UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): November 30, 2020
Lonestar Resources US Inc.
(Exact name of registrant as specified in its charter)
| Delaware | 001-37670 | 81-0874035 | ||
| (State or other jurisdiction of incorporation) |
(Commission File Number) |
(IRS Employer Identification No.) |
| 111 Boland Street, Suite 301 Fort Worth, Texas |
76107 | |
| (Address of principal executive offices) | (Zip Code) |
Registrant’s telephone number, including area code: (817) 921-1889
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| ☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| ☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Securities registered pursuant to Section 12(b) of the Act:
| Title of Each Class |
Trading Symbol* |
Name of Exchange on Which Registered | ||
| Class A Voting Common Stock, par value $0.001 per share | LONEQ | NASDAQ Global Select Market |
| * | The registrant’s Class A Voting Common Stock began trading on the Pink Open Market on October 12, 2020 under the symbol “LONEQ.” |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☒
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Introductory Note
As previously disclosed, on September 30, 2020 (the “Petition Date”), Lonestar Resources US Inc., a Delaware corporation (the “Company” or “we”), and certain of its direct and indirect wholly-owned subsidiaries (collectively with the Company, the “Debtors”), filed voluntary petitions for relief (collectively, the “Petitions” and, the cases commenced thereby, the “Cases”) under chapter 11 of title 11 of the United States Code (the “Bankruptcy Code”) in the United States Bankruptcy Court for the Southern District of Texas (Houston) (the “Bankruptcy Court”). The Debtors also filed with the Bankruptcy Court the proposed Joint Prepackaged Plan of Reorganization for Lonestar Resources US Inc. and its Affiliate Debtors under Chapter 11 of the Bankruptcy Code, as described below (as amended, modified or supplemented from time to time, the “Plan”). On November 12, 2020, the Bankruptcy Court entered an order confirming and approving the Plan (the “Confirmation Order”). The Plan was previously filed as Exhibit 2.1 to the Company’s Current Report on Form 8-K filed with the U.S. Securities and Exchange Commission on November 12, 2020 and is hereby incorporated by reference as Exhibit 2.1 to this Current Report on Form 8-K.
On November 30, 2020 (the “Effective Date”), the conditions to effectiveness of the Plan were satisfied or waived and the Company emerged from Chapter 11. The Company filed a notice of the Effective Date of the Plan with the Bankruptcy Court on November 30, 2020 (the “Notice of Effective Date”). A copy of the Notice of Effective Date is attached hereto as Exhibit 99.1 and is incorporated herein by reference.
| Item 1.01 | Entry into a Material Definitive Agreement. |
Exit Facility Credit Agreement
On the Effective Date, the Company and Lonestar Resources America Inc. entered into a new first-out senior secured revolving credit facility with Citibank, N.A., as administrative agent, and the other lenders from time to time party thereto (the “Revolving Credit Facility”) and a second-out senior secured term loan credit facility (the “Term Loan Facility” and, together with the Revolving Credit Facility, the “Credit Facilities”) by amending and restating the company’s existing credit agreement (as so amended and restated, the “Amended and Restated Credit Agreement”). The Revolving Credit Facility provides for revolving loans in an aggregate amount of up to $225 million, subject to borrowing base capacity. Letters of credit will be available up to the lesser of (a) $2.5 million and (b) the aggregate unused amount of commitments under the Revolving Credit Facility then in effect. On the Effective Date, Lonestar Resources America Inc. will borrow $60 million in term loans under the Term Loan Facility. The Credit Facilities will mature on November 30, 2023. The term loans under the Term Loan Facility amortize on a quarterly basis in an amount equal to $5.0 million. Our obligations under the Credit Facilities will be guaranteed by all of the Company’s direct and indirect subsidiaries (subject to certain permitted exceptions) and will be secured by a lien on substantially all of the Company’s, Lonestar Resources America Inc.’s and the guarantors’ assets (subject to certain exceptions).
Borrowings and letters of credit under the Revolving Credit Facility will be limited by borrowing base calculations set forth therein. The initial borrowing base is $225 million, subject to redetermination. The borrowing base will be redetermined semiannually on or around May 1 and November 1 of each year, with one interim “wildcard” redetermination available between scheduled redeterminations. The first scheduled redetermination will be on or around February 1, 2021.
Borrowings under the Credit Facilities will bear interest at a floating rate at our option, which can be either an adjusted Eurodollar rate plus an applicable margin of 3.50% per annum or a base rate plus an applicable margin of 4.50% per annum.
Our Credit Facilities will contain customary covenants, including, but not limited to, restrictions on our ability and that of our subsidiaries to merge and consolidate with other companies, incur indebtedness, grant liens or security interests on assets, make acquisitions, loans, advances or investments, pay dividends, sell or otherwise transfer assets, or enter into transactions with affiliates.
The Credit Facilities will provide that, upon the occurrence of certain events of default, our obligations thereunder may be accelerated and the lending commitments terminated. Such events of default include payment defaults to the lenders thereunder, material inaccuracies of representations and warranties, covenant defaults, cross-defaults to other material indebtedness, voluntary and involuntary bankruptcy proceedings, material money judgments, certain change of control events and other customary events of default.
The foregoing description of the Amended and Restated Credit Agreement, including the Credit Facilities, is qualified in its entirety by the full text of the Amended and Restated Credit Agreement, which is attached as Exhibit 10.1 to this Current Report on Form 8-K and is incorporated herein by reference.
Registration Rights Agreement
On the Effective Date, the Company entered into a registration rights agreement (the “Registration Rights Agreement”) with certain parties who received certain shares of New Common Stock (as defined below) on the Effective Date (the “Holders”). The Registration Rights Agreement provides resale registration rights for the Holders’ registrable securities of the Company.
Pursuant to the Registration Rights Agreement, Holders have customary underwritten offering and piggyback registration rights, subject to the limitations set forth in the Registration Rights Agreement. Under their underwritten offering registration rights, Holders have the right to demand the Company to effectuate the distribution of any or all of its Registrable Securities by means of an underwritten offering pursuant to an effective registration statement; provided, however, that the expected gross offering price is equal to or greater than $50.0 million in the aggregate. The Company is not obligated to effect an underwritten demand notice upon certain circumstances, including within 180 days of closing an underwritten offering. Under their piggyback registration rights, if at any time the Company proposes to undertake a registered offering of New Common Stock for its own account, the Company must give at least five business days’ notice to all Holders of Registrable Securities to allow them to include a specified number of their shares in the offering.
These registration rights are subject to certain conditions and limitations, including the right of the underwriters to limit the number of shares to be included in an offering and the Company’s right to delay or withdraw a registration statement under certain circumstances. The Company will generally pay all registration expenses in connection with its obligations under the Registration Rights Agreement, regardless of whether a registration statement is filed or becomes effective. The registration rights granted in the Registration Rights Agreement are subject to customary indemnification and contribution provisions, as well as customary restrictions such as blackout periods and, if an underwritten offering is contemplated, limitations on the number of shares to be included in the underwritten offering that may be imposed by the managing underwriter.
This summary is qualified in its entirety by reference to the full text of the Registration Rights Agreement, which is attached hereto as Exhibit 10.2 and incorporated by reference herein.
Warrant Agreements
On the Effective Date, pursuant to the terms of the Plan, the Company entered into a Tranche 1 Warrant Agreement (the “Tranche 1 Warrant Agreement”) with Computershare Inc. and Computershare Trust Company, N.A., and issued warrants (the “Tranche 1 Warrants”) to holders of Allowed Prepetition RBL Claims (as defined in the Plan) or their permitted designees, as applicable, to purchase up to an aggregate of 555,555 shares of common stock in the Company, par value $0.001 (the “New Common Stock”), at an exercise price of $0.001 per share of New Common Stock, subject to adjustment. The Tranche 1 Warrants may only be exercised at any time after the equity value of the Company, as calculated pursuant to the Tranche 1 Warrant Agreement, shall have been greater than $100 million (“Valuation Condition”) and expire on November 30, 2023 (the “Expiration Date”).
On the Effective Date, pursuant to the terms of the Plan, the Company entered into a Tranche 2 Warrant Agreement (the “Tranche 2 Warrant Agreement” and, together with the Tranche 1 Warrant Agreement, the “Warrant Agreements”) with Computershare Inc. and Computershare Trust Company, N.A. and issued warrants (the “Tranche 2 Warrants” and, together with the Tranche 1 Warrants, the “Warrants”) to holders of Allowed Prepetition RBL Claims or their permitted designees, as applicable, to purchase up to an aggregate of 555,555 shares of the New Common Stock, at an exercise price of $0.001 per share of New Common Stock, subject to adjustment. The Tranche 2 Warrants may be exercised after the first anniversary of the issuance of the Second Out Term Loan Facility (as defined in the Plan) if it shall not have been paid in full and if, after the first anniversary date, the Valuation Condition has been met. The Tranche 2 Warrants expire upon the Expiration Date.
No Rights as Stockholders.
Pursuant to the Warrant Agreements, no holders of the Warrants, by virtue of holding or having a beneficial interest in any Warrants, will have the right to vote, to consent, to receive any cash dividends, stock dividends, allotments or rights or other distributions paid, allotted or distributed or distributable to the holders of New Common Stock, or to exercise any rights whatsoever as a stockholder of the Company unless, until and only to the extent such persons become holders of record of New Common Stock issued upon settlement of the Warrants.
Adjustments.
The number of New Common Stock for which any Warrants are exercisable, and the exercise price per share of such Warrants are subject to adjustment from time to time as described in the Warrant Agreements upon the occurrence of certain events including the issuance of New Common Stock as a dividend or distribution to all holders of New Common Stock, or a subdivision, combination, split, reverse split or reclassification of the outstanding New Common Stock into a greater or smaller number of New Common Stock.
Fractional Amounts.
The Company shall not issue any fraction of any Warrants or fraction of a share of New Common Stock upon exercise of any Warrants and any fractions will be rounded down to the nearest whole number.
This summary is qualified in its entirety by reference to the full text of the Tranche 1 Warrant Agreement and Tranche 2 Warrant Agreement, which are attached hereto as Exhibit 10.3 and 10.4, respectively, and incorporated by reference herein.
| Item 1.02 | Termination of Material Definitive Agreement. |
Equity Interests
On the Effective Date, by operation of the Plan and the Confirmation Order, all agreements, instruments, and other documents evidencing, relating to or connected with any equity interests of the Company, issued and outstanding immediately prior to the Effective Date, and any rights of any holder in respect thereof, were deemed cancelled, discharged and of no force or effect.
Senior Notes
On the Effective Date, by operation of the Plan and the Confirmation Order, all outstanding obligations under the 11.25% senior notes due 2023 (the “Prepetition Notes”), issued under that certain Indenture, dated as of January 4, 2018, by and among the Lonestar Resources America Inc., the subsidiary guarantors party thereto and UMB Bank N. A., as trustee, as amended, restated, modified, supplemented, or replaced from time to time, were cancelled and the applicable agreements governing such obligations were terminated, subject to the terms of the Plan.
| Item 2.01 | Termination of Existing Equity Interests. |
The description of the Equity Interests set forth in Item 1.02 of this Current Report on Form 8-K is incorporated herein by reference into this Item 2.01.
| Item 2.03 | Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant. |
The information set forth in Item 1.01 above relating to the Exit Facility Credit Agreement is incorporated herein by reference into this Item 2.03.
| Item 3.02 | Unregistered Sales of Equity Securities |
Upon the Effective Date of the Plan, all previously issued and outstanding equity interests in the Company were cancelled and the Company issued 10,000,000 shares of New Common Stock to holders of Prepetition Notes and the Company’s old common shares and old preferred shares. In addition, the Company issued 555,555 Tranche 1 Warrants and 555,555 Tranche 2 Warrants to holders of Allowed Prepetition RBL Claims (as defined in the Plan) or their permitted designees, as applicable.
The New Common Stock and the Warrants described above were exempt from registration under the Securities Act of 1933, as amended, pursuant to Section 1145 of the Bankruptcy Code (which generally exempts from such registration requirements the issuance of securities under a plan of reorganization).
The information regarding the terms governing the exercise of the Warrants set forth in Item 1.01 above is incorporated herein by reference into this Item 3.02.
| Item 3.03 | Material Modification to Rights of Security Holders. |
The information set forth under the Introductory Note and Items 1.01, 1.02, 5.01 and 5.03 of this Current Report on Form 8-K is incorporated herein by reference into this Item 3.03.
| Item 5.01 | Changes in Control of the Registrant. |
As previously disclosed, on the Effective Date, all previously issued and outstanding equity interests in the Company were cancelled. The Company issued New Common Stock to holders of Prepetition Notes and the Company’s old common shares and old preferred shares, in each case, pursuant to the Plan. For further information, see items 1.01, 1.02 and 3.03 of this Current Report on Form 8-K, which are incorporated herein by reference into this Item 5.01.
| Item 5.02 | Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers. |
Departure and Appointment of Directors
Pursuant to the Plan and the Confirmation Order, as of the Effective Date, the following directors ceased to serve on the Company’s board of directors: John Pinkerton , Henry Ellis, Daniel R. Lockwood, Matthew B. Ockwood, Stephen H. Oglesby, Philip Z. Pace and Randy L. Wolsey.
Pursuant to the Plan and the Confirmation Order, the Company’s new board of directors shall consist of five members, including Frank D. Bracken, III, as chief executive officer, and the four members listed below, who were appointed as of the Effective Date:
| • | Richard Burnett |
| • | Gary D. Packer |
| • | Andrei Verona |
| • | Eric Long |
As of the Effective Date of the Plan, other than as set forth in the Plan and the Plan Supplement (as defined in the Plan), there are no arrangements or understandings between any of the listed directors and any other persons pursuant to which such director was selected as a director and there are no transactions in which any of the listed directors has an interest in which requires disclosure under Item 404(a) of Regulation S-K.
Employment Agreement
The Company entered into an executive employment agreement (the “Employment Agreement”) with Frank D. Bracken, III (“Executive”), the Company’s chief executive officer, effective November 30, 2020. The Employment Agreement has a two year term (unless earlier terminated per the terms of the Employment Agreement) and may be renewed for additional periods upon mutual written agreement of Executive and the Board. Notwithstanding the foregoing, in the case of a Change in Control (as defined in the Employment Agreement, a “Change in Control”), the term of the agreement shall automatically renew until the second anniversary of the effective date of such Change in Control, subject to earlier termination.
The Employment Agreement provides for a base salary of $525,000 and eligibility to participant in the company’s annual bonus program. Executive’s annual incentive compensation under such incentive program for calendar years 2021 and thereafter will be targeted at 100% of his base salary and which will not exceed 200% of such target. Executive shall also be eligible to participate in employee benefit plans, programs and arrangements of the Company and a management incentive plan to be implemented by the Company.
Under the terms of the Employment Agreement, Executive is entitled to certain severance payments and other benefits upon a qualifying termination of employment. Upon termination of Executive’s employment due to death or disability, the Executive (or his estate) shall receive an amount of cash equal to a pro-rata portion of his annual bonus for the year in which termination occurs determined by multiplying (A) the annual bonus based on actual performance and (B) a fraction with the number of full months of the year elapsed prior to the date of termination in the numerator and 12 as the denominator, payable when bonuses for such year are paid to actively employed senior executive of the Company. Upon termination without cause or due to Executive’s resignation for good reason, in either case, which termination does not occur within twenty-four months following date of a Change in Control, then, subject to certain conditions, Executive shall receive (A) cash equal to 1.5 times the sum of his (x) annual salary and (y) target annual bonus and (B) if Executive elects, the Company shall directly pay for certain healthcare payments pursuant to the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended, for the following 18-month period, or such shorter period as provided in the Employment Agreement (such payments “COBRA Benefits”).
If Executive is terminated by the Company without cause or due to Executive’s resignation for good reason, in either case, on or within twenty-four months following the date of a Change in Control, then, subject to certain conditions, including the Executive signing a release, the Executive shall receive (A) an amount in cash equal to 2.0 times the sum of his (x) annual salary and (y) target annual bonus and (B) cash in the amount of the COBRA Benefits, for the following 24-month period.
The foregoing description of the Employment Agreement is qualified in its entirety by reference to the full text of the Employment Agreement, a copy of which is attached hereto as Exhibit 10.5 and is incorporated herein by reference.
| Item 5.03 | Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year. |
On the Effective Date, pursuant to the terms of the Plan and the Confirmation Order, the Company filed the Amended and Restated Certificate of Incorporation of Lonestar Resources US Inc. (the “Certificate of Incorporation”) with the office of the Secretary of State of Delaware. Also on the Effective Date, and pursuant to the terms of the Plan and the Confirmation Order, the Company adopted the Second Amended and Restated Bylaws of Lonestar Resources US Inc. (the “Bylaws”).
Pursuant to the Certificate of Incorporation, the authorized capital stock of the Company consists of 90,000,000 shares of New Common Stock and 10,000,000 shares of preferred stock, par value $0.001 per share.
Each holder of shares of New Common Stock, as such, shall be entitled to one vote for each share of New Common Stock held of record by such holder on all matters submitted for a vote of the stockholders of the Company, in addition to any other vote required by law. Except as otherwise required by law or provided in the Certificate of Incorporation, at any annual or special meeting of stockholders the New Common Stock shall have the right to vote for the election of directors and on all other matters properly submitted to a vote of the stockholders.
Subject to the rights of any then-outstanding shares of preferred stock, the holders of New Common Stock may receive such dividends as the board of directors of the Company (“Board”) may declare in its discretion out of legally available funds. Holders of New Common Stock will share equally in the Company’s assets upon liquidation after payment or provision for all liabilities and any preferential liquidation rights of any preferred stock then outstanding. Shares of New Common Stock are not subject to any redemption provisions and are not convertible into any of the Company’s other securities.
Preferred Stock
Shares of preferred stock may be issued in one or more series from time to time, with each such series to consist of such number of shares and to have such voting powers, full or limited, or no voting powers, and such designations, preferences and relative, participating, optional or other special rights, and the qualifications, limitations or restrictions thereof, as shall be stated in the resolution or resolutions providing for the issuance of such series adopted by the Board.
It is not possible to state the actual effect of the issuance of any shares of preferred stock upon the rights of holders of our common stock until the Board determines the specific rights of the holders of the preferred stock. However, these effects might include:
| • | restricting dividends on the common stock; |
| • | diluting the voting power of the common stock; |
| • | impairing the liquidation rights of the common stock; and |
| • | delaying or preventing a change in control of our company. |
Anti-Takeover Provisions
Some provisions of Delaware law, the Certificate of Incorporation and the Bylaws summarized below could make certain change of control transactions more difficult, including acquisitions of the Company by means of a tender offer, proxy contest or otherwise, as well as removal of the incumbent directors. These provisions may have the effect of preventing changes in management. It is possible that these provisions would make it more difficult to accomplish or deter transactions that a stockholder might consider in his or her best interest, including those attempts that might result in a premium over the market price for the New Common Stock.
Business Combinations under Delaware Law
The Company expressly elects not to be governed by, or subject to, Section 203 of the Delaware General Corporation Law (“DGCL”). In general, the statute prohibits a publicly held Delaware corporation from engaging in a “business combination” with an “interested stockholder” for a period of three years after the date of the transaction in which the person became an interested stockholder, unless the business combination or the transaction by which the person became an interested stockholder is approved by the corporation’s board of directors and/or stockholders in a prescribed manner or the person owns at least 85% of the corporation’s outstanding voting stock after giving effect to the transaction in which the person became an interested stockholder. The term “business combination” includes mergers, asset sales and other transactions resulting in a financial benefit to the interested stockholder. Subject to certain exceptions, an “interested stockholder” is a person who, together with affiliates and associates, owns, or within three years did own, 15% or more of the corporation’s voting stock. A Delaware corporation may “opt out” from the application of Section 203 through a provision in its certificate of incorporation or by-laws. The Company has “opted out” from the application of Section 203.
Number and Election of Directors
As of the Effective Date of the Plan, the Board shall consist of not less than five nor more than eleven members, the exact number of which shall be determined from time to time exclusively by resolution adopted by directors representing at least a majority of the Board.
Calling of Special Meeting of Stockholders
The Bylaws provide that special meetings of stockholders may be called only by (i) the chairman of the Board, (ii) the chief executive officer of the Company or (iii) the secretary of the Company (a) at the request of a majority of the members of the Board then in office or (b) at the written request of one or more holders who own, in the aggregate, at least 25 % in total voting power of the outstanding shares of New Common Stock and any other class or series of stock entitled to vote together with the New Common Stock at the annual meeting. With respect to any special meeting called by the Secretary at the written request of one or more stockholders, such notice shall include the business proposed in such stockholder request except to the extent the Board determines in good faith that such proposed business does not constitute a proper matter for stockholder action. In which case, for the avoidance of doubt, there shall be no special meeting of stockholders.
The Board shall have the sole power to determine the time, date and place, either within or without the State of Delaware, for any special meeting of stockholders. Provided, that a special meeting requested by one or more stockholders shall, if applicable, be held on the date specified in such stockholder request or as promptly as reasonably possible thereafter. Following such determination, it shall be the duty of the Secretary to cause notice to be given to the stockholders entitled to vote at such meeting that a meeting will be held at the time, date and place and in accordance with the record date determined by the Board.
Preemptive Rights
The Certificate of Incorporation provides for preemptive rights to Significant Stockholders (as defined in the Certificate of Incorporation) for any new equity securities in the Company, or any of its subsidiaries, that the Company or any of its subsidiaries proposes to sell or issue for cash, other than as set forth below. Such Significant Stockholder shall have a right to purchase such new equity securities up to such stockholder’s pro rata portion (based on the number of shares of New Common Stock beneficially owned by such stockholder as of the close of business on such record date, as a percentage of the total number of then-outstanding shares of New Common Stock). The preemptive rights do not apply to the following issuances of new equity securities, among others, (1) to employees, officers, directors or consultants pursuant to any equity-based compensation or incentive plan approved by the Board or provided for under the Plan, (2) in connection with a stock split, payment of dividends or any similar recapitalization approved by the Board, (3) pursuant to the Plan, (4) as merger or purchase price consideration in any business combination, consolidation, merger or acquisition transaction or joint venture that is approved by the Board, (5) subject to certain dollar thresholds and other conditions, a bona fide, marketed underwritten public offering of New Common Stock after the closing of which the New Common Stock is listed or quoted on the New York Stock Exchange, the NASDAQ Stock Market or any other national securities exchange, (6) a “direct listing” of the New Common Stock on any such exchange mentioned in clause (5), (7) upon the conversion or exercise of securities convertible or exercisable for shares or securities of (i) New Common Stock, preferred stock or other equity securities of the Company and (ii) equity securities of any subsidiary of the Company, in each case that were initially subject to preemptive rights, and (8) as a bona fide “equity kicker” issued to one or more third party lenders to whom the Company or one or more of its subsidiaries is becoming indebted in connection with the incurrence of any bona fide indebtedness for borrowed money approved by the Board, provided that the aggregate amount issued with respect to all such issuances is less than 5.0% of the then-outstanding shares of New Common Stock.
The Certificate of Incorporation requires the written approval of Company stockholders holding at least 60% of the total voting power of the then outstanding shares of new Common Stock and the outstanding shares of any series of preferred stock of the Company entitled to vote with the New Common Stock to amend or modify the preemptive rights.
Amendments to the Bylaws
The Bylaws may be amended or repealed or new bylaws may be adopted (i) by action of the majority of the Board or (ii) without action of the Board, by the affirmative vote of the holders of a majority of the voting power of all outstanding shares of New Common Stock entitled to vote generally in the election of directors, subject to the rights of the holders of any series of preferred stock. No vote of the stockholders of the Company shall be required to authorize, the adoption, amendment or repeal of any provision of the Bylaws by action of a majority of the Board.
Other Limitations on Stockholder Actions
Advance notice is required for stockholders to nominate directors or to submit proposals for consideration at meetings of stockholders. These procedures provide that notice of stockholder proposals must be timely given in writing to the corporate secretary prior to the meeting at which the action is to be taken. Generally, to be timely, notice must be received at the principal executive offices not less than 60 days nor more than 90 days prior to the anniversary of the immediately preceding annual meeting of stockholders. The Bylaws specify in detail the requirements as to form and content of all stockholder notices. These requirements may preclude stockholders from bringing matters before the stockholders at an annual or special meeting. The Bylaws also describe certain criteria for when stockholder-requested meetings need not be held.
Directors may be removed from office at any time by the affirmative vote of holders of at least a majority of the votes cast by the holders of shares of New Common Stock and holders of any series of preferred stock entitled to vote with the New Common Stock in an election of directors, voting together as a single class, provided that, until the date of the first annual meeting of stockholders to occur after the Effective Date, no director of the Board as of the Effective Date (other than the chief executive officer) may be removed from office without cause (as defined in the Bylaws), except with the prior written consent of the stockholder or stockholders who designated such director to the Board as identified in the Plan.
Newly Created Directorships and Vacancies on the Board
The Certificate of Incorporation provides that vacancies on the Board resulting from death, resignation, removal, disqualification or other causes, and newly created directorships resulting from any increase in the number of directors on the Board, may be filled only (i) by the affirmative vote of a majority of the remaining directors then in office, even if less than a quorum, or by the sole remaining director, (ii) by plurality vote of the holders of shares of New Common Stock (and shares of any series of preferred stock entitled to vote with the holders of New Common Stock in an election of directors) present in person or represented by proxy at a duly called meeting of stockholders, or (iii) by written consent of holders of a majority of the shares of New Common Stock (and shares of any series of preferred stock entitled to vote with the holders of New Common Stock in an election of directors).
No Cumulative Voting
The Certificate of Incorporation provides that there will be no cumulative voting in the election of directors.
Authorized but Unissued Shares
Under Delaware law, the Company’s authorized but unissued shares of New Common Stock are available for future issuance without stockholder approval. The Company may use these additional shares of New Common Stock for a variety of corporate purposes, including future public offerings to raise additional capital, acquisitions and employee benefit plans. The existence of authorized but unissued shares of New Common Stock could render more difficult or discourage an attempt to obtain control of the Company by means of a proxy contest, tender offer, merger or otherwise.
Exclusive Forum
The Certificate of Incorporation provides that, unless the Company consents in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware (the “Court of Chancery”) (or, if the Court of Chancery shall not have jurisdiction, another state court located within the state of Delaware, or if no state court located within the State of Delaware has jurisdiction, the federal district court for the District of Delaware), shall be the sole and exclusive forum for any stockholder of the Company (including a beneficial owner of stock) to bring (i) any derivative action or proceeding brought on behalf of the Company, (ii) any action asserting a claim of breach of a fiduciary duty owed by any director, officer or other employee of the Company to the Company or the Company’s stockholders, (iii) any action asserting a claim against the Company, its directors, officers or employees arising pursuant to any provision of the DGCL, the Certificate of Incorporation or the Bylaws, or (iv) any action asserting a claim against the Company, its directors, officers or employees governed by the internal affairs doctrine, except as to each of (i) through (iv) above, for any claim as to which such court determines that there is an indispensable party not subject to the jurisdiction of such court (and the indispensable party does not consent to the personal jurisdiction of such court within ten (10) days following such determination).
The Certificate of Incorporation provides that the foregoing provisions will not apply to any action or proceeding that is brought to enforce any liability or duty created by the Securities Exchange Act of 1934, as amended (the “Exchange Act”), the Securities Act of 1933, as amended (the “Securities Act), or any other claim for which the federal courts have exclusive jurisdiction.
The descriptions of the Certificate of Incorporation and the Bylaws are qualified in their entirety by reference to the full texts of the Certificate of Incorporation and the Bylaws, which are attached as Exhibits 3.1 and 3.2 to this Current Report on Form 8-K, respectively, and incorporated by reference herein.
Forward-Looking Statements
This Current Report on Form 8-K contains forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act. Such statements reflect management’s current expectations based on currently available information, but are subject to risks, uncertainties and assumptions that could cause actual results to differ materially from those anticipated in or implied by the forward-looking statements. Our forward-looking statements are generally identified with words such as “anticipate,” “believe,” budgeted,” “continue,” “could,” “estimate,” “expect,” “forecast,” “goal,” “intend,” “may,” “objective,” “plan,” “potential,” “predict,” “projection,” “scheduled,” “should,” or other similar words. Risks, uncertainties and assumptions that could affect our forward-looking statements include, among other things the risk related to the impact of the COVID-19 pandemic in geographic regions or markets served by us, or where our operations are located, including the risk of global recession and the other risk factors that have been listed from time to time in the Company’s reports filed with the Securities and Exchange Commission (“SEC”), including but not limited to the Company’s Annual Report on Form 10-K for the year ended December 31, 2019 and any subsequently filed Form 10-Q or Form 8-K.
You should also understand that it is not possible to predict or identify all such factors and should not consider the risk factors in our reports filed with the SEC or the following list to be a complete statement of all potential risks and uncertainties. Factors that could cause our actual results to differ materially from the results contemplated by such forward-looking statements include, but are not limited to: the factors listed in our reports filed with the SEC from time to time. All forward-looking statements included in this notification should be considered in the context of these risks. Except as required by law, we undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Investors and prospective investors are cautioned not to place undue reliance on such forward-looking statements.
| Item 9.01 | Financial Statements and Exhibits. |
| (d) | Exhibits |
| * | Filed herewith. |
| # | Certain schedules and similar attachments have been omitted. The Company agrees to furnish a supplemental copy of any omitted schedule or attachment to the SEC upon request. |
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| LONESTAR RESOURCES US INC. | ||||||
| Date: November 30, 2020 | By: | /s/ Frank D. Bracken, III | ||||
| Name: | Frank D. Bracken, III | |||||
| Title: | Chief Executive Officer | |||||
Exhibit 3.1
AMENDED & RESTATED CERTIFICATE OF INCORPORATION
OF
LONESTAR RESOURCES US INC.
LONESTAR RESOURCES US INC., a corporation organized and existing under the laws of the State of Delaware, hereby certifies as follows:
(1) The name of the Corporation is LONESTAR RESOURCES US INC. (the “Corporation”). The Corporation was originally incorporated by the filing of a Certificate of Incorporation with the Secretary of State of the State of Delaware on December 16, 2015 (the “Incorporation Date”), which was amended on December 22, 2016 and May 24, 2017, (as amended, the “Original Certificate of Incorporation”).
(2) This Amended and Restated Certificate of Incorporation (this “Certificate of Incorporation”) has been duly adopted in accordance with Sections 242, 245 and 303 of the Delaware General Corporation Law, as amended (the “DGCL”), and pursuant to the authority granted to the Corporation under Section 303 of the DGCL and the Joint Prepackaged Plan of Reorganization for Lonestar Resources US Inc. and its Affiliate Debtors Under Chapter 11 of the Bankruptcy Code, as confirmed by that certain order of the United States Bankruptcy Court for the Southern District of Texas, Houston Division entered on November 12, 2020 (as confirmed, including any amendments and supplements thereto, the “Plan of Reorganization”), in In re: Lonestar Resources US Inc., et al., Docket No. 20-34805, under Chapter 11 of the United States Bankruptcy Code (11 U.S.C. Sections 101-1330), as amended (the “Bankruptcy Code”).
(3) The Original Certificate of Incorporation is hereby amended and restated to read in its entirety as follows:
ARTICLE I
NAME
The name of the Corporation is LONESTAR RESOURCES US INC.
ARTICLE II
REGISTERED OFFICE
The address of the registered office of the Corporation in the State of Delaware is 1209 Orange Street, Wilmington, New Castle County, Delaware 19801. The name of its registered agent at such address is the Corporation Trust Company.
ARTICLE III
PURPOSE
The purpose of the Corporation is to engage in any lawful act or activity for which corporations may be organized under the General Corporation Law of the State of Delaware (the “DGCL”).
ARTICLE IV
AUTHORIZED STOCK; CERTAIN DEFINITIONS
The total number of shares of capital stock which the Corporation shall have authority to issue is one hundred million (100,000,000) shares, consisting of ninety million (90,000,000) shares of Common Stock, par value $0.001 per share (“Common Stock”), and ten million (10,000,000) shares of Preferred Stock, par value $0.001 per share (“Preferred Stock”).
The description of the Common Stock and the Preferred Stock of the Corporation, and the relative rights, preferences and limitations thereof, or the method of fixing and establishing the same, are as hereinafter in this Article IV set forth:
SECTION A
COMMON STOCK
1. Voting Rights.
Holders of Common Stock shall be entitled to one vote for each share of such stock held on all matters that may be submitted to a vote of stockholders of the Corporation. Except as otherwise expressly provided in this Certificate of Incorporation and subject to the rights granted to any Preferred Stock, the approval of all matters submitted for a vote of the stockholders of the Corporation shall require, in addition to any other vote required by law, a majority of the votes cast by the holders of shares of Common Stock voted on such matters, either in person or represented by proxy. Each holder of Common Stock shall be entitled to notice of any stockholders’ meeting in accordance with the bylaws of the Corporation (as in effect at the time in question, the “Bylaws”) and applicable law on all matters submitted for a vote of the stockholders of the Corporation.
2. Dividends Generally.
Subject to the rights granted to any Preferred Stock, the holders of Common Stock shall be entitled to receive ratably in proportion to the number of shares of Common Stock held by them such dividends and distributions (payable in cash, stock or otherwise), if any, as may be declared thereon by the board of directors of the Corporation (the “Board of Directors”) at any time and from time to time out of any assets or funds of the Corporation legally available therefor.
3. Liquidation and Dissolution.
In the event of a liquidation, dissolution or winding up of the Corporation, whether voluntary or involuntary, after payment or provision for payment of the debts and liabilities of the Corporation and subject to the prior payment in full of the preferential amounts to which any series of Preferred Stock is entitled, the holders of Common Stock shall share equally, on a share for share basis, in the assets of the Corporation remaining for distribution to the holders of Common Stock. Neither the consolidation or merger of the Corporation with or into any other person or persons nor the sale, transfer or lease of all or substantially all of the assets of the Corporation shall itself be deemed to be a liquidation, dissolution or winding up of the Corporation within the meaning of this paragraph 3.
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SECTION B
PREFERRED STOCK
The Preferred Stock may be issued in one or more series from time to time, with such powers, designations, preferences and relative, participating, optional or other rights, and such qualifications, limitations or restrictions, as shall be stated and expressed in a resolution or resolutions providing for the issue of each such series adopted by the Board of Directors in accordance with this Section B (a “Preferred Stock Designation”). The Board of Directors, in the Preferred Stock Designation with respect to a series of Preferred Stock (a copy of which shall be filed with the Secretary of State of the State of Delaware as required by the DGCL), shall, without limitation of the foregoing, be authorized to fix the following with respect to such series of Preferred Stock:
| (i) | the distinctive serial designations and the number of authorized shares of such series, which may be increased or decreased from time to time, but not below the number of shares thereof then outstanding, by a certificate made, signed and filed as required by law (except where otherwise provided in a Preferred Stock Designation); |
| (ii) | the dividend rate or amounts, if any, for such series, the date or dates from which dividends on all shares of such series shall be cumulative, if dividends on stock of such series shall be cumulative, and the relative preferences or rights of priority, if any, or participation, if any, with respect to payment of dividends on shares of such series; |
| (iii) | the rights of the shares of such series in the event of any voluntary or involuntary liquidation, dissolution or winding up of the Corporation, if any, and the relative preferences or rights of priority, if any, of payment of shares of such series; |
| (iv) | the right, if any, of the holders of such series to convert or exchange such shares into or for other classes or series of a class of stock or indebtedness of the Corporation or of another person, and the terms and conditions of such conversion or exchange, including provision for the adjustment of the conversion or exchange rate in such events as the Board of Directors may determine; |
| (v) | the voting powers, if any, of the holders of such series; |
| (vi) | the terms and conditions, if any, for the Corporation to purchase or redeem shares of such series; and |
| (vii) | any other relative rights, powers, preferences and limitations, if any, of such series. |
The Board of Directors is hereby expressly authorized, subject to Article VIII of this Certificate of Incorporation, to exercise its authority with respect to fixing and designating various series of the Preferred Stock and determining the relative rights, powers, designations, qualifications, limitations, restrictions and preferences, if any, thereof to the full extent permitted by applicable law, subject to any stockholder vote that may be required by this Certificate of
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Incorporation or the DGCL. All shares of any one series of the Preferred Stock shall be alike in every particular. Except to the extent otherwise expressly provided in the Preferred Stock Designation for a series of Preferred Stock, the holders of shares of such series shall have no voting rights except as may be required by the DGCL. Further, unless otherwise expressly provided in the Preferred Stock Designation for a series of Preferred Stock, no consent or vote of the holders of shares of Preferred Stock or any series thereof shall be required for any amendment to this Certificate of Incorporation that would increase the number of authorized shares of Preferred Stock or the number of authorized shares of any series thereof or decrease the number of authorized shares of Preferred Stock or the number of authorized shares of any series thereof (but not below the number of authorized shares of Preferred Stock or such series, as the case may be, then outstanding).
Except as may be provided in a Preferred Stock Designation or required by the DGCL, shares of any series of Preferred Stock that have been redeemed (whether through the operation of a sinking fund or otherwise) or purchased by the Corporation, or which, if convertible or exchangeable, have been converted into or exchanged for shares of stock of any other class or classes, shall have the status of authorized and unissued shares of Preferred Stock and may be reissued as a part of the series of which they were originally a part or may be reissued as part of a new series of Preferred Stock to be created by a Preferred Stock Designation or as part of any other series of Preferred Stock.
SECTION C
NON-VOTING EQUITY SECURITIES
The Corporation shall not issue any non-voting equity securities to the extent prohibited by Section 1123(a)(6) of the Bankruptcy Code as in effect on the effective date of the Plan of Reorganization (the “Effective Date”); provided that the foregoing restriction (i) shall have such force and effect only for so long as Section 1123 of the Bankruptcy Code is in effect and applicable to the Corporation, (ii) shall not have any further force or effect beyond that required under Section 1123(a)(6), and (iii) may be amended or eliminated in accordance with applicable law as from time to time may be in effect.
SECTION D
CERTAIN DEFINITIONS
As used in this Certificate of Incorporation, the following terms shall have the meanings set forth below:
i. “Affiliate” means with respect to any person, any other person directly or indirectly controlling, controlled by, or under common control with, such person as of the date on which, or at any time during the period for which, the determination of affiliation is being made (including any investment fund the primary investment manager or investment advisor to which is such person or its Affiliate). For purposes of this definition, the term “control” (including the correlative meanings of the terms “controlled by” and “under common control with”), as used with respect to any person, means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of such person, whether through the ownership of voting securities, by contract or otherwise.
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ii. “beneficially own” has the meaning ascribed to such term in Rule 13d-3 under the Exchange Act.
iii. “Business Day” means any day other than a Saturday, Sunday or day on which commercial banks in the States of Delaware or New York are authorized or required by law to be closed for business.
iv. “Exchange Act” means the Securities Exchange Act of 1934, as amended.
v. “New Equity Securities” means any and all (A) shares of Common Stock, Preferred Stock or other equity securities of the Corporation, (B) equity securities of any subsidiary of the Corporation, (C) securities exchangeable into, or convertible or exercisable for, shares or securities of a type specified in clause (A) or (B), and (D) options, warrants or other rights to acquire securities of a type specified in clause (A) or (B), in each case other than as issued (1) to employees, officers, directors or consultants pursuant to any equity-based compensation or incentive plan approved by the Board of Directors or provided for under the Plan of Reorganization, and securities issued or issuable upon exercise or conversion of such options, warrants, convertible securities or other rights, (2) in connection with a stock split, payment of dividends or any similar recapitalization, reclassification, distribution, exchange or readjustment of shares approved by the Board of Directors, (3) pursuant to the Plan of Reorganization, (4) as merger or purchase price consideration in any business combination, consolidation, merger or acquisition transaction or joint venture involving the Corporation or any of its subsidiaries that is approved by the Board of Directors, (5) upon the conversion or exercise of securities convertible or exercisable for shares or securities of the type specified in clause (A) or (B), (6) as a bona fide “equity kicker” issued to one or more third party lenders to whom the Corporation or one or more of its subsidiaries is becoming indebted in connection with the incurrence of any bona fide indebtedness for borrowed money approved by the Board of Directors, provided that the aggregate amount issued with respect to all such issuances is less than 5.0% of the then-outstanding shares of Common Stock or (7) in a Qualified Public Offering.
vi. “person” means any individual, corporation, partnership, limited liability company, unincorporated association or other entity.
vii. “Public Offering” means (A) a bona fide, marketed underwritten public offering of Common Stock after the closing of which the Common Stock is listed or quoted on the New York Stock Exchange, the NASDAQ Stock Market or any other national securities exchange or (B) a “direct listing” of the Common Stock on any such exchange.
viii. “Qualified Public Offering” means (A) a bona fide, marketed underwritten public offering of Common Stock after the closing of which the Common Stock is listed or quoted on the New York Stock Exchange, the NASDAQ Stock Market or any other national securities exchange or (B) a “direct listing” of the Common Stock on any such
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exchange, in the case of clause (A) which satisfies at least one of the following two criteria: (i) the gross cash proceeds of such offering exceed fifty million dollars ($50,000,000) or (ii) at least twenty percent (20%) of the outstanding shares of Common Stock shall have been issued or sold to the public in such offering.
ix. “Securities Act” means the Securities Act of 1933, as amended.
x. “Significant Stockholder” means, as of the applicable reference date: (a) each member of the Ad Hoc Noteholders Group (as defined in the Plan of Reorganization), so long as such Stockholder who was a member of the Ad Hoc Noteholders Group holds either at least (i) 5% of the outstanding Common Stock, or (ii) 50% of the shares of Common Stock held by such member as of the Effective Date, or (b) any other holder of at least 5% of the outstanding Common Stock.
xi. “Transfer” means any direct or indirect sale, transfer, gift, hypothecation, pledge, assignment, devise or other disposition of Common Stock (including (x) the granting of any option or entering into any agreement for the future sale, transfer or other disposition of Common Stock, or (y) the sale, transfer, assignment or other disposition of any securities or rights convertible into, or exchangeable or exercisable for, Common Stock), whether voluntary or involuntary, whether of record, constructively or beneficially and whether by operation of law or otherwise, including by recapitalization, merger, consolidation, liquidation, dissolution, dividend, distribution or otherwise. Notwithstanding the foregoing, the following transactions shall not constitute a Transfer of Common Stock for purposes of this Certificate of Incorporation: (i) the issuance, sale or other Transfer of publicly traded equity securities in any Person that is a holder or the direct or indirect parent of a holder (for purposes hereof, “publicly traded equity interests” means equity interests of a class that is registered under Section 12(b) or 12(g) of the Securities Act and is actively traded on a national securities exchange or any of the OTC markets), and (ii) any transaction in which a holder lends or borrows any shares of Common Stock to or from brokers, banks, or other financial institutions for the purpose of effecting margin transactions, or pledges or otherwise encumbers shares of Common Stock in connection with such holder’s internal financing arrangements, in any case in the ordinary course of such holder’s business; provided, however, that any redemption or foreclosure (including the retention of shares of Common Stock in satisfaction of any obligations) on shares of Common Stock by any such broker, bank or other financial institution shall be deemed a Transfer of shares of Common Stock for purposes of this Certificate of Incorporation. The terms “Transferee,” “Transferor,” “Transferred,” and other forms of the word “Transfer” shall have the correlative meanings.
xii. “Whole Board” shall mean, at any time, the total number of authorized directors of the Corporation at such time, whether or not any vacancies then exist on the Board of Directors.
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SECTION E
PREEMPTIVE RIGHTS
| 1. | The Corporation shall grant to each stockholder that is a Significant Stockholder as of the close of business on the record date established by the Board of Directors (each such stockholder, a “Preemptive Rightsholder”), which record date shall not be more than ten (10) Business Days prior to the Corporation’s delivery of the Issuance Notice, the right to purchase, on the terms and conditions set forth in this Section E, up to such stockholder’s pro rata portion (based on the number of shares of Common Stock beneficially owned by such stockholder as of the close of business on such record date, as a percentage of the total number of then-outstanding shares of Common Stock) of any New Equity Securities that the Corporation or any of its subsidiaries proposes to sell or issue for cash at any time and from time to time after the date hereof, other than pursuant to a Public Offering. The rights of Preemptive Rightsholders to purchase New Equity Securities pursuant to this Section E (the “Equity Purchase Right”) shall apply at the time of issuance of any option, warrant, right or other convertible or exchangeable security that constitutes a New Equity Security, and not to any subsequent conversion, exchange or exercise of such New Equity Security in accordance with its terms. |
| 2. | The Corporation shall give each Preemptive Rightsholder written notice of any proposed issuance or sale of New Equity Securities that is subject to the Equity Purchase Right at least five (5) Business Days prior to the proposed issuance or sale. Such notice (an “Issuance Notice”) shall set forth the material terms and conditions of the proposed transaction, including the proposed manner of issuance or sale, a description of the New Equity Securities, the total number of New Equity Securities proposed to be issued or sold in the transaction giving rise to the Equity Purchase Right, the proposed issuance or sale date, the proposed purchase price per share, and (if known) the name and address of the proposed purchaser(s) of the New Equity Securities. |
| 3. | At any time during the ten (10) Business Days following receipt of an Issuance Notice, each Preemptive Rightsholder shall have the right, but not the obligation, to irrevocably elect, by written notice to the Corporation, to purchase such Preemptive Rightsholder’s pro rata portion of the New Equity Securities at the purchase price set forth in such Issuance Notice and upon the other terms and conditions specified in such Issuance Notice; provided that no Preemptive Rightsholder shall be obligated (or permitted without the Corporation’s consent) to purchase any New Equity Securities pursuant to this Section E unless all required regulatory approvals, if any, applicable to such purchase have been obtained. Except as provided in the next sentence, the purchase of New Equity Securities by the electing Preemptive Rightsholders shall be consummated concurrently with the consummation of the issuance or sale described in the Issuance Notice. The closing of the purchase of New Equity Securities by any electing Preemptive Rightsholder may be extended beyond the closing of the transaction described in the Issuance Notice, to the extent necessary to (i) obtain required approvals of governmental authorities and other required regulatory approvals which such Preemptive Rightsholder shall be diligently pursuing in good faith (and the Corporation shall use its commercially reasonable efforts to obtain any approvals required to be obtained by it; provided that the Corporation shall not be required to incur any material out-of-pocket unreimbursed expenses in connection therewith) and (ii) permit such Preemptive Rightsholder to complete its internal capital call process following receipt of the Issuance Notice; provided that the approval of the Board |
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| of Directors shall be required to extend any such closing of the purchase by an electing Preemptive Rightsholder beyond the date that is thirty (30) days after delivery of the applicable Issuance Notice. Notwithstanding anything to the contrary contained herein, in the event that the closing of any purchase of New Equity Securities by any Preemptive Rightsholder is extended pursuant to this paragraph 4, such extension shall not preclude the consummation of the issuance or sale of the remaining New Equity Securities described in the Issuance Notice from occurring prior to such closing. |
| 4. | To the extent that one or more Preemptive Rightsholders does not fully and timely exercise its Equity Purchase Rights, in accordance with the terms and conditions set forth in this Section E, or elects to exercise such rights with respect to less than such Preemptive Rightsholder’s pro rata portion of the New Equity Securities (the difference between such Preemptive Rightsholder’s pro rata portion of the New Equity Securities and the number of New Equity Securities for which such Preemptive Rightsholder Holder exercises its preemptive rights under this Section E, the “Excess Shares”), then the Corporation (or the applicable subsidiary) shall offer to sell to the Preemptive Rightsholder(s) that elected to purchase all of their pro rata portions of the New Equity Securities, pro rata and at the same price and on the same terms as those specified in the Issuance Notice, and such Preemptive Rightsholder(s) shall have the right to acquire, all or any portion of such Excess Shares within two (2) Business Days following the expiration of the ten (10) Business Day period specified in Section E.3 by delivering written notice thereof to the Corporation. |
| 5. | Following compliance with the terms and conditions set forth in this Section E, the Corporation (or its applicable subsidiary) shall be free to consummate the proposed issuance or sale in the transaction described in the applicable Issuance Notice of all or any portion of the remaining New Equity Securities that the Preemptive Rightsholders have not elected to purchase, on terms no less favorable to the Corporation than those set forth in the Issuance Notice; provided that (i) such issuance or sale is closed within ninety (90) days after the date the related Issuance Notice was given (provided, however, that if such issuance or sale is subject to regulatory approval, such 90-day period shall be extended until the expiration of five (5) Business Days after all such approvals have been received, but in no event beyond one hundred eighty (180) days after the related Issuance Notice was given) and (ii) the price at which such New Equity Securities are issued and sold must be equal to or higher than the purchase price described in the Issuance Notice. In the event that the Corporation (or its applicable subsidiary) has not sold such New Equity Securities within such ninety (90)-day period (as so extended), the Corporation (or its applicable subsidiary) shall not thereafter issue or sell any New Equity Securities without first again offering such securities to the stockholders entitled to preemptive rights in the manner provided in this Section E. |
| 6. | Except as otherwise determined pursuant to a resolution adopted by the Board of Directors, the rights and obligations set forth in this Section E shall automatically terminate upon, and shall cease to have any force or effect in the event that (i) the Common Stock is listed on a national securities exchange (which, for the avoidance of doubt, does not include an “over-the-counter” system or network) in the United States or (ii) the Corporation consummates a Qualified Public Offering pursuant to an effective registration statement under the Securities Act, other than a registration statement on Form S-4 or Form S-8 or their equivalent. |
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| 7. | Notwithstanding anything to the contrary contained herein, the Corporation and/or any of its subsidiaries may issue or sell New Equity Securities to any purchaser (an “Accelerated Buyer”) without first complying with the foregoing provisions of this Section E (an “Accelerated Sale”) if the Board of Directors determines in good faith that it is in the best interests of the Corporation to consummate such issuance or sale without having first complied with such provisions; provided that in connection with any such Accelerated Sale, the Corporation shall give the Preemptive Rightsholders written notice of such Accelerated Sale as promptly as practicable, which notice (an “Accelerated Sale Notice”) shall describe in reasonable detail (a) the material terms and conditions of the Accelerated Sale, including the number or amount and description of the New Equity Securities issued, the issuance or sale date, the purchase price per share, and the name and address of the Accelerated Buyer and (b) the rights of the Preemptive Rightsholders to purchase New Equity Securities, pursuant to the next sentence of this paragraph 7, in connection with such issuance or sale. In the event of any such Accelerated Sale of New Equity Securities, each Preemptive Rightsholder shall have the right, at any time during the ten (10) Business Days following receipt of the Accelerated Sale Notice, to elect to purchase New Equity Securities in an amount equal to all or any part of such Preemptive Rightsholder’s pro rata portion (based upon the number of shares of Common Stock beneficially owned by such Preemptive Rightsholder as of the close of business on the date of the Accelerated Sale Notice as a percentage of the total number of shares of Common Stock then outstanding) of the New Equity Securities issued to the Accelerated Buyer, by delivering written notice of such election to the Corporation, whereupon the Corporation shall give effect to such exercise by either (i) requiring that the Accelerated Buyer sell down a portion of its New Equity Securities, or (ii) issuing additional New Equity Securities to such Preemptive Rightsholder, or a combination of (i) and (ii), so long as such action effectively provides such Preemptive Rightsholder with the same opportunity to hold the same percentage of the total number of New Equity Securities outstanding following the issuance or sale to such Preemptive Rightsholder (and to any other Preemptive Rightsholders exercising the rights granted under this sentence) that such Preemptive Rightsholder would have received had the Corporation complied with the provisions of Sections E.1 through E.6 of this Article IV.] |
ARTICLE V
BOARD OF DIRECTORS
SECTION A
NUMBER OF DIRECTORS; INITIAL BOARD
The business and affairs of the Corporation shall be managed by or under the direction of the Board of Directors. As of the Effective Date, the Board of Directors shall consist of five directors who shall initially be the following: Ricky Burnett, Gary D. Packer, Andrei Verona, Eric Long and Frank D. Bracken, III, Chief Executive Officer (such individuals, the “Initial Board”). Each director of the Board of Directors shall hold office until his or her successor is duly elected and qualified or until such director’s earlier death, resignation or removal. No decrease in the number of authorized directors shall shorten the term of any incumbent director.
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Subject to the rights of holders of any series of Preferred Stock of the Corporation to elect additional directors under the circumstances set forth in any Preferred Stock Designation, the number of directors may be increased or decreased from time to time pursuant to a resolution adopted by directors representing at least a majority of the Whole Board; provided, however, that the number of directors constituting the Whole Board shall not be less than five or more than eleven.
SECTION B
ELECTION OF DIRECTORS
Subject to the rights of holders of any series of Preferred Stock of the Corporation to elect additional directors under the circumstances set forth in any Preferred Stock Designation, a nominee for director (other than the Initial Board and a nominee to fill a vacancy on the Board of Directors who is submitted for a stockholder vote in accordance with Section D of this Article V) shall be elected to the Board of Directors at a duly called meeting of the stockholders of the Corporation at which a quorum is present by a plurality of the votes cast by holders of shares of Common Stock (and shares of any series of Preferred Stock entitled under a Preferred Stock Designation to vote with the holders of Common Stock in an election of directors) present in person or represented by proxy at such meeting (with “abstentions” and “broker non-votes” not counted as votes cast for this purpose).
There shall not be cumulative voting by stockholders in the election of directors of the Corporation. Elections of directors need not be by written ballot unless the Bylaws of the Corporation shall so provide.
SECTION C
REMOVAL OF DIRECTORS
Except as otherwise required by applicable law, and subject to the rights of holders of any series of Preferred Stock set forth in any Preferred Stock Designation, any one or more of the directors may be removed from office, with or without cause, only by a majority of the votes cast by the holders of shares of Common Stock and holders of any series of Preferred Stock entitled to vote with the Common Stock in an election of directors who voted on such matters, either in person or represented by proxy , voting together as a single class; provided that, until the date of the first annual meeting of stockholders to occur after the Effective Date, no director of the Initial Board (other than the Chief Executive Officer) may be removed from office without cause (as defined below), except with the prior written consent of the stockholder(s) who designated such director to such the Initial Board as identified in the Plan of Reorganization. For purposes of this paragraph, “cause” shall mean (i) the director’s conviction or plea of guilty or nolo contendere of a felony involving moral turpitude, (ii) the director’s commission of any material act of dishonesty resulting or intended to result in material personal gain or enrichment of such director at the expense of the Corporation or any of its subsidiaries, (iii) the willful failure by such director to perform, or the gross negligence of such director in performing, the duties of a director, (iv) the director’s being adjudged legally incompetent by a court of competent jurisdiction or (v) cause for removal otherwise exists under Section 141(k)(1) of the DGCL.
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SECTION D
NEWLY CREATED DIRECTORSHIPS AND VACANCIES
Subject to the rights of holders of any series of Preferred Stock set forth in any Preferred Stock Designation, vacancies on the Board of Directors resulting from death, resignation, removal, disqualification or other cause, and newly created directorships resulting from any increase in the number of directors on the Board of Directors, may be filled only (i) by the affirmative vote of a majority of the remaining directors then in office (even though less than a quorum) or by the sole remaining director, (ii) by plurality vote of the holders of shares of Common Stock (and shares of any series of Preferred Stock entitled under a Preferred Stock Designation to vote with the holders of Common Stock in an election of directors) present in person or represented by proxy at a duly called meeting of stockholders, or (iii) by written consent of holders of a majority of the shares of Common Stock (and shares of any series of Preferred Stock entitled under a Preferred Stock Designation to vote with the holders of Common Stock in an election of directors). Any director elected in accordance with the preceding sentence shall hold office for the remainder of the full term in which the vacancy occurred or to which the new directorship is allocated, and until such director’s successor shall have been elected and qualified or until such director’s earlier death, resignation or removal.
No decrease in the number of directors constituting the Whole Board shall shorten the term of any incumbent director, except as may be provided in a Preferred Stock Designation with respect to any additional director elected by the holders of one or more series of Preferred Stock.
SECTION E
COMMITTEES
The Board of Directors shall establish an Audit Committee and a Compensation Committee, each of which shall have and may exercise the powers of the Board of Directors (subject to the limitations set forth in the DGCL) with respect to the matters delegated to it. The Board of Directors may also establish, by resolution passed by a majority of the Whole Board, one or more other committees of the Board of Directors (together with the Audit Committee and the Compensation Committee, each a “Committee”); provided that, the authority of any such Committee shall be limited to making recommendations to the full Board of Directors for their approval (except to the extent the Board of Directors delegates authority to a committee of disinterested directors for which the Board determines that such delegation is appropriate). Each Committee shall consist of such number of directors as shall be set forth in the resolution of the Board of Directors appointing the members of such Committee.
SECTION F
DISQUALIFICATION
A director who, at the time of his or her most recent election or appointment to the Board of Directors, is an officer or employee of the Corporation (other than the Chief Executive Officer) or any subsidiary of the Corporation (an “Employee Director”) shall cease to be qualified to serve
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as a director and shall tender his or her resignation as director, if such person ceases to be an officer or employee of the Corporation or any one of its subsidiaries, with the disqualification of such director and the effectiveness of such resignation to take place upon the earliest of (i) such director’s cessation of employment, (ii) delivery by such Employee Director to the Corporation, or such subsidiary or subsidiaries, as the case may be, of a notice of resignation of employment or (iii) delivery by the Corporation or one of its subsidiaries, as the case may be, to such Employee Director of a notice of termination of employment. Notwithstanding the foregoing, a majority of the Board of Directors may choose to waive the foregoing disqualification and resignation provisions with respect to any Employee Director and have such Employee Director remain on the Board of Directors.
SECTION G
CHAIRMAN
The initial Chairman of the Board of Directors (the “Chairman”) shall be the individual identified as such in the Plan of Reorganization. Thereafter, the Chairman shall be chosen from among the directors. The Chairman shall be elected at the first meeting of the Board of Directors occurring after the annual meeting of stockholders by the affirmative vote of a majority of the directors then in office. The Chairman shall perform such duties and have such other powers as set forth in the Bylaws or as may be assigned to the Chairman, from time to time, by the Board of Directors. Any vacancy in the position of Chairman may be filled by the affirmative vote of a majority of the total number of directors then in office at any meeting of the Board of Directors.
ARTICLE VI
LIMITATION ON LIABILITY OF DIRECTORS; INDEMNIFICATION OF OFFICERS AND DIRECTORS
1. Limitation On Liability.
To the fullest extent permitted by the DGCL as the same exists or may hereafter be amended, a director of the Corporation shall not be liable to the Corporation or any of its stockholders for monetary damages for breach of fiduciary duty as a director. Any repeal or modification of this paragraph 1 shall be prospective only and shall not adversely affect any limitation, right or protection of a director of the Corporation existing at the time of such repeal or modification.
2. Indemnification.
i. Right to Indemnification. The Corporation shall indemnify and hold harmless, to the fullest extent permitted by applicable law as it presently exists or may hereafter be amended, any person who was or is made or is threatened to be made a party or is otherwise involved in any action, suit or proceeding, whether civil, criminal, administrative or investigative (a “Proceeding”), by reason of the fact that he, or a person for whom he is the legal representative, is or was a director or officer of the Corporation or while a director or officer of the Corporation is or was serving at the request of the Corporation as a director, officer, employee, representative or agent of another corporation or of a partnership, joint venture, limited liability company, trust or other enterprise,
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including any nonprofit entity, including service with respect to employee benefit plans, against all liability and loss suffered and expenses (including attorneys’ fees) incurred by such person. Such right of indemnification shall inure whether or not the claim asserted is based on matters that antedate the adoption of this Article VI. The Corporation shall be required to indemnify or make advances to a person in connection with a Proceeding (or part thereof) initiated by such person only if the proceeding (or part thereof) was authorized by the Board of Directors of the Corporation.
ii. Prepayment of Expenses. The Corporation shall pay the expenses (including attorneys’ fees) incurred by a director or officer in defending any Proceeding in advance of its final disposition, provided, however, that the payment of expenses incurred by a director or officer in advance of the final disposition of the Proceeding shall be made only upon receipt of an undertaking by the director or officer to repay all amounts advanced if it should be ultimately determined that the director or officer is not entitled to be indemnified under this Article VI or otherwise.
iii. Primary Indemnitor. The Corporation hereby acknowledges that certain persons may have rights to indemnification and advancement of expenses (directly or through insurance obtained by any such entity) provided by one or more third parties (collectively, the “Other Indemnitors”), and which may include third parties for whom such person serves as a manager, member, officer, employee or agent. The Corporation hereby agrees and acknowledges that notwithstanding any such rights that a person may have with respect to any Other Indemnitor(s), (i) the Corporation is the indemnitor of first resort with respect to all persons and all obligations to indemnify and provide advancement of expenses to persons, (ii) the Corporation shall be required to indemnify and advance the full amount of expenses incurred by such persons, to the fullest extent required by law, the terms of this Certificate of Incorporation, the Bylaws, any agreement to which the Corporation is a party, any vote of the stockholders or the Board of Directors.
iv. Claims. If a claim for indemnification or payment of expenses under this Article VI is not paid in full within thirty (30) days after a written claim therefor has been received by the Corporation, the claimant may file suit to recover the unpaid amount of such claim and, to the extent permitted by law, shall be entitled to be paid the expense of prosecuting such claim. In any such action the Corporation shall have the burden of proving that the claimant was not entitled to the requested indemnification or payment of expenses under applicable law.
v. Non-Exclusivity of Rights. The rights conferred on any person by this Article VI shall not be exclusive of any other rights which such person may have or hereafter acquire under any statute, provision of this Certificate of Incorporation, the Bylaws, agreement, vote of stockholders or resolution of disinterested directors or otherwise.
vi. Insurance. The Board of Directors may, to the full extent permitted by applicable law as it presently exists, or may hereafter be amended from time to time, authorize an appropriate officer or officers to purchase and maintain at the Corporation’s expense insurance: (i) to indemnify or insure the Corporation for any obligation which it
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incurs as a result of the indemnification of directors and officers under the provisions of this Article VI; and (ii) to indemnify or insure directors and officers against liability in instances in which they may not otherwise be indemnified by the Corporation under the provisions of this Article VI.
vii. Other Indemnification. The Corporation’s obligation, if any, to indemnify any person who was or is serving at its request as a director, officer, employee or agent of another corporation, partnership, joint venture, limited liability company, trust, enterprise or nonprofit entity shall be reduced by any amount such person may collect as indemnification from such other corporation, partnership, joint venture, limited liability company, trust, enterprise or nonprofit entity.
3. Amendment or Repeal.
Any amendment, modification or repeal of the foregoing provisions of this Article VI shall not adversely affect any right or protection hereunder of any person in respect of any act or omission occurring prior to the time of such amendment, modification or repeal.
ARTICLE VII
STOCKHOLDER ACTION BY WRITTEN CONSENT
Any action required or permitted to be taken at any annual or special meeting of stockholders of the Corporation (including, without limitation, any Majority Stockholder Approval or Supermajority Stockholder Approval pursuant to Article VIII, Article IX or Article XV) may be taken without a meeting, without prior notice and without a vote, if a consent or consents in writing, setting forth the action so taken, shall be signed by the holders of shares having not less than the minimum number of votes that would be necessary to authorize or take such action at a duly called meeting at which all shares entitled to vote thereon were present and voted and shall be delivered to the Corporation in accordance with Section 228 of the DGCL.
ARTICLE VIII
ACTIONS REQUIRING SPECIAL APPROVAL
1. General. Subject to the rights of the holders of any series of Preferred Stock set forth in a Preferred Stock Designation, any amendment or modification to Section E of Article IV (“Preemptive Rights”), Subsection 2 of this Article VIII (“Related Party Transactions”), or Article XII (“Information Rights”) herein shall require the written approval of holders of at least sixty percent (60%) of the total voting power of the then outstanding shares of Common Stock and the outstanding shares of any series of Preferred Stock entitled to vote together with the Common Stock for purposes of such vote under the terms of a Preferred Stock Designation, voting together as a single class (“Majority Stockholder Approval”).
2. Related Party Transactions. The Corporation shall not (and shall not cause or permit any of its subsidiaries to) enter into or consummate a Related Party Transaction unless (A) the Related Party Transaction shall have been approved by Disinterested Director Approval or the unanimous written consent of all Directors then in office and (B) in addition to obtaining the Disinterested Director Approval, if the Related Party Transaction involves total payments or
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value (as determined by the Board in its good faith business judgment) of more than ten million dollars $10,000,000, the Board of Directors shall have obtained, prior to entering into or consummating such Related Party Transaction, an opinion from a nationally recognized investment banking, accounting, appraisal, advisory or valuation firm concluding that such Related Party Transaction is fair to the Company Entities from a financial point of view, or is on terms at least as favorable as might reasonably have been obtained at such time from a person other than a Related Party; provided that if the Board of Directors in good faith determines that no comparable transaction is available with which to compare such Related Party Transaction or that no such opinion can be obtained with commercially reasonable efforts, no such opinion shall be required, in which case the Disinterested Director Approval must include a determination that the Related Party Transaction is otherwise fair to the Company Entities from a financial point of view. In addition to the requirements of the immediately preceding sentence, if a Related Party Transaction involves any of the following, such transaction must be approved by the affirmative vote of holders of at least sixty percent (60%) of the total voting power of the then outstanding shares of Common Stock and the outstanding shares of any series of Preferred Stock entitled to vote together with the Common Stock for purposes of such vote under the terms of a Preferred Stock Designation, voting together as a single class (“Supermajority Stockholder Approval”):
i. the merger or consolidation of this Corporation with or into any other person or any other business combination involving the Corporation; provided, however, that this clause (i) shall not apply to, and no vote of stockholders of the Corporation shall be required to authorize, any such merger or consolidation that is approved by a majority of the Whole Board and as to which the laws of the State of Delaware, as then in effect, do not require the consent or approval of the Corporation’s stockholders;
ii. the sale, lease or exchange of all, or substantially all, of the assets of the Corporation; provided, however, that this clause (ii) shall not apply to, and no vote of stockholders of the Corporation shall be required to authorize, any such sale, lease or exchange that is approved by a majority of the Whole Board and as to which the laws of the State of Delaware, as then in effect, do not require the consent or approval of the Corporation’s stockholders;
iii. the dissolution of the Corporation; or
iv. any transaction with the Corporation whereby a person or group (as such terms are used in Sections 13(d) and 14(d) of the Exchange Act) becomes the beneficial owner, directly or indirectly, of more than fifty percent (50%) of the voting power of the Corporation.
As used herein:
v. “Company Entity” means the Corporation or any of its subsidiaries.
vi. “Disinterested Director Approval” means, with respect to any Related Party Transaction, the affirmative vote at a duly held meeting of the Board of Directors (at which a quorum is present) of a majority of the directors then in office who are “disinterested” with respect to the Related Party Transaction and are not otherwise Affiliated with the Related Party to whom the Related Party Transaction relates.
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vii. “Related Party” means (i) any person who is an executive officer or a member of the board of directors (or similar governing body) of any Company Entity (or a member of the immediate family of any such person); (ii) any person (other than a Company Entity) of which any person described in clause (i) is a partner, director, executive officer or Affiliate; (iii) any person known to the Corporation to beneficially own, together with its Affiliates, at least 10% of the total then-outstanding shares of Common Stock (or any Affiliate of any such person known to the Corporation); provided that no person that is issued warrants pursuant to the Plan of Reorganization shall be deemed to be a Related Party, whether or not such warrants are exercised for Common Stock, unless such person becomes a beneficial owner of at least 10% of the total then outstanding shares of Common Stock as the result of such person acquiring (x) warrants in addition to those issued to it in the Plan of Reorganization or (y) shares of Common Stock in addition to those issued upon exercise of the warrants issued to it in the Plan of Reorganization; or (iv) any director or executive officer of a person described in clause (iii) (or a member of the immediate family of any such director or executive officer).
viii. “Related Party Transaction” means any transaction, agreement or arrangement (or series of related transactions, agreements or arrangements), between a Company Entity, on the one hand, and a Related Party, on the other hand involving an amount payable to or by any Company Entity greater than $250,000; provided, however, that the following shall not constitute a Related Party Transaction: (i) the purchase of insurance products from national insurance companies for the benefit of the Company Entities in the ordinary course of their business; (ii) the payment of dividends to the Corporation’s stockholders to the extent approved by the Board of Directors; (iii) payments to holders of any indebtedness of any Company Entity on the same basis as concurrent payments made or offered to be made in respect of such indebtedness to non-Related Parties; (iv) the payment of reasonable and customary compensation and fees to, and indemnities provided for the benefit of, and reimbursement of expenses incurred by, officers, directors, or employees of any Company Entity in the ordinary course of its business, in each case, as approved by the Board of Directors; (v) entering into, or the amendment or other modification of, and the performance under, any employment, termination, severance or similar agreement or arrangement, stock option or stock ownership plan, employee benefit plan, indemnification agreement or similar arrangements for directors, officers, or employees of any Company Entity (including the issuance of Common Stock or other equity interests thereunder) which, in each case, are approved by the Board of Directors; (vi) advances and loans to, or reimbursements of, officers, directors, employees or consultants of any Company Entity in an amount up to $100,000 in the aggregate outstanding at any time, in each case, for moving, entertainment and travel expenses or similar business expenses incurred in connection with such individual’s services to the Corporation; (vii) any transaction, agreement or arrangement wholly between or among two or more Company Entities; (viii) the sale or issuance of securities pursuant to the exercise of preemptive rights or in an underwritten offering; (ix) entering into, or the amendment or other modification of, and borrowings
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under, any revolving credit facility or any related agreements or documents initially entered into on the effective date of the Plan of Reorganization, as each may be amended and/or refinanced, and the exercise of any party’s rights thereunder; and (x) any transaction, agreement or arrangement (or any amendment or modification thereto that is approved by the Board of Directors) contemplated by, or entered into pursuant to, the Plan of Reorganization.
ARTICLE IX
BYLAWS
As of the Effective Date, the Corporation’s Bylaws shall be amended and restated, as of the Effective Date, in accordance with the Plan of Reorganization.
In furtherance and not in limitation of the powers conferred by the DGCL, the Board of Directors is expressly authorized to amend and repeal the Bylaws; provided that any amendment or repeal of the Bylaws by the Board of Directors (i) shall require the approval of a majority of the Whole Board and (ii) shall be subject to such additional restrictions (which may include, without limitation, majority or supermajority approval by the Board of Directors and/or the Corporation’s stockholders to amend or repeal specifically enumerated provisions), if any, as are set forth in the Bylaws as in effect at such time. Subject to the rights of the holders of any series of Preferred Stock set forth in a Preferred Stock Designation, the stockholders shall also have the power to amend or repeal the Bylaws by Majority Stockholder Approval; provided that any amendment or repeal of the Bylaws by the stockholders shall be subject to such additional restrictions (which may include, without limitation, majority or supermajority approval by the Board of Directors and/or the Corporation’s stockholders to amend or repeal specifically enumerated provisions), if any, as are set forth in the Bylaws as in effect at such time.
ARTICLE X
SECTION 203 OF THE DGCL
The Corporation expressly elects not to be governed by, or subject to, Section 203 of the DGCL.
ARTICLE XI
CERTAIN BUSINESS OPPORTUNITIES
| 1. | In anticipation that the Corporation and certain of its non-employee directors (the “Non-Employee Directors”) may engage in, and are permitted to have, investments or other business relationships, ventures, agreements or arrangements with entities engaged in, the same or similar activities or lines of business, and in recognition of (a) the benefits to be derived by the Corporation through the continued service of such Non-Employee Directors and (b) the difficulties attendant to any Non-Employee Director, who desires and endeavors fully to satisfy such Non-Employee Director’s fiduciary duties, in determining the full scope of such duties in any particular situation, the provisions of this Article XI are set forth to regulate, define and guide the conduct of certain affairs of the Corporation as they may involve such Non-Employee Directors, and the powers, rights, duties and liabilities of the Corporation and its Non-Employee Directors, other directors and officers, and stockholders in connection therewith. |
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| 2. | The Corporation’s Non-Employee Directors shall not have a duty to refrain from engaging directly or indirectly in the same or similar business activities or lines of business as the Corporation or its Affiliates or otherwise competing with the Corporation or its Affiliates, and, to the fullest extent permitted by applicable law, Non-Employee Directors of the Corporation shall not be liable to the Corporation or its stockholders for breach of any fiduciary duty by reason of any such activities. Subject to paragraph 3 of this Article XI, the Corporation hereby renounces any interest or expectancy in, or right to be offered an opportunity to participate in, any business opportunity that may be a corporate opportunity for a Non-Employee Director to the fullest extent permitted by applicable law. Subject to paragraph 3 of this Article XI, if a Non-Employee Director acquires knowledge of a potential transaction or matter that may be a corporate opportunity for the Corporation, such Non-Employee Director shall have no duty to communicate or offer such corporate opportunity to the Corporation and shall not be liable to the Corporation or its stockholders for breach of any fiduciary duty by reason of the fact that such corporate opportunity is not communicated or offered to the Corporation. |
| 3. | The Corporation does not renounce its interest in any corporate opportunity offered to any Non-Employee Director if such opportunity is expressly offered solely to such Non-Employee Director in his or her capacity as a director of the Corporation, and paragraph 2 of this Article XI shall not apply to any such corporate opportunity. |
| 4. | In addition to and notwithstanding the foregoing provisions of this Article XI, a corporate opportunity shall not be deemed to be a potential corporate opportunity for the Corporation if it is a business opportunity (i) that the Corporation is neither financially or legally able, nor contractually permitted to undertake, (ii) that from its nature, is not in the line of the Corporation’s business or is of no practical advantage to the Corporation or (iii) in which the Corporation has no interest or reasonable expectancy. |
| 5. | None of the alteration, amendment, change and repeal of any provision of this Article XI nor the adoption of any provision of this Certificate of Incorporation inconsistent with any provision of this Article XI shall eliminate or reduce the effect of this Article XI in respect of any matter occurring, or any cause of action, suit or claim that, but for this Article XI, would accrue or arise, prior to such alteration, amendment, repeal or adoption. |
ARTICLE XII
INFORMATION RIGHTS
1. Financial Statements and Periodic Reports. For any period that the Corporation is not obligated to file reports with the Securities and Exchange Commission (the “SEC”) under the Exchange Act (“Public Filing Requirement”), the Corporation shall provide the information identified below in this paragraph 1 to each holder of Common Stock, and shall satisfy such obligation by timely posting all such information (“Information”) to an electronic data room on a secure website or electronic data room to which all holders entitled to receive such information, reports and other materials are given access (the “Data Room”). The Corporation shall also
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provide access to the Data Room, upon request by any holder entitled to such access, to any Transferee or potential Transferee of shares of Common Stock to whom such holder would be entitled to disclose Information pursuant to this Article XII, provided, that such Transferee or potential Transferee is a Qualified Institutional Buyer or Accredited Investor (or is otherwise acceptable to the Board of Directors, in its reasonable discretion). All information provided by the Corporation to Stockholders pursuant to this Article XII shall be subject to the confidentiality provisions set forth herein:
i. Each holder of Common Stock shall have the right to receive, (i) within ninety (90) days after the end of each fiscal year of the Corporation, consolidated financial statements of the Corporation for such fiscal year (including balance sheets, statements of operations and statements of cash flows), audited by a national accounting firm and prepared in accordance with GAAP, along with a reasonably detailed management’s discussion and analysis, in narrative form, commenting on the audited consolidated financial statements (“MD&A”), and (ii) within sixty (60) days after the end of each of the first three fiscal quarters of each fiscal year of the Corporation, unaudited condensed consolidated financial statements of the Corporation for such quarter and the year-to-date period and the comparable period of the prior fiscal year (including balance sheets, statements of operations and statements of cash flows), prepared in accordance with GAAP, along with an MD&A with respect thereto. The Corporation shall use its best efforts to continue releasing press releases containing a summary of such information reasonably concurrently with the delivery thereof, consistent with past practice.
ii. Within a reasonable time after it provides annual or quarterly financial statements to holders pursuant to the preceding Subsection 1(i), the Corporation shall hold a conference call with the holders of Common Stock (and reasonable prior notice and dial-in information will be provided to each Stockholder entitled to participate in such call) to discuss the Corporation’s results of operations and financial performance for the immediately preceding quarter (and year-to-date) or fiscal year, as applicable, including a reasonable question and answer session.
iii. Each holder of Common Stock shall, and shall cause its directors, officers, employees, consultants, financial advisors, counsel, accountants and other agents (“Representatives”) to, keep confidential and not divulge any information (including all budgets, business plans and analyses) concerning the Corporation and its subsidiaries, including its assets, business, operations, financial condition, liabilities or business prospects, and shall use, and cause its Representatives to use, such Information only in connection with the operation of the Corporation and its investment in the Corporation; provided, however, that nothing herein shall prevent any holder from disclosing such Information (i) upon the order of any court or administrative agency, (ii) upon the request or demand of any regulatory agency or authority having jurisdiction over such holder, (iii) to the extent compelled by legal process or required or requested pursuant to subpoena, interrogatories or other discovery requests, (iv) to the extent necessary in connection with the exercise of any remedy hereunder, (v) to such holder’s Representatives that in the reasonable judgment of such holder need to know such Information and have an obligation to maintain the confidentiality of such Information, (vi) to any Affiliate as long as the
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Affiliate agrees in writing to be bound by the provisions of this Article XII as if it were a holder, (vii) to a potential Transferee of shares of Common Stock, to the extent reasonably necessary in connection with an actual or potential Transfer to such person that would be permitted by this Certificate of Incorporation, provided that such potential Transferee (prior to such disclosure) enters into a non-disclosure agreement in a form approved by the Board of Directors pursuant to which the potential Transferee agrees in writing to maintain the confidential nature of such Information in accordance with the terms of this Article XII, or (viii) with the prior written consent of the Corporation; provided further, that in the case of clause (i), (ii) or (iii), the applicable holder shall notify the Corporation in writing of the proposed disclosure as far in advance of such disclosure as practicable and use reasonable efforts to ensure that any Information so disclosed is accorded confidential treatment, when and if available.
iv. The restrictions set forth in the preceding Subsection 1(iv) shall not apply to any information that (i) is or becomes generally available to the public other than as a result of a disclosure by a holder or any of its Representatives in violation of this Certificate of Incorporation; (ii) is or becomes available to a holder or any of its Representatives on a non-confidential basis prior to its disclosure by or on behalf of the Corporation to the receiving holder and any of its Representatives, (iii) is or has been independently developed or conceived by such holder or any of its Representatives without use of the Corporation’s Information or (iv) becomes available to the receiving holder or any of its Representatives on a non-confidential basis from a source other than the Corporation, any other holder or any of their respective Representatives, provided, that such source is not known by the recipient of the information to be bound by a confidentiality agreement with the disclosing party or any of its Representatives.
ARTICLE XIII
EXCLUSIVE FORUM
Unless the Corporation consents in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware (or, if the Court of Chancery shall not have jurisdiction, another state court located within the state of Delaware, or if no state court located within the State of Delaware has jurisdiction, the federal district court for the District of Delaware), shall be the sole and exclusive forum for any stockholder of the Corporation (including a beneficial owner of stock) to bring (i) any derivative action or proceeding brought on behalf of the Corporation, (ii) any action asserting a claim of breach of a fiduciary duty owed by any director, officer or other employee of the Corporation to the Corporation or the Corporation’s stockholders, (iii) any action asserting a claim against the Corporation, its directors, officers or employees arising pursuant to any provision of the DGCL or this Certificate of Incorporation or the Bylaws, or (iv) any action asserting a claim against the Corporation, its directors, officers or employees governed by the internal affairs doctrine, except as to each of (i) through (iv) above, for any claim as to which such court determines that there is an indispensable party not subject to the jurisdiction of such court (and the indispensable party does not consent to the personal jurisdiction of such court within ten (10) days following such determination). If any provision or provisions of this Article XIII shall be held to be invalid, illegal or unenforceable as applied to any person or entity or circumstance for any reason whatsoever, then, to the fullest extent permitted by law, the validity, legality and
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enforceability of such provisions in any other circumstance and of the remaining provisions of this Article XIII (including, without limitation, each portion of any sentence of this Article XIII containing any such provision held to be invalid, illegal or unenforceable that is not itself held to be invalid, illegal or unenforceable) and the application of such provision to other persons or entities and circumstances shall not in any way be affected or impaired thereby. Any person purchasing or otherwise holding any interest in shares of capital stock of the Corporation shall be deemed to have notice of and consented to the provisions of this Article XIII. Notwithstanding the foregoing, the provisions of this Article XIII will not apply to the extent (and solely to such extent) the action or proceeding is brought to enforce any liability or duty created by the Exchange Act, the Securities Act or any other claim for which the federal courts have exclusive jurisdiction.
ARTICLE XIV
COMPROMISE, ARRANGEMENT OR REORGANIZATION
Whenever a compromise or arrangement is proposed between the Corporation and its creditors or any class of them and/or between the Corporation and its stockholders or any class of them, any court of equitable jurisdiction within the State of Delaware may, on the application in a summary way of the Corporation or of any creditor or stockholder thereof or on the application of any receiver or receivers appointed for the Corporation under the provisions of Section 291 of the DGCL or on the application of trustees in dissolution or of any receiver or receivers appointed for the Corporation under the provisions of Section 279 of the DGCL, order a meeting of the creditors or class of creditors, and/or of the stockholders or class of stockholders of the Corporation, as the case may be, to be summoned in such manner as the said court directs. If a majority in number representing three-fourths in value of the creditors or class of creditors, and/or of the stockholders or class of stockholders of the Corporation, as the case may be, agrees to any compromise or arrangement and to any reorganization of the Corporation as a consequence of such compromise or arrangement, the said compromise or arrangement and the said reorganization shall, if sanctioned by the court to which the said application has been made, be binding on all the creditors or class of creditors, and/or on all stockholders or class of stockholders, of the Corporation, as the case may be, and also on the Corporation.
ARTICLE XV
AMENDMENTS TO THE CERTIFICATE OF INCORPORATION
The Corporation reserves the right, at any time and from time to time, to amend, modify or repeal any provision(s) contained in this Certificate of Incorporation, except for any provisions contained in Article XVI, in the manner now or hereafter prescribed by the DGCL and in accordance with the provisions of this Article XV, and all rights, preferences and privileges of whatsoever nature conferred upon stockholders, directors or any other persons whomsoever by and pursuant to this Certificate of Incorporation in its present form or as hereafter amended are granted subject to the rights reserved in this Article XV.
In addition to any approvals required by applicable law and subject to the rights of the holders of any series of Preferred Stock set forth in a Preferred Stock Designation or as otherwise expressly set forth herein, approval by a majority of the Whole Board and Majority Stockholder Approval shall be required to amend, modify or repeal any provision(s) contained in this Certificate of Incorporation.
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Notwithstanding anything contained herein to the contrary and subject to applicable law, the prior written consent of Barclays Bank PLC shall be required to amend, modify or repeal any provisions contained in Article XVI for so long as Barclays Bank PLC or any of its Affiliates holds any Common Stock or Warrant.
ARTICLE XVI
MISCELLANEOUS
1. UK Listing Rules. The maximum amount payable to any holder of Common Stock that elects to have this paragraph 1 of Article XVI apply to such stockholder (a “Listing Rules Stockholder”) pursuant to a repurchase or other sale of such Listing Rules Stockholder’s Common Stock and over which the applicable Listing Rules Stockholder does not have sole discretion as to whether to enter into and consummate the applicable sale (a “Listing Rules Subject Sale”) shall be either (i) the minimum amount that would result in such Listing Rules Subject Sale constituting a Class 2 transaction under the U.K. Financial Authority’s Listing Rules minus one pound Sterling (£1.00) or (ii) such other amount as such Listing Rules Stockholder notifies to the Company in writing from time to time; provided, that Barclays Bank PLC is hereby deemed to be a Listing Rules Stockholder for purposes of this paragraph 1 of Article XVI and is not required to provide notification to the Company of its election as such.
2. Bank Holding Company Act. If at any time Barclays Bank PLC, together with its Affiliates, owns or controls Common Stock (the “Barclays Shares”) that exceed the Maximum Voting Control Level (as defined below), then, for so long as Barclays Bank PLC, together with its Affiliates, owns or controls shares of Common Stock that exceed the Maximum Voting Control Level, the voting rights attached to the Barclays Shares shall be equal to that of the Maximum Voting Control Level (with the voting power of each Barclays Share reduced proportionately). Such Bylaws shall not apply to transferees that are not Barclays Bank PLC or its Affiliates. For purposes of this paragraph 2 of Article XVI, the “Maximum Voting Control Level” means ownership or control, or deemed ownership or control for applicable bank regulatory purposes, by Barclays Bank PLC (together with its Affiliates), of more than 4.99% of the total number of issued and outstanding Common Stock.
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IN WITNESS WHEREOF, the Corporation has caused this Certificate of Incorporation to be made, executed and acknowledged by its duly authorized officer this 30th day of November, 2020, as directed by and provided for in the Order of the United States Bankruptcy Court for the Southern District of Texas, Houston Division, dated November 12, 2020, confirming the Plan of Reorganization under Chapter 11 of the Bankruptcy Code.
| LONESTAR RESOURCES US INC. | ||||
| By: | /s/ Frank D. Bracken, III | |||
| Name: | Frank D. Bracken III | |||
| Title: | Chief Executive Officer | |||
| Attest: |
| /s/ Chase Booth |
| Secretary |
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Exhibit 3.2
SECOND AMENDED & RESTATED BYLAWS OF
LONESTAR RESOURCES US INC.
(a Delaware corporation)
Effective as of November 30, 2020
These Second Amended and Restated Bylaws (these “Bylaws”) are subject to, and governed by, the General Corporation Law of the State of Delaware (as amended from time to time, the “DGCL”) and the Amended & Restated Certificate of Incorporation (the “Certificate of Incorporation”) of the Corporation, as filed with the Secretary of State of the State of Delaware on November 30, 2020.
ARTICLE I
STOCKHOLDERS
Section 1.1 Annual Meeting.
An annual meeting of the stockholders of Lonestar Resources US Inc. (the “Corporation”) for the purpose of electing directors and transacting any other business properly brought before the meeting pursuant to these Bylaws shall be held each year beginning in 2021 at such date, time and place, either within or without the State of Delaware or, if so determined by the board of directors of the Corporation (the “Board” or the “Board of Directors”) in its sole discretion, at no place (but rather by means of remote communication), as may be specified by the Board of Directors in the notice of meeting; provided, however, that the annual meeting held in 2021 shall not be held any earlier than November 30, 2021.
Section 1.2 Special Meetings.
Except as may otherwise be provided in the Certificate of Incorporation, in the Preferred Stock Designation (as defined in the Certificate of Incorporation) for any series of preferred stock or under applicable law, special meetings of the stockholders of the Corporation, for the transaction of such business as may properly come before such meetings, may only be called (i) by the Chairman of the Board, (ii) by the Chief Executive Officer of the Corporation (the
“Chief Executive Officer”) or (iii) by the Secretary of the Corporation (the “Secretary”) (a) at the request of a majority of the members of the Board of Directors then in office or (b) at the written request of one or more stockholders holding, in the aggregate, at least 25 % in total voting power of the outstanding shares of Common Stock and any other class or series of stock entitled to vote together with Common Stock at the annual meeting. At any special meeting of stockholders, only such business as is specified in the Corporation’s notice of the special meeting may be transacted thereat; provided, that with respect to any special meeting called by the Secretary at the written request of one or more stockholders pursuant to clause (iii)(b) of the immediately preceding sentence, such notice shall include the business proposed in such stockholder request except to the extent the Board of Directors determines in good faith that such proposed business does not constitute a proper matter for stockholder action in which case, for the avoidance of doubt, there shall be no special meeting of stockholders. The Board of Directors shall have the sole power to determine the time, date and place, either within or without the State of Delaware, for any special meeting of stockholders; provided, that a special meeting requested by one or more stockholders pursuant to clause (iii)(b) shall (if applicable) be held on the date specified in such stockholder request or as promptly as reasonably possible thereafter. Following such determination, it shall be the duty of the Secretary to cause notice to be given to the stockholders entitled to vote at such meeting that a meeting will be held at the time, date and place and in accordance with the record date determined by the Board of Directors.
Section 1.3 Record Date.
In order that the Corporation may determine the stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof, or entitled to receive payment of any dividend or other distribution or allotment of any rights, or entitled to exercise any rights in respect of any change, conversion or exchange of stock or for the purpose of any other lawful
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action, the Board of Directors may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted by the Board of Directors, and which record date: (i) in the case of the determination of stockholders entitled to vote at any meeting of stockholders or adjournment thereof, shall, unless otherwise required by the laws of the State of Delaware, not be more than sixty (60) nor less than ten (10) days before the date of such meeting, and (ii) in the case of any other lawful action, shall not be more than sixty (60) days prior to such other action. If no record date is fixed by the Board of Directors: (i) the record date for determining stockholders entitled to notice of or to vote at a meeting of stockholders shall be at the close of business on the day immediately preceding the day on which notice is given, or, if notice is waived, at the close of business on the day immediately preceding the day on which the meeting is held, and (ii) the record date for determining stockholders for any other purpose shall be at the close of business on the day on which the Board of Directors adopts the resolution relating thereto. A determination of the stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting; provided, however, that the Board of Directors may fix a new record date for the adjourned meeting.
Section 1.4 Notice of Meetings.
Notice of all stockholders meetings, stating (i) the place, if any, date and hour thereof, (ii) the means of remote communication, if any, by which stockholders and proxy holders may be deemed to be present in person and vote at such meeting, (iii) the address of the place within the city, other municipality or community or the electronic network, as applicable, at which the list of stockholders may be examined, and (iv) in the case of a special meeting, the purpose or purposes for which the meeting is called, shall be delivered on behalf of the Corporation in accordance with applicable law by the Chairman of the Board, the Chief Executive Officer, any Vice President, the Secretary or an Assistant Secretary, to each stockholder entitled to vote thereat
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at least ten (10) days but not more than sixty (60) days before the date of the stockholders meeting, unless a different period is prescribed by law, or the lapse of the prescribed period of time shall have been waived. If mailed, such notice shall be deemed to be given when deposited in the United States mail, postage prepaid, directed to such stockholder’s address as it appears on the records of the Corporation. Without limiting the manner by which notice otherwise may be given effectively to stockholders, any notice to stockholders under the Certificate of Incorporation and these Bylaws may be given by electronic transmission in the manner provided in Section 232 of the DGCL.
Section 1.5 Notice of Director Nominations and Business Proposals.
(a) Annual Meetings. (1) Nominations of persons for election to the Board of Directors of the Corporation and the proposal of business to be considered by the stockholders may be made in connection with an annual meeting of stockholders only (i) pursuant to the Corporation’s notice of such meeting (or any supplement thereto), (ii) by or at the direction of the Board of Directors, (iii) as provided in the Certificate of Incorporation, or in the Preferred Stock Designation for any series of preferred stock, or (iv) by any stockholder of the Corporation that (x) is a stockholder of record of the Corporation at the time the written notice provided for in this Section 1.5(a) is delivered to the Secretary, and (y)(A) in the case of nominations of one or more persons for election to the Board of Directors, is a holder of record as of such date of shares of Common Stock or any other class or series of capital stock of the Corporation entitled to vote together with Common Stock upon such election, and (B) in the case of any other matter, is a holder of record as of shares of Common Stock or any other class or series of capital stock of the Corporation entitled to vote together with Common Stock on such matter, and, in each case, complies with the notice procedures set forth in this Section 1.5.
(2) In addition to any other requirements under applicable law and the Certificate of Incorporation, no nomination by any stockholder or stockholders of a person or
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persons for election to the Board of Directors and no other proposal by any stockholder or stockholders, shall be considered properly brought before an annual meeting unless (x) the stockholder shall have timely given written notice thereof to the Secretary in accordance with the next sentence (or paragraph (a)(3) of this Section 1.5, as applicable), (y) the notice sets forth all information required by this paragraph and (z) in the case of any such proposed business other than the nominations of persons for election to the Board of Directors, such proposed business constitutes a proper matter for stockholder action as determined by the Board of Directors. To be timely, a stockholder’s notice with respect to a nomination or other action to be brought before an annual meeting shall be delivered to the Secretary at the principal executive offices of the Corporation not later than the close of business on the sixtieth (60th) day nor earlier than the close of business on the ninetieth (90th) day prior to (x) November 30, 2021, in the case of the annual meeting to be held in 2021, or (y) in the case of any other annual meeting, the first anniversary of the preceding year’s annual meeting; provided, however, that in the event that the date of the annual meeting is more than thirty (30) days before or more than sixty (60) days after such anniversary date, notice by the stockholder must be so delivered not earlier than the close of business on the one hundredth (100th) day prior to such annual meeting and not later than the close of business on the later of the seventieth (70th) day prior to such annual meeting or the tenth (10th) day following the day on which public announcement of the date of such meeting is first made by the Corporation. In no event shall the public announcement of an adjournment or postponement of an annual meeting commence a new time period (or extend any time period) for the giving of a stockholder’s notice as described above. Any such stockholder’s notice shall set forth: (i) as to each person whom the stockholder proposes to nominate for election as a director, (x) all information relating to such person that is required to be disclosed in solicitations of proxies for election of directors in an
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election contest, or is otherwise required, in each case pursuant to and in accordance with Regulation 14A under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and (y) such person’s written consent to being named in the proxy statement as a nominee and to serving as a director if elected; (ii) as to any other business that the stockholder proposes to bring before the meeting, a brief description of the business desired to be brought before the meeting, the text of the proposal or business (including the text of any resolutions proposed for consideration and in the event that such business includes a proposal to amend the Certificate of Incorporation or Bylaws of the Corporation, the language of the proposed amendment), the reasons for conducting such business at the meeting and any material interest in such business of such stockholder and the beneficial owner, if any, on whose behalf the proposal is made; and (iii) as to the stockholder giving the notice and the beneficial owner, if any, on whose behalf the nomination or proposal is made (v) the name and address of such stockholder, as they appear on the Corporation’s books, and of such beneficial owner, (w) the class or series and number of shares of capital stock of the Corporation that are owned beneficially and of record by such stockholder and such beneficial owner, (x) a representation that the stockholder is a holder of record of stock of the Corporation entitled to vote on the matter to which such stockholder’s proposal relates at such meeting and intends to appear in person or by proxy at the meeting to propose such business or nomination, (y) a representation (A) whether any such person or such stockholder has received any financial assistance, funding or other consideration from any other person (a “Stockholder Associated Person”) in respect of such nomination or proposal (and the details of any such financial assistance, funding or other consideration) and (B) whether and the extent to which any hedging, derivative or other transaction has been entered into with respect to the Corporation within the past six (6) months by, or is in effect with respect to, such stockholder, any person
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nominated or to be nominated by such stockholder for election to the Board of Directors or any Stockholder Associated Person, the effect or intent of which transaction is to mitigate loss to or manage risk or benefit of share price changes for, or to increase or decrease the voting power of, such stockholder, nominee or any such Stockholder Associated Person, and (z) a representation whether the stockholder or the beneficial owner, if any, intends, or is part of a group which intends, (A) to deliver a proxy statement and/or form of proxy to holders of at least the percentage of the class or series of the Corporation’s outstanding capital stock required to approve or adopt the proposal or elect the nominee and/or (B) otherwise to solicit proxies from stockholders in support of such proposal or nomination. The foregoing notice requirements of clauses (a)(2)(ii) and (iii) of this Section 1.5 shall not apply to any proposal made pursuant to Rule 14a-8 (or any successor thereof) promulgated under the Exchange Act. A proposal to be made pursuant to Rule 14a-8 (or any successor thereof) promulgated under the Exchange Act shall be deemed satisfied if the stockholder making such proposal complies with the provisions of Rule 14a-8 and has notified the Corporation of his or her intention to present a proposal at an annual meeting in compliance with Rule 14a-8 and such stockholder’s proposal has been included in a proxy statement that has been prepared by the Corporation to solicit proxies for such annual meeting. The Corporation may require any proposed nominee to furnish such other information as it may reasonably require to determine the eligibility of such proposed nominee to serve as a director of the Corporation.
(3) Notwithstanding anything in the second sentence of paragraph (a)(2) of this Section 1.5 to the contrary, in the event that the number of directors to be elected to the Board of Directors of the Corporation at an annual meeting is increased and there is no public announcement by the Corporation naming the nominees for the additional directorships at least one hundred (100) days prior to the first anniversary of the preceding year’s annual meeting (or in
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the case of the annual meeting to be held in 2021, at least one hundred (100) days prior to the first anniversary of the Effective Date (as defined in the Certificate of Incorporation)), a stockholder’s notice required by this Section 1.5(a) shall also be considered timely, but only with respect to nominees for the additional directorships, if it shall be delivered to the Secretary at the principal executive offices of the Corporation not later than the close of business on the tenth (10th) day following the day on which such public announcement is first made by the Corporation.
(b) Special Meetings. Only such business shall be conducted at a special meeting of stockholders as shall have been brought before the meeting pursuant to the Corporation’s notice of such meeting. Subject to the rights of the holders of any series of preferred stock, nominations of persons for election to the Board of Directors in connection with a special meeting of stockholders at which one or more directors are to be elected to the Board of Directors (as specified in the Corporation’s notice of such meeting) may only be made (i) pursuant to the Corporation’s notice of such meeting (or any supplement thereto), (ii) by or at the direction of the Board of Directors, (iii) as otherwise provided in the Certificate of Incorporation, or in the Preferred Stock Designation for any series of preferred stock, or (iv) by any stockholder of the Corporation that, at the time the written notice required by this Section 1.5(b) is delivered to the Secretary, is a holder of record of shares of Common Stock or any other class or series of capital stock of the Corporation entitled to vote together with Common Stock upon such election, and complies with the notice procedures set forth in this Section 1.5(b). In the event a special meeting of stockholders is called for the purpose of electing one or more directors to the Board of Directors (as specified in the Corporation’s notice of such meeting), any such stockholder entitled to vote in such election may nominate a person or persons (as the case may be) for election to such director position(s) as are specified in the Corporation’s notice of such meeting by delivering written notice
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of such nomination (which notice shall set forth all the information that would be required by paragraph (a)(2) of this Section 1.5 if such nomination were in connection with an annual meeting) to the Secretary at the principal executive offices of the Corporation not earlier than the close of business on the ninetieth (90th) day prior to such special meeting and not later than the close of business on the later of the sixtieth (60th) day prior to such special meeting or the tenth (10th) day following the date on which public announcement is first made of the date of the special meeting and of the director nominees proposed by the Corporation in connection with such meeting. In no event shall the public announcement of an adjournment or postponement of a special meeting commence a new time period (or extend any time period) for the giving of a stockholder’s notice as described above.
(c) General. (1) Except as otherwise provided by law, the chairman of any meeting of the stockholders of the Corporation shall have the power and duty (i) to determine whether a nomination or any business proposed to be brought before such meeting was made or proposed, as the case may be, in accordance with the procedures set forth in this Section 1.5 (including whether the stockholder or beneficial owner, if any, on whose behalf the nomination or proposal is made solicited (or is part of a group which solicited) or did not so solicit, as the case may be, proxies in support of such stockholder’s nominee or proposal in compliance with such stockholder’s representation as required by clause (a)(2)(iii)(z) of this Section 1.5) and (ii) if any proposed nomination or business was not made or proposed in compliance with this Section 1.5, to declare that such nomination shall be disregarded or that such proposed business shall not be transacted. Notwithstanding the foregoing provisions of this Section 1.5, unless otherwise required by law, if the stockholder proposing a nominee or any other business for consideration at an annual or special meeting (or a qualified representative of such stockholder) does not appear at the annual
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or special meeting of stockholders to present such nomination or proposed business, such nomination may, in the discretion of the Board of Directors, be disregarded and such proposed business not considered, notwithstanding that proxies in respect of such vote may have been received by the Corporation. For purposes of this Section 1.5, to be considered a qualified representative of the stockholder, a person must be authorized by a writing executed by such stockholder or an electronic transmission delivered by such stockholder to act for such stockholder as proxy at the meeting of stockholders and such person must produce such writing or electronic transmission, or a reliable reproduction of the writing or electronic transmission, at the meeting of stockholders.
(2) For purposes of this Section 1.5, “public announcement” shall include disclosure in a press release reported by the Dow Jones News Service, Associated Press or comparable national news service or in a document publicly filed by the Corporation with the Securities and Exchange Commission pursuant to Section 13, 14 or 15(d) of the Exchange Act.
(3) Notwithstanding the foregoing provisions of this Section 1.5, a stockholder shall also comply with all applicable requirements of the Exchange Act and the rules and regulations thereunder with respect to the matters set forth in this Section 1.5. Nothing in this Section 1.5 shall be deemed to affect any rights (i) of stockholders to request inclusion of proposals in the Corporation’s proxy statement pursuant to Rule 14a-8 under the Exchange Act or (ii) of the holders of any series of preferred stock to elect directors pursuant to any applicable provisions of the Certificate of Incorporation or the Preferred Stock Designation for such series of preferred stock.
Section 1.6 Quorum.
Subject to the rights of the holders of any series of preferred stock and except as otherwise provided by law or in the Certificate of Incorporation, at any meeting of stockholders,
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the holders of a majority in total voting power of the outstanding shares of Common Stock and any other class or series of capital stock entitled to vote together with Common Stock at the meeting shall be present or represented by proxy in order to constitute a quorum for the transaction of any business. Where a separate vote by one or more classes or series of capital stock is required by law or by the Certificate of Incorporation with respect to a particular matter to be presented at any such meeting, a majority in total voting power of the outstanding shares of such class or classes or series present in person or represented by proxy shall constitute a quorum entitled to take action with respect to that vote on that matter. The chairman of the meeting shall have the power and duty to determine whether a quorum is present at any meeting of the stockholders or for any matter to be voted on. If any shares entitled to vote in the election of directors are held, directly or indirectly, by the Corporation or any of its subsidiaries, such shares held by the Corporation or any such subsidiary shall neither be entitled to vote nor be counted for quorum purposes; provided, however, that the foregoing shall not limit the right of the Corporation or any subsidiary of the Corporation to vote stock, including, but not limited to, its own stock, held by it in a fiduciary capacity. In the absence of a quorum, the chairman of the meeting may adjourn the meeting from time to time in the manner provided in Section 1.7 hereof until a quorum shall be present.
Section 1.7 Adjournment.
Any meeting of stockholders, annual or special, may be adjourned from time to time solely by the chairman of the meeting because of the absence of a quorum or for any other reason and to reconvene at the same or some other time, date and place, if any. The chairman of the meeting shall have full power and authority to adjourn a stockholder meeting in his sole discretion, notwithstanding stockholder opposition to such adjournment. The stockholders present at a meeting shall not have the authority to adjourn the meeting. If the time, date and place, if any, of such adjourned meeting, and the means of remote communication, if any, by which the
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stockholders and the proxy holders may be deemed to be present and in person and vote at such adjourned meeting, are announced at the meeting at which the adjournment is taken and the adjournment is for less than thirty (30) days, no notice need be given of any such adjourned meeting. If the adjournment is for more than thirty (30) days and the time, date and place, if any, and the means of remote communication, if any, by which the stockholders and the proxy holders may be deemed to be present and in person are not announced at the meeting at which the adjournment is taken, or if after the adjournment a new record date is fixed for the adjourned meeting, then notice shall be given by the Secretary as required for the original meeting. At the adjourned meeting, the Corporation may transact any business that might have been transacted at the original meeting.
Section 1.8 Organization.
At each meeting of the stockholders, the Chairman of the Board, or in the Chairman’s absence the Chief Executive Officer, or in their absence any stockholder, director or officer of the Corporation appointed by the vote of a majority of the directors present at such meeting, shall call the meeting to order and preside over and act as chairman of such meeting. The date and time of the opening and closing of the polls for each matter upon which the stockholders will vote at a meeting shall be determined by the chairman of the meeting and announced at the meeting. The Board of Directors may adopt by resolution such rules and regulations for the conduct of the meeting of stockholders as it shall deem appropriate. Unless otherwise determined by the Board of Directors, the chairman of the meeting shall have the exclusive right to determine the order of business and to prescribe other such rules, regulations and procedures and shall have the authority in his discretion to regulate the conduct of any such meeting. Such rules, regulations or procedures, whether adopted by the Board of Directors or prescribed by the chairman of the meeting, may include, without limitation, the following: (i) rules and procedures for maintaining
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order at the meeting and the safety of those present; (ii) limitations on attendance at or participation in the meeting to stockholders of record of the Corporation, their duly authorized and constituted proxies or such other persons as the chairman of the meeting shall determine; (iii) restrictions on entry to the meeting after the time fixed for the commencement thereof; and (iv) limitations on the time allotted to questions or comments by participants. Unless and to the extent determined by the Board of Directors or the chairman of the meeting, meetings of stockholders shall not be required to be held in accordance with the rules of parliamentary procedure.
The Secretary shall act as secretary of all meetings of stockholders, but, in the absence of the Secretary, the chairman of the meeting may appoint any other person to act as secretary of the meeting.
Section 1.9 Postponement or Cancellation of Meeting.
Any previously scheduled annual or special meeting of the stockholders may be postponed or canceled by resolution of the Board of Directors upon public notice given (in the manner described in Section 1.5(c)(ii) of these Bylaws) prior to the time previously scheduled for such meeting of stockholders.
Section 1.10 Voting.
Subject to the rights of the holders of any series of preferred stock and except as otherwise provided by law, the Certificate of Incorporation or these Bylaws and except for the election of directors, at any meeting duly called and held at which a quorum is present, the affirmative vote of a majority of the combined voting power of the outstanding shares of Common Stock and any other class or series of capital stock of the Corporation entitled to vote together with Common Stock present in person or represented by proxy at the meeting and entitled to vote on the subject matter shall be the act of the stockholders. Subject to the rights of the holders of any series of preferred stock, at any meeting duly called and held for the election of directors at
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which a quorum is present, directors shall be elected by a plurality of the combined voting power of the outstanding shares of Common Stock and any other class or series of capital stock of the Corporation entitled to vote together with Common Stock present in person or represented by proxy at the meeting and entitled to vote on the election of directors.
Section 1.11 Consent of Stockholders in Lieu of Meeting.
So long as the Certificate of Incorporation permits the holders of any class or series of capital stock of the Corporation to act by written consent, such action may be taken without a meeting, without prior notice and without a vote, if a consent or consents in writing, setting forth the action so taken, shall be signed and delivered to the Corporation by the holders of shares of such class or series having the voting power specified by the Certificate of Incorporation, in the manner set forth in the Certificate of Incorporation (including any such action by electronic communication in accordance with the laws of the State of Delaware).
ARTICLE II
BOARD OF DIRECTORS
Section 2.1 Number and Term of Office.
The governing body of the Corporation shall be a Board of Directors. The total number of authorized directors constituting the whole Board of Directors at any time, whether or not any vacancies then exist on the Board of Directors (the “Whole Board”), shall be fixed by, or in the manner provided in, the Certificate of Incorporation. The term of office of directors shall be as set forth in the Certificate of Incorporation. Directors need not be stockholders of the Corporation. The Corporation shall nominate the person holding the office of Chief Executive Officer for election as a director at any meeting of the stockholders at which such person is subject to election as a director.
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Section 2.2 Resignations.
Any director of the Corporation, or any member of any committee, may resign at any time by giving written notice to the Board of Directors, the Chairman of the Board or the Chief Executive Officer or Secretary. Any such resignation shall take effect at the time specified therein or, if the time be not specified therein, then upon receipt thereof. The acceptance of such resignation shall not be necessary to make it effective unless otherwise stated therein.
Section 2.3 Removal of Directors.
Directors may be removed only in the manner set forth in the Certificate of Incorporation.
Section 2.4 Vacancies and Newly Created Directorships.
Subject to applicable law and the rights of the holders of any series of preferred stock, vacancies on the Board of Directors resulting from the death, resignation, removal or disqualification of a director or any other cause, and newly created directorships resulting from any increase in the total authorized number of directors on the Board of Directors, shall be filled solely in the manner provided in the Certificate of Incorporation.
Section 2.5 Meetings.
The annual meeting of the Board of Directors may be held on such date and at such time and place as the Board of Directors determines. The annual meeting of the Board of Directors may be held immediately following the annual meeting of stockholders, and if so held, no notice of such meeting shall be necessary to the newly elected directors in order to hold the meeting legally, provided that a quorum shall be present thereat.
Regular meetings of the Board of Directors shall be held at least once per fiscal quarter of the Corporation and at such time and place (or at no place, by means of telephone conference or other similar communications equipment pursuant to Section 2.7 of these Bylaws)
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as shall be fixed by resolution adopted by the Board of Directors. Notice of each regular meeting shall be furnished in writing to each member of the Board of Directors not less than ten (10) days in advance of said meeting, unless such notice requirement is waived in writing by each member. No notice need be given of the meeting immediately following an annual meeting of stockholders.
Special meetings of the Board of Directors shall be held at such time and place (or at no place, by means of telephone conference or other similar communications equipment pursuant to Section 2.7 of these Bylaws) as shall be designated in the notice of the meeting. Special meetings of the Board of Directors may be called by the Chairman of the Board, the Chief Executive Officer, or by any two or more directors then in office.
Section 2.6 Notice of Special Meetings.
The Secretary, or in his absence any other officer of the Corporation, shall give each director notice of the time and place of holding of special meetings of the Board of Directors by mail at least ten (10) days before the meeting, or by facsimile transmission, electronic mail or personal service at least twenty-four (24) hours before the meeting unless such notice requirement is waived in writing by each member. Unless otherwise stated in the notice thereof, any and all business may be transacted at any meeting without specification of such business in the notice.
Section 2.7 Conference Telephone Meeting.
Members of the Board of Directors, or any committee thereof, may participate in a meeting of the Board of Directors or such committee by means of telephone conference or other similar communications equipment by means of which all persons participating in the meeting can hear each other and communicate with each other, and such participation in a meeting shall constitute presence in person at such meeting.
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Section 2.8 Quorum and Organization of Meetings.
A majority of the total number of members of the Board of Directors as constituted from time to time shall constitute a quorum for the transaction of business, but, if at any meeting of the Board of Directors (whether or not adjourned from a previous meeting) there shall be less than a quorum present, a majority of those present may adjourn the meeting to another time, date and place, and the meeting may be held as adjourned, provided that written notice of the date to which such meeting is adjourned shall be given to all directors. Except as otherwise provided by law, the Certificate of Incorporation or these Bylaws, a majority of the directors present at any meeting at which a quorum is present may decide any question brought before such meeting. Each meeting of the Board of Directors shall be presided over by the Chairman of the Board or, in the absence of the Chairman of the Board, by such other person as may be appointed by the vote of a majority of the directors present at such meeting. The Board of Directors shall keep written minutes of its meetings. The Secretary shall act as secretary of the meeting, but in his or her absence the chairman of the meeting may appoint any person to act as secretary of the meeting.
Section 2.9 Indemnification.
To the fullest extent permitted by applicable law as it presently exists or may hereafter be amended, the Corporation shall indemnify and hold harmless any person who is or was made, or threatened to be made, a party to or is otherwise involved in any threatened, pending or completed action, suit or proceeding (a “Proceeding”), whether civil, criminal, administrative or investigative, including, without limitation, an action by or in the right of the Corporation to procure a judgment in its favor, by reason of the fact that such person, or a person of whom such person is the legal representative, is or was a director or officer of the Corporation, or while a director or officer of the Corporation is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, limited liability company,
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joint venture, trust, employee benefit plan or other enterprises including non-profit enterprises (an “Other Entity”), against all liabilities and losses, judgments, fines, penalties, excise taxes, amounts paid in settlement and costs, charges and expenses (including attorneys’ fees and disbursements). Persons who are not directors or officers of the Corporation may be similarly indemnified in respect of service to the Corporation or to an Other Entity at the request of the Corporation to the extent the Board of Directors at any time specifies that such persons are entitled to the benefits of this Section 2.9. Except as otherwise provided in Section 2.11 hereof, the Corporation shall be required to indemnify a person in connection with a proceeding (or part thereof) commenced by such person only if the commencement of such proceeding (or part thereof) by the person was authorized in the specific case by the Board of Directors.
Section 2.10 Advancement of Expenses.
The Corporation shall, from time to time, reimburse or advance to any director or officer or other person entitled to indemnification hereunder the funds necessary for payment of expenses, including attorneys’ fees and disbursements, incurred in connection with any Proceeding in advance of the final disposition of such Proceeding; provided, however, that, if required by the laws of the State of Delaware, such expenses incurred by or on behalf of any director or officer or other person may be paid in advance of the final disposition of a Proceeding only upon receipt by the Corporation of an undertaking, by or on behalf of such director or officer (or other person indemnified hereunder), to repay any such amount so advanced if it shall ultimately be determined by final judicial decision from which there is no further right of appeal that such director, officer or other person is not entitled to be indemnified for such expenses. Except as otherwise provided in Section 2.11 hereof, the Corporation shall be required to reimburse or advance expenses incurred by a person in connection with a proceeding (or part thereof) commenced by such person only if the commencement of such proceeding (or part thereof) by the person was authorized by the Board of Directors.
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Section 2.11 Claims.
If a claim for indemnification or advancement of expenses under this Article II is not paid in full within thirty (30) days after a written claim therefor by the person seeking indemnification or reimbursement or advancement of expenses has been received by the Corporation, the person may file suit to recover the unpaid amount of such claim and, if successful, in whole or in part, shall be entitled to be paid the expense of prosecuting such claim. In any such action the Corporation shall have the burden of proving that the person seeking indemnification or reimbursement or advancement of expenses is not entitled to the requested indemnification, reimbursement or advancement of expenses under applicable law.
Section 2.12 Amendment, Modification or Repeal.
Any amendment, modification or repeal of the foregoing provisions of this Article II shall not adversely affect any right or protection hereunder of any person entitled to indemnification under Section 2.9 hereof in respect of any act or omission occurring prior to the time of such repeal or modification.
Section 2.13 Nonexclusivity of Rights.
The rights conferred on any person by this Article II shall not be exclusive of any other rights which such person may have or hereafter acquire under any statute, provision of the Certificate of Incorporation, these Bylaws, agreement, vote of stockholders or disinterested directors or otherwise.
Section 2.14 Other Sources.
The Corporation’s obligation, if any, to indemnify or to advance expenses to any person who was or is serving at its request as a director, officer, employee or agent of an Other Entity shall be reduced by any amount such person may collect as indemnification or advancement of expenses from such Other Entity.
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Section 2.15 Other Indemnification and Prepayment of Expenses.
This Article II shall not limit the right of the Corporation, to the extent and in the manner permitted by law, to indemnify and to advance expenses to additional persons when and as authorized by appropriate corporate action.
Section 2.16 Executive Committee of the Board of Directors.
Subject to any applicable restrictions set forth in the Certificate of Incorporation, the Board of Directors, by the affirmative vote of not less than 75% of the Whole Board, may designate an executive committee, all of whose members shall be directors, to manage and operate the affairs of the Corporation or particular properties or enterprises of the Corporation. Subject to the limitations of the law of the State of Delaware and the Certificate of Incorporation, such executive committee shall exercise all powers and authority of the Board of Directors in the management of the business and affairs of the Corporation including, but not limited to, the power and authority to authorize the issuance of shares of common or preferred stock. The executive committee shall keep minutes of its meetings and report to the Board of Directors not less often than quarterly on its activities and shall be responsible to the Board of Directors for the conduct of the enterprises and affairs entrusted to it. Regular meetings of the executive committee, of which no notice shall be necessary, shall be held at such time, dates and places as shall be fixed by resolution adopted by the executive committee. Special meetings of the executive committee shall be called at the request of the Chief Executive Officer or of any member of the executive committee, and shall be held upon such notice as is required by these Bylaws for special meetings of the Board of Directors, provided that oral notice by telephone or otherwise shall be sufficient if received not later than the day immediately preceding the day of the meeting.
20
Section 2.17 Other Committees of the Board of Directors.
The Board of Directors may by resolution establish committees other than an executive committee and shall specify with particularity the powers and duties of any such committee. Subject to the limitations of the laws of the State of Delaware and the Certificate of Incorporation, any such committee shall exercise all powers and authority specifically granted to it by the Board of Directors. Such committees shall serve at the pleasure of the Board of Directors, keep minutes of their meetings and have such names as the Board of Directors by resolution may determine and shall be responsible to the Board of Directors for the conduct of the enterprises and affairs entrusted to them.
Section 2.18 Committees, Generally.
The Board may designate one or more directors as alternate members of any committee to replace absent or disqualified members at any meeting of such committee. If a member of a committee shall be absent from any meeting, or disqualified from voting thereat, the remaining member or members present and not disqualified from voting, whether or not such member or members constitute a quorum, may, by a unanimous vote, appoint another member of the Board of Directors to act at the meeting in place of any such absent or disqualified member. Any such committee, to the extent provided in a resolution of the Board of Directors passed as aforesaid, shall have and may exercise all the powers and authority of the Board of Directors in the management of the business and affairs of the Corporation, and may authorize the seal of the Corporation to be impressed on all papers that may require it, but no such committee shall have the power or authority of the Board of Directors in reference to (i) approving or adopting, or recommending to the stockholders, any action or matter expressly required by the laws of the State of Delaware to be submitted to the stockholders for approval or (ii) adopting, amending or repealing any Bylaw of the Corporation. Such committee or committees shall have such name or
21
names as may be determined from time to time by resolution adopted by the Board of Directors. Unless otherwise specified in the resolution of the Board of Directors designating a committee, at all meetings of such committee a majority of the total number of members of the committee shall constitute a quorum for the transaction of business, and the vote of a majority of the members of the committee present at any meeting at which there is a quorum shall be the act of the committee. Each committee shall keep regular minutes of its meetings. Unless the Board of Directors otherwise provides, each committee designated by the Board of Directors may make, alter and repeal rules for the conduct of its business. In the absence of such rules each committee shall conduct its business in the same manner as the Board of Directors conducts its business pursuant to Article II of these Bylaws.
Section 2.19 Director Compensation.
Directors who are not employees of the Corporation or any of its subsidiaries shall receive such compensation for attendance at any meetings of the Board and any expenses incidental to the performance of their duties as the Board of Directors shall determine by resolution. Such compensation may be in addition to any compensation received by the members of the Board of Directors in any other capacity.
Section 2.20 Action Without Meeting.
The Board of Directors, or any committee thereof, may take any action required or permitted to be taken by the unanimous written consent (including consent by electronic communication) of all Directors then in office, in accordance with the laws of the State of Delaware and the Certificate of Incorporation.
22
ARTICLE III
OFFICERS
Section 3.1 Executive Officers; Chairman of the Board.
The Board of Directors, at its first meeting after each annual meeting of stockholders, shall elect the officers of the Corporation, including a Chief Executive Officer, a Treasurer and a Secretary, and shall also elect from among the members of the Board of Directors, the Chairman of the Board who may or may not also be an officer of the Corporation. The Board of Directors may also elect, from time to time, such Vice Presidents and such other or additional officers as in its opinion are desirable for the conduct of business of the Corporation. Each officer shall hold office until the first meeting of the Board of Directors following the next annual meeting of stockholders following their respective election. Any person may hold at one time two or more offices.
Unless otherwise provided in the resolution of the Board of Directors electing any officer, each officer shall hold office until his or her successor is elected and qualified or until his or her earlier resignation or removal. Any officer may resign at any time upon written notice to the Board of Directors or the Chief Executive Officer or the Secretary. Such resignation shall take effect at the time specified therein, and unless otherwise specified therein no acceptance of such resignation shall be necessary to make it effective. The Board of Directors may remove any officer with or without cause at any time. Any such removal shall be without prejudice to the contractual rights of such officer, if any, with the Corporation, but the election of an officer shall not of itself create contractual rights. Any vacancy occurring in any office of the Corporation by death, resignation, removal or otherwise may be filled by the Board of Directors at any regular or special meeting.
23
Section 3.2 Powers and Duties of Officers.
Each of the officers of the Corporation elected by the Board of Directors or appointed by an officer in accordance with these Bylaws, or designated pursuant to the Plan of Reorganization (as defined in the Certificate of Incorporation), shall have the powers and duties prescribed by law, by these Bylaws or by the Board of Directors and, in the case of appointed officers, the powers and duties prescribed by the appointing officer, and, unless otherwise prescribed by these Bylaws or by the Board of Directors or such appointing officer, shall have such further powers and duties as ordinarily pertain to that office.
