Document:

Exhibit 10.4 Berry Ninth Amendment

Exhibit 10.4
Execution Version

NINTH AMENDMENT TO SECOND AMENDED AND RESTATED
CREDIT AGREEMENT

THIS NINTH AMENDMENT TO SECOND AMENDED AND RESTATED CREDIT AGREEMENT (this “Amendment”) is made as of April 30, 2014 by and among BERRY PETROLEUM COMPANY, LLC, a Delaware limited liability company ( the “Borrower”), WELLS FARGO BANK, N.A., as Administrative Agent for the Lenders (in such capacity, the “Administrative Agent”) and the Lenders party to the Original Credit Agreement defined below (the “Lenders”).

WITNESSETH:

WHEREAS, the Borrower, the Administrative Agent and the Lenders entered into that certain Second Amended and Restated Credit Agreement dated as of November 15, 2010 (as amended, supplemented or restated to the date hereof, the “Original Credit Agreement”), for the purpose and consideration therein expressed, whereby the Lenders became obligated to make loans and other extensions of credit to the Borrower as provided therein; and

WHEREAS, the Borrower, the Administrative Agent and the Lenders now desire to amend the Original Credit Agreement upon the terms and conditions as set forth herein;

NOW, THEREFORE, in consideration of the premises and the mutual covenants and agreements contained herein and in the Original Credit Agreement, in consideration of the loans and other extensions of credit that may hereafter be made by the Lenders to Borrower, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto do hereby agree as follows:

ARTICLE I
DEFINITIONS AND REFERENCES
SECTION 1.1.   Terms Defined in the Original Credit Agreement.  Unless the context otherwise requires or unless otherwise expressly defined herein, the terms defined in the Original Credit Agreement shall have the same meanings whenever used in this Amendment.
SECTION 1.2.   Other defined Terms.  Unless the context otherwise requires, the following terms when used in this Amendment shall have the meanings assigned to them in this Section 1.2.
“Amendment” means this Ninth Amendment to Second Amended and restated Credit Agreement.

“Credit Agreement” means the Original Credit Agreement as amended hereby.

1

ARTICLE II
AGREEMENTS

SECTION 2.1.   Definitions.  The following definitions in Section 1.1 of the Original Credit Agreement are hereby amended in their entirety to read as follows:
“‘Maturity Date’ means April 6, 2019.

‘Maximum Credit Amount’ means $1,200,000,000.”

SECTION 2.2.   Pro Forma EBITDAX for Asset Acquisitions.  Section 6.2(i) of the Original credit Agreement is hereby amended by deleting such Section and replacing it with “Reserved”.
SECTION 2.3.   Delivery of Title Information.  Section 6.17(d) is hereby amended by deleting the phrase “45 days” and replacing it with “60 days”.
SECTION 2.4.   Current Ratio.  Section 7.11 of the Original Credit Agreement is hereby amended by deleting such Section in its entirety and replacing it with the following:
“Section 7.11    Current Ratio.  The Borrower will not permit, as of the last day of any Fiscal Quarter, its ratio of (a) Current Assets to (b) Current Liabilities to be less than 1.0 to 1.0, provided however, notwithstanding anything to the contrary contained herein, it shall not be a Default or Event of Default under this Agreement if such ratio is less than 1.0 to 1.0 as of the last day of any Fiscal Quarter (up to three Fiscal Quarters in each calendar year) if the ratio determined in accordance with Section 9.01(b) of the Linn Credit Agreement (but including the Current Assets and Current Liabilities of the Borrower and its Consolidated Subsidiaries in such calculation) for such Fiscal Quarter is not less than 1.0 to 1.0.”
ARTICLE III
BORROWING BASE

SECTION 3.1.   Borrowing Base.  For the period from and including the Ninth Amendment Effective Date to but excluding the date of the next Scheduled Redetermination or Special Redetermination, as the case may be, the amount of the Borrowing Base shall be equal to $1.4 billion.  Notwithstanding the foregoing, the Borrowing Base may be subject to further adjustments from time to time pursuant to ‎Section 2.9, ‎Section 7.3 or Section 7.5 of the Credit Agreement.
ARTICLE IV
ASSIGNMENTS AND REALLOCATIONS
The Lenders have agreed among themselves, in consultation with the Borrower, to reallocate their respective Commitments and to, among other things, add National Bank of 

