Document:

Exhibit 10.95 - Second Amendment to STF Supply Agreement

EXHIBIT 10.95
CONFIDENTIAL TREATMENT REQUESTED
REDACTED VERSION

SECOND AMENDMENT TO THE 
AMENDED & RESTATED STF SUPPLY AGREEMENT

This Second Amendment to the Amended and Restated STF Supply Agreement (this “Amendment”) is made this 30th day of June, 2012 (“the Effective Date”), by and among PCS Phosphate Company, Inc., a Delaware corporation (“PCS Phosphate”), PCS Sales (USA), Inc., a Delaware corporation (“PCS Sales”) (PCS Phosphate and PCS Sales may be collectively referred to as “PCS”), and MEMC Electronic Materials, Inc., a Delaware corporation (“MEMC”).
WHEREAS, PCS and MEMC (collectively “the Parties”) are parties to the Amended and Restated STF Supply Agreement (the “STF Agreement”), dated April 30, 2007, hereby incorporated in its entirety by reference, pursuant to which PCS agreed to sell and MEMC agreed to purchase, during the term set forth therein, silicon tetrafluoride (“STF”) produced by PCS, in the quantities and subject to the terms and conditions set forth in the STF Agreement;
WHEREAS, as of the Effective Date, MEMC owes a balance of [*****] U.S. Dollars ($[*****]) to PCS based on MEMC’s failure to take or pay for a portion of the STF produced by PCS from January 1, 2012, through May 31, 2012;
WHEREAS, MEMC has requested a temporary modification of the quantity and price of the STF that it is obligated to purchase pursuant to the STF Agreement;
WHEREAS, PCS has requested that MEMC deliver two additional letters of credit and a surety bond to PCS to assure MEMC’s past and future performance under the STF Agreement;
WHEREAS, the Parties have come to a resolution concerning the aforementioned issues, which resolution alters certain rights and obligations of the Parties under the STF Agreement;
WHEREAS, to reflect their resolution, the Parties desire to amend the STF Agreement solely in the manner specifically set forth herein; and
WHEREAS, except as expressly amended herein, the STF Agreement (and any other agreement among the Parties) shall remain in full force and effect on and after the Effective Date of this Amendment in accordance with its terms.
NOW, THEREFORE, and in consideration of the mutual promises, covenants, and rights contained herein, and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged by the Parties, the Parties agree as follows:
1.Definitions.  All capitalized terms used in this Amendment without definition shall have the respective meanings given them in the STF Agreement.
2.    Quantity and Price.  Section 3 of the STF Agreement sets forth PCS’s sale and MEMC’s purchase obligations.  Section 4 of the STF Agreement sets forth the STF price and payment terms.  Except as expressly amended herein, Sections 3 and 4 of the STF Agreement shall remain in full force and effect on and after the Effective Date of this Amendment in accordance with its terms.

 ****Confidential information has been omitted and replaced with asterisks [*****].  Such information has been filed separately with the Securities and Exchange Commission.

EXHIBIT 10.95
CONFIDENTIAL TREATMENT REQUESTED
REDACTED VERSION

(a)    Tier 1 Requirement.  During the period starting on the Effective Date and ending on May 31, 2014 (the “Amended Requirements Term”), PCS shall sell to MEMC and MEMC shall purchase from PCS Sales [*****] ([*****]) short tons of STF on an annual basis (the “Tier 1 Requirement”), and the Adjusted Base Price defined in Section 4.1(b) of the STF Agreement is amended such that the price of the STF purchased pursuant to the Tier 1 Requirement shall be [*****]U.S. Dollars ($[*****]) per short ton F.O.B. the PCS Site.  When implementing the Tier 1 Requirement, PCS shall sell STF to MEMC and MEMC shall purchase STF from PCS Sales in monthly installments of approximately [*****] ([*****]) short tons.
(b)    Tier 2 Requirement.  During the Amended Requirements Term, PCS shall sell to MEMC and MEMC shall purchase from PCS Sales an additional [*****] ([*****]) short tons of STF on an annual basis (“Tier 2 Requirement”).  The Adjusted Base Price set forth in Section 4.1(b) of the STF Agreement is further amended such that the price of the STF purchased pursuant to the Tier 2 Requirement is [*****]U.S. Dollars ($[*****]) per short ton F.O.B. the PCS Site.  MEMC shall purchase from PCS Sales the STF in monthly installments of approximately [*****] ([*****]) short tons of STF, in addition to the approximately [*****] ([*****]) monthly short tons of STF that MEMC is required to purchase under the Tier 1 Requirement.
(c)    Additional Sale and Purchase of STF.  During the Amended Requirements Term, if MEMC desires to purchase a larger quantity of STF than is provided by the Tier 1 Requirement combined with the Tier 2 Requirement, and if PCS in its sole discretion agrees to sell such larger quantity to MEMC, then MEMC shall pay the Adjusted Base Price of [*****] U.S. Dollars ($[*****]) per short ton F.O.B. the PCS Site for any such additional quantity of STF sold and purchased pursuant to this Paragraph 2(c).  PCS does not guarantee that PCS will be able to produce any such additional quantity of STF.  If PCS is unable to produce or otherwise does not sell any such additional quantity of STF, PCS shall not be liable in any way to MEMC for any damages, liabilities, losses, costs and attorneys’ fees, or problems, including without limitation, special, incidental, indirect, punitive, or consequential damages, resulting from the inability to produce or other failure to sell additional STF.  Further, in no event will MEMC bring any charge, claim, cause of action, demand for relief of any kind, action, or suit of any kind or nature, whether directly or indirectly, against PCS as a result of PCS’s inability to produce or failure to sell additional STF.  Any such additional quantity of STF purchased by MEMC under this Paragraph 2(c) during the Amended Requirements Term shall be subtracted from Additional Short Tons, calculated under Paragraph 9 of this Amendment, for purposes of extending the STF Agreement.
(d)    Monthly Billing.  During the Amended Requirements Term, PCS Sales shall issue an invoice to MEMC for each loaded trailer of STF, payment of which shall be due thirty (30) days net with payment via ACH transfer.  For each monthly invoice during the Amended Requirements Term, MEMC shall pay the Adjusted Base Price of [*****] U.S. Dollars ($[*****]) for the first [*****] ([*****]) short tons of STF, the Adjusted Base Price of [*****]U.S. Dollars ($[*****]) for the next [*****] ([*****]) short tons of STF, and the Adjusted Base Price of [*****]U.S. Dollars ($[*****]) for each subsequent short ton of STF.
3.    Annual Settlement of Take-Or-Pay Obligations.  Section 3 of the STF Agreement sets forth the procedure that the Parties must follow, and provides for liquidated damages, in the event that MEMC fails to take or pay for the STF produced by PCS.  Except as expressly amended herein, Section 3 of the STF Agreement shall remain in full force and effect on and after the Effective Date of this Amendment in accordance with its terms.
During the Amended Requirements Term, the Parties shall perform annual true-up settlements of MEMC’s obligation to purchase the Purchase Requirement, which is set forth in Section 3.1 of the STF Agreement but amended herein for the duration of the Amended Requirements Term.  Following the end of each calendar year in the event that MEMC fails to purchase the Tier 1 Requirement and the Tier 2 Requirement for such calendar year (or such partial year, if applicable) and the monthly billing set forth in Paragraph 2(d) of this Amendment did not result in MEMC purchasing [*****] ([*****]) short tons at [*****]U.S. Dollars ($[*****]) and [*****] ([*****]) shorts tons at [*****]U.S. Dollars ($[*****]) for such calendar year (or an adjusted volume of short tons for such partial year, if applicable), PCS shall calculate liquidated damages and the Parties shall follow the procedure set forth in Section 3.3 of the STF Agreement as modified below.  For the avoidance of doubt, MEMC’s failure to either purchase the Purchase Requirement or pay to PCS any liquidated damages pursuant to Section 3.3 of the STF Agreement shall constitute an Event of Default under the STF Agreement.