The Chief Executive Officer shall be the senior officer of the Corporation, shall have overall responsibility for the management and direction of the business and affairs of the Corporation and shall exercise such duties as customarily pertain to the office of Chief Executive Officer and such other duties as may be prescribed from time to time by the Board of Directors. The Chief Executive Officer may appoint and terminate the appointment or election of officers, agents or employees other than those appointed or elected by the Board of Directors. The Chief Executive Officer may sign, execute and deliver, in the name of the Corporation, powers of attorney, contracts, bonds and other obligations.
Vice Presidents shall have such powers and perform such duties as may be assigned to them by the Chief Executive Officer, the executive committee, if any, or the Board of Directors. A Vice President may sign and execute contracts and other obligations pertaining to the regular course of his/her duties which implement policies established by the Board of Directors.
The Treasurer shall be the chief financial officer of the Corporation. Unless the Board of Directors otherwise declares by resolution, the Treasurer shall have general custody of all the funds and securities of the Corporation and general supervision of the collection and disbursement of funds of the Corporation. The Treasurer shall endorse for collection on behalf of
24
the Corporation checks, notes and other obligations, and shall deposit the same to the credit of the Corporation in such bank or banks or depository as the Board of Directors may designate. The Treasurer may sign, with the Chief Executive Officer or such other person or persons as may be designated for the purpose by the Board of Directors, all bills of exchange or promissory notes of the Corporation. The Treasurer shall enter or cause to be entered regularly in the books of the Corporation a full and accurate account of all moneys received and paid by the Treasurer on account of the Corporation, shall at all reasonable times exhibit his/her books and accounts to any director of the Corporation upon application at the office of the Corporation during business hours and, whenever required by the Board of Directors or the Chief Executive Officer, shall render a statement of his/her accounts. The Treasurer shall perform such other duties as may be prescribed from time to time by the Board of Directors or by these Bylaws. The Treasurer may be required to give bond for the faithful performance of his/her duties in such sum and with such surety as shall be approved by the Board of Directors. Any Assistant Treasurer shall, in the absence or disability of the Treasurer, perform the duties and exercise the powers of the Treasurer and shall perform such other duties and have such other powers as the Board of Directors may from time to time prescribe.
The Secretary shall keep the minutes of all meetings of the stockholders and of the Board of Directors. The Secretary shall cause notice to be given of meetings of stockholders, of the Board of Directors, and of any committee appointed by the Board of Directors. He or she shall have custody of the corporate seal, minutes and records relating to the conduct and acts of the stockholders and Board of Directors, which shall, at all reasonable times, be open to the examination of any director. The Secretary or any Assistant Secretary may certify the record of proceedings of the meetings of the stockholders or of the Board of Directors or resolutions adopted
25
at such meetings, may sign or attest certificates, statements or reports required to be filed with governmental bodies or officials, may sign acknowledgments of instruments, may give notices of meetings and shall perform such other duties and have such other powers as the Board of Directors may from time to time prescribe.
Section 3.3 Bank Accounts.
In addition to such bank accounts as may be authorized in the usual manner by resolution of the Board of Directors, the Treasurer, with approval of the Chief Executive Officer, may authorize such bank accounts to be opened or maintained in the name and on behalf of the Corporation as he may deem necessary or appropriate, provided payments from such bank accounts are to be made upon and according to the check of the Corporation, which may be signed jointly or singularly by either the manual or facsimile signature or signatures of such officers or bonded employees of the Corporation as shall be specified in the written instructions of the Treasurer or Assistant Treasurer of the Corporation with the approval of the Chief Executive Officer.
Section 3.4 Proxies; Stock Transfers.
Unless otherwise provided in the Certificate of Incorporation or directed by the Board of Directors, the Chief Executive Officer or any Vice President or their designees shall have full power and authority on behalf of the Corporation to attend and to vote upon all matters and resolutions at any meeting of stockholders of any corporation in which the Corporation may hold stock, and may exercise on behalf of the Corporation any and all of the rights and powers incident to the ownership of such stock at any such meeting, whether regular or special, and at all adjournments thereof, and shall have power and authority to execute and deliver proxies and consents on behalf of the Corporation in connection with the exercise by the Corporation of the rights and powers incident to the ownership of such stock, with full power of substitution or
26
revocation. Unless otherwise provided in the Certificate of Incorporation or directed by the Board of Directors, the Chief Executive Officer or any Vice President or their designees shall have full power and authority on behalf of the Corporation to transfer, sell or dispose of stock of any corporation in which the Corporation may hold stock.
ARTICLE IV
CAPITAL STOCK
Section 4.1 Shares.
The shares of the Corporation shall be represented by a certificate or shall be uncertificated. Certificates shall be signed by the Chief Executive Officer and by the Secretary or the Treasurer, and sealed with the seal of the Corporation. Such seal may be a facsimile, engraved or printed. Within a reasonable time after the issuance or transfer of uncertificated shares, the Corporation shall send to the registered owner thereof a written notice containing the information required to be set forth or stated on certificates pursuant to Sections 151, 156, 202(a) or 218(a) of the DGCL or a statement that the Corporation will furnish without charge to each stockholder who so requests the powers, designations, preferences and relative participating, optional or other special rights of each class of stock or series thereof and the qualification, limitations or restrictions of such preferences and/or rights.
Any of or all the signatures on a certificate may be facsimile. In case any officer, transfer agent or registrar who has signed or whose facsimile signature has been placed upon a certificate shall have ceased to be such an officer, transfer agent or registrar before such certificate is issued, it may be issued by the Corporation with the same effect as if such officer, transfer agent or registrar had not ceased to hold such position at the time of its issuance.
27
Except as otherwise expressly provided by law, the rights and obligations of the holders of uncertificated shares and the rights and obligations of the holders of certificates representing shares of the same class and series shall be identical.
Section 4.2 Transfer of Shares.
(a) Upon surrender to the Corporation or the transfer agent of a certificate for shares duly endorsed or accompanied by proper evidence of succession, assignation or authority to transfer, it shall be the duty of the Corporation to issue a new certificate to the person entitled thereto, cancel the old certificate and record the transaction upon its books. Upon receipt of proper transfer instructions from the registered owner of uncertificated shares such uncertificated shares shall be cancelled, and the issuance of new equivalent uncertificated shares or certificated shares shall be made to the person entitled thereto and the transaction shall be recorded upon the books of the Corporation.
(b) The person in whose name shares of stock stand on the books of the Corporation shall be deemed by the Corporation to be the owner thereof for all purposes, and the Corporation shall not be bound to recognize any equitable or other claim to or interest in such share or shares on the part of any other person, whether or not it shall have express or other notice thereof, except as otherwise provided by the laws of the State of Delaware.
Section 4.3 Lost certificates.
The Board of Directors or any transfer agent of the Corporation may direct a new certificate or certificates or uncertificated shares representing stock of the Corporation to be issued in place of any certificate or certificates theretofore issued by the Corporation, alleged to have been lost, stolen or destroyed, upon the making of an affidavit of that fact by the person claiming the certificate to be lost, stolen or destroyed. When authorizing such issue of a new certificate or certificates or uncertificated shares, the Board of Directors (or any transfer agent of the
28
Corporation authorized to do so by a resolution of the Board of Directors) may, in its discretion and as a condition precedent to the issuance thereof, require the owner of such lost, stolen or destroyed certificate or certificates, or his legal representative, to give the Corporation a bond in such sum as the Board of Directors (or any transfer agent so authorized) shall direct to indemnify the Corporation and the transfer agent against any claim that may be made against the Corporation with respect to the certificate alleged to have been lost, stolen or destroyed or the issuance of such new certificates or uncertificated shares, and such requirement may be general or confined to specific instances.
Section 4.4 Transfer Agent and Registrar.
The Board of Directors may appoint one or more transfer agents and one or more registrars, and may require all certificates for shares to bear the manual or facsimile signature or signatures of any of them.
Section 4.5 Regulations.
The Board of Directors shall have power and authority to make all such rules and regulations as it may deem expedient concerning the issue, transfer, registration, cancellation and replacement of certificates representing stock of the Corporation or uncertificated shares, which rules and regulations shall comply in all respects with the rules and regulations of the transfer agent.
ARTICLE V
GENERAL PROVISIONS
Section 5.1 Offices.
The Corporation shall maintain a registered office in the State of Delaware as required by the laws of the State of Delaware. The Corporation may also have offices in such other places, either within or without the State of Delaware, as the Board of Directors may from time to time designate or as the business of the Corporation may require.
29
Section 5.2 Corporate Seal.
The corporate seal shall have inscribed thereon the name of the Corporation, the year of its organization as a Delaware corporation, and the words “Corporate Seal” and “Delaware.”
Section 5.3 Fiscal Year.
The fiscal year of the Corporation shall be the calendar year unless otherwise determined by resolution of the Board of Directors.
Section 5.4 Information Rights.
The Corporation shall provide information as any stockholder reasonably requests in connection with any enquiries, investigations, actions and/or proceedings relating to that stockholder or its Affiliates (as defined in the Certificate of Incorporation) or otherwise in order for such stockholder or its Affiliates to comply with any applicable tax, law or regulation, provided that (i) the copies of the books of the Corporation provided to the requesting stockholder in accordance with this Section 5.4 may be provided to other stockholders if such information is determined by the Board of Directors to be of general application to all stockholders, and (ii) upon request by the Corporation, the requesting stockholder shall reimburse the Corporation for the costs incurred by it in making any copies of the books of the Corporation pursuant to this Section 5.4.
Section 5.5 Notices and Waivers Thereof.
Whenever any notice is required by the laws of the State of Delaware, the Certificate of Incorporation or these Bylaws to be given to any stockholder, director or officer,
30
such notice, except as otherwise provided by law, may be given personally, or by mail, or by electronic mail or facsimile transmission, addressed to such address as appears on the books of the Corporation. Any notice given by electronic mail or facsimile transmission shall be deemed to have been given when it shall have been transmitted and any notice given by mail shall be deemed to have been given three (3) business days after it shall have been deposited in the United States mail with postage thereon prepaid.
Whenever any notice is required to be given by law, the Certificate of Incorporation, or these Bylaws, a written waiver thereof, signed by the person entitled to such notice, whether before or after the meeting or the time stated therein, shall be deemed equivalent in all respects to such notice to the full extent permitted by law.
Section 5.6 Saving Clause.
These Bylaws are subject to the provisions of the Certificate of Incorporation and applicable law. In the event any provision of these Bylaws is inconsistent with the Certificate of Incorporation or the corporate laws of the State of Delaware, such provision shall be invalid to the extent only of such conflict, and such conflict shall not affect the validity of any other provision of these Bylaws.
Section 5.7 Amendments.
In furtherance and not in limitation of the powers conferred by the laws of the State of Delaware, the Board of Directors, by action taken by the affirmative vote of not less than a majority of the Whole Board, is hereby expressly authorized and empowered to adopt, amend or repeal any provision of these Bylaws except for Section 5.4.
Subject to the rights of the holders of any series of preferred stock or as otherwise expressly set forth herein, these Bylaws may be adopted, amended or repealed by the affirmative vote of the holders of not less than a majority of the total voting power of the then outstanding
31
capital stock of the Corporation entitled to vote thereon; provided, however, that this paragraph shall not apply to, and no vote of the stockholders of the Corporation shall be required to authorize, the adoption, amendment or repeal of any provision of these Bylaws by the Board of Directors in accordance with the immediately preceding paragraph.
Notwithstanding anything contained herein to the contrary and subject to applicable law, the prior written consent of Barclays Bank PLC shall be required to amend, modify or repeal Section 5.4 for so long as Barclays Bank PLC or any of its Affiliates holds any Common Stock or any warrant issued by the Corporation in accordance with the Plan of Reorganization.
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Exhibit 10.1
EXECUTION VERSION
AMENDED AND RESTATED CREDIT AGREEMENT
DATED AS OF
NOVEMBER 30, 2020
AMONG
LONESTAR RESOURCES US INC.,
AS PARENT,
LONESTAR RESOURCES AMERICA INC.,
AS BORROWER,
CITIBANK, N.A.,
AS ADMINISTRATIVE AGENT,
AND
THE LENDERS PARTY HERETO
CITIBANK, N.A.
AS SOLE LEAD ARRANGER
TABLE OF CONTENTS
| Page | ||||||
| ARTICLE I Definitions and Accounting Matters |
| |||||
| Section 1.01. | Terms Defined Above | 1 | ||||
| Section 1.02. | Certain Defined Terms | 1 | ||||
| Section 1.03. | Types of Loans and Borrowings | 28 | ||||
| Section 1.04. | Terms Generally; Rules of Construction | 28 | ||||
| Section 1.05. | Accounting Terms and Determinations; GAAP | 29 | ||||
| Section 1.06. | Amounts of Letters of Credit | 29 | ||||
| Section 1.07. | Joint Preparation; Construction of Indemnities and Releases | 29 | ||||
| Section 1.08. | Determination of Time | 30 | ||||
| Section 1.09. | Rates | 30 | ||||
| Section 1.10. | Interpretative Provisions Related to Divisions | 30 | ||||
| ARTICLE II The Credits |
| |||||
| Section 2.01. | Commitments | 30 | ||||
| Section 2.02. | Loans and Borrowings | 30 | ||||
| Section 2.03. | Requests for Borrowings | 31 | ||||
| Section 2.04. | Interest Elections | 32 | ||||
| Section 2.05. | Funding of Borrowings | 34 | ||||
| Section 2.06. | Termination and Reduction of Aggregate Maximum Revolving Credit Amounts | 34 | ||||
| Section 2.07. | Borrowing Base | 35 | ||||
| Section 2.08. | Letters of Credit | 39 | ||||
| Section 2.09. | Collateral | 44 | ||||
| Section 2.10. | Defaulting Lenders | 45 | ||||
| ARTICLE III Payments of Principal and Interest; Prepayments; Fees |
| |||||
| Section 3.01. | Repayment of Loans | 47 | ||||
| Section 3.02. | Interest | 48 | ||||
| Section 3.03. | Alternate Rate of Interest; Benchmark Replacement | 49 | ||||
| Section 3.04. | Prepayments | 55 | ||||
| Section 3.05. | Fees | 57 | ||||
| ARTICLE IV Payments; Pro Rata Treatment; Sharing of Payments |
| |||||
| Section 4.01. | Payments Generally; Pro Rata Treatment; Sharing of Payments | 58 | ||||
| Section 4.02. | Presumption of Payment by the Borrower | 59 | ||||
| Section 4.03. | Disposition of Proceeds | 59 | ||||
| ARTICLE V Increased Costs; Break Funding Payments; Taxes; Illegality |
| |||||
| Section 5.01. | Increased Costs | 59 | ||||
| Section 5.02. | Break Funding Payments | 61 | ||||
| Section 5.03. | Taxes | 61 | ||||
| Section 5.04. | Mitigation Obligations; Replacement of Lenders | 65 | ||||
| Section 5.05. | Illegality | 66 | ||||
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| ARTICLE VI Conditions Precedent |
| |||||
| Section 6.01. | Closing Date | 66 | ||||
| Section 6.02. | Each Credit Event | 69 | ||||
| ARTICLE VII Representations and Warranties |
| |||||
| Section 7.01. | Organization; Powers | 70 | ||||
| Section 7.02. | Authority; Enforceability | 70 | ||||
| Section 7.03. | Approvals; No Conflicts | 70 | ||||
| Section 7.04. | Financial Condition; No Material Adverse Change | 71 | ||||
| Section 7.05. | Litigation | 71 | ||||
| Section 7.06. | Environmental Matters | 72 | ||||
| Section 7.07. | Compliance with Laws and Agreements; No Defaults | 72 | ||||
| Section 7.08. | Investment Company Act | 73 | ||||
| Section 7.09. | Taxes | 73 | ||||
| Section 7.10. | ERISA | 73 | ||||
| Section 7.11. | Disclosure; No Material Misstatements | 74 | ||||
| Section 7.12. | Insurance | 74 | ||||
| Section 7.13. | Restriction on Liens | 75 | ||||
| Section 7.14. | Subsidiaries | 75 | ||||
| Section 7.15. | Location of Business and Offices | 75 | ||||
| Section 7.16. | Properties; Titles, Etc | 75 | ||||
| Section 7.17. | Maintenance of Properties | 76 | ||||
| Section 7.18. | Material Gas Imbalances, Prepayments | 77 | ||||
| Section 7.19. | Marketing of Production | 77 | ||||
| Section 7.20. | Swap Agreements | 77 | ||||
| Section 7.21. | Use of Loans and Letters of Credit | 77 | ||||
| Section 7.22. | Solvency | 77 | ||||
| Section 7.23. | International Operations | 78 | ||||
| Section 7.24. | Anti-Corruption Laws and Sanctions | 78 | ||||
| Section 7.25. | Security Instruments | 78 | ||||
| Section 7.26. | Beneficial Ownership Certification | 78 | ||||
| ARTICLE VIII Affirmative Covenants |
| |||||
| Section 8.01. | Financial Statements; Other Information | 78 | ||||
| Section 8.02. | Notices of Material Events | 82 | ||||
| Section 8.03. | Existence; Conduct of Business | 82 | ||||
| Section 8.04. | Payment of Obligations | 83 | ||||
| Section 8.05. | Performance of Obligations under Loan Documents | 83 | ||||
| Section 8.06. | Operation and Maintenance of Properties | 83 | ||||
| Section 8.07. | Insurance | 84 | ||||
| Section 8.08. | Books and Records; Inspection Rights | 84 | ||||
| Section 8.09. | Compliance with Laws | 85 | ||||
| Section 8.10. | Environmental Matters | 85 | ||||
| Section 8.11. | Further Assurances | 86 | ||||
| Section 8.12. | Reserve Reports | 86 | ||||
| Section 8.13. | Title Information | 88 | ||||
| Section 8.14. | Additional Collateral; Additional Guarantors | 89 | ||||
| Section 8.15. | ERISA Compliance | 90 | ||||
ii
| Section 8.16. | Keepwell | 90 | ||||
| Section 8.17. | Required Swap Agreements | 91 | ||||
| Section 8.18. | Beneficial Ownership Regulation Documentation | 91 | ||||
| Section 8.19. | Holding Company | 91 | ||||
| Section 8.21. | CARES Debt | 91 | ||||
| ARTICLE IX Negative Covenants |
| |||||
| Section 9.01. | Financial Covenants | 92 | ||||
| Section 9.02. | Debt | 92 | ||||
| Section 9.03. | Liens | 93 | ||||
| Section 9.04. | Dividends, Distributions and Redemptions; Redemption of Debt | 94 | ||||
| Section 9.05. | Investments, Loans and Advances | 94 | ||||
| Section 9.06. | Nature of Business; International Operations | 96 | ||||
| Section 9.07. | Limitation on Leases | 96 | ||||
| Section 9.08. | Proceeds of Loans | 96 | ||||
| Section 9.09. | ERISA Compliance | 96 | ||||
| Section 9.10. | Sale or Discount of Receivables | 97 | ||||
| Section 9.11. | Mergers, Etc | 98 | ||||
| Section 9.12. | Sale of Properties | 98 | ||||
| Section 9.13. | Environmental Matters | 99 | ||||
| Section 9.14. | Transactions with Affiliates | 99 | ||||
| Section 9.15. | Subsidiaries | 99 | ||||
| Section 9.16. | Negative Pledge Agreements; Dividend Restrictions | 99 | ||||
| Section 9.17. | Gas Imbalances, Take-or-Pay or Other Prepayments | 99 | ||||
| Section 9.18. | Swap Agreements | 99 | ||||
| Section 9.19. | Marketing Activities | 101 | ||||
| Section 9.20. | Maintenance of Deposit Accounts | 101 | ||||
| Section 9.21. | Excluded Subsidiary | 101 | ||||
| Section 9.22. | Limitation on Swap Terminations | 102 | ||||
| ARTICLE X Events of Default; Remedies |
| |||||
| Section 10.01. | Events of Default | 102 | ||||
| Section 10.02. | Remedies | 104 | ||||
| ARTICLE XI The Agents |
| |||||
| Section 11.01. | Appointment; Powers | 106 | ||||
| Section 11.02. | Rights as a Lender | 106 | ||||
| Section 11.03. | Exculpatory Provisions | 107 | ||||
| Section 11.04. | Reliance by Administrative Agent | 108 | ||||
| Section 11.05. | Delegation of Duties | 108 | ||||
| Section 11.06. | Resignation of Administrative Agent and/or Issuing Bank | 108 | ||||
| Section 11.07. | Non-Reliance on Administrative Agent and Other Lenders | 109 | ||||
| Section 11.08. | No Other Duties, etc | 110 | ||||
| Section 11.09. | Administrative Agent May File Proofs of Claim | 110 | ||||
| Section 11.10. | Collateral and Guaranty Matters | 110 | ||||
| Section 11.11. | Secured Swap Agreements and Secured Treasury Management Agreements | 111 | ||||
| Section 11.12. | Credit Bidding | 111 | ||||
iii
| ARTICLE XII Miscellaneous |
| |||||
| Section 12.01. | Notices | 112 | ||||
| Section 12.02. | Waivers; Amendments | 114 | ||||
| Section 12.03. | Expenses, Indemnity; Damage Waiver | 117 | ||||
| Section 12.04. | Successors and Assigns | 119 | ||||
| Section 12.05. | Survival; Revival; Reinstatement | 122 | ||||
| Section 12.06. | Counterparts; Integration; Effectiveness; Electronic Signatures | 123 | ||||
| Section 12.07. | Severability | 124 | ||||
| Section 12.08. | Right of Setoff | 124 | ||||
| Section 12.09. | Governing Law; Jurisdiction; Consent to Service of Process; Waiver of Jury Trial | 124 | ||||
| Section 12.10. | Headings | 125 | ||||
| Section 12.11. | Confidentiality | 125 | ||||
| Section 12.12. | Interest Rate Limitation | 126 | ||||
| Section 12.13. | EXCULPATION PROVISIONS | 127 | ||||
| Section 12.14. | Collateral Matters; Swap Agreements; Treasury Management Agreements | 127 | ||||
| Section 12.15. | No Third Party Beneficiaries | 128 | ||||
| Section 12.16. | No Advisory or Fiduciary Responsibility | 128 | ||||
| Section 12.17. | Time of the Essence | 129 | ||||
| Section 12.18. | USA PATRIOT Act Notice | 129 | ||||
| Section 12.19. | ENTIRE AGREEMENT | 129 | ||||
| Section 12.20. | Acknowledgement and Consent to Bail-In of EEA Financial Institutions | 129 | ||||
| Section 12.21. | Acknowledgement Regarding Any Supported QFCs | 130 | ||||
| Section 12.22. | Amendment and Restatement. | 131 | ||||
iv
ANNEXES, EXHIBITS AND SCHEDULES
| Annex I | List of Maximum Revolving Credit Amounts and Term Loan Commitments | |
| Exhibit A | Form of Note | |
| Exhibit B | Form of Borrowing Request | |
| Exhibit C | Form of Interest Election Request | |
| Exhibit D | Form of Compliance Certificate | |
| Exhibit E | Form of Swap Agreement Certificate | |
| Exhibit F | Security Instruments | |
| Exhibit G | Form of Assignment and Assumption | |
| Exhibit H | Property Certificate | |
| Exhibit I | Reconciliation Schedule | |
| Exhibit J-1 | Form of U.S. Tax Compliance Certificate (For Foreign Lenders That Are Not Partnerships For U.S. Federal Income Tax Purposes) | |
| Exhibit J-2 | Form of U.S. Tax Compliance Certificate (For Foreign Participants That Are Not Partnerships For U.S. Federal Income Tax Purposes) | |
| Exhibit J-3 | Form of U.S. Tax Compliance Certificate (For Foreign Lenders That Are Partnerships For U.S. Federal Income Tax Purposes) | |
| Exhibit J-4 | Form of U.S. Tax Compliance Certificate (For Foreign Participants That Are Partnerships For U.S. Federal Income Tax Purposes) | |
| Schedule 2.08 | Existing Letters of Credit | |
| Schedule 7.05 | Litigation | |
| Schedule 7.06 | Environmental | |
| Schedule 7.14 | Subsidiaries and Partnerships | |
| Schedule 7.18 | Material Gas Imbalances | |
| Schedule 7.19 | Marketing Contracts | |
| Schedule 7.20 | Current Swap Agreements | |
| Schedule 9.03 | Existing Liens | |
| Schedule 9.05 | Existing Investments |
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THIS AMENDED AND RESTATED CREDIT AGREEMENT dated as of November 30, 2020 is among: LONESTAR RESOURCES AMERICA INC., a Delaware corporation duly formed and existing under the laws of the State of Delaware (the “Borrower”); LONESTAR RESOURCES US INC., a Delaware corporation duly formed and existing under the laws of the State of Delaware (the “Parent”); each of the Lenders from time to time party hereto; and CITIBANK, N.A., a national banking association, as administrative agent for the Lenders (in such capacity, together with its successors in such capacity, the “Administrative Agent”).
R E C I T A L S
A. The Borrower, Citibank, N.A., as administrative agent and as an issuing bank, the lenders from time to time party thereto (the “Prepetition Lenders”) and certain other Persons are party to that certain Credit Agreement, dated as of July 28, 2015 (as amended, restated, amended and restated, supplemented or otherwise modified from time to time, the “Prepetition Credit Agreement”).
B. On September 4, 2020, the Parent, the Borrower and certain of its Subsidiaries and Affiliates (collectively in such capacity, the “Debtors”) filed voluntary petitions with the United States Bankruptcy Court for the Southern District of Texas, Houston Division (the “Bankruptcy Court”) commencing their respective cases (the “Bankruptcy Proceedings”) under Chapter 11 of the Bankruptcy Code.
C. The Debtors have filed a Joint Prepackaged Plan of Reorganization for Lonestar Resources US Inc. and its Affiliate Debtors under Chapter 11 of the Bankruptcy Code (together with all exhibits and schedules thereto, the “Plan of Reorganization”) with the Bankruptcy Court, pursuant to which the Debtors expect to be reorganized and emerge from the Bankruptcy Proceedings. The Plan of Reorganization was confirmed by the Bankruptcy Court on November 12, 2020.
D. Pursuant to the terms of the Plan of Reorganization, the Prepetition Lenders have agreed to amend and restate the Prepetition Credit Agreement and provide certain loans, extensions of credit and commitments to the reorganized Borrower subject to the terms and conditions of this Agreement.
E. In consideration of the premises and the covenants and agreements contained herein, the parties hereto hereby agree as follows:
ARTICLE I
Definitions and Accounting Matters
Section 1.01. Terms Defined Above. As used in this Agreement, each term defined above has the meaning indicated above.
Section 1.02. Certain Defined Terms. As used in this Agreement, the following terms have the meanings specified below:
“ABR” when used in reference to any Loan or Borrowing, refers to whether such Loan, or the Loans comprising such Borrowing, are bearing interest at a rate determined by reference to the Alternate Base Rate.
“Account Control Agreement” means each account control agreement executed by a Grantor party thereto, the Security Agent, and Citibank, N.A., as may be amended, modified or supplemented from time to time.
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“Act” has the meaning assigned to such term in Section 12.18.
“Adjusted LIBO Rate” means, with respect to any Eurodollar Borrowing for any Interest Period, an interest rate per annum (rounded upwards, if necessary, to the next 1/100 of 1%) equal to (a) the LIBO Rate for such Interest Period multiplied by (b) the Statutory Reserve Rate.
“Administrative Agent” has the meaning assigned to such term in the Preamble.
“Administrative Questionnaire” means an Administrative Questionnaire in a form supplied from time to time by the Administrative Agent.
“Affected Financial Institution” means (a) any EEA Financial Institution or (b) any UK Financial Institution.
“Affected Loans” has the meaning assigned to such term in Section 5.05.
“Affiliate” means, with respect to a specified Person, another Person that directly, or indirectly through one or more intermediaries, Controls or is Controlled by or is under common Control with the Person specified.
“Agent Parties” has the meaning assigned to such term in Section 12.01(d).
“Agents” means, collectively, the Administrative Agent and other agents subsequently named; and “Agent” shall mean either the Administrative Agent or such other agent, as the context requires.
“Aggregate Maximum Revolving Credit Amount” at any time shall equal the sum of the Maximum Revolving Credit Amounts of the respective Lenders, as the same may be reduced or terminated pursuant to Section 2.06. The Aggregate Maximum Revolving Credit Amount as of the Closing Date is $225,000,000.
“Agreement” means this Credit Agreement, as the same may from time to time be amended, modified, supplemented or restated.
“Alternate Base Rate” means, for any day, a rate per annum equal to the greater of (a) the Prime Rate in effect on such day, (b) the Federal Funds Effective Rate in effect on such day plus 1⁄2 of 1%, and (c) the Adjusted LIBO Rate (based on an Interest Period of 30 days) in effect on such day plus 1%. Any change in the Alternate Base Rate due to a change in the Prime Rate or the Federal Funds Effective Rate or the Adjusted LIBO Rate shall be effective from and including the effective date of such change in the Prime Rate or the Federal Funds Effective Rate or the Adjusted LIBO Rate, respectively; provided that if the Alternate Base Rate shall be less than 2.00%, such rate shall be deemed to be 2.00% for purposes of this Agreement.
“Anti-Corruption Laws” means all state or federal laws, rules, and regulations applicable to the Borrower or any of its Affiliates from time to time concerning or relating to bribery or corruption, including the FCPA.
“Applicable Margin” means, for any day, with respect to any ABR Loan, 3.50%, and with respect to any Eurodollar Loan, 4.50%.
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“Applicable Percentage” means, with respect to any Lender, the fraction expressed as a percentage obtained by dividing (a) the sum of such Lender’s outstanding Term Loan plus such Lender’s Revolving Commitment by (b) the sum of the total outstanding Term Loans plus the total Revolving Commitments; provided that for purposes of this definition, if the Revolving Commitments are terminated pursuant to this Agreement, then each Lender’s Revolving Commitment and the total Revolving Commitments shall be the amounts thereof immediately prior to giving effect to any such termination of such Revolving Commitments.
“Approved Counterparty” means, with respect to any Secured Swap Agreement, any Lender or any Affiliate of a Lender and, with respect to any other Swap Agreement (that is not a Secured Swap Agreement), any other Person engaged in the business of writing Swap Agreements whose long term senior unsecured debt rating is A-/A3 by S&P or Moody’s (or their equivalent) or higher and that is reasonably acceptable to the Administrative Agent.
“Approved Fund” means any Fund that is administered or managed by (a) a Lender, (b) an Affiliate of a Lender or (c) an entity or an Affiliate of an entity that administers or manages a Lender.
“Approved Petroleum Engineers” means (a) W.D. Von Gonten & Co., (b) LaRoche Petroleum Consultants, Ltd., and (c) any other independent petroleum engineers reasonably acceptable to the Administrative Agent.
“Arranger” means Citibank, N.A., in its capacity as the sole lead arranger hereunder.
“ASC 815” means the Accounting Standards Codification No. 815 (Derivatives and Hedging), as issued by the Financial Accounting Standards Board.
“Asset Disposition” means the sale, assignment, lease, license, transfer, exchange or other disposition by any Loan Party of any Oil and Gas Property included in the Borrowing Base, provided that the sale of the Hydrocarbons in the ordinary course of business shall not be deemed to be an Asset Disposition.
“Assignment and Assumption” means an assignment and assumption entered into by a Lender and an Eligible Assignee (with the consent of any party whose consent is required by Section 12.04(b)), and accepted by the Administrative Agent, in substantially the form of Exhibit G or any other form approved by the Administrative Agent.
“Availability Period” means the period from and including the Closing Date to but excluding the Termination Date.
“Bail-In Action” means the exercise of any Write-Down and Conversion Powers by the applicable Resolution Authority in respect of any liability of an Affected Financial Institution.
“Bail-In Legislation” means (a) with respect to any EEA Member Country implementing Article 55 of Directive 2014/59/EU of the European Parliament and of the Council of the European Union, the implementing law, regulation, rule or requirement for such EEA Member Country from time to time which is described in the EU Bail-In Legislation Schedule and (b) with respect to the United Kingdom, Part I of the United Kingdom Banking Act 2009 (as amended from time to time) and any other law, regulation or rule applicable in the United Kingdom relating to the resolution of unsound or failing banks, investment firms or other financial institutions or their affiliates (other than through liquidation, administration or other insolvency proceedings).
“Bankruptcy Code” shall mean Title 11 of the United States Code entitled “Bankruptcy”.
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“BDO” means BDO USA, LLP.
“Beneficial Ownership Certification” means a certification regarding beneficial ownership required by the Beneficial Ownership Regulation.
“Beneficial Ownership Regulation” means 31 C.F.R. § 1010.230.
“Board” means the Board of Governors of the Federal Reserve System of the United States of America or any successor Governmental Authority.
“Borrowing” means Loans of the same Type, made, converted or continued on the same date and, in the case of Eurodollar Loans, as to which a single Interest Period is in effect.
“Borrowing Base” has the meaning assigned to such term in Section 2.07.
“Borrowing Base Deficiency” occurs if at any time the aggregate Revolving Credit Exposures of all Lenders exceeds the Borrowing Base then in effect.
“Borrowing Request” means a request by the Borrower for a Borrowing in accordance with Section 2.03.
“Business Day” means any day that is not a Saturday, Sunday or other day on which commercial banks in New York City or Dallas, Texas are authorized or required by law to remain closed; and if such day relates to a Borrowing or continuation of, a payment or prepayment of principal of or interest on, or a conversion of or into, or the Interest Period for, a Eurodollar Loan or a notice by the Borrower with respect to any such Borrowing or continuation, payment, prepayment, conversion or Interest Period, any day which is also a day on which dealings in dollar deposits are carried out in the London interbank market.
“Capital Expenditures” means, in respect of any Person, for any period, the aggregate (determined without duplication) of all exploration and development expenditures and costs that are capital in nature and any other expenditures that are capitalized on the balance sheet of such Person in accordance with GAAP.
“Capital Leases” means, in respect of any Person, all leases which shall have been, or should have been, in accordance with GAAP, recorded as capital leases on the balance sheet of the Person liable (whether contingent or otherwise) for the payment of rent thereunder; provided, however, notwithstanding anything to the contrary contained herein or in any other Loan Document, for all purposes hereunder and under any other Loan Document, GAAP shall be deemed to treat any operating leases in a manner consistent with their treatment under GAAP as in effect on December 31, 2018.
“CARES Act – Title I” means Title I of the Coronavirus Aid, Relief and Economic Security Act, as amended (including any successor thereto), and all requests, rules, guidelines, requirements and directives thereunder or issued in connection therewith or in implementation thereof, regardless of the date enacted, adopted, issued or implemented.
“CARES Debt” has the meaning assigned to such term in Section 9.02(k).
“CARES Forgiven Debt” means that portion of the CARES Debt that has been finally determined by the lender of the CARES Debt (and, to the extent required, the U.S. Small Business Administration) to be eligible for forgiveness pursuant to the provisions of the CARES Act – Title I; provided that such determination has been made on or before the date that is six (6) months after the date of incurrence of the CARES Debt.
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“CARES Forgiveness Date” means five (5) Business Days after the date that the Borrower obtains a final determination by the lender of the CARES Debt (and, to the extent required, the U.S. Small Business Administration) regarding the amount of CARES Debt that will be forgiven pursuant to the provisions of the CARES Act – Title I; provided that if such date is after the date that is six (6) months after the date of incurrence of the CARES Debt, the full amount of the CARES Debt will be deemed not eligible to be forgiven.
“Cash Collateral” shall have a meaning correlative to the below and shall include the proceeds of such cash collateral and other credit support.
“Cash Collateralize” means to pledge and deposit with or deliver to the Administrative Agent, for the benefit of one or more of the Issuing Bank or Lenders, as collateral for LC Exposure or obligations of Lenders to fund participations in respect of LC Exposure, cash or deposit account balances or, if the Administrative Agent and the Issuing Bank shall agree in their reasonable discretion, other credit support, in each case pursuant to documentation in form and substance reasonably satisfactory to the Administrative Agent and the Issuing Bank.
“Casualty Event” means any loss, casualty or other insured damage to, or any nationalization, taking under power of eminent domain or by condemnation or similar proceeding of, any Property of the Borrower or any of its Subsidiaries having a fair market value in excess of $1,000,000.
“CEO Change in Control Event” means Frank D. Bracken III’s ceasing to be employed as, or perform the function of, the chief executive officer of the Borrower by reason of (i) his employment being terminated Without Cause or (ii) his resignation With Good Reason and in each case, a successor chief executive officer of the Borrower, reasonably acceptable to the Required Lenders, not having been appointed prior to the date falling forty-five (45) days (or such later date as the Administrative Agent may agree in its sole discretion) after the date of such termination or resignation (as applicable) provided that a CEO Change in Control Event shall not apply if the Release Condition is satisfied on the date of such notice of termination or resignation.
“Change in Control” means: (a) any Person, entity or “group” (within the meaning of section 13(d) or 14(d) of the Securities Exchange Act of 1934, but excluding any employee benefit plan of such Person, entity or “group” and its subsidiaries and any Person or entity acting in its capacity as trustee, agent or other fiduciary or administrator of any such plan), other than the Permitted Holders (a “Secondary Holder”), shall at any time have acquired direct or indirect beneficial ownership (as defined in Rules 13(d)-3 and 13(d)-5 under the Securities Exchange Act of 1934) of 35% or more of the aggregate ordinary voting power represented by the issued and outstanding Equity Interests of the Parent; provided that, a Secondary Holder may hold 35% or more of the aggregate ordinary voting power represented by the issued and outstanding Equity Interests of the Parent without it being deemed a “Change in Control” if, and only if, the Permitted Holders hold a percentage of the aggregate ordinary voting power represented by the issued and outstanding Equity Interests of the Parent that is greater than the percentage held by such Secondary Holder; (b) the Parent (or any successor thereto) ceases to own directly or indirectly at least 99.99% of the issued and outstanding Equity Interests in the Borrower; or (c) the occurrence of a CEO Change in Control Event.
“Change in Law” means the occurrence, after the date of this Agreement, of any of the following: (a) the adoption or taking effect of any law, rule, regulation or treaty; (b) any change in any law, rule, regulation or treaty or in the administration, interpretation, implementation or application thereof by any
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Governmental Authority; or (c) the making or issuance of any request, rule, guideline or directive (whether or not having the force of law) by any Governmental Authority; provided that notwithstanding anything herein to the contrary, (x) the Dodd-Frank Wall Street Reform and Consumer Protection Act and all requests, rules, guidelines or directives thereunder or issued in connection therewith and (y) all requests, rules, guidelines or directives concerning capital adequacy promulgated by the Bank for International Settlements, the Basel Committee on Banking Supervision (or any successor or similar authority) or the United States or foreign regulatory authorities, in each case pursuant to Basel III, shall in each case be deemed to be a “Change in Law” regardless of the date enacted, adopted or issued.
“Closing Date” means November 30, 2020.
“Closing Prepayment Requirement” has the meaning assigned to such term in Section 3.04.
“Code” means the Internal Revenue Code of 1986, as amended from time to time, and any successor statute.
“Collateral” means all of the “Collateral” and Mortgaged Property referred to in the Security Instruments, and all of the other Property and other Equity Interests of the Loan Parties and other Persons that is or is intended under the terms of the Security Instruments to be subject to Liens in favor of the Administrative Agent for the benefit of the Secured Parties.
“Commitment” means, with respect to each Lender, its Revolving Commitment and/or its Term Loan Commitment, as the context may require.
“Commodity Exchange Act” means the Commodity Exchange Act (7 U.S.C. § 1 et seq.), as amended from time to time, and any successor statute.
“Communications” has the meaning assigned to such term in Section 12.01(d).
“Connection Income Taxes” means Other Connection Taxes that are imposed on or measured by net income (however denominated) or that are franchise Taxes or branch profits Taxes.
“Consolidated Cash Balance” means, at any time, the aggregate amount of cash and cash equivalents, marketable securities, treasury bonds and bills, certificates of deposit, investments in money market funds and commercial paper, in each case held by the Borrower and its Consolidated Subsidiaries, with the exception of (i) cash set aside to pay royalty obligations, working interest obligations, vendor payments, suspense payments and similar payments as are customary in the oil and gas industry and severance, ad valorem taxes, payroll, payroll taxes and other taxes of the Borrower or any Subsidiary then due and owing, (ii) to the extent the payment of such amounts is not otherwise prohibited by the terms of this Agreement, other amounts in respect of which the Borrower or any Subsidiary has issued checks or initiated wires or ACH transfers to unaffiliated third parties but have not yet been subtracted from the balance in the relevant account and (iii) net cash proceeds of any equity contribution to the Parent that is provided to the Borrower to fund Capital Expenditures, investments and voluntary prepayments of other debt (in each case, to the extent permitted under the terms of this Agreement); provided that, (x) such cash proceeds are deposited in an account held with Citibank, N.A. and (y) the cash proceeds are used in full within thirty (30) days of receipt by the Parent.
“Consolidated Cash Limit” has the meaning assigned to such term in Section 3.04(c).
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“Consolidated Subsidiaries” means each Subsidiary of the Borrower (whether now existing or hereafter created or acquired) the financial statements of which shall be (or should have been) consolidated with the financial statements of the Borrower in accordance with GAAP.
“Control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a Person, whether through the ability to exercise voting power, by contract or otherwise. For the purposes of this definition, and without limiting the generality of the foregoing, any Person that owns directly or indirectly 10% or more of the Equity Interests having ordinary voting power for the election of the directors or managers or other governing body of a Person (other than as a limited partner of such other Person) will be deemed to “control” such other Person. “Controlled” has the meaning correlative thereto.
“Debt” means, for any Person, the sum of the following (without duplication): (a) all obligations of such Person for borrowed money or evidenced by bonds, bankers’ acceptances, debentures, notes or other similar instruments; (b) all obligations of such Person (whether contingent or otherwise) in respect of letters of credit, surety or other bonds and similar instruments; (c) all accounts payable and all accrued expenses, liabilities or other obligations of such Person to pay the deferred purchase price of Property or services; (d) all obligations under Capital Leases; (e) all obligations under Synthetic Leases; (f) all Debt (as defined in the other clauses of this definition) of others secured by (or for which the holder of such Debt has an existing right, contingent or otherwise, to be secured by) a Lien on any Property of such Person, whether or not such Debt is assumed by such Person; (g) all Debt (as defined in the other clauses of this definition) of others guaranteed by such Person or in which such Person otherwise assures a creditor against loss of the Debt (howsoever such assurance shall be made) to the extent of the lesser of the amount of such Debt and the maximum stated amount of such guarantee or assurance against loss; (h) all obligations or undertakings of such Person to maintain or cause to be maintained the financial position or covenants of others or to purchase the Debt or Property of others; (i) obligations to deliver commodities, goods or services, including, without limitation, Hydrocarbons, in consideration of one or more advance payments, other than gas balancing arrangements in the ordinary course of business; (j) obligations to pay for goods or services even if such goods or services are not actually received or utilized by such Person; (k) any Debt of a partnership for which such Person is liable either by agreement, by operation of law or by a Governmental Requirement but only to the extent of such liability; (l) Disqualified Capital Stock; and (m) the undischarged balance of any production payment created by such Person or for the creation of which such Person directly or indirectly received payment. The Debt of any Person shall include all obligations of such Person of the character described above to the extent such Person remains legally liable in respect thereof notwithstanding that any such obligation is not included as a liability of such Person under GAAP.
“Debtor Relief Laws” means the Bankruptcy Code of the United States of America, and all other liquidation, conservatorship, bankruptcy, assignment for the benefit of creditors, moratorium, rearrangement, receivership, insolvency, reorganization, or similar debtor relief Laws of the United States or other applicable jurisdictions from time to time in effect.
“Default” means any event or condition which constitutes an Event of Default or which upon notice, lapse of time or both would, unless cured or waived, become an Event of Default.
“Defaulting Lender” means, subject to Section 2.10(b), any Lender that (a) has failed to (i) fund all or any portion of its Loans within two (2) Business Days of the date such Loans were required to be funded hereunder unless such Lender notifies the Administrative Agent and the Borrower in writing that such failure is the result of such Lender’s good faith determination that one or more conditions precedent to funding (each of which conditions precedent, together with any applicable default, shall be specifically identified in such writing) has not been satisfied, or (ii) pay to the Administrative Agent, the Issuing Bank
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or any other Lender any other amount required to be paid by it hereunder (including in respect of its participation in Letters of Credit) within two (2) Business Days of the date when due, (b) has notified the Borrower, the Administrative Agent or the Issuing Bank in writing that it does not intend to comply with its funding obligations hereunder, or has made a public statement to that effect (unless such writing or public statement relates to such Lender’s obligation to fund a Loan hereunder and states that such position is based on such Lender’s good faith determination that a condition precedent to funding (which condition precedent, together with any applicable default, shall be specifically identified in such writing or public statement) cannot be satisfied), (c) has failed, within three (3) Business Days after written request by the Administrative Agent or the Borrower, to confirm in writing to the Administrative Agent and the Borrower that it will comply with its prospective funding obligations hereunder (provided that such Lender shall cease to be a Defaulting Lender pursuant to this clause (c) upon receipt of such written confirmation by the Administrative Agent and the Borrower), or (d) has, or has a direct or indirect parent company that has, (i) become the subject of a proceeding under any Debtor Relief Law, (ii) had appointed for it a receiver, custodian, conservator, trustee, administrator, assignee for the benefit of creditors or similar Person charged with reorganization or liquidation of its business or assets, including the Federal Deposit Insurance Corporation or any other state or federal regulatory authority acting in such a capacity, or (iii) become the subject of a Bail-In Action; provided that a Lender shall not be a Defaulting Lender solely by virtue of the ownership or acquisition of any equity interest in that Lender or any direct or indirect parent company thereof by a Governmental Authority so long as such ownership interest does not result in or provide such Lender with immunity from the jurisdiction of courts within the United States or from the enforcement of judgments or writs of attachment on its assets or permit such Lender (or such Governmental Authority) to reject, repudiate, disavow or disaffirm any contracts or agreements made with such Lender. Any determination by the Administrative Agent that a Lender is a Defaulting Lender under any one or more of clauses (a) through (d) above shall be conclusive and binding absent manifest error, and such Lender shall be deemed to be a Defaulting Lender (subject to Section 2.10(b)) upon delivery of written notice of such determination to the Borrower, the Issuing Bank and each Lender.
“Disqualified Capital Stock” means any Equity Interest that, by its terms (or by the terms of any security into which it is convertible or for which it is exchangeable) or upon the happening of any event, matures or is mandatorily redeemable for any consideration other than other Equity Interests (which would not constitute Disqualified Capital Stock), pursuant to a sinking fund obligation or otherwise, or is convertible or exchangeable for Debt or redeemable for any consideration other than other Equity Interests (which would not constitute Disqualified Capital Stock) at the option of the holder thereof, in whole or in part, or requires the payment of any cash dividend or any other scheduled payment constituting a return of capital, in the case of each of the foregoing, on or prior to the date that is one year after the earlier of (a) the Maturity Date and (b) the date on which there are no Loans, LC Exposure or other obligations hereunder outstanding and all of the Commitments are terminated.
“dollars” or “$” refers to lawful money of the United States of America.
“Domestic Subsidiary” means any Subsidiary that is organized under the laws of the United States of America or any state thereof or the District of Columbia.
“EBITDAX” means, at any date, for the Borrower and the Consolidated Subsidiaries on a consolidated basis, net income, less non-cash revenue or expense associated with Swap Agreements resulting from ASC 815, less income or plus loss from discontinued operations and extraordinary items, plus income taxes (including franchise taxes to the extent based upon that income), plus interest expense, plus depreciation, accretion of asset retirement obligations, depletion, and amortization, plus IDC and other exploration expenses deducted in determining net income under successful efforts accounting, plus the amount of dividends or other similar distributions actually paid in cash by the Excluded Subsidiary to the Borrower or any Subsidiary during such period plus all severance costs, expenses and/or one-time
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compensation costs as a result of emergence from the Bankruptcy Proceedings plus without duplication of the other addbacks provided herein, fees, costs and expenses paid for attorneys, accountants, lenders, bankers and other restructuring and strategic advisors in connection with the Bankruptcy Proceedings or the Plan of Reorganization and fees, costs and expenses of any party incurred with regard to negotiation, execution and delivery of this Agreement and the other Loan Documents, including any amendments thereto. For the purposes of calculating EBITDAX for any period of four consecutive fiscal quarters (each, a “Reference Period”), (i) if during such Reference Period the Borrower or any Subsidiary shall have made a Material Disposition, EBITDAX for such Reference Period shall be calculated on a pro forma basis as if such Material Disposition occurred on the first day of such Reference Period, and (ii) if during such Reference Period the Borrower or any Subsidiary shall have made a Material Acquisition, EBITDAX for such Reference Period shall be calculated on a pro forma basis as if such Material Acquisition occurred on the first day of such Reference Period.
“EEA Financial Institution” means (a) any credit institution or investment firm established in any EEA Member Country which is subject to the supervision of an EEA Resolution Authority, (b) any entity established in an EEA Member Country which is a parent of an institution described in clause (a) of this definition, or (c) any financial institution established in an EEA Member Country which is a subsidiary of an institution described in clause (a) or (b) of this definition and is subject to consolidated supervision with its parent.
“EEA Member Country” means any of the member states of the European Union, Iceland, Liechtenstein, and Norway.
“EEA Resolution Authority” means any public administrative authority or any Person entrusted with public administrative authority of any EEA Member Country (including any delegee) having responsibility for the resolution of any EEA Financial Institution.
“Eligible Assignee” means any Person that meets the requirements to be an assignee under Section 12.04(b)(iii), (v) and (vi) (subject to such consents, if any, as may be required under Section 12.04(b)(iii)). Notwithstanding the foregoing or anything to the contrary herein or in any other Loan Document, “Eligible Assignee” shall not include any Loan Party or any Loan Party’s Affiliates or Subsidiaries.
“Engineering Reports” has the meaning assigned to such term in Section 2.07(c)(i).
“Environmental Laws” means any and all Governmental Requirements pertaining in any way to health, safety, the environment or the preservation or reclamation of natural resources, or the management, release or threatened release of any Hazardous Materials in effect in any and all jurisdictions in which the Borrower or any Subsidiary is conducting or at any time has conducted business, or where any Property of the Borrower or any Subsidiary is located, including without limitation, the Oil Pollution Act of 1990 (“OPA”), as amended, the Clean Air Act, as amended, the Comprehensive Environmental, Response, Compensation, and Liability Act of 1980 (“CERCLA”), as amended, the Federal Water Pollution Control Act, as amended, the Occupational Safety and Health Act of 1970, as amended, the Resource Conservation and Recovery Act of 1976 (“RCRA”), as amended, the Safe Drinking Water Act, as amended, the Toxic Substances Control Act, as amended, the Superfund Amendments and Reauthorization Act of 1986, as amended, the Hazardous Materials Transportation Act, as amended, and other environmental conservation or protection Governmental Requirements. The term “oil” shall have the meaning specified in OPA, the terms “hazardous substance” and “release” (or “threatened release”) have the meanings specified in CERCLA, the terms “solid waste” and “disposal” (or “disposed”) have the meanings specified in RCRA and the term “oil and gas waste” shall have the meaning specified in section 91.1011 of the Texas Natural Resources Code (“Section 91.1011”); provided, however, that (a) in the event either OPA, CERCLA,
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RCRA or Section 91.1011 is amended so as to broaden the meaning of any term defined thereby, such broader meaning shall apply subsequent to the effective date of such amendment and (b) to the extent the laws of the state or other jurisdiction in which any Property of the Borrower or any Subsidiary is located establish a meaning for “oil,” “hazardous substance,” “release,” “solid waste,” “disposal” or “oil and gas waste” which is broader than that specified in either OPA, CERCLA, RCRA or Section 91.1011, such broader meaning shall apply.
“Equity Interests” means shares of capital stock, partnership interests, membership interests in a limited liability company, beneficial interests in a trust or other equity ownership interests in a Person, and any warrants, options or other rights entitling the holder thereof to purchase or acquire any such Equity Interest.
“ERISA” means the Employee Retirement Income Security Act of 1974, as amended, and any successor statute.
“ERISA Affiliate” means each trade or business (whether or not incorporated) which together with the Borrower or a Subsidiary would be deemed to be a “single employer” within the meaning of section 4001(b)(1) of ERISA or subsection (b), (c), (m) or (o) of section 414 of the Code.
“ERISA Event” means (a) a “Reportable Event” described in section 4043 of ERISA and the regulations issued thereunder, (b) the withdrawal of the Borrower, a Subsidiary or any ERISA Affiliate from a Plan during a plan year in which it was a “substantial employer” as defined in section 4001(a)(2) of ERISA, (c) the filing of a notice of intent to terminate a Plan or the treatment of a Plan amendment as a termination under section 4041 of ERISA, (d) the institution of proceedings to terminate a Plan by the PBGC, (e) the receipt of a notice of withdrawal liability pursuant to section 4202 of ERISA or (f) the institution of proceedings under section 4042 of ERISA for the termination of, or the appointment of a trustee to administer, any Plan.
“EU Bail-In Legislation Schedule” means the EU Bail-In Legislation Schedule published by the Loan Market Association (or any successor Person), as in effect from time to time.
“Eurodollar” when used in reference to any Loan or Borrowing, refers to whether such Loan, or the Loans comprising such Borrowing, are bearing interest at a rate determined by reference to the Adjusted LIBO Rate.
“Event of Default” has the meaning assigned to such term in Section 10.01.
“Excepted Liens” means: (a) Liens for Taxes, assessments or other governmental charges or levies which are not delinquent or which are being contested in good faith by appropriate action and for which adequate reserves have been established and maintained in accordance with GAAP; (b) Liens in connection with workers’ compensation, unemployment insurance or other social security, old age pension or public liability obligations which are not delinquent or which are being contested in good faith by appropriate action and for which adequate reserves have been established and maintained in accordance with GAAP; (c) statutory landlord’s liens, operators’, vendors’, carriers’, warehousemen’s, repairmen’s, mechanics’, suppliers’, workers’, materialmen’s, construction or other like Liens arising by operation of law in the ordinary course of business or incidental to the exploration, development, operation and maintenance of Oil and Gas Properties each of which is in respect of obligations that are not delinquent or which are being contested in good faith by appropriate action and for which adequate reserves have been established and maintained in accordance with GAAP; (d) contractual Liens which arise in the ordinary course of business under operating agreements, joint venture agreements, oil and gas partnership agreements, oil and gas leases, farm-out agreements, division orders, contracts for the sale, transportation or exchange of oil and
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natural gas, unitization and pooling declarations and agreements, area of mutual interest agreements, overriding royalty agreements, marketing agreements, processing agreements, net profits agreements, development agreements, gas balancing or deferred production agreements, injection, repressuring and recycling agreements, salt water or other disposal agreements, seismic or other geophysical permits or agreements, and other agreements which are usual and customary in the oil and gas business and are for claims which are not delinquent or which are being contested in good faith by appropriate action and for which adequate reserves have been established and maintained in accordance with GAAP, provided that any such Lien referred to in this clause does not materially impair the use of the Property covered by such Lien for the purposes for which such Property is held by the Borrower or any Subsidiary or materially impair the value of such Property subject thereto; (e) Liens arising solely by virtue of any statutory or common law provision relating to banker’s liens, rights of set-off or similar rights and remedies and burdening only deposit accounts or other funds maintained with a creditor depository institution, provided that no such deposit account is a dedicated cash collateral account or is subject to restrictions against access by the depositor in excess of those set forth by regulations promulgated by the Board and no such deposit account is intended by the Borrower or any of its Subsidiaries to provide collateral to the depository institution; (f) easements, restrictions, servitudes, permits, conditions, covenants, exceptions or reservations in any Property of the Borrower or any Subsidiary for the purpose of roads, pipelines, transmission lines, transportation lines, distribution lines for the removal of gas, oil, coal or other minerals or timber, and other like purposes, or for the joint or common use of real estate, rights of way, facilities and equipment, which do not secure any monetary obligations and which in the aggregate do not materially impair the use of such Property for the purposes of which such Property is held by the Borrower or any Subsidiary or materially impair the value of such Property subject thereto; (g) minor defects and irregularities in title to any Property which do not secure any monetary obligations and which in the aggregate do not materially impair use of such Property for the purposes for which such Property is held by the Borrower and any Subsidiary or materially impair the value of such Property subject thereto; (h) Liens on cash or securities pledged to secure performance of tenders, surety and appeal bonds, government contracts, performance and return of money bonds, bids, trade contracts, leases, statutory obligations, regulatory obligations and other obligations of a like nature incurred in the ordinary course of business; and (i) judgment and attachment Liens not giving rise to an Event of Default, provided that any appropriate legal proceedings which may have been duly initiated for the review of such judgment shall not have been finally terminated or the period within which such proceeding may be initiated shall not have expired and no action to enforce such Lien has been commenced; provided further that Liens described in clauses (a) through (e) shall remain “Excepted Liens” only for so long as no action to enforce such Lien has been commenced (and not stayed) and no intention to subordinate the first priority Lien granted in favor of the Administrative Agent and the Lenders is to be hereby implied or expressed by the permitted existence of such Excepted Liens.
“Excess Cash” has the meaning assigned to such term in Section 3.04(c).
“Excluded Account” means, individually or collectively as the context requires, (a) tax withholding accounts funded in the ordinary course of business or required by applicable law, in each case used solely for purposes of tax withholding, (b) deposit accounts used solely for funding payroll obligations, payroll taxes, workers compensation and employee benefits in the ordinary course of business, (c) zero balance accounts, (d) trust fund or other fiduciary accounts, in each case maintained for the sole benefit of any Person other than the Borrower or any of its Subsidiaries, and (e) those accounts that have an average daily balance or fair market value, as applicable, which in the aggregate, together with the average daily balance or fair market value, as applicable, of all such other accounts excluded pursuant to this clause (e), do not exceed $500,000; provided that if any account described in the foregoing clauses (a) through (e) is used for any purpose inconsistent with this definition it shall automatically cease to be an “Excluded Account” for purposes of this definition.
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“Excluded Subsidiary” means Boland Building, LLC, (formerly, Eagleford Gas 9, LLC), a Texas limited liability company.
“Excluded Swap Obligation” means, with respect to any Loan Party, any Swap Obligation if, and to the extent that, all or a portion of the guarantee of such Loan Party of, or the grant by such Loan Party of a security interest to secure, such Swap Obligation (or any guarantee thereof) is or becomes illegal under the Commodity Exchange Act or any rule, regulation or order of the Commodity Futures Trading Commission (or the application or official interpretation of any thereof) by virtue of such Loan Party’s failure for any reason to constitute an “eligible contract participant” as defined in the Commodity Exchange Act and the regulations thereunder at the time the guarantee of such Guarantor or the grant of such security interest becomes effective with respect to such Swap Obligations. If a Swap Obligation arises under a master agreement governing more than one swap, such exclusion shall apply only to the portion of such Swap Obligation that is attributable to swaps for which such guarantee or security interest is or becomes illegal.
“Excluded Taxes” means any of the following Taxes imposed on or with respect to a Recipient or required to be withheld or deducted from a payment to a Recipient, (a) Taxes imposed on or measured by net income (however denominated), franchise Taxes, and branch profits Taxes, in each case, (i) imposed as a result of such Recipient being organized under the laws of, or having its principal office or, in the case of any Lender, its applicable lending office located in, the jurisdiction imposing such Tax (or any political subdivision thereof) or (ii) that are Other Connection Taxes, (b) in the case of a Lender, U.S. federal withholding Taxes imposed on amounts payable to or for the account of such Lender with respect to an applicable interest in a Loan or Commitment pursuant to a law in effect on the date on which (i) such Lender acquires such interest in the Loan or Commitment (other than pursuant to an assignment request by the Borrower under Section 5.04(b)) or (ii) such Lender changes its lending office, except in each case to the extent that, pursuant to Section 5.03, amounts with respect to such Taxes were payable either to such Lender’s assignor immediately before such Lender became a party hereto or to such Lender immediately before it changed its lending office, (c) Taxes attributable to such Recipient’s failure to comply with Section 5.03(g) and (d) any U.S. federal withholding Taxes imposed under FATCA.
“Existing Letters of Credit” means each letter of credit issued or deemed issued for the account of, or guaranteed by, the Borrower or any of its Subsidiaries that is outstanding on the Closing Date and set forth on Schedule 2.08 (and any amendment, renewal or extension thereof in accordance with this Agreement).
“FATCA” means sections 1471 through 1474 of the Code, as of the date of this Agreement (or any amended or successor version that is substantively comparable and not materially more onerous to comply with) and any current or future regulations or official interpretations thereof and any agreement entered into pursuant to Section 1471(b)(1) of the Code.
“FCPA” means the Foreign Corrupt Practices Act of 1977, as amended.
“Federal Funds Effective Rate” means, for any day, the weighted average (rounded upwards, if necessary, to the next 1/100 of 1%) of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers, as published on the next succeeding Business Day by the Federal Reserve Bank of New York, or, if such rate is not so published for any day that is a Business Day, the average (rounded upwards, if necessary, to the next 1/100 of 1%) of the quotations for such day for such transactions received by the Administrative Agent from three Federal funds brokers of recognized standing selected by it, provided that if the Federal Funds Effective Rate shall be less than zero, such rate shall be deemed to be zero for purposes of this Agreement.
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“Fee Letter” means any Fee Letter executed and delivered by any Loan Party in favor of the Administrative Agent, the Arranger, the Lenders, the Issuing Bank or any of them, in connection with any Loan Document, including any amendment, modification, Borrowing Base increase, waiver or consent to this Agreement or any other Loan Document.
“Financial Officer” means, for any Person, the chief executive officer, the chief financial officer, principal accounting officer, treasurer or controller of such Person. Unless otherwise specified, all references herein to a Financial Officer means a Financial Officer of the Borrower.
“Financial Statements” means the financial statement or statements of the Borrower and its Consolidated Subsidiaries referred to in Section 7.04(a).
“First Out Obligations” shall mean all Obligations (including, without limitation, any obligations in respect of a Secured Swap Agreement), other than the Term Loan Obligations.
“First Out Secured Parties” shall mean each of the Secured Parties (including each of the Swap Lenders that is party to any Secured Swap Agreement), other than the Term Loan Secured Parties.
“Foreign Lender” means (a) if the Borrower is a U.S. Person, a Lender that is not a U.S. Person, and (b) if the Borrower is not a U.S. Person, a Lender that is resident or organized under the laws of a jurisdiction other than that in which the Borrower is resident for tax purposes.
“Foreign Subsidiary” means any Subsidiary that is not a Domestic Subsidiary.
“Fronting Exposure” means, at any time there is a Defaulting Lender, with respect to the Issuing Bank, such Defaulting Lender’s Applicable Percentage of the outstanding LC Exposure with respect to Letters of Credit issued by such Issuing Bank other than LC Exposure as to which such Defaulting Lender’s participation obligation has been reallocated to other Lenders or Cash Collateralized in accordance with the terms hereof.
“Fund” means any Person (other than a natural Person) that is (or will be) engaged in making, purchasing, holding or otherwise investing in commercial loans and similar extensions of credit in the ordinary course of its activities.
“GAAP” means generally accepted accounting principles in the United States of America as in effect from time to time subject to the terms and conditions set forth in Section 1.05.
“Governmental Authority” means the government of the United States of America, any other nation or any political subdivision thereof, whether state or local, and any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government (including any supra-national bodies such as the European Union or the European Central Bank).
“Governmental Requirement” means any law, statute, code, ordinance, order, determination, rule, regulation, judgment, decree, injunction, franchise, permit, certificate, license, authorization or other directive or requirement, whether now or hereinafter in effect, including, without limitation, Environmental Laws, energy regulations and occupational, safety and health standards or controls, of any Governmental Authority.
“Guarantors” means (a) the Parent, (b) each Subsidiary of the Borrower that guarantees or is required to guarantee the Obligations hereunder (including pursuant to Sections 6.01 and 8.14(b)) other than, for the avoidance of doubt, the Excluded Subsidiary, and (c) each other Person that guarantees the Obligations.
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“Guaranty Agreement” means an agreement executed by one or more of the Guarantors in form and substance reasonably satisfactory to the Administrative Agent, unconditionally guaranteeing on a joint and several basis, payment of the Obligations, as the same may be amended, modified or supplemented from time to time.
“Headquarter Lease” has the meaning assigned to such term in Section 9.07.
“Highest Lawful Rate” means, with respect to each Lender, the maximum nonusurious interest rate, if any, that at any time or from time to time may be contracted for, taken, reserved, charged or received on the Notes or on other Obligations under laws applicable to such Lender which are presently in effect or, to the extent allowed by law, under such applicable laws which may hereafter be in effect and which allow a higher maximum nonusurious interest rate than applicable laws allow as of the date hereof.
“Hydrocarbon Interests” means all rights, titles, interests and estates now or hereafter acquired in and to oil and gas leases, oil, gas and mineral leases (excluding coal and timber), or other liquid or gaseous hydrocarbon leases, mineral fee interests, overriding royalty and royalty interests, net profit interests and production payment interests, including any reserved or residual interests of whatever nature. Unless otherwise indicated herein, each reference to the term “Hydrocarbon Interests” shall mean Hydrocarbon Interests of the Borrower and its Subsidiaries.
“Hydrocarbons” means oil, gas, casinghead gas, drip gasoline, natural gasoline, condensate, distillate, liquid hydrocarbons, gaseous hydrocarbons and all products refined or separated therefrom. Unless otherwise indicated herein, each reference to the term “Hydrocarbons” shall mean Hydrocarbons of the Borrower and its Subsidiaries.
“IDC” means Intangible Drilling and Development Costs, as defined in section 263 of the Code.
“Indemnified Taxes” means (a) Taxes, other than Excluded Taxes, imposed on or with respect to any payment made by or on account of any obligation of any Loan Party under any Loan Document and (b) to the extent not otherwise described in (a), Other Taxes.
“Indemnitee” has the meaning assigned to such term in Section 12.03(b).
“Information” has the meaning assigned to such term in Section 12.11.
“Initial Reserve Report” means collectively, the report prepared by a chief engineer of the Borrower, dated as of November 1, 2020, with respect to certain Oil and Gas Properties of the Borrower and its Subsidiaries.
“Interest Election Request” means a request by the Borrower to convert or continue a Borrowing in accordance with Section 2.04.
“Interest Payment Date” means (a) with respect to any ABR Loan, the last day of each March, June, September and December, and (b) with respect to any Eurodollar Loan, the last day of the Interest Period applicable to the Borrowing of which such Loan is a part and, in the case of a Eurodollar Borrowing with an Interest Period of more than (3) three months’ duration, each day prior to the last day of such Interest Period that occurs at intervals of three months’ duration after the first day of such Interest Period.
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“Interest Period” means, with respect to any Eurodollar Borrowing, the period commencing on the date of such Borrowing and ending on the numerically corresponding day in the calendar month that is one, two, three or six months thereafter, as the Borrower may elect; provided that (a) if any Interest Period would end on a day other than a Business Day, such Interest Period shall be extended to the next succeeding Business Day unless such next succeeding Business Day would fall in the next calendar month, in which case such Interest Period shall end on the next preceding Business Day and (b) any Interest Period pertaining to a Eurodollar Borrowing that commences on the last Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the last calendar month of such Interest Period) shall end on the last Business Day of the last calendar month of such Interest Period. Interest shall accrue from and including the first day of an Interest Period to but excluding the last day of such Interest Period, subject to prepayment or repayment of the same in accordance with the Loan Documents. For purposes hereof, the date of a Borrowing initially shall be the date on which such Borrowing is made and thereafter shall be the effective date of the most recent conversion or continuation of such Borrowing.
“Interim Redetermination” has the meaning assigned to such term in Section 2.07(b).
“Interim Redetermination Date” means the date on which a Borrowing Base that has been redetermined pursuant to an Interim Redetermination becomes effective as provided in Section 2.07(d).
“Intermediate Entities” means Lonestar Resources Intermediate Inc., a Delaware corporation, and LNR America Inc., a Delaware corporation.
“Investment” means, for any Person: (a) the acquisition (whether for cash, Property, services or securities or otherwise) of Equity Interests of any other Person or any agreement to make any such acquisition (including, without limitation, any “short sale” or any sale of any securities at a time when such securities are not owned by the Person entering into such short sale) or any capital contribution to any other Persons; (b) the making of any deposit with, or advance, loan or capital contribution to, assumption of Debt of, purchase or other acquisition of any other Debt or equity participation or interest in, or other extension of credit to, any other Person (including the purchase of Property from another Person subject to an understanding or agreement, contingent or otherwise, to resell such Property to such Person, but excluding any such advance, loan or extension of credit having a term not exceeding ninety (90) days representing the purchase price of inventory or supplies sold by such Person in the ordinary course of business); (c) the purchase or acquisition (in one or a series of transactions) of Property of another Person that constitutes a business unit; or (d) the entering into of any guarantee of, or other contingent obligation (including the deposit of any Equity Interests to be sold) with respect to, Debt or other liability of any other Person and (without duplication) any amount committed to be advanced, lent or extended to such Person.
“IRS” means the United States Internal Revenue Service.
“Issuing Bank” means (a) Citibank, N.A., in its capacity as the issuer of Letters of Credit hereunder, and its successors in such capacity as provided in Section 2.08(i) and (b) with respect to any Existing Letters of Credit, any Lender that, or any Lender whose Affiliate, issued such Existing Letter of Credit. The Issuing Bank may, in its discretion, arrange for one or more Letters of Credit to be issued by Affiliates of the Issuing Bank, in which case the term “Issuing Bank” shall include any such Affiliate with respect to Letters of Credit issued by such Affiliate.
“LC Collection Account” has the meaning assigned to such term in Section 2.08(j).
“LC Commitment” at any time means $2,500,000.
“LC Disbursement” means a payment made by the Issuing Bank pursuant to a Letter of Credit.
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“LC Exposure” means, at any time, the sum of (a) the aggregate undrawn amount of all outstanding Letters of Credit at such time plus (b) the aggregate amount of all LC Disbursements that have not yet been reimbursed by or on behalf of the Borrower at such time. The LC Exposure of any Lender at any time shall be its Revolving Applicable Percentage of the total LC Exposure at such time. For purposes of computing the amount available to be drawn under any Letter of Credit, the amount of such Letter of Credit shall be determined in accordance with Section 1.06. For all purposes of this Agreement, if on any date of determination a Letter of Credit has expired by its terms but any amount may still be drawn thereunder by reason of the operation of Rule 3.14 of the ISP, such Letter of Credit shall be deemed to be “outstanding” in the amount so remaining available to be drawn.
“Lenders” means the Persons listed on Annex I and any other Person that shall have become a party hereto pursuant to an Assignment and Assumption, other than any such Person that ceases to be a party hereto pursuant to an Assignment and Assumption.
“Letter of Credit” means any letter of credit issued (or deemed to be issued) pursuant to this Agreement, which shall include the Existing Letters of Credit.
“Letter of Credit Agreements” means all letter of credit applications and other agreements (including any amendments, modifications or supplements thereto) submitted by the Borrower, or entered into by the Borrower (whether for itself or any Subsidiary as the account party), with the Issuing Bank relating to any Letter of Credit.
“LIBO Rate” means, subject to the implementation of a Replacement Rate in accordance with Section 3.03(b), with respect to any Eurodollar Borrowing for any Interest Period, the rate as published by the ICE Benchmark Administration Limited, a United Kingdom company, or any successor to or substitute for such Service, providing rate quotations comparable to those currently provided, as determined by the Administrative Agent from time to time for purposes of providing quotations of interest rates applicable to dollar deposits in the London interbank market at approximately 11:00 a.m., London time, two (2) Business Days prior to the commencement of such Interest Period, as the rate for dollar deposits with a maturity comparable to such Interest Period, provided that if the LIBO Rate shall be less than zero, such rate will be deemed to be zero for purposes of this Agreement. In the event that such rate is not available at such time for any reason, then the “LIBO Rate” with respect to such Eurodollar Borrowing for such Interest Period shall be the rate at which dollar deposits of $5,000,000 and for a maturity comparable to such Interest Period are offered by the principal London office of the Administrative Agent in immediately available funds in the London interbank market at approximately 11:00 a.m., London time, two (2) Business Days prior to the commencement of such Interest Period, provided that if the LIBO Rate shall be less than 1.00%, such rate will be deemed to be 1.00% for purposes of this Agreement. In the event that a Replacement Rate to the LIBO Rate is implemented in accordance with Section 3.03(b), then all references herein to the LIBO Rate shall be deemed references to such Replacement Rate.
“Lien” means any interest in Property securing an obligation owed to, or a claim by, a Person other than the owner of the Property, whether such interest is based on the common law, statute or contract, and whether such obligation or claim is fixed or contingent, and including but not limited to (a) the lien or security interest arising from a deed of trust, mortgage, encumbrance, pledge, security agreement, conditional sale or trust receipt or a lease, consignment or bailment for security purposes or (b) production payments and the like payable out of Oil and Gas Properties. The term “Lien” shall include easements, restrictions, servitudes, permits, conditions, covenants, exceptions or reservations. For the purposes of this Agreement, the Borrower and its Subsidiaries, as applicable, shall be deemed to be the owner of any Property which they have acquired or hold subject to a conditional sale agreement, or leases under a financing lease or other arrangement pursuant to which title to the Property has been retained by or vested in some other Person in a transaction intended to create a financing.
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“Liquidity” means the amount of Revolving Commitments available to be drawn hereunder.
“Loan Documents” means this Agreement, the Fee Letters, the Notes, the Letter of Credit Agreements, the Letters of Credit, the Property Certificate, any Reconciliation Schedule, the Security Instruments, and any other documents, certificates or agreements that are required to be delivered pursuant to any of the foregoing documents, together with any and all renewals, extensions and restatements of, and amendments and modifications to, any such agreements, documents and instruments, but excluding any Secured Swap Agreements and Secured Treasury Management Agreements.
“Loan Party” means, as applicable, any of the Borrower and each Guarantor and “Loan Parties” means all of the foregoing.
“Loans” means any Revolving Loan or any Term Loan.
“Majority Lenders” means Lenders having Loans, LC Exposure and unused Commitments representing more than 50% of the sum of all Loans, LC Exposure and unused Commitments at such time (without regard to any sale by a Lender of a participation in any Loan under Section 12.04(d)); provided that the Loans, LC Exposure and Commitment of any Defaulting Lender shall be disregarded for purposes of making a determination of Majority Lenders.
“Material Acquisition” means any acquisition of Property or series of related acquisitions of Property that involves the payment of consideration by the Borrower and its Subsidiaries in excess of $5,000,000.
“Material Adverse Effect” means a material adverse change in, or material adverse effect on (i) the business, operations, Property, condition (financial or otherwise) or prospects of the Borrower and the Subsidiaries taken as a whole, (ii) the ability of the Borrower, any Subsidiary or any Guarantor to perform any of its obligations under any Loan Document, (iii) the validity or enforceability of any Loan Document or (iv) the rights and remedies of or benefits available to the Administrative Agent, any other Agent, the Issuing Bank or any Lender under any Loan Document.
“Material Disposition” means any disposition of Property or series of related dispositions of property that yields gross proceeds to the Borrower or any of its Subsidiaries (valued at the initial principal amount thereof in the case of non-cash proceeds consisting of notes or other debt securities and valued at fair market value in the case of other non-cash proceeds) in excess of $5,000,000.
“Material Gas Imbalance” means, with respect to all gas balancing agreements to which the Borrower or any Subsidiary is a party or by which any mineral interest owned by the Borrower or any Subsidiary is bound, a net gas imbalance to the Borrower or any Subsidiary, individually or taken as a whole in excess of $1,000,000. Gas imbalances will be determined based on written agreements, if any, specifying the method of calculation thereof, or, alternatively, if no such agreements are in existence, gas imbalances will be calculated by multiplying (x) the volume of gas imbalance as of the date of calculation (expressed in thousand cubic feet) by (y) the heating value in Btu’s per thousand cubic feet, times the Henry Hub average daily spot price for the month immediately preceding the date of calculation.
“Material Indebtedness” means, as of any date of determination, Debt (other than the Loans and Letters of Credit) or obligations in respect of one or more Swap Agreements, of any one or more of the Borrower and its Subsidiaries in an aggregate principal amount exceeding 5% of the Borrowing Base then in effect. For purposes of determining Material Indebtedness, the “principal amount” of the obligations of the Borrower or any Subsidiary in respect of any Swap Agreement at any time shall be the Swap Termination Value thereof.
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“Maturity Date” means the third anniversary of the Closing Date.
“Maximum Revolving Credit Amount” means, as to each Lender, the amount set forth opposite such Lender’s name on Annex I under the caption “Maximum Revolving Credit Amounts,” as the same may be (a) reduced or terminated from time to time in connection with a reduction or termination of the Aggregate Maximum Revolving Credit Amount pursuant to Section 2.06(b), or (b) modified from time to time pursuant to any assignment permitted by Section 12.04(b).
“Minimum Collateral Amount” means, at any time, (i) with respect to Cash Collateral consisting of cash or deposit account balances, an amount equal to 105% of the Fronting Exposure of the Issuing Bank with respect to Letters of Credit issued and outstanding at such time and (ii) otherwise, an amount determined by the Administrative Agent and the Issuing Bank in their reasonable discretion.
“Moody’s” means Moody’s Investors Service, Inc. and any successor thereto that is a nationally recognized rating agency.
“Mortgaged Property” and “Mortgaged Properties” means any Property owned by the Borrower or any Guarantor which is subject to the Liens existing and to exist under the terms of the Security Instruments.
“Mortgages” means the mortgages, deeds of trust, leasehold mortgages, assignments of leases and rents, assignments of proceeds of production, security documents and the like (including all amendments, amendments and restatements, modifications and supplements thereto) delivered pursuant to this Agreement in order to grant Liens in Oil and Gas Properties or other real estate interests of the Borrower and its Subsidiaries for the ratable benefit of the Secured Parties.
“Multiemployer Plan” means a Plan which is a multiemployer plan as defined in section 3(37) or 4001 (a)(3) of ERISA.
“New Borrowing Base Notice” has the meaning assigned to such term in Section 2.07(d).
“New Warrants” means the warrants of Parent issued on the Closing Date to purchase up to 10% of the common Equity Interests of Parent pursuant to that certain Tranche 1 Warrant Agreement, dated as of the Closing Date, by and among Parent, Computershare Inc. and Computershare Trust Company N.A., as warrant agent and that certain Tranche 2 Warrant Agreement, dated as of the Closing Date, by and among Parent, Computershare Inc. and Computershare Trust Company N.A., as warrant agent.
“Non-Consenting Lender” means any Lender that does not approve any consent, waiver or amendment that (a) (i) other than a Borrowing Base increase, requires the approval of all affected Lenders in accordance with the terms of Section 12.02 and (ii) has been approved by the Required Lenders, or (b) would increase the Borrowing Base and has been approved by the Super Majority Lenders.
“Non-Defaulting Lender” means, at any time, each Lender that is not a Defaulting Lender at such time.
“Notes” means the promissory notes of the Borrower described in Section 2.02(d) and being substantially in the form of Exhibit A, together with all amendments, modifications, replacements, extensions and rearrangements thereof.
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“Obligations” means (a) any and all amounts owing or to be owing by the Borrower, any Subsidiary or any Guarantor or other Loan Party (including without limitation, all debts, liabilities, obligations, covenants and duties of each such Person, whether direct or indirect (including those acquired by assumption), absolute or contingent, due or to become due, now existing or hereafter arising), and including interest and fees that accrue after the commencement by or against any Loan Party or any Affiliate of any Loan Party of any proceeding under any Debtor Relief Laws naming such Person as the debtor in such proceeding, regardless of whether such interest and fees are allowed claims in such proceeding: (i) to the Administrative Agent, the Issuing Bank, any Lender or any other Secured Party under any Loan Document; (ii) to any Swap Lender under any Secured Swap Agreement (which shall be deemed to be the Swap Termination Value as of the date the amount of Obligations is being determined), and (iii) to any Treasury Management Party under any Secured Treasury Management Agreement, and (b) all renewals, extensions and/or rearrangements of any of the above; provided that notwithstanding anything to the contrary herein or in any Loan Document, “Obligations” shall not include, with respect to any Loan Party, any Excluded Swap Obligations of such Loan Party.
“OFAC” means the Office of Foreign Assets Control of the United States Department of the Treasury.
“Oil and Gas Properties” means: (a) Hydrocarbon Interests; (b) the Properties now or hereafter pooled or unitized with Hydrocarbon Interests; (c) all presently existing or future unitization, pooling agreements and declarations of pooled units and the units created thereby (including without limitation all units created under orders, regulations and rules of any Governmental Authority) which may affect all or any portion of the Hydrocarbon Interests; (d) all operating agreements, contracts and other agreements, including production sharing contracts and agreements, which relate to any of the Hydrocarbon Interests or the production, sale, purchase, exchange or processing of Hydrocarbons from or attributable to such Hydrocarbon Interests; (e) all Hydrocarbons in and under and which may be produced and saved or attributable to the Hydrocarbon Interests, including all oil in tanks, and all rents, issues, profits, proceeds, products, revenues and other incomes from or attributable to the Hydrocarbon Interests; (f) all tenements, hereditaments, appurtenances and Properties in any manner appertaining, belonging, affixed or incidental to the Hydrocarbon Interests; and (g) all Properties, rights, titles, interests and estates described or referred to above, including any and all Property, real or personal, now owned or hereafter acquired and situated upon, used, held for use or useful in connection with the operating, working or development of any of such Hydrocarbon Interests or Property (excluding drilling rigs, automotive equipment, rental equipment or other personal Property which may be on such premises for the purpose of drilling a well or for other similar temporary uses) and including any and all oil wells, gas wells, injection wells or other wells, buildings, structures, fuel separators, liquid extraction plants, plant compressors, pumps, pumping units, field gathering systems, tanks and tank batteries, fixtures, valves, fittings, machinery and parts, engines, boilers, meters, apparatus, equipment, appliances, tools, implements, cables, wires, towers, casing, tubing and rods, surface leases, rights-of-way, easements and servitudes together with all additions, substitutions, replacements, accessions and attachments to any and all of the foregoing. Unless otherwise indicated herein, each reference to the term “Oil and Gas Properties” shall mean Oil and Gas Properties of the Borrower and its Subsidiaries.
“Organizational Documents” mean: (a) with respect to any corporation, the certificate or articles of incorporation and the bylaws (or equivalent or comparable constitutive documents with respect to any non-US jurisdiction); (b) with respect to any limited liability company, the certificate or articles of formation or organization and operating agreement; and (c) with respect to any partnership, joint venture, trust or other form of business entity, the partnership, joint venture or other applicable agreement of formation or organization and any agreement, instrument, filing or notice with respect thereto filed in connection with its formation or organization with the applicable Governmental Authority in the jurisdiction of its formation or organization and, if applicable, any certificate or articles of formation or organization of such entity.
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“Other Connection Taxes” means, with respect to any Recipient, Taxes imposed as a result of a present or former connection between such Recipient and the jurisdiction imposing such Tax (other than connections arising from such Recipient having executed, delivered, become a party to, performed its obligations under, received payments under, received or perfected a security interest under, engaged in any other transaction pursuant to or enforced any Loan Document, or sold or assigned an interest in any Loan or Loan Document).
“Other Taxes” means all present or future stamp, court or documentary, intangible, recording, filing or similar Taxes that arise from any payment made under, from the execution, delivery, performance, enforcement or registration of, from the receipt or perfection of a security interest under, or otherwise with respect to, any Loan Document, except any such Taxes that are Other Connection Taxes imposed with respect to an assignment (other than an assignment made pursuant to Section 5.04(b)).
“Parent” means Lonestar Resources US Inc., a Delaware corporation.
“Participant” has the meaning assigned to such term in Section 12.04(d).
“Participant Register” has the meaning assigned to such term in Section 12.04(d).
“PBGC” means the Pension Benefit Guaranty Corporation, or any successor thereto.
“Permitted Holders” means any Person that, on the Effective Date, after giving effect to the Plan of Reorganization, is the beneficial owner, together with any of its Affiliates, of Equity Interests representing 7% or more of the aggregate ordinary voting power represented by the issued and outstanding Equity Interests of the Borrower at such time.
“Person” means any natural person, corporation, limited liability company, trust, joint venture, association, company, partnership, Governmental Authority or other entity.
“Plan” means any employee pension benefit plan, as defined in section 3(2) of ERISA, which (a) is currently or hereafter sponsored, maintained or contributed to by the Borrower, a Subsidiary or an ERISA Affiliate or (b) was at any time during the six calendar years preceding the date hereof, sponsored, maintained or contributed to by the Borrower or a Subsidiary or an ERISA Affiliate.
“Plan of Reorganization” has the meaning assigned to such term in the Recitals.
“Platform” has the meaning assigned to such term in Section 12.01(d).
“Pledge Agreements” means one or more pledge agreements in form and substance reasonably satisfactory to the Administrative Agent pursuant to which the Equity Interests of the Borrower or a Subsidiary of the Borrower, as applicable, are pledged to the Administrative Agent for the ratable benefit of the Lenders to secure the payment of the Obligations and the reimbursement of obligations under the Letters of Credit, as such agreements may be amended, modified or supplemented from time to time.
“Prepetition Credit Agreement” has the meaning assigned to such term in the Recitals.
“Prepetition Lenders” has the meaning assigned to such term in the Recitals.
“Prime Rate” means the rate of interest per annum publicly announced from time to time by Administrative Agent as its prime rate for loans in dollars; each change in the Prime Rate shall be effective from and including the date such change is publicly announced as being effective. Such rate is set by
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Administrative Agent as a general reference rate of interest, taking into account such factors as Administrative Agent may deem appropriate; it being understood that many of Administrative Agent’s commercial or other loans are priced in relation to such rate, that it is not necessarily the lowest or best rate actually charged to any customer and that Administrative Agent may make various commercial or other loans at rates of interest having no relationship to such rate.
“Production Report” shall have the meaning given such term in Section 8.01(o).
“Projected Production” means, for any calendar month, the internally forecasted, reasonably anticipated projected production of crude oil, natural gas and natural gas liquids from all Oil and Gas Properties of the Borrower and its Subsidiaries for such calendar month.
“Property” means any interest in any kind of property or asset, whether real, personal or mixed, or tangible or intangible, including, without limitation, cash, securities, accounts and contract rights.
“Property Certificate” means a certificate with respect to Oil and Gas Property in substantially the form of Exhibit H attached hereto.
“Proposed Borrowing Base” has the meaning assigned to such term in Section 2.07(c)(i).
“Proposed Borrowing Base Notice” has the meaning assigned to such term in Section 2.07(c)(ii).
“Proved Developed Producing Reserves” means Proved Reserves which are categorized as both “Developed” and “Producing” in the Reserve Definitions.
“Proved Reserves” means “Proved Reserves” as defined in the Reserve Definitions.
“Public Lender” has the meaning assigned to such term in Section 8.02.
“Qualified ECP Guarantor” means, in respect of any Swap Obligation, each Loan Party that has total assets exceeding $10,000,000 at the time the relevant guarantee or grant of the relevant security interest becomes effective with respect to such Swap Obligation or such other Person as constitutes an “eligible contract participant” under the Commodity Exchange Act or any regulations promulgated thereunder and can cause another Person to qualify as an “eligible contract participant” at such time by entering into a keepwell under section 1a(18)(A)(v)(II) of the Commodity Exchange Act.
“Recipient” means (a) the Administrative Agent, (b) any Lender and (c) the Issuing Bank, as applicable.
“Recognized Value” means the value, as determined or deemed to be determined by all of the Lenders or the Required Lenders, as applicable, attributed to the Oil and Gas Properties in the most recent determination of the Borrowing Base, based upon the discounted present value of the estimated net cash flow to be realized from the production of Hydrocarbons from such interests and the other standards specified in Section 2.07.
“Reconciliation Schedule” means a schedule substantially in the form of Exhibit I confirming that, except as set forth therein, (i) each well or unit described on the exhibits to the Mortgages is also included in the most recently delivered Reserve Report, and (ii) the respective net revenue interests and working interests for each well or unit described on the exhibits to the Mortgages are also the net revenue interests and working interests for the same well or unit included in the most recently delivered Reserve Report.
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“Redemption” means, with respect to any Debt, the repurchase, redemption, prepayment, repayment, defeasance or any other acquisition or retirement for value (or the segregation of funds with respect to any of the foregoing) of such Debt.
“Redeem” has the correlative meaning thereto.
“Redetermination Date” means, with respect to any Scheduled Redetermination or any Interim Redetermination, the date that the redetermined Borrowing Base related thereto becomes effective pursuant to Section 2.07(d).
“Register” has the meaning assigned to such term in Section 12.04(c).
“Regulation D” means Regulation D of the Board, as the same may be amended, supplemented or replaced from time to time.
“Related Parties” means, with respect to any specified Person, such Person’s Affiliates and the respective partners, directors, managers, officers, employees, agents, trustees, administrators, representatives and advisors (including attorneys, accountants and experts) of such Person and of such Person’s Affiliates.
“Release Condition” shall mean, at any time, the satisfaction of each of the following conditions: (i) the repayment in full in cash of all Term Loan Obligations (other than contingent indemnity obligations as to which no claim has been asserted); (ii) the amount of Revolving Commitments available to be drawn hereunder represents, as at such time, not less than 30% of the total Revolving Commitments; and (iii) no Default, Event of Default or Borrowing Base Deficiency shall have occurred and be continuing at such time.
“Remedial Work” has the meaning assigned to such term in Section 8.10(a).
“Replacement Rate” has the meaning assigned to such term in Section 3.03(b).
“Required Lenders” means Lenders having Loans, LC Exposure and unused Commitments representing more than 66.67% of the sum of all Loans, LC Exposure and unused Commitments at such time (without regard to any sale by a Lender of a participation in any Loan under Section 12.04(d)); provided that the Loans, LC Exposure and Commitment of any Defaulting Lender shall be disregarded for purposes of making a determination of Required Lenders.
“Required Swap Date” has the meaning assigned to such term in Section 8.17.
“Reserve Definitions” means, at any time, the Definitions for Oil and Gas Reserves promulgated by the Society of Petroleum Engineers (or any generally recognized successor) as in effect at such time and reasonably acceptable to the Administrative Agent.
“Reserve Report” means the Initial Reserve Report and each other report, in form and substance reasonably satisfactory to the Administrative Agent, setting forth, as of each January 1 or July 1 (or such other date in the event of an Interim Redetermination) (or, with respect to the Scheduled Redetermination to become effective on or about February 1, 2021, as of December 1, 2020) the oil and gas reserves attributable to the Oil and Gas Properties of the Borrower and the Subsidiaries, together with a projection of the rate of production and future net income, taxes, operating expenses and Capital Expenditures with respect thereto as of such date, based upon the economic and pricing assumptions consistent with the Administrative Agent’s lending requirements at the time.
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“Resolution Authority” means an EEA Resolution Authority or, with respect to any UK Financial Institution, a UK Resolution Authority.
“Responsible Officer” means, as to any Person, the president, any Financial Officer or any vice president of such Person. Unless otherwise specified, all references to a Responsible Officer herein shall mean a Responsible Officer of the Borrower.
“Restricted Payment” means any dividend or other distribution (whether in cash, securities or other Property) with respect to any Equity Interests in the Borrower or any of its Subsidiaries, or any payment (whether in cash, securities or other Property), including any sinking fund or similar deposit, on account of the purchase, Redemption, retirement, acquisition, cancellation or termination of any such Equity Interests in the Borrower or any of its Subsidiaries or any option, warrant or other right to acquire any such Equity Interests in the Borrower or any of its Subsidiaries.
“Revolving Applicable Percentage” means, with respect to any Lender, the percentage of the Aggregate Maximum Revolving Credit Amount represented by such Lender’s Maximum Revolving Credit Amount as such percentage is set forth on Annex I or in any Assignment and Assumption pursuant to which any Lender became a party hereto, as may be adjusted pursuant to any assignment or amendment to this Agreement. If the Maximum Revolving Credit Amounts have terminated or expired, the Revolving Applicable Percentages shall be determined based upon the Maximum Revolving Credit Amounts most recently in effect, giving effect to any assignments.
“Revolving Commitment” means, with respect to each Lender, the commitment of such Lender to make Revolving Loans and to acquire participations in Letters of Credit hereunder, which shall at any time be the lesser of (a) such Lender’s Maximum Revolving Credit Amount and (b) such Lender’s Revolving Applicable Percentage of the then effective Borrowing Base. The total Revolving Commitment is the aggregate amount of the Revolving Commitments of all the Lenders. The amount representing each Lender’s Revolving Commitment shall at any time be the lesser of such Lender’s Maximum Revolving Credit Amount and such Lender’s Applicable Percentage of the then effective Borrowing Base.
“Revolving Credit Exposure” means, with respect to any Lender at any time, the sum of the outstanding principal amount of such Lender’s Revolving Loans and its LC Exposure at such time.
“Revolving Loan” means any revolving loan made to the Borrower pursuant to Section 2.01(a), and “Revolving Loans” means, collectively, two or more such revolving loans, as the context requires.
“S&P” means Standard & Poor’s Ratings Group, a division of The McGraw-Hill Companies, Inc., and any successor thereto that is a nationally recognized rating agency.
“Sanctioned Country” means, at any time, a country or territory which is itself the subject or target of any Sanctions (including, at the time of this Agreement, Crimea, Cuba, Iran, North Korea and Syria).
“Sanctioned Person” means, at any time, (a) any Person listed in any Sanctions-related list of designated Persons maintained by OFAC, the U.S. Department of the Treasury or the U.S. Department of State, (b) any Person operating, organized or resident in a Sanctioned Country or that is the subject of Sanctions, or (c) any Person owned or controlled by any such Person or Persons described in the foregoing clauses (a) or (b).
“Sanctions” means economic or financial sanctions or trade embargoes imposed, administered or enforced from time to time by the U.S. government, including those administered by OFAC, the U.S. Department of the Treasury or the U.S. Department of State.
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“Scheduled Redetermination” has the meaning assigned to such term in Section 2.07(b).
“Scheduled Redetermination Date” means the date on which a Borrowing Base that has been redetermined pursuant to a Scheduled Redetermination becomes effective as provided in Section 2.07(d).
“SEC” means the Securities and Exchange Commission or any successor Governmental Authority.
“Secondary Holder” has the meaning assigned to such term in the definition of “Change in Control.”
“Secured Parties” means the Administrative Agent, each Lender, each Swap Lender and each Treasury Management Party and any other party to whom the Loan Parties provide indemnities under the Loan Documents, any Secured Swap Agreement or any Secured Treasury Management Agreement.
“Secured Swap Agreement” means any Swap Agreement between the Borrower or any Subsidiary and any Swap Lender including any Swap Agreements entered into during the Bankruptcy Proceedings; provided that the term “Secured Swap Agreement” shall not include any transactions entered into after the time that such Swap Lender ceases to be a Lender or an Affiliate of a Lender.
“Secured Treasury Management Agreement” means any Treasury Management Agreement that is entered into by and between the Borrower and any Treasury Management Party.
“Security Agreements” means one or more security agreements in form and substance reasonably satisfactory to the Administrative Agent pursuant to which a security interest in all of the assets of the Parent, the Intermediate Entities, the Borrower and a Subsidiary is granted to the Administrative Agent for the ratable benefit of the Lenders to secure the payment of the Obligations and the reimbursement of obligations under the Letters of Credit, as such agreements may be amended, modified or supplemented from time to time, including pursuant to the amended and restated security agreements dated on or about the date hereof.
“Security Instruments” means the Guaranty Agreements, the Security Agreements, the Pledge Agreements, the Account Control Agreements, the Mortgages, and other agreements, instruments or certificates described or referred to in Exhibit F, and any and all other agreements, instruments, consents or certificates now or hereafter executed and delivered by the Borrower or any other Person (other than Secured Swap Agreements, Secured Treasury Management Agreements and participation or similar agreements between any Lender and any other lender or creditor with respect to any Obligations pursuant to this Agreement) in connection with, or as security for or to guarantee the payment or performance of the Obligations, the Notes, this Agreement, or reimbursement obligations under the Letters of Credit, as such agreements may be amended, modified, supplemented or restated from time to time.
“Statutory Reserve Rate” means a fraction (expressed as a decimal), the numerator of which is the number one and the denominator of which is the number one minus the aggregate of the maximum reserve percentages (including any marginal, special, emergency or supplemental reserves) expressed as a decimal established by the Board to which the Administrative Agent is subject, with respect to the Adjusted LIBO Rate, for eurocurrency funding (currently referred to as “Eurocurrency Liabilities” in Regulation D of the Board). Such reserve percentages shall include those imposed pursuant to such Regulation D. Eurodollar Loans shall be deemed to constitute eurocurrency funding and to be subject to such reserve requirements without benefit of or credit for proration, exemptions or offsets that may be available from time to time to any Lender under such Regulation D or any comparable regulation. The Statutory Reserve Rate shall be adjusted automatically on and as of the effective date of any change in any reserve percentage.
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“Subsidiary” means: (a) any Person of which at least a majority of the outstanding Equity Interests having by the terms thereof ordinary voting power to elect a majority of the board of directors, board of managers or other governing body of such Person (irrespective of whether or not at the time Equity Interests of any other class or classes of such Person shall have or might have voting power by reason of the happening of any contingency) is at the time directly or indirectly owned or controlled by the Borrower or one or more of its Subsidiaries or by the Borrower and one or more of its Subsidiaries; and (b) any partnership of which the Borrower or any of its Subsidiaries is a general partner. Unless otherwise indicated herein, each reference to the term “Subsidiary” shall mean a Subsidiary of the Borrower; provided that, the Excluded Subsidiary shall be deemed not to be a Subsidiary of the Borrower except for purposes of Section 7.06, the first sentence of Section 7.09, Section 7.24, Section 8.04, Section 8.09 and Section 8.10(a).
“Super Majority Lenders” means (a) at any time that there are three or more Lenders, three or more Lenders having Loans, LC Exposure and unused Commitments representing more than 80% of the sum of all Loans, LC Exposure and unused Commitments at such time (without regard to any sale by a Lender of a participation in any Loan under Section 12.04(d)) and (b) at any time that there are two or less Lenders, all Lenders; provided that, in any case, the Loans, LC Exposure and Commitment of any Defaulting Lender shall be disregarded for purposes of making a determination of Super Majority Lenders.
“Swap Agreement” means (a) any and all rate swap transactions, basis swaps, credit derivative transactions, forward rate transactions, commodity swaps, commodity options, forward commodity contracts, forward sale of production, equity or equity index swaps or options, bond or bond price or bond index swaps or options or forward bond or forward bond price or forward bond index transactions, interest rate options, forward foreign exchange transactions, cap transactions, floor transactions, collar transactions, currency swap transactions, cross-currency rate swap transactions, currency options, spot contracts, or any other similar transactions or any combination of any of the foregoing (including any options to enter into any of the foregoing), whether or not any such transaction is governed by or subject to any Master Agreement, (b) any and all transactions of any kind, and the related confirmations, which are subject to the terms and conditions of, or governed by, any form of master agreement published by the International Swaps and Derivatives Association, Inc., any International Foreign Exchange Master Agreement, or any other master agreement (any such master agreement, together with any related schedules, a “Master Agreement”), including any such obligations or liabilities under any Master Agreement and (c) any and all agreements, contracts or transactions that constitute a “swap” within the meaning of section 1a(47) of the Commodity Exchange Act.
“Swap Agreement Certificate” has the meaning given such term in Section 8.01(f).
“Swap Lender” means any Person that is a counterparty to a Swap Agreement with the Borrower or any Subsidiary, which Swap Agreement was entered into prior to the time, or during the time, that such Person was a Lender or an Affiliate of a Lender (including any such Swap Agreement in existence prior to the date hereof), even if such Person subsequently ceases to be a Lender or an Affiliate of a Lender; provided that, so long as any Lender is a Defaulting Lender, such Lender will not be a Swap Lender with respect to any Swap Agreement entered into while such Lender was a Defaulting Lender.
“Swap Obligation” means, with respect to any Loan Party, any obligation to pay or perform under any agreement, contract or transaction that constitutes a “swap” within the meaning of section 1a(47) of the Commodity Exchange Act.
“Swap Termination” means any Swap Agreement, which has been given value in the then effective Borrowing Base is terminated.
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“Swap Termination Value” means, in respect of any one or more Swap Agreements, after taking into account the effect of any legally enforceable netting agreement relating to such Swap Agreements, (a) for any date on or after the date such Swap Agreements have been closed out and termination value(s) determined in accordance therewith, such termination value(s) and (b) for any date prior to the date referenced in clause (a), the amount(s) determined as the mark-to-market value(s) for such Swap Agreements, as determined by the counterparties to such Swap Agreements.
“Synthetic Lease” means, as to any Person, any lease (including a lease that may be terminated by the lessee at any time) of any Property (whether real, personal or mixed) (a) that is accounted for as an operating lease under GAAP and (b) in respect of which the lessee retains or obtains ownership of the Property so leased for U.S. Federal income tax purposes, other than any such lease under which such Person is the lessor.
“Taxes” means any and all present or future taxes, levies, imposts, duties, deductions, withholdings (including backup withholding), assessments, fees or other charges imposed by any Governmental Authority, including any interest, additions to tax or penalties applicable thereto.
“Term Borrowing” means a Borrowing of Term Loans.
“Term Loan” means the term loans made to the Borrower by the Lenders on the Closing Date pursuant to Section 2.01(b), or any portion thereof, as the context requires.
“Term Loan Commitment” means, as to each Lender, the amount set forth opposite such Lender’s name on Annex I under the caption “Term Loan Commitments,” as the same may be modified from time to time pursuant to any assignment permitted by Section 12.04(b).
“Term Loan Obligations” shall mean all Obligations of the Borrower and its Subsidiaries in respect of the Term Loans.
“Term Loan Secured Parties” shall mean all Obligations of the Borrower and the other Loan Parties in respect of the Term Loans.
“Termination Date” means the earlier of the Maturity Date and the date of termination of the Revolving Commitments.
“Total Commitment” means with respect to each Lender, the aggregate of its Revolving Commitment and its Term Loan Commitment.
“Total Debt” means, at any date, all Debt of the Borrower and the Consolidated Subsidiaries on a consolidated basis, excluding (i) non-cash obligations under ASC 815, (ii) accounts payable and other accrued liabilities (for the deferred purchase price of Property or services) from time to time incurred in the ordinary course of business which are not greater than ninety (90) days past the date of invoice or delinquent or which are being contested in good faith by appropriate action and for which adequate reserves are maintained in accordance with GAAP, (iii) Debt permitted under Section 9.02(d) that is secured by cash or cash equivalents in amounts equal to such Debt, and (iv) the CARES Forgiven Debt (but shall include any CARES Debt that is not CARES Forgiven Debt).
“Transactions” means, with respect to (a) the Borrower, the execution, delivery and performance by the Borrower of this Agreement, and each other Loan Document to which it is a party, the borrowing of Loans, the use of the proceeds thereof and the issuance of Letters of Credit hereunder, and the grant of Liens by the Borrower on Mortgaged Properties and other Properties pursuant to the Security Instruments
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and (b) each Guarantor, the execution, delivery and performance by such Guarantor of each Loan Document to which it is a party, the guaranteeing of the Obligations and the other obligations under the Guaranty Agreement by such Guarantor and such Guarantor’s grant of the security interests and provision of collateral under the Security Instruments, and the grant of Liens by such Guarantor on Mortgaged Properties and other Properties pursuant to the Security Instruments.
“Treasury Management Agreement” means any agreement to provide cash management services, including treasury, depositing, overdraft, credit or debit card, electronic funds transfer and other cash management arrangements.
“Treasury Management Party” means any Person that is a Lender or an Affiliate of a Lender, in its capacity as a party to such Treasury Management Agreement, provided that, so long as any Lender is a Defaulting Lender, such Lender will not be a Treasury Management Party with respect to any Treasury Management Agreement entered into while such Lender was a Defaulting Lender.
“Type” when used in reference to any Loan or Borrowing, refers to whether the rate of interest on such Loan, or on the Loans comprising such Borrowing, is determined by reference to the Alternate Base Rate or the Adjusted LIBO Rate.
“UK Financial Institution” means any BRRD Undertaking (as such term is defined under the PRA Rulebook (as amended form time to time) promulgated by the United Kingdom Prudential Regulation Authority) or any Person falling within IFPRU 11.6 of the FCA Handbook (as amended from time to time) promulgated by the United Kingdom Financial Conduct Authority, which includes certain credit institutions and investment firms, and certain affiliates of such credit institutions or investment firms.
“UK Resolution Authority” means the Bank of England or any other public administrative authority having responsibility for the resolution of any UK Financial Institution.
“U.S. Borrower” means any Borrower that is a U.S. Person.
“U.S. Person” means any Person that is a “United States Person” as defined in section 7701(a)(30) of the Code.
“U.S. Tax Compliance Certificate” has the meaning assigned to such term in Section 5.03(g).
“Wholly-Owned Subsidiary” means (a) any Subsidiary of which all of the outstanding Equity Interests, on a fully-diluted basis, are owned by the Borrower or one or more of the Wholly-Owned Subsidiaries or are owned by the Borrower and one or more of the Wholly-Owned Subsidiaries or (b) if permitted by this Agreement, any Subsidiary that is organized in a foreign jurisdiction and is required by the applicable laws and regulations of such foreign jurisdiction to be partially owned by the government of such foreign jurisdiction or individual or corporate citizens of such foreign jurisdiction, provided that the Borrower, directly or indirectly, owns the remaining Equity Interests in such Subsidiary and, by contract or otherwise, Controls the management and business of such Subsidiary and derives economic benefits of ownership of such Subsidiary to substantially the same extent as if such Subsidiary were a Wholly-Owned Subsidiary.
“Withholding Agent” means any Loan Party and the Administrative Agent.
“With Good Reason” means resignation for Good Reason (as defined and described in the employment agreement dated on or about the date hereof, with Frank D. Bracken III).
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“Without Cause” means a termination without Cause (as described in the employment agreement dated on or about the date hereof, with Frank D. Bracken III).
“Write-Down and Conversion Powers” means, (a) with respect to any EEA Resolution Authority, the write-down and conversion powers of such EEA Resolution Authority from time to time under the Bail-In Legislation for the applicable EEA Member Country, which write-down and conversion powers are described in the EU Bail-In Legislation Schedule, and (b) with respect to the United Kingdom, any powers of the applicable Resolution Authority under the Bail-In Legislation to cancel, reduce, modify or change the form of a liability of any UK Financial Institution or any contract or instrument under which that liability arises, to convert all or part of that liability into shares, securities or obligations of that Person or any other Person, to provide that any such contract or instrument is to have effect as if a right had been exercised under it or to suspend any obligation in respect of that liability or any of the powers under that Bail-In Legislation that are related to or ancillary to any of those powers.
Section 1.03. Types of Loans and Borrowings. For purposes of this Agreement, Loans and Borrowings, respectively, may be classified and referred to by Type (e.g., a “Eurodollar Loan” or a “Eurodollar Borrowing”).
Section 1.04. Terms Generally; Rules of Construction. The definitions of terms herein shall apply equally to the singular and plural forms of the terms defined. Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms. The words “include,” “includes” and “including” shall be deemed to be followed by the phrase “without limitation.” The word “will” shall be construed to have the same meaning and effect as the word “shall.” Unless the context requires otherwise (a) any definition of or reference to any agreement, instrument or other document herein shall be construed as referring to such agreement, instrument or other document as from time to time amended, supplemented or otherwise modified (subject to any restrictions on such amendments, supplements or modifications set forth in the Loan Documents), (b) any reference herein to any law or regulation shall be construed as referring to such law or regulation as amended, modified, codified, supplemented or reenacted, in whole or in part, and in effect from time to time, (c) any reference herein to any Person shall be construed to include such Person’s successors and assigns (subject to the restrictions contained in the Loan Documents), (d) the words “herein,” “hereof” and “hereunder,” and words of similar import, shall be construed to refer to this Agreement in its entirety and not to any particular provision hereof, (e) in the computation of periods of time from a specified date to a later specified date, the word “from” means “from and including;” the words “to” and “until” each mean “to but excluding;” and the word “through” means “to and including,” (f) any reference herein to Articles, Sections, Annexes, Exhibits and Schedules shall be construed to refer to Articles and Sections of, and Annexes, Exhibits and Schedules to, this Agreement, (g) any reference to any law or regulation herein shall, unless otherwise specified, refer to such law or regulation as amended, modified or supplemented from time to time and (h) the words “asset” and “property” shall be construed to have the same meaning and effect and to refer to any and all tangible and intangible assets and properties, including, cash, securities, accounts and contract rights. References in this Agreement and the other Loan Documents to “reasonable,” “reasonably” and words of similar import when applied to any request or demand which the Lender is permitted to make hereunder or under any other Loan Document or as applied to a determination of the reasonableness of the amount or the incurrence of any expense shall be interpreted and construed from the perspective of a lender in a senior credit facility where such lender is regulated by various governmental agencies, seeks a high level of assurance regarding the operations, collateral position, condition (financial or otherwise) and Properties of the Borrower and other Persons guaranteeing or otherwise connected to such facility and seeks a high level of assurance and advice regarding its rights and duties under the Loan Documents, and the Borrower and any other Person guaranteeing or otherwise connected to such facility shall comply with such request or demand or accept such determination unless the Borrower or such other Person proves that such request, demand or determination is or was unreasonable.
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Section 1.05. Accounting Terms and Determinations; GAAP.
(a) Generally. All accounting terms not specifically or completely defined herein shall be construed in conformity with, and all financial data (including financial ratios and other financial calculations) required to be submitted pursuant to this Agreement shall be prepared in conformity with, GAAP applied on a consistent basis, as in effect from time to time, applied in a manner consistent with that used in preparing the Financial Statements, except as otherwise specifically prescribed herein.
(b) Changes in GAAP. If at any time any change in GAAP would affect the computation of any financial ratio or requirement set forth in any Loan Document, and either the Borrower or the Required Lenders shall so request, the Administrative Agent, the Lenders and the Borrower shall negotiate in good faith to amend such ratio or requirement to preserve the original intent thereof in light of such change in GAAP (subject to the approval of the Required Lenders); provided that, until so amended, (i) such ratio or requirement shall continue to be computed in accordance with GAAP prior to such change therein and (ii) the Borrower shall provide to the Administrative Agent and the Lenders financial statements and other documents required under this Agreement or as reasonably requested hereunder setting forth a reconciliation between calculations of such ratio or requirement made before and after giving effect to such change in GAAP.
(c) Consolidation of Variable Interest Entities. All references herein to consolidated financial statements of the Borrower and its Subsidiaries or to the determination of any amount for the Borrower and its Subsidiaries on a consolidated basis or any similar reference shall, in each case, be deemed to include each variable interest entity that the Borrower is required to consolidate pursuant to FASB Interpretation No. 46 – Consolidation of Variable Interest Entities: an interpretation of ARB No. 51 (January 2003) as if such variable interest entity were a Subsidiary as defined herein.
(d) Rounding. Any financial ratios required to be maintained by the Borrower pursuant to this Agreement shall be calculated by dividing the appropriate component by the other component, carrying the result to one place more than the number of places by which such ratio is expressed herein and rounding the result up or down to the nearest number (with a rounding-up if there is no nearest number).
Section 1.06. Amounts of Letters of Credit. Unless otherwise specified herein, the amount of a Letter of Credit at any time shall be deemed to be the stated amount of such Letter of Credit in effect at such time; provided, however, that, in determining whether the LC Exposure is greater than the LC Commitment, with respect to any Letter of Credit that, by its terms or the terms of any document related thereto, provides for one or more automatic increases in the stated amount thereof, the amount of such Letter of Credit shall be deemed to be the maximum stated amount of such Letter of Credit after giving effect to all such increases, whether or not such maximum stated amount is in effect at such time.
Section 1.07. Joint Preparation; Construction of Indemnities and Releases. This Agreement and the other Loan Documents have been reviewed and negotiated by sophisticated parties with access to legal counsel, and no rule of construction shall apply hereto or thereto which would require or allow any Loan Document to be construed against any party because of its role in
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drafting such Loan Document. All indemnification and release of liability provisions of this Agreement shall be construed broadly (and not narrowly) in favor of the Persons receiving indemnification or releases of liability.
Section 1.08. Determination of Time. Unless otherwise specified, all references herein to times of day shall be references to Central time (daylight or standard, as applicable) in Dallas, Texas.
Section 1.09. Rates. The Administrative Agent does not warrant or accept responsibility for, and shall not have liability with respect to, the administration, submission or any other matter related to the rates in the definition of “LIBO Rate.”
Section 1.10. Interpretative Provisions Related to Divisions. Any reference herein to a merger, transfer, consolidation, amalgamation, assignment, sale, disposition, or transfer, or similar term, shall be deemed to apply to a division of or by a limited liability company, limited partnership or trust, or an allocation of assets to a series of a limited liability company, limited partnership or trust (or the unwinding of such a division or allocation), as if it were a merger, transfer, amalgamation, consolidation, assignment, sale or transfer, or similar term, as applicable, to, of or with a separate Person. Any series of limited liability company, limited partnership or trust and any entity surviving or resulting from the division of a limited liability company, limited partnership or trust shall constitute a separate Person hereunder (and each series of a limited liability company or entity surviving or resulting from the division of any limited liability company that is a Subsidiary, Consolidated Subsidiary, Domestic Subsidiary, Excluded Subsidiary, Foreign Subsidiary, Wholly Owned Subsidiary, joint venture or any other like term shall also constitute such a Person or entity).
ARTICLE II
The Credits
Section 2.01. Commitments.
(a) Subject to the terms and conditions and relying upon the representations and warranties set forth herein, each Lender agrees to make Revolving Loans to the Borrower during the Availability Period in an aggregate principal amount that will not result in (i) such Lender’s Revolving Credit Exposure exceeding such Lender’s Revolving Commitment or (ii) the total Revolving Credit Exposures exceeding the total Revolving Commitments. Within the foregoing limits and subject to the terms and conditions set forth herein, the Borrower may borrow, repay and reborrow the Revolving Loans.
(b) Subject to the terms and conditions and relying on the representations and warranties set forth herein, each Lender is deemed to make a Term Loan in an amount equal to its Term Loan Commitment. Once borrowed, the Borrower may not reborrow any portion of the Term Loans that has been repaid or prepaid, whether in whole or in part. After giving effect to the deemed funding of the Term Loans on the Closing Date, the Term Loan Commitments shall immediately and automatically terminate without further action. Amounts deemed borrowed under this Section 2.01(b) and repaid or prepaid may not be reborrowed.
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Section 2.02. Loans and Borrowings.
(a) Borrowings; Several Obligations. Each Revolving Loan shall be made as part of a Borrowing consisting of Revolving Loans made by the Lenders ratably in accordance with their respective Revolving Commitments. Each Term Loan shall be deemed to be made as part of a Term Borrowing consisting of Term Loans made by the Lenders in an amount equal to each Lender’s Term Loan Commitment. The failure of any Lender to make any Loan required to be made by it shall not relieve any other Lender of its obligations hereunder; provided that the Commitments are several and no Lender shall be responsible for any other Lender’s failure to make Loans as required.
(b) Types of Loans. Subject to Section 3.03, each Borrowing shall be comprised entirely of ABR Loans or Eurodollar Loans as the Borrower may request in accordance herewith. Each Lender at its option may make any Eurodollar Loan by causing any domestic or foreign branch or Affiliate of such Lender to make such Loan; provided that any exercise of such option shall not affect the obligation of the Borrower to repay such Loan in accordance with the terms of this Agreement.
(c) Minimum Amounts; Limitation on Number of Borrowings. At the commencement of each Interest Period for any Eurodollar Borrowing, such Borrowing shall be in an aggregate amount that is an integral multiple of $500,000 and not less than $1,000,000. At the time that each ABR Borrowing is made, such Borrowing shall be in an aggregate amount that is an integral multiple of $500,000 and not less than $1,000,000; provided that an ABR Borrowing may be in an aggregate amount that is equal to the entire unused balance of the total Commitments or that is required to finance the reimbursement of an LC Disbursement as contemplated by Section 2.08(e). Borrowings of more than one Type may be outstanding at the same time, provided that there shall not at any time be more than a total of ten (10) Eurodollar Borrowings outstanding. Notwithstanding any other provision of this Agreement, the Borrower shall not be entitled to request, or to elect to convert or continue, any Borrowing if the Interest Period requested with respect thereto would end after the Maturity Date.
(d) Evidence of Debt. The Loans made by each Lender shall be evidenced by one or more accounts or records maintained by such Lender and by Administrative Agent in the ordinary course of business. The accounts or records maintained by Administrative Agent and each Lender shall be conclusive absent manifest error of the amount of the Loans made by Lenders to Borrower and the interest and payments thereon. Any failure to so record or any error in doing so shall not, however, limit or otherwise affect the obligation of Borrower hereunder to pay any amount owing with respect to the Obligations. In the event of any conflict between the accounts and records maintained by any Lender and the accounts and records of Administrative Agent in respect of such matters, the accounts and records of Administrative Agent shall control in the absence of manifest error. Upon the request of any Lender made through Administrative Agent, Borrower shall execute and deliver to such Lender (through Administrative Agent) a Note, which shall evidence such Lender’s Loans in addition to such accounts or records. Each Lender may attach schedules to its Note and endorse thereon the date, Type (if applicable), amount and maturity of its Loans and payments with respect thereto. In addition to the accounts and records referred to above, each Lender and Administrative Agent shall maintain in accordance with its usual practice accounts or records evidencing the purchases and sales by such Lender of participations in Letters of Credit. In the event of any conflict between the accounts and records maintained by Administrative Agent and the accounts and records of any Lender in respect of such matters, the accounts and records of Administrative Agent shall control in the absence of manifest error.
Section 2.03. Requests for Borrowings. To request a Borrowing, the Borrower shall notify the Administrative Agent of such request by telephone (a) in the case of a Eurodollar Borrowing on the Closing Date, not later than 11:00 a.m., two (2) Business Days before the date of the proposed Borrowing, (b) in the case of any other Eurodollar Borrowing , not later than 11:00 a.m.,
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three (3) Business Days before the date of the proposed Borrowing or (c) in the case of an ABR Borrowing, not later than 11:00 a.m., on the date of the proposed Borrowing; provided that no such notice shall be required for any deemed request of an ABR Borrowing to finance the reimbursement of an LC Disbursement as provided in Section 2.08(e). Each such telephonic Borrowing Request shall be irrevocable and shall be confirmed promptly by hand delivery or sent by facsimile or electronic transmission to the Administrative Agent of a written Borrowing Request in substantially the form of Exhibit B and signed by the Borrower. Each such telephonic and written Borrowing Request shall specify the following information in compliance with Section 2.02:
(i) the aggregate amount of the requested Borrowing;
(ii) the date of such Borrowing, which shall be a Business Day;
(iii) whether such Borrowing is to be an ABR Borrowing or a Eurodollar Borrowing;
(iv) in the case of a Eurodollar Borrowing, the initial Interest Period to be applicable thereto, which shall be a period contemplated by the definition of the term “Interest Period;”
(v) the amount of the then effective Borrowing Base, the current total Revolving Credit Exposures (without regard to the requested Borrowing), total Term Credit Exposures and the pro forma total Revolving Credit Exposures (giving effect to the requested Borrowing);
(vi) the Consolidated Cash Balance (without regard to the requested Borrowing) and the pro forma Consolidated Cash Balance (giving effect to the requested Borrowing) as of the end of the third Business Day after such requested Borrowing will be funded; and
(vii) the location and number of the Borrower’s account to which funds are to be disbursed, which shall comply with the requirements of Section 2.05.
If no election as to the Type of Borrowing is specified, then the requested Borrowing shall be an ABR Borrowing. If no Interest Period is specified with respect to any requested Eurodollar Borrowing, then the Borrower shall be deemed to have selected an Interest Period of one (1) month’s duration. Each Borrowing Request shall constitute a representation (1) that the amount of the requested Borrowing shall not cause the total Revolving Credit Exposures to exceed the total Revolving Commitments (i.e., the lesser of the Aggregate Maximum Revolving Credit Amount and the then effective Borrowing Base) and (2) that as of the end of the third Business Day after such requested Borrowing will be funded, after giving pro forma effect to the requested Borrowing, the Consolidated Cash Balance shall not exceed the Consolidated Cash Limit.
