exv10w26






Exhibit 10.26




SPECIFIC TERMS IN THIS AGREEMENT HAVE BEEN REDACTED BECAUSE

CONFIDENTIAL TREATMENT FOR THOSE TERMS HAS BEEN REQUESTED. THE

REDACTED MATERIAL HAS BEEN SEPARATELY FILED WITH THE SECURITIES

AND EXCHANGE COMMISSION, AND THE TERMS HAVE BEEN MARKED AT THE

APPROPRIATE PLACE WITH THREE ASTERISKS (***).




AMENDMENT NO. 1 TO

AMENDED AND RESTATED SUPPLY AGREEMENT



     This Amendment No. 1 (this “Amendment”) is entered into effective this 1st day of January,
2010, to that certain Amended and Restated Sand Purchase Agreement (the “Agreement”) entered into
effective as of November 25, 2008, by and between SUPERIOR WELL SERVICES, INC., a Delaware
corporation, as “Buyer”, and PREFERRED ROCKS USS, INC., a Delaware corporation, as “Seller”.



     In consideration of the experience of the parties to date of dealing under the Agreement, and
in consideration of changed economic conditions since the making of the Agreement, and in further
consideration of the mutual interests of Buyer and Seller to effect a more rewarding business
relationship going forward, and for other good and valuable consideration, and intending to be
legally bound hereby, it is hereby AGREED by Buyer and Seller that said Agreement is hereby AMENDED
as follows:



          1. The definition of “Annual Target Amount” in Section 1(a) is amended to delete the phrase
“300,000 Tons of Sand” and replace it with “360,000 Tons of Sand.”




          2. The definition of “Plants” in Section 1(d) is amended to read in its entirety as follows:
“those certain mines and processing facilities throughout the United States owned or leased by
Seller or one of its affiliates.”




          3. The definition of “Sand” in Section 1(f) is amended to read in its entirety as follows:
“all those types of fracturing or “frac” silica sands produced and/or sold by Seller as listed in
Section 2(a) and as further described in the Specifications.” A new “Exhibit B” to the Agreement
with current Specifications is attached hereto and replaces the current Exhibit B to the Agreement
in its entirety.




          4. Section 2 Purchase and Sale; Payments by Buyer is deleted in its entirety and replaced with
the following:




          (a) Purchase and Sale of Sand. Seller shall make available for purchase by Buyer and
Buyer shall purchase from Seller, subject to those general Terms and Conditions set forth in
Exhibit “C” attached hereto, the following Sand products (each a “Product”) from Seller in
bulk packaging, F. O. B. Seller’s plants:



Product A: OTTAWA WHITETM 20/40 from Seller’s Ottawa, IL Plant



Product B: OTTAWA WHITETM 30/50 from Seller’s Ottawa, IL Plant



Product C: OTTAWA WHITETM 30/70 from Seller’s Ottawa, IL Plant



Product D OTTAWA WHITETM 40/70 from Seller’s Ottawa, IL Plant



Product E: USM100 FRAC from Seller’s Mill Creek, OK Plant



Product F: SHALE FRACTM USM65 from Seller’s Pacific, MO Plant







 









 








SPECIFIC TERMS IN THIS AGREEMENT HAVE BEEN REDACTED BECAUSE

CONFIDENTIAL TREATMENT FOR THOSE TERMS HAS BEEN REQUESTED. THE

REDACTED MATERIAL HAS BEEN SEPARATELY FILED WITH THE SECURITIES

AND EXCHANGE COMMISSION, AND THE TERMS HAVE BEEN MARKED AT THE

APPROPRIATE PLACE WITH THREE ASTERISKS (***).