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Canada, Commonwealth Bank of Australia and BP Energy Company as “Lenders” under the Credit Agreement (each a “New Lender”) and Regions Bank has decided to exit as a Lender (the “Exiting Lender”).  The Administrative Agent and the Borrower hereby consent to such reallocation and the Lenders’ and Exiting Lender’s assignments of their Commitments, including assignments to the New Lenders.  On the Ninth Amendment Effective Date and after giving effect to such reallocations, the Commitment of each Lender shall be as set forth on Schedule 1 of this Ninth Amendment which Schedule 1 supersedes and replaces the Schedule 1 to the Original Credit Agreement.  With respect to such reallocation, each Lender shall be deemed to have acquired the Commitment allocated to it from each of the other Lenders and the Exiting Lender pursuant to the terms of the Assignment and Assumption Agreement attached as Exhibit F to the Original Credit Agreement as if each such Lender and Exiting Lender had executed an Assignment and Assumption Agreement with respect to such allocation.  In connection with this Assignment and for purposes of this Assignment only, the Lenders, the New Lenders, the Exiting Lender, the Administrative Agent and the Borrower waive the processing and recordation fee under Section 10.5(b)(iv).

ARTICLE V
CONDITIONS PRECEDENT
This Amendment shall become effective on the date (such date, the “Ninth Amendment Effective Date”), when each of the following conditions is satisfied (or waived in accordance with Section 10.1 of the Credit Agreement):

SECTION 5.1.   Fees and Expenses.  The Administrative Agent shall have received (a) all fees and other amounts due and payable on or prior to the Ninth Amendment Effective Date and all other fees the Borrower has agreed to pay in connection with this Amendment and (b) to the extent invoiced, reimbursement or payment of all out-of-pocket expenses required to be reimbursed or paid by the Borrower under the Credit Agreement.
SECTION 5.2.   Documents.  The Administrative Agent shall have received from all of the Lenders and the Borrower, counterparts (in such number as may be requested by the Administrative Agent) of this Amendment signed on behalf of such Person.

SECTION 5.3.   No Default.  No Default shall have occurred and be continuing as of the date hereof, after giving effect to the terms of this Amendment.
The Administrative Agent is hereby authorized and directed to declare this Amendment to be effective when it has received documents confirming or certifying, to the satisfaction of the Administrative Agent, compliance with the conditions set forth in this Article V or the waiver of such conditions as permitted in Section 10.1 of the Credit Agreement.  Such declaration shall be final, conclusive and binding upon all parties to the Agreement for all purposes.
ARTICLE VI
MISCELLANEOUS

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SECTION 6.1.   Confirmation.  The provisions of the Credit Agreement, as amended by this Amendment, shall remain in full force and effect following the effectiveness of this Amendment.

SECTION 6.2.   Ratification and Affirmation; Representations and Warranties.  The Borrower hereby (a) acknowledges the terms of this Amendment; (b) ratifies and affirms its obligations under, and acknowledges its continued liability under, each Loan Document to which it is a party and agrees that each Loan Document to which it is a party remains in full force and effect as expressly amended hereby and (c) represents and warrants to the Lenders that as of the date hereof, after giving effect to the terms of this Amendment:
(i)    all of the representations and warranties contained in each Loan Document to which it is a party are true and correct in all material respects (except those which have a materiality qualifier, which shall be true and correct as so qualified), except to the extent any such representations and warranties are expressly limited to an earlier date, in which case, such representations and warranties shall continue to be true and correct as of such specified earlier date;
(ii)    no Default or Event of Default has occurred and is continuing; and
(iii)    no event or events have occurred which individually or in the aggregate could reasonably be expected to have a Material Adverse Effect.
SECTION 6.3.   Loan Document.  This Amendment is a Loan Document.
SECTION 6.4.   Counterparts.  This Amendment may be executed by one or more of the parties hereto in any number of separate counterparts, and all of such counterparts taken together shall be deemed to constitute one and the same instrument.  Delivery of this Amendment by facsimile or other electronic transmission shall be effective as delivery of a manually executed counterpart hereof.
SECTION 6.5.   NO ORAL AGREEMENT.  THIS AMENDMENT, THE CREDIT AGREEMENT AND THE OTHER LOAN DOCUMENTS EXECUTED IN CONNECTION HEREWITH AND THEREWITH REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR UNWRITTEN ORAL AGREEMENTS OF THE PARTIES.  THERE ARE NO SUBSEQUENT ORAL AGREEMENTS BETWEEN THE PARTIES.
SECTION 6.6.   GOVERNING LAW.  THIS AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF TEXAS.
SECTION 6.7.   Payment of Expenses.  In accordance with Section 10.4 of the Credit Agreement, the Borrower agrees to pay or reimburse the Administrative Agent for all of its 

