provide,
covering loss resulting from injury, sickness, disability or death of the
employees of EDNLP arising out of and in the course of their employment to the
extent required by law, 

    

      
        
          
          

        

        
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    together
with employer's liability coverage with a limit of at least One Million Dollars
($1,000,000).

     

    (C) Business Interruption
– Business interruption insurance shall be carried at the discretion and cost of
EDNLP.  BMS shall not be responsible for payment or reimbursement of
any premiums or deductibles related to such business interruption
insurance.  BMS shall have no rights to make a claim under any
business interruption insurance that may be carried by EDNLP.

     

    (D) Pollution Liability
Insurance – EDNLP shall carry sudden and accidental pollution liability
insurance. Such coverage shall have a limit of at least Five Million Dollars
($5,000,000) per occurrence and annual aggregate.

     

    (E) Insurance
Certificates – EDNLP shall provide a copy of all applicable insurance
certificates to BMS within ten (10) days following the Commencement Date, and on
an annual basis thereafter. 

    (F) Deductibles:  In
all cases, BMS shall be responsible for the payment of the deductibles for
insurance as mentioned above, including without limitation, the deductible under
pollution insurance purchased by EDNLP for the Nitric Acid Facility, but
excluding business interruption insurance.

     

    17.2                      BMS's Insurance - BMS
shall maintain, or cause to be maintained, the following insurance:

     

    (A)           Insurance Against Loss or
Damage - BMS shall maintain or cause to be maintained in effect at all

    

      
        
          
          

        

        
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    times
during the Term, property insurance to the extent BMS reasonably deems adequate
for the Nitric Acid Facility and the assets comprising the EDNLP Net Book Value
and keep it, and all of the Catalyst, and equipment and machinery comprising the
Nitric Acid Facility insured on a replacement value basis and on an all-risk
basis, which shall include coverage for the following without limitation: perils
of earthquake, windstorm, flood, fire or other casualty; vandalism and malicious
mischief; coverage for replacement costs and cost of demolition endorsements;
and comprehensive boiler and machinery coverage.

     

    (B)           Insurance Against Public
Liability - BMS shall procure and maintain in effect at all times from
the Commencement Date until the expiration or termination of this Agreement,
automobile liability, comprehensive general and excess liability insurance
policies applying to bodily injury (including death) and third party property
damage arising from the
activities of BMS under the Project Agreements.  Such coverage shall
have a minimum combined single limit of liability of at least Five Million
Dollars ($5,000,000) and a general aggregate limit of at least Five Million
Dollars ($5,000,000).  All such policies shall be written to apply to
all bodily injury, property damage, personal injury and other covered losses
occurring during the policy term.  Such coverage shall also contain
endorsements: (A) deleting any employee exclusion on personal injury
coverage; (B) including employees as 

    

      
        
          
          

        

        
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    additional
insureds; (C) deleting any liquor liability exclusion; (D) providing
for coverage of employer's automobile non-ownership liability;
(E) providing for fire legal liability coverage; (F) providing for
explosion, collapse and underground liability coverage; and (G) providing for
contractual liability.

     

    (C)           Workers' Compensation and
Other Insurance - BMS shall also carry workers' compensation insurance
and such other forms of insurance that BMS is required by law to provide
covering loss resulting from injury, sickness, disability or death of the
employees of BMS arising out of and in the course of their employment to the
extent required by law, together with employer's liability coverage with a limit
of at least One Million Dollars ($1,000,000).

     

    17.3                      Waiver of Subrogation
Rights - Notwithstanding anything to the contrary herein, EDNLP and BMS
each waive all of its insurer’s rights of recovery, claim, action or cause of
action against the other, its agents, officers, directors, shareholders or
employees for any loss or damage that may occur to the Nitric Acid Facility, or
any personal property of either party hereto, by reason of any cause or origin,
that is insured against under insurance coverages hereunder, excluding the sole
negligence of the other party hereto, its agents, officers or
employees.  The insurance policies required hereunder shall be
endorsed if necessary to waive the insured's rights of subrogation against EDNLP
or BMS as applicable.  Each party’s 

    

      
        
          
          

        

        
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    fulfillment
of the obligations of this Section 17 shall not, of itself, in whole or in part
satisfy or fulfill its indemnity, liability or other obligations owing under the
Agreement or applicable law.

     

    17.4                      Miscellaneous Insurance
Provisions - Each party shall provide the other party with thirty (30)
days notice of cancellation or material change in terms of any of the coverage
described in this Section 17 required to be maintained by the
party.  If at any time during the Term, the amount or type of
insurance coverage that each party is required to carry under this Section 17
is, in the reasonable judgment of the other party, materially deficient under
Sections 17.1 or 17.2 hereof, the party not in default of this
Section 17 may, at its option: (A) notify the defaulting party in
writing that it has thirty (30) days in which to cure such deficiency or the
defaulting party shall be in default hereunder, or (B) pay any premiums or take
any other steps necessary to cure the deficiency, in which case the defaulting
party shall be liable to the non-defaulting party for all premiums and other
costs associated with such cure.

     

    17.5                      Form of Policies -
All insurance policies required to be carried under this Agreement shall be
obtained from insurance companies of good national or international
reputation.  In any event, deductible amounts shall not exceed ten
percent (10%) of the limit of liability in dollars for each 

    

      
        
          
          

        

        
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    required
insurance.  However, the above conditions of approval and limitations
of amounts of deductible shall not apply when the conditions of self-insurance
set forth in Section 17.6 below are satisfied.  Upon request by BMS,
EDNLP shall provide to BMS two insurance quotes which cover the cost of
incremental additional or new insurance mentioned herein.  BMS shall
determine which insurance policy, including premium and deductible amounts, is
most advantageous and may determine that EDNLP be covered under BMS insurance
policies if BMS deems this action appropriate.

     

                17.6                      Self-Insurance - Any
insurance required to be maintained by either party under this Agreement (other
than workers' compensation insurance) may be maintained under a plan of
self-insurance.  However, either party shall be entitled to use such
self-insurance only (A) during
periods when such party's net worth exceeds Two Hundred Fifty Million Dollars
($250,000,000), and (B) if such party maintains adequate reserves or liquid
assets for payment of claims of liability against the other party, including the
replacement value of the EDNLP Net Book Value in the case of EDNLP and the
Nitric Acid Facility in the case of BMS.

     

    17.7                      Blanket Coverage -
Any policy required to be maintained by either party under this Agreement may be
maintained under a "blanket policy" that insures other parties or locations.
However, the amount of insurance and the type of 

    

      
        
          
          

        

        
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    coverage
required to be provided hereunder may not be thereby diminished, changed or
adversely affected.

    17.8                      Failure of EDNLP to
Insure - If EDNLP fails to procure or maintain the insurance that EDNLP
is required to maintain pursuant to Section 17.1 hereof, BMS may procure, on
behalf of EDNLP, the minimum amount of insurance coverage required under Section
17.1 hereof, and EDNLP shall promptly reimburse BMS for the
same.  Insurance charges for such required insurance are included in
Fixed Costs.

     

    SECTION
18:  DEFAULT AND REMEDIES

     

    18.1                      EDNLP Events of
Default - An EDNLP Event of Default shall occur upon the occurrence of
any one or more of the following events, unless the event is caused by BMS or
any of BMS’s agents or contractors:

     

    (A)           If
EDNLP is unable to provide, for any reason substantially related to EDNLP's
negligence or any material breach of EDNLP's obligations hereunder, a minimum of
the lesser of (i) BMS's monthly Nitric Acid requirements for the Bayer
Baytown Plant or (ii) 18,458 short tons per month of Nitric Acid, in each
case under any combination of this Agreement and the Back-up Supply Plan, provided, however, that if
EDNLP is unable to provide such amounts of Nitric Acid, EDNLP 

    

      
        
          
          

        

        
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    shall
have no obligation to purchase substitute ammonia or utilities;

     

    (B)           If
EDNLP fails to meet, for thirty (30) days during any one hundred eighty (180)
day period or forty-five (45) days during any three hundred sixty-five (365) day
period, its obligations to provide to BMS Nitric Acid meeting the Nitric Acid
Specifications in Section 2.2 hereof, provided such failure
to provide Nitric Acid meeting the Nitric Acid Specifications has a material
adverse effect on the DNT/SAC or MNB/Aniline plants, located within the Bayer
Baytown Plant;

     

    (C)           If
EDNLP fails to pay to BMS any amount due BMS pursuant to Sections 4.3 ("Fixed
Costs Reimbursements"), 4.5 ("Operating Fee Reimbursements by EDNLP"), 5 ("BMS
Reimbursement, Rebate and Egress Fee") or 17.8 ("Failure of EDNLP to Insure")
hereof, when and as due, and such payments are not being contested in good faith
by appropriate proceedings;

     

    (D)           If
EDNLP breaches any of its covenants set forth in Section 9.1(E) hereof
("Health and Safety Covenants") or in Section 9.1(L) hereof (“Environmental
Covenants”);

     

     (E)                      If
EDNLP breaches its covenants set forth in Section 9.1(F) ("Compliance with Laws
& Permits") hereof; or

     

                                         
(F)           If
EDNLP materially defaults in the due performance or observance of any other
term, covenant or agreement on its part to be performed or observed pursuant to

    

      
        
          
          

        

        
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    any of
the provisions of this Agreement or any of the other Project
Agreements.

     

    18.2                      EDNLP Cure Periods -
In the event any EDNLP Event of Default occurs, EDNLP shall have the following
cure periods following written notice by BMS to EDNLP:

     

    (A)           Sixty
(60) days in the case of a default under Section 18.1(A) hereof;

     

    (B)           Zero
(0) days, in the case of a default under Section 18.1(B) hereof;

     

    (C)           Ten
(10) Business Days, in the case of a default under Section 18.1(C)
hereof;

     

    (D)           Ten
(10) days, in the case of a default under Section 18.1(D) hereof (provided, however, that in the
event of a default under Section 18.1(D) that is caused by a breach by EDNLP of
its covenant under Section 9.1(E)(2), EDNLP shall have a reasonable period of
time, which in no event shall exceed one hundred eighty (180) days, to implement
the Safety Improvement Program described in Section 9.1(E)(2)(b)
hereof);

     

    (E)           In
the case of a default under Section 18.1(E) hereof, a reasonable period of time
which in no event shall exceed one hundred eighty (180) days, to implement the
Compliance Program described in Section 9.1(F)(2) hereof and to obtain results
which indicate to BMS in its reasonable discretion that EDNLP has substantially
addressed and corrected the issues identified pursuant to Section 9.1(F)(2)
hereof; and

    

      
        
          
          

        

        
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    (F)           Forty-five
(45) days, in all other cases, unless such EDNLP Event of Default cannot
reasonably be cured in forty-five (45) days and EDNLP has, during such
forty-five (45) day period, undertaken reasonably effective curative measures,
in which case the cure period for such EDNLP Event of Default shall be the
number of days reasonably required to effectuate such cure.

     

    If any EDNLP Event of Default is
remedied within the aforementioned cure periods, such EDNLP Event of Default
shall not constitute a continuing EDNLP Event of Default and this Agreement
shall continue in full force and effect as if said EDNLP Event of Default had
not occurred.  The waiver of any EDNLP Event of Default under this
Agreement shall not constitute a waiver of any subsequent EDNLP Event of
Default.

     

    18.3                      BMS Events of Default
- A BMS Event of Default shall occur upon the occurrence of any one or more of
the following events, unless the event is caused by Force Majeure, by EDNLP or
any of EDNLP agents or contractors:

     

    (A)           If
BMS is unable to provide, for any reason substantially related to BMS's
negligence or any material breach of BMS's obligations hereunder, a minimum of
the lesser of the Ammonia necessary to produce (i) BMS's monthly Nitric
Acid requirements for the Bayer Baytown Plant or (ii) 18,458 short tons per
month of Nitric Acid (less any amounts supplied to BMS under the Back-up Supply
Plan);

    

      
        
          
          

        

        
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    (B)           If
BMS fails to meet, for thirty (30) days during any one hundred eighty (180) day
period or forty-five (45) days during any three hundred sixty-five (365) day
period, its obligations to supply to EDNLP certain Ammonia, Utilities or
Services to be supplied by BMS and such failure to provide Ammonia, Utilities or
Services has a material adverse effect on the Nitric Acid Facility;

     

    (C)           If
BMS fails to pay to EDNLP any amount due EDNLP pursuant to Section 4 hereof when
and as due; or

     

    (D)           If
BMS materially defaults in the due performance or observance of any other term,
covenant or agreement on its part to be performed or observed pursuant to any of
the provisions of this Agreement or any of the other Project
Agreements.

     

    18.4                      BMS Cure Periods - In
the event of any BMS Event of Default occurs, BMS shall have the following cure
periods following written notice by EDNLP to BMS:

    (A)           Sixty
(60) days, in the case of a default under Section 18.3(A); or

     

    (B)           Zero
(0) days, in the case of a default under Section 18.3(B) hereof;

     

    (C)           Ten
(10) Business Days, in the case of a default under Section 18.3(C) hereof;
and

     

    (D)           Forty-five
(45) days, in all other cases, unless such BMS Event of Default cannot
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    forty-five
(45) days and, during such forty-five (45) day period, BMS has undertaken
reasonably effective curative measures, in which case the cure period for such
BMS Event of Default shall be the number of days reasonably required to
effectuate such cure.

     

    If any BMS Event of Default is remedied
within the aforementioned cure periods, such BMS Event of Default shall not
constitute a continuing BMS Event of Default and this Agreement shall continue
in full force and effect as if said BMS Event of Default had not
occurred.  The waiver of any BMS Event of Default under this Agreement
shall not constitute a waiver of any subsequent BMS Event of
Default.

     

    18.5                      BMS Remedies for EDNLP
Events of Default - The parties agree that upon the occurrence of an
EDNLP Event of Default (and subject to the continuation of such Event of Default
beyond any applicable cure periods), BMS shall have the following rights and
remedies (in addition to the indemnification rights provided for in Section 20.1
hereof):

     

    (A)  If an EDNLP Event of
Default occurs pursuant to Section 18.1(A) hereof, BMS shall have the
termination rights specified in Section 19.1 hereof and EDNLP shall pay to BMS
the difference between the reasonable cost of any purchase of substitute nitric
acid (including cost of transportation, storage, handling and any other direct
costs associated with procuring substitute nitric acid) and the Variable Costs

    

      
        
          
          

        

        
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    Component
in respect of all Nitric Acid ordered by BMS and not delivered by EDNLP during
the existence of and continuation of the EDNLP Event of Default;

     

    (B)           If
an EDNLP Event of Default occurs pursuant to Section 18.1(B) hereof, BMS shall
have the termination rights specified in Section 19.1 hereof and EDNLP shall pay
to BMS its actual damages incurred in connection with the provision of nitric
acid failing to meet the Nitric Acid Specifications during the existence and
continuation of the EDNLP Event of Default;

     

    (C)           If
an EDNLP Event of Default occurs pursuant to Section 18.1(C) hereof, BMS shall
have the termination rights specified in Section 19.1 hereof; provided, however, that if
EDNLP contests the amounts due BMS, EDNLP and BMS shall first resolve such
payment dispute in accordance with Section 24 hereof;

     

    (D)           If
an EDNLP Event of Default occurs pursuant to Section 18.1(D) hereof, BMS shall
have the termination rights specified in Section 19.1 hereof and EDNLP shall pay
to BMS its damages incurred; and

     

    (E)           In
all other EDNLP Events of Default, BMS shall have the termination rights
specified in Section 19.1 hereof and EDNLP shall pay to BMS its damages incurred
and BMS shall have any and all other rights and remedies available, whether at
law or at equity.

