LSB Industries 10Q 2010 Q2 Quarterly report | LXU Filing

EXHIBIT 4.2b

SCHEDULES AND EXHIBITS OF TERM LOAN AGREEMENT, DATED AS OF NOVEMBER 2, 2007, AMONG LSB INDUSTRIES, INC., THERMACLIME, INC. AND CERTAIN SUBSIDIARIES OF THERMACLIME, INC., CHEROKEE NITROGEN HOLDINGS, INC., THE LENDERS, THE ADMINISTRATIVE AND COLLATERAL AGENT AND THE PAYMENT AGENT, WHICH TERM LOAN AGREEMENT THE COMPANY FILED AS EXHIBIT 4.1 TO THE COMPANY’S FORM 10-Q FOR THE FISCAL QUARTER ENDED SEPTEMBER 30, 2007.

		SCHEDULES

		1.01(a)		Cherokee Site
		1.01(b)		El Dorado Site
		1.01(c)		Facility Assets
		1.01(d)		Lenders and Lending Offices
		2.01		Commitments and Applicable Percentages
		4.01(a)(iii)		Financing Statements
		4.01(a)(iv)		Leased Property
		5.03		Government Authorizations and Other Consents
		5.05		Indebtedness
		5.06		Litigation
		5.09		Environmental Matters
		5.13		Subsidiaries
		5.18		IP Rights
		5.21		Pipelines
		5.22		Material Contracts
		5.23		Permits
		5.27		Labor Matters
		7.01(b)		Existing Liens
		7.02		Existing Indebtedness and Guarantees
		7.03		Existing Investments
		7.05		Facility Leases/Uses
		7.08		Affiliate Transactions
		7.09		Burdensome Agreements
		11.02		Addresses for Notices; Payment Information


EXHIBITS

	A	Term Note
	B	Compliance Certificate
	C	Borrowing Notice
	D	Assignment and Assumption
	E	Security Agreement
	F-1	Cherokee Mortgage
	F-2	El Dorado Mortgage
	G	Assignment and Consent Agreement
	H-1	Intercompany Lease Subordination Agreement
	H-2	Intercompany Loan Subordination Agreement
	I	Management Agreement Subordination
	J-1	Opinion Matters – Counsel to Loan Parties
	J-2	Opinion Matters – Local Counsel (Alabama)
	J-3	Opinion Matters – Local Counsel (Arkansas)
	K	Inter-Lender Agreement
	L	Assignment and Subordination Agreement
	M	Trademark Security Agreement

SCHEDULE 1.01(a)

LEGAL DESCRIPTION OF CHEROKEE SITE

The tract or lot of land lying in the County of Colbert, State of Alabama, known and described as follows, to wit:

PARCEL I:

Begin at the Northwest corner of Section 7, Township 3 South, Range 13 West, Colbert County, Alabama, and run thence South 0 degrees 36 minutes 44 seconds West 2621.36 feet with the westerly boundary line of said Section 7 to a point on said boundary line; thence run North 88 degrees 55 minutes 46 seconds West 990.00 feet to a point; thence run South 0 degrees 35 minutes 43 seconds West 2623.55 feet parallel with the westerly boundary line of said Section 7, to a point on the northerly boundary line of Section 13, Township 3 South, Range 14 West; thence run South 0 degrees 46 minutes 39 seconds West a distance of 5329.16 feet to a point on the southerly boundary of Section 13, Township 3 South, Range 14 West; thence run South 87 degrees 49 minutes 42 seconds East 1000.47 feet to the Southwest corner of Section 18, Township 3 South, Range 13 West; thence run South 89 degrees 14 minutes 26 seconds East 1397.26 feet to the Southwest corner of the Southeast quarter of the Southeast quarter of said Section 18, which section is a fractional section; thence run North 0 degrees 21 minutes 39 seconds East a distance of 46.5 feet to a concrete monument on the north right-of-way margin of Lile Academy Road; thence south 89 degrees 08 minutes 27 seconds east along said north right-of-way margin a distance of 1,281.76 feet to a concrete monument; thence south 88 degrees 50 minutes 29 seconds east a distance of 2,191.21 feet; thence south 89 degrees 04 minutes 39 seconds east a distance of 474.74 feet; thence north 12 degrees 06 minutes 31 seconds east a distance of 784.37 feet; thence north 12 degrees 02 minutes 41 seconds east a distance of 51.11 feet; thence south 89 degrees 59 minutes 07 seconds west a distance of 726.65 feet; thence north 00 degrees 00 minutes 42 seconds east a distance of 414.62 feet; thence north 84 degrees 05 minutes 23 seconds east a distance of 780.35 feet; thence north 00 degrees 41 minutes 22 seconds east a distance of 816.26 feet to the south right-of-way margin of a 200 foot railroad right-of-way; thence north 88 degrees 03 minutes 37 seconds west along said south right-of-way margin a distance of 1,193.19 feet; thence westerly along the curving south right-of-way margin a distance of 347.85 feet (said curve concave south, having a radius of 1,046.00 feet, a chord bearing of south 82 degrees 24 minutes 48 seconds west, a chord length of 346.25 feet); thence north 02 degrees 12 minutes 51 seconds west a distance of 205.80 feet to the north right-of-way margin of a 200 foot railroad right-of-way; thence easterly along the curving north right-of-way margin a distance of 361.43 feet (said curve concave south, having a radius of 1,246.00 feet, a chord bearing north 83 degrees 37 minutes 48 seconds east, a chord distance of 360.16 feet); thence south 88 degrees 03 minutes 37 seconds east a distance of 1,188.82 feet; thence north 00 degrees 41 minutes 22 seconds east a distance of 310.14 feet; thence south 89 degrees 24 minutes 33 seconds east a distance of 240.77 feet to U.S.-T.V.A. Monument No. 50 (being a concrete monument capped by a bronz tablet showing said monument number and also "T.3S.R.13W.", and all other references to U.S.-T.V.A. monuments herein shall refer to monuments of like character); thence north 00 degrees 24 minutes 16 seconds east a distance of

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420.42 feet to U.S.-T.V.A. Monument No. 51; thence run north 33 degrees 37 minutes west 2,733.00 feet to U.S.-T.V.A. Monument No. 52 in the north line of Section 17, which is in the south line of Section 8; thence north 37 degrees 38 minutes west 416.00 feet to U.S.-T.V.A. Monument No. 53 at the northwest corner of the Southwest Quarter of the Southwest Quarter of the Southeast Quarter of the Southwest Quarter of Section 8; thence north 01 degree 35 minutes east 977.00 feet to U.S.-T.V.A. Monument No. 54 at the northwest corner of the Southeast Quarter of the Southwest Quarter of Section 8; thence north 35 degrees 59 minutes west 1,633.00 feet to U.S.-T.V.A. Monument No. 55 at the southeast corner of the Southwest Quarter of the Southwest Quarter of the Southwest Quarter of the Northwest Quarter of Section 8; thence north 88 degrees 50 minutes west 332.00 feet to U.S.-T.V.A. Monument No. 56 at the southwest corner of the Northwest Quarter of Section 8; thence with the south line of the Northeast Quarter of Section 7 north 88 degrees 50 minutes west 330.00 feet to U.S.-T.V.A. Monument No. 57; thence leaving the said south line north 01 degree 23 minutes 15 seconds east 1,966.31 feet to U.S.-T.V.A. Monument No. 58; thence run north 88 degrees 35 minutes west 336.33 feet to U.S.-T.V.A. Monument No. 59; thence run south 68 degrees 55 minutes 24 seconds west 1,751.46 feet, more or less, to a point on the south line of the north half of the north half of Section 7, Township 3 South, Range 13 West, which point is to be found by finding the intersection of said south line of said north half of the north half of said Section 7 with a line run south 00 degrees 39 minutes 12 seconds west a distance of 45 feet from U.S.-T.V.A. Monument No. 60; thence run north 00 degrees 39 minutes 12 seconds east 659.42 feet; thence run north 56 degrees 58 minutes 57 seconds east 1,150.50 feet, more or less, to U.S.-T.V.A. Monument No. 62 which is located in the north boundary of said Section 7 at a point 1,399.63 feet easterly from the northwest corner thereof; thence run north 88 degrees 39 minutes 30 seconds west with said section line 1,399.63 feet to the POINT OF BEGINNING.

LESS AND EXCEPT FROM THE FOLLOWING PARCELS: III, IV, V, VI, AND VII:

Parcel III:

Commencing at the Southwest corner of Section 18, T-3-S, R-13-W, Colbert County, Alabama, thence North 0 degrees 48 minutes East along the West line of said Section 18 a distance of 4085.36 feet to a point; thence North 89 degrees 58 minutes East a distance of 2003.88 feet to a concrete monument and the point of beginning of the tract herein described; thence North 0 degrees 02 minutes West a distance of 450.00 feet to a point on a chain link fence; thence North 89 degrees 58 minutes East with chain link fence a distance of 298.00 feet to a point; thence South 0 degrees 02 minutes East with chain link fence a distance of 116.50 feet to a point; thence North 89 degrees 58 minutes East with chain link fence a distance of 52.00 feet to a point; thence South 0 degrees 02 minutes East with chain link fence a distance of 333.50 feet to a point; thence leaving said chain link fence South 89 degrees 58 minutes West a distance of 2.00 feet to a concrete monument; thence continuing South 89 degrees 58 minutes West a distance of 348.00 feet to the concrete monument at the point of beginning of the tract herein described.

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Parcel IV

Commence at the Southwest corner of the said Section 7, Township 3 South, Range 13 West, Colbert County, Alabama; thence North 0 degrees 36 minutes 44 seconds east along the west line of the said Section 7 a distance of 2621.68 feet to the northwest corner of the Southwest 1/4 of the said Section 7 and the point of beginning of the tract herein described; thence continuing north 0 degrees 36 minutes 44 seconds east a distance of 200.00 feet to a point; thence south 89 degrees 23 minutes 16 seconds east a distance of 1500.00 feet to a point; thence south 0 degrees 36 minutes 44 seconds west a distance of 600.0 feet to a point; thence north 89 degrees 23 minutes 16 seconds west a distance of 1500.0 feet to a point on the west line of said Section 7; thence north 0 degrees 36 minutes 44 seconds east a distance of 400.0 feet to the point of beginning of the tract herein described.

Parcel V

A parcel of land located in Section 18, Township 3-South, Range 13-West in Colbert County, State of Alabama, said parcel lying east of a right of way for a proposed road approximately 3 miles north of Cherokee, and being more particularly described as follows: Commencing at a point in the east line of Section 18, said point being 1276.0 feet south of the northeast corner of said section; thence due west, 620.9 feet to the POINT OF BEGINNING at the northeast corner of the parcel of land herein described; thence due south 600.0 feet to a point; thence due west, 500.0 feet to a point; thence with a line 132.0 feet east of and parallel to the east line of the right of way of a proposed road due north, 600.0 feet to a point; thence due east, 500.0 feet to the point of beginning.

Parcel VI

Also for the point of beginning, commence at the intersection of the South line of North half of North half of Section 7, Township 3 South, Range 13 West, Colbert County, Alabama, with a line run South 0 degrees 39 minutes 12 seconds West from U.S.-T.V.A. Monument No. 60; thence run North 0 degrees 39 minutes 12 seconds East 659.42 feet to the point of beginning; from said point of beginning run thence North 56 degrees 58 minutes 57 seconds E 1150.50 feet, more or less, to U.S.-T.V.A. Monument No. 62, which is located in the North boundary of Section 7 at a point of 1399.63 feet easterly from the Northwest corner thereof; from said Monument No. 62 run thence South 58 degrees 53 minutes 18 seconds West 1126.17 feet to U.S.-T.V.A. Monument No. 61; thence run South 0 degrees 39 minutes 12 seconds West to the point of beginning.

Parcel VII:

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East a distance of 825.71 feet to the POINT OF BEGINNING; continue thence North 00 degrees 21 minutes 39 seconds East a distance of 505.52 feet; thence South 89 degrees 22 minutes 51 seconds East a distance of 1,116.70 feet; thence South 66 degrees 13 minutes 10 seconds West along said southeasterly right of way margin a distance of 1,223.71 feet to the POINT OF BEGINNING, containing 6.48 acres, more or less, and then being that same parcel of land described in Deed Book 264, Page 560 as recorded in the Probate Office of Colbert County, Alabama.

PARCEL II:

A tract of land lying in Colbert County, State of Alabama, in the East half of East half of Northeast quarter, Section 7, the West half of Northwest quarter and Southwest quarter of Section 8, and the Northeast quarter and East half of Northwest quarter of Section 17, Township 3 South, Range 13 West on the southwest shore of Pickwick Landing Lake opposite Kogor's Island and approximately 4 miles northeast of Cherokee, Alabama, and being more particularly described as follows:

Beginning at U.S.-T.V.A. Monument 51 in the Southwest quarter of Southwest quarter of Northeast quarter of Section 17 and in the boundary of true United States of America's land at a corner of the land of Mrs. F.W. Benson and S.W. Frierson & C.W. Watts' thence with the United States of America's boundary North 33 degrees 37' West 2733.00 feet to the U.S.-T.V.A. Monument 52 in the north line of Section 17, which is the south line of Section 8; thence North 37 degrees 38' West, 416.00 feet to U.S.-T.V.A. Monument 53 at the northwest corner of the Southwest quarter of the Southwest quarter of the Southeast quarter of Southwest quarter, Section 8; thence North 1 degree 35' East, 977.00 feet to U.S.-T.V.A. Monument 54 at the northwest corner of the Southeast quarter of the SW 1/4 Section 8, thence North 35 degrees 59' West, 1633.00 feet to U.S.-T.V.A. Monument 55 at the southeast corner of the Southwest quarter of the Southwest quarter of Southwest quarter of Northwest quarter, Section 8; thence North 88 degrees 50' West, 332.00 feet to U.S.-T.V.A. Monument 56 at the southwest corner of the Northwest quarter of Section 8; thence with the south line of the Northeast quarter, Section 7 North 88 degrees 50' West, 330.00 feet to U.S.-T.V.A. Monument 57; thence leaving the said South line, North 1 degree 23 minutes 15 seconds East, 1966.31 feet to U.S.-T.V.A. Monument 58; thence, leaving the United States of America's boundary South 89 degrees 59 minutes 29 seconds East, 410 feet, passing a metal marker at 385.00 feet, to a point in the 423-foot contour on the shore of Pickwick Landing Lake; thence with the 423-foot contour as it meanders in a southeasterly direction to a point; thence, leaving the contour, South 61 degrees 19 minutes 05 seconds West, 534.50 feet, passing a metal marker at 17 feet, to U.S.-T.V.A. Monument 49 in the south line of the Northeast quarter of Section 17 and in the boundary of the United States of America's land; thence with the United States of America's boundary and the south line of the Northeast quarter of Section 17, North 89 degrees 19 minutes West, 260.20 feet to U.S.-T.V.A. Monument 50; thence leaving the said south line, North 0 degrees 24 minutes 16 seconds East, 420.42 feet to the point of beginning.

PARCEL III:

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concrete monument and the point of beginning of the tract herein described; thence North 0 degrees 02 minutes West a distance of 450.00 feet to a point on a chain link fence; thence North 89 degrees 58 minutes East with chain link fence a distance of 298.00 feet to a point; thence South 0 degrees 02 minutes East with chain link fence a distance of 116.50 feet to a point; thence North 89 degrees 58 minutes East with chain link fence a distance of 52.00 feet to a point; thence South 0 degrees 02 minutes East with chain link fence a distance of 333.50 feet to a point; thence leaving said chain link fence South 89 degrees 58 minutes West a distance of 2.0 feet to a concrete monument; thence continuing South 89 degrees 58 minutes West a distance of 348.00 feet to the concrete monument at the point of beginning at the tract herein described.

PARCEL VIII:

A parcel of land lying in Section 17, Township 3 South, Range 13 West, Colbert County, Alabama, and being more particularly described as follows: Commence at the southwest corner of Section 17, Township 3 south, Range 13 West, Colbert County, Alabama; thence north 00 degrees 44 minutes 27 seconds west a distance of 44.05 feet to a concrete monument on the north right-of-way of Lile Academy Road; thence south 88 degrees 50 minutes 29 seconds east along the north right-of-way of an unnamed County road a distance of 2,191.21 feet; thence south 89 degrees 04 minutes 39 seconds east a distance of 535.94 feet to the east right-of-way of a County road and the POINT OF BEGINNING; thence north 12 degrees 05 minutes 42 seconds east a distance of 761.78 feet; thence south 70 degrees 57 minutes 14 seconds east a distance of 233.95 feet to a Point of Curve; thence southeasterly along a curve concave north a distance of 638.62 feet (said curve having a radius of 2,025.00 feet, a chord bearing of south 79 degrees 59 minutes 24 seconds east, a chord distance of 635.97 feet) to the Point of Tangency; thence south 89 degrees 01 minute 08 seconds east a distance of 517.34 feet to a Point of Curve; thence southeasterly along said curve concave southwesterly a distance of 566.33 feet (said curve having a radius of 950.00 feet, a chord bearing of south 71 degrees 56 minutes 27 seconds east, a chord distance of 557.98 feet) to a Point of Reverse Curve; thence southwesterly along a curve a distance of 108.67 feet (said curve concave northeasterly having a chord bearing of south 25 degrees 43 minutes 19 seconds east, a chord distance of 88.51 feet) to a point; thence south 00 degrees 41 minutes 33' west a distance of 360.35 feet; thence north 89 degrees 04 minutes 24 seconds west a distance of 1,995.46 feet; thence north 00 degrees 46 minutes 28 seconds east a distance of 30.00 feet; thence north 88 degrees 59 minutes 48 seconds west a distance of 94.09 feet to the POINT OF BEGINNING.

PARCEL IX:

A parcel of land lying in Section 17, Township 3 South, Range 13 West and being more particularly described as follows: Commence at the southwest corner of Section 17, Township 3 south, Range 13 West, Colbert County, Alabama; thence north 00 degrees 44 minutes 27 seconds west a distance of 44.05 feet to a concrete monument on the north right-of-way of Lile Academy Road; thence south 88 degrees 50 minutes 29 seconds east along the north right-of-way of an unnamed County road a distance of 2,191.21 feet; thence south 89 degrees 04 minutes 39 seconds east a distance of 535.94 feet to the east right-of-way of a County Road; thence north 12 degrees 05 minutes 42 seconds east along said east right-of-way a distance of 812.15 feet to the POINT OF BEGINNING; thence north 12 degrees 05 minutes 22 seconds east along said right-of-way a distance of 204.63 feet; thence north 01 degree 53 minutes 39 seconds east along said

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right-of-way a distance of 310.69 feet; thence south 89 degrees 07 minutes 03 seconds east a distance of 1,802.58 feet to T.V.A. Monument #48; thence south 42 degrees 56 minutes 26 seconds east a distance of 310.99 feet; thence south 56 degrees 00 minutes 16 seconds west a distance of 808.14 feet to a point of curve; thence northwesterly along a curve concave southwesterly a distance of 43.45 feet (said curve having a radius of 1,000.00 feet, a chord bearing of N 87 deg 46 min 18 sec West a arc length of 43.45 feet) to the point of tangency; thence north 89 degrees 01 minutes 16 seconds West a distance 516.26 feet to the Point of a Curve; thence northwesterly along a curve concave north a distance of 622.86 feet (said curve having a radius of 1,975 feet, a chord bearing of North 79 degrees 59 minutes 24 seconds West, a chord distance of 620.28 feet) to the Point of Tangency; thence North 70 degrees 57 minutes 14 seconds West a distance of 240.04 feet to the POINT OF BEGINNING.

All the foregoing being the same property conveyed by LaRoche Industries, Inc. to Cherokee Nitrogen Company, by deed dated October 31, 2000, filed for record in the Office of the Judge of Probate of Colbert County, Alabama, on November 7, 2000, at 1:37 p.m., and recorded on Microfiche 2000 25, Frames 133-141.

Less and except therefrom property conveyed by Cherokee Nitrogen, Inc., to National Telephone Company of Alabama, by corrective warranty deed dated April 2, 2001 and recorded on Fiche 2001 09 Frame 748, being more particularly described as follows, to-wit:

Commence at a cotton spindle on the SW corner of Section 18, T-3-S, R-12-W, Colbert County, Alabama; then run S 89 degrees 14’ 26” E for 1397.26’ to a spike found; then run N 0 degrees 21’ 39” E for 46.4’ to a 6” concrete monument, the point of beginning; then run N 0 degrees 21’ 39” E for 50.0’ to an iron pin; then run S 89 degrees 14’ 26” E for 50.0’ to an iron pin; then run S 0 degrees 21’ 39” W for 50.0’ to an iron pin; then run N 89 degrees 14’ 26” W for 50.0’ to the point of beginning.

Non-Exclusive Easement for Private Road

A fifty (50) foot wide private road lying in Section 17, Township 3 South, Range 13 West, Colbert County, Alabama, and being more particularly described as follows: Commence at the southwest corner of Section 17, Township 3 South, Range 13 West, Colbert County, Alabama, thence North 00 degrees 44 minutes 27 seconds West a distance of 44.05 feet to a concrete monument on the northern right-of-way margin of Lile Academy road; thence South 88 degrees 50 minutes 29 seconds East along the northern right-of-way margin of a gravel road a distance of 2,191.21 feet; thence South 89 degrees 04 minutes 39 seconds East a distance of 535.74 feet to the east right-of-way margin of a County Road; thence North 12 degrees 05 minutes 42 seconds East a distance of 761.78 feet to the POINT OF BEGINNING; thence continue North 12 degrees 05 minutes 42 seconds East a distance of 50.37 feet; thence South 70 degrees 57 minutes 14 seconds East a distance of 240.04 feet to the P.C. of a curve; thence southeasterly a curve concave northerly a distance of 622.86 feet (said curve having a radius of 1,975.00 feet, a chord distance of 620.28 feet, a chord bearing of South 79 degrees 59 minutes 24 seconds East) to the P.T. of said curve; thence South 89 degrees 01 minute 16 seconds East a distance of 516.26 feet to the P.C. of a curve; thence southeasterly along a curve concave southwesterly a distance of

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648.77 feet (said curve having a radius of 1,000.00 feet, a chord distance of 637.45 feet, a chord bearing of South 70 degrees 26 minutes 42 seconds East) to the P.T. of said curve and the P.C. of a cul-de-sac; thence easterly, southerly, northwesterly along a curve (having a radius of 50.00 feet; a chord bearing of South 82 degrees 09 minutes 16 seconds West, a chord distance of 70.63 feet) a distance of 234.31 feet to the P.T. of said curve; thence northwesterly along a curve concave southwest a distance of 566.33 feet (said curve having a radius of 950.00 feet, a chord bearing of North 71 degrees 56 minutes 27 seconds West, a chord distance of 557.98 feet) to the P.T. of said curve; thence North 89 degrees 01 minute 08 seconds West a distance of 517.34 feet to the P.C. of a curve; thence northwesterly along a curve concave northerly of 638.62 feet (said curve having a radius of 2,025.00 feet, a chord distance of 635.97 feet, a chord bearing of 79 degrees 59 minute 24 seconds west) to the P.T. of said curve, thence North 70 degrees 57 minutes 14 seconds West) to the P.T. of said curve; thence North 70 degrees 57 minutes 14 seconds West a distance of 233.95 feet to the POINT OF BEGINNING.

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SCHEDULE 1.01(b)

LEGAL DESCRIPTION OF EL DORADO SITE

The land referred to herein below is all situated in Union County, Arkansas

Tract 1:

The South Half of Section 6, and the North Half of Section 7, and the Northwest Quarter of the Northwest Quarter of Section 8, all in Township 17 South, Range 15 West, and the following described tract:

Beginning at the Northwest Corner of the Northeast Quarter of the Northwest Quarter of Section 8, Township 17 South, Range 15 West;

thence South along the West line of said Northeast Quarter of the Northwest Quarter of Section 8 to the intersection with the South right-of-way line of the access road as now located, said right-of-way line being 50 feet perpendicular distance from the center line of said access road;

thence in a Northeasterly direction along said right-of-way line to the intersection with the South line of the right-of-way of the railroad spur, said right-of-way line for the railroad spur being 50 feet perpendicular distance from the center line of said railroad spur;

thence along said South right-of-way line for the railroad spur to a point which is 750 feet South of the North line of said Section 8;

thence East along a line which is parallel to the North line of said Section 8, and750 feet distant therefrom to the intersection with the South right-of-way line for the railroad spur herein above described;

thence in a Southeasterly direction along the said South right-of-way line to the intersection with the West right-of-way line of the El Dorado-Smackover Highway;

thence in a Northwesterly direction along the West right-of-way line of said El Dorado-Smackover Highway to the North line of Section 9, Township 17 South, Range 15West;

thence West along the North line of said Section 9 and the North line of said Section 8 to the POINT OF BEGINNING.