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reasonable out-of- pocket costs and reasonable expenses incurred in connection with this Amendment, any other documents prepared in connection herewith and the transactions contemplated hereby, including, without limitation, the reasonable fees and disbursements of counsel to the Administrative Agent.
SECTION 6.8.   Severability.  Any provision of this Amendment which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.
SECTION 6.9.   Credit Agreement.  On and after the Ninth Amendment Effective Date, each reference in the Credit Agreement to “this Agreement,” “hereunder,” “hereof” or words of like import referring to the Credit Agreement shall mean and be a reference to the Credit Agreement, as amended by this Amendment.  The execution, delivery and effectiveness of this Amendment shall not, except as expressly provided herein, operate as a waiver of any right, power or remedy of any Lender or the Administrative Agent under any of the Loan Documents, nor constitute a waiver of any provision of any of the Loan Documents.
SECTION 6.10.   Successors and Assigns.  This Amendment shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns.
[SIGNATURES BEGIN NEXT PAGE]

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

	
			
	BORROWER:
	BERRY PETROLEUM COMPANY, LLC

	 
	 

	 
	 

	 
	 

	 
	By:
	/s/ Kolja Rockov

	 
	 
	Kolja Rockov

	 
	 
	Executive Vice President and 
Chief Financial Officer

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	LENDERS:
	WELLS FARGO BANK, N.A., as Administrative Agent, a Lender, Swingline Lender and LC Issuer

	 
	 

	 
	 

	 
	 

	 
	By:
	/s/ Betsy Jocher

	 
	Name:
	Betsy Jocher

	 
	Title:
	Director

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	ROYAL BANK OF CANADA, as a Lender

	 
	 

	 
	 

	 
	 

	 
	By:
	/s/ Don J. McKinnerney

	 
	Name:
	Don J. McKinnerney

	 
	Title:
	Authorized Signatory

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	BARCLAYS BANK PLC, as a Lender

	 
	 

	 
	 

	 
	 

	 
	By:
	/s/ Vanessa A. Kurbatskiy

	 
	Name:
	Vanessa A. Kurbatskiy

	 
	Title:
	Vice President

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	CITIBANK, N.A., as a Lender

	 
	 

	 
	 

	 
	 

	 
	By:
	/s/ Eamon Baqui

	 
	Name:
	Eamon Baqui

	 
	Title:
	Vice President

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	CREDIT AGRICOLE CORPORATE AND INVESTMENT BANK, as a Lender

	 
	 

	 
	 

	 
	 

	 
	By:
	/s/ Sharada Manne

	 
	Name:
	Sharada Manne

	 
	Title:
	Managing Director

	 
	 

	 
	 

	 
	 

	 
	By:
	/s/ Michael Willis

	 
	Name:
	Michael Willis

	 
	Title:
	Managing Director

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	THE ROYAL BANK OF SCOTLAND PLC, as a Lender

	 
	 

	 
	 

	 
	 

	 
	By:
	/s/ Steve Ray

	 
	Name:
	Steve Ray

	 
	Title:
	Director

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	UBS AG, STAMFORD BRANCH, as a Lender

	 
	 

	 
	 

	 
	 

	 
	By:
	/s/ Lana Gifas

	 
	Name:
	Lana Gifas

	 
	Title:
	Director

	 
	 

	 
	 

	 
	 

	 
	By:
	/s/ Jennifer Anderson

	 
	Name:
	Jennifer Anderson

	 
	Title:
	Associate Director

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	GOLDMAN SACHS BANK USA, as a Lender

	 
	 

	 
	 

	 
	 

	 
	By:
	/s/ Mark Walton

	 
	Name:
	Mark Walton

	 
	Title:
	Authorized Signatory

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	CREDIT SUISSE, AG CAYMAN ISLANDS BRANCH, as a Lender

	 
	 

	 
	 

	 
	 

	 
	By:
	/s/ Michael Spaight

	 
	Name:
	Michael Spaight

	 
	Title:
	Authorized Signatory

	 
	 

	 
	 

	 
	 

	 
	By:
	/s/ Samuel Miller

	 
	Name:
	Samuel Miller

	 
	Title:
	Authorized Signatory

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	BANK OF MONTREAL, as a Lender

	 
	 

	 
	 

	 
	 

	 
	By:
	/s/ James V. Ducote

	 
	Name:
	James V. Ducote

	 
	Title:
	Managing Director

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	CANADIAN IMPERIAL BANK OF COMMERCE, NEW YORK BRANCH, as a Lender

	 
	 

	 
	 

	 
	 

	 
	By:
	/s/ Trudy Nelson

	 
	Name:
	Trudy Nelson

	 
	Title:
	Authorized Signatory

	 
	 

	 
	 

	 
	 

	 
	By:
	/s/ Daria Mahoney

	 
	Name:
	Daria Mahoney

	 
	Title:
	Authorized Signatory

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	THE BANK OF NOVA SCOTIA, as a Lender

	 
	 

	 
	 

	 
	 