    

      
        
          
          

        

        
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    In addition to any and all other
remedies available to BMS as specified above, BMS shall have the right to offset
its damages incurred pursuant to any Event of Default against any payments due
EDNLP under the Project Agreements or otherwise.

     

                          18.6                      EDNLP Remedies for BMS
Events of Default - The parties agree that upon the occurrence of a BMS
Event of Default (and subject to the continuation of such Event of Default
beyond any applicable cure periods), EDNLP shall have the following rights and
remedies (in addition to the indemnification rights provided for in
Section 20.2 hereof):

     

    (A)           If
a BMS Event of Default occurs due to BMS's failure to provide sufficient
quantities of Ammonia pursuant to Section 18.3(A) hereof or BMS's failure to
provide sufficient quantities of Utilities, Additives or Services pursuant to
Section 18.3(B) hereof, EDNLP shall have the termination rights specified in
Section 19.2 hereof and BMS shall pay to EDNLP the difference between the cost
of any reasonable purchase of ammonia, utilities or services, as the case may be
(including cost of transportation, storage, handling and any other direct costs
associated with procuring substitute ammonia, utilities, additives or services)
and the price of Ammonia, Utilities, Additives or Services, as the case may be,
under the Project Agreements in respect of all Ammonia, Utilities, Additives
and/or Services ordered by EDNLP from BMS 

    

      
        
          
          

        

        
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    during
the existence and continuation of the BMS Event of Default;

     

    (B)           If
a BMS Event of Default occurs due to BMS's failure to provide Ammonia,
Utilities, Additives or Services that meet specifications pursuant to Section
18.3(B) hereof, EDNLP shall have the termination rights specified in Section
19.2 hereof and BMS shall pay to EDNLP its actual damages incurred in connection
with the provision of Ammonia, Services or Utilities failing to meet the
specifications for Ammonia, Services, Additives and Utilities during the
existence and the continuation of the BMS Event of Default;

     

    (C)           If
a BMS Event of Default occurs pursuant to Section 18.3(C) hereof, EDNLP shall
have the termination rights specified in Section 19.2 hereof; provided, however, that if BMS
contests the amounts due EDNLP, BMS and EDNLP shall first resolve such payment
dispute in accordance with Section 24 hereof.  Following such
resolution in EDNLP's favor, EDNLP shall have the termination rights specified
in Section 19.2 hereof provided that BMS does not pay to EDNLP its damages
incurred within a period of thirty days after the decision agreed to among the
parties; and

     

    (D)           In
all other BMS Events of Default, EDNLP shall have the termination rights
specified in Section 19.2 hereof and BMS shall pay to EDNLP its damages, and
EDNLP shall 

    

      
        
          
          

        

        
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    have any
and all other rights and remedies available, whether at law or at
equity.

     

    In addition to any and all other
remedies available to EDNLP as specified above, EDNLP shall have the right to
offset its damages incurred pursuant to an Event of Default against any payments
due BMS under the Project Agreements or otherwise.

    

    SECTION
19:  TERMINATION

     

    19.1                      BMS's Optional Termination
Rights - BMS shall have an option to terminate this Agreement by written
notice to EDNLP upon an occurrence of an EDNLP Event of Default that is not
cured within any applicable cure period;

     

    19.2                      EDNLP's Optional Termination
Rights - EDNLP shall have an option to terminate this Agreement by
written notice to BMS upon an occurrence of a BMS Event of Default that is not
cured within any applicable cure period.

     

    19.3                      Automatic Termination
- This Agreement shall be automatically terminated:

     

    (A)           at
the expiration of the Term, if the Term of this Agreement is not extended beyond
either the Initial Term or any current Renewal Term;

     

    (B)           in
the event that either BMS, on the one hand, or EDNLP or El Dorado on the
other hand (collectively, EDNLP Parties) (i) makes an assignment for the benefit
of creditors, becomes insolvent or admits in writing its inability 

    

      
        
          
          

        

        
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    to pay
its debts as they become due, files a voluntary petition in bankruptcy or a
petition seeking reorganization, liquidation, dissolution or similar relief
under any law or regulation; (ii) either BMS or one of the EDNLP Parties applies
for, consents to or acquiesces in the appointment of a trustee, receiver or
liquidator for itself or any of its property; or (iii) an involuntary bankruptcy
or involuntary insolvency proceeding is commenced by either BMS or either of the
EDNLP Parties and such involuntary bankruptcy or involuntary insolvency
proceeding is not dismissed within ninety (90) days of its
commencement.

     

    19.4                      Effects of
Termination

     

    (A)           In
the event that (i) the Term of this Agreement is not extended beyond either the
Initial Term or any current Renewal Term, (ii) is terminated as a result of
an EDNLP Event of Default, (iii) is terminated as a result of a BMS Event
of Default or (iv) is automatically terminated pursuant to Section 19.3 hereof,
BMS shall pay to EDNLP the appropriate termination fee (as hereinafter
provided); the Project Agreements shall terminate (except as otherwise provided
in Section 7 and in Section 19.4(B) hereof).  In the case of a
termination due to (a) the expiration of the Initial Term or any Renewal
Term, any automatic termination under Section 19.3 hereof, or a BMS Event of
Default, BMS shall pay to EDNLP the Expiration Termination Fee; and (b) an
EDNLP Event of Default, BMS shall pay to EDNLP the EDNLP Default Termination
Fee.  

    

      
        
          
          

        

        
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    EDNLP's
interest in and title to the assets comprising the EDNLP Net Book Value shall be
transferred to BMS upon payment to EDNLP of the Expiration Termination Fee or
the EDNLP Default Termination Fee, whichever is applicable.

     

    (B)           The
termination contemplated by this Section 19 shall be conditioned upon and
subject to the receipt of any necessary regulatory approvals, 

    including
without limitation the expiration of the waiting period under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (if
applicable), and any necessary approvals under the Exon-Florio Act, as amended
(if applicable).  At the termination, subject to payment of the
Expiration Termination Fee to EDNLP by BMS, EDNLP shall take all action
necessary (in the sole discretion of BMS and its counsel) to transfer its
interest in the assets comprising the EDNLP Net Book Value to BMS free and clear
of any and all liens, encumbrances and liabilities (direct, contingent and
otherwise).  The rights and obligations set forth in Section 7, rights
set forth in Section 18, the obligations set forth in this Section 19, and the
indemnification obligations contained in Section 20 and elsewhere in the Project
Agreements shall survive any termination or expiration of the Project
Agreements, and the payment of the Expiration Termination Fee or the EDNLP
Default Termination Fee shall be subject to offset by either party for damages
otherwise recoverable by the respective party hereunder as
applicable.

    

      
        
          
          

        

        
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    (C)           Upon
termination of this Agreement pursuant to this Section 19 or exercise of the
Right of First Refusal pursuant to Section 23 hereof, the nondefaulting
party or parties shall be entitled to recover from the defaulting party or
parties, in addition to all other sums due and payable by the defaulting party
or parties hereunder, all expenses incurred in enforcing this Agreement,
including without limitation, all reasonable attorneys' fees and out-of-pocket
litigation expenses.  Termination of this Agreement for any cause
whatsoever shall not interfere with, affect or prevent the collection by the
nondefaulting party or parties of any and all sums of money accrued hereunder or
otherwise due to the nondefaulting party or parties prior to the date such
termination becomes effective.  Termination of this Agreement for any
reason shall not relieve the defaulting party or parties of any of its or their
unfulfilled obligations under this Agreement, including, without limitation, its
or their indemnification obligations hereunder.

     

    (D) Upon notification of termination or
upon impending expiration of the Agreement, EDNLP shall provide BMS employees
with all necessary information and knowledge required to operate the Nitric Acid
Facility prior to the effective date of the termination or expiration of the
Agreement.

     

    (E)  Notwithstanding anything
seemingly to the contrary herein, Section 7 of this Agreement and provisions

    

      
        
          
          

        

        
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    relating
thereto shall not be terminated and shall survive until twenty (20) years after
the Commencement Date of this Agreement.

    

    SECTION
20:  INDEMNIFICATION

    

    20.1                      EDNLP
Indemnification

     

    (A)           EDNLP
shall indemnify, defend and save BMS and its Affiliates harmless from and
against any and all claims, actions, obligations, suits, damages (whether
direct, actual, special, consequential or otherwise, but excluding lost
profits), fines, penalties, losses, costs, liabilities and expenses, including,
without limitation, reasonable attorneys' fees, out-of-pocket litigation
expenses and other costs incurred by, asserted against or awarded against BMS or
its Affiliates to the extent such claims or damages arise, directly or
indirectly, from, or are related in any way to, EDNLP’s or its subcontractors’
performance of the obligations contained herein, including claims made in
connection with (i) any negligence or misconduct on the part of EDNLP or
its officers, employees, agents, invitees or contractors, (ii) any bodily
injury, loss of life, personal injury or death to persons or damage to property
occurring in or on the Nitric Acid Facility not attributable, in whole or in
part, to the negligence or intentional misconduct of the party seeking to be
indemnified, (iii) any breach by EDNLP of any Environmental, Health and
Safety Law, any Spill or the remediation, abatement, containment, clean-up,
disposal or 

    

      
        
          
          

        

        
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    response
costs associated with environmental conditions at the Bayer Baytown Plant or the
Nitric Acid Facility caused by EDNLP, (iv) any failure by EDNLP to observe or
comply with any applicable Laws , or (v)  a breach of any other EDNLP
covenant or agreement hereunder or under any of the Project Agreements, provided, however, that until
the occurrence of an EDNLP Event of Default: (a) BMS's remedy for EDNLP's
failure to supply Nitric Acid is expressly limited to the difference between all
costs associated with the procurement of substitute nitric acid and the Variable
Costs Component and (b) BMS's remedy for off-specification nitric acid is
expressly limited to actual damages.

     

    (B)           If
EDNLP's indemnification obligations under Section 20.1(A) hereof arise or result
from EDNLP's sole negligence, EDNLP shall (subject to any limitations set forth
in Section 20.1(A) hereof) remain entirely responsible for the results and
consequences of its sole negligence, and if EDNLP's indemnification obligations
under Section 20.1(A) hereof arise or result from joint or concurrent negligence
of more than one party, EDNLP shall be responsible (subject to any limitations
set forth in Section 20.1(A) hereof) for only that portion of the claim, loss,
damage, cost or expense caused by the negligence of EDNLP, EDNLP's agents or
employees, subcontractors retained by EDNLP or agents or employees of such
subcontractors.

    

      
        
          
          

        

        
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    In all
other cases, all remedies under Section 18 hereof and at law and equity are
available to BMS.

     

    20.2                      BMS
Indemnification

     

    (A)           BMS
shall indemnify, defend and save EDNLP and its Affiliates harmless from and
against any and all claims, actions, obligations, suits, damages (whether
direct, actual, special, consequential or otherwise, but excluding lost
profits), fines, penalties, losses, costs, liabilities and expenses, including,
without limitation, reasonable attorneys' fees, out-of-pocket litigation
expenses and other costs incurred by, asserted against or awarded against EDNLP
or its Affiliates to the extent such claims or damages arise, directly or
indirectly, from, or are related in any way to, BMS’s performance of the
obligations contained herein, including claims made in connection with (i) any
negligence or misconduct on the part of BMS or its officers, employees, agents,
invitees or contractors, (ii) any bodily injury, loss of life, personal injury
or death to persons or damage to property occurring in or on the Bayer Baytown
Plant (other than the Nitric Acid Facility) not attributable, in whole or in
part, to the negligence or intentional misconduct of the party seeking to be
indemnified, (iii) any breach by BMS of any Environmental, Health and Safety Law
or any Spill or the remediation, abatement, containment, clean-up, disposal or
response costs associated with environmental conditions at the Bayer Baytown
Plant or the 

    

      
        
          
          

        

        
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    Nitric
Acid Facility caused by BMS, (iv) any failure by BMS to observe or comply
with any applicable laws or government rules or regulations or (v) a breach
of any other BMS covenant or agreement hereunder or any of the Project
Agreements, provided, however, that until
the occurrence of a BMS Event of Default, EDNLP's remedy for BMS's failure to
provide Ammonia, Utilities or Services is expressly limited to the difference
between all costs associated with the purchase of substitute ammonia, utilities
or services, as the case may be, and the price of Ammonia, Utilities or
Services, as the case may be, under the Project Agreements.

     

    (B)           If
BMS's indemnification obligations under Section 20.2(A) hereof arise or result
from BMS's sole negligence, BMS shall (subject to any limitations set forth in
Section 20.2(A) hereof) remain entirely responsible for the results and
consequences of its sole negligence, and if BMS's indemnification obligations
under Section 20.2(A) hereof arise or result from joint or concurrent negligence
of more than one party, BMS shall be responsible (subject to any limitations set
forth in Section 20.2(A) hereof) for that portion of the claim, loss, damage,
cost or expense caused by the negligence of BMS, BMS's agents or employees,
subcontractors retained by BMS or agents or employees of such
subcontractors.  In all other cases, all remedies under Section 18
hereof and at law and equity are available to EDNLP.

    

      
        
          
          

        

        
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    20.3 Indemnification Details -
The indemnity, defense, and hold harmless protections provided under this
Section 20 are expressly intended to include, but are not limited
to:

     

    (A)           Any and all claims and damages for, on
account of, or arising from, personal injuries, sickness, disease or death
actually or allegedly sustained by any party, its subcontractor, Affiliate, or
any third party.  The parties hereby expressly waive, for purposes of
the indemnity, defense and hold harmless protections provided under this Section
20, any workers’ compensation immunity that it would otherwise have under any
applicable law from liability for such personal injury, sickness,
disease or death claims related to any claim brought by the indemnified party or
its Affiliates under this indemnity, defense and hold harmless
agreement.  Such waiver of immunity does not extend to direct claims
or damages brought by, or on behalf of, or awarded to, the indemnifying party’s
employees against the indemnified party, but such waiver is intended to include
claims and damages brought by, or on behalf of, or awarded to, the indemnifying
party’s or its subcontractor’s employees against the indemnified party or its
Affiliates.