Promptly following receipt of a Borrowing Request in accordance with this Section 2.03, the Administrative Agent shall advise each Lender of the details thereof and of the amount of such Lender’s Loan to be made as part of the requested Borrowing.
Section 2.04. Interest Elections.
(a) Conversion and Continuance. Each Borrowing initially shall be of the Type specified in the applicable Borrowing Request and, in the case of a Eurodollar Borrowing, shall have an initial Interest Period as specified in such Borrowing Request. Thereafter, the Borrower
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may elect to convert such Borrowing to a different Type or to continue such Borrowing and, in the case of a Eurodollar Borrowing, may elect Interest Periods therefor, all as provided in this Section 2.04. The Borrower may elect different options with respect to different portions of the affected Borrowing, in which case each such portion shall be allocated ratably among the Lenders holding the Loans comprising such Borrowing, and the Loans comprising each such portion shall be considered a separate Borrowing.
(b) Interest Election Requests. To make an election pursuant to this Section 2.04, the Borrower shall notify the Administrative Agent of such election by telephone by the time that a Borrowing Request would be required under Section 2.03 if the Borrower were requesting a Borrowing of the Type resulting from such election to be made on the effective date of such election. Each such telephonic Interest Election Request shall be irrevocable and shall be confirmed promptly by hand delivery or sent by facsimile or electronic transmission to the Administrative Agent of a written Interest Election Request in substantially the form of Exhibit C and signed by the Borrower.
(c) Information in Interest Election Requests. Each telephonic and written Interest Election Request shall specify the following information in compliance with Section 2.02:
(i) the Borrowing to which such Interest Election Request applies and, if different options are being elected with respect to different portions thereof, the portions thereof to be allocated to each resulting Borrowing (in which case the information to be specified pursuant to Section 2.04(c)(iii) and (iv) shall be specified for each resulting Borrowing);
(ii) the effective date of the election made pursuant to such Interest Election Request, which shall be a Business Day;
(iii) whether the resulting Borrowing is to be an ABR Borrowing or a Eurodollar Borrowing; and
(iv) if the resulting Borrowing is a Eurodollar Borrowing, the Interest Period to be applicable thereto after giving effect to such election, which shall be a period contemplated by the definition of the term “Interest Period.”
If any such Interest Election Request requests a Eurodollar Borrowing but does not specify an Interest Period, then the Borrower shall be deemed to have selected an Interest Period of one month’s duration. If such Interest Election Request does not specify a Type, then the Borrower shall be deemed to have selected an ABR Borrowing.
(d) Notice to Lenders by the Administrative Agent. Promptly following receipt of an Interest Election Request, the Administrative Agent shall advise each Lender of the details thereof and of such Lender’s portion of each resulting Borrowing.
(e) Effect of Failure to Deliver Timely Interest Election Request and Events of Default and Borrowing Base Deficiencies on Interest Election. If the Borrower fails to deliver a timely Interest Election Request with respect to a Eurodollar Borrowing prior to the end of the Interest Period applicable thereto, then, unless such Borrowing is repaid as provided herein, at the end of such Interest Period such Borrowing shall be converted to an ABR Borrowing. Notwithstanding any contrary provision hereof, if an Event of Default or a Borrowing Base Deficiency has occurred and is continuing: (i) no outstanding Borrowing may be converted to or continued as a Eurodollar
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Borrowing (and any Interest Election Request that requests the conversion of any Borrowing to, or continuation of any Borrowing as, a Eurodollar Borrowing shall be ineffective); and (ii) unless repaid, each Eurodollar Borrowing shall be converted to an ABR Borrowing at the end of the Interest Period applicable thereto.
Section 2.05. Funding of Borrowings.
(a) Funding by Lenders. Each Lender shall make each Loan to be made by it hereunder on the proposed date thereof by wire transfer of immediately available funds by 3:00 p.m., to the account of the Administrative Agent most recently designated by it for such purpose by notice to the Lenders. The Administrative Agent will make such Loans available to the Borrower by promptly crediting the amounts so received, in like funds, to an account of the Borrower maintained with the Administrative Agent and designated by the Borrower in the applicable Borrowing Request; provided that ABR Loans made to finance the reimbursement of an LC Disbursement as provided in Section 2.08(e) shall be remitted by the Administrative Agent to the Issuing Bank. Nothing herein shall be deemed to obligate any Lender to obtain the funds for its Loan in any particular place or manner or to constitute a representation by any Lender that it has obtained or will obtain the funds for its Loan in any particular place or manner.
(b) Presumption of Funding by the Lenders. Unless the Administrative Agent shall have received notice from a Lender (x) in the case of ABR Loans, prior to 12:00 noon on the date of the proposed Borrowing and (y) otherwise, prior to the proposed date of any Borrowing that such Lender will not make available to the Administrative Agent such Lender’s share of such Borrowing, the Administrative Agent may assume that such Lender has made such share available on such date in accordance with Section 2.05(a) and may, in reliance upon such assumption, make available to the Borrower a corresponding amount. In such event, if a Lender has not in fact made its share of the applicable Borrowing available to the Administrative Agent, then the applicable Lender and the Borrower severally agree to pay to the Administrative Agent forthwith on demand such corresponding amount with interest thereon, for each day from and including the date such amount is made available to the Borrower to but excluding the date of payment to the Administrative Agent, at (i) in the case of a payment to be made by such Lender, the greater of the Federal Funds Effective Rate and a rate determined by the Administrative Agent in accordance with banking industry rules on interbank compensation, plus any administrative, processing or similar fees customarily charged by Administrative Agent in connection with the foregoing, and (ii) in the case of a payment to be made by the Borrower, the interest rate applicable to the Type of Loan elected by the Borrower with respect to such amount. If the Borrower and such Lender shall pay such interest to the Administrative Agent for the same or an overlapping period, the Administrative Agent shall promptly remit to the Borrower the amount of such interest paid by the Borrower for such period. If such Lender pays its share of the applicable Borrowing to the Administrative Agent, then the amount so paid shall constitute such Lender’s Loan included in such Borrowing. Any payment by the Borrower shall be without prejudice to any claim the Borrower may have against a Lender that shall have failed to make such payment to the Administrative Agent.
Section 2.06. Termination and Reduction of Aggregate Maximum Revolving Credit Amount.
(a) Scheduled Termination of Revolving Commitments. Unless previously terminated, the Revolving Commitments shall terminate on the Maturity Date. If at any time the Aggregate Maximum Revolving Credit Amount or the Borrowing Base is terminated or reduced to zero, then the Revolving Commitments shall terminate on the effective date of such termination or reduction.
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(b) Optional Termination and Reduction of Aggregate Maximum Revolving Credit Amount.
(i) The Borrower may at any time terminate, or from time to time reduce, the Aggregate Maximum Revolving Credit Amount; provided that (A) each reduction of the Aggregate Maximum Revolving Credit Amount shall be in an amount that is an integral multiple of $1,000,000 and not less than $5,000,000 and (B) the Borrower shall not terminate or reduce the Aggregate Maximum Revolving Credit Amounts if, after giving effect to any concurrent prepayment of the Loans in accordance with Section 3.04(c), the total Revolving Credit Exposures would exceed the total Revolving Commitments.
(ii) The Borrower shall notify the Administrative Agent of any election to terminate or reduce the Aggregate Maximum Revolving Credit Amount under Section 2.06(b)(i) at least three Business Days prior to the effective date of such termination or reduction (or such shorter amount of time as may be agreed by the Administrative Agent), specifying such election and the effective date thereof. Promptly following receipt of any notice, the Administrative Agent shall advise the Lenders of the contents thereof. Each notice delivered by the Borrower pursuant to this Section 2.06(b)(ii) shall be irrevocable. Any termination or reduction of the Aggregate Maximum Revolving Credit Amount shall be permanent and may not be reinstated. Each reduction of the Aggregate Maximum Revolving Credit Amount shall be made ratably among the Lenders in accordance with each Lender’s Revolving Applicable Percentage.
Section 2.07. Borrowing Base.
(a) Borrowing Base. The term “Borrowing Base” means, as of the date of the determination thereof, the designated loan value as calculated by all of the Lenders or the Required Lenders (and including any Lenders who have been deemed to have approved such Borrowing Base), as applicable, in their sole discretion assigned to the discounted present value of future net income accruing to the Mortgaged Property, based upon the Lenders’ in-house evaluation of the Mortgaged Property. The Lenders’ or Required Lenders’ (and including any Lenders who have been deemed to have approved such Borrowing Base) determination of the Borrowing Base will be made in accordance with then-current practices, economic and pricing parameters, methodology, assumptions, and customary procedures and standards established by each such Lender from time to time for its petroleum industry customers. For the period from and including the Closing Date to but excluding the first Redetermination Date thereafter, the amount of the Borrowing Base shall be $225,000,000, unless otherwise adjusted pursuant to the terms of this Agreement.
(b) Scheduled and Interim Redeterminations. The Borrowing Base shall be redetermined semi-annually in accordance with this Section 2.07 (a “Scheduled Redetermination”), and, subject to Section 2.07(d), such redetermined Borrowing Base shall become effective and applicable to the Borrower, the Agents, the Issuing Bank and the Lenders on or about May 1 and November 1 of each year, provided that the first Scheduled Redetermination shall become effective on or about February 1, 2021 (and thereafter, semi-annually beginning on May 1, 2021). For the avoidance of doubt, there shall be no Scheduled Redetermination and no Interim Redetermination prior to February 1, 2021. If the Term Loan is prepaid in full in cash prior to the first anniversary of the Closing Date in accordance with the terms of this Agreement, the Borrower may by notifying the Administrative Agent within 30 days of the full prepayment of the Term Loan, elect to cause the Borrowing Base to be redetermined in accordance with this Section 2.07 (a “Conditional Interim Redetermination”). In addition, at any time following the first Scheduled Redetermination to become effective on or about February 1, 2021, the Borrower may,
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by notifying the Administrative Agent thereof, one time during any 12-month period, and the Administrative Agent may, one time during any 12-month period, at the direction of the Required Lenders, by notifying the Borrower thereof, each elect to cause the Borrowing Base to be redetermined between Scheduled Redeterminations (an “Annual Interim Redetermination,” and together with a Conditional Interim Redetermination, an “Interim Redetermination”) in accordance with this Section 2.07.
(c) Scheduled and Interim Redetermination Procedure.
(i) Each Scheduled Redetermination and each Interim Redetermination shall be effectuated as follows: Upon receipt by the Administrative Agent of (A) the Reserve Report and the certificate required to be delivered by the Borrower to the Administrative Agent, in the case of a Scheduled Redetermination to become effective on or about February 1, 2021, a Reserve Report prepared by a chief engineer of the Borrower and in the case of any other Scheduled Redetermination, pursuant to Section 8.12(a) and (c), and, in the case of an Interim Redetermination, pursuant to Section 8.12(b) and (c), and (B) such other reports, data and supplemental information, including, without limitation, the information provided pursuant to Section 8.12(c), as may, from time to time, be reasonably requested by the Required Lenders (the Reserve Report, such certificate and such other reports, data and supplemental information being the “Engineering Reports”), the Administrative Agent shall evaluate the information contained in the Engineering Reports and shall, in its sole discretion, propose a new Borrowing Base (the “Proposed Borrowing Base”) based upon such information and such other information (including, without limitation, the status of title information with respect to the Oil and Gas Properties as described in the Engineering Reports and the existence of any other Debt) as the Administrative Agent deems appropriate in its sole discretion and consistent with its normal oil and gas lending criteria as it exists at the particular time. In no event shall the Proposed Borrowing Base exceed the Aggregate Maximum Revolving Credit Amount.
(ii) The Administrative Agent shall notify the Borrower and the Lenders of the Proposed Borrowing Base (the “Proposed Borrowing Base Notice”):
(A) in the case of a Scheduled Redetermination (x) if the Administrative Agent shall have received the Engineering Reports required to be delivered by the Borrower pursuant to Section 8.12(a) and (c) in a timely and complete manner, then on or before April 1st and October 1st of such year following the date of delivery or (y) if the Administrative Agent shall not have received the Engineering Reports required to be delivered by the Borrower pursuant to Section 8.12(a) and (c) in a timely and complete manner, then promptly after the Administrative Agent has received complete Engineering Reports from the Borrower and has had a reasonable opportunity to determine the Proposed Borrowing Base in accordance with Section 2.07(c)(i); and
(B) in the case of an Interim Redetermination, promptly, and in any event, within fifteen (15) days after the Administrative Agent has received the required Engineering Reports.
(iii) Any Proposed Borrowing Base that would increase the Borrowing Base then in effect must be approved by all of the Lenders as provided in this Section 2.07(c)(iii); and any Proposed Borrowing Base that would decrease or maintain the Borrowing Base then in effect must be approved by the Required Lenders as provided in this
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Section 2.07(c)(iii). Upon receipt of the Proposed Borrowing Base Notice, each Lender shall have fifteen (15) days to agree with the Proposed Borrowing Base or disagree with the Proposed Borrowing Base by proposing an alternate Borrowing Base. All decisions regarding the Borrowing Base shall be made by each Lender in its sole discretion. If, at the end of such fifteen (15) days, any Lender has not communicated its approval or disapproval in writing to the Administrative Agent, such non-response shall be deemed to be an approval of the Proposed Borrowing Base. If, at the end of such 15-day period, all of the Lenders, in the case of a Proposed Borrowing Base that would increase the Borrowing Base then in effect, or the Required Lenders, in the case of a Proposed Borrowing Base that would decrease or maintain the Borrowing Base then in effect, have approved or been deemed to have approved, as aforesaid, then the Proposed Borrowing Base shall become the new Borrowing Base, effective on the date specified in Section 2.07(d). If, however, at the end of such 15-day period, all of the Lenders or the Required Lenders, as applicable, have not approved or been deemed to have approved, as aforesaid, the Proposed Borrowing Base, then the Administrative Agent shall poll the Lenders to ascertain the highest Borrowing Base then acceptable to all of the Lenders or the Required Lenders, as applicable, and such amount shall become the new Borrowing Base, effective on the date specified in Section 2.07(d).
(d) Effectiveness of a Redetermined Borrowing Base. After a redetermined Borrowing Base is approved or is deemed to have been approved by all of the Lenders or the Required Lenders, as applicable, pursuant to Section 2.07(c)(iii), the Administrative Agent shall notify the Borrower and the Lenders of the amount of the redetermined Borrowing Base (the “New Borrowing Base Notice”), and such amount shall become the new Borrowing Base, effective and applicable to the Borrower, the Administrative Agent, the Issuing Bank and the Lenders, on the Business Day next succeeding delivery of such notice.
Such amount shall then become the Borrowing Base until the next Scheduled Redetermination Date, the next Interim Redetermination Date or the next adjustment to the Borrowing Base under Section 2.07(e) or otherwise hereunder, whichever occurs first. Notwithstanding the foregoing, no Scheduled Redetermination or Interim Redetermination shall become effective until the New Borrowing Base Notice related thereto is received by the Borrower.
(e) Borrowing Base Reductions.
(i) If the sum of (A) the Recognized Value of the aggregate of Asset Dispositions occurring in any period between Scheduled Redeterminations (determined after taking into account the attributed value (as determined by the Administrative Agent (in its sole discretion)) of any concurrent acquisitions of and other investments in Oil and Gas Properties by the Borrower and its Subsidiaries approved by the Administrative Agent (in its sole discretion) and with respect to which the Borrower has delivered a Reserve Report in accordance with Section 8.12(b)) at least 30 days prior to the consummation of such acquisition or investment (or such shorter time as may be agreed by to by the Administrative Agent)), plus (B) the Recognized Value of Swap Terminations occurring in the same period, determined after taking into account the attributed value (as determined by the Administrative Agent (in its sole discretion)) of any other similar Swap Agreements executed contemporaneously with the taking of such actions acceptable to the Administrative Agent) exceeds 5% of the then effective Borrowing Base, then the Borrowing Base shall be reduced in an amount determined by the Administrative Agent in its sole discretion in accordance with the standards set forth in Section 2.07(a) taking into account both Recognized Value or attributed value of such Asset Dispositions and the
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Recognized Value given to such Swap Agreements. Any redetermination of the Borrowing Base pursuant to this Section 2.07(e) shall not be considered an Interim Redetermination requested by Administrative Agent within the meaning of Section 2.07(b).
(ii) The Borrowing Base may be reduced as provided in Section 8.13(c).
(f) Borrowing Base Deficiency.
(i) If, at any time, a Borrowing Base Deficiency exists, then Administrative Agent shall give notice to Borrower of such Borrowing Base Deficiency (such notice, a “Borrowing Base Deficiency Notice”), and Borrower shall within fifteen (15) days following receipt of such Borrowing Base Deficiency Notice (A) elect whether to (1) prepay an amount which would, if prepaid immediately, reduce the total Revolving Credit Exposures to the amount of the Borrowing Base, (2) mortgage such other Oil and Gas Properties as are acceptable to the Required Lenders, pursuant to security documents acceptable to Administrative Agent having Recognized Values which, in the opinion of the Required Lenders, based upon the Required Lenders’ evaluation of the engineering data provided them, taken in the aggregate are sufficient to increase the Borrowing Base to an amount at least equal to the total Revolving Credit Exposures, or (3) do any combination of the foregoing as is acceptable to Administrative Agent such that the Borrowing Base is an amount at least equal to the total Revolving Credit Exposure and (B) shall take such action elected pursuant to clause (A). If Borrower fails to make an election within fifteen (15) days after Borrower’s receipt of the Borrowing Base Deficiency Notice, then Borrower shall be deemed to have selected the prepayment option specified in clause (A)(1) above.
(ii) Borrower shall deliver such prepayments or mortgages of additional Oil and Gas Properties in accordance with its election (or deemed election) pursuant to clause (f)(i) above as follows:
(A) Prepayment Elections. If Borrower elects (or is deemed to have elected) to prepay an amount in accordance with clause (f)(i)(A)(1) above, then Borrower may make such prepayment in six equal consecutive monthly installments with the first monthly installment due and payable to the Administrative Agent within forty-five (45) days after Borrower’s notice of its election (or date of deemed election) and continuing on the same day of each month thereafter.
(B) Elections to Mortgage Additional Oil and Gas Properties. If Borrower elects to mortgage additional oil and gas properties in accordance with clause (f)(i)(A)(2) above, then (1) such property shall be acceptable to Administrative Agent and the Required Lenders with Recognized Values determined by Administrative Agent and the Required Lenders in accordance with this Section 2.07 and (2) Borrower shall execute, acknowledge and deliver to Administrative Agent security instruments acceptable to Administrative Agent within forty-five (45) days after Borrower’s notice of its election (or such longer time as determined by Administrative Agent); provided, however: (x) if none of the additional Oil and Gas Properties offered by the Borrower are acceptable to the Required Lenders, Borrower shall be deemed to have elected the prepayment option specified in clause (f)(i)(A)(1) (and Borrower shall make such prepayment in accordance with clause (f)(ii)(A)); and (y) if the aggregate Recognized Values of additional Oil and Gas Properties which are acceptable to the Required Lenders
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are insufficient to eliminate the Borrowing Base Deficiency, then Borrower shall be deemed to have selected the option specified in clause (f)(i)(A)(3) (and Borrower shall make prepayment and deliver security instruments as provided clause (f)(ii)(A)(3)).
(C) Combination Elections. If Borrower elects (or is deemed to have elected) to eliminate the Borrowing Base Deficiency by a combination of prepayment and mortgaging of additional Oil and Gas Properties in accordance with clause (f)(i)(A)(3), then within forty-five (45) days after Borrower’s notice of its election (or date of deemed election) (or such longer time as determined by Administrative Agent), Borrower shall execute, acknowledge and deliver to Administrative Agent security instruments reasonably acceptable to Administrative Agent covering such additional Oil and Gas Properties and pay Administrative Agent the amount by which the Borrowing Base Deficiency exceeds the Recognized Values of such additional Oil and Gas Properties in one installment within forty-five (45) days after Borrower’s notice of its election (or date of deemed election) or, if no Event of Default exists, in six equal consecutive monthly installments beginning within forty-five (45) days after notice of its election (or date of deemed election) and continuing on the same day of each month thereafter.
The failure of the Borrower to perform any of the actions elected to eliminate the Borrowing Base Deficiency pursuant to this Section 2.07(f) shall constitute an Event of Default under Section 10.01.
Section 2.08. Letters of Credit.
(a) General. Upon satisfaction of the conditions in Section 6.01 and Section 6.02 (other than the delivery of a request for issuance under Section 2.08(b)) on or prior to the Closing Date, each Existing Letter of Credit will, automatically and without any action of the part of any Person, be deemed to be a Letter of Credit for all purposes of this Agreement and the other Loan Documents. Subject to the terms and conditions set forth herein, the Borrower may request the issuance of dollar denominated Letters of Credit for its own account or for the account of any of its Subsidiaries, in a form reasonably acceptable to the Administrative Agent and the Issuing Bank, at any time and from time to time during the Availability Period; provided that (i) the Borrower may not request the issuance, amendment, renewal or extension of Letters of Credit hereunder if a Borrowing Base Deficiency exists at such time or would exist as a result thereof and (ii) the minimum amount of any such Letter of Credit shall be $50,000, provided further that, the Issuing Bank in respect of Existing Letters of Credit shall not issue any additional Letters of Credit except to the extent that it otherwise becomes, or continues as an Issuing Bank hereunder, and, unless agreed by it, shall not be required to amend, renew or extend an Existing Letter of Credit. In the event of any inconsistency between the terms and conditions of this Agreement and the terms and conditions of any form of letter of credit application or other agreement submitted by the Borrower to, or entered into by the Borrower with, the Issuing Bank relating to any Letter of Credit, the terms and conditions of this Agreement shall control.
(b) Notice of Issuance, Amendment, Renewal, Extension; Certain Conditions. To request the issuance of a Letter of Credit (or the amendment, renewal or extension of an outstanding Letter of Credit), the Borrower shall hand deliver or send by facsimile (or transmit by electronic communication, if arrangements for doing so have been approved by the Issuing Bank) to the Issuing Bank and the Administrative Agent (not less than five (5) Business Days in advance of the requested date of issuance, amendment, renewal or extension) a notice:
(i) requesting the issuance of a Letter of Credit or identifying the Letter of Credit to be amended, renewed or extended;
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(ii) specifying the date of issuance, amendment, renewal or extension (which shall be a Business Day);
(iii) specifying the date on which such Letter of Credit is to expire (which shall comply with Section 2.08(c));
(iv) specifying the amount of such Letter of Credit;
(v) specifying the name and address of the beneficiary thereof and such other information as shall be necessary to prepare, amend, renew or extend such Letter of Credit; and
(vi) specifying the amount of the then effective Borrowing Base and whether a Borrowing Base Deficiency exists at such time, the current total Revolving Credit Exposures (without regard to the requested Letter of Credit or the requested amendment, renewal or extension of an outstanding Letter of Credit) and the pro forma total Revolving Credit Exposures (giving effect to the requested Letter of Credit or the requested amendment, renewal or extension of an outstanding Letter of Credit).
Each notice shall constitute a representation by the Borrower that after giving effect to the requested issuance, amendment, renewal or extension, as applicable, (i) the LC Exposure shall not exceed the LC Commitment and (ii) the total Revolving Credit Exposures shall not exceed the total Revolving Commitments (i.e. the lesser of the Aggregate Maximum Revolving Credit Amount and the then effective Borrowing Base).
If requested by the Issuing Bank, the Borrower also shall submit a letter of credit application on the Issuing Bank’s standard form in connection with any request for a Letter of Credit.
(c) Expiration Date. Each Letter of Credit shall expire at or prior to the close of business on the earlier of (i) the date that is eighteen (18) months after the date of the issuance of such Letter of Credit (or, in the case of any renewal or extension thereof, (18) eighteen months after such renewal or extension) and (ii) the date that is five (5) Business Days prior to the Maturity Date; provided, however, that a Letter of Credit may, upon the request of the Borrower, include a provision whereby such Letter of Credit shall be renewed automatically for additional consecutive periods of twelve (12) months or less (but not beyond the date that is five (5) Business Days prior to the Maturity Date) unless the Issuing Bank notifies the beneficiary thereof at least thirty (30) days (or such longer period as may be specified in such Letter of Credit) prior to the then-applicable expiration date that such Letter of Credit will not be renewed.
(d) Participations. By the issuance of a Letter of Credit (or an amendment to a Letter of Credit increasing the amount thereof) and without any further action on the part of the Issuing Bank or the Lenders, the Issuing Bank hereby grants to each Lender, and each Lender hereby acquires from the Issuing Bank, a participation in such Letter of Credit equal to such Lender’s Revolving Applicable Percentage of the aggregate amount available to be drawn under such Letter of Credit. In consideration and in furtherance of the foregoing, each Lender hereby absolutely and unconditionally agrees to pay to the Administrative Agent, for the account of the Issuing Bank, such Lender’s Revolving Applicable Percentage of each LC Disbursement made by the Issuing Bank and not reimbursed by the Borrower on the date due as provided in Section 2.08(e), or of any
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reimbursement payment required to be refunded to the Borrower for any reason. Each Lender acknowledges and agrees that its obligation to acquire participations pursuant to this Section 2.08(d) in respect of Letters of Credit is absolute and unconditional and shall not be affected by any circumstance whatsoever, including any amendment, renewal or extension of any Letter of Credit or the occurrence and continuance of a Default, the existence of a Borrowing Base Deficiency or reduction or termination of the Revolving Commitments, and that each such payment shall be made without any offset, abatement, withholding or reduction whatsoever.
(e) Reimbursement. If the Issuing Bank shall make any LC Disbursement in respect of a Letter of Credit, the Borrower shall reimburse such LC Disbursement by paying to the Administrative Agent an amount equal to such LC Disbursement not later than 12:00 noon, on the date that such LC Disbursement is made, if the Borrower shall have received notice of such LC Disbursement prior to 10:00 a.m., on such date, or, if such notice has not been received by the Borrower prior to such time on such date, then not later than 12:00 noon, on (i) the Business Day that the Borrower receives such notice, if such notice is received prior to 10:00 a.m., on the day of receipt, or (ii) the Business Day immediately following the day that the Borrower receives such notice, if such notice is not received prior to such time on the day of receipt; provided that if such LC Disbursement is not less than $1,000,000, the Borrower shall, subject to the conditions to Borrowing set forth herein, be deemed to have requested, and the Borrower does hereby request under such circumstances, that such payment be financed with an ABR Borrowing in an equivalent amount and, to the extent so financed, the Borrower’s obligation to make such payment shall be discharged and replaced by the resulting ABR Borrowing. If the Borrower fails to make such payment when due, the Administrative Agent shall notify each Lender of the applicable LC Disbursement, the payment then due from the Borrower in respect thereof and such Lender’s Revolving Applicable Percentage thereof. Promptly following receipt of such notice, each Lender shall pay to the Administrative Agent its Revolving Applicable Percentage of the payment then due from the Borrower, in the same manner as provided in Section 2.05 with respect to Revolving Loans made by such Lender (and Section 2.05 shall apply, mutatis mutandis, to the payment obligations of the Lenders), and the Administrative Agent shall promptly pay to the Issuing Bank the amounts so received by it from the Lenders. Promptly following receipt by the Administrative Agent of any payment from the Borrower pursuant to this Section 2.08(e), the Administrative Agent shall distribute such payment to the Issuing Bank or, to the extent that Lenders have made payments pursuant to this Section 2.08(e) to reimburse the Issuing Bank, then to such Lenders and the Issuing Bank as their interests may appear. Any payment made by a Lender pursuant to this Section 2.08(e) to reimburse the Issuing Bank for any LC Disbursement (other than the funding of ABR Loans as contemplated above) shall not constitute a Loan and shall not relieve the Borrower of its obligation to reimburse such LC Disbursement.
(f) Obligations Absolute. The Borrower’s obligation to reimburse LC Disbursements as provided in Section 2.08(e) shall be absolute, unconditional and irrevocable, and shall be performed strictly in accordance with the terms of this Agreement under any and all circumstances whatsoever and irrespective of (i) any lack of validity or enforceability of any Letter of Credit, any Letter of Credit Agreement or this Agreement, or any term or provision therein, (ii) any draft or other document presented under a Letter of Credit proving to be forged, fraudulent or invalid in any respect or any statement therein being untrue or inaccurate in any respect, (iii) payment by the Issuing Bank under a Letter of Credit against presentation of a draft or other document that does not comply with the terms of such Letter of Credit or any Letter of Credit Agreement, or (iv) any other event or circumstance whatsoever, whether or not similar to any of the foregoing, that might, but for the provisions of this Section 2.08(f), constitute a legal or equitable discharge of, or provide a right of setoff against, the Borrower’s obligations hereunder. Neither the Administrative Agent, the Lenders nor the Issuing Bank, nor any of their Related Parties shall have any liability or
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responsibility by reason of or in connection with the issuance or transfer of any Letter of Credit or any payment or failure to make any payment thereunder (irrespective of any of the circumstances referred to in the preceding sentence), or any error, omission, interruption, loss or delay in transmission or delivery of any draft, notice or other communication under or relating to any Letter of Credit (including any document required to make a drawing thereunder), any error in interpretation of technical terms or any consequence arising from causes beyond the control of the Issuing Bank; provided that the foregoing shall not be construed to excuse the Issuing Bank from liability to the Borrower to the extent of any direct damages (as opposed to consequential damages, claims in respect of which are hereby waived by the Borrower to the extent permitted by applicable law) suffered by the Borrower that are caused by the Issuing Bank’s failure to exercise care when determining whether drafts and other documents presented under a Letter of Credit comply with the terms thereof. The parties hereto expressly agree that, in the absence of gross negligence or willful misconduct on the part of the Issuing Bank (as finally determined by a court of competent jurisdiction), the Issuing Bank shall be deemed to have exercised all requisite care in each such determination. In furtherance of the foregoing and without limiting the generality thereof, the parties agree that, with respect to documents presented which appear on their face to be in substantial compliance with the terms of a Letter of Credit, the Issuing Bank may, in its sole discretion, either accept and make payment upon such documents without responsibility for further investigation, regardless of any notice or information to the contrary, or refuse to accept and make payment upon such documents if such documents are not in strict compliance with the terms of such Letter of Credit.
(g) Disbursement Procedures. The Issuing Bank shall, promptly following its receipt thereof, examine all documents purporting to represent a demand for payment under a Letter of Credit. The Issuing Bank shall promptly notify the Administrative Agent and the Borrower by telephone (confirmed in writing or by facsimile or electronic transmission) of such demand for payment and whether the Issuing Bank has made or will make an LC Disbursement thereunder; provided that any failure to give or delay in giving such notice shall not relieve the Borrower of its obligation to reimburse the Issuing Bank and the Lenders with respect to any such LC Disbursement.
(h) Interim Interest. If the Issuing Bank shall make any LC Disbursement, then, until the Borrower shall have reimbursed the Issuing Bank for such LC Disbursement (either with its own funds or a Borrowing under Section 2.08(e)), the unpaid amount thereof shall bear interest, for each day from and including the date such LC Disbursement is made to but excluding the date that the Borrower reimburses such LC Disbursement, at the rate per annum then applicable to ABR Loans. Interest accrued pursuant to this Section 2.08(h) shall be for the account of the Issuing Bank, except that interest accrued on and after the date of payment by any Lender pursuant to Section 2.08(e) to reimburse the Issuing Bank shall be for the account of such Lender to the extent of such payment.
(i) Replacement of the Issuing Bank. The Issuing Bank may be replaced at any time by written agreement among the Borrower, the Administrative Agent, the replaced Issuing Bank and the successor Issuing Bank. The Administrative Agent shall notify the Lenders of any such replacement of the Issuing Bank. At the time any such replacement shall become effective, the Borrower shall pay all unpaid fees accrued for the account of the replaced Issuing Bank pursuant to Section 3.05(b). From and after the effective date of any such replacement, (i) the successor Issuing Bank shall have all the rights and obligations of the Issuing Bank under this Agreement with respect to Letters of Credit to be issued thereafter and (ii) references herein to the term “Issuing Bank” shall be deemed to refer to such successor or to any previous Issuing Bank, or to such successor and all previous Issuing Banks, as the context shall require. After the replacement of the
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Issuing Bank hereunder, the replaced Issuing Bank shall remain a party hereto and shall continue to have all the rights and obligations of the Issuing Bank under this Agreement with respect to Letters of Credit issued by it prior to such replacement, but shall not be required to issue additional Letters of Credit.
(j) Cash Collateral – Default. If (i) any Event of Default shall occur and be continuing and the Borrower receives notice from the Administrative Agent or the Required Lenders demanding the deposit of cash collateral pursuant to this Section 2.08(j), or (ii) the Borrower is required to pay to the Administrative Agent the excess attributable to an LC Exposure in connection with any prepayment pursuant to Section 3.04(c), then the Borrower shall deposit, in an account with the Administrative Agent (the “LC Collection Account”), in the name of the Administrative Agent and for the benefit of the Lenders, an amount in cash equal to, in the case of an Event of Default, the LC Exposure, and in the case of a payment required by Section 3.04(c), the amount of such excess as provided in Section 3.04(c), as of such date plus any accrued and unpaid interest thereon; provided that the obligation to deposit such cash collateral shall become effective immediately, and such deposit shall become immediately due and payable, without demand or other notice of any kind, upon the occurrence of any Event of Default with respect to the Borrower or any Subsidiary described in Section 10.01(h) or Section 10.01(i). The Borrower hereby grants to the Administrative Agent, for the benefit of the Issuing Bank and the Lenders, an exclusive first priority and continuing perfected security interest in and Lien on the LC Collection Account and all cash, checks, drafts, certificates and instruments, if any, from time to time deposited or held in the LC Collection Account, all deposits or wire transfers made thereto, any and all investments purchased with funds deposited in such account, all interest, dividends, cash, instruments, financial assets and other Property from time to time received, receivable or otherwise payable in respect of, or in exchange for, any or all of the foregoing, and all proceeds, products, accessions, rents, profits, income and benefits therefrom, and any substitutions and replacements therefor. The Borrower’s obligation to deposit amounts pursuant to this Section 2.08(j) shall be absolute and unconditional, without regard to whether any beneficiary of any such Letter of Credit has attempted to draw down all or a portion of such amount under the terms of a Letter of Credit, and, to the fullest extent permitted by applicable law, shall not be subject to any defense or be affected by a right of set-off, counterclaim or recoupment which the Borrower or any of its Subsidiaries may now or hereafter have against any such beneficiary, the Issuing Bank, the Administrative Agent, the Lenders or any other Person for any reason whatsoever. Such deposit shall be held as collateral securing the payment and performance of the Borrower’s and the Guarantors’ obligations under this Agreement and the other Loan Documents. The Administrative Agent shall have exclusive dominion and control, including the exclusive right of withdrawal, over the LC Collection Account. Other than any interest earned on the investment of such deposits, which investments shall be made at the option and sole discretion of the Administrative Agent and at the Borrower’s risk and expense, such deposits shall not bear interest. Interest or profits, if any, on such investments shall accumulate in the LC Collection Account. Moneys in the LC Collection Account shall be applied by the Administrative Agent to reimburse the Issuing Bank for LC Disbursements for which it has not been reimbursed and, to the extent not so applied, shall be held for the satisfaction of the reimbursement obligations of the Borrower for the LC Exposure at such time or, if the maturity of the Loans has been accelerated, be applied to satisfy other obligations of the Borrower and the Guarantors under this Agreement or the other Loan Documents. If the Borrower is required to provide an amount of Cash Collateral hereunder as a result of the occurrence of an Event of Default, and the Borrower is not otherwise required to Cash Collateralize the excess attributable to an LC Exposure in connection with any prepayment pursuant to Section 3.04(c), then such amount (to the extent not applied as aforesaid) shall be returned to the Borrower within three (3) Business Days after all Events of Default have been cured or waived.
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(k) Cash Collateral – Defaulting Lender. At any time that there shall exist a Defaulting Lender, within one Business Day following the written request of the Administrative Agent or the Issuing Bank (with a copy to the Administrative Agent) the Borrower shall Cash Collateralize the Issuing Bank’s Fronting Exposure with respect to such Defaulting Lender (determined after giving effect to Section 2.10(a)(iv) and any Cash Collateral provided by such Defaulting Lender) in an amount not less than the Minimum Collateral Amount.
(i) Grant of Security Interest. The Borrower, and to the extent provided by any Defaulting Lender, such Defaulting Lender, hereby grants to the Administrative Agent, for the benefit of the Issuing Bank, and agrees to maintain, a first priority security interest in all such Cash Collateral as security for the Defaulting Lender’s obligation to fund participations in respect of LC Exposure, to be applied pursuant to clause (ii) below. If at any time the Administrative Agent determines that Cash Collateral is subject to any right or claim of any Person other than the Administrative Agent and the Issuing Bank as herein provided, or that the total amount of such Cash Collateral is less than the Minimum Collateral Amount, the Borrower will, promptly upon demand by the Administrative Agent, pay or provide to the Administrative Agent additional Cash Collateral in an amount sufficient to eliminate such deficiency (after giving effect to any Cash Collateral provided by the Defaulting Lender).
(ii) Application. Notwithstanding anything to the contrary contained in this Agreement, Cash Collateral provided under this Section 2.08(k) or Section 2.10 in respect of Letters of Credit shall be applied to the satisfaction of the Defaulting Lender’s obligation to fund participations in respect of LC Exposure (including, as to Cash Collateral provided by a Defaulting Lender, any interest accrued on such obligation) for which the Cash Collateral was so provided, prior to any other application of such property as may otherwise be provided for herein.
(iii) Termination of Requirement. Cash Collateral (or the appropriate portion thereof) provided to reduce the Issuing Bank’s Fronting Exposure shall no longer be required to be held as Cash Collateral pursuant to this Section 2.08(k) following (A) the elimination of the applicable Fronting Exposure (including, without limitation, by the termination of Defaulting Lender status of the applicable Lender or reduction of the Fronting Exposure), or (B) the determination by the Administrative Agent and the Issuing Bank that there exists excess Cash Collateral; provided that, subject to Section 2.10, the Person providing Cash Collateral and the Issuing Bank may agree that Cash Collateral shall be held to support future anticipated Fronting Exposure or other obligations and provided further that to the extent that such Cash Collateral was provided by the Borrower, such cash collateral shall remain subject to the security interest granted pursuant to the Loan Documents.
(iv) Any payment of Cash Collateral by the Borrower shall be without prejudice to any claim the Borrower may have against the applicable Defaulting Lender.
Section 2.09. Collateral.
(a) Mortgaged Property. The payment and performance of the Notes and all of the other Obligations hereunder and under the Loan Documents and under the Secured Swap Agreements and under Secured Treasury Management Agreements shall be secured by a first priority perfected Lien (subject to Excepted Liens) against the interest of the Borrower and each Subsidiary in a portion of their Oil and Gas Properties, the Recognized Value of which represents
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100% of the Recognized Value of all of their proved Oil and Gas Properties, pursuant to the terms of one or more Mortgages in favor of the Administrative Agent for the ratable benefit of the Secured Parties, which Mortgages shall be reasonably satisfactory in form and substance to the Administrative Agent.
(b) Guarantees and Pledges of Equity Interests. The payment and performance of the Notes and all of the other Obligations hereunder and under the Loan Documents, and under the Secured Swap Agreements and Secured Treasury Management Agreements, (A) shall be unconditionally guaranteed by the Parent, the Intermediate Entities and each Subsidiary of the Borrower pursuant to one or more Guaranty Agreements, and (B) shall be secured by a first priority perfected Lien (subject to Excepted Liens) against the Equity Interests of the Borrower and each Subsidiary of the Borrower pursuant to a Pledge Agreement. Reference is made to Section 8.14 of this Agreement for further provisions with respect to additional Guarantors and additional collateral.
(c) Personal Property of Borrowers and Subsidiaries. The payment and performance of the Notes and all of the other Obligations hereunder and under the Loan Documents and under Secured Swap Agreements and under Secured Treasury Management Agreements shall also be secured by a first priority perfected Lien (subject to Excepted Liens) against all personal property of the Parent, the Intermediate Entities, the Borrower and each Subsidiary of the Borrower pursuant to the terms of one or more Security Agreements in favor of the Administrative Agent for the ratable benefit of the Secured Parties which shall be in form and substance reasonably acceptable to the Administrative Agent.
Section 2.10. Defaulting Lenders.
(a) Defaulting Lender Adjustments. Notwithstanding anything to the contrary contained in this Agreement, if any Lender becomes a Defaulting Lender, then, until such time as such Lender is no longer a Defaulting Lender, to the extent permitted by applicable law:
(i) Waivers and Amendments. Such Defaulting Lender’s right to approve or disapprove any amendment, waiver or consent with respect to this Agreement shall be restricted as set forth in the definition of Required Lenders and in Section 12.02.
(ii) Defaulting Lender Waterfall. Any payment of principal, interest, fees or other amounts received by the Administrative Agent for the account of such Defaulting Lender (whether voluntary or mandatory, at maturity, pursuant to Article X or otherwise) or received by the Administrative Agent from a Defaulting Lender pursuant to Section 12.08 shall be applied at such time or times as may be determined by the Administrative Agent as follows: first, to the payment of any amounts owing by such Defaulting Lender to the Administrative Agent hereunder; second, to the payment on a pro rata basis of any amounts owing by such Defaulting Lender to the Issuing Bank hereunder; third, to Cash Collateralize the Issuing Bank’s Fronting Exposure with respect to such Defaulting Lender in accordance with Section 2.08(k); fourth, as the Borrower may request (so long as no Event of Default exists), to the funding of any Loan in respect of which such Defaulting Lender has failed to fund its portion thereof as required by this Agreement, as determined by the Administrative Agent; fifth, if so determined by the Administrative Agent and the Borrower, to be held in a deposit account and released pro rata in order to (x) satisfy such Defaulting Lender’s potential future funding obligations with respect to Loans under this Agreement and (y) Cash Collateralize the Issuing Bank’s future Fronting Exposure with respect to such Defaulting Lender with respect to future Letters of Credit
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issued under this Agreement, in accordance with Section 2.08(k); sixth, to the payment of any amounts owing to the Lenders or the Issuing Bank as a result of any judgment of a court of competent jurisdiction obtained by any Lender or the Issuing Bank against such Defaulting Lender as a result of such Defaulting Lender’s breach of its obligations under this Agreement; seventh, so long as no Event of Default exists, to the payment of any amounts owing to the Borrower as a result of any judgment of a court of competent jurisdiction obtained by the Borrower against such Defaulting Lender as a result of such Defaulting Lender’s breach of its obligations under this Agreement; and eighth, to such Defaulting Lender or as otherwise directed by a court of competent jurisdiction; provided that if (x) such payment is a payment of the principal amount of any Loans or LC Disbursements in respect of which such Defaulting Lender has not fully funded its appropriate share, and (y) such Loans were made or the related Letters of Credit were issued at a time when the conditions set forth in Section 6.02 were satisfied or waived, such payment shall be applied solely to pay the Loans of, and LC Disbursements owed to, all Non-Defaulting Lenders on a pro rata basis prior to being applied to the payment of any Loans of, or LC Disbursements owed to, such Defaulting Lender until such time as all Loans and funded and unfunded participations in LC Exposure are held by the Lenders pro rata in accordance with the Commitments without giving effect to Section 2.10(a)(iv). Any payments, prepayments or other amounts paid or payable to a Defaulting Lender that are applied (or held) to pay amounts owed by a Defaulting Lender or to post cash collateral pursuant to this Section 2.10(a)(ii) shall be deemed paid to and redirected by such Defaulting Lender, and each Lender irrevocably consents hereto.
(iii) Certain Fees.
(A) No Defaulting Lender shall be entitled to receive any commitment fee under Section 3.05(a) for any period during which that Lender is a Defaulting Lender (and the Borrower shall not be required to pay any such fee that otherwise would have been required to have been paid to that Defaulting Lender).
(B) Each Defaulting Lender shall be entitled to receive fees under Section 3.05(b) for any period during which that Lender is a Defaulting Lender only to the extent allocable to its Applicable Percentage of the stated amount of Letters of Credit for which it has provided Cash Collateral pursuant to Section 2.08(k).
(C) With respect to any fee not required to be paid to any Defaulting Lender pursuant to clause (A) or (B) above, the Borrower shall (x) pay to each Non-Defaulting Lender that portion of any such fee otherwise payable to such Defaulting Lender with respect to such Defaulting Lender’s participation in LC Exposure that has been reallocated to such Non-Defaulting Lender pursuant to clause (iv) below, (y) pay to the Issuing Bank the amount of any such fee otherwise payable to such Defaulting Lender to the extent allocable to such Issuing Bank’s Fronting Exposure to such Defaulting Lender, and (z) not be required to pay the remaining amount of any such fee.
(iv) Reallocation of Participations to Reduce Fronting Exposure. All or any part of such Defaulting Lender’s participation in LC Exposure shall be reallocated among the Non-Defaulting Lenders in accordance with their respective Applicable Percentages (calculated without regard to such Defaulting Lender’s Commitment) but only to the extent
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that (x) the conditions set forth in Section 6.02 are satisfied at the time of such reallocation (and, unless the Borrower shall have otherwise notified the Administrative Agent at such time, the Borrower shall be deemed to have represented and warranted that such conditions are satisfied at such time), and (y) such reallocation does not cause the aggregate Revolving Credit Exposure of any Non-Defaulting Lender to exceed such Non-Defaulting Lender’s Maximum Revolving Credit Amount. Subject to Section 12.20, no reallocation hereunder shall constitute a waiver or release of any claim of any party hereunder against a Defaulting Lender arising from that Lender having become a Defaulting Lender, including any claim of a Non-Defaulting Lender as a result of such Non-Defaulting Lender’s increased exposure following such reallocation.
(v) Cash Collateral. If the reallocation described in clause (iv) above cannot, or can only partially, be effected, the Borrower shall, without prejudice to any right or remedy available to it hereunder or under law, Cash Collateralize the Issuing Bank’s Fronting Exposure in accordance with the procedures set forth in Section 2.08(k).
(b) Defaulting Lender Cure. If the Borrower, the Administrative Agent and Issuing Bank agree in writing that a Lender is no longer a Defaulting Lender, the Administrative Agent will so notify the parties hereto, whereupon as of the effective date specified in such notice and subject to any conditions set forth therein (which may include arrangements with respect to any cash collateral), that Lender will, to the extent applicable, purchase at par that portion of outstanding Loans of the other Lenders or take such other actions as the Administrative Agent may determine to be necessary to cause the Loans and funded and unfunded participations in Letters of Credit to be held pro rata by the Lenders in accordance with the Commitments (without giving effect to Section 2.10(a)(iv)), whereupon such Lender will cease to be a Defaulting Lender; provided that no adjustments will be made retroactively with respect to fees accrued or payments made by or on behalf of the Borrower while that Lender was a Defaulting Lender; and provided, further, that except to the extent otherwise expressly agreed by the affected parties, no change hereunder from Defaulting Lender to Lender will constitute a waiver or release of any claim of any party hereunder arising from that Lender’s having been a Defaulting Lender.
(c) New Letters of Credit. So long as any Lender is a Defaulting Lender, the Issuing Bank shall not be required to issue, extend, renew or increase any Letter of Credit unless it is satisfied that it will have no Fronting Exposure after giving effect thereto.
ARTICLE III
Payments of Principal and Interest; Prepayments; Fees
Section 3.01. Repayment of Loans.
(a) The Borrower hereby unconditionally promises to pay to the Administrative Agent for the account of each Lender the then unpaid principal amount of each Revolving Loan on the Termination Date.
(b) The Borrower hereby unconditionally promises to pay to the Administrative Agent for the ratable benefit of the Lenders, to the extent any Term Loans are outstanding at such time, (i) an amount equal to $5,000,000 (or, if less than $5,000,000, the remaining principal balance of Term Loans outstanding at such time) minus any amounts representing prepayments of the Term Loans pursuant to Section 3.04(a) that have not yet been applied towards this Section 3.01(b), to be applied in accordance with each such Lenders’ pro rata share of the Term Loans, which shall be due and payable on the last day of each fiscal quarter, commencing December 31, 2020 and (ii) the
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outstanding principal balance of the Term Loans (if any) on the Maturity Date, provided that there shall be no repayment under (i) if, at the last day of the relevant fiscal quarter, a Default, Event of Default or Borrowing Base Deficiency exists.
Section 3.02. Interest.
(a) ABR Loans. The Loans comprising each ABR Borrowing shall bear interest at the Alternate Base Rate plus the Applicable Margin, but in no event to exceed the Highest Lawful Rate.
(b) Eurodollar Loans. The Loans comprising each Eurodollar Borrowing shall bear interest at the Adjusted LIBO Rate for the Interest Period in effect for such Borrowing plus the Applicable Margin, but in no event to exceed the Highest Lawful Rate.
(c) Post-Default Rate. Notwithstanding the foregoing, (i) if an Event of Default has occurred and is continuing, or if any principal of or interest on any Loan or any fee or other amount payable by the Borrower or any Guarantor hereunder or under any other Loan Document is not paid when due, whether at stated maturity, upon acceleration or otherwise, and including any payments in respect of a Borrowing Base Deficiency under Section 3.04(c), then all Loans outstanding, in the case of an Event of Default, and such overdue amount, in the case of a failure to pay amounts when due, shall bear interest, after as well as before judgment, at a rate per annum equal to two percent (2%) plus the rate applicable to ABR Loans as provided in Section 3.02(a), but in no event to exceed the Highest Lawful Rate, and (ii) during any Borrowing Base Deficiency (after the expiration of the cure periods provided in Section 2.07(f)), all Loans outstanding at such time shall bear interest, after as well as before judgment, at the rate then applicable to such Loans, plus the Applicable Margin, if any, plus an additional two percent (2%), but in no event to exceed the Highest Lawful Rate.
(d) Interest Payment Dates. Accrued interest on each Loan shall be payable in arrears on each Interest Payment Date for such Loan and, in the case of Revolving Loans, on the Termination Date and in the case of Term Loans, on the Maturity Date; provided that (i) interest accrued pursuant to Section 3.02(c) shall be payable on demand, (ii) in the event of any repayment or prepayment of any Loan (other than an optional prepayment of an ABR Revolving Loan prior to the Termination Date), accrued interest on the principal amount repaid or prepaid shall be payable on the date of such repayment or prepayment, and (iii) in the event of any conversion of any Eurodollar Loan prior to the end of the current Interest Period therefor, accrued interest on such Loan shall be payable on the effective date of such conversion.
(e) Interest Rate Computations. All interest hereunder shall be computed on the basis of a year of 360 days, unless such computation would exceed the Highest Lawful Rate, in which case interest shall be computed on the basis of a year of 365 days (or 366 days in a leap year), except that interest computed by reference to the Alternate Base Rate at times when the Alternate Base Rate is based on the Prime Rate shall be computed on the basis of a year of 365 days (or 366 days in a leap year), and in each case shall be payable for the actual number of days elapsed (including the first day but excluding the last day). The applicable Alternate Base Rate, Adjusted LIBO Rate or LIBO Rate shall be determined by the Administrative Agent, and such determination shall be conclusive absent manifest error, and be binding upon the parties hereto.
(f) No Fees Paid to Defaulting Lenders. Notwithstanding any provision of this Agreement to the contrary, if a Lender becomes a Defaulting Lender, then all fees shall cease to accrue on the unfunded portion of the Commitment of such Defaulting Lender.
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Section 3.03. Alternate Rate of Interest; Benchmark Replacement. Unless and until a Benchmark Replacement is implemented in accordance with clause (b) below, if prior to the commencement of any Interest Period for a Eurodollar Borrowing:
(a) (i) the Administrative Agent determines (which determination shall be conclusive absent manifest error) that adequate and reasonable means do not exist for ascertaining the Adjusted LIBO Rate or the LIBO Rate for such Interest Period; or (ii) the Administrative Agent is advised by the Majority Lenders that the Adjusted LIBO Rate or LIBO Rate, as applicable, for such Interest Period will not adequately and fairly reflect the cost to such Lenders of making or maintaining their Loans included in such Borrowing for such Interest Period; then the Administrative Agent shall give notice thereof to the Borrower and the Lenders by telephone, facsimile or electronic transmission as promptly as practicable thereafter and, until the Administrative Agent notifies the Borrower and the Lenders that the circumstances giving rise to such notice no longer exist, (i) any Interest Election Request that requests the conversion of any Borrowing to, or continuation of any Borrowing as, a Eurodollar Borrowing shall be ineffective (and shall be deemed to be a request for an ABR Borrowing), and (ii) if any Borrowing Request requests a Eurodollar Borrowing, such Borrowing shall be made as an ABR Borrowing.
(b) Benchmark Replacement. Notwithstanding anything to the contrary herein or in any other Loan Document (and any Swap Agreement shall be deemed not to be a “Loan Document” for purposes of this Section 3.03), if a Benchmark Transition Event or an Early Opt-in Election, as applicable, and its related Benchmark Replacement Date have occurred prior to the Reference Time in respect of any setting of the then-current Benchmark, then (x) if a Benchmark Replacement is determined in accordance with clause (1) or (2) of the definition of “Benchmark Replacement” for such Benchmark Replacement Date, such Benchmark Replacement will replace such Benchmark for all purposes hereunder and under any Loan Document in respect of such Benchmark setting and subsequent Benchmark settings without any amendment to, or further action or consent of any other party to, this Agreement or any other Loan Document and (y) if a Benchmark Replacement is determined in accordance with clause (3) of the definition of “Benchmark Replacement” for such Benchmark Replacement Date, such Benchmark Replacement will replace such Benchmark for all purposes hereunder and under any Loan Document in respect of any Benchmark setting at or after 5:00 p.m. (New York City time) on the fifth (5th) Business Day after the date notice of such Benchmark Replacement is provided to the Lenders without any amendment to, or further action or consent of any other party to, this Agreement or any other Loan Document so long as the Administrative Agent has not received, by such time, written notice of objection to such Benchmark Replacement from Lenders comprising the Required Lenders.
(c) Benchmark Replacement Conforming Changes. In connection with the implementation of a Benchmark Replacement, the Administrative Agent will have the right to make Benchmark Replacement Conforming Changes from time to time and, notwithstanding anything to the contrary herein or in any other Loan Document, any amendments implementing such Benchmark Replacement Conforming Changes will become effective without any further action or consent of any other party to this Agreement or any other Loan Document.
(d) Notices; Standards for Decisions and Determinations. The Administrative Agent will promptly notify the Borrower and the Lenders of (i) any Benchmark Replacement Date and the related Benchmark Replacement, (ii) the effectiveness of any Benchmark Replacement Conforming Changes, (iii) the removal or reinstatement of any tenor of a Benchmark pursuant to clause (d) below and (iv) the commencement of any Benchmark Unavailability Period. For the avoidance of doubt, any notice required to be delivered by the Administrative Agent as set forth in this Section 3.03 may be provided, at the option of the Administrative Agent (in its sole discretion),
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in one or more notices and may be delivered together with, or as part of any amendment which implements any Benchmark Replacement or Benchmark Replacement Conforming Changes. Any determination, decision or election that may be made by the Administrative Agent or, if applicable, any Lender (or group of Lenders) pursuant to this Section 3.03 including any determination with respect to a tenor, rate or adjustment or of the occurrence or non-occurrence of an event, circumstance or date and any decision to take or refrain from taking any action or any selection, will be conclusive and binding absent manifest error and may be made in its or their sole discretion and without consent from any other party to this Agreement or any other Loan Document, except, in each case, as expressly required pursuant to this Section 3.03.
(e) Unavailability of Tenor of Benchmark. Notwithstanding anything to the contrary herein or in any other Loan Document, at any time (including in connection with the implementation of a Benchmark Replacement), (i) if the then-current Benchmark is a term rate (including Term SOFR or the LIBO Rate) and either (A) any tenor for such Benchmark is not displayed on a screen or other information service that publishes such rate from time to time as selected by the Administrative Agent in its reasonable discretion or (B) the regulatory supervisor for the administrator of such Benchmark has provided a public statement or publication of information announcing that any tenor for such Benchmark is or will be no longer representative, then the Administrative Agent may modify the definition of “Interest Period” for any Benchmark settings at or after such time to remove such unavailable or non-representative tenor and (ii) if a tenor that was removed pursuant to clause (i) above either (A) is subsequently displayed on a screen or information service for a Benchmark (including a Benchmark Replacement) or (B) is not, or is no longer, subject to an announcement that it is or will no longer be representative for a Benchmark (including a Benchmark Replacement), then the Administrative Agent may modify the definition of “Interest Period” for all Benchmark settings at or after such time to reinstate such previously removed tenor.
(f) Benchmark Unavailability Period. Upon the Borrower’s receipt of notice of the commencement of a Benchmark Unavailability Period, the Borrower may revoke any request for a Eurodollar Borrowing of, conversion to or continuation of Eurodollar Loans to be made, converted or continued during any Benchmark Unavailability Period and, failing that, the Borrower will be deemed to have converted any such request into a request for a Borrowing of or conversion to ABR Loans. During any Benchmark Unavailability Period or at any time that a tenor for the then-current Benchmark is not an Available Tenor, the component of ABR based upon the then-current Benchmark or such tenor for such Benchmark, as applicable, will not be used in any determination of ABR.
(g) Disclaimer. The Administrative Agent does not warrant or accept any responsibility for, and shall not have any liability with respect to (i) the administration, submission or any other matter related to the London interbank offered rate or other rates in the definition of “Eurodollar Rate” or with respect to any alternative or successor rate thereto, or replacement rate thereof (including, without limitation any Benchmark Replacement implemented hereunder), (ii) the composition or characteristics of any such Benchmark Replacement, including whether it is similar to, or produces the same value or economic equivalence to the LIBO Rate (or any other Benchmark) or have the same volume or liquidity as did the LIBO Rate (or any other Benchmark), (iii) any actions or use of its discretion or other decisions or determinations made with respect to any matters covered by this 3.03 including, without limitation, whether or not a Benchmark Transition Event has occurred, the removal or lack thereof of unavailable or non-representative tenors, the implementation or lack thereof of any Benchmark Replacement Conforming Changes, the delivery or non-delivery of any notices required by clause (d) above or otherwise in accordance herewith, and (iv) the effect of any of the foregoing provisions of this Section 3.03.
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(h) Certain Defined Terms. As used in this Section 3.03:
“Available Tenor” means, as of any date of determination and with respect to the then-current Benchmark, as applicable, any tenor for such Benchmark or payment period for interest calculated with reference to such Benchmark, as applicable, that is or may be used for determining the length of an Interest Period pursuant to this Agreement as of such date and not including, for the avoidance of doubt, any tenor for such Benchmark that is then-removed from the definition of “Interest Period” pursuant to clause (e) of this Section 3.03.
“Benchmark” means, initially, the LIBO Rate; provided that if a Benchmark Transition Event or an Early Opt-in Election, as applicable, and its related Benchmark Replacement Date have occurred with respect to the LIBO Rate or the then-current Benchmark, then “Benchmark” means the applicable Benchmark Replacement to the extent that such Benchmark Replacement has replaced such prior benchmark rate pursuant to clause (b) of this Section 3.03.
“Benchmark Replacement” means, for any Available Tenor, the first alternative set forth in the order below that can be determined by the Administrative Agent for the applicable Benchmark Replacement Date:
| (1) | the sum of: (a) Term SOFR and (b) the related Benchmark Replacement Adjustment; |
| (2) | the sum of: (a) Daily Simple SOFR and (b) the related Benchmark Replacement Adjustment; |
| (3) | the sum of: (a) the alternate benchmark rate that has been selected by the Administrative Agent and the Borrower as the replacement for the then-current Benchmark for the applicable Corresponding Tenor giving due consideration to (i) any selection or recommendation of a replacement benchmark rate or the mechanism for determining such a rate by the Relevant Governmental Body or (ii) any evolving or then-prevailing market convention for determining a benchmark rate as a replacement for the then-current Benchmark for U.S. dollar-denominated syndicated credit facilities at such time and (b) the related Benchmark Replacement Adjustment; provided that, in the case of clause (1), such Unadjusted Benchmark Replacement is displayed on a screen or other information service that publishes such rate from time to time as selected by the Administrative Agent in its reasonable discretion. |
If the Benchmark Replacement as determined pursuant to clause (1), (2) or (3) above would be less than the Floor, the Benchmark Replacement will be deemed to be the Floor for the purposes of this Agreement and the other Loan Documents.
“Benchmark Replacement Adjustment” means, with respect to any replacement of the then current Benchmark with an Unadjusted Benchmark Replacement for any applicable Interest Period and Available Tenor for any setting of such Unadjusted Benchmark Replacement:
| (1) | for purposes of clauses (1) and (2) of the definition of “Benchmark Replacement,” the first alternative set forth in the order below that can be determined by the Administrative Agent: (a) the spread adjustment, or method for calculating or determining such spread adjustment, (which may be a positive or negative value or zero) as of the Reference Time such Benchmark Replacement is first set for such Interest Period that has been selected or recommended by the Relevant Governmental Body for the replacement of such Benchmark with the applicable Unadjusted Benchmark Replacement for the applicable Corresponding Tenor; (b) the spread adjustment (which may be a positive or negative value or zero) as of the Reference Time such Benchmark Replacement |
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| is first set for such Interest Period that would apply to the fallback rate for a derivative transaction referencing the ISDA Definitions to be effective upon an index cessation event with respect to such Benchmark for the applicable Corresponding Tenor; and |
| (2) | for purposes of clause (3) of the definition of “Benchmark Replacement,” the spread adjustment, or method for calculating or determining such spread adjustment, (which may be a positive or negative value or zero) that has been selected by the Administrative Agent and the Borrower for the applicable Corresponding Tenor giving due consideration to (i) any selection or recommendation of a spread adjustment, or method for calculating or determining such spread adjustment, for the replacement of such Benchmark with the applicable Unadjusted Benchmark Replacement by the Relevant Governmental Body on the applicable Benchmark Replacement Date or (ii) any evolving or then-prevailing market convention for determining a spread adjustment, or method for calculating or determining such spread adjustment, for the replacement of such Benchmark with the applicable Unadjusted Benchmark Replacement for U.S. dollar denominated syndicated credit facilities; provided that, in the case of clause (1) above, such adjustment is displayed on a screen or other information service that publishes such Benchmark Replacement Adjustment from time to time as selected by the Administrative Agent in its reasonable discretion. |
“Benchmark Replacement Conforming Changes” means, with respect to any Benchmark Replacement, any technical, administrative or operational changes (including changes to the definition of “ABR,” the definition of “Business Day,” the definition of “Interest Period,” timing and frequency of determining rates and making payments of interest, timing of borrowing requests or prepayment, conversion or continuation notices, length of lookback periods, the applicability of breakage provisions, the formula for calculating any successor rates identified pursuant to the definition of “Benchmark Replacement”, the formula, methodology or convention for applying the successor Floor to the successor Benchmark Replacement and other technical, administrative or operational matters) that the Administrative Agent decides may be appropriate to reflect the adoption and implementation of such Benchmark Replacement and to permit the administration thereof by the Administrative Agent in a manner substantially consistent with market practice (or, if the Administrative Agent decides that adoption of any portion of such market practice is not administratively feasible or if the Administrative Agent determines that no market practice for the administration of such Benchmark Replacement exists, in such other manner of administration as the Administrative Agent decides is reasonably necessary in connection with the administration of this Agreement and the other Loan Documents).
“Benchmark Replacement Date” means the earliest to occur of the following events with respect to the then-current Benchmark:
| (1) | in the case of clause (1) or (2) of the definition of “Benchmark Transition Event,” the later of (a) the date of the public statement or publication of information referenced therein and (b) the date on which the administrator of such Benchmark (or the published component used in the calculation thereof) permanently or indefinitely ceases to provide all Available Tenors of such Benchmark (or such component thereof); |
| (2) | in the case of clause (3) of the definition of “Benchmark Transition Event,” the date of the public statement or publication of information referenced therein; or |
| (3) | in the case of an Early Opt-in Election, the sixth (6th) Business Day after the date notice of such Early Opt-in Election is provided to the Lenders, so long as the Administrative Agent has not received, by 5:00 p.m. (New York City time) on the fifth (5th) Business Day after the date notice of such Early Opt-in Election is provided to the Lenders, written notice of objection to such Early Opt-in Election from Lenders comprising the Required Lenders. |
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For the avoidance of doubt, (i) if the event giving rise to the Benchmark Replacement Date occurs on the same day as, but earlier than, the Reference Time in respect of any determination, the Benchmark Replacement Date will be deemed to have occurred prior to the Reference Time for such determination and (ii) the “Benchmark Replacement Date” will be deemed to have occurred in the case of clause (1) or (2) with respect to any Benchmark upon the occurrence of the applicable event or events set forth therein with respect to all then-current Available Tenors of such Benchmark (or the published component used in the calculation thereof).
“Benchmark Transition Event” means the occurrence of one or more of the following events with respect to the then-current Benchmark:
| (1) | a public statement or publication of information by or on behalf of the administrator of such Benchmark (or the published component used in the calculation thereof) announcing that such administrator has ceased or will cease to provide all Available Tenors of such Benchmark (or such component thereof), permanently or indefinitely, provided that, at the time of such statement or publication, there is no successor administrator that will continue to provide any Available Tenor of such Benchmark (or such component thereof); |
| (2) | a public statement or publication of information by the regulatory supervisor for the administrator of such Benchmark (or the published component used in the calculation thereof), the Board of Governors of the Federal Reserve System, the Federal Reserve Bank of New York, an insolvency official with jurisdiction over the administrator for such Benchmark (or such component), a resolution authority with jurisdiction over the administrator for such Benchmark (or such component) or a court or an entity with similar insolvency or resolution authority over the administrator for such Benchmark (or such component), which states that the administrator of such Benchmark (or such component) has ceased or will cease to provide all Available Tenors of such Benchmark (or such component thereof) permanently or indefinitely, provided that, at the time of such statement or publication, there is no successor administrator that will continue to provide any Available Tenor of such Benchmark (or such component thereof); or |
| (3) | a public statement or publication of information by the regulatory supervisor for the administrator of such Benchmark (or the published component used in the calculation thereof) announcing that all Available Tenors of such Benchmark (or such component thereof) are no longer representative. |
For the avoidance of doubt, a “Benchmark Transition Event” will be deemed to have occurred with respect to any Benchmark if a public statement or publication of information set forth above has occurred with respect to each then-current Available Tenor of such Benchmark (or the published component used in the calculation thereof).
“Benchmark Unavailability Period” means the period (if any) (x) beginning at the time that a Benchmark Replacement Date pursuant to clauses (1) or (2) of that definition has occurred if, at such time, no Benchmark Replacement has replaced the then-current Benchmark for all purposes hereunder and under any Loan Document in accordance with this Section 3.03 and (y) ending at the time that a Benchmark Replacement has replaced the then-current Benchmark for all purposes hereunder and under any Loan Document in accordance with this Section 3.03.
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“Corresponding Tenor” with respect to any Available Tenor means, as applicable, either a tenor (including overnight) or an interest payment period having approximately the same length (disregarding business day adjustment) as such Available Tenor.
“Daily Simple SOFR” means, for any day, SOFR, with the conventions for this rate (which will include a lookback) being established by the Administrative Agent in accordance with the conventions for this rate selected or recommended by the Relevant Governmental Body for determining “Daily Simple SOFR” for syndicated business loans; provided, that if the Administrative Agent decides that any such convention is not administratively feasible for the Administrative Agent, then the Administrative Agent may establish another convention in its reasonable discretion.
“Early Opt-in Election” means, if the then-current Benchmark is the LIBO Rate, the occurrence of the following on or after December 31, 2020:
| (1) | a notification by the Administrative Agent to (or the request by the Borrower to the Administrative Agent to notify) each of the other parties hereto that at least five currently outstanding U.S. dollar-denominated syndicated credit facilities in the U.S. syndicated loan market at such time contain (as a result of amendment or as originally executed) a SOFR-based rate (including SOFR, a term SOFR or any other rate based upon SOFR) as a benchmark rate (and such syndicated credit facilities are identified in such notice and are publicly available for review), and |
| (2) | the joint election by the Administrative Agent and the Borrower to trigger a fallback from the LIBO Rate and the provision by the Administrative Agent of written notice of such election to the Lenders. |
“Floor” means the benchmark rate floor, if any, provided in this Agreement initially (as of the execution of this Agreement, the modification, amendment or renewal of this Agreement or otherwise) with respect to the LIBO Rate.
“ISDA Definitions” means the 2006 ISDA Definitions published by the International Swaps and Derivatives Association, Inc. or any successor thereto, as amended or supplemented from time to time, or any successor definitional booklet for interest rate derivatives published from time to time by the International Swaps and Derivatives Association, Inc. or such successor thereto.
“Reference Time” with respect to any setting of the then-current Benchmark means (1) if such Benchmark is the LIBO Rate, 11:00 a.m. (London time) on the day that is two London banking days preceding the date of such setting, and (2) if such Benchmark is not the LIBO Rate, the time determined by the Administrative Agent in its reasonable discretion.
“Relevant Governmental Body” means the Board of Governors of the Federal Reserve System or the Federal Reserve Bank of New York, or a committee officially endorsed or convened by the Board of Governors of the Federal Reserve System or the Federal Reserve Bank of New York, or any successor thereto.
“SOFR” means, with respect to any Business Day, a rate per annum equal to the secured overnight financing rate for such Business Day published by the SOFR Administrator on the SOFR Administrator’s Website on the immediately succeeding Business Day.
“SOFR Administrator” means the Federal Reserve Bank of New York (or a successor administrator of the secured overnight financing rate).
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“SOFR Administrator’s Website” means the website of the Federal Reserve Bank of New York, currently at http://www.newyorkfed.org, or any successor source for the secured overnight financing rate identified as such by the SOFR Administrator from time to time.
“Term SOFR” means, for the applicable Corresponding Tenor as of the applicable Reference Time, the forward-looking term rate based on SOFR that has been selected or recommended by the Relevant Governmental Body.
“Unadjusted Benchmark Replacement” means the applicable Benchmark Replacement excluding the related Benchmark Replacement Adjustment.
Section 3.04. Prepayments.
(a) Optional Prepayments. Subject to prior notice in accordance with Section 3.04(b), the Borrower shall have the right at any time and from time to time to prepay (i) any Borrowing of Revolving Loans in whole or in part and (ii) any Borrowing of Term Loans in whole or in part, provided that, in the case of any prepayment of any Borrowing of Term Loans pursuant to clause (ii) above, at the time of such prepayment, on a pro forma basis (x) Liquidity shall be not less than $15,000,000 and (y) no Default, Event of Default or Borrowing Base Deficiency shall have occurred and be continuing or result therefrom.
(b) Notice and Terms of Optional Prepayment. The Borrower shall notify the Administrative Agent by telephone (confirmed in writing) of any prepayment hereunder (i) in the case of prepayment of a Eurodollar Borrowing, not later than 11:00 a.m., three (3) Business Days before the date of prepayment, or (ii) in the case of prepayment of an ABR Borrowing, not later than 11:00 a.m., one (1) Business Day before the date of prepayment. Each such notice shall be irrevocable and shall specify the prepayment date and the principal amount of each Borrowing or portion thereof to be prepaid. Promptly following receipt of any such notice relating to a Borrowing, the Administrative Agent shall advise the Lenders of the contents thereof. Each partial prepayment of any Borrowing shall be in an amount that would be permitted in the case of an advance of a Borrowing of the same Type as provided in Section 2.02. Each prepayment of a Borrowing of a Revolving Loan shall be applied ratably to the Revolving Loans included in the prepaid Borrowing. Prepayments shall be accompanied by accrued interest to the extent required by Section 3.02 and any break funding payments required by Section 5.02. Each prepayment of a Borrowing of a Term Loan shall be applied to the immediately succeeding amortization payments due in accordance with Section 3.01(b).
(c) Mandatory Prepayments.
(i) If, after giving effect to any termination or reduction of the Aggregate Maximum Revolving Credit Amount pursuant to Section 2.06(b), the total Revolving Credit Exposures exceeds the total Revolving Commitments, then the Borrower shall (A) prepay the Borrowings of Revolving Loans on the date of such termination or reduction in an aggregate principal amount equal to such excess, and (B) if any excess remains after prepaying all of the Borrowings of Revolving Loans as a result of an LC Exposure, pay to the Administrative Agent on behalf of the Lenders an amount equal to such excess to be held as Cash Collateral as provided in Section 2.08(j).
(ii) If, other than upon any adjustment to the Borrowing Base pursuant to Section 2.07(e), a Borrowing Base Deficiency exists, then the Borrower shall take such actions as required by Section 2.07(f) to cure such Borrowing Base Deficiency, including making any prepayment required by such Section 2.07(f).
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(iii) If, upon any adjustments to the Borrowing Base pursuant to Section 2.07(e), a Borrowing Base Deficiency exists, then the Borrower shall (A) prepay the Borrowings of Revolving Loans in an aggregate principal amount equal to such Borrowing Base Deficiency, and (B) if any Borrowing Base Deficiency remains after prepaying all of the Borrowings of Revolving Loans as a result of an LC Exposure, pay to the Administrative Agent on behalf of the Lenders an amount equal to such Borrowing Base Deficiency to be held as Cash Collateral as provided in Section 2.08(j). The Borrower shall be obligated to make such prepayment and/or deposit of Cash Collateral on the date it or any Subsidiary receives cash proceeds as a result of such Asset Disposition or Swap Termination, as the case may be; provided that all payments required to be made pursuant to this Section 3.04(c)(iii) must be made on or prior to the Termination Date.
(iv) If, at any time, (A) there are outstanding Borrowings or LC Exposure and (B) the Consolidated Cash Balance exceeds $20,000,000 (excluding, for the purpose of this Section 3.04(c) only, the proceeds of a Borrowing that will be used within three (3) Business Days of such Borrowing and any proceeds of any sale pursuant to Section 9.12(c) that may be applied in the purchase of replacement Properties in accordance with Section 9.12(c)) (the “Consolidated Cash Limit” and any excess thereof, the “Excess Cash”) as at 5:00 p.m. on any Thursday of each week (or if such day is not a Business Day the next succeeding Business Day), then the Borrower shall, prior to 3:00 p.m. on the first Business Day thereafter, (x) prepay the Borrowings of Revolving Loans in an aggregate principal amount equal to such Excess Cash, and (y) if any Excess Cash remains after prepaying all of the Borrowings of Revolving Loans, pay to the Administrative Agent on behalf of the Lenders an amount equal to the lesser of (i) any remaining amounts of such Excess Cash and (ii) the LC Exposure, to be held as cash collateral as provided in Section 2.08(j), in each case.
(v) If the Borrower or any Subsidiary sells, assigns, farms-out, conveys, or otherwise transfers any Properties and the proceeds of such sale, assignment, farm-out, conveyance, or transfer are not reinvested as permitted pursuant to Section 9.12(c), 100% of the proceeds not reinvested shall be applied immediately by the Borrower, to (x) if Liquidity is greater than $15,000,000 and no Default, Event of Default or Borrowing Base Deficiency exists, prepay the Borrowings of Term Loans or Revolving Loans (in the Borrower’s sole discretion) or (y) if Liquidity is less than $15,000,000, prepay Borrowings of Revolving Loans. Within one (1) Business Day of the Closing Date, the Borrower shall apply cash on hand to fund a prepayment of any Borrowings of Revolving Loans then outstanding in such amount as is required to ensure that, pro forma for such prepayment, the amount of Revolving Commitments available to be drawn as of such date shall be not less than $15,000,000 (the “Closing Prepayment Requirement”).
(vi) Each prepayment of Borrowings pursuant to this Section 3.04(c) shall be applied, first, ratably to any ABR Borrowings then outstanding, and, second, to any Eurodollar Borrowings then outstanding, and if more than one Eurodollar Borrowing is then outstanding, to each such Eurodollar Borrowing in order of priority beginning with the Eurodollar Borrowing with the least number of days remaining in the Interest Period applicable thereto and ending with the Eurodollar Borrowing with the most number of days remaining in the Interest Period applicable thereto.
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(vii) Each prepayment of Borrowings pursuant to this Section 3.04(c) shall be applied ratably to the Loans included in the prepaid Borrowings. Prepayments pursuant to this Section 3.04(c) shall be accompanied by accrued interest to the extent required by Section 3.02.
(d) No Premium or Penalty. Prepayments permitted or required under this Section 3.04 shall be without premium or penalty, except as required under Section 5.02.
(e) No Effect on Swap Agreements. Prepayments permitted or required under this Section 3.04 shall not affect the Borrower’s obligation to continue making payments under any Swap Agreement, which shall remain in full force and effect notwithstanding such prepayment, subject to the terms of such Swap Agreement.
Section 3.05. Fees.
(a) Commitment Fees. The Borrower agrees to pay to the Administrative Agent for the account of each Lender a commitment fee, which shall accrue at a rate equal to 1.00% per annum on the average daily amount of the unused amount of the Revolving Commitment of such Lender during the period from and including the Closing Date to but excluding the Termination Date. Accrued commitment fees shall be payable in arrears on the last day of March, June, September and December of each year and on the Revolving Termination Date, commencing on the first such date to occur after the date hereof. All commitment fees shall be computed on the basis of a year of 360 days, unless such computation would exceed the Highest Lawful Rate, in which case such commitment fees shall be computed on the basis of a year of 365 days (or 366 days in a leap year), and shall be payable for the actual number of days elapsed (including the first day but excluding the last day).
(b) Letter of Credit Fees. The Borrower agrees to pay (i) to the Administrative Agent for the account of each Lender a participation fee with respect to its participations in Letters of Credit, which shall accrue at the Applicable Margin on the average daily amount of such Lender’s LC Exposure (excluding any portion thereof attributable to unreimbursed LC Disbursements) during the period from and including the Closing Date to but excluding the later of the date on which such Lender’s Revolving Commitment terminates and the date on which such Lender ceases to have any LC Exposure, (ii) to the Issuing Bank a fronting fee, which shall accrue at the rate of 0.125% per annum on the average daily amount of the total LC Exposure (excluding any portion thereof attributable to unreimbursed LC Disbursements) during the period from and including the Closing Date to but excluding the later of the date of termination of the Revolving Commitments and the date on which there ceases to be any LC Exposure, provided that in no event shall such fee be less than $500 during any quarter, and (iii) to the Issuing Bank, for its own account, its standard fees with respect to the issuance, amendment, renewal or extension of any Letter of Credit or processing of drawings thereunder. Participation fees and fronting fees accrued through and including the last day of March, June, September and December of each year shall be payable on the third Business Day following such last day, commencing on the first such date to occur after the Closing Date; provided that all such fees shall be payable on the Termination Date and any such fees accruing after the Termination Date shall be payable on demand. Any other fees payable to the Issuing Bank pursuant to this Section 3.05(b) shall be payable within ten (10) days after demand. All participation fees and fronting fees shall be computed on the basis of a year of 360 days, unless such computation would exceed the Highest Lawful Rate, in which case such fees shall be computed on the basis of a year of 365 days (or 366 days in a leap year), and shall be payable for the actual number of days elapsed (including the first day but excluding the last day).
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(c) Administrative Agent Fees. The Borrower agrees to pay to the Administrative Agent, for its own account, fees payable in the amounts and at the times separately agreed upon between the Borrower and the Administrative Agent.
ARTICLE IV
Payments; Pro Rata Treatment; Sharing of Payments
Section 4.01. Payments Generally; Pro Rata Treatment; Sharing of Payments.
(a) Payments by the Borrower. The Borrower shall make each payment required to be made by it hereunder (whether of principal, interest, fees or reimbursement of LC Disbursements, or of amounts payable under Section 5.01, Section 5.02, Section 5.03 or otherwise) prior to 11:00 a.m., on the date when due, in immediately available funds, without defense, deduction, recoupment, set-off or counterclaim. Fees, once paid, shall be fully earned and shall not be refundable under any circumstances. Any amounts received after such time on any date may, in the discretion of the Administrative Agent, be deemed to have been received on the next succeeding Business Day for purposes of calculating interest thereon. All such payments shall be made to the Administrative Agent at its offices specified in Section 12.01, except payments to be made directly to the Issuing Bank as expressly provided herein and except that payments pursuant to Section 5.01, Section 5.02, Section 5.03 and Section 12.03 shall be made directly to the Persons entitled thereto. The Administrative Agent shall distribute any such payments received by it for the account of any other Person to the appropriate recipient promptly following receipt thereof. If any payment hereunder shall be due on a day that is not a Business Day, the date for payment shall be extended to the next succeeding Business Day, and, in the case of any payment accruing interest, interest thereon shall be payable for the period of such extension. All payments hereunder shall be made in dollars.
(b) Application of Insufficient Payments. If at any time insufficient funds are received by and available to the Administrative Agent to pay fully all amounts of principal, unreimbursed LC Disbursements, interest and fees then due hereunder, such funds shall be applied (i) first, towards payment of interest and fees then due hereunder, ratably among the parties entitled thereto in accordance with the amounts of interest and fees then due to such parties, and (ii) second, towards payment of principal and unreimbursed LC Disbursements then due hereunder, ratably among the parties entitled thereto in accordance with the amounts of principal and unreimbursed LC Disbursements then due to such parties.
(c) Sharing of Payments by Lenders. If any Lender shall, by exercising any right of set-off or counterclaim or otherwise, obtain payment in respect of any principal of or interest on any of its Loans or participations in LC Disbursements or other obligations hereunder resulting in such Lender receiving payment of a proportion of the aggregate amount of its Loans and participations in LC Disbursements and accrued interest thereon or other such obligations greater than its pro rata share thereof as provided herein, then the Lender receiving such greater proportion shall (a) notify the Administrative Agent of such fact and (b) purchase (for cash at face value) participations in the Loans and participations in LC Disbursements and such other obligations of the other Lenders, or make such other adjustments as shall be equitable, so that the benefit of all such payments shall be shared by the Lenders ratably in accordance with the aggregate amount of principal of and accrued interest on their respective Loans and participations in LC Disbursements and other amounts owing them; provided that (i) if any such participations are purchased and all or any portion of the payment giving rise thereto is recovered, such participations shall be rescinded and the purchase price restored to the extent of such recovery, without interest, and (ii) the provisions of this Section 4.01(c) shall not be construed to apply to (x) any payment made by the
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Borrower pursuant to and in accordance with the express terms of this Agreement (including the application of funds arising from the existence of a Defaulting Lender) or (y) any payment obtained by a Lender as consideration for the assignment of or sale of a participation in any of its Loans or participations in LC Disbursements to any assignee or Participant, other than to the Borrower or any Subsidiary or Affiliate thereof (as to which the provisions of this Section 4.01(c) shall apply). The Borrower, each Subsidiary, each Guarantor and each other Loan Party consents to the foregoing and agrees, to the extent it may effectively do so under applicable law, that any Lender acquiring a participation pursuant to the foregoing arrangements may exercise against the Borrower, each Subsidiary, each Guarantor and each other Loan Party rights of set-off and counterclaim with respect to such participation as fully as if such Lender were a direct creditor of the Borrower, each Subsidiary, each Guarantor and each other Loan Party in the amount of such participation.
Section 4.02. Presumption of Payment by the Borrower. Unless the Administrative Agent shall have received notice from the Borrower prior to the date on which any payment is due to the Administrative Agent for the account of the Lenders or the Issuing Bank hereunder that the Borrower will not make such payment, the Administrative Agent may assume that the Borrower has made such payment on such date in accordance herewith and may, in reliance upon such assumption, distribute to the Lenders or the Issuing Bank, as the case may be, the amount due. In such event, if the Borrower has not in fact made such payment, then each of the Lenders or the Issuing Bank, as the case may be, severally agrees to repay to the Administrative Agent forthwith on demand the amount so distributed to such Lender or Issuing Bank with interest thereon, for each day from and including the date such amount is distributed to it to but excluding the date of payment to the Administrative Agent, at the greater of the Federal Funds Effective Rate and a rate determined by the Administrative Agent in accordance with banking industry rules on interbank compensation.
Section 4.03. Disposition of Proceeds. The Security Instruments contain an assignment by the Borrower and/or the Guarantors unto and in favor of the Administrative Agent for the benefit of the Secured Parties of all of the Borrower’s or each Guarantor’s interest in and to production and all proceeds attributable thereto which may be produced from or allocated to the Mortgaged Property. The Security Instruments further provide in general for the application of such proceeds to the satisfaction of the Obligations and other obligations described therein and secured thereby. Notwithstanding the assignment contained in such Security Instruments, unless an Event of Default has occurred and is continuing, (a) the Administrative Agent and the Lenders agree that they will neither notify the purchaser or purchasers of such production nor take any other action to cause such proceeds to be remitted to the Administrative Agent or the Lenders, but the Lenders will instead permit such proceeds to be paid to the Borrower and its Subsidiaries and (b) the Lenders hereby authorize the Administrative Agent to take such actions as may be necessary to cause such proceeds to be paid to the Borrower and/or such Subsidiaries.
ARTICLE V
Increased Costs; Break Funding Payments; Taxes; Illegality
Section 5.01. Increased Costs.
(a) Increased Costs, Generally. If any Change in Law shall:
(i) impose, modify or deem applicable any reserve, special deposit, compulsory loan, insurance charge or similar requirement against assets of, deposits with or for the account of, or credit extended or participated in by, any Lender (except any such reserve requirement reflected in the Adjusted LIBO Rate) or the Issuing Bank;
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(ii) subject any Recipient to any Taxes (other than (A) Indemnified Taxes, (B) Taxes described in clauses (b) through (d) of the definition of Excluded Taxes and (C) Connection Income Taxes) on its Loans, Loan principal, letters of credit, commitments, or other obligations, or its deposits, reserves, other liabilities or capital attributable thereto; or
(iii) impose on any Lender or the Issuing Bank or the London interbank market any other condition, cost or expense (other than Taxes) affecting this Agreement or Loans made by such Lender or any Letter of Credit or participation therein,
and the result of any of the foregoing shall be to increase the cost to such Lender or such other Recipient of making, converting to, continuing or maintaining any Loan (or of maintaining its obligation to make any such Loan) or to increase the cost to such Lender, the Issuing Bank or such other Recipient of participating in, issuing or maintaining any Letter of Credit (or of maintaining its obligation to participate in or to issue any Letter of Credit) or to reduce the amount of any sum received or receivable by such Lender, the Issuing Bank or other Recipient hereunder (whether of principal, interest or any other amount), then, upon request of such Lender, the Issuing Bank or other Recipient, the Borrower will pay to such Lender, the Issuing Bank or other Recipient, as the case may be, such additional amount or amounts as will compensate such Lender, the Issuing Bank or other Recipient, as the case may be, for such additional costs incurred or reduction suffered.
(b) Capital Requirements. If any Lender or the Issuing Bank determines that any Change in Law affecting such Lender or the Issuing Bank or any lending office of such Lender or such Lender’s or the Issuing Bank’s holding company, if any, regarding capital or liquidity requirements has or would have the effect of reducing the rate of return on such Lender’s or the Issuing Bank’s capital or on the capital of such Lender’s or the Issuing Bank’s holding company, if any, as a consequence of this Agreement, the Commitment of such Lender or the Loans made by, or participations in Letters of Credit held by, such Lender, or the Letters of Credit issued by the Issuing Bank, to a level below that which such Lender or the Issuing Bank or such Lender’s or the Issuing Bank’s holding company could have achieved but for such Change in Law (taking into consideration such Lender’s or the Issuing Bank’s policies and the policies of such Lender’s or the Issuing Bank’s holding company with respect to capital adequacy), then from time to time the Borrower will pay to such Lender or the Issuing Bank, as the case may be, such additional amount or amounts as will compensate such Lender or the Issuing Bank or such Lender’s or the Issuing Bank’s holding company for any such reduction suffered.
(c) Certificates for Reimbursement. A certificate of a Lender or the Issuing Bank setting forth the amount or amounts necessary to compensate such Lender or the Issuing Bank or its holding company, as the case may be, as specified in Section 5.01(a) or Section 5.01(b) shall be delivered to the Borrower and shall be conclusive absent manifest error. The Borrower shall pay such Lender or the Issuing Bank, as the case may be, the amount shown as due on any such certificate within 10 days after receipt thereof.
(d) Delay in Requests. Failure or delay on the part of any Lender or the Issuing Bank to demand compensation pursuant to this Section 5.01 shall not constitute a waiver of such Lender’s or the Issuing Bank’s right to demand such compensation; provided that the Borrower shall not be required to compensate a Lender or the Issuing Bank pursuant to this Section 5.01 for any increased costs incurred or reductions suffered more than nine months prior to the date that such Lender or
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the Issuing Bank, as the case may be, notifies the Borrower of the Change in Law giving rise to such increased costs or reductions and of such Lender’s or the Issuing Bank’s intention to claim compensation therefor (except that, if the Change in Law giving rise to such increased costs or reductions is retroactive, then the nine-month period referred to above shall be extended to include the period of retroactive effect thereof).
Section 5.02. Break Funding Payments. In the event of (a) the payment of any principal of any Eurodollar Loan other than on the last day of an Interest Period applicable thereto (including as a result of an Event of Default), (b) the conversion of any Eurodollar Loan into an ABR Loan other than on the last day of the Interest Period applicable thereto, (c) the failure to borrow, convert, continue or prepay any Eurodollar Loan on the date specified in any notice delivered pursuant hereto, (d) the assignment of any Eurodollar Loan other than on the last day of the Interest Period applicable thereto as a result of a request by the Borrower pursuant to Section 5.04(b), or (e) the replacement of a Non-Consenting Lender in accordance with the terms of Section 5.04(b), then, in any such event, the Borrower shall compensate each Lender for the loss, cost and expense attributable to such event. In the case of a Eurodollar Loan, such loss, cost or expense to any Lender shall be deemed to include an amount determined by such Lender to be the excess, if any, of (i) the amount of interest which would have accrued on the principal amount of such Loan had such event not occurred, at the Adjusted LIBO Rate that would have been applicable to such Loan, for the period from the date of such event to the last day of the then current Interest Period therefor (or, in the case of a failure to borrow, convert or continue, for the period that would have been the Interest Period for such Loan), over (ii) the amount of interest which would accrue on such principal amount for such period at the interest rate which such Lender would bid were it to bid, at the commencement of such period, for dollar deposits of a comparable amount and period from other banks in the eurodollar market.
A certificate of any Lender setting forth any amount or amounts that such Lender is entitled to receive pursuant to this Section 5.02 shall be delivered to the Borrower and shall be conclusive absent manifest error. The Borrower shall pay such Lender the amount shown as due on any such certificate within 10 days after receipt thereof.
Section 5.03. Taxes.
(a) Issuing Bank. For purposes of this Section 5.03, the term “Lender” includes the Issuing Bank and the term “applicable law” includes FATCA.
(b) Payments Free of Taxes. Any and all payments by or on account of any obligation of any Loan Party under any Loan Document shall be made without deduction or withholding for any Taxes, except as required by applicable law. If any applicable law (as determined in the good faith discretion of an applicable Withholding Agent) requires the deduction or withholding of any Tax from any such payment by a Withholding Agent, then the applicable Withholding Agent shall be entitled to make such deduction or withholding and shall timely pay the full amount deducted or withheld to the relevant Governmental Authority in accordance with applicable law and, if such Tax is an Indemnified Tax, then the sum payable by the applicable Loan Party shall be increased as necessary so that after such deduction or withholding has been made (including such deductions and withholdings applicable to additional sums payable under this Section) the applicable Recipient receives an amount equal to the sum it would have received had no such deduction or withholding been made.
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(c) Payment of Other Taxes by the Borrower. The Loan Parties shall timely pay to the relevant Governmental Authority in accordance with applicable law, or at the option of the Administrative Agent timely reimburse it for the payment of, any Other Taxes.
(d) Indemnification by the Borrower. The Loan Parties shall jointly and severally indemnify each Recipient, within ten (10) days after demand therefor, for the full amount of any Indemnified Taxes (including Indemnified Taxes imposed or asserted on or attributable to amounts payable under this Section) payable or paid by such Recipient or required to be withheld or deducted from a payment to such Recipient and any reasonable expenses arising therefrom or with respect thereto, whether or not such Indemnified Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority. A certificate as to the amount of such payment or liability shall be delivered to the Borrower by a Lender (with a copy to the Administrative Agent), or by the Administrative Agent on its own behalf or on behalf of a Lender, and shall be conclusive absent manifest error.
(e) Indemnification by the Lenders. Each Lender shall severally indemnify the Administrative Agent, within ten (10) days after demand therefor, for (i) any Indemnified Taxes attributable to such Lender (but only to the extent that any Loan Party has not already indemnified the Administrative Agent for such Indemnified Taxes and without limiting the obligation of the Loan Parties to do so), (ii) any Taxes attributable to such Lender’s failure to comply with the provisions of Section 12.04(d) relating to the maintenance of a Participant Register and (iii) any Excluded Taxes attributable to such Lender, in each case, that are payable or paid by the Administrative Agent in connection with any Loan Document, and any reasonable expenses arising therefrom or with respect thereto, whether or not such Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority. A certificate as to the amount of such payment or liability delivered to any Lender by the Administrative Agent shall be conclusive absent manifest error. Each Lender hereby authorizes the Administrative Agent to set off and apply any and all amounts at any time owing to such Lender under any Loan Document or otherwise payable by the Administrative Agent to the Lender from any other source against any amount due to the Administrative Agent under this Section 5.03(e).
(f) Evidence of Payments. As soon as practicable after any payment of Taxes by any Loan Party to a Governmental Authority pursuant to this Section 5.03, such Loan Party shall deliver to the Administrative Agent the original or a certified copy of a receipt issued by such Governmental Authority evidencing such payment, a copy of the return reporting such payment or other evidence of such payment reasonably satisfactory to the Administrative Agent.
(g) Status of Lenders.
(i) Any Lender that is entitled to an exemption from or reduction of withholding Tax with respect to payments made under any Loan Document shall deliver to the Borrower and the Administrative Agent, at the time or times reasonably requested by the Borrower or the Administrative Agent, such properly completed and executed documentation reasonably requested by the Borrower or the Administrative Agent (or as prescribed by law) as will permit such payments to be made without withholding or at a reduced rate of withholding. In addition, any Lender, if reasonably requested by the Borrower or the Administrative Agent, shall deliver such other documentation prescribed by applicable law or reasonably requested by the Borrower or the Administrative Agent as will enable the Borrower or the Administrative Agent to determine whether or not such Lender is subject to backup withholding or information reporting requirements. Notwithstanding anything to the contrary in the preceding two sentences, the completion,
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execution and submission of such documentation (other than such documentation set forth in Section 5.03(g)(ii)(A), (ii)(B) and (ii)(D) below) shall not be required if in the Lender’s reasonable judgment such completion, execution or submission would subject such Lender to any material unreimbursed cost or expense or would materially prejudice the legal or commercial position of such Lender.
(ii) Without limiting the generality of the foregoing, in the event that the Borrower is a U.S. Borrower:
(A) any Lender that is a U.S. Person shall deliver to the Borrower and the Administrative Agent on or prior to the date on which such Lender becomes a Lender under this Agreement (and from time to time thereafter upon the reasonable request of the Borrower or the Administrative Agent), executed copies of IRS Form W-9 certifying that such Lender is exempt from U.S. federal backup withholding tax;
(B) any Foreign Lender shall, to the extent it is legally entitled to do so, deliver to the Borrower and the Administrative Agent (in such number of copies as shall be requested by the recipient) on or prior to the date on which such Foreign Lender becomes a Lender under this Agreement (and from time to time thereafter upon the reasonable request of the Borrower or the Administrative Agent), whichever of the following is applicable:
(I) in the case of a Foreign Lender claiming the benefits of an income tax treaty to which the United States is a party (x) with respect to payments of interest under any Loan Document, executed copies of IRS Form W-8BEN-E or IRS Form W-8BEN, as applicable, establishing an exemption from, or reduction of, U.S. federal withholding Tax pursuant to the “interest” article of such tax treaty and (y) with respect to any other applicable payments under any Loan Document, IRS Form W-8BEN-E or IRS Form W-8BEN, as applicable, establishing an exemption from, or reduction of, U.S. federal withholding Tax pursuant to the “business profits” or “other income” article of such tax treaty;
(II) executed copies of IRS Form W-8ECI;
(III) in the case of a Foreign Lender claiming the benefits of the exemption for portfolio interest under section 881(c) of the Code, (x) a certificate substantially in the form of Exhibit J-1 to the effect that such Foreign Lender is not a “bank” within the meaning of section 881(c)(3)(A) of the Code, a “10 percent shareholder” of the Borrower within the meaning of section 881(c)(3)(B) of the Code, or a “controlled foreign corporation” described in section 881(c)(3)(C) of the Code (a “U.S. Tax Compliance Certificate”) and (y) executed copies of IRS Form W-8BEN-E or IRS Form W-8BEN, as applicable; or
(IV) to the extent a Foreign Lender is not the beneficial owner, executed copies of IRS Form W-8IMY, accompanied by IRS Form W-8ECI, IRS Form W-8BEN-E or IRS Form W-8BEN, as applicable, a U.S. Tax Compliance Certificate substantially in the form of Exhibit J-2 or Exhibit J-4, IRS Form W-9, and/or other certification documents from each beneficial owner, as
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applicable; provided that if the Foreign Lender is a partnership and one or more direct or indirect partners of such Foreign Lender are claiming the portfolio interest exemption, such Foreign Lender may provide a U.S. Tax Compliance Certificate substantially in the form of Exhibit J-3 on behalf of each such direct and indirect partner;
(C) any Foreign Lender shall, to the extent it is legally entitled to do so, deliver to the Borrower and the Administrative Agent (in such number of copies as shall be requested by the recipient) on or prior to the date on which such Foreign Lender becomes a Lender under this Agreement (and from time to time thereafter upon the reasonable request of the Borrower or the Administrative Agent), executed copies of any other form prescribed by applicable law as a basis for claiming exemption from or a reduction in U.S. federal withholding Tax, duly completed, together with such supplementary documentation as may be prescribed by applicable law to permit the Borrower or the Administrative Agent to determine the withholding or deduction required to be made; and
(D) if a payment made to a Lender under any Loan Document would be subject to U.S. federal withholding Tax imposed by FATCA if such Lender were to fail to comply with the applicable reporting requirements of FATCA (including those contained in section 1471(b) or 1472(b) of the Code, as applicable), such Lender shall deliver to the Borrower and the Administrative Agent at the time or times prescribed by law and at such time or times reasonably requested by the Borrower or the Administrative Agent such documentation prescribed by applicable law (including as prescribed by section 1471(b)(3)(C)(i) of the Code) and such additional documentation reasonably requested by the Borrower or the Administrative Agent as may be necessary for the Borrower and the Administrative Agent to comply with their obligations under FATCA and to determine that such Lender has complied with such Lender’s obligations under FATCA or to determine the amount to deduct and withhold from such payment. Solely for purposes of this clause (D), “FATCA” shall include any amendments made to FATCA after the date of this Agreement.
Each Lender agrees that if any form or certification it previously delivered expires or becomes obsolete or inaccurate in any respect, it shall update such form or certification or promptly notify the Borrower and the Administrative Agent in writing of its legal inability to do so.
(h) Treatment of Certain Refunds. If any party determines, in its sole discretion exercised in good faith, that it has received a refund of any Taxes as to which it has been indemnified pursuant to this Section 5.03 (including by the payment of additional amounts pursuant to this Section 5.03), it shall pay to the indemnifying party an amount equal to such refund (but only to the extent of indemnity payments made under this Section with respect to the Taxes giving rise to such refund), net of all out-of-pocket expenses (including Taxes) of such indemnified party and without interest (other than any interest paid by the relevant Governmental Authority with respect to such refund). Such indemnifying party, upon the request of such indemnified party, shall repay to such indemnified party the amount paid over pursuant to this Section 5.03(h) (plus any penalties, interest or other charges imposed by the relevant Governmental Authority) in the event that such indemnified party is required to repay such refund to such Governmental Authority. Notwithstanding anything to the contrary in this Section 5.03(h), in no event will the indemnified party be required to pay any amount to an indemnifying party pursuant to this Section 5.03(h) the payment of which would place the indemnified party in a less favorable net after-Tax position than
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the indemnified party would have been in if the Tax subject to indemnification and giving rise to such refund had not been deducted, withheld or otherwise imposed and the indemnification payments or additional amounts with respect to such Tax had never been paid. This Section 5.03(h) shall not be construed to require any indemnified party to make available its Tax returns (or any other information relating to its Taxes that it deems confidential) to the indemnifying party or any other Person.
(i) Survival. Each party’s obligations under this Section 5.03 shall survive the resignation or replacement of the Administrative Agent or any assignment of rights by, or the replacement of, a Lender, the termination of the Commitments and the repayment, satisfaction or discharge of all obligations under any Loan Document.
Section 5.04. Mitigation Obligations; Replacement of Lenders.
(a) Designation of Different Lending Office. If any Lender requests compensation under Section 5.01 or requires the Borrower to pay any Indemnified Taxes or additional amounts to any Lender or any Governmental Authority for the account of any Lender pursuant to Section 5.03, then such Lender shall (at the request of the Borrower) use reasonable efforts to designate a different lending office for funding or booking its Loans hereunder or to assign its rights and obligations hereunder to another of its offices, branches or affiliates, if, in the judgment of such Lender, such designation or assignment (i) would eliminate or reduce amounts payable pursuant to Section 5.01 or Section 5.03, as the case may be, in the future and (ii) would not subject such Lender to any unreimbursed cost or expense and would not otherwise be disadvantageous to such Lender. The Borrower hereby agrees to pay all reasonable costs and expenses incurred by any Lender (other than a Defaulting Lender) in connection with any such designation or assignment.
(b) Replacement of Lenders. If any Lender requests compensation under Section 5.01 or if the Borrower is required to pay any Indemnified Taxes or additional amounts to any Lender or any Governmental Authority for the account of any Lender pursuant to Section 5.03, and in each case, such Lender has declined or is unable to designate a different lending office in accordance with Section 5.04(a) or if any Lender is a Defaulting Lender or a Non-Consenting Lender, then the Borrower may, at its sole expense and effort, upon notice to such Lender and the Administrative Agent, require such Lender to assign and delegate, without recourse (in accordance with and subject to the restrictions contained in, and consents required by, Section 12.04(b)), all of its interests, rights (other than its existing rights to payments pursuant to Section 5.01 or Section 5.03) and obligations under this Agreement and the related Loan Documents (including its Loans, participations in LC Disbursements and Revolving Commitments) to an Eligible Assignee that shall assume such obligations (which assignee may be another Lender, if a Lender accepts such assignment); provided that:
(i) the Borrower shall have received the prior written consent of the Administrative Agent and paid to the Administrative Agent the assignment fee specified in Section 12.04;
(ii) such Lender shall have received payment of an amount equal to the outstanding principal of its Loans and participations in LC Disbursements, accrued interest thereon, accrued fees and all other amounts payable to it hereunder and under the other Loan Documents (including any amounts under Section 5.02), from the assignee (to the extent of such outstanding principal and accrued interest and fees) or the Borrower (in the case of all other amounts);
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(iii) in the case of any such assignment resulting from a claim for compensation under Section 5.01 or payments required to be made pursuant to Section 5.03, such assignment will result in a reduction in such compensation or payments thereafter;
(iv) such assignment does not conflict with the applicable law; and
(v) in the case of any assignment resulting from a Lender becoming a Non-Consenting Lender, the applicable assignee shall have consented to the applicable amendment, waiver or consent.
A Lender shall not be required to make any such assignment or delegation if, prior thereto, as a result of a waiver by such Lender or otherwise, the circumstances entitling the Borrower to require such assignment and delegation cease to apply.
Section 5.05. Illegality. Notwithstanding any other provision of this Agreement, in the event that it becomes unlawful for any Lender or its applicable lending office to honor its obligation to make or maintain Eurodollar Loans either generally or having a particular Interest Period hereunder, then (a) such Lender shall promptly notify the Borrower and the Administrative Agent thereof and such Lender’s obligation to make such Eurodollar Loans shall be suspended (the “Affected Loans”) until such time as such Lender may again make and maintain such Eurodollar Loans and (b) all Affected Loans which would otherwise be made by such Lender shall be made instead as ABR Loans (and, if such Lender so requests by notice to the Borrower and the Administrative Agent, all Affected Loans of such Lender then outstanding shall be automatically converted into ABR Loans on the date specified by such Lender in such notice) and, to the extent that Affected Loans are so made as (or converted into) ABR Loans, all payments of principal which would otherwise be applied to such Lender’s Affected Loans shall be applied instead to its ABR Loans.
ARTICLE VI
Conditions Precedent
Section 6.01. Closing Date. The obligations of the Lenders to make Loans and of the Issuing Bank to issue Letters of Credit hereunder shall not become effective until each of the following conditions is satisfied (or waived in accordance with Section 12.02) on the Closing Date:
(a) The Bankruptcy Court shall have entered an order reasonably acceptable to the Administrative Agent confirming the Plan of Reorganization (the “Confirmation Order”) and all conditions to the Effective Date (as defined in the Plan of Reorganization) of the Plan of Reorganization shall have been satisfied (or will be satisfied upon the occurrence of the Effective Date (as defined in the Plan of Reorganization)) or waived in accordance with the Plan of Reorganization. The Confirmation Order shall authorize the Debtors to enter into the Loan Documents and authorize the Loan Parties’ execution and delivery thereof.
(b) The Administrative Agent, the Arranger and the Lenders shall have received all upfront, commitment, facility and agency fees and all other fees and amounts due and payable on or prior to the Closing Date, including, to the extent invoiced, reimbursement or payment of all out-of-pocket expenses required to be reimbursed or paid by the Borrower hereunder (including, without limitation, the reasonable fees and expenses of Linklaters LLP, counsel to the Administrative Agent, and Bracewell LLP, as real estate and local counsel to the Administrative Agent).
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(c) The Borrower shall have deposited $6,880 with Bracewell LLP, counsel for the Administrative Agent, to be held by such counsel and applied toward payment of costs and expenses for recordation of the Mortgages, as provided pursuant to Section 12.03(a). If such deposit exceeds the amount of such costs and expenses, the excess shall be returned to the Borrower. If such deposit is less than such costs and expenses, the deficit shall be paid by the Borrower pursuant to Section 12.03(a).
(d) The Administrative Agent shall have received a certificate of the Secretary, an Assistant Secretary, Responsible Officer or other duly authorized officer reasonably satisfactory to the Administrative Agent of the Borrower, the Parent and each Guarantor, each setting forth (i) true and complete copies of the resolutions of its board of directors or board of managers (or equivalent body) authorizing the execution, delivery and performance of the Loan Documents to which it is a party and, in the case of the Borrower, the borrowings hereunder, and that such resolutions have not been modified, rescinded or amended and are in full force and effect, (ii) the officers of the Borrower, the Parent or such Guarantor (y) who are authorized to sign the Loan Documents to which the Borrower, the Parent or such Guarantor is a party and (z) who will, until replaced by another officer or officers duly authorized for that purpose, act as its representative for the purposes of signing documents and giving notices and other communications in connection with this Agreement and the transactions contemplated hereby, (iii) specimen signatures of such authorized officers, and (iv) the articles or certificate of incorporation and bylaws, or certificate of formation and partnership agreement, or certificate of formation and limited liability company agreement (as the case may be) of the Borrower, the Parent and each Guarantor, certified as being true and complete. The Administrative Agent and the Lenders may conclusively rely on such certificate until the Administrative Agent receives notice in writing from the Borrower to the contrary.
(e) The Administrative Agent shall have received certificates of the appropriate State agencies with respect to the existence, qualification and good standing of the Borrower, the Parent and each Guarantor.
(f) The Administrative Agent shall have received a compliance certificate which shall be substantially in the form of Exhibit D, duly and properly executed by a Responsible Officer and dated as of the Closing Date.
(g) The Administrative Agent shall have received from each party hereto counterparts (in such number as may be requested by the Administrative Agent) of this Agreement, the Fee Letters and each other Loan Document signed on behalf of each party.
(h) The Administrative Agent shall have received duly executed Notes payable to each Lender requesting a Note dated as of the date hereof.
(i) The Administrative Agent shall have received from the Borrower and each Guarantor and each other party thereto duly executed counterparts (in such number as may be requested by the Administrative Agent) of the Security Instruments, including the Guaranty Agreement and the other Security Instruments described on Exhibit F. In connection with the execution and delivery of the Security Instruments, the Administrative Agent shall:
(i) be reasonably satisfied that the Security Instruments create first priority, perfected Liens (subject only to Excepted Liens identified in clauses (a), (b), (c), (d) and (f) of the definition thereof, but subject to the provisos at the end of such definition) on 100% of the total Recognized Value of the Oil and Gas Properties evaluated in the Initial Reserve Report; and
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(ii) have received certificates, together with undated, blank stock powers (if applicable) for each such certificate, representing all of the certificated issued and outstanding Equity Interest of each Person, the Equity Interest of which is required to be pledged pursuant to the Loan Documents.
(j) The Administrative Agent shall have received an opinion of Latham and Watkins LLP, counsel to the Borrower, in form and substance satisfactory to the Administrative Agent.
(k) The Administrative Agent shall have received a certificate of insurance coverage of the Borrower evidencing that the Borrower is carrying insurance in accordance with Section 7.12 and either (i) a letter from the Borrower’s insurance agent in a form reasonably acceptable to Administrative Agent or (ii) copies of the policies of insurance evidencing that the Borrower is carrying insurance in accordance with Section 7.12.
(l) The Administrative Agent shall have received title opinions and other title information and data as the Administrative Agent may reasonably request satisfactory to the Administrative Agent setting forth the status of title to at least 100% (or such lesser amount as may be agreed by the Administrative Agent, in its sole discretion, provided that such lesser amount shall be no less than 95%) of the total value of the Loan Parties’ proved Oil and Gas Properties evaluated in the Initial Reserve Report.
(m) The Administrative Agent shall be reasonably satisfied with the environmental condition of the Oil and Gas Properties of the Borrower and its Subsidiaries.
(n) The Administrative Agent shall have received a certificate of a Responsible Officer of the Borrower certifying that the Borrower has received all consents and approvals required by Section 7.03.
(o) The Administrative Agent shall have received the financial statements referred to in Section 7.04(a) and the Initial Reserve Report accompanied by a certificate covering the matters described in Section 8.12(c).
(p) The Administrative Agent shall have received appropriate UCC search certificates reflecting no prior Liens encumbering the Properties of the Borrower and the Subsidiaries (other than Excepted Liens identified in clauses (a), (b), (c), (d), (f) and (h) of the definition thereof, but subject to the provisos at the end of such definition) for each of the following jurisdictions: Delaware, Texas, and any other jurisdiction requested by the Administrative Agent.
(q) The Administrative Agent shall have received Property Certificates for each Oil and Gas Property described as an exhibit to a Mortgage.
(r) The Administrative Agent and the Lenders shall have received, and be reasonably satisfied in form and substance with, all documentation and other information required by bank regulatory authorities under applicable “know-your-customer” and anti-money laundering rules and regulations, including but not restricted to the USA PATRIOT Act.
(s) The Lenders shall have received, in each case, in form and substance satisfactory to each Lender, the (i) New Warrants and (ii) Prepetition RBL Cash Distribution, in each case as defined in the Plan of Reorganization.
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(t) The Administrative Agent shall have received a solvency certificate signed by a Financial Officer of the Borrower in form and substance satisfactory to the Administrative Agent.
(u) The Administrative Agent shall have received evidence in form and substance satisfactory to it that, as of the Closing Date, the Borrower has sufficient cash on hand in order to comply with the Closing Prepayment Requirement, as described at Section 3.04.
(v) Prior to the Closing Date, the Borrower shall have made voluntary prepayments under the Prepetition Credit Agreement of at least $397,634.00, such that, as of the Closing Date, the “Total Commitments” thereunder are in an amount equal to $285,000,000.
(w) The Administrative Agent shall have received such other documents as the Administrative Agent may reasonably request.
The Administrative Agent shall notify the Borrower and the Lenders of the Closing Date, and such notice shall be conclusive and binding. Notwithstanding the foregoing, the obligations of the Lenders to make Loans and of the Issuing Bank to issue Letters of Credit hereunder shall not become effective unless each of the foregoing conditions is satisfied (or waived pursuant to Section 12.02).
Without limiting the generality of the provisions of Section 11.04, for purposes of determining compliance with the conditions specified in this Section 6.01, each Lender that has signed this Agreement shall be deemed to have consented to, approved or accepted or to be satisfied with, each document or other matter required thereunder to be consented to or approved by or acceptable or satisfactory to a Lender unless the Administrative Agent shall have received notice from such Lender prior to the proposed closing date specifying its objection thereto.
Section 6.02. Each Credit Event. The obligation of each Lender to make a Loan on the occasion of any Borrowing (including any initial funding on the Closing Date), and of the Issuing Bank to issue, amend, renew or extend any Letter of Credit, is subject to the satisfaction of the following conditions:
(a) At the time of and immediately after giving effect to such Borrowing or the issuance, amendment, renewal or extension of such Letter of Credit, as applicable, no Default, Event of Default or Borrowing Base Deficiency shall have occurred and be continuing or would result therefrom.
(b) At the time of and immediately after giving effect to such Borrowing or the issuance, amendment, renewal or extension of such Letter of Credit, as applicable, no event, development or circumstance has occurred or shall then exist that has resulted in, or could reasonably be expected to have, a Material Adverse Effect.
(c) The representations and warranties of the Borrower and the Guarantors set forth in this Agreement and in the other Loan Documents shall be true and correct in all material respects (without duplication of materiality) on and as of the date of such Borrowing or the date of issuance, amendment, renewal or extension of such Letter of Credit, as applicable, except to the extent any such representations and warranties are expressly limited to an earlier date, in which case, on and as of the date of such Borrowing or the date of issuance, amendment, renewal or extension of such Letter of Credit, as applicable, such representations and warranties shall continue to be true and correct in all material respects (without duplication of materiality) as of such specified earlier date.
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(d) The making of such Loan or the issuance, amendment, renewal or extension of such Letter of Credit, as applicable, would not conflict with, or cause any Lender or the Issuing Bank to violate or exceed, any applicable Governmental Requirement, and no Change in Law shall have occurred, and no litigation shall be pending or threatened which does or, with respect to any threatened litigation, seeks to, enjoin, prohibit or restrain, the making or repayment of any Loan, the issuance, amendment, renewal, extension or repayment of any Letter of Credit or any participations therein or the consummation of the transactions contemplated by this Agreement or any other Loan Document.
(e) The receipt by the Administrative Agent of a Borrowing Request in accordance with Section 2.03 or a request for a Letter of Credit in accordance with Section 2.08(b), as applicable.
(f) (i) The Consolidated Cash Balance as of the day of the Borrowing Request, and (ii) the pro forma Consolidated Cash Balance as of the end of the third Business Day after such Borrowing will be funded, in each case, shall not exceed the Consolidated Cash Limit.
Each request for a Borrowing and each request for the issuance, amendment, renewal or extension of any Letter of Credit shall be deemed to constitute a representation and warranty by the Borrower on the date thereof as to the matters specified in Section 6.02(a) through (f).
ARTICLE VII
Representations and Warranties
The Borrower represents and warrants to the Administrative Agent, the Issuing Bank and the Lenders that:
Section 7.01. Organization; Powers. Each of the Borrower and the Subsidiaries is duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization, has all requisite power and authority, and has all material governmental licenses, authorizations, consents and approvals necessary, to own its assets and to carry on its business as now conducted, and is qualified to do business in, and is in good standing in, every jurisdiction where such qualification is required, except where failure to have such power, authority, licenses, authorizations, consents, approvals and qualifications could not reasonably be expected to have a Material Adverse Effect.
Section 7.02. Authority; Enforceability. The Transactions are within the Borrower’s and each Guarantor’s powers under its Organizational Documents and have been duly authorized by all necessary action (including, without limitation, any action required to be taken by any class of managers, directors, partners or owners of Equity Interests of the Borrower or any other Person, whether interested or disinterested, in order to ensure the due authorization of the Transactions). Each Loan Document to which the Borrower and each Guarantor is a party has been duly executed and delivered by the Borrower and such Guarantor and constitutes a legal, valid and binding obligation of the Borrower and such Guarantor, as applicable, enforceable in accordance with its terms, subject to Debtor Relief Laws or other laws affecting creditors’ rights generally and subject to general principles of equity, regardless of whether considered in a proceeding in equity or at law.
Section 7.03. Approvals; No Conflicts. The Transactions (a) do not require any consent or approval of, registration or filing with, or any other action by, any Governmental Authority or any other third Person (including members, shareholders, partners or any class of managers, directors, or partners, whether interested or disinterested, of the Borrower or any other Person), nor is any
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such consent, approval, registration, filing or other action necessary for the validity or enforceability of any Loan Document or the consummation of the transactions contemplated thereby, except such as have been obtained or made and are in full force and effect other than (i) the recording and filing of the Security Instruments as required by this Agreement, (ii) those third party approvals or consents which, if not made or obtained, would not cause a Default hereunder, could not reasonably be expected to have a Material Adverse Effect or do not have an adverse effect on the enforceability of the Loan Documents, and (iii) consents by, required notices to, or other actions by state and federal governmental entities in connection with the assignment of state and federal oil and gas leases or other interests therein that are customarily obtained subsequent to such assignments, (b) will not violate any applicable law or Organizational Documents of the Borrower or any Subsidiary or any order of any Governmental Authority, (c) will not violate or result in a default under any indenture, agreement or other instrument binding upon the Borrower or any Subsidiary or its Properties, or give rise to a right thereunder to require any payment to be made by the Borrower or such Subsidiary and (d) will not result in the creation or imposition of any Lien on any Property of the Borrower or any Subsidiary (other than the Liens created by the Loan Documents).
Section 7.04. Financial Condition; No Material Adverse Change.
(a) The financial statements of Borrower heretofore furnished to the Lenders present fairly, in all material respects, the financial condition and results of operations and cash flows of the Borrower and its Consolidated Subsidiaries as of such dates and for such periods in accordance with GAAP, subject to year-end audit adjustments and the absence of footnotes in the case of the unaudited quarterly financial statements.
(b) Since the Closing Date, (i) there has been no event, development or circumstance that has had or could reasonably be expected to have a Material Adverse Effect and (ii) the business of the Borrower and its Subsidiaries has been conducted only in the ordinary course consistent with past business practices in all material respects.
(c) Neither the Borrower nor any Subsidiary has on the date hereof any material Debt (including Disqualified Capital Stock) or any contingent liabilities, off-balance sheet liabilities or partnerships, liabilities for taxes, unusual forward or long-term commitments or unrealized or anticipated losses from any unfavorable commitments, except as referred to or reflected or provided for in the Financial Statements.
Section 7.05. Litigation.
(a) Except as set forth on Schedule 7.05, there are no actions, suits, investigations or proceedings by or before any arbitrator or Governmental Authority pending against or, to the knowledge of the Borrower, threatened against or affecting the Borrower or any Subsidiary (i) not fully covered by insurance (except for normal deductibles) as to which there is a reasonable possibility of an adverse determination that, if adversely determined, could reasonably be expected, individually or in the aggregate, to result in a Material Adverse Effect, or (ii) that involve any Loan Document or the Transactions.
(b) Since the date of this Agreement, there has been no change in the status of the matters disclosed in Schedule 7.05 that, individually or in the aggregate, has resulted in, or materially increased the likelihood of, a Material Adverse Effect.