	 
	By:
	/s/ Terry Donovan

	 
	Name:
	Terry Donovan

	 
	Title:
	Managing Director

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	UNION BANK, N.A., as a Lender

	 
	 

	 
	 

	 
	 

	 
	By:
	/s/ Stacy A. Goldstein

	 
	Name:
	Stacy A. Goldstein

	 
	Title:
	Vice President

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	BANK OF AMERICA, N.A., as a Lender

	 
	 

	 
	 

	 
	 

	 
	By:
	/s/ Joseph Scott

	 
	Name:
	Joseph Scott

	 
	Title:
	Director

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	CAPITAL ONE, N.A., as a Lender

	 
	 

	 
	 

	 
	 

	 
	By:
	/s/ Matthew L. Molero

	 
	Name:
	Matthew L. Molero

	 
	Title:
	Sr. Vice President

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	ING CAPITAL LLC, as a Lender

	 
	 

	 
	 

	 
	 

	 
	By:
	/s/ Juli Bieser

	 
	Name:
	Juli Bieser

	 
	Title:
	Director

	 
	 

	 
	 

	 
	 

	 
	By:
	/s/ Charles Hall

	 
	Name:
	Charles Hall

	 
	Title:
	Managing Director

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	JPMORGAN CHASE BANK, as a Lender

	 
	 

	 
	 

	 
	 

	 
	By:
	/s/ Michael A. Kamauf

	 
	Name:
	Michael A. Kamauf

	 
	Title:
	Authorized Officer

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	SUN TRUST BANK, as a Lender

	 
	 

	 
	 

	 
	 

	 
	By:
	/s/ Chulley Bogle

	 
	Name:
	Chulley Bogle

	 
	Title:
	Vice President

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	U.S. BANK NATIONAL ASSOCIATION, as a Lender

	 
	 

	 
	 

	 
	 

	 
	By:
	/s/ Ben J. Leonard

	 
	Name:
	Ben J. Leonard

	 
	Title:
	Vice President

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	COMPASS BANK, as a Lender

	 
	 

	 
	 

	 
	 

	 
	By:
	/s/ Kathleen J. Bowen

	 
	Name:
	Kathleen J. Bowen

	 
	Title:
	Senior Vice President

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	SOCIETE GENERALE, as a Lender

	 
	 

	 
	 

	 
	 

	 
	By:
	/s/ Graeme Bullen

	 
	Name:
	Graeme Bullen

	 
	Title:
	Managing Director

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	DNB CAPITAL LLC, as a Lender

	 
	 

	 
	 

	 
	 

	 
	By:
	/s/ Joe Hykle

	 
	Name:
	Joe Hykle

	 
	Title:
	Senior Vice President

	 
	 

	 
	 

	 
	 

	 
	By:
	/s/ Robert Dupree

	 
	Name:
	Robert Dupree

	 
	Title:
	Senior Vice President

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	ABN AMRO CAPITAL USA LLC, as a Lender

	 
	 

	 
	 

	 
	 

	 
	By:
	/s/ Darrell Holley

	 
	Name:
	Darrell Holley

	 
	Title:
	Managing Director

	 
	 

	 
	 

	 
	 

	 
	By:
	/s/ J. D. Kalverkamp

	 
	Name:
	J. D. Kalverkamp

	 
	Title:
	Country Executive

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	BNP PARIBAS, as a Lender

	 
	 

	 
	 

	 
	 

	 
	By:
	/s/ Ann Rhoads

	 
	Name:
	Ann RHOADS

	 
	Title:
	Managing Director

	 
	 

	 
	 

	 
	 

	 
	 
	 

	 
	By:
	/s/ Julien Pecoud-Bouvet

	 
	Name:
	Julien PECOUD-BOUVET

	 
	Title:
	Vice President

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	NATIXIS, as a Lender

	 
	 

	 
	 

	 
	 

	 
	By:
	/s/ Louis P. Laville, III

	 
	Name:
	Louis P. Laville, III

	 
	Title:
	Managing Director

	 
	 

	 
	 

	 
	 

	 
	 
	 

	 
	By:
	/s/ Stuart Murray

	 
	Name:
	Stuart Murray

	 
	Title:
	Managing Director

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	SUMITOMO MITSUI BANKING CORPORATION, as a Lender

	 
	 

	 
	 

	 
	 

	 
	By:
	/s/ James D. Weinstein

	 
	Name:
	James D. Weinstein

	 
	Title:
	Managing Director

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	COMERICA BANK, as a Lender

	 
	 

	 
	 

	 
	 

	 
	By:
	/s/ William Robinson

	 
	Name:
	William Robinson

	 
	Title:
	Vice President

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	BRANCH BANKING AND TRUST COMPANY, as a Lender