     

    (B) Any and all claims and damages
relating in any way to any infringement by any services or materials provided to
either party pursuant to this Agreement of any patent, 

    

      
        
          
          

        

        
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    copyright,
trade secret or other intellectual property right of any person or
entity.

     

    (C)  Any and all claims and
damages for, on account of, or arising from, property damage actually or
allegedly sustained by any third party or party, its subcontractors, or their
Affiliates.

     

    The indemnifying party agrees to
attempt in good faith to timely, amicably and fully settle all claims or damages
asserted or awarded against the indemnified party and that may be covered by
this Section 20 such that the indemnified party and its Affiliates are fully
protected from and against any subsequent claims and damages asserted by the
same claimant.

     

    The indemnifying party’s indemnity
obligations as set forth herein shall not be limited by any limitation on the
amount or type of damages, benefits or compensation payable by or for the
indemnifying party under Worker’s Compensation Acts, Disability Benefit Acts or
other employee benefit acts on account of claims against the indemnified party
or its Affiliates by an employee of the indemnifying party or anyone employed
directly or indirectly by the indemnifying party or anyone for whose acts the
indemnifying party may be liable.  In no event shall the indemnifying
party’s obligations hereunder be limited to the extent of any insurance
available to or provided by the indemnifying party.

    

      
        
          
          

        

        
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    The indemnifying party’s duty to
indemnify, defend and hold harmless the indemnified party and its Affiliates
under this Section 20 shall survive the termination of the Agreement for a
period of two years.  The indemnified party rights to indemnity,
defense and hold harmless protections under this Section 20 are cumulative of,
and are provided by the indemnifying party without prejudice to, any other
rights or remedies available to the indemnified party or its
Affiliates.

     

    20.4                      Notice of Proceedings
- The indemnitee shall give the indemnitor notice of any suit, proceeding or
action (whether pending or threatened) commenced by any party which could give
rise to damages under this Section 20.  Such notice shall be given
within thirty (30) days of indemnitee's discovery or receipt of such matter (but
the failure to notify within such time period shall not rescind the indemnitor's
duty to indemnify but shall only reduce the amount of the indemnification amount
to the extent that the indemnifying party is damaged by such delay). The
indemnitor shall then have the option, at its own cost and expense, to
participate in or assume control of such proceedings by retaining counsel
reasonably acceptable to the indemnitee.  If the indemnitor does not
make its election within thirty (30) days of its receipt of the indemnitee's
notice, the indemnitee may proceed with the defense of the matter and indemnitor
shall be bound by the result.

    

      
        
          
          

        

        
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    20.5                      Insurance -
Notwithstanding anything contained in this Section 20 to the contrary, it
is the intention of the parties to avail themselves, to the maximum extent
possible, of the proceeds of the insurance policies required to be maintained
pursuant to this Agreement and to the extent the damages or expenses referenced
by this Section 20 are paid by such insurance policies (including deductibles),
this indemnity shall be inapplicable.  To the extent that a party’s
indemnity or liability is greater than the proceeds of the insurance policies,
that party shall be solely responsible for the indemnity or liability not
covered by such insurance policies.

     

    SECTION
21:  INJUNCTIVE RELIEF

     

    The parties acknowledge that
irreparable damage may occur in the event that any of the material provisions of
this Agreement are not performed in accordance with their specific terms or are
otherwise breached and such performance does not occur or such breach is not
cured within the period set forth above.  Each of the parties
therefore agrees that the other parties shall be entitled to an injunction or
injunctions to prevent nonperformance or breach of material provisions of this
Agreement and to enforce specifically the terms and provisions hereof, this
being in addition to any other remedy to which they are entitled at law or in
equity.

     

    SECTION 22:  TERM
AND RENEWALS

     

    

      
        
          
          

        

        
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               22.1                      Initial Term - The
Initial Term of this Agreement shall commence on the Effective
Date.

     

    22.2                      Renewals - The Term
of this Agreement shall be automatically renewed for five (5) successive Renewal
Terms each consisting of five (5) years unless either BMS or EDNLP has given the
other party written notice of its intention not to renew the Term of this
Agreement not less than twelve (12) and no more than eighteen (18) months before
the expiration of the Initial Term or the current Renewal Term, as the case may
be.  If either party gives such notice, then not more than ninety (90)
days nor less than sixty (60) days before the end of the Term, BMS shall pay to
EDNLP the Expiration Termination Fee and shall terminate this Agreement pursuant
to Section 19 hereof.

    

    SECTION 23:  RIGHT
OF FIRST REFUSAL

     

    23.1(A)  Change of Control
Event - Upon the occurrence of a Change of Control Event, EDNLP shall
notify BMS of BMS's option and right to pay the Expiration Termination Fee and
to terminate this Agreement pursuant to Section 19 hereof.  BMS shall
have a reasonable amount of time, not to exceed sixty (60) days, from its
receipt of notice of a Change of Control Event to exercise an option to pay to
EDNLP the EDNLP Expiration Termination Fee and to terminate this Agreement in
accordance with Section 19 hereof.

    

      
        
          
          

        

        
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    23.1(B)  Third Party Offer -
If EDNLP desires to sell and receives a bona fide third-party offer to purchase
any voting equity securities of EDNLP or the assets comprising the EDNLP Net
Book Value (other than purchases of product in the ordinary course of business)
that EDNLP would like to accept, EDNLP shall notify BMS of BMS's option and
right to pay either the Expiration Termination Fee or the amount of the third
party offer, whichever is lower, and to terminate this Agreement pursuant to
Section 19 hereof (the Right of First Refusal).  BMS shall have a
reasonable amount of time, not to exceed sixty (60) days, from its receipt of
the notice of a bona-fide third party offer to exercise an option to pay to
EDNLP the EDNLP Expiration Termination Fee or the amount of the third party
offer and to terminate this Agreement in accordance with Section 19
hereof.

     

    23.2                      Injunctive Relief and
Specific Performance - The parties acknowledge that irreparable damage
may occur in the event that any of the material provisions of this Section 23
are not performed in accordance with their specific terms or are otherwise
breached and such performance does not occur or such breach is not cured within
the period set forth above.  Each of the parties therefore agrees that
the other party will be entitled to an injunction or injunctions to prevent
nonperformance or breach of material provisions of this Section 23 and to
enforce specifically the terms and provisions 

    

      
        
          
          

        

        
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    hereof,
this being in addition to any other remedy to which they are entitled at law or
in equity.

    

    SECTION
24:  DISPUTE RESOLUTION

     

    24.1                      General - Unless
otherwise provided herein or in the Project Agreements, any dispute arising
hereunder or under the Project Agreements shall be resolved in the manner
specified in this Section 24.

     

    24.2                      Dispute Resolution -
The parties agree to exercise reasonable efforts to resolve any dispute promptly
and within a reasonable period of time.  If any such dispute cannot be
resolved within fifteen (15) Business Days, either party shall have the right to
notify the other party that it wishes to convene a personal meeting between the
senior management of BMS and the senior management of EDNLP.  Such
meeting shall take place within fifteen (15) Business Days of the delivery of
such notice.  The representatives of the parties shall then meet and
attempt in good faith to resolve the subject dispute.  If such attempt
is unsuccessful, either party may proceed to litigate the matter at
issue.  Any such negotiation or series of negotiations shall be
maintained as confidential by the parties and the parties covenant that they
shall not disclose (other than to their respective Affiliates) either the
existence of such proceedings or the content thereof to any other party without
the express written consent of the opposite party.  Any 

    

      
        
          
          

        

        
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    participation
in or initiation of such discussions shall not be deemed to be an admission of
liability and no statement made or provided in or related to such negotiations
shall be construed as a statement against interest or otherwise disclosed or
used in any proceeding involving the parties.

     

    24.3                      Commencement of Legal
Actions - In the absence of irreparable harm or material damages, the
parties agree that no party shall be entitled to commence any legal action to
resolve any dispute hereunder prior to the completion of the procedures
specified in Section 24.2 hereof.  If a party declines or fails to
participate in the meeting contemplated by Section 24.2 hereof, the other party
shall be entitled to request any court of competent jurisdiction to grant a stay
of litigation while the parties attempt to settle the litigation through this
negotiation method.  The party declining to participate agrees not to
oppose such a stay.

     

    24.4                      Governing Law - The
construction and interpretation of this Agreement shall be governed by the
internal laws of the State of Texas, without regard to conflicts-of-laws
provisions.

     

    24.5                      Submission to
Jurisdiction - The parties hereto hereby irrevocably submit to the
jurisdiction of the United States District Court located in Harris County, Texas
over any dispute arising out of or relating to this Agreement or any of the
transactions contemplated hereby.  Each party hereby 

    

      
        
          
          

        

        
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    irrevocably
agrees that all claims in respect of such dispute or proceeding shall be heard
and determined in such court.  The parties hereby irrevocably waive,
to the fullest extent permitted by applicable law, any objection that they may
now or hereafter have to the venue of any such dispute brought in such court,
and any defense of inconvenient forum of any dispute under the Project
Agreements.

     

    24.6                      Consent to Service of
Process - Each of the parties hereto hereby consents to process being
served by either party to this Agreement in any suit, action or proceeding by
mailing of a copy thereof in accordance with the provisions of Section 30
hereof.

     

    SECTION
25:  ENTIRE AGREEMENT

     

    This Agreement, the Technology
Agreement,  and the Confidentiality Agreements together with all the
amendments thereto and the schedules attached hereto and thereto, contain the
entire understanding of the parties and supersede any prior understanding and
agreements among them respecting the subject matter hereof and
thereof.  There are no agreements, arrangements or understandings,
oral or written, between and among the parties hereto relating to the subject
matter of this Agreement and the other Project Agreements that are not set forth
or expressly referred to herein or therein.

    

    SECTION
26:  MODIFICATION

    

      
        
          
          

        

        
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    This
Agreement shall not be modified or amended, except by written instrument
executed by the duly authorized officers of the parties hereto.

     

    SECTION
27:  PAYMENTS

     

    All amounts payable hereunder shall be
paid in lawful money of the United States on a net fifteen (15) day basis, with
interest to accrue thereafter at a rate equal to the prime rate charged by
Citibank, N.A.  The acceptance by either party of bank drafts, checks
or other media of payment will be subject to immediate collection of the full
face amount thereof and the payment shall not be deemed to have been paid until
actually received in cash by the respective party, except that no interest shall
be charged after receipt of any bank drafts, checks or other media of payment
that is collected in cash in the ordinary course of business and without unusual
delay.

    

    SECTION
28:  DEMURRAGE

     

    BMS or EDNLP shall unload and release
all transportation equipment promptly to minimize demurrage or other
out-of-pocket expense resulting from delivery.  The amount of any
demurrage or out-of-pocket expense resulting to either party from the other
party's delay in unloading or releasing transportation equipment will be paid by
the responsible party.

     

    SECTION
29:  COOPERATION

     

    
      
        
        

      

      
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      The parties hereto shall cooperate and
take all such reasonable and necessary actions required to achieve the stated
purposes of the Project Agreements during the Term hereof. EDNLP shall use
reasonable efforts to optimize the total cost for operation of the Nitric Acid
Facility, taking into account various operating parameters, including without
limitation the value of steam, the required production rates, and ambient
conditions.  EDNLP shall consult with BMS on its operating plans at
least quarterly to manage total Nitric Acid costs to BMS.  The parties
acknowledge that operating the Nitric Acid Facility at higher production rates
may result in lower yields.  If this were to occur, the parties shall
meet to resolve any concerns.

    

    

    SECTION
30:  NOTICES

     

    Any notice, communication or statement
required or permitted to be given hereunder shall be in writing and deemed to be
sufficiently given when delivered in person, or on the second Business Day
following the date of transmission by U.S. certified or registered mail, return
receipt requested, or on the Business Day following the date of transmission by
overnight courier to the address of the respective party below:

     

     

    
      	
               
      

            	
              Bayer
      MaterialScience LLC

            

    

    
      	
               
      

            	
              100
      Bayer Road

            

    

    
      	
               
      

            	
              Pittsburgh,
      Pennsylvania 15205-9741

            

    

    
      	
               
      

            	
              Attn:

            	
              Vice
      President, Procurement

            

    

    

    
      	
               
      

            	
              Bayer
      MaterialScience LLC

            

    

    
      	
               
      

            	
              8500
      West Bay Road

            

    

    
      	
               
      

            	
              Baytown,
      Texas  77520

            

    

    
      	
               
      

            	
              Attn:  Head
      of Basic Chemicals Production

            

    

     

    
       

      
        
          
          

        

        
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              El Dorado
      Nitrogen, L.P.

            

    

    16 South Pennsylvania
Avenue

    Oklahoma City, Oklahoma
73107

    Attn:  President

    

    El Dorado Chemical
Company

    16 South Pennsylvania
Avenue

    Oklahoma City, Oklahoma
73107

    Attn:                                President

    

    
      	
               
      

            	
              and:

            	
              LSB
      Industries, Inc.

            

    

    16 South Pennsylvania
Avenue

    Oklahoma City,
Oklahoma  73107

    Attn:  General
Counsel

    

    Either
party may, by notice given as aforesaid, change its address or its party that
receives notices for all subsequent notices.

    

    

    

    SECTION
31:  BINDING AGREEMENT

     

    This Agreement shall be binding upon
and shall inure to the benefit of the respective successors and assigns of the
parties hereto, as the case may be, and may not be terminated, modified, changed
or amended, except by a written instrument signed by the party to be
charged.

    

    SECTION
32:  WAIVER

     

    No waiver by BMS or EDNLP of any
default or breach of any covenant, condition or stipulation herein shall be
treated as a waiver of any subsequent default, or breach of the same or any
other covenant, condition or stipulation hereof.

    
       

      
        
          
          

        

        
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    SECTION
33:  CONSTRUCTION

     

    The singular form of any word used
herein shall include the plural, and vice versa.  The use herein of a
word of any gender shall include each of the masculine, feminine and neuter
genders.  The headings or titles of the several sections and
paragraphs of this Agreement are for convenience only.  They shall not
affect the meaning, construction or effect of the provisions hereof and do not
constitute a part of this Agreement.

     

    Nothing contained in or done pursuant
to this Agreement or any of the other Project Agreements shall be deemed or
construed by the parties hereto, or by any third party, to create the
relationship of principal and agent, partnership, joint venture or any
association whatsoever between BMS and EDNLP.  It is expressly
understood and agreed that no provisions contained in this Agreement, nor any
act or acts of the parties hereto, shall be deemed to create any agency,
partnership or joint venture relationship between BMS and EDNLP.

    

    SECTION
34:  COUNTERPARTS

     

    This Agreement may be executed in two
or more counterparts, each of which shall be deemed an original, but all of
which taken together constitute one instrument.