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Section 7.06. Environmental Matters. Except as set forth in Schedule 7.06 or that could not be reasonably expected to have a Material Adverse Effect (or with respect to (c), (d) and (e) below, where the failure to take such actions could not be reasonably expected to have a Material Adverse Effect):
(a) neither any Property of the Borrower or any Subsidiary nor the operations conducted thereon violate any order or requirement of any court or Governmental Authority or any Environmental Laws;
(b) no Property of the Borrower or any Subsidiary nor the operations currently conducted thereon are in violation of or subject to any existing, pending or threatened action, suit, investigation, inquiry or proceeding by or before any court or Governmental Authority or to any remedial obligations under Environmental Laws;
(c) all notices, permits, licenses, exemptions, approvals or similar authorizations, if any, required to be obtained or filed in connection with the operation or use of any and all Property of the Borrower and each Subsidiary, including, without limitation, past or present treatment, storage, disposal or release of a hazardous substance, oil and gas waste or solid waste into the environment, have been duly obtained or filed, and the Borrower and each Subsidiary have not received written notice stating that they are not in compliance with the terms and conditions of all such notices, permits, licenses and similar authorizations;
(d) to the Borrower’s knowledge, all hazardous substances, solid waste and oil and gas waste, if any, generated at any and all Property of the Borrower or any Subsidiary have in the past been transported, treated and disposed of in accordance with Environmental Laws;
(e) the Borrower has taken all steps reasonably necessary to determine and has determined that no oil, hazardous substances, solid waste or oil and gas waste, have been disposed of or otherwise released and there has been no threatened release of any oil, hazardous substances, solid waste or oil and gas waste on or to any Property of the Borrower or any Subsidiary except in compliance with Environmental Laws;
(f) to the extent applicable, all Property of the Borrower and each Subsidiary currently satisfies all design, operation, and equipment requirements imposed by the OPA, and the Borrower does not have any reason to believe that such Property, to the extent subject to the OPA, will not be able to maintain compliance with the OPA requirements during the term of this Agreement;
(g) neither the Borrower nor any Subsidiary has any known contingent liability or Remedial Work in connection with any release or threatened release of any oil, hazardous substance, solid waste or oil and gas waste into the environment, except as referred to or reflected or provided for in the Financial Statements.
Section 7.07. Compliance with Laws and Agreements; No Defaults.
(a) Each of the Borrower and each Subsidiary is in compliance with all Governmental Requirements applicable to it or its Property and all agreements and other instruments binding upon it or its Property, and possesses all licenses, permits, franchises, exemptions, approvals and other governmental authorizations necessary for the ownership of its Property and the conduct of its business, except where the failure to do so, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect.
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(b) Neither the Borrower nor any Subsidiary is in default nor has any event or circumstance occurred which, but for the expiration of any applicable grace period or the giving of notice, or both, would constitute a default or would require the Borrower or a Subsidiary to Redeem or make any offer to Redeem under any indenture, note, credit agreement or instrument pursuant to which any Material Indebtedness is outstanding or by which the Borrower or any Subsidiary or any of their Properties is bound.
(c) No Default has occurred and is continuing.
Section 7.08. Investment Company Act. Neither the Borrower nor any Subsidiary is an “investment company” or a company “controlled” by an “investment company,” within the meaning of, or subject to regulation under, the Investment Company Act of 1940, as amended.
Section 7.09. Taxes. Each of the Borrower and its Subsidiaries has timely filed or caused to be filed all Tax returns and reports required to have been filed and has paid or caused to be paid all Taxes required to have been paid by it, except (a) Taxes that are being contested in good faith by appropriate proceedings and for which the Borrower or such Subsidiary, as applicable, has set aside on its books adequate reserves in accordance with GAAP or (b) to the extent that the failure to do so could not reasonably be expected to result in a Material Adverse Effect. The charges, accruals and reserves on the books of the Borrower and its Subsidiaries in respect of Taxes and other governmental charges are, in the reasonable opinion of Borrower, adequate. No Tax Lien has been filed and, to the knowledge of the Borrower, no claim is being asserted with respect to any such Tax or other such governmental charge.
Section 7.10. ERISA.
(a) The Borrower, the Subsidiaries and each ERISA Affiliate have complied in all material respects with ERISA and, where applicable, the Code regarding each Plan.
(b) Each Plan is, and has been, maintained in substantial compliance with ERISA and, where applicable, the Code.
(c) No act, omission or transaction has occurred which could result in imposition on the Borrower, any Subsidiary or any ERISA Affiliate (whether directly or indirectly) of (i) either a civil penalty assessed pursuant to subsections (c), (i) or (l) of section 502 of ERISA or a tax imposed pursuant to Chapter 43 of Subtitle D of the Code or (ii) breach of fiduciary duty liability damages under section 409 of ERISA.
(d) No Plan (other than a defined contribution Plan) or any trust created under any such Plan has been terminated since September 2, 1974. No liability to the PBGC (other than for the payment of current premiums which are not past due) by the Borrower, any Subsidiary or any ERISA Affiliate has been or is expected by the Borrower, any Subsidiary or any ERISA Affiliate to be incurred with respect to any Plan. No ERISA Event with respect to any Plan has occurred.
(e) Full payment when due has been made of all amounts which the Borrower, the Subsidiaries or any ERISA Affiliate is required under the terms of each Plan or applicable law to have paid as contributions to such Plan as of the date hereof, and no accumulated funding deficiency (as defined in section 302 of ERISA and section 412 of the Code), whether or not waived, exists with respect to any Plan.
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(f) The actuarial present value of the benefit liabilities under each Plan which is subject to Title IV of ERISA does not, as of the end of the Borrower’s most recently ended fiscal year, exceed the current value of the assets (computed on a Plan termination basis in accordance with Title IV of ERISA) of such Plan allocable to such benefit liabilities. The term “actuarial present value of the benefit liabilities” shall have the meaning specified in section 4041 of ERISA.
(g) Neither the Borrower, the Subsidiaries nor any ERISA Affiliate sponsors, maintains, or contributes to an employee welfare benefit plan, as defined in section 3(1) of ERISA, including, without limitation, any such plan maintained to provide benefits to former employees of such entities, that may not be terminated by the Borrower, a Subsidiary or any ERISA Affiliate in its sole discretion at any time without any material liability.
(h) Neither the Borrower, the Subsidiaries nor any ERISA Affiliate sponsors, maintains or contributes to, or has at any time in the six-year period preceding the date hereof sponsored, maintained or contributed to, any Multiemployer Plan.
(i) Neither the Borrower, the Subsidiaries nor any ERISA Affiliate is required to provide security under section 401(a)(29) of the Code due to a Plan amendment that results in a material increase in current liability for the Plan.
Section 7.11. Disclosure; No Material Misstatements. The Borrower has disclosed or delivered to the Administrative Agent and the Lenders all agreements, instruments and corporate or other restrictions to which it or any of its Subsidiaries is subject, and all other matters known to it, that, individually or in the aggregate, could reasonably be expected to result in a Material Adverse Effect. None of the other reports, financial statements, certificates or other information furnished by or on behalf of the Borrower or any Subsidiary to the Administrative Agent or any Lender or any of their Affiliates in connection with the negotiation of this Agreement or any other Loan Document or delivered hereunder or under any other Loan Document (as modified or supplemented by other information so furnished) contains any material misstatement of fact or omits to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; provided that, with respect to projected financial information, the Borrower represents only that such information was prepared in good faith based upon assumptions believed to be reasonable at the time. There is no fact known to the Borrower or any Subsidiary which could reasonably be expected to have a Material Adverse Effect or in the future is reasonably likely to have a Material Adverse Effect and which has not been set forth in this Agreement or the Loan Documents or the other documents, certificates and statements furnished to the Administrative Agent or the Lenders by or on behalf of the Borrower or any Subsidiary prior to, or on, the date hereof in connection with the transactions contemplated hereby (other than industry-wide risks normally associated with the types of businesses conducted by the Borrower and its Subsidiaries). There are no statements or conclusions in any Reserve Report which are based upon or include misleading information or fail to take into account material information regarding the matters reported therein, it being understood that projections concerning volumes attributable to the Oil and Gas Properties and production and cost estimates contained in each Reserve Report are necessarily based upon professional opinions, estimates and projections and that the Borrower and the Subsidiaries do not warrant that such opinions, estimates and projections will ultimately prove to have been accurate.
Section 7.12. Insurance. The Borrower has, and has caused all of its Subsidiaries to have, (a) all insurance policies sufficient for the compliance by each of them with all material Governmental Requirements and all material agreements and (b) insurance coverage in at least amounts and against such risk (including, without limitation, public liability) that are commercially
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reasonable and usually insured against by companies similarly situated and engaged in the same or a similar business for the assets and operations of the Borrower and its Subsidiaries. The Administrative Agent has been named as an additional insured in respect of such liability insurance policies, and the Administrative Agent in its capacity as such has been named as loss payee with respect to Property loss insurance.
Section 7.13. Restriction on Liens. Neither the Borrower nor any of the Subsidiaries is a party to any material agreement or arrangement (other than the Capital Leases creating Liens permitted by Section 9.03(c), but then only on the Property subject of such Capital Lease), or subject to any order, judgment, writ or decree, which either restricts or purports to restrict its ability to grant Liens to the Administrative Agent and the Lenders on or in respect of their Properties to secure the Obligations and the Loan Documents.
Section 7.14. Subsidiaries. Except as set forth on Schedule 7.14 or as disclosed in writing to the Administrative Agent (which shall promptly furnish a copy to the Lenders), which shall be a supplement to Schedule 7.14, the Borrower has no Subsidiaries and the Borrower has no Foreign Subsidiaries. Each Subsidiary on such schedule is a Wholly-Owned Subsidiary and is a Consolidated Subsidiary.
Section 7.15. Location of Business and Offices. The Borrower’s jurisdiction of organization is Delaware; the name of the Borrower as listed in the public records of its jurisdiction of organization is Lonestar Resources America Inc.; and the organizational identification number of the Borrower in its jurisdiction of organization is 5282689 (or, in each case, as set forth in a notice delivered to the Administrative Agent pursuant to Section 8.01(n) in accordance with Section 12.01). The Borrower’s principal place of business and chief executive offices are located at the address specified in Section 12.01 (or as set forth in a notice delivered pursuant to Section 8.01(n) and Section 12.01(c)). Each Subsidiary’s jurisdiction of organization, name as listed in the public records of its jurisdiction of organization, organizational identification number in its jurisdiction of organization, and the location of its principal place of business and chief executive office is stated on Schedule 7.14 (or as set forth in a notice delivered pursuant to Section 8.01(n)).
Section 7.16. Properties; Titles, Etc.
(a) Each of the Borrower and the Subsidiaries has good and defensible title to its respective Oil and Gas Properties evaluated in the most recently delivered Reserve Report and good title to, or valid leasehold interests in, licenses of, or rights to use, all its personal Properties, in each case, free and clear of all Liens except Liens permitted by Section 9.03. After giving full effect to the Excepted Liens, the Borrower or the Subsidiary specified as the owner owns the net interests in production attributable to the Hydrocarbon Interests as reflected in the most recently delivered Reserve Report, and the ownership of such Properties shall not in any material respect obligate the Borrower or such Subsidiary to bear the costs and expenses relating to the maintenance, development and operations of each such Property in an amount in excess of the working interest of each Property set forth in the most recently delivered Reserve Report that is not offset by a corresponding proportionate increase in the Borrower’s or such Subsidiary’s net revenue interest in such Property.
(b) All material leases and agreements necessary for the conduct of the business of the Borrower and the Subsidiaries are valid and subsisting, in full force and effect, and there exists no default or event or circumstance which with the giving of notice or the passage of time or both would give rise to a default under any such lease or leases, which could reasonably be expected to have a Material Adverse Effect.
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(c) The rights and Properties presently owned, leased or licensed by the Borrower and the Subsidiaries including, without limitation, all easements and rights of way, include all rights and Properties necessary to permit the Borrower and the Subsidiaries to conduct their business in all material respects in the same manner as its business has been conducted prior to the date hereof.
(d) All of the Properties of the Borrower and the Subsidiaries which are reasonably necessary for the operation of their businesses are in good working condition (ordinary wear and tear excepted) and are maintained in accordance with prudent business standards.
(e) Each of the Borrower and each Subsidiary owns, or is licensed to use, all trademarks, tradenames, copyrights, patents and other intellectual Property material to its business, and the use thereof by the Borrower and such Subsidiary does not infringe upon the rights of any other Person, except for any such infringements that, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect. The Borrower and its Subsidiaries either own or have valid licenses or other rights to use all databases, geological data, geophysical data, engineering data, seismic data, maps, interpretations and other technical information used in their businesses as presently conducted, subject to the limitations contained in the agreements governing the use of the same, which limitations are customary for companies engaged in the business of the exploration and production of Hydrocarbons, with such exceptions as could not reasonably be expected to have a Material Adverse Effect.
Section 7.17. Maintenance of Properties. Except for such acts or failures to act as could not be reasonably expected to have a Material Adverse Effect, and subject to the prior rights and limitations of Borrower as an owner of any non-operated working interests, the Oil and Gas Properties (and Properties unitized therewith) of the Borrower and its Subsidiaries have been maintained, operated and developed in a good and workmanlike manner and in conformity with all Governmental Requirements and in conformity with the provisions of all leases, subleases or other contracts comprising a part of the Hydrocarbon Interests and other contracts and agreements forming a part of the Oil and Gas Properties of the Borrower and its Subsidiaries. Specifically in connection with the foregoing, except for those as could not be reasonably expected to have a Material Adverse Effect, (i) no Oil and Gas Property of the Borrower or any Subsidiary is subject to having allowable production reduced below the full and regular allowable (including the maximum permissible tolerance) because of any overproduction (whether or not the same was permissible at the time) and (ii) none of the wells comprising a part of the Oil and Gas Properties (or Properties unitized therewith) of the Borrower or any Subsidiary is deviated from the vertical more than the maximum permitted by Governmental Requirements (except with respect to horizontal wells permitted by Governmental Authority), and such wells are, in fact, bottomed under and are producing from, and the well bores are wholly within, the Oil and Gas Properties (or in the case of wells located on Properties unitized therewith, such unitized Properties) of the Borrower or such Subsidiary. All pipelines, wells, gas processing plants, platforms and other material improvements, fixtures and equipment owned in whole or in part by the Borrower or any of its Subsidiaries that are necessary to conduct normal operations are being maintained in a state adequate to conduct normal operations, and with respect to such of the foregoing which are operated by the Borrower or any of its Subsidiaries, in a manner consistent with the Borrower’s or its Subsidiaries’ past practices (other than those the failure of which to maintain in accordance with this Section 7.17 could not reasonably be expected to have a Material Adverse Effect).
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Section 7.18. Material Gas Imbalances, Prepayments. Except as set forth on Schedule 7.18 or on the most recent certificate delivered pursuant to Section 8.12(c), on a net basis there are no Material Gas Imbalances, take or pay or other prepayments which would require the Borrower or any of its Subsidiaries to deliver Hydrocarbons produced from the Oil and Gas Properties at some future time without then or thereafter receiving full payment therefor.
Section 7.19. Marketing of Production. Except for contracts listed and in effect on the date hereof on Schedule 7.19, and thereafter either disclosed in writing to the Administrative Agent or included in the most recently delivered Reserve Report (with respect to all of which contracts the Borrower represents that it or its Subsidiaries are receiving a price for all production sold thereunder which is computed substantially in accordance with the terms of the relevant contract and are not having deliveries curtailed substantially below the subject Property’s delivery capacity), no material agreements exist which are not cancelable on sixty (60) days’ notice or less without penalty or detriment for the sale of production from the Borrower’s or its Subsidiaries’ Hydrocarbons (including, without limitation, calls on or other rights to purchase, production, whether or not the same are currently being exercised) that (a) pertain to the sale of production at a fixed price and (b) have a maturity or expiry date of longer than six (6) months from the date hereof.
Section 7.20. Swap Agreements. Schedule 7.20, as of the date hereof, and after the date hereof, each certificate required to be delivered by the Borrower pursuant to Section 8.01(f), sets forth, a true and complete list of all Swap Agreements of the Borrower and each Subsidiary, the material terms thereof (including the type, term, effective date, termination date and notional amounts or volumes), the net mark to market value thereof, all credit support agreements relating thereto (including any margin required or supplied) and the counterparty to each such agreement.
Section 7.21. Use of Loans and Letters of Credit. The proceeds of the Loans and the Letters of Credit shall be used to provide working capital for exploration and production operations and for other general corporate purposes. The Borrower and its Subsidiaries are not engaged principally, or as one of its or their important activities, in the business of extending credit for the purpose, whether immediate, incidental or ultimate, of buying or carrying margin stock (within the meaning of Regulation T, U or X of the Board). No part of the proceeds of any Loan or Letter of Credit will be used for any purpose which violates the provisions of Regulations T, U or X of the Board. The Borrower will not request any Borrowing or Letter of Credit, and the Borrower shall not use, and shall procure that its Subsidiaries and its or their respective directors, officers, employees and agents shall not use, the proceeds of any Borrowing or Letter of Credit, directly or indirectly (x) in furtherance of an offer, payment, promise to pay, or authorization of the payment or giving of money, or anything else of value, to any Person in violation of any Anti-Corruption Laws, (y) for the purpose of funding, financing or facilitating any activities, business or transaction of or with any Sanctioned Person, or in any Sanctioned Country, or (z) in any manner that would result in the violation of any Sanctions applicable to any party hereto.
Section 7.22. Solvency. After giving effect to the transactions contemplated hereby, (a) the aggregate assets (after giving effect to amounts that could reasonably be received by reason of indemnity, offset, insurance or any similar arrangement), at a fair valuation, of the Borrower and the Guarantors, taken as a whole, will exceed the aggregate Debt of the Borrower and the Guarantors on a consolidated basis, as the Debt becomes absolute and matures, (b) each of the Borrower and the Guarantors will not have incurred or intended to incur, and will not believe that it will incur, Debt beyond its ability to pay such Debt (after taking into account the timing and amounts of cash to be received by each of the Borrower and the Guarantors and the amounts to be payable on or in respect of its liabilities, and giving effect to amounts that could reasonably be received by reason of indemnity, offset, insurance or any similar arrangement) as such Debt
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becomes absolute and matures and (c) each of the Borrower and the Guarantors will not have (and will have no reason to believe that it will have thereafter) unreasonably small capital for the conduct of its business.
Section 7.23. International Operations. None of the Borrower and its Subsidiaries own, and have not acquired or made any other expenditure (whether such expenditure is capital, operating or otherwise) in or related to, any Oil and Gas Properties located outside of the geographical boundaries of the United States or in the offshore federal waters of the United States of America.
Section 7.24. Anti-Corruption Laws and Sanctions. The Borrower has implemented and maintains in effect policies and/or procedures designed to ensure compliance by the Borrower and the Subsidiaries and their respective directors, officers, employees and agents with Anti-Corruption Laws and applicable Sanctions, and the Borrower and the Subsidiaries and their respective officers and employees and, to the knowledge of the Borrower, their respective directors and officers, are in compliance with Anti-Corruption Laws and applicable Sanctions in all material respects. None of (a) the Borrower and the Subsidiaries or any of their respective directors, officers or employees, or (b) to the knowledge of the Borrower, any agent of the Borrower or any Subsidiary, is a Sanctioned Person. No Borrowing or Letter of Credit, use of proceeds or other transaction contemplated by this Agreement by the Borrower or its Subsidiaries will violate any Anti-Corruption Law or applicable Sanctions.
Section 7.25. Security Instruments. The Mortgages are effective to create in favor of the Administrative Agent, for the ratable benefit of the Secured Parties, a legal, valid and enforceable Lien on all of the Borrower’s and each Guarantor’s right, title and interest in and to the Mortgaged Property thereunder and the proceeds thereof, and when the Mortgages are filed in the offices of the Counties in which the Oil and Gas Properties are located, the Mortgages shall constitute a fully perfected Lien on, and security interest in, all right, title and interest of the Borrower and each Guarantor in such Mortgaged Property and the proceeds thereof, in each case prior and superior in right to any other Person, other than with respect to the rights of Persons pursuant to Liens expressly permitted by Section 9.03.
Section 7.26. Beneficial Ownership Certification. As of the Closing Date, to the Borrower’s knowledge, the information included in any Beneficial Ownership Certification delivered by or on behalf of the Borrower to a Lender is true and correct in all respects.
ARTICLE VIII
Affirmative Covenants
Until the Commitments have expired or been terminated and the principal of and interest on each Loan and all fees payable hereunder, and all other amounts payable under the Loan Documents shall have been paid in full and all Letters of Credit shall have expired or terminated and all LC Disbursements shall have been reimbursed and all other Obligations have been paid in full (other than contingent indemnity obligations for which no claim has been made), the Borrower covenants and agrees with the Lenders that:
Section 8.01. Financial Statements; Other Information. The Borrower will furnish to the Administrative Agent and each Lender:
(a) Annual Financial Statements. As soon as available, but in any event in accordance with then applicable law and not later than 90 days after the end of each fiscal year of the Borrower, its audited consolidated balance sheet and related statements of operations, stockholders’ equity and
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cash flows as of the end of and for such year, setting forth in each case in comparative form the figures for the previous fiscal year, all reported on by BDO or other independent public accountants of recognized national standing (without a “going concern” or like qualification or exception and without any qualification or exception as to the scope of such audit) to the effect that such consolidated financial statements present fairly in all material respects the financial condition and results of operations of the Borrower and its Consolidated Subsidiaries on a consolidated basis in accordance with GAAP consistently applied.
(b) Quarterly Financial Statements. As soon as available, but in any event in accordance with then applicable law and not later than 45 days after the end of each of the first three fiscal quarters of each fiscal year of the Borrower, its unaudited consolidated balance sheet and related unaudited statements of operations, stockholders’ equity and cash flows as of the end of and for such fiscal quarter and the then elapsed portion of the fiscal year, setting forth in each case in comparative form the figures for the corresponding period or periods of (or, in the case of the balance sheet, as of the end of) the previous fiscal year, all certified by one of its Financial Officers as presenting fairly in all material respects the financial condition and results of operations of the Borrower and its Consolidated Subsidiaries on a consolidated basis in accordance with GAAP consistently applied, subject to normal year-end audit adjustments and the absence of footnotes.
(c) Certificate of Financial Officer – Compliance. Concurrently with any delivery of financial statements under Section 8.01(a) or Section 8.01(b), a certificate of a Financial Officer in substantially the form of Exhibit D hereto (i) certifying as to whether a Default has occurred and, if a Default has occurred, specifying the details thereof and any action taken or proposed to be taken with respect thereto, (ii) setting forth reasonably detailed calculations demonstrating compliance with Section 9.01 and (iii) stating whether any change in GAAP or in the application thereof has occurred since the date of the audited financial statements referred to in Section 7.04 (or, if later, the most recently delivered audited financial statements pursuant to Section 8.01(a)) and, if any such change has occurred, specifying the effect of such change on the financial statements accompanying such certificate.
(d) Certificate of Accounting Firm — Defaults. Concurrently with any delivery of financial statements under Section 8.01(a), a certificate of the accounting firm that reported on such financial statements stating whether they obtained knowledge during the course of their examination of such financial statements of any Default (which certificate may be limited to the extent required by accounting rules or guidelines).
(e) Annual Budget. Within thirty (30) days after the end of each fiscal year of the Borrower, a report, in a form satisfactory to the Administrative Agent, prepared by or on behalf of the Borrower detailing on a monthly basis (i) the Projected Production of Hydrocarbons by the Borrower and the Subsidiaries and the assumptions used in calculating such projections, (ii) a proposed annual operating budget for the Borrower and the Subsidiaries for such fiscal year, (iii) the projected Capital Expenditures to be incurred by the Borrower and the Subsidiaries, with a breakdown of those Capital Expenditures to be used for the development of proved undeveloped reserves in the Oil and Gas Properties of the Borrower and the Subsidiaries, and the assumptions used in calculating such projections, and (iv) such other information as may be reasonably requested by the Administrative Agent.
(f) Certificate of Financial Officer – Swap Agreements. Concurrently with any delivery of financial statements under Section 8.01(a) and Section 8.01(b), a certificate of a Financial Officer (a “Swap Agreement Certificate”), in the form of Exhibit E hereto, setting forth
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as of the last Business Day of the fiscal quarter or fiscal year for which such financial statements are being delivered, a true and complete list of all Swap Agreements of the Borrower and each Subsidiary, the material terms thereof (including the type, term, effective date, termination date and notional amounts or volumes), the net mark-to-market value therefor, any new credit support agreements relating thereto not listed on Schedule 7.20, any margin required or supplied under any credit support document, and the counterparty to each such agreement.
(g) Certificate of Insurer – Insurance Coverage. Concurrently with any delivery of financial statements under Section 8.01(a), a certificate of insurance coverage from each insurer with respect to the insurance required by Section 8.07, in form and substance satisfactory to the Administrative Agent, and, if requested by the Administrative Agent or any Lender, all copies of the applicable policies.
(h) Other Accounting Reports. Promptly upon receipt thereof, a copy of each other report or letter submitted to the Borrower or any of its Subsidiaries by independent accountants in connection with any annual, interim or special audit made by them of the books of the Borrower or any such Subsidiary, and a copy of any response by the Borrower or any such Subsidiary, or the board of directors (or other governing body) of the Borrower or any such Subsidiary, to such letter or report.
(i) SEC and Other Filings; Reports to Shareholders. Promptly after the same become publicly available, copies of all periodic and other reports, proxy statements and other materials filed by the Parent or any of its Subsidiaries with any securities commission having jurisdiction over such Person, including the Australian Securities Exchange or any other national securities exchange, or distributed by the Parent to its shareholders generally, as the case may be. Documents required to be delivered pursuant to this clause (i) may be delivered electronically and if so delivered shall be deemed to have been delivered on the date: (x) on which the Borrower posts such documents, or provides a link thereto on the Borrower’s website on the Internet; or (y) on which such documents are posted on the Borrower’s behalf on IntraLinks/SyndTrak or another relevant website, if any, to which each Lender and the Administrative Agent have access (whether a commercial, third-party website or whether sponsored by the Administrative Agent); provided that: (i) upon written request by the Administrative Agent, the Borrower shall deliver paper copies of such documents to the Administrative Agent for further distribution to each Lender until a written request to cease delivering paper copies is given by the Administrative Agent and (ii) the Borrower shall notify (which may be by facsimile or electronic mail) the Administrative Agent of the posting of any such documents and provide to the Administrative Agent by electronic mail electronic versions (i.e., soft copies) of such documents.
(j) Notices Under Material Instruments. Promptly after the furnishing thereof, copies of any financial statement, report or notice furnished to or by any Person pursuant to the terms of any preferred stock designation, indenture, loan or credit or other similar agreement, other than this Agreement and not otherwise required to be furnished to the Lenders pursuant to any other provision of this Section 8.01.
(k) Lists of Purchasers. Concurrently with the delivery of any Reserve Report to the Administrative Agent pursuant to Section 8.12, a list of the names and addresses of the Persons purchasing Hydrocarbons from the Borrower or any Subsidiary per Section 8.12(c)(v).
(l) Notice of Sales of Oil and Gas Properties and Swap Terminations. In the event the Borrower or any Subsidiary intends to sell, transfer, assign or otherwise dispose of any Oil or Gas Properties (other than Hydrocarbons in the ordinary course of business) or any Equity Interests in
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any Subsidiary in accordance with Section 9.12, prior written notice of such disposition, the price thereof and the anticipated date of closing and any other details thereof requested by the Administrative Agent or any Lender. In the event the Borrower or any Subsidiary receives notice or otherwise has knowledge of any Swap Termination, prompt written notice thereof.
(m) Notice of Casualty Events. Prompt written notice, and in any event within three Business Days, of the occurrence of any Casualty Event or the commencement of any action or proceeding that could reasonably be expected to result in a Casualty Event.
(n) Information Regarding Borrower and Guarantors. Prompt written notice (and in any event within thirty (30) days prior thereto) of any change (i) in the Borrower’s or any Guarantor’s corporate name or in any trade name used to identify such Person in the conduct of its business or in the ownership of its Properties, (ii) in the location of the Borrower’s or any Guarantor’s chief executive office or principal place of business, (iii) in the Borrower’s or any Guarantor’s identity or corporate structure or in the jurisdiction in which such Person is incorporated or formed, (iv) in the Borrower’s or any Guarantor’s jurisdiction of organization or such Person’s organizational identification number in such jurisdiction of organization, and (v) in the Borrower’s or any Guarantor’s federal taxpayer identification number, if any.
(o) Production Reports and Lease Operating Statements. Within 45 days after the end of each fiscal quarter, a report (a “Production Report”) setting forth, for each calendar month during the then current fiscal year to date, (i) the volume of production and sales attributable to production (and the prices at which such sales were made and the revenues derived from such sales) for each such calendar month from the Oil and Gas Properties, individually and in the aggregate, and (ii) the related ad valorem, severance and production taxes and lease operating expenses attributable thereto and incurred for each such calendar month.
(p) Material Gas Imbalance Reports. If there are any Material Gas Imbalances, then within 45 days after the end of each fiscal quarter, a report setting forth, for the quarter during the then current fiscal year to date, the existence of any Material Gas Imbalances listed on a property-by-property basis.
(q) Notices of Certain Changes. Promptly, but in any event within five (5) Business Days after the execution thereof, copies of any amendment, modification or supplement to any of the Organizational Documents of the Parent, the Intermediate Entities, the Borrower or any Subsidiary.
(r) PATRIOT Act. Promptly after the request by any Lender, all documentation and other information that such Lender reasonably requests in order to comply with its ongoing obligations under applicable “know your customer” and anti-money laundering rules and regulations, including the USA PATRIOT Act.
(s) Other Requested Information. Promptly following any request therefor, such other information regarding the operations, business affairs and financial condition of the Borrower or any Subsidiary or Affiliate (including, without limitation, any Plan or Multiemployer Plan and any reports or other information required to be filed under ERISA), or compliance with the terms of this Agreement or any other Loan Document, as the Administrative Agent or any Lender may reasonably request.
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Section 8.02. Notices of Material Events. The Borrower will furnish to the Administrative Agent and each Lender prompt written notice of the following:
(a) the occurrence of any Default;
(b) the filing or commencement of, or the threat in writing of, any action, suit, proceeding, investigation or arbitration by or before any arbitrator or Governmental Authority against or affecting the Borrower or any Affiliate thereof not previously disclosed in writing to the Lenders or any material adverse development in any action, suit, proceeding, investigation or arbitration (whether or not previously disclosed to the Lenders) that, in either case, if adversely determined, could reasonably be expected to result in a Material Adverse Effect;
(c) the occurrence of any ERISA Event that, alone or together with any other ERISA Events that have occurred, is reasonably expected to result in liability of the Borrower and its Subsidiaries in an aggregate amount exceeding $1,000,000; and
(d) any other development that results in, or could reasonably be expected to result in, a Material Adverse Effect.
Each notice delivered under this Section 8.02 shall be accompanied by a statement of a Responsible Officer setting forth the details of the event or development requiring such notice and any action taken or proposed to be taken with respect thereto.
The Borrower hereby acknowledges that (a) the Administrative Agent and/or the Arrangers may, at their option, make available to the Lenders and the Issuing Bank the Communications by posting the Communications on the Platform and (b) certain of the Lenders (each, a “Public Lender”) may have personnel who do not wish to receive material non-public information with respect to the Borrower or its Affiliates, or any of the other Loan Parties, or the respective securities of any of the foregoing, and who may be engaged in investment and other market-related activities with respect to such Persons’ securities. The Borrower hereby agrees that: (w) all Communications that are to be made available to Public Lenders that the Borrower determines is not material non-public information shall be clearly and conspicuously marked “PUBLIC” which, at a minimum, shall mean that the word “PUBLIC” shall appear prominently on the first page thereof; (x) by marking Communications “PUBLIC,” the Borrower shall be deemed to have authorized the Administrative Agent, the other Agents, the Arrangers, the Issuing Bank and the Lenders to treat such Communications as not containing any material non-public information with respect to the Borrower, any of the Loan Parties, or any of their securities for purposes of United States Federal and state securities laws (provided, however, that to the extent such Communications constitute Information, they shall be treated as set forth in Section 12.11); (y) all Communications marked “PUBLIC” are permitted to be made available through a portion of the Platform designated “Public Side Information;” and (z) the Administrative Agent, the other Agents and each of the Arrangers shall be entitled to treat any Communications that are not marked “PUBLIC” as being suitable only for posting on a portion of the Platform not designated “Public Side Information.”
Section 8.03. Existence; Conduct of Business. The Borrower will, and will cause each Subsidiary to, do or cause to be done all things necessary to preserve, renew and keep in full force and effect its legal existence and the rights, licenses, permits, privileges and franchises material to the conduct of its business and maintain, if necessary, its qualification to do business in each other jurisdiction in which its Oil and Gas Properties is located or the ownership of its Properties requires such qualification, except where the failure to so qualify could not reasonably be expected to have a Material Adverse Effect; provided that the foregoing shall not prohibit any merger, consolidation, liquidation or dissolution permitted under Section 9.11.
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Section 8.04. Payment of Obligations. The Borrower will, and will cause each Subsidiary to, pay its obligations, including Tax liabilities of the Borrower and all of its Subsidiaries before the same shall become delinquent or in default, except where (a) the validity or amount thereof is being contested in good faith by appropriate proceedings, (b) the Borrower or such Subsidiary has set aside on its books adequate reserves with respect thereto in accordance with GAAP and (c) the failure to make payment pending such contest could not reasonably be expected to result in a Material Adverse Effect or result in the seizure or levy of any material Property of the Borrower or any Subsidiary.
Section 8.05. Performance of Obligations under Loan Documents. The Borrower will pay the Loans according to the terms hereof, and the Parent and the Borrower will, and the Borrower will cause each Subsidiary to, do and perform every act and discharge all of the obligations to be performed and discharged by them under the Loan Documents, including, without limitation, this Agreement, at the time or times and in the manner specified.
Section 8.06. Operation and Maintenance of Properties.
(a) To the extent that the Borrower or a Subsidiary is the operator of the Oil and Gas Properties, the Borrower, at its own expense, will, and will cause each Subsidiary to:
(i) operate its Oil and Gas Properties and other material Properties or cause such Oil and Gas Properties and other material Properties to be operated in a careful and efficient manner in accordance with the practices of the industry and in compliance with all applicable contracts and agreements and in compliance with all Governmental Requirements, including, without limitation, applicable pro ration requirements and Environmental Laws, and all applicable laws, rules and regulations of every other Governmental Authority from time to time constituted to regulate the development and operation of its Oil and Gas Properties and the production and sale of Hydrocarbons and other minerals therefrom, except, in each case, in those circumstances where a reasonably prudent operator under similar circumstances and in accordance with customary industry practice would be prudent not to do so, and the failure to comply could not reasonably be expected to have a Material Adverse Effect;
(ii) operate and maintain in a careful and efficient manner in accordance with the practices of the industry and in compliance with all applicable contracts and agreements and in compliance with all Governmental Requirements, including, without limitation, all applicable laws, rules and regulations of every other Governmental Authority from time to time constituted to regulate the gathering, transportation or processing of Hydrocarbons and other minerals therefrom, except, in each case, in those circumstances where a reasonably prudent operator under similar circumstances and in accordance with customary industry practice would be prudent not to do so, and the failure to comply could not reasonably be expected to have a Material Adverse Effect, any pipelines, compressor stations, wells, gas or crude oil processing facilities, field gathering systems, tanks, tank batteries, pumps, pumping units, fixtures, valves, fittings, machinery, parts, engines, boilers, meters, apparatus, appliances, tools, implements, casing, tubing, rods, cables, wires, towers, surface and other material improvements, fixtures and equipment owned in whole or in part by the Borrower or any of its Subsidiaries that are useful or necessary to conduct normal operations relating to gathering, transportation, processing or removal of Hydrocarbons and other minerals therefrom;
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(iii) keep and maintain all Property material to the conduct of its business in good working order and condition, ordinary wear and tear excepted, and preserve, maintain and keep in good repair, working order and efficiency (ordinary wear and tear excepted) all of its material Oil and Gas Properties, any gas or crude oil processing facilities or equipment and other material Properties, including, without limitation, all equipment, machinery and facilities;
(iv) promptly pay and discharge, or make reasonable and customary efforts to cause to be paid and discharged, all delay rentals, royalties, expenses and indebtedness accruing under the leases or other agreements affecting or pertaining to its Oil and Gas Properties and will do all other things necessary to keep unimpaired their rights with respect thereto and prevent any forfeiture thereof or default thereunder;
(v) promptly perform or make reasonable and customary efforts to cause to be performed, in accordance with industry standards, the obligations required by each and all of the assignments, deeds, leases, sub-leases, contracts and agreements affecting its interests in its Oil and Gas Properties, any gas or crude oil processing facilities and other material Properties; and
(vi) operate its Oil and Gas Properties, any gas or crude oil processing facilities and other material Properties or cause or make reasonable and customary efforts to cause such Oil and Gas Properties, gas or crude oil processing facilities and other material Properties to be operated in accordance with the practices of the industry and in material compliance with all applicable contracts and agreements and in compliance in all material respects with all Governmental Requirements, except, in each case, in those circumstances where a reasonably prudent operator under similar circumstances and in accordance with customary industry practice would be prudent not to do so, and the failure to comply could not reasonably be expected to have a Material Adverse Effect.
(b) To the extent the Borrower or any Subsidiary is not the operator of any Property, the Borrower shall use reasonable efforts to cause the operator to comply with this Section 8.06.
(c) To the extent that any Affiliate of the Borrower operates any of the Borrower’s or its Subsidiaries’ Oil and Gas Properties evaluated in the most recently delivered Reserve Report, the Borrower will cause each such Affiliate to subordinate, pursuant to agreements in forms and substance satisfactory to the Administrative Agent, any operator’s Liens or other Liens in favor of such Affiliate in respect of such Oil and Gas Properties to the Liens in favor of or for the benefit of the Secured Parties.
Section 8.07. Insurance. The Borrower will, and will cause each Subsidiary to, maintain, with financially sound and reputable insurance companies, insurance in such amounts and against such risks as are customarily maintained by companies engaged in the same or similar businesses operating in the same or similar locations. The loss payable clauses or provisions in said insurance policy or policies insuring any of the collateral for the Loans shall be endorsed in favor of and made payable to the Administrative Agent as its interests may appear and such policies shall name the Administrative Agent in its capacity as such as “additional insured” and provide that the insurer will endeavor to give at least 30 days’ prior notice of any cancellation to the Administrative Agent.
Section 8.08. Books and Records; Inspection Rights. The Borrower will, and will cause each Subsidiary to, keep proper books of record and account in which full, true and correct entries are made of all dealings and transactions in relation to its business and activities in accordance with
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GAAP to the extent applicable thereto. The Borrower will, and will cause each Subsidiary to, permit any representatives designated by the Administrative Agent or any Lender, upon reasonable prior notice, to visit and inspect its Properties, to examine and make extracts from its books and records, and to discuss its affairs, finances and condition with its officers and independent accountants, all at such reasonable times and as often as reasonably requested.
Section 8.09. Compliance with Laws. The Parent and the Borrower will, and the Borrower will cause each Subsidiary to, (a) comply with all laws, rules, regulations and orders of any Governmental Authority applicable to it or its Property, except where the failure to do so, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect, and (b) maintain in effect and enforce policies and/or procedures designed to ensure compliance by the Parent, the Borrower, the Subsidiaries and each of their respective directors, officers and employees with Anti-Corruption Laws and applicable Sanctions.
Section 8.10. Environmental Matters.
(a) The Borrower shall at its sole expense: (i) comply, and shall cause its Properties and operations and each Subsidiary and each Subsidiary’s Properties and operations to comply, with all applicable Environmental Laws, the breach of which could be reasonably expected to have a Material Adverse Effect; (ii) not dispose of or otherwise release, and shall cause each Subsidiary not to dispose of or otherwise release, any oil, oil and gas waste, hazardous substance, or solid waste on, under, about or from any of the Borrower’s or its Subsidiaries’ Properties or any other Property to the extent caused by the Borrower’s or any of its Subsidiaries’ operations except in compliance with applicable Environmental Laws, the disposal or release of which could reasonably be expected to have a Material Adverse Effect; (iii) timely obtain or file, and shall cause each Subsidiary to timely obtain or file, all notices, permits, licenses, exemptions, approvals, registrations or other authorizations, if any, required under applicable Environmental Laws to be obtained or filed in connection with the operation or use of the Borrower’s or its Subsidiaries’ Properties, which failure to obtain or file could reasonably be expected to have a Material Adverse Effect; (iv) promptly commence and diligently prosecute to completion, and shall cause each Subsidiary to promptly commence and diligently prosecute to completion, any assessment, evaluation, investigation, monitoring, containment, cleanup, removal, repair, restoration, remediation or other remedial obligations (collectively, the “Remedial Work”) in the event any Remedial Work is required or reasonably necessary under applicable Environmental Laws because of or in connection with the actual or suspected past, present or future disposal or other release of any oil, oil and gas waste, hazardous substance or solid waste on, under, about or from any of the Borrower’s or its Subsidiaries’ Properties, which failure to commence and diligently prosecute to completion could reasonably be expected to have a Material Adverse Effect; (v) conduct, and cause its Subsidiaries to conduct, their respective operations and businesses in a manner that will not expose any Property or Person to any oil, oil and gas waste, hazardous substance or solid waste that could reasonably be expected to form the basis for a claim for damages or compensation; and (vi) establish and implement, and shall cause each Subsidiary to establish and implement, such procedures as may be reasonably necessary to continuously determine and assure that the Borrower’s and its Subsidiaries’ obligations under this Section 8.10(a) are timely and fully satisfied, which failure to establish and implement could reasonably be expected to have a Material Adverse Effect.
(b) The Borrower will promptly, but in no event later than five (5) days of the occurrence of a triggering event, notify the Administrative Agent and the Lenders in writing of any threatened action, investigation or inquiry by any Governmental Authority or any threatened demand or lawsuit by any landowner or other third party against the Borrower or its Subsidiaries
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or their Properties of which the Borrower has knowledge in connection with any Environmental Laws (excluding routine testing and corrective action) if the Borrower reasonably anticipates that such action will result in liability (whether individually or in the aggregate) in excess of $1,000,000, not fully covered by insurance, subject to normal deductibles.
(c) The Borrower will, and will cause each Subsidiary to, provide environmental audits and tests in accordance with American Society of Testing Materials standards upon request by the Administrative Agent and no more than once per year in the absence of any Event of Default (or as otherwise required to be obtained by the Administrative Agent or the Lenders by any Governmental Authority), in connection with any future Material Acquisitions of Oil and Gas Properties or other Properties.
Section 8.11. Further Assurances.
(a) The Parent and Borrower at its sole expense will, and the Borrower will cause each Subsidiary to, promptly execute and deliver to the Administrative Agent all such other documents, agreements and instruments reasonably requested by the Administrative Agent, including a Reconciliation Schedule, to comply with, cure any defects or accomplish the conditions precedent, covenants and agreements of the Parent, the Borrower or any Subsidiary, as the case may be, in the Loan Documents, including the Notes, or to further evidence and more fully describe the collateral intended as security for the Obligations, or to correct any omissions in this Agreement or the Security Instruments, or to state more fully the obligations secured therein, or to perfect, protect or preserve any Liens created pursuant to this Agreement or any of the Security Instruments or the priority thereof, or to make any recordings, file any notices or obtain any consents, all as may be necessary or appropriate, in the sole discretion of the Administrative Agent, in connection therewith.
(b) The Borrower hereby authorizes the Administrative Agent to file one or more financing or continuation statements, and amendments thereto, relative to all or any part of the Mortgaged Property or other Property covered by the Lien of the Security Instruments without the signature of the Borrower or any other Guarantor where permitted by law. A carbon, photographic or other reproduction of the Security Instruments or any financing statement covering the Mortgaged Property or such other Property or any part thereof shall be sufficient as a financing statement where permitted by law.
Section 8.12. Reserve Reports.
(a) On or before April 1st and October 1st of each year, commencing April 1, 2021, the Borrower shall furnish to the Administrative Agent and the Lenders a Reserve Report evaluating the Oil and Gas Properties of the Borrower and its Subsidiaries as of the immediately preceding January 1st and July 1st, respectively; provided that, in connection with the Scheduled Redetermination scheduled to occur on or about February 1, 2021, the Borrower shall furnish to the Administrative Agent and the Lenders on or before January 1, 2021, a Reserve Report prepared by a chief engineer of the Borrower evaluating the Oil and Gas Properties of the Borrower and its Subsidiaries as of the immediately preceding December 1, 2020. The Reserve Report as of January 1 of each year shall be prepared by one or more Approved Petroleum Engineers, and the July 1 Reserve Report of each year shall be prepared by or under the supervision of the chief engineer of the Borrower, who shall certify such Reserve Report to be true and accurate and to have been prepared in accordance with the procedures used in the immediately preceding Reserve Report prepared by an Approved Petroleum Engineer.
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(b) In the event of an Interim Redetermination, the Borrower shall furnish to the Administrative Agent and the Lenders a Reserve Report prepared by or under the supervision of the chief engineer of the Borrower, who shall certify such Reserve Report to be true and accurate and to have been prepared in accordance with the procedures used in the immediately preceding Reserve Report prepared by an Approved Petroleum Engineer. For any Interim Redetermination requested by the Administrative Agent or the Borrower pursuant to Section 2.07(b), the Borrower shall provide such Reserve Report with an “as of” date as required by the Administrative Agent as soon as possible, but in any event no later than thirty (30) days following the receipt of such request.
(c) With the delivery of each Reserve Report, the Borrower shall provide to the Administrative Agent and the Lenders a certificate from a Responsible Officer certifying that (i) the information contained in the Reserve Report and any other information delivered in connection therewith is true and correct in all material respects, it being understood that each Reserve Report is necessarily based upon professional opinions, estimates and projections, and the Borrower does not warrant that the same will prove to be accurate, (ii) the Borrower’s or its Subsidiaries’ own good and defensible title to the Oil and Gas Properties evaluated in such Reserve Report and such Properties are free of all Liens except for Liens permitted by Section 9.03, (iii) except as set forth on an exhibit to the certificate, on a net basis there are no Material Gas Imbalances, take or pay or other prepayments in excess of the volume specified in Section 7.18 with respect to its Oil and Gas Properties evaluated in such Reserve Report which would require the Borrower or any Subsidiary to deliver Hydrocarbons either generally or produced from such Oil and Gas Properties at some future time without then or thereafter receiving full payment therefor, (iv) none of their Oil and Gas Properties have been sold since the date of the last Borrowing Base determination except Hydrocarbons sold in the ordinary course and other Oil and Gas Properties as set forth on an exhibit to the certificate, which certificate shall list all of its Oil and Gas Properties (other than Hydrocarbons sold in the ordinary course of business) sold and in such detail as reasonably required by the Administrative Agent, (v) attached to the certificate is a list of all marketing agreements entered into subsequent to the later of the date hereof or the most recently delivered Reserve Report which the Borrower could reasonably be expected to have been obligated to list on Schedule 7.19 had such agreement been in effect on the date hereof, (vi) attached to the certificate is a list of the names and addresses of the purchasers which accounted for at least 75% of the total natural gas and oil revenues of the Borrower and its Subsidiaries during the 12-month period ended as of the immediately preceding December 31 or June 30, as applicable, (vii) attached thereto is a schedule of the Oil and Gas Properties evaluated by such Reserve Report that are Mortgaged Properties and demonstrating the percentage of the total value of the proved Oil and Gas Properties that the value of such Mortgaged Properties represent in compliance with Section 8.14(a), and (viii) on and as of the date of such certificate, (A) each Oil and Gas Property identified as a Proved Developed Producing Reserve therein was developed for oil and gas, and the wells pertaining to such Oil and Gas Properties that are described therein as producing wells (“Wells”) were each producing oil and/or gas in paying quantities, except for Wells that were utilized as water or gas injection wells, carbon dioxide wells or as water disposal wells (each as noted in such Reserve Report), (B) the descriptions of quantum and nature of record title interests of the Loan Parties, set forth in such Reserve Report, include the entire record title interests of the Loan Parties in such Oil and Gas Properties, are complete and accurate in all material respects, and take into account all Excepted Liens, (C) there are no “back-in”, “reversionary” or “carried” interests held by third parties which could reduce the interests of the Loan Parties in such Oil and Gas Properties, except as set forth in, or otherwise accounted for in, such Reserve Report, (D) no operating or other agreement to which any Loan Party is a party or by which any Loan Party is bound affecting any part of such Oil and Gas Properties requires any Loan Party to bear any of the costs relating to such Oil and Gas Properties greater than the record title interest of any Loan Party in such portion of such Oil and Gas Properties as set forth in such Reserve Report, except in the event any Loan Party is obligated
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under an operating agreement to assume a portion of a defaulting party’s share of costs, and (E) the Loan Parties’ ownership of the Hydrocarbons and the undivided interests in the Oil and Gas Properties as specified in such Reserve Report (1) will, after giving full effect to all Excepted Liens, afford the Loan Parties not less than those net interests (expressed as a fraction, percentage or decimal) in the production from or which is allocated to such Hydrocarbons specified as net revenue interests in such Reserve Report and (2) will not cause the Loan Parties to bear more than that portion (expressed as a fraction, percentage or decimal), specified as working interest in such Reserve Report, of the costs of drilling, developing and operating the wells identified in such Reserve Report or identified in the exhibits to the Mortgages encumbering such Oil and Gas Properties (except for any increases in working interest with a corresponding increase in the net revenue interest in such Oil and Gas Property).
(d) With the delivery of each Reserve Report, the Borrower shall provide to the Administrative Agent and the Lenders an engineering update based upon then-current SEC pricing (an “SEC Report”). The Borrower may (but is not obligated to) provide additional SEC Reports to the Administrative Agent and the Lenders not more than one time during each fiscal quarter.
Section 8.13. Title Information.
(a) On or before the delivery to the Administrative Agent and the Lenders of each Reserve Report required by Section 8.12(a) and at such other times as Agent may reasonably request, the Borrower will deliver title information in form and substance acceptable to the Administrative Agent covering the Oil and Gas Properties evaluated by such Reserve Report that were not included in the immediately preceding Reserve Report, so that the Administrative Agent shall have received together with title information previously delivered to the Administrative Agent, satisfactory title information on at least 95% of the Recognized Value of the proved Oil and Gas Properties evaluated by such Reserve Report.
(b) If the Borrower has provided title information for additional Properties under Section 8.13(a), the Borrower shall, within sixty (60) days of notice from the Administrative Agent that title defects or exceptions exist with respect to such additional Properties, either (i) cure any such title defects or exceptions (including defects or exceptions as to priority) which are not permitted by Section 9.03 raised by such information, (ii) substitute acceptable Mortgaged Properties with no title defects or exceptions except for Excepted Liens (other than Excepted Liens described in clauses (e), (g) and (h) of such definition) having an equivalent value to the Properties in respect of which such title defects or exceptions existed and provide such title information or evidence as to the substitute Mortgaged Properties that is satisfactory to the Administrative Agent or (iii) deliver title information in form and substance acceptable to the Administrative Agent so that the Administrative Agent shall have received, together with title information previously delivered to the Administrative Agent, satisfactory title information on at least 95% of the Recognized Value of the proved Oil and Gas Properties evaluated by such Reserve Report.
(c) If the Borrower is unable to cure any title defect requested by the Administrative Agent or the Lenders to be cured within the 60-day period or the Borrower does not comply with the requirements to provide acceptable title information covering 95% of the Recognized Value of the proved Oil and Gas Properties evaluated in the most recent Reserve Report, such default shall not be a Default, but instead the Administrative Agent shall have the right to exercise the following remedy in its sole discretion from time to time, and any failure to so exercise this remedy at any time shall not be a waiver as to future exercise of the remedy by the Administrative Agent or the Lenders. To the extent that the Administrative Agent is not satisfied with title to any Mortgaged Property after the 60-day period has elapsed, such unacceptable Mortgaged Property shall not count
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towards the 95% requirement, and the Administrative Agent may send a notice to the Borrower and the Lenders that the then outstanding Borrowing Base shall be reduced by an amount as determined by the Administrative Agent to cause the Borrower to be in compliance with the requirement to provide acceptable title information on 95% of the Recognized Value of the proved Oil and Gas Properties. This new Borrowing Base shall become effective immediately after receipt of such notice.
Section 8.14. Additional Collateral; Additional Guarantors.
(a) In connection with each redetermination of the Borrowing Base, the Borrower shall review the Reserve Report and the list of current Mortgaged Properties (as described in Section 8.12(c)(vii)) to ascertain whether the Mortgaged Properties represent 100% of the Recognized Value of the proved Oil and Gas Properties evaluated in the most recently completed Reserve Report after giving effect to exploration and production activities, acquisitions, dispositions and production. In the event that the Mortgaged Properties do not represent 100% of such Recognized Value, then the Borrower shall, and shall cause its Subsidiaries to, grant, within thirty (30) days of delivery of the certificate required under Section 8.12(c), to the Administrative Agent as security for the Obligations a first-priority Lien interest (provided that Excepted Liens of the type described in clauses (a) to (d) and (f) of the definition thereof may exist, but subject to the provisos at the end of such definition) on additional Oil and Gas Properties not already subject to a Lien of the Security Instruments such that after giving effect thereto, the Mortgaged Properties will represent 100% of such total value. All such Liens will be created and perfected by and in accordance with the provisions of Mortgages, security agreements and financing statements or other Security Instruments, all in form and substance reasonably satisfactory to the Administrative Agent and in sufficient executed (and acknowledged where necessary or appropriate) counterparts for recording purposes. In order to comply with the foregoing, if any Subsidiary grants a Lien on its Oil and Gas Properties to the Administrative Agent for the ratable benefit of the Secured Parties and such Subsidiary is not a Guarantor, then it shall become a Guarantor and comply with Section 8.14(b).
(b) The Parent, the Intermediate Entities and the Borrower shall, and the Borrower shall promptly cause each Subsidiary (other than, for the avoidance of doubt, the Excluded Subsidiary) to, guarantee the Obligations pursuant to a Guaranty Agreement. In connection with any such guaranty, the Borrower shall, or shall cause such Subsidiary to, promptly, (i) pledge all of the Equity Interests of such new Subsidiary pursuant to a Pledge Agreement (including, without limitation, delivery of original stock certificates, if any, evidencing the Equity Interests of such Subsidiary, together with an appropriate undated stock powers for each certificate duly executed in blank by the registered owner thereof) and (ii) execute and deliver such other additional closing documents, certificates and legal opinions as shall reasonably be requested by the Administrative Agent.
(c) If the Borrower elects to provide additional Mortgaged Properties in lieu of making any mandatory prepayment pursuant to Section 3.04(c), then the Borrower shall, or shall cause its Subsidiaries (other than, for the avoidance of doubt, the Excluded Subsidiary) to, grant to the Administrative Agent as security for the Obligations a first-priority Lien interest (subject only to Excepted Liens) on additional Oil and Gas Properties not already subject to a Lien of the Security Instruments. All such Liens will be created and perfected by and in accordance with the provisions of Mortgages, deeds of trust, security agreements and financing statements or other Security Instruments, all in form and substance reasonably satisfactory to the Administrative Agent and in sufficient executed (and acknowledged where necessary or appropriate) counterparts for recording purposes. In order to comply with the foregoing, if any Subsidiary places such a Lien on its Oil and Gas Properties and such Subsidiary is not a Guarantor, then it shall become a Guarantor and comply with Section 8.14(b).
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(d) In the event that (i) the Required Lenders waive the provisions of Section 9.15 to permit the Borrower or any Domestic Subsidiary to become the owner of a Foreign Subsidiary (such waiver to be granted in the sole discretion of the Required Lenders), and (ii) such Foreign Subsidiary has total assets in excess of $1,000,000, then the Borrower shall promptly, or shall cause such Domestic Subsidiary to promptly, guarantee the Obligations pursuant to the Guaranty Agreement. In connection with any such guaranty, the Borrower shall, or shall cause such Domestic Subsidiary to, (i) execute and deliver a supplement to the Guaranty Agreement, (ii) pledge 65% of all the Equity Interests of such Foreign Subsidiary (including, without limitation, delivery of original stock certificates evidencing such Equity Interests of such Foreign Subsidiary, together with appropriate stock powers for each certificate duly executed in blank by the registered owner thereof) and (iii) execute and deliver such other additional closing documents, certificates and legal opinions as shall reasonably be requested by the Administrative Agent.
Section 8.15. ERISA Compliance. The Borrower will promptly furnish and will cause the Subsidiaries and any ERISA Affiliate to promptly furnish to the Administrative Agent (i) promptly after the filing thereof with the United States Secretary of Labor, the IRS or the PBGC, copies of each annual and other report with respect to each Plan or any trust created thereunder, (ii) immediately upon becoming aware of the occurrence of any ERISA Event or of any “prohibited transaction,” as described in section 406 of ERISA or in section 4975 of the Code, in connection with any Plan or any trust created thereunder, a written notice signed by the President or the principal Financial Officer of the Borrower, the Subsidiary or the ERISA Affiliate, as the case may be, specifying the nature thereof, what action the Borrower, the Subsidiary or the ERISA Affiliate, as applicable, is taking or proposes to take with respect thereto, and, when known, any action taken or proposed by the IRS, the Department of Labor or the PBGC with respect thereto, and (iii) immediately upon receipt thereof, copies of any notice of the PBGC’s intention to terminate or to have a trustee appointed to administer any Plan. With respect to each Plan (other than a Multiemployer Plan), the Borrower will, and will cause each Subsidiary and ERISA Affiliate to, (i) satisfy in full and in a timely manner, without incurring any late payment or underpayment charge or penalty and without giving rise to any lien, all of the contribution and funding requirements of section 412 of the Code (determined without regard to subsections (d), (e), (f) and (k) thereof) and of section 302 of ERISA (determined without regard to sections 303, 304 and 306 of ERISA), and (ii) pay, or cause to be paid, to the PBGC in a timely manner, without incurring any late payment or underpayment charge or penalty, all premiums required pursuant to sections 4006 and 4007 of ERISA.
Section 8.16. Keepwell. Each Qualified ECP Guarantor hereby jointly and severally absolutely, unconditionally and irrevocably undertakes to provide such funds or other support as may be needed from time to time by each other Loan Party to honor all of its obligations under each Loan Document in respect of Swap Obligations (provided, however, that each Qualified ECP Guarantor shall only be liable under this Section 8.16 for the maximum amount of such liability that can be hereby incurred without rendering its obligations under this Section 8.16, or otherwise under this Agreement, voidable under applicable law relating to fraudulent conveyance or fraudulent transfer, and not for any greater amount). The obligations of each Qualified ECP Guarantor under this Section shall remain in full force and effect until all of the Obligations have been fully and finally paid. Each Qualified ECP Guarantor intends that this Section 8.16 constitute, and this Section 8.16 shall be deemed to constitute, a “keepwell, support, or other agreement” for the benefit of each other Loan Party for all purposes of section 1a(18)(A)(v)(II) of the Commodity Exchange Act.
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Section 8.17. Required Swap Agreements. The Borrower shall or shall cause another Loan Party to: (a) not later than the date falling 90 days following the Closing Date (or such longer period as the Administrative Agent may agree in its sole discretion, provided that such longer period shall not expire after the date falling 120 days following the Closing Date) (the “Required Swap Date”), enter into and maintain Swap Agreements with one or more Approved Counterparties to hedge notional amounts of crude oil and natural gas, as applicable, covering not less than, for each calendar month during the period of 36 consecutive full calendar months following the Closing Date, commencing with the first calendar month for which a Swap Agreement is available, eighty percent (80%) of the Projected Production from the total Proved Developed Producing Reserves of the Borrower and its Subsidiaries for such calendar month, calculated separately (as such production is set forth in the Initial Reserve Report); and (b) as at the date of each Swap Agreement Certificate, for each calendar month during the period of twenty-four (24) months immediately following the date of each Swap Agreement Certificate, enter into and maintain Swap Agreements with one or more Approved Counterparties to ensure that the notional amounts of crude oil and natural gas hedged, as applicable, cover not less than, for each calendar month of such period, seventy-five percent (75%) of the Projected Production from the total Proved Developed Producing Reserves of the Borrower and its Subsidiaries for such calendar month, calculated separately.
Section 8.18. Beneficial Ownership Regulation Documentation. Promptly following any request therefor, the Borrowers shall provide information and documentation reasonably requested by the Administrative Agent or any Lender for purposes of compliance with applicable “know your customer” requirements under the USA PATRIOT Act, the Beneficial Ownership Regulation, or other applicable anti-money laundering laws.
Section 8.19. Holding Company. The Parent will not at any time trade, engage in any business or business activity, incur any material liabilities or own any assets other than (i) the direct or indirect ownership of the Equity Interests in the Intermediate Entities and the Borrower, as applicable, (ii) performance of its obligations under and in connection with the Loan Documents, the granting of liens to secure and the incurrence and performance of guarantee obligations in respect of Debt of the Borrower or any Subsidiary not prohibited by the terms of this Agreement, (iii) issuing, selling and redeeming its Equity Interests, (iv) paying taxes, (v) holding directors’ and shareholders’ meetings, preparing corporate and similar records and other activities required to maintain its corporate or other legal structure or to participate in tax, accounting or other administrative matters as a member of the consolidated group of the Loan Parties, (vi) activities required by applicable laws and regulations and (vii) activities incidental to the business or activities described in each foregoing clause of this Section 8.19.
Section 8.20. CARES Debt.
(a) The Loan Parties shall provide to the Administrative Agent copies of the definitive loan documentation for CARES Debt promptly upon execution and delivery thereof by the parties, together with a reasonably detailed estimate of the amount of CARES Debt that the Loan Parties reasonably anticipate will be subject to forgiveness pursuant to the provisions of the CARES Act – Title I.
(b) The Loan Parties shall timely (and, in any event, not later than thirty (30) days (or such longer period as may be agreed by the Administrative Agent) after the seven-week anniversary of the initial incurrence thereof) submit all applications and required documentation necessary or desirable for the lender of the CARES Debt and/or the U.S. Small Business Administration to make a determination regarding the amount of the CARES Debt that is eligible to be forgiven.
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(c) The Loan Parties shall provide to the Administrative Agent copies of any amendments, modifications, waivers, supplements or consents executed and delivered with respect to the CARES Debt promptly upon execution and delivery thereof, and copies of any notices of default received by any Loan Party with respect to the CARES Debt.
(d) The Loan Parties shall (i) use all of the proceeds of the CARES Debt solely for purposes expressly permitted by the CARES Act – Title I and (ii) use commercially reasonable efforts to conduct their business in a manner that maximizes the amount of the CARES Debt that is forgiven. Without limiting the foregoing, the Loan Parties shall cause the proceeds of the CARES Debt to be deposited into a deposit account that does not sweep funds for the purposes of satisfying any Obligations or any other Debt, and shall ensure that the proceeds of the CARES Debt are not used to repay other Debt.
(e) On the CARES Forgiveness Date, the Loan Parties shall deliver to the Administrative Agent a certificate of an Authorized Officer of the Loan Parties certifying as to the amount of the CARES Debt that will be forgiven pursuant to the provisions of the CARES Act – Title I, together with a reasonably detailed description thereof, all in form reasonably satisfactory to the Administrative Agent.
ARTICLE IX
Negative Covenants
Until the Commitments have expired or terminated and the principal of and interest on each Loan and all fees payable hereunder and all other amounts payable under the Loan Documents have been paid in full and all Letters of Credit have expired or terminated and all LC Disbursements shall have been reimbursed, and all other Obligations have been paid in full (other than contingent indemnity obligations for which no claims has been made), the Borrower covenants and agrees with the Lenders that:
Section 9.01. Financial Covenants.
(a) Ratio of Total Debt to EBITDAX. The Borrower will not, as of the last day of any fiscal quarter, commencing with the fiscal quarter ending December 31, 2020, permit its ratio of Total Debt as of such time to EBITDAX to exceed 3.50 to 1.00. EBITDAX shall be calculated at the end of each fiscal quarter using the results of the 12-month period ending with that fiscal quarter end.
(b) Current Ratio. The Borrower will not permit, as of the last day of any fiscal quarter, its ratio of (i) consolidated current assets of the Borrower and the Consolidated Subsidiaries (including the unused amount of the total Commitments, but excluding non-cash assets under ASC 815) to (ii) consolidated current liabilities of the Borrower and the Consolidated Subsidiaries (excluding non-cash obligations under ASC 815 and current maturities under this Agreement) to be less than, (x) for the fiscal quarter ending December 31, 2020, 0.95 to 1.0 and (y) for any other fiscal quarter, commencing with the fiscal quarter ending March 31, 2020, 1.0 to 1.0.
Section 9.02. Debt. The Borrower will not, and will not permit any Subsidiary to, incur, create, assume or suffer to exist any Debt, except:
(a) the Notes or other Obligations arising under the Loan Documents or any guaranty of or suretyship arrangement for the Notes or other Obligations;
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(b) accounts payable and accrued expenses, liabilities or other obligations to pay the deferred purchase price of Property or services, from time to time incurred in the ordinary course of business which are not greater than 90 days past the date of invoice or delinquent or which are being contested in good faith by appropriate action and for which adequate reserves have been maintained in accordance with GAAP;
(c) Debt under Capital Leases not to exceed $3,000,000 in the aggregate at any one time outstanding;
(d) Debt associated with bonds or surety obligations required by Governmental Requirements in connection with the operation of the Oil and Gas Properties;
(e) intercompany Debt between the Borrower and any Subsidiary or between Subsidiaries to the extent permitted by Section 9.05(g); provided that such Debt is not held, assigned, transferred, negotiated or pledged to any Person other than the Borrower or one of its Wholly-Owned Subsidiaries, and provided further that any such Debt owed by either the Borrower or a Guarantor shall be subordinated to the Obligations on terms set forth in the Guaranty Agreement;
(f) endorsements of negotiable instruments for collection in the ordinary course of business;
(g) Debt approved by the Required Lenders and subordinated to the Borrower’s obligations to Lenders in a manner acceptable to the Administrative Agent in its sole discretion;
(h) other Debt not to exceed $3,000,000 in the aggregate at any one time outstanding provided that, no Default, Event of Default or Borrowing Base Deficiency shall have occurred and be continuing or would result therefrom;
(i) Debt arising under Swap Agreements permitted under Section 9.18; and
(j) guarantee obligations incurred by the Borrower or any Subsidiary in respect of (i) Debt of the Borrower or other Subsidiaries that is permitted to be incurred under Section 9.02(c) or Section 9.02(h) or (ii) obligations that are not for borrowed money (to the extent constituting Debt), in each case provided that, on a pro forma basis, at the time of such incurrence, no Default, no Event of Default and no Borrowing Base Deficiency shall have occurred and be continuing or would result therefrom.
Section 9.03. Liens. The Borrower will not, and will not permit any Subsidiary to, create, incur, assume or permit to exist any Lien on any of its Properties (now owned or hereafter acquired), except:
(a) Liens securing the payment of any Obligations;
(b) Excepted Liens;
(c) Liens securing Capital Leases permitted by Section 9.02(c) but only on the Property under lease;
(d) Liens existing on the date hereof and disclosed to the Lenders on Schedule 9.03;
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(e) Liens on Property not constituting collateral for the Obligations and not otherwise permitted by the foregoing clauses of this Section 9.03; provided that the aggregate principal or face amount of all Debt secured under this Section 9.03(e) shall not exceed $3,000,000 in the aggregate at any time; and
(f) Liens on Property constituting collateral for the Obligations; provided that the aggregate principal or face amount of all Obligations secured under this Section 9.03(f) shall not exceed $1,000,000 in the aggregate at any time and provided further that, at the time such Lien is incurred, no Default, no Event of Default and no Borrowing Base Deficiency shall have occurred and be continuing or would result therefrom.
Section 9.04. Dividends, Distributions and Redemptions; Redemption of Debt.
(a) The Borrower will not, and will not permit any of its Subsidiaries to, declare or make, or agree to pay or make, directly or indirectly, any Restricted Payment, return any capital to its stockholders, members or partners or make any distribution of its Property to its Equity Interest holders; provided that the Borrower may make Restricted Payments to the Parent (through the Intermediate Entities) as shall be necessary to enable the Parent to pay (i) its reasonable operating costs and expenses incurred in the ordinary course of business (including general and administrative, legal, accounting and reserve engineering costs), (ii) expenses attributable to its direct or indirect ownership of the Loan Parties or its status as an SEC reporting company, (iii) taxes, (iv) claims made against the Parent pursuant to customary indemnification arrangements and (v) the amounts necessary to fund repurchases of equity otherwise permitted under the terms of this Agreement as provided under the New Warrants, in each case, solely to the extent that such Restricted Payments are otherwise permitted under Section 8.19 and provided that, the proceeds distributed by the Borrower are applied promptly by the Parent to fund the payments permitted pursuant to this Section 9.04; provided, further, that the Borrower’s Subsidiaries may (x) declare and pay dividends ratably with respect to their Equity Interests and (y) make a distribution of Property to their Equity Interest holders to the extent constituting a disposition permitted under Section 9.12.
(b) The Borrower will not, and will not permit any Subsidiary to, make or offer to make any optional or voluntary Redemption of or otherwise optionally or voluntarily Redeem (whether in whole or in part) any Debt incurred pursuant to Section 9.02(c), (g) or (h) other than any voluntary prepayments of such Debt in exchange for, out of, or funded (in full) with the net cash proceeds of an equity contribution, provided that, at the time of any such repayment, no Default, no Event of Default and no Borrowing Base Deficiency shall have occurred or would result therefrom.
Section 9.05. Investments, Loans and Advances. The Borrower will not, and will not permit any Subsidiary to, make or permit to remain outstanding any Investments in or to any Person, except that the foregoing restriction shall not apply to:
(a) Investments reflected in the Financial Statements or which are disclosed to the Lenders in Schedule 9.05;
(b) accounts receivable arising in the ordinary course of business;
(c) direct obligations of the United States or any agency thereof, or obligations guaranteed by the United States or any agency thereof, in each case maturing within one year from the date of creation thereof;
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(d) commercial paper maturing within one year from the date of creation thereof rated in the highest grade by S&P or Moody’s;
(e) deposits maturing within one year from the date of creation thereof with, including certificates of deposit issued by, any Lender or any office located in the United States of any other bank or trust company which is organized under the laws of the United States or any state thereof, has capital, surplus and undivided profits aggregating at least $100,000,000 (as of the date of such bank or trust company’s most recent financial reports) and has a short term deposit rating of no lower than A2 or P2, as such rating is set forth from time to time, by S&P or Moody’s, respectively or, in the case of any Foreign Subsidiary, a bank organized in a jurisdiction in which the Foreign Subsidiary conducts operations having assets in excess of $500,000,000 (or its equivalent in another currency);
(f) deposits in money market funds investing exclusively in Investments described in Section 9.05(c), Section 9.05(d) or Section 9.05(e);
(g) Investments (i) made by the Borrower in or to the Guarantors, and (ii) made by any Subsidiary in or to the Borrower or any Guarantor;
(h) Investments (including, without limitation, capital contributions) in general or limited partnerships or other types of entities (each a “venture”) entered into by the Borrower or a Subsidiary with others in the ordinary course of business; provided that (i) any such venture is engaged exclusively in oil and gas exploration, development, production, processing and related activities, including transportation, (ii) the interest in such venture is acquired in the ordinary course of business and on fair and reasonable terms and (iii) such venture interests acquired and capital contributions made (valued as of the date such interest was acquired or the contribution made) do not exceed, in the aggregate at any time outstanding, an amount equal to $1,000,000 provided further that at the time such Investment is made, no Default, no Event of Default and no Borrowing Base Deficiency shall have occurred and be continuing or would result therefrom;
(i) Investments made by the Borrower or a Guarantor and funded with the net cash proceeds of any equity contribution by, or equity issuance of, the Parent in direct ownership interests in additional Oil and Gas Properties and gas gathering systems related thereto or related to farm-out, farm-in, joint operating, or area of mutual interest agreements, gathering systems, pipelines or other similar arrangements which are usual and customary in the oil and gas exploration and production business located within the geographic boundaries of the United States of America, provided that, at the time such Investment is made, (A) the Borrower shall be in compliance, on a pro forma basis after giving effect to any such Investment, with the financial covenants set forth in Section 9.01 recomputed as of the last day of the most recently ended fiscal quarter of the Borrower for which financial statements are available, and (B) no Default, no Event of Default and no Borrowing Base Deficiency shall have occurred and be continuing or would result therefrom;
(j) Investments in stock, obligations or securities received in settlement of debts arising from
Investments permitted under this Section 9.05 owing to the Borrower or any Subsidiary as a result of a bankruptcy or other insolvency proceeding of the obligor in respect of such debts or upon the enforcement of any Lien in
favor of the Borrower or any of its Subsidiaries; provided that the Borrower shall give the Administrative Agent prompt written notice in the event that the aggregate amount of all Investments held at any one time under this
Section 9.05(k) exceeds $1,000,000;
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(k) Investments made in exchange for Equity Interests in the Parent or funded with the net cash proceeds of any equity contribution to the Parent, provided that, at the time such Investment is made, no Default, no Event of Default and no Borrowing Base Deficiency shall have occurred or would result therefrom; and
(l) other Investments not to exceed $1,000,000 in the aggregate at any time; provided that, at the time such Investment is made, no Default, no Event of Default and no Borrowing Base Deficiency shall have occurred or would result therefrom.
Section 9.06. Nature of Business; International Operations. The Borrower will not, and will not permit any Subsidiary to, allow any material change to be made in the character of its business as currently conducted by it and business activities reasonably incidental thereto as an independent oil and gas exploration and production company with operations in the continental United States. From and after the date hereof, the Borrower and its Subsidiaries will not acquire or make any other expenditure (whether such expenditure is capital, operating or otherwise) in or related to any Oil and Gas Properties not located within the geographical boundaries of the United States or in the offshore federal waters of the United States.
Section 9.07. Limitation on Leases. The Borrower will not, and will not permit any Subsidiary to, create, incur, assume or suffer to exist any obligation for the payment of rent or hire of Property of any kind whatsoever (real or personal but excluding (a) Capital Leases, leases of Hydrocarbon Interests, and leases of drilling rigs, (b) leases of compression equipment not to exceed $5,000,000 in any period of twelve (12) consecutive calendar months and (c) leases of corporate office space owned by the Excluded Subsidiary (any such lease, a “Headquarter Lease”) not to exceed the sum of (i) $1,000,000 in any period of twelve (12) consecutive calendar months and (ii) any property taxes imposed by any Governmental Authority and required to be borne by the lessee under the terms of such Headquarter Lease), under leases or lease agreements which would cause the aggregate amount of all payments made by the Borrower and the Subsidiaries pursuant to all such leases or lease agreements, including, without limitation, any residual payments at the end of any lease, to exceed $1,000,000 in any period of twelve (12) consecutive calendar months during the life of such leases; provided that any obligation for the payment of rent incurred by the Borrower or any of its Subsidiaries under any Headquarter Lease pursuant to this Section 9.07 shall be at a rate that is no less favorable to it than it would obtain in a comparable arm’s length transaction with a Person not an Affiliate.
Section 9.08. Proceeds of Loans. The Borrower will not permit the proceeds of the Loans to be used for any purpose other than those permitted by Section 7.21. Neither the Borrower nor any Person acting on behalf of the Borrower has taken or will take any action which might cause any of the Loan Documents to violate Regulation T, U or X or any other regulation of the Board or to violate section 7 of the Securities Exchange Act of 1934 or any rule or regulation thereunder, in each case as now in effect or as the same may hereinafter be in effect. If requested by the Administrative Agent, the Borrower will furnish to the Administrative Agent and each Lender a statement to the foregoing effect in conformity with the requirements of FR Form U-1 or such other form referred to in Regulation U, Regulation T or Regulation X of the Board, as the case may be.
Section 9.09. ERISA Compliance. The Borrower will not, and will not permit any Subsidiary to, at any time:
(a) engage in, or permit any ERISA Affiliate to engage in, any transaction in connection with which the Borrower, a Subsidiary or any ERISA Affiliate could be subjected to either a civil penalty assessed pursuant to subsection (c), (i) or (l) of section 502 of ERISA or a tax imposed by Chapter 43 of Subtitle D of the Code;
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(b) terminate, or permit any ERISA Affiliate to terminate, any Plan in a manner, or take any other action with respect to any Plan, which could result in any liability of the Borrower, a Subsidiary or any ERISA Affiliate to the PBGC;
(c) fail to make, or permit any ERISA Affiliate to fail to make, full payment when due of all amounts which, under the provisions of any Plan, agreement relating thereto or applicable law, the Borrower, a Subsidiary or any ERISA Affiliate is required to pay as contributions thereto;
(d) permit to exist, or allow any ERISA Affiliate to permit to exist, any accumulated funding deficiency within the meaning of section 302 of ERISA or section 412 of the Code, whether or not waived, with respect to any Plan;
(e) permit, or allow any ERISA Affiliate to permit, the actuarial present value of the benefit liabilities under any Plan maintained by the Borrower, a Subsidiary or any ERISA Affiliate which is regulated under Title IV of ERISA to exceed the current value of the assets (computed on a plan termination basis in accordance with Title IV of ERISA) of such Plan allocable to such benefit liabilities. The term “actuarial present value of the benefit liabilities” shall have the meaning specified in section 4041 of ERISA;
(f) contribute to or assume an obligation to contribute to, or permit any ERISA Affiliate to contribute to or assume an obligation to contribute to, any Multiemployer Plan;
(g) acquire, or permit any ERISA Affiliate to acquire, an interest in any Person that causes such Person to become an ERISA Affiliate with respect to the Borrower or a Subsidiary or with respect to any ERISA Affiliate of the Borrower or a Subsidiary if such Person sponsors, maintains or contributes to, or at any time in the six-year period preceding such acquisition has sponsored, maintained, or contributed to, (i) any Multiemployer Plan, or (ii) any other Plan that is subject to Title IV of ERISA under which the actuarial present value of the benefit liabilities under such Plan exceeds the current value of the assets (computed on a Plan termination basis in accordance with Title IV of ERISA) of such Plan allocable to such benefit liabilities;
(h) incur, or permit any ERISA Affiliate to incur, a liability to or on account of a Plan under section 515, 4062, 4063, 4064, 4201 or 4204 of ERISA;
(i) contribute to or assume an obligation to contribute to, or permit any ERISA Affiliate to contribute to or assume an obligation to contribute to, any employee welfare benefit plan, as defined in section 3(1) of ERISA, including, without limitation, any such plan maintained to provide benefits to former employees of such entities, that may not be terminated by such entities in their sole discretion at any time without any material liability; or
(j) amend, or permit any ERISA Affiliate to amend, a Plan resulting in an increase in current liability such that the Borrower, a Subsidiary or any ERISA Affiliate is required to provide material security to such Plan under section 401(a)(29) of the Code.
Section 9.10. Sale or Discount of Receivables. Except for receivables obtained by the Borrower or any Subsidiary out of the ordinary course of business or the settlement of joint interest billing accounts in the ordinary course of business or discounts granted to settle collection of accounts receivable or the sale of defaulted accounts arising in the ordinary course of business in
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connection with the compromise or collection thereof and not in connection with any financing transaction, the Borrower will not, and will not permit any Subsidiary to, discount or sell (with or without recourse) any of its notes receivable or accounts receivable.
Section 9.11. Mergers, Etc. Neither the Borrower nor any of its Subsidiaries will merge into or with or consolidate with any other Person, or sell, transfer, lease or otherwise dispose of (whether in one transaction or in a series of transactions) all or substantially all of its Property to any other Person or liquidate or dissolve, except that any Wholly-Owned Subsidiary may merge with, or participate in a consolidation with, any other Wholly-Owned Subsidiary and the Borrower may merge with, or participate in a consolidation with, any Wholly-Owned Subsidiary so long as the Borrower is the continuing or surviving corporation.
Section 9.12. Sale of Properties. The Borrower will not, and will not permit any Subsidiary to, sell, assign, farm out, convey or otherwise transfer any Property (other than to the Borrower or a Guarantor) except for:
(a) the sale of Hydrocarbons in the ordinary course of business;
(b) the sale or transfer of equipment that is no longer necessary for the business of the Borrower or such Subsidiary or is replaced by equipment of at least comparable value and use;
(c) sales, assignments, farm-outs, conveyances and other transfers of Properties; provided that (i) the fair market value of all Properties sold or disposed of pursuant to this clause (c) shall not exceed $5,000,000 in the aggregate, (ii) 100% of the consideration received in respect of such sale, assignment, farm-out, conveyance, or transfer shall be cash, (iii) the consideration received in respect of such sale, assignment, farm-out, conveyance, or transfer shall be equal to or greater than the fair market value of the Property sold or disposed of (as reasonably determined by the board of directors of the Borrower and, if requested by the Administrative Agent, the Borrower shall deliver a certificate of a Responsible Officer of the Borrower certifying to that effect) and (iv) if such proceeds have not, within 30 days of such sale, assignment, farm-out, conveyance, or transfer, been applied in the purchase of replacement Properties, 100% of such proceeds shall be applied as required pursuant to Section 3.04(c)(v);
(d) the disposition of Oil and Gas Properties to the extent that such property is exchanged for Oil and Gas Properties for the purpose of creating contiguous leaseholds with existing Oil and Gas Properties, provided that, (i) the value of such Oil and Gas Properties so exchanged does not exceed in the aggregate, $10,000,000 per annum, (ii) the fair market value of the Properties acquired by the Borrower or its Subsidiary in respect of such exchange shall be equal to or greater than the fair market value of the Oil and Gas Properties disposed of (as reasonably determined by the board of directors of the Borrower and, if requested by the Administrative Agent, the Borrower shall deliver a certificate of a Responsible Officer of the Borrower certifying to that effect), and (iii) at the time of any such disposition, no Default, no Event of Default and no Borrowing Base Deficiency shall have occurred or would result therefrom; and
(e) the sale or other disposition of Properties provided that the fair market value of all Properties sold or disposed of pursuant to this clause (e) shall not exceed $1,000,000 in aggregate per annum and provided further that, at the time of such sale, no Default, no Event of Default and no Borrowing Base Deficiency shall have occurred or would result therefrom.
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Section 9.13. Environmental Matters. The Borrower will not, and will not permit any Subsidiary to, cause or permit any of its Property to be in violation of, or do anything or permit anything to be done which will subject any such Property to any Remedial Work under, any Environmental Laws, assuming disclosure to the applicable Governmental Authority of all relevant facts, conditions and circumstances, if any, pertaining to such Property where such violations or remedial obligations could reasonably be expected to have a Material Adverse Effect.
Section 9.14. Transactions with Affiliates. The Borrower will not, and will not permit any Subsidiary to, enter into any transaction, including, without limitation, any purchase, sale, lease or exchange of Property or the rendering of any service, with any Affiliate (other than the Guarantors and Wholly-Owned Subsidiaries of the Borrower) unless such transactions are otherwise permitted under this Agreement and are upon fair and reasonable terms no less favorable to it than it would obtain in a comparable arm’s length transaction with a Person not an Affiliate. The restrictions in this Section 9.14 do not apply to Restricted Payments permitted under Section 9.04 or to the terms of any additional Equity Investments in the Borrower.
Section 9.15. Subsidiaries. The Borrower will not, and will not permit any Subsidiary to, create or acquire any additional Subsidiary unless the Borrower gives written notice to the Administrative Agent of such creation or acquisition and complies with Section 8.14(b) and Section 8.14(c). The Borrower shall not, and shall not permit any Subsidiary to, sell, assign or otherwise dispose of any Equity Interests in any Subsidiary except in compliance with Section 9.12(d). Neither the Borrower nor any Subsidiary shall have any Foreign Subsidiaries and each Subsidiary shall be a Wholly-Owned Subsidiary.
Section 9.16. Negative Pledge Agreements; Dividend Restrictions. The Borrower will not, and will not permit any Subsidiary to, create, incur, assume or suffer to exist any contract, agreement or understanding (other than this Agreement, the Security Instruments, and Capital Leases creating Liens permitted by Section 9.03(c)), which in any way prohibits or restricts (or which requires the consent of or notice to other Persons in connection therewith): (a) the granting, conveying, creation or imposition of any Lien on any of its Property in favor of the Administrative Agent and the Lenders, (b) any Subsidiary from paying dividends or making distributions to the Borrower or any Guarantor, (c) paying any Debt owed to the Borrower or any other Subsidiary, (d) making loans or advances to, or other Investments in, the Borrower or any other Subsidiary, or (e) transferring any of its assets to the Borrower or any other Subsidiary.
Section 9.17. Gas Imbalances, Take-or-Pay or Other Prepayments. The Borrower will not, and will not permit any Subsidiary to, (a) incur, become or remain liable for, any Material Gas Imbalance, or (b) except in those circumstances where in accordance with customary industry practice it would otherwise be prudent to do so and such actions or transactions individually or in the aggregate will not have a Material Adverse Effect, allow take-or-pay or other prepayments with respect to the Oil and Gas Properties of the Borrower or any Subsidiary that would require the Borrower or such Subsidiary to deliver Hydrocarbons at some future time without then or thereafter receiving full payment therefor.
Section 9.18. Swap Agreements. The Borrower will not, and will not permit any Subsidiary to, enter into any Swap Agreements with any Person other than:
(a) Swap Agreements in respect of commodities:
(i) which are for combined durations of not more than sixty (60) months each;
(ii) with an Approved Counterparty; and
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(iii) the notional volumes for which (when aggregated with other commodity Swap Agreements then in effect other than basis differential swaps on volumes already hedged pursuant to other Swap Agreements) do not exceed, as of the date such Swap Agreement is executed, 90% of the reasonably anticipated Projected Production from total Proved Reserves during the period during which such Swap Agreement is in effect for each of crude oil and natural gas, calculated separately, provided that:
(A) not more than 25% of total hedged volumes will be comprised of hedged volumes from properties other than Proved Developed Producing Reserves, as included in the most recently delivered SEC Report for each of crude oil and natural gas, calculated separately; and
(B) the aggregate notional volumes of all such Swap Agreements (other than put and floor options and basis differential swaps on volumes already hedged pursuant to other Swap Agreements) in any current or future fiscal quarter, as listed in the most recently delivered Swap Agreement Certificate, shall not exceed 100% of gross volumes of crude oil and natural gas production for the most recently completed fiscal quarter, as set forth on the most recently delivered Production Report, for each of crude oil and natural gas, calculated separately.
At all times, clause (a)(iii) above shall be deemed to refer to the most recent SEC Report, Production Report and Swap Agreement Certificate received by the Administrative Agent, as applicable.
If any Swap Agreement Certificate reflects, or if the Borrower otherwise determines and so notifies the Administrative Agent, that after the end of any fiscal quarter the requirements of clause (a)(iii)(B) above are not met, then if requested by the Administrative Agent, the Borrower shall, within thirty (30) days of such request, terminate, create off-setting positions, or otherwise unwind or monetize existing Swap Agreements such that, at such time, the Borrower is then in compliance with the requirements of clause (a)(iii)(B) above.
(b) Swap Agreements in respect of interest rates with an Approved Counterparty, as follows: (i) Swap Agreements effectively converting interest rates from fixed to floating, the notional amounts of which (when aggregated with all other Swap Agreements of the Borrower and the Subsidiaries then in effect effectively converting interest rates from fixed to floating) do not exceed 50% of the then outstanding principal amount of the Borrower’s Debt for borrowed money which bears interest at a fixed rate and (ii) Swap Agreements effectively converting interest rates from floating to fixed, the notional amounts of which (when aggregated with all other Swap Agreements of the Borrower and the Subsidiaries then in effect effectively converting interest rates from floating to fixed) do not exceed 75% of the then outstanding principal amount of the Borrower’s Debt for borrowed money which bears interest at a floating rate.
In no event shall any Swap Agreement contain any requirement, agreement or covenant for the Borrower or any Subsidiary to post collateral (other than the Collateral) or margin to secure their obligations under such Swap Agreement or to cover market exposures. The restrictions in this Section 9.18 do not apply to the purchase of puts, floors or similar options, and the 90% limit above shall be calculated separately for price hedges and for basis hedges.
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Section 9.19. Marketing Activities. The Borrower will not, and will not permit any of its Subsidiaries to, engage in marketing activities for any Hydrocarbons or enter into any contracts related thereto other than (i) contracts for the sale of Hydrocarbons scheduled or reasonably estimated to be produced from their proved Oil and Gas Properties during the period of such contract, (ii) contracts for the sale of Hydrocarbons scheduled or reasonably estimated to be produced from proved Oil and Gas Properties of third parties during the period of such contract associated with the Oil and Gas Properties of the Borrower and its Subsidiaries that the Borrower or one of its Subsidiaries has the right to market pursuant to joint operating agreements, unitization agreements or other similar contracts that are usual and customary in the oil and gas business and (iii) other contracts for the purchase and/or sale of Hydrocarbons of third parties (A) which have generally offsetting provisions (i.e. corresponding pricing mechanics, delivery dates and points and volumes) such that no “position” is taken and (B) for which appropriate credit support has been taken to alleviate the material credit risks of the counterparty thereto.
Section 9.20. Maintenance of Deposit Accounts. The Borrower will not, and will not permit any Subsidiary to (a) open or maintain any deposit account, securities account or commodity account at or with any banking or other financial institution other than a Lender, (b) establish or maintain a deposit account, securities account or commodity account, without delivering to the Administrative Agent a control agreement signed by the Administrative Agent, the depository bank, the other parties thereto and the applicable Loan Party, and otherwise in form and substance reasonably satisfactory to the Administrative Agent, covering the applicable deposit account, securities account or commodity account, or (c) deposit or maintain Collateral (including the proceeds thereof) in a deposit account, securities account or commodities account that is not subject to a control agreement; provided, however, that the requirements of this Section 9.20 shall not apply to any Excluded Account.
Section 9.21. Excluded Subsidiary. The Borrower shall not, nor shall it permit any of its Subsidiaries, other than the Excluded Subsidiary, to (a) create, assume, incur or suffer to exist any Lien on or in respect of any of its Property for the benefit of the Excluded Subsidiary, (b) sell, assign, pledge, or otherwise transfer any of its properties to the Excluded Subsidiary, other than as permitted pursuant to Section 9.05(l), (c) make or permit to exist any loans, advances, or capital contributions to, or make any Investment in, or purchase or commit to purchase any Equity Interests or evidences of Debt of or interests in, the Excluded Subsidiary or in any properties of the Excluded Subsidiary, other than as permitted pursuant to Section 9.05(l), or (d) permit the Excluded Subsidiary to conduct any material business activities or own any material Property other than the following (and activities incidental thereto): (i) ownership and maintenance of the corporate headquarters of the Borrower and the Borrower’s Subsidiaries and the management of the use and access of the corporate headquarters by the Borrower and the Borrower’s Subsidiaries, (ii) the maintenance of its legal existence (including the ability to incur fees, costs and expenses relating to such maintenance and performance of activities relating to its officers, directors, managers and employees and the filing of tax reports and paying taxes and other customary obligations related thereto in the ordinary course (and contesting any taxes)), (iii) financing activities related to the foregoing, (iv) participating in tax, accounting and other administrative matters as a member of the consolidated group of the Borrower and its Subsidiaries, including compliance with applicable law and legal, tax and accounting matters related thereto and activities relating to its officers, directors, managers and employees, (v) holding any cash and Cash Equivalents, (vi) entering into and performance of obligations with respect to contracts and other arrangements entered into in connection with the activities contemplated by this Section 9.21, and (vii) the performance of obligations under and compliance with its organizational documents, any demands or requests from or requirements of a Governmental Authority or any applicable law, ordinance, regulation, rule, order, judgment, decree or permit.
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Section 9.22. Limitation on Swap Terminations. The Borrower shall not, nor shall it permit any of its Subsidiaries to, take any action causing, or otherwise permit, the termination, liquidation, or unwinding of any Swap Agreement to which the Borrower or any of its Subsidiaries is a party unless (a) the Borrower prepays the Borrowings in an aggregate principal amount equal to 100% of the Swap Termination Value (to the extent positive) as required pursuant to Section 3.04(c)(v) and (b) the Borrowing Base is automatically and permanently reduced (ratably among the Lenders in accordance with each Lender’s Applicable Percentage) by the amount of such prepayment described in clause (a).
ARTICLE X
Events of Default; Remedies
Section 10.01. Events of Default. The occurrence or existence of any one or more of the following events shall constitute an “Event of Default”:
(a) the Borrower shall fail to pay any principal of any Loan or any reimbursement obligation in respect of any LC Disbursement when and as the same shall become due and payable (other than LC Disbursements which are repaid through an ABR Borrowing as permitted by Section 2.8(e) hereof), whether at the due date thereof or at a date fixed for prepayment thereof including any prepayment required pursuant to Section 3.04, by acceleration or otherwise;
(b) the Borrower shall fail to pay any interest on any Loan or any fee or any other amount (other than an amount referred to in Section 10.01(a)) payable under any Loan Document, when and as the same shall become due and payable, and such failure shall continue unremedied for a period of three (3) Business Days;
(c) any representation or warranty made or deemed made by or on behalf of the Borrower or any Subsidiary in or in connection with any Loan Document or any amendment or modification of any Loan Document or waiver under such Loan Document, or in any report, certificate, financial statement or other document furnished pursuant to or in connection with any Loan Document or any amendment or modification thereof or waiver thereunder, shall prove to have been incorrect in any material respect when made or deemed made (except that to the extent any such representation or warranty is otherwise qualified by materiality, such representation or warranty shall be true and correct when made or deemed made);
(d) the Borrower or any Subsidiary shall fail to observe or perform any covenant, condition or agreement contained in Section 8.01(j), Section 8.01(n), Section 8.01(q), Section 8.02, Section 8.03, Section 8.14, Section 8.15, Section 8.17, Section 8.19, or in Article IX;
(e) the Borrower or any Subsidiary shall fail to observe or perform any covenant, condition or agreement contained in this Agreement (other than those specified in Section 10.01(a), Section 10.01(b) or Section 10.01(d)) or any other Loan Document, and such failure shall continue unremedied for a period of thirty (30) days after the earlier to occur of (A) notice thereof from the Administrative Agent to the Borrower (which notice will be given at the request of any Lender) or (B) a Responsible Officer of the Borrower or such Subsidiary otherwise becoming aware of such default;
(f) the Borrower or any Subsidiary shall fail to make any payment (whether of principal or interest and regardless of amount) in respect of any Material Indebtedness, when and as the same shall become due and payable (after giving effect to any applicable notice and cure period);
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(g) any event or condition (other than as described in Section 10.01(f)) occurs that results in any Material Indebtedness becoming due prior to its scheduled maturity or that enables or permits (with or without the giving of notice, the lapse of time or both) the holder or holders of any Material Indebtedness or any trustee or agent on its or their behalf to cause any Material Indebtedness to become due, or to require the Redemption thereof or any offer to Redeem to be made in respect thereof, prior to its scheduled maturity or require the Borrower or any Subsidiary to make an offer in respect thereof;
(h) an involuntary proceeding shall be commenced or an involuntary petition shall be filed seeking (i) liquidation, reorganization or other relief in respect of the Borrower or any Subsidiary or its debts, or of a substantial part of its assets, under any Debtor Relief Laws whether Federal, state or foreign, or similar law, now or hereafter in effect or (ii) the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for the Borrower or any Subsidiary or for a substantial part of its assets, and, in any such case, such proceeding or petition shall continue undismissed for sixty (60) days or an order or decree approving or ordering any of the foregoing shall be entered;
(i) the Borrower or any Subsidiary shall (i) voluntarily commence any proceeding or file any petition seeking liquidation, reorganization or other relief under any Debtor Relief Law, whether Federal, state or foreign, or similar law, now or hereafter in effect, (ii) consent to the institution of, or fail to contest in a timely and appropriate manner, any proceeding or petition described in Section 10.01(h), (iii) apply for or consent to the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for the Borrower or any Subsidiary or for a substantial part of its assets, (iv) file an answer admitting the material allegations of a petition filed against it in any such proceeding, (v) make a general assignment for the benefit of creditors or (vi) take any action for the purpose of effecting any of the foregoing;
(j) the Borrower or any Subsidiary shall become unable, admit in writing its inability or fail generally to pay its debts as they become due;
(k) (i) one or more judgments for the payment of money in an aggregate amount in excess of $3,000,000 (to the extent not covered by independent third party insurance provided by insurers of the highest claims paying rating or financial strength as to which the insurer does not dispute coverage and is not subject to an insolvency proceeding) or (ii) any one or more non-monetary judgments that have, or could reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect, shall be rendered against the Borrower, any Subsidiary or any combination thereof and the same shall remain undischarged for a period of thirty (30) consecutive days during which execution shall not be effectively stayed, or any action shall be legally taken by a judgment creditor to attach or levy upon any assets of the Borrower or any Subsidiary to enforce any such judgment;
(l) the Loan Documents after delivery thereof shall for any reason, except to the extent permitted by the terms thereof, cease to be in full force and effect and valid, binding and enforceable in accordance with their terms against the Borrower or a Guarantor party thereto or shall be repudiated by any of them, or cease to create a valid and perfected Lien of the priority required thereby on any of the collateral purported to be covered thereby, except to the extent permitted by the terms of this Agreement, or the Borrower or any Subsidiary or any of their Affiliates shall so state in writing;
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(m) an ERISA Event shall have occurred that, in the opinion of the Required Lenders, when taken together with all other ERISA Events that have occurred, will result in liability of the Borrower and its Subsidiaries in an aggregate amount exceeding $1,000,000 in any year;
(n) there occurs under any swap agreement an early Termination Date (as defined (or as such equivalent term is defined) in such Swap Agreement) resulting from (i) any event of default under such Swap Agreement to which the Borrower or any Subsidiary is the Defaulting Party (as defined (or as such equivalent term is defined) in such Swap Agreement), or (ii) any Termination Event (as defined (or as such equivalent term is defined)) under such Swap Agreement as to which the Borrower or any Subsidiary is an Affected Party (as defined (or as such equivalent term is defined)) and, in either event, the Swap Termination Value owed by the Borrower or such Subsidiary as a result thereof constitutes Material Indebtedness; and
(o) a Change in Control shall occur.
Section 10.02. Remedies.
(a) In the case of an Event of Default other than one described in Section 10.01(h), Section 10.01(i) or Section 10.01(j), at any time thereafter during the continuance of such Event of Default, the Administrative Agent may, and, at the request of the Required Lenders, shall, by notice to the Borrower, take either or both of the following actions, at the same or different times: (i) terminate the Commitments, and thereupon the Commitments shall terminate immediately; and (ii) declare the Notes and the Loans then outstanding to be due and payable in whole (or in part, in which case any principal not so declared to be due and payable may thereafter be declared to be due and payable), and thereupon the principal of the Loans so declared to be due and payable, together with accrued interest thereon and all fees and other obligations other than Obligations outstanding under Secured Swap Agreements and Secured Treasury Management Agreements of the Borrower and the Guarantors accrued hereunder and under the Notes and the other Loan Documents (including, without limitation, the payment of cash collateral to secure the LC Exposure as provided in Section 2.08(j)), shall become due and payable immediately, without presentment, demand, protest, notice of intent to accelerate, notice of acceleration or other notice of any kind, all of which are hereby waived by the Borrower and each Guarantor; and in case of an Event of Default described in Section 10.01(h), Section 10.01(i) or Section 10.01(j), the Commitments shall automatically terminate and the Notes and the principal of the Loans then outstanding, together with accrued interest thereon and all fees and the other obligations other than Obligations outstanding under Secured Swap Agreements and Secured Treasury Management Agreements of the Borrower and the Guarantors accrued hereunder and under the Notes and the other Loan Documents (including, without limitation, the payment of cash collateral to secure the LC Exposure as provided in Section 2.08(j)), shall automatically become due and payable, without presentment, demand, protest or other notice of any kind, all of which are hereby waived by the Borrower and each Guarantor.
(b) In the case of the occurrence of an Event of Default, the Administrative Agent and the Lenders will have all other rights and remedies available at law and equity.
(c) After the earliest to occur of (w) the exercise of remedies provided for in Section 10.02(a), (x) the maturity of the Loans, (y) the Loans automatically becoming due and payable, or (z) the LC Exposure has been required to be Cash Collateralized, any amounts received on account of the Obligations shall be applied by the Administrative Agent in the following order:
(A) First, to payment or reimbursement of that portion of the Obligations constituting fees, expenses and indemnities payable to the Administrative Agent in its capacity as such;
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(B) Second, pro rata to the payment of all amounts owed to any Swap Lender under a Secured Swap Agreement;
(C) Third, pro rata to payment or reimbursement of that portion of the First Out Obligations constituting fees, expenses and indemnities payable to the Lenders;
(D) Fourth, pro rata to payment of accrued interest on the Revolving Loans;
(E) Fifth, pro rata to payment of principal outstanding on the Revolving Loans and Obligations owed to any Treasury Management Party;
(F) Sixth, pro rata to any other Obligations and to serve as Cash Collateral to be held by the Administrative Agent to secure the LC Exposure;
(G) Seventh, pro rata to payment or reimbursement of that portion of the Term Loan Obligations constituting fees, expenses and indemnities payable to the Lenders;
(H) Eighth, pro rata to payment of accrued interest on the Term Loans;
(I) Ninth, pro rata to the payment of principal outstanding on the Term Loans; and
(J) Last, any excess, after all of the Obligations shall have been indefeasibly paid in full in cash, shall be paid to the Borrower or as otherwise required by any Governmental Requirement,
provided that, if, at any time, (i) the Release Condition has been satisfied, all Obligations owing to any Swap Lender shall be deemed to rank “fifth” pro rata with payment of principal outstanding on the Revolving Loans and Obligations to any Treasury Management Party pursuant to (E) above, rather than (B) above, or (ii) a Lender assigns any portion of its Loans or Commitments hereunder and terminates its Secured Swap Agreement(s) pursuant to a termination event under the relevant Secured Swap Agreement as a result of such assignment, the Obligations owed to each such Swap Lender as a result of any such termination, shall be deemed to rank “fifth” pro rata with payment of principal outstanding on the Loans and Obligations to any Treasury Management Party pursuant to (E) above, rather than (B) above.
Amounts used to Cash Collateralize the aggregate undrawn amount of Letters of Credit pursuant to clause (v) above shall be applied to satisfy drawings under such Letters of Credit as they occur. If any amount remains on deposit as Cash Collateral after all Letters of Credit have either been fully drawn or expired, such remaining amount shall be applied to the other Obligations, if any, in the order set forth above.
Notwithstanding the foregoing, Obligations owing to any Swap Lender and Obligations arising under Secured Treasury Management Agreements shall be excluded from the application described above if the Administrative Agent has not received written notice thereof, together with such
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supporting documentation as the Administrative Agent may request, from the applicable Swap Lender or Treasury Management Party, as the case may be. Each Swap Lender and Treasury Management Party not a party to this Agreement that has given the notice contemplated by the preceding sentence shall, by such notice, be deemed to have acknowledged and accepted the appointment of the Administrative Agent pursuant to the terms of Article XI hereof for itself and its Affiliates as if a “Lender” party hereto.
Notwithstanding the foregoing provisions of this Section 10.02(c), or anything to the contrary herein or in any other Loan Document, no amount received from any Loan Party shall be applied to any Excluded Swap Obligation of such Loan Party, but appropriate adjustments shall be made with respect to payments from other Loan Parties to preserve the allocation to Obligations otherwise set forth above in this Section 10.02(c).
ARTICLE XI
The Agents
Section 11.01. Appointment; Powers.
(a) Each of the Lenders and the Issuing Bank hereby irrevocably appoints Citibank, N.A. to act on its behalf as the Administrative Agent hereunder and under the other Loan Documents and authorizes the Administrative Agent to take such actions on its behalf and to exercise such powers as are delegated to the Administrative Agent by the terms hereof or thereof, together with such actions and powers as are reasonably incidental thereto. The provisions of this Article are solely for the benefit of the Administrative Agent, the Lenders and the Issuing Bank, and neither the Borrower nor any other Loan Party shall have rights as a third-party beneficiary of any of such provisions. It is understood and agreed that the use of the term “agent” herein or in any other Loan Documents (or any other similar term) with reference to the Administrative Agent is not intended to connote any fiduciary or other implied (or express) obligations arising under agency doctrine of any applicable law. Instead such term is used as a matter of market custom, and is intended to create or reflect only an administrative relationship between contracting parties.
(b) The Administrative Agent shall also act as the “collateral agent” under the Loan Documents, and each of the Lenders (including in its capacities as a potential Swap Lender and/or Treasury Management Party) and the Issuing Bank hereby irrevocably appoints and authorizes the Administrative Agent to act as the agent of such Lender and the Issuing Bank for purposes of acquiring, holding and enforcing any and all Liens on Collateral granted by any of the Loan Parties to secure any of the Obligations, together with such powers and discretion as are reasonably incidental thereto. In this connection, the Administrative Agent, as “collateral agent” and any co-agents, sub-agents and attorneys-in-fact appointed by the Administrative Agent pursuant to Section 11.05 for purposes of holding or enforcing any Lien on the Collateral (or any portion thereof) granted under the Security Instruments, or for exercising any rights and remedies thereunder at the direction of the Administrative Agent, shall be entitled to the benefits of all provisions of this Article XI and Article XII (including Section 12.03(c), as though such co-agents, sub-agents and attorneys-in-fact were the “collateral agent” under the Loan Documents) as if set forth in full herein with respect thereto.
Section 11.02. Rights as a Lender. The Person serving as the Administrative Agent hereunder shall have the same rights and powers in its capacity as a Lender as any other Lender and may exercise the same as though it were not the Administrative Agent, and the term “Lender” or “Lenders” shall, unless otherwise expressly indicated or unless the context otherwise requires, include the Person serving as the Administrative Agent hereunder in its individual capacity. Such
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Person and its Affiliates may accept deposits from, lend money to, own securities of, act as the financial advisor or in any other advisory capacity for, and generally engage in any kind of business with, the Borrower or any Subsidiary or other Affiliate thereof as if such Person were not the Administrative Agent hereunder and without any duty to account therefor to the Lenders.
Section 11.03. Exculpatory Provisions.
(a) The Administrative Agent shall not have any duties or obligations except those expressly set forth herein and in the other Loan Documents, and its duties hereunder shall be administrative in nature. Without limiting the generality of the foregoing, the Administrative Agent:
(i) shall not be subject to any fiduciary or other implied duties, regardless of whether a Default has occurred and is continuing;
(ii) shall not have any duty to take any discretionary action or exercise any discretionary powers, except discretionary rights and powers expressly contemplated hereby or by the other Loan Documents that the Administrative Agent is required to exercise as directed in writing by the Required Lenders (or such other number or percentage of the Lenders as shall be expressly provided for herein or in the other Loan Documents); provided that the Administrative Agent will not be required to take any action that, in its opinion or the opinion of its counsel, may expose the Administrative Agent to liability or that is contrary to any Loan Document or applicable law, including, for the avoidance of doubt, any action that may be in violation of the automatic stay under any Debtor Relief Law or that may effect a forfeiture, modification or termination of property of a Defaulting Lender in violation of any Debtor Relief Law; and
(iii) shall not, except as expressly set forth herein and in the other Loan Documents, have any duty to disclose, and shall not be liable for the failure to disclose, any information relating to the Borrower or any of its Affiliates that is communicated to or obtained by the Person serving as the Administrative Agent or any of its Affiliates in any capacity.
(b) The Administrative Agent shall not be liable for any action taken or not taken by it (i) with the consent or at the request of the Required Lenders (or such other number or percentage of the Lenders as shall be necessary, or as the Administrative Agent shall believe in good faith shall be necessary, under the circumstances as provided in Sections 10.02 and 12.02), or (ii) in the absence of its own gross negligence or willful misconduct as determined by a court of competent jurisdiction by final and nonappealable judgment. The Administrative Agent shall be deemed not to have knowledge of any Default unless and until notice describing such Default is given to the Administrative Agent in writing by the Borrower, a Lender or the Issuing Bank.
(c) The Administrative Agent shall not be responsible for or have any duty to ascertain or inquire into (i) any statement, warranty or representation made in or in connection with this Agreement or any other Loan Document, (ii) the contents of any certificate, report or other document delivered hereunder or thereunder or in connection herewith or therewith, (iii) the performance or observance of any of the covenants, agreements or other terms or conditions set forth herein or therein or the occurrence of any Default, (iv) the validity, enforceability, effectiveness or genuineness of this Agreement, any other Loan Document or any other agreement, instrument or document, or the creation, perfection or priority of any Lien purported to be created by the Security Instruments, (v) the value or sufficiency of any of the Collateral, or (vi) the satisfaction of any condition set forth in Article VI or elsewhere herein, other than to confirm receipt of items expressly required to be delivered to the Administrative Agent.
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Section 11.04. Reliance by Administrative Agent. The Administrative Agent shall be entitled to rely upon, and shall not incur any liability for relying upon, any notice, request, certificate, consent, statement, instrument, document or other writing (including any electronic message, Internet or intranet website posting or other distribution) believed by it to be genuine and to have been signed, sent or otherwise authenticated by the proper Person. The Administrative Agent also may rely upon any statement made to it orally or by telephone and believed by it to have been made by the proper Person, and shall not incur any liability for relying thereon. In determining compliance with any condition hereunder to the making of a Loan, or the issuance, extension, renewal or increase of a Letter of Credit, that by its terms must be fulfilled to the satisfaction of a Lender or the Issuing Bank, the Administrative Agent may presume that such condition is satisfactory to such Lender or the Issuing Bank unless the Administrative Agent shall have received notice to the contrary from such Lender or the Issuing Bank prior to the making of such Loan or the issuance of such Letter of Credit. The Administrative Agent may consult with legal counsel (who may be counsel for the Borrower), independent accountants and other experts selected by it, and shall not be liable for any action taken or not taken by it in accordance with the advice of any such counsel, accountants or experts.
Section 11.05. Delegation of Duties. The Administrative Agent may perform any and all of its duties and exercise its rights and powers hereunder or under any other Loan Document by or through any one or more sub-agents appointed by the Administrative Agent. The Administrative Agent and any such sub-agent may perform any and all of its duties and exercise its rights and powers by or through their respective Related Parties. The exculpatory provisions of this Article shall apply to any such sub-agent and to the Related Parties of the Administrative Agent and any such sub-agent, and shall apply to their respective activities in connection with the syndication of the Loans as well as activities as Administrative Agent. The Administrative Agent shall not be responsible for the negligence or misconduct of any sub-agents except to the extent that a court of competent jurisdiction determines in a final and nonappealable judgment that the Administrative Agent acted with gross negligence or willful misconduct in the selection of such sub-agents.
Section 11.06. Resignation of Administrative Agent and/or Issuing Bank.
(a) The Administrative Agent may at any time give notice of its resignation to the Lenders, the Issuing Bank and the Borrower. Upon receipt of any such notice of resignation, the Required Lenders shall have the right, so long as no Event of Default then exists in consultation with the Borrower, to appoint a successor, which shall be a bank with an office in the United States, or an Affiliate of any such bank with an office in the United States. If no such successor shall have been so appointed by the Required Lenders and shall have accepted such appointment within thirty (30) days after the retiring Administrative Agent gives notice of its resignation, then the retiring Administrative Agent may, on behalf of the Lenders and the Issuing Bank, appoint a successor Administrative Agent meeting the qualifications set forth above but without any requirement for consultation with the Borrower; provided that if the Administrative Agent shall notify the Borrower and the Lenders that no qualifying Person has accepted such appointment, then such resignation shall nonetheless become effective in accordance with such notice and (i) the retiring Administrative Agent shall be discharged from its duties and obligations hereunder and under the other Loan Documents and (ii) all payments, communications and determinations provided to be made by, to or through the Administrative Agent shall instead be made by or to each Lender and the Issuing Bank directly, until such time as the Required Lenders appoint a successor Administrative Agent as provided for above in this Section. Upon the acceptance of a successor’s
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appointment as Administrative Agent hereunder, such successor shall succeed to and become vested with all of the rights, powers, privileges and duties of the retiring (or retired) Administrative Agent (except for any indemnity, fees or other payments owed to the retiring Administrative Agent), and the retiring Administrative Agent shall be discharged from all of its duties and obligations hereunder or under the other Loan Documents (if not already discharged therefrom as provided above in this Section). The fees payable by the Borrower to a successor Administrative Agent shall be the same as those payable to its predecessor unless otherwise agreed between the Borrower and such successor. After the retiring Administrative Agent’s resignation hereunder and under the other Loan Documents, the provisions of this Article and Section 12.03 shall continue in effect for the benefit of such retiring Administrative Agent, its sub-agents and their respective Related Parties in respect of any actions taken or omitted to be taken by any of them while the retiring Administrative Agent was acting as Administrative Agent.
(b) Any resignation by Citibank, N.A. as Administrative Agent pursuant to this Section shall also constitute its resignation as Issuing Bank. After the resignation of the Issuing Bank hereunder, the retiring Issuing Bank shall remain a party hereto and shall continue to have all the rights and obligations of an Issuing Bank under this Agreement and the other Loan Documents with respect to Letters of Credit issued by it prior to such resignation, but shall not be required to issue additional Letters of Credit or to extend, renew or increase any existing Letter of Credit, including, without limitation, any Letter of Credit with an auto-extend feature (for the avoidance of doubt, the retiring Issuing Bank is authorized to notify any and each beneficiary of each Letter of Credit (in accordance with the terms of such Letter of Credit) that any such Letter of Credit will not be renewed, extended or increased, automatically or otherwise). Upon the acceptance of a successor’s appointment as Administrative Agent hereunder, (i) such successor shall succeed to and become vested with all of the rights, powers, privileges and duties of the retiring Issuing Bank (except for any indemnity, fees or other payments owed to the retiring Issuing Bank), (ii) the retiring Issuing Bank shall be discharged from all of its respective duties and obligations hereunder or under the other Loan Documents, and (iii) the successor Issuing Bank shall issue letters of credit in substitution for the Letters of Credit, if any, outstanding at the time of such succession or make other arrangements satisfactory to the retiring Issuing Bank to effectively assume the obligations of the retiring Issuing Bank with respect to such Letters of Credit.
(c) In addition to the foregoing, if a Lender becomes, and during the period it remains, a Defaulting Lender, the Issuing Bank may, upon prior written notice to the Borrower and the Administrative Agent, resign as Issuing Bank, effective at the close of business on a date specified in such notice (which date may not be less than thirty (30) days after the date of such notice); provided that such resignation by the Issuing Bank will have no effect on the validity or enforceability of any Letter of Credit then outstanding or on the obligations of the Borrower or any Lender under this Agreement with respect to any such outstanding Letter of Credit or otherwise to the Issuing Bank.
Section 11.07. Non-Reliance on Administrative Agent and Other Lenders. Each Lender and the Issuing Bank acknowledges that it has, independently and without reliance upon the Administrative Agent or any other Lender or any of their Related Parties and based on such documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Agreement. Each Lender and the Issuing Bank also acknowledges that it will, independently and without reliance upon the Administrative Agent or any other Lender or any of their Related Parties and based on such documents and information as it shall from time to time deem appropriate, continue to make its own decisions in taking or not taking action under or based upon this Agreement, any other Loan Document or any related agreement or any document furnished hereunder or thereunder. Each Lender and the Issuing Bank expressly acknowledges that
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neither the Administrative Agent nor any of its respective officers, directors, employees, agents, attorneys-in-fact or Affiliates has made any representations or warranties to it and that no act by the Administrative Agent hereinafter taken, including any review of the affairs of the Borrower or any other Loan Party, shall be deemed to constitute any representation or warranty by the Administrative Agent to any Lender or any Issuing Bank.
Section 11.08. No Other Duties, etc. Anything herein to the contrary notwithstanding, none of the Bookrunners, Arrangers or Documentation Agents listed on the cover page hereof shall have any powers, duties or responsibilities under this Agreement or any of the other Loan Documents, except in its capacity, as applicable, as the Administrative Agent, a Lender or the Issuing Bank hereunder. No Bookrunner, Arranger or Documentation Agent listed on the cover page hereof shall have or be deemed to have any fiduciary relationship with any Lender.
Section 11.09. Administrative Agent May File Proofs of Claim. In case of the pendency of any proceeding under any Debtor Relief Law or any other judicial proceeding relative to any Loan Party, the Administrative Agent (irrespective of whether the principal of any Loan or LC Exposure shall then be due and payable as herein expressed or by declaration or otherwise and irrespective of whether the Administrative Agent shall have made any demand on the Borrower) shall be entitled and empowered (but not obligated) by intervention in such proceeding or otherwise:
(a) to file and prove a claim for the whole amount of the principal and interest owing and unpaid in respect of the Loans, LC Exposure and all other Obligations that are owing and unpaid and to file such other documents as may be necessary or advisable in order to have the claims of the Lenders, the Issuing Bank and the Administrative Agent (including any claim for the reasonable compensation, expenses, disbursements and advances of the Lenders, the Issuing Bank and the Administrative Agent and their respective agents and counsel and all other amounts due the Lenders, the Issuing Bank and the Administrative Agent under Sections 3.05 and 12.03) allowed in such judicial proceeding; and
(b) to collect and receive any monies or other property payable or deliverable on any such claims and to distribute the same,
and any custodian, receiver, assignee, trustee, liquidator, sequestrator or other similar official in any such judicial proceeding is hereby authorized by each Lender and the Issuing Bank to make such payments to the Administrative Agent and, in the event that the Administrative Agent shall consent to the making of such payments directly to the Lenders and the Issuing Bank, to pay to the Administrative Agent any amount due for the reasonable compensation, expenses, disbursements and advances of the Administrative Agent and its agents and counsel, and any other amounts due the Administrative Agent under Section 12.03.
Section 11.10. Collateral and Guaranty Matters.
(a) Each of the Lenders and the other Secured Parties (including each Lender in its capacity as a potential Swap Lender and/or Treasury Management Party), and the Issuing Bank, irrevocably authorize the Administrative Agent, at its option and in its discretion:
(i) to release any Lien on any property granted to or held by the Administrative Agent under any Loan Document (x) upon termination of all of the Commitments and payment in full of all Obligations (other than contingent indemnification obligations) and the expiration or termination of all Letters of Credit (other than Letters of Credit as to which other arrangements satisfactory to the Administrative Agent and the
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Issuing Bank shall have been made), (y) that is sold or otherwise disposed of or to be sold or otherwise disposed of as part of or in connection with any sale or other disposition permitted under the Loan Documents, or (z) subject to Section 12.02, if approved, authorized or ratified in writing by the Required Lenders;
(ii) to subordinate any Lien on any property granted to or held by the Administrative Agent under any Loan Document to the holder of any Lien on such property that is permitted by Section 9.03; and
(iii) to release any Guarantor (other than the Borrower) from its obligations under the Guaranty Agreement if such Person ceases to be a Subsidiary of the Parent as a result of a transaction permitted under the Loan Documents.
Upon request by the Administrative Agent at any time, the Required Lenders will confirm in writing the Administrative Agent’s authority to release or subordinate its interest in particular types or items of property, or to release any Guarantor from its obligations under the Guaranty Agreement pursuant to this Article XI. In each case as specified in this Section 11.10, the Administrative Agent will, at the Borrower’s expense, execute and deliver to the applicable Loan Party such documents as such Loan Party may reasonably request to evidence the release of such item of Collateral from the assignment and security interest granted under the Security Instruments or to subordinate its interest in such item, or to release such Guarantor from its obligations under the Guaranty Agreement, in each case in accordance with the terms of the Loan Documents and this Section 11.10.
(b) The Administrative Agent shall not be responsible for or have a duty to ascertain or inquire into any representation or warranty regarding the existence, value or collectability of the Collateral, the existence, priority or perfection of the Administrative Agent’s Lien thereon, or any certificate prepared by any Loan Party in connection therewith, nor shall the Administrative Agent be responsible or liable to the Lenders for any failure to monitor or maintain any portion of the Collateral.
Section 11.11. Secured Swap Agreements and Secured Treasury Management Agreements. No Swap Lender or Treasury Management Party that obtains the benefits of Section 10.02(c), any Guaranty Agreement or any Collateral by virtue of the provisions hereof or of any Guaranty Agreement or any Security Instrument shall have any right to notice of any action or to consent to, direct or object to any action hereunder or under any other Loan Document or otherwise in respect of the Collateral (including the release or impairment of any Collateral) other than in its capacity as a Lender and, in such case, only to the extent expressly provided in the Loan Documents. Notwithstanding any other provision of this Article XI to the contrary, the Administrative Agent shall not be required to verify the payment of, or that other satisfactory arrangements have been made with respect to, Obligations arising under Secured Swap Agreements and/or Secured Treasury Management Agreements unless the Administrative Agent has received written notice of such Obligations, together with such supporting documentation as the Administrative Agent may request, from the applicable Swap Lender or Treasury Management Party, as the case may be.