Product G: SHALE FRACTM COL20/40 from Seller’s Columbia, SC Plant



Product H: SHALE FRACTM COL16/30 from Seller’s Columbia, SC Plant



Product I: SHALE FRACTM COL12/20 from Seller’s Columbia, SC Plant



Product J: SHALE FRACTM L55 from Seller’s Dubberly, LA Plant



Product K: SHALE FRACTM NS20 from Seller’s Jackson, TN Plant



Product L: as-yet unnamed 40/70 frac sand from Seller’s Pacific, MO Plant



Product M: USM100 FRAC from Seller’s Ottawa, IL Plant




          (b) Pricing. The following shall be the base purchase price per Ton of Sand (the
“Purchase Price”) effective as of January 1. 2010:




For Products A, B, C and D: (***) if shipped to East of Mississippi River

For Products A, B, C and D: (***)if shipped to West of Mississippi River

For Product E: (***)

For Product F: (***)

For Product G: (***)

For Product H: (***)

For Product I: (***)

For Products J and K: (***)

For Product L: (***)

For Product M: (***)



The above Purchase Prices shall remain in effect through March 31, 2010. Effective April 1, 2010,
the above Purchase Price shall act as base pricing, subject to the application of the following two
price adjustment mechanisms (with a third price adjustment mechanism, the Inflation Adjustment,
being applicable as of January 1, 2011):




          1. Dryer Fuel Cost Surcharge—Intended to offset the cost of natural gas used in the
processing of Sand, this surcharge will adjust price on a quarterly basis, commencing with
shipments of Sand under this Agreement on April 1, 2010 and thereafter, when the average of the
prior quarter’s NYMEX monthly natural gas closings exceed (***) per MMBTU. The Purchase Price of
Sand (all Products, A through M) will increase $.25 per Ton for every $1.00 per MMBTU increase
above (***) per MMBTU in the average of the three monthly close amounts for the prior quarter’s
NYMEX natural gas closings. The calculation will be prorated, e.g., if the NYMEX three monthly
closings for a prior quarter averages (***) per MIVIBTU, the dryer fuel cost surcharge will be
(***) per Ton for the following quarter. For the avoidance of doubt, this surcharge may increase or
decrease from quarter to quarter but such surcharge shall never be less than zero.







2









 








SPECIFIC TERMS IN THIS AGREEMENT HAVE BEEN REDACTED BECAUSE

CONFIDENTIAL TREATMENT FOR THOSE TERMS HAS BEEN REQUESTED. THE

REDACTED MATERIAL HAS BEEN SEPARATELY FILED WITH THE SECURITIES

AND EXCHANGE COMMISSION, AND THE TERMS HAVE BEEN MARKED AT THE

APPROPRIATE PLACE WITH THREE ASTERISKS (***).




          2. Market Conditions Surcharge—Intended to reflect movements in the natural gas
market and markets generally, this surcharge will adjust price on a quarterly basis, commencing
with shipments of Sand under this Agreement on April 1, 2010 and thereafter, when the average of
the prior quarter’s NYMEX monthly natural gas closings exceed (***) per MMBTU. The Purchase Price
of Sand (all Products, A through L) will increase $.75 per Ton for every $1.00 per MMBTU increase
above (***) per MMBTU in the average of the three monthly close amounts for the prior quarter’s
NYMEX natural gas closings. The calculation will be prorated, e.g., if the NYMEX three month
closings for a prior quarter averages (***) per MMBTU, the surcharge will be (***) per Ton for the
following quarter. For the avoidance of doubt, this surcharge may increase or decrease from quarter
to quarter but such surcharge shall never be less than zero.




          3. Inflation Adjustment—Intended to reflect movements in the Producer Price Index,
the price of Sand (all Products, A through M), commencing with shipments of Sand under this
Agreement on January 1, 2011 and thereafter, shall be the Purchase Price as effective on the date
of this Amendment as set forth in Section 2(b) above (for the avoidance of doubt, the use of the
term “Purchase Price” with respect to any adjustments to such Purchase Price as described in this
Section 2(b)(3) shall be without including the effects of any of the surcharges to Purchase Price
described in subsection 1 and 2 above), increased by the percentage increase of the November 2010
value of the Producer Price Index for non-metallic mineral mining & quarrying (“PPI”), as published
by the United States Department of Commerce, Bureau of Labor Statistics, over that of the November
2009 value (not an average over the preceding twelve month period—see an example of such a
calculation shown following the PPI chart below). The price of product (all Products, A through L)
effective each January 1 thereafter shall be the prior year’s adjusted Purchase Price (for the
avoidance of doubt, without including the effects of any of the surcharges described in subsection
1 and 2 above) increased by the percentage increase in the PPI for non-metallic mineral mining &
quarrying, as published by the United States Department of Commerce, Bureau of Labor Statistics,
comparing such PPI of the November thirteen months prior to such January 1st date of adjustment to
the November next preceding such January 1st date of adjustment.