    

    SECTION
35:  ASSIGNMENT

    
       

      
        
          
          

        

        
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    EDNLP may not assign its respective
rights and obligations under the Project Agreements to any other party without
first obtaining the express written consent of BMS, which consent may be granted
or withheld by BMS in its sole discretion; provided, however
that upon the termination or expiration of this Agreement, EDNLP may assign its
rights and obligations under Section 7 of this Agreement without
restriction.

    

    SECTION 36:  AUDIT
RIGHTS

     

    Each calculation, adjustment, payment
or estimate made pursuant to the Project Agreements shall be supported by
appropriate work papers and background data and shall be made in conformity with
GAAP.  Each party shall have the right, at its own expense, to employ
a firm of independent certified public accountants to conduct an audit of any
adjustment or calculation made pursuant to the Project
Agreements.  Such auditors shall execute agreements of confidentiality
reasonably acceptable to both parties, approval of the form of which shall not
be unreasonably withheld.  The parties agree that they shall exercise
reasonable, good faith efforts from time to time throughout the Term in an
effort to minimize the administrative and accounting burdens on one another that
may be occasioned by the application of this Section 36.

     

    SECTION
37:  GUARANTY

    
       

      
        
          
          

        

        
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    The Guarantor hereby unconditionally
guarantees the full and faithful performance by EDNLP of all of the terms,
provisions, representations, warranties and obligations of EDNLP pursuant to the
Project Agreements, including without limitation the indemnification and
remedial provisions of the Project Agreements.  The Guarantor further
agrees that BMS may, without notice to or further assent of the Guarantor, and
without in any way releasing or impairing the obligations of the Guarantor
hereunder (i) waive compliance with, or any default under, the Project
Agreements; (ii) modify or amend any provisions of the Project Agreements with
the written consent of EDNLP only; (iii) grant extensions or renewals of
any of the obligations of EDNLP; and (iv) in all respects deal with EDNLP as if
this guaranty were not in effect.  The obligations of the Guarantor
under this guaranty shall remain in force notwithstanding any event that would,
in the absence of this clause, result in the release or discharge by operation
of law of the Guarantor from the performance of its obligations
hereunder.  The liability of the Guarantor under this guaranty to BMS
shall be a guaranty of performance and of payment, not merely a guaranty of
collection, and the liability of the Guarantor under this guaranty shall not be
contingent upon the exercise by BMS of any right it may have in respect of the
Guarantor.  This guaranty obligation is not intended to and shall not
release or extinguish any obligations of EDNLP to BMS.  The provisions
of this Section 37 are not 

    
       

      
        
          
          

        

        
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    intended
to create and shall not create or impose any obligations on the Guarantor in
favor of any third party, the provisions of this Section 37 being only for the
benefit of BMS.

    

    SECTION 38:  FORCE
MAJEURE

     

    Upon the occurrence of a Force Majeure
Event, the obligations of the parties shall be suspended pending removal,
termination or cure of the Force Majeure Event, except the obligation to make
payments due under this Agreement.  This Section 38 shall apply to all
provisions, terms and conditions of this Agreement, notwithstanding anything
seemingly to the contrary herein.

    

    SECTION
39:  CONTROLLING AGREEMENT

     

    To the extent any of the Project
Agreements contain conflicting provisions, the terms of this Agreement shall
control.

    IN WITNESS WHEREOF, the undersigned
have executed this Nitric Acid Supply, Operating and Maintenance Agreement
effective as of the date first above written.

    

    BAYER
MATERIALSCIENCE LLC

    

    

    

    By:   /s/ Gregory S.
Babe                  

    

    Name:

    Gregory
S.
Babe                                 
       

    Title:   President and
CEO                                                                        

    
       

      
        
          
          

        

        
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    EL DORADO
NITROGEN, L.P.

    

    

    

    By:  /s/ Anne O. Rendon                                                                                

    

    Name:  Anne O. Rendon                                                                                 

    

    Title:   President of the General Partner of El Dorado
Nitrogen, LP, 

        El Dorado Acid LLC                                                                

    

    
      
        
        

      

      
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    El Dorado Chemical Company executes
this Nitric Acid Supply, Operating and Maintenance Agreement solely for purposes
of the representations, warranties and covenants set forth in Section 9.2
hereof, the provisions of Section 18.4 hereof, the guaranty set forth in Section
37 hereof and the Back-up Supply Plan attached hereto as Exhibit
B.

    

    EL DORADO
CHEMICAL COMPANY

    

    

    

    By:  /s/ Tony M. Shelby                                                                               

    

                                                          Name:Tony M. Shelby    

    

                                                          Title: 

                                        Vice President        

    
      
        
          
          

        

        
          - 131
-

          
            

          

        

         

      

    EXHIBIT
A

    SITE
DATA

    

    

    1.1  Location and Site
Data

    

    
      	
              Plant
      Location:

            	
              Baytown,
      Texas, on portion of Block 12C

            

    

    

    Typical
Climatological Data:

    

    
      	
              Height
      above sea level

            	
              23
      feet

            
	
              Minimum
      Winter temperature

            	
              17°
    F

            
	
              Maximum
      summer temperature

            	
              102°
    F

            
	
              Design
      air temperature for aircooled exchangers

            	
              105°
    F

            
	
              Direction
      of Prevailing Winds

            	
              S/SE

            
	
              Design
      max. wind strength

            	
              125
      mph for the absorber column; others per 1995 Code

            
	
              Design
      max. rainfall intensity

            	
              2.5
      inches/hour

            

    

    

    

    1.2  Product
Storage

    

    BMS
requires storage tanks to have secondary containment for product
storage.  Tanks provide 4900 tons (100 percent acid basis) days
storage at plant capacity.  EDNLP shall include product pumps and
necessary piping to users.  EDNLP shall also provide acid piping to
battery limits with a separate metering station for nitration and
mononitrobenzene (MNB).

    

    

    1.3  Civil Engineering
Information

    

    Refer to
Fugro-McClelland (Southwest), Inc. report of August 29,
1996.  The piling on all absorbers is no lower than thirty-two feet
(32') below mean sea level assuming a grade of at least 23' above mean sea
level.  IF EDNLP requires any additional soil investigation, EDNLP
shall arrange for the performance of such investigations and shall bear the cost
of the same.  BMS requests one copy of any soil investigation done by
EDNLP.

    

    1.4           Metes
And Bounds Description

    

    Tract
I

    

    Field
notes of a 2.755 acre tract of land situated in the Christian Smith League,
Abstract No. 22, Chambers County, Texas, and being out of and a part of the
following tracts of land:

    

    
      	
               
      

            	
              1.

            	
              A
      called 45.837 acre tract of land conveyed to Mobay Chemical Company by
      Sidney S. McClendon III, Trustee by

            

    

     

     

    
      
        
          
          

        

        
          - 132
-

          
            

          

        

         

      
deed dated March 10, 1970 and recorded in Volume
313 at page 345 of the Deed Records of Chambers Country, Texas.

    
      	
               
      

            	
              2.

            	
              A
      called 286.359 acre tract of land conveyed to Mobay Chemical Company by
      Sidney S. McClendon III, Trustee by deed dated March 10, 1970 and recorded
      in Volume 313 at page 340 of the Deed Records of Chambers Country,
      Texas.

            

    

    

    This
2.755 acre tract of land is more particularly described by metes and bounds as
follows, to-wit:

    

    Note:  All
bearings are Lambert Grid Bearings and all coordinates refer to the State Plane
Coordinate System, South Central Zone, as defined by Article 5300A of the
revised civil statutes of the State of Texas.  Scale factor equal
0.9998961.  Lambert Grid bearings to plant bearings -12 Deg 31 Min 34
Sec in the northwest and southeast quadrant, +12 Deg 31 Min 34 Sec in the
Northeast and Southwest Quadrant.  Reference is made to plat of even
date accompanying this description.

    

    Commencing at the
Northeast corner of said 45.837 acres, the Northwest corner of said 286.359
acres, and in the South line of a 166.443 acre tract of land conveyed to Mobay
Chemical Company by Sidney S. McClendon III, Trustee by deed dated January 4,
1974, and recorded in Volume 352 at Page 148 of the Deed Records of Chambers
County, Texas, having a State Plan Coordinate System value of X equal
3,297,676.49 and Y equal 725,015.83.

    

    Thence South 34 Deg
28 Min 15 Sec West across said 45.837 acres a distance of 706.72 feet to a 1⁄2
inch iron rod set for the Northwest corner of this tract of land, and in the
centerline of a 50 foot road right of way, said corner being the Place of
Beginning.  This corner has a State Plane Coordinate System Value of X
equal 3,297,276.54 and Y equal 724,433.26, and a Plant Coordinate Value of N
equal 7630 and E equal 7215.

    

    Thence North 77 Deg
28 Min 26 Sec East with the North line of this tract of land, and across said
45.837 acres a distance of 300.00 feet to a 1⁄2 inch iron rod set for the
Northeast corner of this tract of land in the centerline of a 50 foot right of
way.

    

    Thence South 12 Deg
31 Min 34 Sec East with the East line of this tract of land, the centerline of
said 50 food road, across said 45.837 acres, and across said 286.359 acres a
distance of 400.000 feet to a 1⁄2 inch iron rod set for the Southeast corner of
this tract of land.

    

    Thence South 77 Deg
28 Min 26 Sec West with the South line of this tract of land, and across said
286.359 acres a distance of 300 feet to a 1⁄2 inch iron rod set for the Southwest
corner of this tract of land, and in the centerline of said 50 foot
road.

    

    Thence North 12 Deg
31 Min 34 Sec West with the West line of this tract of land, the centerline of
said 50 foot road, across said 45.837 acres, and across said 286.359 acres a
distance of 

     

    
      
        
          
          

        

        
          - 133
-

          
            

          

        

         

      

    

    400.000
feet to the Place of Beginning, containing within said boundaries 2.755 acres of
land.

    

    1.5  Nameplate
Capacity

    

    The
Nitric Acid Facility has a nameplate capacity of 443,000 short tons (100% basis)
per year.

     

    
      
        
          
          

        

        
          - 134
-

          
            

          

        

         

      

    EXHIBIT
B

    

    

    BACK-UP SUPPLY
PLAN

    

    SUPPLY FOR OUTAGES,
Start-Ups, or Shortfalls up to the Total Estimates

    

    ASSUMPTIONS:

    
      	
               
      

            	
              ·

            	
              In
      the event of a planned outage, beginning storage at minimum level of 95%
      capacity, 4750 tons (100% basis)

            

    

    

    
      	
               
      

            	
              ·

            	
              Storage
      capacity of 5000 tons (100% basis)

            

    

    

    
      	
               
      

            	
              ·

            	
              During
      an outage, BMS usage rate does not exceed BMS nameplate consumption
      (approximately 1,200 tons per day)

            

    

    

    
      	
              Note 1:

            	
              EDNLP
      shall invoice BMS for all costs incurred in the delivery of Nitric Acid
      hereunder.  If the outage is caused by BMS, the price for Nitric
      Acid shipped from the El Dorado, Arkansas plant shall be the actual
      delivered cost of El Dorado ammonia in the nitric acid for the month in
      which the nitric acid was shipped, plus the average conversion fee paid by
      El Dorado’s other nitric acid customers, plus the actual freight charges
      incurred by El Dorado or EDNLP, as applicable.  If the outage is
      caused by EDNLP, the price for Nitric Acid shipped from the El Dorado,
      Arkansas plant shall be the then-current price for Nitric Acid shipped to
      BMS under the Nitric Acid Supply, Operating and Maintenance Agreement
      (adjusted for different ammonia costs) plus the applicable transportation
      charges.  If the cause of the outage cannot be determined, the
      parties will negotiate in good faith a reasonable price for the nitric
      acid shipped from El Dorado.

            

    

    

    
      	
               
      

            	
              When
      feasible, nitric acid shall be supplied on a swap basis, whether from El
      Dorado or a third party.

            

    

     

    
      
        	
                 
      

              	
                All
      Nitric Acid delivered to BMS shall meet the specifications set forth in
      Section 2.2 of the Nitric Acid Supply, Operating and Maintenance
      

              

      

      

    

     

    
       

      
        
          
          

        

        
          - 135
-

          
            

          

        

         

      

    

    
 

    
      	
               
      

            	
              Agreement.
      The price for nitric acid shipped from third parties shall be in all cases
      the price billed to EDNLP plus the applicable transportation
      charges.

            

    

    

    
      	
               
      

            	
              EDNLP
      will use reasonable efforts to supply Nitric Acid hereunder at the lowest
      cost to BMS. Reasonable efforts include supplying BMS with shipments from
      its El Dorado, Arkansas facility when product is available, unless the
      total delivered cost to BMS of a third party shipment is lower than the
      total delivered cost from El Dorado’s facility.  Shipments from third
      parties must have BMS’s prior
approval.

            

    

    

    
      	
              Note 2:

            	
              El
      Dorado will not hold capacity idle to cover outages; however, any
      allocation of nitric acid to downstream products, including any internal
      production, or proportionate sales of nitric acid from El Dorado is
      subject to EDNLP first providing to BMS a minimum of fifty percent (50%)
      of BMS’s requirements for Nitric Acid (50% of BMS’s monthly requirements
      are currently estimated to be approximately 18,500 tons) from El Dorado or
      a combination of nitric acid from El Dorado and other
    sources.

            

    

    

    
      	
              Note 3:

            	
              The
      supply plan for an outage is subject to availability of drivers and
      transportation equipment suitable for nitric acid services, which EDNLP
      currently believes will be available. EDNLP will use its best commercial
      efforts to obtain suitable drivers and transportation equipment. Nitric
      acid that cannot be delivered due to unavailability of transportation
      equipment shall not be included as Production
  Shortfall.

            

    

    

    
      	
              Note 4:

            	
              Subject
      to the provisions of Note 3 herein and allowing for a phase-in period (as
      shown by example below) whereby it may take several days to reach such
      delivery requirements, regardless of (1) the cause of an outage; (2)
      whether an outage is planned or unplanned; or (3) whether the assumptions
      stated above occur in fact, EDNLP is required in the event of an outage to
      provide BMS a minimum of fifty percent (50%) of BMS’s monthly requirements
      of Nitric Acid, estimated to be approximately 18,500 tons, equivalent to
      an average of approximately forty tank trucks per
  

            

    

    

     

    
      
        
          
          

        

        
          - 136
-

          
            

          

        

         

      

    

     

    
      
        	
                 

              	
                 day.  For
      further clarification, the parties agree that subject to the phase-in
      period (as shown by example below), EDNLP shall provide to BMS a minimum
      of one-fourth (1⁄4) of fifty percent (50%) of BMS’s monthly requirements of
      Nitric Acid per week for the duration of the
  outage.