	 
	 

	 
	 

	 
	 

	 
	By:
	/s/ Deanna Breland

	 
	Name:
	Deanna Breland

	 
	Title:
	Senior Vice President

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	TORONTO DOMINION (NEW YORK) LLC, as a Lender

	 
	 

	 
	 

	 
	 

	 
	By:
	/s/ Masood Fikree

	 
	Name:
	Masood Fikree

	 
	Title:
	Authorized Signatory

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	FIFTH THIRD BANK, as a Lender

	 
	 

	 
	 

	 
	 

	 
	By:
	/s/ Byron L. Cooley

	 
	Name:
	Byron L. Cooley

	 
	Title:
	Executive Director

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	PNC BANK NATIONAL ASSOCIATION, as a Lender

	 
	 

	 
	 

	 
	 

	 
	By:
	/s/ Jonathan Luchansky

	 
	Name:
	Jonathan Luchansky

	 
	Title:
	Assistant Vice President

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	KEYBANK NATIONAL ASSOCIATION, as a Lender

	 
	 

	 
	 

	 
	 

	 
	By:
	/s/ John Dravenstott

	 
	Name:
	John Dravenstott

	 
	Title:
	Vice President

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	THE HUNTINGTON NATIONAL BANK, as a Lender

	 
	 

	 
	 

	 
	 

	 
	By:
	/s/ Stephen Hoffman

	 
	Name:
	Stephen Hoffman

	 
	Title:
	Managing Director

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	ASSOCIATED BANK, N.A., as a Lender

	 
	 

	 
	 

	 
	 

	 
	By:
	/s/ Farhan Iqbal

	 
	Name:
	Farhan Iqbal

	 
	Title:
	Senior Vice President

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	BOKF, NA dba BANK OF OKLAHOMA (successor to Bank of Oklahoma, N.A.), as a Lender

	 
	 

	 
	 

	 
	 

	 
	By:
	/s/ Sonja Borodko

	 
	Name:
	Sonja Borodko

	 
	Title:
	Vice President

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	REGIONS BANK, solely for purposes of Section 4 as an Exiting Lender

	 
	 

	 
	 

	 
	 

	 
	By:
	/s/ Daniel G. Steele

	 
	Name:
	Daniel G. Steele

	 
	Title:
	Senior Vice President

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	MORGAN STANLEY BANK, N.A., as a Lender

	 
	 

	 
	 

	 
	 

	 
	By:
	/s/ Michael King

	 
	Name:
	Michael King

	 
	Title:
	Authorized Signatory

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	DEUTSCHE BANK AG NEW YORK BRANCH, as a Lender

	 
	 

	 
	 

	 
	 

	 
	By:
	/s/ Michael Getz

	 
	Name:
	Michael Getz

	 
	Title:
	Vice President

	 
	 

	 
	 

	 
	 

	 
	 
	 

	 
	By:
	/s/ Michael Shannon

	 
	Name:
	Michael Shannon

	 
	Title:
	Vice President

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	BP ENERGY COMPANY, as a Lender

	 
	 

	 
	 

	 
	 

	 
	By:
	/s/ Steve J. Provenzano

	 
	Name:
	Steve J. Provenzano

	 
	Title:
	Vice President

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	NATIONAL BANK OF CANADA, as a Lender

	 
	 

	 
	 

	 
	 

	 
	By:
	/s/ Angela Becker

	 
	Name:
	Angela Becker

	 
	Title:
	Authorized Signatory

	 
	 

	 
	 

	 
	 

	 
	By:
	/s/ John Swendsen

	 
	Name:
	John Swendsen

	 
	Title:
	Authorized Signatory

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	COMMONWEALTH BANK OF AUSTRALIA, as a Lender

	 
	 

	 
	 

	 
	 

	 
	By:
	/s/ Damien Podagiel

	 
	Name:
	Damien Podagiel

	 
	Title:
	Senior Associate

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SCHEDULE 1

LENDERS SCHEDULE

	
					
	Name of Lender
	Percentage Share
	Commitment
($Millions)