For the avoidance of doubt, there will be no price increase in any year in which there is no
increase in such year-to-year November PPI index, and in the next subsequent year, the base
November PPI to be used shall be the November PPI in the last year in which there was an increase
in such November PPI as compared to the prior year. (Example: November 2008 PPI is 229.3. November
2009 PPI is 240.0. November 2010 PPI is 238.5. November 2011 PPI is 253.2.
There would be no increase for PPI in 2011. In 2012, the increase would be based upon the
comparison of November 2011 (253.2) and November 2009 (240.0).)



Notwithstanding the foregoing, the variance in the Purchase Price pursuant to the PPI based
adjustment shall not exceed 6% per year. In the event that the calculation of the PPI based
adjustment done pursuant to this section 2(b)(3) exceeds 6% in any year, then the adjustment to the
Purchase Price for the such year shall be limited to 6%, and the Supplier shall carry over the
excess of the adjustment to be used in subsequent years as applicable.







3









 








SPECIFIC TERMS IN THIS AGREEMENT HAVE BEEN REDACTED BECAUSE

CONFIDENTIAL TREATMENT FOR THOSE TERMS HAS BEEN REQUESTED. THE

REDACTED MATERIAL HAS BEEN SEPARATELY FILED WITH THE SECURITIES

AND EXCHANGE COMMISSION, AND THE TERMS HAVE BEEN MARKED AT THE

APPROPRIATE PLACE WITH THREE ASTERISKS (***).



By way of example only: (1) The adjustment to the Purchase Price for 2011 is (a) the Purchase Price
on December 31, 2010, plus (b) the percentage increase (if any) in the November 2010 PPI compared
to the November 2009 PPI; (2) the adjustment to the Purchase Price for 2012 is (a) the Purchase
Price on December 31, 2011, plus (b) the percentage increase (if any) in the November 2011 PPI
compared to the November 2010 PM; (3) with regard to the 6% limitation on the PPI adjustment to the
Purchase Price and the carryover, if the November 2010 PPI is 13% greater than the November 2009
PPI, then the Purchase Price for 2011 increases 6%, and the Supplier shall carry over 7% for use in
subsequent years if the PPI increase as described in this Section is less than 6% in any such year
(until the carryover amount is fully used); (4) if the November 2011 PPI is 2% greater than the
November 2010 PPI, then the Purchase Price for 2012 increases 6% (2% plus 4% of carryover), and the
future carryover is now reduced to 3%.







4









 








SPECIFIC TERMS IN THIS AGREEMENT HAVE BEEN REDACTED BECAUSE

CONFIDENTIAL TREATMENT FOR THOSE TERMS HAS BEEN REQUESTED. THE

REDACTED MATERIAL HAS BEEN SEPARATELY FILED WITH THE SECURITIES

AND EXCHANGE COMMISSION, AND THE TERMS HAVE BEEN MARKED AT THE

APPROPRIATE PLACE WITH THREE ASTERISKS (***).









	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Year	 	Jan	 	Feb	 	Mar	 	Apr	 	May	 	Jun	 	Jul	 	Aug	 	Sep	 	Oct	 	Nov	 	Dec	 	Annual
	1999

	 	 	133.0	 	 	 	133.5	 	 	 	133.6	 	 	 	133.8	 	 	 	133.8	 	 	 	134.2	 	 	 	134.2	 	 	 	134.2	 	 	 	134.3	 	 	 	134.4	 	 	 	134.4	 	 	 	134.4	 	 	 	134.0	 
	2000

	 	 	135.0	 	 	 	135.3	 	 	 	135.7	 	 	 	136.7	 	 	 	137.2	 	 	 	137.2	 	 	 	137.6	 	 	 	137.8	 	 	 	138.0	 	 	 	138.0	 	 	 	138.0	 	 	 	138.1	 	 	 	137.0	 
	2001