              

      

       

    

    

    
      	
               
      

            	
              Example:

            

    

    
      	
              Day
      #

            	
              Est. Trucks/
      Tons

            	
              Daily
      Use

            	
              Ending
      Inventory

            

    

    
      	
              0

            	
              0

            	
              4300

            

    

    
      	
              1

            	
              15/
      230

            	 	
              600

            	
              3930

            

    

    
      	
              2

            	
              20/
      305

            	 	
              600

            	
              3635

            

    

    
      	
              3

            	 	
              30/
      460

            	 	
              600

            	
              3495

            

    

    
      	
              4

            	
              40/
      610

            	 	
              600

            	
              3505

            

    

    
      	
              5

            	
              40/
      610

            	 	
              600

            	
              3515

            

    

    

    
      
        
        

      

      
        - 137

        
          

        

      

       

    

     

    
      SCHEDULE
1

      Utilities
and Chemical Additives Supplied by BMS

      

      

      (A)
- Water

      

      Plant water:

      The
Coastal Water Authority supplies raw water to the Bayer Baytown Plant through
the canal which runs to the east of the site.  This water flows either
directly to the south plant water system or to one of two 7.5 million gallon
reservoirs at the east plant water system.  The reservoirs provide
both reserve capacity for the fire water system and storage of raw water to be
processed in the east plant water system.  At both plant water
systems, the raw water is chemically treated prior to being introduced into the
systems’ clarifiers.  The clarified water is then sent through a set
of sand filters.  The sand filter effluent is stored in either a 1
million gallon tank at the south system or a 1.5 million gallon storage tank at
the east system. Under normal operations, plant water is distributed to the site
at approximately 135 PSIG.

      

      Typical
EDNLP monthly volume is estimated to be 20 million gallons at an average rate of
approximately 450 gallons per minute.  The EDNLP water consumption
shall not exceed a maximum rate of 870 gallons per minute.  The
maximum plant water system pressure (system design pressure) is 145
PSIG.

      

      Demineralized
water:

      Plant
water is initially run across one of four carbon beds to reduce organics and
improve turbidity.  The filtered water then travels through one of
four demineralized water trains.  With each train, the filtered water
is first sent across the cation exchanger where the positive ions are
removed.  The decationized water then flows across the anion exchanger
where the negative ions are removed.  Train 4 utilizes a decarbonator
(removes CO2) prior to
a series of weak and strong anion beds.  The effluent from the anion
bed then travels through the mix bed exchanger containing both types of resin
which produces a virtually ion free water.  This water is then sent to
the 300,000 gallon storage tank.  Under normal operations,
demineralized water is distributed to the site at approximately 120 PSIG from
BMS Environmental Control Department and Utilities (ECDU).  The Chlor
Alkali unit also exports on average approximately 350 to 400 gallons per minute
of demineralized water into the plant supply system.

       

      The
normal maximum EDNLP consumption rate is 40 gallons per
minute.  Demineralized water can also back up the boiler feed water
supply.  The maximum demineralized water pressure (system design
pressure) is 140 psig.

       

      In the
event BMS cannot provide boiler feed water meeting the specifications and
quantities specified, EDNLP shall be entitled to use demineralized water for
makeup up to a maximum quantity of 275 gallons per minute, subject, however, to
reasonable allocation among 

       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      BMS and
its guest facilities in the event of a shortage of such demineralized
water.

       

      

      Fire water:

      The Bayer
Baytown Plant’s fire water system is supplied from two locations at the site
(east or west).  At the east system, raw water from the site’s
reservoirs is supplied to a combination of diesel and electric motor driven
pumps.  These pumps supply the main system header, which encompasses
the entire site.  Pressure is maintained in this header at
approximately 125 PSIG by the electric "jockey" pump.  A decrease in
the header pressure will automatically start the diesel fire water pumps. An emergency fire water
reserve of approximately 2.4 million gallons is maintained at the east
system.  The west system has a dedicated 2.0 million gallon capacity
when at normal operating level.  This system is equipped with an
electric motor driven "jockey" pump to maintain header pressure.  The
west system also has two diesel driven fire water pumps to maintain system
pressures in the event of a loss of power to the area.

      

      BMS will
supply fire water to the Battery Limits of the Nitric Acid Facility at a
sufficient pressure and flow rate to meet EDNLP design and insurance
requirements of the Nitric Acid Facility.

      

      Potable water:

      The Bayer
Baytown Plant receives potable water through of a 12-inch diameter header from
the City of Baytown.  Under normal operations, the potable water is
distributed at approximately 100 PSIG using one of the two booster pumps
equipped with variable speed drives.  During freeze precautions the
larger of the two potable water booster pumps is used to meet demand at
approximately 135 PSIG.  In the event of an electrical failure, the
emergency potable water diesel pump will automatically start to maintain system
pressures.  Potable water is to be used exclusively to supply safety
showers, eye wash stations, and routine potable water needs in the
plant.

      

      Typical
monthly volume is estimated to be approximately 5,000 gallons. Potable water
consumption shall not exceed a maximum monthly rate of 20,000
gallons.  Potable water shall meet the minimum municipal
guidelines.  The maximum pressure (system design pressure) is 150
PSIG.

       

      Boiler feed
water:

      The
condensate returned from the steam users at the site is collected in one of two
drums where flash steam is recovered.  The condensate is then sent to
a deaerator where the recovered flash steam is used to strip the non-condensable
gases and heat the water to its saturation point.  Chemicals are added
at this point to remove the remaining oxygen and limit system piping
corrosion.  Under normal operations boiler feed water supply to EDNLP
operates in the range from 150 to 230 PSIG.  The boiler feed water
system design pressure is 230 PSIG.

      

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      (B) Nitrogen:

      The Bayer
Baytown Plant is supplied from a single supplier through both of the sites two
metering stations (south and east).  The nitrogen from the east
metering station is supplied at approximately 140 PSIG to the
site.  Nitrogen from the south metering station is supplied at both
140 PSIG and approximately 400 PSIG.  The 400 PSIG nitrogen system is
to be used solely for the site’s emergency shutdown systems.

      

      The
continuous usage is estimated to be minor.  Monthly volume on an
intermittent basis is approximately 15,000 - 25,000 SCF.  The maximum
pressure (system design pressure) is 150 PSIG for the 140 PSIG
system.

      

      C)Instrument/plant
air:

      Plant and
instrument air is supplied to the Bayer Baytown Plant via five air compressors
operated in parallel at one of two locations (west and north
systems).  At the west air system, the compressed air from any of the
three compressors in service enters the adjacent air receivers that act as
pulsation dampeners.  The compressed air is then sent through a set of
air dryers prior to being distributed to the plant air or instrument air
distribution systems.  The discharge piping is arranged so that any
compressor can feed either air header.  At the north air system, the
compressed air exits one of the two compressors, then enters the adjacent air
dryers.  It is then sent to the adjacent air receiver prior to being
sent to either the plant or instrument air headers.  Both instrument
and plant air are distributed above 90 PSIG and at a -40 F dew
point.  In the event of pressure loss in the instrument air system,
there are two emergency nitrogen connections to supply nitrogen to the
instrument air header and maintain system pressure.

      

       

      Typical
volume during truck unloading is estimated to be 300 SCFM. Typical monthly
volume is expected to be 1.5 - 2.5 million SCF at an average rate of
approximately 50 SCFM.  The maximum plant/instrument air pressure
(system design pressure) is 120 PSIG.

       

      During
the plant start-up, plant air must be used to seal the compressor train until
minimum governor speed is reached. Plant air consumption shall not exceed a
maximum rate of 700 SCFM during process start-up.

      

      (D)Steam:

      Steam at
the Bayer Baytown Plant is supplied at three pressures (720 PSIG, 630 PSIG, and
150 PSIG).  The majority of 720 PSIG steam is supplied to the site by
the Calpine Cogeneration Unit located on the north side of the
site.  Typically, the steam supplied by this unit is letdown through
the site’s letdown stations for use by the production units.  The 630
PSIG steam is supplied either through one of the two 720 PSIG to 630 PSIG steam
letdown stations or produced by one of the site’s waste heat
boilers.  The letdown stations operate on pressure control and supply
630 PSIG steam as needed to satisfy production demands.  The site’s
150 PSIG steam is supplied through one of the two 

       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      630 PSIG
to 150 PSIG steam letdown stations or one of the site’s waste heat
boilers.

      

      Except
for each start-up and shutdown of the Nitric Acid Facility, during normal
operation EDNLP will not consume steam from BMS.  EDNLP shall export
approximately 30,000 to 60,000 pounds of steam per hour to BMS.  The
EDNLP export steam pressure will be adequate to supply the site 630 PSIG steam
system.  All steam treatment must be compatible with the BMS steam
treatment system.

       

      (E) Natural gas:

      Natural
gas to Bayer Baytown Plant is supplied by a primary and secondary supplier at
each of the site’s two metering stations.  Natural gas from the
primary supplier is distributed to the site from both the east and south
metering stations at approximately 90 PSIG.  The secondary supplier is
used solely as a back-up at the south metering station and will automatically
begin supplying gas if the system’s pressures fall below 80 PSIG.

      

      No
natural gas is consumed in the nitric acid manufacturing
process.  Natural gas may be used in the laboratory or in the offices
and buildings for heat and air conditioning.  Natural gas consumption
is estimated to average less than 1 SCFM.

      

      (F)
Chlorine

      Chlorine
is used for water treatment at the cooling tower.  Based on the
anticipated blowdown rate, chlorine consumption will average 100 pounds per day,
with a peak consumption of 170 pounds per day.  The chlorine will be
standard commercial grade with a minimum of 99.5% chlorine by weight. The
maximum chlorine supply pressure (system design pressure) is 150
PSIG.

      

      (G)
32% caustic (32% NaOH, 32% sodium hydroxide)

      32%
caustic will be used primarily for neutralization.  Caustic
consumption will average 25-30 pounds per day on a 100% basis with peak
consumption of 1,500 pounds per day.  BMS supplies 32% membrane grade
caustic solution to EDNLP.  The maximum supply pressure (system design
pressure) is 175 PSIGS.

      

      (H)
98% sulfuric acid

      BMS
provides 98% sulfuric acid deliveries to EDNLP for the cooling tower via tank
trucks.  Trucks are typically scheduled on Wednesday of each
week.  The supplier monitors the sulfuric acid tank
level.  Based on this information 98% sulfuric acid deliveries are
scheduled by BMS as needed.  EDNLP may also contact the BMS
Environmental Control Department and Utilities to be put on the schedule for the
next delivery, at least one day in advance.  Approval of the
Certificate of Analysis is done by the polyurethane quality area prior to
delivery to EDNLP.  At the end of the month, BMS informs EDNLP of the
amount of 98% sulfuric acid delivered during the month.  EDNLP reports
this number to the appropriate accounting department, which is then included in
the monthly Variable Cost Component.

      

      
        
           

        

        
           

          
            

          

        

        
           

        

      

       

      SCHEDULE
2

      

      

      AMMONIA

      

      Purchased
Anhydrous Ammonia Specification

      

      Ammonia,
Anhydrous - Commercial Grade

      

      Properties:

      

      Appearance                                                                               Clear,
colorless Liquid

      Oil,
PPM                                                                                 5.0 ppm

      Water,
weight
%                                                                       0.5%
maximum

      
        	
                Iron
      (Fe), PPM

              	
                1
      maximum

              

      

      
        	
                Nonvolatile

              	
                0.5%
      maximum

              

      

      Delivery
Pressure                                                                     200
P.S.I.G.

      Delivery
Temperature,
expected                                            Ambient

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      

      
        	 
      	
                SCHEDULE 3

              
	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      
	 
      	
                EDNLP
      NET BOOK VALUE

                (To
      be completed as of July 1, 2009)

              
	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      	 
      	
                NBV

              	 
      	
                RETURN

              
	 
      	 
      	 
      	 
      	
                NBV1

              	 
      	
                PAYBACK2

              	 
      	
                ON
      NBV3

              
	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      
	 
      	
                JUL-09

              	 
      	 
      	 
      	 
      	 
      	 
      
	 
      	
                AUG-09

              	 
      	 
      	 
      	 
      	 
      	 
      
	 
      	
                ...

              	 
      	 
      	 
      	 
      	 
      	 
      
	 
      	
                ...

              	 
      	 
      	 
      	 
      	 
      	 
      
	 
      	
                ...

              	 
      	 
      	 
      	 
      	 
      	 
      
	 
      	
                ...

              	 
      	 
      	 
      	 
      	 
      	 
      
	 
      	
                ...

              	 
      	 
      	 
      	 
      	 
      	 
      
	 
      	
                ...

              	 
      	 
      	 
      	 
      	 
      	 
      
	 
      	
                ...

              	 
      	 
      	 
      	 
      	 
      	 
      
	 
      	
                ...

              	 
      	 
      	 
      	 
      	 
      	 
      
	 
      	
                ...

              	 
      	 
      	 
      	 
      	 
      	 
      
	 
      	
                ...

              	 
      	 
      	 
      	 
      	 
      	 
      
	 
      	
                ...

              	 
      	 
      	 
      	 
      	 
      	 
      
	 
      	
                ...

              	 
      	 
      	 
      	 
      	 
      	 
      
	 
      	
                ...

              	 
      	 
      	 
      	 
      	 
      	 
      
	 
      	
                JUN-14

              	 
      	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      
	 
      	 	 
      	 
      	 
      	 
      	 
      	 
      	 
      
	 
      	
                1

              	
                NBV
      shall mean the capital investments (excluding the Initial Capital
      Investment) made by EDNLP related to the Nitric Acid Facility prior to
      July 1, 2009 less the aggregate amount of all capital costs recovered by
      EDNLP to relevant date. See Schedule 7 for a detailed list of assets
      comprising the EDNLP Net Book Value at July 1, 2009.

              
	 
      	 
      
	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      
	 
      	
                2

              	
                NBV
      Payback shall mean ***

              
	 
      	 
      
	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      
	 
      	
                3

              	
                Return
      on NBV shall mean the monthly amount is calculated
      as:  ***.