EXHIBIT 10.95
CONFIDENTIAL TREATMENT REQUESTED
REDACTED VERSION

During the Amended Requirements Term, the Purchase Requirement, as amended by this Amendment, shall be calculated as follows:
2012 Purchase Requirement
From June 1, 2012 through December 31, 2012, the Purchase Requirement for which MEMC must either take or pay pursuant to Section 3.3 of the STF Agreement is as follows:
		
	•
	[*****]short tons, which is calculated as follows:  (([*****]ST / 12) X 7) + (([*****]ST / 12) X 7).  This Purchase Requirement of [*****]short tons shall be comprised of STF sold at the following price terms:  [*****]short tons at $[*****]U.S. dollars per short ton, and [*****]short tons at $[*****]U.S. dollars per short ton.

2013 Purchase Requirement
From January 1, 2013, through December 31, 2013, the Purchase Requirement for which MEMC must either take or pay pursuant to Section 3.3 of the STF Agreement is as follows:
		
	•
	[*****]short tons, which is calculated as follows:  (([*****]ST /12) X 12) + (([*****]ST / 12) X 12).  This Purchase Requirement of [*****]short tons shall be comprised of STF sold at the following price terms:  [*****]short tons at $[*****]U.S. dollars per short ton, and [*****]short tons at $[*****]U.S. dollars per short ton.

2014 Purchase Requirement
From January 1, 2014, through May 31, 2014, the Purchase Requirement for which MEMC must either take or pay pursuant to Section 3.3 of the STF Agreement is as follows:
		
	•
	[*****]short tons, which is calculated as follows:  (([*****]ST / 12) X 5) + (([*****]ST / 12) X 5).  This Purchase Requirement of [*****]short tons shall be comprised of STF sold at the following price terms:  [*****]short tons at $[*****]U.S. dollars per short ton, and [*****]short tons at $[*****]U.S. dollars per short ton.

4.    MEMC’s Balance.  The Parties agree that MEMC currently owes PCS [*****] U.S. Dollars ($[*****]) under the STF Agreement (“MEMC’s Balance”) due to MEMC’s failure to take or pay for a portion of the STF produced by PCS from January 1, 2012 through May 31, 2012.  The Parties agree that MEMC cannot voluntarily reduce MEMC’s Balance during the Amended Requirements Term, except as provided by Paragraph 5(f) by making cash payments to PCS in excess of the amount that MEMC owes PCS under Section 3 of the STF Agreement.  If MEMC’s Balance is not paid in full to PCS during the Amended Requirements Term, MEMC shall pay any remaining unpaid portion thereof, along with any other STF shortfall amounts that accrue during calendar year 2014, in 2015 pursuant to Section 3.3(a) of the STF Agreement.
5.    Letters of Credit and Surety Bond.
		
	(a)
	To provide PCS with assurance concerning MEMC’s performance of its obligations under the STF Agreement and this Amendment, including without limitation, the payment of MEMC’s Balance to PCS, and as a condition to PCS’s entry into this Amendment, MEMC shall have delivered to PCS Sales at the time of the execution of this Amendment by the Parties and shall cause to remain in effect (subject to reductions pursuant to and in accordance with Paragraph 5(f) of this Amendment) an irrevocable standby letter of credit (the “MEMC Balance LC”) in PCS Sales’s favor in the original undrawn face amount of [*****]U.S. Dollars ($[*****]) issued by a United States commercial bank acceptable to PCS Sales in the form attached hereto as Exhibit A (subject to such differences as shall be acceptable to PCS Sales in its sole discretion) to secure all of MEMC’s obligations to PCS with respect to MEMC’s Balance and otherwise under the STF 

EXHIBIT 10.95
CONFIDENTIAL TREATMENT REQUESTED
REDACTED VERSION

Agreement and this Amendment.
		