LESS AND EXCEPT THE FOLLOWING TRACTS:

1. Commencing at the Southeast Corner of Section 6, Township 17 South, Range 15 West, and

thence run North 88 degrees 53 minutes 44 seconds West 1772.43 feet;

thence North 01 degree 03 minutes 47 seconds East 576.89 feet for a POINT OF BEGINNING;

thence North 88 degrees 56 minutes 13 seconds West 134.0 feet;

thence North 01 degree 03 minutes 47 seconds East 40.00 feet;

thence North 88 degrees 56 minutes 13 seconds West 16.00 feet;

thence North 01 degree 03 minutes 47 seconds East 40.0 feet;

thence South 88 degrees 56 minutes 13 seconds East 150.00 feet;

thence South 01 degree 03 minutes 47 seconds West 80.00 feet to the POINT OF BEGINNING.

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AND

2. Commencing at the Southeast Corner of Section 6, Township 17 South, Range 15 West, run thence North 88 degrees 53 minutes 44 seconds West 2341.68 feet;

thence North 01 degree 05 minutes 46 seconds East 545.52 feet for a POINT OF BEGINNING;

thence North 88 degrees 54 minutes 14 seconds West 240.00 feet;

thence North 01 degree 05 minutes 46 seconds East 30.00 feet;

thence North 88 degrees 54 minutes 14 seconds West 96.71 feet;

thence North 01 degree 05 minutes 46 seconds East 118.10 feet;

thence South 88 degrees 54 minutes 14 seconds East 336.71 feet;

thence South 01 degree 05 minutes 46 seconds West 85.72 feet;

thence South 88 degrees 54 minutes 14 seconds East 59.31 feet;

thence South 01 degree 05 minutes 46 seconds West 40.58 feet;

thence North 88 degrees 54 minutes 14 seconds West 59.31 feet;

thence South 01 degree 05 minutes 46 seconds West 21.80 feet to the POINT OF BEGINNING.

Tract 2:

Commencing at the North Quarter Corner of Section 1, Township 17 South, Range 16 West, thence South 88 degrees 46 minutes East, 282.7 feet;

thence South 01 degree 14 minutes West, 269.2 feet to the POINT OF BEGINNING;

thence South 88 degrees 46 minutes East, 150.0 feet;

thence South 01 degree 14 minutes West, 150.0 feet;

thence North 88 degrees 46 minutes West, 150.0 feet;

thence North 01 degree 14 minutes East, 150.0 feet to the POINT OF BEGINNING.

Tract 3:

Beginning at the Southwest Corner of the Northeast Quarter of Section 31, Township 16South, Range 15 West;

thence North 00 degrees 07 minutes East 150 feet to a stake;

thence South 88 degrees 37 minutes East 150 feet to a stake;

thence South 00 degrees 07 minutes West 150 feet to a stake on South line of the Northeast Quarter;

thence North 88 degrees 37 minutes West 150 feet to POINT OF BEGINNING.

Tract 4:

Beginning at the Southeast Corner of the Southwest Quarter of Section 30, Township 16 South, Range 15 West, at a iron pipe Corner;

thence North 88 degrees 38 minutes West 150 feet along the South line of said Section 30 to a stake;

thence North 00 degrees 07 minutes East 150 feet to a stake;

thence South 88 degrees 38 minutes East to a stake on the East line of said Southwest Quarter;

thence South 00 degrees 07 minutes West 150 feet to POINT OF BEGINNING.

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Tract 5:

Commencing at the Northwest Corner of the South Half of the Northeast Quarter of Section 12, Township 17 South, Range 16 West;

thence South 00 degrees 04 minutes East, 469.0 feet;

thence North 53 degrees 09 minutes East, 126.45 feet;

thence North 61 degrees 26 minutes East, 239.7 feet to the POINT OF BEGINNING;

thence North 00 degrees 04 minutes West, 118.7 feet;

thence North 89 degrees 56 minutes East, 150.0 feet;

thence South 00 degrees 04 minutes East, 150.0 feet;

thence South 89 degrees 56 minutes West, 150.0 feet;

thence North 00 degrees 04 minutes West, 31.3 feet to the POINT OF BEGINNING.

Tract 6:

Beginning at a point which is South 00 degrees 18 minutes East 223.2 feet and North 89 degrees 42 minutes East 273.1 feet distance from the Northwest Corner of the Southwest Quarter of Section 9, Township 17 South, Range 15 West;

thence North 00 degrees 18 minutes West 150 feet;

thence North 89 degrees 42 minutes East 150 feet;

thence South 00 degrees 18 minutes East 150 feet;

thence South 89 degrees 42 minutes West 150 feet to the POINT OF BEGINNING.

Tract 7:

Beginning at the Southwest Corner of the Southeast Quarter of Section 2, Township 17 South, Range 16 West;

thence North 150 feet along the West line of said Southeast Quarter to a stake;

thence South 88 degrees 56 minutes East 150 feet to a stake;

thence South 150 feet to a stake on South line of said Section 2;

thence North 88 degrees 56 minutes West 150 feet to POINT OF BEGINNING.

Tract 8:

Beginning at the Southwest Corner, Section 2, Township 17 South, Range 16 West;

thence North along Section line 150 feet to a stake;

thence South 88 degrees 56 minutes East 150 feet to a stake;

thence South 150 feet to a stake;

thence North 88 degrees 56 minutes West 150 feet to POINT OF BEGINNING.

Tract 9:

Commencing at the Southwest Corner of the Southeast Quarter of Section 12, Township 17 South, Range 16 West;

thence North 00 degrees 04 minutes West, 276.7 feet;

thence North 89 degrees 56 minutes East, 271.8 feet to the POINT OF BEGINNING;

thence North 00 degrees 04 minutes West, 150 feet;

thence North 89 degrees 56 minutes East, 150 feet;

thence South 00 degrees 04 minutes East, 150 feet;

thence South 89 degrees 56 minutes West, 150 feet to the POINT OF BEGINNING.

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Tract 10:

Commencing at the Southwest Corner of Southeast Quarter of Section 7, Township 17 South, Range 15 West;

thence South 88 degrees 25 minutes East 155.4 feet;

thence North 01 degree 35 minutes East 308.5 feet to the POINT OF BEGINNING;

thence continuing North 01 degree 35 minutes East 150 feet;

thence South 88 degrees 25 minutes East 150 feet;

thence South 01 degree 35 minutes West 150 feet;

thence North 88 degrees 25 minutes West 150 feet to the POINT OF BEGINNING.

Tract 11:

Beginning at the Northwest Corner of the Southeast Quarter, Section 18, Township 17 South, Range 15 West;

thence South 88 degrees 21 minutes East 150 feet along the North line of the said Southeast Quarter to a stake;

thence South 00 degrees 11 minutes East 150 feet to a stake;

thence North 88 degrees 21 minutes West 150 feet to a stake on the West line of the said Southeast Quarter;

thence North 00 degrees 11 minutes West 150 feet to the POINT OF BEGINNING.

Tract 12:

Beginning at a point on the West line of the Southeast Quarter of Section 18, Township 17 South, Range 15 West, located North 00 degrees 11 minutes West 150 feet from the Southwest Corner of said Southeast Quarter;

thence North 00 degrees 11 minutes West 100 feet along the West line of said Southeast Quarter to a stake;

thence South 88 degrees 17 minutes East 150 feet to a stake;

thence South 00 degrees 11 minutes East 100 feet to a stake;

thence North 88 degrees 17 minutes West 150 feet to the POINT OF BEGINNING.

Tract 15:

Beginning at the Southeast Corner of Section 1, Township 17 South, Range 16 West;

thence North 89 degrees 25 minutes West along the South line of said Section 1, 4830.14 feet to POINT OF BEGINNING;

thence North 00 degrees 04 minutes East 150 feet;

thence North 89 degrees 25 minutes West 150 feet;

thence South 00 degrees 04 minutes West 150 feet to the intersection of South line of Section 1;

thence South 89 degrees 25 minutes East along Section line 150 feet to POINT OF BEGINNING.

Page 4 of 12

Tract 16:

Beginning at a point 10.4 feet North of the Southwest Corner of Section 5, Township 17South, Range 15 West;

thence East 29.5 feet;

thence North 150.0 feet;

thence West 29.5 feet;

thence South 150.0 feet to the POINT OF BEGINNING.

Tract 17:

Beginning at a point 70 yards North of the Southeast Corner of Section 1, Township 17 South, Range 16 West;

thence West 25.00 feet;

thence South approximately 134.83 feet;

thence East 25.00 feet;

thence North to the PLACE OF BEGINNING.

The exclusive right to produce water from any horizon lying under the following described Tract 18 in Union County, Arkansas, at and below a depth of 350 feet below the surface:

Tract 18:

The East Half of Section 1 and the East Half of Section 12, all in Township 17 South, Range 16 West,

And

The South Half of Section 7 and all of Section 8, all in Township 17 South, Range 15 West,

And

All that part of the West Half of the West Half of Section 9, Township 17 South, Range 15 West, lying West of the El Dorado-Smackover Highway and all that part of the Southwest Quarter of the Southwest Quarter of Section 4, Township 17 South, Range 15 West, lying West of the El Dorado-Smackover Highway and all of Section 5 and the North Half of Section 6, all in Township 17 South, Range 15 West, EXCEPT the following described tracts, lettered (a) through (k), both inclusive, to-wit:

(a) The Northwest Quarter of the Northwest Quarter of Section 8, Township 17 South, Range 15 West.

(b) Beginning at the Northwest Corner of the Northeast Quarter of the Northwest Quarter of Section 8, Township 17 South, Range 15 West;

thence South along the West line of said Northeast Quarter of the Northwest Quarter of said Section 8 to the intersection with the South right-of-way line of the Access Road as now located, said right-of-way line being 50 feet perpendicular distance from the center line of said Access Road;

Page 5 of 12

thence along said South right-of-way line for the railroad spur to a point which is 750 feet South of the North line of said Section 8;

thence East along a line which is parallel to the North line of said Section 8, and 750 feet distant therefrom, to the intersection with the South right-of-way line for the railroad spur hereinabove described;

thence in a Southeasterly direction along the said South right-of-way line to the intersection with the West right-of-way line of the El Dorado-Smackover Highway;

thence in a Northwesterly direction along the West right-of-way line of said El Dorado-Smackover Highway to the North line of Section 9, Township 17 South, Range 15 West;

thence West along the North line of said Section 9 and the North line of said Section 8 to the POINT OF BEGINNING.

thence South 88 degrees 24 minutes East 4060.30 feet to the POINT OF BEGINNING of this excepted tract;

thence South 00 degrees 40 minutes West 1213.20 feet;

thence South 88 degrees 10 minutes East 1200.33 feet to the El Dorado-Smackover Highway;

thence in a Northwesterly direction along said Highway to the North line of said Section 5;

thence in a Westerly direction to the POINT OF BEGINNING.

(d) Commencing at the Northeast Corner of Section 6, Township 17 South, Range 15 West;

thence North 88 degrees 23 minutes West 1327 feet to the POINT OF BEGINNING of this excepted tract;

thence South 01 degree 37 minutes West 90 feet;

thence North 88 degrees 23 minutes West 990 feet;

thence North 01 degree 37 minutes East 90 feet;

thence South 88 degrees 23 minutes East 990 feet to the POINT OF BEGINNING.

(e) Tract 2 described above.

(f) Tract 5 described above.

(g) Tract 6 described above.

(h) Tract 9 described above.

(i) Tract 10 described above.

(j) Tract 16 described above.

(k) Tract 17 described above.

Page 6 of 12

drainage ditch, road, trail or railroad upon any of the land which constitutes a part of Tract 18 described above or which leads from Tract 18 described above to Tracts 3, 4, 7, 8, 11, 12 and 15 described above, and the right-of-way in connection therewith, all as is more fully set forth in said Quitclaim Deed, Assignment and Bill of Sale.

TOGETHER WITH such water rights as were reserved by Monsanto Company in a Quitclaim Deed in favor of J. L. Lee which was filed February 23, 1981 in Record Book 1459, Page 601, of the Union County Deed Records describing the following tract:

Beginning at the Southwest Corner of the Southwest Quarter of the Southeast Quarter of Section 8, Township 17 South, Range 15 West;

thence North 417.4 feet;

thence East 417.4 feet;

thence South 417.4 feet;

thence West 417.4 feet to the POINT OF BEGINNING.

ALSO

Commencing at the Southeast Corner of the Southeast Quarter of the Southwest Quarter of Section 8, Township 17 South, Range 15 West;

thence North 01 degree 06 minutes East 274.0 feet to the POINT OF BEGINNING;

thence North 88 degrees 54 minutes West 69.8 feet;

thence North 01 degree 06 minutes East 150.0 feet;

thence South 88 degrees 54 minutes East 69.8 feet;

thence South 01 degree 06 minutes West 150.0 feet to the POINT OF BEGINNING.

TOGETHER WITH such water rights as were reserved in a Quitclaim Deed in favor of Louis Knox White et al which was filed September 10, 1982 in Record Book 1521, Page 257, in the Union County Deed Records describing the following tract:

Beginning at the Southwest Corner of the Southwest Quarter of the Northwest Quarter of Section 9, Township 17 South, Range 15 West;

and run North 00 degrees 38 minutes East 1729.4 feet to the South right-of-way line of the Missouri-Pacific Railroad;

thence in a Southeasterly direction along said right-of-way for 547.8 feet to the West line of Highway No. 7B;

thence South 08 degrees 29 minutes East along said line 21.8 feet;

thence South 05 degrees 24 minutes East along said line 1444.0 feet;

thence South 02 degrees 50 minutes East along said line 96.57 feet;

thence North 88 degrees 14 minutes West 675.4 feet to the POINT OF BEGINNING.

Page 7 of 12

Tract 41-1 (25):

The West Half of the Southeast Quarter of the Southeast Quarter and the Northeast Quarter of the Southeast Quarter of Section 7, and the Southwest Quarter of the Northwest Quarter of Section 8, all in Township 17 South, Range 15 West, Union County, Arkansas, EXCEPTING THE FOLLOWING DESCRIBED TRACT:

Beginning at a point 600.0 feet North of the Northwest Corner of the Southwest Quarter of said Section 8;

thence North 435.6 feet;

thence East 100.0 feet;

thence South 435.6 feet;

thence West 100.0 feet to the POINT OF BEGINNING.

Tract 41-2 (20):

The North Three-Quarters of the North Half of the Northwest Quarter of the Southeast Quarter (N 3/4 N/2 NW/4 SE/4) of Section 7, Township 17 South, Range 15 West, LESS three (3) acres in the form of a square in the Northeast Corner thereof.

Tract 41-4 (22):

Three acres in the form of a square out of the Northeast Corner of the Northwest Quarter of the Southeast Quarter of Section 7, Township 17 South, Range 15 West of the Fifth Principal Meridian.

(Same Property as the exception in 41-2 (20) above)

Tract 41-4 (23):

Beginning at a point 600 feet North of the Southwest Corner of the Southwest Quarter of the Northwest Quarter of Section 8, Township 17 South, Range 15 West of the Fifth Principal Meridian;

thence East 100.0 feet;

thence North 435.6 feet;

thence West 100.0 feet;

thence South 435.6 feet to the PLACE OF BEGINNING.

(Same Property as the exception in 41-1 (25) above)

Tract 41-4 (24):

A part of the Southwest Quarter of the Southeast Quarter of Section 8, Township 17 South, Range 15 West of the Fifth Principal Meridian, described as follows:

Beginning at a point 417.4 feet North of the Southwest Corner of the said Southwest Quarter of the Southeast Quarter of Section 8 and running thence North 208.71 feet;

thence East 208.71 feet;

thence South 208.71 feet;

thence West 208.71 feet to the PLACE OF BEGINNING,

Page 8 of 12

EXCEPT that part of the Southwest Quarter of the Southeast Quarter of Section 8 contained within the following parcel of land, described as:

Commencing at the Southwest Corner of said Southwest Quarter of the Southeast Quarter of said Section 8;

thence South 88 degrees 54 minutes East, 80.2 feet;

thence North 01 degree 06 minutes East, 274.0 feet to the POINT OF BEGINNING of said parcel;

thence North 88 degrees 54 minutes West, 150.0 feet;

thence North 01 degree 06 minutes East, 150.0 feet;

thence South 88 degrees 54 minutes East, 150.0 feet;

thence South 01 degree 06 minutes West, 150.0 feet to the POINT OF BEGINNING.

Tract 41-5 (19):

The South Five-Eighths of the Northwest Quarter of the Southeast Quarter and the North Three-Eighths of the Southwest Quarter of the Southeast Quarter of Section 7, Township 17 South, Range 15 West of the Fifth Principal Meridian.

Tract 41-7:

The Southwest Quarter of the Northeast Quarter and the Southeast Quarter of the Northwest Quarter of Section 6, Township 17 South, Range 15 West, Union County, Arkansas.

Tract 41-9:

The Northwest Quarter of the Southwest Quarter of Section 5, Township 17 South, Range 15 West,

AND

The East Half of the Northeast Quarter of Section 6, Township 17 South, Range 15 West.

Tract 41-10:

The Northwest Quarter of the Northeast Quarter of Section 6, Township 17 South, Range 15 West, Union County, Arkansas, LESS AND EXCEPT the following tract:

Commencing at the Northeast Corner of the Northwest Quarter of the Northeast Quarter of Section 6, Township 17 South, Range 15 West, and run thence South 90 feet;

thence West 990 feet;

thence North 90 feet;

thence East 990 feet to the POINT OF BEGINNING.

Tract 41-11:

The Southeast Quarter of the Northeast Quarter of Section 1, Township 17 South, Range 16 West,

ALSO

The Southwest Quarter of the Northwest Quarter of Section 6, Township 17 South, Range 15 West,

Page 9 of 12

LESS AND EXCEPT THE FOLLOWING TRACTS:

1. All that part of the Southeast Quarter of the Northeast Quarter (SE/4 NE/4) of Section 1, Township 17 South, Range 16 West, Union County, Arkansas, lying North and West of Arkansas State Highway #335,

2. All that part of the Southwest Quarter of the Northwest Quarter (SW/4 NW/4) of Section 6, Township 17 South, Range 15 West, Union County, Arkansas, lying North and West of Arkansas State Highway #335.

Tract 41-12:

The East Quarter of the Southwest Quarter of the Southeast Quarter of Section 1, Township 17 South, Range 16 West

AND

the Southeast Quarter of the Southeast Quarter of Section 1 Township 17 South, Range 16 West of the Fifth Principal Meridian, LESS THE FOLLOWING TRACTS:

1. A tract described as:

Commencing 70 yards North of the Southeast Corner of the Southeast Quarter of the Southeast Quarter of Section 1, Township 17 South, Range 16 West, as a BEGINNING POINT;

thence South 70 yards;

thence West 330 yards;

thence North 61.5 yards;

thence in a straight line to a POINT OF BEGINNING.

2. A tract described as:

Beginning at a point 70 yards North of the Southeast Corner of Section 1, Township 17 South, Range 16 West;

thence North 15.17 feet;

thence West 25.00 feet;

thence South 15.17 feet;

thence East to the POINT OF BEGINNING.

3. A tract described as:

Commencing at the Southeast Corner (SECor) of Section 1, Township 17 South, Range 16 West, Union County, Arkansas, and run North 89 degrees 24 minutes 22 seconds West along the South line of said Section 1 a distance of 1172.08 feet, more or less, to the center line of a county road for the point of beginning;

thence run North 33 degrees 28 minutes 58 seconds East 432.00 feet;

thence North 89 degrees 21 minutes 48 seconds West 715.87 feet;

thence South 00 degrees 16 minutes 35 seconds West 363.30 feet to the South line of Section 1;

thence South 89 degrees 24 minutes 22 seconds East 479.28 feet to the point of beginning.

Page 10 of 12

4. (Monsanto to Gardner)

Commencing at the Southeast Corner of Section 1, Township 17 South, Range 16 West, and run North 89 degrees 25 minutes West 400.0 feet;

thence North 00 degrees 15 minutes East 199.7 feet to the POINT OF BEGINNING;

thence North 00 degrees 15 minutes East 150.9 feet;

thence North 89 degrees 25 minutes West 543.7 feet to the center of State Highway No. 335;

thence South 33 degrees 55 minutes West along said Highway for 422.4 feet;

thence South 89 degrees 25 minutes East 184.0 feet;

thence North 00 degrees 15 minutes East 184.5 feet;

thence North 89 degrees 00 minutes East 593.5 feet to the POINT OF BEGINNING.

5. (Monsanto to Haney)

Commencing at the Southeast Corner of Section 1, Township 17 South, Range 16 West, and run North 89 degrees 25 minutes West 400.0 feet;

thence run North 00 degrees 15 minutes East 350.6 feet to the POINT OF BEGINNING;

thence run North 00 degrees 15 minutes East 819.7 feet to the center of State Highway No. 335;

thence run South 33 degrees 55 minutes West along said Highway for 979.8 feet;

thence run South 89 degrees 25 minutes East 543.7 feet to the POINT OF BEGINNING.

6. (NWF to Cole Timber)

The East Quarter of the Southwest Quarter of the Southeast Quarter (E/4 SW/4 SE/4) and all that part of the Southeast Quarter of the Southeast Quarter (SE/4 SE/4) of Section 1, Township 17 South, Range 16 West, Union County, Arkansas, lying West of Arkansas State Highway #335.

Tract 41-12A:

1. (Gardner to Monsanto)

Beginning at the Northeast Corner (NECor) of Section 12, Township 17 South, Range 16 West, Union County, Arkansas, and run South 00 degrees 15 minutes West 330.0 feet;

thence North 89 degrees 25 minutes West 400.0 feet;

thence North 00 degrees 15 minutes East 529.7 feet;

thence North 89 degrees 00 minutes East 375.0 feet;

thence South 00 degrees 15 minutes West 134.85 feet;

thence South 89 degrees 25 minutes East 25.0 feet;

thence South 00 degrees 15 minutes West 75.05 feet to the POINT OF BEGINNING, and being part of the Southeast Quarter of the Southeast Quarter (SE/4 SE/4) of Section 1, and part of the Northeast Quarter of the Northeast Quarter (NE/4 NE/4) of Section 12, all in Township 17 South, Range 16 West.

Page 11 of 12

2. (Haney to Monsanto)

Beginning at the Southeast Corner of the Northeast Quarter of the Northeast Quarter (SECor NE/4 NE/4) of Section 12, Township 17 South, Range 16 West, Union County, Arkansas, and run North 89 degrees 25 minutes West 400.0 feet;

thence North 00 degrees 15 minutes East 990.0 feet;

thence South 89 degrees 25 minutes East 400.0 feet;

thence South 00 degrees 15 minutes West 990.0 feet to the POINT OF BEGINNING.

Tract 41-16:

The North Half of the Southwest Quarter of Section 7, Township 17 South, Range 15 West, Union County, Arkansas.

Tract 41-17:

The Northwest Quarter of the Southwest Quarter of Section 8, Township 17 South, Range 15 West, Union County, Arkansas.

Tract 41-18:

The Southwest Quarter of the Southwest Quarter (SW1/4 SW 1/4) and the West Half of the Southeast Quarter of the Southwest Quarter (W1/2 SE1/4 SW1/4) of Section 5, Township 17 South, Range 15 West, Union County, Arkansas

AND

Beginning at the Northeast Corner of the Southeast Quarter of the Southwest Quarter (SE1/4 SW1/4) of Section 5, Township 17 South, Range 15 West, Union County, Arkansas, and run North 88 degrees 53 minutes West 695.0 feet;

thence South 00 degrees 11 minutes West 1326.0 feet to the South line of said forty;

thence South 88 degrees 53 minutes East along said South line 347.5 feet;

thence North 00 degrees 11 minutes East 1290.4 feet;

thence South 88 degrees 53 minutes East 347.5 feet;

thence North 00 degrees 11 minutes East 26.0 feet to the POINT OF BEGINNING.

Railroad Right-of-Way:

Railroad right-of-way extending 50 feet on each side of the centerline of the railroad track as the same is now located, on, over and across the North Half of Section 8, the North Half of Section 9, and the North Half of Section 10, all in Township 17 South, Range 15 West.

