AMMONIUM NITRATE SUPPLY AGREEMENT

A.

Subject to paragraph B below, this Agreement shall continue in force and effect for an initial term commencing on the Effective Date and ending on December 31, 2016 (the “ Initial Term ”). Either Party shall have the right to terminate this Agreement effective at the end of the Initial Term by giving the other Party notice by December 31, *** of its intention to so terminate. If neither Party gives notice by December 31, ***, the Agreement shall automatically be extended to December 31,

***; and if neither Party gives notice by December 31, ***, the Agreement shall automatically be extended to December 31, ***; and thereafter mutatis mutandis on an every **-years basis. The Initial Term and any extension thereof shall be referred to in this Agreement as the “ Term .”

B.

Notwithstanding Section II.A. hereof, this Agreement shall nevertheless be effective from and after the date of its execution solely to govern Buyer’s obligations in respect of the Facility Fee as more particularly described in Section VI.D. hereof.

A.

For Contract Years through ***, Seller shall make available to Buyer Products up to the Base Reserved Capacity. Buyer shall have the exclusive right, but not the obligation, to purchase and take delivery of Products up to the Base Reserved Capacity through Contract Year ***.

B.

For Contract Years commencing in ***, Seller shall make available to Buyer Products up to the Annual Reserved Capacity. Buyer shall have the exclusive right, but not the obligation, to purchase and take delivery of Products up to the Annual Reserved Capacity. The exclusivity provisions of this Section III.B shall continue in force and effect through the end of Contract Year *** and thereafter during all subsequent Contract Years unless and until the occurrence of the following:

1.

Subject to Seller’s election not to supply the ************ Tons of IGAN as more fully described in Section VI.A.2. of this Agreement, in which case Buyer shall for purposes of this Section III.B.1. be deemed to have purchased and receive a credit for such Tons, if Buyer ********* have not purchased an aggregate of ****** Tons of Products from the Effective Date through the end of Contract Year ***, which quantity shall be pro-rated as to IGAN only (and not ANS) in the event and to the extent the Effective Date is later than ****************, Seller shall have the right, but not the obligation, to give Buyer notice in ****** of Seller’s intention to terminate, effective *********, ****** Buyer’s exclusive right to purchase the Products. If Seller has timely delivered such notice and if Buyer **************** do not purchase an aggregate of at least *** Tons of Products in Contract Year ***, Buyer shall no longer have the exclusive right to purchase Products in Contract Year *** or thereafter. If Buyer *************** do purchase an aggregate of at least *** Tons of Products in Contract Year ***, then Buyer shall retain the exclusive right to purchase Products in Contract Year ***, and such Seller’s notice shall become null and void.

2.

Subject to Seller’s election not to supply the *********Tons of IGAN as more fully described in Section VI.A.II of this Agreement, in which case Buyer shall for purposes of this Section III.B.2. be deemed to have purchased and receive a credit for such Tons, if Buyer ********* have not purchased an aggregate of ****** Tons of Products in Contract Year *** or any subsequent Contract Year, Seller shall have the right, but not the obligation, to give Buyer notice in ****** of the succeeding Contract Year of Seller’s intention to terminate Buyer’s exclusive right to purchase the Products during the Contract Year following the year in which notice is given. If Seller has timely delivered such notice and if Buyer ********* do not purchase an aggregate of at least ****** Tons of Products in the Contract Year in which notice is given, Buyer shall no longer have the exclusive right to purchase the Products in the Contract Year following the year in which notice is given or thereafter. If Buyer **************** do purchase an aggregate of at least ****** Tons of Products in the Contract Year in which notice is given, then Buyer shall retain the exclusive right to purchase Products in the Contract Year following the year in which notice is given, and such Seller’s notice shall become null and void.

C.

In the event that Buyer’s exclusive right to purchase Products is no longer applicable as a result of the operation of Paragraph B. above, this Agreement shall nevertheless continue in full force and effect on the following basis:

1.

The Price shall continue to be calculated as described herein;

2.

The Annual Reserved Capacity shall continue to be calculated as described herein;

3.