	(b)
	To provide PCS with assurance concerning MEMC’s performance of its obligations under the STF Agreement and this Amendment, and as a condition to PCS’s entry into this Amendment, MEMC shall have delivered to PCS Sales at the time of the execution of this Amendment by the Parties and shall cause to remain in effect (with a term ending no earlier than ninety (90) days after the then current expiry date of the STF Agreement) an irrevocable standby letter of credit (the “Receivable Exposure LC” and, together with the MEMC Balance LC, each an “LC” and collectively the “LCs”) in PCS Sales’s favor in the original undrawn face amount of [*****]U.S. Dollars ($[*****]) issued by a United States commercial bank acceptable to PCS Sales in the form attached hereto as Exhibit B (subject to such differences as shall be acceptable to PCS Sales in its sole discretion) to secure all of MEMC’s obligations to PCS under the STF Agreement and this Amendment.

		
	(c)
	To provide PCS with further assurance of MEMC’s performance under the STF Agreement and this Amendment, including without limitation, the payment of MEMC’s Balance, and as a condition to PCS’s entry into this Amendment, MEMC shall have delivered to PCS Sales at the time of the execution of this Amendment by the Parties and shall cause to remain in effect a surety bond (the “Bond”) in PCS Sales’s favor in the face amount of [*****] U.S. Dollars ($[*****]) in the form attached hereto as Exhibit C (subject to such differences as shall be acceptable to PCS Sales in its sole discretion) to secure all of MEMC’s obligations to PCS under the STF Agreement and this Amendment, including without limitation, the payment of MEMC’s Balance; provided, however, that at MEMC’s election, it may choose to replace the Bond with a letter of credit with substantially similar terms to the letters of credit provided above (subject to such differences in such letter of credit as shall be acceptable to PCS Sales in its sole discretion).

		
	(d)
	If an Event of Default (as defined in Section 5.3 of the STF Agreement) has occurred and is continuing, PCS shall be entitled from time to time to draw on the LCs and/or the Bond and apply the proceeds thereof to satisfy MEMC’s obligations under the STF Agreement and this Amendment.  MEMC agrees that PCS’s right to draw on the LCs and/or the Bond upon the occurrence and continuance of an Event of Default is in addition to and cumulative with all other rights of, and remedies available to, PCS under the STF Agreement or at law or equity.  For the avoidance of doubt, PCS shall be entitled to draw on the MEMC Balance LC and/or the Bond if MEMC fails to pay MEMC’s Balance to PCS by no later than the annual true-up settlement procedure occurring in 2015 pursuant to Section 3.3 of the STF Agreement.

		
	(e)
	If either of the LCs is not renewed (for at least twelve (12) months) at least ninety (90) days prior to any expiry date thereof, PCS shall be entitled to immediately draw the full amount thereof and to apply the proceeds thereof to satisfy MEMC’s obligations under the STF Agreement and this Amendment, including without limitation, MEMC’s Balance.  To the extent such drawn amount exceeds such obligations then outstanding, PCS shall place such excess amount in an interest-bearing account with a nationally recognized bank, with the ability to apply the proceeds thereof to payment of any future unpaid obligations of MEMC under the STF Agreement and this Amendment.

		
	(f)
	During the Amended Requirements Term, MEMC annually shall have the option to reduce the undrawn amount of the MEMC Balance LC in connection with the Parties’ annual true-up settlement as set forth in Paragraph 3 of this Amendment by paying cash to PCS in an amount in excess of MEMC’s Balance plus the liquidated damages MEMC otherwise owes at the time of the annual true-up settlement pursuant to Paragraph 3 of this Amendment and notifying PCS that the purpose of such excess payment is reduction of MEMC’s Balance (and the MEMC Balance LC).  If as part of any such annual true-up settlement, MEMC makes such a payment and provides such notice, and ninety-eight (98) consecutive days pass from the date of such payment without a proceeding under any Federal, state or foreign bankruptcy, insolvency, receivership or similar law 

EXHIBIT 10.95
CONFIDENTIAL TREATMENT REQUESTED
REDACTED VERSION

now or hereafter in effect by or against MEMC or any person or entity from which MEMC may have directly or indirectly derived funds which were used to make such payment being commenced, PCS shall agree to reduction of the undrawn amount of the MEMC Balance LC by the amount of such excess cash payment.
6.    PCS Payment of Letters of Credit Costs.  PCS shall pay the reasonable and customary issuance and fronting costs charged by MEMC’s commercial bank for the issuance and maintenance of the LCs while they are outstanding up to, but not in excess of, the lesser of (a) 2.5% of the then outstanding undrawn amount of the LCs and (b) an aggregate annual amount of Two Hundred Fifty Thousand and 00/100 U.S. Dollars ($250,000.00), provided that, for the avoidance of doubt, such payment obligation shall not include any reimbursement of draws under either LC.  As between PCS and MEMC, MEMC shall fund the remaining cost of the LCs and the Bond.
7.    Existing Irrevocable Standby Letter of Credit.  If (a) ninety-eight (98) consecutive days pass after the Effective Date without a proceeding under any Federal, state or foreign bankruptcy, insolvency, receivership or similar law now or hereafter in effect by or against MEMC being commenced and (b) no Event of Default has occurred and is continuing, PCS shall agree to the termination and/or return to MEMC of the Irrevocable Standby Letter of Credit No. 3102325 dated April 16, 2010 issued by Bank of America, N.A. to PCS Phosphate.
8.    Purchase Rates.  Section 3.4 of the STF Agreement governs the rate at which MEMC shall purchase and PCS shall supply STF product.  During the Amended Requirements Term, Section 3.4 is amended as follows:
MEMC agrees to purchase and PCS agrees to supply STF at a reasonably constant daily rate.  MEMC agrees to purchase and receive STF at a higher rate than the constant daily rate, sufficient to load up to [*****] STF Trailers daily, when requested by PCS.  The Parties will work together to coordinate outages and curtailments in production, whether planned or unplanned, in order to prevent or minimize any adverse impact on their respective plants and operations; provided, however, PCS shall have no obligation to sell or deliver STF quantities to MEMC at approximately the constant daily rate during periods when one or more STF plants are not in operation due to reasonable maintenance requirements and turnarounds or due to any event of force majeure.
MEMC, at its sole expense, shall provide a minimum of [*****] ([*****]) and, upon PCS’s request up to a maximum of [*****] ([*****]), STF Trailers to the PCS Site daily for the loading of the STF sold to MEMC.
9.    Extension of the STF Agreement.  Pursuant to Section 5.1 of the STF Agreement, the STF Agreement expires on December 31, 2018.  PCS and MEMC hereby agree to extend the STF Agreement beyond December 31, 2018, until such time as PCS sells and MEMC purchases an additional volume of short tons of STF (“Additional Short Tons”) necessary to recapture the revenue PCS may lose as a result of this Amendment (“PCS Lost Revenue”) on a straight line basis, net of any interest or time value of money.  The Additional Short Tons shall be calculated as follows: 