	 	 	139.1	 	 	 	139.9	 	 	 	140.4	 	 	 	140.8	 	 	 	140.8	 	 	 	141.3	 	 	 	141.5	 	 	 	141.4	 	 	 	141.5	 	 	 	141.8	 	 	 	141.6	 	 	 	141.5	 	 	 	141.0	 
	2002

	 	 	142.5	 	 	 	143.4	 	 	 	143.5	 	 	 	143.4	 	 	 	143.6	 	 	 	143.7	 	 	 	143.7	 	 	 	143.5	 	 	 	143.5	 	 	 	143.7	 	 	 	143.8	 	 	 	144.2	 	 	 	143.5	 
	2003

	 	 	144.9	 	 	 	145.4	 	 	 	145.9	 	 	 	146.3	 	 	 	146.4	 	 	 	146.6	 	 	 	146.7	 	 	 	146.8	 	 	 	146.8	 	 	 	147.1	 	 	 	147.2	 	 	 	147.0	 	 	 	146.4	 
	2004

	 	 	148.7	 	 	 	149.0	 	 	 	149.3	 	 	 	150.3	 	 	 	150.7	 	 	 	151.1	 	 	 	151.7	 	 	 	151.9	 	 	 	152.3	 	 	 	152.5	 	 	 	153.0	 	 	 	153.9	 	 	 	151.2	 
	2005

	 	 	157.2	 	 	 	158.0	 	 	 	158.9	 	 	 	159.9	 	 	 	160.8	 	 	 	161.5	 	 	 	162.7	 	 	 	162.6	 	 	 	163.2	 	 	 	163.3	 	 	 	164.4	 	 	 	163.7	 	 	 	161.3	 
	2006

	 	 	170.5	 	 	 	170.5	 	 	 	173.5	 	 	 	176.8	 	 	 	176.0	 	 	 	174.8	 	 	 	177.7	 	 	 	177.8	 	 	 	177.5	 	 	 	179.4	 	 	 	178.2	 	 	 	178.9	 	 	 	176.0	 
	2007

	 	 	184.8	 	 	 	186.3	 	 	 	188.1	 	 	 	189.4	 	 	 	190.0	 	 	 	189.6	 	 	 	193.0	 	 	 	193.4	 	 	 	193.4	 	 	 	193.4	 	 	 	195.0	 	 	 	197.3	 	 	 	191.1	 
	2008

	 	 	202.6	 	 	 	205.6	 	 	 	206.3	 	 	 	210.1	 	 	 	211.6	 	 	 	214.4	 	 	 	218.7	 	 	 	225.4	 	 	 	226.7	 	 	 	227.7	 	 	 	229.3	 	 	 	232.7	 	 	 	217.6	 
	2009

	 	 	232.6	 	 	 	236.4	(P)	 	 	235.6	(P)	 	 	235.4	(P)	 	 	234.1	(P)	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 





P: Preliminary. All indexes are subject to revision four months after original publication




Example of Inflation Adjustment calculation:

PPI for November, 2007: 195.0; PPI for November, 2008: 229.3

Difference between the two PPIs: 229.3 less 195M = 34.3

Percentage increase represented by difference in PPI: 34.3 / 195.0 = 17.589%

Thus effective January 1, 2009, pricing for all Products would increase by 17.6%

Note: The 17.6% increase would be capped at 6% as described above and the remainder would carry over




          (c) Minimum Tonnage:



(i) FOR THE REMAINDER OF CALENDAR YEAR 2009:




     There are no minimum Tonnage requirements for the remainder of 2009.



5









 





SPECIFIC TERMS IN THIS AGREEMENT HAVE BEEN REDACTED BECAUSE

CONFIDENTIAL TREATMENT FOR THOSE TERMS HAS BEEN REQUESTED. THE

REDACTED MATERIAL HAS BEEN SEPARATELY FILED WITH THE SECURITIES

AND EXCHANGE COMMISSION, AND THE TERMS HAVE BEEN MARKED AT THE

APPROPRIATE PLACE WITH THREE ASTERISKS (***).