Page 12 of 12

SCHEDULE 1.01(c)

FACILITY ASSETS

Part A – Cherokee Facility

The major personal property assets identified at this facility include a concrete dome prill storage facility with a storage capacity of 14,000 tons; a Kellogg Company ammonia processing plant, 500 tons per day (“TPD”) rated capacity; a Chemical Industrial Engineers Company nitric acid plant #1, 300 TPD rated capacity; a D.M. Weatherly Company nitric acid plant #2, 500 TPD rated capacity; ammonium nitrate solution neutralizers; UAN production equipment; a Technip Company urea plant, 600 TPD rated capacity; a pollution control and irrigation system; cooling towers; a de-mineralizer; barge unloading equipment and storage tanks; forklift trucks; an auxiliary boiler; a de-aerator system; product storage tanks; air compressors; an electrical substation and transformers; and process plant piping, pumps and wiring.

Part B – El Dorado Facility

The major personal property assets identified at this facility include 2 Chemico weak nitric acid plants, 785 TPD combined rated capacity; a Chemico sulfuric acid plant, 360 TPD rated capacity; an E2 high-density ammonium nitrate prill plant, 1,100 TPD rated capacity; a K-T lo-density ammonium nitrate prill plant, 700 TPD rated capacity; a 100 TPD mixed acids plant, a D.M. Weatherly nitric acid plant, 350 TPD rated capacity; a CB&I tank farm, including ten ammonia storage spheres, a refrigerated ammonia tank, and six ammonia storage tanks; a plant steam generation system, including two Babcock & Wilcox processing boilers; a plant electrical generation system, including substations and transformers; maintenance and machine shop equipment; a wastewater pH neutralization system; a pollution control and irrigation system; cooling towers; forklift trucks; air compressors; and process plant piping, pumps and wiring.

Schedule 1.01(d)

Lenders and Lending Offices

Banc of America Leasing & Capital LLC

Mail Code: GA3-003-04-01

NORTHEAST CENTER BUILDING

2059 NORTHLAKE PKWY

TUCKER GA 30084-5399

Attn: Shelley B. LaCagnin, Vice President - Operations Manager

Tel: 770-270-8590

Fax: 770-270-8638

With a copy to:

Banc of American Leasing & Capital LLC

One Financial Plaza, 2nd Floor

Mail Code: R11-537-02-01

http://corpdir.bankofamerica.com/staffresults.asp?txtField1Name=mailunit&txtField1Type=is&txtField1V

Providence, RI 02903

Attn: Lee Bonaldi

Vice President - Credit Underwriting

Tel: 401-278-7655

Fax: 401-719-8344

And a copy to:

Banc of America Leasing & Capital LLC

Annemarie L. Warren

Vice President - Group Operations Manager

Banc of America Leasing

Mail Code: MA5-100-32-01

100 FEDERAL ST

BOSTON MA 02110

Tel: 617-434-3611

Fax: 617-434-0532

Merrill Lynch Capital, a Division of Merrill Lynch Business Financial Services Inc.

222 N. LaSalle Street, 16th Floor

Chicago, IL 60601

Attention: Gary Modesto, Vice President, Group Credit Manager

Tel: 312-750-6204

Fax: 312-316-3422

Email: Gary_Modesto@ml.com

- 1 - -

Arvest Bank

3900 N. Lincoln Boulevard

Oklahoma City, OK 73105

Attn: Cindy Batt, Sr. Vice President & Corporate Division Manager

Tel: 405-523-4169

Fax: 405-523-4126

Email: cbatt@arvest.com

Bank of Utah, as Payment Agent

ATTN: Corporate Trust Services

200 E. South Temple, Suite 210

Salt Lake City, UT 84111

Phone: (801) 924-3690

Fax: (801) 746-3519

- 2 - -

Schedule 2.01

Commitments and Applicable Percentages

As a % of Total

Commitment

Allocation: &# 160; Commitment Amounts Amounts

Banc of America Leasing & Capital, LLC $10,000,000.00 20.00%

Banc of America Leasing & Capital, LLC $ 5,000,000.00 10.00%

Arvest Bank $15,000,000.00 30.00%

Merrill Lynch Capital, a Division of Merrill

Lynch Business Financial Services Inc. $15,000,000.00 30.00%

______________________________________________________

Total Commitment Amount: $50,000,000.00 100.00%

SCHEDULE 4.01(a)(iii)

FINANCING STATEMENTS

1.	Cherokee Mortgage filed in the real property records of the Probate Office (County Clerk) of Colbert County, Alabama.

2.	Financing Statement filed in the Probate Office (County Clerk) of Colbert County, Alabama naming Collateral Agent, as secured party, and Cherokee Nitrogen Company (“CNC”) and Cherokee Nitrogen Holdings, Inc. (“CNH”), as debtors, covering the Collateral with respect to CNC and CNH.

Financing Statement filed in the Office of the County Clerk of Oklahoma County, Oklahoma naming Collateral Agent, as secured party, and CNH, Northwest Financial Corporation (“NWF”), CNC, DSN Corporation (“DSN”) and El Dorado Chemical Company (“EDC”), as debtors, covering the Collateral with respect to CNH, NWF, CNC, DSN and EDC.

4.	El Dorado Mortgage filed in the real property records of the Office of the Circuit Clerk and Ex-Officio Recorder of Union County, Arkansas.

5.	Financing Statement filed in the Office of the Circuit Clerk and Ex-Officio Recorder of Union County, Arkansas, naming Collateral Agent, as secured party, and NWF, EDC, and DSN, as debtors, covering the Collateral with respect to NWF, EDC and DSN.

6.	Trademark Security Agreement filed in the United States Patent and Trademark Office made by EDC in favor of Collateral Agent covering the trademarks owned by EDC.

Page 1 of 1

SCHEDULE 4.01(a)(iv)

LEASED PROPERTY

None

SCHEDULE 5.03

GOVERNMENT AUTHORIZATIONS AND OTHER CONSENTS

1.	Filing of UCC-1 Financing Statements, Mortgages, and Trademark Security Agreement referenced on Schedule 4.01(a)(iii).

2.	Consent of Wells Fargo Foothill, Inc. and Persons party to the Assigned Agreements.

3.	Filing of UCC-3 Continuation Statements.

SCHEDULE 5.05

INDEBTEDNESS

(as of September 30, 2007)

Long Term Debt

1.	El Dorado Chemical Company (“EDC”) is indebted to the following:

a.	ThermaClime, Inc. (“TCI”) in the principal amount of $35,593,138.

b.	LSB Chemical Corp. (“LSB Chemical”) in the principal amount of $2,098,787.

2.	Trison Construction, Inc. (“Trison”) is indebted to TCI in the principal amount of $6,364,700 less $2,500,0001.

3.	International Environmental Corporation (“IEC”) is indebted to the following:

a.	Amada Capital Corporation in the amount of $57,714.

b.	ThermaClime Technologies, Inc. (“TTI”) in the principal amount of $779,221.

4.	ClimateCraft, Inc. (“CLC”) is indebted to the following:

a.	The City of Oklahoma City in the amount of $2,450,000.

b.	TCI in the principal amount of $6,947,768 less $5,200,0001.

c.	Summit Machine Tool Manufacturing Corp. in the principal amount of $715,719.

5.	TCI is indebted to the following:

a.	IEC in the principal amount of $76,297,857.

b.	The Climate Control Group, Inc. (“CCG”) in the principal amount of $3,104,268.

c.	Climate Master, Inc. (“CLM”) in the principal amount of $40,537,986.

d.	Koax Corp. (“Koax”) in the principal amount of $22,811,075.

e.	Chemex I Corp. (“Chemex I”) in the principal amount of $276,944.

f.	Chemex II Corp. (“Chemex II”) in the principal amount of $1,484,718.

g.	Northwest Financial Corporation in the principal amount of $13,328,828.

h.	CEPOLK Holdings, Inc. in the principal amount of $3,898,523.

i.	El Dorado Nitrogen, L.P. in the principal amount of $25,734,720.

j.	LSB Industries, Inc. (“LSB”) in the principal amount of $36,287,224 and $962,398 in interest.

k.	Holders (LSB) of 10-3/4% Senior Unsecured Notes due 2007 in the principal amount of $6,950,000.

6.	Cherokee Nitrogen Company (“CNC”) is indebted to the following companies:

a.	TCI in the principal amount of $10,604,163.

b.	EDC in the principal amount of $2,438,209.

1 Adjustment as of October 31, 2007.

Page 1 of 3

7.	LSB Chemical is indebted to the following companies:

a.	TCI in the principal amount of $24,187,624 plus $4,500,0001 .

b.	DSN Corporation (“DSN”) in the principal amount of $275,773.

8.	DSN is indebted to TCI in the principal amount of $18,784,414 less $4,500,0001.

9.	XpediAir, Inc. (“XPA”) is indebted to TCI in the principal amount of $1,768,968 less $1,900,0001.

10.	CCG is indebted to LSB in the principal amount of $228,321.

11.	TTI is indebted to TCI in the principal amount of $3,548,796 less $2,700,0001.

12.	ClimaCool Corp. (“CCC”) is indebted to TCI in the principal amount of $3,450,175 less $2,300,0001.

13.	Chemex I is indebted to the following companies:

(a)	LSB Chemical in the principal amount of $385,282 less $150,0001.

(b)	Chemex II in the principal amount of $348.

14.	Cherokee Nitrogen Holdings, Inc. is indebted to LSB in the principal amount of $61,899,327.

Accrued Liabilities

15.	TCI has accrued $1,940,175 for payroll, taxes, insurance other expenses.

16.	IEC has accrued $4,247,406 for payroll, taxes and other expenses.

17.	TTI has accrued $245,358 for payroll, taxes and other expenses.

18.	Koax has accrued $125,735 for payroll, taxes and other expenses.

19.	CLM has accrued $ 10,231,111 for payroll, taxes and other expenses.

20.	CLC has accrued $ 1,143,698 for payroll, taxes and other expenses.

21.	XPA has accrued $66,966 for payroll, taxes and other expenses.

22.	Trison has accrued $105,893 for payroll, taxes and other expenses.

23.	CCC has accrued $408,394 for payroll, taxes and other expenses.

1 Adjustment as of October 31, 2007.

Page 2 of 3

24.	LSB Chemical has accrued $33,737 for payroll, taxes and other expenses.

25.	EDC has accrued $3,284,122 for payroll, taxes and other expenses.

26.	Chemex I $492,052 for payroll, taxes and other expenses.

27.	CNC has $466,714 for payroll, taxes and other expenses.

Accounts Payable

28.	TCI has accounts payable in the amount of $457,490.

29.	CLM has accounts payable in the amount of $10,393,220.

30.	IEC has accounts payable in the amount of $5,951,735.

31.	TTI has accounts payable in the amount of $1,686,575.

32.	CLC has accounts payable in the amount of $947,479.

33.	Trison has accounts payable in the amount of $495,550.

34.	Koax has accounts payable in the amount of $254,471.

35.	LSB Chemical has accounts payable in the amount of $31,429.

34.	EDC has accounts payable in the amount of $8,929,336.

35.	CNC has accounts payable in the amount of $3,821,811.

2 Adjustment as of October 31, 2007.

Page 3 of 3

SCHEDULE 5.06

LITIGATION

Donna Wetheral v. Climate Master. On September 14, 2007 Climate Master, Inc. (“Climate Master”) was served with the complaint filed in this litigation with the Circuit Court of Johnson County, Illinois. Plaintiff sues in its individual capacity and as a class action representative stating that Climate Master now offers a coated coil option for its evaporator coils to protect its evaporator coils from corrosion from airborne chemicals resulting from modern building material out gassing and most airborne environmental chemicals. Plaintiff asserts that it was well known in the industry that a coating was necessary to prevent failure of evaporator coils, that Climate Master was aware of the need to coat its coils since the mid-1990s, and that Climate Master sold untreated coils to thousands of consumers, including the Plaintiff, despite knowledge that they were defective and failing without the coating. Plaintiff asserts itself as a representative of a class consisting of, “all consumers who purchased heating and cooling systems sold or installed in Illinois, with evaporator coils manufactured by Climate Master, Inc. prior to Climate Master’s utilization of their new E-coated technology”. Plaintiff asserts claims against Climate Master based upon negligence and strict liability. As these claims arise in tort, Climate Master intends to place its applicable insurance carriers on notice of this claim. Insurance coverage on this matter is unknown at this time.

Climate Master advises that there has been an industry wide issue related to coil failures. The research of others appears to link coil failures to formicary corrosion that is suspected of being the result of environmental airborne materials. Although the occurrence of such failures is low nationwide, such research indicates that unexplainable failures seem to occur more frequently in some geographical areas and that the failure appear to occur after one to four years of installation and use. Climate Master, like other manufacturers, began to experience certain coil failures (many times concentrated in a particular geographic area) which began to appear to be the result of formicary corrosion. In an effort to minimize any formicary corrosion issues, Climate Master began offering its E-coating as a standard part of its offering of residential products in June, 2003. In April, 2004, the coating was made standard on Climate Masters vertical stack commercial products and as an option on all its other commercial products, except Climate Master’s commercial roof top series of products. In March, 2006, Climate Master then began offering a non-coated option for its vertical stack commercial products. Not all HVAC manufacturer’s have decided even to offer coated coils. While Climate Master has continued to experience some coil failures of coated coils, the incidences appear to have declined in number for the coated coils.

SCHEDULE 5.09

ENVIRONMENTAL MATTERS

A.	ITEMS DISCUSSED IN PARENT’S FORM 10Q FOR THE PERIOD ENDING JUNE 30, 2007

El Dorado Chemical Company - Discharge Water Matters. The El Dorado Facility within our Chemical Business generates process wastewater. The process water discharge and storm-water run off are governed by a state National Pollutant Discharge Elimination System (“NPDES”) water discharge permit issued by the Arkansas Department of Environmental Quality (“ADEQ”), which permit is to be renewed every five years. The ADEQ issued to the El Dorado Facility a NPDES water discharge permit in 2004, and the El Dorado Facility had until June 1, 2007 to meet the compliance deadline for the more restrictive limits under the 2004 NPDES permit. In order to meet the El Dorado Facility’s June 2007 limits, the El Dorado Facility has significantly reduced the effluent levels of its wastewater.

In order to directly discharge its wastewater from the El Dorado Facility into the creek and to meet the June 2007 permit limits, the El Dorado Facility has conducted a study of the adjacent stream to determine whether a permit modification is appropriate. On September 22, 2006, the Arkansas Pollution Control and Ecology Commission (“Commission”) approved the results of the study that showed that the proposed permit modification is appropriate. A public hearing was held on the matter on November 13, 2006 with minimal opposition.

The El Dorado Facility has demonstrated its ability to comply with the more restrictive permit limits, and the rules which support the more restrictive dissolved minerals rules have been revised to authorize a permit modification to adopt achievable dissolved minerals permit limits. The ADEQ has orally agreed to issue a consent administrative order to authorize the El Dorado Facility to continue operations without incurring permit violations pending the modification of the permit to implement the revised rule and to allow the El Dorado Facility to continue to discharge its wastewater into the creek from and after June 1, 2007.

In addition, the El Dorado Facility has entered into a consent administrative order (“CAO”) that recognizes the presence of nitrate contamination in the shallow groundwater at the El Dorado Facility. A new CAO to address the shallow groundwater contamination became effective on November 16, 2006 and requires the evaluation of the current conditions and remediation based upon a risk assessment. The final remedy for shallow groundwater contamination, should any remediation be required, will be selected pursuant to the new CAO and based upon the risk assessment. Based on area well surveys performed, there are no known users of this shallow groundwater in the area, and

Page 1 of 3

preliminary risk assessments have not identified any public health risk that would require remediation. As an interim measure, the El Dorado Facility has installed two recovery wells to recycle groundwater and to recover nitrates. The cost of any additional remediation that may be required will be determined based on the results of the investigation and risk assessment and cannot currently be reasonably estimated. Therefore, no liability has been established at June 30, 2007.

El Dorado Chemical Company - Air Matters. Under the terms of a consent administrative order relating to air matters (“AirCAO”), which became effective in February 2004, resolving certain air regulatory alleged violations associated with the El Dorado Facility’s sulfuric acid plant and certain other alleged air emission violations, the El Dorado Facility is required to implement additional air emission controls at the El Dorado Facility no later than February 2010. We have decided to accelerate this capital expenditure and currently estimate the environmental compliance related expenditures to be between $6.0 and $6.5 million, to be expended through the third quarter of 2008.

Slurry Explosive Corporation (n/k/a Chemex I Corp.). In April 2002, Slurry Explosive Corporation (“Slurry”), later renamed Chemex I Corp., a subsidiary within our Chemical Business, entered into a Consent Administrative Order (“Slurry Consent Order”) with the Kansas Department of Health and Environment (“KDHE”), regarding Slurry’s Hallowell, Kansas manufacturing facility (“Hallowell Facility”). The Slurry Consent Order addressed the release of contaminants from the facility into the soils and groundwater and surface water at the Hallowell Facility. There are no known users of the groundwater in the area. Under the terms of the Slurry Consent Order, Slurry is required to, among other things, submit an environmental assessment work plan to the KDHE for review and approval, and agree with the KDHE as to any required corrective actions to be performed at the Hallowell Facility.

In connection with the sale of substantially all of the operating assets of Slurry and Universal Tech Corporation (“UTeC”) in December 2002, which was accounted for as discontinued operations, both subsidiaries within our Chemical Business, UTeC leased the Hallowell Facility to the buyer under a triple net long-term lease agreement. However, Slurry retained the obligation to be responsible for, and perform the activities under, the Slurry Consent Order. In addition, certain of our subsidiaries agreed to indemnify the buyer of such assets for these environmental matters. The successor (“Chevron”) of the prior owner of the Hallowell Facility has agreed, within certain limitations, to pay and has been paying one-half of the costs of certain interim remediation measures at the site approved by the KDHE, subject to reallocation.

At June 30, 2007, the total estimated liability (which is included in current and noncurrent accrued and other liabilities) in connection with this remediation matter is approximately $1.4 million and Chevron’s share for one-half of these costs (which is included in accounts receivable and other assets) is approximately $.7 million. Slurry and Chevron expect to pursue a course with the KDHE of long-term surface and ground

Page 2 of 3

water monitoring to track the natural decline in contamination, instead of the soil excavation. We estimate the costs relating to this course of action to be substantially less than the cost of soil excavation but we are unable to determine if the KDHE will ultimately accept the proposal.

B.	OTHER DISCLOSURES

El Dorado Chemical Company - Landfill. In 1995, the EDC entered into a Consent Administrative Agreement (“Agreement”) with the State of Arkansas. The Agreement provided for the Company to remediate (by removal of hazardous material) and close a landfill located on the EDC site. The Agreement also provided for the Company to monitor groundwater for certain contaminants and, depending on the results of the monitoring program, to submit a remediation plan, upgrade certain equipment to reduce wastewater effluent. EDC timely completed the landfill remediation and closure and performed the ground water monitoring activities.

El Dorado Chemical Company – Caustic. On May 8, 1998, approximately 2,300 gallons of caustic spilled when a valve in a storage vessel failed, which was released to a stormwater drain and resulted in a minor fish kill in a drainage ditch near the plant. EDC entered into a CAO with ADEQ to resolve this event.

Page 3 of 3

SCHEDULE 5.13

SUBSIDIARIES

Part (a) – Subsidiaries of Parent

1.	ThermaClime, Inc., a Borrower

2.	Northwest Financial Corporation, a Borrower

3.	LSB Chemical Corp., a Borrower

4.	El Dorado Chemical Company, a Borrower

5.	Chemex I Corp., a Borrower

6.	DSN Corporation, a Borrower

7.	Chemex II Corp., a Borrower

8.	El Dorado Nitric Company

9.	El Dorado Acid, L.L.C.

10.	El Dorado Acid II, L.L.C.

11.	El Dorado Nitrogen, L.P.

12.	XpediAir, Inc., a Borrower

13.	International Environmental Corporation, a Borrower

14.	Climate Master, Inc., a Borrower

15.	The Climate Control Group, Inc., a Borrower

16.	ClimateCraft, Inc., a Borrower

17.	ThermaClime Technologies, Inc., a Borrower

18.	CEPOLK Holdings, Inc.

19.	ClimaCool Corp., a Borrower

20.	Trison Construction, Inc., a Borrower

21.	Koax Corp., a Borrower

22.	Cherokee Nitrogen Company, a Borrower

23.	Prime Financial Corporation

24.	Prime Holdings Corporation

25.	Northwest Capital Corporation

26.	LSB Holdings, Inc.

27.	LSB-Europa Limited

28.	Summit Machine Tool Inc. Corp.

29.	Cherokee Nitrogen Holdings, Inc., a Borrower

30.	ClimateCraft Technologies, Inc.

31.	Summit Machine Tool Manufacturing Corp.

32.	Summit Machinery Company

33.	Pryor Plant Chemical Company

34.	Hercules Energy Mfg. Corporation

Page 1 of 3

Part (b) - Equity Investments of Parent

1.	CEPOLK Holdings, Inc., a subsidiary of ThermaClime, Inc., is the sole limited partner of, and owns a fifty percent (50%) interest in, CEPOLK Limited Partnership.

2.	Summit Machinery Company, a subsidiary of Parent, owns a 50% of the value of KAC Acquisition Company, an Oklahoma corporation, the value of which is de minimis.

Part (c) – Parent’s Outstanding Equity Interest in Each of the Borrowers

1.	ThermaClime, Inc. (“TCI”). The total authorized capital stock of TCI is 500,000 shares of common stock. The total outstanding shares of capital stock is 10,000, of which LSB owns 9,500 shares (95% ownership) and Prime Financial Corporation (“PFC”) owns 500 shares (5% ownership).

2.	Northwest Financial Corporation (“NWF”). The total authorized capital stock of NWF is 100 shares of common stock. The total outstanding shares of capital stock is 54 which is owned 100% by TCI.

3.	LSB Chemical Corp. (“LSBCC”). The total authorized capital stock of LSBCC is 50 shares of common stock. The total outstanding shares of capital stock is 50 which is owned 100% by TCI.

4.	El Dorado Chemical Company (“EDC”). The total authorized capital stock of EDC is 25,000 shares of common stock. The total outstanding shares of capital stock is 1,000 which is owned 100% by LSBCC.

5.	Chemex I Corp. (“Chemex I). The total authorized capital stock of Chemex I is 10,000 shares of common stock. The total outstanding shares of capital stock is 1,000 which is owned 100% by EDC.

6.	DSN Corporation (“DSN”). The total authorized capital stock of DSN is 50,000 shares of common stock. The total outstanding shares of capital stock is 1,000 which is owned 100% by LSBCC.

7.	Chemex II Corp. (“Chemex II). The total authorized capital stock of Chemex II is 10,000 shares of common stock. The total outstanding shares of capital stock is 1,000 which is owned 100% by LSBCC.

8.	XpediAir, Inc. (“XPA”). The total authorized capital stock of XPA is 500,000 shares of common stock. The total outstanding shares of capital stock is 10,000 which is owned 100% by TCI.

9.	International Environmental Corporation (“IEC”). The total authorized capital stock of IEC is 300 shares of common stock. The total outstanding shares of capital stock is 300 which is owned 100% by TCI.

Page 2 of 3

10.	Climate Master, Inc. (“CLM”). The total authorized capital stock of CLM is 1,000 shares of common stock. The total outstanding shares of capital stock is 1,000 which is owned 100% by TCI.

11.	The Climate Control Group, Inc. (“CGG”). The total authorized capital stock of CCG is 100,000 shares of common stock. The total outstanding shares of capital stock is 10,000 which is owned 100% by TCI.

12.	ClimateCraft, Inc. (“CLC”). The total authorized capital stock of CLC is 1,000, of which 900 shares are Class A voting common stock and 100 shares are Class B non-voting common stock. The total outstanding shares of both classes of common stock combined is 1,000 which is owned 100% by TCI.

13.	ThermaClime Technologies, Inc. (“TTI”). The total authorized capital stock of TTI is 500,000 shares of common stock. The total outstanding shares of capital stock is 10,000 which is owned 100% by TCI.

14.	ClimaCool Corp. (“CCC”). The total authorized capital stock of CCC is 50,000 shares of common stock. The total outstanding shares of capital stock is 1,000 which is owned 100% by TCI.

15.	Trison Construction, Inc. (“Trison”). The total authorized capital stock of Trison is 500,000 shares of common stock. The total outstanding shares of capital stock is 10,000 which is owned 100% by TCI.

16.	Koax Corp. (“Koax”). The total authorized capital stock of Koax is 50 shares of common stock. The total outstanding shares of capital stock is 50 which is owned 100% by TCI.

17.	Cherokee Nitrogen Company (“CNC”). The total authorized capital stock of CNC is 500,000 shares of common stock. The total outstanding shares of capital stock is 10,000 which is owned 100% by TCI.