EXHIBIT 10.95
CONFIDENTIAL TREATMENT REQUESTED
REDACTED VERSION

	
		
	Step
	Calculation

	1
	Multiply the total STF Agreement 2-year volume ([*****]ST) by the Adjusted Base Price-per-short ton as of the Effective Date ($[*****]U.S. dollars per short ton)

	2
	Identify STF shipped to MEMC pursuant to Tier 1 Requirement during the Amended Requirements Term

	3
	Multiply by the Adjusted Base Price-per-short ton under Tier 1 Requirement ($[*****]U.S. dollars per short ton)

	4
	Identify STF shipped to MEMC pursuant to Tier 2 Requirement during the Amended Requirements Term

	5
	Multiply by the Adjusted Base Price-per-short ton under Tier 2 Requirement ($[*****]U.S. dollars per short ton)

	6
	Calculate step 1 product less step 2 product and step 4 product

	7
	Divide by Tier 1 Requirement Adjusted Base Price ($[*****]U.S. dollars per short ton)

	8
	Subtract additional quantities of STF that MEMC purchased during the Amended Requirements Term pursuant to Paragraph 2(c) of this Amendment

For example, if during the Amended Requirements Term, PCS sells and MEMC purchases [*****]short tons under the Tier 1 Requirement and [*****] short tons under the Tier 2 Requirement, then the STF Agreement shall be extended after December 31, 2018, until such time as PCS sells and MEMC purchases [*****] Additional Short Tons, pursuant to the following calculation:
	
			
	Step
	Calculation
	Result

	1
	Multiply the total STF Agreement 2-year volume by the Adjusted Base Price-per-short ton as of the Effective Date 
	[*****] X $[*****] = $[*****]

	2
	Identify STF shipped to MEMC pursuant to Tier 1 Requirement during the Amended Requirements Term
	[*****]

	3
	Multiply by Tier 1 Requirement Adjusted Base Price
	[*****] X $[*****] = $[*****]

	4
	Identify STF shipped to MEMC pursuant to Tier 2 Requirement during the Amended Requirements Term
	[*****]

	5
	Multiply by Tier 2 Requirement Adjusted Base Price
	[*****] X $[*****] = $[*****]

	6
	Calculate step 1 product less step 2 product and step 4 product
	$[*****] - $[*****] - $[*****] = $[*****]

	7
	Divide by Tier 1 Requirement Adjusted Base Price
	$[*****] / $[*****] = $[*****]

	8
	Subtract additional quantities of STF that MEMC purchased during the Amended Requirements Term pursuant to Paragraph 2(c) of this Amendment
	[*****] - [*****] = [*****] Additional Short Tons

After December 31, 2018, PCS shall sell and MEMC shall purchase the Additional Short Tons at the rate of [*****] ([*****]) short tons per month until PCS has recouped PCS’s Lost Revenue through MEMC’s purchase of the Additional Short Tons.  In the event MEMC fails to purchase the Additional Short Tons at the rate of [*****] ([*****]) shorts tons per month, PCS shall be entitled to draw on the Receivable Exposure LC and apply the 

EXHIBIT 10.95
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REDACTED VERSION

proceeds to satisfy MEMC’s obligations under this Amendment.  When PCS has recouped PCS’s Lost Revenue pursuant to this Paragraph 9, the STF Agreement shall terminate immediately.
10.    Construction.  It is acknowledged that each Party, with the assistance of competent counsel, has participated in the drafting of this Amendment.  The Parties agree that this Amendment has been negotiated at arms’ length by Parties of equal bargaining power, each of whom was represented by competent counsel of its own choosing.  None of the Parties hereto shall be considered to be the drafter of this Amendment or any provision hereof for the purpose of any statute, case law, or rule of interpretation or construction that would or might cause any provision to be construed against the drafter hereof.
11.    Confidentiality.  The Parties agree that except as required by applicable laws (including any securities laws), each Party will keep confidential any information contained in this Amendment that is not otherwise generally available to the public. 
12.    Complete Agreement; Continuing Effect of STF Agreement.  The STF Agreement and this Amendment constitute the entire understanding of the Parties with respect to the subject matter hereof.  This Amendment shall not constitute an amendment of any provision of the STF Agreement not expressly referred to herein and shall not be construed as a waiver or consent to any further or future action on the part of MEMC that would require a waiver or consent of PCS.  Except as expressly amended hereby, the provisions of the STF Agreement are and shall remain in full force and effect.  On and after the Effective Date, each reference in the STF Agreement to “this Agreement”, “hereunder”, “hereof”, “herein”, or words of like import referring to the STF Agreement shall mean and be a reference to the STF Agreement after giving effect to this Amendment.
13.    Governing Law.  The validity, interpretation, construction, and performance of this Amendment shall be governed by the laws of the State of North Carolina, without regard to principles of conflicts of laws.
14.    Modifications.  No change, alteration, or modification of this Amendment may be made except in a writing signed by the Parties.
15.    Severability.  In the event any provision of this Amendment shall be held to be void, voidable, unlawful, or for any reason, unenforceable, the remaining portions shall remain in full force and effect.
16.    Waiver.  No breach of any provision of this Amendment shall be deemed waived unless it is waived in writing.  Waiver of any one breach shall not be deemed a waiver of any other breach of the same or any other provision of this Amendment.
17.    Cumulative Remedies.  Each and every right and remedy under this Amendment is cumulative with each and every other right and remedy in this Amendment or in any other agreement between the Parties or under applicable law.
18.    Counterparts.  This Amendment may be executed in multiple counterparts, each bearing the signature of one or more Parties.  Any copy bearing the signature of the Party to be charged may be deemed an original.  PCS and MEMC agree that delivery of a copy of this Agreement bearing an original signature by facsimile, by electronic mail in “portable document format” (“pdf”) form or by any other electronic means, or by a combination of such means, shall have the same effect as physical delivery of the paper document bearing the original signature.