              
	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      

      

      

      
 

      

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

      
        
          
            -  -

          

           

        

        
           

          
            

          

        

        
           

        

      

      SCHEDULE  4
– Fixed Costs

      

      El
Dorado                                                                                         Period
                       12

      Cost
Sharing Summary                                                                                  Period+
1                   13

      December
2007

      

      
        	 
      	 
      	 
      	
                Year
      to Date

              	 
      	 
      	 
      	 
      
	
                Account
      Number

              	
                Description

              	 
      	
                Actual

              	
                Baseline
      Budget

              	
                Variance

              	
                Sharing

              	
                YTD
      Accrual

              	 
      	
                Adj

              	
                Net
      Balance

              	
                (Penalty)

                Benefit
      to EDNC

              
	
                Fixed Utilities

              	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      
	
                7230.101

              	
                Electricity

              	 
      	
                ***

              	
                ***

              	
                ***

              	
                ***

              	
                ***

              	 
      	
                ***

              	
                ***

              	
                ***

              
	
                7230.106

              	
                Natural
      Gas

              	 
      	
                ***

              	
                ***

              	
                ***

              	
                ***

              	
                ***

              	 
      	
                ***

              	
                ***

              	
                ***

              
	
                7230.107

              	
                Water
      - Drinking (Potable)

              	 
      	
                ***

              	
                ***

              	
                ***

              	
                ***

              	
                ***

              	 
      	
                ***

              	
                ***

              	
                ***

              
	
                7230.108

              	
                Nitrogen

              	 
      	
                ***

              	
                ***

              	
                ***

              	
                ***

              	
                ***

              	 
      	
                ***

              	
                ***

              	
                ***

              
	
                7320.109

              	
                Instrument
      Air

              	 
      	
                ***

              	
                ***

              	
                ***

              	
                ***

              	
                ***

              	 
      	
                ***

              	
                ***

              	
                ***

              
	
                7320.110

              	
                Plant
      Air

              	 
      	
                ***

              	
                ***

              	
                ***

              	
                ***

              	
                ***

              	 
      	
                ***

              	
                ***

              	
                ***

              
	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      	
                ***

              	 
      	 
      	 
      
	
                Allocated and Services

              	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      
	
                7590.011

              	
                Bayer
      Lab Fee

              	 
      	
                ***

              	
                ***

              	
                ***

              	
                ***

              	
                ***

              	 
      	 
      	
                ***

              	
                ***

              
	
                7590.012

              	
                Bayer
      F.I.E.

              	 
      	
                ***

              	
                ***

              	
                ***

              	
                ***

              	
                ***

              	 
      	 
      	
                ***

              	
                ***

              
	
                6900.004

              	
                Medical

              	 
      	
                ***

              	
                ***

              	
                ***

              	
                ***

              	
                ***

              	 
      	 
      	
                ***

              	
                ***

              
	
                8610.000

              	
                Management
      Fees

              	 
      	
                ***

              	
                ***

              	
                ***

              	
                ***

              	
                ***

              	 
      	 
      	
                ***

              	
                ***

              
	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      	
                ***

              	 
      	 
      	 
      
	
                Salaries

              	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      
	
                5110.002

              	
                Salaries

              	 
      	
                ***

              	
                ***

              	
                ***

              	
                ***

              	
                ***

              	
                ***

              	 
      	
                ***

              	
                ***

              
	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      
	
                Hourly Labor

              	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      
	
                4325.001

              	
                Wages

              	 
      	
                ***

              	
                ***

              	
                ***

              	
                ***

              	
                ***

              	 
      	 
      	
                ***

              	
                ***

              
	
                5130.001

              	
                Clerical
      – Hourly

              	 
      	
                ***

              	
                ***

              	
                ***

              	
                ***

              	
                ***

              	 
      	 
      	
                ***

              	
                ***

              
	
                4325.002

              	
                Shift
      Premium Hourly

              	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      	
                ***

              	
                ***

              
	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      	
                ***

              	 
      	 
      	 
      
	
                Overtime

              	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      
	
                5410.000

              	
                Hourly
      Overtime Base and Premium

              	 
      	
                ***

              	
                ***

              	
                ***

              	
                ***

              	
                ***

              	 
      	 
      	
                ***

              	
                ***

              
	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      
	
                Travel Expenses

              	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      
	
                7269.001

              	
                ACC
      Responsible Care

              	 
      	
                ***

              	
                ***

              	
                ***

              	
                ***

              	
                ***

              	 
      	 
      	
                ***

              	
                ***

              
	
                7260.000

              	
                Travel

              	 
      	
                ***

              	
                ***

              	
                ***

              	
                ***

              	
                ***

              	 
      	 
      	
                ***

              	
                ***

              
	
                7261.000

              	
                Airline

              	 
      	
                ***

              	
                ***

              	
                ***

              	
                ***

              	
                ***

              	 
      	 
      	
                ***

              	
                ***

              
	
                7269.000

              	
                Other
      Travel

              	 
      	
                ***

              	
                ***

              	
                ***

              	
                ***

              	
                ***

              	 
      	 
      	
                ***

              	
                ***

              
	
                7272.000

              	
                Meeting
      & Conferences

              	 
      	
                ***

              	
                ***

              	
                ***

              	
                ***

              	
                ***

              	 
      	 
      	
                ***

              	
                ***

              
	
                7280.001

              	
                Other
      Auto Expense, Car Rental

              	 
      	
                ***

              	
                ***

              	
                ***

              	
                ***

              	
                ***

              	 
      	 
      	
                ***

              	
                ***

              
	
                7262.000

              	
                Hotel
      Expense

              	 
      	
                ***

              	
                ***

              	
                ***

              	
                ***

              	
                ***

              	 
      	 
      	
                ***

              	
                ***

              
	
                7264.000

              	
                Taxi,
      Bus, Train, Limo

              	 
      	
                ***

              	
                ***

              	
                ***

              	
                ***

              	
                ***

              	 
      	 
      	
                ***

              	
                ***

              
	
                7271.000

              	
                Meals

              	 
      	
                ***

              	
                ***

              	
                ***

              	
                ***

              	
                ***

              	 
      	 
      	
                ***

              	
                ***

              
	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      	
                ***

              	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      
	
                Insurance & Benefits

              	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      
	
                6220.000

              	
                Employee
      Benefits - Health Benefits

              	 
      	
                ***

              	
                ***

              	
                ***

              	
                ***

              	
                ***

              	 
      	 
      	
                ***

              	
                ***

              
	
                6900.000

              	
                Employee
      Benefits – Other

              	 
      	
                ***

              	
                ***

              	
                ***

              	
                ***

              	
                ***

              	 
      	 
      	
                ***

              	
                ***

              
	
                7510.002

              	
                Employment
      Agencies

              	 
      	
                ***

              	
                ***

              	
                ***

              	
                ***

              	
                ***

              	 
      	 
      	
                ***

              	
                ***

              
	
                7911.000

              	
                Recruiting
      Expense

              	 
      	
                ***

              	
                ***

              	
                ***

              	
                ***

              	
                ***

              	 
      	 
      	
                ***

              	
                ***

              
	
                7912.000

              	
                Relocation
      Expense

              	 
      	
                ***

              	
                ***

              	
                ***

              	
                ***

              	
                ***

              	 
      	 
      	
                ***

              	
                ***

              
	
                6900.001

              	
                Tuition
      Reimbursement

              	 
      	
                ***

              	
                ***

              	
                ***

              	
                ***

              	
                ***

              	 
      	 
      	
                ***

              	
                ***

              
	
                6620.000

              	
                Employee
      Relations

              	 
      	
                ***

              	
                ***

              	
                ***

              	
                ***

              	
                ***

              	 
      	 
      	
                ***

              	
                ***

              
	
                6900.002

              	
                Attendance
      Awards

              	 
      	
                ***

              	
                ***

              	
                ***

              	
                ***

              	
                ***

              	 
      	 
      	
                ***

              	
                ***

              
	
                6900.003

              	
                Uniforms

              	 
      	
                ***

              	
                ***

              	
                ***

              	
                ***

              	
                ***

              	 
      	 
      	
                ***

              	
                ***

              
	
                6420.000

              	
                Overtime
      Meals

              	 
      	
                ***

              	
                ***

              	
                ***

              	
                ***

              	
                ***

              	 
      	 
      	
                ***

              	
                ***

              
	
                7930.001

              	
                Professional
      Dues & Memberships

              	 
      	
                ***

              	
                ***

              	
                ***

              	
                ***

              	
                ***

              	
                ***

              	 
      	
                ***

              	
                ***

              
	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      
	
                Training Expense

              	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      
	
                6510.000

              	
                Training
      Time (wages)

              	 
      	
                ***

              	
                ***

              	
                ***

              	
                ***

              	
                ***

              	 
      	 
      	
                ***

              	
                ***

              
	
                6510.001

              	
                Safety
      Programs & Training

              	 
      	
                ***

              	
                ***

              	
                ***

              	
                ***

              	
                ***

              	 
      	 
      	
                ***

              	
                ***

              
	
                6510.002

              	
                Training
      Program

              	 
      	
                ***

              	
                ***

              	
                ***

              	
                ***

              	
                ***

              	
                ***

              	 
      	
                ***

              	
                ***

              
	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      
	
                Workman’s Compensation

              	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      
	
                6210.000

              	
                Workers’
      Compensation Insurance

              	 
      	
                ***

              	
                ***

              	
                ***

              	
                ***

              	
                ***

              	 
      	 
      	 
      	 
      
	
                8410.000

              	
                General
      Liability Insurance

              	 
      	
                ***

              	
                ***

              	
                ***

              	
                ***

              	
                ***

              	
                ***

              	 
      	
                ***

              	 
      
	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      	
                ***

              	
                ***

              
	
                Payroll Taxes

              	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      
	
                6100.000

              	
                Employee
      Benefits - Payroll Taxes

              	 
      	
                ***

              	
                ***

              	
                ***

              	
                ***

              	
                ***

              	
                ***

              	 
      	
                ***

              	
                ***

              

      

      

      (1) Property
insurance premiums, including deductibles and retention amounts, shall be paid
directly by BMS. Insurance coverage referenced herein.

      (2) The
headcount is capped at 5 salaried positions, 9 Process Technicians, 1 Hourly
E&I Specialist, and 1 Hourly Administrative person.  Overtime is
capped at 21.5 percent of wages.

      

       

      

      

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

      
        
           

        

        
          
            

          

        

         

      

      

      
        	 
      	 
      	 
      	
                Year
      to Date

              	 
      	 
      	 
      	 
      
	
                Account
      Number

              	
                Description

              	 
      	
                Actual

              	
                Baseline
      Budget

              	
                Variance

              	
                Sharing

              	
                YTD
      Accrual

              	 
      	
                Adj

              	
                Net
      Balance

              	
                (Penalty)

                Benefit
      to EDNC

              
	
                Property Insurance

              	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      
	
                8430.003

              	
                Automobile
      Insurance

              	 
      	
                ***

              	
                ***

              	
                ***

              	
                ***

              	
                ***

              	 
      	 
      	
                ***

              	
                ***

              
	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      	
                ***

              	 
      	 
      	 
      
	
                Property Taxes

              	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      
	
                8510.000

              	
                Real
      Estate & Personal Property Tax

              	 
      	
                ***

              	
                ***

              	
                ***

              	
                ***

              	
                ***

              	
                ***

              	 
      	
                ***

              	
                ***

              
	
                8520.000

              	
                Franchise
      Tax

              	 
      	
                ***

              	
                ***

              	
                ***

              	
                ***

              	
                ***

              	 
      	 
      	
                ***

              	
                ***

              
	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      
	
                Direct Environmental
Expense

              	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      
	
                7590.100

              	
                Non
      Hazardous/Trash Waste Disposal

              	 
      	
                ***

              	
                ***

              	
                ***

              	
                ***

              	
                ***

              	 
      	 
      	
                ***

              	
                ***

              
	
                7590.101

              	
                Permits/Certification
      - EC

              	 
      	
                ***

              	
                ***

              	
                ***

              	
                ***

              	
                ***

              	 
      	 
      	
                ***

              	
                ***

              
	
                7590.102

              	
                Environmental
      Consultants

              	 
      	
                ***

              	
                ***

              	
                ***

              	
                ***

              	
                ***

              	 
      	 
      	
                ***

              	
                ***

              
	
                7950.002

              	
                Trade
      Relations

              	 
      	
                ***

              	
                ***

              	
                ***

              	
                ***

              	
                ***

              	 
      	 
      	
                ***

              	
                ***

              
	
                7350.101

              	
                Instrument
      Supplies

              	 
      	
                ***

              	
                ***

              	
                ***

              	
                ***

              	
                ***

              	 
      	 
      	
                ***

              	
                ***

              
	
                7590.103

              	
                Misc.
      (Unexpected Cost)

              	 
      	
                ***

              	
                ***

              	
                ***

              	
                ***

              	
                ***

              	
                ***

              	 
      	
                ***

              	
                ***

              
	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      
	
                Contract Maintenance

              	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      
	
                7350.000

              	
                Repair
      & Maintenance Work

              	 
      	
                ***

              	
                ***

              	
                ***

              	
                ***

              	
                ***

              	 
      	 
      	
                ***

              	
                ***

              
	
                7350.100

              	
                Temporary
      Personnel

              	 
      	
                ***

              	
                ***

              	
                ***

              	
                ***

              	
                ***

              	 
      	 
      	
                ***

              	
                ***

              
	
                7392.001

              	
                Data
      Processing - Computer/Technical Support

              	 
      	
                ***

              	
                ***

              	
                ***

              	
                ***

              	
                ***

              	 
      	 
      	
                ***

              	
                ***

              
	
                7350.102

              	
                Bottled
      Gases

              	 
      	
                ***

              	
                ***

              	
                ***

              	
                ***

              	
                ***

              	 
      	 
      	
                ***

              	
                ***

              
	
                7350.103

              	
                Process
      Filter Replacements

              	 
      	
                ***

              	
                ***

              	
                ***

              	
                ***

              	
                ***

              	 
      	 
      	
                ***

              	
                ***

              
	
                7350.104

              	
                Contract
      Labor

              	 
      	
                ***

              	
                ***

              	
                ***

              	
                ***

              	
                ***

              	 
      	 
      	
                ***

              	
                ***

              
	
                7350.105

              	
                Maint.
      Contract Labor Supervisory & Occup. Health

              	 
      	
                ***

              	
                ***

              	
                ***

              	
                ***

              	
                ***

              	 
      	 
      	
                ***

              	
                ***

              
	
                7350.106

              	
                Contract
      Drafting

              	 
      	
                ***

              	
                ***

              	
                ***

              	
                ***

              	
                ***

              	 
      	 
      	
                ***

              	
                ***

              
	
                7350.107

              	
                Purchased
      Operating/Maintenance Equipment

              	 
      	
                ***

              	
                ***

              	
                ***

              	
                ***

              	
                ***

              	 
      	 
      	
                ***

              	
                ***

              
	
                7350.108

              	
                Repairs
      & Maintenance - Outside Services

              	 
      	
                ***

              	
                ***

              	
                ***

              	
                ***

              	
                ***

              	 
      	 
      	
                ***

              	
                ***

              
	
                7140.000

              	
                Repairs
      & Maintenance - Materials

              	 
      	
                ***

              	
                ***

              	
                ***

              	
                ***

              	
                ***

              	 
      	 
      	
                ***

              	
                ***

              
	
                7140.100

              	
                Gaskets

              	 
      	
                ***

              	
                ***

              	
                ***

              	
                ***

              	
                ***

              	 
      	 
      	
                ***

              	
                ***

              
	
                7140.200

              	
                Instrument/Electrical

              	 
      	
                ***

              	
                ***

              	
                ***

              	
                ***

              	
                ***

              	 
      	 
      	
                ***

              	
                ***

              
	
                7140.300

              	
                Pipe,Fittings,Etc.