18.	Cherokee Nitrogen Holdings, Inc. (“CNH”). The total authorized capital stock of CNH is 500,000 shares of common stock. The total outstanding shares of capital stock is 10,000 which is owned 100% by LSB Holdings, Inc.

Page 3 of 3

SCHEDULE 5.18

INTELLECTUAL PROPERTY RIGHTS

Chemex I Corp.

PATENTS

NONE

TRADEMARKS

NONE

COPYRIGHTS

NONE

TRADE NAMES1

NONE

SERVICE MARKS

NONE

1 Other than the formal corporate name.

Page 1 of 21

Chemex II Corp.

PATENTS

NONE

TRADEMARKS

NONE

COPYRIGHTS

NONE

TRADE NAMES1

NONE

SERVICE MARKS

NONE

1 Other than the formal corporate name.

Page 2 of 21

Cherokee Nitrogen Company

PATENTS

NONE

TRADEMARKS

NONE

COPYRIGHTS

NONE

TRADE NAMES1

NONE

SERVICE MARKS

NONE

1 Other than the formal corporate name.

Page 3 of 21

Cherokee Nitrogen Holdings, Inc.

PATENTS

NONE

TRADEMARKS

NONE

COPYRIGHTS

NONE

TRADE NAMES1

NONE

SERVICE MARKS

NONE

1 Other than the formal corporate name.

Page 4 of 21

ClimaCool Corp.

PATENTS

NONE

TRADEMARKS

NONE

COPYRIGHTS

NONE

TRADE NAMES1

NONE

SERVICE MARKS

NONE

1 Other than the formal corporate name.

Page 5 of 21

Climate Master, Inc.

PATENTS

Patent

App./Reg. No.

Place of

Registration

Issue

Date

“Water-Cooled Air Conditioning

System Using Condenser Water

Regeneration for Precise Air Reheat

in Dehumidifying Mode”

11/161,808

United States

Pending

TRADEMARKS

Mark

Serial./Reg. No.

Place of

Registration

Issue

Date

“Climate Master (& Design)”

2,139,570

United States

02/24/98

“Climate Master (& Design)”

#TMA 471,487

Canada

02/21/97

“Climate Master”

808,500

United States

05/17/66

“Climate Master”

409,647

Chile

07/22/93

“Climate Master”

84930

Israel

10/08/92

“Climate Master”

292/82

Saudi Arabia

12/30/92

“Climate Master”

1,514,734

United Kingdom

11/13/98

“Climate Master”

11,215

Greece

07/07/98

“Climate Master”

280854

Korea

12/07/93

“Climate Master”

641,594

Taiwan

04/16/94

“Climate Master”

614,556

Taiwan

10/01/93

“Climate Master”

516424

Mexico

12/10/92

“Climate Master”

25162

Kuwait

08/16/93

“Climate Master”

0-999746

Czech Republic

03/20/00

“Climate Master”

583,151

Benelux

06/22/95

“Climate Master”

95575091

France

06/09/95

“Climate Master”

147,007

Hungary

04/25/95

“Climate Master”

172643

Norway

04/25/96

“Climate Master”

309 649

Portugal

05/06/96

“Climate Master”

O-POZ-1170-95

Slovak Republic

05/02/95

“Climate Master”

16121

Turkey

05/01/95

“Climate Master”

729,783

Italy

10/16/97

“Climate Master”

402,883

Europe

02/24/98

“Climate Master”

3480166

China

03/10/03

“Climate Master”

860,657

Australia

12/14/00

“Climate Mate”

TMA 371,539

Canada

08/03/90

Page 6 of 21

Climate Master, Inc. (cont’d.)

Mark

Serial./Reg. No.

Place of

Registration

Issue

Date

“Roommate”

1,906,435

United States

07/18/95

“Paradigm”

2,112,244

United States

11/11/97

“Geodesigner”

2,184,992

United States

08/25/98

“Earthpure”

2,994,853

United States

09/13/05

“Climadry”

3,253,779

United States

06/19/07

COPYRIGHTS

NONE

TRADENAMES1

Climate Master

SERVICE MARKS

NONE

1 Other than the formal corporate name.

Page 7 of 21

ClimateCraft, Inc.

PATENTS

NONE

TRADEMARKS

Mark

Serial./Reg. No.

Place of

Registration

Issue

Date

“Climatecraft”

#2,369,333

United States

07/18/00

COPYRIGHTS

NONE

TRADE NAMES1

NONE

SERVICE MARKS

NONE

1 Other than the formal corporate name.

Page 8 of 21

DSN Corporation

PATENTS

NONE

TRADEMARKS

NONE

COPYRIGHTS

NONE

TRADE NAMES1

NONE

SERVICE MARKS

NONE

1 Other than the formal corporate name.

Page 9 of 21

El Dorado Chemical Company

PATENTS

NONE

TRADEMARKS

Mark

Serial./Reg. No.

Place of

Registration

Issue

Date

“El Dorado (& Design)”

1,427,064

United States

02/03/87

“E-2”

833,891

United States

08/22/67

COPYRIGHTS

NONE

TRADE NAMES1

NONE

SERVICE MARKS

NONE

1 Other than the formal corporate name.

Page 10 of 21

International Environmental Corporation

PATENTS

Patent

Serial./Reg. No.

Place of

Registration

Issue

Date

“Conditioned Air Fan Coil Unit”

6,109,044

United States

08/29/00

TRADEMARKS

Mark

Serial./Reg. No.

Place of

Registration

Issue

Date

“International Environmental

Corporation (& IE Design)”

1,569,505

439970

United States

Mexico

12/05/89

08/18/93

292/85

Saudi Arabia

08/31/93

“International Environmental”

B1,514,822

United Kingdom

07/01/94

92/165,999

Hong Kong

11/21/94

IEC International Environmental (& Design)”

77110687

United States

Pending

“Sureflow”

2,449,571

United States

05/08/01

“IE (Stylized)”

2,556,892

United States

04/02/02

“Air Coil Technologies”

1,755,144

United States

03/02/93

“UV Ultrashield”

2,660,647

United States

12/10/02

COPYRIGHTS

NONE

TRADE NAMES1

Air Coil Technologies

International Climate Systems

SERVICE MARKS

NONE

1 Other than the formal corporate name.

Page 11 of 21

Koax Corp.

PATENTS

NONE

TRADEMARKS

Mark

Serial./Reg. No.

Place of

Registration

Issue

Date

“Koax”

1,776,407

United States

06/15/93

“Koax and design”

1,905,551

United States

07/18/95

COPYRIGHTS

NONE

TRADE NAMES1

NONE

SERVICE MARKS

NONE

1 Other than the formal corporate name.

Page 12 of 21

LSB Chemical Corp.

PATENTS

NONE

TRADEMARKS

NONE

COPYRIGHTS

NONE

TRADE NAMES1

NONE

SERVICE MARKS

NONE

1 Other than the formal corporate name.

Page 13 of 21

Northwest Financial Corporation

PATENTS

NONE

TRADEMARKS

NONE

COPYRIGHTS

NONE

TRADE NAMES1

NONE

SERVICE MARKS

NONE

1 Other than the formal corporate name.

Page 14 of 21

The Climate Control Group, Inc.

PATENTS

NONE

TRADEMARKS

Mark

Serial./Reg. No.

Place of

Registration

Issue

Date

“APR Corporation and Design”

1,624,527

United States

11/27/90

COPYRIGHTS

NONE

TRADE NAMES1

NONE

SERVICE MARKS

NONE

1 Other than the formal corporate name.

Page 15 of 21

ThermaClime, Inc.

PATENTS

NONE

TRADEMARKS

NONE

COPYRIGHTS

NONE

TRADE NAMES1

NONE

SERVICE MARKS

NONE

1 Other than the formal corporate name.

Page 16 of 21

ThermaClime, Inc. (continued)

DOMAIN NAMES

The following domain names are registered by ThermaClime, Inc. with Catalog.com:

1.	climatecontrolgroup.com

koax.com

koax.biz

4.	climacoolcorp.com

5.	edc-ark.com

6.	bryantgeo.com

7.	carriergeo.com

8.	climatemast.com

9.	climatemaster.com

10.	climatemaster.eu

11.	climatemaster.hk

12.	climatematergenesis.com

13.	climasize.com

14.	climatemate.com

15.	climadry.com

16.	watersourceparts.com

17.

trison.us

18.	trisonconstruction.biz

19.	trisonconstruction.com

20.	trisonconstruction.info

21.	trisonconstruction.org

22.	trisonconstruction.net

23.	sureflow.net

24.	iec-okc.com

25.	iecokc.com

26.	sureflowcomfort.com

27.	sureflow-comfort.com

28.	iecreps.com

29.	carriersolutioncenter.com

30.	ineedhvac.com

31.	hvacbids.com

32.	fancoil.com

33.	uvcdirect.com

Page 17 of 21

ThermaClime Technologies, Inc.

PATENTS

NONE

TRADEMARKS

NONE

COPYRIGHTS

NONE

TRADE NAMES1

NONE

SERVICE MARKS

NONE

1 Other than the formal corporate name.

Page 18 of 21

Trison Construction, Inc.

PATENTS

NONE

TRADEMARKS

NONE

COPYRIGHTS

NONE

TRADE NAMES1

Trison Geothermal Construction Inc.

SERVICE MARKS

NONE

1 Other than the formal corporate name.

Page 19 of 21

XpediAir, Inc.

PATENTS

NONE

TRADEMARKS

Mark

Serial./Reg. No.

Place of

Registration

Issue

Date

“Climacool”

2,564,496

United States

04/23/02

“CHP”

1,707,991

United States

08/18/92

“XpediAir” (Design Only)*

2,986,893

United States

08/23/05

COPYRIGHTS

NONE

TRADE NAMES1

NONE

SERVICE MARKS

NONE

* Trademark is the subject of a Settlement Agreement with Expedia, Inc. regarding XpediAir, Inc’s right to use the name, throughout the world, in connection with the sale and manufacture of HVAC equipment and related goods and services, and to register the name with the USPTO or any foreign patent and trademark office in design form only.

1 Other than the formal corporate name.

Page 20 of 21

LICENSES

1.	License Agreement between Koax Corp. and The City of Oklahoma City Pursuant to ONG Franchise Ordinance to Authorize Receipt of Transport Gas, dated July 3, 2006.

2.	License Agreement between Climate Master, Inc. and The City of Oklahoma City Pursuant to ONG Franchise Ordinance to Authorize Receipt of Transport Gas, dated December 8, 2005.

3.	License Agreement between International Environmental Corporation and The City of Oklahoma City Pursuant to ONG Franchise Ordinance to Authorize Receipt of Transport Gas, dated December 8, 2006.

4.	System License Agreement between Cherokee Nitrogen Company and Tennessee Gas Pipeline Company and Midwestern Gas Transmission Company, dated November 30, 2000.

5.	Software License between PTC Global and International Environmental Corporation.

6.	Software License between SigmaTEK and International Environmental Corporation.

7.	Software License and Services Agreement between ThermaClime, Inc. (formerly known as ClimaChem, Inc.) and Cognos Corporation (successor in interest to Adaytum, Inc.), effective June 29, 2000, as amended.

8.	Software License Agreement between ThermaClime, Inc. (formerly known as ClimaChem, Inc.) and Electronic Storage Corporation, executed April 4, 2003.

9.	Software and Services License Agreement between Cherokee Nitrogen Company and Mainsaver Software, effective December 4, 2002.

10.	Master License Agreement for Software Program Processes between El Dorado Chemical Company and Marcam Solutions, Inc.

11.	Engineering and License Agreement between El Dorado Chemical Company and Kaltenbach-Thuring S.A., dated October 27, 1994, regarding LDAN plant capacity increase.

12.	Order Form, dated June 26, 1997, between SSA Global Technologies, Inc., successor in interest to Computer Associates International, Inc., and LSB Industries, Inc., as amended.

Page 21 of 21

SCHEDULE 5.21

PIPELINES

Cherokee Site

1.	North Alabama natural gas pipeline.

2.	Enbridge natural gas pipeline.

3.	Cherokee Water Company water line.

El Dorado Site

1.	Valero ammonia pipeline.

2.	Centerpoint Energy natural gas pipeline.

3.	Water pipeline supplies treated river water to the facility as industrial water make up.

SCHEDULE 5.22

MATERIAL CONTRACTS

1.	Anhydrous Ammonia Sales Agreement between El Dorado Chemical Company (“EDC”) and Koch Nitrogen International SARL and Koch Nitrogen Company(“Koch”), effective January 3, 2005.

2.	AN Supply Agreement between EDC and Orica USA, Inc., dated November 1, 2001, as amended.

3.	On-Site Product Supply Agreement between EDC and Air Liquide America Corporation, dated as of May 31, 1994.

4.	Sales Agreement between CNC and Nelson Brothers LLC for Ammonium Nitrate, dated October 1, 2001.

5.	NAESB Base Contract between CNC and Interconn Resources, Inc., dated April 1, 2003.

See also Schedules 5.23 and 7.05.

SCHEDULE 5.23

PERMITS

Cherokee Nitrogen Company, Cherokee, Alabama

·	NPDES Wastewater Discharge Permit #AL 0000418; effective date 2-1-06; expiration date 1-31-11

·	Title V Air Permit #701-0013; effective date 12-14-06; expiration date 11-28-11

El Dorado Chemical Company, El Dorado, Arkansas

·	NPDES Wastewater Discharge Permit #AR0000752; effective date 7-1-02; expiration date

6-30-07

·	Title V Air Permit #0573-AOP-R7; effective date 4-12-05; expiration date 4-11-10

SCHEDULE 5.27

LABOR MATTERS

1.	El Dorado Chemical Company (“EDC”) is party to collective bargaining agreement, effective October 17, 2004, with the International Association of Machinists and Aerospace Workers, AFL-CIO, Local 224.

2.	EDC is party to a collective bargaining agreement, effective August 1, 2004, with the Paper, Allied-Industrial, Chemical & Energy (PACE) Workers International Union AFL-CIO and Its Local 5-434.

3.	Cherokee Nitrogen Company is party to a collective bargaining agreement, dated November 12, 2004, with the United Steelworkers of America's International Union, AFL-CIO, CLC, Cherokee Local 417-G.

SCHEDULE 7.01(b)

EXISTING LIENS

Name of Obligor	Description of Secured Indebtedness
Chemex I Corp.	None

Name of Obligor	Description of Secured Indebtedness
Chemex II Corp.	None

Name of Obligor	Description of Secured Indebtedness
Cherokee Nitrogen Company	None

Name of Obligor	Description of Secured Indebtedness
Cherokee Nitrogen Holdings, Inc.	None

Name of Obligor	Description of Secured Indebtedness
ClimaCool Corp.	None

Name of Obligor	Description of Secured Indebtedness
Climate Master, Inc. (“CLM,”) as bailee (operating lease)	Secured Party: Marquette Equipment Finance, LLC, as Bailor, assigned to Park National Bank Collateral: One (1) Chiyoda SP-25ST 3 Axis Tube Bender with RH rotation, including all standard equipment and 5/8”, 3/4” and 7/8” OD and mandrels
CLM (operating lease)	Secured Party: Prime Financial Corporation Collateral: Trumpf L3040 Laser Cutting Machine System purchased from Icon Machine Tool, Inc., S/N A0235A0061, and all accessories and attachments thereto.
CLM, as lessee (operating lease)	Secured Party: Prime Financial Corporation, as lessor Collateral: One (1) Trumpf TruLaser 3530 Laser Cutting Machine, Serial #AX035A0061
CLM (operating lease)	Secured Party: National Machine Tool Financial Corporation and TCF Equipment Finance, Inc. Collateral: One (1) new Trumpf L3530 4000 Watt Laser with 60”x120”, S/N A0235A0061, and all accessories and attachments thereto.

Page 1 of 7

Name of Obligor

Description of Secured Indebtedness

CLM, as lessee (operating lease)	Secured Party: IOS Capital, as lessor Collateral: All equipment now or hereafter leased (PCP 1050, booklet maker and accessories) in an equipment leasing transaction in connection with that certain Master Agreement No. -------------, Product Schedule No./Agreement No. 2068765, as amended from time to time, between IOS Capital, LLC as lessor, and the above referenced Lessee/Debtor, including, without limit, the equipment listed below, and all additions, improvements, attachments, accessories, accessions, upgrades and replacements related thereto, and any and all substitutions or exchanges, and any and all products, insurance and/or other proceeds (cash and non-cash) therefrom. Customer: 1095557 IKCPP500 C11029146
CLM, as lessee (operating lease)	Secured Party: Prime Financial Corporation, as lessor Collateral: 1 each five stage Power Spray Stainless Washer (installed) in accordance with quote 3703-0107R3 from Industrial Finishing Systems.
CLM, as lessee (operating lease)	Secured Party: Prime Financial Corporation, as lessor Collateral: Ingersoll-Rand oil-free Nirvana compressor system consisting of various components; S/N IRN75H-OF.
CLM, as lessee (operating lease)	Secured Party: Prime Financial Corporation, as lessor Collateral: Gamma G333PC Wire Processing System per quote 06-0150-2743-0135C; S/N 1-528324-1 and all accessories and attachments thereto.
CLM, as lessee (operating lease)	Secured Party: IOS Capital, as lessor Collateral: All equipment now [5 Ricoh copiers] or hereafter leased in an equipment leasing transaction in connection with that certain Master Agreement No. -------------, Product Schedule No./Agreement No. 2929907, as amended from time to time, between Lessor and Lessee, including, without limit, the equipment listed below, and all additions, improvements, attachments, accessories, accessions, upgrades and replacements related thereto, and any and all substitutions or exchanges, and any and all products, insurance and/or other proceeds (cash and non-cash) therefrom. CUSTOMER: 1095557 RIAF2035 S/P J5837002733 RIAF2035 S/P J5837002727 RIAF2035 S/P J5837102886 RIAF2035 S/P J5837102735 RIAF2035 S/P J5837102721 RIAF1060 J4235501227 RIAF1060 J422500470 RIAF2090 J7031100205 RIAF2090 J7031100244

Page 2 of 7

Name of Obligor

Description of Secured Indebtedness

CLM, as lessee (operating lease)	Secured Party: Prime Financial Corporation, as lessor Collateral: One (1) Amada Vipros 368 King, Turret Punch Press, S/N 36840024, with New London Slug Conveyor, One (1) Amada LUL510 loading device, S/N 00510090, Amada SR510 .30 unloading device, S/N 2218, Sun Classic Workstation with Line Control Software, S/N FW900085, AP100 Punch Upgrade, AP100 Punch Add. Seat Upgrade, complete with all attachments now or hereafter acquired.
CLM (operating lease)	Secured Party: Prime Financial Corporation Collateral: Amada press brake, model HFB 1003/8, S/N HFB010030 R981151, w/ ISB light curtain
CLM, as lessee (operating lease)	Secured Party: Prime Financial Corporation, as lessor Collateral: One (1) Raidzone GangSTOTR Systems RC8-2-R2000 (2x8 disk rack mount systems and all accessories and attachments thereto.
CLM, as lessee (operating lease)	Secured Party: Prime Financial Corporation, as lessor Collateral: Nine (9) OptiGun-2AX Automatic Guns, Nine (9) OptiTronicPlus Control Units and associated accessories.
CLM, as lessee (operating lease)	Secured Party: Prime Financial Corporation, as lessor Collateral: Six (6) sets of ECI line equipment (Procix) and associated accessories.
CLM, as lessee (operating lease)	Secured Party: Prime Financial Corporation, as lessor Collateral: One (1) Amada 386 King, Vipros 30 ton CNC Turret Punch, S/N 36820017 and associated accessories.
CLM, as lessee (operating lease)	Secured Party: Prime Financial Corporation, as lessor Collateral: One (1) Amada CNC Blanking Shear, S/N 101000056 and associated accessories.
CLM, as lessee (operating lease)	Secured Party: Prime Financial Corporation, as lessor Collateral: One(1) Trumpf Laser 3040 Plus and associated accessories
CLM, as lessee (operating lease)	Secured Party: Prime Financial Corporation, as lessor Collateral: One(1) Trumpf Laser 3040 Plus and associated accessories
CLM (operating lease)	Secured Party: RCA Capital Corp. Collateral: One (1) new Chiyoda SP-25ST 3 Axis CNC Pipe Bender and associated accessories
CLM, as lessee (operating lease)	Secured Party: Prime Financial Corporation, as lessor Collateral: One (1) single Tube Cutoff Line (STCOS) and all accessories and attachments thereto (Burr Oak Copper Cut).
CLM, as lessee (operating lease)	Secured Party: Prime Financial Corporation, as lessor, as assigned to Marquette Equipment Finance, LLC, as assigned to Park National Bank Collateral: One (1) Chiyoda SP-25 ST 3-Axis Tube Bender and associated accessories.

Page 3 of 7

Name of Obligor

Description of Secured Indebtedness

CLM (operating lease)	Secured Party: Prime Financial Corporation Collateral: One 1996 Amada FCXB-III-8025 CNC Press Brake
CLM (operating lease)	Secured Party: Prime Financial Corporation Collateral: IPCS Equipment and accessories
CLM (operating lease)	Secured Party: Prime Financial Corporation Collateral: Used 1995 FBD-125 Amada Press Brake, S/N 12530058
CLM (operating lease)	Secured Party: Prime Financial Corporation Collateral: 88 ton Amada HFB, S/N R091-18; 88 ton Amada HFB, S/N R970432; 138 ton Amada FBD, S/N 12530263

Name of Obligor	Description of Secured Indebtedness
ClimateCraft, Inc. (“CLC”) (operating lease)	Secured Party: Prime Financial Corporation Collateral: Trumpf NC Punching Machine
CLC (operating lease)	Secured Party: Prime Financial Corporation Collateral: 1999 Amada HFB1254 Promecam CNC Press Brake w/ Controls
CLC	Secured Party: City of Oklahoma City Collateral: Real estate owned by Summit Machine Tool Manufacturing Corp.
CLC (operating lease)	Secured Party: Prime Financial Corporation Collateral: Two (2) model 625014 Accushears w/ 48” extended travel and CNC front gauging 12’x6’x6’; S/N 5110 and 5111
CLC (operating lease)	Secured Party: Prime Financial Corporation Collateral: Trumpf model TC2020 Punch Machine, S/N A0030A0239 with tooling
CLC (operating lease)	Secured Party: Prime Financial Corporation Collateral: Amada CNC Hydraulic Press Brake model HFB220/440, SN H980519

Name of Obligor	Description of Secured Indebtedness
DSN Corporation	None

Name of Obligor	Description of Secured Indebtedness
El Dorado Chemical Company (“EDC”) as bailee	Secured Party: Orica USA Inc., as bailor Collateral: All of bailor’s inventory located at bailee’s El Dorado, AR facility
EDC, as lessee (operating lease)	Secured Party: LSB Industries, Inc. Collateral: Catalysts associated with EDC’s El Dorado, AR facility

Page 4 of 7

Name of Obligor

Description of Secured Indebtedness

EDC, as bailee (operating lease)	Secured Party: Republic Bank, Inc., as bailor Collateral: Personal property (rail cars) located at bailee’s El Dorado, AR facility and described in Lease Schedule No. 001 to Master Lease Agreement No. AF10506 by and between Prime Financial Corporation, as lessee, and Applied Financial, LLC, as lessor
EDC	Secured Party: Air Liquide Industrial US LP Collateral: Gas generating plant, located at debtor’s El Dorado, AR facility
EDC (operating lease)	Secured Party: General Electric Capital Corporation Collateral: PerkinElmer Aanalyst 700 AA Spectrometer and accessories

Name of Obligor	Description of Secured Indebtedness
International Environmental Corporation (“IEC”) (operating lease)	Secured Party: Prime Financial Corporation Collateral: Bolina Cut-to-Length; 2 Optiflex 110/08 Pullmax CNC Press Brakes; vertical bender; Trumpf laser cutting machine
IEC (operating lease)	Secured Party: Prime Financial Corporation Collateral: Amada Turret Press Dies & accessories
IEC (operating lease)	Secured Party: Prime Financial Corporation Collateral: Two Trumpf Laser Cutting Machines
IEC	Secured Party: Amada Capital Corporation Collateral: Amada Turret Press Model VIPROS358K w/ scrap conveyor and attachments
IEC	Secured Party: Amada Capital Corporation Collateral: Software package consisting of two seats of Anmest punch software and one seat AP100 US punch complete w/ all attachments
IEC (operating lease)	Secured Party: Prime Financial Corporation Collateral: One (1) T-Drill SP-55 tube end spinner, 440V, S/N 97032
IEC (operating lease)	Secured Party: Prime Financial Corporation Collateral: High Takt assembly line (spur line south bldg)

Page 5 of 7

Name of Obligor

Description of Secured Indebtedness

IEC (operating lease)	Secured Party: IOS Capital Collateral: All equipment now or hereafter leased in an equipment leasing transaction in connection with that certain Master Agreement No. -------------, Product Schedule No./Agreement No. 1842990, as amended from time to time, between IOS Capital, LLC as lessor, and the above referenced Lessee/Debtor, including, without limit, the equipment listed below, and all additions, improvements, attachments, accessories, accessions, upgrades and replacements related thereto, and any and all substitutions or exchanges, and any and all products, insurance and/or other proceeds (cash and non-cash) therefrom. Customer: 357586 RIAF 2075 S/P C11020120, RIAF2075 S/P C11020023, RIAF 2075 S/P C11020123, RIAF2060 S/P C11020019, RIAF3030 S/P C11020011, RIAF3030 S/P C11020010, RIAF3030 W/P C11020009, RIAF3030 SP C11020008, RIAF3425C C11020124, ZZrightfax software
IEC (operating lease)	Secured Party: Prime Financial Corporation Collateral: Trumpf Laser 3040 Plus, 4000 watt resonator
IEC (operating lease)	Secured Party: Prime Financial Corporation Collateral: Security system

Name of Obligor	Description of Secured Indebtedness
Koax Corp (operating lease)	Secured Party: Intrust Bank Collateral: LSE 1751964 S/N MPH04374

Name of Obligor	Description of Secured Indebtedness
LSB Chemical Corp.	None

Name of Obligor	Description of Secured Indebtedness
Northwest Financial Corporation	None

Name of Obligor	Description of Secured Indebtedness
The Climate Control Group, Inc.	None

Name of Obligor	Description of Secured Indebtedness
ThermaClime, Inc. (f/k/a ClimaChem, Inc.)	Secured Party: Toshiba America Information Systems Collateral: Six (6) Toshiba copiers

Page 6 of 7

Name of Obligor	Description of Secured Indebtedness
ThermaClime Technologies, Inc. (f/k/a ACP International Limited (“TTI”) (operating lease)	Secured Party: Park National Bank, assigned to Marquette Equipment Finance, LLC Collateral: All equipment, software and other property leased under that Equipment Lease dated March 1, 2007 between Prime Financial Corporation and TTI (Continental washer and dryer)
TTI, as bailee (operating lease)	Secured Party: Park National Bank, as bailor Collateral: Radiator coil washer and dryer
TTI (operating lease)	Secured Party: Prime Financial Corporation Collateral: One (1) Continental Equipment 2-stage belt washer, natural gas heated dryer and drain tank
TTI (operating lease)	Secured Party: Prime Financial Corporation Collateral: Burr oak fin die, S/N FDM-1532-1

Name of Obligor	Description of Secured Indebtedness
Trison Construction, Inc. (“Trison”)	None

Name of Obligor	Description of Secured Indebtedness
XpediAir, Inc.	None

Page 7 of 7

SCHEDULE 7.02

EXISTING INDEBTEDNESS AND GUARANTEES

(as of September 30, 2007)

Part A - Indebtedness

1.	International Environmental Corporation is indebted to Amada Capital Corporation in the amount of $57,714.

2.	ClimateCraft, Inc. is indebted to the following:

a.	The City of Oklahoma City in the amount of $2,450,000.

b.	Summit Machine Tool Manufacturing Corp. in the principal amount of $715,719.