EXHIBIT 10.95
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REDACTED VERSION

IN WITNESS WHEREOF, the Parties hereto have caused this Amendment to be executed by their duly authorized representatives as of the first date written above.

PCS PHOSPHATE COMPANY, INC.,
a Delaware corporation

By: /s/ Brent Heimann____________________

PCS SALES (USA), INC.,
a Delaware corporation

By: /s/ Troy Erny    

MEMC ELECTRONIC MATERIALS, INC.,
a Delaware corporation

By: /s/ Brian Wuebbels    

EXHIBIT 10.95
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Schedule of Exhibits

		
	A.
	Example of MEMC Balance Letter of Credit

		
	B.
	Example of Receivable Exposure Letter of Credit

		
	C.
	Example of Surety Bondexhibit4a.htm

Exhibit 4(a)

 

EIGHTH AMENDMENT TO CREDIT AGREEMENT

 

This Eighth Amendment to Credit Agreement (this “Eighth Amendment”) is entered into as of July 26, 2012, by and among Denbury Resources Inc., a Delaware corporation (“Borrower”), JPMorgan Chase Bank, N.A., as Administrative Agent (“Administrative Agent”), and the financial institutions parties hereto as Banks (collectively, “Banks”, and each individually, a “Bank”).

 

W I T N E S S E T H

 

 WHEREAS, Borrower, Administrative Agent, the other agents party thereto and Banks party thereto are parties to that certain Credit Agreement dated as of March 9, 2010 (as amended, the “Credit Agreement”) (unless otherwise defined herein, all terms used herein with their initial letter capitalized shall have the meaning given such terms in the Credit Agreement, including, to the extent applicable, after giving effect to the amendments set forth in Section 1 of this Eighth Amendment);

 

 WHEREAS, pursuant to the Credit Agreement, Banks have made a Revolving Loan to Borrower and provided certain other credit accommodations to Borrower; and

 

WHEREAS, Borrower has requested that (i) Sections 9.1(a) and (b) of the Credit Agreement be amended to allow Borrower and other Credit Parties to incur up to $300,000,000 of capital lease obligations as more specifically described below and (ii) Banks provide a limited waiver of any violation of Section 9.1 of the Credit Agreement for periods prior to the Eighth Amendment Effective Date (defined below) and resulting solely from the reclassification of “operating leases” as “capital leases” to reflect such leases in accordance with ASC Topic 840 (the “Specified Violation”).

 

 NOW THEREFORE, for and in consideration of the mutual covenants and agreements herein contained and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged and confessed, Borrower, Administrative Agent and Banks hereby agree as follows:

 

Section 1. Eighth Amendment Effective Date Amendments.  In reliance on the representations, warranties, covenants and agreements contained in this Eighth Amendment, and subject to the satisfaction of the conditions precedent set forth in Section 3 hereof, the Credit Agreement shall be amended effective as of the Eighth Amendment Effective Date (defined below) in the manner provided in this Section 1.

 

1.1 Additional Definition.  Section 1.1 of the Credit Agreement shall be amended to add thereto in alphabetical order the following definitions of “Capital Lease Obligations” and “Eighth Amendment” which shall read in full as follows:

 

“Capital Lease Obligations” of a Person means the obligations of such Person to pay rent or other amounts under any lease of (or other arrangement conveying the right to use) real or personal property, or a combination thereof, which obligations are required to be classified and accounted for as capital leases on the balance sheet of such Person under GAAP and, for purposes of this Agreement, the amount of such obligations at any time shall be the capitalized amount thereof at such time determined in accordance with GAAP.

 

“Eighth Amendment” means that certain Eighth Amendment to Credit Agreement dated as of July 26, 2012 among Borrower, Administrative Agent and Banks party thereto.

 

1.2 Amendment to Definition.  The definition of “Debt” contained in Section 1.1 of the Credit Agreement shall be amended to replace the reference to “capitalized lease obligations” set forth in clause (c) of the definition of Debt with a reference to “Capital Lease Obligations”.

 

1.3 Amendment to Definition.  The definition of “Loan Papers” contained in Section 1.1 of the Credit Agreement shall be amended and restated in its entirety to read in full as follows:

 

  

  

  

 

“Loan Papers” means this Agreement, the First Amendment, the Second Amendment, the Third Amendment, the Fourth Amendment, the Fifth Amendment, the Sixth Amendment, the Seventh Amendment, the Eighth Amendment, the Notes, each Facility Guarantee which may now or hereafter be executed, each Borrower Pledge Agreement which may now or hereafter be executed, each Subsidiary Pledge Agreement which may now or hereafter be executed, all Mortgages now or at any time hereafter delivered pursuant to Section 5.1, and all other certificates, documents, or instruments delivered in connection with this Agreement, as the foregoing may be amended from time to time.