Section 11.12. Credit Bidding.
(a) The Administrative Agent, on behalf of itself and the Secured Parties, shall have the right, at the direction of the Majority Lenders, to credit bid and purchase for the benefit of the Administrative Agent and the Secured Parties all or any portion of Collateral at any sale thereof
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conducted by the Administrative Agent under the provisions of the UCC, including pursuant to section 9-610 or 9-620 of the UCC, at any sale thereof conducted under the provisions of the United States Bankruptcy Code, including section 363 thereof, or a sale under a plan of reorganization, or at any other sale or foreclosure conducted by the Administrative Agent (whether by judicial action or otherwise) in accordance with applicable laws or regulations.
(b) Each Secured Party hereby agrees that, except as otherwise provided in any Loan Documents or with the written consent of the Administrative Agent and the Majority Lenders, it will not take any enforcement action, accelerate obligations under any Loan Documents, or exercise any right that it might otherwise have under applicable laws or regulations to credit bid at foreclosure sales, UCC sales or other similar dispositions of Collateral; provided that, for the avoidance of doubt, this Section 11.12(b) shall not limit the rights of (i) any Swap Lender to terminate any Swap Agreement or net out any resulting termination values, or (ii) any Treasury Management Party to terminate any Treasury Management Agreement or set off against any deposit accounts of the Borrower or any other Loan Party.
ARTICLE XII
Miscellaneous
Section 12.01. Notices.
(a) Except in the case of notices and other communications expressly permitted to be given by telephone (and subject to Section 12.01(b)), all notices and other communications provided for herein shall be in writing and shall be delivered by hand or overnight courier service, mailed by certified or registered mail or sent by facsimile or electronic transmission, as follows:
(i) if to the Parent, to it at:
Lonestar Resources US Inc.
111 Boland Street, Suite 300
Fort Worth, TX 76107
Attention: Frank D. Bracken III
Facsimile: (817) 546-8641
Telephone: (817) 546-6400
fbracken@lonestarresources.com
(ii) if to the Borrower, to it at:
Lonestar Resources America Inc.
111 Boland Street, Suite 300
Fort Worth, TX 76107
Attention: Frank D. Bracken III
Facsimile: (817) 546-8641
Telephone: (817) 546-6400
fbracken@lonestarresources.com
(iii) if to the Administrative Agent, to it at:
Citibank, N.A.
2001 Ross Avenue, Suite 4300
Dallas, TX 75201-2998
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Attention: Jarrod Bourgeois
Facsimile: (972) 419-3589
Telephone: (214) 647-0857
with a copy to the Administrative Agent at:
Citibank, N.A.
Commercial Syndications
Commercial Loan Operations
6801 Colwell Blvd, Irving, TX 75039
Attention: Cheryl Bradford
Facsimile: (866) 634-5642
Telephone: (469) 220-3204
if to the Issuing Bank, to it at:
Citibank, N.A.
Commercial Syndications
Commercial Loan Operations
6801 Colwell Blvd, Irving, TX 75039
Attention: Cheryl Bradford
Facsimile: (866) 634-5642
Telephone: (469) 220-3204
(iv) if to a Lender, to it at its address (or facsimile number or email address) set forth in its Administrative Questionnaire.
Notices sent by hand or overnight courier service, or mailed by certified or registered mail, shall be deemed to have been given when received and notices sent by facsimile shall be deemed to have been given when sent (except that, if not given during normal business hours for the recipient, shall be deemed to have been given at the opening of business on the next Business Day for the recipient). Notices delivered through electronic communications, to the extent provided in Section 12.01, shall be effective as provided in said Section 12.01(b).
(b) Notices and other communications to the Lenders and the Issuing Bank hereunder may be delivered or furnished by electronic communication (including email and Internet or intranet websites) pursuant to procedures approved by the Administrative Agent; provided that the foregoing shall not apply to notices to any Lender or the Issuing Bank pursuant to Article II, Article III, Article IV and Article V if such Lender or the Issuing Bank, as applicable, has notified the Administrative Agent that it is incapable of receiving notices under such Article by electronic communication. The Administrative Agent or the Borrower may, in its discretion, agree to accept notices and other communications to it hereunder by electronic communications pursuant to procedures approved by it; provided that approval of such procedures may be limited to particular notices or communications.
Unless the Administrative Agent otherwise prescribes, (i) notices and other communications sent to an email address shall be deemed received upon the sender’s receipt of an acknowledgement from the intended recipient (such as by the “return receipt requested” function, as available, return email or other written acknowledgement), and (ii) notices or communications posted to an Internet or intranet website shall be deemed received upon the deemed receipt by the intended recipient at its email address as described in the foregoing clause (i) of notification that
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such notice or communication is available and identifying the website address therefor, provided that, for both clauses (i) and (ii) above, if such notice, email or other communication is not sent during the normal business hours of the recipient, such notice or communication shall be deemed to have been sent at the opening of business on the next business day for the recipient.
(c) Any party hereto may change its address or facsimile number or email address for notices and other communications hereunder by notice to the other parties hereto.
(d) (i) Each Loan Party agrees that the Administrative Agent may, but shall not be obligated to, make the Communications (as defined below) available to the Issuing Bank and the other Lenders by posting the Communications on Debt Domain, Intralinks, Syndtrak or a substantially similar electronic transmission system (the “Platform”).
(ii) The Platform is provided “as is” and “as available.” The Agent Parties (as defined below) do not warrant the adequacy of the Platform and expressly disclaim liability for errors or omissions in the Communications. No warranty of any kind, express, implied or statutory, including, without limitation, any warranty of merchantability, fitness for a particular purpose, non-infringement of third-party rights or freedom from viruses or other code defects, is made by any Agent Party in connection with the Communications or the Platform. In no event shall the Administrative Agent or any of its Related Parties (collectively, the “Agent Parties”) have any liability to the Borrower or the other Loan Parties, any Lender or any other Person or entity for damages of any kind, including, without limitation, direct or indirect, special, incidental or consequential damages, losses or expenses (whether in tort, contract or otherwise) arising out of any Loan Party’s or the Administrative Agent’s transmission of communications through the Platform. “Communications” means, collectively, any notice, demand, communication, information, document or other material provided by or on behalf of any Loan Party pursuant to any Loan Document or the transactions contemplated therein which is distributed to the Administrative Agent, any Lender or the Issuing Bank by means of electronic communications pursuant to this Section, including through the Platform.
(iii) Each Public Lender agrees to cause at least one individual at or on behalf of such Public Lender to at all times have selected the “Private Side Information” or similar designation on the content declaration screen of the Platform in order to enable such Public Lender or its delegate, in accordance with such Public Lender’s compliance procedures and applicable Law, including United States Federal and state securities Laws, to make reference to Communications that are not made available through the “Public Side Information” portion of the Platform and that may contain material non-public information with respect to the Borrower, any of the other Loan Parties, or their securities for purposes of United States Federal or state securities laws.
Section 12.02. Waivers; Amendments.
(a) No failure on the part of the Administrative Agent, any other Agent, the Issuing Bank or any Lender to exercise and no delay in exercising, and no course of dealing with respect to, any right, power or privilege, or any abandonment or discontinuance of steps to enforce such right, power or privilege, under any of the Loan Documents shall operate as a waiver thereof, nor shall any single or partial exercise of any right, power or privilege under any of the Loan Documents preclude any other or further exercise thereof or the exercise of any other right, power or privilege. The rights and remedies of the Administrative Agent, any other Agent, the Issuing Bank and the Lenders hereunder and under the other Loan Documents are cumulative and are not exclusive of
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any rights or remedies that they would otherwise have. No waiver of any provision of this Agreement or any other Loan Document (other than a Fee Letter) or consent to any departure by the Borrower therefrom shall in any event be effective unless the same shall be permitted by Section 12.02(b), and then such waiver or consent shall be effective only in the specific instance and for the purpose for which given. Without limiting the generality of the foregoing, the making of a Loan or issuance of a Letter of Credit shall not be construed as a waiver of any Default, regardless of whether the Administrative Agent, any other Agent, any Lender or the Issuing Bank may have had notice or knowledge of such Default at the time.
Notwithstanding anything to the contrary contained herein or in any other Loan Document, the authority to enforce rights and remedies hereunder and under the other Loan Documents against the Loan Parties or any of them shall be vested exclusively in, and all actions and proceedings at law in connection with such enforcement shall be instituted and maintained exclusively by, the Administrative Agent in accordance with Section 10.02 for the benefit of all the Lenders and the Issuing Bank; provided, however, that the foregoing shall not prohibit (a) the Administrative Agent from exercising on its own behalf the rights and remedies that inure to its benefit (solely in its capacity as the Administrative Agent) hereunder and under the other Loan Documents, (b) the Issuing Bank from exercising the rights and remedies that inure to its benefit (solely in its capacity as Issuing Bank) hereunder and under the other Loan Documents, (c) any Lender from exercising setoff rights in accordance with Section 12.08 (subject to the terms of Section 4.01), or (d) any Lender from filing proofs of claim or appearing and filing pleadings on its own behalf during the pendency of a proceeding relative to any Loan Party under any Debtor Relief Law; and provided, further, that if at any time there is no Person acting as the Administrative Agent hereunder and under the other Loan Documents, then (i) the Required Lenders shall have the rights otherwise ascribed to the Administrative Agent pursuant to Section 10.02 and (ii) in addition to the matters set forth in clauses (b), (c) and (d) of the preceding proviso and subject to Section 4.01, any Lender may, with the consent of the Required Lenders, enforce any rights and remedies available to it and as authorized by the Required Lenders.
(b) Neither this Agreement nor any provision hereof nor any other Loan Document (other than a Fee Letter) or any provision thereof may be waived, amended or modified, except pursuant to an agreement or agreements in writing entered into by the Borrower and the Majority Lenders or by the Borrower and the Administrative Agent with the consent of the Majority Lenders; provided that no such agreement shall:
(i) increase the Commitment or the Maximum Revolving Credit Amount of any Lender without the written consent of such Lender;
(ii) increase the Borrowing Base without the written consent of each Lender, decrease or maintain the Borrowing Base without the consent of the Required Lenders, or modify Section 2.07 in any manner without the consent of each Lender;
(iii) reduce the principal amount of any Loan or LC Disbursement or reduce the rate of interest thereon, or reduce any fees payable hereunder, or reduce any other Obligations hereunder or under any other Loan Document, without the written consent of each Lender affected thereby;
(iv) postpone the scheduled date of payment or prepayment of the principal amount of any Loan or LC Disbursement, or any interest thereon, or any fees payable hereunder, or any other Obligations hereunder or under any other Loan Document, or reduce the amount of, waive or excuse any such payment, or postpone or extend the Termination Date without the written consent of each Lender affected thereby;
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(v) change Section 4.01(b) or Section 4.01(c) or Section 10.02(c) in a manner that would alter the pro rata sharing of payments required thereby, without the written consent of each Lender affected thereby and, if applicable, each Swap Lender and each Treasury Management Party affected thereby;
(vi) waive or amend Section 3.04(c), Section 6.02, Section 8.14, Section 10.02(c), Section 11.11 or Section 12.14 or change the definition of the terms “Domestic Subsidiary,” “Foreign Subsidiary” or “Subsidiary,” without the written consent of each Lender affected thereby and, if applicable, each Swap Lender and each Treasury Management Party affected thereby;
(vii) release any Guarantor (except as set forth in the Guaranty Agreement), release all or substantially all of the Collateral (other than as provided in Section 11.10), without the written consent of each Lender affected thereby; or
(viii) change any of the provisions of this Section 12.02(b) or the definition of “Required Lenders”, “Majority Lenders”, “Super Majority Lenders” or any other provision hereof specifying the number or percentage of Lenders required to waive, amend or modify any rights hereunder or under any other Loan Documents or make any determination or grant any consent hereunder or any other Loan Documents, without the written consent of each Lender affected thereby,
provided further that, notwithstanding the foregoing or any other provision to the contrary, (A) no such agreement shall amend, modify or otherwise affect the rights or duties of the Administrative Agent, any other Agent, or the Issuing Bank hereunder or under any other Loan Document without the prior written consent of the Administrative Agent, such other Agent or the Issuing Bank, as the case may be, and (B) nothing in this Section 12.02 shall cause any waiver, amendment, modification or consent to (I) any fee letter between the Borrower and any Lender, Agent or the Administrative Agent or Issuing Bank to require the consent of the Majority Lenders, (II) any Letter of Credit Agreements between the Borrower or any Subsidiary of the Borrower and the Issuing Bank to require the consent of the Majority Lenders, (III) any Letter of Credit issued by the Issuing Bank pursuant to the terms of this Agreement to require the consent of the Majority Lenders except as specifically required by Section 2.08 ,(IV) any Swap Agreement, to require the consent of the Majority Lenders, or (V) any Treasury Management Agreement to require the consent of the Majority Lenders.
(c) Notwithstanding anything to the contrary herein, no Defaulting Lender shall have any right to approve or disapprove of any amendment, waiver or consent hereunder, except that the Commitment of such Lender may not be increased or extended without the consent of such Defaulting Lender.
(d) Notwithstanding anything to the contrary herein, the Administrative Agent may, without the consent of any Lender, enter into amendments or modifications to this Agreement or any of the other Loan Documents or to enter into additional Loan Documents as the Administrative Agent reasonably deems appropriate in order to implement any Replacement Rate or otherwise effectuate the terms of Section 3.03(b) in accordance with its terms.
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Section 12.03. Expenses, Indemnity; Damage Waiver.
(a) The Borrower shall pay (i) all reasonable out-of-pocket expenses incurred by the Administrative Agent and its Affiliates, including, without limitation, the reasonable fees, charges and disbursements of outside counsel (limited to one counsel and, if reasonably necessary, a single local counsel in each relevant jurisdiction (which may be a single local counsel acting in multiple jurisdictions)) and other outside consultants for the Administrative Agent, the reasonable travel, photocopy, mailing, courier, telephone and other similar expenses, and the cost of environmental audits and surveys and appraisals, in connection with the syndication of the credit facilities provided for herein, the preparation, negotiation, execution, delivery and administration (both before and after the execution hereof and including advice of counsel to the Administrative Agent as to the rights and duties of the Administrative Agent and the Lenders with respect thereto) of this Agreement and the other Loan Documents and any amendments, modifications or waivers of or consents related to the provisions hereof or thereof (whether or not the transactions contemplated hereby or thereby shall be consummated), (ii) all costs, expenses, Taxes, assessments and other charges incurred by any Agent or any Lender in connection with any filing, registration, recording or perfection of any security interest contemplated by this Agreement or any Security Instrument or any other document referred to therein, (iii) all reasonable out-of-pocket expenses incurred by the Issuing Bank in connection with the issuance, amendment, renewal or extension of any Letter of Credit or any demand for payment thereunder, and (iv) all out-of-pocket expenses incurred by any Agent, the Issuing Bank or any Lender, including the fees, charges and disbursements of any counsel for any Agent, the Issuing Bank or any Lender, in connection with the enforcement or protection of its rights in connection with this Agreement or any other Loan Document, including its rights under this Section 12.03, or in connection with the Loans made or Letters of Credit issued hereunder, including, without limitation, all such out-of-pocket expenses incurred during any workout, restructuring or negotiations in respect of such Loans or Letters of Credit.
(b) THE BORROWER SHALL INDEMNIFY THE ADMINISTRATIVE AGENT (AND ANY SUB-AGENT THEREOF), EACH LENDER AND THE ISSUING BANK, AND EACH RELATED PARTY OF ANY OF THE FOREGOING PERSONS (EACH SUCH PERSON BEING CALLED AN “INDEMNITEE”) AGAINST, AND HOLD EACH INDEMNITEE HARMLESS FROM, ANY AND ALL LOSSES, CLAIMS, DAMAGES, LIABILITIES, PENALTIES AND RELATED EXPENSES (INCLUDING THE FEES, CHARGES AND DISBURSEMENTS OF ANY COUNSEL FOR ANY INDEMNITEE), INCURRED BY ANY INDEMNITEE OR ASSERTED AGAINST ANY INDEMNITEE BY ANY PERSON OR BY THE BORROWER OR ANY OTHER LOAN PARTY ARISING OUT OF, IN CONNECTION WITH, OR AS A RESULT OF (I) THE EXECUTION OR DELIVERY OF THIS AGREEMENT, ANY OTHER LOAN DOCUMENT OR ANY AGREEMENT OR INSTRUMENT CONTEMPLATED HEREBY OR THEREBY, THE PERFORMANCE BY THE PARTIES HERETO OF THEIR RESPECTIVE OBLIGATIONS HEREUNDER OR THEREUNDER OR THE CONSUMMATION OF THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY, (II) ANY LOAN OR LETTER OF CREDIT OR THE USE OR PROPOSED USE OF THE PROCEEDS THEREFROM (INCLUDING ANY REFUSAL BY THE ISSUING BANK TO HONOR A DEMAND FOR PAYMENT UNDER A LETTER OF CREDIT IF THE DOCUMENTS PRESENTED IN CONNECTION WITH SUCH DEMAND DO NOT STRICTLY COMPLY WITH THE TERMS OF SUCH LETTER OF CREDIT), (III) ANY ACTUAL OR ALLEGED PRESENCE OR RELEASE OF HAZARDOUS MATERIALS ON OR FROM ANY PROPERTY OWNED OR OPERATED BY THE BORROWER OR ANY OF ITS SUBSIDIARIES OR OTHER LOAN PARTIES, OR ANY ENVIRONMENTAL LIABILITY RELATED IN ANY WAY TO THE BORROWER OR ANY OF ITS SUBSIDIARIES, OR OTHER LOAN PARTIES, OR (IV) ANY ACTUAL OR PROSPECTIVE CLAIM, LITIGATION, INVESTIGATION OR PROCEEDING RELATING TO ANY OF THE FOREGOING, WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY, WHETHER
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BROUGHT BY A THIRD PARTY OR BY THE BORROWER OR ANY OTHER LOAN PARTY, AND REGARDLESS OF WHETHER ANY INDEMNITEE IS A PARTY THERETO, PROVIDED THAT SUCH INDEMNITY SHALL NOT, AS TO ANY INDEMNITEE, BE AVAILABLE TO THE EXTENT THAT SUCH LOSSES, CLAIMS, DAMAGES, LIABILITIES, PENALTIES OR RELATED EXPENSES (X) ARE DETERMINED BY A COURT OF COMPETENT JURISDICTION BY FINAL AND NONAPPEALABLE JUDGMENT TO HAVE RESULTED FROM THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF SUCH INDEMNITEE OR (Y) RESULT FROM A CLAIM BROUGHT BY THE BORROWER OR ANY OTHER LOAN PARTY AGAINST AN INDEMNITEE FOR MATERIAL BREACH IN BAD FAITH OF SUCH INDEMNITEE’S OBLIGATIONS HEREUNDER OR UNDER ANY OTHER LOAN DOCUMENT, IF THE BORROWER OR SUCH LOAN PARTY HAS OBTAINED A FINAL AND NONAPPEALABLE JUDGMENT IN ITS FAVOR ON SUCH CLAIM AS DETERMINED BY A COURT OF COMPETENT JURISDICTION. THIS SECTION 12.03(b) SHALL NOT APPLY WITH RESPECT TO TAXES OTHER THAN ANY TAXES THAT REPRESENT LOSSES, CLAIMS, DAMAGES, ETC. ARISING FROM ANY NON-TAX CLAIM.
(c) To the extent that the Borrower for any reason fails to indefeasibly pay any amount required to be paid by it to any Agent (or any sub-agent thereof), the Arranger or the Issuing Bank or any Related Party of the foregoing under Section 12.03(a) or (b), each Lender severally agrees to pay to such Agent (or any such sub-agent), the Issuing Bank, or such Related Party as the case may be, such Lender’s pro rata share (determined as of the time that the applicable unreimbursed expense or indemnity payment is sought based on each Lender’s share of the total Revolving Credit Exposure at such time) of such unpaid amount (including any such unpaid amount in respect of a claim asserted by such Lender); provided that with respect to such unpaid amounts owed to the Issuing Bank solely in its capacity as such, only the Lenders shall be required to pay such unpaid amounts, such payment to be made severally among them based on such Lenders’ Applicable Percentage (determined as of the time that the applicable unreimbursed expense or indemnity payment is sought) provided, further, that the unreimbursed expense or indemnified loss, claim, damage, liability or related expense, as the case may be, was incurred by or asserted against the Administrative Agent (or any such sub-agent), the Issuing Bank in its capacity as such, or against any Related Party of any of the foregoing acting for the Administrative Agent (or any such sub-agent), the Issuing Bank in connection with such capacity.
(d) To the fullest extent permitted by applicable law, the Borrower shall not assert, and hereby waives, any claim against any Indemnitee, on any theory of liability, for special, indirect, consequential or punitive damages (as opposed to direct or actual damages) arising out of, in connection with, or as a result of, this Agreement, any other Loan Document or any agreement or instrument contemplated hereby or thereby, the Transactions, any Loan or Letter of Credit or the use of the proceeds thereof. No Indemnitee referred to in Section 12.03(b) shall be liable for any damages arising from the use by unintended recipients of any information or other materials distributed by it through telecommunications, electronic or other information transmission systems in connection with this Agreement or the other Loan Documents or the transactions contemplated hereby or thereby.
(e) All amounts due under this Section 12.03 shall be payable promptly, but in any event not later than ten (10) days after demand therefor.
(f) The provisions of this Section 12.03 shall remain operative and in full force and effect regardless of the expiration of the term of this Agreement, the consummation of the transactions contemplated hereby, the repayment of any of the Loans, the expiration of the
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Commitments, the expiration of any Letter of Credit, the invalidity or unenforceability of any term or provision of this Agreement or any other Loan Document, or any investigation made by or on behalf of the Administrative Agent, any Lender or the Issuing Bank.
Section 12.04. Successors and Assigns.
(a) Successors and Assigns Generally. The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns permitted hereby, except that neither the Borrower nor any other Loan Party may assign or otherwise transfer any of its rights or obligations hereunder without the prior written consent of the Administrative Agent and each Lender, and no Lender may assign or otherwise transfer any of its rights or obligations hereunder except (i) to an assignee in accordance with the provisions of Section 12.04(b), (ii) by way of participation in accordance with the provisions of Section 12.04(d), or (iii) by way of pledge or assignment of a security interest subject to the restrictions in Section 12.04(f) (and any other attempted assignment or transfer by any party hereto shall be null and void). Nothing in this Agreement, expressed or implied, shall be construed to confer upon any Person (other than the parties hereto, their respective successors and assigns permitted hereby, Participants to the extent provided in Section 12.04(d) and, to the extent expressly contemplated hereby, the Related Parties of each of the Administrative Agent and the Lenders) any legal or equitable right, remedy or claim under or by reason of this Agreement. Notwithstanding anything to the contrary in this Section 12.04, no Lender may assign or otherwise transfer any of its rights or obligations hereunder with respect to its (i) Term Loans unless such Lender concurrently assigns the corresponding pro rata amount of such Lender’s Revolving Loans or Revolving Commitment to the same assignee or (ii) Revolving Loans or Revolving Commitment unless such Lender concurrently assigns the corresponding pro rata amount of such Lender’s Term Loans to the same assignee.
(b) Assignments by Lenders. Any Lender may at any time assign to one or more assignees all or a portion of its rights and obligations under this Agreement (including all or a portion of its Commitment and the Loans at the time owing to it); provided that in each case any such assignment shall be subject to the following conditions:
(i) Minimum Amounts.
(A) in the case of an assignment of the entire remaining amount of the assigning Lender’s Commitment and/or the Loans at the time owing to it (in each case) or contemporaneous assignments to related Approved Funds that equal at least the amount specified in Section 12.04(b)(i)(B) in the aggregate or in the case of an assignment to a Lender, an Affiliate of a Lender or an Approved Fund, no minimum amount need be assigned; and
(B) in any case not described in Section 12.04(b)(i)(A), the aggregate amount of the Commitment (which for this purpose includes Loans outstanding thereunder) or, if the applicable Commitment is not then in effect, the principal outstanding balance of the Loans of the assigning Lender subject to each such assignment (determined as of the date the Assignment and Assumption with respect to such assignment is delivered to the Administrative Agent or, if “Trade Date” is specified in the Assignment and Assumption, as of the Trade Date) shall not be less than $5,000,000, unless each of the Administrative Agent and, so long as no Event of Default has occurred and is continuing, the Borrower otherwise consents (each such consent not to be unreasonably withheld or delayed).
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(ii) Proportionate Amounts. Each partial assignment shall be made as an assignment of a proportionate part of all the assigning Lender’s rights and obligations under this Agreement with respect to the Loan or the Commitment assigned.
(iii) Required Consents. No consent shall be required for any assignment except to the extent required by Section 12.04(b)(i)(B) and, in addition:
(A) the consent of the Borrower (such consent not to be unreasonably withheld or delayed) shall be required unless (x) an Event of Default has occurred and is continuing at the time of such assignment, or (y) such assignment is to a Lender, an Affiliate of a Lender or an Approved Fund; provided that the Borrower shall be deemed to have consented to any such assignment unless it shall object thereto by written notice to the Administrative Agent within five (5) Business Days after having received notice thereof and provided, further, that the Borrower’s consent shall not be required during the primary syndication of the Loans;
(B) the consent of the Administrative Agent shall be required for assignments in respect of the Loans or any unfunded Commitments if such assignment is to a Person that is not a Lender with a Commitment, an Affiliate of such Lender or an Approved Fund with respect to such Lender; and
(C) the consent of the Issuing Bank shall be required for any assignment in respect of the Loans or any unfunded Commitment.
(iv) Assignment and Assumption. The parties to each assignment shall execute and deliver to the Administrative Agent an Assignment and Assumption, together with a processing and recordation fee of $3,500; provided that the Administrative Agent may, in its sole discretion, elect to waive such processing and recordation fee in the case of any assignment. The assignee, if it is not a Lender, shall deliver to the Administrative Agent an Administrative Questionnaire.
(v) No Assignment to Certain Persons. No such assignment shall be made (A) to any Loan Party or any of Affiliate of any Loan Party or (B) to any Defaulting Lender or any of its Subsidiaries, or any Person who, upon becoming a Lender hereunder, would constitute any of the foregoing Persons described in this clause (B).
(vi) No Assignment to Natural Persons. No such assignment shall be made to a natural Person.
(vii) Certain Additional Payments. In connection with any assignment of rights and obligations of any Defaulting Lender hereunder, no such assignment shall be effective unless and until, in addition to the other conditions thereto set forth herein, the parties to the assignment shall make such additional payments to the Administrative Agent in an aggregate amount sufficient, upon distribution thereof as appropriate (which may be outright payment, purchases by the assignee of participations or subparticipations, or other compensating actions, including funding, with the consent of the Borrower and the Administrative Agent, the applicable pro rata share of Loans previously requested but not funded by the Defaulting Lender, to each of which the applicable assignee and assignor hereby irrevocably consent), to (x) pay and satisfy in full all payment liabilities then owed by such Defaulting Lender to the Administrative Agent, the Issuing Bank, and each other Lender hereunder (and interest accrued thereon), and (y) acquire (and fund as appropriate)
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its full pro rata share of all Loans and participations in Letters of Credit in accordance with its Applicable Percentage. Notwithstanding the foregoing, in the event that any assignment of rights and obligations of any Defaulting Lender hereunder shall become effective under applicable law without compliance with the provisions of this Section 12.04(b)(vii), then the assignee of such interest shall be deemed to be a Defaulting Lender for all purposes of this Agreement until such compliance occurs.
Subject to acceptance and recording thereof by the Administrative Agent pursuant to Section 12.04(c), from and after the effective date specified in each Assignment and Assumption, the assignee thereunder shall be a party to this Agreement and, to the extent of the interest assigned by such Assignment and Assumption, have the rights and obligations of a Lender under this Agreement, and the assigning Lender thereunder shall, to the extent of the interest assigned by such Assignment and Assumption, be released from its obligations under this Agreement (and, in the case of an Assignment and Assumption covering all of the assigning Lender’s rights and obligations under this Agreement, such Lender shall cease to be a party hereto) but shall continue to be entitled to the benefits of Article V and Section 12.03 with respect to facts and circumstances occurring prior to the effective date of such assignment; provided, that except to the extent otherwise expressly agreed by the affected parties, no assignment by a Defaulting Lender will constitute a waiver or release of any claim of any party hereunder arising from that Lender’s having been a Defaulting Lender. Any assignment or transfer by a Lender of rights or obligations under this Agreement that does not comply with this Section 12.04 shall be treated for purposes of this Agreement as a sale by such Lender of a participation in such rights and obligations in accordance with Section 12.04(d).
(c) Register. The Administrative Agent, acting solely for this purpose as a non-fiduciary agent of the Borrower, shall maintain at one of its offices in Dallas, Texas, a copy of each Assignment and Assumption delivered to it and a register for the recordation of the names and addresses of the Lenders, and the Commitments of, and principal amounts (and stated interest) of the Loans owing to, each Lender pursuant to the terms hereof from time to time (the “Register”). The entries in the Register shall be conclusive absent manifest error, and the Borrower, the Administrative Agent and the Lenders shall treat each Person whose name is recorded in the Register pursuant to the terms hereof as a Lender hereunder for all purposes of this Agreement. The Register shall be available for inspection by the Borrower and any Lender, at any reasonable time and from time to time upon reasonable prior notice.
(d) Participations. Any Lender may at any time, without the consent of, or notice to, the Borrower or the Administrative Agent, sell participations to any Person (except (x) a natural Person or (y) any Loan Party or any Subsidiary of a Loan Party or any Affiliate of a Loan Party or Subsidiary of a Loan Party) (each, a “Participant”) in all or a portion of such Lender’s rights and/or obligations under this Agreement (including all or a portion of its Commitment and/or the Loans owing to it); provided that (i) such Lender’s obligations under this Agreement shall remain unchanged, (ii) such Lender shall remain solely responsible to the other parties hereto for the performance of such obligations, and (iii) the Borrower, the Administrative Agent, the Issuing Bank and Lenders shall continue to deal solely and directly with such Lender in connection with such Lender’s rights and obligations under this Agreement. For the avoidance of doubt, each Lender shall be responsible for the indemnity under Section 12.03(c) with respect to any payments made by such Lender to its Participant(s).
Any agreement or instrument pursuant to which a Lender sells such a participation shall provide that such Lender shall retain the sole right to enforce this Agreement and to approve any amendment, modification or waiver of any provision of this Agreement; provided that such
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agreement or instrument may provide that such Lender will not, without the consent of the Participant, agree to any amendment, modification or waiver described in Section 12.02(b) to the extent that it affects such Participant. The Borrower agrees that each Participant shall be entitled to the benefits of Article V (subject to the requirements and limitations therein, including the requirements under Section 5.03(g) (it being understood that the documentation required under Section 5.03(g) shall be delivered to the participating Lender)) to the same extent as if it were a Lender and had acquired its interest by assignment pursuant to Section 12.04(b); provided that such Participant: (A) agrees to be subject to the provisions of Section 5.04 as if it were an assignee under Section 12.04(b); and (B) shall not be entitled to receive any greater payment under Section 5.01 or 5.03, with respect to any participation, than its participating Lender would have been entitled to receive, except to the extent such entitlement to receive a greater payment results from a Change in Law that occurs after the Participant acquired the applicable participation. Each Lender that sells a participation agrees, at the Borrower’s request and expense, to use reasonable efforts to cooperate with the Borrower to effectuate the provisions of Section 5.04(b) with respect to any Participant. To the extent permitted by law, each Participant also shall be entitled to the benefits of Section 12.08 as though it were a Lender; provided that such Participant agrees to be subject to Section 4.01(c) as though it were a Lender. Each Lender that sells a participation shall, acting solely for this purpose as a non-fiduciary agent of the Borrower, maintain a register on which it enters the name and address of each Participant and the principal amounts (and stated interest) of each Participant’s interest in the Loans or other obligations under the Loan Documents (the “Participant Register”); provided that no Lender shall have any obligation to disclose all or any portion of the Participant Register (including the identity of any Participant or any information relating to a Participant’s interest in any commitments, loans, letters of credit or its other obligations under any Loan Document) to any Person except to the extent that such disclosure is necessary to establish that such commitment, loan, letter of credit or other obligation is in registered form under Section 5f.103-1(c) of the United States Treasury Regulations. The entries in the Participant Register shall be conclusive absent manifest error, and such Lender shall treat each Person whose name is recorded in the Participant Register as the owner of such participation for all purposes of this Agreement notwithstanding any notice to the contrary. For the avoidance of doubt, the Administrative Agent (in its capacity as Administrative Agent) shall have no responsibility for maintaining a Participant Register.
(e) Certain Pledges. Any Lender may at any time pledge or assign a security interest in all or any portion of its rights under this Agreement to secure obligations of such Lender, including any pledge or assignment to secure obligations to a Federal Reserve Bank; provided that no such pledge or assignment shall release such Lender from any of its obligations hereunder or substitute any such pledgee or assignee for such Lender as a party hereto.
(f) Prohibited Transfer. Notwithstanding any other provisions of this Section 12.04, no transfer or assignment of the interests or obligations of any Lender or any grant of participations therein shall be permitted if such transfer, assignment or grant would require the Borrower and the Subsidiaries to file a registration statement with the SEC or to qualify the Loans under the “Blue Sky” laws of any state.
Section 12.05. Survival; Revival; Reinstatement.
(a) All covenants, agreements, representations and warranties made by the Borrower and the other Loan Parties herein and in the certificates or other instruments delivered in connection with or pursuant to this Agreement or any other Loan Document shall be considered to have been relied upon by the other parties hereto and shall survive the execution and delivery of this Agreement and the making of any Loans and issuance of any Letters of Credit, regardless of any
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investigation made by any such other party or on its behalf and notwithstanding that the Administrative Agent, any other Agent, the Issuing Bank or any Lender may have had notice or knowledge of any Default or incorrect representation or warranty at the time any credit is extended hereunder, and shall continue in full force and effect as long as the principal of or any accrued interest on any Loan or any fee or any other amount payable under this Agreement is outstanding and unpaid or any Letter of Credit is outstanding and so long as the Commitments have not expired or terminated. The provisions of Section 5.01, Section 5.02, Section 5.03 and Section 12.03 and Article XI shall survive and remain in full force and effect regardless of the consummation of the Transactions contemplated hereby, the repayment of the Loans, the expiration or termination of the Letters of Credit and the Commitments or the termination of this Agreement, any other Loan Document or any provision hereof or thereof.
(b) To the extent that any payments on the Obligations or proceeds of any collateral are subsequently invalidated, declared to be fraudulent or preferential, set aside or required to be repaid to a trustee, debtor in possession, receiver or other Person under any bankruptcy law, common law or equitable cause, then to such extent, the Obligations so satisfied shall be revived and continue as if such payment or proceeds had not been received and the Administrative Agent’s and the Lenders’ Liens, security interests, rights, powers and remedies under this Agreement and each Loan Document shall continue in full force and effect. In such event, each Loan Document shall be automatically reinstated and the Borrower shall take such action as may be reasonably requested by the Administrative Agent and the Lenders to effect such reinstatement.
Section 12.06. Counterparts; Integration; Effectiveness; Electronic Signatures.
(a) This Agreement may be executed in counterparts (and by different parties hereto on different counterparts), each of which shall constitute an original, but all of which when taken together shall constitute a single contract.
(b) This Agreement, the other Loan Documents and any separate letter agreements with respect to fees payable to the Administrative Agent constitute the entire contract among the parties relating to the subject matter hereof and thereof and supersede any and all previous agreements and understandings, oral or written, relating to the subject matter hereof and thereof. THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT AMONG THE PARTIES HERETO AND THERETO AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
(c) Except as provided in Section 6.01, this Agreement shall become effective on the Closing Date when it shall have been executed by the Administrative Agent and when the Administrative Agent shall have received counterparts hereof which, when taken together, bear the signatures of each of the other parties hereto, and thereafter shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns. Delivery of an executed counterpart of a signature page of this Agreement by facsimile or in electronic (i.e., “pdf” or “tif”) format shall be effective as delivery of a manually executed counterpart of this Agreement.
(d) Electronic Execution of Assignments. The words “execution,” “signed,” “signature,” and words of like import in any Assignment and Assumption or in any amendment or other modification hereof (including waivers and consents) shall be deemed to include electronic signatures or the keeping of records in electronic form, each of which shall be of the same legal effect, validity or enforceability as a manually executed signature or the use of a paper-based
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recordkeeping system, as the case may be, to the extent and as provided for in any applicable law, including the Federal Electronic Signatures in Global and National Commerce Act, the New York State Electronic Signatures and Records Act, or any other similar state laws based on the Uniform Electronic Transactions Act.
Section 12.07. Severability. Any provision of this Agreement or any other Loan Document held to be invalid, illegal or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such invalidity, illegality or unenforceability without affecting the validity, legality and enforceability of the remaining provisions hereof or thereof; and the invalidity of a particular provision in a particular jurisdiction shall not invalidate such provision in any other jurisdiction.
Section 12.08. Right of Setoff. If an Event of Default shall have occurred and be continuing, each Lender, the Issuing Bank, and each of their respective Affiliates is hereby authorized at any time and from time to time, to the fullest extent permitted by applicable law, to set off and apply any and all deposits (general or special, time or demand, provisional or final, in whatever currency) at any time held and other obligations (of whatsoever kind and in whatever currency, including, without limitation, obligations under Swap Agreements and Treasury Management Agreements) at any time owing by such Lender or the Issuing Bank, or any such Affiliate, to or for the credit or the account of the Borrower, any Subsidiary, or other Loan Party against any and all of the obligations of the Borrower, any Subsidiary, or other Loan Party now or hereafter existing under this Agreement or any other Loan Documents to such Lender or the Issuing Bank or their respective Affiliates, irrespective of whether or not such Lender, Issuing Bank or Affiliate shall have made any demand under this Agreement or any other Loan Document and although such obligations of the Borrower, such Subsidiary or such Guarantor may be contingent or unmatured or are owed to a branch, office or Affiliate of such Lender or the Issuing Bank different from the branch, office or Affiliate holding such deposit or obligated on such indebtedness; provided that in the event that any Defaulting Lender shall exercise any such right of setoff, (x) all amounts so set off shall be paid over immediately to the Administrative Agent for further application in accordance with the provisions of Section 2.10 and, pending such payment, shall be segregated by such Defaulting Lender from its other funds and deemed held in trust for the benefit of the Administrative Agent, the Issuing Bank, and the Lenders, and (y) the Defaulting Lender shall provide promptly to the Administrative Agent a statement describing in reasonable detail the Obligations owing to such Defaulting Lender as to which it exercised such right of setoff. The rights of each Lender, the Issuing Bank and their respective Affiliates under this Section are in addition to other rights and remedies (including other rights of setoff) that such Lender, the Issuing Bank or their respective Affiliates may have. The rights of each Lender under this Section 12.08 are in addition to other rights and remedies (including other rights of setoff) which such Lender or its Affiliates may have. Each Lender and the Issuing Bank agrees to notify the Borrower and the Administrative Agent promptly after any such setoff and application, provided that the failure to give such notice shall not affect the validity of such setoff and application.
Section 12.09. Governing Law; Jurisdiction; Consent to Service of Process; Waiver of Jury Trial.
(a) Governing Law. This Agreement and the other Loan Documents and any claims, controversy, dispute or cause of action (whether in contract or tort or otherwise) based upon, arising out of or relating to this Agreement or any other Loan Document (except, as to any other Loan Document, as expressly set forth therein) and the transactions contemplated hereby and thereby shall be governed by, and construed in accordance with, the laws of the State of New York.
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(b) Submission to Jurisdiction. Each of the parties hereto irrevocably and unconditionally agrees that it will not commence any action, litigation or proceeding of any kind or description, whether in law or equity, whether in contract or in tort or otherwise, against the Administrative Agent, any Lender, the Issuing Bank, or any Related Party of the foregoing in any way relating to this Agreement or any other Loan Document or the Transactions relating hereto or thereto, in any forum other than the courts of the State of New York sitting in the borough of Manhattan, and of the United States District Court of the Southern District of New York and of any New York State court sitting in New York City, and any appellate court from any thereof, and each of the parties hereto irrevocably and unconditionally submits to the jurisdiction of such courts and agrees that all claims in respect of any such action, litigation or proceeding may be heard and determined in such New York State court or, to the fullest extent permitted by applicable law, in such federal court. Each of the parties hereto agrees that a final judgment in any such action, litigation or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law. Nothing in this Agreement or in any other Loan Document shall affect any right that the Administrative Agent, any Lender or the Issuing Bank may otherwise have to bring any action or proceeding relating to this Agreement or any other Loan Document against the Borrower or any other Loan Party or its properties in the courts of any jurisdiction.
(c) Waiver of Venue. Each party hereto irrevocably and unconditionally waives, to the fullest extent permitted by applicable law, any objection that it may now or hereafter have to the laying of venue of any action or proceeding arising out of or relating to this Agreement or any other Loan Document in any court referred to in Section 12.09(b). Each of the parties hereto hereby irrevocably waives, to the fullest extent permitted by applicable law, the defense of an inconvenient forum to the maintenance of such action or proceeding in any such court.
(d) Service of Process. Each party hereto irrevocably consents to service of process in the manner provided for notices in Section 12.01. Nothing in this Agreement will affect the right of any party hereto to serve process in any other manner permitted by applicable law.
(e) Waiver of Jury Trial. EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (i) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PERSON HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PERSON WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (ii) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.
Section 12.10. Headings. Article and Section headings and the Table of Contents used herein and in the other Loan Documents are for convenience of reference only, are not part of this Agreement and shall not affect the construction of, or be taken into consideration in interpreting, this Agreement or any other Loan Document.
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Section 12.11. Confidentiality. Each of the Administrative Agent, the Lenders and the Issuing Bank agree to maintain the confidentiality of the Information (as defined below), except that Information may be disclosed: (a) to its Affiliates and to its Related Parties (it being understood that the Persons to whom such disclosure is made will be informed of the confidential nature of such Information and instructed to keep such Information confidential); (b) to the extent required or requested by any regulatory authority purporting to have jurisdiction over such Person or its Related Parties (including any self-regulatory authority, such as the National Association of Insurance Commissioners); (c) to the extent required by applicable laws or regulations or by any subpoena or similar legal process; (d) to any other party hereto; (e) in connection with the exercise of any remedies hereunder or under any other Loan Document or any action or proceeding relating to this Agreement or any other Loan Document or the enforcement of rights hereunder or thereunder; (f) subject to an agreement containing provisions substantially the same as those of this Section, to (i) any assignee of or Participant in, or any prospective assignee of or Participant in, any of its rights and obligations under this Agreement, or (ii) any actual or prospective party (or its Related Parties) to any swap, derivative or other transaction under which payments are to be made by reference to the Borrower and its obligations, this Agreement or payments hereunder; (g) on a confidential basis to (i) any rating agency in connection with rating the Borrower or its Subsidiaries or the Loans or (ii) the CUSIP Service Bureau or any similar agency in connection with the issuance and monitoring of CUSIP numbers with respect to the Loans; (h) with the consent of the Borrower; or (i) to the extent such Information (x) becomes publicly available other than as a result of a breach of this Section, or (y) becomes available to the Administrative Agent, any Lender, the Issuing Bank or any of their respective Affiliates on a nonconfidential basis from a source other than the Borrower.
For purposes of this Section, “Information” means all information received from the Borrower or any of its Subsidiaries relating to the Borrower or any of its Subsidiaries or any of their respective businesses, other than any such information that is available to the Administrative Agent, any Lender or the Issuing Bank on a nonconfidential basis prior to disclosure by the Borrower or any of its Subsidiaries; provided that, in the case of information received from the Borrower or any of its Subsidiaries after the date hereof, such information is clearly identified at the time of delivery as confidential. Any Person required to maintain the confidentiality of Information as provided in this Section shall be considered to have complied with its obligation to do so if such Person has exercised the same degree of care to maintain the confidentiality of such Information as such Person would accord to its own confidential information.
Each of the Lenders acknowledges and agrees that (a) the Information may include material non-public information concerning the Borrower or another Loan Party, as the case may be, (b) it has developed compliance procedures regarding the use of material non-public information and (c) it will handle such material non-public information in accordance with applicable law, including United States Federal and state securities laws.
Section 12.12. Interest Rate Limitation. It is the intention of the parties hereto that each Lender shall conform strictly to usury laws applicable to it. Accordingly, if the Transactions contemplated hereby would be usurious as to any Lender under laws applicable to it (including the laws of the United States of America and the State of New York or any other jurisdiction whose laws may be mandatorily applicable to such Lender notwithstanding the other provisions of this Agreement), then, in that event, notwithstanding anything to the contrary in any of the Loan Documents or any agreement entered into in connection with or as security for the Notes, it is agreed as follows: (i) the aggregate of all consideration which constitutes interest under law applicable to any Lender that is contracted for, taken, reserved, charged or received by such Lender under any of the Loan Documents or agreements or otherwise in connection with the Notes shall under no circumstances exceed the maximum amount allowed by such applicable law, and any excess shall be canceled automatically and if theretofore paid shall be credited by such Lender on
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the principal amount of the Obligations (or, to the extent that the principal amount of the Obligations shall have been or would thereby be paid in full, refunded by such Lender to the Borrower); and (ii) in the event that the maturity of the Notes is accelerated by reason of an election of the holder thereof resulting from any Event of Default under this Agreement or otherwise, or in the event of any required or permitted prepayment, then such consideration that constitutes interest under law applicable to any Lender may never include more than the maximum amount allowed by such applicable law, and excess interest, if any, provided for in this Agreement or otherwise shall be canceled automatically by such Lender as of the date of such acceleration or prepayment and, if theretofore paid, shall be credited by such Lender on the principal amount of the Obligations (or, to the extent that the principal amount of the Obligations shall have been or would thereby be paid in full, refunded by such Lender to the Borrower). All sums paid or agreed to be paid to any Lender for the use, forbearance or detention of sums due hereunder shall, to the extent permitted by law applicable to such Lender, be amortized, prorated, allocated and spread throughout the stated term of the Loans evidenced by the Notes until payment in full so that the rate or amount of interest on account of any Loans hereunder does not exceed the maximum amount allowed by such applicable law. If at any time and from time to time (i) the amount of interest payable to any Lender on any date shall be computed at the Highest Lawful Rate applicable to such Lender pursuant to this Section 12.12 and (ii) in respect of any subsequent interest computation period, the amount of interest otherwise payable to such Lender would be less than the amount of interest payable to such Lender computed at the Highest Lawful Rate applicable to such Lender, then the amount of interest payable to such Lender in respect of such subsequent interest computation period shall continue to be computed at the Highest Lawful Rate applicable to such Lender until the total amount of interest payable to such Lender shall equal the total amount of interest which would have been payable to such Lender if the total amount of interest had been computed without giving effect to this Section 12.12.
Section 12.13. EXCULPATION PROVISIONS. EACH OF THE PARTIES HERETO SPECIFICALLY AGREES THAT IT HAS A DUTY TO READ THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS AND AGREES THAT IT IS CHARGED WITH NOTICE AND KNOWLEDGE OF THE TERMS OF THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS; THAT IT HAS IN FACT READ THIS AGREEMENT AND IS FULLY INFORMED AND HAS FULL NOTICE AND KNOWLEDGE OF THE TERMS, CONDITIONS AND EFFECTS OF THIS AGREEMENT; THAT IT HAS BEEN REPRESENTED BY INDEPENDENT LEGAL COUNSEL OF ITS CHOICE THROUGHOUT THE NEGOTIATIONS PRECEDING ITS EXECUTION OF THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS; AND HAS RECEIVED THE ADVICE OF ITS ATTORNEY IN ENTERING INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS; AND THAT IT RECOGNIZES THAT CERTAIN OF THE TERMS OF THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS RESULT IN ONE PARTY ASSUMING THE LIABILITY INHERENT IN SOME ASPECTS OF THE TRANSACTION AND RELIEVING THE OTHER PARTY OF ITS RESPONSIBILITY FOR SUCH LIABILITY. EACH PARTY HERETO AGREES AND COVENANTS THAT IT WILL NOT CONTEST THE VALIDITY OR ENFORCEABILITY OF ANY EXCULPATORY PROVISION OF THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS ON THE BASIS THAT THE PARTY HAD NO NOTICE OR KNOWLEDGE OF SUCH PROVISION OR THAT THE PROVISION IS NOT “CONSPICUOUS.”
Section 12.14. Collateral Matters; Swap Agreements; Treasury Management Agreements. The benefit of the Security Instruments and of the provisions of this Agreement relating to any Collateral securing the Obligations shall also extend to and be available to any Swap Lender and any Treasury Management Party with respect to amounts payable by the Borrower, any Subsidiary, and any Guarantor under any Secured Swap Agreement and/or Secured Treasury
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Management Agreement on a pari passu basis with respect to repayment of principal outstanding on Loans due under this Agreement. Except as otherwise provided in Section 12.02(b)(v), no Swap Lender or Treasury Management Party shall have any voting rights under any Loan Document as a result of the existence of obligations owed to it under any such Swap Agreements or Treasury Management Agreements. All Swap Agreements between the Borrower or any Subsidiary and any Swap Lender are independent agreements governed by the terms thereof and will remain in full force and effect, unaffected by any repayment, prepayment, acceleration, reduction, increase or change in the terms of the Loans created under this Agreement except as otherwise provided in said Swap Agreement, and any payoff statement from any Lender relating to this Agreement shall not apply to said Swap Agreement with such Swap Lender except as otherwise expressly provided in such payoff statement. All Treasury Management Agreements between the Borrower and any Treasury Management Party are independent agreements governed by the terms thereof and will remain in force and effect, unaffected by any repayment, prepayment, acceleration, reduction, increase or change in the terms of the Loans created under this Agreement except as otherwise provided in said Treasury Management Agreement, and any payoff statement from any Lender relating to this Agreement shall not apply to said Treasury Management Agreement with such Treasury Management Party except as otherwise expressly provided in such payoff statement.
Section 12.15. No Third Party Beneficiaries. This Agreement, the other Loan Documents, and the agreement of the Lenders to make Loans and the Issuing Bank to issue, amend, renew or extend Letters of Credit hereunder are solely for the benefit of the Borrower, and no other Person (including, without limitation, any Subsidiary of the Borrower, any obligor, contractor, subcontractor, supplier or materialman) shall have any rights, claims, remedies or privileges hereunder or under any other Loan Document against the Administrative Agent, any other Agent, the Issuing Bank or any Lender for any reason whatsoever. There are no third-party beneficiaries.
Section 12.16. No Advisory or Fiduciary Responsibility. The Borrower and each other Loan Party acknowledges and agrees, and acknowledges its Affiliates’ understanding, that in connection with all aspects of (x) the transaction evidenced by this Agreement and the other Loan Documents, (y) the Transactions and (z) each other transaction contemplated hereby and by the other Loan Documents (including in connection with any amendment, waiver or other modification hereof or of any other Loan Document) that:
(a) (1) the arranging and other services regarding this Agreement and the other Loan Documents provided by the Agents and the Arrangers, are arm’s-length commercial transactions between the Borrower, each other Loan Party and their respective Affiliates, on the one hand, and the Administrative Agent, the other Agents and each of the Arrangers, on the other hand,
(i) each of the Borrower and the other Loan Parties has consulted its own legal, accounting, regulatory and tax advisors to the extent it has deemed appropriate; and
(ii) the Borrower and each other Loan Party is capable of evaluating, and understands and accepts, the terms, risks and conditions of the transactions contemplated hereby and by the other Loan Documents;
(b) (2) each of the Administrative Agent, the other Agents and each of the Arrangers, is, and has been, acting solely as a principal and, except as expressly agreed in writing by the relevant parties, has not been, is not, and will not be acting as an advisor, agent or fiduciary for the Borrower, any other Loan Party or any of their respective Affiliates, or any other Person;
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(i) none of the Administrative Agent, the other Agents nor any of the Arrangers has any obligation to the Borrower, any other Loan Party or any of their respective Affiliates with respect to the transactions contemplated hereby except those obligations expressly set forth herein and in the other Loan Documents; and
(ii) any of the Administrative Agent, the other Agents and the Arrangers, and any of their respective Affiliates, may be engaged in a broad range of transactions that involve interests that differ from those of the Borrower, the other Loan Parties and their respective Affiliates, and none of the Administrative Agent, the other Agents nor any of the Arrangers has any obligation to disclose any of such interests to the Borrower, any other Loan Party or any of their respective Affiliates.
To the fullest extent permitted by law, each of the Borrower and the other Loan Parties hereby waives and releases any claims that it may have against the Administrative Agent, any of the other Agents or any of the Arrangers with respect to any breach or alleged breach of agency or fiduciary duty in connection with any aspect of any transaction contemplated hereby and by the other Loan Documents.
Section 12.17. Time of the Essence. Time is of the essence of the Loan Documents.
Section 12.18. USA PATRIOT Act Notice. Each Lender that is subject to the Act (as hereinafter defined) and the Administrative Agent (for itself and not on behalf of any Lender) hereby notifies the Borrower that pursuant to the requirements of the USA PATRIOT Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001)) (the “Act”), it is required to obtain, verify and record information that identifies each Loan Party, which information includes the name and address of each Loan Party and other information that will allow such Lender or the Administrative Agent, as applicable, to identify each Loan Party in accordance with the Act. The Borrower shall, promptly following a request by the Administrative Agent or any Lender, provide all documentation and other information that the Administrative Agent or such Lender requests in order to comply with its ongoing obligations under applicable “know your customer” an anti-money laundering rules and regulations, including the Act.
Section 12.19. ENTIRE AGREEMENT. THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT AMONG THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS AMONG THE PARTIES.
Section 12.20. Acknowledgement and Consent to Bail-In of Affected Financial Institutions. Notwithstanding anything to the contrary in any Loan Document or in any other agreement, arrangement or understanding among any such parties, each party hereto acknowledges that any liability of any Affected Financial Institution arising under any Loan Document, to the extent such liability is unsecured, may be subject to the write-down and conversion powers of the applicable Resolution Authority and agrees and consents to, and acknowledges and agrees to be bound by:
(a) the application of any Write-Down and Conversion Powers by the applicable Resolution Authority to any such liabilities arising hereunder which may be payable to it by any party hereto that is an Affected Financial Institution; and
(b) the effects of any Bail-In Action on any such liability, including, if applicable:
(i) a reduction in full or in part or cancellation of any such liability;
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(ii) a conversion of all, or a portion of, such liability into shares or other instruments of ownership in such Affected Financial Institution, its parent undertaking, or a bridge institution that may be issued to it or otherwise conferred on it, and that such shares or other instruments of ownership will be accepted by it in lieu of any rights with respect to any such liability under this Agreement or any other Loan Document; or
(iii) the variation of the terms of such liability in connection with the exercise of the write-down and conversion powers of the applicable Resolution Authority.
Section 12.21. Acknowledgement Regarding Any Supported QFCs. To the extent that the Loan Documents provide support, through a guarantee or otherwise, for any Swap Agreement or any other agreement or instrument that is a QFC (such support, “QFC Credit Support,” and each such QFC, a “Supported QFC”), the parties acknowledge and agree as follows with respect to the resolution power of the Federal Deposit Insurance Corporation under the Federal Deposit Insurance Act and Title II of the Dodd-Frank Wall Street Reform and Consumer Protection Act (together with the regulations promulgated thereunder, the “U.S. Special Resolution Regimes”) in respect of such Supported QFC and QFC Credit Support (with the provisions below applicable notwithstanding that the Loan Documents and any Supported QFC may in fact be stated to be governed by the laws of the State of New York and/or of the United States or any other state of the United States):
(a) In the event a Covered Entity that is party to a Supported QFC (each, a “Covered Party”) becomes subject to a proceeding under a U.S. Special Resolution Regime, the transfer of such Supported QFC and the benefit of such QFC Credit Support (and any interest and obligation in or under such Supported QFC and such QFC Credit Support, and any rights in property securing such Supported QFC or such QFC Credit Support) from such Covered Party will be effective to the same extent as the transfer would be effective under the U.S. Special Resolution Regime if the Supported QFC and such QFC Credit Support (and any such interest, obligation and rights in property) were governed by the laws of the United States or a state of the United States. In the event a Covered Party or a BHC Act Affiliate of a Covered Party becomes subject to a proceeding under a U.S. Special Resolution Regime, Default Rights under the Loan Documents that might otherwise apply to such Supported QFC or any QFC Credit Support that may be exercised against such Covered Party are permitted to be exercised to no greater extent than such Default Rights could be exercised under the U.S. Special Resolution Regime if the Supported QFC and the Loan Documents were governed by the laws of the United States or a state of the United States. Without limitation of the foregoing, it is understood and agreed that rights and remedies of the parties with respect to a Defaulting Lender shall in no event affect the rights of any Covered Party with respect to a Supported QFC or any QFC Credit Support.
(b) As used in this Section 12.21, the following terms have the following meanings:
“BHC Act Affiliate” of a party means an “affiliate” (as such term is defined under, and interpreted in accordance with, 12 U.S.C. 1841(k)) of such party.
“Covered Entity” means any of the following: (i) a “covered entity” as that term is defined in, and interpreted in accordance with, 12 C.F.R. § 252.82(b); (ii) a “covered bank” as that term is defined in, and interpreted in accordance with, 12 C.F.R. § 47.3(b); or (iii) a “covered FSI” as that term is defined in, and interpreted in accordance with, 12 C.F.R. § 382.2(b).
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“Default Right” has the meaning assigned to that term in, and shall be interpreted in accordance with, 12 C.F.R. §§ 252.81, 47.2 or 382.1, as applicable.
“QFC” has the meaning assigned to the term “qualified financial contract” in, and shall be interpreted in accordance with, 12 U.S.C. 5390(c)(8)(D).
Section 12.22. Amendment and Restatement. This Agreement amends and restates the Prepetition Credit Agreement in its entirety. The Borrower hereby agrees that (a) the Debt outstanding under the Prepetition Credit Agreement and the Loan Documents (as defined in the Prepetition Credit Agreement; together with the Prepetition Credit Agreement, the “Existing Credit Documents”) and all accrued and unpaid interest thereon and (b) all accrued and unpaid fees under the Existing Credit Documents, shall be deemed to be outstanding under and governed by this Agreement. The Borrower hereby acknowledges, warrants, represents and agrees that this Agreement is not intended to be, and shall not be deemed or construed to be, a novation or release of the Existing Credit Documents. Each Lender which is a Lender under the Existing Credit Documents hereby waives any requirements for notice of prepayment, minimum amounts of prepayments of the loans thereunder, ratable reductions of the commitments of Lenders under the Existing Credit Documents and ratable payments on account of the principal or interest of any loan under the Existing Credit Documents to the extent that any such prepayment, reductions or payments are required to ensure that, upon the effectiveness of this Agreement, the loans of the Lenders shall be outstanding on a ratable basis in accordance with their respective Applicable Percentage. Each Lender hereby authorizes the Administrative Agent and the Borrower to request Borrowings from Lenders, to make prepayment of the loans under the Existing Credit Documents and to reduce the commitments under the Existing Credit Documents among Lenders in order to ensure that, upon the effectiveness of this Agreement, the loans of Lenders shall be outstanding on a ratable basis in accordance with their respective Applicable Percentage. The parties hereto confirm, ratify and reaffirm each of the Existing Credit Documents entered into prior to the Closing Date (but excluding the Prepetition Credit Agreement) and agree that such Existing Credit Documents continue to be legal, valid, binding and enforceable in accordance with their terms (except to the extent, amended, restated and superseded in connection with the transactions contemplated hereby). The Borrower hereby represents and warrants that, as of the Closing Date, there are no claims or offsets against, or defenses or counterclaims to, their obligations (or the obligations of any Guarantor) under the Prepetition Credit Agreement or any other Existing Credit Documents.
[Signature Pages Follow.]
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The parties hereto have caused this Agreement to be duly executed as of the day and year first above written.
| LONESTAR RESOURCES AMERICA INC., | ||
| as Borrower | ||
| By: | /s/ Frank D. Bracken III | |
| Name: | Frank D. Bracken III | |
| Title: | Chief Executive Officer | |
| LONESTAR RESOURCES US INC., | ||
| as Parent | ||
| By: | /s/ Frank D. Bracken III | |
| Name: | Frank D. Bracken III | |
| Title: | Chief Executive Officer | |
| ALBANY SERVICES, L.L.C. | ||
| AMADEUS PETROLEUM INC. | ||
| T-N-T ENGINEERING, INC. | ||
| LONESTAR RESOURCES INTERMEDIATE INC. LNR AMERICA INC., | ||
| as Guarantors | ||
| By: | /s/ Frank D. Bracken III | |
| Name: | Frank D. Bracken III | |
| Title: | President | |
Signature Page to the Amended and Restated Credit Agreement
| EAGLEFORD GAS, LLC | ||
| EAGLEFORD GAS 2, LLC | ||
| EAGLEFORD GAS 3, LLC | ||
| EAGLEFORD GAS 4, LLC | ||
| EAGLEFORD GAS 5, LLC | ||
| EAGLEFORD GAS 6, LLC | ||
| EAGLEFORD GAS 7, LLC | ||
| EAGLEFORD GAS 8, LLC | ||
| EAGLEFORD GAS 10, LLC | ||
| LA SALLE EAGLE FORD GATHERING LINE LLC | ||
| LONESTAR BR DISPOSAL LLC | ||
| LONESTAR OPERATING, LLC | ||
| LONESTAR RESOURCES, INC. | ||
| POPLAR ENERGY, LLC | ||
| as Guarantors | ||
| By: | /s/ Frank D. Bracken III | |
| Name: | Frank D. Bracken III | |
| Title: | Chief Executive Officer | |
| EAGLEFORD GAS 11, LLC | ||
| By: LONESTAR RESOURCES, INC., its sole member | ||
| By: | /s/ Frank D. Bracken III | |
| Name: | Frank D. Bracken III | |
| Title: | Chief Executive Officer | |
Signature Page to the Amended and Restated Credit Agreement
ADMINISTRATIVE AGENT:
CITIBANK, N.A.
| By: | /s/ Bryan McDavid | |
| Name: | Bryan McDavid | |
| Title: | Senior Vice President |
LENDER:
CITIBANK, N.A.
| By: | /s/ Bryan McDavid | |
| Name: | Bryan McDavid | |
| Title: | Senior Vice President |
SOLE LEAD ARRANGER:
CITIBANK, N.A.
| By: | /s/ Bryan McDavid | |
| Name: | Bryan McDavid | |
| Title: | Senior Vice President |
Signature Page to the Amended and Restated Credit Agreement
LENDER:
ABN AMRO CAPITAL USA LLC
| By: | /s/ Hugo Diogo | |
| Name: | Hugo Diogo | |
| Title: |
| By: | /s/ Kelly Hall | |
| Name: | Kelly Hall | |
| Title: |
Signature Page to the Amended and Restated Credit Agreement
LENDER:
BARCLAYS BANK PLC
| By: | /s/ Sydney G. Dennis | |
| Name: | Sydney G. Dennis | |
| Title: | Director |
Signature Page to the Amended and Restated Credit Agreement
LENDER:
COMERICA BANK
| By: | /s/ Chris Reed | |
| Name: | Chris Reed | |
| Title: | Vice President |
Signature Page to the Amended and Restated Credit Agreement
LENDER:
FIFTH THIRD BANK, NATIONAL ASSOCIATION
| By: | /s/ David R. Garcia | |
| Name: | David R. Garcia | |
| Title: | Vice President |
Signature Page to the Amended and Restated Credit Agreement
LENDER:
IBERIABANK, A DIVISION OF FIRST HORIZON
| By: | /s/ Blake Norris | |
| Name: | Blake Norris | |
| Title: | Vice President |
Signature Page to the Amended and Restated Credit Agreement
LENDER:
JPMORGAN CHASE BANK, N.A.
| By: | /s/ Michael A. Kamauf | |
| Name: | Michael A. Kamauf | |
| Title: | Authorized Officer |
Signature Page to the Amended and Restated Credit Agreement
LENDER:
OCM ENGY HOLDINGS, LLC
By: Oaktree Fund GP, LLC
Its: Manager
By: Oaktree Fund GP I, L.P.
Its: Managing Member
| By: | /s/ Brook Hinchman | |
| Name: | Brook Hinchman | |
| Title: | Authorized Signatory |
| By: | /s/ Jordan Mikes | |
| Name: | Jordan Mikes | |
| Title: | Authorized Signatory |
Signature Page to the Amended and Restated Credit Agreement
LENDER:
TRUIST BANK
| By: | /s/ William S. Krueger | |
| Name: | William S. Krueger | |
| Title: | Senior Vice President |
Signature Page to the Amended and Restated Credit Agreement
Exhibit 10.2
REGISTRATION RIGHTS AGREEMENT
This REGISTRATION RIGHTS AGREEMENT (as amended, supplemented, or otherwise modified from time to time, this “Agreement”), is made as of November 30, 2020 between Lonestar Resources US Inc., a Delaware corporation (the “Company”), and the Holders (as defined below) party hereto from time to time. Capitalized terms used but not otherwise defined herein shall have the meanings set forth for such terms in Section 1 hereof.
WHEREAS, (a) on September 30, 2020, the Company and certain of its Subsidiaries filed voluntary petitions for relief in the United States Bankruptcy Court for the Southern District of Texas (the “Bankruptcy Court”), commencing cases under Chapter 11 of title 11 of the United States Code, (b) on November 12, 2020, the Bankruptcy Court entered an order (In re Lonestar Resources US Inc., et al., No. 20-34805) (the “Confirmation Order”) confirming the Joint Prepackaged Plan of Reorganization for Lonestar Resources US Inc. and its Affiliate Debtors under Chapter 11 of the Bankruptcy Code (as confirmed, including any amendments and supplements thereto, the “Plan”), and (c) the “Effective Date” of the Plan (under and as defined therein, the “Effective Date”) is occurring as of the date of this Agreement;
WHEREAS, pursuant to the Plan and the Confirmation Order, on the Effective Date, (a) the holders of Prepetition Notes Claims (as defined in the Plan) received or became (or contemporaneously herewith receive or become) entitled to receive, in partial satisfaction of such claims, shares of the Company’s newly issued Common Stock, par value $0.001 per share and (b) the Warrants were issued to certain holders of Allowed Prepetition RBL Claims (as defined in the Plan) who are entitled to receive, in partial satisfaction of the Prepetition RBL Claims (as defined in the Plan), the “New Warrants” (pursuant to and as defined in the Plan); and
WHEREAS, Section V(I) of the Plan provides that, as of the Effective Date, the Company and each of the parties that receives or becomes entitled to receive shares of Common Stock or Warrants under the Plan and desires to do so shall enter into a registration rights agreement on the terms specified in the Plan, and in furtherance thereof the Company and the Holders are entering into this Agreement.
NOW, THEREFORE, in consideration of the mutual premises set forth herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereby agree as follows:
1. Definitions.
(a) Certain Defined Terms. As used in this Agreement, unless the context requires a different meaning, the following terms shall have the following meanings:
“Action” has the meaning specified in Section 6(c).
“Adverse Effect” has the meaning specified in Section 2(f).
“Affiliate” means, with respect to any Person, any other Person that directly, or indirectly through one or more intermediaries, controls or is controlled by, or is under common control with, the specified Person, and shall also include (i) any Related Fund of such Person and (ii) in the case
of a specified Person who is an individual, any Family Member of such Person; provided, however, that a Holder (or any Affiliate thereof) shall not be deemed an Affiliate of any another Person solely by reason of the Holder’s ownership of Common Stock or Warrants or its being a party to this Agreement. For purposes hereof, the term “control” (including the terms “controlling”, “controlled by” and “under common control with”) means the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract, or otherwise.
“Agreement” has the meaning specified in the preamble of this Agreement.
“Board” means the board of directors of the Company.
“Business Day” means any day other than a day which is a Saturday, Sunday or other day on which banks in New York City, New York are required or authorized to be closed.
“Certificate of Incorporation” means the certificate of incorporation of the Company, as amended, amended and restated, supplemented or otherwise modified and in effect from time to time.
“Common Stock” has the meaning specified in the Certificate of Incorporation.
“Company” has the meaning specified in the preamble of this Agreement.
“Company Indemnified Person” has the meaning specified in Section 6(b).
“control” has the meaning specified in the definition of “Affiliate”.
“Demand Registration” means the registration of Registrable Securities under the Securities Act that is effected by the Company pursuant to a Demand Registration Request.
“Demand Registration Request” has the meaning specified in Section 2(a).
“e-mail” has the meaning specified in Section 9(e).
“Equity Incentive Plan” means (a) the management incentive plan to be established and implemented with respect to the Company (and/or its Subsidiaries) by the Board after the Effective Date, as provided for in the Plan and (b) any other employee benefit plan or program, incentive compensation plan or program, executive compensation agreement or directors’ compensation program, in each case approved by the Board.
“Exchange Act” means the Securities Exchange Act of 1934, as amended, or any successor federal statute, and the rules and regulations of the SEC promulgated thereunder.
“Family Member” means, with respect to any individual, (i) any of such individual’s parents, spouse, siblings, children and grandchildren or (ii) any trust the sole beneficiaries of which are such individual or one or more of such individual’s parents, spouse, siblings, children and grandchildren.
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“FINRA” has the meaning specified in Section 5(a)(xiv).
“Form S-3” means Form S-3 under the Securities Act, or any successor form hereafter adopted by the SEC having substantially equivalent usage as Form S-3.
“Governmental Authority” means any nation or government, any state or other political subdivision thereof, any entity, authority or body exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government, including any government authority, agency, department, board, body, commission or instrumentality of the United States or any other nation, or any state or other political subdivision thereof, any court, tribunal or arbitrator and any self-regulatory organization.
“Holder” means each Initial Holder, and each other Person who hereafter becomes a party to this Agreement by signing a Joinder Agreement, in each case only for so long as such Person continues to hold Registrable Securities.
“Indemnified Person” has the meaning specified in Section 6(a).
“Indemnitee” has the meaning specified in Section 6(c).
“Initial Holders” means, collectively, the Persons listed in Schedule A attached hereto, and any Affiliate of any Initial Holder that becomes a party to this Agreement in accordance with Section 8 hereof.
“Inspectors” has the meaning specified in Section 5(a)(xii).
“Joinder Agreement” means a Joinder Agreement in the form of Exhibit A attached hereto, or otherwise in form and substance acceptable to the Board in its discretion, pursuant to which a Person described in clause (a) or clause (b) of Section 8 hereof agrees to become bound as a Holder party to this Agreement.
“Joining Holder” has the meaning specified in Section 2(c).
“Loss” and “Losses” have the meanings specified in Section 6(a).
“Majority Requesting Holders” means, with respect to any registration of Registrable Securities under this Agreement in a registration statement pursuant to a Demand Registration, the Requesting Holder or Requesting Holders at the relevant time that hold at least a majority of the Registrable Securities held by all Requesting Holders to be included in the registration statement in question.
“Material Disclosure Event” means, as of any date of determination, any pending or imminent event relating to the Company or any of its Subsidiaries, which, in the reasonable determination of the Company, (i) would require disclosure of material, non-public information relating to such event in any registration statement or related prospectus (including documents incorporated by reference therein) so that such registration statement or related prospectus would not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under
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which they are made, not misleading, (ii) is otherwise not required to be publicly disclosed at that date (e.g., on Forms 10-K, 8-K, or 10-Q) under applicable federal or state securities laws and (iii) if publicly disclosed as of such date, could reasonably be expected to have a material adverse effect on the business, financial condition or prospects of the Company and its Subsidiaries or would materially adversely affect a pending or proposed acquisition, merger, recapitalization, consolidation, reorganization, financing or similar transaction, or negotiations with respect thereto.
“Participating Holder” means any Holder on whose behalf Registrable Securities are registered pursuant to Section 2 or Section 3.
“Person” means any natural person, corporation, limited liability company, partnership, unincorporated organization, joint stock company, association, joint venture, trust, or other legal entity, or a Governmental Agency or political subdivision thereof.
“Personal Representative” means the legal representative (including a guardian, executor, administrator or conservator) of a deceased or incompetent Holder that is an individual.
“Records” has the meaning specified in Section 5(a)(xii).
“Registrable Securities” means (i) all shares of Common Stock held by the Initial Holders (including all shares of Common Stock issued or issuable upon the exercise of the Warrants held by the Initial Holders), whether held by the Initial Holders on the date of this Agreement or acquired hereafter, (ii) any Common Stock issued or issuable with respect to shares of Common Stock or other Registrable Securities by way of a stock dividend, stock split or reverse stock or in connection with a combination of shares, recapitalization, reclassification, merger, consolidation or otherwise, (iii) any Common Stock issued or issuable in exchange for or in replacement of shares of Common Stock or other Registrable Securities, (iv) any Registrable Securities transferred by a Holder to any other Holder, and (v) any Registrable Securities transferred by a Holder to any Person who, in connection with such transfer, becomes a party to this Agreement in accordance with Section 8 hereof; provided, however, that as to any securities that are Registrable Securities, such securities shall cease to constitute “Registrable Securities” for purposes of this Agreement upon the earliest to occur of: (A) the date such securities shall have been sold pursuant to a registration statement under the Securities Act that shall have been declared effective by the SEC, (B) the date such securities are sold or transferred pursuant to Rule 144 under the Securities Act, (C) the date on which the Holder of such securities would be able to sell all of the Registrable Securities owned by such Holder in a single transaction pursuant to Rule 144 under the Securities Act without any limitation as to volume or manner of sale restrictions, as set forth in a legal opinion from counsel to the Company to such effect, addressed and delivered to the applicable Holder(s) and the transfer agent for the Common Stock, or (D) the date such securities cease to be outstanding.
“Registration Expenses” has the meaning specified in Section 7.
“Related Fund” means, with respect to any Person, any fund, account or investment vehicle that is controlled or managed by (x) such Person or an Affiliate thereof, (y) the same investment manager or advisor as such Person or (z) an Affiliate of such investment manager or advisor.
“Requesting Holder” has the meaning specified in Section 2(a).
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“SEC” means the United States Securities and Exchange Commission, or any other federal agency at the time administering the Securities Act or the Exchange Act.
“Securities Act” means the Securities Act of 1933, as amended, or any successor federal statute, and the rules and regulations of the SEC promulgated thereunder.
“Shelf Registration” has the meaning specified in Section 2(b).
“Subsidiary” means any Person in which the Company, directly or indirectly through one or more Subsidiaries or otherwise, beneficially owns more than fifty percent (50.0%) of either the equity interests in, or the voting control of, such Person.
“Suspension Notice” has the meaning specified in Section 4(b).
“Suspension Period” has the meaning specified in Section 4(b).
“Total Equity Interests” means, at any time of determination, a number of shares of Common Stock equal to the sum of (w) the total outstanding shares of Common Stock plus (x) the total shares of Common Stock issuable upon exercise of all of the outstanding Warrants. For any Person, the percentage of the Total Equity Interests held by such Person at any time of determination shall be equal to the quotient (expressed as a percentage) of (y) the sum of the shares of Common Stock then held by such Person plus the shares of Common Stock issuable upon exercise of all Warrants then held by such Person, divided by (z) the Total Equity Interests.
“Warrants” means the means the warrants to purchase shares of Common Stock issued by the Company as of the Effective Date pursuant to the Plan and governed by that certain Warrant Agreement, dated as of the Effective Date, between the Company, Computershare Inc. and Computershare Trust Company, N.A., collectively as Warrant Agent.
(b) Rules of Construction. Unless otherwise expressly provided, for purposes of this Agreement, the following rules of interpretation shall apply: the definitions in this Section 1 shall apply equally to both the singular and plural forms of the terms defined. Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms. All references herein to Articles, Sections, Schedules and Exhibits shall be deemed to be references to Articles and Sections of, and Schedules and Exhibits to, this Agreement unless the context shall otherwise require. All Schedules and Exhibits attached hereto shall be deemed incorporated herein as if set forth in full herein and, unless otherwise defined therein, all terms used in any Schedule or Exhibit shall have the meaning ascribed to such term in this Agreement. The words “include,” “includes” and “including” shall be deemed to be followed by the phrase “without limitation.” All accounting terms not defined in this Agreement shall have the meanings determined by GAAP. The words “hereof,” “herein” and “hereunder” and words of similar import when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement. Unless otherwise expressly provided herein, any agreement, instrument or statute defined or referred to herein or in any agreement or instrument that is referred to herein means such agreement, instrument or statute as from time to time amended, modified or supplemented, including (in the case of agreements or instruments) by waiver or consent and (in the case of statutes) by succession of comparable successor statutes and references to all attachments thereto and instruments incorporated therein. Any reference in this Agreement to “$”
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or “dollars” shall mean United States dollars. In calculating any Holder’s ownership of Common Stock for the purposes of determining whether such Holder shall have certain rights under this Agreement that are subject to a minimum ownership threshold, all shares of Common Stock and shares of Common Stock issuable upon conversion of Warrants held by such Holder and by Affiliates of such Holder shall be aggregated for the purposes of such determination.
2. Demand Registration.
(a) Request for Registration. At any time and from time to time after the Company becomes eligible to register the Registrable Securities for resale by the Holders on Form S-3 (and solely for so long as the Company remains so eligible), any one or more Holders that hold (together with its Affiliates) Registrable Securities representing at least ten percent (10.0%) of the Total Equity Interests (each such Holder, a “Requesting Holder”), may request in writing (a “Demand Registration Request”) that the Company effect the registration under the Securities Act of all or any portion of the Registrable Securities held by the Requesting Holders, and any such request shall specify the intended method of disposition thereof, including, if such disposition is pursuant to an underwritten offering, whether such offering shall be a “firm commitment” underwriting; provided, however, that (A) the Company shall not be obligated to effect a Demand Registration unless the aggregate proceeds expected to be received from the sale of the Registrable Securities requested to be included in such Demand Registration (before deduction of any underwriting discounts and commissions) is reasonably expected to equal or exceed $50.0 million, (B) the Company shall not be required to effect more than two (2) Demand Registrations during any consecutive 12-month period; provided, further, that a Demand Registration Request for a non-underwritten Shelf Registration on Form S-3 (or any equivalent successor form) if the Company is a registrant qualified to use Form S-3 (or any equivalent successor form) shall not count towards such limit, and (C) the Company will not be obligated to take any action to effect any such Demand Registration within one hundred eighty (180) days immediately following the effective date of a previous Demand Registration or any other registration statement in which Holders were permitted to register the offer and sale under the Securities Act the Registrable Securities requested to be included therein.
(b) Shelf Registration. With respect to a Demand Registration Request made pursuant to Section 2(a), such request may specify that the intended distribution of the Registrable Securities to be registered pursuant to the Demand Registration be made by means of a shelf registration statement pursuant to Rule 415 under the Securities Act (a “Shelf Registration”). Upon receipt of a Demand Registration Request, the Company will cause to be included in a registration statement under the Securities Act, filed with the SEC as promptly as reasonably practicable but in any event not later than seventy five (75) days after receiving the applicable Demand Registration Request, such Registrable Securities as may be requested by such Requesting Holders in such Demand Registration Request together with any other Registrable Securities as requested by Joining Holders joining in such request pursuant to Section 2(c). The Company shall use its commercially reasonable efforts to cause any such registration statement to be declared effective by the SEC as promptly as practicable after such filing. Notwithstanding the foregoing, to the extent the Company has filed a Shelf Registration pursuant to this Agreement that is effective and includes all Registrable Securities, the Company shall not be obligated to file another registration statement so long as such Shelf Registration is effective.
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(c) Joining Holders. If at any time the Company proposes to register Registrable Securities for the account of the Requesting Holders pursuant to Section 2(a), then the Company shall give, or cause to be given, written notice of such proposed filing to all other Holders as soon as practicable (but in no event less than thirty (30) days before the anticipated filing date). Upon the written request of any Holder, delivered to the Company no later than the tenth (10th) Business Day after the Company’s notice is delivered to such Holder (each such Holder, a “Joining Holder”), to register any of its Registrable Securities, on the same terms and conditions as the Registrable Securities otherwise being sold pursuant to such Demand Registration, the Company will use its commercially reasonable efforts to cause such Registrable Securities to be included in the registration statement proposed to be filed by the Company on the same terms and conditions as the Registrable Securities otherwise included therein.
(d) Effective Registration. A registration will not count as a Demand Registration for purposes of the limitations set forth in Section 2(a) and Section 2(b) unless the related registration statement has been declared effective and has remained effective until (i) in the case of a registration statement other than a Shelf Registration, the earlier of (x) such time as all of the Registrable Securities covered thereby have been sold (but in no event for a period of more than ninety (90) days after such registration statement becomes effective) and (y) the expiration of the time when a prospectus relating to such registration is required to be delivered under the Securities Act and (ii) in the case of a Shelf Registration, such time as all of the Registrable Securities covered thereby have been sold (but in no event for a period of more than one year after such Shelf Registration becomes effective); provided, however, that if, after a registration statement has become effective, an offering of Registrable Securities pursuant to such registration statement is terminated by any stop order, injunction, or other order of the SEC or other Governmental Authority before the applicable time period specified, such registration pursuant thereto will be deemed not to have been effected and will not count as a Demand Registration for purposes of the limitations set forth in Section 2(a) and Section 2(b); provided, further, that the Company shall not be obligated or required to file another registration statement until the registration statement that has been previously filed with respect to a registration pursuant to a Demand Registration becomes effective or is subsequently terminated. In addition, a registration will not count as a Demand Registration for purposes of the limitations set forth in Section 2(a) and Section 2(b) if, (A) the registration statement relating to such Demand Registration is not declared effective within forty-five (45) days (in any case where the SEC has no comments on the registration statement) or ninety (90) days (in any case where the SEC has comments on the registration statement) of the date such registration statement is first filed with the SEC (so long as the Requesting Holders withdraw their request prior to the effective date of the registration statement), (B) more than thirty percent (30.0%) of the Registrable Securities requested by the Requesting Holders to be included in such Demand Registration are not so included pursuant to Section 2(f), or (C) the conditions to closing specified in the underwriting agreement or purchase agreement entered into in connection with the registration relating to such Demand Registration Request are not satisfied. Notwithstanding the foregoing, the Company will
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pay all Registration Expenses in connection with any Demand Registration, regardless of whether or not such Demand Registration counts as one of the permitted Demand Registrations under Section 2(a).
(e) Selection of Underwriters. With respect to any offering of Registrable Securities pursuant to a Demand Registration in the form of an underwritten offering, the Majority Requesting Holders shall have the right to select an investment banking firm of national standing, reasonably satisfactory to the Company, to be the managing underwriter for the offering.
(f) Priority on Demand Registrations. With respect to any offering of Registrable Securities pursuant to a Demand Registration in the form of an underwritten offering, no securities to be sold for the account of any Person (including the Company) other than the Requesting Holders and the Joining Holders shall be included in a Demand Registration unless the managing underwriter advises, in good faith, the Requesting Holders and the Company in writing that the inclusion of such securities would exceed the maximum dollar amount or maximum number of equity securities that can be sold in the underwritten offering without having an adverse effect on the price, timing, distribution or probability of success of the offering (an “Adverse Effect”). Furthermore, in the event that the managing underwriter advises the Requesting Holders and the Company in writing that the amount of Registrable Securities proposed to be included in a Demand Registration by the Requesting Holders and the Joining Holders is sufficiently large (even after exclusion of all securities of any other Person pursuant to the immediately preceding sentence) to cause an Adverse Effect, the number of Registrable Securities to be included in such Demand Registration shall first be reduced by any applicable Registrable Securities held by Effective Date Warrant Holders and, if necessary, the remaining shall be allocated among all such Requesting Holders and Joining Holders pro rata based on the ratio that the number of Registrable Securities that each such Holder requested to be included in such Demand Registration bears to the total number of Registrable Securities that all Requesting Holders and Joining Holders requested to be included in such Demand Registration; provided, that if, as a result of such pro-ration, any Requesting Holder or Joining Holder shall not be entitled to include in a registration all Registrable Securities of the class that such Holder had requested to be included, such Holder may elect to withdraw its request to include such Registrable Securities in such registration or may reduce the number requested to be included, whereupon only the Registrable Securities, if any, it desires to have included will be so included and the Holders not so reducing shall be entitled to a corresponding increase in the amount of Registrable Securities to be included in such Demand Registration; provided, further, that such withdrawal or reduction (x) must be made in writing by the Holder desiring to effect such withdrawal or reduction prior to the earlier of the execution of the underwriting agreement and the execution of the custody agreement with respect to such registration and (y) shall be irrevocable.
(g) Registration Statement Form. Demand Registrations shall be on such appropriate registration form of the SEC (i) as shall be selected by the Majority Requesting Holders in consultation with the Company and (ii) which shall be available for the sale of Registrable Securities in accordance with (x) the intended method or methods of disposition specified in the Demand Registration Request and (y) applicable law. The
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Company agrees to consult with any Participating Holder with respect to any information which such Participating Holder, upon advice of counsel, has reasonably requested to be included in the registration statement.
(h) Exclusive Rights. The registration rights granted pursuant to the provisions of this Section 2 shall be in addition to the registration rights granted pursuant to the provisions of Section 3.
3. Piggy-Back Registration.
(a) Holder Piggyback Registration. If the Company at any time proposes to file a registration statement under the Securities Act with respect to an offering of any Common Stock for the Company’s own account (except pursuant to registrations on Form S-4 or any successor form, or otherwise in connection with the acquisition of a business or assets of a business, a merger, or an exchange offer for the securities of another entity, or registrations on Form S-8 or any successor form relating solely to securities offered pursuant to any Equity Incentive Plan) or for the account of any holder of securities of the Company (other than a Holder) on a form that would permit registration of Registrable Securities for sale to the public under the Securities Act, then the Company shall give written notice of such proposed filing to the Holders as soon as practicable (but in no event less than five (5) business days before the anticipated filing date of a registration statement or less than three (3) Business Days before the filing of a prospectus supplement to an already effective registration statement), describing in reasonable detail the proposed registration (including the number and class of securities proposed to be registered, the proposed date of filing of such registration statement, any proposed means of distribution of such securities, any proposed managing underwriter of such securities and a good faith estimate by the Company of the proposed maximum offering price of such securities as such price is proposed to appear on the facing page of such registration statement), and offering the Holders the opportunity to register such number of Registrable Securities as each Holder may request. Upon the written request of any Holder, given by such Holder to the Company no later than five (5) Business Days after the Company’s notice is delivered to such Holder, to register, on the same terms and conditions as the securities otherwise being sold pursuant to such registration, any of such Holder’s Registrable Securities (which request shall state the intended method of disposition thereof if the securities otherwise being sold are being sold by more than one method of disposition), the Company will use its commercially reasonable efforts to cause such Registrable Securities as to which registration shall have been so requested by such Holder to be included in the registration statement proposed to be filed by the Company on the same terms and conditions as any similar securities included therein; provided, however, that, notwithstanding the foregoing, the Company may at any time, in its sole discretion, without the consent of any Holder, delay or abandon the proposed offering in which any Holder had requested to participate pursuant to this Section 3(a) or cease the filing (or obtaining or maintaining the effectiveness) of or withdraw the related registration statement or other governmental approvals, registrations or qualifications. In such event, the Company shall so notify each Holder that had notified the Company in accordance with this Section 3(a) of its intention to participate in such offering and, except for the obligation of the Company to pay Registration Expenses pursuant to Section 7, the Company shall incur no liability
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for its failure to complete any such offering. There is no limitation on the number of registrations that may be requested by any Holder pursuant to this Section 3(a) which the Company is obligated to effect. The registration rights granted pursuant to the provisions of this Section 3 shall be in addition to the registration rights granted pursuant to the provisions of Section 2.
(b) Priority on Piggyback Registrations.
(i) If the Registrable Securities requested to be included in a registration statement by any Holder pursuant to Section 3(a) differ from the type of securities proposed to be registered by the Company and the managing underwriter for the related underwritten offering advises the Company in writing that the inclusion of such Registrable Securities would cause an Adverse Effect, and the Company notifies such Holder in writing of such advice, then (A) the number of such Holder’s or Holders’ Registrable Securities to be included in the registration statement shall be reduced (with the number of Registrable Securities held by Effective Date Warrant Holders being reduced first) to an amount which, in the judgment of such managing underwriter, would eliminate such Adverse Effect or (B) if no such reduction would, in the judgment of such managing underwriter, eliminate such Adverse Effect, then the Company shall have the right to exclude all such Registrable Securities from such registration statement; provided, however, that, in the case of this clause (B), no other securities that are the same as, or similar to, the Registrable Securities that had been requested to be included in a registration statement by any Holder pursuant to Section 3(a) shall be included and offered for the account of any other Person (other than the Company) in such registration statement. Any partial reduction in the number of Registrable Securities to be included in the registration statement pursuant to clause (A) of the immediately preceding sentence shall be effected on a pro rata basis among each of the Holders requesting inclusion of Registrable Securities in such registration statement and each of the other holders of securities of the Company that are requesting inclusion of securities of the Company in such registration statement that are the same as, or similar to, the Registrable Securities that had been requested to be included in such registration statement based on the ratio that the number of Registrable Securities or other securities of the Company that each such Holder or each such other holder requested to be included in such registration statement bears to the total number of Registrable Securities and other securities of the Company that all Holders and such other holders requested to be included in such registration statement.
(ii) If the managing underwriter advises the Company in writing that the inclusion of the Registrable Securities that the Holders request to be included in the registration statement pursuant to Section 3(a) would cause an Adverse Effect, and the Company notifies the requesting Holders in writing of such advice, then (A) in the event that the registration is an underwritten registration on behalf of the Company, the Company will be obligated to include in such registration statement only that number of Registrable Securities which, in the judgment of the managing underwriter, would not have an Adverse Effect; provided, that any reduction in the number of Registrable Securities to be included in such registration statement shall be made on a pro rata basis among each of the Holders requesting inclusion of Registrable Securities in such registration statement and each of the other holders of securities of the Company that are requesting inclusion of securities of the
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Company in such registration statement based on the ratio that the number of Registrable Securities or other securities of the Company that each such Holder or each such other holder requested to be included in such registration statement bears to the total number of Registrable Securities and other securities of the Company that all Holders and such other holders requested to be included in such registration statement and (B) in the event that the registration relates to an underwritten registration on behalf of holders of the securities of the Company (other than the Holders), the Company will be obligated to include in such registration statement only that number of Registrable Securities which, in the judgment of the managing underwriter, would not have an Adverse Effect; provided, that any reduction in the number of Registrable Securities to be included in such registration statement shall be made on a pro rata basis among each of the Holders requesting inclusion of their respective Registrable Securities in such registration statement and each of the other holders of securities of the Company (other than the holders of securities of the Company requesting such registration) that are requesting inclusion of securities of the Company in such registration statement based on the ratio that the number of Registrable Securities or other securities of the Company that each such Holder or each such other holder requested to be included in such registration statement bears to the total number of Registrable Securities and other securities of the Company that all Holders and such other holders requested to be included in such registration statement; provided, further, that the Company shall not be permitted to include any of its securities in such registration statement to be sold for its own account if the number of Registrable Securities to be included in such registration statement is reduced pursuant to this Section 3(b)(ii)(B).
(c) Withdrawals. Each Holder shall have the right to withdraw its request for inclusion of its Registrable Securities in any registration statement pursuant to this Section 3 or may reduce the number of Registrable Securities requested to be included by giving written notice to the Company of its request to withdraw or reduce, whereupon only the Registrable Securities, if any, it desires to have included will be so included and the Holders not so reducing shall be entitled to a corresponding increase in the amount of Registrable Securities to be included in such registration; provided, however, that such withdrawal or reduction (x) must be made in writing by the Holder desiring to effect such withdrawal or reduction prior to the earlier of the execution of the underwriting agreement and the execution of the custody agreement with respect to such registration and (y) shall be irrevocable.
(d) Underwritten Offerings. In connection with the exercise of any registration rights granted to Holders pursuant to this Section 3, if the registration is to be effected by means of an underwritten offering, the Company may condition the participation in such registration by any such Holder upon such Holder’s entering into an underwriting agreement pursuant to Section 5(b)(iv).
(e) Selection of Underwriters. With respect to any offering of Registrable Securities pursuant to this Section 3 in the form of an underwritten offering, the Company shall have the right to select an investment banking firm of national standing to be the managing underwriter for the offering.
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4. Standstill and Suspension Periods.
(a) Company Standstill Period. In the event of an underwritten public offering of Registrable Securities pursuant to Section 2(a) or Section 2(b), the Company agrees not to effect, without the prior written consent of the managing underwriter of such underwritten public offering, any public sale or public distribution of any securities (except securities that may be held by the Company for its own account under the relevant registration statement) that are the same as, or similar to, the Registrable Securities, or any securities convertible into, or exchangeable or exercisable for, any securities of the Company that are the same as, or similar to, the Registrable Securities (except pursuant to (i) registrations on Form S-4 or any successor form, or otherwise in connection with the acquisition of a business or assets of a business, a merger, or an exchange offer for the securities of another entity, (ii) registrations on Form S-8 or any successor form relating solely to securities offered pursuant to any Equity Incentive Plan, (iii) the issuance of shares of Common Stock or other equity awards pursuant to an Equity Incentive Plan in effect prior to the underwritten public offering, or (iv) the issuance of shares of Common Stock or securities convertible into or exercisable for shares of Common Stock pursuant to the conversion or exchange of convertible or exchangeable securities (including the Warrants) or the exercise (including net exercise) of warrants or options or the settlement (including net settlement) of RSUs, in each case solely with respect to convertible or exchangeable securities, warrants, options or RSUs that were outstanding prior to the underwritten public offering and solely in accordance with the terms thereof as in effect prior to the underwritten public offering), during the period commencing fifteen (15) days prior to the effective date of the registration statement relating to such Demand Registration and ending on the earlier of (i) the ninetieth (90th) day after such effective date and (ii) the date any lockup arrangement entered into by the Requesting Holders expires.
(b) Suspension Period. If (x) there shall occur a Material Disclosure Event or (y) the Board determines, in good faith, that it would be detrimental to the Company and its shareholders for a registration statement pursuant to a Demand Registration to be filed and it is therefore advisable to defer the filing of such registration statement, the Company, by notice in writing to each Holder, may postpone the filing or effectiveness of any registration requested pursuant to this Agreement, or otherwise suspend the Demand Registration rights of the Holders (and, if applicable, require the Holders to suspend use of any resale prospectus included in a shelf registration statement) for any period of time determined by the Company (such period, a “Suspension Period”). Notwithstanding anything herein to the contrary, the Company shall not be entitled to more than four (4) Suspension Periods, which Suspension Periods shall have durations of not more than forty-five (45) days each (but may, at the Company’s determination, run consecutively for a given Material Disclosure Event), during any consecutive 12-month period, and which Suspension Periods shall not exceed more than ninety (90) days in the aggregate in any consecutive 12-month period; provided, however, that if the Company deems in good faith that it is necessary to file a post-effective amendment to a shelf registration statement in order to comply with Section 5(a)(vi) hereof, then such period of time from the date of filing such post-effective amendment until the date on which such shelf registration statement is declared effective by the SEC shall not be treated as a Suspension Period and the Company shall use its reasonable best efforts to cause such post-
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effective amendment to be declared effective as promptly as practicable. Each Holder agrees that, upon receipt of a written notice from the Company declaring a Suspension Period as a result of the occurrence of a Material Disclosure Event (a “Suspension Notice”), such Holder will forthwith discontinue any disposition of Registrable Securities pursuant to any public sale or distribution, including pursuant to Rule 144 under the Securities Act, until the earlier of (i) the expiration of the Suspension Period and (ii) the Company’s delivery of the written notice described in the immediately following sentence. In the event that the Company has delivered a Suspension Notice, the Company shall, promptly after such time as the related Material Disclosure Event no longer exists, provide written notice to all Holders that the Suspension Period has ended, and take any and all actions necessary or desirable to give effect to any Holder’s rights under this Agreement that may have been affected by such Suspension Notice, including the Holders’ Demand Registration rights. Any suspension of the right to use any registration statement shall result in an extension of the registration period equal to the number of days of the suspension.
(c) Holder Standstill Period. Each Holder who sells Registrable Securities in an underwritten public offering pursuant to Section 2(a), Section 2(b) or Section 3(a) agrees not to effect, without the prior written consent of the managing underwriter for such underwritten offering, any disposition (except for dispositions included in, or pursuant to, such underwritten offering) pursuant to any Shelf Registration or any public sale or distribution, including pursuant to Rule 144 under the Securities Act, of any Registrable Securities or any securities convertible into, or exchangeable or exercisable for, any securities of the Company that are the same as, or similar to, the Registrable Securities, during the period commencing fifteen (15) days prior to the effective date of any registration statement relating to such securities of the Company and ending on the earlier of (i) the ninetieth (90th) day after such effective date and (ii) the date any lockup arrangement entered into by the Requesting Holders or any other holder of securities of the Company that is selling securities in such underwritten public offering expires.
5. Registration Procedures.
(a) Company Obligations. Whenever the Company is required pursuant to this Agreement to register Registrable Securities, it will:
(i) provide the Participating Holders with a reasonable opportunity to review any related registration statement to be prepared and filed pursuant to this Agreement prior to the filing thereof with the SEC;
(ii) cause any such registration statement and the related prospectus and any amendment or supplement thereto, as of the effective date of such registration statement or amendment or the date of such supplement, (x) to comply in all material respects with the applicable requirements of the Securities Act and (y) not to contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading;
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(iii) subject to Section 4(b), prepare and file with the SEC such amendments and supplements to such registration statement and the prospectus used in connection therewith as may be necessary to keep such registration statement effective and to comply with the provisions of the Securities Act with respect to the disposition of all securities covered by such registration statement until the earlier of such time that (x) all of such securities have been sold thereunder and (y) the Company is no longer required to keep such registration statement effective pursuant to the terms of this Agreement;
(iv) furnish, at its expense and as promptly as possible, to the Participating Holders and each underwriter, if any, without charge, such number of conformed copies of such registration statement and of each such amendment thereto, in each case including all exhibits thereto, such number of copies of the prospectus included in such registration statement (including each preliminary prospectus and each supplement thereto), and such number of the documents, if any, incorporated by reference in such registration statement or prospectus, as the Participating Holders reasonably may request;
(v) use its commercially reasonable efforts to register or qualify the Registrable Securities covered by such registration statement under such securities or “blue sky” laws of the jurisdictions of the United States as the Participating Holders or the managing underwriter, if any, reasonably shall request, to keep such registration or qualification in effect for so long as such registration statement remains in effect, and to do any and all other acts and things that may be necessary or advisable to enable the Participating Holders to consummate the disposition in such jurisdictions of the Registrable Securities covered by such registration statement, except that the Company shall not, for any such purpose, be required to qualify generally to do business as a foreign corporation in any jurisdiction in which it is not obligated to be so qualified but for this clause (v), or to subject itself to taxation in any such jurisdiction, or to consent to general service of process in any such jurisdiction, or to amend its Certificate of Incorporation, bylaws or other organizational documents in a manner that the Board determines is inadvisable; and use its commercially reasonable efforts to obtain all other approvals, consents, exemptions or authorizations from such securities regulatory authorities or other Governmental Authorities as may be necessary to enable such Participating Holders to sell such Registrable Securities under such registration statement;
(vi) promptly notify the Participating Holders and the managing underwriter, if any, and (if requested by any such Person) confirm such notice in writing, at any time when (x) a prospectus or prospectus supplement relating thereto is required to be delivered under the Securities Act or (y) upon discovery that, or upon the occurrence of any event as a result of which, the prospectus included in such registration statement, as then in effect, includes an untrue statement of a material fact or omits to state any material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, which untrue statement or omission requires amendment of the registration statement or supplementation of the prospectus, and, as promptly as practicable following such notice (subject to Section 4(b)), prepare and furnish, at its expense, to the Participating Holders a reasonable number of copies of a supplement to such prospectus as may be necessary so that, as thereafter delivered to the purchasers of such Registrable Securities, such prospectus shall not include
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an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; provided, however, that with respect to Registrable Securities registered pursuant to such registration statement, each Holder agrees, severally and not jointly, that it will not enter into any transaction for the sale of any Registrable Securities pursuant to such registration statement during the time after the furnishing of the Company’s notice that the Company is preparing a supplement to or an amendment of such prospectus or registration statement and until the filing and effectiveness thereof;
(vii) use its commercially reasonable efforts to comply with all applicable rules and regulations of the SEC, and make available to holders of its securities, as soon as reasonably practicable, an earnings statement covering the period of at least twelve (12) months, but not more than eighteen (18) months, beginning with the first (1st) full calendar month after the effective date of the registration statement, which earnings statement shall satisfy the provisions of Section 11(a) of the Securities Act and Rule 158 promulgated thereunder;
(viii) provide, and cause to be maintained, a transfer agent and registrar for the Registrable Securities covered by such registration statement (which transfer agent and registrar shall be the Company’s existing transfer agent and registrar, unless otherwise specified by the Company), and provide a CUSIP number for all such Registrable Securities, in each case from and after a date not later than the effective date of such registration statement, for the period during which securities are transferred and registered on the books of the Company pursuant to such registration statement;
(ix) promptly notify the Participating Holders and the managing underwriter, if any, and (if requested by any such Person) confirm such notice in writing, (A) when a registration statement, prospectus, prospectus supplement or post-effective amendment related to such registration statement has been filed, and, with respect to such registration statement or any post-effective amendment thereto, when the same has become effective, (B) of any request by the SEC or any other Governmental Authority for amendments or supplements to such registration statement or related prospectus, (C) of the issuance by the SEC or any other Governmental Authority of any stop order suspending the effectiveness of such registration statement or the initiation or threat of any proceedings for that purpose and (D) of the receipt by the Company of any notification with respect to the suspension of the qualification or exemption from qualification of any of the Registrable Securities for sale in any jurisdiction or the initiation or threatening of any proceeding for such purpose;
(x) use its commercially reasonable efforts to obtain, as promptly as practicable, (x) the withdrawal of any order suspending the effectiveness of a registration statement and (y) the lifting of any suspension of the qualification (or exemption from qualification) of any of the Registrable Securities for sale in any jurisdiction;
(xi) in the event of an underwritten public offering of Registrable Securities pursuant to Section 2(a) or Section 2(b), enter into customary agreements (including underwriting agreements in customary form, which may include, in the case of
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an underwritten offering on a firm commitment basis, “lock-up” obligations substantially similar to those contained in Section 4(a)) and take such other actions (including using its commercially reasonable efforts to make such road show presentations and otherwise engaging in such reasonable marketing support in connection with any such underwritten offering, including the obligation to make its executive officers available for such purpose if so requested by the managing underwriter for such offering) as are reasonably requested by the Majority Requesting Holders or the managing underwriter in order to expedite or facilitate the sale of such Registrable Securities;
(xii) (A) make available for inspection by each Participating Holder, any underwriter participating in any disposition pursuant to such registration, and any attorney, accountant, advisor or other agent retained by such Participating Holder or any such underwriter (collectively, the “Inspectors”), all financial and other records, and all pertinent corporate documents and properties of the Company and any of its Subsidiaries (collectively, the “Records”) as shall be reasonably necessary to enable each Inspector to exercise its due diligence responsibility and (B) cause the officers, directors and employees of the Company to supply all information reasonably requested by any such Inspector in connection with such registration, provided, however, that (1) in connection with any such inspection, any such Inspector shall cooperate to the extent reasonably practicable to minimize any disruption to the operation by the Company of its business and shall comply with all Company site safety rules, (2) Records and information obtained, furnished or otherwise made available hereunder shall be used by such Inspectors only to exercise their due diligence responsibility and (3) Records or information obtained, furnished or otherwise made available hereunder shall be kept confidential and shall not be disclosed by such Inspector unless (x) such Inspector advises the Company that the disclosure of such Records or information is necessary to avoid or correct a misstatement or omission in a registration statement or is otherwise required by law (provided that such Inspector complies with its obligations under Section 5(b)(iii)), (y) the release of such Records or information is ordered pursuant to a subpoena or other order from a court or other Governmental Authority of competent jurisdiction (provided that such Inspector complies with its obligations under Section 5(b)(iii)) or (z) such Records or information otherwise become generally available to the public other than through disclosure by such Inspector in breach of, or by any other Person of which such Inspector is actually aware is in breach of, any other confidentiality arrangement with the Company;
(xiii) if requested by the Majority Requesting Holders (in the event of a Demand Registration) and/or the managing underwriter, if any, use commercially reasonable efforts to obtain (A) an opinion or opinions of counsel to the Company, (B) a comfort letter or comfort letters from the Company’s independent public accountants who have certified the Company’s financial statements included or incorporated by reference in such registration statement and (C) officers’ certificates and other customary closing documents, each in customary form and covering such matters of the type customarily covered by opinions, comfort letters or officers’ certificates, as the case may be;
(xiv) reasonably cooperate with each seller of Registrable Securities and any underwriter in the disposition of such Registrable Securities and with underwriters’ counsel, if any, in connection with any filings required to be made with the Financial Industry Regulatory Authority, Inc. (“FINRA”);
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(xv) use its commercially reasonable efforts to cause all such Registrable Securities to be listed on each securities exchange or trading system on which securities of the same class issued by the Company are then listed;
(xvi) cooperate with the Participating Holders and the managing underwriter, if any, to facilitate the timely preparation and delivery of certificates not bearing any restrictive legends representing the Registrable Securities to be sold, and cause such Registrable Securities to be issued in such denominations and registered in such names in accordance with the underwriting agreement prior to any sale of Registrable Securities to the underwriters or, if not an underwritten offering, in accordance with the instructions of the Participating Holders prior to any sale of Registrable Securities; and
(xvii) use its commercially reasonable efforts to take or cause to be taken all other actions, and do and cause to be done all other things, necessary or reasonably advisable to effect the registration of such Registrable Securities contemplated hereby.
The Company agrees not to file or make any amendment to any registration statement with respect to any Registrable Securities, or any amendment of or supplement to the prospectus used in connection therewith, that refers to any Holder covered thereby by name, or otherwise identifies such Holder as the holder of any securities of the Company, without the written consent of such Holder, such consent not to be unreasonably withheld or delayed, unless and to the extent such disclosure is required by law.
(b) Holder Obligations. Each Holder agrees:
(i) that it shall furnish to the Company such information regarding such Holder and the plan and method of distribution of Registrable Securities intended by such Holder (A) as the Company may, from time to time, reasonably request in writing and (B) as shall be required by law or by the SEC in connection therewith, and, if any Holder does not provide information requested pursuant to this Section 5(b)(i) within seven (7) Business Days after receipt of a written request therefor, the Company shall have the right to exclude from the underwritten offering the Registrable Securities of such Holder;
(ii) that information relating to the Company and its Affiliates that is provided by or on behalf of the Company to it or its other Inspectors shall be deemed confidential and shall not be used by it as the basis for any market transactions in the securities of the Company or its Affiliates unless and until such information is made generally available to the public;
(iii) to use reasonable efforts, prior to making any disclosure allowed under clause (x) or clause (y) of the proviso in Section 5(a)(xii), to provide the Company with prior written notice that such disclosure is necessary to avoid or correct a misstatement or omission in the registration statement or is ordered pursuant to a subpoena or other order from a court or other Governmental Authority of competent jurisdiction or otherwise required by law, in sufficient time to afford the Company with an opportunity to seek a protective order or other appropriate remedy in response; and
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(iv) in the case of an underwritten offering of Registrable Securities pursuant to this Agreement, if requested by the managing underwriter, to enter into an underwriting agreement with the underwriters for such offering containing such reasonable representations and warranties by each Holder and such other terms and provisions as are customarily contained in such underwriting agreements, including reasonable and customary indemnity and contribution provisions and “lock-up” obligations substantially similar to those contained in Section 4(c); provided, however, that no Holder will be required to agree to any indemnification obligations in favor of the underwriters for such offering that are greater than its obligations pursuant to Section 6(b).
6. Indemnification.
(a) Indemnification by the Company. In the event of any registration of any Registrable Securities under the Securities Act pursuant to this Agreement, the Company shall indemnify and hold harmless (i) each Holder and its Affiliates and their respective directors, partners, members and officers, (ii) any selling agent selected by the Holders with respect to such Registrable Securities and (iii) each Person who controls (within the meaning of Section 15 of the Securities Act) any Holder or such Affiliate, or selling agent, including directors and officers thereof (each such Person being sometimes referred to as an “Indemnified Person”), against any losses, claims, damages, expenses or liabilities, joint or several (each, a “Loss” and, collectively, “Losses”), to which such Indemnified Person may become subject to the extent that such Losses (or related actions or proceedings, whether commenced or threatened) arise out of or are based upon (A) any untrue statement or alleged untrue statement of any material fact contained in any registration statement in which such Registrable Securities were included for registration under the Securities Act, or any preliminary prospectus or any final prospectus included in such registration statement (or any amendment or supplement to such registration statement or prospectus), (B) any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading or (C) any violation by the Company or any of its agents of any rule or regulation promulgated under the Securities Act, the Exchange Act or any state securities laws applicable to the Company and relating to action or inaction required of the Company in connection with any such registration; and the Company agrees to reimburse such Indemnified Person for any legal or other expenses reasonably incurred by it in connection with investigating, defending or settling any such Loss (or related actions or proceedings, whether commenced or threatened) as such expenses are incurred; provided, however, that the Company shall have no obligation to provide any indemnification hereunder to the extent that any such Losses (or actions or proceedings in respect thereof) arise out of or are based upon an untrue statement or alleged untrue statement or omission or alleged omission made in such registration statement, preliminary prospectus, final prospectus, amendment or supplement, in reliance upon and in conformity with written information furnished to the Company by a Holder, or on such Holder’s behalf, specifically for inclusion, respectively, or an underwriter in such registration statement, preliminary prospectus, final prospectus, amendment or
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supplement. The indemnity provided in this Section 6(a) shall survive the transfer of the Registrable Securities by any Holder. In connection with an underwritten offering, the Company, if requested, will indemnify the underwriters, their officers and directors and each Person who controls (within the meaning of Section 15 of the Securities Act) such underwriters, to the same extent, and with the same limitations, as provided above with respect to the indemnification of the Indemnified Persons.
(b) Indemnification by the Holders. In the event of any registration of any Registrable Securities under the Securities Act pursuant to this Agreement, each Holder that participates in such registration shall indemnify and hold harmless the Company, each director, officer, employee and agent of the Company and each other Person, if any, who controls (within the meaning of Section 15 of the Securities Act) the Company (each such Person being sometimes referred to as a “Company Indemnified Person”), against Losses to which any such Company Indemnified Person may become subject under the Securities Act or otherwise, to the extent that such Losses (or related actions or proceedings) arise out of or are based upon (i) any untrue statement or alleged untrue statement of any material fact contained in any registration statement in which Registrable Securities were included for registration under the Securities Act, or any preliminary prospectus or any final prospectus included in such registration statement (or any amendment or supplement to such registration statement or prospectus) or (ii) any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading, in each case, only to the extent that such untrue statement or alleged untrue statement or omission or alleged omission was made in such registration statement, preliminary prospectus, final prospectus, amendment or supplement in reliance upon and in conformity with written information furnished to the Company by such Holder, or on such Holder’s behalf, specifically for inclusion, respectively, in such registration statement, preliminary prospectus, final prospectus, amendment or supplement; and each Holder agrees to reimburse such Company Indemnified Person for any legal or other expenses reasonably incurred by it in connection with investigating, defending or settling any such action or claim related to such Holder as such expenses are incurred; provided, however, that the obligation to indemnify and hold harmless will be individual and several to each Holder and a Holder’s aggregate liability under this Agreement with respect to Losses arising from a particular registration of Registrable Securities shall be limited to an amount equal to the net proceeds (after deducting the underwriter’s discount and commissions) received by such Holder from the sale of such Holder’s Registrable Securities pursuant to such registration, except in the case of fraud by such Holder.
(c) Notice of Claims. Promptly after receipt by any Person entitled to indemnity under Section 6(a) or Section 6(b) (an “Indemnitee”) of notice of the commencement of any action or proceeding (an “Action”) involving a claim referred to in either of such Sections, such Indemnitee shall, if indemnification is sought against an indemnifying party, give written notice to such indemnifying party of the commencement of such Action; provided, however, that the failure of any Indemnitee to give said notice shall not relieve the indemnifying party of its obligations under Section 6(a) or Section 6(b), except to the extent that the indemnifying party is actually prejudiced by such failure. In case an Action is brought against any Indemnitee, and such Indemnitee notifies
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the indemnifying party of the commencement thereof, each indemnifying party shall be entitled to participate therein and, to the extent it elects to do so by written notice delivered to the Indemnitee promptly after receiving the aforesaid notice, to assume the defense thereof with counsel reasonably satisfactory to such Indemnitee. Notwithstanding the foregoing, the Indemnitee shall have the right to employ its own counsel in any such case, but the fees and expenses of such counsel shall be at the expense of such Indemnitee unless (i) the employment of such counsel shall have been authorized in writing by the indemnifying party, (ii) the indemnifying party shall have failed to assume the defense of such Action or shall not have employed counsel reasonably satisfactory to the Indemnitee to take charge of the defense of such Action reasonably promptly after notice of the commencement thereof or (iii) such Indemnitee reasonably shall have concluded that there may be defenses available to it which are different from or additional to those available to the indemnifying party which, if the indemnifying party and the Indemnitee were to be represented by the same counsel, could result in a conflict of interest for such counsel or materially prejudice the prosecution of the defenses available to such Indemnitee. If any of the events specified in clauses (i), (ii) or (iii) of the immediately preceding sentence shall have occurred or otherwise shall be applicable, then the fees and expenses of counsel for the Indemnitee shall be borne by the indemnifying party; provided, however, that the indemnifying party shall not, in connection with any one such claim or proceeding, or separate but substantially similar or related claims or proceedings arising out of the same general allegations or circumstances, be liable for the fees and expenses of more than one separate firm of attorneys (together with appropriate local counsel) at any time for all Indemnitees hereunder (unless in the reasonable judgment of any Indemnitee a conflict of interest may exist between such Indemnitee and any other of such Indemnitees with respect to such claim or proceeding), or for fees and expenses that are not reasonable. Anything in this Section 6(c) to the contrary notwithstanding, an indemnifying party shall not be liable for the settlement of any Action effected without its prior written consent (which consent shall not be unreasonably withheld or delayed), but if settled with the prior written consent of the indemnifying party, the indemnifying party agrees to indemnify the Indemnitee from and against any loss or liability by reason of such settlement. No indemnifying party shall, without the prior written consent of the Indemnitee (which consent shall not be unreasonably withheld or delayed), consent to entry of any judgment or enter into any settlement or compromise, with respect to any pending or threatened Action in respect of which the Indemnitee would be entitled to indemnification or contribution hereunder (whether or not the Indemnitee is an actual party to such Action), which (x) does not include as a term thereof the unconditional release of the Indemnitee from all liability in respect of such Action or (y) includes a statement as to, or an admission of, fault, culpability or a failure to act, by or on behalf of the Indemnitee.
(d) Contribution. If the indemnification provided for in this Section 6 is unavailable or insufficient to hold harmless an Indemnitee in respect of any Losses, then each indemnifying party shall, in lieu of indemnifying such Indemnitee, contribute to the amount paid or payable by such Indemnitee as a result of such Losses in such proportion as appropriate to reflect the relative fault of the indemnifying party, on the one hand, and the Indemnitee, on the other hand, which relative fault shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or omission or alleged omission to state a material fact relates to information supplied by such
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Indemnitee or such indemnifying party, and such parties’ relative intent, knowledge, access to information and opportunity to correct or mitigate the damage in respect of, or prevent the untrue statement or omission giving rise to, such indemnification obligation. The parties hereto agree that it would not be just and equitable if contributions pursuant to this Section 6(d) were determined solely by pro rata allocation or by any other method of allocation which did not take account of the equitable considerations referred to above. No Person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) with respect to a claimed indemnification event shall be entitled to contribution from any Person who is not guilty of fraudulent misrepresentation with respect to the same indemnification event. Notwithstanding the foregoing, the amount any Holder will be obligated to contribute pursuant to this Section 6(d) will be limited to an amount equal to the net proceeds (after deducting the underwriter’s discount and commissions) to such Holder of the Registrable Securities sold pursuant to the registration statement which gave rise to such obligation to contribute (less the aggregate amount of any damages which such Holder has otherwise been required to pay in respect of the applicable Losses).
(e) Indemnification Payments; Other Remedies; Investigation and Survival.
(i) Periodic payments of amounts required to be paid pursuant to this Section 6 shall be made during the course of the investigation, defense or settlement, as and when reasonably itemized bills therefor are delivered to the indemnifying party in respect of any particular Loss as incurred.
(ii) The remedies provided in this Section 6 are not exclusive and shall not limit any rights or remedies that may otherwise be available to an Indemnitee at law or in equity.
(iii) The indemnification and contribution provided for under this Section 6 will remain in full force and effect regardless of any investigation made by or on behalf of an Indemnitee or any officer, director or controlling Person of such Indemnitee and will survive the registration and sale of any securities by any Indemnitee and the expiration or termination of this Agreement.
7. Registration Expenses. In connection with any requests for, or offerings pursuant to, the filing of a registration statement hereunder, the Company will pay all reasonable expenses arising from or incident to its performance of, and compliance with, this Agreement (whether or not any such registration statement becomes effective and whether or not all Registrable Securities originally requested to be included in such registration are withdrawn or otherwise ultimately not included in such registration) (“Registration Expenses”), including (a) all registration and filing fees, (b) all fees and expenses of compliance with state securities or “blue sky” laws (including reasonable fees and disbursements of counsel in connection with “blue sky” laws qualifications of the Registrable Securities), (c) printing and duplicating expenses, (d) internal expenses of the Company (including all salaries and expenses of its officers and employees performing legal or accounting duties), (e) fees, disbursements and expenses of counsel for the Company and independent certified public accountants retained by the Company (including the expenses of any comfort letters or costs associated with the delivery by independent certified
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public accountants of a comfort letter or comfort letters or with any required special audits), (f) the reasonable fees and expenses of any special experts retained by the Company, (g) fees and expenses in connection with any review of underwriting arrangements by FINRA, including fees and expenses of any “qualified independent underwriter” in connection with an underwritten offering, (h) reasonable fees and expenses of not more than one counsel for the Participating Holders (as a group), which counsel shall be selected by (i) with respect to a Demand Registration, the Majority Requesting Holders and (ii) with respect to a registration pursuant to Section 3, Participating Holders that at the relevant time hold at least a majority of the Registrable Securities held by all Participating Holders to be included in such registration, (i) fees and expenses in connection with filings required to be made with any securities exchange or other trading market on which the Registrable Securities are listed for trading, and (j) all duplicating, distribution and delivery expenses. In connection with any offerings pursuant to a registration statement hereunder, each Participating Holder will pay (i) any underwriting discounts or commissions attributable to the sale of Registrable Securities by such Participating Holder in connection with an underwritten offering, (ii) any out-of-pocket expenses of such Participating Holder, including any fees and expenses of counsel to such Participating Holder (other than as set forth in clause (h) of the immediately preceding sentence), and (iii) any applicable transfer or similar taxes or charges.
8. Transfer of Rights. This Agreement, and the rights and obligations of each Holder hereunder, may be assigned by such Holder to (a) any Person to which Registrable Securities (or securities that are exercisable or exchangeable for, or convertible into, Registrable Securities) are transferred by such Holder, so long as such Person, upon giving effect to such transfer, owns or controls, together with its Affiliates, Registrable Securities representing at least five percent (5%) of the Total Equity Interests or (b) to any Affiliate of such Holder, and, in each case, such transferee shall be deemed a Holder for purposes of this Agreement; provided that such assignment of rights shall be contingent upon the transferee executing and delivering to the Company a Joinder Agreement.