3.	ThermaClime, Inc. is indebted to the following:

a.	CEPOLK Holdings, Inc. in the principal amount of $3,898,523.

b.	El Dorado Nitrogen, L.P. in the principal amount of $25,734,720.

Part B - Guarantees

N/A

SCHEDULE 7.03

EXISTING INVESTMENTS

(as of September 30, 2007)

1.	See Schedule 5.13 for Equity Interests.

2.	El Dorado Chemical Company (“EDC”) is indebted to the following:

a.	ThermaClime, Inc. (“TCI”) in the principal amount of $35,593,138.

b.	LSB Chemical Corp. (“LSB Chemical”) in the principal amount of $2,098,787.

3.	Trison Construction, Inc. is indebted to TCI in the principal amount of $6,364,700 less $2,500,0001.

4.	ClimateCraft, Inc. is indebted to TCI in the principal amount of $6,947,768 less $5,200,0001.

5.	TCI is indebted to the following:

a.	International Environmental Corporation in the principal amount of $76,297,857.

b.	The Climate Control Group, Inc. in the principal amount of $3,104,268.

c.	Climate Master, Inc. in the principal amount of $40,537,986.

d.	Koax Corp. in the principal amount of $22,811,075.

e.	Chemex I Corp. (“Chemex I”) in the principal amount of $276,944.

f.	Chemex II Corp. (“Chemex II”) in the principal amount of $1,484,718.

g.	Northwest Financial Corporation in the principal amount of $13,328,828.

6.	Cherokee Nitrogen Company is indebted to the following companies:

a.	TCI in the principal amount of $10,604,163.

b.	EDC in the principal amount of $2,438,209.

7.	LSB Chemical is indebted to the following companies:

a.	TCI in the principal amount of $24,187,624 plus $4,500,0001.

b.	DSN Corporation (“DSN”) in the principal amount of $275,773.

8.	DSN is indebted to TCI in the principal amount of $18,784,414 less $4,500,0001.

9.	XpediAir, Inc. is indebted to TCI in the principal amount of $1,768,968 less $1,900,0001.

10.	ThermaClime Technologies, Inc. is indebted to TCI in the principal amount of $3,548,796 less $2,700,0001.

11.	ClimaCool Corp. (“CCC”) is indebted to TCI in the principal amount of $3,450,175 less $2,300,0001.

1 Adjustment as of October 31, 2007.

12.	Chemex I is indebted to the following companies:

a.	LSB Chemical in the principal amount of $385,282 less $150,0001.

b.	Chemex II in the principal amount of $348.

13.	LSB Holdings, Inc., a subsidiary of LSB Industries, Inc., is indebted to CCC in the principal amount of $2,705,594.

SCHEDULE 7.05

FACILITY USE/LEASES

Part I – Cherokee Site

1.	Cherokee Nitrogen Company leases from Cherokee Nitrogen Holdings, Inc. (“CNH”) the Cherokee Site and Facility Assets therein pursuant to a Lease Agreement effective January 1, 2004.

2.	Nelson Brothers LLC leases from CNH a certain portion of the Cherokee Site pursuant to a Ground Lease dated November 4, 1998, as amended.

3.	Farm Lease between CNH and Isbell Farms, effective as of January 1, 2007.

Ground Lease between United States Steel Corporation and The Industrial Development Board of the Town of Cherokee (“Board”) dated as of April 1, 1980, Lease Agreement between the Board and Airco, Inc. dated as of April 1, 1980, as amended between the Board and The BOC Group, Inc. (formerly known as Airco, Inc.) on August 1, 1993, Trust Indenture between the Board and Trust Company Bank dated as of April 1, 1980 and Indenture of Trust between the Board and First-Citizens Bank and Trust Company dated as of August 1, 1993.

5.	Airgas Specialty Products, Inc. leases from CNH a certain portion of the Cherokee Site pursuant to a Lease Agreement dated June 1, 2005.

6.	Austin Powder Company leases from CNH a certain portion of the Cherokee Site pursuant to a Real Property Lease and Easement dated effective November 1, 2007.

Part II – El Dorado Site

1.	El Dorado Chemical Company (“EDC”) leases from Northwest Financial Corporation (“NWF”) a certain portion of the El Dorado Site pursuant to a Lease Agreement dated March 7, 1988, as amended.

2.	DSN Corporation (“DSN”) leases from NWF a certain portion of the El Dorado Site pursuant to a Lease Agreement dated April 15, 2003.

3.	EDC subleases from DSN a certain portion of the El Dorado Site and the Facility Assets therein pursuant to a Sublease Agreement dated April 15, 2003.

4.	On-Site Product Supply Agreement between EDC and Air Liquide America Corporation dated May 31, 1994.

Page 1 of 1

SCHEDULE 7.08

AFFILIATE TRANSACTIONS

1.	Agreement for Raw Material Sourcing between LSB Industries, Inc. (“LSB”) and its subsidiaries.

2.	Tax Sharing Agreement between LSB and ThermaClime, Inc. (f/k/a ClimaChem, Inc. (“TCI”)).

3.	Tax Sharing Agreement between LSB and ClimateCraft, Inc. (“CLC”).

4.	Management Agreement between LSB and TCI.

5.	Lease Agreement between Prime Holdings Corporation (“PHC”) and International Environmental Corporation (“IEC”) for property at 5000 West I-40, OKC.

6.	Lease Agreement between Prime Holdings Corporation (“PHC”) and ThermaClime Technologies, Inc. (“TTI”) for property at 5000 West I-40, OKC.

7.	Railcar Services Agreement between Prime Financial Corporation (“PFC”) and El Dorado Chemical Company (“EDC”).

8.	Industrial Plant Lease between PFC and Climate Master, Inc. (“CLM”) for property at 4700 West Point Boulevard, OKC.

9.	Equipment Lease between IEC and PFC Re: Laser Center, 2 Pullmax Press Brakes and accessories

10.	Equipment Lease between IEC and PFC Re: Cabinet & Steel Rack w/ Amada Turret Press Dies and shop carts with Amada Turret Punch Press tooling.

11.	Equipment Lease between IEC and PFC Re: Bolina Cut-to-Length, 2 Optiflex 110/08 Pullmax CNC Press Brakes, and 1 Vertical Bender Hairpin Bender.

12.	Equipment Lease between IEC and PFC Re: Trumpf Laser 3040 Plus.

13.	Equipment Lease between IEC and PFC Re: T-Drill SP-55 Tube End Spinner.

14.	Equipment Lease between IEC and PFC Re: Security System.

15.	Equipment Lease between IEC and PFC Re: High Takt Assembly Line.

16.	Equipment Lease between CLM and PFC Re: IPCS Equipment

Page 1 of 5

17.	Equipment Lease between CLM and PFC Re: Optima Press Brake and accessories.

18.	Equipment Lease between CLM and PFC Re: Amada Vipros 868 King, Turret Punch Press and accessories.

19.	Equipment Lease between CLM and PFC Re: ECI equipment.

20.	Equipment Lease between CLM and PFC Re: 1996 Amada FCXBIII-8025 CNC Press Brake.

21.	Equipment Lease between CLM and PFC Re: Model HFB/1003/8 Amada Press Brake.

22.	Equipment Lease between CLM and PFC Re: Model HFB/1003/8 Amada Press Brake.

23.	Equipment Lease between CLM and PFC Re: Procix equipment.

24.	Equipment Lease between CLM and PFC Re: Trumpf 3040 Laser System.

25.	Equipment Lease between CLM and PFC Re: Trumpf 3040 Laser System.

26.	Equipment Lease between CLM and PFC Re: RAIDZone GangStor System.

27.	Equipment Lease between CLM and PFC Re: Blanking Shear.

28.	Equipment Lease between CLM and PFC Re: Amada 386 King, Vipros 30 CNC Turret Punch

29.	Equipment Lease between CLM and PFC Re: Optigun equipment.

30.	Equipment Lease between CLM and PFC Re: Burr Oak Copper Cut.

31.	Equipment Lease between CLM and PFC Re: Chiyoda SP-25ST Tube bender

32.	Equipment Lease between CLM and PFC Re: Amada FBD-125 Press Brake.

33.	Equipment Lease between CLM and PFC Re: Trumpf Laser L3040 Laser Cutting Machine.

34.	Equipment Lease between CLM and PFC Re: Trumpf Trulaser 3530.

35.	Equipment Lease between CLM and PFC Re: Ingersoll Rand Nirvana Compressor System.

36.	Equipment Lease between CLM and PFC Re: Gamma Wire Processing System.

Page 2 of 5

37.	Equipment Lease between CLM and PFC Re: Power Spray Stainless Washer.

38.	Equipment Lease between CLM and PFC Re: Three (3) Amada Press Brakes.

39.	Equipment Lease between CLM and IEC Re: Trumpf Laser 3040 Plus.

40.	Equipment Sublease between LSB and CLM Re: Blanking Shear (leased by LSB from PFC).

41.	Equipment Sublease between CLC and PFC for Trumpf Punching Machine.

42.	Equipment Lease between CLC and PFC Re: 1999 Amada HFB 1254 Promecam CNC Press Brake.

43.	Equipment Lease between CLC and PFC Re: Trumpf Tooling Set.

44.	Equipment Lease between CLC and PFC Re: 2 Accushears.

45.	Equipment Lease between CLC and PFC Re: Trumpf TC2020 Punch Machine.

46.	Equipment Lease between CLC and PFC Re: Amada CNC Hydraulic Press Brake.

47.	Equipment Lease between TTI and PFC Re: Continental Belt Washer.

48.	Equipment Lease between TTI and PFC Re: Burr Oak Fin Die.

49.	Equipment Lease between EDC and PFC Re: 2004 Chevy Impala.

50.	Equipment Lease between EDC and PFC Re: 2002 International Spreader Truck.

51.	Plant Equipment Lease between EDC and DSN Corporation

52.	Equipment Lease between Trison Construction, Inc. (“Trison”) and PFC Re: 2 John Deer Gators and 3 trailers with dove tail.

53.	Services Agreements between LSB and the following subsidiaries:

a.	Chemex II Corp.

b.	Koax Corp.

c.	Climate Master, Inc.

d.	International Environmental Corporation

e.	The Climate Control Group, Inc.

f.	LSB Chemical Corp.

g.	ClimateCraft, Inc.

h.	El Dorado Chemical Company

Page 3 of 5

i.	Chemex I Corp.

j.	ThermaClime, Inc.

k.	DSN Corporation

l.	ThermaClime Technologies, Inc.

m.	XpediAir, Inc.

n.	Trison Construction, Inc.

54.	Precious Metals Lease between LSB and EDC.

55.	Exclusive License Agreement Between CLC and ClimateCraft Technologies, Inc.

56.	Assignment of Option to Purchase between CLM and PFC Re: CLM Facility Located at 7300 S.W. 44th Street, Oklahoma City from Raptor Master LLC.

57.	Consulting Agreements between LSB Chemical Corp. (“LSB Chemical”) and various affiliates.

58.	Lease between Summit Machinery Company (“SMC”) and Trison for office space at 4000 N.W. 39th Street, OKC.

59.	Lease between XpediAir, Inc. and SMC at 4000 NW 39th Street, OKC.

60.	Warehouse Lease between CLM and SMC at 4000 NW 39th Street, OKC.

61.	Warehouse Lease between Summit Machine Tool Manufacturing Corp. (“Summit”) and ClimaCool Corp. at 518 North Indiana, OKC.

62.	Warehouse Lease between Summit and CLC at 1601 NW 4th Street, OKC.

63.	Capital Lease Agreement with Right of Transfer of Title between Summit and CLC for CLC facility in OKC.

64.	Lease of drilling equipment from LSB Holdings, Inc. to Trison.

65.	Lease of office space from SMC to TCI at 4000 NW 39th Street, OKC.

66.	Lease of office space from PFC to TCI at 16 South Pennsylvania Avenue, OKC.

67.	Lease of office space from TCI to LSB at 16 South Pennsylvania Avenue, OKC.

68.	Lease of building from LSB to Koax Corp. (“Koax”) at 510 North Indiana, OKC.

69.	Lease of warehouse space from Summit to Koax at 518 North Indiana, OKC.

Page 4 of 5

70.	Lease of office space from PFC to LSB Chemical at 16 South Pennsylvania Avenue, OKC.

71.	Lease of office space from SMC to The Climate Control Group, Inc. (“CCG”) at 4000 NW 39th Street, OKC.

72.	Lease of office space from SMC to IEC at 4000 NW 39th Street, OKC.

73.	Computer rental from LSB to TCI.

74.	Auto rental from LSB to TCI.

75.	Auto rental from LSB to CCG.

76.	Auto rental from PFC to CCG.

77.	See Schedules 5.05, 7.03 and 7.05.

Page 5 of 5

SCHEDULE 7.09

RESTRICTIVE AGREEMENTS

Amended and Restated Loan and Security Agreement dated as of November ____, 2007, by and among ThermaClime, Inc. and each of the Subsidiaries of ThermaClime identified on the signature pages thereof, LSB Industries, Inc., the lenders identified on the signature pages thereof and Wells Fargo Foothill, Inc., as the arranger and administrative agent for the Lenders, as amended.

2.	Equipment Purchase and Security Agreement between International Environmental Corporation and Amada America, Inc., dated June 27, 2003.*

3.	Capital Lease Agreement with Right of Transfer of Title by and between Summit Machine Tool Manufacturing Corp. and ClimateCraft, Inc., effective December 31, 1999, as amended.*

4.	Loan Agreement between The City of Oklahoma City and ClimateCraft, Inc., dated December 23, 1999.*

*These agreements relate to equipment and property not part of Collateral. The restrictions (including lien restrictions) are limited to the equipment and property that are the subject of such agreements.

Schedule 11.02

Addresses for Notices; Payment Information

BORROWERS: PARENT:

ThermaClime, Inc.

16 South Pennsylvania Avenue

Oklahoma City, Oklahoma 73107

Attention: Tony M. Shelby, Ex. V.P.

Tel: 405-235-4546

Fax: 405-235-5067

with copy to:

ThermaClime, Inc.

16 South Pennsylvania Avenue

Oklahoma City, Oklahoma 73107

Attention: David Shear, General Counsel

Tel: 405-235-4546

Fax: 405-236-1209

LSB Industries, Inc.

16 South Pennsylvania Avenue

Oklahoma City, Oklahoma 73107

Attention: Tony M. Shelby, Ex. V.P.

Tel: 405-235-4546

Fax: 405-235-5067

with copy to:

LSB Industries, Inc.

16 South Pennsylvania Avenue

Oklahoma City, Oklahoma 73107

Attention: David Shear, General Counsel

Tel: 405-235-4546

Fax: 405-236-1209

AGENTS:

Addresses for Notices	Payment Information

Banc of America Leasing & Capital LLC, as Collateral Agent Mail Code: GA3-003-04-01 Northeast Center Building 2059 Northlake Pkwy Tucker GA 30084-5399 Attn: Shelley B. LaCagnin Vice President - Operations Manager Tel: 770-270-8590 Fax: 770-270-8638	Bank: Bank of America Address: Concord, CA ABA: 026 009 593 Account No: 1233401992 Account Name: Banc of America Leasing & Capital, LLC Attention: Benny Sumardi Reference: ThermaClime
Banc of America Leasing & Capital LLC, as Administrative Agent Mail Code: MA5-100-32-01 100 Federal St Boston MA 02110 Attn: Annemarie L. Warren Vice President - Group Operations Manager Tel: 617-434-3611 Fax: 617-434-0532	Bank: Bank of America Address: Concord, CA ABA: 026 009 593 Account No: 1233401992 Account Name: Banc of America Leasing & Capital, LLC Attention: Benny Sumardi Reference: ThermaClime

Page 1 of 3

Addresses for Notices

Payment Information


Bank of Utah, as Payment Agent ATTN: Corporate Trust Services 200 E. South Temple, Suite 210 Salt Lake City, UT 84111 Phone: (801) 924-3690 Fax: (801) 746-3519	Bank: Bank of Utah ABA No. 124-300-107 Acct. No. 01020296 Re: ThermaClime Acct. No. 8000099
LENDERS:

Addresses for Notices

Banc of America Leasing & Capital LLC, Northeast Center Building Mail Code: GA3-003-04-01 2059 Northlake Pkwy Tucker GA 30084-5399 Attn: Shelley B. LaCagnin Vice President - Operations Manager Tel: 770-270-8590 Fax: 770-270-8638


With Copy to: Banc of America Leasing & Capital LLC One Financial Plaza, 2nd Floor Mail Code: R11-537-02-01 http://corpdir.bankofamerica.com/staffresults.asp?txtField1Name=mailunit&txtField1Type=is&txtField1V Providence, RI 02903 Attn: Lee Bonaldi Vice President - Credit Underwriting Tel: 401-278-7655 Fax: 401-719-8344

Page 2 of 3

Addresses for Notices


Merrill Lynch Capital, a Division of Merrill Lynch Business Financial Services Inc. 222 N. LaSalle Street, 16th Floor Chicago, IL 60601 Attention: Gary Modesto Vice President, Group Credit Manager Tel: 312-750-6204 Fax: 312-316-3422 Email: Gary_Modesto@ml.com


Arvest Bank 3900 N. Lincoln Boulevard Oklahoma City, OK 73105 Attn: Cindy Batt Sr. Vice President & Corporate Division Manager Tel: 405-523-4169 Fax: 405-523-4126 Email: cbatt@arvest.com

Page 3 of 3

EXHIBIT A

FORM OF TERM NOTE

$_____________ 60; _____________, 2007

FOR VALUE RECEIVED, each of THERMACLIME, INC. (“ThermaClime”) and each of the undersigned Affiliates of ThermaClime (each a “Borrower” and collectively the “Borrowers”) hereby jointly and severally promises to pay to _____________________ or registered assigns (the “Lender”), in accordance with the provisions of the Agreement (as hereinafter defined), the principal amount of the Term Loan made by the Lender to the Borrower under that certain Term Loan Agreement, dated as of ___________, 2007 (as amended, restated, extended, supplemented or otherwise modified in writing from time to time, the “Agreement;” the terms defined therein being used herein as therein defined), among the Borrowers, each lender from time to time party hereto (collectively, the “Lenders” and individually, a “Lender”), Banc of America Leasing & Capital, LLC, as Administrative Agent and Collateral Agent, and Bank of Utah, as Payment Agent.

Each Borrower, jointly and severally, promises to pay interest on the unpaid principal amount of such Lender’s Term Loan from the date of such Term Loan until such principal amount is paid in full, at such interest rates and at such times as provided in the Agreement. All payments of principal and interest shall be made to the Collateral Agent for the account of the Lender at the Collateral Agent’s Office. If any amount is not paid in full when due hereunder, such unpaid amount shall bear interest, to be paid upon demand, from the due date thereof until the date of actual payment (and before as well as after judgment) computed at the per annum rate set forth in the Agreement.

This note is one of the Term Notes referred to in the Agreement, is entitled to the benefits thereof and may be prepaid in whole or in part subject to the terms and conditions provided therein. This Term Note is also entitled to the benefits of the Guaranty and is secured by the Collateral Documents. Upon the occurrence and continuation of one or more of the Events of Default specified in the Agreement, all amounts then remaining unpaid on this Term Note shall become, or may be declared to be, immediately due and payable all as provided in the Agreement. The Term Loan made by the Lender shall be evidenced by one or more loan accounts or records maintained by the Lender in the ordinary course of business. The Lender may also attach schedules to this Term Note and endorse thereon the date, amount, currency and maturity of its Term Loans and payments with respect thereto.

Each Borrower, for itself, its successors and assigns, hereby waives diligence, presentment, protest and demand and notice of protest, demand, dishonor and non-payment of this Term Note.

Exhibit A-1

THIS TERM NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.

THERMACLIME, INC.

CHEROKEE NITROGEN HOLDINGS, INC.,

NORTHWEST FINANCIAL CORPORATION,

CHEMEX I CORP.,

CHEMEX II CORP.,

CHEROKEE NITROGEN COMPANY,

CLIMACOOL CORP.,

CLIMATECRAFT, INC.,

CLIMATE MASTER, INC.,

DSN CORPORATION,

EL DORADO CHEMICAL COMPANY,

INTERNATIONAL ENVIRONMENTAL CORPORATION,

KOAX CORP.,

LSB CHEMICAL CORP.,

THE CLIMATE CONTROL GROUP, INC.,

TRISON CONSTRUCTION, INC.,

THERMACLIME TECHNOLOGIES, INC.,

XPEDIAIR, INC.