 

1.4 Amendment to Section 9.1(a) of the Credit Agreement.  Section 9.1(a) of the Credit Agreement shall be amended to restate clause (iii) in its entirety and to add a new clause (iv) thereto to read in full as follows:

 

“(iii)  Capital Lease Obligations in an aggregate amount outstanding at any time not to exceed $300,000,000;

 

(iv)  other unsecured Debt in an aggregate amount outstanding at any time not to exceed $40,000,000;”

 

1.5 Amendment to Section 9.1(b) of the Credit Agreement.  Section 9.1(b) of the Credit Agreement shall be amended and restated in its entirety to read in full as follows:

 

“(b) any other Credit Party may incur, become or remain liable for (i) the Obligations, (ii) without duplication, Permitted Revenue Bond Debt, (iii) without duplication, Permitted Subordinate Debt, subject to the limitations set forth in Section 9.1(a)(ii), and (iv) without duplication, Capital Lease Obligations, subject to the limitations set forth in Section 9.1(a)(iii);”

 

Section 2. Limited Waiver.  In reliance on the representations, warranties, covenants and agreements contained in this Eighth Amendment, and subject to the terms and conditions set forth in this Section 2 and the satisfaction of the conditions precedent set forth in Section 3 hereof, Banks hereby waive the Specified Violation for the period prior to the Eighth Amendment Effective Date.  The limited waiver contained in this Section 2 is limited to the Specified Violation and to the period prior to the Eighth Amendment Effective Date, and nothing contained herein shall be deemed a consent to, or waiver of, any other action or inaction of Borrower or the other Credit Parties which constitutes (or would constitute) a violation of any provision of the Credit Agreement or any other Loan Paper.  Neither Banks nor Administrative Agent shall be obligated to grant any future waivers, consents or amendments with respect to any other provision of the Credit Agreement or any other Loan Paper.

 

Section 3. Conditions Precedent to Eighth Amendment Effective Date Amendments.  The amendments contained in Section 1 and the limited waiver contained in Section 2 shall be effective on the date that each of the following conditions precedent is satisfied (the “Eighth Amendment Effective Date”):

 

3.1 Counterparts.  Administrative Agent shall have received counterparts hereof duly executed by Borrower and the Majority Banks and acknowledged by each Restricted Subsidiary (or, in the case of any party as to which an executed counterpart shall not have been received, telegraphic, electronic, telecopy, or other written confirmation from such party of execution of a counterpart hereof by such party).

 

3.2 No Default; No Borrowing Base Deficiency.  After giving effect to the amendments set forth in Section 1 and the limited waiver set forth in Section 2 hereof, no Default or Event of Default shall have occurred which is continuing, and no Borrowing Base Deficiency then exists.

 

3.3 Other Documents.  Administrative Agent shall have been provided with such documents, instruments and agreements, and Borrower shall have taken such actions, in each case as Administrative Agent may reasonably require in connection with this Eighth Amendment and the transactions contemplated hereby.

 

Section 4. Representations and Warranties.  To induce Banks and Administrative Agent to enter into this Eighth Amendment, Borrower hereby represents and warrants to Banks and Administrative Agent as follows on the Eighth Amendment Effective Date:

 

  

  

  

 

4.1 Reaffirm Existing Representations and Warranties.  After giving effect to the amendments set forth in Section 1 and the limited waiver set forth in Section 2 hereof, each representation and warranty of Borrower contained in the Credit Agreement and the other Loan Papers is true and correct in all material respects on the Eighth Amendment Effective Date, except that any representation or warranty that is qualified by “material” or “Material Adverse Effect” references therein shall be true and correct in all respects.

 

4.2 Due Authorization; No Conflict.  The execution, delivery and performance by Borrower of this Eighth Amendment are within Borrower’s corporate or organizational powers, have been duly authorized by all necessary action, require no action by or in respect of, or filing with, any governmental body, agency or official and do not violate or constitute a default under any provision of applicable law or any Material Agreement binding upon Borrower or any other Credit Party or result in the creation or imposition of any Lien upon any of the assets of Borrower or any other Credit Party other than Liens securing the Obligations.

 

4.3 Validity and Enforceability.  This Eighth Amendment constitutes the valid and binding obligation of Borrower enforceable in accordance with its terms, except as (a) the enforceability thereof may be limited by bankruptcy, insolvency or similar laws affecting creditor’s rights generally, and (b) the availability of equitable remedies may be limited by equitable principles of general application.

 

4.4 No Defense.  Borrower acknowledges that Borrower has no defense to (a) Borrower’s obligation to pay the Obligations when due, or (b) the validity, enforceability or binding effect against Borrower of the Credit Agreement or any of the other Loan Papers or any Liens intended to be created thereby.

 

Section 5. Miscellaneous.

 

5.1 No Waivers.  No failure or delay on the part of Administrative Agent or Banks to exercise any right or remedy under the Credit Agreement, any other Loan Papers or applicable law shall operate as a waiver thereof, nor shall any single or partial exercise of any right or remedy preclude any other or further exercise of any right or remedy, all of which are cumulative and may be exercised without notice except to the extent notice is expressly required (and has not been waived) under the Credit Agreement, the other Loan Papers and applicable law.

 

5.2 Reaffirmation of Loan Papers.  Any and all of the terms and provisions of the Credit Agreement and the Loan Papers shall, except as amended and modified hereby, remain in full force and effect.  The amendments contemplated hereby shall not limit or impair any Liens securing the Obligations, each of which are hereby ratified, affirmed and extended to secure the Obligations as they may be increased pursuant hereto.

 

5.3 Legal Expenses.  Borrower hereby agrees to pay on demand all reasonable fees and expenses of counsel to Administrative Agent incurred by Administrative Agent in connection with the preparation, negotiation and execution of this Eighth Amendment and all related documents.

 

5.4 Parties in Interest.  All of the terms and provisions of this Eighth Amendment shall bind and inure to the benefit of the parties hereto and their respective successors and assigns.

 

5.5 Counterparts.  This Eighth Amendment may be executed in counterparts (including, without limitation, by electronic signature), and all parties need not execute the same counterpart; however, no party shall be bound by this Eighth Amendment until Borrower, the Majority Banks and each Restricted Subsidiary have executed a counterpart.  Facsimiles and counterparts executed by electronic signature shall be effective as originals.

 

5.6 Complete Agreement.  THIS EIGHTH AMENDMENT, THE CREDIT AGREEMENT AND THE OTHER LOAN PAPERS REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR ORAL AGREEMENTS OF THE PARTIES.  THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN OR AMONG THE PARTIES.