9. Miscellaneous.
(a) Recapitalizations, Exchanges, Etc. The provisions of this Agreement shall apply, to the full extent set forth herein with respect to the Registrable Securities, to any and all shares or units of capital stock or other equity securities of the Company or any successor or assign of the Company (whether by merger, consolidation, sale of assets, conversion or otherwise) which may be issued in respect of, in exchange for or in substitution of, the Registrable Securities and shall be appropriately adjusted for any stock or unit dividends, splits, reverse splits, combinations, recapitalizations and the like occurring after the date hereof.
(b) Entire Agreement. This Agreement (including the exhibits, schedules and other documents referred to in this Agreement) contains the entire understanding among the Holders and the Company with respect to the subject matter of this Agreement and supersedes any prior understandings, agreements or representations, written or oral, relating to the subject matter of this Agreement.
(c) Counterparts. For the convenience of the parties hereto, this Agreement may be executed and delivered (including by PDF signature) in any number of counterparts, each such counterpart being deemed to be an original instrument, and all such counterparts shall together constitute the same agreement.
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(d) Severability. In the event that any provision hereof would be invalid or unenforceable in any respect under applicable law, such provision shall be construed by modifying or limiting it so as to be valid and enforceable to the maximum extent compatible with, and possible under, applicable law. The provisions hereof are severable, and in the event any provision hereof should be held invalid or unenforceable in any respect, it shall not invalidate, render unenforceable or otherwise affect any other provision hereof.
(e) Notices. All notices, requests, waivers and other communications made pursuant to this Agreement shall be in writing and shall be deemed to have been effectively given, sent, provided, delivered or received (i) when personally delivered to the party to be notified, (ii) when sent by electronic mail (“e-mail”) to the party to be notified, (iii) three (3) Business Days after deposit in the United States mail, postage prepaid, by certified or registered mail with return receipt requested, addressed to the party to be notified or (iv) one (1) Business Day after deposit with a national overnight delivery service, postage prepaid, addressed to the party to be notified with next-Business Day delivery guaranteed, in each case as follows: (A) in the case of any Holder, to such Holder at its address or e-mail address set forth on its signature page to this Agreement or a Joinder Agreement; and (B) in the case of the Company, to the Corporate Secretary of the Company at its address or an e-mail address set forth on its signature page to this Agreement. A party may change its address or e-mail address for purposes of notice hereunder by (x) in the case of the Company, giving notice of such change to all of the Holders in the manner provided in this Section 9(e) and (y) in the case of any Holder, giving notice of such change to the Company in the manner provided in this Section 9(e).
(f) Successors and Assigns. This Agreement shall be binding upon the permitted transferees, successors, assigns and legal representatives of the parties to this Agreement. Notwithstanding any transfer of such rights, all of the obligations of the Company hereunder shall survive any such transfer and shall continue to inure to the benefit of all transferees.
(g) Headings. The headings of the various sections of this Agreement have been inserted for convenience of reference only and shall not be deemed to be a part of this Agreement.
(h) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO ITS CONFLICTS OF LAW DOCTRINE. THE COMPANY AND EACH HOLDER HEREBY SUBMITS TO THE EXCLUSIVE JURISDICTION OF THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK OR ANY NEW YORK STATE COURT SITTING IN NEW YORK CITY, AND ANY JUDICIAL PROCEEDING BROUGHT AGAINST THE COMPANY OR ANY HOLDER WITH RESPECT TO ANY DISPUTE ARISING OUT OF THIS AGREEMENT OR ANY MATTER RELATED HERETO
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SHALL BE BROUGHT ONLY IN SUCH COURTS. THE COMPANY AND EACH HOLDER HEREBY IRREVOCABLY WAIVE, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION IT MAY HAVE OR HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT AND ANY CLAIM THAT ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. THE COMPANY AND EACH HOLDER HEREBY CONSENT TO PROCESS BEING SERVED IN ANY SUCH PROCEEDING BY THE MAILING OF A COPY THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, TO THE ADDRESS SPECIFIED IN SECTION 9(E), OR IN ANY OTHER MANNER PERMITTED BY LAW. THE COMPANY AND EACH HOLDER HEREBY KNOWINGLY, VOLUNTARILY, AND INTENTIONALLY WAIVE ANY RIGHTS IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY SUCH ACTION OR PROCEEDING.
(i) Third Party Beneficiaries. The terms and provisions of this Agreement are intended solely for the benefit of each party hereto and its successors and permitted assigns, and it is not the intention of the parties to confer third-party beneficiary rights upon any other Person, except for any Indemnitee not a party hereto (solely with respect to Section 6). The foregoing notwithstanding, holders of Warrants on the Effective Date (and their designated Affiliates and participants on such date) (“Effective Date Warrant Holders”) shall be deemed third party beneficiaries of the rights afforded Initial Holders hereunder with respect to any Registrable Securities held by such persons; provided, however, that the Effective Date Warrant Holders shall not have any right to make a Demand Registration Request.
(j) Injunctive Relief. It is hereby agreed and acknowledged that it will be impossible to measure in money the damages that would be suffered if the parties to this Agreement fail to comply with any of the obligations imposed on them by this Agreement and that in the event of any such failure, a non-breaching party hereto will be irreparably damaged and will not have an adequate remedy at law. Any such Person shall, therefore, be entitled to injunctive relief, specific performance or other equitable remedies to enforce such obligations, this being in addition to any other remedy to which such Person is entitled at law or in equity. Each of the parties hereto hereby waives any defense that a remedy at law is adequate and any requirement to post bond or other security in connection with actions instituted for injunctive relief, specific performance or other equitable remedies. Each of the parties hereto hereby agrees not to assert that specific performance, injunctive relief and other equitable remedies are unenforceable, violate public policy, invalid, contrary to law or inequitable for any reason. The right of specific performance, injunctive relief and other equitable remedies is an integral part of the transactions contemplated by this Agreement.
(k) Additional Actions and Documents. The parties agree to execute and deliver any further instruments or perform any acts that are or may become necessary to carry out or to perform the provisions of this Agreement.
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(l) Amendments and Waivers. The provisions of this Agreement, including the provisions of this sentence, may not be amended, modified or supplemented, or waived unless the same shall be in writing and signed by the Company and Holders who beneficially own at least sixty percent (60.0%) of the then outstanding Registrable Securities; provided, however, that any party may give a waiver as to itself. No waiver of any terms or conditions of this Agreement shall operate as a waiver of any other breach of such terms and conditions or any other term or condition, nor shall any failure to enforce any provision hereof operate as a waiver of such provision or of any other provision hereof. No written waiver hereunder, unless it by its own terms explicitly provides to the contrary, shall be construed to effect a continuing waiver of the provisions being waived and no such waiver in any instance shall constitute a waiver in any other instance or for any other purpose or impair the right of the party against whom such waiver is claimed in all other instances or for all other purposes to require full compliance with such provision. The failure of any party to enforce any provision of this Agreement shall not be construed as a waiver of such provision and shall not affect the right of such party thereafter to enforce each provision of this Agreement in accordance with its terms.
(m) Termination. The obligations of the Company and of any Holder, other than those obligations contained in Section 6 and this Section 9, shall terminate with respect to the Company and such Holder as soon as such Holder no longer beneficially owns any Registrable Securities.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
25
IN WITNESS WHEREOF, the undersigned have caused this Registration Rights Agreement to be executed and delivered by their respective officers hereunto duly authorized on the date first above written.
| LONESTAR RESOURCES US INC. | ||||
| By: | /s/ Frank D. Bracken, III | |||
| Name: | Frank D. Bracken, III | |||
| Title: | Chief Executive Officer | |||
| Address: | 111 Boland St. Suite 300 Fort Worth, TX 76107 | |||
| Email Address: bracken@lonestarresources.com | ||||
[Signature Page to Registration Rights Agreement]
| FS Energy and Power Fund | ||||
| By: FS/EIG Advisor, LLC, its investment adviser | ||||
| By: | /s/ Eric Long | |||
| Name: | Eric Long | |||
| Title: | Authorized Person | |||
| By: | /s/ Andrew Jamison | |||
| Name: | Andrew Jamison | |||
| Title: | Authorized Person | |||
| Address: | ||||
| FS Energy and Power Fund | ||||
| c/o EIG Management Company, LLC | ||||
| 600 New Hampshire Avenue NW, Suite 1200 Washington, DC 20037 | ||||
| Attn: Eric Long | ||||
| cc: Andrew Jamison | ||||
| Email Address: eric.long@eigpartners.com cc: andy.jamison@eigpartners.com; notices@eigpartners.com | ||||
[Signature Page to Registration Rights Agreement]
| Hotchkis and Wiley High Yield Fund | ||||
| By: |
Hotchkis and Wiley Capital Management, LLC (H&W) as its investment manager | |||
| By: | /s/ Anna Marie Lopez | |||
| Name: | Anna Marie Lopez | |||
| Title: | Chief Operating Officer | |||
| Address: | ||||
| c/o Hotchkis & Wiley Capital Management, LLC 601 South Figueroa Street, 39th Floor Los Angeles, CA 90017 Attention: Anna Marie Lopez | ||||
| Email Address: anna.marie.lopez@hwcm.com | ||||
[Signature Page to Registration Rights Agreement]
| San Diego County Employees Retirement Association | ||||
| By: |
Hotchkis and Wiley Capital Management, LLC (H&W) as its investment manager | |||
| By: | /s/ Anna Marie Lopez | |||
| Name: | Anna Marie Lopez | |||
| Title: | Chief Operating Officer | |||
| Address: | ||||
| c/o Hotchkis & Wiley Capital Management, LLC 601 South Figueroa Street, 39th Floor Los Angeles, CA 90017 Attention: Anna Marie Lopez | ||||
| Email Address: anna.marie.lopez@hwcm.com | ||||
[Signature Page to Registration Rights Agreement]
| Santa Barbara County Employees’ Retirement System | ||||
| By: |
Hotchkis and Wiley Capital Management, LLC (H&W) as its investment manager | |||
| By: | /s/ Anna Marie Lopez | |||
| Name: | Anna Marie Lopez | |||
| Title: | Chief Operating Officer | |||
| Address: | ||||
| c/o Hotchkis & Wiley Capital Management, LLC 601 South Figueroa Street, 39th Floor Los Angeles, CA 90017 Attention: Anna Marie Lopez | ||||
| Email Address: anna.marie.lopez@hwcm.com | ||||
[Signature Page to Registration Rights Agreement]
| National Elevator Industry Pension Plan | ||||
| By: |
Hotchkis and Wiley Capital Management, LLC (H&W) as its investment manager | |||
| By: | /s/ Anna Marie Lopez | |||
| Name: | Anna Marie Lopez | |||
| Title: | Chief Operating Officer | |||
| Address: | ||||
| c/o Hotchkis & Wiley Capital Management, LLC 601 South Figueroa Street, 39th Floor Los Angeles, CA 90017 Attention: Anna Marie Lopez | ||||
| Email Address: anna.marie.lopez@hwcm.com | ||||
[Signature Page to Registration Rights Agreement]
| Texas County & District Retirement System | ||||
| By: |
Hotchkis and Wiley Capital Management, LLC (H&W) as its investment manager | |||
| By: | /s/ Anna Marie Lopez | |||
| Name: | Anna Marie Lopez | |||
| Title: | Chief Operating Officer | |||
| Address: | ||||
| c/o Hotchkis & Wiley Capital Management, LLC 601 South Figueroa Street, 39th Floor Los Angeles, CA 90017 Attention: Anna Marie Lopez | ||||
| Email Address: anna.marie.lopez@hwcm.com | ||||
[Signature Page to Registration Rights Agreement]
| Government of Guam Retirement Fund | ||||
| By: |
Hotchkis and Wiley Capital Management, LLC (H&W) as its investment manager | |||
| By: | /s/ Anna Marie Lopez | |||
| Name: | Anna Marie Lopez | |||
| Title: | Chief Operating Officer | |||
| Address: | ||||
| c/o Hotchkis & Wiley Capital Management, LLC 601 South Figueroa Street, 39th Floor Los Angeles, CA 90017 Attention: Anna Marie Lopez | ||||
| Email Address: anna.marie.lopez@hwcm.com | ||||
[Signature Page to Registration Rights Agreement]
| Loomis, Sayles & Company, L.P., as investment manager, on behalf of each of the accounts listed on Exhibit 1 hereto (each such account, separately and not jointly, a (“Noteholder”)
By: Loomis, Sayles & Company, Incorporated Its General Partner | ||||
| By: | /s/ Thomas H. Day | |||
| Name: | Thomas H. Day | |||
| Title: | Assistant General Counsel | |||
| Address: | ||||
| One Financial Center Boston MA 0211 I Attention: Thomas H. Day Email Address: | ||||
[Signature Page to Registration Rights Agreement]
| David Matlin | ||||
| By: | /s/ David Matlin | |||
| Name: | David Matlin | |||
| Title: | N/A | |||
| Address: | ||||
| P.O. Box 63 New York, New York 10014 | ||||
| Email Address: matlin@matlinpatterson.com | ||||
[Signature Page to Registration Rights Agreement]
| Lisa H. Matlin | ||||
| By: | /s/ Lisa H. Matlin | |||
| Name: | Lisa H. Matlin | |||
| Title: | N/A | |||
| Address: | ||||
| P.O. Box 63 New York, New York 10014 | ||||
| Email Address: lisa@matlin.us | ||||
[Signature Page to Registration Rights Agreement]
Exhibit A to
Registration Rights Agreement
FORM OF JOINDER AGREEMENT
The undersigned hereby agrees, effective as of the date hereof, to become a party to that certain Registration Rights Agreement (as amended, supplemented, amended and restated or otherwise modified from time to time, the “Agreement”), dated as of November 30, 2020, by and among Lonestar Resources US Inc. (the “Company”) and the other parties thereto, and for all purposes of the Agreement, the undersigned shall, effective as of the date hereof, be bound by the terms and provisions of the Agreement applicable to Holders and be included within the term “Holder” (as defined in the Agreement).
The address and e-mail address to which notices may be sent to the undersigned is as follows:
[Address]
E-mail Address:
| [NAME OF PARTY] | ||||||
| Date: | By: |
| ||||
| Name: | ||||||
| Title: | ||||||
Exhibit A to Registration Rights Agreement
Exhibit 10.3
TRANCHE 1 WARRANT AGREEMENT
between
LONESTAR RESOURCES US INC.
COMPUTERSHARE INC.
and
COMPUTERSHARE TRUST COMPANY N.A.,
as Warrant Agent
Dated as of November 30, 2020
Warrants to Purchase Common Stock
TABLE OF CONTENTS
Page
| 1. | Definitions |
1 | ||||||
| 2. | Warrant Certificates; Book-Entry Warrants |
10 | ||||||
| 2.1 |
Original Issuance of Warrants |
10 | ||||||
| 2.2 |
Form of Warrants |
10 | ||||||
| 2.3 |
Execution and Delivery of Warrant Certificates and Book-Entry Warrants |
11 | ||||||
| 2.4 |
Global Warrant Certificates |
12 | ||||||
| 2.5 |
Transfer and Exchange of Warrants represented by Definitive Warrant Certificates or Book-Entry Warrants |
14 | ||||||
| 2.6 |
Restrictions on Exchange or Transfer of a Book-Entry Warrant or a Warrant Represented by a Definitive Warrant Certificate for a Beneficial Interest in a Global Warrant Certificate |
14 | ||||||
| 3. | Exercise and Expiration of Warrants |
14 | ||||||
| 3.1 |
Right to Acquire Common Stock Upon Exercise |
14 | ||||||
| 3.2 |
Exercise and Expiration of Warrants |
14 | ||||||
| 3.3 |
Application of Funds upon Exercise of Warrants |
16 | ||||||
| 3.4 |
Payment of Taxes |
17 | ||||||
| 3.5 |
Withholding and Reporting Requirements |
17 | ||||||
| 3.6 |
Cancellation of Warrant Certificates |
17 | ||||||
| 3.7 |
Cashless Exercise |
18 | ||||||
| 3.8 |
Shares Issuable |
18 | ||||||
| 3.9 |
Cost Basis Information |
18 | ||||||
| 3.10 |
Redemption |
19 | ||||||
| 4. | Dissolution, Liquidation or Winding up |
19 | ||||||
| 5. | Adjustments |
20 | ||||||
| 5.1 |
Adjustments |
20 | ||||||
| 5.2 |
Fractional Interest |
28 | ||||||
| 5.3 |
No Adjustments |
28 | ||||||
| 5.4 |
Adjustment of Prices |
28 | ||||||
| 6. | Loss or Mutilation |
28 | ||||||
| 7. | Reservation and Authorization of Common Stock |
29 | ||||||
| 8. | Warrant Transfer Books |
30 | ||||||
| 9. | Warrant Holders |
31 | ||||||
| 9.1 |
No Rights as Stockholders until Exercise |
31 | ||||||
| 9.2 |
Rights of Action |
32 | ||||||
| 9.3 |
Treatment of Holders of Warrant Certificates |
32 | ||||||
| 10. | Concerning the Warrant Agent |
32 | ||||||
| 10.1 |
Rights and Duties of the Warrant Agent |
32 | ||||||
i
| 10.2 |
Limitation of Liability |
35 | ||||||
| 10.3 |
Indemnification |
35 | ||||||
| 10.4 |
Right to Consult Counsel |
36 | ||||||
| 10.5 |
Compensation and Reimbursement |
36 | ||||||
| 10.6 |
Warrant Agent May Hold Company Securities |
36 | ||||||
| 10.7 |
Resignation and Removal; Appointment of Successor |
36 | ||||||
| 10.8 |
Appointment of Countersigning Agent |
37 | ||||||
| 11. | Notices |
38 | ||||||
| 11.1 |
Notices Generally |
38 | ||||||
| 11.2 |
Required Notices to Holders |
40 | ||||||
| 12. | Information Rights |
41 | ||||||
| 13. | Inspection |
41 | ||||||
| 14. | Amendments |
42 | ||||||
| 15. | Waivers |
43 | ||||||
| 16. | Successors |
43 | ||||||
| 17. | Headings |
43 | ||||||
| 18. | Counterparts |
43 | ||||||
| 19. | Severability |
43 | ||||||
| 20. | Persons Benefiting |
43 | ||||||
| 21. | Applicable Law |
44 | ||||||
| 22. | Entire Agreement |
44 | ||||||
| 23. | Force Majeure |
44 | ||||||
| 24. | Further Assurances |
44 | ||||||
| 25. | Confidentiality |
44 | ||||||
EXHIBITS
| Exhibit A |
Form of Warrant Statement | |
| Exhibit B |
Form of Tranche 1 Warrant Certificate | |
ii
TRANCHE 1 WARRANT AGREEMENT
This Tranche 1 Warrant Agreement (as may be supplemented, amended or amended and restated pursuant to the applicable provisions hereof, this “Agreement”), dated as of November 30, 2020, between Lonestar Resources US Inc., a Delaware corporation (and any Successor Company that becomes successor to the Company in accordance with Section 16) (the “Company”), Computershare Inc., a Delaware corporation (“Computershare”), and its wholly-owned subsidiary Computershare Trust Company, N.A., a federally chartered trust company (and any successor of such Warrant Agent appointed in accordance with the terms hereof) (collectively, the “Warrant Agent”). Capitalized terms that are used in this Agreement shall have the meanings set forth in Section 1 hereof.
WITNESSETH THAT:
WHEREAS, pursuant to the terms and conditions of the Joint Prepackaged Plan of Reorganization of Lonestar Resources US Inc. and Its Affiliate Debtors Under Chapter 11 of the Bankruptcy Code, Case No. 20-34805 (the “Plan”) relating to a reorganization with respect to the existing debt and other obligations of (i) the Company, (ii) Lonestar Resources America Inc., a Delaware corporation (“Lonestar”), and (iii) each other direct and indirect wholly-owned subsidiary (other than Boland Building, LLC) (collectively, the “Subsidiaries”) of the Company, under chapter 11 of title 11 of the United States Code (the “Bankruptcy Code”), the Company proposes to issue and deliver to holders of Allowed Prepetition RBL Claims (each term as defined in the Plan) that have voted to accept the Plan (the “Initial Holders”) the Warrants (as defined below) to purchase up to 555,555 shares of Common Stock, subject to adjustment as provided herein, and the Warrant Certificates evidencing such Warrants;
WHEREAS, each Warrant shall entitle the registered owner thereof to purchase one share of Common Stock, subject to adjustment as provided herein;
WHEREAS, the Warrants and the Common Stock issuable upon exercise of the Warrants are being issued in an offering in reliance on the exemption from the registration requirements of the Securities Act (as defined below) afforded by Section 1145 of the Bankruptcy Code and of any applicable state securities or “blue sky” laws; and
WHEREAS, the Company desires that the Warrant Agent act on behalf of the Company, and the Warrant Agent is willing to so act, in connection with the issuance, exchange, transfer, substitution and exercise of Warrants.
NOW THEREFORE, in consideration of the mutual agreements herein contained, the Company and the Warrant Agent agree as follows:
1. Definitions.
“Action” has the meaning set forth in Section 11.2.
“Adjustment Events” has the meaning set forth in Section 5.1.
“Affiliate” of any specified Person, means any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified Person. For the purposes of this definition, “control” when used with respect to any Person means the power to direct the management and policies of such specified Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise, and the terms “controlling” and “controlled” have meanings correlative to the foregoing.
“Agent Members” has the meaning set forth in Section 2.4(b).
“Agreement” has the meaning set forth in the preamble hereto.
“Applicable Procedures” means, with respect to any transfer or exchange of, or exercise of any Warrants evidenced by, any Global Warrant Certificate, the rules and procedures of the Depositary that apply to such transfer, exchange or exercise.
“Appropriate Officer” means the Chairman of the Board of Directors, the Chief Executive Officer, the principal operating officer, the principal financial officer and any Vice President (including the officers or persons with equivalent responsibilities) of the Company.
“Bankruptcy Code” has the meaning set forth in the recitals hereto.
“BDO” means BDO USA, LLP.
“Board of Directors” means either the board of directors of the Company or any duly authorized committee of that board.
“Book-Entry Warrants” means Warrants issued by book-entry registration on the Warrant Register, evidenced by the Warrant Statements.
“Business Day” means each Monday, Tuesday, Wednesday, Thursday and Friday which is not a legal holiday in the State of New York, or a day on which banking institutions and trust companies in the state in which the Corporate Agency Office is located are authorized or obligated by law, regulation or executive order to close.
“Bylaws” means the Second Amended and Restated Bylaws of the Company, as amended from time to time.
“Capital Expenditures” means, in respect of any Person, for any period, the aggregate (determined without duplication) of all exploration and development expenditures and costs that are capital in nature and any other expenditures that are capitalized on the balance sheet of such Person in accordance with GAAP.
“Cashless Exercise” has the meaning set forth in Section 3.7.
“Cashless Exercise Current Market Price” means the Current Market Price of the Common Stock on the Exercise Date with respect to any Cashless Exercise.
“Cashless Exercise Warrant” has the meaning set forth in Section 3.7.
2
“Certificate of Incorporation” means the Amended and Restated Certificate of Incorporation of the Company, as filed with the Secretary of State of the State of Delaware on the date hereof, as amended from time to time.
“Commission” means the Securities and Exchange Commission, or any other federal agency at the time administering the Securities Act or the Exchange Act, whichever is the relevant statute for the particular purpose.
“Common Stock” means the Common Stock, par value $0.001 per share, of the Company.
“Company” means the company identified in the preamble hereof, or any successor to the Company.
“Company Order” means a written request or order signed in the name of the Company by Chairman of the Board of Directors, the Chief Executive Officer, the principal operating officer, the principal financial officer, any Vice President, the Treasurer and the Secretary (including the officers or persons with equivalent responsibilities), and delivered to the Warrant Agent.
“Corporate Agency Office” has the meaning set forth in Section 8.
“corporation” means a corporation, association, company (including limited liability company), joint-stock company, business trust or other similar entity.
“Countersigning Agent” means any Person authorized by the Warrant Agent to act on behalf of the Warrant Agent to countersign Warrant Statements and Warrant Certificates.
“Credit Agreement” means the Amended and Restated Credit Agreement dated as of November 30, 2020 (as amended, modified, or supplemented from time to time), by and among the Company, Lonestar, Citibank, N.A. and the lenders party thereto.
“Current Market Price” means the per share price of Common Stock on any date herein specified, in an amount equal to (i) for the purpose of any computation under this Agreement (except under Section 5.2), the Equity Value on such date divided by the number of shares of Common Stock then outstanding, or (ii) for the purposes of any computation under Section 5.2, the Quoted Price for such date or, if such date is not a Trading Day, for the next preceding Trading Day.
“Cut-Off Time” means 5:00 p.m., New York City time, on the day prior to the consummation of a Sale of the Company.
“Definitive Warrant Certificate” means a Warrant Certificate registered in the name of the Holder thereof that does not bear the Global Warrant Legend and that does not have a “Schedule of Decreases of Warrants” attached thereto.
“Depositary” means DTC and its successors as depositary hereunder.
“DTC” means The Depository Trust Company.
3
“Equity Value” means on any date of determination, the equity value of the Company determined as follows:
(1) if on such date the Common Stock is listed or admitted to trading on any U.S. national securities exchange or traded and quoted in the over-the-counter market in the United States, the product of (x) the average of the Quoted Prices for the 20 consecutive Trading Days ending on the Trading Day that is or next precedes the date in question and (y) the number of shares of Common Stock then outstanding; and
(2) if on such date the Common Stock is not listed or admitted to trading on any U.S. national securities exchange or traded and quoted in the over-the-counter market in the United States, the sum, as of the most recent Valuation Date, of:
(A) (x) with respect to the PDP Reserves, the Present Value of such reserves using a discount rate equal to 12%, (y) with respect to the PDNP Reserves, the Present Value of such reserves using a discount rate equal to 15% and (z) with respect to the PUD Reserves and Probable and Possible Reserves, the Present Value of such reserves using a discount rate equal to 20%, plus
(B) unrestricted cash on hand, plus
(C) the amount, if any, by which the aggregate value of the Company’s and its Subsidiaries’ current assets (determined in accordance with GAAP but excluding cash, cash equivalents and other current assets from risk management activities) (“Current Assets”) exceeds, without duplication, the aggregate value, determined in accordance with GAAP, of the sum of the Company’s and its Subsidiaries’ (i) current liabilities, (ii) guaranty obligations with respect to any current liabilities, (iii) the current portion of any long-term debt, (iv) the current liabilities plugging and abandonment obligations and (v) any other current liabilities from risk management activities (“Current Liabilities”), plus
(D) the positive mark-to-market value under the Company’s and its Subsidiaries commodity derivative agreements, less
(E) the amount, if any, by which the value of the Company’s and its Subsidiaries’ Current Liabilities exceeds the value of their Current Assets, less
(F) the book value of total long-term debt, and less
(G) the negative mark-to-market value (or obligations) under the Company’s and its Subsidiaries commodity derivative agreements
(such amount, the “Original Value”); provided, however, if any Holder believes in good faith that the Original Value is not an accurate reflection of the fair market equity value of the Common Stock as of such date of determination, and following good faith discussions such dispute or challenge cannot be settled among the Holders and the Company, then the Equity Value shall be determined by an appraiser jointly selected by such Holder or Holders and the Company. In the event the parties, acting in good faith, cannot mutually agree upon the selection of an appraiser within 15 Business Days of the dispute or challenge, each
4
party shall appoint its appraiser and the Equity Value shall be equal to the average of the two fair market values determined by the two appraisers. Such third-party appraiser’s valuation or the average of the appraisers’ valuations, as the case may be (the “New Value”), if higher than the Original Value, shall be binding upon all parties absent demonstrable error.
“Exchange Act” means the Securities Exchange Act of 1934 and any statute successor thereto, in each case, as amended from time to time.
“Exercise Condition” means the condition that at any time following the Original Issue Date the Equity Value shall have been greater than the Minimum Equity Value.
“Exercise Date” has the meaning set forth in Section 3.2(f).
“Exercise Form” has the meaning set forth in Section 3.2(c).
“Exercise Period” means the period from and including the Original Issue Date to and including the Expiration Date.
“Exercise Price” means the exercise price of $0.001 per share of Common Stock, subject to adjustment as provided in Section 5.1.
“Expiration Date” means the earliest to occur of (i) the Scheduled Expiration Date, (ii) the Sale Date in the event a Sale of the Company occurs and (iii) a Winding Up.
“GAAP” means generally accepted accounting principles in the United States of America as in effect from time to time.
“Global Warrant Certificate” means a Warrant Certificate deposited with or on behalf of and registered in the name of the Depositary or its nominee, that bears the Global Warrant Legend and that has the “Schedule of Decreases of Warrants” attached thereto.
“Governmental Authority” means the government of the United States of America, any other nation or any political subdivision thereof, whether state or local, and any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government (including any supra-national bodies such as the European Union or the European Central Bank).
“Global Warrant Legend” means the legend set forth in Section 2.4(a).
“Holder” means any Person in whose name at the time any Warrant, whether evidenced in book entry form or evidenced by a Warrant Certificate, is registered upon the Warrant Register and, when used with respect to any Book-Entry Warrant or Warrant Certificate, the Person in whose name the Warrants evidenced by the applicable Warrant Statement or Warrant Certificate is registered in the Warrant Register.
5
“Hydrocarbon Interests” means all rights, titles, interests and estates now or hereafter acquired in and to oil and gas leases, oil, gas and mineral leases (excluding coal and timber), or other liquid or gaseous hydrocarbon leases, mineral fee interests, overriding royalty and royalty interests, net profit interests and production payment interests, including any reserved or residual interests of whatever nature. Unless otherwise indicated herein, each reference to the term “Hydrocarbon Interests” shall mean Hydrocarbon Interests of the Company and its Subsidiaries.
“Hydrocarbons” means oil, gas, casinghead gas, drip gasoline, natural gasoline, condensate, distillate, liquid hydrocarbons, gaseous hydrocarbons and all products refined or separated therefrom. Unless otherwise indicated herein, each reference to the term “Hydrocarbons” shall mean Hydrocarbons of the Company and its Subsidiaries.
“Initial Holders” has the meaning set forth in the recitals hereto.
“Initial Reserve Report” means the report prepared by a chief engineer of Lonestar, dated as of November 1, 2020, with respect to all Hydrocarbon Interests.
“Interim Redetermination” has the meaning set forth in the Credit Agreement.
“Management Incentive Plan” has the meaning set forth in the Plan.
“Minimum Equity Value” means $100 million.
“MIP Equity” has the meaning set forth in the Plan.
“Original Issue Date” means November 30, 2020, the date on which Warrants are originally issued under this Agreement.
“outstanding” when used with respect to any Warrants, means, as of the time of determination, all Warrants theretofore originally issued under this Agreement except (i) Warrants that have been exercised pursuant to Section 3.2(a), (ii) Warrants that have expired pursuant to Section 3.2(b) or Section 4 and (iii) Warrants that have otherwise been acquired by the Company; provided, however, that in determining whether the Holders of the requisite amount of the outstanding Warrants have given any request, demand, authorization, direction, notice, consent or waiver under the provisions of this Agreement, Warrants held directly or beneficially by the Company or any Subsidiary or Affiliate of the Company or any of their respective employees shall be disregarded and deemed not to be outstanding.
“Payoff Documentation” means with respect to any payment or delivery of Transaction Consideration to any Holder under Section 5.1(i), the timely delivery by such Holder to the Warrant Agent of Warrant Certificates for any Warrants in respect of such payment or delivery (if such Warrants are certificated) and any other letters of transmittal and other customary documentation as may be reasonably requested by the Company and provided in any notice to such Holder, including such documentation as may be specified in the definitive documentation providing for a Sale of the Company.
6
“Person” means any individual, corporation, limited liability company, partnership, joint venture, trust, any other entity, unincorporated organization or government or any agency or political subdivision thereof.
“Plan” has the meaning set forth in the recitals hereto.
“Property” means any interest in any kind of property or asset, whether real, personal or mixed, or tangible or intangible, including, without limitation, cash, securities, accounts and contract rights.
“PDP Reserves” means the Hydrocarbon Interests designated as “proved developed producing” (in accordance with the Definitions for Oil and Gas Reserves approved by the Board of Directors of the Society of Petroleum Engineers, Inc. from time to time) in the most recently delivered Reserve Report.
“PDNP Reserves” means the Hydrocarbon Interests designated as “proved developed non-producing” (in accordance with the Definitions for Oil and Gas Reserves approved by the Board of Directors of the Society of Petroleum Engineers, Inc. from time to time) in the most recently delivered Reserve Report.
“Present Value” means, as of the most recent Valuation Date, the value of all Hydrocarbon Interests:
(1) calculated using Strip Prices for crude oil (WTI Cushing), for natural gas liquids (Mont Belvieu) and natural gas (Henry Hub), with such price held flat for each subsequent year, quoted on the New York Mercantile Exchange (or its successor) on such date of determination;
(2) discounted using a specified annual discount rate;
(3) as set forth in the Reserve Report as of such Valuation Date;
(4) in all cases, adjusted in good faith by the Company to give pro forma effect to all acquisitions, extensions, discoveries and other upward revisions and all dispositions, production and downward revisions, in each case, since the date of the applicable Reserve Report; and
(5) in any event, excluding the value of any well and/or location where Hydrocarbon Interests exist, if the Present Value thereof, calculated in accordance with the terms herein, would be equal to zero or a negative value.
“Probable and Possible Reserves” means the Hydrocarbon Interests designated as “probable” or “possible” (in accordance with the Definitions for Oil and Gas Reserves approved by the Board of Directors of the Society of Petroleum Engineers, Inc. from time to time) in the most recently delivered Reserve Report.
“Proved Reserves” means the Hydrocarbon Interests designated as “proved developed producing”, “proved developed non-producing”, proved undeveloped” (in accordance with the Definitions for Oil and Gas Reserves approved by the Board of Directors of the Society of Petroleum Engineers, Inc. from time to time) in the most recently delivered Reserve Report.
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“PUD Reserves” means the Hydrocarbon Interests designated as “proved undeveloped” (in accordance with the Definitions for Oil and Gas Reserves approved by the Board of Directors of the Society of Petroleum Engineers, Inc. from time to time) in the most recently delivered Reserve Report.
“Quoted Price” means the volume-weighted average price on the principal U.S. national securities exchange on which the Common Stock is listed or admitted to trading for trading hours of the regular trading session (including any extensions thereof), determined without regard to pre-open or after-hours trading or any other trading outside of the trading hours of the regular trading session (including any extensions thereof) or, if shares of the Common Stock are not listed or admitted to trading on any U.S. national securities exchange, the average of the closing bid and asked prices in the over the counter market in the United States as furnished by any New York Stock Exchange member firm that shall be selected from time to time (or if such volume-weighted average price or the average of the closing bid and asked price is unavailable, the fair market value of one share of Common Stock on such Trading Day reasonably determined by a nationally recognized financial institution appointed by the Company for such purpose).
“Recipient” has the meaning set forth in Section 3.2(e).
“Reorganization Event” means (A) any recapitalization, reclassification, redenomination or other change to the Common Stock (other than (x) changes solely resulting from a subdivision or combination of the Common Stock, (y) a change only in par value and (z) stock splits and stock combinations that do not involve the issuance of any other series or class of securities); and (B) any consolidation, merger, amalgamation, combination or binding or statutory share exchange involving the Company; and, in each case, does not give rise to a Sale of the Company and as a result of which shares of Common Stock are converted into, or are exchanged for, or represent solely the right to receive Transaction Consideration.
“Required Warrant Holders” means Holders of Book-Entry Warrants and Warrant Certificates evidencing a majority of the then-outstanding Warrants.
“Reserve Report” means the Initial Reserve Report and each other report, in form and substance reasonably satisfactory to the Holders, setting forth, as of each Valuation Date, the oil and gas reserves attributable to the Hydrocarbons Interests, together with a projection of the rate of production and future net income, taxes, operating expenses, Present Value of Proved Reserves, and Probable and Possible Reserves (each discounted at the respective rates applicable in the definition of Equity Value) and capital expenditures with respect thereto as of such date.
“Sale Date” means the date on which a Sale of the Company is consummated.
“Sale of the Company” means any transaction or series of related transactions constituting any direct or indirect sale or other disposition (including, without limitation, by way of stock sale, merger, consolidation or similar transactions) of at least a majority of the equity securities of the Company or of all or substantially all of the consolidated assets or business of the Company and its Subsidiaries, taken as a whole.
“Scheduled Expiration Date” means November 30, 2023 (the third (3rd) anniversary of the Original Issue Date) or, if not a Business Day, then the next Business Day thereafter.
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“Securities Act” means the Securities Act of 1933, as amended.
“Signature Guarantee” has the meaning set forth in Section 2.5.
“Strip Price” means, as of any date of determination, the forward month prices as of the first Business Day of the month in which such prices are determined for the most comparable hydrocarbon commodity applicable to such future production month for a ten-year period (or such shorter period if forward month prices are not quoted for a reasonably comparable hydrocarbon commodity for the full ten year period), with such prices escalated at 2% each year thereafter based on the last quoted forward month price of such period, as such prices are (i) quoted on the New York Mercantile Exchange (or its successor) as of the determination date and (ii) as adjusted for any basis differential as of the date of determination.
“Subsidiaries” has the meaning set forth in recitals hereto.
“Trading Day” means a day on which trading in the Common Stock (or other applicable security) generally occurs on the principal exchange or market on which shares of the Common Stock (or other applicable security) are then listed or traded; provided that if shares of the Common Stock (or other applicable security) are not so listed or traded, “Trading Day” means a Business Day.
“Transaction Consideration” means, with respect to any transaction which is either a Sale of the Company or Reorganization Event, the cash, stock, shares or other securities or property, or any combination thereof, payable to each holder of Common Stock in exchange for, or upon conversion of, shares of Common Stock (or otherwise into which such shares of Common Stock are changed into) in such transaction; provided, that (a) no contingent or escrowed property shall be treated as part of Transaction Consideration unless and until such time as such property is actually paid to such holders of Common Stock (and any contingent rights with respect thereto shall be treated as valueless unless and until such payment occurs); and (b) in the event holders of Common Stock have the opportunity to elect the form of consideration to be received in such transaction, the type and amount of consideration paid or payable to each holder shall be deemed, for purposes of this Agreement, to be the weighted average per share of the types and amounts of consideration received by all such holders in such transaction. For all purposes under this Agreement, the value of any Transaction Consideration shall be determined reasonably and in good faith by the Company, using where applicable the Current Market Price of any applicable securities received with respect to a share of Common Stock.
“Unit of Transaction Consideration” means, with respect to a Sale of the Company or Reorganization Event, the amount and kind of Transaction Consideration (including, without limitation, cash) that a holder of one (1) share of Common Stock would be entitled to receive on account of such Sale of the Company or Reorganization Event (without giving effect to any arrangement not to issue or deliver a fractional portion of any security or other property).
“Valuation Date” means each January 1, April 1, July 1 and October 1 during the Exercise Period.
“Warrant Agent” has the meaning set forth in the preamble hereof.
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“Warrant Certificates” means those certain warrant certificates evidencing the Warrants, substantially in the form set forth in Exhibit B attached hereto, which, for the avoidance of doubt, are either Global Warrant Certificates or Definitive Warrant Certificates.
“Warrant Register” means the register established by the Warrant Agent set forth in Section 2.3.
“Warrant Statement” means any statement issued by the Warrant Agent from time to time to a registered Holder of Book-Entry Warrants reflecting such book-entry position, substantially in the form of Exhibit A.
“Warrants” means those certain Tranche 1 warrants to purchase initially up to an aggregate of 555,555 shares of Common Stock at the Exercise Price, subject to adjustment pursuant to Section 5, issued hereunder.
“Warrant Shares” means the shares of Common Stock issuable upon exercise of the Warrants.
“Winding Up” has the meaning set forth in Section 4.
2. Warrant Certificates; Book-Entry Warrants.
2.1 Original Issuance of Warrants.
(a) On the Original Issue Date, the Company shall issue to each Initial Holder its pro-rata share of the Warrants under the Plan by (i) book-entry registration on the books of the Warrant Agent (the “Book-Entry Warrants”), registered in the names of the Initial Holders of such Warrants and, upon the Company’s written instruction to the Warrant Agent, evidenced by Warrant Statements issued to such Initial Holders and/or (ii) by delivery of one or more Definitive Warrant Certificates evidencing Warrants, which shall be executed by the Company and delivered to the Warrant Agent for countersignature, and the Warrant Agent shall, upon receipt of a Company Order and at the direction of the Company set forth therein, countersign (in manual or facsimile form) and deliver such Definitive Warrant Certificates for original issuance to the Initial Holders thereof; in each case, in accordance with the terms of this Agreement.
(b) Each Warrant Statement or Warrant Certificate shall evidence the number of Warrants specified therein, and each Warrant evidenced thereby shall represent the right, subject to the provisions contained herein and therein, to purchase one share of Common Stock, subject to adjustment as provided in Section 5.
2.2 Form of Warrants.
(a) The Warrants shall initially be issued in book-entry registration on the books and records of the Warrant Agent and evidenced by the Warrant Statements, in substantially the form set forth in Exhibit A hereto, and/or Warrant Certificates in registered form by certificates substantially in the form set forth in Exhibit B hereto. The Warrant Statements and the Warrant Certificates shall be dated the date on which countersigned by the Warrant Agent, shall have such insertions as are appropriate or required or permitted by this Agreement and may have such letters,
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numbers or other marks of identification and such legends and endorsements typed, stamped, printed, lithographed or engraved thereon (which do not impact the Warrant Agent’s rights, duties or immunities) as the officers of the Company executing the same may approve (execution thereof to be conclusive evidence of such approval) and as are not inconsistent with the provisions of this Agreement, or as may be required to comply with any law or with any rule or regulation pursuant thereto or with any rule or regulation of any securities exchange on which the Warrants may be listed, or to conform to usage.
2.3 Execution and Delivery of Warrant Certificates and Book-Entry Warrants.
(a) Upon written order of the Company, the Warrant Agent shall (i) register in the Warrant Register the Book-Entry Warrants and (ii) upon receipt of Warrant Certificates duly executed on behalf of the Company, countersign (either manually or by facsimile signature) each such Warrant Certificate. Such written order of the Company shall specifically state the number of Warrants that are to be issued as Book-Entry Warrants and the number of Warrants that are to be issued as Warrant Certificates.
(b) The Company shall cause to be kept at the office or offices of the Warrant Agent designated for such purpose a warrant register (the “Warrant Register”) in which, subject to such reasonable regulations as it may prescribe, it shall register the Book-Entry Warrants as well as any Warrant Certificates and exchanges and transfers of outstanding Warrants in accordance with the procedures set forth in Section 2.4, Section 2.5 and Section 2.6 of this Agreement. No service charge shall be made for any exchange or registration of transfer of the Warrants, but the Company may require payment of a sum sufficient to cover any stamp or other tax or other governmental charge that may be imposed on the registered Holder in connection with any such exchange or registration of transfer. The Warrant Agent shall have no obligation to effect an exchange or register a transfer unless and until any payments required by the immediately preceding sentence have been made.
(c) The Warrant Agent is hereby authorized to countersign and deliver Warrant Certificates and Warrant Statements as required by Section 2.1 or by Section 2.3, Section 3.2(d), Section 6 or Section 8.
(d) The Warrant Certificates shall be executed in the corporate name and on behalf of the Company by the Appropriate Officer under corporate seal reproduced thereon and attested to by the Secretary of the Company, either manually or by facsimile signature printed thereon. The Warrant Certificates shall be countersigned, either by manual or facsimile signature, by the Warrant Agent and shall not be valid for any purpose unless so countersigned. In case any officer of the Company whose signature shall have been placed upon any of the Warrant Certificates shall cease to be such officer of the Company before countersignature by the Warrant Agent and issue and delivery thereof, such Warrant Certificates may, nevertheless, be countersigned by the Warrant Agent and issued and delivered with the same force and effect as though such person had not ceased to be such officer of the Company, and any Warrant Certificate may be signed on behalf of the Company by such person as, at the actual date of the execution of such Warrant Certificate, shall be a proper officer of the Company, although at the date of the execution of this Agreement any such person was not such officer.
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2.4 Global Warrant Certificates.
(a) Any Global Warrant Certificate shall bear the legend substantially in the form set forth in Exhibit B hereto (the “Global Warrant Legend”).
(b) So long as a Global Warrant Certificate is registered in the name of the Depositary or its nominee, members of, or participants in, the Depositary (“Agent Members”) shall have no rights under this Agreement with respect to the Warrants evidenced by such Global Warrant Certificate held on their behalf by the Depositary or its custodian, and the Depositary may be treated by the Company, the Warrant Agent and any agent of the Company or the Warrant Agent as the absolute owner of such Warrants, and as the sole Holder of such Warrant Certificate, for all purposes. Accordingly, any such Agent Member’s beneficial interest in such Warrants will be shown only on, and the transfer of such interest shall be effected only through, records maintained by the Depositary or its nominee or its Agent Members, and neither the Company nor the Warrant Agent shall have any responsibility or liability with respect to such records maintained by the Depositary or its nominee or its Agent Members. Notwithstanding the foregoing, nothing herein shall prevent the Company, the Warrant Agent or any agent of the Company or the Warrant Agent from giving effect to any written certification, proxy or other authorization furnished by the Depositary or impair, as between the Depositary and its Agent Members, the operation of customary practices governing the exercise of the rights of a holder of any security.
(c) Any holder of a beneficial interest in Warrants evidenced by a Global Warrant Certificate registered in the name of the Depositary or its nominee shall, by acceptance of such beneficial interest, agree that transfers of beneficial interests in the Warrants evidenced by such Global Warrant Certificate may be effected only through a book-entry system maintained by the Depositary as the Holder of such Global Warrant Certificate (or its agent), and that ownership of a beneficial interest in Warrants evidenced thereby shall be reflected solely in such book-entry form.
(d) Transfers of a Global Warrant Certificate registered in the name of the Depositary or its nominee shall be limited to transfers in whole, and not in part, to the Depositary, its successors, and their respective nominees except as set forth in Section 2.4(e). Interests of beneficial owners in a Global Warrant Certificate registered in the name of the Depositary or its nominee shall be transferred in accordance with the Applicable Procedures of the Depositary.
(e) A Global Warrant Certificate registered in the name of the Depositary or its nominee shall be exchanged for Definitive Warrant Certificates only if the Depositary (i) has notified the Company that it is unwilling or unable to continue as or ceases to be a clearing agency registered under Section 17A of the Exchange Act and (ii) a successor to the Depositary registered as a clearing agency under Section 17A of the Exchange Act is not able to be appointed by the Company within 90 days or the Depositary is at any time unwilling or unable to continue as Depositary and a successor to the Depositary is not able to be appointed by the Company within 90 days. In any such event, each Global Warrant Certificate registered in the name of the Depositary or its nominee shall be surrendered to the Warrant Agent for cancellation in accordance with Section 3.6, and the Company shall execute, and the Warrant Agent shall countersign and deliver, upon the Company’s written instruction, to each beneficial owner identified by the Depositary, in exchange for such beneficial owner’s beneficial interest in such Global Warrant
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Certificate, Definitive Warrant Certificates evidencing, in the aggregate, the number of Warrants theretofore represented by such Global Warrant Certificate with respect to such beneficial owner’s respective beneficial interest. Any Definitive Warrant Certificate delivered in exchange for an interest in a Global Warrant Certificate pursuant to this Section 2.4(e) shall not bear the Global Warrant Legend. Interests in any Global Warrant Certificate may not be exchanged for Definitive Warrant Certificates other than as provided in this Section 2.4(e).
(f) The holder of a Global Warrant Certificate registered in the name of the Depositary or its nominee may grant proxies and otherwise authorize any Person, including Agent Members and Persons that may hold interests through Agent Members, to take any action which a Holder of a Warrant Certificate is entitled to take under this Agreement or such Global Warrant Certificate.
(g) Each Global Warrant Certificate will evidence such of the outstanding Warrants as will be specified therein and each shall provide that it evidences the aggregate number of outstanding Warrants from time to time endorsed thereon and that the aggregate number of outstanding Warrants evidenced thereby may from time to time be reduced, to reflect exercises or expirations. Any endorsement of a Global Warrant Certificate to reflect the amount of any decrease in the aggregate number of outstanding Warrants evidenced thereby will be made by the Warrant Agent (i) in the case of an exercise, in accordance with the Applicable Procedures as required by Section 3.2(c) or (ii) in the case of an expiration, in accordance with Section 3.2(b).
(h) The Company initially appoints DTC to act as Depositary with respect to any Global Warrant Certificates.
(i) Every Warrant Certificate authenticated and delivered in exchange for, or in lieu of, a Global Warrant Certificate or any portion thereof, pursuant to this Section 2.4 or Section 8 or Section 10, shall be authenticated and delivered in the form of, and shall be, a Global Warrant Certificate, and a Global Warrant Certificate may not be exchanged for a Definitive Warrant Certificate, in each case, other than as provided in Section 2.4(e). Whenever any provision herein refers to issuance by the Company and countersignature and delivery by the Warrant Agent of a new Warrant Certificate in exchange for the portion of a surrendered Warrant Certificate that has not been exercised, in lieu of the surrender of any Global Warrant Certificate and the issuance, countersignature and delivery of a new Global Warrant Certificate in exchange therefor, the Warrant Agent, on the Company’s written instruction, may endorse such Global Warrant Certificate to reflect a reduction in the number of Warrants evidenced thereby in the amount of Warrants so evidenced that have been so exercised.
(j) Beneficial interests in any Global Warrant Certificate may be transferred to Persons who take delivery thereof in the form of a beneficial interest in the same Global Warrant Certificate in accordance with the Applicable Procedures.
(k) At such time as all Warrants evidenced by a particular Global Warrant Certificate have been exercised or expired in whole and not in part, such Global Warrant Certificate shall, if not in custody of the Warrant Agent, be surrendered to or retained by the Warrant Agent for cancellation in accordance with Section 3.6.
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2.5 Transfer and Exchange of Warrants represented by Definitive Warrant Certificates or Book-Entry Warrants. When Warrants represented by Definitive Warrant Certificates or Book-Entry Warrants are presented to the Warrant Agent with a written request (i) to register the transfer of the Warrants; or (ii) to exchange such Warrants for an equal number of Warrants represented by Definitive Warrant Certificates or Book-Entry Warrants of other authorized denominations, then the Warrant Agent shall register the transfer or make the exchange as requested if its customary requirements for such transactions are met; provided, however, that the Warrant Agent has received a written instruction of transfer in form satisfactory to the Warrant Agent, properly completed and duly executed by the registered Holder thereof or by his attorney, duly authorized in writing and accompanied by a signature guarantee from an eligible guarantor institution participating in a signature guarantee program approved by the Securities Transfer Association (a “Signature Guarantee”).
2.6 Restrictions on Exchange or Transfer of a Book-Entry Warrant or a Warrant Represented by a Definitive Warrant Certificate for a Beneficial Interest in a Global Warrant Certificate. A Book-Entry Warrant or a Warrant Represented by a Definitive Warrant Certificate may not be exchanged for a beneficial interest in a Global Warrant Certificate unless the Warrants are eligible to be cleared or settled in DTC. Upon receipt by the Warrant Agent of appropriate instruments of transfer with respect to a Book-Entry Warrant or a Warrant represented by a Definitive Warrant Certificate, in form satisfactory to the Warrant Agent, together with written instructions directing the Warrant Agent to make, or to direct the Depositary to make, an endorsement on the Global Warrant Certificate to reflect an increase in the number of Warrants represented by the Global Warrant Certificate equal to the number of Warrants represented by such Book-Entry Warrant, then the Warrant Agent shall cancel such Book-Entry Warrant or Warrants represented by Definitive Warrant Certificates on the Warrant Register, increase accordingly the number of Warrants on the Warrant Register registered in the name of the registered owner of the Global Warrant Certificate and cause, or direct the Depositary to cause, in accordance with the standing instructions and procedures existing between the Depositary and the Warrant Agent, the number of Warrants represented by the Global Warrant Certificate to be increased accordingly. If no Global Warrant Certificate is then outstanding, the Company shall issue and the Warrant Agent shall countersign a new Global Warrant Certificate representing the appropriate number of Warrants.
3. Exercise and Expiration of Warrants.
3.1 Right to Acquire Common Stock Upon Exercise. Each duly issued Warrant shall entitle the Holder thereof, subject to the provisions thereof and of this Agreement, to acquire from the Company, for each Warrant evidenced thereby, one share of Common Stock at the Exercise Price, subject to adjustment as provided in this Agreement. The Exercise Price, and the number of shares of Common Stock to be issued upon exercise of each Warrant, shall be adjusted from time to time as required by Section 5.1.
3.2 Exercise and Expiration of Warrants.
(a) Exercise of Warrants. Subject to the terms and conditions set forth herein and satisfaction of the Exercise Condition, a Holder of a Warrant Certificate may exercise all or any whole number of the Warrants evidenced thereby, on any Business Day from and after the Original Issue Date until 5:00 p.m., New York time, on the Expiration Date, for the shares of Common Stock obtainable thereunder.
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(b) Expiration of Warrants. The Warrants, to the extent not exercised prior thereto, shall automatically expire, terminate and become void as of 5:00 p.m., New York time, on the Expiration Date. No further action of any Person (including by, or on behalf of, any Holder, the Company, or the Warrant Agent) shall be required to effectuate the expiration of Warrants pursuant to this Section 3.2(b).
(c) Method of Exercise. In order for a Holder to exercise all or any of the Warrants held by such Holder, the Holder thereof must (i) (x) in the case of a Global Warrant Certificate, deliver to the Warrant Agent an exercise form for the election to exercise such Warrants substantially in the form set forth in Exhibit B hereto (an “Exercise Form”), setting forth the number of Warrants being exercised and, if applicable, whether Cashless Exercise is being elected with respect thereto, and otherwise properly completed and duly executed by the Holder thereof and deliver such Warrants by book-entry transfer through the facilities of the Depositary to the Warrant Agent in accordance with the Applicable Procedures and otherwise comply with the Applicable Procedures in respect of the exercise of such Warrants, (y) in the case of a Definitive Warrant Certificate, at the Corporate Agency Office, (I) deliver to the Warrant Agent an Exercise Form, setting forth the number of Warrants being exercised and, if applicable, whether Cashless Exercise is being elected with respect thereto, and otherwise properly completed and duly executed by the Holder thereof as well as any such other information the Warrant Agent may reasonably require, and (II) surrender to the Warrant Agent the Definitive Warrant Certificate evidencing such Warrants and or (z) in the case of a Book-Entry Warrant, at the Corporate Agency Office, deliver to the Warrant Agent an Exercise Form, setting forth the number of Warrants being exercised and, if applicable, whether Cashless Exercise is being elected with respect thereto, and otherwise properly completed and duly executed by the Holder thereof as well as any such other information the Warrant Agent may reasonably require; and (ii) pay to the Warrant Agent an amount equal to (x) all taxes and charges required to be paid by the Holder, if any, pursuant to Section 3.4 prior to, or concurrently with, exercise of such Warrants and (y) except in the case of a Cashless Exercise, the aggregate of the Exercise Price in respect of each share of Common Stock into which such Warrants are exercisable.
(d) Partial Exercise. If fewer than all the Warrants represented by a Warrant Certificate are exercised, (i) in the case of exercise of Warrants evidenced by a Global Warrant Certificate, the Warrant Agent shall cause the custodian of DTC to endorse the “Schedule of Decreases of Warrants” attached to such Global Warrant Certificate to reflect the Warrants being exercised, (ii) in the case of exercise of Warrants evidenced by a Definitive Warrant Certificate, such Definitive Warrant Certificate shall be surrendered and a new Definitive Warrant Certificate of the same tenor and for the number of Warrants which were not exercised shall be executed by the Company, and (iii) in the case of Book-Entry Warrants, the Warrant Agent shall adjust such Holder’s Warrant Statement to reflect the Warrants being exercised. The Warrant Agent shall countersign any new Definitive Warrant Certificate, registered in such name or names, subject to the provisions of Section 8 regarding registration of transfer and payment of governmental charges in respect thereof, as may be directed in writing by the Holder, and shall deliver a new Warrant Statement or Definitive Warrant Certificate to the Person or Persons in whose name such Warrants are is so registered. The Company, whenever required by the Warrant Agent, will supply the Warrant Agent with Definitive Warrant Certificates duly executed on behalf of the Company for such purpose.
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(e) Issuance of Common Stock. Upon due exercise of Warrants evidenced by any Warrant Statement or Warrant Certificate in conformity with the foregoing provisions of Section 3.2(c), the Warrant Agent shall, when actions specified in Section 3.2(c)(i) have been effected and any payment specified in Section 3.2(c)(ii) is received (as promptly confirmed in writing by the Company), shall deliver to the Company the Exercise Form received pursuant to Section 3.2(c)(i), deliver or deposit all funds received in accordance with Section 3.3. The Company shall thereupon, as promptly as practicable, and in any event within two (2) Business Days after the Exercise Date referred to below, (i) determine the number of shares of Common Stock issuable pursuant to exercise of such Warrants pursuant to Section 3.8 or, if Cashless Exercise applies, Section 3.7 and (ii) (x) in the case of exercise of Warrants evidenced by a Global Warrant Certificate, deliver or cause to be delivered to the Recipient (as defined below) in accordance with the Applicable Procedures shares of Common Stock in book-entry form to be so held through the facilities of DTC in an amount equal to, or, if the shares of Common Stock may not then be held in book-entry form through the facilities of DTC, shares of Common Stock in book entry form in an amount equal to, or duly executed certificates representing, or (y) in the case of exercise of Warrants evidenced by Warrant Statements or Definitive Warrant Certificates, execute or cause to be executed and deliver or cause to be delivered to the Recipient (as defined below) shares of Common Stock in book entry form in an amount equal to, or a certificate or certificates representing, in case of (x) and (y), the aggregate number of shares of Common Stock issuable upon such exercise (based upon the aggregate number of Warrants so exercised), as so determined, together with an amount in cash in lieu of any fractional share(s), if the Company so elects pursuant to Section 5.2. The shares of Common Stock in book-entry form or certificate or certificates representing shares of Common Stock so delivered shall be, to the extent possible, in such denomination or denominations as such Holder shall request in the applicable Exercise Form and shall be registered or otherwise placed in the name of, and delivered to, the Holder or, subject to Section 3.4, such other Person as shall be designated by the Holder in such Exercise Form (the Holder or such other Person being referred to herein as the “Recipient”).
(f) Time of Exercise. Each exercise of a Warrant shall be deemed to have been effected immediately prior to the close of business on the day on which each of the requirements for exercise of such Warrant specified in Section 3.2(c) has been duly satisfied (the “Exercise Date”). At such time, shares of Common Stock in book-entry form or the certificates for the shares of Common Stock issuable upon such exercise as provided in Section 3.2(e) shall be deemed to have been issued and, for all purposes of this Agreement, the Recipient shall, as between such Person and the Company, be deemed to be and entitled to all rights of the holder or record of such shares of Common Stock.
3.3 Application of Funds upon Exercise of Warrants. All funds received by the Warrant Agent under this Agreement that are to be distributed or applied by the Warrant Agent in the performance of services (the “Funds”) shall be held by Computershare, as agent for the Company, and deposited in one or more bank accounts to be maintained by Computershare in its name as agent for the Company. Until paid pursuant to the terms of this Agreement, Computershare will hold the Funds through such accounts in: deposit accounts of commercial banks with Tier 1 capital exceeding $1 billion or with an average rating above investment grade by S&P (LT Local Issuer
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Credit Rating), Moody’s (Long Term Rating) and Fitch Ratings, Inc. (LT Issuer Default Rating) (each as reported by Bloomberg Finance L.P.). The Warrant Agent shall have no responsibility or liability for any diminution of the Funds that may result from any deposit made by Computershare in accordance with this paragraph, including any losses resulting from a default by any bank, financial institution or other third party. Computershare may from time to time receive interest, dividends or other earnings in connection with such deposits. The Warrant Agent shall not be obligated to pay such interest, dividends or earnings to the Company, any holder or any other party. Computershare shall forward funds received for warrant exercises in a given month by the 5th Business Day of the following month by wire transfer to an account designated by the Company.
3.4 Payment of Taxes. The Company shall pay any and all taxes (other than income or withholding taxes) that may be payable in respect of the issue or delivery of Common Stock on exercise of Warrants pursuant hereto. The Company or the Warrant Agent shall not be required, however, to pay any tax or other charge imposed in respect of any transfer involved in the issue and delivery of Common Stock in book-entry form or any certificates for Common Stock or payment of cash or other property to any Recipient (other than, in the case of the Company, the Holder of the exercised Warrants), and in case of such transfer or payment, the Warrant Agent and the Company shall not be required to issue or deliver any share of Common Stock in book-entry form or any certificate or pay any cash until (a) such tax or charge has been paid or an amount sufficient for the payment thereof has been delivered to the Warrant Agent or the Company or (b) it has been established to the Company’s or Warrant Agent’s satisfaction that any such tax or other charge that is or may become due has been paid.
3.5 Withholding and Reporting Requirements. The Company shall comply with all applicable tax withholding and reporting requirements imposed by any Governmental Authority, and all distributions, including deemed distributions, pursuant to the Warrants will be subject to applicable withholding and reporting requirements. Notwithstanding any provision to the contrary, the Company and the Warrant Agent will be authorized to (i) take any actions that may be reasonably necessary or appropriate to comply with such withholding and reporting requirements, (ii) apply a portion of any cash distribution to be made under the Warrants to pay applicable withholding taxes, (iii) liquidate a portion of any non-cash distribution to be made under the Warrants to generate sufficient funds to pay applicable withholding taxes or (iv) establish any other mechanisms the Company believes are reasonable and appropriate, including requiring Holders to submit appropriate tax and withholding certifications (such as IRS Forms W-9 and the appropriate IRS Forms W-8, as applicable) and/or requiring Holders to pay the withholding tax amount to the Company in cash as a condition of receiving the benefit of any antidilution adjustment pursuant to Section 5.
3.6 Cancellation of Warrant Certificates. Any Definitive Warrant Certificate surrendered for exercise shall, if surrendered to the Company, be delivered to the Warrant Agent. All Warrant Certificates surrendered or delivered to or received by the Warrant Agent for cancellation pursuant to this Section 3.6 or Section 2.4(e) or Section 2.4(k) shall be promptly cancelled by the Warrant Agent and shall not be reissued by the Company. At the Company’s expense, the Warrant Agent shall destroy any such cancelled Warrant Certificates and deliver its certificate of destruction to the Company, unless the Company shall otherwise direct in writing.
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3.7 Cashless Exercise. Notwithstanding any provisions herein to the contrary, if, on the Exercise Date of a Cashless Exercise, the Cashless Exercise Current Market Price of one share of Common Stock is greater than the applicable Exercise Price on the Exercise Date, then, in lieu of paying to the Company the applicable Exercise Price by wire transfer in immediately available funds, the Holder may elect to receive shares of Common Stock equal to the value (as determined below) of the Warrants or any portion thereof being exercised (such portion, the “Cashless Exercise Warrants” with respect to such date) by (i) in the case of Warrants evidenced by a Global Warrant Certificate, providing notice to the Warrant Agent pursuant to the Applicable Procedures and the Exercise Form; or (ii) in the case of Warrants evidenced by a Warrant Statement or a Definitive Warrant Certificate, providing notice pursuant to the Exercise Form, in the case of (i) or (ii), that the Holder desires to effect a “cashless exercise” (a “Cashless Exercise”) with respect to the Cashless Exercise Warrants, in which event the Company shall issue to the Holder a number of shares of Common Stock with respect to Cashless Exercise Warrants computed using the following formula (it being understood that any portion of the Warrants being exercised on such date that are not Cashless Exercise Warrants will not be affected by this calculation):
| X = (Y (A-B)) ÷ A | ||
| Where X = | the number of shares of Common Stock to be issued to the Holder in respect of the Cashless Exercise Warrants | |
| Y = | the number of shares of Common Stock purchasable under the Cashless Exercise Warrants being exercised by the Holder (on the Exercise Date) | |
| A = | the applicable Cashless Exercise Current Market Price of one share of Common Stock (on the Exercise Date) | |
| B = | the applicable Exercise Price (as adjusted through and including the Exercise Date). | |
The Company shall calculate and transmit to the Warrant Agent the number of shares of Common Stock to be issued on such Cashless Exercise, and the Warrant Agent shall have no obligation under this Agreement to calculate, confirm or verify such amount.
3.8 Shares Issuable. The number of shares of Common Stock “obtainable upon exercise” of Warrants at any time shall be the number of shares of Common Stock into which such Warrants are then exercisable. The Company will confirm the number of shares issuable if so requested by the Warrant Agent. The number of shares of Common Stock “into which each Warrant is exercisable” shall be one share of Common Stock, subject to adjustment as provided in Section 5.1.
3.9 Cost Basis Information.
(a) In the event of a cash exercise, the Company hereby instructs the Warrant Agent to record cost basis for newly issued shares at the time of such exercise in accordance with instructions by the Company. If the Company does not provide such cost basis information to the Warrant Agent, as outlined above, then the Warrant Agent will treat those shares issued hereunder as uncovered securities or the equivalent, and each holder of such shares will need to obtain such cost basis information from the Company.
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(b) In the event of a cashless exercise, the Company shall provide cost basis for shares issued pursuant to a cashless exercise at the time the Company provides the cashless exercise to the Warrant Agent pursuant to Section 3.7 hereof.
3.10 Redemption. Notwithstanding any provisions hereof to the contrary, once a Holder exercises any Warrants and becomes a stockholder of the Common Stock in accordance with the terms herein, in the event such stockholder determines in its sole discretion that (i) the holding of any Common Stock would be unlawful or a breach of any applicable laws, whether U.S. or foreign, or (ii) there has been, is, or could be, an act, matter, event or circumstance related to the Company that results in or could result in damage to the reputation of the stockholder or any of its Affiliates, upon prior written notice to the Company, the stockholder shall have the right to: (x) sell or assign all or any Common Stock it holds to a Person on such terms (including as to price) as determined by the stockholder; or (y) require the Company to repurchase all or any Common Stock it holds for an aggregate purchase price of $1.00.
4. Dissolution, Liquidation or Winding up.
Other than a Sale of the Company, if, on or prior to the Expiration Date, the Company (or any other Person controlling the Company) shall propose a voluntary or involuntary dissolution, liquidation or winding up (a “Winding Up”) of the affairs of the Company, the Company shall give written notice thereof to the Warrant Agent and all Holders in the manner provided in Section 11.1(b) prior to the date on which such transaction is expected to become effective or, if earlier, the record date for such transaction. Such notice shall also specify the date as of which the holders of record of Common Stock shall be entitled to exchange their shares for securities, money or other property deliverable upon such dissolution, liquidation or winding up, as the case may be, on which date, if the Exercise Condition is satisfied, each Holder of Warrants shall receive the securities, money or other property which such Holder would have been entitled to receive had such Holder been the holder of record of the shares of Common Stock into which the Warrants were exercisable immediately prior to such dissolution, liquidation or winding up (net of the then applicable Exercise Price) and the rights to exercise the Warrants shall terminate.
Other than a Sale of the Company, in case of any such voluntary or involuntary dissolution, liquidation or winding up of the Company, the Company shall deposit with the Warrant Agent any funds or other property which the Holders are entitled to receive pursuant to the above paragraph, together with a Company Order as to the distribution thereof. After receipt of such deposit from the Company and after receipt of surrendered Book-Entry Warrants or Warrant Certificates evidencing Warrants, and any such other information as the Warrant Agent may reasonably require, subject to such Company Order, the Warrant Agent shall make payment in appropriate amount to such Person or Persons as it may be directed in writing by the Holder surrendering such Book-Entry Warrant or Warrant Certificate. The Warrant Agent shall not be required to pay interest on any money deposited pursuant to the provisions of this Section 4. Any moneys, securities or other property which at any time shall be deposited by the Company or on its behalf with the Warrant Agent pursuant to this Section 4 shall be, and are hereby, assigned, transferred and set over to the
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Warrant Agent in accordance with Section 3.3 hereof; provided, that, moneys, securities or other property need not be segregated from other funds, securities or other property held by the Warrant Agent except to the extent required by law.
5. Adjustments.
5.1 Adjustments. In order to prevent dilution of the rights granted under the Warrants and to grant the Holders certain additional rights, the Exercise Price shall be subject to adjustment from time to time only as specifically provided in this Section 5.1 (the “Adjustment Events”) and the number of shares of Common Stock issuable upon exercise of Warrants shall be subject to adjustment from time to time only as specifically provided in this Section 5.1.
All adjustments made to the Exercise Price pursuant to this Section 5.1 shall be calculated to the nearest one-ten thousandth of a cent ($0.000001), and all adjustments made to the Warrant Shares issuable upon exercise of each Warrant pursuant to this Section 5.1 shall be calculated to the nearest one-ten thousandth of a Warrant Share (0.000001). Except as described in this Section 5.1, the Company will not adjust the Exercise Price and the number of Warrant Shares for which the Warrants are exercisable.
(a) Adjustment to Exercise Price. Upon any adjustment to the number of Warrant Shares for which each Warrant is exercisable pursuant to Sections 5.1(b), 5.1(c), 5.1(d) and 5.1(e), the Exercise Price shall immediately be adjusted to equal the quotient obtained by dividing (i) the aggregate Exercise Price of the maximum number of Warrant Shares for which each Warrant was exercisable immediately prior to such adjustment by (ii) the maximum number of Warrant Shares for which each Warrant is exercisable immediately after such adjustment.
(b) Stock Dividend or Stock Split. If the Company issues shares of Common Stock as a dividend or distribution on Common Stock, or effects a subdivision or stock split or stock combination or reverse split, or shall increase or decrease the number of shares of Common Stock outstanding by reclassification of its Common Stock, then in each case, the number of Warrant Shares for which each Warrant is exercisable will be adjusted based on the following formula:
| NS' = NS0 x | OS' | |||
| OS0 |
| where, | ||||
| NS' | = | the number of Warrant Shares for which each Warrant is exercisable in effect immediately after such event | ||
| NS0 | = | the number of Warrant Shares for which each Warrant is exercisable in effect immediately prior to such event | ||
| OS' | = | the number of shares of Common Stock outstanding immediately after such event | ||
| OS0 | = | the number of shares of Common Stock outstanding immediately prior to such event. | ||
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Such adjustment shall become effective immediately after 9:00 a.m., New York City time, on the Business Day following the date fixed for the determination of stockholders entitled to receive such dividend or distribution on the effective date of such subdivision or share split. The Company will not pay any dividend or make any distribution on Common Stock held in treasury by the Company. If any dividend or distribution of the type described in this Section 5.1(b) is declared but not so paid or made, the number of shares of Common Stock for which each Warrant is exercisable shall again be adjusted to the number of shares of Common Stock for which each Warrant is exercisable that would then be in effect if such dividend or distribution had not been declared.
(c) Rights or Warrants. If the Company issues to all or substantially all holders of its Common Stock any rights or warrants entitling them to subscribe for or purchase shares of Common Stock, subject to the last paragraph of this Section 5.1(c), at a price per share less than the Current Market Price per share of Common Stock on the Business Day immediately preceding the date of announcement of such issuance, the number of Warrant Shares for which each Warrant is exercisable will be adjusted based on the following formula:
| NS' = NS0 x | OS0 + X | |||
| OS0 + Y |
| where, | ||||
| NS' | = | the number of Warrant Shares for which each Warrant is exercisable in effect immediately after such event | ||
| NS0 | = | the number of Warrant Shares for which each Warrant is exercisable in effect immediately prior to such event | ||
| OS0 | = | the number of shares of Common Stock outstanding immediately prior to such event | ||
| X | = | the total number of shares of Common Stock issuable pursuant to such rights (or warrants) | ||
| Y | = | the number of shares of Common Stock equal to the aggregate price payable to exercise such rights (or warrants) divided by the Current Market Price per share of Common Stock as of the record date. | ||
Such adjustment shall be successively made whenever any such rights or warrants are issued and shall become effective immediately after 9:00 a.m., New York City time, on the Business Day following the date fixed for the determination of stockholders entitled to receive such rights or warrants. The Company shall not issue any such rights, options or warrants in respect of Common
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Stock held in treasury by the Company. To the extent that shares of Common Stock are not delivered after the expiration of such rights or warrants, the number of Warrant Shares for which the Warrants are exercisable shall be readjusted to the number of Warrant Shares for which the Warrants are exercisable that would then be in effect had the adjustments made upon the issuance of such rights or warrants been made on the basis of delivery of only the number of shares of Common Stock actually delivered. If such rights or warrants are not so issued, the number of Warrant Shares for which the Warrants are exercisable shall again be adjusted to be the number of Warrant Shares for which each Warrant is exercisable that would then be in effect if such date fixed for the determination of stockholders entitled to receive such rights or warrants had not been fixed. No adjustment shall be made pursuant to this Section 5.1(c) which shall have the effect of decreasing the number of Warrant Shares issuable upon exercise of the Warrants.
In the event that the Company issues rights pursuant to a stockholder rights plan, no adjustment shall be required under this Section 5.1(c) until the time such rights become exercisable.
In determining whether any rights or warrants entitle the Holders to subscribe for or purchase shares of Common Stock at less than the Current Market Price, and in determining the aggregate price payable to exercise such rights or warrants, there shall be taken into account any consideration received by the Company for such rights or warrants and any amount payable on exercise thereof, the value of such consideration, if other than cash, to be determined reasonably and in good faith by the Board of Directors.
(d) Other Distributions. If the Company fixes a record date for the making of any distribution of stock, other securities, evidences of indebtedness or other assets or property of the Company to all or substantially all holders of the Common Stock, excluding:
(i) dividends or distributions and rights or warrants referred to in Sections 5.1(b) or 5.1(c);
(ii) dividends or distributions paid exclusively in cash referred to in Section 5.1(e); and
(iii) any Transaction Consideration in a Reorganization Event (for which Sections 5.1(i)(A) and (B) apply) or a Sale of the Company (for which Section 5.1(i)(C) applies),
then the number of Warrant Shares for which each Warrant is exercisable will be adjusted based on the following formula:
| NS' = NS0 x | SP0 | |||
| SP0 - FMV |
| where, | ||||||
| NS' | = | the number of Warrant Shares for which each Warrant is exercisable in effect immediately after such distribution | ||||
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| NS0 | = | the number of Warrant Shares for which each Warrant is exercisable in effect immediately prior to such distribution | ||||
| SP0 | = | the Current Market Price per share of Common Stock | ||||
| FMV | = | the fair market value (as determined reasonably and in good faith by the Company) of the shares, other securities, evidences of indebtedness, assets or property distributed with respect to each issued and outstanding share of Common Stock on the record date for such distribution. | ||||
Such adjustment shall become effective immediately prior to 9:00 a.m., New York City time, on the Business Day following the date fixed for the determination of stockholders entitled to receive such distribution. Such adjustment shall be made successively whenever such a record date is fixed with respect to a subsequent event. To the extent such distribution is not so paid or made, the number of Warrant Shares will be readjusted to the number that would then be in effect had the adjustment been made on the basis of only the distribution, if any, actually made or paid.
In the event the Company makes a distribution of rights pursuant to a stockholder rights plan, no adjustment shall be required under this Section 5.1(d) until the time such rights become exercisable.
With respect to an adjustment pursuant to this Section 5.1(d) where there has been a payment of a dividend or other distribution on the Common Stock or shares of any class or series, or similar equity interest, of or relating to a subsidiary or other business unit listed on a national securities exchange (a “Spin-Off”), the number of Warrant Shares for which each Warrant is exercisable in effect immediately before 5:00 p.m., New York City time, on the record date fixed for determination of stockholders entitled to receive the distribution will be increased based on the following formula:
| NS' = NS0 x | FMV0 + MP0 | |||
| MP0 |
| where, | ||||
| NS' | = | the number of Warrant Shares for which each Warrant is exercisable in effect immediately after such distribution | ||
| NS0 | = | the number of Warrant Shares for which each Warrant is exercisable in effect immediately prior to such distribution | ||
| FMV0 | = | the product of (1) the average of the Quoted Prices of one unit of such capital stock, share capital or similar equity interest over the first ten consecutive Trading Day period after the effective date of the Spin-Off and (2) the number of units of such capital stock, share capital or equity interests distributed per share of Common Stock. | ||
| MP0 | = | the average of the Quoted Prices of Common Stock over the first ten consecutive Trading Day period after the effective date of the Spin-Off. | ||
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Such adjustment shall occur on the tenth consecutive Trading Day from, and including, the effective date of the Spin-Off. No adjustment shall be made pursuant to this Section 5.1(d) which shall have the effect of decreasing the number of Warrant Shares issuable upon exercise of each Warrant. To the extent such distribution is not so paid or made, the number of Warrant Shares will be readjusted to the number that would then be in effect had the adjustment been made on the basis of only the distribution, if any, actually made or paid.
(e) Cash Dividend. If the Company makes any cash dividend (excluding any cash distributions in connection with the Company’s liquidation, dissolution or winding up) or any Transaction Consideration in a Reorganization Event or distribution during any quarterly fiscal period to all or substantially all holders of Common Stock, the number of Warrant Shares for which each Warrant is exercisable will be adjusted based on the following formula:
| NS' = NS0 x | SP0 | |||
| SP0 - C |
| where, | ||||
| NS' | = | the number of Warrant Shares for which each Warrant is exercisable in effect immediately after the record date for such distribution | ||
| NS0 | = | the number of Warrant Shares for which each Warrant is exercisable in effect immediately prior to the record date for such distribution | ||
| SP0 | = | the Current Market Price per share of Common Stock ending on the last Trading Day immediately preceding the first date on which the Common Stock trade regular way without the right to receive such distribution | ||
| C | = | the amount in cash per share the Company distributes to holders of Common Stock. | ||
Such adjustment shall become effective immediately after the close of business, on the date for the determination of stockholders entitled to receive such cash dividend. No adjustment shall be made pursuant to this Section 5.1(e) which shall have the effect of decreasing the number of Warrant Shares issuable upon exercise of the Warrants. To the extent such distribution is not so paid or made, the number of Warrant Shares will be readjusted to the number that would then be in effect had the adjustment been made on the basis of only the distribution, if any, actually made or paid.
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(f) No Adjustment if Participating. Notwithstanding the foregoing provisions of this Section 5.1, no adjustment shall be made hereunder, nor shall an adjustment be made to the ability of a Holder to exercise, for any distribution described herein if the Holder will otherwise participate in the distribution with respect to its Warrant Shares without exercise of the Warrants (without giving effect to any separate exercise of preemptive rights).
(g) When Adjustments Are to be Made. The adjustments required by this Section 5.1 shall be made whenever and as often as any specified event requiring an adjustment shall occur, except that no adjustment of the Exercise Price or the number of shares of Common Stock issuable upon exercise of the Warrants that would otherwise be required shall be made unless and until such adjustment either by itself or with other adjustments not previously made increases or decreases the Exercise Price or the shares of Common Stock issuable upon exercise of the Warrants immediately prior to the making of such adjustment by at least 1.0%. Any adjustment representing a change of less than such minimum amount (except as aforesaid) shall be carried forward and made as soon as such adjustment, together with other adjustments required by this Section 5.1 and not previously made, would result in such minimum adjustment.
(h) Adjustment Event. In any case in which this Section 5.1 provides that an adjustment shall become effective immediately after (i) a record date or record date for an event, (ii) the date fixed for the determination of stockholders entitled to receive a dividend or distribution pursuant to this Section 5.1 or (iii) a date fixed for the determination of stockholders entitled to receive rights or warrants pursuant to this Section 5.1 (each a “Determination Date”), the Company may elect to defer until the occurrence of the applicable Adjustment Event (x) issuing to the Holder of any Warrant exercised after such Determination Date and before the occurrence of such Adjustment Event, the additional shares of Common Stock or other securities issuable upon such exercise by reason of the adjustment required by such Adjustment Event over and above the shares of Common Stock issuable upon such conversion before giving effect to such adjustment and (y) paying to such holder any amount in cash in lieu of any fraction pursuant to Section 5.2. For purposes of this Section 5.1(h), the term “Adjustment Event” shall mean:
(A) in any case referred to in clause (i) hereof, the occurrence of such event,
(B) in any case referred to in clause (ii) hereof, the date any such dividend or distribution is paid or made, and
(C) in any case referred to in clause (iii) hereof, the date of expiration of such rights or warrants.
(i) Adjustments for Reorganization Events; Effect of Sale of the Company.
(A) In case, after the date hereof, a Reorganization Event shall occur while any Warrants remain outstanding and unexpired, then, subject to Section 5.1(i)(C), proper provision shall be made (including the Company obtaining the agreement of any surviving entity in such transaction to assume the obligations of this section) so that, upon the basis and terms and in the manner provided in this Agreement, the Holders, upon the exercise of the Warrants any time after the
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consummation of such transaction and prior to the Expiration Date, shall be entitled to receive (upon payment of the aggregate Exercise Price for each Warrant Share otherwise issuable upon such exercise) a Unit of Transaction Consideration, subject to adjustments (subsequent to such consummation) as nearly equivalent as practicable to the adjustments provided for in Sections 5.1(b), 5.1(c), 5.1(d) and 5.1(e) above; provided, further, that the Board of Directors of the Company may in good faith decide to reduce the cash portion of a Unit of Transaction Consideration payable to such Holder in respect of each of its Warrants upon exercise thereof if and to the extent the Company reduces the Exercise Price payable by such Holder in respect of each such Warrant by an amount equal to such portion.
(B) In connection with any Reorganization Event prior to the Expiration Date, the Company shall make appropriate provision to ensure that the Holders shall have the right to receive, upon consummation of such transaction and thereafter upon exercise of any convertible securities so received, as applicable, such property as may be required pursuant to Section 5.1 hereof, and to the extent such property includes convertible securities, the Company shall provide for adjustments substantially equivalent to the adjustments provided for in Section 5.1 hereof.
(C) In connection with a Sale of the Company while any Warrants remain outstanding and unexpired,
(i) if the aggregate Transaction Consideration payable in connection with such Sale of the Company is less than the Minimum Equity Value, then any outstanding Warrants shall be cancelled and extinguished for no consideration on the Sale Date; and
(ii) if the aggregate Transaction Consideration payable in connection with such Sale of the Company is equal to or greater than the Minimum Equity Value, then upon consummation of such Sale of the Company, without any further action required by the Company, any Holder, or any other Person, the Company shall acquire (or cause the purchaser or surviving company in such Sale of the Company, as applicable, to acquire) on the Sale Date each outstanding Warrant that has not been exercised as of the Cut-Off Time for a Unit of Transaction Consideration; provided that with respect to shares of common stock (or other comparable common equity interests or depositary receipts therefor) that each applicable Holder received in the Sale of the Company, any definitive documents executed by the Company shall provide for customary protections, including, without limitation, the registration rights.
(j) Compliance with Governmental Requirements. Before taking any action that would cause an adjustment reducing the Exercise Price below the then par value of any of shares of the Common Stock into which the Warrants are exercisable, the Company will take any corporate action that may be necessary in order that the Company may validly and legally issue fully paid and non-assessable shares of Common Stock at such adjusted Exercise Price.
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(k) Optional Tax Adjustment. The Company may at its option, at any time during the term of the Warrants, increase the number of shares of Common Stock into which each Warrant is exercisable, or decrease the Exercise Price, in addition to those changes required by Sections 5.1(b), 5.1(c), 5.1(d) and 5.1(e) as deemed advisable by the Board of Directors of the Company, in order that any event treated for Federal income tax purposes as a dividend of shares or share rights shall not be taxable to the recipients.
(l) Warrants Deemed Exercisable. For purposes solely of this Section 5, the number of shares of Common Stock which the holder of any Warrant would have been entitled to receive had such Warrant been exercised in full at any time or into which any Warrant was exercisable at any time shall be determined assuming such Warrant was exercisable in full at such time.
(m) Number of Shares Outstanding. For purposes of this Section 5.1, the number of shares of Common Stock outstanding at any time shall not include shares held in the treasury of the Company. The Company will not pay any dividend or make any distribution on Common Stock held in the treasury of the Company.
(n) Successive Adjustments. Successive adjustments in the Exercise Price and the number of shares of Common Stock for which the Warrants are exercisable shall be made, without duplication, whenever any event specified in this Section 5.1 shall occur.
(o) Notice of Adjustment. Upon the occurrence of each adjustment of the Exercise Price or the number of shares of Common Stock into which a Warrant is exercisable pursuant to this Section 5.1, the Company at its expense shall promptly:
(i) compute such adjustment in accordance with the terms hereof;
(ii) deliver to all Holders (in accordance with Section 11.1(b) and Section 11.2) and the Warrant Agent a certificate of the principal financial officer of the Company setting forth the Exercise Price and the number of shares of Common Stock into which each Warrant is exercisable after such adjustment, setting forth a brief, detailed statement of the facts requiring such adjustment and the computation by which such adjustment was made (including a description of the basis on which the Current Market Price of the Common Stock) and including the form and requirements for any applicable Payoff Documentation and any applicable Cut-Off Time. As provided in Section 10, the Warrant Agent shall be entitled to rely on such certificate and shall be under no duty or responsibility with respect to any such certificate, except to exhibit the same from time to time at the Corporate Agency Office to any Holder desiring an inspection thereof during reasonable business hours. The Company hereby agrees that it will provide the Holders and the Warrant Agent with reasonable notice of any Adjustment Event set forth in this Section 5.1. The Company further agrees that it will provide to the Holders and Warrant Agent with any new or amended exercise terms. The Warrant Agent shall have no obligation under any Section of this Agreement to determine, confirm or verfy whether an Adjustment Event has occurred or to calculate any of the adjustments set forth herein.
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(p) Statement on Warrant Certificates. Irrespective of any adjustment in the Exercise Price or amount or kind of shares into which the Warrants are exercisable, Warrant Certificates theretofore or thereafter issued may continue to express the same Exercise Price initially applicable or amount or kind of shares initially issuable upon exercise of the Warrants evidenced thereby pursuant to this Agreement.
5.2 Fractional Interest. The Company shall not be required upon the exercise of any Warrant to issue any fractional share of Common Stock, but may, in lieu of issuing any fractional shares make an adjustment therefore in cash on the basis of the Current Market Price per share of Common Stock on the date of such exercise. The number of Warrant Shares (and any fractional shares) shall be calculated on the aggregate number of Warrants exercised. If Book-Entry Warrants or Warrant Certificates evidencing more than one Warrant shall be presented for exercise at the same time by the same Holder, the number of full shares of Common Stock which shall be issuable upon such exercise thereof shall be computed on the basis of the aggregate number of Warrants so to be exercised. The Holders, by their acceptance of the Book-Entry Warrants or Warrant Certificates, expressly waive their right to receive any fraction of a share of Common Stock or a share certificate representing a fraction of a share of Common Stock if such amount of cash is paid in lieu thereof.
5.3 No Adjustments. No adjustment to the Exercise Price or the number of Warrant Shares for which the Warrants are exercisable need be made upon the issuance of any MIP Equity pursuant to the Management Incentive Plan.
5.4 Adjustment of Prices. Whenever any provision of this Warrant Agreement requires a calculation of a price over a span of multiple days (including, without limitation, a Current Market Price, a Cashless Exercise Current Market Price or Quoted Price) the Company shall make appropriate adjustments to each to account for any adjustment to the Exercise Price that becomes effective, or any event requiring an adjustment to the Exercise Price where the record date, effective date or expiration date of the event occurs, at any time during the period when such price is to be calculated. Further, and without limiting the foregoing, in the event of a Cashless Exercise following an adjustment to the Exercise Price where the Cashless Exercise Current Market Price spans any day prior to the effectiveness of such adjustment, the Company shall make appropriate adjustments to the Cashless Exercise Current Market Price to take into account such adjustment.
6. Loss or Mutilation.
If any mutilated, lost, stolen or destroyed Warrant Certificate is surrendered to the Warrant Agent (i) there shall be delivered to the Company and the Warrant Agent (A) a claim by a Holder as to the destruction, loss or wrongful taking of any Warrant Certificate of such Holder and a request thereby for a new replacement Warrant Certificate, and (B) such open penalty surety bond and/or indemnity bond as may be required by the Company or the Warrant Agent to save each of the Company and the Warrant Agent and any agent of either of them harmless, (ii) such other reasonable requirements as may be imposed by the Company or Warrant Agent as permitted by Section 8-405 of the Uniform Commercial Code have been satisfied, then, in the absence of notice to the Company or the Warrant Agent that such Warrant Certificate has been acquired by a “protected purchaser” within the meaning of Section 8-405 of the Uniform Commercial Code or bona fide purchaser, and (iii) at the Company’s or the Warrant Agent’s request, reimbursement to
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the Company and the Warrant Agent of all reasonable expenses incidental thereto, the Company shall execute and upon its written request the Warrant Agent shall countersign and deliver to the Holder of the lost, wrongfully taken, destroyed or mutilated Warrant Certificate, in exchange therefore or in lieu thereof, a new Warrant Certificate of the same tenor and for a like aggregate number of Warrants. At the written request of such Holder, the new Warrant Certificate so issued shall be retained by the Warrant Agent as having been surrendered for exercise, in lieu of delivery thereof to such Holder, and shall be deemed for purposes of Section 3.2(c)(i)(y)(II) to have been surrendered for exercise on the date the conditions specified in clauses (A) or (B) of the preceding sentence were first satisfied. The Warrant Agent may, at its option, issue replacement Warrants for mutilated certificates upon presentation thereof without such indemnity.
Upon the issuance of any new Warrant Certificate under this Section 6, the Company may require the payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in relation thereto and other expenses (including the reasonable and documented fees and expenses of the Warrant Agent) in connection therewith.
Every new Warrant Certificate executed and delivered pursuant to this Section 6 in lieu of any lost, wrongfully taken or destroyed Warrant Certificate shall constitute an additional contractual obligation of the Company, whether or not the allegedly lost, wrongfully taken or destroyed Warrant Certificate shall be at any time enforceable by anyone, and shall be entitled to the benefits of this Agreement equally and proportionately with any and all other Warrant Certificates duly executed and delivered hereunder.
7. Reservation and Authorization of Common Stock.
The Company covenants that, for the duration of the Exercise Period, the Company will at all times reserve and keep available, from its authorized and unissued shares, shares of Common Stock solely for issuance and delivery upon the exercise of the Warrants and free of preemptive rights, such number of shares of Common Stock and other securities, cash or property as from time to time shall be issuable upon the exercise in full of all outstanding Warrants for cash. The Company further covenants that it shall, from time to time, take all steps necessary to increase its number of authorized shares to such number of shares as shall be sufficient to deliver all shares of Common Stock deliverable upon exercise in full of all outstanding Warrants, if at any time the authorized but unissued number of shares of Common Stock would otherwise be insufficient to allow delivery of all the shares of Common Stock then deliverable upon the exercise in full of all outstanding Warrants. The Company covenants that all shares of Common Stock issuable upon exercise of the Warrants will, upon issuance, be duly and validly issued, fully paid and nonassessable and will be free of restrictions on transfer and will be free from (i) any and all security interests created by or imposed upon the Company and (ii) all taxes, liens and charges in respect of the issue thereof (other than income or withholding taxes or taxes in respect of any transfer occurring contemporaneously or otherwise specified herein or in connection with a Cashless Exercise). The Company shall take all such actions as may be necessary to ensure that all such shares of Common Stock may be so issued without violation of any applicable law or governmental regulation or any requirements of any U.S. national securities exchange upon which shares of Common Stock may be listed (except for official notice of issuance which shall be immediately delivered by the Company upon each such issuance). The Company covenants that all shares of Common Stock will, at all times that Warrants are exercisable, be duly approved for
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listing subject to official notice of issuance on each securities exchange, if any, on which the shares of Common Stock are then listed. The Company covenants that the share certificates issued to evidence any shares of Common Stock issued upon exercise of Warrants, if any, will comply with any applicable law.
The Company hereby authorizes and directs its current and future transfer agents for the shares of Common Stock at all times to reserve share certificates for such number of authorized shares, to the extent as, and if, required. The Company will supply such transfer agents with duly executed share certificates for such purposes, to the extent as, and if, required.
The Company hereby represents and warrants to the Holders that the issuance of the Warrants and the issuance of shares of Common Stock upon exercise thereof in accordance with the terms hereof will not constitute a breach of, or a default under, any other material agreements to which the Company is a party on the date hereof.
8. Warrant Transfer Books.
The Warrant Agent will maintain an office or offices (the “Corporate Agency Office”) in the United States of America, where Warrant Certificates may be surrendered for registration of transfer or exchange and where Warrant Certificates may be surrendered for exercise of Warrants evidenced thereby, which office is 150 Royall Street, Canton, MA 02021 on the Original Issue Date. The Warrant Agent will give prompt written notice to all Holders of Warrant Certificates of any change in the location of such office.
The Warrants shall be issued in registered form only. The Company shall cause to be kept at the Corporate Agency Office a Warrant Register in which, subject to such reasonable regulations as the Warrant Agent may prescribe and such regulations as may be prescribed by law, the Company shall provide for the registration of Warrants and of transfers or exchanges of Warrants as herein provided, in each case whether in the form of Book Entry Warrants or Warrant Certificates.
Upon surrender for registration of transfer of any Warrant Certificate at the Corporate Agency Office, the Company shall execute, and the Warrant Agent shall countersign and deliver, in the name of the designated transferee or transferees, one or more new Warrant Certificates, as applicable, evidencing a like aggregate number of Warrants in accordance with the terms of this Agreement.
At the option of the Holder, Warrant Certificates may be exchanged at the Corporate Agency Office upon payment of the charges hereinafter provided for other Warrant Certificates evidencing a like aggregate number of Warrants. Whenever any Warrant Certificates are so surrendered for exchange, the Company shall execute, and the Warrant Agent shall countersign and deliver, the Warrant Certificates of the same tenor and evidencing the same number of Warrants as evidenced by the Warrant Certificates surrendered by the Holder making the exchange.
All Book-Entry Warrants and Warrant Certificates issued upon any registration of transfer or exchange of Book-Entry Warrants or Warrant Certificates shall be the valid obligations of the Company, evidencing the same obligations, and entitled to the same benefits under this Agreement, as the Book-Entry Warrants or Warrant Certificates surrendered for such registration of transfer or exchange.
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Every Warrant Certificate surrendered for registration of transfer or exchange shall (if so required by the Company or the Warrant Agent) be: (i) duly endorsed and containing a Signature Guarantee, or (ii) be accompanied by a written instrument of transfer in form satisfactory to the Company and the Warrant Agent, duly executed by the Holder thereof or his attorney duly authorized in writing, also containing a Signature Guarantee. Further, to effect such transfer or exchange, all other necessary information or documentation shall be provided as the Warrant Agent may reasonably request.
No service charge shall be made for any registration of transfer or exchange of Warrants; provided, however, the Company may require payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in connection with any registration of transfer or exchange. The Warrant Agent shall not have any duty or obligation to take any action under any section of this Agreement that requires the payment of taxes and/or charges unless and until it is satisfied that all such payments have been made.
The Warrant Agent shall, upon request and at the expense of the Company from time to time, deliver to the Company such reports of registered ownership of the Warrants and such records of transactions with respect to the Warrants and the shares of Common Stock as the Company may reasonably request. The Warrant Agent shall, upon reasonable advance notice, also make available to the Company for inspection by the Company’s agents or employees, from time to time as the Company may reasonably request, such books of accounts and records maintained by the Warrant Agent in connection with the issuance and exercise of Warrants hereunder, such inspections to occur at the Corporate Agency Office during normal business hours.
The Warrant Agent shall keep copies of this Agreement and any notices given to Holders hereunder available for inspection, upon reasonable advance notice, by the Holders during normal business hours at the Corporate Agency Office. The Company shall supply the Warrant Agent from time to time with such numbers of copies of this Agreement as the Warrant Agent may request.
9. Warrant Holders.
9.1 No Rights as Stockholders until Exercise.
(a) Nothing contained in this Agreement shall be construed as conferring upon any Holder, by virtue of holding any Book-Entry Warrant or Warrant Certificate evidencing any Warrant, the right to be deemed a holder of Common Stock for any purpose or to exercise any rights whatsoever as a holder of Common Stock, including, without limitation, the right to vote, to receive dividends or distributions, to receive subscription rights, to exercise appraisal rights or otherwise, or to receive notice of, or attend, meetings or any other proceedings of the holders of Common Stock, unless and until the exercise of the Warrants hereof and the date the Warrant Shares are required to be delivered hereunder.
(b) Prior to the exercise hereof of the Warrants and the date the Warrant Shares are required to be delivered hereunder, subject to the terms in the Plan, the consent of any Holder of a Book-Entry Warrant or a Warrant Certificate shall not be required with respect to any action or proceeding of the Company.
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9.2 Rights of Action. All rights of action against the Company in respect of this Agreement, except rights of action vested in the Warrant Agent, are vested in the Holders of the Book-Entry Warrants and the Warrant Certificates, and any Holder of any Book-Entry Warrant or Warrant Certificate, without the consent of the Warrant Agent or the Holder of any other Book-Entry Warrant or Warrant Certificate, may, in such Holder’s own behalf and for such Holder’s own benefit, enforce and may institute and maintain any suit, action or proceeding against the Company suitable to enforce, or otherwise in respect of, such Holder’s right to exercise such Holder’s Warrants in the manner provided in this Agreement.
9.3 Treatment of Holders of Warrant Certificates. Every Holder, by virtue of accepting a Warrant Certificate, consents and agrees with the Company, with the Warrant Agent and with every subsequent holder of such Warrant Certificate that, prior to due presentment of such Warrant Certificate for registration of transfer, the Company and the Warrant Agent may treat the Person in whose name the Warrant Certificate is registered as the owner thereof for all purposes and as the Person entitled to exercise the rights granted under the Warrants, and neither the Company, the Warrant Agent nor any agent thereof shall be affected by any notice to the contrary.
10. Concerning the Warrant Agent. Sections 10.1, 10.2, 10.3, 10.4, 10.5, 10.6 and 10.8 shall survive the expiration of the Warrants and the termination of this Agreement and the resignation, replacement or removal of the Warrant Agent.
10.1 Rights and Duties of the Warrant Agent.
(a) The Company hereby appoints the Warrant Agent to act as agent of the Company as set forth in this Agreement. The Warrant Agent hereby accepts the appointment as agent of the Company and agrees to perform that agency upon the express terms and conditions (and no implied terms or conditions) set forth in this Agreement, in the Warrant Statements and in the Warrant Certificates, by all of which the Company and the Holders of Book-Entry Warrants and Warrant Certificates, by their acceptance thereof, shall be bound; provided, however, that the terms and conditions contained in the Warrant Statements and Warrant Certificates are subject to and governed by this Agreement. The Warrant Agent shall act solely as agent of the Company hereunder and does not assume any obligation or relationship of agency or trust for or with any of the Holders or any beneficial owners of Warrants or any other Person.
(b) The Warrant Agent shall not, by countersigning Warrant Statements, Warrant Certificates or by any other act hereunder, be deemed to make any representations as to validity or authorization of (i) the Warrants or the Warrant Statements and the Warrant Certificates (except as to its countersignature thereon), (ii) any securities or other property delivered upon exercise of any Warrant, (iii) the accuracy of the computation of the number or kind or amount of stock, shares or other securities or other property deliverable upon exercise of any Warrant, (iv) the correctness of any of the representations of the Company made in such certificates that the Warrant Agent receives; or (v) any of the statements of act or recitals contained in this Warrant Agreement, Warrant Statement or Warrant
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Certificate. The Warrant Agent shall not at any time have any duty to calculate or determine whether any facts exist that may require any adjustments pursuant to Section 5 hereof with respect to the kind and amount of stock, shares or other securities or any property issuable to Holders upon the exercise of Warrants required from time to time. The Warrant Agent shall have no duty or responsibility to determine the accuracy or correctness of such calculation or with respect to the methods employed in making the same. The Warrant Agent shall not be accountable with respect to the validity or value (or the kind or amount) of any Common Stock or of any securities or property which may at any time be issued or delivered upon the exercise of any Warrant or upon any adjustment pursuant to Section 5 hereof, and it makes no representation with respect thereto. The Warrant Agent shall not be responsible for any failure of the Company to make any cash payment or to issue, transfer or deliver any share of Common Stock or share certificates or other securities or property upon the surrender of any Book-Entry Warrant or Warrant Certificate for the purpose of exercise or upon any adjustment pursuant to Section 5 hereof or to comply with any of the covenants of the Company contained in Section 5 hereof.
(c) The Warrant Agent shall not be liable for or by reason of any of the statements of fact or recitals contained in this Warrant Agreement or in the Warrant Statements or Warrant Certificates (except its countersignature thereof) or be required to verify the same, and all such statements and recitals are and shall be deemed to have been made by the Company only.
(d) The Warrant Agent shall not have any duty or responsibility in the case of the receipt of any written demand from any holder of Warrants with respect to any action or default by the Company, including, without limiting the generality of the foregoing, any duty or responsibility to initiate or attempt to initiate any proceedings at law or otherwise or to make any demand upon the Company or any other Person.
(e) The Warrant Agent may execute and exercise any of the rights or powers hereby vested in it or perform any duty hereunder either itself or by or through its attorney or agents, and the Warrant Agent shall not be answerable or accountable for any act, default, neglect or misconduct of any such attorney or agents or for any loss to the Company resulting from any such act, default, neglect or misconduct, absent gross negligence, willful misconduct, fraud or bad faith (each as determined by a final judgment of a court of competent jurisdiction) in the selection and continued employment thereof.
(f) The Warrant Agent may rely on and shall be held harmless and protected and shall incur no liability for or in respect of any action taken, suffered or omitted to be taken by it absent gross negligence, willful misconduct, fraud or bad faith (each as determined by a final judgment of a court of competent jurisdiction) in reliance upon any certificate, statement, instrument, opinion, notice, letter, facsimile transmission, telegram or other document, or any security delivered to it, and believed by it to be genuine and to have been made or signed by the proper party or parties, or upon any written or oral instructions or statements from the Company with respect to any matter relating to its acting as Warrant Agent hereunder. It is understood, for the avoidance of doubt, that the taking (or refraining) of any action by the Warrant Agent in reliance of any such written instructions by the Company shall not, in and of itself, be deemed to constitute gross negligence, willful misconduct, fraud or bad faith.
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(g) The Warrant Agent shall not be obligated to expend or risk its own funds or to take any action that it believes would expose or subject it to expense or liability or to a risk of incurring expense or liability, unless it has been furnished with assurances of repayment or indemnity satisfactory to it.
(h) The Warrant Agent shall not be liable or responsible for any failure of the Company to comply with any of its obligations relating to any registration statement filed with the Commission or this Warrant Agreement, including without limitation obligations under applicable regulation or law.
(i) The Warrant Agent shall not be accountable or under any duty or responsibility for the use by the Company of any Warrants authenticated by the Warrant Agent and delivered by it to the Company pursuant to this Warrant Agreement or for the application by the Company of the proceeds of the issue and sale, or exercise, of the Warrants.
(j) The Warrant Agent shall act hereunder solely as agent for the Company, and its duties shall be determined solely by the express provisions hereof (and no duties or obligations shall be inferred or implied). The Warrant Agent shall not assume any obligations or relationship of agency or trust with any of the owners or holders of the Warrants.
(k) The Warrant Agent may rely on and be fully authorized and protected in acting or failing to act upon (a) any guaranty of signature by an “eligible guarantor institution” that is a member or participant in the Securities Transfer Agents Medallion Program or other comparable “signature guarantee program” or insurance program in addition to, or in substitution for, the foregoing; or (b) any law, act, regulation or any interpretation of the same even though such law, act, or regulation may thereafter have been altered, changed, amended or repealed.
(l) In the event the Warrant Agent believes any ambiguity or uncertainty exists hereunder or in any notice, instruction, direction, request or other communication, paper or document received by the Warrant Agent hereunder, the Warrant Agent, may, in its sole discretion, refrain from taking any action, and shall be fully protected and shall not be liable in any way to Company, the holder of any Book-Entry Warrant, Warrant Certificate or any other person or entity for refraining from taking such action, unless the Warrant Agent receives written instructions signed by the Company which eliminates such ambiguity or uncertainty to the satisfaction of Warrant Agent.
(m) Whenever in the performance of its duties under this Agreement, the Warrant Agent shall deem it necessary or desirable that any fact or matter be proved or established by the Company prior to taking or suffering any action hereunder, such fact or matter (unless other evidence in respect thereof be herein specifically prescribed) may be deemed to be conclusively proved and established by a statement signed by the Chairman of the Board of Directors, the Chief Executive Officer, the principal operating officer, the principal financial officer, any Vice President or the Secretary (including the officers or persons with equivalent responsibilities) of the Company and delivered to the Warrant Agent. The Warrant Agent may rely upon such statement, and will not be liable and shall be held harmless for such reliance, and shall not be held liable in connection with any delay in receiving such statement.
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(n) The Warrant Agent shall have no responsibility to the Company, any Holders of Warrants or any holders of Common Stock for interest or earnings on any moneys held by the Warrant Agent pursuant to this Agreement.
(o) The Warrant Agent shall not be required to take notice or be deemed to have notice of any event or condition hereunder, including any event or condition that may require action by the Warrant Agent, unless the Warrant Agent shall be specifically notified in writing of such event or condition by the Company, and all notices or other instruments required by this Agreement to be delivered to the Warrant Agent must, in order to be effective, be received by the Warrant Agent as specified in Section 11.1 hereof, and in the absence of such notice so delivered, the Warrant Agent may conclusively assume no such event or condition exists.
10.2 Limitation of Liability.
(a) The Warrant Agent shall be liable hereunder only for its own gross negligence, willful misconduct, fraud or bad faith (each as determined by a final judgment of a court of competent jurisdiction). Notwithstanding anything contained herein to the contrary, the Warrant Agent’s aggregate liability during any term of this Agreement with respect to, arising from, or arising in connection with this Agreement, or from all services provided or omitted to be provided under this Agreement, whether in contract, or in tort, or otherwise, is limited to, and shall not exceed, the amounts paid hereunder by the Company to Warrant Agent as fees and charges, but not including reimbursed or reimbursable expenses, during the twelve (12) months immediately preceding the event for which recovery from Warrant Agent is being sought. Neither party to this Agreement shall be liable to the other party for any consequential, punitive, indirect, special or incidental damages under any provisions of this Agreement or for any consequential, indirect, punitive, special or incidental damages arising out of any act or failure to act hereunder even if that party has been advised of or has foreseen the possibility of such damages.
(b) Exclusions. The Warrant Agent shall have no responsibility with respect to the validity of this Agreement or with respect to the validity or execution of any Warrant. The Warrant Agent shall not be responsible for any breach by the Company of any covenant or condition contained in this Agreement or in any Warrant. The Warrant Agent shall not be responsible to make any adjustments required under the provisions of Section 5 hereof or responsible for the manner, method, or amount of any such adjustment or the ascertaining of the existence of facts that would require any such adjustment; nor shall it by any act hereunder be deemed to make any representation or warranty as to the authorization or reservation of any shares of Common Stock to be issued pursuant to this Agreement or any Warrant or as to whether any shares of Common Stock shall, when issued, be valid and fully paid and non-assessable.
10.3 Indemnification.
(a) The Company covenants and agrees to indemnify and to hold the Warrant Agent harmless against any costs, expenses (including reasonable and documented fees of its legal counsel), losses or damages, which may be paid, incurred or suffered by or to which it may become subject, arising from or out of, directly or indirectly, any claims or liability resulting from its actions as Warrant Agent pursuant hereto; provided, that such covenant and agreement does not extend to, and the Warrant Agent shall not be indemnified with respect to, such costs, expenses,
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losses and damages incurred or suffered by the Warrant Agent as a result of, or arising out of, the Warrant Agent’s own gross negligence, bad faith, or willful misconduct (which gross negligence, bad faith, or willful misconduct must be determined by a final, non-appealable judgment of a court of competent jurisdiction). The costs and expenses incurred in enforcing this right of indemnification shall be paid by the Company.
(b) Instructions. From time to time, the Company may provide the Warrant Agent with instructions, by Company Order or otherwise, concerning the services performed by the Warrant Agent hereunder. In addition, at any time the Warrant Agent may apply to any officer of Company for instruction, and may consult with legal counsel for the Warrant Agent or the Company with respect to any matter arising in connection with the services to be performed by the Warrant Agent under this Warrant Agreement. Warrant Agent and its agents and subcontractors shall not be liable and shall be indemnified by Company for any action taken, suffered or omitted to be taken by Warrant Agent in reliance upon any Company instructions or upon the advice or opinion of such counsel.
10.4 Right to Consult Counsel. The Warrant Agent may at any time consult with legal counsel satisfactory to it (who may be legal counsel for the Company), and the Warrant Agent shall incur no liability or responsibility to the Company or to any Holder for any action taken, suffered or omitted by it absent gross negligence, willful misconduct, fraud or bad faith (each as determined by a final judgment of a court of competent jurisdiction) in accordance with the opinion or advice of such counsel.
10.5 Compensation and Reimbursement. The Company agrees to pay to the Warrant Agent reasonable compensation for all services rendered by it hereunder in accordance with a fee schedule to be mutually agreed upon and, from time to time, on demand of the Warrant Agent, to reimburse the Warrant Agent for all of its reasonable expenses and counsel fees and other disbursements incurred in the preparation, delivery, negotiation, amendment, administration and execution of this Agreement and the exercise and performance of its duties hereunder.
10.6 Warrant Agent May Hold Company Securities. The Warrant Agent and any stockholder, director, officer or employee of the Warrant Agent may buy, sell or deal in any of the Warrants or other securities of the Company or become pecuniarily interested in any transaction in which the Company may be interested, or contract with or lend money to the Company or otherwise act as fully and freely as though it were not Warrant Agent under this Warrant Agreement. Nothing herein shall preclude the Warrant Agent from acting in any other capacity for the Company or for any other legal entity. Nothing herein shall preclude the Warrant Agent or any Countersigning Agent from acting in any other capacity for the Company or for any other legal entity.
10.7 Resignation and Removal; Appointment of Successor.
(a) The Warrant Agent may resign its duties and be discharged from all further duties and liability hereunder (except liability arising as a result of the Warrant Agent’s own gross negligence or willful misconduct, fraud or bad faith as determined by a final, non-appealable judgment of a court of competent jurisdiction) after giving 30 days’ prior written notice to the Company. In the event any transfer agency relationship in effect between the Company and the
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Warrant Agent terminates, the Warrant Agent will be deemed to have resigned automatically and be discharged from its duties under this Agreement as of the effective date of such termination. The Company may remove the Warrant Agent upon 30 days’ written notice, and the Warrant Agent shall thereupon in like manner be discharged from all further duties and liabilities hereunder, except as aforesaid. The Warrant Agent shall, at the expense of the Company, cause notice to be given in accordance with Section 11.1(a) to the Company of said notice of resignation. Upon such resignation or removal, the Company shall appoint in writing a new Warrant Agent. If the Company shall fail to make such appointment within a period of 30 calendar days after it has been notified in writing of such resignation by the resigning Warrant Agent or after such removal, then the Holder of any Book-Entry Warrant or Warrant Certificate may apply to any court of competent jurisdiction for the appointment of a new Warrant Agent. The new Warrant Agent shall be vested with the same powers, rights, duties and responsibilities as if it had been originally named herein as the Warrant Agent, without any further assurance, conveyance, act or deed; but if for any reason it shall be reasonably necessary or expedient to execute and deliver any further assurance, conveyance, act or deed, the same shall be done at the reasonable expense of the Company and shall be legally and validly executed and delivered by the resigning or removed Warrant Agent. Not later than the effective date of any such appointment, the Company shall file notice thereof with the resigning or removed Warrant Agent. Failure to give any notice provided for in this Section 10.7(a), however, or any defect therein, shall not affect the legality or validity of the resignation of the Warrant Agent or the appointment of a new Warrant Agent as the case may be.
(b) Any Person into which the Warrant Agent or any new Warrant Agent may be merged, or any Person resulting from any consolidation to which the Warrant Agent or any new Warrant Agent shall be a party, shall be a successor Warrant Agent under this Agreement without any further act. Any such successor Warrant Agent shall promptly cause notice of its succession as Warrant Agent to be given in accordance with Section 11.1(b) to each Holder of a Book-Entry Warrant or Warrant Certificate at such Holder’s last address as shown on the Warrant Register.
10.8 Appointment of Countersigning Agent.
(a) The Warrant Agent may, but is not required to, appoint a Countersigning Agent or Agents which shall be authorized to act on behalf of the Warrant Agent to countersign Warrant Statements or Warrant Certificates issued upon original issue and upon exchange, registration of transfer or pursuant to Section 6, and Warrant Statements and Warrant Certificates so countersigned shall be entitled to the benefits of this Agreement equally and proportionately with any and all other Warrant Certificates duly executed and delivered hereunder. Wherever reference is made in this Agreement to the countersignature and delivery of Warrant Statements or Warrant Certificates by the Warrant Agent or to Warrant Statements or Warrant Certificates countersigned by the Warrant Agent, such reference shall be deemed to include countersignature and delivery on behalf of the Warrant Agent by a Countersigning Agent and Warrant Statements or Warrant Certificates countersigned by a Countersigning Agent.
(b) A Countersigning Agent may resign at any time by giving 30 days’ prior written notice thereof to the Warrant Agent and to the Company. The Warrant Agent may at any time terminate the agency of a Countersigning Agent by giving 30 days’ prior written notice thereof to such Countersigning Agent and to the Company.
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(c) The Warrant Agent agrees to pay to each Countersigning Agent from time to time reasonable compensation for its services under this Section 10.8 and the Warrant Agent shall be entitled to be reimbursed for such payments, subject to the provisions of Section 10.5.
(d) Any Countersigning Agent shall have the same rights and immunities as those of the Warrant Agent set forth Section 10 and this Agreement.
(e) Any Person into which the Warrant Agent or a Countersigning Agent may be merged or any Person resulting from any consolidation to which the Warrant Agent or such Countersigning Agent shall be a party, shall be a successor Warrant Agent or Countersigning Agent, as applicable, without any further act; provided, that, such Person would be eligible for appointment as a new Warrant Agent or Countersigning Agent, as applicable, under the provisions of Section 10.8(a), without the execution or filing of any paper or any further act on the part of the Warrant Agent or the Countersigning Agent. Any such successor Warrant Agent or Countersigning Agent shall promptly cause notice of its succession as Warrant Agent or Countersigning Agent, as applicable, to be given in accordance with Section 11.1(b) to each Holder of a Book-Entry Warrant or Warrant Certificate at such Holder’s last address as shown on the Warrant Register.
11. Notices.
11.1 Notices Generally.
(a) Any request, notice, direction, authorization, consent, waiver, demand or other communication permitted or authorized by this Agreement to be made upon, given or furnished to or filed with the Company or the Warrant Agent by the other party hereto or by any Holder shall be sufficient for every purpose hereunder if in writing (including telecopy) and telecopied, sent via electronic means, trackable or first-class mail or delivered by hand (including by a nationally recognized courier service) as follows:
if to the Company, to:
Lonestar Resources US Inc.
111 Boland Street, Suite 300
Fort Worth, TX
Attention: Frank D. Bracken III
Email: fbracken@lonestarresources.com
with a copy which shall not constitute notice to:
Latham & Watkins LLP
885 Third Avenue
New York, New York 10022
Attention: David J. Miller
Email: david.miller@lw.com
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if to the Warrant Agent, to:
Computershare Inc.
Computershare Trust Company, N.A.
150 Royall Street
Canton, MA 02021
Facsimile: (781) 575-2549
Attention: Corporate Actions
with a copy which shall not constitute notice to:
Computershare Inc.
Computershare Trust Company, N.A.
480 Washington Boulevard, 29th Floor
Jersey City, New Jersey 07310
Facsimile: (201) 680-4610
Attention: Legal Department
or, in either case, such other address as shall have been set forth in a notice delivered in accordance with this Section 11.1(a).
All such communications shall be effective when sent.
For effective delivery under this Section 11, any Person that telecopies or sends by electronic means any communication hereunder to any Person shall, on the same date as such telecopy or electronic copy is transmitted, also send, by trackable or first class mail, postage prepaid and addressed to such Person as specified above, an original or copy of the communication so transmitted.
(b) Where this Agreement provides for notice to Holders of any event, such notice shall be sufficiently given (unless otherwise herein expressly provided) if (i) in writing and mailed, by trackable or first-class mail, to each Holder affected by such event, at the address of such Holder as it appears in the Warrant Register or (ii) sent by electronic means with an original or copy of the communication so transmitted sent (on the same date as such electronic copy is transmitted), by trackable or first class mail, postage prepaid and addressed to such Person as specified above. Without limiting any of the rights or immunities of the Warrant Agent under this Agreement, where this Agreement provides for notice in any manner, such notice may be waived in writing by the Person entitled to receive such notice, either before or after the event, and such waiver shall be the equivalent of such notice.
In case by reason of the suspension of regular mail service or by reason of any other cause it shall be impracticable to give such notice by mail, then such notification as shall be made by a method approved by the Warrant Agent as one which would be most reliable under the circumstances for successfully delivering the notice to the addressees shall constitute a sufficient notification for every purpose hereunder.
Where this Agreement provides for notice of any event to a Holder of a Global Warrant Certificate, such notice shall be sufficiently given if given to the Depositary (or its designee), pursuant to its Applicable Procedures, not later than the latest date (if any), and not earlier than the earliest date (if any), prescribed for the giving of such notice.
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11.2 Required Notices to Holders. In the event the Company shall propose to:
(a) take any action that would result in an adjustment to the Exercise Price and/or the number of shares of Common Stock issuable upon exercise of a Warrant pursuant to Section 5.1;
(b) distribute any dividend or other distribution to all holders of its Common Stock or options, warrants or other rights to receive such dividend or distribution;
(c) effect any capital reorganization, reclassification, recapitalization, business combination, consolidation, amalgamation or merger (for the avoidance of doubt, including any potential Sale of the Company);
(d) effect the voluntary or involuntary dissolution, liquidation or winding-up of the Company; or
(e) make a tender offer or exchange offer with respect to the Common Stock (each of (a), (b), (c), (d) or (e), an “Action”);
then, in each such case, the Company shall cause to be delivered to the Warrant Agent and shall give to each Holder of a Book-Entry Warrant or a Warrant Certificate, in accordance with Section 11.1(b) hereof, a written notice of such Action, including, in the case of an action pursuant to Section 11.2(a), the information required under Section 5.1(o). To the extent such notice does not constitute material nonpublic information in the reasonable determination of the Company (it being understood that such information shall not constitute material nonpublic information if such information is provided to the stockholders of the Company), such notice shall be given at least 30 days prior to taking such Action (except in the case of clause (b), at least 10 days prior to the date of the taking of such Action) and shall specify the record date for the purposes of a dividend, distribution or rights, or the date such issuance or event is to take place and the date of participation therein by the holders of Common Stock, if any such date is to be fixed, and shall briefly indicate the effect, if any, of such action on the Common Stock and on the number and kind of any other shares and on property, if any, and the number of shares of Common Stock and other property, if any, issuable upon exercise of each Warrant and the Exercise Price after giving effect to any such adjustment pursuant to Section 5.1 which will be required as a result of such action.
If at any time the Company shall cancel any of the Actions for which notice has been given under this Section 11.2 prior to the consummation thereof, the Company shall give each Holder prompt notice of such cancellation in accordance with Section 11.1(b).
In addition, in the event the Company enters into any definitive agreement with respect to any sale transaction (including, without limitation, any Sale of the Company), the Company shall cause to be delivered to the Warrant Agent and shall give to each Holder of a Book-Entry Warrant or a Warrant Certificate, in accordance with Section 11.1(b), a notice of the entering into such definitive agreement.
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12. Information Rights.