By:

Name:

Title:

Exhibit A-2

LOANS AND PAYMENTS WITH RESPECT THERETO

Date	Type of Loan Made	Amount of Loan Made	End of Interest Period	Amount of Principal or Interest Paid This Date	Outstanding Principal Balance This Date	Notation Made By
_________	_________	_________	_____________	_____________	___________	________
_________	_________	_________	_____________	_____________	___________	________
_________	_________	_________	_____________	_____________	___________	________
_________	_________	_________	_____________	_____________	___________	________
_________	_________	_________	_____________	_____________	___________	________
_________	_________	_________	_____________	_____________	___________	________
_________	_________	_________	_____________	_____________	___________	________
_________	_________	_________	_____________	_____________	___________	________
_________	_________	_________	_____________	_____________	___________	________
_________	_________	_________	_____________	_____________	___________	________
_________	_________	_________	_____________	_____________	___________	________
_________	_________	_________	_____________	_____________	___________	________
_________	_________	_________	_____________	_____________	___________	________
_________	_________	_________	_____________	_____________	___________	________
_________	_________	_________	_____________	_____________	___________	________
_________	_________	_________	_____________	_____________	___________	________
_________	_________	_________	_____________	_____________	___________	________
_________	_________	_________	_____________	_____________	___________	________
_________	_________	_________	_____________	_____________	___________	________
_________	_________	_________	_____________	_____________	___________	________
_________	_________	_________	_____________	_____________	___________	________
_________	_________	_________	_____________	_____________	___________	________
_________	_________	_________	_____________	_____________	___________	________
_________	_________	_________	_____________	_____________	___________	________
_________	_________	_________	_____________	_____________	___________	________

Exhibit A of 3

EXHIBIT B

FORM OF COMPLIANCE CERTIFICATE

Financial Statement Date: ______, ____

To: Bank of Utah, as Payment Agent

Ladies and Gentlemen:

Reference is made to that certain Term Loan Agreement, dated as of ____________, 2007 (as amended, restated, extended, supplemented or otherwise modified in writing from time to time, the “Agreement;” the terms defined therein being used herein as therein defined), among THERMACLIME, INC. (“ThermaClime”) and certain Affiliates of ThermaClime, as borrowers (with ThermaClime, collectively, the “Borrowers” and each a “Borrower”), LSB Industries, Inc., as guarantor (“Parent”), each lender from time to time party hereto (collectively, the “Lenders” and individually, a “Lender”), Banc of America Leasing & Capital, LLC, as Administrative Agent and Collateral Agent, and Bank of Utah, as Payment Agent.

The undersigned hereby certifies as of the date hereof that he/she is the [chief executive officer/chief financial officer/treasurer/controller] of each of Parent and ThermaClime, and that, as such, he/she is authorized to execute and deliver this Certificate to the Collateral Agent on the behalf of each of Parent and ThermaClime, and that:

[Use following paragraph 1 for fiscal year-end financial statements]

1. Each of Parent and ThermaClime has delivered the year-end audited financial statements required by Section 6.01(a) of the Agreement for the fiscal year of Parent or ThermaClime, as applicable, ended as of the above date, together with the report and opinion of an independent certified public accountant required by such section.

[Use following paragraph 1 for fiscal quarter-end financial statements]

1. Each of Parent and ThermaClime has delivered the unaudited financial statements required by Section 6.01(b) of the Agreement for the fiscal quarter of Parent or ThermaClime, as applicable, ended as of the above date. Such financial statements fairly present the financial condition, results of operations and cash flows of Parent or ThermaClime, as applicable, and its Subsidiaries in accordance with GAAP as at such date and for such period, subject only to normal year-end audit adjustments and the absence of footnotes.

2. The undersigned has reviewed and is familiar with the terms of the Agreement and has made, or has caused to be made under his/her supervision, a detailed review of the transactions and condition (financial or otherwise) of Parent and the Borrowers during the accounting period covered by such financial statements.

3. A review of the activities of Parent and the Borrowers during such fiscal period has been made under the supervision of the undersigned with a view to determining whether during such fiscal period a Default has occurred under the Loan Documents, and

Exhibit B-1

[select one:]

[to the knowledge of the undersigned, during such fiscal period each of Parent and the Borrowers was in compliance with each covenant and condition of the Loan Documents applicable to it, and no Default has occurred and is continuing.]

--or--

[to the knowledge of the undersigned, during such fiscal period the following is a list of each Default that occurred and its nature and status:]

4. The financial covenant analyses and information set forth on Schedule 1 attached hereto are true and accurate on and as of the date of this Certificate.

IN WITNESS WHEREOF, the undersigned has executed this Certificate as of _________, 200[_].

THERMACLIME, INC.

By:

Name:

Title:

LSB INDUSTRIES, INC.

By:

Name:

Title:

Exhibit B-2

SCHEDULE 1

to the Compliance Certificate

1. Consolidated Leverage Ratio. [If applicable.]

(a) The Consolidated Leverage Ratio of ThermaClime and its Subsidiaries (the “ThermaClime Entities”) for such period is calculated as follows:

(i)

Consolidated Total Indebtedness as of the financial statement date:

$______________

(ii)

Borrowers’ Consolidated EBITDA for such period:

$______________

The ratio of item (i) to (ii) = Consolidated Leverage Ratio = �� ___ : ___

(b) The Consolidated Leverage Ratio set forth above [is/is not] greater than or equal to the amount set forth in Section 7.11(a) of the Loan Agreement for such period, which is 4.50 to 1.00.

2. Consolidated Fixed Charge Coverage Ratio.

(a) The Consolidated Fixed Charge Coverage Ratio of the ThermaClime Entities for such period is calculated as follows:

(i)

Consolidated EBITDA of the ThermaClime Entities for the most recently completed four fiscal quarters (the “Measurement Period”):

$_________________

(ii)

Aggregate amount of all Capital Expenditures made during the Measurement Period by the ThermaClime Entities on a consolidated basis ($_________________), but excluding any such payments to the extent financed through the incurrence of additional Indebtedness ($_________________):$________________

(iii)

Aggregate amount of federal, state, local and foreign income taxes paid in cash, in each case of or by the TheramClime Entities for the most recently completed Measurement Period:

$________________

(iv)

Consolidated Interest Charges:

$________________

(v)

Aggregate principal amount of all regularly scheduled principal payments or redemptions or similar acquisitions for value of outstanding debt for borrowed money for ThermaClime on a consolidated basis during such Measurement Period1:

$________________

1 Excluding (a) prepayments of principal under the Revolving Credit Agreement which are not accompanied by or give rise to a reduction in the aggregate outstanding commitments under the Revolving Credit Agreement and not

Exhibit B-3

(vi)

All amounts paid or payable by the ThermaClime Entities on Capitalized Lease Obligations having a scheduled due date during such Measurement Period:

$_____________

(vii)

Dividends paid by ThermaClime to Parent during such Measurement Period:

$_____________

The ratio of items (i) minus (ii) minus (iii) divided by the sum of items (iv) plus (v) plus (vi) = Consolidated Fixed Charge Coverage Ratio ___ : ___

(b) The Consolidated Fixed Charge Coverage Ratio set forth above [is/is not] greater than or equal to the amount set forth in Section 7.11(b) of the Loan Agreement for the Measurement Period, which is 1.10 to 1.00.

including the final scheduled payment of amounts due under the Revolving Credit Agreement at maturity and (b) payment at maturity of the Indebtedness of ThermaClime to Parent under the $6,950,000 10 3/4 % bonds maturing in November 2007, provided that Parent is the sole holder of such Indebtedness and such Indebtedness is at all times subject to the terms of the Intercompany Loan Subordination Agreement.

Exhibit B-4

EXHIBIT C

FORM OF BORROWING NOTICE

Date: ___________, 2007

To: Bank of Utah, as Payment Agent

Ladies and Gentlemen:

Reference is made to that certain Term Loan Agreement, dated as of __________, 2007 (as amended, restated, extended, supplemented or otherwise modified in writing from time to time, the “Agreement;” the terms defined therein being used herein as therein defined), among THERMACLIME, INC. (“ThermaClime”) and certain Affiliates of ThermaClime, as borrowers (collectively, the “Borrowers” and each a “Borrower”), LSB Industries, Inc., as guarantor, each lender from time to time party hereto (collectively, the “Lenders” and individually, a “Lender”), Banc of America Leasing & Capital, LLC, as Administrative Agent and Collateral Agent, and Bank of Utah, as Payment Agent.

The undersigned Borrowers hereby request the borrowing of the Term Loans:

1. On ______________________ (a Business Day at least one (1) Business Day following the date of this notice).

2. In the amount of $________________.

3. The proceeds of which shall be disbursed as follows:

[INCLUDE WIRE TRANSFER INSTRUCTIONS]

THERMACLIME, INC.

CHEROKEE NITROGEN HOLDINGS, INC.,

NORTHWEST FINANCIAL CORPORATION,

CHEMEX I CORP.,

CHEMEX II CORP.,

CHEROKEE NITROGEN COMPANY,

CLIMACOOL CORP.,

CLIMATECRAFT, INC.,

CLIMATE MASTER, INC.,

DSN CORPORATION,

EL DORADO CHEMICAL COMPANY,

INTERNATIONAL ENVIRONMENTAL CORPORATION,

KOAX CORP.,

LSB CHEMICAL CORP.,

THE CLIMATE CONTROL GROUP, INC.,

TRISON CONSTRUCTION, INC.,

THERMACLIME TECHNOLOGIES, INC.,

XPEDIAIR, INC.

By:

Name:

Title:

EXHIBIT D

ASSIGNMENT AND ASSUMPTION

This Assignment and Assumption (this “Assignment and Assumption”) is dated as of the Effective Date set forth below and is entered into by and between [the][each] 2 Assignor identified in item 1 below ([the][each, an] “Assignor”) and [the][each] 3 Assignee identified in item 2 below ([the][each, an] “Assignee”). [It is understood and agreed that the rights and obligations of [the Assignors][the Assignees] 4 hereunder are several and not joint.] 5 Capitalized terms used but not defined herein shall have the meanings given to them in the Term Loan Agreement identified below (the “Loan Agreement”), receipt of a copy of which is hereby acknowledged by the Assignee. The Standard Terms and Conditions set forth in Annex 1 attached hereto are hereby agreed to and incorporated herein by reference and made a part of this Assignment and Assumption as if set forth herein in full.

For an agreed consideration, [the][each] Assignor hereby irrevocably sells and assigns to [the Assignee][the respective Assignees], and [the][each] Assignee hereby irrevocably purchases and assumes from [the Assignor][the respective Assignors], subject to and in accordance with the Standard Terms and Conditions and the Loan Agreement, as of the Effective Date inserted by the Collateral Agent as contemplated below (i) all of [the Assignor’s][the respective Assignors’] rights and obligations in [its capacity as a Lender][their respective capacities as Lenders] under the Loan Agreement, the Loan Documents and any other documents or instruments delivered pursuant thereto to the extent related to the amount and percentage interest identified below of all of such outstanding rights and obligations of [the Assignor][the respective Assignors] under the respective facilities identified below and (ii) to the extent permitted to be assigned under applicable law, all claims, suits, causes of action and any other right of [the Assignor (in its capacity as a Lender)][the respective Assignors (in their respective capacities as Lenders)] against any Person, whether known or unknown, arising under or in connection with the Loan Agreement, any other documents or instruments delivered pursuant thereto or the loan transactions governed thereby or in any way based on or related to any of the foregoing, including, but not limited to, contract claims, tort claims, malpractice claims, statutory claims and all other claims at law or in equity related to the rights and obligations sold and assigned pursuant to clause (i) above (the rights and obligations sold and assigned by [the][any] Assignor to [the][any] Assignee pursuant to clauses (i) and (ii) above being referred to herein collectively as [the][an] “Assigned Interest”). Each such sale and assignment is without recourse to [the][any] Assignor and, except as expressly provided in this Assignment and Assumption, without representation or warranty by [the][any] Assignor.

________________________________________

2 For bracketed language here and elsewhere in this form relating to the Assignor(s), if the assignment is from a single Assignor, choose the first bracketed language. If the assignment is from multiple Assignors, choose the second bracketed language.

3 For bracketed language here and elsewhere in this form relating to the Assignee(s), if the assignment is to a single Assignee, choose the first bracketed language. If the assignment is to multiple Assignees, choose the second bracketed language.

4 Select as appropriate.

5 Include bracketed language if there are either multiple Assignors or multiple Assignees.

Exhibit D-1

Assignor[s]:

Assignee[s]:

[for each Assignee, indicate [Affiliate][Approved Fund] of [identify Lender]]

Borrower(s):

ThermaClime, Inc. and certain of its Affiliates

4.	Collateral Agent: Banc of America Leasing & Capital, LLC, as the collateral agent under the Loan Agreement

Loan Agreement: Term Loan Agreement, dated as of ___________, 2007, among THERMACLIME, INC. and certain Affiliates of ThermaClime, as borrowers (collectively, the “Borrowers” and each a “Borrower”), LSB Industries, Inc., as guarantor, each lender from time to time party hereto (collectively, the “Lenders” and individually, a “Lender”), Banc of America Leasing & Capital, LLC, as Administrative Agent and Collateral Agent, and Bank of Utah, as Payment Agent.

6.	Assigned Interest[s]:

Assignor[s] 6	Assignee[s] 7	Facility Assigned	Aggregate Amount of Term Loans for all Lenders 8	Amount of Term Loans Assigned	Percentage Assigned of Term Loans 9
		Term Loans	$___________	$___________	_________%
		Term Loans	$___________	$___________	_________%
		Term Loans	$___________	$___________	_________%

[Trade Date:

__________________]10

Effective Date: __________________, 20__ [TO BE INSERTED BY COLLATERAL AGENT AND WHICH SHALL BE THE EFFECTIVE DATE OF RECORDATION OF TRANSFER IN THE REGISTER THEREFOR.]

6 List each Assignor, as appropriate.

7 List each Assignee, as appropriate.

8 Amounts in this column and in the column immediately to the right to be adjusted by the counterparties to take into account any payments or prepayments made between the Trade Date and the Effective Date.

9 Set forth, to at least 9 decimals, as a percentage of the Term Loans of all Lenders thereunder.

10 To be completed if the Assignor and the Assignee intend that the minimum assignment amount is to be determined as of the Trade Date.

Exhibit D-2

The terms set forth in this Assignment and Assumption are hereby agreed to:

ASSIGNOR

[NAME OF ASSIGNOR]

By:

Title:

ASSIGNEE

[NAME OF ASSIGNEE]

By:

Title:

[Consented to and]11 Accepted:

BANC OF AMERICA LEASING & CAPITAL, LLC,

as Collateral Agent

By:

Title:

[Consented to:]12

THERMACLIME, INC.

By:

Title:

10 To be added only if the consent of the Collateral Agent is required by the terms of the Loan Agreement.

11 To be added only if the consent of the Company is required by the terms of the Loan Agreement.

Exhibit D-3

ANNEX 1 TO ASSIGNMENT AND ASSUMPTION

STANDARD TERMS AND CONDITIONS FOR

ASSIGNMENT AND ASSUMPTION

1. Representations and Warranties.

1.1. Assignor. [The][Each] Assignor (a) represents and warrants that (i) it is the legal and beneficial owner of [the][[the relevant] Assigned Interest, (ii) [the][such] Assigned Interest is free and clear of any lien, encumbrance or other adverse claim created by Assignor and (iii) it has full power and authority, and has taken all action necessary, to execute and deliver this Assignment and Assumption and to consummate the transactions contemplated hereby; and (b) assumes no responsibility with respect to (i) any statements, warranties or representations made in or in connection with the Loan Agreement or any other Loan Document, (ii) the execution, legality, validity, enforceability, genuineness, sufficiency or value of the Loan Documents or any collateral thereunder, (iii) the financial condition of any Borrower, any of their Subsidiaries or Affiliates or any other Person obligated in respect of any Loan Document or (iv) the performance or observance by any Borrower, any of their Subsidiaries or Affiliates or any other Person of any of their respective obligations under any Loan Document.

1.2. Assignee. [The][Each] Assignee (a) represents and warrants that (i) it has full power and authority, and has taken all action necessary, to execute and deliver this Assignment and Assumption and to consummate the transactions contemplated hereby and to become a Lender under the Loan Agreement, (ii) it meets all the requirements to be an assignee under the definition of “Eligible Assignee” and Sections 11.06(b)(iii), (v) and (vi) of the Loan Agreement (subject to such consents, if any, as may be required under Section 11.06(b)(iii) of the Loan Agreement), (iii) from and after the Effective Date, it shall be bound by the provisions of the Loan Agreement and other Loan Documents to which it is bound as a Lender thereunder and, to the extent of [the][the relevant] Assigned Interest, shall have the obligations of a Lender thereunder, (iv) it is sophisticated with respect to decisions to acquire assets of the type represented by [the][such] Assigned Interest and either it, or the Person exercising discretion in making its decision to acquire [the][such] Assigned Interest, is experienced in acquiring assets of such type, (v) it has received a copy of the Loan Agreement, and has received or has been accorded the opportunity to receive copies of the most recent financial statements delivered pursuant to Section 6.01 thereof, as applicable, and such other documents and information as it deems appropriate to make its own credit analysis and decision to enter into this Assignment and Assumption and to purchase [the][such] Assigned Interest, (vi) it has, independently and without reliance upon any Agent or any other Lender and based on such documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Assignment and Assumption and to purchase [the][such] Assigned Interest, and (vii) if it is a Foreign Lender, attached hereto is any documentation required to be delivered by it pursuant to the terms of the Loan Agreement, duly completed and executed by [the][such] Assignee; and (b) agrees that (i) it will, independently and without reliance upon any Agent, [the][any] Assignor or any other Lender, and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under the Loan Documents, and (ii) it will perform in accordance with their terms all of the obligations which by the terms of the Loan Documents are required to be performed by it as a Lender.

Exhibit D-4

2. Payments. From and after the Effective Date, the Collateral Agent shall make all payments in respect of [the][each] Assigned Interest (including payments of principal, interest, fees and other amounts) to [the][the relevant] Assignor for amounts which have accrued to but excluding the Effective Date and to [the][the relevant] Assignee for amounts which have accrued from and after the Effective Date.

3. General Provisions. This Assignment and Assumption shall be binding upon, and inure to the benefit of, the parties hereto and their respective successors and assigns. This Assignment and Assumption may be executed in any number of counterparts, which together shall constitute one instrument. Delivery of an executed counterpart of a signature page of this Assignment and Assumption by telecopy shall be effective as delivery of a manually executed counterpart of this Assignment and Assumption. This Assignment and Assumption shall be governed by, and construed in accordance with, the law of the State of New York.

Exhibit D-5

EXHIBIT E

SECURITY AGREEMENT

This SECURITY AGREEMENT, dated as of November 2, 2007 (as amended, supplemented, amended and restated or otherwise modified from time to time, this “Security Agreement”), is made by CHEROKEE NITROGEN HOLDINGS, INC., an Oklahoma corporation, NORTHWEST FINANCIAL CORPORATION, an Oklahoma corporation, CHEROKEE NITROGEN COMPANY, an Oklahoma corporation, DSN CORPORATION, an Oklahoma corporation, and EL DORADO CHEMICAL COMPANY, an Oklahoma corporation, (each individually a “Grantor” and collectively, the “Grantors”), in favor of BANC OF AMERICA LEASING & CAPITAL LLC, as the collateral agent (together with its successor(s) thereto in such capacity, the “Collateral Agent”) for each of the Secured Parties.

W I T N E S S E T H :

WHEREAS, pursuant to a Term Loan Agreement, dated as of November 2, 2007 (as amended, supplemented, amended and restated or otherwise modified from time to time, the “Loan Agreement”), among ThermaClime, Inc., an Oklahoma corporation (“ThermaClime”), and certain subsidiaries and an affiliate of ThermaClime including each of the Grantors, as borrowers (collectively, together with ThermaClime, the “Borrowers”), LSB Industries, Inc., as guarantor, the various financial institutions and other Persons from time to time party thereto, Banc of America Leasing & Capital, LLC, as administrative agent, and the Collateral Agent, the Lenders have agreed, subject to the terms and conditions set forth in the Loan Agreement, to make Term Loans to the Borrowers; and

WHEREAS, as a condition precedent to the making of the Term Loans under the Loan Agreement, each Grantor is required to execute and deliver this Security Agreement;

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and in order to induce the Lenders to make Term Loans to the Grantors and the other Borrowers, each Grantor agrees, for the benefit of each Secured Party, as follows:

ARTICLE I

DEFINITIONS

SECTION 1.1. Certain Terms. The following terms (whether or not underscored) when used in this Security Agreement, including its preamble and recitals, shall have the following meanings (such definitions to be equally applicable to the singular and plural forms thereof):

“Accounts” means all of Borrowers’ now owned or hereafter acquired right, title and interest with respect to “accounts” (as that term is defined in the UCC), and any and all supporting obligations in respect thereof.

“Books” means all of each Borrower’s now owned or hereafter acquired books and records (including all of its records indicating, summarizing, or evidencing its assets (including the UCC Collateral) or liabilities, all of its records relating to its business operations or financial condition, and all of its goods or General Intangibles related to such information).

“Cherokee Collateral” means (a) the Cherokee Plant, (b) all Material Contracts, Assigned Agreements, Support Rights and Interests, Intellectual Property Collateral, and Permits, (c) all data bases, skill, experience, processes, models, drawings, manuals, materials, records and all other Cherokee General Intangibles, (d) all insurance proceeds arising in connection with the Cherokee Plant or used in or necessary to conduct the Facility Business or the operation or maintenance of the Facility Assets, and (e) all Proceeds of the Cherokee Collateral described in clauses (a) through (d) above; provided, however, the Cherokee Collateral shall not include any of the Excluded Assets.

“Cherokee General Intangibles” means the General Intangibles which, in whole or in part, relate to the Cherokee Plant or are used in or necessary to conduct the Facility Business or the operation or maintenance of the Facility Assets.

“Cherokee Plant” means (a) the Cherokee Site and (b) the land, land improvements, buildings, Fixtures, Equipment (including, without limitation, chemical processing equipment, office equipment, barge unloading equipment and laboratory equipment), the Kellogg Company ammonia processing plant, the Chemical Industrial Engineers Company nitric acid plant, the D.M. Weatherly Company nitric acid plant, the Technip Company UREA plant, the ammonium nitrate prill plant, a pollution control and irrigation system, cooling towers, a demineralizer, transformers, substations, storage tanks, office furniture, computers and software, vehicles and forklift trucks (other than rolling stock or titled vehicles), an auxiliary boiler, a deaerator system, product storage tanks, air compressors, an electrical substation and transformers, process plant piping, pumps and wiring, and other tangible assets located on the Cherokee Site or used in or necessary to the conduct of the Facility Business or the operation or maintenance of the Facility Assets at the Cherokee Site from time to time, including, without limitation, as described on Part A of Schedule 1.1(a).

“Cherokee Site” means the real property described on Schedule 1.1(b).

“Collateral” is defined in Section 2.1.

“Collateral Agent” is defined in the preamble.

“El Dorado Collateral” means (a) the El Dorado Plant, (b) all Material Contracts, Assigned Agreements, Support Rights and Interests, Intellectual Property Collateral, and Permits, (c) all data bases, data, skill, experience, processes, models, drawings, manuals, materials, records and all other El Dorado General Intangibles, (d) all insurance proceeds arising in connection with the El Dorado Plant or used in or necessary to conduct the Facility Business or the operation or maintenance of the Facility Assets, and (e) all Proceeds of the El Dorado Collateral described in clauses (a) through (d) above; provided, however, the El Dorado Collateral shall not include any of the Excluded Assets.1

______________________________________________

1 Final Collateral descriptions are subject to final update and modification by the Appraiser.

- 2 - -

“El Dorado General Intangibles” means General Intangibles which, in whole or in part, relate to the El Dorado Plant or are used in or necessary to conduct the Facility Business or the operation or maintenance of the Facility Assets.

“El Dorado Plant” means (a) the El Dorado Site and (b) the land, land improvements, buildings, Fixtures, Equipment (including, without limitation, chemical processing equipment, office equipment, maintenance and machine shop equipment and laboratory equipment), the Chemico east/west weak nitric plant, the Chemico sulfuric acid plant, the Chemico E2 high-density ammonium nitrate prill plant, the K-T lo-density ammonium nitrate prill plant, a 100 TPD mixed acids plant, the D.M. Weatherly nitric acid plant, the UHDE 285 TPD direct strong nitric acid processing plant, the CB&I tank farm including ammonia storage spheres, a refrigerated ammonia tank and ammonia storage tanks, a plant steam generation system including Babcock & Wilcox processing boilers, a plant electrical generation system including substations and transformers, a wastewater ph neutralization system, a pollution control and irrigation system, cooling towers, air compressors, transformers, substations, storage tanks, office furniture, computers and software, vehicles, forklift trucks (other than rolling stock or titled vehicles), process plant piping, pumps and wiring, and other tangible assets located on the El Dorado Site or used in or necessary to the conduct of the Facility Business or the operation or maintenance of the Facility Assets at the El Dorado Site from time to time, including, without limitation, as described on Part B of Schedule 1.1(a).

“El Dorado Site” means the real property described on Schedule 1.1(c).