 

5.7 Headings.  The headings, captions and arrangements used in this Eighth Amendment are, unless specified otherwise, for convenience only and shall not be deemed to limit, amplify or modify the terms of this Eighth Amendment, nor affect the meaning thereof.

 

  

  

  

 

5.8 Governing Law.  THIS EIGHTH AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

 

  

  

  

 

IN WITNESS WHEREOF, the parties hereto have caused this Eighth Amendment to be duly executed by their respective authorized officers on the date and year first above written.

 

	  	
BORROWER:

	  	
 

DENBURY RESOURCES INC.,

a Delaware corporation

	  	  	  
	  	
By:

	
/s/ Mark C. Allen

	  	  	
Mark C. Allen,

Senior Vice President and

Chief Financial Officer

 

 

[Signature Page]

Eighth Amendment to Credit Agreement

Denbury Resources Inc.

 

  

  

  

 

Each of the undersigned (i) consent and agree to this Eighth Amendment, and (ii) agree that the Loan Papers to which it is a party shall remain in full force and effect and shall continue to be the legal, valid and binding obligation of such Person, enforceable against it in accordance with its terms.

 

	  	
DENBURY GATHERING & MARKETING, INC.,

a Delaware corporation

 

	  	  	  
	  	
By:

	
/s/ Mark C. Allen

	  	  	
Mark C. Allen,

Senior Vice President and Chief Financial Officer

 

	  	
DENBURY HOLDINGS, INC.,

a Delaware corporation (f/k/a Denbury Encore Holdings Inc.)

 

	  	  	  
	  	
By:

	
/s/ Mark C. Allen

	  	  	
Mark C. Allen,

Senior Vice President and Chief Financial Officer

 

	  	
DENBURY OPERATING COMPANY,

a Delaware corporation (f/k/a EAP Properties, Inc. and successor-by-merger to a previous “Denbury Operating Company”)

 

	  	  	  
	  	
By:

	
/s/ Mark C. Allen

	  	  	
Mark C. Allen,

Senior Vice President and Chief Financial Officer

 

 

	  	
DENBURY ONSHORE, LLC,

a Delaware limited liability company

 

	  	  	  
	  	
By:

	
/s/ Mark C. Allen

	  	  	
Mark C. Allen,

Senior Vice President and Chief Financial Officer

 

 

	  	
DENBURY PIPELINE HOLDINGS, LLC,

a Delaware limited liability company

 

	  	  	  
	  	
By:

	
/s/ Mark C. Allen

	  	  	
Mark C. Allen,

Senior Vice President and Chief Financial Officer

 

 

[Signature Page]

Eighth Amendment to Credit Agreement

Denbury Resources Inc.

 

  

  

  

 

	  	
DENBURY GREEN PIPELINE-TEXAS, LLC,

a Delaware limited liability company

 

	  	  	  
	  	
By:

	
/s/ Mark C. Allen

	  	  	
Mark C. Allen,

Senior Vice President and Chief Financial Officer

 

	  	
DENBURY GULF COAST PIPELINES, LLC,

a Delaware limited liability company

 

	  	  	  
	  	
By:

	
/s/ Mark C. Allen

	  	  	
Mark C. Allen,

Senior Vice President and Chief Financial Officer

 

	  	
GREENCORE PIPELINE COMPANY LLC,

a Delaware limited liability company

 

	  	  	  
	  	
By:

	
/s/ Mark C. Allen

	  	  	
Mark C. Allen,

Senior Vice President and Chief Financial Officer

 

	  	
DENBURY AIR, LLC,

a Delaware limited liability company (f/k/a EAP Operating, LLC)

 

	  	  	  
	  	
By:

	
/s/ Mark C. Allen

	  	  	
Mark C. Allen,

Senior Vice President and Chief Financial Officer

 

 

[Signature Page]

Eighth Amendment to Credit Agreement

Denbury Resources Inc.

 

  

  

  

 

	  	
ADMINISTRATIVE AGENT/BANK:

 

	  	
JPMORGAN CHASE BANK, N.A.,

as Administrative Agent and a Bank

 

	  	  	  
	  	
By:

	
/s/ Mark E. Olson

	  	  	
Mark E. Olson,

Authorized Officer

 

 

[Signature Page]

Eighth Amendment to Credit Agreement

Denbury Resources Inc.

 

  

  

  

 

	  	
BANKS:

 

	  	
BANK OF AMERICA, N.A.

 

	  	  	  
	  	
By:

	
/s/ Christopher T. Renyl

	  	
Name:

	
Christopher T. Renyl

	  	
Title:

	
Vice President

 

 

[Signature Page]

Eighth Amendment to Credit Agreement

Denbury Resources Inc.

 

  

  

  

 

	  	
BANKS:

 

	  	
WELLS FARGO BANK, N.A.

 

	  	  	  
	  	
By:

	
/s/ Tom K. Martin

	  	
Name:

	
Tom K. Martin

	  	
Title:

	
Director

 

 

[Signature Page]

Eighth Amendment to Credit Agreement

Denbury Resources Inc.

 

  

  

  

 

	  	
BANKS:

 

	  	
THE BANK OF NOVA SCOTIA

 

	  	  	  
	  	
By:

	
/s/ Mark Sparrow

	  	
Name:

	
Mark Sparrow

	  	
Title:

	
Director

 

 

[Signature Page]

Eighth Amendment to Credit Agreement

Denbury Resources Inc.

 

  

  

  

 

	  	
BANKS:

 

	  	
CREDIT SUISSE AG, CAYMAN ISLANDS BRANCH

 

	  	  	  
	  	
By:

	
/s/ Doreen Barr

	  	
Name:

	
Doreen Barr

	  	
Title:

	
Director

	  	
By:

	
/s/ Michael Spaight

	  	
Name:

	
Michael Spaight

	  	
Title:

	
Associate

 

 

[Signature Page]

Eighth Amendment to Credit Agreement

Denbury Resources Inc.