The Company shall furnish to each Holder:
(a) As soon as available, but in any event in accordance with then applicable law and not later than 90 days after the end of each fiscal year of the Company, its audited consolidated balance sheet and related statements of operations, stockholders’ equity and cash flows as of the end of and for such year, setting forth in each case in comparative form the figures for the previous fiscal year, all reported on by BDO or other independent public accountants of recognized national standing to the effect that such consolidated financial statements present fairly in all material respects the financial condition and results of operations of the Company and its Subsidiaries on a consolidated basis in accordance with GAAP consistently applied;
(b) As soon as available, but in any event in accordance with then applicable law and not later than 60 days after the end of each of the first three fiscal quarters of each fiscal year of the Company, its unaudited consolidated balance sheet and related unaudited statements of operations, stockholders’ equity and cash flows as of the end of and for such fiscal quarter and the then elapsed portion of the fiscal year, setting forth in each case in comparative form the figures for the corresponding period or periods of (or, in the case of the balance sheet, as of the end of) the previous fiscal year;
(c) As soon as available, the Reserve Report;
(d) If requested by a Holder not less than 10 Business Days prior to date required for delivery of the information required in clauses (a) and (b) above, in connection with delivery of the information required in clauses (a) (b) with respect to the applicable period, a calculation of the Original Value as of such Valuation Date, if the Common Stock is not then listed or admitted to trading on any U.S. national securities exchange or traded and quoted in the over-the-counter market in the United States; and
(e) If requested by a Holder, as soon as reasonably practicable after such request, any other information a holder of Common Stock is entitled to receive pursuant to and in accordance with the Certificate of Incorporation and the Bylaws, provided or delivered in accordance with Section 11.1(b) (unless otherwise instructed by the Holder);
provided, however, that the Company will be deemed to have satisfied its obligations under this Section 12 if and to the extent (i) the Company furnishes such statements, reports and information referred to above to the Holders in their capacity as lenders pursuant to the Company’s or any of its subsidiary’s revolving credit facility (including the Credit Agreement), as applicable, and/or (ii) the Company files such statements, reports and information with the Commission via the EDGAR filing system and such statements, reports and information are publicly available.
13. Inspection.
The Warrant Agent shall cause a copy of this Agreement to be available at all reasonable times at the Corporate Agency Office for inspection by any Holder of any Book-Entry Warrant or Warrant Certificate. The Warrant Agent may require any such Holder of a Warrant Certificate to submit such Warrant Certificate for inspection by the Warrant Agent.
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14. Amendments.
(a) This Agreement may be amended by the Company and the Warrant Agent with the consent of the Required Warrant Holders.
(b) Notwithstanding the foregoing, the Company and the Warrant Agent may, without the consent or concurrence of the Holders of the Book-Entry Warrants or the Warrant Certificates, by supplemental agreement or otherwise, amend this Agreement for the purpose of making any changes or corrections in this Agreement that (i) are required to cure any ambiguity or to correct or supplement any defective or inconsistent provision or clerical omission or mistake or manifest error herein contained or (ii) add to the covenants and agreements of the Company in this Agreement further covenants and agreements of the Company thereafter to be observed, or surrender any rights or powers reserved to or conferred upon the Company in this Agreement; provided, however, that in the case of clause (ii) such amendment shall not adversely affect, alter or change the rights or interests of the Holders of the Warrants hereunder in any material respect.
(c) The consent of each Holder of any Book-Entry Warrants or Warrant Certificate evidencing any warrants affected thereby shall be required for any supplement or amendment to this Agreement or the Warrants that would: (i) increase the Exercise Price or decrease the number of shares of Common Stock receivable upon exercise of Warrants, in each case other than as provided in Section 5.1; (ii) the Expiration Date is changed to an earlier date; or (iii) modify the provisions contained in Section 5.1 in a manner adverse to the Holders of Book-Entry Warrants or Warrant Certificates generally with respect to their Warrants.
(d) The Warrant Agent shall join with the Company in the execution and delivery of any such amendment; provided, that, as a condition precedent to the Warrant Agent’s execution of any such amendment to this Agreement, the Company shall deliver to the Warrant Agent a certificate from an Appropriate Officer that states that the proposed amendment is in compliance with the terms of this Section 14. Notwithstanding anything in this Agreement to the contrary, the Warrant Agent shall not be required to execute any amendment to this Agreement that it has determined would adversely affect its own rights, duties, obligations or immunities under this Agreement and no amendment to this Agreement shall be effective unless duly executed by the Warrant Agent. Upon execution and delivery of any amendment pursuant to this Section 14, such amendment shall be considered a part of this Agreement for all purposes and every Holder of a Book-Entry Warrant or a Warrant Certificate theretofore or thereafter countersigned and delivered hereunder shall be bound thereby.
(e) Promptly after the execution by the Company and the Warrant Agent of any such amendment, the Company shall give notice to the Holders of Book-Entry Warrants and Warrant Certificates, setting forth in general terms the substance of such amendment, in accordance with the provisions of Section 11.1(b). Any failure of the Company to mail such notice or any defect therein, shall not, however, in any way impair or affect the validity of any such amendment.
42
15. Waivers.
The Company may take any action herein prohibited, or omit to perform any act herein required to be performed by it, only if the Company has obtained the written consent of the Required Warrant Holders and the prior written consent of the Warrant Agent.
16. Successors.
The terms and provisions of this Agreement shall inure to the benefit of, and be binding upon, the Company, the Warrant Agent and the Holders and their respective successors and permitted assigns.
17. Headings.
The section headings contained in this Agreement are inserted for convenience only and will not affect in any way the meaning or interpretation of this Agreement.
18. Counterparts.
This Agreement may be executed in two or more counterparts, each of which will be deemed to be an original, but all of which together constitute one and the same instrument. A signature to this Agreement transmitted electronically shall have the same authority, effect and enforceability as an original signature.
19. Severability.
The provisions of this Agreement will be deemed severable and the invalidity or unenforceability of any provision hereof will not affect the validity or enforceability of the other provisions hereof; provided, that, if any provision of this Agreement, as applied to any party or to any circumstance, is adjudged by a court or governmental body not to be enforceable in accordance with its terms, the parties agree that the court or governmental body making such determination will have the power to modify the provision in a manner consistent with its objectives such that it is enforceable, and/or to delete specific words or phrases, and in its reduced form, such provision will then be enforceable and will be enforced; further, provided, that, if such excluded provision shall affect the rights, immunities, liabilities, duties or obligations of the Warrant Agent, the Warrant Agent shall be entitled to resign immediately upon written notice to the Company.
20. Persons Benefiting.
This Agreement shall be binding upon and inure to the benefit of the Company, the Warrant Agent and the Holders from time to time. Nothing in this Agreement, express or implied, is intended to confer upon any person other than the Company, the Warrant Agent and the Holders any rights or remedies under or by reason of this Agreement or any part hereof, and all covenants, conditions, stipulations, promises and agreements contained in this Agreement shall be for the sole and exclusive benefit of the parties hereto and of the Holders. Each Holder, by acceptance of a Book-Entry Warrant or a Warrant Certificate, agrees to all of the terms and provisions of this Agreement applicable thereto.
43
21. Applicable Law.
THIS AGREEMENT, EACH WARRANT CERTIFICATE ISSUED HEREUNDER, EACH WARRANT EVIDENCED THEREBY AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HERETO AND THERETO, INCLUDING THE INTERPRETATION, CONSTRUCTION, VALIDITY AND ENFORCEABILITY THEREOF, SHALL BE GOVERNED BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
22. Entire Agreement.
This Agreement sets forth the entire agreement of the parties hereto as to the subject matter hereof and supersedes all previous agreements among all or some of the parties hereto with respect thereto, whether written, oral or otherwise.
23. Force Majeure.
Notwithstanding anything to the contrary contained herein, the Warrant Agent will not be liable for any delays or failures in performance resulting from acts beyond its reasonable control including, without limitation, acts of God, terrorist acts, epidemics, pandemics, government orders, shortage of supply, disruptions in public utilities, interruptions or malfunction of computer facilities, or loss of data due to power failures or mechanical difficulties with information storage or retrieval systems, labor difficulties, war, or civil unrest.
24. Further Assurances.
The Company shall perform, acknowledge and deliver or cause to be performed, acknowledged and delivered all such further and other acts, documents, instruments and assurances as may be reasonably required by the Warrant Agent in order to enable it to carry out or perform its duties under this Agreement.
25. Confidentiality.
The Warrant Agent and the Company agree that all books, records, information and data pertaining to the business of the other party, including inter alia, personal, non-public warrant holder information, which are exchanged or received pursuant to the negotiation or the carrying out of this Agreement including the agreed upon fees for services shall remain confidential, and shall not be voluntarily disclosed to any other person, except as may be required by law, including, without limitation, pursuant to subpoenas from state or federal government authorities (e.g., in divorce and criminal actions). However, each party may disclose relevant aspects of the other party’s confidential information to its officers, affiliates, agents, subcontractors and employees to the extent reasonably necessary to perform its duties and obligations under this Agreement and such disclosure is not prohibited by applicable law.
[Remainder of Page Intentionally Left Blank]
44
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and delivered as of the day and year first above written.
| Lonestar Resources US Inc., a Delaware corporation | ||||
| By: | /s/ Frank D. Bracken III | |||
| Name: | Frank D. Bracken III | |||
| Title: | Chief Executive Officer | |||
| Computershare Inc. and Computershare Trust On behalf of both entities | ||||
| By: | /s/ Collin Ekeogu | |||
| Name: | Collin Ekeogu | |||
| Title: | Manager, Corporation Actions | |||
[Signature Page to Warrant Agreement]
EXHIBIT A
FORM OF WARRANT STATEMENT
| Lonestar Resources US Inc. | DRS Warrant Distribution Statement | |||
| CUSIP Number | Account Number/Account Key | |||
| Ticker Symbol | Investor ID | |||
| Issuance Date | Distribution | |||
[ ]
[ ]
[ ]
[ ]
| Tranche 1 Warrants Issued To You In Book-Entry Form |
| [ ] |
PLEASE RETAIN THIS STATEMENT FOR YOUR RECORDS
These Tranche 1 Warrants are maintained for you under the Direct Registration System, which means they are held for you in an electronic, book-entry account maintained by Computershare Inc. Please retain this statement for your permanent record.
| Questions? Contact Computershare Inc. | ||||
| To access your account, use your Investor ID Number that is located in the box above on the top right hand corner of this statement. You can contact Computershare Inc. in one of the following ways: | ||||
|
By Internet: Visit www.computershare.com for access to your account. You will be able to certify your Taxpayer Identification Number/Social Security Number, change your address or sell warrants. | ||||
| By Phone: |
By Mail: | |||
| Toll Free Number |
[●] |
Lonestar Resources US Inc. | ||
| Outside the U.S. (Collect) |
[●] |
c/o Computershare | ||
| Hearing Impaired |
[●] |
[●] | ||
| Representatives are available [●] a.m. to [●] p.m. Eastern Time weekdays |
[●] | |||
[Request for Taxpayer Identification and Certification
Our records indicate that we do not have a certified Taxpayer Identification Number (“TIN”) on file. Without a certified TIN, we may be required by law to withhold [●]% from any future payments and any sale transaction that you request. Logon to [•] to certify your TIN or contact us by phone to request a Substitute Form W-9.]
SEE REVERSE SIDE FOR IMPORTANT INFORMATION
This statement is your record that the Tranche 1 Warrants have been credited to your account on the books of maintained by Computershare Inc., under the Direct Registration System. Please verify all information on the reverse side of this statement. This statement is neither a negotiable instrument nor a security, and delivery of this statement does not itself confer any rights on the recipient. Nevertheless, it should be kept with your important documents as a record of your ownership of these securities.
Transfer ownership of your book-entry warrants at any time by submitting the appropriate warrant transfer documents to [●]. Visit [●]’s Investor ServiceDirect online at [●] or call [●] to obtain transfer documents.
[Transfer of your book-entry warrants to your broker can be accomplished in one of two ways:
(1) The fastest and easiest way is to provide your broker with your Account Key at [●], your Taxpayer Identification Number (TIN) and your account registration information, and request that your broker initiate an electronic transfer of your warrants, or
(2) Obtain a “Broker-Dealer Authorization Form” by visiting [●] or by calling [●].]
The Warrant Agreement, dated November [●], 2020 (the “Warrant Agreement”), among (the “Company”) and Computershare Inc. and Computershare Trust Company, N.A, together, as Warrant Agent (the “Warrant Agent”), is incorporated by reference into and made a part of this statement, and this statement is qualified in its entirety by reference to the Warrant Agreement. A copy of the Warrant Agreement may be inspected at the Warrant Agent’s office at 150 Royall Street, Canton, MA 02021. All capitalized terms used but not defined herein shall have the meanings assigned to them in the Warrant Agreement.
Subject to the provisions of the Warrant Agreement, Book-Entry Warrants may be exercised to purchase shares of Common Stock (subject to adjustment as provided in Section 5 of the Warrant Agreement) from the Company from the Original Issue Date through 5:00 p.m. New York City time on the Expiration Date, at an exercise price of $0.001 per share of Common Stock (as adjusted from time to time, the “Exercise Price”). The number of shares of Common Stock purchasable upon exercise of the Warrants is subject to adjustment upon the occurrence of certain events as set forth in the Warrant Agreement. Subject to the terms and conditions set forth in the Warrant Agreement, each Holder of a Book-Entry Warrant may exercise such Book-Entry Warrant, in whole or from time to time in part, by: (1) delivering to the Warrant Agent at the Corporate Agency Office an Exercise Form, setting forth the number of Warrants being exercised and, if applicable, whether Cashless Exercise is being elected with respect thereto, and otherwise properly completed and duly executed by the Holder thereof as well as any such other information the Warrant Agent may reasonably require, and (2) paying to the Warrant Agent an amount equal to (x) all taxes and charges required to be paid by the Holder, if any, prior to, or concurrently with, exercise of such Warrants pursuant to the Warrant Agreement and (y) except in the case of a Cashless Exercise, the aggregate of the Exercise Price in respect of each share of Common Stock into which such Warrants are exercisable. Upon due exercise of Warrants as described in the preceding sentence, the Warrant Agent shall deliver to the Company the Exercise Form and all funds received and the Company shall thereupon, as promptly as practicable, and in any event within two (2) Business Days after the Exercise Date, (i) determine the number of shares of Common Stock issuable pursuant to exercise of such Warrants or if Cashless Exercise applies, and (ii) execute or cause to be executed and deliver or cause to be delivered to the Recipient shares of Common Stock in book entry form in an amount equal to, or a certificate or certificates representing the aggregate number of shares of Common Stock issuable upon such exercise (based upon the aggregate number of Warrants so exercised), as so determined, together with an amount in cash in lieu of any fractional share(s), if the Company so elects as described below and in accordance with the terms set forth in the Warrant Agreement.
The Company shall not be required to issue any fractional share of Common Stock in connection with the exercise of Warrants. All shares of Common Stock issuable upon exercise of more than one Warrant by a holder thereof shall be aggregated for purposes of determining whether the conversion would result in the issuance of any fractional share. If, after the aforementioned aggregation, the exercise would result in the issuance of any fractional share, the Company may, in lieu of issuing any fractional share, make an adjustment therefore in cash on the basis of the Current Market Price per share of Common Stock on the date of such exercise.
THE WARRANTS REPRESENTED BY THIS STATEMENT ARE SUBJECT TO CERTAIN RESTRICTIONS ON EXERCISE, TRANSFER, SALE, ASSIGNMENT, PLEDGE, ENCUMBRANCE OR OTHER SIMILAR TRANSFER AS SET FORTH IN THE WARRANT AGREEMENT AMONG THE COMPANY AND THE WARRANT AGENT (ON BEHALF OF THE ORIGINAL HOLDERS OF THE WARRANT SHARES) (THE “WARRANT AGREEMENT”). DURING THE EXCHANGE PERIOD, THE WARRANTS (AND ANY BENEFICIAL INTERESTS THEREIN) MAY NOT BE TRANSFERRED (AS DEFINED IN THE WARRANT AGREEMENT) AND THE WARRANTS MAY NOT BE EXERCISED. COPIES OF THE WARRANT AGREEMENT MAY BE OBTAINED AT THE PRINCIPAL OFFICE OF THE COMPANY.
[FORM OF ASSIGNMENT]
FOR VALUE RECEIVED, the undersigned registered holder of the Book-Entry Warrant hereby sells, assigns and transfers unto the Assignee(s) named below (including the undersigned with respect to any Warrants constituting a part of the Warrants evidenced by the Warrant Statement not being assigned hereby) all of the rights of the undersigned under the Book-Entry Warrant, with respect to the whole number of Tranche 1 Warrants set forth below:
|
|
| Name(s) of Assignee(s): |
|
|
| Address: |
|
|
| No. of Tranche 1 Warrants: |
| Please insert social security or other identifying number of assignee(s): |
and does hereby irrevocably constitute and appoint
the undersigned’s attorney to make such transfer on the books of
maintained for such purposes, with full power of substitution in the premises.
|
|
| Dated |
|
|
| (Signature of Owner) |
|
|
| (Street Address) |
|
|
| (City) (State) (Zip Code) |
|
|
| Signature Guaranteed By |
EXHIBIT B
[FACE OF TRANCHE 1 WARRANT CERTIFICATE]1
LONESTAR RESOURCES US INC.
TRANCHE 1 WARRANT CERTIFICATE
EVIDENCING
TRANCHE 1 WARRANTS TO PURCHASE COMMON STOCK
[FACE]
| No. [ ] | CUSIP No. 54240F 111 |
[UNLESS THIS GLOBAL TRANCHE 1 WARRANT CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION (“DTC”), TO LONESTAR RESOURCES US INC. (THE “COMPANY”), THE CUSTODIAN OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
TRANSFER OF THIS GLOBAL TRANCHE 1 WARRANT CERTIFICATE SHALL BE LIMITED TO TRANSFERS IN WHOLE, AND NOT IN PART, TO THE COMPANY, DTC, THEIR SUCCESSORS AND THEIR RESPECTIVE NOMINEES.]2
| 1 | NTD: To be removed in the versions of the Definitive Warrant Certificates printed in multiple copies for use by the Warrant Agent in preparing Definitive Warrants Certificates for issuance and delivery from time to time to holders. |
| 2 | NTD: Include only on Global Warrant Certificate. |
LONESTAR RESOURCES US INC.
| No. [ ] | [ , , ] Warrants |
CUSIP No. 54240F 111
THIS CERTIFIES THAT, for value received, [ ], or registered assigns, is the registered owner of the number of Warrants to purchase Common Stock of Lonestar Resources US Inc., a Delaware corporation (the “Company”, which term includes any successor thereto under the Warrant Agreement (as may be supplemented, amended or amended and restated pursuant to the applicable provisions hereof, the “Warrant Agreement”), dated as of November 30, 2020, between the Company, Computershare Inc., a Delaware corporation, and its wholly-owned subsidiary Computershare Trust Company, N.A., a federally chartered trust company (collectively, the “Warrant Agent”, which term includes any successor thereto permitted under the Warrant Agreement)) specified above [or such lesser number as may from time to time be endorsed on the “Schedule of Decreases in Warrants” attached hereto]3, and is entitled, subject to and upon compliance with the provisions hereof and of the Warrant Agreement, at such Holder’s option, at any time when the Warrants evidenced hereby are exercisable, to purchase from the Company one share of Common Stock for each Warrant evidenced hereby, at the purchase price of $0.001 per share of Common Stock (as adjusted from time to time, the “Exercise Price”), payable in full at the time of purchase, the number of shares of Common Stock into which and the Exercise Price at which each Warrant shall be exercisable each being subject to adjustment as provided in Section 5 of the Warrant Agreement.
This Warrant Certificate is subject to all of the terms, provisions and conditions of the Warrant Agreement, which terms, provisions and conditions are hereby incorporated herein by reference and made a part hereof and to which Warrant Agreement reference is hereby made for a full description of the rights, limitations of rights, obligations, duties and immunities hereunder of the Warrant Agent, the Company and the Holders of the Warrant Certificate.
All shares of Common Stock issuable by the Company upon the exercise of Warrants shall, upon such issuance, be duly and validly issued and fully paid and nonassessable. The Company shall pay any and all taxes (other than income or withholding taxes) that may be payable in respect of the issue or delivery of shares of Common Stock on exercise of Warrants. The Company shall not be required, however, to pay any tax or other charge imposed in respect of any transfer involved in the issue and delivery of shares of Common Stock in book-entry form or any certificates for Common Stock or payment of cash to any Person other than the Holder of the Warrant Certificate evidencing the exercised Warrant, and in case of such transfer or payment, the Warrant Agent and the Company shall not be required to issue or deliver any shares of Common Stock in book-entry form or any certificate or pay any cash until (a) such tax or charge has been paid or an amount sufficient for the payment thereof has been delivered to the Warrant Agent or to the Company, (b) it has been established to the Company’s satisfaction that any such tax or other charge that is or may become due has been paid or (c) the receipt of any other such information as set forth in the Warrant Agreement.
| 3 | Include only on Global Warrant Certificate. |
B-2
Each Warrant evidenced hereby may be exercised by the Holder hereof at the Exercise Price then in effect on any Business Day from and after the Original Issue Date until 5:00 p.m., New York time, on the Expiration Date in the Warrant Agreement.
Subject to the provisions hereof and of the Warrant Agreement, the Holder of this Warrant Certificate may exercise all or any whole number of the Warrants evidenced hereby by, in the case of a Global Warrant Certificate, by delivery to the Warrant Agent of the Exercise Form on the reverse hereof, setting forth the number of Warrants being exercised and, if applicable, whether Cashless Exercise is being elected with respect thereto, and otherwise properly completed and duly executed by the Holder thereof to the Warrant Agent, and delivering such Warrants by book-entry transfer through the facilities of the Depositary, to the Warrant Agent in accordance with the Applicable Procedures and otherwise complying with Applicable Procedures in respect of the exercise of such Warrants or, in the case of a Definitive Warrant Certificate, by delivery to the Warrant Agent of the Exercise Form on the reverse hereof, setting forth the number of Warrants being exercised and, if applicable, whether Cashless Exercise is being elected with respect thereto, and otherwise properly completed and duly executed by the Holder thereof to the Warrant Agent, and surrendering this Warrant Certificate to the Warrant Agent at its office maintained for such purpose (the “Corporate Agency Office”), together with payment in full of the Exercise Price as then in effect for each share of Common Stock receivable upon exercise of each Warrant being submitted for exercise unless Cashless Exercise is being elected with respect thereto. Any such payment of the Exercise Price is to be by wire transfer in immediately available funds to such account of the Company at such banking institution as the Company shall have designated from time to time for such purpose.
Reference is hereby made to the further provisions of this Warrant Certificate set forth on the reverse hereof, which further provisions shall for all purposes have the same effect as if set forth at this place.
Unless this Warrant Certificate has been countersigned by the Warrant Agent by manual or facsimile signature of an authorized officer on behalf of the Warrant Agent, this Warrant Certificate shall not be valid for any purpose and no Warrant evidenced hereby shall be exercisable.
IN WITNESS WHEREOF, the Company has caused this certificate to be duly executed under its corporate seal.
Dated: [ ], 20[ ]
| LONESTAR RESOURCES US INC. | ||||||
| [SEAL] | By: |
| ||||
| [Title] | ||||||
| ATTEST: | ||||||
| Countersigned: | ||||||
| Computershare Trust Company, N.A., as Warrant Agent | [ ] | |||||
B-3
| OR | ||||||||
| By: |
|
By: |
| |||||
| Authorized Agent | as Countersigning Agent | |||||||
| By: |
| |||||||
| Authorized Officer | ||||||||
Reverse of Tranche 1 Warrant Certificate
LONESTAR RESOURCES US INC.
TRANCHE 1 WARRANT CERTIFICATE
EVIDENCING
TRANCHE 1 WARRANTS TO PURCHASE COMMON STOCK
The Warrants evidenced hereby are one of a duly authorized issue of Warrants of the Company designated as its Tranche 1 Warrants to Purchase Common Stock (“Warrants”), limited in aggregate number to [●] issued under and in accordance with the Warrant Agreement, dated as of November 30, 2020 (the “Warrant Agreement”), between the Company, Computershare Inc., a Delaware corporation, and its wholly-owned subsidiary Computershare Trust Company, N.A., a federally chartered trust company (collectively, the “Warrant Agent”, which term includes any successor thereto permitted under the Warrant Agreement), to which the Warrant Agreement and all amendments thereto reference is hereby made for a statement of the respective rights, limitations of rights, duties and immunities thereunder of the Company, the Warrant Agent, the Holders of Warrant Certificates and the owners of the Warrants evidenced thereby and of the terms upon which the Warrant Certificates are, and are to be, countersigned and delivered. A copy of the Warrant Agreement shall be available at all reasonable times at the office of the Warrant Agent for inspection by the Holder hereof.
The Exercise Price and the number of shares of Common Stock purchasable upon exercise of the Warrants are subject to adjustment upon the occurrence of certain events as set forth in the Warrant Agreement.
Except as provided in the Warrant Agreement, all outstanding Warrants shall expire and all rights of the Holders of Warrant Certificates evidencing such Warrants shall automatically terminate and cease to exist, as of 5:00 p.m., New York time, on the Expiration Date. The “Expiration Date” shall mean the earliest to occur of (x) November 30, 2023 (the third (3rd) anniversary of the Original Issue Date) or, if not a Business Day, then the next Business Day thereafter, (y) the Sale Date in the event a Sale of the Company occurs and (z) a Winding Up.
In the event of the exercise of less than all of the Warrants evidenced hereby, a new Warrant Certificate of the same tenor and for the number of Warrants which are not exercised shall be issued by the Company in the name or upon the written order of the Holder of this Warrant Certificate upon the cancellation hereof.
B-4
The Warrant Certificates are issuable only in registered form in denominations of whole numbers of Warrants. Upon surrender at the office of the Warrant Agent and payment of the charges specified herein and in the Warrant Agreement, this Warrant Certificate may be exchanged for Warrant Certificates in other authorized denominations or the transfer hereof may be registered in whole or in part in authorized denominations to one or more designated transferees; provided, however, that such other Warrant Certificates issued upon exchange or registration of transfer shall evidence the same aggregate number of Warrants as this Warrant Certificate. The Company shall cause to be kept at the office or offices of the Warrant Agent the Warrant Register in which, subject to such reasonable regulations as the Warrant Agent may prescribe and such regulations as may be prescribed by law, the Company shall provide for the registration of Warrant Certificates and of transfers or exchanges of Warrant Certificates. No service charge shall be made for any registration of transfer or exchange of Warrant Certificates; provided, however, the Company may require payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in connection with any registration of transfer or exchange of Warrant Certificates.
Prior to due presentment of this Warrant Certificate for registration of transfer, the Company, the Warrant Agent and any agent of the Company or the Warrant Agent may treat the Person in whose name this Warrant Certificate is registered as the owner hereof for all purposes, and neither the Company, the Warrant Agent nor any such agent shall be affected by notice to the contrary.
The Warrant Agreement permits, with certain exceptions as therein provided, the amendment thereof and the modification of the rights and obligations of the Company and the rights of the Holders of Warrant Certificates under the Warrant Agreement at any time by the Company and the Warrant Agent with the consent of the Required Warrant Holders.
Until the exercise of any Warrant, subject to the provisions of the Warrant Agreement and except as may be specifically provided for in the Warrant Agreement, no Holder of a Warrant Certificate evidencing any Warrant shall have the right to be deemed a holder of Common Stock for any purpose or to exercise any rights whatsoever as a holder of Common Stock, including, without limitation, the right to vote, to receive dividends or distributions, to receive subscription rights, to exercise appraisal rights or otherwise, or to receive notice of, or attend, meetings or any other proceedings of the holders of Common Stock, unless and until the exercise of the Warrants hereof and the date the Warrant Shares are required to be delivered hereunder. Prior to the exercise hereof of the Warrants and the date the Warrant Shares are required to be delivered hereunder, subject to the terms in the Plan, the consent of any Holder of a Book-Entry Warrant or a Warrant Certificate shall not be required with respect to any action or proceeding of the Company.
This Warrant Certificate, each Warrant evidenced thereby and the Warrant Agreement shall be governed by and construed in accordance with the laws of the State of New York.
All terms used in this Warrant Certificate which are defined in the Warrant Agreement shall have the meanings assigned to them in the Warrant Agreement.
B-5
Exercise Form
Computershare Trust Company N.A.
150 Royall Street
Canton, MA 02021
Attention: Corporate Actions
cc:
Computershare Inc.
480 Washington Boulevard, 29th Floor
Jersey City, New Jersey 07310
Attention: Legal Department
Re: Lonestar Resources US Inc. Warrant Agreement, dated as of November 30, 2020
In accordance with and subject to the terms and conditions hereof and of the Warrant Agreement, the undersigned Holder of this Warrant Certificate hereby irrevocably elects to exercise Warrants evidenced by this Warrant Certificate and represents that for each of the Warrants evidenced hereby being exercised such Holder either has (please check one box only):
| ☐ | tendered the Exercise Price in the aggregate amount of $ by wire transfer in immediately available funds to such account of the Company at such banking institution as the Company shall have designated from time to time for such purpose; or | |
| ☐ | elected a “Cashless Exercise”. | |
The undersigned requests that the shares of Common Stock issuable upon exercise be in fully registered form in such denominations and registered in such names and delivered, together with any other property receivable upon exercise, in such manner as is specified in the instructions set forth below.
If the number of Warrants exercised is less than all of the Warrants evidenced hereby, (i) if this Warrant Certificate is a Global Warrant Certificate, the Warrant Agent shall endorse the “Schedule of Decreases in Warrants” attached hereto to reflect the Warrants being exercised or (ii) if this Warrant Certificate is a Definitive Warrant Certificate, the undersigned requests that a new Definitive Warrant Certificate representing the remaining Warrants evidenced hereby be issued and delivered to the undersigned unless otherwise specified in the instructions below.
B-6
| Dated: |
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Name: |
| |||||
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(Please Print) | |||||||
| (Insert Social Security or Other Identifying Number of Holder) | Address: |
| ||||||
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| ||||||||
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| ||||||||
| Signature | ||||||||
| (Signature must conform in all respects to name of Holder as specified on the face of this Warrant Certificate and must bear a signature guarantee by a bank, trust company or member firm of a U.S. national securities exchange.) | ||||||||
Signature Guaranteed:
Instructions (i) as to denominations of shares of Common Stock issuable upon exercise and as to delivery of such securities and any other property issuable upon exercise and (ii) if applicable, as to Definitive Warrant Certificates evidencing unexercised Warrants:
Assignment
(Form of Assignment To Be Executed If Holder Desires To Transfer Warrant Certificate)
FOR VALUE RECEIVED hereby sells, assigns and transfers unto
Please insert social security or other identifying number
(Please print name and address including zip code)
the Warrants represented by the within Warrant Certificate and does hereby irrevocably constitute and appoint Attorney, to transfer said Warrant Certificate on the books of the within-named Company with full power of substitution in the premises.
| Dated: |
|
Signature |
| |||||
| (Signature must conform in all respects to name of Holder as specified on the face of this Warrant Certificate and must bear a signature guarantee by a bank, trust company or member firm of a U.S. national securities exchange.) | ||||||||
B-7
SCHEDULE OF DECREASES IN WARRANTS
The following decreases in the number of Warrants evidenced by this Global Warrant Certificate have been made:
| Date |
Amount of decrease in |
Number of Warrants |
Signature of authorized |
| 4 | NTD: Include only on Global Warrant Certificate. |
B-8
Exhibit 10.4
TRANCHE 2 WARRANT AGREEMENT
between
LONESTAR RESOURCES US INC.
COMPUTERSHARE INC.
and
COMPUTERSHARE TRUST COMPANY N.A.,
as Warrant Agent
Dated as of November 30, 2020
Warrants to Purchase Common Stock
TABLE OF CONTENTS
Page
| 1. |
Definitions | 1 | ||||||
| 2. |
Warrant Certificates; Book-Entry Warrants | 10 | ||||||
| 2.1 | Original Issuance of Warrants | 10 | ||||||
| 2.2 | Form of Warrants | 10 | ||||||
| 2.3 | Execution and Delivery of Warrant Certificates and Book-Entry Warrants | 11 | ||||||
| 2.4 | Global Warrant Certificates | 12 | ||||||
| 2.5 | Transfer and Exchange of Warrants represented by Definitive Warrant Certificates or Book-Entry Warrants | 14 | ||||||
| 2.6 | Restrictions on Exchange or Transfer of a Book-Entry Warrant or a Warrant Represented by a Definitive Warrant Certificate for a Beneficial Interest in a Global Warrant Certificate |
14 | ||||||
| 3. |
Exercise and Expiration of Warrants | 14 | ||||||
| 3.1 |
Right to Acquire Common Stock Upon Exercise | 14 | ||||||
| 3.2 |
Exercise and Expiration of Warrants | 14 | ||||||
| 3.3 |
Application of Funds upon Exercise of Warrants | 16 | ||||||
| 3.4 |
Payment of Taxes | 17 | ||||||
| 3.5 |
Withholding and Reporting Requirements | 17 | ||||||
| 3.6 |
Cancellation of Warrant Certificates | 17 | ||||||
| 3.7 |
Cashless Exercise | 18 | ||||||
| 3.8 |
Shares Issuable | 18 | ||||||
| 3.9 |
Cost Basis Information | 18 | ||||||
| 3.10 |
Redemption | 19 | ||||||
| 4. |
Dissolution, Liquidation or Winding up | 19 | ||||||
| 5. |
Adjustments | 20 | ||||||
| 5.1 | Adjustments | 20 | ||||||
| 5.2 | Fractional Interest | 28 | ||||||
| 5.3 | No Adjustments | 28 | ||||||
| 5.4 | Adjustment of Prices | 28 | ||||||
| 6. |
Loss or Mutilation | 28 | ||||||
| 7. |
Reservation and Authorization of Common Stock | 29 | ||||||
| 8. |
Warrant Transfer Books | 30 | ||||||
| 9. |
Warrant Holders | 31 | ||||||
| 9.1 | No Rights as Stockholders until Exercise | 31 | ||||||
| 9.2 | Rights of Action | 32 | ||||||
| 9.3 | Treatment of Holders of Warrant Certificates | 32 | ||||||
| 10. |
Concerning the Warrant Agent | 32 | ||||||
i
| 10.1 |
Rights and Duties of the Warrant Agent | 32 | ||||||
| 10.2 |
Limitation of Liability | 35 | ||||||
| 10.3 |
Indemnification | 35 | ||||||
| 10.4 |
Right to Consult Counsel | 36 | ||||||
| 10.5 |
Compensation and Reimbursement | 36 | ||||||
| 10.6 |
Warrant Agent May Hold Company Securities | 36 | ||||||
| 10.7 |
Resignation and Removal; Appointment of Successor | 36 | ||||||
| 10.8 |
Appointment of Countersigning Agent | 37 | ||||||
| 11. |
Notices | 38 | ||||||
| 11.1 |
Notices Generally | 38 | ||||||
| 11.2 |
Required Notices to Holders | 40 | ||||||
| 12. |
Information Rights | 41 | ||||||
| 13. |
Inspection | 41 | ||||||
| 14. |
Amendments | 42 | ||||||
| 15. |
Waivers | 43 | ||||||
| 16. |
Successors | 43 | ||||||
| 17. |
Headings | 43 | ||||||
| 18. |
Counterparts | 43 | ||||||
| 19. |
Severability | 43 | ||||||
| 20. |
Persons Benefiting | 43 | ||||||
| 21. |
Applicable Law | 44 | ||||||
| 22. |
Entire Agreement | 44 | ||||||
| 23. |
Force Majeure | 44 | ||||||
| 24. |
Further Assurances | 44 | ||||||
| 25. |
Confidentiality | 44 | ||||||
| EXHIBITS | ||
| Exhibit A |
Form of Warrant Statement | |
| Exhibit B |
Form of Tranche 2 Warrant Certificate | |
ii
TRANCHE 2 WARRANT AGREEMENT
This Tranche 2 Warrant Agreement (as may be supplemented, amended or amended and restated pursuant to the applicable provisions hereof, this “Agreement”), dated as of November 30, 2020, between Lonestar Resources US Inc., a Delaware corporation (and any Successor Company that becomes successor to the Company in accordance with Section 16) (the “Company”), Computershare Inc., a Delaware corporation (“Computershare”), and its wholly-owned subsidiary Computershare Trust Company, N.A., a federally chartered trust company (and any successor of such Warrant Agent appointed in accordance with the terms hereof) (collectively, the “Warrant Agent”). Capitalized terms that are used in this Agreement shall have the meanings set forth in Section 1 hereof.
WITNESSETH THAT:
WHEREAS, pursuant to the terms and conditions of the Joint Prepackaged Plan of Reorganization of Lonestar Resources US Inc. and Its Affiliate Debtors Under Chapter 11 of the Bankruptcy Code, Case No. 20-34805 (the “Plan”) relating to a reorganization with respect to the existing debt and other obligations of (i) the Company, (ii) Lonestar Resources America Inc., a Delaware corporation (“Lonestar”), and (iii) each other direct and indirect wholly-owned subsidiary (other than Boland Building, LLC) (collectively, the “Subsidiaries”) of the Company, under chapter 11 of title 11 of the United States Code (the “Bankruptcy Code”), the Company proposes to issue and deliver to holders of Allowed Prepetition RBL Claims (each term as defined in the Plan) that have voted to accept the Plan (the “Initial Holders”) the Warrants (as defined below) to purchase up to 555,555shares of Common Stock, subject to adjustment as provided herein, and the Warrant Certificates evidencing such Warrants;
WHEREAS, each Warrant shall entitle the registered owner thereof to purchase one share of Common Stock, subject to adjustment as provided herein;
WHEREAS, the Warrants and the Common Stock issuable upon exercise of the Warrants are being issued in an offering in reliance on the exemption from the registration requirements of the Securities Act (as defined below) afforded by Section 1145 of the Bankruptcy Code and of any applicable state securities or “blue sky” laws; and
WHEREAS, the Company desires that the Warrant Agent act on behalf of the Company, and the Warrant Agent is willing to so act, in connection with the issuance, exchange, transfer, substitution and exercise of Warrants.
NOW THEREFORE, in consideration of the mutual agreements herein contained, the Company and the Warrant Agent agree as follows:
1. Definitions.
“Action” has the meaning set forth in Section 11.2.
“Adjustment Events” has the meaning set forth in Section 5.1.
“Affiliate” of any specified Person, means any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified Person. For the purposes of this definition, “control” when used with respect to any Person means the power to direct the management and policies of such specified Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise, and the terms “controlling” and “controlled” have meanings correlative to the foregoing.
“Agent Members” has the meaning set forth in Section 2.4(b).
“Agreement” has the meaning set forth in the preamble hereto.
“Applicable Procedures” means, with respect to any transfer or exchange of, or exercise of any Warrants evidenced by, any Global Warrant Certificate, the rules and procedures of the Depositary that apply to such transfer, exchange or exercise.
“Appropriate Officer” means the Chairman of the Board of Directors, the Chief Executive Officer, the principal operating officer, the principal financial officer and any Vice President (including the officers or persons with equivalent responsibilities) of the Company.
“Bankruptcy Code” has the meaning set forth in the recitals hereto.
“BDO” means BDO USA, LLP.
“Board of Directors” means either the board of directors of the Company or any duly authorized committee of that board.
“Book-Entry Warrants” means Warrants issued by book-entry registration on the Warrant Register, evidenced by the Warrant Statements.
“Business Day” means each Monday, Tuesday, Wednesday, Thursday and Friday which is not a legal holiday in the State of New York, or a day on which banking institutions and trust companies in the state in which the Corporate Agency Office is located are authorized or obligated by law, regulation or executive order to close.
“Bylaws” means the Second Amended and Restated Bylaws of the Company, as amended from time to time.
“Capital Expenditures” means, in respect of any Person, for any period, the aggregate (determined without duplication) of all exploration and development expenditures and costs that are capital in nature and any other expenditures that are capitalized on the balance sheet of such Person in accordance with GAAP.
“Cashless Exercise” has the meaning set forth in Section 3.7.
“Cashless Exercise Current Market Price” means the Current Market Price of the Common Stock on the Exercise Date with respect to any Cashless Exercise.
“Cashless Exercise Warrant” has the meaning set forth in Section 3.7.
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“Certificate of Incorporation” means the Amended and Restated Certificate of Incorporation of the Company, as filed with the Secretary of State of the State of Delaware on the date hereof, as amended from time to time.
“Commission” means the Securities and Exchange Commission, or any other federal agency at the time administering the Securities Act or the Exchange Act, whichever is the relevant statute for the particular purpose.
“Common Stock” means the Common Stock, par value $0.001 per share, of the Company.
“Company” means the company identified in the preamble hereof, or any successor to the Company.
“Company Order” means a written request or order signed in the name of the Company by Chairman of the Board of Directors, the Chief Executive Officer, the principal operating officer, the principal financial officer, any Vice President, the Treasurer and the Secretary (including the officers or persons with equivalent responsibilities), and delivered to the Warrant Agent.
“Corporate Agency Office” has the meaning set forth in Section 8.
“corporation” means a corporation, association, company (including limited liability company), joint-stock company, business trust or other similar entity.
“Countersigning Agent” means any Person authorized by the Warrant Agent to act on behalf of the Warrant Agent to countersign Warrant Statements and Warrant Certificates.
“Credit Agreement” means the Amended and Restated Credit Agreement dated as of November 30, 2020 (as amended, modified, or supplemented from time to time), by and among the Company, Lonestar, Citibank, N.A. and the lenders party thereto.
“Current Market Price” means the per share price of Common Stock on any date herein specified, in an amount equal to (i) for the purpose of any computation under this Agreement (except under Section 5.2), the Equity Value on such date divided by the number of shares of Common Stock then outstanding, or (ii) for the purposes of any computation under Section 5.2, the Quoted Price for such date or, if such date is not a Trading Day, for the next preceding Trading Day.
“Cut-Off Time” means 5:00 p.m., New York City time, on the day prior to the consummation of a Sale of the Company.
“Definitive Warrant Certificate” means a Warrant Certificate registered in the name of the Holder thereof that does not bear the Global Warrant Legend and that does not have a “Schedule of Decreases of Warrants” attached thereto.
“Depositary” means DTC and its successors as depositary hereunder.
“DTC” means The Depository Trust Company.
3
“Equity Value” means on any date of determination, the equity value of the Company determined as follows:
(1) if on such date the Common Stock is listed or admitted to trading on any U.S. national securities exchange or traded and quoted in the over-the-counter market in the United States, the product of (x) the average of the Quoted Prices for the 20 consecutive Trading Days ending on the Trading Day that is or next precedes the date in question and (y) the number of shares of Common Stock then outstanding; and
(2) if on such date the Common Stock is not listed or admitted to trading on any U.S. national securities exchange or traded and quoted in the over-the-counter market in the United States, the sum, as of the most recent Valuation Date, of:
(A) (x) with respect to the PDP Reserves, the Present Value of such reserves using a discount rate equal to 12%, (y) with respect to the PDNP Reserves, the Present Value of such reserves using a discount rate equal to 15% and (z) with respect to the PUD Reserves and Probable and Possible Reserves, the Present Value of such reserves using a discount rate equal to 20%, plus
(B) unrestricted cash on hand, plus
(C) the amount, if any, by which the aggregate value of the Company’s and its Subsidiaries’ current assets (determined in accordance with GAAP but excluding cash, cash equivalents and other current assets from risk management activities) (“Current Assets”) exceeds, without duplication, the aggregate value, determined in accordance with GAAP, of the sum of the Company’s and its Subsidiaries’ (i) current liabilities, (ii) guaranty obligations with respect to any current liabilities, (iii) the current portion of any long-term debt, (iv) the current liabilities plugging and abandonment obligations and (v) any other current liabilities from risk management activities (“Current Liabilities”), plus
(D) the positive mark-to-market value under the Company’s and its Subsidiaries commodity derivative agreements, less
(E) the amount, if any, by which the value of the Company’s and its Subsidiaries’ Current Liabilities exceeds the value of their Current Assets, less
(F) the book value of total long-term debt, and less
(G) the negative mark-to-market value (or obligations) under the Company’s and its Subsidiaries commodity derivative agreements.
(such amount, the “Original Value”); provided, however, if any Holder believes in good faith that the Original Value is not an accurate reflection of the fair market equity value of the Common Stock as of such date of determination, and following good faith discussions such dispute or challenge cannot be settled among the Holders and the Company, then the Equity Value shall be determined by an appraiser jointly selected by such Holder or Holders and the Company. In the event the parties, acting in good faith, cannot mutually agree upon the selection of an appraiser within 15 Business Days of the dispute or challenge, each party shall appoint its appraiser and the
4
Equity Value shall be equal to the average of the two fair market values determined by the two appraisers. Such third-party appraiser’s valuation or the average of the appraisers’ valuations, as the case may be (the “New Value”), if higher than the Original Value, shall be binding upon all parties absent demonstrable error.
“Exchange Act” means the Securities Exchange Act of 1934 and any statute successor thereto, in each case, as amended from time to time.
“Exercise Conditions” means the conditions that (a) as of the first anniversary of the Original Issue Date the Second Out Term Loan Facility (as defined in the Plan) shall not have been paid in full and (b) at any time on or after the first anniversary of the Original Issue Date, the Equity Value shall have been greater than the Minimum Equity Value.
“Exercise Date” has the meaning set forth in Section 3.2(f).
“Exercise Form” has the meaning set forth in Section 3.2(c).
“Exercise Period” means the period from and including the first anniversary of Original Issue Date to and including the Expiration Date.
“Exercise Price” means the exercise price of $0.001 per share of Common Stock, subject to adjustment as provided in Section 5.1.
“Expiration Date” means the earliest to occur of (i) the Scheduled Expiration Date, (ii) the Sale Date in the event a Sale of the Company occurs and (iii) a Winding Up.
“GAAP” means generally accepted accounting principles in the United States of America as in effect from time to time.
“Global Warrant Certificate” means a Warrant Certificate deposited with or on behalf of and registered in the name of the Depositary or its nominee, that bears the Global Warrant Legend and that has the “Schedule of Decreases of Warrants” attached thereto.
“Governmental Authority” means the government of the United States of America, any other nation or any political subdivision thereof, whether state or local, and any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government (including any supra-national bodies such as the European Union or the European Central Bank).
“Global Warrant Legend” means the legend set forth in Section 2.4(a).
“Holder” means any Person in whose name at the time any Warrant, whether evidenced in book entry form or evidenced by a Warrant Certificate, is registered upon the Warrant Register and, when used with respect to any Book-Entry Warrant or Warrant Certificate, the Person in whose name the Warrants evidenced by the applicable Warrant Statement or Warrant Certificate is registered in the Warrant Register.
5
“Hydrocarbon Interests” means all rights, titles, interests and estates now or hereafter acquired in and to oil and gas leases, oil, gas and mineral leases (excluding coal and timber), or other liquid or gaseous hydrocarbon leases, mineral fee interests, overriding royalty and royalty interests, net profit interests and production payment interests, including any reserved or residual interests of whatever nature. Unless otherwise indicated herein, each reference to the term “Hydrocarbon Interests” shall mean Hydrocarbon Interests of the Company and its Subsidiaries.
“Hydrocarbons” means oil, gas, casinghead gas, drip gasoline, natural gasoline, condensate, distillate, liquid hydrocarbons, gaseous hydrocarbons and all products refined or separated therefrom. Unless otherwise indicated herein, each reference to the term “Hydrocarbons” shall mean Hydrocarbons of the Company and its Subsidiaries.
“Initial Holders” has the meaning set forth in the recitals hereto.
“Initial Reserve Report” means the report prepared by a chief engineer of Lonestar, dated as of November 1, 2020, with respect to all Hydrocarbon Interests.
“Interim Redetermination” has the meaning set forth in the Credit Agreement.
“Management Incentive Plan” has the meaning set forth in the Plan.
“Minimum Equity Value” means $100 million.
“MIP Equity” has the meaning set forth in the Plan.
“Original Issue Date” means November 30, 2020, the date on which Warrants are originally issued under this Agreement.
“outstanding” when used with respect to any Warrants, means, as of the time of determination, all Warrants theretofore originally issued under this Agreement except (i) Warrants that have been exercised pursuant to Section 3.2(a), (ii) Warrants that have expired pursuant to Section 3.2(b) or Section 4 and (iii) Warrants that have otherwise been acquired by the Company; provided, however, that in determining whether the Holders of the requisite amount of the outstanding Warrants have given any request, demand, authorization, direction, notice, consent or waiver under the provisions of this Agreement, Warrants held directly or beneficially by the Company or any Subsidiary or Affiliate of the Company or any of their respective employees shall be disregarded and deemed not to be outstanding.
“Payoff Documentation” means with respect to any payment or delivery of Transaction Consideration to any Holder under Section 5.1(i), the timely delivery by such Holder to the Warrant Agent of Warrant Certificates for any Warrants in respect of such payment or delivery (if such Warrants are certificated) and any other letters of transmittal and other customary documentation as may be reasonably requested by the Company and provided in any notice to such Holder, including such documentation as may be specified in the definitive documentation providing for a Sale of the Company.
6
“Person” means any individual, corporation, limited liability company, partnership, joint venture, trust, any other entity, unincorporated organization or government or any agency or political subdivision thereof.
“Plan” has the meaning set forth in the recitals hereto.
“Property” means any interest in any kind of property or asset, whether real, personal or mixed, or tangible or intangible, including, without limitation, cash, securities, accounts and contract rights.
“PDP Reserves” means the Hydrocarbon Interests designated as “proved developed producing” (in accordance with the Definitions for Oil and Gas Reserves approved by the Board of Directors of the Society of Petroleum Engineers, Inc. from time to time) in the most recently delivered Reserve Report.
“PDNP Reserves” means the Hydrocarbon Interests designated as “proved developed non-producing” (in accordance with the Definitions for Oil and Gas Reserves approved by the Board of Directors of the Society of Petroleum Engineers, Inc. from time to time) in the most recently delivered Reserve Report.
“Present Value” means, as of the most recent Valuation Date, the value of all Hydrocarbon Interests:
(1) calculated using Strip Prices for crude oil (WTI Cushing), for natural gas liquids (Mont Belvieu) and natural gas (Henry Hub), with such price held flat for each subsequent year, quoted on the New York Mercantile Exchange (or its successor) on such date of determination;
(2) discounted using a specified annual discount rate;
(3) as set forth in the Reserve Report as of such Valuation Date;
(4) in all cases, adjusted in good faith by the Company to give pro forma effect to all acquisitions, extensions, discoveries and other upward revisions and all dispositions, production and downward revisions, in each case, since the date of the applicable Reserve Report; and
(5) in any event, excluding the value of any well and/or location where Hydrocarbon Interests exist, if the Present Value thereof, calculated in accordance with the terms herein, would be equal to zero or a negative value.
“Probable and Possible Reserves” means the Hydrocarbon Interests designated as “probable” or “possible” (in accordance with the Definitions for Oil and Gas Reserves approved by the Board of Directors of the Society of Petroleum Engineers, Inc. from time to time) in the most recently delivered Reserve Report.
“Proved Reserves” means the Hydrocarbon Interests designated as “proved developed producing”, “proved developed non-producing”, proved undeveloped” (in accordance with the Definitions for Oil and Gas Reserves approved by the Board of Directors of the Society of Petroleum Engineers, Inc. from time to time) in the most recently delivered Reserve Report.
7
“PUD Reserves” means the Hydrocarbon Interests designated as “proved undeveloped” (in accordance with the Definitions for Oil and Gas Reserves approved by the Board of Directors of the Society of Petroleum Engineers, Inc. from time to time) in the most recently delivered Reserve Report.
“Quoted Price” means the volume-weighted average price on the principal U.S. national securities exchange on which the Common Stock is listed or admitted to trading for trading hours of the regular trading session (including any extensions thereof), determined without regard to pre-open or after-hours trading or any other trading outside of the trading hours of the regular trading session (including any extensions thereof) or, if shares of the Common Stock are not listed or admitted to trading on any U.S. national securities exchange, the average of the closing bid and asked prices in the over the counter market in the United States as furnished by any New York Stock Exchange member firm that shall be selected from time to time (or if such volume-weighted average price or the average of the closing bid and asked price is unavailable, the fair market value of one share of Common Stock on such Trading Day reasonably determined by a nationally recognized financial institution appointed by the Company for such purpose).
“Recipient” has the meaning set forth in Section 3.2(e).
“Reorganization Event” means (A) any recapitalization, reclassification, redenomination or other change to the Common Stock (other than (x) changes solely resulting from a subdivision or combination of the Common Stock, (y) a change only in par value and (z) stock splits and stock combinations that do not involve the issuance of any other series or class of securities); and (B) any consolidation, merger, amalgamation, combination or binding or statutory share exchange involving the Company; and, in each case, does not give rise to a Sale of the Company and as a result of which shares of Common Stock are converted into, or are exchanged for, or represent solely the right to receive Transaction Consideration.
“Required Warrant Holders” means Holders of Book-Entry Warrants and Warrant Certificates evidencing a majority of the then-outstanding Warrants.
“Reserve Report” means the Initial Reserve Report and each other report, in form and substance reasonably satisfactory to the Holders, setting forth, as of each Valuation Date, the oil and gas reserves attributable to the Hydrocarbons Interests, together with a projection of the rate of production and future net income, taxes, operating expenses, Present Value of Proved Reserves, and Probable and Possible Reserves (each discounted at the respective rates applicable in the definition of Equity Value) and capital expenditures with respect thereto as of such date.
“Sale Date” means the date on which a Sale of the Company is consummated.
“Sale of the Company” means any transaction or series of related transactions constituting any direct or indirect sale or other disposition (including, without limitation, by way of stock sale, merger, consolidation or similar transactions) of at least a majority of the equity securities of the Company or of all or substantially all of the consolidated assets or business of the Company and its Subsidiaries, taken as a whole.
“Scheduled Expiration Date” means November 30, 2023 (the third (3rd) anniversary of the Original Issue Date) or, if not a Business Day, then the next Business Day thereafter.
8
“Securities Act” means the Securities Act of 1933, as amended.
“Signature Guarantee” has the meaning set forth in Section 2.5.
“Strip Price” means, as of any date of determination, the forward month prices as of the first Business Day of the month in which such prices are determined for the most comparable hydrocarbon commodity applicable to such future production month for a ten-year period (or such shorter period if forward month prices are not quoted for a reasonably comparable hydrocarbon commodity for the full ten year period), with such prices escalated at 2% each year thereafter based on the last quoted forward month price of such period, as such prices are (i) quoted on the New York Mercantile Exchange (or its successor) as of the determination date and (ii) as adjusted for any basis differential as of the date of determination.
“Subsidiaries” has the meaning set forth in recitals hereto.
“Trading Day” means a day on which trading in the Common Stock (or other applicable security) generally occurs on the principal exchange or market on which shares of the Common Stock (or other applicable security) are then listed or traded; provided that if shares of the Common Stock (or other applicable security) are not so listed or traded, “Trading Day” means a Business Day.
“Transaction Consideration” means, with respect to any transaction which is either a Sale of the Company or Reorganization Event, the cash, stock, shares or other securities or property, or any combination thereof, payable to each holder of Common Stock in exchange for, or upon conversion of, shares of Common Stock (or otherwise into which such shares of Common Stock are changed into) in such transaction; provided, that (a) no contingent or escrowed property shall be treated as part of Transaction Consideration unless and until such time as such property is actually paid to such holders of Common Stock (and any contingent rights with respect thereto shall be treated as valueless unless and until such payment occurs); and (b) in the event holders of Common Stock have the opportunity to elect the form of consideration to be received in such transaction, the type and amount of consideration paid or payable to each holder shall be deemed, for purposes of this Agreement, to be the weighted average per share of the types and amounts of consideration received by all such holders in such transaction. For all purposes under this Agreement, the value of any Transaction Consideration shall be determined reasonably and in good faith by the Company, using where applicable the Current Market Price of any applicable securities received with respect to a share of Common Stock.
“Unit of Transaction Consideration” means, with respect to a Sale of the Company or Reorganization Event, the amount and kind of Transaction Consideration (including, without limitation, cash) that a holder of one (1) share of Common Stock would be entitled to receive on account of such Sale of the Company or Reorganization Event (without giving effect to any arrangement not to issue or deliver a fractional portion of any security or other property).
“Valuation Date” means each January 1, April 1, July 1 and October 1 during the Exercise Period.
“Warrant Agent” has the meaning set forth in the preamble hereof.
9
“Warrant Certificates” means those certain warrant certificates evidencing the Warrants, substantially in the form set forth in Exhibit B attached hereto, which, for the avoidance of doubt, are either Global Warrant Certificates or Definitive Warrant Certificates.
“Warrant Register” means the register established by the Warrant Agent set forth in Section 2.3.
“Warrant Statement” means any statement issued by the Warrant Agent from time to time to a registered Holder of Book-Entry Warrants reflecting such book-entry position, substantially in the form of Exhibit A.
“Warrants” means those certain Tranche 2 warrants to purchase initially up to an aggregate of 555,555 shares of Common Stock at the Exercise Price, subject to adjustment pursuant to Section 5, issued hereunder.
“Warrant Shares” means the shares of Common Stock issuable upon exercise of the Warrants.
“Winding Up” has the meaning set forth in Section 4.
2. Warrant Certificates; Book-Entry Warrants.
2.1 Original Issuance of Warrants.
(a) On the Original Issue Date, the Company shall issue to each Initial Holder its pro-rata share of the Warrants under the Plan by (i) book-entry registration on the books of the Warrant Agent (the “Book-Entry Warrants”), registered in the names of the Initial Holders of such Warrants and, upon the Company’s written instruction to the Warrant Agent, evidenced by Warrant Statements issued to such Initial Holders and/or (ii) by delivery of one or more Definitive Warrant Certificates evidencing Warrants, which shall be executed by the Company and delivered to the Warrant Agent for countersignature, and the Warrant Agent shall, upon receipt of a Company Order and at the direction of the Company set forth therein, countersign (in manual or facsimile form) and deliver such Definitive Warrant Certificates for original issuance to the Initial Holders thereof; in each case, in accordance with the terms of this Agreement.
(b) Each Warrant Statement or Warrant Certificate shall evidence the number of Warrants specified therein, and each Warrant evidenced thereby shall represent the right, subject to the provisions contained herein and therein, to purchase one share of Common Stock, subject to adjustment as provided in Section 5.
2.2 Form of Warrants.
(a) The Warrants shall initially be issued in book-entry registration on the books and records of the Warrant Agent and evidenced by the Warrant Statements, in substantially the form set forth in Exhibit A hereto, and/or Warrant Certificates in registered form by certificates substantially in the form set forth in Exhibit B hereto. The Warrant Statements and the Warrant Certificates shall be dated the date on which countersigned by the Warrant Agent, shall have such insertions as are appropriate or required or permitted by this Agreement and may have such letters,
10
numbers or other marks of identification and such legends and endorsements typed, stamped, printed, lithographed or engraved thereon (which do not impact the Warrant Agent’s rights, duties or immunities) as the officers of the Company executing the same may approve (execution thereof to be conclusive evidence of such approval) and as are not inconsistent with the provisions of this Agreement, or as may be required to comply with any law or with any rule or regulation pursuant thereto or with any rule or regulation of any securities exchange on which the Warrants may be listed, or to conform to usage.
2.3 Execution and Delivery of Warrant Certificates and Book-Entry Warrants.
(a) Upon written order of the Company, the Warrant Agent shall (i) register in the Warrant Register the Book-Entry Warrants and (ii) upon receipt of Warrant Certificates duly executed on behalf of the Company, countersign (either manually or by facsimile signature) each such Warrant Certificate. Such written order of the Company shall specifically state the number of Warrants that are to be issued as Book-Entry Warrants and the number of Warrants that are to be issued as Warrant Certificates.
(b) The Company shall cause to be kept at the office or offices of the Warrant Agent designated for such purpose a warrant register (the “Warrant Register”) in which, subject to such reasonable regulations as it may prescribe, it shall register the Book-Entry Warrants as well as any Warrant Certificates and exchanges and transfers of outstanding Warrants in accordance with the procedures set forth in Section 2.4, Section 2.5 and Section 2.6 of this Agreement. No service charge shall be made for any exchange or registration of transfer of the Warrants, but the Company may require payment of a sum sufficient to cover any stamp or other tax or other governmental charge that may be imposed on the registered Holder in connection with any such exchange or registration of transfer. The Warrant Agent shall have no obligation to effect an exchange or register a transfer unless and until any payments required by the immediately preceding sentence have been made.
(c) The Warrant Agent is hereby authorized to countersign and deliver Warrant Certificates and Warrant Statements as required by Section 2.1 or by Section 2.3, Section 3.2(d), Section 6 or Section 8.
(d) The Warrant Certificates shall be executed in the corporate name and on behalf of the Company by the Appropriate Officer under corporate seal reproduced thereon and attested to by the Secretary of the Company, either manually or by facsimile signature printed thereon. The Warrant Certificates shall be countersigned, either by manual or facsimile signature, by the Warrant Agent and shall not be valid for any purpose unless so countersigned. In case any officer of the Company whose signature shall have been placed upon any of the Warrant Certificates shall cease to be such officer of the Company before countersignature by the Warrant Agent and issue and delivery thereof, such Warrant Certificates may, nevertheless, be countersigned by the Warrant Agent and issued and delivered with the same force and effect as though such person had not ceased to be such officer of the Company, and any Warrant Certificate may be signed on behalf of the Company by such person as, at the actual date of the execution of such Warrant Certificate, shall be a proper officer of the Company, although at the date of the execution of this Agreement any such person was not such officer.
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2.4 Global Warrant Certificates.
(a) Any Global Warrant Certificate shall bear the legend substantially in the form set forth in Exhibit B hereto (the “Global Warrant Legend”).
(b) So long as a Global Warrant Certificate is registered in the name of the Depositary or its nominee, members of, or participants in, the Depositary (“Agent Members”) shall have no rights under this Agreement with respect to the Warrants evidenced by such Global Warrant Certificate held on their behalf by the Depositary or its custodian, and the Depositary may be treated by the Company, the Warrant Agent and any agent of the Company or the Warrant Agent as the absolute owner of such Warrants, and as the sole Holder of such Warrant Certificate, for all purposes. Accordingly, any such Agent Member’s beneficial interest in such Warrants will be shown only on, and the transfer of such interest shall be effected only through, records maintained by the Depositary or its nominee or its Agent Members, and neither the Company nor the Warrant Agent shall have any responsibility or liability with respect to such records maintained by the Depositary or its nominee or its Agent Members. Notwithstanding the foregoing, nothing herein shall prevent the Company, the Warrant Agent or any agent of the Company or the Warrant Agent from giving effect to any written certification, proxy or other authorization furnished by the Depositary or impair, as between the Depositary and its Agent Members, the operation of customary practices governing the exercise of the rights of a holder of any security.
(c) Any holder of a beneficial interest in Warrants evidenced by a Global Warrant Certificate registered in the name of the Depositary or its nominee shall, by acceptance of such beneficial interest, agree that transfers of beneficial interests in the Warrants evidenced by such Global Warrant Certificate may be effected only through a book-entry system maintained by the Depositary as the Holder of such Global Warrant Certificate (or its agent), and that ownership of a beneficial interest in Warrants evidenced thereby shall be reflected solely in such book-entry form.
(d) Transfers of a Global Warrant Certificate registered in the name of the Depositary or its nominee shall be limited to transfers in whole, and not in part, to the Depositary, its successors, and their respective nominees except as set forth in Section 2.4(e). Interests of beneficial owners in a Global Warrant Certificate registered in the name of the Depositary or its nominee shall be transferred in accordance with the Applicable Procedures of the Depositary.
(e) A Global Warrant Certificate registered in the name of the Depositary or its nominee shall be exchanged for Definitive Warrant Certificates only if the Depositary (i) has notified the Company that it is unwilling or unable to continue as or ceases to be a clearing agency registered under Section 17A of the Exchange Act and (ii) a successor to the Depositary registered as a clearing agency under Section 17A of the Exchange Act is not able to be appointed by the Company within 90 days or the Depositary is at any time unwilling or unable to continue as Depositary and a successor to the Depositary is not able to be appointed by the Company within 90 days. In any such event, each Global Warrant Certificate registered in the name of the Depositary or its nominee shall be surrendered to the Warrant Agent for cancellation in accordance with Section 3.6, and the Company shall execute, and the Warrant Agent shall countersign and deliver, upon the Company’s written instruction, to each beneficial owner identified by the Depositary, in exchange for such beneficial owner’s beneficial interest in such Global Warrant
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Certificate, Definitive Warrant Certificates evidencing, in the aggregate, the number of Warrants theretofore represented by such Global Warrant Certificate with respect to such beneficial owner’s respective beneficial interest. Any Definitive Warrant Certificate delivered in exchange for an interest in a Global Warrant Certificate pursuant to this Section 2.4(e) shall not bear the Global Warrant Legend. Interests in any Global Warrant Certificate may not be exchanged for Definitive Warrant Certificates other than as provided in this Section 2.4(e).
(f) The holder of a Global Warrant Certificate registered in the name of the Depositary or its nominee may grant proxies and otherwise authorize any Person, including Agent Members and Persons that may hold interests through Agent Members, to take any action which a Holder of a Warrant Certificate is entitled to take under this Agreement or such Global Warrant Certificate.
(g) Each Global Warrant Certificate will evidence such of the outstanding Warrants as will be specified therein and each shall provide that it evidences the aggregate number of outstanding Warrants from time to time endorsed thereon and that the aggregate number of outstanding Warrants evidenced thereby may from time to time be reduced, to reflect exercises or expirations. Any endorsement of a Global Warrant Certificate to reflect the amount of any decrease in the aggregate number of outstanding Warrants evidenced thereby will be made by the Warrant Agent (i) in the case of an exercise, in accordance with the Applicable Procedures as required by Section 3.2(c) or (ii) in the case of an expiration, in accordance with Section 3.2(b).
(h) The Company initially appoints DTC to act as Depositary with respect to any Global Warrant Certificates.
(i) Every Warrant Certificate authenticated and delivered in exchange for, or in lieu of, a Global Warrant Certificate or any portion thereof, pursuant to this Section 2.4 or Section 8 or Section 10, shall be authenticated and delivered in the form of, and shall be, a Global Warrant Certificate, and a Global Warrant Certificate may not be exchanged for a Definitive Warrant Certificate, in each case, other than as provided in Section 2.4(e). Whenever any provision herein refers to issuance by the Company and countersignature and delivery by the Warrant Agent of a new Warrant Certificate in exchange for the portion of a surrendered Warrant Certificate that has not been exercised, in lieu of the surrender of any Global Warrant Certificate and the issuance, countersignature and delivery of a new Global Warrant Certificate in exchange therefor, the Warrant Agent, on the Company’s written instruction, may endorse such Global Warrant Certificate to reflect a reduction in the number of Warrants evidenced thereby in the amount of Warrants so evidenced that have been so exercised.
(j) Beneficial interests in any Global Warrant Certificate may be transferred to Persons who take delivery thereof in the form of a beneficial interest in the same Global Warrant Certificate in accordance with the Applicable Procedures.
(k) At such time as all Warrants evidenced by a particular Global Warrant Certificate have been exercised or expired in whole and not in part, such Global Warrant Certificate shall, if not in custody of the Warrant Agent, be surrendered to or retained by the Warrant Agent for cancellation in accordance with Section 3.6.
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2.5 Transfer and Exchange of Warrants represented by Definitive Warrant Certificates or Book-Entry Warrants. When Warrants represented by Definitive Warrant Certificates or Book-Entry Warrants are presented to the Warrant Agent with a written request (i) to register the transfer of the Warrants; or (ii) to exchange such Warrants for an equal number of Warrants represented by Definitive Warrant Certificates or Book-Entry Warrants of other authorized denominations, then the Warrant Agent shall register the transfer or make the exchange as requested if its customary requirements for such transactions are met; provided, however, that the Warrant Agent has received a written instruction of transfer in form satisfactory to the Warrant Agent, properly completed and duly executed by the registered Holder thereof or by his attorney, duly authorized in writing and accompanied by a signature guarantee from an eligible guarantor institution participating in a signature guarantee program approved by the Securities Transfer Association (a “Signature Guarantee”).
2.6 Restrictions on Exchange or Transfer of a Book-Entry Warrant or a Warrant Represented by a Definitive Warrant Certificate for a Beneficial Interest in a Global Warrant Certificate. A Book-Entry Warrant or a Warrant Represented by a Definitive Warrant Certificate may not be exchanged for a beneficial interest in a Global Warrant Certificate unless the Warrants are eligible to be cleared or settled in DTC. Upon receipt by the Warrant Agent of appropriate instruments of transfer with respect to a Book-Entry Warrant or a Warrant represented by a Definitive Warrant Certificate, in form satisfactory to the Warrant Agent, together with written instructions directing the Warrant Agent to make, or to direct the Depositary to make, an endorsement on the Global Warrant Certificate to reflect an increase in the number of Warrants represented by the Global Warrant Certificate equal to the number of Warrants represented by such Book-Entry Warrant, then the Warrant Agent shall cancel such Book-Entry Warrant or Warrants represented by Definitive Warrant Certificates on the Warrant Register, increase accordingly the number of Warrants on the Warrant Register registered in the name of the registered owner of the Global Warrant Certificate and cause, or direct the Depositary to cause, in accordance with the standing instructions and procedures existing between the Depositary and the Warrant Agent, the number of Warrants represented by the Global Warrant Certificate to be increased accordingly. If no Global Warrant Certificate is then outstanding, the Company shall issue and the Warrant Agent shall countersign a new Global Warrant Certificate representing the appropriate number of Warrants.
3. Exercise and Expiration of Warrants.
3.1 Right to Acquire Common Stock Upon Exercise. Each duly issued Warrant shall entitle the Holder thereof, subject to the provisions thereof and of this Agreement, to acquire from the Company, for each Warrant evidenced thereby, one share of Common Stock at the Exercise Price, subject to adjustment as provided in this Agreement. The Exercise Price, and the number of shares of Common Stock to be issued upon exercise of each Warrant, shall be adjusted from time to time as required by Section 5.1.
3.2 Exercise and Expiration of Warrants.
(a) Exercise of Warrants. Subject to the terms and conditions set forth herein and satisfaction of the Exercise Conditions, a Holder of a Warrant Certificate may exercise all or any whole number of the Warrants evidenced thereby, on any Business Day from and after the Original Issue Date until 5:00 p.m., New York time, on the Expiration Date, for the shares of Common Stock obtainable thereunder.
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(b) Expiration of Warrants. The Warrants, to the extent not exercised prior thereto, shall automatically expire, terminate and become void as of 5:00 p.m., New York time, on the Expiration Date. No further action of any Person (including by, or on behalf of, any Holder, the Company, or the Warrant Agent) shall be required to effectuate the expiration of Warrants pursuant to this Section 3.2(b).
(c) Method of Exercise. In order for a Holder to exercise all or any of the Warrants held by such Holder, the Holder thereof must (i) (x) in the case of a Global Warrant Certificate, deliver to the Warrant Agent an exercise form for the election to exercise such Warrants substantially in the form set forth in Exhibit B hereto (an “Exercise Form”), setting forth the number of Warrants being exercised and, if applicable, whether Cashless Exercise is being elected with respect thereto, and otherwise properly completed and duly executed by the Holder thereof and deliver such Warrants by book-entry transfer through the facilities of the Depositary to the Warrant Agent in accordance with the Applicable Procedures and otherwise comply with the Applicable Procedures in respect of the exercise of such Warrants, (y) in the case of a Definitive Warrant Certificate, at the Corporate Agency Office, (I) deliver to the Warrant Agent an Exercise Form, setting forth the number of Warrants being exercised and, if applicable, whether Cashless Exercise is being elected with respect thereto, and otherwise properly completed and duly executed by the Holder thereof as well as any such other information the Warrant Agent may reasonably require, and (II) surrender to the Warrant Agent the Definitive Warrant Certificate evidencing such Warrants and or (z) in the case of a Book-Entry Warrant, at the Corporate Agency Office, deliver to the Warrant Agent an Exercise Form, setting forth the number of Warrants being exercised and, if applicable, whether Cashless Exercise is being elected with respect thereto, and otherwise properly completed and duly executed by the Holder thereof as well as any such other information the Warrant Agent may reasonably require; and (ii) pay to the Warrant Agent an amount equal to (x) all taxes and charges required to be paid by the Holder, if any, pursuant to Section 3.4 prior to, or concurrently with, exercise of such Warrants and (y) except in the case of a Cashless Exercise, the aggregate of the Exercise Price in respect of each share of Common Stock into which such Warrants are exercisable.
(d) Partial Exercise. If fewer than all the Warrants represented by a Warrant Certificate are exercised, (i) in the case of exercise of Warrants evidenced by a Global Warrant Certificate, the Warrant Agent shall cause the custodian of DTC to endorse the “Schedule of Decreases of Warrants” attached to such Global Warrant Certificate to reflect the Warrants being exercised, (ii) in the case of exercise of Warrants evidenced by a Definitive Warrant Certificate, such Definitive Warrant Certificate shall be surrendered and a new Definitive Warrant Certificate of the same tenor and for the number of Warrants which were not exercised shall be executed by the Company, and (iii) in the case of Book-Entry Warrants, the Warrant Agent shall adjust such Holder’s Warrant Statement to reflect the Warrants being exercised. The Warrant Agent shall countersign any new Definitive Warrant Certificate, registered in such name or names, subject to the provisions of Section 8 regarding registration of transfer and payment of governmental charges in respect thereof, as may be directed in writing by the Holder, and shall deliver a new Warrant Statement or Definitive Warrant Certificate to the Person or Persons in whose name such Warrants are is so registered. The Company, whenever required by the Warrant Agent, will supply the Warrant Agent with Definitive Warrant Certificates duly executed on behalf of the Company for such purpose.
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(e) Issuance of Common Stock. Upon due exercise of Warrants evidenced by any Warrant Statement or Warrant Certificate in conformity with the foregoing provisions of Section 3.2(c), the Warrant Agent shall, when actions specified in Section 3.2(c)(i) have been effected and any payment specified in Section 3.2(c)(ii) is received (as promptly confirmed in writing by the Company), shall deliver to the Company the Exercise Form received pursuant to Section 3.2(c)(i), deliver or deposit all funds received in accordance with Section 3.3. The Company shall thereupon, as promptly as practicable, and in any event within two (2) Business Days after the Exercise Date referred to below, (i) determine the number of shares of Common Stock issuable pursuant to exercise of such Warrants pursuant to Section 3.8 or, if Cashless Exercise applies, Section 3.7 and (ii) (x) in the case of exercise of Warrants evidenced by a Global Warrant Certificate, deliver or cause to be delivered to the Recipient (as defined below) in accordance with the Applicable Procedures shares of Common Stock in book-entry form to be so held through the facilities of DTC in an amount equal to, or, if the shares of Common Stock may not then be held in book-entry form through the facilities of DTC, shares of Common Stock in book entry form in an amount equal to, or duly executed certificates representing, or (y) in the case of exercise of Warrants evidenced by Warrant Statements or Definitive Warrant Certificates, execute or cause to be executed and deliver or cause to be delivered to the Recipient (as defined below) shares of Common Stock in book entry form in an amount equal to, or a certificate or certificates representing, in case of (x) and (y), the aggregate number of shares of Common Stock issuable upon such exercise (based upon the aggregate number of Warrants so exercised), as so determined, together with an amount in cash in lieu of any fractional share(s), if the Company so elects pursuant to Section 5.2. The shares of Common Stock in book-entry form or certificate or certificates representing shares of Common Stock so delivered shall be, to the extent possible, in such denomination or denominations as such Holder shall request in the applicable Exercise Form and shall be registered or otherwise placed in the name of, and delivered to, the Holder or, subject to Section 3.4, such other Person as shall be designated by the Holder in such Exercise Form (the Holder or such other Person being referred to herein as the “Recipient”).
(f) Time of Exercise. Each exercise of a Warrant shall be deemed to have been effected immediately prior to the close of business on the day on which each of the requirements for exercise of such Warrant specified in Section 3.2(c) has been duly satisfied (the “Exercise Date”). At such time, shares of Common Stock in book-entry form or the certificates for the shares of Common Stock issuable upon such exercise as provided in Section 3.2(e) shall be deemed to have been issued and, for all purposes of this Agreement, the Recipient shall, as between such Person and the Company, be deemed to be and entitled to all rights of the holder or record of such shares of Common Stock.
3.3 Application of Funds upon Exercise of Warrants. All funds received by the Warrant Agent under this Agreement that are to be distributed or applied by the Warrant Agent in the performance of services (the “Funds”) shall be held by Computershare, as agent for the Company, and deposited in one or more bank accounts to be maintained by Computershare in its name as agent for the Company. Until paid pursuant to the terms of this Agreement, Computershare will hold the Funds through such accounts in: deposit accounts of commercial banks with Tier 1 capital exceeding $1 billion or with an average rating above investment grade by S&P (LT Local Issuer
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Credit Rating), Moody’s (Long Term Rating) and Fitch Ratings, Inc. (LT Issuer Default Rating) (each as reported by Bloomberg Finance L.P.). The Warrant Agent shall have no responsibility or liability for any diminution of the Funds that may result from any deposit made by Computershare in accordance with this paragraph, including any losses resulting from a default by any bank, financial institution or other third party. Computershare may from time to time receive interest, dividends or other earnings in connection with such deposits. The Warrant Agent shall not be obligated to pay such interest, dividends or earnings to the Company, any holder or any other party. Computershare shall forward funds received for warrant exercises in a given month by the 5th Business Day of the following month by wire transfer to an account designated by the Company.
3.4 Payment of Taxes. The Company shall pay any and all taxes (other than income or withholding taxes) that may be payable in respect of the issue or delivery of Common Stock on exercise of Warrants pursuant hereto. The Company or the Warrant Agent shall not be required, however, to pay any tax or other charge imposed in respect of any transfer involved in the issue and delivery of Common Stock in book-entry form or any certificates for Common Stock or payment of cash or other property to any Recipient (other than, in the case of the Company, the Holder of the exercised Warrants), and in case of such transfer or payment, the Warrant Agent and the Company shall not be required to issue or deliver any share of Common Stock in book-entry form or any certificate or pay any cash until (a) such tax or charge has been paid or an amount sufficient for the payment thereof has been delivered to the Warrant Agent or the Company or (b) it has been established to the Company’s or Warrant Agent’s satisfaction that any such tax or other charge that is or may become due has been paid.
3.5 Withholding and Reporting Requirements. The Company shall comply with all applicable tax withholding and reporting requirements imposed by any Governmental Authority, and all distributions, including deemed distributions, pursuant to the Warrants will be subject to applicable withholding and reporting requirements. Notwithstanding any provision to the contrary, the Company and the Warrant Agent will be authorized to (i) take any actions that may be reasonably necessary or appropriate to comply with such withholding and reporting requirements, (ii) apply a portion of any cash distribution to be made under the Warrants to pay applicable withholding taxes, (iii) liquidate a portion of any non-cash distribution to be made under the Warrants to generate sufficient funds to pay applicable withholding taxes or (iv) establish any other mechanisms the Company believes are reasonable and appropriate, including requiring Holders to submit appropriate tax and withholding certifications (such as IRS Forms W-9 and the appropriate IRS Forms W-8, as applicable) and/or requiring Holders to pay the withholding tax amount to the Company in cash as a condition of receiving the benefit of any antidilution adjustment pursuant to Section 5.
3.6 Cancellation of Warrant Certificates. Any Definitive Warrant Certificate surrendered for exercise shall, if surrendered to the Company, be delivered to the Warrant Agent. All Warrant Certificates surrendered or delivered to or received by the Warrant Agent for cancellation pursuant to this Section 3.6 or Section 2.4(e) or Section 2.4(k) shall be promptly cancelled by the Warrant Agent and shall not be reissued by the Company. At the Company’s expense, the Warrant Agent shall destroy any such cancelled Warrant Certificates and deliver its certificate of destruction to the Company, unless the Company shall otherwise direct in writing.
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3.7 Cashless Exercise. Notwithstanding any provisions herein to the contrary, if, on the Exercise Date of a Cashless Exercise, the Cashless Exercise Current Market Price of one share of Common Stock is greater than the applicable Exercise Price on the Exercise Date, then, in lieu of paying to the Company the applicable Exercise Price by wire transfer in immediately available funds, the Holder may elect to receive shares of Common Stock equal to the value (as determined below) of the Warrants or any portion thereof being exercised (such portion, the “Cashless Exercise Warrants” with respect to such date) by (i) in the case of Warrants evidenced by a Global Warrant Certificate, providing notice to the Warrant Agent pursuant to the Applicable Procedures and the Exercise Form; or (ii) in the case of Warrants evidenced by a Warrant Statement or a Definitive Warrant Certificate, providing notice pursuant to the Exercise Form, in the case of (i) or (ii), that the Holder desires to effect a “cashless exercise” (a “Cashless Exercise”) with respect to the Cashless Exercise Warrants, in which event the Company shall issue to the Holder a number of shares of Common Stock with respect to Cashless Exercise Warrants computed using the following formula (it being understood that any portion of the Warrants being exercised on such date that are not Cashless Exercise Warrants will not be affected by this calculation):
| X = (Y (A-B)) ÷ A | ||
| Where X = | the number of shares of Common Stock to be issued to the Holder in respect of the Cashless Exercise Warrants | |
| Y= | the number of shares of Common Stock purchasable under the Cashless Exercise Warrants being exercised by the Holder (on the Exercise Date) | |
| A= | the applicable Cashless Exercise Current Market Price of one share of Common Stock (on the Exercise Date) | |
| B= | the applicable Exercise Price (as adjusted through and including the Exercise Date). | |
The Company shall calculate and transmit to the Warrant Agent the number of shares of Common Stock to be issued on such Cashless Exercise, and the Warrant Agent shall have no obligation under this Agreement to calculate, confirm or verify such amount.
3.8 Shares Issuable. The number of shares of Common Stock “obtainable upon exercise” of Warrants at any time shall be the number of shares of Common Stock into which such Warrants are then exercisable. The Company will confirm the number of shares issuable if so requested by the Warrant Agent. The number of shares of Common Stock “into which each Warrant is exercisable” shall be one share of Common Stock, subject to adjustment as provided in Section 5.1.
3.9 Cost Basis Information.
(a) In the event of a cash exercise, the Company hereby instructs the Warrant Agent to record cost basis for newly issued shares at the time of such exercise in accordance with instructions by the Company. If the Company does not provide such cost basis information to the Warrant Agent, as outlined above, then the Warrant Agent will treat those shares issued hereunder as uncovered securities or the equivalent, and each holder of such shares will need to obtain such cost basis information from the Company.
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(b) In the event of a cashless exercise, the Company shall provide cost basis for shares issued pursuant to a cashless exercise at the time the Company provides the cashless exercise to the Warrant Agent pursuant to Section 3.7 hereof.
3.10 Redemption. Notwithstanding any provisions hereof to the contrary, once a Holder exercises any Warrants and becomes a stockholder of the Common Stock in accordance with the terms herein, in the event such stockholder determines in its sole discretion that (i) the holding of any Common Stock would be unlawful or a breach of any applicable laws, whether U.S. or foreign, or (ii) there has been, is, or could be, an act, matter, event or circumstance related to the Company that results in or could result in damage to the reputation of the stockholder or any of its Affiliates, upon prior written notice to the Company, the stockholder shall have the right to: (x) sell or assign all or any Common Stock it holds to a Person on such terms (including as to price) as determined by the stockholder; or (y) require the Company to repurchase all or any Common Stock it holds for an aggregate purchase price of $1.00.
4. Dissolution, Liquidation or Winding up.
Other than a Sale of the Company, if, on or prior to the Expiration Date, the Company (or any other Person controlling the Company) shall propose a voluntary or involuntary dissolution, liquidation or winding up (a “Winding Up”) of the affairs of the Company, the Company shall give written notice thereof to the Warrant Agent and all Holders in the manner provided in Section 11.1(b) prior to the date on which such transaction is expected to become effective or, if earlier, the record date for such transaction. Such notice shall also specify the date as of which the holders of record of Common Stock shall be entitled to exchange their shares for securities, money or other property deliverable upon such dissolution, liquidation or winding up, as the case may be, on which date, if the Exercise Conditions are satisfied, each Holder of Warrants shall receive the securities, money or other property which such Holder would have been entitled to receive had such Holder been the holder of record of the shares of Common Stock into which the Warrants were exercisable immediately prior to such dissolution, liquidation or winding up (net of the then applicable Exercise Price) and the rights to exercise the Warrants shall terminate.
Other than a Sale of the Company, in case of any such voluntary or involuntary dissolution, liquidation or winding up of the Company, the Company shall deposit with the Warrant Agent any funds or other property which the Holders are entitled to receive pursuant to the above paragraph, together with a Company Order as to the distribution thereof. After receipt of such deposit from the Company and after receipt of surrendered Book-Entry Warrants or Warrant Certificates evidencing Warrants, and any such other information as the Warrant Agent may reasonably require, subject to such Company Order, the Warrant Agent shall make payment in appropriate amount to such Person or Persons as it may be directed in writing by the Holder surrendering such Book-Entry Warrant or Warrant Certificate. The Warrant Agent shall not be required to pay interest on any money deposited pursuant to the provisions of this Section 4. Any moneys, securities or other property which at any time shall be deposited by the Company or on its behalf with the Warrant Agent pursuant to this Section 4 shall be, and are hereby, assigned, transferred and set over to the
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Warrant Agent in accordance with Section 3.3 hereof; provided, that, moneys, securities or other property need not be segregated from other funds, securities or other property held by the Warrant Agent except to the extent required by law.
5. Adjustments.
5.1 Adjustments. In order to prevent dilution of the rights granted under the Warrants and to grant the Holders certain additional rights, the Exercise Price shall be subject to adjustment from time to time only as specifically provided in this Section 5.1 (the “Adjustment Events”) and the number of shares of Common Stock issuable upon exercise of Warrants shall be subject to adjustment from time to time only as specifically provided in this Section 5.1.
All adjustments made to the Exercise Price pursuant to this Section 5.1 shall be calculated to the nearest one-ten thousandth of a cent ($0.000001), and all adjustments made to the Warrant Shares issuable upon exercise of each Warrant pursuant to this Section 5.1 shall be calculated to the nearest one-ten thousandth of a Warrant Share (0.000001). Except as described in this Section 5.1, the Company will not adjust the Exercise Price and the number of Warrant Shares for which the Warrants are exercisable.
(a) Adjustment to Exercise Price. Upon any adjustment to the number of Warrant Shares for which each Warrant is exercisable pursuant to Sections 5.1(b), 5.1(c), 5.1(d) and 5.1(e), the Exercise Price shall immediately be adjusted to equal the quotient obtained by dividing (i) the aggregate Exercise Price of the maximum number of Warrant Shares for which each Warrant was exercisable immediately prior to such adjustment by (ii) the maximum number of Warrant Shares for which each Warrant is exercisable immediately after such adjustment.
(b) Stock Dividend or Stock Split. If the Company issues shares of Common Stock as a dividend or distribution on Common Stock, or effects a subdivision or stock split or stock combination or reverse split, or shall increase or decrease the number of shares of Common Stock outstanding by reclassification of its Common Stock, then in each case, the number of Warrant Shares for which each Warrant is exercisable will be adjusted based on the following formula:
| NS’ = NS0 x | OS' | |||||
|
|
||||||
| OS0 |
where,
| NS' | = | the number of Warrant Shares for which each Warrant is exercisable in effect immediately after such event | ||
| NS0 | = | the number of Warrant Shares for which each Warrant is exercisable in effect immediately prior to such event | ||
| OS' | = | the number of shares of Common Stock outstanding immediately after such event | ||
| OS0 | = | the number of shares of Common Stock outstanding immediately prior to such event. | ||
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Such adjustment shall become effective immediately after 9:00 a.m., New York City time, on the Business Day following the date fixed for the determination of stockholders entitled to receive such dividend or distribution on the effective date of such subdivision or share split. The Company will not pay any dividend or make any distribution on Common Stock held in treasury by the Company. If any dividend or distribution of the type described in this Section 5.1(b) is declared but not so paid or made, the number of shares of Common Stock for which each Warrant is exercisable shall again be adjusted to the number of shares of Common Stock for which each Warrant is exercisable that would then be in effect if such dividend or distribution had not been declared.
(c) Rights or Warrants. If the Company issues to all or substantially all holders of its Common Stock any rights or warrants entitling them to subscribe for or purchase shares of Common Stock, subject to the last paragraph of this Section 5.1(c), at a price per share less than the Current Market Price per share of Common Stock on the Business Day immediately preceding the date of announcement of such issuance, the number of Warrant Shares for which each Warrant is exercisable will be adjusted based on the following formula:
| NS' = NS0 x | OS0 + X |
|||||
| OS0 + Y |
where,
| NS' | = | the number of Warrant Shares for which each Warrant is exercisable in effect immediately after such event | ||
| NS0 | = | the number of Warrant Shares for which each Warrant is exercisable in effect immediately prior to such event | ||
| OS0 | = | the number of shares of Common Stock outstanding immediately prior to such event | ||
| X | = | the total number of shares of Common Stock issuable pursuant to such rights (or warrants) | ||
| Y | = | the number of shares of Common Stock equal to the aggregate price payable to exercise such rights (or warrants) divided by the Current Market Price per share of Common Stock as of the record date. | ||
Such adjustment shall be successively made whenever any such rights or warrants are issued and shall become effective immediately after 9:00 a.m., New York City time, on the Business Day following the date fixed for the determination of stockholders entitled to receive such rights or warrants. The Company shall not issue any such rights, options or warrants in respect of Common
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Stock held in treasury by the Company. To the extent that shares of Common Stock are not delivered after the expiration of such rights or warrants, the number of Warrant Shares for which the Warrants are exercisable shall be readjusted to the number of Warrant Shares for which the Warrants are exercisable that would then be in effect had the adjustments made upon the issuance of such rights or warrants been made on the basis of delivery of only the number of shares of Common Stock actually delivered. If such rights or warrants are not so issued, the number of Warrant Shares for which the Warrants are exercisable shall again be adjusted to be the number of Warrant Shares for which each Warrant is exercisable that would then be in effect if such date fixed for the determination of stockholders entitled to receive such rights or warrants had not been fixed. No adjustment shall be made pursuant to this Section 5.1(c) which shall have the effect of decreasing the number of Warrant Shares issuable upon exercise of the Warrants.
In the event that the Company issues rights pursuant to a stockholder rights plan, no adjustment shall be required under this Section 5.1(c) until the time such rights become exercisable.
In determining whether any rights or warrants entitle the Holders to subscribe for or purchase shares of Common Stock at less than the Current Market Price, and in determining the aggregate price payable to exercise such rights or warrants, there shall be taken into account any consideration received by the Company for such rights or warrants and any amount payable on exercise thereof, the value of such consideration, if other than cash, to be determined reasonably and in good faith by the Board of Directors.
(d) Other Distributions. If the Company fixes a record date for the making of any distribution of stock, other securities, evidences of indebtedness or other assets or property of the Company to all or substantially all holders of the Common Stock, excluding:
(i) dividends or distributions and rights or warrants referred to in Sections 5.1(b) or 5.1(c);
(ii) dividends or distributions paid exclusively in cash referred to in Section 5.1(e); and
(iii) any Transaction Consideration in a Reorganization Event (for which Sections 5.1(i)(A) and (B) apply) or a Sale of the Company (for which Section 5.1(i)(C) applies),
then the number of Warrant Shares for which each Warrant is exercisable will be adjusted based on the following formula:
| NS' = NS0 x | SP0 |
|||||
| SP0 - FMV |
where,
| NS' | = | the number of Warrant Shares for which each Warrant is exercisable in effect immediately after such distribution |
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| NS0 | = | the number of Warrant Shares for which each Warrant is exercisable in effect immediately prior to such distribution | ||
| SP0 |
= | the Current Market Price per share of Common Stock | ||
| FMV | = | the fair market value (as determined reasonably and in good faith by the Company) of the shares, other securities, evidences of indebtedness, assets or property distributed with respect to each issued and outstanding share of Common Stock on the record date for such distribution. | ||
Such adjustment shall become effective immediately prior to 9:00 a.m., New York City time, on the Business Day following the date fixed for the determination of stockholders entitled to receive such distribution. Such adjustment shall be made successively whenever such a record date is fixed with respect to a subsequent event. To the extent such distribution is not so paid or made, the number of Warrant Shares will be readjusted to the number that would then be in effect had the adjustment been made on the basis of only the distribution, if any, actually made or paid.
In the event the Company makes a distribution of rights pursuant to a stockholder rights plan, no adjustment shall be required under this Section 5.1(d) until the time such rights become exercisable.
With respect to an adjustment pursuant to this Section 5.1(d) where there has been a payment of a dividend or other distribution on the Common Stock or shares of any class or series, or similar equity interest, of or relating to a subsidiary or other business unit listed on a national securities exchange (a “Spin-Off”), the number of Warrant Shares for which each Warrant is exercisable in effect immediately before 5:00 p.m., New York City time, on the record date fixed for determination of stockholders entitled to receive the distribution will be increased based on the following formula:
| NS' = NS0 x | FMV0 + MP0 |
|||||
| MP0 |
where,
| NS' | = | the number of Warrant Shares for which each Warrant is exercisable in effect immediately after such distribution | ||
| NS0 | = | the number of Warrant Shares for which each Warrant is exercisable in effect immediately prior to such distribution | ||
| FMV0 | = | the product of (1) the average of the Quoted Prices of one unit of such capital stock, share capital or similar equity interest over the first ten consecutive Trading Day period after the effective date of the Spin-Off and (2) the number of units of such capital stock, share capital or equity interests distributed per share of Common Stock. | ||
| MP0 | = | the average of the Quoted Prices of Common Stock over the first ten consecutive Trading Day period after the effective date of the Spin-Off. | ||
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Such adjustment shall occur on the tenth consecutive Trading Day from, and including, the effective date of the Spin-Off. No adjustment shall be made pursuant to this Section 5.1(d) which shall have the effect of decreasing the number of Warrant Shares issuable upon exercise of each Warrant. To the extent such distribution is not so paid or made, the number of Warrant Shares will be readjusted to the number that would then be in effect had the adjustment been made on the basis of only the distribution, if any, actually made or paid.
(e) Cash Dividend. If the Company makes any cash dividend (excluding any cash distributions in connection with the Company’s liquidation, dissolution or winding up) or any Transaction Consideration in a Reorganization Event or distribution during any quarterly fiscal period to all or substantially all holders of Common Stock, the number of Warrant Shares for which each Warrant is exercisable will be adjusted based on the following formula:
| NS' = NS0 x | SP0 |
|||||
| SP0 - C |
where,
| NS' | = | the number of Warrant Shares for which each Warrant is exercisable in effect immediately after the record date for such distribution | ||
| NS0 | = | the number of Warrant Shares for which each Warrant is exercisable in effect immediately prior to the record date for such distribution | ||
| SP0 | = | the Current Market Price per share of Common Stock ending on the last Trading Day immediately preceding the first date on which the Common Stock trade regular way without the right to receive such distribution | ||
| C | = | the amount in cash per share the Company distributes to holders of Common Stock. | ||
Such adjustment shall become effective immediately after the close of business, on the date for the determination of stockholders entitled to receive such cash dividend. No adjustment shall be made pursuant to this Section 5.1(e) which shall have the effect of decreasing the number of Warrant Shares issuable upon exercise of the Warrants. To the extent such distribution is not so paid or made, the number of Warrant Shares will be readjusted to the number that would then be in effect had the adjustment been made on the basis of only the distribution, if any, actually made or paid.
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(f) No Adjustment if Participating. Notwithstanding the foregoing provisions of this Section 5.1, no adjustment shall be made hereunder, nor shall an adjustment be made to the ability of a Holder to exercise, for any distribution described herein if the Holder will otherwise participate in the distribution with respect to its Warrant Shares without exercise of the Warrants (without giving effect to any separate exercise of preemptive rights).
(g) When Adjustments Are to be Made. The adjustments required by this Section 5.1 shall be made whenever and as often as any specified event requiring an adjustment shall occur, except that no adjustment of the Exercise Price or the number of shares of Common Stock issuable upon exercise of the Warrants that would otherwise be required shall be made unless and until such adjustment either by itself or with other adjustments not previously made increases or decreases the Exercise Price or the shares of Common Stock issuable upon exercise of the Warrants immediately prior to the making of such adjustment by at least 1.0%. Any adjustment representing a change of less than such minimum amount (except as aforesaid) shall be carried forward and made as soon as such adjustment, together with other adjustments required by this Section 5.1 and not previously made, would result in such minimum adjustment.
(h) Adjustment Event. In any case in which this Section 5.1 provides that an adjustment shall become effective immediately after (i) a record date or record date for an event, (ii) the date fixed for the determination of stockholders entitled to receive a dividend or distribution pursuant to this Section 5.1 or (iii) a date fixed for the determination of stockholders entitled to receive rights or warrants pursuant to this Section 5.1 (each a “Determination Date”), the Company may elect to defer until the occurrence of the applicable Adjustment Event (x) issuing to the Holder of any Warrant exercised after such Determination Date and before the occurrence of such Adjustment Event, the additional shares of Common Stock or other securities issuable upon such exercise by reason of the adjustment required by such Adjustment Event over and above the shares of Common Stock issuable upon such conversion before giving effect to such adjustment and (y) paying to such holder any amount in cash in lieu of any fraction pursuant to Section 5.2. For purposes of this Section 5.1(h), the term “Adjustment Event” shall mean:
(A) in any case referred to in clause (i) hereof, the occurrence of such event,
(B) in any case referred to in clause (ii) hereof, the date any such dividend or distribution is paid or made, and
(C) in any case referred to in clause (iii) hereof, the date of expiration of such rights or warrants.
(i) Adjustments for Reorganization Events; Effect of Sale of the Company.
(A) In case, after the date hereof, a Reorganization Event shall occur while any Warrants remain outstanding and unexpired, then, subject to Section 5.1(i)(C), proper provision shall be made (including the Company obtaining the agreement of any surviving entity in such transaction to assume the obligations of this section) so that, upon the basis and terms and in the manner provided in this Agreement, the Holders, upon the exercise of the Warrants any time after the
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consummation of such transaction and prior to the Expiration Date, shall be entitled to receive (upon payment of the aggregate Exercise Price for each Warrant Share otherwise issuable upon such exercise) a Unit of Transaction Consideration, subject to adjustments (subsequent to such consummation) as nearly equivalent as practicable to the adjustments provided for in Sections 5.1(b), 5.1(c), 5.1(d) and 5.1(e) above; provided, further, that the Board of Directors of the Company may in good faith decide to reduce the cash portion of a Unit of Transaction Consideration payable to such Holder in respect of each of its Warrants upon exercise thereof if and to the extent the Company reduces the Exercise Price payable by such Holder in respect of each such Warrant by an amount equal to such portion.
(B) In connection with any Reorganization Event prior to the Expiration Date, the Company shall make appropriate provision to ensure that the Holders shall have the right to receive, upon consummation of such transaction and thereafter upon exercise of any convertible securities so received, as applicable, such property as may be required pursuant to Section 5.1 hereof, and to the extent such property includes convertible securities, the Company shall provide for adjustments substantially equivalent to the adjustments provided for in Section 5.1 hereof.
(C) In connection with a Sale of the Company while any Warrants remain outstanding and unexpired,
(i) if the aggregate Transaction Consideration payable in connection with such Sale of the Company is less than the Minimum Equity Value, then any outstanding Warrants shall be cancelled and extinguished for no consideration on the Sale Date; and
(ii) if the aggregate Transaction Consideration payable in connection with such Sale of the Company is equal to or greater than the Minimum Equity Value, then upon consummation of such Sale of the Company, without any further action required by the Company, any Holder, or any other Person, the Company shall acquire (or cause the purchaser or surviving company in such Sale of the Company, as applicable, to acquire) on the Sale Date each outstanding Warrant that has not been exercised as of the Cut-Off Time for a Unit of Transaction Consideration; provided that with respect to shares of common stock (or other comparable common equity interests or depositary receipts therefor) that each applicable Holder received in the Sale of the Company, any definitive documents executed by the Company shall provide for customary protections, including, without limitation, the registration rights.
(j) Compliance with Governmental Requirements. Before taking any action that would cause an adjustment reducing the Exercise Price below the then par value of any of shares of the Common Stock into which the Warrants are exercisable, the Company will take any corporate action that may be necessary in order that the Company may validly and legally issue fully paid and non-assessable shares of Common Stock at such adjusted Exercise Price.
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(k) Optional Tax Adjustment. The Company may at its option, at any time during the term of the Warrants, increase the number of shares of Common Stock into which each Warrant is exercisable, or decrease the Exercise Price, in addition to those changes required by Sections 5.1(b), 5.1(c), 5.1(d) and 5.1(e) as deemed advisable by the Board of Directors of the Company, in order that any event treated for Federal income tax purposes as a dividend of shares or share rights shall not be taxable to the recipients.
(l) Warrants Deemed Exercisable. For purposes solely of this Section 5, the number of shares of Common Stock which the holder of any Warrant would have been entitled to receive had such Warrant been exercised in full at any time or into which any Warrant was exercisable at any time shall be determined assuming such Warrant was exercisable in full at such time.
(m) Number of Shares Outstanding. For purposes of this Section 5.1, the number of shares of Common Stock outstanding at any time shall not include shares held in the treasury of the Company. The Company will not pay any dividend or make any distribution on Common Stock held in the treasury of the Company.
(n) Successive Adjustments. Successive adjustments in the Exercise Price and the number of shares of Common Stock for which the Warrants are exercisable shall be made, without duplication, whenever any event specified in this Section 5.1 shall occur.
(o) Notice of Adjustment. Upon the occurrence of each adjustment of the Exercise Price or the number of shares of Common Stock into which a Warrant is exercisable pursuant to this Section 5.1, the Company at its expense shall promptly:
(i) compute such adjustment in accordance with the terms hereof;
(ii) deliver to all Holders (in accordance with Section 11.1(b) and Section 11.2) and the Warrant Agent a certificate of the principal financial officer of the Company setting forth the Exercise Price and the number of shares of Common Stock into which each Warrant is exercisable after such adjustment, setting forth a brief, detailed statement of the facts requiring such adjustment and the computation by which such adjustment was made (including a description of the basis on which the Current Market Price of the Common Stock) and including the form and requirements for any applicable Payoff Documentation and any applicable Cut-Off Time. As provided in Section 10, the Warrant Agent shall be entitled to rely on such certificate and shall be under no duty or responsibility with respect to any such certificate, except to exhibit the same from time to time at the Corporate Agency Office to any Holder desiring an inspection thereof during reasonable business hours. The Company hereby agrees that it will provide the Holders and the Warrant Agent with reasonable notice of any Adjustment Event set forth in this Section 5.1. The Company further agrees that it will provide to the Holders and Warrant Agent with any new or amended exercise terms. The Warrant Agent shall have no obligation under any Section of this Agreement to determine, confirm or verfy whether an Adjustment Event has occurred or to calculate any of the adjustments set forth herein.
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(p) Statement on Warrant Certificates. Irrespective of any adjustment in the Exercise Price or amount or kind of shares into which the Warrants are exercisable, Warrant Certificates theretofore or thereafter issued may continue to express the same Exercise Price initially applicable or amount or kind of shares initially issuable upon exercise of the Warrants evidenced thereby pursuant to this Agreement.
5.2 Fractional Interest. The Company shall not be required upon the exercise of any Warrant to issue any fractional share of Common Stock, but may, in lieu of issuing any fractional shares make an adjustment therefore in cash on the basis of the Current Market Price per share of Common Stock on the date of such exercise. The number of Warrant Shares (and any fractional shares) shall be calculated on the aggregate number of Warrants exercised. If Book-Entry Warrants or Warrant Certificates evidencing more than one Warrant shall be presented for exercise at the same time by the same Holder, the number of full shares of Common Stock which shall be issuable upon such exercise thereof shall be computed on the basis of the aggregate number of Warrants so to be exercised. The Holders, by their acceptance of the Book-Entry Warrants or Warrant Certificates, expressly waive their right to receive any fraction of a share of Common Stock or a share certificate representing a fraction of a share of Common Stock if such amount of cash is paid in lieu thereof.
5.3 No Adjustments. No adjustment to the Exercise Price or the number of Warrant Shares for which the Warrants are exercisable need be made upon the issuance of any MIP Equity pursuant to the Management Incentive Plan.
5.4 Adjustment of Prices. Whenever any provision of this Warrant Agreement requires a calculation of a price over a span of multiple days (including, without limitation, a Current Market Price, a Cashless Exercise Current Market Price or Quoted Price) the Company shall make appropriate adjustments to each to account for any adjustment to the Exercise Price that becomes effective, or any event requiring an adjustment to the Exercise Price where the record date, effective date or expiration date of the event occurs, at any time during the period when such price is to be calculated. Further, and without limiting the foregoing, in the event of a Cashless Exercise following an adjustment to the Exercise Price where the Cashless Exercise Current Market Price spans any day prior to the effectiveness of such adjustment, the Company shall make appropriate adjustments to the Cashless Exercise Current Market Price to take into account such adjustment.
6. Loss or Mutilation.
If any mutilated, lost, stolen or destroyed Warrant Certificate is surrendered to the Warrant Agent (i) there shall be delivered to the Company and the Warrant Agent (A) a claim by a Holder as to the destruction, loss or wrongful taking of any Warrant Certificate of such Holder and a request thereby for a new replacement Warrant Certificate, and (B) such open penalty surety bond and/or indemnity bond as may be required by the Company or the Warrant Agent to save each of the Company and the Warrant Agent and any agent of either of them harmless, (ii) such other reasonable requirements as may be imposed by the Company or Warrant Agent as permitted by Section 8-405 of the Uniform Commercial Code have been satisfied, then, in the absence of notice to the Company or the Warrant Agent that such Warrant Certificate has been acquired by a “protected purchaser” within the meaning of Section 8-405 of the Uniform Commercial Code or bona fide purchaser, and (iii) at the Company’s or the Warrant Agent’s request, reimbursement to
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the Company and the Warrant Agent of all reasonable expenses incidental thereto, the Company shall execute and upon its written request the Warrant Agent shall countersign and deliver to the Holder of the lost, wrongfully taken, destroyed or mutilated Warrant Certificate, in exchange therefore or in lieu thereof, a new Warrant Certificate of the same tenor and for a like aggregate number of Warrants. At the written request of such Holder, the new Warrant Certificate so issued shall be retained by the Warrant Agent as having been surrendered for exercise, in lieu of delivery thereof to such Holder, and shall be deemed for purposes of Section 3.2(c)(i)(y)(II) to have been surrendered for exercise on the date the conditions specified in clauses (A) or (B) of the preceding sentence were first satisfied. The Warrant Agent may, at its option, issue replacement Warrants for mutilated certificates upon presentation thereof without such indemnity.
Upon the issuance of any new Warrant Certificate under this Section 6, the Company may require the payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in relation thereto and other expenses (including the reasonable and documented fees and expenses of the Warrant Agent) in connection therewith.
Every new Warrant Certificate executed and delivered pursuant to this Section 6 in lieu of any lost, wrongfully taken or destroyed Warrant Certificate shall constitute an additional contractual obligation of the Company, whether or not the allegedly lost, wrongfully taken or destroyed Warrant Certificate shall be at any time enforceable by anyone, and shall be entitled to the benefits of this Agreement equally and proportionately with any and all other Warrant Certificates duly executed and delivered hereunder.
7. Reservation and Authorization of Common Stock.
The Company covenants that, for the duration of the Exercise Period, the Company will at all times reserve and keep available, from its authorized and unissued shares, shares of Common Stock solely for issuance and delivery upon the exercise of the Warrants and free of preemptive rights, such number of shares of Common Stock and other securities, cash or property as from time to time shall be issuable upon the exercise in full of all outstanding Warrants for cash. The Company further covenants that it shall, from time to time, take all steps necessary to increase its number of authorized shares to such number of shares as shall be sufficient to deliver all shares of Common Stock deliverable upon exercise in full of all outstanding Warrants, if at any time the authorized but unissued number of shares of Common Stock would otherwise be insufficient to allow delivery of all the shares of Common Stock then deliverable upon the exercise in full of all outstanding Warrants. The Company covenants that all shares of Common Stock issuable upon exercise of the Warrants will, upon issuance, be duly and validly issued, fully paid and nonassessable and will be free of restrictions on transfer and will be free from (i) any and all security interests created by or imposed upon the Company and (ii) all taxes, liens and charges in respect of the issue thereof (other than income or withholding taxes or taxes in respect of any transfer occurring contemporaneously or otherwise specified herein or in connection with a Cashless Exercise). The Company shall take all such actions as may be necessary to ensure that all such shares of Common Stock may be so issued without violation of any applicable law or governmental regulation or any requirements of any U.S. national securities exchange upon which shares of Common Stock may be listed (except for official notice of issuance which shall be immediately delivered by the Company upon each such issuance). The Company covenants that all shares of Common Stock will, at all times that Warrants are exercisable, be duly approved for
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listing subject to official notice of issuance on each securities exchange, if any, on which the shares of Common Stock are then listed. The Company covenants that the share certificates issued to evidence any shares of Common Stock issued upon exercise of Warrants, if any, will comply with any applicable law.
The Company hereby authorizes and directs its current and future transfer agents for the shares of Common Stock at all times to reserve share certificates for such number of authorized shares, to the extent as, and if, required. The Company will supply such transfer agents with duly executed share certificates for such purposes, to the extent as, and if, required.
The Company hereby represents and warrants to the Holders that the issuance of the Warrants and the issuance of shares of Common Stock upon exercise thereof in accordance with the terms hereof will not constitute a breach of, or a default under, any other material agreements to which the Company is a party on the date hereof.
8. Warrant Transfer Books.
The Warrant Agent will maintain an office or offices (the “Corporate Agency Office”) in the United States of America, where Warrant Certificates may be surrendered for registration of transfer or exchange and where Warrant Certificates may be surrendered for exercise of Warrants evidenced thereby, which office is 150 Royall Street, Canton, MA 02021 on the Original Issue Date. The Warrant Agent will give prompt written notice to all Holders of Warrant Certificates of any change in the location of such office.
The Warrants shall be issued in registered form only. The Company shall cause to be kept at the Corporate Agency Office a Warrant Register in which, subject to such reasonable regulations as the Warrant Agent may prescribe and such regulations as may be prescribed by law, the Company shall provide for the registration of Warrants and of transfers or exchanges of Warrants as herein provided, in each case whether in the form of Book Entry Warrants or Warrant Certificates.
Upon surrender for registration of transfer of any Warrant Certificate at the Corporate Agency Office, the Company shall execute, and the Warrant Agent shall countersign and deliver, in the name of the designated transferee or transferees, one or more new Warrant Certificates, as applicable, evidencing a like aggregate number of Warrants in accordance with the terms of this Agreement.
At the option of the Holder, Warrant Certificates may be exchanged at the Corporate Agency Office upon payment of the charges hereinafter provided for other Warrant Certificates evidencing a like aggregate number of Warrants. Whenever any Warrant Certificates are so surrendered for exchange, the Company shall execute, and the Warrant Agent shall countersign and deliver, the Warrant Certificates of the same tenor and evidencing the same number of Warrants as evidenced by the Warrant Certificates surrendered by the Holder making the exchange.
All Book-Entry Warrants and Warrant Certificates issued upon any registration of transfer or exchange of Book-Entry Warrants or Warrant Certificates shall be the valid obligations of the Company, evidencing the same obligations, and entitled to the same benefits under this Agreement, as the Book-Entry Warrants or Warrant Certificates surrendered for such registration of transfer or exchange.
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Every Warrant Certificate surrendered for registration of transfer or exchange shall (if so required by the Company or the Warrant Agent) be: (i) duly endorsed and containing a Signature Guarantee, or (ii) be accompanied by a written instrument of transfer in form satisfactory to the Company and the Warrant Agent, duly executed by the Holder thereof or his attorney duly authorized in writing, also containing a Signature Guarantee. Further, to effect such transfer or exchange, all other necessary information or documentation shall be provided as the Warrant Agent may reasonably request.
No service charge shall be made for any registration of transfer or exchange of Warrants; provided, however, the Company may require payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in connection with any registration of transfer or exchange. The Warrant Agent shall not have any duty or obligation to take any action under any section of this Agreement that requires the payment of taxes and/or charges unless and until it is satisfied that all such payments have been made.
The Warrant Agent shall, upon request and at the expense of the Company from time to time, deliver to the Company such reports of registered ownership of the Warrants and such records of transactions with respect to the Warrants and the shares of Common Stock as the Company may reasonably request. The Warrant Agent shall, upon reasonable advance notice, also make available to the Company for inspection by the Company’s agents or employees, from time to time as the Company may reasonably request, such books of accounts and records maintained by the Warrant Agent in connection with the issuance and exercise of Warrants hereunder, such inspections to occur at the Corporate Agency Office during normal business hours.
The Warrant Agent shall keep copies of this Agreement and any notices given to Holders hereunder available for inspection, upon reasonable advance notice, by the Holders during normal business hours at the Corporate Agency Office. The Company shall supply the Warrant Agent from time to time with such numbers of copies of this Agreement as the Warrant Agent may request.
9. Warrant Holders.
9.1 No Rights as Stockholders until Exercise.
(a) Nothing contained in this Agreement shall be construed as conferring upon any Holder, by virtue of holding any Book-Entry Warrant or Warrant Certificate evidencing any Warrant, the right to be deemed a holder of Common Stock for any purpose or to exercise any rights whatsoever as a holder of Common Stock, including, without limitation, the right to vote, to receive dividends or distributions, to receive subscription rights, to exercise appraisal rights or otherwise, or to receive notice of, or attend, meetings or any other proceedings of the holders of Common Stock, unless and until the exercise of the Warrants hereof and the date the Warrant Shares are required to be delivered hereunder.
(b) Prior to the exercise hereof of the Warrants and the date the Warrant Shares are required to be delivered hereunder, subject to the terms in the Plan, the consent of any Holder of a Book-Entry Warrant or a Warrant Certificate shall not be required with respect to any action or proceeding of the Company.
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9.2 Rights of Action. All rights of action against the Company in respect of this Agreement, except rights of action vested in the Warrant Agent, are vested in the Holders of the Book-Entry Warrants and the Warrant Certificates, and any Holder of any Book-Entry Warrant or Warrant Certificate, without the consent of the Warrant Agent or the Holder of any other Book-Entry Warrant or Warrant Certificate, may, in such Holder’s own behalf and for such Holder’s own benefit, enforce and may institute and maintain any suit, action or proceeding against the Company suitable to enforce, or otherwise in respect of, such Holder’s right to exercise such Holder’s Warrants in the manner provided in this Agreement.
9.3 Treatment of Holders of Warrant Certificates. Every Holder, by virtue of accepting a Warrant Certificate, consents and agrees with the Company, with the Warrant Agent and with every subsequent holder of such Warrant Certificate that, prior to due presentment of such Warrant Certificate for registration of transfer, the Company and the Warrant Agent may treat the Person in whose name the Warrant Certificate is registered as the owner thereof for all purposes and as the Person entitled to exercise the rights granted under the Warrants, and neither the Company, the Warrant Agent nor any agent thereof shall be affected by any notice to the contrary.
10. Concerning the Warrant Agent. Sections 10.1, 10.2, 10.3, 10.4, 10.5, 10.6 and 10.8 shall survive the expiration of the Warrants and the termination of this Agreement and the resignation, replacement or removal of the Warrant Agent.
10.1 Rights and Duties of the Warrant Agent.
(a) The Company hereby appoints the Warrant Agent to act as agent of the Company as set forth in this Agreement. The Warrant Agent hereby accepts the appointment as agent of the Company and agrees to perform that agency upon the express terms and conditions (and no implied terms or conditions) set forth in this Agreement, in the Warrant Statements and in the Warrant Certificates, by all of which the Company and the Holders of Book-Entry Warrants and Warrant Certificates, by their acceptance thereof, shall be bound; provided, however, that the terms and conditions contained in the Warrant Statements and Warrant Certificates are subject to and governed by this Agreement. The Warrant Agent shall act solely as agent of the Company hereunder and does not assume any obligation or relationship of agency or trust for or with any of the Holders or any beneficial owners of Warrants or any other Person.
(b) The Warrant Agent shall not, by countersigning Warrant Statements, Warrant Certificates or by any other act hereunder, be deemed to make any representations as to validity or authorization of (i) the Warrants or the Warrant Statements and the Warrant Certificates (except as to its countersignature thereon), (ii) any securities or other property delivered upon exercise of any Warrant, (iii) the accuracy of the computation of the number or kind or amount of stock, shares or other securities or other property deliverable upon exercise of any Warrant, (iv) the correctness of any of the representations of the Company made in such certificates that the Warrant Agent receives; or (v) any of the statements of act or recitals contained in this Warrant Agreement, Warrant Statement or Warrant
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Certificate. The Warrant Agent shall not at any time have any duty to calculate or determine whether any facts exist that may require any adjustments pursuant to Section 5 hereof with respect to the kind and amount of stock, shares or other securities or any property issuable to Holders upon the exercise of Warrants required from time to time. The Warrant Agent shall have no duty or responsibility to determine the accuracy or correctness of such calculation or with respect to the methods employed in making the same. The Warrant Agent shall not be accountable with respect to the validity or value (or the kind or amount) of any Common Stock or of any securities or property which may at any time be issued or delivered upon the exercise of any Warrant or upon any adjustment pursuant to Section 5 hereof, and it makes no representation with respect thereto. The Warrant Agent shall not be responsible for any failure of the Company to make any cash payment or to issue, transfer or deliver any share of Common Stock or share certificates or other securities or property upon the surrender of any Book-Entry Warrant or Warrant Certificate for the purpose of exercise or upon any adjustment pursuant to Section 5 hereof or to comply with any of the covenants of the Company contained in Section 5 hereof.
(c) The Warrant Agent shall not be liable for or by reason of any of the statements of fact or recitals contained in this Warrant Agreement or in the Warrant Statements or Warrant Certificates (except its countersignature thereof) or be required to verify the same, and all such statements and recitals are and shall be deemed to have been made by the Company only.
(d) The Warrant Agent shall not have any duty or responsibility in the case of the receipt of any written demand from any holder of Warrants with respect to any action or default by the Company, including, without limiting the generality of the foregoing, any duty or responsibility to initiate or attempt to initiate any proceedings at law or otherwise or to make any demand upon the Company or any other Person.
(e) The Warrant Agent may execute and exercise any of the rights or powers hereby vested in it or perform any duty hereunder either itself or by or through its attorney or agents, and the Warrant Agent shall not be answerable or accountable for any act, default, neglect or misconduct of any such attorney or agents or for any loss to the Company resulting from any such act, default, neglect or misconduct, absent gross negligence, willful misconduct, fraud or bad faith (each as determined by a final judgment of a court of competent jurisdiction) in the selection and continued employment thereof.
(f) The Warrant Agent may rely on and shall be held harmless and protected and shall incur no liability for or in respect of any action taken, suffered or omitted to be taken by it absent gross negligence, willful misconduct, fraud or bad faith (each as determined by a final judgment of a court of competent jurisdiction) in reliance upon any certificate, statement, instrument, opinion, notice, letter, facsimile transmission, telegram or other document, or any security delivered to it, and believed by it to be genuine and to have been made or signed by the proper party or parties, or upon any written or oral instructions or statements from the Company with respect to any matter relating to its acting as Warrant Agent hereunder. It is understood, for the avoidance of doubt, that the taking (or refraining) of any action by the Warrant Agent in reliance of any such written instructions by the Company shall not, in and of itself, be deemed to constitute gross negligence, willful misconduct, fraud or bad faith.
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(g) The Warrant Agent shall not be obligated to expend or risk its own funds or to take any action that it believes would expose or subject it to expense or liability or to a risk of incurring expense or liability, unless it has been furnished with assurances of repayment or indemnity satisfactory to it.
(h) The Warrant Agent shall not be liable or responsible for any failure of the Company to comply with any of its obligations relating to any registration statement filed with the Commission or this Warrant Agreement, including without limitation obligations under applicable regulation or law.
(i) The Warrant Agent shall not be accountable or under any duty or responsibility for the use by the Company of any Warrants authenticated by the Warrant Agent and delivered by it to the Company pursuant to this Warrant Agreement or for the application by the Company of the proceeds of the issue and sale, or exercise, of the Warrants.
(j) The Warrant Agent shall act hereunder solely as agent for the Company, and its duties shall be determined solely by the express provisions hereof (and no duties or obligations shall be inferred or implied). The Warrant Agent shall not assume any obligations or relationship of agency or trust with any of the owners or holders of the Warrants.
