PORTIONS OF THIS EXHIBIT
IDENTIFIED BY “***” HAVE BEEN DELETED PURSUANT TO A
REQUEST FOR CONFIDENTIAL TREATMENT FILED WITH THE SECURITIES AND
EXCHANGE COMMISSION UNDER RULE 24b-2 OF THE SECURITIES EXCHANGE ACT
OF 1934, AS AMENDED, AND THE FREEDOM OF INFORMATION ACT.
Exhibit 10(n)-2
EXECUTION COPY
FOURTH AMENDMENT TO
CAVITY DEVELOPMENT AND STORAGE
AGREEMENT
This Fourth
Amendment to Cavity Development and Storage Agreement (this
“Fourth Amendment”) made of the 30th day of July, 2004,
by and between Olin Corporation (“Olin”) and Bay Gas
Storage Company, Ltd. (“Bay Gas”).
WHEREAS, the
parties hereto entered into that certain Cavity Development and
Storage Agreement dated January 14, 1992, which is recorded in
the Office of the Judge of Probate of Washington County, Alabama in
Deed Record Book No. 320, page 106, et seq.; and
WHEREAS, the
parties hereto entered into that certain First Amendment to Cavity
Development and Storage Agreement dated August 18, 1994
(“First Amendment”), which is recorded in the Office of
the Judge of Probate of Washington County, Alabama, in
Miscellaneous Book 100, page 112, et seq.; that certain Second
Amendment to Cavity Development and Storage Agreement made as of
the 28th day of September, 2000, which is recorded in the Office of
the Judge of Probate of Washington County, Alabama, in
Miscellaneous Book 128, Page 77, et seq., Entry #42538 (the
“Second Amendment”); and that certain
Third Amendment to Cavity
Development and Storage Agreement dated March 28, 2003 which
is recorded in the Office of the Judge of Probate of Washington
County, Alabama in Miscellaneous Book 430, Page 62, et seq., Entry
# 51387 (the “Third Amendment”) (the Cavity
Development and Storage Agreement as
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amended by the First Amendment,
Second Amendment and Third Amendment being hereinafter referred to
as the “CDSA”); and
WHEREAS, Bay Gas
has constructed the initial Cavity provided for pursuant to the
CDSA (the “First Cavity”) as well as an additional
Cavity (the “Second Cavity”), and Bay Gas’ Cavity
Development Rights with respect to a third cavity have terminated
upon expiration of the Maximum Development Period specified in
Section 2.07 of the CDSA; and
WHEREAS, Bay Gas
and Olin desire to amend the CDSA to provide for New Cavity
Development Rights with respect to the First Cavity, the Second
Cavity and an additional Cavity (the “New Third
Cavity”) as set forth herein.
NOW, THEREFORE, in
consideration of the premises, receipt by Olin from Bay Gas of the
payment specified in Section 1 hereof and of the other
payments specified in the CDSA and other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows (capitalized
terms used herein and not otherwise defined having the meanings
ascribed thereto in the CDSA):
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1.
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Bay
Gas shall pay to Olin the sum of *** within seven (7) days
following the execution of this Fourth Amendment.
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2.
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The
CDSA is hereby amended as follows:
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(a)
the address of the principal place of business of Olin in the
preface is amended to read as follows: 501 Merritt Seven, Norwalk,
Connecticut 06856-4500
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(b)
the penultimate recital paragraph is amended in its entirety to
read as follows:
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WHEREAS, Olin and Owners have
entered into a fourth amendment to the Cavity Storage Agreement,
effective as of May 1, 1991, a complete copy of which amendment
together with letter agreements effecting extensions thereof are
attached hereto as Exhibit B, establishing the monies to be
paid to the Owners with respect to cavity storage of natural gas,
and a fifth amendment to the Cavity Storage Agreement, effective as
of July 30, 2004, a complete copy of which is attached hereto
as Exhibit B-1, setting forth certain agreements with respect
to the New Third Cavity in Section 2.01(c) hereof.
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(c) a
new sentence is added to the end of Section 1.01 as
follows:
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For
the purposes hereof the “Surface Lease” shall mean the
same as it has been and may be amended from time to time, and the
“Leased Land” shall include all real property leased to
BGSC pursuant thereto.
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(d)
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the
last sentence of Section 1.02 is amended in its entirety to
read as follows:
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For
the purposes hereof the site of the New Third Cavity and any
alternate Cavity Site leased to BGSC pursuant to the Surface Lease
or any amendment thereto shall be deemed a “Cavity
Site”.
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(e)
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a
new Section 2.01(c) is added as follows:
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(c)
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Notwithstanding subsection 2.01(a)
and (b) above, BGSC shall have the rights to: develop a third
Cavity hereunder (the “New Third Cavity”) with a
maximum capacity of *** barrels (subject to adjustment as provided
herein, the “Stipulated Capacity” of the New Third
Cavity); to develop increased capacity (“Fillout
Capacity”) in either or both of the First Cavity and the
Second Cavity up to the respective Stipulated Capacity of each,
being *** barrels for the First Cavity, and *** barrels for the
Second Cavity; and to develop capacity in excess of the Stipulated
Capacity (capacity in excess of Stipulated Capacity being referred
to as “Chargeable Expanded Capacity”) in either or both
of the First Cavity and the Second Cavity, subject to payment of a
Partial Brine Fee as provided below. Measurements of
Actual
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Capacity shall be made not less
frequently than annually, and to the extent that Chargeable
Expanded Capacity is created, the Stipulated Capacity of the New
Third Cavity shall be correspondingly reduced. If Chargeable
Expanded Capacity is created, the Partial Brine Fee for same shall
become due as specified in Section 2.04(d). The Brine Fee for
the New Third Cavity shall be as specified in Section
2.04(a).