Subject to and after making available the Annual Reserved Capacity to Buyer and subject to subparagraph III.C.4. below as to IGAN, Seller shall be entitled to sell Products and AGAN for use in Commercial Explosives applications in the Territory; and

4.

Subject to and after making available the *********************** to Buyer, Seller shall be entitled to use any ********************** at the Facility to produce IGAN for ***************, in which event (i) ********** of operating the Facility as provided herein, and (ii) ***************************************************

D.

In the event that, during any Contract Year, Buyer requires Products in excess of the Base Reserved Capacity or the Annual Reserved Capacity (as applicable, the “ Additional Capacity ”), and such Additional Capacity is available at the Plant, Seller may, at its option, make available such Additional Capacity to Buyer at either the Price or on price terms otherwise agreed to by the Parties.

E.

Beginning on the Effective Date and thereafter on or before the seventh business day of each Month during the Term, Buyer will provide Seller with a rolling 120-day forecast of the requirements of Buyer for each Product (the “ Forecasts ”). The Parties agree that the Forecasts are estimates only, and that Buyer shall not be obligated to purchase the quantity of Products set forth in any Forecast. Buyer’s annual Forecast for the Initial Contract Year is ****** Tons of Shipped ANS and ****** Tons of IGAN, which quantity shall be pro-rated as to IGAN only (and not ANS) in the event the Effective Date is later than ********* Buyer’s annual Forecast for Contract Year *** is ****** Tons of Shipped ANS and ****** Tons of IGAN. Buyer’s annual Forecast for Contract Year *** is ****** Tons of Shipped ANS and ****** Tons of IGAN.

F.

Seller shall install, own and operate scales and other measurement facilities (the “ Scales ”) in order to measure the Tons of Product delivered by Seller to Buyer under this Agreement. Such Scales shall include without limitation:

1.

Scales suitable to determine the weights of rail and truck shipments of ANS and IGAN; and

2.

Laboratory and analytical services and facilities capable of performing all necessary quality control methods and procedures, including scale calibration.

G.

At all times during the Term, the Buyer shall have the right to request Seller to utilize the full storage capacity of the Storage Dome to store IGAN produced at the Facility for delivery and sale to Buyer, provided that if Buyer loses exclusivity under Section III.B. hereof, then the storage capacity in the Storage Dome shall also be available for Seller’s use.

H.

Notwithstanding the foregoing in this Article III and references to sales to Nelson Brothers in this Agreement, the exclusivity rights granted hereunder by Seller are specific as to Buyer. Seller shall have no exclusivity obligation to Nelson Brothers and the Parties agree that Nelson Brothers is not intended to be a third-party beneficiary to this Agreement.

A.

All Products Delivered shall conform to the Specifications. All claims by Buyer that any Product Delivered hereunder does not conform to the Specifications shall be made within forty-five (45) days of Delivery of such Product. Except with respect to claims based on Seller’s breach of its representations or warranties under Section V.(ii). as to title, failure to give notice of such claim within the specified time shall constitute a waiver of such claim.

B.

In the event that any Products Delivered do not conform to the Specifications, Seller shall, at Buyer’s option, either (i) Deliver to the location where the nonconformance was identified equivalent quantities of conforming Products as promptly as practical at Seller’s expense, or (ii) refund the Price paid by Buyer for the nonconforming Products and any transportation and handling costs incurred by Buyer prior to determination of the nonconformance. In both cases Seller shall reimburse to Buyer all costs incurred by Buyer to dispose of nonconforming Products provided however that Buyer shall make all reasonable efforts to cooperate with Seller to minimize such disposal costs. The foregoing remedies are not exclusive and, except as expressly provided to the contrary herein, Buyer shall be entitled to all rights and remedies otherwise available to it under applicable law.

C.

Buyer and Seller shall mutually agree on any IGAN additives or coatings.

A.

The Price of the Products shall be calculated as follows:

1.

ANS:

a.