	Wells Fargo Bank, N.A.
	5.4%
	

	$65.0
	

	Royal Bank of Canada
	4.2%
	50.0
	

	Bank of Montreal
	3.3%
	40.0
	

	Barclays Bank PLC
	3.3%
	40.0
	

	Capital One, N.A.
	3.3%
	40.0
	

	Citibank, N.A.
	3.3%
	40.0
	

	Credit Agricole Corporate and Investment Bank
	3.3%
	40.0
	

	Credit Suisse, AG Cayman Islands Branch
	3.3%
	40.0
	

	DNB Capital LLC
	3.3%
	40.0
	

	Goldman Sachs Bank USA
	3.3%
	40.0
	

	JPMorgan Chase Bank
	3.3%
	40.0
	

	Societe Generale
	3.3%
	40.0
	

	The Royal Bank of Scotland PLC
	3.3%
	40.0
	

	UBS AG, Stamford Branch
	3.3%
	40.0
	

	BNP Paribas
	2.8%
	34.0
	

	Canadian Imperial Bank of Commerce, New York Branch
	2.8%
	34.0
	

	Compass Bank
	2.8%
	34.0
	

	Deutsche Bank
	2.8%
	34.0
	

	The Bank of Nova Scotia
	2.8%
	34.0
	

	PNC Bank National Association
	2.8%
	34.0
	

	Sumitomo Mitsui Banking Corporation
	2.8%
	34.0
	

	Union Bank, N.A.
	2.8%
	34.0
	

	U.S. Bank National Association
	2.8%
	34.0
	

	ABN AMRO Capital USA LLC
	2.1%
	25.0
	

	Bank of America, N.A.
	2.1%
	25.0
	

	Branch Banking and Trust Company
	2.1%
	25.0
	

	Comerica Bank
	2.1%
	25.0
	

	Fifth Third Bank
	2.1%
	25.0
	

	ING Capital LLC
	2.1%
	25.0
	

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	Name of Lender
	Percentage Share
	Commitment
($Millions)

	Sun Trust Bank
	2.1%
	25.0
	

	Toronto Dominion (New York) LLC
	2.1%
	25.0
	

	Natixis
	2.1%
	25.0
	

	BOKF, N.A. dba Bank of Oklahoma (successor to Bank of Oklahoma)
	1.6%
	19.0
	

	The Huntington National Bank
	1.2%
	15.0
	

	Associated Bank, N.A.
	0.8%
	10.0
	

	Commonwealth Bank of Australia
	0.8%
	10.0
	

	Morgan Stanley Bank, N.A.
	0.4%
	5.0
	

	BP Energy Company
	0.4%
	5.0
	

	National Bank of Canada
	0.4%
	5.0
	

	Keybank National Association
	0.4%
	5.0
	

	TOTAL
	100.0%
	

	$1,200.0
	

Active.15604030.6Exhibit 10.1 Employment Offer Letter

Exhibit 10.1

Peter J. Nowlan

Dear Peter:

		
	Re:
	Offer of Employment as Chief Brand and Marketing Officer

We are pleased to offer you a permanent, full-time position with Tim Hortons Inc. (the “Company” or “THI”) as Chief Brand and Marketing Officer, reporting to our President and Chief Executive Officer.  

Scope of Employment

As Chief Brand and Marketing Officer, you shall undertake those duties, responsibilities and reporting requirements which are ordinarily expected of a Chief Marketing Officer of a publicly-listed company, as well as other services as are required from time to time by the President and Chief Executive Officer.  You shall perform these services principally from the Head Office of the Company in Oakville, Ontario, although you acknowledge that the performance of these duties and functions may necessitate travel to other places throughout Canada, the United States and Internationally. 

Throughout the term of your employment, you agree to carry out the performance of your duties in compliance with the governing documents of the Company, including all rules, policies and practices now or hereafter established and amended from time to time by the Company. 

Employment Conditions

This offer is conditional upon satisfaction of each of the following conditions:  

		
	•
	Approval by the Board of Directors of the Company of your appointment as Chief Brand and Marketing Officer; and

		
	•
	Execution of this Offer Letter and the attached Employment and Post-Employment Covenants Agreement (the “Covenants Agreement”) in forms satisfactory to the Company.

Subject to the satisfaction of the foregoing conditions, your employment with the Company will commence on May 21, 2014, and will be subject to the terms and conditions set forth in the table below.  

All dollar amounts in this offer letter are in Canadian funds.  In addition, we have separately provided to you information on the Company’s group benefits and pension plan.  The signature below indicates that you have reviewed and read these materials. 

Participation in and level of compensation under the following compensation arrangements and benefits programs shall be subject to the Company’s practices and procedures as they may exist from time to time 

2.

including, without limitation, the attainment of performance objectives and other grant or award conditions.  The weighting, mix and design features of compensation programs are also subject to change at the Board’s discretion.

	
			
	Provision
	Employment Terms
	Commentary

	Position
	•   Chief Brand and Marketing Officer
	•   Reports to the President and Chief Executive Officer of the Company

	Effective Date
	•   No later than May 21, 2014
	 

	Term of Agreement
	•   Open-ended employment
	•   No fixed term

	Base Salary
	•   $375,000 effective May 21, 2014
	•   Base Salary will be reviewed by the Human Resource and Compensation Committee (“HRCC”) on an annual basis, and any future adjustments will be at the sole discretion of the HRCC.