              	 
      	
                ***

              	
                ***

              	
                ***

              	
                ***

              	
                ***

              	 
      	 
      	
                ***

              	
                ***

              
	
                7140.400

              	
                Mechanical

              	 
      	
                ***

              	
                ***

              	
                ***

              	
                ***

              	
                ***

              	 
      	 
      	
                ***

              	
                ***

              
	
                7140.500

              	
                Tools

              	 
      	
                ***

              	
                ***

              	
                ***

              	
                ***

              	
                ***

              	 
      	 
      	
                ***

              	
                ***

              
	
                7350.109

              	
                Repairs
      & Maintenance - Lab/Office Equip

              	 
      	
                ***

              	
                ***

              	
                ***

              	
                ***

              	
                ***

              	 
      	 
      	
                ***

              	
                ***

              
	
                7350.110

              	
                Signs
      & Line Labeling Maintenance

              	 
      	
                ***

              	
                ***

              	
                ***

              	
                ***

              	
                ***

              	 
      	 
      	
                ***

              	
                ***

              
	
                7350.111

              	
                Vehicle
      Maintenance - Outside Services

              	 
      	
                ***

              	
                ***

              	
                ***

              	
                ***

              	
                ***

              	 
      	 
      	
                ***

              	
                ***

              
	
                7350.112

              	
                Operating
      Maint. - Computer Equip. & Software

              	 
      	
                ***

              	
                ***

              	
                ***

              	
                ***

              	
                ***

              	 
      	 
      	
                ***

              	
                ***

              
	
                7350.113

              	
                Administration
      Maint - Computer Equip & Software

              	 
      	
                ***

              	
                ***

              	
                ***

              	
                ***

              	
                ***

              	 
      	 
      	
                ***

              	
                ***

              
	
                7350.114

              	
                Contract
      Telecommunication Service

              	 
      	
                ***

              	
                ***

              	
                ***

              	
                ***

              	
                ***

              	 
      	 
      	
                ***

              	
                ***

              
	
                7350.115

              	
                Maintenance
      Trailer

              	 
      	
                ***

              	
                ***

              	
                ***

              	
                ***

              	
                ***

              	 
      	 
      	
                ***

              	
                ***

              
	
                7520.001

              	
                Outside
      Janitorial Service

              	 
      	
                ***

              	
                ***

              	
                ***

              	
                ***

              	
                ***

              	 
      	 
      	
                ***

              	
                ***

              
	
                7590.000

              	
                Miscellaneous
      Outside Service

              	 
      	
                ***

              	
                ***

              	
                ***

              	
                ***

              	
                ***

              	 
      	 
      	
                ***

              	
                ***

              
	
                7229.000

              	
                Freight
      – Miscellaneous

              	 
      	
                ***

              	
                ***

              	
                ***

              	
                ***

              	
                ***

              	 
      	 
      	
                ***

              	
                ***

              
	
                7290.100

              	
                Catalyst
      Warehouse Storage & Handling

              	 
      	
                ***

              	
                ***

              	
                ***

              	
                ***

              	
                ***

              	 
      	 
      	
                ***

              	
                ***

              
	
                7350.116

              	
                Turnaround
      Expense

              	 
      	
                ***

              	
                ***

              	
                ***

              	
                ***

              	
                ***

              	 
      	 
      	
                ***

              	
                ***

              
	
                7350.117

              	
                Engineering
      Support Services

              	 
      	
                ***

              	
                ***

              	
                ***

              	
                ***

              	
                ***

              	 
      	 
      	
                ***

              	
                ***

              
	 
      	
                Experimental
      Projects / Tests

              	 
      	
                ***

              	
                ***

              	
                ***

              	
                ***

              	
                ***

              	 
      	 
      	
                ***

              	
                ***

              
	
                7290.101

              	
                Rotating
      Equipment Spare Storage

              	 
      	
                ***

              	
                ***

              	
                ***

              	
                ***

              	
                ***

              	 
      	 
      	
                ***

              	
                ***

              
	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      	
                ***

              	 
      	 
      	 
      
	
                In-Plant Lab Supplies &
      Equipment

              	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      
	
                7150.100

              	
                Laboratory
      Supplies

              	 
      	
                ***

              	
                ***

              	
                ***

              	
                ***

              	
                ***

              	 
      	 
      	
                ***

              	
                ***

              
	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      	
                ***

              	 
      	 
      	 
      
	
                Safety Equipment Upkeep

              	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      
	
                6430.100

              	
                Safety
      Medical Supplies

              	 
      	
                ***

              	
                ***

              	
                ***

              	
                ***

              	
                ***

              	 
      	 
      	
                ***

              	
                ***

              
	
                6430.101

              	
                Safety
      Shoes

              	 
      	
                ***

              	
                ***

              	
                ***

              	
                ***

              	
                ***

              	 
      	 
      	
                ***

              	
                ***

              
	
                6430.102

              	
                Safety
      Supplies

              	 
      	
                ***

              	
                ***

              	
                ***

              	
                ***

              	
                ***

              	 
      	 
      	
                ***

              	
                ***

              
	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      	
                ***

              	 
      	 
      	 
      
	
                Office Expenses, Phones,
    Etc.

              	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      
	
                7180.001

              	
                Stationery
      & Printing

              	 
      	
                ***

              	
                ***

              	
                ***

              	
                ***

              	
                ***

              	 
      	 
      	
                ***

              	
                ***

              
	
                7180.000

              	
                General
      Office Supplies

              	 
      	
                ***

              	
                ***

              	
                ***

              	
                ***

              	
                ***

              	 
      	 
      	
                ***

              	
                ***

              
	
                7180.100

              	
                Blueprinting
      & Drafting

              	 
      	
                ***

              	
                ***

              	
                ***

              	
                ***

              	
                ***

              	 
      	 
      	
                ***

              	
                ***

              
	
                7181.000

              	
                Computer
      Supplies - Other

              	 
      	
                ***

              	
                ***

              	
                ***

              	
                ***

              	
                ***

              	 
      	 
      	
                ***

              	
                ***

              
	
                7140.002

              	
                Janitorial
      & Housekeeping Supplies

              	 
      	
                ***

              	
                ***

              	
                ***

              	
                ***

              	
                ***

              	 
      	 
      	
                ***

              	
                ***

              
	
                7190.000

              	
                Other
      Supplies & Materials

              	 
      	
                ***

              	
                ***

              	
                ***

              	
                ***

              	
                ***

              	 
      	 
      	
                ***

              	
                ***

              
	
                7181.100

              	
                Purchased
      PC Hardware

              	 
      	
                ***

              	
                ***

              	
                ***

              	
                ***

              	
                ***

              	 
      	 
      	
                ***

              	
                ***

              
	
                7181.101

              	
                Purchased
      PC Software

              	 
      	
                ***

              	
                ***

              	
                ***

              	
                ***

              	
                ***

              	 
      	 
      	
                ***

              	
                ***

              
	
                7180.101

              	
                Purchased
      Office Equipment

              	 
      	
                ***

              	
                ***

              	
                ***

              	
                ***

              	
                ***

              	 
      	 
      	
                ***

              	
                ***

              
	
                7180.102

              	
                Purchased
      Other Hardware

              	 
      	
                ***

              	
                ***

              	
                ***

              	
                ***

              	
                ***

              	 
      	 
      	
                ***

              	
                ***

              
	
                7240.000

              	
                Telephone

              	 
      	
                ***

              	
                ***

              	
                ***

              	
                ***

              	
                ***

              	 
      	 
      	
                ***

              	
                ***

              
	
                7241.000

              	
                Long
      Distance

              	 
      	
                ***

              	
                ***

              	
                ***

              	
                ***

              	
                ***

              	 
      	 
      	
                ***

              	
                ***

              
	
                7242.000

              	
                Cellular
      Telephone

              	 
      	
                ***

              	
                ***

              	
                ***

              	
                ***

              	
                ***

              	 
      	 
      	
                ***

              	
                ***

              
	
                7250.000

              	
                Postage

              	 
      	
                ***

              	
                ***

              	
                ***

              	
                ***

              	
                ***

              	 
      	 
      	
                ***

              	
                ***

              

      

      

       

      

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

      
        
           

        

        
           

          
            

          

        

         

      

      

      
        	 
      	 
      	 
      	
                Year
      to Date

              	 
      	 
      	 
      	 
      
	
                Account
      Number

              	
                Description

              	 
      	
                Actual

              	
                Baseline
      Budget

              	
                Variance

              	
                Sharing

              	
                YTD
      Accrual

              	 
      	
                Adj

              	
                Net
      Balance

              	
                (Penalty)

                Benefit
      to EDNC

              
	
                Rental Requirement

              	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      
	
                8310.000

              	
                Automobile
      Insurance

              	
                `

              	
                ***

              	
                ***

              	
                ***

              	
                ***

              	
                ***

              	 
      	 
      	
                ***

              	
                ***

              
	
                8311.000

              	
                Leased
      Office Equipment

              	 
      	
                ***

              	
                ***

              	
                ***

              	
                ***

              	
                ***

              	 
      	 
      	
                ***

              	
                ***

              
	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      	
                ***

              	 
      	 
      	 
      
	
                Plant Vehicle Expense

              	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      
	
                7280.000

              	
                Gas
      & Oil for Vehicles/Supply Fuel

              	 
      	
                ***

              	
                ***

              	
                ***

              	
                ***

              	
                ***

              	 
      	 
      	
                ***

              	
                ***

              
	
                7281.000

              	
                Auto
      Mileage

              	 
      	
                ***

              	
                ***

              	
                ***

              	
                ***

              	
                ***

              	 
      	 
      	
                ***

              	
                ***

              
	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      	
                ***

              	 
      	 
      	 
      
	 
      	 
      	 
      	
                ***

              	
                ***

              	
                ***

              	 
      	
                ***

              	
                ***

              	 
      	
                ***

              	
                ***

              

      

      

      (1)  The
final total in the Net Balance column is the resulting debit or credit to
BMS

      (2)  These
pages are intended to be a non-binding example.

      

       

      
 

      

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

      
        
           

        

        
           

          
            

          

        

         

      

      

      
        	
                QPU Calculation Addendum to
      Schedule 4 - example months
      included.                                                                                                           Non-binding
      example

              
	
                Fixed
      Utility

              	
                Budgeted
      QPUs/mo

              	
                Units

              	
                Actual
      QPU-Jan

              	
                Actual
      QPU-Apr

              	
                Actual
      QPU-Jun

              	
                Actual
      QPU-Jul

              	
                Actual
      QPU-Oct

              	
                Totals

              
	
                Total Budgeted Billing to Bayer included in
      FCC

              	 
      	 
      	 
      	 
      	 
      
	
                Natural
      Gas

              	
                ***

              	
                $/kscf

              	
                ***

              	
                ***

              	
                ***

              	
                ***

              	
                ***

              	
                ***

              
	
                Potable
      Water

              	
                ***

              	
                $/kgal

              	
                ***

              	
                ***

              	
                ***

              	
                ***

              	
                ***

              	
                ***

              
	
                Nitrogen

              	
                ***

              	
                $/k
      lbs

              	
                ***

              	
                ***

              	
                ***

              	
                ***

              	
                ***

              	
                ***

              
	
                Instrument
      Air

              	
                ***

              	
                $/kscf

              	
                ***

              	
                ***

              	
                ***

              	
                ***

              	
                ***

              	
                ***

              
	
                Plant
      Air

              	
                ***

              	
                $/kscf

              	
                ***

              	
                ***

              	
                ***

              	
                ***

              	
                ***

              	
                ***

              
	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      	
                $
                    ***

              
	
                Bayer Actual $/QPU (variable portion
      only)

              	 
      	 
      	 
      	 
      	 
      	 
      
	
                Natural
      Gas

              	 
      	
                kscf

              	
                ***

              	
                ***

              	
                ***

              	
                ***

              	
                ***

              	 
      
	
                Potable
      Water

              	 
      	
                k
      gal

              	
                ***

              	
                ***

              	
                ***

              	
                ***

              	
                ***

              	 
      
	
                Nitrogen

              	 
      	
                kscf

              	
                ***

              	
                ***

              	
                ***

              	
                ***

              	
                ***

              	 
      
	
                Instrument
      Air

              	 
      	
                kscf

              	
                ***

              	
                ***

              	
                ***

              	
                ***

              	
                ***

              	 
      
	
                Plant
      Air

              	 
      	
                kscf

              	
                ***

              	
                ***

              	
                ***

              	
                ***

              	
                ***

              	 
      
	
                Actual QPU Volumes

              	 
      	 
      	 
      	 
      	 
      	 
      
	
                Natural
      Gas

              	
                ***

              	
                kscf

              	
                ***

              	
                ***

              	
                ***

              	
                ***

              	
                ***

              	 
      
	
                Potable
      Water

              	
                ***

              	
                k
      gal

              	
                ***

              	
                ***

              	
                ***

              	
                ***

              	
                ***

              	 
      
	
                Nitrogen

              	
                ***

              	
                kscf

              	
                ***

              	
                ***

              	
                ***

              	
                ***

              	
                ***

              	 
      
	
                Instrument
      Air

              	
                ***

              	
                kscf

              	
                ***

              	
                ***

              	
                ***

              	
                ***

              	
                ***

              	 
      
	
                Plant
      Air

              	
                ***

              	
                kscf

              	
                ***

              	
                ***

              	
                ***

              	
                ***

              	
                ***

              	 
      
	
                QPU Volume Variance

              	
                2007

              	 
      
	
                Natural
      Gas

              	 
      	 
      	
                ***

              	
                ***

              	
                ***

              	
                ***

              	
                ***

              	 
      
	
                Potable
      Water

              	 
      	 
      	
                ***

              	
                ***

              	
                ***

              	
                ***

              	
                ***

              	 
      
	
                Nitrogen

              	 
      	 
      	
                ***

              	
                ***

              	
                ***

              	
                ***

              	
                ***

              	 
      
	
                Instrument
      Air

              	 
      	 
      	
                ***

              	
                ***

              	
                ***

              	
                ***

              	
                ***

              	 
      
	
                Plant
      Air

              	 
      	 
      	
                ***

              	
                ***

              	
                ***

              	
                ***

              	
                ***

              	 
      
	
                QPU $$ Volume Variance

              	
                2007

              
	
                Natural
      Gas

              	 
      	 
      	
                ***

              	
                ***

              	
                ***

              	
                ***

              	
                ***

              	
                ***

              
	
                Potable
      Water

              	 
      	 
      	
                ***

              	
                ***

              	
                ***

              	
                ***

              	
                ***

              	
                ***

              
	
                Nitrogen

              	 
      	 
      	
                ***

              	
                ***

              	
                ***

              	
                ***

              	
                ***

              	
                ***

              
	
                Instrument
      Air

              	 
      	 
      	
                ***

              	
                ***

              	
                ***

              	
                ***

              	
                ***

              	
                ***

              
	
                Plant
      Air

              	 
      	 
      	
                ***

              	
                ***

              	
                ***

              	
                ***

              	
                ***

              	
                ***

              
	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      	
                $
                    ***