(ii) FOR CALENDAR YEARS 2010 and 2011:




     Buyer shall purchase, at the minimum, the Annual Target Amount of Sand (360,000 Tons) from
Seller during each of calendar years 2010 and 2011. Such annual minimum Tonnage purchase
obligation, based upon Buyer’s reasonable projections as to need and upon Seller’s reasonable
projections as to production capability, shall be allocated among Seller’s Products as follows:




Product A: (***), comprised of (***) shipped east of the Mississippi River, and (***)shipped to west of the Mississippi River

Product B: (***)

Product C: (***)

Product D: (***)

Product E: (***)

Product F: (***)

Product G: (***)

Product H: (***)

Product I: (***)

Product L: (***)

Product M: (***)




     Notwithstanding the foregoing, Buyer shall not be strictly held to the above-stated allocation
of Products comprising the annual minimum Tonnage purchase obligation, and Buyer may satisfy its
annual minimum Tonnage purchase obligation by purchasing more of one Product and less of another
Product, so long as consideration is given to Seller’s production capabilities. Buyer may also
purchase more of a specific Product than the minimum Tonnage required, and in excess of the annual
minimum Tonnage obligation and at those prices as provided under this Agreement, so long as Seller
is able to have such Product available.



     Notwithstanding anything in this Agreement to the contrary, in the event that Buyer places an
order for a Product and Seller is not able to fill or to fully fill such order, any shortfall in
Seller delivery of Tonnage from such order shall, at the discretion of Buyer, be deducted from any
minimum Tonnage requirements under this Agreement.


(iii) FOR CALENDAR YEARS SUBSEQUENT TO 2011




     The minimum Tonnage requirements applicable to calendar year 2011, as described in Section
2(c)(ii) above, shall continue in full force and effect for calendar years subsequent to 2011 so
long as the parties operate under this Agreement as amended, subject to adjustment as a
result of good faith negotiation between the parties based upon changed market conditions
and/or production capabilities.



     (d) Buyer Deferral of Tonnage:



6









 





SPECIFIC TERMS IN THIS AGREEMENT HAVE BEEN REDACTED BECAUSE

CONFIDENTIAL TREATMENT FOR THOSE TERMS HAS BEEN REQUESTED. THE

REDACTED MATERIAL HAS BEEN SEPARATELY FILED WITH THE SECURITIES

AND EXCHANGE COMMISSION, AND THE TERMS HAVE BEEN MARKED AT THE

APPROPRIATE PLACE WITH THREE ASTERISKS (***).




          (i) Requests for Deferral of Amounts. For any calendar year (up to two calendar
years), Buyer shall have the option to defer Buyer’s minimum Tonnage purchase obligation in an
amount not to exceed, for each option exercise, the Maximum Amount (as hereinafter defined). Buyer
shall exercise such option to defer by giving notice to Seller at least sixty (60) days prior to
the earliest date on which the making by Seller of Sand available for delivery may be affected by
the exercise of such option. The notice given with respect to each option exercise shall state (A)
the amount of Sand with respect to which Buyer is deferring, (B) the type of Sand subject to such
deferral and the Plant from which such Sand was expected to be sourced, and (C) any other
information relevant to such option exercise.




          (ii) Maximum Amount. As used herein, “Maximum Amount” means an amount of Sand equal to
thirty-five percent (35%) of the Annual Target Amount, pro rata on a grade-by-grade basis.




          (iii) Catch-Up. Notwithstanding anything herein to the contrary, Buyer shall be
obligated to purchase all amounts deferred pursuant to this Section 2(d). Buyer may request to
purchase Sand previously deferred in accordance with this Section 2(c) at any time during the Term
by delivering a purchase order to Seller pursuant to Section 3(a)(ii), and otherwise in accordance
with this Agreement, and subject in all cases to availability of the applicable Sand. If Buyer has
not purchased all amounts of Sand deferred pursuant to this Section 2(d) at the end of the Term,
Buyer shall have the right to extend the Term for up to one (1) additional year solely for the
purpose of purchasing any such Sand, at the Purchase Price in effect, at the time of such purchase;
provided that Buyer must provide Seller written notice of any such election to extend
(which shall specify the length of such extension, not to exceed one (1) year) no later than one
hundred eighty (180) days before the end of the Term.