	Target Annual Incentive (“EAPP”)
	•   Target annual incentive of 80% of base salary ($300,000 for 2014)
	•   Your 2014 annual incentive target will not be prorated.  Final payout is subject to company and individual performance.  
•   Awards under the EAPP are entirely discretionary on the part of the Company, and there is no guarantee of an award in any particular year.
•   For 2014, your EAPP payout will be based on the following company performance metrics:
o     THI Net Income (60%)
o     Same Store Sales Growth (30%), weighted 80% Canada and 20% U.S.
o     Individual/Strategic Objectives as determined by the President & CEO (10%)    

3.

	
			
	Provision
	Employment Terms
	Commentary

	 Performance
 Share Units (“PSU”)
	•   Annual grant of $150,000 at target 
•   This award will be granted during the open trading window expected to be in either May or August 2014  

	•   Awards under the Stock Incentive Plan are entirely discretionary on the part of the Company, and there is no guarantee of an award or grant in any particular year.                   
•   PSUs vest after three years based on three-year Company performance against Return on Asset (ROA) and Relative Total Shareholder Return (TSR) objectives.
•   The 2014 grant will have a minimum vest (floor) of 95% of units granted and will vest in March 2017. Subsequent grants will have a minimum vest (floor) of 50% of units granted.
•   Further information will be provided at the time of grant.

	Stock Options/SARs
	•   Annual grant of $150,000 at target 
•   This award will be granted during the open trading window expected to be in either May or August 2014
	•   Awards under the Stock Incentive Plan are entirely discretionary on the part of the Company and there is no guarantee of an award or grant in any particular year.  
•   Options/SARs vest annually over 3 years with a 7-year term.

	Welcome (Sign-On) Grant
	•   Welcome PSU grant of $300,000 with 95% guarantee (see commentary under PSU section)
•   Welcome Restricted Share Units (RSU) grant of $300,000
•   This award will be granted during the open trading window expected to be in either May or August 2014
	•   The PSUs will vest in March 2017 based on the Company’s performance against ROA and TSR objectives (see above).
•   RSUs will vest one-third annually beginning in March 2015.

	Company Allowance
	•   Eligible to participate in the Company’s car allowance program, on the same terms as offered to other employees at the executive officer level
	•   $1,900 per month, paid bi-weekly.

	Executive Medical
	•   One Medcan Health Assessment per year
	•   Approximate value of $1,600

4.

	
			
	Provision
	Employment Terms
	Commentary

	Defined Contribution Pension Plan (“DCPP”)
	•   Eligible to participate in the existing THI pension plan arrangements
	•    The defined contribution plan includes compulsory employee participation and employer contributions at levels determined by the Company.  
•     The Company contributes 5% of your gross regular earnings on your behalf and you contribute 2% of regular earnings, subject to legislated maximum limits. 
•     The Company regularly reviews these plans, and accordingly, reserves the right to, at any time, amend or terminate these plans.

	Executive Retirement Savings Plan (“Savings Plan”)
	•   Eligible to participate in existing THI executive retirement savings plan arrangement
•    This program, combined with the DCPP, delivers 12% of your base pay and annual incentive in retirement savings 
	•     The Company regularly reviews these plans, and accordingly, reserves the right to, at any time, amend or terminate these plans.
•     Prorated to employment period.  For 2014, this will be the prorated portion of your base salary only.  For 2015, the calculation will be based on 12% of your 2015 base salary plus your 2014 bonus (paid in February 2015), less employer contributions to DCPP.

	Group Benefits
	•   Eligible to participate in the Company’s benefit plans, including medical, dental, vision, life and long-term disability insurance, which are offered to other employees of the Company at the executive officer level  
	•     The Company regularly reviews the benefit plans, as well as its insurance carriers, and accordingly, reserves the right to amend or discontinue the benefit plans and change its insurance carriers where deemed appropriate.  

	Vacation
	•   Entitled to five weeks of vacation
	 

	Change in Control Agreement
	•   Provides for severance upon termination of employment after Change in Control
	•     Execution of our Standard Change in Control Agreement

	Restrictive Covenants
	•   Confidentiality agreement
•   Non-compete clause – 1 year from notice of termination
•   Non-solicitation clause – 2 years from notice of termination
•   Other covenants as set forth in the Covenants Agreement
	•     Execution of our standard employment and post-employment covenant agreement will be required, i.e., the “Covenants Agreement”.

5.