              
	
                ***% Sharing on Volume
    Variance

              	
                2007

              
	
                Natural
      Gas

              	 
      	 
      	
                ***

              	
                ***

              	
                ***

              	
                ***

              	
                ***

              	
                ***

              
	
                Potable
      Water

              	 
      	 
      	
                ***

              	
                ***

              	
                ***

              	
                ***

              	
                ***

              	
                ***

              
	
                Nitrogen

              	 
      	 
      	
                ***

              	
                ***

              	
                ***

              	
                ***

              	
                ***

              	
                ***

              
	
                Instrument
      Air

              	 
      	 
      	
                ***

              	
                ***

              	
                ***

              	
                ***

              	
                ***

              	
                ***

              
	
                Plant
      Air

              	 
      	 
      	
                ***

              	
                ***

              	
                ***

              	
                ***

              	
                ***

              	
                ***

              
	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      	
                $
                    ***

              
	
                Price Variance (***%
      Pass-through)

              	
                2007

              
	
                Natural
      Gas

              	 
      	 
      	
                ***

              	
                ***

              	
                ***

              	
                ***

              	
                ***

              	 
      
	
                Potable
      Water

              	 
      	 
      	
                ***

              	
                ***

              	
                ***

              	
                ***

              	
                ***

              	 
      
	
                Nitrogen

              	 
      	 
      	
                ***

              	
                ***

              	
                ***

              	
                ***

              	
                ***

              	 
      
	
                Instrument
      Air

              	 
      	 
      	
                ***

              	
                ***

              	
                ***

              	
                ***

              	
                ***

              	 
      
	
                Plant
      Air

              	 
      	 
      	
                ***

              	
                ***

              	
                ***

              	
                ***

              	
                ***

              	 
      
	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      
	
                Price Variance (***%
      Pass-through)

              	
                2007

              
	
                Natural
      Gas

              	 
      	 
      	
                ***

              	
                ***

              	
                ***

              	
                ***

              	
                ***

              	
                ***

              
	
                Potable
      Water

              	 
      	 
      	
                ***

              	
                ***

              	
                ***

              	
                ***

              	
                ***

              	
                ***

              
	
                Nitrogen

              	 
      	 
      	
                ***

              	
                ***

              	
                ***

              	
                ***

              	
                ***

              	
                ***

              
	
                Instrument
      Air

              	 
      	 
      	
                ***

              	
                ***

              	
                ***

              	
                ***

              	
                ***

              	
                ***

              
	
                Plant
      Air

              	 
      	 
      	
                ***

              	
                ***

              	
                ***

              	
                ***

              	
                ***

              	
                ***

              
	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      
	
                Fixed Charge on Instrument and Plant Air, all
      taken to plant air

              	 
      	 
      	 
      	 
      
	
                Budget

              	
                $          ***

              	
                $

              	
                ***

              	
                ***

              	
                ***

              	
                ***

              	
                ***

              	
                ***

              
	
                Actual

              	 
      	 
      	
                ***

              	
                ***

              	
                ***

              	
                ***

              	
                ***

              	
                ***

              
	
                   Difference

              	 
      	
                ***

              	
                ***

              	
                ***

              	
                ***

              	
                ***

              	
                ***

              	
                $
                    ***

              
	 
      	 
      	 
      	
                2007

              	 
      	 
      	 
      	 
      
	
                Sharing Reimbursement Due to (from)
      Bayer

              	 
      	 
      	 
      	 
      	 
      	 
      
	
                Natural
      Gas

              	 
      	 
      	
                ***

              	
                ***

              	
                ***

              	
                ***

              	
                ***

              	
                ***

              
	
                Potable
      Water

              	 
      	 
      	
                ***

              	
                ***

              	
                ***

              	
                ***

              	
                ***

              	
                ***

              
	
                Nitrogen

              	 
      	 
      	
                ***

              	
                ***

              	
                ***

              	
                ***

              	
                ***

              	
                ***

              
	
                Instrument
      Air

              	 
      	 
      	
                ***

              	
                ***

              	
                ***

              	
                ***

              	
                ***

              	
                ***

              
	
                Plant
      Air

              	 
      	 
      	
                ***

              	
                ***

              	
                ***

              	
                ***

              	
                ***

              	
                ***

              
	 
      	 
      	 
      	
                ***

              	
                ***

              	
                ***

              	
                ***

              	
                ***

              	
                $               ***

              

      

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

      
        
           

        

        
           

          
            

          

        

         

      

      SCHEDULE
5

      

      WASTE

      

      BASIS:

      

      
        	
                1.

              	
                For
      pH control of Routine Process Waste, Initial Stormwater and Additional
      Stormwater, EDNLP will neutralize with caustic
  soda.

              

      

      
        	
                2.

              	
                EDNLP
      will discharge Cooling Tower Blowdown into the Bayer Baytown Plant's
      cooling tower blowdown header.

              

      

      
        	
                3.

              	
                The
      overhead waste water header backpressure is up to 50 P.S.I.G. during
      rains.

              

      

      
        	
                4.

              	
                Normal
      flow rates below are based on Nitric Acid Facility production of 443,000
      short tons of nitric acid (100% basis) a
year.

              

      

      
        	
                5.

              	
                EDNLP
      will continuously monitor pH and flow to waste water header as well as pH
      of Additional Stormwater to BMS's storm
sewer.

              

      

      
        	
                6.

              	
                EDNLP
      must keep Uncollected Stormwater free of
  contaminants.

              

      

      
        	
                 

                Waste Stream

              	
                 

                Quality

              	
                Peak

                Flow

              	
                Normal

                 Flow

              
	
                Flow
      to Cooling Tower Blowdown header, gpm

              	
                pH range 7.5 -
    8.0

              	
                138

              	
                85

              
	 
      	
                Anticipated metal levels:1

                Cr 0.013 lb/day

                Cu 0.045 lb/day

                Ni 0.014 lb/day

                Pb 0.007 lb/day

                Zn 0.767
lb/day

              	 
      	 
      
	
                Flow
      to Waste Water header

              	 
      	 
      	 
      
	
                Routine Process Waste,
      gpm

                  Washdown
      Water

                  Lab
      Samples

                  Process
      Purges

                  Leaks

                  Boiler
      Blowdown

                 

                 

              	
                 

                 

                 

                warranted
      pH range of 5.0 to 8.0

                 

                 

                 

                *
      Intermittent flow from Waste Water Sump to header when pumping rate is
      about 100 gpm.

                 

              	
                 

                 

                 

                150

                 

                 

                 

                 

                 

                 

                 

                 

              	
                 

                 

                 

                15

                 

                 

                 

                 

                 

                 

                 

                 

              
	
                Total
      Flow to Waste Water  header,
      gpm          

              	 
      	 
      	 
      
	 
      	 
      	 
      	 
      

      

      

      ______________

      1

        Metal levels of this water
shall be no more than twice the anticipated metal levels.

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      

      SCHEDULE
6

      

      Schedule
6

      Variable
Cost Billing Worksheet

      CLOSING
PERIOD March 31 through April 29, 2008

      

      
        	
                ITEM

              	 
      	 
      	
                COST

                PER/ITEM

              	
                HNO3

                Delivered/TONS

              	
                MULTIPLIER
      /

                CAP

              	
                USAGE

              	 
      	
                Non-binding
      example

                EXTENDED
      COST

              
	
                AMMONIA - BAYER CONSUMPTION

              	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      
	
                March
      INVENTORY

              	
                tons/ton
      hno3

              	
                $

              	
                ***

              	
                ***

              	
                ***

              	
                ***

              	 
      	
                ***

              
	
                April
      INVENTORY

              	
                tons/ton
      hno3

              	
                $

              	
                ***

              	
                ***

              	
                ***

              	
                ***

              	
                tons

              	
                ***

              
	
                    Subtotal
      Ammonia

              	 
      	 
      	 
      	
                ***

              	 
      	
                ***

              	 
      	
                ***

              
	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      
	
                TRUCKED
      ACID - PURCHASE PRICE

              	 
      	 
      	 
      	 
      	 
      	 
      	
                tons

              	 
      
	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      
	
                Catalyst/Getter Cost - refining, fabrication,
      freight, other miscall.

              	 
      	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      	 
      	 
      
	
                April CATALYST CONSUMPTION post gauze
      change (Run #16)

              	 
      	 
      	 
      	 
      	 
      	 
      
	
                PLATINUM

              	
                troy
      oz/ton

              	 
      	
                ***

              	
                ***

              	
                ***

              	 
      	 
      	
                ***

              
	
                RHODIUM

              	
                troy
      oz/ton

              	 
      	
                ***

              	
                ***

              	
                ***

              	 
      	 
      	
                ***

              
	
                PALLADIUM

              	
                troy
      oz/ton

              	 
      	
                ***

              	
                ***

              	
                ***

              	 
      	 
      	
                ***

              
	 
      	 
      	 
      	 
      	 
      	
                Gals.

              	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      
	
                       MATERIAL
      / UTILITIES /
      SERVICES       

              	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      
	
                CAUSTIC
      SODA

              	
                $/lb

              	
                $

              	
                ***

              	
                ***

              	
                $

              	
                ***

              	
                lbs

              	
                ***

              
	
                CHLORINE

              	
                $/lb

              	
                $

              	
                ***

              	
                ***

              	
                $

              	
                ***

              	
                lbs

              	
                ***

              
	
                SULFURIC
      ACID

              	
                $/ton

              	
                $

              	
                ***

              	
                ***

              	
                $

              	
                ***

              	
                lbs

              	
                ***

              
	
                HYDROGEN
      PEROXIDE

              	
                $/ton

              	 
      	 
      	 
      	 
      	 
      	
                lbs

              	
                ***

              
	
                LUBE
      OIL

              	
                $/gal

              	 
      	 
      	 
      	 
      	 
      	 
      	 
      
	
                LUBE
      OIL WASTE PROCESSING

              	
                $/gal

              	 
      	 
      	 
      	 
      	 
      	
                gal

              	 
      
	
                LUBE
      OIL WASTE PROCESSING

              	
                $/drum

              	 
      	 
      	 
      	 
      	 
      	
                drums

              	 
      
	
                HYDROGEN
      START-UP

              	
                tanks/yr

              	 
      	 
      	 
      	 
      	 
      	
                scf

              	 
      
	
                BOILER
      FEEDWATER CHEMICALS

              	
                $/yr

              	 
      	 
      	 
      	 
      	 
      	
                lbs

              	 
      
	
                COOLING
      TOWER CHEMICALS

              	
                $/yr

              	 
      	 
      	 
      	 
      	 
      	
                lbs

              	 
      
	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      
	
                CONDENSATE-VARIABLE

              	
                k
      lbs/ton HNO3

              	
                $

              	
                ***

              	
                N/A

              	 
      	
                ***

              	
                k
      lbs

              	
                $                  ***

              
	
                CONDENSATE-FIXED

              	 
      	 
      	
                ***

              	 
      	 
      	 
      	 
      	
                ***

              
	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      
	
                ELECTRICITY
      - VARIABLE

              	
                $/kwh

              	
                $

              	
                ***

              	
                55000/day
      max

              	
                ***

              	
                kwh

              	
                ***

              
	 
      	 
      	 
      	 
      	
                measurement
      conversion/unit cost

              	 
      	 
      	 
      
	
                STEAM
      START-UP - VARIABLE

              	
                $/k
      LBS

              	
                $

              	
                ***

              	 
      	 
      	
                ***

              	
                k
      lbs

              	
                $                  ***

              
	
                STEAM
      START-UP - FIXED

              	
                $/month

              	 
      	
                ***

              	 
      	 
      	 
      	
                month

              	
                ***

              
	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      
	
                WASTE
      TREATMENT SERVICES - VARIABLE

              	
                $/k
      gal

              	
                $

              	
                ***

              	 
      	 
      	
                ***

              	
                k
      gal

              	
                ***

              
	
                WASTE
      TREATMENT SERVICES - FIXED

              	
                $/month

              	 
      	
                ***

              	 
      	 
      	 
      	 
      	
                ***

              
	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      
	
                CARBON
      TREATMENT SERVICES – VARIABLE

              	 
      	
                ***

              	 
      	 
      	
                ***

              	 
      	
                ***

              
	
                CARBON
      TREATMENT SERVICES - FIXED

              	 
      	 
      	
                ***

              	 
      	 
      	 
      	 
      	
                ***

              
	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      
	
                CWT
      BLOWDOWN SERVICES - VARIABLE

              	
                $/k
      gal

              	
                $

              	
                ***

              	 
      	 
      	
                ***

              	
                k
      gal

              	
                ***

              
	
                CWT
      BLOWDOWN SERVICES - FIXED

              	
                $/month

              	 
      	
                ***

              	 
      	 
      	 
      	 
      	
                ***

              
	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      
	
                DEMINERALIZED
      WATER – VARIABLE

              	
                $/k
      gal

              	 
      	
                ***

              	 
      	 
      	
                ***

              	
                k
      gal

              	
                ***

              
	
                DEMINERALIZED
      WATER – FIXED

              	
                $/month

              	 
      	
                ***

              	 
      	 
      	 
      	
                month

              	
                ***

              
	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      
	
                PLANT
      WATER - VARIABLE

              	
                $/k
      gal

              	 
      	
                ***

              	 
      	 
      	
                ***

              	
                k
      gal

              	
                ***

              
	
                PLANT
      WATER - FIXED

              	
                $/month

              	 
      	
                ***

              	 
      	 
      	 
      	
                month

              	
                ***

              
	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	
                TOTAL
      VARIABLE COST - April

              	
                ***

              
	 
      	 
      	 
      	 
      	
                LESS
      VC ALLOCATION TO THIRD PARTY SALES

              	
                ***

              
	 
      	 
      	 
      	 
      	
                ADJUSTED
      VARIABLE COST – BAYER

              	 
      	
                ***

              
	
                THIRD
      PARTY SALES

              	
                ***

              	 
      	 
      	 
      	
                LESS
      SEPARATE BILLING

              	
                ***

              
	 
      	 
      	 
      	 
      	
                NET
      VARIABLE INVOICE - April

              	
                ***

              
	 
      	
                Variable
      Cost per all tons sold, ex NH3, catalyst:

              	 
      	
                ***

              	 
      	 
      
	 
      	 
      	
                Bayer
      per ton cost, ex NH3:

              	 
      	
                ***

              	 
      	 
      
	 
      	 
      	
                Bayer
      per ton cost, with NH3:

              	 
      	
                ***

              	 
      	 
      

      

      

       

      

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

       

      
        
           

        

        
           

          
            

          

        

         

      

      

      SCHEDULE
7

      

      
        	 
      	 
      	 
      	 
      
	
                AFE Number

              	
                EDNLP Net Book Value

              	
                Date

              	
                Description

              

      

      

      

      To be completed as of July
1, 2009

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00149-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00149-of-00352.parquet"}]]