 

  

  

  

 

	  	
BANKS:

 

	  	
ROYAL BANK OF CANADA

 

	  	  	  
	  	
By:

	
/s/ Jay T. Sartain

	  	
Name:

	
Jay T. Sartain

	  	
Title:

	
Authorized Signatory

 

 

[Signature Page]

Eighth Amendment to Credit Agreement

Denbury Resources Inc.

 

  

  

  

 

	  	
BANKS:

 

	  	
UBS AG, STAMFORD BRANCH

 

	  	  	  
	  	
By:

	
/s/ Irja R. Otsa

	  	
Name:

	
Irja R. Otsa

	  	
Title:

	
Associate Director

	  	
By:

	
/s/ David Urban

	  	
Name:

	
David Urban

	  	
Title:

	
Associate Director

 

 

[Signature Page]

Eighth Amendment to Credit Agreement

Denbury Resources Inc.

 

  

  

  

 

	  	
BANKS:

 

	  	
UNION BANK, N.A.

 

	  	  	  
	  	
By:

	
/s/ Alison White

	  	
Name:

	
Alison White

	  	
Title:

	
Vice President

 

 

[Signature Page]

Eighth Amendment to Credit Agreement

Denbury Resources Inc.

 

  

  

  

 

	  	
BANKS:

 

	  	
CREDIT AGRICOLE CORPORATE AND INVESTMENT BANK (f/k/a CALYON NEW YORK BRANCH)

 

	  	  	  
	  	
By:

	
/s/ Mark Roche

	  	
Name:

	
Mark Roche

	  	
Title:

	
Managing Director

 

	  	
By:

	
/s/ Michael Willis

	  	
Name:

	
Michael Willis

	  	
Title:

	
Managing Director

 

 

[Signature Page]

Eighth Amendment to Credit Agreement

Denbury Resources Inc.

 

  

  

  

 

	  	
BANKS:

 

	  	
BANK OF SCOTLAND plc

 

	  	  	  
	  	
By:

	
/s/ Stephen Giacolone

	  	
Name:

	
Stephen Giacolone

	  	
Title:

	
Assistant Vice President

 

 

[Signature Page]

Eighth Amendment to Credit Agreement

Denbury Resources Inc.

 

  

  

  

 

	  	
BANKS:

 

	  	
COMPASS BANK

 

	  	  	  
	  	
By:

	
/s/ Blake Kirshman

	  	
Name:

	
Blake Kirshman

	  	
Title:

	
Assistant Vice President

 

 

[Signature Page]

Eighth Amendment to Credit Agreement

Denbury Resources Inc.

 

  

  

  

 

	  	
BANKS:

 

	  	
CAPITAL ONE NATIONAL ASSOCIATION, formerly known as Capital One, N.A.

 

	  	  	  
	  	
By:

	
/s/ Peter Shen

	  	
Name:

	
Peter Shen

	  	
Title:

	
Vice President

	  	  	  

 

 

[Signature Page]

Eighth Amendment to Credit Agreement

Denbury Resources Inc.

 

  

  

  

 

	  	
BANKS:

 

	  	
COMERICA BANK

 

	  	  	  
	  	
By:

	
/s/ John S. Lesikar

	  	
Name:

	
John S. Lesikar

	  	
Title:

	
Vice President

 

 

[Signature Page]

Eighth Amendment to Credit Agreement

Denbury Resources Inc.

 

  

  

  

 

	  	
BANKS:

 

	  	
ING CAPITAL LLC

 

	  	  	  
	  	
By:

	
/s/ Petra van Woensel

	  	
Name:

	
Petra van Woensel

	  	
Title:

	
Director

 

 

[Signature Page]

Eighth Amendment to Credit Agreement

Denbury Resources Inc.

 

  

  

  

 

	  	
BANKS:

 

	  	
CIBC, INC.

 

	  	  	  
	  	
By:

	
/s/ Trudy Nelson

	  	
Name:

	
Trudy Nelson

	  	
Title:

	
Authorized Signatory

 

 

	  	
By:

	
/s/ Richard Antl

	  	
Name:

	
Richard Antl

	  	
Title:

	
Authorized Signatory

 

 

[Signature Page]

Eighth Amendment to Credit Agreement

Denbury Resources Inc.

 

  

  

  

 

	  	
BANKS:

 

	  	
KEYBANK NATIONAL ASSOCIATION

 

	  	  	  
	  	
By:

	
/s/ Craig Hanselman

	  	
Name:

	
Craig Hanselman

	  	
Title:

	
Vice President

 

 

[Signature Page]

Eighth Amendment to Credit Agreement

Denbury Resources Inc.

 

  

  

  

 

	  	
BANKS:

 

	  	
U.S. BANK NATIONAL ASSOCIATION

 

	  	  	  
	  	
By:

	
/s/ Daria M. Mahoney

	  	
Name:

	
Daria M. Mahoney

	  	
Title:

	
Vice President

 

 

[Signature Page]

Eighth Amendment to Credit Agreement

Denbury Resources Inc.

 

  

  

  

 

	  	
BANKS:

 

	  	
SUMITOMO MITSUI BANKING CORPORATION

 

	  	  	  
	  	
By:

	
/s/ Shuji Yabe

	  	
Name:

	
Shuji Yabe

	  	
Title:

	
Managing Director

 

 

[Signature Page]

Eighth Amendment to Credit Agreement

Denbury Resources Inc.

 

  

  

  

 

	  	
BANKS:

 

	  	
FIFTH THIRD BANK

 

	  	  	  
	  	
By:

	
/s/ Matthew Lewis

	  	
Name:

	
Matthew Lewis

	  	
Title:

	
Vice President

 

 

[Signature Page]

Eighth Amendment to Credit Agreement

Denbury Resources Inc.

 

  

  

  

 

	  	
BANKS:

 

	  	
GOLDMAN SACHS LENDING PARTNERS LLC

 

	  	  	  
	  	
By:

	
/s/ Michelle Latzoni

	  	
Name:

	
Michelle Latzoni

	  	
Title:

	
Authorized Signatory

 

 

[Signature Page]

Eighth Amendment to Credit Agreement

Denbury Resources Inc.

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