For Tranche # 1 ANS shall be the sum of:

i.

the annual *************************************** as determined by the “Ammonia Based Version” of “Yazoo City AN Synthesis” in Seller’s Blue Book, including, once Seller has fully recovered its investment, if any, to achieve such efficiencies, any and all efficiency improvements at the Plant such as, but not limited to, changes in the Seller’s costs to purchase and deliver natural gas by pipeline to the Plant, except that fixed costs may be limited by this Subsection VI. A. 1. a., plus

ii.

the annual *************************************** of “Turnaround Amortization” in Seller’s Blue Book, plus

iii.

the annual *************************************** of “Catalyst Amortization, Excluding Fabrication” in Seller’s Blue Book, plus

iv.

a markup to Seller equal to **************************************************, plus

v.

the annual *************************************** of “Depreciation” in Seller’s Blue Book, not to exceed *** per Ton of ANS.

b.

For Tranche # 2 ANS shall be, for the period through Calendar Year *** and thereafter (unless Seller provides Buyer with ********* prior written notice to terminate this pricing for Tranche #2 ANS), ****** per Ton of ANS, based upon a “burner tip” cost of natural gas at the Plant of *** per mmbtu (calculated as a NYMEX Henry Hub natural gas price of *** per mmbtu plus *** per mmbtu pipeline delivery cost). Prior to such termination notice, such Price shall be adjusted ****** by a natural gas into ANS usage factor of *** multiplied by the difference between *** per mmbtu and Index price, in dollars per mmbtu, indicated under ************ example, the ****** price equals ****** per mmbtu. If Seller provides Buyer with ****** prior written notice to terminate this pricing calculation for Tranche # 2 ANS, such notice not to be effective earlier than *********, then the Tranche # 2 ANS Price will no longer be in effect as of the effective date of such notice and the Tranche # 2 ANS Price will thereafter be the same as the Tranche # 1 ANS Price. The Tranche # 2 ANS Price shall not, at any time or under any circumstance, exceed the then applicable Tranche # 1 ANS Price.

2.

IGAN:

a.

For ************ Tons per year, shall be the sum of:

i.

the sum of **********************************************************, plus

ii.

a markup to Seller equal to the sum calculated pursuant to Section VI. A. 2. a. i. above***************** ***************************************************:

iii.

the annual ***************************************** of “Depreciation” in Seller’s Blue Book, not to exceed *** per Ton of ANS,

iv.

the actual annual ANS into IGAN usage factor in Tons of ANS per Ton of IGAN, as determined in Seller’s Blue Book, plus

v.

the annual *************************************** in Seller’s Blue Book, plus

vi.

the annual *************************************** for the Facility, as determined in Seller’s Blue Book; with the exceptions being that (A) during Contract Years *** and ***, the annual *********** ************************ shall be calculated on the basis that the Buyer bears, during Contract Year ***, not more than *** (****** Tons / ****** Tons

– to be proportionately reduced if and to the extent the Effective Date is later than ******) of the annual ****************************************** for the Facility and, during Contract Year ******** (****** Tons / ****** Tons) of the annual ************************************************* for the Facility, and (B) commencing in Contract Year *** and in subsequent Contract Years, Buyer shall bear the annual ******************************************** for the Facility, provided however that Seller shall bear a proportionate share of the annual ***************************** for the Facility if the Seller manufactures for its own account and sale AGAN ********* by using the Facility; and

b.

for the ****** Tons per year shall be, at Buyer’s option, either:

i.

the same Price as calculated in Section VI. A. 2. a. above, or

ii.

a Price as otherwise negotiated on a case-by-case basis by Seller and Buyer, in which event Buyer shall present to Seller ******************, and Seller shall have the option to ************************ *********. If Seller ************************** ********* presented by Buyer, then Seller shall bear a proportionate share of the annual “Actual – Total Spending” of the “Total - Fixed Costs (Cash Only)” for the Facility, attributable to the *************** ************ by Seller, calculated based on the ratio that the Tons of IGAN represented by the ********* ****** by Seller bears to 260,000 Tons, provided that Seller shall not bear such proportionate share of the annual “Actual – Total Spending” of the “Total - Fixed Costs (Cash Only)” for the Facility, attributable to the *************** by Seller, if the Price of IGAN required by Buyer to realize such opportunity would result in Seller receiving ****************** ****** such IGAN.

B.

IMPORTED AMMONIA :

1.