	
			
	Provision
	Employment Terms
	Commentary

	Policies
	•   Acknowledgement to comply with applicable Company plans and programs
	•   Recoupment policy
•   Share ownership guidelines 
•   Insider trading policy
•   Standards of Business Practices
•   Governance Guidelines
•   All other policies, as applicable to   employees

Corporate Plans and Policies

By signing this Offer Letter, you acknowledge and agree that:  

		
	(a)
	the Company has provided you with copies of all of the Company’s policies and programs relevant to your employment, including but not limited to those described in the Company’s management information circular dated March 11, 2014 in the sections entitled “Corporate Governance Principles and Practices”, “Compensation Discussion and Analysis” and “Executive and Director Compensation” (collectively, the “Company Policies”); 

		
	(b)
	you have read and understood the Company Policies, and agree that your employment, as well as your entitlement to compensation, benefits and incentives, will be governed by the Company Policies; and

		
	(c)
	the Company may, from time to time, amend, alter, change or delete policies and programs including, without limitation, the Company Policies, to meet the business needs of the enterprise and that, upon receiving notice of such policies or programs (or any amendments, alternations, changes or deletions thereof), your employment, as well as your entitlement to compensation, benefits and incentives, will be governed by such revised policies and programs.

In addition, by signing this Offer Letter, you acknowledge and agree that:

		
	(a)
	as an officer of the Company, you will be held to equity ownership guidelines equal to three times your annual base salary, from time to time, and you have until the end of 2019 to satisfy the guidelines; and

		
	(b)
	the Company’s Recoupment Policy Relating to Performance-Based Compensation is binding on you as a “Senior Executive” under such policy, and that all performance-based compensation awarded to you in accordance with the terms and conditions of this Offer Letter or otherwise under any incentive, bonus or other plan of the Company or its affiliates are subject to the Recoupment Policy.

Eligibility to Perform Services

By signing this Offer Letter, you represent, warrant and covenant that:

		
	(a)
	you are legally eligible to work in Canada and will continue to be legally eligible to work in Canada; 

6.

		
	(b)
	you are not bound by any agreement or subject to any legal obligations to any third party, including but not limited to any person with whom the Company may be in competition, that would prohibit you from negotiating or accepting employment with the Company or would otherwise conflict with any of your obligations to the Company under this Offer Letter or the Covenants Agreement including but not limited to any confidentiality, non-competition, non-solicitation or non-interference agreement with respect to any third party; and  

		
	(c)
	the information provided by you, both verbally and on any resume, application form or questionnaire is complete and accurate in every respect.   

You acknowledge that the Company has relied upon the representations outlined above, and you agree to indemnify and hold the Company, its directors, officers, employees, agents and/or consultants harmless against any and all claims, liabilities, losses, damages, costs, fees and/or expenses including reasonable legal fees incurred by the Company, its directors, officers, employees, agents and/or consultants by reason of your violation of any of the representations set forth above.

Privacy Consent

By accepting employment with the Company, you hereby consent to the Company and any affiliate collecting, using and disclosing your personal information to establish, manage, terminate and/or otherwise to administer the employment relationship, including, but not limited to:

		
	(a)
	providing for proper remuneration for your services to the Company, which may include disclosure to third party payroll providers;

		
	(b)
	administering and/or facilitating the provision of any benefits to which you are or may become entitled, including benefits coverage, registered retirement savings plan and incentive plans; this shall include the disclosure of your personal information to the Company’s third party service providers and administrators;

		
	(c)
	enabling the Company to comply with any regulatory, reporting and withholding requirements relating to your employment, including but not limited to insider trading requirements;

		
	(d)
	performance and promotion reviews and consideration;

		
	(e)
	monitoring your access to and use of the Company’s electronic media services to confirm that the use of such services is in compliance with the Company’s policies and procedures and is not in violation of any applicable laws;

		
	(f)
	complying with the Company’s obligations to report improper or illegal conduct by any director, officer, executive or agent of the Company under any applicable securities, criminal or other law; 

		
	(g)
	acquiring, selling or transferring any or all of the Company’s business; and

		
	(h)
	complying with all applicable laws relating to public disclosure or otherwise.

You also agree to the terms of the enclosed Covenants Agreement which forms part of this offer of employment, and which expands upon several of the terms and conditions of employment set forth herein.  

Congratulations on joining the Company.  We are confident you will find your new position both challenging and rewarding.

7.

Tim Hortons Inc.

Per:       /s/ MARC CAIRA    
Marc Caira
President and Chief Executive Officer    

The undersigned hereby accepts the above offer of employment upon the terms and conditions set out therein.  The undersigned acknowledges that he was given the opportunity to obtain independent legal advice prior to accepting the said offer of employment.  The parties hereto shall be entitled to rely on delivery of a facsimile/electronically scanned copy of this executed document and such copy shall be legally effective to create a valid and binding agreement.

  /s/ PETER J. NOWLAN            
Peter J. Nowlan

Dated:  April 13, 2014

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