“Equipment” means all “equipment” as such term is defined in the UCC, now owned or hereafter acquired by any Grantor and located on the Cherokee Site or the El Dorado Site or used in or necessary to the conduct of the Facility Business or the operation of the Facility Assets at either of the Sites, including all such Grantor’s machinery and equipment, including processing equipment, conveyors, machine tools, data processing and computer equipment, including embedded software and peripheral equipment, and all engineering, processing and manufacturing equipment, office machinery, furniture, materials, handling equipment, tools, attachments, accessories, automotive equipment, trailers, trucks, forklifts, molds, dies, stamps, motor vehicles (other than rolling stock or titled vehicles), other equipment of every kind and nature, trade fixtures and fixtures not forming a part of real property, together with all additions and accessions thereto, replacements therefor, all parts therefor, all substitutes for any of the foregoing, fuel therefor, and all manuals, drawings, instructions, warranties and rights with respect thereto, and all products and proceeds thereof and condemnation awards and insurance proceeds with respect thereto.

“Excluded Assets” means (i) all titled vehicles, railcars, rolling stock, Accounts, Non Facility General Intangibles and Books, Inventory, Investment Property, and Negotiable Collateral, (ii) all insurance proceeds relating to the assets described in clause (i) above, and (iii) all Proceeds of the assets described in clauses (i) and (ii) above.

“Facility Business” means the business conducted by the Borrowers at the Cherokee Site and the El Dorado Site.

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“Fixtures” means all “fixtures” as such term is defined in the UCC, now owned or hereafter acquired by any Grantor.

“General Intangibles” means all of Grantor’s now owned or hereafter acquired right, title, and interest with respect to “general intangibles” as that term is defined in the UCC (including contract rights, proprietary rights, rights arising under common law, statutes, or regulations, choses or things in action, goodwill, patents, trade names, trademarks, servicemarks, copyrights, blueprints, drawings, purchase orders, customer lists, route lists, rights to payment and other rights under any royalty or licensing agreements, infringement claims, computer programs, information contained on computer disks or tapes, software, literature, reports, and catalogs) and any and all supporting obligations in respect thereof.

“Grantor” and “Grantors” are defined in the preamble.

“Intellectual Property Collateral” means patents, patent rights, copyrights, works which are the subject matter of copyrights, trademarks, service marks, trade names, trade styles, patent applications, trademark applications and service mark applications, trade secrets, proprietary or confidential information, inventions (whether or not patented or patentable), technical information, procedures, designs, knowledge and know-how used in or necessary to the conduct of the Facility Business or the operation and maintenance of the Facility Assets from time to time, and any licenses and rights related to any of the foregoing, including without limitation, with respect to the Grantors, those patents, trademarks, service marks, trade names, and copyright registrations set forth on Schedule 3.4 to this Security Agreement and all other rights under any of the foregoing, all extensions, renewals, reissues, divisions, continuations, and continuations-in-part of any of the foregoing, and all rights to sue for past, present and future infringement of any of the foregoing.

“Inventory” means all Borrowers’ now owned or hereafter acquired right, title, and interest with respect to inventory, including goods held for sale or lease or to be furnished under a contract of service, goods that are leased by a Borrower as lessor, goods that are furnished by a Borrower under a contract of service, and raw materials, work in process, or materials used or consumed in a Borrower’s business.

“Investment Property” means all of Borrowers’ now owned or hereafter acquired right, title and interest with respect to “investment property” as that term is defined in the UCC, and any and all supporting obligations in respect thereof.

“Loan Agreement” is defined in the first recital.

“Negotiable Collateral” means all of Borrowers’ now owned or hereafter acquired right, title and interest with respect to letters of credit, letter of credit rights, instruments, promissory notes, drafts, documents and chattel paper (including electronic chattel paper and tangible chattel paper), and any and all supporting obligations in respect thereof.

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“Non Facility General Intangibles and Books” means General Intangibles and Books of Borrowers, but excluding all (i) Cherokee General Intangibles, (ii) El Dorado General Intangibles and (iii) Intellectual Property Collateral.2

“Proceeds” has the meaning set forth in Article 9 of the UCC.

“Security Agreement” is defined in the preamble.

SECTION 1.2. Loan Agreement Definitions. Unless otherwise defined herein or the context otherwise requires, terms used in this Security Agreement, including its preamble and recitals, have the meanings provided in the Loan Agreement.

ARTICLE II

SECURITY INTEREST

SECTION 2.1. Grant of Security Interest. Each Grantor hereby grants to the Collateral Agent, for its benefit and the ratable benefit of each other Secured Party, a continuing security interest in all of such Grantor’s following property, whether now or hereafter existing, owned or acquired by such Grantor, and wherever located (collectively, the “Collateral”):

(a) the Cherokee Collateral;

(b) the El Dorado Collateral;

(c) all books, records, writings, databases, information and other property relating to or used in connection with, evidencing, embodying, incorporating or referring to, any of the foregoing in this Section or the Facility Business; and

(d) all Proceeds of the foregoing and, to the extent not otherwise included,

(i) all payments under insurance (whether or not the Collateral Agent is the loss payee thereof) and (ii) all tort claims relating to the foregoing.

Notwithstanding anything hereto the contrary, the Collateral shall not include any of the Excluded Assets.

SECTION 2.2. Security for Obligations. This Security Agreement and the Collateral in which the Collateral Agent for the benefit of the Secured Parties is granted a security interest hereunder by the Grantors secure the payment and performance of all of the Obligations.

SECTION 2.3. Grantors Remain Liable. Anything herein to the contrary notwithstanding:

__________________________________

2 Note to Foothill: As we discussed, to the extent that any books, records or intellectual property items are carved out of your collateral by clauses (i), (ii) and (iii), Foothill is given access and a license to use these items in the Inter-Lender Agreement.

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(a) the Grantors will remain liable under the contracts and agreements included in the Collateral to the extent set forth therein, and will perform all of their duties and obligations under such contracts and agreements to the same extent as if this Security Agreement had not been executed;

(b) the exercise by the Collateral Agent of any of its rights hereunder will not release any Grantor from any of its duties or obligations under any such contracts or agreements included in the Collateral; and

(c) no Secured Party will have any obligation or liability under any contracts or agreements included in the Collateral by reason of this Security Agreement, nor will any Secured Party be obligated to perform any of the obligations or duties of any Grantor thereunder or to take any action to collect or enforce any claim for payment assigned hereunder.

SECTION 2.4. Security Interest Absolute, etc. This Security Agreement shall in all respects be a continuing, absolute, unconditional and irrevocable grant of security interest, and shall remain in full force and effect until the Obligations have been indefeasibly paid in full. All rights of the Secured Parties and the security interests granted to the Collateral Agent (for its benefit and the ratable benefit of each other Secured Party) hereunder, and all obligations of the Grantors hereunder, shall, in each case, be absolute, unconditional and irrevocable irrespective of:

(a) any lack of validity, legality or enforceability of any Loan Document;

(b) the failure of any Secured Party (i) to assert any claim or demand or to enforce any right or remedy against any Loan Party or any other Person (including any other Grantor) under the provisions of any Loan Document or otherwise, or (ii) to exercise any right or remedy against any other guarantor (including any other Grantor) of, or collateral securing, any Obligations;

(c) any change in the time, manner or place of payment of, or in any other term of, all or any part of the Obligations, or any other extension, compromise or renewal of any Obligations;

(d) any reduction, limitation, impairment or termination of any Obligations for any reason, including any claim of waiver, release, surrender, alteration or compromise, and shall not be subject to (and each Grantor hereby waives any right to or claim of) any defense or setoff, counterclaim, recoupment or termination whatsoever by reason of the invalidity, illegality, nongenuineness, irregularity, compromise, unenforceability of, or any other event or occurrence affecting, any Obligations or otherwise;

(e) any amendment to, rescission, waiver, or other modification of, or any consent to or departure from, any of the terms of any Loan Document;

(f) any addition, exchange or release of any collateral or of any Person that is (or will become) a grantor (including the Grantors hereunder) of the Obligations, or any surrender or non-perfection of any collateral, or any amendment to or waiver or release or addition to, or consent to or departure from, any other guaranty held by any Secured Party securing any of the Obligations; or

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(g) any other circumstance which might otherwise constitute a defense available to, or a legal or equitable discharge of, any Loan Party, any surety or any guarantor.

SECTION 2.5. Postponement of Subrogation. Each Grantor agrees that it will not exercise any rights against another Grantor which it may acquire by way of rights of subrogation under any Loan Document to which it is a party until the Indefeasible Payment and Performance of All Obligations has occurred. No Grantor shall seek or be entitled to seek any contribution or reimbursement from any Loan Party, in respect of any payment made under any Loan Document, until after the Indefeasible Payment and Performance of All Obligations has occurred. Any amount paid to such Grantor on account of any such subrogation rights prior to the indefeasible payment in full of the Obligations shall be held in trust for the benefit of the Secured Parties and shall immediately be paid and turned over to the Collateral Agent for the benefit of the Secured Parties in the exact form received by such Grantor (duly endorsed in favor of the Collateral Agent, if required), to be credited and applied against the Obligations, whether matured or unmatured, in accordance with Section 6.1. In furtherance of the foregoing, at all times prior to the Indefeasible Payment and Performance of All Obligations, such Grantor shall refrain from taking any action or commencing any proceeding against any Loan Party (or its successors or assigns, whether in connection with a bankruptcy proceeding or otherwise) to recover any amounts in respect of payments made under this Security Agreement to any Secured Party. The foregoing provisions of this Section 2.5 are in addition to and not by way of limitation of the provisions set forth in Article XI of the Loan Agreement.

ARTICLE III

REPRESENTATIONS AND WARRANTIES

In order to induce the Secured Parties to enter into the Loan Agreement and make the Term Loans, the Grantors represent and warrant to each Secured Party as of the date hereof, the date of the Borrowing Notice and the Borrowing Date, as set forth below.

SECTION 3.1. Grantor Name, Location, etc.

(a) The jurisdiction in which each Grantor is located for purposes of Sections 9-301 and 9-307 of the UCC is set forth in Part A of Schedule 3.1.

(b) Each location a secured party would have filed a UCC financing statement in the five years prior to the date hereof to perfect a security interest in Equipment and General Intangibles owned by such Grantor is set forth in Part B of Schedule 3.1.

(c) The Grantors do not have any trade names (other than the respective corporate names of the Grantors except to the extent such names or portions thereof are used in any other trade names) other than those set forth in Part C of Schedule 3.1.

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(d) During the four months preceding the date hereof, no Grantor has been known by any legal name different from the one set forth on the signature page hereto, nor has such Grantor been the subject of any merger or other corporate reorganization, except as set forth in Part D of Schedule 3.1 hereto.

(e) Each Grantor’s federal taxpayer identification number is (and, during the four months preceding the date hereof, such Grantor has not had a federal taxpayer identification number different from that) set forth in Part E of Schedule 3.1 hereto.

(f) The name set forth on the signature page attached hereto is the true and correct legal name (as defined in the UCC) of each Grantor.

SECTION 3.2. Ownership, No Liens, etc. Each Grantor has rights in or the power to transfer the Collateral, and owns its Collateral free and clear of any Lien, except for any security interest (a) created by this Security Agreement or (b) that is a Permitted Encumbrance. No effective UCC financing statement or other filing similar in effect (other than Permitted Encumbrances solely with respect to a filing similar in effect) covering all or any part of the Collateral is on file in any recording office, except those filed in favor of the Collateral Agent relating to this Security Agreement or as to which a duly authorized termination statement relating to such UCC financing statement or other instrument has been delivered to the Collateral Agent on the Closing Date. There are no parties to the Intercompany Leases other than the Grantors.

SECTION 3.3. Possession of Equipment. Each Grantor has, and agrees that it will maintain, exclusive possession of its Equipment constituting Collateral, other than (i) Equipment in transit in the ordinary course of business and (ii) Equipment that is in the possession or control of a warehouseman, bailee agent or other Person (other than a Person controlled by or under common control with the applicable Grantor) which other Person holds such Equipment in the ordinary course of its business for purposes of repairing or maintaining such Equipment. In the case of Equipment described in clause (ii) above, no lessor or warehouseman of any premises or warehouse upon or in which such Equipment is located has (i) issued any warehouse receipt or other receipt in the nature of a warehouse receipt in respect of any such Equipment, (ii) issued any document for any such Equipment, (iii) received notification of any Secured Party’s interest (other than the security interest granted hereunder) in any such Equipment or (iv) any Lien on any such Equipment.

SECTION 3.4. Intellectual Property Collateral.

(a) In respect of the Intellectual Property Collateral:

(i) set forth in Part A of Schedule 3.4 hereto is a complete and accurate list of all issued and applied-for patents and all patent licenses owned by each Grantor and used in or necessary to the conduct of the Facility Business or the operation of the Facility Assets, including those that have been issued by or are on file with the United States Patent and Trademark Office;

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(ii) set forth in Part B of Schedule 3.4 hereto is a complete and accurate list all registered and applied-for trademarks and all trademark licenses owned by each Grantor and used in or necessary to the conduct of the Facility Business or the operation of the Facility Assets, including those that are registered, or for which an application for registration has been made, with the United States Patent and Trademark Office;

(iii) set forth in Part C of Schedule 3.4 hereto is a complete and accurate list of all registered and applied-for copyrights and all copyright licenses owned by each Grantor and used in or necessary to the conduct of the Facility Business or the operation of the Facility Assets, including those that are registered, or for which an application for registration has been made, with the United States Copyright Office;

(iv) the Grantors are the sole and exclusive owners of the entire and unencumbered rights, title and interest in and to the Intellectual Property Collateral (except for the Permitted Encumbrances), and no claim has been made that any such Grantor is or may be, in conflict with, infringing, misappropriating, diluting, misusing or otherwise violating any of the rights of any third party or that challenges the ownership, use, protectability, registerability, validity, enforceability of any Intellectual Property Collateral and, to such Grantor’s knowledge, there is no valid basis for any such claims, and the Grantors have not licensed the Intellectual Property Collateral to any Affiliates or any third parties.

(b) In respect of each Grantor:

(i) the Intellectual Property Collateral owned by it is valid, subsisting, and enforceable and has not been abandoned or adjudged invalid or unenforceable, in whole or in part, and no consents from third parties are required in connection with the collateral assignment to the Collateral Agent of any licenses constituting Intellectual Property Collateral;

(ii) such Grantor has made all necessary filings and recordings, including recordings in the United States Patent and Trademark Office and the United States Copyright Office, as appropriate, to protect its interest in (x) the Intellectual Property Collateral that is set forth in Part B of Schedule 3.4 and (y) all other Intellectual Property used in or necessary to the conduct of the Facility Business or the operation of the Facility Assets, which in the case of clause (y) would have a Material Adverse Effect if Grantor failed to make such filings or recordings;

(iii) no action by such Grantor is currently pending or threatened in writing which asserts that any third party is infringing, misappropriating, diluting, misusing or voiding any Intellectual Property Collateral and, to such Grantor’s knowledge, no third party is infringing upon, misappropriating, diluting, misusing or voiding any Intellectual Property Collateral owned or used by such Grantor in any material respect, or any of its respective licensees;

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(iv) no settlement or consents, covenants not to sue, nonassertion assurances, or releases have been entered into by such Grantor or to which such Grantor is bound that adversely affects its rights to own or use any Intellectual Property Collateral;

(v) such Grantor has executed and delivered to the Collateral Agent, Intellectual Property Collateral security agreements for all Intellectual Property Collateral owned by such Grantor;

(vi) the consummation of the transactions contemplated by the Loan Agreement and this Security Agreement will not result in the termination or material impairment of any of the Intellectual Property Collateral;

(vii) such Grantor owns directly or is entitled to use by license or otherwise, all Intellectual Property used in, or necessary for or of importance to the business conducted at the Cherokee Plant and the El Dorado Plant.

SECTION 3.5. Validity, etc.

(a) This Security Agreement creates a valid security interest in the Collateral securing the payment of the Obligations.

(b) Each Grantor has filed or caused to be filed all UCC-1 financing statements in the filing office for each Grantor’s jurisdiction of organization listed in Part A of Schedule 3.1 (collectively, the “Financing Statements”) (or has authenticated and delivered to the Collateral Agent the Financing Statements suitable for filing in such offices) and has taken all other:

(i) actions necessary to obtain control of the Collateral as provided in Sections 9-104, 9-105, 9-106 and 9-107 of the UCC in accordance with Article IV; and

(ii) actions necessary to perfect the Collateral Agent’s security interest with respect to any Collateral evidenced by a certificate of ownership.

(c) Upon the filing of the Financing Statements with the appropriate agencies therefor the security interests created under this Security Agreement shall constitute a perfected first priority security interest in the Collateral described on such Financing Statements in favor of the Collateral Agent on behalf of the Secured Parties to the extent that a security interest therein may be perfected by filing pursuant to the relevant UCC, subject only to Permitted Encumbrances.

SECTION 3.6. Authorization, Approval, etc. Except as have been obtained or made and are in full force and effect, no authorization, approval or other action by, and no notice to or filing with, any Governmental Authority, except for the Assignments and Consents to be delivered pursuant to Section 4.01(a)(iii)(D) of the Loan Agreement, or any other third party is required either

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(a) for the grant by the Grantors of the security interest granted hereby or for the execution, delivery and performance of this Security Agreement by the Grantors;

(b) for the perfection or maintenance of the security interests hereunder including the first priority nature of such security interest (except with respect to the Financing Statements or UCC-3 Continuation Statements required to be filed in the future with respect thereof or, with respect to Intellectual Property Collateral, the recordation of any agreements with the United States Patent and Trademark Office or the United States Copyright Office) or the exercise by the Collateral Agent of its rights and remedies hereunder; or

ARTICLE IV

COVENANTS

Each Grantor covenants and agrees that, until the indefeasible payment in full of the Obligations, such Grantor will perform, comply with and be bound by the obligations set forth below.

SECTION 4.1. Change of Name, etc. No Grantor will change its name or place of incorporation or organization or federal taxpayer identification number except upon 30 days’ prior written notice to the Collateral Agent.

SECTION 4.2. Equipment.

(a) Each Grantor shall promptly inform the Collateral Agent of any material additions to or deletions from its Equipment constituting Collateral. No Grantor shall permit any of its Equipment constituting Collateral to become a Fixture with respect to real property or to become an accession with respect to other personal property with respect to which real or personal property the Collateral Agent does not have a Lien except as provided for in the final paragraph of Section 7.01 of the Loan Agreement. No Grantor will, without the Collateral Agent’s prior written consent, alter or remove any identifying symbol or number on any of such Grantor’s Equipment constituting Collateral.

(b) Except as set forth in the Loan Agreement, no Grantor shall, without the Collateral Agent’s prior written consent, sell, license, lease as a lessor, or otherwise dispose of any of the Grantor’s Equipment.

SECTION 4.3. As to Intellectual Property Collateral. Each Grantor covenants and agrees to comply with the following provisions as such provisions relate to any Intellectual Property Collateral used in or necessary to the conduct of the Facility Business or the operation of the Facility Assets:

(a) such Grantor shall not (i) do or fail to perform any act whereby any of the patents or patent licenses may lapse or become abandoned or dedicated to the public or

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unenforceable, (ii) itself or permit any of its licensees to (A) fail to continue to use any of the trademarks, trade names or trademark licenses in order to maintain the Intellectual Property Collateral in full force free from any claim of abandonment for non-use, (B) fail to maintain as in the past the quality of products and services offered under the trademarks, trade names or trademark licenses, or (C) do or permit any act or knowingly omit to do any act whereby any of the trademarks, trade names or trademark licenses may lapse or become invalid or unenforceable, or (iii) do or permit any act or knowingly omit to do any act whereby any of the copyrights or copyright licenses or any of the trade secrets may lapse or become invalid or unenforceable or placed in the public domain except upon expiration of the end of an unrenewable term of a registration thereof, unless, in the case of any of the foregoing requirements in clauses (i), (ii) and (iii), such Grantor shall reasonably and in good faith determine that any of such Intellectual Property Collateral is of negligible economic value to such Grantor or is no longer used in or necessary to the conduct of the Facility Business or the operation of the Facility Assets, and the loss of such Intellectual Property Collateral would not have a Material Adverse Effect on the business;

(b) such Grantor shall promptly notify the Collateral Agent if it knows, or reasonably suspects, that any application or registration relating to any material item of the Intellectual Property Collateral may become abandoned or dedicated to the public or placed in the public domain or invalid or unenforceable, or of any adverse determination or development (including the institution of, or any such determination or development in, any proceeding in the United States Patent and Trademark Office, the United States Copyright Office or any foreign counterpart thereof or any court) regarding such Grantor’s ownership of any Intellectual Property Collateral, its right to register the same or to keep and maintain and enforce the same except with respect to such Intellectual Property which such Grantor reasonably determines is of negligible economic value to such Guarantor or is no longer used in or necessary to the conduct of the Facility Business or the operation of the Facility Assets;

(c) such Grantor shall notify Collateral Agent within a reasonable period (i) of such Grantor or any of its agents, employees, designees or licensees filing an application for the registration of any patent or trademark constituting Intellectual Property Collateral with the United States Patent and Trademark Office or (ii) of such Grantor receiving, as owner or exclusive licensee, a copyright registration constituting Intellectual Property Collateral with the United States Copyright Office, and upon request of the Collateral Agent, promptly execute and deliver the Trademark Security Agreement and other documents as the Collateral Agent may request to evidence the Collateral Agent’s security interest in such Intellectual Property Collateral;

(d) except as permitted under clause (a) and (b) above, such Grantor shall take all reasonable steps, including in any proceeding before the United States Patent and Trademark Office, the United States Copyright Office, to maintain and pursue any application (and to obtain the relevant registration) filed with respect to, and to maintain any registration of, the Intellectual Property Collateral, including the filing of applications for renewal, affidavits of use, affidavits of incontestability and opposition, interference and cancellation proceedings and the payment of fees and taxes; and

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(e) such Grantor shall promptly, but within sixty (60) days, after it obtains an ownership interest in any patent or trademark constituting Intellectual Property Collateral, execute and deliver to the Collateral Agent an IP Security Agreement, and Grantor shall promptly, but within thirty (30) days, after it obtains an ownership interest or an exclusive license in any copyright constituting Intellectual Property Collateral, execute and deliver to the Collateral Agent an IP Security Agreement, and in each case such Grantor shall execute and deliver to the Collateral Agent any other document required to acknowledge or register, record or perfect the Collateral Agent’s interest in any part of such item of Intellectual Property Collateral unless such Grantor shall determine in good faith using its commercially reasonable business judgment that any such Intellectual Property Collateral is not material and is of negligible economic value to such Grantor.

SECTION 4.4. Further Assurances, etc. Each Grantor agrees that, (i) from time to time at its own expense, it will promptly execute and deliver all further instruments and documents, and take all further action, that may be necessary or that the Collateral Agent may request, in order to perfect, preserve and protect any security interest granted or purported to be granted hereby or to enable the Collateral Agent to exercise and enforce its rights and remedies hereunder with respect to any Collateral. Without limiting the generality of the foregoing, such Grantor will

(a) file (and hereby authorize the Collateral Agent to file) such Financing Statements or continuation statements, or amendments thereto, and such other instruments or notices, as may be necessary or that the Collateral Agent may request in order to perfect and preserve the security interests and other rights granted or purported to be granted to the Collateral Agent hereby; and

(b) furnish to the Collateral Agent, from time to time at the Collateral Agent’s request, statements and schedules further identifying and describing the Collateral and such other reports in connection with the Collateral as the Collateral Agent may request, all in reasonable detail.

With respect to the foregoing and the grant of the security interest hereunder, each Grantor hereby authorizes the Collateral Agent to file one or more financing or continuation statements, and amendments thereto, relative to all or any part of the Collateral; and to make all relevant filings with the United States Patent and Trademark Office and the United States Copyright Office in respect of the Intellectual Property Collateral. Each Grantor agrees that a carbon, photographic or other reproduction of this Security Agreement or any UCC financing statement covering the Collateral or any part thereof shall be sufficient as a UCC financing statement where permitted by law.

ARTICLE V

THE COLLATERAL AGENT

SECTION 5.1. Collateral Agent Appointed Attorney-in-Fact. Each Grantor hereby irrevocably appoints the Collateral Agent its attorney-in-fact, with full authority in the place and stead of such Grantor and in the name of such Grantor or otherwise, from time to time in the

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Collateral Agent’s discretion, following the occurrence and during the continuance of an Event of Default, to take any action and to execute any instrument which the Collateral Agent may deem necessary or advisable to accomplish the purposes of this Security Agreement, including:

(a) to ask, demand, collect, sue for, recover, compromise, receive and give acquittance and receipts for moneys due and to become due under or in respect of any of the Collateral;

(b) to receive, endorse, and collect any drafts or other instruments, documents and chattel paper, in connection with clause (a) above;

(c) to file any claims or take any action or institute any proceedings which the Collateral Agent may deem necessary or desirable for the collection of any of the Collateral or otherwise to enforce the rights of the Collateral Agent with respect to any of the Collateral; and

(d) to perform the affirmative obligations of such Grantor hereunder.