Affililate Ammonia. If any such ammonia is supplied from one or more of Seller’s Affiliated Company’s North American ammonia production facilities, then the ammonia will be factored into such ANS and IGAN Prices at ****************************************************************************************** *********************************************************************************.

2.

Non-Affiliate North American Ammonia. If any such ammonia is supplied from a non-Affiliate North American source, then the ammonia will be factored into such ANS and IGAN Prices at the actual price paid by Seller to purchase the ammonia and have it delivered to the Plant.

3.

Non-North American Ammonia. If any such ammonia is supplied from offshore sources (that is, non-North American manufactured ammonia), then such ammonia shall be factored into such ANS and IGAN Prices ****************** ***********************************************************************************************. For purposes of clarity, Seller’s ****** cost for imported ammonia shall be deemed to include, without limitation, any importation charges and terminal throughput charges.

4.

North American and Non-North American Sources. If any such ammonia is supplied from both North American and Non-North American sources, then such ammonia will be factored into ANS and IGAN Prices at the ******** in 1. above, or the actual price paid in 2. *** above, by Seller to purchase the ammonia and have it delivered to the Plant based upon Seller’s ****** accounting with respect to such ammonia.

C.

FIRM-PRICED AMMONIA :

1.

Buyer shall have the right to request, upon reasonable notice to Seller and subject to Seller’s natural gas hedging policy and credit limitations in effect at the time of said notice, that Seller make firm for a period of time, not less than ********* and not more than *********, the cost of a quantity of natural gas used in the manufacture of the Products, such that the natural gas component of the ANS Price and/or IGAN Price, as the case may be, likewise be made firm for the same period of time and, after taking into account the actual usage factors involved in the manufacturing processes, in the same amount.

2.

If Buyer exercises such right and Seller purchases such natural gas on a firm basis, Buyer shall purchase from Seller the ANS and/or IGAN which corresponds to such natural gas purchases, unless

Seller is unable to manufacture such ANS and/or IGAN in which case, except to the extent Buyer otherwise directs, Seller will liquidate the natural gas position and the gains or losses resulting from said liquidation shall be for Buyer’s account.

3.

Buyer shall pay all transaction costs associated with the hedging activities described in this Section VI.C.

D.

FACILITY FEE :

1.

Seller shall provide the capital funding for the Conversion Project, in accordance with the Conversion Project Capital Budget, and Buyer shall, in addition to payment for ANS, IGAN and Maintenance and Capital Expenditures as provided for in this Article, repay, in equal Monthly installments, such capital amount with interest at an annual interest rate of *** (such amount plus such interest, the “ Facility Fee ”). The principal portion of the Facility Fee shall include all engineering, procurement, construction, erection, installation and Commissioning work, services, equipment, machinery and materials costs actually incurred by Seller or Buyer and paid by Seller prior to the Effective Date hereof or to be paid by Seller in the ordinary course after the Effective Date directly in connection with the Conversion Project. Buyer shall begin making the Facility Fee payments on the earlier to occur of Commissioning and ************. Buyer shall nominate, prior to the earlier to occur of Commissioning and ************, the length of the term over which the principal amount of the Facility Fee shall be repaid, such term not to be less than ********* and nor more than ************. At any time during the nominated term, Buyer shall have the option to prepay the remaining unpaid balance of the principal amount and the unpaid interest accrued to the date of such payment on the unpaid principal balance.

2.

Buyer shall be responsible for payment of the Facility Fee attributable to the portion of the Conversion Project Capital Budget actually spent by Seller until all principal and interest accrued and owing is repaid in full, regardless of whether the Facility is Commissioned, except in the events that (i) Buyer terminates the Conversion Agreement pursuant to Section 3.2 thereof, prior to the Commissioning of the Facility by reason of Seller’s breach of that Agreement as finally determined under Article X thereof; (ii) the Facility cannot be Commissioned due to Seller’s negligence in the engineering, procurement, construction, erection, installation or start-up of the Facility as finally determined under Article X of the Conversion Agreement; (iii) Buyer’s obligation to pay the Facility Fee is reduced pursuant to Section III.C.4. of this Agreement; or

(iv) Buyer terminates this Agreement pursuant to (a) Section XI.B. hereof as a resul