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(f)
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a
new Section 2.01(d) is added as follows:
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(d)
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The
development rights set forth in Section 2.01(c) (the
“New Cavity Development Rights”) may be exercised in
such order and at such times (which times shall be extended for the
duration of any force majeure event described in Section 6.01)
prior to the termination of the New Cavity Development Rights
pursuant to Sections 2.07(d) and 2.07(e) below, subject to the
terms hereof, as may be determined by BGSC. The maximum Chargeable
Expanded Capacity shall be *** barrels.
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(g)
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a
new Section 2.01(e) is added as follows:
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(e)
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In
the event that, following the expiration of the New Cavity
Development Rights any one or more of the Cavities has not been
developed to its full Stipulated Capacity:
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(i)
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if
Olin’s Brine Services (being the brine supply and disposal
and other services set forth in Section 2.02) are not
committed to a third party and Olin so agrees, BGSC may continue to
develop Fillout Capacity in any one or more of the First and Second
Cavities or to increase the Third Cavity up to its Stipulated
Capacity, upon notice to Olin of its intent to do so. In such
event, Olin shall provide Brine Services for such development on
the same basis as during the term of the New Cavity Development
Rights.
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(ii)
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if
Olin’s Brine Services are committed to a third party or are
otherwise unavailable, BGSC may at its expense drill fresh water
wells and utilize disposal wells in accordance with
Section 2.09 to continue development of Fillout Capacity in
any one or more of the First and Second Cavities or to increase the
Third Cavity up to its Stipulated Capacity, and Olin will cooperate
in such cavity development as provided therein.
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Any
capacity created pursuant to this Section 2.01(e) shall be
added to previously-developed capacity for
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purposes of calculating service fees
pursuant to Section 3.02(e).
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(h)
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Section 2.02(a) is amended by
replacing the phrase “of *** grams per liter” with the
phrase “averaging approximately *** grams per liter”,
and by replacing the phrase “*** gallons per minute”
with the phrase “*** gallons per minute”.
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(i)
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Section 2.02(c) is amended by
adding to the end of the first sentence the phrase “, except
as provided in Section 2.09”; by replacing the phrase
“generally averaged *** to *** gpm” in the third
sentence with “generally averaged *** to *** gpm”; and
by replacing the phrase “*** gpm” in the last sentence
with the phrase “*** gpm”.
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(j)
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Section 2.02(d) is amended by
adding the following to the end of the last sentence:
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,
it being understood that solution mining methods used prior to
July 30, 2004, including reverse circulation (injection water
down the tubing-case annulus, brine return through the tubing) and
solution mining under gas (“SMUG”), have been mutually
agreed.
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(k)
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The
last sentence of Section 2.02(e) is amended in its entirety to
read as follows:
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(e)
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Subject to the requirements of
Section 2.02(a), should the returned injection water/brine be
of such quality (due to impurities or for any other reason), that,
in Olin’s reasonable opinion, Olin’s present treatment
facilities could not accept and treat said injection water/brine,
then BGSC shall either: treat the injection water/brine to render
it equivalent (in Olin’s sole determination) to Olin’s
existing raw brine; or, if other treatment is deemed necessary by
Olin, reimburse Olin upon demand for the extra treatment costs
incurred by Olin calculated at Olin’s cost; or utilize
disposal wells in accordance with Section 2.09.
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(l)
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Section 2.02(g) is amended in
its entirety to read as follows:
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(g)
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Olin shall timely grant to BGSC
pipeline rights of way and easements over Olin’s lands during
the leaching, dewatering and maintenance washing processes over
which BGSC may construct at BGSC’s expense pipelines and
equipment to accomplish the purposes of the Agreement. Each such
BGSC pipeline and equipment if not removed by BGSC at
BGSC’s
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expense pipelines and equipment to
accomplish the purposes of the Agreement. Each such BGSC pipeline
and equipment if not removed by BGSC at BGSC’s expense
immediately after it is no longer useful for solution mining or
maintenance washing pursuant to this Agreement, shall be removed by
Olin at BGSC’s expense.
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(m)
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Section 2.03(b) is
deleted.
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(n)
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The
first sentence of Section 2.04(a) is amended by replacing the
phrase “brine supply and disposal services described in
Section 2.02 hereof” with the term “Brine
Services”.
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(o)
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The
following new sentence is added to Section 2.04(a) as the third
sentence thereof:
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Notwithstanding the foregoing
sentence, the brine fee for the New Third Cavity shall be *** (the
“New Brine Fee”), subject to any credit for a Partial
Brine Fee that may be applied thereto pursuant to
Section 2.04(d) and also subject to the credit for a portion
of an extension fee, if any, paid as provided in
Section 2.07(d).
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(p)
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The
penultimate sentence of Section 2.04(a) is deleted.
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(q)
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A
new Section 2.04(d) is added as follows:
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(d)
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In
the event that BGSC develops Chargeable Expanded Capacity prior to
payment of the New Brine
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Fee, BGSC shall pay to Olin a
partial Brine Fee (“Partial Brine Fee”) in the amount
of ***. The Partial Brine Fee shall be due within 30 days
after action is taken to create any Chargeable Expanded Capacity.
Any Partial Brine Fee paid to Olin shall be a credit against any
New Brine Fee thereafter due.
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(r)
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A
new Section 2.07(d) is added as follows:
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(d)
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Notwithstanding the provisions of
Section 2.07(c), should BGSC fail to spud
(“Commence”) the New Third Cavity before expiration of
the “New Maximum Development Period” then the New
Cavity Development Rights shall termina
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