Each Grantor hereby acknowledges, consents and agrees that the power of attorney granted pursuant to this Section is irrevocable and coupled with an interest.

SECTION 5.2. Grant of License to Use Intellectual Property Collateral. For the purpose of enabling Collateral Agent to exercise rights and remedies under Article VI hereof (including, without limiting the terms of Article VI hereof, in order to take possession of, hold, preserve, process, assemble, prepare for sale, market for sale, sell or otherwise dispose of Collateral) at such time as Collateral Agent shall be lawfully entitled to exercise such rights and remedies, each Grantor hereby grants to Collateral Agent, for the benefit of Collateral Agent and Lenders, which shall be effective upon the occurrence of an Event of Default and during the continuance thereof, an irrevocable, nonexclusive license (exercisable without payment of royalty or other compensation to such Grantor) to use, license or sublicense any Intellectual Property Collateral now owned or hereafter acquired by such Grantor, and wherever the same may be located, and including in such license access to all media in which any of the licensed items may be recorded or stored and to all computer software and programs used for the compilation or printout thereof.

SECTION 5.3. Collateral Agent Has No Duty. The powers conferred on the Collateral Agent hereunder are solely to protect its interest (on behalf of the Secured Parties) in the Collateral and shall not impose any duty on it to exercise any such powers. Except for reasonable care of any Collateral in its possession and the accounting for moneys actually received by it hereunder, the Collateral Agent shall have no duty as to any Collateral or responsibility for taking any necessary steps to preserve rights against prior parties or any other rights pertaining to any Collateral.

ARTICLE VI

REMEDIES

SECTION 6.1. Certain Remedies. If any Event of Default shall have occurred and be continuing:

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(a) The Collateral Agent may exercise in respect of the Collateral, in addition to other rights and remedies provided for herein or otherwise available to it, all the rights and remedies of a Secured Party on default under the UCC (whether or not the UCC applies to the affected Collateral) and also may

(i) take possession of any Collateral not already in its possession without demand and without legal process;

(ii) require each Grantor to, and each Grantor hereby agrees that it will, at its expense and upon request of the Collateral Agent forthwith, assemble all or part of the Collateral as directed by the Collateral Agent and make it available to the Collateral Agent at a place to be designated by the Collateral Agent that is reasonably convenient to both parties,

(iii) enter onto the property where any Collateral is located and take possession thereof without demand and without legal process;

(iv) without notice except as specified below, lease, license, sell or otherwise dispose of the Collateral or any part thereof in one or more parcels at public or private sale, at any of the Collateral Agent’s offices or elsewhere, for cash, on credit or for future delivery, and upon such other terms as the Collateral Agent may deem commercially reasonable. Each Grantor agrees that, to the extent notice of sale shall be required by law, at least ten days’ prior notice to such Grantor of the time and place of any public sale or the time after which any private sale is to be made shall constitute reasonable notification. The Collateral Agent shall not be obligated to make any sale of Collateral regardless of notice of sale having been given. The Collateral Agent may adjourn any public or private sale from time to time by announcement at the time and place fixed therefor, and such sale may, without further notice, be made at the time and place to which it was so adjourned.

(b) All cash Proceeds received by the Collateral Agent in respect of any sale of, collection from, or other realization upon, all or any part of the Collateral shall be applied by the Collateral Agent against, all or any part of the Obligations as set forth in Section 8.03 of the Loan Agreement.

(i) transfer all or any part of the Collateral into the name of the Collateral Agent or its nominee, with or without disclosing that such Collateral is subject to the Lien hereunder,

(ii) notify the parties obligated on any of the Collateral to make payment to the Collateral Agent of any amount due or to become due thereunder,

(iii) enforce collection of any of the Collateral by suit or otherwise, and surrender, release or exchange all or any part thereof, or compromise or extend or

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renew for any period (whether or not longer than the original period) any obligations of any nature of any party with respect thereto,

(iv) endorse any checks, drafts, or other writings in any Grantor’s name to allow collection of the Collateral,

(v) take control of any Proceeds of the Collateral, and

(vi) execute (in the name, place and stead of any Grantor) endorsements, assignments and other instruments of conveyance or transfer with respect to all or any of the Collateral.

(d) Without limiting the foregoing, in respect of the Intellectual Property Collateral:

(i) upon the request of the Collateral Agent, each Grantor shall execute and deliver to the Collateral Agent an assignment or assignments of the Intellectual Property Collateral, subject (in the case of any licenses thereunder) to any valid and enforceable requirements to obtain consents from any third parties, and such other documents as are necessary or appropriate to carry out the intent and purposes hereof;

(ii) each Grantor agrees that the Collateral Agent may file applications and maintain registrations for the protection of the Intellectual Property Collateral and/or bring suit in the name of such Grantor, the Collateral Agent or any Secured Party to enforce the Intellectual Property Collateral and any licenses thereunder and, upon the request of the Collateral Agent, each Grantor shall use all commercially reasonable efforts to assist with such filing or enforcement (including the execution of relevant documents); and

(iii) in the event that the Collateral Agent elects not to make any filing or bring any suit as set forth in clause (ii), each Grantor shall, upon the request of Collateral Agent, use all commercially reasonable efforts, whether through making appropriate filings or bringing suit or otherwise, to protect, enforce and prevent the infringement, misappropriation, dilution, unauthorized use or other violation of the Intellectual Property Collateral.

Notwithstanding the foregoing provisions of this Section 6.1, for the purposes of this Section 6.1, “Collateral” and “Intellectual Property Collateral” shall include any “intent to use” trademark application only to the extent (i) that the business of such Grantor, or portion thereof, to which that mark pertains is also included in the Collateral and (ii) that such business is ongoing and existing.

SECTION 6.2. Compliance with Restrictions. Each Grantor agrees that in any sale of any of the Collateral whenever an Event of Default shall have occurred and be continuing, the Collateral Agent is hereby authorized to comply with any limitation or restriction in connection with such sale as it may be advised by counsel is necessary in order to avoid any violation of applicable law (including compliance with such procedures as may restrict the number of

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prospective bidders and purchasers, require that such prospective bidders and purchasers have certain qualifications, and restrict such prospective bidders and purchasers to Persons who will represent and agree that they are purchasing for their own account for investment and not with a view to the distribution or resale of such Collateral), or in order to obtain any required approval of the sale or of the purchaser by any Governmental Authority or official, and such Grantor further agrees that such compliance shall not result in such sale being considered or deemed not to have been made in a commercially reasonable manner, nor shall the Collateral Agent be liable nor accountable to such Grantor for any discount allowed by the reason of the fact that such Collateral is sold in compliance with any such limitation or restriction.

SECTION 6.3. Protection of Collateral. The Collateral Agent may from time to time, at its option (a) perform any act which any Grantor fails to perform after being requested in writing so to perform (it being understood that no such request need be given after the occurrence and during the continuance of an Event of Default) and (b) take any other action which the Collateral Agent deems necessary for the maintenance, preservation or protection of any of the Collateral or of its security interest therein and, in each case, the expenses of the Collateral Agent incurred in connection therewith shall be payable by such Grantor pursuant to Section 11.04 of the Loan Agreement.

ARTICLE VII

MISCELLANEOUS PROVISIONS

SECTION 7.1. Loan Document. This Security Agreement is a Loan Document executed pursuant to the Loan Agreement and shall (unless otherwise expressly indicated herein) be construed, administered and applied in accordance with the terms and provisions thereof, including Article XI thereof.

SECTION 7.2. Binding on Successors, Transferees and Assigns; Assignment. This Security Agreement shall remain in full force and effect until the indefeasible payment in full of the Obligations has occurred, shall be binding upon the Grantors and their successors, transferees and assigns and shall inure to the benefit of and be enforceable by each Secured Party and its successors, transferees and assigns; provided that no Grantor may (unless otherwise permitted under the terms of the Loan Agreement or this Security Agreement) assign any of its obligations hereunder without the prior written consent of all Lenders.

SECTION 7.3. Amendments, etc. No amendment to or waiver of any provision of this Security Agreement, nor consent to any departure by any Grantor from its obligations under this Security Agreement, shall in any event be effective unless the same shall be in writing and signed by the Collateral Agent (on behalf of the Lenders or the Required Lenders, as the case may be, pursuant to Section 11.01 of the Loan Agreement) and the Grantors and then such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given.

SECTION 7.4. Notices. All notices and other communications provided for hereunder shall be in writing or by facsimile and addressed, delivered or transmitted to the appropriate party at the address or facsimile number of such party specified in the Loan Agreement in accordance with the notice provisions set forth in the Loan Agreement.

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SECTION 7.5. Release of Liens and Termination of Rights. Upon (a) the Disposition of Collateral in accordance with the Loan Agreement or (b) the Indefeasible Payment and Performance of All Obligations, the security interests granted herein and the power of attorney and license granted pursuant to Sections 5.1, 5.2 and 5.3 shall automatically terminate with respect to (i) such Collateral (in the case of clause (a)) or (ii) all Collateral (in the case of clause (b)), without delivery of any instrument or performance of any act by any party. Upon any such Disposition or termination, the Collateral Agent will, at the Grantors’ sole expense, deliver to the Grantors, without any representations, warranties or recourse of any kind whatsoever, all Collateral held by the Collateral Agent hereunder, and execute and deliver to the Grantors such documents as the Grantors shall reasonably request to evidence such termination. This Section 7.5 is in addition to and without limitation of Grantors rights as set forth in the final paragraph of Section 7.01 of the Loan Agreement.

SECTION 7.6. No Waiver; Remedies. No failure on the part of any Secured Party to exercise, and no delay in exercising, any right hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any right hereunder preclude any other or further exercise thereof or the exercise of any other right. The remedies herein provided are cumulative and not exclusive of any remedies provided by law.

SECTION 7.7. Headings. The various headings of this Security Agreement are inserted for convenience only and shall not affect the meaning or interpretation of this Security Agreement or any provisions thereof.

SECTION 7.8. Severability. Any provision of this Security Agreement which is prohibited or unenforceable in any jurisdiction shall, as to such provision and such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions of this Security Agreement or affecting the validity or enforceability of such provision in any other jurisdiction.

SECTION 7.9. Governing Law, Entire Agreement, etc. THIS SECURITY AGREEMENT SHALL BE DEEMED TO BE A CONTRACT MADE UNDER AND GOVERNED BY THE INTERNAL LAWS OF THE STATE OF NEW YORK (INCLUDING FOR SUCH PURPOSE SECTIONS 5-1401 AND 5-1402 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK). This Security Agreement and the other Loan Documents constitute the entire understanding among the parties hereto with respect to the subject matter hereof and thereof and supersede any prior agreements, written or oral, with respect thereto.

SECTION 7.10. Forum Selection and Consent to Jurisdiction. ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH, ANY LOAN DOCUMENT, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER ORAL OR WRITTEN) OR ACTIONS OF THE COLLATERAL AGENT, THE ADMINISTRATIVE AGENT, THE LENDERS OR ANY GRANTOR IN CONNECTION HEREWITH OR THEREWITH MAY BE BROUGHT AND MAINTAINED IN THE COURTS OF THE STATE OF NEW YORK OR IN THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK; PROVIDED THAT ANY SUIT SEEKING ENFORCEMENT AGAINST ANY PROPERTY MAY BE BROUGHT,

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AT THE COLLATERAL AGENT’S OPTION, IN THE COURTS OF ANY JURISDICTION WHERE SUCH PROPERTY MAY BE FOUND. EACH GRANTOR HEREBY EXPRESSLY AND IRREVOCABLY SUBMITS TO THE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK, NEW YORK COUNTY AND OF THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK FOR THE PURPOSE OF ANY SUCH LITIGATION AS SET FORTH ABOVE AND IRREVOCABLY AGREES TO BE BOUND BY ANY JUDGMENT RENDERED THEREBY IN CONNECTION WITH SUCH LITIGATION. EACH GRANTOR IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS BY REGISTERED MAIL, POSTAGE PREPAID, OR BY PERSONAL SERVICE WITHIN OR WITHOUT THE STATE OF NEW YORK AT THE ADDRESS FOR NOTICES SPECIFIED FOR THE BORROWER IN SECTION 10.2 OF THE LOAN AGREEMENT. EACH GRANTOR HEREBY EXPRESSLY AND IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY HAVE OR HEREAFTER MAY HAVE TO THE LAYING OF VENUE OF ANY SUCH LITIGATION BROUGHT IN ANY SUCH COURT REFERRED TO ABOVE AND ANY CLAIM THAT ANY SUCH LITIGATION HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. TO THE EXTENT THAT ANY GRANTOR HAS OR HEREAFTER MAY ACQUIRE ANY IMMUNITY FROM JURISDICTION OF ANY COURT OR FROM ANY LEGAL PROCESS (WHETHER THROUGH SERVICE OR NOTICE, ATTACHMENT PRIOR TO JUDGMENT, ATTACHMENT IN AID OF EXECUTION OR OTHERWISE) WITH RESPECT TO ITSELF OR ITS PROPERTY, SUCH GRANTOR HEREBY IRREVOCABLY WAIVES TO THE FULLEST EXTENT PERMITTED BY LAW SUCH IMMUNITY IN RESPECT OF ITS OBLIGATIONS UNDER THE LOAN DOCUMENTS.

SECTION 7.11. Counterparts. This Security Agreement may be executed by the parties hereto in several counterparts, each of which shall be deemed to be an original and all of which shall constitute together but one and the same agreement. Delivery of an executed counterpart of a signature page to this Security Agreement by facsimile or via other electronic means shall be effective as delivery of a manually executed counterpart of this Security Agreement.

SECTION 7.12. Reinstatement. This Security Agreement shall remain in full force and effect and continue to be effective should any petition be filed by or against any Grantor for liquidation or reorganization, should any Grantor become insolvent or make an assignment for the benefit of any creditor or creditors or should a receiver or trustee be appointed for all or any significant part of any Grantor’s assets, and shall continue to be effective or be reinstated, as the case may be, if at any time payment and performance of the Obligations, or any part thereof, is, pursuant to applicable law, rescinded or reduced in amount, or must otherwise be restored or returned by any obligee of the Obligations, whether as a “voidable preference,” “fraudulent conveyance,” or otherwise, all as though such payment or performance has not been made. In the event that any payment, or any part thereof, is rescinded, reduced, restored or returned, the Obligations shall be reinstated and deemed reduced only by such amount paid and not so rescinded, reduced, restored or returned.

Remainder of page intentionally left blank.

Signatures on following page.

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IN WITNESS WHEREOF, each of the parties hereto has caused this Security Agreement to be duly executed and delivered by its authorized officer as of the date first above written.

CHEROKEE NITROGEN HOLDINGS, INC., an Oklahoma corporation

By: _________________________________

Name:

Title:

NORTHWEST FINANCIAL CORPORATION, an Oklahoma corporation

By: _________________________________

Name:

Title:

CHEROKEE NITROGEN COMPANY, an Oklahoma corporation

By: _________________________________

Name:

Title:

DSN CORPORATION, an Oklahoma corporation

By: _________________________________

Name:

Title:

SIGNATURE PAGES TO SECURITY AGRE

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EL DORADO CHEMICAL COMPANY, an Oklahoma corporation

By: _________________________________

Name:

Title:

BANC OF AMERICA LEASING & CAPITAL LLC, as Collateral Agent

By: _________________________________

Name:

Title:

SIGNATURE PAGES TO SECURITY AGREEMENT

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SCHEDULE 1.1(a)

to Security Agreement

Part A – Cherokee Facility

The major personal property assets identified at this facility include a concrete dome prill storage facility with a storage capacity of 14,000 tons; a Kellogg 500 ton per day (“TPD”) rated capacity ammonia processing plant including six (6) compressors and sixteen (16) heat exchangers; Chemical Industrial Engineers 300 TPD nitric acid plant #1 which include two (2) air compressors and two (2) 38 ft high absorption towers; a D.M. Weatherly Company 500 TPD nitric acid plant #2 w/ 60 ft high absorption tower and steam turbine; two (2) Mississippi Chemical designed 830 TPD ammonium nitrate neutralizers including four (4) storage tanks and a truck load-out; a 430 TPD high density ammonium nitrate prilling operation consisting of a prill tower, a prill fattening operation, elevators, conveyors, sizing equipment, an environmental scrubber, bagging equipment, and climate control storage; a Technip designed 275 TPD UREA plant with an 83% ammonium nitrate mixing operation for urea ammonium nitrate (UAN) production and including a high pressure reactor, four (4) storage tanks, a barge, truck and rail load-out; other plant infrastructure and support equipment including a pollution control and irrigation system, cooling towers, a de-alkalizer; barge unloading equipment, storage tanks, forklift trucks, an auxiliary boiler, a de-aerator system, product storage tanks, air compressors, electrical power and distribution equipment including substations, transformers, and motor control centers, steam water facilities, process plant piping, various pumps, office furniture and equipment, and general plant equipment.

Part B – El Dorado Facility

The major personal property assets identified at this facility include a 285 ton per day (“TPD”) rated capacity UHDE direct strong nitric acid processing plant; a Chemical & Industrial Corporation (C&I Girdler/Chemico) East/West 750 TPD weak nitric acid plant with two (2) parallel trains (375 TPD each); a D.M. Weatherly 350 TPD nitric acid plant; a KT 600 TPD low density ammonium nitrate prill plant (capacity increased to 860 TPD); a Chemical & Industrial Corporation (C&I Girdler/Chemico) 1,100 TPD E2 high density ammonium nitrate prill plant with neutralizer; a Chemico 360 TPD sulfuric acid plant; a 100 TPD mixed acid plant; other plant infrastructure and support equipment includes a CB&I tank farm with ten (10) ammonia storage spheres, a refrigerated ammonia tank, and six (6) other ammonia nitrate solution storage tanks; a plant steam production system with two (2) Babcock & Wilcox processing boilers; a plant electrical power and distribution system including substations, transformers and motor control centers; maintenance machinery and equipment; a wastewater pH neutralization system; a pollution control and irrigation system; cooling towers; forklift trucks; air compressors; process plant piping, various pumps, office furniture and equipment, and general plant equipment.

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SCHEDULE 1.1(b)

to Security Agreement

Cherokee Site

The tract or lot of land lying in the County of Colbert, State of Alabama, known and described as follows, to wit:

PARCEL I:

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monuments of like character); thence north 00 degrees 24 minutes 16 seconds east a distance of 420.42 feet to U.S.-T.V.A. Monument No. 51; thence run north 33 degrees 37 minutes west 2,733.00 feet to U.S.-T.V.A. Monument No. 52 in the north line of Section 17, which is in the south line of Section 8; thence north 37 degrees 38 minutes west 416.00 feet to U.S.-T.V.A. Monument No. 53 at the northwest corner of the Southwest Quarter of the Southwest Quarter of the Southeast Quarter of the Southwest Quarter of Section 8; thence north 01 degree 35 minutes east 977.00 feet to U.S.-T.V.A. Monument No. 54 at the northwest corner of the Southeast Quarter of the Southwest Quarter of Section 8; thence north 35 degrees 59 minutes west 1,633.00 feet to U.S.-T.V.A. Monument No. 55 at the southeast corner of the Southwest Quarter of the Southwest Quarter of the Southwest Quarter of the Northwest Quarter of Section 8; thence north 88 degrees 50 minutes west 332.00 feet to U.S.-T.V.A. Monument No. 56 at the southwest corner of the Northwest Quarter of Section 8; thence with the south line of the Northeast Quarter of Section 7 north 88 degrees 50 minutes west 330.00 feet to U.S.-T.V.A. Monument No. 57; thence leaving the said south line north 01 degree 23 minutes 15 seconds east 1,966.31 feet to U.S.-T.V.A. Monument No. 58; thence run north 88 degrees 35 minutes west 336.33 feet to U.S.-T.V.A. Monument No. 59; thence run south 68 degrees 55 minutes 24 seconds west 1,751.46 feet, more or less, to a point on the south line of the north half of the north half of Section 7, Township 3 South, Range 13 West, which point is to be found by finding the intersection of said south line of said north half of the north half of said Section 7 with a line run south 00 degrees 39 minutes 12 seconds west a distance of 45 feet from U.S.-T.V.A. Monument No. 60; thence run north 00 degrees 39 minutes 12 seconds east 659.42 feet; thence run north 56 degrees 58 minutes 57 seconds east 1,150.50 feet, more or less, to U.S.-T.V.A. Monument No. 62 which is located in the north boundary of said Section 7 at a point 1,399.63 feet easterly from the northwest corner thereof; thence run north 88 degrees 39 minutes 30 seconds west with said section line 1,399.63 feet to the POINT OF BEGINNING.

LESS AND EXCEPT FROM THE FOLLOWING PARCELS: III, IV, V, VI, AND VII:

Parcel III:

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Parcel IV

Parcel V

Parcel VI

Parcel VII:

Commence at the southwest corner of Section 18, Township 3 South, Range 13 West, Colbert County, Alabama; thence south 89 degrees 14 minutes 26 seconds east along the South boundary of said Section 18 a distance of 1,397.26 feet; thence run North 00 degrees 21 minutes 39 seconds East a distance of 825.71 feet to the POINT OF BEGINNING; continue thence North 00 degrees 21 minutes 39 seconds East a distance of 505.52 feet; thence South 89 degrees 22 minutes 51 seconds East

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a distance of 1,116.70 feet; thence South 66 degrees 13 minutes 10 seconds West along said southeasterly right of way margin a distance of 1,223.71 feet to the POINT OF BEGINNING, containing 6.48 acres, more or less, and then being that same parcel of land described in Deed Book 264, Page 560 as recorded in the Probate Office of Colbert County, Alabama.

PARCEL II:

PARCEL III:

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89 degrees 58 minutes East with chain link fence a distance of 298.00 feet to a point; thence South 0 degrees 02 minutes East with chain link fence a distance of 116.50 feet to a point; thence North 89 degrees 58 minutes East with chain link fence a distance of 52.00 feet to a point; thence South 0 degrees 02 minutes East with chain link fence a distance of 333.50 feet to a point; thence leaving said chain link fence South 89 degrees 58 minutes West a distance of 2.0 feet to a concrete monument; thence continuing South 89 degrees 58 minutes West a distance of 348.00 feet to the concrete monument at the point of beginning at the tract herein described.

PARCEL VIII:

PARCEL IX:

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southwesterly a distance of 43.45 feet (said curve having a radius of 1,000.00 feet, a chord bearing of N 87 deg 46 min 18 sec West a arc length of 43.45 feet) to the point of tangency; thence north 89 degrees 01 minutes 16 seconds West a distance 516.26 feet to the Point of a Curve; thence northwesterly along a curve concave north a distance of 622.86 feet (said curve having a radius of 1,975 feet, a chord bearing of North 79 degrees 59 minutes 24 seconds West, a chord distance of 620.28 feet) to the Point of Tangency; thence North 70 degrees 57 minutes 14 seconds West a distance of 240.04 feet to the POINT OF BEGINNING.

NON-EXCLUSIVE EASEMENT FOR PRIVATE ROAD

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concave southwest a distance of 566.33 feet (said curve having a radius of 950.00 feet, a chord bearing of North 71 degrees 56 minutes 27 seconds West, a chord distance of 557.98 feet) to the P.T. of said curve; thence North 89 degrees 01 minute 08 seconds West a distance of 517.34 feet to the P.C. of a curve; thence northwesterly along a curve concave northerly of 638.62 feet (said curve having a radius of 2,025.00 feet, a chord distance of 635.97 feet, a chord bearing of 79 degrees 59 minute 24 seconds west) to the P.T. of said curve, thence North 70 degrees 57 minutes 14 seconds West) to the P.T. of said curve; thence North 70 degrees 57 minutes 14 seconds West a distance of 233.95 feet to the POINT OF BEGINNING.

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SCHEDULE 1.1(c)

to Security Agreement

El Dorado Site

The land referred to herein below is all situated in Union County, Arkansas

Tract 1:

Beginning at the Northwest Corner of the Northeast Quarter of the Northwest Quarter of Section 8, Township 17 South, Range 15 West;

thence along said South right-of-way line for the railroad spur to a point which is 750 feet South of the North line of said Section 8;

thence East along a line which is parallel to the North line of said Section 8, and 750 feet distant therefrom to the intersection with the South right-of-way line for the railroad spur herein above described;