          (iv) Application of Additional Amounts. If and to the extent that Buyer purchases Sand
from Seller in addition to the amounts Buyer is required to purchase pursuant to this Agreement
(“Additional Amounts”), in all cases subject to availability, and Buyer subsequently exercises an
option to defer pursuant to this Section 2(c), Buyer may elect to satisfy its obligation to
purchase and pay for any such amounts of Sand deferred pursuant to this Section 2(d) by applying
such Additional Amounts, to the extent comparable in grade and volume to the Sand so deferred, in
lieu of purchasing or paying for such deferred amounts pursuant to Section 2(d)(iii).




     (e) Further General Provisions Regarding Purchase and Sale:



          (i) Seller shall at all times be contractually obligated to supply Buyer with the Annual
Target Amount of Sand and minimum Tonnage of Product required to be purchased by Buyer on an annual
basis under this Agreement, as amended. Product shall be ordered and delivered on a monthly basis,
with the ability of either party to reasonably deviate, pursuant to that schedule attached hereto
as “Exhibit A”. Buyer covenants and agrees to pay Seller for Seller’s Sand in accordance with the
provisions of Sections 2 and 4 of this Agreement. Seller shall have the right to source Sand from
any from any of its Plants, or from any other source, so







7









 








SPECIFIC TERMS IN THIS AGREEMENT HAVE BEEN REDACTED BECAUSE

CONFIDENTIAL TREATMENT FOR THOSE TERMS HAS BEEN REQUESTED. THE

REDACTED MATERIAL HAS BEEN SEPARATELY FILED WITH THE SECURITIES

AND EXCHANGE COMMISSION, AND THE TERMS HAVE BEEN MARKED AT THE

APPROPRIATE PLACE WITH THREE ASTERISKS (***).



long as the Sand provided to Buyer is comparable in quality, is within specification, and is
comparable to the transportation cost to Buyer from the Seller’s Plant designated in the schedule
appearing above in Section 2(a) from which such Sand was to be supplied.”




     5. Each of Section 3(c) and Section 6 is amended to delete the reference to “Section
2(b)(fii)(1)” and replace them with “Section 2(b).”



     6. Section 4(a) is amended to read in its entirety as follows: “The Purchase Price per Ton for
the Sand is set forth in Section 2(b) of this Agreement.”



     7. Section 4(a)(i), Cash Payment, is amended by adding the following new sentence at
the end of such subsection: “Notwithstanding the Note on its face providing for interest at the
rate of ten percent (10%) per annum, Seller shall pay interest at the rate of six percent (6%) per
annum upon the unpaid principal of the Note, effective as of the date of this Amendment.”



     8. Section 4(b), Fuel Surcharge, is hereby deleted in its entirety.



     9. The last sentence of Section 5(b), Renewal Option, and all of Section 5(c),
Limited Purpose Extension, are hereby deleted in their entirety.



     10. Section 9, Notices, is hereby amended by deleting Preferred Unlimited, Inc. in
Conshohocken, PA as a notice recipient for any notices whatsoever under the Agreement.



     11. Exhibit “A” of the Agreement is hereby deleted and replaced with Exhibit “A” attached
hereto and Exhibit “E” of the Agreement is hereby deleted.



8









 





SPECIFIC TERMS IN THIS AGREEMENT HAVE BEEN REDACTED BECAUSE

CONFIDENTIAL TREATMENT FOR THOSE TERMS HAS BEEN REQUESTED. THE

REDACTED MATERIAL HAS BEEN SEPARATELY FILED WITH THE SECURITIES

AND EXCHANGE COMMISSION, AND THE TERMS HAVE BEEN MARKED AT THE

APPROPRIATE PLACE WITH THREE ASTERISKS (***).




     OTHERWISE, ALL TERMS AND PROVISIONS OF SAID AGREEMENT SHALL REMAIN IN FULL FORCE AND EFFECT.



	 	 	 	 	 
	PREFERRED ROCKS USS, INC.

 	 
	By:  	/s/ John A. Ulizio
 	 
	 	John A. Ulizio, President & C.E.O. 	 
	 


Date signed: January 14, 2010




	 	 	 	 	 
	SUPERIOR WELL SERVICES, INC.

 	 
	By:  	/s/ David E. Wallace
 	 
	 	David E. Wallace, President & C.E.O. 	 
	 	 	 	 


Date signed: January 14, 2010