(k) The Warrant Agent may rely on and be fully authorized and protected in acting or failing to act upon (a) any guaranty of signature by an “eligible guarantor institution” that is a member or participant in the Securities Transfer Agents Medallion Program or other comparable “signature guarantee program” or insurance program in addition to, or in substitution for, the foregoing; or (b) any law, act, regulation or any interpretation of the same even though such law, act, or regulation may thereafter have been altered, changed, amended or repealed.
(l) In the event the Warrant Agent believes any ambiguity or uncertainty exists hereunder or in any notice, instruction, direction, request or other communication, paper or document received by the Warrant Agent hereunder, the Warrant Agent, may, in its sole discretion, refrain from taking any action, and shall be fully protected and shall not be liable in any way to Company, the holder of any Book-Entry Warrant, Warrant Certificate or any other person or entity for refraining from taking such action, unless the Warrant Agent receives written instructions signed by the Company which eliminates such ambiguity or uncertainty to the satisfaction of Warrant Agent.
(m) Whenever in the performance of its duties under this Agreement, the Warrant Agent shall deem it necessary or desirable that any fact or matter be proved or established by the Company prior to taking or suffering any action hereunder, such fact or matter (unless other evidence in respect thereof be herein specifically prescribed) may be deemed to be conclusively proved and established by a statement signed by the Chairman of the Board of Directors, the Chief Executive Officer, the principal operating officer, the principal financial officer, any Vice President or the Secretary (including the officers or persons with equivalent responsibilities) of the Company and delivered to the Warrant Agent. The Warrant Agent may rely upon such statement, and will not be liable and shall be held harmless for such reliance, and shall not be held liable in connection with any delay in receiving such statement.
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(n) The Warrant Agent shall have no responsibility to the Company, any Holders of Warrants or any holders of Common Stock for interest or earnings on any moneys held by the Warrant Agent pursuant to this Agreement.
(o) The Warrant Agent shall not be required to take notice or be deemed to have notice of any event or condition hereunder, including any event or condition that may require action by the Warrant Agent, unless the Warrant Agent shall be specifically notified in writing of such event or condition by the Company, and all notices or other instruments required by this Agreement to be delivered to the Warrant Agent must, in order to be effective, be received by the Warrant Agent as specified in Section 11.1 hereof, and in the absence of such notice so delivered, the Warrant Agent may conclusively assume no such event or condition exists.
10.2 Limitation of Liability.
(a) The Warrant Agent shall be liable hereunder only for its own gross negligence, willful misconduct, fraud or bad faith (each as determined by a final judgment of a court of competent jurisdiction). Notwithstanding anything contained herein to the contrary, the Warrant Agent’s aggregate liability during any term of this Agreement with respect to, arising from, or arising in connection with this Agreement, or from all services provided or omitted to be provided under this Agreement, whether in contract, or in tort, or otherwise, is limited to, and shall not exceed, the amounts paid hereunder by the Company to Warrant Agent as fees and charges, but not including reimbursed or reimbursable expenses, during the twelve (12) months immediately preceding the event for which recovery from Warrant Agent is being sought. Neither party to this Agreement shall be liable to the other party for any consequential, punitive, indirect, special or incidental damages under any provisions of this Agreement or for any consequential, indirect, punitive, special or incidental damages arising out of any act or failure to act hereunder even if that party has been advised of or has foreseen the possibility of such damages.
(b) Exclusions. The Warrant Agent shall have no responsibility with respect to the validity of this Agreement or with respect to the validity or execution of any Warrant. The Warrant Agent shall not be responsible for any breach by the Company of any covenant or condition contained in this Agreement or in any Warrant. The Warrant Agent shall not be responsible to make any adjustments required under the provisions of Section 5 hereof or responsible for the manner, method, or amount of any such adjustment or the ascertaining of the existence of facts that would require any such adjustment; nor shall it by any act hereunder be deemed to make any representation or warranty as to the authorization or reservation of any shares of Common Stock to be issued pursuant to this Agreement or any Warrant or as to whether any shares of Common Stock shall, when issued, be valid and fully paid and non-assessable.
10.3 Indemnification.
(a) The Company covenants and agrees to indemnify and to hold the Warrant Agent harmless against any costs, expenses (including reasonable and documented fees of its legal counsel), losses or damages, which may be paid, incurred or suffered by or to which it may become subject, arising from or out of, directly or indirectly, any claims or liability resulting from its actions as Warrant Agent pursuant hereto; provided, that such covenant and agreement does not extend to, and the Warrant Agent shall not be indemnified with respect to, such costs, expenses,
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losses and damages incurred or suffered by the Warrant Agent as a result of, or arising out of, the Warrant Agent’s own gross negligence, bad faith, or willful misconduct (which gross negligence, bad faith, or willful misconduct must be determined by a final, non-appealable judgment of a court of competent jurisdiction). The costs and expenses incurred in enforcing this right of indemnification shall be paid by the Company.
(b) Instructions. From time to time, the Company may provide the Warrant Agent with instructions, by Company Order or otherwise, concerning the services performed by the Warrant Agent hereunder. In addition, at any time the Warrant Agent may apply to any officer of Company for instruction, and may consult with legal counsel for the Warrant Agent or the Company with respect to any matter arising in connection with the services to be performed by the Warrant Agent under this Warrant Agreement. Warrant Agent and its agents and subcontractors shall not be liable and shall be indemnified by Company for any action taken, suffered or omitted to be taken by Warrant Agent in reliance upon any Company instructions or upon the advice or opinion of such counsel.
10.4 Right to Consult Counsel. The Warrant Agent may at any time consult with legal counsel satisfactory to it (who may be legal counsel for the Company), and the Warrant Agent shall incur no liability or responsibility to the Company or to any Holder for any action taken, suffered or omitted by it absent gross negligence, willful misconduct, fraud or bad faith (each as determined by a final judgment of a court of competent jurisdiction) in accordance with the opinion or advice of such counsel.
10.5 Compensation and Reimbursement. The Company agrees to pay to the Warrant Agent reasonable compensation for all services rendered by it hereunder in accordance with a fee schedule to be mutually agreed upon and, from time to time, on demand of the Warrant Agent, to reimburse the Warrant Agent for all of its reasonable expenses and counsel fees and other disbursements incurred in the preparation, delivery, negotiation, amendment, administration and execution of this Agreement and the exercise and performance of its duties hereunder.
10.6 Warrant Agent May Hold Company Securities. The Warrant Agent and any stockholder, director, officer or employee of the Warrant Agent may buy, sell or deal in any of the Warrants or other securities of the Company or become pecuniarily interested in any transaction in which the Company may be interested, or contract with or lend money to the Company or otherwise act as fully and freely as though it were not Warrant Agent under this Warrant Agreement. Nothing herein shall preclude the Warrant Agent from acting in any other capacity for the Company or for any other legal entity. Nothing herein shall preclude the Warrant Agent or any Countersigning Agent from acting in any other capacity for the Company or for any other legal entity.
10.7 Resignation and Removal; Appointment of Successor.
(a) The Warrant Agent may resign its duties and be discharged from all further duties and liability hereunder (except liability arising as a result of the Warrant Agent’s own gross negligence or willful misconduct, fraud or bad faith as determined by a final, non-appealable judgment of a court of competent jurisdiction) after giving 30 days’ prior written notice to the Company. In the event any transfer agency relationship in effect between the Company and the
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Warrant Agent terminates, the Warrant Agent will be deemed to have resigned automatically and be discharged from its duties under this Agreement as of the effective date of such termination. The Company may remove the Warrant Agent upon 30 days’ written notice, and the Warrant Agent shall thereupon in like manner be discharged from all further duties and liabilities hereunder, except as aforesaid. The Warrant Agent shall, at the expense of the Company, cause notice to be given in accordance with Section 11.1(a) to the Company of said notice of resignation. Upon such resignation or removal, the Company shall appoint in writing a new Warrant Agent. If the Company shall fail to make such appointment within a period of 30 calendar days after it has been notified in writing of such resignation by the resigning Warrant Agent or after such removal, then the Holder of any Book-Entry Warrant or Warrant Certificate may apply to any court of competent jurisdiction for the appointment of a new Warrant Agent. The new Warrant Agent shall be vested with the same powers, rights, duties and responsibilities as if it had been originally named herein as the Warrant Agent, without any further assurance, conveyance, act or deed; but if for any reason it shall be reasonably necessary or expedient to execute and deliver any further assurance, conveyance, act or deed, the same shall be done at the reasonable expense of the Company and shall be legally and validly executed and delivered by the resigning or removed Warrant Agent. Not later than the effective date of any such appointment, the Company shall file notice thereof with the resigning or removed Warrant Agent. Failure to give any notice provided for in this Section 10.7(a), however, or any defect therein, shall not affect the legality or validity of the resignation of the Warrant Agent or the appointment of a new Warrant Agent as the case may be.
(b) Any Person into which the Warrant Agent or any new Warrant Agent may be merged, or any Person resulting from any consolidation to which the Warrant Agent or any new Warrant Agent shall be a party, shall be a successor Warrant Agent under this Agreement without any further act. Any such successor Warrant Agent shall promptly cause notice of its succession as Warrant Agent to be given in accordance with Section 11.1(b) to each Holder of a Book-Entry Warrant or Warrant Certificate at such Holder’s last address as shown on the Warrant Register.
10.8 Appointment of Countersigning Agent.
(a) The Warrant Agent may, but is not required to, appoint a Countersigning Agent or Agents which shall be authorized to act on behalf of the Warrant Agent to countersign Warrant Statements or Warrant Certificates issued upon original issue and upon exchange, registration of transfer or pursuant to Section 6, and Warrant Statements and Warrant Certificates so countersigned shall be entitled to the benefits of this Agreement equally and proportionately with any and all other Warrant Certificates duly executed and delivered hereunder. Wherever reference is made in this Agreement to the countersignature and delivery of Warrant Statements or Warrant Certificates by the Warrant Agent or to Warrant Statements or Warrant Certificates countersigned by the Warrant Agent, such reference shall be deemed to include countersignature and delivery on behalf of the Warrant Agent by a Countersigning Agent and Warrant Statements or Warrant Certificates countersigned by a Countersigning Agent.
(b) A Countersigning Agent may resign at any time by giving 30 days’ prior written notice thereof to the Warrant Agent and to the Company. The Warrant Agent may at any time terminate the agency of a Countersigning Agent by giving 30 days’ prior written notice thereof to such Countersigning Agent and to the Company.
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(c) The Warrant Agent agrees to pay to each Countersigning Agent from time to time reasonable compensation for its services under this Section 10.8 and the Warrant Agent shall be entitled to be reimbursed for such payments, subject to the provisions of Section 10.5.
(d) Any Countersigning Agent shall have the same rights and immunities as those of the Warrant Agent set forth Section 10 and this Agreement.
(e) Any Person into which the Warrant Agent or a Countersigning Agent may be merged or any Person resulting from any consolidation to which the Warrant Agent or such Countersigning Agent shall be a party, shall be a successor Warrant Agent or Countersigning Agent, as applicable, without any further act; provided, that, such Person would be eligible for appointment as a new Warrant Agent or Countersigning Agent, as applicable, under the provisions of Section 10.8(a), without the execution or filing of any paper or any further act on the part of the Warrant Agent or the Countersigning Agent. Any such successor Warrant Agent or Countersigning Agent shall promptly cause notice of its succession as Warrant Agent or Countersigning Agent, as applicable, to be given in accordance with Section 11.1(b) to each Holder of a Book-Entry Warrant or Warrant Certificate at such Holder’s last address as shown on the Warrant Register.
11. Notices.
11.1 Notices Generally.
(a) Any request, notice, direction, authorization, consent, waiver, demand or other communication permitted or authorized by this Agreement to be made upon, given or furnished to or filed with the Company or the Warrant Agent by the other party hereto or by any Holder shall be sufficient for every purpose hereunder if in writing (including telecopy) and telecopied, sent via electronic means, trackable or first-class mail or delivered by hand (including by a nationally recognized courier service) as follows:
if to the Company, to:
Lonestar Resources US Inc.
111 Boland Street, Suite 300
Fort Worth, TX
Attention: Frank D. Bracken III
Email: fbracken@lonestarresources.com
with a copy which shall not constitute notice to:
Latham & Watkins LLP
885 Third Avenue
New York, New York 10022
Attention: David J. Miller
Email: david.miller@lw.com
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if to the Warrant Agent, to:
Computershare Inc.
Computershare Trust Company, N.A.
150 Royall Street
Canton, MA 02021
Facsimile: (781) 575-2549
Attention: Corporate Actions
with a copy which shall not constitute notice to:
Computershare Inc.
Computershare Trust Company, N.A.
480 Washington Boulevard, 29th Floor
Jersey City, New Jersey 07310
Facsimile: (201) 680-4610
Attention: Legal Department
or, in either case, such other address as shall have been set forth in a notice delivered in accordance with this Section 11.1(a).
All such communications shall be effective when sent.
For effective delivery under this Section 11, any Person that telecopies or sends by electronic means any communication hereunder to any Person shall, on the same date as such telecopy or electronic copy is transmitted, also send, by trackable or first class mail, postage prepaid and addressed to such Person as specified above, an original or copy of the communication so transmitted.
(b) Where this Agreement provides for notice to Holders of any event, such notice shall be sufficiently given (unless otherwise herein expressly provided) if (i) in writing and mailed, by trackable or first-class mail, to each Holder affected by such event, at the address of such Holder as it appears in the Warrant Register or (ii) sent by electronic means with an original or copy of the communication so transmitted sent (on the same date as such electronic copy is transmitted), by trackable or first class mail, postage prepaid and addressed to such Person as specified above. Without limiting any of the rights or immunities of the Warrant Agent under this Agreement, where this Agreement provides for notice in any manner, such notice may be waived in writing by the Person entitled to receive such notice, either before or after the event, and such waiver shall be the equivalent of such notice.
In case by reason of the suspension of regular mail service or by reason of any other cause it shall be impracticable to give such notice by mail, then such notification as shall be made by a method approved by the Warrant Agent as one which would be most reliable under the circumstances for successfully delivering the notice to the addressees shall constitute a sufficient notification for every purpose hereunder.
Where this Agreement provides for notice of any event to a Holder of a Global Warrant Certificate, such notice shall be sufficiently given if given to the Depositary (or its designee), pursuant to its Applicable Procedures, not later than the latest date (if any), and not earlier than the earliest date (if any), prescribed for the giving of such notice.
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11.2 Required Notices to Holders. In the event the Company shall propose to:
(a) take any action that would result in an adjustment to the Exercise Price and/or the number of shares of Common Stock issuable upon exercise of a Warrant pursuant to Section 5.1;
(b) distribute any dividend or other distribution to all holders of its Common Stock or options, warrants or other rights to receive such dividend or distribution;
(c) effect any capital reorganization, reclassification, recapitalization, business combination, consolidation, amalgamation or merger (for the avoidance of doubt, including any potential Sale of the Company);
(d) effect the voluntary or involuntary dissolution, liquidation or winding-up of the Company; or
(e) make a tender offer or exchange offer with respect to the Common Stock (each of (a), (b), (c), (d) or (e), an “Action”);
then, in each such case, the Company shall cause to be delivered to the Warrant Agent and shall give to each Holder of a Book-Entry Warrant or a Warrant Certificate, in accordance with Section 11.1(b) hereof, a written notice of such Action, including, in the case of an action pursuant to Section 11.2(a), the information required under Section 5.1(o). To the extent such notice does not constitute material nonpublic information in the reasonable determination of the Company (it being understood that such information shall not constitute material nonpublic information if such information is provided to the stockholders of the Company), such notice shall be given at least 30 days prior to taking such Action (except in the case of clause (b), at least 10 days prior to the date of the taking of such Action) and shall specify the record date for the purposes of a dividend, distribution or rights, or the date such issuance or event is to take place and the date of participation therein by the holders of Common Stock, if any such date is to be fixed, and shall briefly indicate the effect, if any, of such action on the Common Stock and on the number and kind of any other shares and on property, if any, and the number of shares of Common Stock and other property, if any, issuable upon exercise of each Warrant and the Exercise Price after giving effect to any such adjustment pursuant to Section 5.1 which will be required as a result of such action.
If at any time the Company shall cancel any of the Actions for which notice has been given under this Section 11.2 prior to the consummation thereof, the Company shall give each Holder prompt notice of such cancellation in accordance with Section 11.1(b).
In addition, in the event the Company enters into any definitive agreement with respect to any sale transaction (including, without limitation, any Sale of the Company), the Company shall cause to be delivered to the Warrant Agent and shall give to each Holder of a Book-Entry Warrant or a Warrant Certificate, in accordance with Section 11.1(b), a notice of the entering into such definitive agreement.
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12. Information Rights.
The Company shall furnish to each Holder:
(a) As soon as available, but in any event in accordance with then applicable law and not later than 90 days after the end of each fiscal year of the Company, its audited consolidated balance sheet and related statements of operations, stockholders’ equity and cash flows as of the end of and for such year, setting forth in each case in comparative form the figures for the previous fiscal year, all reported on by BDO or other independent public accountants of recognized national standing to the effect that such consolidated financial statements present fairly in all material respects the financial condition and results of operations of the Company and its Subsidiaries on a consolidated basis in accordance with GAAP consistently applied;
(b) As soon as available, but in any event in accordance with then applicable law and not later than 60 days after the end of each of the first three fiscal quarters of each fiscal year of the Company, its unaudited consolidated balance sheet and related unaudited statements of operations, stockholders’ equity and cash flows as of the end of and for such fiscal quarter and the then elapsed portion of the fiscal year, setting forth in each case in comparative form the figures for the corresponding period or periods of (or, in the case of the balance sheet, as of the end of) the previous fiscal year;
(c) As soon as available, the Reserve Report;
(d) If requested by a Holder not less than 10 Business Days prior to date required for delivery of the information required in clauses (a) and (b) above, in connection with delivery of the information required in clauses (a) (b) with respect to the applicable period, a calculation of the Original Value as of such Valuation Date, if the Common Stock is not then listed or admitted to trading on any U.S. national securities exchange or traded and quoted in the over-the-counter market in the United States; and
(e) If requested by a Holder, as soon as reasonably practicable after such request, any other information a holder of Common Stock is entitled to receive pursuant to and in accordance with the Certificate of Incorporation and the Bylaws, provided or delivered in accordance with Section 11.1(b) (unless otherwise instructed by the Holder);
provided, however, that the Company will be deemed to have satisfied its obligations under this Section 12 if and to the extent (i) the Company furnishes such statements, reports and information referred to above to the Holders in their capacity as lenders pursuant to the Company’s or any of its subsidiary’s revolving credit facility (including the Credit Agreement), as applicable, and/or (ii) the Company files such statements, reports and information with the Commission via the EDGAR filing system and such statements, reports and information are publicly available.
13. Inspection.
The Warrant Agent shall cause a copy of this Agreement to be available at all reasonable times at the Corporate Agency Office for inspection by any Holder of any Book-Entry Warrant or Warrant Certificate. The Warrant Agent may require any such Holder of a Warrant Certificate to submit such Warrant Certificate for inspection by the Warrant Agent.
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14. Amendments.
(a) This Agreement may be amended by the Company and the Warrant Agent with the consent of the Required Warrant Holders.
(b) Notwithstanding the foregoing, the Company and the Warrant Agent may, without the consent or concurrence of the Holders of the Book-Entry Warrants or the Warrant Certificates, by supplemental agreement or otherwise, amend this Agreement for the purpose of making any changes or corrections in this Agreement that (i) are required to cure any ambiguity or to correct or supplement any defective or inconsistent provision or clerical omission or mistake or manifest error herein contained or (ii) add to the covenants and agreements of the Company in this Agreement further covenants and agreements of the Company thereafter to be observed, or surrender any rights or powers reserved to or conferred upon the Company in this Agreement; provided, however, that in the case of clause (ii) such amendment shall not adversely affect, alter or change the rights or interests of the Holders of the Warrants hereunder in any material respect.
(c) The consent of each Holder of any Book-Entry Warrants or Warrant Certificate evidencing any warrants affected thereby shall be required for any supplement or amendment to this Agreement or the Warrants that would: (i) increase the Exercise Price or decrease the number of shares of Common Stock receivable upon exercise of Warrants, in each case other than as provided in Section 5.1; (ii) the Expiration Date is changed to an earlier date; or (iii) modify the provisions contained in Section 5.1 in a manner adverse to the Holders of Book-Entry Warrants or Warrant Certificates generally with respect to their Warrants.
(d) The Warrant Agent shall join with the Company in the execution and delivery of any such amendment; provided, that, as a condition precedent to the Warrant Agent’s execution of any such amendment to this Agreement, the Company shall deliver to the Warrant Agent a certificate from an Appropriate Officer that states that the proposed amendment is in compliance with the terms of this Section 14. Notwithstanding anything in this Agreement to the contrary, the Warrant Agent shall not be required to execute any amendment to this Agreement that it has determined would adversely affect its own rights, duties, obligations or immunities under this Agreement and no amendment to this Agreement shall be effective unless duly executed by the Warrant Agent. Upon execution and delivery of any amendment pursuant to this Section 14, such amendment shall be considered a part of this Agreement for all purposes and every Holder of a Book-Entry Warrant or a Warrant Certificate theretofore or thereafter countersigned and delivered hereunder shall be bound thereby.
(e) Promptly after the execution by the Company and the Warrant Agent of any such amendment, the Company shall give notice to the Holders of Book-Entry Warrants and Warrant Certificates, setting forth in general terms the substance of such amendment, in accordance with the provisions of Section 11.1(b). Any failure of the Company to mail such notice or any defect therein, shall not, however, in any way impair or affect the validity of any such amendment.
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15. Waivers.
The Company may take any action herein prohibited, or omit to perform any act herein required to be performed by it, only if the Company has obtained the written consent of the Required Warrant Holders and the prior written consent of the Warrant Agent.
16. Successors.
The terms and provisions of this Agreement shall inure to the benefit of, and be binding upon, the Company, the Warrant Agent and the Holders and their respective successors and permitted assigns.
17. Headings.
The section headings contained in this Agreement are inserted for convenience only and will not affect in any way the meaning or interpretation of this Agreement.
18. Counterparts.
This Agreement may be executed in two or more counterparts, each of which will be deemed to be an original, but all of which together constitute one and the same instrument. A signature to this Agreement transmitted electronically shall have the same authority, effect and enforceability as an original signature.
19. Severability.
The provisions of this Agreement will be deemed severable and the invalidity or unenforceability of any provision hereof will not affect the validity or enforceability of the other provisions hereof; provided, that, if any provision of this Agreement, as applied to any party or to any circumstance, is adjudged by a court or governmental body not to be enforceable in accordance with its terms, the parties agree that the court or governmental body making such determination will have the power to modify the provision in a manner consistent with its objectives such that it is enforceable, and/or to delete specific words or phrases, and in its reduced form, such provision will then be enforceable and will be enforced; further, provided, that, if such excluded provision shall affect the rights, immunities, liabilities, duties or obligations of the Warrant Agent, the Warrant Agent shall be entitled to resign immediately upon written notice to the Company.
20. Persons Benefiting.
This Agreement shall be binding upon and inure to the benefit of the Company, the Warrant Agent and the Holders from time to time. Nothing in this Agreement, express or implied, is intended to confer upon any person other than the Company, the Warrant Agent and the Holders any rights or remedies under or by reason of this Agreement or any part hereof, and all covenants, conditions, stipulations, promises and agreements contained in this Agreement shall be for the sole and exclusive benefit of the parties hereto and of the Holders. Each Holder, by acceptance of a Book-Entry Warrant or a Warrant Certificate, agrees to all of the terms and provisions of this Agreement applicable thereto.
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21. Applicable Law.
THIS AGREEMENT, EACH WARRANT CERTIFICATE ISSUED HEREUNDER, EACH WARRANT EVIDENCED THEREBY AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HERETO AND THERETO, INCLUDING THE INTERPRETATION, CONSTRUCTION, VALIDITY AND ENFORCEABILITY THEREOF, SHALL BE GOVERNED BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
22. Entire Agreement.
This Agreement sets forth the entire agreement of the parties hereto as to the subject matter hereof and supersedes all previous agreements among all or some of the parties hereto with respect thereto, whether written, oral or otherwise.
23. Force Majeure.
Notwithstanding anything to the contrary contained herein, the Warrant Agent will not be liable for any delays or failures in performance resulting from acts beyond its reasonable control including, without limitation, acts of God, terrorist acts, epidemics, pandemics, government orders, shortage of supply, disruptions in public utilities, interruptions or malfunction of computer facilities, or loss of data due to power failures or mechanical difficulties with information storage or retrieval systems, labor difficulties, war, or civil unrest.
24. Further Assurances.
The Company shall perform, acknowledge and deliver or cause to be performed, acknowledged and delivered all such further and other acts, documents, instruments and assurances as may be reasonably required by the Warrant Agent in order to enable it to carry out or perform its duties under this Agreement.
25. Confidentiality.
The Warrant Agent and the Company agree that all books, records, information and data pertaining to the business of the other party, including inter alia, personal, non-public warrant holder information, which are exchanged or received pursuant to the negotiation or the carrying out of this Agreement including the agreed upon fees for services shall remain confidential, and shall not be voluntarily disclosed to any other person, except as may be required by law, including, without limitation, pursuant to subpoenas from state or federal government authorities (e.g., in divorce and criminal actions). However, each party may disclose relevant aspects of the other party’s confidential information to its officers, affiliates, agents, subcontractors and employees to the extent reasonably necessary to perform its duties and obligations under this Agreement and such disclosure is not prohibited by applicable law.
[Remainder of Page Intentionally Left Blank]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and delivered as of the day and year first above written.
| Lonestar Resources US Inc., a Delaware corporation | ||||
| By: | /s/ Frank D. Bracken III | |||
| Name: | Frank D. Bracken III | |||
| Title: | Chief Executive Officer | |||
| Computershare Inc. and Computershare Trust Company, N.A. On behalf of both entities | ||||
| By: | /s/ Collin Ekeogu | |||
| Name: | Collin Ekeogu | |||
| Title: | Manager, Corporation Actions | |||
[Signature Page to Warrant Agreement]
EXHIBIT A
FORM OF WARRANT STATEMENT
| Lonestar Resources US Inc. | DRS Warrant Distribution Statement | |||
| CUSIP Number | Account Number/Account Key | |||
| Ticker Symbol | Investor ID | |||
| Issuance Date | Distribution | |||
[ ]
[ ]
[ ]
[ ]
| Tranche 2 Warrants Issued To You In Book-Entry Form |
| [ ] |
PLEASE RETAIN THIS STATEMENT FOR YOUR RECORDS
These Tranche 2 Warrants are maintained for you under the Direct Registration System, which means they are held for you in an electronic, book-entry account maintained by Computershare Inc. Please retain this statement for your permanent record.
| Questions? Contact Computershare Inc. | ||||
| To access your account, use your Investor ID Number that is located in the box above on the top right hand corner of this statement. You can contact Computershare Inc. in one of the following ways: | ||||
| By Internet: Visit www.computershare.com for access to your account. You will be able to certify your Taxpayer Identification Number/Social Security Number, change your address or sell warrants. | ||||
| By Phone: | By Mail: | |||
| Toll Free Number | [●] | Lonestar Resources US Inc. | ||
| Outside the U.S. (Collect) | [●] | c/o Computershare | ||
| Hearing Impaired | [●] | [●] | ||
| Representatives are available [●] a.m. to [●] p.m. Eastern Time weekdays | [●] | |||
[Request for Taxpayer Identification and Certification
Our records indicate that we do not have a certified Taxpayer Identification Number (“TIN”) on file. Without a certified TIN, we may be required by law to withhold [●]% from any future payments and any sale transaction that you request. Logon to [●] to certify your TIN or contact us by phone to request a Substitute Form W-9.]
SEE REVERSE SIDE FOR IMPORTANT INFORMATION
This statement is your record that the Tranche 2 Warrants have been credited to your account on the books of maintained by Computershare Inc., under the Direct Registration System. Please verify all information on the reverse side of this statement. This statement is neither a negotiable instrument nor a security, and delivery of this statement does not itself confer any rights on the recipient. Nevertheless, it should be kept with your important documents as a record of your ownership of these securities.
Transfer ownership of your book-entry warrants at any time by submitting the appropriate warrant transfer documents to [●]. Visit [●]’s Investor ServiceDirect online at [●] or call [●] to obtain transfer documents.
[Transfer of your book-entry warrants to your broker can be accomplished in one of two ways:
(1) The fastest and easiest way is to provide your broker with your Account Key at [●], your Taxpayer Identification Number (TIN) and your account registration information, and request that your broker initiate an electronic transfer of your warrants, or
(2) Obtain a “Broker-Dealer Authorization Form” by visiting [●] or by calling [●].]
The Warrant Agreement, dated November 30, 2020 (the “Warrant Agreement”), among (the “Company”) and Computershare Inc. and Computershare Trust Company, N.A, together, as Warrant Agent (the “Warrant Agent”), is incorporated by reference into and made a part of this statement, and this statement is qualified in its entirety by reference to the Warrant Agreement. A copy of the Warrant Agreement may be inspected at the Warrant Agent’s office at 150 Royall Street, Canton, MA 02021. All capitalized terms used but not defined herein shall have the meanings assigned to them in the Warrant Agreement.
Subject to the provisions of the Warrant Agreement, Book-Entry Warrants may be exercised to purchase shares of Common Stock (subject to adjustment as provided in Section 5 of the Warrant Agreement) from the Company from the first anniversary of Original Issue Date through 5:00 p.m. New York City time on the Expiration Date, at an exercise price of $0.001 per share of Common Stock (as adjusted from time to time, the “Exercise Price”). The number of shares of Common Stock purchasable upon exercise of the Warrants is subject to adjustment upon the occurrence of certain events as set forth in the Warrant Agreement. Subject to the terms and conditions set forth in the Warrant Agreement, each Holder of a Book-Entry Warrant may exercise such Book-Entry Warrant, in whole or from time to time in part, by: (1) delivering to the Warrant Agent at the Corporate Agency Office an Exercise Form, setting forth the number of Warrants being exercised and, if applicable, whether Cashless Exercise is being elected with respect thereto, and otherwise properly completed and duly executed by the Holder thereof as well as any such other information the Warrant Agent may reasonably require, and (2) paying to the Warrant Agent an amount equal to (x) all taxes and charges required to be paid by the Holder, if any, prior to, or concurrently with, exercise of such Warrants pursuant to the Warrant Agreement and (y) except in the case of a Cashless Exercise, the aggregate of the Exercise Price in respect of each share of Common Stock into which such Warrants are exercisable. Upon due exercise of Warrants as described in the preceding sentence, the Warrant Agent shall deliver to the Company the Exercise Form and all funds received and the Company shall thereupon, as promptly as practicable, and in any event within two (2) Business Days after the Exercise Date, (i) determine the number of shares of Common Stock issuable pursuant to exercise of such Warrants or if Cashless Exercise applies, and (ii) execute or cause to be executed and deliver or cause to be delivered to the Recipient shares of Common Stock in book entry form in an amount equal to, or a certificate or certificates representing the aggregate number of shares of Common Stock issuable upon such exercise (based upon the aggregate number of Warrants so exercised), as so determined, together with an amount in cash in lieu of any fractional share(s), if the Company so elects as described below and in accordance with the terms set forth in the Warrant Agreement.
The Company shall not be required to issue any fractional share of Common Stock in connection with the exercise of Warrants. All shares of Common Stock issuable upon exercise of more than one Warrant by a holder thereof shall be aggregated for purposes of determining whether the conversion would result in the issuance of any fractional share. If, after the aforementioned aggregation, the exercise would result in the issuance of any fractional share, the Company may, in lieu of issuing any fractional share, make an adjustment therefore in cash on the basis of the Current Market Price per share of Common Stock on the date of such exercise.
THE WARRANTS REPRESENTED BY THIS STATEMENT ARE SUBJECT TO CERTAIN RESTRICTIONS ON EXERCISE, TRANSFER, SALE, ASSIGNMENT, PLEDGE, ENCUMBRANCE OR OTHER SIMILAR TRANSFER AS SET FORTH IN THE WARRANT AGREEMENT AMONG THE COMPANY AND THE WARRANT AGENT (ON BEHALF OF THE ORIGINAL HOLDERS OF THE WARRANT SHARES) (THE “WARRANT AGREEMENT”). DURING THE EXCHANGE PERIOD, THE WARRANTS (AND ANY BENEFICIAL INTERESTS THEREIN) MAY NOT BE TRANSFERRED (AS DEFINED IN THE WARRANT AGREEMENT) AND THE WARRANTS MAY NOT BE EXERCISED. COPIES OF THE WARRANT AGREEMENT MAY BE OBTAINED AT THE PRINCIPAL OFFICE OF THE COMPANY.
[FORM OF ASSIGNMENT]
FOR VALUE RECEIVED, the undersigned registered holder of the Book-Entry Warrant hereby sells, assigns and transfers unto the Assignee(s) named below (including the undersigned with respect to any Warrants constituting a part of the Warrants evidenced by the Warrant Statement not being assigned hereby) all of the rights of the undersigned under the Book-Entry Warrant, with respect to the whole number of Tranche 2 Warrants set forth below:
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and does hereby irrevocably constitute and appoint
the undersigned’s attorney to make such transfer on the books of
maintained for such purposes, with full power of substitution in the premises.
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EXHIBIT B
[FACE OF TRANCHE 2 WARRANT CERTIFICATE]1
LONESTAR RESOURCES US INC.
TRANCHE 2 WARRANT CERTIFICATE
EVIDENCING
TRANCHE 2 WARRANTS TO PURCHASE COMMON STOCK
[FACE]
| No. [ ] | CUSIP No. 54240F 129 |
[UNLESS THIS GLOBAL TRANCHE 2 WARRANT CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION (“DTC”), TO LONESTAR RESOURCES US INC. (THE “COMPANY”), THE CUSTODIAN OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
TRANSFER OF THIS GLOBAL TRANCHE 2 WARRANT CERTIFICATE SHALL BE LIMITED TO TRANSFERS IN WHOLE, AND NOT IN PART, TO THE COMPANY, DTC, THEIR SUCCESSORS AND THEIR RESPECTIVE NOMINEES.]2
| 1 | NTD: To be removed in the versions of the Definitive Warrant Certificates printed in multiple copies for use by the Warrant Agent in preparing Definitive Warrants Certificates for issuance and delivery from time to time to holders. |
| 2 | NTD: Include only on Global Warrant Certificate. |
LONESTAR RESOURCES US INC.
| No. [ ] | [ , , ] Warrants | |
| CUSIP No. 54240F 129 |
THIS CERTIFIES THAT, for value received, [ ], or registered assigns, is the registered owner of the number of Warrants to purchase Common Stock of Lonestar Resources US Inc., a Delaware corporation (the “Company”, which term includes any successor thereto under the Warrant Agreement (as may be supplemented, amended or amended and restated pursuant to the applicable provisions hereof, the “Warrant Agreement”), dated as of November 30, 2020, between the Company, Computershare Inc., a Delaware corporation, and its wholly-owned subsidiary Computershare Trust Company, N.A., a federally chartered trust company (collectively, the “Warrant Agent”, which term includes any successor thereto permitted under the Warrant Agreement)) specified above [or such lesser number as may from time to time be endorsed on the “Schedule of Decreases in Warrants” attached hereto]3, and is entitled, subject to and upon compliance with the provisions hereof and of the Warrant Agreement, at such Holder’s option, at any time when the Warrants evidenced hereby are exercisable, to purchase from the Company one share of Common Stock for each Warrant evidenced hereby, at the purchase price of $0.001 per share of Common Stock (as adjusted from time to time, the “Exercise Price”), payable in full at the time of purchase, the number of shares of Common Stock into which and the Exercise Price at which each Warrant shall be exercisable each being subject to adjustment as provided in Section 5 of the Warrant Agreement.
This Warrant Certificate is subject to all of the terms, provisions and conditions of the Warrant Agreement, which terms, provisions and conditions are hereby incorporated herein by reference and made a part hereof and to which Warrant Agreement reference is hereby made for a full description of the rights, limitations of rights, obligations, duties and immunities hereunder of the Warrant Agent, the Company and the Holders of the Warrant Certificate.
All shares of Common Stock issuable by the Company upon the exercise of Warrants shall, upon such issuance, be duly and validly issued and fully paid and nonassessable. The Company shall pay any and all taxes (other than income or withholding taxes) that may be payable in respect of the issue or delivery of shares of Common Stock on exercise of Warrants. The Company shall not be required, however, to pay any tax or other charge imposed in respect of any transfer involved in the issue and delivery of shares of Common Stock in book-entry form or any certificates for Common Stock or payment of cash to any Person other than the Holder of the Warrant Certificate evidencing the exercised Warrant, and in case of such transfer or payment, the Warrant Agent and the Company shall not be required to issue or deliver any shares of Common Stock in book-entry form or any certificate or pay any cash until (a) such tax or charge has been paid or an amount sufficient for the payment thereof has been delivered to the Warrant Agent or to the Company, (b) it has been established to the Company’s satisfaction that any such tax or other charge that is or
may become due has been paid or (c) the receipt of any other such information as set forth in the Warrant Agreement.
| 3 | Include only on Global Warrant Certificate. |
B-2
Each Warrant evidenced hereby may be exercised by the Holder hereof at the Exercise Price then in effect on any Business Day from and after the Original Issue Date until 5:00 p.m., New York time, on the Expiration Date in the Warrant Agreement.
Subject to the provisions hereof and of the Warrant Agreement, the Holder of this Warrant Certificate may exercise all or any whole number of the Warrants evidenced hereby by, in the case of a Global Warrant Certificate, by delivery to the Warrant Agent of the Exercise Form on the reverse hereof, setting forth the number of Warrants being exercised and, if applicable, whether Cashless Exercise is being elected with respect thereto, and otherwise properly completed and duly executed by the Holder thereof to the Warrant Agent, and delivering such Warrants by book-entry transfer through the facilities of the Depositary, to the Warrant Agent in accordance with the Applicable Procedures and otherwise complying with Applicable Procedures in respect of the exercise of such Warrants or, in the case of a Definitive Warrant Certificate, by delivery to the Warrant Agent of the Exercise Form on the reverse hereof, setting forth the number of Warrants being exercised and, if applicable, whether Cashless Exercise is being elected with respect thereto, and otherwise properly completed and duly executed by the Holder thereof to the Warrant Agent, and surrendering this Warrant Certificate to the Warrant Agent at its office maintained for such purpose (the “Corporate Agency Office”), together with payment in full of the Exercise Price as then in effect for each share of Common Stock receivable upon exercise of each Warrant being submitted for exercise unless Cashless Exercise is being elected with respect thereto. Any such payment of the Exercise Price is to be by wire transfer in immediately available funds to such account of the Company at such banking institution as the Company shall have designated from time to time for such purpose.
Reference is hereby made to the further provisions of this Warrant Certificate set forth on the reverse hereof, which further provisions shall for all purposes have the same effect as if set forth at this place.
Unless this Warrant Certificate has been countersigned by the Warrant Agent by manual or facsimile signature of an authorized officer on behalf of the Warrant Agent, this Warrant Certificate shall not be valid for any purpose and no Warrant evidenced hereby shall be exercisable.
IN WITNESS WHEREOF, the Company has caused this certificate to be duly executed under its corporate seal.
Dated: [ ], 20[ ]
| LONESTAR RESOURCES US INC. | ||||||
| [SEAL] | By: |
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| [Title] | ||||||
| ATTEST: | ||||||
B-3
| Countersigned: | ||||||||
| Computershare Trust Company, N.A., as Warrant Agent | [ ] | |||||||
| OR | ||||||||
| By: |
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By: |
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| Authorized Agent | as Countersigning Agent | |||||||
| By: |
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| Authorized Officer | ||||||||
Reverse of Tranche 2 Warrant Certificate
LONESTAR RESOURCES US INC.
TRANCHE 2 WARRANT CERTIFICATE
EVIDENCING
TRANCHE 2 WARRANTS TO PURCHASE COMMON STOCK
The Warrants evidenced hereby are one of a duly authorized issue of Warrants of the Company designated as its Tranche 2 Warrants to Purchase Common Stock (“Warrants”), limited in aggregate number to [●] issued under and in accordance with the Warrant Agreement, dated as of November 30, 2020 (the “Warrant Agreement”), between the Company, Computershare Inc., a Delaware corporation, and its wholly-owned subsidiary Computershare Trust Company, N.A., a federally chartered trust company (collectively, the “Warrant Agent”, which term includes any successor thereto permitted under the Warrant Agreement), to which the Warrant Agreement and all amendments thereto reference is hereby made for a statement of the respective rights, limitations of rights, duties and immunities thereunder of the Company, the Warrant Agent, the Holders of Warrant Certificates and the owners of the Warrants evidenced thereby and of the terms upon which the Warrant Certificates are, and are to be, countersigned and delivered. A copy of the Warrant Agreement shall be available at all reasonable times at the office of the Warrant Agent for inspection by the Holder hereof.
The Exercise Price and the number of shares of Common Stock purchasable upon exercise of the Warrants are subject to adjustment upon the occurrence of certain events as set forth in the Warrant Agreement.
Except as provided in the Warrant Agreement, all outstanding Warrants shall expire and all rights of the Holders of Warrant Certificates evidencing such Warrants shall automatically terminate and cease to exist, as of 5:00 p.m., New York time, on the Expiration Date. The “Expiration Date” shall mean the earliest to occur of (x) November 30, 2023 (the third (3rd) anniversary of the Original Issue Date) or, if not a Business Day, then the next Business Day thereafter, (y) the Sale Date in the event a Sale of the Company occurs and (z) a Winding Up.
B-4
In the event of the exercise of less than all of the Warrants evidenced hereby, a new Warrant Certificate of the same tenor and for the number of Warrants which are not exercised shall be issued by the Company in the name or upon the written order of the Holder of this Warrant Certificate upon the cancellation hereof.
The Warrant Certificates are issuable only in registered form in denominations of whole numbers of Warrants. Upon surrender at the office of the Warrant Agent and payment of the charges specified herein and in the Warrant Agreement, this Warrant Certificate may be exchanged for Warrant Certificates in other authorized denominations or the transfer hereof may be registered in whole or in part in authorized denominations to one or more designated transferees; provided, however, that such other Warrant Certificates issued upon exchange or registration of transfer shall evidence the same aggregate number of Warrants as this Warrant Certificate. The Company shall cause to be kept at the office or offices of the Warrant Agent the Warrant Register in which, subject to such reasonable regulations as the Warrant Agent may prescribe and such regulations as may be prescribed by law, the Company shall provide for the registration of Warrant Certificates and of transfers or exchanges of Warrant Certificates. No service charge shall be made for any registration of transfer or exchange of Warrant Certificates; provided, however, the Company may require payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in connection with any registration of transfer or exchange of Warrant Certificates.
Prior to due presentment of this Warrant Certificate for registration of transfer, the Company, the Warrant Agent and any agent of the Company or the Warrant Agent may treat the Person in whose name this Warrant Certificate is registered as the owner hereof for all purposes, and neither the Company, the Warrant Agent nor any such agent shall be affected by notice to the contrary.
The Warrant Agreement permits, with certain exceptions as therein provided, the amendment thereof and the modification of the rights and obligations of the Company and the rights of the Holders of Warrant Certificates under the Warrant Agreement at any time by the Company and the Warrant Agent with the consent of the Required Warrant Holders.
Until the exercise of any Warrant, subject to the provisions of the Warrant Agreement and except as may be specifically provided for in the Warrant Agreement, no Holder of a Warrant Certificate evidencing any Warrant shall have the right to be deemed a holder of Common Stock for any purpose or to exercise any rights whatsoever as a holder of Common Stock, including, without limitation, the right to vote, to receive dividends or distributions, to receive subscription rights, to exercise appraisal rights or otherwise, or to receive notice of, or attend, meetings or any other proceedings of the holders of Common Stock, unless and until the exercise of the Warrants hereof and the date the Warrant Shares are required to be delivered hereunder. Prior to the exercise hereof of the Warrants and the date the Warrant Shares are required to be delivered hereunder, subject to the terms in the Plan, the consent of any Holder of a Book-Entry Warrant or a Warrant Certificate shall not be required with respect to any action or proceeding of the Company.
This Warrant Certificate, each Warrant evidenced thereby and the Warrant Agreement shall be governed by and construed in accordance with the laws of the State of New York.
B-5
All terms used in this Warrant Certificate which are defined in the Warrant Agreement shall have the meanings assigned to them in the Warrant Agreement.
B-6
Exercise Form
Computershare Trust Company N.A.
150 Royall Street
Canton, MA 02021
Attention: Corporate Actions
cc:
Computershare Inc.
480 Washington Boulevard, 29th Floor
Jersey City, New Jersey 07310
Attention: Legal Department
Re: Lonestar Resources US Inc. Warrant Agreement, dated as of November 30, 2020
In accordance with and subject to the terms and conditions hereof and of the Warrant Agreement, the undersigned Holder of this Warrant Certificate hereby irrevocably elects to exercise Warrants evidenced by this Warrant Certificate and represents that for each of the Warrants evidenced hereby being exercised such Holder either has (please check one box only):
| ☐ | tendered the Exercise Price in the aggregate amount of $ by wire transfer in immediately available funds to such account of the Company at such banking institution as the Company shall have designated from time to time for such purpose; or |
| ☐ | elected a “Cashless Exercise”. |
The undersigned requests that the shares of Common Stock issuable upon exercise be in fully registered form in such denominations and registered in such names and delivered, together with any other property receivable upon exercise, in such manner as is specified in the instructions set forth below.
If the number of Warrants exercised is less than all of the Warrants evidenced hereby, (i) if this Warrant Certificate is a Global Warrant Certificate, the Warrant Agent shall endorse the “Schedule of Decreases in Warrants” attached hereto to reflect the Warrants being exercised or (ii) if this Warrant Certificate is a Definitive Warrant Certificate, the undersigned requests that a new Definitive Warrant Certificate representing the remaining Warrants evidenced hereby be issued and delivered to the undersigned unless otherwise specified in the instructions below.
B-7
| Dated: |
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Name: |
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| (Insert Social Security or Other Identifying Number of Holder) |
Address: |
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| (Signature must conform in all respects to name of Holder as specified on the face of this Warrant Certificate and must bear a signature guarantee by a bank, trust company or member firm of a U.S. national securities exchange.) | ||||||||
Signature Guaranteed:
Instructions (i) as to denominations of shares of Common Stock issuable upon exercise and as to delivery of such securities and any other property issuable upon exercise and (ii) if applicable, as to Definitive Warrant Certificates evidencing unexercised Warrants:
Assignment
(Form of Assignment To Be Executed If Holder Desires To Transfer Warrant Certificate)
FOR VALUE RECEIVED hereby sells, assigns and transfers unto
Please insert social security or other identifying number
(Please print name and address including zip code)
the Warrants represented by the within Warrant Certificate and does hereby irrevocably constitute and appoint Attorney, to transfer said Warrant Certificate on the books of the within-named Company with full power of substitution in the premises.
| Dated: |
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Signature |
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| (Signature must conform in all respects to name of Holder as specified on the face of this Warrant Certificate and must bear a signature guarantee by a bank, trust company or member firm of a U.S. national securities exchange.) | ||||||||
B-8
SCHEDULE OF DECREASES IN WARRANTS
The following decreases in the number of Warrants evidenced by this Global Warrant Certificate have been made:
| Date |
Amount of decrease in number of Warrants evidenced by this Global Warrant Certificate |
Number of Warrants evidenced by this Global Warrant Certificate following such decrease |
Signature of authorized signatory]4 |
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| 4 | NTD: Include only on Global Warrant Certificate. |
B-9
Exhibit 10.5
Employment Agreement
This Employment Agreement (this “Agreement”), dated as of November 30, 2020, is made by and between Lonestar Resources US Inc. (together with any successor thereto, the “Company”), and Frank Bracken (the “Executive”) (each a “Party” and collectively referred to herein as the “Parties”).
RECITALS
| A. | This Agreement is entered into in connection with the Company’s Joint Prepackaged Plan of Reorganization for Lonestar Resources US Inc. and its Affiliate Debtors Under Chapter 11 of the Bankruptcy Code, dated September 28, 2020 [Docket No. 29] (as amended, modified, or supplemented, the “Plan” and such transactions contemplated thereunder, the “Reorganization”). |
| B. | It is the desire of the Company to continue to assure itself of the services of Executive by engaging the Executive to continue to perform services under the terms hereof. |
| C. | Executive desires to continue to provide services to the Company on the terms herein provided. |
| D. | This Agreement supersedes any prior agreements or understandings, whether formal or informal, between Executive and the Company and any of its affiliates. |
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing and of the respective covenants and agreements set forth below, the Parties hereto agree as follows:
1. Employment.
(a) Employment Term. The term of employment under this Agreement (the “Term”) shall be for the period beginning on the Effective Date (as defined in the Plan) (the “Effective Date”) and ending on the second anniversary of the Effective Date, subject to earlier termination as provided in Section 3. The Term may renew for additional periods upon mutual written agreement of Executive and the Board of Directors of the Company or an authorized committee (in any case, the “Board”) prior to the end of the then-applicable Term (the “Expiration Date”). In the event Executive or the Board do not elect to renew the Term pursuant to this Section 1(a), Executive’s employment will terminate on the Expiration Date, subject to earlier termination as provided in Section 3; provided, that such termination on the Expiration Date shall not constitute or be deemed to constitute a termination without Cause (as described in Section 3(a)(iv)) or a resignation from the Company for Good Reason (as described in Section 3(a)(v)). Notwithstanding the foregoing, in the event of a Change in Control (as defined below), the Term shall automatically renew until the second anniversary of the effective date of such Change in Control, subject to earlier termination as provided in Section 3.
(b) Position and Duties. Executive shall serve as Chief Executive Officer of the Company with such responsibilities, duties and authority normally associated with such position and as may from time to time be assigned to Executive by the Board. Executive shall also serve as a member of the Board. Executive shall devote substantially all of Executive’s working time and efforts to the business and affairs of the Company (which shall include service to its affiliates but for no additional compensation) and shall not engage in outside business activities without the consent of the Board; provided, that Executive shall be permitted to (i) manage Executive’s personal, financial and legal affairs, (ii) participate in trade associations, (iii) serve on the board of directors of not-for-profit or tax-exempt charitable organizations, and (iv) additional for-profit entities (subject to the prior consent of the Board not to be unreasonably
withheld), in each case, subject to compliance with this Agreement and provided that such activities do not result in a conflict of interest or materially interfere with Executive’s performance of Executive’s duties and responsibilities hereunder. Executive agrees to observe and comply with the rules and policies of the Company and its affiliates as adopted by the Company or its affiliates from time to time, in each case as amended from time to time, as set forth in writing, and as delivered or made available to Executive (each, a “Policy”).
(c) Principal Place of Employment. Executive’s principal place of employment shall be in Fort Worth, Texas, although Executive understands and agrees that Executive will be required to travel from time to time for business reasons.
2. Compensation and Related Matters. During the Term, Executive will be entitled to the following:
(a) Annual Base Salary. Executive shall receive a base salary at a rate of $525,000 per annum, which shall be paid in accordance with the customary payroll practices of the Company and shall be pro-rated for partial years of employment. Such annual base salary shall be reviewed (and may be increased) from time to time by the Board or a Board committee (such annual base salary, as it may be increased from time to time, the “Annual Base Salary”). The Annual Base Salary may not be decreased during the Term, except as part of a general proportional reduction for all senior executives.
(b) Annual Bonus. Executive will be eligible to participate in an annual incentive program established by the Board. Executive’s annual incentive compensation under such incentive program (the “Annual Bonus”) for calendar years of service in 2021 and thereafter shall be targeted at 100% of the Annual Base Salary and which will not exceed 200% of such target. Such target Annual Bonus shall be reviewed (and may be increased) from time to time by the Board (such target Annual Bonus, as it may be increased from time to time, the “Target Annual Bonus”). The Target Annual Bonus may be increased from time to time by the Board or Committee but not decreased other than as a part of a general proportional reduction for all senior executives. The bonus will scale upward and downward based on actual performance, as determined by the Board or a Board committee. The Annual Bonus shall be based upon the achievement of individual and Company performance metrics established by the Board or a Board committee in its sole discretion during the first calendar quarter of the year after prior consultation with the Executive. The payment of any Annual Bonus pursuant to the incentive program shall be subject to Executive’s continued employment with the Company through the date of payment, except as otherwise provided in Section 4, and any Annual Bonus (i) shall be paid to Executive in the calendar year following the calendar year for which such Annual Bonus is earned but no later than March 15th of such calendar year and (ii) is subject to clawback pursuant to any applicable Company clawback policy as then in effect. Notwithstanding the foregoing, a bonus for 2020, if any, will be in the sole discretion of the Board.
(c) Benefits. Executive shall be eligible to participate in employee benefit plans, programs and arrangements of the Company (including medical, dental and defined contribution retirement plans), consistent with the terms thereof and as such plans, programs and arrangements may be amended from time to time. In no event shall Executive be eligible to participate in any severance plan, arrangement or program of the Company, except as set forth in Section 4 of this Agreement.
(d) Equity Compensation. Executive shall be eligible to participate in a management incentive plan to be implemented by the Company within 60 days following the Effective Date (or as soon as reasonably practicable thereafter) subject to the terms and conditions therein as determined by the Board.
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(e) Vacation. Executive shall be entitled to paid personal leave in accordance with the Company’s Policies. Any vacation shall be taken at the reasonable and mutual convenience of the Company and Executive.
(f) Business Expenses. The Company shall reimburse Executive for all reasonable travel and other business expenses reasonably incurred by Executive in the performance of Executive’s duties to the Company in accordance with the Company’s expense reimbursement Policy.
(g) Key Person Insurance. At any time during the Term, the Company shall have the right to insure the life of Executive for the Company’s sole benefit. The Company shall have the right to determine the amount of insurance and the type of policy. Executive shall reasonably cooperate with the Company in obtaining such insurance by submitting to physical examinations, by supplying all information reasonably required by any insurance carrier, and by executing all necessary documents reasonably required by any insurance carrier, provided that any information provided to an insurance company or broker shall not be provided to the Company without the prior written authorization of Executive. Executive shall incur no financial obligation by executing any required document, and shall have no interest in any such policy.
3. Termination.
Executive’s employment hereunder may be terminated by the Company or Executive, as applicable, without any breach of this Agreement under the following circumstances:
(a) Circumstances.
(i) Death. Executive’s employment hereunder shall terminate upon Executive’s death.
(ii) Disability. If Executive has incurred a Disability, as defined below, the Company may terminate Executive’s employment.
(iii) Termination for Cause. The Company may terminate Executive’s employment for Cause, as defined below.
(iv) Termination without Cause. The Company may terminate Executive’s employment without Cause.
(v) Resignation from the Company for Good Reason. Executive may resign Executive’s employment with the Company for Good Reason, as defined below.
(vi) Resignation from the Company Without Good Reason. Executive may resign Executive’s employment with the Company for any reason other than Good Reason or for no reason.
(vii) Upon Expiration of the Term. Executive’s employment hereunder shall terminate upon expiration of the Term pursuant to Section 1(a). For the avoidance of doubt, expiration of the Term shall not constitute termination by the Company without Cause or resignation by the Executive for Good Reason.
(b) Notice of Termination. Any termination of Executive’s employment by the Company or by Executive under this Section 3 (other than termination pursuant to paragraph (a)(i) or paragraph
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(a)(vii)) shall be communicated by a written notice to the other Party hereto (i) indicating the specific termination provision in this Agreement relied upon, (ii) in the event of a termination pursuant to paragraph (a)(iii) or (a)(v), setting forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of Executive’s employment under the provision so indicated, and (iii) specifying a Date of Termination which, if submitted by Executive, shall be at least thirty (30) days following the date of such notice (a “Notice of Termination”); provided, however, that in the event that Executive delivers a Notice of Termination to the Company, the Company may, in its sole discretion, change the Date of Termination to any date that occurs following the date of the Company’s receipt of such Notice of Termination and is prior to the date specified in such Notice of Termination (without any additional payment for such waived period), but the termination will still be considered a resignation by Executive. A Notice of Termination submitted by the Company may provide for a Date of Termination on the date Executive receives the Notice of Termination, or any date thereafter elected by the Company in its sole discretion. Notwithstanding clause (ii) of this Section 3(b), the failure by the Company or Executive to set forth in the Notice of Termination any fact or circumstance which contributes to a showing of Cause or Good Reason shall not waive any right of such Party hereunder or preclude such Party from asserting such fact or circumstance in enforcing such Party’s rights hereunder at any time.
(c) Company Obligations upon Termination. Upon termination of Executive’s employment pursuant to any of the circumstances listed in Section 3, Executive (or Executive’s estate) shall be entitled to receive the sum of: (i) the portion of Executive’s Annual Base Salary earned through the Date of Termination, but not yet paid to Executive, (ii) any vacation time that has been accrued but unused in accordance with the Company’s Policies, (iii) any reimbursements owed to Executive and duly substantiated in accordance with Company Policy pursuant to Section 2, and (iv) any amount accrued and arising from Executive’s participation in, or benefits accrued under any employee benefit plans, programs or arrangements, which amounts shall be payable in accordance with the terms and conditions of such employee benefit plans, programs or arrangements (collectively, the “Company Arrangements”). Such amounts shall be paid in a lump soon as soon as practicable but in no event later than the thirtieth (30th) day following termination. In addition, upon termination of Executive’s employment pursuant to any of the circumstances listed in Section 3, other than pursuant to Section 3(a)(iii) for Cause or Section 3(a)(vi) for Executive’s resignation from the Company without Good Reason or for no reason, Executive (or Executive’s estate) shall also be entitled to receive any unpaid Annual Bonus earned by Executive for the completed year prior to the year in which the Date of Termination occurs, as determined by the Board in its discretion based upon actual performance achieved, which Annual Bonus, if any, shall be paid to Executive when bonuses for such year are paid to actively employed senior executives of the Company, but in no event later than March 15 of the year in which the Date of Termination occurs. Except as otherwise expressly required by law (e.g., COBRA) or as specifically provided herein, all of Executive’s rights to salary, severance, benefits, bonuses and other compensatory amounts hereunder (if any) shall cease upon the termination of Executive’s employment hereunder. In the event that Executive’s employment is terminated by the Company for any reason, Executive’s sole and exclusive remedy shall be to receive the payments and benefits described in this Section 3(c) or Section 4, as applicable.
(d) Deemed Resignation. Upon termination of Executive’s employment for any or no reason by the Company or Executive, Executive shall be deemed to have resigned from all offices and directorships, if any, then held with the Company or any of its affiliates.
4. Severance Payments.
(a) Termination upon Death or Disability. If Executive’s employment is terminated as a result of Executive’s death pursuant to Section 3(a)(i) or by the Company due to Executive’s Disability pursuant to Section 3(a)(ii), then Executive (or Executive’s estate) shall receive, in addition to the payments and benefits set forth in Section 3(c), an amount in cash equal to a pro-rata portion of the
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Annual Bonus for the year in which the Date of Termination occurs, determined by multiplying (A) the Annual Bonus amount based on actual performance for the year as determined by the Board by (B) a fraction, using the number of full months of the year elapsed prior to the Date of Termination as the numerator and 12 as the denominator, payable when bonuses for such year are paid to actively employed senior executives of the Company, but in no event later than March 15 of the year following the year in which the Date of Termination occurs.
(b) Termination without Cause or Resignation from the Company for Good Reason. If Executive’s employment is terminated by the Company without Cause pursuant to Section 3(a)(iv), or pursuant to Section 3(a)(v) due to Executive’s resignation for Good Reason, in either case, which termination does not occur within twenty-four (24) months following the date of a Change in Control, then, subject to Executive signing on or before the 60th day following Executive’s Separation from Service (as defined below), and not revoking, a separation agreement and release of claims substantially in the form attached as Exhibit A to this Agreement (the “Release”), and Executive’s continued compliance with Section 5 and Section 6, Executive shall receive, in addition to payments and benefits set forth in Section 3(c), the following (commencing on the sixtieth (60th) day following termination or such earlier date as the Company determines following the effective date of such Release that does not result in a violation of Section 409A of Internal Revenue Code of 1986, as amended (together with all regulations and applicable published guidance thereunder, the “Code”)):
(i) an amount in cash equal to 1.5 times the sum of (x) the Annual Base Salary and (y) the Target Annual Bonus, payable in substantially equal installments over the 18-month period following the date of Executive’s Separation from Service in accordance with the Company’s normal payroll practices; and
(ii) if Executive elects to receive continued medical, dental and/or vision coverage under one or more of the Company’s group healthcare plans pursuant to the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended (“COBRA”), the Company shall directly pay, or reimburse Executive for, the employer’s share of COBRA premiums for Executive and Executive’s covered dependents under such plans based on the employer’s share that the Company pays for similarly situated active employees (the “COBRA Benefits”) during the period commencing on Executive’s Separation from Service and ending upon the earliest of (X) the expiration of the 18-month period following the date of Executive’s Separation from Service, (Y) the date that Executive and/or Executive’s covered dependents become no longer eligible for COBRA or (Z) the date Executive becomes eligible to receive medical, dental or vision coverage, as applicable, from a subsequent employer (and Executive agrees to promptly notify the Company of such eligibility). Notwithstanding the foregoing, if the Company cannot provide the foregoing benefit without potentially violating applicable law (including, without limitation, Section 2716 of the Public Health Service Act) or incurring an excise tax, as it reasonably determines, the Company may alter the manner in which medical, dental or vision coverage is provided to Executive after the date of Executive’s Separation from Service.
(c) Change in Control. In lieu of the payments and benefits set forth in Section 4(b), if Executive’s employment is terminated by the Company without Cause pursuant to Section 3(a)(iv), or pursuant to Section 3(a)(v) due to Executive’s resignation for Good Reason, in either case, on or within twenty-four (24) months following the date of a Change in Control, then, subject to Executive signing on or before the 60th day following Executive’s Separation from Service, and not revoking, the Release, and Executive’s continued compliance with Section 5 and Section 6, Executive shall receive, in addition to payments and benefits set forth in Section 3(c), the following:
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(i) an amount in cash equal to 2.0 times the sum of (x) the Annual Base Salary and (y) the Target Annual Bonus, payable in a lump sum on the First Payment Date; and
(ii) a lump sum cash payment equal to the equivalent of the COBRA Benefits for the period commencing on Executive’s Separation from Service and ending upon the earliest of (X) the expiration of the 24-month period following the date of Executive’s Separation from Service, based on the COBRA Benefits amount for the first month following Executive’s Separation from Service and assuming Executive remained eligible for the COBRA Benefits for the duration of such 24- month period.
(d) Termination for Cause, Resignation from the Company without Good Reason or Termination upon Expiration of the Term. If Executive’s employment shall terminate pursuant to Section 3(a)(iii) for Cause, pursuant to Section 3(a)(vi) for Executive’s resignation from the Company without Good Reason or for no reason, or pursuant to Section 3(a)(vii) upon expiration of the Term, or should grounds for Cause exist as of the date of such termination (provided that Executive is notified of such grounds for Cause within ninety (90) days after the Date of Termination and afforded an opportunity to cure such grounds in a manner consistent with the applicable provisions of Section 10(a), if curable), then Executive shall not be entitled to receive or retain any severance payments or benefits, except as provided in Section 3(c).
(e) Survival. Notwithstanding anything to the contrary in this Agreement, the provisions of Sections 5 through 9 and Section 11 will survive the termination of Executive’s employment and the expiration or termination of the Term.
5. Competition; Solicitation. Executive acknowledges that during the Term, the Company from will provide Executive with access to Confidential Information (as defined below). Ancillary to the rights provided to Executive as set forth in this Agreement, Executive’s continued employment with the Company during the Term (subject to earlier termination as provided herein) and the Company’s provision of Confidential Information, and Executive’s agreements regarding the use of same, in order to protect the value of such Confidential Information, as well as the goodwill associated with the business relationships developed with its customers, the Company and Executive agree to the following provisions against unfair competition, which Executive acknowledges represent a fair balance of the Company’s rights to protect its business and Executive’s right to pursue employment:
(a) Executive shall not, other than in connection with his service to the Company, at any time during the Restriction Period (as defined below), directly or indirectly engage in the Business (as defined below), have any equity interest in, interview for a potential employment or consulting relationship with or manage, provide services in any capacity to, advise, operate, or finance, any person, firm, corporation, partnership or business (whether as officer, employee, agent, representative, or otherwise) that engages in the Business (as defined below) in the Restricted Territory (as defined below). Nothing herein shall prohibit Executive from (i) being a passive owner of less than 1% of the outstanding equity interest in any entity that is publicly traded, so long as Executive has no active participation in the business of such entity, or (ii) making, holding or managing passive oil and gas investments, such as royalty interests and non-operated working interests.
(b) Executive shall not, at any time during the Restriction Period, directly or indirectly, (i) solicit, divert or take away any customer, client, or business relation (including, without limitation, contractors) of the Company with whom Executive engaged in business on behalf of the Company or about whom Executive learned Confidential Information as a result of his employment with the Company or potential customer, client or business relation of the Company whom Executive solicited for business on behalf of the Company or about whom Executive learned Confidential Information as a result of his
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employment with the Company, provided that with respect to a business relation that such solicitation would be reasonably expected to cause such business relation to cease, reduce, or adversely affect its business relationship with the Company; (ii) divert or take away any or business acquisition or other business opportunity of the Company, (ii) contact or solicit, with respect to hiring, or hire, any employee of the Company or any person employed or engaged by the Company at any time during the 12-month period immediately preceding the Date of Termination, (iii) induce or otherwise counsel, advise or encourage any employee of the Company to leave the employment or engagement of the Company, or (iv) induce any distributor, representative or agent of the Company to terminate or modify its relationship with the Company.
(c) In the event the terms of this Section 5 shall be determined by any court of competent jurisdiction to be unenforceable by reason of its extending for too great a period of time or over too great a geographical area or by reason of its being too extensive in any other respect, it will be interpreted to extend only over the maximum period of time for which it may be enforceable, over the maximum geographical area as to which it may be enforceable, or to the maximum extent in all other respects as to which it may be enforceable, all as determined by such court in such action. For the avoidance of doubt, the restrictions in this Section 5 shall apply in addition to any other restrictive covenants contained in any other written agreement between Executive and the Company or any of its affiliates to which Executive may be bound.
(d) As used in this Section 5:
(i) The term “Business” shall mean the acquisition, exploration, exploitation, production, marketing and development of, oil and natural gas assets, and the acquisition, directly or indirectly, of leases and other real property in connection therewith;
(ii) The term “Company” shall include the Company and its subsidiaries;
(iii) The term “Restriction Period” shall mean the period beginning on the Effective Date and ending on the date 12 months following the Date of Termination; provided that, in the event Executive’s employment terminates pursuant to Section 3(a)(vii) upon expiration of the Term and the Company has not offered to extend the Term on terms no less favorable in the aggregate to Executive as those in effect immediately prior to the expiration of the Term, the Restriction Period shall end upon expiration of the then-applicable Term; and
(iv) The term “Restricted Territory” means any area that is within a 10 mile radius around the Company’s or any of its direct or indirect subsidiaries’ oil and natural gas assets in the Eagle Ford shale formation that are owned by the Company as of Executive’s Date of Termination.
(e) During Executive’s employment by the Company, Executive agrees that Executive has not violated and will not violate any non-solicitation, non-compete or other restrictive covenants agreements that Executive entered into with any former employer or improperly make use of, or disclose, any information or trade secrets of any former employer or other third party, nor will Executive bring onto the premises of the Company or its affiliates or use any unpublished documents or any property belonging to any former employer or other third party, in violation of any lawful agreements with that former employer or third party.
(f) Each Party (which, in the case of the Company, shall mean solely instructing its officers and the members of the Board to comply with the following) agrees, during the Term and following the Date of Termination, to refrain from Disparaging (as defined below) the other Party and its affiliates,
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including, in the case of the Company, any of its services, technologies or practices, or any of its directors, officers, agents, representatives or stockholders, either orally or in writing. Nothing in this paragraph shall preclude any Party from making truthful statements that are reasonably necessary to comply with applicable law, regulation or legal process, or to defend or enforce a Party’s rights under this Agreement, or from exercising their duties for the Company in good faith. For purposes of this Agreement, “Disparaging” means making remarks, comments or statements, whether written or oral, that impugn the character, integrity, reputation or abilities of the Person being disparaged.
(g) Executive acknowledge and agrees that, in the event Executive is found or reasonably determined by the Board to be in breach of the covenants set forth in this Section 5 then the Restriction Period shall be extended by the duration of the breach thereof, and such covenants shall be enforced or enforceable as extended.
6. Proprietary Information.
(a) Except in connection with the faithful performance of Executive’s duties hereunder or pursuant to Section 6(c) and (e), Executive shall, in perpetuity, maintain in confidence and shall not directly, indirectly or otherwise, use, disseminate, disclose or publish, or use for Executive’s benefit or the benefit of any person, firm, corporation or other entity (other than the Company) any confidential or proprietary information or trade secrets of or relating to the Company (including, without limitation, business plans, business strategies and methods, acquisition targets, intellectual property in the form of patents, trademarks and copyrights and applications therefor, ideas, inventions, works, discoveries, improvements, information, documents, formulae, practices, processes, methods, developments, source code, modifications, technology, techniques, data, programs, other know-how or materials, owned, developed or possessed by the Company, whether in tangible or intangible form, information with respect to the Company’s operations, processes, products, inventions, business practices, finances, principals, vendors, suppliers, customers, potential customers, marketing methods, costs, prices, contractual relationships, regulatory status, prospects and compensation paid to employees or other terms of employment) (collectively, the “Confidential Information”), or deliver to any person, firm, corporation or other entity any document, record, notebook, computer program or similar repository of or containing any such Confidential Information. The Parties hereby stipulate and agree that, as between them, any item of Confidential Information is important, material and confidential and affects the successful conduct of the businesses of the Company (and any successor or assignee of the Company). Notwithstanding the foregoing, Confidential Information shall not include any information that has been published in a form generally available to the public or is publicly available or has become public knowledge prior to the date Executive proposes to disclose or use such information, provided, that such publishing or public availability or knowledge of the Confidential Information shall not have resulted from Executive directly or indirectly breaching Executive’s obligations under this Section 6(a) or any other similar provision by which Executive is bound, or from any third-party breaching a provision similar to that found under this Section 6(a). For the purposes of the previous sentence, Confidential Information will not be deemed to have been published or otherwise disclosed merely because individual portions of the information have been separately published, but only if material features comprising such information have been published or become publicly available.
(b) At any time upon request of the Company, and, in any event upon termination of Executive’s employment with the Company for any reason, Executive will promptly deliver to the Company all correspondence, drawings, manuals, letters, notes, notebooks, reports, programs, plans, proposals, financial documents, or any other documents or property concerning the Company or its customers in any way, including, without limitation all business plans, marketing strategies, products, property or processes, and whether or not such documents or property contain Confidential Information; provided, however, Executive may retain documents and information regarding Executive’s own personal
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compensation and benefits information. In addition, after providing a copy to the Company, if directed in writing by the Company, Executive shall destroy any Confidential Information or other Company information which may be stored in electronic format on any personal electronic device, or that cannot be otherwise returned to the Company upon termination of employment and shall cooperate with the Company to confirm that all copies of such Confidential Information have been permanently destroyed, regardless of where or how such data was stored, although Executive agrees that Executive shall not destroy any original documents or data, nor shall Executive destroy the only version or copy of any Company document or data. Notwithstanding the return or destruction of such Confidential Information, Executive shall continue to be bound by the restrictions set forth in this Section 6 after the termination of Executive’s employment. If any Confidential Information or other information or data that is the property of the Company is contained on Executive’s personal electronic devices, for a period of 30 days following the Date of Termination, Executive agrees to make Executive’s personal electronic devices available to the Company upon reasonable notice from the Company for the removal by the Company of any Company information (other than Executive’s own personal compensation and benefits information), including, without limitation, Confidential Information.
(c) Executive may respond to a lawful and valid subpoena or other legal process, but Executive shall give the Company the earliest possible notice thereof, and shall, as much in advance of the return date as possible, make available to the Company and its counsel the documents and other information sought and shall assist such counsel at the Company’s expense in resisting or otherwise responding to such process, in each case to the extent permitted by applicable laws or rules.
(d) As used in this Section 6 and Section 7, the term “Company” shall include the Company and its subsidiaries.
(e) Nothing in this Agreement shall prohibit Executive from (i) disclosing information and documents when required by law, subpoena or court order (subject to the requirements of Section 6(c) above), (ii) disclosing information and documents to Executive’s attorney, financial or tax adviser for the purpose of securing legal, financial or tax advice, provided that any such person first agrees to be bound by the confidentiality provisions of this Section 6, (iii) reporting possible violations of federal law or regulation to any United States governmental agency or entity in accordance with the provisions of and rules promulgated under Section 21F of the Securities Exchange Act of 1934 or Section 806 of the Sarbanes-Oxley Act of 2002, or any other whistleblower protection provisions of state or federal law or regulation (including the right to receive an award for information provided to any such government agencies), (iv) disclosing Executive’s post-employment restrictions in this Agreement in confidence to any potential new employer, or (v) retaining, at any time, Executive’s personal correspondence, Executive’s personal contacts and documents related to Executive’s own personal benefits, entitlements and obligations. Furthermore, in accordance with 18 U.S.C. § 1833, notwithstanding anything to the contrary in this Agreement: (A) Executive shall not be in breach of this Agreement, and shall not be held criminally or civilly liable under any federal or state trade secret law (x) for the disclosure of a trade secret that is made in confidence to a federal, state, or local government official or to an attorney solely for the purpose of reporting or investigating a suspected violation of law, or (y) for the disclosure of a trade secret that is made in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal; and (B) if Executive files a lawsuit for retaliation by the Company for reporting a suspected violation of law, Executive may disclose the trade secret to Executive’s attorney, and may use the trade secret information in the court proceeding, if Executive files any document containing the trade secret under seal, and does not disclose the trade secret, except pursuant to court order. Executive represents and warrants that Executive is not subject to any contract that in any way limits Executive’s ability to enter into and fully perform Executive’s obligations under this Agreement.
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7. Inventions.
All rights to discoveries, inventions, improvements and innovations (including all data and records pertaining thereto) related to the business of the Company, whether or not patentable, copyrightable, registrable as a trademark, or reduced to writing, that Executive may discover, invent or originate during the Term, either alone or with others and whether or not during working hours or by the use of the facilities of the Company (“Inventions”), shall be the exclusive property of the Company. Executive shall promptly disclose all Inventions to the Company, shall execute at the request of the Company any assignments or other documents the Company may deem reasonably necessary to protect or perfect its rights therein, and shall assist the Company, upon reasonable request and at the Company’s expense, in obtaining, defending and enforcing the Company’s rights therein. Executive hereby appoints the Company as Executive’s attorney-in-fact to execute on Executive’s behalf any assignments or other documents reasonably deemed necessary by the Company to protect or perfect its rights to any Inventions.
8. Injunctive Relief.
(a) Injunctive Relief and Other Remedies. It is recognized and acknowledged by Executive that a breach of the covenants contained in Sections 5 through 7 will cause irreparable damage to the Company and its goodwill, the exact amount of which will be difficult or impossible to ascertain, and that the remedies at law for any such breach will be inadequate. Accordingly, Executive agrees that in the event of a breach or threatened breach of any of the covenants contained in Sections 5 through 7, in addition to any other remedy which may be available at law or in equity, the Company will be entitled to specific performance and injunctive relief without the requirement to post bond. FURTHER, IN THE EVENT OF ANY SUCH BREACH OR THREATENED BREACH FOLLOWING THE DATE OF TERMINATION, THE COMPANY SHALL HAVE THE RIGHT TO CEASE MAKING ANY FURTHER SEVERANCE PAYMENTS OR PROVIDING ANY FURTHER BENEFITS THAT MAY BE OTHERWISE DUE TO EXECUTIVE AND TO RECOUPMENT AND/OR OFFSET OF ANY SEVERANCE PAID TO EXECUTIVE PRIOR TO THE DATE OF SUCH BREACH, TO THE EXTENT PERMITTED BY LAW, PLUS THE REASONABLE ATTORNEYS’ FEES AND COSTS THE COMPANY INCURS IN RECOUPING SUCH BENEFITS AND AMOUNTS FROM OR EXERCISING SUCH REMEDIES AGAINST THE EXECUTIVE.
(b) Essential and Independent Agreements. It is understood by the parties hereto that the Executive’s obligations and the restrictions and remedies set forth in Sections 5 through 8 are essential elements of this Agreement and that but for his agreement to comply with and/or agree to such obligations, restrictions and remedies, the Company would not have entered into this Agreement or employed (or continued to employ) him. The Executive’s obligations and the restrictions and remedies set forth in this Section 8 are independent agreements and the existence of any claim or claims by him against the Company under this Agreement or otherwise will not excuse his breach of any of his obligations or affect the restrictions and remedies set forth under this Section 8.
c. Survival of Terms; Representations. The Executive’s obligations under Sections 5 through 8 hereof shall remain in full force and effect notwithstanding the termination of his employment or this Agreement, regardless of the reasons surrounding such termination, except as otherwise expressly provided in Section 5(d)(iii). The Executive acknowledges that he is sophisticated in business, and that the restrictions and remedies set forth in Sections 5 through 8 do not create an undue hardship on him and will not prevent him from earning a livelihood. He further acknowledges that he has had a sufficient period of time within which to review this Agreement, including Sections 5 through 8, with an attorney of his choice and he has done so to the extent he desired. The Executive and the Company agree that the restrictions and remedies contained in Sections 5 through 8 are reasonable and necessary to protect the
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Company’s legitimate business interests and that he and the Company intend that such restrictions and remedies shall be enforceable to the fullest extent permissible by law. The Executive agrees that given the scope of the Company’s business, any further geographic limitation on such remedies and restrictions would deny the Company the protection to which it is entitled hereunder.
d. Notice of Obligations. During the Restriction Period, Executive shall notify any person or entity with whom Executive accepts employment or engagement of his obligations under Sections 5 and 6 of this Agreement. The Company similarly may notify any person or entity for whom Executive provides services in any capacity during the Restriction Period of Executive’s obligations under Sections 5 and 6 of this Agreement, and the Company shall not be liable for any such notification.
9. Assignment and Successors.
The Company may assign its rights and obligations under this Agreement to any of its affiliates or to any successor to all or substantially all of the business or the assets of the Company (by merger or otherwise), and may assign or encumber this Agreement and its rights hereunder as security for indebtedness of the Company and its affiliates. This Agreement shall be binding upon and inure to the benefit of the Company, Executive and their respective successors, assigns, personnel and legal representatives, executors, administrators, heirs, distributees, devisees, and legatees, as applicable. None of Executive’s rights or obligations may be assigned or transferred by Executive, other than Executive’s rights to payments hereunder, which may be transferred only by will or operation of law. Notwithstanding the foregoing, Executive shall be entitled, to the extent permitted under applicable law and applicable Company Arrangements, to select and change a beneficiary or beneficiaries to receive compensation hereunder following Executive’s death by giving written notice thereof to the Company.
10. Certain Definitions.
(a) Cause. The Company shall have “Cause” to terminate Executive’s employment hereunder upon:
(i) Executive’s refusal to substantially perform the Executive’s duties to the Company (other than any such failure resulting from Executive’s incapacity due to physical or mental illness);
(ii) Executive’s gross negligence or willful engagement in conduct that is materially injurious to the Company or its affiliates, whether monetarily or otherwise;
(iii) Executive’s commission of a crime or an act of fraud, theft, misappropriation or embezzlement that could reasonably be expected to materially impair the Executive’s ability to substantially perform the Executive’s duties to the Company;
(iv) Executive’s failure to comply with any reasonable legal directive of the Board;
(v) Executive’s material breach of any obligation under this Agreement or any other written agreement between Executive and the Company;
(vi) Executive’s violation of the Company’s written Policies or codes of conduct, including written Policies related to discrimination, harassment, performance of illegal or unethical activities, and ethical misconduct; or
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(vii) Executive’s violation of any securities or other law, rule or regulation applicable to the Company, its affiliates or Executive relating to the business operations of the Company or its affiliates that may have a material adverse effect upon the Company’s business, operations or condition (financial or otherwise).
Notwithstanding the foregoing, in the case of any conduct described in clauses (i), (iv), (v) or (vi) of the immediately preceding sentence, if such conduct is reasonably susceptible of being cured, then Executive’s termination shall be for “Cause” only if Executive fails to cure such conduct to the Board’s reasonable satisfaction within thirty (30) days after receiving written notice from the Company describing such conduct in reasonable detail.
(b) Change in Control. “Change in Control” shall mean and include each of the following:
(i) a transaction or series of transactions occurring after the Effective Date whereby any “person” or related “group” of “persons” (as such terms are used in Sections 13(d) and 14(d)(2) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) (other than the Company, any of its subsidiaries, an employee benefit plan maintained by the Company or any of its subsidiaries or a “person” that, prior to such transaction, directly or indirectly controls, is controlled by, or is under common control with, the Company) directly or indirectly acquires beneficial ownership (within the meaning of Rule 13d-3 under the Exchange Act) of securities of the Company possessing more than 50% of the total combined voting power of the Company’s securities outstanding immediately after such transaction; or
(ii) the consummation by the Company (whether directly involving the Company or indirectly involving the Company through one or more intermediaries) after the Effective Date of (x) a merger, consolidation, reorganization, or business combination or (y) a sale or other disposition of all or substantially all of the Company’s assets in any single transaction or series of related transactions or (z) the acquisition of assets or stock of another entity, in each case other than a transaction:
(A) which results in the Company’s voting securities outstanding immediately before the transaction continuing to represent (either by remaining outstanding or by being converted into voting securities of the Company or the person that, as a result of the transaction, controls, directly or indirectly, the Company or owns, directly or indirectly, all or substantially all of the Company’s assets or otherwise succeeds to the business of the Company (the Company or such person, the “Successor Entity”)) directly or indirectly, at least a majority of the combined voting power of the Successor Entity’s outstanding voting securities immediately after the transaction, and
(B) after which no person or group beneficially owns voting securities representing 50% or more of the combined voting power of the Successor Entity; provided, however, that no person or group shall be treated for purposes of this clause (B) as beneficially owning 50% or more of the combined voting power of the Successor Entity solely as a result of the voting power held in the Company prior to the consummation of the transaction.
Notwithstanding the foregoing, if a Change in Control constitutes a payment event with respect to any amount that provides for the deferral of compensation that is subject to Section 409A (as defined below) or with respect to a Change in Control described in Section 4(c), to the extent required to avoid the imposition of additional taxes under Section 409A, the transaction or event described in subsection (i), (ii)
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or (iii) with respect to such amount shall only constitute a Change in Control for purposes of the payment timing of such amount if such transaction also constitutes a “change in control event” as defined in Treasury Regulation Section 1.409A-3(i)(5).
(c) Date of Termination. “Date of Termination” shall mean (i) if Executive’s employment is terminated by Executive’s death, the date of Executive’s death, (ii) if Executive’s employment is terminated pursuant to Section 3(a)(ii)–(vi) either the date indicated in the Notice of Termination or the date specified by the Company pursuant to Section 3(b), whichever is earlier, or (iii) if Executive’s employment is terminated due to expiration of the Term, the day following the last day of the then-applicable Term.
(d) Disability. Disability shall mean the Executive is unable to perform his duties hereunder due to the onset of any sickness, injury or disability for a consecutive period of ninety (90) consecutive days or an aggregate of 180 days in any twelve (12)-consecutive month period as determined by a physician satisfactory to both the Executive and the Company. Any refusal by Executive to submit to a medical examination for the purpose of determining Disability shall be deemed to constitute conclusive evidence of Executive’s Disability.
(e) Good Reason. For the sole purpose of determining Executive’s right to severance payments as described above, the Executive’s resignation will be for “Good Reason” if the Executive resigns after any of the following events, unless Executive consents to the applicable event: (i) a material diminution in the Executive’s responsibilities, authority and duties as an employee of the Company; (ii) a material reduction in Executive’s Annual Base Salary or Target Annual Bonus (other than as part of a general proportional reduction for all senior executives); (iii) a requirement by the Company that the Executive relocate the Executive’s principal location of employment to a location that is more than fifty (50) miles from the Executive’s principal work location as of the Effective Date; or (iv) a material breach of the Employment Agreement by the Company. Notwithstanding the foregoing, no Good Reason will have occurred unless and until Executive has: (a) provided the Company, within ninety (90) days of Executive’s knowledge of the occurrence of the facts and circumstances underlying the Good Reason event, written-notice stating with specificity the applicable facts and circumstances underlying such finding of Good Reason; (b) provided the Company with an opportunity to cure, and the Company has not cured, the same within thirty (30) days after the receipt of such notice; and (c) the terminates the Executive’s employment within thirty (30) days after the end of the cure period.
(f) Person. “Person” shall mean any individual, firm, corporation, partnership, limited liability company, incorporated or unincorporated association, joint venture, joint stock company, trust, governmental authority or other entity of any kind.
11. Miscellaneous Provisions.
(a) Governing Law. This Agreement shall be governed, construed, interpreted and enforced in accordance with its express terms, and otherwise in accordance with the substantive laws of the State of Texas without reference to the principles of conflicts of law of the State of Texas or any other jurisdiction, and where applicable, the laws of the United States.
(b) Validity. The invalidity or unenforceability of any provision or provisions of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement, which shall remain in full force and effect.
(c) Notices. Any notice, request, claim, demand, document and other communication hereunder to any Party shall be effective upon receipt (or refusal of receipt) and shall be in writing and delivered personally or sent by facsimile, email, or certified or registered mail, postage prepaid, as follows:
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(i) If to the Company, the Board of Directors, at the Company’s headquarters,
(ii) If to Executive, at the last address that the Company has in its personnel records for Executive, or
(iii) At any other address as any Party shall have specified by notice in writing to the other Party.
(d) Counterparts. This Agreement may be executed in several counterparts, each of which shall be deemed to be an original, but all of which together will constitute one and the same Agreement. Facsimile, pdf, emails and other true and correct photostatic copies of this Agreement shall have the same force and effect as originals hereof. Signatures delivered by facsimile, email or other electronic means shall be deemed effective for all purposes.
(e) Entire Agreement. The terms of this Agreement are intended by the Parties to be the final expression of their agreement with respect to the subject matter hereof and supersede all prior understandings, term sheets and agreements, whether written or oral. The Parties further intend that this Agreement shall constitute the complete and exclusive statement of their terms and that no extrinsic evidence whatsoever may be introduced in any judicial, administrative, or other legal proceeding to vary the terms of this Agreement.
(f) Amendments; Waivers. This Agreement may not be modified, amended, or terminated except by an instrument in writing, signed by Executive and a duly authorized officer of the Company. By an instrument in writing similarly executed, Executive or a duly authorized officer of the Company may waive compliance by the other Party with any specifically identified provision of this Agreement that such other Party was or is obligated to comply with or perform; provided, however, that such waiver shall not operate as a waiver of, or estoppel with respect to, any other or subsequent failure. No failure to exercise and no delay in exercising any right, remedy, or power hereunder preclude any other or further exercise of any other right, remedy, or power provided herein or by law or in equity.
(g) No Inconsistent Actions. The Parties hereto shall not voluntarily undertake or fail to undertake any action or course of action inconsistent with the provisions or essential intent of this Agreement. Furthermore, it is the intent of the Parties hereto to act in a fair and reasonable manner with respect to the interpretation and application of the provisions of this Agreement.
(h) Construction. This Agreement shall be deemed drafted equally by both the Parties. Its language shall be construed as a whole and according to its fair meaning. Any presumption or principle that the language is to be construed against any Party shall not apply. The headings in this Agreement are only for convenience and are not intended to affect construction or interpretation. Any references to paragraphs, subparagraphs, sections or subsections are to those parts of this Agreement, unless the context clearly indicates to the contrary. Also, unless the context clearly indicates to the contrary, (i) the plural includes the singular and the singular includes the plural; (ii) “and” and “or” are each used both conjunctively and disjunctively; (iii) “any,” “all,” “each,” or “every” means “any and all,” and “each and every”; (iv) “includes” and “including” are each “without limitation”; (v) “herein,” “hereof,” “hereunder” and other similar compounds of the word “here” refer to the entire Agreement and not to any particular paragraph, subparagraph, section or subsection; and (vi) all pronouns and any variations thereof shall be deemed to refer to the masculine, feminine, neuter, singular or plural as the identity of the entities or persons referred to may require.
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(i) Arbitration.
(i) Disputes subject to Arbitration. Any controversy, claim or dispute arising out of or relating to this Agreement or Executive’s employment or termination of employment with the Company (other than as prohibited by law or temporary or permanent injunctive or other equitable relief sought by the Company Group in connection with Sections 5 through 8 hereof), shall be settled solely and exclusively by a binding arbitration process administered by JAMS/Endispute in Dallas, TX. Accordingly, Executive agrees to submit to arbitration, in accordance with the terms of this Agreement, any claims against the Company (including any of its agents, employees, officers, directors, owners, members, and partners, as well as any other entity or individual claimed to be jointly and/or severally liable with the Company), which arise out of or relate to this Agreement and/or Executive’s employment with the Company or the termination thereof, including, but not limited to, any claim arising from this Agreement, or any other agreement with the Company, express or implied, statements, acts or omissions of the Company, any claim for compensation from the Company, such as for wages, salary, bonuses, severance pay, vacation pay, expenses, benefits, allowances and any other payment or compensation of any kind whatsoever, any tort claim, any claim based on any law (state, federal, local, or otherwise) prohibiting discrimination , harassment or retaliation on the basis of any protected characteristic, including, without limitation, race, color, religion, creed, sex, national origin, citizenship, alienage, age, sexual orientation, marital status, family or medical leave, uniformed service, disability, protected activity, (i.e., opposition to prohibited discrimination or participation in proceedings covered by the anti-discrimination statutes) or any other characteristic protected by applicable law. Such laws shall include, without limitation, Title VII of the Civil Rights Act of 1964, the Age Discrimination in Employment Act, the Older Workers Benefit Protection Act, the Equal Pay Act, the Americans with Disabilities Act, the Fair Labor Standards Act, the Family and Medical Leave Act, and any applicable state or local law. EXECUTIVE AND THE COMPANY EACH EXPRESSLY ACKNOWLEDGES AND AGREES THAT ARBITRATION SHALL BE THE EXCLUSIVE FORUM FOR THE ADJUDICATION OF ANY CLAIMS COVERED BY THIS AGREEMENT, THAT EXECUTIVE AND EMPLOYER EACH IS WAIVING THE RIGHT TO FILE SUIT IN COURT, AND THAT EXECUTIVE AND EMPLOYER SHALL BE PRECLUDED FROM BRINGING SUIT IN COURT WITH RESPECT TO ANY CLAIM(S) THAT WERE OR COULD HAVE BEEN BROUGHT PURSUANT TO THIS AGREEMENT.
(ii) Arbitration Procedures. Such arbitration shall be conducted in accordance with the then-existing JAMS/Endispute Rules of Practice and Procedure, with the following exceptions if in conflict: (i) one arbitrator who is a retired judge chosen by and satisfactory to both Parties; (ii) the expenses and fees of the arbitrator together with other expenses of the arbitration incurred or approved by the arbitrator shall be borne equally by each Party, provided that the arbitrator may, in its sole discretion, allocate such fees and expenses to the non-prevailing party; and (iii) arbitration may proceed in the absence of any Party if written notice (pursuant to the JAMS/Endispute rules and regulations) of the proceedings has been given to such Party. Each Party shall bear its own attorney’s’ fees and expenses; provided that the arbitrator may assess the prevailing Party’s fees and costs against the non-prevailing Party as part of the arbitrator’s award as the arbitrator determines, or as may be provided by applicable law. The arbitrator, and not any federal, state, or local court or agency, shall have exclusive authority to resolve any dispute relating to the interpretation, applicability, enforceability or formation of this Agreement, including but not limited to, any claim that all or any part of this Agreement and/or this Section is void or voidable. The arbitrator shall render a written award and opinion, accompanied by a decision consisting of findings of fact and conclusions of law. The Parties agree to abide by all decisions and awards rendered in such proceedings. Such decisions and awards rendered by the
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arbitrator shall be final and conclusive. All such controversies, claims or disputes shall be settled in this manner in lieu of any action at law or equity; provided, however, that nothing in this subsection shall be construed as precluding the bringing an action for injunctive relief or specific performance as provided in this Agreement. This dispute resolution process and any arbitration hereunder shall be confidential and neither any Party nor the neutral arbitrator shall disclose the existence, contents or results of such process without the prior written consent of all Parties, except where necessary or compelled in a court to enforce this arbitration provision or an award from such arbitration or otherwise in a legal proceeding. If JAMS/Endispute no longer exists or is otherwise unavailable, the Parties agree that the American Arbitration Association (“AAA”) shall administer the arbitration in accordance with its then-existing rules as modified by this subsection. In such event, all references herein to JAMS/Endispute shall mean AAA. Notwithstanding the foregoing, Executive and the Company each have the right to resolve any issue or dispute over intellectual property rights by court action instead of arbitration.
(iii) Injunctive/Equitable Relief Excluded. Claims by the Company against Executive for injunctive and/or other equitable relief in connection with Executive’s breach or threatened breach of Sections 5 through 7 of this Agreement are excluded from this arbitration provision, it being understood and agreed that the Company may seek and obtain injunctive relief for such claims from a court of competent jurisdiction. Claims by Executive for workers’ compensation or unemployment compensation benefits are also not covered by this arbitration provision. In addition, claims for benefits under an employee benefit or pension plan are excluded from this arbitration provision when the plan specifies that its claims procedure shall culminate in an arbitration procedure other than this one.
(iv) Authority of the Arbitrator. The arbitrator shall have the authority to entertain a motion to dismiss and/or a motion for summary judgment by any Party and shall apply the standards governing such motions under the Federal Rules of Civil Procedure. The arbitrator shall have authority to award remedies authorized by the statute(s) pursuant to which any claim(s) arises, including costs and attorneys’ fees, but shall have no authority to award remedies not authorized, or to award damages in excess of any cap imposed by such statute. The arbitrator shall have no authority to award punitive damages, except as otherwise required by law. Executive and the Company agree that neither shall file nor commence a lawsuit or arbitration in any way related to any claim agreed to be arbitrated, except as provided herein. If either Executive or the Company violates this provision, the other Party shall be entitled to dismissal or injunctive relief regarding such lawsuit or arbitration and recovery of all costs and disbursements, losses, and attorneys’ fees related to such other proceeding, if such claim is dismissed, to the extent permitted by law.
(j) Enforcement. If any provision of this Agreement is held to be illegal, invalid or unenforceable under present or future laws effective during the Term, such provision shall be fully severable; this Agreement shall be construed and enforced as if such illegal, invalid or unenforceable provision had never comprised a portion of this Agreement; and the remaining provisions of this Agreement shall remain in full force and effect and shall not be affected by the illegal, invalid or unenforceable provision or by its severance from this Agreement. Furthermore, in lieu of such illegal, invalid or unenforceable provision there shall be added automatically as part of this Agreement a provision as similar in terms to such illegal, invalid or unenforceable provision as may be possible and be legal, valid and enforceable.
(k) Withholding. The Company shall be entitled to withhold from any amounts payable under this Agreement any federal, state, local or foreign withholding or other taxes or charges which the Company is required to withhold. The Company shall be entitled to rely on a determination of counsel if any questions as to the amount or requirement of withholding shall arise.
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(l) Clawback. Any amounts payable under this Agreement will be subject to any Company Policy (whether in existence as of the Effective Date or later adopted) established by the Board and applicable to all executive officers of the Company and providing for clawback or recovery of amounts that were paid.
(m) Indemnification of Executive and Inclusion in D&O Coverage. During the Term, the Company shall include Executive in its Directors and Officer’s liability coverage, and the Company during the Term and thereafter shall further indemnify Executive to the fullest extent permitted by applicable law and its applicable governing documentation against any and all actions, claims, demands, suits, proceedings, liabilities, expenses, including attorney’s fees, sums of money, damages, and costs arising from Executive’s conduct with respect to the positions and duties set forth in Section 1(b) of this Agreement.
(n) Section 409A.
(i) General. The intent of the Parties is that the payments and benefits under this Agreement comply with or be exempt from Section 409A of the Code and the regulations and guidance promulgated thereunder (collectively, “Section 409A”) and, accordingly, to the maximum extent permitted, this Agreement shall be interpreted to be in compliance therewith.
(ii) Separation from Service. Notwithstanding anything in this Agreement to the contrary, any compensation or benefits payable under this Agreement that is considered nonqualified deferred compensation under Section 409A and is designated under this Agreement as payable upon Executive’s termination of employment shall be payable only upon Executive’s “separation from service” with the Company within the meaning of Section 409A (a “Separation from Service”) and, except as provided below, any such compensation or benefits described in Section 4(b) or Section 4(c) shall not be paid, or, in the case of installments, shall not commence payment, until the sixtieth (60th) day following Executive’s Separation from Service (the “First Payment Date”). Any installment payments that would have been made to Executive during the sixty (60) day period immediately following Executive’s Separation from Service but for the preceding sentence shall be paid to Executive on the First Payment Date and the remaining payments shall be made as provided in this Agreement.
(iii) Specified Employee. Notwithstanding anything in this Agreement to the contrary, if Executive is deemed by the Company at the time of Executive’s Separation from Service to be a “specified employee” for purposes of Section 409A, to the extent delayed commencement of any portion of the benefits to which Executive is entitled under this Agreement is required in order to avoid a prohibited distribution of nonqualified deferred compensation under Section 409A, such portion of Executive’s benefits shall not be provided to Executive prior to the earlier of (A) the expiration of the six-month period measured from the date of Executive’s Separation from Service with the Company or (B) the date of Executive’s death. Upon the first business day following the expiration of the applicable Section 409A period, all payments deferred pursuant to the preceding sentence shall be paid in a lump sum to Executive (or Executive’s estate or beneficiaries), and any remaining payments due to Executive under this Agreement shall be paid as otherwise provided herein.
(iv) Expense Reimbursements. To the extent that any reimbursements under this Agreement are subject to Section 409A, any such reimbursements payable to Executive shall be
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paid to Executive no later than December 31 of the year following the year in which the expense was incurred; provided, that Executive submits Executive’s reimbursement request promptly following the date the expense is incurred, the amount of expenses reimbursed in one year shall not affect the amount eligible for reimbursement in any subsequent year, other than medical expenses referred to in Section 105(b) of the Code, and Executive’s right to reimbursement under this Agreement will not be subject to liquidation or exchange for another benefit.
(v) Installments. Executive’s right to receive any installment payments under this Agreement, including without limitation any continuation salary payments that are payable on Company payroll dates, shall be treated as a right to receive a series of separate payments and, accordingly, each such installment payment shall at all times be considered a separate and distinct payment as permitted under Section 409A. Except as otherwise permitted under Section 409A, no payment hereunder shall be accelerated or deferred unless such acceleration or deferral would not result in additional tax or interest pursuant to Section 409A.
(vi) Release. In the event that any review period for the Release spans two calendar years, such Release will be deemed effective (subject to it being executed and not revoked) in the latter of the two calendar years and Executive will not be permitted to choose the effective date of any such release, except as would not result in a violation of Section 409A of the Code.
12. Cooperation.
The Company and Executive agree that certain matters in which Executive will be involved during the Term may necessitate Executive’s cooperation in the future. Accordingly, following the termination of Executive’s employment for any reason, to the extent reasonably requested by the Board, Executive shall cooperate with the Company in connection with matters arising out of Executive’s service to the Company; provided that, the Company shall make reasonable efforts to minimize disruption of Executive’s other activities. The Company shall reimburse Executive for reasonable expenses incurred in connection with such cooperation.
13. Parachute Payments.
(a) Notwithstanding any other provisions of this Agreement or any Company equity plan or agreement, in the event that any payment or benefit by the Company or otherwise to or for the benefit of Executive, whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise (all such payments and benefits, including the payments and benefits under Section 4(b) or Section 4(c) hereof, being hereinafter referred to as the “Total Payments”), would be subject (in whole or in part) to the excise tax imposed by Section 4999 of the Code (the “Excise Tax”), then the Total Payments shall be reduced (in the order provided in Section 13(b)) to the extent necessary to avoid the imposition of the Excise Tax on the Total Payments, but only if (i) the net amount of such Total Payments, as so reduced (and after subtracting the net amount of federal, state and local income and employment taxes on such reduced Total Payments and after taking into account the phase out of itemized deductions and personal exemptions attributable to such reduced Total Payments), is greater than or equal to (ii) the net amount of such Total Payments without such reduction (but after subtracting the net amount of federal, state and local income and employment taxes on such Total Payments and the amount of the Excise Tax to which Executive would be subject in respect of such unreduced Total Payments and after taking into account the phase out of itemized deductions and personal exemptions attributable to such unreduced Total Payments).
(b) The Total Payments shall be reduced in the following order: (i) reduction on a pro-rata basis of any cash severance payments that are exempt from Section 409A, (ii) reduction on a pro-rata
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basis of any non-cash severance payments or benefits that are exempt from Section 409A, (iii) reduction on a pro-rata basis of any other payments or benefits that are exempt from Section 409A, and (iv) reduction of any payments or benefits otherwise payable to Executive on a pro-rata basis or such other manner that complies with Section 409A; provided, in case of clauses (ii), (iii) and (iv), that reduction of any payments attributable to the acceleration of vesting of equity awards, if applicable, shall be first applied to equity awards that would otherwise vest last in time.
(c) The Company will select an accounting firm or consulting group with experience in performing calculations regarding the applicability of Section 280G of the Code and the Excise Tax (the “Independent Advisors”) to make determinations regarding the application of this Section 13. For purposes of such determinations, no portion of the Total Payments shall be taken into account which, in the opinion of the Independent Advisors, (i) does not constitute a “parachute payment” within the meaning of Section 280G(b)(2) of the Code (including by reason of Section 280G(b)(4)(A) of the Code) or (ii) constitutes reasonable compensation for services actually rendered, within the meaning of Section 280G(b)(4)(B) of the Code, in excess of the “base amount” (as defined in Section 280G(b)(3) of the Code) allocable to such reasonable compensation. The costs of obtaining such Independent Advisor determination and all related Independent Advisor fees and expenses (including related fees and expenses incurred in any later audit) shall be borne by the Company.
(d) In the event it is later determined that to implement the objective and intent of this Section 13, a greater reduction in the Total Payments should have been made, the excess amount shall be returned promptly by Executive to the Company.
14. Executive Acknowledgement.
Executive acknowledges that Executive has read and understands this Agreement, is fully aware of its legal effect, has not acted in reliance upon any representations or promises made by the Company other than those contained in writing herein, and has entered into this Agreement freely based on Executive’s own judgment. Executive acknowledges and agrees that Executive has been advised to and has had an opportunity to ask questions and consult with an independent attorney of Executive’s choice before signing this Agreement.
[Signature Page Follows]
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IN WITNESS WHEREOF, the Parties have executed this Agreement on the date and year first above written.
| LONESTAR RESOURCES US INC. | ||||
| By: | /s/ Frank D. Bracken, III | |||
| Name: | Frank D. Bracken, III | |||
| Title: | Chief Executive Officer | |||
| EXECUTIVE | ||||
| By: | /s/ Frank D. Bracken, III | |||
| Frank D. Bracken, III | ||||
[Signature Page to Employment Agreement]
EXHIBIT A
Separation Agreement and Release
This Separation Agreement and Release (“Agreement”) is made by and between Frank Bracken (“Executive”) and Lonestar Resources US Inc. (together with any successor thereto, the “Company”) (collectively, referred to as the “Parties” or individually referred to as a “Party”). Capitalized terms used but not defined in this Agreement shall have the meanings set forth in the Employment Agreement (as defined below).
WHEREAS, the Parties have previously entered into that certain Employment Agreement, dated as of November 30, 2020 (the “Employment Agreement”); and
WHEREAS, in connection with Executive’s termination of employment with the Company or a subsidiary or affiliate of the Company effective , 20 , the Parties wish to resolve any and all disputes, claims, complaints, grievances, charges, actions, petitions, and demands that Executive may have against the Company and any of the Releasees, as defined below, including, but not limited to, any and all claims arising out of or in any way related to Executive’s employment with or separation from the Company or its subsidiaries or affiliates but, for the avoidance of doubt, nothing herein will be deemed to release any rights or remedies in connection with Executive’s ownership of vested equity securities of the Company or one of its affiliates or Executive’s right to indemnification by the Company or any of its affiliates pursuant to contract or applicable law (collectively, the “Retained Claims”).
NOW, THEREFORE, in consideration of the severance payments described in Section [4(b)/4(c)] of the Employment Agreement, which, pursuant to the Employment Agreement, are conditioned on Executive’s execution and non-revocation of this Agreement and continued compliance with the surviving terms of the Employment Agreement, and in consideration of the mutual promises made herein, the Company and Executive hereby agree as follows:
1. Severance Payments; Salary and Benefits. The Company agrees to provide Executive with the severance payments described in Section [4(b)/4(c)] of the Employment Agreement, payable at the times set forth in, and subject to the terms and conditions of, the Employment Agreement. In addition, to the extent not already paid, and subject to the terms and conditions of the Employment Agreement, the Company shall pay or provide to Executive all other payments or benefits described in Section 3(c) of the Employment Agreement, subject to and in accordance with the terms thereof.
2. Release of Claims. Executive agrees that, other than with respect to the Retained Claims, the foregoing consideration represents settlement in full of all outstanding obligations owed to Executive by the Company, any of its direct or indirect subsidiaries and affiliates, and any of their current and former officers, directors, equity holders, managers, employees, agents, investors, attorneys, shareholders, administrators, affiliates, benefit plans, plan administrators, insurers, trustees, divisions, and subsidiaries and predecessor and successor corporations and assigns (collectively, the “Releasees”). Executive, on his own behalf and on behalf of any of Executive’s affiliated companies or entities and any of their respective heirs, family members, executors, agents, and assigns, other than with respect to the Retained Claims, hereby and forever releases the Releasees from, and agrees not to sue concerning, or in any manner to institute, prosecute, or pursue, any claim, complaint, charge, duty, obligation, or cause of action relating to any matters of any kind, whether presently known or unknown, suspected or unsuspected, that Executive may possess against any of the Releasees arising from any omissions, acts, facts, or damages that have occurred from the beginning of time up until and including the date Executive signs this Agreement, including, without limitation:
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(a) any and all claims relating to or arising from Executive’s employment or service relationship with the Company or any of its direct or indirect subsidiaries or affiliates and the termination of that relationship;
(b) any and all claims relating to, or arising from, Executive’s right to purchase, or actual purchase of any shares of stock or other equity interests of the Company or any of its affiliates, including, without limitation, any claims for fraud, misrepresentation, breach of fiduciary duty, breach of duty under applicable state corporate law, and securities fraud under any state or federal law;
(c) any and all claims for wrongful discharge of employment; termination in violation of public policy; discrimination; harassment; retaliation; breach of contract, both express and implied; breach of covenant of good faith and fair dealing, both express and implied; promissory estoppel; negligent or intentional infliction of emotional distress; fraud; negligent or intentional misrepresentation; negligent or intentional interference with contract or prospective economic advantage; unfair business practices; defamation; libel; slander; negligence; personal injury; assault; battery; invasion of privacy; false imprisonment; conversion; and disability benefits;
(d) any and all claims for violation of any federal, state, or municipal statute, including, but not limited to, Title VII of the Civil Rights Act of 1964; the Civil Rights Act of 1991; the Rehabilitation Act of 1973; the Americans with Disabilities Act of 1990; the Equal Pay Act; the Fair Credit Reporting Act; the Age Discrimination in Employment Act of 1967; the Older Workers Benefit Protection Act; the Employee Retirement Income Security Act of 1974; the Worker Adjustment and Retraining Notification Act; the Family and Medical Leave Act; and the Sarbanes-Oxley Act of 2002;
(e) any and all claims for violation of the federal or any state constitution;
(f) any and all claims arising out of any other laws and regulations relating to employment or employment discrimination;
(g) any claim for any loss, cost, damage, or expense arising out of any dispute over the non-withholding or other tax treatment of any of the proceeds received by Executive as a result of this Agreement; and
(h) any and all claims for attorneys’ fees and costs.1
Executive agrees that the release set forth in this section shall be and remain in effect in all respects as a complete general release as to the matters released. This release does not release claims that cannot be released as a matter of law, including, but not limited to, Executive’s right to file a charge with or participate in a charge by the Equal Employment Opportunity Commission, or any other local, state, or federal administrative body or government agency that is authorized to enforce or administer laws related to employment, against the Company (with the understanding that Executive’s release of claims herein bars Executive from recovering such monetary relief from the Company or any Releasee), claims for unemployment compensation or any state disability insurance benefits pursuant to the terms of applicable state law, claims to continued participation in certain of the Company’s group benefit plans pursuant to the terms and conditions of COBRA, claims to any qualified retirement plan benefit entitlements vested as the date of separation of Executive’s employment, pursuant to written terms of any employee benefit plan of the Company or its affiliates and Executive’s right under applicable law and any Retained Claims. This release further does not release claims for breach of Section 3(c) or Section [4(b)/4(c)] of the Employment Agreement or prevent Executive from reporting possible violations of federal law or
| 1 | Subject to update for applicable laws and circumstance. |
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regulation to any United States governmental agency or entity in accordance with the provisions of and rules promulgated under Section 21F of the Securities Exchange Act of 1934 or Section 806 of the Sarbanes-Oxley Act of 2002, or any other whistleblower protection provisions of state or federal law or regulation (including the right to receive an award for information provided to any such government agencies). Executive agrees to indemnify, protect, defend, and hold the Releasees harmless from any and all loss, cost, damage, or expense (including but not limited to court costs and reasonable attorneys’ fees and costs) incurred by the Releasees resulting from Executive bringing any claim released hereunder.
3. Acknowledgment of Waiver of Claims under ADEA. Executive understands and acknowledges that Executive is waiving and releasing any rights Executive may have under the Age Discrimination in Employment Act of 1967 (“ADEA”), and that this waiver and release is knowing and voluntary. Executive understands and agrees that this waiver and release does not apply to any rights or claims that may arise under the ADEA after the date Executive signs this Agreement. Executive understands and acknowledges that the consideration given for this waiver and release is in addition to anything of value to which Executive was already entitled. Executive further understands and acknowledges that Executive has been advised by this writing that: (a) Executive should consult with an attorney prior to executing this Agreement; (b) Executive has [21] days within which to consider this Agreement; (c) Executive has 7 days following Executive’s execution of this Agreement to revoke this Agreement pursuant to written notice to the General Counsel of the Company; (d) this Agreement shall not be effective until after the revocation period has expired; and (e) nothing in this Agreement prevents or precludes Executive from challenging or seeking a determination in good faith of the validity of this waiver under the ADEA, nor does it impose any condition precedent, penalties, or costs for doing so, unless specifically authorized by federal law. In the event Executive signs this Agreement and returns it to the Company in less than the [21] day period identified above, Executive hereby acknowledges that Executive has freely and voluntarily chosen to waive the time period allotted for considering this Agreement.
4. Severability. In the event that any provision or any portion of any provision hereof or any surviving agreement made a part hereof becomes or is declared by a court of competent jurisdiction or arbitrator to be illegal, unenforceable, or void, this Agreement shall continue in full force and effect without said provision or portion of provision.
5. No Oral Modification. This Agreement may only be amended in a writing signed by Executive and a duly authorized officer of the Company.
6. Governing Law; Dispute Resolution. This Agreement shall be subject to the provisions of Sections 11(a), 11(c) and 11(i) of the Employment Agreement.
7. Effectiveness. If Executive has attained or is over the age of 40 as of the date of Executive’s termination of employment, then Executive has seven days after Executive has signed this Agreement to revoke it and this Agreement will become effective on the eighth day after Executive signed this Agreement, so long as it has been signed by the Parties and has not been revoked by Executive before that date. If Executive has not attained the age of 40 as of the date of Executive’s termination of employment, then this Agreement shall become effective the date on which Executive signs this Agreement.
8. Voluntary Execution of Agreement. Executive understands and agrees that Executive executed this Agreement voluntarily, without any duress or undue influence on the part or behalf of the Company or any third party, with the full intent of releasing all of Executive’s claims against the Company and any of the other Releasees. Executive acknowledges that: (a) Executive has read this Agreement; (b) Executive has not relied upon any representations or statements made by the Company
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that are not specifically set forth in this Agreement; (c) Executive has been represented in the preparation, negotiation, and execution of this Agreement by legal counsel of his own choice or has elected not to retain legal counsel; (d) Executive understands the terms and consequences of this Agreement and of the releases it contains; and (e) Executive is fully aware of the legal and binding effect of this Agreement.
9. Reaffirmation of Obligation. Executive hereby expressly acknowledges and reaffirms Executive’s obligations under the Employment Agreement, including, without limitation, Section 5 thereof, which shall survive the expiration of the Term and are incorporated herein by reference.
10. Effect of Breach. SHOULD EXECUTIVE BREACH OR THREATEN TO BREACH THIS AGREEMENT OR THE EMPLOYMENT AGREEMENT OR OTHER OBLIGATIONS TO WHICH EXECUTIVE IS SUBJECT OR THE COMPANY OTHERWISE DISCOVER GROUNDS FOR CAUSE EXISTED AS OF THE DATE OF TERMINATION OF EXECUTIVE’S EMPLOYMENT (WHENEVER DISCOVERED), THEN (I) THE COMPANY SHALL HAVE NO FURTHER OBLIGATIONS TO EXECUTIVE UNDER THIS AGREEMENT (INCLUDING BUT NOT LIMITED TO ANY OBLIGATION TO MAKE ANY FURTHER PAYMENTS OR PROVIDE BENEFITS TO EXECUTIVE, WHETHER OR NOT ACCRUED, UNDER THIS AGREEMENT OR OTHERWISE) EXCEPT AS REQUIRED BY APPLICABLE LAW, (II) EXCEPT AS EXPRESSLY PROHIBITED BY APPLICABLE LAW, THE COMPANY SHALL BE ENTITLED TO RECOUP THE AMOUNT OF THE BENEFITS AND PAYMENTS SET FORTH IN SECTION 1 OF THIS AGREEMENT THAT EXECUTIVE RECEIVED PURSUANT TO THIS AGREEMENT AND TO EXERCISE ANY RIGHTS WAIVED OR MODIFIED THEREUNDER, PLUS THE REASONABLE ATTORNEYS’ FEES AND COSTS THE COMPANY INCURS IN RECOUPING SUCH BENEFITS AND AMOUNTS FROM OR EXERCISING SUCH REMEDIES AGAINST EXECUTIVE, (III) THE COMPANY SHALL HAVE ALL RIGHTS AND REMEDIES AVAILABLE TO IT UNDER THIS AGREEMENT AND/OR THE EMPLOYMENT AGREEMENT AND ANY APPLICABLE LAW, AND (IV) ALL OF EXECUTIVE’S PROMISES, COVENANTS, REPRESENTATIONS, AND WARRANTIES UNDER THIS AGREEMENT AND/OR THE EMPLOYMENT AGREEMENT AND OTHERWISE, SHALL REMAIN IN FULL FORCE AND EFFECT.
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IN WITNESS WHEREOF, the Parties have executed this Agreement on the respective dates set forth below.
| Executive | ||||||||
| Dated: |
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| Lonestar Resources US Inc. | ||||||||
| Dated: |
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By: |
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| Name: | ||||||||
| Title: | ||||||||
Exhibit 99.1
IN THE UNITED STATES BANKRUPTCY COURT
FOR THE SOUTHERN DISTRICT OF TEXAS
HOUSTON DIVISION
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|
x | |||
| In re: | : | Chapter 11 | ||
| : | ||||
| LONESTAR RESOURCES US INC., et al.,1 | : | Case No. 20-34805 (DRJ) | ||
| : | ||||
| Debtors. |
: | (Jointly Administered) | ||
| : | ||||
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x |
NOTICE OF EFFECTIVE DATE OF THE JOINT PREPACKAGED
PLAN OF REORGANIZATION FOR LONESTAR RESOURCES US INC. AND
ITS AFFILIATE DEBTORS UNDER CHAPTER 11 OF THE BANKRUPTCY CODE
TO ALL CREDITORS, EQUITY INTEREST HOLDERS, AND OTHER PARTIES-IN-INTEREST:
PLEASE TAKE NOTICE that on November 12, 2020, the United States Bankruptcy Court for the Southern District of Texas (the “Bankruptcy Court”) entered the Findings of Fact, Conclusions of Law and Order Approving Debtors’ Disclosure Statement and Confirming the Joint Prepackaged Plan of Reorganization for Lonestar Resources US Inc. and Its Affiliate Debtors Under Chapter 11 of the Bankruptcy Code (the “Confirmation Order”) [Docket No. 219]. Among other things, the Confirmation Order confirmed the Joint Prepackaged Plan of Reorganization for Lonestar Resources US, Inc. and its Debtor Affiliates Under Chapter 11 of the Bankruptcy Code, dated September 28, 2020 (as amended, modified, or supplemented from time to time, the “Plan”)2 as satisfying the requirements of the Bankruptcy Code, thereby authorizing Lonestar Resources US Inc. and its debtor affiliates (collectively, the “Debtors”) to implement the Plan on the Effective Date.
PLEASE TAKE FURTHER NOTICE that the Plan was substantially consummated, and the Effective Date (as defined in the Plan) occurred, on November 30, 2020.
| 1 | The Debtors in these cases, along with the last four digits of each Debtor’s federal tax identification number, are Lonestar Resources US Inc. (4035), Lonestar Resources Intermediate Inc. (2449), LNR America Inc. (3936), Lonestar Resources America Inc. (5863), Amadeus Petroleum Inc. (8763), Albany Services, L.L.C. (3185), T-N-T Engineering, Inc. (0348), Lonestar Resources, Inc. (8204), Lonestar Operating, LLC (5228), Poplar Energy, LLC (5718), Eagleford Gas, LLC (5513), Eagleford Gas 2, LLC (0638), Eagleford Gas 3, LLC (3663), Eagleford Gas 4, LLC (8776), Eagleford Gas 5, LLC (5240), Eagleford Gas 6, LLC (4966), Eagleford Gas 7, LLC (3078), Eagleford Gas 8, LLC (7542), Eagleford Gas 10, LLC (2838), Eagleford Gas 11, LLC (5951), Lonestar BR Disposal LLC (0644), and La Salle Eagle Ford Gathering Line LLC (8877). The Debtors’ address is 111 Boland Street, Suite 300, Fort Worth, TX 76107. |
| 2 | Capitalized terms used but not otherwise defined herein shall have the meanings ascribed to them in the Plan or the Confirmation Order, as applicable. |
PLEASE TAKE FURTHER NOTICE that any party in interest who wishes to continue to receive service of court filings must file a request for such notice with the Bankruptcy Court under Bankruptcy Rule 2002. Parties who previously filed such notices must file new notices if they wish to continue to receive service of court filings.
| ALL PLEADINGS FILED WITH, AND ORDERS GRANTED BY, THE BANKRUPTCY COURT ARE AVAILABLE FOR INSPECTION ON THE BANKRUPTCY COURT’S INTERNET SITE AT WWW.TXS.USCOURTS.GOV AND AT NO COST FROM THE REORGANIZED DEBTORS’ RESTRUCTURING WEBSITE: HTTP://CASES.PRIMECLERK.COM/LONESTAR. |
| Dated: | November 30, 2020 | |
| Houston, Texas |
| HUNTON ANDREWS KURTH LLP | LATHAM & WATKINS LLP | |
| Timothy A. (“Tad”) Davidson II (No. 24012503) | David A. Hammerman | |
| Ashley L. Harper (No. 24065272) | Keith A. Simon | |
| 600 Travis Street, Suite 4200 | Annemarie V. Reilly | |
| Houston, Texas 77002 | Madeleine C. Parish | |
| Telephone: (713) 220-4200 | 885 Third Avenue | |
| Facsimile: (713) 220-4285 | New York, New York 10022 | |
| Telephone: (212) 906-1200 | ||
| Facsimile: (212) 751-4864 | ||
Counsel for the Debtors and Debtors-in-Possession
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